Thursday, August 30, 2012

Friday August 31 Housing and Economic stories


Spanish bad bank loans soar to fresh high - ( Spanish bad bank loans soared to a fresh high in June, with almost 10pc of households and companies now behind on their payments. Bad debts climbed to 9.42pc of total lending, the Bank of Spain said on Friday, the highest since records began in 1962. The data showed that €164.4bn of loans were more than three months past their repayment deadlines.A month earlier, the bad loan rate was 8.96pc.

Insight: Goldman independent research arm dies, shunned by clients - ( Goldman Sachs Group Inc has given up trying to sell research from independent analysts to its institutional clients, after spending millions of dollars on distribution only to find that big money managers had little interest. The bank has laid off or reassigned the dozen or so employees at its Hudson Street Services unit, which offered data and independent research to investors. Goldman also sold its minority stakes in most firms that were producing the research, generating an overall profit in the process.

Lack of Bond Liquidity Hurting European Investors, Fitch Says - ( Investors are concerned about a lack of liquidity in Europe’s corporate bond market as banks cut back on trading and fund managers hold on to securities for longer. Two-thirds of participants in a Fitch Ratings survey published today reported reduced corporate bond liquidity since the start of the euro crisis. The same is true in the U.S., where trading volumes averaged $9.97 billion last month, 8 percent lower than in July 2011, according to data from the Financial Industry Regulatory Authority. “It’s something that’s not going away and if it’s already taking place in the U.S., where the market’s much more liquid and mature than Europe, then we’re in trouble,” said Adriaan Klop, a fund manager at Bryan Garnier Asset Management Ltd. in Paris.

New rules expose bigger funding gaps for public pensions - ( Already-strapped state and local governments are coming under increasing pressure to reduce pension benefits or increase taxpayer contributions that help pay for them because of new rules that would require them to report those obligations more honestly, advocates say. The latest rules come on line from the bond-rating firm Moody’s at the end of this month. They are projected to triple the gap between what states and municipalities report they have in their funds and what they have promised to pay out to retirees. That hole would stand at $2.2 trillion. For the worst-off cities, the new pension debt calculations could mean bond rating downgrades and increased borrowing costs when localities try to raise money for new projects, Moody’s has warned.

Drought Sparks Battle Over Ethanol Quotas – ( Three big intertwined but rival agribusinesses — corn farmers, meat and poultry producers, and biofuel refineries — are in a political fight to protect their interests as a drought ravages corn producers and industrial consumers alike.  At issue is whether to suspend a five-year-old federal mandate requiring more ethanol in gasoline each year, a policy that has diverted almost half of the domestic corn supply from animal feedlots to ethanol refineries, driven up corn prices and plantings and created a desperate competition for corn as drought grips the nation’s farm belt. Meat producers are demanding that the Obama administration waive the ethanol quota to ease rising feed prices. But ethanol producers worry that the loss of the quota will undermine the ethanol industry and do little for corn farmers but drive down the price of their stunted harvest.

Wednesday, August 29, 2012

Thursday August 30 Housing and Economic stories


China’s Largest Broker Plunges on Rumors Over Losses - (  Shares of Shanghai-listed Citic Securities, China’s largest brokerage firm, fell by 9.1 percent on Monday after rumors the company had suffered a large 2.9 billion yuan ($460 million) loss on overseas trading. But a spokesperson for the company denied the rumors and told CNBC that reports the company’s chairman had been arrested by the police were also untrue. The drop in Citic’s shares also affected other brokers on Monday with shares of Haitong Securities falling 8.6 percent. Reuters reported that traders were worried over earnings in the latest quarter.

California Sales Tax Collections Plunge an Amazing 40% in July - ( Typically, July is a month when California revenues go on vacation, as the month accounts for about one dollar of every $20 deposited in the General Fund. (Only October has lower revenue volume.) Despite those low expectations, July’s revenues were $475 million, or 10.1%, below estimates. Some of that variance may be due to timing, as a fund transfer expected in July will now be made in August (in the range of $100 million). Most of the shortfall was attributable to sales tax, which dropped $295 million, or 33.5%, below estimates. Partially offsetting these revenue losses, the state’s other major revenue sources — income and corporate taxes — performed above estimates.

Worst drought since 1956 - (  Driving by a boat ramp one Saturday morning last month, a local man noticed some white spots on the Des Moines River. He stopped to have a look. Turns out the spots were fish bellies. The undersides of dead sturgeon formed glistening constellations in the muddy brown water. In all, about 58,000 dead fish were along a 42-mile stretch, according to state officials, and the cause of death appeared to be heat. Biologists measured the water at 97 degrees in multiple spots. “I’ve never seen anything quite like it,” said Justin Pedretti, who owns a farm near the boat ramp in Bonaparte, Iowa, and first reported the fish kill. Under the most wide-reaching drought since 1956, and torched by the hottest July on record dating from 1895, the United States has been under the kind of weather stress that climatologists say will be more common if the long-standing trend toward higher U.S. temperatures continues. 

Five years on, the Great Recession is turning into a life sentence - ( Five years into the Long Slump it almost seems as if we are back to square one. China is sufficiently alarmed by the flint hardness of its "soft-landing" to talk up trillions of fresh stimulus. The European Central Bank is preparing to print “whatever it takes” to save Spain and Italy. Markets are pricing in an 80pc chance of yet more printing by the US Federal Reserve in September or soon after. There is no doubt that the three superpowers acting in concert can launch a mini-cycle of growth early next year - assuming they deliver on their rhetoric - but the twin headwinds of debt-leveraging and excess manufacturing plant across the globe cannot easily be conjured away.

Going after Wall Street - and watching the clock - ( If prosecutors want to go after Wall Street for its role in the financial crisis, they better watch the clock: The statute of limitations for many federal offenses is just about up. For securities fraud and most other federal offenses, prosecutions must begin within five years, and the subprime lending bubble hit its peak in 2007. "The statute is already becoming a concern in a broad range of cases," said Bill Black, a law professor at the University of Missouri-Kansas City. Federal officials, however, have a number of ways around this problem. For starters, they could pursue "tolling agreements" with the firms or individuals under investigation. In these agreements, the subjects of investigation agree to have the statute of limitations extended, and can earn more lenient treatment in return.

Tuesday, August 28, 2012

Wednesday August 29 Housing and Economic stories


No Criminal Case Is Likely in Loss at MF Global - ( A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case. The hurdles to building a criminal case were always high with MF Global, which filed for bankruptcy in October after a huge bet on European debt unnerved the market. 

Muni Defaults May Be 36 Times More Frequent Than Reported - (  Municipal bond defaults occur with a frequency at least 36-fold greater than reported by credit raters, Federal Reserve Bank of New York researchers say. When including unrated debt not covered by the firms, 2,521 issuers in the $3.7 trillion market for state and local bonds defaulted from 1970 to 2011, authors Jason Appleson, Eric Parsons and Andrew Haughwout wrote today in a blog posting. That compares with 71 reported by Moody’s Investors Service for issues it rated over the period. “Although the low default history of municipal bonds has played a key role in luring investors to the market, frequently cited default rates published by the rating agencies do not tell the whole story,” the researchers wrote.

Spain Said To Speed EU Bank Bailout On Collateral Limits - ( Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter. The ECB last month imposed limits on how much it will lend banks against government-guaranteed bonds. The rule change meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank, said the person, who asked not to be named because the matter is private. Bankia group, formed in 2010 from the merger of Spain’s troubled savings banks, will now get the first portion of the country’s European Union cash imminently, the person said. The rescue program always included a 30 billion-euro tranche to be paid out first and “mobilized in any contingency,” according to the agreement document dated July 16.

Risk Builds as Junk Bonds Boom - ( Money market funds pay next to nothing. Interest rates on United States Treasuries are dismal. The volatile stock market has been dead money for more than a decade. But on Wall Street — as the old saying goes — somewhere, someone is making money. And these days, that somewhere is junk bonds. The market for junk bonds, risky corporate debt that pays high interest rates, is red hot. Such debt, also known as high-yield bonds, has returned 10.2 percent year-to-date, according to a JPMorgan high-yield index. Junk bond funds are on a pace to take in a record amount of money this year. Companies with less than stellar credit are issuing hundreds of billions of dollars of bonds. Fueling this frenzy are investors of all stripes — including individuals, mutual funds and state pensions — who are desperate for returns in their bond portfolios and willing to take more risk to get them. Demand is insatiable, even as analysts warn that the market has become overheated and is ripe for a fall.

'Cliff' Hanger: US Companies Putting Everything on Hold - ( Company executives are postponing decisions such as hiring and plant-building until they can get some clarity from Washington on the looming “fiscal cliff” and possible higher taxes, according to an analysis of earnings conference calls by Goldman Sachs. “Regulatory direction and political uncertainty remain key concerns to corporate leaders,” wrote David Kostin, a Goldman strategist, in the note. “Firms expressed a uniform desire for regulatory clarity.”

Monday, August 27, 2012

Tuesday August 28 Housing and Economic stories


Winfield considers ending police force - (  West suburban Winfield is considering dismantling its police force to save money it could use to repair its crumbling roads. Consultants Laurence Mulcrone and Daniel McDevitt prepared a study for the village of 9,000 on the advantages and downfalls of scrapping its 19-member police force and contracting with DuPage County to use sheriff's police for law enforcement. Adopting the plan won't happen easily or quickly. Residents have publicly balked at the idea, first pitched this year by officials looking to repair the village's notoriously failing roads.

UC payroll up 6 percent See who made $1 million or more - ( The University of California spent more on payroll in 2011 than in the prior year, though officials say the money for higher salaries is coming more from hospital fees than from rising tuition. UC's total payroll grew by 6 percent last year, from about $10 billion in 2010 to $10.6 billion in 2011, according to salary data the university released today. "This increase is likely attributable to a combination of factors, including restoration of furlough reductions, increased research activity and market pressures for more competitive compensation, particularly in the areas of health care, instruction and research," says the university's employee pay report. About 36 percent of the funding for compensation in 2011 came from fees at UC hospitals, the report says, while less than 26 percent came from general funds and tuition, down a percentage point from 2010. UC had 22 employees statewide who made at least $1 million in 2011 - mostly doctors and coaches. Scroll over the blue bars below to learn more about them:

Obamacare may expose immigrant status of millions - ( As she was ushered into surgery eight years ago, Paula was confident that doctors at Washington's Howard University Hospital would find the cancer that had been growing in her right breast for months. She was less certain about where she would wake up the next day. "I felt scared because of the stories in other states ... It was always in the back of my mind that a doctor, or an immigration officer dressed as a doctor, could take me," said Paula, 60, of the fear that she would be exposed as an undocumented immigrant and deported. Still cancer-free, Paula, who asked to have her last name withheld, waits in the tiny chapel of La Clinica Del Pueblo, a community health clinic in Washington, DC, where she receives routine care. She and other illegal immigrants worry that their ability to access healthcare at facilities like La Clinica will become even more risky once President Barack Obama's healthcare law takes effect. 

For Unpaid College Loans, Feds Dock Social Security  - ( It's no secret that falling behind on student loan payments can squash a borrower's hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits. According to government data, compiled by the Treasury Department at the request of, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees' Social Security checks on those grounds. That's nearly double the pace of the department's enforcement in 2011; it's up from around 60,000 cases in all of 2007 and just 6 cases in 2000.

Foreclosure counseling is a bureaucratic waste that should be eliminated - ( The House passed a 2013 HUD appropriations bill in June allocating $45 million to housing counseling, $10 million less than HUD requested. The bill is now stalled in the Senate, and the White House has said President Barack Obama plans to veto the bill if passed in its current form. … “The housing counseling community needs to work to restore federal funding,” said David Berenbaum, chief program officer for the National Community Reinvestment Coalition. “Housing counseling organizations have had to downsize across the country at a time when the demands on service are at an all-time high.” They should be downsized out of existence. These services are part of the amend-extend-pretend charade. Banks need to foreclose on these people and be done with it. Most of these people have been struggling for five years. At this point, a foreclosure is a mercy killing.

Sunday, August 26, 2012

Monday August 27 Housing and Economic stories


Blink! U.S. Debt Just Grew by $11 Trillion - ( Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade. In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion. The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones. Some question whether “official” and “unofficial” spending commitments can be added together. 

Three California cities' bankruptcy cases reverberate - ( The back-to-back bankruptcy filings of Stockton and San Bernardino, following Vallejo's insolvency a few years earlier, have sparked finger-pointing about causes and speculation about whether more cities may go under. Those on the political right say the bankruptcies resulted from local politicians' caving in to pressure from unions for higher pay and more generous pension and health benefits. Those on the left – unions particularly – contend that the collapse of the real estate market, caused by rapacious Wall Street bankers, is to blame.

BNP Fund Freeze Shrinks Holdings Five Years After Crisis Ignited - ( When a Brookfield Investment Management Inc. analyst saw bonds of Accuride Corp., the wheel manufacturer in Evansville, Indiana, at 94 cents on the dollar in December, he decided it was time to buy. The problem was the price wasn’t real. The debt was only available at 104 cents. “When it actually came time to shake them loose from somebody’s hands, that’s where the disconnect came in,” said Richard Cryan, co-manager of high-yield corporate debt at the New York-based firm, which oversees $150 billion of assets. Unable to find a seller at the lower price, they gave up. Five years after BNP Paribas SA (BNP) marked the start of the worst financial crisis since the Great Depression by halting withdrawals from three investment funds that owned subprime mortgage securities, repercussions are lingering in the credit markets. What investors see still isn’t what they can get.

Forty Million Houses in the US That No One Needs? - ( 40 million houses too many ... one explanation for falling prices ... America has too many big houses – 40 million, to be exact – because consumers are shifting preferences to condos, apartments and small homes, experts told the New Partners for Smart Growth Thursday, holding its 11th annual conference in San Diego through Sunday. Relying on developers' surveys, Chris Nelson, who heads the Metropolitan Research Center at the University of Utah, said 43 percent of Americans prefer traditional big, suburban homes but the rest don't. "That means we are out of balance in terms of where the market is right now, let alone trending toward the future," he said. He estimated that this demand suggests a need for 10 million more attached homes and 30 million more small homes on 4,000-square-foot lots or less.        

Former ECB Chief Economist Warns Against Trying to Blackmail Germany With History - ( Germany’s guilt over the Second World War doesn’t oblige it to write blank checks to euro-zone countries that fail to reform their economies, said former European Central Bank executive board member Otmar Issing. Mr. Issing served as a member of the ECB’s Executive Board from 1998 to 2006. A German, he remains an influential voice on economic and central bank matters in his home country. Since leaving his ECB post he has served as an adviser to his government on financial and economic matters.

Thursday, August 23, 2012

Friday August 24 Housing and Economic stories


Real estate bubble bursts for California lawmakers too - ( In the boom years, several California legislators bought homes but are now having trouble keeping up with mortgages or avoiding big losses.  State lawmakers typically keep modest quarters near the Capitol to use when they're in town, with help from their tax-free expense allowance of $28,000 a year. Assemblyman Tony Mendoza bought a three-bedroom home instead, paying $463,000 for it after his 2006 election. "If you bought property, property values would go higher," said the Democrat, whose main home is in Artesia. "So I figured as soon as I get there [Sacramento], I will buy the house." But now he is one of at least 10 legislators who didn't fare well in a real estate climate that once showed no sign of cooling. The housing market tanked, the recession lingered and legislators' pay was cut. Unlike some predecessors who made handsome profits on second residences in Sacramento or in their districts before the downturn, these lawmakers have found themselves unable to pay their mortgages or stuck with homes that would sell at a loss, or both.

NEIL BAROFSKY: Here's The Real Reason The Feds Are Furious At The New York Regulator Going After Standard Chartered - ( According to CNBC's Steve Leisman, the Feds are even saying that the head of the NYDFS, Benjamin Lawsky, hijacked the investigation and may have over-stated the case, which could lead to a lower fine for Standard Chartered. They were also given little notice that the case was being filed. It all sounds very complicated, so having never been a regulator ourselves, Business Insider reached out to Neil Barofsky, former Special Inspector General of TARP and author of called Bailout: An Insider Account of How Washington Abandoned Main Street While Rescuing Wall Street. We figured he could explain why The Feds would be upset about someone from outside D.C. filing a case like this. Here's what he said: "If you want to understand exactly what's going on here, reread the four or five pages in chapter 1 of my book about my battles with Washington over the FARC case. Exactly the same thing happening here. They'd rather trash a potentially legitimate case than admit that they were asleep at the switch, especially now after the recent revelations about their failures with LIBOR and HSBC."

Despite Record Fraud Payouts, Most Execs Avoid Jail - (   Pharmaceutical companies, military contractors, banks and other corporations are on track to pay as much as $8 billion this year to resolve charges of defrauding the government, analysts say — a record sum and more than twice the amount assessed last year by the Justice Department. The surge in penalties is because of a number of factors, including the resolution of longstanding actions against drug makers and military contractors, as well as lawsuits brought against mortgage lenders after the financial crisis. But it also reflects a renewed emphasis on corporate fraud, as the Justice Department devotes more resources to the issue and demands higher penalties from companies.

Emerging Markets Experiencing Capital Outflows - ( There's always something comforting about dining in a restaurant where locals are eager to eat. Yet even as foreign investors pile back into emerging markets this year - searching for growth, yield and sovereign credit stability so elusive in the big developed markets these days - there is something unnerving about seeing domestic capital spinning out the same revolving door in some countries. Russia's deputy economy minister Andrei Klepach said on Monday the government may double its existing 2012 net capital outflow forecast to $50 billion, and even that's still below private forecasts of a $65 billion drain. Although more modest than last year's outflow of $80.5 billion and well under the worst moments of the 2008/09 credit shock, domestic money continues to exit the country at a brisk pace.

Meet The Wall Street Regulator Who Pissed Off The Fed, The Treasury, And The Entire City Of London - ( The Superintendent of Financial Services Benjamin Lawsky, who is now being referred to as the "rogue regulator", has certainly put his regulatory agency and himself on the map. Earlier this week, little known/newly formed regulator the New York Department of Financial Services released bombshell allegations that Standard Chartered helped facilitate hundreds of billions of dollars worth of transactions for Iran, which is currently under sanctions by the U.S.  What's more is the bank, whose stock price has been hammered, could also lose its banking license in the state. On top of all that, his agency's actions have reportedly ticked off the Federal Reserve and the U.S. Treasury for going around them.

Wednesday, August 22, 2012

Thursday August 23 Housing and Economic stories


ECB’s Rescue Worsens Spain, Italy Maturity Crunch: Euro Credit - (  European Central Bank President Mario Draghi’s bid to bring down Spanish and Italian yields may spur the nations to sell more short-dated notes, swelling the debt pile that needs refinancing in the coming years. Yields on Italian and Spanish two-year notes plunged after Draghi said on Aug. 2 the ECB may buy debt on the “short-end of the yield curve” as part of a broader crisis-fighting plan. The gap between Spain’s two-year and 10-year yields rose on Aug. 6 to the widest in at least two decades, while the spreadbetween similar Italian securities also approached a record. The average maturity of Spanish debt is the shortest since 2004 as Spain, like Italy, hasn’t issued 15- or 30-year bonds all year. As Prime Ministers Mario Monti and Mariano Rajoy fight to avoid bailouts that may threaten the euro’s survival, the ECB’s plan risks adding to pressure on the two nations’ treasuries.

Recession Generation Opts to Rent Not Buy Houses to Cars - ( The day Michael Anselmo signed a lease on his first apartment in New York City, he lost his job at Buck Consultants LLC. He spent about 10 months struggling to pay rent with unemployment benefits. Two years later he’s still hesitant to buy a home or even a road bike.  “Every decision that I have made since I lost my job has been colored by that insecurity I feel about the future,” said Anselmo, 28, who now rents an apartment in Austin, Texas, and works as a consultant for UnitedHealth Group Inc. “Buying a house is just further out on the timeline for me than it used to be.” Anselmo and many of his peers are wary about making large purchases after entering adulthood in the deepest recession and weakest recovery since World War II. Confronting ajobless rate above 8 percent since 2009 and student-loan debt hitting about $1 trillion, 20-to-34-year-olds are renting apartments, cars and even clothing to save money and stay flexible.

‘Les Riches’ in France Vow to Leave if 75% Tax Rate Is Passed - ( The call to Vincent Grandil’s Paris law firm began like many others that have rolled in recently. On the line was the well-paid chief executive of one of France’s most profitable companies, and he was feeling nervous. President Fran├žois Hollande is vowing to impose a 75 percent tax on the portion of anyone’s income above a million euros ($1.24 million) a year. “Should I be preparing to leave the country?” the executive asked Mr. Grandil. The lawyer’s counsel: Wait and see. For now, at least. “We’re getting a lot of calls from high earners who are asking whether they should get out of France,” said Mr. Grandil, a partner at Altexis, which specializes in tax matters for corporations and the wealthy. “Even young, dynamic people pulling in 200,000 euros are wondering whether to remain in a country where making money is not considered a good thing.”

Loan-Shark Lending Surge Feared in Japan - ( Toyoki Yoshida recalls the winter day in 2002 when he tried to hang himself with a leather belt after yakuza thugs hounded him for weeks to pay back 500,000 yen ($6,300) in loans. The belt ripped as his neck strained the noose, saving his life. The loans, with interest rates as high as 5,000 percent annually, were among those Yoshida owed to 96 loan sharks --some with connections to organized crime. Working in the billing department of a Tokyo electronics company, he’d been borrowing from consumer-finance companies to entertain clients and colleagues and fell into a spiral of debt which cost him his job. It ended when lawyers helped Yoshida terminate his contracts through a bankruptcy filing and partial payments.

Greece’s Rating Outlook Lowered By S&P As Economy Weakens - ( Greece’s credit rating may be cut again by Standard & Poor’s on concern the debt-burdened nation will need more support from European Union lenders. The outlook on Greece’s CCC rating, already eight levels below investment grade, was revised to negative from stable, S&P said in a statement yesterday. The change reflects the risk of a downgrade if Greece is unable to obtain its next disbursement of bailout loans from the EU and International Monetary Fund rescue package, the rating company said. Representatives from the so-called troika of the European Commission, European Central Bank and IMF return to Athen searly next month to review Greece’s economic program, which will determine whether the nation will receive further funds from rescue packages, amounting to 240 billion euros ($297 billion), needed to remain in the 17-nation euro area.