Wednesday, January 30, 2013

Tuesday February 19 Housing and Economic stories


TOP STORIES:

Banks tighten loan standards, see more coming: ECB - (www.reuters.com) Banks began early repayment of crisis funds to the European Central Bank on Wednesday, shrinking the ECB's balance sheet while the world's other big central banks are still spending to support their economies. Combined with lackluster demand for weekly funding, it helped boost the euro to its highest level against the dollar since November 2011. An ECB survey separately showed that banks' access to market funding improved in recent months following the ECB's pledge to do what it takes to preserve the euro and the launch of a new bond purchase program. However, new capital requirements and financial regulation led them to toughen loan standards.

Writedowns Near $50 Billion as M&A Haunts Mine CEOs: Commodities - (www.bloomberg.com) The world’s biggest mining and steel companies have wiped about $50 billion off project valuations in the past year and the purge is poised to continue this earnings season as managers reassess expensive takeovers. Anglo American Plc (AAL)Vale SA (VALE3) and Rio Tinto Group (RIO) led the writedowns as declining metal prices, rising project costs and slowing demand forced reviews. Glencore International Plc (GLEN) may write down some nickel and copper assets acquired through its takeover of Xstrata Plc (XTA), Liberum Capital Ltd. has said. BHP Billiton Ltd. (BHP) may trim aluminum operation valuations, according to Goldman Sachs Group Inc. and Sanford C. Bernstein Ltd.

Analysis: Pall of bank "legacy assets" hangs over euro zone - (www.reuters.com) In September last year, at a below-the-radar meeting in Helsinki, three euro zone finance ministers came up with a two-word phrase that sounded harmless at the time but has since troubled European leaders a great deal. Banks' "legacy assets" sound innocent enough but in the context of Europe's debt crisis, and particularly for Ireland and Spain, the question of how to deal with existing bad debts is a time bomb that has not been defused. In the months since the term entered the EU's lexicon, efforts have been made to parse it or play it down. But those that came up with it -- the finance ministers of Finland, Germanyand the Netherlands -- appear determined to keep it alive, and until June 2013, the deadline leaders have set themselves to resolve it, the issue will fuel uncertainty.

Spain Recession Deepens More Than Forecast Amid Austerity - (www.bloomberg.com) Spain’s recession deepened more than economists forecast in the fourth quarter as the government’s struggle to rein in the euro region’s second-largest budget deficit weighed on domestic demand. Gross domestic product fell 0.7 percent in the three months through December from the previous quarter, when it declined 0.3 percent, the Madrid-based National Statistics Institute said today. That’s more than the 0.6 percent contraction the Bank of Spain predicted on Jan. 23. GDP dropped 1.8 percent in the fourth quarter from a year earlier and 1.37 percent in the full year from 2011, INE said. The European Commission this week signaled it may recommend easing Spain’s budget goals for the fourth time in a year as unemployment in the euro region’s fourth-largest economy rose to a record 26 percent at the end of Prime Minister Mariano Rajoy’s first year in power.

Fed Risks Losses From Bonds - (online.wsj.com) The Federal Reserve could be charting a course that leaves the highly profitable central bank with no extra income to hand over to the U.S. Treasury for several years. That is the conclusion of five Fed staff economists who examined how the central bank's bond-buying programs will affect its profitability over the long run. Right now the Fed is earning large returns on its bond portfolio and sending most of its profits to the Treasury. Several years from now, when the economy is stronger, the Fed is expected to sell bonds and raise short-term interest rates to tighten credit and restrain inflation. The group found the Fed might have to sell bonds at a loss and incur higher expenses on interest it pays to banks on the reserves they hold at the Fed.




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