TOP STORIES:
Spain’s Lost Generation Spends Its Salad Days Toiling in
Britain - (www.bloomberg.com) Carlos Hernandez Sonseca
studied six years for a bachelor’s degree and couldn’t find a job near his home
outside Madrid when he graduated in 2011. Last
year, he took an increasingly well-worn path to the U.K. The 27-year-old
journalist now washes and chops vegetables eight hours a day at the Vital Ingredient salad bar in London’s
financial district, making 260 pounds ($418) before taxes in a 40-hour week.
Thirteen other Spaniards are among a workforce of 17, said manager Francisco
“Chico” Baumle, a Brazilian. U.K. fast-food jobs and other low-wage roles have
been dominated by Poles and others who arrived after the European
Union expanded eastward in 2004. Now they’re joined by young
Spaniards who can’t find work at home, where unemployment hit 25 percent last
year. In the financial year to April, 30,370 Spaniards registered to work in
the U.K., up 25 percent from the previous year, and more than double the
2009-10 levels, according to data from the Department for Work and
Pensions.
U.S. Bank Deposits Drop Most Since 9/11 Terror Attacks - (www.bloomberg.com) Clients of the largest U.S.
banks withdrew funds this month at the fastest weekly pace since the Sept. 11
attacks as a deposit-insurance program ended and customers tapped into their
year-end cash hoards. Net withdrawals at the 25 largest U.S. lenders totaled $114.1 billion in
the week ended Jan. 9, pushing deposits down to $5.37 trillion, according to Federal
Reserve data released last week. The magnitude of the drop was
second only to the decline after the Sept. 11, 2001 terrorist attacks,
according to Jason Goldberg, a New York-based analyst at
Barclays Plc. Customers may be moving money no longer insured by the U.S.,
drawing down year-end balances and investing in advancing equity markets. A
Federal Deposit Insurance Corp. backstop, the Transaction Account Guarantee
program, ended last month, prompting some analysts, investors and trade
organizations to predict it could drive funds from the banking system.
One
man's mortgage debt is an entire neighborhood's equity - (www.ochousingnews.com) To facilitate reflation of
the housing bubble, the federal reserve lowered interest rates to zero, and
embarked on a program of buying 10-year Treasuries (operation Twist) and
directly buying mortgage-backed securities to ensure the flow of capital into the
housing market and dramatically lower mortgage interest rates. At the peak of
the housing bubble, mortgage interest rates were between 6% and 6.5%. They are 3.35% today — a near 50%
reduction. These super-low interest rates give today’s buyers the ability to
borrow amounts commensurate with peak prices under stable loan terms. The stage
was set to reflate the bubble and allow lenders to foreclose and recover
capital at peak prices. There was only one problem. Due to the collapse of
prices when the housing bubble burst, comparable sales were far below peak
prices, and continued foreclosure processing was keeping prices down. The
solution was simple; stop foreclosure processing and restrict inventory
until the housing bubble reflates. That’s where we are today.
Dish to close 300 Blockbuster stores, 3,000 jobs may be lost
- (www.reuters.com) Dish Network Corp plans to
close 300 Blockbuster stores in the United States in the coming weeks and could
lay off as many as 3,000 employees, a move that comes days after the DVD rental
firm's UK unit went into administration. Dish is trying to shed unprofitable
Blockbuster outlets as online retailers like Amazon.Com Inc and download sites
like Apple Inc's iTunes eat away at Blockbuster's business model. The potential job cuts
represent about 40 percent of Blockbuster's U.S. workforce of 7,300 people. "We
continue to see value in the Blockbuster brand and we will continue to analyze
store-level profitability and, as we have in the past, close unprofitable
stores," Dish said in a statement. The company did not disclose the
locations of the store closings.
Monte Paschi Hid Documents on Deals, Bank of Italy Says - (www.bloomberg.com) Banca Monte dei Paschi di Siena SpA, the
Italian bank seeking a second state bailout in four years, hid documents from
regulators on financial transactions that may prompt the lender to restate
profit. “The nature of some transactions involving Monte dei Paschi di Siena
reported by the press has been disclosed only recently after hidden documents
were found by new executives,” the Bank of Italy said
in an e-mailed statement today. “The transactions are now being reviewed by the
central bank’s oversight division as well as judicial authorities.” Monte
Paschi said on Jan. 17 it will review its accounts after Bloomberg News
reported the lender engaged in a derivative with Deutsche Bank AG (DBK) in 2008, dubbed
“Project Santorini,” that obscured losses before it sought a government bailout
the next year. The Siena-based bank said in a statement today it’s reviewing
three money-losing derivative deals, dubbed Santorini, Alexandria and Nota
Italia, which led to losses for the bank.
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