Tuesday, April 30, 2013

Wednesday May 1 Housing and Economic stories


TOP STORIES:

Obama budget projects $943-million bailout for key housing agency - (www.chicagotribune.com) The Obama administration's proposed budget projects the  Federal Housing Administration will need a $943-million bailout this year to stabilize its shaky long-term finances. The agency, whose mortgage insurance business increased dramatically during the Great Recession, is supposed to fund itself from premiums it charges homeowners. It has never received taxpayer funds in its 79-year history. But the agency reported in November that reserves to cover losses on some of the more than $1 trillion in mortgages it insures had dropped into negative territory for the year that ended Sept. 30. With FHA facing a shortfall of $16.3 billion to cover projected losses in coming years, Obama's 2014 budget anticipates the agency's reserve fund would need $943 million this year. The FHA has permanent authority to draw the money from the Treasury and does not need congressional approval for the bailout. A final decision would not be made until the fiscal year ends Sept. 30.

In Spain, A Mattress That Lets Your Money Rest Easy - (www.npr.org) Spaniards wary of trusting their life savings to their country's shaky banking system can now buy a mattress that has an armored safe equipped with a keypad combination lock hidden in one end. The new product, Caja de ahorros Micolchon — Spanish for "My Mattress Safe" — went on sale three weeks ago, several months after the European Union approved loans of up to $130 billion to bail out troubled Spanish banks. It's the brainchild of Paco Santos, who was laid off from Spain's biggest mattress manufacturer three years ago and has since started his own company, Descanso Santos Suenos, or DeSS. Reached by telephone at his offices in Salamanca, the 57-year-old salesman assured NPR that My Mattress Safe is no April Fool's Day joke. "We're completely serious! And we've sold many, many of these mattresses," Santos said, declining to give specific sales figures.

ECB Worries Shift to the Core. What Now?  - (online.wsj.com) As core euro-zone economies increasingly struggle to generate growth, could the European Central Bank be tilting towards generating yet more monetary stimulus? While countries on the euro-zone’s Mediterranean and Atlantic coasts have long been mired in semi-permanent recessions to the point where Greece is in downright depression and Spain and Portugal could well be heading in the same direction, the euro zone’s Northern European heartland has been doing relatively well. That, though, appears to be changing. Finland, one of the strongest voices against bailouts to the over-indebted south, is flagging. Its most recent industrial production data showed a 7.5% year-on-year decline. The Netherlands is struggling under the weight of a collapsing housing market, while Austria is vulnerable to economic upheavals in Slovenia and Hungary.

Monte Paschi Prosecutors Seize $2.3 Billion of Nomura Assets - (www.bloomberg.com) Prosecutors in Italy are seeking to seize 1.8 billion euros ($2.4 billion) of assets from Nomura Holdings Inc. (8604) as part of an investigation into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses. Sadeq Sayeed, Nomura’s former European head, and Raffaele Ricci, a managing director in fixed-income sales, are also being probed for colluding to obstruct regulators and making false statements, prosecutors in Siena, where the bank is based, said in a statement today. They are also sequestering 14.4 million euros of assets from three former Monte Paschi managers already under investigation, including Chairman Giuseppe Mussari, General Manager Antonio Vigni and finance chief Gianluca Baldassarri. The seizures are linked to allegations of fraud and usury, prosecutors said. Monte Paschi has claimed Nomura colluded with its former managers to devise one of two derivatives in 2008 and 2009 that hid total losses of much as 557 million euros. Nomura reaped at least 88 million euros from the transaction, dubbed Alexandria, according to the Italian lender.

Ex-Soros Advisor Sells "Almost All" Japan Holdings, Shorts Bonds; Sees Market Crash, Default And Hyperinflation - (www.zerohedge.com) Moments ago, it was none other than Takeshi Fujimaki, Soros' former advisor on all matters Japanese, who tripled down on the warnings, and told Bloomberg that the Bank of Japan’s “huge bet” by boosting quantitative easing won’t turn the economy around and is instead sending the nation toward default. “By expanding the monetary base to 270 trillion yen, the BOJ is making a huge bet which I think it will ultimately lose,” Fujimaki said in an interview in Tokyo on April 11. “Kuroda’s QE announcement is declaring double suicide with the government. The BOJ will have to share the country’s fate and default together.” Why? Same reason we have been pointing out every day for the past week, the same reason the Japanese bond market is now essentially broken with daily trading halts becoming an expected feature: “The volatility in the JGB market as well as the fact that there is large selling represent fear among investors,” Fujimaki said. “They are early signs of a larger selloff and we should continue to monitor the moves in the long-term bonds.” Fujimaki said he recently bought put options for Japanese government bonds of various maturities, without elaborating. He continues to hold real estate in Japan and options granting the right to sell the yen against the greenback expiring in less than five years. He also holds assets in U.S. dollars and currencies of other developed nations. “Japan’s finance is sinking into the ocean,” Fujimaki said. “There’s no escape from a market crash in the future when you have such enormous debt.”





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