Monday, August 11, 2014

Tuesday August 12 Housing and Economic stories


Have central banks been breaking the law? - (www.telegraph.co.uk) Quantitative easing has had a reverse Robin Hood-type effect by robbing from the poor and giving to the rich. The best way to destroy the capitalist system, the Russian revolutionary leader Vladimir Lenin is reputed to have said, is to debauch the currency. The world’s major central banks have certainly been having a fair old go at it. In the six years since the financial crisis first broke, they’ve been printing money like there is no tomorrow. Fortunately, they have not yet managed to bring down the free market system. On the other hand, they have succeeded in putting a rocket under asset prices and, in so doing, they have greatly exaggerated the wealth divide. In a number of cases, including the US and the UK, they have also significantly assisted governments in financing burgeoning fiscal deficits. To the extent that quantitative easing (QE) has had any effect at all, it is asset prices and governments that have been the prime beneficiaries.

S&P warns Europe debt market near pre-crash levels - (www.cnbc.com) European corporate debt markets have become "intoxicated" by monetary stimulus from central banks and "aggressive" transactions are in danger of reaching the excesses seen before the global financial crisis, ratings agency Standard & Poor's has warned. "Artificially low interest rates not only encourage an inefficient allocation of capital but create the incentive for excessive speculation in financial markets that ultimately risk doing more harm than good when boom turns to bust," Credit Analyst Paul Watters warned in S&P's quarterly European corporate credit outlook on Monday afternoon. "The greater use of leverage and a growing number of aggressively structured transactions in the European leveraged finance market is reminiscent of some of the excesses of the 2006-2007 boom period."

Reports: $180K stolen in Atlantic City casino heist - (www.cnbc.com) Two masked thieves stole more than $180,000 from an Atlantic City casino Monday morning, according to multiple media reports. Police say two suspects entered Caesars Atlantic City around 6 a.m. and at least one of them pulled out a gun before stealing two plastic boxes containing more than $180,000 in cash, NBC 10 in Philadelphia reported. The robbers then fled in a car. The New Jersey State Police Gaming Bureau is investigating the case, indicating the robbery occurred within the casino, according to the Press of Atlantic City. City police deal with matters related to the hotel and public areas. Trooper Alina Spies confirmed to USA TODAY that New Jersey State Police were investigating a robbery of an undisclosed amount from an Atlantic City casino, but was unable to provide any further information.

[Reuters] NY Fed found serious problems at Deutsche Bank's U.S. arms: source - (www.reuters.com) The Federal Reserve Bank of New York has found serious problems in Deutsche Bank AG's U.S. operations, including shoddy financial reporting, weak technology and inadequate auditing and oversight, people close to the matter told Reuters. In a letter to the German lender's executives last December, a senior official with the New York Fed described financial reports produced by some of the bank's U.S. divisions as "low quality, inaccurate and unreliable", said one of the sources, who is familiar with the letter. The New York Fed, as the U.S. central bank's eyes and ears on Wall Street, directly supervises the biggest U.S. and foreign banks, partly through embedded regulators who go to work each day inside the firms.

Puerto Rico debt crisis headed for U.S.-style bankruptcy resolution - (www.reuters.com) Momentum is building toward a deal that would make painful losses inevitable for investors holding about $20 billion in bonds issued by Puerto Rico's highway, water and electricity authorities even as some big U.S. mutual funds launch a legal battle to squelch a new law that authorizes a restructuring. The Puerto Rican government and most of its creditors have hired U.S.-based bankruptcy experts to advise them through the Caribbean island’s efforts to solve its debt problem, and the resolution figures to look a lot like a U.S.-style bankruptcy. The crisis came to a head late last month when Governor Alejandro Garcia Padilla pushed through the Public Corporations Debt Enforcement and Recovery Act to create a bankruptcy-like process for restructuring the debt of commonwealth-run corporations. That’s caused prices on some of the bonds of the electric utility, known as PREPA, to fall to 40 cents on the dollar or below. PREPA is widely viewed to be in the weakest condition of the agencies.





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