Wednesday, September 24, 2014

Thursday September 25 Housing and Economic stories


Venezuela Default Seen by Harvard Economist as Arrears Grow - (www.bloomberg.com) As Venezuela racks up billions of dollars of arrears with importers that are fueling the worst shortages on record, one of the nation’s top economists is questioning the government’s decision to keep servicing its foreign bonds. A “massive default on the country’s import chain” is part of what has allowed the nation to keep paying its foreign bonds, Ricardo Hausmann, a former Venezuelan planning minister who is now director of the Center for International Development at Harvard University in Cambridge, Massachusetts, said by phone from Boston. “I find the moral choice odd. Normally governments declare that they have an inability to pay way before this point.”

Treasury to Decide in ‘Near Future’ on Inversions: Lew - (www.bloomberg.com) The Treasury Department will decide in the “very near future” what actions it can take to deter U.S. companies from cutting tax bills by moving their addresses to other countries, Treasury Secretary Jacob J. Lew said today. In a speech in Washington, Lew again urged Congress to revamp the U.S. tax code and pass a retroactive law to curb the deals known as inversions. With Congress deadlocked, the Treasury “is completing an evaluation of what we can do to make these deals less economically appealing, and we plan to make a decision in the very near future,” Lew said during a speech at the Urban Institute in Washington. “Any action we take will have a strong legal and policy basis, but will not be a substitute for meaningful legislation - - it can only affect part of the economics,” Lew said.

Schumer Anti-Inversion Tax Plan Could Reach Back to 1994 - (www.bloomberg.com) A top Senate Democrat’s proposal to limit future deductions for companies that moved tax addresses out of the U.S. as many as 20 years ago would penalize dozens of so-called inversion deals. The proposal by Charles Schumer of New York, the No. 3 leader in the Senate’s Democratic majority, would reduce the amount of deductible interest for inverted companies to 25 percent of U.S. taxable income from 50 percent, according to a draft obtained by Bloomberg News. President Barack Obama has included a similar provision in his annual budgets, and this is the first time the language made it into a legislative proposal, Robert Willens, a New York-based independent consultant on corporate taxes, said by phone yesterday.

CLO surge prompts regulatory concerns - (www.ft.com) Sales of bonds backed by riskier US corporate loans have surged to their highest level in seven years, helping to fuel a leveraged lending boom that is concerning regulators. So-called collateralised loan obligations, or CLOs, have staged a striking recovery in the years since 2008, when securitised bundles of subprime mortgages were blamed for inflating the housing bubble and exacerbating the ensuing financial crisis. Bonds backed by home mortgages not guaranteed by the US government’s housing financiers have since largely disappeared, but sales of CLOs comprised of leveraged loans made to low-rated companies are poised to overtake levels last seen in the 2006-2007 credit boom as investors look for higher-yielding assets and companies take advantage of low borrowing costs. Some analysts predict this year’s issuance volume could eclipse the record $97bn worth of deals sold at the height of the credit bubble back in 2006. On Friday, analysts at JPMorgan Chase increased their forecast for full-year sales from $90bn-$100bn to $105bn-$115bn.

Scottish Independence Looms as Iceberg Moves Toward U.K. - (www.bloomberg.com) Scottish independence increasingly looks like an iceberg that could sink Prime Minister David Cameron’s government and the opposition Labour Party. And like the passengers on the Titanic, they never saw it coming. Yesterday’s YouGov Plc (YOU) poll putting the Yes vote on 51 percent sparked a fresh effort from supporters of the union to urge Scots to come back from the brink. About 100 Labour lawmakers will travel to Scotlandthis week to campaign for a No vote, while Conservative Chancellor of the Exchequer George Osborne offered more powers over taxes and spending to the Scottish Parliament -- if voters opt to stay part of the U.K.






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