Wednesday, March 11, 2015

Thursday March 12 Housing and Economic stories


Brazil politicians in huge ‘oil kickback’ probe - (www.bbc.com) Brazil's chief prosecutor has asked the Supreme Court to investigate 54 people, including politicians, for alleged involvement in a huge kickback scheme at the state-run oil firm Petrobras. Investigators allege firms paid inflated prices for Petrobras contracts and money was funnelled to the ruling Workers Party (PT) and its allies. This has been denied by the party and President Dilma Rousseff. The politicians' names were not released by prosecutor Rodrigo Janot. The move takes Brazil's biggest corruption scandal, which has so far focussed on companies, into the political sphere. The scandal has led Petrobras' shares to drop and the company has lost about $100bn (£65bn) in value since September, with the crisis casting a long shadow in South America's biggest country, the BBC's Julia Carneiro reports from Rio de Janeiro. Mr Janot asked for 28 separate inquiries to be opened into the activities of politicians who allegedly benefitted from the alleged scheme.

U.S. Companies Are Stashing $2.1 Trillion Overseas to Avoid Taxes - (www.bloomberg.com) Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home. Microsoft Corp., Apple Inc., Google Inc. and five other tech firms now account for more than a fifth of the $2.10 trillion in profits that U.S. companies are holding overseas, according to a Bloomberg News review of the securities filings of 304 corporations. The total amount held outside the U.S. by the companies was up 8 percent from the previous year, though 58 companies reported smaller stockpiles. The money pileup, reflecting companies’ incentives to park profits in low-tax countries, has drawn the attention of President Barack Obama and U.S. lawmakers, who see a chance to tap the funds for spending programs and to revamp the tax code. That effort is stalled in Washington, and there are few signs that tech companies will bring the profits back to the U.S. until Congress gives them an incentive or a mandate.

ECB Glimpse of Cyprus Debt Mountain Shows Limits of Bank Cleanup - (www.bloomberg.com) There was a time when a Cypriot on a moderate income could take a gamble on foreign real-estate worth more than his life savings. One banking crash, 3 1/2 years of recession and an international bailout later, 58-year-old Stelios Charalambous is among the Mediterranean island nation’s many debtors who realize that time has passed. “I took a 70,000-euro loan six years ago from a cooperative bank in the days when no one asked you many questions, and I bought six plots of land in Romania,” the Nicosia-based chiropractor said in an interview. “Now I’m earning half what I was and no one wants to buy my Romanian land. I realized I could afford to pay my children’s university expenses or my loan. I chose my kids and no one can blame me.” The European Central Bank, which holds a policy meeting in the euro area’s easternmost capital on Thursday, cares about such cases as they add up to almost 900 billion euros ($1 trillion) of soured credit in the region and hobble lenders’ ability to serve the economy. Yet Cyprus, where non-performing exposures account for more than half the country’s loan-book, also shows how politics can get in the way of a cleanup.

How a 25-Year-Old Sparked Plunge at Lumber Liquidators - (www.bloomberg.com) Lumber Liquidators Holdings Inc.’s stock plunge over the past week, fueled by allegations of excessive formaldehyde in its flooring, can be traced back to a blog post from an obscure 25-year-old short seller. Xuhua Zhou, who had dropped out of UCLA’s doctoral program in finance and became an individual investor, took an interest in Lumber Liquidators about two years ago. After seeing a surge in the company’s gross profit margin, Zhou learned that it sourced some products from China. That raised his suspicions that safety might have been skirted in pursuit of lower costs, he said in an interview. Zhou, who was born and raised in China, already had experience researching suppliers in the country, so he began investigating. His digging ultimately led to lawsuits, a “60 Minutes” report and accolades from the well-known short seller Whitney Tilson, who also bet against Lumber Liquidators.

The moment when an imploding Virginia college knew it was in trouble - (www.businessinsider.com) Sweet Briar College abruptly announced Tuesday that the school would close after the spring 2015 semester, surprising students and faculty at the women's liberal arts college in Virginia. However, Sweet Briar had been in trouble for some time. Like most colleges, it was seriously affected by the economic recession in 2008, as potential students were unable to pay tuition. As Scott Jaschik at Inside Higher Ed reported in November 2009, many colleges chose to raise the amount of financial aid they awarded to keep their enrollment numbers steady. Jaschik highlights Sweet Briar as a college that kept its financial aid at the same level — and suffered the consequences. In the fall 2009 semester, Jaschik reported, Sweet Briar ended up enrolling 605 students, rather than the 650 it had anticipated. While that may not seem like a large number, 45 fewer students on a campus of only a few hundred can have a major financial impact on the college. That was when the school probably knew it was in trouble.


Brazil’s Real Leads Global Drops as Rousseff Rebuffed on Taxes - (www.bloomberg.com)
Global stocks pull back further from record highs - (www.reuters.com)
Euro Slides Toward Lowest Since 2003 as Data Falters Before QE - (www.bloomberg.com)
Rajan Cuts India Rates After Modi Agrees to Inflation Target - (www.bloomberg.com)

In a Zero-Rate World, Brazil’s 12% Finds Few Buyers: Currencies - (www.bloomberg.com)
Petrobras CEO Lost Job Over a $30 Billion Disagreement - (www.bloomberg.com)
Fed Sheds Light on Turbulent ’09 With Publication of Transcripts - (www.bloomberg.com)
The Price of Oil Is About to Blow a Hole in Corporate Accounting - (www.bloomberg.com)

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