Friday June 19 Housing and Economic stories

TOP STORIES:

Home-Equity Lines of Credit See Jump in Delinquencies - (online.wsj.com) Banks face another post-crisis hangover as bills come due on lines of credit extended during property boom. A decade after homeowners used a soaring real-estate market to go on a borrowing binge against their own properties, many are now falling behind on payments, threatening to leave banks on the hook for hundreds of millions of dollars. Borrowers who took out home-equity lines of credit, or Helocs, when prices were near their peak are struggling to keep up as principal finally comes due after years of interest-only payments. Borrowers who signed up for Helocs in 2004 were 30 or more days late on $1.8 billion worth of outstanding balances just four months after principal payments started kicking in, according to data provided to The Wall Street Journal by credit-reporting firm Equifax.

$584.7B short: Pensions in bad shape - (www.usatoday.com) If you thought the raging bull market would fix pensions by now – you’d be wrong. Half a trillion dollars wrong. Pensions and other post-employment benefits of the giant companies in the Standard & Poor’s 500 are underfunded to the tune of $584.7 billion – a 44% worsening from the $405.7 billion underfunding in 2013, according to a report released by S&P Monday. That means just 75% of the total obligations are covered, down from 81% in 2013. And just 4.5% of pension and post-employment benefit plans are fully funded, down from the 8.4% that were in 2013. Total assets set aside for pensions and post-employment benefits plans grew just 3.5% in 2014. The trouble is that obligations shot up 11.3% to a record $2.34 trillion. That’s a mess. Making pensions are still reeling from the 37% hit they took amid the 2008 market meltdown. Most of the mess centers around the low growth of pension investment asset values compared to the skyrocketing of the obligations. The underfunding of corporate pensions hit $389 billion in 2014 – which is 9.7% worse than the shortfall in 2011 – even though the market has shot up by 10% those years. Pensions are the most underfunded since the record high in 2012 at $452 billion, S&P says.

Europe Stocks Extend Longest Losing Streak of ’15 as Miners Drop - (www.bloomberg.com)  A slump in German equities helped send European stocks down for a sixth day. The Stoxx Europe 600 Index fell 0.4 percent to 383.87 at the close of trading in London, earlier losing as much as 1.4 percent. Germany’s DAX Index declined 0.6 percent after entering a correction on Monday. It’s dropped 11 percent from its April peak. Stocks have fallen in past days as Greece struggles to strike a debt deal after months of talks. Creditors are growing increasingly frustrated with the country’s government after it rejected the terms of an aid package again last week and deferred a payment due to the International Monetary Fund. Greece pulled back on budget concessions to its creditors in new proposals Tuesday.

America's Shale Oil Boom Is Grinding to a Halt - (www.bloomberg.com) The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt. Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday. With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March.

Paul Volcker warns on health of US state finances - (www.cnbc.com) Paul Volcker, former chairman of the Federal Reserve, has warned that US states rely on faulty practices to balance their budgets, masking the true nature of their finances and leading to poor policy making. While states have returned to better health after the depths of the financial crisis and recession of the last decade, many remain under "heavy pressure," with overall tax revenues, adjusted for inflation, barely recovered from their pre-recession peaks. "The continued fiscal stress is tempting states to continue, and even intensify, budgeting and accounting practices that obscure their true financial position, shift current costs on to future generations, and push off the need to make hard choices on spending priorities and revenue practices," Mr Volcker said in a report released on Monday by the Volcker Alliance, a government reform group he founded in 2013.

OTHER STORIES:

Asian Stocks Drop Seventh Day on Fed Concern; China Shares Fall - (www.bloomberg.com)
Europe Stocks Extend Longest Losing Streak of ’15 as Miners Drop - (www.bloomberg.com)
Greece Said to Submit Revised Budget Plan in Bid for Funding - (www.bloomberg.com)
The $6.5 Trillion China Rally That’s Making Stock-Market History - (www.bloomberg.com)

Why you should care that Robert Prechter is warning of a ‘sharp collapse’ in stocks - (www.marketwatch.com)
China's soft May inflation increases calls for fiscal stimulus - (www.reuters.com)
Rajan Seeks to Deter Indian Defaulters as Fitch Sees Challenges - (www.bloomberg.com)
Eight Ukrainian servicemen killed in past 24 hours: military - (www.reuters.com)