Tuesday September 15 Housing and Economic stories

TOP STORIES:

Looting Made Easy: the $2 Trillion Buyback Binge - Mike Whitney  - (www.counterpunch.com)  Corporations are taking the retirement savings of elderly public employees and using them to inflate their stock prices so wealthy CEOs and their shareholders can enrich themselves at the expense of their companies. And it’s all completely legal. Under current financial regulations, corporate bosses are free to repurchase their own company’s shares, push stock prices into the stratosphere, skim off a generous bonuses for themselves in the form of executive compensation, and leave their companies drowning in red ink. Even worse, a sizable portion of the money devoted to stock buybacks is coming from  “massively underfunded public pension” funds that retired workers depend on for their survival. According to Brian Reynolds, Chief Market Strategist at New Albion Partners,  “Pension funds have to make 7.5%,” so they are putting their money “in these levered credit funds that mimic Long-Term Capital Management in the 1990s.” Those funds, in turn, “buy enormous amounts of corporate bonds from companies which put cash onto company balance sheets…and they use it to jack their stock price up, either through buybacks or mergers and acquisitions…It’s just a daisy chain of financial engineering and it’s probably going to intensify in coming years.”   (“How a Public Pension Crisis Is Driving an Epic Credit Boom“, Financial Sense)

China Stock Probes Send Shivers Through Investment Community - (www.reuters.com)  Investigations by Chinese authorities into wild stock market swings are spreading fear among China-based investors, with some unsure if they are simply helping with inquiries or actually under suspicion, executives in the financial community said. Chinese fund managers say they have come under increasing pressure from Beijing as authorities' attempts to revive the country's stock markets hit headwinds, with some investors now being called in to explain trading strategies to regulators every two weeks. One manager at a major fund - part of the "national team" of investors and brokerages charged with buying stocks to revive prices – said a friend, also an executive at a large fund, was recently summoned for a meeting with regulators, along with all other mutual funds that had engaged in short-selling activity.

Obama drives down coal company stocks, and Soros buys them on the cheap - (www.americanthinker.com)  Following President Obama’s use of CO2 emissions as a weapon to drive major coal companies near bankruptcy, the ultimate politically connected speculator George Soros is buying up stock in major coal producers on the cheap. I predicted in this column last week that the left wasn’t going to kill off the coal industry so much as it was going to steal it. That prediction is already becoming true courtesy of billionaire George Soros. U.S. Securities and Exchange Act filings indicate that Soros has purchased an initial 1 million shares of Peabody Energy and 553,200 shares of Arch Coal, the two largest publicly traded U.S. coal companies. As pointed out last week, both companies have been driven perilously close to bankruptcy by the combination of President Obama’s “war on coal” and inexpensive natural gas brought on by the hydro-fracturing revolution.

Brazil's Epic Era of Splurging Is Over - (www.bloomberg.com)  Gone are the days of Brazilians flooding Miami to spend millions on fast cars and bling.  An era of austerity has dawned in Latin America's largest economy as the country charts a course in fiscal tightening. “The good times are over,” Jankiel Santos, chief economist at BESI Brazil, said by phone. “Brazil is in a difficult situation, and needs to correct the excesses of the past.” These three charts illustrate the end of a decade-long consumption boom. Brazil’s economy bled almost 900,000 jobs over the last year. That's unheard of, even in the aftermath of the 2008 Lehman Brother’s crisis. 

Murder Rates Rising Sharply in Many U.S. Cities - (www.nytimes.com)   ... many top police officials say they are seeing a growing willingness among disenchanted young men in poor neighborhoods to use violence to settle ordinary disputes. ... with at least 35 of the nation's cities reporting increases in murders, violent crimes or both, according to a recent survey, the spikes are raising alarm among urban police chiefs. The uptick prompted an urgent summit meeting in August of more than 70 officials from some of the nation's largest cities. A Justice Department initiative is scheduled to address the rising homicide rates as part of a conference in September. ... Less debated [than the race-hate theory] is the sense among police officials that more young people are settling their disputes, including one started on Facebook, with guns.

OTHER STORIES:

Hong Kong Buys $2 Billion to Keep the City's Currency Pegged - (www.bloomberg.com)
South Korea's Exports Fall Most Since 2009 as China Slows - (www.bloomberg.com)
China’s Economic Woes Echo Across Asia - (online.wsj.com)
Brazil's Epic Era of Splurging Is Over - (www.bloomberg.com)
Canada Economy Contracts for 2nd Straight Quarter on Oil Shock - (www.bloomberg.com)

Southeast Asia's Biggest Companies Risk $392 Billion Debt Burden - (www.bloomberg.com)
Exclusive: U.S. weighs sanctioning Russia as well as China in cyber attacks - (www.reuters.com)
Why China Had To Crash Part 2 - (www.forbes.com)
Understanding the Mechanics—and Risks—of Securities-Based Loans - (online.wsj.com)
China Parade Draws Putin, but Few Other Major World Leaders - (www.nytimes.com)