Wednesday July 27 2016 Housing and Economic stories

TOP STORIES:

First Italy, Now Portuguese Banks "Unexpectedly" Need A Taxpayer Bailout - (www.zerohedge.com) According to the FT, Portuguese banks, already undercapitalised and loaded with bad debt, are bracing for even more heavy losses from Lisbon’s so far unsuccessful attempts to sell Novo Banco. Estimates of the potential bill facing banks, which finance the resolution fund that bailed out Novo Banco in 2014, range from €2.9bn to €3.9bn. Some bankers are even doubtful that the rescued lender will attract any acceptable offers, leading to its possible break-up or liquidation. Maybe. Or maybe we we will the first case of a "bad bank squared" - it would be hardly surprising considering Italy is about to bail out its already repeatedly bailed out banking sector... again. According to the FT, the sale of Novo Banco is among critical decisions that will shortly determine the future shape of Portugal’s banking industry, which the International Monetary Fund has linked with the problems facing Italian lenders as among potential risks to global growth.

Turkey's Erdogan, using emergency decree, shuts private schools, charities, unions - (www.reuters.com) President Tayyip Erdogan tightened his grip on Turkey on Saturday, ordering the closure of thousands of private schools, charities and other institutions in his first decree since imposing a state of emergency after the failed military coup. Turkish authorities also detained a nephew of Fethullah Gulen, the U.S.-based Muslim cleric accused by Ankara of orchestrating the July 15 coup attempt, the Anadolu state news agency reported. A restructuring of Turkey's once untouchable military also drew closer, with a planned meeting between Erdogan and the already purged top brass brought forward by several days. The schools and other institutions are suspected by Turkish authorities of having links to Gulen, who has many followers in Turkey. Gulen denies any involvement in the coup attempt in which at least 246 people were killed.

China Bans Internet News Reporting as Media Crackdown Widens - (www.bloomberg.com) China’s top internet regulator ordered major online companies including Sina Corp. and Tencent Holdings Ltd. to stop original news reporting, the latest effort by the government to tighten its grip over the country’s web and information industries. The Cyberspace Administration of China imposed the ban on several major news portals, including Sohu.com Inc. and NetEase Inc., Chinese media reported in identically worded articles citing an unidentified official from the agency’s Beijing office. The companies have “seriously violated” internet regulations by carrying plenty of news content obtained through original reporting, causing “huge negative effects,” according to a report that appeared in The Paper on Sunday.

Subprime Snaps: Largest US Subprime Auto Lender Delays Earnings Due To "Accounting Matters"  - (www.zerohedge.com) We first introduced readers to Skopos Financial, a company which we dubbed "The new king of deepsubprime" which we have long expected to become ground zero for the upcoming subprime auto crisis, and which is run by Santander Consumer USA veterans, last April. This is what we said about the company that has become increasingly more prominent: "Skopos Financial, a four-year-old auto finance company based in Irving, Tex., sold a $149 million bond deal consisting of car loans made to borrowers considered so subprime you might call them—we dunno—sub-subprime?" As Bloomberg noted at the time, the details from the prospectus showed a whopping 20 percent of the loans bundled into the bond deal were made to borrowers with a credit score ranging from 351 to 500—the bottom 6 percent of U.S. borrowers, according to FICO. As a reminder, the cut-off for "prime" borrowers is generally considered to be a credit score of around 620. More than 14 percent of the loans in the Skopos deal were made to borrowers with no score at all. 

Based On This Measure, China May Be Caught in a Liquidity Trap - (www.bloomberg.com) Markets might get concerned about China again. Supportive credit conditions and growth that's beat economists' expectations have buoyed investors and turned January's concerns into a distant memory, in part thanks to a commitment to unleash credit even at the cost of adding to the country's debt load. But based on a broader measure of money supply, the People's Bank of China is failing to keep liquidity conditions loose, according to Lombard Street Research Ltd. Welcome to the liquidity trap. While markets are all-too aware of Beijing's challenge to pump up the money supply to spur private investment, the scale of the mission is put into stark distinction by Michelle Lam, analyst at Lombard.

OTHER STORIES:

G20 nations pledge to bolster defenses against Brexit headwinds - (www.reuters.com)
UK comes under pressure to spell out Brexit plans at G20 - (www.reuters.com)
BOJ's Kuroda says to ease again if necessary to hit 2 percent price goal - (www.reuters.com)
Schaeuble Is Putting Financial Transaction Tax on Global Agenda - (www.bloomberg.com)

Turkey Publishes Decree to Close Gulen-Linked Institutions - (www.bloomberg.com)
Erdogan's Putsch: Turkey's Post-Coup Slide into Dictatorship - (www.spiegel.de)
ASEAN in discord ahead of meeting with top China, U.S. diplomats - (www.reuters.com)