Wednesday May 3 2017 Housing and Economic stories

TOP STORIES:            

Corruption Scandals already Trip Up Spain’s New Government - (www.wolfstreet.com) After taking almost a whole year to form, Spain’s coalition government is already showing signs of strain. Chief among its problems is the endless string of corruption scandals engulfing the government’s majority party, the People’s Party. In the latest scandal the regional government of Madrid — a bastion of the party’s national apparatus — is accused of channeling illegal funds through the local water company, Canal de Isabel II. Also, the embattled construction behemoth OHL allegedly gave the former president of the regional government, Ignacio González, a €1.4 million bribe in return for the tender of a light-rail project in Madrid. González is now in jail awaiting charges, as is his brother who is promising to drag down others. Javier López Madrid, OHL’s chief executive, has also been arrested by Spain’s Civil Guard.

 

Crashing Canadian Mortgage Lender Bailed-Out By 321,000 Retired Ontario Healthcare Workers - (www.zerohedge.com) With Canada's housing bubble imploding amid the collapse of the country's largest mortgage lender, it was no surprise that a bailout had been orchestrated, and now we know the source of the $1.5 billion 'loan' - 321,000 retired healthcare workers in Ontario. As we noted yesterday, the stock of Home Capital Group cratered by over 60%, its biggest drop on record, after the company disclosed that it struck an emergency liquidity arrangement for a C$2 billion ($1.5 billion) credit line to counter evaporating deposits at terms that will leave the alternative mortgage lender unable to meet financial targets, and worse, may leave it insolvent in very short notice. As part of this inevitable outcome, one which presages the company's eventual disintegration and likely liquidation, Bloomberg reported that the non-binding rescue loan with an unnamed counterparty will be secured by a portfolio of mortgage loans originated by Home Trust, the Toronto-based firm said in a statement Wednesday. Home Capital shares dropped by 61% in Toronto to the lowest since 2003, dragging down other home lenders.

The U.S. Student Loan Implosion: By The Numbers  - (politicalcalculations.blogspot.gr) The Consumer Federation of America recently put out a press release that reports that they've found that 1.1 million student loan borrowers in the United States have gone 270 or more days without making payments on their Federal Direct Student Loans, with more than $137 billion worth of the loans issued by the U.S. government now qualifying as being in default by that standard. The combination of low number of defaulters and relatively large amount of defaulted student loans tells us that these individuals have truly racked up what might be considered to be gargantuan student loan debt... The average student loan balance in the U.S. is $30,650. For Americans who haven't defaulted on their student loans, that average figure drops to $28,150. But for Americans who have defaulted on their payments to their U.S. government creditor, the average balance on their Federal Direct Student Loan is $124,545.

Bond Buyers Blacklist Some Chinese Provinces After Run of Defaults - (www.bloomberg.com) Investors are becoming more discerning when it comes to the origin of Chinese debt. China saw its worst start to a year on record for corporate defaults, with companies headquartered in two eastern provinces -- Liaoning and Shandong -- responsible for the lion’s share. Money managers are taking notice, with a run of messy, high-profile company scandals helping sour sentiment toward certain regions. Beijing’s de-leveraging drive, which has been ramped up this month and has boosted borrowing costs, is also a factor. “When the whole bond market is under pressure amid regulatory checks, investors would certainly want to sell those in risky regions first,” said Nie Wen, an economist at Huabao Trust Co. in Shanghai, which managed 557.5 billion yuan ($81 billion) at the end of 2015. “As the liquidity tide starts to ebb, it’s time to see who’s swimming naked.”

Trump plan to slash business taxes to test Congress on deficit - (www.reuters.com) President Donald Trump unveiled a one-page plan on Wednesday proposing deep U.S. tax cuts, many for businesses, that would make the federal deficit balloon if enacted, drawing a cautious welcome from fiscal conservatives and financial markets. While the proposed tax cuts would please those helped by them, such as multinational corporations and wealthy taxpayers, Trump's package fell far short of the kind of comprehensive tax reform that both parties in Washington have sought for years. As his milestone 100th day in office on Saturday nears, Trump has been scrambling to show progress on his agenda. The tax plan, though meager in detail, matched up closely with the promises he made during his victorious 2016 election campaign.

OTHER STORIES:

Stocks Rise to Records, Dollar Surges on Tax Plan: Markets Wrap
The White House just outlined its tax plan. Here's what's in it
Congress scrambles to wrap up deal averting government shutdown - (www.reuters.com)

U.S. Commerce's Ross to announce probe into imported aluminum: CNBC - (www.reuters.com)
Home Capital Plunges as New Loan Will Force It to Miss Goals - (www.bloomberg.com)
Trump Calls for Deep Cuts in Business Taxes, Changes for Individuals - (www.wsj.com)