Thursday March 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Credit union: Pul-lease take your money - (www.lvrj.com) Nevada Federal Credit Union has a deal for big savers: Withdraw your money and you'll get a bonus. The credit union, one of the largest in Nevada, figures that deposits from members who don't have a checking account, mortgage loan or any other products are expensive. Brad Beal, chief executive officer of Nevada Federal Credit Union, estimates that about 1,600 of Nevada Federal's 85,000 members only use the credit union for savings. The financial institution typically uses member deposits, including certificates of deposit and money market accounts, to make loans, which typically bear higher rates than deposits. Beal figures those interest-bearing accounts are a money-losing proposition in Nevada's current depressed economy. "We don't have any loan demand right now," Beal said. The credit union is investing in short-term Treasurys and earns about one-quarter of 1 percent on those government securities on average, but it was paying 0.4 percent to customers with savings. In addition, the credit union expects the National Credit Union Administration to boost deposit insurance premiums by 0.15 percent to 0.4 percent this year. For each $100 million in deposits, that premium increase will increase Nevada Federal's costs up to $400,000 yearly, Beal said.

Iceland rejects Icesave repayment deal - (www.ft.com) Icelanders voted overwhelmingly on Saturday to reject a €3.9bn debt repayment deal with Britain and the Netherlands in a move that threatens to derail international support for the country’s crisis-hit economy. With half the vote counted 93.6 per cent voted against the plan to reimburse money lost by British and Dutch depositors in the failed Icesave bank when Iceland’s banking sector collapsed in 2008. Only 1.5 per cent supported the deal, with another 4.8 per cent casting empty or spoilt ballots. The resounding rejection reflected deep public anger over a deal which critics said would punish taxpayers for the mistakes of bankers and regulators and pile more debts on a country of 320,000 people struggling to rebuild its shattered economy. The outcome will force the three countries back to the negotiating table after more than a year of abortive efforts to solve a dispute that has held up crucial loans from the International Monetary Fund and cast a cloud over Reykjavik’s bid to join the European Union. Jóhanna Sigurdardóttir, prime minister, said the government remained committed to repaying the Icesave debt and vowed to continue talks with Britain and the Netherlands to find a compromise.

The Swaps That Swallowed Your Town - (www.nytimes.com) AS more details surface about how derivatives helped Greece and perhaps other countries mask their debt loads, let’s not forget that the wonders of these complex products aren’t on display only overseas. Across our very own country, municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess. Like the credit default swaps that hid Greece’s obligations, the instruments weighing on our municipalities were brought to us by the creative minds of Wall Street. The rocket scientists crafting the products got backup from swap advisers, a group of conflicted promoters who consulted municipalities and other issuers. Both of these camps peddled swaps as a way for tax-exempt debt issuers to reduce their financing costs. Now, however, the promised benefits of these swaps have mutated into enormous, and sometimes smothering, expenses. Making matters worse, issuers who want out of the arrangements — swap contracts typically run for 30 years — must pay up in order to escape. That’s right. Issuers are essentially paying twice for flawed deals that bestowed great riches on the bankers and advisers who sold them. Taxpayers should be outraged, but to be angry you have to be informed — and few taxpayers may even know that the complicated arrangements exist.

Obama Spending Plan Underestimates Deficits, Budget Office Says - (www.bloomberg.com) President Barack Obama’s budget proposal would create bigger deficits than advertised every year of the next decade, with the shortfalls totaling $1.2 trillion more than the administration projected, according to the Congressional Budget Office. The nonpartisan agency said yesterday the deficit will remain above 4 percent of the nation’s gross domestic product for the foreseeable future while the publicly held debt will zoom to $20.3 trillion, amounting to 90 percent of GDP by 2020. By then, interest payments on the debt will have quadrupled to more than $900 billion annually, the report said. Deficits between 2011 and 2020 would total $9.76 trillion, the CBO said. Economists generally consider deficits topping 3 percent of GDP to be unsustainable because that means government debt is growing faster than the ability to pay back the money. “The news today from CBO is clear: The president’s budget will continue to lead our nation into a fiscal catastrophe -- an ever worse one than the president’s own numbers suggest,” Representative Paul Ryan of Wisconsin, the top Republican on the House Budget Committee, said yesterday.

Is the SEC Contributing to a Rigged Market? - (finance.yahoo.com) The Securities and Exchange Commission (SEC) recently passed new rules that restrict short selling in stocks. Will these regulatory moves stabilize financial markets? Or are they contributing to a rigged stock market? Let's examine these questions. The Rule: Both securities and futures exchanges have coordinated trading halts designed to counteract severe market declines that threaten market liquidity. These procedures are known as 'circuit breakers' and aim to quell downside volatility through temporary suspensions in trading or in extreme cases, closing the markets before the end of the normal close of the trading session. The circuit breakers are measured by a single day decrease in the Dow Jones Industrial Average. There are three circuit breaker thresholds - 10%, 20%, and 30% - set by the markets at point levels that are calculated at the beginning of each quarter. The New York Stock Exchange (NYSE) establishes the formulas for these market thresholds. How does this affect short sellers? The SEC's new short selling curbs apply once a circuit breaker has been triggered. Short selling in stocks that have fallen 10% or more is now only allowed above the best bid price for the stock. This trading restriction would be in force for the remaining trading session including the following day's session.

Nine million savers see 'severe drop' in income - (www.telegraph.co.uk) More than nine million savers have seen a “severe" drop in their income since the Bank of England cut interest rates to their lowest level exactly one year ago, it has been disclosed. It is equivalent to one in five Britons, according to the research by campaign group Save Our Savers. During the past year, savers have been hit by “pitiful” interest rates, it said. The reduction in rates means many savers no longer receive a real return on their money once inflation and tax is taken into account. Almost three quarters Britons said savers are not given a fair deal, while nine out of 10 said there has been too much encouragement to borrow. Revd John Strain, a spokesman for Save Our Savers, said: “The fever of frustration among savers has turned into real anger since the financial crisis. Responsible savers didn’t cause the economic collapse but they are being forced to carry the can yet again. Many are struggling on a much reduced income while others are watching their savings shrink in front of them."

OTHER STORIES:

Homeowners Hold Ground Against Rising Property Taxes - (online.wsj.com)

Rep. Barney Frank warns of Fannie, Freddie risks - (www.washingtonpost.com)

Greek Woes Show Swaps Must Be Curbed, Merkel Says - (www.bloomberg.com)

Financial reform bill likely to lose measure to protect Main Street investors - (www.washingtonpost.com)

Greeks ban hedge funds in bond sale - (www.ft.com)

Obama Turns Up Heat on Health Care Overhaul - (www.cnbc.com)

WABC Goes Dark on Cablevision - (www.cnbc.com)

Sarkozy Says EU Must Back Greece or Put Monetary Union at Risk - (www.bloomberg.com)

Zhou Signals Yuan Policy Shift - (online.wsj.com)

Zhou Says China Should Be ‘Very Cautious’ in Crisis Exit - (www.bloomberg.com)

China’s Bank Chief Says Currency Is Unlikely to Rise - (www.nytimes.com)

As Easing Nears, BOJ Faces Choice on Deflation - (online.wsj.com)

In Europe, Volcker Makes Case for Trading Limits - (www.cnbc.com)

Positive Jobs Report Doesn't Ease 'Double Dip' Worries - (www.cnbc.com)

Iceland Voters Reject Debt Deal - (www.cnbc.com)

Iceland votes over foreign debts, economy at risk - (www.reuters.com)

China wants yuan in SDR in 2015: report - (www.reuters.com)

Four U.S. Banks Shut Down as Failure Count This Year Reaches 26 - (www.bloomberg.com)

For Auto Towns, Emissary Is Ambassador of Hope - (www.nytimes.com)

After Jerky Swings, the Economy Begins to Look Nice and Boring - (www.nytimes.com)