KeNo's Housing and Economic Portal: Tuesday March 2 Housing and Economic stories

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Boulder CO City Contractors Forcing Residents to Change Light Bulbs - (online.wsj.com) This spring, city contractors will fan out across this well-to-do college town to unscrew light bulbs in thousands of homes and replace them with more energy-efficient models, at taxpayer expense. City officials never dreamed they'd have to play nanny when they set out in 2006 to make Boulder a role model in the fight against global warming. The cause seemed like a natural fit in a place where residents tend to be politically liberal and passionate about the great outdoors. Instead, as Congress considers how to encourage Americans to conserve more energy, Boulder stands as a cautionary tale about the limits of good intentions. "What we've found is that for the vast majority of people, it's exceedingly difficult to get them to do much of anything," says Kevin Doran, a senior research fellow at the University of Colorado at Boulder. President Barack Obama has set ambitious goals for cutting greenhouse-gas emissions, in part by improving energy efficiency. Last year's stimulus bill set aside billions to weatherize buildings. The president has also called for a "cash for caulkers" rebate for Americans who weatherize their homes.

There's Greece - and Also Some U.S. States - (online.barrons.com) BRACE YOURSELF FOR THE SECOND WAVE -- the wave of sovereign defaults that typically occurs a few years after a financial meltdown. The first sign of what's headed our way may have arrived last week, when pressure on the Greek debt markets was intense enough for the European Union to publicly promise to support the profligate spender. Concern about Dubai's ability to pay its debts re-emerged as well, despite earlier financial support from Abu Dhabi that calmed the market for a short time. Worries about the ability of Spain, Portugal, Ireland and Italy to fund their deficits are also dogging investors. And before Americans start to feel smug, our own domestic tests are coming from states like California, Illinois and New York, which are facing large deficits. California's 10-year debt yields 4.5%, which translates into a 6.92% after-tax yield. Illinois' 10-year debt sports a 3.77% yield, for an after-tax bonanza of 5.8%. Those are extraordinary levels; municipal debt typically yields less than 10-year Treasuries, currently at 3.69%. There are credit-default swaps on 50 countries, and all but three have seen widening spreads, notes James Bianco, CEO of Bianco Research. "The whole planet's ability to pay its debt is being questioned," he says. The risk is that these smaller "subprime" countries and states drag down their larger "prime" counterparts.

Goldman Sachs’s Spilker, Overseer of $871 Billion, Exits Firm - (www.bloomberg.com) Goldman Sachs Group Inc. investment management co-head Marc Spilker is leaving the firm after two decades and will be replaced by a predecessor. Spilker, 45, will turn over responsibilities at the end of February to Edward Forst, who rejoined the most profitable securities firm in Wall Street history in September from Harvard University, according to internal memorandums yesterday from Chief Executive Officer Lloyd Blankfein and President Gary Cohn. The departing executive was on the firm’s management committee, whose members got year-end bonuses for 2009 in stock they can’t sell for five years instead of cash. Spilker’s exit is the latest of a series of changes atop investment management, which accounts for less than 10 percent of the firm’s revenue. Spilker and Tim O’Neill were elevated to help run it in June 2008, when Forst, 49, left to oversee finances at Harvard, his alma mater, after less than a year at the division. “There’s a history there of no one really running asset management for a long period of time,” said Henry Higdon, managing partner at recruitment firm Higdon Partners LLC in New York. “Have any of the leaders of the firm ever come from asset management? I don’t think so. They’re all from trading or investment banking.”

Dubai Default Swaps Jump to Highest Since Debt Delay- (www.bloomberg.com) The cost to protect against a default by Dubai surged to the highest since state-controlled Dubai World delayed debt repayments in November, as Greece’s financial crisis reignited concern riskier emerging-market debt might not be repaid. Credit-default swaps linked to Dubai debt jumped the most in two months, rising 53 basis points to 638 basis points at 9:15 a.m. in New York, according to CMA Datavision. The contracts are at the highest since Nov. 27. Dubai’s Islamic bond due 2014 fell to 87.125 cents on the dollar from 89 cents, the lowest since the debt was sold in October, according to Royal Bank of Scotland Group Plc prices. Dubai World, developer of the world’s tallest tower, said Nov. 25 it was seeking a standstill agreement from creditors so that it could restructure $22 billion of debt, shaking investor confidence around the world. Dubai default swaps reached 647 basis points on speculation Dubai World unit Nakheel PJSC would default after losing access to funding after a 50 percent plunge in the emirate’s home prices.

Greece turns on EU critics - (www.ft.com) Greece on Friday unleashed a fierce attack on its European Union partners, accusing them of creating a “psychology of looming collapse” a day after they pledged support for the country’s crisis-hit government. George Papandreou, Greek prime minister, said that, in the eurozone’s first big test, Greece had become “a laboratory animal in the battle between Europe and the markets”. In a televised address to his cabinet, he criticised EU members for sending “mixed messages about our country . . . that have created a psychology of looming collapse which could be self-fulfilling”. Mr Papandreou blamed the European Commission for failing to crack down on the previous conservative government’s “criminal record” in falsifying statistics. “This has undermined the responsibility of the European institutions with international markets,” he said.

The $555,000 Student-Loan Burden - (online.wsj.com) When Michelle Bisutti, a 41-year-old family practitioner in Columbus, Ohio, finished medical school in 2003, her student-loan debt amounted to roughly $250,000. Since then, it has ballooned to $555,000. It is the result of her deferring loan payments while she completed her residency, default charges and relentlessly compounding interest rates. Among the charges: a single $53,870 fee for when her loan was turned over to a collection agency. "Maybe half of it was my fault because I didn't look at the fine print," Dr. Bisutti says. "But this is just outrageous now." To be sure, Dr. Bisutti's case is extreme, and lenders say student-loan terms are clear and that they try to work with borrowers who get in trouble. But as tuitions rise, many people are borrowing heavily to pay their bills. Some no doubt view it as "good debt," because an education can lead to a higher salary. But in practice, student loans are one of the most toxic debts, requiring extreme consumer caution and, as Dr. Bisutti learned, responsibility. Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can't make their mortgage payments can hand over the keys to their house to their lender. Credit-card and even gambling debts can be discharged in bankruptcy. But ditching a student loan is virtually impossible, especially once a collection agency gets involved. Although lenders may trim payments, getting fees or principals waived seldom happens. Yet many former students are trying. There is an estimated $730 billion in outstanding federal and private student-loan debt, says Mark Kantrowitz of FinAid.org, a Web site that tracks financial-aid issues—and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in "forbearance," which means payments are halted while interest accrues.