KeNo's Housing and Economic Portal: Saturday April 24 Housing and Economic stories

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TOP STORIES:

Irish taxpayers takes on banks' toxic debt - (www.thisismoney.co.uk) rish taxpayers are set to become the country's biggest property owner following Dublin's latest attempt to cleanse its stricken financial system. The government is buying toxic debts with a face value of £14bn from the Republic of Ireland's five biggest lenders, with the loans placed into a state-owned 'bad bank'. But it is paying just 50 cents in the euro for the portfolio of mortgages and loans to property developers, many of whom have gone bust in Ireland's spectacular housing crash. Finance minister Brian Lenihan yesterday lashed out at the Irish banking industry for the 'appalling lending decisions' it made during the credit boom. With the exception of Bank of Ireland, which runs the banking wing of Britain's Post Office, the Irish taxpayer will end up as a majority or outright owner of every major bank in the land.

Trash Collecting Entrepreneur Squashed In San Francisco - (Mish at globaleconomicanalysis.blogspot.com) Here in San Francisco picking up a garbage costs about $37/can per week. A contractor I know got fed up, canceled his service as did his neighbor. They simply loaded both houses garbage into his truck, took it to the dump and paid the $40 to get rid of it. He charged his friend $10. As a contractor he had to go to the dump all the time anyway. Pretty soon he had a small business, neighbors paying him $10 instead of $37, a difference of over $1400 per year or the price of a vacation or plasma TV for the family. He sorted their garbage and turned in the recycling for more money. Normally the neighbors had to keep two cans, sort their garbage themselves and the Garbage monopoly took all the recycling fees anyway. Pretty soon he hired a couple of neighborhood kids and his crew of 3 did both sides of residential streets at the same time. If you had an old monitor or TV, motor oil, or paint to get rid of he'd take that too, sometimes he'd charge you $5 + what the dump charged for the special item. Need an extra pickup? No problem. He'd work from 5am to 8am and he was earning $200 per day and his workers $75. The amazing thing he kept telling me was that the larger the truck you had the more money you could make. He was amazed that with only a modified large pickup truck he could make money at a third of what the Garbage company charged. When the local garbage company and its union found out about "Joe" they complained to the city. Within a year a law was passed stating that garbage service was now mandatory for all residents at the price the city's monopoly charged, which was shortly raised. And Joe? For a while he still took our recyclables until he was fined $4000, even though he had our permission. It appears our household recyclables are owned by the Garbage company, not us, as it subsidizes our low cost of garbage service!

Chicago Sees Nation's Steepest House Price Drop For January - (www.cbs2chicago.com) The housing market rebound may be fading, but there's a bigger concern for Chicago homeowners looking to sell – home prices here are still falling. In January, home prices in Chicago fell 0.8 percent on a seasonally-adjusted basis among the 20 cities onStandard & Poor's Case-Shiller Home Price Index. Prices were relatively stable in most of the country in January, except in Southern California, which boasted strong gains. The seasonally-adjusted home prices jumped 1.8 percent in Los Angeles, and 0.9 percent in San Diego. For the index overall, the news was good. Prices rose 0.3 percent from December to January on a seasonally adjusted basis, and increased in 12 cities in the index. Many analysts expect the Case-Shiller 20-city index will again turn downward in the coming months as more foreclosures in other states hit the market. "It is only a matter of time before the index records a double-dip in prices," wrote Paul Dales, U.S. economist with Capital Economics, who forecasts a 5 percent drop. The market will be tested in the second half of the year, he wrote, when a tax credit that has boosted sales is gone.

Irish Banks: "Worst Fears Have Been Surpassed" - (Mish at http://globaleconomicanalysis.blogspot.com) Inquiring minds note Ireland's finance minister is shocked to discoverIrish Banks Need $43 Billion in New Capital on account of ‘Appalling’ Lending. Ireland’s banks need $43 billion in new capital after “appalling” lending decisions left the country’s financial system on the brink of collapse. “Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin yesterday. “Irish banking made appalling lending decisions that will cost the taxpayer dearly for years to come.” The agency aims to cleanse banks of toxic loans, the legacy of plunging real-estate prices and the country’s deepest ever recession. In all, it will buy loans with a book value of 80 billion euros ($107 billion), about half the size of the economy. “The information that has emerged from the banks in the course of the NAMA process is truly shocking,” Lenihan said. Dublin-based Allied Irish needs to raise 7.4 billion euros to meet the capital targets, while cross-town rival Bank of Ireland will need 2.66 billion euros. Anglo Irish Bank Corp., nationalized last year, may need as much 18.3 billion euros. Customer-owned lenders Irish Nationwide and EBS will need 2.6 billion euros and 875 million euros, respectively.

Bank of Mom and Dad Shuts Amid White-Collar Struggle - (online.wsj.com) When Maurice Johnson was laid off a year ago from his six-figure salary as a managing director at GE Capital, it wasn't his future he was worried about. It was his children's. The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson's two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn't sure whether he'll be able to help her to go to college, or even to get the older kids to graduation. Cutting Off the Kids: Mr. Johnson, who watched his own father struggle as an engineer without a college degree, was determined to do better for his own children. "We saved like crazy from the minute they were born," he says. "Then, it all fell to pieces." Many families such as the Johnsons—upper-middle-class professionals—are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children's careers. But pay cuts, layoffs and the decadelong flatlining of the stock market mean many families can no longer help their children.

Office vacancy rate hits 16-year high - (finance.yahoo.com) The U.S. office vacancy rate in the first quarter reached its highest level in 16 years, but the decline in rents eased and crept closer to stabilization, according to a report by real estate research firm Reis Inc. The U.S. office vacancy rate rose to 17.2 percent, a level unseen since 1994, as the market lost about 11.6 million net square feet of occupied space during the first quarter, according to the report released on Monday. The U.S. vacancy rate inched up 0.2 percentage points from a quarter earlier and was 2 percent higher than a year ago. "As labor markets stabilize, we expect occupancies and rents to require another 12 to 18 months before showing signs of improvement, given typical lags in commercial real estate," Reis director of research Victor Calanog said in a statement. "Even as occupancy continues to deteriorate, we're observing signs of renewed leasing activity across different metros."

OTHER STORIES:

Bond Buyers Accept More Risk - (online.wsj.com)

"Too big to fail" in crosshairs of reform debate - (www.reuters.com)

Macro hedge funds fail to profit from crisis - (www.ft.com)

Bond Buyers Demand Record Downgrade Protection: Credit Markets - (www.bloomberg.com)

Copper May Surpass $8,000 for First Time Since 2008 - (www.bloomberg.com)

Spring Outlook: Housing Sales Looking as Bleak as Ever - (realestate.yahoo.com)

More housing trouble - (www.thehill.com)

Loan Modifications Succeed by Increasing Borrower Entitlements - (www.irvinehousingblog.com)

Geithner Has His Work Cut Out for Him in India - (www.nytimes.com)

Germany splits with EU over Greek rates - (www.ft.com)

New fears over speed of China’s growth - (www.ft.com)