Thursday April 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Moves to Garnish Pay Rise as More Debtors Fall Behind - (www.nytimes.com) When the bank sued Leann Weaver for not paying her credit card balance, her reaction was typical for someone in that situation. Personal and financial setbacks weighed her down, and she knew she owed the $2,470. So she never went to court to defend herself. She was startled by what happened next. When she swiped her debit card at the grocery store, it was declined. It turned out Capital One Bank had taken $224.25 from her paycheck, a quarter of her wages for two weeks of work at a retail chain, and her bank account was overdrawn. “They’re kicking somebody who’s already in the dirt,” she said. One of the worst economic downturns of modern history has produced a big increase in the number of delinquent borrowers, and creditors are suing them by the millions. Concern is mounting in government and among consumer advocates that the debtors are not always getting a fair shake in these cases. Most consumers never offer a defense, and creditors win their lawsuits without having to offer proof of the debts, much less justify to a judge the huge interest charges and penalties they often tack on. After winning, creditors can secure a court order to seize part of the debtor’s paycheck or the funds in a bank account, a procedure called garnishment. No national statistics are kept, but the pay seizures are rising fast in some areas — up 121 percent in the Phoenix area since 2005, and 55 percent in the Atlanta area since 2004. In Cleveland, garnishments jumped 30 percent between 2008 and 2009 alone.

California's sole auto plant shuts down - (www.latimes.com) The NUMMI plant in Fremont puts out its last car, a Toyota Corolla. It was established in 1984 and employed 4,700 workers. California's sole auto plant shut down Thursday in Fremont as the last car rolled off the assembly line and thousands of now unemployed workers walked out the doors, some crying. A red Toyota Corolla was the last of nearly 8 million vehicles that have moved through production at New United Motor Manufacturing Inc., known as NUMMI, and a throng of workers accompanied it on the final leg of the line. "I saw a whole lotta men crying in there when things started going quiet and we said our goodbyes. It made me choke up," said David Guerra, who has worked at NUMMI for 25 years -- as long as the plant's been open. The plant, established in 1984 as a joint venture between GM and Toyota Motors Corp., employed 4,700 workers.

Europe has left Greece hanging in the wind - (www.telegraph.co.uk) However you dress it, the Greek package agreed by EU leaders is a capitulation to German-Dutch demands. There will be no European debt union as long as Angela Merkel remains Iron Chancellor of Germany. The Frankfurter Allgemeine summed up the deal succinctly: "No member of Europe's monetary union should be liable for the debts of another state. Bilateral credit from Berlin for Athens is not the same as German acceptance of responsibility for Greek debt." This shatters the assumption since Maastricht that monetary union leads inexorably to fiscal union. By drawing the IMF into Euroland's affairs, Germany has broken the spell and reduced EMU to a fixed-exchange system with knobs on, like the 1930s Gold Standard that it so resembles. No wonder Jean-Claude Trichet at the European Central Bank is cross. Far from stemming contagion, the deal leaves Club Med exposed. Underlying default risk has risen for Greece, Portugal, Italy and Spain, as well as for Ireland, Slovakia and Malta even if credit markets keep missing the point. The world's top holder of EU debt does understand. Greece is the "tip of the iceberg", said the deputy-governor of China's central bank. "The main concern today, obviously, is Spain and Italy."

Sharp Increase in March in Personal Bankruptcies - (www.nytimes.com) More Americans filed for bankruptcy protection in March than during any month since the federal personal bankruptcy law was tightened in October 2005, a new report says, a result of high unemployment and the housing crash. Federal courts reported over 158,000 bankruptcy filings in March, or 6,900 a day, a rise of 35 percent from February, according to a report to be released on Friday by Automated Access to Court Electronic Records, a data collection company known as Aacer. Filings were up 19 percent over March 2009. The previous record over the last five years was 133,000 in October. “Even with the restrictive new law, we’re back up over where we were before the law changed,” Mike Bickford, president of Aacer, said in a phone interview Thursday from his headquarters in Oklahoma City. He faulted the stagnant economy, saying a surge in bankruptcies generally follows economic contraction by 6 to 18 months, and he pointed to March as a historically busy month for bankruptcy filings.

Demystify the Lehman Shell Game - (www.nytimes.com) Making unattractive assets disappear from corporate balance sheets was one of the great magical tricks performed by accountants over the last few decades. Whoosh went assets into off-balance-sheet vehicles that seemed to be owned by no one. Zip went assets into securitizations that turned mortgage loans for poor credit risks into complicated pieces of paper that somehow earned AAA ratings. As impressive as those accomplishments were, they did not make the assets vanish altogether. If you dug deep enough, you could find the structured investment vehicle or the underlying assets of that strange securitization. Now there is another possibility in the world of accounting magic. Did accountants find a way to make some assets disappear altogether? Was it possible for everybody with an interest in them to disclaim ownership? ….. Lehman’s reasons for doing it were simple: to mislead investors into thinking the company was not overleveraged. Were other firms doing that? Are they still? Lehman thought not, but no one really knows. Now the Securities and Exchange Commission is demanding that other firms disclose whether they did the same. If it finds they did, the commission ought to go further and examine whether there were conspiracies to make the assets vanish, thus making Wall Street appear to be less leveraged than it was.

Canadians losing sleep over their finances - (www.rbc.com) According to the March RBC Canadian Consumer Outlook Index, most Canadians (65 per cent) are losing sleep over their finances. More than one-in-four Canadians (27 per cent) are up at night worrying about paying off their debt, followed by nearly one-in-five (18 per cent) who worry about having enough for retirement and 16 per cent who worry about having no emergency fund. The survey also found that one-in-three (34 per cent) were not confident about any aspect of their financial situation.

Pittsburgh's pension liability hits $1 billion – (www.pittsburghlive.com) Pittsburgh's multimillion-dollar pension liability is set to balloon to $1.04 billion today, when city officials must comply with a state requirement to report retirement obligations to police, firefighters and other city workers. With $296 million on hand in February, the city has about 30 cents for every dollar required to cover pension promises to about 3,200 employees and thousands of pensioners. Mayor Luke Ravenstahl wants to avoid a state takeover of the pension funds looming at year's end by depositing at least $200 million from a controversial plan to lease city parking garages and meters for 50 years to a private firm. "They're going to have to be very liberal in their assumptions, if they think that $200 million is going to bring them to 50 percent," said James McAneny, director of the Pennsylvania Employee Retirement Commission. "They're going to have to assume really good earnings and that nobody is going to be able to get a pay raise."

OTHER STORIES:

MGM Mirage's Ties Face Scrutiny - (online.wsj.com)

Credit-Crunch Relic Gets Fresh Look - (online.wsj.com)

Insurers, Regulators Fight on - (online.wsj.com)

Jobless claims match 19-month low - (money.cnn.com)

Construction spending falls for fourth straight month - (www.reuters.com)

China PBOC Sees New Asset Bubbles Emerging Globally - (www.bloomberg.com)

China’s Central Bank Sees Limited Rebound for Dollar - (www.bloomberg.com)

German Bund Yields Hold Near Year’s Low; Investors Seek Safety - (www.bloomberg.com)

Yuan Forwards Post Best Week in 3 Months as Gains May Resume - (www.bloomberg.com)

Mortgage Problems? Fed Can Relate - (online.wsj.com)

JFE Steel Plans to Boost Output - (online.wsj.com)

U.S. Firms Criticize Chinese Rules - (online.wsj.com)

Coming Visit May Signal Easing by China on Currency - (www.nytimes.com)

BOJ Said to Consider Raising Japan Economy Assessment - (www.bloomberg.com)

Payrolls in U.S. Rise 162,000; Unemployment at 9.7% - (www.bloomberg.com)

Fed's balance sheet down in latest week - (www.reuters.com)

Steelmakers Fight Back Over Iron Ore Price Push - (www.bloomberg.com)

Sweet deals lure car buyers, lift sales in March - (finance.yahoo.com)