KeNo's Housing and Economic Portal: Thursday April 29 Housing and Economic stories

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TOP STORIES:

Another brutal day for Greece - (www.theglobeandmail.com) Despite rescue plan, country's borrowing costs hit new highs Wednesday and stock market sags as investors worry about possible default. After enacting painful austerity measures and winning a deal for a European and International Monetary Fund financial backstop, Greece is back in a familiar position: Borrowing costs have skyrocketed and the stock market is sagging. Predictions of default or an expensive bailout are again on the rise, leaving investors to wonder: what's next for the country's struggle to pull itself out of the debt crisis? Prime Minister George Papandreou on Wednesday said a joint euro zone-IMF financial rescue plan, agreed in Brussels on March 25, had helped his country's recovery effort. “This was clearly a great success for our country ... it guaranteed a safety net for Greece and another country that could face a similar problem,” he said. “We got a breathing space, we gained time.” But Mr. Papandreou's upbeat message was undermined by another brutal day for Greece in the markets, and increasingly dire predictions by analysts.

U.S. Banks Hid Risk by Lowering Debt Before Reporting - (www.bloomberg.com) U.S. banks masked their true risk levels by temporarily lowering debt before reporting it, the Wall Street Journal said, citing data provided by the Federal Reserve Bank of New York. Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and 13 other banks all understated the amount of debt used to pay for securities trades by cutting them by an average of 42 percent at the end of five quarterly periods; the debt levels were then boosted midway through each quarter, the newspaper said. After the collapse of Lehman Brothers Holdings Inc., spurred in part by excessive borrowing, in 2008, banks have become more concerned that reporting high debt levels could jeopardize share prices and credit ratings, the Journal said. While not illegal, the practice can distort investors’ impression of risk being taken by banks, the report said. Hong Kong-based spokespeople for Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup declined to comment on the Fed data or the report. Banks not identified in the report confirmed that they temporarily cut borrowings at the end of a quarter and some noted their regulatory filings tell investors debt levels can rise and fall during the quarter, the Journal said.

Las Vegas Apartment market said to need decade to recover - (www.lvbusinesspress.com) Apartment market said to need decade to recover. 2009 marked a 90.5 percent drop in sales from three years ago. Southern Nevada's beleaguered apartment sector is hoping for brighter days ahead. It may be a while, though. The apartment market suffered an ugly downturn in 2009, with plunging rents, soaring vacancies and virtually no sales. A return to normalcy could take a decade or more, says one industry official. "We had a gold rush taking place between 2004 and 2007, with a population and hotel building boom," Hendricks & Partners apartment specialist Carl Sims said. "We were on a honeymoon. Our forecast is it could take 10 years for things to return to normal. Prices are back to 2003 on a per square foot basis. There were only three sales of apartment complexes in 2009 with 100 units or more."

Rice Lake Wisconsin Elects 19 Year old Ron Paul Fan as Mayor - (Mish at globaleconomicanalysis.blogspot.com) In what I sure hope is a harbinger of political change this fall, Rice Lake Voters Elect 19-Year-Old Mayor: A young man wearing a Hollister T-shirt, shorts and sandals picked up election signs Wednesday in Rice Lake, Wis. The 19-year-old wasn't a campaign volunteer. Romaine Quinn is the new mayor. Quinn, who served one year on the Rice Lake City Council before being elected mayor on Tuesday, said, "Age, I don't think, necessarily makes a difference, I mean, it's about the issues." "Apparently, a lot of people wanted change," said 78-year-old Del Hanson, who voted for Quinn. Romaine's big win had a lot to do with what happened on Manwaring Avenue and other roads around town. "They cut down trees that were 40 and 50 years old and put in sidewalks nobody needed or wanted," said Richard Cerminar. "They just didn't listen," said George Erickson. "Basically everybody on this street didn't want a sidewalk." The "improvements" being made by the city are effectively taking away half of Erickson's front yard. Quinn cites Ron Paul, the libertarian-leaning Republican congressman from Texas, as his political role model. During his campaign, Quinn told voters he wants to hold the line on taxes, replace the city administrator and, of course, reconsider plans to put sidewalks all over Rice Lake.

Faith in houseownership drops, Fannie Mae poll shows - (www.washingtonpost.com) Despite turbulence in the housing market during the past three years, most people still think homeownership is important and preferable to renting, but many remain skeptical that home prices will rebound soon, according to a survey by Fannie Mae to be released Tuesday. The survey is Fannie Mae's first attempt to gauge how the foreclosure crisis has affected public attitudes about homeownership. The crisis was unprecedented in many aspects, including the widespread decline in home values and the prevalence of risky subprime loans, company officials said. With some homeowners feeling burned by the housing crisis, the survey found that many people are less likely to take risks related to buying a home. "We have been through a serious dislocation of the housing market," said Mike Williams, Fannie Mae's chief executive. "What we're trying to determine is what are the effects for consumers." Among the major shifts the survey found is that the public is less likely to view a home as a safe investment. In 2003, 83 percent of those interviewed in a similar study by Fannie Mae said real estate was a safe investment, compared with about 70 percent in the most recent survey. "That is one of the big changes we have seen in attitudes. We need to figure out whether this is a sustainable shift," said Doug Duncan, Fannie Mae's vice president and chief economist.

Pfizer Caught Illegally Marketing Bextra, Feds Won't Prosecute Because "Pfizer Too Big To Nail" - (Mish at globaleconomicanalysis.blogspot.com) CNN Health has an interesting article detailing illegal marketing practices at Pfizer. However, government officials looked the other way because Pfizer too big to nail. Imagine being charged with a crime, but an imaginary friend takes the rap for you. That is essentially what happened when Pfizer, the world's largest pharmaceutical company, was caught illegally marketing Bextra, a painkiller that was taken off the market in 2005 because of safety concerns. Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra. Pfizer said in court that "the company's intent was pure": to foster a legal exchange of scientific information among doctors. But an internal marketing plan called for training physicians "to serve as public relations spokespeople."