KeNo's Housing and Economic Portal: Sunday June 27 Housing and Economic stories

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TOP STORIES:

Growing ranks of long-term jobless face tough odds - (news.yahoo.com/s/ap) If you lose your job these days, it's worth scrambling to find a new one — fast. After six months of unemployment, your chances of landing work dwindle. The proportion of people jobless for six months or more has accelerated in the past year and now makes up 46 percent of the unemployed. That's the highest percentage on records dating to 1948. By late summer or early fall, they are expected to make up half of all jobless Americans. Economists say those out of work for six months or more risk becoming less and less employable. Their skills can erode, their confidence falter, their contacts dry up. Their growing ranks also will keep pressure on Congress to keep extending jobless benefits, which now run for up to 99 weeks. Overall, the economy has created a net 982,000 jobs this year. But for Jeff Martinez and the record 6.76 million others who have struck out for six months or more, their struggles are getting worse, not better. Martinez, 40, a salesman in Washington, D.C., says he's logged more than 200 interviews in the past three years. Decked out in a dark navy suit and Burberry tie, Martinez projects drive and a zest for deal-making. And yet the most urgent deal of his career — finding a job — eludes him.

Debtors’ Prism: Who Has Europe’s Loans? - (www.nytimes.com) IT’S a $2.6 trillion mystery. That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid. The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another. Now, with government resources strained and confidence in European economies eroding, some analysts say the Continent’s banks have to come clean with a transparent and rigorous accounting of their woes. Until then, they say, nobody will be able to wrestle effectively with Europe’s mounting problems.

Hungary Default Comments ‘Unfortunate,’ Varga Says - (www.bloomberg.com) Hungary’s economic situation is stable and recent comments about a possible default were “unfortunate,” the government said, pledging to stick to the budget deficit goal approved by the country’s creditors. “Any comparison with countries that have much higher credit default swap ratings than Hungary is unfortunate,” State Secretary Mihaly Varga told reporters today in Budapest. “The comments that have been made about this issue are exaggerated and if they come from colleagues that’s unfortunate.” Comments from Hungarian officials over the previous two days sparked concern that Europe’s sovereign debt crisis may be spreading to eastern Europe. That helped weaken the euro, pushed Hungary’s currency to a 12-month low and borrowing costs rose the most since October 2008, when the country needed an international bailout to avert a default. Prime Minister Viktor Orban, who took power a week ago, sought permission for a wider budget deficit from the European Union and the International Monetary Fund, which led the 20 billion-euro ($24 billion) bailout for Hungary. European Commission President Jose Manuel Barroso this week rebuffed Orban, urging him to continue fiscal consolidation.

California’s Lockyer Seeks Curbs on ‘Naked’ Swaps - (www.bloomberg.com) California Treasurer Bill Lockyer said U.S. and international financial regulators should limit trading of municipal credit-default swaps to help prevent speculative, or “naked,” trading of the derivatives. Lockyer, a Democrat, said lacking an outright ban on speculative use of credit default swaps -- the trading of debt- insurance contracts by investors who don’t own the securities -- regulators should adopt capital-margin requirements to reduce leverage and prevent abuses. “The municipal CDS market, when used by bondholders to hedge risk, can benefit issuers by increasing demand for bonds,” Lockyer, who earlier sought a ban on speculative trading of municipal credit default swaps, said today in a statement. “But naked trading of CDS by investors who don’t own California bonds poses a potential danger to taxpayers.” The growth of credit default swaps has raised questions among officials including Lockyer about whether Wall Street banks that are paid to underwrite their bonds also profit by arranging or promoting bets against them. Credit-default swaps tied to subprime home loans amplified the financial crisis that struck more than two years ago. There were $31 trillion of credit-default swaps outstanding in the first half of 2009, more than double the level four years earlier, according to the International Swaps and Derivatives Association.

The Next Shoe: Hungary Pressed To Disclose The 'True State' Of Its Finance's - (www.businessinsider.com) The Hungarian government has preemptively warned that it will soon outline massive economic restructuring... since it will soon, ominously, disclose the true state of its 2010 budget. The Hungarian currency, the forint, fell and Hungarian bond yields rose on the news: CNBC: "After the figures reflecting the true state of the economy (become public), within 72 hours an economic action plan must be put on the table," Prime Minister Viktor Orban's spokesman Peter Szijjarto told TV2 television. "It cannot be about...an adjustment, about patching up (the economy)...measures aimed at improving the financial situation must be linked with deep structural changes," Orban told the same television channel over the phone from Brussels.