KeNo's Housing and Economic Portal: Tuesday June 8 Housing and Economic stories

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TOP STORIES:

Europe’s Debt Crisis Casts a Shadow Over China - (www.nytimes.com) The pain of the European debt crisis is spreading as the plummeting euro makes Chinese companies less competitive in Europe, their largest market, and complicates any move to break the Chinese currency’s peg to the dollar. Chinese policy makers reached a rough consensus early last month about breaking the dollar peg and letting the currency, the renminbi, rise in value somewhat, according to people close to Chinese currency policy makers. Uncoupling the currencies would make American goods more competitive against Chinese products. But for various reasons, China has not yet put that policy into place. And in light of the euro’s nose dive, such a move could be difficult. Letting the renminbi rise against the dollar would also mean a further increase in the renminbi’s value against the euro, creating even more problems for Chinese exporters to Europe.

“There’s No Money Left,” U.K. Minister Learns - (www.bloomberg.com) Arriving for work at the U.K. Treasury last week, the incoming chief secretary, David Laws, found a note from his predecessor, Liam Byrne, offering advice on the job. “Dear Chief Secretary, I’m afraid to tell you there’s no money left,” Laws cited it as saying. “Which was honest,” Laws, whose position is the No. 2 in the Treasury after the chancellor of the exchequer, told a press conference in London today. “But slightly less than I was expecting.” The note underscores the task facing Britain’s Conservative-Liberal Democrat coalition as it seeks to reconcile demand for improved health and education services with promises to reduce the largest budget deficit since World War II. It was also in the tradition of Reginald Maudling, Conservative chancellor of the exchequer from 1962 to 1964. Leaving his residence after election defeat, he was reported by James Callaghan, his successor, to have remarked, “Sorry, old cock, to leave it in this shape.”

China frets over rising capital inflow pressure - (www.reuters.com) Capital inflows are placing big pressure on Chinathis year, as domestic companies and banks repatriate large volumes of foreign currency, a senior official said in remarks published on Monday. Guan Tao, who heads the international balance of payments department at the State Administration of Foreign Exchange (SAFE), said that ultra-low interest rates in the United States were also fuelling a global dollar carry trade that was channeling more funds to China. But rather than point his finger at foreign speculators, Guan suggested that Chinese players were the main drivers of these flows, looking to take advantage of both yuan appreciation and low U.S. rates. "Tighter credit controls are prompting domestic companies to raise funds from overseas and then repatriate them, which increases capital inflows," Guan was paraphrased as saying by the official China Securities Journal.

Forget the wolf pack, the ongoing euro crisis was caused by EMU - (www.telegraph.co.uk) Jean-Claude Trichet tells us the world faced a second Lehman crash in the days and hours before EU leaders launched their €720bn (£612bn) defence fund. If the European Central Bank’s president is correct, we are in trouble. The EU-IMF package is already unravelling. What will the West do for its next trick? Mr Trichet was ash-white at the Brussels summit a week ago. He distributed charts of credit stress to every eurozone leader. By the time he had finished his hair-raising discourse, everybody round the table finally understood what they faced. “The markets had ceased to function,” he told Der Spiegel. “There is still a risk of contagion. It can happen extremely fast, sometimes within hours.” The spreads on Greek, Iberian, and Irish bonds have, of course, dropped since the ECB stepped in with direct purchases. But the euro rally fizzled fast, to be followed by a fresh plunge to a 18-month low of $1.24 against the dollar. European bank stocks have buckled again. Spain’s IBEX index fell 6.6pc in capitulation fever on Friday. Geneva professor Charles Wyplosz said EU leaders made the error of overselling up their “shock and awe” package before establishing any political mechanism to mobilise such sums. “The fund is an empty shell,” he wrote at Vox EU. “Worse still, crucial principles have been sacrificed for the sake of unconvincing announcements.”

Senate Votes for a Clear Credit Score - (www.nytimes.com) Anyone rejected for a credit card, car loan or department store charge account has most likely discovered a frustrating aspect of the government-mandated, free credit reports: the glaring absence of the numerical credit score that lenders rely on to make their decisions. That now stands to change as a result of an amendment adopted by the Senate on Monday as it moved closer toward completing a sweeping financial regulatory bill. The Senate, by a voice vote, approved a proposal by Senator Mark Udall, Democrat of Colorado, to require that credit reports include the numerical score, which by the most common measure ranges from 300 to 850. Obtaining a score from the major credit reporting bureaus that calculate them typically costs up to $15.95 for each score. “This I believe will empower consumers, it will increase the financial literacy in our country,” Mr. Udall said. “It’s a win-win.” His proposal would require the score to be provided if it was used to deny credit, required a higher interest rate on a loan, or prevented an applicant from being hired for a job.

OTHER STORIES:

G.M. Posts Profit as Sales Rise 40 Percent - (www.nytimes.com) The automaker said that it earned $865 million in the first quarter and that it would increase production.

Stall in Applications for Federal Mortgage Program - (www.nytimes.com) The number of homeowners enrolling in a program to lower their payments was flat in April, and some say the effort may be reaching its limits.

Filmmakers Tread Softly on Early Release to Cable - (www.nytimes.com)

A Major Deflationary Red Flag Warning - (www.businessinsider.com)

Investors brace for a queasy new week of stock uneasiness - (www.usatoday.com)

Stall in Applications for Federal Mortgage Program - (www.nytimes.com)

CDS Traders Face Disclosure Requirements in Europe - (www.bloomberg.com)

Speedy New Traders Make Waves Far From Wall St. - (www.nytimes.com)

Frank Says Senate’s Stronger Rules Will Sway Financial Bill - (www.bloomberg.com)

Corporate Bonds Are Feeling Strain - (online.wsj.com)

Obama's terms for financial overhaul remain mostly intact - (www.washingtonpost.com)

Sovereign Funds Tightened the Spigot - (online.wsj.com)

Greece to Get First EU Loans Tomorrow, Official Says - (www.bloomberg.com)

EU Faces Trichet’s ‘Quantum Leap’ Call as Euro Falls - (www.bloomberg.com)