KeNo's Housing and Economic Portal: Wednesday July 14 Housing and Economic stories

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TOP STORIES:

Soros Says Germany Could Cause Euro Collapse - (www.cnbc.com) German's budget savings policy risks destroying the European project and a collapse of the euro cannot be ruled out, billionaire investor George Soros said in a newspaper interview released on Wednesday. "German policy is a danger for Europe, it could destroy the European project," he told German weekly Die Zeit. Soros, who earned $1 billion in 1992 by betting against the British pound, added that he "could not rule out a collapse of the euro." "If the Germans don't change their policy, their exit from the currency union would be helpful for the rest of Europe," he said. Chancellor Angela Merkel unveiled plans earlier this month for 80 billion euros ($107 billion) in budget cuts over the next four years—a package she hopes will bring Germany's structural deficit within European Union limits by 2013. Thousands in Germany protested the measures, which union leaders said were "economically damaging." "Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk," Soros said.

Cost of Fannie Mae and Freddie Mac Keeps Rising - (www.nytimes.com) Fannie Mae and Freddie Mac took over a foreclosed home roughly every 90 seconds during the first three months of the year. They owned 163,828 houses at the end of March, a virtual city with more houses than Seattle. The mortgage finance companies, created by Congress to help Americans buy homes, have become two of the nation’s largest landlords. Bill Bridwell, a real estate agent in the desert south of Phoenix, is among the thousands of agents hired nationwide by the companies to sell those foreclosures, recouping some of the money that borrowers failed to repay. In a good week, he sells 20 homes and Fannie sends another 20 listings his way. “We’re all working for the government now,” said Mr. Bridwell on a recent sun-baked morning, steering a Hummer through subdivisions laid out like circuit boards on the desert floor.

Credit Unions Beckon With Open Arms - (www.nytimes.com) Everyone can join a credit union, but not everyone can join any credit union. Do credit unions offer the best deals on financial services? This turns out to be a source of much confusion for consumers looking for a better checking account, a more generous credit card or a cheaper auto or home loan. By their very name, credit unions suggest exclusivity. After all, unions are something you have to join, and it isn’t always clear from walking by a credit union or running across one on the Web whether everyone is welcome. But over the years, some of the biggest credit unions with some of the best deals have quietly opened up membership to everybody. This infuriates bankers, who must compete with them while also paying income taxes that the nonprofit credit unions do not owe. Consumers, however, ought to rejoice and take a closer look at some of the more aggressive credit unions, since there may be big savings for the taking once you realize you are eligible.

Time to Dismantle the American Dream? - (www.newgeography.com) For some time, theorists have been suggesting that it is time to redefine the American Dream of home ownership. Households, we are told, should live in smaller houses, in more crowded neighborhoods and more should rent. This thinking has been heightened by the mortgage crisis in some parts of the country, particularly in areas where prices rose most extravagantly in the past decade. And to be sure, many of the irrational attempts – many of them government sponsored – to expand ownership to those not financially prepared to bear the costs need to curbed. But now the anti-homeowner interests have expanded beyond reigning in dodgy practices and expanded into an argument essentially against the very idea of widespread dispersion of property ownership. Social theorist Richard Florida recently took on this argument, in a Wall Street Journal article entitled "Home Ownership is Overvalued."

Bankruptcy Looming for BP? - (www.cnbc.com) Because of the potential for a near infinite number of claims from the Gulf of Mexico oil spill, Cramer said Tuesday, bankruptcy is "very much on the table" for BP. It's "magical thinking" to believe the company's cash flow of nearly $7 billion a quarter is enough to get them through the disaster, Cramer said. Virtually any storm that blew through the Gulf of Mexico would "swallow the company," but a big storm “could be a catastrophe for BP." Plus, he thinks a finding of guilt is a "real possibility" once a Justice Department investigation is complete. "If we get indictments," Cramer said, "the claims will overwhelm the company, and it will be in BP's interest to file bankruptcy in order to manage the process." Some have likened the present situation to the Exxon Valdez spill, but Cramer thinks it's more like the troubles we saw with asbestos, where a long list of companies filed bankruptcy to handle the endless claims from those exposed to the toxic substance. Asbestos companies knew their product hurt people, Cramer said, but they did not stop using it. When the lawsuits came in, they said things were under control because the insurance companies were handling things. But they went bankrupt after they became overwhelmed with non-stop claims over the fatal lung disease caused by asbestos.