KeNo's Housing and Economic Portal: Thursday December 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

India Microcredit Faces Collapse From Defaults - (www.nytimes.com) India’s rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India’s largest states have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. The crisis has been building for weeks, but has now reached a critical stage. Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry, banking officials say. “We are extremely worried about our exposure to the microfinance sector,” said Sunand K. Mitra, a senior executive at Axis Bank, speaking Tuesday on a panel at the India Economic Summit.

Who are the bond holders Ireland is bailing out? - (golemxiv-credo.blogspot.com) The citizens of Ireland have been forced over the last two years to give the bond holders of Anglo Irish bank 20 billion euros. WHY? The Irish government recently told its people the 20 billion was not enough and they MUST give the same bond holders another 10 to 20 billion euros. WHO are these special people called Bond Holders that they must be so carefully protected even at the cost of despoiling a nation? I tried to find out. I failed. 15th October the British Blogger Guido Fawkes published a list of the bond holders. I would like to thank Mr Fawkes, and thank Unclear for posting the link and bringing it to my attention. So those are the names but WHO are they? I thought this was something I could help with, to add my contribution to Mr Fawkes' break-through. It is worth knowing who they are because the Irish government has said more than once that one of the reasons the bond holders had to be protected and could not, must not, be made to suffer any losses, even though it would be PERFECTLY legal to do so, is because the bond holders are pension funds for poor Irish widows and cooperative savings funds for orphans and 'ordinary folk'. A little poetic exageration there, but only a little. This reason, for why the Bond holders must not take any loss, was trotted out to bolster the first answer given, which was that if Ireland pissed off the bond holders then they would refuse to ever deal with Ireland ever again and Ireland would never be able to borrow ever again, ever, and everyone would die in penury, friendless and cold.

Full Year of Muni Gains Wiped Out in 2 Weeks - (Mish at globaleconomicanalysis.blogspot.com) A full year of municipal bond gains went up in smoke in the past two weeks. Worse yet, it's highly likely more blood is coming as issuance soars amid decreased demand from investors. A Moody's downgrade of Philadelphia, a complete mess in California, and a looming city bankruptcy in Michigan all weigh on the sector. Bloomberg reports Philadelphia Bond Rating Cut to A2 by Moody’s on Fiscal Weakness: Philadelphia’s credit rating was reduced to A2 from A1 by Moody’s Investors Service, which said the sixth most-populous U.S. city is financially weak and has limited budget options. The downgrade, to the firm’s sixth-highest investment grade, affects $3.8 billion of general obligation bonds and similar debt. The outlook for the city of 1.5 million is stable, according to Moody’s. Philadelphia is rated BBB by Standard & Poor’s, two steps above noninvestment grade, and A- by Fitch, four steps above noninvestment grade, according to data compiled by Bloomberg. “The city has little budgetary margin over its five-year plan which includes significant repayment of deferred pension contributions in 2013 and 2014,” the Moody’s report says.

The Tea Party's Foreclosure Rant Is Totally Wrong - (www.businessinsider.com) It is my hope that people will no longer be distracted by Rick Santelli. He was the motivation for the Tea Party. I am not here to tell you all the Tea Party movement is bad. Some is good. I have argued that many of the leaders and funders of the Tea Party are bad. The Santelli rant that motivated the Tea Party was a rant that was factually inaccurate. The Tea Party is founded on this rant, and that foundation is fatally flawed. Indeed, the Chicago and St. Louis Tea Parties, the first Tea Parties formed on February 22, while the rant took place on February 19, 2009, cite Santelli's rant as their inspiration. Santelli said that those borrowers who were underwater were "losers." The tone was clearly derogatory as it means that the borrowers were poor quality people. The claim is actually inaccurate. I can prove that it is inaccurate. We must understand that Santelli is a paid employee of CNBC, a network that I watch and have observed defending the big banks over many years. The tag "losers" implies that these people understood the nature of the Ponzi that was going on around them, that they made a bet and lost. I would say that by far the vast majority did not understand it. Furthermore, the price appreciation of the houses was artificial based upon the easy money loans themselves.