KeNo's Housing and Economic Portal: Monday February 28 Housing and Economic stories

Sunday, February 27, 2011

Monday February 28 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Banks Push Home Buyers to Put Down More Cash - (online.wsj.com) The down payments demanded by banks to buy homes have ballooned since the housing bust, forcing many people to rethink what they can afford and potentially shrinking the pool of eligible buyers. Last week, the Obama administration called for gradually raising down payments to a minimum of 10% on conventional loans, meaning those that can be bought or guaranteed by mortgage giants Fannie Mae and Freddie Mac. And mortgage data show that private lenders are already pushing sharply higher the required down payments, mainly to mitigate their risk as home prices continue to fall. The median down payment in nine major U.S. cities rose to 22% last year on properties purchased through conventional mortgages, according to an analysis for The Wall Street Journal by real-estate portal Zillow.com.

World Risks ‘Scary’ Tightening as Rates Hobbled, JPMorgan Says - (www.bloomberg.com) Emerging-market central banks are failing to counter rising inflation, risking a “scary” and “synchronized” global monetary-policy tightening as early as next year, JPMorgan Chase & Co. said. Real interest rates in emerging markets remain at “recession lows” because policy makers believe increases would pressure currency pegs to the dollar and risk exacerbating capital inflows, said chief economist Bruce Kasman in an interview in Beijing today. The risk is that emerging markets tighten policy only after inflation leaks into developed economies and the U.S. Federal Reserve reacts, prompting simultaneous interest rate increases across the world after a longer period of “financial excesses,” Kasman said. JPMorgan strategists cut their year-end target for the MSCI Emerging Markets Index to 1,300 from 1,500 yesterday on expectations that accelerating inflation in developing nations will spur tighter monetary policy. “The pressures are building and we don’t see policy makers addressing them in a serious way,” New York-based Kasman said. “A more synchronized adjustment globally is kind of a scary prospect down the road for how this stuff ultimately unwinds.”

Borders Files Bankruptcy After Years of Market Losses - (www.bloomberg.com) Borders Group Inc., the second- biggest U.S. bookstore chain, filed for bankruptcy in New York today after management changes, job cuts and debt restructuring failed to make up for sagging book sales in the face of competition from Amazon.com Inc. and Wal-Mart Stores Inc. Borders plans to keep operating and restructure with $505 million in so-called debtor-in-possession financing from lenders led by GE Capital, according to a statement. The 40-year-old chain listed debt of $1.29 billion and assets of $1.28 billion as of Dec. 25 in its Chapter 11 petition filed today in U.S. Bankruptcy Court in Manhattan.

Banks Go Straight to Public Borrowers - (online.wsj.com) Banks are setting aside billions of dollars to do something that until now was rarely heard of: making big loans to cities, states, schools and other public borrowers that otherwise might have turned to the bond market. When Riverside, Calif., was ironing out a bond offering recently to expand its performing-arts center, several banks pitched a radical idea: Why not take out a loan instead? The city scrapped the bond plan and borrowed $25 million from City National Bank in Los Angeles. "This was a method we'd never even heard of before," says Scott Catlett, the city's assistant finance director. He says Riverside now intends to seek a bank loan for a conference center that it had planned to build with bonds. It could find a robust reception for its business. Banks are aggressively courting municipal borrowers with conventional loans for capital projects.

Food Riots Threaten Latin America on Surging Commodities - (www.bloomberg.com) Countries in Latin America and Africa, including Bolivia and Mozambique, are most at risk of food riots as prices advance, the United Nations reported. The past month’s protests in North Africa and the Middle East were partly linked to agriculture costs. World food prices climbed to a record in January, the UN said on Feb. 3. Food prices are rising to “dangerous levels and threaten tens of millions of poor people” globally, World Bank President Robert Zoellick said yesterday. “The low-income food deficit countries are on the front line of the current surge in world prices,”Abdolreza Abbassian, a senior economist at the UN Food and Agriculture Organization inRome, said in an e-mail Feb. 14. Other countries where expensive food imports may become a “major burden” include Uganda, Mali, Niger and Somalia in Africa, Kyrgyzstan and Tajikistan in Asia and Honduras, Guatemala, and Haiti in Latin America, he said.