KeNo's Housing and Economic Portal: Sunday May 29 Housing and Economic stories

Saturday, May 28, 2011

Sunday May 29 Housing and Economic stories

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'Secret, dark debates' fan flames of eurozone turmoil - (www.telegraph.co.uk) Political union frays at the edges as tensions and resentments rise ahead of a critical meeting on Monday on the debt crisis in Greece and a bail-out for Portugal. An undercurrent of anger, suspicion and mistrust will per-meate on Monday night's critical meeting of eurozone ministers in Brussels as they grapple with a spiralling Greek debt crisis and try to seal a €78bn (£69bn) bail-out for Portugal. As if the euro's problems were not enough, seething resentments will add a new political dimension to the talks. The inclement mood was set 10 days earlier beside a gently babbling brook and old water mill that speaks of Europe's troubled past. On Friday May 6, Jean-Claude Juncker, Luxembourg's prime minister and the chairman of the eurogroup of single currency members, called a secret meeting of the European Union's most powerful countries at the picturesque Chateau de Senningen on the outskirts of the tiny Duchy state. Gathered at the 18th century former paper mill, which served as an artists' retreat during the Nazi occupation, were finance ministers from Germany, France, Italy and Spain – the euro's G20 members, Jean-Claude Trichet, president of the European Central Bank (ECB), and Olli Rehn, EU commissioner for monetary affairs. Top of the agenda was the fate of Greece, after the International Monetary Fund (IMF) – on the hook for €30bn of the original €110bn rescue – demanded that the EU come up with a new strategy as the Mediterranean country continued to plunge into debt and recession.

The Dangerous Allure of Distressed Real Estate - (blogs.nytimes.com) Compare this to the mid 2000’s when everyone was a real estate investor. Back then, multifamily properties had multiple offers the day they hit the market, and being a real estate investor seem like a sure thing. After years of being scared away, more and more people started to think about real estate as an “easy” investment. Buying distressed properties might be tempting now, and it very well could be a good idea. But it is far from a sure thing. Just because something has fallen 40 to 50 percent doesn’t mean it can’t fall further or stay down for a very long time. There is, in fact, evidence that the housing market has further to fall. And investing in real estate requires skill and careful analysis, not just a kit you buy on late-night TV. I don’t have anything personal against real estate. It may be a legitimate part of your investing strategy. The problem happens when investors don’t stop to do the math. Too often, investors get sucked into the buying things they shouldn’t when they fail to add up the real costs. In the case of real estate, how much in property tax, upkeep and insurance will that “sure thing” cost you? How much time will be required, and what is that worth? Real real estate investors take the time to make sure buying an investment property will “pencil” before they buy it, and they pass on plenty of deals that won’t work. There are lots of calculators that can help, including the one here at the Times.

Greece Pressed by EU to Sell Assets - (www.bloomberg.com) European finance ministers endorsed a 78 billion-euro ($110.8 billion) bailout for Portugal as they stepped up pressure on Greece to do more to win improved aid terms. Portugal followed Greece and Ireland in seeking emergency loans from the European Union and International Monetary Fund, bringing to 256 billion euros the aid provided to stamp out the sovereign debt crisis. The backing for Portugal came during deliberations in Brussels today clouded by the absence of International Monetary Fund Managing Director Dominique Strauss-Kahn. Europe’s rich countries tied extra money for Greece to pledges that it reap more revenue at home and weighed whether to make bondholders share the pain. “Greece also has a huge privatization potential and the Greeks should help themselves before calling for more money,” Austrian Finance Minister Maria Fekter told reporters before a euro crisis meeting in Brussels today.

A Depressing Look At Suicide, Homelessness, And Societal Collapse In Post-Austerity Greece - (www.businessinsider.com) We talk a lot about the failure of Greek austerity around here, and the debunked idea that a country in the midst of a depression can get out of its debt hole by cutting spending. But take a step back from the failed math for a moment, and read this piece at NYT by Landon Thomas Jr. on social secay in Greece. As the economy has slowed, suicide hotlines are seeing much more activity. Former professionals are homeless, or seeking social aid, and basically everyone is still in emotion shock. Now, as you know, all of Europe is figuring out how to administer a second dose of the "medicine" which will involve more cuts. In the end, Europe will probably foist more cash on the country -- because of the banks on the hook for Greek debt -- but you have to wonder how much longer domestic politicians will put up with the failed Eurozone system, that doesn't allow for any other alternative.