KeNo's Housing and Economic Portal: Thursday June 30 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Greece poses $41 billion risk to U.S. banks - (www.marketwatch.com) As fears stirred by Greece’s deepening debt crisis raced through global financial markets Wednesday, a quick check of U.S. banks showed they risk losses of tens of billions of dollars should the Mediterranean nation default on its payments. U.S. banks had total exposure of $41 billion to Greece by the end of 2010, according to the latest figures, issued June 9, from the Bank for International Settlements. Most of the financial commitments appear to be indirect. About 83% is tied to “guarantees” that range from protection for sellers of credit-derivative contracts to other obligations owed to third parties. Still the data are murky, according to economic consultant Kash Mansori. “We don’t know exactly what the form of exposure is,” said Mansori, who authors the Street Light blog. “We can only make educated guesses.” He thinks U.S. banks are mostly exposed to Greek’s financial crisis through credit-default swaps, which essentially are insurance contracts, he said. Mansori said he believes U.S. banks largely sold these deals to European banks, which own bonds issued by Greek banks and the Greek government.

Las Vegas land prices down 83 percent from 2007 peak - (www.vegasinc.com) Land transactions remain scarce in Las Vegas, but when deals get done, the price apparently has yet to find its bottom. Las Vegas-based Applied Analysis reported the price paid for vacant land during the first quarter fell to an average of $156,700 an acre outside the resort corridor. That’s a decline of 6.3 percent since the fourth quarter, when it was $167,276 per acre, and down 14.1 percent from the first quarter of 2010 when it was $182,461 per acre. Since the peak of the market in the fourth quarter of 2007, land prices have fallen by 83.3 outside the resort corridor, the firm reported. Applied Analysis Principal Brian Gordon said the oversupply on the market in all real estate sectors continues to put downward pressure on new construction and ultimately the need for land. High vacancy rates in commercial properties and limited residential construction are expected to limit the demand for land.

Ireland Opens New Front as ECB Battles to Avert Another Meltdown - (www.bloomberg.com) Ireland opened a new front in the drive to restructure debt on the euro area’s periphery, adding to the European Central Bank’s concerns as it tries to head off another wave of financial turmoil. Irish Finance Minister Michael Noonan said yesterday that senior bondholders should share in the losses of Anglo Irish Bank Corp. and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities. The ECB is against imposing losses on investors. President Jean-Claude Trichet said on Feb. 7 that haircuts aren’t part of a plan to reduce Ireland’s debt load. Ireland’s about-face on bondholder involvement in its banking crisis comes as European lawmakers struggle to settle a dispute over how to avoid a Greek sovereign default. While German Finance Minister Wolfgang Schaeuble said last week that Europe’s biggest economy insists on the participation of the private sector, his French counterpartChristine Lagarde has ruled out any action that constitutes a “credit event,” backing the ECB’s view.

Greek 2-Year Yield Surges Past 30% as Default Concerns Mount; Bunds Rise - (www.bloomberg.com) Greek government bonds slumped, pushing the yield on the two-year note above 30 percent for the first time, as Prime Minister George Papandreou’s failure to win support for more austerity fueled speculation of a default. Portuguese and Irish two-year yields also climbed to the most since the euro’s 1999 debut, while the 10-year Spanish yield jumped to the highest since 2000 as the country’s borrowing costs rose at a debt sale. The cost of insuring against default on Greek, Irish and Portuguese government debt surged to records. Papandreou will reshuffle his Cabinet and seek a confidence vote today. German government bonds gained, pushing the 10-year yield to a five-month low. “The Greek drama is firmly catching everything under its wings and there’s no way around that story,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “Implementation risk is highly elevated. It’s completely risk- off mode and for a country like Spain to come to the market in this environment, it’s challenging.”

LA sues banks over upkeep of foreclosed units - (www.sfgate.com) A dead dog lies among the knee-high weeds, a sign to Guillermo Elenes that the burned-out, boarded-up house is being used as a dump. Inside, soiled diapers, fast-food trash and the strewn beer and vodka bottles indicate that squatters have been living there. The dumping ground-crash pad serves as a squalid symbol of how the foreclosure crisis is riddling communities with blight because no one wants to shoulder the responsibility of maintaining foreclosed homes. "There's one on every block," said Elenes, a community organizer with the Alliance of Californians for Community Empowerment in Watts, a low-income South Los Angeles neighborhood pockmarked with foreclosed homes. "All we want is for the banks to step up and be good citizens." Communities across the nation have made little progress in getting banks to maintain foreclosed properties, and as the crisis matures and bank-owned homes fall into advanced stages of disrepair, cities and residents are getting desperate.

OTHER STORIES:

Europe Faces ‘Lehman Moment’ as Greece Unravels - (www.bloomberg.com)

Spanish Bond Sale Misses Treasury’s Maximum Target as Borrowing Costs Rise - (www.bloomberg.com)

U.S. Stock-Fund Investors Pull Most Money in Six Months as Markets Decline - (www.bloomberg.com)

Greek default fears hit global markets as Papandreou pushes austerity measures - (www.washingtonpost.com)

Greek debt worries spread to Spain - (www.ft.com)

Greek PM reshuffles government, lenders dangle lifeline - (www.bloomberg.com)

Papandreou Reshuffle Fuels Allies Dissent - (www.bloomberg.com)

Papandreou Calls Confidence Vote on New Government in Bid for More EU Aid - (www.bloomberg.com)

China Indicator Points to ‘More Moderate’ Growth as Central Bank Tightens - (www.bloomberg.com)

India Raises Rates for 10th Time Since 2010 - (www.bloomberg.com)

Philadelphia-Area Manufacturing Unexpectedly Shrinks to -7.7 in Fed Index - (www.bloomberg.com)