KeNo's Housing and Economic Portal: Friday September 16 Housing and Economic stories

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TOP STORIES:

Solyndra Filing a Disaster for Obama - (www.nbcbayarea.com) President Obama faces political catastrophe in the form of Solyndra -- a San Francisco Bay area solar company that he touted as a gleaming example of green technology. It has announced it will declare Chapter 11 bankruptcy. More than 1,100 people will lose their jobs. During a visit to the Fremont facility in spring of 2010, the President said the factory "is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. " It's not his statements the administration will regret; it's the loan guarantees. The President was celebrating $535 million in federal promises from the Department of Energy to the solar startup. The administration didn't do its due diligence, says the Government Accountability Office. "There's a consequence if you don't follow a rigorous process that's transparent," Franklin Rusco of GAO told the website iWatch News.

California Redevelopment Bonds ‘Uncertainty’ Risks Downgrade, Moody’s Says - (www.bloomberg.com) About $11.6 billion in California tax-allocation bonds are at risk of a downgrade, Moody’s Investors Service said, due to “substantial uncertainty” over the future of redevelopment agencies in the most-populous state. Two new laws that divert money from California’s 400 redevelopment agencies and eliminate tracking of revenue used to repay their bonds may diminish the credit quality of the debt, Moody’s said yesterday. Governor Jerry Brown signed the laws as part of a deal to balance California’s $86 billion budget for 2011-12 in June. On Aug. 11, the California Supreme Court blocked the Brown administration from diverting $1.7 billion from the agencies, which provide tax incentives for development projects in areas that are deemed blighted. Moody’s said the ongoing court challenge is a “key contributor” to its decision to review the tax-allocation bonds. “The fact that a state supreme court ruling could invalidate one, both, or neither of these bills, in whole or in part, creates uncertainty that is negative for the credit quality of all California tax allocation bonds,” Moody’s said.

Self-Employed Struggle as U.S. Recovery Offers Few Opportunities - (www.bloomberg.com) More than 1 million self-employed Americans are no longer in business almost four years after the last recession began, as the economy constrains entrepreneurial activity and small-business job creation. The 18-month contraction that started in December 2007 initially resulted in more would-be business owners, as the number of people who work for themselves grew to 16.3 million in July 2008 from 15.7 million at the end of 2007, according to data from the Bureau of Labor Statistics. Since then, the total has fallen about 10 percent to 14.7 million in July, the data show. Employer businesses -- those that provide work for individuals including the founder -- “have been starting in fewer numbers, with fewer workers and growing at a slower pace than in the past,” according to Robert Litan, a vice president at the Kansas City, Missouri-based Kauffman Foundation, which supports research on start-ups. “Therefore, these entrepreneurs are generating increasingly fewer new jobs for the U.S. labor market.”

Obama Refinancing Bailout to Hammer Taxpayers, Banks: Bove – (www.cnbc.com) “Little gremlins” have proposed a massive government-sponsored mortgage refinancing program for struggling homeowners that is doomed to fail, analyst Dick Bove said. In a scathing note and subsequent CNBC appearance, the Rochdale Securities vice president of equity research said the Obama Administration’s plans will foist new costs on both taxpayers and the banking industry. Under the plan, homeowners suffering under previously negotiated high rates will be able to refinance under the current rock-bottom rates near 4 percent. The plan comes as about 1 in 4 homeowners owe more than their homes are worth. Advocates believe the plan could help ease the underwater mortgage problem and help generate consumer spending by lowering mortgage payments But Bove said the $85 billion in estimated savings for homeowners would translate to costs for taxpayers who subsidize government-sponsored agencies such as Fannie Mae, and to banks which will lose that much revenue with the refinancing. The estimate comes from a New York Times report on the program that cited sources familiar with the plan.

Goldman Takes a Dark View – (online.wsj.com) A top Goldman Sachs Group Inc. strategist has provided the firm's hedge-fund clients with a particularly gloomy economic outlook and suggestions for how these traders can take advantage of the financial crisis in Europe. In a 54-page report sent to hundreds of Goldman's institutional clients dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm's trading desk—argued that as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China's growth may not be sustainable.

OTHER STORIES:

Buba's Weidmann warns of loss of trust in ECB - (www.reuters.com)

Euro Rescue Fund Faces Political Demands - (www.bloomberg.com)

IMF sees 200 billion euro capital gap at European banks - (www.reuters.com)

BRICs No Cure for Global Economy as Avon to Siemens Shares Sink - (www.bloomberg.com)

IMF and eurozone clash over estimates – (www.ft.com)

U.K. Manufacturing Contracts Most in Over Two Years - (www.bloomberg.com)

Europe Manufacturing Shrinks More Than Initially Estimated Amid Slowdown - (www.bloomberg.com)

Brazil Unexpectedly Cuts Rate to 12% as Recession Risks Outweigh Inflation - (www.bloomberg.com)

South Korea Inflation Accelerates to Three-Year High, Adding Rate Pressure - (www.bloomberg.com)

India’s Food Inflation Quickens to 4-Month High, Sustaining Rate Pressure- (www.bloomberg.com)

Swiss Economy Grows at Weakest Pace Since ’09 as Strong Franc Cuts Exports - (www.bloomberg.com)