KeNo's Housing and Economic Portal: Thursday September 15 Housing and Economic stories

Wednesday, September 14, 2011

Thursday September 15 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Containers Slump to 50-Year Low as Ships From China Slow: Freight Markets - (www.bloomberg.com) The container-shipping industry is contending with the longest stretch of near-zero rates in its half-century history on the Asia-to-Europeroute, as a capacity glut combines with the slowest growth in trade since 2009. Commerce on the world’s second-busiest container route rose 4.2 percent in the second quarter, the weakest since the end of 2009, Woking, England-based Container Trade Statistics Ltd. estimates. Rates excluding fuel surcharges were “practically” zero in July and little changed this month, the worst run ever, said Menno Sanderse, an analyst at Morgan Stanley in London. While growth in container volumes has slowed for four consecutive quarters, it’s still nowhere near the 22 percent contractions seen in the first half of 2009. Europe normally imports more goods this quarter as shops begin stockpiling for the December holidays. That gain may be curbed this year as retailers anticipate mounting concern about economies and jobs will hurt consumer spending.

S&P Rates Subprime Mortgages Higher Than U.S. - (www.bloomberg.com) Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government. S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.

Europe bank regulator plans radical funding aid - (www.ft.com) Europe’s top banking regulator is drawing up options to help banks in Europe struggling to tap credit markets for medium- and long-term funding. Among the policy proposals being considered by the European Banking Authority is a new guarantee scheme for bank bonds, a controversial measure that would require the eurozone’s €440bn bail-out fund to be given new powers. The EBA proposals are expected to be presented to a meeting of senior European officials next week. Even before submitting its analysis, however, the EBA is facing stiff resistance from some member states unwilling to reopen a deal struck last month, which would give the bail-out fund – formally the European financial stability facility – new but less expansive powers. BaFin, the German financial regulator, on Tuesday took the unusual step of speaking out against a separate mooted plan to give the EFSF powers to inject capital directly into banks. Under the July agreement, the EFSF would only be able to recapitalise banks through loans to governments.

The Bomb That Might Blow A Hole In Bank Of America... - (www.businessinsider.com) After watching its stock tank 50% this year while denying that it needed capital, Bank of America's management has begun to acknowledge reality. The bank raised $5 billion by selling preferred stock and options to Warren Buffett—diluting common shareholders in the process. And now, as previously promised, it has sold half its stake in China Construction Bank for $8 billion. These moves are good news for the bank's employees and shareholders, as well as for the U.S. taxpayer, which will be on the hook if Bank of America's management flies the company into a mountain. But many analysts believe that Bank of America will need to raise a lot more capital before it gets back on sound footing. These analysts believe that Bank of America is still overstating the value of some of the assets on its balance sheet. When the company is finally forced to recognize the real values of these assets, this theory goes, the bank will once again have to fill a major capital hole.

Guess how much buying Countrywide REALLY cost Bank of America - (www.businessinsider.com) Remember in January 2008, when Bank of America announced a deal to buy Countrywide for $4 billion? Technically, the deal cost them less, because the purchase represented an increase in Bank of America's investment in the troubled California lender of about $2 billion. So Reuters estimates that buying Countrywide in January cost BofA around $2.5 billion. Wait until you see how much it really cost the firm. As you're surely aware, the deal has turned out to be a disaster. Short story: The company "turned the American dream into a nightmare for thousands of innocent borrowers," in the words of Chuck Schumer. Countrywide's CEO Angelo Mozilo was charged with fraud (he settled) because his company, the largest mortgage lender, underwrote so many of the toxic subprime loans that caused the financial crisis, and he allegedly was aware of it all along.