KeNo's Housing and Economic Portal: Wednesday December 21 Housing and Economic stories

Tuesday, December 20, 2011

Wednesday December 21 Housing and Economic stories

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REPORT: Jon Corzine Threatened To Quit If MF Global Didn't Let Him Bet Aggressively On European Bonds - (www.businessinsider.com) Mr. Roseman contended MF Global didn't have enough spare cash to withstand the risks of its position in bonds of Italy, Spain, Portugal, Ireland and Belgium. He also presented gloomy hypothetical scenarios of what could happen if MF Global's credit rating was downgraded because of the exposure. Mr. Corzine, who started betting on the bonds shortly after arriving as chief executive in March 2010, responded to Mr. Roseman's concerns that some of the scenarios were too extreme and likely impossible, people familiar with the matter said. The former New Jersey governor and Goldman Sachs Group Inc. chairman said MF Global's exposure was limited, adding that the likely profit was worth the risks, these people said. The CEO suggested to board members earlier this year that he might leave the company if they didn't trust his judgment about the bet, according to people familiar with the matter.

Fed Said to Use ‘Dollar Rolls’ in Mortgage-Bond Program Shift - (www.bloomberg.com) The Federal Reserve Bank of New York entered into paired contracts to buy and sell mortgage securities for the first time since it began reinvesting in the debt in October, in a move that may reduce funding costs. The so-called dollar roll transactions will “facilitate the settlement of our outstanding MBS purchases,” Jonathan Freed, a New York Fed spokesman, said in an e-mailed statement. The central bank is purchasing bonds for December settlement and agreeing to sell the same amount of similar debt in January, said two people familiar with the matter, who declined to be identified because details haven’t been disclosed. Funding costs for mortgage-bond investors, which had risen in anticipation of banks trimming their balance sheets before year-end, fell after the Fed transactions.

Tremors from a euro collapse would be global, with U.S. recession likely - (www.washingtonpost.com) To get a sense of how vulnerable the U.S. economy could be if the euro currency union cracks apart, start with the volume of U.S. exports to the euro zone — $153 billion in the first six months of the year. Add several hundred billion dollars in investments by U.S. banks in the euro zone and several trillion dollars’ worth of other financial contracts between the two economies. As European leaders meet later this week to try to resolve their spreading debt crisis and prevent the breakup of the 17-nation euro zone, U.S. politicians, corporate leaders and financial analysts are watching anxiously for a breakthrough. The alternative could be staggering for the U.S. economy. American banks and other companies could find themselves battling with any country that leaves the euro union and reinstates its own currency. “The risk is likely paralysis,” said Michael Hood, a market strategist at J.P. Morgan Asset Management. “You won’t even know what people owe you.”

S&P says EFSF could be downgraded - (www.reuters.com) Standard & Poor's said on Tuesday it is considering downgrading the European Financial Stability Facility, the euro zone's bailout fund that is financed by member governments, after saying it could downgrade the majority of euro zone nations on Monday. The EFSF could be downgraded by one or two notches, and the lower rating would depend on whether the six triple-A rated nations in the euro zone are cut.

FCC eyes standards for mass disconnections - (www.businessinsider.com) The Federal Communications Commission (FCC) said recently that it would attempt to outline the circumstances under which officials may legally disrupt wireless communications in the U.S. Following an investigation into a public transit authority that cut off mobile phone service amid a protest earlier this year, the Federal Communications Commission (FCC) said recently that it would attempt to outline the circumstances under which officials may legally disrupt wireless communications in the U.S. In a release last week (PDF), FCC Chairman Julius Genachowski noted that his staff had been investigating the Bay Area Rapid Transit (BART) authority’s preemptive disconnection of mobile phone towers in their subway system: an action that stymied a demonstration which aimed to shut down one of the train platforms as a protest of police brutality. A similar tactic was attempted by Egyptian dictator Hosni Mubarak ahead of an angry revolutionary tide that toppled his government early this year. The order to cut off the entire country’s access to the Internet and mobile networks — which was carried out by Mubarak’s corporate partners in the West — was ultimately a tipping point that drove even more people into the streets.