Thursday March 8 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Housing's Dilemma: There's Not Enough To Buy - (www.cnbc.com) Last week I wrote about how fewer foreclosures up for sale in the housing market could actually mean lower overall home prices. That may sound counter-intuitive, given that we always talk about how distressed sales deflate comparable home prices. My reasoning is that foreclosures are in high demand right now, and organic, non-distressed sellers are still not coming back to the market. Without the foreclosures, there really is no competitive market. I hate to say, “I told you so,” but … today the National Association of Realtors reported that inventories of homes for sale in January fell to 2.31 million,the lowest supply since March, 2005. Rather than pushing home prices higher, they are still down, 2 percent, from a year ago.

Greek Crisis Raises New Fears Over Credit-Default Swaps - (www.nytimes.com) Greece’s debt restructuring is dragging credit-default swaps back into the spotlight. The last time this financial instrument was on the global stage was in 2008, when the American International Group’s credit-default swaps brought the insurer, as well as the wider financial system, to the brink of collapse. A.I.G. had unique weaknesses, and regulators have started to overhaul the credit-default swap market since 2008. European policy makers have nonetheless looked warily at credit-default swaps, at least until recently, while they structured the Greek rescue over the last six months. They aimed for a voluntary debt exchange that would not initiate the default swaps, fearing that payments on the swaps might set off destabilizing chain reactions through Europe’s financial system.

Fed’s push on housing crosses a line, critics say - (www.washingtonpost.com) Senior Federal Reserve officials are injecting themselves into a noisy debate over how to solve the housing crisis, drawing criticism from some lawmakers who say the Fed has no business straying from its traditional role as the U.S. central bank. Amid complaints that the Fed has encroached on Congress’s territory, Chairman Ben S. Bernanke has tried to allay concerns on Capitol Hill over the past few weeks, in the latest flap in a broader debate about the Fed’s proper role in the economy. That discussion began after the Fed started taking un­or­tho­dox measures in 2008 to address the financial crisis, including several rounds of massive bond purchases and steps to shore up lending markets. All the Republican presidential candidates have criticized Bernanke on various counts, saying he has printed too much money, damaged the value of the dollar and carried out programs that simply haven’t worked.

Fitch downgrades Greece, will reassess after debt swap - (www.reuters.com) Fitch downgraded Greece on Tuesday to 'C' from 'CCC', a move widely expected after the country said it may enforce losses on bondholders who do not voluntarily sign up to a debt swap plan accompanying its EU/IMF-approved bailout. "The exchange, if completed, would constitute a 'distressed debt exchange'," Fitch said. When the bond swap plan is completed Greece's rating will drop further to 'restricted default' and then will be re-rated again "at a level consistent with the agency's assessment of its post-default structure and credit profile," Fitch said.

You Do Not Appreciate How Much Taxes On Rich People Are About To Go Up... - (www.businessinsider.com) Huge tax increases are now only 10 months away. There has been a lot of fighting about the possibility of raising taxes on the highest-earning Americans. There has also been frustration about how much President Obama's healthcare plan will eventually cost Americans, especially high-income Americans. And there have been fisticuffs over the expiration of the "Bush tax cuts," which have now been in force for so long that most people have forgotten what life was like before them (in part, a federal budget surplus).

OTHER STORIES:

Former BOJ Deputy Governor Says Unsustainable Debt Risks Bond-Yield Spike - (www.bloomberg.com)

Euro-Area Manufacturing, Services Contract - (www.bloomberg.com)

China Manufacturing Data Shows Slowdown Risk - (www.bloomberg.com)

Lending by China's big 4 banks down in early Feb - paper - (www.reuters.com)

BOE Splits as Posen, Miles Push for Larger Stimulus - (www.bloomberg.com)

Greece races to meet bail-out demands - (www.ft.com)

Sales of Existing Homes Rise to Best Rate Since May 2010 - (www.bloomberg.com)

U.S. mortgage applications sagged last week: MBA - (www.reuters.com)