KeNo's Housing and Economic Portal: Tuesday March 20 Housing and Economic stories

Monday, March 19, 2012

Tuesday March 20 Housing and Economic stories

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Goldman Secret Greece Loan Reveals Two Sinners - (www.bloomberg.com) Greece’s secret loan from Goldman Sachs Group Inc. (GS) was a costly mistake from the start. On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said. Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

Fed Study of Student Debt Outlines a Growing Burden - (www.nytimes.com) A report released Monday by the Federal Reserve Bank of New Yorkrenews concerns about the growing debt load of college students and graduates. The report suggests that as many as 27 percent of the 37 million borrowers have past-due balances of 30 days or more. “In sum, student loan debt is not just a concern for the young,” the report said. “Parents and the federal government shoulder a substantial part of the postsecondary education bill.” The report, which was created by an analysis of Equifax credit reports, said the total balance of student loans was $870 billion. Of the 241 million with Equifax credit reports (there are 311 million people in the United States), 15 percent had student debt.

Greek Debt Private Investors Join Swap - (www.bloomberg.com) The private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap required for an international bailout. The 12 members of the creditors’ steering committee that said yesterday they would join in the exchange have debt with a face value of at least 40 billion euros ($53 billion), compared with the 206 billion euros of Greek bonds in private hands, according to data compiled by Bloomberg from company reports. European officials are pressing investors to swallow the writedowns to avert even greater losses. The participating firms include some of Greece’s biggest creditors, including National Bank of Greece SA, Alpha Bank SA (ALPHA), BNP Paribas SA (BNP) and Commerzbank AG. (CBK) The goal of the swap, which runs through March 8, is to reduce by 53.5 percent the total of privately held Greek debt, helping avert an uncontrolled default that could roil markets and spur contagion to states such as Portugal.

Bondholder group sees 1 trillion euro Greek default risk - (www.reuters.com) Athens turned up the heat on its creditors on Tuesday as it sought to secure a bond swap that will cut its mountainous debt, while the main bondholders group warned a disorderly default would cause more than a trillion euros of damage to the euro zone. Greek private creditors have until Thursday night to say whether they will participate in the exchange that is a key part of a bailout program to helpGreece manage its wrecked finances and meet a debt repayment on March 20. A number of the biggest bondholders are signing up but despite the dire warnings, a clutch of Greek pension funds and some foreign investors rejected the offer which will see investors lose almost three-quarters of the value of their holdings and lop about 100 billion euros off Greece's debt.

ECB Balance Sheet Jumps to a Record $3.96 Trillion Amid Lending to Banks - (www.bloomberg.com) The European Central Bank’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week, 31 percent bigger than the German economy, after a second tranche of three-year loans. Lending to euro-area banks jumped 310.7 billion euros to 1.13 trillion euros in the week ended March 2, the Frankfurt- based ECB said in a statement today. The balance sheet gained 330.6 billion euros in the week. It is now more than a third bigger than the U.S. Federal Reserve’s $2.9 trillion and eclipses the 2.3 trillion-euro gross domestic product of Germany (EUANDE), the world’s fourth largest economy. The ECB last week awarded banks 529.5 billion euros for three years in the biggest single refinancing operation in its history, adding to the 489 billion euros it lent in December. The flood of money, which aims to combat Europe’s sovereign debt crisis by unlocking credit for companies and households, has increased the risk exposure of the 17 euro-area central banks that together with the ECB comprise the Eurosystem.