Wednesday July 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

SCRANTON RUNS OUT OF MONEY, Cuts All City Salaries To Minimum Wage - (www.businessinsider.com) Scranton, Pennsylvania's, the state's sixth-most-populous city (population of 76,089 in 2010 census), is down to its last $5,000 and has no way to pay salaries. The mayor wants an immediate tax hike of 29% and 78% over three years. In every sense of the word, Scranton is bankrupt. NPR reports Scranton's Public Workers Now Paid Minimum Wage. The city of Scranton, Pa., sent out paychecks to its employees Friday, like it does every two weeks. But this time the checks were much smaller than usual. Mayor Chris Doherty has reduced everyone's pay — including his own — to the state's minimum wage: $7.25 an hour. Doherty says his city has run out of money.

MBIA Drops as Regulator Balks on Note Payment: New York Mover - (www.bloomberg.com) MBIA Inc. fell the most in 11 months after the bond insurer said a regulator hasn’t decided whether to allow a unit that backed soured mortgage debt to make an interest payment on notes. The insurer dropped as much as 12 percent to $9.35 before climbing back to $9.48 as of 10:39 a.m. in New York. The shares have declined 18 percent this year. Payments on the 14 percent surplus notes maturing in 2033 are scheduled for July 16, MBIA said today in a regulatory filing. No cash is due from the company’s MBIA Insurance Corp. unit if the New York State Department of Financial Services doesn’t approve of the step, the Armonk, New York-based insurer said. Kevin Brown, an MBIA spokesman, declined to comment further.

Libor Woes Threaten to Turn Companies Off Syndicated Loans - (www.bloomberg.com) The scandal surrounding the London interbank offered rate is threatening to undermine confidence in syndicated loans and hasten companies’ flight to bonds. “What corporate treasurers are concerned about is the damage this Libor problem will do to market confidence,” said John Grout, the policy and technical director at the Association of Corporate Treasurers in London, which has about 4,500 members. “If people lose trust in banks and Libor, which is indexed to a huge amount of debt and derivatives instruments, market liquidity could be reduced and borrowing costs could rise for corporates.” Corporate loans typically pay interest pegged to Libor or its equivalents in other currencies, and the rate-rigging scandal is spreading uncertainty about whether the benchmarks reflect lenders’ true cost of funding. At least a dozen banks are being investigated for manipulating Libor, prompting Barclays Plc (BARC) Chief Executive Officer Robert Diamond to quit last week after the U.K.’s second-biggest lender was fined a record $451 million.

Investment Bankers Face Termination As Europe Fees Fall - (www.bloomberg.com) Investment bankers in Europe are girding for a second wave of job cuts in less than a year after the euro area’s debt crisis drove fees from mergers and securities underwriting to a nine-year low. Credit Suisse Group AG  and UBS AG, Switzerland’s biggest lenders, face the most pressure to boost efficiency as that country runs ahead of others in introducing tougher capital and liquidity rules to curtail risk-taking, making some businesses unviable. The banks’ securities units had the highest costs as a proportion of revenue among a group of the 12 largest firms in Europe and the U.S. last year, Morgan Stanley analysts Hubert Lam and Huw van Steenis wrote in a May 24 note. While the situation may be most acute at Credit Suisse and UBS, similar dynamics are at work at other firms as the debt crisis drags on, capital requirements ratchet higher and economic growth grinds to a halt.

CHANOS: China's Credit Situation Is Worse Than Greece And Spain - (www.businessinsider.com)  In an interview with Opalesque TV, Jim Chanos gave his thoughts on short selling and also added his outlook on the China macro and micro situation. Chanos sees many short opportunities in Chinese companies for a number of reasons, including a terrible credit situation. Below are some of the transcribed quotes from his interview, with the video embedded at the bottom of the page. On China: "A lot of people get the wrong impression, we are not macro people and I've stressed that we are stock people. But we came at China for exactly that reason. In the summer of 2009 we were looking at mining stocks, and we were trying to figure out why it was that in the teeth of a global recession, in mid-'09, that mining companies were reporting pretty close to record profits."

OTHER STORIES:

EU To Speed $123 Billion Aid For Spanish Banks - (www.bloomberg.com)

China’s Gold Demand Seen Rising 13% As Council Pares Target - (www.bloomberg.com)

Bank Scandal Turns Spotlight to Regulators - (www.nytimes.com)

Monti Says He Excludes Serving Beyond End of Term Next Year - (www.bloomberg.com)

Dodging Bubble Means Canada Economy Loses Edge: Mortgages - (www.bloomberg.com)

China’s Import Growth Misses Estimates For June - (www.bloomberg.com)

Eurozone draws up Spanish aid blueprint - (www.ft.com)

Fed’s Lacker Says U.S. May Be Close to Maximum Employment - (www.bloomberg.com)

Man Who Knew Too Much About Ratings Says They Aren’t Meaningful - (www.bloomberg.com)