realtors
desperately lobby for higher loan limits to support housing - (www.ochousingnews.com) Lower
limits on conforming loans guaranteed by the GSEs or the FHA will lower sales
volumes and prices in the price ranges no longer financeable with government
loans. Everyone who understands the relationship between easy-money financing
and aggregate house prices knows this, and those most interested in reflating
the housing bubble and maintaining sales volumes (realtors mostly) are doing
everything possible to make sure these conforming loan limits stay as high as
possible. Of course, this is contrary to the greater good and the stated goals
of the Obama administration that wants to reduce the footprint of government in
home finance, but realtors aren’t concerned with the greater good, they are
concerned about commission income. Watching the realtor lobby work is a lesson
in political influence in Washington. When the possibility of lower loan limits
was first announced, realtors began a public relations campaign to scare
everyone with fears of housing market Armageddon. Then, they followed with
letters to regulators urging bureaucrats to keep the realtor
commission subsidies in place. Finally, they organized their minions who they
control with their campaign contributions and had legislators write letters for
them also urging bureaucrats to keep the money flowing irrespective of the
taxpayer costs.
IBM’s
huge revenue miss worries Wall Street - (www.marketwatch.com) IBM
Corp.’s big miss of nearly $1 billion in third quarter revenue, combined with
its misses in the last few quarters, has got Wall Street nervous that the tech
giant is being too optimistic with its forecasts, especially for 2015. The
company blamed most of the revenue shortfall on a 40% drop in hardware sales in
China, as the country gets ready to implement a new economic plan in November. “There
simply has been a substantial impact of China’s economic reform plan, which
will be announced in November,” IBM Chief Financial Officer Mark Loughridge told
analysts. “But once that economic plan is announced and adds clarity to the
markets, we will see a recovery in the demand from state-owned enterprises in
the government sector.”
BOJ
to extend loan schemes to encourage bank lending: sources - (www.reuters.com) The
Bank of Japan is likely to extend three special loan
facilities that have provided more than $81 billion in lending over the past
three years to try to nudge Japan's risk-averse banks to
create more credit, sources said. An extension would signal the BOJ's
commitment to driving funds through the banking sector to borrowers, even as it
continues its unprecedented quantitative easing policy under Governor Haruhiko
Kuroda to try to revive an economy that
has suffered years of low-grade deflation and sluggish growth. The central
bank's policy board is expected to review the loan programs in November or
December before their expiry date of March 2014. Apart from extending them by
at least a year, the board might also combine the programs to simplify their
operations, people familiar with the matter said.
Franco-German
divisions cloud efforts to fix broken banks - (www.reuters.com) The euro zone wrestled on Monday with the question of
who should pay for a clean-up of bust banks,
as Franco-German divisions cast a cloud over efforts to seal a landmark reform
and draw a line under the region's financial crisis. As Spain and Ireland prepare
to end their reliance on international aid that shored up their banks,
finance ministers sought to devise a long-term action plan to deal with
problems likely to be uncovered in bank health checks next year. Issues
remained over how much the euro zone's rescue fund, the European Stability
Mechanism, will be able to help, as well as over how to build a single banking
framework for the bloc and resolve future problems together in a banking union.
Build
America Bonds Biggest Loser in Yield-Rise Bet: Muni Credit - (www.bloomberg.com) The
$188 billion market for Build America Bonds is set to trail the rest of
municipal debt for the first time as issuers face cuts to their federal
subsidies while investors bet interest rates will rise. The taxable debt
created under President Barack Obama’s 2009 stimulus plan has lost 6.1 percent this
year, compared with a 3.7 percent drop for the $3.7 trillion municipal market,
Bank of America Merrill Lynch data show. The bonds beat all local debt in the
first three full years of their existence as they drew buyers from across the
fixed-income universe. Build America proceeds funded infrastructure projects,
so the securities tend to have longer maturities. The duration has spurred
sharper declines this year compared with other munis, said Dan Close at Nuveen
Asset Management. Longer-dated yields have climbed since May on speculation a
growing economy will lead the Federal Reserve to curb its bond buying.
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