KeNo's Housing and Economic Portal: Thursday May 21 Housing and Economic stories

TOP STORIES:

These Asian Bankers Face $43 Billion Dead Deals After Oil Plunge - (www.bloomberg.com) It’s a tough time to be an investment banker in Southeast Asia. Singapore, the region’s biggest stock market, is having its driest spell in six years with no initial public offering bigger than $25 million in 2015. Mergers involving Southeast Asian companies have dropped 45 percent this year to the lowest level since 2009, bucking a 39 percent rise in the broader Asia Pacific. Adding to the woes, more than a fifth of all acquisitions, or $43 billion worth, announced in the past 12 months were scrapped, data compiled by Bloomberg show. The dearth of mergers, down to $20 billion, is taking a toll on bankers. Goldman Sachs Group Inc. has reduced its investment-banking team in Singapore about 30 percent, while HSBC Holdings Plc’s top equity capital markets banker in the region and the merger headsat Bank of America Corp. and UBS Group AG are departing. Companies are reluctant to do deals or go public in the wake of low commodity prices that have curtailed growth in Southeast Asian economies including Malaysia and Indonesia. “The mood on the street is very dismal,” said Nicholas Teo, a Singapore-based strategist at CMC Markets. “In Southeast Asia, the big companies and tycoons have been sitting on the sidelines.”

Almost Half Of US States Are Officially Broke - (www.zerohedge.com) At least 22 states are facing budget shortfalls thanks to a combination of fiscal mismanagement and falling oil prices. The negative impact on the public sector has been dramatic suggesting that in the event of a sustained economic downturn, citizens' patience for austerity could wear thin leading to political instability and social unrest. Last month, we documented the case of Louisiana State University, the large, well-known public institution whose 2014 enrollment totaled nearly 31,000 students. LSU, it turns out, is facing funding cuts of as much as 82% which, if realized, would likely force the school into financial exigency, the college equivalent of bankruptcy. The reason for the cuts: the sharp decline in oil prices and fiscal mismanagement have conspired to blow a $1.6 billion hole in the state’s budget. Bloomberg has more: With tax revenue from the oil industry falling short of projections, the deficit has swelled to $1.6 billion for the fiscal year that starts July 1. Moody’s Investors Service and Standard & Poor’s say they may lower Louisiana’s credit rating if officials don’t come up with sustainable budget solutions. Louisiana paid the price when it sold $335 million of general obligations Wednesday, its first deal this year. Borrowing costs jumped compared with an issue in November, with the yield spread more than doubling on some maturities.

It’s Not Just Greece, China’s Retreat Threatens European Bonds - (www.bloomberg.com) European policy makers will be focused on Greek aid talks in Brussels on Monday. Investors may need to look further afield to fully explain the sell-off in the continent’s sovereign debt market. China’s foreign-currency reserves had their biggest quarterly drop on record in the first three months of the year and the yuan is trading at the closest to fair value since 2010, according Goldman Sachs Group Inc. That means less demand for assets in dollars and euros from the world’s biggest creditor. The Chinese central bank has amassed $3.73 trillion in currency reserves over the past decade in a bid to hold down the value of the yuan and underpin the competitiveness of its exporters. As the government in Beijing changes gear, cultivating domestic demand to sustain economic growth, it may affect European bond markets just as much as the Greek efforts to win better terms from creditors.

I.M.F. and Central Bank Loom Large Over Greece’s Debt Talks - (www.nytimes.com) Greek leaders have fought fiercely in recent months with politicians from other European countries over relief on Greece’s vast debt load. Yet the power to decide the fate of Greece lies not just in the hands of these national governments, but also with unelected officials at two powerful institutions: the European Central Bank and the International Monetary Fund. Each is a creditor to Greece, and each is expecting the country to repay it billions of dollars of debt in the coming weeks. The influence of the E.C.B. and the I.M.F. will be felt behind the scenes on Monday, when finance ministers from Greece and other European nations meet in their latest effort to break an impasse that is paralyzing the Greek economy and frightening global markets.

Angry Greeks Occupy Siemens Office; "Won't Become German Colony" - (www.zerohedge.com) Earlier today we reported that German FinMin Wolfgang Shaeuble has now suggested that the best alternative for Greece’s embattled socialist ‘savior’ government may be to put euro membership to a referendum. In Shaeuble’s words, Tsipras should “ask the Greek people to decide whether it’s ready to accept what is necessary or whether it wants the alternative.” What is “necessary” of course, is the implementation of more austerity measures, as the country’s current fiscal reform efforts have fallen well short of what’s necessary for creditors to unlock the next tranche of much needed financial assistance. The “alternative” to which Schaeuble refers, is redenomination risk or, more simply, the introduction of a parallel currency which will promptly collapse in value and wreak havoc across the country’s already beleaguered economy. Greeks, of course, aren’t even the slightest bit interested in subjecting themselves to further belt-tightening and as the following from Reuters makes clear, Greek citizens are at their breaking point not only with austerity, but with the Germans as well: A small group of demonstrators occupied the Athens headquarters of German industrial group Siemens on Monday, police and company officials said, in a protest against the austerity policies imposed on Greece by its lenders. About 30 people entered the building in a northern Athens suburb, occupying the Siemens offices and hanging a banner outside the main entrance ahead of a scheduled rally to the German embassy planned for later this month

OTHER STORIES: