Tuesday May 6 Housing and Economic stories

TOP STORIES:

Puerto Rico officials warn government shutdown imminent - (www.reuters.com)   Puerto Rico's top finance officials said the government of the U.S. territory will likely shutdown in three months because of a looming liquidity crisis and warned of a devastating impact on the island's economy. In a letter to leading lawmakers, including Governor Alejandro Padilla, the officials said a financing deal that could potentially salvage the government's finances currently looked unlikely to succeed. It warned of laying off government employees and reducing public services. "A government shutdown is very probable in the next three months due to the absence of liquidity to operate," the officials said. "The likelihood of completing a market transaction to finance the government's operations and keep the government open is currently remote." The letter, dated April 21, was also sent to the heads of Puerto Rico's Senate and House as well as the governor. It was signed by the government's fiscal team, including the head of the Government Development Bank and the Treasury Secretary.

The War On Cash: JPMorgan Chase To Prohibit The Storage Of Cash In Safety Deposit Boxes - (www.marketdailynews.com)  Letters are apparently going out to some JPMoragnChase customers announcing that cash will be prohibited from being stored in the bank’s safety deposit boxes. My mother has a SDB at a Chase branch with one of my siblings as co-signers. Last week they got a letter outlining a number of changes to the lease agreement, including this: “Contents of the box: You agree not to store any cash or coins other than those found to have a collectible value.”

Another change is that signatures will no longer be accepted to access the box. The next time they go in they have to bring two forms of ID and they will be issued a four-digit pin number that will be used to access the box then and in the future.

Greece may ask Europe to buy bonds to pay for redemptions -paper - (www.reuters.com)  Greece is considering asking the European Stability Mechanism (ESM) to buy Greek government bonds held by the European Central Bank (ECB) to pay for debt redemptions this summer, newspaper Kathimerini reported on Thursday. Shut out of bond markets and fast running out of cash, Greece faces big redemptions to the ECB, 4.18 billion euros ($4.46 billion) in July and 3.38 billion in August, as remaining bailout money remains locked until it agrees with creditors on reforms. "The aim of the government's plan is to have the ESM buy the bonds and reach a deal to repay them further out in time, as is the case with loans from the EFSF (European Financial Stability Facility)," the paper said without citing sources. To receive some 7.2 billion euros of remaining bailout cash, Athens must agree a reforms' programme with the European Union, the International Monetary Fund and the ECB. Progress with negotiations has been painfully slow.

Moody’s to CEOs: Think twice before buying back stock - (www.cnbc.com)  Companies that obsessively buy back their shares could be making a big mistake, says one Moody's analyst. In fact, it may be time for corporate managers to rethink the popular buybacks and dividend hikes that improve the share price of a company without doing anything for its long-term prospects, she says. "You have to expect that there's an inherent conflict between creditors and equityholders when it comes to share buybacks," said Christina Padgett, the head of leveraged finance at credit-rating firm Moody's, in a Wednesday interview. Both stockholders and bondholders "believe in the long term success of the company, but there are certain benefits that go to the shareholder directly in the form of a buyback or a dividend that actually don't support future growth of the company, and so really don't inure to the benefit of creditors."

What Happened When Maine Forced Welfare Recipients To Work For Their Benefits? - (www.marketdailynews.com)  Earlier this year the state of Maine enacted legislation with the intention of ending the gravy train for able-bodied adult welfare recipients. The state will now impose a work requirement on welfare recipients without dependents, which must be fulfilled in order to receive food stamps. All adults without a disability must have to actually work for food, volunteer twenty hours per week, or enroll in an employment training program if they want to ensure their EBT card (Electronic Benefits Transfer) is loaded each month. People under the age of 18 and over 50 are excluded from that law. The law affected some 12,000 recipients of welfare benefits. Just two months after the state began implementing the new program Maine has seen what Republicans in the State’s legislature call a victory for welfare reform: Keep in mind that these individuals are adults who aren’t disabled and who don’t have children at home and who are claiming the food-stamp benefits because of a lack of financial resources. After forcing these individuals to either work part-time for twenty hours each week, enroll in a vocational program, or volunteer for a minimum of twenty-four hours per month, the numbers showed a significant drop from 12,000 enrollees to just over 2,500.

OTHER STORIES:

Saudi-led coalition launches air strikes throughout Yemen: residents - (www.reuters.com)
Factbox - Greek banks on liquidity drip-feed while Athens haggles with creditors - (www.reuters.com)
European Stocks Drop as Manufacturing, Services Miss Estimates - (www.bloomberg.com)
Greece Hasn’t Discussed ‘Plan B’ With Creditors, Official Says - (www.bloomberg.com)

China Manufacturing Gauge Drops to Lowest Level in 12 Months - (www.bloomberg.com)
China’s Riskiest Bonds Flagged By Haitong After Tianwei Default - (www.bloomberg.com)
Japan March final manufacturing PMI falls to 50.3 as domestic orders contract - (www.reuters.com)
Euro-Region Output Growth Slows as Economy Awaits QE Effect - (www.bloomberg.com)
Bird Flu ‘Catastrophe’ Mounts Amid Concern Virus Is Airborne - (www.bloomberg.com)