KeNo's Housing and Economic Portal: Wednesday June 24 Housing and Economic stories

TOP STORIES:

Spanish Bonds Slump With Italy’s as Greece Retakes Center Stage - (www.bloomberg.com) Spain’s government bonds fell, pushing 10-year yields up by the most in two weeks, as the prospect of Greece moving toward a default sparked a selloff in the euro region’s higher-yielding assets. Italian 10-year securities dropped relative to similar-maturity German bunds for the first time in a week as Bild newspaper reported that German Chancellor Angela Merkel’s government was preparing for a Greek default. German bonds extended Thursday’s gains after European Union President Donald Tusk rebuked Greece for dragging its feet on a debt agreement. “The spread widening is a Greek-related story,” said Lyn Graham-Taylor, a rates strategist at Rabobank International in London. “There seems to be a hardening of the position, particularly in Germany. We are getting closer and closer to the one-minute-to-midnight point where Greece has to make a decision.” Spain’s 10-year bond yield rose 12 basis points, or 0.12 percentage point, to 2.25 percent as of 5 p.m London time, the biggest increase since June 2. The 1.6 percent security due in April 2025 fell 1.025, or 10.25 euros per 1,000-euro ($1,127) face amount, to 94.305. The yield dropped 11 basis points on Thursday, the steepest decline in a month.

175 Quadrillion Zimbabwean Dollars Are Now Worth $5 - (www.bloomberg.com) The Zimbabwean dollar will be taken from circulation, formalizing a multi-currency system introduced in 2009 to help stem inflation and stabilize the economy. The central bank will offer $5 for every 175 quadrillion, or 175,000 trillion, Zimbabwean dollars, Governor John Mangudya said in an e-mailed statement from the capital, Harare. While it marks the official dropping of the currency, transactions in the southern African nation have been made using mainly the U.S. dollar and rand of neighboring South Africa for six years. “The decommissioning of the Zimbabwean dollar has therefore been pending and long outstanding since 2009,” Mangudya said on Thursday. “We cannot have two legal currency systems. We need therefore to safeguard the integrity of the multiple-currency system or dollarization in Zimbabwe.”

Is Deutsche Bank The Next Lehman? – (www.zerohedge.com) Looking back at the Lehman Brothers collapse of 2008, it’s amazing how quickly it all happened. In hindsight there were a few early-warning signs, but the true scale of the disaster publicly unfolded only in the final moments before it became apparent that Lehman was doomed. Could this happen to Deutsche Bank? First, for purposes of drawing a parallel, let’s re-cap the events of 2007-2008: There were few early indicators of Lehman’s plight. Insiders however, were well aware: In late 2007, Goldman Sachs placed a massive proprietary bet against Lehman which would be known internally as the “Big Short”. (It’s a bet that would later profit from during the crisis). In the summer 2007 subprime loans were beginning to perform poorly in the marketplace. By August of 2007, the commercial paper market saw liquidity evaporating quickly and funding for all types of asset-backed security was drying up.

Homeowners deepest underwater: No relief in sight - (www.cnbc.com) Home prices are rising, and homeowners have collectively regained trillions of dollars in home equity since the worst of the real estate crash. For some borrowers, however, it is not enough, not nearly enough to bring them back into the black on their home loans. These so-called underwater borrowers are stuck in place, unable to sell without paying into their mortgages. For those deepest underwater, there is very little hope in sight. "It's great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it's likely they may not regain equity for up to a decade or more at these rates," said Zillow Chief Economist Dr. Stan Humphries.

Germany No Longer Ruling Out Greek Default, Bild Reports - (www.bloomberg.com) Germany’s government is no longer ruling out a Greek default after Prime Minister Alexis Tsipras during talks on Thursday didn’t concede any ground on European Union reform proposals, Bild reported, citing unidentified people familiar with the government’s position. Chancellor Angela Merkel’s advisers are in discussion on how to deal with a default, including capital controls for Greek banking clients and a debt cut, the German newspaper reported. Merkel is also responding to pressure from her Christian Democratic bloc as a growing number of lawmakers object to further financial aid for Greece, according to Bild. The preparations follow International Monetary Fund negotiators leaving Brussels after failing to make progress on a debt deal that would help Greece avoid default and cement its position within the euro area.

OTHER STORIES:

Macedonia Central Bank Blocks Greek Bank Withdrawals "In Case Of Grexit" - (www.zerohedge.com)

EU Prepares for Worst as Tsipras Drives Greek Finances to Brink - (www.bloomberg.com)
Fearful ECB starts countdown on Greek funding lifeline - (www.reuters.com)