Thursday June 9 2016 Housing and Economic stories

TOP STORIES:

College Loan Glut Worries Policy Makers - (www.wsj.com) The U.S. government over the last 15 years made a trillion-dollar investment to improve the nation’s workforce, productivity and economy. A big portion of that investment has now turned toxic, with echoes of the housing crisis. The investment was in “human capital,” or, more specifically, higher education. The government helped finance tens of millions of tuitions as enrollment in U.S. colleges and graduate schools soared 24% from 2002 to 2012, rivaling the higher-education boom of the 1970s. Millions of others attended trade schools that award career certificates. The government financed a large share of these educations through grants, low-interest loans and loan guarantees. Total outstanding student debt—almost all guaranteed or made directly by the federal government—has quadrupled since 2000 to $1.2 trillion today. The government also spent tens of billions of dollars in grants and tax credits for students.

"When Your Biggest Investment Is Now Worthless, It's Devastating" - Homes In Connecticut Are Literally Crumbling - (www.zerohedge.com) "You can't eat, you can't sleep. When you're told your home is now worthless and your biggest investment is now worthless, it's devastating" - This is how Tim Heim, a homeowner in northeastern Connecticut describes the feeling when you're told the concrete foundation of your home is crumbling, and your house is gradually collapsing. Sadly, this is exactly what thousands of homeowners are being told across nearly 20 towns in northeastern Connecticut. The problem has been traced back to foundations which used materials from a specific quarry and related concrete maker since the 1980's. From the NYT: The scope of the problem is so vast that state officials have begun an investigation, andthey recently announced that the crumbling foundations had been traced to a quarry business and a related concrete maker, which have agreed to stop selling their products for residential use. 

Consumers in Texas Begin to React - (www.wolfstreet.com) The stories are now piling up of oil-bust contagion working its way deeper into the overall economy of oil-producing states, including Texas. Unlike some other oil producing states, Texas has a vast and diversified economy. So from the beginning, it was said that this time, the oil bust won’t hurt like it did last time; the pain would be contained in its isolated corner of the economy. But this theory is now falling apart. It comes on top of the weakness of the overall US economy. And consumers are reacting. Sales tax collections in May, for sales in April, plunged 7.1% year over year, according to the Texas Comptroller of Public Accounts. It was the worst year-over-year decline since March 2010 at the very bottom of the last retail crash during the Financial Crisis and the oil bust that ended in a V-shaped recovery as the Fed’s bailouts, QE, and ZIRP started taking effect.

Brexit Worry Radiates Around World as Poll Puts Traders on Edge - (www.bloomberg.com) Brexit is back, and investors from Australia to Thailand are ducking for cover. The pound fell and currency volatility surged on Monday after two polls showed more Britons favor a vote to leave the European Union at a June 23 referendum than those who want to stay. That prompted a money manager 10,500 miles away in Sydney to buy stock-market protection, while a brokerage in Bangkok is advising clients to trim equities and hold extra cash. “I don’t want to sound scary, but the market isn’t prepared for this,” said Nader Naeimi at AMP Capital Investors Ltd. in Sydney, a company that oversees more than $110 billion. He’s been buying futures contracts on European and U.S. equity volatility, even as he forecasts voters will choose to stay in the EU. “It makes sense to buy some protection. Fear, worry and volatility are likely to intensify as we get closer.”

Global Yields Fall to Record as U.S. Jobs, Brexit to Hamper Fed - (www.bloomberg.com)  Global bond yields tumbled to a record after the U.S. reported a weaker-than-expected May jobs gain and as polls showed more Britons favor leaving the European Union. The yield on the Bloomberg Global Developed Sovereign Bond Index dropped to 0.62 percent at the end of last week, the least in data going back to 2010. Australian 10-year yields fell to an all-time low of 2.15 percent. Japan’s slid to minus 0.125 percent, approaching the record of minus 0.135 percent. Treasuries fell for the first time in five days Monday after yields declined the most in four months on Friday.

OTHER STORIES:

Corporate bonds join negative yield club - (www.ft.com)
Goldman Says Hedge Funds Wedded to Top Picks Like Never Before - (www.bloomberg.com)
Payday Loans’ Debt Spiral to Be Curtailed - (www.nytimes.com)
China tells U.S., don't let allies set South China Sea policy - (www.reuters.com)

A photo of Steve Cohen's demolished $62 million mansion - (www.cnbc.com)

Yellen: No Rate Rise Until Economic Outlook Clears - (www.wsj.com)
Fed’s Yellen sees rate hikes ahead, but few hints on when - (www.reuters.com)
Boom-Bust in China’s Equity Market Leaves an Economic Hangover - (www.bloomberg.com)
Lured by hopes of easy money, amateur Chinese commodity traders lose their shirts - (www.reuters.com)