Tuesday June 12 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Bankia Shares Suspended Ahead of Rescue Details - (www.reuters.com) Spain's Bankia is set to ask the state for a more than 15 billion euros ($19 billion) bailout on Friday, marking another rise in the cost of a drawn-out rescue of the country's fourth-biggest bank. The capital shortfall at Bankia is key to a wider funding gap in Spain's banking system, which some investors believe could drive the euro zone's fourth-largest economy to seek international aid — a move that would create fresh uncertainty around the whole currency union. Spain is nationalizing Bankia, which holds some 10 percent of the country's bank deposits, after it was unable to handle heavy losses from a 2008 property crash. The government insists the bank is a one-off case.

JPMorgan Gave Risk Oversight to Museum Head Who Sat on AIG Board - (www.bloomberg.com) The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots. What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years. “It seems hard to believe that this is good enough,” said Anat Admati, a professor of finance at Stanford University who studies corporate governance. “It’s a massive task to watch the risk of JPMorgan.”

Spain's Catalonia seeks government help to pay debt - (www.reuters.com) Spain's wealthiest autonomous region, Catalonia, needs financing help from the central government because it is running out of options for refinancing debt this year, Catalan President Artur Mas said on Friday. "We don't care how they do it, but we need to make payments at the end of the month. Your economy can't recover if you can't pay your bills," Mas told a group of reporters from foreign media. A spokesman for the Catalan government later emphasised that Mas was referring to payments that must be met routinely each month and not a specific deadline this month. The debt burden of Spain's 17 highly devolved regions, and rising bad loans at the country's banks, are both at the heart of the euro zone debt crisis because investors are concerned they could strain finances so much that Spain, the currency bloc's fourth biggest economy, will need an international bailout.

Red Flag in Bank Lending? - (online.wsj.com) Lending stumbled in the first quarter after nearly a year of growth, deepening questions about the recovery and confidence of borrowers and bankers. Loan balances fell by more than $56 billion, or 0.8%, in the quarter ended March 31, according to the Federal Deposit Insurance Corp. The quarter-over-quarter decline marks a reversal from three consecutive quarters in which lending expanded. While lending to larger commercial and industrial customers rose as it has for nearly two years, declines came in nearly all other types of loans, including those to small businesses. "We're afraid to expand right now," said Dan Thystrup, who owns Adventureglass, a four-person company in North Webster, Ind., that builds fiberglass paddleboats in the shape of swans, ducks and dragons. Mr. Thystrup said his reasons for caution include sluggish demand and new environmental regulations.

In Spain, Bank Transfers Reflect Broader Fears - (www.nytimes.com) Ángel de la Peña, a Spanish government worker, is seriously considering the once unthinkable: converting some of his savings from euros to British pounds. Alvaro Saavedra Lopez, a senior executive for I.B.M. in Spain, says many of his corporate counterparts across the country are similarly looking for safer havens by transferring their spare cash to stronger euro zone countries like Germany “on a daily basis.” It is only a trickle so far, and not nearly enough to constitute a classic bank run. But these growing transfers of deposits out of troubled Spanish banks reflect a broader fear that the country’s problems could make it hard for Spaniards to get to their money if banks fail and cannot be supported by the government. In a worst case, some even worry their money will be worth substantially less if Spain is forced to leave the euro currency zone and re-adopt its old currency, the peseta.

OTHER STORIES:

Buba boss dismisses French-led euro bond push - (www.reuters.com)

Frozen Europe Means ECB Must Resort to ELA as Finance Lights Dim - (www.bloomberg.com)

Emerging Stock Funds Post $1.5 Billion Outflows on Greece, China - (www.bloomberg.com)

Analysis: Funds of hedge funds fight to stay relevant - (www.reuters.com)

Governments must restore faith in debt sustainability: ECB's Praet - (www.reuters.com)

Biggest Nordic Banks Lowered By Moody’s On Funding Risks - (www.bloomberg.com)

Big European funds dump euro assets - (www.ft.com)

Europe slowdown adds more tension to Greek drama - (www.reuters.com)

Euro-zone countries appear far from compromise - (www.washingtonpost.com)

India’s Growth De-Rated As Rupee Constrains Subbarao: Economy - (www.bloomberg.com)

After Barreling Ahead in Recession, China Finally Slows - (www.nytimes.com)

New Signs of Global Slowdown - (online.wsj.com)

J.P. Morgan Unit Made Risky Bets on Firms - (online.wsj.com)

Monday June 11 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Short sales damage house prices just like REO - (www.ochousingnews.com) Many market pundits claim lenders should focus on short sales rather than foreclosures. They contend short sales offer better capital recovery than foreclosures and they are less harmful to market pricing. This is not an accurate assessment. First, not all foreclosures become REO. About a third of all foreclosures are purchased by third parties who either flip them or hold them as cashflow investments. Flippers generally improve the property and sell for full market value, so their activities don’t push prices lower. And obviously, cashflow investors don’t push prices lower because they don’t sell their properties. Both short sales and REO resales require discounts to sell. REOs require a discount because lenders are loathe to spend any money fixing them up. Short sales require a discount because buyers won’t put up with the arduous process unless there is a reward for their patience. 

Euro Zone Crisis Boils as Leaders Fail to Signal New Steps - (www.nytimes.com)  With Greece’s membership in the euro zone teetering, fears of bank insolvency rising and Europe’s leaders bickering about what to do, the euro crisis is once again intensifying and threatening to undermine fragile growth globally. At a summit meeting in Brussels on Wednesday, regional leaders failed to signal any significant new steps to stimulate the sputtering regional economy or resolve the competing agendas of President François Hollande of France, who favors stronger action to spur growth, and his German counterpart, Chancellor Angela Merkel, who has opposed aggressive moves to ease the pressure on Europe’s weakest economies. Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never have been greater.

Underwater homeowners owe $1.2 trillion more than homes' worth - (www.centralvalleybusinesstimes.com) The deep end of the pool is the Central Valley when it comes to homes that are underwater, according to a new national report from the real estate information company Zillow Inc. Breaking down the mortgage crisis by ZIP code, Zillow (NASDAQ: Z) lists portions of the Valley as in the worst 1 percent in the nation. This includes the 95206 ZIP code on the south side of Stockton; 95205 on the city’s east side, both of which have 70 percent or more of the homes with mortgages more than the homes are worth; 93307 on the southeast side of Bakersfield; 95833, 95834; 95835, all on the north side of Sacramento; 95742 in Rancho Cordova; 95824 on Sacramento’s south side; and 95961 in Olivehurst. To make it into Zillow’s Worst 1 Percent, homes have to be at least 70 percent underwater.

Firm Targets Calif. Homeowners With Foreclosed 2nd Mortgages - (www.10news.com) Adding new uncertainty in the state's ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt -- on homes they've already lost through foreclosure. Many of these former homeowners believed their mortgage debt had been erased after their houses were taken by banks and lending companies. But the Texas company, Heritage Pacific Financial, has aggressively pursued collections and filed lawsuits claiming those debts still linger. For Ahmed Abdelfattah of San Jose, debt collectors started calling in 2009, saying he owed Heritage Pacific $135,000. He said he'd never heard of the company before. "It's been a nightmare," Abdelfattah said. "It's cost me money and time, and they ruined my credit until now." Oscar Trejo said his first encounter came a few days before he expected to exit bankruptcy and get a fresh financial start. That was in November 2010, he said. Heritage Pacific sent Trejo, who also lives in San Jose, a letter saying it had asked a bankruptcy judge not to discharge, or erase, its $88,800 claim against him.

California bank repossessions continue to plummet, squatters rejoice - (www.ochousingnews.com)  Like any business, banks adjust their business plans quarterly based on both internal and external forces. Internally, banks respond their need for additional capital to fund operations. Externally, they cope with a declining housing market, recent regulatory changes, and new conditions imposed by the bank settlement. When banks adjust their business plans, it may have sudden and dramatic effect on their policies. In the first quarter of 2012, the major banks which control most California REO dramatically reduced the number of properties they purchased at auction. The precipitous declines in REO were not due to improving borrower delinquency. Far too many people are not paying their mortgages, and banks haven’t made significant progress in reducing shadow inventory. In short, they didn’t stop foreclosing because they ran out of people to foreclose on. So why did they?

OTHER STORIES:

Europe Manufacturing Shrinks, German Confidence Drops - (www.bloomberg.com)

Facebook, Zuckerberg sued over IPO - (www.cnet.com)

Maybe Repealing Glass-Steagall Wasn't Such A Good Idea After All - (www.minyanville.com)

What causes wrongful convictions? Lies, mistaken eyewitnesses top the list. - (www.csmonitor.com)

Foreclosure Suicide - (www.guardian.co.uk)

Poll shows strong support for legal marijuana - (www.csmonitor.com)

Texas firm targets homeowners with foreclosed 2nd mortgages - (www.baycitizen.org)

Friday June 8 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Vallejo, Calif., once bankrupt, is now a model for cities in an age of austerity - (www.washingtonpost.com) The first couple of years were ugly. After this working-class port city became the largest in America to declare bankruptcy in 2008, crime and prostitution surged as the police force was thinned by 40 percent. Firehouses were shuttered, and funding for libraries and senior centers was slashed. Foreclosures multiplied and home prices plummeted. But then this city of 116,000 began to reinvent itself. It started using technology to fill personnel gaps, rallying residents to volunteer to provide public services and offering local voters the chance to decide how money would be spent — in return for an increase in the sales tax. For the first time in five years, the city expects to have enough money to do such things as fill potholes, clear weeds, trim trees and repair tennis courts. The nation’s cities are weak links in the U.S. economy and, if they collapse in large numbers, it could knock the country’s recovery off course. Cuts at the federal level are being pushed down to the states, which in turn are passing the problems to their cities.

Rajoy Urges ECB Action To Reverse Surge In Spanish Bond Yields - (www.bloomberg.com) Spanish Prime Minister Mariano Rajoy called on the European Central Bank to act to bring down rising borrowing costs after Spanish bond yields approached the levels that pushed Greece, Ireland and Portugal into bailouts. “If public debt isn’t sustainable, we have a problem,” he said today after a meeting of European Union leaders in Brussels. “I insist it is up to the ECB to take this decision that it has already taken in the past.” Rajoy’s call for help from the Frankfurt-based ECB was his clearest yet. He has previously urged unspecified European authorities to help him battle Spain’s surging yields. The ECB helped ease yields in August when it began buying the country’s bonds and then lent euro-region banks 1 trillion euros ($1.3 trillion) for three years in December and February, some of which was recycled into public debt purchases.

HP to lay off 27,000, profit slides 31 percent - (www.reuters.com) Analysts said Hewlett Packard Co's plan to cut jobs was a step in the right direction but the PC maker will have to do more to regain investors' confidence. Shares of the world's No. 1 personal computer maker were up 6 percent at $22.26 in early trading on the New York Stock Exchange on Thursday. "While we certainly don't believe HP has resolved all their issues, we do see the company moving in the right direction," RBC Capital Markets LLC analyst Amit Daryanani wrote in a note to clients. The accelerating popularity of mobile computing devices such as Apple Inc's iPad has been eroding PC sales for years and a downturn in the European markets has just added to the pressure. Rival Dell gave a disappointing revenue forecast Earlier this week that spurred fears that global tech spending is weakening faster than anticipated.

Medical Costs Contribute to Credit Card Debt - (www.nytimes.com) Medical bills are a leading contributor to credit card debt, a new survey finds. Nearly half of low- and moderate-income households carry debt from out-of-pocket medical expenses on their credit cards, the survey found. The average amount of medical debt on credit cards was $1,678. Demos, a nonpartisan research organization, contracted with Knowledge Networks to conduct the survey in February and March to gauge the impact of the recession as well as of the Credit Card Accountability Responsibility and Disclosure Act of 2009. The survey, conducted online among participants selected by random sampling, included 997 adults who had carried credit card balances for at least three months. The margin of sampling error was four percentage points.

California downgrades loan owners, diverts bank extortion booty to others - (www.ochousingnews.com) Many loan owners made mortgage payments over the last few years when they would have benefited more from strategic default. Many of those loan owners were motivated by the false hope of a government bailout bringing principal reduction or other goodies. California led these sheeple down the path and garnered much public attention for the tough stance the Attorney General took in favor of loan owners. Everyone rejoiced. Loan owners could taste the debt relief. Kamala Harris stoked her political ambitions as a pandering lefty. The banks got relief from further lawsuits. There was only one problem. Governor Jerry Brown and others in the state legislature decided giving money to loan owners wasn’t the best use of taxpayer funds — thankfully. The State is diverting the extortion booty it garnered from the bank settlement to others leaving loan owners with nothing but their denial and false hope. Loan owners got screwed.

OTHER STORIES:

Merkel Stands by Opposition to Euro Bonds After EU Summit - (www.bloomberg.com)

EU Chiefs Clash On Euro Bonds As Crisis Summit Bogs Down- (www.bloomberg.com)

U.K. Economy Shrinks More Than Estimated on Building Slump - (www.bloomberg.com)

Europe Manufacturing Shrinks, German Confidence Drops: Economy - (www.bloomberg.com)

Euro Zone Crisis Boils as Leaders Argue, Failing at Pact - (www.nytimes.com)

Thursday June 7 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Righteous Samurai Chops Off Realtor's Arm - (www.malaysia-chronicle.com) A Japanese man has been arrested after lopping off the arm of the president of a real estate company with a samurai sword. He also attacked two other employees, leaving them with serious stomach wounds. Hifumi Kuwada was charged on Saturday over the attempted murder of Katsumi Jitskata, the president of Daikyo Home, and two workers with a 70cm blade. Employees Hiroshi Jitsukata, Kiyoshi Sato are currently being treated in hospital for severe stomach lacerations. Kawada has pleaded guilty to the charges. He reportedly smuggled the samurai into the Daikyo Home’s offices inside a golf bag before embarking on the bloody rampage. Kawada then fled the scene in his car, but was caught and arrested shortly afterwards by local police. Japanese police suspect that the attack was motivated by business interests. According to newspaper The Japan Times Hifumi Kuwada runs a construction company and had ordered Daikyo Home to work on an apartment building project.

N.J. Revenue May Trail Christie Forecasts by $1.3 Billion - (www.bloomberg.com) New Jersey’s revenue may fall below Governor Chris Christie’s projections by as much as $1.3 billion through June 2013, the Legislature’s chief budget analyst said, prompting the state's chief executive to ask, “Why would anyone with a functioning brain believe this guy? Collections may lag behind Christie’s targets by $668 million in fiscal 2012 and $635 million in the year that begins July 1, David Rosen of the nonpartisan Office of Legislative Services told the Assembly Budget Committee today. The shortfall estimated by Rosen is more than double the $537 million over the two-year period that he projected for the budget panels in March. New Jersey revenue is increasing at a pace that is “a good deal more modest than had been anticipated” in Christie’s budget, Rosen said.

Fitch: Non-resident investors pulling out of Spain, Italy - (www.reuters.com) The proportion of Spanish and Italian public debt held by non-resident investors continued to fall in the first quarter of 2012 as banks funded with cheap ECB money replaced international institutional investors, according to Fitch Ratings. We expect this trend to continue in the coming quarters. The pace of the withdrawal by non-residents quickened in Spain, where we estimate that non-resident holdings of Spanish public debt, excluding ECB holdings under the Securities Markets Programme, dropped to 34% in Q112, from 40% at end-2011. It has been dropping steadily from over 60% in 2008. The drop in private-sector non-resident holdings of Italian debt has followed a different path. The total outflow in Italy has been less than in Spain, with non-residents only accounting for around 50% of bondholders in 2008 and the outflow did not start until Q311. Nevertheless non-resident holdings of Italian debt have dropped to 32% and, although the pace has slowed, continue to fall.

Spain calls for help to lower borrowing rates – (www.finance.yahoo.com) Worries about Greece's electoral turmoil and Spain's spiraling borrowing costs are piling the pressure on European Union leaders meeting in Brussels on Wednesday amid renewed market pressure to keep the region's debt problems from getting worse. Spain's prime minister warned that his country can't continue much longer with its current high borrowing rates and urged a joint European response to help. Mariano Rajoy and newly elected French President Francois Hollande, heading later in the evening to meet other European Union leaders in Brussels, also stressed their commitment to keeping Greece in the euro despite its political uncertainty. "Europe has to come up with an answer. It is a must, because we cannot go on like this for a long time, with large differences when it comes to financing ourselves. And it is because of these differences that the policies that we Europeans believe in, such as controlling government spending and reforms to encourage growth, ultimately have no effect," Rajoy said in Paris alongside Hollande.

Bond exodus on a par with eurozone bank run - (www.ft.com) A great deal of attention is being heaped on the possibility of a bank run across the eurozone. But something just as important is currently happening: a bond run. Foreign investors have left the government and corporate bond markets of Italy and Spain in droves in the past year and there is little evidence of the selling slowing down. If anything, the worry would be that the process carries on for some time as it has done in Greece, Ireland and Portugal. There is little doubt that a generalised bank run across several countries would be disastrous. But so far there is scant evidence of it. Deposits at Italian banks have increased in recent months while those at Spanish banks have only dropped slightly.

OTHER STORIES:

Euro zone officials agree to prepare for Greek exit scenario - (www.reuters.com)

Eurozone looks at Greek exit as leaders meet - (www.reuters.com)

European Banks Unprepared For Greek Exit From Euro - (www.bloomberg.com)

Bundesbank Suggests Greek Exit From Euro Would Be Manageable - (www.bloomberg.com)

German Bundesbank warns Greece not to reject reforms - (www.reuters.com)

Hollande-Merkel Gulf Opens as 18th Euro Summit Tackles Crisis - (www.bloomberg.com)

Hollande Challenges German Crisis Handling on Euro Bonds, Banks - (www.bloomberg.com)

Stage set for Hollande-Merkel showdown at EU summit - (www.reuters.com)

Italian Consumer Confidence Falls To Lowest Since 1996 - (www.bloomberg.com)

Merkel Faces Hollande Pleas To Shed Taboos At Crisis Summit - (www.bloomberg.com)

U.K. Retail Sales Fall Most In Two Years On Rain Effects - (www.bloomberg.com)

EU struggles to agree hard line on Greece - (www.ft.com)

Germany's Schaeuble Reaffirms Opposition To Euro-Zone Bonds - (online.wsj.com)

SEC Focusing on JPMorgan’s Disclosure of Risk Models - (www.bloomberg.com)

J.P. Morgan Exposed on Right Flank - (online.wsj.com)

War-Gaming Greek Euro Exit Highlights Hazards in 46-Hour Weekend - (www.bloomberg.com)

Wednesday June 6 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Real Estate Agent from Sacramento Found Guilty on 13 Counts of Mortgage Fraud - (www.loansafe.org) According to the evidence presented at trial, Badie, with co-defendants Derek Davis and Dino Rosetti (both of whom previously pleaded guilty), participated in a scheme to defraud mortgage lenders from June 2005 through December 2006. Badie was the buyer’s real estate agent for the purchase of 16 residential properties by four straw buyers. Rosetti served as the mortgage broker for 15 of the purchasers, and Davis orchestrated the scheme. With Badie’s assistance, Harriette Davis, Derek Davis’ ex-wife, purchased six residential properties. Kristina Harvey, Davis’ girlfriend, purchased five. William Emmons, an elderly friend of Davis’, purchased four. Alan Bolton, a person to whom Davis owed money, purchased one. Each of the purchase agreements drafted by Badie indicated the offer was being submitted by one of the foregoing buyers who intended to occupy the property as his or her primary residence. In fact, Badie knew the properties were really being purchased by Davis, who planned to remodel the properties and then sell them. The individuals named on the purchase agreements, at least two of whom Badie never even met, never planned on residing in the properties. Badie submitted the offers on behalf of the buyers so that 100 percent financing could be obtained for each purchase. In furtherance of that goal, Rosetti submitted loan applications that, in every case, substantially overstated the income and understated the liabilities of each buyer.

Large depositors beginning to make withdrawals from UK bank - (www.telegraph.co.uk) Customers with large deposits have started withdrawing cash from Santander, the bank has admitted, as it tried to reassure concerned members of the public that their money is safe. The high street bank also saw an increase in enquiries by worried savers to its call centres and in its 1,380 branches across Britain yesterday. Customers are worried that the bank will be dragged into the eurozone crisis because it is owned by Spain’s Banco Santander. On Thursday, Banco Santander, its UK subsidiary and 15 other Spanish banks had their credit ratings downgraded due to their exposure to the struggling Spanish economy. The Spanish banks were hit with more bad news yesterday, as official figures showed bad debts had risen to their highest level in 18 years. However, shares across the sector shrugged off the concerns to rally strongly, as treasury minister Inigo Fernandez de Mesa said there was little reason for concern as “Spanish banks have plenty of liquidity”. Lenders have about two years of funding, due to the European Central Bank’s emergency support.

Court-bound housing meltdown is stark at Plumas Lake - (www.sacbee.com) At the height of the housing bubble, Plumas Lake seemed like a good deal to buyers willing to trade a long commute for a big house. Sales were brisk for a while in the sprawling subdivision about 40 minutes north ofSacramento on Highway 70 in rural Yuba County. Today, the equation is much different. Homes closer to jobs and services are more affordable than they've been in decades, and much ofPlumas Lake looks like a suburban ghost town. Only a fraction of the thousands of homes planned there have been built. Along streets named High Noon Drive and Long Horn Trail, vacant lots are choked with weeds. Roads dead-end into concrete barriers. Construction trailers sit empty. Home prices have crashed hard, and residents are underwater and upset.

IMF call for drastic action to rescue Britain's economy - (www.telegraph.co.uk)  Warning that weak growth was putting the country at risk of permanently high unemployment, the Bretton Woods institution called for swift and co-ordinated action between the Bank and the Treasury. If the joint efforts had failed to have much effect by November, the Government should then consider cutting taxes and boosting infrastructure spending by as much as £30bn, said the IMF. In an unusually alarmist annual assessment of the UK, IMF managing director Christine Lagarde said that "growth is too slow and unemployment too high, and policies to bolster demand before low growth becomes entrenched are needed".

Fitch downgrades Japan - (money.cnn.com) Fitch Ratings cut Japan's credit rating Tuesday, citing "growing risks" from the country's "rising public debt ratios." Fitch forecast that the Japanese government's debt will reach 239% of gross domestic product by the end of the year, which would be the highest of any countries rated by Fitch. Fitch also criticized Japan's plan to control in its debt as being too "leisurely." The rating agency downgraded Japan's long-term foreign and local currency issuer default ratings to A+ from AA and AA-, respectively, with negative outlooks for both. The yen continued to weaken against the U.S. dollar, falling nearly 0.5% to ¥ 79.70 early Tuesday. The Japanese currency is down nearly 4% against the greenback so far this year. But the rating agency praised Japan for maintaining "exceptional financing flexibility" and its ability to "fund itself at low nominal yields."

Rows break out over eurozone woes - (www.telegraph.co.uk) On a day when angry comments were exchanged over France’s call for eurobonds, Adam Posen, a member of the Bank of England’s Monetary Policy Committee, said it was undercapitalised lenders that were the real cause of the region’s woes and urged authorities not to be afraid of nationalising them if necessary. “The source of current problems is not Greece ... The source of current problems in the eurozone is that various financial exposures we all have in the interbank market are not yet resolved because certain financial institutions are insufficiently capitalised,” Mr Posen told a conference in Tokyo. His comments came as Spain revealed that the state-backed Bankia would need another €7.5bn of equity, which would leave it almost entirely taxpayer owned and French President Francois Hollande sparked an angry exchange with Spanish Prime Minister Mariano Rajoy by saying the rest of the sector should also be recapitalised.

OTHER STORIES:

Eurozone warned 'severe recession' looming  - (finance.yahoo.com)

Greece: Top 3 risks facing U.S. - (money.cnn.com)

Europe debt could derail world economy - (money.cnn.com)

Fed's Lockhart says circumstances not ripe for QE3 - (www.reuters.com)

Fiscal cliff: Market sting may come sooner - (money.cnn.com)

Why is Jamie Dimon on a Federal Reserve board? - (money.cnn.com)

Seeing bailouts through rose colored glasses - (www.nytimes.com)

A Fed governor feels Wall Street�s heat - (www.washingtonpost.com)

Rising US recession risk poses the real threat to Europe - (www.telegraph.co.uk)

Tuesday June 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

CBO Warns About 'Fiscal Cliff' - (online.wsj.com) The U.S. economy will likely fall into recession in the first half of 2013 if large tax increases and scheduled government spending cuts are allowed to go into effect in January, the Congressional Budget Office said Tuesday. The nonpartisan agency's finding could ramp up pressure on policy makers to reach a broad budget deal later this year to avoid such an outcome. The combination of tax increases and spending cuts, often referred to as a "fiscal cliff," would sharply reduce the federal budget deficit but would temporarily arrest the economic recovery, said the CBO, which serves as Congress's budget calculator.

Greek banks to be recapitalised by Friday - banker - (www.reuters.com) Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to rescue its four largest banks on Tuesday, and an official said they would get the urgently needed funds as soon Wednesday. Bankers say the recapitalisation will allow them to again receive funding from the European Central Bank (ECB), which cut off some Greek banks last week because they lacked enough capital to be considered solvent. Huge losses from a sovereign debt swap in March nearly wiped out the capital of Greece's systemically important banks and Greek authorities are scrambling to wrap up a bridge recapitalisation to help them cope with a cash crunch.

Secret €100bn aid props up Greek banks - (www.ft.com)  There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100bn or so of emergency liquidity provided by the country’s central bank – approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug. Extensive use of “emergency liquidity assistance” (ELA) to help banks in the weakest economies has been one of the less-noticed features of the eurozone crisis. Separate from normal supplies of liquidity and meant originally as a temporary facility for national authorities to use when banks hit problems, ELA proved a lifesaver for the financial system Ireland and is now even more so in Greece. As such, it has given the ECB – which has ultimate control over the facility – considerable power to determine countries’ fates.

SEC, FINRA call for Facebook review, pressure builds - (www.reuters.com) Two top U.S. financial regulators said the issues around the initial public offering of Facebook should be reviewed, putting fresh pressure on the company, its embattled lead underwriter and the Nasdaq. After Friday's nearly flat close and Monday's 11 percent plunge, Facebook shares closed 8.9 percent lower at $31 on volume of 101 million shares. At that price the company has shed more than $19 billion in market capitalization from its $38-per-share offering price last week. Investors were still shaking their heads over the botched opening trading of Facebook when Reuters reported late Monday that the consumer Internet analyst at lead underwriter Morgan Stanley cut his revenue forecasts for Facebook in the days before the offering, information that may not have reached many investors before the stock was listed.

Obama Is Getting Humiliated In The Kentucky Primary, 40 Percent Of Democrats Voted For 'Uncommitted' - (www.businessinsider.com) Problem in Appalachia.  This is just crazy. With almost all districts reporting, Obama is carrying about 60 percent of the vote in tonight's Kentucky primary according to the Wall Street Journal. But about 40 percent of that state's Democratic voters cast their ballot for 'Undecided.'  Compare that to Mitt Romney, who has won 67% in the Republican primary, while Ron Paul, Rick Santorum, and Newt Gingrich are all scoring in the single-digits.  The result doesn't exactly change anything for Obama but it is another embarrassing result for the incumbent. Last week in West Virginia, a convicted felon won 41 percent of the vote against Obama. The message is this, Obama is unbelievably weak among white Appalachian Democrats.

OTHER STORIES:

Eurozone warned 'severe recession' looming  - (finance.yahoo.com)

Spain Will Remain in Recession Next Year, OECD Forecasts - (www.bloomberg.com)

China targets infrastructure to lift economy, report says - (www.reuters.com)

Merkel Pressed To Share German States’ Debt Costs - (www.bloomberg.com)

France, Germany Joust Over Euro Bonds - (online.wsj.com)

Sales of U.S. Existing Homes Rise for First Time in Three Months - (www.bloomberg.com)

CBO warns of US falling off 'fiscal cliff' - (finance.yahoo.com)

Dell Profit, Forecast Miss Estimates on Slumping PC Sales - (www.bloomberg.com)

Facebook 11% Drop Means Morgan Stanley Gets Blame - (www.bloomberg.com)

War-Gaming Greek Euro Exit Highlights Hazards in 46-Hour Weekend - (www.bloomberg.com)

JPMorgan's fight against hedging restriction: Kemp - (www.reuters.com)

Monday June 4 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

U.S. Banks Sold More Swaps on European Debt as Risks Rose  - (www.bloomberg.com) U.S. banks increased sales of protection against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the last quarter of 2011 as the European debt crisis escalated. Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose 10 percent from the previous quarter to $567 billion, according to the most recent data from the Bank for International Settlements. Those guarantees refer to credit-default swaps written on bonds. JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc., two of the top CDS underwriters in the U.S., say they have bought more protection than they sold, indicating they may benefit from defaults in the region. That outcome is called into question by JPMorgan’s $2 billion loss on similar derivatives, which shows that risks don’t vanish when offsetting bets are taken, said Craig Pirrong, a finance professor at the University of Houston.

Spain Crisis Lender For Regions Can Tap ECB To Fill Coffers - (www.bloomberg.com) The Spanish government’s bank channeling aid to cash-strapped regions can keep a lid on its funding bill by tapping the European Central Bank for loans that cost it a fraction of the amount bond investors will charge. While Instituto de Credito Oficial has sold 60 percent of the 20 billion euros ($25 billion) in bonds it planned to issue in 2012, the lender is also able to use its banking license to access the ECB’s facilities, said Antonio Cordero, its head of funding and treasury. That allows the institution to access money at 1 percent, compared with a cost of more than 5 percent from investors for its three-year debt. “Like any other bank, the ICO can pledge loans as guarantees to obtain Bank of Spain funding,” Cordero said in a May 11 interview at the lender’s headquarters in Madrid. “Potentially most of our balance sheet is eligible.”

Peering Over J.P. Morgan's Hedges - (online.wsj.com) With big U.S. bank stocks again sliding, investors are wondering how much is due to Europe's woes versus blowback from J.P. Morgan Chase's JPM -0.59% trading debacle. One answer: The issues are intertwined. When J.P. Morgan revealed $2 billion-plus in trading losses, it said it had executed hedges poorly and failed to monitor them properly. This raised questions about J.P. Morgan's overall hedging abilities, including those meant to offset exposures to Europe. And, if J.P. Morgan could mess up, what about Citigroup, Bank of America, Morgan Stanley or Goldman Sachs? With investors in the dark on the degree to which the five banks are mostly buying and selling protection from each other, investors also have little way to assess contagion risks.

Apocalypse Fairly Soon - (www.nytimes.com) Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. We’re not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years. And the costs — both economic and, arguably even more important, political. This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve.

The Decline of Inherited Money - (online.wsj.com) My Krugman post brought a lot of emails asking about my assertion that “the vast majority of today’s rich didn’t inherit their money, but made it themselves.” For the sake of brevity, I didn’t cite the research behind the statement. But since many of you have asked, and we aim to please here at the Wealth Report, here are my three main data points:

1. According to a study of Federal Reserve data conducted by NYU professor Edward Wolff, for the nation’s richest 1%, inherited wealth accounted for only 9% of their net worth in 2001, down from 23% in 1989. (The 2001 number was the latest available.)

2. According to a study by Prince & Associates, less than 10% of today’s multi-millionaires cited “inheritance” as their source of wealth.

3. A study by Spectrem Group found that among today’s millionaires, inherited wealth accounted for just 2% of their total sources of wealth.

OTHER STORIES:

Spanish Bad-Loans Ratio Hit 17-Year High In March - (online.wsj.com)

EU, ECB working on Greece exit contingency: paper - (www.reuters.com)

Euro zone market turmoil to last 12-24 months: German finance minister - (www.reuters.com)

Boom-Era Debt Sparking German Apartment Sales: Mortgages - (www.bloomberg.com)

China Home Prices, Car Inventory Add To Signs Of Slowing - (www.bloomberg.com)

China Home Prices Fall In More Than Half Cities Tracked - (www.bloomberg.com)

China’s Car Dealerships Struggle As Stockpiles Increase - (www.bloomberg.com)

Fed May Prefer Another Twist to Adding Assets - (www.bloomberg.com)

JPMorgan May Lose $5 Billion on Derivatives, WSJ Reports - (www.bloomberg.com)