Monday November 12 Housing and Economic stories

TOP STORIES:

Greek debt to badly miss target - euro zone official - (www.reuters.com) Greek debt will be above the target of 120 percent of GDP in 2020, a preliminary report by the IMF showed on Thursday, and Athens will need more reforms before emergency credit from international lenders can start flowing again. Excerpts from the International Monetary Fund (IMF) report were presented to the Eurogroup Working Group (EWG) - junior finance ministers and treasury officials who prepare meetings of euro zone finance ministers. "It is clear that Greece is off track and there is no chance they will cut the debt to 120 percent of GDP in 2020 as envisaged. It will be rather 136 percent, and this would be under a positive scenario of a primary budget surplus, a return to economic growth, and privatisation," a euro zoneofficial, who insisted on anonymity, said.

Latest Obama Headfake: Threat to Replace Favorite Housing Scapegoat, FHFA’s Ed DeMarco - (www.nakedcapitalism.com) The October surprises are now coming fast and furious as Obama’s lead is slipping in most polls and on Intrade. So empty gestures to boost turnout in his heretofore spurned Democratic party base are the order of the day. I’m a day behind on this item, but nevertheless thought it was so cynical as to merit special notice. A new effort to rally the troops, per Shahien Nasirpour at the Financial Times, is that the Administration has started messaging to pet activist groups that it will replace Ed DeMacro, the Administration’s favorite scapegoat for its negligence on the housing beat. Team Obama has backed the banks every step of the way, from its failure to use chain of title abuses and obvious tax code (REMIC) violations to pressure banks to do mortgage mods, to its unwillingness to prosecute senior bankers (Charles Ferguson, this blog, and others have set forth legal theories and evidence; the issue clearly is lack of political will), its refusal to undertake anything other than cursory “see no evil” investigations, and its bank friendly measures, from borrower-damaging, “foam the runway” HAMP to a fraud-institutionalizing mortgage “settlement”. But DeMarco, by refusing to endorse principal mods for Fannie and Freddie borrowers (which is a peculiarly short-sighted posture) serves an a convenient distraction for the Administration’s repeated refusal to take any serious pro-borrower measures. From the Financial Times:

9 More Banks Subpoenaed Over Libor - (online.wsj.com) Nine more banks have received subpoenas in connection with a probe into alleged widespread interest-rate manipulation by banks, a person familiar with the investigation said. The probe, a joint effort by the offices of New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen, could lead to civil enforcement action related to breaches of antitrust and fraud laws. The subpoenas, which were issued in August and September but haven't been previously reported, bring the total number of subpoenas in the case to 16. The banks involved in the probe include most members of the panel that helps set the dollar London interbank offered rate.

Spain’s Unemployment Reaches Record as Bailout Looms - (www.bloomberg.com) Spanish unemployment climbed to a fresh record in the third quarter as a deepening recession left one in four workers jobless, adding pressure on Prime Minister Mariano Rajoy to seek a second European bailout. Unemployment, the second highest in the European Union after Greece, rose to 25.02 percent from 24.6 percent in the previous quarter, the National Statistics Institute said in Madrid today. That is the highest since at least 1976, the year after dictator Francisco Franco’s death led Spain to democracy. The euro-area average is 11.4 percent. Nearly three months after the European Central Bank offered bond buys to lower its borrowing costs, Spain is still playing for time. Rajoy is ignoring pressure to seek more European aid even as the country’s recession worsens and banks report decreasing third-quarter earnings following an increase in provisions for souring real-estate assets. Spain’s Ibex 35 stock index has dropped 10 percent this year, the only decline among major European equity markets.

S&P downgrades French banks - (money.cnn.com)  Credit agency Standard & Poor's has cut its ratings on BNP Paribas and two other major French banks, citing the rising economic risks that they face. The downgrade, which came after the market closed in Paris Thursday, also cut the ratings for Banque Solfea and Cofidis. "We see them as more exposed to this more difficult European environment," said the statement from S&P. "In our view, the economic risks under which French banks operate are increasing, leaving [them] moderately more exposed to the potential of a more protracted recession in the eurozone."

OTHER STORIES:

Why you should take GDP Headline with a grain of salt. - (www.washingtonpost.com)

Spanish unemployment hits new peak  - (money.cnn.com)

Korea’s Growth Slows as Global Cooling Caps Export Demand - (www.bloomberg.com)

Wen Jiabao Family Linked to Billions in Assets, NYT Reports - (www.bloomberg.com)

Italy Business Optimism Unexpectedly Falls on Recession - (www.bloomberg.com)

Billions in Hidden Riches for Family of Chinese Leader - (www.nytimes.com)

‘Fiscal cliff’ already hampering U.S. economy, report says - (www.washingtonpost.com)

Apple Forecast Shortfall Shows Cost of Year-End Product Rush - (www.bloomberg.com)

Citi Chairman Is Said to Have Planned Chief’s Exit Over Months - (www.nytimes.com)

Friday November 9 Housing and Economic stories

TOP STORIES:

The Immeasurable Risk European Banks May Be Hiding - (www.cnbc.com) There is growing concern among policymakers and analysts that the true extent of European banks’ debt problems is being masked. Sir Mervyn King, Governor of the Bank of England, became the most high-profile policymaker to date to warn of the dangers of banks putting off foreclosures in a speech Tuesday night. His stern warning to U.K. banks that they need to drop the “pretense” that some of their bad debts will be repaid was coupled with the statement that they have “insufficient capital” to deal with losses which have remained undeclared. Essentially, what seems to have happened is that banks across the euro zone have put off foreclosures on weak businesses – a process known as forbearance. This has been enabled by low interest rates across the region and rescue packages which have injected unprecedented amounts of liquidity into the banking system and helped keep struggling economies afloat.

Spain’s Bad Bank Seen as Too Big to Work: Mortgages - (www.bloomberg.com)  Spain’s bad bank will struggle to sell the 90 billion euros ($117 billion) of toxic property assets it takes from other lenders because of its size and inability to help buyers finance purchases. “When managing tens of thousands of assets scattered across the whole of Spain, big is not beautiful, it’s sheer chaos,” said Mikel Echavarren, chairman of Irea, a Madrid-based financial adviser. A large, “clumsy” bad bank will be at a “tremendous” disadvantage and will generate losses that Spaniards will have to pay for. The country has until the end of next month to establish the institution, a condition for receiving 100 billion euros of external aid for the financial system it requested in June. Premier Mariano Rajoy’s government seeks to purge about 180 billion euros of bad assets that the Bank of Spain says are on the balance sheets of lenders. The government has said the bank will be profitable and won’t cost taxpayers.

Ford Shuts Three Plants as Europe Loss to Top $3 Billion - (www.bloomberg.com) Ford Motor Co. (F) will shut three European plants, its first factory closings in the region in a decade, and cut 5,700 jobs to stem losses that the carmaker predicts will total more than $3 billion over two years. The shutdown of two U.K. factories and a plant in Belgium will remove production capacity for 355,000 vehicles, or 18 percent of the carmaker’s total in the region, Dearborn, Michigan-based Ford said in a statement today. The moves will yield gross annual savings of $450 million to $500 million annually, it said. Ford rose after saying its third-quarter earnings will be better than the second. The carmaker is forecasting losses wider than $1.5 billion each this year and next in Europe, Chief Financial Officer Bob Shanks said on a conference call. Ford had estimated the loss this year would total more than $1 billion. The closings, more extensive than those planned or carried out by PSA Peugeot Citroen (UG), General Motors Co. (GM)’s Opel unit and Fiat SpA (F), are in response to a car-market drop that may be the worst in 19 years.

ADP changes the way it estimates new jobs - (www.cnbc.com) ADP is altering the formula used for counting how many U.S. jobs are created each month in order to better align with government data, after repeated instances in which the two reports sharply diverged. The first ADP release to include the new formula will be the October jobs report to be issued Nov. 1. The government’s official report will come out one day later. Economists and investors look at the monthly data compiled by Automatic Data Processing Inc. ADP +0.47% , the nation’s largest processor of company payrolls and the distribution of checks to employees, to glean clues on how many new jobs the government is likely to report. Yet the ADP report has often overshot the mark or undercounted the number of new jobs created when compared to the official U.S. report issued by the Bureau of Labor Statistics.

France’s Quiet Bank Rescues Top $78 Billion With Peugeot - (www.bloomberg.com) France’s aid to PSA Peugeot Citroen SA (UG)’s troubled finance arm brings the state’s backing for the nation’s banks to more than 60 billion euros ($78 billion). The government yesterday said it will guarantee 7 billion euros in new bonds by Banque PSA Finance, the consumer-finance unit of Europe’s second-largest carmaker. The aid comes on top of support for Dexia SA (DEXB), the French-Belgian municipal lender, and for home-loans company Credit Immobilier de France.  “These bank rescues on the quiet should be getting more critical market attention,” said Bill Blain, a strategist at Mint Partners Ltd. in London. “We don’t know what’s next, but it certainly demonstrates that some of the specialized financial institutions remain very, very weak.”

OTHER STORIES:

Spain speeds up 2013 funding, will cover regional needs - (www.reuters.com)

Brazil’s Gold Reserves Rise For First Time Since 2008 - (www.bloomberg.com)

Europe’s Crisis Creeps North as Schneider, Daimler Cut Targets - (www.bloomberg.com)

China factories eye stronger fourth quarter, external risks remain - (www.reuters.com)

U.K. Economy Surges 1% as Britain Exits Recession - (www.bloomberg.com)

Orders for U.S. Capital Goods Stagnate Spending Slumps - (www.bloomberg.com)

Jobless Claims in U.S. Show Limited Labor Market Progress - (www.bloomberg.com)

Analysis: Americans to face tougher 2013 on rising prices, taxes - (www.reuters.com)

Firings Highest Since 2010 as Ford to Dow Face Slump - (www.bloomberg.com)

Fed Pledges to Maintain Stimulus - (www.nytimes.com)

Government crusade against mortgage lenders - (www.washingtonpost.com)

Thursday November 8 Housing and Economic stories

TOP STORIES:

US sues BofA for $1bn over home loans - (www.ft.com) The US Department of Justice sued Bank of America for more than $1bn on Wednesday, alleging the bank committed civil fraud by selling defective home loans to US government-backed mortgage companies. The lawsuit said that Countrywide, the California-based mortgage originator that BofA bought in 2008, implemented a process called the “Hustle” to deal with loans at high speed without checking their quality. Thousands of loans were then sold to Fannie Mae and Freddie Mac, which guarantee most US mortgages, and later defaulted, the Justice Department’s lawsuit claims. “As described, Countrywide and Bank of America systematically removed every check in favour of its own balance – they cast aside underwriters, eliminated quality controls, incentivised unqualified personnel to cut corners, and concealed the resulting defects,” said Preet Bharara, US attorney for the southern district of New York. “These toxic products were then sold to the government sponsored enterprises as good loans.”

Robin Hood tax gains traction in Europe - (money.cnn.com) Supporters say the controversial move will raise billions of euros, by applying a small tax on transactions in financial markets. Robin Hood may not have roamed Sherwood Forest for hundreds of years, but fans of his "steal from the rich, give to the poor" ethos appear to have made inroads into European tax policy. The European Union's executive body said Tuesday that 10 members of the 27-nation group had agreed to move forward with a Financial Transaction Tax, also known as the Robin Hood tax. Supporters say the controversial move will raise billions of euros for cash-strapped governments by applying a small tax on transactions in financial markets. But critics say imposing the tax will drive investors away and act as a break on economic growth. Nobel Prize wining economist James Tobin first proposed taxing transactions in the foreign exchange market in the 1970s to limit volatility and curb speculation. The idea of taxing financial transactions more broadly really started to gain ground earlier this year, when former French President Nicolas Sarkozy began touting it as a way out of Europe's financial crisis.

Cheap Natural Gas Gives New Hope to the Rust Belt - (online.wsj.com) Three decades after being devastated by the closing of steel mills, this gritty river valley is hoping its revival will come from cheap natural gas. The hope doesn't rest on drilling rigs, but on a multibillion-dollar chemical plant that Royal Dutch Shell RDSB.LN +0.78% PLC is considering building here because of a flood of domestically produced natural gas. Community leaders are touting the plant as the first step toward reviving a manufacturing industry many thought was gone for good. "I never would have expected that as a region we'd have a second chance to be a real leader in American manufacturing," Bill Flanagan of the Allegheny Conference on Community Development, a regional business group, told a crowd of locals who came to hear about the chemical plant. "Suddenly we're back in the game." It isn't just Beaver County reaping the benefits of cheap gas. Plunging prices have turned the U.S. into one of the most profitable places in the world to make chemicals and fertilizer, industries that use gas as both a feedstock and an energy source. And they have slashed costs for makers of energy-intensive products such as aluminum, steel and glass.

Zynga doing layoffs, closing studios; Seattle intact - (www.seattletimes.com) Struggling social games giant Zynga is announcing sweeping layoffs and studio closures but it appears the company's engineering office in Seattle was largely spared. Word of the layoffs surfaced earlier and was confirmed in an internal memo to employees from founder Mark Pincus.  The memo said the company is cutting 5 percent of its full-time workers and closing its studio in Boston. That would be around 160 of its roughly 3,200 positions. Also proposed is the closure of studios in Japan and the United Kingdom. The company is phasing out 13 older games and cutting back investment in The Ville, leading to layoffs at its Austin, Texas, studio. Zynga's Seattle office is relatively safe because it's working on new game genres such as arcade titles, not the older franchises that are being trimmed back. Zynga opened the Seattle office in Pioneer Square last year and now has about 60 employees here. It was planning to expand the office, at least before the company lost some of its momentum. Facebook's earnings report confirmed the slide, disclosing that its revenue from Zynga were down 20 percent.

Eurozone debt hits 90 percent of its economy - (finance.yahoo.com) In spite of years of harsh spending cuts and tax increases, Europe's debt problems are getting worse. Figures from the EU's statistics office Wednesday showed that, at the end of the second quarter, the total government debt of the 17 countries that use the single currency was worth 90 percent of the group's total economic output for the year — the highest level since the euro was launched in 1999. The rise from the previous quarter's debt to gross domestic product ratio of 88.2 percent, and the previous year's equivalent of 87.1 percent, is a result of the eurozone's economic problems — which are making it harder for countries to handle their debts.

OTHER STORIES:

Euro-Area Recession Deepens as Manufacturing Shrinks: Economy - (www.bloomberg.com)

Draghi Defends Bond Purchases With Warning of Deflation Risk - (www.bloomberg.com)

Euro-Area Services, Manufacturing Shrink More Than Forecast - (www.bloomberg.com)

China Industry Gauge Rises as Easing Prospects Abate - (www.bloomberg.com)

Draghi Takes Pitch Into Lion’s Den as German Faith Wavers - (www.bloomberg.com)

BoE ready for stimulus if positive signs from UK economy fade - King - (www.reuters.com)

October PMIs suggest euro zone downturn deepening - (www.reuters.com)

German Ifo Business Confidence Unexpectedly Fell in October - (www.bloomberg.com)

U.S. Home Prices Rose 0.7% in August From July, FHFA Says - (www.bloomberg.com)

Bernanke Seen Attacking Jobless Rate With QE Until His Term Ends - (www.reuters.com)

Wednesday November 7 Housing and Economic stories

TOP STORIES:

B of A sues 28 Nevada HOAs, collection agencies in lien dispute - (www.vegasinc.com) Bank of America is suing 28 Nevada homeowner associations and their collection agencies in the continuing dispute over charges that HOAs have been hitting homeowners and buyers of foreclosed homes with inflated bills for past-due assessments and collection costs. The bank filed suit Tuesday in Clark County District Court charging that state law limits the ''super-priority" first-position liens that HOAs can place against homes to an amount equal to nine months of HOA assessments -- but that the HOAs are "improperly'' filing liens demanding payment of attorney's fees and collection costs on top of that. These liens typically cover unpaid HOA assessments that accumulate while homes in foreclosure sit vacant, as well as costs to collect those unpaid bills. Charges that the HOAs and their bill collectors have been inflating the liens are pending in numerous lawsuits, with many attorneys expecting the Nevada Supreme Court or the Legislature to ultimately decide what limits should be placed on the liens.

Corzine, banks push to end MF Global fraud lawsuit - (finance.yahoo.com) Jon Corzine's lawyers say allegations that he fraudulently ran MF Global Holdings Ltd (Other OTC:MFGLQ -News) make "no sense" and that a lawsuit seeking to hold him and others responsible for the futures brokerage's bankruptcy must be thrown out. Corzine, former colleagues and several banks, including JPMorgan Chase & Co (NYSE:JPM - News) and Goldman Sachs Group Inc (NYSE:GS - News), filed papers on Friday night to dismiss investor litigation over MF Global's collapse. The company's October 31, 2011, bankruptcy was Wall Street's biggest meltdown since 2008. Plaintiffs led by the Virginia Retirement System and the province of Alberta, Canada, have accused MF Global in the U.S. District Court in Manhattan of inflating its ability to manage risk, obscuring risks from a big bet on European sovereign debt and improperly accounting for deferred tax assets.

Spain’s Vicious Circle Worsens as Regions Downgraded - (www.cnbc.com) With Spain looking increasingly likely to miss this year’s deficit target, credit rating downgrades for several of its regions, and its borrowing costs showing an uptick things aren’t getting any better for the country, with one analyst telling CNBC that the country is caught in a “vicious circle”. Spanish newspaper El Confidencial reported on Tuesday that the central bank had written to the European Union explaining that Spain’s government is due to miss its deficit forecast for this year, which currently stands at 6.3 percent of gross domestic product (GDP). The Spanish economy also contracted in the third quarter by 1.7 percent year-on-year the government reported on Tuesday, compared with a 1.3 percent contraction in the second quarter. “Spain is trapped in a vicious circle”, Nicholas Spiro, Managing Director at Spiro Sovereign Strategy told CNBC.com.

DuPont to Cut 1,500 Jobs as Earnings Miss Estimates - (www.cnbc.com) DuPont reported quarterly earnings and revenue on Tuesday that fell short of analysts' expectations. The chemical maker also said it is cutting 1,500 jobs, or about 2 percent of its 70,000 workers, and said it plans to take further steps to increase competitiveness. The job cuts by the company, which also makes Kevlar bulletproof fiber and Corian countertops, marks one of the more extreme reactions to slipping demand and global economic uncertainty so far in this earnings season.

Moody's downgrades five regions in Spain - (www.telegraph.co.uk) US and European markets have fallen as earnings from a host of of large multinational companies were worse than expected and Moody's downgrade of five regions in Spain triggered concerns about the slowing global economy. The move today has almost completely wiped out the gains that have been built up over the last week or so and are a stark reminder that markets can have a nasty way of reversing their course and quickly. It has also dawned on investors that the good results in the regional Spanish elections for prime minister Rajoy mean that he may not request a bailout as soon as many had hoped, something that had under pinned the recent gains in stock markets. With several failed attempts at getting above and beyond the near term resistance the bulls’ ability to maintain upward momentum is being called into question.

OTHER STORIES:

65% of housing markets worse than before the bust - (www.washingtonpost.com)

Japan Exports Tumble 10% - (www.bloomberg.com)

Greece Austerity Diet Risks 1930s-Style Depression - (www.bloomberg.com)

Earnings Cliff Ahead? Profit Outlooks Are 90% Negative - (www.cnbc.com)

If U.S. goes over fiscal cliff, dollar could fly - (www.reuters.com)

Wall Street Week Ahead: Investors face earnings blitz with dread - (www.reuters.com)

Stock market plunges amid mediocre earnings  - (www.washingtonpost.com)

Tuesday November 6 Housing and Economic stories

TOP STORIES:

Worst Carry Trades Show Central Banks Reaching Stimulus Limits - (www.bloomberg.com) The $4 trillion-a-day foreign- exchange market is losing confidence in central banks’ abilities to boost a struggling world economy.

Rather than sparking bets on growth, the JPMorgan Chase & Co. G7 Volatility Index (MXWD), which doubled in 2008 before policy makers employed extraordinary measures to address faltering global expansion, has dropped to a five-year low. While small foreign-exchange swings historically favor the strategy of borrowing in low-yielding currencies to buy those with higher returns, a UBS AG index that tracks profits from the so-called carry trade has fallen to the lowest level since 2011.

Germany Grumbles as UK Waffles on EU Integration - (www.cnbc.com) Until recently, German officials tended to down play divisions with Britain when pressed about its semi-detached stance on Europe. Not any more. Now they tend to make their irritation plain. "If someone wants to leave, you can't stop them," said one senior German official, summing up a view in Berlin that the door is open if Britain really wants to quit the European Union. While Angela Merkel has largely overcome Eurosceptic qualms on the fringes of her center-right coalition, Britain's David Cameron — never a committed European in Berlin's view — appears to be bowing to the isolationist instincts of the bulk of his Conservative lawmakers.

Greece's Extreme Right Strengthens as Economy Sinks - (www.cnbc.com) Ali Rahimi was enjoying a warm Greek evening, chatting away with two friends, when a mob of 15 people approached and asked where they were from. "I told them that I am from Afghanistan and they said that it is time for me to go back to my country," the 28-year-old asylum-seeker told NBC News. Rahimi attempted to run away but was cornered, beaten, hit over the head with a bottle and stabbed in the chest and back by three assailants in the entryway of his Athens apartment building. "When police arrived they called an ambulance, but then told me that they could not help me any further and left," Rahimi recalled, explaining how he only realized how serious his injuries were after spotting blood running out from under his T-shirt during the brutal attack on Sept. 17, 2011.

GE, McDonald's give Wall Street a black eye on '87 crash date  - (www.reuters.com) Stocks ended the week on Friday with their worst day since late June after Dowcomponents General Electric and McDonald's, both barometers of the overall economy's health, added to a disappointing earnings season. Technology shares kept up a pattern of recent weakness, hurt by anemic results from Microsoft (MSFT.O) and another losing day for Google (GOOG.O). The Nasdaq closed down 2.2 percent. For the Dow, Friday's slide marked its biggest loss since June 21 - with the sell-off coming on the 25th anniversary of Black Monday, when the Dow plunged 22.6 percent in its worst single-day percentage drop ever.

OBAMA'S ENERGY RECORD - (money.cnn.com) Of the 63 firms that got significant government funding, five have gone bankrupt.  President Obama is getting hammered for funding renewable energy companies that have since gone belly up. During the first presidential debate, Mitt Romney said half of the companies Obama funded in the first two years through the program that supported Solyndra went bankrupt. That is true, in terms of that specific program, for just those two years. But a spokesman for the Energy Department said that agency has dozens of programs that funded over 1,300 companies in the renewable energy space, and that less than 1% have gone bankrupt -- also true. So just how many federally-funded energy companies have failed? A total of five have gone bankrupt, according to the House Committee on Energy and Commerce. All of the failed companies that the Committee identified came from just two programs that received the most significant dollar amounts from the Department of Energy. 

OTHER STORIES:

Bernanke Sedates Bond Traders Seeing Treasuries Added to QE3 - (www.bloomberg.com)

Norway Corporate Bond Sales Set to Top 2007 Peak: Nordic Credit - (www.bloomberg.com)

Asset-Backed Securities May Face Tougher Oversight in Basel Plan - (www.bloomberg.com)

EU faces two tough months of bargaining to boost euro confidence - (www.reuters.com)

Japan Exports Fall at Fastest Pace Since Post-Earthquake Slump- (www.bloomberg.com)

China leftists urge parliament not to expel Bo Xilai - (www.reuters.com)

ECB's Asmussen Backs Idea for EU Finance Czar - (www.reuters.com)

German Economy to Slow Significantly in 4th Quarter -Finance Ministry - (online.wsj.com)

Monday November 5 Housing and Economic stories

TOP STORIES:

Mortgage Settlement: Half Of Money Siphoned Off By Cash-Hungry States - (www.huffingtonpost.com)  After a bruising year-long battle with banks that resulted in a $25 billion mortgage settlement, the state attorneys general who led the negotiations could be excused for thinking the hard part was over. But in the months after that deal was reached, many found themselves confronted by a new challenge: fighting with lawmakers who want to siphon off money earmarked for homeowner aid for other uses. A report released Thursday by Enterprise Community Partners, a housing nonprofit, offers the clearest indication yet that the state attorneys general -- and by extension, struggling homeowners -- are losing the fight against those with sticky fingers. States have diverted more than half of the money allocated for mortgage relief, $988 million so far, to pet projects and other initiatives, according to the report.

Cost of Four Euro Exits? $22 Trillion - (www.cnbc.com) A Greek departure from the euro currency, followed by other southern European countries, would cut 17 trillion euros ($22 trillion) from global economic growth, causing a worldwide recession hitting the U.S. and China, a study by a German think tank has found. Commissioned by the Bertelsmann foundation, the study by Prognos looks at four scenarios in which Greece defaults on its debts as creditor nations grow tired of providing financial aid to other euro zone countries.

Google's Miss Highlights Big Worry on Wall Street - (www.cnbc.com) Google's stunning earnings disappointment on Thursday is a dramatic example of what has become Wall Street's latest worry: revenue is coming in much worse than anyone thought. Overall this earnings season, third-quarter profits have managed to be a shade better than the doom-and-gloom forecasts. But company top lines—or the revenue generated that should be driving those bottom-line profit beats—have been even worse this quarter than they were last.

Former GE execs get prison for bid-rigging - (money.cnn.com) A trio of former financial executives from General Electric are headed to prison after being found guilty of defrauding taxpayers in the municipal bond market.

The men are the first to be sentenced as part of the government's ongoing investigation of bid-rigging in auctions for the investment of municipal bond proceeds by some of Wall Street's biggest firms. The probe has yielded 20 indictments so far, with defendants coming from institutions including Bank of America (BAC, Fortune 500), JPMorgan (JPM, Fortune 500) andUBS (UBS). The three men sentenced Thursday formerly worked at General Electric's(GE, Fortune 500) GE Capital unit, where prosecutors say they colluded with counterparts at other firms to rip off bond issuers. Two men -- Dominick Carollo and Peter Grimm -- received three years in prison, while the third, Steven Goldberg, got four years.

Germany Takes Hard Line on Spanish Banks - (online.wsj.com) Germany's Merkel insisted the bailout fund can't be used retroactively, meaning Spain's already-heavy debt load could swell further. German Chancellor Angela Merkel took a hard line on Spain Friday, saying that Madrid will have to keep on its own balance sheet the tens of billions of dollars it is about to inject into its banks and won't be able to transfer them to the euro-zone bailout fund. That position, laid out after a two-day summit of European Union leaders in Brussels, would mean that Spanish borrowing from the euro zone to bolster the capital of shaky banks—estimated to be as much as €60 billion ($78.72 billion)—will swell the country's already-heavy debt load. Germany's stance appeared to dash hopes, fostered by the leaders at a summit in June, that the government's capital injections into the banks could later be transferred to the bailout fund once an effective euro-wide bank supervisor is in place, something that is now slated for 2013. The position could hurt the Spanish government's ability to fund itself on the market, just as interest rates on its bonds have dropped to multi-month lows.

OTHER STORIES:

A Computer Lesson Still Unlearned - (www.nytimes.com)

The hidden indicator pointing to bad news for jobs - (www.washingtonpost.com)

Spain Banks Face More Pain as Worst-Case Scenario Turns Real - (www.bloomberg.com)

Sales stumbles raise fresh worry for corporate America - (www.reuters.com)

Jobless claims snap back up - (money.cnn.com)

Friday November 2 Housing and Economic stories

TOP STORIES:

Foreclosure bus tours - (www.sfgate.com) The large number of bank-owned properties nationwide has popularized a new kind of real estate tour: the foreclosure bus. A recent Chicago Tribune article described a tour where shoppers were helped along not just by agents but by an attorney and banker who specialize in foreclosures, and by day’s end, the would-be landlords, flippers and homeowners had put in several bids. A Chronicle article from a few years back said one tour guide even incorporates entertainment and a luxury bus. In the Bay Area, Hastings Reality Group, for one, drives Saturday foreclosure buses through San Francisco, San Mateo, Alameda, Contra Costa and Santa Clara counties. Here are some of the bank-owned properties you might view if you board Hastings’ Bay Area Foreclosure Bus:

Merkel, Hollande clash on EU budget czar before summit - (www.reuters.com)  Germany and France, Europe's two central powers, clashed over greater European Union control of national budgets and moves towards a single banking supervisor before a summit of the bloc's leaders began on Thursday. German Chancellor Angela Merkel demanded stronger authority for the executive European Commission to veto national budgets that breach EU rules, but French President Francois Hollande said the issue was not on the summit agenda and the priority was to get moving on a European banking union.

Spain Banks Face More Pain as Worst-Case Scenario Turns Real - (www.bloomberg.com) Spain’s banks face more loan losses as the pace of an economic slump risks turning a worst-case scenario dismissed in stress tests into reality. Bad loans as a proportion of total lending jumped to a record 10.5 percent in August from a restated 10.1 percent in July as 9.3 billion euros ($12.2 billion) of loans were newly classified as being in default, according to data published by the Bank of Spain on its website today. The ratio has climbed for 17 straight months from 0.72 percent in December 2006, before Spain’s property boom turned to bust. Spanish bank stress tests by management consultants Oliver Wyman have factored in an economic contraction totaling 6.5 percent from 2012 to 2014 in an adverse scenario that the government and Bank of Spain said has a probability of about 1 percent. Analysts at Nomura and Citigroup Inc. disagree, saying spending cuts and economic conditions mean the worst-case outcome already looks feasible.

Greeks go on strike over austerity as EU meets - (www.reuters.com) Greek police clashed with anti-austerity protesters hurling stones and petrol bombs on the day of a general strike that brought much of the near-bankrupt country to a standstill. In the second major walkout in three weeks on Thursday, almost 40,000 protesters marched in Athens in a bid to show EU leaders meeting in Brussels that new wage and pension cuts will only worsen their plight after five years of recession. Tensions mounted when a small group of protesters began throwing pieces of marble, bottles and petrol bombs at police barricading part of the square in front of parliament, prompting riot police to fire several rounds of teargas to disperse them.

CMBS Faces Risk of ‘Disruptive Shocks' Regulators Told - (www.bloomberg.com) Commercial mortgage-backed securities have more risk than last year as landlords need to repay maturing debt and vacancies remain elevated, according to an analysis prepared for insurance regulators. “Downside risk for CMBS relative to last year’s assumptions has clearly increased,” according to a report for the National Association of Insurance Commissioners posted on the group’s website. The market is “proving itself subject to highly disruptive shocks” and has less time to deal with the coming wave of loan maturities, consultants and NAIC staff said in the report. Regulators are scrutinizing bonds held by insurers as they evaluate whether the companies will have enough funds for policyholder obligations in an economic slump. The report, dated Oct. 16, was sent to Kevin Fry, chairman of the NAIC’s task force for valuation of securities. State regulators can demand insurers hold more funds against assets deemed risky.

OTHER STORIES:

EU seeks way to involve non-euro states in banking union - (www.reuters.com)

U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says - (www.bloomberg.com)

EU summit to tackle banking union; Spain on watch - (www.reuters.com)

EU Tussle Over Costs Threatens to Derail Bank Union Plan - (www.bloomberg.com)

On Crisis Anniversary, Athens Tear Gas Defies Merkel’s Stability - (www.bloomberg.com)

China Shows Pickup Signs After Seven-Quarter Slowdown: Economy - (www.bloomberg.com)

Merkel Proposes EU Aid Fund in Rejection of Move to Debt Sharing - (www.bloomberg.com)

EU Summit Highlights Financial Divide - (online.wsj.com)

China Reports Slower Growth in 3rd Quarter but Sees Signs of a Possible Revival - (www.nytimes.com)

Global Economy: When China sneezes - (www.ft.com)

U.S. Jobless Claims Rise 46,000 on Seasonal Shift - (www.bloomberg.com)

Manufacturing in Philadelphia Area Grows More Than Forecast - (www.bloomberg.com)

FOMC Straying on Price Target, Former Fed Officials Say - (www.bloomberg.com)

Lumber Mills Trail Rebound in U.S. as Beetles Bite: Commodities - (www.bloomberg.com)