Tuesday February 12 Housing and Economic stories

TOP STORIES:

Squatting in style: 23-year-old occupies empty $2.5 million Boca home - (www.orlandosentinel.com)  Andre Barbosa is squatting in style. The 23-year-old has moved into an empty $2.5 million mansion in a posh Boca Raton neighborhood, using an obscure Florida real estate law to stake his claim on the foreclosed waterside property. The police can't move him. No one saw him breaking into the 5-bedroom house, so it's a civil matter. And representatives for the real owner, Bank of America, said they are aware of the situation and are following a legal process. But the situation is driving his wealthy neighbors crazy. "This is a very upsetting thing," said next door neighbor Lyn Houston. "Last week, I went to the Bank of America and asked to see the person in charge of mortgages. I told them, 'I am prepared to buy this house.' They haven't even called me back." Barbosa, according to records, is a Brazilian national who refers to himself as "Loki Boy," presumably after the Norse god of mischief. He did not return calls. Someone with his name has been boasting about his new home on Facebook, even calling it Templo de Kamisamar.

France's richest man moves to Belgium to avoid new socialist super-tax - (www.dailymail.co.uk) The richest man in France has officially transferred his multi-billion pound fortune out of his homeland to Belgium. Bernard Arnault, head of luxury goods group LVMH, insists he has moved his assets for ‘family inheritance reasons’. But others are convinced that the 63-year-old has joined other tycoons and celebrities in wanting to avoid taxes – including a 75 per cent top rate on income – introduced by Socialist President Francois Hollande. Mr Arnault applied for a Belgian passport soon after the Socialists won elections last year. Mr Arnault, who owns numerous homes around the world including one in London, applied for a Belgian passport soon after Mr Hollande’s Socialists won presidential and parliamentary elections last year.  Critics immediately attacked him for leaving the country that is associated with all the brands which made his fortune - including Louis Vuitton, Christian Dior, Guerlain, Moet & Chandon champagne and Hennessy cognac.

Fed Pushes Into ‘Uncharted Territory’ With Record Assets - (www.bloomberg.com) Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8 percent unemployment. The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month. “We’re in uncharted territory,” said Julia Coronado, chief economist for North America at BNP Paribas SA in New York, and a former Fed economist. Even as “the easy money will flow through financial markets and into the real economy at some point and lift us to a better growth trajectory,” the U.S. faces “a lot of risks,” she said.

Credit Bubble Seen in Davos as Cohn Warns of Repricing - (www.bloomberg.com) Goldman Sachs Group Inc. (GS) President Gary Cohn warned of a potential drop in fixed-income prices as bankers and policy makers in Davos celebrated surging demand for financial assets. Debt markets that have seen junk-bond yields drop to record lows may face a “substantial repricing” if interest rates spike or investors begin pulling money out of fixed income, Cohn, 52, said in an interview yesterday with Bloomberg Television’s Erik Schatzker at the World Economic Forum in Davos, Switzerland. The Spanish government attracted record demand for its 7 billion-euro ($9.4 billion) sale of 10-year bonds this week and Portugal sold five-year debt for the first time in two years. TheStandard & Poor’s 500 Index (SPX) topped 1,500 yesterday for the first time since 2007.

Monti Says Monte Paschi Bailout Hinges on Bank of Italy - (www.bloomberg.com) Banca Monte dei Paschi di Siena SpA’s 3.9 billion-euro ($5.2 billion) government bailout may face a delay after Prime Minister Mario Monti called for a further review of the bank’s accounts. Monti said the Bank of Italy will take another look at the bank’s books after the company disclosed this week it may face more than 700 million euros of losses related to structured finance transactions hidden from regulators. Monte Paschi shareholders are voting on a capital increase today to pave the way for the emergency government loans.  “The subscriptions of those financial tools hasn’t happened yet, among other reasons because the needed conditions for the operation to be completed haven’t been met yet,” Monti, 69, said at a press conference in Davos, Switzerland, yesterday. Monti announced the increased oversight as he tries to limit the political fallout from Monte Paschi (BMPS) on his bid for a second term in elections next month. Former Prime Minister Silvio Berlusconi has stepped up attacks against Monti for the state-aid plan and frontrunner Democratic Party Leader Pier Luigi Bersani for his party’s ties to the bank.

OTHER STORIES:

ECB Says Banks to Repay More Than Forecast of 3-Year Loan - (www.bloomberg.com)

Obama nominates Mary Jo White as SEC chair - (www.washingtonpost.com)

Crisis questions linger as Geithner exits public stage - (www.reuters.com)

ECB to Give First Indication of Three-Year Loan Repayment - (www.bloomberg.com)

Apple Growth Slowdown Fuels Concern of Value-Stock Shift - (www.bloomberg.com)

Fears over ECB longer-term funding scheme - (www.ft.com)

Italy's Monti steps into Monte Paschi scandal - (www.reuters.com)

China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad - (www.bloomberg.com)

Draghi Says Jury Still Out on Whether Euro Economy Will Improve - (www.bloomberg.com)

U.K. Economy Shrinks More Than Forecast - (www.bloomberg.com)

Japan CPI Fall Shows Challenge For BOJ Price Target - (www.bloomberg.com)

Chinese Graduates Say No Thanks to Factory Jobs - (www.nytimes.com)

Geithner Exits Treasury as Lew Prepares for Senate Vote - (www.bloomberg.com)

Monday February 11 Housing and Economic stories

TOP STORIES:

Lenders will target near-equity squatters for future foreclosures - (www.ochousingnews.com) Banks are letting delinquent borrowers squat rather than foreclosing on them and booting them out. At first, it was a self-preservation measure by the banks taken out of desperation when the first wave of foreclosures caused prices to crash. However, now the banks are content to allow squatting, even for years, because squatters do not become MLS supply weighing down prices. The houses occupied by squatters are effectively removed from the market creating an artificial shortage. The lack of MLS homes for sale and high affordability is causing prices to rise, and as prices go up, banks have collateral backing on their bad loans. Rising prices due to rampant delinquent mortgage squatting creates an unusual set of circumstances for lenders. When prices were falling, banks chose to foreclose on the least desirable properties and a random mix of nicer properties. The random selection of properties was intended to frighten underwater borrowers who were still paying their mortgages into continued payment. This terrorist tactic is the only real option they had short of widespread foreclosure processing. However, now that prices are going up, they have a new option. They can foreclose on underwater squatters as they hit the surface.

Growing numbers of Valley residents want walkable neighborhoods - (www.centralvalleybusinesstimes.com) If a study released Wednesday by a nonprofit that promotes in-fill development pans out, living in the eight counties of the San Joaquin could look surprisingly different by mid-century. The Council of Infill Builders is forecasting housing demand through 2050 that shows that the San Joaquin Valley will need significantly more walkable homes in cities and towns to meet future demand. The new data come as the California Air Resources Board sets to meet in Bakersfield on Thursday, to address how the eight counties from Kern in the south to San Joaquin in the north, are coordinating their land use and transportation policies and adapting to serve the region’s changing population and market forces.

Wells Fargo sued by German agency for $160 million in CDO losses - (www.reuters.com) Wells Fargo Bank, N.A. was sued Wednesday by a German government agency that accused it of mismanaging a collateralized debt obligation, resulting in more than $160 million in losses. Wells Fargo and Collineo Asset Management GMBH, a German financial services company, allowed investments of overly risky assets not permitted under the contracts governing House of Europe Funding I Ltd, a Cayman Islands CDO issuer, according to the lawsuit filed in Manhattan federal court.

Moody's warns European banks need more cash - (www.reuters.com) Banks in Spain, Italy, Ireland and Britain need to set aside much more money to cover potentially bad loans, credit ratings agency Moody's said on Thursday, meaning European taxpayers may again be tapped for cash. European banks have already raised hundreds of billions of euros to cover possible losses from loans that soured in property and financial market crises. Much of the funding has come from governments. "We believe that many banks, in particular in Spain, Italy, Ireland, and the UK, require material amounts of additional provisions to fully clean up their balance sheets," Moody's said in its global banking outlook for 2013.

Investors grow cagey as Italy election nears - (www.reuters.com)  As Silvio Berlusconi's pre-election media blitz intensifies, so do fears of a costly detour from Italy's road back to economic strength. Yields on short-term Italian debt, which have fallen sharply, are creeping up again, reflecting concerns that the billionaire tycoon, who lost power at the peak of Italy's fiscal woes in 2011, could have a big influence on the election outcome. Some overseas investors are selling up now, rather than waiting to find out.

OTHER STORIES:

Merkel worried about currency manipulation, Japan - (www.reuters.com)

Rising bad loans signal more pain for Spanish banks- (www.reuters.com)

Analysis: U.S. bond stars bet big on equities revival - (www.reuters.com)

Yen at 100 Per Dollar Endorsed by Japan Official Nishimura - (www.bloomberg.com)

Moody’s, S&P Stay Cautious Amid Budget Battle - (online.wsj.com)

Derivatives trading volumes fall in 2012 - (www.ft.com)

Euro-Area Services, Manufacturing Slump Eases in January - (www.bloomberg.com)

Japan Export Slide Bolsters Abe’s Case for Driving Down Yen - (www.bloomberg.com)

Spanish Jobless Rate Hits Record After Rajoy’s First Year - (www.bloomberg.com)

Bernanke Seen Pressing On With Stimulus Amid Debate on QE - (www.bloomberg.com)

Still no timetable for returning Boeing 787 to flight - (www.reuters.com)

Friday February 8 Housing and Economic stories

TOP STORIES:

Spain’s Lost Generation Spends Its Salad Days Toiling in Britain - (www.bloomberg.com) Carlos Hernandez Sonseca studied six years for a bachelor’s degree and couldn’t find a job near his home outside Madrid when he graduated in 2011. Last year, he took an increasingly well-worn path to the U.K. The 27-year-old journalist now washes and chops vegetables eight hours a day at the Vital Ingredient salad bar in London’s financial district, making 260 pounds ($418) before taxes in a 40-hour week. Thirteen other Spaniards are among a workforce of 17, said manager Francisco “Chico” Baumle, a Brazilian. U.K. fast-food jobs and other low-wage roles have been dominated by Poles and others who arrived after the European Union expanded eastward in 2004. Now they’re joined by young Spaniards who can’t find work at home, where unemployment hit 25 percent last year. In the financial year to April, 30,370 Spaniards registered to work in the U.K., up 25 percent from the previous year, and more than double the 2009-10 levels, according to data from the Department for Work and Pensions.

U.S. Bank Deposits Drop Most Since 9/11 Terror Attacks - (www.bloomberg.com) Clients of the largest U.S. banks withdrew funds this month at the fastest weekly pace since the Sept. 11 attacks as a deposit-insurance program ended and customers tapped into their year-end cash hoards. Net withdrawals at the 25 largest U.S. lenders totaled $114.1 billion in the week ended Jan. 9, pushing deposits down to $5.37 trillion, according to Federal Reserve data released last week. The magnitude of the drop was second only to the decline after the Sept. 11, 2001 terrorist attacks, according to Jason Goldberg, a New York-based analyst at Barclays Plc. Customers may be moving money no longer insured by the U.S., drawing down year-end balances and investing in advancing equity markets. A Federal Deposit Insurance Corp. backstop, the Transaction Account Guarantee program, ended last month, prompting some analysts, investors and trade organizations to predict it could drive funds from the banking system.

One man's mortgage debt is an entire neighborhood's equity - (www.ochousingnews.com) To facilitate reflation of the housing bubble, the federal reserve lowered interest rates to zero, and embarked on a program of buying 10-year Treasuries (operation Twist) and directly buying mortgage-backed securities to ensure the flow of capital into the housing market and dramatically lower mortgage interest rates. At the peak of the housing bubble, mortgage interest rates were between 6% and 6.5%. They are 3.35% today — a near 50% reduction. These super-low interest rates give today’s buyers the ability to borrow amounts commensurate with peak prices under stable loan terms. The stage was set to reflate the bubble and allow lenders to foreclose and recover capital at peak prices. There was only one problem. Due to the collapse of prices when the housing bubble burst, comparable sales were far below peak prices, and continued foreclosure processing was keeping prices down. The solution was simple; stop foreclosure processing and restrict inventory until the housing bubble reflates. That’s where we are today.

Dish to close 300 Blockbuster stores, 3,000 jobs may be lost - (www.reuters.com) Dish Network Corp plans to close 300 Blockbuster stores in the United States in the coming weeks and could lay off as many as 3,000 employees, a move that comes days after the DVD rental firm's UK unit went into administration. Dish is trying to shed unprofitable Blockbuster outlets as online retailers like Amazon.Com Inc and download sites like Apple Inc's iTunes eat away at Blockbuster's business model. The potential job cuts represent about 40 percent of Blockbuster's U.S. workforce of 7,300 people. "We continue to see value in the Blockbuster brand and we will continue to analyze store-level profitability and, as we have in the past, close unprofitable stores," Dish said in a statement. The company did not disclose the locations of the store closings.

Monte Paschi Hid Documents on Deals, Bank of Italy Says - (www.bloomberg.com) Banca Monte dei Paschi di Siena SpA, the Italian bank seeking a second state bailout in four years, hid documents from regulators on financial transactions that may prompt the lender to restate profit. “The nature of some transactions involving Monte dei Paschi di Siena reported by the press has been disclosed only recently after hidden documents were found by new executives,” the Bank of Italy said in an e-mailed statement today. “The transactions are now being reviewed by the central bank’s oversight division as well as judicial authorities.” Monte Paschi said on Jan. 17 it will review its accounts after Bloomberg News reported the lender engaged in a derivative with Deutsche Bank AG (DBK) in 2008, dubbed “Project Santorini,” that obscured losses before it sought a government bailout the next year. The Siena-based bank said in a statement today it’s reviewing three money-losing derivative deals, dubbed Santorini, Alexandria and Nota Italia, which led to losses for the bank.

OTHER STORIES:

Dimon Praises Policy as Weber Opposes ‘Short-Term Fixes’ - (www.bloomberg.com)

Euro zone's debt stabilizes as north-south split emerges - (www.reuters.com)

Banks Too Big to Manage Find Davos Vows Too Hard to Win - (www.bloomberg.com)

Japan’s Bond-Buying Plan Quickly Meets Criticism - (www.nytimes.com)

Shirakawa Leaves Onus on Abe for Stimulus as Action Deferred - (www.bloomberg.com)

Spanish economy sinks deeper into recession - (finance.yahoo.com)

Economists slash growth forecasts for Asian economies in 2013 - (www.bloomberg.com)

Reluctant BoJ given deflation-beating role - (www.ft.com)

U.S. Home Prices Rose 5.6% in 12 Months Through November - (www.bloomberg.com)

U.S. MBA Mortgage Applications Index Increased 7% Last Week - (www.bloomberg.com)

Samsung Tops Apple as Biggest Chip Buyer, Gartner Says - (www.bloomberg.com)

Ryan Says Republican Goal Is ‘Big Down Payment’ on Debt - (www.bloomberg.com)

Obama ‘will not oppose’ House GOP plan to suspend debt limit until May - (www.washingtonpost.com)

Thursday February 7 Housing and Economic stories

TOP STORIES:

Fed's 2007 crisis response: Hope and Twinkies - (www.washingtonpost.com) During the Aug. 16 videoconference, when the Fed elected to cut the discount rate for bank lending, Richmond Fed President Jeffrey Lacker suggested that Timothy Geithner, then the New York Fed president, may have allowed word of the impending rate cut to leak to one leading bank. That set up a tense exchange between the two officials. Geithner said that the banks “obviously don’t have any idea that we’re contemplating a change in policy or what might be possible and what we might say or not say going forward.” Lacker said, “Vice Chairman Geithner, did you say that they [the banks] are unaware of what we’re considering or what we might be doing with the discount rate?” “Yes,” replied Geithner. Continued Lacker: “Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.”

New mortgage regulations will prevent future housing bubbles - (www.ochousingnews.com) Last week I wrote about How the new mortgage rules will impact the housing market. Since then, even more regulations were announced. After thinking about the ramifications of these new regulations over the last week, I am surprisingly relieved by what I see. I think these new regulations really will prevent future housing bubbles. With any regulation, there is fear that it will either be changed or enforcement will be lax. While it’s still possible future generations may forget the folly of the last decade, it’s unlikely our generation will. These new regulations are here to stay. A far larger concern is the lack of enforcement and oversight. And if the issue were left up to the agencies or the federal reserve, that would still be a big concern, but that’s not where enforcement will come from. Civil lawsuits from future loanowners decrying their inability to repay the loans is what will keep lenders in line.

World Unemployment to Hit Record High in 2013 - (www.cnbc.com) World unemployment could top record levels this year and continue rising until 2017, the International Labour Organization (ILO) said on Tuesday in its annual employment report. 2009 currently stands as the worst recorded year for world unemployment, with 198 million people across the globe without work. In its 2013 Global Employment Trends report, the ILO forecasts unemployment numbers will rise by 5.1 million in 2013 to reach 202 million, topping 2009's record. The report also predicts unemployment will rise further in 2014 to reach 205 million. "Unemployment remains as dire as it was during the crisis in 2009," Ekkehard Ernst, chief of the employment trends unit at the ILO, which wrote the report, told CNBC.

When someone figures out the RE market,let me know. - (www.businessinsider.com) 1.4 million borrowers moved to positive equity (where homeowners owe less on their mortgage than their home is worth) in the year through the end of Q3.  This is according to CoreLogic's latest negative equity report. But a whopping 10.7 million or 22 percent of all residential properties with mortgages were underwater by the end of Q3. "The substantive gain in house prices made in 2012, partly due to tight inventory caused by negative equity’s lock-out effect, has paradoxically alleviated some of the pain," Mark Fleming, chief economist for CoreLogic said in a press release. We drew on CoreLogic's report to highlight the 12 states that are deepest in negative equity. We ordered them based on the number of underwater mortgages as a share of total mortgages (i.e. negative equity share).

Last debt ceiling debate indicates more economic hurt likely as another fight looms - (www.washingtonpost.com) As Washington debates whether to raise the limit on government borrowing, an earlier conflict over the debt ceiling offers a cautionary tale about how brinksmanship can damage the economy. The U.S. economic recovery was chugging along in the summer of 2011 when a partisan fight broke out over whether Congress would raise the federal debt limit and avoid a national default. The protracted, unsettling nature of the negotiations between the White House and Republicans dramatically slowed the recovery, economists conclude, looking back at the episode. Consumer confidence collapsed, reaching its worst level since the depths of the financial crisis. Hiring stalled, with the private sector creating jobs at its slowest pace since the economy exited the recession. The stock market plunged, sending the Standard & Poor’s 500-stock index down more than 10 percent.

OTHER STORIES:

Protests become way of life in Spanish recession - (www.reuters.com)

Dijsselbloem Preaches Balanced Budgets, Irks Spain as Euro Chief - (www.bloomberg.com)

ECB’s Weidmann Says Bank of Japan’s Independence Under Threat - (www.bloomberg.com)

Japan’s 5-Year Yield Declines to Lowest Since 2000 on BOJ Easing - (www.bloomberg.com)

Investors Most Optimistic on Stocks in 3 1/2 Years in Poll - (www.bloomberg.com)

Weidmann warns of currency war risk - (www.ft.com)

Italy Finance Minister Says He Made Side Payment for Rome Home - (www.bloomberg.com)

Analysis: No respite for euro zone in long rebalancing slog - (www.reuters.com)

BoJ follows Fed and ECB with new pledge - (www.ft.com)

China’s Focus on Aerospace Raises Security Questions - (www.nytimes.com)

Sales of U.S. Existing Homes Drop on Lowest Supply in a Decade - (www.bloomberg.com)

Global jobless to hit record 200 million this year: ILO - (www.reuters.com)

Apple May Face First Profit Drop in Decade as IPhone Slows: Tech - (www.bloomberg.com)

Dreamliner Probes Intensify - (online.wsj.com)

Fossil Fuel Projects from U.S. to China Raise CO2 by 20% - (www.bloomberg.com) 

Wednesday February 6 Housing and Economic stories

TOP STORIES:

Fed official alleges Geithner may have alerted banks to rate cut - (www.reuters.com) In the summer of 2007, as storm clouds gathered over the world's financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and otherbanks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official. Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.

Bob Rubin’s Washington Reign Reaches 20 Years - (www.bloomberg.com) We are fast approaching an important but underappreciated anniversary: Robert Rubin’s 20th year of extraordinary proximity to political power in Washington. This is not a milestone to be celebrated. Not only was Rubin secretary of the Treasury under President Bill Clinton, but the next three secretaries in Democratic administrations -- Lawrence Summers, Tim Geithner and (assuming he is confirmed) Jacob Lew -- have Rubin’s fingerprints on them. This is a cause for grave concern -- assuming, of course, you care about whether it’s right for Rubin to have such a long stretch of political influence. I do, and here’s why: When Rubin was an arbitrager at Goldman Sachs Group Inc. in the 1980s, and again when he was in the executive office of Citigroup Inc. (C)in the 2000s, he was one of the leading purveyors of the kind of irresponsible behavior that led to the financial crisis of 2007 and 2008. Not only has Rubin refused to take a shred of responsibility for his actions, but he has also managed to win the hearts and minds of two of our last three presidents. That’s no mean feat, and it says much about the cozy relationship between Washington and Wall Street.

Delinquent jumbo loans in Coastal California pollute bank balance sheets - (www.ochousingnews.com) More than four years after the financial crisis, many big banks have regained their footing. But Bank of America and Citigroup remain dogged by the past. On Thursday, the two banks disclosed that substantial legal costs undercut their fourth-quarter earnings. The expenses, the banks said, stemmed from huge settlements involving their mortgage businesses. … “The 2008 collapse was not the flu — it was a major debilitating disease,” said Lawrence Remmel, a partner at the law firm Pryor Cashman. “It takes time rebuilding your strength,” he said, and it is “unpredictable when some of the institutions will fully recover.” …

Spain Recession Scars Exposed as Jobless Seen at 6 Mln - (www.bloomberg.com) Officials predict the euro-area’s fourth-biggest economy faces a further slump this year at a time when the government will struggle to meet its budget goals. Such a backdrop hasn’t deterred investors, with the prospect of a European Central Bank backstop in the event of a bailout enabling the Treasury to fast-track higher 2013 funding needs, selling 16 billion euros ($21 billion) at its first three auctions at lower costs. “Unemployment will continue to rise this year,” said Sara Balina, an analyst with Madrid-based consultancy firm Analistas Financieros Internacionales. “Demand will deteriorate and outweigh the positive contributors to growth that are tourism and exports.”

Rent Crash Diary; Eastside Puget Sound - (www.seattletimes.com) Local landlords may have to get used to more vacant apartments and smaller rent increases, a recent report suggests. The average monthly rent in complexes with 50 or more units in King and Snohomish counties fell slightly during the last quarter of 2012, to $1,140 from $1,142, after three straight quarters of “impressive” growth, according to research firm Apartment Insights Washington. And, while the two-county vacancy rate dropped from 4.85 to 4.75 percent, the decline was all Snohomish County’s doing, said Tom Cain, who owns the research firm. King County vacancies were unchanged. “The market is still very healthy” for landlords, Cain said, “but it’s flattening out, and I’m concerned about the impact of all the new construction in the pipeline.”

OTHER STORIES:

ECB's Weidmann says bond buy conditions problematic: paper - (www.reuters.com)

U.K. Finance Industry to Cut 43,000 Jobs, CBI Survey Says - (www.bloomberg.com)

Bundesbank Says German Economy Already Showing Signs of Recovery - (www.bloomberg.com)

Bitter setback for Merkel months before German election - (www.reuters.com)

Lower Saxony blow for Merkel re-election - (www.ft.com)

Britain's Plan to Rework Its Ties to Europe Is Risky - (www.nytimes.com)

Dell Said to Hire Evercore to Seek Higher Bids After Buyout - (www.bloomberg.com)

House Republicans seek vote to extend debt limit to May 19 - (www.reuters.com)

Senate Democrats’ budget plan will reopen battle over taxes - (www.washingtonpost.com)

Tuesday February 5 Housing and Economic stories

TOP STORIES:

Sappy letters to sellers return in tight supply market - (www.ochousingnews.com) One of the most ridiculous features of the housing bubble rally was when buyers would write emotional letters to sellers to try to make their offers stand out in the crowd. In 2004 in particular as the Option ARM permitted buyers to raise their bids to ridiculous levels, competing bids well over asking price prompted sappy letters to appeal to a seller’s emotions to get the deal. Now, with the federal reserve lowering interest rates below 3.5%, we face a similar infusion of affordability allowing buyers to raise their bids. The tight supply engineered by the banking cartel is causing the buyers to bid over ask again as they compete for the few properties available. The return of the ass-kissing letter is another sign of the success the cartel is having in reflating the housing bubble.

Spanish banks' bad loans hit new high in November - (www.reuters.com) Spanish banks' bad loans reached a new high in November, data from the Bank of Spain released on Friday showed, with loans that have fallen into arrears rising by 2 billion euros to 191 billion euros, or 11.4 percent of the outstanding portfolio. This compared with an 11.2 percent bad loan rate in October. Non-performing loans on the books of the country's ailing banks have risen steadily since a decade-long property boom ended four years ago, with the country in its second recession since 2009 and one in four Spaniards out of work. Analysts expect bad loans to keep rising in the coming months and concerns remain about the health of the banking sector, despite an injection of emergency cash from the European Union of more than 40 billion euros ($53 billion).

Algerian hostage crisis prompts international oil companies to evacuate workers - (www.washingtonpost.com) Norway’s Statoil, London-based oil giant BP and Spain’s Cepsa started evacuating workers and their families from Algeria on Thursday in the wake of an attack by Algerian troops on hostage-takers at an isolated natural gas facility in what might turn out to be one of the most lethal incidents in the history of the industry. Statoil said it could confirm the safety of only eight of its 17 employees who had been working at the In Amenas gas facility. Five of those employees escaped Wednesday, and three Algerian employees were found safe Thursday. The company said the Norwegian government was flying in medical personnel. Statoil and BP decided to evacuate nonessential personnel from two other gas processing plants in Algeria — In Salah and Hassi Mouina. At least three planes were expected to leave Thursday night bound for London, Statoil said, adding that about 40 of its employees would be on board.

Marble Fortress Cracked: Falling DC Rents - (www.thedailybeast.com) When I moved to the District in 2007, it was pretty easy to find a one bedroom apartment close to downtown for $1500.  It might not be the most attractive apartment you ever saw, but it would have an actual separate bedroom and a full kitchen. Five years later, the $1500 one bedrooms are thin on the ground, especially if you want to be walking distance from work.  That's one of the reasons that I've been reluctant to label our soaring home prices an actual bubble; while home prices have certainly leapt upwards, they're roughly tracking the rising rents.  The comments sections of local real estate blogs are filled with outraged residents who simply refuse to accept that anyone could possibly charge that for a rental. But now rents in DC have started softening. While demand has certainly risen--DC has been gaining population for the first time in decades--in normal times, it might easily have been absorbed.  Though DC's restrictive housing regulations do restrict supply, there are still plenty of sites within the district borders that could be built on.  And houses are being subdivided into apartments at a pretty brisk clip.  

Own a house in a flood zone? National flood insurance rates set to skyrocket. - (www.patch.com) There was no mincing of words: recovering from Sandy will be difficult, and a decision on federal flood insurance made months before the storm struck will make things even harder. Brick residents got the low-down on the difficult decisions that loom in the future for many families following Sandy - brought on mainly by the impending flood insurance hurdle that could cripple already-strained finances for many - at a series of Sandy Information Fairs held at Brick Township High School Saturday morning. Brick is the first town in New Jersey to offer such information sessions, said Mayor Stephen C. Acropolis.

OTHER STORIES:

Bubble fears for central Europe debt rush - (www.ft.com)

Euro zone to tackle thorny question of aid for bank - (www.reuters.com)

BOJ eyes open-ended asset buying, agrees new inflation goal - (www.reuters.com)

China Exits Slowdown as Quarterly Growth Tops Forecasts: Economy - (www.bloomberg.com)

Japan, China need "rules of game" to avoid clash: Abe adviser - (www.reuters.com)

China lets Gini out of the bottle; wide wealth gap - (www.reuters.com)

China Home Prices Rise in Most Cities Since April 2011 - (www.bloomberg.com)

Silver Lake Is Said to Be Near Financing on Dell LBO - (www.bloomberg.com)

Monday February 4 Housing and Economic stories

TOP STORIES:

Housing Is The Next Shoe To Drop In France - (www.businessinsider.com) Barnes, a British real estate group that specializes in high-end properties in France and certain tony locations elsewhere, based its study on data gleaned from lawyers (notaires) who engage in real estate transactions. Prices of high-end homes in Paris dropped by 10-15%. For properties under €2 million, transactions screeched lower by 28%, but prices remained stable. The study blames “the confluence of the euro crisis, the elections, and taxation.” Harsh words. “Elections,” of course, refers to the events last summer that elevated Socialist François Hollande to President of France and that put the Socialist Party in control of parliament.

California records its one millionth foreclosure - (www.ochousingnews.com) On November 26, 2012, ForeclosureRadar recorded its millionth California foreclosure sale since January 2007. While we acknowledge that foreclosures are painful and unpleasant, this milestone also means a million underwater homeowners have escaped a prison of debt. I will take it a step further. I believe Foreclosures are essential to the economic recovery. In addition, the millionth foreclosure sale points to steady strides toward recovery in the housing market and provides an excellent launching pad for a retrospective on the California foreclosure marketplace: Pre-2008 – The California Housing Market Collapses, Foreclosure Market Changes Drastically: We start with the peak of the California real estate bubble in 2007 and describe how a normally functioning foreclosure market changed drastically due to record numbers of homeowners defaulting on their mortgages. Foreclosure filings surged in 2007 and 2008.

Vancouver drops; Toronto faces Miami Problem - (www.macleans.ca) A housing correction—or, possibly, a crash—is no longer coming. It’s here. And you don’t have to own a tiny $500,000 condo in downtown Toronto or a $1.3-million bungalow in Vancouver to get hurt. With few exceptions, the impact will be indiscriminate as the euphoria of rising house prices is replaced by fear. The only question now is how bad things will get. If the decline picks up speed, as many believe it will, there could be a nasty snowball effect. Construction jobs will be lost. Homeowners will end up underwater. Consumers may stop spending. “I’m getting very nervous,” says David Madani, an economist at Capital Economics, who has been predicting a drop in housing prices of up to 25 per cent in Canada. “I know I’m a bear, but the housing market itself has the potential to put us in a recession, let alone what’s happening in Europe and the U.S.”

Fed Concerned About Overheated Markets Amid Record Bond-Buying - (www.bloomberg.com) Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases. Investors have been snapping up riskier assets since the Fed boosted its bond buying to reduce long-term borrowing costs after cutting its overnight rate target close to zero in December 2008. Enthusiasm for speculative-grade bonds is at unprecedented levels, driving a Credit Suisse index that tracks the yield on more than 1,500 issues to a record-low 5.9 percent last week. Now, as central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it.

Abe Currency Policy Stokes Gaffe Risk as Amari Roils Yen - (www.bloomberg.com) Japan’s newly installed government saw one danger of verbal intervention in the foreign-exchange market this week, with a Cabinet member’s remarks interpreted as indicating a shift in stance that he later disowned. Economy Minister Akira Amari today told reporters in Tokyo that the yen is still correcting from excessive appreciation, two days after flagging the danger of the exchange rate getting too weak. His Jan. 15 remarks stoked a two-day gain in the yen. Today, comments by Amari snapped the rise, with the currency down 0.9 percent at 89.15 per dollar at 7:06 p.m. in Tokyo. The Abe administration’s determination to end deflation through coordinated action with the central bank has driven a 4.4 percent slide in the yen since it took office Dec. 26. A cheaper yen aids the competitiveness of exporters from Panasonic Corp. (6752) to Nissan Motor Co. (7201)that have labored under years of exchange-rate strength that saw the currency reach a postwar high in 2011.

OTHER STORIES:

London Finance Hub Threatened by EU Exit, Sweden’s Borg Says - (www.bloomberg.com)

Default Alarm Rings as Trust Loans Jump Sevenfold: China Credit - (www.bloomberg.com)

European Banks to Shrink as U.S. Peers Set Pace: Euro Credit - (www.bloomberg.com)

China Set to Exit Slowdown by Boosting Infrastructure - (www.bloomberg.com)

Euro Area Seen Stalling as Economists Share Draghi Pessimism - (www.bloomberg.com)

Fed hawk voices doubts over benefits of bond buying - (www.reuters.com)

Boeing Dreamliner Fleet Grounded by U.S. After Emergency - (www.bloomberg.com)

BofA Profit Falls Less Than Estimated After Loan Accord - (www.bloomberg.com)