The Housing Bubble

There’s some lessons here:

1. If you have a good job then keep it. If you are offered early retirement then just say “no”.

2. Underfunded promises are promises destined to be broken.

http://online.wsj.com/article/SB10001424053111903532804576566862041674794.html?r

Ruh-roh!

“Florida Schools Learn Hard Lessons

As part of the 2009 economic stimulus package, millions of federal dollars flowed to Florida’s public school districts. The money was intended to benefit low-performing schools as way of closing the so-called achievement gap.

“Every dollar we spend must advance reforms and improve learning,”

But with the aid of federal waivers, school districts were allowed to divert money from education reform to patch holes in general operating budgets. In fact, a review of financial records by the Florida Center for Investigative Reporting shows that the state’s school districts spent more than $890 million in federal money this way.”

http://www.theledger.com/article/20110917/NEWS/110919399/1001/BUSINESS?Title=Florida-Schools-Learn-Hard-Lessons-

Et tu Reuters?

Fake and subsidized industry = massive government debt = no jobs when the money runs out = still falling housing prices

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Solyndra, the logical endpoint of Obamanomics
Reuters | Sept. 16, 2011 | James Pethokoukis

The bankruptcy of solar-panel maker Solyndra neatly encapsulates the economic, political and intellectual bankruptcy of Barack Obama’s Big Idea. It was the president’s intention back in 2009 to begin centrally reorganizing the U.S. economy around the supposed climate-change crisis.

To what end? Well, Obama claimed his election would mark “the moment when the rise of the oceans began to slow and our planet began to heal.” But that was just the cover story. At its core, Obamanomics is about the top-down redistribution of wealth and income. Government spending on various “green” subsidies and programs, along with a cap-and-trade system to limit carbon emissions, would enrich key Democrat constituencies: lawyers, public sector unions, academia and non-profits.

And Obama almost pulled it off. The Great Recession conveniently allowed the president to start the spendathon under the guise of economic stimulus. (”You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.” - White House Chief of Staff Rahm Emanuel, 2009).

GOP presidential hopeful Ron Paul wins California straw poll

cnn

“Texas Rep. Ron Paul won a California straw poll, the state Republican Party announced in a statement Saturday night. A total of 833 ballots were cast during the straw poll, the statement said.

Paul won with 44.9% of the votes, Texas Gov. Rick Perry came in second with 29.3% of the votes, and former Massachusetts Gov. Mitt Romney came in third with 8.8% of the votes. The California Republican Party, associated members and registered guests were allowed to vote in the straw poll, according to the statement. ”

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I know there are a lot of Paul lovers out there, but I’m not sure he’s electable. All he needs to do is go into debates and start ripping unconstitutional claptrap like SS and Medicare and any other post 1800 invention, like penicillin, and Obama will look like “the devil you know.”

Back in the “bad old days” ie - in the 1990s or before:

1. 20% was the rule - no 20% down meant no loan
2. Banks really looked at debt/income ratios - too much debt meant no loan
3. You had to prove you had a job (lots of check stubs plus documentation from your employer) - no job meant no loan
4. Banks usually kept the loans on their books – so they watched them carefully
5. If a bank had too many non-performing loans - the bank manager got fired.

And it worked pretty well. Foreclosures were very rare. Housing increased (if you were lucky) just barely ahead of the inflation rate

Then the government got involved in the process (to make things “fair” or to buy votes)…

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This Rule Could Really Kill the Housing Market (Dodd-Frank Provision)
Fiscal Times | 09/15/2011 | Rob Garver

Of the many financial reforms in Dodd-Frank, a requirement that lenders retain a share of the risk in mortgages they sell to investors seemed like a no-brainer. If lenders were on the hook, too, the thinking went, they would tighten standards and avoid the kind of defaults that contributed to the collapse of the housing market and the financial crisis.

But now that a rule to implement this provision has been written, critics say the requirement will make it so hard to get a mortgage that it will further depress the housing market and undercut a struggling economy. “I’ve been in this business 32 years and I have never seen guidelines as tight as they are now,” said Scott Eggen, senior vice president for capital markets with PrimeLending, a mortgage lending subsidiary of Dallas-based Plains Capital Corp.

“The proposal as introduced will literally erase a decade of accomplishment in defining what is a responsible loan,” said David Berenbaum, chief program officer with the Coalition, an advocacy group for community organizations that support affordable housing and equal access to credit. “It is going to narrow the range of loans that lenders are willing to originate to the point that only consumers with the best credit scores—meaning white and affluent consumers—are going to get loans.”

During the housing bubble of the last decade, lenders to marginal borrowers could quickly offload the risk of default by selling the loans to third parties that packaged mortgages into securities. When those borrowers couldn’t make their payments, the value of the securities tanked. To create an incentive for more prudent underwriting, the Dodd-Frank financial-reform act directed regulators to issue rules requiring mortgage lenders to retain no less than five percent of the risk associated with loans they sell.

Regulators defined qualifying residential mortgages very conservatively, requiring a 20 percent down payment, caps on a borrower’s debt-to-income ratio, restrictions on loan terms, and other limits designed to restrict the number of loans that would qualify for the exemption.

The real problem, he said, was the proliferation of “exotic” loans that allowed borrowers to defer principal payments, such as interest-only loans, and others that were structured to allow lower payments but the principal balance increased over time. “About half of those exotic loans went into default during the economic crisis,” said Feltner.

I must say, reading the bits bucket yesterday with all the sniping and name calling back and forth about RNC and DNC trolls, was a bit disheartening. And btw, that’s EXACTLY what TPTB wants people to do, fight amongst themselves.

As leaders meet in Europe, crisis remains largely unchanged
Marketplace Morning Report, Friday, September 16, 2011

After growing fears this week about a Greek default, leaders today are now saying there is reason to still have confidence in the financial system. But has anything really changed?

Jeremy Hobson: U.S. Treasury Secretary Tim Geithner is in Poland this morning at a meeting with European finance ministers, trying to boost confidence in Europe and its financial system. The news so far is that we’ll have to wait until October to find out if Greece will get its next round of bailout money.
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Has Uncle Sam been cut out of the BRICS deal?

Developing BRICS countries less affected by European downturn
Marketplace Morning Report, Friday, September 16, 2011

The global economy we live with today means that when Europe hurts, we all hurt. But developing nations like Brazil are hit much less hard these days than the U.S.
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The BBC’s Paolo Cabral is with us now from Sao Paolo, Brazil. Paolo, good morning.

Paolo Cabral: Hello there.

Chiotakis: So how is Brazil looking at all this turmoil in Europe? What happens in Europe certainly is going to have an effect on the BRICS developing nations, right?

Cabral: Certainly. Brazil is looking with concern to the financial turmoil hitting Europe and the United States, because everything is connected nowadays. But it must be said, it doesn’t have impact in Brazil as strong as it would have had 10 or 15 years ago because Brazil has diversified its straight partners, its straight relations. Just an example — China took over the position of the United States as the main trading partner of Brazil some two years ago. And so, nowadays Brazil sells its commodities to China. So in the past we’d say that whenever Europe or the United States sneezed, Brazil would have pneumonia. That doesn’t happen anymore.
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Phil Angelides on the Lehman Brothers collapse
Marketplace Morning Report, Thursday, September 15, 2011

The bankruptcy of Lehman Brothers three years later: What have we learned? Phil Angelides, former chairman of the Financial Crisis Inquiry Commission, talks about the financial crisis of 2008.

Steve Chiotakis: Three years ago today, an investment bank called Lehman Brothers filed for Chapter 11 bankruptcy. While the global financial system was already cracked by then, Lehman’s undoing was a big jolt that sent Wall Street bankers scrambling for help.

Phil Angelides chaired the Congressional panel called the Financial Crisis Inquiry Commission and he’s with us now. Thanks for being with us.

Phil Angelides: Good morning. Good to be with you.

Chiotakis: Three years from the banking collapse, and it seems like the recovery’s sort of stalled. As far as the financial system goes — and how that relates to people like you and me — where are we?

Angelides: Well that’s been the remarkable fallout from this financial crisis. It is three years ago today that Lehman Brothers filed bankruptcy, Bank of America acquired Merrill Lynch. On the next day, AIG got its first bailout of $85 billion. By the end of the week three years ago, the U.S. government had waded in with a proposed $700 billion bailout of the banks. And what we saw three years ago was that finally the recklessness on Wall Street, the regulatory neglect in Washington, took their toll.

What’s been quite striking, though, is that there’s been very little consequence for Wall Street while the rest of the nation has suffered. We’ve got 24 million people out of work, can’t find full-time work. American families have lost $9 trillion in household wealth and retirement savings. But meanwhile, Wall Street’s barely skipped a beat. Compensation was at record levels in 2010 — $135 billion at publicly traded Wall Street firms.

And the top ten banks in this country today now have more power, more assets than ever before. They control 77 percent of the country’s banking assets. Last year they have $62 billion in profits. So it’s quite a remarkable story — a sad story — here about how Wall Street survived and thrived, and the rest of the country has suffered greatly.

Chiotakis: I know one of the goals of your commission was to find ways to make the financial system work for everyday folks. How much progress has been made on that front?

Angelides: Well — not enough, by any means. And I think you put it well because I think what we really need in this country is a financial system that’s not the master of our economy, but the servant of our economy.

You know, in many ways over the last two or three decades in this country, the financial sector became the dominant force in our economy. In 1980, 15 percent of the corporate profits in this country came from the financial sector. By the mid-2000s, that was over 30 percent. The amount of financial debt in this country soared from $3 trillion to $36 trillion.

We became very much a economy that was about money making money, versus an economy where our financial system deployed capital, undertook lending to create jobs and wealth for the American people and the American economy. And on that big score, very little has changed since the financial meltdown of 2008.
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Why you should care about Greece’s potential default
By Stephen Beard Marketplace, Wednesday, September 14, 2011

If European countries aren’t able to repay loans, it affects Americans in a variety of ways, from the value of the dollar to the worth of our investment funds.
Greece

Kai Ryssdal: As of the latest on the foreign exchange markets today, 8 billion euros works out to about $11 billion. That’s how much the Greek government’s due to get from the European Union bailout fund come the end of the month. It’ll keep Athens solvent and — the theory goes — keep Europe from a Lehman-like crisis.

Tonight Germany’s Angela Merkel and French president Nicolas Sarkozy got off a conference call with George Papandreou — he’s the prime minister of Greece — and said Greece remains an integral part of the eurozone. U.S. Treasury Secretary Tim Geithner said this morning on CNBC there’s not a chance the E.U.’s going to let the Greeks default.

We asked Marketplace’s Stephen Beard to follow up on our story yesterday, and explain why a tiny little country in a far off corner of southeastern Europe is so important.
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Euro crisis reaching a crescendo
Marketplace, Monday, September 12, 2011

The euro could collapse or Germany could bail out debt-ridden eurozone nations. Europe correspondent Stephen Beard discusses the eurozone’s options.

A general view of Athens with the Acropolis Hill in the background. (Louisa Gouliamaki/AFP/Getty Images)

Kai Ryssdal: Today’s update on the European debt crisis goes a little something like this: Greece is in trouble, and the Germans don’t really want to pay for another bailout. That’s an oversimplification, to be sure, but not much of one. The slightly longer version goes like this: People are slowly coming to grips with the fact that Athens might actually default, sooner rather than later. And that big banks in France, Germany, and right here, are dangerously exposed to it.
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With Greece in trouble yet again, the euro loses value
Marketplace Morning Report, Monday, September 12, 2011

Greece’s financial troubles have left the euro zone shaky for months now. But are we prepared for the worst case scenario?
A Greek man protests against austerity measures.

A demonstrator holds a Greek flag on September 10, 2011 during a protest in Thessaloniki. (SAKIS MITROLIDIS/AFP/Getty Images)

Jeremy Hobson: Global stock markets are way down this morning because of new fears over the stability of the Eurozone. And the worries can be traced to Athens, where a national default is looking like more of a possibility. There’s reluctance from Germany to step in again with another bailout of Greece. And the health of big European banks is in question because of their exposure to Greek debt.
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The Government Bailout

Get a closer look at the government financial bailout

History of U.S. Gov’t Bailouts
Updated: April 15, 2009 12:02 pm EDT

With the flurry of recent government bailouts, we decided to try to put them in perspective. The circles below represent the size of U.S. government bailout, calculated in 2008 dollars. They are also in chronological order. Our chart focuses on U.S. government bailouts of U.S. corporations (and one city). We have not included instances where the U.S. government aided other nations.

Check out how the Treasury did in the end after initial government outlays. Also, check out our ultimate bailout guide. We’re tracking every taxpayer dollar, every recipient and every program in the current financial crisis. All searchable – and translated into English.
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Special Report The Rescue
CNNMoney.com’s bailout tracker

The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here’s how you can keep tabs on the bailouts.
By David Goldman, CNNMoney.com staff writer
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Uncle Sam bails out the banking system

Europeans leave summit with no new strategy to deal with continent’s debt crisis

View Photo Gallery —  European leaders are at a crossroads: They must pull closer together or risk the euro currency project falling apart.

By Michael Birnbaum, Published: September 17

BERLIN — European officials ended a two-day financial summit Saturday with no new concrete plans to help support euro-area countries that are having difficulty repaying their debts, as deep divisions remained about the best course for the coming weeks and months.

On Saturday, the officials discussed but failed to agree on a proposal to tax financial transactions. Greece is likely to run out of cash by mid-October if it does not receive billions of euros of bailout money, potentially setting off a financial contagion that could hop from bank to bank and country to country.

But European officials remain undecided on whether Greece has done enough of the spending cuts and reforms that it had promised to carry out as a condition of taking the money.

Officials said Friday that a decision on Greece would probably wait until early October, disappointing investors who had hoped for earlier certainty about what could happen to the country’s debts. Markets closed up for the week as fears eased about an imminent Greek default.
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Can’t afford the cost of the house
Can’t afford the taxes
Can’t afford the utility bills

This new green economy is working out great…

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Crippling family energy bills are your own fault, says UK Energy Secretary Chris Huhne
UK Mail | 18th September 2011 | By Glen Owen and Jonathan Petre

Utility price rises have pushed the average household energy bill to almost £1,300 a year, partly driven – as critics pointed out yesterday – by ‘green’ taxes imposed by Mr Huhne’s department.

The stealth levies, introduced to fund Britain’s investment in wind and solar power, are costing families an average of £200 a year – two-thirds of the amount the Cabinet Minister said they should be able to save.

This represents an increase of between 15 and 20 per cent on the average domestic power bill. The money is being used to help fund the building of 10,000 wind turbines and the proposed installation of £7 billion worth of smart meters in homes.

‘These outrageous comments show this Government’s reluctance to take proper action on the rising cost of fuel and to stick up for hard-hit families.’

I like the Eurozone finance ministers’ financial tax idea, except I suggest it should be cast as an insurance premium, charged to systemically risky institutions which pose a risk of future taxpayer-funded bailouts. Forcing systemically risky institutions to bear their own risk costs would be a great first step towards right-sizing Wall Street Megabanks.

Europe’s finance ministers reach no accord on debt crisis
U.S. Treasury Secretary Timothy Geithner warns them to hurry, but his reception is less than warm. Greece faces a delay in getting the latest installment of its bailout money.

A police officer uses a fire extinguisher to put out the flames after a man set himself on fire outside a bank in the northern port city of Thessaloniki, Greece. It was the third attempted self-immolation by the former small-business owner, who says he was ruined after taking out a series of loans. The 56-year-old was hospitalized but was expected to survive.(Nontas Stlianidis, Associated Press)

September 16, 2011|By Henry Chu, Los Angeles Times

Reporting from London — Despite strong pressure on them to act, European finance ministers offered no new measures Friday either to tackle the region’s worsening debt crisis or to spur growth in their floundering economies.

Instead, at a meeting in Wroclaw, Poland, officials heard U.S. Treasury Secretary Timothy Geithner warn them not to dally in coming to grips with a deteriorating situation that analysts say has the potential to cause major disruption in the global economy.

The finance ministers also indicated that near-bankrupt Greece, the epicenter of the Eurozone’s troubles, would not receive a crucial infusion of previously approved emergency loans before early October. The Mediterranean nation needs the money if it is to pay its bills past the middle of the month.

The delay in handing out those loans, originally to be disbursed by the end of September, is likely to fray the nerves of investors who are increasingly bracing for a Greek default. Fear of such an eventuality sparked wild swings in European stock markets this week.

The inconclusive meeting in Poland, at which officials failed to iron out differences over a proposed second bailout package for Greece, illustrated the continuing difficulty of achieving quick action from countries bound by a single currency but divided by domestic politics. Although the financial markets and world leaders have repeatedly pressed for bold, decisive measures, Europe’s politicians have been unable to deliver.

Still, the region’s stock exchanges generally held even Friday, steadied by the announcement a day earlier that central banks around the world, including the U.S. Federal Reserve, would offer easy access to loans for cash-strapped European banks.

The gravity of the debt crisis prompted the unusual invitation to Geithner to attend the finance ministers meeting. His appearance was billed as a chance for a transatlantic exchange of views at a critical juncture in the long-running euro crisis, which many analysts feel may be coming to a head.

Geithner told his European counterparts that he attended the meeting “with humility,” acknowledging the United States’ own serious problems regarding debt and a possible double-dip recession.

“We’re not in a particularly strong position to provide advice to all of you,” he said.

But he then went on to warn the assembly that Europe needed to unite and show collective will in trying to resolve the debt crisis.

Geithner recommended that countries in the Eurozone, which all use the euro currency, significantly expand the capacity of their joint bailout fund in a show of force to reassure investors, the Reuters news agency reported.

“He conveyed dramatically that we need to commit money to avoid bringing the system into difficulty,” Austrian Finance Minister Maria Fekter told reporters.

But Fekter complained that Geithner was dismissive of an idea floated by countries such as Germany to use a financial transaction tax, rather than taxpayer money, to beef up the bailout fund. Popular sentiment in Germany, Austria, the Netherlands and Finland is strongly against any more taxpayer money being sunk into rescuing ailing nations.

“I found it peculiar that even though the Americans have significantly worse fundamental data than the Eurozone, that they tell us what we should do, and when we make a suggestion … that they say no straight away,” Fekter said.

In a testy rebuke of Geithner, Jean-Claude Juncker, prime minister and finance minister of Luxembourg, said, “We are not discussing the increase or the expansion of [the bailout fund] with a nonmember of the euro area.”
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EU finance ministers debate finance tax
By DAVID McHUGH and GABRIELE STEINHAUSER
WROCLAW, Poland

European Union finance ministers are debating a tax on financial transactions that could raise money for the EU and make banks share bailout burdens with taxpayers.

The tax would take a tiny fraction from a wide range of financial dealings and the EU wants use the money to relieve states’ membership contributions to the institution.

It could also help repay governments for some of the billions of euros in taxpayer money they had to pour into banks that needed to be bailed out out during the 2007-2009 financial crisis because they had made risky investments that went sour. Some also argue it could reduce volatility on financial markets.

The EU has been pushing the idea since it came up during global summits held in 2009 to combat the financial crisis. France and Germany support the idea but Britain is opposed because London is a major financial center. The U.S. also opposes such a tax, and many say it won’t work unless imposed globally because banks will simply move transactions to jurisdictions where there is no tax.

Belgian Finance Minister Didier Reynders said ahead of Saturday’s meeting of finance ministers in Wroclaw, Poland, that if a tax can’t be imposed in all 27 EU member countries, then it could be discussed for 17 that use the euro. That group doesn’t include Britain.

“We are having a discussion about stabilization in the eurozone and the world, and I am sure we need to put on the table the financial transaction tax,” he said. “It’s important not only to finance the budget but to stabilize the flows on the capital markets.”
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Geithner Ignored Obama Order to Plan for Citigroup Wind Down
September 16, 2011, 2:15 PM EDT
By Donal Griffin and Caroline Salas Gage

(Updates with Treasury statement in seventh paragraph, Citigroup comment in eighth.)

Sept. 16 (Bloomberg) — U.S. Treasury Secretary Timothy F. Geithner ignored an order in 2009 from President Barack Obama to prepare a plan to “wind down” Citigroup Inc., once the biggest bank in the world, according to a book to be released next week.

Geithner didn’t proceed with Obama’s order to develop a plan to dissolve New York-based Citigroup in March 2009, several months after the bank had received a $45 billion taxpayer bailout, according to “Confidence Men: Wall Street, Washington and the Education of a President” by Ron Suskind, a former Wall Street Journal reporter. Bloomberg News obtained a copy of the book’s manuscript. The book, published by New York-based HarperCollins, is to be released Sept. 20.

Citigroup, led by Chief Executive Officer Vikram Pandit, posted $29.3 billion in combined losses for 2008 and 2009, much of them tied to subprime mortgages. U.S. taxpayers also guaranteed more than $300 billion of the lender’s riskiest assets to prop up the company as it neared collapse. Obama wanted to consider restructuring the bank while Geithner would also proceed with stress tests of the country’s lenders, according to the book.

Geithner didn’t recall Obama getting angry at him for not implementing the order and said that he didn’t “slow walk the president on anything,” according to the book.
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Protesters Converge on Lower Manhattan, Plan ‘Occupation’
September 17, 2011, 5:43 PM EDT
By Laura Marcinek

(Updates with protester count in fourth paragraph.)

Sept. 17 (Bloomberg) — Wall Street firms are the target of a nonviolent demonstration in which organizers say they want 20,000 people to participate with tents, kitchens and “peaceful barricades” in lower Manhattan.

Dubbed “#OccupyWallStreet,” the goal of the protest is to get President Barack Obama to establish a commission to end “the influence money has over our representatives in Washington,” according to the website of Adbusters, a group promoting the demonstration. Organizers want participants to “occupy” the area for “a few months,” according to the website.

“People have a right to protest, and if they want to protest, we’ll be happy to make sure they have locations to do it,” New York City Mayor Michael Bloomberg said Sept. 15 at a press conference. “As long as they do it where other people’s rights are respected, this is the place where people can speak their minds, and that’s what makes New York, New York.”

As the demonstration began this afternoon, as many as 1,000 people congregated in the Chase Manhattan Plaza area and, after speakers with a bullhorn rallied the crowd, broke into groups to discuss the event’s goals. Some participants circulated trays of sliced white and wheat bread while others passed out jars of creamy Skippy peanut butter, and distributed apples, bananas and oranges from shopping carts.
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This reminds me of the part of the Lehman saga when they were trying to bring in Barclays bank as a deep pocket source of bail.

Global Banks ‘Quietly’ Lobby BRICs for EU20 Billion for Greece
September 16, 2011, 6:03 PM EDT
By Christine Harper

Sept. 16 (Bloomberg) — A group that represents the world’s biggest banks is trying to persuade Brazil, Russia, India, China and others to lend 20 billion euros ($27.6 billion) to supplement a debt refinancing package for Greece.

The Institute of International Finance Inc. has been “quietly exploring” whether the so-called BRIC countries and others would be willing to participate, IIF Deputy Managing Director Hung Tran said today in a telephone interview. The plan would add to a July 21 agreement that included debt buybacks and bond exchanges, he said.

“If you have the extra 20 billion which we are seeking from other countries, that of course would increase the amount of debt retirement that Greece can have,” Tran said. “We have been in preliminary discussions with some countries and the reaction we received is an open mind and request for more information and discussion.”
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In Europe, echoes of Lehman, with much bigger consequences
September 16, 2011: 11:01 AM ET
What started as a sovereign debt crisis in Europe is slowly turning into a potentially disastrous banking crisis. It’s like watching a bad rerun of a movie with a worse ending.
By Cyrus Sanati, contributor

FORTUNE — The European economic contagion that began 18 months ago as a sovereign debt crisis is dangerously mutating into a full-blown banking crisis. With Greece in de-facto market default, weak banks within the eurozone have started to fall ill as their investors, trading partners and clients pull short-term funding. The move by central banks on Thursday to provide extended U.S. dollar loans to European banks is only a stopgap measure. A Lehman Brothers-like collapse or a Northern Rock-like bank run still cannot be ruled out at this point for several of the eurozone’s largest financial institutions.

The market has hammered French banks into the ground first, but banks in Italy, Spain, Germany and the United Kingdom face serious funding issues as well. Swift action is needed on the part of eurozone members to shore up confidence in its crippled banking sector. The expansion of the European Financial Stability Facility (EFSF) is a good start, but more money will be needed to ensure investors that it’s all clear to park their cash with European banks again.

The alarm bells were sounded on trading floors in Paris and New York this week. Société Générale, Credit Agricole and BNP Paribas – the three major French banking institutions - have seen their share prices move violently in recent days, ostensibly because of their exposure to toxic Greek sovereign debt. On Wednesday Moody’s downgraded the credit rating of Société Générale and Credit Agricole one notch and kept BNP Paribas on review for a downgrade.

But the violent drops in their share prices seem to go beyond the banks’ exposure to Greece and the credit downgrade. Take Société Générale for example. The bank’s total exposure to Greek sovereign debt, including the amount held by its Greek subsidiary, is around 5 billion euros. That’s equivalent to around 1% of the bank’s balance sheet and around the same amount of money the bank lost at the hands of rogue trader Jérôme Kerviel in 2009.

As punishment for its Greek sovereign investments, the market wiped out 56% off Société Générale’s market value in the last three months up to Thursday. That’s around 3.5 times the value of its exposure to Greek sovereign debt, which is clearly overkill. Some of the extra losses baked in to the market value haircut derive from the bank’s exposure to the private Greek credit market through the bank’s local subsidiary. But the market seems to be sending a signal that it is worried about much more than the bank’s measly Greek exposure. The big fear is that Société Générale, along with its French banking brethren, is extremely undercapitalized and could therefore collapse at any moment.

Echoes of Lehman
…

Evildoc is very transparent. He was probably a democrat all his life and now , because of the economy, is fearful of socialized medicine and a tax increase. How low we will stoop in protecting our standard of living. Shameful.

Just remember: Possession is 90 percent of the law.

Robo-signed mortgage docs date back to late 1990s
By PALLAVI GOGOI, AP Business Writer – Sep 1, 2011

NEW YORK (AP) — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide last fall.

At the time, “robo-signing” was thought to be contained to the affidavits that banks file when a mortgage is issued and somebody buys a house. The documents are used to prove they have the right foreclosure if the homeowner isn’t making mortgage payments. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

But now, as county officials review years’ worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.

“Because of these bad titles, property owners can’t prove they own the properties they think they bought, and banks can’t prove they had the right to sell them,” says Jeff Thigpen, the registrar of deeds in Guilford County, N.C.
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Obama’s road to re-election lined with boarded-up homes; the housing slump is a 2012 liability

FILE - In this April 4, 2010 file photo, a foreclosure sign sits atop a for sale sign in front of a single-family home tops the for sale sign in Denver. Barack Obama’s road to re-election is lined with lots of boarded-up homes. While the high unemployment rate dominates talk in Washington, for many 2012 voters the housing crisis may well be a more powerful manifestation of the sick economy. And, in an unfortunate twist for Obama, the housing problem is at its worst in many of the battleground states that will be decisive in determining whether the president gets another term.

By Associated Press, Published: September 16

WASHINGTON — Barack Obama’s road to re-election is lined with lots of boarded-up homes.

Though the high unemployment rate dominates talk in Washington, for many 2012 voters the housing crisis may well be a more powerful manifestation of a sick economy. And, in an unfortunate twist for Obama, the problem is at its worst in many of the battleground states that will be decisive in determining whether he gets another term.

Swing states Florida, Arizona, Nevada, Ohio and Michigan — they all pulse red-hot on a foreclosure rate “heat map.” And by themselves those five add up to 80 of the 270 electoral votes needed to win the presidency.

Mortgage default notices surged nationally last month. One in every 118 homes in Nevada received a foreclosure filing in August, according to the foreclosure listing firm RealtyTrac. One in 248 in Arizona. One in 349 in Michigan. One in 376 in Florida. And so on.

A foreclosure’s impact is visceral and outsized, rippling far beyond one household.

“Entire neighborhoods see what’s going on,” says Bill Galston, a senior fellow at the Brookings Institution and a former Clinton administration official. “The visibility contributes to the psychology of continued economic troubles.”

There’s the in-your-face eyesore sometimes created by a vacant house next door sprouting weeds on the front lawn.

There’s the downward pressure on housing values that can follow for everyone else in the neighborhood.

There’s the welling frustration felt by neighboring homeowners who may owe more on their own mortgages than their homes are worth.

Nearly a quarter of all U.S. homeowners with mortgages are now underwater, representing nearly 11 million homes, according to CoreLogic, a real estate research firm.

Again, many of the states with the highest underwater mortgage rates also are political battleground states: In Nevada, 60 percent of homeowners are upside down, according to CoreLogic. Arizona is at 49 percent; Florida, 45 percent; Michigan, 36 percent.

Obama will need swing-state voters more than ever in 2012 because of the tougher political climate for Democrats this election season.

Politically, it all adds up to “the thousand-pound gorilla in the room,” says Roy Oppenheim, a Florida foreclosure defense attorney who speaks of “suburban blight” in his home state, of gutted homes, of entire neighborhoods where banks are bulldozing foreclosures.
…

Sept. 17, 2011, 6:14 p.m. EDT
Obama debt-cut plan seen topping $1.5 trillion
Key question is by how much president’s plan exceeds that level
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — There is not much doubt that President Barack Obama’s deficit-reduction plan will top $1.5 trillion, but the key question is by how much.

In his speech to a joint session of Congress, Obama said he would present “an ambitious deficit plan” to a new congressional supercommittee on Monday. The supercommittee is looking for ways to cut deficits by at least $1.5 trillion.

Experts said it is just sound politics for Obama to surpass that goal.

President Obama has indicated he will not propose changes to Social Security in his deficit-reduction plan.

A package of spending and revenue larger than $1.5 trillion would send the message that Obama “is serious about deficit reduction,” said Ethan Siegal, a political analyst with the Washington Exchange.

“The White House wants to be ahead of the curve for deficit reduction,” Siegal said.

Stan Collender, a budget expert and partner with Qorvis Communications Inc., said Obama’s plan is designed to “take care” of the Republican charge that Obama has never laid out a deficit-reduction plan of his own.

Analysts were divided about whether Obama will “go big” with a plan to cut the deficit by $3 trillion or more or “go small” with a proposal nearer $2 trillion.
…

Watching livestreams of the NYC sit ins. Looks pretty mellow so far as the organizers planned. Let’s see what the numbers are tomorrow when people are supposed to be back at work. I’m also very curious to watch Bloomberg’s reaction.

anycdj, NYCboy, WTE anyone have anything to report?

Posted yesterday

Law firm warns of foreclosure ruling’s effect

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 8:15 p.m. Friday, Sept. 16, 2011

WEST PALM BEACH — The national law firm of Greenberg Traurig issued an alert this week warning its lawyers that a 4th District Court of Appeal ruling in favor of Palm Beach County homeowners could “dramatically change the foreclosure landscape in Florida.”

The Sept. 7 decision in the case of Gary and Anita Glarum vs. LaSalle Bank says that an affidavit of indebtedness submitted by the bank was hearsay because the person who signed it did not have personal knowledge of the case. It reversed a 2010 Palm Beach County Circuit Court summary judgment that said the Glarums owed the bank $422,677.

Ice Legal of Royal Palm Beach represents the Glarums, who have been in foreclosure since 2008 and continue to live in the home.

COMMENTS

I don’t support the banks, it’s their fault for giving out loans to people they knew couldn’t pay. But I am sick and tired of watching people live for free while I struggle to pay my rent, utilities,my student loans, attend college fulltime and work fulltime just to make ends meet. My neighbor has been living for free for 4 yrs now,has purchased 2 brand new cars since and has gone on multiple estravagant vacations.all b/c they know how to play the system. Would like 2 bail on my student loans

Student
11:02 PM, 9/16/2011

Student, did you miss a class or two in school? You should have bought a house, pulled out equity, paid off the student loans, walked away, and filed bankruptcy all before they changed the laws. That’s how the lawyers did it.

Only thing that will dramatically change the Foreclosure Landscape around here is a Cat 3+ hurricane. Most foreclosures won’t survive it, and owners who are underwater will be able to get out when their insurance check hits the mortgage company’s bank account.

Brown.Pelican
7:17 PM, 9/17/2011

http://www.palmbeachpost.com/money/foreclosures/law-firm-warns-of-foreclosure-rulings-effect-1862934.html - -

I Wanna Be Rich lyrics

Songwriters: Gentry, Melvin; Calloway, Reggie; Calloway, Vincent; Lipscomb, Belinda; saturday, jeff;

Imagine
Cash cold, and a free house that’s what I need

These bill collectors, they ring my phone
They bother me when I’m not at home
Ain’t got no time to be fooling round
On this house I am upside down, you see

I owe money, lots and lots of money
I want the pie in the sky
I owe money, lots and lots of money
So don’t be asking me why

I want a free house, ohh
I want a free house, ohh
I want a free house with some love, peace and happiness

I want my cake, wanna eat it too
I want the stars and the silver moon
I spend my money on lottery
My favorite number is 1 2 3, you see

I owe money, lots and lots of money
I want the pie in the sky
I owe money, lots and lots of money
So don’t be asking me why

I want a free house, ohh
I want a free house, ohh
I want a free house with some love, peace and happiness

I want to do things that owners do
Buy new cars and vacation too
These are things that you`re gonna find
When you`re house note is three years behind

Because I owe money, lots and lots of money
I want the pie in the sky
I owe money, lots and lots of money
So don’t be asking me why

I want a free house, ohh
I want a free house, ohh
I want a free house without the indebtedness

The Operation to Bail Out the World

Two days ago in New York, US Treasury Secretary Timothy Geithner uttered the words, “There is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.”

He then went on to relate that Germany’s increasingly beleaguered Angela Merkel has committed, along with the other strong eurozone countries (read: Germany), to do whatever it takes to assure that they were “not going to have a Lehman Brothers.”

Translated from bureaucratese, what the Sec. Treasury was telling us in the first instance was not that the European banks are at risk of failing – they clearly are – but rather that the eurozone governments will do whatever it takes to mask that stark reality from “the market.”

As to assessing the scale of the risk, there is an excellent interactive graphic available from ThomsonReuters. On the right side of the page are buttons that, when clicked, display the debt of each of the PIIGS, and who is holding that debt.
…

MSM journalists haven’t quite connected the dots just yet between a standing too-big-to-fail bailout guarantee and the tendency of international megabanks to make loans that look really dicey to anyone with at least half a brain. It’s not really Greece’s fault that banks were willing to offer them subprime loans, on the questionable assumption that bailouts would flow forth, if ever needed, like Manna from Heaven.

Questions and answers about the crisis in Greece
By BERNARD CONDON, AP Business Writer – 2 days ago

NEW YORK (AP) — Its economy is smaller than that of many U.S. states. It’s better known for olive oil and souvlaki than high finance. It last strode global affairs 2,400 years ago, when men wore togas.

Yet everyone is suddenly worried about Greece.

Stocks have whipsawed on signals that the country will or will not default on its debt. Economists are adjusting their estimates for economic growth in Europe and the U.S. based on what happens by the Mediterranean Sea.

The fear is that if Greece defaults, it could plunge Europe into recession and set off a cascade of mistrust and selling akin to what happened during the financial crisis in 2008.

How likely is that? No one is sure. Greece says it won’t default, and Germany and France have pledged support. But the news keeps getting worse, and amid the confusion and uncertainty, investors are frightened.

Here are some questions and answers to cut through the swirl of figures and rumors and, perhaps, better assess the risks:

___

Q: What’s a default?

A country is considered in default when it stops paying principal and interest to its lenders. For Greece, those lenders include European banks that own its national bonds. If Greece defaults, the banks would have to absorb big losses. That would make it more difficult for them to loan money, and that could push Europe, already weak, into a deep recession.

___

Q: What’s being done to make sure it doesn’t happen?

A: Bailouts and more bailouts. Last year, other European nations and the International Monetary Fund agreed to lend Greece 110 billion euros, or about $150 billion. A second aid package hammered out in July would help Greece avoid having to ask jittery bond investors for more money. But the bailout needs approval from 17 European legislatures, and that is not assured. German voters, in particular, are wary of sending more money to their free-spending neighbor.

On Thursday, the European Central Bank, the U.S. Federal Reserve and three other national central banks announced they would supply European banks with unlimited three-month loans.

___

Q: How did Greece get into this mess?

The government spent too much, didn’t collect enough in taxes and had to sell lots of bonds to make up the difference. For most of the past decade, Greece has run up budget deficits well beyond limits set by the European Union, a group of 27 nations that allow goods and workers to cross their borders freely.

When Greece fell into recession two years ago, bondholders worried they wouldn’t get their money back. To make sure they do, the EU is lending money to Greece, essentially allowing it to use new debt to pay off old debt.

Keeping Greece afloat will be tough. Like a loan officer at the bank who checks your salary and what you owe before deciding how much to lend to you, bond investors and other lenders to governments like to look at how much a country makes each year. And Greece looks like a bad bet. Its publicly held debt is more than 140 percent of its annual economic output, or gross domestic product. U.S. debt is 67 percent.
…

Too Big to Fail: The Hazards of Bank Bailouts
by Gary H. Stern, Ron J. Feldman, Paul A. Volcker in Books

$18 online, $23 nearby
3 reviews

By Gary H. Stern, Ron J. Feldman, Paul A. Volcker - Brookings Institution Press (2009) - Paperback - 230 pages - ISBN 081570304X

The potential failure of a large bank presents vexing questions for policymakers. It poses significant risks to other financial institutions, to the financial system as a whole, and possibly to the economic and social order. Because of such fears, policymakers in many countries — developed and less developed, democratic and autocratic — respond by protecting bank creditors from all or some of the losses they otherwise would face. Failing banks are labeled “too big to fail” (or TBTF). This important new book examines the issues surrounding TBTF, explaining why it is a problem and discussing ways of dealing with it more effectively.Gary Stern and Ron Feldman, officers with the Federal Reserve, warn that not enough has been done to reduce creditors’ expectations of TBTF protection. Many of the existing pledges and policies meant to convince creditors that they will bear market losses when large banks fail are not credible, resulting in significant net costs to the economy. The authors recommend that policymakers enact a series of reforms to reduce expectations of bailouts when large banks fail.

Sayonara, too-big-to-fail Megabanks.

Posted at 06:00 AM ET, 09/16/2011
Say ‘good-bye’ to ‘too big to fail’
By Dominic Basulto

A Wall Street sign hangs on a signpost in front of the New York Stock Exchange (LUCAS JACKSON - REUTERS)

Three years ago, as the world’s largest banks teetered on the edge of collapse, the global financial system nearly experienced the financial equivalent of Armageddon. When Lehman Brothers finally went under in September 2008, the chaos that ensued was largely blamed on a wide-scale embrace of the “too big to fail” mentality. Put simply: America’s largest financial institutions were considered too large, too complex and too hopelessly interconnected to ever be allowed to collapse. That is no longer the case, now that the FDIC, Federal Reserve and Financial Stability Oversight Council have united on the mandatory creation of “living wills” for the largest banks in the country.

The idea behind these “living wills” is simple — before a large financial institution is ever allowed to reach the precipice, it will be required to lay out, point-by-point, exactly how its assets would be distributed in the event of its demise. Contrary to the wonderfully elegant risk calculation models of the Wall Street moneymen, there are, indeed, Black Swans in the financial universe — and far more than might be expected. Making sure that banks like Citigroup, J.P. Morgan Chase and Bank of America have contingency plans in effect is a way of ensuring that a $700 billion bailout of the banking system will never be required again.

By next July, the nation’s largest banks with more than $250 billion in assets — the likes of Citigroup, J.P. Morgan Chase, and Bank of America — will be required to detail how they should be broken up if they, indeed, need to be broken up in the future. By Dec. 2013, any bank or bank holding company with more than $50 billion in assets will be required to present an orderly plan for how their assets can be liquidated before they file for bankruptcy. Even foreign banks with significant exposure to the U.S. market will be required to put together a comprehensive contingency plan.
…

Starting Esselstyn/going vegan today for my health, wallet, and sanity. I’m done with disgusting food; I can’t take it anymore.

I would also like to be around to see my kiddos into adulthood.

Sept. 17, 2011, 2:36 p.m. EDT
European leaders still divided on debt crisis
Advice from U.S. Treasury secretary brushed off
By MarketWatch

WASHINGTON (MarketWatch) — European leaders made little headway Saturday on resolving a banking crisis that threatens to weaken their economies and spread damage overseas to countries such as the United States.

Finance ministers from European Union nations gathered in Poland for two days of talks and even invited Treasury Secretary Timothy Geithner to their meeting to explain how the U.S. handled a similar crisis in 2008-09.

Yet EU ministers did not coalesce around any rescue plan for Greece or troubled European banks. Some also brushed off advice from Geithner, who’s urged them to stimulate their economies and act quickly to shore up their banking system.

Europe’s largest banks own billons of dollars worth of Greek bonds and they could suffer massive losses if Greece is unable make payments. The shaky finances of European banks, especially the biggest institutions in France, has unnerved global investors and made it harder for those banks to raise money.

The fear of a Greek default and damage to European banks has weighed heavily on U.S. markets over the past few weeks. Economists warn that a crisis could damage the world economy and perhaps even send the U.S. back into recession.

Europe is one of the largest trading partners of the U.S., accounting for almost 22% of the nation’s exports. As a result, the Obama administration has been pressing the EU to take quicker action to contain the crisis.
…

Garden is demanding Hwy’s attention, so eyes leave ya all with a current events tale, that has a linkage to the Korean War:

The local story: (open house @ their Ranch is Oct 29th)

“People tend to admire determination in other humans, but not at all in donkeys,” Meyers writes on the group’s website. “When donkeys show the tenacity that kept them alive in the wild, people call them stubborn. But if you think about it, being ’stubborn’ is not always a bad thing.”

Donkeys airlifted from Hawaii to California:
Peaceful Valley Donkey Rescue near Tehachapi flies 120 unwanted animals from the Big Island, hoping they can be adopted. An allied Texas facility also tries to save donkeys.
Reporting from Tehachapi—
By Catherine Saillant / Los Angeles Times / September 18, 2011

What started as an act of compassion has become a calling for Meyers, 48, and his wife, Amy, 37.

Eventually most of them were resettled in Waikoloa, where they roamed free until, once again, they became a nuisance, breaking down barriers and foraging close to roads and residential areas.

How sad — it sounds like taxpayer-funded, federally-guaranteed loans for millionaires might soon come be scaled back.

Sept. 16, 2011, 10:50 a.m. EDT
Bid to keep higher mortgage limits in peril
Without action by Congress, guarantees for big loans end Oct. 1
By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — An effort to create a short-term extension of regulations seeking to allow the maximum size of loans that can be guaranteed by Fannie Mae and Freddie Mac to remain at the current level of $729,750 is expected to fail, for now, a legislative aide said Thursday.

“We are disappointed,” said Christopher Boganno, spokesman for Rep. John Campbell, who’s a Republican from California and a key sponsor of the measure.

Without action by Congress, the limit on loans that Fannie and Freddie can guarantee will drop back to a maximum of $625,500 effective Oct, 1. Boganno said that he expects the guarantee level to drop down to the lower level on Oct. 1, and that there will be some negative consequences to the mortgage market in that upper price range as a result.
…

Realtors Are Liars®

.
Sorry for the delay but spent most of day with church activities. No fetch your 30 pieces Lying Realtor.

Sept. 18, 2011, 3:00 p.m. EDT
Greece holding emergency debt talks: report
By MarketWatch

SAN FRANCISCO (MarketWatch) — Greece’s government was meeting over the weekend to assess a new warning that future euro-zone aid will be withheld unless it can bring its unruly budget deficit into line, according to a media report Sunday. Prime Minister George Papandreou aborted a planned trip to the U.S. this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met, The Wall Street Journal reported. Without fresh aid, Greece will run out of money by mid-October, the Journal said.

$300m is spittin’ in the ocean so far as the profits from Megabank, Inc’s illegal banking activities are concerned.

Sept. 18, 2011, 3:39 p.m. EDT
UBS ups rogue trading loss figure to $2.3 billion
Swiss bank increases total from $2 billion; probes underway
By Russ Britt, MarketWatch

LOS ANGELES (MarketWatch) — UBS AG on Sunday raised its estimate of losses from unauthorized rogue trades to $2.3 billion, a $300 million increase from its earlier figure.
…

“Papandreou cancelled his U.S. visit to deal with the deepening crisis at home as euro zone partners made clear further funding for the debt-ridden country would hinge on adhering to agreed fiscal targets. ”

http://www.reuters.com/article/2011/09/18/greece-economy-idUSL5E7KI0N620110918

I don’t think they can last much longer, they are going under

http://www.youtube.com/watch?v=sEnNUwfDIV4&NR=1

Not sure if this was posted TV Trouble shooter had his own troubles with……..real estate ,,,,,um look at the amount…..staggering

http://www.denverpost.com/breakingnews/ci_18894403

I don’t know if this has been posted but on the National CBC they said that a report I believe by RBC said Canada’s housing was about to fall by 25%.

I believe it.

Sept. 18, 2011, 8:42 p.m. EDT
More warnings on China’s debt
Commentary: Shadow banking sparks new worries
By Craig Stephen

HONG KONG (MarketWatch) — Three years ago, China’s banks were widely applauded as they lent their way out of the last financial crisis, hauling much of the world with them. But now with these loans coming due and interest rates on the rise, officials and analysts are increasingly sounding the alarm.

Throw into the mix new revelations about the escalation of shadow banking, and it’s little surprise “China” and “subprime” are increasingly talked about in the same breath.

So far, the loans causing most unease are with local-government investment vehicles, estimated at up to $1.7 trillion. Cheng Siwei, a former vice-chairman of the standing committee of the National People’s Congress told the World Economic Forum last week in Dalian: “Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults.”
…

Sept. 18, 2011, 10:09 p.m. EDT
U.S. stock futures trade down sharply
By Sarah Turner

SYDNEY (MarketWatch) — U.S. stock futures were sharply lower in Asian trading hours on Monday after a weekend meeting of Europe’s finance ministers made little progress in solving the region’s debt problems and reignited concerns that Greece will default. Dow Jones Industrial Average (DJIA +0.66%) futures declined 1.3%, or 153 points, to 11,293, Nasdaq 100 futures were down 1.4% or 31.75 points at 2,275.50, while S&P 500 (SPX +0.57%) futures lost 1.6% or 18.60 points to 1,193.10.

Sliding toward financial crisis

An anti-austerity protester shouts at police officers outside the Greek parliament following an unscheduled cabinet meeting in Athens September 18, 2011. REUTERS/Yannis Behrakis

By Stella Dawson, U.S. Economics Editor

WASHINGTON | Sun Sep 18, 2011 3:01pm EDT

(Reuters) - Three years after the collapse of Lehman Brothers, the world’s financial system is sliding toward another major crisis.

At stake is the global recovery and future shape of Europe.

Calls are mounting for financial leaders of the world’s biggest economies meeting this week to take bold action, not on the scale of the $1 trillion rescue package of March 2009 but something equally important in policy terms.

The challenge for the Group of 20 talks in Washington on Thursday and Friday is to prevent a sovereign debt crisis centered in Greece from turning into a full-blown banking crisis. Such a crisis could engulf other indebted European countries, lead to messy defaults and plunge the region and world back into economic and financial turmoil.

“We have entered a dangerous new phase of the crisis,” said Christine Lagarde, managing director of the International Monetary Fund, last Thursday. “To navigate it, we need strong political will across the world — leadership over brinkmanship.”

World Bank President Robert Zoellick a day earlier said: “The time for muddling through is over.”

Pieces of a multipronged approach to the crisis have come into focus and should solidify further this week.

The political hurdles remain significant but if the parts of the program are endorsed by G20 finance ministers and central bankers, and their governments continue to deliver, investment strategists say turmoil in markets should abate.

Two factors are driving the crisis — political discord within Europe over how much support to give indebted euro-zone governments that are implementing tough fiscal austerity programs; and vulnerabilities within the region’s financial system, especially in France where banks hold 671.6 billion euros of government debt of high-deficit euro-zone countries.

These factors have fed upon each other in a vicious cycle. Talk among top German officials of Greece defaulting or leaving the euro zone has accelerated investor withdrawal of short-term funding to French banks, raising concerns about bank solvency.

To halt the cycle, the following steps are coming together:

* To support growth and ease lending costs, a growing number of central banks worldwide are loosening monetary conditions — an action likely to win the G20’s endorsement for countries where inflationary pressures are in check.

The Federal Reserve will play its part on Wednesday when it is expected to announce a plan to lower longer-term interest rates by shifting the balance of its $2.8 trillion securities portfolio away from short-term debt. How aggressively it does this, and whether it also cuts the interest rate paid to banks on their excess reserves held at the Fed, an idea gaining traction in markets, will signal the Fed’s degree of concern over the economic slowdown.
…

The euro zone shuns Geithner
Sep 16, 2011 16:55 EDT

Tim Geithner has experience flying around the world to address finance ministers and instructing them on how to solve their problems. He was a senior executive at the IMF from 2011(?) to 2003, after all — a period which coincided with major sovereign crises in South America.

So it may or may not be surprising that his latest attempt at such activity, in sunny Wroclaw, fell spectacularly flat. He waltzed into a meeting of euro zone finance ministers (he took a private car, they shared a bus), and informed them that they should follow his lead and leverage the money in the EFSF. In unison, the finance ministers responded by saying “why, Mr Geithner, that’s a simply spectacular idea, we’re shamefaced to admit that we didn’t think of it ourselves. Thanks for your advice, we’ll follow it, to the letter, forthwith!”

Or, not so much:

Mr. Juncker said, pointedly, that the euro group was not discussing “an increase or expansion” of its bailout fund “with a nonmember of the euro area.”

That’s Jean-Claude Juncker, president of the group of euro area finance ministers, and he was being diplomatic.

“I found it peculiar that even though the Americans have significantly worse fundamental data than the euro zone that they tell us what we should do and when we make a suggestion … that they say no straight away,” Maria Fekter told reporters afterwards…

“We can always discuss with our American colleagues. I’d like to hear how the United States will reduce its deficits … and its debts,” Belgian Finance Minister Didier Reynders said somewhat tartly.

It’s pretty clear, here, that in the wake of the debt-ceiling debacle Geithner has lost a significant amount of international heft. And it’s also clear that the euro zone has absolutely no cohesion, nor any real ability to do anything at all to resolve the current crisis.

Clashing with U.S. Treasury Secretary Timothy Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.

I’m not sure that Geithner was the right person to send to Poland to try to knock European heads together. As the biggest shareholder of the IMF, he would probably have been better off conferring with Christine Lagarde and getting her to make his point for him. The Europeans were never likely to take well to the Americans telling them what to do, especially when their gentle attempts to ask something of Geithner (maybe you might consider getting on board with a financial transactions tax?) were unceremoniously dismissed out of hand by the Treasury secretary.

In any case, Geithner seems to have failed in whatever it was that he was trying to achieve: the only unanimity he managed to foster was in the belief that he had no business telling the euro zone what to do.
…

Always remember, a closely-watched pot never boils over.

Investors peer through the gloom
By Natsuko Waki
LONDON | Sun Sep 18, 2011 11:23am EDT

(Reuters) - Even after a rare four-day rally in world stocks, investors are unlikely to let their guard down in a week filled with heavy U.S. and euro zone policy risks that could potentially disappoint again and trigger a sell-off.

There is no doubt gloom is widespread. However, investors are also beginning to realize that betting too strongly on a collapse of financial markets with policymakers poised for action to combat global crisis may be unwise.

Thursday’s coordinated action by five major central banks to add liquidity to a European banking system struggling with its dollar funding needs has lifted world stocks, measured by MSCI, from a one-year low.

Focus in the coming week will be on a policy meeting of the U.S. Federal Reserve. The Fed is posed to increase downward pressure on long-term interest rates to spur the recovery, reviving “Operation Twist,” first undertaken in the 1960s.

Despite the rally in the past week, the MSCI index is still down more than 9 percent since January and the third quarter performance looks set to be the worst since the June-September period in 2010.

Furthermore, against conventional wisdom, total returns on a 10-year rolling basis on government bonds are higher than on equities. This is providing much food for thought for long-term investors.

“In a very short term, positive news may come out and policymakers will announce something. Economic data is not as bad as falls in the market would’ve suggested. So over the next 4-6 weeks we could get slightly higher,” said Jeremy Beckwith, chief investment officer at wealth manager Kleinwort Benson.

“Everyone is hoping policymakers are coming up with good ideas, although it’s hard to see what good ideas are… The euro zone is such a huge issue and one day you could wake up and find out Greece has defaulted and get caught out. So our position is to underweight risk.”
…

So the latest is that DSK boinked the maid, FOR FREE, but it was not rape.

The story was a lot more convincing before the clarification about how the maid supposedly offered free sex to someone she just met. By contrast, Clinton had plenty of time to get to know Lewinsky before the onset of their tryst.

18 September 2011 Last updated at 19:24 ET
Dominique Strauss-Kahn rues New York hotel maid liaison

New York prosecutors dropped all criminal charges against Strauss-Kahn last month, though he still faces a civil suit

Dominique Strauss-Kahn has described his liaison with a hotel maid in New York, over which he was charged with attempted rape, as “inappropriate”.

In his first TV interview since charges were dropped, the ex-IMF chief said he regretted the affair had lost him his chance to stand for French president, but denied using violence.

He said he had been afraid and humiliated by the US justice system.

Mr Strauss-Kahn, 62, resigned as IMF chief in May after his arrest.

The maid, Nafissatou Diallo, is bringing a civil suit against him.

The criminal charges were dropped in August when prosecutors said Ms Diallo’s lack of credibility meant the case could not continue.
‘Missed appointment’

Mr Strauss-Kahn was questioned by Claire Chazal, a friend of his wife Anne Sinclair, on the main Sunday night bulletin of France’s TV1 - watched by a huge audience.

“What happened was more than an inappropriate relationship. It was an error,” he said, adding that he regretted it infinitely.

Dominique Strauss-Kahn had waited a fortnight to give his side of the story. “Everyone has had their chance”, he said, “except me.”

He brought with him a copy of the New York prosecutor’s report. “There was neither violence nor coercion nor aggression or any criminal act,” he said. “Neither scratches or injuries, no sign of violence. Not my words but the words of the prosecutor.”

Since his return to France, a team of lawyers and advisers have been heavily involved in the negotiations for this interview. But scripted or not, there was an apology to the French people and his family.

This was a very astute politician who wanted to present himself as a victim.

In all it was a polished performance from a politician who has had plenty of time to consider the questions he might be asked.

The reaction in the coming days from his party and the public will tell us whether there is sympathy with that position and whether ultimately his rehabilitation is possible.

Strauss-Kahn’s ‘moment of truth’

“I think it was a moral failing and I am not proud of it,” he told Ms Chazal.
…

Denmark’s Housing Market Faces Correction as Buyers Shun 25% Overvaluation
By Frances Schwartzkopff - Sep 18, 2011 3:01 PM PT

Denmark’s property market may be facing another correction after a housing boom that turned to bust at the height of the financial crisis failed to push prices low enough to entice buyers.

The Nordic country’s housing market may still be as much as 25 percent overvalued, according to Jes Asmussen, chief economist in Copenhagen at Svenska Handelsbanken AB.

“Denmark is at risk of getting trapped in a very, very slow growth environment,” Asmussen said in an interview. “There’s a risk that we will lose credibility in the financial markets in the long run.”
…

The Financial Times
September 18, 2011 7:47 pm
Spanish lenders to be seized by Madrid
By Victor Mallet in Madrid

Spain’s official bank rescue fund, Frob, is preparing to nationalise three more groups of savings banks at the end of the month at a cost of nearly €5bn ($6.9bn), but could allow two others extra time to find investors to help boost their capital, according to people familiar with the discussions.

NovaCaixaGalicia (NCG), Caixa Catalunya and Unnim are expected to be recapitalised by Frob after failing to present adequate plans to secure new investors by a September 10 deadline.

The two that are likely to benefit from a temporary reprieve are Liberbank and BMN (Banco Mare Nostrum). Foreign investors have recently been examining the assets of most of the banks with capital shortfalls and, says one Madrid businessman involved, “they have certainly been spending a lot of time and due diligence on it”.

NCG, meanwhile, was quoted by Bloomberg as saying that Christopher Flowers of US private equity firm JC Flowers & Co met NCG executives in Galicia on Friday, in what is likely to have been an 11th-hour attempt by NCG to find a financial saviour and escape the clutches of the state.

All the groups have been created out of mergers between regional cajas as part of a nationwide restructuring plan that has already reduced the number of cajas from 45 to 15 and forced most of them to establish commercial banks.

With its lenders battered by the collapse of the country’s housing construction boom in 2007 and by the eurozone’s sovereign debt crisis, Spain earlier this year ordered its banks to ensure core capital ratios of at least 10 per cent of risk-weighted assets, or 8 per cent if they were listed on the stock exchange or had outside investors, by September 30.

The government and the central bank originally calculated that the total amount of new capital needed in the banking system was about €15bn, of which nearly €4bn was subsequently raised from the initial public offerings of Bankia and Banca Cívica in July.

Bank analysts say the final bill for the taxpayers will be two or three times as much as the official €15bn projection and possibly more than €50bn.
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Spanish house price drop continues as road show hits Hamburg
15 September 2011, 07:44 PM

Spanish house prices dropped by 6.8% year-on-year in August, according to the National Statistics Institute, even as a delegation of Spanish real estate developers and banks, led by Housing Minister Beatriz Corredor, visited Hamburg to showcase 4,000 houses as part of Madrid’s attempts to shift the nation’s ballooning housing stock.

Billed as ideal second homes for northern Europeans and made more attractive by discounts of up to 40% on 2007 prices, a reduced value-added tax on purchases and a guaranteed legal framework for investors, the majority of the houses are located on the Balearic and Canary islands and along the Mediterranean coast. “The initiative aims to recover channels of communication, distribution and sale with the main markets interested in holiday homes, which represent a third of all of Spain’s residential units,” Corredor told the Europa Press portal. This second phase of the road show begins as National Statistics Institute (INE) data show house prices dropped by 6.8% year-on-year in August, while sales have slumped more than 30%.

Behind British home buyers, Germans have the largest investment in Spanish residential real estate, up 13% in 2010 against 2009, while 8.8m German tourists visited Spain, 16.7% of total foreign arrivals. The road show will continue to France, the Netherlands, Sweden and the UK through October.

Deflating speculation on the property bubble
David Potts
September 18, 2011

Home prices will halve over the next few years, says the only forecaster to have predicted both the record sharemarket run to 2007 as well as the subsequent GFC. And that was in 1993.

More recently, he also predicted the property collapse in the US, selling his Florida home at the peak in 2005 and renting ever since.

He’s predicting a second big drop in the US and Australia’s first, which, in four years, could turn McMansions into ghost houses.

Harry Dent, who runs the US-based forecaster HS Dent Foundation, isn’t alone in predicting property prices will collapse.

US experts do seem gobsmacked by our prices, understandable when theirs were down 18.9 per cent at one point - and that’s an average, so some houses did far worse - which is a bigger slump than during the Great Depression.

No wonder our banks have produced special housing price studies for their roadshows in the US. The gist is, what are you worried about?

Plenty, it seems.

The world’s most successful fund manager, Jeremy Grantham of GMO, said on a visit earlier this year that Australian property was a bubble about to burst, though later recanted slightly to suggest it might deflate slowly rather than pop.

But there are also local economists, still a minority, who say the same.
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US banks step up actions against homeowners (01:49)

Banks have stepped up their actions against US homeowners who have fallen behind on their mortgage payments. 16/09/11