Home Prices in U.S. Decrease More Than Forecast
– Home prices dropped more than forecast in October, a sign housing will remain a weak link as the U.S. recovery accelerates into the new year. The S&P/Case-Shiller
index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009, the group said today in New York. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg News. A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances. Federal Reserve policy makers this month said “depressed” housing and high unemployment remained constraints on consumer spending, reasons why they reiterated a plan to expand record monetary stimulus.
Credit Suisse Sells Soured Loans to Appllo at Huge Discount
– Credit Suisse Group is selling a $2.8 billion portfolio of soured commercial-property loans to Apollo Management LP for $1.2 billion, marking one of the largest bank sales of distressed real-estate loans since the downturn, according to people familiar with the matter. The properties backed by the loans include apartment buildings in Germany and hotels in Denmark, Sweden and France, many of them of lower quality and in hard-hit locales, the people say. Real-estate investors are watching loan sales closely. Ever since the 2008 financial crisis, expectations of a world-wide wave of defaults by landlords and fire sales by banks have tantalized private-equity firms. In the early 1990s, some of these same firms generated handsome profits after buying big loan portfolios from the government as it took over failing U.S. savings-and-loans. This time around, fire sales by banks have been few and far between. Banks have been wary of taking big losses on their boom-time loans while regulators have encouraged banks to restructure many of their commercial mortgages rather than simply foreclose.
Triple The National Debt – Hugh Jidette For President. Let’s Borrow Like There’s No Tomorrow. Hugh Jidette is running for President on a platform of lowering taxes while increasing spending. How? One word. Debt. Sure, we’re saddling future generations with it, but what have future generations ever done for us? Hugh Jidette is running ads across the country, at least until the networks realize he can’t afford to pay for them. In case they pull the ads, you can watch them here, and share them with friends.
As the state’s stack of unpaid bills grows, Gov. Pat Quinn is floating the idea of borrowing roughly $15 billion to alleviate the pressure, though taxpayers would be saddled with loan payments for years. The governor has approached several lawmakers with a plan he’s dubbed a "debt bond." While the name is somewhat redundant, the thinking is the state can pay back what it owes and plug its big budget hole — if only for a year. Supporters say the outsize loan would provide instant cash to schools, doctors and social welfare agencies that have laid off workers and cut services as they await long-overdue payments.
In Los Angeles, When It Rains, It Pours – Red Ink
– The recent deluge widened and deepened many previously neglected potholes, necessitating numerous lane and street closures throughout the City. Unfortunately for our cash starved City that has neglected our streets for years, it costs exponentially more to repair these larger car devouring potholes, blowing an even wider hole in the City’s ever increasing budget deficit. But the City’s finances and very solvency are not a top priority for Mayor Villaraigosa despite the looming budget deficit of $350 million, the $16.7 billion unfunded pension liability, and our Third World infrastructure which requires an investment of $10 billion just to reach “economic sustainability.”
Despite gargantuan deficit, Texas officials to launch ambitious building plans – Got a hole in your budget? Cut spending. Shake the couch for spare change. Raid your savings. Ask for a raise, if you think you can get away with it. And when all else fails, sell your assets, right? But not in Texas. In fact, the folks who handle the state’s real estate are focused not on the current budget mess, but on ambitious building plans they say will make long-term financial sense: getting state agencies and employees out of expensive building leases and into new buildings owned by taxpayers. They’re also looking at plans for private development on state land along a seven-block canyon of parking garages and smaller buildings near the Capitol.
For-Profit College Share Slump Converges With Surging Student Life-Debtors – Students seeking to move up in life by getting a degree from a for-profit college are being trapped in a growing underclass of education debtors. Under U.S. law, their loan obligations can rarely be discharged in bankruptcy, making them more onerous than credit-card debt or subprime mortgages taken out before the housing bubble burst. Along with blocking students from further education and access to housing, defaults can subject them to government confiscation of tax refunds and Social Security payments, as well as paychecks. Students at for-profit colleges, which rely on federal financial-aid programs for as much as 90 percent of revenue, carry the biggest loans in U.S. higher education. Bachelor’s degree recipients at for-profits have median debt of $31,190 compared with $17,040 at private, nonprofit institutions and $7,960 at public colleges, according to Education Trust, a Washington-based nonprofit research and student-advocacy organization.
U.S. house prices tumble in October
– Home prices tumbled in October, according to data released Tuesday, with six cities setting new lows as the housing market remains divorced from the upturn seen in other parts of the U.S. economy. The non-seasonally-adjusted S&P/Case-Shiller 20-city composite home-price index fell 1.3% on a monthly basis and 0.8% on an annual basis in October. Economists polled by Dow Jones Newswires had expected a 0.6% decline in the annual figure. Prices hadn’t dropped on an annual basis since January and are 29.6% below their peak. “The double dip is almost here, as six cities set new lows for the period since the 2006 peaks,” said David M. Blitzer, chairman of the index committee at Standard & Poor’s. “There is no good news in October’s report. Home prices across the country continue to fall.” Atlanta, Charlotte, Miami, Portland, Seattle and Tampa hit their lowest levels since home prices started to fall in 2006 and 2007.
Ariz. Cities Aim To Protect State-Shared Revenue – A top priority of cities and towns during the upcoming session of the Arizona Legislature is protecting the tax revenue distributed back to them from the state. The state faces a budget deficit of $2.25 billion. Cities fear state-shared revenue that comes from income, sales and vehicle-license taxes could be an inviting target for the Legislature in the session that begins Jan. 10. Incoming Senate President Russell Pearce said the Legislature should consider reducing the municipalities’ portion of state revenue and let them raise their own revenue.
French debt reaches 81.5 pct of GDP in Q3 end – France’s gross debt reached 1,574.6 billion euros (2,082.3 billion U.S. dollars) at the end of the third quarter of 2010, amounting to 81.5 percent of whole national output, the state statistics bureau Insee said on Tuesday. The figure by the end of September decreased to 17 billion euros (22.5 billion dollars) compared to the second three months of the year, and lowered the percentage from 82.9 percent in that period, the national agency added. Among the public debt, general government net debt played a negative role in need of strict control despite of efforts aiming to slash the public expenditure.
Illinois Default Insurance Cost Rises as Weak States Punished – The cost of insuring Illinois’s bonds against default rose to the highest level in five months as the state headed for the new year without a plan to finance a $3.7 billion pension-fund contribution. The cost of credit-default swap insurance on the lowest- rated state after California has risen 16 percent to $330,000 to protect $10 million of debt, from $285,000 on Dec. 3, according to data compiled by Bloomberg. “They’re punishing all the states but they’re punishing the worst states more,”“Illinois has been worse for a while.” Insuring Illinois against default now costs more than that for California, the lowest-rated U.S. state according to Standard & Poor’s. Covering the most-populous state’s general- obligation debt averaged $291,000 in December, Bloomberg data show. S&P ranks California at A-, its fourth-lowest investment grade, and Illinois at A+, two levels higher. The cost of insuring Illinois debt is more than three times that of Texas at $102,000. Texas, which S&P said felt the effects of the recession later and began to pull out earlier, may face a deficit of as much as $25 billion in the next two years, according to an Oct. 25 report in the Dallas Morning News.
Andes Villagers Resist China’s Claim on $50 Billion Mine
-(video)- Before Aluminum Corp. of China, known as Chinalco, can mine the more than $50 billion of copper ore buried in the Toromocho mountain in Peru, the company must get the residents of the nearby town of Morococha to leave their land. Some residents are resisting the move, despite the offer of a free house in a newly built town. They want a greater share of the spoils. The problem illustrates the challenges global mining companies face as copper resources decline, consumer demand increases and exploration is pushed to the frontiers of the earth.
Baby boomers near 65 with retirements in jeopardy
– Through a combination of procrastination and bad timing, many baby boomers are facing a personal finance disaster just as they’re hoping to retire. Starting in January, more than 10,000 baby boomers a day will turn 65, a pattern that will continue for the next 19 years. The boomers, who in their youth revolutionized everything from music to race relations, are set to redefine retirement. But a generation that made its mark in the tumultuous 1960s now faces a crisis as it hits its own mid-60s."The situation is extremely serious because baby boomers have not saved very effectively for retirement and are still retiring too early,"
Medicare will soon bulge with baby boomers
– Richard Carlson turns 65 in January but already carries a symbol of that milestone – a Medicare card. Carlson is among the 77 million baby boomers born between 1946 and 1964 who will become Medicare-eligible at the rate of one every eight seconds beginning in January. The implications of the population bulge are enormous – for government spending as well as for the care seniors will get. Medicare is already sagging under the weight of cost increases above inflation that are driving it toward insolvency. The Centers for Medicare and Medicaid Services expects 2.8 million 65-year-olds will enter the system next year. Their average costs will exceed $7,700 per person
Reinhart Says Fed Treasury Purchases May Exceed $600 Billion
— The Federal Reserve may expand its purchases of U.S. Treasuries, or quantitative easing, beyond its $600 billion target, said Vincent Reinhart, who was the Fed’s chief monetary-policy strategist from 2001 until September 2007. “They do all of QE2 because they don’t want to be seen as succumbing to outside pressure,” Reinhart, now a scholar at the American Enterprise Institute in Washington, said in an interview on Bloomberg. “I think there is a chance there will be QE3 and it is going to be because the unemployment rate is above 9 percent,” he said, referring to a third round of purchases."
Michigan Town Is Left Pleading for Bankruptcy
— Leaders of this city met for more than seven hours on a Saturday not long ago, searching for something to cut from a budget that has already been cut, over and over. This time they slashed money for boarding up abandoned houses — aside from circumstances like vagrants or obvious rats, said William J. Cooper, the city manager. They shrank money for trimming trees and cutting grass on hundreds of lots that have been left to the city. And Mr. Cooper is hoping that predictions of a ferocious snow season prove false; once state road money runs out, the city has set nothing aside to plow streets. “We can make it until March 1 — maybe,” Mr. Cooper said of Hamtramck’s ability to pay its bills. Beyond that? The political leaders of this old working-class city almost surrounded by Detroit are pleading with the state to let them declare bankruptcy, a desperate move the state is not even willing to admit as an option under the current circumstances. “The state is concerned that if they say yes to one, if that door is opened, they’ll have 30 more cities right behind us,”