Daily Digest

Daily Digest 3/7 - Greece Selling Off Corfu, Districts Peer Into Budgetary Abyss, Rising Gas Prices Trap Lobstermen

Wednesday, March 7, 2012, 11:46 AM
  • Cash-strapped Greece begins its bid to raise funds… by selling off Corfu
  • ECB Balance Sheet Jumps to a Record $3.96 Trillion Amid Lending to Banks
  • Ky. retirees may lose cost-of-living increases
  • School Districts Peer Into Budgetary Abyss
  • Schools face $8 million in possible budget cuts
  • State analysts brief Maryland lawmakers on ‘doomsday’ budget plan
  • Biggest Court in Nation Cuts Operations in 'Crippling Blow'
  • Ontario budget: Hundreds of daycares will close without new money in the spring budget
  • Unintended Consequences: ECB’s Effort to ‘Save’ Europe Will Lead to Its Demise, Mauldin Says
  • Long Beach board of education to review worst-case scenario budget
  • China orders local govts to set up debt repayment funds
  • China’s debt mounts to $2.78 trn, 43% of GDP
  • Healthcare firms asked to take Greek debt writedown
  • Suffolk budget panel predicts $530M deficit
  • EIA raises price forecasts for U.S. oil, fuels
  • Spain's Regions commit to new 2012 deficit target
  • Alarming Number of Homeless Students
  • Some states consider higher fuel taxes
  • Indonesia Seen Facing Inflationary Spiral
  • Rising gas prices trap lobstermen

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Economy

Cash-strapped Greece begins its bid to raise funds… by selling off Corfu

Greece is trying to sell off a huge slab of land on the holiday island of Corfu to raise cash to tackle its debts, it emerged today.

Government officials revealed a tender has been launched for the exploitation of a large seaside plot on the western resort island. The Hellenic Republic Asset Development Fund said it is seeking to sell the 'right of surface' for the 120-acre, forested property at Kassiopi for up to 100 years.

ECB Balance Sheet Jumps to a Record $3.96 Trillion Amid Lending to Banks

The European Central Bank’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week, 31 percent bigger than the German economy, after a second tranche of three-year loans.

Lending to euro-area banks jumped 310.7 billion euros to 1.13 trillion euros in the week ended March 2, the Frankfurt- based ECB said in a statement today. The balance sheet gained 330.6 billion euros in the week. It is now more than a third bigger than the U.S. Federal Reserve’s $2.9 trillion and eclipses the 2.3 trillion-euro gross domestic product of Germany (EUANDE), the world’s fourth largest economy.

Ky. retirees may lose cost-of-living increases

State and local government retirees in Kentucky won't get cost-of-living pension increases over the next two years under a budget proposal that could face a House floor vote by midweek.

Some 200,000 retirees had been slated to receive 1.5 percent increases, but House lawmakers, faced with tight finances, are recommending those hikes be suspended. "It's a difficult budget," said state Rep. Rick Rand, chairman of the House Appropriations and Revenue Committee. "This is just the times we're in."

SCHOOL DISTRICTS PEER INTO BUDGETARY ABYSS (San Diego)

The Carlsbad school board just voted to eliminate 20 percent of its teaching positions. San Diego Unified is poised to issue more than 1,600 pink slips to teachers. Sweetwater Union is contemplating one-year cuts that amount to nearly triple the cuts previously made in a decade. At this point, school officials can’t say whether all or even some of that may come to pass.

School districts are facing perhaps their most difficult and uncertain budget year ever. The annual budget dance has always had a specter of unpredictability because deadlines force districts to make budget and staffing decisions well before they know how much money they will get from the state.

Schools face $8 million in possible budget cuts (Napa Valley, CA)

Gov. Jerry Brown hopes to raise $6.9 billion in revenue by temporarily increasing the state sales tax by half a cent and raising taxes on individuals who earn $250,000 or more per year. The tax increases would expire in five years.

If the taxes don’t pass, Napa Valley Unified will face a mid-year cut of up to $450 per student and a gaping budget shortfall of $8.6 million, said Wade Roach, assistant superintendent of business services. The impacts of those cuts would be widespread, affecting everything from transportation to counseling services.

State analysts brief Maryland lawmakers on ‘doomsday’ budget plan

Maryland analysts have outlined nearly $800 million in additional budget cuts to fill budget gaps in case lawmakers can’t agree on new taxes or savings.

Warren Deschenaux, director of the state’s Office of Policy Analysis, presented a wide-ranging variety of cuts on Tuesday that would impact education, health, environmental programs and state agencies. It’s being described as a “doomsday” budget plan.

Biggest Court in Nation Cuts Operations in 'Crippling Blow'

The nation's biggest court announced Monday extraordinary staff cuts and courtroom closures as a result of both California's budget crisis and long term policy by the top administrative brass for California's courts.

"These are extraordinary measures, never before seen in the Los Angeles Superior Court," wrote Presiding Judge Lee Edmon in a memo sent to court staff Monday. "These changes will affect every judicial officer and staff member -- as well as the millions of attorneys and litigants who depend upon our courts to deliver justice."

Ontario budget: Hundreds of daycares will close without new money in the spring budget

Hundreds of Ontario daycares will close if there is no new money in the provincial budget this spring, advocates warn.

At least $287 million in emergency funding is needed this year to stabilize the system, say parents and child-care operators who are taking their campaign to Queen’s Park on Tuesday. “We need that money and we need it right now,” said Andrea Calver of the Ontario Coalition for Better Child Care. “If we don’t get it, we will see a wave of closures across this province and we will see a lot of heartache from parents who, even today, are having trouble finding child care.”

Unintended Consequences: ECB’s Effort to ‘Save’ Europe Will Lead to Its Demise, Mauldin Says (Daily Ticker video)

The drama over Greece's bailout comes to a head this week. Debt holders have until Thursday to accept or reject the "voluntary" 53.3% haircut on their Greek holdings. If less than 75% of bondholders reject the terms, Greece will be considered in default, which would be the first sovereign default in the eurozone.

Long Beach board of education to review worst-case scenario budget (CA)

The Long Beach Unified Board of Education on Tuesday is expected to review a grim budget plan that calls for extreme cuts including eliminating high school sports and slashing the school year by 20 days if a November tax initiative fails.

In a worst-case scenario, the district projects a $189 million deficit out of its $700 million operating budget by 2014 if state budget cuts continue.

China orders local govts to set up debt repayment funds

Many analysts believe local government debt could threaten China's banks if cash-strapped local governments default and saddle them with a stock of sour loans. As banks supplied most of the local government loans, a domino effect could put overall financial system stability at risk in a worst case scenario.

Although China's local debt woes have festered for over a year, Beijing has offered few details on the extent of the problem or possible solutions. The lack of information led some analysts to guess at least a fifth of loans, worth 2-3 trillion yuan, have gone bad. They say that could cause banks' non-performing loan ratios to more than quadruple to about 5 percent.

China’s debt mounts to $2.78 trn, 43% of GDP

China may be sitting on world’s highest foreign exchange reserves of about USD 3.20 trillion but it is also burdened with USD 2.78 trillion government debt causing great deal of concern among policy makers.

China's government debt amounts to about 17.5 trillion yuan (USD 2.78 trillion) about 43 per cent of the country's gross domestic product (GDP), Yang Kaisheng, president of the Industrial and Commercial Bank of China, said Tuesday. It is composed of 10.7 trillion yuan (USD 1.7 trillion) of local government debt and 6.8 trillion yuan of central government debt, Yang told a press conference on the sidelines of China's annual parliamentary session.

Healthcare firms asked to take Greek debt writedown

International healthcare firms have been asked to accept losses on Greek government bonds they got in exchange for unpaid hospital bills, evidence that the country's debt restructuring deal will have an impact beyond the mainstream financial sector.

Suffolk budget panel predicts $530M deficit

Suffolk County's fiscal health was given an ominous outlook Tuesday morning, with an independent budget panel forecasting a combined deficit of $530 million through 2013. The panel, formed in January by County Executive Steve Bellone, said lawmakers and officials had crafted budgets with overly optimistic projections in sales tax growth and unrealistic savings from layoffs and overtime reductions.

"The truth is worse than we could have imagined," Bellone said in introducing the panel at a meeting of the legislature's budget and finance committee. "It is not pleasant, but it is reality."

EIA raises price forecasts for U.S. oil, fuels

The Energy Department raised its price forecasts for crude oil, gasoline and other petroleum products Tuesday, estimating oil prices will average $106 a barrel this year. U.S. retail gasoline prices are expected to average $3.92 a gallon this summer, with average monthly prices peaking at $3.96 a gallon in May, the Energy Department's forecasting group, the Energy Information Administration, said in its monthly Short-Term Energy Outlook.

Spain's Regions commit to new 2012 deficit target

Two months after coming to power at the end of December, the conservative leader last week announced his government will prepare a 2012 budget that aims to reduce its deficit to 5.8% of gross domestic product, far in excess of the 4.4% target his predecessor, Jose Luis Rodriguez Zapatero, had committed to with the European Union.

Under Rajoy's plan, the central government in Madrid will be allowed to run a deficit of 4% of GDP in 2012, up from 3.2% earlier, and regional governments will be allowed a new target of 1.5%, up from 1.3%

Alarming Number of Homeless Students (Colorado...video)

It’s a statistic that may alarm you, and even tug at your heart strings. Ten percent of students in one Southern Colorado School District are without a home.

Some states consider higher fuel taxes

As if gas prices weren't high enough, several states across the U.S. are looking to raise fuel taxes they say are needed to pay for roads and bridges that are outdated, congested and in some cases, dangerous.

Maryland's governor is proposing a phased-in 6 percent sales tax by 2 percent a year, which would raise about $613 million annually when fully implemented. Iowa is considering raising its current 21-cent-per-gallon tax by either 8 cents or 10 cents. Such proposals were hard to even contemplate during the recession and its immediate aftermath. Now, states forced to grapple with the problem are running into record-high gas prices for this time of year and lingering effects of the recession.

Indonesia Seen Facing Inflationary Spiral

Indonesia could get caught in an inflationary spiral as rising global oil prices and falling gasoline subsidies at home combine with rising wages, said Sofjan Wanandi, chairman of one of the country's most influential business organizations.

Local governments raised minimum wages in key industrial zones near Jakarta by as much as 36% last month. Similar increases could spread to other parts of the country

Rising gas prices trap lobstermen

Dave Casmi has made his living fishing for lobsters along the coast of Cape Cod, Massachusetts, for 40 years. But he and other lobster fishermen are asking themselves if it's even worth untying their boats from the dock anymore.

In today's market, they are suffering from an economic triple whammy: High fuel prices mean it's more expensive to trap lobsters, and the recession finds fewer people splurging on their catch. Plus, a lobster's market value begins depreciating the moment it's caught. "I'm getting what I got 15 years ago," he said, referring to the amount distributors are paying for his catch. "Just how long would you spend $3 to make $4?"

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

18 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Posts: 2785
Mish....cake for hedge funds holding Greek debt

Some headlines first:

  1. Nearly 1,700 Layoff Warnings Issued by City Schools (San Diego)
  2. Hamtramck, Wayne Co. face rising struggles making payroll
  3. With a Pension Shortfall, Companies Want to Kick in Even Less
  4. California Pension May Lower Assumed Return for First Time Since Recession
  5. Spanish farmers faced with ruinous tax hikes
  6. Hospitals face $170m hit from sick carbon tax (Victoria)

.....................Athens' Pitifully Hollow Warning to Bond Holdouts; Self-Serving, Misguided Hype by IIF on "Implications of a Disorderly Greek Default and Euro Exit" (Mish)...."Greece has threatened to default on any of its bondholders who do not take part in this week’s €206bn debt restructuring, raising the pressure on potential holdouts.

The threat is aimed in particular at the 14 per cent of investors who own Greek bonds issued under international law. The remaining 86 per cent, who own bonds covered by Greek law, were warned in the same statement that Greece would use so-called collective action clauses to make any deal binding on any holdouts"

Mish's comment: "Pitiful Threat

This pitiful threat demonizing evil hedge funds will prove to be as effective as a parent telling a child, "If you don't clean up your room, I will give you piece of cake".

The hedge funds want a default. They are the ones covered with CDS contracts that will pay them in case of default. Those covered by CDS contracts have no incentive to agree to deals and threats to blow the entire deal sky high is exactly what most of the holdouts want to hear"

Other updates:

Four Greek pension funds refuse to join debt swap-official

The pension funds have come under pressure from workers' unions worried the writedown on Greek debt holdings will affect the viability of their funds. About eight or nine funds have agreed to take part but pension funds for journalists, police, the self-employed and hotel workers - which hold Greek debt worth 2 billion euros - have refused, the official said.

NY county declares emergency, could roil municipal bond market

The top government official in New York's Suffolk County said on Tuesday he would declare a fiscal emergency, a move that could roil the $3.7 trillion municipal bond market. County Executive Steve Bellone said he was taking the action after an independent task force found it would have a deficit of $530 million in a three-year period.

Investors holding $106 billion in Greek debt agree to participate in bond swap

Private investors holding some €95 billion ($125 billion) in Greek bonds said Wednesday that they will participate in a massive debt relief for the struggling country, bringing Athens closer to avoiding default.......Investors holding a total of €206 billion ($271 billion) in Greek bonds have until Thursday evening to decide whether they want to participate in the bond swap. Athens needs to reach a participation rate of at least 66.7 percent of investors holding bonds issued under Greek law to force the deal onto holdouts.

Armstrong Says There’s ‘No Incentive’ to Agree to Greek Swap

Armstrong Investment Managers LLP, a London-based money manager that oversees about $350 million, said it won’t participate in Greece’s debt swap because it may recoup more money by holding out. There’s no incentive to agree to the debt exchange because investors are likely to be swept in anyway by so-called collective action clauses, Managing Director Patrick Armstrong said in an interview with Bloomberg Television today. Holders of Greek bonds that mature this month have a “small window” of getting paid out at face value if they hold out, he said.

Philadelphia school deficit could hit $400 million, official says

The Philadelphia School District could face a budget shortfall of as much as $400 million in the next fiscal year, a top district official said Tuesday. Or it could be $145 million - "still very big" but more manageable, said Thomas E. Knudsen, the district's chief recovery officer.

States facing ‘sleeping cancer’ in 96% unfunded retiree benefits

The near-failure by U.S. states to fund rising retiree health-care costs for millions of government workers threatens to produce budget crises similar to the one that pushed Stockton, Calif., to take a step toward bankruptcy last week. States haven’t financed almost 96 percent of the $627.4 billion they were projected to owe for future retiree benefits in 2010, according to Bloomberg Rankings data. The estimated deficit grew from about 95 percent in 2009 as governors coped with lower general-fund revenue and rising demand for services following the longest recession since the Great Depression.

Creditors join forces to challenge Greek bond swap

Investors in a Swiss-law governed Greek government bond have teamed up to challenge the terms of Athens' proposed bond swap, highlighting the wave of litigation the country could face in trying to cut its debt

And the losers from Greek CDS contracts are… German (Ambrose Evans-Pritchard)

Davos's picture
Davos
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Posts: 3620
Hells Gate

That video of the teens being homeless was incredible Sax.

Just when you thought the inter-generational tyranny couldn’t possibly deteriorate further.  Blankfein walks around professing to be doing God’s work.  I never thought God’s work was a negative externality that subjected teens to predators for shelter.  Amazing how the innocent third parties were decimated by a handful of psychopaths so they can jet around in Gulfstream V’s with gold faucets. 

Anne Stattelman, Director of Posada, says that the numbers are indicative of Pueblo County’s high poverty rate, reportedly one of the highest in the state. According to the 2010 Census, the county has the highest child poverty rates in the state, an alarming 31 percent.

Stattelman says over they years the rate of ten percent for students reporting they were homeless sometime during the school year, has been fairly consistent. Where she becomes even more concerned is the number of those who do not have a family is growing.

Stattelman says many teens turn to unsafe adults who provide shelter or basic needs in return for favors, including sexual favors.

saxplayer00o1's picture
saxplayer00o1
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Posts: 2785
Oil, gold tick higher on Fed bond-buying report

"Crude-oil and gold futures traded higher Wednesday, leaving behind their anemic floor-trading opening as investors cheered a Wall Street Journal report that Federal Reserve officials are considering a new type of bond-buying program. Gold for April delivery rose $15, or 0.9%, to $1,686.90 an ounce on the Comex division of the New York Mercantile Exchange. Crude for the same month's delivery rose $1.10, or 1.1%, to $105.80 a barrel on Nymex. The program would buy mortgage or Treasury bonds but would tie up the money by borrowing it back for short periods and at low rates"

"The Federal Reserve is considering a new kind of bond-buying program that would simultaneously try to limit inflation, according to a report in the Wall Street Journal. The Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates"

Thanks, Davos for the comments above. Glad to see somebody reading and listening to these.

Locavorous's picture
Locavorous
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Posts: 25
Saxy, I read these every day. Thank you!

Saxplayer,

I read 4 sites daily, with this Daily Digest and your comments being one. I care more about your focused headline consolidation than any mainstream media outlets.

I often forward the pertinent ones to my circles of aware and becoming aware folks, who also distribute to their own circles.

So, please continue with this important work.

Davos, I appreciate your perspective and passion, and learn much from your posts. Please also continue to have a presence here.

You each are the stones thrown in the pond, whose ripples wash over the consciousness of us watchers. The pile of stones will eventually break the surface, and you will know it by the awakening of mass consciousness on these subjects.

Thanks again.

an ex Copper Top.

littlefeatfan's picture
littlefeatfan
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Posts: 141
3E links, cartoons, and resources

New post at  http://3es.weebly.com/

Estatesavr's picture
Estatesavr
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Posts: 77
we housed one of those teens when we lived in Colorado

This was spring of 2009 for us.  So this story has been going on for sometime.

We lived North of Pueblo (Peyton).  Our teenagers asked us one day if a friend could spend night on weekend.  Sure.

A day turned into a week, into a few weeks.  Then the mother called and told us her story "we're broke, in rehab, etc - can you keep her?"

That girl lived with us for entire school year.  We paid her dental, medical, clothing etc.  Never asked her or Child services for a dime.  Thought we were doing a good thing.

The day school let out we came home early & found the teenaged girl 'sacking' our house (see stealing)

She had given her 'parents' our house key & security code.  Her mother's new boyfriend tried using a knife on me.  He found that prior Marines do not take kindly to being threatened at knife point.  He lost three teeth, broken jaw and arm.  

Thankfully we were smart enough to get the mother on paper (power of atty, etc) so no legal blow-back.  

El Paso County Sheriff told us all too common a story - and to get our conceal carry permit as their department was being ravaged budget-wise.  Response time, then, was 2+ hours.

We moved away and did not look back.

Sad to see this has worsened. 

thatchmo's picture
thatchmo
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All day long....

My answer to the quoted question from the lobsterman.  As long as I could multiply that transaction by an adequate number.

"Just how long would you spend $3 to make $4?"

Though I commiserate with all commercial fisherman that are having a hard time of it, looks like a niche for a return to a sail-powered industry.  Perhaps the days of that 85 footer are numbered...Sell it off while it still has value, purchase some smaller, locally-built sailing craft, give one to each crewmember and see what happens.  I think that's how they used to do it....Aloha, Steve.

NZSailor's picture
NZSailor
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Posts: 60
NYT: The Other Ticking Time Bomb in Europe: Auto Overcapacity

Mr. Marchionne, who besides running two of the world’s biggest car companies is also president of the European Automobile Manufacturers’ Association, estimated that the industry needed to cut capacity in Europe by 20 percent. That is a huge number considering that the car industry directly employs 2.3 million people in Europe, including subcontractors, according to the manufacturers’ association.

http://www.nytimes.com/2012/03/08/business/global/the-other-ticking-time...

Chip

Denny Johnson's picture
Denny Johnson
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Posts: 324
Thanks Sax

Sax............want to second Locavorous's comments in post #4. Thank you very much for your almost thankless efforts. They undoubtably have ripples that you can't imagine.

Best wishes

Denny

dps's picture
dps
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Praise for the Daily Digest

I too count on this for my daily news. 

Thanks to all who have contributed to its success over the years.

... dons

Travlin's picture
Travlin
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Davos too

I believe that thanks are in order for Davos too.  My impression is that he started it and ran it for a long time.  Wasn't it originally call "Davos' blog'?

Travlin 

Peter Smith's picture
Peter Smith
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Posts: 27
Saxy, I read these every day. Thank you!

Me too, thanks!

Davos's picture
Davos
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Posts: 3620
Thx Travlin

It was a name that we considered when Erik asked me to do it and I spoke with CM.

We thought it was best to pick a name that would make it easier for when I moved on.  Which, for the record, when I began was almost immediatly, because I loved to toss the M-word around and CM is a "bit" more refined.

Okay, so I couldn't buy class.

earthwise's picture
earthwise
Status: Platinum Member (Online)
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Posts: 829
You rock Saxy....

saxplayer,

The only way you could do any better is if you could play us a tune!

I hit CM.com before my morning coffee and the Daily Digest is the first stop, if that tells you anything. 

Thanks a million (while it's worth sumthin')

Woodman's picture
Woodman
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Posts: 1027
Lobstering

thatchmo wrote:

My answer to the quoted question from the lobsterman.  As long as I could multiply that transaction by an adequate number.

"Just how long would you spend $3 to make $4?"

Though I commiserate with all commercial fisherman that are having a hard time of it, looks like a niche for a return to a sail-powered industry.  Perhaps the days of that 85 footer are numbered...Sell it off while it still has value, purchase some smaller, locally-built sailing craft, give one to each crewmember and see what happens.  I think that's how they used to do it....Aloha, Steve.

In the old days lobsters were so large and numerous they were harvested by hand from the shoreline.  As boats and equipment got more and more advanced and more people got into lobstering the total catch landed still remained fairly steady while operating costs rose and living standards and associated costs rose also.    If all the fishermen went back to sailing craft it might work, with no one having an unfair advantage with a motorized boat.  It would be a lot harder work than most folks are used to these days though.  

The lobstering industry is interesting though in that (so far) it has not collapsed like many of the fisheries.  This may be due to minimize size requirements and other rules that ensure enough breeding stock remains, plus fisherman are very much in local touch with their resources and there are a lot of local unwritten rules that help limit overfishing.

SingleSpeak's picture
SingleSpeak
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Posts: 430
Ditto that-

earthwise wrote:

saxplayer,

The only way you could do any better is if you could play us a tune!

I hit CM.com before my morning coffee and the Daily Digest is the first stop, if that tells you anything. 

Thanks a million (while it's worth sumthin')

+1

saxplayer00o1's picture
saxplayer00o1
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Posts: 2785
jumblies's picture
jumblies
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Joined: Jun 13 2010
Posts: 244
Mortgage time-bomb UK’s top threat

http://www.cityam.com/latest-news/allister-heath/mortgage-time-bomb-uk-s-top-threat

Longer-term rates are determined by powerful market and regulatory forces that are largely independent of the official base rate; and they are already beginning to shoot up. Halifax (part of Lloyds) will increase its standard variable rate from 3.5 to 3.99 per cent on 1 May and the rate on two other products from 3.4 to 3.89 per cent. Royal Bank of Scotland has hiked the rate for new and existing customers on two products, including one from NatWest, from 3.75 per cent to 4 per cent. Santander has hiked the rate for new borrowers on four products by 0.1 per cent. Bank of Ireland yesterday announced a rise of 1.5 points to 4.49 per cent in two stages, affecting 100,000 customers in Britain. Around 850,000 existing borrowers will be hit by Halifax’s move and 200,000 by RBS. Capital Economics calculates that for the average mortgage monthly payments at Halifax would rise £30 per month on a repayment basis and £45 per month on an interest-only basis – a hike of 3-14 per cent.

Approximately 70% of UK mortgages are on standard variable rate and so any change affects a large swathe of the market. Also the current interest rates are incredibly low of around 3.5% but looking at the historical rates going back to the 70's a rate of around 8% is more normal. We have seen spikes of around 15% a couple of times in the last 30 or so years.

I've been expecting this. As this starts to bite I would expect to see property prices start to fall as people try to sell those increasingly unaffordable houses.

*pop*

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