Daily Digest

Daily Digest 11/9 - 1 In 4 Homeowners 'Underwater', Tough Economy Hurts Food Banks, Berlusconi 'Vows To Resign'

Wednesday, November 9, 2011, 10:47 AM
  • Italy Bonds Fall on Speculation LCH to Raise Margin Requirement
  • California Supreme Court to hear redevelopment argument
  • Stanislaus legal system squeezed as budgets are chopped
  • City fines and fees double, triple for minor and major offenses
  • More than 1 in 4 homeowners 'underwater' as U.S. housing market continues to sink
  • Tough Economy Hurts Food Banks
  • Troops Forced To Turn To Food Pantries To Feed Families
  • Chicago, Illinois speed camera project could generate $150 million in revenue
  • No Pension? You May Still Owe $30,000 On One
  • Greek Opposition Faces Internal Dissent Over EU Pledge
  • Italian bond yields flirt with 7%
  • Italian crisis: Silvio Berlusconi 'vows to resign'

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Italy Bonds Fall on Speculation LCH to Raise Margin Requirement

‘‘The other big problem is there’s a lot of talk going around the market that LCH are going to revise the margins on Italian debt. We seem to be driving the market in the direction of making it self-fulfilling.’’

Italy’s 10-year bond yield rose four basis points, or 0.04 percentage point, to 6.70 percent at 3:53 p.m. London time, after rising to a record 6.74 percent.

California Supreme Court to hear redevelopment argument

The organizations contend that the cuts violate Prop. 22, passed in 2010 by voters, which prohibits the state from raiding transportation, redevelopment or local government money.

If the justices agree that the legislators’ money grab was unconstitutional, the decision would result in an additional $1.7 billion hole in the state budget. And if the Supreme Court backs the legislature, most redevelopment plans throughout the state would be terminated because of lack of funding.

Stanislaus legal system squeezed as budgets are chopped (California)

Prosecutors are forced to ignore misdemeanor violations to pursue more serious crimes. Judges are delaying trials to cope with layoffs and strained staffing levels. And in some cases, those charged with violent crimes, even murder, are set free because caseloads are too heavy to ensure that they receive a speedy trial

City fines and fees double, triple for minor and major offenses (Chicago)

Mayor Rahm Emanuel has said his plan to raise taxes, fines and fees by $220 million in 2012 includes higher fines for a laundry list of offenses, but he has yet to air that laundry list.

Now, the mayor’s 2012 revenue ordinance makes the details public. It’s a doozy. ....He’s also raising nuisance fines. They include:

Allowing weeds to grow to a height that exceeds 10 inches — $600-to-$1,200-a-day, up from $500-to-$1,000.

Illegal dumping or allowing trash to accumulate in a way that provides a food supply for rats — $300-to-$600, up from $250-to-$500.

Accumulation of materials or junk on any open lot or other premises not placed on open racks “elevated not less than 18 inches above ground”: $300-to-$600, up from $250-to-$500.

Failure to maintain vacant lots and keep them clear of debris: $300-to-$600.

Neglecting to register or renew registration of a vacant building: $500

More than 1 in 4 homeowners 'underwater' as U.S. housing market continues to sink

Nearly 30 percent of American homeowners owe more on their mortgages than their homes are worth, according to a new report from the real estate website Zillow. Defaults and foreclosures are likely to increase as homeowners decide to walk away from their houses, rather than continuing to make mortgage payments on property they can't sell or refinance, analysts said.

Tough Economy Hurts Food Banks

The tough economy is hitting everyone hard including food banks, which are now relying more on donations.

Shelves are looking pretty sparse at Kearney's Mid-Nebraska Food Bank, but it's not just here. There's extreme demand on the whole pantry system with less food available, but an increase in demand. Officials say it's a direct result of difficult economic times.

Troops Forced To Turn To Food Pantries To Feed Families

For some Americans it may be a hard fact to swallow. Men and women who keep this country safe and free are forced to turn to food pantries to feed their families. And the experts say the need continues to grow.

A supply cage at the Army Reserve Center at Jefferson Barracks is vital to many folks in the military. It was almost full of food just days ago but Saturday 59 military families came for help and now many of the shelves are bare. Nancy Amundson is with Operation Homefront, she said, 'The biggest shock is the fact that the men and women who are defending our country defending our freedom that they can`t afford to buy the food they need to fee their families.'

Chicago, Illinois speed camera project could generate $150 million in revenue.

Sixty-one million dollars a year is a lot of money. That is the revenue Chicago's red light camera program program generated in 2010. Based on reports from the Chicago Department of Transportation (CDOT), a proposed speed camera enforcement program being pushed by Mayor Rahm Emanuel (D) would make the city's red light camera program look penny ante in comparison.

No Pension? You May Still Owe $30,000 On One

Pension accounts for state and local government workers are underfunded by $4 trillion, according to one recent analysis. If America's households were to split that tab today, each would have to kick in $34,000.Don't have that kind of cash on hand? Another option is to chip away at the shortfall over 30 years starting now. That would cost households $1,400 a year beyond what they pay in taxes today.

Greek Opposition Faces Internal Dissent Over EU Pledge

Greece's opposition New Democracy party is facing internal dissent over a demand by the European Union that it co-sign a letter committing it to implementing a new EUR130 billion bailout for the country, a senior party official said Tuesday.

The opposition, which is currently in talks with Greece's Socialist government on forming an interim government, has consistently opposed the austerity measures the Socialists have taken to win new fresh aid from Europe.

Earlier Tuesday, New Democracy leader Antonis Samaras gave his verbal support for the latest aid package but hinted he wouldn't sign such a letter--possibly throwing a fresh wrench in talks on a coalition government.

Italian bond yields flirt with 7%

Italy's borrowing costs continue to rocket higher as the nation's parliament passed a crucial vote on budget reforms, marking a win for embattled Italian Prime Minister Silvio Berlusconi.

Italian 10-year bond yields remained well above 6% Tuesday. Yields reached a high of 6.77%. On Monday, the 10-year yield peaked at a record high of 6.8% -- its highest level since the euro was launched in 1999.Tuesday's yield is uncomfortably close to the 7% benchmark that could herald a bailout, despite the European Central Bank's bond-buying spree. A 7% yield is not an automatic bailout trigger, but it is the same level that prompted bailouts for Portugal and Ireland.

Italian crisis: Silvio Berlusconi 'vows to resign'

Italian Prime Minister Silvio Berlusconi will resign after key economic reforms have been approved, Italian media reports say. Mr Berlusconi's decision follows a vote on the budget in parliament, in which he appeared to lose his majority. Both allies and opponents have been urging him to step down, as Italy's debt crisis grows.

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saxplayer00o1's picture
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Italian borrowing costs reach breaking point


"Italian borrowing costs reached breaking point on Wednesday after Prime Minister Silvio Berlusconi's promise to resign failed to raise optimism about the country's ability to deliver on long-promised economic reforms.

Italian 10-year bond yields shot above the 7 percent level that is widely deemed unsustainable, reflecting investors' concerns that they may not get their money back, a fear reflected in a jump in the cost of insuring against Italian debt default.

German Chancellor Angela Merkel said Europe's plight was now so "unpleasant" that deep structural reforms were needed quickly, warning the rest of the world would not wait."


<<<<<<Note: Reuters has now changed the story to "Italy at breaking point, Merkel calls for "new Europe"">>>>>>


....................1A) Italy on brink as 10-year bond yield tops 7%

Other headlines:


  1. Treasuries Rise as Italy Deposit Requirement Spurs Refuge Demand
  2. IMF May Need $300 Billion To Shore Up Europe, Kremlin Aide Says
  3. European Companies Face $1.2 Trillion of Refinancing by 2015, Moody’s Says
  4. Fannie Mae loss widens, asks taxpayers for $7.8B
  5. Jefferson County Officials to Meet on Bankruptcy Plan Today
  6. France set for zero growth in last quarter: central bank
  7. India 10-Year Bond Yields Rise on Concern Over Fiscal Deficit
  8. Canada Govt Pushes Projection For Balanced Budget Back A Year
  9. Spanish Banks May See $83 Billion Losses, BBVA Research Says
  10. Ambrose Evans-Pritchard: The biggest bankruptcy in history cannot be allowed to run its course
  11. Italian Credit Risk Rises to Record as LCH Lifts Margin Level
  12. Greek Government Wrangling Drags Into Third Day
  13. Stockton, California, Downgraded by Moody’s on Costs Threatening Budget
  14. Gov: Flint in financial emergency
  15. Italy’s Woes Spell ‘Nightmare’ for BNP, Agricole
  16. IMF’s Lagarde Warns of Risk of ‘Lost Decade’
  17. Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return" (Zerohedge)


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Oil prices are in 'danger zone', warns the IEA

Oil could hit $150 a barrel soon if investment in the Middle East and North Africa fails to rise with demand, the International Energy Agency (IEA) says.

Prices have remained high throughout 2011, partly due to Libyan unrest.

"We are in the danger zone for the global economy at current levels," said IEA economist Fatih Birol.

The IEA also wants more investment in green technology, warning that the world is heading down an "insecure, inefficient and high-carbon" path.

"Growth, prosperity and rising population will inevitably push up energy needs over the coming decades," said IEA executive director Maria van der Hoeven.

"But we cannot continue to rely on insecure and environmentally unsustainable uses of energy."


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Matt Holbert
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Re: "Barclays Says Italy Is Finished..."

The Barclays point of view:

1) At this point, it seems Italy is now mathematically beyond point of no return
2) While reforms are necessary, in and of itself not be enough to prevent crisis
3) Reason? Simple math--growth and austerity not enough to offset cost of debt
4) On our ests, yields above 5.5% is inflection point where game is over
5) The danger:high rates reinforce stability concerns, leading to higher rates
6) and deeper conviction of a self sustaining credit event and eventual default
7) We think decisions at eurozone summit is step forward but EFSF not adequate
8) Time has run out--policy reforms not sufficient to break neg mkt dynamics
9) Investors do not have the patience to wait for austerity, growth to work
10) And rate of change in negatives not enuff to offset slow drip of positives
11) Conclusion: We think ECB needs to step up to the plate, print and buy bonds
12) At the moment ECB remains unwilling to be lender last resort on scale needed
13) But frankly will have hand forced by market given massive systemic risk

Please take note of the phrase "will have hand forced by market given massive systemic risk." Apparently this analyst is not aware that there is no longer a market. We have -- and no surprise to CM regular readers -- big banks and corporations in bed with big government. This anti-market is the "massive systemic risk."

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The Double-Dip Housing Recession Has Begun

2011 and 2012- the loans are resetting.

In 2006 and 2007, lenders had largely run out of qualified borrowers to buy homes. But banks and other lenders were still making lots of money from fees generating by selling mortgages to individual homeowners, and other fees from bundling those loans together and reselling them to investors. Some of the riskiest loans were called Pay-option ARMs. In this case, "ARMs" stands for "adjustable rate mortgages," in which the interest rate fluctuates over time. There's nothing necessarily risky about that.

The risk comes in the "pay-option" part. Typically these loans gave borrowers the option to make minimal payments at the outset of the loan. Not only did they not have to pay toward the principal, they didn't even have to pay all the interest as it accrued. This "teaser" period usually lasts five years.

After the teaser period is over, the loan resets. All the principal and interest payments that were deferred during the first five years get added to the total price of the loan. Only now, instead of 30 years to pay it off, five years have elapsed. That means the borrower has just 25 years to pay the entire balance.

The result, Mason says, is that monthly payments can jump by 300 percent.


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What is the outstanding

What is the outstanding Pay-option ARM value and reset schedule??? thx

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Ala. county votes for largest municipal bankruptcy


"Leaders of Alabama's most populous county on Wednesday voted to declare an estimated $4.1 billion bankruptcy, the largest for a municipality in U.S. history."

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Posts: 67
World Energy Outlook

The charts say it all.  It IS alarming...

"Oil prices will more than double over the next 20 or so years despite a short-term reduction in global GDP since 90% of population growth and energy demand comes from emerging markets."





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World Energy Outlook


In that Financial Sense article on the IEA report I don't get the projected drop in US oil imports; we might be forced to live with less but I'd like to see the data showing we can make the difference with domestic production.


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