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- As austerity lifts, so does Europe | MacroBusiness
… overall, it's more good news out of Europe as the national economies eke their way towards growth. Obviously there are still major issues, most notably the continued lack of demand for credit in many nations and the underlying issue of debt imbalances across the region. As I stated last week , the question now is whether the same adjustments in austerity policy that are supporting this recovery will continue after the German election, or whether we will see a return to old form and a renewed slow down. We'll obviously have to wait until after September 22nd to find that out.
Read the source article … http://www.macrobusiness.com.au/2013/09/ as-austerity-lifts-so-does-europe/
- S&P charges subprime lawsuit is retaliation for U.S. downgrade – Sep. 4, 2013
Standard & Poor's is arguing in a court filing that it is being sued by the Justice Department in retaliation for the firm's downgrade of the U.S. government's credit rating two years ago.
What the article doesn't mention is that S&P is paid by those they rate, those who produce what is rated. The Justice Department suit alleges that S&P misrepresented the level of due diligence S&P was performing in rating the securities, which bad ratings (merely rubber stamping with a grade of AAA in many cases) then did great harm to the US (and global) economy.
That said, it does appear that S&P has gone a long way in cleaning up its act since then.
As for S&P's suit, do they want the other rating agencies likewise sued by the US government because that would not harm S&P's competitive position vis-a-vis those other agencies?
Should they settle and move on, leaving the Justice Department to decide whether to take action against those other ratings agencies?
Read the source article … http://money.cnn.com/2013/09/04/news/com panies/sandp-downgrade-lawsuit/index.htm l
- More than 8 million homeowners are 'resurfacing' | Inman News
When the following happens, price pressures will ease. If the Fed doesn't shoot the recovery by withdrawing QE too drastically, affordability will improve.
Portending relief for inventory-starved housing markets in the not-so-distant future, 8.3 million homeowners, or about 18 percent of homeowners with mortgages, will gain enough equity to sell their homes in the next 15 months without resorting to short sales, according to data aggregator RealtyTrac.
The 8.3 million "resurfacing" homeowners currently have anywhere from 10 percent negative equity to 10 percent positive equity, according to RealtyTrac's September report on home equity.
Though a homeowner with low equity is not technically underwater, that borrower still typically faces more difficulty in selling a home than a homeowner with more equity because the proceeds of a low-equity sale may not be enough to adequately contribute to sales-related costs and a down payment on a new home.
Read the source article … http://www.inman.com/2013/09/05/more-tha n-8-million-homeowners-are-resurfacing/
- Emerging Economies' Misinsurance Problem by Gene Frieda – Project Syndicate
Powerfully important conclusion:
… China's slowness to implement an alternative to the investment-led, debt-financed growth model that has prevailed for the last two decades means that its domestic credit risks are the most significant threat to the global economy today. While China may have the financial resources to cover its debt overhang, it risks being left with a low-to-middle-income economy, high debt levels, and nominal growth rates roughly two-thirds lower than the 17% average annual rate achieved in 2004-2011. This is bad news for other emerging economies, which have depended heavily on China's growth for their own.
Unless emerging-market governments take advantage of the limited space provided by their foreign-exchange reserves and floating currencies to enact vital structural reforms, the onus of adjustment will fall on interest rates, compounding the effects of slowing growth and the risks associated with bad debt. Whether this becomes a systemic issue affecting the entire global economy will hinge on China.
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