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- REITs, Pension Plans Increase Multifamily Debt Holdings
MBA's Vice President of Commercial Real Estate Research, Jamie Woodwell, said of the numbers, "A strong appetite among investors to put their money to work in commercial and multifamily mortgages led to an increase in the level of mortgage debt outstanding.
Read the source article … http://www.mortgagenewsdaily.com/0927201 3_commercial_multifamily_debt.asp
- Analysis: Shutdown, default threat elevates appeal of U.S. Treasuries | Reuters
(Reuters) – Government shutdown. Federal default. These looming political threats to the U.S. economy might scare investors to buy more U.S. Treasuries in the coming days as they seek a shelter for their cash.
"It's paradoxical that a government shutdown or hitting the debt ceiling is good for Treasuries, but you most likely would see a flight-to-safety into Treasuries," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.
…a long-lasting government shutdown, or, even worse, a default, could harm the Treasuries market.
"You don't want to damage investor confidence in U.S. Treasuries," said Craig Dismuke, chief economic strategist with Vining Sparks in Memphis, Tennessee. "If there is a flight-to-safety, it would [be] a temporary one."
Keep in mind that all other things being equal, the more people buy bonds, the lower mortgage-interest rates will be, which will be good for the overall housing market and construction and attending jobs, etc.
Read the source article … http://www.reuters.com/article/2013/09/2 8/us-markets-usa-bonds-shutdown-analysis -idUSBRE98R06R20130928
- What is the Huge Gap Between IRX and SPX Saying This Time
I find it interesting that $IRX, the 3-Month T-Bill Discount Rate Index (a safe haven), is camping out at the 2011 lows again, where it was last seen during the previous debt ceiling debates, S&P's debt downgrade and the market crash. The 3M T-Bill rate even made a new low last week. But the difference between now and mid-2011 is QE ended before the 2011 debt ceiling volatility. "Risk assets" didn't have $85 billion of stimulus coming in every month like today.
Read the source article … http://www.distressedvolatility.com/2013 /09/what-is-huge-gap-between-irx-and-sp x.html
- BBC News – Bank of England 'vigilant' on housing market
… it is argued that price rises in London are distorting figures for the whole country, with the market remaining weak in many parts of the UK.
"If risks of a bubble did appear, the FPC spelled out a reassurance that it, and the regulators, had a range of tools to restore stability. These included guidance on underwriting standards, capital requirements and recommendations to the regulators on tightening of affordability tests."
Read the source article … http://www.bbc.co.uk/news/business-24239 742
- Cameron Launches State-Backed Mortgages Plan – Yahoo Finance UK
David Cameron says 95% government-backed mortgages to help people get on to the property ladder will start within days.
The scheme was due to start in January but hours before the Conservative Party Conference opened, the Prime Minister revealed that NatWest, RBS (LSE: RBS.L – news) and Halifax had all agreed to provide the new deals.
He denied that the move would create a housing bubble and said that they had taken advice from the Bank of England and empowered it to stop a bubble being created.
The 95% mortgage scheme has previously attracted widespread concern, with some claiming it may lead to more problems than it solves.
Liberal Democrat Business Secretary Vince Cable warned the scheme "could inflate the market" and said he feared there was a "danger of getting into another housing bubble".
Speaking on Sunday, Labour's shadow chancellor Ed Balls said: "If David Cameron is serious about helping first-time buyers he should be bringing forward investment to build more affordable homes. Rising demand for housing must be matched with rising supply, but under this government house-building is at its lowest level since the 1920s."
The big question is whether the bankers can stay out in front of any potential problems. They don't have the greatest track record; but then again, they all still remember 2007-8 (we hope). It's not as if there are generations in between, as we had from 1929 to 2007. Time will tell though. Greed and corruption are great at causing widespread economic and financial amnesia and in even blocking people from learning about the limitations of "experts" not placing too much faith in themselves.
Read the source article … http://uk.finance.yahoo.com/news/cameron -launches-state-backed-mortgages-0353580 41.html
- European Commission schizophrenic on shadow banking /Euromoney magazine
…Brussels financial sector lobbyists suggest that, rather than a considered, moderate approach to these highly complex and interdependent systemic questions, key European legislators are seeking to fast-track the passage of shadow banking regulation as a vote-generating tool in view of upcoming elections in May 2014.
The sinister connotations of a 'shadowy' financial system that operates beyond the reach of regulators continues to fuel populist politics and mainstream media stories.
While the role of shadow banks during the crisis as a source of off-balance sheet leverage and systemic risk arising from OTC derivatives positions is by now well explored, there are encouraging signs the debate in Europe has moved on from accusations of regulatory arbitrage….
We're not sure just how excusatory, if at all, that statement is intended to be.
Read the source article … http://www.euromoney.com/Article/3257742 /European-Commission-schizophrenic-on-s hadow-banking.html
- Reuters — China to adjust loan-to-deposit ratios for banks in Shanghai free trade zone
This will be a hugely important test for the Chinese. If it goes the way they hope and if China's economy doesn't implode, China could race ahead in becoming an international financial center, like London and Singapore, etc., and establish the renminbi as a regional and global reserve currency.
SHANGHAI – Chinese banking regulators will adjust loan-to-deposit ratios and other regulatory requirements for banks in the Shanghai free trade zone which formally opened for business on Sunday, a senior banking regulator said.
Read the source article … http://preview.reuters.com/2013/9/29/chi na-to-adjust-loan-to-deposit-ratios-for- banks
- Shovel ready? | Public Finance — official CIPFA magazine
The government's National Infrastructure Plan promises much, but can it deliver? With HS2 under fire, private finance at a premium and only a handful of pipeline projects completed, it will be a big ask…If its current rhetoric is to be believed, the government is embarking on the biggest programme of infrastructure development since the Victorian era.
Yet the critics have a point, as will become more evident in the Autumn Statement later this year, when the Treasury is forced to report slow progress on the National Infrastructure Plan. In reality, investment remains muted, in both the public and the private sectors. Despite Chief Secretary to the Treasury Danny Alexander's claim in the July Spending Round that the government is implementing the 'most comprehensive, ambitious and long-lasting capital investment plans ever', the figures reveal a 1.7% fall in public capital spending. Even the much-trumpeted £300bn of investment means a real-terms fall in capital spending in every year from 2015/16.
According to the influential World Economic Forum report on global competitiveness, Britain has fallen from 24th to 28th in the world for the quality of its infrastructure. While it is difficult to see which events over the past 12 months actually merit such a league table collapse, the fact that the world's seventh-largest economy is perceived to have worse infrastructure than South Korea, Malaysia and the Bahamas is a valid cause for political attention. A cacophony of voices is calling for something to be done, and there is an increasingly prominent view that some form of independent office is required — a body that can, to a degree, take the inevitable volatility of politics out of national infrastructure planning and delivery.
A more activist role for the state was envisaged by the outgoing Labour government, which began to draw up plans for a national infrastructure bank in 2009, which it believed could help to increase the supply of private finance. This idea was also backed by the LSE Growth Commission, which pointed out that such a bank could overcome regulatory constraints and reduce political risk. International experience appears to show the advantages of a bank with this sort of mandate, such as the Brazilian Development Bank (BNDES), Germany's Kreditanstalt für Wiederaufbau (KfW), and the European Bank for Reconstruction and Development. Though the idea was backed by both Labour and Liberal Democrat manifestos for the 2010 election, and commands the support of the all the great and the good economists at LSE, the limited scope of the Armitt review appears to underline the fact that such radical measures are off the table, at least in the short term.
But even as spending on public services is constrained and public capital investment is curtailed, the state is slowly, tentatively, creeping back into the infrastructure business. The old nationalised industries had their problems, but under state control, the country's infrastructure coped with the most rapid period of economic growth in history, from the end of the Second World War until the 1970s. It is far from clear that a privatised economy can do likewise as Britain gradually drags itself from its current economic malaise.
This is austerity versus no austerity and is a very large part of why Britain's recovery has been so up and down and anemic. The time for governments to save (run surpluses) is during booms. The time for governments to spend (run deficits) is during downturns and recoveries, when the private sector is deleveraging.
Read the source article … http://www.publicfinance.co.uk/features/ 2013/09/shovel-ready/
- Reuters — China to allow banks to sell $49 billion of asset-backed securities: sources
China's leaders have pledged to scale up a pilot project for securitization of bank loans as a way to clear space on bank balance sheets for new lending, while also satisfying investor demand for higher-yielding, fixed-income assets.
Read the source article … http://preview.reuters.com/2013/9/27/chi na-to-allow-banks-to-sell-49-billion-of- asset
- Capital is back! | vox
Looking at the very long run, the postwar decades — marked by relatively low wealth — appear to be a historical anomaly. According to the best available historical estimates, high wealth-to-income ratios were the norm in Europe throughout the 18th and 19th centuries. Then the world wars, low saving rates, and a number of anti-capital policies provoked a large drop in private wealth, from six to seven times national income to about two times in the aftermath of World War II. The wealth-to-income ratios have been rising ever since, to the extent that they appear to be returning to their 19th-century levels.
In the US, the wealth-to-income ratio has also followed a U-shape evolution, but less marked (Figure 2).
Beyond inequality, the return of high wealth-to-income ratios has important implications for financial regulation. According to our computations, the wealth-to-income ratio reached 700% at the peak of the Japanese bubble of the late 1980s, and 800% in Spain in 2008-2009 (Figure 4). Bubbles are potentially more devastating when the total stock of wealth amounts to six to eight times national income rather than two to three times. Monitoring wealth-to-income ratios may help detect such bubbles and strikes us as important for designing appropriate financial and monetary policies.
Read the source article … http://www.voxeu.org/article/capital-bac k
- EM Countries Best Poised to Weather the End of Easy Money | BlackRock Blog | Global Market Intelligence
We believe that when the Fed does taper, countries with certain sound fundamentals—like the three highlighted below— are likely better positioned to withstand significant capital outflows and the impact of reduced US monetary stimulus.
1. Current account surpluses: Countries with this characteristic aren't so reliant on external funding so they may not be as impacted by a withdrawal of foreign funding.
2. Significant foreign exchange reserves: Countries with this characteristic have a buffer to keep their currencies stable if there's an exodus of foreign capital.
3. Healthy corporate leverage: Healthy and sustainable corporate leverage, as reflected in higher interest coverage ratios, means that companies in a country can comfortably handle the interest costs of their debt. This final attribute is especially important as more emerging countries are resorting to higher local rates to try to counter capital outflow and inflation pressure from cheaper local currencies. Higher local rates, in turn, increase the interest burden on corporate earnings.
To be sure, when tapering eventually happens, the degree of capital outflow from emerging economies will depend on the pace of Fed tapering and the expected path of rates. If tapering turns out to be extremely gentle and rates expectations remain close to zero, we may not see as much of an impact on emerging markets in general as we did this spring.
That's what we expect — a gentle tapering (and also one that can be reversed if needs be).
Read the source article … http://www.blackrockblog.com/2013/09/27/ em-countries-poised-weather-easy-money/
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