Category: Makrotalous


US homebuilder confidence climbs

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18/05/2009

US homebuilder confidence rose to an eight-month high in May and has doubled since falling to a record low at the beginning of the year as buyers responded to new incentives to break ground.

The National Association of Home Builders’ index of homebuilder sentiment rose from 14 to 16 this month, in line with economists’ expectations. The figure remains 78 per cent below the peak of hopefulness reached in June 2005 when the index rose to 72. A reading of more than 50 indicates “good” conditions.

“Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime,” Joe Robson, NAHB chairman, said on Monday. “You’re not likely to get a better deal in terms of mortgage rates than what’s available right now.”

Sentiment improved the most in the west and north-east, while inching up slightly in the south and staying flat in the mid-west. Sales conditions and expectations of sales for the next six months also improved.

David Crowe, NAHB’s chief economist, noted that greater affordability and a new tax credit for first-time buyers are succeeding in luring people back to the market.

The US government has thrown billions of dollars at the housing crisis, with programmes to modify troubled mortgages and others to help homeowners refinance into new loans even if their homes are worth less than they owe. The Mortgage Bankers Association estimates that lenders could originate as much as $2,780bn of new mortgages this year as homeowners take advantage of lower interest rates.

“We’ve kind of tip-toed to the abyss and said we’re not jumping,” said Brian Bethune, an economist at IHS Global Insight. “The sky is not falling.”

Home prices have seen record drops in the last year and remain nearly 30 per cent below their peak in July 2006. The National Association of Realtors said last week that the median price of an existing home fell by 13.8 per cent to $169,000 in the first quarter of this year from the same period in 2008. Foreclosures and distressed sales made up nearly half of all transactions in the first quarter and continue to rise as job cuts continue to spread.

A return of homebuilder confidence signals that housing starts could start to rebound. New residential building hit a record low in 2008 but spiked in February before slipping back again in March. Economists expect that the number of housing starts in April, to be revealed on Tuesday, ticked up

via FT.com / World – US homebuilder confidence climbs.

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In February Estonian retail sales fell by 18 pct yoy

Filed Under: Balttia, Construction, Olvi by pietrox — Leave a comment
31/03/2009

In February 2009 compared to February of the previous year the retail sales of goods of retail trade enterprises decreased 18% at constant prices, Estonian Statistics announced.

The decrease in retail sales of goods, which had begun in March 2008 compared to the corresponding month of the previous year, remained within 1–10% till January of this year. But in February the retail sales decreased to the lowest level so far. The melting-down economy and the resulting decline in consumer confidence contributed to this trend. The confidence indicators reflected in the consumer survey organized by the Estonian Institute of Economic Research also showed a continuous falling trend in February.

In February, the retail sales of goods of retail trade enterprises were 4.1 billion kroons. Compared to February 2008, the retail sales of goods decreased in most economic activities. The decrease in retail sales was most influenced by the stores selling manufactured goods, where retail sales decreased 27% compared to the same month of the previous year. The greatest decrease was recorded in the retail sales of other specialized stores and non-specialized stores as well as stores selling household goods and appliances, hardware and building materials.

Retail sales in grocery stores decreased by one tenth compared to February of the previous year. Consumers are continuously hesitant about the future and have started to restrict their expenditure on food ever more due to that.

Compared to January, the retail sales of goods in retail trade enterprises decreased by 7% at constant prices. According to the seasonally and calendar-based adjustments of data, the retail sales decreased 2%.

In February the revenues from the sales of retail trade enterprises were 4.9 billion kroons, out of which retail sales of goods accounted for 85%. Compared to February of the previous year, the revenues from sales decreased 21% at current prices. Compared to the previous month, this indicator decreased 7%.

(bbn.com)

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Latvia Faces June Bankruptcy If IMF Loan Halted, Premier Says

Filed Under: Balttia by pietrox — Leave a comment
09/03/2009

March 9 (Bloomberg) — Latvia faces bankruptcy in three months if it fails to deliver budget cuts required by the International Monetary Fund and the next installment of its bailout is delayed, Premier-designate Valdis Dombrovskis said.

“If we do not continue to receive this international loan, then we go bankrupt in June,” Dombrovskis, 37, said in an interview on March 6.

Latvia, in the grip of the severest crisis since independence in 1991, was granted a 7.5 billion-euro ($9.5 billion) bailout last quarter after the economy shrank 10.5 percent and the state seized its second biggest bank. The government fell on Feb. 20 after agreeing to budget cuts needed to keep the deficit below 5 percent of gross domestic product.

Dombrovskis wants the IMF to approve a deficit of 8 percent of GDP to avoid crippling the economy. Latvia must cut the budget to meet terms of the bailout or get a bigger loan from the IMF- led group and European Commission or it will run out of money.

“It’s hardly possible” to keep to the earlier target, Dombrovskis said. “The previous memorandum of understanding was signed under the assumption of a 5 percent recession, meanwhile the forecast is for 12 percent and it may get worse.”

Latvia faces a deepening contraction as its currency peg to the euro forces it to push through wage cuts to remain competitive. The economic collapse threatens to spread through the whole Baltic region, and there may be need for a broader bailout that includes Lithuania and Estonia, Dombrovskis said.

‘Domino Effect’

“In the Baltic region there is a fear of a domino effect, if one country would go, then probably the whole region will go,” he said. Any plan “could talk about all three countries, with a focus on Latvia as its weakest link.”

Last quarter, Estonia’s economy shrank an annual 9.4 percent, the most in at least 15 years, while Lithuanian GDP contracted for the first time in nine years, shrinking 2 percent.

Bankruptcy in Latvia would also affect Sweden, Dombrovskis said. Swedish banks have claims in Latvia, Lithuania and Estonia worth about $75 billion, according to ING Groep NV.

Standard & Poor’s cut Latvia’s credit rating to junk on Feb. 24, lowering the country to BB+ from BBB-. Credit-default swaps for Latvia soared to a record 1,109 basis points on March 3, the highest in the EU.

Dombrovskis’s five-party coalition, which may be confirmed by a parliamentary vote this week, is planning to cut spending by 360 million lati ($642 million) instead of the 700 million lati that would be necessary to keep the deficit under 5 percent.

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Banks Move to Free Up Eastern Europe Lending

Filed Under: Balttia, Olvi by pietrox — Leave a comment
27/02/2009

hree big development banks Thursday said they will offer €24.5 billion ($31 billion) in financing for struggling banks in Eastern Europe and some of their customers, trying to free up lending and pressure wealthier Western Europe to pitch in.

The World Bank, European Bank for Reconstruction and Development and the European Investment Bank announced the program to help head off a precipitous slide in the economies of Eastern Europe, which have been hit hard by the global downturn.

World Bank President Robert Zoellick has been campaigning for a large-scale European rescue plan, arguing that banks in the region need $120 billion altogether for recapitalization.

The announcement came just before European Union leaders will meet Sunday to figure out how to aid Eastern Europe. “As someone who was personally involved with the issues of trying to restore Europe to its historical unity 20 years ago, I think it would be a tremendous tragedy if Europe allows itself to be broken in half again,” Mr. Zoellick said in an interview with the German newspaper Sueddeutsche Zeitung earlier this week.

His campaign has rankled EU officials. Joaquin Almunia, the EU’s monetary affairs chief, wrote Mr. Zoellick on Feb. 20 that EU countries already had provided generous funding for banks in Western Europe, which should help their subsidiaries in the east. In many eastern European countries, the bulk of the financial sector is owned by Western Europe banks.

Those relationships have deepened the crisis in Western Europe, as loan losses in the east further undermine struggling banks in the west.

The difficulties faced by Eastern Europe were underscored by a statement by Latvia’s Prime Minister-designate Valdis Dombrovskis, who said on his first day on the job Thursday that the Baltic state could fall short of money by the summer.

Further budget slashing is needed, Mr. Dombrovskis said, adding to the steady stream of negative news from emerging Europe. The head of Romania’s central bank also said Thursday his country will ask the International Monetary Fund and the European Union for loans.

Latvia has already been forced to turn to the International Monetary Fund, the European Union and Nordic governments for a combined €7.5 billion in emergency funding.

“The state is on the verge of bankruptcy,” Mr. Dombrovskis told reporters Thursday, after Latvian President Valdis Zatlers appointed the 37-year-old European Parliament member to form a new governing coalition following the previous government’s collapse last week.

The two-year financing plan announced by the three development banks is aimed at lending for small and medium-sized businesses. The three institutions will provide equity and debt finance, credit lines and political risk insurance.

The World Bank committed to provide €7.5 billion to the banking sector and also increase lending by €12.5 billion euros outside the banking sector in Eastern Europe and central Asia during 2009 and 2010. The EBRD, which focuses on former Soviet bloc countries, said it would provide about €6 billion in equity and debt finance to banks, and may lend directly to businesses. The EIB, the EU’s long-term lending bank, said it would make available about €11 billion in lending facilities aimed at businesses.

Source: wsj.com

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Estonia has 75,420 unemployed

Filed Under: Makrotalous, Olvi by pietrox — Leave a comment
02/02/2009

According to Eurostat the number of unemployed grew to 75,420 by the end of 2008, making 9.2 pct of working age population, aripaev.ee writes.

By the end of first half of 2008 the jobless rate was 4.7 pct. That number doubled in the other half of the year.

In November the Ministry of Finance forecasted this year’s jobless rate to be 8.6 pct and that will grow to 9.3 in 2010.

Source: Baltic Business News

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High Dive Into the Toxic Pool

Filed Under: Finanssikriisi by pietrox — Leave a comment
30/01/2009

What if nearly half of U.S. banking assets turn out to be bad?

As the Obama administration readies a plan for the stressed financial system, it is no doubt trying to work out the potential size of the bad-asset pool.

[Bad Company]

It is no longer just subprime mortgages and exotic credit-boom securities that are considered toxic. A wide range of other assets — from certain prime mortgages to commercial real estate to plain old credit-card loans — are now experiencing soaring defaults as the economy worsens.

Indeed, Goldman Sachs Group estimates that troubled assets could exceed $5 trillion, if defined as assets that could show a loss rate close to, or above, 10%. To put that in context, $5 trillion is just over 40% of the $12.3 trillion in total assets of U.S. commercial banks. View full article »

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Option ARMs See Rising Defaults

Filed Under: Finanssikriisi by pietrox — Leave a comment
30/01/2009

Defaults on a popular form of mortgage that gave home buyers a choice of how much to pay each month are rising and could rival those on subprime loans, potentially causing more trouble for investors and banks.

Nearly $750 billion of option adjustable-rate mortgages, or option ARMs, were issued from 2004 to 2007, according to Inside Mortgage Finance, an industry publication. Rising delinquencies are creating fresh challenges for companies such as Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co. that acquired troubled option-ARM lenders.

[Bad Company]Option ARMs typically were made to borrowers with higher credit scores than those getting subprime mortgages. But many of these borrowers were stretched thin even when they were making payments, and are particularly vulnerable to a weakening economy and falling home prices. Borrowers can face payment shock when they must begin making payments of full interest and principal.

Often, these loans were taken out without full documentation of borrowers’ incomes and assets, and the reported incomes were often overstated, analysts say. Option ARMs are concentrated in areas such as California and Florida that have seen some of the biggest home-price downturns.

Option ARMs, which have been largely abandoned, give borrowers multiple payment options, including a minimum payment that often was less than the monthly interest due. Borrowers who made the minimum payment on a regular basis often saw their loan balances grow, also known as “negative amortization.” And with home prices falling, more than 55% of borrowers with option ARMs owe more than their homes are valued at, according to J.P. Morgan Securities Inc. View full article »

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