Agnes's Feed
Jan 3, 2011
via Breakingviews

An American dream: government gets out of housing

Could the U.S. government stop subsidizing mortgages altogether? Probably not in real life. But that is where the debate over reforming Fannie Mae and Freddie Mac, as well as righting the public-private sector balance in housing, should begin.

This unlikely dream imagines the government out of the business of guaranteeing housing finance within 10 years. That should be long enough to phase out subsidies slowly, preventing the still fragile housing market from dropping further. It would give private-sector banks time to absorb an estimated $5 trillion of government-backed mortgages. And it would wean homeowners gently off the subsidized financing they’ve grown accustomed to. Just as importantly, though, 10 years is short enough to focus minds now.

Dec 29, 2010
via Breakingviews

U.S. consumers may be getting ahead of themselves

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

NEW YORK — Americans may feel less confident, but they didn’t let that get in the way of holiday cheer. Enthusiastic shoppers pushed retail and services sales up 5.5 percent in the run-up to Christmas, according to MasterCard Advisors. Next year’s payroll tax cut for the 90 percent of the working population that still has jobs should keep the nation’s malls bustling in 2011, but the temporary stimulus can only do so much. The housing market offers a cautionary tale.

Dec 24, 2010
via Breakingviews

Real estate’s commercial side looks bright in 2011

The author is a Reuters Breakingviews columnist. The opinions expressed are her own

American commercial real estate used to be a sucker’s bet. Think Lehman Brothers’ interest in Archstone-Smith, the disastrous 2006 purchase of New York’s Stuyvesant Town/Peter Cooper Village complex for $5.4 billion, and a host of other deals in which investors and their lenders got in way over their heads.

Dec 15, 2010
via Breakingviews

Fed’s QE2 presses print red ink

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

If Ben Bernanke were an investor, he’d be bummed out. The first chunk of the Federal Reserve’s $600 billion Treasury bond purchase program is in the red thanks to rising yields. The central bank’s cheap financing makes outright losses unlikely, but Mr. Bernanke, the Fed chairman, could still face an image problem.

Dec 13, 2010
via Breakingviews

Citi’s Pandit pips GE’s Immelt in shrinkage race

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

NEW YORK — Corporate titans aren’t usually rewarded for shrinking their companies. But the CEOs of two of the world’s biggest companies, General Electric’s Jeffrey Immelt and Citigroup’s Vikram Pandit, have had to do something like that. Bloated balance sheets heavily reliant on short-term financing forced both to beg for government help two years ago. Since then, they’ve been shedding assets in a bid to return to normal business and create a buffer against ever needing taxpayer handouts again.

Dec 9, 2010
via Breakingviews

Fiction an easy sell in U.S. muni market

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Armageddon makes for a sexy story. Volatility in the $2.8 trillion U.S. municipal bond market is real, but the scary tale being spun out of budget-busting states like California involves a lot of literary license.

Dec 1, 2010
via Breakingviews

Fed’s data dump holds important lessons for Europe

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The Federal Reserve on Wednesday finally published details of the institutions that clamored for its funds during the financial crisis. It’s hardly surprising that troubled banks like Bank of America, Merrill Lynch and Citigroup topped the charts for banks that lined up for federal money. But the disclosure illustrates the scope of the U.S. central bank’s measures to keep the financial system on life support. The scale of emergency lending — $3.3 trillion at its peak — could hold important lessons for Europe, too.

Nov 24, 2010
via Breakingviews

Tiffany’s sparkle speaks against economic relapse

Europe may be burning and the U.S. smoldering, but the comfortably-off are splurging on their blue-boxed trinkets. Tiffany is reaping the benefits, posting double-digit sales growth across the globe in its third quarter, most notably in Europe where receipts rose 22 percent in the period. Together with a bright outlook, that suggests well-heeled and aspirational consumers aren’t anticipating another painful downturn.

In 2008, the near-collapse of the financial system unnerved the usually confident, comfortable class. Tiffany’s sales tumbled. Its holiday season that year was a disaster, with sales plunging 21 percent. And it wasn’t just consumers wanting to spend their way up the social ladder that dropped off. Even the firm’s traditional customers cut back. That proved that even those with plenty of money — with the possible exception of the billionaires club — need confidence if they are to indulge themselves.

Nov 18, 2010
via Breakingviews

Muni market concerns look overblown

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The normally staid U.S. municipal bond market is making headlines for all the wrong reasons. Yields on tax-exempt bonds, the parking lot for wealthy investors looking for tax breaks, have soared this week, a mini meltdown that has prompted the Gwinnett County Water and Sewerage Authority and others to pull more than $3 billion of deals.

Nov 16, 2010
via Breakingviews

Markets won’t force California’s budget hand

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

When Ireland and Greece run big budget deficits, debt investors get angry. But when California says it will need more than $20 billion to balance its budget, bond buyers stay cool. The state is marketing $10 billion of short-term debt that matures next year to big and small investors at interest rates that would make Dublin or Athens green with envy.