Now raising intellectual capital

from Rolfe Winkler:

Evening links 12-14

Substantial bank losses needed to fix housing (Bloomberg) To avoid foreclosures, principal has to be written down. That implies hefty losses, especially for banks that hold lots of home equity loans on their balance sheet. Such loans get wiped out before first mortgages lose a penny. Complicating matters, many big banks service both the first and the second mortgage, which means they are highly conflicted. They don't want to eat a loss on the second mortgage, even if writing it down would make the first perform much better...

Greece defies Europe as crisis grows deadly serious (Evans Pritchard, Telegraph) Provocative idea: To relieve its debt burden, Ambrose says Greece should devalue its currency. That's not easy since they use the Euro. He recommends Greece ditch the Euro, "restore its currency, devalue, pass a law switching internal euro debt into drachmas, and "restructure" foreign contracts. This is the 'kitchen-sink' option. Such action would allow Greece to break out of its death loop." Call it the nuclear option... (ht Implode-o-Meter)

Whole Foods Republicans (Petrilli, WSJ) The Republican party is missing an opportunity to reach independent college-educated voters...

Cuts come to New York: Two subway lines may get eliminated, along with subsidized fares for students. In the meantime, Gov. Paterson announced that he will withhold payments to schools and local governments.

from Rolfe Winkler:

America’s debt burden starts to shrink*

Last week, when I published data showing that U.S. households were beginning to reduce their debt burden, I commented that the government is more than offsetting this with increased federal and state borrowing. I was wrong.

The Flow of Funds report often revises historical data. The latest revisions show a slightly improving picture.*

from Rolfe Winkler:

Lunchtime Links 12-11

Jamie gets a deal! (Bloomberg) Prof. Linus Wilson had been estimated that warrants the government got as part of its TARP bailout for JP Morgan were worth $11-$37.  They ended up selling for $10.75. The lower price is most likely because these are not common securities, are illiquid, and therefore worth less than we all thought. Can't really complain. The market spoke. Dimon looks smart for refusing to negotiate bilaterally with Treasury to repurchase them. Treasury was driving too hard a bargain. IIn retrospect, that means the deals on TARP warrants for the likes of AmEx and Goldman ended up going off much better for taxpayers. But Hank Paulson still did far worse negotiating with banks for emergency capital than Warren Buffett. Shame.

Ginnie Mae's growth puts taxpayers on the hook (Grow/Goldfarb, WaPo...via Patrick) Ginnie packages FHA mortgages into mortgage-backed securities. It's the next Fannie/Freddie....

from Rolfe Winkler:

Evening Links 12-10

Loopholes lurk in bank bill (Paletta/Enrich, WSJ) Companies with connections get to buy exemptions...

Treasury yield curve widens to most since 1992 (Walker, Bloomberg)

Dems want to raise debt ceiling a whopping $1.8 trillion (Rogers, Politico) So they don't have to revisit the issue before the 2010 midterm elections...

from Rolfe Winkler:

Wells Fargo forecloses farm, animals fend for themselves

I smell a PR problem here, at least locally. "Glocester farmer, evicted in foreclosure, seeks to compel care for animals" (Djuardin, Projo)

The evicted owner of Bonniedale Farms, upset with the way 136 animals on his farm have been treated since he was forced off the property Monday by Wells Fargo Bank, plans to go before a Superior Court judge Wednesday to get a restraining order to force the bank or its agents to provide food, water and care for the animals left behind.

from Rolfe Winkler:

Households cut debt, have long way to go

U.S. households are slowly repairing their (private) balance sheet. We've a long way to go, but according to the latest Flow of Funds report, we're making progress.

See the chart below

household debt slide

As households and businesses cut debt, governments (state and federal) are adding debt to soften the blow. The good news appears to be that consumers are de-levering faster than the government is re-levering, a figure I'm trying to nail down at the moment.

from Rolfe Winkler:

Parsons says Citi can repay TARP

I've got a question below...but first the story: "Citi positioned to repay TARP, report" (Eder/Wilchins, Reuters) --

Citigroup Inc is in a position to repay TARP, the bank's chairman, Dick Parsons, told cable television network CNBC on Wednesday.

from Rolfe Winkler:

Ireland, ahead of the curve

At least one country is making tough choices. From John Murray Brown (FT): Ireland poised for harsh budget

The Irish government is set to unveil the harshest budget in decades on Wednesday as it seeks to curb a ballooning deficit and restore credibility with international debt markets....

from Rolfe Winkler:

Calling all design feedback!

Now that readers have had a few days to see the new Reuters blog format, we want to hear from you. What do you like? What do you hate? Send me an e-mail or leave a comment. I've been asked by the design team to compile feedback so now's your chance. Please don't be shy.

Topics for discussion:

1. The automatic "continue reading" feature on the front page of the blog.

2. Having comments appear on the front-page.

3. The color, font and size of text.

4. ....

from Rolfe Winkler:

CIT to emerge from bankruptcy

CIT expects to exit bankruptcy protection on December 10, having filed for it only 40 days previously on November 1. (Chasan, Reuters)

The firm, one of the largest financial victims of the credit crisis, will be the first of the financial bankruptcies to emerge from bankruptcy protection, unlike Lehman Brothers, Washington Mutual, IndyMac and other financial companies that have been unable to continue on their own.