Fed May Cut Rates, Leave Door Open for Further Action Dec. 11 (Bloomberg) -- The Federal Reserve will probably cut interest rates today and lay the groundwork for more to prevent the economy from sliding into recession. The Federal Open Market Committee will be loath to repeat language from its last meeting that risks between inflation and growth are ``roughly'' balanced, economists said. Keeping the phrase would open officials to criticism they're oblivious to the credit squeeze that's threatening growth.
Freddie Sees $5.5B-$12B More Losses Freddie Mac Chief Says Business Will 'Get Tougher Before It Gets Better' As Defaults Rise WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise. The government-sponsored company has already logged about $4.5 billion in projected losses during the first nine months of this year. "I honestly think it's going to get tougher before it gets better," Richard Syron, the company's chairman and CEO, said in a discussion with financial analysts in New York.
Citigroup cuts SIV size by $15 billion: LONDON (Reuters) - Citigroup (C.N: Quote, Profile, Research) has reduced the size of its structured investment vehicles (SIVs) by more than $15 billion in the past two months, the Financial Times said on Tuesday. The reduction was achieved through deals under which junior investors bought portions of the SIVs' assets in exchange for their note holdings, the FT said, citing people familiar with the matter. As a result the size of the SIVs has shrunk to $66 billion from more than $80 billion at the end of September.
Ben Bernanke’s Socialist Side Federal Reserve Chairman Ben Bernanke is backing the government’s plan to freeze some mortgages for years — and that has plenty of free-market advocates and mortgage market experts hopping mad. "The streamlined process for refinancing and modifying subprime adjustable rate mortgages announced today is a welcome step in helping Americans protect their homes and communities from the consequences of unnecessary foreclosures," Bernanke said in a prepared statement supporting the plan.
Gold Climbs to Month-High on Falling Dollar NEW YORK -- Gold prices climbed Monday to their highest levels so far this month as expectations for lower U.S. interest rates weighed on the dollar and boosted the appeal of precious metals. The Federal Reserve meets Tuesday, and investors widely expect the central bank to cut its benchmark federal funds rate by at least a quarter point; some expect a sharper half point reduction. Those expectations undercut the dollar, and gave investors reason to shift funds to hard assets like oil and gold. H&R Block Suffers Huge $500 Million 2Q Loss KANSAS CITY, Mo. -- H&R Block Inc., the nation's largest tax preparer, said in a preliminary earnings report Tuesday that it expected a huge second-quarter loss as it continued to wrestle with its disintegrating mortgage arm. In a securities filing, the company said it was submitting its quarterly report late, citing a decision earlier this fall to change accounting firms. The company was scheduled to file late Monday. Foreclosure Avoidance: A Society that is Psychologically Bent On Avoiding the Brutal Facts. Most will agree that as a society, we cannot spend our way into prosperity. In fact, many even the most ardent bulls will acknowledge that we have some serious issues to address in our current economy. From preliminary reports, this rate freeze will have a very minimal impact on the overall housing market. Keep in mind that we have yet to see the plan in action since the first rate resets to take effect will not occur until 1/1/2008. The proposal at best is an avenue for a cathartic release from the housing doldrums and gives those in the industry a respite to scream “let us gasp for air!” It seems to have worked. Housing related stocks are up and with the prospect of further rate cuts, all seems well until you start facing the brutal reality of what is occurring.
Adjustment or affliction? Why the dollar’s drop is failing to rebalance the world People love to complain about the dollar. Five years ago, angst surrounded the greenback’s strength and the ever-rising US trade deficit that stemmed from an uncompetitive exchange rate. The fear was that deepening global trade imbalances would end in tears. The dollar must fall, almost everyone said. Since February 2002 the dollar has indeed fallen, by 28 per cent against the currencies of America’s trading partners after adjusting for inflation. But those expecting a warm glow of happiness in international currency discussions find themselves sorely disappointed.
Subprimed to Lose Lots of Money "So, after the last of the money is finally spent on taxes, that $6.6 billion reduction in tax revenue actually means somewhere between five and eight times as much will be 'lost income' and lost taxes!" The Washington Post reports that "The widening credit crunch is making it harder for cities and school systems to get money for buildings, ballparks and other vital projects from the $2.5 trillion market for municipal bonds, a sector of Wall Street that rarely sees trouble. That is leaving them with a tough choice: either put off the projects, or pay higher interest rates on their bonds."
Chapman Calls for a Recession in 2008 (complete report PDF) Orange, CA – The A. Gary Anderson Center for Economic Research at Chapman University released today the results of its 30th annual economic forecast for the U.S., California and Orange County. The forecast was presented to more than 1,200 Orange County business leaders at a conference held at the Orange County Performing Artscenter, Costa Mesa. Following are highlights of the forecasts.
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