EUOBSERVER / BRUSSELS - Spain has come out in favour of direct EU taxation, one of the ideas being considered as part of a major review of European Union budgeting currently underway. In a statement indicating the government of Jose Luis Rodrigues Zapatero is much more receptive to the idea than London, Paris or Berlin, which have come out sharply against such proposals in recent days, the prime minister said on Tuesday: "any consideration to strengthen economic and financial capabilities by the EU will be seen by the government with interest."
EUOBSERVER / BRUSSELS - Spain has come out in favour of direct EU taxation, one of the ideas being considered as part of a major review of European Union budgeting currently underway.
In a statement indicating the government of Jose Luis Rodrigues Zapatero is much more receptive to the idea than London, Paris or Berlin, which have come out sharply against such proposals in recent days, the prime minister said on Tuesday: "any consideration to strengthen economic and financial capabilities by the EU will be seen by the government with interest."
The Polish commissioner in charge of the EU budget, Janusz Lewandowski, has said an EU levy on the financial sector has the best chance of winning support after France joined the UK and Germany in opposition to plans for creating an EU tax. "Talking about EU own resources and something with the shape of a European tax is extraordinarily unfashionable. But I see a tendency, that it is possible in terms of public opinion to defend a tax on financial transactions or another form of tax on the financial sector. It would even be popular," he told the Polish press agency, PAP, on Tuesday (10 August).
The Polish commissioner in charge of the EU budget, Janusz Lewandowski, has said an EU levy on the financial sector has the best chance of winning support after France joined the UK and Germany in opposition to plans for creating an EU tax.
"Talking about EU own resources and something with the shape of a European tax is extraordinarily unfashionable. But I see a tendency, that it is possible in terms of public opinion to defend a tax on financial transactions or another form of tax on the financial sector. It would even be popular," he told the Polish press agency, PAP, on Tuesday (10 August).
Spanish Prime Minister Jose Luis Rodriguez Zapatero has said the government may reintroduce investments in some of infrastructure projects suspended as a part of austerity measures announced in May. "The cut in infrastructure has been very sharp," Mr Zapatero said at a widely reported news conference on Tuesday (10 August) after meeting King Juan Carlo in Palma de Mallorca. "[In] 10 to 15 days we will be able to give some positive news in relation to restoring investment activity in infrastructure."
Spanish Prime Minister Jose Luis Rodriguez Zapatero has said the government may reintroduce investments in some of infrastructure projects suspended as a part of austerity measures announced in May.
"The cut in infrastructure has been very sharp," Mr Zapatero said at a widely reported news conference on Tuesday (10 August) after meeting King Juan Carlo in Palma de Mallorca. "[In] 10 to 15 days we will be able to give some positive news in relation to restoring investment activity in infrastructure."
The World Bank and Bulgaria on Tuesday signed an agreement to better cooperate on development projects for the country's outdated infrastructure. The memorandum of understanding signed by World Bank President Robert Zoellick and Bulgarian Prime Minister Boyko Borisov included "accelerating maintenance and investment in roads and railways," but did not specify the amount of aid the bank would provide. The support is to come in conjunction with billions of euros from the European Union and development organizations.
The World Bank and Bulgaria on Tuesday signed an agreement to better cooperate on development projects for the country's outdated infrastructure.
The memorandum of understanding signed by World Bank President Robert Zoellick and Bulgarian Prime Minister Boyko Borisov included "accelerating maintenance and investment in roads and railways," but did not specify the amount of aid the bank would provide.
The support is to come in conjunction with billions of euros from the European Union and development organizations.
Economists are suggesting the current heat wave in Russia could cost the economy between 5 and 12 billion euros ($7-15 billion) and undermine the current modest economic revival in the country. The figure accounts for immediate losses in the agricultural, industrial and services sector, but does not factor in losses that stem from a spike in deaths and illnesses. The heat wave has been accompanied by a persistent drought, and forest fires which have caused a thick smog to descend over the capital Moscow.
Economists are suggesting the current heat wave in Russia could cost the economy between 5 and 12 billion euros ($7-15 billion) and undermine the current modest economic revival in the country.
The figure accounts for immediate losses in the agricultural, industrial and services sector, but does not factor in losses that stem from a spike in deaths and illnesses.
The heat wave has been accompanied by a persistent drought, and forest fires which have caused a thick smog to descend over the capital Moscow.
he Cologne Institute for Economic Research (IW) said that the government should consider raising the age for workers to receive pensions to 70. The group's chief economist, Michael Huether, told the German daily newspaper Rheinische Post on Wednesday that current plans to raise the age to 67 might not go far enough. "When we look at rising life expectancy and declining birth rates in Germany, a retirement age of 70 must be considered," said Huether. "We should not stop raising the pension in 2029, but instead continue with it afterwards."
he Cologne Institute for Economic Research (IW) said that the government should consider raising the age for workers to receive pensions to 70.
The group's chief economist, Michael Huether, told the German daily newspaper Rheinische Post on Wednesday that current plans to raise the age to 67 might not go far enough.
"When we look at rising life expectancy and declining birth rates in Germany, a retirement age of 70 must be considered," said Huether.
"We should not stop raising the pension in 2029, but instead continue with it afterwards."
Fear returned to global markets with stocks sinking on Wednesday and the dollar making its biggest one-day gain in nearly two years against most major currencies on renewed worries of an economic slowdown in China and the United States. Even as the dollar strengthened across the board, the Japanese yen hit a 15-year high against the greenback as the yield spreads of U.S. Treasury debt over those of Japanese government bonds narrowed.Commodity prices fell, with oil prices sliding more than $2 to below $79 per barrel, on fears that a global economic slowdown would reduce demand for raw materials.
Fear returned to global markets with stocks sinking on Wednesday and the dollar making its biggest one-day gain in nearly two years against most major currencies on renewed worries of an economic slowdown in China and the United States.
Even as the dollar strengthened across the board, the Japanese yen hit a 15-year high against the greenback as the yield spreads of U.S. Treasury debt over those of Japanese government bonds narrowed.
Commodity prices fell, with oil prices sliding more than $2 to below $79 per barrel, on fears that a global economic slowdown would reduce demand for raw materials.
(Reuters) - The number of Britons claiming jobless benefit fell less than expected last month but growth in part-time employment drove the biggest rise in numbers of people in work since 1989 in the three months to June, official data showed on Wednesday. The Office for National Statistics said numbers claiming jobless benefit fell by 3,800 in July, after a downwardly revised drop of 15,900 in June and significantly less than analysts' forecasts for a decline of 16,500.However, the number of people without a job on the wider ILO measure fell by 49,000 in the three months to June, its biggest fall in three years and taking the total to 2.457 million. That took the jobless rate to 7.8 percent -- in line with forecasts.
(Reuters) - The number of Britons claiming jobless benefit fell less than expected last month but growth in part-time employment drove the biggest rise in numbers of people in work since 1989 in the three months to June, official data showed on Wednesday.
The Office for National Statistics said numbers claiming jobless benefit fell by 3,800 in July, after a downwardly revised drop of 15,900 in June and significantly less than analysts' forecasts for a decline of 16,500.
However, the number of people without a job on the wider ILO measure fell by 49,000 in the three months to June, its biggest fall in three years and taking the total to 2.457 million. That took the jobless rate to 7.8 percent -- in line with forecasts.
The Bank of England has cut its growth outlook for the UK economy, citing shaky business and consumer confidence, tight bank lending and the government's spending cuts.The central bank's warning that Britain faces a protracted and "choppy recovery" came as official data showed a sharp rise in long-term unemployment and a smaller than expected fall in the number of people claiming jobless benefits.
The Bank of England has cut its growth outlook for the UK economy, citing shaky business and consumer confidence, tight bank lending and the government's spending cuts.
The central bank's warning that Britain faces a protracted and "choppy recovery" came as official data showed a sharp rise in long-term unemployment and a smaller than expected fall in the number of people claiming jobless benefits.
The Bank of England on Wednesday revised down its forecasts for UK GDP growth over the next few years and now expects inflation to be above target until well into 2012.The lower growth forecasts come as global growth has shown signs of slowing and in the face of the problems in Europe.Higher inflation forecasts reflect in part the rise in valued-added tax slated by the government to hit from next January, as well as the fact that the Bank has consistently underestimated how strong inflation is going to be. "Risks to growth remain weighted to the downside," the Bank's quarterly inflation report notes.Mervyn King, the governor, denied that the downgrade to growth forecasts was the result of the government's austerity Budget.
The lower growth forecasts come as global growth has shown signs of slowing and in the face of the problems in Europe.
Higher inflation forecasts reflect in part the rise in valued-added tax slated by the government to hit from next January, as well as the fact that the Bank has consistently underestimated how strong inflation is going to be.
"Risks to growth remain weighted to the downside," the Bank's quarterly inflation report notes.
Mervyn King, the governor, denied that the downgrade to growth forecasts was the result of the government's austerity Budget.
US regulators have increased their scrutiny of the country's largest banks in recent months, digging deeper into riskier activities and pushing institutions to conduct more rigorous "stress tests" of their financial health.Wall Street executives say that since the end of the financial crisis examiners from the Federal Reserve, the main banking watchdog, have become tougher and more detailed in their policing of large financial institutions."They are all over us," said a senior Wall Street banker. "They want to see a lot more detail and are demanding a lot more information."
Wall Street executives say that since the end of the financial crisis examiners from the Federal Reserve, the main banking watchdog, have become tougher and more detailed in their policing of large financial institutions.
"They are all over us," said a senior Wall Street banker. "They want to see a lot more detail and are demanding a lot more information."
MBIA says losses on its R.M.B.S. insurance portfolio are falling. That, too, is good news. Now for the bad news. The company said it expected to have to pay out $230 million over time on insurance for C.M.B.S.'s -- commercial mortgage-backed securities. As Rob Haines of CreditSights pointed out, the company in the past claimed that portfolio was "nearly bulletproof," although it did cite a $123 million number three months ago. But officials then played down that number, saying they still thought the most probable result was that, in the end, there would be no losses on C.M.B.S. exposure.... This is a company that took forever to admit it had problems in residential mortgage securities, and that vigorously argued with anyone who disagreed. Could this be history repeating itself?
Now for the bad news.
The company said it expected to have to pay out $230 million over time on insurance for C.M.B.S.'s -- commercial mortgage-backed securities. As Rob Haines of CreditSights pointed out, the company in the past claimed that portfolio was "nearly bulletproof," although it did cite a $123 million number three months ago. But officials then played down that number, saying they still thought the most probable result was that, in the end, there would be no losses on C.M.B.S. exposure.... This is a company that took forever to admit it had problems in residential mortgage securities, and that vigorously argued with anyone who disagreed. Could this be history repeating itself?
A surge of imports from China helped push the US trade gap with the rest of the world to its highest level in almost two years in June, official figures showed on WednesdayThe trade deficit jumped by 18.8 per cent to $49.9bn, according to the commerce department. That easily surpassed economists' expectations and brought the deficit to its highest level since October 2008.In June, US exports fell by 1.3 per cent to $150.5bn as international demand for industrial supplies, capital goods and food and beverages waned. Imports climbed by 3 per cent as America's appetite grew for consumer goods, cars and parts.Since bottoming out last May at $24.8bn, America's trade deficit has more than doubled. The widening deficit hinders US output and in the second quarter the gap knocked nearly 3 percentage points off the growth rate.
The trade deficit jumped by 18.8 per cent to $49.9bn, according to the commerce department. That easily surpassed economists' expectations and brought the deficit to its highest level since October 2008.
In June, US exports fell by 1.3 per cent to $150.5bn as international demand for industrial supplies, capital goods and food and beverages waned. Imports climbed by 3 per cent as America's appetite grew for consumer goods, cars and parts.
Since bottoming out last May at $24.8bn, America's trade deficit has more than doubled. The widening deficit hinders US output and in the second quarter the gap knocked nearly 3 percentage points off the growth rate.
China's economy continued to slow last month as efforts to cool the property market and reduce energy consumption began to bite, even as consumer price inflation rose further. The rates of increase for industrial production, fixed asset investment and retail sales each fell last month, while new banks loans and money supply growth also slowed. However, inflation jumped to 3.3 per cent, higher than the 3 per cent target the government has set for the year and up from 2.9 per cent the month before. In contrast, factory-gate inflation fell back from 6.4 per cent to 4.8 per cent. The latest figures come a day after data showing a sharp decline in the pace of growth in imports in July, adding to signs that demand is waning.
The rates of increase for industrial production, fixed asset investment and retail sales each fell last month, while new banks loans and money supply growth also slowed.
However, inflation jumped to 3.3 per cent, higher than the 3 per cent target the government has set for the year and up from 2.9 per cent the month before. In contrast, factory-gate inflation fell back from 6.4 per cent to 4.8 per cent.
The latest figures come a day after data showing a sharp decline in the pace of growth in imports in July, adding to signs that demand is waning.
Ukraine, one of the world's top grain exporters, said on Wednesday it was considering a cap on wheat exports, a move that would put more pressure on surging global grain prices.The announcement was made after Russia had introduced a ban on grain exports until the end of the year following the devastation of its crops by the worst drought in a century. The World Bank has urged countries not to restrict trade in grain. Ngozi Okonjo-Iweala, managing director at the World Bank, said export bans threatened a repetition of the 2007-08 food crisis, when the cost of crops from corn to rice hit record highs and food riots broke out in countries from Bangladesh to Haiti.
The announcement was made after Russia had introduced a ban on grain exports until the end of the year following the devastation of its crops by the worst drought in a century. The World Bank has urged countries not to restrict trade in grain.
Ngozi Okonjo-Iweala, managing director at the World Bank, said export bans threatened a repetition of the 2007-08 food crisis, when the cost of crops from corn to rice hit record highs and food riots broke out in countries from Bangladesh to Haiti.
WHY THE NBER HASN'T DECLARED "IT" TO BE OVER"It", of course, is the recession that began in December 2007....By now, if this was a normal recession followed by a normal recovery, as opposed to a debt-deleveraging-depression, real GDP would already be back at a new high. But here we are, 31 months after the recession began, and the level of real GDP is still -1.1% below its prior high.There are two other critical factors preventing NBER from declaring the all-clear signal. First, despite the dramatic rebound in the equity market in 2009, personal income fell in 49 of the 52 U.S. cities of a million population or more....Second... the rapid decline in the employment-to-population ratio. This is a far more informative measure regarding labour market performance than the traditional unemployment rate, especially at a time when discouraged workers are withdrawing from the labour force at such an alarming clip.The employment rate has declined now for three months in a row, back to where it was at the start of the year, and smartalecks who see this recovery as anything but disturbing don't realize that this employment rate, at 58.4%, is down from 64.0% at the 2007 high. This was the largest drop in the post-war era and what it means is that the economy is 12 million jobs shy of being at full employment.
"It", of course, is the recession that began in December 2007....By now, if this was a normal recession followed by a normal recovery, as opposed to a debt-deleveraging-depression, real GDP would already be back at a new high. But here we are, 31 months after the recession began, and the level of real GDP is still -1.1% below its prior high.
There are two other critical factors preventing NBER from declaring the all-clear signal. First, despite the dramatic rebound in the equity market in 2009, personal income fell in 49 of the 52 U.S. cities of a million population or more....Second... the rapid decline in the employment-to-population ratio. This is a far more informative measure regarding labour market performance than the traditional unemployment rate, especially at a time when discouraged workers are withdrawing from the labour force at such an alarming clip.
The employment rate has declined now for three months in a row, back to where it was at the start of the year, and smartalecks who see this recovery as anything but disturbing don't realize that this employment rate, at 58.4%, is down from 64.0% at the 2007 high. This was the largest drop in the post-war era and what it means is that the economy is 12 million jobs shy of being at full employment.
The Obama Administration today announced additional support to help homeowners struggling with unemployment through two targeted foreclosure-prevention programs. Through the existing Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), the U.S. Department of the Treasury will make $2 billion of additional assistance available for HFA programs for homeowners struggling to make their mortgage payments due to unemployment. Additionally, the U.S. Department of Housing and Urban Development (HUD) will soon launch a complementary $1 billion Emergency Homeowners Loan Program to provide assistance - for up to 24 months - to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.... The program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment "bridge loan" (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months. Under the program, eligible borrowers must: Be at least three months delinquent in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within two years; Have a mortgage property that is the principal residence of the borrower, and eligible borrowers may not own a second home; Demonstrate a good payment record prior to the event that produced the reduction of income. Read more...
The program will work through a variety of state and non-profit entities and will offer a declining balance, deferred payment "bridge loan" (zero percent interest, non-recourse, subordinate loan) for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes and hazard insurance for up to 24 months.
Under the program, eligible borrowers must:
ht CR Diversity is the key to economic and political evolution.
And so, Goldman, in 1991, came up with this idea of the commodity index fund, which really was a way for them to accumulate huge piles of cash for themselves. It wasn't really about the markets, anyway. The market was just an excuse. And so, the fact that they threw these wheat markets out of whack didn't really matter to them. How did this work? Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It's called "going long." They started going long on wheat futures. OK? And every time one of these contracts came due, they would do something called "rolling it over" into the next contract. So they would take all those buy promises they had made and say, "OK, we still--we're just going to--we'll buy more later. And plus we're going to buy more now." And they kept on buying and buying and buying and buying and accumulating this unprecedented, this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It's called a "demand shock." Usually prices go up because supply is low, right? That's the idea. There's not a lot of supply, so the price goes up. In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then set the price up. Now, a lot of people are saying, "Oh, it was biofuel production. It was drought in Australia. It was floods in Kazakhstan." Let me tell you, hard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel. This is completely beyond the pale, particularly at a-- JUAN GONZALEZ: Almost ten times its historic price. FREDERICK KAUFMAN: Yeah. It was just completely out of control. And, of course, the irony here is that in 2008, it was the greatest wheat-producing year in world history. The world produced more wheat in 2008 than ever before.
How did this work? Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It's called "going long." They started going long on wheat futures. OK? And every time one of these contracts came due, they would do something called "rolling it over" into the next contract. So they would take all those buy promises they had made and say, "OK, we still--we're just going to--we'll buy more later. And plus we're going to buy more now." And they kept on buying and buying and buying and buying and accumulating this unprecedented, this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It's called a "demand shock." Usually prices go up because supply is low, right? That's the idea. There's not a lot of supply, so the price goes up. In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then set the price up. Now, a lot of people are saying, "Oh, it was biofuel production. It was drought in Australia. It was floods in Kazakhstan." Let me tell you, hard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel. This is completely beyond the pale, particularly at a--
JUAN GONZALEZ: Almost ten times its historic price.
FREDERICK KAUFMAN: Yeah. It was just completely out of control. And, of course, the irony here is that in 2008, it was the greatest wheat-producing year in world history. The world produced more wheat in 2008 than ever before.
And his 2008 argument is quite silly: it was also the year of highest demand ever - what matters is what storage (reserves) look like and they did not look good then.
One can fight the notion that wheat should be rationed using a monetary criteria, but the perpetual urge to blame speculators each time is silly. Wind power
India's central bank has launched a review of bank ownership regulation that is expected to lead to the re-entry into the banking sector of some of the country's largest industrial conglomerates, such as the Tata and Reliance groups. The discussion paper from the Reserve Bank of India opens debate on whether large domestic industrial groups should be allowed to own banks again for the first time since the country's financial sector was nationalised in 1969.But it also made clear that the licences would favour Indian groups by proposing tougher restrictions on investment in domestically incorporated banks by foreign companies.
The discussion paper from the Reserve Bank of India opens debate on whether large domestic industrial groups should be allowed to own banks again for the first time since the country's financial sector was nationalised in 1969.
But it also made clear that the licences would favour Indian groups by proposing tougher restrictions on investment in domestically incorporated banks by foreign companies.
Dr Clint Laurent of Global Demographics has consistently stated that China's statisticians have overstated the country's birth rates since 1990. This implied, as he said in a paper in 2005, that China's labour force would peak at 770 million in 2008, falling to 690 million by 2025. Another major consequence is that the important age group of 20-39 peaked in 2000 at 458 million and by this year will have fallen by 4%. The consequences of these demographic changes are immense. First, wage inflation will be a given, not just in the private and foreign sectors but amongst the SOEs, as we mentioned earlier. Second, it means that manufacturers will introduce automated machinery to reduce the workforce (the new booming sector) and improve productivity. Third, rising wages lay the foundation for better consumer spending; though households, as in the past, will have to cover the losses racked up by local governments, according to Michael Pettis, a visiting professor in Beijing. Fourth, disposable income in the rural sector is improving.
The consequences of these demographic changes are immense. First, wage inflation will be a given, not just in the private and foreign sectors but amongst the SOEs, as we mentioned earlier. Second, it means that manufacturers will introduce automated machinery to reduce the workforce (the new booming sector) and improve productivity. Third, rising wages lay the foundation for better consumer spending; though households, as in the past, will have to cover the losses racked up by local governments, according to Michael Pettis, a visiting professor in Beijing. Fourth, disposable income in the rural sector is improving.
U.S. life insurers have drawn fire from state and national elected officials since Bloomberg Markets magazine reported last month that more than 100 carriers profit by holding and investing $28 billion owed to life-insurance beneficiaries. Retained-asset Capital reserve accounts are backstopped by insurer guaranty associations in the event a carrier fails, according to MetLife Inc., the biggest U.S. life insurer, and the National Organization of Life & Health Insurance Guaranty Associations. etc
etc
True, a state's insurance commission determines minimum capital reserve requirements by periodic review of financial statements and assesses each admitted insurer to finance a jointly administered guaranty fund and other purposes. Producers in MD, for example, are however prohibited from making any statements of warrantee to policy owners or subscribers on such account or other document or verbal misrepresentation ("fraud") of coverage such as FDIC insurance "back-stop." Leaving one to wonder why VA MANAGERS would require ITS CONTRACTORS to disclose, ironically, that its sponsored plans are NOT FDIC insured: perhaps VA DEPENDENTS assumed that demonstrated federal policy employing TREASURY "back-stop" for certain commerical investment instruments and insurers over the past two years necessarily included VA-sponsored plans? The Bloomberg investigation of 100 insurers' financial records does not say.
Catalonia, which accounts for a fifth of Spanish gross domestic product, has been shut out of public bond markets since March and the extra yield it pays over national government debt has almost tripled this year. Galicia, in the northwest, has asked to freeze payments of debt it owes the central government and the Madrid region postponed a bond sale last month.... The regions' borrowing difficulties will likely complicate their relationship with the Madrid government. While Catalonia is pushing for more autonomy and Spanish law prevents the central government from bailing out the provinces, some investors expect it would do so if necessary. "There's a certain perception that there's a big brother standing behind," said Diego Fernandez, a fund manager who helps oversee 240 million euros at Inverseguros in Madrid and is cutting holdings of regional debt. "There could be a region that has more difficulties and so would need some help, which wouldn't materialize as a bailout but as some kind of larger transfer." lesen sie es...
The regions' borrowing difficulties will likely complicate their relationship with the Madrid government. While Catalonia is pushing for more autonomy and Spanish law prevents the central government from bailing out the provinces, some investors expect it would do so if necessary.
"There's a certain perception that there's a big brother standing behind," said Diego Fernandez, a fund manager who helps oversee 240 million euros at Inverseguros in Madrid and is cutting holdings of regional debt. "There could be a region that has more difficulties and so would need some help, which wouldn't materialize as a bailout but as some kind of larger transfer."
lesen sie es...
During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back. The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association. Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared. The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.
The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.
Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.
The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.
