Archive for the ‘real estate’ Category
May 27th, 2010 | 
Author: World banks brace for euro collapse | GoldSilver.com
goldsilver.com12/26/11
Banks around the world are preparing for the possible collapse of the euro as fears of the European debt crisis increase.
What Will Happen if the Euro Collapses? A Few Scenarios | Global …
globalspin.blogs.time.com12/13/11
Despite the distracting political drama over the UK's outlier rejection at last week's European Union agreement on fiscal and budgetary coordination, it's now become clear that main objective of the collective effort–to ensure …
If you think that the European financial crisis resembles the American banking crisis of a couple of years ago then you’re underestimating the gravity of Europe’s problem.
The European sub-prime crisis of 2007 and 2008 was ‘solved’, although most likely only temporarily, by nationalizing bank debt, and whilst that calmed the markets, the bottom line is that bank debt was merely being transferred onto the public-sector balance sheets.
The governor of the Bank of England, Mervyn King perhaps summed it up best when he said:
“Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets onto which the problems could be moved. Once you move into sovereign debt, there is no answer; there’s no backstop”.
The investors who leapt back into the US markets in 2009 and fueled the biggest stock-market leap since the recovery from the Wall Street Crash in the early 1930s, are now quickly disappearing and the confusion on European bourses is even worse, and we are now in a similar position to that of 2008.
The crunch that is now happening in Europe was foreseen by a great many economists for many years however, because of the difference in approach by Germany and Holland who practice high saving and low spending, and the Mediterranean countries and southern Ireland who have exactly the opposite approach.
The Mediterranean countries and the U.K. too, borrowed cheap in order to raise their standards of living, ignoring the question of whether they could afford to take on so much debt, and that was one of the main causes of the sub-prime disaster.
The Big Danger
Whereas it was possible to bail out sub-prime households, and the banks that lent to them, the International Monetary Fund doesn’t have enough cash to bail out major economies like Spain, Italy or Britain.
The sub-prime property market in the US, together with its slightly less toxic relatives represented a $2 trillion mound of debt, but the combined public and private debt of the most troubled European countries which include Greece, Portugal and Spain is closer to $9 trillion.
If Greek and other government bonds collapse, then that country’s banking system would de facto become insolvent overnight and banks throughout the euro area would be at risk because they hold so much of their neighbors’ government debt.
The Prognosis
It took Britain just a few days in September 2008 for the Government to push through the semi-nationalization of Royal Bank of Scotland and HBOS, but as politicians are now discovering, organizing a European sovereign bail-out is far, far more difficult than rescuing a bank, or banks.
The euro continues to fall and European politicians who are torn between Brussels and their electorates are emitting confusing signals which only tend to destabilize the markets even further.
The single currency might possibly survive, but only if its members were to agree to an even closer political union, and the likelihood of that happening seems as likely as the survival of the Euro.
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And Home Prices Drop By Record Amount
According to the National Association of Realtors, whose records go back to 1979, the median U.S. price for an existing single-family home dropped a record 15.6% to $174,100 in the second quarter of this year.
But Home Sales Increased
Meanwhile, sales of new homes increased by 11% for new homes and 3.6% for existing homes, which suggests that it’s a buyer’s market, and that buyers are taking advantage of the falling prices.
The total dollar reduction was $27.8 billion, and the states that were hardest hit were Nevada (15%) and Florida (13%) and a quarter of would-be sellers lowered prices by around 10%.
Which States Reduced Had The Most Reductions?
Connecticut, Massachusetts, Rhode Island and Illinois had the highest share of homes with price reductions of around 33%.
Then came,
Oregon 29%, followed by,
Washington
New Jersey
Minnesota
New Hampshire
Maryland.
Which Cities Were Worst Hit?
Jacksonville, Florida 38%
Portland, Oregon 35%
Milwaukee, Minneapolis, Boston and Seattle 34%
Albuquerque, New Mexico, and Chicago 33%
Detroit; 16%
Las Vegas 15%
Miami 13%
New York City and Phoenix 12%
San Francisco and Los Angeles 10%
* Undeveloped land and foreclosed properties were excluded from the above estimates.
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