Banks Paying Cash to Homeowners to Avoid Foreclosures

Here’s the latest story that’s been getting buzz around the internet: banks are trying to get troubled mortgages off their books without having to go through costly foreclosure processes and they are offering homeowners cash incentives to do so

On Canadian and Australian bank risk

Banking sectors in both countries are highly concentrated. The top four banks in Australia account for about three quarters of the banking assets. The top six Canadian banks account for upwards of 90% of the Canadian banking assets. According to Fitch, the concentration and high profits of the banking sector is favorable to each as it provides a cushion against losses and need to pursue higher risk activity/lending.

Both Canada and Australia are experiencing over-valued housing markets. The IMF estimates Canadian house prices are about 10% risk while Australia is 10-15% over-valued

[PREMIUM] The Fed’s Rate easing and Obama’s Mortgage refi plan are bullish

Investors must still be worried about the fallout from the European meltdown. However, the situation in the US is looking much better than it did last week because of this aggressive policy response

On building debt

I am glad to say that the overinvestment thesis is much more widely acknowledged today than it was even two or three years ago, but one myth, I think, is that most of the overinvestment excesses in China are concentrated in the real estate sector. I have always argued that it is infrastructure where the most amount of investment has been wasted

A Month In Spain That Didn’t Shake The World

Spain’s economic problems are very grave. The country is facing a decade long depression, and if enough young qualified people leave during this period then the country could enter a negative dynamic from which it will never properly recover. At the outset (2007) I and others argued for a 20% internal devaluation to shift resources over to the export sector. This did not happen, and virtually no one is interested in the idea. The main priorities are still reducing the deficit, and restructuring the financial sector without injecting any significant quantity of public money. Both these policies are contractionary in their impact. In addition the proposed labour market reform is timid, and won’t act quickly enough to stop the rot on the growth front

On the IMF bailouts, Greek defaults and Canadian household debts

Below is the link to my latest appearance on BNN with Howard Green and Ryan Avent. Quick thoughts here

Robert Shiller: “Sweden has a bubble”

Sweden may have a bubble in its housing market. But now that housing prices have begun to fall, it is too late to deploy countermeasures

Jim O’Neill: Chinese GDP numbers are “a blow for the hard landing guys”

There has been a lot of discussion about whether China’s growth will slow enough to be considered a hard landing and what that would mean for the global economy and investors. Below is an account from Bloomberg featuring Goldman Sachs Chief Economist Jim O’Neill that is more in the soft landing camp. O’Neill also talks about the European sovereign debt crisis and Greece

Why Spain may be More Worrisome than Italy

At the end of last year, Italian 10-year yields were more than 200 bp on top of Spain. The spread has narrowed in recent days, but is still well beyond the euro era average of about 10 bp and the late 2008 extreme near 65 bp. There is more room for Italy to outperform Spain

Edward Harrison’s Ten Surprises for 2012

Welcome to Credit Writedowns Pro. This is the first post in a series here. Let me start this Byron Wien-style and make a predictions list. Wien defines his surprises as events to which investors assign 1-in-3 odds of happening but which he believes have a more than 50 percent likelihood of occurring in 2012. That’s how I am playing it too

John Mauldin: The Matterhorn Interview

Investment advisor John Mauldin explains his attitude towards austerity measures; a return of the gold standard; the euro crisis; and the willingness to bailout everyone that makes capitalism and monetary systems stop working

The Rain In Spain Falls Mainly On The Journalists, It Seems

Nothing in Spain is exactly as it appears to be, and that few of the arguments politicians and so called “experts” advance are entirely innocent. Most “information” circulating in Spain is highly politicised. Really “independent” analysts are virtually unknown