Finance Ministers' Meeting in Washington Tackling
Tough Economic Issue
Finance ministers from seven major industrial nations are meeting in
Washington in the midst of a continuing financial crisis that has slowed
growth and boosted inflationary pressure.
The meeting at the U.S. Treasury is focused on what can be done to
lubricate credit markets still reeling from the US home mortgage debacle
that surfaced eight months ago.
The ministers from Western Europe, North America and Japan are also
conferring with leading commercial bankers, seeking their counsel on
what needs to be done to reactivate credit markets and boost investor
confidence. The heads of the International Monetary Fund and the World
Bank are also taking part.
The US sub-prime crisis has spread worldwide and its biggest effects
have been a slowdown in economic growth and a continued sharp rise in
commodity prices that has accompanied a decline in the value of the
dollar. The world economy has not faced the dual problem of slowing
growth and high inflation since the 1970s.
Specialists at the IMF say the inflation problem has become particularly
acute in Asia where the price of rice-the food staple-has shot up by 75
percent since the first of the year. Chinese inflation has reached eight
point three percent and is much higher in other Asian nations.
David Burton, the head of the IMF Asia department believes that a faster
revaluation of the Chinese currency could alleviate inflationary pressure.
"It (the value of the RMB or yuan) has moved quite fast against the dollar
since late last year, but looked at in effective terms (against other
currencies) it hasn't moved very much at all. And I think you find the same
thing if you look at India as well," he said.
The IMF is predicting that the U.S. economy will enter a recession this
year and that global growth will decelerate to its slowest pace in five
years (3.7 percent). In a further sign of a U.S. slowdown, consumer
confidence in April fell to its lowest level since 1982. The U.S. economy
has shed 250,000 jobs since the beginning of the year.
Finance ministers from around the world are meeting in Washington
Saturday and Sunday at the regularly scheduled spring meeting of the
IMF and World Bank.
Submitted by Admin 04/11/08
source: VOA
Embattled US Housing Chief Resigns
Housing and Urban Development Secretary Alphonso Jackson says he
will step down April 18.
"There comes a time when one must attend diligently to personal and
family matters," he said. "Now is such a time for me."
For two years, Jackson has been fighting allegations that he behaved
improperly in awarding contracts with his agency. The Federal Bureau of
Investigation has been probing the relationship between Jackson and a
friend who was paid 392,000 by his department as a construction
manager in New Orleans, following Hurricane Katrina.
Also, the housing authority in the city of Philadelphia (Pennsylvania) has
filed a lawsuit alleging that Jackson tried to punish the city agency for
rejecting a deal involving one of Jackson's friends.
Jackson did not mention the controversies as he announced his
resignation. Instead, he concentrated on what his agency has
accomplished since he became Secretary in 2004.
"We have helped families keep their homes. We have transformed public
housing. We have reduced chronic homelessness. And we have
preserved affordable housing and increased minority homeownership."
Alphonso Jackson's resignation will likely leave the Bush administration
without a Housing Secretary at a time when a crisis in the housing
industry, set off by risky mortgage lending, is causing problems for the
U.S. economy.
President Bush, who has had a friendship with Jackson since the late
1980's, accepted his resignation with regret, calling him "a strong leader
and a good man."
Jackson says he has spent more than 30 years improving housing
opportunities for all Americans, regardless of income or race.
"As the son of a lead smelter and [a] nurse midwife, and the last of 12
children, never did I imagine I would serve America in such a way. I am
truly grateful for the opportunity."
Jackson said he is staying on for three more weeks to ensure an orderly
leadership transition at his agency.
Submitted by admin 31 March 2008
source: VOA
Mortgage Applications Increase 5.7 Percent
The Mortgage Bankers Association (MBA) today released its Weekly
Mortgage Applications Survey for the week ending April 4, 2008. The
Market Composite Index, a measure of mortgage loan application
volume, was 725.6, an increase of 5.4 percent on a seasonally adjusted
basis from 688.3 one week earlier. On an unadjusted basis, the Index
increased 5.7 percent compared with the previous week and was up
10.9 percent compared with the same week one year earlier.
The Refinance Index increased 3.4 percent to 2724.7 from 2636.0 the
previous week and the seasonally adjusted Purchase Index increased
8.1 percent to 384.7 from 356.0 one week earlier. The Conventional
Purchase Index increased 6.1 percent while the Government Purchase
Index (largely FHA) increased 15.2 percent. On an unadjusted basis, the
Conventional Purchase Index increased 6.3 percent to 561.1 from 527.7
the previous week. The seasonally adjusted Conventional Index
increased 3.8 percent to 935.8 from 901.8 the previous week, and the
seasonally adjusted Government Index increased 12.9 percent to 375.2
from 332.4 the previous week.
The four week moving average for the seasonally adjusted Mortgage
Market Index is up 1.8 percent to 758.0 from 744.5. The four week
moving average is up 1.1 percent to 377.4 from 373.4 for the Purchase
Index, while this average is up 2.4 percent to 2987.8 from 2918.6 for the
Refinance Index.
The refinance share of mortgage activity decreased to 52.2 percent of
total applications from 53.4 percent the previous week. The
adjustable-rate mortgage (ARM) share of activity increased to 6.5 from
5.4 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages
increased to 5.78 percent from 5.75 percent, with points decreasing to
1.11 from 1.19 (including the origination fee) for 80 percent loan-to-value
(LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages
increased to 5.39 percent from 5.27 percent, with points decreasing to
1.11 from 1.13 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 7.06
percent from 7.00 percent, with points increasing to 1.46 from 1.39
(including the origination fee) for 80 percent LTV loans.
The survey covers approximately 50 percent of all U.S. retail residential
mortgage applications, and has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.
Base period and value for all indexes is March 16, 1990=100.
Submitted by admin on 4/9/08
Source: Mortgage Bankers Association
IMF: Credit Squeeze in US Could Get Worse
The International Monetary Fund Tuesday said the turmoil in world credit
markets that began with rising home loan defaults in the United States
is not over and losses could hit $945 billion as the impact spreads into
the global economy. The Bloomberg financial news services estimates
that banks and securities firms have so far written off only a fraction of
that total, $232 billion.
IMF specialists say the overall risks to global financial stability have
increased sharply in recent months. Jaime Caruana is the principal
author of the IMF report on financial stability.
"The credit shock emanating from the US subprime crisis is set to
broaden amid a significant economic slowdown," he said. "The
deterioration in credit has moved up and across the credit spectrum."
As bank losses have soared, lenders have tightened standards and,
despite lower interest rates, many commercial and consumer loans are
still hard to come by. Caruana says more than six months into the crisis,
credit markets are still not functioning normally.
"We have seen confidence quickly evaporate, ending in liquidity driven
solvency events that threaten the core financial system," he added.
He is referring to the US central bank-orchestrated rescue of the Bear
Stearns investment bank, which teetered on the brink of bankruptcy
because of loan losses.
The IMF is not alone in its worry that the credit crisis could worsen.
Morris Goldstein, a financial specialist at Washington's Peterson
Institute, says if home prices continue to fall in the United States,
defaults on mortgage loans could grow beyond the two million predicted
for this year.
"It's been estimated that if US housing prices fall by an additional 15
percent or so, approximately a third of US homeowners will have
negative equity in their homes," he explained. "This raises the question
of whether willingness to pay will have to be addressed along with ability
to pay."
US home prices on average declined by 10 percent in 2007, a factor IMF
economists say contributed to the global credit crisis. Many US
mortgage loans were bundled into securities and sold to financial
institutions worldwide.
Caruana says if the situation worsens, it may be necessary for
governments to spend taxpayer money to stabilize markets.
"I think we have to be careful on that," he cautioned. "And the question is
to what extent the situation continues to deteriorate."
The IMF says lax regulation and a failure to recognize the risks of highly
leveraged loans contributed to the credit crisis. Financial markets, it
says, will come under increased strain as world economic growth
decelerates.
Submitted by admin April 8, 2008
source: VOA