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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (47864)	3/7/2006 1:18:08 PM
From: mishedlo	Respond to of 116555

Risky Mortgage Lending Tapers Off Nationwide, Study Says builderonline.com

To: Think4Yourself who wrote (47864)	3/7/2006 1:21:14 PM
From: mishedlo	Respond to of 116555

Cut claims on pension corp., Treasury says Tuesday, March 7, 2006 6:06:24 PM afxpress.com WASHINGTON (AFX) -- Congress must reduce expected claims on the federal Pension Benefit Guaranty Corp. to help save the pension system and avoid a taxpayer bailout, a top U.S. Treasury official said Tuesday. In a prepared speech, Assistant Treasury Secretary Mark Warshawsky said current congressional pension reform proposals are "inadequate" and urged lawmakers to reduce claims on the PBGC over the next 10 years. He also called for improved disclosure about plans' status to workers and for adjusting pension insurance premiums to better reflect each plan's risk. The PBGC is currently running a $23 billion deficit, he said The corporation protects pensions of about 44 million American workers and retirees. But the PBGC's future is in doubt as companies with defined benefit plans have declared bankruptcy and shifted payment responsibilities to the corporation. Both the House and the Senate have passed pension reform bills and are expected to meet soon to hammer out differences. Warshawsky said both versions contain language pleasing to the White House but that differences remain, including how to measure assets and liabilities, use of credit balances and "overly long phase-in periods." "We continue to have serious concerns and will insist on a bill that reduces the risk to workers," he said. PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of 44.1 million American workers and retirees in 30,330 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans

To: Think4Yourself who wrote (47864)	3/7/2006 2:46:25 PM
From: mishedlo	Respond to of 116555

Poole Party (and other short stories) globaleconomicanalysis.blogspot.com Mish

To: Think4Yourself who wrote (47864)	3/7/2006 3:10:14 PM
From: mishedlo	Respond to of 116555

Excess liquidity clinches case for ECB rate rises ..... Robert Lind, European economist at ABN Amro, said that every central banker he now meets stresses the need to end the stream of cheap cash, regardless of domestic economic conditions. "There is a huge global overlay to this which is influencing what the ECB is doing," said Lind. "We are talking about a globally-synchronized boom, which requires a globally- synchronized policy reaction, and the ECB is playing its part in that." This view is shared by fund managers and other analysts. TURNING OFF THE TAPS Ending the flood global liquidity appears to be playing a significant role in the ECB's equation of deciding to tighten, analysts said. It brought at least one doubter on board. Lorenzo Bini Smaghi, the ECB Executive Board member who analysts viewed last year as most reluctant to raise rates, has said since the December increase that turning off the tap was necessary. "We are not entering a tightening cycle. We are just taking away excessive liquidity," he has said. Another Governing Council member viewed by analysts as more dovish, Vitor Constancio of Portugal, has been quiet. Goldman Sachs estimates that euro zone liquidity, measured as credit growth in excess of nominal GDP growth, at a 6 percent rate, twice the global rate. Elga Bartsch of Morgan Stanley agrees that ECB tightening so far is hardly even a cleanup move. "It is a question of not piling up more liquidity," she said. If you want to actually mop up liquidity, then you would have to be above 3.25 percent, which we could see by the end of the year and then we can talk about tightening." Adjusted for inflation real ECB rates are scarcely positive, in other words money remains virtually free. No wonder then that mortgage lending reached 11.7 percent in January, around a five year high. Most analysts agree the ECB refinancing rate needs to be nearer 3.5 percent before it creates economic friction. The second factor underlying ECB determination to raise is improving growth in the euro zone. The ECB has said recovery is broadening and strengthening, despite a weak fourth quarter. Evidence for this multiplies almost daily. Corporate profits are at record highs and companies are starting to invest in plant and equipment. Factory order books hit a 22 month high in February while the jobless rate has slipped to 8.3 percent in February from 8.9 percent a year ago and retail spending may be turning the corner. ..... ..... today.reuters.com