Word: loan
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...American consumer has already lost faith in his own ability to buy things. He knows he might lose his job, he might not qualify for a loan, that his house is worthless, and that the local Sears (SHLD) was closed. If he wants to return something he bought at the store, he will need to drive 50 miles to do it. People who have trouble buying things that they need probably do not want to have their problems compounded by worrying about what they should do if something they buy suddenly breaks...
...Here's where things start to get interesting: A lower price translates into a high potential return for an investor. When the loans were made, an investor who bought them at "par," or the dollar value of the loan, could expect a return of around 7%. That's a more than acceptable rate of return if you believe you will get paid back. But now that defaults are rising on home loans, investors are demanding higher returns to compensate them for the risk that a mortgage will end up delinquent or in foreclosure. A price of $0.26 implies that investor...
...Earlier this month, though, the Financial Accounting Standard Board proposed a change to bookkeeping rules that would allow banks to characterize these loan sales as "distressed." That would allow banks to continue to claim they could get more for the loans they have yet to sell once this whole global financial crisis thing finally blows over...
...purchasing up to $1 trillion in toxic debt, equivalent to 6.8% of U.S. GDP. German banks have about $550 billion in cash reserves. So, it's not hard to figure out what would happen to the real economy if the banks are left on their own to work through loan failure of this magnitude. "Germany has not succeeded yet in getting control of the financial crisis," says Klaus Zimmermann, president of the Berlin-based DIW economic research institute. "We must quickly extract the toxic assets from the system so that the banks can finally reassume their service role...
...year stretch without serious accidents in the U.S., no-nukes sentiment has faded; a Gallup poll this month found that 59% of Americans now support atomic power. The industry has an even broader base of bipartisan support in Congress, which continues to funnel it billions of dollars worth of loan guarantees, tax breaks, insurance benefits and direct subsidies; the latest goodie is "risk insurance," which will reimburse the industry for regulatory delays. States are devising even more creative incentives for new plants; Florida has promised to pay utilities for nuclear investments even if they never complete any reactors...