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Wednesday, September 8, 2010


Asian share markets decline as financial stocks take a hit
Most Asian stock markets were down Wednesday, with exporter shares weighing on Tokyo's Nikkei and financial stocks in the region suffered a blow. Japan's Nikkei 225 plunged 2.2%, Australia's S&P/ASX 200 slid 0.8% and South Korea's Kospi Composite dropped 0.5%. Hong Kong's Hang Seng Index fell 1.5%, China's Shanghai Composite inched down 0.1% and New Zealand's NZX 50 slipped 0.4%. Singapore's Straits Times Index gave up 0.8% and India's Sensex lost 0.2% in afternoon trading. The Wall Street Journal (08 Sep.)

Builders restart projects as banks unload distressed assets
Construction is resuming on some housing projects in the U.S. that collapsed during the recession, as builders buy lots from lenders for less than half of their original cost. Mothballed developments are being restarted in suburban Washington, D.C., and in select markets in California, Florida, Utah and Las Vegas, said Brad Hunter, chief economist for housing-research firm Metrostudy. Bloomberg (08 Sep.)

Stimulus money goes unspent because of a staff shortage, auditors say
A staff shortage in managing stimulus programs is keeping money appropriated by Congress from flowing into the U.S. economy, government auditors said. The problem has been building for years but has reached a breaking point, said Recovery Board Chairman Earl Devaney. The Energy Department has spent only 8.4% of $3.2 billion appropriated for energy-efficiency projects because it doesn't have enough grant officers. USA TODAY (08 Sep.)

Obama is against extending Bush-era tax cuts for the rich:
U.S. President Barack Obama will make it clear that he opposes any extension of Bush-era tax cuts that include the wealthy, White House officials said. Many congressional Democrats have been waiting for a straightforward answer from Obama so they can go ahead with a showdown with Republicans on the issue, analysts said. The New York Times (free registration) (07 Sep.)

China's property-market bubble is poised to burst
Property has emerged as the preferred investment choice for the Chinese, and the situation is fueling concern that the market is bubbling. A prominent economist said China's property market has overheated. "Many of them are bought by property speculators betting on a constantly rising property market," Yi Xianrong wrote in a commentary in People's Daily. "This is a serious threat to the sustainability of China's economy." (08 Sep.)

China considers a reserve ratio for banks to cover loan losses
The China Banking Regulatory Commission is considering adopting a reserve requirement to keep financial institutions from getting into trouble because of bad loans, Shanghai Securities News reported. If the rule is adopted, banks will have to hold about 2.5% of their total loan value, according to the newspaper. China Daily (Beijing) (08 Sep.)

Survey: Banks expect more loan applications, fewer qualified borrowers
A quarterly survey from FICO found that nearly 75% of U.S. lenders expect an increase in loan applications this year but are concerned that fewer borrowers will qualify. More than two-thirds of risk professionals surveyed said they expect the rate of credit approval to decline. Bankers also expect to face increased delinquency on small-business loans, mortgages, credit cards, auto loans and student loans, according to the survey. Bloomberg Businessweek/The Associated Press (07 Sep.)

Japan and Australia indicate difficulty in setting monetary policy
The central banks of Australia and Japan signaled that a deteriorating growth outlook for the U.S. has made it more difficult for them to determine monetary policy. The Reserve Bank of Australia decided to continue holding interest rates despite a solid increase in the nation's gross domestic product, and the Bank of Japan said more monetary stimulus is possible. "If the U.S. economy slows more than forecast and if there is a double-dip, then clearly there are significant implications for policy elsewhere," said Mitul Kotecha of Credit Agricole CIB. Bloomberg (07 Sep.)

Commentary: Politicians don't understand structural unemployment
As Democrats and Republicans argue about the economy, they are ignoring the fact that the disappearance of 8 million jobs relates to factors that are more structural than cyclical, business columnist Steven Pearlstein writes. For decades, the U.S. has allowed its industrial and technological base to deteriorate, and fiddling with government spending won't change that. "In this election season, the politicians who are really serious about creating jobs and bringing down unemployment won't be the ones screaming about tax cuts, or stimulus or some imagined government takeover of the economy," Pearlstein writes. "They'll be the ones talking about how to make the American economy competitive again." The Washington Post (07 Sep.)

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