Greenspan: Bond Yield Rise Foreshadows High Rates
前FRB議長のグリーンスパンは、“米国債の利息が急騰することは、インフレを予兆するものだ～丁度、炭鉱のカナリアと言える”と発言した。“Canary in a coal mine"というのは、一昔前のアメリカの炭鉱では、有毒ガス(メタンと一酸化炭素）を検知するために、坑内にカナリアを持ち込んだのだ。カナリアは有毒ガスに敏感である。鳴いている内は安全といことだ。グリーンスパンは、利息を上げないと売れなくなる米国債のその「利息」を有毒ガスに例えたのである。伊勢平次郎 ルイジアナ
Monday, 29 Mar 2010 09:21 AM
By: Frank McGuire
Former Federal Reserve Chairman Alan Greenspan warns that the spike in Treasury yields is a “canary in the mine” that may foreshadow higher interest rates, as investors have avoided three major Treasury auctions this week.
Prices of U.S. government debt fell on Thursday following a weak auction of $32 billion in seven-year Treasury notes. The high yield on the auction came in at 3.37 percent, above the market's expectations, according to market data.
Thursday's auction capped a week of $118 billion in new supply which attracted dismal investor interest. The government has been auctioning a steady stream of bonds for months to fund its economic stimulus efforts.
The higher yields indicate investors’ fears about a “huge overhang of federal debt which we have never seen before,” Greenspan told Bloomberg. “I’m very much concerned about the fiscal situation,” he said.
Greenspan said an increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”
Thursday, benchmark 10-year Treasury notes fell 13/32 in price to yield 3.93 percent, the highest since June 11 and up from 3.86 percent at Wednesday's close. The yield of the 10-year note is linked to interest rates on mortgages and other consumer loans. A drop in prices sends yields higher.
The seven-year note dropped 11/32 to yield 3.35 percent, up from 3.29 percent on Wednesday, Reuters reported.
Testimony from Federal Reserve Chairman Ben Bernanke that affirmed his pledge to keep interest rates near zero for an extended period did little to sway investors.
Economists say there is a looming sense of financial disaster in the wake of President Barack Obama’s landmark — and expensive — healthcare overhaul.
Worries about government bonds issued by Greece and Portugal contributed to investors' wariness of sovereign debt Thursday, analysts said.
If demand for U.S. debt continues to weaken, experts say the government would be forced to pay higher interest rates to lure investors. Prospects that the $940 billion healthcare plan could add to the massive U.S. deficit would make the nation's debt less attractive to investors because of an increase in supply and less fiscal stability.
Most auctions so far in 2010 have attracted strong demand. Experts say a few lukewarm auctions don’t mean that demand will continue to evaporate. An auction Tuesday of $44 billion in two-year notes also saw demand slip from earlier in the year.
Investors showed little interest in the Treasury Department's $42 billion auction of five-year notes Wednesday, which also pushed Treasury higher and prices lower.
The Treasury Department said that the February deficit totaled $220.9 billion, 14 percent higher than the previous record set in February of last year. The deficit through the first five months of this budget year totals $651.6 billion, 10.5 percent higher than a year ago.
The Obama administration is projecting that the deficit for the 2010 budget year will hit an all-time high of $1.56 trillion, surpassing last year's $1.4 trillion total. The administration is forecasting that the deficit will remain above $1 trillion in 2011, giving the country three straight years of $1 trillion-plus deficits.
The administration says the huge deficits are necessary to get the country out of the deepest recession since the 1930s. But Republicans have attacked the stimulus spending as wasteful and a failure at the primary objective of lowering unemployment.
© Moneynews. All rights reserved.
Some cherry trees gave their lives for Jefferson Memorial
The cherry blossoms have begun to bloom around Washington's Tidal Basin.
By Michael E. Ruane
Washington Post Staff Writer
Sunday, March 28, 2010
Franklin D. Roosevelt was mad.
This whole problem with the cherry blossoms was nothing but a "flimflam" cooked up by the newspapers to boost advertising, the president told the White House reporters.
"Six hundred trees" doomed, he mocked, reading from some headlines. "Public aroused," he quoted, "Ten Million-Dollar Project." It was baloney. As for those women chained to the trees down by the Tidal Basin . . . they would be carted off along with their trees.
Harsh words from FDR. But this was the great "Cherry Tree Rebellion," as one newspaper called it -- one of the strangest and most passionate chapters in the now-almost 100-year history of the cherry blossoms in Washington.
It peaked in 1937 and 1938 and pitted advocates of the planned Jefferson Memorial -- whose construction would claim some cherry trees -- and an army of civic activists bent on protecting Washington's famed blossoms.
Along the way, it dragged in the president of the United States, several of the city's newspapers, the legendary editor Eleanor "Cissy" Patterson and so-called dowagers, who at one point stormed the Tidal Basin and briefly chained themselves to the hallowed trees.
It saw protesters gather outside the White House to sing a musical version of Joyce Kilmer's poem "Trees." And it generated poetry of its own:
Who is it wants these grand old trees displaced?
Who is it wants our fair DC disgraced?
From the distance of 70 years, odes to the blossoms and the image of women in furs carrying chains to the Tidal Basin seem quaint. But the dispute became angry at times and tapped into the city's deep-seated grievance over lack of self-government.
* * *
The cherry blossoms had been in Washington only for 25 years -- a gift from the city of Tokyo in 1912. But their beauty was stunning. Each spring, they drew tens of thousands of visitors. And they already were considered among the jewels of the city.
Then came Rep. John J. Boylan, a former postal clerk from Manhattan, a veteran Tammany Hall politician and opponent of prohibition whose dream was to erect a memorial to Thomas Jefferson in Washington.
After years of Boylan's pleas, a Jefferson Memorial Commission was formed in 1936, headed by Boylan, and planning got underway.
But when the Tidal Basin, one of several proposed sites, was selected and a grandiose, mid-basin design by John Russell Pope was suggested, critics deduced that the cherry trees were doomed.
The project would claim all of the 700 Tidal Basin trees, opponents argued. Or half of them. Or at least several hundred. It was nothing short of "vandalism" -- the memorial "a mausoleum," a "pile of marble."
Thomas Luebke, today's secretary of the U.S. Commission of Fine Arts, said that in early versions of the memorial, the design "basically reconfigured the entire Tidal Basin."
"I believe that it would have required more or less wholesale relocation," he said.
Roosevelt joined fellow Democrat Boylan on the side of the memorial, budgeting $500,000 for the start of the estimated $3 million project.
Business and restaurant groups sided with women's clubs, associations like "the housekeepers alliance," and PTAs opposed to "Boylan's Folly."
"When visitors are told that the first step toward the Jefferson Memorial will be to rip out every cherry tree around the Tidal Basin, they just laugh," The Washington Post said in a 1937 editorial. "None can at first believe that such incredible folly is about to be perpetrated."
After a year of bitter conflict in Congress and in public forums, Boylan's panel came up with a compromise: a much smaller memorial, moved to the south shore of the Tidal Basin, that would honor Jefferson but spare most of the trees.
It was essentially the design that exists today.
But some trees would still be lost, and the opposition was not mollified.
On Oct. 5, 1938, Boylan died. Pope, the designer, had died the year before. Roosevelt became the opponent's main target. He was depicted in editorial cartoons as a bespectacled George Washington, having just chopped down a cherry tree before a group of horrified female protesters.
Activists took their case to the airwaves, broadcasting objections in a nationwide radio address. On Nov. 17, 1938, with work on the memorial site already started, 50 women representing a host of social groups marched on the White House with a petition. The next day, activists descended on the Tidal Basin with their chains.
About 150 women occupied the work site, seizing shovels from workers digging up trees and in some cases replacing dirt that had been removed. Several posed for pictures "chained" to trees. No one, apparently, was arrested, and the protest soon dissipated.
At the White House, however, Roosevelt was not amused. He complained that the fracas was a flimflam drummed up by certain Washington newspapers. Only 88 of the trees would be lost, he said. Hundreds more would be added.
The next day, Patterson, the flamboyant editor of the Washington Herald and Washington Times (which she later combined) and a Roosevelt adversary, shot back with a blistering, signed editorial on the Herald's front page.
She argued that the campaign was not overblown. The protests were widespread and real. Besides, the Interior Department had just reported that 328 cherry trees would have to go. Not 88. "Flimflam?" she asked.
After that, the controversy died quickly, and it is not clear how many cherry trees were removed. "I don't think it was a huge number," said Kay Fanning, a Fine Arts Commission historian.
The U.S. Park Police and Secret Service planned extra security for the official memorial groundbreaking on Dec. 15, 1938. But when the day arrived, no protesters appeared.
The president attended, accompanied by his wife, and spoke from his car to a national radio audience.
"In the days to come," he said, "the millions of American citizens who each year visit the national capital will have a sense of gratitude that at last an adequate permanent national memorial to Thomas Jefferson has been placed at this beautiful spot."
About 50 yards away, a sign had been erected, reportedly at Roosevelt's behest. It read, in part: "The increased land area will provide space for planting a large number of Japanese cherry trees."
U.S. Stocks Fall on Treasury Auction, Disagreement Over Greece
March 25 (Bloomberg) -- U.S. stocks fell for a second day as a disappointing Treasury auction and discord among European leaders about how to rescue Greece erased a rally in the final half hour of the session. The 10-year note’s yield climbed to the highest level since June, and the dollar rallied.
Schlumberger Ltd. and ConocoPhillips paced declines in 38 of 40 energy companies in the Standard & Poor’s 500 Index as a stronger dollar wiped out early gains in oil. Monsanto Co. and DuPont Co. helped lead producers of raw materials lower. Citigroup Inc. advanced 2.9 percent as the government was said to plan an orderly sale of its stake in the bank, while Qualcomm Inc. and Best Buy Co. rallied at least 3.6 percent on profit forecasts that topped analysts’ estimates.
“One of the big things affecting the psychology of the market is concern about global government debt levels,” said Michael Shinnick, a South Bend, Indiana-based money manager at Wasatch Advisors Inc., which manages $7 billion. “To the extent there are signs that the debt problem is not going to be a later problem but a near-term problem, the market gets concerned.”
The S&P 500 slipped 0.2 percent to 1,165.73 at 4 p.m. in New York after rallying as much as 1.1 percent and surpassing its highest close in 18 months. The Dow Jones Industrial Average increased 5.06 points, or less than 0.1 percent, to 10,841.21, wiping out most of a 119-point rally. More five stocks retreated for every three that rose on the New York Stock Exchange and Nasdaq Stock Market.
The yield on 10-year Treasuries, which determines borrowing costs for homeowners, companies and other governments around the world, climbed 0.03 percentage point to 3.88 percent at 5 p.m. in New York after jumping 0.17 point yesterday. The yield touched the highest since June when it reached 4 percent.
The Dollar Index, which measures the U.S. currency against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, rose 0.5 percent to 82.207, the highest level since May.
The euro weakened as much as 0.4 percent to $1.3268 as European Central Bank President Jean-Claude Trichet told French television that the region needs to take responsibility for its members and that possible International Monetary Fund aid for Greece is “very, very bad.” French President Nicolas Sarkozy bowed to German Chancellor Angela Merkel’s demand for an IMF role in a potential rescue package for Greece.
The record-tying $32 billion sale of seven-year notes today attracted a yield of 3.374 percent, compared with the average forecast of 3.372 percent in a Bloomberg News survey of 8 of the Federal Reserve’s 18 primary dealers. The current seven-year note yield rose 3 basis points, or 0.03 percentage point, to 3.33 percent.
“The bond auction disappointed investors,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “The question is how high bond yields will have to go and how much of a hurdle will that be for the stock market. Trichet’s comments also did not help a market that has gone up too far, too fast.”
Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., told Bloomberg Radio the almost three-decade bond market rally may be drawing to a close.
Excess borrowing in nations including the U.S., U.K. and Japan will eventually lead to inflation as governments sell record amounts of debt to finance surging deficits, Gross said. Pimco, which announced in December that it would offer stock funds for the first time, is advising that investors buy the debt of countries such as Germany and Canada that have low deficits and higher-yielding corporate securities.
Bond Market ‘Slammed’
“The U.S. Treasury market has gotten slammed over the past two days,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in an e-mail. “This is the last thing a fragile economy needs because yields aren’t spiking because all of a sudden the U.S. economy is great again.”
Schlumberger, the oilfield services provider, slid 2.3 percent to $60.76. ConocoPhillips, the oil producer and refiner, lost 1.9 percent to $51.53. Crude oil for May delivery declined 8 cents to settle at $80.53 a barrel in New York after rallying as much as 1.1 percent. The contract extended losses in electronic trading after the close of the New York Mercantile Exchange, sliding as much as 0.6 percent.
Genzyme Corp. fell 7.6 percent to $51.13 for the biggest drop in the S&P 500. The world’s largest maker of enzyme- replacement therapies was cut to “underweight” from “neutral” at JPMorgan Chase & Co.
Red Hat Inc. fell 5.9 percent to $28.90. The software maker said 2011 earnings excluding some items will be 71 cents to 74 cents a share. Analysts surveyed by Bloomberg estimated 76 cents.
Ambac Financial Group Inc. slumped 17 percent, the most since Nov. 10, to 66 cents. The bond insurer will hand control of subprime mortgage-related contracts to a regulator amid concern its collapse would trigger losses for holders of municipal debt.
Earlier gains in U.S. stocks also came as Federal Reserve Chairman Ben S. Bernanke, presenting to the House Financial Services Committee testimony that was released Feb. 10 during a snowstorm that delayed his appearance until today, said the U.S. economy still needs low interest rates and that the central bank will raise them “at the appropriate time.”
The S&P 500 has risen 72 percent from a 12-year low in March 2009 as the economy returned to growth and a record-long slump in earnings ended. The aggregate profit for companies in the S&P 500 increased in the fourth quarter from a year earlier for the first time since the second quarter of 2007.
‘Back in Sync’
Qualcomm climbed 5 percent to $42.19 for the second-biggest gain in the S&P 500. The company said it will earn 56 cents to 58 cents a share excluding some items in the quarter ending this month on sales of at least $2.55 billion. Qualcomm previously forecast profit of 49 cents to 53 cents on sales of at least $2.4 billion.
“This puts Qualcomm back in sync with the rest of the major technology companies that are reporting strong results,” said Howard Ward, chief investment officer for growth equities at Gabelli & Co. in Rye, New York, which oversees $26 billion including Qualcomm shares. “It’s becoming more difficult to refute the notion that we’re going to be looking at 3 or 3.5 percent GDP growth in the first quarter.”
Technology companies in the S&P 500 beat analyst estimates for earnings-per-share by 17 percent in the fourth quarter, according to Bloomberg data. For the index as a whole, profits exceeded the average estimates by 5.4 percent. Adobe Systems Inc., the world’s biggest maker of graphic-design programs, yesterday rose 3.7 percent after its sales forecast topped analyst estimates.
Amazon.com Inc. led retailers in the S&P 500 to the biggest gain among 24 industries. Shawn Milne, an analyst at Janney Capital Markets, said industry data suggest sales growth improved in February. Amazon rose 5.2 percent to $134.73, the highest price since Dec. 30.
Priceline.com Inc., the online travel agency, rose 4.6 percent to $255.03. EBay Inc., the most-visited online auction site, gained 2.3 percent to $27.56. Its sales growth also improved in February, Milne’s report said, and Credit Suisse Group AG upgraded the shares to “outperform” from “neutral.”
Best Buy, Citigroup
Best Buy increased 3.6 percent to $42.66. The company earned $1.82 a share in the fiscal fourth quarter, 1.7 percent more than the average estimate in a Bloomberg survey of 17 analysts. Reduced prices for flat-panel TVs before the National Football League’s Super Bowl championship game on Feb. 7 boosted U.S. sales.
Citigroup climbed 2.9 percent to $4.27, leading financial stocks in the S&P 500 to a 0.4 percent gain. The share-sale plan being contemplated by the government is similar to those used by executives to protect themselves against accusations of insider trading, the people with knowledge of the matter said.
The government’s sale of its stake will allow Citigroup to “act more freely and competitively,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, which manages $2 billion, including shares of Citigroup. “We like it as a recovery situation.”
Americans Say They Missed 73% Rise in S&P 500 as Economy Surged
March 24 (Bloomberg) -- Americans are down on the economy and the markets even as stocks and growth indicators are up.
By an almost 2-to-1 margin Americans believe the economy has worsened rather than improved during the past year, according to a Bloomberg National Poll conducted March 19-22. Among those who own stocks, bonds or mutual funds, only three of 10 people say the value of their portfolio has risen since a year ago.
During that period, a bull market has driven up the benchmark Standard & Poor’s 500 Index more than 73 percent since its low on March 9, 2009. The economy grew at a 5.9 percent annual pace during last year’s fourth quarter.
“It’s very difficult to turn perceptions around once you’ve been through the proverbial economic wringer,” says Mark Zandi, chief economist for Moody’s Economy.com. “Everything is colored by the fact that unemployment is near 10 percent. It doesn’t really matter what you ask, you’re going to get the same answer.”
Zandi says the poor performance people report on their investments “is very telling. It’s just a fact that everyone’s stock portfolio is up, or nearly everyone’s.”
Even among investors with annual incomes exceeding $100,000, and who might be expected to follow their financial holdings’ performance, more say they have lost money compared with a year ago than say they have made money.
J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based company that conducted the survey, says the disconnect is typical of the way Americans think about the economy.
‘Everyday Life’ Indicators
“Economists look at their indicators and the American people see indicators in their everyday life,” she says. “It is hard to argue with what people observe in their own communities.”
The poll also finds that Americans remain skeptical about the health-care overhaul even after the U.S. House passed the legislation March 21, with fewer than 40 percent of respondents saying they favor the plan. While most say the government should play a role in ensuring everyone has access to affordable care, a majority say health care is a private matter and consider the new rules approved by Congress to be a government takeover.
A sense of despair pervades perceptions of the economy and nation. Barely one-in-three Americans say the country is on the right track. Fewer than one in 10 say they believe the economy will be strong again within a year. Just 4 percent of Americans who cut back on spending during the recession now say they are confident enough to open their wallets, according to the poll, which has a margin of error of plus or minus 3.1 percentage points.
Poll respondent Lynn Heath, 31, a Belleville, Illinois, stay-at-home mom with four children whose husband lost his job 18 months ago and since has only been able to find part-time work, says her family has nearly depleted its savings.
“We don’t have cable. We don’t have internet. I just learned how to make laundry soap. For $4, I can make two-and- half gallons,” Heath says.
The Obama Administration has made no progress over the past three months convincing the public that the $787 billion stimulus package passed last year either helped the economy or prevented greater deterioration. Only 37 percent of the public say they see positive effects, the same portion who said so in a December poll.
Asked about a range of economic measures, people say they have seen deterioration over the past year: 54 percent say the condition of businesses in their community has worsened and 56 percent say the value of homes in their community dropped during the period.
Poll respondent Jim Buyer, 47, an electric utility lineman from Syracuse, Indiana, says that his impression of a worsening economy comes from cutbacks in overtime on his job and his observations as he drives to and from work along an industrial road that services home suppliers, toolmakers and recreational- vehicle manufacturers. Media reporting on the economy may be “slanted,” he says, and what he sees has greater credibility.
“We see the traffic in front of where we work,” Buyer says. “A couple of years ago it was hard to pull out at quitting time. Now you almost don’t even have to look because the traffic is so slim.”
Most Important Issue
Half of Americans say they believe the economy or unemployment is the most important issue facing the country. Health care was cited by 22 percent, followed by 20 percent who cite the federal deficit and government spending. Just 5 percent say the war in Afghanistan.
Unemployment in February was 9.7 percent. Payrolls in the U.S. have dropped every month except one since December 2007. Economists expect job growth to turn around in March, with a median forecast that payrolls will rise by 192,000.
Poll respondents rate persistently high unemployment the greatest threat to the economy over the next two years, with 75 percent calling it a high threat. Chronically high budget deficits are cited as a high threat by 70 percent, followed by homeowners who can’t pay their mortgages, which is cited by 58 percent. Higher taxes are deemed a high threat by 57 percent.
Nine of 10 Americans believe that cutting the deficit, which is projected to reach a record $1.5 trillion this year, will require sacrifices from middle-class Americans. Still, when asked about a range of potential tax increases and spending cuts to address the problem, the large majorities of Americans favor tax increases that only affect the wealthy.
More than three of four Americans say deficit-cutters should consider removing the cap on earnings covered by the Social Security tax, currently set at just under $107,000. More than two-thirds say repealing the tax cuts for wealthy Americans enacted by President George W. Bush should be considered.
Smaller majorities favor considering three other options: a reduction in annual cost of living increases for Social Security recipients, which 52 percent say should be considered; cuts in spending on public works, which 54 percent say should be considered; and a penny-an-ounce tax on sugar-sweetened drinks amounting to 12 cents on a 12-ounce can of soda, which 57 percent say should be considered.
Majorities say other options shouldn’t even be on the table. Among them are higher out-of-pocket payments for Medicare services beyond basic care, an increase in the eligibility age for Medicare, a 2 percent increase in income-tax rates on middle-class Americans, and elimination of the home-mortgage interest deduction.
Berkshire Hathaway Inc.の会長であるウォーレン・バフェット。アメリカ一の富豪である。
ブルームバーグは、「カネを貸すなら、オバマよりもバフェットの方が安全だとボンド市場は言っている」とリポートした。米国債がAAAの格付けを失う危険が迫っているからだ。伊勢平次郎 ルイジアナObama Pays More Than Buffett as U.S. Risks AAA Rating
March 22 (Bloomberg) -- The bond market is saying that it’s safer to lend to Warren Buffett than Barack Obama.
Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg. Procter & Gamble Co., Johnson & Johnson and Lowe’s Cos. debt also traded at lower yields in recent weeks, a situation former Lehman Brothers Holdings Inc. chief fixed-income strategist Jack Malvey calls an “exceedingly rare” event in the history of the bond market.
The $2.59 trillion of Treasury Department sales since the start of 2009 have created a glut as the budget deficit swelled to a post-World War II-record 10 percent of the economy and raised concerns whether the U.S. deserves its AAA credit rating. The increased borrowing may also undermine the first-quarter rally in Treasuries as the economy improves.
“It’s a slap upside the head of the government,” said Mitchell Stapley, the chief fixed-income officer in Grand Rapids, Michigan, at Fifth Third Asset Management, which oversees $22 billion. “It could be the moment where hopefully you realize that risk is beginning to creep into your credit profile and the costs associated with that can be pretty scary.”
While Treasuries backed by the full faith and credit of the government typically yield less than corporate debt, the relationship has flipped as Moody’s Investors Service predicts the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K. America will use about 7 percent of taxes for debt payments in 2010 and almost 11 percent in 2013, moving “substantially” closer to losing its AAA rating, Moody’s said last week.
“Those economies have been caught in a crisis while they are highly leveraged,” said Pierre Cailleteau, the managing director of sovereign risk at Moody’s in London. “They have to make the required adjustment to stabilize markets without choking off growth.”
Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels, said John Lipsky, first deputy managing director of the International Monetary Fund.
All G7 countries, except Canada and Germany, will have debt-to-GDP ratios close to or exceeding 100 percent by 2014, Lipsky said in a speech yesterday at the China Development Forum in Beijing. Already this year, the average ratio in advanced economies is expected to reach the levels seen in 1950, after World War II, he said.
Obama’s unprecedented spending and the Federal Reserve’s emergency measures to fix the financial system are boosting the economy and cutting the risk of corporate failures. Standard & Poor’s said the default rate will drop to 5 percent by year-end from 10.4 percent in February.
Bonds sold by companies have returned 3.24 percent this year, including reinvested interest, compared with a 1.55 percent gain for Treasuries, Bank of America Merrill Lynch index data show. Returns exceeded government debt by a record 23 percentage points in 2009.
Berkshire Hathaway’s 1.4 percent notes due February 2012 yielded 0.89 percent on March 18, 3.5 basis points, or 0.035 percentage point, less than Treasuries, composite prices compiled by Bloomberg show. The Omaha, Nebraska-based company, which is rated Aa2 by Moody’s and AA+ by S&P, has about $157 billion of cash and equivalents and about $52 billion of debt.
P&G, the world’s largest consumer-products maker, saw the yield on its 1.375 percent notes due August 2012 fall to 1.12 percent on March 18, 6 basis points below government debt. The Cincinnati-based company, rated Aa3 by Moody’s and AA- by S&P, makes everything from Tide detergent to Swiffer dusters.
New Brunswick, New Jersey-based Johnson & Johnson’s 5.15 percent securities due August 2012 yielded 1.11 percent on Feb. 17, 3 basis points less than Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The world’s largest health products company is rated AAA by S&P and Moody’s.
Yields on bonds of home-improvement retailer Lowe’s in Mooresville, North Carolina, drugmaker Abbott Laboratories of Abbott Park, Illinois, and Toronto-based Royal Bank of Canada have also been below Treasuries, Trace data show.
“It’s a manifestation of this avalanche, this growth in U.S. Treasury supply which is under way and continues for the foreseeable future, and the comparative scarcity of high-quality credit,” particularly in shorter-maturity debt, said Malvey, whose Lehman team was ranked No. 1 in fixed-income strategy by Institutional Investor magazine from 1998 through 2007.
Last year’s $2.1 trillion in borrowing by the government exceeded the $1.08 trillion issued by investment-grade companies, the biggest gap ever, Bloomberg data show. Malvey said the last time he can recall that a corporate bond yield traded below Treasuries was when he was head of company debt research at Kidder Peabody & Co. in the mid-1980s.
While Treasuries are poised to make money for investors this quarter, they are losing momentum. The securities are down 0.43 percent in March after gaining 0.4 percent last month and 1.58 percent in January, Bank of America Merrill Lynch indexes show.
Benchmark 10-year Treasury yields will reach 4.20 percent by year-end, up from 3.69 percent last week, according to the median forecast of 48 economists in a Bloomberg News survey. Two-year yields will rise to 1.77 percent, from 0.99 percent.
Investors demand about half a percentage point more in yield to own 10-year Treasuries than German bunds of similar maturity, Bloomberg data show. A year ago, debt of Germany, whose deficit is 4.2 percent of its economy, yielded about half a percentage point more than Treasuries.
President Obama’s budget proposal would create bigger deficits every year of the next decade, with the gaps totaling $1.2 trillion more than his administration projects, the nonpartisan Congressional Budget Office said this month. Publicly held debt will zoom to $20.3 trillion, or 90 percent of gross domestic product, by 2020, the CBO forecast.
There’s “a lack of a long-term plan to deal with the federal budget deficit,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York. “At some point in time the market may lose its patience.”
Deutsche Bank and Barclays Plc, two of the 18 primary dealers of U.S. government securities that are obligated to bid at the Treasury’s auctions, say balance sheets of high-rated companies make them more attractive than Treasuries.
Corporate borrowers are reducing debt at a record pace. Companies in the S&P 500 cut their liabilities by $282 billion to $7.1 trillion in the fourth quarter from the prior three months, Bloomberg data show. That represents 28 percent of assets, the least in at least a decade.
Investors are accepting smaller premiums to lend to companies, with yields on bonds rated at least AA falling to within 107 basis points of Treasuries on average, Bank of America Merrill Lynch indexes show. That’s down from the peak of 515 basis points in November 2008, and approaching the record low of 36 in 1997.
Adding to Corporates
New York Life Investment Management is adding to bets the difference in yields will continue to shrink.
“As the balance sheet of corporate America continues to improve and the balance sheet of the government deteriorates, that spread should narrow,” said Thomas Girard, a senior money manager who helps invest $115 billion at the New York-based insurer. “There is some sort of breaking point. The federal government can’t keep expanding its borrowing without having to incur some costs.”
For all the concern about U.S. finances, Treasuries are unlikely to lose their role as the world’s borrowing benchmark, said Michael Cheah, who manages $2 billion in bonds at SunAmerica Asset Management in Jersey City, New Jersey. The U.S. has the biggest, most liquid securities markets, said Cheah.
Speculating that Treasuries may lose their privileged position is “not a bet I want to put on,” said Cheah, who worked at Singapore’s central bank. Yields on 10-year notes are about half their average since 1980.
Losing its Status
The last time there was talk of the U.S. losing its status as the world’s benchmark for bonds was in the late 1990s, when the government began amassing budget surpluses in 1998 for the first time in almost three decades. The amount of Treasuries outstanding dropped 8 percent to $3.4 trillion in 2000, the biggest annual decline since 1946.
Treasury supply resumed growing in 2001 after two rounds of tax cuts proposed by President George W. Bush led to deficits. Outstanding Treasury supply rose 53 percent to $4.5 trillion in 2007 from 2000 as the U.S. borrowed to finance tax cuts intended to revive a slumping economy. The amount has since risen 64 percent to $7.4 trillion.
More is on the way. The U.S. will sell a record $2.43 trillion of debt in 2010, according to the average forecast of 10 of the 18 primary dealers in a Bloomberg survey.
At the same time Treasury sales are rising, the cash position of the largest corporations is swelling. Companies in the S&P 500 held a record $2.3 trillion as of the fourth quarter, Bloomberg data show.
High-rated corporate bonds due in three to five years are most likely to yield less than Treasuries, according to Deutsche Bank’s Pollack. The growing supply of Treasuries with those maturities will make government debt a bigger proportion of indexes that fund managers measure their performance against, he said. Managers betting Treasury yields will rise may diversify into corporate debt, Pollack said.
“There’s no natural law that says a Treasury has to yield less than a corporate,” said Daniel Shackelford, who is part of a group that manages $18 billion in bonds at T. Rowe Price Group Inc. in Baltimore. “It wouldn’t be the first time that I would scratch my head and say ‘this doesn’t make sense, the market’s behaving irrationally.’ And it can go on for much longer than you may think.”
ギリシアの首都アテネにある国会議事堂。その前に集まった群衆。「憲法通り」と言う広場だが、その近くにパルテノンの丘がある。０７年のクリスマスに、パルテノン神殿を見上げる位置の小ホテルに泊まった。ギリシア人は理屈っぽく、勤勉ではないという印象があった。この記事を読んで、再確認が出来た。伊勢平次郎 ルイジアナFor investors, there's still plenty of reasons to be cautious
By Frank Ahrens
Washington Post Staff Writer
Sunday, March 21, 2010
Stocks hit some significant recovery milestones last week. Is it time to break out the top hats and champagne?
Not quite, especially if you watched the market dip Friday. Traders continue to worry about the unresolved problem of Greece and the even bigger potential problem of whether Europe can function as a one-currency union.
But last week's milestones, which come just a little more than one year after the stock market bottomed last March, tell us that our portfolios and retirement accounts are about three-quarters of the way back to where they peaked in October 2007. Looking forward, they are a sign that traders and other investors are starting to believe in the markets again.
On Wednesday, the Dow Jones Industrial Average of 30 blue-chip stocks briefly passed its 52-week high before closing slightly lower. On Thursday, it continued to rise, closing higher than it had since October 2008.
The tech-heavy Nasdaq hit its 18-month high Thursday.
Year-to-date, the Dow is up 3 percent, while the broader Standard & Poor's 500-stock index and the Nasdaq are up more than 4 percent.
Wall Street has been feasting on tasty economic data of late and is hungry for more. The Street is hopeful for a slight decline in unemployment when the March jobs report comes out in early April. The rise in February retail sales, despite the month's heavy snows, represented the third consecutive month of gains and the fifth positive month of the past six. Retail sales and factory output in struggling Japan even continued to rise in February, which has cheered markets here. And despite increasing currency hostilities with China, Asia is not the problem. Europe is.
How confident you are about plowing money back into the market should partly depend on how confident you are that Greece is an isolated crisis. If you think the other European Union nations can contain the problems in the ancient and continually debt-ridden Greece, then the markets look promising.
If, however, you think Greece is the first brick to fall out of a wobbly Euro-wide debt wall, then the markets look shaky. And if you think Europe's economic Atlas -- Germany -- is getting tired of shouldering the continent's load, the markets look especially shaky.
"The problem that is Europe is only now coming to the fore," equity strategist Dennis Gartman writes. "Hard working, high-taxed, highly productive Germans will not pay the costs of less-than-hardworking, low-taxed, incredibly unproductive Greeks [so they] can have an earlier retirement and more vacation days each year than can the Germans." Waggish financial analysts have referred to the Greek problems as a "Greece fire," meaning it's messy and hard to put out.
Overall, Europe is not in great shape. Average unemployment in the 16-nation Euro Area is 9.9 percent, higher than in the United States. And Europe is stagnant. The European Commission said this month that it expects gross domestic product across the continent to grow by just 0.7 percent this year. And there's all that debt you keep reading about.
The sovereign debt problems in Europe have driven down the euro and pushed up the dollar. Although U.S. foreign policy is officially for a strong dollar, the dollar has traditionally had an inverse relationship with stocks. When the dollar goes up, stocks go down and vice versa. If you think the European problems will continue and multiply, or if you take the more radical bust-up-the-euro viewpoint, then the stock market's performance for the remainder of 2010 will not be as promising as to someone who believes Europe will backstop Greece and contain the crisis.
Another factor to consider when evaluating the health and prospects of equities is inflation and its partner, interest rates.
Historically low interest rates have played a part in this rally during the past year. The Federal Reserve has kept rates between zero and 0.25 percent to keep the cash spigot open and pump liquidity into the system. At low rates, people will borrow money. But the Fed's decisions have rippled through the economy and likewise brought down interest rates on products, such as certificates of deposit, that people buy specifically to collect interest.
The low interest rates even creep into online savings accounts, which have lured savers from brick-and-mortar banks with higher interest rates. When you prepared your 2009 taxes, many of you probably didn't get statements from your online savings accounts because the earned interest was negligible.
With interest rates so low, investors migrate into riskier investments, such as stocks. More buyers in the markets push the markets higher.
Another tea leaf to read is the unusually low trading volume on Wall Street in recent weeks.
Low volume means there's still money sitting on the sidelines. But trading in long options is up. And that can mean that investors and traders believe in this market and are taking long positions in it, betting it will go higher.
If you short a stock, that means you think it will take a dive. If you take a long position, you're expressing your optimism, which indicates a cautious confidence by traders and investors. Unless you're a bear. Then you believe that low volume tells us that we're in for a correction, or slump, in the stock market soon.
Bearish Miller Tabak equity strategy Peter Boockvar said Friday, "The last thing I would do is to tell somebody to buy [stocks] now."
He added: "I see the rally in stocks as just a re-test of the January highs with nothing more sustainable. The rest of the year becomes much more challenging."
But you don't have to be a Wall Street analyst to know that we're not out of the woods, yet.
Well-known companies, such as Palm, are still in trouble. In a research note Friday, Canaccord Adams equity research said the smartphone company's "carriers and suppliers increasingly question the company's solvency."
And sobering facts like that are reason enough -- even if you look past Greece, Europe, low volume, you name it -- to continue being a cautious investor.
Bank of Japan expands lending to fight deflation
By TOMOKO A. HOSAKA
The Associated Press
Wednesday, March 17, 2010; 6:57 AM
TOKYO -- Japan's central bank is escalating the fight against deflation by offering more cheap loans to banks.
In a split decision, the Bank of Japan's policy board decided Wednesday to double the amount available under its short-term lending program to 20 trillion yen ($221 billion) from 10 trillion yen.
Introduced in December, the three-month loans at a fixed rate of 0.1 percent are intended to nourish credit flows and reduce longer-term interest rates.
The seven-member board voted unanimously to keep its key interest rate at a super lean 0.1 percent. In a statement, it pledged to maintain an "extremely accommodative financial environment" for the time being. The central bank has not changed the overnight call rate target since December 2008, when the policy board lowered it from 0.3 percent.
The central bank's expected move came amid growing political pressure to take stronger action to combat falling prices, which threaten to undermine Japan's patchy economic recovery.
"The Bank recognizes that it is a critical challenge for Japan's economy to overcome deflation and return to a sustainable growth path with price stability," the central bank said. "To this end, the Bank will continue to consistently make contributions as a central bank."
The world's second biggest economy grew at an annualized pace of 3.8 percent in the fourth quarter thanks to robust exports, but that has done little to bolster demand or wages at home. Japan's key consumer price index, which fell for the 11th straight month in January, is expected to keep declining for the next two years.
The troubling outlook separates Japan from growing economies elsewhere in Asia, where central banks are winding down stimulus measures and tightening monetary policy. Interests rates are rising in Australia and Malaysia, while central banks in China and India are reducing liquidity to control inflation.
Meanwhile, Japan struggles with a familiar foe. The country has battled periods of deflation since the "Lost Decade" in the 1990s. Lower prices may seem like a good thing, but it hamstrings economic growth by shrinking company profits, sparking wage cuts and causing consumers to postpone purchases. It also magnifies debt burdens.
The government's ability to counter deflation with increased spending is constrained because of Japan's ballooning debt, the highest among industrialized countries and rising. Prime Minister Yukio Hatoyama has proposed a record $1 trillion budget for the next fiscal year starting April, which will require the government to issue some 44.3 trillion yen ($492 billion) in bonds.
With limited room to maneuver on the fiscal policy front, Finance Minister Naoto Kan has repeatedly called on the central bank to do more. He wants deflation gone by the end of the year and has suggested establishing an inflation target.
The latest move may appease the government for now. But it falls short of a meaningful fight against deflation, economists say.
Richard Jerram, chief economist at Macquarie Securities in Japan, described a temporary increase in liquidity or even a modest interest rate cut as "irrelevant." Japan needs aggressive, government-led changes to shock prices higher, he writes in a recent report.
"Japan is in such a deep deflationary hole that marginal policy changes are likely to be ineffective," he said.
Newly powerful China defies Western nations with remarks, policies
By John Pomfret
Washington Post Staff Writer
Monday, March 15, 2010
BEIJING -- China's government has embraced an increasingly anti-Western tone in recent months and is adopting policies across a wide spectrum that reflect a heightened fear of foreign influence.
The shift has accelerated as China has emerged stronger from the global financial meltdown, with a world-beating economic expansion rate and a growing nationalist movement. China has long felt bullied by the West, and its stronger stance is challenging the long-held assumption shared among Western and Chinese businessmen, academics and government officials that a more powerful and prosperous China would be more positively inclined toward Western values and systems.
China's shift is occurring throughout society, and is reflected in government policy and in a new attitude toward the West. Over the past year, the government of President Hu Jintao has rolled back market-oriented reforms by encouraging China's state-owned enterprises to forcibly buy private firms. In the past weeks, China announced plans to force Western companies to turn over their most sensitive technology and patents to Chinese competitors in exchange for access to the country's markets.
Internally, it has carried out more arrests and indictments for endangering state security over the past two years than in the five-year period from 2003 to 2007, according to a report released Friday by the Dui Hua Foundation, a San Francisco-based human rights organization.
China has also reined in the news media and attempted to control the Internet more vigorously than in the past. This month, it announced regulations designed to make it harder for China's fledgling community of nongovernmental organizations to get financial support from overseas. In foreign affairs, after years of playing down differences, it has reverted to a tone not heard in more than a decade, condemning recent U.S. decisions to sell weapons to Taiwan and to have President Obama meet the exiled Tibetan leader, the Dalai Lama.
"This is a fundamental shift, and I've been here a long time," said James L. McGregor, a senior counselor with the public affairs firm Apco China. "It's a change in national attitude."
For their part, senior Chinese leaders bristle at the notion that China is turning away from reforms or is reluctant to cooperate with Western nations. In a news conference on Sunday, Premier Wen Jiabao said he was aware of "theories about China's arrogance, toughness and triumphalism," but rejected them. Asked about widespread criticism of China's hard-line position at the U.N. Climate Change Conference in Copenhagen, for example, Wen replied: "It still baffles me why some people continue to try to make an issue about China."
Nonetheless, China's legislature, whose annual session ended this weekend, also showed the trend toward toughness. With a reported 700,000 security personnel posted throughout the city for the 10-day session, Beijing was in a virtual lockdown. Inside the Great Hall of the People, the proposals -- albeit spurious -- put forward by the delegates to the National People's Congress included calls for all Internet cafes to be taken over by the government and a declaration that all cellphones should be equipped with surveillance cameras.
The shift does not bode well for U.S.-China relations. The Obama administration entered office with an ambitious China agenda comprising plans to cooperate on climate change, curbing the nuclear ambitions of Iran and North Korea, and stabilizing the global financial system. In China, those plans are generally viewed by the party leadership as a trap to overextend and weaken the country, according to a Chinese official who spoke on the condition of anonymity because he would lose his job if his name were published.
In his news conference, Wen also seemed disinclined to bend to another American demand -- that China allow its currency, the yuan, to appreciate against the dollar, which (theoretically) would boost U.S. exports. Wen countered that he didn't think the yuan is undervalued and that the U.S. method of seeking to enlarge exports through tweaking currency exchange rates is "protectionist."
The change comes during what a leading Chinese economist, Hu Angang, in an interview called "the longest golden era in China since the opium wars" of the 1840s, when British warships forced China to open to trade. From its position as an impoverished, developing country, it has jumped into the ranks of the powerful.
But the closer China gets to a variety of firsts -- No. 1 exporting nation and even No. 1 economy in the world -- the more its government seems to exhibit a nagging insecurity and opposition to the West.
The Chinese people are no longer embarrassed about being Chinese," said Wang Xiaodong, a leading nationalist writer who has co-authored a series of popular books with titles such as "China Is Unhappy," which capitalized on the growing anti-Western trend. "The time when China worshipped the West is over. We have a rightful sense of superiority."
"People are now looking down on the West, from leadership circles to academia to everyday folk," said Kang Xiaoguang, a professor at Renmin University who studies NGOs and Confucius.
The turn away from the West is evidenced within China's leadership. China's previous president, Jiang Zemin, is widely thought to have been pro-American. He was fond of reciting the Gettysburg Address and crooning American songs. During a trip to the United States in 1997, he took the politically risky move of announcing that China welcomed continued U.S. engagement in Asia -- including the stationing of American troops. On the other hand, Hu, who took power in 2002, is the first Communist leader with no experience outside the current system.
Other factors are at play. It is campaign season in Beijing. In two years, the leadership of the Communist Party will undergo a huge transition, with as many as seven of the nine seats of the Standing Committee of the Politburo -- the center of power -- up for grabs. Nothing looks better in China than being tough on the West.
Secondly, despite its apparent successes, China's leadership continues to be alarmed by international developments -- such as the "color revolutions" inside the former Soviet Union -- and domestic ones as well, such as the anti-Chinese riots in Tibet in 2008 and the northwest province of Xinjiang last year.
A recent example is how the party reacted to the threat by the Internet search company Google, which said it would leave the country if China continued to censor the Internet. Concerned about an outpouring of support in China for the American company, the Ministry of Propaganda framed the issue not as an argument over freedom but as part of a U.S. strategy to contain and isolate China.
On Friday, Li Yizhong, China's minister of industry and information technology, issued China's toughest statement on the dispute yet. "If you want to do something that disobeys Chinese law and regulations, you are unfriendly, you are irresponsible, and you will have to pay the consequences," he warned.
China's policy changes have met with opposition. Not all of its efforts to nationalize private companies have succeeded. And China's plans to compel Western businesses to share their technology have prompted a backlash from a community that does not like to criticize China openly. On that front, Wen on Sunday seemed to give in a little.
"I must say I am still not in very close touch with foreign businessmen doing work in China," he acknowledged. "In the next three years I will create more opportunities . . . to listen to your views."
New round of foreclosures threatens housing market
By Renae Merle
Washington Post Staff Writer
Friday, March 12, 2010
The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.
About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can't obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.
As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.
The rate at which J.P. Morgan Chase seized properties, for example, peaked in the middle of 2008 and fell steadily last year, according to a February investor report. But the bank expects repossessions to increase this year, nearly doubling to 45,000 by the fourth quarter.
"Some of the positive housing data may not be signaling a true turning point, as many servicers are holding back on foreclosures and the related houses are not yet being offered for sale," said Diane Westerback, a managing director at Standard & Poor's. Westerback said it could take 33 months to clear the backlog.
Data released Thursday by RealtyTrac illustrate the dynamic. While banks repossessed fewer homes in February than a month earlier, borrowers continued to fall behind on their payments, adding to the inventory of properties headed toward foreclosure that have yet to be put on the market, said Daren Blomquist, RealtyTrac's spokesman.
"Just looking at the numbers, we would expect there to be a bigger percentage of properties" repossessed by banks by now, he said.
This "shadow market" reflects the increasing lag between defaults and foreclosures. Many lenders are struggling to keep up with the overwhelming number of borrowers who can't make their payments, and they're reluctant to rush repossessed homes onto the market when prices are depressed.
Today's delinquent borrowers, for the most part, differ in a key regard from those who were caught up in the surge of defaults in 2008. That earlier wave, which precipitated the financial crisis, consisted largely of subprime borrowers who defaulted when their risky loans became unaffordable.
The borrowers in trouble now are, for the most part, people who have better credit and safer loans and have become delinquent because they've lost their jobs or are dealing with other economic setbacks, economists said. More than 75 percent of the borrowers who are now seriously delinquent -- meaning they have missed at least three monthly payments -- have traditional prime loans, according to First American CoreLogic. Most of these borrowers have not made a mortgage payment in six months.
These borrowers are among the most difficult to help. Homeowners with economic troubles such as extended unemployment often cannot make even reduced mortgage payments. And the longer borrowers stay delinquent, the more difficult it is to fashion a mortgage relief plan for them.
Some lenders are giving distressed borrowers more time to see whether they can modify the terms of their loans.
It can take a borrower six to seven months to find out whether he or she qualifies for a permanent loan modification under the federal foreclosure relief program, Making Home Affordable, according to Barclays Capital.
In Maryland, for example, lawmakers extended the foreclosure process from 15 days to 135 days in 2008 and are considering emergency legislation to force lenders into mediation with a borrower before foreclosing on a property. But other states and jurisdictions have even more drastic measures to slow down the foreclosure process. "There were cases where sheriffs were refusing to file foreclosure notices," said Jay Brinkmann, chief economist for the Mortgage Bankers Association.
After a temporary foreclosure moratorium in 2008, the backlog of homeowners facing foreclosure in Maryland has surged. The number of Maryland homeowners who are seriously delinquent or in the midst of the foreclosure process nearly doubled during the fourth quarter of 2009 compared with the same period a year earlier, according to data from the Mortgage Bankers Association.
"Lenders are deluged by late-stage delinquencies. The pent-up foreclosure inventory is there," said Massoud Ahmadi, director of research for the Maryland Department of Housing and Community Development.
The uptick in foreclosure sales is helping depress Maryland home prices, he said. "We have seen that home sales are on an upswing, but prices are on a downswing. That is the impact of the shadow inventory. It is keeping prices down," Ahmadi said.
In addition to those already in default are 11 million more U.S. borrowers who owe more on their mortgage than their home is worth -- known as being underwater -- and are in danger of becoming delinquent, said Sam Khater, chief economist for First American CoreLogic.
Over the past year, the number of foreclosed homes going up for sale has declined. Distressed properties made up just 38 percent of purchases in January, compared with the 49 percent peak in March 2009, according to the National Association of Realtors. That helped the inventory of homes on the market fall to a 7.8-month supply, close to the figure during normal times and down from more than 11 months in July 2008. But as prices continue to stabilize, lenders are likely to take advantage of the situation by putting more of these distressed properties on the market, economists said.
"Banks have remained in foreclosure paralysis, allowing that backlog to get larger and larger. You can't do that indefinitely," said Sandeep Bordia, head of U.S. residential credit strategy at Barclays Capital.
That impact could be muted if enough buyers emerge to snap up properties or efforts to enroll borrowers in mortgage relief programs improve. Some lenders are looking for ways to ease delinquent borrowers out of their homes without a foreclosure. For example, lenders are allowing more short sales, in which the home is sold for less than the outstanding loan balance. Citigroup is testing a program that allows delinquent borrowers to stay in their home for six months free if they leave the property in good condition, making it easier to sell afterward.
"We are anticipating a foreclosure glut that is likely to come up in next 16 to 18 months. We are trying to stay ahead of this," said Sanjiv Das, chief executive of CitiMortgage. These types of programs are "protecting house prices and consumer sentiment from going down further," he said.
The impact of the coming foreclosure wave will vary by region. The Washington area has a "shadow inventory" of about 67,000 properties that could go into foreclosure this year, an 11-month supply at the current sales rates, according to research by John Burns Real Estate Consulting in Irvine, Calif. That is slightly higher than the national average but far less than the hardest-hit communities, such as Orlando and Miami, where there is two-year backlog.
And the backlog will hang over some communities for years. By the end of 2012, 39 percent to 50 percent of home purchases in Phoenix will still be foreclosed properties, J.P. Morgan Chase has estimated. In Los Angeles, they'll account for 28 percent of home sales.
Obamas will get a sneak peek at 'The Pacific'
by Scott Wilson（AP)
In what has to be one of the real perks of the job, President Obama and Michelle Obama will have Tom Hanks, Steven Spielberg and a few others over to the White House on Thursday evening for an advance screening of "The Pacific." HBO's lavish World War II miniseries begins Sunday night for the rest of us.
The group will gather around 5 p.m. in the White House Movie Theater for the first installment of what is estimated to be the most expensive miniseries ever made - topping HBO's "Band of Brothers," which focused on the war's European theater.
Among the invited guests is national security adviser James L. Jones, the retired four-star general who once served as Supreme Allied Commander, Europe. HBO President Richard Plepler is on the guest list, which also includes some members of Congress, VFW members, and members of Women in the Military Service for the American Memorial.
The Obamas will stop personally at one of the battlefronts of the Pacific War later this month, when they travel to Guam. U.S. troops retook the island in the summer of 1944, three years after Japan captured it.
去年９月、ピッツバーグでG20が会った。会場に入るゴードン・ブラウン（英国首相）、ニコラス・サルコジ（仏大統領）とオバマである。それから、６ヶ月が経った。オバマには、親しい関係の外国の首脳はいない。「エリート意識や、ナルシズム、冷静を保つ性格が高いコストについている」との記事だ。Where are Obama's foreign confidants?
By Jackson Diehl
Monday, March 8, 2010
I recently asked several senior administration officials, separately, to name a foreign leader with whom Barack Obama has forged a strong personal relationship during his first year in office. A lot of hemming and hawing ensued.
One official mentioned French president Nicolas Sarkozy, who is scheduled to bring his glamorous wife to the White House residence this month for a couples dinner with Barack and Michelle Obama. But in France, Sarkozy's bitterness toward Obama, the product of several perceived snubs, is an open secret, reported widely in the French press. In a speech at the U.N. General Assembly in September Sarkozy appeared to mock Obama's signature disarmament initiative, saying "we are living in a real world, not a virtual world."
Angela Merkel's name also came up: Obama and the German chancellor, I was told, share a down-to-business pragmatism. But Merkel, too, has been conspicuously cool toward Obama ever since he made Berlin a stop on his 2008 election campaign. She stopped him then from appearing at the Brandenburg Gate and was said to be miffed last November when Obama didn't show for ceremonies celebrating the 20th anniversary of the fall of the Berlin wall. Anyway, diplomats say that Merkel has a much warmer relationship with Secretary of State Hillary Rodham Clinton.
No one named Gordon Brown. That's fairly remarkable: The relationship between the sitting British prime minister and U.S. president has been consistently close over the past 30 years. Think Reagan and Thatcher, Clinton and Blair, Bush and Blair. But Obama has been portrayed as dissing Brown ever since he presented him with a set of DVDs as a gift during their first meeting in Washington a year ago. Last fall the British press reported that the White House had turned down five requests for Obama to meet Brown one-on-one at the United Nations or the G-20 summit.
Finally, I was offered a name I didn't expect: Dmitry Medvedev. Obama, I was assured, has built a solid relationship with the Russian president during their several bilateral meetings, which have focused in part on a new nuclear arms control agreement that both could count as a distinctive achievement. But the deal hasn't been clinched -- maybe because Vladimir Putin, whom Obama has held at arm's length, doesn't like it. And could it really be that an American president has found his closest foreign partner in the Kremlin?
The paradox here is that Obama remains hugely popular abroad -- from Germany and France to countries where anti-Americanism has recently been a problem, such as Turkey and Indonesia. His following means that, in democratic countries at least, leaders have a strong incentive to befriend him. And yet this president appears, so far, to have no genuine foreign friends. In this he is the opposite of George W. Bush, who was reviled among the foreign masses but who forged close ties with a host of leaders -- Aznar of Spain, Uribe of Colombia, Sharon and Olmert of Israel, Koizumi of Japan.
Jealousy or political rivalry may play a part -- Sarkozy is one of several Europeans who have wanted to assume the role of Obama's closest ally and reacted poorly when he didn't respond. But another big cause seems to be lack of interest on Obama's part. Focused intently on his domestic agenda, the president is said to be reluctant to take time to build relationships with foreign leaders. If something has needed to be done or decided, he has readily picked up the phone. If not, he generally hasn't been available.
Obama also hasn't hesitated to publicly express displeasure with U.S. allies. He sparred all last year with Israel's Binyamin Netanyahu; he expressed impatience when Japan's Yukio Hatoyama balked at implementing a military base agreement. He has repeatedly criticized Afghanistan's Hamid Karzai, and he gave up the videoconferences Bush used to have with Iraq's Nouri al-Maliki.
An argument can be made that none of this matters. Bush, after all, was often criticized for depending too heavily on personal relationships -- remember how he looked into Putin's soul? -- and his pals didn't save his administration from being universally condemned as "unilateralist." The Obama administration, in contrast, can argue that it has done pretty well in lining up European support on key matters such as Afghanistan and Iran. And Obama's personal popularity continues to provide leverage with leaders around the world, whether they hit it off with him or not.
Still, it's worth wondering: Would Sarkozy have fought French public opinion and sent more troops to Afghanistan (he has refused) if he had been cultivated more by Obama? Would Israel's Netanyahu be willing to take more risks in the (moribund) Middle East peace process if he believed he could count on this U.S. president? Would Karzai cooperate more closely with U.S. commanders in the field if Obama had embraced him?
The answers seem obvious. In foreign as well as domestic affairs, coolness has its cost.
This photo released by the Iranian Defense Ministry, alledgedly shows a Nasr1 (Victory) missile in a factory in Tehran, Iran, Sunday, March 7, 2010. Gen. Ahmad Vahidi announced on state TV Sunday a new production line of highly accurate, short range cruise missiles capable of evading radar. The missile named Nasr 1 (Victory) will be capable of destroying targets up to 3,000 tons in size according to Vahidi. Iran frequently makes announcements about new advances in military technology that cannot be independently verified. (AP Photo/Iranian Defense Ministry, Vahid Reza Alaei, HO) (Vahid Reza Alaei - AP) Iran begins production of cruise missiles
By NASSER KARIMI
The Associated Press
Sunday, March 7, 2010; 2:15 PM
TEHRAN, Iran -- Iran announced Sunday that it has started a new production line of highly accurate, short range cruise missiles, which would add a new element to the country's already imposing arsenal.
Gen. Ahmad Vahidi told Iranian state TV that the cruise missile, called Nasr 1, would be capable of destroying targets up to 3,000 tons in size.
The minister said the missile can be fired from ground-based launchers as well as ships, but would eventually be modified to be fired from helicopters and submarines.
Western powers are already concerned about Iran's military capabilities, especially the implications of its nuclear program. The U.S. and some of its allies, as well as the International Atomic Energy Agency, fear Iran is trying to produce nuclear weapons, a charge Iran denies.
The West is considering stiffer sanctions against Tehran to try to force it to halt uranium enrichment, a process that has civilian uses but can be also used for nuclear arms if the uranium is enriched over 90 percent.
Iran also boasts an array of short and medium-range missiles capable of hitting targets in the region, including Israel, U.S. military bases in the region and much of Europe.
Tehran frequently makes announcements about new advances in military technology that cannot be independently verified.
Gen. Vahidi said the production of the cruise missiles, which took two years to develop, showed that sanctions on Iran have failed. He said the cruise missiles would strengthen Iran's naval power.
Cruise missiles are highly advanced, usually subsonic rocket-powered weapons that can hug the ground and hit targets with great precision. The U.S. used large numbers of cruise missiles in its attack on Baghdad in 2002, launching most of them from warships in the Persian Gulf.
Iranian state TV showed a video of boxes in a warehouse containing several missiles. It also showed footage of Iran's cruise missile test in 2007. That missile was apparently imported.
Tehran began a military self-sufficiency program in 1992, under which it produces a large range of weapons, including tanks, missiles, jet fighters, unmanned drone aircraft and torpedoes.