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What foreclosure mess could cost The Obama administration doesn't want an all-out moratium on foreclosures in the United States, fearing the damage that it would cause to a housing industry yet to recover from the meltdown.
Robert Gibbs, the spokesman for the White House, said today there would be "a series of unintended consequences" to a full-fledged moratoium. While that could help homeowners about to be evicted, it could also lead to a buildup of homes, which would later be put on the market, while the foreclosure mess is sorted out, reports said.
There have been allegations in the U.S. that some lenders did not use proper procedures, sparking calls for a federal probe and the suspension of foreclosure sales by some banks.
The fallout could be hefty. According to Bloomberg News, Morgan Stanley said in a research note today that up to 9 million mortgages could face legal challenges, some already through proceedings, others in the pipeline.
"We are talking about some pretty big numbers," Morgan Stanley housing strategist Oliver Change told the news agency.
Already, Bloomberg noted, some 2.5 million homes have been repossessed in the past five years, and a further 6.5 million either are in proceedings or soon could be.
Separately, also according to Bloomberg, FBR Capital Markets analyst Paul Miller says the troubles could cost lenders $2-billion (U.S.) for each month foreclosures are delayed.
Canada forecasts return to surplus Finance Minister Jim Flaherty expects Ottawa to return to a surprlus, albeit a small one, by fiscal 2015-2016, and lead the industrialized world on debt.
In a fiscal update released today, Mr. Flaherty's department projected that the deficit would fall from 3.6 per cent of gross domestic product in 2009-2010 to 2.8 per cent of GDP in 2010-2011. Declining steadily from there, the department forecast, the deficit will be a slim 0.1 per cent of GDP by 2014-15, and Ottawa will be back in surplus, at 0.1 per cent, in 2015-2016.
"On a total government basis, which combines the fiscal positions of the federal, provincial and territorial and local governments, the IMF projects that Canada will be broadly in balance in 2015 - the best fiscal position in G7," the department said.
Referring to just the federal debt, the department project a steady decline to a debt-to-GDP ratio of 30.8 per cent by 2015-2016.
U.S. lifts drilling moratorium
The U.S. government has lifted its moratorium on drilling for oil in the deep water of the Gulf of Mexico Tuesday, but activity won't resume until Washington provides clear guidance on new safety and environmental rules that companies must meet.
At a news conference, Interior Secretary Ken Salazar said he was satisfied that a series of regulations being implemented will allow companies to go back to work in exploring for and development oil and gas resources in the deep water, while protecting workers, coastal communities and the environment.
U.S. lifts Gulf drilling moratorium
Canada No. 20 in gender equality rankings Canada sits behind Sri Lanka, Lesotho and Latvia, at No. 20, in a global measure of equality between men and women. Nordic countries - Iceland, Norway, Finland and Sweden - are still on top of the World Economic Forum's gender gap study released today, The Globe and Mail's Tavia Grant reports.
Separately, Toronto-Dominion Bank released a study showing the earnings wage gap between men and women is tied primarily to motherhood. Women with no children tend to have similar wages to men, all else being equal, while those with children face steeper "wage penalties."
"Absences related to childcare were found to generate a persistent 3-per-cent wage penalty per year of absence," wrote economists Beata Caranci and Pascal Gauthier.
"While this may appear to be pocket change, it is not. As an example, let's take a woman today with $60,000 in after-tax income, who works continuously for another six years - upon which her real (inflation-adjusted) earnings are assumed to have grown by 1 per cent per year to nearly $64,000.
"Then suppose she takes a single three-year stint out of the labour force before returning and working another continuous 20 years."
"According to the estimates ... and assuming a 55-per-cent income replacement ration in the first year of a child-related absence, this woman would incur a cumulative earnings penalty of over $325,000 in today's dollars."
Guess they didn't get the memo The world is still reeling from the financial crisis and recession, but the place where it all began just over two years ago is doing just fine. Wall Street is set for a record payday for the second year in a row, The Wall Street Journal reports today, or some $144-billion (U.S.) in compensation and benefits for employees of the biggest banks, securities firms, hedge funds and money managers.
That's up 4 per cent from $139-billion last year, a study by the newspaper showed.
Compensation and bonuses have become a flashpoint since the meltdown, and the latest figures will only serve to heighten that, particularly given that the global economy is still struggling to rebound, governments are facing massive bailout-related debts and unemployment remains high.
China moves again on bank lending China's major banks have been ordered to again boost their reserves, reports from Beijing say. Chinese authorities are concerned about an overheating housing markets and rising inflation, and, the reports said, have ordered the six biggest state-owned lenders to boost reserves by half a percentage point to 17.5 per cent.
"There were a number of developments in China which point to tighter policy and slower growth ... but not that slow (GDP for Q3 is not expected to be released until next week but a 9.5-per-cent year-over-year growth rate has been bandied about, down from the 11.9 per cent surge in Q1 but still strong)," said BMO Nesbitt Burns senior economist Jennifer Lee.
"For one, reserve requirements for the nation's largest banks were lifted for the first time since May, with the latest being a 50-basis-point increase to 17.5 per cent, but only temporarily. The increase will only have a two-month window, suggesting that these moves are similar to tapping on, versus slamming, the brakes on loan growth."
History backs dividend investors Investors chasing dividends in these uncertain economic times have history on their side, CIBC World Markets says.
Stocks surged in September, senior economist Peter Buchanan said in a research note, adding that "yield is still very much the name of the game though, and it will take more than one good month to reverse investors' recent preference for 'clipping the coupon.'"
More investors have, over the past few months, come to accept that so-called safe havens, such as U.S. Treasuries, are not as attractive as dividend stocks given current low yields.
"Underscoring the shift, investor inflows into dividend and income funds have risen at twice the percentage pace as inflows into equity funds in general, and bond funds this year."
Like other economists, Mr. Buchanan pointed to consumers cutting back, slowing housing markets and greater fiscal concerns that will lead to tepid economic growth of less than 2 per cent in the United States and Canada next year.
"Those betting that dividend stocks will provide a useful portfolio anchor in that sort of environment have history as an ally," he said. "On both sides of the border, dividend-paying issues have fared better over the medium term than those with low or zero payouts. The gap has been the widest in a period of subdued economic performance."
Since 1990, Mr. Buchanan's research showed, "quality" U.S. dividend stocks have outpaced the S&P 500 by more than 9 percentage points, on average and annually, in years of economic growth below 2 per cent. That compared to a deficit of a "modest" 2 percentage points when expansion topped that mark.
The same holds true in Canada generally, he noted. In recent years, dividend stocks outperformed the S&P/TSX composite by about 5 percentage points when growth slowed below 2 per cent, and still outperformed when it topped that pace, though by a slimmer margin of 1 percentage point.
"Although the TSX has yet to regain its pre-Lehman bankruptcy levels, an investor in quality dividend issues back then would be up by well over 10 per cent today, counting distributions."
From today's Report on Business
- CTV-Rogers set to renew their Olympic teamwork.
- Potash companies ride corn price surge
- Why PEI's wind plan is dying
- New Magna team primed for growth
And, read our Streetwise blog and Your Business section.