Welcome to Banking Update, a roundup of articles and news from around the Internet. The Fed’s low interest rate policy has killed savers but is it also killing the economy? Also, the U.S. is heading for another credit downgrade, what capital levels do banks real need and housing prices drop again. On to the links.
We all know that ultra low interest rates have resulted in dramatically reduced income for retirees and others who depend on interest income to pay the monthly bills. Beyond the beating that savers are taking due to the Fed’s zero rate interest policies, one analyst says that zero rates are actually “creating contraction instead of expansion in the real economy.”
It’s not only banks that are having their credit ratings downgraded. Fitch Ratings warns that the U.S. will soon be facing another credit downgrade due to “the high and rising federal and general government debt burden.”
The difficult question of determining adequate bank capital is examined by Dealbreaker.
Struggling European banks get a cash infusion of $640 billion from the European Central Bank which puts off the day of reckoning. The New York Times questions whether or not the massive cash infusion to banks will stimulate real economic growth.
The Federal Housing Finance Agency says housing prices dropped another 2.8% for the 12 months ending in October. Meanwhile, mortgage rates remain at 30 year lows.
After trillions of dollars of stimulus paid for by governmental borrowing, the economy is showing some signs of life. Are we looking at the beginning of a sustained recovery or is the blip up due only to temporary factors? Household confidence will not return unless income growth increases.
The National Association of Realtors, otherwise known as the cheerleaders of the housing industry, admits that they overestimated home sale by a substantial 14% from 2007 to 2010. Why should we believe them when they say that home sales rose in November?
Chinese property values start to decline in a big way – will they follow the path of Japan? Bloomberg examines one home for insights into the Chinese property market.
That’s it for today – have a great day!