Economic News Roundup
Bush to press Saudi king on oil prices, Iran
JERUSALEM, May 16 (Reuters) - U.S. President George W. Bush heads for Saudi Arabia on Friday to renew his appeal to help tame record oil prices and try to shore up Arab support for containing Iran's growing regional clout.
After a three-day trip to Israel, Bush will fly to Riyadh to see King Abdullah, who for the second time this year is expected to rebuff the president's face-to-face call to get OPEC pumping more oil to world markets.
While oil prices are a source of friction, Bush and Abdullah will find some common ground on Iran, which they both see as a rising threat to stability in the Middle East.
Bush ratcheted up his rhetoric toward Tehran in a speech to Israel's Knesset on Thursday, saying critics' calls for talks with Iranian President Mahmoud Ahmadinejad were comparable to the "appeasement" of Adolf Hitler before World War Two.
He vowed that Washington would stand with Israel in opposing Iran's nuclear ambitions, saying it would be "unforgivable" if Tehran were allowed to get the bomb.
For his part, Abdullah will be looking for reassurances of Bush's commitment to push a $1.4 billion U.S. arms sale through an opposition-led U.S. Congress.
Builders: No signs of housing recovery
NEW YORK (CNNMoney.com) -- Homebuilders' confidence fell once again in May and their view of the state of the battered market hit a record low.
The National Association of Home Builders/Wells Fargo monthly index fell to its second lowest reading on record, ahead of only last December's reading.
Only 6% of the builders surveyed believe the current market is good while 69% view it as poor. Builders also reported a lower level of people looking to buy new homes.
And 51% of the builders said they now expect conditions to remain poor six months from now, up from 47% who were expecting a poor outlook in the previous reading.
"The message is very clear: The single-family housing market is still deteriorating and Congress and the Administration must move immediately to enact legislation that will help reverse the trend," said NAHB President Sandy Dunn, a homebuilder from Point Pleasant, W.Va.
U.S. Economy: Manufacturing Weak as Expansion Falters (Update2)
May 15 (Bloomberg) -- The slump in U.S. manufacturing deepened while the economy skirted recession, reports today showed.
Industrial production declined 0.7 percent in April, the Federal Reserve said in Washington today, more than twice the drop forecast by economists. Separate figures from the New York and Philadelphia branches of the central bank indicated the slide may continue this month.
``There is no question about whether or not there is a recession in manufacturing -- there is,'' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, who correctly anticipated the drop in industrial production.
``There's certainly no sign of a turnaround in the economy,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``Even if the worst is over in the financial markets, the economic effects are still playing out.
Bernanke Says Banks Need More Capital
Ben S. Bernanke, the Federal Reserve chairman, pushed banks on Thursday to keep raising capital in the aftermath of losses from the credit crisis to avert deeper damage to the economy.
“Firms are hunkering down,” Mr. Bernanke said at the Chicago Fed conference on credit markets. “They have at least partially replaced the losses with new capital raising, but not entirely. They are being rather conservative in making new loans, which has implications for the broader economy.”
Mr. Bernanke’s remarks reflect concerns he and other Fed officials expressed this week that financial markets had yet to return to normal. The Fed chief also said the central bank was considering strengthening its guidance to banks on how they manage risk after “weaknesses” that contributed to the crisis.
US foreclosure filings surge 65 percent in April
LOS ANGELES (AP) — More U.S. homeowners fell behind on mortgage payments last month, driving the number of homes facing foreclosure up 65 percent versus the same month last year and contributing to a deepening slide in home values, a research company said Tuesday.
Nationwide, 243,353 homes received at least one foreclosure-related filing in April, up 65 percent from 147,708 in the same month last year and up 4 percent since March, RealtyTrac Inc. said.
Nevada, Arizona, California and Florida were among the hardest hit states, with metropolitan areas in California and Florida accounting for nine of the top 10 areas with the highest rate of foreclosure, the company said.
One in every 519 U.S. households received a foreclosure filing in April. Foreclosure filings increased from a year earlier in all but eight states.
The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with fewer options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.
Efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners.
The April data show nearly half of the properties received an initial notice of default, suggesting many homes were new entrants to the foreclosure process.
California man losing nine homes in mortgage mess
LOS ANGELES (Reuters) - A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.
Shawn Forgaard, a 37-year-old software company project manager, bought one home for his family to live in and nine more as investments. He stands to lose all the investment houses in the mortgage meltdown but says he has come away wiser from the experience.
Forgaard bought a house in Santa Cruz, about 60 miles (100 km) south of San Francisco, in 2000. Four years later, using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative amortization loans -- in which payments do not cover the interest so that a borrower's balance grows over time.
It was those "neg-am" loans, which include triggers causing payments to balloon if the debt reaches a certain percentage of the original balance, that would come back to haunt him.
"I knew I was sitting on time bombs," Forgaard said. "I knew the market was going to go soft and I knew that property values would decline. But I figured that I had enough equity to survive the storm and sell or take the loss and refinance.
"I didn't anticipate a downturn of epic proportions such that home values are 40 percent less than they were," he said.
"It really wasn't until five months ago that I realized, 'Hey, you know what? Not only am I going to lose everything I have invested but this is going to force me into bankruptcy," he said.
"I'm going to lose my car and my primary (home) and we're not going to be able to live in Santa Cruz, where I was born and raised, and live by the beach. And that was pretty tough to take."