I’ve been constantly wide-eyed this morning, sorting through an inbox full of great stories that popped up in the news all weekend. Here’s a few for your perusal:
This one, from columnist Dan Walters from the Sacramento Bee, looks at previous economic recessions in California and looks to economists to place the current housing slump on the continuum. Their consensus so far: a full-blown recession is unlikely. But the fallout for state and local governments that counted on the housing revenue explosion is still being sorted out. Here’s a taste:
It is, in a sense, a continuation of a pattern in the multifaceted California economy — one segment surging ahead, showering some with immense wealth, and then tumbling spectacularly.
If you’ve got a subscription to the Wall Street Journal, this one is a must-read. An analysis the paper commissioned from First American LoanPerformance showed that 55 percent of the subprime loans made in 2005 — the peak year for the high-cost loans — were made to higher-credit consumers who would probably have qualified for loans with better terms. Brokers steered the loans to such consumers to often to yield bonuses or extra commissions from the lender to the broker.
And here’s a fascinating story from Friday’s New York Times about an arctic city in Norway that incarnates the problem municipalities face when they bank on appreciation in the U.S. housing market.
The leaders of the town of 18,000 invested revenues — and bet on future revenues — from a nearby hydroelectric plant in complex investment vehicles linked to American mortgages and municipal bonds. Here’s a taste from the lede:
At this time of year, the sun does not rise at all this far north of the Arctic Circle.
But Karen Margrethe Kuvaas says she has not been able to sleep well for days.
What is keeping her awake are the far-reaching ripple effects of the troubled housing market in sunny Florida, California and other parts of the United States.
Ms. Kuvaas is the mayor of Narvik, a remote seaport where the season’s perpetual gloom deepened even further in recent days after news that the town — along with three other Norwegian municipalities — had lost about $64 million, and potentially much more, in complex securities investments that went sour.