Arlington, VA, United States (AHN) – Mortgage rates in the U.S. have fallen to a record low-again.

The average rate for 30-year fixed loan slipped to 3.84 percent for the week ending May 3, down from 3.88 percent in theor week. It is the lowest ever for the 30-year since mortgage giant Freddie Mac started tracking rates in 1971.

The average rate for the 15-year dipped to 3.07 percent from 3.12 percent.

Lower interest rates will provide some cushion and support for the struggling housing market, but unfortunately, the U.S. economic recovery appears to be stalling, and that does not provide the confidence consumers want to take on the obligation of purchasing a home.

The Census Bureau reported earlier this week that homeownership in the U.S. dropped to the lowest level in 15 years, sliding to 65.4 percent in the first quarter of 2012, down from 66 percent in the previous quarter.

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Kathmandu, Nepal (AHN) – Japan has agreed to provide financial support of ¥250 million (approximately $3 million) to Nepal as food aid.

Narayan Kaji Shrestha, Nepal’s deputy prime minister and minister for foreign affairs, and Koichiro Gemba, Japan’s foreign minister, witnessed the signing of the deal Sunday at the Ministry of Foreign Affairs.

“The grant is extended for procuring the items necessary to increase food production in Nepal with special emphasis on underprivileged farmers,” read a statement issued by the Japanese embassy.

Japan has been extending grant assistance for the increase of food production to Nepal since 1977, one of the oldest grant programs from Japan to Nepal. The last such grant was extended in 2009 in the amount of ¥490 million.

Japan has also agreed to provide support for Nepal’s IT initiative by the election commission. The assistance includes training on XenServer management, PostgreSQL database management and information security.

Earlier, Japan also provided internet servers for 25 strategic district election commissions.

During the talks, Nepal sought Japanese assistance for the construction of the Upper Seti hydropower project, said Lal Sankar Ghimire, foreign aid division chief at the Finance Ministry.

Nepal also asked for Japanese assistance to build a new hydropower storage project, a hospital for the treatment of serious injuries, modernisation of Tribhuvan International Airport, development of the Madhya Pahadi Lokmarga and resumption of a loan that Japan had stopped in 2004, among other topics, added Ghimire.

“Japan has assured us it would continue its support from education to infrastructural development, and would do the same in the days ahead,” Shrestha said at a news conference after the completion of the visit.

This was the first visit by a Japanese foreign minister in 35 years.

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Gaza, Palestinian Territory (IRIN) – The demand for microloans has risen steeply in the West Bank and Gaza Strip in recent years, according to data from the Palestinian Network for Small and Microfinance (Sharakeh), which represents 11 microfinance non-profit institutions whose total loan portfolio was US$75 million by the end of 2011.

Between 2007 and 2011, the number of active microloans in the West Bank and Gaza Strip rose from 20,000 to more than 43,000. This trend is likely to continue, said Sharakeh, predicting that by 2015 the number of loans will reach 77,000. The number of active clients receiving loans from microfinance institutions has grown by an average of 27 percent annually since 2007, he added.

“Microfinance is on the rise in Palestine because it serves small businesses which are growing in number and importance,” Shireen al-Ahmad, a division chief at the Palestine Monetary Authority (PMA), told IRIN. Trying to start a small business is one way to cope with the challenges of public sector employment – but it can be a precarious existence given the state of the Palestinian economy.

Demand for microcredit, designed for borrowers who typically lack collateral, steady employment and a verifiable credit history, has spread by word of mouth, said Alaa Abu Halawa, programme coordinator at Sharakeh, adding: “The people realized the benefit of microfinance. And its growing importance is attracting more investors.”

Besides being promoted as a tool for providing the poor with financial access, microloans in the occupied Palestinian territory (oPt) have become an attractive alternative to normal credit from banks for any small businesses, say Palestinian microfinance institutions.

“Banks require high collateral and complicated loan procedures. We don’t,” Sameer Kraishi, a microcredit manager at the Arab Centre for Agricultural Development (ACAD), told IRIN. “The Palestinian case is special…Our microloans are high compared to developing countries like India, usually about $5,000.”

During his work for ACAD, Kraishi has seen many Palestinians who successfully built up their business with the help of microloans. But equally, he has seen many of them fail. The persistent financial crisis of the aid-dependent Palestinian Authority (PA) and the resulting impacts on the general West Bank economy affect small businesses heavily, he said.

Lack of donor support

According to the PA senior official Ghassan Khatib, the PA’s salaries were once again delayed for several days this month. “The PA cannot fulfil its payment obligations because of a lack in foreign funding. The outlook for this year does not look good,” he told IRIN.

One of the reasons why economic growth in the West Bank slowed down in 2011 was foreign donors’ failure to provide sufficient support to the PA, the World Bank said in a recent report. In 2011, the PA required $1.5 billion in budget support, but eventually only received about $814 million. The budget for 2012 is expected to have a recurrent budget deficit of around $1.1 billion.

“Economic deterioration is a main reason for a rise in microfinance, which together with the PA financial crisis resulted in high unemployment and increased the poverty rate. This, in turn, lead people to look for private projects to earn their living,” said Sharakeh’s Halawa.

But small businesses are dependent on the spending of government employees. “When salaries are cut, the demand for goods and services goes down,” Samer Barghouti, general manager at ACAD, told IRIN, adding: “As a result, our clients often face difficulties paying back their microloans, and this creates risks for them, but also for us, as an institution.”

Failure never far away

One of ACAD’s clients hit by the economic slowdown is 43-year-old Mahmud al-Haj, a vegetable seller in Ramallah’s central market.

“Over the last year, I have made less and less profit. Many of my customers are PA employees. They just don’t have enough money when their salaries come too late, so they simply stop buying,” he told IRIN.

Some years ago he had made the equivalent of about $1,600 per month, now his monthly profit barely exceeds $500. He had borrowed US$3,000.

“I hardly sell 200kg of vegetables a month,” he said, adding: “I fear that once the loan is used up, I will not be able to continue. I need to pay taxes to the municipality. I have to take care of my family. I need to pay for my children’s school, for electricity, food, and haven’t even paid back most of the loan I took.”

Almost half of micro-loan projects fail in one way or another, according to Shaker Saadeh, manager of ACAD’s Ramallah field office.

“Many of our clients used to be unskilled labourers in Israel, never acquiring the knowledge necessary to run a business. Others use microloans as a means to change profession, like a carpenter who suddenly starts an agricultural business, but doesn’t really know how to do it,” he added.

Sewing

“Over the last seven years I received 15 microloans from different organizations. I used to be a wage worker, but eventually opened my own sewing workshop,” 48-year-old Na’ma Shamali said, while pulling fabric through a sewing machine in her shop in Ramallah.

Her current loan amounts to $3,000, but past experience has taught her to invest the borrowed money wisely. “At the beginning of every month I set my priorities. What do I really need? So recently I bought a new automatic sewing machine for 9,000 shekels [$2,400]. But at the beginning of every month, I pressure myself to work a lot, so I can pay back the loan,” she said.

Thanks to the growth of her business, she and her husband were able to buy the house they previously rented and send their children to a private school. “I am making 5,000 shekels [$1,320] of profit [per month] today. I am satisfied.”

Whether microfinance provides a mechanism for women’s empowerment beyond mere financial success has been widely debated in the past.

Gender issue

In oPt, real empowerment is often hindered by the traditional roles women are assigned to, said Nisreen Swelem, West Bank regional manager at the Palestinian Businesswomen’s Association (Asala), which is currently providing microloans to about 4,000 Palestinian women.

“It happens often that women continue to do the hard work while their husbands take over the business. We simply cannot control the cultural aspects,” Swelem told IRIN.

In particular in the field of agriculture, women often remain unpaid family workers and as such are invisible contributors to the economy, Asala’s research has shown.

“I try to raise awareness. I ask them, who controls the money?” Swelem said.

“There is still a lot to do on the level of gender awareness. But in one way, the positive impact of the gender meetings is obvious. Many of the women that take the trainings later become trainers themselves.”

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Cairo, Egypt David Rosenberg / The Med – An International Monetary Fund loan critical to propping up Egypt’s teetering economy is being jeopardized by domestic political infighting that threatens to delay or even scuttle the program, economists say.

An IMF delegation left Cairo late on Tuesday after 17 days of talks apparently without reaching any agreement on the conditions for the $3.2 billion package. In a statement issued on its departure, the Washington-based financial institution said that Cairo needed to “mobilize the required political support for this program” before its board could approve the aid.

“Broad-based support for a national economic program is essential to bolster confidence and ensure its successful implementation in the period following the current political transition,” the IMF said, although it termed discussions with Egyptian officials and lawmakers “productive.”

Egypt is in critical need of the cash infusion. The economy is sputtering and foreign currency reserves are falling fast as tourism receipts and investment from overseas have plunged since President Hosni Mubarak was ousted from office more than a year ago. Egyptian reserves fell by $600 million in March to $15.12 billion, equivalent to less than the three months’ worth of imports widely seen as the minimum. On the eve of the revolution, reserves stood at $36 billion.

But negotiations with the IMF are taking place at an unusually sensitive time.

Politics are in high gear as Egyptians go to the polls to elect a president next month in a campaign season shadowed by even bigger political dilemmas. A new constitution has yet to be written so that the division of powers between the president and parliament remains up for grabs. Meanwhile, the emergent political establishment of Islamists and liberals is fighting with the interim military government over the timing and terms of the transition to civilian rule.

“It’s an ongoing saga. The problem is that the IMF money comes with conditions attached and countries don’t want to be dictated to,” Daniel Brody, chief investment officer at London-based Silk Investment, told The Media Line.

Two days before the IMF delegation departed, Khairat Al-Shater, the candidate for the Muslim Brotherhood’s Freedom and Justice Party, threw a wrench into the talks by asserting that it was irresponsible for Egypt’s interim government to negotiate terms and leave its successor with the responsibility of repaying the loan.

“We told them [the government], ‘You have two choices. Either postpone this issue of borrowing and come up with any other way of dealing with it without our approval, or speed up the formation of a government,’” he told the Reuters news agency in an interview.

In remarks that could be interpreted as a negotiating tactic aimed at pressing the interim government to hand over power more quickly, Al-Shater said that he might approve a plan whereby only a small amount of the aid package is disbursed before the new government takes power.

Inside the interim government, there has also been considerable policy confusion. The government has been saying it wants to tie up a deal with the IMF this month, but last week Planning Minister Faiza Abu Al-Naga said she expected the two sides to sign nothing more than a memorandum of understanding within a few weeks and only seal a final agreement by June.

The IMF itself said last week that there is no timeline to conclude the loan talks.

The waffling at the top may have to do with broad opposition among ordinary Egyptians from accepting aid of any kind, including from the IMF, according to a series of Gallup polls. Back in August, Egyptians supported IMF assistance by a margin of 57 percent to 32 percent, but by February, when the most recent survey was taken, the public had reversed opinion. Now, 57 percent oppose accepting IMF money versus 36 percent in favor.

“It’s due to a broad misconception in Egypt, which is that Egypt has a lot of misappropriated money in offshore bank accounts from the Mubarak days, so therefore we don’t need other people’s money,” said Silk Invest’s Broby. “The Brotherhood is using this as a political weapon.”

The reports of ill-gotten gains are so rife that in March, Assem Al-Gohary, the head of Egypt’s Illicit Gains Authority, called on the media to refrain from published unverified stories, citing a series of forged documents and unproven reports. The most widespread rumor is that the Mubarak’s family stashed away as much as $70 billion in foreign bank accounts during the three decades he was in power.

But Egypt ultimately may have little choice than to accept the IMF’s offer because the country’s foreign reserves position is more dire than the headline number suggests, according to a report by the London-based consulting firm Capital Economics.

Using figures from February, the latest available, liquid reserves such as convertible securities, currency and deposits, were less than $9 billion, or just two months of import cover, its Middle East economist, Said Hirsh, said in a comment. About $4 billion of the $15.2 billion total is gold bullion that the government would be reluctant to draw down.

The government itself is gradually reaching the limits of what it can borrow domestically to cover a yawning fiscal deficit. It has relied on loans from domestic banks to cover the gap, but economists say the banks are reaching the limits of their ability to lend. A fiscal crisis may well up as early as next month if the first of the IMF disbursements has not come through, economists warn.

With Egypt heading toward a financial crisis and the IMF loan’s fate still unresolved, a market rally that began at the start of the year has fizzled out in the past month over concerns about the economy and Egypt’s chronic political turmoil.

This week alone shares on the Egyptian Exchange were shaken by Al-Shater’s IMF remarks on Sunday and two days later by a court’s decision suspending the constitutional assembly. On Tuesday, the Egyptian Exchange’s benchmark EGX 30 index marked its sixth straight day of declines to finish at its lowest since Feb. 6.

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Washington, DC, United States (ProPublica) – by Marian Wang

It was with some fanfare that the Obama administration announced last fall that it was ramping up a program to help students with federal loans reduce their monthly payments. Under the program, payments are adjusted based on how much students earn — what’s known as income-based repayment.

Yet, even while the administration has emphasized easing the burden for student borrowers, some contractors with the Department of Education appear to be exacerbating it.

Bloomberg reported this week that some federally contracted debt collection agencies have been playing hardball with borrowers who are behind:

insisting on payments the borrowers can’t afford;

even when federal student-loan rules allow more leniency.

The debt collectors have an incentive to be tough. As Bloomberg explains:

Under Education Department contracts, collection companies “rehabilitate” a defaulted loan by getting a borrower to make nine payments in 10 months. If they succeed, they reap a jackpot: a commission equal to as much as 16 percent of the entire loan amount, or $3,200 on a $20,000 loan.

These companies receive that fee only if borrowers make a minimum payment of 0.75 percent to 1.25 percent of the loan each month, depending on its size. For example, a $20,000 loan would require payments of about $200 a month. If the payment falls below that figure, the collector receives an administrative fee of $150.

The Department of Education is trying to balance its interest in helping struggling borrowers and stewarding taxpayer dollars, department spokesman Justin Hamilton told Bloomberg.

Striking that balance, it seems, hasn’t been easy. Consumer advocates chafed when President Obama, as part of a deficit-reduction plan promoted last fall, recommended allowing debt collectors to robo-call the cell phones of borrowers who fell behind on federal student loans and other debts to the government.

That plan didn’t get far. But the measure resurfaced as a line item in Obama’s proposed 2013 budget last month.

As Bloomberg noted, federal student-loan rules require that collectors work out “reasonable and affordable” payments with borrowers to get them back on track, but the rules don’t spell out how such a calculation should be made. The Department of Education is meeting with key student-loan stakeholders this week to discuss, among other things , whether to use the income-based repayment formula to help set that standard. (As it stands, only borrowers who are current on their federal loans are eligible for help via income-based repayment.)

One thing that isn’t on the table at these rule-making meetings? A measure hailed by some advocates as potentially the single most important rule change for student borrowers who’ve become severely disabled and are seeking a discharge of their federal student loans. As we reported last year, the department initially pledged to overhaul the program and consider whether to simply accept Social Security determinations of disability instead of its current complex and opaque process. The department subsequently backed off that fix. Now it isn’t even on the agenda .

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Mao, Chad (IRIN) – Late Chadian government recognition of a food crisis, a slow build-up from aid agencies, and severe pipeline constraints due to closed Libyan and Nigerian borders mean food aid has not yet arrived in Chad, despite many thousands of people having already run out of food.

Residents of Eri Toukoul village in Kanem Region, western Chad, told IRIN they have nothing to eat. Most are surviving by leaving for towns and cities. Grain stores are empty and the animals they used to rely on are dead.

“Before we had 10-15 animals each, now we have nothing,” said Fatou Su Hawadriss, who has seven children. Almost every family in this village once had at least one relative working in Libya who sent back money, but now all have fled the violence there.

In the village of Tassino, Mangalmé District, Guéra Region, central Chad, women have resorted to digging up anthills in the hope of collecting grain left behind by ants, said Oxfam Regional Campaigns and Policy manager Stephen Cockburn from the capital N’djamena.

These examples are backed up by an inter-agency assessment from October 2011, which predicted families in some vulnerable regions such as northern Kanem, would run out of food by February.

When it comes to malnutrition, response gaps remain in the regions of Batha, Hajer Lamis, northern Kanem, Wadi Fira, Ouaddai and Guéra, according to ECHO’s (The European Commission aid body) Technical Assistant in N’djamena, Jane Lewis.

The Chadian government only appealed for help on 21 December. As a result, the UN country team, whose protocol dictates that it waits for an invitation to respond, started mobilizing late. While staff in agencies such as the World Food Program (WFP) are working furiously to beat the clock, a lead time of up to six months to get food to where it is needed means that the very soonest food will start to arrive is some time in April.

Border closures

Food import options are severely limited this year, as the Libyan and Nigerian borders are closed, leaving only Port Sudan and a rail link from Douala in Cameroon. Regional food stocks from Nigeria and Cameroon are also diminished because both were also affected by drought, said WFP head of logistics Jean-Pierre Leroy, though WFP is currently exploring options of procuring Nigerian government food reserves.

As of early March, some-,000 tons of WFP-imported grain was on its way to Douala, and 18,500 tons en route from Sudan; but this is just a fraction of the estimated 160,000 tons needed until the end of 2012.

Getting food to where it is needed can take up to three months between arrival at the port and distribution to regional warehouses, said Leroy, which means anything that comes through after 1 April “will be very tight” as roads could become impassable after rains begin in June.

“Now is the crunch time… It is very complicated. We are very stretched, and can’t afford to have any problems with the Sudan pipeline right now,” Leroy told IRIN. WFP in Chad could face some competition from WFP in Sudan which is stocking up food for displaced people in camps there.

WFP plans to provide food to 1.2 million children as well as pregnant and lactating women for six months, according to Alice-Martin Dahirou, head of WFP in Chad.

Little pre-positioning

Despite recurrent droughts in the Sahel region, WFP has no significant pre-positioned food stocks in Chad as they would be too expensive to keep up, said Leroy. However, the organization has managed to cut down its delivery times from six to three or four months because of its Working Capital Fund, whereby it can procure food on a loan basis, creating a rolling stock. In place for three years, it is now starting to work well, said Dahirou.

Chad’s problem is that the government has few emergency stocks – just 40,000 tons, according to Agriculture Minister Djimit Adoum – which sets it apart from its neighbors Mali, Burkina Faso and Niger, all of which have been building up emergency reserves over recent years.

NGO Action Against Hunger (ACF) has helped some 30 villages across Kanem and Bahr el Gazal regions to build up grain reserves, but “this can only help on a small scale,” Céline Bernier, nutrition coordinator at ACF, told IRIN.

The government will build up emergency stocks only if donors and UN agencies help it to do so, said Adoum.

In January the government put 20,000 tons of subsidized cereals on the market, and it plans to release another 20,000 by the end of March, according to Adoum. Meanwhile, the Chinese have promised US$4 million of rice, though it is unclear how this will arrive in the country.

“Faced with such a large need [3.5 million Chadians will struggle to feed themselves and maintain their livelihoods this year, according to the UN], the proactivity of the government is essential in driving and coordinating an effective response to this crisis,” said Oxfam’s Cockburn.

A “rapidly implemented” national response plan, bringing together all humanitarian actors, is needed, he said. A national response plan was allegedly adopted last week, though details are as yet unknown.

The government, donors and aid agencies all need to build up better mitigation reflexes, ACF’s Bernier told IRIN. “We know the Sahel and we know there will always be crises… Agencies are gearing up and are doing mitigation, but the crisis is now… It’s so much cheaper if we react early.”

While the government is looking to intensify agricultural production, and commits 8 percent of its annual budget to the sector, it does not prioritize food security or nutrition, one aid official told IRIN. Instead, large sums are spent on “roads, and lots of white elephants – there is a poor prioritization of funds here.”

The Chadian government’s Food Security and Emergency Management Committee holds regular food security meetings but few decisions are taken at them, while donors are not as well-coordinated on the food crisis response as they could be, one aid donor who preferred anonymity, told IRIN. The main donors involved are ECHO, the Swiss, the USA, France and Germany.

It was the UN Central Emergency Response Fund’s US$6 million, given early on, that helped agencies to scale up quickly, said staff from several agencies.

Crisis fatigue?

Some say the international community took a while to wake up to the looming food crisis partly because of “crisis overload”. “There are so many crises here – cholera, Nigeria, measles, Libya, meningitis, polio, food – it’s non-stop, so there is a sense of `here we go again’,” one aid expert told IRIN.

Lots of aid agencies operate in the country, but they are unevenly spread, with up to 70 NGOs in and around Sudanese refugee camps in the east, while some highly vulnerable areas in central and western Chad may have just three or four. When responding to the 2009 food crisis WFP had to distribute much of its food itself due to a lack of partners.

Many in the international community are trying to push NGOs westwards to create a more even balance.

Meanwhile, Hawadriss in Kanem just received five goats from the Food and Agriculture Organization – one of the few international agencies working out of Mao. Just when she thought she had run out of survival options, they have provided a lifeline. But ultimately, she says, her way of life may be coming to an end. “If things continue this way, with bad rains, I don’t know if we will be able to stay here in the future,” she told IRIN.

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Cairo, Egypt (IRIN) – Nasser Ali Hossan Morsy, who worked as a porter in central-northern Egypt, knew he needed another source of income when he suffered lower back problems last year so he decided to take a loan and buy a motorcycle.

The motorcycle, he reasoned, would help him provide for his wife and five children. Once operational, it could also help him pay back the 3,500 Egyptian pound loan (US$580). But things took a turn for the worse when the motorcycle was stolen, and shortly after, major protests erupted throughout Egypt in February 2010, leading to the ousting of then President Hosni Mubarak.

Since then Morsy has been scrambling to make ends meet in his home town of Maghagha, some 175 kilometers south of Cairo. Between his debt and back problems, earning enough to feed his wife and children, aged two months to 16 years, has been a real challenge. “I don’t find enough food because there’s no more work,” he said.

He is not alone. “Poverty is a common result of the 25 January revolution,” said Nabil Gamil Mohamed, professor of pediatrics at Minya University and regional head of political party the Muslim Brotherhood. Increasing poverty, he added, has had two effects: new cases of malnutrition have emerged, and families already dealing with malnutrition are facing more pressure to feed properly.

In Maghagha’s Qulyan neighborhood, where Morsy lives, many people now feed only on `ful’ (cooked and mashed fava beans) and sesame-sprinkled ta’meyya (deep-fried fava bean patty) sandwiches. Their daily diet does not include fruit, vegetables or dairy products, and last time most had meat was last November, during Eid al-Adha, he said. It had been donated by the local al-Gama’ayat al-Shara’aya, the social arm of the Muslim Brotherhood.

According to Awad Abdul Hafiz, head of the charity al-Gama’ayat al-Shara’aya responsible for Qulyan, about 30 new needy families registered with his organization last year. It is a small number, mainly because Maghagha did not witness the same level of violence that rocked the Egyptian capital and the Nile delta.

Currently, his organization provides about 650 Maghagha families with a meal every two weeks, and a minimum monthly food allowance of 20 Egyptian pounds ($3) per child. This supplements an average monthly family income of 200-300 Egyptian pounds ($33-50).

Al-Gama’ayat al-Shara’aya’s money comes from roughly 1,000 donors, but the economic turmoil in which Egypt finds itself has had an impact on this as well. “There’s been a slight decrease in donations since the revolution,” says Abdul Hafiz.

Low incomes

According to figures released by the World Food Program (WFP) in November, the monthly income of about 77 percent of vulnerable households in Egypt did not cover their monthly needs.

Another WFP report released in December but based on 2009 government data showed that governorates in Upper Egypt were already at great risk from food insecurity, which was linked to their precarious economic situation.

According to Alia Hafiz, a nutrition program officer at WFP’s office in Cairo, an assessment is currently under way to examine the consequences of last year’s events on food security and vulnerability. However, she added, anecdotal evidence suggests that poverty is on the rise in Upper Egypt, and that malnutrition is following an upward trend in the region.

“Malnutrition is an issue that is not improving, and it is not stable. It may be on the rise because of the unstable situation,” she said.

Experts say malnutrition in Egypt is not related to a shortage of food, but rather to a lack of access to proper foods, leading to a deficiency in essential micronutrients. Indicators from the 2009 data showed that 30 percent of Upper Egyptians suffered from caloric deprivation, and 49 percent had poor dietary diversity.

Almost a third of Upper Egyptians suffer from iron, zinc, or vitamin A deficiency. Iron deficiency leads to loss of attention and low productivity, which impinges on education and work. “Anemia mainly affects children, because their bodies have higher demands,” said Hafiz.

A lack of vitamin A may lead to night blindness, also known as nyctalopia, while zinc deficiency may cause severe diarrhea and pneumonia. These two health problems are common among children in the governorate of Minya, according to Mohamed of Minya University.

“This is a vicious circle, because diarrhoea and pneumonia weaken the immune system, and a weak immune system leads to more diarrhoea and pneumonia,” he added.

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Washington, DC, United States (ProPublica) – by Lois Beckett

As we’ve detailed, President Obama’s plans to help homeowners have come up short time and again. We recently looked at Obama’s latest proposals, most of which are unlikely to make a major dent in the crisis.

So, how about the Republican presidential candidates: What do they say should be done about the foreclosure crisis?

They don’t say much. As newspapers in hard-hit states like Florida, Nevada, California and Ohio have been quick to point out, none of the candidates has made the foreclosure crisis a policy priority.

Mostly, the candidates have argued that the housing market needs to heal on its own, without government interference. Rick Santorum and Congressman Ron Paul have suggested tax breaks for some homeowners.

Here’s our in-depth guide to how Santorum, Mitt Romney, Paul and Newt Gingrich say they would approach the issue as president, as well as an evaluation of their claims.

Think we missed an important statement? Let us know.

Rick Santorum: ‘Let capitalism work,’ but let homeowners write off home losses on their taxes.

Former Pennsylvania Sen. Rick Santorum has proposed allowing people who owe more on their mortgages than their homes are worth to sell their houses and deduct their losses from their taxes.

The details of Santorum’s plan aren’t clear, and the campaign did not respond to our multiple requests for comment.

One tax law expert, James Maule of Villanova University School of Law, said a tax write-off “would not do much for the majority of people who are in financial trouble.”

Right now, taxpayers who sell their primary residences at a loss can’t deduct that loss from their taxes. Changing the tax law wouldn’t do much good, Maule said, because people who are struggling with their mortgages often have little or no income, so giving them a tax deduction actually wouldn’t help.

Other than that, Santorum says we just need to “let capitalism work,” as he put it in a Republican debate in Tampa, Fla., on Jan. 23. “Allow these banks to realize their losses. And create an opportunity for folks who have houses to realize their losses and at least help them out.”

Santorum also has said his plan would help the housing market “find its bottom.”

“This is something I think is important temporarily to put in place to allow people the freedom to be able to go out and get out from underneath these houses that they’re holding onto and at least get some relief from the federal government for doing so,” he said at the Jan. 23 debate.

But according to some experts, housing prices might be close to hitting bottom already — and thus on their way to rebounding already.

It’s also worth noting that a 2007 law provides a tax exemption for homeowners who negotiate debt relief on their mortgages, including through short sales. It’s unclear whether this law and Santorum’s plan might overlap.

Earlier, in Nevada, one of the states where the foreclosure crisis has been most severe, Santorum emphasized “free-market solutions” and cautioned citizens against looking to the government for help. According to CNN, Santorum compared the housing crisis to health care and suggested that, given the opportunity, liberals in government would implement a housing solution like “Obamacare.”

When Santorum and others call for private-sector solutions, they’re largely sidestepping a reality: The mortgage market already relies deeply on government support.

Government-owned Fannie Mae and Freddie Mac own or guarantee roughly half of all mortgages in the United States. And while both the Obama administration and Republicans want to scale back government involvement, it’s actually been growing. Fannie and Freddie now guarantee three out of every four new mortgages. Factor in the Federal Housing Administration mortgages guaranteed by Ginnie Mae, and the percentage of mortgages backed by the government is even higher.

Mitt Romney: May be open to some homeowner aid programs but won’t talk specifics.

In a videotaped interview with the Las Vegas Review-Journal’s editorial board in October 2011, former Massachusetts Gov. Mitt Romney said his approach to addressing the housing market would be: “Don’t try to stop the foreclosure process. Let it run its course and hit the bottom.”

He said the Obama administration had “slow-walked the foreclosure process,” and that the housing market would “turn around and come back up” only when foreclosures go through and those houses are put on the market, sold to investors and then rented.

Romney also has said that repealing the Dodd-Frank financial reform law, which introduced new regulations to the mortgage market, would help ease the crisis.

Economist Elliott Parker of the University of Nevada, Reno, told us that while he is not “enamored” with the Dodd-Frank regulation itself, “it is absurd to pretend that repealing Dodd-Frank would work some magic in turning around Nevada’s housing catastrophe.”

“Any time you establish a set of regulations there are unintended consequences,” Parker told the Las Vegas Sun in October. “There may be banks that can’t lend now or some people who can’t get loans. But to offer that as a solution is pretty empty, and it completely ignores the magnitude of the problem that we have today.”

Mark Calabria, the director of financial regulation studies at the Cato Institute, pointed out that while he agrees with Romney that the housing market needs to heal on its own, the Obama administration’s general approach to the foreclosure crisis was first developed and instituted by President George W. Bush, so it’s not fair to characterize the administration’s programs to help homeowners as a purely Democratic strategy.

“Both Obama and Bush’s housing policies have had relatively small impact. They certainly have not stopped the price decline. They’ve slowed the rate at which this happened,” Calabria said.

Contacted for comment, a Romney campaign spokeswoman emailed a statement saying, “The only real solution to the housing crisis is to get the economy growing again at a healthy rate.” The spokeswoman did not offer details about what plans Romney endorses or opposes.

Despite his “hit the bottom” rhetoric and focus on “private-sector solutions” between banks and homeowners,” some of Romney’s statements suggest that he might actually be open to providing government assistance to homeowners.

As Forbes pointed out recently, Romney was very supportive of Bush’s attempts to aid homeowners in 2008.

“Helping reverse the housing crisis is critical,” he said in 2008, praising Bush’s programs to help homeowners through the Federal Housing Administration. “Loosening those requirements and expanding the ability of FHA to help out homeowners would make a big difference.”

One of Romney’s top economic advisers, economist Glenn Hubbard, released a plan in September suggesting that every homeowner with a Fannie Mae or Freddie Mac government-backed mortgage who is current on mortgage payments should be allowed to refinance his or her mortgage at a low rate.

Romney didn’t endorse the plan but didn’t reject it, either.

“I think the idea of helping people refinance homes to stay in them is one that’s worth further consideration, but I’m not signing on until I find out who’s going to pay and who’s going to get bailed out,” Romney said in October.

In January, when Romney met with a preselected group of struggling Florida homeowners in Tampa, he called their situations “tragic” and said “the banks ought to show greater flexibility in being able to renegotiate with those people who have circumstances that would justify that renegotiation.”

But at the same event, he defended banks that foreclose on homeowners. “The banks are scared to death, of course, because they think they’re going to go out of business,” Romney said. “They’re afraid that if they write all these loans off, they’re going to go broke. And so they’re feeling the same thing you’re feeling. They just want to pretend all of this is going to get paid someday so they don’t have to write it off and potentially go out of business themselves.”

Many investors suspect that Romney is right: While banks continue to list mortgage investments on their balance sheets at their face values, investors worry that because of the struggling housing market and high rates of foreclosure, the actual value of what the banks own is actually far less. If true, banks could face big losses.

Other elements of Romney’s defense of the banks’ role in the foreclosure crisis have been more questionable.

“Now, the banks aren’t bad people. They’re just overwhelmed right now,” Romney said at another event in Florida, according to the Los Angeles Times. “They’re overwhelmed with a lot of things. One is a lot of homes coming in, that are in foreclosure or in trouble, and the other is a massive new pile of regulations.”

Banks may be overwhelmed, but they also recently agreed to a $25 billion settlement over robo-signing and other fraudulent foreclosure practices. We’ve done extensive reporting on how homeowners have suffered from the banks’ deeply dysfunctional loan servicing practices, which continued years after the foreclosure crisis began in 2007 and long before the Dodd-Frank financial regulations became law in 2010.

Ron Paul: Hands-off policy except for tax benefits for those who lose their homes.

Like other Republican candidates, Texas Congressman Ron Paul has advocated a hands-off approach to the foreclosure crisis.

“The best thing you can do is get out of the way, because you want the prices to come down so that people will start buying them again,” he said at the Tampa debate in January.

“Any further federal programs designed to fix prices by pumping credit into the housing market will only compound the damage done by prior interventions,” he said in an interview with the Las Vegas Review-Journal.

But Paul also laid out a series of tax benefits that he said would help the residents of Nevada, which is among the states hardest-hit by the foreclosure crisis.

Among these were “providing tax credits to those who have suffered foreclosure” in order to provide an easier path to “new, more affordable housing,” and allowing homeowners “to take a capital-loss deduction if they sell a home for less than they paid for it.”

Paul’s campaign did not respond to a request for comment, making it difficult to compare Paul’s and Santorum’s tax-deduction plans.

It’s worth noting that Paul, unlike Santorum, did warn about the dangers of the mortgage bubble years before it burst. “Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss,” Paul told the House of Representatives in 2002, introducing his “Free Market Enhancement Act,” which would have repealed special privileges granted to Fannie Mae and Freddie Mac.

Paul also warned that taxpayers would ultimately be forced to bail out investors. Fannie and Freddie are still more than $150 billion in the red after a taxpayer bailout.

Newt Gingrich: ‘Repeal Dodd-Frank.’

Like Romney, former Speaker of the House Newt Gingrich has advocated removing new regulations on the mortgage industry as a way to address the foreclosure crisis.

“If you could repeal Dodd-Frank tomorrow morning, you would see the economy start to improve overnight,” Gingrich said at the January debate in Tampa.

He has not offered much beyond that point. His 21st Century Contract with America mentions the housing crisis only in the context of his goals for repealing Dodd-Frank and reforming the Federal Reserve. In a January interview with the Las Vegas Review-Journal, he repeated his debate comments almost word for word, adding, “The No. 1 thing that we can do to help the housing market is to strengthen the overall economy.”

– Provided by ProPublica.org

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Cairo, Egypt (The Media Line) – Egypt faces a risk-laden game of Beat the Clock as it tries to get its political house in order before its foreign currency reserves sink much more.

Reserves fell to $16.4 billion in January from about $36 million a year earlier, a drop that economists all agree imperils the economy and requires Egypt to seek support from external sources and make difficult decisions to cut back government spending and subsidies. But that will be difficult given the political situation.

Presidential elections are now scheduled for late May, preceded by a six-week election season. Meanwhile, a parliament dominated by Islamists is tussling over who will control the government with the interim military council. A dispute with the United States over foreign human rights activists detained in Egypt is threatening vital American aid to the country. In the meantime, no U.S. assistance is being transferred to the country.

The timetable looks even more challenging when the role of the International Monetary Fund (IMF) is factored in. Egypt’s Ministry of Finance is reportedly counting on the IMF’s executive board to approve a $3.2 billion facility towards mid-March, which will then go to parliament for approval about the time the presidential campaign is getting under way.

“Time is not on Egypt’s side and politics could be the prime suspect to derail or delay an IMF program or exacerbate dollarization and [foreign currency] outflows,” Bank of America Merrill Lynch analyst Jean-Michel Saliba said in a note to investors last week.

Concerns that Egypt’s political trajectory looks to be on a collision course with its financial needs came in the form a downgrade in its bond rating by Standard & Poor’s (S&P) on Feb. 10. S&P lowered its ratings to B from B+ on Friday, five notches into junk territory, and said further downgrades could be on the way.

“The negative outlook reflects our view that a further downgrade is possible if the government fails to stem the decline in reserves, or an uncertain policy environment and weak institutions emerge from the ongoing political transition,” S&P said. Moody’s and Fitch, two other bond-rating agencies, cut their ratings on Egypt earlier.

Diminishing foreign reserves may be the most immediate threat to Egypt’s economy, but it is not the only one. More than a year after the revolution that brought down Hosni Mubarak, economic growth has stalled, the number of visiting tourists has plummeted and foreign investment has evaporated, all of which is exerting huge economic pressure on the government at a time of political flux.

Bank of America Merrill Lynch estimated that Egypt’s drawdown of its foreign currency would slow to what it called a “more manageable” $500 million a month because the foreign capital that has been responsible for much of the decline has been nearly drained out of the country.

On the other hand, Egypt could also get a boost from a rare instance of foreign investment if France Telecom goes ahead with the purchase of a $2 billion stake in the Egyptian Company for Mobile Service, popularly known as Mobinil, which it agreed to buy from Egyptian entrepreneur Naguib Sawiris last week. If the transaction goes through, that money might be transferred to Egypt in March.

But Merrill also noted that Egypt’s finances look more precarious than the headline foreign reserves figures show. Taking out Egypt’s holdings of gold, reserves fall to $13.6 billion, which are equal to just 2.8 months of imports, Saliba wrote in the Feb. 16 note. Meanwhile, Egypt’s external financing needs could reach some $11 billion through June 2013, Finance Minister Momtaz el-Saieed said Feb. 10.

But accepting aid is politically problematic because the public looks askance at foreign assistance, especially from the U.S. Only 26 percent favor accepting American aid, according to a Gallup poll taken in December. The proportion willing to accept international aid rises to 50 percent (with 42 percent opposing) and those willing to accept it from fellow Arabs reaches 68 percent (28 percent opposing), Gallup found.

Egyptians don’t like aid because it usual comes with strings attached, such as unpopular economic reforms in the case of the IMF and maintaining the 1979 peace treaty with Israel, in the case of American assistance. Political opposition to foreign assistance caused the interim military government to reject the original offer of an IMF credit last spring, a decision many economists say has exacerbated the financial troubles in which Egypt now finds itself.

Parliament must approve an IMF loan, but Essam el-Erian, a leader of the Muslim Brotherhood’s Freedom and Justice Party, which dominates parliament, said his group may vote against it because it might impinge on Egyptian sovereignty. “Look at Greece,” el-Erian said in an interview with Bloomberg News this week. “Everybody is telling it what to do.”

Above and beyond accepting foreign financial assistance, the other remedies for Egypt’s foreign reserves ailment are all painful for politicians and the public alike.

One is bringing down the budget deficit. As the economy has shrunk and the government boosted handouts in the early days of the revolution to try and palliate the population, Egypt’s fiscal deficit has ballooned. Officials recently revised upward their forecast for the budget deficit for the fiscal year ending June 30 to 9.4 percent of gross domestic product.

The solution would be to cut spending, particularly costly and wasteful subsidies on food and energy. Indeed, the military government recently announced plans for $4 billion in spending cuts and the IMF and others providing aid will have their own list of fiscal measures. But political analysts suggest that will inevitably mean cuts to popular energy and food subsidies of the kind that have set off riots in the past.

Another remedy is devaluing the Egyptian pound. In spite of Egypt’s mountain of economic woes, the pound had shed only about 1 percent of its value over the past year as the central bank acted to shore up its value by raising interest rates and drawing down on reserves. But the bank’s options are narrowing as it is forced to devalue the pound, which will almost certainly lead to higher inflation.

Analysts see some positive elements in the Egyptian political scene. Saliba notes that the decision to move up the presidential vote to May reduces the length of the campaign season and the opportunity for grandstanding by candidates. Ahmed Galal, managing director of the Economic Research Forum in Cairo, maintains that the Muslim Brotherhood has taken a pragmatic line on subsidiary reform and supports free markets.

©2012. The Media Line. All Rights Reserved.

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London, England, United Kingdom (AHN Sports) – Thierry Henry is headed back to New York.

Arsenal’s all-time leading scorer, Henry will return to New York Red Bulls next week as his loan reaches an agreed date, Arsenal manager Arsene Wenger said on Friday.

The 34-year-old originally played for Arsenal from 1999 until 2007, scoring a record 226 goals. He rejoined Arsenal on January 6 but will go back his Major League Soccer club next Thursday, the day after Arsenal play AC Milan in the first leg of the Champions League round of 16.

“I would have loved him to stay for two more weeks but he has to go back,” Wenger said. “He is captain of the Red Bulls, so just to appear on the first day of the season would be unfair to them.”

Red Bulls start their new season on March 11.

“We accepted at the start that we would release him on February 16 so we respect our word. He thinks as well that it would be too late (if he stayed another two weeks),” Wenger said.

Henry has scored twice in five games during his loan and Wenger has been pleased with the impact he has made on the club.

“He was happy to be here and all the players were happy to have him around,” Wenger said. “In training he looks better every week. He is now back to a fitness level comparable to all the other players. His movement in training makes me think it is a shame he does not play for the national team anymore.”

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