Here Comes The Double Dip Pt. 3

[Daniel_Plainview]

Here's a classic case of a Cornie grasping for any shred of positive news:

“Lower interest rates ... are also symptomatic of heightened risk aversion, which means it could be more difficult for some borrowers to get loans.”

By way of contrast, the last time interest rates got this low was last September when there were fears that the U.S. economy was going into a second recession – a double-dip. Congress and the White House had just engaged in a stare-down over the debt ceiling which froze business investment. And the stock market was struggling.

In case you missed it:

"The last time interest rates got this low was ... when there were fears that the U.S. economy was going into a second recession – a double-dip."

LOL




Once again:

"The last time interest rates got this low was ... when there were fears that the U.S. economy was going into a second recession – a double-dip."

[OilFinder2]

Here's a classic case of a Cornie grasping for any shred of positive news:

“Lower interest rates ... are also symptomatic of heightened risk aversion, which means it could be more difficult for some borrowers to get loans.”

By way of contrast, the last time interest rates got this low was LAST SEPTEMBER when there were fears that the U.S. economy was going into a second recession – a double-dip. Congress and the White House had just engaged in a stare-down over the debt ceiling which froze business investment. And the stock market was struggling.

In case you missed it:

"The last time interest rates got this low was ... when there were fears that the U.S. economy was going into a second recession – a double-dip."

OOOPPPS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Notice he conveniently omitted "last September" when he re-quoted it!!!!

Remember ... last September ... just before you started this thread called "Here comes the double dip" ... a double-dip I'm STILL waiting for!!!!!!!!!!!!!!

[eXpat]

Very long, but interesting article, packed with info

Finally, though our overall assessment of market return/risk prospects is largely independent of our macroeconomic concerns, the joint deterioration in the growth of real personal income, real personal consumption, real final sales, and employment, coupled with our inference of leading economic pressures from "unobserved components" methods, creates not only the concern but the expectation that the U.S. economy is entering a recession - not a quarter or two from today, but most likely at present. Indeed, Europe already appears to be in a broadening recession, which the U.K. has now joined, and the confluence of economic weakness and already strained government debt conditions in Europe is likely to produce disruptive outcomes in the coming quarters.

Addicted to Hopium

Again last week, some comments from economist Martin Feldstein were worth noting, particularly in contrast to the "hopium" sprinkled around by so many Wall Street analysts.

"The big problem for Spain is not its trade and current account deficit - that's relatively small. The big problem there is how they're going to finance both their fiscal deficit and the rollover of the debt that's coming due. Those two together will be some 20% of GDP of Spain this year. So that's not something that's going to be easy to do when the banks are under tremendous pressure, and when foreign bond-buyers of Spanish sovereign debt are walking away.

"We've now had QE2 and after that we had Operation Twist, and both of these have helped to lower long-term interest rates and boost the stock market a bit. But they're not doing anything to help the real economy. They're not doing anything for economic activity. Housing remains in a slump. Businesses are not investing. Individuals have been reluctant to spend. It helps the financial markets, and that's why they are cheering for it, but I don't think it's doing anything for real economic activity.

"The state of the economy is quite poor. There was a little burst of enthusiasm in the beginning of the year, but that's come off as job growth fell very sharply in the most recent month, as real incomes are falling, real wages are falling, house prices continue to fall, so it's not a very pretty picture. There was talk of 2 1/2% and 3% GDP growth this year, but I think we will be lucky if we get as high as 2%. Last year, we only had 1 1/2%. If you look at the first quarter of this year, while the GDP number was 2.2%, almost all of it - nearly three-quarters of it - was automobile purchases; catching up for last year's shortages of automobiles. So it doesn't suggest that there is strong consumer spending on ordinary goods and services, and certainly there isn't on construction and on business investment spending."
...
"It took more than a year to learn that GDP actually shrank by 1.3% during the first quarter of the 2001 recession. But back then it was initially reported as having grown at 2.0%. That's not very different from the latest reading for GDP growth in the first quarter of 2012 - 2.2%. In August 2008, just before the Lehman collapse, GDP was reported to have risen in the first and second quarters with the latter revised up sharply, triggering over a 200-point rally in the Dow that day. Today we know that GDP actually shrank in the first quarter while the second has been revised down by two full percentage points."

For investors, I should note that by the time people said "Huh, something happened" 6 months into recessions in 2001 and 2008, the market had already lost about 20-25% in both cases, was entering free fall, and the best opportunity to reduce risk was long gone.

http://www.hussman.net/wmc/wmc120514.htm

[Daniel_Plainview]

Spanish Bad-Loans Ratio Hits 17-Year High

Bad debts held by Spanish banks rose to a 17-year high in March and the cost of insuring the debt of two major Spanish banks against default hit a record Friday a day after the sector was hit by a downgrade, underscoring the continuing challenges posed by the country's five-year property slump. The central bank said that 8.37% of the loans held by banks, or €147.97 billion ($188 billion), were more than three months overdue for repayment in March, up from 8.3% in February and the highest since September 1994. The total number of non-performing loans is now almost 10 times higher than the level reported in 2007, just as Spain's decade-high property boom peaked.

The rapid deterioration of the loan books was one of four reasons cited by Moody's Investors Service for its downgrade of the credit ratings of Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and 14 other banks in the country late Thursday. "Moody's announcement will increase speculation that the Iberian state will be forced to ask for external support in order to effectively tackle its banking crisis," said interest rates strategists at Lloyds Bank WBM.

[dorlomin]

Smell the fear.

http://www.guardian.co.uk/business/2012 ... exits-euro

With economic output in the UK still 4% below its peak level when the recession began in early 2008, the prime minister and the governor of the Bank of England, Sir Mervyn King, have expressed concern in recent days about the vulnerability of Britain to the eurozone.

Chote said he was particularly concerned about the possibility that a second deep recession would leave permanent scars. "That means not just that the economy weakens and then strengthens again – it goes into a hole and comes out – but that you go down and you never quite get back up to where you started."

Shares in London closed down for a third week, with the jittery mood in financial markets pushing the FTSE 100 below 5,400 for the first time this year. German and French stock markets were also depressed, with even the much-anticipated stock market debut of Facebook in New York failing to lift spirits.

Meanwhile, analysts at Deutsche Bank predicted that the weak state of Ireland's banks could result in the former Celtic tiger requiring a second bailout, and in Spain there were reports that the government would call in Goldman Sachs to help sort out its banks after 16 suffered credit downgrades on Thursday.

In an echo of the months leading up to the Lehmans collapse, Mike Smith, chief executive of Australia and New Zealand Banking Group, said the turmoil in the eurozone meant Australian banks were being frozen out of money markets when seeking funds.

Its floating around the back of so many discussions. When you see Gideon and Darling on the same basic vibe you know there is a fear they can all smell.

[Daniel_Plainview]

Yep, fear is in the air

UK will suffer "permanent" damage amid Euro collapse
Britain's economy may suffer “permanent” damage and “never quite get back up” if the euro collapses in a chaotic way, the Government’s chief economic forecaster has said.

Robert Chote, the head of the Office of Budget Responsibility, issued the warning amid fears of financial shockwaves across Europe if Greece crashes out of the single currency.

The senior Government economist, who has access to the most up-to-date Treasury data, said this could cause a recession as bad as the last one and “lingering, long-lasting effects” for Britain’s public finances.

He said it could “permanently hamper the economy” in the worst case scenario, raising the prospect that Britain may never again see the same high growth it has had in recent decades.

Mr Chote’s comments come as:

* A row broke out over whether Angela Merkel, the German leader, has suggested Greece should hold a referendum on leaving the euro. Greek officials said she raised the idea in a phone call with their President, but a spokesman for the German Chancellor strongly dismissed the reports.

* European Union officials finally admitted they were drafting plans for how Greece could exit the single currency.

* George Osborne, the Chancellor, warned that the “storms” of a eurozone crisis are gathering again. He said there is a risk that Europe’s “good work in building a stable financial sector and creating jobs and prosperity might unwind”.

* Santander reassured its 25 million British customers that their money is safe, amid worries that its Spanish parent company is exposed to the eurozone crisis. The bank told worried savers calling its telephone helplines that it is an entirely separate entity and said only a small number of customers with very large deposits have started withdrawing cash.

* Francois Hollande, the French leader, said Greece must stay in the eurozone, as world leaders gathered for the G8 summit at US President’s official residence Camp David. President Barack Obama said resolving the crisis is of “extraordinary importance” to the world.

* Shares on Britain’s FTSE 100 index fell by 1.3 per cent to their lowest level in six months as concerns about the Greek and Spanish economies hit stock markets around the world. Five more Greek banks had their creditworthiness downgraded by the Fitch rating agency.

Worries that Greece is finding it too painful to stick to its public spending plans have caused fresh warnings about the future of the eurozone over the last week.

The Chancellor has described the possibility of Greece leaving the euro as a “genie out of the bottle”, with people now talking openly about the prospect.

Nigel Farage, the MEP and leader of the UK Independence Party, yesterday claimed the “game is up” for the euro.”

However, world leaders are insisting that the euro in its current form can still be saved. David Cameron has issued an unprecedented three-point plan to save the single currency, arguing that Europe's debt problems are “the biggest risk to recovery in the UK”.

Last night, Mr Chote gave an even stronger warning about the potential impact of "disorderly" a European financial collapse. “If you have a permanent impact on the productive potential of the economy, then it will have a permanent impact on the ability to raise tax revenue and a permanent impact on public finances,” he told the Daily Telegraph.

In a separate interview, he said there is a risk that Britain’s economy could go down and “never quite get back up to where you started”.

“The concern is that you end up with an outcome in the eurozone that creates the same sort of structural difficulties in the financial system and in the economy that we saw in the past recession,” he said.

He also said there is not enough "evidence” that George Osborne’s 50p tax rate will promote growth.

[Daniel_Plainview]

Eurozone exposure to a Greek default

... The Greek Central Bank owes the other central banks, including the ECB, $130 billion euros, a number that dwarfs all the other numbers in the table. Such a sum would have to have been built up over a fairly long period of time. It seems to suggest that the Central Bank of Greece has lent similar sums to Greek banks that could not otherwise clear their outflow transactions. In theory, such loans by the Central Bank of Greece to its member banks should be collateralized, but whether such collateral would have value is not known. It also is not known how the Central Bank of Greece would treat its obligations to the ECB and other eurozone central banks in the event of a Greek default and exit from the euro.



The 35 billion of SMP exposure refers to the securities purchased by the ECB in the open market. Losses on such securities would fall similarly to the Target 2 losses. In this case, there is no collateralization.

The table appears to assume that whatever loss from Target 2 would fall on the ECB and that it would have to be made up by the remaining countries in the euro. I wonder whether that would be the case. I am guessing that the ECB will do something other than calling on the member states or their central banks to make up for the loss. After all, in theory, the ECB could simply cause more euros to come into being or could operate with a lesser theoretical capital base. It is not merely a bank.

Some of the other exposures are exposures to having to write off money that already has been lent. This would be true of the bilateral loans, for example. Since nations do not, strictly speaking, have balance sheets, such write-offs would merely disappear. They would show up in the GDP numbers, I assume, but not being cash, those losses should have no real impact.

To the extent that nations have issued guarantees of debts or have pledged to provide money to a common fund, those would be real losses that each nation would have to make up by providing cash. The big number here is the EFSF (European Financial Stabilization Fund) exposure of 73 billion. The EFSF has borrowed these funds in the capital markets on the strength of its member nations' guarantees. (See Investor presentation May 15, 2012 on the linked EFSF website.) Thus, if Greece were to default, the member nations would have to make up for the losses. That 73 billion euros is, therefore, a real exposure that, it appears, cannot be fudged away. Such is the power of leverage.

Those are the exposures of official (public) entities. I do not have a handle on the private exposures at this time.

How bad would a Greek default be for the other eurozone countries? From this brief survey, that appears to depend on the creativity of the ECB. I expect that the ECB would be creative.

In order to evaluate the real impact, one needs to understand the private sector risks as well as the public sector risks.

Regardless of whether the private sector risks also appear bearable, the big question will be contagion.

The problem is (and has been) that things are getting worse in the Eurozone, and the rate of degradation is worsening at an accelerating rate:

1. Most economies are contracting either to the point of recession or depression;
2. Virtually every Eurozone nation is plagued by unsustainable levels of sovereign and private debt (which rely on "growth" to extricate said debt);
3. The ECB has reached (or will soon reach) its limit on remedial possibilities ... and all of its short-term, bandaid fixes will only worsen the long-run prognosis;
4. Nothing has been done to remedy the underlying problems/issues;
5. Recent elections suggest that the anti-Euro sentiment is strengthening;
6. Consider this article: "The Rise of Nationalism Will End the Euro Before Year's End" ... in short, there is a tidal wave of anti-Euro inertia sweeping the Eurozone;
7. So ... even if the "Greek blackhole" is papered-over, then the focus becomes Spain (which is in dire straits), Italy (which is approaching boiling point), Ireland (ditto), Portugal, France, etc ...

Where does this leave us?

How can the Eurozone extricate itself from its debt quagmire (and "free lunch" mentality) without "growth" ? How can there be "growth" amid highly constrained energy resources (think "Club of Rome")?

When the US finally gets dragged down by this spiraling vortex, will Heli-Ben's QE3 be the "final straw" for central bank intervention?

[AgentR11]

When the US finally gets dragged down by this spiraling vortex, will Heli-Ben's QE3 be the "final straw" for central bank intervention?

Nope. It'll be just the opening pitch of the real game.

Is there any limit in law that says the Fed balance sheet can not be 100 quadrillion US$ in magnitude?
Last I checked.... nope,

Get ready.

[Daniel_Plainview]

Is there any limit in law that says the Fed balance sheet can not be 100 quadrillion US$ in magnitude?

The most relevant "law" is the "law of diminishing returns;" specifically:

1. It now takes $2.50 to create $1 of economic growth (link);
2. The "bounce" that the markets have received from ongoing Fed intervention has progressively diminished with each subsequent infusion ... to the point of being effete and inconsequential (link):

Is there any limit

The true "limit" is the scarcity (price and availability) of commodities and natural resources (such as oil, phosphorous, etc.). Last time I checked, the Earth is finite, and conventional crude oil has passed its peak. The Fed cannot print oil, and any short-term attempts to paper-over the ongoing and accelerating scarcities will only result in even harsher, more acute long-term pain.

More importantly, each time the Fed tries to circumvent this law by printing or monetizing, it has led to higher commodity prices ... IOW, it backfires, and leads to worse results.

Get ready.

I agree: "get ready" and "buckle up" ... this is precisely the appropriate mentality.

[Daniel_Plainview]

Robert Reich to College Grads: "You're FUCKED!"

Members of the Class of 2012,

As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you’re picking up today.

"You’re f*cked."



Fewer than half of the graduates from last year’s class have as yet found full-time jobs. Most are still looking.

That’s been the pattern over the last three graduating classes: It’s been taking them more than a year to land the first job. And those who still haven’t found a job will be competing with you, making your job search even harder.

Contrast this with the class of 2008, whose members were lucky enough to get out of here and into the job market before the Great Recession really hit. Almost three-quarters of them found jobs within the year.

You’re still better off than your friends who didn’t graduate. Overall, the unemployment rate among young people (21 to 24 years old) with four-year college degrees is now 6.4 percent. With just a high school degree, the rate is double that.

But even when you get a job, it’s likely to pay peanuts.

Last year’s young college graduates lucky enough to land jobs had an average hourly wage of only $16.81, according to a new study by the Economic Policy Institute. That’s about $35,000 a year – lower than the yearly earnings of young college graduates in 2007, before the Great Recession. The typical wage of young college graduates dropped 4.6 percent between 2007 and 2011, adjusted for inflation. Presumably this means that when we come out of the gravitational pull of the recession your wages will improve.

But there’s a longer-term trend that should concern you. The decline in the earnings of college grads really began more than a decade ago. Young college grads with jobs are earnings 5.4 percent less than they did in the year 2000, adjusted for inflation.

Don’t get me wrong. A four-year college degree is still valuable. Over your lifetimes, you’ll earn about 70 percent more than people who don’t have the pieces of parchment you’re picking up today.

But this parchment isn’t as valuable as it once was. So much of what was once considered “knowledge work” – the kind that college graduates specialize in – can now be done more cheaply by software. Or by workers with college degrees in India or East Asia, linked up by Internet.

For many of you, your immediate problem is that pile of debt on your shoulders. In a few moments, when you march out of here, those of you who have taken out college loans will owe more than $25,000 on average. Last year, ten percent of college grads with loans owed more than $54,000. Your parents have also taken out loans to help you. Loans to parents for the college educations of their children have soared 75 percent since the academic year 2005-2006. Outstanding student debt now totals over $1 trillion. That’s more than the nation’s total credit-card debt.

The extraordinary rise in student debt is due to two related facts: the cost of a college education continues to increase faster than inflation, and state and local spending per college student continues to drop – this year reaching a 25-year low.

But this can’t go on. If unemployment stays high for many years, if the wages of young college grads continue to fall, if the costs of college continue to rise and state and local spending per college student continues to drop, and if the college debt burden therefore continues to explode – well, you do the math.

At some point in the not-too-distant future these lines cross. College is no longer a good investment.

That’s a problem for you and for those who will follow you into these hallowed halls, but it’s also a problem for America as a whole.

You see, a college education isn’t just a private investment. It’s also a public good. This nation can’t be competitive globally, nor can we have a vibrant and responsible democracy, without a large number of well-educated people.

So it’s not just you who are burdened by these trends. If they continue, we’re all f*cked.

[eXpat]

This is big news, is official, spending is the answer!
At Camp David, world leaders agree on more spending to boost Europe’s economy

CAMP DAVID, Md. — Leaders of the world’s wealthiest nations opened the door Saturday to more government spending in Europe as way to revive the continent’s struggling economy, shifting away from the idea that the surest way to recovery was through strict fiscal austerity.

Meeting at the Group of Eight summit at Camp David, President Obama and his fellow leaders said they were committed foremost to creating jobs and growth, a shift, at least in emphasis, from previous gatherings dominated by German efforts to reduce high government debt through drastic fiscal reform.
In a joint statement, the leaders of eight of world’s richest countries said they would promote investment in education and infrastructure, as they also sought to rein in government debt. Obama, who has pushed for additional fiscal stimulus in the United States, said the new agreement affirmed the course his administration pursued during the financial recession at home. He said the move toward economic stimulus bolstered Europe’s chances of surviving the crisis.

“The direction the debate has taken recently should give us confidence that Europe has taken significant steps to manage the crisis,” Obama said in a brief statement to reporters outside his wooden cabin nestled in the leafy presidential retreat in the Catoctin Mountains. “There is now an emerging consensus that more must be done to promote growth and job creation right now in the context these fiscal and structural reforms.”

http://www.washingtonpost.com/politics/at-camp-david-obama-calls-iranian-nuclear-program-a-grave-concern-for-us-allies/2012/05/19/gIQAjxcwaU_story.html?tid=pm_politics_pop
All hail the almighty printing machine!!!
The crash is going to be biblical!

[AgentR11]

More importantly, each time the Fed tries to circumvent this law by printing or monetizing, it has led to higher commodity prices ... IOW, it backfires, and leads to worse results.

This is where we really disagree, its not a "backfire" at all. Its a desired result. The Fed is NOT trying to print oil, they are trying, and succeeding, at reducing the relative value of outstanding debt, while insuring that every P&L that counts, shows a profit in current dollars. Doesn't really even matter if that profit has less and less purchasing power every year, it just needs to be a positive value.

Get ready.

I agree: "get ready" and "buckle up" ... this is precisely the appropriate mentality.

However, you have to be ready for not only the bump in the night to happen within a year, but you also need the ability to outlast the game, if no bump comes for a decade or two. If you are totally spent in fifteen years, and then the bump comes, it'll take you and all those that depend on you, straight into nightmare and death.

[OilFinder2]

Ze Chermans are goingk dto have zome more money to spendt on ze Bimmers ahdt nice houses.



Euro zone row gets fat pay rise for German workers

BERLIN, May 20 (Reuters) - A record-breaking pay deal will give millions of German workers their biggest rise in wages in two decades, boost consumption in Europe's biggest economy and help towards adjusting the regional imbalances that have caused severe tensions within the euro zone, analysts said on Sunday.

Germany's largest industrial union IG Metall agreed to a 4.3-percent pay rise from employers just before dawn on Saturday, giving the 3.6 million car and engineering industry workers their biggest wage increase since a 5.4 percent deal in 1992.

The eye-catching 4.3 percent increase in the headline number will cover the 12 months from May 1 to April 30, 2013, union officials said. The agreement that ends a series of disruptive strikes takes effect from April 1, 2012 but will encompass a 13-month period. Workers will get no raise for April 2012.

The highest wage increase in two decades was agreed after German political leaders broke a long-standing, self-imposed taboo of staying out of wage talks and instead repeatedly called for strong pay rises.

Low wage growth in Germany has been identified as a source of danger in the euro zone with economists blaming it for causing imbalances that have exacerbated the sovereign debt crisis. Nominal wage growth in Germany was 1 percent on average from 2007 compared to 2.7 percent in the combined euro zone.

[...]

Ahdt zome backcrowndt. Ze Chermans zeem to be igknoring ze rest of ze Eurozsone.

Germany booms as euro crisis deepens

While the rest of Europe nervously peers at an insecure future, Germans are spending their evenings in long lines, hoping for a chance to buy or rent property before costs rise even more.

Since the euro crisis began, a Berlin housing boom has seen rents rise by 70 percent in posh districts, and 23 percent even in dicey areas. And this newly forming housing bubble is just one of many signs that the fortunes of Germany and the eurozone it leads have taken sharply divergent paths.

As the euro crisis deepens, and more and more neighbors slip down the path toward economic perdition, it is increasingly obvious that the German economy is growing healthier.

Oddly, the Germans don't have a word for it. Yet. But Germans are well aware that these divergent paths are connected. Schadenfreude might be the term, except that instead of finding joy in the misery of others, the Germans are finding cash money.

Ferdinand Fichtner, head of the department of forecasting and economic policy at the German Institute for Economic Research, said problems elsewhere force the European Central Bank to keep interest rates low. That, he said, is a boon to already booming German manufacturers.

"Businesses can invest and expand further," he said. "We will see more growth, more employment and higher wages, leading to better domestic sales as well."

[...]

[OilFinder2]

ahdt

Oops, that should be "ahndt."

[Repent]

One of my favorite habits over the last ten to twenty years or so, was going out to the video store to rent movies on my spare time. They used to be everywhere, you could even rent them at the gas stations. Over time the smaller rental places went under, or were bought out by large chains. But we still had Jumbo video, TVS the superstore, ADI's and a few others. They were all either bought out or out competed when the big box stores tried to get into the action; Rogers, Blockbuster as examples.

Rogers and Blockbuster are gone now, and the last major video rental place in my city, movie village was bought out by a drugstore which wants to demolish the building to make a bigger parking lot this week. So, its the end of an era; I can't rent movies anymore. All the movie rental places are gone. I never really got into the 'buy' movies thing. Why waste money on something you're only going to watch a few times and throw away, or conversely it will pile up in your house, unused, taking up space. Rental is far better.

You generally can't watch copyrighted movies on youtube, so what do you do? I can't stand TV, with constant interruptions for commericals which ruin the storyline, or they have been censored for content. Of all the things I expect will decline over the future, being able to rent an old 40's movie, watch Kirk and Spock take on the universe, these were things I'm sorry to see go first. How much of our cultural legacy will be lost in the years and decades to follow?

Still this is only the beginning of decline; collapse still awaits us.

[Quinny]

Download

[Daniel_Plainview]

So what do you do?

Netflix is the obvious answer. I don't watch TV either, but I'm hooked on Netflix: great value and great product.

[Armageddon]

Is the derivative time bomb beginning to unfold starting with JPM ?

[Daniel_Plainview]

Fitch downgrades Japan to A+, outlook negative

FRANKFURT (MarketWatch) -- Fitch Ratings on Tuesday downgraded Japan to A+ and issued a negative outlook on the country's credit rating, citing rising public debt levels. Japan's long-term foreign rating had stood at AA and its local currency issuer default rating was previously at AA-.



"The downgrades and negative outlooks reflect growing risks for Japan's sovereign credit profile as a result of high and rising public debt ratios," said Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch, in a news release "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk," he said.

[OilFinder2]

Existing Home Sales Rose 3.4 Percent in April

U.S. home resales rose in April to their highest annual rate in nearly two years and a falloff in foreclosures pushed prices higher, hopeful signs about the pace of recovery in the still-struggling housing sector.

The National Association of Realtors said on Tuesday that existing home sales increased 3.4 percent to an annual rate of 4.62 million units last month, the highest since May 2010.

Nationwide, the median price for a home resale jumped to $177,400 in April, up 10.1 percent from a year earlier. That was the biggest year-over-year increase since January 2006.

Distressed sales accounted for 28 percent of resales, down from 29 percent in March. NAR economist Lawrence Yun said a drop in foreclosures fueled the decline in distressed sales, which in turn drove the increase in the median sales prices.

[...]