National News

Why bank loans are getting riskier

Marketplace - American Public Media - Thu, 2014-06-26 04:25

The Office of the Comptroller of the Currency has issued a new report that says banks are taking bigger risks when they lend. They're doing that in two ways: lending more in auto loans to individuals, and lending more in leveraged loans to companies. And, increasingly, they're making those corprate loans "covenant-lite." Stopped you in your tracks, huh? Let me explain:

Q. First, what's a leveraged loan?

A "leveraged loan," also often known as a high-yield loan (if you're talking dirty, a junk loan), is a risky loan, borrowed by a company that's heavily in debt. Because of the risk, leveraged loans come with high interest rates. They also usually come chock-full of covenants.

Q. Which raises the question: What's a covenant?

A covenant is a requirement that the borrower has to meet every month. Perhaps is a certain debt-to-earnings ratio, or a minimum amount of gross income.  It can be anything the lender decides on. Covenants act like canaries in the coal mine for lenders, giving them early warnings that a company might run into trouble and possibly default on the loan.

Q. Got it... so what's a covenant-lite loan?

A covenant-lite (cov-lite, in the jargon) loan is like a coal mine with few or no canaries. So there will be little or no advance warning of problems in these loans: the first the lender hears about any issues is when the loan is on the brink of default.

Q. So why would anyone want a covenant-lite loan?

Well, borrowers love cov-lite loans, because they're easier to live with. There are fewer pesky rules and regulations to follow, and in some cases the loans are just pure money, with no strings.  Lenders don't really like them, for obvious reasons, but right now they're over a barrel. They're stuffed full of cash that they have to put to work in a very low-interest rate environment. There are precious few investment opportunities out there that will make the much money. And that allows the borrowers to force the lenders' hands. If you want a real estate analogy, it's a buyer's market. The buyers are the borrowers, and they're getting pretty much anything they want in these loans.

Q. Finally, then, why should I care?

Because all this means that risk is being baked into the system again. Leveraged loans are already risky.

When they're structured with few covenants, they're even riskier.

And when banks are loaded down with risky investments, well, we all remember how dangerous unfettered risk can be... don't we?

'We Welcome' Syrian Airstrikes On ISIS, Iraqi Leader Maliki Says

NPR News - Thu, 2014-06-26 04:17

Iraqi Prime Minister Nouri al-Maliki says that he didn't ask for the airstrikes along the border — but he doesn't have a problem with them, either.

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Reports Of New Fighting Rattle Ukraine's Truce As Kerry Urges Russia To Help

NPR News - Thu, 2014-06-26 03:23

Russian state news media report explosions in the eastern Ukrainian city of Kramatorsk. Secretary of State John Kerry says Russia could face sanctions if it doesn't help end the violence.

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Oil Off The Coast Of Ibiza? Protesters Don't Want To Know

NPR News - Thu, 2014-06-26 03:15

Spain is weighing a plan to allow oil exploration near the party island of Ibiza. Opponents fear the move could threaten the environment and tourism, but finding oil could also be an economic boost.

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In Flanders Fields, Europeans Still Learning How To Get Along

NPR News - Thu, 2014-06-26 03:03

On the 100th anniversary of the start of World War I, EU leaders will meet at Flanders Fields Museum. They'll have an opportunity to reflect on what can happen when nations fail to find common ground.

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Millennials kick up soccer's popularity

Marketplace - American Public Media - Thu, 2014-06-26 03:00

The team is called Sacramento Republic FC -- The FC stands for football club (even Sacramento’s booster club also has a European flavor).

But they -- the mostly young people in their twenties in the stands -- call themselves the Tower Bridge Brigade. They stand, sing, and chant all game long.

“I grew up watching soccer,” says fan Ana Garza. “I grew up listening to soccer, I grew up with a soccer ball in my crib.  The whole thing is just exciting.”

Sacramento Republic plays in the USL. The league is a notch below Major League Soccer, where U.S. superstar Clint Dempsey plays for the Seattle Sounders. But don’t tell Sacramento Republic fans they’re second-tier. The team has sold out several games in a 20,000-seat stadium.

So why are these mostly young fans so revved up?

“If you just look at the numbers the average person, the average person when they graduate high school, at least in the Sacramento has played seven years of soccer,” says team owner Warren Smith.

Smith says he has actually been surprised by the extent of the crowds. But he knew all those young soccer players and their parents could support a team.

“They’re familiar with it. They understand it. They have played it. And so if they play it, that is one of the first indicators that they will buy a ticket," says Smith.

Sports economist Patrick Rishe says the reason professional soccer is growing is because it’s connecting with millennials.  

“I think it’s just a natural progression of people being interested in soccer,” says Rishe. “It’s been a popular youth sport for a long time. And now NBC has this deal with the English Premier League, so now we can see regularly the top quality soccer league in the world.”

Some say Republic FC’s early success at the gate and on the field could bump the team up a notch to Major League Soccer. But on a recent night, they were losing 1-0 to Arizona United SC.  

Brian Trainer, one of the leaders of the Tower Bridge Brigade says it time to get louder: “We’re going to keep singing, and it might happen right here, I’m hoping for it. Here we go, here we go…”

And just then, Republic FC booted through the game-tying goal. The assist, more or less, came from its fans in the stadium.

PODCAST: GoPro's next move

Marketplace - American Public Media - Thu, 2014-06-26 03:00

IKEA announced it would raise its minimum wage -- more on the motivation behind companies raising pay without prompting from government. Plus, with GoPro's IPO going strong, a look at what the company might do to remain profitable besides just selling cameras. Also, a new report shows that although Latinos are one of the fastest growing ethnic groups in the U.S., they remain underrepresented in American media both on air, and behind the scenes.

Report finds Latinos are underrepresented in the media

Marketplace - American Public Media - Thu, 2014-06-26 03:00

It is no secret that Latinos are one of the fastest growing ethnic groups in America. By the year 2015, Latino buying power is expected to exceed $1.6 trillion. Yet, despite this surge in population and buying power, one place that Latinos are under represented is in the media.

The Center For the Study of Ethnicity and Race at Columbia University just released a new report on that found Latinos are vastly underrepresented in the American media landscape, both on screen and behind the scenes.

For more on the report, click the media player above to hear Univision news anchor Enrique Acevedo in conversation with Marketplace's Mark Garrison.

Aereo loses at the Supreme Court: what's next?

Marketplace - American Public Media - Thu, 2014-06-26 02:00

After weeks of waiting the Supreme Court has decided on the ABC vs. Aereo case, with the court ruling against the video streaming startup and in favor of broadcasters. 

With a 6-3 vote, the court found that Aereo infringes on copyright because it presents a public performance, citing that the service's audience is not individuals.

According to Sam Gustin, a Vice correspondent covering technology policy for Motherboard, “The takeaway is that court simply didnt buy Aereo’s technological argument.”

The ruling could have implications for how the courts rule on other copyright issues raised by digital distribution.

“One thing that it tells us is that the courts are sympathetic to the arguments of the broadcasters and rights holders,” says Gustin.

Still confused about Aereo? Here are some answers to your questions

What is the service? 

What is its business model? 

 What might have happened if the court ruled in Aereo's favor?

GoPro goes public

Marketplace - American Public Media - Thu, 2014-06-26 02:00

The following story was updated after GoPro raised $427 million in its IPO, and its price jumped 30 percent in the first day of trading, closing above $31 per share.

GoPro, which makes action sports cameras, has gone public. The company raised $427 million in its initial public offering, initially selling shares at $24 apiece. 

Investors bought the stock based on GoPro’s potential. So what are they buying? 

GoPro videos are famous for scenes of daredevil skiing or surfing. So far, GoPro has made most of its money from cameras, which can be mounted on helmets, toddlers,  birds -- you name it. 

But, to really make money, GoPro needs to be more interactive; perhaps build its cameras into goggles that connect to the Web. 

“I might want a map of the resort. I might want to know where I am in the resort, ” says Andrew Sheehy of Generator Research.

GoPro videos could also have a future on cable TV.

“If they are able to take a 'best of' and upstream it -- you know, they get their own half-hour show on MTV or something,” says Jeff Howe, who teaches multimedia journalism at Northeastern University.

GoPro could sell advertising, leading to a steady stream of revenue, which investors would love. 

Why is GoPro so popular? Check out some of the craziest, death-defying, fascinating, and hilarious GoPro videos on the web.

1. Watch what happens when this GoPro camera falls out of a plane. You won't believe the end. 

2. Daredevil Felix Baumgartner inspired the world when he became the first man to jump from 24 miles above the surface of the Earth. See what he saw through the GoPro attached to his head.

3. GoPros aren't just for taping freefalls from great heights. Here's what happens when you put one on a ukulele and give that ukulele to an orangutan. 

4. People use GoPros to go places they couldn't otherwise go -- like right up to a rattlesnake. We don't suggest you try this one at home.

5. There's a reason GoPro is so popular with extreme atheletes...

6. GoPro was first popular with surfers. 

7. But you hardly need to be an athelete or daredevil to use one. 

8. This guy took his to Burning Man. 

9. Ever wonder what it must be like to be a rat crawling around in Walmart?

10. Or go to space? 

11. Or live inside The Matrix? 

12. Of course, who says you have to do anything interesting at all?



Everyday Activities With A GoPro - watch more funny videos

Why won't millenials just buy houses already?

Marketplace - American Public Media - Thu, 2014-06-26 02:00

Millennials get blamed for a lot these days: entitled behavior, too much texting, kombucha.

Now, there's one more thing that's kind of their fault (but only kind of), according to a new report from Harvard's Joint Center for Housing Studies: the sluggish housing recovery.

"Young people are always the key to the housing market," says Chris Herbert, the center's director of research. He says an expanding housing market requires a chain reaction -- young people buy starter homes from middle-aged people, who in turn upgrade to bigger homes themselves, and on and on. But "without those young buyers coming in to the market, the whole market really tends to get bogged down."

And that's what’s happened in the past few years. So what do millennials have to say for themselves for all this bogging-down they're doing of the housing market?

Of course no one millennial can speak for their whole generation, but 29-year-old Steve Parkhurst gave it his best shot in his recent Youtube video "Millennials: We Suck and We’re Sorry."

When I asked Parkhurst why he didn't own a house, he laughed.

"I've tried to increase my credit limit on my credit cards," he says. "I can't even do that — so the idea of walking into a bank and asking for a 30-year mortgage seems comical to me."

Parkhurst says the economic realities facing many millennials — student-loan debt, low-paying freelance jobs, and scary unemployment rates for most of his adult life — have kept him and lots of his friends from even thinking about real estate, he says.

"It's not like we're all too hip and cool to want it," he says. "I love the idea of owning a home. But at the moment it's just not a possibility."

Maybe, he hopes, he might own by the time he's 40.

Giants' Lincecum Pitches 2nd No-Hitter Vs Padres

NPR News - Thu, 2014-06-26 00:22

Tim Lincecum pitched his second no-hitter against the San Diego Padres in less than a year, allowing only one runner Wednesday and leading the San Francisco Giants to a 4-0 win.

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U.S. Ends Philippines Anti-Terrorism Force

NPR News - Thu, 2014-06-26 00:16

But special forces from the U.S. Pacific Command will remain after the deactivation of the anti-terrorism contingent to ensure al-Qaida offshoots do not regain lost ground.

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Tourism Money Flows Into Cuba, Bringing Economic Hopes And Fears

NPR News - Wed, 2014-06-25 23:17

Tourism is an essential part of Cuba's economy. But as the industry grows, some worry it will create a gap between the haves and have-nots in a throwback to pre-revolution days.

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Tourism Money Flows Into Cuba, Bringing Economic Hopes And Fears

NPR News - Wed, 2014-06-25 23:17

Tourism is an essential part of Cuba's economy. But as the industry grows, some worry it will create a gap between the haves and have-nots in a throwback to pre-revolution days.

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Rain Storms Pummel Upper Midwest, Drowning Resources

NPR News - Wed, 2014-06-25 23:16

Iowa, Minnesota and other parts of the Midwest have been hit with record levels of rainfall recently. As water floods homes and businesses and threatens crops, local officials scramble to help.

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Behind ISIS Battle In Iraq, A Clash Between Two Arch-Terrorists

NPR News - Wed, 2014-06-25 23:15

Focusing on Iraq's fight may be missing the point. Under the surface is a more fundamental war between al-Qaida leader Ayman al-Zawahri and Abu Bakr al-Baghdadi of the Islamic State of Iraq and Syria.

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Report Questions U.S. Policy On Overseas Drone Strikes

NPR News - Wed, 2014-06-25 20:03

The Stimson Center concludes that targeted killing operations may have protected Americans at home, but come at a heavy price abroad.

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North Korea Threatens War Over New Seth Rogen Comedy

NPR News - Wed, 2014-06-25 16:49

The plot of The Interview, which also stars James Franco, involves a television journalist and his producer who are recruited by the CIA to assassinate North Korean leader Kim Jong Un.

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Arrivals And Departures: Films Explore The Immigrant Experience

NPR News - Wed, 2014-06-25 15:38

The Immigrant and Zinda Bhaag are idea-driven films that delve into the global arc of migration from different corners of the world.

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