Some housing bubble news from homebuilders and Washington. St. Louis, "Developer Michael Lawless is selling residential building sites, ground held for future development, the Valley Park office building where his company is based and his $2.9 million home in an effort to raise money to pay off creditors owed thousands of dollars by Lawless Homes Inc."

"Lawless Homes' financial problems hit as the number of home-building permits issued in St. Louis, Franklin and Jefferson counties all dipped slightly between 2004 and 2005." "In addition to paying off secured creditors, Lawless said he is working to remove liens on homes sold to customers. (Attorney) Dudley McCarter said Lawless Homes is facing an 'unusually high number' of liens, in part because word travels fast through the construction community."

"Builders boosted construction spending to an all-time high. That was the message coming from the latest batch of economic reports released Monday."

"The personal savings rate rose to negative 0.3 percent in March, compared with negative 0.6 percent in February. Economists, however, caution against reading too much into the savings rate. They say it doesn't provide a complete picture of household's finances because it doesn't capture gains from such things as real estate."

"Peak Phobia? The volume of U.S. home sales is near the record high seen in 2005, but Americans are much less confident today than they were a year ago about the advisability of buying real estate. Just 52% of Americans say now is a good time to buy a house, down from 71% last April and 81% in 2003. Residents of the East and West are especially likely to consider it a bad time to purchase a new home."

"Housing looked like a good deal in the recent past when single-family homes were experiencing back-to-back years of double-digit appreciation. Now that the increases appear to be slowing, and home values are leveling off at fairly high prices, prospective buyers are naturally more concerned about paying top dollar. The recent decline in consumer optimism about the housing market is seen with all major income groups and regions of the country."

Paul Muolo, "Here's something to think about: A few weeks ago Freddie Mac settled a consolidated shareholders lawsuit, agreeing to pay $410 million in damages. The plaintiffs sued, arguing that they were misled by the company about its finances."

"Freddie's woes were a bit different from that of its sister company, Fannie Mae. Freddie was earning so much money that it felt compelled to sock away $5 billion for a rainy day. Fannie, on the other hand, was cooking its books to hide $11 billion in losses that it should've been taking."

"Now, this is where it gets interesting. Fannie, too, has been sued by shareholders. If Freddie's settlement cost it $410 million, what's Fannie's going to cost? If I were a betting man (and I'm not) I'd wager that it could be close to $1 billion. I wonder how Fannie's directors will react to that?"

"China: A surge in the number of vacant and newly constructed apartment buildings in that fast-growing (sort-of communist) nation is fueling press reports that a shakeout might be just around the corner. Speculators are playing a key role in the boom, and low- and moderate-income families are being priced out of certain markets. Sound familiar?"

"A Colorado insurance regulator told Congress on Thursday that a 'black market' exists in which real estate agents, homebuilders, lenders and mortgage brokers are demanding and receiving illegal kickbacks from title insurance firms."

"The Fed is confident that this slowdown and disinflation will happen as a result of monetary tightening that has already occurred since US interest rates started to rise in June 2004. The Fed sees the softening US housing market as the main driving force of the coming slowdown. Indeed, it is so convinced about housing market weakness that Mr Bernanke’s main concern is to prevent 'a more pronounced housing slowdown' than is necessary."

"But what about the awkward implication: that the Fed will sit back and do nothing, even if inflation continues to accelerate in the months ahead? Mr Bernanke did indeed seem worried about this contradiction, since inflation responds even more slowly to monetary tightening than does economic growth."

"What will happen if inflation continues to accelerate in the next few months, while the US economy is slowing? Will this not revive the ugliest word in the economic headlines of the 1970s and 1980s, 'stagflation?' And what impact will this have on the financial markets, especially on the bond markets?"

"The 'inflation vigilantes' in the bond markets have spent the past few years in peaceful slumber, but Mr Bernanke’s apparent indifference could turn out to be a rather alarming wake-up call."