The Housing Bubble

And the hits just keep on a comin’….

Harley to cut 1,100 jobs as 4Q profit falls
Friday January 23, 7:18 am ET
Harley-Davidson to cut 1,100 jobs over 2 years, shutter facilities as 4th-qtr earnings plunge.

MILWAUKEE (AP) — Harley-Davidson Inc. said Friday it will cut 1,100 jobs over two years, close some facilities and consolidate others as it grapples with a slowdown in motorcycle sales.
The company also reported its fourth-quarter profit fell nearly 60 percent, and said it is slashing motorcycle shipments in 2009 to cope with reduced demand.

The iconic motorcycle maker said it will consolidate two engine and transmission plants in Milwaukee into its facility in Menomonee Falls, Wis. It will shrink its paint and frame operations in its York, Pa., plant and close its distribution facility in Franklin, Wis. Harley also said it will end its domestic transportation fleet operation.

The company said 70 percent of the job cuts will occur this year and the rest in 2010. The cuts will result in one-time charges of $110 million to $140 million over 2009 and 2010. Once they are finished, the cuts will save between $60 million and $70 million per year.

It has been reported that Geither the tax dodge was a ’smart’ guy, however he made a glaringly ignorant comment yesterday. If we head down the path to protectionism then we can forget a recession because we will get a depression. Those that don’t read, know or understand history do indeed repeat it.

Geithner blows up the world
January 22nd, 2009
By David Goldman

Geithner’s comment today that President Obama believes that China is “manipulating the yuan” takes us straight into Great Depression territory. With Paul Volcker at his side, I had hoped that Obama would be perspicacious enough not to touch the third rail of global economics, namely protectionism. Nothing, absolutely nothing that Obama might have done could be worse than this. If the US looks at the global jobs market as a zero-sum game in which the US has to claw back manufacturing jobs which China has taken away, we are back to beggar-thy-neighbor and the 1930s.

Notice that the 10-year Treasury has backed up from a low of 2.05% to 2.65% today, even while the stock market and the economic outlook have cratered. During the past several days, the market has sold off essentially everything: stocks, credit, and Treasuries. Only oil and gold are up. The cost of credit protection on the leading sovereigns, including the US, has jumped. What is happening?

As I observed yesterday, the immediate risk to sovereign credit, the risk of Icelandization of Ireland and perhaps even the UK, lies in the banking crisis. If governments take over banks on the premise that their asset books are worthless but their liabilities must be met, the weight of bank liabilities is sufficient to sink government finances. It is the threat of bank nationalization and the likelihood that the US government will have to assume massive amounts of additional debt that is crushing the long end of the Treasury curve and forcing up the price of credit protection on the US sovereign.

The alternative, hinted at by Paul Volcker after the presentation of the Group of 30 recommendations on the banking system, would eliminate mark to market accounting, stop the writedowns at banks, and run banks on a cash-flow plus recovery basis. There is a sufficient base of viable assets to keep the banks in positive cash flow if financed at zero interest by the Fed, and effectively zero capital cover (since the banks really don’t have any capital).

All this presumes that the major creditors of the US, notably China, will continue to support the Treasury market in a huge way. A cynic might think that Geithner’s statement is designed to unleash a wave of speculation that China will revalue, leading to enormous capital inflows into yuan and Chinese government intervention, which would balloon Chinese reserves, and increase Chinese purchases of Treasuries. No-one in this business, though, is that subtle or that smart.

It appears simply that Obama is playing to his labor constituency. Resorting to protectionism could have cataclysmic consequences in the midst of a 1930s-style contraction of world trade. If China were to shift even a fraction of its reserves into gold, the consequences for the dollar would be frightening. We already are seeing hairline fractures in the street cred of the US Treasury, in the form of a LIBOR+75 cost of default protection as well as the violent backup in the long end of the Treasury curve. That should flash a red danger signal at the Administration.

The way out of the recession (might as well say depression) lies through Beijing, Francesco Sisci and I wrote in November. This is the worst economic news I’ve heard all year.

Step one, partial, step two full blown. The boyz bit into the gubment cheese and found out it was connected to a great big rat trap.

Citigroup, Bank of America ‘Nationalized’ as U.S. Calls Shots
By Ari Levy

Jan. 23 (Bloomberg) — The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup Inc. and Bank of America Corp. may be nationalization by another name, according to former bankers and regulators.

Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.

“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”

While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.

Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.

Government Decides

“Some of these traditional management decisions are being made by the government,” said Donald Powell, 67, who was chairman of the Federal Deposit Insurance Corp. from 2001 to 2005, and now lives in Amarillo, Texas. “Shareholders don’t have a voice in some of these things that are occurring.”

After the Treasury’s initial investments in October failed to adequately shield Citigroup and Bank of America from mortgage- related losses, the companies returned for more capital along with protection from hundreds of billions of dollars in potential defaults.

Citigroup needed $20 billion in November on top of an earlier $25 billion injection, which still wasn’t enough to keep the company from splitting apart after posting a record deficit on Jan. 15. The same day, Bank of America received $20 billion to cover losses tied to Merrill Lynch & Co. after the two companies received a combined $25 billion in October.

Off course, but worth paying attention to I think. Could be some tight supplies coming to some areas this year…

Calif. farmers slash planting to cope with drought
In drought-stricken California, farmers cut back spring planting to cope with drought
* Garance Burke and Tracie Cone, Associated Press Writers
* Friday January 23, 2009, 12:11 am EST
SAN FRANCISCO (AP) — Some of the nation’s largest farms plan to cut back on planting this spring over concerns that federal water supplies will dry up as officials deal with the drought plaguing California.

Farmers in the Central Valley said Thursday they would forego planting thousands of acres of water-thirsty canning tomatoes and already have started slashing acreage for lettuce and melons.

As growers in Fresno and Kings counties prepared to sow their dry fields with tomato seeds this week, the giant water district that supplies the irrigation for their sprinklers warned them to think again.

Computer models of the state’s parched reservoirs and this year’s patchy snowfall showed shortages so extreme that federal officials could slash supplies down to zero, managers at the Westlands Water District told their members in an emergency conference call.

“We thought it was important to talk to our growers so they can make important planting decisions,” said Sarah Woolf, a spokeswoman for Westlands, the coalition of giant agribusinesses in the state’s fertile interior.

Officials with the U.S. Bureau of Reclamation and the state Department of Water Resources plan to announce next month how much water they’ll speed to farms and cities.

But farmers say that’s too late, since they need to decide what to plant now, as they negotiate with banks for crop loans. Growers who are struggling to revive shriveled vines and dying trees say they’re panicked at the thought of having to solely rely on well water of dubious quality.

“It’s ugly,” said Shawn Coburn, who grows 1,000 acres of almonds in Fresno County. “I’ve heard from probably eight to 10 guys whose lines of credit are frozen until they can show they have water.”

Coburn said he is abandoning tomatoes and will use his brackish well water to try to keep vineyards and almond orchards alive. Other growers are choosing instead to let their nut trees go dormant, which has meant less work for the beekeepers who travel to central California each year to pollinate orchards.

Farmers’ decisions to fallow thousands of acres during last year’s drought cost $260 million in crop losses statewide, as well as hundreds of jobs. In the tiny farm community of Mendota, in the heart of Westlands farming country, the unemployment rate is nearly 40 percent, city officials report.

Elissa Lynn, a senior meteorologist with the state water agency, said the forecast so far suggests conditions will not improve this spring.

“It’s pretty clear we’re heading into the third dry year in a row,” Lynn said. “We’ve only gotten one-third of the rainfall we desperately need, and we’re already halfway through the winter.”

Guess the last old fat grandpa with a p.t. just bought his, no market left.

Hey deflationists, what’s up?

new all time high in euro gold today (except for brief intraday spike in October), and $gold close to breaking out from the medium term downtrend as well. Looks to me like the market is sniffing some wildly inflationairy policies around the corner.

On another note related to housing:
Squatting wars in Netherlands are on the rise, with strong violence used against the squatters. Squatting is primarily a political issue here, especially in Amsterdam which is (and has been for generations) ruled by rich people with a certain Middle Eastern background. They will always protect property rights, even if the owners leave their buildings abandoned and falling down for many years.

Things are starting to look more and more like the late seventies, just before the big -40% housing crash. In those times tanks rolled through the streets of Amsterdam to protect the speculators and politicians from angry citizens. Fortunately for the squatters the Dutch army is overstretched at the moment, fighting some dumb US war in Afghanistan. Or maybe this is not good, because speculators now use foreign mobs against the squatters, and politics has clearly no intention to stop them.

Just one of a dozen reasons to start chunking these arrogant pukes off the roof tops.

Merrill’s Thain Said to Pay $1.2 Million to Redecorate Office
By Peter S. Green

Jan. 23 (Bloomberg) — John Thain, the former Merrill Lynch & Co. chief executive officer ousted yesterday, spent $1.2 million redecorating his downtown Manhattan office last year as the company was firing employees, a person familiar with the project said.

Thain hired Los Angeles-based decorator Michael Smith, chosen by President Barack Obama and his wife Michelle to redecorate the White House, CNBC reported. Thain paid Smith $837,000 and his purchases included $87,000 for area rugs, $25,000 for a pedestal table and $68,000 for a 19th century credenza, CNBC said.

Thain, 53, oversaw the sale of Merrill Lynch to Bank of America Corp. last month, and took over the bank’s wealth management and corporate and investment banking divisions. Merrill’s $15.4 billion fourth-quarter loss forced Bank of America to seek additional aid from the U.S. government, which last week agreed to provide $20 billion in capital and $118 billion in asset guarantees.

“Spending company money on a lavish re-do at a time when Merrill’s finances were rocky sends the wrong message,” said Amy Borrus, deputy director of the Council of Institutional Investors. “Thain was compensated well enough to foot the bill himself if he wanted such an upscale redecoration.”

“It is pretty surprising that John Thain would need to spend that much on a power office in this economy,” said Sheila Bridges, a New York interior designer who decorated former President Bill Clinton’s Harlem office. “I do hope the designer’s fees were also included in that price tag.”

A reasonable prediction….perhaps.

“China is going to suffer even more than the United States. At least in the short run. America will lose its position in the world. The dollar will lose its status as the world’s reserve currency. Americans will be beaten up - first by deflation, then by inflation. When it is over, they will be poorer, wiser, and probably better people… With a little luck and good leadership, maybe they can sink into a graceful post-imperial poverty…followed by genuine prosperity.” ~ Daily Reckoning

“Americans realized that they were trillions of dollars short of funding their collective retirement. The national illusion that capital gains would substitute for savings has disappeared, and Americans are now attempting to save as much as they can. If they all try to save at the same time by shutting down expenditures, of course, the economy will collapse.” ~David P. Goldman, Bank of America.

This is the bottom line. If we consumers cut back on spending and attempt to pile up some savings the U.S. economy will tank. But if we don’t clear our debt and start saving WE will tank! To paraphrase Woody Allen….we are at a fork in the road. One road leads to catastrophe, the other to calamity. “Give us the wisdom to choose wisely.”

Marijuana = the next bubble

http://www.examiner.com/x-1960-LA-City-Buzz-Examiner~y2009m1d22-Marijuana-Inc-on-CNBC-at-10PM-tonight-PST-report-on-billion-dollar-industry-in-Calif

Remember how we kept wonder what the nice folks over at HGTV will do since their re estate always goes up shows might now go over soo well.

Seems renting is the new black

http://www.hgtv.com/income-property/show/index.html

Before-and-After Makeovers From Income Property

See the amazing transformations that happen after host Scott McGillivray helps homeowners spruce up a space in their home to make it rent-worthy

“… Americans are now attempting to save as much as the can. If they all try to save at the same time by shutting down expenditures, of course, the economy will collapse.”

The is when those few who were saving while the many were spending get to buy up assets on the cheap.

The beat goes on…, and cash remains king.

Report from the local TV news last night….

Apartment that went condo still has no separate meters for water so pay the water bill to the city out of HOA dues. Half of units are not paying, so the HOA is not paying the water bill… so, the city shut off the water.

Wonder what that will do to the property value.

CNBC this morning they are having a round-table of experts and they’re talking about getting the debt flowing again. One brings up the fact that households really need to delever, and is getting the debt flowing again really the answer. SO, a discussion starts to turn somber with stuff about government replacing the consumer, but how long can that last, then defaults the way to delever households…

And guest host jumps in with, let’s not let this spiral into negative. We’re going to do what is necessary to get debt flowing again, so let’s focuse on that….

Ignore the man behind the curtains… focus on the lie…

Can someone please explain to me why Realtors charge 6% as comission?

I really do not understand where the number came from and why people put up with it.

Is it the same throughout the country?

Thanks you

Trouble in paradise from the Easthampton Star:

Figures for ’08 Are Gloomy

By Kate Maier

(01/21/2009) Real estate reporting agencies have started to come out with market figures for 2008, and it is no surprise that the numbers are down across the East End.

George Simpson, the president of Suffolk Research Service, a data collection company based in Hampton Bays, reported that the median price of home sales dropped 12 percent in 2008 compared to the year before. This was for the Towns of Southampton, East Hampton, Shelter Island, Riverhead, and South­old.

The median price in Southampton dropped almost 14 percent, but total dollar sales there did slightly better than in East Hampton, dropping by 33 percent. The total number of homes sold in Southampton dropped from 1,329 in 2007 to 882 in 2008.

I drive 7 miles to work, 5 through mixed residential patchworked with strip malls, and the last 2 on the freeway through commercial/industrial. In the 5 mile drive through the mixed residential, I’ve noticed RVs parked in yards. Some for sale, others set up to be lived in.

SO, yesterday I decided to count.
For sale: 2 class A, 1 class C, 2 5th wheel, 1 hard side trailer, 2 pop-up tent trailers, 1 pickup camper.
Being lived in: 1 class C, 2 5th wheel, 1 pop-up (hope they are out of there by summer)

other for sale: over a dozen houses, flat bed truck, large trailer that looks to be for hauling construction equipment, seceral dozen pickups/SUVs.

It seems to me, EVERYONE in this part of town is trying to unload assets.

As I mentioned a couple of days ago, my company will lay off probably 20% of its workforce or so. I work for a semiconductor company, and I talked to a couple of my foreign friends that work with me with H1 visas. It is a scary, scary situation for them; they said they have to leave the US within a couple of weeks after being laid off.

I wonder if we will be hearing about massive migration of H1 workers back to their home countries due to current lay-offs.

In the interest of nonpartisan politics, THIS is a Democrat I wouldn’t mind getting to know better……..

The new babe in town:

http://www.nypost.com/seven/01232009/news/politics/dave_picks_gillibrand_as_liberal_dems_ho_151502.htm

One of my best friends just lost his job. What’s so annoying is the company just “expanded” into a new office. If they had stayed in the old joint, they’d be better prepared for this…

What does every stupid damn company do this?

Jan. 23 (Bloomberg) — U.S. companies are reducing dividends at the fastest rate in half a century, squeezing investors who depend on the payouts more than ever to boost returns.

On Wednesday, I’m listening to one of the cable news channels while driving to the store (XM radio) and I catch the news event where The One signs an executive order banning lobbyists from moving directly to the govt (gotta wait two years) and govt folks from moving directly to a lobbying career (gotta wait until he leaves office). I thought, “Wow, that’s a break with the past.”

Then the VERY NEXT DAY The One decides to make not one but TWO exceptions to that order! So is it even worth the paper it’s written on?

Carter II indeed.

Jan. 23 (Bloomberg) — Schlumberger Ltd., the world’s largest oilfield-services provider, said fourth-quarter profit fell 17 percent as a collapse in petroleum prices slowed exploration spending by customers….

CNBC

“‘Bad Bank’ Regains Favor As Solution for Toxic Debt”

“Analysts say both Wall Street and Washington are largely resolved to creating a government-run entity to buy troubled assets from banks and other struggling financial institutions. It’s just a matter of how and when—and some say, the sooner the better.”

I say, great idea. We do it RTC style. Chapter 11 style where we buy up the assets at the price needed to keep depositors whole. Equity holders get zip. Bond holders, if they agree, get stock in exchange for bonds. If they do not agree, chapter 7.

NO WAY to we buy this toxic garbage at a price that let’s the Wall Street crooks continue to operate as “normal”.

Troubled OneUnited Bank in Boston didn’t look much like a candidate for aid from the Treasury Department’s bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives’ use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.

Bankers, regulators and politicians complain of a secretive and opaque process for deciding which banks get cash and which don’t. The goal of aiding only banks healthy enough to lend — laid out by the Treasury when the program began — clearly seems to have shifted, but in a way that’s hard to pin down and that the Treasury has declined to explain. Part of the problem is that some powerful politicians have used their leverage to try to direct federal millions toward banks in their home states.

“It’s totally arbitrary,” says South Carolina Gov. Mark Sanford. “If you’ve got the right lobbyist and the right representative connected to Washington or the right ties to Washington, you get the golden tap on the shoulder,” says Gov. Sanford, a Republican.

Several Ohio banks received funds after Ohio’s congressional delegation complained bitterly about the treatment of Cleveland-based National City Corp., which regulators forced into a merger rather than provide with cash. And in Alabama, the state’s top banking official says a windfall there — five banks are slated to receive funds — is testament to the influence of two powerful Alabama lawmakers who sit on key congressional committees.

“…Just look at the data released yesterday in the US. Housing starts fell another 16 per cent year-on-year in December, to an annualised rate of 550,000 - the lowest rate since records began in 1959. Economists believe there is an excess of about 1.5m homes across America and a natural demand for housing each year of just a tad more. That means supply will not come back into balance with demand until at least the second half of next year, at current building rates….”
LEX

A couple days off to have fun in the woods. I’m going back on my snowmobile, more fun than these markets!

Re: “There will be no inflation without wage increases.”
Wrong. Wage increases come after the inflation.

Beware Simple ‘Fixes’ to a Complicated Financial Mess

By Steven Pearlstein
Friday, January 23, 2009

“…

At the same time, rather than using taxpayer dollars directly to recapitalize banks, the Treasury could help banks attract private capital by offering some sort of guarantee of any newly issued preferred stock, much as it has already done for newly issued debt. As payment for its guarantee, the government could demand warrants for up to 49 percent of a bank’s common stock, which could be exercised in the future if and when the stock price recovers. Such a guarantee program would also avoid the market-roiling specter of nationalization, force shareholders to give up a sizable share of a company, and offer taxpayers a reasonable return on their investment and risk-taking.

There is a way out of this mess, if only we have faith in the people chosen to manage the process and the patience to see it through. It will almost surely require the commitment of additional funds beyond the original $700 billion, and it will involve several more rounds of trial and error. But most of all, it will require us to resist the fetching idea that there is a simple, quick and relatively painless way to put a complex financial system back together again. ”

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/22/AR2009012203626.html

“… the Treasury could help banks attract private capital by offering some sort of guarantee of any newly issued preferred stock, much as it has already done for newly issued debt….”

Unless the bond holders of WaMu get reimbursed for the government theft, no reasonable bond investor will buy new bank debt when there is government confiscation without due process. Government guarantee or not.

Troll Bros…

Just heard a report that the Troll bros are offering a 30yr. fixed mort. @ 3.99%. 720 credit score min., 20%dn. on any of their houses priced @ $417,000.00 & up. They would not say who is underwriting the loans.

Washington, DC named best worldwide for real estate buys

Forbes Magazine’s Matt Woolsey published an article which ranks Washington, D.C. as the number one best city in the world for real estate investment, ahead of London and New York City, which are ranked number two and number three.

The rankings come from the Association of Foreign Investors in Real Estate, which surveys its 200 members about global investment opportunities. Washington, D.C. ranked highest because of the proposed $1 trillion in government spending. The new programs will need commercial space and new employees will need places to live, so investors are looking for both commercial and residential investment opportunities in the area.

Other US cities besides New York and Washington moved up on the list of places where investors are puchasing real estate, including San Francisco, Los Angeles and Houston, all among the top ten best places for real estate investing around the world. Cities in the Asian Pacific region dropped as investors favor the long-term stability of the US and are fearful that emerging countries may take a harder hit from the global economic crisis.

http://www.examiner.com/x-612-Residential-Real-Estate-Examiner~y2009m1d22-Washington-DC-named-best-worldwide-for-real-estate-buys

“Build up some cash reserves. Got that? Hold Cash! Cash in the mattress. Cash in the bank. Certificates of deposit. Don’t try to get too fancy. Just save some cash where you can get hold of it in case you need it pronto.”

~Byron W. King

watching the explosion in the Gold market today I’m waiting for Mr. Geithners announcement that they are starting to withdraw liquidity (they promised to do that quickly when necessary …).

I’m not holding my breath

S. Fla. repossessions up 160%, housing starts tumble

More than 26,000 properties in South Florida went back to lenders last year – a 160 percent increase over 2007

In Miami-Dade County 12,059 went back to lenders in 2008, up from 4,539 the previous year.

Broward County 10,072 homes repossessed, up from 3,686 in 2007.

Palm Beach County 4,109 bank-owned properties in 2008, an increase from 1,862 REOs in 2007

“To understand the magnitude of the increase, consider that Broward County alone had as many REOs in 2008 as did the entire tri-county South Florida region for all of 2007,” Condo Vultures principal Peter Zalewski said.

Real estate always goes up!

tampabay.com/breakingnews/2009/01/clearwater-home.html

(yes, I was a pyro as a teen)

“If stupidity got us into this mess, why can’t it get us out?”

-Will Rogers

Hahaha, I clicked the NAR’s ad above (unchain my house) and modified their letter, below:

I’m writing today to urge you NOT to pass a housing plan. Any such plan will just delay the inevitable price correction in real estate. America doesn’t realize it yet, but LOWER house prices are a huge boon to the economy. We’ll be able to *actually afford* the payments on our own, and we WON’T NEED subsidized interest rates or tax credits. We also won’t be spending 50% of our income on digs. This is what will grow our economy and benefit all Americans.

There is no housing crisis. This is just the aftermath of the REAL crisis in lending and unregulated securitization, which happened 5-6 years ago. Let it pass, because the taxpayers won’t take kindly to being asked to pay for someone else’s Hummer or boat or vacation they HELOC’d.

Signed,

P.S. Ironically this email comes from the National Association of Realtors, who is trying to get me to ask you for any plan that will prop up prices. All they want is a fat commission. I want cheaper digs.

Delays in Bank Aid Spur Frustration
As Requests Pile Up, Executives Leery Of Treasury’s Silence on Bailout Decisions

A massive backlog of bank applications for emergency federal aid has provoked widespread frustration over how the Treasury Department is allocating rescue funds and raised suspicions among executives that political connections are playing a role, industry officials and regulators say.

The delay is pushing bank executives across the nation to lobby their lawmakers, financial groups and friends within the federal government to try to expedite their requests.

“I think there is a suspicion among a large number of our members that it’s who you know rather than the merits of the application,”…
WaPo

And what else is new, Washington has always been “Who do you know”. And the stimulus package is being fought over which companies will get the free moneys. The companies with the grease will get the first crack. So look on the ‘donors list to congress people’ for the investment opportunities of the next decade. Actually, I will start an ETF for that purpose. NASDAQ: symbol BRIBES

Wadda you think Faster, WMBZ, Voz, Marketmaven?

Imagine that! There’s politics involved in political solutions! Try not to act too surprised at the results:

From WSJ online-

Barney Frank Goes to Bat for Lender, and It Gets an Infusion

Troubled OneUnited Bank in Boston didn’t look much like a candidate for aid from the Treasury Department’s bank bailout fund last fall.

The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives’ use.

Nonetheless, in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.

As President Barack Obama’s team sets about revising the $700 billion TARP program, following last week’s release of the second half of the money, among the issues it faces is widespread dissatisfaction with way the program has been implemented. Treasury Secretary nominee Timothy Geithner, testifying Wednesday at his Senate confirmation hearing, acknowledged “there are serious concerns about transparency and accountability…confusion about the goals of the program, and a deep skepticism about whether we are using the taxpayers’ money wisely.”

Bankers, regulators and politicians complain of a secretive and opaque process for deciding which banks get cash and which don’t. The goal of aiding only banks healthy enough to lend — laid out by the Treasury when the program began — clearly seems to have shifted, but in a way that’s hard to pin down and that the Treasury has declined to explain. Part of the problem is that some powerful politicians have used their leverage to try to direct federal millions toward banks in their home states.

“It’s totally arbitrary,” says South Carolina Gov. Mark Sanford. “If you’ve got the right lobbyist and the right representative connected to Washington or the right ties to Washington, you get the golden tap on the shoulder,” says Gov. Sanford, a Republican.

Here’s the link to the WSJ Online discussion of Barney Frank’s pet bailout and what a slice of politics looks like:

http://tinyurl.com/d75axl

Banking System Liabilities to GDP:
Eurozone 335% [Est. $41 trillion]
United States 65% [Est. $9.8 trillion]

Got money?

“$140 Million in Texas Multifamily Assets up for Grabs
Mission Capital Advisors LLC, a New York-based loan sale advisor, has been selected to offer mortgage loans secured by 15 recently renovated multifamily properties in Houston and Austin, TX, with an outstanding balance of more than $140 million. The seller is an unidentified. Mission Capital is initially soliciting indicative bids from interested parties in acquiring the defaulted loan, bids which are due Jan. 27. The loans were issued a year ago and mature in February 2010. Note A was issued in the amount of $133 million and Note B was for $9 million and was used for capital improvements. The class B multifamily apartment properties in Houston and one in Austin contain a total of 4,568 one-, two- and three-bedroom apartment units with an average size of 804 square feet. The majority of the properties, which have undergone $7.3 million in upgrades in the past year, offer amenities such as a swimming pool, laundry facilities and covered parking.”
CoStar

Exit Queen playing ‘Another One Bites the Dust’

Skyworks just laid off 150 these layoff bombs are hitting closer to home. Won’t be long now and we’ll get a salvo here. What can you do but just ride it out ….. and not spend any money and Especially not buy a house.

Even CNBC, which always has a BS reason for stocks to rebound, can’t come up with a reason this time…..

What is up with the 3-4% bounce off bottom for S&P???

WhooooHOOOOOOO! Lookit this! Front page of my local paper, The Olympian. (which is feeling thinner lately. Ad revenue going away?Oh, and all those staff layoffs…)

‘County home sales mark six-year low’

http://tinyurl.com/at9mzx

‘Year-end data show that 3,175 single-family residences and condos were sold in the county last year, down 24 percent from the 4,180 units that sold in 2007 and down nearly 35 percent from the record sales year of 2006.’

BUT DON”T WORRY! STOP WORRYING!

‘Other encouraging signs for Thurston County include mortgage interest rates that remain at historic lows between 5 percent and 6 percent, and lower inventory levels, which could help to stimulate this year’s housing market, he said. Since the summer, active listings have fallen about 600 units, Jorgenson said…’

BWAHAHAHAHAH! *gasp, gasp for breath * BWAHAHAHAHA!

Oh, gosh, I suffered through several stakeholder meetings on local housing/water stuff and hearing those utter as*shat realtor/builder/developer wh*res, how I HATE them so much; this’d be in in the last few years, and I’d complain about stuff, loudly wonder how they were going to protect water quality whilst building in aquifer recharge areas and wetlands, little ticky stuff like that… I’d question the validity of their lying numbers and buildable lands projections, I heard again and again—’it’s different here! And it doesn’t matter if it isn’t because we want to make lots of money.’

Excuse me, everyone. I have to go have a lie-down for a bit. My head’s about to explode from joy. Can’t have that! I wanna be around to watch the rest of the funnnnn! BWAHAHAHAHAA!

Moody’s Investors Service on Friday cut its ratings on The New York Times Co (NYT.N) into junk territory, saying declining advertising revenues will continue to pressure the newspaper publisher’s earnings.

Moody’s cut The New York Times three notches to “Ba3,” three steps below investment grade, from “Baa3.” The outlook is negative, indicating an additional downgrade may be likely over the next 12-to-18 months.

“NEW YORK (MarketWatch) — Oil futures rallied 6% in a very volatile session Friday, reversing their earlier sharp losses as U.S. stocks also rebounded from their lows. Crude oil for March delivery was last up $2.44, or 5.6%, to $46.10 a barrel on Globex after soaring to an intraday high of $47 a barrel. The rise is “short-covering ahead of the weekend,” said Kevin Kerr, editor of Global Commodities Alert. ”

The news just gets worse and worse, but oil has rallied 43% from it’s trading lows of just a few days ago. Yeah, fundamentals!

Jan. 23 (Bloomberg) — Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, could go out of business “absent a miracle” bolstering its equity and cash reserves, bond analyst Vicki Bryan said today. Hovnanian denied it was in trouble.
…
Hovnanian’s market value has tumbled 98 percent from its peak on July 20, 2005. The builder was last profitable in the fiscal first quarter of 2007. The shares fell 2 cents to $1.63 at 12:57 p.m. in New York Stock Exchange composite trading. The stock hit an 18-year low on Jan. 20.

From Birmingham craigslist:

Reply to: hous-1004684608@craigslist.org [?]
Date: 2009-01-23, 2:38PM EST

Will trade up to 200 ounces of gold for your home on acreage within or immediately around Chilton county Alabama.

Looking for at least 5 acres with a home but will consider acreage without a home.

California unemployment rate jumps to 9.3 percent in December; highest level since 1994

Samantha Young, Associated Press Writer
Friday January 23, 2009, 2:09 pm EST

SACRAMENTO (AP) — California’s unemployment rate jumped to 9.3 percent in December, capping a tumultuous year of massive job losses and a housing slump that has struck most of the country.

The jobless rate announced Friday by the state Employment Development Department represents a jump from the 8.4 percent figure in November 2008.

Excluding farmworkers, California lost 78,200 jobs in December as employers sliced payrolls to deal with the slowing economy.

California’s unemployment rate hasn’t been at this level since January 1994, when the state was coming out of its recession in the early part of that decade, said Stephen Levy, senior economist for the Center for Continuing Study of the California Economy.

“California, like the nation, is in the midst of a terrible and deepening recession,” Levy said. “We all expect the job losses to continue and unemployment rates to go higher.”

The national unemployment rate jumped to 7.2 percent in December.

About 1.7 million Californians were looking for work last month — up by 166,000 since November and up 653,000 since December 2007.

Some 785,200 were laid off, while 125,300 chose to leave their job. The rest were either temporarily employed or new job seekers.

Proof that government spending is not limited to how many bills they can print.

Thickness of an american bill: .0043 inch.
$2.5 trillion ($1 trillion deficit, $700 billion TARP, $800+ billion stimulus) is $25 billion, $100 bills, the largest bills in circulation.

10,750,000 inches tall.
895,833 feet tall
179 miles tall.
Low Earth Orbit starts at about 100 miles up.

Or, if we prefer the end-to-end trick…
6.14 inches long x $25 billion = 2,422,644 miles long. Just a hair over 10x the distance between the earth and the moon at their closest point.

Shame about Harley-Davidson…

Do you know the difference between a Hoover and a Harley ?

It’s the location of the dirtbag !!

Jan. 23 (Bloomberg) — Freddie Mac, the mortgage-finance company now under federal control, said it will ask the U.S. Treasury Department for as much as $35 billion more in federal aid.

Freddie, which took $13.8 billion from Treasury in November, said in a securities filing today that its fourth- quarter operating losses will again drive its net worth below zero. The company also said it settled a dispute over Washington Mutual loans with JPMorgan Chase & Co.

Jan. 23 (Bloomberg) — Treasuries fell, with 30-year bonds posting the biggest weekly loss in almost 22 years, on concern that debt sales will increase as the government boosts spending to ease the deepening economic slump.

HB Readers:

The next big shoe, that is dropping now, as if in slooow-mooooootion, is Commercial Real Estate (CRE). The effects of the CRE plummet will feel very much closer to home for all of us. We will see a large number of Regional and Local Banks disappear; most will be bought or absorbed. And I believe that, once it begins, it will happen at lightning speed.

The difference between the local and national banking picture is that much more of the CRE portfolio ’stayed home’ with the local banks. Yes, some was securitized, but that portion is already mixed with the bad RRE securities being batted about like a hot potato.
And the negative effect of a failing commercial building or complex is generally more significant in magnitude than a bad home loan on a small local or regional bank.

In this round, there will be no Big Brother system in place to catch all of the fall-out, and mask the bad news, as has happened at the National level. I expect that it will be much more unsettling in some locales, as Banks close in rapid-fire fashion, people go for days without news about their deposits, and the FDIC struggles to keep up with the quantity of failures.

After all, we have had a massive expansion of Bank brick-and-mortor, and its is highly likely that the recession will cause a banking contraction to at least match the prior growth.

Keep your ear to the ground with regards to your own local banks. I have tended to bank with smaller banks because I like the personal service and the opportunity to get to know the President, Vice-President, etc. All are at risk.

Have a great weekend!

Niel is right.

Condo vultures coming in for landings in West Palm Beach

By JEFF OSTROWSKI

Palm Beach Post Staff Writer

Monday, January 19, 2009

For two years now, we heard that vulture investors were circling West Palm Beach’s overbuilt condo market - but none of the predicted bargain-basement deals closed. Maybe the construction cranes scared off the scavengers?

In recent weeks, though, the vultures have arrived in force.

One unnamed vulture investor is poised to pay $150 a square foot for 140 units at The Whitney at 410 Evernia St., people familiar with the deal say. That’s much less than the $330 a square foot or more paid by buyers who closed in 2007.

In December, lender iStar Financial took 140 of the The Whitney’s 210 units from the developer in a deed-in-lieu of foreclosure. CB Richard Ellis broker Robert Given is marketing the units for iStar. He confirmed that the condos are under contract but wouldn’t disclose other details.

The Whitney isn’t the only prey for vultures. In late December, Ed Dunlap, head of a Pennsylvania roofing company, paid $5 million, or $165 a square foot, for 26 units at The Edge. That’s well below the $368 a square foot paid by the 155 buyers who closed in 2007.

The vultures are getting big discounts from boomtime prices, but Neil Merin of NAI/Merin Hunter Codman says they still might be paying too much.

How will pay freezes (or cuts) square with plans to stabilize housing by propping up home prices? Brick wall, meet fast-moving automobile…

Pay freezes hit workers _ White House not spared
By JEANNINE AVERSA – 1 day ago

WASHINGTON (AP) — What do Tropicana Casino and Resort, Avis, Yahoo and the White House now have in common?

They’re all freezing the pay of some of their workers. It’s part of a growing trend by employers facing the fallout — economic and political — from a brutal recession.

For companies, pay freezes are a key cost-cutting tool for surviving hard times.

For President Barack Obama, who ordered a pay freeze for White House employees earning over $100,000 a year, the move on his first full day in office sent a message to a nervous country: We’re in this together.

“During this period of economic emergency,” Obama said Wednesday, “families are tightening their belts, and so should Washington.”

So we did an ‘Oly’
we are out on the sleds, riding safely (no more than a 6 pack/person), when we got to a stop sign and looked at my friends 17 yr old grandson and he is soaked. He was wearing a “hot rod racing POS helmet” and couldn’t drink through the helmet, typical teenager. All the beer was on him, damn his gramma was teed off that he wasted “that fine beer”.

Now back to my house and instead of the cheap stuff (Capt Morgan’s, Admiral Nelson’s or Montgay) they go for the Barbancourt! Bottles bite the dust. Oh well the sacrifice to go sledding.