The Housing Bubble

WASHINGTON (Reuters) – The pace of sales of existing homes in the United States rose 2.9 percent in April, according to an industry survey on Wednesday that supported views the three-year housing recession was near a bottom.

The National Association of Realtors said sales climbed to an annual rate of 4.68 million units from a downwardly revised 4.55 million pace in March, initially reported as 4.57 million. That was slightly higher than market expectations for a 4.66 million-unit pace.

The inventory of existing homes for sale rose 8.8 percent to 3.97 million. The median national home price fell 15.4 percent from the same period a year-ago to $170,200.

Put a fork in retail real estate:

http://tinyurl.com/pz2k2y

“Gary London, president of London Group Realty Advisors, said he expects San Diego’s retail real estate market to hurt for at least the next 10 years. And with increasing online retailing, he’s not sure it will ever come back as strong as it was earlier in the decade.”

“It’s going to take at least a decade, except for revamped retail,” London said, adding Internet retail will take an ever-larger bite. “There’s going to be a major compression in this sector for a long time.”

“London said it was simply a case of overbuilding. He said during an approximately three-year period in the middle of the decade when consumer demand had climbed 14 percent, retail construction had increased by 50 percent.”

“And that was in good times. The most important thing is I don’t think consumers are going to spend like they did at least for another decade. They won’t be able to use their homes like they did for equity loans anymore,” London added. “We haven’t begun to see the impact of this yet.”

Another perspective

By Bob Willis

May 27 (Bloomberg) — Home resales in the U.S. gained in April as foreclosure auctions and improved affordability spurred bargain hunters.

Purchases increased 2.9 percent to an annual rate of 4.68 million, close to forecasts, from 4.55 million in March, the National Association of Realtors said today in Washington. The median price slumped 15 percent from a year earlier, the second- biggest drop on record, and distressed properties accounted for 45 percent of all sales.

45% of all sales distressed. Hmmm.

Traveled to Bakersfield yesterday to get new truck tires, smog testing and pick up some new running shoes. Can get things done on my truck cheaper and better there then I can here in Salinas. Can’t even buy the brand of running shoes here in Salinas. Temp’s in Salinas (50-60), Valley’s in the 90’s with bad air quality.

Met someone who was buying a second home in Palm Desert. Said it was a great deal in a gated development of some 5000 homes. He said that he paid for a home inspection but very little was included in the inspection. Bottom line was that in spite of everything he still wanted to buy because it’d be a good retirement place in the future (you guessed it, he was a teacher).

Can’t wait to get into the Sierra’s soon. Will spend 4 days on horseback checking out the wild mustang herds and fishing.

10-year treasury bonds up-up-and-away - broke through 3.5 today up to 3.57 already.

Time for some more QE.

ACH - wanted to address this comment from last night:

This will get interesting. BTW, I do not believe for a second that the economy will “reflate”. We may get inflation, but you cannot force people to borrow.

To which I would say - I very much beg to differ.

(However I wouldn’t necessarily equate reflation with increased debt - one can have increased debt without pumping up the general economy; see WWII for example when debt skyrocketed without a corresponding economic boom - it all depends on how the borrowed money is spent.)

WASHINGTON (AP) — More than 90 percent of economists predict the U.S. recession will end this year, although the recovery is likely to be bumpy.

That assessment came from leading forecasters in a survey by the National Association for Business Economics released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.

About 74 percent of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.

Reuters*: SEOUL (Reuters) - Economist Nouriel Roubini on Wednesday said the end of the global recession is likely to occur at the end of the year rather than the middle, and that U.S. growth will remain below potential afterwards.

“We are not yet at the bottom of the U.S. and the global recession,” said Roubini. “The contraction is still occurring and the recession is going to be over more towards the end of the year rather than in the middle of the year.”

“There is still too much optimism that a recovery is just around the corner,” said Roubini, a professor at New York University’s Stern School of Business and chairman of RGE Monitor, an independent economic research firm.

Roubini, who is widely credited for predicting the current economic turmoil, was speaking at the Seoul Digital Forum.

“A more sober analysis suggests we’re closer to the bottom; there is light at the end of the tunnel, but it’s going to take a while longer, and the recovery is going to be weaker than otherwise expected.”

Once the recession ends, “U.S. economic growth is going to be below potential for at least two years,” he said, amid multiple imbalances in the housing sector and the financial system, and the rise of public debt.

Roubini said the outlook for Asia was more positive than for Europe, Japan and the United States, thanks to stronger fundamentals.

“The latest economic indicators from Korea … suggest there is the beginning of an economic recovery, and growth might be already positive in the second quarter.”

The downside risk, Roubini said, was if advanced countries did not recover fast enough and if China’s rate of growth started to slow again.

Roubini predicted China would post a 6 percent growth rate this year, a “hard landing” considering it grew by 10 percent for a decade.

A robust recovery in Korean, China and other countries in the region would depend upon relying less on external demand and export-led growth and relying more on domestic growth, he said.

The Great Ethanol Scam
Not only is ethanol proving to be a dud as a fuel substitute but there is increasing evidence that it is destroying engines in large numbers

By Ed Wallace

http://www.businessweek.com/lifestyle/content/may2009/bw20090514_058678.htm

…Not one mechanic I’ve spoken with said they would be comfortable with a 15% blend of ethanol in their personal car. However, most suggest that if the government moves the ethanol mandate to 15%, it will be the dawn of a new golden age for auto mechanics’ income….

Bodies Found In Funeral Home Bought At Tax Sale

http://cbs2chicago.com/local/Bodies.Found.Funeral.2.1020590.html

This is going to cause those young people to go right out there and spend, spend, spend….

http://www.nytimes.com/2009/05/27/your-money/student-loans/27forgive.html

Relying on loan forgiveness programs has got to stop. Of course, the alternative method - get a job that pays a lot of money, pay the loans off really quickly while living as if you make almost nothing and then get a job in public service - isn’t always available.

Whew! Thank goodness it’s different in Rochester. Area home prices fell only slightly in 2008.

http://democratandchronicle.com/article/20090527/NEWS01/90527001/Area+home+prices+fell+only+slightly+in+2008&referrer=NEWSFRONTCAROUSEL

Consumer confidence increasing?

What kinda crack are these statistic dolts smoking.

As I’ve repeatedly posted here, what sets this downturn apart from the others is that it’s now the Demographic End of the Line…Boomer’s have paid for all this governmental Ponzi program crap. Now they’re all gettin’ ready to claim their oldster bennies.

‘cept for one small problem…there ain’t no more dough as the Prez acknowledged in a recent interview.

Even the WSJ tiptoes around the size and scope of this finanical tsumani.

From a USA Today article in Drudge…

RE: The government may have a hard time trimming spending to reduce the deficit when the recession ends. The 77 million Baby Boomers— those born in 1946 through 1964 — will start tapping their federal retirement benefits soon, which means increased government outlays for Social Security and Medicare.

“It will be doubly difficult for federal government to reduce expenditures and narrow the deficit as rapidly as they did following previous recessions,” Lonski says. At the end of the last major recession, in 1981, Boomers were in their 30s. Their incomes were expanding, as was their appetite for goods and services.

The Boomers now are in their 50s and 60s and unlikely to keep increasing incomes for long, which means that revenue from income taxes could flatten in the next few years. Also, Lonski says, they are more likely to save for retirement than spend — and consumer spending is a big driver of the economy.

“The American consumer led us out of previous recessions with some semblance of gusto,” Lonski says. “They’re too old to do it now.”

From the Real Estate page Palm Beach Post. Com

Biggest Bargains
West Palm Beach
-50% (last sale $130,000)
$65,000
2 / 1.5 - Foxwood Estates
4953 Alder Dr # C

Palm Beach Gardens
-50% (last sale $330,000)
$165,000
2 / 3 - Prestwick Chase
397-1 Prestwick Lane

Lake Worth
-50% (last sale $400,000)
$200,000
3861 Wry Rd

Boynton Beach
-50% (last sale $240,000)
$120,000
3 / 2 - Mirabella Villas at Boynton Beach
824 Villa Cir # 824
Jupiter
-47% (last sale $340,000)
$179,900
3 / 2 - The Heights of Jupiter
6298 Pompano St

Wellington
-50% (last sale $400,000)
$200,000
4 / 2 - Scribner
2503 Sawyer Ter

Boca Raton
-50% (last sale $230,000)
$115,000
2 / 2 - The Cypresses
9307 Pecky Cypress Lane # 17F

Royal Palm Beach
-50% (last sale $200,000)
$100,000
3 / 2 - Lantern Walk
216 Par

http://atlanta.craigslist.org/zip/1190504183.html

Above is a link to what tenants will leave with their landlords.

Thinking of renting your home? Be careful.

Hip Tip: Whenever 90% (or more) of economists think something is a sure bet, go ahead and bet against them. Remember, HBB’ers, these are the same shills and idiots who told us “RE prices only go up”, and “There is no recession out there!”

WASHINGTON (AP) — More than 90 percent of economists predict the U.S. recession will end this year, although the recovery is likely to be bumpy.
That assessment came from leading forecasters in a survey by the National Association for Business Economics released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.

About 74 percent of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.

“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” said NABE president Chris Varvares, head of Macroeconomic Advisers. “The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines.”

One of the major forces that plunged the economy into a recession was the financial crisis that struck with force last fall and was the worst since the 1930s. Economists say recoveries after financial crises tend to be slower.

Against that backdrop, unemployment will climb this year even if the economy is rebounding, the NABE forecasters predict. Companies won’t be in a rush to hire until they feel certain any recovery is firmly rooted.

You can bet the farm, IMHO, that the economy will, in fact:

1. Collapse to unexpected depths
2. Prove all the “experts” and “leading economists” to be dead wrong
3. Cause the maximum pain to the maximum number of people
4. Prove the case that there is no “free lunch” or free money
5. Provide a compelling argument against the Federal Reserve System
6. Hyperinflate in due course

Don’t know if this was posted earlier - I’ve been out of town all weekend. Saw this headline on my google homepage: Time to Cash Out: Why Paper Money Hurts the Economy

Sure…let’s lose the anonymity of cash and cut the banks in on every financial transaction….

www wired.com/culture/culturereviews/magazine/17-06/st_essay

(I”ll post working link below)

I’m listening to Dave Ramsey right now. He sounds like a well rounded person and his debt reduction message seems to help many people. Then he says “now is the best time to buy real estate in the last 30 years”. I can’t believe his is giving this advice and think this could be misleading to many of his devoted listeners.

Sense from Blodget: (from BusinessInsider)

Phoenix Fixing Its Own Housing Market As Foreclosure Sales Go Crazy
Henry Blodget|May. 24, 2009, 10:18 AM|2
PrintTags: Economy, Housing Crisis, Housing
In Phoenix, the real-estate market is fixing itself with no help from the government.

How? Houses owned by folks who can’t afford to own them are being sold at auction. In some cases, happily, the buyers are then turning around and renting the houses to their previous owners with at rents that are much lower than the previous mortgage payments.

This is the free-market at work. And it’s better than any solution that has so far been floated by the government.

Note the important features of this solution:

Homeowners who can’t afford their houses stop owning them.
The entity dumb enough to lend the homeowner the money to buy the house (or to own the loan) takes the loss.
The bad loan is permanently eliminated, not “modified.”
The homeowner, in some cases, doesn’t even have to leave the house.
The market “clears” fast: Houses that have to be sold get sold, at market prices, instead of piling up as over-supply and continuing to weigh on the market for years.
This is the only solution that has a chance of fixing the housing market rapidly. It will NOT bail out people and banks that paid too much for houses: In most cases, all the equity and some of the debt will be gone. But it fixes the market as fast as possible and paves the way for recovery. And if people can remain in their houses instead of being shoved into the street, the main goal of the government’s bailout will have been achieved.

Welcome to Amerika. If you can’t afford it, you better think of a way to buy it. Or… the bank/government will think of way for you an makd you buy it. Consume, damn it!

Has the Queen of “Great Britain” ever taken back a knighted “Sir” title?

(Hwy’s blogging… listening to Neil Young’s “Living with War”!)

Quiet children, let’s listen in on the whispered wisdom of Sir Greenisrespun:

“…His verdict on former Fed Chairman Alan Greenspan is as astute as it is merciless. A telling moment comes when Ritholtz shows how Greenspan drew the wrong conclusion from the first crisis during his tenure, the crash of ‘87.

“What the astute student learns from the history of speculative frenzies is that the 1987 crash was a unique aberration,” Ritholtz writes. It was a rare combination of a sizzling equity market, a (dangerously) innovative product called portfolio insurance and some antiquated stock-exchange plumbing that together created a short, brutal drop in an otherwise strong economy, he says.

“Greenspan completely missed this point,” he says. “The 1987 crash was the rare exception, not the rule.”

The upshot: Greenspan would respond to crisis after crisis — from LTCM to the popping dot-com bubble — with the same mistaken treatment: more liquidity and lower rates. The Greenspan Put was born.”

Greenspan Flunks Test, Bush Falls Into $15 Trillion Pit:

Review by James Pressley May 27 (Bloomberg)

Filed under: I love you …I love you not!

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!!

Pilot pension scam…

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=13682873&ch=4226720&src=news

A General Motors Corp. bankruptcy filing became almost certain after the 100-year-old automaker failed to persuade enough bondholders to take equity in a streamlined company in exchange for $27 billion of debt. “It’s no surprise at all that a deal that was as unattractive as this one would be soundly rejected,” said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co. in Memphis, who had urged his clients to refuse the exchange offer. “The broader market may react to the headline. It’s like watching a train wreck in a horror firm: You see it coming down the tracks. There might be an initial negative reaction but it’s pretty well anticipated.”

You know its silly and slightly paranoid; this bits list came out late and I thought Ben had been silenced.

Ben Jones escapes from Guantanamo Bay!

I don’t know if it will be the deranged real estate agent, FB, crazed bank president or mass of lawsuits that gets him.

Alrighty, got to put on my tin foil hat. Not sure if the aluminum foil is really working.

From today’s WSJ dot COM: Stressed municipalities considering disincorporation to escape financial woes.

The FDIC classified 305 banks with $220 billion in assets as “problem” lenders as of March 31, an increase from 252 with $159 billion in assets in the fourth quarter.

The FDIC said its insurance fund slumped 25 percent to the lowest level since 1993.

Regulators have taken over 36 lenders this year, including BankUnited Financial Corp. in Florida on May 21 and Silverton Bank of Atlanta on May 1, which combined cost the FDIC’s deposit insurance fund $6.2 billion.

Twenty-one banks collapsed in the quarter, the most since late 1992, as the pace of failures accelerated amid the worst crisis since the Great Depression.

Funds set aside by banks to cover loan losses rose 64 percent to $60.9 billion in the first quarter from $37.2 billion in the year-earlier quarter. Bair said 97 percent of banks were “well-capitalized” at the end of the first quarter.

Really

The deposit insurance fund, generated by fees paid by banks, fell to $13 billion from $17.3 billion in the previous quarter, and first-quarter failures cost the fund $2.2 billion, the FDIC said. The FDIC is imposing an emergency fee to raise $5.6 billion to rebuild the fund.

FDIC-insured banks had net income of $7.6 billion in the first quarter compared with a $36.9 billion loss in the fourth. The FDIC said 22 percent of U.S. banks had a net loss and 59 percent reported lower net income compared with a year earlier.

Capital Raising

Bank capital rose to $82.1 billion, the biggest three-month gain since the third quarter of 2004, with most of the increase coming from a “relatively small” number of lenders including recipients of U.S. aid, the FDIC said. “The good news is that banks have been able to raise a lot of new capital even before taking a more aggressive steps to cleanse their balance sheets,” Bair said.

The FDIC insures deposits at 8,246 institutions with $13.5 trillion in assets. The agency reimburses customers for deposits of as much as $250,000 when a bank fails.

Lets see banks have 82 billion in cash/13 trillion or so lent out = 0.006. ie banks have less than 1 cent to cover any losses on their 13 trillion dollars in lending and other activity. Fortunately the FDIC has another 13 billion plus 5.6 billion from a special fee ???. Real estate is still falling in value. Treasury rates are rising.

I doubt that anyone is reading past days, but I invited my cousin Nancy from Wyoming to read what we’d all said about her rental property on May 24, and to reply by posting in a more current spot. Instead, she posted a reply May 24 under MY screen name, oh well.

Her point was, an agent’s suggested listing price today is a good deal more than an amount she was actually offered last year; meanwhile she lost 20% on stock holdings, so is feeling good about her RE. Says she is cash-flow positive on the rental house. My attitude would be “Sell out at the top!” — but even here on HBB there was some division about whether rural WYO prices were really vulnerable.

It’s the inventory and the crashing prices, stupid!

Rise in sales points to U.S. housing bottom
Wed May 27, 2009 12:40pm EDT
INSTANT VIEW: April home sales better than anticipated

By Lucia Mutikani

WASHINGTON (Reuters) - Sales of existing homes in the United States rose 2.9 percent in April, according to an industry survey on Wednesday that supported views the three-year housing recession was near a bottom.

The National Association of Realtors said sales climbed to an annual rate of 4.68 million from a 4.55 million pace in March. That was slightly higher than market expectations for a 4.66 million-unit pace.

“Most of the sales are taking place in lower price ranges and activity is beginning to pick-up in the mid-price ranges, but high-end home sales remain sluggish,” NAR chief economist Lawrence Yun told reporters.

May 27 (Bloomberg) — Yields on Fannie Mae and Freddie Mac mortgage bonds rose for a fourth day, after yesterday for the first time exceeding where they stood before the Federal Reserve announced it would expand purchases to drive down loan rates.

Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds climbed to 4.3 percent as of 10:25 a.m. in New York, the highest since March 10 and up from 3.94 percent on May 20, data compiled by Bloomberg show.

The Fed, seeking to use lower home-loans rates to stem the housing slump and bolster consumers, said March 18 it would increase its planned purchases of so-called agency mortgage bonds by $750 billion, to as much as $1.25 trillion, and start buying government notes. Rising mortgage-bond yields, driven higher in part by climbing Treasury rates, means the Fed now “faces a challenge to its ability to sustain low mortgage rates,” according to Jeffrey Rosenberg at Bank of America Corp.

I smell fire

Why don’t we ever hear about the “toxic” assets on banks’ balance sheets anymore? A couple months ago this was the big concern and there was much discussion about creating a “bad” bank that would take on all these toxic assets.

Have the toxic assets disappeared with a wave an accounting rule “magic wand”? It seems the market has gone up ever since the mark-to-market rules were suspended.

Are these toxic assets still on the banks’ balance sheets and if so, why are they no longer a concern? Will the issue reappear in the near future?

Add another $50 billion to the government debt load today… according to sources from The New York Times, the government will give GM $50 billion in order to speedily move the company through bankruptcy court. Potential deals with GM debt holders officially fell through last night, as we forecast, and now Chapter 11 is all but imminent. Should this latest GM bailout come to fruition, the U.S. government is expected to receive a 70% ownership stake in return.

The U.S. government is on track to spend (borrow) over $70 billion on GM’s behalf… crazytown.

“General Motors is worth $879 million,” notes Eric Fry in today’s Rude Awakening. “Facebook is worth $10 billion. What else do you need to know about the strength of the American economy?”

Amen.

“The number of single-family homes sold in Lee County with the help of a Realtor in April shot up to 1,468, an all-time record, according to statistics released today by the Florida Association of Realtors today.

That number is 81 percent up from April 2008, when 809 homes were sold.

Meanwhile, the median price of a home sold in April was $85,000, down 57 percent from $200,300 a year earlier and about what that figure was 14 years ago.”

http://news-press.com/article/20090527/BUSINESS/90527032/1075

It must be the drop in realtors popping open that bottle in celebration of those fat commissions of yesteryear.

France reports sharp drop in wine, champagne sales

PARIS (AP) — As wallets grew thinner around the world, fans of Bordeaux, Burgundy and Champagne cut back heavily on their purchases of French wine in 2008, according to French government statistics released Tuesday.

French households drank almost 10 percent less wine last year than in 2007, and exports by French vintners sank 15 percent by volume and almost 30 percent by value in the first quarter of 2009, the agriculture ministry reported.

Many experts and vintners have linked the drop in consumption to the global financial downturn. But another set of government numbers released this week show French households have bumped up their purchasing in recent months, and some view the falloff in wine consumption as an emblem of a larger, ongoing cultural shift.

“In the old days, it’s true that we drank 10 times more alcohol,” said Jacques Delpiroux, who runs a Paris brasserie with his wife and has worked in cafes since 1968. “The bars used to be full morning to night.”

In 1960, the average French adult drank almost 175 liters of wine per year — more than four times as much as the average for an entire household in 2008. And wine has been harder hit in recent years than beer or spirits — the French drink only half as much total alcohol today as 50 years ago.

Gone are the wine-drenched lunches of yore, the early-evening bottles of Bordeaux, traditions now relegated to the realm of cultural lore, said Delpiroux. A few years ago he kept his brasserie open for the after-work crowd, but he now shuts the door at 4:30 p.m.

“It wasn’t profitable,” he said. “It didn’t even pay for the lights.”

http://finance.yahoo.com/news/France-reports-sharp-drop-in-apf-15359340.html?.v=1

Have the toxic assets disappeared with a wave an accounting rule “magic wand”? It seems the market has gone up ever since the mark-to-market rules were suspended.

Are these toxic assets still on the banks’ balance sheets and if so, why are they no longer a concern? Will the issue reappear in the near future?

The toxic assets default/mature slowly; or only as fast as the foreclosure rate or the REO resell rate. Sure the banks are in technical insolvency, but that’s a distance from being in actual insolvency. With the MTM rules, this is allowed to drag on, which means more walking Zombie/Vampire banks — banks whose any shred money from profitable deals will be used to “fill in” the hole of toxic assets. Imagine new blood of the economy being sucked out of the system, to fill old voids.

This is aka the Japan Lost Decade.

The issue is unlikely to reappear as the same crisis anymore. Now that everything is backed by the Fed/Govt, the next failure , if it occurs, will be something grandiose and spectacular on the scale of fed/govt; like a default of the govt (through inflation or outright default), a destruction of USD (and possibly leading to reissuing the national currency, something like a US Bucks, at some terrible exchange rate), failure of countries and govts outright (no longer banks and individual companies). No matter what, a few things will be true for the next crisis:

1. It will arrive unexpectedly, it will extract maximum pain from the system.
2. It will not be easily “shortable” or “hedgable”; govt laws will change dramatically as crisis builds, expect radical things like confiscation or “mandatory national emergency rescue” mandates like making all 401K go buy US Treasuries, or outlaw ownership of Gold, outlaw ownership of puts or short shares, etc.
3. It will be globally complicit, so no single govt will be the savior. Any country out of line will be forced into bankruptcy / war. Thus every govt will maintain same level of corruptness.

On the other hand, maybe we’ve delayed this “next crisis” sufficiently, so that it will recur (with a vengence) sufficiently far away from this crisis, that people attribute it to some other problem/bubble. (i.e. recur 10 years later, right in the middle of baby boomer’s retirement flood, or something)

Tomorrow is my niece’s graduation from high school. I’ll be driving to west Michigan in the morning. I have a growing feeling of impending doooooom at the thought of spending 4 days around my Realtard BIL, who is up from Florida (SW coast) for his daughter’s graduation. He and my sister are in the final stage of packing up their remaining possessions to move down there. Sis and BIL have lived apart for the past year so their brainy child (class valedictorian, woo hoo!) could finish high school in MI with her friends and her beloved band teacher. BIL really wanted to flee MI, not that I can blame him, but since he could sell used houses just as well in MI as in FL, he could have stuck around one more year.

I haven’t seen him in amost a year. Not sure if I can refrain from punching his lights out while there. So if you next hear from me from jail, you’ll know I was unable to control the impulse to take him out.

At one point last year, I came close to cosigning a mortgage on their house in Florida in an effort to ‘help them out’. Fortunately I came to my senses. *shudder* Now that would really have been Dooooom on several levels!

GM is not looking too hot right now. Credit Default Swaps are so beautifully destructive.

http://www.nakedcapitalism.com/2009/05/credit-default-swaps-holders-likely-to.html

http://finance.yahoo.com/news/Stocks-fall-as-home-apf-15357429.html?sec=topStories&pos=main&asset=&ccode=

Put a fork in SD retail RE:

tinyurl dot com / pz2k2y

“Gary London, president of London Group Realty Advisors, said he expects San Diego’s retail real estate market to hurt for at least the next 10 years. And with increasing online retailing, he’s not sure it will ever come back as strong as it was earlier in the decade.”

“It’s going to take at least a decade, except for revamped retail,” London said, adding Internet retail will take an ever-larger bite. “There’s going to be a major compression in this sector for a long time.”

“London said it was simply a case of overbuilding. He said during an approximately three-year period in the middle of the decade when consumer demand had climbed 14 percent, retail construction had increased by 50 percent.”

“And that was in good times. The most important thing is I don’t think consumers are going to spend like they did at least for another decade. They won’t be able to use their homes like they did for equity loans anymore,” London added. “We haven’t begun to see the impact of this yet.”

It’s good thing that the prices of everything humans need & want are controlled by that mystical global phenomena of: “Supply & Demand”…

(Hwy thinks Phillipe’s in LA may have to raise their coffee prices above the current .09 cents per cup)

Run Hwy…run!

“…Coffee prices rose to an eight-month high as supplies of arabica beans dwindled from Colombia, the second-largest producer of the variety, and from Central America.”

Coffee Rises to Eight-Month High as Colombian Output Declines :

By Shruti Date Singh May 27 (Bloomberg)

Come on…join in…and sing along:
“On top of spaghetti. All covered with cheese, I lost my poor meatball,…”

Do they have coin launderettes in Italy?

“…Known as Sicily’s king of supermarkets, Grigoli, 59, is on trial in Marsala for running the food stores and other enterprises at the behest of the Sicilian Mafia.”

“…Unlike over leveraged companies burned in the credit crisis, the Mafia and its cash-based, debt-free business model are breezing through economic hard times. With young, savvy leaders at the helm, organized crime is poised to expand as legitimate companies founder.

“There’s a risk that Mafia organizations can profit from the current crisis by buying control of struggling businesses, infiltrating all regions of the country,”

Mafia Cash Increases Grip on Sinking Italy :

May 27 (Bloomberg) By Steve Scherer and Vernon Silver

There’s that concept again: “Supply & Demand” …it’s almost as efficient as gravity & perpetual motion!

“…With oil plentiful and demand slack, expectations that OPEC will continue pumping at present levels normally would push prices downward.”

“…The upward trend appeared due to optimism that the U.S. — the world’s largest oil consumer — is emerging from a severe recession.”

“The Saudis have said they can live with oil at $50 a barrel, while supporting the general view of the Organization of the Petroleum Exporting that prices of $75 to $80 are needed over the longer term. Price hawks Venezuela and Iran, the No. 2 OPEC producer, have been the most vociferous in support of those levels”

Can a swine oink vociferously? …just wondering…

Not so brief
A brief history of General Motors Corp.May 27, 2009 2:43 PM ET

All Associated Press news(AP) - Some key events in General Motors’ history:

Sept. 16, 1908 - General Motors Company founded by William C. Durant.

1909 - GM sells 25,000 cars and trucks.

1910 - Durant brings the Buick, Olds, Pontiac, Cadillac, Champion ignition, AC spark plug and other companies into GM. Sales rise 60 percent, but earnings lag. Durant is ousted by bankers as company sinks into debt.

1911 - Electric self-starter first appears on a Cadillac.

1916 - GM incorporated as General Motors Corp. Durant, after founding company that builds Chevrolets, regains control.

1917-19 - GM shifts most truck production to war effort.

1920 - Durant resigns, later files personal bankruptcy and dies running bowling alleys.

1920s - GM creates product policy aiming Buick, Pontiac, Chevrolet, Oldsmobile and Cadillac at five different groups of buyers.

1921 - GM accounts for 12 percent of U.S. car market.

1923 - Alfred P. Sloan named president and chief executive.

1925 - GM acquires Vauxhall Motors Ltd. of Great Britain.

1929 - GM acquires Adam Opel AG of Germany.

1937 - Violent sit-down strikes by GM hourly workers in Flint, Mich., shake company, lead to United Auto Workers representation.

1941 - GM market share grows to 41 percent.

1942 - Civilian auto production halted and plants turned to war effort.

1945-46 - Workers strike for 113 days.

1948 - First automobile fins unveiled, on a Cadillac.

1949 - After purchase of National City Lines of Los Angeles, GM accused of buying streetcar companies since 1920s and replacing them with bus systems. GM is convicted just once, of conspiracy in the Los Angeles case.

1953 - Air conditioning first offered, on a Cadillac.

1954 - GM’s U.S. market share reaches 54 percent. Company makes 50 millionth car.

1955 - GM introduces Chevrolet V-8 engine.

1956 - Sloan retires as chairman.

1960 - Reacting to invasion of small European cars, GM introduces Chevrolet Corvair. Car later attacked by Ralph Nader, who wrote book “Unsafe at Any Speed” that led to congressional auto safety hearings.

1979 - GM’s U.S. employment peaks at 618,365, making it the largest private employer in the country. Worldwide employment is 853,000. Decade features sales decline, recession, Arab oil embargo and gains by Japanese automakers.

1980 - Roger B. Smith named chairman. GM loses more than $750 million as car and truck sales plunge 26 percent.

1981 - GM consolidates truck, bus and van operations. Auto workers bash Japanese cars with sledge hammers. Company earns $333.4 million on $62.7 billion in revenue.

1983 - GM and Toyota Motor Corp. of Japan form joint venture to build cars at a GM-owned plant in Fremont, Calif. Smith announces Saturn project to fight Japanese cars. GM makes $3.7 billion.

1984 - GM overhauls North American organization; acquires Electronic Data Systems Corp., owned by Texas billionaire H. Ross Perot, for $2.5 billion. Earnings rise to $4.5 billion on revenue of $84.9 billion.

1985 - Company forms new Saturn Corp. subsidiary. GM acquires Hughes Aircraft Co. for $5 billion. GM makes $4 billion.

1986 - GM announces plans to close 11 U.S. plants. Employment grows to 877,000 as earnings fall to $3.9 billion. After infighting, Perot resigns from board and gets $700 million in severance.

1987 - GM and UAW reach contract prohibiting closure of a plant unless its product sales fall. Earnings rise to $3.6 billion.

1988 - Earnings rise to $4.6 billion and revenue hits $123.6 billion. Employment drops to 766,000.

1989 - GM complies with federal regulations and equips about 15 percent of fleet with driver’s air bags, blames devices for boosting car prices. Profits fall to $4.2 billion.

1990 - GM and Saab-Scania AB of Sweden form joint venture to make cars in Europe. Smith retires as chairman, succeeded by President Robert Stempel. GM launches Saturn, takes $2.1 billion charge for four plant closings, and profits fall to $102 million as auto sales plummet.

1991 - Company loses industry record $4.45 billion. Stempel announces GM will close 21 plants over the next few years and eliminate 9,000 salaried and 15,000 hourly jobs in 1992, in addition to layoffs at shuttered plants.

1992 - Board strips some of Stempel’s authority. Stempel later resigns, saying rumors about his future compromised his ability to lead. Jack Smith gets title of chief executive officer and outside director John Smale is named chairman.

1996 - GM spins off Electronic Data Systems as a separate company.

1997 - GM sells defense electronics business of Hughes Electronics to Raytheon and merges Hughes’ auto parts business with Delphi Automotive Systems (now Delphi Corp.).

1998 - Strikes at two Michigan parts plants shut down almost all North American production.

1999 - Delphi is spun off as a separate company. GM purchases rights to the Hummer brand from AM General.

2000 - President Rick Wagoner replaces Smith as CEO. GM cuts 10 percent of white-collar employment.

2002 - GM spends $251 million on 42 percent stake in South Korea’s bankrupt Daewoo Motor and names it GM Daewoo Auto & Technology Co. Stake later increased to 51 percent.

2003 - GM sells defense unit to General Dynamics Corp. for $1.1 billion and sells 20 percent stake in Hughes Electronics to News Corp. for $3.1 billion.

2004 - Last model year for Oldsmobile.

2006 - About 47,600 GM and Delphi hourly workers take buyout or early retirement offers. GM investor Kirk Kerkorian suggests alliance with Nissan and Renault, which GM’s board examines and rejects; Kerkorian sells much of his stake. GM sells 51 percent stake in GMAC Financial Services to group led by Cerberus Capital Management LP for $14 billion.

2007 - GM loses $38.7 billion, including $39 billion third-quarter charge for unused tax credits. It’s the largest annual loss in auto industry history. GM reaches historic contract with United Auto Workers that shifts billions in retiree health care expenses to union-administered trust. Company agrees to pay $33.7 billion into trust. Contract also lets company pay some new hires $14 per hour. U.S. market share is 23.7 percent. GM sells Allison Transmission to The Carlyle Group and Onex Corp. for $5.6 billion.

2008 - Gas prices hit $4 per gallon and truck sales plummet. GM announces plan to close four pickup and sport utility vehicle factories, plans to shed 8,350 jobs. Hummer brand put up for sale. By fall, executives begin asking congressional leaders for aid. GM and Chrysler talk about a merger, but talks die down as both companies’ sales continue to fall on U.S. and worldwide recession woes. By December, GM tells Congress it needs $18 billion to stay afloat. It receives $13.4 billion, and racks up a $30.9 billion annual loss and burns through $19.2 billion.

2009 - The Obama administration takes office in January. On Feb. 17, GM says it will need a total of $30 billion and its Saab unit files for bankruptcy in Sweden. In its restructuring plan presented to the U.S. government, GM say it will only keep Saturn running through 2011, but it’s open to the possibility of spinning off the money-losing brand to retailers or investors. Discussions are ongoing.

March 30 — President Barack Obama — a day after firing CEO Rick Wagoner — tells GM it hasn’t done enough to restructure and gives the company until June 1 to make aggressive cuts. Chief Operating Officer Fritz Henderson takes over as CEO. Board member Kent Kresa becomes interim chairman.

April 27 — GM asks 90 percent of its bondholders to participate in a debt-for-equity swap to rid the company of $24 billion by giving them 225 shares for every $1,000 in bond for a combined 10 percent stake in the company. Existing shareholders would end up with 1 percent of the company following the issuance of 62 billion new shares and a 100-for-1 reverse stock split. GM also says it will end the Pontiac line.

May 7 — GM reports a first quarter loss of $6 billion, with revenue falling by more than half.

May 15 — GM says it will end contracts with about 1,100 dealers.

May 26 — UAW agrees to job cuts, 14 plant closures, and a 20 percent equity stake in the company to cover retiree health care costs. Members are expected to vote on the changes by the end of the week.

May 27 — GM says debt exchange offer has failed. Bankruptcy appears likely, as GM tries to get all parties to agree to new, leaner terms before June 1. Government loans now total $19.4 billion.

NEW YORK (Reuters) - Oil prices rose to a six-month high near $64 a barrel on Wednesday after Saudi Arabia, OPEC’s biggest member, said the global economy had strengthened enough to cope with oil at $75 to $80 a barrel.

U.S. crude oil for July delivery rose $1.25 to $63.70 a barrel by 12:30 p.m. EDT, after hitting $63.82, the highest level since mid-November. London Brent crude rose $1.37 to $62.61 a barrel.

Saudi Oil Minister Ali al-Naimi, speaking on the eve of a meeting of the Organization of Petroleum Exporting Countries in Vienna, said oil prices would continue to rise and that the global economy was now strong enough to support $75-$80 oil.

“The price rise is a function of optimism. Better things are coming in the future,” Naimi told reporters in Vienna.

The minister said OPEC did not need to change its output policy. The group already has agree to remove 4.2 million barrels per day of oil from the market in a bid to shore up prices battered by recession.

The U.S. Energy Information Administration reacted to the Saudi comment by saying higher oil prices would be detrimental to the economic recovery.

“I certainly would think that we are still in some pretty thick economic woods, and that it would make sense to not to push things with respect to oil markets,” the acting head of the EIA, Howard Gruenspecht, said.

Bolstering the market, U.S. housing data showed the pace of sales of existing homes in the United States rose 2.9 percent in April, supporting views that the three-year housing recession was near a bottom.

But weakness in the U.S. stock market tempered oil’s strength. Wall Street shares declined amid gloom around General Motors as it inched closer to bankruptcy.

“Everyone talks about green shoots, but we’re not completely out of the woods. To see a real price rally we’ll need to see a larger pick-up in demand,” VTB Capital analyst Andrey Kryuchenkov said.

Global oil demand is seen falling this year at the fastest rate since 1981, with the International Energy Agency, adviser to 28 industrial nations, predicting a decline of 2.56 million barrels per day.

However, don’t worry about losing the money in your checking account if your bank goes under. Congress has already approved a $500 billion line of credit to the FDIC. Without a doubt, that line of credit is going to have to be tapped. This does emphasize the insanity of having the FDIC provide the guarantees for the PPIP [Public-Private Investment Program]. The fund simply does not have the resources available to do it. The money for the inevitable large losses that the fund will take on the program will come from that line of credit.

The prospect of the FDIC paying back that loan anytime soon from increased assessments on the banks is extremely remote. This is simply a back-door bailout of the FDIC, structured as a line of credit so it does not increase the reported budget deficit.

Using the FDIC to backstop the PPIP program is simply a way to bypass Congress. There is no way that Congress could not have approved the line of credit and let the FDIC become insolvent. By all rights, the assessments on the banks should be raised to make up for the shortfall in the FDIC, but now is not exactly the time to do it, since it would simply deplete their capital at a time when they desperately need to improve their capital base.

To bring the fund up to a more normal 1.2% of insured assets would require $44.8 billion, not counting the losses that the fund has incurred so far in the second quarter, or any subsequent losses. That would be a pretty hefty tax for the banks to pay. Still, fairness demands that it be paid by the banks, not by the general taxpayer.

Fairness demands, how quaint.

U.S. job market may need 5 years to fully heal…

WASHINGTON (Reuters) - The U.S. housing bust and auto sector upheaval have left hundreds of thousands of workers looking for jobs in the same sectors, in the same places, and at the same time.

Some of these jobs won’t come back even after the recession ends because Americans are unlikely to buy as many new homes or cars as they did at the peak of the easy-money days.

The result is that it may be several years before the United States returns to full employment — and even then the jobless rate may not get back to the low 4.9 percent level where it stood when the recession began in December 2007.

“I don’t think we’re going back there any time soon,” said James Galbraith, an economist who teaches at the University of Texas’ LBJ School of Public Affairs. He thinks unemployment may stay “close to 10 percent for quite a long time.”

Persistently high unemployment would be problematic for President Barack Obama, who has made creating or saving jobs the measure of success for a $787 billion stimulus package.

It would also complicate policy for the Federal Reserve, the U.S. central bank, which is supposed to promote full employment and keep inflation in check. Eventually, the Fed will want to raise short-term interest rates from their current level near zero, but it will be hard-pressed to do so while the jobless rate remains abnormally high.

Unemployment normally rises in recessions. What makes the current episode worrisome is that the biggest job losses are heavily concentrated, both in terms of sectors and geography.

The worst of the auto sector job cuts are in the U.S. Midwest, and a large portion of the out-of-work home builders are in Florida and California. The areas with low unemployment include low-population states like Wyoming and South Dakota.

This suggests that not only are there too few jobs to go around, but there is also a mismatch between where the workers are and where the jobs are.

GONE FOR GOOD

Take residential construction, for example. At the top of the real estate market, housing starts surpassed 2 million. They are now running at less than a quarter of that rate, according to U.S. Commerce Department data.

There were more than 1 million people employed in U.S. residential construction in 2006. As of April 2009, that total was down to 711,000, Labor Department data shows.

I just wanted to vent here. We are waiting in the West Los Angeles area, but sometimes check out the local listings. There is one house that requiring a preapproval letter before a showing. Well, we got curious and decided to go ahead and get the preapproval letter. I talked to the realtor last night, and mentioned that the house had been on the market for almost a year. Now I get this defensive e-mail stating that the only reason the house hasn’t sold is because for the last four months the bank hasn’t been lending money. He bolded and highlighted a previously rejected offer, to let me know that they were only going to accept a full offer. Don’t even want to see it anymore…argh!

Didn’t see this posted yet:

U.S. Inflation to Approach Zimbabwe Level, Faber Says

On yesterdays post, I missed. I think Faster is just fine as well. A very intelligent person who has added insight to my mind.

If there is a new value added national sales tax…will they tax rent and dentist visits?

Random thoughts that have nothing to do with this blog:

These are good times for businesses that deal in sin. Tough times equate to higher drug and alcohol use. Why would anyone hold auto and bank investment risk when you can hold sin shares? Big government is not in the least shy to tax and spend on sin (so why shouldn’t we profit too?), and kudos on that name change to “Altria” - no name brand connection to cancer patients hooked to a respirator and morphine drip waiting to be zipped into a body bag. Don’t look for any big tobacco or tax spending bureaucrat to sit vigil in the palliative care rooms comforting the dying. Perhaps the height of Western ingenuity is the combo pharmacy/booze drive through store. God I love free enterprise and personal responsibility. Make mine a Dublin brewed Guinness - you can have the smokes and dope!

Debtbeats will default.

Financial Times
JPMorgan warns on credit card woes
By Henny Sender and Saskia Scholtes in New York
Published: May 27 2009 18:46 | Last updated: May 27 2009 22:01

Jamie Dimon, JPMorgan Chase chief executive, warned on Wednesday that loss rates on the credit card loans of Washington Mutual, the troubled bank acquired last year by JPMorgan, could climb to 24 per cent by the year end.

In the past, credit card loss rates have tracked the unemployment rate but that relationship has been breaking down for more troubled credit card portfolios, such as the $25.9bn in WaMu credit card loans.

Housing prices have taken a long ride in the wayback machine, with mortgage debt inexorably to soon follow. And I note that not all MSM sources prefer to keep elephants hidden under the living room rug.

The $4 trillion housing headache

House prices have returned to 2002 levels, but mortgage debt hasn’t deflated from its bubbly highs.

By Colin Barr, senior writer
May 27, 2009: 4:05 PM ET

Alan Greenspan has warned that the problems for banks may not be over.

NEW YORK (Fortune) — House prices are taking a long ride in the wayback machine. Unfortunately, Americans’ housing-related debt isn’t going anywhere fast.

Yet as bad as that is for overburdened homeowners and their bankers, the mighty mountain of mortgage debt Americans have taken on is an even bigger concern - especially for those who believe an economic recovery is in sight.

Even though the amount of home mortgage debt outstanding declined in 2008 for the first time since the Federal Reserve started keeping track in 1945, mortgage debt levels remain distressingly high.

Home mortgage debt outstanding was 73% of gross domestic product last year, according to government data. That’s the third-highest reading on record, after the 75%-plus bubble years of 2006 and 2007.

Getting that ratio down to a more manageable number will mean more lean years ahead, as Americans further cut spending to rebuild their savings and banks struggle to boost their capital amid heavy loan losses.

How long this process might take is a key question for those trying to gauge the prospects for an economic recovery.

To get the mortgage debt-to-GDP ratio down to a more normal level such as the 46% average of the 1990s, Americans would have to cut their mortgage debt to $6.6 trillion from $10.5 trillion at the end of 2008. The last time the national mortgage debt count was below $7 trillion was 2003, according to Federal Reserve data.

We might call this mortgage overhang the $4 trillion elephant in the room for policymakers, who have spent the past year injecting liquidity into the economy - a course of action that will do little to solve the problem of too much debt.

This is an article from the Wall St Journal, but you have to have a subscription to read it in full. Does anyone here have one? If so, could you post the good parts?

This was predicted by FPSS long ago!

Plan to Buy Banks’ Bad Loans Founders

WASHINGTON — A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter.

The Legacy Loans Program, being crafted by the Federal Deposit Insurance Corp., is part of the $1 trillion Public Private Investment Program the Obama administration announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors.

But prospective buyers and sellers have expressed reticence to the FDIC …

Green shoots in Japan?

May 28 (Bloomberg) — Japan’s retail sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers.

Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.

The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.

“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”

The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.

Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.

Isetan Mitsukoshi

Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.

From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.

The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.

The Fed’s War on Savers is beginning to look a bit long in the teeth now that the bond market is on high alert for potential future hyperinflation. Watch the Fed fumble all over itself going forward with insistence that “nobody could have seen” rising long-term interest rates coming…

Wall Street Journal

* REVIEW & OUTLOOK
* MAY 28, 2009

The Bond Vigilantes
The disciplanarians of U.S. policy makers return.

They’re back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. The vigilantes vanished earlier this decade amid the credit mania, but they appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.

Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%, its highest close since November. Treasury yields had stayed low, and the dollar had remained strong, as long as investors were looking for the safest financial port amid the post-September panic. But as risk aversion subsides, and investors return to corporate bonds and other assets, investors are now calculating the risks of renewed dollar inflation.

They have cause to be worried, given Washington’s astonishing bet on fiscal and monetary reflation. The Obama Administration’s epic spending spree means the Treasury will have to float trillions of dollars in new debt in the next two or three years alone. Meanwhile, the Fed has gone beyond cutting rates to directly purchasing such financial assets as mortgage-backed securities, as well as directly monetizing federal debt by buying Treasurys for the first time in half a century. No wonder the Chinese and other dollar asset holders are nervous. They wonder — as do we — whether the unspoken Beltway strategy is to pay off this debt by inflating away its value.

As a reward for miserable ineptitude beyond belief in regulating the lending sector during the housing market mania meltup, the proposal in the works would make Fed the Übermensch banking regulator. This seems in keeping with Uncle Sam’s central governing principles:

- Punish comptitude;
- Reward ineptance.

Fed would serve as risk regulator under Obama plan
By JIM KUHNHENN, The Associated Press

8:41 p.m. May 27, 2009

WASHINGTON — The Obama administration is proposing that the Federal Reserve serve as an all-seeing regulator to detect activities that could pose risks to the entire financial system.

Under a plan circulating among key lawmakers, the administration also is recommending a new agency to protect consumers and another aimed at protecting investors and maintaining the integrity of the markets. The Federal Deposit Insurance Corp. would get expanded authority to unwind troubled bank holding companies and a new government agency would conduct “prudential regulation,” supervising state and federally chartered depository institutions, bank holding companies and insurance companies.

The sweeping proposals are part of six regulatory overhaul recommendations designed to address weaknesses in the financial system that contributed to the current crisis. People familiar with the plan say details still need to be hammered out. They spoke on condition of anonymity because the proposals aren’t final.

“The president is committed to signing a regulatory reform package by the end of the year and officials at the White House and the Treasury department are continuing work with Congress on the final phases of a proposal,” White House spokeswoman Jen Psaki said Wednesday. “But there is no final proposal in place and any announcement will not be for a couple of weeks.”