The Housing Bubble

I am sure this is gonna get some interesting comments from Oregon/PNW HBB bloggers:

From NY Times
Slump Dashes Oregon Dreams of Californians

BEND, Ore. — Susan and Mike Telford had a plan back in the boom years in California. They would sell their house outside Fresno at a solid profit and take their equity to this sunny mountain city to build a better life, a fresh-air future in Oregon.

We wanted to lose the commute, to lose the smog,” Mrs. Telford said. “We wanted to lose California.”

They moved here in 2006, when Bend was one of the fastest-growing places in the West and money and migration from California fueled that growth. Now the Bend area’s unemployment rate, at almost 16 percent, is one of the highest of any metropolitan area in the nation. “For sale” signs dot desert-toned, unfinished subdivisions. Luxury furniture stores downtown are going out of business. San Francisco chefs have fled.

The freefall has made Bend a succinct symbol for the economic perils of “lifestyle destinations” in the so-called New West, recreation-heavy communities where jobs have been heavily tilted toward construction and services and where many of the new residents were self-made exiles from California cashing in on their overpriced real estate. Bend, a former timber town that now has 80,000 residents, was particularly popular among those drawn to the often rainy Northwest because it is located on the sunny side of the Cascade Range.

Now the Californians who contributed to Oregon’s growth are in some cases adding to its economic struggle. As of May, Oregon had the second-highest unemployment rate in the nation, at 12.4 percent, behind Michigan. California, which has not released its May figures, ranked fifth in April.

Obama’s Plan Falls Flat With Many Economists…
by Liz Halloran
NPR.org, June 17, 2009

President Obama said he was looking for a “careful balance” when sketching his blueprint to stabilize the nation’s financial sector and wring from the system the kind of risky practices that propelled the country into economic turmoil.

But in seeking that balance — and bowing to political realities on Capitol Hill — the president may have boxed himself in with a mixed-bag proposal that has managed to disappoint economists and financial experts across the spectrum.

“Is he proposing a system with smarter regulation, or just more regulation?” asked Martin Baily, a senior fellow in economic studies at the liberal Brookings Institution and chair of the Council of Economic Advisers for the Clinton Administration, who was adopting a wait-and-see attitude about how the details of the plan play out.

The plan that Obama rolled out Wednesday would expand government oversight of banks and other financial institutions, establish a new consumer financial protection agency, and more vigorously regulate both financial markets and unusual financial instruments like credit derivatives.

But rather than setting the parameters of a broad shake-up of the nation’s financial regulation system, the proposal has emerged a muddle, says R. Christopher Whalen of Institutional Risk Analytics.

“The plan is not doing a whole lot of anything,” says Whalen, a former Wall Street investment banker. “The fundamental point is that we don’t need new tools; we need political will to clean up the mess.”

Resistance To Broadening Fed’s Role

Advocates of Obama’s plan characterize it as a good first step, but acknowledge that the turf battles he faces on Capitol Hill — where Congress has to approve the plan — will kill off some of his proposals.

One that’s already considered in deep trouble is Obama’s recommendation that the Federal Reserve be given new powers and expanded authority to supervise firms at risk.

“That’s going to be a struggle between the president and Congress,” Baily says. “Congress wants to see the Fed’s power reined in.”

After the Fed’s controversial bailout of insurance giant AIG, that’s true on both sides of the aisle: In an interview Wednesday on MSNBC, Virginia Democratic Sen. Mark Warner said he is concerned that giving the Fed more power will compromise its independence and “draw it further into the political process.”

James Gattuso, a senior research fellow in regulatory policy at the conservative Heritage Foundation, agrees.

“The more power given to the Fed, the more political it becomes,” Gattuso says. He suggested that accountability would emerge as an issue on the Fed’s Board of Governors, whose members are appointed for terms of 14 years.

“This goes straight to the dilemma between accountability and politics,” Gattuso says. “If the Fed is going to intervene to support an individual company, do you want that decision made by an unaccountable body?”

: )

So - new jobless claims continues at its 600k+ weekly rate, but all of the sudden continuing claims took a sharp drop down.

WTF?

I could understand a tailing off of continuing claims as unemployment benefits expire - but not as a sudden sharp drop like that, after they had been rising steadily. Seems like they just got the numbers wrong.

Maybe the census? Doesn’t seem feasible for them to hire about 200k people in just one week though, which is about the level of discrepancy.

Much easier to read one comment than 442 on the old thread. Coffee this morning is a blend of half de-caf
and half regular, surprisingly good, nice aroma, and
no shakes after the third cup….Morning everyone!

Enjoy the Day!

Well here we are at the very bottom of the housing market. Or was that yesterday? If it was yesterday, then prices will go up today. Or maybe they’ll stay flat through the weekend.

I hope Cramer clarifies all this on today’s show.

Retailers Head for Exits in Detroit in WSJ.

Article outlined how big box stores are leaving. I suspect this will be a trend in the US and the US get’s poorer. I suspect that these companies leave because of theft by the unemployed and those minimum wage workers they higher. The whole model of a store the size of Home Depot with a small handfull of employees to police it starts to break down when the customers become poor.

This regulation talk is a joke . Until the Powers admit that the housing boom was a “crime wave ” in which the lenders and appraisers breached their duty by granting loans based on future value of a asset ,based on a myth that real estate always goes up ,rather than current value of the property and the ability to qualify currently ,the powers won’t enact the right regulations .Consumers submitted fake loan applications based on future value of the asset and ability to use “future equity “as the bail out plan ,or a future loan as the bail out plan to the
gambling that was taking place .

Make one law that no loans can be made based on the future value of the asset, or getting the loan now based on qualifying in the future, which actually is current law anyway ,and you go a long way toward solving the problem . I would like the media to talk more about the the faulty concept of “future
value” of a asset being the faulty ,fraudulent, rock that the Industry relied on ,as well as consumers .

There can be no major, sustained bull market without one of two things happening.
-B.Bonner-TDR

Either the mistakes of the Bubble Epoque must be cleared away…allowing for a new era of genuine growth and real prosperity. At best, this would take a few years to achieve. Just imagine how long it will take to restructure GM into a profit-making business again. Just imagine how long it will take consumers to pay down their debts so they can begin to spend again. Just imagine how long it will take to save enough money to build new factories…and convert shopping malls to warehouses and apartment complexes… And just imagine how long it will take with the feds fighting it tooth and nail. At least a decade!

Or people must be willing to go even further into debt…thus increasing the errors of the debt-soaked boom. Anything is possible. But here at The Daily Reckoning we think the economy is already saturated with debt. It can’t absorb more. Besides, the financial industry is no longer capable of pushing debt on the public. That machine is broken. The bubble in finance exploded when Lehman Bros. went down. Once a bubble blows up, it can’t be reflated.

And so far, the feds’ efforts to reflate the bubble in consumer finance have caused a return of speculation in oil, commodities, and emerging markets. There is no sign of consumer price inflation or expanding consumer credit. Instead, consumer credit is contracting.

So don’t expect a real bull market.

Speaking again about regulations ,they already figured it out years ago
after the stock market crash of 1929 that there is a conflict of interest in the same party making the loan that also makes the future investment .The Glass/Steagal Act was a great Act . Investment banks would be tempted to make a loan based on future value of a investment in order to sell future value of a investment ,as they did in the 20’s with selling on margin with the stock market .
During the recent housing boom , loans were given and sold based on future value of the asset .The current ability to qualify and the current value of the asset of real estate was based on future value ,not unlike the 1920’s .

The Powers won’t do it ,but you need to address the conflict of interest between the party that makes a loan and the party that sells the future value of a investment .

The current administration, as with previous administrations, will continue to kick the can. This fundamental flaw in our monetary system will not go away though. Tricky Dicky drove the final spike into the dollars heart. Of course that’s what the FED and gubmint wanted. Fire up the presses!

Obama blows it. Big-time! No Surprise.

“This was a failure of the entire system,” President Obama said Wednesday, referring to the financial crisis. “An absence of oversight engendered systematic, and systemic, abuse.”

With that, the president announced an ambitious plan to refashion supervision of the U.S. financial system. It is needed, he said, to fix lapses in oversight and excessive risk taking that helped push the economy into a prolonged recession.

Mr. Obama and his advisors completely overlooked the single fundamental reason the United States ran into the economic ditch. There is no control of the value of the dollar. None. Nada. Zip. No one on the planet can predict what the purchasing power of the dollar will be next year, or the year after. Or five years hence. There is nothing to measure it with. No scale to insure that the value of tomorrow’s dollar will be close to what today’s dollar is.

Imagine your butcher selling you meat without relying on a Fairbanks-Morse or other reliable scale. How else would you know what weight you were buying? There are bathroom scales, postage scales, kitchen scales, physicians’ scales, and dozens of other such measuring devices. There are nominal scales, ordinal scales, interval scales, and ratio scales. They measure our transactions and keep us honest.

When the dollar functioned as money….that is as a store of value, a unit of measure*, and a medium of exchange…its very nature controlled the excessive impulses of men. When they borrowed too much and made stupid mistakes they were ruined. They couldn’t print more of it to bail themselves out. Money wasn’t paper currency or IOUs on ledgers. Money was gold or silver and, because it was quite rare it worked very well as a governor on the economic motor.

Mr. Obama has missed his chance to actually repair the nation’s financial system. He will smother the economy with more supervision and control, which history clearly shows does not work. He could, instead, have pushed for a return to an honest money system. (Why must honesty be banned from our monetary system?)

But Congress has the final say. There’s still time to badger your representatives in Washington, reminding them that their Constitutional mandate to set and control weights and measures includes the pitifully weakened U.S. dollar. An honest dollar - real money - will eliminate the need for government micromanagement of our every transaction.

When scammers prey on the elderly:
“For months, family members wrestled with what to do. When confronted, our relative would acknowledge he had been ripped off and promise it would end — but then he would succumb again, a pattern experts say is common.

The debate ended this spring when our relative, unable to cash out his life-insurance policy, was conned into selling his car and wiring $4,000 to Costa Rica. In May, with his three children and a stepson present, he acknowledged to a judge that he had been financially scammed. The judge granted guardianship to two of his children, taking away his right to manage his own affairs.

The family went to lunch with him, then dismantled his cellphone and redirected his mail to another state. A few hours later, he demanded his phone back. He wanted to call some “friends” who had some money waiting for him.”

Local gubmint hard at work. Put on your drawers stinky!

City: Workers Must Wear Underwear…
Deodorant Also Included In Florida City’s Revised Dress Code
A Florida city has written common sense into its employee dress code: Wear underwear to work.

The Brooksville city council recently approved a revised dress code as part of its effort to update existing policies.

The revision instructs employees to observe “strict personal hygiene,” including the use of deodorant. It lists “the observable lack of undergarments and exposed undergarments” as “unacceptable attire.”

It also prohibits clothing with foul language or messages promoting drug use, “sexually provocative” garments, halter tops and piercings anywhere except the ears.

Repeat offenders can be fired.

The city council approved the dress code 4-1. Mayor Joe Bernadini opposed the revision, saying the underwear edict “takes away freedom of choice.”

I just love the failure of these programs!

Fed Gets No Requests for First Round of TALF Loans to Buy CMBS

June 17 (Bloomberg) — The Federal Reserve received no requests from investors for loans to buy new commercial mortgage-backed securities under an emergency program aimed at reducing borrowing costs and reviving U.S. economic growth.

The New York Fed announced the absence of loan requests yesterday, the first monthly deadline for investors to apply for loans to buy new CMBS through the Term Asset-Backed Securities Loan Facility, or TALF. No issuers have publicly announced debt that’s eligible for the program.

The Fed has made $25.2 billion in TALF loans for other securities, including those backed by auto and credit-card debt.

“This is not an embarrassment for the Fed, but it does show there is a slow discovery process on the part of investors and originators,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Yesterday’s deadline applied to securities issued this year. In late July, the Fed will start accepting investor requests for loans to purchase older CMBS.

The Fed, acceding to an industry request in May, authorized TALF loans of as long as five years, up from three years for other parts of the TALF. Real estate groups including the Mortgage Bankers Association had lobbied the Fed for the extended loan terms.

Fed officials hope the TALF — an emergency program that may make as much as $1 trillion in loans — will help revive the $760 billion market for CMBS. That in turn may lower interest rates and expand the availability of loans for the commercial real estate market.

“The revival of the CMBS market is essential to stabilizing the commercial real estate market,” Dudley said in the speech.

“The U.S. economy is not bottoming, let alone recovering,” says Charles Biderman, CEO of TrimTabs Investment Research.
Biderman takes a very different view on the “green shoots” than Schwab’s Liz Ann Sonders, who believes the recession has already ended.

In taking the opposing view, Biderman cited the following: Income tax withholdings are down 5.1% on a year-over-year basis, based on the Treasury’s daily reports. “That’s an amazingly large decline in income,” he says, and a much worse than the 2% drop ahead of the 2001 recession.

That decline in income suggests the personal savings rate is not improving nearly as much as the Bureau of Economic Analysis says, because their analysis is based on lagging data.”

http://tinyurl.com/ldwdn4

Southern California home prices rise slightly in May L A Times
“The modest rise reflects increasing purchases at the high end of the housing market, where sales have been virtually frozen. For much of the last year, most home sales have occurred in the low end of the housing market, with banks unloading foreclosed properties at deep discounts, dragging the median price down.”

http://www.latimes.com/business/la-fi-home-sales18-2009jun18,1,4533522.story

This is a bit off topic, I know, but I was wondering:

ARMS, interest-only mortgages, teaser rates, pick-a-payment — these were all contributors to the fiasco we’re in now. And people ate them up, despite the obvious risks.

My question: Why haven’t we heard more about adjustable-rate car loans? Are they even available? I would have thought with the easy credit and low lending standards of the past five years that car dealers would have joined the bandwagon and offered similarly slippery loans to unsuspecting/greedy borrowers.

Any ideas?

Liz Ann Sonders Is Wrong: U.S. Economy Not Bottoming, TrimTabs’ Biderman Says
Posted Jun 18, 2009 07:00am EDT by Aaron Task

“The U.S. economy is not bottoming, let alone recovering,” says Charles Biderman, CEO of TrimTabs Investment Research.

Biderman takes a very different view on the “green shoots” than Schwab’s Liz Ann Sonders, who believes the recession has already ended.

In taking the opposing view, Biderman cited the following: Income tax withholdings are down 5.1% on a year-over-year basis, based on the Treasury’s daily reports. “That’s an amazingly large decline in income,” he says, and a much worse than the 2% drop ahead of the 2001 recession.

That decline in income suggests the personal savings rate is not improving nearly as much as the Bureau of Economic Analysis says, because their analysis is based on lagging data.

More importantly, Biderman says falling incomes are going to make it very hard for Americans to make the $1 trillion in consumer debt service payments that are due annually. As a result, Biderman believes foreclosures are going to pick up again after the recent lull, with Alt-A and jumbo loans being the next problem areas. In addition, credit card default rates will rise sharply from their already elevated levels, he predicts, noting default rates at Bank of America increased to 12.5% in May vs. 10.5% in April.

“A significant portion of the $14 trillion of consumer debt is going to go bad,” he says. “The negative implications on the [bank] stress test were nowhere near what’s really going on.”

That’s one reason Biderman is short the Financial SPDR (XLF) in his model portfolio. Stay tuned for part 2 of the interview where we discuss his reasons for being “cautiously bearish” on the stock market.

From Paul Krugman

I know it’s a tough competition, but this just might be the most hypocritical thing I’ve seen in the past year:

On Monday, Sens. Jon Kyl (R-AZ), Mitch McConnell (R-KY), and Pat Roberts (R-KS) introduced the “Preserving Access to Targeted, Individualized, and Effective New Treatments and Services (PATIENTS) Act of 2009,” a new bill prohibiting Medicare or Medicaid from using “comparative effectiveness research to deny coverage.”

How bad is it? Let me count the ways.

1. Politicians who rail against wasteful government spending are taking action to prevent the government from reining in … wasteful spending.

2. Politicians who warn that the burden of entitlements is killing the federal budget are stepping in to block … the single most painless route to reducing the growth of entitlements.

3. They’re doing it in the name of avoiding “rationing of health care” … but they’re specifically addressing taxpayer-funded care. If you want to go out and buy a medically useless treatment, Medicare won’t stop you.

4. These same politicians are, of course, opposed to efforts to expand coverage. In other words, it’s evil for government to “ration care” by only paying for things that work; it is, however, perfectly OK, indeed virtuous, to ration care by refusing to pay for any care at all.

If you can’t sell it, you can always rent it out, right?

The Accidental Slumlord
http://www.newsweek.com/id/201838?

Accidental, my tuchus.

Whups - just like that 10-year treasury back up above 3.8 again today. That’s gonna leave a mark. Mortgage rates had been creeping back down, but now of course will follow treasuries back up.

June and July’s home starts/sales and mortgage origination numbers are going to be really bad, methinks.

translation of the day..

‘mistakes were made’ = ‘please don’t prosecute me’

I really like how news morgues are easily accessible online.

I’ll bet Paul Krugman may have forgotten his words from back in 2002 by now - about what a good deal a housing bubble would be since it would stimulate consumer purchasing.

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Judging by Mr. Greenspan’s remarkably cheerful recent testimony, he still thinks he can pull that off.

Mornin’ everyone! Slim’s just back from the University of Arizona’s semi-annual economic forecast. Here are some fun tidbits:

1. The Tucson housing market is coming close to bottoming out! Median house price is now $167k! (Meanwhile, our local median income is mired in the mid to high $30ks, which means that our median house prices are still above the 3x median income level. More like 4.7x median if you’re assuming a local median income of $35k.)

2. The local unemployment rate is forecast to rise even further. As in, past 10%. (Which made poor ole Slim wonder where the much-celebrated increases in house local sales are being generated by. Ohhhhh, the houses are being bought by investors. But in an economy where employment is increasing, where are the tenants going to come from?)

3. On a national level, only 65% of our manufacturing capacity is being utilized. (With consumer demand being so low, one can’t expect manufacturing to pick up anytime soon.)

Oh, I might add that my not-so-silent comments really annoyed a couple of real estate agents sitting at the table in front of mine. They kept turning around to give me dirty looks.

Any day in which I piss off the REIC is a good day.

This story is about one of our own:

http://www.bobcesca.com/blog-archives/2009/06/health_insuranc_2.html

This is waaayyy off thread, but does anyone know who sings the song in this SPDR commercial? It airs on CNBC several times a day. I love her voice, but I’m not familiar with any french singers.

http://www.youtube.com/watch?v=asWxVzUQc0w

Apparently these guys missed the memo on shadow inventory the banks are holding back from the market and Alt-A and prime option ARM resets that are scheduled to keep high-end foreclosures bombarding the market like a meteor shower through 2011 or so. To each his own but I, for one, would rather see how the market weathers this celestial storm before hastily jumping in to catch a falling knife. Unless someone is very sure about their employment situation and their ability to service a loan, why rush to buy “within the next couple of months”?

Regional home prices end 2-year skid, report shows
By Roger Showley
Union-Tribune Staff Writer
2:00 a.m. June 18, 2009

Online: For a breakdown of Southern California home prices and sales, go to uniontrib dot com/more/socalprices

In the latest indication that the gloom in the housing market might be lifting, MDA DataQuick reported yesterday that May prices in Southern California rose for the first time in nearly two years, up $2,000 from April to reach an overall median of $249,000.

On Tuesday, DataQuick reported that San Diego County’s median price rose even more, up $5,000 from April, to stand at $295,000, or $15,000 above the recent low point in January.

“We appear to be in the early stages of the market gradually tilting back toward a normal balance of sales across the home-price spectrum,” DataQuick President John Walsh said.

Jerry Nickelsburg, senior economist at the UCLA Anderson Forecast, said the prices are “about right” in historical terms and are attracting would-be buyers, but not yet enough of them to completely turn the market upward.

“A lot of people are on the sidelines who are saying it may be beneficial to wait another month or so,” he said.

But for now, the “sideways” direction of the market signals one possible conclusion – “The big implosion in housing is running out of steam,” Nickelsburg said.

Central banker and Fed alum goes to bat in favor of Fed power consolidation:

Geithner Defends Plan to Give Fed Stepped-Up Powers (Update2)
By Robert Schmidt

June 18 (Bloomberg) — Treasury Secretary Timothy Geithner defended the administration’s proposal to give the Federal Reserve increased powers in his first public tussle with lawmakers skeptical whether the central bank is up to the job.

Wow. Slow day. We are still below 100 posts.

Just wanted to add to the Amazon economic index. I placed an order on Tuesday morning before leaving for the office. Chose super saver shipping which is supposed to ship 5-9 days after the order and no shipping until entire order is complete. The books were sent out before I got home from work that day and the small electronic item was shipped shortly after midnight that night.

They paid to ship the books early even though the other item was in stock and was available to send approximately 8 hours later.

Yikes.

How is the Government going to go from backing all loans made with the feeling that Contract law could be violated at any time ,to have a free market system in which investors are interested in investing in a loan based on the fact that it’s a solid loan and a good risk and not a by-product of some form of fraud ,or bail out,or taxpayer insurance ?

Oh, and guys, I think I just answered my own question of a day or two ago about how good my health insurance is. I took a look at back of my insurance card and it mentioned something about a $500 extra charge if you don’t get hospital stays pre-approved. It also said that an in-network hopsital would take care of it for you, but I wanted to call to make sure that had happened. So the nice young man took my info and told me that I didn’t need pre-approval because I wasn’t staying overnight. That is it. Anything that can happen without an overnight stay in the hospital that you and your doctor decide to do is fair game and doesn’t require an approval. Now, remember I said I had the most expensive BC/BS federal employee plan, but still.

Some BS statistic on CNBC said that of 300,000 jobs outsourced from 2004-2007 contributed $105 billion to the US economy. Sounds fishy to me. Even if it was true, I’m sure most of it went into the pockets of the top brass. I am absolutely staggered, and sickened, by what’s happening to this country.

If economists did understand the economy, we would not have these problems. The crisis can only be solved if the root causes are recognised. These are usury (interest on money) and credit (the creation of money out of nothing).

If someone brought a 1/10 oz gold coin to the bank in the year 1 AD, and the money remained there until the year 2000 AD, collecting a yearly interest of 4%, the amount of gold in the account would have been 3.6 * 10^31 kilograms of gold. This is 1.9 * 10^27 cubic metres of gold weighing 317 times the complete mass of the Earth. This example demonstrates that interest on money is unsustainable and leads to crisis.

Credit and interest on money make it possible for an economy to grow above potential during a boom phase. In the boom phase investors add leverage using credit which further intensifies the boom, creating shortages of materials and labour resulting in rising prices. Interest on money entices banks to lend money to leveraged investors. Credit makes it possible to create money out of thin air, which enables the banks to fuel the boom. When the cycle turns into bust, investors start to deleverage, which intensifies the bust, creating surplusses of materials and labour resulting in falling prices. What most economists do not see, is that credit and interest on money are the root causes of economic booms and busts.

If you see the root causes of the problem, it becomes possible to end the depression in a few months, to have constant economic growth at maximum potential without crisis forever without unemployment or government intervention. You can read more about it here:

Why are we not using natural gas to fuel our vehicles? A recent report showed reserves larger than the entire reserves of the Saudi oil fields. It burns cleaner, too. I’m losing hope that this country will ever do the right thing. The chokehold that special interests have on WA, and business and industry, is sickening.

Local “Sports Radio” station here in the KC area is running ads for a new condo development.

One of their sales points is that “40% of our current residents are single women…..”

-As a guy, I find it insulting that they think they can sell a crappy, overpriced condo to me, because they think I’m going to make a low-mid six figure purchase decision based on the little head doing the thinking for the big head.

-If I were female, I’d be pi$$ed that the developer would be pushing condo’s onto the type of loser that makes his buy/rent decision based on how many women tenants/owners there are. You could almost make the case that they are pimps; they are selling YOU, along with the condo. Did you get a “discount” because you are female? If not, they are pimping you, and you aren’t getting “paid”…….the last thing I would want is to live in a place where I’m constantly being hit on by guys, many of which won’t take no for an answer.

Call me too sensitive, but I’m getting tired of being portrayed by mainstream media/advertising that I’m some sort of half retarded lazy slob, that makes decisions solely based on improving my chances of hooking up with some hottie……or that I’m inherently dumber and lazier that the typical US American female.

Fed + more power= BANZAAAAAAAIIIIIIII!!!!!!!!

They say that childhood memories of how great things were are just your imagination bringing the good to the surface. I am 60 and I am here to tell you they were better times. REALLY!

What’s this horsesh!t about China “leading the world out of recession”? Correct me if I am wrong, but I see nothing which would indicate that a healthy China leads to US job growth. Unless there’s some miraculous turnaround in our manufacturing and trade deficit, I don’t buy it. Because some pig men from Wall St. can make a bundle investing there is irrelevant, IMO.

Maybe it’s just me, but……..

A local “Sports Radio” station in KC is running ads for some condo development. One of the come-ons is that “40% of our sales are to single women……”

-As a male, this insults me in that these guys think I’m going to make a six figure purchase, based on the proximity of women.

-If I were female, I’d be even more pi$$ed, in that the developer is using ME as bait to sell their condos; do women want to live somewhere where guys are hitting on them all the time? (…..actually, they would if all the guys were “hot”, but I digress…..)Did I get a discount on my place, so they could use me as bait? Or are they pimping me, and “paying” me nothing?

I’m getting tired of mainstream media/advertising assuming that I am some lazy dumba$$ simpleton, who makes all his decisions based on improving my chances of “hooking up”.

How about a facebook group for HBB’ers? Anyone want to start one?

Treasury to Auction $104 Billion In Debt Next Week, a Record
By: Reuters | 18 Jun 2009 | 03:36 PM ET

The Treasury announced Thursday a record $104 billion worth of bond auctions for next week, part of its herculean efforts to finance a rescue of the world’s largest economy.

The sales will exceed the previous record of $101 billion set in auctions that took place in the last week of April and consist of two-year, five-year and seven-year securities. That record was matched by another $101 billion week in May.

Though next week’s total was broadly in line with expectations, worries about supply have weighed on the U.S. government bond market, which will see a mammoth $2 trillion worth of new debt issued this year.

“Maybe the Treasury market reacted a little negatively and it will continue to be like this,” said Suvrat Prakash, U.S. interest rate strategist with BNP Paribas in New York. “Supply announcements and auctions on the horizon will make the market a bit nervous about upcoming debt.”

“We are entering upon waters for which I have no chart and in which I therefore feel myself an utterly incompetent pilot.”

— James Warburg of the banking dynasty, resigning as President Roosevelt’s monetary advisor, 1933.

Not that this was entirely predictable but the Senate had a non-binding referendum to appologize for slavery pass today.

The last line in the article on CNN talks about reperations for blacks.

I made that charge back in election time about obama and the liberal democrats back then. Its slowly moving its way forward.

More people looking for a handout and a free pass.

First time really reading the bits bucket. Interesting discussion with lots of schadenfreude towards people seduced by virtual assets in a service economy. Having lived within our means, I just can’t get the pervasive pollyannas of prosperity and their view that taking on extra burdens of debt, of any type, has minimal risk when one has a non-liquid asset in play.

One reaps what one sows.

A little off topic, but the US military is now tracking a North Korean ship believed to be in violation of the UN sanctions.
P/c to Kim from Obama. ” hey old buddy, how’s it going. The reason i called was to ask you to stop this war mongering. Were friends and you know we didn’t mean to divide korea like we did. I’m sorry if GW offended you by calling you part of the axis of evil, and I’m willing to have my friend Mr. Gietner deliver a couple of billion to you if you would just take your prozac. Again ol buddy, why can’t we be friends?”
P/c to Kim from Richard Nixon.” Kim, this is Nixon. Look, if you fire one shot, send any nuclear material to a terrorist, or cross the border in South Korea, with even one soldier, I’m going to push the button. I won’t bomb you into the stone age, I’ll obliterate you from the face of the earth. Have I made myself clear?”

From moneynews.com

“Obama to Cities: Bulldoze Whole cities

Dozens of U.S. cities may have entire neighborhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline.

The idea was first presented to President Obama during his campaign by Dan Kildee, treasurer of the Michigan county that includes automaker center Flint.

Local politicians estimate that the town must now contract 40 percent in order to concentrate the dwindling population and local services into a more practical area.

Such a “contraction” would involve razing large sections of the city, creating countryside where houses and commercial buildings once stood. Kildee has been approached by the White House to research applying the strategy to 50 additional U.S. cities.

“The real question is not whether these cities shrink — we’re all shrinking — but whether we let it happen in a destructive or sustainable way,” Kildee.

“Decline is a fact of life in Flint. Resisting it is like resisting gravity.”

The cities Kildee will look at were identified in a recent study by the Brookings Institution. Most are former industrial cities in the “rust belt” of America’s Mid-West and North East, including Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

Indianapolis and Little Rock, Ark., have recently set up land banks, and other cities are in the process of doing so.

“Shrinkage is moving from an idea to a fact,” Karina Pallagst, director of the Shrinking Cities in a Global Perspective Program at the University of California, Berkeley told The New York Times.

“There’s finally the insight that some cities just don’t have a choice.””

50 bonus points to anyone who can pick out all of the glaring logical errors in this story (She musta went to A&M):

May home sales down, but market is picking up
By Shonda Novak | Thursday, June 18, 2009, 12:18 PM

Central Texas home sales were down 19 percent in May from a year ago, but the market has picked up momentum from the beginning of the year thanks to low mortgage rates and a healthy supply of homes, the Austin Board of Realtors said today.

There were 1,707 home sales in May compared with 2,108 a year ago. It was the highest number since August.

There were 2,132 sales pending to close in June, down only 1 percent from a year ago.

The median sales price dipped 1 percent, to $193,000.

However, unlike the national real estate market, both the average and median sales prices for single-family homes in the Austin area have risen from January, the board noted.

“While we still aren’t completely out of the water, we’re starting to dry off,” said Jay Gohil, chairman of the Austin Board of Realtors. “Factors such as the local economy and job growth are promising for both sellers and buyers.”

There were 9,939 homes on the market in May, down 6 percent from May 2008. Last year, listings had topped the 10,000 mark each month from April through September.

From January through May, sales are down 25 percent and the median price is off 1 percent, the board reported.

Lots of great income and housing data on the 100 top markets.

http://www.brookings.edu/~/media/Files/rc/reports/2009/06_metro_monitor/06_metromonitor.pdf

WARNING: pdf

Syr had the lowest per capita number of REO properties in the 100 top metro areas which helps explain why our home prices haven’t fallen much but unfortunately also had next to the worst YOY change in avg wages . (-2.2%)

Green shoots exposed.

CHICAGO (Reuters) – Personal income taxes, a key revenue generator for most U.S. states, plummeted 26 percent, or $28.8 billion, in the first four months of 2009 compared to the same period in 2008, according to a Rockefeller Institute of Government report on Thursday.

“As we predicted in a previous report, tax returns on 2008 income that were filed in April show huge declines, likely due to stock market-driven declines in investment income and declines in bonus payments,” Institute Senior Fellow Donald J. Boyd, the report’s co-author, said in a statement.

and

NEW YORK (Reuters) – More than 800,000 New York state residents were unemployed in May, the highest level in 33 years, and another sign the state is still mired in recession, the state labor department said on Thursday.

The New York state unemployment rate rose to 8.2 percent in May from 7.7 percent in April, the highest level since February 1993, the agency said in a statement.

The jobless rate in New York City, which powers the state’s economy, climbed to 9 percent in May, its highest since October 1997, from 8 percent in April.

Nice read on the meltdown in Hot Springs, Arkansas, one of several resort communities in the state heavily targeted by lot flippers.

http://nwanews.com/adg/national/261959/

slim,

longterm lurker here, met some folks at the vegas gig, you seem like a nice guy, well balanced, but the pittsburgh comment was wrong. i grew up in monroeville. nice people, good values. i bet you believe the same

My apologies for any lost sleep this post my cause:

Beijing is playing with fire by issuing a `Buy China’ edict for its stimulus package.

“It bans the purchase of foreign equipment for investment projects unless a special exemption is obtained. The measures apply to European goods, even though EU states have not imposed any such “Buy Europe” clause of their own. EU producers of wind turbines have already been excluded from a $5bn wind project, whether or not they have factories in China.

Beijing risks making the same catastrophic error as the US Congress when it passed the US Smoot-Hawley Tariff Act in 1930. America was then the rising surplus power, like China today. It was the chief beneficiary of an open global system.

By imposing tariffs, Washington triggered massive retaliation. While nobody escaped the Great Depression that ensued, the effects were unequal. The US suffered a far steeper decline in output than the rest of the world. Britain muddled through relatively well in a trade bloc behind Imperial Preference.

China’s action is extremely disturbing. It confirms what we have long feared, that the Chinese government is sufficiently worried about rising unemployment to adopt suicidal measures. Nor does this episode instill confidence in the `China recovery story’.

While exports fell 26pc in April, imports were down by almost as much. There is no real rebalancing under way from external to internal demand. China is still running a massive surplus. It is flooding the world with excess goods, and exporting deflation. This is untenable. At some point, the West will react.”

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5561347/China-risks-trade-suicide.html

Ambrose Evans-Pritchard

Yuh, right, anything that takes away from the Fed’s leverage would be bad, as they have so capably demonstrated that they above all have the power to steer the country clear of crippling financial disasters…THESE PEOPLE DON’T ANSWER TO YOUR CONSTITUTIONAL GOVERNMENT! WAKE UP, AMERICA!!!

Business News
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Economic Outlook: The view from the Hill
Published: June 19, 2009 at 8:07 AM

Sen. Charles Schumer, D-NY, (L) confers with Sen. Jack Reed, D-RI, as Treasury Secretary Timothy Geithner testifies before the Senate Banking, Housing and Urban Affairs Committee regarding the U.S. President Barack Obama administration’s plans for overhauling the financial regulatory system on Capitol Hill in Washington on June 18, 2009. (UPI Photo/Roger L. Wollenberg)

* Senators question regulatory reform plan

NEW YORK, June 19 (UPI) — The Obama administration’s 85-page regulatory reform proposal has run into a scatter shot of resistance from U.S. senators on Capital Hill.

In a focused public hearing Thursday, Treasury Secretary Timothy Geithner faced members of the Senate Banking Committee, where Chairman Christopher Dodd, D-Conn., gave an initial endorsement that may prove prophetic.

“I believe that we can find common ground in a number of the areas contained in your proposal,” Dodd said.

But Senators from both sides of the aisle expressed concern about giving the Federal Reserve more power.

Geithner said the new role for the Fed would be a “quite modest,” building on authority it already wields.

Richard Shelby, R-Ala., countered that the Fed should concentrate on its task of monitoring inflation and economic growth, saying the Fed was “not designed to carry out the systemic risk-oversight mission the administration proposes to give it.” And Dodd expressed his own concerns over the relying on the Fed, which is frequently blamed after recessions for missing early cues.

In the aftermath of the greatest financial meltdown since the Great Depression, Dodd said giving more power to the Fed, “is like a parent giving his son a bigger, faster car right after he crashed the family station wagon.”

And it turns out Fed Chairman Ben Bernanke is not thrilled with the entire package, either, The Washington Post reported Friday.

Bernanke is expected to argue the formation of a Consumer Financial Products Agency, a popular concept on Capital Hill, will take away some of the Fed’s leverage in dealing with banks, the Post reported.

I saw a great hanging sign in Las Vegas last weekend at a Town & Country Bank….”The only TARP you’ll see here is this sign”

Amount of people in the casinos was not too much lower then I’ve seen in the last year or two.

Friends of my cousins were having a foreclosure party. They bought a cheap place and are letting the bank foreclose on the McMansion they previously had…another couple who pretended to be rich, HELOC’d the crap out of it, spent it on vacations and cars and then gamed the system. Needless to say we didn’t go to the party.