The Housing Bubble

RAIN in NYC…who hoo i am saving tons on my electricity bills

I still haven’t installed my ac’s yet…

New SFH sold in April = 352K annualized
SFH starts in May = 401K annualized
(Haven’t I heard “401K” somewhere before? Hmm)

How wonderful, the housing industry is adding a thousand new empty houses in every state, just what America needs this year.

Treasury’s Got Bill Gross on Speed Dial…
By DEVIN LEONARD
Published: June 20, 2009
Newport Beach, Calif.

Every day, Bill Gross, the world’s most successful bond fund manager, withdraws into a conference room at lunchtime with his lieutenants to discuss his firm’s investments. The blinds are drawn to keep out the sunshine, and he forbids any fiddling with BlackBerrys or cellphones. He wants everyone disconnected from the outside world and focused on what matters most to him: mining riches for his clients at Pimco, the swiftly growing money management firm.

Mr. Gross, 65, has long been celebrated for his eccentricities. He learned some of his lucrative investing strategies by gambling in Las Vegas. Many of his most inspired ideas arrived while he was standing on his head doing yoga. He knows he has to be well dressed for client meetings or television — but instead of keeping his Hermès ties neatly knotted, he drapes them around his neck like scarves so he can labor with his collar open.

And with the collapse of Wall Street, Mr. Gross has emerged as one of the nation’s most influential financiers. His frequent appearances on CNBC draw buzz, as do his wickedly humorous monthly investing columns on the Pimco Web site. Treasury secretaries call him for advice. Warren E. Buffett, the Berkshire Hathaway chairman, and Alan Greenspan, the former Federal Reserve chairman, sing his praises.

“He’s a very individualistic person. He doesn’t come at analysis or investment judgment in the words, terminology or ambience that I have been used to over the decades,” Mr. Greenspan says. “That may be the secret of his success. There is no doubt there is an extraordinary intellect there.” Mr. Greenspan, it should be noted, now works for Pimco as a consultant.

Amid all of this, Mr. Gross and his firm are trying to shape the government’s response to the economic crisis. He is one of the most fervent supporters of the Obama administration’s plan to enlist private investors to help bail out the nation’s ailing banks and try to revive the economy.

That effort, known as the Public-Private Investment Program, or P.P.I.P., has gained little traction so far. But Mr. Gross has energetically defended its architect, Treasury Secretary Timothy F. Geithner, against critics like the New York University economics professor Nouriel Roubini and the New York Times columnist Paul Krugman — both of whom argue that the strategy is flawed and that it would be best for the government to temporarily nationalize so-called zombie banks to prevent a repeat of the Great Depression.

The Coming Oil Crisis
By Mohammed J. Herzallah | NEWSWEEK
Published Jun 20, 2009
From the magazine issue dated Jun 29, 2009

Canadian economist Jeff Rubin has a somewhat oracular reputation. Since 2000, he has predicted a massive oil-price spike, and he was among the first in 2007 to prophesy that oil would soar over $100 per barrel (a few months later, he said $150 a barrel and was basically proved right again). Now, even though oil has dropped considerably from its peak, Rubin warns that it’s bound to skyrocket once more and cause another, even greater economic crisis. In his new book, Why Your World Is About to Get a Whole Lot Smaller, he lays out how this energy crunch will occur—and why it will spell the end of globalization.

The scenario goes something like this: the ongoing depletion of the world’s oil resources, coupled with soaring demand from emerging economies like India and China, will send the price of crude through the roof, Rubin says. This will seriously escalate transportation costs, which in turn will cripple international trade, reverse commercial interdependence and disable the global economy. The resulting age will be one in which nations are isolated, technological progress is sluggish and travel is infrequent. The Middle East will be less relevant than it is today, and food scarcity will emerge as the foremost international problem. Countries with a shortage of arable land will scramble and compete to buy agricultural real estate from other nations (for example, as Saudi Arabia is already now doing in Sudan) to alleviate their ever-worsening food crises.

Rubin’s future isn’t all bad. To offset the effects of the energy crisis, governments will have to invest heavily in national infrastructure (especially public-transportation systems); national industries once hurt by outsourcing and foreign competition will thrive; and the environment will become cleaner as people are forced to use less fossil fuel and as cars disappear from the streets. But Rubin warns that governments can do only so much—successful adaptation to an energy-starved world will largely depend on individuals altering their energy-consumption norms. Still, he is willing to bet that people will make the right choices. All in all, he says, “don’t be surprised if the new, smaller world that emerges isn’t a lot more liveable and enjoyable than the one we are about to leave behind.”

Rubin’s argument is powerful. There’s no denying that the international economy has become critically dependent on oil as its main source for energy. Yet, like other believers in the “peak oil” theory, he falls into the trap of underestimating society’s capacity to meet future fuel challenges through innovation and conservation. The story of energy over the past century has been one of breakthroughs, not retreat—so although the energy problems we face today should be a cause for concern, global integration will continue to deepen and the world is not likely to get smaller any time soon.

Strange feeling here in N Ohio. Price of gas falling, lowest in the 2.50’s(opposite of last year), no real construction going on ( one house framed this year in at the next door development, only 23 more lots to go), increasing number of for lease /available signs, everywhere. !500 laid off steelworkers seem resigned to the fact that they wont be going back to work for many months, if ever. Cities with closed GM and Chrysler plants show no sign of increased cutbacks, layoffs or adjustment in services. Stores are less crowded (really no crowds), most big box stores have only one maybe two check out registers open. Real estate sales ads just as positive ever, talking up the stimulus $$ and low interest ( GF’s neighbor foreclosed, $100, now getting evicted) for “those who want to live cheaper than rent”. People seem beat down, resigned to whats happened. Strange feeling, unlike any of the last 6 or 7 recessions Ive lived through. Will I live through this one?

Kendra Todd accused of fraud:

http://tinyurl.com/n632ss

Actually, this case sounds pretty weak, sounds to me like everyone here is probably guilty of something, but not much to prove it. However, I continue to hope that the stupid show on TV where people buy 5K worth of appliances and then are told that they “increased the value of their home by 15K!!!” will go away, and will go away very soon. So, hopefully they will at least start to charge some of these morons with something, anything to give them less time in front of the camera spewing gawd-awful investment advice!

this recession is just started.I don’t believe the hype,that it’s coming back soon.Maybe in 3 years.

Down here at pawn shop. Yop Yop.

I can’t believe I missed this:

Real Estate Intervention (HGTV 11.00pm Sunday)

Summary of a Review
On the show’s first episode (which aired last Sunday), a couple in Baltimore refused to take Aubrey’s advice at every turn. Apparently blind to the fact that their house had all of the charm and style of an ’80s-era condo (and a cramped one at that), the couple seemed at first perplexed, then downright angered by the suggestion that their house was less desirable than houses priced much lower in the same area. Aubrey insisted that they wouldn’t sell their house until they lowered their price by $20K. In the end, the couple opted to rent out their place — at a monthly loss — instead. Aubrey told the camera that he felt sure that he’d helped the couple, but something deep inside him must’ve been screaming “I’ve failed again! Damn me!”

Happy Father’s Day!

A. At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed. Although farmers themselves technically were not unemployed, drastic drops in farm commodity prices resulted in farmers losing their lands and homes to foreclosure.

Number of people receiving unemployment benefits jumps to all-time high
by syracuse.com Thursday February 19, 2009, 9:38 AM

The number of unemployed workers receiving unemployment benefits jumped to an all-time high near 5 million earlier this month, while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year.

Many of the jobless get no unemployment benefits

By Barbara Hagenbaugh, USA TODAY. While 13.2 million people were unemployed in March, approximately 5.8 million were collecting unemployment benefits at the end of the month, double the number from a year ago, the government said Thursday. That means less than half of those who were out of work and were actively trying to find a new job were receiving unemployment benefits.

6 States Hitting Residents With Big Tax Hikes

California is facing the biggest budget deficit in the nation, yet voters’ willingness to chip in is starting to wane. Last month, they voted down five ballot measures that included sales and income tax increases. Who could blame them? At 11%, California has one of the worst unemployment rates in the country, the housing market has been decimated, and the state already raised taxes on sales by 1% to 8.25% and income by 0.25% (both of which expire in 2011). Gov. Arnold Schwarzenegger’s latest budget plan includes steep spending cuts across the government and cutbacks in social services

New York State Gov. David Paterson may have been unsuccessful in levying an 18% tax on soda and other sugary drinks in the name of combating obesity, but he’s had a hand in raising taxes on plenty of other “sinful” items, including tobacco (up to 46% from 37%) and wine (up 58% per gallon, or about two cents more per bottle).

For those living in New York, all those tax hikes can really add up. Second only to New Jersey, New Yorkers bear the second-highest tax burden thanks to a high income-tax rate of 7.85% (for those earning more than $200,000). And property and gas taxes are among the highest in the nation, according to the Tax Foundation. Nevertheless, shoppers can rejoice: The sales tax here remains relatively low at just 4%

Florida passed its budget in May with a not-so-pleasant surprise for smokers: a $1-per-pack hike (the first such increase in 19 years). Motorists also got hit with higher fees to renew a license or register a vehicle. It could have been worse, though. Senate lawmakers had proposed eliminating the sales tax exemption on items like bottled water and tickets to sporting events, both of which didn’t make the cut.

Massachusetts
The most hard-hitting for residents is a proposed increase in the sales tax to 6.25% from 5%. Both the House and Senate approved the measure and it’s looking likely the increase will pass by the July 1 deadline, says Noah Berger, executive director of the Massachusetts Budget and Policy Center, an independent research group. Satellite TV subscribers may also get hit. The state is proposing a 5% sales tax on satellite services. Providers, of course, are fighting the tax.

AZ
During the boom, construction accounted for at least a quarter of new jobs created. Since home prices have fallen 43% from their peak, the construction industry has lost tens of thousands of jobs, says McPheters. Arizona’s unemployment rate in April was 7.7%, shy of the 8.9% national average. Furlows for state employees.

Nevada used to be able to afford being so generous with its residents. Revenue from tourism and gambling supported the state just fine. But now, as consumers would rather put their coins in a bank account than a slot machine, that revenue source is drying up. In fact, the state boasts the dubious honor of having the largest deficit in the country as a percentage of its budget – 32%. It’s hiked the sales tax by 0.35% to 6.85% and taxes on hotel rooms are up 3%. It’s even gambling with its business-friendly climate by raising taxes on businesses.

If Gov. Janice Brewer gets her way, residents will pay for the state’s problems by shelling out an extra 1% at the cash register. The proposed sales-tax hike, which would bring the rate to 6.6%, was omitted from the budget the legislature passed this month, but the governor may veto the budget until it’s put back in

FED pumping money into wallstreet while states and future inflation to take it away from mainstreet.

finance.yahoo.com/taxes/article/107205/6-states-hitting-residents-big-tax-hikes.html?mod=taxes-advice_strategy

Sounds familiar

“il duce”

Benito MUSSOLINI

Fascist Dictator of Italy 1922-1943

BENITO MUSSOLINI, (1883-1945), Fascist dictator of Italy from 1922 to 1943. He centralized all power in himself as the leader (il duce) of the Fascist party and attempted to create an Italian empire, ultimately in alliance with HITLER’s Germany. The defeat of Italian arms in World War 2 brought an end to his imperial dream and led to his downfall.
Mussolini was born in Predappio, near Forli, in Romagna, on July 29, 1883. His father, Alessandro, was a blacksmith, and his mother, Rosa, was a schoolteacher. Like his father, Benito became a fervent socialist.

1923

Fascist Dictatorship

At first he was supported by the Liberals in parliament. With their help he introduced strict censorship and altered the methods of election so that in 1925-1926 he was able to assume dictatorial powers and dissolve all other political parties. Skillfully using his absolute control over the press, he gradually built up the legend of the “Duce, a man who was always right and could solve all the problems of politics and economics. Italy was soon a police state. With those who tried to resist him, for example the Socialist Giacomo Matteotti, he showed himself utterly ruthless. But Mussolini’s skill in propaganda was such that he had surprisingly little opposition.

At various times after 1922, Mussolini personally took over the ministries of the interior, of foreign affairs, of the colonies, of the corporations, of the army and the other armed services, and of public works. Sometimes he held as many as seven departments simultaneously, as well as the premiership. He was also head of the all-powerful Fascist party (formed in 1921) and the armed Fascist militia. In this way he succeeded in keeping power in his own hands and preventing the emergence of any rival. But it was at the price of creating a regime that was overcentralized, inefficient, and corrupt.

Most of his time was spent on propaganda, whether at home or abroad, and here his training as a journalist was invaluable. Press, radio, education, films–all were carefully supervised to manufacture the illusion that fascism was “the doctrine of the 20th century that was replacing liberalism and democracy. The principles of this doctrine were laid down in the article on fascism, reputedly written by himself, that appeared in 1932 in the Enciclopedia Italiana. In 1929 a concordat with the Vatican was signed, by which the Italian state was at last recognized by the Roman Catholic Church.

Under the dictatorship the parliamentary system was virtually abolished. The law codes were rewritten. All teachers in schools and universities had to swear an oath to defend the Fascist regime. Newspaper editors were all personally chosen by Mussolini himself, and no one could practice journalism who did not possess a certificate of approval from the Fascist party. The trade unions were also deprived of any independence and were integrated into what was called the “corporative system. The aim (never completely achieved) was to place all Italians in various professional organizations or “corporations, all of them under governmental control.

Mussolini played up to his financial backers at first by transferring a number of industries from public to private ownership. But by the 1930’s he had begun moving back to the opposite extreme of rigid governmental control of industry. A great deal of money was spent on public works. But the economy suffered from his exaggerated attempt to make Italy self-sufficient. There was too much concentration on heavy industry, for which Italy lacked the resources.

NY: “The sales tax here remains relatively low at just 4%”

That point is misleading because it doesn’t talk about the county’s tax on that exact same purchase. The tax burden on the consumer between the two is often double that.

Onondaga Cty is at 8% right now.

Seeking Alpha

Worst Housing Number in Decades: What Is the Wall Street Media Smoking?

The housing numbers are as bad as they could possibly be. They show year-over- year housing starts to be down by 45.2% from May 2008. I cannot recall the numbers, but, if memory serves me, this decline is of the same magnitude as the housing decline which occured during the Great Depression of the 1930s.

Housing sales always are greater in April than in February. Furthermore, people almost always buy more houses in May than in April. The fact that they repeated that pattern in 2009 is not surprising. It’s been happening since the days of the Roman Republic.

The real news is that housing starts are deeply down year over year. On top of that, we must consider that fact that 2008’s numbers are way down from 2007, and 2007’s numbers were way down from 2006. Housing starts in May, 2006 were running at a seasonally adjusted annual rate of 1,957,000 (www.census.gov/const/newresconst_200605.pdf). In other words, since the height of the housing market, housing starts have fallen so deeply that they amount to only 27% of what they were 4 years ago. That is very bad news and it justifies a deeply downward move on the stock market. Frankly, it is surprising that the DOW and S&P 500 didn’t fall a lot lower than they did.

However, forget about all the doom and gloom of reality! Enter the Wall Street spinmeisters. Don’t bother them with reality. Here is the fantasy…

Bloomberg writes: “Housing starts jumped 17.2% to a seasonally adjusted annual rate of 532,000 units in May, up from April’s figure of 454,000…”[i]

Marketwatch wrote:“Housing starts bounced back with a vengeance in May, rising 17.2% to a rate of 532,000 on a seasonally adjusted annual basis”[ii]

No, I am not making that up. I’ve given you the citation and you can read it for yourself. As ridiculously stupid as that is, they really did write “…bounced back with a vengeance…”.

But, no one beats Wall Street’s big bank analysts at the exceptional skill of being out of touch with reality.

Zach Pandl at Nomura Securities in New York, for example, explained: “This (housing) starts report is actually very encouraging…”[iii]

What kind of weed are these people smoking?

This is a horrible economic news week so far. To add to the bad housing numbers, the Federal Reserve reported that industrial production fell 1.1% in May from April and, in an unusual twist, admitted that this news was “worse than expected.” Six Flags, which owes billions of dollars to its creditors, has filed bankruptcy. Extended Stay Motel chain, which owes billions more, joined them in bankruptcy court.

The most frightening thing is that this is probably only a first taste of things to come. The green shoots are becoming impossible to find, if there ever were any.

Commercial Real Estate Loans Mature - Bigger Problems Arise

The problem is about to get very, very big: Between now and 2011, as much as $814 billion in commercial real estate loans will mature - and need to be refinanced. The problem is that the credit markets are still too tight for most commercial projects.

Most banks have tightened their lending standards, reduced the amount they are willing to lend and significantly reduced the value of the collateral (malls). This leaves many owners with little choice but to turn to the Feds.

Back in May - and with much fanfare - the Federal government announced it would soon be expanding its Term Asset-Backed Securities Loan Facility (TALF). It now plans to include existing securities backed by loans for apartment buildings, office complexes, shopping centers and other commercial property.

But these programs aren’t an industry panacea. If you read the fine print, they provide backing only if the securities are rated AAA by major rating agencies. This excludes just about all the needy real estate - and the REITs that own it - from participating in the program.

Kendra Todd accused of fraud… Anyone surprised?

http://www.palmbeachpost.com/localnews/content/business/epaper/2009/06/21/sunbiz_thesource_0621.html

Sotheby’s Realty has an ad in the Chicago Tribune today for a house on Magnolia in Chicago. Its an “urban retreat on a 34′ wide lot”. Asking price: $3,995,000.

I guess the agents were honest… It really is “unlike anything you’ve seen before!”. At least I’ve never seen a price tag that high for a house on a 34′ lot.

May 2009 DataQuick price per square foot numbers for North County San Diego zip codes show a lot of air has leaked out of the balloon, though there still seems to be a bit of froth in those prices (sorry about the cluttered format!). Overall, the North County single family residence PPSF has dropped from $234 to $180, for a year-on-year decline of 22.91 percent. Here are the PPSF numbers for SFRs by zip code:

No Sold (5/09) 08 PPSF 09 PPSF Change
North County Inland 596 $234 $180 -22.91%
Bonsall 92003 5 $195 $201 3.41%
Borrego Spr. 92004 6 $184 $117 -36.16%
Escondido S 92025 33 $208 $150 -28.11%
Escondido N 92026 57 $205 $174 -15.01%
Escondido E 92027 73 $201 $145 -27.63%
Escondido W 92029 13 $222 $215 -3.05%
Fallbrook 92028 41 $234 $149 -36.52%
Julian 92036 6 $156 $165 5.27%
Palomar Mtn 92060 n/a $274 n/a n/a
Pauma Valley 92061 6 n/a $141 n/a
Penasquitos 92129 36 $286 $276 -3.47%
Poway 92064 32 $290 $260 -10.20%
Ramona 92065 22 $222 $183 -17.50%
Rancho Bernardo W 92127 36 $269 $244 -9.13%
Rancho Bernardo E 92128 38 $281 $279 -0.80%
Rancho Santa Fe 92067 7 $571 $446 -21.93%
Rancho Santa Fe post office 92091 5 $479 $391 -18.25%
San Marcos N 92069 31 $209 $164 -21.63%
San Marcos S 92078 29 $254 $202 -20.47%
Santa Ysabel 92070 1 n/a $239 n/a
Valley Center 92082 21 $264 $156 -41.05%
Vista S 92081 23 $226 $186 -17.87%
Vista W 92083 31 $203 $168 -16.87%
Vista E 92084 43 $215 $163 -23.82%
Warner Spr 92086 1 $173 $113 -34.84%

I keep hearing from various sources (MSM as well as individuals who think they know something) that San Diego home prices have bottomed out. If that is the case, it is sure hard to find evidence in the YOY price changes from DataQuick. Here are year-over-year changes (from May 08 to May 09) in median PPSF for single family residences (middle columns) and condos (right columns) for major areas of San Diego:

Place Code ‘09 ‘08 ‘09 change ‘09 ‘08 ‘09 change

Central San Diego 491 $301 $246 -18.10% 372 $310 $250 -19.13%
East County 301 $229 $189 -17.44% 127 $182 $121 -33.62%
North County Inland 596 $234 $180 -22.91% 153 $228 $180 -20.84%
North County Coast 361 $276 $223 -19.34% 176 $327 $215 -34.27%
South County 315 $209 $168 -19.52% 146 $180 $141 -21.55%

Businessweek…the nation’s premiere business magazine bases a 2012 housing recovery on luch. (paragraph 2, sentence 2).

http://finance.yahoo.com/real-estate/article/107219/what-your-home-will-be-worth-in-2012.html?mod=realestate-buy

i can’t believe they even wrote that.

We have had some recent alarmist posts on here raising the scepter of hyperinflation. To this group, I have to ask: How does your heightened state of anxiety take into consideration housing prices which have recently dropped on a national basis at the fastest rate in the history of the U.S. real estate market? Does your “model” of inflation exclude home purchase prices from the equation, just like the Fed’s does?

In a rare departure from the “it’s different here, Austin is just taking a little breather before it’s back to the boom, boom, boom times, we’re the new California, downtown is the new Manhattan” mantra - Austin American Statesman reports on the increasing rate of foreclosures.

partial link :
statesman.com/news/content/news/stories/local/2009/06/21/0621foreclosures.html

People are desperate to leave california, so they go to Austin..

While purusing the Westside Homes insert in the LA Times this morning, ran across a full page ad from TheMLS.com which contained two bar graphs for the “Market Dynamics” of condominiums in “Primary Areas from Downtown to the Ocean”.

The first shows Median Price (Sold Listings) covering 12/28/08 - 6/14/09. Comparing first quarter with second quarter 2009, it apprears there was a 2% drop in the median price. And if you give their “trendline” lying across the bar graphs a cursory look, it appears that prices have stabilized.

The second bar graph is for Number of Units Sold for the same two quarters. Both the trendline and bars indicate a 64% increase in sales second quarter over first quarter.

Then you look at the numbers: 34 units sold first quarter; and 56 units sold second quarter. Total: 90 units sold in six months.

I just now did my own informal survey of TheMLS.com and found that there are approximately 1460 condo listings for Downtown + Hancock Park + Hollywood + West Hollywood + Beverly Hills + Westwood + West LA + Santa Monica.

If you factor in that there might be only a couple of listings for entire buildings just coming on the market, I’m willing to bet that the number increases by at least 50%.

So Professor Bear, if you will, give us a calculation on how many years of current inventory we currently possess at this rate.

Now, if you just looked at the pretty bar graphs, you’d come away with the impression that prices were stabilizing and sales were increasing dramatically. Without doing a little homework, you might start thinking that you’d better buy now or get priced out again.

Finally, it wasn’t until I started to really scrutinize the ad, that I noticed the “Primary Areas” in 9 point type underneath the 24 point type in bold. So, in order to get these numbers, TheMLS.com was picking and choosing which areas to include.

These real estate people are really starting to irritate me.

(Note: couldn’t find a link for the ad, if anyone else can, please feel free)

1923 Sw Exeter Ct
Port Saint Lucie, FL 34953 Striking Drive-Up - Gated - Cul-De-Sac Location16$184,900
5 Bed, 3 Bath, 4,084 Sq Ft
Property Type: Single Family Home
Stately and grand home on Cul-De-Sac in upscale Newport Isles. Home features dual stairways to upstairs bedrooms. Massive den/bonus room upstairs great location for media… more

From the website of the Hartford Courant at courant dot com:
HARTFORD - A New Jersey blogger is due in a Connecticut courtroom to face a charge of inciting violence against state lawmakers.

Harold “Hal” Turner of North Bergen, N.J., is set to appear in Hartford Superior Court on Monday [22 June 2009].

The 47-year-old former radio talk show host, who now broadcasts commentary on his Web site [i.e., posts webcasts], urged his blog readers earlier this month to “take up arms” against Connecticut lawmakers and suggested government officials should “obey the Constitution or die.”
Also see “Hal Turner” on wiki.

Adventures in homeownership:

The yard is coming along nicely. It used to look like an abandoned lot but a couple of mows and some watering later, it looks like a half-dead lawn, which is a BIG improvement. Still not safe for little man, who wants to eat the ornamental pear berries. (Ick.) And it appears that we have a two-pronged sprinkler system for the backyard, with two missing or damaged heads. The wires were cut by some inept landscaper but we can turn it on by hand. (One of the two sets is intact, so we’ll just use that until we can fix the other ones.)

Neighbors said, “You didn’t check the sprinkler system?” Really, very very low on the list of priorities.

A large portion of the sideways tree has been removed, but there’s still a lot to go. Probably gain about 400 square feet by its removal. Oleander is gone, and that was fun. There’s a mint field (restrain your mint!) and blackberries to remove, and nutsedge. Weeds, weeds, weeds.

Three black widows so far. Ah, the joys of ownership.

Two rooms painted. Little man’s room is bright green, a color called Sweet Midori. I’m a big believer in obnoxious colors for kids’ rooms. Popcorn ceilings are evil when it comes to paint. EEEEEVIL.

Anyway, after the hectic move, tech week, show weekends and their associated duties, and getting the home to the point where we could have family over yesterday (baptism, grill party, s’mores, and relatives sleeping over), we can finally breathe a bit. There’s a lot of work to do but it’s almost all cosmetic, and we’ll be pulling the 45 cubic feet of books out of the garage so we’ll have room for a work bench.

Still have the cheapest house for miles. Hardly surprising. The bathroom wallpaper probably scared people off.

(Incidentally, you know that trick where the realtor calls you and says, “they have another offer”? Yeah, they tried to pull that. We thought about the seven months the house had been on the market, shrugged, and said, “Well, if the other offer’s better, they can have it.” Surprise surprise, the other offer somehow never materialized…)

So Olygal, we have two friendly neighbor cats who think this is their backyard, a bunch of alligator lizards that they torment, tons of pottery animals that keep turning up in the underbrush, and some birds’ nests in the dead tree. Those are deep enough that they’ll fledge before we get to cutting their living space away. The breeze– since you asked– smells very very faintly of salt water. Slightly damp and cool and with any luck, it will be present a lot this summer as we work on insulation and shade issues.

Lots of work. But we’re having fun AND the finances work in the proper direction (as in, cheaper to buy this space than rent it.) Most of the houses around here don’t fit that description and for some reason, they aren’t selling…

Destiny may prove me wrong in this conjecture, but the future inflation outlook seems strikingly clear to me at the moment:

3) At the end of the day, inflation which “nobody expected” eats away enough debt so Uncle Sam can carry on his dollar-denominated business.

* The Wall Street Journal

* THE OUTLOOK
* JUNE 22, 2009

Fed’s Exit Strategies Begin to Come Into Focus
By JON HILSENRATH

When U.S. Federal Reserve officials meet this week, they will spend a lot of time discussing exit strategies. When should they start unwinding their efforts to stimulate the economy? How should they go about doing it?

It’s easy to answer the first question: not soon.

The economy and financial markets have stabilized in recent weeks, but Fed officials want more evidence a recovery is for real. The economy is on track to contract at about a 1% annual rate in the second quarter, according to forecasters Macroeconomic Advisers. That would be the fourth straight quarterly contraction, a stretch of decline that hasn’t occurred since the Great Depression.

Most Fed officials believe the economy has a lot of ground to make up before worrisome inflationary pressures build. The underlying inflation rate, a measure that excludes volatile food and energy prices, is still slowing and tends to continue to slow after a recession ends. “The slack in resource utilization remains sizable,” Fed Chairman Ben Bernanke told the House Budget Committee recently. “Inflation is likely to move down some over the next year relative to its pace in 2008.”
…

FT….

(The Cost of Sewage Removal Goes Up)..
______________________________________________

Warning of stimulus cash paying for bribes
By Brooke Masters in London

Published: June 22 2009 01:19 | Last updated: June 22 2009 01:19

More than $500bn in global economic stimulus spending could be lost to wasteful and fraudulent procurement practices ranging from bribery to selecting less efficient service providers, according to a report on Monday by Kroll, the world’s leading risk consultancy.

Governments have promised to spend $5,000bn (€3,587bn, £3,026bn) to jump-start their economies. But many of them – and the companies they deal with – have reduced spending on compliance and control functions as part of larger cost-cutting measures.

Studies of government contracting found that up to 3.5 per cent of the money ended up as bribes and 4-10 per cent was wasted by failing to pick the most efficient bidder, the report said. The numbers come from a 2002 study of World Bank figures and may understate the problem as it was conducted in more stable economic conditions, Kroll said.

Capital improvement projects are particularly vulnerable to corruption, the consultancy said. It recommended making procurement processes as transparent as possible and offering officials rewards tied to timely delivery.

The big Wall Street sponsored builders who brought us the McMansion craze and millions of vacant tract homes are heaving a collective sigh of relief now that (according to pundits) the worst is over and the housing recovery is in sight. I am still hopeful that at least of few of these will go under before the “longer than expected” recession is over, as I don’t feel they have experienced enough comeuppance for their pivotal role in creating the housing disaster.

Wall Street Journal

* COMMERCIAL REAL ESTATE
* JUNE 22, 2009

Land Deals Help Builders Stay Alive

By MICHAEL CORKERY

In Indio, a small city east of Los Angeles, the supply of foreclosed houses for sale is plentiful. Even so, work crews are finishing a batch of new homes for Lennar Corp.

While the recession wiped out many small builders, mortgage lenders and homeowners, the nation’s biggest builders have hung on, in part through favorable land deals, loan agreements and tax strategies.

Now, the worst appears to be over for most of them. Nationwide, new-home sales are showing signs of bottoming out. The stocks of the big home builders have rebounded from their November lows, and some have bolstered their cash and borrowing ability. Lennar and Toll Brothers Inc. each sold $400 million of bonds in April, and Ryland Group Inc. sold $230 million worth, a sign that some investors think these companies will make it.

A look at how Lennar navigated the worst housing crisis in decades reveals that timely land deals have been critical to its survival.

“Land can humble you,” says Emile Haddad, Lennar’s chief investment officer. “On the surface it looks like the simplest real-estate asset, but it’s really the most complicated.”
…

* The Wall Street Journal
* ABREAST OF THE MARKET
* JUNE 22, 2009

Is the Bull Run Pulling Up Lame?

Overextended Rally Seen Ripe for Downturn; Look Out 6547.05, Says Mr. Roth

By E.S. BROWNING

The stock market is stumbling.

After a powerful rally that pushed the Dow Jones Industrial Average ahead by more than 30% in three months through last week, stocks are clearly having trouble extending their gains.

Many analysts see a pullback ahead, and they are debating whether it will be just a temporary annoyance or something bigger and more painful.

Indicators of market health, including trading volume, buying demand and trading by companies and corporate insiders, are beginning to flash yellow or red. People also are beginning to question whether the economic fundamentals are strong enough to justify continued gains.

The Dow finished Friday at 8539.73, down 3% for the week. It is at the same levels now as in early May. The Standard & Poor’s 500-stock index, which a week ago was up as much as 40% from its March low, ended Friday was at 921.23, still 36% above the low.

“This 40% rally isn’t based on a 40% increase in fundamentals,” says Michael Farr, president of Washington, D.C., money-management firm Farr, Miller & Washington. “The economy is still declining. Credit isn’t coming back. Unemployment is rising and we are seeing a much less robust consumer. I think the market at some point is going to give back a large portion of these gains.”

Before the Senate gets slap happy with using debaucherous lending standards to respike the mortgage market, hows about if they look around at how many lives they have wrecked through encouraging families to buy houses they cannot afford, destined to eventually go into foreclosure?

Stories like this one really point out the pitfalls of management by crisis. They haven’t even figured out yet how we got into the mess, but that is not stopping the proposal and use of myriad hair-of-the-dog stimulus programs to fix things.

Wall Street Journal

* JUNE 22, 2009

Changes Urged to Rules on Condo Loans

By NICK TIMIRAOS

Two Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won’t purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.

In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold “may be too onerous” and could lead condo buyers to shun new developments. The legislators asked the companies to “make appropriate adjustments” to their underwriting standards for condos.

If there is still a fire, here is a bit of oil.
Or: who saved the Hamptons.

Fromt the Guardian:

“Goldman to make record bonus payout”.

“Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm’s 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Staff in London were briefed last week on the banking and securities company’s prospects and told they could look forward to bumper bonuses if, as predicted, it completed its most profitable year ever.”

Fire moves into houses abandoned by foreclosures
By ADAM GELLER
The Associated Press
Sunday, June 21, 2009; 12:44 AM

FLINT, Mich. — Like the house across the street gone missing and the one at the corner stripped of its front door, the weathered brown bungalow at 1430 Jane Ave. bided its time, edging nearer to a meeting with a wrecking crew.

But in a city with more than 1,000 abandoned homes slated for demolition, it would have to wait its turn. Until, at 8:15 a.m. Oct. 8, the little house jumped the line.

When firefighters arrived seven minutes later, the front of 1430 Jane was already swollen with flames - the latest in a long, sad string of fires destroying scores of homes this half-empty city no longer has any use for.

Except this one was different.

Like the others, the owner had thrown in the towel. It was in tax foreclosure and ready to be forgotten.

But it wasn’t empty.

“Gordy!” neighbors yelled in to the flames. “Get out of there if you’re in there!”

Flint’s abandoned homes usually announce themselves by the boards covering their windows, walls ripped open and scavenged for pipes and aluminum siding. But at 1430, a pair of chairs hung from the porch. Blinds flapped from bedroom windows.

And as firefighters battled in, a terrible paradox was revealed. In a city and a nation awash in empty structures, one man’s abandoned home can be another’s man refuge - and sometimes his final resting place.
———————————————————————————
In this May 14, 2009 photo, Elmer Crawley, Gordy Yoesting’s half-brother, looks over the burned remains of the home in Flint, Mich., where Yoesting died in a fire last October. (AP Photo/Carlos Osorio)

Chart shows home vacancy rates over time and number of structure fires in vacant homes (P. Holm - AP)

In this May 14, 2009 photo, synthetic flowers at the base of a tree form a temporary memorial to Gordon Yoesting in front of the burned home where he died last October on 1430 Jane Ave. in Flint, Mich. (AP Photo/Carlos Osorio)

In this May 14, 2009 photo, three abandoned homes are boarded up along Jane Ave. in this East Side neighborhood of Flint, Mich. (AP Photo/Carlos Osorio)

In this May 14, 2009 photo, Andy Graves, a primary captain in the Flint, Mich., fire department, talks about the challenge of fighting fires in the city’s many vacant buildings. (AP Photo/Carlos Osorio)

If Nick says it, then it must be so.

Echo boomers a lifeline for embattled U.S. housing
Mon Jun 22, 2009 12:23am EDT
By Lynn Adler

NEW YORK (Reuters) - The children of baby boomers will eventually resuscitate the pummeled U.S. housing market, Harvard University said on Monday, but in the meantime, limits on income and credit are sustaining the three-year bust.

The highest unemployment in almost 26 years, record foreclosures and rigid lending threaten to overcome emerging home sales progress despite unprecedented efforts by the Obama administration, Harvard’s State of the Nation’s Housing 2009 report said.

Echo boomers, the children of the post-World War Two baby boomer generation, offer a massive source of support for housing, the study said. The generation is entering the peak home buying and renting ages of 25 to 44 and numbers over five million people more than did their parents’ record-sized group in the 1970s.

“Echo boomers are larger than the baby boomer population. Couple that with immigration and you have the seeds, the possibility of a housing recovery,” Nicolas Retsinas, director of Harvard’s Joint Center for Housing Studies, said in an interview.

The group will bolster demand for the next 10 years and beyond, supporting the sagging housing market even if immigration drops, the study said.

The challenges are myriad, however, said Retsinas, a widely followed housing industry expert and former senior official in the Department of Housing and Urban Development.

“We have to find a way to stabilize housing finance in this country,” he said.
…

Voice of San Diego dot org
The W’s Trouble: ‘The Tip of a Very, Very Large Iceberg’
Owners of the W San Diego decided this month to walk away from their mortgage on the building, signaling trouble in the local hotel market. Photo: Sam Hodgson
By KELLY BENNETT

Wednesday, June 19, 2009 | Downtown’s W Hotel is accustomed to being in the spotlight.

With great aplomb, the luxury hotel opened in 2002 after building considerable hype. It even employed a hotel-room-on-wheels with Plexiglas walls where underwear-clad models frolicked on plush beds as it drove through the city streets. Another iteration featured partying swimsuit-wearers to promote the hotel’s beach-style bar with a sand floor.

Now, the W is attracting attention again, but of a decidedly soberer tone. The hotel’s owners announced last week they will stop making their mortgage payments, sending a ripple of disquiet through the local hotelier community. While the W’s trouble might be dismissed as an isolated incident, the market for hotel and office and retail space in San Diego in general is in deep trouble.

“<bWe are at the tip of a very, very large iceberg,” said Alan Reay, president of Atlas Hospitality Group, an Orange-County-based hospitality real estate firm. “We’re going to see a lot more of that.”

Across the country, hotel revenues have dropped off a cliff. In San Diego, those revenues are expected to drop 24 percent this year, according to a report released Tuesday by PFK Hospitality Research.

“Two-thousand-nine is going to be the worst year on record in the U.S. lodging industry in the more than 70 years that they’ve been keeping records, and 2010 isn’t going to be much better,” said Jim Butler, an L.A.-based hotel lawyer and author of the Hotel Law Blog.
…

It’s amazing that with home sale prices off by nearly 50 pct, Bay Area home sales have dropped, not increased. Suggests that would-be sellers expect the market to come back soon rather than continue to drop, as why would they hang on to falling knives?

SF Examiner dot com
Home prices drop, less units sold
Staff, wire report
06/18/09 9:51 PM PDT

There were fewer homes sold in The City last month than during May 2008, and the median price dropped almost 20 percent to $634,000, a real estate tracking company said.

In the nine-county Bay Area, the median price fell to $341,500 from $517,000 a year ago. That’s 49 percent less than the peak reached two years ago, according to San Diego-based MDA DataQuick.

WSJ com tracks the housing market with news, tips and analysis

* June 15, 2009, 10:02 AM ET

Beaches and Freeways: How Coastal Values Have Fallen

By Nick Timiraos

How far have values fallen in coastal California? This video from Jim Klinge, a north San Diego County Realtor adept with a video camera, provides some insight.

As Mr. Klinge notes, values have fallen even along the coastal submarkets that were once seen as mostly immune from the collapse in home prices elsewhere. Now, while signs of a recovery mount in some of the most distressed inland markets, declining values along the coast are just beginning to lead to short sales and foreclosures in mid-to-upper end housing markets.

Notices of defaults, which represent the first stage in the foreclosure process, have jumped in the first quarter of the year as foreclosure moratoria and a state law to slow down foreclosures have expired.

In Carlsbad’s 92009 zip code, where Zillow tracks a median home price of more than $500,000, nearly one in 50 homes had received a notice of default in the 12 months ending in February, according to RealtyTrac. Further south, in San Diego’s tony La Jolla suburb, where median prices measure at nearly $1 million, around one out of 100 homes had received a default notice over that same period.

Good news for Bay Area home prices
James Temple, Chronicle Staff Writer
Friday, June 19, 2009

(06-18) 18:54 PDT — Bay Area home prices rose from April to May, the second straight monthly gain and a surefire sign that the cold-cocked real estate market is finally coming around.

Unless, of course, it’s not. The data could just as easily reflect growing distress in the high-end market that is forcing more well-to-do owners to unload their homes, distorting the statistics with discounted but still relatively expensive properties and foreshadowing greater pain to come.

New York Times Op Ed
June 21, 2009, 9:13 pm
California Bailout, Impossible or Inevitable?
By The Editors

California budget(Photo, left to right: Rich Pedroncelli/Associated Press, David McNew/Getty Images) Left: A father and son demonstrating in Sacramento last month with a sign reading “child care for all.” Right: Gov. Arnold Schwarzenegger spoke about the state budget this month in Escondido, Calif.

New York was on the brink of bankruptcy in 1975, when the investment banker Felix Rohatyn helped oversee the city’s rescue and recovery. But California’s current problems seem to be of a different order. “I certainly don’t recall a feeling of hopelessness here as I seem to sense there is about California’s present situation,” Mr. Rohatyn told Geraldine Baum of The Los Angeles Times in a recent interview.

The Obama administration has told California not to expect a federal bailout. So how should the state deal with its $24.3 billion shortfall? Can it save itself? Or is it likely that the taxpayers of Iowa and Utah will end up picking up the tab of the state that represents an eighth of the nation’s economy? We asked Ron Paul and others for their views on what has to happen next.

The Desert Sun
Palm Springs, CA
California bailout? No way
Legislators got us in this mess, so federal funds unwarranted

The Desert Sun • June 21, 2009

The Obama administration has made it crystal clear it has no intention of bailing out cash-strapped California.

Treasury Secretary Timothy Geithner and other federal officials decided the state, hammered by the global recession and a failure of legislative leadership in Sacramento, must get its budget in order before federal officials could consider lending the Golden State a hand.

Washington’s primary concern: A California bailout would trigger a cascade of demands from other states.

We agree with President Barack Obama’s stance, even as we acknowledge that the economic ripples spawned by California’s continued economic malaise cannot be ignored. But this is a crisis where those elected to solve the state’s greatest challenges and carve its future have simply not done their job.

Obama’s press secretary, Robert Gibbs, affirmed last week that California’s situation is a dire one. “We’ll continue to monitor the challenges that they have,” he said. “But this budgetary problem, unfortunately, is one that they’re going to have to solve.”

That’s the right answer.
…

With apologies to Robert Frost:

Two loans diverged in a yellow wood
And sorry I could not be one borrower
And borrow both long I stood
And peered down one as far as I could
‘Til it bent around the undergrowth.

And then took the ARM as just as fair
For it was sassy and had a lot of flair
But as for that passing there
Had worn both about the same [not!]

And on that morn both equally lay
With eaves no rot had painted black
Oh I left the first for another day
But knowing how way leads on to way
I doubted I would ever pay it back

I’m telling this with a sigh now that the bubble has burst hence:
Two loans diverged in a wood and I,
I took the greedier one and
That has made all the [solvent] difference