The Housing Bubble

Great news! We are on track with our “jobless” recovery.

May-June joblessness up in 90% of metro areas.

WASHINGTON — More than 90% of the nation’s largest metropolitan areas saw their unemployment rates climb in June from the previous month.

Some of the biggest increases hit college towns, where the annual summertime exodus of students causes bars, restaurants and other businesses to cut staff. The Detroit area, hit hard by manufacturing layoffs tied to the beleaguered auto industry, also got stung in June.

Unemployment rates rose from May to June in 348 of more than 370 metro areas, according to an Associated Press analysis of Labor Department data released Wednesday.

The figures aren’t adjusted to account for seasonal trends, such as lifeguards hired during summer or retail clerks let go after the holiday shopping season. So they tend to be volatile from month to month.

The Labor Department does not provide seasonally adjusted metro area unemployment data. It does adjust the national unemployment rate for seasonal factors. The U.S. jobless rate, which hit 9.5% in June, is expected to rise to 9.7% when the department reports the July rate next week.

DETROIT - Faced with the worst residential real estate market in decades, the developers of the Westin Book Cadillac Hotel are cutting prices on unsold condos. Advance purchase orders had been taken on almost all of the 64 condominium units on the hotel’s upper floors, including the priciest at $1 million or more. But the collapse of the economy prevented many buyers from closing on their units. Only about 12 deals closed. The developer said Wednesday he is putting all the unsold units back on the market and cutting the prices 10% to 35%. — Buy now or pay even less later. They’re not building any more condos in Detroit!

Las Vegas, Fort Myers, Florida Lead U.S. Cities in Foreclosures:

July 30 (Bloomberg) — Las Vegas and Cape Coral-Fort Myers, Florida led U.S. metropolitan areas in foreclosures in the first half of the year as unemployment and falling home prices forced home-loan defaults, RealtyTrac Inc. said.

The Las Vegas area had the highest rate of foreclosure filings, with 7.5 percent of households receiving a default or auction notice or being seized by a lender. That rate was six times the national average. The Cape Coral-Fort Myers region, on Florida’s Gulf Coast, was second, with a rate of 7.2 percent.

“Foreclosure activity continued its upward trajectory nationwide and in the majority of metro areas in the first half of the year,” James Saccacio, chief executive officer of RealtyTrac, said in a statement. “While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases.”

Home prices in 20 major U.S. metropolitan areas dropped 17.1 percent in May from a year earlier, according to the S&P/Case-Shiller index. Nationwide, home prices have fallen 21 percent since peaking in July of 2006, according to the National Association of Realtors in Chicago. The U.S. unemployment rate rose to 9.5 percent in June, the highest in almost 26 years, the U.S. Labor Department said on July 2.

That brought the total number of lost jobs to about 6.5 million since the recession started in December 2007, the Labor Department said.

1.5 Million Properties

U.S. foreclosure filings rose to a record in the first half as job losses and slumping home prices fueled an increase in defaults, RealtyTrac said in a July 16 report. More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June. That’s a 15 percent increase from the year earlier.

What’s this? “Compassionate” lib’s, blowing off other compassionate lib’s. Can’t be, they just don’t do that, where’s the love?

Congresswoman’s abandoned house angers neighbors.

Laura Richardson’s former home in Sacramento’s upscale Curtis Park neighborhood is in disrepair. Residents say they have appealed to her and House Speaker Nancy Pelosi without success.

Reporting from Sacramento — John Bailey thought it was great when his neighbor was elected to the House of Representatives in 2007.

“Not everyone lives next door to a congresswoman,” he said.

But two years later, he doesn’t feel so lucky. The congresswoman’s house is abandoned and in disrepair, “a blight on the neighborhood,” Bailey said.

He thinks the way that Rep. Laura Richardson (D-Long Beach) has treated her Sacramento home tells far more about her than her voting record.

“I wouldn’t want anyone that irresponsible to represent me,” said Bailey, like Richardson a liberal Democrat. “What I don’t get is how she has the time to visit with Fidel Castro but doesn’t have time for her own house. If you can’t manage your own household, you probably shouldn’t get involved in international affairs.”

He’s not alone. Neighbors have complained to the city, written letters and e-mails to Richardson and House Speaker Nancy Pelosi , but the three-bedroom house remains an eyesore. Neighbors just wish she would sell it or let it go into foreclosure, anything to get it into the hands of someone who would care.

“She shows total disregard for everyone in the neighborhood,” said Sean Padovan, a retired police sergeant. “She ought to be embarrassed and ashamed.”

Richardson did not return phone calls for this story.

The problems with the house began shortly after Richardson was elected to the Assembly in 2006 from Long Beach and bought the two-story house in the leafy Curtis Park neighborhood.

It wasn’t long before Padovan, 62, angry that the lawn wasn’t being mowed, knocked on Richardson’s door, told her he was a neighbor and asked if she minded if he cut the grass. He hauled out his hand mower, and when Richardson still seemed to have no interest in taking care of her yard, he stuck a gardener’s card in her door with a note saying that she should call him if she had questions.

He never heard from Richardson, not a thank-you or a wave as she walked past.

Akron-area medical lab run by Pioneer Physicians Network to offer low-cost medical lab tests to uninsured patients of other physicians. ”We’ve kept our pricing down because we have self-pay patients and uninsured patients,” practice manager Kathy Kostelnick said. ”It’s one fee schedule for everybody.” The Summit County Medical Society had been running a campaign to get all local labs to accept payments from uninsured patients that are similar to the amount Medicare pays. Medicare, for example, pays $18.57 in Ohio for a cholesterol test that area labs charge $96 to $147.75 to provide, according to a recent survey of area labs. Pioneer charges $24 for the test, according to its Web site. To quality for the new program with Pioneer, patients must pay with cash, check or credit card for the tests at the time of the service. A flat $5 draw fee also is charged per appointment, regardless of how many tests are run.

It aint just houses.

Nevada sales plunge 21.1 percent in MayJuly 30, 2009 7:49 AM ET advertisement

All Associated Press news By SANDRA CHEREB

CARSON CITY, Nev. (AP) - Nevada merchants sold $3.19 billion in goods during May, representing a 21.1 percent drop compared with the same month a year ago, the Nevada Department of Taxation reported Wednesday.

Sales were down in 16 of Nevada’s 17 counties, including the state’s population centers of Clark County, which encompasses Las Vegas, and Washoe County, which includes Reno. Mineral County was the exception, the report said.

For the fiscal year that ended June 30, sales are down 11.9 percent compared with the prior year.

Gross revenue collections from sales and use taxes totaled $240.3 million, a 19.26 percent decrease from May of last year.

“This months sales tax figures are another sobering reminder that the economy is in dire shape,” Gov. Jim Gibbons said. “I will continue to work on bringing more jobs and tourists to Nevada. We need to shore up the economy in order to restore consumer confidence and encourage consumer spending.”

Out of curiosity, I visited the “qualifying” cars for the cash for clunkers programs yesterday. I think that they have “tweaked” the mileage on a lot of car to make them compliant. I checked my older car that I use as a second driver, and it qualifies… I regularly get almost 30Mpg on the highway in this car, and about 24 combined, so I was quite surprised that they had it at an exact 18. Coincidence?
I also saw in the local fishwrap an article about an electrician’s family that was interviewed due to the new chase policy of requiring a monthly payment equivalent to 5% of the oustanding balance. The wife was a housekeeper, and they were complaining because their payment went from 380 to 780 a month. That would be 18K in CC bills. Of course the “owed” their house, probably had car payments, and a miriad of other expenses.
This is why I think that the recast in Alt-A really will matter in MA. A lot of people are hanging on by the thread of their pants, and will not make it. I think that Alt-A has the nucular bombs. It is the home of the neg-am pick-a-payment no doc no income verification pay 3% but real interest is 9% loan that is about to recast. Granted some Alt-a’s could actually afford their loans, and when the reset (not recast) comes, they will be better off, but those are the ones that read this blog. The rest? How-much-a-month dudes…

RIP, Globalism. Wasn’t much benefit to anyone but maybe some emerging third world countries and transnational corporations. It’s gonna get ugly, but this system is going down. Needs to be purged, anyway.

Lucrative Fees May Deter Efforts to Alter Loans

Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.

http://www.nytimes.com/2009/07/30/business/30services.html?_r=1&hp

I had an idea for a thread. It occurred to me that we often say even though we know better or we run into people off the blog that don’t realize that Presidents don’t research economic policy decisions themselves. They have advisors and perhaps they tap other experts in the field.

It would be really helpful to me and perhaps others to have a list of leading economists (past and present) with maybe a bullet point list as to how they are advising or influencing our government officials. Then we could compare and contrast the theories and reasoning behind them. I’ve been thinking about asking several news magazines if they may be interested in tackling this too.

Most of the voting public appears to imagine an administration that pulls out ideas from their own brain cells never realizing these ideas and concepts have been around for a long time, are what past systems have been based on and cross party lines.

Too busy at work to post these days, but went out for some sushi last night and was surprised to see “geoduck” on the board of specials. Apparently there was a sushi dish that somehow included it, as well as a soup of some sort.

Eew.

I want a geo-duck!! Oly promised me one, but, well, anyway…

Just returned to Orlando from a series of long trips. Drove down from Raleigh yesterday. What surprised me is that, relative to the fairly light traffic, I saw hardly any “touristy” vehicles. I don’t remember seeing so few apparent tourists driving to Florida at this time of year since the gas rationing of the 1970s. The folks who say tourism is down only a little, if there are any of those folks left, must be smoking something IMO. If traffic at the airport is down and they aren’t on the roads, how are all the supposed visitors arriving?

Stopped to tire-kick at a new development near Jax; the very pleasant agent mentioned the “uptick” in sales reported on Monday or Tuesday, but readily caved when I noted that YOY is down about 22%. It was a fairly large development and sales center and there were zero other lookers in the hour and a half I was there.

From an earlier-in-the-month trip to Bradenton-Sarasota: along roads that I drive each time, I see many, many For Rent signs where For Sale ones had been for the past year or two. This agrees with observations of friends here who report increasing rental availability in their neighborhoods (I haven’t confirmed this by tracking listings).

Wish I had been back in time to join the comments on Ahansen’s excellent demographic observations in Tuesday’s post here.

Other countries aren’t stupid enough to let their jobs go outside their borders . How many jobs did China add to our collective American job
bank for the last 10 years ? Do you see many ads in the paper for jobs being offered from Mexico to Americans from the recent American Companies that moved there?

Big Business wants open borders when it comes to wage competition ,and why wouldn’t slave labor Countries be open to any American Company opening up a manufacturing plant in their Country …….it creates jobs ,and they come out ahead and we lose . Oh no ,Big Business thought we could live on credit .

The interactions of the various Stock Markets World wide is another rigged Casino game .Regulators can’t even keep tract of America Business and the New York Stock Exchange ,let alone regulate World
wide gaming of the system .

Lucrative Fees May Deter Efforts to Alter Loans
New York Times

Homeowners and Investors May Lose, but the Bank Wins (July 30, 2009)

Industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans.

Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.

“It frustrates me when I see the government looking to the servicer for the solution, because it will never ever happen,” said Margery Golant, a Florida lawyer who defends homeowners against foreclosure and who worked in the law department of a major mortgage company, Ocwen Financial. “I don’t think they’re motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It’s a license to do whatever they want.”

Rich Miller, a governance project manager at Countrywide Financial and Bank of America before he left in January, said Bank of America had been reluctant to modify loans, which hurt the bottom line. The company has been waiting and hoping the economy will improve and delinquent customers will resume making payments, he said.

“That’s the short-term strategy,” said Mr. Miller, who oversaw training programs at Countrywide, which was bought by Bank of America. He now works as an industry consultant.

Bank of America disputed that characterization. “To think that somehow or other we would jeopardize investor relationships and customer relationships for the very small incremental income we would receive by delaying seems ludicrous,” said Robert V. James, the bank’s senior vice president for mortgage operations and insurance. “It’s not the right thing to do.”

Mortgage companies, some of which are affiliated with the nation’s largest banks, are paid to manage pools of loans owned by investors. The companies typically collect a percentage of the value of the loans they service. They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.

Legal experts say the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

Under the Obama administration’s foreclosure program, a servicer that modifies a loan for a homeowner collects $1,000 from the government, followed by $1,000 a year for each of the next three years. A senior Treasury adviser, Seth Wheeler, said these payments amounted to “meaningful incentives to servicers to help overcome the challenges and competing demands they face in considering and completing loan modifications.” He added that mortgage companies “are contractually obligated to the terms of this program, which require them to offer modifications to qualified borrowers.”

But experts say the administration’s incentives are often outweighed by the benefits of collecting fees from delinquency, and then more fees through the sale of homes in foreclosure.

“If they do a loan modification, they get a few shekels from the government,” said David Dickey, who led a mortgage sales team at Countrywide and Bank of America, leaving in March to start his own mortgage advisory firm, National Home Loan Advocates. By contrast, he said, the road to foreclosure is lined with fees, especially if it is prolonged. “There’s all sorts of things behind the scenes,” he said.

When borrowers fall behind, mortgage companies typically collect late fees reaching 6 percent of the monthly payments.

“For many subprime servicers, late fees alone constitute a significant fraction of their total income and profit,” said Diane E. Thompson, a lawyer for the National Consumer Law Center, in testimony to the Senate Banking Committee this month. “Servicers thus have an incentive to push homeowners into late payments and keep them there: if the loan pays late, the servicer is more likely to profit.”

She cited Ocwen Financial, which reported that nearly 12 percent of its income in 2007 came from fees to borrowers.

WSJ Blogs

* July 30, 2009, 8:30 AM ET

Daily Show Gets Some Laughs Out of Geithner’s Home Troubles

By Conor Dougherty

Last night The Daily Show had some fun with the difficulty Treasury Secretary Timothy Geithner is having in selling his Larchmont, NY home, calling it a “toxic asset” and referring to his blue tile bathroom as “ghastly.” It also makes jokes that Mr. Geithner’s woes are the result of Fed policies “he helped to implement.”

…The Daily Show piece… starts by describing the thawing real estate market but noting a “tragic tale” about “a family forced to move when the father had to take a job in a different city, and now their well-appointed home remains unsold.” The house, of course, is Mr. Geithner’s.

The Daily Show interviews a real estate agent who says Mr. Geithner priced his house “way too high” but didn’t want to take a price reduction. According to the piece, Mr. Geithner bought his house during the 2004 peak for $1.6 million but, despite the subsequent falloff in prices, listed it for slightly more.

The Daily Show drags out Yale Economist Robert Shiller for a little perspective on the matter.

“Is it not like hiring a personal trainer who is morbidly obese?” Daily Show correspondent John Oliver asks Mr. Shiller, about hiring a Treasury secretary who can’t seem to navigate the real estate market.
…

I thought we would play with our landlords a bit and asked them how much to buy their home?

This is an e-mail from the wife of Bob:

“Sorry for just now getting back to you on the possible purchase of Bobs’ house , He has been working a lot of overtime and I wanted to research the current comps. Not so much what people are listing their houses for.. but what they are actually selling them for. Last year we had it listed with Alan next door for $349,000.00. The market has gone down even more since then. The current 4 bedroom, 2 bath, 2 car garage homes with pools are selling between $290,000.00 and $250,000.00. Somewhere in the middle would be great, but we are defiantly willing to negotiate. Let us know what you are looking to pay and we’ll go from there. You still have 8 months left on the lease so at $1,500.00 a month you will save $12,000.00 in rent. Plus the headache of moving again. Could be a WIN / WIN on both ends…:)

MAKE AN OFFER !!!!!!”

I wrote back:

“I have attached a proper comparable for you.

The value of a home should be between 120x and 150x of the rental price. To apply a 150x multiplier one would need to had updated a few things like the kitchen, bathrooms.
Since none of these things have been done and it appears that the roof may need doing as well. We feel your homes value should be in the 120 multiplier.
So for your home:

1500 X 120 = 180,000
Here is a recent comp of a newer home but with the same size, pool that sold for 181,000.

http://www.zillow.com/homedetails/birds-eye-view-map/46482091_zpid/#birds-eye-view

If we wanted to spend more we would most likely go with something much newer, more like this 2007 built home home with pool priced at 239,000:

http://www.realtor.com/realestateandhomes-detail/17744-N-44Th-Pl_Loxahatchee_FL_33470_1102385049

We do not wish to insult you and I hope I have not, these are real numbers that I have obtained based on real sales.

Sincerely,”

She wrote back:

“Our bottom line is $234,900 “as is” we can’t afford to go any lower so we have decided to keep the home as a rental until the market turns around”.

I wrote my husband and e mail:

“Hey baby,

This shows you how selfish the people are in this entire stupid freaking housing market when you get a seller saying they tried to sell for 349,000 last year ( tried to find a huge sucker) , and then says buy our house now between 250,000 and 290,000….takes a breath of air and then says “bottom line” is 234,900. They are still trying to find more suckers and are trying to make a pile of money.

Now they say they are going to wait until the market turns around. I hope that they have kids really fast so they can have them take over their mortgage one day as NO ONE is going to re start this housing market again in our lifetime.

The day I pay 234,900 for a crap shack like this is the day I have completely LOST my mind. In fact when the housing market does finally bottom out I am sure that 175,000 would seem like the good ole days to our landlords who are completely NUTS. They will kick themselves for not taking that generous offer.

1995 built house House needs: new roof
pool needs resurfacing
new kitchen
new bathroom counters, cub-boards.
gutters
more dirt to bring up low areas.
On top of the barn and riding ring.”

To my landlords, I will send them a simple “thank you”

I have 8 months left on this rental with the option of re-new for another year…I bet these idiots will try to raise my rent in 8 months.

I think I am going to be a renter for a long time.

I hate this mess I just wanted to have my horses at home.

I’ve been looking into the coming mortgage resets of the Alt-A and Prime. I have found some preliminary information that these resets are running ahead of schedule. Pick A Payment was mentioned.

“About 40% of the option ARMs that were underwritten in 2006 and 2007 are already delinquent. ” I’m very suspicious of that number. I don’t think that the source - Business Week - understands that statement is dependent upon more than just late payments and is not foreclosure - late payments, partial payments, jingle mail, squatting, etc. Still, I really need hard numbers for this. What it does state is that the mortgage reset chart is obsolete. Note that there is nothing to take it’s place. Again, we are in uncharted waters.

In any case, the number itself indicates that the wave of resets is early due to a simple inability to pay the original mortgage and the borrowers realization that the loan balance was increasing while the value of the house was declining.

I’m currently in the “will arrive early” camp. The are other people who apparently agree: Barney Frank and Barrack Obama. They are directly threatening the lenders themselves for not getting more workouts in the pipeline. Called them to Washington they did! They went and got yelled at. I smell panic that the green shoots could be in trouble.
Gee. Ya think?
Here is the link.
http://www.businessweek.com/investing/wall_street_news_blog/archives/2009/07/option_arm_loan.html

Who was it that said, ” I see debt people.”

Roidy
P.S. Global unrest is increasing. I’m a real fan of globalization. I just wish we had put adults in charge of its growth and development.

If the Fed’s optimistic forecast for second-half growth fails to pan out, should we expect another stock market crash this October? I frankly see no fundamental reason the stock market has risen meteorically thus far into the year. Isn’t the economy in the worst slump since the 1930s at the moment? And aren’t many of the would-be investors sidelined by a lack of spare change to invest? I can’t help but wonder about the source of liquidity which has driven the stock market up sharply in recent months.

Wall Street Journal

* TODAY’S MARKETS
* JULY 30, 2009, 4:40 A.M. ET

Demand Fears Rattle Markets

By PETER A. MCKAY and GEOFFREY ROGOW

Worry that poor economic conditions will restrain commodity demand and hurt profits of metals and oil companies helped drive stocks lower on Wednesday.

The Dow Jones Industrial Average fell 26.00 points, or 0.3%, to 9070.72 amid declines in energy components Chevron and Exxon Mobil and manufacturers Caterpillar and General Electric. The S&P 500 declined 4.47 points, or 0.5%, to 975.15 as its energy sector sank 2.3% and its basic-materials group fell 2.1%.

Oil-company stocks fell as crude-oil futures slid $3.88 to $63.35 a barrel after U.S. inventory data showed a surprise increase in stockpiles. ConocoPhillips, which posted a 76% decline in earnings, fell 3.5%.

ArcelorMittal fell 6.3% after the world’s largest steelmaker reported a loss that was wider than expected amid a slump in sales. Other metals stocks also sank, with Dow component Alcoa sliding 2.1%.

There were mounting concerns that the U.S. and China, the world’s two biggest users of most major natural resources, may see demand stay weak longer than previously expected. The Chinese stock market suffered its biggest percentage drop since mid-November on concerns that the government may start to tighten credit after banks there lent a record $1.08 trillion in the first half of the year.

Economic signals in the U.S. were mixed. Durable-goods orders fell 2.4% last month, though orders outside transportation sector rose. The Federal Reserve’s “beige book” report on regional conditions showed that U.S. economic activity overall remained weak but that the recession seemed to be growing less severe. New York Federal Reserve Bank President William Dudley said that the U.S. is likely to see moderate growth in the second half of 2009, but at a muted pace.
…

Corporate profits plunging
Unemployment rising
Foreclosure Train still rolling
Wages falling
State Government revenue plunging
Higher cost of borrowing

All this and the Stock Market continues to rise. I guess if you hold the keys to the house, you can pretty much do anything. (Goldman and the Stock Market)

New York Times
Businesswoman Sues California for Paying With I.O.U.’s
By REBECCA CATHCART
Published: July 29, 2009

LOS ANGELES — The owner of an embroidery and printing business sued California’s controller and treasurer on Wednesday, saying they had violated state and federal law by issuing hundreds of thousands of i.o.u.’s since July 2 to vendors like herself with no immediate prospect that they could be cashed.

The suit, which seeks certification as a class action on behalf of all affected vendors, was filed in the Federal District Court in San Francisco. It demands that California stop issuing the i.o.u.’s, or registered warrants, and redeem all those it has dispensed.

“I’ve never seen a state behave in such a cavalier manner to the people that provide goods and services that enable it to operate,” said William M. Audet, the lawyer for the plaintiff. “The state is forcing people to accept these pieces of paper and pay taxes on them. Small businesses are closing, and more will close by the time the state redeems these warrants.”

The plaintiff, Nancy Baird, said she would have to shut her business if California did not quickly redeem her $27,752.16 i.o.u., the payment given her for polo shirts and uniforms supplied to a state-run youth camp. Her bank would not accept the warrant, she said, because she had had an account there only nine months.

Tom Dresslar, a spokesman for State Treasurer Bill Lockyer, said Mr. Lockyer “understands the frustration felt by i.o.u. recipients and feels bad about the hardship they’ve suffered.” But, Mr. Dresslar said, the state’s process for issuing and redeeming the warrants “meets all legal and constitutional requirements.”
…

In defense of Ahnold, a state which employs a “soak-the-rich” tax strategy may soon find many of its wealthy residents (read “entrepreneurs and corporate managers”) fleeing to tax havens, leaving behind the indigent masses with high need for government services and little ability to pay for them.

Schwarzenegger’s approval numbers hit an all-time low
By Steven Harmon
Contra Costa Times
Posted: 07/29/2009 10:00:00 PM PDT
Updated: 07/30/2009 07:07:40 AM PDT

SACRAMENTO — Gov. Arnold Schwarzenegger has sunk to an all-time low among Californians in a new survey that also finds that residents, while strongly in favor of environmental regulations, want to slow down on environmental reforms while the economy is still taking a beating.

Schwarzenegger’s job approval rating is now at 28 percent, according to a poll by the Public Policy Institute of California, comparable to the ratings faced by former Gov. Gray Davis before he was recalled in 2003.

The poll of 2,501 adults was taken July 7-21, at the height of budget negotiations but before the $26 billion deficit had been resolved. Ironically, Schwarzenegger had attempted to appeal to populist sentiment by refusing to consider taxes as a way to climb out of the budget hole, using a combination of cuts, fund shifts and borrowing instead.

“A lot of the cuts being made were not popular, and he really took the lead and was out front on what he said was needed — staying firm on not raising taxes — so the entire deal has his fingerprints,” said Melissa Michelson, a political science professor at Cal State East Bay. “I hear from a lot of people who would have understood if some taxes were raised. Raising taxes on the wealthy sure would have been more palatable than cuts on students, elderly and children.”
…

WSJ: A Senate panel has subpoenaed financial institutions, including Goldman Sachs Group Inc. and Deutsche Bank AG, seeking evidence of fraud in last year’s mortgage-market meltdown.

Tax evaders flock to IRS to report their sins

The number of illegal immigrants living in Arizona has plunged by one-third in the past two years amid a dismal job market and stiffer enforcement of immigration laws, according to researchers who released a new report. After reaching a high of 530,000 in 2007, Arizona’s undocumented population now numbers about 350,000, a drop of about 180,000 people.

“After reaching a high of 530,000 in 2007, Arizona’s undocumented population now numbers about 350,000, a drop of about 180,000 people.”

Am I missing something here? If they are undocumented and we didn’t know that they were and loaned them big sums of money for houses and cars, how can we now state that 1/3 rd of them left AZ and that we now have about 350K left in AZ. Amazing what figures pop up in the news of late.
Am I the only one seeing more reporting of criminal activity especially in the more touristy cities? Could it be because tourism is down and law enforcement maybe subject to layoffs so let’s evoke the fear factor once again?

Former CBS newsman Dan Rather wants the White House to establish a commission to save the news business! At stake, he says, is the “very survival of American democracy.”

Rather said yesterday that such a commission on media reform ought to make recommendations on saving journalism jobs and create new business models to keep news organizations alive.

Speaking in Aspen, CO Rather said, “A truly free and independent press is the red beating heart of democracy and freedom. This is not something just for journalists to be concerned about, and the loss of jobs and the loss of newspapers, and the diminution of the American press’ traditional role of being the watchdog on power. This is something every citizen should be concerned about.”

Wait a sec. Rather wants a “truly free and independent press” supervised and sheltered by a federal commission?

Would he resurrect Joseph Geobbels to run it? (In wartime Germany Goebbels was Reich Minister of Propaganda. It was he who wrote: “Think of the press as a great keyboard upon which government can play.”

Government already has too much of the news media functioning as its public relations department. We hardly need a tax-paid federal commission to make matters worse.

The U.S. Treasury borrowed $39 billion yesterday in an auction that drew poor demand, raising worries over the cost of financing the government’s burgeoning budget deficit. The borrowing program didn’t do well Tuesday, either, and another attempt to peddle debt today is also expected to be disappointing.

What does this mean? Very likely the big lenders here and abroad are questioning the credit worthiness of the United States. The public debt is racing toward $12 trillion and the federal government’s outgo exceeds its income by about $4 billion per day.

Hey Olygal,

Check your email. I hope I did not land in the “spam” folder.

Midlands ambulance crews strain to help obese patients

By Michael O’Connor
WORLD-HERALD STAFF *
Four-hundred-, 600- and even 800-pound patients are presenting ambulance crews with some big challenges.

As obesity rates rise, paramedics in Nebraska and Iowa are faced with carrying more obese patients. In turn, paramedics find creative ways to move them, and some fire departments are looking to borrow or buy specialized equipment.

Lincoln Fire & Rescue, for example, is considering putting a construction crane and a forklift on call for patients who are too big to get out a door or down steps. Firefighters had to use a tarp to haul an 800-pound patient a few years ago.

It’s another example of how obesity can strain the health care system, whether that’s hospitals or ambulance crews. The Nebraska Medical Center in Omaha in recent years has purchased heavy-duty beds and wheelchairs for obese patients.

Adult obesity rates in Nebraska and Iowa have been rising.

In 2008, about 27 percent of the population in the two states was obese. That’s up from 23 percent in Nebraska and 24 percent in Iowa in 2005, according to a report by Trust for America’s Health, a nonprofit group that focuses on preventive health.

Lloyd Rupp, a battalion chief in the Omaha Fire Department, said his crews encounter a 400-pound-plus patient every several days. Five to 10 years ago, crews would run into such patients every couple of weeks.

Paramedics in Omaha, Sioux City, Iowa, and elsewhere occasionally must call in an extra crew to help carry big patients, particularly up or down steps.

Fire departments emphasized that even though large patients can be tougher to move, they are treated with the same respect as other patients.

When paramedics don’t have specialized equipment, they have to improvise.

“That is the trademark of firefighters,” said Pat Borer, deputy chief of the Lincoln department. “They are resourceful.”

Bill Lundy, volunteer captain with the York (Neb.) Fire Department, remembers a call several years ago involving a man who had suffered a heart attack in his basement apartment. The man weighed more than 350 pounds, and there wasn’t enough room to get him and the stretcher up the basement stairs. There was also concern about whether the staircase could support the man and the firefighters carrying him.

Firefighters unhinged an interior door, put the man on it and slid it through a basement window.

Wendee Brown, an Omaha fire captain, said big patients often apologize for their size.

“They are embarrassed,” she said. “You feel bad for them.”

Moving big patients is tricky, she said. It’s hard to get your arms around an obese patient, making it difficult to get leverage. If a patient is weak or unconscious, it’s even harder.

A few years ago, a woman weighing more than 600 pounds who was dehydrated and weak had fallen out of a chair. Firefighters couldn’t lift her onto a stretcher, so they used a backboard, which is normally used for people with neck or spine injuries.

Brown said firefighters rolled the woman onto her side and slid the board under her. They lifted the board onto the stretcher, then slid the board out.

Borer, the Lincoln fire official, said that several years ago crews used a 16-by-16-foot canvas tarp from a firetruck to move a patient who weighed more than 800 pounds.

Firefighters rolled up the tarp edges to create handles and slid the tarp under the person. An extra crew was called in to help, and it took about 10 firefighters to carry the person to the ambulance.

Standard response in Omaha for a medical call is an ambulance and a firetruck, with a combined crew of six members. Rupp said that a couple times a year an additional truck with four firefighters will be called to help when a patient weighs more than 500 pounds and must be carried up or down steps.

Omaha might purchase a special ambulance to make it easier to transport obese patients. The ambulance would be used for all patients, not just those who are obese.

A standard ambulance costs $190,000 to $200,000. Omaha is considering paying $15,000 to $20,000 more for one that comes with, along with a winch, a reinforced floor and a bigger patient compartment. Rupp said the ambulance would be purchased when an existing ambulance must be replaced.

Some fire departments are considering purchasing heavy-duty stretchers, which can come with hydraulic lifts.

The Council Bluffs Fire Department purchased one four years ago. The stretcher can hold up to 1,600 pounds, compared with the standard 700 pounds, and is 29 inches wide instead of 23 inches.

The department uses it for patients who are 400-pounds-plus, and it’s getting more use lately— once or twice per month instead of every other month, said Rick Benson, a division chief in the department.

The Bernanke Fed has repeatedly sounded the alarm bells on deflation. But two decades of deflation has not appeared to have been that damaging to Japanese households (except perhaps for those which bought lots of stocks or houses at the bubble peak). It seems like deflation would create winners and losers more than being universally bad. Savers would be among the winners while the Fed’s Wall Street banking constituency and those who recently bought houses (like Treasury Secretary Timothy Geithner) would be among the losers. Am I missing something important here?

Given the appearance that developed nation central banking cartel members are united in their intention to use coordinated monetary policy to defeat deflation, I believe the European fears of deflation may prove unfounded.

Financial Times
Europeans expect prices to tumble
By Ralph Atkins in Frankfurt
Published: July 30 2009 12:34 | Last updated: July 30 2009 12:34

Eurozone consumers see inflation as vanquished and increasingly expect prices to tumble in the year ahead, according to a European Commission survey that could stoke fears of deflation.

Expectations about trends in consumer prices in the next year were this month more skewed towards falls than at any point since comparable Commission data started in 1985. The results come ahead of official data on Friday that are expected to show eurozone annual inflation falling further into negative territory.

They suggested that while the eurozone is recovering from continental Europe’s worst post-war recession, there is still a lot of slack in the economy, which means inflationary pressures have disappeared. Headline eurozone inflation has fallen below zero largely because of steep falls in energy prices, but evidence is mounting that price falls are becoming more widespread.
…
Among consumers, confidence returned to a level not seen since September, before the global economic crisis intensified. Households were more optimistic about their financial situation over the next 12 months than at any time since December 2007.

But some of the increased confidence may have been driven by expectations of lower prices – which would boost spending power. Prior to the economic crisis, the component of the Commission’s survey covering consumers’ expectations about prices in the next 12 months had always been positive. But in April it turned negative for the first time, indicating that a more consumers expected prices to remain stable or fall than were expecting increases. In July, the indicator fell further, to a record low of minus 12.

The risk for the ECB is that negative inflation rates fuel fears of a damaging bout of deflation – a protracted period in which prices fall generally, wreaking significant economic damage. Friday’s eurozone inflation data are expected to show an annual rate of minus 0.4 per cent, or an even faster pace of price falls. However, the ECB expects the annual rate to return to positive territory later this year and economists believe that the rebound in economic activity, even if modest, mean the risk of deflation remains slight.
…

Anyone heard of this? Its fascinating. Reads like a Stephen King short story.

http://www.wired.com/science/discoveries/magazine/17-05/ff_guidestones

” However, the ECB expects the annual rate to return to positive territory later this year and economists believe that the rebound in economic activity, even if modest, mean the risk of deflation remains slight.”

I just love all of this unbridled optimism out there spewing from these pseudo economists, pseudo intellectuals, and government officials all the while trying to find a one time fix until next year when their great turnaround is to take place. They already gulped down their dose of hemlock and don’t even know it.

Unbridled optimism, Dow up 150, pump monkeys dancing! Jobs for everyone?

Unemployment Report FAR Weaker Than Claimed

“Initial Claims” were 584,000 today, scream the headlines, and the pumpers all claim this is “better than expected” when looking at continuing claims, which declined slightly to 6.416 million on a 4-week rolling basis.

But those numbers don’t include the people who rolled off the original 13 week unemployment rolls and onto the extended programs (which go out to 52 weeks in many cases), and as such the number is being dramatically underreported.

That’s a problem - see, there are 2,656,879 people in that bin, an increase of 24,518 from the prior week, and worse, 352,482 people rolled off the 13 week program last week!

So the real increase was about 50,000 people, not 24,000 in the current week, because you have to add back in those that have been removed from the count but are still unemployed!

Again: 352,483 people, or well over half of the newly-filed claims, rolled off the original 13 week benefits onto extended benefits. This is where the “decrease” in the 4-week moving average came from. This little machination means that there was not an actual decrease in the 4-week moving average of people on unemployment; to the contrary, those on unemployment increased, not decreased!

“Extended benefits” are people who cannot find work within three months of being laid off, and are being forced onto the expanded benefit programs. Until the moving average change drops to close to zero including extended benefits the labor market is not slowing its rate of contraction!

Worse, we’re going to start losing people off the “extended” benefits soon (next month) which will make it nearly impossible to count the real number of unemployed, and those who drop off extended benefits will have no income whatsoever, which means they won’t be paying taxes - or spending.

The total count of people on both 13 week and extended benefits (raw numbers, not seasonally adjusted) is 8.718 million, another new record.

Don’t believe the “green shoot” callers - this report was horrendous and shows continued dramatic contraction in the workforce and economy.
(from K Denninger)

Bulk purchases latest condo trend in Florida.
AP Real Estate
Thursday, Jul. 30, 2009

MIAMI They’re lurking, holding bags of cash and eyeing distressed condo markets.

Big-time cash investors are snapping up South Florida condo units in bulk. There have been at least seven purchases of 10 or more condos this year, including four since June, according to county records. Investors are re-selling the units or renting them until the market recovers.

Last month, Tom D. Sullivan and Jorge Arevalo shelled out $14.6 million for 51 oceanfront, condo-hotel units in the One Bal Harbour complex from developer WCI Communities, which is reorganizing under bankruptcy protection.

“It didn’t take 10 years of research to see it was a pretty good deal,” said Sullivan, founder of Lumber Liquidators Inc.

That’s because existing condo prices in Miami have fallen by half since the peak in December 2006, and investors think they see the bottom. There’s also plenty of selection. Miami has a two-year supply of condos for sale, at the current demand, according to the local Realtors associations.

Since 2003, nearly 23,000 units have been built or are still under construction in greater downtown Miami, said Peter Zalewski, a principal with Condo Vultures Realty. In June, developers were still holding about 9,400 units, he said. Banks own about 5,000 local homes and condos.

Desperate to get them off their books, banks and developers are auctioning off Miami condos by the dozen. That’s where investor Ed Pascoe, an antiques dealer, snapped up 56 units for $4 million in a 135-unit building in February.

This month, he started offering the units for rent at $1,000 a month, or for sale from $99,000 to $299,000, according to his broker Brian Carter. Pascoe declined to comment.

By paying monthly fees on time, these new owners can be a financial relief for homeowners associations struggling to cover the costs of maintenance and insurance in a building dotted with empty units. While lenders and developers are obligated by law to keep up with association fees, it doesn’t always happen.

The cash for some of these deals is coming from groups of private investors. One multibillion-dollar firm, Contrarian Capital Management LLC in Greenwich, Conn., is looking closely at bulk purchases in Florida, according to Gil Tenzer, the firm’s real estate portfolio manager.

He’s not the only one.

“We’re getting much closer on several deals,” said Jay Massirman, managing partner of Rivergate Residential, a Miami-based real estate investment firm. Massirman said he has researched dozens of bulk purchases for investors.

Unlike the condo investors of the boom years, who borrowed recklessly with the intention on flipping the units within months, more investors today are using cash and thinking strategically.

“They have the money and the knowledge and wherewithal to hold them until the market turns around,” said Jennifer Drake, a real estate attorney with Becker & Poliakoff.

All aid? That’s a f—ing laugh! How the hell would the general public know if they repaid one thin dime? Can’t be known, it is what we’re told it is.

Fannie, Freddie Won’t Repay All Aid, Lockhart Says

July 30 (Bloomberg) — Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, won’t be able to repay all of the $84.9 billion in federal aid they have received since being seized by the government last year, their regulator said.

“Some assets and senior preferreds will have to be left behind as they come out of conservatorship, and that means some of those losses will never be repaid,” Federal Housing Finance Agency Director James Lockhart said at a speech in Washington today. “Their book is so large, it’s hard for me to see that they will be able to repay all of that.”

Fannie Mae and Freddie Mac, which have posted $150 billion in losses going back to the third quarter of 2007, will continue losing money “for at least the next year or so,” and won’t return to “strong profits” for another two to three years, Lockhart told reporters after his speech.

“It’s hard to predict at this point,” Lockhart said.

He said Washington-based Fannie Mae and McLean, Virginia- based Freddie Mac have asked the Treasury “from time to time” to reduce their annual dividend obligations to the government, currently at 10 percent.

Hi Sign of times ? Coming home late about 9PM last night and a few weeks ago noticed about 1/2 dozen people camping out under the overhang of 1401 New York Ave, NW. This is an office building just a couple block east of the White House. Have not seen street people camping in this neighboorhood for years. But it’s rare I’m here this late. Maybe charities / social services overwhelmed ? These people were very wretched looking - that is not people who just like to party and won’t work but looked deranged or with other problems.
Spectum, a new high end condo development in Falls Church, VA, (close in suburb) at 444 West Broad Street (Route 7) has started renting condos it can’t sell. Rent to own. (one bedrooms start at $400K) The places and development look nice and are in decent neighborhood - good shopping and dining but the place is not within walking distance to Metro.

1,200 R.I. businesses face closure over sales tax.

PROVIDENCE — State tax officials have put more than 1,200 businesses across the state on notice this week that they are out of business unless they pay their overdue sales taxes immediately.

For most, that action came in the form of a personal visit from the state Division of Taxation, ordering business owners to lock their doors at once.

By Wednesday, a line of people had queued up inside the Department of Administration building on Smith Hill, waiting their turn to plead their case to a state revenue agent. Some were angry. Others frustrated.

“I understand the state needs money, but to put pressure on the small guy or the moderate guy that’s struggling, it’s not going to do any good,” said Mike Suriani, who owns an electrical supply company in South Providence.

In Suriani’s case, it may have been a bookkeeping error that landed him in the three-hour line. Suriani says he paid his taxes in full — albeit a little late –– and had copies of the cancelled checks from the state showing he had indeed turned over the sales taxes he collected.

But that didn’t keep taxation officials from appearing at his door Tuesday demanding that he close up shop.

“Yes, the rules state that we have a responsibility to pay our bills every quarter. But when your customers come in and they don’t pay you for a month, and then another month, and another month, businesses have no choice [in] the eyes of the state but to close up and get out,” Suriani said.

State officials say they’ve given businesses with sales-tax permits plenty of notice that they’ve fallen behind in making tax payments.

(We intend to see that these lowlife tax dodging bastards pay, damn it!)

(I added the last line.)

Downtown Fort Myers condo has 32 stories, and one lonely tale.
Condo can get spooky for tower’s only family.

Victor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.There are no neighbors.

Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.

The 45-year-old Weehawken, N.J., firefighter bought the condo from Miami-based The Related Group for $430,000 and closed on it in November. He planned to make it a vacation getaway and eventually his full-time residence when he retires in four years.

But prices have fallen hard since the real estate bubble burst in early 2006. Only a handful of those who put down deposits on the tower’s units actually closed on the deal. Those who did have swapped their Oasis I units for condos in Oasis II next door.

Vangelakos didn’t, because he was unable to convince his lender to agree to the swap, said Betsy Lu McCoy, vice president and associate corporate counsel for Related.

That leaves the Vangelakos family splitting their time between New Jersey and a creepy, surreal life in Oasis I.

They’re the only ones using a well-appointed clubhouse, but they can’t watch the big plasma TV.

“We haven’t found the remote controls,” Victor said.

Pause for a moment anywhere in the building during the day and the silence is deafening.

At night, Vangelakos said, they often hear people on the grounds or even inside the building itself. It’s not hard to break in one of the many entrances.

Once, late at night, “Somebody banged on our door,” Vanelakos said.

It wouldn’t have been hard to find the person in the otherwise darkened building.
“At night,” he said, “you can see our TV from the street.”

Especially popular for intruders is the swimming pool, Vangelakos said. They heard people there one night “and the next day all our chairs were in the pool.”

His relationship with Related is testy at best. Once, he said, when management turned off his water to fix a leak in a pipe, “we came back 10 days later and the water was off but our TV was on.”

Now, after months of exchanging letters with Related about building maintenance and other issues, Vangelakos said he just wants out.

He hasn’t filed a lawsuit but his attorney, Fort Lauderdale-based John Ewing, said Related hasn’t delivered the marina, pro shop and fancy restaurants that were promised.

“They have the ability to buy him out,” Ewing said. “They can resolve this in a fair way.”
McCoy said it’s not that simple.

“His concerns have not fallen on deaf ears,” she said, but it isn’t Related’s fault he hasn’t been able to persuade his lender, JP Morgan Chase Bank, to transfer the mortgage to a unit in Oasis II.

“What he paid went to our lender, it didn’t come to us,” McCoy noted, so Related would have to pay off the mortgage before it got the unit back.

Besides, she said, the situation is the result of market forces beyond anyone’s control.

“We did not foresee, nor did anyone else foresee, the collapse of the real estate business and the concurrent collapse of the lending industry,” McCoy said. “They’re caught and we’re caught.”

“The 45-year-old Weehawken, N.J., firefighter bought the condo from Miami-based The Related Group for $430,000 and closed on it in November. He planned to make it a vacation getaway and eventually his full-time residence when he retires in four years.”

Something is rotten when a 45 yr. old firefighter can purchase a $430K vacation getaway in addition to his prime residence and whatever else.

NEW YORK (Reuters) – Bonuses paid to executives at nine banks that received U.S. government bailout money in 2008 were greater than net income at some of the banks, the office of New York Attorney General Andrew Cuomo said on Thursday.

Cuomo, in a report on months of investigation into compensation paid by the banks, said employee pay “has become unmoored from the banks’ financial performance.”

That’s putting it mildly. What a great deal for tax payers and stock holders.

Why Pima County, Arizona, property taxes are on the rise

Why whould I pay for cash-for-cllunkers? I mean, does it really benefit me the taxpayer when joe consumate-consumer trades his rusted crown-victoria for a new Ford focus? Or does it help the car manufacturer? The stealership? What if I don’t want a new car? What if I ride a bike? A big-wheel?

Cuomo says banks paid more out in bonus money then they earned

Goldman earned $2.3 billion, paid out $4.8 billion in bonuses and received $10 billion in TARP funding, the report said.

Morgan Stanley earned $1.7 billion, paid $4.475 billion in bonuses and received $10 billion in TARP funding, while JP Morgan Chase earned $5.6 billion, paid $8.69 billion in bonuses and received $25 billion in TARP funding.

Cuomo said his office studied historical financial filings and found that at many banks compensation increased in the 2003-2006 bull market years, but stayed at those levels as the mortgage crisis and recession hit.

“Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well.

“Bonuses and overall compensation did not vary significantly as profits diminished.”

While Citigroup Inc (C.N) and Merrill Lynch, bought by Bank of America Corp (BAC.N), lost more than $27 billion each, Citigroup paid $5.33 billion in bonuses and Merrill paid $3.6 billion, the report said. TARP paid the two banks a combined $55 billion.

A spokesman for Bank of America said bonuses were paid to 200,000 bank employees and 30,000 Merrill legacy employees.

“Episodes of “contagious fear” are not uncommon and should not be treated lightly, medical experts say.

Fort Worth psychologist Hap Klinefelter said the power of suggestion can manifest itself in medical symptoms.

“Emotions are real contagious,” he said. “A lot of times people will reason from their feelings. It introduces the power of suggestion and it makes them real susceptible to misinterpreting physical cues or it will distort their perceptions.”

I now understand the housing bubble debacle. It was “contagious greed” leading the way and ‘Contagious fear’ by the discriminating buyer who refused to buy that caused the collapse.

I got popped this morning for no front plate by LAPD motor cop on my way to work. Surprise, surprise, my license expired 2 weeks ago so I also got dinged for a misdemeanor driving with an expired license.
I didn’t say anything about the officers momma.

Disney Profit Falls 26% on Drop in Ad Sales, Theme-Park Slump

July 30 (Bloomberg) — Walt Disney Co., the world’s biggest media company, said third-quarter profit fell 26 percent as the recession cut advertising sales and theme-park revenue.

Net income dropped to $954 million, or 51 cents a share, from $1.28 billion, or 66 cents, a year earlier, Burbank, California-based Disney said today in a statement distributed by Business Wire. Sales fell to $8.6 billion in the quarter ended June 27, missing the $8.81 billion average of 17 analysts’ estimates compiled by Bloomberg.

The U.S. Postal Service is on track for a record $7 billion deficit this year. That’s more than double last year’s loss. The Postal Service is a government run enterprise. So is Amtrack. It loses money, too.

Yet millions of Americans pin their hopes on government business expertise to manage medical insurance and services without plunging these programs into a more calamitous condition than they are already. Geesh!

Ian Mathias writes: “The Postal Service is facing a perfect storm of business risk: The business is already loaded up with debt. Minimum wage and benefit costs are rising while revenues are plummeting. For example, they are expected to handle at least 27 million fewer pieces of mail this year than in 2008. Is there any business in America that isn’t looking to cut shipping costs? (There’s this new technology we’ve heard about it, it’s called “e-mail.”)

Chuck Butler at The Daily Pfennig knows his stuff. “Our economy is dependent on the Chinese continuing to buy our debt. Unfortunately Treasury Secretary Geithner’s boss isn’t making his job any easier, as the deficits continue to rise. The nonpartisan Congressional Budget Office estimates the annual deficits under the administration’s spending plans will never drop below $633 billion over the next decade. And it forecasts an additional $9.1 trillion added to the debt held by the public - the amount that Geithner has to finance with bond sales.

Publicly traded US debt - which excludes deficits the government owes to itself in Social Security and other trust funds - stood at 41 percent of the total economy in 2008. It is projected to climb to 82 percent of the entire economy by 2019.”

Yikes! Obama’s spending plans feature deficits of more than $633 billion annually all the way out to 2019? No one has a clue, of course, about what the monetary landscape will look like in 2019. At its present rate of descent the dollar will be history by then.

I for one have NOT read the national sickness plan, have you?

It’s roughly 2000 pages at this point.I don’t know any congress folks that have either. Some people have, here are a few highlights(EDITED). Don’t believe it? Then please ask for a copy and read it, if it matters to you. Are we in nirvana yet? For those of you that don’t care and think this will screw the “money” machine and stick it to the rich… Enjoy!

• Page 22: Mandates audits of all employers that self-insure!
• Page 29: Admission: your health care will be rationed!
• Page 30: A government committee will decide what treatments and benefits you get (and, unlike an insurer, there will be no appeals process)
• Page 42: The “Health Choices Commissioner” will decide health benefits for you. You will have no choice. None.
• Page 50: All non-US citizens, illegal or not, will be provided with free healthcare services.
• Page 58: Every person will be issued a National ID HealthCare.
• Page 59: The federal government will have direct, real-time access to all individual bank accounts for electronic funds transfer.
• Page 65: Taxpayers will subsidize all union retiree and community organizer health plans (read: SEIU, UAW and ACORN)
• Page 72: All private healthcare plans must conform to government rules to participate in a Healthcare Exchange.
• Page 84: All private healthcare plans must participate in the Healthcare Exchange (i.e., total government control of private plans)
• Page 91: Government mandates linguistic infrastructure for services; translation: illegal aliens
• Page 95: The Government will pay ACORN and Americorps to sign up individuals for Government-run Health Care plan.
• Page 102: Those eligible for Medicaid will be automatically enrolled: you have no choice in the matter.
• Page 124: No company can sue the government for price-fixing. No “judicial review” is permitted against the government monopoly. Put simply, private insurers will be crushed.
• Page 127: The AMA sold doctors out: the government will set wages.
• Page 145: An employer MUST auto-enroll employees into the government-run public plan. No alternatives.
• Page 126: Employers MUST pay healthcare bills for part-time employees AND their families.
• Page 149: Any employer with a payroll of $400K or more, who does not offer the public option, pays an 8% tax on payroll
• Page 150: Any employer with a payroll of $250K-400K or more, who does not offer the public option, pays a 2 to 6% tax on payroll
• Page 167: Any individual who doesn’t’ have acceptable healthcare (according to the government) will be taxed 2.5% of income.
• Page 170: Any NON-RESIDENT alien is exempt from individual taxes (Americans will pay for them).
• Page 195: Officers and employees of Government Healthcare Bureaucracy will have access to ALL American financial and personal records.
• Page 203: “The tax imposed under this section shall not be treated as tax.” Yes, it really says that.
• Page 239: Bill will reduce physician services for Medicaid. Seniors and the poor most affected.”
• Page 241: Doctors: no matter what specialty you have, you’ll all be paid the same (thanks, AMA!)
• Page 253: Government sets value of doctors’ time, their professional judgment, etc.
• Page 265: Government mandates and controls productivity for private healthcare industries.
• Page 268: Government regulates rental and purchase of power-driven wheelchairs.
• Page 272: Cancer patients: welcome to the wonderful world of rationing!
• Page 280: Hospitals will be penalized for what the government deems preventable re-admissions.
• Page 298: Doctors: if you treat a patient during an initial admission that results in a readmission, you will be penalized by the government.
• Page 317: Doctors: you are now prohibited for owning and investing in healthcare companies!
• Page 318: Prohibition on hospital expansion. Hospitals cannot expand without government approval.
• Page 321: Hospital expansion hinges on “community” input: in other words, yet another payoff for ACORN.
• Page 335: Government mandates establishment of outcome-based measures: i.e., rationing.
• Page 341: Government has authority to disqualify Medicare Advantage Plans, HMOs, etc.
• Page 354: Government will restrict enrollment of SPECIAL NEEDS individuals.
• Page 379: More bureaucracy: Telehealth Advisory Committee (healthcare by phone).
• Page 425: More bureaucracy: Advance Care Planning Consult: Senior Citizens, assisted suicide, euthanasia?
• Page 425: Government will instruct and consult regarding living wills, durable powers of attorney, etc. Mandatory. Appears to lock in estate taxes ahead of time.
• Page 425: Government provides approved list of end-of-life resources, guiding you in death.
• Page 427: Government mandates program that orders end-of-life treatment; government dictates how your life ends.
• Page 429: Advance Care Planning Consult will be used to dictate treatment as patient’s health deteriorates. This can include an ORDER for end-of-life plans. An ORDER from the GOVERNMENT.
• Page 430: Government will decide what level of treatments you may have at end-of-life.
• Page 469: Community-based Home Medical Services: more payoffs for ACORN.
• Page 472: Payments to Community-based organizations: more payoffs for ACORN.
• Page 489: Government will cover marriage and family therapy. Government intervenes in your marriage.
• Page 494: Government will cover mental health services: defining, creating and rationing those services.

Wrap it up….. I’ll take it.

I am not the only one who believes Cuomo’s bonus report suggests Megabank, Inc may have committed fraud in a big way by paying massive bonuses out of TARP funds. I just heard Peter Morici suggest the same on the BBC evening financial news report.

Cash for clunkers dead already! Say it ain’t so!

Financial Times
Tarp banks award billions in bonuses
By Greg Farrell in New York
Published: July 30 2009 18:18 | Last updated: July 30 2009 21:46

Citigroup and Merrill Lynch, which lost $55bn in 2008, between them paid 1,400 employees bonuses of $1m or more each, according to a New York state report, released on Thursday, on banks propped up with taxpayer funds.

The study, compiled by Andrew Cuomo, New York attorney-general, showed that JPMorgan Chase and Goldman Sachs, which both finished in the black last year, paid the most million-dollar bonuses - 1,626 and 953, respectively.

However, the totals at a profitable bank such as Goldman were nearly matched by two of the year’s biggest losers on Wall Street. Citi, which suffered a $27.7bn loss, paid million-dollar bonuses to 738 employees. Merrill, which lost $27.6bn, paid 696 bonuses of $1m or more.

“There is no clear rhyme or reason to the way banks compensate and reward their employees,” Mr Cuomo said. “Compensation for bank employees has become unmoored from the banks’ financial performance.”

Jul. 30 2009 - 10:01 am
The Best Goldman Apology Yet

“So you can see why Goldman alums sometimes don’t do very impressively once they leave Goldman. They find themselves in positions where no one questions their premises and it’s hard to get good feedback and pushback. (This is why Paulson employed telephone banks of analysts to call Wall Street to solicit opinions.) Outside of the Goldman womb of debate and ideas, bankers and traders lack perspective. You might say that no Goldman is an island.”

And the winner of this month’s Most Retarded Horsesh!t Written In Defense of Goldman Sachs award goes to… Heidi Moore at Big Money! Come on down, Heidi!

This stuff is just getting funnier and funnier. Now that both Michael Lewis and Joe Hagan at New York have piled on and hammered the “magical” Wall Street bank’s reputation, the tearful, wounded apologies on the bank’s behalf are trickling in with some more urgency, especially now that, as Moore puts it, the bank faces the specter of “disastrously populist” hearings in the Senate for (and Moore left out this part) selling crap mortgages while shorting them at the same time.

This latest effort by Moore over at the Slate-run “Big Money” column is absolutely hilarious. She manages to write a fairly lengthy three-page article defending Goldman without addressing a single one of the main criticisms recently leveled at the bank. The piece is a protracted exercise in goalpost-moving, as her premise is that what Goldman’s critics accuse it of is not using the power of the state to bail itself out and enrich itself at the expense of others, but of having “designed the kind of hive mind that controls anything it touches.” According to Moore, the defense against the charge that Goldman executives have “the kind of hive mind that can control everything that it touches” is the fact that they fared so badly in their attempts at “controlling” government and popular opinion. She actually writes the following:

“If you believe that Goldman Sachs has designed the kind of devastating hive mind that can control any institution it touches, including the U.S. government, you also have to explain why Goldman Sachs alums have a history of not functioning terribly well outside of Goldman. Why, for instance, did Henry Paulson, by all accounts a brilliant man, flounder about in the politics of the Treasury so desperately that he was forced at one point to plead with Nancy Pelosi on bended knee? Why did the first TARP overseer, Neel Kashkari, get yelled at by Congress while performing the thankless job of managing the $700 billion kitty of the government? Why did Edward Liddy, former Goldman board member who served as the new CEO of AIG (AIG), quit in a huff over bonuses?”

Moore here is arguing that because Hank Paulson actually had to beg the House majority leader for $700 billion in no-strings-attached money to bail out his buddies, and because Neel Kashkari got “yelled at” for unilaterally changing the TARP mission in defiance of congressional orders (and for refusing to provide congress with information about where TARP money went and how he chose whom to give it to), and because former Goldman banker Ed Liddy evoked popular anger for using public money to shell out bonuses to the very department of AIG that bet $450 billion without having a dime to cover it (”necessitating” the bailout), that all of this somehow is proof that Goldman does not “have the kind of hive mind that conrols everything.”

Oh come on you guys ,they are all a bunch of thieves ,always have been ,always will be . The crash of the real estate scheme just exposed just how bad they are .

If enough bottom callers say there will be a bottom later this year, perhaps a critical mass of good hopefulness will make it so. But I note similar assumptions following the Great Wall Street Crash of 1929 proved to be unfounded. I know it is different this time, as BB has studied the Great Depression and knows how to avoid making the same mistakes the Fed made back then, etc., but I still question whether some problems are not large enough that their very nature requires more than the usual amount of time to mend.

Wall Street Journal

* JULY 31, 2009

Bottom Lines Buoy Rebound Hopes
Though Profits Are Still Weak, Cost Cuts, Overseas Demand Help Many Companies Find Footing

BY PHRED DVORAK

Ten months after credit markets froze and deepened the recession, many companies, while still hurting, are seeing signs of a bottom and growing cautiously optimistic about an uptick by year’s end.

A number of major companies reported second-quarter earnings noticeably less grim than the prior two quarters, and in line with or ahead of Wall Street expectations, if still far below a year ago. Much of the support for earnings came through aggressive job cuts. But global companies also are seeing demand rise in some overseas markets, especially in Asia, even as demand stays slack at home.
…

Wall Street Journal

* OPINION
* JULY 30, 2009, 11:21 P.M. ET

Signs of Life in the Housing Market

The good news is that government efforts to prop up prices didn’t do much.

By GERALD P. O’DRISCOLL JR.

The economic crisis began with a housing downturn that spread to housing finance, and then to the entire economy in the form of a deep recession. Stability in the financial sector and growth in the economy will not resume until there is recovery in housing. But what will constitute a recovery in housing?

While the news this week about an uptick in home prices and sales in some markets is encouraging, those anticipating a return to pre-bubble price levels will find the wait to be a long one. In some markets it might not happen for a decade or more. Other markets may never return to pre-crisis prices—certainly not when adjusted for inflation.

Unfortunately, many public policy proposals have been aimed at propping up home prices, or at least cushioning their fall. Nothing could be more counterproductive.

The housing downturn was a classic bursting of an asset bubble. The suddenness of the collapse was frightening and, for a time, prices seemed to be in a free-fall, especially in over-heated areas in Arizona, California, Florida and Nevada. But the cure for falling prices in the aftermath of a speculative bubble is, paradoxically, to allow them to fall.

In housing, as with other assets, falling prices clear markets. They do so by making homes more affordable. During the bubble, homes had become out of reach for many people. In some areas—such as the San Francisco Bay area—households with a median income could not afford a median-priced home. This locked first-time buyers out of the market and made existing homes the currency for purchasing another home. To get around this, creative financing (such as “liar loans”) sprang up to enable some to acquire a substitute currency. We know where that led—defaults and bankruptcies.
…

There are no green shoots sprouting just yet in the commercial property sector…

Finance and Economics

The collapse in commercial property
Towers of debt

Jul 30th 2009
From The Economist print edition
Concerns are switching from the residential to the commercial sector

Illustration by S. Kambayashi

FROM a distance Potsdamer Platz looks a bit like its old self. Once the central hub of Berlin, before it was turned into a rubble-strewn no-man’s-land divided by the Wall, it is now surrounded by shiny new towers. Get a little closer, however, and it becomes clear that many buildings are just façades painted onto giant hoardings that rise ten stories high between actual office blocks.

This subterfuge makes for a far more pleasant view than that provided by vacant lots. It also points to an unusual degree of restraint among developers in Europe’s second-largest property market (by transactions). The commercial-property market in most other parts of the developed world is in deep trouble.

Unlike other property busts, this downturn has not been driven by speculative overbuilding but by investors’ overenthusiasm. Commercial property was a popular asset class for much of this decade. Institutional investors who lost a lot of money when the dotcom bubble burst were persuaded that switching from the stockmarket into property would diversify their portfolios and reduce their risk. Cheap finance was plentiful. Investors could indulge in a version of the “carry trade”—borrowing at a low interest rate to buy buildings and counting on the rental yield and capital growth to more than cover their financing costs.

That strategy looked smart when rents and capital values were rising and vacancy rates were low. But as cheap financing has dried up and economies have tumbled into recession, investors have become badly exposed. According to Marcus & Millichap, an estate agent, the office-vacancy rate in Manhattan climbed by more than three percentage points in the first half of the year, to 11.2%. As tenants have disappeared, rents have fallen too—by 16% over the past year, Marcus & Millichap reckons.

Property prices have also been badly hit. Moody’s, a rating agency, estimates that American commercial-property prices dropped by 7.6% in May alone, leaving them almost 35% below their peak in October 2007. Prices would have gone down even further had not transactions dried to a trickle (see chart). Owners are loath to sell into a falling market, although some distressed sales are occurring.

All this sounds like a replay of the downturn in the residential-property market, where easy borrowing terms allowed homebuyers to push prices to extreme levels. To add to the sense of déjà vu, property loans have also been bundled into complex financial instruments, known as commercial mortgage-backed securities (CMBSs). The riskiest of these, mainly those issued between 2005 and 2007, are now running into trouble.

Realpoint, a credit-rating agency, says that nearly $29 billion of CMBSs, around 3.5% of the total, have become delinquent (ie, borrowers have not kept up interest payments) in the past 12 months. It thinks the delinquency rate could reach 6% by the end of the year. Richard Parkus of Deutsche Bank reckons the default rate could eventually reach 12%. Together with bad construction loans, that could push the losses of American banks on commercial property to $200 billion-230 billion. Many small banks will go under as a result.
…

Behind the rickety wall of misplaced and premature optimism erected by the serial bottom caller brigade lies an ugly fundamental reality which they seem unwilling to confront: The juxtaposition of a cresting baby boomer demographic wave with massive overbuilding of supersized high end US homes has created perfect storm disequilibrium conditions which will take decades, not months, to unwind.

The Huffington Post
July 31, 2009

Mark Miller

Syndicated newspaper columnist, blogger at RetirementRevised.com
Posted: July 30, 2009 01:05 PM

Read More: Baby Boomers, Economic Crisis, Housing Bubble, Housing Crisis, Housing Market, Housing Slump, Retirement, Business News

When the housing market was soaring, many baby boomers thought of their homes as piggy-banks that could be cracked open in retirement to finance retirement.

High housing prices would allow us to leverage equity to finance our lifestyles, buy second homes or pay entry fees into retirement communities. That thinking was encouraged by the financial services industry, which aggressively marketed low-interest mortgage debt and equity-to-cash products like home equity loans and reverse mortgages.

But the piggy bank was smashed when the housing market crashed. And today’s high unemployment rates, sagging incomes and rising foreclosure rates make it unlikely that we’ll see a strong rebound anytime soon in housing. True, the widely-watched Standard & Poor’s/Case-Shiller home price index released this week showed U.S. home prices rose in May on a month-to-month basis for the first time since July 2006. But that shouldn’t be taken as a sign that the market is going to rebound to pre-crash levels anytime soon. At best, the Case-Shiller index hints that we may have found a bottom in housing. Maybe.

To be sure, the housing crash has caused pain for every American demographic group. But older Americans have the greatest exposure to real estate. Consider:

–Seventy-nine percent of Americans over age 55 own their own homes, compared with a national median ownership rate of 69 percent. As prices soared during the bubble era, boomers took on larger mortgages, and a greater percentage are now carrying mortgage debt well into their 60s than ever before.

–Home equity accounts for one-third to half of all net worth for older Americans; the only larger source of household wealth is Social Security. (Despite all the buzz about the stock market’s crash, housing actually impacts a much larger group of Americans, simply because home ownership is spread much more evenly across income groups than equity investments.)

– 30 percent of Americans age 45 to 54 are underwater on their mortgages, according to one study–that is, they owe more than their homes are worth, and would need to bring cash to a closing.
…

This passage from Mark Miller’s Huffington Post article succinctly explains why a US housing market bottom is not likely at hand, and in fact may take decades, not months, to reach:

Warning signs were flashing in the housing market well ahead of the crash, due to basic laws of supply and demand. Baby boomers have been a key driver of housing demand over the past several decades due to our generation’s extraordinary size. Now, we constitute an enormous group of potential home sellers as we age and begin to sell homes in order to downsize or move.

But boomers need to sell to a smaller, less affluent pool of buyers. “The most important factor that pushes prices up is when you have more buyers than sellers,” says Dowell Myers, a professor of urban planning and demography at the University of Southern California. Myers has been pointing to a huge sea change in the ratio of buyers and sellers that will put downward pressure on housing values over the next two decades.

“The baby boom generation has pushed up housing prices over the past three decades, as they steadily moved up the ladder and bought housing. So people think the last three decades are normal. But at some point boomers will start to cash out.”
…

LA Times

Hot housing market? No, but Dean Baker bought a house
…
– Dean Baker, the prominent Washington, D.C., housing economist who saw the bubble coming and sold his condo in 2004, recently bought a house. Baker said he thinks the market still has more room to fall, but he wanted to enjoy his backyard this summer and was willing to pay a premium if it comes to that. He said he’s OK with a 5% to 10% further decline in his home value, but “if it goes down 20% I’ll be upset.”

This sure does not sound to me like a description of a real estate market nearing an incipient bottom. Both commercial and residential are still in the process of getting flushed down the default toilet. Given still-rising unemployment, plus yet-to-be-seen fallout from the state budget crisis, I am highly puzzled over the serial bottom callers’ recent optimism.

LA Times
MORTGAGES
California’s default rate soars to 9.5%

Delinquencies in June are up sharply from a year ago, when 6% of borrowers were behind on their loans.

By Peter Y. Hong
July 31, 2009

About 1 in 10 Californians with a home loan is now in default, and there’s growing evidence that the mortgage meltdown is spreading to commercial real estate.

The home mortgage delinquency rate — the percentage of borrowers who have missed several payments and are in the first stage of foreclosure — climbed in June to 9.5% in California and 9.9% in Los Angeles County, according to First American CoreLogic.

The staggering number of home mortgage defaults probably will lead to large numbers of foreclosures through at least this year, housing experts say.

“It’s probably a given we’ll see a high number of foreclosures in the next couple of quarters due to the level of defaults plus the recession and jobs lost. There’s plenty more pain to come,” said Andrew LePage, an analyst for real estate research firm MDA DataQuick of San Diego.

Mortgage defaults are more likely to result in foreclosure when borrowers owe more on their homes than they are currently worth — commonly called being “upside down” or “underwater” in industry lingo.
…