The Housing Bubble

Hello everyone,

I think my last post got cut off, but I’m still FIRST!!!

I am doing well, as is the 82nd Airborne Division here in Kandahar.

I also want to thank all of you who posted about the VA loan program. It is sort of sad I didnt know as much as I did, but now I am much more educated…Anyone got any good housing news today?

Also, for the lady that is Ahanson, please forgive if I have gotten your logon wrong..

I think you are out of town, but I want you to know how pleased I was when I reread your story. Although I think me and you are from different views politically, I was intrigued by your fight with the bear and how you survived. I wanted to ask about your dogs and their status at the moment. Otherwise, me and alot of my friends here were discussing your story, and I said, “Hey, I sort of know her!” My friends asked me to tell you good job, and we wanted to give you a big HOOAH and AIRBORNE!! I feel it an honor to say I have conversed with you..

Otherwise, on with the realtor and broker bashing!!!

Anybody got any good Realtor jokes? I actually do use them at meetings here in afghanistan…

Stpn2me

Regulators Shutter Three U.S. Banks, Bringing 2009 Toll to 84

Aug. 29 (Bloomberg) — Regulators closed banks in California, Maryland and Minnesota yesterday, pushing U.S. bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression.

The Federal Deposit Insurance Corp. was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of Lake Forest, Minnesota, after yesterday’s closings, the FDIC said. Assets of $1.9 billion and deposits of $1.7 billion from the three banks were turned over to new lenders at a total cost of about $446 million to the FDIC’s deposit insurance fund, according to agency statements.

Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real- estate debt. A total of 416 banks with combined assets of $299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the regulator said in a report Aug. 27.

Pacific Western Bank of San Diego will assume the deposits of Affinity Bank, the FDIC said. Affinity, with $1 billion in assets and $922 million in deposits, had 10 branches. Two, based in San Mateo and San Francisco, will open today as Pacific Western branches; the rest will open Aug. 31 under new ownership, according to the FDIC. The regulator agreed to share losses on $934 million of the assets.

Central Bank of Stillwater, Minnesota, assumed $434 million in deposits at Mainstreet Bank, the FDIC said. Central Bank will pay a premium to purchase Mainstreet’s $459 million in assets, with the FDIC sharing losses on about $268 million. Mainstreet’s eight branches will open today as Central offices.

Buffett Stake

Manufacturers & Traders Trust Co. of Buffalo, New York, took over the deposits of Bradford Bank, the FDIC said. M&T, whose parent counts billionaire investor Warren Buffett among its biggest shareholders, is buying Bradford’s $383 million of deposits and $452 million in assets. The FDIC is sharing losses on $338 million of assets in the deal, the regulator said.

Bradford is the second Maryland-based bank acquired this year by M&T, which bought Baltimore-based Provident Bankshares Corp. in May. M&T picked up $5.1 billion in deposits and $6.3 billion assets in the Provident deal, according to a company filing.

The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets and reimburses customers for deposits of up to $250,000 per account when a bank fails. The surge in failures has depleted the Washington-based regulator’s deposit insurance fund, which fell to $10.4 billion at the end of June from $13 billion in the previous quarter, the agency said. The total was the lowest since 1993.

Yesterday I saw an interview with the young star of the recent Woodstock-inspired movie on one of those syndicated entertainment shows. He said something to the effect that he watched old Woodstock documentary footage and noticed that the people didn’t have tatoos, weren’t obese, didn’t have waxed chests and “cut” upper body sculpting. He said “In other words, they looked normal”.

Right on. But it started me thinking about this obesity issue. Why IS obesity such a problem these days? The media razzmatazz is all about leafy greens and more exercise. BS. I didn’t eat my leafies that much back in the day and I’ll cop to being something of a couch potato. And I wuz skinny. Not to mention, the year that I lived in a New England ski resort and got the most exercise of my life, I wuz eatin’ and drinkin’ pretty good, too and porked out, but able to lose the weight.

I think there’s something really nasty in the food and maybe even the air that contributes to obesity and makes it hard to lose the weight. Maybe way too much sugar in foods that wouldn’t normally have it.

Blackstone’s Schwarzman Selling Hamptons Home for $7.2 Million

Aug. 28 (Bloomberg) — Blackstone Group LP’s Stephen Schwarzman, the highest paid chief executive officer in the U.S. last year, put his East Hampton home up for sale for $7.2 million, according to public records and the property listing.

The four-bedroom, three-bathroom Hamptons property, offered through broker Brown Harris Stevens, has a pool and tennis court, the listing shows. Judi Desiderio, president of Town and Country Real Estate on Long Island’s east end, said the house has been for sale “all summer.” She isn’t connected with it.

“Great price, in my professional opinion,” Desiderio wrote in an e-mail about the 3,250 square-foot home. “With the shift towards ‘less is more,’ this size house is back in fashion.”

Peter Turino, the listing agent for Brown Harris Stevens, declined to comment.

Schwarzman bought the property for $2.3 million in 1996, and paid $30,412 in property taxes on it in 2008, according to the East Hampton assessor’s office.

He’s selling it as he completes construction on a 9.9-acre estate in Water Mill, New York, also on Long Island, the Wall Street Journal reported today. He bought that property for $34 million in 2005, according to the Journal.

Schwarzman was the highest-paid executive in the U.S. last year, with compensation topping $702 million, the Corporate Library reported on Aug. 14.

His pay included $699.8 million from the vesting of one- quarter of the equity interest he was granted when he took Blackstone public in 2007, according to the Portland, Maine- based Corporate Library.

Schwarzman, 62, co-founded what became the world’s largest private equity firm and timed its initial public offering for the height of a five-year bull run for the Dow Jones Industrial Average.

After the boom and bust, housing prices rose at the same rate of inflation from 2001 to 2009, or not at all in real terms.

http://www.nytimes.com/2009/08/29/business/economy/29charts.html?ref=business

New York “best performing” as its housing has become 20 percent more expensive. Best for whom? And I thought housing was getting overpriced relative to income here in 2001. There were big increases from 1998 until then.

But consider this - nationally the excess pricing relative to inflation, and we still have the effects of job loss and eventually interest rate increases on prices to come. Housing could get cheap.

I suppose someone has previously posted a link here to Jon Stewart’s Daily Show segment where Geithner’s RE agent and also Robt Shiller are interviewed about Geithner’s failure to sell his house. (Daily Show of 7/29/09.) I didn’t see it till this morning. For some reason, the funniest part for me is where Shiller is shown a picture of Geithner’s bathroom and says he doesn’t like the color of the tiles.

Hey, nycdj, looks like there is a job opening you may be able to fill…

AP source: DJ AM is found dead
OBITUARY: He performed at Hollywood’s most exclusive parties.

NEW YORK — DJ AM, the sought-after disc jockey who became a celebrity in his own right with high-profile romances and a glamorous lifestyle, was found dead Friday at his apartment, which had drug paraphernalia in it, a law enforcement official said.

Paramedics had to break down the door to his Manhattan apartment before they found his body about 5:20p.m., the official told The Associated Press on condition of anonymity because family hadn’t been notified. There was no evidence of foul play, the official said.

DJ AM, whose real name was Adam Goldstein, had talked openly about past addictions to crack cocaine, Ecstasy and other drugs, but he claimed he had been drug-free for years.

He died nearly a year after surviving a South Carolina plane crash that killed four people and seriously injured rock musician Travis Barker.

Goldstein, 36, was a deejay for hire who performed at Hollywood’s most exclusive parties and was admired by music aficionados. He also was famous for past relationships with the reality TV star Nicole Richie, the daughter of singer Lionel Richie, and with actress-singer Mandy Moore.

Goldstein was critically injured in September when a Learjet crashed on takeoff in Columbia, S.C. The plane was transporting Goldstein and Barker, a drummer for the pop punk band Blink-182, after a performance; the pair had formed the duo TRVSDJ-AM.

Barker and Goldstein were burned, though Barker was injured more severely. Goldstein had to get skin graft surgery, but about a month later, he was performing again, joining Jay-Z on stage.

At the time, he told People magazine he was grateful to survive.

“I can’t believe I made it,” he said. “I’ve prayed every night for the past 10 years. There’s a lot more to thank God for now. … I was saved for a reason. Maybe I’m going to help someone else. I don’t question it. All I know is I’m thankful to be here.”

Goldstein rose to fame several years ago as highly sought-after DJ whose beats kept the dance floor packed and clubgoers hypnotized.

Who could has seen this coming…

Banks ‘Too Big to Fail’ Have Grown Even Bigger
Behemoths Born of the Bailout Reduce Consumer Choice, Tempt Corporate Moral Hazard
[The Big Get Bigger]
Washington Post

When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation’s leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system.
This Story

Today, the biggest of those banks are even bigger.

The crisis may be turning out very well for many of the behemoths that dominate U.S. finance. A series of federally arranged mergers safely landed troubled banks on the decks of more stable firms. And it allowed the survivors to emerge from the turmoil with strengthened market positions, giving them even greater control over consumer lending and more potential to profit.

J.P. Morgan Chase, an amalgam of some of Wall Street’s most storied institutions, now holds more than $1 of every $10 on deposit in this country. So does Bank of America, scarred by its acquisition of Merrill Lynch and partly government-owned as a result of the crisis, as does Wells Fargo, the biggest West Coast bank. Those three banks, plus government-rescued and -owned Citigroup, now issue one of every two mortgages and about two of every three credit cards, federal data show.

A year after the near-collapse of the financial system last September, the federal response has redefined how Americans get mortgages, student loans and other kinds of credit and has made a national spectacle of executive pay. But no consequence of the crisis alarms top regulators more than having banks that were already too big to fail grow even larger and more interconnected.
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“It is at the top of the list of things that need to be fixed,” said Sheila C. Bair, chairman of the Federal Deposit Insurance Corp. “It fed the crisis, and it has gotten worse because of the crisis.”

http://news.yahoo.com/s/ap/20090829/ap_on_re_us/us_kidnapped_girl_found

The story of the kidnapped girl kept by her abductor in his backyard shows not just the mind-boggling incompetence and remarkable incuriousity of most local law enforcement, but also the decline in neighborhood cohesiveness over the years. There’s a quote from one neighbor to the effect of “you look after your own” to explain her indifference to the fact a mentally unbalanced convicted sex offender was living in their midst and keeping children in tents in his backyard.

Beware all you campers out there…

Warning on possible pot growers called profiling…

DENVER (AP) - A federal warning to beware of campers in national forests who eat tortillas, drink Tecate beer and play Spanish music because they could be armed marijuana growers is racial profiling, an advocate for Hispanic rights said Friday.

The warnings were issued Wednesday by the U.S. Forest Service, which is investigating how much marijuana is being illegally cultivated in Colorado’s national forests following the recent discovery of more than 14,000 plants in Pike National Forest.

“That’s discriminatory, and it puts Hispanic campers in danger,” said Polly Baca, co-chairwoman of the Colorado Latino Forum.

A spokesman for the U.S. Forest Service had no immediate response to Baca’s comments.

Forest Service officials said they believe illegal immigrants are being brought to Colorado by Latin American drug cartels for mass cultivation of marijuana.

Michael Skinner, a law enforcement officer with the U.S. Forest Service in Colorado, said warning signs of possible drug trafficking include “tortilla packaging, beer cans, Spam, Tuna, Tecate beer cans,” and campers who play Spanish music. He said the warning includes people speaking Spanish.

The warning signs were included in a slide presentation put together for drug agents in Colorado and the public.

Skinner said this may or may not represent criminal activity, but are indicators and he urged any campers who encounter long-term campers meeting the profile to “hike out quickly” and call police.

Will these money questions EVER be resolved?

“The Federal Deposit Insurance Corporation, which guarantees deposits at the nation’s nearly 8,200 banks, announced that the sector’s deteriorating health has forced it to add more than 100 new institutions to its list of so-called problem banks. When the second quarter closed, the FDIC had 416 banks on the list, up sharply from just 117 a year earlier and its highest level in 15 years. At the same time, the agency’s fund used to reimburse the depositors at failed banks has declined about 20 percent, to $10.4 billion. In light of these developments, it’s natural for consumers to wonder about the safety of their bank deposits”. Is your money safe?

When you deposit money in a bank you are loaning that money to the bank. Until you take it out it is the property of the bank. If the banker makes poor decisions and comes up short, ruined by too many bad loans, the FDIC will step in to be sure you don’t lose your money.

The U.S. News & World Report, quoted above, concludes that your money is safe because the FDIC can tap the U.S. Treasury for tax dollars if its insurance fund runs too low. The assurance seems to be - “You will get your money, but we don’t know if it will be worth anywhere near what it was when you deposited it.”

Here are a few questions to ponder for all the stock market bulls who have participated in the rally to push headline US stock index levels up by 50 percent since green shoots began sprouting last March:

4) With the huge number of banks recently failing and still-rising unemployment rates in many parts of the country, is it plausible that the economy is already recovering?

Google Back to Google News
Meltdown 101: Why banks’ struggles have worsened

By MARCY GORDON (AP) – 10 hours ago

WASHINGTON — Despite signs of an improving economy, the nation’s banks are still struggling — in fact, the pace of bank failures has accelerated.

What would it take to turn the banking sector around? And what can people do to protect their savings in the meantime?

Here are some questions and answers about the wave of U.S. bank failures, as the latest quarterly snapshot of the industry painted a grim picture.

Q: How bad is this wave of failures?

A: A cascade of collapses began last year as the financial crisis struck.
…

‘Shorters’ retreat helps fuel volatility

By Michael Mackenzie and Francesco Guerrera in New York
August 28 2009 19:30

Short sellers have been deserting the US stock market in droves during its sluggish summer sessions in a retreat that has helped fuel the recent volatile trading in AIG and other beaten-down financial shares, analysts said on Friday.

Short sellers seek to profit from price declines by selling borrowed shares and then “covering” their positions with purchases of the same stocks. When large numbers of short sellers close their positions by buying shares at the same time, the stocks involved can register explosive – and often inexplicable – gains.

Although stocks gave back some of their gains in early trading on Friday, the S&P has climbed steadily in August to its highest levels in 10 months, with some of the best performing stocks being those that were most heavily sold short – AIG, Fannie Mae, Freddie Mac and Citigroup.

US mortgage agencies graphic for 2nd front Analysts say short sellers have been closing many of their positions in recent weeks. Short interest as a percentage of S&P 500 stocks fell to its lowest level in eight months by mid-August, according to the most recent data. Bespoke Investment Group said average short interest in other major equity indices had fallen to the lowest levels since at least October 2007.

“The US Fish and Wildlife Service may have a new candidate for its endangered species list,” said Paul Hickey of Bespoke. “It’s short sellers.”

Paul Krugman had a moronic “…deficits saved the world” op-ed in the NYT on the 27th.

Have the Nobel prizes gone the way of the Grammys? Milli Villi won best new artist in 1990. Al Gore won the Nobel Peace Prize in 2007 (for Climate Change - and promptly chartered a Gulfstream IV to collect it). Krugman won the economic prize in 2008.

I’d say the Nobel prize has jumped the shark.

A colleague at work is ready to go buy a new car, now that the C4C program is over. He suspects the dealer might be really, really happy to see him…

Consumer spending rises in July, but consumer sentiment slips
Cash for clunkers

The federal “cash for clunkers” program gave a boost to consumer spending last month. Above, cars traded in sit in a storage lot in Fairfield, Calif. (Justin Sullivan / Getty Images / August 26, 2009)

By Annys Shin

August 29, 2009

Washington - The “cash for clunkers” trade-in program, which gave consumers a subsidy to turn in less fuel-efficient vehicles for newer models, boosted consumer spending in July, the Commerce Department reported Friday.

Personal consumption expenditures, adjusted for inflation, rose 0.2%, roughly in line with analysts’ forecasts. Motor vehicle and parts purchases more than accounted for the increase in July and accounted for most of the increase in June, the report said.

Cash for clunkers ended Monday. Policymakers are considering a similar program for appliances.

The data indicated that consumers are willing to spend if given the right incentives. The data also suggested that the boost in spending might not be sustainable now that the subsidy is gone.
…

It’s so nice to have gubmint make decisions for you, takes the load off of being able to make your own.

Laura Dekker wants to set a world record as the youngest person to sail alone around the world. The government has stepped in to delay her plans.

13-year-old girl’s goal to sail solo around the world was called “undeniably daring and risky” by Dutch judges Friday. They refused, however, to scrap the venture in a high-profile clash between child care authorities and liberal Dutch parenting.

Laura was born on a boat in New Zealand and spent the first four years of her life sailing the world with her parents. She also spends her holidays sailing off the Dutch coast. In May, British authorities briefly detained her after she arrived alone in the eastern port of Lowestoft and said she planned to sail home alone.

A British lad sailed solo across the Atlantic when he was fourteen. Mike Perham. now 17, recently sailed into the record books as the world’s youngest round-the-world solo sailor by covering 28,000 miles in just nine months.

The Dutch government will rule in late October, following weeks of evaluation, on Laura’s plan to break Perham’s record. Her 26 foot yacht is called “Guppy.”

Who popped my bubblet? The Quick Vote speaks volumes about what kind of people read CNN Money…not many HBB readers I suspect!

Dow snaps winning streak
Intel’s improved sales forecast and Dell’s profit surprise encourage tech investors, but stocks struggle one day after the Dow, S&P 500 and Nasdaq hit fresh 2009 highs.

By Alexandra Twin, CNNMoney dot com senior writer
Last Updated: August 28, 2009: 6:10 PM ET

Quick Vote

Should the $8,000 first-time homebuyer tax credit be extended beyond Nov. 30?

* Yes
* No

(Yes 60% / No 40%)

NEW YORK (CNNMoney.com) — Stocks seesawed Friday as investors welcomed corporate news from Intel and Dell that signaled a bottom in the PC market, but mostly played it cautious after pushing the markets to 2009 highs in the previous session.
…

The Central Communist Bureaucracy seems to silence Mr Market’s voice in every way possible. Why not let the voice of Mr Market decide what kind of housing needs to be built, instead of some central planner or government subsidy program?

Stimulus gives lifeline to affordable housing
But there’s not enough money for every project
By Lori Weisberg
Union-Tribune Staff Writer

2:00 a.m. August 29, 2009
An affordable-housing high-rise is under construction on B Street in San Diego. (Peggy Peattie / Union-Tribune) -

Many moribund affordable-housing projects throughout the county will likely be revived this year by federal stimulus funds, but the money won’t be enough to resuscitate the backlog of developments meant to serve the region’s neediest.

Formerly reliable state bond money is drying up, lenders remain skittish about financing low-income projects, and private investors are pumping far less money into such developments.

While San Diego County could normally expect as many as 2,000 new affordable units a year, production will likely drop to half that, developers and advocates predict.

“At a time when there’s more and more people in need — suffering from unemployment, foreclosures, loss of health insurance — there will be less money available to produce affordable rental housing,” said Anne Wilson of Community HousingWorks, a prolific nonprofit developer of low-income housing.
…

The funny thing about depositing money in a bank is what the bank does with it. For centuries, banks have practiced fractional reserve lending. So a bank can take your deposit and use it to make loans of 9 times the amount of your deposit. In this manner, banks can grow impressively…until loans start going bad and depositors get nervous and want their money back. At that point bank failures occur as the bank can not get the necessary liquidity to pay depositors. Is the FDIC the answer? Only if it has enough capital to make up the shortfalls. At the moment it looks as though it may run out of money to pay depositors. What can the government do to prevent a wide spread bank collapse? It can declare a bank holiday, close all banks for a time and when they reopen, decree that depositors are limited to, say, $500 a week in withdrawals. There! That solves the problem!

It was the best of times and the worst of times…

* The Wall Street Journal
* AUGUST 29, 2009

Halting Recovery Divides America in Two

By CARI TUNA, LIZ RAPPAPORT and JULIE JARGON

The U.S. recovery is a tale of two economies.

At one extreme of Corporate America is a cadre of companies and banks, mostly big, united by an enviable access to credit. At the other end are firms, chiefly small, with slumping sales that can’t borrow or are facing stiff terms to do so.

On Main Street, there are consumers with rock-solid jobs — but also legions of debt-strapped individuals struggling to keep their noses above water.

This split helps explain the patchiness of the recovery that appears to be taking hold after the worst recession in a half-century.

Panera Bread, a St. Louis-based national chain of more than 1,400 cafes, is a rare winner in its industry. With more than $100 million in cash and no debt, it is demanding, and getting, cut-rate leases from landlords. Panera’s occupancy costs have come down 10% to 20% since last year. It is hiring and expanding into spaces formerly occupied by Blockbusters and Bennigan’s.

“For us, this is the best of times,” says Ron Shaich, its chief executive. “Cash is king and this is a buyer’s market.”
…

We had a little discussion here yesterday about whether TARP funds were getting used to sweeten block foreclosure deals. Any online information you can scrounge up with hard evidence would be appreciated (I have found none so far…).

Diverting TARP Funds to Failed Housing Agenda
By Rep. Spencer Bachus | 07/10/09 | 12:40 PM EDT

Yesterday the Financial Services Committee held a hearing on the Democrats’ TARP for Main Street bill that will divert billions of dollars from TARP to fund their failed housing agenda. At a time when the taxpayer has not recouped the full $700 billion committed through TARP, I will oppose any effort that prevents or delays the repayment of this money to the taxpayer.

While TARP may earn a profit from the Capital Purchase Program, the TARP program overall will not. Congress authorized $700 billion for TARP and so far, Treasury has received $70.1 billion in repayments and $6.7 billion in dividend payments—all from the Capital Purchase Program. We have a long way to go before taxpayers recoup their money. Therefore, all repayments and gains should go directly to the taxpayers.
…

“Bond Market Movements Have Brought Down Mortgage Rates”

Is it proper to refer to Fed-engineered low T-bond yields as being in a ’slump’? That description seems to border on an outright lie. Ignoring the Man Behind the Curtain tends to result in a misleading picture.

* The Wall Street Journal
* ROI
* AUGUST 28, 2009, 2:10 P.M. ET

Low Mortgage Rates Are Back—For the Moment
Bond Market Movements Have Brought Down Mortgage Rates

* By BRETT ARENDS

If you missed out on refinancing your mortgage last spring, here’s another opportunity.

A window has opened up in the mortgage market—thanks to some unusual movements in the bond market, rates have come down in recent weeks, and someone with good credit may be able to get a 30-year fixed rate for as little as 5% right now.

Yes, mortgages still aren’t as cheap as they were in May, when rates fell as low as about 4.75 %, but they’re still a pretty good deal. As recently as June, rates spiked around 5.6%. And before the financial crisis walloped us last year, they were over 6%.

Improving Home Sales Belie Market Reality

In a recent Bankrate survey the average rate was about 5.5%, he says, but you can do better if you look. “The different between getting 5.5% and 5% is shopping around,” he says.

The obvious caveats apply. You’ll need good credit to get the best rates—Bankrate cites a credit score of 700 or above. Those with lower scores may end up paying a higher rate or fees. And these rates only apply to conforming loans below non-jumbo limits.

The main reason for the cheaper home loans: A slump in the yields on long-term government bonds.
…

Jane… mail me at marketw04 At yahoo dot com regarding RV’s. Posting links here takes too much time.

Good Morning beautiful world.

Just returned from a holo holo style fishing trip to the backside of Maui. It is 4 AM here and I just got back. In my cooler are two very large ulua. Biggest one is over 60 lbs. I have been rode hard and put away wet. In my cup I have a large quanity of my home grown coffee, and in my other hand I have a stick of my very sweet home grown.

I would never thought when I jumped into the water to dive bait yesterday I would have this kind of luck. These are my first fish of the year and I feel like god.

As my muscles start to freeze up I know I will hurt like a dog in the next few days. But it will be worth it all.

I’m going to have about 50 lbs of fish to give away tomorrow. I wish you people were here so I could give them to you. You all know what they say about the blind hog. This one just found dinner.

Later John

How not to recreate a sound banking system: Give private equity investors a whack at flailing banks

Barbarians back at bank gates

As failing banks pressure the FDIC’s deposit insurance fund, regulators reach out to private equity investors for help.

See all CNNMoney.com RSS FEEDS (close)
By Colin Barr, senior writer
Last Updated: August 27, 2009: 5:06 AM ET

NEW YORK (Fortune) — Regulators cleaning up after bank failures showed Wednesday how far they’re willing to reach out for help.

The Federal Deposit Insurance Corp.’s board voted 4-1 to set new rules governing the terms under which private investors such as buyout firms may invest in failed banks.

The rules call for private buyers of failed banks to hold more capital than existing banks are required to, and to hold onto their investments for at least three years.

Chairman Sheila Bair said at the agency’s board meeting in Washington that she views the rules — which aim to lure in private equity money while minimizing risks to the federal deposit insurance fund — as a workable solution to a “tough issue.”
…

Here is a story with a link to a video story which explains the A-B-C’s of how to gamble invest in the Chinese stock market.

Just for grins, I fit a log-quadratic growth model to the FDIC’s “problem bank” count:

I know these estimates are overly pessimistic, as I have not explicitly taken under consideration the self-extinguishing nature of banking crises (Intuition: Each bank failure represents one fewer problem bank, and the ultimate maximum number of problem banks has to be some fraction of the existing number of banks, adjusted for the ever-dwindling number of banks in the system). For starters, one should base such estimates off a reasonable tally of the initial total number of banks.

FDIC says it has 416 banks on “problem list”
SIFMA SmartBrief | 08/28/2009

The Federal Deposit Insurance Corp. said its list of problem banks has grown from 117 at the end of June 2008 to 305 at the end of March to 416 at the end of June. Those banks have combined assets worth nearly $300 billion. The number of troubled lenders continues to rise despite indications that the economy is stabilizing. “It’s a continuation of the deterioration across the industry,” said Gerard Cassidy, a bank analyst at RBC Capital Markets. “We think there are hundreds of failures to come.” Wall Street Journal, The (08/28)

Wonder how the Great California Garage Sale is going.

“If we can avoid meltdown by artificially stimulating the economy, why on Earth not try that first??”

A logical well thought out plan is one thing but just throwing money around without understanding the problem is another. I don’t see where we are stimulating anything. The Government is function on HOPE. Hope that if they can forestall things just until next month or years end things will automatically work themselves out. It won’t happen! We have idiots in leadership positions.

I am going to bed. I know this is not True Confessions, but, I just saw a close friend of mine drop dead. Well, he isn’t dead yet, but he was helicoptered. My heart is broken right now. They say he won’t make it.

Mmmmm…

Peanut Butter Crunch, snack food of morbidly obese champions!

Tide turns as Florida Shrinks:

http://www.nytimes.com/2009/08/30/us/30florida.html

Okay, this evening I am in a stupid mental state:

To be financially savvy, we should not buy any real estate yet because the RE market willl continue to go down through the resets the next two and a half years. We will have to wait until rents cost more than owning before we buy after that.

Also, only the cool people here on HBB know that the stock market is rigged and you cannot get rich buying stocks. Anymore. Ever! 1980 through February 2000 was an aberration.

So ’splain me this (while I sip from Estancia Pino Noir): How would a full time engineer become wealthy if he does not want to start his own business?

Passbook savings? Gold? Can anyone find me a URL of an asset class that beats out all other forms of investments in a 20 yedar period?

PB not sure if you’re online tonight - FYI I’m on vacation (Hershey PA) this weekend so not posting/monitoring much, until Tuesday. Ben hasn’t gotten back to me with your email yet for some reason.

Economist sees rebound for San Diego real estate market

The National Association of Realtors’ chief economist paints upbeat picture of market, as industry professionals push for more favorable laws.

By Helen Kaiao Chang, SDNN
Tuesday, August 18, 2009

An expert economist sees good things for the San Diego housing market.

Lawrence Yun, chief economist for the National Association of Realtors, said the local market is buoyed by a tight housing inventory and federal tax incentives.

Yun was speaking at a lunch event hosted by the San Diego Association of Realtors on Tuesday. Some 700 people attended the event held at the DoubleTree Hotel in Mission Valley. San Diego Mayor Jerry Sanders, as well as representatives of various politicians in town, also attended the event.

“The worst in housing is probably already past in the San Diego market,” said Yun. “Home values have fallen so much that many of the potential buyers who have been sidelined are understanding this is a great opportunity.”
…

Packman,

Were you going to send me that data?

I have some San Diego County foreclosure data to send you as well if you are interested. I am hoping you can put the graphs up in the same way you have made other graphs available for display here.

One is monthly NODs & Trustee’s Deeds from 1991-July 2009; the other is annual aggregates for the same series from 1974-2008 (I included a projected version of 2009 totals as well).

Take home messages:

- NODs and Trustee’s Deeds are at all-time high levels.

- Highest previous levels before the current episode were about 16K NODs (1982?) and 4K Trustee’s Deeds (1983).

- Despite another foreclosure moratorium which is supposed to soon expire, 2009 levels are on track to be higher than 2008 levels, with NODs running near 40K (2 1/2 times the 1982 level) and Trustee’s Deeds running at about 22K (5 1/2 times the 1983 level).

- Despite FunYun’s reassuring message to San Diego area realtors last week, there is no indication in these statistics that a bottom is in the making. These statistics are way off the charts!

Rep. Frank eyes Fed audit, emergency lending curbs

Well do you think Barney is starting to feel the heat?

http://news.yahoo.com/s/nm/20090830/bs_nm/us_usa_fed_audits_2