The Housing Bubble

John Mauldin (with some partners) is starting a mutual fund. I’ll probably not put any money in it, but I liked this assertion: “Buy and Hold is not a strategy, it’s a religious belief.”

Coming soon: cash for appliances
Sunday, August 30, 2009 S.F.Gate

The popularity of Cash for Clunkers has built excitement for the government’s next program to stimulate the economy and save energy: cash for appliances.

In June, the Department of Energy said it is making

$300 million in stimulus-act money available to state energy offices to offer rebates on energy-efficient household appliances. California’s share is $35.27 million.

Unlike the $3 billion clunkers program, which required an old car to be traded in, consumers do not have to turn in an old appliance to get a rebate on a new one.

Another difference: The clunkers program was consistent nationwide, but each state can decide which appliance categories will be eligible for rebates, how energy efficient they must be, the amount of the rebates, whether they can be combined with other rebates, how the money will be tracked, and how consumers and retailers will know when it is about to run out.

The California Energy Commission, which will receive the money in California, has made no decisions about any of these issues.

“We have until Oct. 15 to apply for the program. The federal government has until the end of November to disburse awards back to the state,” says Amy Morgan, a spokeswoman for the commission. She says consumers can start getting rebates “later this fall or maybe early 2010.” In the meantime, she says, consumers should investigate rebates offered by utilities.

The U.S. Energy Department says appliances eligible for federal rebates include central air conditioners, heat pumps (air source and geothermal), boilers, furnaces (oil and gas), room air conditioners, clothes washers, dishwashers, freezers, refrigerators and water heaters. States don’t have to include all these appliances in their programs. They can propose additional ones, which will be reviewed on a case-by-case basis, an Energy Department spokeswoman says.

To qualify, an appliance must carry the U.S. government’s Energy Star label, but states could require even higher energy-efficiency ratings such as those put out by the Consortium for Energy Efficiency.

A friend of a friend developed the following site and is looking for input. All kinds of interesting economic info and graphs included there if you sort things using the tabs on top.

Thanks!

http://www.fedviewer.com/

Natural Gas Prices at 7-Year-Low and Affecting Local Economy 8/28/09
CBS 7 News

August 28, 2009
Midland, Texas -

Natural Gas prices are at a seven-year low and while consumers are happy it’s hurting the local economy.

“Everybody gets impacted somewhat in a severe downturn like this is and as fast as it went down”, says Natural Gas Services Group CEO, Steve Taylor.

On Labor Day of last year, natural gas was around $7.00 per million BTU, while today, it is less than half that, around $3.00. 
The drastic dive is challenging local companies like the Natural Gas Services Group.

“We’ve laid off a fair amount of our fabrication people”, says Taylor.

Steve Taylor’s company has been somewhat insulated from the price-dive but others are hurting.

“The macro economic picture’s got to get better. There’s got to be some demand in the system”, says Taylor.

Taylor’s right. Greater supply in part from the Barnett Shale and the beaten economy has reduced demand, thus, straining natural gas companies.

“The general economy has something to do with it but the lower price of natural gas also contributes significantly to impact the workforce and the unemployment rate”, says UTPB Dean of Business, Jack Ladd.

Companies are not only forced to sell gas for lower prices they’re selling less overall.

“It’s caused the unemployment rate in the Permian Basin to increase. There are layoffs in the area where we have a larger number of energy companies such as we’re blessed with out here”, says Ladd.

While prices continue to deflate, experts predict a rebound for natural gas.

“Allowing the Fed to operate our nation’s monetary system in almost complete secrecy leads to abuse, inflation and a lower quality of life.” ~Sen. Jim DeMint

A growing number of representatives in Washington are pushing for a full blown audit of the FED. The pressure is mounting, I sincerely hope it comes to pass.

when will they announce cash for savers?

Death dance: Financial ‘zombies’ still trading
Associated Press
Sunday, August 30, 2009

Washington — Investors are still trading common shares of Fannie Mae, Freddie Mac and American International Group Inc. by the billions, even though analysts say their prices are almost certain to go to zero.

All three are majority-owned by the government and are losing huge sums of money. The Securities and Exchange Commission and other regulators lack authority to end trading of stocks in such “zombie” companies that technically are alive — until the government takes them off life support.

Shares of the two mortgage giants and the insurer have been swept up in a summer rally in financial stocks. Investors have been trading their shares at abnormally high volumes, despite analysts’ warnings that they’re destined to lose their money.

“People have done well by trading them (in the short term), but when it gets to the end of the road, these stocks are going to be worth zero,” said Bose George, an analyst with the investment bank Keefe, Bruyette & Woods Inc.

Some of the activity involves day traders aiming to profit from short-term price swings, George said. But he said inexperienced investors might have the misimpression that the companies may recover or be rescued.

“That would be kind of unfortunate,” he said. “There could be a lot of improvement in the economy, and these companies would still be worth zero.”

The government continues to support the companies with billions in taxpayer money, saying they still play a crucial role in the financial system.

Fannie and Freddie buy loans from banks and sell them to investors — a role critical to the mortgage market. They have tapped about $96 billion out of a potential $400 billion in aid from the Treasury Department.

Officials have said AIG’s failure would be disastrous for the financial markets. Treasury and the Federal Reserve have spent about $175 billion on AIG and AIG-related securities. The company also has access to $28 billion from the $700 billion financial industry bailout.

But analysts say the wind-down strategies for the companies are almost sure to wipe out any common equity, making their shares worthless.

Never eat a pint of Ben and Jerry’s “Coffee Heath Bar Crunch” late at night and expect to get a good nights sleep.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/7/31_John_Mauldin__Part_I.html

I’m listening to this broadcast interview w/John Mauldin. More than 1/2 way through they start talking about block sales of WCI condos in Miami that sold for 94% off peak. They were in the Luxury I Bal Harbor Complex.

As some of us HBBers sit here and wait for prices to fall to have a chance at a first home, I’m feeling a bit of anger toward these block sales of properties never offered to the public. Or is this necessary when properties are located in an empty and deteriorating building?

Michael Hirsh
Aug 28, 2009
Lecturing Bernanke

The Fed chairman’s old teacher worries that Washington isn’t fixing the too-big-to-fail issue.

Even with thousands going into foreclosure around San Diego County each month, the housing shortage continues, especially as regards affordable rentals.

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) -
—
“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.
…

Helpful advice for “underbuyers”:

Just say “No” to that next shopping trip!

Spending money can take emotional toll on tightwads

By Gregory Karp

MCT NEWS SERVICE

2:00 a.m. August 30, 2009

Call it the tightwad paradox. Ultrafrugal people are likely to have money in the bank and be in good financial position, which should contribute to their happiness. But that death grip on their dollars can detract from it.

Tightwads feel an emotional “pain of paying.” They spend less than their rational selves want to, according to the academic study “Tightwads and Spendthrifts” by University of Michigan professor Scott Rick and co-authors.

“There’s an assumption in popular culture that everybody loves to buy stuff, and that’s just not true,” said Gretchen Rubin, author of The Happiness Project blog (happiness-project. com) and a forthcoming book of the same name. “Some people hate to shop. That’s unpleasant, too. No one ever talks about that. It’s stressful to be an underbuyer.”
…

Goldilocks predicted to rise from the dead by 2012. Judging from the price points at which they plan to market these homes, I guess they are also predicting San Diego employment will recover by then, and the foreclosure tsunami will no longer be creating any competition for new construction?

Optimism builds
Developers see better times in the not-too-distant future
By Roger Showley
Union-Tribune Staff Writer

2:00 a.m. August 30, 2009

New homes in new subdivisions are rare this year, as builders seek to clear out their inventories and get ready for an upturn.

San Diego County’s new housing market is winding up 2009’s peak buying season with the worst record in memory — so why are builders smiling?

Sales are off 40 percent from last year’s dismal pace. Building permits so far this year for new single-family homes are down 32.7 percent from year-ago levels.

And developers seeking to erect new homes have nearly as much trouble getting construction loans as their would-be buyers have in securing mortgages.

But builders, by nature an optimistic breed, see evidence that the bottom has been reached in the worst real estate and economic downturn since World War II.

Consequently, many believe that 2010 will be OK, 2011 will be better and 2012 will be Goldilocks normal — not too hot or too cold but just about right.
…

If Ms. Brun is correct, then how about that other article in the San Diego Homes section discussing builder optimism about the recovery of McMansion demand by 2012? Somebody is going to be wrong going forward.

There’s a lot to be said for living small
By Michael James Rocha
HOME INTERIORS EDITOR

2:00 a.m. August 30, 2009

A 600-square-foot condo in Seattle utilized custom built-ins — made of sustainable apple plywood — to maximize the use of small space. - Nathan Hartman

“Small Space Living” was written by local interior designer Christine Brun.

Living small is big right now. Just ask San Diego interior designer Christine Brun.

“I think this entire housing mess has people looking at how they live,” says Brun, the author of “Small Space Living” (Schiffer Publishing, $34.99) and a longtime syndicated columnist specializing on small spaces. “One of the unintended results that’s starting to emerge is that people are now talking about living smaller — basically tearing down one’s lifestyle.”

Gone are the days of buying large homes that need to be filled with a large amount of stuff, says Brun, who owns Christine Brun & Associates on Washington Avenue.
…

I have a deep conviction the sacrosanct mortgage interest deduction is here to stay. My deep convictions have been wrong before, on rare occasions . But I will believe this story when and if I see it happen.

Can anyone who understands it please explain to me the rationale behind the present law, which allows homeowners up to $1.1m in mortgage interest deductions. It sounds to me like a tax giveaway to the rich, but perhaps I am missing something important in support of this policy.

Related Terms: Washington, George W. Bush
Nation’s Housing
Revenue-raising options target mortgage deduction

By Kenneth R. Harney
2:00 a.m. August 30, 2009
…
Committee staffs, economists, tax lawyers and policy shapers who toil below the headlines never really leave town. For example, earlier this month the nonpartisan Congressional Budget Office delivered its latest revenue-raising options for Senate and House consideration as they write this fall’s tax and budget legislation.

Tucked away in the report are several incendiary plans that could, if adopted, cost homeowners billions of dollars. Though not formal legislative proposals, the CBO’s options represent a handy fiscal menu for legislators to pick and choose from to reduce the deficit, now at unprecedented levels, or to pay for new programs they might want to advance.

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.
…

Rentable housing numbers vex cities

by David Madrid - Aug. 30, 2009 12:00 AM
The Arizona Republic .

With mounting foreclosures, investors are snapping up homes and renting them to tenants at bargain rates. But in the long run, the trend could shake the stability of Valley neighborhoods and hurt cities’ efforts to promote homeownership, community leaders warn.

Some cities that have been hit hard by foreclosures are trying to wrap their arms around the problem.

Avondale, which grew rapidly during boom years, now has 46 subdivisions with single-family-home rental rates higher than 20 percent. Almost half of one neighborhood is made up of rental homes.
Local leaders say investors contributed to a housing boom that went bust and, now, are outbidding first-time homebuyers seeking to buy foreclosed properties.

“It’s a vicious cycle, and I don’t know how we get out of it,” said Avondale Vice Mayor Ken Weise.

“At some point, the residents throw up their hands and say, ‘There’s nothing we can do,’ and they look to the city to see if there’s something we can do. The City Council throws up its hands and says, ‘There’s nothing we can do.’ ”

Cities want the stability of homeownership because homeowners have a stake in the community.

Like Avondale, Phoenix is seeing home rentals rising and that’s “somewhat problematic,” said Jerome Miller, the city’s director of the Neighborhood Services Department.

When homeowners buy a property, “it’s their home,” he said. “They’re going to fix it up. They’re going to keep it up. They’re going to paint it when it needs it. It’s a challenging issue with the foreclosures.”

On the other hand, it is better to have renters than a glut of vacant houses. “It’s sort of a catch-22 right now,” Miller said.

Besides, renting can be a pathway to owning a home, and rental homes bring in sales taxes.

Last fiscal year, Avondale collected $909,150 in ongoing taxes and $381,853 in one-time back taxes.

“There is no cure for birth and death save to enjoy the interval.”
George Santayana, Soliloquies in England, 1922, “War Shrines”

For Now, It’s All Yours
The New York Times
August 28, 2009

LESLEY REY was carrying two mortgages when her income from selling airplanes took a dive last fall. She has a one-bedroom apartment on the Upper West Side and a house in Westchester.

“You feel a little defeated by the economy,” she said. “But you have to make sacrifices.”

She couldn’t sell the house in Westchester because she owns it with her sister, and she couldn’t bear to part with her home on the Upper West Side.

“It’s just too perfect,” she said.

At the suggestion of the real estate broker who sold her the apartment, Carol Halt, who now works at Barak Realty, she decided to rent it out. And she decided to leave it furnished.

In this economy, many an apartment has become unaffordable as jobs disappear and income shrinks. But if your home is a place you love too much to sell, the best way to hang on to it may be to entrust it to somebody else for a while.

Leaving the furniture behind can be a good way to make it through tough financial times — the owner doesn’t have to spend money on storage and the tenant does not have to pay for furniture.

According to Halstead Property, the number of furnished apartments in its database — which includes rentals by co-op and condo owners, as well as sublets by other renters — jumped by more than 50 percent from the first six months of 2008 to the same period this year.

“Certainly, part of that increase is due to inventory that was on the market for sale that shifted to the rental market,” said Fritz Frigan, the executive director of sales and leasing at Halstead.

There’s nothing like an economic landslide to help a person move past the disquieting idea of sharing personal belongings with a stranger.

Ms. Rey remembers the January evening when her tenant arrived as an unnerving experience.

“This is really weird!” she recalled saying to the man, whom she had found on Craigslist. “I don’t even know you, and I’m leaving my apartment in your hands.”

The apartment, yes. And also the books, the candles, the rugs, even the standing mixer in the kitchen. “All of that stayed,” she said. “I just took down my photos.”

The arrangement, for $3,000 a month, went well, though Ms. Rey found the month-to-month renewal process frustrating. When her first tenant cleared out in May, friends of her brother signed a one-month lease, and she started looking for her next tenant. She returned to Craigslist for a replacement. This time, her luck was not so good.

Can’t wait to here the spin from this little segment of the NAR populaiton. Perhaps “Home values are only going down. There’s never been a better time to have a short sale”

NAR certifies agents for short sales, foreclosures, REOs

The National Association of Realtors (NAR) is coming to the rescue of homeowners facing foreclosures or short sales with real estate agents specifically schooled in those subjects.

A new Short Sales and Foreclosure Certification Program (SFR) trains agents on how to manage short-sales, foreclosures, and real-estate owned (REO or bank owned) transactions, and keeps agents current on national and state-specific information and regulations on these issues.

To earn the certification, agents must complete a one-day education program, either in-person or online, as well as in three one-hour Webinars.

Nearly one-third of all existing homes sold recently were either short sales or foreclosures, NAR says.

“Foreclosures and short sales can offer opportunities for home buyers, but it’s extremely important to have the help of a real estate professional … for these kinds of purchases,” said NAR President Charles McMillan.

Thinking of investing in the stock market?

Or, thinking of staying as far away as you can?

It’s difficult to buy low and sell high, if you first buy into a 143 multiple on the S & P:

The “rush to junk” is one that I and many other commentators have pointed out on multiple occasions. This isn’t some conspiracy - it is how these sorts of parabolic blow-off movements come. If you think this isn’t a parabolic move, chart the S&P 500’s price .vs. P/E over the last six months and tell me if your opinion changes.

As of July 31st we stand at 143.95 for that ratio, with a new update out in a few days. By any measurement you care to use this is a parabolic move and those always follow the same pattern coming off the base (or bottom):

•First, the strongest firms have a nice, measured, volume-backed move.

•Then their volume and strength on a relative basis starts to weaken. The middle-tier companies get it next, with their volume supporting their advance, dragging the strong firms along (but on flat to declining volume.)

•Finally, the used dogfood firms like Citibank, AIG, Fannie and Freddie “catch the fever” and their volumes spike to three, four, five, ten, even 100 times their normal volume and they take off like a rocket. The “drag along” effect gets weaker and weaker as people start to look at the charts and go “heh, wait a second - that’s a company that’s doubled in three days, represents 10% of the entire NYSE volume, and on any reasonable valuation basis is a zero?
Not long thereafter the move collapses.

(Link): http://market-ticker.denninger.net/

Here’s a little tidbit for West Central Floridians. Brought to you by the housing bubble, which unleashed the most godawful flood of illegal immigrants on the US, EVER. I once aspired to live in the Dade City area, where these cartel members set up shop. I would have liked to have had that nice little house in the middle of an orange grove, I would have liked to have had a nice little cash crop, except it wouldn’t have been drugs. East Pasco County used to be a charming, quiet, rural area. But now you’ve got to wonder what happens if you have neighbors like these, who operate with impunity.

http://www.abcactionnews.com/news/local/story/Pasco-agents-make-largest-cocaine-bust-in-county/TXsYoC03IEykJTH_feJtdg.cspx

“Health-care reform is small potatoes. If fiscal conservatives ever hope to regain the high ground in Washington, D.C., they had better start talking about the real crisis … the pending bankruptcy of the entire nation.”

~Frank Miele

Rep. Barney Frank told a “town hall” meeting that Rep. Ron Paul’s bill to order an audit of the Federal Reserve for the first time since 1913 would come up for a vote in October. HOWEVER, he also says Paul has backed off on some provisions of the bill and the compromise is not known, yet.

But it’s a start.

Frank’s specific comment may be found 2/3rds of the way into this video clip of the meeting. Fed’l Reserve Audit?

Kudos to Gary North for his column on the Federal Reserve and the Fed audit bill.

“The FED is a legitimate target for people who think the government botches the economy. It is the classic example of the much-praised government-business alliance. It is the consummate model of that alliance. When it fails to achieve its twin official goals of low unemployment and low price inflation, millions of its economic victims will figure out who the culprit is.” End the Fed

My Dear Friends:

dude, Bill, Silver, Prof. B., SanFranGal, Step, Highway, Jane, CarrieAnn( I love that name, Hollies!), Housing.

Even if it sounds stupid, dependant, voyeristic ( Hey Oly, how do you spell Vooooisssstic?).

I love you very much.

LeftLa, that is a hit. Sounds like you are going to be OK. I sure hope so. Clearly, you have the brains/spunk for a best recovery.I wish you the best.

Step, I read the family drug article you wrote. Change a few vowels and consonants (sp?) and you got what I did. 16 years clean, no parades, please.

It seems like it would be inherently difficult for the failure of a recently created bank to inflict much harm on the economy. How about a little more scrutiny for the too-big-to-fail 800 lb gorillas who cast hundreds of billions of dollars into the sea, fully and correctly anticipating bailouts to make them whole again? The new startup banks cannot inflict catastrophic damage on the global economy, but Megabank, Inc has amply proven its ability to do so.

FDIC to Ratchet Up Scrutiny of Newly Chartered Banks
They Are Overrepresented in Failures

By Neil Irwin
Washington Post Staff Writer
Saturday, August 29, 2009
…
“Recent experience demonstrates that newly insured institutions pose an elevated risk to the Deposit Insurance Fund, particularly during an economic downturn,” the FDIC said in a letter to banks. Those that have been covered by deposit insurance for less than seven years “are over-represented on the list of institutions that failed during 2008 and 2009, with most of those failures occurring between the fourth and seventh years of operation.”
…

After Century of Growth, Tide Turns in Florida

NYT
By DAMIEN CAVE
Published: August 29, 2009

HOLLYWOOD, Fla. — The smiling couple barreling ahead on the cover of Liberty magazine in 1926 knew exactly where to go. “Florida or Bust,” said the white paint on the car doors. “Four wheels, no brakes.”

So it has been for a century, as Florida welcomed thousands of newcomers every week, year after year, becoming the nation’s fourth-most-populous state with about 16 million people in 2000.

Imagine the shock, then, to discover that traffic is now heading the other way. That’s right, the Sunshine State is shrinking.

Choked by a record level of foreclosures and unemployment, along with a helping of disillusionment, the state’s population declined by 58,000 people from April 2008 to April 2009, according to the University of Florida’s Bureau of Economic and Business Research. Except for the years around World Wars I and II, it was the state’s first population loss since at least 1900.

“It’s dramatic,” said Stanley K. Smith, an economics professor at the University of Florida who compiled the report. “You have a state that was booming and has been a leader in population growth for the last 100 years that suddenly has seen a substantial shift.”

The loss is more than a data point. Growth gave Florida its notorious flip-flop and flower-print swagger. Life could be carefree under the sun because, as a famous state tourism advertisement put it in 1986, “The rules are different here.”

But what if they are not? Or if those Florida rules — an approach that made growth paramount in the state’s sales pitch, self-image and revenue structure — no longer apply?

“It’s got to be a real psychological blow,” said William H. Frey, a demographer at the Brookings Institution who predicted that census data in December would confirm the findings. “I don’t know if you can take a whole state to a psychiatrist, but the whole Florida economy was based on migration flows.”

Yawn…seems old news never gets old anymore.

Banks slapped again; commercial real estate delinquencies mushroom
By Thomas Olson, TRIBUNE-REVIEW
Sunday, August 30, 2009

The subprime mortgage fiasco is being compounded by a newer stress factor at banks these days: Commercial loans, especially for real estate.

Delinquencies on such loans are a hot spot of potential trouble, experts say, because many regional banks hold large numbers of them. The cause is companies that shut down amid the recession, vacating shopping malls and office buildings financed by the loans.

According to Foresight Analytics, a real estate research firm in Oakland, Calif., delinquent payments 30 or more days late reached 4.3 percent during the April-June quarter, the worst since the recession in the early 1990s. An estimated $7 billion of commercial mortgages were in foreclosure last quarter, nearly four times the level in fourth-quarter 2007, when the recession began.

“Commercial real estate is the next shoe to drop. The question is, how bad will it get?” said Matt Schultheis, a bank analyst for Boenning & Scattergood, an investment banking firm in West Conshohocken. “We’re still in the early stages of this.”
…

Like the housing and dotCom bubbles, The Stimulus Bubble (aka uncontrolled Keynesian deficit spending) is another extraordinary popular delusion that will end badly. It’s only a matter of time. Watch and wait.

http://inflation.us/videos.html#hyperinflationnation

How can you tell whether the housing market has not yet reached a bottom?

For one thing, I see few signs that many of the greatest fools of the housing bubble have yet even left the denial phase of the housing bubble stages of grief yet.

The Bell Tolls for the Housing Crisis
By Chris Jones
August 28, 2009
Motley Fool Stock Advisor

Hal-le-lu-jah!
Hal-le-lu-jah!
Housing mar-ket …
May be stable now …
Let’s all buy lux’ry homes!

I can just hear housing optimists singing this rendition of Handel’s “Messiah” after Toll Brothers CEO Bob Toll’s remarks in recent weeks. Luxury homebuyers are purportedly easing back into the market. With more new deposits, fewer cancellations, and cutbacks on incentives and price reductions, is it possible we’ve already hit bottom? Mr. Toll certainly thinks we have.
…

I’ve been increasingly aware of the flippers that have come into our area in the last year. I spoke earlier of a 25 year old home that was left to mold & burst pipes. Someone’s been in there replacing the kitchen, flooring and repainting walls. They did an awful lot of work in only a couple of weeks so I’m skeeving out at the thought of lipstick on a pig w/lurking issues.

Poorly maintained historic homes seem to be the regular mark for flippers. I saw a decent number flipped in my last location. I think the reason the market beckons is that there’s increasingly a clash of what was acceptable living conditions between older boomer sellers and the current crop of buyers. The types of jobs new buyers often hold don’t allow much time for Home Depot moments. Many months they’re in Europe, Asia or cross country for several weeks. There’s also the culture in this particular location that that type of ability is below them. So they’ll pay whatever it takes up front for the feeling everything has all been taken care of. After looking at more than a few open houses I’d have to guess most long time owners go on vacation rather than worry about their places deteriorating. When its time to sell, new buyers balk. Properties sit. Flippers are noticing the opportunity. Target homes are in a low inventory price niche. There probably is a window for this activity before they become bag holders. We’ll see what happens as the tax burdens and interest rates start rising.

Have any other upstaters or hbbers in low price housing areas noticed an increase in flipper activity?

Heather Havrilesky, I just had to put this into out bits bucket today. Heather is writing a piece on two shows that are GOING DOWN IN FLAMES, and these first paragraphs are so great I thought maybe, just maybe she was on the HBB somewhere! The link I will put in later.

Aug. 30, 2009 | Ah, the many joys of Los Angeles in August! What’s more romantic than a freeway of ants running through the kitchen? What’s more exhilarating than thick clouds of brown smoke, billowing in the hills and threatening untold tracts of overpriced, overleveraged real estate below?

It’s hard not to have a kick in your step on a day like today, when it’s 103 degrees outside, the world is in flames, and even the ants are looting, looking to steal the water that the residents of Los Angeles stole from somewhere else, some lusher place where you nonetheless can’t get a spray tan with your morning doughnut.

I wonder if, so many decades ago, the robber barons of Los Angeles paused in their diligent and important work of bloodily oppressing various indigenous and imported brown peoples to gaze across this scrubby desert basin with a sense of awe at what it might one day become: an enormous maze of pavement, thirsty lawns and overvalued stucco. How proud they might be, to see that their selfless efforts to rape the land and disempower the laboring classes have paid off in acre upon acre of foreclosures, punctuated only by auto body shops and shitty Chinese restaurants! Los Angeles, glorious and vast, land of roof rats, home of the Whopper!

I guess my piece is STUCK?

link to *Going Down In Flames
http://www.salon.com/ent/tv/iltw/2009/08/30/cougar_town/?source=newsletter

Seems the writer just might either read the HBB.
Piece on the 2 shows failing, but the rest is so HBB style.

Trim Tabs announces highest insider selling to insider buying ratio since they began keeping records in 2004.

http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/08-28-2009/0005084471&EDATE=

There were a lot of “loft” condos built in downtown Boise the last few years. One developer is going to auction off 5 units, apparently with no reserve. He thinks he can get the occupancy up enough to allow subsequent purchasers to qualify for FHA loans.

CitySide Lofts hasn’t sold a unit this yeareither, but Steve Hosac, Bob’s brother and CitySide Lofts’ developer, isn’t waiting. He said he decided to try auctioning five units, with no minimum bid, after seeing a few condoauctions in McCall succeed. . . .

The auction will be held at noon Sept. 12 at CitySide Lofts, 13th and Myrtle streets. If the five go for fair prices, Hosac said he may put up to 20 more on the auction block.

How much of a per diem do US bureaucrats on international travel get these days?

Diplomats Help Boost Rates at World’s Most Expensive Hotels
by Tara Loader Wilkinson
Wednesday, August 26, 2009

Starwood Hotels

The Royal Penthouse Suite at the President Wilson Hotel in Geneva commands $65,000 a night for its four-bedroom penthouse.

Amid the recession, rock stars, diplomats and other celebrities find solace from the doom and gloom by spending their time in sanctuary provided by the world’s most luxurious, and expensive, hotels. While many of us are tightening our belts, shortening our summer holidays or even abandoning them, hoteliers to the rich and famous claim to have no trouble filling their most exclusive accommodations, and in the case of the most expensive suite in the world, managing to double its rate to $65,000 (€45,642) a night.

In an annual survey by Financial News’ sister publication Wealth Bulletin, the Royal Penthouse Suite at the President Wilson Hotel in Geneva, Switzerland, tops the list as the most expensive hotel room in 2009, commanding $65,000 for its four-bedroom penthouse — twice as much as patrons paid a year ago for its luxurious setting and views of Lake Geneva and Mont Blanc.

The hotel’s management puts the rise down to “buoyant demand” from government officials and U.N. diplomats.
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Interesting social observation: 60 Minutes tonight had a piece on credit default swaps, and how Congress repealed anti-financial-gaming laws in effect for most of the 20th century, in 2000. The last act of the 2000 Congress actually. They discussed how it helped cause the financial crisis.

So they had a headline for another piece, showcasing elites. My first reaction was, are these more “Wealthy looters in 3-piece suits?” But no, it was about inventors, and a particularly great one in particular (Forrest Byrd). I thought, “Ohhh, elites who actually benefitted society, that’s worth watching.”

Owners of a bubble zone newspaper frequently quoted here file for BK:

* The Wall Street Journal
* AUGUST 31, 2009

Paper Owner Freedom Plans to File For Chapter 11

By PETER LATTMAN and RUSSELL ADAMS

Freedom Communications Inc., the owner of the Orange County Register, is expected to declare bankruptcy this week, according to people familiar with the situation, the latest in a string of Chapter 11 filings in the battered newspaper business.

The company, majority owned for more than 70 years by the Hoiles family, has reached agreements with its lenders to restructure its debts, according to these people.

With annual revenue of about $700 million, Freedom owns the Register and more than 30 other daily papers and eight TV stations. Earnings before interest, taxes, depreciation and amortization — a popular measurement for leveraged companies — have declined about 75% over the past five years to about $50 million.

Freedom was founded in the 1930s by R. C. Hoiles, a former printer’s apprentice who used his publications in part to spread his libertarian views. The Orange County Register continues the libertarian approach but, like other newspapers across the country, has had to confront the question of its survival.

“We are continuing to work with our lenders to address our balance sheet,” said a Freedom spokesman.
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* The Wall Street Journal
* AUGUST 31, 2009

Raft of Deals for Failed Banks Puts U.S. on Hook for Billions

By DAMIAN PALETTA

WASHINGTON — The biggest spur to deal-making among banks isn’t private-equity cash or foreign investors. It is the federal government.

To encourage banks to pick through the wreckage of their collapsed competitors, the Federal Deposit Insurance Corp. has agreed to assume most of the risk on $80 billion in loans and other assets. The agency expects it will eventually have to cover $14 billion in future losses on deals cut so far. The initiative amounts to a subsidy for the banking industry.

See banks, savings banks and thrifts that have failed since the beginning of 2008.

Through more than 50 deals known as “loss shares,” the FDIC has agreed to absorb losses on the detritus of the financial crisis — from loans on two log cabins in the woods of northwestern Illinois to hundreds of millions of dollars in busted condominium loans in Florida. The agency’s total exposure is about six times the amount remaining in its fund that guarantees consumers’ deposits, exposing taxpayers to a big, new risk.

As financial markets heal and the economy appears to be pulling out of recession, the federal government is shifting from crisis to cleanup mode. But as the loss-share deals show, its potential financial burden isn’t receding. So far, the FDIC has paid out $300 million to a handful of banks under the loss-share agreements.

The practice is largely a response to the number of bank failures of the past 18 months, which has stretched the FDIC’s financial and logistical resources. The FDIC had just $10.4 billion in its deposit-insurance fund at the end of June, down from more than $50 billion last year. The agency said Thursday it had 416 banks on its “problem” list at the end of the second quarter, which means the list of banks at a higher risk of insolvency has been growing.
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Noone could have seen it coming!

* The Wall Street Journal
* AUGUST 30, 2009

Lessons of the Financial Crisis — One Year Later

By GREGORY ZUCKERMAN

The numbers hardly tell the story.

Today, the Dow Jones Industrial Average stands roughly 2000 points below where it was on this end-of-summer weekend one year ago. No one knew then, of course, but the U.S. stock market and the world economy were just days from historic calamity, unprecedented in the lives of anyone born in the last 80 years.

And today? We are nearly six months into one of the most impressive bull markets in memory; the Dow has risen 46% since early March. The Nasdaq Composite Index is up 60%.

Go figure. It’s been a year of horrors and opportunities for investors.
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Maybe our Airhead Pres will see the value in allowing people to choose a more dignified way of dying

like having family members around wishing him well in the next life as he slowly fades out under heavy doses of morphine…like my father did.

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Richard Egan, the billionaire co-founder of EMC Corp. and the former U.S. ambassador to Ireland, died yesterday of a self-inflicted shotgun wound to the head, police and other sources confirmed.

Egan, 73, a resident of the Four Seasons condominiums on Boylston Street, had been battling terminal cancer, sources said. He had a visiting nurse attending to him while he underwent treatments.

Sources said Egan shot and killed himself in a linen closet. His nurse heard the blast and called 911 at 12:32 p.m., sources said.

Egan leaves his wife, Maureen, and five children. The family released a statement last night asking for privacy.

Party on, Garth! Why wasn’t this guy given some kind of entrepreneurship award instead of jail time for figuring out a fun recreational use for the open space inside upscale vacant homes?

North County Times
Home / News / Local News / San Diego County
REGION: San Marcos man charged with throwing parties in vacant upscale homes

San Marcos man charged with throwing parties in vacant upscale homes

TERI FIGUEROA and CHRIS NICHOLS - tfigueroa@nctimes.com, cnichols@nctimes.com | Posted: Wednesday, August 19, 2009 7:15 pm

When the market got down, apparently, so did some kids. But the party may be over for a jailed San Marcos man, charged Wednesday with breaking into upscale but empty North County homes to throw large and destructive bashes for profit.

Jovan Peter Araujo, 21, pleaded not guilty to two felony counts each of burglary and vandalism.

Prosecutors suspect he was organizing and promoting blowout bashes, breaking into vacant homes and —- putting the “band” in abandoned? —- threw parties, charging party-goers $5 a head to attend.

Fallbrook Sheriff’s Detective Jeff Lauhon said Araujo and friends allegedly scouted secluded million-dollar homes that were either for sale or in foreclosure. Sometimes, they simply watched for hours to see if anyone entered or exited the homes, he said.

“They’d go out and find houses that were vacant, no neighbors, long driveways —- you know, ideal party houses,” Lauhon said.
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To save LA the trouble of going to Hell, it seems Hell has come to call on LA.

Los Angeles fire worsens, 10,000 homes threatened

A wildfire in the heavily populated foothills of Los Angeles surged north overnight, forcing more evacuations and threatening 10,000 homes.

Published: 9:57PM BST 30 Aug 2009

Japan Credit Swaps to Rise After Election Fever, Barclays Says
By Katrina Nicholas

Aug. 31 (Bloomberg) — Japanese credit-default swap prices will rise once the novelty of the Democratic Party of Japan’s election victory wears off and attention turns back to the economy, according to Barclays Plc.

Credit-default swaps in Japan should “trend tighter briefly, but that won’t be sustainable,” Jun Anno, a Tokyo- based trader at Barclays, said in a phone interview today. “The fundamentals in Japan are still poor.”

The Markit iTraxx Japan index of credit swaps fell 3 basis points to 157.5 basis points as of 9:55 a.m. in Tokyo, Barclays prices show. The bond risk benchmark rose to as much as 565.4 basis points on March 12, according to CMA DataVision.

The DPJ, which wrested power from the Liberal Democratic Party for the first time yesterday, inherits record unemployment and accelerating deflation in a nation emerging from its deepest postwar recession. Factory output rose at the slowest pace in four months in July and retail sales fell, Japan’s Trade Ministry said today. Government data last week showed that household spending fell at the fastest pace in five months.

The yield on 10-year government bonds fell 1.5 basis points to 1.295 percent as of the 11:05 a.m. morning close in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer broker.
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The hungry wolves are licking their chops looking over the sick herd of sheep. Soon the hunt will culminate in a bloody massacre of the sheep.

New York Times
Editorial
New Rules for Private Equity
Article Tools Sponsored By
Published: August 30, 2009

When a bank fails, the preferred course of action by the Federal Deposit Insurance Corporation is to sell it, quickly, to a healthy bank. That protects the insurance fund and, by extension, taxpayers, because a sale is considerably less costly than liquidation. But with several hundred banks poised for failure in the months to come, there may not be enough ready buyers to clear out the anticipated inventory.

This is the crunch moment for which private equity firms have been waiting. The firms have long styled themselves as saviors, able and willing to spend billions of dollars to buy failed banks. The problem is, they are not banks and their partners don’t act or think like traditional bankers; they have thin track records running banks, and they do not want to be regulated as banks.

They are private firms, whose partners and investors have thrived on high-flying and highly leveraged deal-making. Many have amassed great wealth, but too often, they have reaped big gains while saddling their acquisitions with debilitating debt. Normally, private equity firms would not be anyone’s first choice to run a bank. But they have a lot of money and the government is going to have a lot of banks to sell.
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Asian share prices are dropping yet again. Luckily we have decoupling, and besides, the US stock market always goes up. Look for a blistering rally tomorrow.

Aug 31, 2009, 12:20 a.m. EST
Asian Shares Fall; Japan Erases Rise,China Mkt Drops

By Colin Ng

(Adds information, quotes, updates/adds market levels)

SINGAPORE (MarketWatch) — Asian stock markets fell Monday, retracing early gains, with Japanese shares sinking after initial euphoria over the opposition’s election victory and China’s stock markets sharply lower as an upcoming share offering spurred concerns over increased supply.

“Tokyo reacted to the change in government with a big spike up before the reality of their economic situation started to bite,” said Macquarie Private Wealth Associate Director David Halliday.

Japan’s Nikkei 225 was down 0.1% after initially rising more than 2.0% to its highest intraday level for this year. The early gains were fueled by the Democratic Party of Japan win’s of more than 300 of the 480 seats in the Lower House on Sunday, pushing out the Liberal Democratic Party after 54 years of nearly uninterrupted rule.

The election outcome also pushed the Japanese yen sharply higher.

“The questions that linger now is if the DPJ could deliver their lofty election promises and what the results mean for Japan’s policies, including foreign relations and foreign exchange policies,” said UBS analysts in a note.

Shares in China dropped sharply, with the Shanghai Composite trading down 5.4%, as Metallurgical Corp. of China’s share offer aggravated supply concerns and as talk of a slowdown in lending growth continued to weigh on sentiment.

The declines on the mainland weighed on regional stock markets, with Hong Kong’s Hang Seng Index shedding 2.1%.

“On one hand, new share supply is hanging over the (Shanghai) market, while on the other, liquidity isn’t that supportive as new loan growth may decline further in August,” said Wang Junqing at Guosen Securities.
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