The Housing Bubble

Good morning, HBB! Just got home from a date….(that’s a sign of a good date, btw). Now to sleep for 3 hours and get ready for work. Ugh.

Stiglitz Says U.S. Economic Recovery May Not Be ‘Sustainable’

Sept. 4 (Bloomberg) — The U.S. economy faces a “significant chance” of contracting again after emerging from its worst recession since the 1930s, Nobel Prize-winning economist Joseph Stiglitz said.

“It’s not clear that the U.S. is recovering in a sustainable way,” Stiglitz, a Columbia University professor, told reporters yesterday in New York.

Economists and policy makers are expressing concern about the strength of a projected economic recovery, with Treasury Secretary Timothy Geithner saying two days ago that it’s too soon to remove government measures aimed at boosting growth.

Stiglitz said he sees two scenarios for the world’s largest economy in coming months. One is a period of “malaise,” in which consumption lags and private investment is slow to accelerate. The other is a rebound fueled by government stimulus that’s followed by an abrupt downturn — an occurrence that economists call a “W-shaped’ recovery.

“There’s a significant chance of a W, but I don’t think it’s inevitable,” he said. The economy “could just bounce along the bottom.”

Stiglitz said it’s difficult to predict the economy’s trajectory because “we really are in a different world.” He said the crisis of the past year was made worse by lax regulation that allowed some financial firms to grow so large that the system couldn’t handle a failure of any of them.

Big Banks

“These institutions are not only too big to fail, they are too big to be managed,” he said.

Finance ministers and central bankers from the Group of 20 nations meet in London Sept. 4-5 to lay the groundwork for a summit in Pittsburgh later this month, where leaders will consider measures to overhaul supervision of the financial system.

The U.S. Treasury Department, in a statement yesterday, said it wants a global agreement requiring banks to increase their capital cushions to be reached by the end of next year.

Stiglitz, 66, said that while $787 billion in federal government stimulus is propelling growth this quarter, there’s no guarantee the economy will maintain its momentum. On whether the U.S. needs another injection of stimulus, Stiglitz said it’s best to “wait and see.”

“We did have a very big stimulus, and that stimulus has added to economic growth and will be adding in the current quarter,” he said. “But the question going forward in 2011 is the stimulus is coming off, and that’s a negative.”

Women gain as men lose jobs
USA TODAY

Women are on the verge of outnumbering men in the workforce for the first time, a historic reversal caused by long-term changes in women’s roles and massive job losses for men during this recession.

Women held 49.83% of the nation’s 132 million jobs in June and they’re gaining the vast majority of jobs in the few sectors of the economy that are growing, according to the most recent numbers available from the Bureau of Labor Statistics.

That’s a record high for a measure that’s been growing steadily for decades and accelerating during the recession. At the current pace, women will become a majority of workers in October or November. The data for July will be released Friday.

“It was a long historical slog to get to this point,” says labor economist Heidi Hartmann, president of the Institute for Women’s Policy Research.

The change reflects the growing importance of women as wage earners, but it doesn’t show full equality, Hartmann says. On average, women work fewer hours than men, hold more part-time jobs and earn 77% of what men make, she says. Men also still dominate higher-paying executive ranks.

Women have been a growing share of the once heavily male labor force for nearly a century, recording big bumps during epochal events such as the Depression and World War II.

This time, the boost came from a severe recession that has been brutal on male-dominated professions such as construction and manufacturing.

Through June, men have lost 74% of the 6.4 million jobs erased since the recession began in December 2007. Men have lost more than 3 million jobs in construction and manufacturing alone.

1.3 million to lose jobless benefits by year’s end.
USA Today

JACKSONVILLE, Fla. — Jobless since January, Donald Money has already moved in with his elderly parents, stopped going to the movies and started using less of his prescription medication so it will last longer.

This month, something else will fall by the wayside: Money’s unemployment check. The 43-year-old former printing press operator is among the more than 1.3 million Americans whose unemployment insurance benefits will run out by the end of the year, placing extra strain on an economy that is just starting to recover from the worst downturn in a generation.

These are the most unfortunate of America’s 14.5 million jobless: the ones whose benefits are drying up — in some cases after a record 18 months of government support.

With savings depleted and job opportunities scarce, people …. are living with relatives and borrowing cash from friends. They are even skipping meals. Through it all, they are trying to stay positive through exercise and prayer.

The government said Thursday that 570,000 laid-off workers filed new claims for unemployment benefits last week, bringing the number of people receiving benefits to 6.23 million. The Labor Department is expected to report Friday that the August unemployment rate rose to 9.5%, up from 9.4% in July.

Money and others like him are scrambling to find work before the government safety net is taken away. On a recent day in Jacksonville, Money attended a church-run job fair in a half-vacant shopping mall. Most of the vendors were vocational schools trolling for students, or recruiters for the military and fast food joints.

Money, who was laid off from a printing business, said he’ll do anything for a paycheck.

“I’m tired of not working,” he sighed. “I just can’t sit at home anymore.”

People who lost white-collar jobs seem most surprised by the dire circumstances they are finding themselves in as unemployment benefits dry up. Before the recession and financial crisis, it had always been easy for them to find work.

Clifford Sheffield, 43, of Fernandina Beach, Fla., used to earn $2,000 a week as an analyst for Merrill Lynch’s Jacksonville office.

Today, he lives off of a $1,300 monthly check from the government — and is burning through his savings to keep up with rent. The unemployment benefits run out later this month.

At a recent job fair, he perused applications for Valu Pawn and Taco Bell, but did not fill them out.

“I have family I could fall back on, but it’s not very appealing,” Sheffield said.

Capmark May Signal More Bank Failures From Commercial Property

Sept. 4 (Bloomberg) — Capmark Financial Group Inc.’s possible collapse may signal a new wave of real estate losses for banks — this one tied to business property — that could push the year’s tally of failures past 100.

Capmark, ranked among the largest U.S. commercial real estate lenders by Moody’s Investors Service, posted a $1.6 billion quarterly loss on Sept. 2 and said it might go bankrupt. The Horsham, Pennsylvania-based company struggled as the default rate on commercial mortgages held by U.S. banks more than doubled to the highest since 1994.

“We haven’t really experienced the full extent of the distress,” said Sam Chandan, chief economist at property research firm Real Estate Econometrics LLC in New York. “When you look at community banks and some smaller regional banks, they tend to have a far greater concentration in terms of their exposure to commercial real estate.”

Lenders are still reeling from residential real estate losses that helped push U.S. bank failures to 84 so far this year. The tally included Colonial BancGroup Inc., the sixth- largest failure in the history of the Federal Deposit Insurance Corp. The total may rise late Friday, when the agency customarily announces the week’s shutdowns.

Bank failures last topped 100 in 1992, when at least 179 were seized, according to FDIC data. Chairwoman Sheila Bair has said more collapses are likely, and the agency’s list of “problem banks” stands at 416, the most in 15 years.

Commercial Holdings

Capmark’s holdings include a banking unit based in Salt Lake City with $11.1 billion in assets and a “well- capitalized” ranking from its regulators, according to the bank’s Web site. Deposits stood at $8.4 billion on June 30, according to the Horsham, Pennsylvania-based company’s quarterly statement.

U.S. banks hold about $1.087 trillion of commercial property loans, almost 15 percent of their loans and leases, according to Real Estate Econometrics. Stress tests conducted by regulators in May found that the largest U.S. financial firms could face losses of $53 billion tied to commercial real estate.

Late payments on a commercial loan two years ago typically were cured with no damage to the lender, Chandan said. Now, amid the worst economic slump since the Great Depression, bankers are finding late payments are more likely to signal an actual loss is brewing, he said.

Ah ha ! I am not the firstiest of the first, but I am the fourthiest of the fourth. Almost the first post. But the fourth is not bad. To make this post fit the parameters of the HBB,I will write the word ” houses. ” There. Now, it’s appropriately apropos. Gold’s still going up in Hong Kong, though I noticed this morning. I wonder what will happen today in N.Y. trading.

Food stamp list soars past 35 million: USDA

WASHINGTON (Reuters) - More than 35 million Americans received food stamps in June, up 22 percent from June 2008 and a new record as the country continued to grapple with the worst recession since the Great Depression of the 1930s.

The food stamp program, which helps cover the cost of groceries for one in nine Americans, has grown in step with the U.S. unemployment rate which stood at 9.4 percent in July.

The Labor Department will release August employment figures on Friday.

June was the seventh straight month in which food stamp rolls set a record. The average benefit in June was $133.12 per person.

OK, I’m going to take this opportunity to do my “report from Canada” after this year’s vacation. Largely observations from the Stratford Shakespeare Festival and its surrounding areas. By the way, I recommend the shows there as a fabulously good value. They aren’t cheap, though there are plenty of discount programs so you might be able to get some cheap this year. But they are a good value. The performances are fantastic and the productions don’t cut corners. You get a lot. I think that three hours drive from either Buffalo or Detroit should get you all the way there, but check that.

I’m gonna get so flamed by the neoliberals for this, considering the publisher. But I’ve been reading the old Greek for years. Anyhoo, this scientist says exactly what I’ve been saying for a long time, SSRIs make people not give a crap what they do.

http://www.takimag.com/blogs/article/the_myth_of_technological_progress/

..More OT than the Shakespearean festival thing above..

Last time I bought a 20 lb bag of potatoes from Costco a lot went bad before i had a chance to use them. At 40 cents a pound it’s a fine bargain, imo.. big perfect baking potatoes.. but i really hate to waste food.

A week ago I bought them again, but his time tried freezing a few as an experiment according to the generally accepted procedure..

Peel, rinse, and cut into slices or fries, about 1/3 inch thick.
Wash well in plain water and dry them.
Fry small quantities in 360 F oil for about 5 minutes. Don’t brown them.
Drain, let cool, package in freezer quality bags and freeze.

Defrosted a single portion-bag last night and finished frying them (can also be oven baked). Came out perfect.. yummy. They supposedly keep for two months frozen. A sub zero deep freezer might keep them a lot longer..

“Comment by sleepless_near_seattle
2009-09-04 01:03:59

So a foreclosure sale to someone other than the bank is not recorded but the bank taking the house back at the bid price is? Amazing.”

We had this brief discussion last night about how DataQuick comes up with their ‘median sales price’ statistics for San Diego, whose rising levels have been used to justify serial bottom callers’ claims that the housing market has bottomed out and a recovery is underway (despite rising unemployment and foreclosures) — see discussion towards the end of yesterday’s bits bucket or listen to the transcript of KPBS San Diego Public Radio ‘These Days’ here.

If they actually are averaging in the prices at which banks take the (unsold) house back at the bid price as though the home actually sold at that price, this could creating significant upward bias in what they report as ‘median sales price.’

I have several related questions:

1) Can anyone independently verify whether this is actually how they calculate ‘median sales price’?

2) If so, wouldn’t the resulting statistic be fraudulently misleading, due to a systematically upward-biased calculation of the median sales price?

3) Is this legal?

I was over at zero hedge yesterday and they had a story about Wells Fargo and their delinquent loan situation. They linked to wlmlab.com which gets it’s data from the FDIC. I had never seen that site before and it’s interesting. WF’s delinquency numbers have ballooned.

Is there any reason to doubt that Wall Street will not have a banner day on the “higher than expected” unemployment rate announcement? (You know the drill — “bad news is already priced in, bad news is a sign the economy is bottoming, bad news provides a contrarian signal, etc. etc. etc.”)

Index Futures:
SP 500 1,009 1.60 0.16%
DOW 9,350 +20.00 +0.21%
NASDAQ 1,604 4.50 0.28%

Jobless rate hits 26-yr. high

U.S. nonfarm payrolls contract by 216,000, pushing the unemployment rate to 9.7% — its highest level in more than a quarter-century. August becomes the 20th straight month in which the U.S. economy has lost jobs.

EUROPE
Spain rallies with 18.5% jobless
Alongside one of the worst economies in Europe, Spain’s stock market has outperformed France and Germany this year.

Unemployment rate rises to 26-year high
On Friday September 4, 2009, 8:40 am EDT

WASHINGTON (Reuters) - U.S. employers cut a fewer-than-expected 216,000 jobs in August, while the unemployment rate rose to a 26-year high, the government said on Friday in a report showing a still fragile labor market.
Reuters - Stephen Battaglia (L) of West Palm Beach, Florida searches for jobs on a computer at Workforce Alliance in …

Reuters - Stephen Battaglia (L) of West Palm Beach, Florida searches for jobs on a computer at Workforce Alliance in …

The Labor Department said the unemployment rate rose to 9.7 percent after dipping to 9.4 percent in July and the decline in payrolls was the smallest in a year. The department revised job losses for June and July to show 49,000 more jobs lost than previously reported.

Analysts had expected non-farm payrolls to drop 225,000 in August and the unemployment rate to rise to 9.5 percent.

The labor force increased by 73,000 in August, indicating the return of some jobless workers who had given up looking for work accounting for part of the rise in the unemployment rate.

Since the start of the recession in December 2007, the economy has shed 6.9 million jobs, the department said. Stubbornly high unemployment is wearing on consumer confidence and crimping domestic demand, pointing to an anemic recovery from the worst slump in 70 years. Consumer spending accounts for over two-thirds of U.S. economic activity.

However, the August report confirmed the pace of layoffs was easing from early this year, when nearly three quarters of a million jobs were lost in January.

Manufacturing employment fell by 63,000, with a total of 2 million factory jobs lost since the start of the recession. Payrolls in construction industries dropped 65,000 after falling 73,000 in July.

The service-providing sector purged 80,000 workers in August, while the goods-producing industries shed 136,000 positions.

Education and health services continued to add jobs, with payrolls increasing 52,000 in August after rising 21,000 in July. Government employment fell 18,000 after slipping 28,000 in July.

Mortgage = death pledge, a loan commitment which lives on after you die…

Realty Q&A
Sep 4, 2009, 8:01 a.m. EST
Death don’t us part
Estate is responsible for mortgage payments

-Unemployment up to 9.7% and on that great news the stockmarket is trending upwards this morning. Watch the headfakes people, the market is about to test the March lows.
-Interesting to note the upward revision to last month’s job’s numbers that sent stocks flying and watching the MSM spin the results.
-Saw Cramer two nights ago looking sober and sincere telling the bulls this is a great buying dip. If that ain’t a crash sign, “I don’t know nothin’.”

In honor of Obama’s birthday, Beck blows out candles on Chinese flag-decorated cake

August 05, 2009 9:34 am ET
From the August 4 edition of Fox News’ Glenn Beck:

http://mediamatters.org/mmtv/200908050007

Subprime Sam’s next bailout recipient?

* The Wall Street Journal
* SEPTEMBER 4, 2009

Loan Losses Spark Concern Over FHA

By NICK TIMIRAOS and DEBORAH SOLOMON

The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout.

The rising losses at the FHA, part of the U.S. Department of Housing and Urban Development, come as the agency has rapidly increased its role in guaranteeing loans in an attempt to stabilize the housing market.

It isn’t clear how the rising losses may affect home buyers. Options for the agency could include politically unpalatable choices, such as asking for taxpayer funds to boost reserves or increasing the premiums borrowers pay for the insurance offered by the agency. Agency officials say if there is a shortfall, they don’t have to do anything except report it to lawmakers. But some mortgage and housing analysts see trouble ahead. “They’re probably going to need a bailout at some point because they’re making loans in a riskier environment,” says Edward Pinto, a mortgage-industry consultant and former chief credit officer at Fannie Mae. “…I’ve never seen an entity successfully outrun a situation like this.”
…

* The Wall Street Journal
* REAL ESTATE
* SEPTEMBER 4, 2009

Troubles For ‘Prime’ Borrowers Intensify

By ROBIN SIDEL

The long recession and rising joblessness are taking an increasing toll on the nation’s most credit-worthy borrowers, who are now falling behind on their mortgage and credit-card payments at a faster pace than people with poor financial histories.

The mortgage-delinquency rate among so-called subprime borrowers reached 25% in the first quarter but appears to be leveling off, rising only slightly in the second quarter. The pace of delinquencies for prime borrowers is accelerating. Since prime loans account for 80% of U.S. bank exposure to mortgages and credit cards, these losses could ultimately exceed those from weaker borrowers.

“The subprime pain is in the rearview mirror,” says Sanjiv Das, head of Citigroup Inc.’s mortgage business, which is seeing delinquencies rise among prime borrowers, who make up three-quarters of its mortgage portfolio.
…

Considering all the inflation fear mongering that is in play, it is amazing how little cash is actually in circulation these days, as evidenced by all the states that are still facing a severe credit crunch, despite assurances to the contrary from on high.

* The Wall Street Journal
* SEPTEMBER 4, 2009

States Shut Down to Save Cash

Maine, Maryland, Michigan Slash Service; ‘Nightmare’ at California Vehicle Registry

By LESLIE EATON, RYAN KNUTSON and PHILIP SHISHKIN

California drivers can’t line up to renew their licenses Friday. Wisconsin natives can’t order copies of their birth certificates. Georgia consumers will have to postpone registering complaints with state watchdogs. And stranded motorists in Maryland may have to wait a little longer for highway-department help.

Across the country, cash-strapped state governments are shutting down business for a day at a time to save money. State offices are shuttered Friday in California, Maine, Maryland and Michigan. Rhode Island had planned to join them until a judge on Thursday blocked its closure plan.
…

Sep 3, 2009, 6:22 a.m. EST

Hong Kong recalls gold reserves, touts high-security vault
In a challenge to London, Asian states invited to store bullion closer to home

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city’s airport, in a move that won praise from local traders Thursday.

The facility, industry professionals said, would support Hong Kong’s emergence as a Swiss-style trading hub for bullion and would lessen London’s status as a key settlement-and-storage center.
…

The Long Adjustment
How Bad Will It Get?
By MIKE WHITNEY

The U.S. economy is at the beginning of a protracted period of adjustment. The sharp decline in business activity, which began in the summer of 2007, has moderated slightly, but there are few indications that growth will return to pre-crisis levels. Stocks have performed well in the last six months, beating most analysts expectations, but weakness in the underlying economy will continue to crimp demand reducing any chance of a strong rebound. Bankruptcies, delinquencies and defaults are all on the rise, which is pushing down asset prices and increasing unemployment. As joblessness soars, debts pile up, consumer spending slows, and businesses are forced to cut back even further. This is the deflationary spiral Fed chairman Ben Bernanke was hoping to avoid. Surging equities and an impressive “green shoots” public relations campaign have helped to improve consumer confidence, but the hard data conflicts with the optimistic narrative reiterated in the financial media. For the millions of Americans who don’t qualify for government bailouts, things have never been worse.

Kevin Harrington, managing director at Clarium Capital Management LLC, summed up the present economic situation in an interview with Bloomberg News: “If we have a recovery at all, it isn’t sustainable. This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”

Reflecting on the Fed’s unwillingness to force banks to report their losses on hard-to-value illiquid assets, Harrington added, “We haven’t fixed the problem. We’ve just slowed down the official recognition of it.”

“Unemployment rate jumps to 9.7 percent”

“Stocks edge up after positive jobs data”

Yeah. I didn’t read the articles but I guess it’s better than expected.

I’ve been reading this blog since circa 2003-4. At first I was kicking and screaming as I was pulled into the dark side…that ended in around mid 2005 as I had finally seen the light.

I am curious to hear what specific things people think must change in order to get our economy/society back on track.

Based on all that I have read, I am of the opinion that we are in a rather hopeless situation and not likely to EVER regain the status and standard of living we have enjoyed in the past.

Fecaltime!

What, me worry?

When the agency that insures traditional pension plans is running a $33.5 billion deficit — the largest in its 35-year history — should you be worried? If you’re a worker or retiree counting on a traditional pension, the answer is probably not. But if you’re a taxpayer, start worrying.

Though it will likely take years, it’s all but inevitable that at some point the Pension Benefit Guaranty Corp., the agency responsible for guaranteeing pension benefits for some 44 million Americans, will need to either cut those benefits or raise a lot of cash, experts say.

Given that slashing payouts to older people is considered political suicide, the likely scenario is that the U.S. government will pony up funds to shore the agency’s finances.

Pensioners “don’t have to worry,” said Douglas Elliott, an author of numerous studies on the PBGC and a fellow at the Brookings Institution, a Washington-based public-policy think tank.

“The taxpayer has to worry. There is no way politically that Congress would let the PBGC fail to send checks to Grandma and Grandpa. Just like they rescued the savings-and-loans years ago without the legal obligation to do it, just like they rescued a number of banks without the legal obligation to do it, they’ll do the same thing with the PBGC if necessary,” Elliott said.

Romer Says Jobless Rate Is a ‘Tragedy,’ Stimulus Plan Working

Sept. 4 (Bloomberg) — The U.S. unemployment rate of 9.7 percent is a “tragedy,” and job growth likely won’t come until several months after the economy begins to expand, President Barack Obama’s chief economist said.

“That’s sort of the trajectory we’re seeing,” Christina Romer, chairman of the White House Council of Economic Advisers, said in an interview today on Bloomberg Television. She said the $787 billion economic stimulus package enacted earlier this year is working to boost growth and declined to comment about whether a second round will be needed.

“At this point we are very encouraged that the stimulus we put in place is doing its job,” Romer said. “Of course, we’re going to be watching this thing.”

Employers cut 216,000 workers from payrolls in August, fewer than forecast, after a 276,000 drop in July that was larger than previously reported, Labor Department data showed today in Washington. The jobless rate jumped to a 26-year high, from 9.4 percent.

The pace of U.S. job losses is slowing as signs emerge that a recession that started in December 2007 is ending. The rising unemployment rate underscores threats to consumer spending gains in the recovery.

The jobless rate reached a post-World War II record of 10.8 percent in 1982.

Hey,

I just bought a Double gold High Relief Double Eagle from the U.S. Mint…It’s a bad coin!

I know I said I wouldnt buy a Mutual Fund, but I did buy one that specializes in gold and it’s up. I put in $100, last two weeks it was down to 93 dollars, but today it’s at $103! LOL…..

And check this out…

http://money.cnn.com/2009/09/03/markets/thebuzz/index.htm

And why is it Uh oh, gold is rising….Seems I am on the end of everything the main stream media thinks is bad….

Uh oh, gold is rising…..good for me
uh oh, housing prices are falling…good for me
Uh oh, savings are going up…I am saving…WTF???

Just WHO is the main stream media rooting for?

Any comments or insight on the gold situation is great!!!

I dont even know what to say, how did this endup in newsweek?

http://www.newsweek.com/id/214866

A cupcake bubble??????????

It seems that a lot of what we produce in the USA is easily copied and ‘our’ companies do the work and other people reap the rewards. For example: Music and movies are created here and then stolen copies are stolen and sold in China and elsewhere. Also once a DRUG is created by a company like Pfizer, it once again seems that dealers in the black market could remake this drug (minus all the hassles Pfizer or other drug companies must endure).
I’m certain there are other examples of this. I wonder how much this sort of thing hurts our economy and what can be done to minimize it. BTW: I am no fan of either industry and try to NOT purchase much of either product!
Fecaltime!

Pa. man fires cannon, hits neighbor’s house
AP

UNIONTOWN, Pa. – A Pennsylvania history buff who recreates firearms from old wars accidentally fired a 2-pound cannonball through the wall of his neighbor’s home.

Fifty-four-year-old William Maser fired a cannonball Wednesday evening outside his home in Georges Township that ricocheted and hit a house 400 yards away.

The cannonball, about two inches in diameter, smashed through a window and a wall before landing in a closet. Authorities say nobody was hurt.

State police charged Maser with reckless endangerment, criminal mischief and disorderly conduct.

No one answered the phone Friday at Maser’s home. He tells WPXI-TV recreating 19th century cannons is a longtime hobby. He says he is sorry and he will stop shooting them on his property, about 35 miles southeast of Pittsburgh.

Hi everyone, haven’t posted for ages cause I’ve been out in the backcountry with no internet. I’m now pirating a neighbor’s wifi to write this and it comes and goes, so may not be able to read any comments or reply.

I’m writing this from Bozeman, Montana. Beautiful place but too urban for me. Every other place here is for rent and prices are rapidly dropping, now that college is in session. Landlords are feeling desperate. Some are even offering first month free.

Here’s an example: My landlady lives 3 hours away. She rented her place to me with no money down over the phone. She bought it for her son to live in while attending college, you know, the old paradigm of selling for a profit no matter what. I paid her for the first two weeks after being here a week, but no deposit. I have one more week paid and will then leave. She is grateful to have gotten 2 weeks’ rent from the place. I can stay as long as I want. It’s a nice duplex in a good location. I have all 8 of my pets here with me (except the horses, couldn’t get them into the car).

It’s just too noisy and urban. A few days ago there were 100 college students in the street having a rager. Someone called the cops (not me, I kind of enjoyed all the noise after living in complete solitude for so long). I’m getting to know some of the neighbors, nice college types, freshmen cowboys from Absaroka who would give you the shirt off their backs then accidentally shoot you while drunk. But nice kids. They all hate Missoula, too hippy. I like Missoula. But I digress.

I’ve been exploring a lot of Montana backcountry and it’s a beautiful state, but I’m going back to the wilds of Utah, where nobody asks your name, what you do, or if you own a house. That’s because there’s nobody out there to ask.

Speaking of Utah, I made an offer on my old house, the one I was squatting in last summer. Asking price then was 150k. I offered 25k. The bank (BOA) replied with 58k. I passed. It’s now down to 45k. I may again offer, but this time maybe 20k. It’s an old bungalow with character but needs lots of work. Best location in town. I just bought a new Casita trailer (casita.com check them out) and may just go live in it, travel around, and be a gypsy.

Wait…I already am a gypsy, I think.

I posted something that I hope Mr. Filter got a one-year lease for me on Pluto, preferably an ice view.

It was just me ruminating about my job, and polly’s friends situation triggered it. Please ignore it, and don’t respond. Like I said this ain’t True Confessions and you guys have helped enough already. We ALL have problems.

Sometimes, “the typing” is therapeutic, I am sure someone understands. Never hit the send button w/o thinking.

Now, nobody would want a premature celebration dripping off their lips:

Who Should Get Credit for a Recovery?
by Chris Isidore, CNNMoney.com

Thursday, September 3, 2009

“Most economists agree the economy has taken a turn for the better, but agreeing what got us here is the tough part — and it’s key to avoiding future mistakes.

Although the recession isn’t officially over yet, there is a growing sense that the economy is now in a recovery. But there is also a growing debate about who deserves the credit.

The question of who should receive praise for helping to get the economy back on track may seem trivial. But knowing what policies worked, and which ones need to stay in place, could keep the recovery from stalling out.

Many in Washington have gone to extraordinary lengths to try and turn around the economy over the past year or so.

Last year, Congress signed a blank check to Treasury to cover losses at mortgage finance giants Fannie Mae and Freddie Mac and created the $700 billion Troubled Asset Relief Program for banks. Earlier this year, lawmakers passed a $787 billion stimulus package.

Meanwhile the Federal Reserve slashed interest rates to nearly 0% and pumped more than $1 trillion into the economy with its bailout of AIG, its support for mortgage-backed securities and various lending programs.

Federal Reserve chairman Ben Bernanke said in a speech last month that the Fed and Congress, as well as other governments and central banks around the world, deserve credit for stopping the global economy from falling into a depression.

“Without these speedy and forceful actions, last October’s panic would likely have continued to intensify, more major financial firms would have failed, and the entire global financial system would have been at serious risk,” he said.

A number of economists agree that the Fed, Congress and both the Bush and Obama administrations all deserve credit for steps taken to end of the recession.”

(All I can say is wow, wait til about Souper Bowl time)

Here’s an article for you . . . what $50K buys you in various markets.

[Note: some assembly required. ]

http://finance.yahoo.com/real-estate/article/107652/a-%2450,000-house-but-at-what-cost.html?mod=realestate-buy

Got a dream but no cash? The Internet can help.
Fri Sep 4, 2009

NEW YORK (Reuters) - Chris Waddell wants to climb Kilimanjaro in a wheelchair; George Del Barrio wants to make a film in Cambodia; Jeff Edwards wants to write a book about a science fiction writer: they want you to fund their dreams.

A website called Kickstarter.com is making it possible for people like this to raise sums ranging from a few hundred to tens of thousands of dollars to fund anything that captures the imagination of Internet users with a little money to spare.

It worked for Emily Richmond, a 24-year-old living in Los Angeles who plans to sail solo around the world for two years.

She has raised $8,142 from 148 people who will receive rewards such as Polaroid photos from the trip, an origami sailboat or a telephone call when she crosses the equator.

Landon Ray, who runs a marketing software firm called SendPepper.com, gave $500 after showing his 5-year-old daughter Richmond’s video promising to keep donors updated by blog and send rewards such as a coconut mailed from a far-flung port.

“I thought this was a perfect learning experience for my daughter,” Ray said, adding that he also dreamed of sailing the world himself, so it was partly about living vicariously.

Ray also plans to use his sponsorship as a marketing tool.

Many of the projects on the site are by filmmakers, musicians, artists and writers. Project creators set a time limit and a target. If they don’t reach it, they get nothing.

COMMUNITIES ONLINE AND OFFLINE

Jason Bitner’s pitch for $7,500 to pay for post-production of a documentary about the small Midwestern town of La Porte, Indiana, was so popular it raised $12,153.

hey guys, ive been thinking about the banks and their foreclosure practices. do you think they are spending their time now foreclosing on homes that will have no recourse, and putting off foreclosing on people who have helocd, and are thus now in a recourse situation. perhaps they are in no hurry, cuz they have the debt slave by the cajones and are more likely to get something eventually. if i was a bank with limited resources, didnt want to flood the market, and wanted to hide losses as long as possible, i would do it this way. sorry if this has already been mentioned, but i dont recall seeing this. have a great weekend everyone!

There’s a widening compensation gap between U.S. CEOs and American workers. And there’s no end in sight to the trend, according to the Institute for Policy Studies, which has been tracking executive pay since 1994.

In 2007, the average ratio between salaries for a chief executive and American worker was 344 to one. That figure dipped to 319 in 2008, but is likely to rise this year, which is “really worrisome,” says John Cavanagh, the Institute’s director.

“If nothing is done — if the federal government does nothing this fall in terms of CEO pay, the ratio will likely go up this year and there will be huge stock option gains by the CEOs of some of the worst-run companies,” he says.

The public’s outrage about CEO pay seems to have died down in recent months as the broader stock market has rallied, and the focus has shifted to health-care reform, among other issues. But Cavanagh says the chasm between the incomes of the average CEO and the average worker is a critical issue.

The gap is “still very, very high, still much higher than most other countries in the world would consider decent and in sync with democracy,” Cavanagh says. “If you go back a generation in this country, on average it was about 30-to-1.”

Time for some progressive taxation. A new tax bracket for CEO’s and Hedge Fund Managers.

Hammer Time…

Inquiry Stokes Unease Over Trading Firms That Shape Markets
Published: September 3, 2009

LONDON — Its superfast, supersecret oil trading software was called the Hammer.

And if the Commodity Futures Trading Commission is right, the name fit well with an intricate scheme that allowed commodity traders in Chicago working for Optiver, a little-known company based in Amsterdam, to put their orders first in line and subtly manipulate the price of oil to the company’s advantage.

Transcripts and taped conversations of actions that took place in 2007, included in the commission’s case, reveal the secretive workings of high-frequency trading, a fast-growing Wall Street business that is suddenly drawing scrutiny in Washington. Critics say this high-speed form of computerized trading, which is used in a wide range of financial markets, enables its practitioners to profit at other investors’ expense.

Traders in the Chicago office of Optiver openly talked among themselves of “whacking” and “bullying up” the price of oil. But when called to account by officials of the New York Mercantile Exchange, they described their actions as just “providing liquidity.”

In July 2008, the commission charged Optiver with manipulating the price of oil; negotiations over a settlement continue.

In the cutthroat world of high-frequency trading, success is a function of speed, secrecy and often a bit of intrigue. Few have been more adroit at these arts than Optiver.

Optiver describes itself as one of the world’s leading liquidity providers, a trading firm that uses its own capital to make markets. It seeks to profit on razor-thin price differences — which can be as small as half a penny — by buying and selling stocks, bonds, futures, options and derivatives. (Derivatives represent about 65 percent of its business, equities 25 percent, and commodities and others make up the remaining 10 percent.)

But the extent to which market making (providing liquidity to markets that need it) and proprietary trading (the pursuit of pure profit with a firm’s own money) can properly coexist has become a thorny question for regulators. They are grappling with an exploding business that makes up as much as half the overall trading in the United States and a growing share in Europe as well.

90 Minutes till todays latest bank casualty list starts getting announced.

It’s a long weekend, and I can’t decide if that means we will have more or less than the usual 4.

I would be grinning from ear to ear to see the arrogant azzholes at the federal reserve have to open their books for a full blown audit. Of course I’ll believe it when and if it happens.

Outsider Ron Paul finds support for Fed audit.
Fri Sep 4, 2009

WASHINGTON (Reuters) - After decades of pushing long-shot causes like abolishing the income tax and reinstating the gold standard, Republican Representative Ron Paul finds himself in an unaccustomed spot: on the cusp of legislative victory.

A majority of the libertarian-leaning Texan’s colleagues in the House of Representatives support his proposal to increase congressional scrutiny of the Federal Reserve, and the measure could be included in a broader banking overhaul this fall.

But don’t expect the House to take up Paul’s other pet causes, such as pulling out of the United Nations.

Experts say the success of his Federal Reserve Scrutiny Act reflects rising unease with the central bank’s dramatic actions over the past year, rather than any increased influence stemming from Paul’s quixotic 2008 presidential bid.

“He’s finally found the right moment,” said Sarah Binder of the liberal-leaning Brookings Institution.

Paul’s spokeswoman Rachel Mills agrees: “His bill happens to be in the right place at the right time.”

The former obstetrician has pursued unpopular causes in a political career that has earned him the nickname “Dr. No.”

He’s proposed abolishing an alphabet soup of government agencies and repealing federal drug laws. He has called for withdrawing from trade pacts and military alliances like NATO and pulling U.S. troops back from overseas bases.

He was the only member to vote against awarding congressional medals to Pope John Paul II and civil rights leader Rosa Parks. He has defied his party by opposing the Iraq war and speaking out against a proposed ban on gay marriage.

Paul’s 2008 presidential bid attracted a grass-roots following that hired blimps and swamped Web message boards.

Many have continued their activism this year — visitors to RonPaul.com can enjoy songs like “Audit the Fed” written and performed by supporters. His latest book, “End the Fed,” is ranked #22 on Amazon.com’s bestseller list.

UNEXPECTED CLOUT

As a renegade member of a political party that controls neither house of Congress, Paul would seem to have little legislative clout. None of the 57 bills he’s introduced this year have attracted more than 12 co-sponsors.

The exception is his Federal Reserve Transparency Act, which would allow congressional investigators greater access to the Federal Reserve’s records. All 178 House Republicans and 104 Democrats have signed on.

The chairman of the House Financial Services Committee, Democratic Representative Barney Frank, plans to work with Paul to include a Fed audit in broader legislation to revamp financial regulation that could come up for a vote in October.

my guess is they will walk out of the room pale and sweating then tell us it’s all good go back to work.

first friday failure;

http://www.fdic.gov/bank/individual/failed/firstbankkc-mo.html

Five bank failures a week occur at an annual rate of 5*52 = 260 bank failures. But not to worry — there are thousands of more banks where those came from, plus potential new banks which might actually be more reluctant to make loans which are unlikely to ever be repaid.

Five more banks fail — 89 so far in 2009
Regulators close banks in Arizona, Illinois, Iowa and Missouri.

Amy Haimerl, CNNMoney dot com senior producer
Last Updated: September 4, 2009: 9:44 PM ET

NEW YORK (CNNMoney dot com) — Five small regional banks were closed by regulators on Friday evening, pushing 2009’s tally so far to 88 institutions. Of the five failures, two were in Illinois, and there was one each in Arizona, Iowa and Missouri.

Customers of the banks, however, are protected. The Federal Deposit Insurance Company, which has insured bank deposits since the Great Depression, covers each customer account up to $250,000.

In Illinois, Platinum Community Bank, in Rolling Meadows, and InBank, in Oak Forest, were the latest institutions to be cosed by regulators. This makes for a total of 15 failed Illinois banks this year. The last one to go under was Mutual Bank, in Harvey, on July 31, 2009.

The Office of Thrift Supervision was unable to find a buyer to take over the assets of Platinum Community, which were estimated at $345.6 million with deposits of $305 million. As a result, the FDIC will begin mailing customers checks for their insured deposits beginning on Tues., Sept. 8.

That means customers are out of luck over the weekend and cannot access any of their Platinum Community accounts. “The bank is gone. It no longer exists,” said David Barr, spokesman for the FDIC. “We couldn’t find an appropriate buyer. We don’t do that very often.”
…

Posted on Fri, Sep. 4, 2009

PhillyDeals: Fannie and Freddie woes trump banking debacle

By Joseph N. DiStefano

Federal banking agents will be out again late this afternoon, walking into the nation’s most troubled banks and taking them over, if today is like most recent Fridays.

The government likes Fridays because it gives staff the weekend to reorganize the bank so customers can get to their money when it reopens for business. It has seized an average of four banks each Friday since the end of June, up from one every other week last year, and none in 2005-06.
…

The real problem

“Fannie Mae and Freddie Mac are much more serious problems,” with tens or hundreds of billions in as-yet-undeclared losses on bad mortgage loans, Isaac added.

The government’s alternatives, since it effectively took over Fannie and Freddie last year: “Keep them as wards of the state forever,” Isaac urged. “Or truly privatize them - break them down into much smaller pieces and sell them off. There’s no way the private sector can deal with something that large.”

How’d we get to this point? “Everybody believed [Fannie and Freddie] had the government’s backing” when they financed increasingly questionable loans in the 1990s and early 2000s, Isaac said. “They weren’t subject to enough discipline.”
…

I am still expecting housing market capitulation before green shoots sprout into the next credit boom, especially after skimming articles like this one:

Finance and Economics

The wealth effect
Withdrawal symptoms

Sep 3rd 2009
From The Economist print edition
Most new borrowing during America’s housing boom was for spending

HOW big an influence on spending is housing wealth? Hopes for a consumer revival in countries where house prices have slumped rest, in part, on the answer. A purist view is that the value of homes has no “wealth effect” on consumption. An increase in house prices only raises the future cost of shelter. Those about to trade down or sell out receive a windfall, but first-time buyers and those hoping to buy a bigger home are worse off. The overall effect on wealth is a wash. But even if that is correct, house-price increases may still have an impact as they create housing collateral for consumers who could not otherwise borrow. A study* by Atif Mian and Amir Sufi of the University of Chicago’s Booth School of Business pins down the size of this effect, using the credit records of almost 70,000 American borrowers.
…
Is “purist” an Economist magazine euphemism for “dumb shit”?

What if home prices rise so much relative to incomes, thanks to crazy loans, then lending standards revert to prudent pre-mania sanity? Wouldn’t that pretty much price out almost all the prospective first-time and move-up buyers, making it financially impossible for them to screw themselves, no matter how desperate their desire to do so? Wouldn’t that situation pretty much precipitate a real estate crash for the ages?

A graph that accompanies this article tells a most insightful story about the US underwater mortgage problem.

The take-home message is altogether simple to explain:

1) From 1997 through 2006 or so, US household mortgage debt moved in lockstep with the S&P/Case-Shiller national house price index (R^2 = 99% or so if you ran a simple linear regression of home prices on mortgage debt outstanding);

2) Between 2006 and the present, the S&P/Case-Shiller index crashed while US mortgage debt actually rose!!!

3) The most recent data point shows the level of the S&P/Case-Shiller index down by 40 pct in relative terms to the trend in outstanding household mortgage debt, with which it moved in perfect synchronization up until 2006. I.e., if the value of housing in 2006 had represented 100% of outstanding mortgage debt, it only represents maybe 60% of it at the present.

4) FYI, the value of all US mortgages was $10.5 t as of 2008 (at least according to this Wikipedia article). 40% of that would be $4,200,000,000,000 ($4.2 t). Does that seem like a reasonable estimate of how far the US mortgage market is currently underwater?