The Housing Bubble

Plunge Protection Team victorious in efforts to protect housing prices from plunging:

The Wall Street Journal
SEPTEMBER 15, 2009
No Easy Exit for Government as Housing Market’s Savior

By JON HILSENRATH and DEBORAH SOLOMON
…
In a speech on Wall Street a year after Lehman Brothers collapsed, President Barack Obama said Monday the need for the government to keep stabilizing the financial system “is waning.” His administration released a 51-page report detailing rescue programs that are slowly being scaled back. But the Treasury Department, author of the report, noted that housing is one area where it’s too early to exit.

Over the past year, the government has intervened heavily at essentially every stage of the home-buying process. In fact, more than 80% of the new residential mortgage loans made this year benefited from some form of government support, according to the trade publication Inside Mortgage Finance.

To keep funds flowing to the housing market, the government bailed out Fannie Mae and Freddie Mac last year and now effectively owns the mortgage finance giants and their combined $5.4 trillion in loan portfolios. To keep mortgage rates low, the Federal Reserve is on track to purchase nearly $1.5 trillion in debt issued or guaranteed by the government’s various mortgage arms and another $300 billion in Treasurys, which set the benchmark for home lending.

And to boost sales, the government also is offering $8,000 tax credits to first-time home buyers.

Those efforts appear to have had the intended effect of braking the housing market’s plunge.
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REAL ESTATE
SEPTEMBER 15, 2009
Behind Lehman’s Big Property Struggle

By CARRICK MOLLENKAMP and LINGLING WEI

A year after Lehman Brothers’ collapse, the firm overseeing its bankruptcy is moving to restructure loans for 900 properties to help salvage a battered $16 billion real-estate portfolio.

The moves — involving commercial real-estate properties ranging from huge apartment holdings to office buildings to a Miami condominium complex — portend the strategies big U.S. banks are likely to undertake as they deal with their own troubled loans and buildings over the next 18 months, specialists say. In some cases, Lehman is generating new loans or even agreeing to buy condominium mortgage loans to keep projects afloat.

Cleaning up this mess hasn’t been easy. As the big securities firm bulked up its real-estate holdings, it ended up financing, for example, at least $2 billion in South Florida real-estate projects.

The Laurel Cove golf-and-residential development in Tennessee, a victim of Lehman’s bankruptcy, has seen development come to a halt.

“It’s not a great time to sell today,” says Bryan Marsal, chief restructuring officer and chief executive officer at Lehman, and head of Alvarez & Marsal, the advisory firm overseeing Lehman’s bankruptcy proceedings. But he adds: “We are not passively waiting for a better market.”

Lehman’s restructuring efforts could provide a template for other banks. U.S. banks and thrifts hold more than $1.2 trillion in commercial mortgages backed by offices, hotels, shopping malls and apartments, according to Deutsche Bank AG. Now, with property values down and credit still scarce, losses for the commercial-property lenders could total $115 billion to $150 billion, according to a Deutsche report.
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Markets which superficially appear to be healing destroy any political pressure for fixing them.

If the central bankers running the Fed and Treasury pulled the plug on the government’s financially-engineered housing market bottom, there suddenly would be a return of financial crisis conditions which could be used to bolster support for reform similarly to the manner in which a government-engineered panci was used to ram the TARP through Congress last fall.

For Obama, a Chance to Reform the Street Is Fading
Ruth Fremson/The New York Times

From left, Representative Barney Frank; Mayor Michael R. Bloomberg; former Federal Reserve Chairman Paul Volcker; Christina D. Romer, the chairwoman of the Council of Economic Advisers; and Treasury Secretary Timothy F. Geithner listened to President Obama’s speech at Federal Hall.

STEPHEN LABATON and JEFF ZELENY
Published: September 14, 2009

President Obama on Monday sternly admonished the financial industry and lawmakers to accept his proposals to reshape financial regulation to protect the nation from a repeat of the excesses that drove Lehman Brothers into bankruptcy and wreaked havoc on the global economy last year.

“We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis,” President Obama said.

But with the markets slowly healing, Mr. Obama’s plan to revamp financial rules faces a diminishing political imperative. Disenchantment by many Americans with big government, along with growing obstacles from financial industry lobbyists pressing Congress not to do anything drastic, have also helped to stall his proposals.
…

Kalimera from the far eastern Med ya’ll!

I apologize for the off topic.

But I need some advice. I am mostly cash after I sold my home last year and renting now.
I missed the current market rally and think a correction is coming soon. The only thing I have done was to buy some gold and silver coins last year. Don’t regret the decision but I don’t see massive inflation hitting anytime soon.

What should I do? Sometimes I worry putting all eggs in one basket, ie. being all cash. My situation is I am in early thirties single male.

I would love to hear the explanation behind this “secretive gathering of ships.” The full story begs to be told!

Revealed: The ghost fleet of the recession
By Simon Parry

Last updated at 6:34 PM on 13th September 2009

The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore
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Santa Claus is worried about the sudden renewed interest in building emergency funds, reducing debt and saving for retirement.

“I’m…Dreaming of a Tight…Christmas
Just like the ones…I used…to know…”

Sept. 14, 2009, 11:03 p.m. EDT

Steel market poised for losses as China output hits record

By Myra P. Saefong, MarketWatch

TOKYO (MarketWatch) — Coming off this year’s highs, steel-maker shares in Asia are unlikely to revisit their peak levels from 2007 anytime soon, with steel output in China at a record pace and prices for the metal on the decline, analysts said.

China’s monthly steel production hit a fresh high in August at 51.65 million tons, up 21% year on year to represent a record daily production of 1.67 million tons, according to a Morgan Stanley research note Monday.

China’s “steel inventories are now over 11 million tons, similar to the last peak in March 2009 — which suggests industry over-production,” the analysts said.
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WSJ: the federal government is propping up the housing market, and can’t stop or it will tank again. And future generations are going to be on the hook for just about every post-bubble mortgage for years. Looks like my children are catching the knife.

http://online.wsj.com/article/SB125297162259710323.html#mod=WSJ_hpp_LEFTWhatsNewsCollection

Also, the Devil’s Dictionary in today’s WSJ is humorous. They should have added a pre-2007 definition of “financial journalism.” “An arm of the public relations industry” might have fit.

Yes, Bill in LA, I have always supported the gold standard. Surprised?

Has the Fed traditionally propped up the MBS market as needed, or is this time the first?

I personally have serious doubts this MBS purchase program will end any time in the foreseeable future, as the housing market would crash further if taken off government life support.

SEPTEMBER 15, 2009
Fed Likely to Keep Buying Mortgage Instruments

By SUDEEP REDDY

WASHINGTON —

The Federal Reserve, which convenes its policy meeting next week, is likely to stay the course to buy $1.45 trillion in mortgage-linked securities despite potential resistance from a few regional Fed presidents.

Central-bank officials plan to discuss winding down those purchases over the coming months to limit disruption to the market when the buying comes to an end.

Some regional Fed policy makers have suggested the Fed might halt the program before it finishes its purchases of $1.25 trillion in mortgage-backed securities and $200 billion in Fannie Mae and Freddie Mac debt announced in the past year. But they are a small minority across the Fed system.

Top Fed officials believe such a move would tighten overall monetary policy at a time when they still worry about the durability of the economic recovery. The Fed has completed about two-thirds of its purchases, almost $1 trillion worth, and is likely to complete the rest unless prospects for the economy improve radically in the coming months.
…

SEPTEMBER 15, 2009
For France, a Joie de Vivre Index

Sarkozy to Add New Indicators, Such as Well-Being, to Measure Economic Health

By DAVID GAUTHIER-VILLARS

PARIS — Nicolas Sarkozy was elected president two years ago on a pledge to boost France’s economic prosperity. Now he is suggesting a different way to measure that prosperity — one that includes factors such as vacation time, health care and family relationships.

From now on, to gauge the economy’s health, France will consider well-being in addition to the classic measure of gross domestic product, Mr. Sarkozy said Monday in a speech at the Sorbonne, part of the University of Paris.

In the speech presenting the findings of a committee headed by Nobel Prize-winning economist Joseph Stiglitz, the president said new measures are needed in the wake of the financial crisis, which was triggered by an overreliance on free-market principles. “If the market was the solution to all problems and was never wrong, then why are we in such a situation?” asked Mr. Sarkozy. “We need to change criteria.”

The so-called Stiglitz commission has been working at the French president’s behest for 18 months on recommendations for measuring well-being. In its report, the group — which includes 1998 Nobel laureate Amartya Sen among its two dozen members — said tracking household income and consumption would provide a better indication of living standards than GDP. In the longer term, the panel said, governments must pay more attention to sustainability to determine what level of well-being can be maintained for future generations.
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REAL ESTATE SEPTEMBER 14, 2009, 9:55 A.M. ET
Your House: Just a Home
By M.P. MCQUEEN

It’s time to face facts, if you haven’t already: sometimes your house is just a home.

For most of the last decade, Americans treated their homes as sources of ready cash and as brick-and-mortar retirement plans. Overleveraged at purchase with no down payment, no documentation and negative-amortization mortgages, homeowners also mined equity with home-equity loans and lines of credit.

At the end of the second quarter, about 23% of single-family homes with mortgages were “underwater,” with owners owing more on their homes than they are worth, according to Zillow.com. And analysts for at least one major bank expect that share to rise as the housing market bottoms out in some areas.

Foreclosures and short sales, where homes are sold for less than the debt outstanding on them, comprised 31% of total sales in July, according to the National Association of Realtors, helping depress prices for all. Buyers and sellers are at loggerheads in many markets, as home sellers refuse to accept the reality of lower prices.

Depressed values and tighter credit in turn have reduced everyone’s ability to borrow against their houses for remodeling, refurbishing, college tuition or other purposes. The lockup has caused people to feel poorer, even if they’re employed and don’t need to move. This feeling has, in a reversal of the boom’s wealth effect, curbed consumer spending.
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Good job by Ron Paul on this news program.

http://www.youtube.com/watch?v=uNhBeTQ9GCw&feature=player_embedded#t=372

35% of Memphis home list prices fall in August
Memphis Business Journal

For the fourth month in a row, the percent of Memphis homes for sale that experienced a price reduction increased as of Sept. 1.

In August, the rate jumped to 35 percent, after percent gains of 32, 30 and 29 in July, June and May, respectively, real estate search firm Trulia Inc. said.

Memphis was one of eight cities to have four consecutive months of listed home value deflations. Memphis was also one of just 14 of the largest 50 cities where the percentage of reduction rates were above the national average.

Nationally, 26 percent of homes currently on the market as of Sept. 1 have experienced at least one price cut, the company said.

From June to September, the total amount cut from home prices increased by more than $1.1 billion to $28.5 billion.

The average discount off the original list price held steady at 10 percent.

“The steady rise in price reductions is a signal that sellers are still trying to adjust to the ever changing market conditions,” Pete Flint, Trulia co-founder and CEO, said in a release. “We expect the $8,000 federal tax incentive to extend the peak home purchasing season beyond the summer months, continuing to drive competition amongst sellers and ultimately leading to more price reductions, giving consumers a great opportunity to find the home of their dreams.”

The 14 cities with reduction rates higher than the national average of 26 percent as of Sept. 1 included:

• Jacksonville, Fla. 37 percent

• Milwaukee, Wis. 36 percent

• Portland, Ore. 35 percent

• Memphis 35 percent

• Baltimore 34 percent

• Indianapolis 34 percent

• Minneapolis 34 percent

• Raleigh, N.C. 34 percent

• Albuquerque, N.M. 33 percent

• Columbus, Ohio 33 percent

• Chicago 33 percent

• Tucson, Ariz. 33 percent

• Boston 33 percent

• Seattle 33 percent

Nassim Taleb on the economy
‘We still have the same disease’
The Globe and Mail 9-15-09

Margaret Wente: Happy days are here again. The central bankers say the recession is over. The markets are buoyant. Can we relax?

Nassim Taleb: Not at all. Central bankers have no clue. In the first place, the financial crisis was not a black swan. It was perfectly predictable. They ignored the phenomenal buildup in leverage since 1980. They acted like airline pilots who’d never heard of hurricanes.

After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions.

MW: But aren’t those the very problems we’re supposed to be fixing?

MT: They’re all still here. Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient’s symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.

MW: Are you saying the U.S. shouldn’t have done all those bailouts? What was the alternative?

NT: Blood , sweat and tears. A lot of the growth of the past few years was fake growth from debt. So swallow the losses, be dignified and move on. Suck it up. I gather you’re not too impressed with the folks in Washington who are handling this crisis.

Ben Bernanke saved nothing! He shouldn’t be allowed in Washington. He’s like a doctor who misses the metastatic tumour and says the patient is doing very well. The first thing I would tell Chinese officials is, how can you buy U.S. bonds as long as Larry Summers is there? He’s a textbook case of overconfidence. Look what happened to Harvard’s finances. They took a lot of risk they didn’t understand, and it was a disaster. That’s the Larry Summers mentality.

MW: You argue that globalization and modern technology have made the world financial system far more fragile than ever before. How?

NT: Globalization and the Web create worldwide mass effects, whether positive or negative. We have planetary fads that cause random variables to have bigger spikes than ever before. Variables that used to move 10 per cent now move 30 per cent. The whole planet can pull its money out on the same day. The Internet is what bankrupted Iceland! You in Canada destroyed things with your BlackBerry.

Are the Fed and the Treasury Siamese twins?

OPINION
SEPTEMBER 15, 2009
Lehman and the Financial Crisis

The lesson is that institutions that take trading risks must be allowed to fail.

By JOHN H. COCHRANE AND LUIGI ZINGALES
One year ago today Lehman Brothers filed for bankruptcy. The weeks that followed are among the most dramatic in U.S. history. They led to a massive government intervention in the financial system—an intervention that will likely change that system forever.

Many people say that letting Lehman fail was the mistake that caused the financial crisis. To them, the lesson is that the government should never allow any “systemically important” financial institution to fail. If only Lehman had been bailed out, the story goes, we could have avoided much of a 45% drop in the S&P 500, a 4% drop in output, the rise in unemployment to 9.7% from 6.2%, and the $784 billion “stimulus” to top off a $1.59 trillion deficit.

This story is false.

The Lehman failure was not an isolated event. It was a movement in a dramatic crescendo of failures.
…
the main risk indicators only took off after Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke’s TARP speeches to Congress on Sept. 23 and 24—not after the Lehman failure.
…
Why? In effect, these speeches amounted to “The financial system is about to collapse. We can’t tell you why. We need $700 billion. We can’t tell you what we’re going to do with it.” That’s a pretty good way to start a financial crisis.

Subsequent reporting explained why they did it: The Fed and Treasury had felt for months that they needed legal authority to do more bailouts, and a crisis might get Congress to vote for it.
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Pension Plan Shocker Dead Ahead!
by Nilus Mattive

I’ve talked about corporate pension plans before, but in a few short weeks I think we’re going to get some shocking news. Namely, that the government backup for failed pension plans is more underfunded than it has ever been before.

Back in April, I told you a bit about the Pension Benefit Guaranty Corporation and its decade of running in the red.

But just to recap: The PBGC is there for workers when their companies break retirement promises, and yet ironically, the PBGC itself has been underfunded every year since 2002!

To its credit, the organization was doing a decent job of getting back toward the black lately. It cut its deficit slightly in 2005, then made major strides in 2006 … 2007 … and 2008.

Now that streak looks ready to end — in a BIG way — when the PBGC reports its full-year financial results at the end of this month.

I’m basing that on what the group’s acting director Vince Snowbarger told a Senate Special Committee on Aging back in May. At that point, he said the PBGC was running a $33.5 billion deficit in 2009.

As Snowbarger stated in his written testimony:

“The increase in the PBGC’s deficit is driven primarily by a drop in interest rates and by plan terminations, not by investment losses. The PBGC has sufficient funds to meet its benefit obligations for many years because benefits are paid monthly over the lifetimes of beneficiaries, not as lump sums. Nevertheless, over the long term, the deficit must be addressed.”

PBGC Acting Director Vince Snowbarger and former director, Charles Millard, testify before the Senate.
I’m willing to bet that the PBGC’s official release at the end of this month is going to show a rather dire situation, possibly worse than the mid-year deficit.

And the most important part of Snowbarger’s statement is that this deficit WILL need to be addressed.

That raises a few important questions …

First, Where Does the PBGC Get Its Funding?

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. That basically means it’s a quasi-governmental agency, much like Fannie Mae and Freddie Mac were. (Yes, feel free to either shudder or snicker at this point.)

Essentially, the PBGC builds up a kitty by collecting premiums from working pension plans, and then uses that money to dole out benefits when companies go bankrupt or otherwise abandon their plans.

The PBGC currently guarantees basic pension benefits for about 44 million U.S. workers and retirees taking part in nearly 30,000 defined benefit pension plans.

Filed under: Get a “reverse mortgage” and Buy Gold! Buy Gold! Buy Gold!

Prices rose 38 percent from the end of 2003 through mid- 2008, buoyed by growing U.S. household wealth, which peaked at $64.3 trillion in the third quarter of 2007. Rough stones rose 81 percent over the same period, said Platt. About half of the world’s polished diamonds are sold in the U.S., according to De Beers.

“It is possible to pull too many diamonds out of the ground and cut and polish too many of them and try to cram them down the gullets of the American customer,” Ellis said. “It’s like making foie gras. You wind up with a very unhappy goose.”

“Do you realize how many retirees are on South Beach walking around with $700,000 on their fingers?” Grossbard said he asked the dealer.

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)

Diamonds Post-Lehman Have No Aura as Buffett Can’t See Recovery:
By Alan Katz, Subramaniam Sharma and Peter Robison Sept. 15 (Bloomberg)

I guess the party is over in Malibu:

Wells Fargo Fires Exec Who Partied In A Foreclosed Malibu Pad
http://www.businessweek.com/the_thread/hotproperty/archives/2009/09/wells_fires_exe.html

Capital One Financial Corp.’s domestic net default charge-offs dropped in August while credit card delinquencies rose in the U.S.

McLean-based Capital One (NYSE: COF) is the third biggest issuer of Visa cards in the country.

The company, in a regulatory filing with the Securities and Exchange Commission, said charge-offs in the U.S. fell to 9.32 percent from July’s 9.83 percent. Internationally they fell to 8.6 percent in August from 9.76 percent in July.

Capital One’s 30-day credit card delinquencies rose in August to 5.09 percent from 4.83 percent in July, while auto deals were flat at 9.42 percent and international delinquencies eased to 6.67 percent from 6.68 percent. The auto-finance area remains troubled with charge-offs rising to 4.31 percent from 4.26 percent.

Rx for money woes: Doctors quit medicine
Some physicians, fed up with the costs of their practice, are ready to hang up their stethoscopes and shift careers.

NEW YORK (CNNMoney.com) — Some 5,000 patients suddenly found themselves without an ob/gyn last November when Dr. Tara Wah closed her practice in Tallahassee, Fla.

Wah, 55, informed her patients in a letter that she could “no longer afford to make ends meet.”

After 24 years, “I’m working longer hours than ever,” she wrote. “Insurance payments for patient care have stayed virtually the same for the last 15 years, while the cost of doing business, including health insurance, staff salaries and supplies have risen.”

The rising cost of malpractice insurance, particularly for her specialty, was the straw that broke the camel’s back.

“My malpractice insurance was $125,000 a year, and going up,” said Wah. “The only way to get the extra money was to cut back on my salary.”

But it wasn’t always like that. Being a doctor was once thought to be a path to a cushy lifestyle. Six years after she started practicing, Wah hit her “peak” income year in 1990. Then she took a pay cut every year from 1993 onward, to eventually take no salary for two months prior to permanently shutting her office.
Wasted skills

Wah no longer practices medicine. Instead, she designs and repairs jewelry. “I feel guilty. I dream about [medicine],” she said. “[But] I am so angry. I think, ‘What a waste of my training.’ ”

Wah’s situation sheds light on a troubling trend of physicians leaving medicine for a career outside of health care, said Kurt Mosley, a staffing expert with Merritt Hawkins & Associates, a physician search and consulting firm.

This retailer believes X-Mas sales will be strong, the Chicoms better ramp up shipments…

Toys ‘R Us Plans to Open 350 ‘Holiday Express’ Stores
15 Sep 2009 News Editor

At a time when many retailers are shutting store locations, Toys ‘R Us is making a bold move of boosting its retail presence during its most critical selling season.

The toy retailer is expected to announce that it will open 350 “Holiday Express” stores by early October. This significant expansion will include more than 80 Holiday Express “pop-up” stores, which temporarily will open nationwide in malls and other shopping centers, and more than 260 Toys ‘R Us Holiday Express shops within the company’s Babies ‘R Us stores.

“We’re aggressively expanding our toy-selling footprint to make Toys ‘R Us more accessible than ever for busy shoppers this holiday season,” said company Chairman and CEO Jerry Storch.

Look at these idiots…

I really love the Hairstylist and the crane operator buying a $750,000 house….

http://money.cnn.com/galleries/2009/real_estate/0908/gallery.first_time_homebuyers/3.html

I went to Vegas this weekend. I was amazed at how dead it was, at the Luxor and everywhere else. I left Los Angeles at 3:45pm on Friday, in 2007 I would have been doomed to an extra 2 hours of traffic for this sin, but I breezed all the way through to vegas, hitting speeds of 90 at times. Clearly attendence is way off, short lines at buffets, no lines at all for the roller coaster at NYNY and at the border. All in all, it was a pleasant experience without the crush of humanity I usually have to battle.

Fecaltime!

When Ben speaks, the stock market glistens.

market pulse
Sept. 15, 2009, 10:36 a.m. EDT

Bernanke defends crisis actions, upbeat on growth

Oil prices and stock shares will head higher so long as the Fed’s liquidity pump is running on high blast — it’s a nobrainer.

Sept. 15, 2009, 11:37 a.m. EDT

S&P 500 buybacks skidded to new lows in second quarter

Exxon Mobil accounts for one-fifth of all stock repurchases among S&P issues

NEW YORK (MarketWatch) — Stock buybacks among S&P 500 companies now stand at their lowest level in more than a decade, with the practice currently out of favor as companies horde cash to ride out the recession, Standard & Poor’s said on Tuesday.

Until sales and profits improve, and for more than one quarter, buybacks will be for the few brave companies that are willing to be separated from their cash security blanket,” Howard Silverblatt, senior index analyst at Standard & Poor’s, said in an email.
…

Corinne Reilly - Merced Sun-Star

MERCED, Calif. — The first time Carey Mitchell saw her, Tammy was standing at an intersection near the 16th Street off ramp from Highway 99. Her clothes looked dirty, her face tired. She held a cardboard sign asking for spare change.

Without thinking, Mitchell pulled her car over. In an instant, Tammy was at her window. Mitchell rolled it down. “Do you need a place to sleep tonight?” she remembers asking. On a scrap of paper, Mitchell quickly sketched a map to a house a few miles away. It was Mitchell’s house, but she didn’t want it anymore.

She’d decided to stop paying the home’s mortgage. As she walked away, she handed the keys to Tammy, who stayed for three months before she was formally evicted this May. The nights Tammy spent there were the first she’d slept inside in more than three years.

Foreign purchases of U.S. homes dip

Almost half of international home buyers pay cash to dodge difficulty of securing a mortgage, survey finds.

NEW YORK (CNNMoney) — Despite record U.S. home price affordability, international buyers have been unable to take advantage because of the worldwide recession and credit crunch, a real estate group said Tuesday.

Home sales to foreign clients dropped 9.4% in the year ended in May to 154,000, according to a report from the National Association of Realtors.

Among international clients who did purchase, almost half paid cash for their property because securing a mortgage was more difficult than before, according to the report.

But the NAR expects the latest improvements in the credit market to turn the tide.

“Stock market gains and improving bank balance sheets will permit a greater amount of lending for second home purchases,” said NAR chief economist Lawrence Yun, adding that expending foreign economies and favorable exchange rates will give international buyers more purchasing power.

A lot of the malpractice insurance has been consolidated in the last few years. What you hear less about: AIG absorbed much of that business.

Au @ 1007….. dollar down because BB popped out and blew smoke up every body’s pa-toot!

Gold turns up as Bernanke says recession is over

NEW YORK (MarketWatch) — Gold futures climbed back above the $1,000-an-ounce mark on Tuesday, after upbeat U.S. economic reports and as Federal Reserve Chairman Ben Bernanke said the recession is likely over.

However, he and other Fed officials reiterated views that unemployment will remain high and economy stay weak well into next year, fueling expectations that the central bank will continue to provide ample liquidity.

The front-month September gold contract was up $4.30, or 0.4%, at $1,004.20 an ounce on the Comex division of the New York Mercantile Exchange. The more active December contract was up $4.30, or 0.4%, at $1,005.50 an ounce.

Blockbusted: 960 Stores May Be Closed by 2011
Blockbuster may close or convert almost a thousand stores by the end of next year (AP)

In a regulatory filing posted Tuesday, Dallas-based video rental giant Blockbuster revealed 18 percent of their stores are currently unprofitable and may face closure.

Blockbuster may close 960 stores by the end of next year, according to the Dallas Morning News, but that number could increase if many of the under-performing stores cannot renegotiate lease agreements.

In addition, some locations could be converted to “outlets,” focusing on reselling media rather than Blockbuster’s current rental and resale mix.

Last month, Blockbuster CEO Jim Keyes said the company’s focus is on a more aggressive “hub and spoke” strategy — one that includes more retail DVD kiosks, ala Redbox.

He must have heard… the recession is over.

Rockefeller & Co CEO dies from apparent suicide…

BOSTON (Reuters) - James McDonald, a prominent adviser to wealthy families as chief executive of investment management group Rockefeller & Co, died of a single gunshot wound on Sunday, local authorities said on Tuesday.

McDonald, 56, was found dead in his car near a strip mall in Dartmouth, Massachusetts on Sunday afternoon. Police are still investigating.

“The preliminary investigation concludes that this was an apparent suicide,” Gregg Miliote, a spokesman for Bristol County District Attorney Sam Sutter said.

McDonald won praise for growing Rockefeller & Co, the New York-based family office established by oil tycoon John D. Rockefeller in 1882 to manage the dynasty’s assets, into a broader investment management company with roughly $28 billion in assets.

Known as a perfectionist who drove himself and his employees hard, McDonald lived in New York City where people who worked with him said he was equally at home in corporate boardrooms and the city’s most exclusive social circles.

Earlier this year, McDonald was one of the directors who left the board of lender CIT Group.

NEW YORK -(Dow Jones)- Political pressure to reign in energy “speculators” appears to have claimed its first victim in the ETF industry.

On Tuesday Deutsche Bank said it will redeem all shares of PowerShares DB Crude Oil Double Long Exchange Traded Note (DXO), an ETF-like security that helps investor double bets on the price of oil.

Deutsche Bank had already stopped issuing new shares for the exchange-traded note, prompting existing shares to trade at a steep premium. The move appears to be the first time calls to curb speculation in the energy markets has prompted a fund firm to close a product.

Samurai sword must be gaining popularity, we had a fellow kill (run through) a thief with one in our city, not long ago.

Hopkins student kills intruder with samurai sword, police say
Off-campus house was burglarized Monday; suspect recently freed from county jail

A Johns Hopkins University student armed with a samurai sword killed a man who broke into the garage of his off-campus residence early Tuesday, a Baltimore police spokesman said.

According to preliminary reports, a resident of the 300 block of E. University Parkway called police about a suspicious person, department spokesman Anthony Guglielmi said. An off-duty officer responded about 1:20 a.m. to the area with university security, according to Guglielmi. They heard shouts and screams from a neighboring house and found the suspected burglar suffering from a nearly severed hand and laceration to his upper body, he said.

The suspect was pronounced dead at the scene. Based on the initial investigation, the student killed the man with only one strike of the sword, according to Guglielmi. The medical examiner will make the final determination, he said.

If Chinese drywall or anti-freeze in your toothpaste doesn’t get you, your shower-head might:

Shower heads harbour germs that cause lung disease, study finds - by Hannah Devlin (UK Times Online)

It’s not quite Psycho-esque — but taking a shower could damage your health, according to scientists who have discovered that shower heads are a breeding ground for germs that cause lung disease.

A study has found that shower-heads contained levels of Mycobacterium avium, or M. avium, that were more than 100 times higher than in tapwater. Exposure to the pathogen can lead to low-level persistent infections in healthy people and to a more serious condition similar to tuberculosis in the elderly and those with compromised immune systems.

The bacteria multiply rapidly in shower heads’ warm, dark, wet conditions, clumping together in slimy residues known as biofilms. The discovery is worrying because shower water is vaporised into tiny drops, meaning bacteria can be carried deep into the lungs.

Professor Norman Pace, a molecular biologist at the University of Colorado at Boulder, who led the study, said: “How many people do you know with a shallow cough? Probably a lot. I would bet that in a lot of cases Mycobacterium avium is responsible. I think it’s a serious public health concern.”

Unlike tuberculosis, M. avium cannot be transmitted from person to person and generally causes only mild symptoms in healthy people. Little is known about how many people are affected by the strain. About eight million people in the UK have some form of lung disease.

In the study, 45 shower heads were taken from homes in ten American regions and tested for bacteria linked with lung disease. More than 20 per cent had significant amounts of M. avium. It was found in few samples of tapwater from the same locations.

U.S. hotel room rates fall 17% in first half of 2009
South Florida Business Journal

The average price of a hotel room in the U.S. fell 17 percent, year-over-year, in the first six months of 2009, according to the latest Hotels.com Hotel Price Index.

The average room rate in the U.S. cost, on average, $115 a night in the first half of the year, down from $139 in 2008.

“This is, by far, the most significant change in prices we’ve seen since we created the Hotel Price Index,” Hotels.com President David Roche said in a news release. “Americans’ travel dollars have never gone farther than in 2009.”

The reduction in the U.S. follows a larger global trend, with room rates in Europe down 16 percent, Asia down 17 percent and Latin America down 18 percent.

Among other findings:

* Las Vegas overtook New York City as the favorite domestic destination for U.S. travelers in the first half of 2009, with room rates in the city averaging just $82 a night. New York City, Orlando, Chicago and San Francisco rounded out the top five.
* Las Vegas and New York City both experienced the nation’s greatest drop in room rates, with each destination down 30 percent compared to the same period the previous year.
* New York was the most expensive destination, followed by Hawaii, Massachusetts and Wyoming, whose ski tourism helped boost hotel prices in the state.
* The nation’s least expensive states in the first half of 2009 included Nevada, with room rates averaging just $77, Idaho and Kansas.
* London usurped Toronto as the most popular foreign destination for U.S. travelers.
* For international travelers visiting the U.S., New York, Las Vegas and San Francisco were the top destinations in the first and second quarters of the year.

” They heard shouts and screams from a neighboring house and found the suspected burglar suffering from a nearly severed hand and laceration to his upper body, he said.”

“The suspect was pronounced dead at the scene. The medical examiner will make the final determination, he said.”

What determination will the medical examiner make?

Note to self.
Don`t fuque with a Samurai.

Poorer but no wiser… America falls behind in the global wealth wars

LONDON (MarketWatch) — A year after the Lehman Bros. collapse and subsequent credit crisis comes new confirmation that America is falling behind.

A report by the Boston Consulting Group finds that the U.S. is no longer home to the greatest chunk of the world’s wealth. That honor now belongs to Europe. See related story.

Of course, it’s not like anybody is really getting ahead. Global wealth fell nearly 12% in the past year to $92.4 trillion. It’s just that America’s share is falling faster than Europe’s, where total wealth declined a mere 5.8%.

And it could just be a case of America having a higher “beta” than the rest of the world. In which case, even though wealth gets destroyed faster in the U.S., it also is created more quickly there.

One had better hope so, given that the effect on the U.S. tax base over the past year has been pretty devastating, especially at a time when the country’s need of big earners has never been greater.

Bernanke: “Recession Is Over” (Depression Has Just Begun)
Then explain this for credit card charge-offs for the last month:

Discover Financial Services Reports Aug Master Trust; Net Charge offs 9.16% v 8.43% m/m

JPMorgan Chase and Co Reports Aug Master Trust; Net charge offs 10.07% v 7.92% m/m

Bank of America Corp Reports Aug Master Trust; Net Charge offs 14.54% v 13.82% m/m

Citigroup Inc Reports Aug Master Trust; Net Charge offs 12.1% v 10.03% m/m

At these rates, credit card interest rates will necessarily go to 25% or the issuers will go broke,
or both. Green shoots? More like green vomit.

http://news.yahoo.com/comics/tom-toles

Go to the 13th. Or just click “Prev”

Hey I found a good use for all of those moth balled ships

This may sound like a pretty good TV crime show plot, but this is non-fiction: Reuters reports that Italian authorities have discovered a ship containing 180 barrels of toxic waste (some of which may be radioactive), which was purposely sunk by the Mafia, off Italy’s southern coast. What’s more, it’s suspected there are 32 more vessels waiting to be found:

The Fed is too-big-to-audit.

* WALL STREET JOURNAL
* SEPTEMBER 16, 2009

Anti-Fed Activists Fuel Push for Audit

By SUDEEP REDDY

At the core of a congressional push to audit the Federal Reserve are activists with a larger purpose: to abolish the central bank.

Thousands of Americans are joining protests and lobbying their lawmakers in pursuit of the ultimate goal of replacing the Fed with a money system backed by gold or other commodities.

A movement to abolish the Fed was largely inspired by Rep. Ron Paul, left, addressing an audience about a health-care overhaul on Aug. 12, 2009.

Largely inspired by Rep. Ron Paul, the Texas Republican whose latest book, “End the Fed,” will be released Wednesday, the movement draws its strength from people who want a sharp shift away from government dependency and toward a truly free-market economy.

Among the activists backing the cause is Isaiah Matos, the superintendent of a luxury high-rise building in New York City. Mr. Matos was an antiwar protester earlier this decade before he became a libertarian. Through neighborhood groups in Queens organized using Meetup.com, Mr. Matos met other Ron Paul backers who shared his distrust for the central bank and a currency backed only by a government’s promise.

“I believe in a commodity-backed currency,” said Mr. Matos, 30 years old. “In college, I didn’t understand how we could move from gold to paper.”

Mr. Paul’s entrance into politics was driven by a similar concern. He decided to run for Congress in the early 1970s after President Richard Nixon ended the U.S. dollar’s ties to gold. His long-term goal is a return to a commodity-backed dollar, allowing the currency to be redeemed for gold. Through his constant attacks on the central bank, Mr. Paul is drawing backers nationwide who also criticize the Fed for supporting Wall Street and bailing out financial institutions.

Mainstream economists generally credit the Fed for moderating economic cycles and mitigating the fallout from financial shocks. The central bank serves as the nation’s lender of last resort, preventing runs on commercial banks by using its ability to create credit. The Fed influences interest rates as part of its mandate to balance inflation and unemployment. Mr. Paul and his followers say all of that should be left to market forces.
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Didn’t prices rise and sales slow just before the really big crash first started?

Southern California home sales dip while median prices rise

By Roger Showley
Union-Tribune Staff Writer

11:23 a.m. September 15, 2009

Southern California home sales dipped in August as foreclosure activity slowed, while median prices rose for the fourth straight month, MDA DataQuick reported Tuesday.

The six-county trend, mirrored in San Diego, left the overall median at $275,000, up 2.6 percent from $268,000 in July but 16.7 percent below the $330,000 median in August 2008. San Diego’s median, as reported Monday, was $325,000, up $5,000 from July but down 7.1 percent from August 2008’s $350,000.

Sales regionally totaled 19,366, down 10.8 percent from 24,104 in July, though the usual pattern is for August sales to be higher than July. DataQuick said the decline was probably attributable to fewer low-cost homes sold that had previously gone through foreclosure in the previous 12 months.

Of the total resales in August, 38.8 percent were foreclosure properties, down from 40.7 percent in July and 45.5 percent in August 2008. San Diego’s percentage was 32.2 percent, compared with 37.4 percent in July and 43.1 percent a year earlier.

With fewer low-cost foreclosure sales taking place, the overall median rose as nondistressed and higher-priced properties closed escrow, DataQuick noted.

“There’s still a lot of uncertainty out there about prices, interest rates and the availability of mortgage money,” DataQuick President John Walsh said in a statement.
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The central bankers are going to try to set up Congress to take the blame for the future inflation that is already in the pipeline, thanks to the helicopter drops of cash that have been flooding out of the sky.

Greenspan Sees Threat Congress to Hamper Fed Inflation Fight

By Timothy R. Homan

Sept. 16 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said he’s concerned that lawmakers will hamper U.S. central bank efforts to rein in its monetary stimulus, and that inflation might “swamp” the bond market.

“It’s the politics in the United States that worries me, whether the Congress will basically feel comfortable” with the Fed withdrawing its stimulus, Greenspan said in a broadcast to Tokyo clients of Deutsche Bank Securities Inc. today. He later said that “if inflation rears its head, it will swamp long-term markets,” referring to bonds.
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The Financial Times
Why some economists could see it coming

By Dirk Bezemer

Published: September 8 2009 03:00 | Last updated: September 8 2009 03:00

From the beginning of the credit crisis and ensuing recession, it has become conventional wisdom that “no one saw this coming”. Anatole Kaletsky wrote in The Times of “those who failed to foresee the gravity of this crisis” - a group that included “almost every leading economist and financier in the world”. Glenn Stevens, governor of the Reserve Bank of Australia, said: “I do not know anyone who predicted this course of events. But it has occurred, it has implications, and so we must reflect on it.” We must indeed.

Because, in fact, many had seen it coming for years. They were ignored by an establishment that, as the former Federal Reserve chairman Alan Greenspan professed in his October 2008 testimony to Congress, watched with “shocked disbelief” as its “whole intellectual edifice collapsed in the summer [of 2007]“. Official models missed the crisis not because the conditions were so unusual, as we are often told. They missed it by design. It is impossible to warn against a debt deflation recession in a model world where debt does not exist. This is the world our policymakers have been living in. They urgently need to change habitat.
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