The Housing Bubble

First? Wow, and on the second cup of coffee..Morning all!

Morning Rancher and everyone else!

Stop taking your crazy pills!

I mentioned I was draining and covering a pool in Lake Havasu City. Something happened with that could be of interest. This is a big place in a nice part of town. It’s been listed with UHS “team” for a while, and they told me it was a short sale. Of course, it’s always “got a lot of interest.”

So yesterday I get a call from a guy doing the finishing work on it, who tells me the utility showed up and cut the water off. “He said the new owner wants the water off, it must have sold,” he said.

Well, I suspect it sold all right. That’s what they call it when the lender takes it back. A new “owner” would want the water switched into their name, and I doubt the lender would want the pool covered if it had a sale pending.

This brings up a situation I see over and over; why are the short sales almost never successful? Is it because the lender feels they can get more for it post foreclosure? Are they tired of waiting? And it also brings out this curious animal we never hear much about; the asset manager. These specialized people are the ones who make these decisions and we don’t hear much about them. I’m gonna try and get one to do a HBB interview, even if it’s anonymous.

BTW, we’ve got a couple of interesting interviews in the works. A long time HBBer with a first hand account of the Thailand market and a southern California broker is going to give us the low down on his area.

Chattin’ with a wife the other day and was discussing an interesting little tidbit about the ole’ HB that not many folks talk about.

With all the fees and such clearly the banks were rolling in the dough selling the coolaid and then dumping the mortgages into MBS’s and pawning them off on Fannie and Freddie.

Now an interesting side effect of all this record level of mortgage origination is that at this point in time banks and fannie/freddie should be rolling in all that interest money since these are fresh mortgages that are producing the highest interest payments (as opposed to the amount going to principal in the property). Therefore banks should now be at the peak of profitability regarding all their mortgage origination. Well we all know that’s not true at all so the question begs: If the banks and Fannie/Freddie are bleeding like stuck pigs now what will happen when these mortgages get paid off even further?

Maybe I’m don’t fully understand how the banks keep mortgages on their books for their lifespans and what they consider ‘profit’ but something smells (even more) rotten to me.

OMG. It Never Ends.

Frakkin NY Times Again, with “erudite” article on St Joseph’s Statues to help sell houses.

… sigh…

http://www.nytimes.com/2009/09/17/nyregion/17towns.html?em

regards

evildoc

An Appetite for Risk
By Bill Jenkins
09/16/09 Pylesville, Maryland

The world is awash in credit and debt. What I mean is, credit had been extended to anything with a shadow. Almost every Tom, Dick and Harry participated in it. From the central banks around the world to the man in the street, everyone has done exactly the same thing: finance whatever needs to be bought.

And when we ran out of money, no problem! There was more where that came from. In one sense we couldn’t spend money fast enough. As soon as it was gone, there was more suddenly available. So we just finance the house again, take out some equity (which always rises) and do one of two things – Pay off credit cards (so we can load more debt on them) or just spend the cash on things a home improvement (that is no longer reflected in the price of the home) or a vacation.

Remember how MasterCard taught us that those memories were priceless? Hope you got some good ones… because you “done bought something you can’t eat,” as one of my teachers used to say.

At a time when we are drowning in debt, we are also out of money.

When a debtor is out of money, he has no ability to repay. And when a creditor has borrowers who are out of money, the creditor has no income. No earnings. No power to make better loans.

So how are banks in America posting “profits”? How did Citigroup, Bank of America, AIG and Wells Fargo jump 400% in stock price? Are they worth 400% more? Are their earnings up 400%? And where in the world did all this money come from?

These companies were just bankrupt… yet found a way to get back above water. And not just above water – they are making moon-shots!

Their share price should be zero (or less, if possible!). How are they worth so much more now?

As I have written before, mark-to-market accounting rules were repealed in favor of a fictitious slight of hand. Banks no longer have to list their distressed assets at the fire sale price they should be worth. Instead they get to record their value as the price they bought them, or what they believe they will be worth in the future.

In other words, it’s like me refinancing my house, but doing my own appraisal and assigning it whatever value suits me. I want cash out? Just pad the value of the house. I can’t afford a higher payment? No worries, I just pad my reported income. Two years down the road I can’t afford my payments anymore? Easy, just follow the same refinancing procedure all over again.

But my family and I would only have one toxic asset to deal with. The banks have them coming out the wazoo!

They are still in possession of the faulty loans and derivatives that caused this entire mess in the first place. Nothing has changed – except the accounting!

Only fools

buy overpriced houses.

Americans Plan to Limit Spending on Recovery Concern (Update1)

Sept. 17 (Bloomberg) — Americans plan to refrain from boosting their spending even after the biggest drop in consumption since 1980, signaling concern about the direction of the economy over the next six months.

Only 8 percent of U.S. adults plan to increase household spending, almost one-third will spend less, and 58 percent expect to “stay the course,” a Bloomberg News poll showed. More than 3 in 4 said they reduced spending in the past year.

Respondents were divided over whether the economy will get better or stay the same in the next six months; only 1 in 6 said things will get worse. More than 40 percent of those surveyed said they feel less financially secure than they did when President Barack Obama took office in January, outnumbering 35 percent who said they feel more secure.

“People I never thought would lose their jobs have lost their jobs,” said Angela Payton, 42, a university publications editor in Florence, South Carolina. She kept her children out of summer camp, stopped buying organic milk and plans to curtail the party for her daughter’s 6th birthday in November.

In the poll, conducted Sept. 10-14, 40 percent of those questioned said they have experienced one or more problems from the banking crisis. In the most-often cited repercussions, 27 percent said their credit-card interest rates have risen dramatically and 15 percent report that they couldn’t get a home-equity, car, or other kind of consumer loan.

The Fed’s Dr. Bernanke says the recession is “technically” about over and we’re in the recovery mode. Lila Rajiva comments: “What kind of recovery is that, you ask?”

“What kind? It’s the new deadbeat, can’t-get-a job, rocketing-inflation, trashed-currency, can’t-sell-my-house, can’t-make-my-payments, bankrupt-mafia-government, kazillions-in-debt, trade-warring-with-China recovery – that’s what it is. Glad you asked.

“It’s kind of a new thing. No one’s really tried it so far, but they’re doing it in Europe, we hear. And maybe a bit of it in Asia. But it’s back here in the US of A that we’ve got the whole thing down. Right here in Washington. And from now until the economy gets really going, we’ll be getting the full Bernanke on it – at least, that’s the buzz.”

Ground Hog Ben. L.Rockwell

But…. Things are booming around me….

http://dayton.bizjournals.com/dayton/stories/2009/09/14/daily14.html?surround=lfn

New office space going up ahead of schedule at new interstate interchange, in Dayton area.

I swear, we must be 180 degrees out of phase with the rest of you. Sure, some projects are being cancelled, but in general, things are really happening around here. New roads all over the place, new office buildings going up everywhere. New outlet mall just opened a mile from me.

Heck, even Home Depot just opened a new distribution center a mile from my house.

Maybe it’s due to all you folks and/or your companies on the coasts cashing out and moving to a low-cost, yet quite metropolitan area?

Another anecdote I’m sure this crowd will enjoy.

You all may be familiar with U-verse the AT&T fiber optic service being rolled out. I used to have AT&T land line, no longer, I switched to digital phone service from my cable provider. Get a knock on my door over the weekend from a sales rep telling me U-verse in now available in my area, would I like to sign up, I can get a big discount as an ex-AT&T customer, I have AT&t wireless, even bigger discount, blah blah.

I told him I’d think about it, give me a call next week, I don’t have time to talk right now. Today, I get a call from a number I don’t recognize. Don’t answer it. I looked up the number on google and saw it was the number of a real estate agent, “John Smith”. No clue who he is. Same number calls an hour later, I answer it. Turns out John Smith is the sales rep from AT&T.

At least he’s got a job.

China Derivatives
(Excerpt)
Graham Summers

In case you have not heard the news, China has announced that it will be instructing its state-owned enterprises to potentially default on their derivatives contracts. As I have written extensively in the past, the derivatives market is a massive time bomb just waiting to go off. China’s latest move may be the match that lights the fuse.

All told, US Commercial banks own $202 trillion in derivatives in notional value. To put that number into perspective, it’s roughly four times the global GDP. And 96% of this exposure sits on five banks’ balance sheets.

Of course, not ALL of the $202 trillion these guys own is “at risk.” As their name implies, derivatives are “derived” from underlying assets (homes, debt, etc). The actual “at risk” money can be far FAR smaller than the “notional” value of derivatives outstanding.

However, when you’re talking about $200+ trillion, even a marginal amount of “at risk” money can mean ENORMOUS losses. Consider, if 1% of that $200 trillion were at risk, you’re talking about $2 trillion in capital. Now, if even 10% of those bets go bad, you’re talking about $200 billion in losses.

Now consider that, combined, the top five banks (JP Morgan, Goldman, BofA, Citi, and HSBC) have roughly $700 billion in equity.

And that’s it only 1% of the derivatives outstanding are actually “at risk.” Given the over-leveraged, stupid plays Wall Street made on mortgage-backed securities and credit default swaps (both investments that had SOME degree of oversight, even if it were paltry), as well as the fact that derivatives are COMPLETELY unregulated, I would argue it’s quite possible that as much as 5% or even 10% of the derivatives outstanding could be “at risk.”

In that case, we’re talking about $10-$20 trillion in “at risk” capital. If even 10% of these bets go wrong, you’ve wiped out ALL the equity at all five banks AND THEN SOME.

As I mentioned just now (and before many times), the primary problem with derivatives is that they are COMPLETELY TOTALLY unregulated. NO ONE has any idea what’s “at risk” or who owns what or who’s betting against who.

But we may be about to find out.

I’ve detailed the ongoing conflict between China and the US regarding monetary policies on these pages before. The brief overview is that China owns $800+ billion (by some accounts $1.3 trillion or more) of our Treasuries (debt) and is not too happy about Ben Bernanke and other US monetary figures throwing trillions around in bailouts and emergency measures to counteract the financial crisis.

China has fired a couple of “warning” shots already, mainly in the form of various Chinese diplomats expressing concern and frustration with the US’s monetary policies. They even flew China’s Vice Premiere to an unscheduled talk with US monetary officials back in July.

No one knows what was said during the talks, but given that Ben Bernanke is extended Quantitative Easing to October and has shown little signs of reversing his current “anti-dollar” policies, it’s pretty clear China didn’t get what they wanted.

I’ve often wondered what China would do if push came to shove. Their decision to have their state-owned enterprises default or renege on their derivatives contracts may be the answer.

The “say it in five words” topic caused me to wonder if there has ever been an “HBB meme haiku thread” (if there was I missed it) and I could not resist.

Buyers make the rules
In every suburb today
Squirrels are on their own

Where are the green shoots?
Only one sapling will thrive
The Joshua tree

Dust in the hallways
Faded curtains’ soft whisper:
“Casey bought us once”

FedEx 1Q profit falls, sees improving economy but notes profit will stay weak this year

NEW YORK (AP) — FedEx Corp. said Thursday it sees signs of improvement in the global economy as international shipments pick up, but warned its profit will remain weak at least through the end of the year.

The world’s second-largest package delivery company, considered a bellwether of economic health, said fiscal 2010 first-quarter earnings fell 53 percent — matching its prediction released last week. It also reiterated a fiscal second-quarter view that implies a modest uptick in worldwide economic activity.

FedEx indicated it might start beefing up schedules for flight crew and hourly personnel as package volume improves, but it doesn’t expect that to happen soon. It also doesn’t expect to start adding back employees it cut during the worst of the downturn in the near future.

Over the last year, the company has laid off workers and cut wages for thousands of employees to cut costs.

The Memphis, Tenn.-based company reported earnings of $181 million, or 58 cents per share for the quarter ended in August, compared with $384 million, or $1.23 per share, a year ago.

Revenue fell 20 percent to about $8 billion.

Analysts predicted profit of 58 cents per share on revenue of $8.24 billion.

Predators and Decepticons, Underwater Mortgage Variety:

FTC files charges against 2 mortgage rescue firms, accusing them of posing as gov’t agencies

By Alan Zibel, AP Real Estate Writer
On Thursday September 17, 2009, 10:16 am EDT

WASHINGTON (AP) — Federal authorities are cracking down on two companies that promised homeowners help with their mortgages, accusing them of posing them as government agencies.

The Federal Trade Commission on Thursday said it filed charges against two companies — Nations Housing Modification Center and Infinity Group Services. It accused the companies of charging homeowners large fees for assistance in working with their lenders, but did “little or nothing” to actually help borrowers.

Federal regulators have filed charges against a total of 22 such operators. And in Washington, Treasury Secretary Timothy Geithner and Attorney General Eric Holder met with attorneys general from 12 states to discuss anti-fraud efforts.

F.T. reports that China is banning the export of rare earth metals as well as silver and gold. Go Gold

SHhhhhhhh!! Obama is speaking.

China’s “cancer villages” bear witness to economic boom

HONG KONG (Reuters) - One needs to look no further then the river that runs through Shangba to understand the extent of the heavy metals pollution that experts say has turned the hamlets in this region of southern China into cancer villages.

The river’s flow ranges from murky white to a bright shade of orange and the waters are so viscous that they barely ripple in the breeze. In Shangba, the river brings death, not sustenance.

“All the fish died, even chickens and ducks that drank from the river died. If you put your leg in the water, you’ll get rashes and a terrible itch,” said He Shuncai, a 34-year-old rice farmer who has lived in Shangba all his life.

“Last year alone, six people in our village died from cancer and they were in their 30s and 40s.”

Cancer casts a shadow over the villages in this region of China in southern Guangdong province, nestled among farmland contaminated by heavy metals used to make batteries, computer parts and other electronics devices.

Every year, an estimated 460,000 people die prematurely in China due to exposure to air and water pollution, according to a 2007 World Bank study.

Yun Yaoshun’s two granddaughters died at the ages of 12 and 18, succumbing to kidney and stomach cancer even though these types of cancers rarely affect children. The World Health Organization has suggested that the high rate of such digestive cancers are due to the ingestion of polluted water.

“It’s because of Daboshan and the dirty water,” said the 82-year-old grandmother. “The girls were always playing in the river, even our well water is contaminated,” Yun told Reuters during a visit to the village.

Mounds of tailings from mineral mining are discarded alongside paddy fields throughout the region.

“If you test this rice, it will be toxic but we eat it too, otherwise, we will starve,” said He, the farmer, as he shoveled freshly milled rice into a sack.

Here is some fantastic news for Ownership Society members:

market pulse

Sept. 17, 2009, 12:02 p.m. EDT

Households’ net worth rises first time in 2 years

WASHINGTON (MarketWatch) - American households were $2 trillion richer on June 30 than they were three months earlier, the first time in two years that household net worth has increased, the Federal Reserve reported Thursday in its quarterly flow of funds report. Household wealth rose in the second quarter at a 17% annual rate, or $2 trillion, to $53.1 trillion after falling at a 13% rate in the first quarter. The rally on Wall Street was the main reason for the increase in household wealth, but rising home prices contributed as well.

For a while this morning the US Dollar index traded at a new 52 week low on the NY Board of Trade. Coincidently the equities markets were trading at about 52 week highs. Evidently a good portion of the trillions the Fed has been creating recently found its way into the money casino.
This ought to get very interesting when all the recent winners show up at the window to cash in their chips.

Plunge protect us at the market; all or none please. Good til canceled.

Of course the cash 4 clunk program had nothing to do with the environment, it was simply to prop up the auto bitness. Dough 4 Dumps is the same plan.

A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of
gas a year.

A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a
year.

So, the average Cash for Clunkers transaction will reduce US gasoline
consumption by 320 gallons per vehicle, per year.

They claim 700,000 vehicles so that’s 224 million gallons saved per
year.

That equates to a bit over 5 million barrels of oil.

5 million barrels is about 5 hours worth of US consumption.

More importantly, 5 million barrels of oil at $70 per barrel costs
about $350 million dollars

So, the government paid $3 billion of our tax dollars for this program
to save $350 million.

We spend $8.57 for every dollar saved.

How good a deal was that?

Big Bankers would like to pull the plug on it.
Not many people living today remember when a U.S. dollar was defined as something of real substance and value. Most of us have lived our lives with a debt money system in which even the experts cannot predict the value of U.S. currency as far as a year into the future.

Rep. Ron Paul’s bill to audit the Federal Reserve (HR 1207), if adopted, would take a giant step toward fixing our dishonest money system. It now has 287 co-sponsors, and the numbers keep growing! HR 1207’s companion bill in the Senate, S 604, has already attracted 24 co-sponsors.

Barney Frank has said his House Financial Services committee will look into HR 1207 later this month. Our guess is he would like to keep it in mothballs, so heavy pressure must come from constituents.

Remember - under the sound money system adopted by the Founders the United States prospered until early in the 20th century. The dollar’s purchasing power increased some 11 percent. With the advent of the Federal Reserve the purchasing power of the dollar steadily decreased in less than a century more than 95 percent! Something must be done to stop the demise of the dollar and the adoption of HR1207 and S 604 opens the possibility of preventing total destruction of the once mighty United States dollar.

Gary North adds: “Until H. R. 1207, Congress had remained comatose with regard to the FED ever since 1914. Bernanke is the first Chairman to face skepticism regarding the independence of the FED. This has to do with politics. Politicians want to find out which big banks got how much. This has nothing to do with the fundamental question, namely, the theoretical case for a bankers’ cartel enforced by a central bank. That question has not been raised by 99.9% of academia, the media, or politicians since 1914.

“The Powers That Be will keep the public bamboozled for as long as the economy does not collapse, either through mass inflation, mass depression, or both.

“The bills are coming due. The crash will come. The consumers’ veto will come. The FED’s free ride will end. In the meantime, audit the FED.

Madoff beach house sells big
The Ponzi swindler’s Montauk getaway goes to a mystery buyer for more than its $8.75 million list price.
September 17, 2009

NEW YORK (Fortune) — It looks like Fed chief Ben Bernanke is right in saying the recession is ending: Today, Tiffany’s & Co. advertised a $115,000 diamond and platinum bracelet in its page three New York Times spot — and convicted swindler Bernie Madoff’s Montauk beach house sold for more than its $8.75 million list price.

The real estate agent handling the property won’t disclose the buyer — nor the exact price — but says contracts have been signed. “It did go for over the list price,” Joan Hegner, a broker with Corcoran Group, told Fortune. There were between five and 10 offers on the property, and more than 28 showings since it went on the market in late August, she added.

The house, nestled on a beach in Montauk — a town at the farthest reaches of Long Island known for its surfing and fishing — is a relatively modest getaway for a family as wealthy as the Madoffs. Completed in 1982, it featured a Formica kitchen and small bedrooms.

Locals were skeptical that Corcoran — enlisted by a U.S. Marshal-picked management company — could even get the asking price.

But the property, which boasts sweeping ocean views, was built closer to the beach than would be permitted under today’s strict zoning regulations. And it offered the added bonus of the trophy value of nabbing the vacation home of the biggest swindler in history.

No haikus today
But yes topical jest
Maybe in great supply

Kanye Interrupts Swayze Funeral, Says Jackson’s was Better:

Even as the buzz on Twitter, Facebook, and the universe of entertainment news outlets is humming with the discussion of the hip-hop star’s outrageous antics at the MTV Video Music Awards, Kanye West doubled down on his image as an outspoken and no-holds-barred loudmouth yesterday.

During a service being held to remember the life and career Patrick Swayze, West barged his way into the pastor’s pulpit, comandered the microphone and launched into a tirade on the ’80s star’s death and funeral.

After seizing the platform from the startled reverend, West said, “I’m happy for you Patrick, and I’ll let them finish your service in a minute, but I just wanted to say that Michael had one of the best funerals ever!”

Swayze was unavailable for comment.

Looks like we’re going to get a pull back.

This month’s Unclear on the Concept Award.

“Tea Party Protesters Protest D.C. Metro Service”,

“The Texas Republican on Wednesday released a letter he sent to Washington’s Metro system complaining that the taxpayer-funded subway system was unable to properly transport protesters to the rally to protest government spending and expansion.”

Peter Schiff is running for senate. He formally announced his candidacy today.

http://www.youtube.com/watch?v=usVyfMyitHc
http://www.youtube.com/watch?v=oA6s4_zLTQU

Finally we have a candidate who can think rationally and talk straight, no bull@#$%. I am drooling over the thought of him debating these career politicians.

Make no mistake, he is a dark horse. His current poll ratings stand at 1%. ONE PERCENT. We must do everything we can to get that number rising. Please follow this man’s campaign.

Spread the word: the PETERNATOR has ARRIVED!! And so it begins …

China’s Pig Farmers Amass Copper, Nickel, Sucden Says

Sept. 17 (Bloomberg) — Private investors in China, the world’s largest metals user, have stockpiled “substantial” quantities of copper as the government ramps up stimulus spending to spur the economy, according to Sucden Financial Ltd.

Pig farmers and other speculators may have amassed more than 50,000 metric tons, Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e- mailed report after a visit to China. That’s about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.

Sucden’s estimate underscores the difficulty analysts face in gauging metals demand in China amid increased speculation by retail investors, whose holdings remain outside the reporting framework undertaken by exchanges. Private investors in China also had as much as 20,000 tons of nickel, Goldwyn wrote.

“People who have nothing at all to do with the copper trade have been buying copper as a store of value, much like they would with gold,” said Jiang Mingjun, an analyst at Shanghai Oriental Futures Co.

Copper on the London Metal Exchange has more than doubled this year as China’s 4 trillion yuan ($586 billion) stimulus plan and record $1.1 trillion of lending in the first half spurred purchases of the metal used in construction and autos. The metal traded today at $6,470 a ton, which would value a holding of 50,000 tons at $324 million.

‘Private Stockpiles’

“Private stockpiles, built by many including the much- vaunted, pig-farming speculators, have clearly absorbed substantial quantities of metal,” Sucden’s Goldwyn said. “Much of this metal will remain out of the normal market place.”

Scotia Capital Inc. analyst Liu Na highlighted the role of Chinese pig farmers and other private speculators in the metals markets in an Aug. 17 note that cited reports from state-owned China Central Television. These speculators may become “quick sellers” if sentiment turned, Liu said in that note.

I am a very tame bear compared to Mr Allmon.

Peter Brimelow

Sept. 17, 2009, 12:08 a.m. EDT

Allmon is out
Commentary: Senior investor all but exits the stock rally

By Peter Brimelow, MarketWatch

NEW YORK (MarketWatch) — Stocks surge to a new high for the year, but one veteran editor bails out.

Well, “bailing out” is sort of a relative term for Growth Stock Outlook’s octogenarian Charles Allmon. He’s been 75% or more in cash since the Crash of 1987. (Well, it seemed like a Crash at the time.) But his remarkable stock-picking helped keep him a contender — with, of course, some assistance from the Crash of 2008. ( See April 30 column.)

So it was big news when Allmon went to 50% cash on April 15.

His call caught the post-March rally pretty neatly. The rally still seems to be going on, but without Allmon. In his latest letter, he announced the sale of all but three stocks, putting him 82% in cash.
…
The advantage of all that cash is clear over the longer haul. >b?Over the past 12 months, GSO is up 2.94% against negative 18.45% for the total return Wilshire 5000. Over the past three years, the letter is up 3.08% annualized, versus negative 5.41% annualized for the total return Wilshire.

Over the past five years, the letter has achieved a 4.14% annualized gain, against 1.27% annualized for the total return Wilshire 5000. Over the past 10 years, the letter has achieved a 3.91% annualized gain, as compared to 0.19% annualized for the total return Wilshire.

Allmon doesn’t really give much reason for his decision. He is completely contemptuous of the Obama administration, but that’s not new. ( See June 5, 2008, column.) For the record, he did say back in April that he was hoping to catch a swing up to Dow 9,000-10,000. Maybe that was enough.

Allmon does say (twice in a two-page letter) that he’s still a superbear: “My bear market forecast months ago was Dow 3,000-4,000. That remains valid for the next 31/2 years.”
…

CNN Poll: U.S. still in a serious recession
Poll says 86% of Americans believe the U.S. is still in a recession, while Fed chairman is more optimistic.

WASHINGTON (CNN) — Americans are not nearly as optimistic about the economy as the chairman of the Federal Reserve seems to be, a national poll released Thursday shows.

Eighty-six percent of those questioned in a CNN/Opinion Research Corporation survey said they think the United States is still in a recession, with 13% saying the nation’s economic downturn has ended. According to the poll, 42% say the country is in a serious recession, 35% call it a moderate recession, and one in 10 characterize it as a mild recession.

Earlier this week, Federal Reserve Chairman Ben Bernanke said the recession is very likely over, although the job market will continue to struggle for some time.

“Economists have typically called an end to recessions long before the public thinks hard times have passed,” said CNN Polling Director Keating Holland. “The recession of the early 1990s was officially over by 1991, but a majority of Americans didn’t think the recession was over until late in 1993.”

The poll also suggests that only a small minority, 9%, say their family’s financial situation is better now than it was a year ago. Nearly four in 10 say they’re worse off now than they were a year ago, and just over half said their family’s financial situation was about the same.

Centerpoint developer seeking Chapter 7
Phoenix Business Journal -

Tempe Land Co. LLC, the company that partially developed the Centerpoint high rise in downtown Tempe, is seeking to convert its U.S. Bankruptcy Court filing to Chapter 7.

The motion to convert from a Chapter 11 reorganization to Chapter 7 liquidation was filed Sept. 15.

” The impact of the Motion is that the bankruptcy will be put into the control of a trustee, who will decide how to proceed,” said a statement from Tempe Land. “The adverse financial markets, ongoing conflicts, and continuing costs contributed to the decision.”

The high profile project has been at a standstill since summer 2008 when developers were unable to obtain the estimated $75 million in additional funding needed to complete the $200 million residential and retail project.

The situation became even more dire when the project’s primary lender, Mortgages Ltd., filed for Chapter 11 in mid-summer after the suicide of its founder and sole shareholder Scott Coles. Mortgages Ltd. since emerged from bankruptcy and is under new leadership headed by former state land Commissioner Mark Winkleman. When he spoke recently with the Phoenix Business Journal, Winkleman said the firm would work out new agreements with its borrowers or, if necessary, file foreclosure proceedings on properties secured by the promissory notes the borrowers signed.

Really, who woulda thunk it? Everyone here has known this for what, several years now.

U.S. “option” mortgages to explode, officials warn.

WASHINGTON (Reuters) - The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.

“Payment option ARMs are about to explode,” Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways to combat mortgage scams.

“That’s the next round of potential foreclosures in our country,” he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These “underwater” mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state’s attorney general, Terry Goddard, told Reuters after the meeting.

“It’s the other shoe,” he said. “I can’t say it’s waiting to drop. It’s dropping now.”

The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan’s principal.

When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount. The loan’s interest rate also may have been fixed at a low level for the first few years with a so-called teaser rate, but then reset to a higher level.

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they “threaten a much greater hit to the consumer than the subprimes,” Goddard said, referring to the mortgages often extended to less credit-worthy

borrowers that fed the first wave of the financial crisis.

Miller said option-ARMs were discussed at Tuesday’s meeting on mortgage scams, which brought state attorneys general from across the country together with U.S. Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, and Federal Trade Commission Chairman Jon Leibowitz.

The mortgages tend to be “jumbo,” or for significantly large amounts, Goddard said, making it even harder for borrowers to sidestep foreclosure. He said he expected to see an increase in scams as distressed homeowners become more desperate to refinance big debts.

“It’s the other shoe,” he said. “I can’t say it’s waiting to drop. It’s dropping now.”

LOL, Hey mister official it’s more like an anvil that’s dropping.

DennisN, is it possible for a dealer to purchase a particular shotgun out of state (ID) and have it shipped to CA using a CA dealer as the transfer agent?