The Housing Bubble

Housing Suffering Relapse Confronts Bernanke Credit Conundrum.

Sept. 21 (Bloomberg) — The recovering housing market may be heading for a relapse as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke consider ending support for the source of the global financial crisis.

The Obama administration is studying whether to let a first-time home buyers’ tax credit expire as scheduled at the end of November. Bernanke and his Fed colleagues may continue talking this week about how to wind down purchases of mortgage- backed securities, according to Peter Hooper, chief economist at Deutsche Bank Securities Inc. in New York. The two programs have helped stabilize real-estate demand, with new-house sales rising 9.6 percent in July from the prior month, the most since 2005.

Ending these efforts may stifle the housing rebound by depressing sales and pushing up both mortgage-backed bond yields and interest rates on home loans, even in the face of the record-low zero to 0.25 percent short-term rates the Fed has engineered, said economist Thomas Lawler. A weaker housing market would likely dampen the economic recovery and undercut shares of builders including Fort Worth, Texas-based D.R. Horton Inc. and Miami-based Lennar Corp., that have risen 40 percent this year, based on the Standard and Poor’s Supercomposite Homebuilding Index of 12 companies.

“Things could get ugly,” said Lawler, an independent consultant in Leesburg, Virginia, who spent 22 years at Fannie Mae, a Washington, D.C.-based government-controlled mortgage- finance company. “We could be facing a triple whammy at the end of the year: the expiration of the tax credit, the end of the Fed mortgage-buying program and rising foreclosures.”

Major Test

This is the first major test of policy makers’ ability to coordinate exit strategies as they seek to wean the economy off government support, said Brian Bethune, chief financial economist of IHS Global Insight, a forecasting company in Lexington, Massachusetts.

They have already acted separately, with the administration ending its $3 billion “cash-for-clunkers” automobile trade-in program on Aug. 24 and the Fed starting to wind down its purchases of Treasury debt, which totaled $285.2 billion between March 25, when the initiative began, and Sept. 16.

The 55-year-old Bernanke and his colleagues, who meet tomorrow and Wednesday to map monetary strategy, discussed “tapering” off the Fed’s purchases of mortgage-backed securities and housing-agency debt at their last gathering in August, according to the minutes of that meeting. No decision was made by the central bank’s policy-making Federal Open Market Committee.

Obama wants G20 to rethink global economy.

WASHINGTON/BERLIN (Reuters) - U.S. President Barack Obama said on Sunday he would push world leaders this week for a reshaping of the global economy in response to the deepest financial crisis in decades.

In Europe, officials kept up pressure for a deal to curb bankers’ pay and bonuses at a two-day summit of leaders from the Group of 20 countries, which begins on Thursday.

The summit will be held in the former steelmaking center of Pittsburgh, Pennsylvania, marking the third time in less than a year that leaders of countries accounting for about 85 percent of the world economy will have met to coordinate their responses to the crisis.

The United States is proposing a broad new economic framework that it hopes the G20 will adopt, according to a letter by a top White House adviser.

Obama said the U.S. economy was recovering, even if unemployment remained high, and now was the time to rebalance the global economy after decades of U.S. over-consumption.

“We can’t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them,” Obama said in an interview with CNN television.

For years before the financial crisis erupted in 2007, economists had warned of the dangers of imbalances in the global economy — namely huge trade surpluses and currency reserves built up by exporters like China, and similarly big deficits in the United States and other economies.

With U.S. consumers now holding back on spending after house prices plunged and as unemployment climbs, Washington wants other countries to become engines of growth.

“That’s part of what the G20 meeting in Pittsburgh is going to be about, making sure that there’s a more balanced economy,” Obama told CNN.

China has long been the target of calls from the West to get its massive population to spend more. It may be reluctant to offer a significant change in economic policy when Chinese President Hu Jintao meets Obama this week.

ITEM: Tucked away in an $87 billion higher education bill that passed the House last week was a broad new federal initiative aimed not at benefiting college students, but at raising quality in the early learning and care programs that serve children from birth through age 5.

The initiative, the Early Learning Challenge Fund, would channel $8 billion over eight years to states with plans to improve standards, training and oversight of programs serving infants, toddlers and preschoolers.
< An additional $1 billion per year to beef up government supervision of kids from birth through age 5!! How long before the tots will go straight from the womb to the loving arms of state caregivers far better trained to deal with infants and small children than actual parents?

This is a make-work scheme for the surplus of people who want to make their living in the field of advanced baby-sitting.

Obama open to newspaper bailout bill
The Hill 09/20/09

The president said he is “happy to look at” bills before Congress that would give struggling news organizations tax breaks if they were to restructure as nonprofit businesses.

“I haven’t seen detailed proposals yet, but I’ll be happy to look at them,” Obama told the editors of the Pittsburgh Post-Gazette and Toledo Blade in an interview.

Sen. Ben Cardin (D-Md.) has introduced S. 673, the so-called “Newspaper Revitalization Act,” that would give outlets tax deals if they were to restructure as 501(c)(3) corporations. That bill has so far attracted one cosponsor, Cardin’s Maryland colleague Sen. Barbara Mikulski (D).

White House Press Secretary Robert Gibbs had played down the possibility of government assistance for news organizations, which have been hit by an economic downturn and dwindling ad revenue.

In early May, Gibbs said that while he hadn’t asked the president specifically about bailout options for newspapers, “I don’t know what, in all honesty, government can do about it.”

Obama said that good journalism is “critical to the health of our democracy,” but expressed concern toward growing tends in reporting — especially on political blogs, from which a groundswell of support for his campaign emerged during the presidential election.

“I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding,” he said.

For sale: $2 billion in state buildings
Effort to balance budget likely to draw global interest

California plans to sell $2 billion worth of prime real estate with lease-back agreements to help fill the budget gap created by the state’s severe money woes.

Much of the real estate consists of Sacramento office buildings, including the five-building East End Complex, the Attorney General building and the Franchise Tax Board complex.

The buildings are trophies — made even more valuable by their long-term lease-back agreements.

The portfolio, which also includes buildings in San Francisco and Los Angeles, represents more than 5.66 million square feet. A preliminary estimate values the buildings at $2 billion, but the state’s proceeds are expected to be only a third of that, or about $662 million, because some of the buildings still carry financing and bonds. Some also have deferred maintenance.

“There are many factors for each building,” said Jeffrey Young, deputy director of public affairs with the state Department of General Services.

The 17 buildings could be sold individually, as a complete package or in various combinations.

Nine of the office buildings and a parking garage are in the Sacramento area, and seven of them are in downtown Sacramento. Five of the buildings and the parking garage make up the East End Complex on the east side of Capitol Park, spanning from L to N streets. They are part of the state’s push more than a decade ago to build big office spaces downtown rather than leasing many smaller scattered buildings through midtown Sacramento and in the suburbs.
Wanted: A broker

The offering likely will garner the attention of international investors. The call for a brokerage to represent the buildings certainly has gathered a lot of attention.

The Department of General Services last week released the request for proposals for brokerage and investment banking advisory services. The deadline for written questions is Sept. 30. Proposals must be submitted by Oct. 30, and the contract will be awarded Dec. 28.

The first sales could occur during the first quarter.

“There is no doubt that it is going to draw a lot of attention. There are an awful lot of people that want that assignment,” said John Frisch, managing partner with Cornish & Carey Commercial/Oncor International in Sacramento.

At a minimum, the state is requiring bidders to have structured at least five sales and sales/lease-backs worth at least $20 million apiece, and to have completed at least $150 million in such sales over the past seven years.

Brokers said buildings of this caliber — mostly Class A buildings with steady, long-term leases — rarely are available. And for the most part, the locations are all very strong.

Buy now, or get priced out forever!

The article caption states 125 foreclosed homes will be auctioned, but in the body, it says 92,326 California homes were foreclosed in August, and that was during a ‘foreclosure moratorium’ which just expired on September 15! So what’s the rush to buy now?

Nearly 125 Foreclosed Homes Head to Auction in 12 Cities Throughout California
Fri Sep 18, 2009 12:00pm EDT

Valued from $18,500 to $850,000, Homes Will Be Auctioned September 23rd — 27th

LOS ANGELES, Sept. 18 /PRNewswire-USNewswire/ — California remains one of the weakest housing markets in the nation but its high inventory of foreclosures are attracting many buyers. Distressed homes have been driving sales gains in California and other Sun Belt states. Hudson & Marshall will auction about 120 bank-owned homes in 12 cities throughout California.

There are a variety of homes up for auction for every type of buyer, from investors to families and first time home buyers, ranging from move-in ready homes to those in need of improvements. Valued from about $18,500 to $850,000, all the homes come with title insurance paid for by the sellers. Buyers will be required to make a cash or certified check deposit of $5,000 for each property which they are the winning bidder.

“As home prices continue to sink in California, foreclosures are sought after purchases for homebuyers seeking great properties at discounted prices. National home sales are rising slowly, indicating a light at the end of the housing decline. Buyers should take advantage of these historically low prices before the tide begins to turn,” said Dave Webb, principal, Hudson & Marshall.

According to Realtytrac, during August, California posted the highest number of foreclosures of any state, with 92,326 homes receiving a foreclosure filing. According to S&P/Case Shiller Home Price Index report, in the second quarter of 2009 Los Angeles home values dropped 17.8% from the same time a year while San Francisco declined a staggering 22%.
…

Let her rip…

* THE WALL STREET JOURNAL
* TODAY’S MARKETS
* SEPTEMBER 21, 2009, 9:41 A.M. ET

Stocks Skid as Dollar Climbs

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP

Stocks declined on Monday, led by basic-materials and energy stocks, after a rebound in the dollar weighed on commodities prices.

Shortly after the opening bell, the Dow Jones Industrial Average was lower by about 67 points. Alcoa was the largest decliner among the blue chips, falling by about 3%. The S&P 500-stock index declined 0.7% and the Nasdaq Composite Index shed about 0.5%.

The dollar, which has been under significant pressure against other currencies in recent weeks, strengthened in morning trading. The euro slipped to $1.4627 from $1.4702 late Friday in New York, while the dollar climbed to 92.42 yen from 91.38 yen.

Gold futures fell more than $10 to trade around $1,000 an ounce and crude-oil futures fell nearly $3, slipping below $70 a barrel. Exchange-traded funds that track the energy sector were down sharply; U.S. Oil Fund was down about 3%.
…

Q&A about the possibility of a tax credit extension - best part of the response:

So it’s entirely possible we’ll see an extension, but no one knows. No one can know. One thing you can be sure of is that your pushy real estate agent is clearly much more interested in locking up a commission than in helping you make the decision that’s right for you.

The large cast of bad actors that got us into this housing mess clearly includes the army of real estate agents out there who insisted that “home prices never go down.” Many of these folks are honest, decent souls who perform a legitimate function. Others are less honorable. Unfortunately you can’t tell which one you’ve got until after the damage is done.

So take anything and everything you hear from a real estate agent with a healthy dose of skepticism. The industry has long known it has an image problem, which is why it came up with a fancy new word so they can call themselves Realtors®™©, etc. Whatever they’re called, these folks get paid to convince you to sell your house and convince someone else to buy it. Keep that foremost in your mind when they give you advice — especially about market conditions, forecasts and the timing of a sale. In thirty years, I have never heard a real estate agent say “This is a terrible time to buy a house.”

http://www.msnbc.msn.com/id/32939476/

Love it!

This sounds to me like more of a test on deflation, though I can see how one type of test could quickly morph into its opposite.

* THE WALL STREET JOURNAL
* SEPTEMBER 21, 2009

Slack Attack: Fed Faces Test on Inflation

By SARA MURRAY and JON HILSENRATH

BEND, Ore. — Tens of thousands of people who moved here in the past decade saw a booming real-estate market and plentiful jobs amid the mountains of Central Oregon. Now they see slack.

A year and a half of recession has left local manufacturer Bright Wood Corp. with too much capacity at its plants that make window and door components. Bright Wood has laid off nearly half of its work force, shut an 80,000-square-foot factory in Bend, and sold or stored its extra equipment.

Additional underutilized industrial space, housing and workers are apparent across town. More than 9,000 people have lost jobs since mid-2006. Some 29% of homes are vacant. “For Lease” signs hang on store windows near the town’s main drag, Wall Street.

Similar slack — the unused portion of an economy’s productive capacity — is evident across the U.S. Thousands of airplanes and hundreds of thousands of train cars sit unused, hotels report their highest vacancy rates in at least two decades, and millions of Americans are underemployed.
…

CORRUPTION: Govermment Housing Programs

It is time to call “BS” on the so-called “reform” in the mortgage lending industry, along with the government’s “progress” in this regard.

The current FHA report is now out for servicing delinquencies and defaults, and as expected it is indeed worse, not better. The administration continues to LIE about claimed “improvements” in the character of home finance.

22.9% of all FHA loans are either delinquent or in foreclosure. Why?

Ginnie claims that a “typical” borrower can spend 36% of their gross income on housing, or the front-end ratio (they also include $342 monthly for other housing-related costs, presumably homeowners insurance and utilities) and 49% of gross income on housing and all other mandatory debt service, or a 49% DTI.

This is preposterous. Such a loan would leave a typical couple with $1800 in monthly income - pretax!

Now let’s take out the required FICA + Medicare tax and $322.91 comes out off the top monthly. This leaves you with under $1,500 monthly.

From this you must pay:

•Federal and state income taxes
•Car registration and insurance
•Child care for those two dependents
•Food
•All other employment-related expenses (transportation, whether in your vehicle or mass transit, uniforms or clothing as required, etc.)
•Health insurance contributions (if covered under an employee plan) along with all co-pays and other non-reimbursed expenses.
•Retirement contributions (401k/IRA)
and on and on and on.

A family of four on $1,500 a month for everything other than the house eh? Yes, this might work - if you don’t make any retirement contribution, you never get sick, you don’t lose your job and are unable to find a new one for even one week, your car does not break down and your “great housing opportunity” doesn’t require a roof, a furnace, or a water heater.

This much is certain - you won’t be saving anything for a rainy-day fund, you won’t be paying for child care, and if any of the ordinary calamities that hit families from time to time (see the above for a partial list) hit your family you will almost certainly fall behind on your house payment.

Since you have no extra earnings capacity or slack in your budget once that happens you’re doomed - there is essentially no chance you can catch up which means you will wind up foreclosed upon.

This is exactly the sort of BS “lending” that went on during the housing bubble; while it is SOMEWHAT-less egregious than the “OptionARM” games the fact remains that under any sort of actual underwriting standard where CAPACITY is evaluated this loan is manifestly unsound and, on the objective evidence, should be considered PREDATORY.

Yet this is what our government is willing to underwrite and issue a formal federal full-faith-and-credit guarantee upon.

Oh, and the real topper? The $6,190 you need to come up with at closing could be entirely monetized from the $8,000 “first time future foreclosure victim tax credit”, meaning that you don’t even have to demonstrate that you can save up $6,000 first.

This is an outrage!

The safe limits for underwriting have for years been known to be 28%/36% and this is the reason why. At a 36% DTI the same family has $2,666 monthly pretax instead of $1,800 - a critical $850 that is the difference between being able to eat real food and cat food, having something with which to pay for child care, being able to afford a failed transmission in your car or a new water heater, and being able to make some sort of contribution to a retirement account.

This outrageous and corrupt attempt by our government to pump housing for the explicit purpose of shielding banks from having to take their losses as well as catering to the homebuilder and Realty industries is beyond the pale. These “affordability” ratios will do nothing other than generate millions of new foreclosures in the coming years, and the responsibility for each and every one of them rests directly with the present administration and the GSEs.

Everyone involved in this predatory conduct both within and beyond our government should find themselves in new housing - the graybar motel.

(From K. Denninger)

“Typical Overconsumption on a very small scale”

I coach a softball team, 2 days ago I was given a large bucket of 30 softballs, in addition to this, I was given 5 ‘game balls’. I casually looked at these boxed ‘gameballs’ and noticed they were made in China. I got to thinking to myself, why did we really need these 5 extra gameballs? I already had 30 perfectly good softballs (all made in China of course). The girls would have been just fine if we used ‘preused’ softballs. I think we need to rethink a million little things like this, if we ever are going to move in the right direction of less mindless wasteful consumption. I intend on talking to the league official (my buddy), I will likely get laughed at for bringing it up though…:(

Fecaltime!

“We know we still have a lot to do, in conjunction with nations around the world, to strengthen the rules governing financial markets and ensure that we never again find ourselves in the precarious situation we found ourselves in just one year ago.” ~ President Barack Obama ..

The Obama administration has proposed an overhaul of U.S. financial regulations including oversight of the systemic risk large financial institutions pose to the economy, new ways for the government to dismantle failed companies and a regulator to oversee financial products for consumers.
< The philosopher George Santayana observed in the early twentieth century that people unfamiliar with history are doomed to repeat it. When the New Deal disconnected the U.S. dollar from the Constitution in 1934 the power to “regulate money” became strictly a matter of politics and banking. The dollar, fixed as something of substance by the Constitution, was abandoned - even though the most astonishing period of progress in human history had taken place under the money system set into place by the Founding Fathers.

The Obama administration proposes to make matters worse.

When government management of the “dollar” destroys it, what will replace it?

“NPR’s Guy Raz’s interview with Dr. Ron Paul” (excerpt)

Raz: If it was left to market devices, how do you envision that working to help insure all Americans?

Paul: Well, about opposite of what we should expect when we go to total government. And we have a pretty good record of showing what we did in this country up until the 1960s. I recall working in a church hospital for $3 an hour and nobody was ever turned away and nobody was left out in the streets. And just think of all the church hospitals that have been closed down because the invasion of government into the health care industry.

Raz: But who would pay for them?

Paul: Well, who pays for the Shriner hospitals? Charity takes care of it, the churches take care of it. When government takes care of it, the bureaucrats get paid. And insurance companies become the lobbyists, the drug companies become the lobbyists, the management companies become the lobbyists, doctors get squeezed, the patients get squeezed.

You can’t put all these corporations in between the doctors and the patients. You have a form of corporatism, which motivates the type of system that we have now, and it’s not any better. Some worry that Obama would give us socialized medicine, but he isn’t. He’s giving us a continuation of corporatism. He’s forcing people to buy insurance. The insurance companies love it! They love to see 20 or 30 million more people being forced into the system, and they will have more customers.

Retirement Living

Sept. 21, 2009, 12:01 a.m. EDT
Retirement? Good luck with that
Financial crisis reveals U.S. retirement-system’s holes with painful clarity

By Andrea Coombes, MarketWatch

SAN FRANCISCO (MarketWatch) — The destructive effects of the financial crisis may be waning, but your retirement account won’t soon forget. Savers lost 40% or more in the downturn — a collective $2.1 trillion disappeared from 401(k) and IRA assets in 2008 alone — and while the recent stock-market recovery may feel good, it’s done little to stem a mounting crisis in the retirement system in the United States.

It’s not just investments that are the problem: Social Security needs financial resuscitation, and the bursting of the housing bubble that helped spark the financial crisis vaporized the home equity many people were counting on to fund their golden years. Corporations are curtailing traditional pensions and older Americans are being forced to work longer to make up the difference.

Older workers’ unemployment rate is lower than the national average, but it often takes them longer to find a job. Kerry Kiley, a regional manager at staffing firm Adecco, talks about which industries are hiring. Stacey Delo reports.

Where does this leave our retirement plans? Ask a middle-class American when he plans to retire, and more often than not you’ll get a wry chuckle and “I’ll be working until I die.” The attempt at humor masks what may be close to reality for some people.
…

If you’re about to run out of unemployment checks, here’s good news from Washington, that hallowed city with the endless cornucopia of money. . . .

A bill offered by Rep. Jim McDermott, D-Wash., and expected to pass easily would provide 13 weeks of extended unemployment benefits for more than 300,000 jobless people who live in states with unemployment rates of at least 8.5 percent and who are scheduled to run out of benefits by the end of September.

The 13-week extension would supplement the 26 weeks of benefits most states offer and the federally funded extensions of up to 53 weeks that Congress approved in legislation last year and in the stimulus bill enacted last February. (Note: Some cynics say that keeping people on the dole for a year or more tends to lower their incentive for job hunting. Hard to imagine, isn’t it?)

Wells Fargo’s Ticking Time Bomb: Credit Default Swaps On Commercial Mortgages.- Business Insider

Outside experts hired by Wells Fargo to examine its books are reportedly shocked at the bank’s exposure to derivatives trades it took on when it acquired Wachovia may trigger huge losses at the bank, Teri Buhl reports at BankImplode.com

It appears that Wachovia wrote credit default swaps on the junior tranches of commercial mortgage backed securities it was selling, which means that it is on the hook for losses in the riskiest CMBS tranches it sold. Wells itself might not even know the size of its exposure, Buhl reports.

From Buhl:

According to sources currently working out these loans at Wells Fargo when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds. Should the junior tranches eventually default, then the bank is on the hook. Dan Alpert of Westwood Capital says these were practices that he saw going on in the market at large.

Alpert says in reference to how he saw CMBS trades get done, “These guys would say ‘We’ll just take back that silly credit risk you’re worried about.’ Of course that was a nice increase to earnings when they got the security sold. The bank made money at the time.”

Buhl points out that investors might be caught off-guard if Wells has to start paying out on the swaps it sold. Wells, like most banks, almost certainly holds the credit default swap liabilities off balance sheet and most likely does not recognize them as a loss until they actually have to pay, Buhl writes.

There was a guy on the radio the other day saying that instead of paying unemployment the gov should help companies create half time positions since it is a little more expensive for the company. At least that way people are still getting up and going to work and retaining a skill. We should not pay for people to sit at home either create jobs or create incentives for companies to create more jobs.

The Health and Human Services Department is objecting to a mailer that Humana recently sent Medicare recipients.

It warned that “millions of seniors and disabled individuals could lose many … important benefits and services.” The bills in Congress would cut payments to private insurance plans that serve about one-fourth of seniors. Government experts say those plans are overpaid, and lawmakers insist it won’t affect benefits.

Give us the money or granny gets it.

We may all disagree on the public plan, but I hope all of us object to the private public partnership which is all about stripping money from taxpayers.

An astute comment from Market Watch, after they said “Five indicators are rising, this is the end of the recesssion”.

Positive contributors:

1)interest rate spread (FED manipulation)
2)stock prices (current sucker’s bubble)
3)building permits ($8,000 directly from the government)
4)consumer expectations (pumped up by Ozbama’s plans and schemes and so on)

Negative contributors

1)real money supply (money isnt circulating cause zombie-banks are broke and they know it by hoarding this cash)
2)jobless claims (its the depression, stupid)
3)capital goods orders (who in his right mind is ordering things when the consumer is unable and/or unwilling to spend more in his way down to slavery)

Conclusion: Excluding green shoots, wishful thinking, manipulated stock markets, Fed pumping a ruined dollar in the system and government’s socialistic intervention in the free market, the Depression continues to deepen.

Happy morning to everybody

Sky Lodge, claiming $5.6 million error, seeks bankruptcy protection

http://www.parkrecord.com/ci_13368547?source=most_viewed

[from the comments]
Mumbo jumbo
Salt Lake City, UT

Sounds familiar, doesn’t it? A computer error, an accounting error, a miscommunication, a misunderstanding…absolutely fascinating.

Its never revenues didn’t meet or exceed expenses. Its never that the business went bankrupt because the economy sucks and it didn’t work.

At this rate Main St is going to start looking like downtown Flint in the not too distant future.

Hang on.
oooops
Salt Lake City, UT

sorry boss…wrong button.

http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx

Dataquick numbers for socal in August are out.

“The fact that we have just 15 units left [out of 31], even in such difficult times, is remarkable.”
The $12.5 million penthouse has been under agreement for months. More than 50 percent of the remaining, primarily single-floor, 4,200-square-foot units, which start at $3.9 million, have been sold.
“What 1706 does is set a precedent, and future development will try to capture this market,” said Joseph Zuritsky, who is also president of Parkway Corp.

philly.com/philly/business/20090920_Soaring_Above_the_Crisis.html

Quote from “Mish”. Global Economic Analysis.

“Consumers and banks both are suffering from a massive hangover. Their willingness and ability to drink is gone. No matter how many pints of whiskey Bernanke sets in front of someone passed out on the floor, liquor sales will not rise”.

Stories
City Lights News
Experts

By Don Bauder | Published Wednesday, Sept. 16, 2009
…
The British royalty demands performance from its experts. Last November, Queen Elizabeth visited the London School of Economics to inquire why none of its experts had anticipated the financial devastation. Chastened, a group of Britain’s most eminent economists wrote her a letter, confessing that they were guilty of “wishful thinking combined with hubris.” Figuratively bowing to the queen, they stated, “In summary, your majesty, the failure to foresee the timing, extent, and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.”
…

U.S. mortgage delinquencies set record: Equifax.

NEW YORK (Reuters) - High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday.

Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.

The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.

The results, which correlate with consumer bankruptcy filings, suggest U.S. homeowners remain under financial stress despite signs of improving sentiment and fundamentals in the U.S. housing market.

August bankruptcy filings were up 32 percent from a year earlier, compared with a 35 percent year-over-year increase in July.

Still, while more Americans were late with mortgage payments, they are keeping up with other bills. The proportion of credit card accounts at least 60 days past due was down in August for the third straight month, while subprime card delinquencies also fell.

The eBay auction for this 1963 Pontiac LeMans Tempest started out innocently enough. Obtained after owner died. Appears to have original interior but no motor, no transmission. Body has a little rust and some dents. There’s stuff in the trunk, but no key to open it. Opening bid nine days ago was a mere $500. After one week, eBay seller 123ecklin will pocket $226,521 before auction fees. What happened between Day 1 and Day 9 is an amazing story.

The car’s plexiglass windows, unusual suspension setup and a dash plate bearing the name of a racetrack tipped the owner to its racing history. But what he didn’t know is that the car is one of only six 1963 Pontiac LeMans Tempest Super Duty coupes ever made. Hemmings recently did a story on the rare cars in which they listed all ever built. This one looks to have been driven by Stan Antlocer and was the fastest drag car in 1963 before disappearing.

Reading through the questions on the auction gives us reason to believe the seller truly didn’t know the car’s provenance. In his answers, he seems both surprised by the car’s potential value as well as overwhelmed by the attention. He turned down an offer of $160,000 to end the auction early because he feared getting negative eBay feedback. That decision paid off. With only seven minutes remaining, the highest offer was $95,000. When the virtual gavel fell, eBayer ccsi2000 had bought a very rare, if a little rusty, LeMans for $226,521.

There’s More to Answer for in the Wells Fargo Subprime Suits

.. (T)he bank is facing several lawsuits charging that it engaged in illegal discriminatory lending practices by allegedly selling high-cost subprime loans primarily to minority borrowers.

[...]

The lawsuit also follows a recent Chicago Reporter analysis of mortgage data submitted by Wells Fargo to the federal government. That study found that, in 2007, Wells Fargo sold high-cost, subprime loans more often to its highest-earning African-American borrowers in Chicago than to its lowest-earning white borrowers. According to the study, in 2007, about 34 percent of African Americans earning $120,000 or more received high cost mortgages from Wells Fargo in the Chicago metro area, while less than 22 percent of white borrowers earning less than $40,000 received high-cost mortgages from the lender.

What? I’ve been assured repeatedly that a modern-day financial entity would never do such a thing!

They all got bonuses for pushing subprime loans.

David G. Kittle- wrote this article, but it isn’t disclosed, except in the comment section(and I confirmed it), he is the
CMB, Chairman of the Mortgage Bankers Association (MBA)

Opposing view: Extend, expand tax credit
Letting incentive expire would jeopardize the housing recovery.

http://blogs.usatoday.com/oped/2009/09/opposing-view-extend-expand-tax-credit.html

I don’t read this paper. It came from a blog link.

Dept. of Labor data for unemployment is out for August. This gives a deeper look than the headline CPI data that’s provided at the beginning of the month. The Exhaustion Rate of benefits, and the Duration of unemployment continue their updward pace unabated:

……….. Exh Rate….Duration
01/31/2008 35.50 15.18
02/29/2008 35.84 15.15
03/31/2008 36.35 15.19
04/30/2008 36.63 15.18
05/31/2008 36.80 15.18
06/30/2008 37.23 15.27
07/31/2008 37.79 15.25
08/31/2008 38.18 15.26
09/30/2008 38.99 15.33
10/31/2008 39.24 15.22
11/30/2008 40.09 15.14
12/31/2008 41.49 14.87
01/31/2009 42.33 14.61
02/28/2009 43.70 14.61
03/31/2009 45.51 14.89
04/30/2009 47.07 15.21
05/31/2009 49.23 15.68
06/30/2009 49.87 16.21
07/31/2009 50.70 16.61
08/31/2009 52.02 17.10

Though note that these are 12-month running averages, not actual monthly numbers. Nevertheless they indicate that the employment situation continues to indicate zero green shoots. The is also borne out by the unabated fall in the number of civilian employed:

2008-01-01 146317
2008-02-01 146075
2008-03-01 146023
2008-04-01 146257
2008-05-01 145974
2008-06-01 145738
2008-07-01 145596
2008-08-01 145273
2008-09-01 145029
2008-10-01 144657
2008-11-01 144144
2008-12-01 143338
2009-01-01 142099
2009-02-01 141748
2009-03-01 140887
2009-04-01 141007
2009-05-01 140570
2009-06-01 140196
2009-07-01 140041
2009-08-01 139649

Naked Gun: 91-year-old nude Fla. man makes arrest
AP

LAKE WORTH, Fla. – Authorities say a 91-year-old South Florida man jumped out of bed naked and held an intruder at gunpoint until deputies arrived.

The Palm Beach County Sheriff’s Office said Robert E. Thompson woke up Saturday morning after a would-be burglar climbed his backyard fence and was met by his charging dog, Rettt, a Rottweiler and Doberman pinscher mix. Thompson heard the commotion, grabbed his .38-caliber revolver and phoned police without ever getting dressed.

Deputies say Thompson fired a warning shot as 26-year-old Jose Pasqual started to come toward him. Thompson kept his gun trained on Pasqual until deputies arrived.

Pasqual was booked in the Palm Beach County Jail on a burglary charge and did not immediately have an attorney.

Prison sentence for woman who kept mom’s body.

MIAMI (Reuters) – A Florida woman was sentenced on Monday to a year and a day in prison for keeping her dead mother’s body in a bedroom for years while collecting more than $230,000 in pension benefits, prosecutors said.

Penelope Sharon Jordan, 61, of Sebastian, Florida, pleaded guilty to theft of government funds in June, the U.S. Attorney’s Office in Miami said.

Police said when they found the body in a spare bedroom in March, Jordan told them her mother had been dead for at least six years. During the sentencing hearing, evidence indicated that Jordan told her sister their mother had died before December, 2001.

An autopsy on the body found no signs of foul play.

Jordan told the court she concealed her mother’s death in order to continue collecting her Social Security and military pension benefits. Over a six-year period she received $61,415 in Social Security payments and $176,461 from the military pension.

She was ordered to repay $237,876 to the government.

Sept. 21, 2009
AIG gains on hope government may ease bailout again
Congress may review proposal to restructure rescue package, Bloomberg says

SAN FRANCISCO (MarketWatch) — American International Group shares jumped 10% Monday amid hope the government may ease the terms of its bailout of the giant insurer again.

Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee, has told the panel’s staff to review a proposal put forward by former AIG Chief Executive Maurice “Hank” Greenberg to restructure the insurer’s government rescue package, Bloomberg News reported Monday on its Web site.

Greenberg is proposing a lower interest rate on government loans, more time to repay the debt, and a reduction of the government’s stake in AIG, Bloomberg reported.

Greenberg met with Towns last week, and Towns may start talks with the Treasury Department and Federal Reserve on the Greenberg proposal, Bloomberg said.

Catherine Seifert, an insurance analyst at Standard & Poor’s Equity Research, upgraded AIG shares(AIG 45.63, +5.72, +14.33%) to hold from sell after the report.

“We see this news buoying the shares near term,” she wrote in a note to investors.

AIG shares were up 10% at $45.93 during midday action on Monday.

Here’s your ‘demonstration project,’ Mr. President — it’s called Mississippi
The Examiner- 09/21/09

Since passing tort reform in 2004, Mississippi has seen the number of medical malpractice claims plummet by 91 percent from its peak. The state’s largest medical liability insurer dropped its premiums by 42 percent, and has offered an additional 20 percent rebate each year since tort reform went into effect.

That is the story that Mississippi’s governor, Haley Barbour, offered on Friday, speaking at the Heritage Foundation. He also made an observation about President Obama’s decision to offer only token “demonstration projects” on lawsuit abuse rather than address it meaningfully in his health care reform proposal.

“It’s mysterious to me that the administration and the leadership of Congress talk about health care reform and the goal of reducing costs, and yet refuse to put tort reform into the legislation,” he said. “I believe $200, $250 billion a year in health care costs is caused by litigation. It may be more than that. But this is the lowest hanging fruit, this ain’t rocket science. If they want a demonstration project, come down to Mississippi, and I’ll show you a demonstration project.”

Mississippi’s legal situation was particularly bad when he came into office, Barbour said. “When I ran for governor in 2003, for the third consecutive year the U.S. Chamber rated Mississippi the worst state in the country for lawsuit abuse — a judicial hell-hole,” he said. “And the reason they rated us that way is because we were. The state was overrun by out-of-state plaintiffs shopping for generous venues, some of which rarely if ever ruled for defendants.

Where’s Oly Gal?

I wanted to tell her me an’ Shorty made Cupcakes out of Drano and battery acid last night. I washed dishes.

The Liars Club(nar) will be propagating their distortions this Thursday. The Glorified WoodButchers(NAHB) will post their lies on Friday.

Of course FHFA will publish their garbage(Housing Price Index) tomorrow to lay the ground work for the previously mentioned lowlifes to spin their BS.

Silicon Valley reinvents the lowly brick.
NEWARK, California (Reuters) - Forget microchips.

Silicon Valley sees a profitable future in the humble brick thanks to a low-energy production process that illustrates the greening of the U.S. technology capital.

Brick maker Calstar Products is heavy on PhDs and backed by venture capitalists whose vision is to create buildings less expensively and in a way that saves energy.

“We think it is time for a second industrial revolution,” said Paul Holland, a partner at Foundation Capital, which invested $7 million in Calstar. EnerTech Capital led another round that raised $8 million for the business.

“We and dozens of others are trying to create green alternatives for all the things that happen in the building industry,” Holland said.

Currently about 40 percent of U.S. energy use goes toward the heating, cooling and general operation of buildings.

Silicon Valley is finding high-tech ways to make age-old materials, pursuing carbon dioxide-eating concrete, windows that insulate better than walls, and wood substitutes.

The field is still new. Venture investments in green buildings have waxed and waned with the recession, but involved 45 deals worth about $350 million the past year, according to Cleantech Group LLC.

3,000-YEAR WAIT

Bricks have been made pretty much the same way for 3,000 years, until Calstar’s scientists came up with their new technique, said Chief Executive Michael Kane.

Ordinary bricks are fired for 24 hours at 2,000 degrees F (1,093 C) as part of a process that can last a week, while Calstar bricks are baked at temperatures below 212 F (100 C) and take only 10 hours from start to finish, Kane said.

The recipe incorporates large amounts of fly ash — a fluffy, powdery residue of burned coal at electric plants, that can otherwise wind up as a troublesome pollutant.

“Ours is a precise product” that relies on getting the chemistry right, said Amitabha Kumar, Calstar’s director of research and development.

The process of making the bricks, which look and feel like any other brick, requires 80 to 90 percent less energy and emits 85 percent less greenhouse gas than ordinary bricks, according to Calstar.

New poll: Majority believe government is doing too much.
The Beltway 09/21/09

A new Gallup poll shows that the number of people who believe government has its hand in too many areas of American life has reached its highest point in more than a decade.

The question asked by Gallup was, “Some people think the government is trying to do too many things that should be left to individuals and businesses. Others think that government should do more to solve our country’s problems. Which comes closer to your own view?” Fifty-seven percent of those surveyed say government is doing too much, while 38 percent say it should do more. Five percent are undecided.

The number of people who believe government is doing too much is up sharply from early March, when 47 percent said government was doing too much and 42 percent said it should do more.

The last time the number of people who believe government is doing too much hit 57 percent was in October 1994, shortly before voters threw Democrats out of power in both the House and Senate. It continued to rise after that, hitting 60 percent in December 1995, before settling down in the later Clinton and Bush years.

Also, the number of people who say there is too much government regulation of business and industry has reached its highest point since Gallup began asking the question in 1993. In the new survey 45 percent say there’s too much regulation, versus 24 percent who say there’s too little and 27 percent who say there’s the right amount. In a September 2008 Gallup survey, 38 percent said there was too much regulation, versus 27 percent who said there was too little and 31 percent who said there was the right amount.

From the Federal Reserve Bank of Minneapolis: (They used a lot of big words with charts and stuff and talked about numbers)

“The small share of subprime lending in 2005 and 2006 that can be linked to the CRA suggests it is very unlikely the CRA could have played a substantial role in the subprime crisis.”

“Two basic points emerge from our analysis of the available data. First, only a small portion of subprime mortgage originations is related to the CRA. Second, CRA-related loans appear to perform comparably to other types of subprime loans. Taken together, the available evidence seems to run counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis.
”

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4136

Fed’s Daily Securities Lending

Mon 09/21/09 $12.703 billion

National Debt $11,807,667,118,297.67

You go BB!

Lordy, a gathering of leaches…

The United Nations is planning a form of diplomatic shock therapy for world leaders this week in the hope of injecting badly needed urgency into negotiations for a climate change treaty that, it is now widely acknowledged, are dangerously adrift.

UN chief Ban Ki-Moonbat and negotiators say that unless they can convert world leaders into committed advocates of radical action, it will be very hard to reach a credible and enforceable agreement to avoid the most devastating consequences of climate change.

As the digital counter ticking off the hours to the Copenhagen summit – which had been supposed to seal the deal on climate change – hit 77 days today, progress at the UN summit in New York is seen as vital. Nearly 100 heads of state and government are to attend the summit, for which a pared-down format has been devised.

“We need these leaders to go outside their usual comfort zones,” said one diplomat. “Our sense is that leaders have got a little too cosy and comfortable. They really have to hear from countries that are vulnerable and suffering.”

Rajendra Pachauri, head of the Intergovernmental Panel on Climate Change, which won the Nobel peace prize with Al Gore, agreed. Commenting on the leaders attending the G20 summit in Pittsburgh next week, he said: “We need to remind these people about impacts of climate change – the fact that they are inequitable and fall very heavily on some of the poorest people in the world. We are likely to see a large number of failed states if we don’t act in time.”

Jack Daniel’s to end NASCAR ties
Business First of Louisville

Brown-Forman Corp. will conclude its Jack Daniel’s NASCAR program and end its sponsorship of the Richard Childress Racing’s No. 07 team after the 2009 season.

The Louisville-based beverage company said in a news release that a change in Brown-Forman’s spending priorities led to the decision to conclude the five-year sponsorship.

“Jack Daniel’s has enjoyed a good five-year run with Richard Childress Racing and NASCAR, and we are pleased with the overall performance of our sponsorship program,” Tim Rutledge, vice president and brand director for Jack Daniel’s, said in the release. “While it is difficult for us to end our formal relationship with RCR, the current economic environment has compelled us to reevaluate our spending, and we’ve concluded that other areas in the marketing mix require additional investment.”

The cost of the sponsorship was not disclosed.

So this POS is going to butt heads with team Barry. Better watch out Chrisy.

US senator plans radical regulation rethink.
September 20 2009

Christopher Dodd, chairman of the Senate banking committee, on Sunday revealed plans that would put him strikingly at odds with the Obama administration’s proposals to reform Wall Street and would almost certainly provoke a war with the financial industry.

Mr Dodd, a former presidential candidate who is facing a tough re-election battle in his home state of Connecticut next year, told the New York Times that he was drawing up plans to merge the four Washington bank regulators into one banking “super-regulator”.

Follow up: from the September 19th Flying Miser column, Go East said: “Nothing even to buy in Orlando or on the West coast, Ft. Myers or Lehigh? RE my finances: I have to live somewhere after I graduate, and it won’t be in L.A. If I have to rent, so be it, but not in CA. I just don’t think I can rent anything with my credit.”

I noted that I would “spend some time looking through my archives, can’t find the folder, but there is one non profit in TX who patented a concrete-like shell hardened over a inflatable air frame.” I found the folder. The web site is monolithic dot com, and the organization branched into doing this domestically from doing it in natural disaster areas overseas. A lot about this building style tickles my fancy, not the least of which is its relative affordability.

Pratt to Close Cheshire Plant, East Hartford Department

Matt Dwyer Reporting
About 1,000 jobs will be lost, as Pratt & Whitney today announced it will close a facility in Cheshire, and a department in East Hartford.

Layoffs will be phased in in early 2010 as a result of the decision, according, according to company officlias at a press conference.

The comapy said it needed almost $54-million in annual savings.

Pratt said the union and state offers fell short of that amount.

The company is expected to move the work out of state, or overseas.

Whadd’ya know — maybe they will give it away after all!

* The Wall Street Journal
* HEARD ON THE STREET
* SEPTEMBER 22, 2009

Lennar in No-Man’s Land

By JOHN JANNARONE

Home builders are beginning to patch up their businesses by getting rid of excess inventory. But what happens when they actually start building again on their own land?

Companies such as Lennar are sitting on undeveloped land purchased during the boom, waiting for the right time to parcel it into lots and build houses. Yet as signs of stability emerge and companies try to expand, Lennar has discovered it is cheaper to buy distressed lots already developed by rivals rather than build on its own land.

That means land prices in some places have become so depressed that sellers are practically throwing it in for free. While that helps Lennar, it may eventually become a burden. Lennar’s $2 billion in “land under development,” including raw land, accounts for 27% of total assets.
…

COMMERCIAL REAL ESTATE
Chinese real estate investors scout Austin for possibilities
[AUSTIN] AMERICAN-STATESMAN Friday, September 18, 2009

Business and city leaders on Thursday hosted a delegation of two dozen Chinese developers and investors who are touring several U.S. cities to learn about investing in U.S. commercial real estate.
The group, which is looking at industrial, office and retail properties, was welcomed Thursday morning by Austin Mayor Lee Leffingwell, and later met with real estate consultant Charles Heimsath and officials of the Greater Austin Chamber of Commerce to learn more about the region.
….
The group arrived in California on Sept. 10 and has visited San Francisco, Los Angeles and Dallas, and is headed to Houston and New York after Austin.
….
Last week, the English-language China Daily newspaper reported that Nie was leading a delegation of major Chinese developers “on a fact-finding trip (of the U.S.) to assess multibillion-dollar investment opportunities in real estate.”
A plunge in property markets worldwide following the credit market crisis has created opportunities for cash-rich buyers. Commercial property values in the U.S. have fallen 35 percent since October 2007.
“China is a country of saving, and that makes this a good time to be looking at real estate,” Nie said Thursday.

Census: Recession had sweeping effect on US life

Sep 21st, 2009 | WASHINGTON — The recession is profoundly disrupting American life: More people are delaying marriage and home-buying, turning to carpools yet getting stuck in ever-worse traffic, staying put rather than moving to new cities.

A broad array of U.S. census data, released Monday, also shows a dip in the foreign-born population last year, to under 38 million after it reached an all-time high in 2007. This was due to declines in low-skilled workers from Mexico searching for jobs in Arizona, Florida and California.

Health coverage swung widely by region, based partly on levels of unemployment. Massachusetts, with its universal coverage law, had fewer than 1 in 20 uninsured residents — the lowest in the nation. Texas had the highest share, at 1 in four, largely because of illegal immigrants excluded from government-sponsored and employer-provided plans.

Demographers said the latest figures were striking confirmation of the social impact of the economic decline as it hit home in 2008. Findings come from the annual American Community Survey, a sweeping look at life built on information from 3 million households.

Preliminary data earlier this year found that many Americans were not moving, staying put in big cities rather than migrating to the Sunbelt because of frozen lines of credit. Mobility is at a 60-year low, upending population trends ahead of the 2010 census that will be used to apportion House seats.

The rest of story at the link: http://tinyurl.com/n9ru33

Haven’t been around to post much, but had some time tonight to upload the latest version of the JT Extension, which had been sitting on my hard drive for a while.

Those of you who aren’t using it should give it a shot. Those of you who are should upgrade to the latest version, though honestly it doesn’t add any features - just a bugfix and a new popup item.

Anyway, I’ll post a proper link, but one that will get past the filter here:

http colon // home.avvanta.com/~drumminj/joshuatree.html

I’ve still got to update the User Guide for version 1.4, and want to integrate Lavi’s search engine, but haven’t yet figured out how to do so.

And the proper link (sorry, it appears my “non-link” still got caught by the filter…):

Joshua Tree Extension for Firefox

Questions, comments, concerns always welcome.

Hey everyone today is Herbert George Wells (aka H. G. Wells) birthday.

Author of:

The Time Machine
The First Men in the Moon
The War of the Worlds
The Invisible Man
The Island of Doctor Moreau
The Shape of Things to Come

Just in case anyone’s was wearing out, I found the perfect place to order my next tin foil hat. Not that I’m plugging the site. I was just enjoying the humor.

http://deviantwear.deviantart.com/art/Urban-Headgear-117791729

Hi, the whole thing is going perfectly here and ofcourse
every one is sharing data, that’s really good, keep up writing.