The Housing Bubble

This is the bust in the boomtown that banks built
Beneath Charlotte’s shiny skyline, ‘a new humility’

In Charlotte, Consequences of The Economic Crisis Are Deeply Felt
Few American cities prospered more over the last two decades than Charlotte, its growth propelled and gilded by Wachovia and its cross-town rival, Bank of America. Now Charlotte is suffering, as the crisis that shattered several of the nation’s largest banks left many of the survivors struggling to recover.

CHARLOTTE — A monument to the financial crisis is rising amid this city’s thicket of skyscrapers: a gleaming, glass-walled trophy tower that was intended as a fitting headquarters for Wachovia’s national banking empire.

It will open instead as the headquarters of a regional power company. Wachovia, unable to survive a run of bad decisions, was swallowed by San Francisco-based Wells Fargo during the depths of the crisis last year.

Few American cities prospered more over the past two decades than Charlotte, its growth propelled and gilded by Wachovia and its crosstown rival, Bank of America. Executives shoehorned gaudy mansions into old neighborhoods around downtown. Workers poured into vast subdivisions on the city’s ever-expanding periphery. With coffers overflowing, giddy public officials spent tax dollars on a manmade river for whitewater rafting.

Now Charlotte is suffering. Unemployment has spiked to 12 percent, well above the national average. Subdivisions sit unfinished. Mansions cannot be sold. The school system, which for years had recruited teachers from shrinking cities such as Detroit, laid off more than 1,000 employees this summer.

The crisis that shattered several of the nation’s largest banks and left many of the survivors struggling to recover has also damaged the bank towns, the smaller cities that became financial centers in recent years — less celebrated than New York but even more dependent on the industry.

Hamptons Home Sales Surge Most in Five Years Amid 19% Discounts.

Oct. 22 (Bloomberg) — Home sales in the Hamptons, the Long Island beach retreats favored by Hollywood celebrities and Wall Street financiers, surged 32 percent in the third quarter as deal seekers landed discounted properties.

Transactions climbed to 339 from 257 a year earlier, the biggest increase in five years of records, New York-based appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The median price dropped 2.4 percent to $810,000.

“It shows the power of affordability,” Miller Samuel President Jonathan Miller said in an interview. “There’s enough value in the market for people to recognize it.”

Concessions averaged 19 percent off asking prices as sellers sought to lure buyers. New York financial companies cut 32,000 city jobs in the 12 months through September, the state Labor Department said Oct. 15. The reductions came as worldwide losses and asset writedowns tied to sour home loans surpassed $1.6 trillion, according to data compiled by Bloomberg. Wall Street bonuses help drive demand for Hamptons property.

New York City’s unemployment rate increased to 10.3 percent in September and total private-sector employment fell by 111,700, or 3.5 percent, in the year through September.

“You’re still looking at a very weak economy and very tight credit so it’s hard to see a second-home market as rising when you’re not seeing that in the city,” Miller said.

Hello everyone…

Listening to “Jam on it” by Newcleus. What great music.

Not to much happening now. It’s getting cold and I have always found fighting a war in the winter sucks…

But,

Afghanistan has these HUGE bees and it appears they are fighting going in for the winter. They mostly leave you alone, but I am deaftly afraid of them. If we are ever attacked with bees by our enemies, your military is one CPT short.

Hey, Lindsey
by Ron Paul

The other day when Lindsey Graham went after me, and accused me of trying to take over the Republican party, I couldn’t help but chuckle. Partisan politics is one thing, and about the only thing politicians understand. But ideas are something else. And our ideas – the ideas of liberty – are capturing the hearts and minds of millions of Americans, and that is what counts.

Ever since our presidential campaign ignited a prairie fire of freedom, especially among young people, I see our progress everywhere. The bureaucrats are right, for example, to be worried at the Federal Reserve. After putting us into this economic pickle, the Fed is under attack for the first time in all its years. The Fed has devalued our dollar by 95% since it was founded by the big banksters and one senator in 1913, but it took the recent boom-bust engineered by the Fed, and then our presidential campaign, to rattle the china at their marble palace on Constitution (!) Avenue.

To build on the momentum you and I started, I wrote a book that can change our country, End the Fed. We must audit the Fed, expose its secret doings, and then end it. We deserve sound money, not the fiat paper that can be manipulated for Goldman Sachs and J.P. Morgan, and against the rest of us.

The book has done well – four weeks on the NY Times bestseller list, for example – but while it started out at #7, and #1 on Amazon, it has dropped. This book can change America, and undermine all the statists in DC, by explaining, in easy to understand terms, the history of the Fed and all the trouble it has caused, and why we can and must replace it with the Constitution.

Book plug aside…

I like Ron Paul….

And from USA Today, Oprah picks another winner:

“PORTLAND, Maine — Kaile Warren was depressed and homeless when, through “divine intervention,” he got the concept — and brand name — that would make him something of a national celebrity.
Warren says God presented him with the idea for a home-repair franchise and this slogan: “Rent-A-Husband: For those jobs that never get done.” At the time, the former home builder was lying surrounded by rats in an abandoned warehouse — or in a homeless shelter or on a friend’s couch, depending on the version he’s pitching to the media.”
“What is certain: Buoyed by his national media presence and well-scripted sales pitch, Warren persuaded dozens of people to invest at least a total of $4.5 million in his business, which was more than $3 million in debt and had assets of just $142,000 as of March, according to company financial documents reviewed by USA TODAY. He faces disputes over promised payments to investors, including one lawsuit, and is under investigation by the Maine Division of Securities.”
“the 10-year CBS Early Show home-repair contributor, author, three-time Oprah Winfrey Show guest and founder of the Rent-A-Husband chain, “

From yesterday, re: eddie/Tampa

“I’ve seen what $1500 gets you in a 3/2/2 in that area. To me that is not even in the ballpark of decent.”

Where are you from and what do you expect? I can see how a Manhattanite would not like CBS, but in this area you have two choices: CBS from the 60’s and Rotting Chinese Drywall from the 00’s.

Can you describe what ‘decent’ means to you?

Did anyone catch the news yesterday showing the story of the thousands of people lined up in Rockville, MD for an H1N1 flu shot? The majority were turned away. Just wasn’t enough to go around. But you had to see the clips. Now THERE was a moment. Reminded me of something you’d see in a third world country, public clinics jammed to the gills and people being turned away. We’ve arrived!

Oh, and since I decided to play hooky from work yesterday, I actually tuned into Oprah’s “global” program. (Yeah, I know, I know). Got a big bang out of the segment where she interviewed a middle class lady from Rio, Brazil. It was almost surreal. The lady showed off her Afro-Brazilian maid and took the camera crew to the maid’s “favela” to show how the maid lived. After saying that favelas are basically slums, the lady said her maid lived in a “nice” favela. Now, I’m not sure which offended Oprah more, the fact that Rio got the Olympics over Chicago, or that here was a middle class white Brazilian with an Afro-Brazilian maid. So Oprah, in her lofty manner, gets in a jab about isn’t the lady worried about the violence and corruption in Brazil, because Oprah’s camera crew had to pay someone off with $600.00 just to film in the “nice favela”. Oooooh! What followed next was hysterical. The Brazilian lady gets all thin lipped and toothy, still smiling, but you could see she was pissed, giving some explanation about how safe the favelas are, her children go to nightclubs there, but maybe it was Oprah’s ostentatious camera crew that drew out the thugs.

Awesome.

combotechie - thanks for the reference to the boingboing article on the banks borrowing at 0% and then lending back to the government via treasuries. I’ve saved it as a reference, though perhaps not the best one. The only reference mentioned is Phil Grenspun’s “friend in the money business” - who knows who that is. Also they seem to think the Federal Reserve is officially a government agency, and in fact don’t even mention the Federal Reserve anywhere in the article! He just says the banks are borrowing from “the government”. So FWIW - not really a good reference. I was thinking more along the lines of some detail from the WSJ with some real numbers if possible.

Link

How Wall Street is making its billions

He explained that “carry trade” would be a more accurate description of what they’re doing. Because of the Collapse of 2008 financial reforms, the big investment banks are able to borrow money from the U.S. government at 0 percent interest. Then they can turn around and buy short-term bonds that pay 2 or 3 percent annual interest. Now they’re making 2 percent on whatever they borrowed. They can use leverage to increase this number, by pledging some of the bonds that they’ve already bought as collateral on additional bonds.
…

20 Year Old Buys Home With $183,000 FHA Loan And Just 3.5% Down
BusinessInsider.com - John Carney|Oct. 18, 2009, 12:22 PM

Denise Tejada bought a house last month at the age of 20, thanks in large part to a loan guaranteed by the Federal Housing Authority.

Without question, Tejada’s loan is toxic–to her and to the taxpayers who are backing the loan. Her house cost $155,000. Tejada’s loan was apparently made on a micro-down payment of just 3.5%, the minimum down payment to qualify for an FHA loan. On top of this, however, she got an additional government backed loan to make improvements. Her total loans amount to $183,0000. In short, she was immediately underwater on her new house.

The monthly payments on her debt amount to $1328. Her income is $2470, leaving her with just $285 a week to live on. She’s paying 54% of her income to make the mortgage payments. She earns that income by holding down one full time and two part time jobs. Obviously, this woman has a strong work ethic. But it also means her income is precarious. With unemployment still rising, she obviously should be worried about losing one of her three jobs. A loss of one of them would likely leave her unable to make the debt payments.

Tejada says that when she bought it, the house was just a “box” with no kitchen or bathroom. Now it is “gorgeous”. She claims the renovation has increased the value of her home from $155,000 to $255,000.

“I bought my house for $155,000. And now, after all the fixing, after all the remodeling, my house is worth $255,000. So just within a month period, I made a $100,000,” she tells Market Place’s Scott Jagow.

She doesn’t give any indication about how she arrived at the conclusion that she has made a $100,000 gain in just a month. Even if her improvements had dramatically increased the value of the house beyond the cost of the improvements themselves, she would have to contend a declining housing market. From last year to this year, the median price of homes sale in Oakland, California has declined 28%.

Tejada sees her house as an investment rather than a home. And she is planning on buying more homes, despite the fact that her income is already strained by her debt. This three bedroom house is just her “first house” and is “a little too big for me.” This is the opposite direction house buying traditionally moved in, with young people buying a small fixer-upper or renting and moving into larger homes as their incomes and family size increased. Tejada has started big.

Tejada, a first generation immigrant from Guatemala, isn’t going to college. If that was ever the American dream, it isn’t hers. She’s going into home buying. Her older brother also bought a house. Indeed part of the reason she bought her house so young was that she wanted to beat her brother, who bought his house at the age of 21. She is very happy about the fact that her friends seem impressed that she owns a home.

“This is the kind of mentality that our dad pretty much embedded in us since we were 12 years old,” she says.

Her father bought a house shortly after moving to the United States. Shortly after buying the home, the family started acquiring nicer things. New cars, new televisions, that kind of thing. When Tejada’s brother asked about where they were getting the money for these things, the father said it was all because of the house.

That sounds a lot like the father was using his house as an ATM, most likely borrowing from a home equity line of credit to purchase consumer goods. As the value of the house increased during the housing bubble, the family seemed to be getting richer. Most likely, they were simply acquiring more debt. This way of thinking has been passed on to Tejada–who believes she made $100,000 in a month.

The Tejada family obviously has a very strong worth ethic and a savings ethic as well. Unfortunately, something appears to have gone haywire when it comes to homes. The children were encouraged to work and save but then to spend their savings on homes and to be completely unafraid of massive amounts of debt. This is, in short, a living breathing example of the ideology of home ownership at work.

We wish the Tejada’s nothing but the best of luck. We hope she really can keep paying her mortgages and that she somehow makes money on her house. But it is outrageous that the FHA is guaranteeing her loans, putting the taxpayer on the hook for her precarious financial situation.

Here is some of the bullsh&& detection from our troll Eddie.

I sold my house close to the peak as well. Missed the absolute peak by about 6 months for my neck of the woods. It didn’t take a genius to figure out that when my house more doubled in value in less than 2 years something wasn’t quite right. I, like you also got out of stocks in 2007, May and June. And I bet the other way with options on all sorts of financials, GM, Harley Davidson and retailers. A recession was inevitable. It came, I made money. I was happy.

so basically this guy just happened to see the big real estate bubble based on instinct and then get out just in time. Followed by realization that this was a “garden variety recession” and knew to short the market based on instinct again. Explanation of why he is long below? Nope. Does he identify which financials and retailers. Nope.

But the difference between me and the HBB crew is that I see the recession as your garden variety recession. It happened, people suffered, politicians vowed to do something, as usual they only make things worse but look good in the photo op while wasting trillions. But as all recessions do, this one has ended. And my investments are almost a mirror opposite of what they were in 2007/2008. Instead of shorting financials and retailers, I’m long both of them including some long term calls that have done exceptionally well the last 2-3 months.

As for real estate, it’s home buying time for me…
Its a good time to BUY!

As for renting, I posted what I found back a couple of months ago. To rent anything decent in Tampa is $2500 to $3000. To buy something decent is $500-600K. Do the math and you’ll see renting is marginally cheaper per month. But throw in the tax deduction and it’s a toss up. I’m not trying to convince anyone to go out and buy 12 houses. I’m telling you my opinion which I know will be disagreed with by one and all here.
So, you can do an easy search in the tampa area and find plenty of great houses for less than 400k. In fact that is too high. 300K still gets you a 3000 sq ft home… on a lake even. This is a siege people. You are going to be under attack from all sides, including the Eddies that are here pretending. Lets see how Eddie does predicting the future instead of the past. We have another year or more to wait everyone.

Well enough droning on….back to work.
Is the phone still on at the realitard agency?

Any of you Florida guys got any background on the St. Joe/Southwest deal?

Dallas-based Southwest Airlines Co. will partner with real estate developer St. Joe Co. to start service in May at a new airport being built near Panama City, Fla.

In a partnership that Southwest chief executive Gary Kelly called the first of its kind, St. Joe will subsidize at least the first two years of Southwest’s service from Northwest Florida Panama City Airport.

Flu update:

Still running low grade fever. Went through the sinus drainage stage yesterday afternoon/evening from about 2:00 PM to about 10:00 PM. Had to go out to Bed Bath and Beyond to pick up more tissues around 3. Treated myself to the aloe infused kind - that was a good idea. Still dripping but at a much slower pace. Hacked up phlem this morning, but there doesn’t seem to be any more of that going on. Cough and sore throat continue. It was harder to sleep last night because of the congestion, but I’m surviving.

CDC is now reporting that you can transmit the disease for 48 hours after having a normal temp (without medicine) not just 24 hours, so I’m still toxic for a few days. My waste paper basket needs to be treated with biohazard precautions. May be I should go out and talk to some realtors?

Current tea is lemon zinger with honey.

Maybe its not a done deal??? Either that or they are just laying low for now.

White House studying housing tax credit

By Jeff Mason

WASHINGTON (Reuters) - The Obama administration is still considering extending a popular housing tax credit but is weighing that against efforts to bring down the federal deficit, senior White House officials said on Wednesday.

The $8,000 tax credit, which will expire at the end of November, has boosted home sales in recent months, helping to revive a flagging housing market, which was a major factor driving the United States into a recession.

Lawrence Summers, top economic adviser to President Barack Obama, told Reuters there was a case to be made for extending the credit “in terms of supporting the housing market.”

But he added: “At the same time, we can’t afford everything for which there is a case.”

On Tuesday, Housing and Urban Development Secretary Shaun Donovan — the administration’s top housing official — expressed doubts the United States could afford to extend the tax credit for first-time home buyers beyond its expiration.

Valerie Jarrett, a senior adviser to Obama on business issues, said she was undecided about the program.

“I’m not leaning any which way or another. I’m still in the process of doing our due diligence on the program,” she told Reuters in a separate interview.

Jarrett said the White House was considering whether to continue a host of programs that had been used to boost the economy. “We have to measure them against how successful have they been. And so we’re in the process of doing that now,” she said.

“As we look at all the different ways that we could help jump-start the economy, we have to measure that against our desire to bring down the deficit.”

Summers said he thought it was important to keep the program’s emphasis on first-time home buyers. Some in Congress would like to broaden the credit to offer it to other home buyers as well.

Critics say expanding the credit might be wasteful because it could end up providing incentives to people who would have bought a home anyway.

“It does seem to me that concentrating on first-time home buyers has the virtue that you’re stimulating demand without also stimulating supply as distinct from (providing) the credit to those who are turning over a home,” Summers said in the interview.

But he also emphasized that in weighing whether an extension of the credit could benefit the economy, the White House would also consider its impact on the deficit.

Summers said the administration would look at the possibility of expanding the size of the credit, but on that issue, the impact on the deficit would be a consideration.

© Thomson Reuters 2009. All rights reserved.

I’ve read online that people born before 1957 are already immune to swine flu. Is this true, and if so, why? — Lisa Radher, Chicago

Yes, pretty much so, says Dr. David Morens of the National Institutes of Health, who has studied the history of flu viruses.

People born before 1957 were exposed to ancestors of the new pandemic virus, which are in a lineage that goes back to the notorious H1N1 virus that touched off the raging pandemic of 1918-19. That’s why people older than 52 are likely to have some protective antibodies that “cross-react” with the new H1N1 flu.

In 1957, for reasons flu experts don’t fully understand, H1N1 viruses disappeared for 20 years.

…link it to continue
http://www.npr.org/templates/story/story.php?storyId=113446539

Sounds like the myriad artificial life support measures propping up the ailing housing market may have to be extended indefinitely, to help fulfill the green shoots predictions of this Fed narrative:

Business Briefing
Housing, manufacturing aiding economy, Fed says

Compiled from staff and wire reports

2:00 a.m. October 22, 2009

Improvements in housing and manufacturing are driving the early stages of the economic recovery, according to a Federal Reserve survey.

The Fed’s latest “Beige Book” snapshot of business conditions nationwide found “many sectors” of the economy either stabilized or logged modest improvements over the last six weeks. The pickups, though, often were from “depressed” levels of activity.

The new report adds to evidence that a recovery has started from the worst recession since the 1930s. Only two of the Fed’s 12 regions — Atlanta and St. Louis — reported weaker overall economic activity.

The report said factories increased production as businesses restocked depleted inventories. Both housing and manufacturing continued a “pattern of improvement that emerged over the summer,” the Fed observed.
…

Economic Report

Oct. 22, 2009, 10:46 a.m. EDT
Home prices fall 0.3% in August, FHFA says

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) — After rising for three months, U.S. home prices fell a seasonally adjusted 0.3% in August compared with July, the Federal Housing Finance Agency reported Thursday.

Prices were down 3.6% in the past year, and were down 10.7% from the peak. Prices are roughly the same level they were in February 2005. Read the full report.

Prices rose in four of nine regions, fell in four and were flat in the other. The FHFA index is based on repeat sales on homes financed through Fannie Mae or Freddie Mac.

The largest price declines in August were in the South Atlantic states (down 1.6%) and New England (down 1.1%)

The biggest price gains in August came in the Pacific region (up 1.2%) and Mountain region (up 0.8%), where the housing bubble was the most intense.
…

Stainless steel,granite, these two (so called luxury items) single handed ruined the home industry.
Just add this to your home and it goes from $150k to $500k instantly and the dumb public fell for it hook line and sinker.

Happy October 22! Ah, another $1,000 52-week T-bill added to my collection. Now I have 52-week T-bills maturing every four weeks, enough to pay my rent on one of my apartments.

But the story today is another tech ticker guy (other than Peter Schiff) who says gold will eventually get to $5,000 per ounce:

http://tinyurl.com/yztm9qf

Then massive fraud on the $8,000 tax credit may jeopardize the program or any extension of it:

“Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.”

http://tinyurl.com/yj4zkga

market pulse

Oct. 22, 2009, 11:48 a.m. EDT

Financial Panel OK’s Consumer Protection Agency
By Ronald D. Orol

WASHINGTON (MarketWatch) - A key congressional committee on Thursday approved the creation of a controversial Consumer Financial Protection Agency, charged with writing rules for mortgage and credit card products in the wake of the credit crunch. In a partisan vote, lawmakers in the House Financial Services Committee took a major step in financial regulatory reform by approving the wide-ranging agency, backed by the panel’s chairman, Rep. Barney Frank, D-Mass., in a voice vote.

Good News!

U.S. Initial Jobless Claims Rose More Than Forecast (Update1)

Oct. 22 (Bloomberg) — More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover.

Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said today in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased.

Economists project the unemployment rate will reach 10 percent by the first quarter of 2010, underscoring the risk to consumer spending, the biggest part of the economy. Companies cutting costs remain reluctant to hire, even as they’ve eased dismissals from levels seen earlier this year.

“Until demand turns around, businesses have to continue to cut costs,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “We remain pessimistic on consumer spending.”

Losing their lifeline - 7,000 a day
As the Senate debates whether to extend unemployment benefits, more than 200,000 jobless Americans are set to see their checks stop in October.

NEW YORK (CNNMoney.com) — Another day, another 7,000 people run out of unemployment benefits.

One month after the House passed a bill extending unemployment benefits, the issue is still being debated in the Senate.

Democratic leaders in the Senate introduced a bill two weeks ago to lengthen benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% would receive an additional six weeks.

Senate Republicans want to add several amendments, including one that would pay for the extra benefits with stimulus funds rather than by extending a federal unemployment tax.

While leaders in both parties are trying to negotiate a compromise, Senate Democrats Wednesday took a step to bring the bill to the floor as early as the end of next week. If it passes, the Senate legislation must then be reconciled with the House version, which extends benefits by 13 weeks in high-unemployment states.
How to get a job in 100 words or less

Meanwhile, the bickering has cost people like Crystal Jordan of Dolton, Ill., their benefits. The single mother of three ran out in late September.

She is one of the 1.3 million people set to lose their benefits before year’s end if Congress doesn’t act, according to the National Employment Law Project, an advocacy group. In October alone, more than 200,000 people will fall off the rolls.

Lawmakers twice lengthened the time people can receive checks to as much as 79 weeks, depending on the state.

Jordan lost her administrative support job in the spring of 2008. She had never been unemployed before and hasn’t been able to find work since, despite sending out 10 resumes a day.

Jordan is also finishing her bachelor’s degree in business management. She hopes that will give her the edge she needs to find a job in 2010.

The $1,000 check she received every two weeks allowed her to pay the rent and feed her family. Now, she doesn’t know how she’ll cover next month’s bills.

“I am fearful we will all end up on the street because I can’t find a job and have no income,” Jordan said.

NTK Files for Bankruptcy to Cut Debt by $1.3 Billion (Update1)

Oct. 22 (Bloomberg) — NTK Holdings Inc., a manufacturer of heating and cooling equipment owned by Thomas H. Lee Partners LP, sought bankruptcy protection with a plan to eliminate about $1.3 billion in debt.

The company, based in Providence, Rhode Island, listed debt of $2.78 billion and assets of $1.65 billion as of July 4, in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware. Thirty-seven affiliates also sought protection, including the company’s operating unit, Nortek Inc.

“The Chapter 11 process will enable Nortek to emerge as an even stronger company with substantially less debt,” Chairman and Chief Executive Officer Richard L. Bready said today in a statement.

Nortek is North America’s largest supplier of residential range hoods and exhaust fans, and makes home-security and audio- video equipment, according to court documents. Sales totaled $2.3 billion in 2008. The company sells home heating, ventilation and air conditioning products under brands including Maytag, Westinghouse and Frigidaire, and makes custom HVAC products for hospitals, stores and government buildings.

“Unsustainable debt levels,” along with a slump in home construction, forced the company to seek bankruptcy protection, NTK said. U.S. home starts fell 33 percent in 2008, and dropped another 48 percent in the first half of 2009.

All that bailout money comes in handy when campaign donation season rolls around. Coup de banksters continues…

* The Wall Street Journal
* OCTOBER 22, 2009

Wall Street Steps Up Political Donations, Lobbying
Firms Boost Outlays Amid Debate on Financial-Services Overhaul, After Slowing Spending While Getting Bailout Cash

Spoke with a local/small ATV dealer this morning, he said business had been very slow for the first part of the year. Recently sales have picked up a good deal, due to new zero down, zero payments for the first six months, lending available. Great part is NO credit check, must have a job though.

Asked who the financing was being offered by? One of which is through an Ally Bank group. Remember who that used to be? GMAC?

In the end they will payfor it by hitting the upper middle class. A payroll tax hike on those making over 250k.

I can’t wait to see next years comparisons of total effective tax rates for 2009. My guess is that all catagories rise except the bottom 20% and the top 0.5%.

NYC sees economic gold in green jobs. NYC’s boot camp…

NEW YORK (Reuters) - Recession-stricken New York City plans to double its current green work force by creating over 13,000 new jobs in the next decade, partly by competing with London to become the new center for carbon trading, a city official said on Wednesday.

London, whose prominence as a financial capital rivals New York City and Tokyo, got an early lock in trading pollution credits by training lawyers, accountants and other experts “before the market even existed,” Seth Pinsky, president of the Economic Development Corporation, told Reuters.

New York City’s new boot camp in green finance will be run by the State University of New York’s Levin Institute. It will be open to laid-off workers or future entrepreneurs, much like an already “booming” incubator for financial start-ups, Pinsky said.

Mayor Michael Bloomberg, who made his first fortune as a Wall Street bond trader before getting into politics, is expected to announce on Thursday this green job branch to his two-year-old PlaNYC program, which set ambitious goals for reducing greenhouse gases, planting 1 million trees and crowning skyscrapers with wind turbines.

The mayor’s $7.5 million green jobs plan will call on Columbia University to help offer public school pupils “hands-on” learning in energy efficiency, according to Bloomberg, who is running as an independent candidate for a third term. His plan also will create an Urban Technology Innovation Center to tap academic research. Existing city and state funds and federal stimulus dollars will pay for it.

$425K drops to $15K in 4 years - now THAT’s an investment opportunity for someone, and proof that they aren’t making any more land, but they are making more excuses:

Conservatory Lot Sells at Tax Deed Sale for $15,185
Lots in this Ginn community sold originally for $329.9 thousand to $529.9 thousand.
By Toby Tobin

Palm Coast, FL – October 21, 2009 – In its 2005 sales launch, real estate developer Ginn-LA (Bobby Ginn and his financial partner Lubert Adler) sold 337 lots in The Conservatory at Hammock Beach for a total of about $142 million. Buyers anxiously anticipated news that they had been selected to purchase one (or more) lots in a golfing community that was being developed surrounding a Tom Watson signature golf course. Lot prices ranged from $329.9 thousand to $529.9 thousand. As it turns out, the lucky ones were those who were not selected. One lot purchased then for $425.9 thousand was sold yesterday at a Flagler County tax deed sale. The only bidder paid $15,185; the minimum bid to cover back taxes, interest, penalties, and fees.

Of four Conservatory lots originally scheduled to be sold on September 20, two were redeemed or withdrawn prior to the sale, a third was rescheduled for the November sale.

The Conservatory is not representative of the Palm Coast and Flagler County real estate market, but it mirrors what is happening in some Ginn communities. Tesoro and Bella Collina were both fueled by speculative buyers and suffered a similar market collapse. But parts of Ginn’s former empire remain relatively healthy. Hammock Beach (and Ocean Hammock) owners are building homes. The developer, whose local efforts are now managed by a subsidiary of Reynolds Plantation, recently reintroduced unsold condominiums albeit at prices roughly half the original launch prices. Sales, while not brisk, are encouraging.

In spite of the amenities, which include access to the premier Hammock Beach Club, The Conservatory seems unable to gain market traction. It consists of a beautiful Tom Watson designed golf course and magnificent clubhouse, four model homes, and one privately built home.

Just a little peek into what is on the FED’s balance sheet.

Deserted shopping mall bleak symbol of Fed bailout

OKLAHOMA CITY (Reuters) - A $29 billion trail from the Federal Reserve’s bailout of Wall Street investment bank Bear Stearns ends in a partially deserted shopping center on a bleak spot on the south side of Oklahoma City.

The Fed now owns the Crossroads Mall, a sprawling shopping complex at the junction of Interstate highways 244 and 35, complete with an oil well pumping crude in the parking lot — except the Fed does not own the mineral rights.

http://uk.reuters.com/article/idUSTRE59K01420091021?pageNumber=1&virtualBrandChannel=11604&sp=true

I’m blogging live from the hospital — it’s baby time!

Don’t worry, the wifers told me to bring the laptop to keep me busy and therefore less annoying. Lol…

Romer: Impact of stimulus will level off.

WASHINGTON (AP)— A top White House economist says spending from the $787 billion economic stimulus has already had its biggest impact on economic growth and will likely not contribute to significant expansion next year.

Christina Romer, the chair of President Barack Obama’s Council of Economic Advisers, said Thursday that the $194 billion already spent gave a jolt to the economy that contributed to growth in the second and third quarters of the year. She told a congressional panel that by the middle of next year, the impact of the stimulus will level off. Romer said spending so far has saved or created 600,000 to 1.5 million jobs but warned that unemployment will remain high, above 9.5 percent, through the end of 2010.

About 1.4 million home sales have claimed the credit. About 350,000 to 400,000 of those sales are believed to have been a direct result of its availability, according to estimates of the real estate industry and independent economists. Extending the credit would cost about $1 billion a month in lost revenue, Congressional analysts say. Making it more generous and extending it to all homebuyers — as the industry and some lawmakers want — would cost more than twice that.

“I am pleased that more than 1 million taxpayers claimed the first-time homebuyer credit,” Representative John Lewis, Democrat from Georgia who is chairman of the subcommittee, said in his statement announcing the hearing. “However, I am concerned about recent reports that there have been fraudulent schemes involving the credit. This hearing will allow the subcommittee to hear what, if any, additional steps should be taken to allow the I.R.S to strike a balance between issuing timely refunds of the homebuyer tax credit and protecting federal revenue.”

Gubmint’s on the job…

The Sovereign Society Offshore A-Letter
Thursday, October 22, 2009

The Government’s
Forever Blowing Bubbles…
By Andrew Packer

Did you hear the one about the portly 20-year-old Guatemalan?

Seems most Friday nights, when all the other 20-year-olds are trying to sneak into bars, she’s out shopping…for houses…

From the “so crazy only government involvement can explain it” file, the Federal Housing Authority (FHA) recently (as in post-real-estate bust) allowed this 20-year old to take out a $183,000 mortgage for only 3.5% down. The actual selling price of the home? $155,000.

For those readers “in-the-know,” that’s what you might call a toxic loan. 110% loan-to-value…3.5% down payment…in a declining market…and in that income bracket? That kind of paper could make even the boldest of subprime lenders blush (though you probably couldn’t tell whether Countrywide’s Angelo Mozilo was blushing or just far too tanned).

But wait, there’s more!

Her income is provided from not just her full time job, but an additional two part-time jobs. The possibility of her losing at least one of them seems more than likely as the economy continues to shed jobs.

It’s this kind of government-financed lunacy that makes it so difficult for the few financially responsible Americans out there to take advantage of the next great deal.

Indeed, it seems almost like the government is siding with banks and lenders (the current owners of these houses, who stand to lose if prices continue to fall) rather than the actual citizens they allegedly represent (citizens, of course, stand to lose in terms of opportunities if prices don’t fall)

If anything, it’s starting to look like real estate is the bubble that government will never let fully burst. “Take our currency, take our investment banks, take our financial system,” the government says, “…but whatever you do, don’t take away our ‘American dream’ that represents almost universally overinflated real estate prices.”

New Mexico’s Investment Chief Resigns Amid Probe (Update1)

Oct. 22 (Bloomberg) — New Mexico’s chief investment officer resigned after the state was drawn into a nationwide investigation of the fees paid to politically connected agents by those seeking to win investment-management work.

Gary Bland, who serves on the board overseeing endowment funds for the fifth-biggest U.S. state by area, quit yesterday, according to a letter submitted to New Mexico Governor Bill Richardson. Bland was appointed by Richardson, a Democrat who unsuccessfully sought his party’s 2008 presidential nomination.

“Clearly, I am saddened and disappointed to render my resignation as state investment officer,” Bland wrote.

New York Attorney General Andrew Cuomo, the U.S. Securities and Exchange Commission and the Justice Department are investigating “pay to play” practices in which money managers and their placement agents used ties to public officials to help gain access to $2 trillion in U.S. public pension systems.

Bland’s resignation follows the Oct. 6 guilty plea to fraud charges by Saul Meyer, founder of Dallas-based pension consultant Aldus Equity. Meyer pleaded guilty in court to fraud charges and admitted he paid $300,000 to Hank Morris, a one-time adviser to former New York state Comptroller Alan Hevesi, to secure money from that state’s pension fund.

Aldus worked as a private equity adviser to New Mexico before being fired by the investment council and Educational Retirement Board earlier this year. The retirement board said in June that it was subpoenaed by the Justice Department, which sought information about the role Aldus played in investments with the fund.

You go gubmint! folks are spending to much time on line anyway…

Carriers Eye Pay-As-You-Go Internet
Amid Government Push to Open Networks, Some See Cover for Pricing Based on Usage. The Wall Street Journal. 10-21-09

Recent efforts to introduce usage-based, or metered, broadband services have met stiff resistance from consumers. But a new push by the federal government to adopt rules that would force Internet providers to treat all Web traffic equally, no matter how much bandwidth they take up, could give ammunition to the broadband providers that want to change how they charge for Web access, Internet experts and consumer advocates say.

“This could come down to carriers saying, ‘If you don’t allow us to manage our networks the way we see fit, then we will just have to cap everything,’ ” says Phillip Dampier, a consumer advocate focusing on technology issues in Rochester, N.Y. “They’ll make it an either/or thing: give them more control over their network or expect metered broadband.”

The #1 job of a politician is to get re-elected. Presidents are short term, these folks want the job for life!

Key senators may rebuff Obama on health care.
Key Democratic senators may prove indifferent to Obama’s health care pleas ~ Thursday October 22, 2009

WASHINGTON (AP) — The Democrats’ control of a hefty majority in the Senate — plus the House — would suggest that President Barack Obama is within reach of overhauling the nation’s health care system this fall.

But the numbers mask a more complicated reality: Obama and Democratic leaders have modest leverage over several pivotal Senate Democrats who are more concerned about their next election or feel they have little to lose by opposing their party’s hierarchy.

One is still smarting from being forced to abandon next year’s election. Another had to leave the Democratic Party to stay in office. And some are from states that Obama lost badly last year.

These factors will limit the president’s ability to play his strongest card — an appeal for party loyalty and Democratic achievement — in trying to muster the 60 votes his allies will need this fall to overcome a Republican filibuster in the 100-member Senate.

When lawmakers face a tough vote, their uppermost thought is “survival,” said Alan Simpson, a Wyoming Republican who spent three terms in the Senate.

On a very few occasions, Simpson said, then-President George H.W. Bush asked him to cast a vote likely to cause him political problems back home. That was perhaps three times in 18 years, said Simpson, who held a GOP leadership post. “I swallowed hard and went over the cliff,” he said.

But it’s a sacrifice that presidents and party leaders should not count on, he said.

The Democratic leaders’ limited leverage will complicate the push for allowing the government to sell insurance in competition with private companies. Some Senate Democrats who oppose the idea are from states that voted heavily against Obama last fall.

Democratic Sen. Blanche Lincoln faces a potentially tough re-election race next year in Arkansas, where Obama lost to Republican John McCain by 20 percentage points. She says she will base her health care votes on what is best for Arkansans.

Choice and competition among insurers are good, Lincoln said, but “I’ve ruled out a government-funded and a government-operated plan.”

Sen. Mary Landrieu of Louisiana, where Obama lost by a similar margin, said she might be willing to let some states try “fallback or trigger” mechanisms that would create a public option if residents don’t have enough insurance choices.

But she told reporters, “I’m not for a government-run, national, taxpayer-subsidized plan, and never will be.”

Weeee Dawgies ! You go DOW ! 10,000 in the rear view.

This “Pay czar” crap, is just that! Doing nothing but grabbing a headline.

Big pay cuts … what about Goldman? NAAAAAH!

Pay czar Kenneth Feinberg cut the pay of 175 employees at the top seven bailed-out companies, but some are calling for curbs at other firms as well.

NEW YORK (CNNMoney.com) — The Obama administration’s pay czar is imposing tough cuts on 175 big earners — but many on Wall Street are still on track for a banner payday.

Kenneth Feinberg, appointed the Treasury’s special master for compensation in June, has ultimate say over compensation for the top paid employees at the 7 most bailed-out companies: AIG (AIG, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), General Motors, Chrysler, GMAC and Chrysler Financial.

In a policy announced Thursday, Feinberg demanded salary cuts of up to 90%, and total reductions — including stock and options — of 50%.

But Feinberg’s ruling does not impact other financial firms that are on track to pay out record bonuses, like Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).

Revenue projections for those firms keep rising, and analysts say bonuses will be back on track for another record year following a one-year dive in 2008. Goldman Sachs said last week that it set aside $16.7 billion for salaries, employee stock options and bonuses, which works out to about $526,814 per employee.

Snippet from today’s New York Times about U.S. Federal drug cartel sweeps:

“La Familia is unusual in that its leaders espouse a religious philosophy and ask the core members of the organization to carry bibles and attend church. It recruits heavily from drug rehabilitation centers..”

..all while peddling dope, murdering people, and sneaking firearms into Mexico to murder more people. Hail Mary.

LONDON – Concerns worldwide about the dollar’s slide have escalated to the point where currency markets are beginning to wonder when governments might try to do something about it.

For now, any attempt to put a floor under the dollar’s exchange rate is expected to remain rhetorical, with actual market interventions by central banks unlikely — especially if China won’t change its currency policy.

I love the MSM
So the chinese currency policy is keeping the value of the dollar suppressed?????????????????

George Carlin ~ Fear of germs…

Typical Carlin “language” !!!! FYI a little foul to some folks.

http://vids.myspace.com/index.cfm?fuseaction=vids.individual&videoid=7309396

NCR Corp. reported Thursday its profit plunged about 79 percent following impairment charges, litigation charges and the impact of the recession. It also will cut up to 2,200 jobs.

Duluth, Ga.-based NCR (NYSE: NCR), which makes automated teller machines (ATMs) and retail self-checkouts, recorded net income of $17 million and earnings of 9 cents a share. This compares with net income of $80 million and earnings of 49 cents a share in the third quarter of 2008.

The results for the third quarter of 2009 included a $17 million impairment charge related to an equity investment and a $6 million litigation charge.

Third-quarter revenue decreased 18 percent to $1.14 billion, hurt by the negative impact from foreign currency translation. Revenue also was hurt by the recession’s impact on the global financial services industry and the retail and hospitality industries.

“In the third-quarter, financial services, and especially retail customer investments were negatively impacted by the global economic downturn in most geographies,” said Bill Nuti, chairman and CEO of NCR, in an earnings statement. “The willingness of customers to invest in the second quarter of 2009, which helped NCR deliver solid results in that quarter, did not spill over into the third-quarter. That said, we were more encouraged by the conversations we were having with our customers about the fourth quarter and 2010, as well as our internal execution against our cost programs and strategic priorities.”

Given that this program is rife with fraud, I would think most Congress folk would have to love it, not to mention all the real-estate agents, home builders and mortgage bankers who are pressuring Congress to renew it.

* The Wall Street Journal
* OCTOBER 22, 2009, 6:18 P.M. ET

Thousands of Suspicious Claims Filed for Home-Buyer Credit

By MARTIN VAUGHAN and JOHN D. MCKINNON

WASHINGTON – Tens of thousands of people submitted suspicious — and possibly fraudulent — claims for the federal first-time home buyer tax credit, tax officials told Congress Thursday.

Raising new worries about the stimulus program as lawmakers consider extending the credit, the Treasury Department said that at least 19,000 filers who hadn’t yet bought homes claimed $139 million in tax credits. Treasury officials said they have found another 74,000 tax-credit claims, worth $500 million, where evidence of prior homeownership could make their claims invalid.

More than 500 people under the age of 18, including a 4-year-old, also filed for the credit, which is worth up to $8,000 for new home buyers, federal officials said at a hearing about abuses of the program. Most of the claims involving children were made by parents who purchased a home but were ineligible for the credit because their incomes were too high, said J. Russell George, the Treasury inspector general for tax administration.

The problems are potentially troublesome for backers of the credit – including real-estate agents, home builders and mortgage bankers – who want Congress to extend it and expand it to all home buyers, not just first-time buyers. The credit is set to expire on Nov. 30.
…

I submitted a credit increase today on all of my cards. I’m shorting the f*ckers that deny me. It’s the best probe I have into how stable their balance sheets actually are.

I don’t need credit, as most here already know. LOL

WHEEEEEEEEEEEEEEEEEEEEEEEEEEEE

Market Snapshot

Oct. 22, 2009, 4:19 p.m. EDT
Follow the stimulus
Government spending translates into sector stock gains

By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — As the U.S. stock market on Thursday rode a wave largely dictated by the latest quarterly earnings, some equity analysts say investors would be wise to focus on sectors where the government also is investing, namely manufacturing and residential real estate.

“The government is not only the lender but the spender of last resort,” said Doug Roberts, chief investment strategist for Channel Capital Research.
…

Like I have been saying…

* The Wall Street Journal
* OPINION
* OCTOBER 22, 2009, 10:49 P.M. ET

Preventing the Next Financial Crisis

Don’t be fooled by the bond market. Banks are holding prices down because they can buy Treasurys with free money from the Fed.

By ALLAN H. MELTZER

The United States is headed toward a new financial crisis. History gives many examples of countries with high actual and expected money growth, unsustainable budget deficits, and a currency expected to depreciate. Unless these countries made massive policy changes, they ended in crisis. We will escape only if we act forcefully and soon.

As long ago as the 1960s, then French President Charles de Gaulle complained that the U.S. had the “exorbitant privilege” of financing its budget deficit by issuing more dollars. Massive purchases of dollar debt by foreigners can of course delay the crisis, but today most countries have their own deficits to finance. It is unwise to expect them, mainly China, to continue financing up to half of ours for the next 10 or more years. Our current and projected deficits are too large relative to current and prospective world saving to rely on that outcome.

Worse, banks’ idle reserves that are available for lending reached $1 trillion last week. Federal Reserve Chairman Ben Bernanke said repeatedly in the past that excess reserves would run down when banks and other financial companies repaid their heavy short-term borrowing to the Fed. The borrowing has been repaid but idle reserves have increased. Once banks begin to expand loans or finance even more of the massive deficits, money growth will rise rapidly and the dollar will sink to new lows. Do we have to wait for a crisis before we replace promises with effective restraint?
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* REVIEW & OUTLOOK
* OCTOBER 23, 2009

Our New Paymasters
Wage controls are politically easier than genuine reforms.

In the annals of what used to be known as American capitalism, yesterday will go down as a sorry day: The Treasury and Federal Reserve announced wage controls on private American companies. So once again our politicians are blaming bankers, rather than addressing the incentives the politicians themselves created for bankers to take excessive risks.

President Obama cheered the pay reductions as “an important step forward” and urged Congress to “continue moving forward on financial reform to help prevent the crisis we saw last fall from happening again.” The pay curbs are intended to feed the official political narrative that the bankers caused the entire crisis, and that cutting their future pay will prevent the next one. Only a politician could really believe this, or at least pretend to.

We certainly have no sympathy for bankers who’ve been bailed out, and the most defensible of yesterday’s pay curbs are those announced by Treasury “pay czar” Ken Feinberg. He was handed the task of determining compensation for 175 executives at seven companies that are still using money from the Troubled Asset Relief Program: Citigroup, AIG, Bank of America, General Motors, Chrysler, GMAC and Chrysler Financial. These companies—and executives—owe their survival to political intervention, and the price of such taxpayer help is inevitably some populist retribution.
…

Is price fixing legal, provided it is Treasury and Fed officials who are executing the scheme?

Commentary
Price-Fixing Begins At Home
Nicole Gelinas, 01.15.09, 12:01 AM EST
The government can’t determine mortgage rates forever.

The U.S. Federal Reserve and the Treasury Department have been mulling over a plan that would obliterate all market signals from the mortgage industry. The plan demonstrates once again Washington’s perverse belief that the cure for decades’ worth of government distortion of the housing market is … more government distortion.

Normally, Washington doesn’t directly control mortgage rates. Yes, the Fed helps control general interest rates for all kinds of borrowing through its interest rate policies. And the government’s long-assumed guarantee of mortgage behemoths Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), until it quasi-nationalized the two companies last summer, also kept mortgage rates lower than they would otherwise have been for decades.

But now, the government may take a giant step further. The Fed and the Treasury may set home-borrowing rates in the next few months by purchasing mortgages directly from Fannie Mae, Freddie Mac and other mortgage lenders at a fixed price that would dictate an interest rate of 4.5% for new home buyers, as well as, possibly, for owners of existing homes who want to refinance their more expensive loans. After news of the tentative plan got out in December, mortgage rates plummeted to just above 5%, the lowest level in four decades. (Since then, the Fed has begun purchasing mortgages, but the government hasn’t yet formalized the target mortgage rate.)

The government’s reasoning is obvious, if wrongheaded. It wants to keep housing prices from falling further, which would drive homeowners into foreclosure and push banks and investors into deeper distress. To achieve this, the government has to scare up new home buyers, many of whom feel skeptical that prices have hit bottom. So the Fed hopes to lure buyers with dirt-cheap mortgages, just as they were priced during the housing bubble. The gambit could work–for a while. But in the long run, the federal plan will just make things worse.
…

Price fixing
From Wikipedia, the free encyclopedia

Price fixing is an agreement between business competitors to sell the same product or service at the same price. Historically, such a group of businesses in price fixing was referred to as a combination.

In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers. Price-fixing can also involve any agreement to fix, peg, discount or stabilize prices. The principal feature is any agreement on price, whether expressed or implied. For the buyer, meanwhile, the practice results in a phenomenon similar to price gouging.

Price fixing requires a conspiracy between two or more sellers; the purpose is to coordinate pricing for mutual benefit at the expense of buyers. Sellers might agree to sell at a common target price; set a common “minimum” price; buy the product from a supplier at a specified “maximum” price; adhere to a price book or list price; engage in cooperative price advertising; standardize financial credit terms offered to purchasers; use uniform trade-in allowances; limit discounts; discontinue a free service or fix the price of one component of an overall service; adhere uniformly to previously-announced prices and terms of sale; establish uniform costs and markups; impose mandatory surcharges; purposefully reduce output or sales in order to charge higher prices; or purposefully share or “pool” markets, territories, or customers.
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