The Housing Bubble

U.S. Considers Reining In ‘Too Big to Fail’ Institutions

WASHINGTON — Congress and the Obama administration are about to take up one of the most fundamental issues stemming from the near collapse of the financial system last year — how to deal with institutions that are so big that the government has no choice but to rescue them when they get in trouble.

A senior administration official said on Sunday that after extensive consultations with Treasury Department officials, Representative Barney Frank, the chairman of the House Financial Services Committee, would introduce legislation as early as this week. The measure would make it easier for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.

The official said the Treasury secretary, Timothy F. Geithner, was planning to endorse the changes in testimony before the House Financial Services Committee on Thursday.

The White House plan as outlined so far would already make it much more costly to be a large financial company whose failure would put the financial system and the economy at risk. It would force such institutions to hold more money in reserve and make it harder for them to borrow too heavily against their assets.

Setting up the equivalent of living wills for corporations, that plan would require that they come up with their own procedure to be disentangled in the event of a crisis, a plan that administration officials say ought to be made public in advance.

Return To What?

Peter Souleles
Sydney, Australia
Oct 26, 2009

“Sacred cows must be slaughtered, especially if they are too fat to walk on their own. Cash for clunkers, stimulus cheques, tax credits for home buyers, and rescue packages for auto manufacturers are nothing more than the equivalent of burning ones furniture to keep warm.”

Let me tell you up front and very clearly that the recession is not over until your wealth, income and purchasing power have ALL been restored (on a sustainable basis) to where they were before the Global Financial Crisis. Forget the other definitions. Until we return to that level of “affluence” there can be no end to the recession. The problem however is that yesterday’s level of affluence was largely a series of dovetailing mirages. Thus the mirages were not only transient but also undermined whatever strengths there were prior to that period of “hedonistic” unbridled capitalist aberrations.

So what were these dovetailing mirages? YES we can keep fighting wars forever, YES cheap interest can cure all economic ills, YES we can use our homes as ATMs, YES we can become rich by flipping condos, YES we can increase government expenditure and still reduce taxes, YES we can print money and still remain the reserve currency of the world, and finally, YES we can spend our way out of trouble. This would all sound insanely funny had the outcomes not been so devastatingly sad.

So the question is largely, “where do we return to?”

What is certain is that there will be no return to past glories. The USA is like an Olympic athlete who 60 years after his victory (WWII) has been found guilty of having taken metabolic steroids and is stripped of his medals. The athlete realises the error of his ways and vows a comeback. The problem is the body of the athlete is no longer what it was as the ravages of time and loose living have turned muscle into fat and sinews into cellulite. The USA today is faced with an unpayable and one day unserviceable government and private debt, a disembowelled manufacturing sector, a less than prime demographic trajectory and above all government structures that place power and vested interests above people and democracy. If the balance sheet of the USA is the US dollar then it too is clearly sub-prime.

http://www.321gold.com/editorials/souleles/souleles102609.html

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says.

Oct. 26 (Bloomberg) — The U.S. Standard & Poor’s 500 Index is about 40 percent overvalued and headed for a drop as central banks pull back on securities purchases that pushed up asset prices, according to economist Andrew Smithers.

Declines are also likely because banks will need to sell more shares to raise capital and restore their financial health, the economist and president of research firm Smithers & Co. said in an Oct. 23 interview at Bloomberg’s Tokyo office. A 40 percent tumble from the S&P 500’s price at the end of last week of 1,079.60 would take the gauge to 647.76, below its March low.

“Markets are very vulnerable to an end of quantitative easing,” said Smithers, 72, who recommended avoiding stocks in 2000 just as the U.S. benchmark entered a two-year bear market. “Central banks, they’ve got to stop some time and if that happens everything will come down.”

Central banks from the Federal Reserve to the Bank of England last year embarked on unprecedented measures to flood credit markets with cash in order to rescue the global financial system from the worst crisis since the Great Depression.

Those purchases may be nearing an end. The Fed’s emergency liquidity programs including the Term Auction Facility and commercial paper purchases have shrunk as the central bank completes the scheduled purchases of housing debt and Treasuries. Bank of England policy makers voted unanimously at their latest meeting to leave the asset purchase program unchanged, rather than move to increase it, minutes showed.

Back-Door Taxes Hit Americans With Public Financing in the Dark.

Oct. 26 (Bloomberg) — Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007.

He didn’t know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe.

“I thought they were money markets that were just paying more,” Calvanese said in an interview. “Nobody ever used the term ‘CDO,’ and I am not sure I would have known what that was anyway.”

Such financial mistakes, often enabled by public officials’ lack of disclosure and accountability for almost 90 percent of government financings in the $2.8 trillion municipal bond market, are costing U.S. taxpayers as much as $6 billion a year, according to data compiled by Bloomberg in more than a dozen states.

The money lost to taxpayers — when the worst recession since the Great Depression is forcing local governments to cut university funding, delay paying bills and raise taxes — is enough to buy health care for everybody in Minneapolis; Orlando, Florida; and Grand Rapids, Michigan, according to figures from the U.S. Census Bureau and the U.S. Department of Health and Human Services.

Florida county commissioners approved no-bid deals with their favorite banks in an arrangement that led to criminal convictions. Pennsylvania school board members lost $4 million on an interest-rate swap agreement they didn’t understand in the unregulated $300 billion market for municipal derivatives.

Trouble With Swaps

Local agencies in Indianapolis, Philadelphia, Miami and Oakland, California, spent $331 million to end interest-rate swaps with banks including JPMorgan Chase & Co. of New York and Charlotte, North Carolina-based Bank of America Corp. during the past 18 months. The swaps, agreements to exchange periodic interest payments with banks or insurers, were intended to save borrowing costs. Payments increased instead.

New Jersey taxpayers are sending almost $1 million a month to a partnership run by Goldman Sachs Group Inc. for protection against rising interest costs on bonds the state redeemed more than a year ago, Bloomberg News reported Friday.

Detroit house auction flops for urban wasteland

DETROIT (Reuters) – In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.

After five hours of calling out a drumbeat of “no bid” for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.

“OK,” he said. “We only have 300 more pages to go.”

There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.

On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.

Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York’s Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate.

The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse.

Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.

The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September.

The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City.

“It is safe to assume that no one working at the Federal Reserve or at the White House has a picture of Warren Gamaliel Harding over his desk. Yet, if American presidents were ranked on the basis of how well they faced up to financial disaster, Warren G. Harding might be somebody. His handsome face would be carved on Rushmore. His likeness would grace the $100 bill. Harding was the last American president to deal honestly with a major financial crisis. Every president since has tried to scam his way out of it.”

~ B.Bonner

Recession claims two area scrap booking stores.
Indiana

For years scrapbookers bought and bought and bought, building enormous stashes of paper, stickers, diecuts and embellishments. So when budgets began contracting, hobbyists realized they did not have to visit their favorite scrapbook store.

Not as often, that is.

Unless they run out of adhesive, need a certain item, or want to see the latest products, the recession has prompted many scrapbookers to ride out the recession by using what they have.

Creators of photo pages and memory albums, in essence, have become more creative in the way they spend their dollars while money is tight.

This has affected the bottom line for stores like Memory Zone in Plymouth and Pages In Time in Mishawaka — independent retailers that have decided to liquidate and call it quits.

“Customers have been looking at what they have in their scrapbook room and realizing they don’t need any more,” said Rhonda Hurford, owner of Memory Zone in Plymouth. “People have stopped coming in as often, and when they do, they don’t spend as much.”

The US has all the earmarks of a failed state. Massive income inequality, for one thing. Good read.

http://www.opednews.com/articles/The-Financo-State–Are-Yo-by-Paul-Craig-Roberts-091026-652.html

Madoff friend Jeffry Picower dead, found in pool.

MIAMI (Reuters) - Palm Beach billionaire and philanthropist Jeffry Picower, described as the biggest beneficiary of Bernard Madoff’s fraud, died on Sunday after he was found lying at the bottom of the pool at his home, police said.

Police were investigating the death of the 67-year-old investor as a drowning, local media reported.

Picower was pulled unconscious from the pool of his multimillion-dollar oceanside home, called Casa del Sud, by his wife and a housekeeper. He was later pronounced dead, the Palm Beach Post reported quoting police and Fire Rescue officials.

Picower and his wife, Barbara, were friends of Wall Street financier Madoff, who is serving a 150-year sentence after pleading guilty to running a $65 billion Ponzi scheme.

The trustee handling the Madoff fraud case, Irving Picard, said in court documents filed in U.S. Bankruptcy Court in New York late last month that Picower, newly listed as one of the 400 wealthiest Americans by Forbes magazine, was complicit in the fraud.

Part of Picard’s filing said: “Based upon the trustee’s investigation to date, Picower was the biggest beneficiary of Madoff’s scheme, having withdrawn either directly or through the entities he controlled more than $7.2 billion of other investors’ money.”

Picower was being sued for the $7.2 billion, $2 billion more than the trustee in the case demanded in May.

Debt is bad, unless it goes unpaid, in which case it is stimulative for economic recovery.

Why does this not sound like a sustainable recovery plan?

* The Wall Street Journal
* THE OUTLOOK
* OCTOBER 26, 2009

Household Debt Can Hasten Recovery, When It Goes Unpaid

By MARK WHITEHOUSE

The pain of millions of people across America losing their homes hardly inspires confidence in the future. But in a brutal way, it could be restoring the financial health of the U.S. consumer faster than many recognize.

One of the biggest clouds on the economic horizon is the vast amount of debt U.S. households took on during the boom years. The Federal Reserve puts total household debt, including mortgage debt, at about $13.7 trillion, or 125% of annual after-tax income, a burden that many economists believe will take several years to pare down to what they see as a more sustainable level of 100%. During that “deleveraging” process, the logic goes, U.S. consumers — whose spending makes up more than two-thirds of the U.S. economy and about one-fifth of the global economy — won’t be able to play a leading role in any recovery.

The gloomy forecasts, though, miss an important point: Debts have value only to the extent that they are being paid, and a rapidly rising number of U.S. households aren’t doing so. Those defaults are leading to losses at banks, a wave of foreclosures, trouble for neighborhoods and strife for families. But they are also providing an immediate, albeit radical, form of debt relief.

“It’s not ideal, because it carries other costs,” said Karen Dynan, a consumer-finance specialist at the liberal Brookings Institution think tank who recently served as a senior adviser to the Federal Reserve. But it is “going to help get household balance sheets back to the right place.”
…

How does the mortgage denial rate for blacks compare to the rate at which banks in trouble are denied TARP funding from the Fed because they don’t know how to manage money properly? Perhaps the data for the comparison doesn’t exist, as banks automatically qualify provided they lost money in the financial crisis?

* The Wall Street Journal
* REAL ESTATE
* OCTOBER 6, 2009, 8:01 A.M. ET

U.S. Data Show High Mortgage-Denial Rate for Blacks

By JAMES R. HAGERTY

A Federal Reserve report on home mortgage data showed that blacks and Hispanic whites were far more likely than non-Hispanic whites to be denied last year in applying to refinance.

The annual report is based on data collected from more than 8,000 mortgage lenders nationwide under the Home Mortgage Disclosure Act of 1975, known as HMDA.

For applications to refinance conventional mortgages, those that aren’t insured by the federal government, the denial rate for blacks or African Americans was 61%. That compares with 51% for Hispanic whites and 32% for non-Hispanic whites.
…

* The Wall Street Journal
* OCTOBER 26, 2009

Fed’s Tarullo Shakes Up Bank Rules

By JON HILSENRATH and DAMIAN PALETTA

The rise of Daniel Tarullo, a lawyer with a longstanding interest in bank regulation appointed to the Federal Reserve Board by President Barack Obama, is a sign the era of light-touch bank regulation is over.

New guidelines on bankers’ pay proposed by the Fed last week reflect Mr. Tarullo’s influence. He is shaking up the Fed’s 2,858-person army of bank supervisors, weighing in on issues ranging from the way regulators deal with troubled commercial real estate loans to the rules that will govern global banking for years to come.

“Dan is filling a gap,” says Richard Fisher, president of the Federal Reserve Bank of Dallas. During the Greenspan era, Mr. Fisher says, banking supervision in Washington was “de-emphasized.” Now, after a banking calamity, it’s a priority.
…

Things are looking up for reestablishing a rule of law in the financial sector.

* The Wall Street Journal
* REVIEW & OUTLOOK
* OCTOBER 26, 2009, 7:45 A.M. ET

The Countrywide Files
A revolt forces Ed Towns to subpoena the ‘Friends of Angelo’ documents.

At last, there’s some good news for taxpayers in the Countrywide Financial loan scandal. On Friday night, House oversight committee chairman Edolphus Towns (D., N.Y.) and ranking member Darrell Issa (R., Calif.) reached an agreement to subpoena documents from the “Friends of Angelo” program. Named for former Countrywide CEO Angelo Mozilo, the program provided VIP mortgages to “friends” including Senators Chris Dodd and Kent Conrad.

Said Mr. Towns, “In line with the commitment to an ethical and accountable Congress, the subpoena to Countrywide covers records that could show special treatment for Members of Congress.” This is significant, because a compromise plan floated last week would have authorized a subpoena covering—don’t laugh—all federal officials except members of Congress.

Kudos to Illinois Congressman Mike Quigley, who became the first committee Democrat to publicly back a subpoena when he told us, “Both parties must decide that they can’t protect their members, no matter how powerful they are.” Last week, New Hampshire Democrat Paul Hodes also made the principled decision to buck his party and join Mr. Quigley in calling for the subpoena of Bank of America, which bought Countrywide last year and has said it is ready to provide the documents if asked. These defections from his own party forced the reluctant hand of Mr. Towns, who was under pressure from other Democrats to keep all this under wraps.
…

I don’t know if this will make it past the filters, but I’ve come to realize that the purpose of Congress is to (figuratively) spread the legs of the American people and hold them down for the gangbangers. Laws are being made to protect perpetrators of crime. As Paul Craig Roberts says, that is the sign of a failed state.

Damn good thing we have the gubmint pay-master on the job! Imagine what this poor fellow could have been paid, to run a failed business, if not for the D.C. brain trust.

ALL BUSINESS: Generous pay for new Freddie Mac CFO.
NEW YORK

The pay package given to Freddie Mac’s new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

The Federal Housing Finance Agency, which oversees Freddie Mac, approved the pay package. A spokeswoman pointed to a statement that justified the agency’s approval of the pay, which was done in part because the amount was comparable to what others in the financial services industry make.

That way of thinking is exactly what helped feed the surge in executive pay over the last decade. Everyone wants to make at least as much, or more, than their peers.

Freddie Mac is not just another company. It’s alive today, and nearly 80 percent owned by the government, only because almost $51 billion in taxpayer funds were pumped into it over the last year. More bailout money also may be needed in the quarters ahead as losses from its troubled mortgages mount.

Outside pay experts are outraged. “We are in a period when this shouldn’t be acceptable,” said Paul Hodgson, a senior research associate at The Corporate Library, an independent corporate governance research firm. “Even if pay is competitive to the market, that doesn’t make it OK today.”

Lawmakers, regulators and corporate directors have spent the last year talking about how to “fix” executive pay following the outcry over what many Americans deem as excessive compensation.

Excerpt from the Ticker forum:

“DETROIT (Reuters) – In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded.

After five hours of calling out a drumbeat of “no bid” for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag.

“OK,” he said. “We only have 300 more pages to go.”

There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor.

On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters.”

DId Obama appoint a “CNBC bullish-news only censorship czar”? Must have because he is really cracking the whip this morning. Major commercial creditor collapse is the real news, but Cramer just wrote a new book and it is #1 on the NYT-bestseller list! BUY, BUY,BUY!!!!!

“We spent, as a nation, more than we were producing,” Volcker said. Mix that with a real-estate bubble, reckless financial manipulation and too little government oversight, and it was a recipe for disaster.

From yesterday’s bits thread.

We are borrowing and spending even more now as a nation than we are producing. Plus, the government is now fully in charge of leading the reckless financial manipulation known as the recovery.

Lawrence Livermore Laboratories has discovered the heaviest element yet known to science.

The new element, Governmentium (Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert; however, it can be detected, because it impedes every reaction with which it comes into contact.

A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 2 to 6 years. It does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places.

In fact, Governmentium’s mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes. This characteristic of morons promotion leads some scientists to believe that Governmentium is formed whenever morons’ reach a critical concentration. This hypothetical quantity is referred to as critical morass.

When catalysed with money, Governmentium becomes Administratium, an element that radiates just as much energy as Governmentium since it has half as many peons but twice as many morons.

Several people at work telling me also that the good jobs are going overseas and worried what America will be noted for.

My suggestions:

Al Gore’s Carbon footprint business
antique stores
bed and breakfast
green tours
Hollywood movies
NYC movies
Expert litigators (lawyers)
land for sale to Chinese mainlanders.
Porn

can’t think of anything else Americans will make money at in a few years.

The other day, I was chatting with a neighbor who works at Applied Materials doing nanotechnology stuff. He mentioned this recent Thomas Friedman column about how the manufacturing processes his company innovates and the factories it creates are implemented overseas, not in the US. My neighbor gave additional examples.

after the w-s: nytimes.com/2009/09/16/opinion/16friedman.html

(Not a Friedman fan, but it’s an interesting case.

It looks like there’s a party at the white house. Music every weekend, golf every other weekend.

WASHINGTON (Reuters) - President Barack Obama will announce the largest investment of economic stimulus funds in clean energy during a visit to Florida, an Obama administration official said on Monday.

The announcement will involve the smart grid, which will help bring energy from clean domestic sources to consumers in 49 states and help build a strong and more reliable electricity grid, the official said.

Obama is to travel to Arcadia, Florida, on Tuesday to make the speech and take a tour of the DeSoto Next Generation Solar Energy Center.

Separately, U.S. Vice President Joe Biden plans on Tuesday to visit a closed General Motors plant in Wilmington, Delaware, where he is expected to announce that it will be reopened for the building of plug-in hybrid electric cars.

The California-based venture capital firm Fisker Automotive Inc has reached a deal to buy the former GM assembly plant and plans to use it for the manufacture of the cars, according to a source familiar with the details of Biden’s visit.

A White House statement on Biden’s visit said he planned a major announcement about the assembly plant’s future, but gave no other details. Delaware is Biden’s home state.

Home-buyer tax credit is administrative nightmare
Get ready to wait: 2009 tax refunds will be delayed for months.

LOS ANGELES (MarketWatch) — Last November, J. Russell George, the Treasury Inspector General for Tax Administration, warned the Internal Revenue Service that if they didn’t ask for documentation from people filing for the first-time home-buyer credit, there would be fraud. The IRS ignored the advice. The result?

The IRS doled out about $620 million to ineligible filers. See TaxWatch.

Big deal, you might say. How does it affect me? Well, thanks to the problems, the IRS is now checking every return by hand. If you’re among the millions of people who bought or plan to buy a first home in 2009, be prepared for long delays in getting your tax refund sent to you.
Flaws in the home tax-break program

That’s true whether you plan to claim the credit on your 2009 return, or you’ve amended your 2008 tax return to get your refund sooner. Either way, get ready to wait. TaxMama has been hearing from people whose amended returns were filed as far back as June or July who are still waiting for their money.
What’s holding it all up?

TaxMama’s office has processed several hundred amended 2008 returns (From 1040X), and a few original 2008 electronically filed returns (Form 1040). Most were processed properly in the normal course of business. Then the calls started. We began to realize there’s a huge problem, and it’s just beginning. There are three different scenarios we’ve encountered.

Problem No. 1: The IRS lost some returns. We thought IRS was simply not recording them on the taxpayer record until the amended returns were processed. We reassured clients and callers, advocating patience. After four months, without their 1040X appearing in the system, we investigated, using a Power of Attorney authorization from several taxpayers.

The expert staff at the Practitioner Priority Service hotline can find just about anything — if it’s in the system. They absolutely could not find two of the returns we asked about.

I would LOVE to see it canceled, will be surprised if it happens. I would expect some last minuet end around BS.

Housing Tax Credit Probably Won’t Be Extended in U.S., ISI Says

Oct. 26 (Bloomberg) — The U.S. Congress probably won’t extend the tax credit for first-time home buyers, according to a note sent by ISI Group Inc.’s Washington research analysts.

“There could be an agreement reached as early today on the Reid/Baucus amendment that would PHASE OUT (not extend, as we originally understood when the idea was first proposed last week) the home buyer tax credit,” ISI analysts said in the note. “The phase out is worse than a straight extension and probably worse for housing than the consensus.”

NEW YORK (AP) — The decline in U.S. newspaper circulation is accelerating as the industry struggles with defections to the Internet and tumbling ad revenue.

Figures released Monday by the Audit Bureau of Circulations show that average daily circulation dropped 10.6 percent in the April-September period from the same six-month span in 2008. That was greater than the 7.1 percent decline in the October 2008-March 2009 period and the 4.6 percent drop in the April-September period of 2008.

Sunday circulation fell 7.5 percent in the latest six-month span.

As expected, The Wall Street Journal has surpassed USA Today as the top-selling newspaper in the United States. The Journal’s average Monday-Friday circulation edged up 0.6 percent to 2.02 million — making it the only daily newspaper in the top 25 to see an increase.

USA Today saw its worst decline ever, dropping more than 17 percent to 1.90 million. The newspaper has blamed reductions in travel for much of the circulation shortfall, because many of its single-copy sales come in airports and hotels.

Ben’s request to rank papers may be a moot point.

Hey OlyGal, PNW version of Pasadena’s Dooh-Dah parade?

Nation’s Morons March On Washington State:
October 21, 2009 Issue 45•43 OLYMPIA, WA …the ONION

“…Throughout the day, the number of protesters grew to include not just morons, but more than 6,000 nimrods, 3,500 dunderheads, and approximately 12,000 of the biggest fooking dipsh!ts known to man.”

In all, 75,000 of the simpletons turned out, though dozens were killed after walking out into traffic, and hundreds more were lost after wandering into nearby Trillium Park.

“I’m against things,” longtime North Carolina resident Pam Beucher said. “I’m for things.”

“America!” she added.

“I didn’t know Washington, D.C. had Seattle in it,” said Connecticut resident Kyle Hinton, an idiot. “Anyway, stop the war! No more hate! Swine flu! Iran! Pharmaceutical companies! Illegal immigrants! Never again!”

How come you guys aren’t up in Chicago raging against MegaBank, leader of the debtTrapTiCON?

WASHINGTON (AP) — The head of the AFL-CIO said Monday he’s willing to consider a tax on high-end health insurance plans to help pay for President Barack Obama’s health care overhaul, as long as middle-class workers aren’t hurt.

Looks like more taxes on the middle and upper middle income. These taxes on good insurance plans will of course cause two things.

1. Insurers will increase the cost of their good plans, these costs will then be passed onto the worker via higher cost of insurance or lower pay.
2. Others will move to lower priced plans and be forced to pay higher deductibles and have lower caps on how much will get paid for.

A brilliant job of the elite getting the middle and upper middle class to pay for health care for the poor.

This of course will shift the total effective tax burden even more to the middle and upper middle class. The great thing is it won’t show up on the books as a tax so the middle and the upper middle class won’t recognize it. Similar to the inflation tax.

Man stuffs mouth with 16 cockroaches in record bid.
AP ~ Oct 25

LANSING, Mich. – A Michigan pet store employee got himself a mouthful of cockroaches — on purpose. The Lansing State Journal reported Sean Murphy on Friday stuffed 16 Madagascar hissing cockroaches into his mouth. He was trying to set a new Guinness World Records mark and said the old record was 11.

Murphy initially got 12 squirming cockroaches into his mouth, but then kept adding them until he got to 16. He says it was a “big surprise” since he’s never fit that many in his mouth before “in one try.”

The employee of Preuss Pets in Lansing says each cockroach was at least 2 1/2 inches long. Murphy says he might try for 20 next year.

***HBB Hip-Tip Investment Advisory Alert!***

“AP2:30 pm : The stock market is on track to log its fourth loss in five sessions. During that time the S&P 500 has fallen more than 2.5%. That’s actually its worst five-session performance since the beginning of September.

Though stocks remain mired in weakness, Treasuries have stayed out of favor. Even strong results for an auction of 5-year TIPS hasn’t induced buying in the 10-year Note. The benchmark Note is down 13 ticks, near session lows. Meanwhile, the 30-year Bond has shed one full point.”

Nota Bene: “Strong results for an auction” these days refers to the fact that at least 5 minutes elapsed before the Fed bought them back from the original bidders using money printed less than 5 minutes ago.

Congress could try Jenny Craig route on debt.

Unable themselves to put government on a diet, Congress and Obama could go Jenny Craig route Monday October 26, 2009

WASHINGTON (AP) — If Congress can’t stop itself from spending the nation into everlasting debt, give the controls to somebody else.

Who says?

A sizeable number of senators themselves.

An unpopular but must-pass vote next month to let the government borrow almost $1 trillion has nine Senate Democrats saying enough is enough. Since Congress and the president lack the will to tighten their belts, maybe a commission can put them on a diet.

The thinking is that it’ll take such a task force — whose members would be drawn from Congress and the administration — to force people to roll up their sleeves, stop their political jabs, and come up with a bipartisan plan to try to keep the country from drowning in debt.

“Everything would be on the table. Social Security is on the table. Medicare is on the table. Revenues are on the table,” said Sen. Judd Gregg, R-N.H., who with Sen. Kent Conrad, D-N.D., came up with the plan. “The key to it is that it has to be … absolutely fair and bipartisan.”

Conrad and Gregg are, respectively, the chairman and senior Republican on the Senate Budget Committee, one of the most partisan panels in all of Congress.

That they’re willing to hold hands and leap when even the most timid attempts to cut spending or raise revenues start street fights on Capitol Hill says something about the degree of the problem.

“When you’re dealing with something of this dimension it requires a special process,” Conrad says. “This is daunting and it’s going to take both sides coming together.”

The 16-member commission’s task would be to come up with a bipartisan plan to be submitted to Congress for a mandatory up-or-down vote. It would have eight Democrats and eight Republicans, but it would require 12 votes to agree upon a plan. It would also take 60 percent margins to pass the House and Senate.

Conrad points to the successful 1982 effort to shore up Social Security as the model for bipartisanship. The process is borrowed from the way politically hazardous decisions are made on which military bases to close: Congress votes up or down on the recommendations of a base closing commission.

As for all the promises that new “pay-as-you-go” budget rules would require lawmakers to make sure new spending and tax cuts wouldn’t swell the deficit, the reality has proven quite different.

Better protect Uncle Buck lest your fat burgers disappear!

Iceland says goodbye to the Big Mac
By GUDJON HELGASON and JANE WARDELL (Associated Press Writers)
From Associated Press
October 26, 2009 2:39 PM EDT
REYKJAVIK, Iceland - The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation’s overexposure to the world financial crisis.

Iceland’s three McDonald’s restaurants - all in the capital Reykjavik - will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

No more Iceburgers - Micky D goes home.
Iceland says goodbye to the Big Mac:

By GUDJON HELGASON and JANE WARDELL, Associated Press Writers Gudjon Helgason And Jane Wardell, Associated Press Writers – 54 mins ago
REYKJAVIK, Iceland – The Big Mac, long a symbol of globalization, has become the latest victim of this tiny island nation’s overexposure to the world financial crisis.

Iceland’s three McDonald’s restaurants — all in the capital Reykjavik — will close next weekend, as the franchise owner gives in to falling profits caused by the collapse in the Icelandic krona.

“The economic situation has just made it too expensive for us,” Magnus Ogmundsson, the managing director of Lyst Hr., McDonald’s franchise holder in Iceland, told the Associated Press by telephone on Monday.

Lyst was bound by McDonald’s requirement that it import all the goods required for its restaurants — from packaging to meat and cheeses — from Germany.

Costs had doubled over the past year because of the fall in the krona and high import tariffs on imported goods, Ogmundsson said, making it impossible for the company to raise prices further and remain competitive with competitors that use locally sourced produce.

A Big Mac in Reykjavik already retails for 650 krona ($5.29). But the 20 percent increase needed to make a decent profit would have pushed that to 780 krona ($6.36), he said.

That would have made the Icelandic version of the burger the most expensive in the world, a title currently held jointly by Switzerland and Norway where it costs $5.75, according to The Economist magazine’s 2009 Big Mac index.

The decision to shutter the Icelandic franchise was taken in agreement with McDonald’s Inc., Ogmundsson said, after a review of several months.

McDonald’s, the world’s largest chain of hamburger fast food restaurants, arrived in Reykjavik in 1993 when the country was on an upward trajectory of wealth and expansion.

The first person to take a bite out of a Big Mac on the island was then Prime Minister David Oddsson. Oddsson went on to become governor of the country’s central bank, Sedlabanki, a position that he was forced out of by lawmakers earlier this year after a public outcry about his inability to prevent the financial crisis.

Bank of America, Lenders Fall as Bove Sees Firm Still ’Chained’

Oct. 26 (Bloomberg) — Bank of America Corp. dropped as much as 7.1 percent in New York trading after Rochdale Securities LLC analyst Richard Bove said the lender will remain “chained” to the government and Moody’s Investors Service said the industry’s write-offs have equaled the Great Depression.

Bank of America, the biggest U.S. lender, fell 72 cents to $15.50 in 2:47 p.m. New York Stock Exchange composite trading. Synovus Financial Corp. led losers in the 24-company KBW Bank Index with a 12 percent plunge to $2.56. Fifth Third Bancorp’s 8.2 percent decline was the worst in the Standard & Poor’s 500.

Bove, who sent stocks reeling last week by downgrading Wells Fargo & Co. to “sell” from “neutral,” said in a new note the U.S. wants Bank of America to raise $45 billion in capital before repaying the Troubled Asset Relief Program. Selling new common stock would “meaningfully harm Bank of America’s shareholders,” he wrote, without changing his “buy” rating.

“It may be evident to the politicians just how good they have it with this company,” Bove wrote. “They can abuse it as much as they choose and get paid for doing so.” He cited $2.9 billion in annual TARP dividends from the Charlotte, North Carolina-based bank and warrants that increased in value. “Shareholders must stay chained to a government that only demonstrates ill will toward the organization,” he wrote.

Bove also downgraded Cincinnati-based Fifth Third, Atlanta’s SunTrust Banks Inc. and Minneapolis-based U.S. Bancorp. SunTrust fell as much as 6.7 percent, U.S. Bancorp dropped 3.8 percent and Fifth Third declined as much as 8.4 percent. Synovus is based in Columbus, Georgia, and Wells Fargo is based in San Francisco.

Loans Go Sour

The KBW Bank Index fell as much as 3.9 percent today, the biggest intraday decline since Oct. 1.

Bad loans at U.S. banks are running at a 2.9 percent yearly rate so far in 2009 and 3.4 percent annualized for the third quarter, Moody’s said in its weekly credit outlook. During the Great Depression, the rate peaked in 1934 at 3.4 percent, Moody’s said. Cumulative write-offs in 2009 reached $116 billion and will total $415 billion sometime next year, Moody’s said.

They’ll have to find another source of junk food…

Iceland’s McDonald’s restaurants to close.
Bloomberg 2009/10/26

The franchise holder said it doesn’t expect the situation to change in the short term.

“We would have to raise our prices by 20% to get the margin needed on our products,” Magnus Ogmundsson, Lyst chief executive officer, said in a phone interview. “That would have sent a Big Mac to 780 kronur ($6,36), compared with the 650 kronur it costs today, he said.

The island’s currency collapsed last year following the failure of Iceland’s biggest banks. Offshore, the krona slumped as much as 80% against the euro, while capital restrictions this year have failed to prevent an 8,1% decline, making the krona the second-worst performer of the 26 emerging-market currencies tracked by Bloomberg.

“Our competitors all use domestic meat and lettuce and so on, while we are flying in these materials, which is extremely expensive,” Ogmundsson said.

The most expensive Big Macs are sold in Switzerland and Norway, where the burger costs about $5,75, according to the Economist 2009 BigMac index. The cheapest are sold in S A, 1,68, and China, 1,83, the index shows.

McDonald’s, the world’s largest restaurant chain, opened its first store in Iceland in 1993. The first person on the island to consume a Big Mac was then Prime Minister David Oddsson, who later became governor of the central bank before his dismissal by the current ruling coalition earlier this year. The island has three McDonald’s restaurants, all of which will be closed.

The closure sparked a wide range of responses from bloggers on the island. Pall Vilhjalmsson said he was glad the stores were closing, calling the chain a “symbol of American colonialism” and that it has “terrorized food culture all over the world.” Hreinn Omar Smarason, said he will “miss Ronald McDonald,” adding he hopes the stores will return as soon as possible.

Iceland is relying on a $2,1bn loan from the International Monetary Fund to stay afloat after its three biggest banks collapsed having racked up debt more than 10 times the size of the economy. The central bank imposed capital restrictions at the end of last year to prevent a sell-off of the currency.

GOOD NEWS GOOD NEWS

WASHINGTON (AFP) – The market share of subprime US home mortgages, which caused the collapse of the housing market at the epicenter of the financial crisis, has returned to pre-crisis levels, a central bank report showed Monday.

But the Federal Reserve Bank of San Francisco study said nearly all of the loans were now owned or guaranteed by the government, which has pumped hundreds of billions of dollars to keep the market afloat.

Government-backed agencies Fannie Mae, Freddie Mac and Ginnie Mae “are providing unprecedented support to the housing market — owning or guaranteeing almost 95 percent of the new residential mortgage lending,” said John Krainer, a senior economist with the regional central bank who penned the report.

“This shift in mortgage finance has had a profound impact on the types of borrowers receiving loans,” he said.

The subprime market had shrunk to virtually zero percent in the first quarter of 2008 after triggering the housing collapse following defaults by borrowers.

Subprime borrowers, usually lacking good credit histories, find it nearly impossible to obtain mortgage loans from mainstream lenders.

Since the January-March period last year, “increased FHA (Federal Housing Administration) lending… has revived this segment of the market,” Krainer said.

“After plummeting in early 2008, the share of borrowers with FICO credit scores lower than 660 has returned to just higher than 20 percent, the same share as when subprime securitization peaked in 2006,” he said.

FICO is a company that developed a popular scoring system for assessing credit risk. Subprime loans are usually classified as those where the borrower has a FICO score below 660.

The report warned that recovery of the embattled housing industry will be slow amid a credit crunch that has persisted since the crisis.

*sigh* where are my posts?

Female CEOs’ pay fell more than men’s: survey.

NEW YORK (Reuters) - Female chief executives earned just 58 percent of what their male counterparts did in 2008, and their compensation packages were slashed three times as much as their male peers, according to a survey released on Monday.

Corporate governance research firm the Corporate Library said total realized compensation — which includes base salary, bonuses, perquisites, benefits, and the value realized on the exercise of options and vesting of other equity — fell by a median of 18.5 percent in 2008 for female CEOs.

In the same period, the compensation of male CEOs fell 6.1 percent, the survey revealed.

Top female chief executives’ median base salary was $40,000 higher than that for male CEOs, but men’s’ discretionary bonuses were more than 3.5 times larger than those given to females, and men’s perquisite payments were nearly twice the amount received by women, the survey said.

Female CEOs earned on average 58 percent of what males earned in realized compensation, the Corporate Library said.

United Therapeutics Corp’s Martine Rothblatt was the only female CEO among the top 150 earners of 2008, with total compensation worth $21.8 million.

Record NYC Real Estate Deal Now on the Rocks

NEW YORK (AP) — It was the most expensive real estate deal in U.S. history. Now, it’s poised to become one of the biggest flops.

At the height of the real estate boom in 2006, an investment group paid $5.4 billion for a gigantic Manhattan apartment complex with mostly rent-regulated apartments.

Now analysts say the group led by Tishman Speyer Properties and BlackRock Realty may be two to three months away from defaulting on its $3 billion mortgage.

The company had pursued a strategy to aggressively convert thousands of rent-regulated apartments at Stuyvesant Town and Peter Cooper Village into luxury units that would fetch top dollar.

But tenants fought back, conversions happened slower than expected and a state court ruled last week that the company improperly raised the rent for thousands.

So I wonder what is to happen to this property? Did all the original tenants ‘go away’ or where do all the units stand in terms of 1/3 sold, 1/4 rents or?? This was from yesterdays bits I think. But was interested via DJ to know where this great property was going to end up.

Vail Bets Recession Over as U.S. Ski Resorts Begin Recovery.

Oct. 26 (Bloomberg) — Vail Resorts Inc.’s season pass sales rose 13 percent in September as skiers eager for powder prepared to make tracks a year after the financial crisis.

“This year the economy is still struggling but there is more confidence that it’s not getting dramatically worse,” Robert Katz, chief executive officer of Vail Resorts, said in an interview. “The economic issues that we faced last year started right at the beginning of ski season and got worse until the end of the season.” The company operates five U.S. ski properties.

Resort operators are forecasting increases in bookings this season after the recession kept some snow lovers home last year. Lodging and slopes close to metropolitan areas such as New York, Denver and Los Angeles stand to benefit the most as residents stay closer to home, said Ralf Garrison, an analyst with the Denver-based Mountain Travel Research Program.

Bookings at ski resorts made in August for all future arrivals were up 2 percent year over year, Garrison said.

Starwood Hotels & Resorts Worldwide Inc., the third- largest U.S. lodging company, is also reporting an improvement at its ski resorts from last year, said K.C. Kavanagh, a company spokeswoman.

“We are seeing that travelers who did not ski last year are not willing to forego their trips again this year,” she said. “People are anxious to get back on the slopes.”

Rooms Filled

The company’s St. Regis Aspen Resort in Colorado, “is pacing better” than last year and rooms for the winter holidays are “close to being filled” at the soon-to-open St. Regis Deer Crest Resort in Utah, Kavanagh said.

Demand at the Dakota Mountain Lodge in Park City, Utah, part of Hilton Worldwide’s Waldorf Astoria collection, is “strong,” said Steve Lindburg, the general manager. Nightly rates for Christmas week range from about $800 for a one bedroom to about $6,000 for a four-bedroom suite.

WASHINGTON (AP) — The Treasury Department and a senior House Democrat have decided against making financial firms pay upfront the costs of dismantling them if regulators decide they have grown “too big to fail,” according to a House aide familiar with the plan.

Instead, those companies would be allowed to borrow money from the government. The government would then recoup the costs by either seizing the firm’s profits or seeking restitution from the entire industry, the aide said.

So CEO gets to scoop up massive profits on gambling, no pressure to split firms, when gambling goes bad tohers will pick up the tab.

Yep business as usual.

Sorry if this is old news - SFGate can be a bit behind the times these days as its staff seems to have shrunk to skeletal levels.

5 charged with torturing Calif. home loan agents

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/10/26/financial/f145705D39.DTL&tsp=1

“Prosecutors say five people have been charged in Los Angeles with torturing and robbing two men they thought falsely promised to save their home from foreclosure.”

A couple of things from work today.

1. A woman I know is closing this Friday on a house because she is pregnant

2. Some relatives of mine live in a neighborhood where one family owns 8 homes (they are big/waterfront). Word is they are all in foreclosure, but here is the snag: the family owns the mortgage company. Is this even possible/legal? What are the ramifications? My FIL thinks it’s a scam they’re working…

Lol, I just got an acceptance email from a Law School that had my numbers from LSAC.

It must be bad out there.

Has anyone heard from ATE-UP recently?

Participants in a $12.8 million loan program have yet to close on a single home
By KIMBERLY MILLER
Palm Beach Post Staff Writer

Sunday, October 25, 2009

Palm Beach County has $12.8 million in federal money to lend to home-buyers in an effort to decrease surplus housing.

But a well-intentioned catch has actually stymied sales with few contracts being signed and no homes yet purchased.

Only foreclosed, vacant and abandoned houses are eligible under the Neighborhood Stabilization Program, which garnered nearly 400 applications in the first two weeks it was advertised by the county in April.

The idea is to clean up neighborhoods ravaged by subprime loans. Buyers must choose homes in specific ZIP codes identified as high foreclosure areas.

Foreclosures, however, also attract investors, who are usually able to outbid people in the program. Under federal guidelines, the neighborhood stabilization loans are capped at 1 percent below the home’s appraised value.

“Every time I go to look at something, come to find out it’s already been bid on and is gone,” said Sharon Burgess, who has been approved for a $78,000 loan through the program and has been looking for more than a month. “I appreciate them giving me the opportunity to buy, but it’s been really difficult.”

The program gives a buyer just 45 days to sign a contract on a home. Burgess got an extension on her application, but worries she won’t find something by her new Dec. 4 deadline.

“After that, I’m afraid I won’t even be able to participate,” she said.

Nationally, $3.92 billion was made available in the Housing and Economic Recovery Act of 2008 for the neighborhood stabilization program.

Palm Beach County was awarded $27.7 million. About $12.8 million is for individual home-buyer loans, $5 million is for cities or nonprofits to buy and restore foreclosed homes, and $7.5 million goes to buying properties that will be used as public facilities. The remaining money is for program oversight.

Counties have some leeway in how to use the money. Martin County, which received $3.5 million, is working with nonprofits such as Habitat for Humanity to distribute the loans. St. Lucie County, which received nearly $4 million, is providing money for down payments, closing costs and repairs, while also loaning to nonprofits and buying property itself to rehab.

Edward Lowery, director of Palm Beach County’s Department of Housing and Community Development, said he hopes to make loans to up to 125 people.

As of Friday, 68 applications had been approved by the county, but about 100 still need to be reviewed.

Of the 68 approvals, eight have signed contracts on homes, but no one has closed.

“Some of the problems finding a place are with the restrictive zip codes,” Lowery said. “Families would love to live in a particular area with schools and shopping, but they’re not in the approved zone.”

Keller Williams Realtor Yvonne Westerman is working with a few people in the program and managed to get contracts signed for two clients.

One wanted to live near Boynton Beach or Lake Worth, but ended up with a contract for a home in Riviera Beach.

“She said, ‘I’ll take anywhere, I have to find something,’ ” said Westerman about her client. “When the home is foreclosed, it’s cash only, or there are 25 offers in one hour and it’s sold in one day.”

Palm Beach County isn’t the only area struggling to get people into homes under the neighborhood stabilization program.

Armando Fana, director of the U.S. Department of Housing and Urban Development’s Miami office, said a November meeting is scheduled for housing officials to speak with banks about how to open up the foreclosure market to average buyers.

“This is definitely a problem that we notice and acknowledge, but there isn’t a whole lot that can be done about it right now,” Fana said. “Some properties are being bundled up and sold to investors before they even make it to the market.”

I’m thinking maybe Citigroup will generate the earthquake that provides the impulse for the next major financial tsunami?

Or is the risk fully contained, as “a closely watched pot never boils over”?

* The Wall Street Journal
* OCTOBER 27, 2009

Regulators Prepare for the Next ‘Big One’

By LAURENCE NORMAN and NATASHA BRERETON

LONDON — Global economic policy makers are just beginning to grapple with a key issue rising out of last year’s bankruptcy of Lehman Brothers Holdings: how to react if — or when — the next big global bank spins out of control.

While the furor over bankers’ bonuses has captured most of the headlines, policy makers are in the process of assigning each of the world’s 25 most complex international banks to a multinational crisis-management team to draw up contingency plans if they run into trouble.

But remarks from current and former officials underscore the major challenges such an effort will face. At the heart of the problem, said Harvey Pitt, who chaired the U.S. Securities and Exchange Commission from 2001 to 2003, are “fundamental concerns about sovereignty.”

Those include the difficulty of precommitting taxpayer money in a crisis, and the multitude of national insolvency laws and resolution regimes that can make swift, unified action impossible.

The leaders of the Group of 20 advanced economies assigned the Financial Stability Board to carry out the work. Progress likely will be reviewed when G20 finance ministers and central bankers gather in Scotland next week.

The Lehman Brothers case was instructive. The bank, which collapsed in September 2008, had 2,985 legal entities in 50 countries, according to the Basel Committee of regulators and central bankers. When Lehman imploded, authorities around the world didn’t know which assets they could sell in a hurry, and markets panicked over worries about which institutions were exposed.

To avoid a repeat, the Basel Committee said in a report last month that banks should provide regulators with updated information on organizational structures, lists of counterparties, asset inventories for each legal entity and country, groupwide contingency funding plans and information needed to quickly settle financial contracts. Such plans have come to be known as “living wills.”
…

I suggest they end TARP, but roll out the new Comprehensive Relief for All Pissants = CRAP program.

* The Wall Street Journal
* REVIEW & OUTLOOK
* OCTOBER 27, 2009

Rolling up the TARP
The $700 billion for banks has become an all-purpose bailout fund.

The Troubled Asset Relief Program will expire on December 31, unless Treasury Secretary Timothy Geithner exercises his authority to extend it to next October. We hope he doesn’t. Historians will debate TARP’s role in ending the financial panic of 2008, but today there is little evidence that the government needs or can prudently manage what has evolved into a $700 billion all-purpose political bailout fund.

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn’t the limit of his check-writing ability. Treasury considers TARP a “revolving fund.” If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.
…

Paul B. Farrell

Oct. 27, 2009, 12:01 a.m. EDT

Goldman’s ‘Chainsaw Massacre’ Halloween party
Vote: Best costume from your favorite horror films worn by 23 celebrities

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — Yes, Halloween is a perfect holiday to commemorate how the Goldman Conspiracy and Wall Street’s other too-greedy-to-fail gangster banks have returned from the dead, like mummies, ghouls, zombies and vampires, rising out of their tombs, crypts, catacombs and mausoleums to suck the bloody retirement funds from the souls of living and unborn future generations.

Our inspiration for this commemorative celebration is Michael Jackson’s mind-blowing “Thriller.” And thanks to Hank Paulson, their Trojan Horse in Washington, the Goldman Conspiracy deserves center stage as the lead dancer and choreographer in Wall Street’s “Thriller” revival.
Small investors getting run over

Because markets trade on information, can the small investor ever hope to keep up with trading giants? Intelligent Investor columnist Jason Zweig says yes, but small investors should think long-term.

Notably, the other too-stupid-to-fail banks do some fabulous dancing in the chorus behind the Goldman Conspiracy, making 2009 one of the greatest in history for bonuses, as we all wait gleefully for a sequel to “Halloween,” “Friday the 13th,” “Curse of the Mummy” or “Night of the Living Dead.”

With all this excitement and thrilling anticipation, we propose to honor the return of the too-evil-to-die undead banks with the first ever “Goldman Conspiracy’s Halloween Chainsaw Massacre Costume Ball,” giving full recognition to Hank Paulson’s historic role in leading this bloody massacre of America and capitalism for Goldman and Wall Street. All set to the magical pounding beat of Michael Jackson’s “Thriller:”

It’s close to midnight and something evil’s lurking in the dark

You’re fighting for your life inside a killer, thriller tonight
…

Click on my name for full SLATE Story.

The tax breaks that ate America

“Did I mention the home mortgage interest deduction? This costs the Treasury around $80 billion a year in lost tax revenue that must be paid for by other taxes if it is not to enlarge the deficit. This program, justified on the grounds that it promotes home ownership, in practice showers government subsidies chiefly on rich and upper-middle-class homeowners. Some countries like Canada that lack such a tax expenditure have higher rates of homeownership than the U.S.”

That sound you hear is the social fabric about to snap

The real unemployment rate is almost 20 percent. Here’s what the federal government can do about the jobs crisis

By Michael Lind

Read more: Democratic Party, Congress, Labor, Jobs, Franklin Delano Roosevelt, Taxes, Opinion, Michael Lind

Unemployed people plea for aid in Seattle, circa the 1930s.

Oct. 19, 2009 | According to official statistics, the unemployment rate in the United States is now 9.8 percent. But those statistics understate the severity of the jobs crisis. The official statistics do not include the 875,000 Americans who have given up looking for work, even though they want jobs. When these “marginally attached” workers and part-time workers are added to the officially unemployed, the result, according to another, broader governement measure of unemployment known as “U-6,” is shocking. The United States has an unemployment rate of 17 percent.

And even this may understate the depth of the problem. By adding the 3.4 million Americans who want a job but have not looked for one in over a year, businessman, philanthropist and Obama advisor Leo Hindery Jr. infers an actual unemployment rate of 18.8 percent. In other words, nearly one in five Americans is unemployed or underemployed.

The sound you hear is the sound of the social fabric in America rotting and beginning to snap. Thanks to the unemployment insurance system adopted during the New Deal years, and thanks in part to the stimulus that the Obama administration and Congress passed earlier in the year, we do not have hordes of out-of-work Americans standing in line at soup kitchens and riding the rails from town to town. Even so, the invisible decay of America’s social order is just as real as the highly visible decay of abandoned McMansions in new developments that are turning into ghost towns across the continent.

Mass unemployment has yet to spawn a wave of crime or social unrest. But those possibilities cannot be dismissed. And the desperation is real, even if it is not signaled by desperate acts. The psychological toll of prolonged unemployment is devastating on individuals who have lost their roles as breadwinners or productive, self-reliant citizens. Employers prefer not to hire people who have been unemployed for long periods — and laid-off workers today are spending an average of 26.2 weeks without jobs, the highest average since the Great Depression. And then there are the new graduates of high schools and colleges, a lost generation whose members may be crippled throughout their careers by the lack of opportunities in their youth.
…

It doesn’t matter if it’s a bad idea. What matters is not the marginal impact of the tax credit on the economic recovery, but rather the marginal effect of its renewal on Congressional campaign contributions from the NAR, the NAHB and other REIC constituents.

The home-buyer tax credit: Throwing good money after bad

By Simon Johnson and James Kwak
Tuesday, October 27, 2009; 12:20 AM

Congress and the administration seem likely to extend the first-time-home-buyer tax credit. Senate Majority Leader Harry M. Reid wants to extend it through December 2010 but phase out the amount over time; Republican Senator Johnny Isakson, a former real estate agent, wants to extend it through June but double the income limit and make it available to all home buyers.

This is a bad idea.

The main argument for the tax credit is that it stimulates the economy and stabilizes the housing market. Seen purely as a stimulus, the tax credit is highly inefficient. The National Association of Realtors claims that the credit created 350,000 new sales; the Calculated Risk blog calculates that this means the government is paying $43,000 for every extra house sold (since most sales would have happened anyway). According to the Wall Street Journal, Goldman Sachs estimates 200,000 new sales, implying a cost of $80,000 per marginal sale.

Even at a price of $43,000, what are we getting? Given that these are first-time home buyers, and given the glut of homes on the market, most of these are financial transactions where a house changes hands in exchange for cash (and additional transaction costs). The $43,000 is not being invested; it isn’t buying anything for the public, like a new road. It’s just cash going into people’s pockets.

Putting cash in pockets does have a stimulative effect because some of that cash will turn into consumption. But as far as stimulus measures go, it has a low multiplier (the ratio of new economic activity to stimulus spending). By contrast, we could take the same cash and hire more teachers, police officers or soldiers to fight in Afghanistan. We would get more economic activity, and the government would get something for its money.
…

Would you rather rent a home in a nice neighborhood, or pay the same monthly nut to own one of the worst homes in one of the worst neighborhoods with the worst schools? LOL! This article is destined to become a classic:

…isn’t it just better for more people to own their homes? The conventional wisdom is that homeownership has positive externalities: Homeowners are more likely to invest in their communities, and it is the best way to build household wealth. But the evidence for this is mixed. In “Our Lot,” Alyssa Katz cites three academic studies and concludes: “Scholars found that once they set aside the various traits that tend to determine whether someone chooses to own or rent one’s home, homeowners and tenants really aren’t that different. . . . Often the new homebuyers were purchasing the worst housing in the worst neighborhoods with the worst schools — hardly a solid investment.”
…