The Housing Bubble

Apology to Stpn2me:
I am sorry I railed against you while I am mad at the hijacking of our congress by the big corporations who profit from war and dictate the direction we are going in as a country. Be Safe! Anything I can do t help please post here and I will try. Happy Holidays to you and your men. You all
are good soldiers acting on orders and info fed to you.

“Health “Insurance”: A Criminal Enterprise”

The principle behind traditional insurance is the distribution of risk….This “pooling of risk” is a staple of most high school economics classes.

The system I have described would be cause enough for the government to ban private insurance and replace it with a publicly-run plan. Unfortunately, the economic structure of the system is not nearly as nefarious in theory as it is in practice. Most people in this country who do have private health insurance are happy with their coverage — until they actually attempt to use it. Once they face a medical emergency, however, they soon discover that the unspoken policy of many insurers is to deny as many claims as possible, often on legally and medically implausible grounds, until the patient or his family give up.

Jacob M. Appel: Bioethicist and medical historian

http://www.huffingtonpost.com/jacob-m-appel/health-insurance-a-crimin_b_341448.html

Golly…

Is anyone out there in gambling land still shorting these black dog builder stocks? The handwriting on the wall ought to be pretty clear by now: Even with Dough-4-Dumps and the Fed pinning mortgage rates to the mat, they are still hemorrhaging losses. How are they going to look once mortgage rates revert to historic norms, there are no more first-time home buyers left and the first-time home buyer tax credit is finally phased out?

Oh, sorry, I forgot that is where the green shoots will kick in and people will start flipping homes like hot cakes once again to ward off the bad case of inflation heebie-jeebies the Fed gave them.

* The Wall Street Journal
* REAL ESTATE
* NOVEMBER 4, 2009, 7:51 A.M. ET

Pulte Posts Loss on Centex Charges

By KEVIN KINGSBURY

Pulte Homes Inc.’s third-quarter loss widened due to costs related to its acquisition of Centex while orders jumped 35% from last year amid the deal.

Shares rose 1.3% premarket to $9.35.

The deal, which closed in August, created the largest home builder in the U.S. and may kick off a consolidation wave in the beaten-down industry.

Pulte reported a loss of $361.4 million, or $1.15 a share, compared with a year-earlier loss of $280.4 million, or $1.11 a share. The latest results included $163.8 million in impairment and land-related charges and $86.7 million in Centex-related charges. The prior year had $266.6 million in write-downs and land charges.

Home-building revenue dropped 31% to $1.06 billion as closings declined 23% and the average selling price fell 10%.
…

Is this part of the govt’s “affordable housing” policy?

In case anyone has a copy of the Rogoff/Reinhart book handy, could you please check quickly whether governments reacted in previous bubble collapses to attempt to prop up asset prices? If so, how did it work out for them?

November 3, 2009 2:36 PM
Feds Try To Prop Up Home Prices, $729,750 At A Time

Posted by Declan McCullagh

(AP Photo/Nick Ut)

commentary

Never mind the debate about whether to prop up the U.S. housing market by extending the $8,000 home-buying tax credit. (See related CBS News video about the credit, which is scheduled to expire on December 1.)

A more important housing subsidy has already snuck into law without many people noticing. Last Thursday, President Obama signed legislation, H.R.2996, that was billed as providing funding for the Forest Service and the Indian Health Service and temporary cash for the rest of the government. It also extended, substantially, the federal government’s support for higher housing prices for another year.

You won’t see any mention of housing policy in the Congress’ official summary or the White House’s announcement that Obama had signed the measure. But if you look carefully, you’ll find it buried in the middle of the 31,332-word bill (which can claim the dubious virtue of topping out at over 1,000 words longer than George Orwell’s novel Animal Farm).

If Congress had done nothing, the maximum government-backed loan for a house or condo in the continental United States would have dropped from $729,750 to $625,500 on January 1, 2010. Other loans — known as “non-conforming” loans — would still be available, but they’d be more expensive. TotalMortgage.com, for instance, puts the difference at around 1.1 percentage points as of this week.

It’s true that the extension applies mostly to coastal areas (and it’s even higher in Alaska, Guam, Hawaii, and the Virgin Islands), deemed sufficiently “high cost” to exceed the normal $417,000 limit. Home-buyers in the wastelands of Detroit, where you can buy houses for a few thousand dollars, won’t be affected. Not so ones in Washington, D.C., New York, Boston, and San Francisco.

Nevertheless, letting the maximum loan amount fall back to normal levels would have been wise. First, it would reduce the cost of any possible future taxpayer-funded bailout if housing prices continue to fall.
…

“Year of What The –”

Was it the F-word they left out? Oh yeah — The Fed!

The Daily Walk of Shame: The Fed

By Alyce Lomax
November 3, 2009

This Motley Fool series examines things that just aren’t right in the world of finance and investing. Here’s what’s got us riled today. If something’s bugging you, too — and we suspect it is — go ahead and unload in the comments section below.

Today’s subject: Last year’s “Autumn of the Massive Collective Pants-Soiling” heralded what I like to call the ensuing “Year of What The –” … well, suffice to say, the Fool frowns on publishing certain words.

Much of the blame for our economic crisis can be pinned on the Federal Reserve’s monetary policies. Even worse, the “cure” for an ailing economy always seems strikingly similar to what caused the problems to begin with, at least according to the Fed. That means our problems aren’t over by a long shot.

Why you should be indignant: Way before Ben Bernanke came along, former Federal Reserve Chairman Alan Greenspan’s low interest rates, left in place too long, fed the frenzy of borrowing that fueled the housing bubble.
…
Pumped up by low interest rates, our overinflated economy lifted homebuilders such as Toll Brothers (NYSE: TOL) and high-profile mortgage lending monstrosities like Countrywide. People were thrilled with the inflated “values” of their homes — never mind whether their meteoric rise made any real sense. They bought into the red-hot real estate market with interest-only loans and other exotic vehicles, then used their homes as ATMs to finance bling, trips, fancy cars, and more. The ripple effects expanded throughout the economy as greed, myopia, and rampant consumerism took hold. Too many people realized it was fun to spend way above their means; everything went “up,” and the piper seemed to go unpaid.

This manic mentality was even worse in the housing market, yielding flawed financial models that never bothered to account for a fall in housing prices or other negative possibilities. I guess it wasn’t convenient or pleasant for many to think too hard about economic realities. As last fall amply proved, it was even less pleasant to live through them.

In the wake of the collapse, some financial companies have gone bust or been swallowed up by rivals. Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and many others took a shot of taxpayer money to stay on their feet. We’re all on the hook for pulling them back from the brink of collapse.

Is the “fix” better than the disease? Bernanke’s Fed has lowered interest rates to record lows to rejuvenate the same terrible behavior that got us into trouble in the first place. To juice the economy, the Fed’s encouraging banks to make new loans, even when there are still plenty of bad loans out there. Overly indebted consumers and businesses have not yet deleveraged, plain and simple.

Meanwhile, the massive bank bailouts have partly made their way into bankers’ pockets, thanks to a continued abundance of lucrative pay and bonus packages. We were all told that bailing out the banks was a necessary evil to ensure economic survival. Apparently, some of us are “surviving” better than others.

With economic friends like The Fed, who needs enemies? (Unless, of course, you’re a bank executive.)
…

A dollar collapse

Question: My husband’s paranoid web sites are now predicting the collapse of the dollar by the end of the year. They say that other countries are no longer buying dollars and that the Fed is printing money like crazy to make up for the lack of foreign investment.

What do you think? If the dollar did collapse, what would that mean for the average citizen? Cheryl, Boulder, CO
…

It looks like the Fed has successfully stoked the flames of inflation expectations, as evidenced by surging gold, stampeding shares and bubbling crude, in order to stave off the deflationary wolf at the door.

Next up: “No one could have seen it coming” on “higher than expected” future inflation…

Index Futures:

S&P 500 1,050 8.30 0.80%
DOW 9,755 75.00 0.77%
NASDAQ 1,685 9.00 0.54%

Gold surges toward $1,100

Contract touches $1,094 in electronic trading, with observers citing a backdrop of factors as signposts pointing the way toward further gains.
• Crude trends back atop $80

Condo association says half its owners are behind on a total of $675,000 in fees

By KIMBERLY MILLER
Palm Beach Post Staff Writer
Tuesday, November 03, 2009

With 50 percent of its owners owing a total of more than half-a-million dollars in overdue maintenance fees, a suburban West Palm Beach condo association wants to seize control of delinquent units, bypass owners when it comes to rent collection and possibly even rent units through a third party.

The move by the Palm Beach Grande Condominium Association is a desperation measure as coffers dwindle to amounts unable to support the association through the end of the year, according to a petition filed in Palm Beach County Circuit Court.

In some cases, the owner of a condo in foreclosure is renting it out, receiving a monthly rent payment, but refusing to pay association fees for water, landscaping, security, insurance and upkeep of the fitness facilities.

Since 2007, nearly 160 of Palm Beach Grande’s 304 units have faced a foreclosure filing, according to Condo Vultures, a Miami-based consulting company.

About $675,000 is owed Palm Beach Grande’s association.

The request for a receiver says it is “unfair that unit owners should be allowed the benefit of rental income in their pockets when they are not meeting their monthly obligations to the condominium association.”

Past practice has been for an association to ask for a receiver for each individual unit in default. But that was when defaults were relatively few.

Now, faced with hundreds of delinquent units, “blanket receiverships” are becoming more common.

Recent court decisions in Miami-Dade and Broward counties have granted blanket receiverships, allowing a court-appointed representative to directly collect rents to pay off maintenance fees.

While laws differ when it comes to owner-occupied, vacant and rented condo units, some boards are even asking for the power to rent out delinquent units, effectively bypassing the owner to become landlord.

The new legal tool appears to be moving north with one Palm Beach County property management company saying it expects about five condo boards it represents to file receivership requests within the next 30 days.

“If 50 percent of the people don’t pay, the other 50 percent pay more, and it just becomes a burden,” said Mark Quinn, president of Banyan Property Management, which represents Palm Beach Grande Condominium Association. “You end up with dues going up, people can’t pay, they go up again. Everything spirals down.”

Palm Beach Grande, near Okeechobee Boulevard and Benoist Farms Road, was an apartment complex until 2006 when it converted into a condo.

Units were going for about $165,000 and to $180,000. Their current market value, as listed by the Palm Beach County Property Appraiser, is around $50,000.

Monthly condo association fees are around $235. The lawsuit claims about 100 of the delinquent units are not owner-occupied.

“We’re collecting for the association to keep the community in working order,” said Steve Terrinoni, a broker with Rent Florida Realty, Inc., which is requesting to be the receiver for Palm Beach Grande. “This is what it’s going to take to get the associations out of debt.”

But Peter Zalewski, a principal with Condo Vultures, said while a receivership looks good on paper, it doesn’t mean it will work in practice.

It can be difficult, he said, to persuade a renter to pay the receiver instead of the owner. The landlord may offer a discount to keep the rent coming in, or play on the tenant’s sympathies with a tale of economic woe.

“The tenant gets confused as to who to pay,” Zalewski said. “They don’t want that grief or headache and at the end of the day, they don’t know who to believe.”

Still, John Lapolla, who recently bought five Palm Beach Grande units at deflated prices and is renting them out, said he’s in favor of a legal order to force assessment payments when a person is earning money from a unit.

“Every person who buys a unit should live up to the commitments they made when they bought it,” he said.

The pressure is on to buy again. At least that’s the advice I keep getting from colleague. The reasoning? Interest rates won’t ever be this low again. So I’m wondering about the poor sods who buy an overpriced property (I’m talking in the San Francisco area) with these low interest rates. They have big mortgage payments to hit each month. There will be no chance to “refinance” in later years at a better rate, will there? I mean, if rates are at an all time low and they’re carrying these heavy payments, they’re stuck with them for 30 years, aren’t they? I ask out of blissful ignorance.

After commercial real estate finishes collapsing, we’ll move onto state and local governments.

http://blogs.law.harvard.edu/philg/2009/11/03/the-coming-collapse-of-the-municipal-bond-market/

“Barring some sort of miraculous boom in the economy and pension fund investment returns, state and local governments are headed for insolvency and default.”

OK, let’s take the bets again. Will the federal government succeed in engineering a mass back-door default via inflation?

Will debts just disappear, leading to massive deflation as people’s money goes to money heaven?

Or will all the public and private debts be federalized, with men with guns sent to collect the money from future generations who will live in poverty to pay it back?

And finally, since younger U.S. “citizens” couldn’t be bothered to get informed, vote, run for office, and stop all this, but will be mad as hell when the bills come due, when do we get our Il Duce?

New ocean front property:

http://news.yahoo.com/s/livescience/giantcrackinafricawillcreateanewocean

Research firm: U.S. lost 284,000 jobs in Oct., 5.9M in 12 months
Silicon Valley / San Jose Business Journal.

The U.S. economy lost 284,000 jobs in October, with about 5.9 million jobs lost in all over the past 12 months, according to research released Wednesday from TrimTabs Investment Research.

The Sausalito firm said October’s figure was a modest improvement over the 358,000 jobs shed in September.

TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees.

In a research note, TrimTabs added that wages and salaries are still declining sequentially. The firm estimates based on income tax deposits that wages and salaries fell 5.3 percent year over year in September and 4.6 percent year over year in October, steeper than declines earlier in the year.

Meanwhile, a report in the Wall Street Journal broke down the number of private jobs lost in the U.S. — not counting government positions — to 203,000 last month.

We’ve got a long way to go. A friend gave me his copy of a letter from Capitol Honda in San Jose, CA. Dispicable in my opinion.

“Due to extreme competition in the current lending markets, individuals with less than perfect credit (such as BANKRUPTCY, REPOSSESSION, FORECLOSURE or ALL OF THE ABOVE) are encouraged to respond. With record low interest rates and preferred pricing you can save like never before and be driving home today.” (Caps are not mine)

This friend had just completed BK last month and in the process gave up his 2008 car!

Senate May Approve Homebuyer Tax Credit, Jobless Benefits Today

Nov. 4 (Bloomberg) — The U.S. Senate may approve as early as today a $45 billion plan to expand a tax credit for first- time homebuyers, extend jobless benefits and provide tax refunds to money-losing companies.

Lawmakers plan to vote this afternoon on whether to end debate and move to a final vote. The Senate is likely to approve the legislation and send it to the House, where Democratic leaders predicted it would be quickly forwarded to President Barack Obama to be signed into law.

The plan would be the first major extension of provisions in February’s stimulus package. It would continue until April 30 the $8,000 homebuyers’ tax credit, slated to expire this month, which would be expanded to include people with higher incomes and some who already own homes. The credit would cost $10 billion, according to Congress’s Joint Committee on Taxation.

The measure includes $2.4 billion to extend unemployment benefits for as many as 20 weeks, enough to aid the jobless through the holiday season. It would loosen tax rules for homebuilders and other money-losing companies to let them claim an estimated $33 billion in tax refunds this year, according to Joint Committee on Taxation estimates.

Senators voted 85-2 on Nov. 2 to advance the legislation. It has been delayed for weeks by Republican demands for votes on amendments to the plan.

“Republicans used every trick in the book to slow and stall and ensure we can’t do important work,” Senate Majority Leader Harry Reid, a Nevada Democrat, said today.

Republican Amendment

Senate Minority Leader Mitch McConnell, a Kentucky Republican, has said the legislation could have been approved last week if Democrats had agreed to his colleagues’ demands. Republicans sought a vote on an amendment to end the Treasury Department’s Troubled Asset Relief Program.

Dollar Falls on View Fed Will Reiterate Pledge to Keep Rate Low

The Fed is likely to retain its reference to keeping interest rates at a record low for an “extended period” in its monetary policy statement today, according to Citigroup Inc.
‘More Dovish’
The Fed is “likely to retain its current statement,” Michael Hart, a London-based currency analyst at Citigroup, wrote in a note today. “Market implications are ambiguous though, and the dollar is more likely to be driven by the next payrolls release.”
Policy makers will hold the benchmark interest rate in a range of zero to 0.25 percent, according to all of the 96 economists in a Bloomberg survey.

The Fed (I mean the scumbag) is likely to screw the prudent taxpayer who played by the rules for an extended period of time.

There you go I have fixed it for you Michael Hart.

http://www.bloomberg.com/apps/news?pid=20601100&sid=aPXTAJiXg9GY

Colorado ski town legalizes pot
AP

DENVER – The Colorado ski town of Breckenridge has voted overwhelmingly to legalize marijuana.

Early returns Tuesday night showed the proposal winning with 72 percent of the vote. The measure would allow adults over 21 to have up to 1 ounce of marijuana.

The measure is largely symbolic because pot possession remains a state crime for people without medical clearance. But supporters said they wanted to send a message to local law enforcement to stop busting small-time pot smokers.

The vote comes as communities nationwide are struggling with how to enforce pot laws at a time when medical marijuana has surged in popularity.

Looks like our local crooks are doing a little pre-holiday shopping. To support their “lifestyle”.

Break-ins soar in Columbia,S.C.
Nov. 04, 2009

Home burglaries in Columbia are up 32 percent so far this year over last year.

From Jan. 1 through Oct. 5, 1,150 dwellings have been burglarized in the capital city. That’s compared with 869 for the same time period last year.

“These are hard economic times. I’m sure that those in the criminal element are out there taking from those who are not criminals to help support their lifestyle,” said Columbia police Capt. Thomas Dodson.

Burglaries are break-ins at unoccupied houses or apartments, most occurring during the day. Burglars target money, guns, jewelry and small electric items such as iPods.

Home break-ins are up across the city, not just in any one neighborhood, police said.

More good news…

Personal bankruptcies surge 9%
Number of Americans filing for bankruptcy continues to climb. Total bankruptcies expected to top 1.4 million in 2009, highest in 4 years.

NEW YORK (CNNMoney.com) — The number of Americans filing personal bankruptcies surged 9% in October and were on target for the highest annual total in four years, according to a report issued Wednesday.

The American Bankruptcy Institute, an industry research firm that relies on data from the National Bankruptcy Research Center, said 135,914 consumers filed for bankruptcy last month. Almost a third of the bankruptcies were filed under Chapter 13, in which consumers are put on a repayment plan of up to five years.

“The nearly 9% increase in consumer bankruptcy filings in October, together with a 7% jump reported in business cases, demonstrates the sustained stress on the U.S. economy,” said ABI executive director Samuel Gerdano.

The group forecasts total bankruptcies to exceed 1.4 million in 2009, which would be the highest since 2005. It would also be an increase of at least 30% from last year.

“People are still carrying a lot of debt in terms of credit cards and home equity loans, and unemployment is still rising,” said Maureen Thompson, legislative director for the National Association of Consumer Bankruptcy Attorneys in Washington. “All of those factors are hitting consumers at the exact same time.”

While some Americans are able to survive by tapping into savings and retirement funds, Thompson said many middle-income families are struggling after becoming unemployed for longer than anticipated. And with their homes values lower, interest rates creeping higher and credit lines reducing, they are being forced to declare bankruptcy.

Measure G FUHSD Parcel Tax defeated. Next step: LAWSUIT. I’ll keep you posted.

Here’s some RealtWhore logic. This “woman” thinks that higher property taxes keeps home “values” (I think she means prices) up:

http://activerain.com/blogsview/1318901/a-98-a-year-bargain

…in her argument to support Sunnyvale Cupertino FUHSD Measure G(reed)

Since my local Measure G(reed) (Sunnyvale, Cupertino FUHSD) parcel tax has been defeated, I now have extra $$$ to donate to the HBB! Clicking the donate button now. (Ben: look for name “swirsky”)

Store clerk indicted for stealing $1 million lottery ticket is declared winner.

A Texas county has indicted a store clerk for allegedly stealing a winning $1 million lottery ticket, but the state lottery commission tells the original buyer that it considers the clerk to be the winner and won’t pay up, the Fort Worth Star-Telegram reports.

Commission officials told Willis Willis, 67, of Grand Prairie, Texas, that they consider the clerk, Pankaj Joshi, the rightful winner because Joshi signed and redeemed the ticket as required, Willis’ attorney says.

But Joshi has been indicted in Travis County on charges of claiming a lottery prize by fraud. Prosecutors hope to give Willis about $365,000 they seized from Joshi’s bank accounts, the paper says.

Joshi, clerk at the store where Willis bought the ticket in May, didn’t let on that it was the big winner when he scanned Willis’ tickets two days later, authorities say.

Joshi later cashed it in, receiving $750,000 after taxes, and apparently returned to his native Nepal, the paper says.

A spokesman for the lottery commission declined to comment, the paper says.

Proposed law would require pay for sick workers.

WASHINGTON (Reuters) - U.S. employers who tell workers to stay home when they are sick will have to give them paid time off for up to five days under new federal legislation proposed on Tuesday.

The emergency law would cover pandemic H1N1 flu or any other infectious disease, said California Representative George Miller, a Democrat who chairs the House Education and Labor Committee and who introduced the bill.

“Sick workers advised to stay home by their employers shouldn’t have to choose between their livelihood, and their co-workers’ or customers’ health,” Miller said.

“This will not only protect employees, but it will save employers money by ensuring that sick employees don’t spread infection to co-workers and customers, and will relieve the financial burden on our health system swamped by those suffering from H1N1.”

The U.S. Centers for Disease Control and Prevention advises employers to encourage sick workers to stay home so they do not spread H1N1. “But workers have been reporting that many of them are either afraid or cannot afford to take time off,” Miller told reporters in a telephone briefing.

Paid sick leave is not required by U.S. laws.

Miller said the committee would hold a hearing the week of November 16 and he would press to have a full vote as soon as possible.

Miller said at least 50 million American workers are not paid for time taken off sick, “many in lower-wage jobs that have direct contact with the public such as the food-service and hospitality industry, schools and health care fields.”

22 mortgage modification companies being forced to close their doors.
Nevada

If you are homeowner in the middle of a mortgage modification, you could be in a jam. The state is cracking down on loan modification companies and more than two dozen are about to shut down.

Nearly, 30 companies will be out of business all in the name of keeping homeowners in their homes. The state is cracking down on companies offering loan modification services who don’t meet specific requirements, like FBI background checks, educational requirements and having a $75,000 surety bond.

Homeowners already doing business with the companies being forced to close, should be prepared.

“The homeowner may not get back all of their money at this point, it depends on where they are in that contact with the homeowner,” said Elisabeth Daniels.

“Short sale” battles weigh on U.S. housing recovery.

NEW YORK (Reuters) - Home equity lenders faced with losses from the U.S. property slump are holding out for more money in distressed sales, slowing transactions needed to support a recovery, real estate agents and analysts say.

These secondary lenders are gaining power in negotiating payments from “short sales,” a growing part of the market where homes are sold for less than the balance of outstanding loans.

Short sales are often cheaper for the primary lender than foreclosure and a solution for homeowners who cannot get their payments reduced by federal loan modification efforts.

But the push by these lenders to recover more of their loans is complicating short sales which agents complain can take several months to complete.

The delays have grabbed the attention of the U.S. Treasury which is writing rules it hopes will smooth the process as it tries to help fix the housing market.

The fallout, a legacy of the era of easy credit when multiple loans were encouraged, comes as U.S. housing is struggling to maintain a nascent recovery in prices.

Analysts fear the first signs of a recovery in demand may drop back during the typically slow selling months of the U.S. winter just as banks put to market thousands of foreclosures delayed by the scramble to make loan modifications work.

Marilyn Monroe crypt auction fails again.

LOS ANGELES (Reuters) - A second attempt to sell a crypt on top of Marilyn Monroe’s final resting place has failed, with not a single bid received for the burial spot in a celebrity-filled Los Angeles cemetery.

Widow Elsie Poncher is trying to sell her husband’s crypt to pay off the mortgage on her Beverly Hills home. On selling the crypt, Poncher had planned to move her husband, who died in 1986, to an adjacent crypt intended for her.

But a $4.6 million bid submitted through online auctioneer eBay Inc in August fell through when the unidentified bidder pulled out.

A second auction on eBay with a reserve price of $500,000 also failed, with a notice on the online trading website saying it had closed with no bids on the marble mausoleum where Monroe was laid to rest in 1962.

The crypt is located at the Westwood Village Memorial Park cemetery, home to celebrities including Dean Martin, James Coburn, Roy Orbison, Truman Capote, Natalie Wood, Carl Wilson, Minnie Riperton and recent arrival Farrah Fawcett.

The space next to Monroe’s vault was sold in 1992 to the publisher of Playboy magazine, Hugh Hefner, for $75,000.

Buffett’s Berkshire Hathaway May Lose Only Remaining AAA Credit Rating
Wednesday November 4, 2009

Warren Buffett’s Berkshire Hathaway could be stripped of its one remaining top-grade AAA credit rating.

Standard & Poor’s Ratings Services says in a news release today that it has put Berkshire on “CreditWatch with negative implications” in the wake of its announced deal to buy all of Burlington Northern Santa Fe.

Last March, S&P kept its AAA rating on Berkshire, but lowered its outlook to “negative” from “stable” because lower equity prices were hurting the capital holdings of Berkshire’s insurance operations.

Fitch took away Berkshire’s AAA rating in mid-March, and Moody’s did the same in early April.

Today S&P says it may lower Berkshire’s rating by one or two notches within 90 days, after it takes a closer look at the company’s agreement to buy BNSF.

It expects a “significant part” of the deal’s cash portion will come from Berkshire’s “core insurance operations, as has historically been the case in other transactions.”

As a result, says S&P credit analyst John Iten, “We believe that this transaction will decrease the liquidity and capital adequacy of the insurance operations. For the consolidated organization, financial leverage will increase and fixed-charge coverage may decline.”

Have a Safety Deposit Box in California?
Maybe What It Held Has Already Been Spent By California:

Not-So-Safe-Deposit Boxes - ABC News
San Francisco resident Carla Ruff’s safe-deposit box was drilled, seized, and turned over to the state of California, marked “owner unknown.”

“I was appalled,” Ruff said. “I felt violated.”

Unknown? Carla’s name was right on documents in the box at the Noe Valley Bank of America location. So was her address — a house about six blocks from the bank. Carla had a checking account at the bank, too — still does — and receives regular statements. Plus, she has receipts showing she’s the kind of person who paid her box rental fee. And yet, she says nobody ever notified her.

“They are zealously uncovering accounts that are not unclaimed,” Ruff said.

To make matters worse, Ruff discovered the loss when she went to her box to retrieve important paperwork she needed because her husband was dying. Those papers had been shredded.

And that’s not all. Her great-grandmother’s precious natural pearls and other jewelry had been auctioned off. They were sold for just $1,800, even though they were appraised for $82,500.

“These things were things that she gave to me,” Ruff said. “I valued them because I loved her.”

Bank of America told ABC News it deeply regrets the situation and appreciates the difficulty of what Mrs. Ruff was going through. The bank has reached a settlement with Ruff and continues to update its unclaimed property procedures as laws change.

California’s Class Action Lawsuit

Ruff is not alone. Attorney Bill Palmer represents her and countless other citizens in a class action lawsuit against the state of California.

“They figured the safety-deposit box was safer than keeping it under the mattress,” Palmer said. “In the case of a lot of citizens, they were wrong, weren’t they?”

California law used to say property was unclaimed if the rightful owner had had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money.

“That’s absolutely correct,” said California State Controller John Chiang, who inherited the situation when he came into office. “What we’ve done here over the last two decades has been dead wrong. We’ve kept the property and not provided owners with the opportunities — the best opportunities — to get their property back.”

Chiang now faces the daunting task of returning $5.1 billion worth of unclaimed property to people. Some states keep their unclaimed property in a special trust fund and only tap into the interest they earn on it. But California dumps the money into the general fund — and spends it.

“It’s supposed to be segregated and protected,” Palmer said. “California has taken all of that $5.1 billion and has used it as a massive loan.”

California became so addicted to spending people’s money, that, for years, it simply stopped sending notices to the rightful owners. ABC News obtained a 1996 internal memo in which the lawyer for the Bureau of Unclaimed Property argued against expanding programs to notify rightful owners. He wrote, “It could well result in additional claims of monies that would otherwise flow into the general fund.”

See the 20/20 report on proposed Healthcare legislation that got John Stossel fired:

http://tinyurl.com/maczlq

“GM plans 10,000 job cuts at Opel”

And the Germans don’t like it. Hmmm. Let’s see, Daimler left Chrysler for dead. Payback? what comes around goes around….