The Housing Bubble

I’m working today cat sitting, visiting the little kitties and making a few buckos

I’m dog sitting… started the day by walking them in central park. Not sure which is worse, scooping a cat box or tidying up after fido with a plastic bag. buckos nice tho.

Happy Holidays to all.

Boxes and packing tape accompanied by Mythbusters marathon. Not quite Chinese food and a movie, but it’ll do.

Merry Christmas everyone. I’m listening to a CD of Christmas Piano.

Check the “Magical Caroling Truck” video out. I grew up in North Hollywood, when it was nice. The entertainment element is still alive and well, Thank God.

http://abclocal.go.com/kabc/video?id=7188469
Enjoy the magic of the season.

The New York Times
Reuters Breakingviews
Mortgage Titans Resist Shrinkage

By AGNES CRANE and UNA GALANI
Published: December 24, 2009

As with many giants, it’s hard to cut Fannie Mae and Freddie Mac down to size. The government, which controls the mortgage behemoths, planned to shrink them by 10 percent in 2010. Don’t count on it.

Failure is unthinkable, even though both companies still rely on a $400 billion equity life-line from taxpayers. These are institutions with a combined $1.5 trillion portfolio of mortgage-related investments. Without their supply of financing for home borrowers with good credit, house prices would be lower — and more banks would be in trouble.

Yet in theory, Fannie and Freddie could still be allowed to wither away. When they were put into conservatorship in 2008, a special sort of bankruptcy, the plan was to cut back on their hedge-fund-like investment portfolios beginning next year.

In March, one other big support of the housing market will disappear. The Federal Reserve is supposed to sell down, or at least not add to, its $1.25 trillion portfolio of mortgage-related securities built up since January. Private investors are expected to take the Fed’s place. Mortgage-backed bonds still sport triple-A ratings and offer a higher yield than government debt.

But it’s a big hole to fill. And the last thing any politicians want in an election year is for mortgage rates to rise, as they will if private demand falls short. So the government is not going to be in a hurry to let Fannie and Freddie add to the pressure on the weak housing market. They won’t start winding down their portfolios until house prices are much firmer. On the contrary, they will stand ready to act as purchaser of last resort.

Of course, in the long term it’s hard to see why government should be in the business of using tax receipts to prop up housing prices and make good on losses from mortgage defaults. That distorts everything about the housing business and adds to the state’s fiscal burden. But barring a government financing crisis, the long-term wind-down for Fannie and Freddie isn’t going to start in 2010.

A Christmas present for Fannie and Freddie: TBTF bailouts without limits!

* The Wall Street Journal
* DECEMBER 24, 2009, 4:05 P.M. ET

U.S. Uncaps Support for Fannie, Freddie

By JESSICA HOLZER and MICHAEL R. CRITTENDEN

WASHINGTON — The U.S. Treasury said it would provide capital as needed to Fannie Mae and Freddie Mac over the next three years, effectively opening its checkbook to the government-controlled companies in a bid to reassure investors in their debt.

Treasury also will end its purchases of the companies’ mortgage-backed securities and terminate a never-used short-term liquidity facility set up for the firms and the Federal Home Loan Banks.

And it moved to allow the companies to shrink their giant portfolios of mortgage securities more slowly, though it said it was still “committed to the principle” of reducing the portfolios.

Treasury announced the moves in a Christmas Eve press release, a week before its authority to change the terms of its agreements with the companies was set to expire. After Dec. 31, Treasury would need the consent of Congress to make such changes.

So far, the government has pumped $60 billion into Fannie Mae and $51 billion into Freddie Mac to keep each company solvent since it seized the firms in September 2008 under a legal authority known as “conservatorship.” The companies, threatened by mounting mortgage defaults, were headed toward collapse.

At the time, the Treasury pledged to inject up to $100 billion of capital apiece as needed into the companies in exchange for preferred stock paying a 10% dividend. The Obama administration earlier this year doubled that commitment to $200 billion.

The new terms announced Thursday would allow the cap on Treasury’s support to increase by the amount of the total net loss the firms experience over the next three years, beginning on Jan. 1. The cap in place at the end of 2012 would apply thereafter.

The changes come as Fannie’s and Freddie’s regulator, the Federal Housing Finance Agency, on Thursday approved multimillion pay packages for the firms’ top executives. The pay announcement and the sweeping increase in the government’s commitment to backstop the companies are certain to stoke anger from the companies’ critics on Capitol Hill.

“The Obama administration’s decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling,” said Rep. Scott Garrett (R., N.J.). He argued the timing of the announcement, on Christmas Eve, was “designed to try and sneak the bailout by the taxpayers.”
…

It’s time for sheeple to start trusting again so Megabank, Inc can resume lucrative fleecing operations.

Mutual Funds Weekly
Dec. 24, 2009, 5:54 p.m. EST
By MarketWatch

What makes investing so difficult is that much of it is beyond our control. The fact is that individually we have no real say over the economy or the financial markets or the decisions that professional money managers make. Trust is all we have, and over the past couple of years that faith has been sorely tested.

It is time to trust again. Not because stocks are going up — who knows what will happen? It’s time to trust again because this time, we can be smarter.

This time, we’ll focus on the two elements of investing that we can control, namely portfolio allocation — how much we give to stocks, bonds, cash and other assets — and expenses, because you make only what you keep, and higher cost does not mean greater returns.

This time, we’ll be dedicated to rebalancing a portfolio, so that we don’t chase the hottest investments and instead follow an established formula to sell high and buy low. For many of us that will mean buying stocks when we’re skittish, casting off the security blanket of bonds. But this time we’ll go slowly, dollar-cost-averaging into stocks with a set amount every month or quarter, so that when the stock market takes another dive — as it invariably will –.our own will won’t be shaken to the core.

Last year at this time, people were rightly scared. We’re not out of the woods, but at least it’s clearer where we stand. It’s time now to focus on saving, spending and sharing. Trust your abilities, look ahead and get help if you need it.

Happy holidays to you and yours.

– Jonathan Burton, assistant personal finance editor

Merry Christmas to Ben & all HBB….

Berkshire Eliminates 21,000 Jobs as Manufacturing, Retail Slump

(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. reported 21,000 fewer employees than it had at the end of 2008 amid a slump at the firm’s manufacturing and retail units.

Berkshire and its subsidiaries have about 225,000 workers, the Omaha, Nebraska-based company said this week in regulatory filings. That’s 8.6 percent lower than the 246,083 disclosed in the 2008 annual report. Berkshire provided the jobs information in a document tied to its planned $26 billion takeover of railroad Burlington Northern Santa Fe Corp. Buffett didn’t reply to a request, left with an assistant, for comment on the cuts.

Buffett, Berkshire’s chief executive officer, oversees a collection of more than 70 subsidiaries that sell products including Geico car insurance, Fruit of the Loom T-shirts and Dairy Queen ice cream. Profit at the firm’s manufacturing, service and retail businesses plunged by more than half in the first nine months of the year, and Buffett replaced the CEOs of two operating units whose sales suffered in the recession.

“There’s a lot of businesses that have been struggling,” said Paul Howard, an analyst with Janney Montgomery Scott LLC’s Langen McAlenney division in Hartford, Connecticut. “I gotta believe all his managers are on their toes trying to figure out what to do.” Buffett didn’t respond to a request, left with an assistant, for comment on the job cuts.

A Christmas Tradition Under Threat in Spain
Dec. 22, 2009

The annual giving of the Christmas cesta, or basket, to employees from their employers in Spain is facing some changes. The economic crisis here has many companies tightening their belts and that holiday extra this year may be less bountiful or nonexistent for some workers. Barbara Kollmeyer reports from Madrid.

Bill Bonner enjoys Christmas as much as anyone else, but he doesn’t let the tinsel and lights completely replace the sense of gloom he feels when he surveys the present economic dilemma:

* The international monetary system, an experimental system built of paper dollars, may be falling apart.
* The US is losing its privileged place in the world. Americans compete with many other people in many other places for the world’s resources – including its savings.
* The days of cheap and bountiful energy are over.
* Governments are going broke. State governments. National governments. In Europe. In the Middle East. And in America.
* The engine of economic growth – Americans’ willingness to go into debt in order to consume more and more of the world’s output – has gone into reverse.
* And, governments are meddling on an unprecedented scale…delaying and avoiding necessary adjustments, possibly turning an ordinary depression into a Great Depression…or even a Much Greater Depression.

WASHINGTON – The Senate voted Thursday to raise the ceiling on the government debt to $12.4 trillion.

The Senate’s rare Christmas Eve vote, 60-39, follows House passage last week and raises the debt ceiling by $290 billion.

The bill permits the Treasury Department to issue enough bonds (borrow money) to fund the government’s operations and programs until mid-February. The Senate will vote again on the issue Jan. 20.

Talk about “kicking the can down the road!” Congress only bought a few weeks of breathing room before it must vote to push the debt ceiling much, much higher. Members may be counting on the public’s short attention span. 2010, after all, is an election year.

Bankers to the rest of the world:

Let them eat cake.

Do Bankers Care About Their Reputation?
Dec. 22, 2009

Bankers often highlight their relationships with clients and markets as key to their success. Why, then, do they seem so reluctant to correct their worsening reputation?

For consumers, a bit of cheer replaced gloom and doom this holiday season.By Ylan Q. Mui ~Washington Post Staff Writer
Friday, December 25, 2009

After two years in financial turmoil, consumers have found a bit of holiday cheer this Christmas.

Shoppers are reporting that their personal finances are stabilizing, and they are spending a little bit more on holiday gifts than initially planned, according to surveys. Retail sales were surprisingly strong last month, with stores and credit card companies reporting increases in sales of electronics, shoes and jewelry.

Retail sales have begun to accelerate, surprising economists. Purchases of electronics, shoes and jewelry have risen, and online sales are shining.

Retail experts say consumers are still a long way off from a full-fledged recovery, and some key forecasts show sales declining over the course of the entire holiday season.

Many economists say that consumer spending cannot rebound without a turnaround in the job market. And while initial jobless claims fell last week to the lowest level in more than a year, the unemployment rate remains in double digits for the first time in 26 years. But analysts and shoppers acknowledge that the economy is no longer in free fall.

Schumer Urges Wall Street Banks to ‘Get That Money Out There’

Dec. 25 (Bloomberg) –New York Senator Chuck U. Schumer warned Wall Street firms to “live up to your responsibilities” and increase lending, particularly to small businesses, while showing restraint on executives’ bonuses.

“Get that money out there,” Schumer said in an interview Dec. 23 on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. Banks should make sure the bonuses aren’t “excessive” and are based on merit, Schumer said. The position of firms such as Goldman Sachs Group Inc. that they didn’t need the government’s help to survive “is just false,” he said.

At the same time, reinstating the Depression-era Glass- Steagall Act that split investment and commercial banking should be considered, yet is “easier said than done,” he said. Last week, lawmakers including Senator John McCain proposed reinstating Glass-Steagall, which was struck in 1999 by the Gramm-Leach-Bliley Act.

The repeal led to a rise in conglomerates including Citigroup Inc. that were allowed to branch into insurance and proprietary trading.

The Corpus Christi, Texas Police Department reports finding a man’s body in the Nueces River near Labonte Park . KYJ News 12-24-09

The dead man’s name has not been
released until his family has been notified.. The victim apparently drowned
due to excessive alcohol consumption. He was wearing black fishnet stockings, a red garter belt, a pink G-string, a strap-on dildo, purple lipstick, along with an
Obama for President in 2008 t-shirt. It was also noted that he had a cucumber in his rectum.

The police removed the Obama t-shirt to spare his family any unnecessary embarrassment.

In spite of what we sometimes think, the Police really do care.

http://www.321gold.com/editorials/benson/benson122409.html

Jingle Mail, Jingle Mail. ‘Tis the season to mail in your keys and walk.

For the 49th year in a row, Santa Claus got me באָפּקעס , גאָרנישט!

We got a really great set of Politicians . They give blank checks and bail outs to these detestable Companies without making requirements for the bail outs . Than the Companies flaunt their bonuses in front of the World ,
and prove that they are as greedy and bad as we thought they were . Than
Schumer thinks he can make a requirement of these bail out criminals
after the fact by a verbal command ? You would of thought that any Politician with half a brain would of made the requirement in order for the Bailed out parties to get the money . I think all this grandstanding is just lip service to the public
anyway and the Politicians know darn well that these traitors bought them off a long time ago . It’s painful to watch .

The Financial Times
Deck the halls with shop-bought holly
Published: December 23 2009 20:09 | Last updated: December 23 2009 20:09

In 601, as England was being claimed by Roman Catholic missionaries, Gregory the Great, the Pope, wrote to Mellitus, one of his men on the frontline, with instructions to move slowly. He advised that some of the trappings of local pagan religions – such as animal sacrifices and temple buildings – should be preserved and respected by the incoming Church. “Whilst some outward gratifications are permitted them, they may the more easily consent to thee inward consolations of the grace of God.”

Gregory was probably not, however, advising that his disciples move so slowly that 1,408 years later the commemoration of Jesus Christ’s humble birth would still be celebrated across the Anglosphere with a heathen potlatch feast and rowdy Godless singing.

There is, after all, nothing Christian about hanging mistletoe – an ancient sacred plant – inside houses, hunting and gathering gifts, or ritually gorging on mulled wine, goose or turkey. Nowhere in the Bible is it suggested that God-fearing folk should eat Brussels sprouts as a Christmas-time penance for their sins.

Gregory was right to counsel leaving the older rites alone: Puritans attempted to purge the festival of its paganism in the 17th century – and prompted revolt. People who believe that Christmas should be more Christian are not being nostalgic: they are being radicals, hoping to silence the deep-felt echoes of an ancient culture.

However, one not need be a devout follower of Jesus Christ irritated by the slow progress of Gregory’s softly-softly approach to believe that there is something distasteful about Christmas. These days, celebratory lights appear in October and jingling songs become ubiquitous in November.

This lengthening of the festive season is not driven by evangelists hoping to use an extra-long celebration to spread a Christian message far and wide. Nor is it pushed by spear-carriers of the pagan gods who lost market share to the Christian incursion. The Christmas frenzy is driven by shopping chains that are keen to cash in on the holiday.

But give these soulless merchants some credit. By covering themselves in tinsel, antlers and baubles, and ramming Christmas down shoppers’ throats, they are doing their duty by their countries. At this time of extreme economic weakness, what could be more national-minded than encouraging people to spend their money on festive tat?
…

A good dose of Christmas driving to remind me I’m back in S. CA they may drive better here over all but they drive rude

Too crowed I guess plus the roads suck

CA reminds me of my old Townhome used to be really nice but over time went broke and couldn’t afford to maintain the common areas even though the HOA fee went from 118 to over 500 a month in the 15 years I lived there. Who will pay top dollar for that Townhome now ? Who will pay top dollar to live in a state thats unable to maintain the roads, sewers, basic infrastructure. CA just like my old HOA always crying about being broke and raising the HOA.

Just thinking about the new year. Cheers everyone

More BS from a brain dead retard named Reid.

Tanning Salons Say Tax Would Trigger Job Cuts, Store Closings.

Dec. 23 (Bloomberg) — A proposed tax on indoor tanning salons may trigger more job cuts, store closings and expansion into other tanning products, industry executives said.

The Senate plans to vote tomorrow on an $871 billion overhaul of the U.S. health-care system, and procedural votes suggest that the measure will pass. The legislation includes a 10 percent levy on indoor tanning salons, which replaced a previously proposed tax on cosmetic surgery.

“I don’t really have a game plan,” Dan Humiston, owner of Buffalo, New York-based Tanning Bed Inc., said Dec. 21 in a telephone interview. “I know I can’t absorb it. I may have to cut people, pare some costs to customers, close some stores.”

There are 18,000 to 20,000 places with tanning equipment in the U.S., according to John Overstreet, executive director of the Indoor Tanning Association. More than 90 percent are businesses owned by one person, said Humiston, who is also president of the Washington-based trade group. The tax will probably help drive more salons — already hurt by declines in consumer spending — into bankruptcy, he said.

The levy, proposed by Senate Majority Leader Harry Reid, could raise $2.7 billion over 10 years, according to an estimate by the Joint Committee on Taxation, a Washington-based nonpartisan congressional committee.

http://www.mauinews.com/page/content.detail/id/527037.htm

The crux of the article is that the Pineapple industry on Maui is ending, to be replaced by (what else) Real Estate Development. 284 workers being laid off. Not great employment prospects on Maui these days. I don’t think many of these workers would do well hawking timeshares or working at the activity center.

Sad, damn sad.

I’ve spent many a day on Central Maui and have always enjoyed looking at the blue-green expanse of pineapple stretching up the hillsides. Just what Maui needs is more condos.

ø¤MERRYº°¨¨°º¤ø °¨¨°º¤ø ¸„ø¤º°¨¨°º¤ø¸CHRISTMAS¤ø ¸„ø¤º°¨¨°º¤ø ø¤º°¨¨¨°º¤ø ¸„ø¤MERRYº°¨¨°º¤ø ¸„ø¤º°¨¨°º¤ø ¸„ø¤º°¨¨°º¤ø,„CHRISTMAS¤ø ¸„ø¤º°¨¨°º¤ø ø¤º°..

Merry •*¨*•.¸¸ ¸¸.•*¨*•Christmas •*¨*•.¸¸ ¸¸.•*¨*•…And A Happy New Year!•*¨*•.¸¸ ¸¸.•*¨*•…
To Ben, the HBB crowd and get well Ate and Ahansen.
And to Oly, oly oly oxen free.. come out come out wherever you are..!

I wish the very best to you all.
Take care Stpn.

Merry Christmas to Ben and all the contributors to this blog. Thank you for your efforts. Your brilliance is admired.

Stacked Deck Against Homeowners

Homeowners facing foreclosure who have been the victims of fraud have little hope of obtaining justice or financial restitution. That was the message of Lionel Ouellette, executive director of the New York City-based advocacy group Changer. He was speaking to a grim-faced group of about thirty Hispanic and African-American homeowners at a community center in the Brooklyn neighborhood of East New York last winter.

Nobody at the meeting had the resources to hire a lawyer for complex legal cases, said Ouellette, a 35-year-old former schoolteacher who became a housing counselor after falling victim to a scam that involved predatory loans and concealed damage in a house he purchased in 2001.

http://www.thenation.com/doc/20100111/ulam

Sorry for the long link…but guv pensions are next…

Why shouldn’t we demand that if people want a retirement check they actually are retired?

http://www.nypost.com/p/news/opinion/opedcolumnists/new_york_goes_broke_pension_by_pension_gQJHYAU1nBzBtcq1p1O5hM#ixzz0aPWxmmQ6

Merry Christmas, you miserable, money-grubbing bastards.

Scrooge on!

Merry Christmas everyone!

Credit crunch: Home equity lending evaporates

By ADRIAN SAINZ
The Associated Press

Posted: 11:40 a.m. Friday, Dec. 25, 2009

Hocking the house for quick cash is a lot harder than it used to be, and it’s causing headaches for homeowners, banks and the economy.

During the housing boom, millions of people borrowed against the value of their homes to remodel kitchens, finish basements, pay off credit cards, buy TVs or cars, and finance educations. Banks encouraged the borrowing, touting in ads how easy it is to unlock the cash in their homes to “live richly” and “seize your someday.”

Now, the days of tapping your house for easy money have gone the way of soaring home prices. A quarter of all homeowners are ineligible for home equity loans because they owe more on their mortgage than what the house is worth. Those who have equity in their homes are finding banks far more stingy. Many with home-equity loans are seeing their credit limits reduced dramatically.

The sharp pullback is dragging on the economy, household budgets and banks’ books. And it’s another sign that the consumer spending binge that powered the economy through most of the decade is unlikely to return anytime soon.

At the peak of the housing boom in 2006, banks made $430 billion in home equity loans and lines of credit, according to the trade publication Inside Mortgage Finance. From 2002 to 2006, such lending was equal to 2.8 percent of the nation’s economic activity, according to a study by finance professors Atif Mian and Amir Sufi of the University of Chicago.

For the first nine months of 2009, only $40 billion in new home equity loans were made. The impact on the economy: close to zero.

“The home as ATM is yesterday,” says Keith Gumbinger, vice president of HSH Associates FinancialPublishers, which publishes consumer loan information.

Millions of homeowners borrowed from the house to improve their standard of living. Now, unable to count on rising home values to absorb more borrowing, indebted homeowners are feeling anything but wealthy.

Holly Scribner, 34, and her husband took out a $20,000 home equity loan in mid-2007 — just as the housing market began its swoon. They used the money to replace sinks and faucets, paint, buy a snow blower and make other improvements to their home in Nashua, N.H.

The $200 monthly payment was easy until property taxes jumped $200 a month, the basement flooded (causing $20,000 in damage) and the family ran into other financial difficulties as the recession took hold. Their home’s value fell from $279,000 to $180,000. They could no longer afford to make payments on either their first $200,000 mortgage or the home equity loan.

Scribner, who is a stay-at-home mom with three children, avoided foreclosure by striking a deal with the first mortgage lender, HSBC, which agreed to modify their loan and reduce payments from $1,900 a month to $1,100 a month. The home equity lender, Ditech, refused to negotiate. Scribner’s husband, Scott, works at an auto loan financing company but is looking for a second job to supplement the family’s income.

The family is still having trouble making regular payments on the home-equity loan. The latest was for $100 in November.

“It was a huge mess. I ruined my credit,” Holly Scribner says. “We did everything right, we thought, and we ended up in a bad situation.”

It’s a mess for the banking industry, too.

Home equity lending gained popularity after 1986, the year Congress eliminated the tax deduction for interest on credit card debt but preserved deductions on interest for home equity loans and lines of credit. Homeowners realized it was easier or cheaper to taptheir home equity for cash than to use money taken from savings accounts, mutual funds or personal loans to fund home improvements.

Banks made plenty of money issuing these loans. Home equity borrowers pay many of the costs associated with buying a home. They also may have to pay annual membership fees, account maintenance fees and transaction fees each time a credit line is tapped.

In 1990, the overall outstanding balance on home equity loans was $215 billion. In 2007, it peaked at $1.13 trillion. For the first nine months of 2009, it’s at $1.05 trillion, the Federal Reserve said. Today, there are more than 20 million outstanding home equity loans and lines of credit, according to First American CoreLogic.

But delinquencies are rising, hitting record highs in the second quarter. About 4 percent of home equity loans were delinquent, and nearly 2 percent of credit lines were 30 days or more overdue, according to the most recent data available from the American Bankers Association.

A rise in home-equity defaults can be particularly painful for a bank. That’s because the primary mortgage lender is first in line to get repaid after the home is sold through foreclosure. Often, the home-equity lender is left with little or nothing.

Banks are applying the brakes.

Bank of America, for example made about $10.4 billion in home equity loans in the first nine months of the year — down 70 percent from the same period last year, spokesman Rick Simon says. The also started sending letters freezing or cutting lines of credit last year, and will disqualify borrowers in areas where home prices are declining.

“This was just solid risk management,” he says.

Jeffrey Yellin is in the middle of remodeling his kitchen, dining room, living room and garage at his home in Oak Park, Calif. He planned to pay for the project with his $200,000 home equity line of credit, which he took out in January 2007 when his house was valued at $750,000.

In October, his lender, Wells Fargo, sent a letter informing him that his credit line was being cut to $110,000 because his home’s value had fallen by $168,000, according to the bank.

He is suing the bank, alleging it used unfair standards to justify its reduction, incorrectly assessed the property value, failed to inform customers promptly and used an appeals process that is “oppressive.” Jay Edelson, a lawyer in Chicago who is representing Yellin, says homeowners are increasingly challenging such letters in court. He says he’s received 500 calls from upset borrowers.

Wells Fargo declined to comment on Yellin’s lawsuit but said it reviews of customers’ home equity lines of credit to make sure that account limits are in line with the borrowers’ ability to repay and the value of their homes.

“We do sometimes change our decisions when the customer provides sufficient additional information,” Wells Fargo spokeswoman Mary Berg said in a statement e-mailed to The Associated Press.

Work has stopped at the Yellin’s home. The backyard, used as a staging area for the remodeling job, is packed with materials and equipment.

“Now, I’ve got a backyard that looks like ‘Sanford and Son’ almost,” he says.