Bits Bucket For December 26, 2009
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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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.
“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.”
We are helping our landlord buy some efficiency toilets this year. Since we don’t have any home equity, we will use some of that worthless fiat money we have parked in the bank to cover our share of the home improvement expense.
I asked you this before, and I never did get an answer. Why, on Gods green earth, would you pay for improvements on a house you do not own? I am absolutely baffled by this. You are paying good money to improve your landlords asset. That’s like paying for new tires on a rental car. I wouldn’t even pay for maintenance items like furnace filters, but new toilets? What’s next, a kitchen remodel?
Grizzly, I was considering doing the same thing on my rental house, but only if there is tangible benefit to me. For an item like attic insulation, that would have to include a guarantee of no rent increases (which might make me want to move) until the costs are recouped. Otherwise, it’s simpler to just move now, and pick a place that has more of the things I want already completed.
it would make sense if the improvement would reduce your utility bills enough to recover the cost during the expected rental period, or if it added a significant measure of convenience. If you are tired of plunging ever other day or so, the cost of a couple Toto’s would be money well spent, even in a rental.
If you’re going to be there long enough to enjoy said improvements and amortize that cost over time, why not? Presumably, the cost is already baked in to a comparable rental, or if not, you still have the hassle and expense of moving.
GrizzlyBear, I’ve done this a few times, but only if it benefited both myself and my landlord.
It benefits me as I do not have to wait for the repair people to show up and I can choose the replacement. I always get reimbursed or a discount on rent.
It benefits the land lords as they do not have to take the time to deal with anything but write the check or authorize the discount.
And after they come around and see the finished work, they know they have a responsible tenet and it looks on me.
It helps if you’ve done any type of home remodeling. I have, so it was relatively easy for me. Sometimes I did the work, sometime I just supervised the contractor.
O.K., it’s here somewhere…
Grizzly,
When you consider the fact that home improvments are usually sunk costs, with no guarantee you’ll get your money back (in normal circumstances, you rarely get your money back), most people improve their homes because it benefits them while they live there.
We’ve spent thousands on our rental home: new ceiling fans/lights in every bedroom and the family room, new shower in the master bathroom, new plumbing fixtures, etc.
All of this was done because we wanted to improve our living conditions while we lived here. In exchange, our landlord agreed not to raise our rent. Also, we’re fortunate enough to have found an original owner LL (from the 70s) who has no debt on the house, so we won’t be foreclosed on, and they have less incentive to raise our rent. Additionally, we pre-pay our rent six months in advance.
Why do we do all of this? Because it makes our living situation nicer for us. Also, I’ve long thought it would take a long time for the bubble to unravel, so wanted to be sure we found the right house and LL combination. Unlike many of our renter friends, we don’t worry about them selling the house, nor do we worry about rent increases — I raised our rent this past December because they are losing about $600/month on us vs. market rents, and this way, I get to control the increases.
Unlike many others, we’ve continued to “live life” while we’ve rented. We’ve conceived babies and done everything just as we would have if we were “owners.” We are established in the neighborhood, and know more of the neighbors than many of the people who’ve lived here for decades.
If all else fails, and we’re never able to buy here, at least we can say that we lived comfortably while we were renting. Our kids don’t know there’s a “difference” between themselves and any of the “owner” neighbor kids. We maintain our yard and house, and take pride in our home.
In short, a home is a home, no matter if you rent or “own.” If making some improvements makes it easier/nicer to live there, there’s no reason renters should live less well than “owners,” IMHO.
“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 just terrible when bad loans happen to good people.
Going into debt for “improvements” that you don’t need and can’t afford is “doing everything right?” Maybe in Retardville….
I love how these FBs always wail that they “ended up in a bad situation.” To which any astute reporter would interject: “You idiots PUT yourselves in a bad situation.”
Amen.
“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.”
It took two decades for the Congressionally-generated home equity lending bubble to pop.
You mean to tell me that a gub’mint “solution” had unintended consequences?! I am shocked, shocked! I tell you.
The mid 1980s was also the time that Savings & Loans received VERY favorable regulation changes that they, themselves had lobbied for, thus leading directly to the S&L disaster.
Again, quit blaming JUST the government.
Off to work more cats to feed and clean out their precious litter boxes
That’s nice.
Freddie sees mortgage rates hitting 6% in 2010
Washington Post ~ Saturday, December 26, 2009
After hitting an all-time low in early December, the average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, if not sooner, according to giant mortgage financier Freddie Mac.
The results are noteworthy because rates have not topped 5 percent since the last week of October, when they reached 5.03 percent, based on the results of this closely watched survey, which polls lenders during the first three days of every week.
Many firms regularly track interest rates and come up with slightly different numbers because they survey different lenders at different times of the day or week. But several have reported the upward trend in recent weeks. They attribute it in part to the effects of the holiday season, when demand for buying and refinancing homes dies down and financial markets coast through the end of the year.
“However, this is also a glimpse of what we’re going to see in 2010,” said Greg McBride, a senior financial analyst at Bankrate.com, a personal finance Web site.
The key catalyst for interest rates going forward will be the end of a Federal Reserve program that buys a sizable chunk of mortgage-backed securities issued by firms such as Fannie Mae and Freddie Mac. That program succeeded in immediately pushing mortgage rates well below the 6 percent mark when it was announced last year.
Is the Fed planning to get out of the interest rate manipulation business next year? If not, why would they deliberately let interest rates climb to 6%, given the frail state of the housing market?
Because China wouldn’t buy bonds otherwise?
Who wants to bet that this MBS purchase program will be resurected in short order?
I hope there are no glitches on the blog, as I see no posts.
I heard a really interesting anecdote yesterday. During World War II the USA managed to break the Japanese military code. Of course, breaking the code was itself a big secret and of tremendous value. The Chicago Tribune went ahead and published the story that the code had been broken. The Tribune was a longtime opponent of Roosevelt who was determined to see the editors punished.
His advisors prevailed upon him to let it pass, because the Japanese didn’t read the Tribune. Apparently they were right, and the US was able to continue to read their transmissions!
True story. Get the book “The military and the Press”, by Michael S. Sweeney, for those who want confirmation.
The Chicago Tribune went ahead and published the story that the code had been broken.
Let it pass? This is serious treason.
The persons that passed the story to the Tribune were the treasons. If they told the newspaper, you would have to assume they also told other people and the secret was already out.
It would be pointless to stop the story. Kinda like how Google maps doesn’t show the Navel Observatory in Washington DC any more.
“navel observatory”, where you can ponder your belly button.
Almost as bad as the Congressman that went on a Pacific junket, and told the press “Don’t worry about our boys in the submarines……the Japanese aren’t setting their depth charges deep enough.”
As Admiral Lockwood (at the time ComSubPac) wrote to Admiral King, “….the Congressman will be glad to know that the Japanese are setting their depth charges deeper now.”
Another fine example of why Roosevelt had to be the president he was. It’s tough doing your job when everybody is out to stab you in the back and will resort to treason to accomplish it.
Credit crunch: Home equity lending evaporates
Hock the house? Home equity lending evaporates as real estate values fall, banks get stingy. (AP)
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.
MGM Mirage’s James Murren Says Ground Zero Inspired CityCenter
(Bloomberg) — If James Murren, the chairman and chief executive officer of MGM Mirage, needs any reminder of the dire state of Las Vegas, he doesn’t have far to go.
Standing forlornly next door to CityCenter, the glittering new mega-resort his company co-owns with state entity Dubai World, is the defaulted, unfinished Cosmopolitan casino.
CityCenter, which at $8.5 billion and 18 million square feet is by far the largest development Las Vegas has ever seen, opened this month as the city’s two-year recession showed signs of easing. Yet the complex is a long shot by any measure.
I spoke to Murren, a youthful 48 with a touch of gray, while sitting at a boardroom-size table in his grand private office within the faux Tuscan splendor of the Bellagio Resort. From here he runs the 20 properties MGM Mirage owns or has investments in.
Bringing in six celebrity architects to design CityCenter was Murren’s brainchild. Their sleek, glistening buildings are supposed to lure the free-spending visitors necessary to reduce MGM Mirage’s $13 billion in long-term debt.
I asked Murren, who once considered a career in architecture, how big-name architects figured into a city defined by fantasy and spectacle.
“In 2004, we were looking at how to develop the 67 prime acres we had between the Bellagio and Monte Carlo resorts. We were seeing designs for one theme hotel after another. It was a big yawn.”
Murren said that while attending Trinity College in the “troubled, decaying” city of Hartford, Connecticut, he interned at agencies that helped house people. He also swooned over Rome during a college-sponsored sojourn.
‘Magical Time’
“That was a magical time,” he said, and one when the profession of architecture tempted him. “I wanted to examine the livability of cities.”
I don’t see how Vegas is a “livable” city. It’s certainly not a sustainable city. Everything has to be trucked in from outside, including food, water, and tourism money. Unless they fill the desert with solar panels stat, Vegas should have stayed as a supply outpost for travelers and Hoover Dam.
Uhm you know it’s 2009 and not 1709 right and we have the technology to truck things in rather efficiently. By your standard 80% of cities in the US should not exit because they are not fully self sustaining and need things trucked in.
Eddie, the same can be said for any ghost town.
A town or city has to have a reason to exist. When that reason vanishes then so do the inhabitants.
Are you suggesting 80% of the cities in the US should exit?
I can see the case of New Orleans and Detroit, but 80% seems like a rather high share.
Trucking things in will be efficient until oil becomes too expensive. Almost every city in the US was established because it had some natural advantage: a port, a river, good soil, water, good climate. In the case of Vegas, everything has to be trucked in, and for a very long distance. If the SHTF, Vegas will be too much trouble to maintain.
I agree oxide. When diesel reaches $4 to $5 per gallon trucking items hundreds of miles becomes insanely expensive. Some of the rigs don’t even get 10 miles per gallon.
A “very long distance” of 200 miles from the central valley of California and S. California. Yep $4 gas will make the whole city a ghost town.
Uhm you know it’s 2009 and not 1709 right and we have the technology to truck things in rather efficiently. By your standard 80% of cities in the US should not exit because they are not fully self sustaining and need things trucked in.
But it’s not just technology, we also need government interference to condemn rights-of-way and build and maintain roads and bridges for the trucks. Landowners have to suffer and everyone has to pay taxes for this infrastructure, whether they want the stuff being trucked in or not ( or could produce it locally or not).
I would say that indeed 80% of US cities are highly artificial creations and should not exist in their current form.
Water, such a thorny issue. Though historically, most all major US cities have been built near either a river, lake and/or ocean, which meant both local access to fresh water and a handy means of transporting goods. The Colorado River is 30 miles from Las Vegas. They had groundwater but their population growth wiped it out years ago….
http://www.lasvegassun.com/news/2008/jun/01/satiating-booming-city/
Did any of you see the hangover?I saw it yesterday and it was very funny.The whole thing was set in vegas and even mike tyson had a cameo.
Passengers help foil attack on Detroit-bound plane.
Dec 26, 8:49 AM (ET)
ROMULUS, Mich. (AP) - An attempted terrorist attack on a Christmas Day flight began with a pop and a puff of smoke - sending passengers scrambling to subdue a Nigerian man who claimed to be acting on orders from al-Qaida to blow up the airliner, officials and travelers said.
The commotion began as Northwest Airlines Flight 253, carrying 278 passengers and 11 crew members from Amsterdam, prepared to land in Detroit just before noon Friday. Travelers said they smelled smoke, saw a glow, and heard what sounded like firecrackers. At least one person climbed over others and jumped on the man, who officials say was trying to ignite an explosive device.
“It sounded like a firecracker in a pillowcase,” said Peter Smith, a passenger from the Netherlands. “First there was a pop, and then (there) was smoke.”
Smith said one passenger, sitting opposite the man, climbed over passengers, went across the aisle and tried to restrain the man. The heroic passenger appeared to have been burned.
Afterward, the suspect was taken to a front-row seat with his pants cut off and his legs burned. Multiple law enforcement officials also said the man appeared badly burned on his legs, indicating the explosive was strapped there. The components were apparently mixed in-flight and included a powdery substance, multiple law enforcement and counterterrorism officials said.
The White House said it believed it was an attempted act of terrorism and stricter security measures were quickly imposed on airline travel. Dutch anti-terrorism authorities said the U.S. has asked all airlines to take extra precautions on flights worldwide that are bound for the United States.
The incident was reminiscent of Richard Reid, who tried to destroy a trans-Atlantic flight in 2001 with explosives hidden in his shoes, but was subdued by other passengers.
Multiple law enforcement officials identified the suspect in Friday’s attempted attack as Umar Farouk Abdul Mutallab. He was described as Nigerian.
Flying home (to Norfolk VA) out of Orlando is going to be fun today.
Show up 2 hours early at the checkpoint and you’ll be fine.
Yep, TSA is going to be extra vigilant now for containers of > 3 1/2 oz of liquids.
The whole security process is a big charade. It inconveniences the hell out of all of us, costs enormous sums of money and absolutely will not dissuade a dedicated terrorist.
I may be wrong (sarcasm), but flying is not a right. I have no disagreement at all with the rules at the checkpoint. I care most for safety.
I’m a frequent flier. If you don’t like the extra wait I recommend signing up for an extensive background investigation. Some airports allow you to go quicker through the checkpoints if you are recognized as having gone through the investigation.
It will be interesting to see what new security rules go into effect. One I heard this morning says they will not permit you to get out of your seat within an hour of landing. For flights between Phoenix and LA, that would mean the entire flight.
Bill, you disappoint me. I’m pulling your Libertarian card and your man-card is on double-secret probation as of now.
The reality is, there’s no way to make security absolutely airtight. You have to strike a sound balance between security and massively inconveniencing the 99.99999% of travelers who have no bad intent. Air travel is already enough of a nightmare without further security hurdles to jump through.
What’s sad to me is that one brave passenger took immediate action to nip this plot in the bud. I’m guessing most of the other so-called men on the flight sat there petrified with fear, waiting for somebody else to “do something.” They should’ve risen en mass and given the perp a pulverizing beat-down the second they detected he was up to no good.
To atone for my “bad words” I would like to see the U.S. completely pull out of all overseas ventures and completely stop foreign aid in any way (money, food, military) to any other nation. That includes Israel.
Had we pulled out of support of the Shah of Iran in 1975 and completely got out of the Middle East, we would most likely not have had any Moslem terrorists to worry about, only Christian terrorists murdering doctors.
“An attempted terrorist attack on a Christmas Day”
Shouldn`t that read
An attempted man made disaster on a Christmas Day
Are the housing bulls back?
Amazing how different the view is on other websites. Here’s a comment I saw from Marketwatch. I wasn’t sure if it was a hangover from the eggnog…
With so many signals from DC that they are going to reflate the housing market, it is small wonder that flippers and specuvestors are finding HOPE NOW.
I saw that. The guys goes by multiple usernames. Here are some of them.
1) Gleongelpi
2) Mikebosa3
3) Farwest
He has many more usernames and is a realtard and backroom beancounter for local shack builders. I throw down facts following every one of his posts.
It’s pretty clear he’s a troll…however he’s not the only one “biding his time” until the market bounces back in 2010…er, make that 2011…unless it’s 2012…if not, then 2013….
The sad thing about retards like this is that they prey on the hopes and fears of the desperate…kind of like faith healers in a cancer ward.
I’ve had a few people tell me they are waiting for the market to “get better” to sell their homes. A couple of them are sitting on empty homes, too!
This is why we have to be patient. It’s the **duration** of the downturn, not just the depth, that will cause the most pain, IMHO.
Lots of people are sitting on the edge of their seats…just waiting to sell. How many are still fence-sitting buyers? I’m guessing far fewer than exited in late 2008. On all the housing blogs I visit, the strong hands have been jumping in, en masse, this past year.
Dropping the Bomb on Health Care
by Peter Schiff
“The real tragedy is that the current bill does nothing to restrain the forces that are propelling healthcare costs into the stratosphere, namely: regulatory bans of insurance competition, the out-of-control medical malpractice industry, federal programs and subsidies, and a tax code that favors a third-party payment system – which alienates the patient from the cost of his care”.
“To consider that many in Washington have the nerve to market this multi-trillion dollar monstrosity as a “deficit reduction bill” is to realize that our representatives have lost all touch with reality. For those keeping score, the government made similarly rosy projections in the mid-1960’s when Medicare was first introduced. The inflation-adjusted cost of that program already exceeds the original estimate by a factor of ten. That’s probably where we are headed this time around”.
http://www.lewrockwell.com/schiff/schiff64.1.html
Fear the black “Non-Hawaiian” …he aims to destroy America!
GOP lawmakers change tune on costly health plans:
“…By contrast, when Republicans controlled the House, Senate and White House in 2003, they overcame Democratic opposition to add a deficit-financed prescription drug benefit to Medicare. The program will cost a half-trillion dollars over 10 years, or more by some estimates.
With no new taxes or spending offsets accompanying the Medicare drug program, the cost has been added to the federal debt.”
AP News 12-26-09
Most of us here are aware of the $560 billion Prescription Medical Benefit passed by Republicans. Many of us capitalist types have been p.o.’d by it ever since. So your point is not new.
So what does your point have to do with Peter Schiff? Are you saying he is a closet socialist?
What hwy’s saying is that neither party can claim the high ground when it comes to “destroying this country”.
Tankxs…spoken in my best faux Irish accent.
Right. But it’s funny how people must think we need to constantly be reminded that socialism is a bipartisan effort is the executive branch and Congress.
Sammy is aware. When the context is clear, he will post that both Republicans and Democrats are at fault for the ever growing government. And he’s right.
It does not matter how fast or slow we are going down the road to serfdom. The only difference between the two large parties is the speed of getting there.
Anyone who cannot see that is blind.
Two wrong make a right in your world?
The White House has also endorsed the Senate’s plan to create an independent advisory board with broad powers to cut Medicare spending.
This will cut costs.
Medicare already dictates what it will pay for certain procedures. Once they have a board that does not have to worry about frequent elections you can bet they will put the screws to medical costs. Ask any MD what they think of this and ask them if it will cut costs. They will all say they are going to quit if they cut reimbursement, but unlikely to happen.
A public option will cut costs as well. Medicare costs 14% less than private medicare advantage program. Medicare delivers $1.00 of medical care for much less than private insurance. Private insurance takes 22-24 cents of every dollar spent on medical care.
I would be an interesting thought experiment to see what the medical industry would look like today had Medicare not been implemented 45 years ago. It would be very, very different I am sure.
Let’s see how “Magical” he thinks this is in a few months or a year!!
I guess banks are overworked funding all those big bonus fees for their execs. My small business has just been hit with a new fee from SunTrust. Any business account that deposits ‘excess cash,’ which SunTrust defines as over $10,000 per month in bills or coins, has to pay a surcharge for the bother of handling actual physical money.
Mind you, I do not operate a vending machine concession. We are not talking zillions of rolled coins. For the most part, no coins at all. Just those exhausting $10s, $20s and $50s. Which arrive at the bank pre-counted accompanied with a deposit slip.
Remember those days before all the government bailouts when banks actually WANTED your money? Now it’s such a bummer to handle cash from the common people. So much easier to push a button and fund operations w that endless flow of digital dollars from Uncle Sam.
Wow. That’s absolutely ridiculous!
Seems anything that resembles “work” — even if it’s counting cash — goes beyond what banks think they are supposed to do?
Since it is claimed by many “experts” that the housing market is key to our nations economy. Why not legislate a new law that makes it mandatory that all citizens buy and sell houses and or property to one another a minimum of one transaction per year.
The national association of real-a-tors could Unionize and it would be illegal to buy or sell a property without the ‘expert’ guidance of a real estate professional. All real-a-tors would have a guaranteed commission of at least 8% along with a Union/gubmint backed retirement pension and sickness care progrum, guaranteed for the life of said real-a-tor and family.
There could never be a better time to pass this ground breaking legislation for the betterment of society and future generations. This could easily be piggy backed in one of the many current bills that are in motion.Since no one knows what’s in them anyway, what could be the harm. With the lunatics in charge of the asylum I see no reason that this would not easily pass.
I am forwarding this idea up to the cesspool. I am calling it, “The It Takes a Village Home Ownership Plan”(TIT-VHOP)Bill#BR-549. Because we all “deserve” a home, not just a house.
I think your bill stands a pretty good chance if you add that all profit from RE trades be in the form of vouchers for Hummers and flatscreen tvs and such instead of cash.
“Why not legislate a new law that makes it mandatory that all citizens buy and sell houses and or property to one another a minimum of one transaction per year.”
Don’t give ‘them’ any ideas…
From your mouth to Ried’s ears.
wmbz,
Haven’t you learned by now that whenever we describe some kind of harebrained idea here as a joke…it ends up becoming policy in D.C.?
Gotta keep the jokes off-line, so they don’t get any bright ideas.
Nobel economics laureate Paul Krugman once again dips his pen in acid to denigrate those of us who do not believe government has the skill nor resources to supervise the individual lives of the masses.
“There’s the crazy right, the tea party and death panel people – a lunatic fringe that is no longer a fringe but has moved into the heart of the Republican Party. In the past, there was a general understanding, a sort of implicit clause in the rules of American politics, that major parties would at least pretend to distance themselves from irrational extremists. But those rules are no longer operative. No, Virginia, at this point there is no sanity clause.”
Krugman’s Christmas Carol
I take issue with a lot of things Krugman writes, but he hit the bullseye on this one.
Uhhuuh, uhhuhh. And I’m sure Krugie said the same about Dems and Kos commentators pre-2008.
It’s the same thing over and over. Anyone and anything on the left is mainstream in the eyes of Krugie and the NY Times. Anything even remotely right of center is extreme, racist, etc.
See you in 2010 Krugie.
The Bushitlerites, Cheneyburtonists,Cindy Sheehan’s crew, Ecofreaks, Acorns, community organizer Alinskys and the rest made up the Obama base. Krugman was right behind them, and they look a lot more nutty to me than the housewives and small businessmen who seems to be the tea partiers.
That sad part about this is that the “Tea Parties” started out as a reaction to the bailouts. I very much supported what they were all about in the beginning.
Problem is, the movement was co-opted by the Republican Party, and now they’ve gone from being anti-bailout to anti-tax, anti-healthcare regulation, etc., and the whole thing was turned into a circus.
I wish we could have a single-issue movement (anti-bailout for banks/lenders/borrowers), that wouldn’t be taken over by clowns and extremists.
Here’s how it started (and very much in line with what **all** of us — Dems, Repubs, Lib, etc. — believe at the HBB):
http://www.youtube.com/watch?v=bEZB4taSEoA
that wouldn’t be taken over by clowns and extremists.
ala dick armey etc.
Agreed Ca renter, to the single issue- would be much more effective.
RV sales may lead road to recovery.
Chicago Tribune ~ Saturday, December 26, 2009
CHICAGO — Before housing hit the skids, credit got crunched and the unemployment rate shot into double digits, the market for recreational vehicles started to plummet.
Economists view RVs as an early indicator of where the economy is going, and, as it turned out, the rest of the planet followed motor homes and travel trailers right over the edge.
Sales of recreational vehicles are a sign of an improving economy.
Now comes word that RV sales have started picking up. Airstream Inc. is boosting production of its iconic caravans and expanding its work force by 50 percent.
“Airstream is back on the road to recovery,” Chief Executive Bob Wheeler declared. “We can expect to see significant growth.”
As decades go, the 2000s ended with such a bust that the 2010s almost can’t help but look good in comparison.
With the economy lurching from housing crisis to credit crisis to its ongoing job crisis, it might seem premature to declare a recovery in the offing. Yet most forecasters expect at least some growth ahead. And by a few measures, the good times already have started rolling again.
Just look at a chart of stock market performance since the bottom in March: Megabucks are being made, and no matter how hard a sheepish Wall Street tries to hide it, bonuses will be enormous.
Conventional wisdom holds that the rich will get richer and everybody else in a winner-take-all economy will be downwardly mobile.
But if the assembly workers at Midwest RV plants can stage an unlikely comeback, anybody can. It’s just going to take time.
Could it be that the unwashed masses are turning away from their McMansions for RVs?
If you know your next job has a limited time frame and you want to be able to move to the next job in a different town, this seems like a prudent move.
+1 Not a bad idea. Bill in LA, are you listening?
I saw a newsclip on a stay-at-”home” worker who did exactly that. Put his wife and two kids in the RV and trucked around the country. He did his computer work in the bedroom while mom either drove, or home schooled the kids. Imagine the field trips to every national park..
One of the industry’s web sites has a blog. From reading the posts, there are contractors who do exactly as that - stay in an RV and move their home on wheels to the proximity of their new gig. There are even thread topics about RV camping.
I prefer apartment living, although it’s probably a lot more expensive.
I refuse to even consider RV living until the efficiency goes above 20mpg or more, or they come out with electric ones. I’ve still got a good 30 years or so ’til I retire (if ever), so I can wait.
Some of the Sprinter vans actually do get about 20mpg or better, at least on the freeway.
I thought the “urban assault RV” from Stripes was pretty cool…
Speaking of the econo aspects of RV life, have any of you heard about the boom in TV rabbit ears that supposedly get reception of most of the new digital transmissions? Have any of you tried it? Sounds too good to be true, but I’m all ears!!!!
http://www.latimes.com/business/la-fi-rabbit-ears25-2009dec25,0,3882718.story
Oh my goodness!!! You have no idea how happy this would make me.
After moving to San Diego from LA in 1998, I found that the hills kept my TV w/antenna from receiving any signals.
Who know if this will now work better, but I will try to find one of these and will report back.
Yee-haw! No more cable!
John Williams- Economist, of Shadow Stats interviewed on the real U.S. economy using original methodology:
http://www.fairfieldweekly.com/article.cfm?aid=16014
I’m really tired of old, white men predicting chaos.
…”until I become their age.”
You left those words off.
And when you get to 50, you will wonder how the years went by so fast. And if you remember your phrase “old white men” at that age, I hope you still think it’s funny!
Bashing old white men -> When you absolutely, positively have to make a PC statement without coming up with new material.
Old white men -> when you absolutely, positively cannot die thinking the world will go on without you. Bonus points for being a pot-smoking Boomer turned right-wing lawyer with a pony tail.
Ram, is by far the head punk thug on team-Barry.
Odd Couple Demands Probe of Rahm Emanuel at Freddie as More Money Rolls In ~ December 25, 2009
Two strange bedfellows have asked Attorney General Eric Holder to investigate President Obama’s right-hand man, chief of staff Rahm Emanuel, for his potential role in the near collapse of mortgage giants Fannie Mae and Freddie Mac, just as Treasury lifts the cap on their bailout money.
The letter by Jane Hamsher, founder of the liberal Firedoglake Web site, and Grover Norquist, Americans for Tax Reform Chief, was sent Wednesday, one day before the Treasury Department announced that it will lift the $400 billion financial cap on loans to the government-sponsored enterprises to make sure they stay afloat.
It also arrived just before the Federal Housing Financial Authority announced Thursday that it would place salary caps on 11 of the companies’ top executives.
Hamsher and Norquist want to know now whether the bailout was in part the result of corrupt practices by Emanuel while he was a board member at Freddie in 2000-2001.
Two strange bedfellows have asked Attorney General Eric Holder to investigate President Obama’s right-hand man, chief of staff Rahm Emanuel, for his potential role in the near collapse of mortgage giants Fannie Mae and Freddie Mac, just as Treasury lifts the cap on their bailout money.
Not going to happen. Rahm is the brains of the operation - Obama is just the front man. The Powers that Be will never countenance a serious investigation of any of the true wire-pullers behind this administration. Wait and see.
* The Wall Street Journal
* DECEMBER 26, 2009
U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy
By JAMES R. HAGERTY and JESSICA HOLZER
The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.
“The timing of this executive order giving Fannie and Freddie a blank check is no coincidence,” said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed “to prevent the general public from taking note.”
Treasury officials couldn’t be reached for comment Friday.
So far, Treasury has provided $60 billion of capital to Fannie and $51 billion to Freddie. Mahesh Swaminathan, a senior mortgage analyst at Credit Suisse in New York, said he didn’t believe Fannie and Freddie would need more than $200 billion apiece from the Treasury. But he and other analysts have said the market would find a larger commitment from the Treasury reassuring.
In exchange for the funding, the Treasury has received preferred stock in the companies paying 10% dividends. The Treasury also has warrants to acquire nearly 80% of the common shares in each firm.
The Treasury removed the cap on the size of available bailout funds by amending agreements it reached with the companies in September 2008, when the government seized control of the agencies under a legal process called conservatorship. The agreement allowed the Treasury to make amendments through the end of the year, without the consent of Congress. Changes made after Dec. 31 would likely involve a struggle with lawmakers over the terms.
Some Republicans are angry the administration is expanding the potential size of the bailout without having a plan for eventually ending the federal government’s role in the companies.
The Treasury reiterated administration plans for a “preliminary report” on the government’s future role in the mortgage market around the time the federal budget proposal is released in February.
…
It’s about time they covered their Fannie.
It’s a good thing that the young repubicans believe that only airplanes should be America’s sole provider of National transportation…
China unveils ‘world’s fastest train link’:
“…In September, officials said they planned to build 42 high-speed lines by 2012 in a massive system overhaul as part of efforts to spur economic growth amid the global downturn.”
“The network uses technology developed in co-operation with foreign firms such as Siemens, Bombardier and Alstom.”
Sat Dec 26, BEIJING (AFP)
“young repubicans”???
The whole government top to bottom has been promoting the air travel industry for years. With all of the printed money being thrown around you think we could have built the infrastructure to support high speed trains. Instead we pass out cash to worthless banks and corrupt elecition rigging groups like ACORN.
Total federal grants received by ACORN since 1994: $54 Million.*
Bonus pool for the top 5 brokerages in 2006 pre-pop: $24 Billion.**
In other words, ACORN managed to destroy this country (as per Glenn and Rush) on a measly $54 million bucks. If you ask me, the conservative pundits shouldn’t be critizing ACORN; they should be taking efficiency lessons.
——
*citypaper dot com/digest.asp?id=18983
**fiercefinance dot com/story/bonus-pool-2007-goldman-sachs-dominates/2007-11-19
meet hwy50, always good for the partisan take - on just about anything!
Heeheehheeeee..Let’s look at how Cheney-Shrub got the Saudi Bin Laden family out of the good ole’ US of A…
Amtrak or a private jet, when ordinary “tax-paying” Americans (democraps & yng reoubicans) couldn’t even get an air-vac for Grandpa
Heeheehheeeeev
for petesake, quit honkin that ol tired lameass horn when it was a small %age. Jezelouise. And whose the partisan now?
The wealthy are the socialists. Pay attention.
Amtrak has lost money every single year it has existed.
Liberal solution: expand Amtrak of course.
Yep, they rank right near the top of the gubmint money rat hole!
Amtrak …or US $$$$$$$$$$$$$$$$$ for Xe? Tough very very tough.
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
“…Amtrak’s leader at the time, David L. Gunn, was polite but direct in response to congressional criticism. In a departure from his predecessors’ promises to make Amtrak self-sufficient in the short term, Gunn argued that no form of passenger transportation in the United States is self-sufficient as the economy is currently structured.[49] Highways, airports, and air traffic control all require large government expenditures to build and operate, coming from the Highway Trust Fund and Aviation Trust Fund paid for by user fees, highway fuel and road taxes, and, in the case of the General Fund, by people who own cars and do not.”
“…Before a congressional hearing, Gunn answered a demand by leading Amtrak critic Arizona Senator John McCain to eliminate all operating subsidies by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. McCain, usually not at a loss for words when debating Amtrak funding, did not reply.”
Oh no, I agree with Eddie!!
Think I’ll go and lie down.
China on Saturday unveiled what it billed as the fastest rail link in the world — a train connecting the modern cities of Guangzhou and Wuhan at an average speed of 350 kilometres (217 miles) an hour.
The super-high-speed train reduces the 1,069 kilometre journey to a three hour ride and cuts the previous journey time by more than seven and a half hours, the official Xinhua news agency said.
Work on the project began in 2005 as part of plans to expand a high-speed network aimed at eventually linking Guangzhou, a business hub in southern China near Hong Kong, with the capital Beijing, Xinhua added.
“The train can go 394.2 kilometres per hour, it’s the fastest train in operation in the world,” Zhang Shuguang, head of the transport bureau at the railways ministry, told Xinhua.
Test runs for the service began earlier in December and the link officially went into service when the first scheduled train left the eastern metropolis of Wuhan on Saturday.
By comparison, the average for high-speed trains in Japan was 243 kilometres per hour while in France it was 277 kilometres per hour, said Xu Fangliang, general engineer in charge of designing the link, according to Xinhua.
Beijing has an ambitious rail development programme aimed at increasing the national network from the current 86,000 kilometres to 120,000 kilometres, making it the most extensive rail system outside the United States.
China unveiled its first high-speed line at the time of the Beijing Olympics in 2008 — a service linking the capital with the port city of Tianjin.
In September, officials said they planned to build 42 high-speed lines by 2012 in a massive system overhaul as part of efforts to spur economic growth amid the global downturn.
The network uses technology developed in co-operation with foreign firms such as Siemens, Bombardier and Alstom.
Europe has some of the most extensive high speed train links N.S.E and W, so why should we not have the same things to promote growth, jobs etc.?
Ummm…maybe because Europe has a MUCH higher population density than the U.S.?
I’ve traveled extensively by train in Europe and Japan. Both locations have great systems, but very few trips take longer than a few hours.
Around here, ‘blips’ are known as ‘dead cat bounces.’
Tax credit fuels home-sales bounce, but will it be just a blip?
The first-time homebuyers’ tax credit helped resuscitate the Seattle real-estate market in 2009. The market remains fragile, most insiders say, and the outlook for late 2010, after the credits are scheduled to expire, is especially murky.
By Eric Pryne
Seattle Times business reporter
In residential real-estate annals, 2009 probably will be recorded as the Year of the Credit.
In February, Congress approved an $8,000 tax credit for first-time homebuyers in hopes of kick-starting moribund home sales.
“It worked,” Lennox Scott, chairman and CEO of John L. Scott Real Estate, said at a recent industry forum. “That’s what completely activated the market.”
It sprang to life in the spring. After nearly two years of declining sales, buyers bought 20 percent more houses in King County between June and November than during the same six months in 2008.
Was that a blip, or the start of a trend? That’s what real-estate insiders are asking as they gear up for 2010.
…
Foreclosures
They aren’t as commonplace here as in Florida or Las Vegas or Phoenix, and it’s highly unlikely they ever will be. Still, the number of foreclosures in the Seattle area could rise in 2010, sending ripples through the market.
About 2.2 percent of all loans in Washington were in foreclosure in the third quarter, according to a Mortgage Bankers Association survey. That’s about half the national rate.
But another 3.2 percent of Washington loans were 90 days or more past due. They could be foreclosures-in-waiting unless government loan-modification programs reach more homeowners, observers say.
And if those homes are foreclosed and later put up for sale at bargain-basement prices, they could push the entire market lower, Ellis said.
There’s already a substantial “shadow inventory” of homes that lenders have repossessed, but haven’t yet listed, said mortgage banker Jeff Bell of Cobalt Mortgage in Kirkland. Their disposition could affect the broader market as well, he said.
But Wood said she’s more concerned about the impact on prices of “short sales” — sales for less than the owner owes the lender.
…
20% more sales than in 2008….hmmm that sounds like a housing market that’s….what’s the word I’m looking for….oh yeah, recovering.
I don’t think anyone (even straw men) would argue that the $8K tax credit giveaway to the REIC failed to stimulate sales.
Don’t forget the artificially low interest rates.
“After plummeting 20 percent in 18 months from its summer 2007 peak, the median price of a single-family home sold in King County slipped only slightly more in 2009.”
“It was $382,500 in January and dropped to $370,000 in November, according to the broker-owned Northwest Multiple Listing Service.”
Seems the median price is still going down. With a median HH income of roughly 65k for the county, I would say it still has a long way to go. In fact, I will go so far as to say…TTTiiimmmbberrr!!!
you go Eddie!
Hey Eddie,
First time we “sort-of” agree on anything… One little clarification I’d like to get from you. That 20% you tout- can you give me any indication on the price point/size ave of the homes being sold? Can you give me a solid percentage of the homes that sold will be owner occupied? Because I can tell you this- permits at my job have ground down to next to nothing. The ONLY homes being built are 1100 SF 3bd 2ba boxes on spits of land next to another identical box. Gone are the 5000-15000 SF monstrosities of “yester-year”. I like the fact that the lake is being exploited less around here, but my read does not bode well for your “recovery”. An economy built on 24″ rims and 1000 SF kitchens won’t recover based on laminate flooring in tiny homes.
PLEASE PLEASE PLEASE explain your thought rationale on this. Tell me how we will bounce back based on a tearing shift to “walmart” housing.
“Gone are the 5000-15000 SF monstrosities of “yester-year”.
That is a plain and simple fact, that many can not or will not grasp.
The days of Mc-mansions popping up like dandelions everywhere are over. The only way to go back to where we were (housing-mania) is to recreate it’s cause. That is just not going to happen, try as D.C. might.
The world won’t stop spinning, but buy now pay later and live off home equity in mean time, is kaput. Millions hate it, and whine constantly about it. Team Barry can tell the banksters to start more lending all he wants to, but can he order them to start lending to strawberry pickers wanting liar loans? Nope, ain’t gonna happen.
Living within ones means is a bitter pill for many to swallow, but it’s a good thing, and it isn’t painful at all.
best response I could hope to get, thanks-
Actors and real estate investing don’t mix.
Charlie Sheen, wife in boozy Christmas clash
* Carly Crawford
* From: Sunday Herald Sun
* December 27, 2009 12:00AM
BAD boy actor Charlie Sheen spent Christmas Day in jail after his wife accused him of physically attacking her during a bitter, drunken argument.
The feud erupted Christmas morning after Sheen, the star of Channel 9’s sitcom sensation Two and a Half Men, flew to Colorado from LA to spend time with wife Brooke Mueller and their twin boys, Max and Bob.
The pair had been living apart and had simmering marital problems.
Soon after Sheen arrived at their $7.5 million Aspen chalet, he and Mueller began arguing until Sheen allegedly throttled Mueller, US reports said.
Last night his wife tried to hose down the drama, telling police both had been drinking before the scuffle, according to reports.
Police claimed Sheen blew 0.04 while Mueller registered 0.13 on their blood alcohol tests, celebrity website TMZ reported.
It was unclear why a blood alcohol test was needed.
Sheen is the highest paid actor in US television and takes home $825,000 per episode on Two and a Half Men, which is also a ratings juggeraut for Channel 9.
It averages 1.2 million Australian viewers and is consistently in the top 10 most watched shows.
And, despite many episodes being repeated, it still trounces its competition, including The 7PM Project.
But Sheen’s private life has had many ups and downs.
The latest drama began about 8.30am, local time, when real estate investor Mueller, 29, placed a 911 call to police.
Police arrived about three hours later and arrested 44-year-old Sheen,
whose big screen credits include Platoon, Major League and Wall Street.
…
Were they arguing about Suzanne?
I’m pretty sure Suzanne blew higher than a .13
“…when real estate investor Mueller, 29″ + “…Soon after Sheen arrived at their $7.5 million Aspen chalet”
YGG = You Go Girl!
Potential question for Congressional auditors to ask the Fed:
Do your policies deliberately penalize savers and the elderly, or is their victimization an accidental consequence of the your too-big-to-fail financial rescues?
At Tiny Rates, Saving Money Costs Investors
By STEPHANIE STROM
Published: December 25, 2009
Millions of Americans are paying a high price for a safe place to put their money: extremely low interest rates on savings accounts and certificates of deposit.
Joe Parks, a retired accountant in Houston who sits on the volunteer advisory board of Better Investing, said that with low interest rates and fees, retirees and the elderly could take anywhere from a half to three-quarters of a percent cut in their incomes.
Joe Parks, a retired accountant, said retirees and the elderly would take up to a three-quarters of a percent cut in income.
The elderly and others on fixed incomes have been especially hard hit. Many have seen returns on savings, C.D.’s and government bonds drop to niggling amounts recently, often costing them money once inflation, fees and taxes are considered.
“Open a Savings Plus Account today and get a great rate,” read an advertisement in the Dec. 16 Newsday for Citibank, which was then offering 1.2 percent for an account. (As low as it was, the offer was good only for accounts of $25,000 and up.)
“They’re advertising it in the papers as if they’re actually proud of that,” said Steven Weisman, a title insurance consultant in New York. “It’s a joke.”
…
With availability of money so tight it’s amazing to see interest rates still this low.
When they pay me interest to borrow it, I’ll take out a loan.
Comment by rms
2009-12-26 15:12:57
With availability of money so tight it’s amazing to see interest rates still this low.
——————–
Exactly right. Which means, IMHO, that rates are being kept low by artificial means.
Property, casualty insurers’ sales drop ~ BLOOMBERG NEWS
December 26, 2009
U. S. property and casualty insurance sales plunged 5 percent in the third quarter, the biggest drop since at least 1986, on lower prices and reduced demand.
Policy sales in the three months ended Sept. 30 fell to $108.4 billion from $114.1 billion in the year-earlier period, Verisk Analytics Inc. said this week in an e-mailed statement. The previous record was the 4.8 percent slump in the second quarter.
Layoffs at manufacturing and construction companies weighed on demand for workers’ compensation coverage, and individuals who feared losing their jobs spent less insuring their homes and cars. The U. S. lost more than 7 million jobs in the past two years as banks limited lending for businesses and home-buyers.
“Written premiums have now declined versus year-ago levels for 10 successive quarters,” said David Sampson, president of the Property Casualty Insurers Association of America, in the statement. He blamed the recession and “increasingly intense competition in many insurance markets.”
American International Group Inc., the insurer bailed out by the U. S., said property-casualty premiums fell 13 percent to $8.1 billion in the quarter as clients scaled back and rivals poached staff and customers. Travelers Cos., the insurer added to the Dow Jones industrial average, said policy sales fell 2.6 percent from last year’s third quarter to $5.34 billion.
The industry posted net income of $10.4 billion compared with a loss of about $9.8 billion a year earlier on lower hurricane claims.
“Financial operations do not lend themselves to innovation. What is recurrently so described and celebrated is, without exception, a small variation on an established design . . . The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version.”
John Kenneth Galbraith, A Short History of Financial Euphoria
Glut of shadow properties could hurt housing prices
Expert says ‘Pipeline of default coming’
By Alejandro Lazo and Tiffany Hsu • LOS ANGELES TIMES • December 20, 2009
A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the U.S. housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.
A variety of measures to keep discounted bank-owned properties off the market — including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford — has helped to increase a backlog of so-called “shadow inventory” by 55 percent in the year ended Sept. 30, according to a report Thursday from First American CoreLogic, a Santa Ana, Calif.-based real estate research firm.
These shadow inventory properties are homes that have not been tallied into official inventory numbers tracked by Realtors and other real estate professionals. They include homes taken back by lenders through foreclosures and similar actions, as well as those homes where borrowers are at least 90 days delinquent on their mortgage notes. A year earlier, the pending supply of homes not yet up for sale totaled 1.1 million.
A debate among real estate professionals and market watchers has emerged as to how big an impact such shadow properties will have on housing prices and sales if they emerge as part of the total mix of homes for sale next year.
Some argue that lenders, concerned over potential losses, will spread out the pace of repossessions to avoid depressing the market. Others say efforts by the government won’t be able to keep up with the sheer number of defaults brought on by unemployment and depressed home values.
“One of the key questions is the timing, and a lot of the timing issues are really related to the administration’s HAMP program,” or Home Affordable Modification Program, said Sam Khater, a senior economist for First American. “If many of the loans that are delinquent are able to be successfully modified, and those loans perform, then that should alleviate this issue of the pending supply and shadow inventory.”
Such success is proving elusive. Data released last week by the federal government showed banks are doing poorly turning the growing number of temporary mortgage modifications into permanent ones. Only 31,382 of more than 700,000 mortgage modifications under the federal program had been made permanent by the end of November.
“Our forecast is that (home) prices will drop,” Khater said. “We are basically expecting that the program will continue to proceed as it has in the recent past; there might be a slight improvement, but it is a drop in the bucket relative to the size of the pipeline of default that is coming up.”
In California, home prices and sales have shown steady improvement in part because foreclosure properties have made up a smaller slice of the for-sale housing mix in recent months.
They need a HEMP program.
A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the U.S. housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.
———————–
Once again, they won’t be able to solve the problem until they learn how to define it.
The “recovery” means that prices will go DOWN, not up. Prices need to be LOWER in order for our economy to immprove.
It’s not rocket science, for goodness sake!
By Pat Beall
Palm Beach Post Staff Writer
Posted: 10:15 p.m. Friday, Dec. 25, 2009
WELLINGTON — The $1.3 million house at 10775 Versailles Blvd. is relocating, one upscale piece at a time.
Mirrors, cabinets, air conditioning units, even the kitchen sinks have marched out of the luxe property during the past 18 months as owner and licensed contractor Todd Gerst has dismantled the house he used to call home.
Welcome to house stripping: Owners or thieves enter a foreclosed property and haul away anything not nailed down — and, frequently, items that are.
“I have seen every handle in a house removed, the cabinet handles, the bathroom handles, even the doorknobs,” said Randy Bianchi of Paradise Properties of Florida.
Another unexpected piece of loot: cheap plastic electric outlet covers, “59 cents at the Home Depot,” emphasized Antoinette Hill, co-owner of JAJ Consulting Services LLC, a Tampa company handling sales of distressed properties.
If no item is too small, no effort is too great. Jim Banford, CEO of Real Estate Asset Disposition Corp., recalled a Jupiter home where the air conditioner was in the attic. “They took down the bedroom ceiling to get it out the door,” he said.
The oddest theft? Entire toilets. “What are they doing with them?” asked an incredulous Hill.
Selling them, said Bob Trumpy of Atlantic Auto Discount, which buys scrap metal. Cast iron versions are going for 6 cents a pound.
As the economy has gone down, the number of people hoping to resell scrap metal has gone up, and distressed owners are believed to be selling even modest pieces of their home for parts, like a junked car.
Electrical wiring, for instance, is coveted for its copper, which has more than doubled in price this year. Specialized wiring for surround sound disappears quickly.
But cupboards are not safe, either. Pool pumps are fair game. So are kitchen countertops, especially in higher-end homes.
At 410 Palmetto St. in West Palm Beach, a house up for sale, Bianchi stepped out of his car one day and touched down on sand, not concrete. Someone had hauled away the concrete pavers, leaving half the driveway gone.
When workers came for the driveway pavers at 10775 Versailles Blvd., a neighbor staged an intervention, taking photos of both the men and their truck until they left.
Neighbors may not always see it coming. “I hear that sometimes it happens in the middle of the night,” said an agent working in the Olympia community.
No residents, no problem
Police can do little. “If it’s an owner, what we can do?” said Rose Taleau, head of code enforcement in Wellington, where it’s estimated that more than 1,000 homes are in foreclosure. Further, she said, “if no one is residing in the house, it’s not a problem” from a code violation standpoint.
Lenders might better protect the property, and once a judgment of foreclosure is final, removing items is a crime. However, it’s averaging 360 days for a bank to seize a home in foreclosure, Banford said, plenty of time for an angry or desperate homeowner to cart away goods.
And lenders can be slow to take possession. For instance, Bank of New York got a judgment and permission to sell the Versailles Boulevard house in June. But Gerst remains the owner of record, according to the property appraiser’s office.
Neighbors face impact
Neighbors, homeowners associations and potential buyers are left with the fallout. True, from the exterior, Gerst’s two-story, 4,368-square-foot home is intact. Shrubs are trimmed, the lawn is mowed.
A closer look, though, reveals double front doors to the empty home are left unlocked. The view from a neighbor’s back yard shows pavers ripped from the swimming pool area and exterior molding stripped from nearby entrances. Sewer gas could be smelled, the upshot of removed toilets.
Gerst could not be reached for comment. On probation for multiple counts of theft and selling counterfeit goods, his last known address was not in his $1 million Versailles home.
According to the Florida Department of Corrections, it was the Palm Beach County Jail.
“Welcome to house stripping: Owners or thieves enter a foreclosed property and haul away anything not nailed down — and, frequently, items that are”.
This has been going on everywhere to my knowledge. We looked at a house last month, and to the surprise of the real-a-tor the entire kitchen had been stripped as well as the bathrooms. Part of the back yard fence was gone along with most of the deck boards, on the rear deck.
There was not a single fixture left, however they did not strip the plumbing or wiring. Perhaps they(the thieves)will go back and handle that soon.
wmbz
Let me guess, the “real-a-tor” said it had potential.
Sad to say, this kind of dispicable behavior might ultimately give banks the incentive they need to get foreclosures off their books as soon as possible.
We can hope…
SHERMAN FREDERICK: Hey Harry: Where is Nevada’s gift?
~ Nevada Journal
I’m very disappointed.
It’s Christmas morning and I can’t find one single gift to Nevada from Sen. Harry Reid under the health-care “reform” tree.
Louisiana got a nice package. Florida and Connecticut, too. And Nebraska scored a really big present.
Just three days ago Uncle Harry said that if a senator didn’t get his state “something” in the health-care “reform” package, then that senator wasn’t doing his or her job.
And yesterday Sen. Chuck Schumer, D-N.Y., upped the ante. He said that every state did “get something” in the measure.
OK. I’m excited. What’s Nevada’s gift? Uncle Harry, as everyone knows, is the Big Kahuna of the Senate. He “brings home the bacon,” his TV commercials claim. So if Nebraska got dispensation from Medicaid increases forever, one can only imagine the magnitude of Nevada’s present.
Flat screen TVs for every man, woman and child? No, no — that’s way too small.
A new military base … for every county?
A lump of coal and a power plant to fire it?
Maybe double our water allotment from the Colorado River?
Oh, I know: Lifetime exemptions for Nevada residents and all of their descendents from federal income tax? That would be nice.
Whatever it is, I can’t wait for the UPS truck tomorrow. The suspense is unbearable.
Nursing crisis looms as baby boomers age.
NEW YORK (CNNMoney.com) — America could be facing a nursing shortage that will worsen exponentially as the population grows older.
The problem: Baby boomers are getting older and will require more care than ever, taxing an already strained nursing system.
America has had a nursing shortage for years, said Peter Buerhaus, workforce analyst at Vanderbilt University School of Nursing in Nashville, Tenn. But by 2025, the country will be facing a shortfall of 260,000 RNs, he said.
“In a few short years, just under four out of 10 nurses will be over the age of 50,” said Buerhaus. “They’ll be retiring out in a decade. And we’re not replacing these nurses even as the demand for them will be growing.”
That’s because nursing schools are already maxed out.
“We’ve got to find another portal to bring nurses into the profession,” said Claire Zangerle, chief executive of the Visiting Nurse Association of Ohio and former chief nursing officer at the Cleveland Clinic. “We don’t have enough nursing instructors, so therefore the capacity of nursing schools is very limited.”
“Baby boomers are getting older and will require more care than ever”
I’ll make sure they’re all well cared for.
No problem; we’ll just import slave-wage illegals to care for all the aging boomers. No wonder McCain and his RINO ilk want to amnesty 20 million of them.
Nothing that several million Filipino nurses can’t fix. I was talking to a guy today who’s a DirecTV installer/repairman. He said that the illegal aliens are cornering the market in his occupation as well. They’re considered “independent contractors”, so DirecTV and Dish Network are feasting at the illegal alien labor pool as well. He’s Hispanic, but an American citizen who was born in AZ. He was very unhappy.
http://www.fairfieldweekly.com/article.cfm?aid=16014
We’re Screwed: a cheery new year’s forecast. Sobering.
Heaven help us if commerce ceases. I better learn how to create my favorite microbrew so that I can self-medicate myself when things get really bad.
http://business.timesonline.co.uk/tol/business/markets/europe/article6967905.ece
Ireland today, the US tomorrow? The inevitable bad ending to economic “booms” fueled by debt and speculative excesses.
Freddie Mac sees rates headed to 6 percent by end of 2010 December 26, 2009 12:38 AM ET
All Thomson Reuters newsWASHINGTON (Reuters) - After hitting an all-time low in early December, the average rate on a 30-year, fixed-rate mortgage rose to 5.05 percent this week and could climb to 6 percent by the end of 2010, the Washington Post reported on Saturday, citing U.S. mortgage financier Freddie Mac’s latest survey.
The results are noteworthy because rates have not topped 5 percent since the last week of October, when they reached 5.03 percent, based on the results of this survey, which polls lenders during the first three days of every week, the newspaper said.
Amy Crews Cutts, deputy chief economist at Freddie Mac, told the newspaper that interest rates were bound to rise to 6 percent by the end of 2010 because private buyers would demand a higher rate of return on the securities than did the Federal Reserve, the U.S. central bank. Lenders may have to raise the rates they charge to consumers in order to make that happen.
“Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it’s hard to imagine that the rates can go much lower than they are,” Crews Cutts said. “Anything we get at or below 5 percent is a gift at this point.”