The Housing Bubble

http://newhavenregister.com/articles/2010/01/10/news/a1jesse.txt

Jes’ Me Jackson and ACORN have a new shakedown target: The Banksters. This should be entertaining.

I just saw The gov of california on Meet the Press say, “Everyone wants to come to California”…

ROTFLMAO…LOL…LOL..

Hey Ben
I’m waiting for the next meet in DC area. I’ll take you around the Eastern Panhandle of WV to show a live picture of Boom and bust.

Somehow due to stimulus and low rates, the prices are up again by 5-7%.
But they will fall again later this year when reality strikes realty.

Martin

http://www.nytimes.com/2010/01/10/opinion/10rich.html

A rare NYT editorial on the incredible damage Banksters have wreaked on the US economy, and the need to rein them in.

The Other Plot to Wreck America by Frank Rich

“THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.”

“Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)’s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault.”

Good article about CITI and the Financial Crisis Inquiry Committee.

http://www.nytimes.com/2010/01/10/opinion/10rich.html?ref=opinion

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6958528/Record-bonus-pot-at-JP-Morgan.html

JP Morgan to pay out record bonuses. So much for Obama’s staged photo op “scolding” of his string-pullers at the White House.

China vows to keep “hot money” out of property marketJanuary 10, 2010 2:01 AM ET

All Thomson Reuters news BEIJING (Reuters) - China vowed on Sunday not to let foreign speculative investment affect the property market, the latest expression of official concern that real-estate prices are racing ahead too fast.

The directive from the State Council, China’s cabinet, will serve as a guideline for local authorities and ministries, including the People’s Bank of China and the China Banking Regulatory Commission, to work out detailed policies.

“Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China’s real-estate market,” the cabinet said.

It said the central bank and banking regulator should step up oversight and “window guidance” of mortgage lending.

About one-sixth of China’s nearly 10 trillion yuan ($1.5 trillion) in new loans last year flowed into the property sector.

Concerned that a property bubble could stir social and economic instability, Beijing has vowed to combat overly fast price increases, although its moves to date, such as restricting sales tax exemptions, have been relatively mild.

The cabinet urged local authorities, especially in cities where housing prices are rising sharply, to increase the supply of affordable housing.

It reiterated that it would curb house buying for “investment and speculation purposes” and keep the minimum down payment for purchases of second homes at 40 percent.

China’s central bank said this week that it would pay particularly close attention to the property market in 2010 while managing inflationary expectations.

(Reporting by Zhou Xin and Tom Miles; Editing by Alan Wheatley)

You know what pisses me off? “Double-Dip Recesssion” -What idiot thought up this phrase and whoever uses such retarded reference is even more brain dead than he who coined it. The implication is a brief slump then a resumption of the roaring “recovery”. This is bull$hit. Any lapse in the fake recovery perception would mean a loss in confidence in our government’s ability to control the economy which would lower the probability to zero of the chance of another orchestrated recovery being possible. “Failed Fake Recovery” would be much more fitting to describe a return to red ink in GDP growth. “Double Credit Bubble Pop” would even be better. What kind of idiots do the MSM spinmeisters take us for?

Is “dismembering” a bank as unpleasant as it sounds? The choice of terms such as “dismember” and “carve out” certainly conjures up unsavory images.

Thomas Hoenig appears to be emerging from this crisis as a champion of the American free enterprise system, standing up to powerful, entrenched interests on Wall Street and K Street. May God grant him the strength to stand up against the monopoly power of the evil Megabanks and their minions.

Federal Reserve President Announces “Dismemberment” Of Large Financial Institutions Should Be Considered

Submitted by Tyler Durden on 01/05/2010 11:29

Bad news for fixed income market monopolist Goldman Sachs. Kansas City Fed President Thomas Hoenig, in response to a question from University of Maryland Professor Carmen Reinhardt said “dismembering firms is a fair thing to consider.” Hoenig further clarified that regulators “have people who are experts who understand what’s going on inside institutions who could figure out how to carve out” some parts of a financial institution if they are taking undue risks with taxpayer backing.” Surely, we expect Lloyd Blankfein to comment promptly on how even the Federal Reserve is now thoroughly underappreciating the divine nature of its prop/flow-focused business model, and how originating the proactively entire volume of OTC quote flow is just a natural side effect of completely cornering the CDS, bond and loan market.
…

The best kind, consumers.

MCClatchy is one of the few MSM outlets that are doing a good job digging up and exposing the corruption that caused the crash. Here’s an article on their continuing investigation of Goldman’s starring role. (It’s a few days old, so maybe it’s already been posted.)

http://www.mcclatchydc.com/329/story/81465.html

In case we have any Islamic posters here, please help me out. Doesn’t ‘Allah’ simply translate as ‘God’? If so, why should it be against the law for Christians to use it to describe their god?

Whatever happened to the notion of Freedom of Religion, anyway? It seems both the global ecclesiastic and banking sectors are ever increasingly dominated these days by oligopolistic cartels.

In Malaysia, Uproar Grows Over Use of Word ‘Allah’

By SETH MYDANS
Published: January 10, 2010

BANGKOK — An uproar among Muslims over the use of the word Allah by Christians spread over the weekend with the firebombing and vandalizing of several churches, increasing tensions in a country that is in the midst of far-reaching political changes.

Malaysian Christians prayed at a temporary location after their church was set ablaze by the unidentified attackers in Kuala Lumpur.

Arsonists struck three churches and a convent school early Sunday and splashed black paint on another church. This followed the firebombing of four churches on Friday and Saturday. No injuries were reported, and only one of the churches, Metro Tabernacle in the capital, Kuala Lumpur, suffered extensive damage.

The attacks, unlike anything Malaysia has seen before, have shaken a country where many Muslims are angry over a Dec. 31 court ruling that overturned a government ban on the use of the word Allah to denote the Christian God.
…

Rethinking Vacation Homes ~ The New York Times

IN the heart of the winter, many homeowners may be romanticizing about a vacation home in warmer climes.

Fewer people had the opportunity to buy one last year, what with the mortgage crisis. Lenders now appear more willing to finance second homes, but borrowers must be patient, eminently qualified and strategic about their housing choices.

“People are beginning to see some opportunities, but they have to be strong borrowers,” said John Walsh, the president of Total Mortgage Services in Milford, Conn.

The improving conditions for borrowers, Mr. Walsh said, come mainly from the drop in vacation home prices, not any relaxation in lending standards. The lower prices, and lower loan amounts, make it easier for people to afford a second mortgage payment.

Fannie Mae and Freddie Mac, the government-owned companies that essentially dictate the lending standards for mortgages, have actually tightened requirements on second homes. Borrowers must now have credit scores of at least 660 and down payments of 20 percent to qualify; a year ago, the industry standard was a 620 or better credit score and at least 10 percent down.

While all borrowers have faced more scrutiny, lenders consider loans on second homes riskier than those on primary homes.

Because loan requirements were in such flux last year, many lenders opted not to take a chance on second-home mortgages, fearful of being forced by Fannie and Freddie to buy back the loans if the mortgages were not underwritten precisely according to specifications, said Ellen Bitton, the chief executive of Park Avenue Mortgage in Manhattan.

Devaluation ups stakes in Venezuela election year

CARACAS, Jan 9 (Reuters) - Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.

In a bid to jump-start the recession-hit economy of South America’s top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.

It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.

Utah construction outlook 2010: Bleak

(The Enterprise) Despite many large construction projects looming on the horizon, industry analysts are predicting another down year for Utah’s construction industry in 2010.

In 2009, nonresidential construction in Utah fell almost 37 percent, the biggest single-year decline since the Great Depression. Commercial, permit-authorized construction fell to $1.2 billion from $1.9 billion in 2008, and will likely drop further in 2010.

James Wood, director of the Bureau of Economic and Business Research (BEBR) predicts Utah construction will most likely have two more weak years. Commercial construction will total less than $1 billion in 2010 and 2011 before beginning to recover in 2012.

Construction workers, who make up 6 percent of Utah’s workforce, have experienced massive layoffs as companies have been forced to make cuts due to declining revenue and increased bid competition.

In 2007, Utah’s construction industry had 103,500 jobs, but lost over 12 percent in 2008. According to BEBR, only two years since World War II have had steeper declines in construction jobs: 1967 when jobs dropped by 13 percent, and 1987, when job losses reached 17 percent. The forecast for 2010 anticipates moderation in job losses but still a 6.9 percent drop and the loss of another 4,800 construction jobs.

Aye carramba! Cash es basuda en Caracas.

CARACAS – President Hugo Chavez, harried by recession and declining popularity, announced a major currency devaluation late Friday to shore up government finances and stimulate economic growth before key elections this year.

The move cuts Mr. Chavez’s two-year-old “strong bolivar” currency by half – to 4.3 per dollar from 2.15 per dollar – for most imports and transactions. The central bank will also subsidize a stronger 2.6-per-dollar rate for imports of food, medicine and other essential items, Mr. Chavez said.

WSJ: Chavez Devalues Venezuela’s Currency

The mini ice age starts here
10th January 2010 Daily Mail (UK)

The bitter winter afflicting much of the Northern Hemisphere is only the start of a global trend towards cooler weather that is likely to last for 20 or 30 years, say some of the world’s most eminent climate scientists.

Their predictions – based on an analysis of natural cycles in water temperatures in the Pacific and Atlantic oceans – challenge some of the global warming orthodoxy’s most deeply cherished beliefs, such as the claim that the North Pole will be free of ice in
summer by 2013.

According to the US National Snow and Ice Data Centre in Colorado, Arctic summer sea ice has increased by 409,000 square miles, or 26 per cent, since 2007 – and even the most committed global warming activists do not dispute this.

Cold snap triggers power shortage in China’s coal heartland ~ AFP

CHINA’S coal-rich Shanxi province faced its most severe power shortage in three years as severe cold weather continued to drive up national electricity demand, state media reported today.

The northern province was rationing electricity as two major coal-fired electricity plants in the capital Taiyuan saw their coal reserves fall below the seven-day supply warning level, the official Xinhua news agency reported.

Shanxi is China’s coal heartland, the biggest producer of a fossil fuel that provides 70 per cent of the nation’s fast-growing energy needs. It is also home to many coal-burning power plants.

But the province now faces shortages because of falling production and having to export large amounts of coal to other parts of China, Li Jianwei, an official with the province’s electricity association, said.

Taiyuan has ordered rotating shutdowns for more than 40 factories to ensure residences have enough power.

A spate of deadly mine accidents has also forced officials in Shanxi to close thousands of small mines.

Here is one way to quickly resolve the problem of burdensome pension obligations. I don’t believe this would be legal in the USA, but perhaps at least some other developed countries lack the same pension protections we enjoy.

Transportation
Japan Air Could Dissolve Pensions: Report
By Robert Holmes 01/10/10 - 10:53 AM EST

TOKYO (TheStreet) — Japan Airlines is considering a move to dissolve its pension fund for retirees if they choose to reject a 30% cut in payouts, according to a published report.

Japan Air, which is eyeing a court-led bankruptcy, needs to win the agreement of more than two-thirds of its 9,000 retirees. If not, the state-run agency restructuring Asia’s largest airline will likely close the pension fund, according to a Bloomberg report. The Yomiuri newspaper said that the pension fund has 291.8 billion yen ($3.15 billion) in assets.
…

China vows to keep “hot money” out of property market.
Sun Jan 10, 2010

BEIJING (Reuters) - China vowed on Sunday not to let foreign speculative investment affect the property market, the latest expression of official concern that real-estate prices are racing ahead too fast.

China

The directive from the State Council, China’s cabinet, will serve as a guideline for local authorities and ministries, including the People’s Bank of China and the China Banking Regulatory Commission, to work out detailed policies.

“Relevant departments must enhance monitoring of loans and cross-border investment to prevent illegal inflows of capital into the property market and to avoid the impact of overseas hot money on China’s real-estate market,” the cabinet said.

It said the central bank and banking regulator should step up oversight and “window guidance” of mortgage lending.

About one-sixth of China’s nearly 10 trillion yuan ($1.5 trillion) in new loans last year flowed into the property sector.

Concerned that a property bubble could stir social and economic instability, Beijing has vowed to combat overly fast price increases, although its moves to date, such as restricting sales tax exemptions, have been relatively mild.

The cabinet urged local authorities, especially in cities where housing prices are rising sharply, to increase the supply of affordable housing.

I love watching hypocrites like this fool melt down, Reid is toast. He can take his ill gotten gains and head back to Porch Light NV.

Reid apologizes for ‘no Negro dialect’ comment.

WASHINGTON(AP) – The top Democrat in the U.S. Senate apologized on Saturday for comments he made about Barack Obama’s race during the 2008 presidential bid and are quoted in a yet-to-be-released book about the campaign.

Senate Majority Leader Harry Reid of Nevada described in private then-Sen. Barack Obama as “light skinned” and “with no Negro dialect, unless he wanted to have one.” Obama is the nation’s first African-American president.

“I deeply regret using such a poor choice of words. I sincerely apologize for offending any and all Americans, especially African-Americans for my improper comments,” Reid said in a statement released after the excerpts were first reported on the Web site of The Atlantic.

For the unemployed, a new job in this economy often means less pay than they’re used to. ~AP

Unemployed for nearly a year, David Becker was relieved to land a new job in information technology last summer.

The offer carried a price, though: It was a lower-rung job than the one Becker had lost. He had to uproot his family from Wisconsin to Nevada. And, like many formerly jobless people who find work these days, Becker is now paid far less than before — $25,000 less.

It’s one of the bleak realities of the economic recovery: Even as more employers are starting to hire, the new jobs typically pay less than the ones that were lost.

In the government’s data, a job is a job. More jobs point to a growing economy. But to people who used to earn $60,000, a new $40,000 job means they’ll spend less — and contribute less to the recovery.

“In most cases, it means a subdued expansion, for sure,” said Marisa Di Natale, director at Moody’s Economy.com.

So if the “public option” is DOA what in the hell is buried in the 2000+ page stinking pile of BS? ‘It’ will be one giant assed mess.

Government health insurance option appears doomed.
House Democrats pursue alternatives to government-run insurance option in health care overhaul.

WASHINGTON (AP) — Senior House Democrats have largely abandoned hopes of including a government-run insurance option in the final compromise health care bill taking shape, according to several officials, and are pushing for other measures to rein in private insurers.

House Speaker Nancy Pelosi and other senior Democrats told President Barack Obama in recent meetings they want the legislation to strip the insurance industry of a long-standing exemption from federal antitrust laws, officials said. That provision is in the House-passed measure, but was omitted from the bill that the Senate passed on Christmas Eve.

They also want the final measure to include a House-passed proposal for a nationwide insurance exchange, to be regulated by the federal government, where consumers could shop for private coverage. The Senate bill calls for a state-based system of exchanges.

Additionally, House Democrats want to require insurers to spend a minimum amount of premium income on benefits, thereby limiting what is available for salaries, bonuses, advertising and other items. The House bill sets the floor at 85 percent; the Senate-passed measure lowers it to 80 percent for policies sold to small groups and individuals.

The officials spoke on condition of anonymity because the negotiations are private.

How about a little Sunday morning handwriting on the wall for countries which don’t keep their fiscal houses in order?

* JANUARY 9, 2010

Court Reinstates Fired Central-Bank Chief
Argentina’s Constitutional Crisis Escalates as Judge Blocks President Kirchner From Using Reserves to Pay National Debt

By MATT MOFFETT and MATTHEW COWLEY

BUENOS AIRES — A federal judge blocked President Cristina Kirchner from using foreign-currency reserves to pay Argentina’s national debt and revoked her dismissal of the central-bank chief who opposed that policy.

The twin legal defeats for the government injected further uncertainty in the battle for control of the central-bank reserves. The dispute, which has put Argentina on the verge of a constitutional crisis and placed the president and the opposition-controlled Congress at loggerheads, led to a selloff in the country’s bond and stock markets.

On Friday morning, federal judge Maria Jose Sarmiento granted an injunction request by two opposition parties barring the central bank from transferring money into the so-called Bicentennial Fund, which Mrs. Kirchner had hoped to create with $6.57 billion from the reserves.

A few hours later, Judge Sarmiento ordered the reinstatement of the bank president, Martín Redrado, whom Mrs. Kirchner dismissed on Thursday for refusing to make the transfer.

The Kirchner administration said it will appeal the two decisions.

Argentine television showed Mr. Redrado returning to the bank Friday afternoon. Earlier in the day he defended his action in defying Mrs. Kirchner. “The reserves belong to all Argentines and if they are to be used for some purpose besides backing the currency, the matter should go before Congress,” he said.
…

Which alternative version of reality does your favorite central banker prefer?

* JANUARY 8, 2010, 10:30 A.M. ET

World’s Central Banks Face Different Realities

BY MICHAEL CASEY

NEW YORK — All signs suggest the global economy is undergoing a solid recovery. But a striking gap exists between how central bankers in developed countries that are still reeling from the 2008 credit crisis and those in places benefiting from a China-led boom view this recovery.

In the past couple of days, the Federal Reserve and the Bank of England demonstrated their resistance to any premature removal of so-called “quantitative easing” policies while the People’s Bank of China moved the other way, incrementally tightening monetary conditions by modestly increasing its three-month T-bills rate.
…

Does anybody on this blog have had any experience buying an REO from bank? We have large banks such as Deutsche Bank, HSBC who are holding on to a huge inventory of homes. How long can they drag their feet to unload these properties? At the present time they are asking their wishing prices and some properties just sit there for years (2) in one case.

The Coming Housing Crisis in Spain, and What It Means for Europe
Economic woes in Europe’s

PIGS (an acronym for Portugal, Ireland, Greece, and Spain, states at the periphery of the EU) have been grabbing headlines recently. Greece’s swan dive has gotten the most attention so far, but there’s likely another economy in line for the springboard: Spain.

It’s only just now started to show up on everyone’s radar, too. When all attention was on housing prices, Spain looked relatively stable: Over the last year, average housing prices dropped a mere 9%. As HSBC bank put it (italics added), “The [price fall] is much smaller than the 20% peak-to-trough drop seen for the UK housing market or the 32% fall of US housing prices, and is difficult to explain given the dominance of the housing market in the Spanish economy.”

Not so difficult. Spanish banks are holding all the properties. It’s a repeat of a strategy from the early 1990’s, when local banks held onto their property portfolios until economic recovery caught up and let them unload the properties at acceptable prices. Makes perfect sense — if it worked before, why not try it again?

The only problem is Spain’s “resilient” property market is likely ready to evaporate. The Bank of Spain has doubled the amount local banks must set aside to cushion repossessed property losses, and with liquidity already hard to come by, the banks have no option but to sell their properties. June estimates by Spanish bank BBVA said that housing prices would drop by 10% in 2009 and 12% in 2010, with a total 30% peak-to-trough drop. A December review hasn’t changed those numbers.

We’ve all seen the devastating impact of a 30% drop in housing prices in the U.S. Imagine what it might do to a country that already has the Eurozone’s second-worst unemployment rate (nearly 20%, second only to Latvia), whose credit outlook has been downgraded to negative, and whose budget shortfall for 2009 is five times last year’s levels.

Keep also in mind that Spain is the Eurozone’s fifth-largest economy, which, because of its buoyant property sector, has been a vital intra-Eurozone source of demand for export-reliant markets like Germany.

If Spain’s domestic financial system becomes more unstable, the shockwaves will be felt throughout asset and interbank markets. Keeping your European investments safe in a world economy this turbulent requires constant updates on market moves all over the Eurozone.

http://www.elliottwave.com/freeupdates/archives/2010/01/07/The-Coming-Housing-Crisis-in-Spain-and-What-It-Means-for-Europe.aspx

Is this a good example of “change we can believe in”?

The Associated Press January 9, 2010, 12:43PM ET

In Foreclosureville, USA, so much change

By EVELYN NIEVES
MORE FROM BUSINESSWEEK

STOCKTON, Calif.

Stockton hardly looks like the most miserable city in the country.

But the statistics and stories over the last two years make a case that it is: Since the housing crisis began, this inland port city 80 miles east of San Francisco has had one of the worst foreclosure rates in the country — for most of the time, the worst.

At the height of it, about 1 in 10 houses fell to foreclosure. Houses that sold for more than $500,000 before the crash now go for $200,000. In some neighborhoods, fixer-uppers cost less than a new Honda Fit — under $20,000.

To spend time in Stockton, a plain-jane city of single-family home neighborhoods edged by freeways and lingering farms, is to begin to understand the calamitous effects of the nation’s foreclosure crisis, which has devastated so many once-booming places.

Stockton is the San Joaquin County seat. And according to the Associated Press Economic Stress Index, a month-by-month scoring of U.S. counties’ rates of unemployment, bankruptcy and foreclosures, San Joaquin had a score of 23.55 in November, making it the fourth-most stressed of counties with a population over 25,000. Its foreclosure rate of 6 percent was exceeded only by metro Las Vegas, metro Fort Myers, Fla., metro Orlando, Merced County, Calif., and Kendall County, Ill.

An outsider might not notice immediately how Stockton has suffered. It boasts a downtown mall, a mix of handsome, century-old and modern architecture, a new sports stadium, even a promenade overlooking the city’s canal.

But two years into the housing crisis, Stockton is a changed place. Whole neighborhoods have been decimated by the mortgage disaster. The tax base has shrunken. City services and municipal jobs have been cut. Unemployment hovers at about 16 percent. Economists predict it will take years for Stockton to recover from the housing bust.
…

Funny word that should be a word: (I don’t know who coined it.)

“Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time. “

Has San Diego ever in modern times even experienced a tsunami?

Tsunami spending? Wave your money bye

By Michael Stetz, UNION-TRIBUNE COLUMNIST

Sunday, January 10, 2010 at 2:50 a.m.

A Tsunami Evacuation Route sign at the corner of Spray Street and Brighton Avenue in Ocean Beach shows what direction to take away from the beach.

Eduardo Contreras / Union-Tribune

Imperial Beach spent $47,000 in grant money. San Diego County, $30,000. San Diego City has received $1,500 and may seek another $150,000 to protect us from a terrible tsunami.

All we need, I guess, is a terrible tsunami. Not that I’m rooting for one, but they’re so rare here, one has to wonder why we’re forking over all this money to protect us from one.

Oops.

I’m not in government.
…

Have torch, will collect insurance claims…

Suspicious fire damages home
By Kristina Davis, UNION-TRIBUNE STAFF WRITER
Saturday, January 9, 2010 at 9:55 a.m.

SAN DIEGO — Arson investigators are working to determine the cause of a fire that damaged a home in the Southcrest neighborhood early Saturday.

The fire was reported about 3:30 a.m. on Newton Avenue near 37th Street, and arriving firefighters saw heavy smoke billowing from the back of the single-story home, according to the San Diego Fire-Rescue Department.

The blaze was knocked down about 10 minutes later. The home was vacant, and no one was injured.
…

UPDATE 1-Horizon Bank first U.S. bank failure of 2010
Fri Jan 8, 2010 9:59pm

WASHINGTON, Jan 8 (Reuters) - U.S. regulators closed Horizon Bank (HRZB.O) of Bellingham, Washington, on Friday, kicking off what has been forecast as a peak year for small bank failures.

From a Business Person of the Year [Bellingham] page showing candidates from March 2004:

“Over his entire career at the bank, Evans is proud that Horizon has maintained high standards of asset quality and efficiency.”

“Shareholders, of course, demand significant return on investment. Federal regulators demand adherence to laws to maintain liquidity.”

http://www.businesspulse.com/businesspulse/bp2004/march/0304bpbpoyperson.html#evans

Support for Ben’s foreclosure shadow inventory conspiracy theory:

http://www.charlotteobserver.com/topstories/story/1171171.html

I bet they are waking up in Caracas wishing they had some of the none dividend paying barbarous relic, laying around, collecting dust.

Jan. 10 (Bloomberg) — Venezuelan President Hugo Chavez said that businesses have no reason to raise prices following the devaluation of the bolivar and that the government will seize any entity that boosts its prices.

Chavez said he’ll create an anti-speculation committee to monitor prices after private businesses said that prices would double and consumers rushed to buy household appliances and televisions. The government is the only authority able to dictate price increases, he said.

Brilliant analysis of the situation.

http://www.pbs.org/moyers/journal/01082010/watch.html

More signs of the recession, Honda is increasing production.

___________________________________________________________

TOKYO (Reuters) - Automaker Honda Motor Co plans to produce 3.59 million units in the world next financial year to start in April, up 6 percent from this financial year’s outlook on rising sales, Asahi newspaper reported on Saturday.

The company plans to produce 1.29 million units in North America next financial year, up 110,000 units from the current financial year, and 980,000 units in Japan, up 70,000 units, Asahi reported.

Anybody see After Armageddon on the History channel? I highly recommend it.

Shows and talks about what could happen to society after something like an avarian flu kills over 100 million in the U.S. Covers what will happen to food, power, society, medicine, etc…

Kind of late in the day for the east coasters, but anybody know anything about Forest Hill, Maryland? If so, what do you think about $495k for a 4 bedroom 3k square foot house with a 1k square foot basement on 1.5 acres? Seems rich to me, but someone dear to me has apparently just made this purchase and I’m wondering how much of a scalping they just signed up for.

Decline in building has contractors tightening belts
The Daily News |January 9, 2010

New construction slowed to a crawl last year and will likely get worse, according to an industry trade group, and area contractors say they’re cutting costs and trying to survive until better times come.

“People are having to really low-ball on bidding. And this is after they’ve already cut in other ways,” said Jeff Richter, the incoming president of the Lower Columbia Contractors Association.

Nationwide, construction spending fell by $137 billion in November to hit a six-year low, according to an analysis released last week by the Associated General Contractors of America, an industry trade group.

The trade group is forecasting construction spending will fall by another 5 percent this year, said Brian Turmail, spokesman for the Arlington, Va.-based association.

“We’d love to be wrong on this, but we don’t see much reason for the construction picture to improve before the end of 2010,” Turmail said Friday.

Construction recovery won’t happen nationwide until the labor market picks up, because people need jobs before they buy houses, said Scott Bailey, regional economist for the state Employment Security Department.

The decline in building has reduced construction employment in 324 out of the 337 geographic regions the trade group surveyed nationwide recently. In the greater Longview area, jobs in construction, mining and logging sector fell by 24 percent in the 12-month period ending in November, among the highest in the state, according to the U.S. Bureau of Labor Statistics.

Economy puts doctor visits on hold
enquirer.com • January 10, 2010

As the economy crashes, people skimp on a lot of things.

That dinner out might not seem quite so important. Maybe you buy the cheaper gas.
That video game for the kids for Christmas?
Maybe next year.

All of these things can be recovered when the furloughs and layoffs stop. But when people start to skimp on their health care you can feel the long-term costs adding up.

Robyn Chatman sees it. A primary-care doctor in Madisonville, she sees patients skipping appointments they need because they can’t afford it.

“I’m giving a lot more advice over the phone,” she says. “You never used to see as much of that.”

The trend shows in the numbers. U.S. spending on health care grew only 4.4 percent in 2008, the slowest increase in nearly half a century, according to Health Affairs magazine.

Out-of-pocket spending, what we all pay for premiums and co-payments and prescriptions, increased only 2.8 percent. That’s less than half the rate of the year before and has to reflect the job losses that came in waves as the economy crashed late in the year.

Yes, the numbers still are huge. Total spending on health care was $2.3 trillion, or $7,681 per person. And the slowest growth rate in 50 years still was faster than the economy as a whole.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6962632/America-slides-deeper-into-depression-as-Wall-Street-revels.html

Real reporting from the British press: America Slides Deeper into Depression as Wall Street Revels.

United States

The Financial Crisis Inquiry Commission
That 1930s show

Jan 7th 2010 | WASHINGTON, DC
From The Economist print edition
A Depression-era crusade against Wall Street has a 2010 revival

Getty Images Pecora in his pomp

THE battle against the financial crisis may be ending, but the war over why it happened has barely begun. The most ambitious effort yet to settle the story begins next week with the first hearing of the Financial Crisis Inquiry Commission.

Congress gave the ten-member bipartisan commission a sprawling mandate: to investigate at least 22 potential causes, from excess global savings to short-selling, and to explain why specific firms collapsed or needed bail-outs. The report, due by December 15th, is not supposed to contain recommendations but probably will.

Though modelled on the body that investigated the attacks of September 11th 2001, the spiritual father of this venture is the Pecora Commission. This was named after Ferdinand Pecora, the chief lawyer on the Senate Banking Committee from 1933 to 1934. His cross-examinations brought forth revelations of widespread abuses on Wall Street: bankers selling stocks at preferred prices to powerful friends, or giving executives bonuses for dumping dud securities on the public. Within days of testifying, the head of National City Bank, the predecessor of Citibank, was forced to resign. The commission’s findings led to the creation of the Securities and Exchange Commission and the passage of the Glass-Steagall Act, which separated commercial and investment banking.
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From the Telegraph article above:

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody’s Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck’s Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor “harsh, repugnant, shocking and repulsive”. We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or “Farm Holidays”. Such flexibility innoculated America’s democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of “option ARM” contracts due to reset violently upwards this year and next.

US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. “If the 2008 and 2009 loans go bad, then we’re back where we were before – in a nightmare.”

My father-in-law says it’s a good time to rent. If you knew my FIL, you’d know this might be the mother of all buy signals… Lol.

Dubai’s First Foreclosure May Open Floodgates in Worst Market

Jan. 11 (Bloomberg) — Dubai’s housing rout sent prices down 52 percent in the past year, prompting some homeowners to abandon their cars and mortgage payments and flee the country. Not one received a foreclosure notice.

Until now.

Barclays Plc won the sheikdom’s first foreclosure cases in court, clearing the way for lenders holding about $16 billion of Dubai home loans to take action when borrowers don’t pay. Islamic lender Tamweel PJSC, the emirate’s biggest mortgage bank, has several of its own foreclosure claims pending and estimates about 3 percent of its mortgages are in default.

“Banks will be more aggressive in pursuing legal action if they see the process is efficient,” said Antoine Yacoub, a banking analyst at Moody’s Investors Service Inc. “They were trying to avoid the courts and restructure most of their loans, but once they see a precedent has been set, they will be encouraged to push more cases through.”

The successful foreclosures by Barclays may open the floodgates in Dubai’s property market, which went from the world’s best in 2008 to the worst after credit dried up and speculators who had fueled price increases left the market, according to Deutsche Bank AG. Moody’s estimated in September that 12 percent of the 27,000 residential mortgages in the sheikdom would default within 12 to 18 months.

Every dark financial crisis has a silver lining.

* JANUARY 11, 2010

Devaluation Sparks Chaos in Caracas

By JOHN LYONS and DARCY CROWE

CARACAS — President Hugo Chávez’s decision to devalue Venezuela’s bolivar and impose a complicated new currency regime may paper over some growing cracks in the economy, but it is also setting the stage for bigger problems down the road for the country’s oil-rich nation and its populist leader.

Over the weekend, there were signs that Mr. Chávez’s slashing of the “strong bolivar” currency could create as many problems as it solves in Venezuela’s economy, provoking a wave of anxiety that sent Venezuelans scurrying to spend cash they feared could soon be worthless.

At Caracas’s middle-class Sambil shopping mall, lines at cashiers reached 50-deep. Carmen Blanco, a 28-year-old accountant, waited to buy a 42-inch flat-screen television she doesn’t need because she already has one at home.

“It doesn’t make any sense to keep my savings,” Ms. Blanco said Saturday. “I’d love to see how things work in a normal country.”

On Sunday, Mr. Chávez vowed to fight speculation and price increases that could result from the devaluation, which raises the price of imports.

Harried by recession and sliding popularity, Mr. Chávez on Friday weakened the bolivar to 4.3 per dollar from 2.15 in a bid to shore up government finances, which have been hit by weaker oil prices, and to stimulate economic growth ahead of key elections.
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Life’s but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more: it is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

* MANAGEMENT
* JANUARY 11, 2010

Banks Brace for Bonus Fury

BY SUSANNE CRAIG, DAVID ENRICH AND ROBIN SIDEL

Critics of Wall Street firms are grumbling that this year’s bonuses are far too generous. But some recipients are none too happy, either: They’re complaining too much of the payout is coming in stock instead of cash.

Banks and securities firms have told workers their bonuses will contain a bigger percentage of stock to demonstrate that Wall Street is sensitive to public anger over the big paychecks. The idea is that stock reduces employees’ temptation to take too many financial risks, since they have an ownership stake.
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* OPINION
* JANUARY 10, 2010, 7:08 P.M. ET

The Fed and the Crisis: A Reply to Ben Bernanke
In his recent speech, the Fed chairman denied that too-low interest rates were responsible. Does this mean we’re headed for a new boom-bust cycle?

By JOHN B. TAYLOR

Federal Reserve Board Chairman Ben Bernanke spent most of his speech to the American Economic Association on Jan. 3 responding to the critique that easy monetary policy during 2002-2005 contributed to the housing boom, to excessive risk taking, and thereby to the financial crisis.
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Mr. Bernanke claimed that “Economists who have investigated the issue have generally found that, based on historical relationships, only a small portion of the increase in house prices earlier this decade can be attributed to the stance of U.S. monetary policy.” But two of the economists he cites—Frank Smets, director of research at the European Central Bank, and his colleague Marek Jarocinski—reported in the July/August issue of the St. Louis Fed Review that “evidence that monetary policy has significant effects on housing investment and house prices and that easy monetary policy designed to stave off perceived risks of deflation in 2002-04 has contributed to the boom in the housing market in 2004 and 2005.”

These technical arguments are important, but one should not lose sight of the forest through the trees. You do not have to rely on the Taylor rule to see that monetary policy was too loose. The real interest rate during this period was persistently less than zero, thereby subsidizing borrowers. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, reported in a speech on Jan. 7 that during the past decade “real interest rates—the nominal interest rate adjusted for inflation—remained at negative levels for approximately 40 percent of the time. The last time this occurred was during the 1970s, preceding a time of turbulence.”

Inflation was increasing, even excluding skyrocketing housing prices. Yet even when inflation is low, the damage of boom-bust monetary policy can be severe as Milton Friedman stressed in his strong criticism of the Fed in the 1950s and 1960s. Stepping back from the fray, an objective observer of all this evidence would have to at least admit the possibility that monetary policy was too easy and a possible contributor to the crisis.

Not admitting the possibility raises concerns. One is that if such a large deviation from standard policy is rationalized away, it might happen again. Indeed, some analysts are worried now about the Fed holding interest rates too low for too long, causing another boom-bust and a shorter expansion.

Another concern is that, rather than trying to be vigilant and avoid causing bubbles, the Fed will try to burst them with interest rates. Indeed, one of the lines from Mr. Bernanke’s speech most picked up by Fed watchers is that “we must remain open to using monetary policy as a supplementary tool for addressing those risks.” We have very limited ability to fine tune monetary policy in such an interventionist way.

Finally, there is a concern that the line of analysis in Mr. Bernanke’s speech puts the full burden of preventing future bubbles on new regulation. Clearly the Fed missed excessive risks on and off the balance sheets of the banks that it supervises and regulates. That policy needs to be corrected. However, it is wishful thinking that some new and untried macro-prudential systemic risk regulation will prevent bubbles.

While I disagree with Mr. Bernanke’s analysis, it is good news that the Federal Reserve Board has begun to examine its policies and publish its findings. This will help inform the Financial Crisis Inquiry Commission, which will soon begin holding public hearings on the causes of the financial and economic crisis. In the meantime I hope the Federal Reserve Board will continue with this new self-examination policy and transparently evaluate all its recent crisis-related actions, from the AIG bailout to the Mortgage Backed Security purchase program.

Mr. Taylor is professor of economics at Stanford University and a senior fellow at the Hoover Institution.

Why can’t Draghi point out the obvious remedy to the fragile banking system: Chop up the too-big-to-fail megabanks into systemically safe bits that don’t threaten to bring down the entire global economy if one of them fails? If enough top bankers started saying this, perhaps a quorum would develop to stand behind action to fix the too-big-to-fail systemic risk problem for good. Dismembering TBTF banks (and the free government insurance which protects them from their own destructive behaviors) would also go a long way to eliminating paychecks that encourage dangerous speculation, as bankers would have to fund their bonus payments out of the profitability of their own operations, rather than being able to charge off massive bonus payments to TBTF claims payments extracted through currency dilution.

It would also be nice if this generation of bankers could leave behind a clear warning to subsequent generations to avoid the moral hazard problem that comes with free too-big-to-fail bailout insurance. We should do this for the children, and for the children’s children, and for all future generations. TOO-BIG-TO-FAIL IS A RECIPE FOR SYSTEMIC FAILURE!!!

* BUSINESS
* JANUARY 11, 2010

Banks Warned Against Complacency

FSB Head Urges Tough Capital Requirements; ‘Substantial Fragilities’ Remain

By NINA KOEPPEN

BASEL, Switzerland—The head of the Financial Stability Board warned banks against complacency and backed recent proposals that would toughen capital requirements as part of a global banking industry overhaul.

Mario Draghi, chairman of the FSB and governor of the Bank of Italy, said banks ran the risk of of overrating the strength of the economic recovery and recklessly returning to dangerous old habits even as “substantial fragilities” remained in the system.

“The general situation is much better than we could have expected a year ago but, at the same time, it is not as good as the market thinks it is,” Mr. Draghi said at a news briefing Saturday night after the group’s biannual plenary meeting.

Moreover, he added, banks must pay more attention to compensation practices with an aim toward ensuring that pay policies don’t encourage dangerous speculation. Those comments come as banks prepare to announce large bonuses for staff following a year of surprisingly strong performance.
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” Let them eat cake, while we laugh our f-ing azzes off.”

* PAGE ONE
* JANUARY 11, 2010

Wall Street’s Latest Derivative: Goldman Parodies
Exclusive Club Sends Up a Mighty Bank With Lampoons of Old Tunes

By ROBERT FRANK and DENNIS K. BERMAN

“How do you solve a problem like Lloyd Blankfein?

How do you cap a bonus and keep it down?

How do you find a way to say

I’m sorry, excusez-moi, je suis désolé, pardon?”
[drawing kappa beta phi symbol]

So sang Evercore Partners Inc. banker Jane Gladstone, dressed in a nun’s habit, at an annual roast of Wall Street’s elite Thursday night. In a take-off on the Sound of Music tune “How Do You Solve a Problem Like Maria?” she was sending up Goldman Sachs Group Inc. and its chief executive, Mr. Blankfein.

He and Goldman took the brunt of the jokes at the 78th induction ceremony for Kappa Beta Phi, a secretive and exclusive Wall Street fraternity.

More than 175 people gathered to induct new members in a ceremony that’s a throwback to a chummy world long before television and the Internet.

The group dressed up in drag, sang satiric songs and threw dinner rolls at the new members — known as “Neophytes” — at a ballroom of Manhattan’s St. Regis Hotel.

With Goldman’s bonus and compensation pool slated to surpass $20 billion this year, the bank has become a subject of wide public attention and criticism, even among its peers.

Ms. Gladstone’s parody, “How Do You Solve a Problem Like Lloyd Blankfein?” captured the investment bank’s current image problems and was described by many attendees as the evening’s highlight.

“He trades metal from the mines.

He’d steal swine flu from the swines

Unless that rare vaccine goes to the schools.

He is little, he is bald,

His plane’s late when Obama calls.

He’s a headache, he’s a handful, he’s a squid.”
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