The Housing Bubble

I just read about the bipartisan Financial Crisis Inquiry Commission that starts Wednesday, headed by Phil Angelides, a former California Treasurer. Also on the commission are some I am very familiar with: Brooksley Born, Douglas Holtz-Eaken, Bob Graham, and some others I am less familiar with: Bill Thomas, Byron Georgiou, Keith Hennessey, Heather Murren, John Thompson, Peter Wallison,

I just thought I would post Angelide’s Wikipedia bio here. He is a former real estate developer, but as Treasurer instituted conflict-of-interest requirements for CalPERs that was applauded by Eliot Spitzer, and called for reform at the the SEC. Kind of a mixed bag…

Does anyone know anything more about him or the others? Is it truly bipartisan, and are they competent players?

Good morning HBBers.

Before I get the kids off to school I thought I’d share this with you. If temporary employment is embraced across multiple industries, we should see a big drop in sales numbers for homes. I can’t imagine even with government help how new buyers could commit to a mortgage w/the possibility of income loss perpetually hanging over their heads. I also question how someone with large breaks in income or sporadic income could be approved for a mortgage as credit tightens.

http://www.businessweek.com/magazine/content/10_03/b4163032935448.htm?campaign_id=rss_topStories

FOREX-Dollar falls on weak jobs data, Fed comment.
Jan 11, 2010

LONDON, Jan 11 (Reuters) - The dollar fell broadly on Monday in the wake of weak U.S. jobs data and comments from a Federal Reserve official that U.S. interest rates are likely to stay low for quite some time.

But strong Chinese export data boosted optimism that the global economy is recovering, led by Asia. This lifted investor appetite for risk which helped the euro and commodity-linked currencies such as the Australian dollar.

Data on Friday showed U.S. employers cut 85,000 jobs last month, disappointing many who had expected the U.S. economy to stop losing jobs and offsetting a revision to November payrolls that showed 4,000 jobs were added.

The dollar extended falls on Monday after St. Louis Federal Reserve Bank President James Bullard said rates may remain low for quite some time, although he said Fed policy was unlikely to be pushed off course by December’s jobs data.

“Expectations of the speed and scale of Fed tightening received a set-back from the weak payrolls numbers,” said Chris Turner, head of currency strategy at ING in London.

Where’s WMBZ with my news???? Grrrrrrr!!!!!!!!

Seeing as how my comments aren’t showing up, maybe he has already posted the news and I’m just being impatient…

I’m referring to WMBZ. The first post didn’t show up

US commercial property attracts new wave of money. (FT)

The beleaguered US commercial real estate sector has been attracting a new wave of money from sources including foreign banks, US private equity firms, and a leading Chinese sovereign wealth fund.

Market participants warn that the activity represents “bottom-feeding” by opportunistic investors whose strategies could be derailed by rising interest rates. Also, sums are tiny compared with the debts that need refinancing. Nevertheless, the growing interest from investors is a sign of stabilisation, making it less likely that worsening commercial real estate conditions will sink banks and choke off a US recovery.

Clipped from: Money and Markets. ~ Martin Weiss ~ 1-11-10

The unemployment report on Friday was an unmitigated disaster. Based on the government’s payroll survey, the economy shed 85,000 jobs in December, many more than analysts had expected.

Worse, based on its separate household survey, the government reported that the job losses in December were 589,000 — over SIX times more.

So which of the two figures better reflects the true number of jobs lost last month — 85,000 or 589,000 jobs? According to John Williams’ Shadow Government Statistics, it’s clearly the latter. Strip out the faulty seasonal adjustments from the government payroll survey, he says, and it would ALSO show job declines of about 500,000 in December!

Result: Williams estimates that official unemployment is actually closer to 10.2 percent (instead of the 10 percent reported).

Moreover …
The government also publishes a broader measure of unemployment, which has now risen to the Depression-era level of 17.3 percent. This includes discouraged workers who have given up looking for a job for up to a year, plus part-time workers seeking full-time employment.

If you include ALL workers who have given up looking for a job (as the government used to before the Clinton administration changed the definition), Williams estimates that the TRUE, all-inclusive unemployment rate is now close to 21.9 percent!

And most shocking of all, we are suffering this chronic high unemployment despite the greatest government stimulus of all time.
Between monetary and fiscal stimulus packages and programs, Jim Grant, editor of Interest Rate Observer, estimates that the U.S. government has already poured in amounts equivalent to at least 30 percent of GDP. That’s over three times more than the stimulus in the first years of the Great Depression … and TEN times more than the average stimulus during eight U.S. recessions following World War II.

The big problem: Instead of going into job creation as intended, most of this Washington funny money is flowing into other assets, including U.S. stocks.

Good thing all real estate is local. http://tinyurl.com/ygl3sje

‘While there are modest hopes for 2010, it’s unlikely the local market will turn around before the national one does, said Teri Polumsky, co-owner and managing broker at By Owner Hamilton.

‘“The problems with the national economy have created that much less demand here,” she said. “We do not have people moving in from the areas that we typically had such a big percentage of people moving from. The people who can not sell their house in California or Washington or Florida cannot move here now. So it’s the general national real estate market that has much more to do with it.”’

I have noticed the price of solar panels systems, has gone up nearly double for some models. I think this is the cash for caulker effect.

Does anyone else besides me detect numerous hints in the article posted below that the Chinese housing bubble is inflating as an echo of its U.S. symbiont, with maybe a five-year lag? When this bubble bursts, it will make the U.S. housing bubble seem more like a soap bubble by comparison.

Page last updated at 04:17 GMT, Monday, 11 January 2010
China orders low-cost housing against property bubble
By Chris Hogg
BBC News, Shanghai

A Chinese woman walks past a property sales office at the Central Business District in Beijing

The Chinese government is offering incentives to homebuyers

China’s city governments and ministries have been told to build more low cost housing.

They have also been ordered to push property developers to complete projects more quickly in order to help ease property prices.

The directive has come from the country’s cabinet, the State Council, amid fears of a property bubble.

It also says it wants to prevent speculative foreign investment pushing up prices even further.

If too many Chinese are priced out of the market, it could stir economic and social instability.

Last year China’s banks issued $1.5 trillion (£932 bn) worth of new loans to help ease the country through the financial crisis.

It is thought around a sixth of the total flowed into the property sector and there are some here who worry it is now overheating.
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ahansen,

Did you recover from your illness? Perhaps I missed your update, but wonder why you’re not posting.

How did Mrs. Miller make out with the Christmas fund?

Hair-of-the-dog housing bubble reflation efforts seem to be working quite well these days.

01-07-2010 17:04
Creating Another Housing Bubble?

By Doug Bandow

The U.S. Congress doesn’t know when to quit. Legislators recently extended the scandal-marred $8,000 homebuyer tax credit. Another $11 billion will be wasted.

Ground zero of the 2008 financial crash was the politically-driven collapse in the housing market. Several years ago Rep. Barney Frank, now chairman of the House Financial Services Committee, declared: “I want to roll the dice a little bit more in this situation toward subsidized housing.”

So far the homebuyer tax credit has cost $10 billion. By one estimate that ran $75,000 per new house sold.

However, the credit is barely a rounding error compared to losses by Fannie Mae and Freddie Mac. These two “government-sponsored enterprises” (GSEs) promoted both subprime lending and mortgage securitization, which turned bad mortgages into bad securities.

Today Fannie and Freddie underwrite $5.4 trillion worth of private home mortgages. Yet in early November Fannie Mae announced a third-quarter loss of $19 billion, making $102 billion in losses over the last two years. Fannie requested another $15 billion in taxpayer aid.

Freddie Mac lost “only” $6.3 billion in the third quarter, but overall has been an even bigger financial black hole, dropping $121 billion over the last 14 months. On Christmas Eve, the administration announced that it would provide an unlimited credit line for the two companies.

The Federal Housing Administration insured more than $360 billion worth of mortgages over the last year, twice the amount in 2008 and four times as much as the year before. Today the agency is requiring just a 3.5 percent down payment.

The FHA’s share of new loans went from 2.7 percent in 2006 to 23 percent earlier last year, and the agency moved into high-priced cities. One young San Francisco borrower told The New York Times that “It was kind of crazy we could get this big a loan.”

FHA capital reserves have fallen to 0.53 percent, well under the congressionally mandated 2 percent. Defaults on FHA-backed loans are now 8.3 percent, up from 6.1 percent a year ago. A fifth of agency-guaranteed loans are considered to be “seriously delinquent.”

Under pressure, the FHA has proposed raising capital standards and credit scores. Still, FHA Commissioner David Stevens warns against the temptation to “overcorrect.”

Government National Mortgage Association, or Ginnie Mae, also is expanding its issuance of guaranteed mortgage-backed securities. The organization is backing 27 mortgage companies “with a history of reckless lending, fines or other sanctions by state and federal regulators or civil lawsuits,” according to the Washington Post.

Yet, in June, Ginnie Mae issued a monthly record of $43 billion worth of guarantee securities. Financial exposure is expected to rise from $577 billion in 2008 to $1 trillion by the end of this year.

The Community Reinvestment Act was used by ACORN and similar groups to extort money from banks seeking merger approval. More important, CRA pressed banks to make loans to unqualified borrowers.

CRA commitments currently exceed $6 trillion (compared to just $9 billion between 1977 and 1991). Edward Pinto reports in City Journal that CRA loans “constitute toxic lending ― that is, lending that leads to unsustainable loans, resulting in an unacceptable level of foreclosures.”

Yet Congress is considering expanding CRA to credit unions, insurance companies, and mortgage lenders. The Obama administration declared that “rigorous application of the Community Reinvestment Act should be a core function of” its proposed Consumer Financial Protection Agency.

Some policymakers simply don’t worry about big loan losses. Said Rep. Frank: “I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast.”
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It seems to me that the housing situation is this: in much of the country, housing prices are back to normal measures of affordability, but only given ultra-low interest rates. The REIC is now dismissing the possibility of an overshoot on the downside, even as they try with all their might to prevent it.

The question is, can interest rates remain low while debt funded stimulus remains this high long enough to soak up all that inventory, even with historically low construction and growing abandonment?

What does the FHA have against the financially prudent? Aren’t financially stable households the type to whom you would want to loan federal money (if anyone), as they are the most likely to repay it? Instead, our Congress appears to prefer pouring your tax dollars down subprime mortgage lending rat holes.

FHA’s dilemma - back loans, stay solvent
Robert Selna, Chronicle Staff Writer
Saturday, January 9, 2010

Keally McBride and her husband both have good jobs and credit scores, but they would not have been able to buy their three-bedroom home in Oakland’s Grand Lake area if not for Federal Housing Administration insurance that allowed them to put down just 3.5 percent.
Images

McBride and buyers like her boosted the popularity of FHA-backed mortgages to historic highs in the Bay Area and across the nation in 2009 after subprime financing evaporated and as private insurers became increasingly reluctant to cover mortgages with down payments of less than 20 percent.

But now 1 in 6 FHA borrowers nationwide is behind on payments, and the FHA’s backup reserve fund is below the congressionally mandated minimum. McBride, who is in good standing on her loan, is not among them. The delinquencies have led to concerns by members of Congress and a call by FHA administrators for program changes by the end of January.

As reforms are being debated, the FHA is trying to strike a delicate balance. The agency must ensure that its program remains solvent, while not making changes that are so restrictive that they knock a large number of buyers out of the market - and stymie the burgeoning housing recovery.

“The people I know who are trying to buy a home for the first time have strong salaries and credit, but they don’t have the 20 percent for a down payment,” said McBride, a University of San Francisco professor who sold a $300,000, six-bedroom house in Philadelphia and moved to the Bay Area in 2007.
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Is ‘culture’ truly synonymous with ‘theft’? I was unaware of that…

Why bankers’ bonus culture is not going away
CLANCY YEATES
January 9, 2010

SHAREMARKETS are back to 15-month highs, but most investors face a much longer wait before their assets make a full recovery. For those working in financial markets, however, that lucrative perk of the industry - the oversized performance bonus - remains solidly intact.

Although the huge pay packets dished out to investment bankers dwindled in 2008, last year saw a return to six and seven-figure bonuses, which can double or triple the pay of the (mainly) young, well-dressed men working around Collins Street.

And despite attempts to curb the excess, bankers around the world are staunchly defending their perceived right to absurdly high pay. In the latest attempt to keep the money flowing, Goldman Sachs this week threatened to abandon key offices in London if the City does not dump a 50 per cent tax on bonuses above £25,000 ($A44,000). This followed a similar threat by JPMorgan.

Wall Street’s three biggest banks, meanwhile, paid their staff a staggering $US30 billion ($A33 billion) in bonuses last year, equal to $US250,000 for every staff member.

All up, it’s clear the bonus culture of the financial markets is little changed. So how do bankers manage to pay themselves so much, despite some of them having brought the system to its knees?
…

Are banks too big to tame?
Despite financial meltdown, measures to protect consumers have been limited. ~ Charlotte Business Journal ~

Robin Lyle isn’t afraid of new rules about overdraft fees.

In fact, the president of N.C. Bank & Trust says his family will be one of the first to decline overdraft protection when a new law requires banks to ask customers if they want to enroll in to the program. If they opt out, debit-card customers with overdrawn accounts will not be able to proceed with a purchase. The benefit is they won’t pay a fee.

“I have four daughters, two of them in college, and none of them will be opting in,” Lyle says.

Bank leaders such as Lyle are preparing for reforms that take effect this year that are designed to protect consumers.

Critics say bankers have little to worry about because the industry’s lobbyists are parrying congressional efforts at reform. Congress is creating a federal consumer agency for financial products some observers say won’t live up to its mandate.

Efforts to bring back the Glass-Steagall Act to separate commercial and investment banking seem destined to fail. Bank of America Corp., which spent almost $20 billion to acquire Merrill Lynch & Co., opposes any such move. It says investment banking allows it to provide services its customers need. Critics say investment-banking activities were a major contributor to the meltdown and that banks that deal in securities expose taxpayers to risk because of federal deposit insurance.

Stricter rules for overdrawn debit cards will be the biggest change in 2010 for the average retail bank.

Beginning this month, banks are required to disclose the total amount a customer has been charged year-to-date for overdraft fees on debit accounts. In July, banks can charge overdraft fees only if a customer has agreed to opt in to the program. Now, most customers are automatically enrolled. Banks charge up to $38 per transaction when an account is overdrawn.

Went for a brisk walk this morning, walking past a brand spanking new Chevy Subdivision with a bumper sticker that read…

“The recession is over, now get out there and buy something…Anything”!

(Capitol Hill) ~ The White House announced Friday the awarding of $2.3 billion in tax credits — the money comes from last year’s stimulus bill — to companies to create “green jobs.”

The announcement was rather obviously timed to counter the news that the nation lost 85,000 jobs last month and the unemployment rate stayed at 10% — bad news for an administration that once promised to hold unemployment to 8% by the end of 2009.

So the administration sought to change the tune by talking about all those green jobs in the pipeline.

“Building a robust clean-energy sector is how we will create the jobs of the future — jobs that pay well and can’t be outsourced,” President Obama said Friday.

Yes, but getting these jobs is burning a hole in the national wallet. The problem is that even advocates like Obama concede that these programs are not very cost-effective in creating jobs.

Obama says the grants will create 17,000 cleantech jobs. Well, get out your calculator. $2.3 billion for 17,000 jobs equals $135,294 per job. (And that’s not including the eventual interest on this deficit spending). Those green jobs had better pay well over six figures to justify that expense.

Not to worry, the administration has a plan to solve this, too. It wants Congress to approve another $5 billion for “tens of thousands” more green jobs.

CAPITOL JOURNAL
The worst budget mess ever
Arnold Schwarzenegger

California faces a $20-billion deficit, and Gov. Arnold Schwarzenegger is unwilling to raise taxes significantly. (Lawrence K. Ho / Associated Press / January 7, 2010)

The governor and lawmakers collide when they should be collaborating.
By George Skelton Capitol Journal

January 11, 2010

Reporting from Sacramento

Gov. Arnold Schwarzenegger’s budget proposal was depressing by itself. And the reaction to it made the Capitol even gloomier.

Blame the governor for his populist pouncing on the federal government, trying to lay partial responsibility for Sacramento’s dogged deficit on Washington.

Cite Democrats and their interest groups for too many predictable, pedestrian potshots.

And, while we’re at it, fault Republicans for their obstinate opposition to even considering a temporary tax increase.

OK, there’s merit on all sides. Everyone’s got a legitimate beef. And this is an election year in California, when politics is particularly poisonous.

It doesn’t help everyone’s mood that the Capitol has been socked in by dreary tule fog. It was drizzling outside Friday as the governor was unveiling his budget with its painful program cuts that even he called draconian.

But all the bromides and sound bites — whether meritorious or just mischievous — will make it harder for the politicians to resolve arguably the worst budget mess ever.

The answer to Rodney King’s famous question — “Can’t we all just get along?” — is “Rarely” in politics. But this is one time when the politicians urgently need to search for common ground to build bridges.
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It takes a crisis to raise a mortgage program.

WASHINGTON (Reuters) - April Fools’ Day will have a special meaning for the Federal Reserve this year: it will be the first day the central bank allows a ravaged U.S. mortgage market to stand on its own two feet.

Housing Market

Even if things are a bit wobbly at first, the Fed is unlikely to step in again after its debt purchase program — devised at the height of the financial meltdown — expires. That would take a renewed crisis, like a sudden and destabilizing spike in mortgage rates.

Not that such a possibility is out of the question. Some November data, such as housing starts and pending home sales — homes are under contract to be sold — showed abrupt retrenchments after signs of improvement, suggesting government tax credits and the Fed’s loan purchases were playing a big part in propping up the market.

Barring a double-dip in housing, however, Fed officials are unlikely to meddle.

Their reluctance to intervene anew has many roots. For one thing, it would signal a policy about-face that could adversely affect markets as investors reassess what they believed was an improving economic outlook.

More importantly, it is unclear how much more impact the Fed could have on a market where it has already become by far the overwhelming source of demand.

Friday, January 8, 2010
California Treasurer says construction jobs are at risk without budget resolution
San Francisco Business Times - by Mark Calvey

California State Treasurer Bill Lockyer said Friday that jobs tied to state construction projects are at risk if the state can’t sell bonds due to budget woes.

“Thousands of infrastructure projects will be threatened with delay or closure if the state cannot reenter the bond market soon,” Lockyer said in a statement. “To do that, we need to quickly and credibly solve this fiscal year’s budget problem.”

“Infrastructure development is crucial to California’s economic recovery. It creates and protects jobs, helps put our businesses back in the black and strengthens our competitiveness,” Lockyer said.
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Which ‘experts’ are the UHS who penned this editorial citing? My reading of Robert Shiller’s careful retrospective on real estate price appreciation suggests that aside from the recent bubble, real estate did not generally outpace inflation over the long run, going back all the way to the 1890s.

Why catch yourself a falling knife when a once-in-a-lifetime opportunity to buy at the bottom awaits the patient? I am very optimistic about the future of prudently purchased and financed San Diego real estate, at least for those who avoid catching themselves falling knives during the course of an unfolding financial crisis.

Union-Tribune Editorial
Real estate bubble burst / Headlines obscure gains for prudent buyers

Monday, January 11, 2010 at 12:04 a.m.

“Buy land, they’re not making any more of it.”

– Mark Twain

Over the last three or four years, it has been all but impossible on any given day to watch television, scan the Internet or read newspapers – including this one – without encountering a story about the great dislocation suffered by individuals, families and whole communities as the housing bubble burst.

… what has gone largely unnoted, at least until Union-Tribune reporter Roger Showley recently documented it, is that for long-term owners, San Diego County real estate remains what it has been at least since Alonzo Horton got to town – a pretty sound investment.

It is true that someone who bought a median-priced home in the county at the November 2005 peak of $517,500 would feel whipsawed at best, and be on the way to foreclosure at worst, with that home valued at today’s median of $325,000.

But, as Showley noted, someone who owned a median-priced home in January 2000 would have seen a 48.4 percent gain, from $219,000 to today’s $325,000, even after the intervening boom and bust.

No one knows for sure what the next year or two will bring for the region’s housing market, with some predicting a new leg down for prices if unemployment remains high and many more homes go into foreclosure.

But long-term – there’s that word again – experts generally agree that prices will rise and even outpace the rate of inflation.

That is not such a bold prediction. Eventually the law of supply and demand will reassert itself. If you consider that in 2009 permits were issued for just 2,900 new dwellings in San Diego County, the lowest number since World War II, and note that this region’s matchless natural beauty and its vibrant – if temporarily battered – economy will continue to draw new residents, it is all but impossible to be pessimistic about the future of prudently purchased and financed residential real estate.

Are there any exogenous factors which could force the Fed to raise interest rates before they would autonomously choose to do so? I am perpetually curious about this, given how Fed governors seem to always project the impression of holding all the cards.

FEDERAL RESERVE
Sweet and low

St. Louis Fed chief Bullard sees U.S. interest rates staying low for “quite some time,” tamping down last week’s kerfuffle over when to begin tightening.

HOW ABOUT THOSE AZ CARDINALS —-

Kurt Warner had more touchdowns than INCOMPLETES! Sorry Packer fans, we just made the last defensive play in an awesomely offensive game.

Dollar weakness is great for gold prices!

Metals Stocks

Jan. 11, 2010, 10:52 a.m. EST
Gold rises as dollar loses ground to rivals

By Polya Lesova & Nick Godt, MarketWatch

NEW YORK (MarketWatch) — Gold futures rose Monday to their strongest level in more than a month, as signs of improved Chinese oil demand and comments from a Federal Reserve official that U.S. interest rates would stay low pressured the dollar.
…

well…it was armageddon week on the history channel last week. i watched a show called Earth 2100. it was a “documentary” based on someone who was born on January 1, 2009…and lived to 2100.

basically…we should all just put a bullet in our head…everyone on the planet. we are doomed.

it was pretty funny. i could only take it in 10 to 20 mintue sesssions. it was two hours. i swear…if i hear one more eco nutjob use katrina as an example of global warming i am going to scream.

China Ends U.S.’s Reign as Largest Auto Market (Update2)

Jan. 11 (Bloomberg) — China supplanted the U.S. as the world’s largest auto market after its 2009 vehicle sales jumped 46 percent, ending more than a century of American dominance that started with the Model T Ford.

The nation’s sales of passenger cars, buses and trucks rose to 13.6 million, the fastest pace in at least 10 years, according to the China Association of Automobile Manufacturers. In the U.S., sales slumped 21 percent to 10.4 million, the fewest since 1982, according to Autodata Corp.

China’s vehicle sales have surged since 1999 as economic growth averaging more than 9 percent a year has helped automakers including General Motors Co. and Volkswagen AG compensate for slumping demand in the U.S. and Europe. The market will likely remain the world’s largest, even as sales slow this year on a reduction in tax cuts, according to Booz & Co.

“China is becoming the center stage of development for the 21st century global auto industry,” said Bill Russo, a Beijing- based senior adviser at Booz & Co., which advises automakers. “Economic growth has directly translated into growth in automobile sales.”

China Ends U.S.’s Reign as Largest Auto Market ??

And you know whats next ? ? ?

Bye, Bye Boeing….

Jim Jubak

It’s a desperate gamble but Japan’s Democratic Party government, headed by Prime Minister Yukio Hatoyama, doesn’t have much choice.

To break the hold of deflation on the Japanese economy, the country has to spend money—lots of money—it doesn’t have to stimulate an economy that threatens to turn in a third straight year of negative growth in the fiscal 2011 year that begins in April 2010.

The government’s new budget calls for a record $1 trillion in spending for the fiscal year. But it’s not the size of the budget that’s so shocking. Government projections say that tax receipts next year will come to just $405 billion. For the first time since World War II Japan’s government will borrow more than it takes in from taxes.

That new borrowing—an estimated $485 billion—will bring the country’s total debt to $9.4 trillion by the end of fiscal 2011 in March 2011. That will be equal to 181% of the country’s GDP (gross domestic product) by March 2011. In other words Japan will owe almost two year’s worth of the activity of its entire economy.

How big is that debt burden? Let’s look at a few comparisons.
Just for context, Greece—the country that all the credit rating companies are rushing to downgrade now–is projected to finish 2009 with debt equal to 112% of GDP. The United States, according to the International Monetary Fund (IMF) will finish 2011 with gross government debt equal to 98% of GDP. (Before you feel too smug about that remember that this ratio was at just 71% in 2008 and in Korea the ratio is at 35%.)

If the Hatoyama stimulus doesn’t work, of course, the country will wind up with an economy that’s going nowhere and a government debt that is massively higher.

For investors outside of Japan, the gamble means that the Japanese government will be issuing a truckload of new debt at the same time as the governments of the United States, the United Kingdom, Spain, Germany, and the rest of the developed world will be carting their own mountains of new debt to the bond market.

Sounds like a lot of upward pressure on interest rates, downward pressure on currencies such as the yen and the dollar, and increased demand for gold in 2010, no?

The past week’s abnormally cold temperatures enabled AGL Resources Inc. to break its natural gas delivery record twice.

The Atlanta-based energy company said it broke its record for peak-day natural gas delivery on Jan. 8, when its six distribution companies delivered 3,078,064 dekatherms of natural gas to customers from New Jersey to Florida.

The new record enabled AGL Resources to surpass the 3 million dekatherm mark for the first time in the company’s 154-year history. The company’s previous peak-day delivery record was set just five days earlier. On Jan. 3, AGL Resources provided customers with 2,926,099 dekatherms of natural gas.

AGL Resources (NYSE: AGL) operates Atlanta Gas Light, Chattanooga Gas in Tennessee, Elizabethtown Gas in New Jersey, Elkton Gas in Maryland, Florida City Gas in Florida and Virginia Natural Gas in Virginia.

New research shows that while most travel-related costs decreased in 2009, rental car rates soared.

Abrams Consulting Group found that the average weekly rate for a compact car rental at an airport jumped 51 percent from 2008 levels, to $335.05 in 2009.

Neil Abrams, president of the Purchase, N.Y.-based car rental consulting firm, said rates will continue to increase this year. He says rental companies significantly reduced their fleets, giving them leverage to raise prices.

The Abrams report showed that fleet sizes fell 25 percent on average across the industry in 2009, and they are down about 50 percent compared with several years ago.

While fleet sizes have shrunk, demand in 2009 fell by only about 20 percent across the industry, Abrams said. As a result, rental-car companies were able to raise prices.

Rental-car companies are expected to increase fleet sizes gradually as demand increases this year.

Eleven rental car companies operate out of Phoenix Sky Harbor International Airport: Advantage, Alamo, Avis, Budget, Dollar, Enterprise, Fox, Hertz, National, Payless and Thrifty.

The last line tells what course the chicom government is steering.

La Go Go’s Growth Shows China Consumer Spending Power (Update1)

Jan. 11 (Bloomberg) — Beijing office worker Wang Hong holds up a $44 black blouse at Chinese clothing store La Go Go and smiles.

“It’s like getting a foreign brand at local prices,” said the 33-year-old Wang, standing in front of racks of clothes at the Jiamao mall.

By offering prices as much as 25 percent less than international retailers Esprit and Mango, La Go Go parent Ever- Glory International Group Inc. is transforming itself from a supplier to Levi Strauss & Co. into a Chinese fashion chain. The retail unit’s sales climbed 153 percent in the third quarter from a year earlier.

Ever-Glory chairman Edward Kang started La Go Go stores in 2008 to capitalize on rising local affluence and counter a drop in exports. The Nanjing-based company now has 154 La Go Go outlets and plans to open as many as 1,000 by 2015.

The shift shows how the nation’s consumers are helping compensate for exports, which yesterday recorded the first annual decline in more than 25 years even as shipments for December climbed almost 18 percent. The government is seeking to boost the domestic economy by creating health-care and pension systems that will encourage spending.

I think this should be mentioned in the Bits Bucket as well as the other thread:

The Flagstaff paper ran a little article about Ben.

http://www.azdailysun.com/business/local/article_26238719-a56e-512d-9e18-4588c1accd8b.html

Most shuttered auto plants remain closed; communities struggle to find new uses. ~ The Canadian Press

WIXOM, Mich. — Henry Ford’s great-grandson arrived at the shuttered auto plant to brag about a plan to revive the vast empty space: Investors would transform it into a modern factory to make solar panels and high-tech energy systems instead of Town Cars and Thunderbirds.

“I can’t imagine a better way to reuse the facility,” Bill Ford said during his visit to the former Wixom Assembly plant in September.

Several months later, a plan that exists only on paper is still awaiting final approval. The plant is still vacant, just like scores of other cavernous auto factories across the nation that have never been redeveloped.

An Associated Press analysis illustrates the scope of the problem: Of 128 manufacturing plants in North America closed since 1980 by the Detroit Three automakers and their largest suppliers, three of every five now sit idle.

At their peak, these roaring engines of economic activity employed hundreds of thousands of people, mostly well-paid union members on the assembly line and white-collar engineers in windowed offices above the factory floor.

Those 128 plants had a payroll of 196,000 workers at the time they closed. Today, only 36,500 people work at those sites that have been redeveloped, and at only three of the revived plants does the number of employees match or exceed the number in their carmaking past. The rest are concrete prairies or steel behemoths waiting for reuse or a wrecking ball, most without any real prospects for new use.

“The cost is going to be borne by the next generation,” said James Rubenstein, a professor at Miami University in Oxford, Ohio, who has studied U.S. auto plant closings and openings. “It’s the children and grandchildren of the laid-off workers. They won’t have the opportunities in those communities.”

Layoffs Looming for Cleveland Safety Force Workers
Cleveland Cuts More Than 100 Safety Force Positions
Fox 8 Report

CLEVELAND — Over one 100 Cleveland policemen, firefighters, and EMS workers are expected to be laid off on Monday after the city and their unions failed to reach agreements on concessions.

“What we’ve asked from our employees is four cents on the dollar,” says Cleveland Safety Director Marty Flask. He adds that a four percent cut amounts to about a dollar an hour for a regular police officer.

Flask says the concessions are only being requested for calendar year 2010, and that many other unions agreed to them.

But the president of the Cleveland Police Patrolmen’s Associaiton, Steve Loomis, says the cuts would cost his members about $3,200 a piece.

Loomis says the jobs done by the safety forces are different than those done by employees in other departments.

“I don’t get that we don’t prioritize our city services a little better,” Loomis says.

Venezuelan’s rush to buy flat screen tvs — fear cash becoming worthless.

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.

WSJ: Devaluation Sparks Chaos in Caracas

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6968143/Is-a-cashless-society-on-the-cards.html

Masters of the Universe are pushing for a cashless society. Why? Cash is freedom - and inimical to progress on the road to serfdom. Far better to have full visibility over the source of all your income, and how and where you spend it, the better to tax, monitor, and control you. Learn to love Big Brother!

The mad chase for return.

“After rallies in stock and corporate bond markets, fund managers are struggling to find underperforming assets where prices may rebound. U.S. stocks posted their biggest annual gain since 2003 last year while yields on U.S. and European government bonds are still at least a percentage point lower than before the financial crisis. ”

This is going to end sooooo…BAD.
——————————————————————-

Scottish Widows Buys ‘Unloved’ Japanese Stocks, Greek Bonds

Jan. 12 (Bloomberg) — Scottish Widows Investment Partnership, manager of about 140 billion pounds ($226 billion), is buying up some of the world’s least popular assets.

The Edinburgh-based company purchased Greek bonds last month after yields soared because of concern the country may struggle to pay back its debts. Scottish Widows also increased holdings of stocks in the “unloved” Japanese market, according to Ken Adams, head of strategy at the fund manager.

“You don’t wait for things to improve, you buy when the news is hitting the screens and everyone is depressed,” Adams said in an interview at his office in the Scottish capital. “You’re being paid to take the risk and I think Greece will have no choice but to take action and I think they will.”

After rallies in stock and corporate bond markets, fund managers are struggling to find underperforming assets where prices may rebound. U.S. stocks posted their biggest annual gain since 2003 last year while yields on U.S. and European government bonds are still at least a percentage point lower than before the financial crisis.

This guy hit it spot on with his comment. By contrast, methinks the journalist whose story was the target of this comment must have taken way too many Wall-Street-funded paychecks to have a clear perspective on his subject.

By Steve Berkowitz

From San Diego, CA, 01/11/2010

I make it a point to listen to Marketplace because the reporting and analysis is usually insightful and thoughtful. Today’s story was, to put it mildly, insulting and appalling. Not only don’t the bankers get it, but it appears that the whole attitude of entitlement and superiority has infected even those who observe and write about them. Robert Teitelman doesn’t get it either. I’m disappointed, Marketplace. You can do better than this.

Dumb question of the day: Why wouldn’t anyone sitting in an underwater home with a gargantuan debt burden just walk away?

And is Hank Paulson just about the darkest pot ever in modern cookware history to call a kettle black?

Monday, January 11, 2010

Listen to the show
Walking away from your mortgage

Roger Lowenstein talks with Kai Ryssdal about the article he wrote for The New York Times Magazine, which discusses a new trend in real estate: choosing to walk away from a mortgage you could pay.
…
Kai Ryssdal: When you buy a house and you sign those mortgage papers — that’s it. You’re on the hook for many hundreds of thousands of dollars until the thing’s paid off. Unless, you decide otherwise. With almost 11 million homeowners underwater in this country — that is, paying for a house that’s not worth the mortgage — there is a new trend in real estate. Just walkin’ away. Roger Lowenstein wrote about it in The New York Times Magazine yesterday.
…
Ryssdal: Let’s define who we’re talking about here. These are people who could conceivably pay, but they’re just not.

Lowenstein: Yeah, you know it’s a twist on the old-fashioned American nightmare of not being able to pay your mortgage and being forced out, in the dark of night, having to go live with your in-laws or something. What we have now is tens of thousands, hundreds of thousands of people, potentially, who could pay their mortgage. But they’re deciding that the darker night doesn’t look so bad compared to what I owe, I don’t think I’m going to pay it. I think I’m going to pull that trailer up and leave.

Ryssdal: You point that companies do it all the time.

Lowenstein: That’s right. It’s common practice in business for business to say, we owe more on this company or on this piece of real estate than it’s worth, so rather than keep paying, we’ll leave it to the banker, whoever the creditor is. Let them worry about it.

Ryssdal: So here’s the point where I reveal my bias. When I read your piece, I said a couple of things. One was, wait what about their credit ratings, that will just be terrible? And the other one was, man, what about the shame and public opprobrium of just walking away from this debt that you signed onto?

Lowenstein: Is it really right to say that there are moral… Both the administrations, both of the recent ones — the Bush administration, Hank Paulson, and even Obama recently — has called on people to do what they call the responsible thing. Hank Paulson even said people who walk away from their homes are no better than speculators, which is kind of amusing because Hank Paulson spent 32 years at Goldman Sachs. But presumably once in a while they speculated on something or other, right?

In my view, you’re not a social pariah. You’re not any worse than the company that gave you the mortgage and probably flipped it about five minutes later.

Ryssdal: Well about those banks and the folks who gave you the mortgage. Is there a chance that if a lot of people did this, it would actually fix the housing market faster? It would change lending standards, and it would get the foreclosures through the system and all that stuff?

Lowenstein: The theory is that if enough people said we’re not afraid of the opprobrium, the social shame, whatever. We’re not going to pay. The banks would say, you know, I think we have to renegotiate with these people because otherwise we’re going to have a tidal wave on our hands. That’s the theory.
…

Greed is evil, fear is good. Bankers taken ill-gotten bonuses should be afraid — very afraid. Wheel of karma gonna getcha!!!

* OPINION
* JANUARY 11, 2010, 6:55 P.M. ET

When Greed Is Not Good
Wall Street has quickly rediscovered the virtues of mammoth paychecks. Why hasn’t there been more financial reform?

By ALAN S. BLINDER

I hear Gordon Gekko is making a comeback. So is greed.

They say markets are alternately ruled by greed and fear. Well, our panic-stricken financial markets have been ruled by fear for so long that a little greed might serve as an elixir. But everybody knows you can overdose on an elixir.
…
You can overdose on hair-of-the-dog liquidity cures, too!