The Housing Bubble

Sam’s Club closing 10 stores:
http://latimesblogs.latimes.com/money_co/2010/01/sams-club-to-shutter-10-stores-including-four-in-california.html

From the article:

“Spokeswoman Susan Koehler said the stores are scheduled to close Jan. 22. She said she didn’t know why so many California locations were affected.

“It’s not related to the economy,” she said. “It’s just unfortunate poor financial performance throughout the years.””

Hmm, here’s a hint, Susan. Sacramento, Orange County, Palm Springs, Oceanside (San Diego suburb), Phoenix, Houston. All places where the real estate market has cratered, people have lost jobs and nobody can cash out equity anymore to fill a giant house with mega-quantity consumer goods.

Could be worth looking at, huh?

Good early morning guys!

Been looking at houses in the Winston Salem Area of N.C. Not too many for sale signs out in the upper price limits $400k and up. Visited a new development where they said they had no HOA. That was refreshing. In the lower price ranges, I am seeing ALOT of for rent signs. Not as many for sale signs. But I still say there’s not nearly as many jobs in this area to support inflated values. There is about the same for open, raw land here, especially between Sanford and Siler City..

Man, only a few more days of leave left!

Hidden Key To Last Decade’s Disasters: Dubya’s Commitment To “Diversity”

by Steve Sailer>

*Bush had Transportation Secretary Norman Mineta eradicate the airport security ethnic profiling system before 9/11. (Then he reappointed Mineta, a Democrat, for his second term!).

Of course, those are by no means the only causes of the subsequent disasters. But shouldn’t we at least talk about them?…

I’m no fan of vdare.com, or conflating terrorists with CRA borrowers…but it is fair to talk about a subject that isn’t going away soon and should be debated in the open, without the albatross of political correctness.

Is saying that someone “looks” like a terrorist as legitimate as saying that someone “looks” like they can’t pay their mortgage? It provides great cover for those who think the world is less complicated than it is. Profiling may have caught many Arab terrorists, but would it have caught a John Walker Lindh, Robert Reid or Jose Padilla? If al-Qaeda knows obvious Muslims are being profiled, wouldn’t they just send non-Arab white, black, Hispanic, or Asian radical Muslims?

Similarly, “redlining” by banks may reduce the risk of default, but provides cover for ethnic purists who can’t be objective. There have been studies showing that for the same income and FICO, there is still substantial racial disparity in who gets a good mortgage rate or even any mortgage at all. Then there are those lovely people who feel it is their job to maintain “ethnic purity” in certain neighborhoods.

The call for Muslims to do a better job of policing their own for extremists is legitimate if they want to avoid the indignities of profiling: Turn in your brother if he’s a terrorist. Similarly, social conservatives need to do the same thing: Police your own and stop providing cover for bigots whose agenda exceeds the mandate of airline safety or reasonable credit risks, and quit providing breaks for your own by way of nepotism (i.e. the Old Boys club).

Whatever you think America stands for…be fair. Those of us who live in the real world know that it isn’t easy to separate the good guys from the bad guys, and that the bad guys will always take advantage of any opening you give them, including exploiting your own prejudices (or perceived lack thereof).

Commodity-Cost Jump Threatens to Stifle Rebound ~~ WSJ

From corn to crude, prices for a wide range of commodities are on the rise across the globe, a trend that underscores — but could also hinder — a gathering economic recovery.

In recent months, global food prices have been growing at a rate that rivals some of the wildest months of 2008, when food riots erupted across the developing world. Higher prices could be a positive sign that companies are gearing up for a rebound in consumer spending, or the harbinger of a return to the upward spiral that plagued consumers before the recession took hold.

The surge in commodities “is a reflection of extremely strong demand in the emerging world, and growing hopes of stronger demand in the developed world,” said Jim O’Neill, head of global economic research at Goldman Sachs in London. It is “encouraging so long as it isn’t too persistent.”

But Hugh Grant, chairman and chief executive of St. Louis crop-biotechnology company Monsanto Co., said the recession merely “masked” the 2008 food crisis.

U.S. automakers rev up lobbying.

WASHINGTON (Reuters) - U.S. automakers will again benefit from government programs in 2010 despite bailout fatigue and uncertain prospects for some of the industry’s legislative priorities on trade and energy.

Congress faces a mid-term elections this year with the Obama administration and majority Democrats on shaky ground with voters over the economy.

Against that backdrop, policymakers and lawmakers expect the auto industry to play a critical role in their efforts to boost manufacturing and create jobs, especially in states like Michigan, Ohio, and Indiana that are coveted politically and are struggling with high unemployment.

“We know as this industry comes back, the economy will come back, jobs will come back,” Transportation Secretary Ray LaHood said on Monday at the North American International Auto Show in Detroit where industry lobbying kicked into high gear.

Arizona treasurer says checks will bounce amid budget crisis
abc15.com

PHOENIX — Arizona state legislators go back to work Monday in an attempt to battle a nearly $1.5 billion dollar deficit.

“The February school payment we can’t make, February payroll there’s no money there,” said State Treasurer, Dean Martin.

Martin said unless the capitol buildings are sold before the end of the month, there will be no more money meaning, “If they continue to issue checks without having money from the sale of the buildings, I have to bounce them.”

That’s because Martin said spending has increased double digits during the first two years of the recession, while revenues were dropping at the same rate.

Martin said the biggest issue is what he calls welfare healthcare.

“Ten years ago AHCCCS was only a $200 million dollar agency, today it’s over $2 billion,” he said.

What Stimulus? Road Projects Aren’t Boosting Jobs Much ~ (AP)

Ten months into President Obama’s first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn’t matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama’s argument that more road money would address an “urgent need to accelerate job growth.”

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are “at the heart of our effort to accelerate job growth.”

Buffett-Backed BYD Sees U.S. as Key for Electric Cars (Update1)

Jan. 12 (Bloomberg) — BYD Co., the Chinese auto- and battery maker backed by Warren Buffett, may sell a rechargeable electric car in the U.S. as soon as this year to meet demand for fuel-efficient models, the company’s founder said.

“The U.S. is a very important market for BYD in the future, and the electric vehicle is our future,” Chairman Wang Chuanfu said yesterday in an interview at the Detroit auto show. “We will start toward the market in the second half.”

Beginning U.S. sales in 2010 would accelerate the timetable BYD set last year, when the Shenzhen, China-based automaker targeted a 2011 debut. Speeding up the model’s debut in a market dominated by hybrids such as Toyota Motor Corp.’s Prius is “very ambitious and probably too risky,” said Bill Russo, a Beijing-based senior adviser at Booz & Co.

“Introducing a new brand and technology to a mature market is a major task for even the most experienced companies,” Russo said. It “seems like a stretch for a relatively new company like BYD.”

Watching TV May Shorten Life for Couch Potatoes, Study Finds.

Jan. 12 (Bloomberg) — Every hour spent sitting idle in front of the television raises the risk of premature death from heart disease by 18 percent, an Australian study found.

Researchers tracked the TV-viewing habits of 8,800 adults and followed them for six years. They found those who spent four hours daily in front of the tube had an 80 percent greater risk of dying from cardiovascular disease than those who watched the box for less than two hours. The association was independent of risks such as smoking, obesity and unhealthy diet.

Prolonged inactivity, which can raise blood-sugar and cholesterol levels, is to blame for the health effects, not the appliance itself, said David Dunstan, a study author and researcher at Baker IDI Heart & Diabetes Institute in Melbourne. The finding, published today in the medical journal Circulation, supports studies from the Rochester, Minnesota-based Mayo Clinic showing that watching too much television is one of the biggest contributors to a sedentary lifestyle and weight gain.

“Too much sitting is bad for health,” said Dunstan, a professor of health sciences. “Avoid sitting for prolonged periods and keep in mind to move more, more often.”

AIG, autos offset Treasury bank bailout profits.

WASHINGTON (Reuters) - U.S. taxpayer profits from bank bailout investments are being offset by estimated losses from American International Group and automakers and mortgage payment cuts for struggling homeowners, a U.S. Treasury report showed on Monday.

The Treasury estimated net losses on its $700 billion bailout program at $68.5 billion for the fiscal year ended September 30, 2009.

The December report for the Troubled Asset Relief Program, or TARP, showed that the fiscal 2009 net loss included estimated losses of $30.4 billion for AIG and $30.4 billion for automakers, with $27.1 billion in losses from the Home Affordable Modification Program.

The Disposable Worker ~ Business Week~

Pay is falling, benefits are vanishing, and no one’s job is secure. How companies are making the era of the temp more than temporary

On a recent Tuesday morning, single mom Tammy DePew Smith woke up in her tidy Florida townhouse in time to shuttle her oldest daughter, a high school freshman, to the 6:11 a.m. bus. At 6:40 she was at the desk in her bedroom, starting her first shift of the day with LiveOps, a Santa Clara (Calif.) provider of call-center workers for everyone from Eastman Kodak (EK) and Pizza Hut (YUM) to infomercial behemoth Tristar Products. She’s paid by the minute—25 cents—but only for the time she’s actually on the phone with customers.

By 7:40, Smith had grossed $15. But there wasn’t much time to reflect on her early morning productivity; the next child had to be roused from bed, fed, and put onto the school bus. Somehow she managed to squeeze three more shifts into her day, pausing only to homeschool her 7-year-old son, make dinner, and do the bedtime routine. “I tell my kids, unless somebody is bleeding or dying, don’t mess with me.”

As an independent agent, Smith has no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance. But in recession-ravaged Ormond Beach, she’s considered lucky. She has had more or less steady work since she signed on with LiveOps in October 2006. “LiveOps was a lifesaver for me,” she says.

You know American workers are in bad shape when a low-paying, no-benefits job is considered a sweet deal. Their situation isn’t likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That’s because this recession’s unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions’ influence, new management techniques, and regulatory changes—that already had been eroding workers’ economic standing.

“There is no countervailing power to the finance lobby in DC. And if there’s no pressure coming into DC, the status quo is going to win.” This was an important point in a Bill Moyers interview with writers David Corn and Kevin Drum, from Mother Jones magazine.

Complexity is the friend of the finance lobby. During the bubble, complex models were created to justify their actions. If one questioned them, one was told, you simply don’t understand, come back and talk to us when you grow a brain. Better yet, don’t bother us at all.

And yet, it was all bogus. Smoke and mirrors.

Simplicity in rules is the enemy of the banks. Complexity allows loopholes. Complexity was what banks hid behind as they built the house of cards.

The simplest rule of all, that would prevent much of this in the future is this: “Banks cannot trade securities.” Point blank.

In the Consumer Financial Products Administration (cFPA), there was the “Vanilla Products Option.” Banks fought this very hard because they can not get around simplicity. Simple rules can prevent the financial industry from running amok, and looting the United States.

With no organized power to bring pressure into DC, a financial crisis will happen again. Because there is no countervailing power in DC, banks can charge interest rates of 10,000%. How? With overdraft fees. The average overdraft is 17 dollars. The average overdraft fee is 39 dollars. That’s 10,000% interest. In 2004, banks introduced legislation that stated that overdrafts were not loans, and thus any interest rate could be charged on them. Mafia-esque.

To give you an idea of how entrenched the banking lobby is in DC, Tim Geithner’s chief of staff used to be a lobbyist for Goldman Sachs. He successfully fought a bill authored by Barack Obama, that would put some limits on CEO pay, back around 2004-2005. Geithner’s chief of staff.

Currently, there is no leadership on the issue. If 99% of the people do not understand what a credit default swap is, you cannot regulate them. As was noted earlier, there is no countervailing power to the finance lobby in DC. There needs to be leadership on the issue. On the Moyers site, there are links to organizations dealing with financial reform - http://www.pbs.org/moyers/journal/01082010/profile.html

These were some points I gleaned from the piece. Bottom line - there needs to be leadership on the issue. There’s no countervailing power in DC. One thing people can do is write their congress critters and tell them, if you don’t vote for meaningful reform, I’m not voting for you. They need to hear this over and over.

Finally, time is the enemy. In the years 2000-2009, there was no job growth. Median wages hvae not gone up in 30 years. As the financial crisis recedes, it will be business as usual. But the US will be like a patient with a hemorrhage. He will get weaker. We will get more of the same, more wealth stripped from the rest of society and concentrated in the pockets of the financial industry. All with the blessings of the government. But, the patient is going to get weaker and weaker. I think we can do something about it, but we need to get organized. The financially responsible can be an effective voting bloc. We’re in the minority, but look at how many other swing-vote minorities get attention and drive policy.

Oil-product imports may grow as U.S. refinery market suffers.

TOKYO (MarketWatch) — A rough road of regulatory obstacles, dull demand for oil products and weak profitability has driven U.S. refiners to cut capacity, likely setting the market up for a growing reliance on imports.

And consumers will be the ultimate losers.

Massive regulatory hurdles make it highly unlikely the U.S. will see any new refineries built anytime in the near future, “if ever again,” said Neal Ryan, a managing partner at Ryan Oil & Gas Partners LLC.

The nation’s last so-called grassroots refinery, one built from scratch, was completed more than 33 years ago.

The lack of new refineries and shut downs of old ones will result in a bottleneck, the likes of which will create “more of a regional than national market for various fuels,” said Ryan, explaining that as some refineries are shut in, certain areas of the country will “become much more reliant on foreign imports versus U.S. refining capacity to satiate market demand.”

Fed split over impact of mortgage purchases
January 12 2010 ~ FT

Federal Reserve policy-makers are divided over the potential impact of their plan to end the purchase of mortgages on a still-fragile housing market recovery.

Different Fed officials believe the spreads on mortgage-related securities could go up anywhere from a quarter to three-quarters of a percentage point when the Fed stops buying mortgages by the end of March.

Census May Jump-Start U.S. Jobs Rebound With 1.2 Million Temporary Workers, reports Bloomberg News. ” The 2010 census couldn’t have come at a better time for the U.S. economy.”

~~ Taxpayers must fork over a bundle of cash to pay people to come to their doors to count noses. It doesn’t grow a single turnip, manufacture a widget , or produce anything of value except a mountain of data that may re-arrange the political map. How does that boost net wealth in the USA?

The Fed is making big money off this depression. Great businessmen that they are - No wonder Bernanke is the man of the year!

http://finance.yahoo.com/news/Fed-earned-45-billion-in-2009-rb-3493111557.html;_ylt=AlbOAzBrB8_KSgNVdZzV3n67YWsA;_ylu=X3oDMTE5N2lhZ21sBHBvcwM5BHNlYwN0b3BTdG9yaWVzQ29rZQRzbGsDZmVkZWFybmVkNDVi?x=0&sec=topStories&pos=7&asset=0b0343ecc54f424c2a0d20e468c30141&ccode=rd

China Raises Banks’ Reserve Requirement Ratio 50 Basis Points.

Jan. 12 (Bloomberg) — The People’s Bank of China raised reserve requirments for the nation’s lenders by 50 basis points effective Jan. 18, according to a statement posted today to the Web site of China’s central bank.

An appraisor called me with a Duplex in Barstow, Cal. The only real city between San Bernadino and Vegas. FHA owns it and it’ll rent for $1100-1200. I might get it for $30,000 cash. I thought I would never buy for at least 2 years. Time will tell if I am an FB.

When do you plan on making this purchase?

I am working on an assignment now. It wont be for at least two years.

The kind of war I can believe in

http://www.bloomberg.com/apps/news?pid=20601109&sid=afZr1H_gTltg&pos=12

Make mine a Dos Equis Amber

Morning all.

Took the dogs out this morning and it was a balmy 29 with the sun coming up. Which is still cold but after a week of 12-15 degree wake ups, it felt damn near tropical. Rumor has it we might see the 50s tomorrow….I’m getting out the sunscreen.

Does anyone have available a history of the periods QE was utilized over the course of the Fed’s existence (back to 1913)?

Quantitative Easing

A government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Investopedia explains Quantitative Easing

Central banks tend to use quantitative easing when interest rates have already been lowered to near 0% levels and have failed to produce the desired effect. The major risk of quantitative easing is that although more money is floating around, there is still a fixed amount of goods for sale. This will eventually lead to higher prices or inflation.

I must have missed a HBB memo or something.

When did Eddie -> Eddie The Great?

And what did he do to deserve such a title?

Just wondering.

= the filter

Really would help to have a posting policy, Ben.

It seems like gloomsters are coming out of hiding over at Marketwatch dot com. Did they somehow miss the memo that the stock market always goes up, over the long run? Still more interesting is the persistent tendency of Mr Market to hone in on opening bell levels whenever traders give it a little dust up early on in the trading day (such as this morning, for example), while the dollar concurrently absorbs yet another blow on the FOREX market.

Who is in charge of offloading stock market corrections onto the back of Uncle Buck (yet another good way to dump Wall Street losses onto Main Street’s back)? Is this a fair question for the Fed audit to address, or is this a monetary policy secret?

Indications

Jan. 12, 2010, 8:57 a.m. EST
Alcoa miss sends U.S. stock futures lower

By Steve Goldstein & Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — Alcoa Inc.’s disappointing kickoff of the fourth-quarter earnings season sent U.S. stock futures lower on Tuesday.

S&P 500 futures fell 8 points to 1,134.5 and Nasdaq 100 futures fell 11.75 points to 1,871.75. Futures on the Dow Jones Industrial Average dropped 68 points to 10,536.
…

Bad news: if you are 35, you are over the hill.

Economic, health worries make 35 the new 40
Reuters (Jan 12, 2010)

Research by the Philips Center for Health and Well-Being showed that 40 was previously widely considered as the milestone that defined middle age but this has been lowered to 35.

“Thirty five is the new 40 as Americans feel the pressures of middle age earlier than ever,” the Amsterdam-based center said in a statement.

Katy Hartley, the director of the center which aims to improve quality of life, said stress about the economy and healthcare that you would typically associate with turning 40 is starting at a younger age.

“The data suggests the new age for middle age is 35,” she said in an interview.

Nearly 80 percent of 35 year olds questioned for the Philips Index said they were concerned about the economy, and three-quarters were also worried about healthcare. These stresses, according to the study, have contributed to the feeling of early onset of middle age or the loss of five years of youth.

The report showed the economy topped the list of stressors for most Americans at 74 percent which was nearly double from a 2004 survey. A nearly equal amount said they feel positive about their overall health and well-being.

But many Americans may not be realistic about their health.

Only 39 percent of Americans consider themselves to be overweight, according to the index while a report by the National Center for Health Statistics showed 67 percent of Americans are overweight or obese.

Americans seem to accept being overweight as normal.

“I think the data would support that,” said Hartley.

Although most Americans said they are in good health, only 51 percent think they are as fit as they could be and 66 percent wished they exercised more.

When they do get sick, more than half of the 1,503 Americans who were questioned for the index said a doctor would be their first choice for getting information, followed by the Internet.

“The role of doctors remains important. Fifty-three percent of people still see their doctor as the first source of information and the second source of information is the Internet,” said Hartley.

But most people seek the company of family and friends to improve their health and well being, while job and salary were far less important.

“Initially it looks fine. We all feel great about our health and well being. I think when you dig a level deeper that Americans are struggling to balance spending time with their family, with their jobs, with the economy and with stress levels,” said Hartley.

At least the San Diego housing market is still offering good opportunity for fraud schemers to make a buck these days:

Four charged in defrauding Filipinos of homes
Owners persuaded to sign over homes

By Eleanor Yang Su, UNION-TRIBUNE STAFF WRITER
Tuesday, January 12, 2010 at 12:01 a.m.

Watchdog Update

Background: In March, The San Diego Union-Tribune published an investigation showing how a group doing business under the names Amerisian and Apocalypse trusts persuaded more than a dozen San Diego County families to sign over their house deeds with the promise of helping to lower their mortgage payments and avoid foreclosure.

What’s changing: The county grand jury has indicted four individuals linked to the trusts, and prosecutors have charged them with 54 felony counts, including foreclosure consultant fraud, grand theft and securities fraud.
…

There has never been a better time to be too-big-to-fail.

Economic Report

Jan. 12, 2010, 10:07 a.m. EST
Small-business index fell in December
Firms shedding jobs, cutting inventories amid weak sales, NFIB says

By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) - U.S. small businesses are stilling shedding jobs and cutting inventories amid weak sales and low expectations, the National Federation of Independent Businesses reported Tuesday.

The NFIB small-business index fell in December to 88.0 from 88.3 in November, the lobbying organization said. The index has been below 90 for two years and bottomed at 81 in March. Read the full report on the NFIB website.

The index has been in a narrow range since April, in contrast to sizable gains in such indicators such as the Institute for Supply Management index, which is dominated by large firms.
…
The single biggest problem for most firms remains poor sales, followed by taxes and government regulation.

“So why hasn’t owner optimism soared like it usually does at the end of a recession, especially one that cut so deeply into our economic fabric?” asked William Dunkelberg, NFIB chief economist. “The answer is ‘hope and change.’ There is little hope and the change that is being delivered is far from encouraging. Washington is offering nothing but higher taxes and fines and fees and more regulation.”

“Confidence in our political leadership has tanked,” Dunkelberg said.

Behold the consequences of tying your city services budget to a real estate bubble:

San Diego County Faces Another Economic Crisis
Video published January 8, 2010

Above: San Diego County Treasurer Dan McAllister predicts collecting $50 million less in revenues because of declining property values. The editors discuss.

By Megan Burke, Hank Crook, Gloria Penner, Natalie Walsh

January 8, 2010

GLORIA PENNER (Host): Although there may be some signs that housing prices are now inching upward, the County is just now seeing a drop in property tax revenue from the decline in home values that began in 2007. So we put San Diego Treasurer Tax Collector Dan McAllister on the record and asked him what that decreased revenue means to San Diego.

DAN McALLISTER (SD County Treasurer - Tax Collector): Well every year that we take in revenue, it’s divvied up between a vast number of places to go. Cities get revenue, redevelopment agencies get revenue, but probably the biggest recipient of revenues from property tax dollars in San Diego County, and throughout the state really, are our schools. And in fact about 43.3% of every dollar we bring in goes to our K-12 school systems. And they are the ones that are the biggest deficiency holders, if you will, and they suffer the most when there is a lapse in revenues. Such is the case this year. We project about $50 million less in revenues that will be taken in by taxes this year and we also see that that will continue on into next year. So that number will grow and it will impact schools as well as libraries and all the other services that many government agencies provide.

PENNER: Joining me now to discuss the County’s economic outlook are John Warren, editor and publisher of San Diego Voice & Viewpoint, and Leslie Wolf Branscomb, editor of San Diego Uptown News. John, let me start with you. Lets talk about those millions lost and property taxes because of declining home prices. If we do see a recovery this year, will property taxes recover with better funding for those services that Dan McAllister says have suffered?
…

I read the article in today’s Times about Obama’s proposed tax on banks and can’t help but think this is the stupidest idea ever. The banks will simply pass the costs on to us!

With an estimated $500,000,000 in tax fraud related to improper first-time-home-buyer credits (and growing! See: http://www.usatoday.com/money/economy/housing/2009-10-22-homebuyer-tax-credit-fraud_N.htm) why not start there as a way of getting some more money?

Or how about auditing every stated-income mortgage application from the past 7 years and making sure people paid income tax on their stated income?

Is Obama trying to buy votes, even if they cost $8,000 apiece (in the form of fraudulent tax credits?)

The title of this radio piece suggests outright that San Diego housing mania still bubbles just below the surface, at least in the hearts minds of true housing bubble believers. I love how the ‘expert opinion,’ that “It is always a good thing when home values go up,” is met with no critical scrutiny whatever.

Housing Market On Its Way Up
Video published January 8, 2010

Above: San Diego County home prices are creeping higher and higher. But, is it enough to be optimistic for the future? KPBS Reporter Sharon Heilbrunn investigates.

By Sharon Heilbrunn, Gloria Penner

January 8, 2010

GLORIA PENNER (Host): We start our economic analysis with the local housing market, which has in been in a steep dive for the past two years, but recently home prices have been on the rise. KPBS Reporter Sharon Heilbrunn has an update on the current status of buying and selling homes in San Diego.

SHARON HEILBRUNN (KPBS Reporter): For almost a year, home prices in San Diego County have crept higher. The most recent home price index report from Standard & Poor’s/Case-Shiller showed that home prices in San Diego County rose .4 percent from September to October, when home buying activity usually slows down.

So, is this a reason to be optimistic about the housing situation in San Diego? Mark Goldman, a certified mortgage planning specialist and lecturer at San Diego State University, is hesitant.

MARK GOLDMAN (SDSU Lecturer, Certified Mortgage Planning Specialist): It’s always a good thing when home values go up. We’ve lost a great deal in value in San Diego. Prices are down over a third, about a third of homeowners are upside down on their homes. So it’s good that prices don’t decline further. What does it tell us about the future? Not very much, unfortunately. I’m hoping we’re nearing a bottom in the market. But the two questions I always ask is, what brought us here, and what’s changing?

Goldman attributes improvements in the housing market to very low interest rates and supports from the first time homebuyer tax credit.

GOLDMAN: In 2009, the federal reserve committed to purchase on and a quarter trillion in mortgages and to help support the residential mortgage market.

But what happens when this government help expires?

GOLDMAN: Those supports, those props of the market, are going to be removed during the first quarter and first half of 2010. My concern for 2010 is that none of the fundamental problems that brought the housing market down have not been addressed, in my opinion.

Goldman is talking about unemployment, which is at 10 percent right now in San Diego County, and active foreclosures.

GOLDMAN: The number of active foreclosures — the last report was in Oct 2009 — are almost double what they were the year before.

But there are some promising signs.

GOLDMAN: One of the things we’ve seen in the last 30 days is that the gov’t has tried to put more pressures onto banks to mitigate foreclosures by doing realistic loan modifications or allowing deeds in lieu of foreclosure or allowing short sales.

And this is still a buyer’s market.

GOLDMAN: Home prices have fallen to the point where the cost to own is similar to the cost to rent. So if someone is thinking about buying a home and staying in it for a long time, this could be a great opportunity.

Here’s a letter I sent to a newspaper editor today:

Dear Editor:

Reuven S*****

The Top ‘Recession Porn’ Stories of 2009
Posted by Brad Tuttle Tuesday, December 22, 2009 at 10:15 am

With an apparently resurgent economy, the media genre known as recession porn may be gone for good. What, exactly, is recession porn? You know it when you see it. Basically, it’s the fascination with all the weird ways the recession has affected different groups of people—the rich and privileged especially, because everyone knows the financial crisis has been tough on the working classes. In this look back, you’ll see that recession porn stories include the economic downturn’s impact on celebrities, the Queen of England, and workers in the actual porn industry.
…

What a great idea Bob Putz has come up with…

GM’s Lutz: Higher gas tax would help.

DETROIT (CNNMoney.com) — Bob Lutz is generally not a close ally of environmentalists.

The vice chairman of General Motors is a frequent critic of fuel economy rules and once declared that global warming was a “total crock” of excrement, although he used a more common and colorful word in that description.

Lutz also declared in 2004 that hybrid cars didn’t make sense to sell or buy. And just this week, as he and GM were hyping the new electric Chevrolet Volt, at Detroit’s North American International Auto Show, he declared that internal combustion engines would dominate the auto industry for the next 20 years, no matter what advances were made in electric vehicles.

So Bob Lutz wouldn’t seem a likely candidate to argue for significantly higher gasoline taxes, or to suggest that such taxes would be a good thing for the auto industry. But in a meeting with journalists at the auto show Monday, he did just that.

“If the rise in gasoline prices is gradual, I think that all of us in the industry would frankly welcome that, because there is nothing more illogical than forcing fuel-saving technology when gasoline is extremely cheap,” he said when asked about any concerns about oil again rising above $80 a barrel.

“[China can't] go from third-world communist hellhole to the world’s second major economy without some serious bust-ups…especially when the communists are still in control.”

~Bill Bonner.

WTH? I doubt our gubmint would ever “falsify” data, that’s just unheard of!

* Greece condemned for falsifying data

Greece was condemned by the European Commission on Tuesday for deliberately falsifying data about its public finances and allowing political pressures to obstruct the collection of accurate statistics.

In a damning report published as the eurozone grapples with its worst fiscal crisis since the euro’s launch in 1999, the Commission said Greece’s figures were so unreliable that its budget deficit and public debt might be even higher than the government had claimed last October.

At that time Greece estimated its 2009 deficit would be 12.5 per cent of gross domestic product, far above the 3.7 per cent predicted in April. It revised its 2008 deficit up to 7.7 per cent from 5 per cent.

Wall Street Journal

Despite the mortgage meltdown, financial firms are coming off a blockbuster year. Revenue has rebounded to pre-crisis levels, and 2009 compensation is on pace to approach or surpass the record payouts of 2007.

well thast all thast important Wall Street was saved everything else can be out-sourced

(Hwy wonders what Molly Ivins would have to say ’bout her fellow Texan’s social experiments…)

4 year old Hippie child boy put on suspension:

“…The Mesquite ISD’s dress code has been enforcing hair length since at least the 1970s, when the district sent home a 10-year-old boy because his hair touched his collar.”

Mesquite ISD says 4-year-old disciplined for long hair can upbraid his locks

http://www.nbcbayarea.com/news/weird/Follicle-Fight-Goes-to-School-Board-81152687.html
Tue, Jan 12, 2010

You remember when US sentiment was overwhelmingly against TARP, yet the bankers were able to get their paid for stooges in Congress to vote for it, after the initial vote failed.

LONDON – The Icelandic government held emergency talks Tuesday to come up with an agreement on repaying British and Dutch investors $5.7 billion so it can avoid a divisive referendum on the issue.

A spokesman for Icelandic Prime Minister Johanna Sigurdardottir said the country’s leading political parties had agreed to work together to revise terms for the disputed payment to the two countries over a failed Icelandic Internet bank.

The dispute has jeopardized Iceland’s bid to join the European Union and threatened crucial bailout funds for Iceland promised by the International Monetary Fund and Nordic countries.

The government was forced into organizing the nationwide vote, which must be held by March 6, after President Olafur R. Grimsson last week refused to sign the so-called Icesave bill.

Grimsson’s decision rode a wave of popular opposition to the bill, named after the high-interest-paying Internet bank that went bust, leaving the British and Dutch governments to fork out compensation for their citizens.

While the government argued that the bill was necessary for Iceland’s economic recovery, opponents were angry that Britain and the Netherlands succeeded in imposing tougher terms on repayment.

If those two countries agree to revised terms that are also palatable to Iceland’s opposition parties, the referendum could be averted — a scenario the government is keen to see.

It seems Icelanders suffer the same problem, ie bought and paid for politicians.

Federal Bias Toward Homeownership ~~ Tad DeHaven

The Wall Street Journal ran the story last week: “U.S. Now a Renters’ Market.” Apartment vacancies hit a 30-year high in the last quarter of 2009, and rents are falling in most markets. For current or former homeowners trying to stumble out of the debris left from the government-fueled housing bubble, a renter-friendly environment is a positive opportunity.

But it’s also a reminder of how the government’s obsession with homeownership continues to distort the market for housing. As the Journal notes, “Government efforts to prop up the housing market also threaten the apartment sector by making it easier for some renters to buy homes. Some landlords have reported a slight uptick in renters moving out to buy homes.”

Homeownership in the U.S. began an upward trajectory following the federal government’s plunge into the housing market during the Great Depression. Prior to that fewer than half of Americans owned their own home according to University of Pennsylvania Prof. Thomas J. Sugrue. Owning one’s home is now viewed in this country as American as apple pie. but as Sugrue points out, this mentality is “a story riddled with irony”:

http://www.cato-at-liberty.org/2010/01/11/federal-bias-toward-homeownership/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Cato-at-liberty+%28Cato+at+Liberty%29&utm_content=Google+Reader

Good interview here with a REIC insider who comes across as much more forthright than average. I especially enjoyed the conjecture over the San Diego “shadow inventory” — it seems even REIC insiders have only a vague notion of the scale of this, or how it will unwind.

P.S. Try not to catch yourself a falling knife buying San Diego real estate long before the roller coaster reaches the bottom of the hill.

These Days
Housing Market Outlook for San Diego

An audio recording of this interview will be posted here within a few hours of the live broadcast. A transcript will also be added within 24 hours. Thank you for your patience.

By Maureen Cavanaugh, Sharon Heilbrunn

January 12, 2010

Maureen Cavanaugh: The New Year is here and with it comes new optimism about an economic recovery. We all know it has to happen sometime, and most of us are hoping this is the year.

In San Diego, a lot of the economic recovery we’re hoping for comes in the form of real estate. Homeowners have seen the value of their properties shrink the last two years and homebuyers have seen mortgage money dry up. What are the realistic expectations for the San Diego real estate market in 2010 and how do we start preparing for them?

Guest
Mark Goldman, mortgage broker with Cobalt Financial Corp.

from the history channel discussion yesterday:

i kind of like pawn stars. i think it is relevent to history. not full blown historical stories…but filled with tidbits about small and somewhat meaningless objects from history.

i think it’s interesting. although i think the channel has fallen to the TLC gods (i remember with TLC meant The Learning Channel).

nat geo and the science channels are just about the only TV i watch now (with a little history and discovery channels thrown in.)

Best time to sell Treasurys? When the economic news is turning out to be “worse than expected.”

market pulse

Jan. 12, 2010, 1:08 p.m. EST
Treasury sells $40 bln in 3-year notes at 1.490%

NEW YORK (MarketWatch) — The Treasury Department sold $40 billion in 3-year notes (UST3YR 1.43, -0.07, -4.74%) at a yield of 1.490% on Tuesday, around where traders expected for the second of four big debt sales this week. The amount matches last month’s auction.
…
Indirect bidders, a group that includes foreign central banks, bought 38% of the sale, compared to an average of 59.3% at the last three. However, direct bidders — investors buying for their own accounts — purchased a record 23.4%, compared to 7.1% on average recently. The broader bond market remained higher after the auction, buoyed by as a combination of news out of China, Greece and Alcoa (AA 15.57, -1.89,-10.80%) that raised concerns about the outlook for economic growth.
…
Q. Is the Fed included in the “direct bidder” category?

More Homeowners Struggling As Option ARMs Reset Higher
CNBC ~~ 12, 2010

Thousands of American homeowners are starting to see their monthly mortgage payments skyrocket, dealing a fresh blow to the already shaky housing recovery.

The widely feared reset of thousands of option adjustable-rate mortgages-where both interest and principal payments rise sharply-is already leaving many homeowners struggling to keep a roof over their head.

“It’s going to kill off housing,” warns Patrick Pulatie, CEO of Loan Fraud Investigations, a predatory lending audit firm. “We have pretty close to 500,000 option ARM payments going higher in California over the next couple of years. The impact of the higher payments will be devastating for homeowners who are having trouble now making ends meet.”

Option ARM mortgages, which have been around since 1981 and are aimed primarily for people who had fluctuating incomes, became popular during the housing boom. Terms of the loan usually allowed the borrower to make low monthly payments initially-sometimes by just paying interest only.

But as the terms of those mortgages now readjust, homeowners are facing much higher mortgage payments at a time when the value of their house has plummeted and many are out of work. In some cases, homeowners who chose a very low starting interest rate have actually seen the overall amount of their mortgage increase-known as negative amoritization-putting them even deeper in debt.

Kiddie Kandids files for bankruptcy, closes studios.

The Great Recession caught up with another Utah-based business Monday. Kiddie Kandids filed for bankruptcy and shut down nearly 200 photography studios in malls nationwide.

Employees of the photography business, which is based in Sandy, heard whispering about the closing during the weekend, and got the confirmation they feared Monday morning.
“Effective immediately, Kiddie Kandids must completely cease operations and relieve all employees of their positions with the company.” - Dale Merrill, President of Kiddie Kandids

“Yesterday was a perfectly normal day, business as usual,” said Kristen Turner, a Kiddie Kandids studio manager. She had even received a promotion in recent weeks. Now, she’s filing for unemployment.

“I’m the sole breadwinner in the family ‘cause my husband has been unemployed for a while,” Turner said.

Now, she’s fighting for survival, along with hundreds of other company employees across the country.

“We have four children,” Turner said, “and we’re doing everything we can just to hang on.”

Kiddie Kandids started off in a mall kiosk in 1974. It grew to 184 studios in malls across the country that specialized in portraits of babies and children. Now all studios are locked up, and employees are locked out.

Issa Says Someone Must Be Held Accountable for AIG.

Jan. 12 (Bloomberg) — Darrell Issa, the lawmaker looking into the Federal Reserve Bank of New York’s efforts to limit American International Group Inc. disclosures during the credit crisis, said the government must hold someone responsible.

“Who do we hold accountable for these lost billions, and what’s wrong with the system that the New York Fed can hand out your tax dollars in these quantities and not think it’s particularly important to make sure it’s the right amount,” Issa, a California Republican, said today in an interview on Bloomberg Television. “I think the American people deserve somebody’s head on a platter.”

E-mails obtained by Issa show the New York Fed requested in 2008 that AIG withhold information from public filings about payments to banks. Treasury Secretary Timothy Geithner, who was president of the New York Fed at the time, was asked to testify before a congressional committee about the effort to limit AIG’s disclosure on the payments that retired credit-default swaps.

Don’t know if anyone saw these figures on TV (yes CNBC I am afraid to say) this morning:

Cumulative Mortgage Default Ratio, 2006 Origination:

Alt-A: 38.8%
Optional-ARM: 49%
Subprime: 61.3%

2007 figures are only a couple of % behind 2006 #s.

As mentioned before I do not believe there will be a sudden spike in Alt-A and Optional-ARM mortgages in that well-known reset chart in late 2010/2011 as that is already happening as we speak. Optional-ARM is only 12% behind the worst of the worst, subprime and Alt-A is 20% behind.

How soon again will this Fed housing market price support program end? (I initially thought this was a recent story, until I took a closer look at the year…)

Fed to Begin Buying Mortgage-Backed Securities

By THE ASSOCIATED PRESS
Published: January 5, 2009

The Federal Reserve Bank of New York said Monday that it had begun purchasing mortgage-backed securities in an effort to bolster the battered housing market.

The program, initially announced Nov. 25, allows the Fed to spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks. The program is aimed at driving down the price of mortgages and making home loans more available.

The New York Fed is overseeing the program for the Federal Reserve. The New York Fed is working with four investment managers — BlackRock, Goldman Sachs Asset Management, PIMCO and Wellington Management Company — to purchase the securities.

Up to $500 billion in securities will be purchased by the end of the second quarter.

The mortgage-backed securities being purchased are considered investment grade and are not the packages of loans that helped ignite the current credit market turmoil. An initial sharp rise in defaults in 2007 among subprime mortgages — loans given to customers with poor credit history — helped touch off the continuing credit market downturn. As defaults continued to rise, the value of securities backed by subprime mortgages plummeted and investors shied away from purchasing the risky debt.

Mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac are typically higher-quality prime mortgages and not pools of subprime loans, meaning they carry less risk.
…

For the academic geeks in the virtual room, this article might be worth a read:

Estimated Impact of the Fed’s Mortgage-Backed Securities Purchase Program

Johannes C. Stroebel, John B. Taylor

NBER Working Paper No. 15626*
Issued in December 2009

We examine the quantitative impact of the Federal Reserve’s mortgage-backed securities (MBS) purchase program. We focus on how much of the recent decline in mortgage interest rate spreads can be attributed to these purchases. The question is more difficult than frequently perceived because of simultaneous changes in prepayment and default risks. When we control for these risks, we find evidence of statistically insignificant or small effects of the program. For specifications where the existence or announcement of the program appears to have lowered spreads, we find no separate effect of the size of the stock of MBS purchased by the Fed.

This paper is available as PDF (137 K) or via email.

The Buzz
Hip hip hooray! Oh, wait.
By Paul R. La Monica, editor at large
January 12, 2010: 1:20 PM ET

NEW YORK (CNNMoney.com) — It looks like those pesky corporate earnings reports may rain on Wall Street’s parade.

Stocks have been rallying for months, largely on the hopes that the economy and corporate profits would bounce back sharply this year. But aluminum producer and Dow component Alcoa kicked off the fourth-quarter earnings period Monday with tinny results that disappointed investors.
…
Considering that analysts and investors have been waiting for several quarters now for companies to finally show even faint signs of life on the top line, shouldn’t Wall Street be cheering instead of panning Alcoa’s results?

Nope. And here’s why. All the enthusiasm about how much better the economy seemed to be getting at the end of last year has led to some unreasonably high expectations.

Many investors seemed to think that the economy was something that could simply be turned on like a light switch. But this light switch clearly has a dimmer.
…

Senator urges SEC probe NY Fed over AIG emails
WASHINGTON
Tue Jan 12, 2010 1:36pm EST

WASHINGTON (Reuters) - U.S. regulators should investigate whether laws were violated when the New York Federal Reserve Bank under Timothy Geithner urged insurer AIG to limit discussions about payments to banks, a Republican lawmaker said on Tuesday.

Republican Senator Jim Bunning of Kentucky, a member of the Senate Banking Committee, said an email exchange released on January 7 that showed the New York Fed advising American International Group Inc to withhold information about its derivatives counterparties from its Securities and Exchange Commission filings raised serious issues.

“Because the information withheld appears to be material information about the financial condition of AIG and the value of the company, these actions may constitute a serious violation of the securities laws,” Bunning said in a letter to SEC Chairman Mary Schapiro.
…

An investment strategist at China’s $300-billion (U.S.) wealth fund said the world’s third-largest economy now had a say in the exchange rate of the U.S. dollar, which it expects to rise while the yen should fall further.

The comments by Peng Junming, who works in the asset allocation and strategic research department at China Investment Corp, triggered a rally in the U.S. dollar.

“I think the dollar is at its bottom now. There will be very limited space for the dollar to drop further,” he told an academic forum. “The yen is what, I think, has the worst outlook. The yen will continue to drop, unlike the dollar, which will not serve for long as a source of funding carry trades.”

The U.S. dollar rose more than half a yen close to 92.40 yen on the news, then pared gains after Mr. Peng said his speech at the Chinese Academy of Social Sciences reflected personal views. The euro slid against the dollar and gold dropped before rebounding slightly.

The market reaction to Mr. Peng’s comments shows the sensitivity to clues on how China and its state fund view the markets.

Listening to NPR on this fella’s book:
Priceless The Myth of Fair Value
by William Poundstone

“That price has a hypnotic effect: the profit margin of the 99 Cents Only store is twice that of Wal-Mart. Why do text messages cost money, while e-mails are free? Why do jars of peanut butter keep getting smaller in order to keep the price the “same”? The answer is simple: prices are a collective hallucination.”

“Price consultants” advise retailers on how to convince consumers to pay more for less, and negotiation coaches offer similar advice for businesspeople…”

I wasn’t aware that CA & ME are the top RED states…

http://www.utahgasprices.com/Price_By_County.aspx

The Unemployed States of America.

http://www.businesspundit.com/the-unemployed-states-of-america/

Tax break gives KB Home profits
Washington Business Journal - 1-12-10

KB Home, which plans to resume home building in the Washington market after pulling out in 2008, reported its first profits since 2007, after new tax breaks recently given to home builders.

The Los Angeles-based builder’s revenue fell after selling its houses for less than a year ago.

KB Home had fourth quarter net income of $100.7 million, or $1.31 per share, compared to a net loss of $307.3 million, or $3.96 per share in the same quarter a year ago. Total revenue was $674.6 million, down 27 percent.

The company recorded a $191.7 million income tax benefit during the quarter, related to recently enacted tax legislation that extended the permitted carryback period for offsetting operating losses from two years to five years. The company posted a pre-tax loss for the quarter of $91 million.

Orders increased 12 percent during the quarter, thanks to a decline in cancelations. The number of home sales completed fell 22 percent, and its average sales price was $203,400, down from $232,200 a year ago.

NYC Office Space for Rent Increases 38%.

Jan. 12 (Bloomberg) — Manhattan has 38 percent more office space for rent than a year ago as Wall Street job cuts and a weak economy dampen demand, Cushman & Wakefield Inc. said. The vacancy rate in the fourth quarter was unchanged from the third.

Available space totaled 43.8 million square feet at the end of 2009, compared with 31.8 million a year earlier, the New York-based brokerage said today in a report. That’s equivalent to 11.1 percent of Manhattan’s office space, the same as at the end of September, according to Cushman.

“We’re calling this close to the bottom,” said Joseph Harbert, Cushman’s chief operating officer for the New York region. “Rents will go down a bit from here, vacancies will go up a bit, but you won’t see any dramatic movements on either of those fronts in the next nine months.”

Jan. 11, 2010, 2:23 p.m. EST

New York AG Cuomo seeks bonus data on bailed-out banks

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) - Responding to concerns about record payouts to Wall Street bankers, New York Attorney General Andrew Cuomo on Monday said he is asking eight of the largest U.S. banks that received bank-bailout dollars for information about their pay and bonus packages for 2009.

Cuomo said he is seeking the data from Bank of America Corp. (BAC 16.27, -0.66, -3.90%) , Bank of New York Mellon Corp. (BK 29.13, +0.11, +0.38%) , Citigroup Inc. (C 3.51, -0.13, -3.44%) , Goldman Sachs Group Inc. (GS 167.68, -3.88, -2.26%) , J.P. Morgan Chase & Co., (JPM 43.20, -1.33, -2.99%) Morgan Stanley (MS 31.06, -0.99, -3.07%) , State Street Corp. (STT 44.22, -0.14, -0.32%) and Wells Fargo & Co. (WFC 28.05, -0.75, -2.60%)

These institutions received federal dollars as part of the U.S. government’s $700 billion bank-bailout program, known as the Troubled Asset Relief Program. They have since repaid the bailout funds.
…

Talk about a screwed up country…

Family shut out of their ‘dream home’ by gang of gipsies who moved in over Christmas ~ 12th January 2010 Daily Mail ~ (UK)

With the building works nearly over, Julian and Samantha Mosedale and their three children were looking forward to moving into their ‘dream home’.

But now their future has been thrown into doubt - after a gang of Romanian gipsies beat them to it and took over the £285,000 property.

To add insult to injury, when the law-abiding couple questioned the squatters’ right to be in Britain, police told them that they were being ‘racist’.

The unwanted guests entered the three-bedroom terrace house over Christmas, changed the locks and began moving in furniture.

Mr Mosedale, an illustrator, and his wife, a catalogue manager, both 45, had moved out of the house in Tottenham, North London, in July 2007 while extensive structural and renovation work was completed.

They rented another property, and regularly visited the house to project manage the work.

But, after spending Christmas visiting relatives in Essex, they were horrified when they next visited the house on January 3 to find the squatters had moved in.

They now fear they could soon be homeless because they can only afford to foot the dual monthly cost of rent and mortgage payments until March.

The couple also claim the police have left them ‘feeling like criminals’ even though they are the innocent victims - because they dared to wonder if the squatters were illegally claiming benefits from their home.

Mrs Mosedale , whose three sons are 10, eight, and five, said: ‘We called the police as soon as we found out they were in there. An officer suggested I was racist when I asked if they were Romanians, and did they have a legal right to be in this country.

‘We are hard-working citizens yet get treated like criminals when our home is stolen. This whole thing is making me feel constantly sick. All we want to do is get on with our lives.

‘We feel let down by the law, by government, and by the police, in fact all the authorities that one would expect to protect society.

‘The house had builders in it while the renovations were being done. It was only in the last couple of months that it was left completely empty.

‘Our lawyers don’t know how long it will take us to get them out and the stress is really getting to the whole family.

‘The kids are upset at the idea that other children are playing with their toys in the garden. Our son Jake is old enough to understand what is going on and he is finding it difficult to sleep.

“Well it seems that they have taken that message to heart, and so they changed the way that they are counting jobs as “created or saved.” Only, now it may be even worse”. Neal Boortz

ABC’s Jake Tapper reports:

In a little-noticed December 18, 2009 memo from Office of Management and Budget director Peter Orszag the Obama administration is changing the way stimulus jobs are counted.

The memo, first noted by ProPublica, says that those receiving stimulus funds no longer have to say whether a job has been saved or created …

In other words, if the project is being funded with stimulus dollars - even if the person worked at that company or organization before and will work the same place afterwards - that’s a stimulus job.

So why didn’t this loser get the job done in his 4 years?

Corzine Condemns ‘Too Damn High’ New Jersey Taxes as He Exits

Jan. 12 (Bloomberg) — New Jersey Governor Jon Corzine, making his valedictory speech to lawmakers, said the most critical issue facing them and his successor boils down to this: “Everyone’s property taxes are too damn high.”

In his final State of the State address, seven days before he cedes the office to Republican Christopher Christie, Corzine expressed disappointment that he was unable to win another four years in office. He leaves with a record 58 percent disapproval rating by state voters, according to a Fairleigh Dickinson University poll today.

The former chairman of Goldman, Sachs & Co., who pledged to use his Wall Street expertise to end budget deficits and lower the highest property taxes in the nation, urged politicians to “think not just about the next election.”

“Until we reform our state’s antiquated structure for providing local government services,” state leaders are “never going to get the job done,” Corzine said.

When botox Pelosi flies she leaves the biggest carbon foot print a moonbat can…

(CBS) Few would argue with the U.S. having a presence at the Copenhagen Climate Summit. But wait until you hear what we found about how many in Congress got all-expense paid trips to Denmark on your dime.

CBS investigative correspondent Sharyl Attkisson reports that cameras spotted House Speaker Nancy Pelosi at the summit. She called the shots on who got to go. House Majority Leader Steny Hoyer, and embattled Chairman of the Tax Committee Charles Rangel were also there.

They were joined by 17 colleagues: Democrats: Waxman, Miller, Markey, Gordon, Levin, Blumenauer, DeGette, Inslee, Ryan, Butterfield, Cleaver, Giffords, and Republicans: Barton, Upton, Moore Capito, Sullivan, Blackburn and Sensenbrenner.

That’s not the half of it. But finding out more was a bit like trying to get the keys to Ft. Knox. Many referred us to Speaker Pelosi who wouldn’t agree to an interview. Her office said it “will comply with disclosure requirements” but wouldn’t give us cost estimates or even tell us where they all stayed.

Senator Inhofe (R-OK) is one of the few who provided us any detail. He attended the summit on his own for just a few hours, to give an “opposing view.”

“They’re going because it’s the biggest party of the year,” Sen. Inhofe said. “The worst thing that happened there is they ran out of caviar.”

Our investigation found that the congressional delegation was so large, it needed three military jets: two 737’s and a Gulfstream Five — up to 64 passengers — traveling in luxurious comfort.

Add senators and staff, most of whom flew commercial, and we counted at least 101 Congress-related attendees. All for a summit that failed to deliver a global climate deal.

As a perk, some took spouses, since they could snag an open seat on a military jet or share a room at no extra cost to taxpayers. Rep. Gabrielle Giffords (D-AZ) was there with her husband. Rep. Shelley Moore Capito (R-WV) was also there with her husband. Rep. Ed Markey (D-MA) took his wife, as did Rep. Jim Sensenbrenner (R-WI). Congressman Barton — a climate change skeptic — even brought along his daughter.

Until required filings are made in the coming weeks, we can only figure bits and pieces of the cost to you.

# Three military jets at $9,900 per hour - $168,000 just in flight time.
# Dozens flew commercial at up to $2,000 each.
(CBS)

# 321 hotel nights booked - the bulk at Copenhagen’s five-star Marriott.
# Meals add tens of thousands more.

Raleigh appraisal company ALA Inc. files for Chapter 7 liquidation
Triangle Business Journal -

Raleigh appraisal company ALA Inc., which formerly was known as Morgan & Company Inc., has filed for Chapter 7 liquidation.

The firm, run by Winston T. Morgan, made the filing Dec. 30 in U.S. Bankruptcy Court for the Eastern District of North Carolina. The company listed assets of $2,700 compared to liabilities of $2.4 million.

Bankruptcy attorney Douglas Wickham says that ALA invested in a Durham residential land development deal that went south, a turn of events that eventually resulted in the need for the bankruptcy filing. He adds that Morgan is continuing to run an appraisal business under a different corporate entity.

According to the bankruptcy filing, ALA posted gross sales from appraisals of $173,029 in 2009, compared to gross sales from appraisals of $206,400 in 2008.

The local residential home industry has been hit hard by the bursting of the housing bubble nationally. Another recent casualty was Willow Spring-based custom residential builder Promise Homes LLC, which filed for liquidation on Dec. 31.

The company, which was headed up by Stephen Cochran, primarily built high-end houses in the $500,000 price range in southern Wake County, according to bankruptcy attorney Paul Winborne Documents filed in the U.S. Bankruptcy Court for the Eastern District of North Carolina show that Promise Homes had assets of $2.03 million and liabilities of $2.36 million.

Hmmmm. That’s interesting. Just checked the bankrate rating on one of my local banks just cuz I hadn’t done it in a while.

Significantly lower ratios than last time. I’d go as far as to say the memo used some extreme phraseology. Feeling a little more confident that shadow inventory’s out there locally.

Bill Bonner, who has today’s reckoning from Bethesda, Maryland…

Poor Obama. The man is in way over his head. And what can he do? Few people understand what is going on in the economy…and none of them work for the Obama administration, as near as we can tell. The only one who seemed to be on the ball was his advisor, Paul Volcker. But Volcker got edged out by Larry Summers, a man with a long history of bad ideas on economic matters.

Summers is a stalwart member of that very special club - modern economists. Never has an unarmed professional group done more damage to a society than Summers and his colleagues.

“We cannot and will not accept any speed limit on American growth,” said Summers in a 1995 speech, rejecting the idea of higher interest rates to cool speculation. By 2000, the economy with no speed limit had smashed into an abutment. But Summers never figured out what the problem was. He was too busy wrecking a great university. He went on to apply the same ‘no speed limit’ philosophy to Harvard, where his building program was so costly the university years will probably never recover from it.

Ben Bernanke gives no hint that he has any idea of what is going on either. He maintains that modern central banking can’t see when economies are getting into trouble. But when they do…he knows just what to do to fix it.

What kind of strange GPS system is this, dear reader? It failed to tell us where we were before we ran off the cliff… But now, we’re going to use it to find our way home. Good luck!

But who worries now? We’re rolling along…convinced that trouble is behind us. Recovery is on the way; that’s what the signs say.

But wait…

Joblessness at a 26-year high, and rising….

Consumer credit just took the biggest monthly drop ever…it’s fallen 10 months in a row.

Nearly half of Florida’s mortgages are underwater…

Hey…what a recovery!

But the stock market doesn’t seem to care. Or notice.

The Dow rose 45 points yesterday. Investors seem to think that businesses are going to make a lot of money in the years ahead. How? How much stuff can you sell to unemployed people? But why else would investors pay 100 times earnings for a share?

The current price/earnings ratio is a subject of much discussion. Earnings collapsed in the depression. Prices did not. So if you look just at current earnings you come to a P/E ratio in the 100+ range. That means investors pay $100 for every dollar’s worth of earnings. If they intend to earn their money back - and nothing changes - they’ll wait a century to break even.

But earnings are expected to go up. So Robert Shiller used a 10-year moving average to compute earnings…smoothing them out to a “normal” level. Still, he says, the S&P 500 is overvalued by about 27%.

The point is, stocks are expensive. So, you have to wonder: what is going on? Are stock market investors really such optimists?

Or, is the federal government manipulating stock prices? It is spending trillions of dollars to give people the impression that things are getting back to normal. Why not spend a few billion more to manipulate stock prices?

We don’t know. The feds have shown themselves willing to do any fool thing…but rigging the stock market? Who knows?

We’ve got to reckon with what we’ve got. And what we’ve got is a stock market that is either manipulated…or delusional.

Stocks could only be worth current prices if this were a normal recession. But if this were a normal recession, it would be over by now. Stocks would be moving up in anticipation of the next boom phase. But this is not a normal recession. And it hasn’t come to an end. New jobs aren’t being created. Consumer credit is not expanding. And the only prices that are going up are the prices subject to speculation.

The real reason stocks are so expensive (assuming the market isn’t rigged) is that this is the beginning of a depression, not the end of one. At the beginning, people don’t quite believe it.

“We’re climbing out of a nasty recession,” said a financial expert interviewed on the radio this morning. “And we’re all happy to put this thing behind us as soon as possible.”

Stocks are high because people think they can ‘put this thing behind them.’ They can’t imagine that the depression will last for 5…10…maybe 15 more years. Nor do they realize that the US economy is permanently impaired…that the companies traded on Wall Street will have a very hard time earning profits in the years ahead…nor that the average American family may have reached the height of its wealth in 1973!

The disappointment will come…then the disillusionment…then the disgust…then the despair. It will be like walking down a staircase…each step heavier…deeper…and more depressing the last. And with each step, stocks will fall. Investors will begin to see things in a new way. And at the bottom, a whole new outlook will be common:

“America is finished as an economic power,” people will say. “Incomes are going down - forever; we can’t compete with the Chinese. Stocks were dreadfully overpriced; now they are cheap…but who would want to buy them?”

It may not happen like that. But somehow, some day…stocks will once again trade at low P/E ratios… Below 10…maybe down to 5. Then, they will be bargains.

How will you know when it is time to buy again? When you no longer want to.

Labor angry over Obama-backed insurance tax ~~ Jan 12,

WASHINGTON (AP) - Labor leaders are pushing hard on President Barack Obama and Senate Democrats to drop a proposed new tax on high-value health insurance plans, warning of political consequences.

The White House has indicated the tax may change so it hits fewer workers - but it’s not going away.

A Monday evening meeting at the White House between Obama and about a dozen heads of the country’s biggest labor unions capped a day when two union leaders fired broadsides at Obama and Senate Democrats over their plans to pay for overhauling the nation’s health care system with a tax union leaders fear could hurt their workers.

The 40 percent tax would fall on employer health plans worth more than $8,500 for an individual or $23,000 for a family. Although Obama terms them “Cadillac” plans, union leaders say numerous working-class Americans who’ve negotiated good benefits in exchange for lesser pay would be hurt.

The president of the AFL-CIO, Richard Trumka, warned that Democrats risk catastrophic election defeats similar to 1994 if they fail to come up with a health bill labor likes.

“A bad bill could have that kind of effect - a place where people sit at home” - as happened in 1994, when Democrats lost 54 House seats and eight in the Senate, costing them control of Congress, Trumka told reporters.

Schwarzenegger budget ax would fall heavily on poor ~~Tue Jan 12, 2010

* California’s welfare-to-work program on chopping block

* Health programs for poor, elderly and disabled at risk

* At least 200,000 children could lose low-cost insurance

LOS ANGELES, Jan 12 (Reuters) - The latest budget plan from California Governor Arnold Schwarzenegger would force 200,000 children off low-cost medical insurance, end in-home care for 350,000 infirm and elderly citizens and slash income assistance to hundreds of thousands more.

And that’s the best-case scenario under Schwarzenegger’s prescription for filling the state’s $19.9 billion deficit.

Refusing to consider broad tax hikes, he is relying mostly on $8.5 billion in reduced expenditures including drastic cuts to health and social spending that has long made California one of the leading U.S. states in providing help to the needy.

Schwarzenegger also is counting on the U.S. government contributing nearly $7 billion that he says is due California because of various federal mandates.

If federal money fails to materialize, the governor’s plan would trigger deeper cuts that would dismantle entire programs, including the state’s welfare-to-work system, CalWorks.

A 7.0 earthquake just hit Haiti. Wonder how many more “seismic events” are in the cards. For our California HBBers, I hope you’re well stocked with emergency supplies just in case.

Major earthquake off Haiti causes hospital to collapse
A magnitude 7.3 earthuake hit the impoverished country of Haiti on Tuesday, the U.S. Geological Survey reported.

The epicenter of the quake, which was initially reported a magnitude 7.0 off the coast, was located inland, six miles west of Carrefour, and just 10 miles from the capital Port-au-Prince.

An AFP correspondent in the nearby town of Petionville said one three-story building had been toppled, and a tractor was already at the scene trying to dig out victims as people fled onto the streets in panic.

A hospital collapsed near the epicentre, and cries of people within the structure were reported by witnesses.

The quake prompted a tsunami watch for Haiti, Cuba, the Bahamas and the Dominican Republic, the Pacific Tsunami Center said.

A major earthquake, of magnitude 7 or higher, is capable of causing widespread and heavy damage. There was no immediate report of casualties.

Haiti is the poorest country in the Western Hemisphere.

Google to Stop Censoring China Results, May Shut Site (Update1)

Jan. 12 (Bloomberg) — Google Inc., owner of the world’s most popular search engine, plans to stop censoring results on its Chinese site, Google.cn, a move that may lead to shutting down the service.

The company said it will discuss the plan with Chinese authorities and is willing to close the site, according to a blog post today. Google also said it has evidence that an attack on its China Web site was aimed at accessing Gmail accounts of Chinese human-rights activists.

“Over the next few weeks, we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all,” the Mountain View, California-based company said on its blog. “We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”

Venezuelans Rush for TVs on Devaluation, Colgate Hit (Update3)

Jan. 12 (Bloomberg) — Venezuelan consumers are rushing to buy flat screen televisions before prices jump, while U.S. companies including Colgate-Palmolive Co. brace for profit declines after President Hugo Chavez devalued the currency.

Shoppers picked through half-empty shelves at the Game-Zone electronics store in Caracas yesterday after a surge in demand drove up sales 70 percent over the weekend, said salesman Xavier Manrique. Colgate, the world’s largest toothpaste-maker, forecast a charge of up to 6 cents a share each quarter this year and Clorox Co., the biggest bleach maker, said it expects as much as $30 million in Venezuelan currency-related losses.

Chavez’s threats to seize businesses that raise prices following the first devaluation in five years may deepen shortages by making companies hesitate to restock, said Juan Pablo Fuentes, an economist at Moody’s Economy.com. He forecasts inflation could reach 60 percent, the highest since 1996 and more than double the government’s forecast.

“It’s going to be a tough year,” Fuentes said in a telephone interview from West Chester, Pennsylvania. “The devaluation has an immediate impact on consumers. You’re going to see a sharp contraction in consumption, which is the main driver for GDP.”

The ‘lil commies have a keen sense of “tolerance” when it comes to dissent of their Gov’t “goals”…it’s a good thing that we have them as a “trading partner”

“Google said that a primary goal of the attackers was accessing the Gmail accounts of Chinese human right activists, but that the attack also targeted 20 other large companies in the finance, technology, media and chemical sectors.”

“In a blog posting by David Drummond, the corporate development and chief legal officer, Google said that it had found a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.”

Google, Citing Cyber Attack, Threatens to Exit China:

NY Times By MIGUEL HELFT and JOHN MARKOFF Published: January 12, 2010

It’s not “more” laws, just more deputies, with “real” bullets.

State bar closes mortgage-aid firms
January 12th, 2010, by Mathew Padilla OC Register

The California State Bar said today it shut down the loan modification businesses of two men for allegedly lying to consumers about being supervised by attorneys. The bar, which acted with the Orange County Superior Court in this case, has worked with other state and local officials to crack down on companies promising homeowner aid but not delivering it.

The bar alleges Curtis Melone of Huntington Beach and Christopher Fox of Redondo Beach promised to help homeowners facing foreclosure keep their properties but did nothing.

The duo operated under the names Guardian Credit Services, Green Credit Solutions, Green Credit Services, Erickson Law Group, Green Credit Law and PacWest Funding. A Web search indicates the companies were based primarily in Foothill Ranch and Irvine.

Here’s more from the bar:

After working with the California Department of Justice, the California Department of Real Estate and the Orange County District Attorney’s Office, State Bar investigators and prosecutors seized client files, terminated phone and computer services and posted notices to clients and the public about the shutdown. All officers, principals and employees of the businesses were ordered to cease and desist from holding themselves out as attorneys.

Since last March, the State Bar has aggressively sought to stop loan modification fraud by lawyers and to shut down the offices of people offering foreclosure services who represent themselves as lawyers. Thirteen attorneys have resigned in the wake of investigations by the State Bar Task Force on Loan Modification and six businesses have been closed.

Section 6126.3 of the Business and Professions Code gives authority to a superior court, on its own motion or upon application of the State Bar, to assume jurisdiction of the business of a person who is not a lawyer. Assumption of a law practice by a Superior Court is based upon the court finding that a person has engaged in the practice of law without being an active member of the State Bar or otherwise authorized to practice in California and that the interest of a client or interested person or entity will be prejudiced if the court does not assume jurisdiction.

California might become the #1 producer with this agricultural “commodity”

There’s nothing like the smell of “revenue” up in Sacramento these days.

Key vote supports recreational marijuana use:

Wyatt Buchanan, Chronicle Sacramento Bureau

Tuesday, January 12, 2010

“AB390 would allow possession, sale and cultivation of marijuana for people over 21, and impose a $50-an-ounce sales tax, much like taxes on tobacco and alcohol. The California Department of Alcoholic Beverage Control would be tasked with regulation.”

“The vote in Sacramento comes as state lawmakers in New Jersey on Monday made that state one of the few on the East Coast to approve medicinal marijuana use. Up north in Olympia, the Washington State Legislature will consider two bills today to remove state criminal penalties associated with marijuana.”

Academic economists are closing rank around BB, as he is one of their own…

* The Wall Street Journal
* JANUARY 13, 2010

Bernanke Challenged on Rates’ Role in Bust

By JON HILSENRATH

Federal Reserve Chairman Ben Bernanke says low interest rates engineered by the Fed in the early 2000s aren’t to blame for the housing boom and bust. But he hasn’t convinced fellow economists.

Two surveys conducted by The Wall Street Journal this week found many economists believe low rates did contribute to the bubble.

In a monthly survey of mainly Wall Street and other business economists, 42 said low interest rates were partly to blame for the housing boom while 12 sided with Mr. Bernanke and said they weren’t. Academic economists who specialize in monetary policy were split in a separate survey: 13 said low interest rates helped cause the housing bubble; 14 said they didn’t.

It is more than an academic argument. Fed officials have been trying to understand what went wrong last decade to avoid repeating it. In addition, lawmakers are weighing whether to give Mr. Bernanke a second term and whether to bolster or restrain the Fed’s power as a financial regulator.

The Fed pushed its benchmark federal funds interest rate — at which banks lend to each other overnight — to 1% in 2003 when Alan Greenspan was Fed chairman and Mr. Bernanke was a member of the Fed board. With the economy weak and deflation a concern, the Fed pushed rates up gradually beginning in 2004. Mr. Bernanke became chairman in 2006.

Mr. Bernanke laid out his defense of Fed policy in a speech to the American Economic Association last week, acknowledging that interest rates were very low but adding that policy “does not appear to have been inappropriate.” Other factors — notably an explosion of exotic mortgages and a flood of cash coming into the U.S. from abroad — were the crucial drivers of the housing bubble, he said. “Regulatory and supervisory policies, rather than monetary policies, would have been more effective means of addressing the run-up in house prices,” he said.
…

Can anyone suggest how I can lay claim to my personal share of the bailout?

* OPINION: BUSINESS WORLD
* JANUARY 12, 2010, 9:33 P.M. ET

Bashing Bankers Is a Political Duty
But don’t overlook the fact that taxpayers are making out on the bailout too.

* By HOLMAN W. JENKINS, JR.

If you would know why bankers are enjoying a large and controversial deluge of annual bonuses, look no further than the monthly report of the New York State Comptroller’s Office. The economy may be in the dumps, but Wall Street enjoyed record profits of $50 billion in the first nine months of last year—”nearly two and a half times the previous annual peak in 2000.”

“Profitability,” adds the state of New York, “has soared because revenues rose while the costs of doing business—particularly interest costs—declined” (in other words, thank you Federal Reserve).
…

Does Vegas offer odds on how long Geithner has left in office before he gets the golden shove towards a lucrative Wall Street career? The future brazillians he will make on Wall Street make his current stint as the Obamanomics Team’s designated piñata seem a small price to pay.

* REVIEW & OUTLOOK
* JANUARY 12, 2010, 11:17 P.M. ET

The Geithner AIG Story
Those emails and ’systemic risk.’

Timothy Geithner is back in piñata mode, with House Oversight Chairman Edolphus Towns asking him to testify next week about bailout giant AIG. By all means Members should swing away at the Treasury Secretary, but only if they focus on the right questions.

The trigger for the Towns hearing is the release of emails between the Federal Reserve Bank of New York and AIG in November and December 2008. The New York Fed urged AIG to limit disclosure of its deal to buy out derivative trading partners at 100 cents on the dollar. But since AIG went ahead and disclosed it anyway, this line of inquiry doesn’t get to the heart of the taxpayer interest.

Likewise, asking if Mr. Geithner helped write the emails to AIG will simply allow him to continue avoiding the bigger questions: Why did he believe AIG could not fail? Why should he receive more authority to declare firms systemically important, when he will still not fully explain his previous multibillion-dollar judgments in the name of countering “systemic risk”?

Mr. Geithner was president of the New York Fed when it began sending what has become $182.3 billion in taxpayer assistance to AIG in September 2008. Much of this money was used to meet collateral calls from big banks that had bought AIG’s credit default swaps. AIG had resisted handing over more collateral. But once Mr. Geithner was in charge of AIG, the cash flowed freely to these bank counterparties.

The Fed and AIG ultimately bought the underlying securities at par. This was not only much more than the counterparties might have received from a bankrupt AIG, but even a healthy AIG would never have handed over so much cash in the midst of a panic in which cash was king. Mr. Geithner’s New York Fed demanded the 100-cents on the dollar deal for these counterparties, and it demanded that their identities be kept secret. The Journal nonetheless reported this sweet deal and the names of some beneficiaries, including Goldman Sachs, in early November 2008, but taxpayers had to wait months before AIG finally released the full story.
…