The Housing Bubble

Almost 10% of jumbo mortgages ’seriously delinquent’ ~USA Today~2/8/10

“Serious delinquencies” on prime jumbo mortgages rose again last month, nearing 10%, Fitch Ratings has announced. It marked the 32nd straight monthly increase.

“The trend line for delinquencies indicates the 10% level could be reached as early as next month,” a Fitch statement said today, Bloomberg reports. The rate last month reached 9.6%, and nearly tripled for last year.

Jumbo mortgages are loans larger than Fannie Mae or Freddie Mac can finance. “Serious delinquencies” are payments at least 60 days late.

Ritz-Carlton Lake Las Vegas Closing. No Reservations After May 2

LAS VEGAS — The Ritz-Carlton Lake Las Vegas will close May 2, FOX5 has learned.

An employee said notifications were sent out Monday morning and a hotel official confirmed the closing a few hours later.

The resort, which opened in 2003, is among the top luxury destinations in southern Nevada and recently won the AAA Five Diamond award.

Despite the accolades, the Lake Las Vegas area fell on hard times during the recession. Last year, the three golf courses within the resort were closed or went bankrupt.

USA Today said the move will put nearly 400 employees out of work.

Los Angeles, California, mayor orders elimination of 1,000 city worker jobs

On Thursday, Los Angeles Mayor Antonio Villaraigosa ordered the elimination of 1,000 city worker jobs in order to close the city’s $218.5 million budget deficit.

The layoffs arrived on the heels of a rash of additional concessions demanded by the mayor and the city council. These included the granting of contracts to cheaper private contracting firms; increases in pension contributions from 7 percent to 9 percent; and the acceleration of the Early Retirement Incentive Program (ERIP) to quickly remove higher-paid veteran workers from payrolls.

After hundreds of city workers descended on City Hall on Wednesday, February 3, to plead for the preservation of their jobs, the city council voted to postpone a decision for 30 days.

Just two days after the city council’s decision, Villaraigosa issued an order to city department heads to eliminate the 1,000 city jobs, “saying he was accelerating the effort to shift as many employees as possible to vacant positions not paid by the city’s general fund and would impose layoffs where necessary,”

Some industries are doing very well during the recession..

Male Breast Reduction Fastest Growing Area Of Cosmetic Surgery In Britain Last Year

The economic situation does not appear to have affected the cosmetic surgery business in Britain: new figures from a not-for-profit organisation show that the number of surgical procedures were 6.7 per cent higher in 2009 than 2008, among which the number of male breast reductions went up by 80 per cent

In men, the number of breast reduction or or gynaecomastia operations (to remove “man boobs”) went up from 323 in 2008 to 581 in 2009 (80 per cent increase).
Breast reduction went from the 5th to the 3rd most popular procedure for men

Snow. Snow, snow, snow, snow, snow.

Snow.

We attempted a ski trip this past weekend, but wiped out spectacularly. We got snowed in on the way there - not unexpectedly actually, we were planning for that to probably happen, but then to drive on to the resort (in WV) on Sunday. However my 2-year-old proceeded to get a wicked stomach flu - up all night throwing up in the bed. Then this storm starting building, fouling plans for our return Wednesday, so we bagged it and never went there, coming back home Sunday. Then it was my turn, then my daughter’s turn (also several times in the bed). Ugh. My poor wife.

We ended up getting just shy of 36″ here in NoVA, and now there’s another 10-20 inches on the way. Generally I don’t mind snow so much, but this is getting a bit much. I’ve lost a couple of cypress trees. Yes, one of the downsides of home ownership - if you leave during a storm, you’re not there to prevent bad things from happening.

Um….I can’t think of any other forum in which to do it, so may I apologize here for all the inadvertant paid time off that the DC area federal workforce is getting this week? I can? Thanks. I apologize. I’m still doing a few things from my computer at home, but most of my work planned for this week requires talking to a few of my co-workers. I’m kind of stuck.

I had to go out yesterday evening to buy groceries (I didn’t do it before the last one), and I finally get why they shut us down. Even main roads are not really clear. MD 355 going through downtown Bethesda had at least two inches of frozen slush and patches of lumpy ice bringing safe travel speed down to 10 to 15 miles an hour at best and walking speed in places. And that was on the best lane of a three lane (each way) main road. I can’t imagine how bad the smaller roads are. Tons of people have been without power for days. Supermarkets were just getting supply trucks in yesterday. And the next storm starts around noon today. This one was supposed to be mixed with substantial sleet and ice, but the accumulation predictions are going up, so maybe the sleet will be less then they expected. Predictions are up to 12 to 18 inches by Wednesday evening.

“negative for the next year or two”? Funny! So what rabbit we ‘they’ pull out of their hat to fix this little problem?

Rash of retirements pushes Social Security to brink.

WASHINGTON — Social Security’s annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability.

The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated.

“Things are a little bit worse than had been expected,” says Stephen Goss, chief actuary for the Social Security Administration. “Clearly, we’re going to be negative for a year or two.”

Do we really have a group of government employees that bleed the system that hate the corporate world for being greedy? That is a bit hypocritical if you were to ask me…

(Yesterday’s response to a topic)

———————-

“the percentage of federal employees earning over $100,000 has jumped to 19 percent during the recession.”

PSST….

…there are several individuals on this very board that fall into this category. Federal employees and contract employees alike. In many cases, the tell-tale signs are those who hate big money corporate types, and those who think they know best how others should spend their money.

http://www.larouchepub.com/pr/2010/100202eu_dictatorship_europe.html

Bankers’ Dictatorship Demanded for Europe

Feb. 2, 2010 (EIRNS)—The only option being offered to the nations of Portugal, Italy, Ireland, Greece, and Spain (or PIIGS, in London’s sadistic lexicon) is to impose fascist austerity on their populations. This message was delivered in straight forward manner by the Jan. 30 Economist and the Feb. 2 Financial Times, both prominent mouthpieces for the British Monarchy’s financial interests. After the banks of the Anglo-Dutch financial system made loans to these desperate countries, the the European Union (EU) bureaucracy comes in as the enforcer, armed with the new powers it has under the Lisbon Treaty.to enforce brutal austerity.

The Economist insists that the PIIGS must do as Ireland has done: “The Irish government has torn up its 30-year social compact with employers and unions. It has slashed public spending and made sharp cuts in pay. Indeed, pay is now falling across the whole economy”—clearly a delightful outcome, as far as the Empire the British financial empire is concerned.
As the Financial Times reports, the EU states have borrowed a record Euro110 billion since the start of the year, with investors saying that yields will rise on not only Greek debt, but also Spanish, Portuguese, and Italian debt. The London Times quotes one speculator warning of a sell-off of Eurozone government debt “if there is any sign from politicians that they are not prepared to tackle their debt levels.” Another source reports to the Financial Times that Deutsche Bank has told investors to sell debt of so-called “peripheral European nations,” meaning Spain, Greece, Portugal, and Italy. The rates on 10-year Greek bonds have been driven up to 7.15%, a percentage point higher than last week. Bloomberg reports that investors have pulled EU13 billion out of the Eurozone in the last weeks, no doubt from these very nations.
Then come the imperial administrators of the EU—the hitmen. The Greek daily Ekathinerini reports that the European Commission will publish its judgment on the Greek “Stability and Growth Program” which will be followed by demands for more cuts if it fails to cut its budget deficit from 12% to 3% of GDP over the next three years. The daily then writes, “Such a recommendation can be issued under the new EU treaty when the economic policies of an EU member are not in line with broad policy guidelines adopted by the bloc risk jeopardizing the proper functioning of the 16 nation Eurozone.”

In this, as in the rest, Greece is merely a secondary testing ground for policies of fascist austerity and the end of sovereignty, that London means to apply across Europe. Thus, City of London mouthpiece Ambrose Evans-Pritchard, writing in today’s Daily Telegraph, reports on the EU demands that Athens make deep cuts in “average nominal wages” across the entire public sector, cut pensions, raise the retirement age, increase the fuel levy, and impose luxury taxes. And fascist EU Economics Commissioner, Joaquin Almunia said that the cuts will be enforced rigorously: “Every time we see or perceive slippages, we will ask for additional measures to correct these slippages. Never before have we established so detailed and tough a system of surveillance.”
Dutch Finance Minister Wouter Bos, in an interview on the Dutch business channel RTL Z quoted by Reuters, said “We all know that if Greece doesn’t solve their problems, the market will, and already is, focussing on the next weak link. That’s Portugal, Ireland’s next, and then Spain. And then you’ll get a domino effect,” said Bos.

“If the United States government were to nationalize (in other words, steal) every penny of private wealth accumulated by America’s citizens since the nation’s founding 235 years ago, the government would remain totally bankrupt”.

~Chuck Butler

Ex-Gulfstreamfixer, belated good luck on starting your new job yesterday! Sending you good vibes!

S&P futures through the roof. PPT has been hit and miss during the open market. Pre-market jam-job is a sure thing. 10k at all cost.

Faulty Tower: cheap Chinese elevator breaks.

http://hosted.ap.org/dynamic/stories/M/ML_DUBAI_TALLEST_BUILDING?SITE=FLDAY&SECTION=HOME&TEMPLATE=DEFAULT

http://www.nypost.com/p/news/local/manhattan/coyotes_roaming_manhattan_yAm8a3Yl2ZdmClz3C28CPN

Coyotes are on the prowl in Manhattan. Real ones, unlike the hyenas on Wall Street. Note to feral beasts: realtors and Wall Street suits are an acquired taste. Attack at will.

An update here , on Haiti … Thousands of USA citizens were stuck there without funds , or the wetherwithall to leave there.. The airlines and ”Homeland Security” , didn’t give a squat about them .
The good old USA military stepped in , and has brought back many Planeloads of folks on the military transport planes , strapped to web seats , without fanfare and without any charge at all.The drop-off points were in New jersey and in Miami… Common sense where it counts . My hat’s off to whoever worked that out .
Perhaps they need to start an airlift to get folks out of the Snow-Zones…

Geithner Claims Mortgage Modifications a Success Despite House Probe

FOXNews.com

Millions more Americans are facing financial security as a result of stabilizing home prices, Treasury Secretary Tim Geithner said Sunday, even though only about 66,000 people have benefited from permanent mortgage loan modifications aimed to prevent foreclosure, a figure that has resulted in a House panel investigation.

Millions more Americans are facing financial security as a result of stabilizing home prices, Treasury Secretary Tim Geithner said Sunday, even though only about 66,000 people have benefited from permanent mortgage loan modifications aimed to prevent foreclosure, a figure that has resulted in a House panel investigation.

Geithner said the mortgage modification program has helped 750,000 Americans so far to lower their monthly payments substantially even though he tacitly acknowledged that many of the temporary, verbal agreements have not been made permanent.

“This program is providing very, very substantial cash flow relief right now to more than 750,000 Americans. And we believe we’re still on a path to be able to reach many, many more American households. And of course, we’re going to make sure that those temporary modifications translate into permanent modifications,” he told ABC’s “This Week.”

“We’re absolutely committed to make sure that translates into what we said it would, which is for eligible Americans, they’re getting permanent modifications that substantially lower their monthly payment,” he added.

Under the $75 billion mortgage modification plan, called the Making Homes Affordable program, President Obama last year pledged that lenders who participated would be required to reduce payments to no more than 31 percent of a borrower’s income, enabling as many as 3 million to 4 million homeowners to modify the terms of their mortgages to avoid foreclosure.

House Oversight and Government Reform Committee Chairman Edolphus Towns, D-N.Y., on Saturday announced that his panel is investigating the Treasury Department’s home mortgage modification program after he heard concerns about the ability of the Making Homes Affordable program to assist homeowners on the verge of default.

“While I applaud Treasury’s efforts, numerous concerns have been brought to my attention regarding the effectiveness and efficiency of the MHA program and the extent to which it has assisted struggling homeowners,” he said.

Towns said among the complaints he has received are that loan servicers have been slow to modify loans, are inconsistent in their application of the program and are not clear about the plan’s requirements with eligible homeowners.

In a letter Towns wrote Geithner last Thursday, he asked for specific data on the program. He also noted that Treasury’s accountability and transparency have been nothing to brag about.

“It is my understanding that Treasury has thus far refused to reveal in detail how it defines ‘net present value,’ one of the key criteria for homeowner participation in the mortgage modification program. Moreover, if a homeowner is denied a permanent mortgage modification, the specific reasons for the denial are not revealed. Finally, Treasury has not established a process for homeowners to appeal the denial of a permanent mortgage modification,” he wrote.

According to Towns’ committee, the home foreclosure rate is rising faster than the modification program by a 2 to 1 ratio, and several financial institutions have made “dismal progress in modifying loans, even though they service a large number of homeowners potentially eligible for modification.”

But Geithner said the temporary deals have translated into “hundreds and hundreds of dollars every month” in real benefits to struggling homeowners, and claimed the program has resulted in stopping house prices from “falling off the cliff” they were tumbling down a year ago.

“People thought house prices might fall another 20 percent, 30 percent. And we’ve had six months now of early signs of stability in house prices. So what that means is, millions and millions of Americans, middle-class families across the country, are now seeing more stability in what is a basic source of financial security for all Americans.

Those programs were enormously effective in helping, again, pull a housing market that was in near collapse back to the point now where you’re seeing the signs of stability,” he said.

Geithner added that the administration’s efforts to stabilize the big banks — many who participated in taking big risks on housing loans — have brought America back from the brink of collapse.

“This was like nothing anybody in public office today, or in the last few decades, have ever faced. It was the gravest, most dangerous moment since the Great Depression of the United States. Again, remember, we had a — we were in a situation where people were no longer sure they could safely keep their money in the strongest American banks. It was catastrophic.

“And we were very, very effective — because of the leadership of the president — moving very quickly with enormous care and force to bring stability. And those policies have got this economy growing again. And as I said, we’ve been able to put out this financial fire at much, much lower cost than anybody anticipated.”

Too Big to Flail

P.S. Whatever became of the mission to provide affordable housing?

* FEBRUARY 9, 2010

No Exit in Sight for U.S. As Fannie, Freddie Flail

By NICK TIMIRAOS And JAMES R. HAGERTY

MCLEAN, Va.—When Charles E. Haldeman Jr. became Freddie Mac’s chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It’s likely to need even more.

Freddie’s federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn’t likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes.

Former Fannie CEO Daniel Mudd testifying in 2008, says the U.S. is running Fannie and Freddie ‘not as a business.’

On a recent afternoon, employees at Freddie’s headquarters here peppered Mr. Haldeman with concerns about the company’s future. He responded that they were “fortunate” to have such a clear mission—the government’s foreclosure-prevention drive. “We’re doing what’s best for the country,” he told them.
…

“Where are the customer’s yachts?”

And what does Wall Street have up its collective sleeve to make Elizabeth Warren disappear?

* OPINION
* FEBRUARY 8, 2010, 7:02 P.M. ET

Wall Street’s Race to the Bottom
Jamie Dimon is wrong. We shouldn’t expect a crisis ‘every five to seven years.’

By ELIZABETH WARREN

Banking is based on trust. The banks get our paychecks and hold our savings; they know where we spend our money and they keep it private. If we don’t trust them, the whole system breaks down. Yet for years, Wall Street CEOs have thrown away customer trust like so much worthless trash.

Banks and brokers have sold deceptive mortgages for more than a decade. Financial wizards made billions by packaging and repackaging those loans into securities. And federal regulators played the role of lookout at a bank robbery, holding back anyone who tried to stop the massive looting from middle-class families. When they weren’t selling deceptive mortgages, Wall Street invented new credit card tricks and clever overdraft fees.

In October 2008, when all the risks accumulated and the economy went into a tailspin, Wall Street CEOs squandered what little trust was left when they accepted taxpayer bailouts. As the economy stabilized and it seemed like we would change the rules that got us into this crisis—including the rules that let big banks trick their customers for so many years—it looked like things might come out all right.

Now, a year later, President Obama’s proposals for reform are bottled up in the Senate. The same Wall Street CEOs who brought the economy to its knees have spent more than a year and hundreds of millions of dollars furiously lobbying Washington to kill the president’s proposal for a Consumer Financial Protection Agency (CFPA).

Within the thousands of pages of print in the “Restoring American Financial Stability Act” now before the Senate, the consumer agency is the only proposal that would help families directly. Even those most concerned about the role of personal responsibility concede that it is hard for families to make smart decisions and to compare products when the paperwork on mortgages, credit cards and even checking accounts has morphed into reams of incomprehensible legalese.

The consumer agency is a watchdog that would root out gimmicks and traps and slim down paperwork, giving families a fighting chance to hang on to some of their money. So far, Wall Street CEOs seem determined to stop any kind of watchdog. They seem to think that they can run their businesses forever without our trust. This is a bad calculation.

It’s a bad calculation because shareholders suffer enormously from the long-term cost of the boom-and- bust cycles that accompany a poorly regulated market. J.P. Morgan CEO Jamie Dimon recently explained this brave new world, saying that crises should be expected “every five to seven years.”
…

Toyota is recalling about 437,000 Prius.

What a disaster for Toyota, all the bad PR…wait, what about all the drivers of their cars that have either been injured or had the bejeebers scared out of them?

I had the opposite problem with my fairly new Toyota FJ Cruiser a couple of years ago. I was coming down that hill from Mammoth Springs into whatever that Yellowstone town is called there that always has all the anti-tourist elk on the lawn with the signs that say don’t feed the crazed elk…anyway, I was coming down that hill and my brakes started catching and I started skidding. Sometimes I have this same problem when I try to take Deadman’s Curve too fast, you know, the one out by the Yip Yip Mine, but this time it was like the car was possessed.

Only happened that once, so maybe all my cussin’ made the car sit up and think.

Along those lines, I bought a new 2007 Tundra and ended up selling it back to the dealer about 10 minutes before it was recalled for the accelerator problem (which the Japanese have erroneously translated into English as “sticking floormats”). I noticed last time I was in Glenwood Springs, Colorado, that it was still on their lot for sale, been there for several months now, only 7k miles and pristine and they’re asking 22k.

If it doesn’t quit snowing, I’m thinking of getting a Swiss Unimogs (Universal-Motor-Gerät, or Universal Motor Implement in English).

* The Wall Street Journal
* OPINION: THE TILTING YARD
* FEBRUARY 3, 2010

Populism Is Democracy at Work

* By THOMAS FRANK

Late last month, the success of an idea made newspaper headlines. “Populism” was on the march. After the surprise victory of a Republican in the Massachusetts Senate race, a number of Democrats in the U.S. Senate swerved abruptly to the left, momentarily casting into doubt Ben Bernanke’s second term as Federal Reserve chairman.

“Populist Backlash Puts Bernanke Under Siege,” screamed a page-one headline in the Washington Post; those who read further would also have discovered that the “populist brushfire” was also responsible for the declining value of stocks. In a New York Times column published a few days later, David Brooks deplored “The Populist Addiction.” The possibility that President Barack Obama would also fall to this advancing idea struck Washington Post columnist George Will as so cosmically wrong that he likened it to “Fred Astaire donning coveralls and clodhoppers.”

What is populism? To judge by this coverage, populism is a trick that politicians perform—a clumsy disguise they adopt or a fake-folksy rhetorical line they try to put over. Populism is a species of demagogy, a backwoods form of class war, a sinister cross of Lenin with Li’l Abner.

Populism also seems to mean liberalism, only expressed in more fiery language than the pallid, technocratic drone that makes Washington happy. But whatever they mean by it, journalists and opinionators seem to agree that populism is dangerous. It scares the markets. And it is the duty of every right-thinking citizen to resist it.
…
Commentators tremble to think that Democrats might be driven by the current economic situation into the arms of populism, but they might do better to examine the kind of populism that got us into this situation in the first place. This perverse movement powered the deregulation of the banks, the effort to starve the federal beast, and the grand campaign to herd the public into mutual funds on the grounds that markets are the true vox populi, expressing the infallible wisdom of the average citizen.

They might also begin searching for a different term to describe the situation when elected representatives start doing what their constituents want them to do. My suggestion: Call it “democracy.”

Write to thomas at wsj dot com.

Why bother owning when it is cheaper to rent? Irony is such sweet comeuppance!

Mortgage matters
Mortgage bankers headquarters fiasco reveals double standard
Posted by Scott Van Voorhis
February 9, 2010 07:00 AM

Now this is a good story.

Mortgage bankers have not been terribly sympathetic these past few years to the plight of struggling homeowners.

Those who have tried to do the right thing, and sell their homes in short sales instead of simply walking away, have too often found themselves caught in a web of corporate red tape.

And for frustrated homeowners who opt to walk away, well let’s just say there’s been absolutely no mercy at all.

“What about the message they will send to their family and their kids and their friends?” John Courson, chief executive of the Mortgage Bankers Association, recently asked.

Well now we can ask the same question about the Mortgage Bankers Association’s own, spectacularly foolish real estate activities.

After shelling out nearly $80 million for a downtown Washington office building in 2007, right around the peak of the commercial real estate price bubble, the Mortgage Bankers Association is bailing out big time, The Wall Street Journal reports.

The trade group has sold its 10-story Washington headquarters for $41 million after shelling out $79 million for it three years ago. All but $5 million of that was financed.

It gets better, for its not clear the Mortgage Bankers Association will pay off all of the roughly $30 million it still owes its lenders on the trophy office building, just a few blocks from the White House, the Journal reports.

On top of that, giant commercial landlord Tishman Speyer is battling in court with the MBA, contending the trade group still owes $1 million after breaking an earlier lease to move into its now clearly massively overpriced headquarters.

Like so many struggling homeowners who bet badly on the market, the Mortgage Bankers Association will now become a renter, not an owner.
…

I guess Sh!t!group’s stock will rally on this “worse than expected” news?

S&P lowers Citigroup’s outlook to negative

8 min ago10:26 a.m. Feb. 9, 2010

- Sue Chang

Apocalypse Now!

Either this guy is a cranky Cassandra, a genius, or both…

Paul B. Farrell

Feb. 9, 2010, 12:01 a.m. EST

How to invest for a global-debt-bomb explosion
Prepare for an apocalyptic anarchy ending Wall Street’s toxic capitalism

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) — Wake up investors. Are you prepared for the economic anarchy coming after a global-debt time bomb explodes? Are you thinking outside the box? Investing differently? Act now — tomorrow will be too late.

Start by looking past the endless cable skirmishes between Rush, Glenn, Bill and Shawn versus Harry, Nancy, Ben and Barack. Look way past the insurgency bonding Sarah and her diehard Tea Party revolutionaries with Ron Paul’s Neo-Reaganite ideologues, Fat-Cat Bankers and the Party of No, all planning a massive frontal assault on the 2010 elections, hell-bent on destroying the presidency. All that’s the sideshow.
Europe’s debt woes won’t recede

European stocks managed to look somewhere other than Greece, Spain and Portugal early Monday, but don’t bet on that lasting.

The Big One is coming soon, bigger than the 2000 dot-com crash and the 2008 subprime credit meltdown combined. A huge market blowout. And as Bloomberg-BusinessWeek predicts: “The results won’t be pretty for investors or elected officials.”

After the global-debt bomb explodes don’t expect a typical bear correction followed by a new bull. Wall Street’s toxic pseudo-capitalism is imploding. Be prepared for a massive meltdown. Yes, already the third major bubble-bust of the 21st century, triggered once again by Wall Street’s out-of-control Fat Cat Bankers. And it’s dead ahead.
Can your family survive in the anarchy after the debt bomb explodes?

America’s already descending into economic anarchy. We’re all trapped in a historic economic supercycle, a turning point that must bleed through a no-man’s land of lawless self-destructive anarchy before a neo-capitalistic world can re-emerge. Investors tell me they “feel” it at a deep level, “know” it’s happening. They keep asking: “What’s the best investment strategy to prepare now?”

This is no joke, folks. Are you prepared? Or preparing? Will your family survive in a post-apocalyptic world, when anarchy is rampant in America? Look at Washington, Wall Street and Corporate America today. You know it’s already begun.

You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late.
…

Me confused. Given the U.S. recession ended six months ago (at least according to some self-assured sources) and happy days are hear again, why do the leaders of the international banking system seem so worried these days?

E.C.B. Chief Cuts Short Trip to Attend Summit on Debt Crisis

By DAVID JOLLY
Published: February 9, 2010

PARIS — Jean-Claude Trichet, the European Central Bank president, is returning early from a conference in Australia to take part in a summit meeting of European leaders this week, amid speculation over possible action to ease the debt crisis several countries are facing.

Mr. Trichet will attend the meeting Thursday of the European Council called by Herman Van Rompuy, the bloc’s first full-time president, an E.C.B. spokesman said Tuesday. He said Mr. Trichet was only invited to the meeting on Monday.

“There had been some uncertainty about whether he would be invited,” said the spokesman, who cannot be identified according to the institution’s rules.

The E.C.B. president often participates in such summit meetings, which bring together the leaders of the 27 E.U. member states and the head of the European Commission, Jose Manuel Barroso. But this one is being held at an especially difficult time for the 16-country euro currency.

Investors have grown wary of the feeble public finances of a number of European countries — particularly Greece, Spain, Portugal and, to a lesser extent, Italy — raising the fear in some minds that the entire currency system could come under attack. The currency has fallen by more than 9 percent against the dollar from a late November peak, trading Tuesday morning at $1.3714.
…

Citi plans crisis derivatives ~ Source: Risk magazine | 08 Feb 2010

Credit specialists at Citi are considering launching the first derivatives intended to pay out in the event of a financial crisis. The firm has drawn up plans for a tradable liquidity index, known as the CLX, on which products could be structured that allow buyers to hedge a spike in funding costs.

I believe it will reduce the systemic risk in the industry, akin to how the advent of swaps means that people don’t worry about interest rate exposures anymore.

Like the untraded US rates liquidity index (USRLI), the CLX is constructed as a sum of the Sharpe ratio – deviations from the mean divided by volatility – of various market factors, such as equity volatilities, Treasury rates, swap spreads, corporate bond swaption-implied volatilities, and structured credit spreads. Citi will make the CLX tradable by using fixed historical values for the mean and volatility parameters, eliminating the need for costly recomputation from lengthy time series.

Suit over secondhand smoke targets real estate broker
Boston.com

Alyssa Burrage says she was smoked out of her new $405,000 condominium.

Burrage, a 32-year-old advertising company employee with a history of asthma, had smelled cigarettes when she first visited the bright, parlor-level condo in Boston’s South End in 2006 with her real estate broker. But the broker, she alleges, assured her that the owner must be a smoker and the stench would disappear.

After Burrage moved into the Milford Street brick row house, she says, she discovered the secondhand smoke was coming from one of two men living in the condo below. The men and the condo association refused to fix the problem, she adds, and she had to move out.

Today, in what tobacco law specialists call one of the first lawsuits of its kind to go to trial in Massachusetts, a jury is scheduled to decide whether Burrage’s real estate broker is liable for damages.

In recent years, there have been a handful of lawsuits over secondhand smoke in the state, including several disputes between tenants and landlords in Housing Court. But no one has ever won monetary damages in a case over smoking fumes, legal specialists say. If Burrage wins in Suffolk Superior Court, it could encourage similar litigation and open a new front in the battle over secondhand smoke.

Burrage, who has leased her condo out since she left the building in May 2008, says she dislikes confrontations and is hardly an antismoking crusader.

“I’m certainly not a person who’s on a soapbox saying people shouldn’t smoke,’’ she said in the Back Bay office of her lawyer. “But when it affects somebody else, that’s where the line needs to be drawn. It’s an awful thing to not be able to escape from something that’s hurting your health.’’

Neither the real estate broker, Joseph DeAngelo, nor his lawyer would comment on the case. In a joint court filing summarizing the case, DeAngelo and his employer, Gibson Sotheby’s International Realty, deny that Burrage questioned him about smoke in the condo.

“DeAngelo never made any misrepresentations, or any representations at all, concerning the source of the alleged smoke smell,’’ the broker’s lawyer, Jay S. Gregory of Boston, said in the filing.

A funny article from Cap times

In a recent post, Graham Summers, editor of Gain, Pains, and Capital, says the rally last year was largely a technically driven rally fueled by easy money from the world’s Central Banks.

In other words, smoke and mirrors.

The true fundamentals of the U.S. economy, Summers notes, remain in crisis and in some case have gotten worse since March 2009.

Consider the unemployment rate which has risen from 8.5 percent in March 2009 to 9.7 percent today or the number of Americans on food stamps, which has risen from 33.1 million to 38.2 million.

The “good news” is that only 1 in 4 mortgages are underwater — meaning the borrowers owe more than the house is worth. That is an improvement from March 2009 when 1 in 5 homeowners with mortgages were drowning under an ocean of debt.

Wow that’s a real improvement??? Math is hard.

This study will come as surprise to many, but it shouldn’t.

Ball State study: Minimum wage led to job cuts ~ February 9, 2010

Increasing the minimum wage was meant to raise the living standards of millions of Americans holding unskilled, entry-level positions.

But it may have led to the elimination of 550,000 jobs — opening the possibility that such wage levels should be revised, a new study from Ball State University.

The study of part-time workers monitored by the U.S. Bureau of Labor Statistics from 1999 to 2009 found that raising the minimum wage to $7.25 during the recession caused some businesses to scale back on filling vacant positions or eliminate jobs altogether, said Michael Hicks, director of Ball State’s Center for Business and Economic Research.

Unemployment taxes slam businesses ~ February 9, 2010

NEW YORK (CNNMoney.com) — Employers are getting hit with a massive tax hike at a time when they can least afford it.

Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.

The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.

News from behind the curtain of: “The O.C.”

Filed under: “Is this happening in your “taxpayer” neighborhood?”

More democracy-aversion at OC water districts?
February 9th, 2010, by Teri Sforza, Register staff writer

“Last week, the Orange County Water District appointed Noble J. Waite to its powerful board of directors, replacing Wes Bannister, who died in December. Which brings things strangely full circle.

See, Waite sat on OCWD’s board for 21 years, from 1970 to 1991.

In 1991, Waite retired, and was replaced by Wes Bannister.

Bannister then sat on the powerful board for nearly 20 years, until he died.

So now Waite is replacing his replacement.

Will this prompt members of last year’s Orange County Grand Jury to yank bits of their hair out? In a scathing report last summer, the grand jury blasted local water districts for, among other things:

* circumventing the democratic process by appointing people to vacant seats, rather than holding elections;
* and for not having term limits, which allow the same few Water Lords to serve decade after decade after decade (see Some water officials use office for personal gain for detail).

The Irvine Ranch Water District recently filled a seat by appointment, rather than election, even though the seat had nearly four years on it.

The Municipal Water District of Orange County recently filled a seat by appointment, rather than election, as well.”

Wow, Denninger really chewing on China

http://market-ticker dot denninger dot net

BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan

“Our President can, with the wave of a pen, reduce our outstanding Federal Debt by a trillion dollars. He can issue an executive order that declares that every bond the Chinese Government holds is worthless.

What are you going to do about it?

That’s because you spend your money building cities in which nobody lives, but calling it “economic progress.” You blow a housing bubble 10x what we blew, with home prices 80x average incomes. You have trillions in yuan of bad loans which you are willfully blind to, making our banking foibles look like a sixth-grader’s birthday party. You won’t allow anyone to speak ill of your “great government” lest they be imprisoned or worse so as to try to avoid the truth about your barbarism and fraud getting into the public.”

All this talk about Greece got me thinking as I was just watching the Prez and it struck me how much he actually tries to use the Socratic Method. He kept trying to engage the Republicans to define the terms of the debate. He didn’t inject his definitions, just asked everyone to sit down and hash out the terms. The Republicans prefer the Rhetorical style. In the classic Socratic Dialogue in which Plato sets the rhetorician, whose specialty is persuasion, in opposition to the philosopher, whose specialty is dissuasion, or refutation. The art of persuasion was widely considered necessary for political and legal advantage in classical Athens, and rhetoricians promoted themselves as teachers of this fundamental skill. This may be why Obama’s poll numbers keep falling, he keeps baffling us with logic. This is Amerika, where 90% think evolution is a hoax and still think Sadam was behind 9/11.

McDonald’s to Close Hundreds of Outlets in Japan

McDonald’s Corp. (MCD) is closing 430 restaurants in Japan, the latest sign of the faltering economy in the Asian country.

A 50% owned affiliate will shutter the locations over the next 12 to 18 months in conjunction with the strategic review of the company’s real estate portfolio. The world’s largest restaurant chain plans to take charges of $40 million to $50 million in the first half of the year. McDonald’s Holdings Co. (Japan) has 3,700 stores.

Is it just me, or do others have a bit of cognitive dissonance when they see things like Hyundai Tucson?

A new take on your quote Mr. Bear.

(Might have an application for aeroplane wings…)

A watched pot never boils, but an electrically charged pot sometimes freezes.:

“We are very, very surprised by this result,” says study coauthor Igor Lubomirsky of the Weizmann Institute of Science in Rehovot, Israel. “It means that by controlling surface charge, either positive or negative, you can either suppress ice formation or enhance ice formation.”

Read More http://www.wired.com/wiredscience/2010/02/electric-charge-can-change-the-freezing-point-of-water/#ixzz0f4hypaAy

I remember when G.Ford said to NYC, you’re on your own. What happened? Did the world stop turning? Did the sun turn into an ice cube? No, but you may have thought it might if you had listened to all the whining and crying. Of course Barry won’t say the same to California, the more dependent on the Fed they are the happier team Barry is.

Clipped from the Daily Reckoning… 2-9-10

It won’t take investors long to figure out that there isn’t a whole lot of difference between Greece’s finances and those of the US. Each has about the same amount of debt and the same size deficit, relative to GDP. The big difference is that the US ultimately controls the currency in which its debt is calibrated. Greece does not. Neither does California.

Both California and Greece borrow long-term at about the same rate…around 6%. Lenders know that when their backs are to the wall, both governments will have only two choices, not three. They can cut spending. Or, they can default. What they can’t do is wiggle out of their obligations by inflating their currencies.

Jean Claude Trichet has already made that clear:

“…belonging to the euro area, you…have an easy means of financing your current account deficit. You share a currency that is credible, so that you have a quality of financing that corresponds to that of a credible currency.”

He went on to say that Greece contributes only about 3% to the total output of the euro-zone. If push comes to shove, Greece will be pushed out rather than allowed to weaken the euro.

Then, Mr. Trichet made an odious comparison. California is a much bigger part of the US economy than Greece is of the euro economy. In fact, it is more than four times as large. Will the US come to California’s aid? Mr. Trichet didn’t say.

It is possible, of course, that Mr. Obama will say to the Golden State what Gerald Ford said to the Big Apple. In 1975, New York City’s back was to the wall. It appealed to Washington for help. “Ford to City: Drop Dead,” was the famous headline in the New York Daily News, reporting the president’s response.

New Yorkers were incensed. Later, they realized that by vowing to veto a bailout President Ford had done them a great favor; he forced New York to clean up its act. The city went on to its greatest years. Likewise, the feds would be doing all of us a favor by letting failure fail with dignity.

Will Obama help California mend its ways? Or will he turn it into a zombie state?

Bonanza of bargains? Not so, home buyers say

By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 10:02 p.m. Monday, Feb. 8, 2010

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Think there are all kinds of crazy deals to be had in today’s real estate market?

That’s what 31-year-old Jason Bellak thought, too — a year ago.

He’s been searching that long for something in the $150,000 price range in Palm Beach County.

Short sale, condo, townhouse, foreclosure — he’s looked at them all, made offers on several, but is still living with his parents in Royal Palm Beach.

Despite a perception that three-bedroom, two-bath beauties with granite countertops and good schools can be yours for a song — or at least for 20 percent down — it’s not a market reality, say frustrated home buyers and their Realtors.

Cash investors, sluggish banks and thorny financing are limiting the options for your average home buyer, who, by the way, is sick of hearing, “It’s a buyers’ market.”

“I was like most people, thinking there were a lot of deals out there,” Bellak said. “But it quickly became apparent that it wasn’t going to be such an easy process.”

Competition is highest now in the $150,000 to $250,000 price range, said market analyst Jack McCabe of McCabe Research and Consulting in Deerfield Beach.

The median single-­family home in Palm Beach County sold for $238,000 in January — 9 percent higher than in 2009, according to the Realtors Association of the Palm Beaches. Inventory in January was down to eight months, less than half of what it was in January 2009.

“Most people still think we’re in this terrible market, but the inventory tells a different story,” said Realtor Scott Smith, who has clients struggling to find homes in the Jupiter and Palm Beach Gardens area even though they’re willing to spend between $350,000 and $400,000.

Bellak can’t even recall the details of all the offers he’s made on homes in the past year. He bid on a three-bedroom townhouse in foreclosure but lost. He made an offer on a short sale condo — meeting the $141,000 asking price — waited three months, but then couldn’t get financing because the homeowners association had too many delinquent accounts.

In most cases, for a buyer to get a Federal Housing Administration-backed loan for a condominium, no more than 15 percent of the units can be more than 30 days past due on association fees.

Now Bellak has his heart set on a two-­bedroom Jupiter townhouse.

“I think if this one doesn’t go through, I may hold off for now,” said Bellak, who has been working with Realtor Craig Fialkowski of Herman Group Real Estate in Palm Beach Gardens.

Realtors say part of the problem is that people hear the hype about the down market and expect to find a steal in a great neighborhood.

Last year, more than 500,000 Florida homes received some type of foreclosure notice, according to the Irvine, Calif.-based company RealtyTrac.

But while foreclosures are usually priced low, they’re not always good deals. They could be tagged with liens, have missing appliances or be in general disrepair.

“It’s not like everything just became half-price overnight with no repercussions,” said Realtor Shannon Brink of Re/Max Prestige Realty in downtown West Palm Beach. “Plus, many banks still sell homes off at auction or to capital investors, so not everything even hits the open market.”

Crystal Paul and her fiancé, Antonio Hester, both 25, have been working with Brink since December to find a home for about $150,000.

They’ve looked at a dozen or more properties and have made some offers. But they’ve lost out to investors with ready cash, which is more attractive to banks.

“You find a house you think you can live in, but then you lose it,” Paul said. “The cash investors have the upper hand and here we are just trying to get started.”

When a short sale off Military Trail popped up last week for $139,900, Paul and Hester made an offer that the homeowner accepted. But he owes more than $230,000 on the house, and in the end it’s up to the bank to OK the sale.

Brink said banks will sometimes set a low asking price on a short sale to attract buyers, but with no plans to actually settle for that price.

While short sales have traditionally taken months to settle, new federal guidelines that go into effect in April require banks to respond to short sale offers within 10 days.

More good news for buyers this year is the prediction of an increase in foreclosures that could further reduce prices.

G. Stacy Sirmans, a real estate professor at Florida State University, said the market hasn’t hit bottom and won’t for at least another year.

“It’s definitely a buyers’ market,” Sirmans said.

“Paper money has always been a con game based on belief. Neither the emperors of Rome, the Kings of France and England, or the chairmen of the Federal Reserve have been able to resist debasing the currency. It makes both warfare and welfare possible. Guns and butter are the health of the state and the death of sound money.”

~ Dan Denning, writing from Australia.

Why just a proposed $80 billion in this puny bill? That will be burned off instantly. We needs mo’ money!

Senate jobs bill extends Medicare payment rates ~ Feb 9, 2010

WASHINGTON, Feb 9 (Reuters) - A jobs-creation bill that could pass the Senate this week would delay a scheduled 20 percent reduction in doctor payments under the Medicare health-insurance program, according to a copy of the text obtained by Reuters.

The bill also extends soon-to-expire jobless payments, healthcare subsidies for the unemployed and highway-funding programs, according to the text of the bill, which has not yet been introduced.

Job openings fell by nearly one-quarter last year as layoffs also soared.

WASHINGTON (AP) — Finding a job got much tougher last year, as the number of available openings fell by nearly one quarter.

At the same time, the unemployed population soared by more than one-third, leaving more laid-off workers competing for fewer jobs.

All told, there were 6.1 unemployed workers in December, on average, for every available position, according to Labor Department data released Tuesday.

That’s a sharp increase from 3.4 jobless workers per opening in December of 2008, and much worse than the 1.7 unemployed people per opening in December 2007, when the recession began.

The economy grew in the second half of last year and gross domestic product, the broadest measure of output, rose by a healthy 5.7 percent in the fourth quarter.

That should lead to more hiring, but employers are reluctant to add jobs. Many companies are unsure about whether the recovery will continue, economists say, and how health care reform and other government policies will affect them.

“No business hires into uncertainty and right now there’s too much uncertainty in the markets,” said Harry Griendling, CEO of DoubleStar Inc., a consulting firm specializing in recruitment.

Henry Cisneros is on CNBC’s “Fast Money” talking about how house prices are now increasing and the government needs to “keep the peddle to the metal” to support the housing market, and price increases. Those increases are what will lead to jobs and a healthy economy in his warped mind. Of course, nobody bothered to ask him any difficult questions. For instance, how will people afford high housing prices which were the root of the problem in the first place? These people seem absolutely oblivious to how we got to where we are today, and they want to promote the same insane policies. They are frightening.

Physicists Kill Cancer With ‘Nanobubbles’

ScienceDaily (Feb. 5, 2010) — Using lasers and nanoparticles, scientists at Rice University have discovered a new technique for singling out individual diseased cells and destroying them with tiny explosions. The scientists used lasers to make “nanobubbles” by zapping gold nanoparticles inside cells. In tests on cancer cells, they found they could tune the lasers to create either small, bright bubbles that were visible but harmless or large bubbles that burst the cells.

“Single-cell targeting is one of the most touted advantages of nanomedicine, and our approach delivers on that promise with a localized effect inside an individual cell,” said Rice physicist Dmitri Lapotko, the lead researcher on the project. “The idea is to spot and treat unhealthy cells early, before a disease progresses to the point of making people extremely ill.”

The research is available online in the journal Nanotechnology.

14.8 million Americans are currently out of work and looking for a job, according to a report released today by the Bureaus of Labor Statistics. Even if you do have a job, wages have not increased substantially over the last ten years, with one exception: government workers.

Thanks to generous health-care benefits and pensions, it pays - more than ever - to work in the public sector. Economist Gary Shilling fears dubious consequences if state and local workers continue to make more money and at the same time governments raise taxes and cut services.

“In good times, nobody really cares that much but now we’re not in good times,” says the President of A. Gary Shilling & Co. “The basic problem is pay differential, as I see it, and that I think is likely to lead to a taxpayer revolt.”

Shilling’s point about pay is illustrated well in this recent research by Dr. Mark J. Perry, professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

According to a December report from the BLS, state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits). In other words, government employees make 45% more on average than private sector employees.

According to another BLS report, compensation for private industry workers has increased by 6.9% between December 2006 and December 2009, compared to a 9.8% increase for government workers (state and local) over the same period.

If that’s not enough, the trend will lead to a lowering of our standard of living, even for the highest paid workers on Wall Street, Shilling tells Henry in the accompanying clip. If reforms like the Volcker Rule take hold, Shilling’s “not sure Wall Street (will be) permanently bidding up the prices of Manhattan real estate and vacation homes in the Hamptons.”

Filed under: “All fraud is local”…or…”Executive + Professional = Ethical”

By COURTNEY PERKES.THE ORANGE COUNTY REGISTER
Tustin hospital exec pleads guilty to fraud:

“A former Tustin Hospital executive pleaded guilty Tuesday to paying kickbacks to recruit homeless people who underwent unnecessary treatment billed to Medicare.

Vincent Rubio, 49, of Los Angeles admitted to healthcare fraud and to omitting illegal payments he received from his federal tax returns in a plea agreement reached with the U.S. Attorney’s Office.
He worked as chief financial officer from 2003 to 2007. According to the legal documents, over that time he signed $2.4 million in hospital checks to recruiters who sent phony patients from Skid Row in Los Angeles to Tustin. For their care, Medicare paid the hospital $7.9 million and Medi-Cal paid $2.7 million. For Rubio’s cut, a recruiter gave him about $3,000 a month.

In August 2008, the FBI raided Tustin Hospital and two hospitals in Los Angeles.”

“…growing by 18 million people a year”

Inspector Gadget: Wowser’s!

India Rejects First GM Vegetable, Hampering Monsanto Expansion:

By Jay Shankar and Thomas Kutty Abraham Feb. 10 (Bloomberg)

“Ramesh, 55, had to balance the technology’s promise to help feed a nation growing by 18 million people a year, more than the population of the Netherlands, and concern that food safety and threats to biodiversity haven’t been investigated. Monsanto, the world’s largest seed maker, supplied the gene for the vegetable and introduced genetically modified cotton in India eight years ago.”

Monsanto = “TrueEvil™”

(Hwy eagerly awaits the communist state sequel: Lao Tzu meets Mao @ McDonald’s)

‘Avatar’ Swamps ‘Confucius’ at China Box Office:
By Le-Min Lim Feb. 9 (Bloomberg)

“Confucius” stars Hong Kong actor Chow Yun-fat and cost 150 million yuan to make, Wu said. The authoritarian political and social theory advocated by the philosopher, who lived about 2,500 years ago, is the basis for much of East Asia’s philosophical beliefs. Dadi expects the film to “do well” in South Korea, Singapore and other Asian countries, Wu said.

Whoo hoo ya gotta watch this one peeps….:

http://thinkbigworksmall.com/mypage/player/tbws/23088/1162246