The Housing Bubble

California puts 11 office buildings up for sale
The Sun News - Associated Press

SACRAMENTO, Calif. — California has put the “for sale” sign on 11 state office buildings, including the San Francisco Civic Center and the Ronald Reagan State Building in Los Angeles, as a way to raise cash to shrink the budget deficit.

Los Angeles-based real estate firm CB Richard Ellis released a sales brochure Friday titled the “Golden State Portfolio” as part of its marketing strategy to lure potential buyers. Combined, the buildings have more than 7 million square feet of office space.

State officials are hoping to draw offers worth more than $2 billion.

N.J. property taxes climb 70 percent in 11 years, remain highest in U.S.
Statehouse Bureau N.J.

New Jersey’s highest-in-the-nation residential property taxes continued to climb last year, to an average of $7,281, according to a new state report.

The 3.3 percent average increase was the smallest in a decade, and marked the second straight year with a rate below the 4 percent cap instituted by former Gov. Jon Corzine through a special legislative session in 2006-07.

“We’re moving in the right direction,” Senate President Stephen Sweeney (D-Gloucester) said today, adding that the caps forced the state’s hundreds of towns and school districts to cut expenses by sharing services. “They’re doing it now because there’s a gun to their head.”

Man who broke the Bank of England, George Soros, ‘at centre of hedge funds plot to cash in on fall of the euro. Daily Mail ~ UK

The man about to break the euro? George Soros is said to be placing large bearish bets against the single currency

A secretive group of Wall Street hedge fund bosses are said to be behind a plot to cash in on the decline of the euro.

Representatives of George Soros’s investment business were among an all-star line up of Wall Street investors at an ‘ideas dinner’ at a private townhouse in Manhattan, according to reports.

A spokesman for Soros Fund Management said the legendary investor did not attend the dinner on February 8, but did not deny that his firm was represented.

At the dinner, the speculators are said to have argued that the euro is likely to plunge in value to parity with the dollar.

The single currency has been under enormous pressure because of Greece’s debt crisis, plus financial worries in Portugal, Italy, Spain and Ireland.

But, it has also struggled because hedge funds have been placing huge bets on the currency’s decline, which could make the speculators hundreds of millions of pounds.

“N.J. property taxes climb 70 percent in 11 years, remain highest in U.S.
Statehouse Bureau N.J.”

Hard to believe they are higher than the $17.44 per $1,000 I pay just outside of Boston. You should see the new fire station it’s a beauty….

Private School Demand Dips as New Yorkers Evade Cost.
$36,000 Kindergarten

(Bloomberg) — Anxiety over the recession is trumping the angst of New York City parents to get their children into elite private schools.

Fewer children took entrance exams for private elementary schools, continuing a decline that began last year, as the economy hurt parents’ ability to pay annual tuition of more than $30,000. The number of tests completed by kids applying to prekindergarten to fifth grade declined 4.4 percent, to 4,259, said Antoinette DeLuca, an executive director of the Educational Records Bureau, which administers the exams.

The public schools in the city, the most populous in the U.S., last year had their first increase in enrollment since 2002, mostly in kindergarten, said Jack Zarin-Rosenfeld, a spokesman for the New York City Department of Education. Families that considered sending their children to private schools are turning to the public system partly because the cost of alternatives such as Ethical Culture Fieldston School climbed, said Carol Cate, 45, whose daughter is to begin kindergarten in September.

“I’d always fantasized about her going to Ethical Culture,” said Cate, who produces events for the Food Network, a television channel owned principally by Cincinnati-based Scripps Networks Interactive Inc. “I was hearing that public schools were getting better and private schools were getting so ridiculously expensive. Once we got serious, private schools were off the list.”

This is about a local mall here in central S.C. It has just been bought by a new group. It is also a mall that tried putting in condos so you could live and shop. They did not sell a single one after over a year of trying. Note the last line.

Mall fans might need lower expectations.
The State Newspaper 2-28-10

Midtown at Forest Acres has done high-end, and it didn’t work out so well.

Soon after Richland Mall, as it was originally called, was enclosed in the late 1980s, it lured Bonwit Teller, an ultra upscale department store with locations in New York and Miami Beach.

But Bonwit left after just two years and eventually so did many other stores. The mall is less than half full. — “If you build it we will shop.”

Now, less than two weeks after Midtown got new owners, some shoppers are calling for another try at upscale.

In a Facebook group called “Please bring some nice stores to Richland Mall,” some of its nearly 1,200 members have clamored for merchants not yet in the Columbia area - Ikea, Trader Joes, Pottery Barn and an Apple store.

“Crate and Barrel. Cheesecake Factory. Please keep Gymboree and TGIFridays,” one poster wrote. “I will shop every day and spend our whole Social Security check at Richland Mall if you bring some nice stores!!”

Buffett Says Housing Woes to Ease Next Year, Barring Explosions

Feb. 28 (Bloomberg) — Billionaire Warren Buffett said the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote yesterday in his annual letter to the shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The worst housing decline since the Great Depression has left one in five U.S. mortgage holders owing more than their houses are worth. Record foreclosures last year flooded a real estate market already glutted with unsold property, causing new construction to fall to the lowest in at least 50 years. The fall in homebuilding is the only fix unless the U.S. decides to “blow up a lot of houses,” Buffett joked.

It’s Sunday so I guess it’s okay to go off topic.

One the mikeys(?) here hated Avatar. I saw it last Wednesday and have to agree that, while I didn’t hate it, and while it didn’t “suck” mightily, I really expected better of James Cameron. This is the guy who gave us the best chick movie ever made (no, not that one; I refer to Terminator) and one of the best military movies ever made (Aliens). Avatar was…Dances with Wolves meets Starcraft, only with a hero even more boring and less memorable hero than Kevin “Sominex” Costner. (No, I didn’t think it was possible either.)

I went in there expecting meh, kept waiting for the movie to change my mind. It never did. I did, however, manage to mark off every item on my cliché checklist except for one.* All that 3-D and SFX…wasted. Memo to Hollywood: nobody cares how “real” your CGI characters look. 2-D Elmer Fudd has more dimension than this lot, and Jack Skellington is more real than any pile of pixels.

I could think of several hundred better ways to blow a half bil.

————
*that was the hero-dies-and-leaves-girl-with-baby plot. Cameron mercifully spares us that.

Obama’s Plan to Stem Foreclosures Will Do More Harm Than Good

The Obama administration is mulling a plan that would require lenders to make efforts to enroll homeowners in the government’s Home Affordable Modification Program (HAMP) before they pursue foreclosure.

According to a memo reviewed by Bloomberg, the proposal “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.”

If the program is implemented, banks would be unable to initiate foreclosure proceedings until they have tried to contact borrowers about HAMP at least four times by phone and at least twice by certified mail.

“Conceptually it is a good idea. Procedurally, it might create more havoc and confusion for the lenders and servicing agents due to lack of consistent processes and lack of manpower,” says Dale Robyn Siegel.

The problem is that many borrowers who face foreclosure simply can’t afford the house. Trial modifications and dragging out the foreclosure process won’t do much good, other than to let some people live rent-free for awhile.

Forcing mortgage companies to aggressively court distressed homeowners with information about HAMP — four phone calls and two certified letters — will do little to help most homeowners, and will only burden loan servicers with useless bureaucracy that prevents them from devoting resources to people who need and want help.

Boston Mortgage Lenders Not Honoring HAMP

Boston homeowners who financed their homes with Wells Fargo or Bank of America, are suing the mortgage lenders for not honoring agreements afforded under the Treasury’s new Home Affordable Modification Program (HAMP). The program allows homeowners who are facing foreclosure a slight reprieve in mortgage payments.

Residents in Boston, however, argue the agreement was not carried out by both Wells Fargo and Bank of America. Both banks accepted billions of dollars under the government’s Troubled Asset Relief Program, which helped to bail them out. In accepting the assets, both banks agreed to participate in the government’s various modification programs including HAMP.

The banks receive a sum of $1,000 for each successfully modified loan. Homeowner Germano DePina of Roxbury, one of the plaintiffs involved in the case, says that he began making modified payments to Wells Fargo’s lending unit America’s Servicing Co. in September 2009. Three months went by and he heard no response back from the mortgage lender. This was true of many other borrowers.

The lawsuit is being considered for class-action status. Many Boston homeowners and borrowers remain in the dark about their loan status. As a result, the threat of foreclosure continues to loom large. Currently, only 2 percent of Wells Fargo loans have resulted in permanent modifications.

Just got word that a niece of mine who is moving from Clarendon Hills IL. To Newport RI. Just had their offer on an up dated farm house on 2 acres excepted.

Asking price: $675,000.00 ~ Offer that was excepted: $535,000.00

Oh well, they think they got a good deal, I guess.

Foreclosure crisis hits affluent towns
boston.com

DOVER - The foreclosure auction was still an hour away, but potential buyers were already circling the Baird home, snapping photos with their Blackberries.

Inside the 1,900-square-foot house they built in 1968 for $110,000, and recently assessed by the town at $915,700, G. Stewart Baird Jr., 80, and his wife, Martha, 77, were in despair.

The Bairds took out a primary adjustable-rate mortgage for $999,950 in October 2005, and a second mortgage for $300,000 in March 2006, according to the Norfolk County Registry of Deeds.

The Bairds acknowledge they have not been able to pay their mortgage or property taxes since October 2008. The amount owed on the mortgages is not a matter of public record, but Stewart Baird said he believed the family owed close to $1 million on the home.

“It seems so pointless and grotesque to pull people out of their homes when nobody is buying,’’ his wife said. “We are very active members of the community. We’re very involved.

Stewart Baird, who worked for decades selling advertising for the publisher McGraw-Hill, said they heavily mortgaged their home to pay for living expenses and to support their business in the hopes it would meet what now seem like overly optimistic revenue projections. “We thought we could do it,’’ he said.

What is the financial advantage to purchasing luxury homes when prices are dropping like a rock?

And wouldn’t price declines of 30% ($600,000 in the case of a former $2 m home) be a sign of real estate market instability?

Price Drops Seen for Newport Beach Luxury Homes

(I-Newswire) February 24, 2010 - Home buyers looking into the luxury market should definitely consider Newport Beach–a city well known for its pricey homes, high-end living and laid-back beach vibe. A slow economy and sluggish market activity have driven down home values across the city, and many Newport Beach Luxury homes have had to be repriced. Price cuts of up to 30% have been observed, and experts believe the trend will continue well into 2010.

Newport Beach is located in coastal Orange County, one of the most upscale areas in Southern California. Once dubbed the most expensive city in the United States to live in, it continues to be a symbol of luxury living for home buyers and sellers alike. With home values averaging $2 million even during its slowest years, Newport Beach is among the most stable cities in the county in terms of economy and the real estate market.

In 2008, the average price for Newport Beach luxury homes was $1.8 million, well above the countywide average of $436,000. Detached single-family homes remain the most valuable with a mean price of $2.1 million, but townhouses and duplexes aren’t far behind at $1.2 million and $1.6 million respectively. Attached homes comprising five or more units are less common but are far more affordable, averaging a mere $772,000.
…

Would it really be possible for a critical mass of sheeple who want to become home moaners to once again get fooled by the phony “home buyer tax credit expiration date” ploy? Hasn’t the new home market pretty much run out of sheeple with buckets of money and boxes of stoopid by now? How dumb do the builders think any remaining fence sitters are?

Developments
Real estate news and analysis from The Wall Street Journal

* February 24, 2010, 5:29 PM ET

On New Home Sales It’s Builders vs. Government

By Dawn Wotapka

Home builders have become a positive bunch lately, relieved after reporting narrowed year-over-year losses, increased traffic and reduced cancellations. When luxury developer Toll Bros. detailed improved quarterly results early Wednesday, Chief Executive Bob Toll said “we believe the housing market is still in choppy waters but the seas are getting calmer.”

Strong, positive words from a honcho known for saying it like it is. That’s what made the Commerce Department’s new-home sales data from such a head-scratcher. Sales plunged 11.2% in January to a seasonally adjusted annual rate of 309,000, a record low. Shares of builders tumbled on the news, with Lennar falling nearly 6% while sector giant Pulte saw a drop topping 4%. (The sector recovered slightly by the closing bell.)

Turns out, we’ve seen this disconnect before. “The disharmony between today’s data release and home builder commentary bears a striking similarity to the events which transpired a year ago,” writes Josh Levin, an analyst with Citi. “Despite the fact that home builders in early ‘09 reported better sales in 1/09 relative to late ‘08 sales, the government reported that 1/09’s new home sales totaled 329,000.” Until today, that was the lowest data on record.

Deeper into ‘09, new-home sales trended up and the stocks followed. “We expect a similar pattern this year,” Mr. Levin says.

That’s why few are worried that the sector is crashing again. Builders will undoubtedly see a short-term sales boost prior to the federal home buyer tax credit’s April 30 expiration.
…

Is Ben Bernanke part of the Obama administration now? I am puzzling why the photograph of the chairman of the “independent central bank” is prominently featured in this article about administration policy. It seems like a rather odd juxtaposition for the leader of the “independent central bank.”

Developments

Real estate news and analysis from The Wall Street Journal

* February 25, 2010, 9:54 AM ET

Don’t Hold Your Breath on Fannie, Freddie Overhaul

By Nick Timiraos

Bloomberg

(Fed Chairman Ben Bernanke speaking at a House committee on Wednesday.)

The Obama administration confirmed on Wednesday that it will wait until next year to put forward legislation on Fannie Mae and Freddie Mac. That’s not a huge surprise: the administration has a lot on its plate, and some analysts have long said it was unrealistic to expect any action before midterm elections this fall.

Moreover, the mortgage market’s current arrangement, while far from an ideal long-term fix, appears to be holding together and helping to revive what had been a very sick housing patient. Even if Congress and the White House knew what it wanted to do with Fannie and Freddie (which it doesn’t), right now could be a dicey time to attempt anything terribly dramatic. The Federal Reserve is winding down its purchases of mortgage-backed securities in the next month, and the home-buyer tax-credit will expire after that.

Still, that doesn’t change the tough politics facing the White House in delaying action on Fannie and Freddie. (Last summer, the White House promised to put out something when it released its budget proposal earlier this month.)
…

Developments
Real estate news and analysis from The Wall Street Journal

* February 26, 2010, 2:06 PM ET

Freddie Mac Abandons Ship on Interest-Only Loans
Posted by Nick Timiraos

Freddie Mac said on Friday that it would stop buying and securitizing interest-only loans in September because those mortgages have performed so poorly.

Interest-only mortgages allow borrowers to make payments on interest for an initial period, usually between three and 10 years, before requiring principal and interest payments for the remainder of the term. An adjustable-rate variety of those loans, called “hybrid ARMs,” feature a fixed-rate during the interest-only period that resets annually to a market benchmark when the loan begins amortizing.

During the housing boom, those interest-only ARMs became increasingly popular because they allowed homeowners to make purchases even as homes became less affordable. “It normally allows you to buy more house than you would be able to afford,” says Guy Cecala, publisher of Inside Mortgage Finance.
…

Runaway health costs are rocking municipal budgets
boston.com

Elizabeth Debski spent eight years as Everett’s city planner, before losing her job in 2006 when a newly elected mayor installed his own team.

But Debski did not leave City Hall empty-handed. In addition to her pension, Debski, at 42, walked away with city-subsidized health care insurance for life. If she lives into her 80s, as actuarial charts predict, taxpayers could pay more than $1 million in all for her family’s health care benefits.

That’s not to say Debski manipulated the system. She simply took what she was owed under a municipal health care system whose generous benefits and colossal inefficiencies are crippling cities and towns across Massachusetts.

A six-month review by the Globe found that municipal health plans, which cover employees, retirees, and elected officials, provide benefit levels largely unheard of in the private sector. Copays are much lower. Some communities do not force retirees onto Medicare at age 65. Many citizens on elected boards - some after serving as few as six years - receive coverage for life, too.

As medical costs across the board rose over the past decade, municipal health care expenses exploded, draining local budgets and forcing major cuts in services, higher property tax bills, and billions in new debt.

“It has got to be dealt with,’’ said Richard Fortucci , the chief financial officer in Lynn. “Or we will all go bankrupt.’’

The cost of municipal health care more than doubled from fiscal 2001 to 2008, adding more than $1 billion in all to city and town budgets, according to state Department of Revenue data. A Globe survey of 25 communities found that they now devote, on average, 14 percent of their budgets to health care, up from 8 percent a decade ago. Somerville, for one, spends $20 million more annually than it did 10 years ago, now devoting almost 20 percent of its budget to health care.

So far, with powerful labor unions resistant to giving away hard-won benefits and a lack of political will in the state Legislature to force changes, efforts to overhaul the system have fallen short.

“It’s a nice deal,’’ said Debski, now a part-time planner in Malden.
She could get insurance through her husband’s employer but doesn’t, for a simple reason: The municipal plan is far more generous and costs less. “The system was there,’’ she said. “I find it hard to believe that anyone wouldn’t take what the system offered.’’

“The banks receive a sum of $1,000 for each successfully modified loan. Homeowner Germano DePina of Roxbury, one of the plaintiffs involved in the case, says that he began making modified payments to Wells Fargo’s lending unit America’s Servicing Co. in September 2009″

Not sure what he’s bitchin’ about he didn’t put a cent down. According to land records he paid 420k for a 2 bedroom single family that previously sold for 8k. His foreclosed condo which he paid 309k (again with nothing down) recently resold for 80k. The amount of fraud committed in Roxbury land deals boggles the mind…

This article’s title reminds me of my high school tennis coach’s enduring advice for tennis and for life in general: “You can rationalize all you want.”

— Martin Luther — (as updated by Professor Bear)

Developments
Real estate news and analysis from The Wall Street Journal

* February 26, 2010, 12:19 PM ET

Why Existing Home Sales Are Flat, Not in Free Fall

By James R. Hagerty

Ignore today’s headlines on U.S. home resales. If you strip out the effects of tax credits, the underlying trend looks about flat, says from Tom Lawler, a housing economist in Leesburg, Va., who monitors local sales across the country day to day.

The housing market remains fragile, of course. It isn’t roaring back, but it isn’t in free fall either. Home sales for all of 2010 are likely to be about even with last year’s level, Mr. Lawler figures. The outlook still depends heavily on when the economy begins creating more jobs, how much interest rates rise and how many of the 8 million U.S. households that are behind on their mortgage payments can be saved from foreclosure.

The National Association of Realtors reported this morning that home resales in January declined 7.2% from December to a seasonally adjusted annual rate of 5.05 million units. That disappointed Wall Street, which expected a slight increase, but “anyone who was surprised shouldn’t have been,” Mr. Lawler says.

The original deadline for buyers to qualify for federal tax credits was Nov. 30. That led to a rush of buying in the fall. The annual sales rate, which is (imperfectly) adjusted to smooth out seasonal factors, leaped to about 5.6 million in September, 6 million in October and 6.5 million in November from the range of 4.9 million to 5.1 million that prevailed in June through August. Now the sales rate is back in that range.

“The home-buyer tax credit goosed things in a big way,” Mr. Lawler says. It pulled forward sales that otherwise would have happened later.
…

Huge volatility (and not only to the downside!) in high-end luxury homes noted:

Developments
Real estate news and analysis from The Wall Street Journal

* February 26, 2010, 11:41 AM ET

Friday Diversion: Cher’s House Sells to GoDaddy CEO, James Franco Sells in L.A.

Home resales fell 7.2% in January, here’s a look at some high-end sales and listings from February.

Billionaire software entrepreneur and philanthropist Tom Siebel lists a 62,000-acre Montana cattle ranch called N Bar Ranch for $45 million. Located about 90 miles north of Billings, Mont., the property is one of the state’s oldest and largest cattle ranches. Founded in 1885 and comprising grassy foothills and valley, open meadows and aspen forests, the ranch supports 1,500 head of cattle. On the property are a 2,500-square-foot farmhouse, a guest house and an airstrip. Mr. Siebel, 57, bought N Bar Ranch nine years ago. Photos. (WSJ)

Actor James Franco sells his Los Angeles home for $3.3 million. Built in 1923, the Spanish-style villa measures 4,000 square feet and has three bedrooms and three-and-a-half bathrooms. The property also includes a swimming pool and a guest house. Mr. Franco listed the home in September for $3.695 million. He purchased it in 2006 for $2.325 million, according to public records. (Los Angeles Times)

Bob Parsons, the founder and CEO of Web-hosting company GoDaddy.com, paid $8.72 million for a Balinese-style house on Hawaii’s Big Island that was built by singer-actress Cher and went to a auction last month. Located at the Four Seasons’ Hualalai resort, the property includes a main house and four one-bedroom bungalows. Cher bought the property in December 2004 for $2.9 million and last year began building the house but never lived in it. Photos. (WSJ)

Philanthropist Patricia Kluge slashes the price of her 300-acre English country estate in Charlottesville, Va., to $48 million, 52% off the original October asking price of $100 million. The estate, near Thomas Jefferson’s Monticello, includes a 45-room neo-Georgian manse of about 23,500 square feet with eight bedrooms and 13 bathrooms. Ms. Kluge, 61, is the former wife of billionaire John Kluge, the founder of the Metromedia broadcast and cellphone empire.
…

Dumb predictions:

2) When it expires, a larger but curiously different housing demand stimulus measure will be concurrently rolled out to replace it.

Developments
Real estate news and analysis from The Wall Street Journal

* February 22, 2010, 6:00 AM ET

Take Three: Will Congress Extend the Home Buyer Tax Credit?

By Nick Timiraos

It’s that time of year again: time for lobbyists to convince Congress to extend the home buyer tax credit.

The National Association of Realtors and other industry groups are beginning to make the rounds on Capitol Hill to press their case, which goes something like this: We know you’ve extended the tax credit two times already, but the housing market is still fragile, the tax credit is working, and don’t forget– you’re up for re-election soon. In other words, do you really want to own the next leg down in home prices?

They’ll also make their case by reminding pols that a series of other market supports are being removed, the largest of which is the Federal Reserve’s purchases of $1.25 trillion in mortgage-backed securities that expires next month and has pushed mortgage rates to postwar lows for much of the past year. The Federal Housing Administration is also under pressure to pull back its lending, and more foreclosures could add to the housing inventory as borrowers fail to qualify for modifications.

Industry groups are also pushing the argument that the credit should be extended because it’s taking so long for banks to approve short sales, where lenders agree to a sale for less than the value of the mortgage.

To recap, Congress first passed a $7,500 tax credit in 2008 for first-time buyers, but that credit had to be repaid over 15 years. When it expired one year ago, Congress extended it, expanded it to $8,000, and said it wouldn’t have to be paid back. Just before that credit was to expire last December, Congress extended it again, until April 30 (sales contracts signed by April 30 have until June 30 to close). A new credit of $6,500 was created for current home-buyers. “There’s nothing more permanent in Washington than a temporary tax credit,” jokes Howard Glaser, a housing-industry consultant.

This time, the lobbyists certainly have their work cut out for them. For one, industry groups last time swore that the last tax credit extension would be, well, the last extension. To secure the deal, the lawmaker who shepherded that effort through Congress, Sen. Johnny Isakson (R., Ga.), made clear at the time that extending it again would be a nonstarter. (His spokeswoman says that he has no plans to offer any legislation extending the credit. “Part of the benefit of the tax credit is the urgency of it sunsetting,” said spokeswoman Sheridan Watson.)

Economists mostly agree that the tax credit has helped to goose demand and sell more homes, though there’s still considerable debate over just how many homes would have sold anyway.

Mark Zandi, chief economist at Moody’s Economy.com, pushed to extend the tax credit last fall but says now it’s time to let it expire. “It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”
…

http://www.telegraph.co.uk/finance/economics/7332415/Germany-and-France-agree-to-rescue-Greece-with-conditions.html

The so-called leaders of Germany and France, in the mold of our own Republicrats, have agreed to “rescue” Greece by buying 30 billion euros of Greek debt. Color that money gone. Greece in turn promises to implement meaningful austerity measures.

Hard cash for promises. Show of hands: who thinks this is going to end well?

I have trouble believing the leaders of Germany and France are so profoundly stupid and delusional that they actually believe Greece will hold up its end of the bargain, or that they’ll ever get any of their money back. Rather, like their Republicrat counterparts across the pond, they are colluding with the banks in a desperate, doomed, cynical attempt to forestall the financial reckoning day beyond the next election.

George Soros and his coterie are said to be betting heavily against the euro. If the German-French action stabilizes the euro, at least for the next few months or so, Rapacious George would end up getting burned on that bet. That, at least, would be fun to watch.

“Well, I guess it’s time for the town to Ben-Dover. ”

Might be funny to you sir but we just lost our parade bugler…

The parade to Highland Cemetery took place under the supervision
of Chief Marshal Robert G. Fuller. The parade stopped enroute so that
flower bearers Caroline Wider and Spencer Bisson could place flowers at
the Town Monument. The parade buglers were G. Stewart Baird and
Mariel Bisson

I saw a story on the CBS morning News today, about this website that helps people find local banks to transfer their money to, from the big banks. The movement seems to be gaining steam.

http://moveyourmoney.info/

We may not be able to get elected officials to listen, but people can vote with with their money. Too big to fail can be taken care of by the people.

This article completely misses the question it should be asking, as it presumes the expiration of the first-time buyer credit will happen as planned, with nothing to replace it. It is almost a given that if it actually expires, another housing demand stimulus measure of equal or greater anticipated impact will be rolled out as a replacement. The question the writer should ask is that of what form the replacement housing demand stimulus program will take.

Another question is whether the replacement stimulus measure will be announced (like the home buyer’s tax credit) or stealthy (like Fed MBS purchases to suppress mortgage interest rates).

Developments
Real estate news and analysis from The Wall Street Journal

* February 25, 2010, 12:36 PM ET

Better to Wait Until Home Buyer Tax Credit Expires?

The home builders and Realtors are jazzed for the home buyer tax credit’s remaining weeks. It’s tempting for home buyers to get caught up in the hype. But perhaps you’re better off waiting?

In case you missed the news, the federal government will give you money if you buy a house–$8,000 for first-time buyers and up to $6,500 for current homeowners within certain price and income limits. The benefit covers buyers who enter into contracts before April 30 and close by June 30.

Over at Zillow’s Blog, they’re debating a Denver reader’s question: “It it better to buy now or wait until the credit expires?” He explains that competition is heated in his price range of below $150,000 in Denver and wonders if that will ebb after April.

Answers are mixed. One commenter says that prices will fall after the credit expires: “I’ve seen prices in my neighborhood jump up over $30k since the credit started,” he writes. Indeed, some analysts have argued that the benefit of the tax credit has been priced into the market and that by stimulating demand, home sellers have been able to hold off on steeper price cuts. When the credit expires, the thinking goes, home prices could fall a bit to compensate.
…

I am frankly astounded by the number of residential real estate articles the WSJ writers are producing these days. The pro-REIC bias is fairly minor, and easily filtered out if you refer to HBB commentary. Kudos!!!

Anyone who is thinking about buying a home in the near future would be a fool to not fork out the price of a WSJ subscription, which is minuscule compared to the amount of money that many greater fools have recently lost on their falling-knife housing gambles, just for the ability to access this treasure trove of housing market information, even if you read nothing else.

Developments
Real estate news and analysis from The Wall Street Journal

* February 25, 2010, 10:30 AM ET

Groping in the Dark Toward Foreclosure Remedies

By James R. Hagerty

Mortgage bankers used to spend most of their time at conventions talking to one another. Now, having made too many crazy loans during the housing boom, they spend more time listening to Big Brother.

Some of the most eagerly attended sessions at this week’s annual convention of loan servicers–sponsored by the Mortgage Bankers Association at a hotel in San Diego–have been those featuring representatives of the Treasury, the Federal Housing Administration and other government-related bodies. Loan servicers are the firms, many of them owned by banks, that collect payments on home loans and (lately) handle foreclosures and mandatory efforts to avoid them, such as the government’s Home Affordable Modification Program, or HAMP.

There was a bit of mandatory grumbling by the mortgage bankers, of course. “We support HAMP,” thundered Robert E. Story Jr., the MBA’s current chairman, in his opening speech, “but it has to be easier to use.” He complained that the government keeps issuing tweaks, guidances, clarifications and baffling new iterations of the ever-expanding array of programs that politicians hope will save millions of people from losing their homes, or at least postpone that until after the next election.

Despite Mr. Story’s plea for simplicity, look for the government to continue improvising as it attacks an evolving monster of a problem, now involving nearly 8 million households behind on their mortgage payments.

HAMP was announced a year ago by President Obama. He and his administration said it would help three million to four million borrowers. For now, about 947,000 households are benefiting from lower monthly payments, but many of those are likely to fall out of the program because they are unwilling or unable to document their income to show they qualify for it.

One problem is that HAMP was designed mainly for dealing with people who had decent income but still couldn’t afford the mortgage loan they took out. Now, though, the bigger problems are that many borrowers are unemployed or owe far more on their mortgages than the current value of their homes, or both.
…

The Florida luxury condo market has not run out of carpet bagger investors with buckets of money and boxes of stupid.

Developments
Real estate news and analysis from The Wall Street Journal

* February 22, 2010, 1:52 PM ET

Miami Condo Vulture Sees Success
By Dawn Wotapka

Is the Miami’s troubled condo market coming back? One recent case shows that there is again money to be made there.

The New York investment group that snapped up the construction loan on more than 90 units in Miami Beach’s Caribbean condo development has resold the units at a 40% markup, reports CondoVultures dot com, a local real estate consultancy.

The group, identified as 3737 Caribbean Group LLC with New York’s Melohn Properties and local investor Michael Konig, sold a combined 35 units in the 107-unit, double-tower complex for $31 million, or $584 per square foot. Many of the remaining 59 condos are said to be under contract. The buyers are foreigners and “Northeasterners who’ve been searching for deals,” says Peter Zalewski, a Condo Vultures principal.
…

One small step toward principal reduction; one giant leap towards housing bubble reflation.

Developments
Real estate news and analysis from The Wall Street Journal

* February 22, 2010, 11:14 AM ET

Obama’s Small Step Toward Principal Reduction

By James R. Hagerty

The Obama administration hinted Friday that it may be closer to accepting the idea of prodding banks to forgive mortgage principal for many Americans.

The hint came with the announcement of a modest $1.5 billion (yes, that counts as modest in the age of trillion-dollar bailouts) federal program dubbed Help for the Hardest-Hit Housing Markets, likely to be known as 4HM. (Not to be confused with previous plans with such fanciful names as HAMP, HARP, PPIP, TARP, 2MP, HAFA and perhaps a dozen others few can recall.)

The money from this latest program will go to housing finance agencies in the states deemed hardest hit by falling home prices: Arizona, California, Florida, Nevada and Michigan.

Among other things, the White House said, this money can be used to help people who are “underwater,” owing more on their mortgages than the current value of their homes. The administration said the agencies “may experiment with programs that would assist borrowers to negotiate with lenders to write down mortgages.”
…

The upshot of a “glacially slow” foreclosure process: Many more foreclosures will flood the market when the glacier ultimately melts due to global economic warming.

Developments
Real estate news and analysis from The Wall Street Journal

* February 22, 2010, 4:06 PM ET

Already Glacial, Foreclosure Process May Get Even Slower

By James R. Hagerty

Lenders are taking more than a year to complete foreclosure cases against many struggling home-mortgage borrowers. Now that process may get even slower.

The U.S. Treasury is considering new guidelines that would give distressed borrowers more time to try to qualify for a federal program aimed to averting foreclosures.

Under the proposals, loan servicing companies, which collect payments and handle foreclosures, would have to give borrowers 30 days to respond after being denied a modification of their loan terms under the Home Affordable Modification Program, known as HAMP. During that period, borrowers would have time to appeal the decision, the servicer couldn’t put the home up for sale at a foreclosure auction.

The proposals are outlined in a draft presentation obtained by The Wall Street Journal and other news organizations.

A Treasury spokeswoman said the proposals are among “many ideas under consideration in the administration’s ongoing housing stabilization efforts.” She added: “This proposal has not been approved and there are no immediate planned announcements on the issue.”

Servicers also would be required to provide a “written certification” that a borrower isn’t eligible for HAMP before a foreclosure sale can be held.
…

Professor Bear asks: Why buy yourself a falling knife real estate asset?

On the other hand, there has never been a more affordable time to buy in Detroit.

Developments
Real estate news and analysis from The Wall Street Journal

* February 23, 2010, 12:33 PM ET

Credit Suisse Asks: Why Rent?

By Dawn Wotapka

We’ve previously wondered if the housing crisis will result in more people renting for longer. But Dan Oppenheim, a home-building analyst with Credit Suisse, wants to know: “Why rent when homes are this cheap?”

Home price declines, paired with low mortgage rates, have made ownership possible for many would-be buyers left on the sidelines during the housing boom. The monthly mortgage payment on a median-priced home was just 15.3% of the median-family income in the fourth quarter, far below the 20% average from 1991-2008. Affordability, the key driver of housing demand, is “at or better than historic averages in 49 of the top 50 home building markets,” Mr. Oppenheim writes in a client note.

But here’s the rub: Housing remains the most unaffordable in bigger cities with more job potential. Topping Mr. Oppenheim’s list is San Francisco, New York City and Los Angeles.

The most affordable market is Detroit, a city that is seeing most of its residents flee. Next up is Ft. Myers, Fla., battered by the housing bust, and Indianapolis.

If this is so confusing, why am I not confused?

The only thing I find confusing is the question of whether and when federal stimulus will be withdrawn from the U.S. housing market. The facts that this massive and unprecedented amount of stimulus is not sustainable and that once withdrawn, there will be nothing else to support home prices at their current levels clearly indicate that residential real estate will remain a money-losing investment for at least another decade to come. Momentum ain’t gonna cut it.

Developments
Real estate news and analysis from The Wall Street Journal

* February 23, 2010, 1:00 PM ET

Case-Shiller Adds to Confusion on Housing Market

By Nick Timiraos

Tuesday’s latest home-price reading shows that momentum slowed at the end of 2009 for the housing market, adding to the confusion about where prices are headed from here.

The S&P/Case-Shiller 20-city composite index in December fell 0.2% from November, but after adjusting for seasonal factors, home prices were up 0.3%. That was the same change that the index showed in November.

Fifteen of 20 markets tracked by the index showed monthly declines, though the battered Southwest fared well. Las Vegas had its first monthly gain in more than three years (and today’s story helps to explain why conditions there have improved), while Los Angeles led the nation with a 1% monthly increase.

Today’s Ahead of the Tape column takes a look at how some of the worst-case scenarios from last year’s bank stress tests haven’t come to fruition.

Robert Shiller, the Yale University economist who co-founded the index that bears his name, called the home-price rebound during the second half of the year “the most dramatic turnaround” since he began charting home prices in 1987. Home prices fell by 11% for six months ending in April 2009, before rising by around 5% over the following six months. The last time home prices swung so sharply was in April 1991, when a more modest 5% decline over six months was followed by a 2% rally.

What followed? “Nothing,” says Mr. Shiller. “The home market was absolutely dead for the better part of a decade after that.” But he says today’s volatility in prices and the massive amount of federal stimulus has made the home-price outlook far more uncertain. “The market has shown a lot of momentum,” he said. “What trend are we seeing now? It’s very ambiguous.”
…

Developments
Real estate news and analysis from The Wall Street Journal

* February 23, 2010, 3:51 PM ET

Highlights from Home Builder ‘Survivor Conference’

By Dawn Wotapka

I’ve spent much of Tuesday tuned into the “2010 Wells Fargo Securities Housing and Building Products Conference.” At times it was like listening to a group therapy session with a bunch of trauma survivors. Still, a theme emerged: Builders are looking past their depression and thinking about the future.

“Against the backdrop of historic market conditions that adversely affected the vast majority of industries across the United States, KB Home made substantial progress in transforming our business to compete in a sector that was among the hardest hit, the nation’s housing market,” said Jeffrey Mezger, chief executive of the California builder that has begun building smaller, more-affordable homes to remain competitive.

Like many of his peers, Larry Sorsby, CFO of New Jersey-based Hovnanian Enterprises, sees plenty of opportunity from low housing starts and demand from household formation. “Builders are not going out there and overbuilding,” he said, adding: “I don’t know when this demand’s going to actually show up … but I think there is pent-up demand being created.”

The trigger for recovery, he added, is job creation.
…

Developments
Real estate news and analysis from The Wall Street Journal

* February 23, 2010, 4:31 PM ET

Nearly One in Four Borrowers Underwater on Mortgage

By Nick Timiraos

Nearly one in four U.S. homeowners with a mortgage owed more than their homes were worth at the end of 2009, underscoring the challenges facing any sustained recovery in consumer spending and housing. Some 11.3 million households had negative equity at the end of the fourth quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif., up from 10.7 million at the end of the third quarter

Problems are concentrated in the states that have had the biggest home price declines. In Nevada, seven in 10 borrowers were underwater at the end of December, up from 65% three months earlier. Nearly half of all borrowers in Arizona and Florida and one third of borrowers in California owe more than their properties are worth.

“Negative equity is a long-term problem for us,” says Mark Fleming, chief economist at First American CoreLogic. “Some of these markets have lost from their peak 50% of their value. How many years at 5% growth would it take to bring it back?”
…

I believe ARMageddon may be HBB coinage…

Developments
Real estate news and analysis from The Wall Street Journal

* February 24, 2010, 6:00 AM ET

Facing ARMageddon Borrowers Grapple With Refinancing

By Nick Timiraos

Housing analysts expect mortgage rates to rise this spring as the Federal Reserve stops buying up mortgage-backed securities. That means many borrowers who use adjustable-rate mortgages have a big decision to make: refinance now into historically low fixed rates or stick with an ARM that’s currently even lower?

MarketWatch notes that many adjustable-rate borrowers are enjoying rates as low as 3%. Those rates will ultimately rise whenever the economy improves and the Federal Reserve increases rates.

Borrowers who take out adjustable-rate mortgages do so for times like these: when interest rates are very low. They’re giving up the stability of payment in exchange for the chance at some big-time savings. But Keith Gumbinger at HSH Associates notes that there’s really only one direction for rates to head in the coming years: up. The only question is whether that happens gradually or not. Borrowers with hybrid ARMs see their interest rate fall when those loans reset from their initial fixed-rate period to an annual adjustable rate.

We took a look in this story last year at some of these borrowers who were grappling with this decision when rates first fell. “I’d rather take my beating now than wait and find out the beating is a massacre,” said Jim Sullivan, a Connecticut homeowner who’d wanted to refinance and pay a slightly higher rate but who’s wife prevailed in keeping them in their ARM.
…

Surely an independent central bank can execute its publicly announced plans without yielding to political interference?

P.S. How many elephants can fit in a single room?

Developments
Real estate news and analysis from The Wall Street Journal

* February 24, 2010, 12:03 PM ET

Analyst: Pressure Will Build on Fed To Extend Mortgage Program

By Nick Timiraos

With the Federal Reserve set to wind down its purchases of mortgage-backed securities in a little more than 30 days, there’s growing uncertainty about what will happen to mortgage rates. Already, rates bumped up last week after the Fed said it would raise the discount rate by quarter point to 0.75% last Thursday.

Mortgage rates ended the week at 5.03% for 30-year fixed-rate mortgages, up from 4.94% one week earlier, according to the Mortgage Bankers Association.

But the elephant in the room is the Fed’s planned exit from the mortgage market, and analysts expect rates to rise by anywhere from a quarter-point to a full percentage point or more. Bob Eisenbeis, the chief economist at Cumberland Advisors, has a provocative commentary piece on Wednesday morning arguing that there’s a growing chance that the Fed will have to come back to buy mortgage-backed securities because of ongoing concerns over the fragility of the housing market. Two indicators out Wednesday morning underscore that softness: the MBA reported that loan applications for home purchases was at a 12-year-low last week, and new home sales plunged 11.2% in January.

“What we expect is that toward the end of the first quarter political pressure on the Fed will increase from both [Fannie and Freddie] and Congress to temporarily extend the program because of the concern about hurting a still struggling housing and mortgage markets,” Mr. Eisenbeis writes. “But if this fails to persuade the FOMC to change its mind, the program stops, and interest rates jump up significantly, then the Fed itself will decide that the risks of another downturn are too great, and the program will be restarted.
…

* ROI
* FEBRUARY 26, 2010

When It’s OK to Walk Away From Your Home

* By BRETT ARENDS

(A real-estate agent moves a torn “Lender Foreclosure” sign outside a foreclosed home in Reno, Nev., last Monday.)

Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.

How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

Are you in this situation? Are you still battling to pay the bills each month, even when it may make little financial sense to do so?

It’s time for some tough talk.

Stop trying to chase your lost equity. That money is gone. Don’t think like the gambler who blows more and more cash trying to win back his losses. That’s how a lot of people turn a small loss into a big one.

And do the math. Even if you hope the real estate market is near the bottom—it’s possible, but by no means certain—it may still take years to see any meaningful recovery. If you are 25% underwater, your home will have to rise by 33% just to get you back to even.

Is that likely? And over what time period? Even if home prices rose by 5% a year from here, that would still take six years. And during that time you could instead be building fresh savings elsewhere.

If you are reluctant to give up on “your” home, realize that it isn’t “yours.” If you are in negative equity, it’s the bank’s home. You’re just renting it. And right now you may be paying way above market rates. You need to be ruthless about your cash flow.

Are you worried about the legal consequences of walking away? Certainly, you should check with a lawyer before doing anything, but the consequences will probably be more limited than you think.

In “non-recourse” states, the mortgage lender may have no right to come after you for any shortfall. They may have no option but to take the home, sell it and eat the loss. According to a survey last year by the Federal Reserve Bank of Richmond, such states include negative-equity hot spots California and Arizona. Even in “recourse” states, lenders may have limited ability to come after you. Often they’d have to jump a lot of legal hurdles, and it’s just not worth it for them. They’re swamped with cases anyway.

“In my experience, right now they’re not really going after anyone,” says Richard Nemeth, a bankruptcy attorney in Cleveland. “They just don’t have the resources.”
…

* The Wall Street Journal
* FEBRUARY 27, 2010

This Week: What Happened to Your Money
…
Shaky Foundation

New home sales fell 11.2% in January, with annualized sales rates hitting the lowest level since the Feds started counting in 1963. The weather played a role, as storms kept would-be buyers from visiting sites. February’s snow doesn’t bode well for a rebound. Also unhelpful: 30-year fixed rates ticked up above 5% this week for the first time in three weeks.
…

FWIW, we’re trying to use the credit as incentive to scare the sellers into selling ASAP. Like, you’d better sign now, because who knows what’s next.

Who knows…

Here is a story I sure wish I could share with OlyGal:

Big plans in Borrego didn’t quite blossom

By J. Harry Jones, UNION-TRIBUNE STAFF WRITER

Sunday, February 28, 2010 at 12:04 a.m.

A chicken-wire fence and a “no trespassing” sign are posted in front of the Borrego Ranch Resort & Spa, formerly La Casa del Zorro. The resort closed in January, about two years after developer Greg Perlman purchased it.

John Gibbins / Union-Tribune

A chicken-wire fence and a “no trespassing” sign are posted in front of the Borrego Ranch Resort & Spa, formerly La Casa del Zorro. The resort closed in January, about two years after developer Greg Perlman purchased it.

Photo by John Gibbins - Union-Tribune

The former Borrego Valley Foods store on Christmas Circle, which was going to be renovated by Perlman, has reverted to the previous owner after Perlman stopped making loan payments.
A chicken-wire fence and a “no trespassing” sign are posted in front of the Borrego Ranch Resort & Spa, formerly La Casa del Zorro. The resort closed in January, about two years after developer Greg Perlman purchased it.

Over the decades, the economy of Borrego Springs has had its ups and its many downs.

The small desert town, surrounded by the state’s largest park, has always envisioned itself as an alternative tourist retreat for those who don’t want the hustle and bustle of Palm Springs, but still crave the austere beauty of the desert and its spring bloom of wildflowers.

Plans for large developments have come and gone and come again. The most recent dreamer, Greg Perlman, looked like the real deal a few years ago. Now the town feels he has abandoned Borrego.
…
Flash forward to today.

The grocery store is vacant and unpaid electric bills recently littered the floor.

La Casa del Zorro, renamed Borrego Ranch Resort & Spa after the sale, was remodeled at a cost of $10 million, then closed in January. All 68 employees at the 42-acre resort were laid off and “no trespassing” signs were placed at the entrances.

And now Montesoro, envisioned to be a second-home retreat for the wealthy, is struggling mightily despite the $50 million to $80 million spent on its remodeling. Only 15 homes have been built out of a planned 700 to 1,000 since the resort was renamed, Perlman said in an interview last week.

“The only promises we made is that we would improve the property — I spent $50 to $75 million dollars — now it’s up to the world to find Borrego and build there. It’s up to God to get the people to come out there and buy,” said Perlman, principal of Sherman Oaks-based GH Capital.
…

Open question to the forum:

The only way for GM to cancel union contracts was in bankruptcy. Is this route possible for states and municipalities? I was told by a NY retiree that the payment of benefits is written into the state constitution, and that there was no way to get out of it.

NJ Gov Christie was on CNBC recently. He stated that the typical state employee, who retires after 20 years, will have paid $114,000 into the retirement fund. The employee will typically derive $3.3 million in benefits during retirement. This is clearly unsustainable.

Sorry in case this is a repost; I am losing track of what I have posted from the recent tsunami tide of residential real estate gloom and doom stories in the MSM.

Report details depth of mortgage delinquency rate here

By Roger Showley, UNION-TRIBUNE STAFF WRITER

Wednesday, February 17, 2010 at 1 p.m.

Nearly 10 percent of San Diego homeowners with mortgages are two months or more behind on their payments and are likely to default and lose their homes to foreclosure, according to a new report from TransUnion, a credit and information technology company in Chicago.

TransUnion did a sampling of 27 million credit records nationally. It said 9.85 percent of San Diego properties — both owner-occupied vacation or second homes — were at least 60 days late on payments in the fourth quarter of 2009. The California delinquency rate was even higher, 11 percent, while the U.S. rate was 6.89 percent. But all three rates were much higher than the historical average of 1.5 to 2 percent, last seen in all three cases in the first quarter of 2007.

FJ Guarrera, TransUnion vice president of financial services, said most owners who are behind on two or more mortgage payments typically fall further and further behind and find it difficult if not impossible make up the backlog of payments and associated penalties.

“We know that 60-day delinquencies tend to be a very good indicator of the potential for foreclosure,” Guarrera said. “Many if not most of the homes are going to end up in foreclosure.”
…

A perfect storm is brewing for the IPCC

” Put the errors together and it can be seen that one after another they tick off all the central, iconic issues of the entire global warming saga. Apart from those non-vanishing polar bears, no fears of climate change have been played on more insistently than these: the destruction of Himalayan glaciers and Amazonian rainforest; famine in Africa; fast-rising sea levels; the threat of hurricanes, droughts, floods and heatwaves all becoming more frequent. ”

“All these alarms were given special prominence in the IPCC’s 2007 report and each of them has now been shown to be based, not on hard evidence, but on scare stories, derived not from proper scientists but from environmental activists.”

“Furthermore, it has also emerged in almost every case that the decision to include these scare stories rather than hard scientific evidence was deliberate. As several IPCC scientists have pointed out about the scare over Himalayan glaciers, for instance, those responsible for including it were well aware that proper science said something quite different. ”

“The implications of all this for the warming scare, as it has been presented to us over the past two decades, can scarcely be overestimated. The reputation of the IPCC is in shreds. And this is to say nothing of the personal reputation of the man who was the mastermind of its 2007 report, its chairman, Dr Rajendra Pachauri.”

“It was in this newspaper that we first revealed how Pachauri has earned millions of pounds for his Delhi-based research institute Teri, and further details are still emerging of how he has parlayed his position into a worldwide business empire, including 17 lucrative contracts from the EU alone”

http://www.telegraph.co.uk/comment/7332803/A-perfect-storm-is-brewing-for-the-IPCC.html

IMO if you follow the money, you’ll find many scientists that perpetuated this scam merely for the purpose of getting another grant to complete another study. Sure three are plenty of honest scientists (aka believers) but the scammers have been in control of the news and have benefitted from a compliant MSM.

Here is a tax question for the HBB brain trust. Suppose my kid earns under $16,500 a year. Can I give him or her $1,000 in spending money, in exchange for a deal for them to claim a $1,000 “Saver’s Credit” on their tax return?

Another question: If we use Turbo Tax to prepare our tax return, does this provide us with the right to underpay on the taxes we owe?

IRS credit rewards low-income savers

Gail MarksJarvis

February 28, 2010

If you can barely scrounge up enough cash to pay the bills, saving for retirement might be relegated to your good-intentions list.

But with the nation deeply in debt and concerns mounting about Social Security and Medicare, Americans are going to need more than good intentions to secure their future. And your tax return, of all places, might help you get there.

Buried deep within the tax forms is a treat for those who think they can’t afford to save. It’s called the Saver’s Credit and provides up to $1,000 from the government to put in an IRA or Roth IRA for those who qualify.

If your income is low enough, and you put any money into a 401(k), 403(b) or other retirement savings plan at work in 2009, you might qualify. Use IRS Form 8880.

Though the full $1,000 credit is available to single people with income of $16,500 or less who contribute at least $2,000 to a retirement savings account, singles making up to $27,750 can obtain smaller credits. You don’t need to save $2,000, but the largest credit comes if you do.

For married couples, the credit disappears when they make more than $55,501, and the maximum is available with income of $33,000 or less. If each spouse saves $2,000 in an IRA or 401(k), they can get up to $2,000.

Through deductions and funding IRAs, individuals can lower their income to within the technical “adjusted gross income” requirement and qualify for the credit. Financial planners who are savvy with the Saver’s Credit will often have people submit their tax return, say they are opening an IRA or Roth, and then fund it with their refund that includes the credit, if they get their refund and deposit it in the IRA by April 15.

If you use Tax Act or Turbo Tax, which are available free at http://www dot irs dot gov, the software will do the calculations so you can see what credit amount is possible. Also, free tax clinics are available through the IRS Volunteer Income Tax Assistance Program (800-829-1040) or AARP (888-227-7669). Make sure any tax preparer you use knows about the Saver’s Credit. And do not pay any preparer to get your refund early.
…

I saw a story on the CBS morning News today, about this website that helps people find local banks to transfer their money to, from the big banks. The movement seems to be gaining steam.

moveyourmoney.info/

We may not be able to get elected officials to listen, but people can vote with with their money. Too big to fail can be taken care of by the people.

From today’s NYT magazine interview with Harry Markopolos:

What was it like to spend nine years trying to persuade the Securities and Exchange Commission that Bernard Madoff was a fraud, only to learn that the agency thought he was perfectly reputable?

For nine years I was the S.E.C.’s doormat.

Now you’re triumphant, a hero in investment circles who exposes the S.E.C. as the most futile of agencies in your new book, “No One Would Listen.”
It was a trip through the twilight zone.

Why do you think the S.E.C. failed to wake up to Madoff’s $65 billion Ponzi scheme until he turned himself in?
They weren’t even asleep at the switch; they were comatose. They didn’t respond to heat and light, much less evidence of wrongdoing. They were not engaged in the fight.

This was when William Donaldson was head of the S.E.C.?
Donaldson was too tough on Wall Street, so he got the ax. Then you had Christopher Cox, because he wasn’t going to do his job. That’s why he got the job.

It’s worth a read.

My brother and I were talking about Logins run he thought the FED might eventually launch a program based on the movie

New Carousel program from the FED

Once they have calculated that you have reached the point where you can’t or won’t accumulate and pay off debt you get a letter advising you to go to carousel. There they suspend you in the air while bankers blast you from the sky with high power lasers.

Wha’ happened, Venture Capitalists?

Seems like those once-vaunted returns are much harder to come by these days. Via the NYT:

“Ten-year returns for the venture capital industry have sunk to 8.4 percent, annualized, in the decade ended last Sept. 30, from 40.2 percent in the 10 years ended Sept. 30, 2008, a number inflated by the spectacular success of Google and other dot-com companies at the beginning of that period.”

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7338857/Dont-go-wobbly-on-us-now-Ben-Bernanke.html

Deflation on the way?

Wayyyy OT but a little ozzy never hurts

http://www.dailymail.co.uk/tvshowbiz/article-1254209/SHARON-OSBOURNE-The-dark-fame–cult-celebrity-destroying-todays-children.html

Adventures in homeownership:

The bad: sewer backup today. Not on the county side, unfortunately, though that does indicate that they did their job right in fixing the long-term problems. Evil Rob is currently attempting to find a plumber who isn’t overbooked today. Thankfully, it’s a “slow drain” backup rather than a “oh god, here comes the sewage” backup, and we discovered it with running a load of wash, so it was just a bit of colored water.

The good: We just replaced the heater and AC. They discovered that a number of the vents were not connected properly, and now we’re getting heat to the back of the house. Yes, the HVAC still needed some serious replacement; there was rust inside the heater and our summer electrical bills were over $300 for a 1500 square foot house. And we’re looking into replacing the windows in the next month and a half, so that ought to help a lot too. (Single pane sliding glass doors with aluminum frames– you can feel the heat leach out of the room.) Insulation is next– the only reason the HVAC was first is that Evil Rob was really nervous about that heater.

Yeah, such things cost money. However, our costs are fairly low compared to what they were a few years back, because companies around here (Sacramento area) are desperate for work and are offering good deals. A 30% off quote is nothing to sneeze at.

So if your area has crashed hard, and there’s companies fighting for work, it might be a good time to get some quotes on upgrades.

DAAMMMMIIIITTTT

We JUST left as freaking house, and the seller accepted an offer while we were driving FREAKING HOME. I can’t handle this. There is definitely a mini-bubble right now.

Unfrickinbelievable.

SIL and hubby recently relocated to Philly. First they were planning to buy a home there, but I suppose my warnings scared them off. It does my heart good to know that at least a few friends and loved ones heed my prudent financial advice.

Underwater Mortgages Continue To Rise

Staff Report
Sunday, February 28, 2010

First American CoreLogic reported today that more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgage than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

In Philadelphia, 7.7 percent, or 69,350, of all residential properties with a mortgage were in negative equity for Q4 2009. An additional 3.6 percent, or 32,150, were in near negative equity in Philadelphia.
…

Is America truly facing a huge number of homeowners who are going to walk away from their mortgages, or do the MSM articles to that effect amount to groundless rumor mongering?

More homeowners may start to walk away
By Ilyce Glink | Tribune Newspapers

If your home is worth less than what you owe, would you walk away and allow it to go into foreclosure?

How much less? What if your home is worth 75 percent of the loan amount? What about half? At what point would you walk away?

According to research by First American CoreLogic that will be published in the coming “Negative Equity Report,” homeowners whose homes are worth less than 75 percent of the mortgage amount are most apt to simply walk away and let the home fall into foreclosure, even if they have the means to pay.

The results of the study seem to show that homeowners face a mental hurdle that melts away as the equity in their home disappears. So if the home you bought for $400,000 is now worth less than $300,000, you’ll think seriously about a strategic default, even if you could afford to continue to pay.

More than 4 million homeowners find themselves paying the mortgage on property that might never recover in value. With the housing market’s trek to recovery, the number of homeowners with homes worth less than 75 percent of the mortgage amount could jump to more than 5 million, or 10 percent of the total number of homeowners with mortgages in the U.S.

At what point is it worth simply throwing up your hands and preserving your wealth for your next move?
…

February 26th, 2010 04:50pm
Homes underwater — and not from a hurricane

by Wayne Faulkner

Looking at the recession’s effect on housing, it, well, depends where you are looking.

First, the bad news.

When taking a drive through the neighborhoods and subdivisions in and around Wilmington, would it surprise you that 16.1 percent of those mortgaged homes are underwater? And we don’t mean after a heavy rainstorm.

Negative equity, often referred to as being “underwater” or “upside down,” means that borrowers owe more on their mortgage than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both, First American CoreLogic said in a news release.

The Wilmington area has seen a 20 percent drop in home values on average since the end of the housing boom in 2006, local real estate experts say. And a lot of the homes bought in the last, say, seven years, were bought with no down payment or a small one. The banks say it — and we know it.

In Wilmington, 10,758 residential properties with a mortgage were in negative equity in the fourth quarter of 2009, according to the company, which gathers and analyzes data.

Statewide, the figures were better, with 10.2 percent of homes with a mortgage underwater. That adds adds up to 151,028.
…

Debt, Mortgages
Underwater on your mortgage? Thoughts to consider
Posted by Cheryl Costa February 25, 2010 09:22 AM

The housing market is still very unstable. One month we read that sales are strong and prices are rising. The next month we see that sales are down. One piece of discouraging news that came out recently was that in the fourth quarter of 2009 another 600,000 homeowners found themselves “underwater” or owing more on their mortgages than their homes were worth. In fact, the total number of households in this situation is now over 11 million people or 24 percent of all properties that carry a mortgage. This information, reported by First American Core Logic, a real estate research firm, tells us that many people are still really struggling.
…
…walking away is certainly not without its costs. If your financial life is going to be impacted for five to seven years anyway, it just might make more sense to hang in there and keep making the mortgage payments. No one can accurately predict what the real estate market might look in 2015 — perhaps by then your situation could be dramatically different.

I’m fully prepared to retract earlier skeptical statements I posted here about literal truth of the Biblical Great Flood. At least so far as regards residebtial real estate, it appears it may be possible for the whole world to become submerged.

Report: 22 percent of Hampton Roads homes with mortgage are “underwater”
Thursday, February 25, 2010 10:55 PM
(Source: Daily Press)
By Veronica Chufo, Daily Press, Newport News, Va.

Feb. 25–About 22 percent of Hampton Roads homeowners with a mortgage owe more on their homes than they’re worth, according to a new report.

Nationally, 24 percent of residential properties with a mortgage were in “negative equity,” up from 23 percent at the end of the third quarter, according to the fourth-quarter report released by First American CoreLogic this week.

Negative equity, also called being “underwater” or “upside down,” occurs because of a decline in home value, an increase in mortgage debt, or both. It’ll probably get worse before it gets better, said James Koch, an economist and president emeritus of Old Dominion University.

“This is not going to improve until the job market and the economy in Hampton Roads improves,” Koch said. “The housing market in Hampton Roads very closely tracks employment numbers. Not only have those numbers gotten a little bit worse, the outlook for the future isn’t especially good, either.”
…

Wednesday, February 24, 2010, 12:38pm EST
44% of area’s mortgages are underwater
Jacksonville Business Journal - by Christian Conte Staff writer

* Home prices continue slide from 2008
* Oregon foreclosure rate soars
* Report: Foreclosures, loan delinquency up
* RealtyTrac: Tennessee foreclosure filings fall in 2009
* Report: Memphis home prices decline in November

More than 44 percent, or 147,498 of the residential property mortgages in Jacksonville, were in negative equity in the fourth quarter, and another 4.9 percent, or 16,270 were near negative equity, according to First American CoreLogic Inc.

Jacksonville’s negative equity percentages were nearly double the national average of 24 percent. Nationally there were 11.3 million residential properties in negative equity, up from 10.7 million and 23 percent at the end of the third quarter, according to a new report.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgage than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

According to the report by Santa Ana, Calif.-based real estate information company First American CoreLogic, 48 percent of Florida’s residential mortgages were under water in the fourth quarter. Florida is also one of five states where negative equity is concentrated. Nevada, which had 70 percent of all of its mortgaged properties underwater, had the worst concentration of mortgages under water. The other states include Arizona at 51 percent, Michigan at 39 percent and California at 35 percent.

“Negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners,” said Mark Fleming, chief economist with First American CoreLogic, in a statement.
…

Nevada’s 70% Underwater Mortgages Lead Negative Equity Trend
2/24/2010
* By Heather Anderson

Nearly one in four mortgages nationwide was in negative equity status as Dec. 31, 2009, up 600,000 from third quarter, according to a report released yesterday by First American CoreLogic.

Nevada credit unions are struggling with the nation’s worst equity situation, as 70% of all borrowers owe more than their homes are worth. Arizona follows with 51%, Florida with 48%, Michigan with 39%, and California rounds out the top five with 35% of all mortgages underwater.

Nevada’s statewide loan-to-value ratio is 123%, underwater nearly $25 billion. Arizona and Florida follow with 95% and 91% LTV respectively. Georgia is next at 80%.

News that California’s housing market is stabilizing showed in equity numbers; compared to other high negative-equity states, California had the smallest increase during the fourth quarter, only 0.4%. Nevada, Georgia and Arizona experienced the largest increases.
“Negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners,” said Mark Fleming, chief economist with First American CoreLogic. Fleming said because he expects home prices to only increase slightly during 2010, negative equity will remain a “dominant issue” in mortgage markets for “some time.”
…

A few questions about the Fed’s housing market interventions seem warranted:

3) What will happen to housing prices when this support is withdrawn?

Fed’s balance sheet liabilities hit record
NEW YORK
Thu Jan 14, 2010 5:41pm EST

NEW YORK (Reuters) - The U.S. Federal Reserve’s balance sheet rose to a record level in the latest week, boosted by its ongoing efforts to support the mortgage market, Fed data released on Thursday showed.

The Fed’s balance sheet — a broad gauge of its lending to the financial system — rose to $2.274 trillion in the week ended January 13 from 2.216 trillion in the prior week.

After declining early last year, the balance sheet generally has been accumulating mass amid the Fed’s asset-buying, or quantitative easing, program.

Given that this program has led the central bank’s holdings of agency debt and mortgage-backed securities to grow to more than $1 trillion, the balance sheet rise reported on Thursday came as little surprise.

“It is probably expected,” said William Larkin, fixed income portfolio manager at Cabot Money Management in Salem, Massachusetts.

The rise in the balance sheet came on the back of a jump in its holdings of agency mortgage-backed securities, which rose to $968.59 billion in the week ended January 13 from $908.74 billion in the previous week.

The Fed’s holdings of agency debt totaled $160.83 billion in the week ended January 13 versus $159.88 billion the previous week.

By the end of March, the Fed plans to have bought $1.25 trillion worth of mortgage-backed securities and about $175 billion worth of agency debt.

At that point the balance sheet growth would be expected to taper off, though some say the Fed will find it difficult to end by that deadline if the economy hasn’t improved markedly.

“The quantitative easing component that’s going to end in March is probably going to be phased out longer than that,” said Larkin.
…

I guess the Wall Street Journal writers never heard of the Plunge Protection Team? Always bear in mind, “A closely watched pot never boils over.”

Markets Flash a Warning

Some experts say this year’s lockstep declines by stocks and commodities are an ominous sign that both markets could be jolted by everything from the euro-zone sovereign-debt crisis to sluggish economic recovery.

* ABREAST OF THE MARKET
* MARCH 1, 2010

Tandem Moves by Stocks, Commodities Flash Warning

By LIAM PLEVEN

Here is one sure sign that some investors are worried about a potential train wreck in the markets: Stocks and commodities are traveling down parallel tracks again.

As of Friday’s close, the Dow Jones Industrial Average was down 1% in 2010. The Dow Jones-UBS Commodity Index, which tracks 19 commodities from aluminum to zinc, is down 3.8%. Last week, the benchmarks swung in sync with each other on two different days, as they have a number of times in recent weeks.

It isn’t supposed to happen like that. For much of the past decade, oil prices often were propelled by concerns of looming oil shortages or rising demand in China. Stocks were far more responsive to corporate profits and irrational exuberance that eventually came back to haunt the market.

As a result, stocks and commodities sometimes went in opposite directions. One of the most dramatic examples: The Dow tumbled 10% in June 2008, while oil was up 10%.

That changed as the worst of the financial crisis hit, which is why some experts now have an uncomfortable feeling of deja vu. They say this year’s lockstep declines by stocks and commodities are an ominous sign that both markets could be jolted violently by everything from the euro-zone sovereign-debt crisis to sluggish economic recovery.

“Lately, we’ve certainly seen the correlations be very high. There should be some deviation,” says Nicholas Johnson, co-manager of Pimco’s CommodityRealReturn Fund. The mutual fund has about $16 billion in assets.
…

This is great news, as it will add to the extant inventory glut, helping to restore housing price affordability.

* The Wall Street Journal
* REAL ESTATE
* MARCH 1, 2010

As Loans Dry Up, Builders Work for Banks
Lenders Seize Half-Built Subdivisions, Then Offer Contract Jobs to Finish Them

By JIM CARLTON

(Workers carried supplies through the Liberty Hill housing development in Las Vegas Wednesday.)

LAS VEGAS—Home builders in some of the nation’s hardest-hit housing markets are going to work directly for banks, in a little-used arrangement that is helping to ameliorate conditions in some battered local economies.

The builders traditionally got loans from banks to build homes, but that credit has largely dried up. The contract work builders are getting is welcome as many of them struggle to stay afloat.

Randy Schaefer, who has been building homes in this city since 1981, recently began working for a bank for the first time. In September, construction lender Housing Capital Co. hired him to help finish a subdivision of 170 homes in the desert outskirts here. While Mr. Schaefer is only being paid a flat fee instead of any profit on the three to four homes a month he has agreed to build, it enables him to keep his eight workers employed.

“It helps stop the bleeding,” said Mr. Schaefer, 58 years old, who slashed his work force from 17 after the housing market tanked in Las Vegas starting in 2007. “It’s not my first choice, but it helps keep me in business.”
…

The graph that accompanies this article is interesting. It shows the index was continually above the break-even level of 50 from 2005-2007, then dove into the basement. Since 2008, it has continually remained below 50, providing clear indication there is no real estate recovery in view of the architecture profession just yet.

* REAL ESTATE
* FEBRUARY 25, 2010

Continued Declines Start a Third Year

The Architecture Billings Index began its third year of negative conditions. The index was 42.5 in January, down sharply from a revised reading of 45.4 in December. The latest reading indicates a continued decline in demand for design services. Any reading above 50 indicates an increase in billings. The index is derived from a monthly survey of architectural firms by the American Institute of Architects.

It seems at this point that bubble concerns have inundated the globe with tsunami waves of financial panic. We are a long way from 2005, when only tinfoil hat wearing bloggers could see bubbles.

* The Wall Street Journal
* REAL ESTATE
* FEBRUARY 23, 2010, 12:15 A.M. ET

Hong Kong Land Sale Raises Worry of a Bubble

By JONATHAN CHENG And ARIES POON

HONG KONG—Strong results in a Hong Kong government land auction are the latest sign that the city’s real-estate market is surging higher after a brief lull, as government officials here and elsewhere in the region grapple with how to cool off overheating property prices.

On Monday, blue-chip developer Sun Hung Kai Properties Ltd. agreed to pay 3.37 billion Hong Kong dollars (US$434 million) bid for a 130,000-square-foot site in the suburbs of Hong Kong. That price, reached after an intense bidding session, was above the average US$362 million forecast of six surveyors and analysts polled earlier by Dow Jones Newswires, and was 69% above the reserve price of US$258 million.

The big purchase came just after Sun Hung Kai sold 900 apartment units in a major new residential complex over the weekend for a total of US$541 million. The units, ranging from 400 to 1,400 square feet, sold for about US$700 per square foot, a steep premium to other apartments in the area. That indicates the mass-residential market could be vulnerable to the speculation that led to a jump of about 50% in Hong Kong’s luxury-apartment prices last year.
…

You will have to pry the myriad housing subsidies out of REIC lobbyists’ cold dead hands.

* The Wall Street Journal
* MARCH 1, 2010

Bid to Curb Mortgage Tax Break Falters

By JAMES R. HAGERTY

The latest effort to scale back some tax deductions on mortgage interest, one of the nation’s most-enduring tax breaks, is finding little support in Congress.

President Barack Obama’s latest budget proposal, released in February, includes a provision that would shrink deductions for mortgage interest, real-estate taxes, charitable contributions and other items for married couples with annual incomes of more than $250,000, or individual filers earning more than $200,000. Under the proposal, such taxpayers would save 28 cents of tax liability for every $1 of mortgage interest or other eligible expenses, down from 35 cents now.

But the proposal has gained no traction in Congress so far. Members from both parties are concerned about how it would affect both the housing market and charitable contributions, says Matthew Beck, a spokesman for the Democratic majority on the House Ways and Means Committee.

The administration believes the proposal would reduce the deficit and “distribute the cost of government more fairly among taxpayers of various income levels,” says a Treasury spokeswoman.

But lobbyists for the real-estate industry say scaling back the deduction would hurt demand for housing at a time when the market remains fragile. “It seems very counterintuitive to impose this kind of pain on an industry that’s already suffering more than any industry in America,” says Jerry Howard, chief executive of the National Association of Home Builders.

Lucien Salvant, spokesman for the National Association of Realtors, says the proposal “amounts to a tax increase on an important group of homeowners and would rob buyers of the incentive to move up in the housing market.”

The Treasury rejects those arguments. “This proposal is unlikely to have any real effect on the housing market since tax benefits are only one small part in determining the overall demand for high-end housing,” the Treasury spokeswoman says.
…

Gary Trudeau seems to have glommed on to the HBB’s view of banksters, as exemplified in today’s Doonesbury comic strip.

A Banker’s Progress

1. (High school student dreaming of the future): “Hope!”

2. (College student dreaming of the future): “I hope to do something well…”

3. (At college graduation): “I hope to do something of value well and be fairly paid.”

4. (In entry-level corporate post): “I’d like to be paid for doing something of value fairly well.”

5. (Now a middle manager): “I want to be valued and paid fairly well for doing something.”

6. (Now a banker looking out of the corner office window): “I deserve to be paid well for doing something of no value!”

7. (A banker addressing his corporate board): “I demand to be paid obscenely well for for destroying value!”

8. (Banker addressing his alma mater’s graduating class): “Always hold on to your values!”

The Financial Times
Emerging market rate risk unnerves investors
By David Oakley in London

Published: February 28 2010 18:55 | Last updated: February 28 2010 19:58

Investors are pricing in big interest rate rises in emerging market economies this year, sparking fears of a stock market sell-off and prompting worries over the global recovery, which has been driven by the developing world.

Emerging market interest rate expectationsWith the withdrawal of cheap central bank money in the industrialised world coupled with the increasing tensions in the eurozone because of the Greek debt crisis, sharp rate rises in emerging markets could deliver a further blow to the growth outlook.

Investors are concerned that emerging market central banks might be forced to tighten monetary policy quickly to keep a lid on the build-up of inflationary pressures.

“Although central banks are right to introduce policies to restrain inflation, they must not tighten too far, too fast,” says Nigel Rendell, senior emerging market strategist at RBC Capital Markets.

Significant rate increases are being forecast in Brazil, Turkey, Mexico and India. Brazilian forward markets are pricing in a 256 basis point rate increase to 11.50 per cent by the end of the year.

Turkish markets, meanwhile, are pricing in a 186bp rise to 9.05 per cent and Indian markets a 119bp increase to 4.66 per cent. Mexican markets are currently pricing in a 115bp rise to 5.81 per cent by the year-end

In China, bank lending rates are not expected to rise sharply. But Beijing is restraining its economy by raising capital reserve requirements for commercial banks.
…

An oracle finds his voice:

Feb. 27, 2010, 11:28 a.m. EST

Buffett calls out financial leaders
Berkshire Hathaway chairman suggests Wall Street execs have gotten off lightly

By Sam Mamudi, MarketWatch

NEW YORK (MarketWatch) — Warren Buffett, the world’s most famous investor, launched an attack Saturday on big-bank executives, calling for penalties for those who led their companies to near-ruin.

In his latest letter to shareholders, the chairman of Berkshire Hathaway Inc. decried the fact that while shareholders suffered during the recent crash, the top people at the banks got off relatively lightly.

“It has not been shareholders who have botched the operations of some of our country’s largest financial institutions,” wrote Buffett. “Yet they have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure. Collectively, they have lost more than $500 billion in just the four largest financial fiascos of the last two years. To say these owners have been ‘bailed-out’ is to make a mockery of the term.

“The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style,” added Buffett.
…