The Housing Bubble

Flees Newport Beach…to India…he probably already has a customer Service job with AT&T…

Family charged in $16 million real estate fraud:
March 9th, 2010, by Marilyn Kalfus, real estate reporter OC Register

Lohia, Soni, and Suniti Shah were arrested. An arrest warrant has been issued for Dinesh Shah, who is believed to be in India.

Four members of an Orange County family — including a mother and two daughters — have been charged in a conspiracy to commit more than $16 million in real estate fraud by forging documents and buying homes using “straw buyers,” the Orange County District Attorney’s office says.

The defendants:

* Sushama Devi Lohia, 71, Newport Beach. Felony charges include 13 counts of conspiracy to commit a crime, 19 counts of forgery, 6 counts of identity theft and 4 counts of recording false and forged instrument and other charges. She is the mother of defendants Supriti Soni and Suniti Shah.
* Supriti Soni, 49, Corona del Mar. Felony charges include eight counts of conspiracy to commit a crime, 10 counts of forgery and other charges. In addition, prosecutors are seeking a stiffer sentence for her, if she’s convicted, because she was imprisoned in 2003 for perjury.
* Suniti Shah, 48, Newport Beach. Felony charges include five counts of conspiracy to commit a crime, nine counts of forgery, six felony counts of identity theft, four counts of recording a false and forged instrument and other charges.
* Dinesh Valjeebhai Shah, 60, Newport Beach. Felony charges include two counts of conspiracy to commit a crime, four counts of forgery, four counts of identity theft, four counts of recording a false and forged instrument and other charges. He is Suniti Shah’s husband.

German Exports Unexpectedly Slumped in January, Bloomberg March 10, 2010,

German exports unexpectedly slumped in January, erasing December’s jump and ending a four-month streak of gains.

With rising unemployment damping consumer spending, Germany is relying on exports to drive a recovery from its worst recession since World War II. While Bundesbank President Axel Weber yesterday warned that the coldest winter in 14 years may cause the economy to contract this quarter, he said robust factory orders and industrial production show the upswing is “essentially” intact.

“Today’s data does not fit at all with the other industrial data we’ve been getting out of Germany, so the decline must be driven by one-off factors and a backlash from December,”… “It doesn’t change the overall trend that exports are going to be the growth driver.”
http://www.businessweek.com/news/2010-03-10/german-january-exports-unexpectedly-slump-after-december-jump.html

U.K. Industrial Production Drops Unexpectedly In January 3/10/10 rttnews

Industrial production in the U.K. registered an unexpected decline at the start of the year, showing the first monthly fall since August 2009…”Today’s data mark an inauspicious start to 2010,”…Total production fared a little better than manufacturing as energy extraction and supply increased in January, the economist noted.

…it is possible that the weakness in January was due to disruptions in production caused by bad weather. Also, decline in output may reflect temporary factors and reverse in February. Still, production will be on course to post modest positive rise in the first quarter of this year as a whole, the economist said…Elsewhere today, Prime Minister Gordon Brown said the economic recovery is still in early stages and it remains very fragile.
http://www.rttnews.com/ArticleView.aspx?Id=1235839&SMap=1

Australia home loans unexpectedly fall to decade low
2010-03-10 (Forex Pros)

The number of home loans approved in Australia unexpectedly tumbled to a decade low in January, official data showed on Wednesday…Economists had in fact expected a 2% rise in January.

The decline followed a series of interest rate hikes by Australia’s central bank and the phasing out of a first-home buyers’ grant boost, both of which sapped demand.
http://www.forexpros.com/news/forex-news/australia-home-loans-unexpectedly-fall-to-decade-low-124783

Czech February Inflation Unexpectedly Slowed on Fuel Prices Bloomberg
March 09, 2010,

Czech inflation unexpectedly slowed in February as growth in fuel prices was capped, outweighing the higher costs in beverages and housing prices…

The central bank said last month risks in its new 12- to 18-month forecasts were “balanced overall” and that it expects the inflation rate to rise above its 2 percent target in the fourth quarter, while still staying within the tolerance band of plus or minus 1 percentage point. It should fall back toward the targeted level in the first quarter of 2011, it said.
http://www.businessweek.com/news/2010-03-09/czech-february-inflation-unexpectedly-slowed-on-fuel-prices.html

Plan Now For Unexpected Early Retirement 3/8/10 Murfreesboro post

Just how big a problem is this? Consider the following statistics from the Employee Benefit Research Institute’s 2009 Retirement Confidence Survey:

• Forty-seven percent of retirees left the work force earlier than planned.
• Of that total, 42 percent did so because of health problems or disability, 34 percent left due to their employers’ downsizing or closure, and 18 percent left to care for a spouse or another family member.

So here’s the bottom line: Even if you think you’re going to work until, say, 65, and you want to work until 65, you may be forced to quit at 62, 60 — or even younger. And during those years you won’t be working, you’re not just losing out on earned income — you’re also not contributing to your 401(k) or other employer-sponsored retirement plan, and you might lose your ability to contribute to your IRA as well. At the same time, your retirement lifestyle expenses have begun earlier than you anticipated — and many people find that these costs aren’t much, if any, lower than the expenses they incurred while working.
http://www.murfreesboropost.com/plan-now-for-unexpected-early-retirement-cms-22323

Well I’ll be darned. This was unexpected. Will it happen? Could it happen in the USA?

Public sector pay freeze expected (In the UK) 3/10/10 Press Association

Thousands of top-earning public sector workers are bracing themselves for a pay freeze as the recommendations of (an) independent salary review body are published.

Senior civil servants, the judiciary and senior NHS managers are among those covered by the Senior Salaries Review Body (SSRB) report to be released on Wednesday morning.

Mr Darling even signalled recently that generous public sector pay and bonus packages might have to be reduced.

The SSRB report is expected to look at the issue of performance-related bonuses and the practice of linking the pay of top public executives with their private sector equivalents…The SSRB is independent of the Government but its recommendations are not binding and ministers will have the final word.

http://money-news.dailyfinance.co.uk/article/2010/03/10/public_sector_pay_freeze_expected

Chilling food for thought from Urban Land Instutute via the Sarasota Herald Tribune.

http://www.heraldtribune.com/article/20100215/COLUMNIST/2151011/2305/BUSINESS?Title=A-look-at-the-housing-market-that-may-induce-some-chills

“People in their mid-60s will be stuck in their homes because the values have fallen below what is owed on the property.

“Job prospects will dim for younger baby boomers who cannot sell these “underwater” homes to move up to a better career in a different town.

“Because the real median household income has not increased since 2000, people in their late 30s and mid-40s will not be able to move up into bigger homes as their families grow.

“When 20-somethings finally move out, it will most likely be to a rental unit to avoid the underwater situation that they see is now stressing out their parents.

“Those projections for the next decade come from a new report by the Urban Land Institute, a Washington, D.C.-based nonprofit that works to promote responsible use of land and to create thriving communities.

“Florida’s case is particularly dramatic,” …. “It has moved from being the state with the most net domestic migration from July 2001 to July 2005 down to 45th with a loss of 37,179 people to other states from July 2008 to July 2009.

“In terms of its total growth rate, with foreign arrivals included, Florida now ranks 32nd, down from third in 2002,” McIlwain said.

“Those projections for the next decade come from a new report by the Urban Land Institute, a Washington, D.C.-based nonprofit that works to promote responsible use of land and to create thriving communities

The line between jobless benefits and welfare. ~ MSNBC 3-9-10
Government faces question of how long should temporary payments go on.

Millions of Americans have been forced to rely on unemployment payments for extended periods as the nation struggles through its longest period of high joblessness in a generation, and critics are taking aim, saying that the Depression-era program created as a temporary bridge for laid-off workers is turning into an expensive entitlement.

About 11.4 million out-of-work people now collect unemployment compensation, at a cost of $10 billion a month. Half of them have been receiving payments for more than six months, the usual insurance limit.

The ranks of the unemployed include Jerome Boyd, 48, a father of four who lives in Arlington. He was laid off in August from his job as a sous chef at Gaylord National Hotel at National Harbor.

He receives $1,200 a month in unemployment benefits, less than half the $3,000 a month he brought home from his job. Now he is often behind paying about $1,500 in rent, a car payment and other expenses. “I’m stealing from Peter to pay Paul,” he said, adding: “There’s the cable, the phone bill. I owe the bank overdraft fees and the insurance is lapsing a little bit. I can’t take my kids shopping for school clothes because I don’t have enough to do that.”

The checks may be meager, but Boyd does not know what he would do without them. “I depend on this money,” he said. “I’m wondering every other week if it is going to keep coming in or not. It’s stressful, and especially when you’re trying to look for a job, too.”

“I can’t take something that’s minimum wage because I just won’t be able to pay my bills,” he said. “I’d have to work three jobs to pay the bills, and that doesn’t make sense.”

“…saying that the Depression-era program created as a temporary bridge for laid-off workers is turning into an expensive entitlement”

Wells you has tah be “quick on your feet” & helps if your “former” company sent you traveling around so you could charge flights & hotels…like this guy:

Homeless man lives off hotel points from former life
By PEGGY LOWE THE ORANGE COUNTY REGISTER

“I’m not going to claim I was cheated out of my house,” Kennedy says several times. “I didn’t pay my mortgage.”

Reference to the “chilling outlook I tried to submit earlier today

http://www.uli.org/sitecore/content/ULI2Home/News/MediaCenter/PressReleases/2010%20archives/Content/~/media/Documents/ResearchAndPublications/Fellows/McIlwain/HousinginAmerica.ashx

Required reading for HBBers

Just in time for the red hot spring sales season: A brand new killer app to help you with your real estate investing decisions!

* The Wall Street Journal
* TECH JOURNAL
* MARCH 9, 2010

Home Buyers Check Out Apps
Smart-Phone Tools Use GPS Technology to Provide Local Housing

By JAMES R. HAGERTY

Just in time for the spring house-hunting season, smart-phone applications that provide information to home buyers are proliferating.

Real-estate firms have long vied to have the most engaging Web site to attract people searching for homes. Now they also feel compelled to have an “app” for Apple Inc.’s iPhone and other smart phones. Rather than being moneymakers—brokers tend to offer their apps for free—the apps are seen as a tool to make the home-buying process easier.

“I don’t think it’s driving revenue for us, but it’s making customers happier,” says Glenn Kelman, chief executive of Redfin Corp., a Seattle-based broker that operates in nine states.

Many of the apps’ functions—such as listing which nearby homes are for sale and which have sold recently, then fetching pricing and other data—have long been available via traditional Web sites. But the apps combine those functions with smart phones’ global-positioning technology, so that users can get information on their immediate surroundings without having to type the address or zip code.

“It’s like having your laptop with you on the ride,” says Rachel Ashby, a marketing manager in Seattle who is using Redfin’s app in her search for a house.
…

I agree cable is a waste of money. The question is has the internet become a basic utility? Maybe he is talking about the internet bill.

U.S. Concrete warns future is in doubt.

LONDON (MarketWatch) — U.S. Concrete Inc. on Wednesday reported a narrower fourth-quarter net loss, but warned that without a successful restructuring there’s “substantial doubt about our ability to continue to operate as a going concern.”

Economy ‘Far too Close’ to Double Dip: Roubini
Wednesday, 10 Mar 2010 ~ CNBC.com

Poor economic data in the US coupled with Europe’s debt crisis are contributing to an increase of the risk of the US economy going through a double-dip recession, Nouriel Roubini, who predicted the 2007 financial crisis, wrote in a research paper.

At best, the US economy is headed for a U-shaped recovery this year, Roubini said. That has been his prediction in recent months.

The US faces challenges in the second half, especially as fiscal stimulus measures fade, and “appears far too close to the tipping point of a double-dip recession,” he said.

A developer here in Boise has finally thrown in the towel on a planned-community development, and sold the property to the City of Boise.

The city’s $4.1 million deal to secure Hammer Flat means The Cliffs, a proposed 707-acre development, will become a permanent winter home for pronghorn, elk and one of the largest mule deer herds in the state….

Several years ago, the Idaho Department of Fish and Game partnered with the city and the Land Trust of the Treasure Valley to try to purchase Hammer Flat. They couldn’t raise enough money, and the land eventually was sold to the Johnson family in 2004 for $9.12 million. In late 2005, the Johnsons announced plans to build a planned community.

So Skyline lost $5 million on the failed development.

Where did all of California’s vast riches go?
State university students left holding the bag want to know.

You can be sure that when throngs of students are gathering at the Sather Gate, the winds of political change are gathering speed.

The Wall Street Journal
California’s College Dreamers
When will students figure out the politicians have sold them out?

Hundreds of University of California students rallied against a 32% tuition hike last week. Let’s hope their future employers get a better work product. With just a little research, the students could have discovered that compensation packages won from the state by unions were a big reason for the hike.

Last year, the state cut funding to the 10-campus system to $2.6 billion from $3.25 billion. To make up for the reduction in state funding, the UC Board of Regents increased tuition to $10,300, about triple 1999’s cost.

Understandably, students have gone wild. The UC system is supposed to offer low- and middle-income students a cheaper alternative to a private college education. Now a year at a UC school can cost students as much as at many private schools.

Students block Sather Gate on the University of California at Berkeley campus Thursday, March 4, 2010.

Who’s to blame? UC President Mark Yudof rightly notes he had no other means of closing the university’s budget gap. The university used $300 million in reserves last year and cut staff salaries by furloughing them between 11 and 26 days this year. Governor Arnold Schwarzenegger says “we’ve done everything we could, but the bottom line is it’s not enough. We need to put pressure on the legislature not only this year in a year of crisis, but in the future.”

The California legislature? Good luck with that. In 1999, the Democratic legislature ran a reckless gamble that makes Wall Street’s bankers look cautious. At the top of a bull market, they assumed their investment returns would grow at a 8.25% rate in perpetuity—equivalent to assuming that the Dow would reach 25,000 by 2009—and enacted a huge pension boon for public-safety and industrial unions.

The bill refigured the compensation formula for pension benefits of all public-safety employees who retired on or after January 1, 2000. It let firefighters retire at age 50 and receive 3% of their final year’s compensation times the number of years they worked. If a firefighter started working at the age of 20, he could retire at 50 and earn 90% of his final salary, in perpetuity. One San Ramon Valley fire chief’s yearly pension amounted to $284,000—more than his $221,000 annual salary.

In 2002, the state legislature further extended benefits to many nonsafety classifications, such as milk and billboard inspectors. More than 15,000 public employees have retired with annual pensions greater than $100,000. Who needs college when you can get a state job and make out like that?

In the last decade, government worker pension costs (not including health care) have risen to $3 billion from $150 million, a 2,000% jump, while state revenues have increased by 24%. Because the stock market didn’t grow the way the legislature predicted in 1999, the only way to cover the skyrocketing costs of these defined-benefit pension plans has been to cut other programs (and increase taxes).

This year alone $3 billion was diverted from other programs to fund pensions, including more than $800 million from the UC system. It is becoming clear that in the most strapped liberal states there’s a pecking order: Unions get the lifeboats, and everyone else gets thrown over the side. Sorry, kids.

Get ready for more. The governor’s office projects that over the next decade the annual taxpayer contributions to retiree pensions and health care will grow to $15 billion from $5.5 billion, and that’s assuming the stock market doubles every 10 years. With unfunded pension and health-care liabilities totaling more than $122 billion, California will continue chopping at higher-ed.

Mr. Schwarzenegger has routinely called for pension reform, but the Democratic legislature has tossed aside the Terminator like a paper doll.
…

This piece brings to mind the mob’s request when Jesus was dying on the cross: “Give us Barabas.”

* The Wall Street Journal
* OPINION: WONDER LAND
* MARCH 3, 2010, 9:33 P.M. ET

Bring Back the Robber Barons
There’s a big difference between entrepreneurs who make a fortune in the market, and those who do so by gaming the government.

* By DANIEL HENNINGER

Faced with high, painful unemployment as far as the eye can see, the government naturally is here to help.

The Senate passed a $15 billion “jobs bill.” Its proudest piece is a tax credit for employers who hire a person out of work at least 60 days. The employer won’t have to pay the 6.2% Social Security payroll tax for what remains of this year. If the worker stays on the job at least a year, the government will give the employer $1,000.

As to the earlier $787 billion stimulus bill, Vice President Joe Biden praised it in Orlando this week as an engine of job creation, while he stood before a pile of broken concrete and asphalt. The subject was highways.

Finally, Barack Obama’s government now may force companies to raise wages and benefits by squeezing their federal contracts if they don’t.

Maybe there’s a better way.
***
Let’s bring back the robber barons.

“Robber baron” became a term of derision to generations of American students after many earnest teachers made them read Matthew Josephson’s long tome of the same name about the men whose enterprise drove the American industrial age from 1861 to 1901.

Josephson’s cast of pillaging villains was comprehensive: Rockefeller, Carnegie, Vanderbilt, Morgan, Astor, Jay Gould, James J. Hill. His table of contents alone shaped impressions of those times: “Carnegie as ‘business pirate’.” “Henry Frick, baron of coke.” “Terrorism in Oil.” “The sack of California.”

I say, bring ‘em back, and the sooner the better. What we need, a lot more than a $1,000 tax credit, are industries no one has thought of before. We need vision, vitality and commercial moxie. This government is draining it away.
…

Chart of the day - worldwide currency reserves.

Something to be aware of when people talk about the US$ being “the world’s reserve currency”. It is the majority, but it’s still only a percentage, and that percentage is shrinking lately. Now 61.65% as of latest data (Q3 2009), down from peak of 72.57% in 2001.

Euro is second, and was rising, though I’m guessing it’s taken a big hit the past couple of months. All other currencies are a very distant third+.

Beware ye the handwriting on the wall, profligate sovereigns!

I suppose we could continue debating about to what extent the housing bubble was cause versus effect of the broader financial crisis over the next several decades…

* The Wall Street Journal
* MARCH 10, 2010

Irish Take Bitter Medicine To Survive Age of Red Ink

By NEIL SHAH

DUBLIN—Debt-laden Ireland is winning applause from financial markets for quickly taking the kind of harsh economic medicine that countries around the world are putting off. But in this newly austere country, people like 35-year-old Robert Peelo are finding little cause for cheer.

Mr. Peelo, a police officer, expected the government to give him a 6% raise a year ago and build a new station at his post in Dundalk, not far from a town across the border in Northern Ireland where a car bomb exploded in February. Instead, Ireland has cut his take-home pay by 18% and mothballed the new facilities, leaving him and other Irish police, or Gardai, in temporary offices he calls “porta-cabins.”

Mr. Peelo says he’s paying his 30-year mortgage by cutting out vacations, skimping on paid child care for his two young children and working police shifts on Sundays. Adding to the challenge, an old Irish code prohibits him and other police from taking outside jobs.

“We know that there’s an international crisis and that our pay will be affected,” says Mr. Peelo, whose work vehicle has more than 180,000 miles on it. “But there has to be some sense in it.”

The hard choices forced upon Ireland are confronting governments around the world. The U.S. and Britain have huge budget deficits that are potent political issues. Cash-strapped cities and states in the U.S. are slashing services. The pressures are acute in the smaller members of the 16-nation euro zone, where fears of a debt default by Greece have shaken the Continent.

Late last year, Ireland looked a lot like Greece. The financial crisis coincided with a housing bust that left Ireland’s banks in terrible shape, requiring a government rescue. Ireland’s fiscal deficit rose to almost 12% of gross domestic product—a shade under Greece’s 12.7%.

But unlike Greece—where protests and strikes are expected to escalate this week after the government unveiled new spending cuts and tax increases after months of foot-dragging—Ireland took swift measures to snuff out fears of a default.
…

No one could’ve seen this coming: Chicago’s condo market continues to suffer from one-time condomaniacs turned into second-guessers, backpedal artists, or Johnny-come-lately rationalists.

Foreclosure suit tarnishes Silver Tower condo project
By: Alby Gallun March 10, 2010

(Crain’s) — Bank of America has filed a $40-million foreclosure lawsuit on a 225-unit River North condominium project in what could be a preview for other slow-selling downtown high-rises.

The developer of the 38-story Silver Tower didn’t pay back B of A’s loan by its Dec. 29 due date, according to the suit, filed in January in Cook County Circuit Court. The developer, an affiliate of Oak Brook-based Metropolitan Real Estate Co., has closed on sales of just 76, or 33%, of the condos in the project at 303 W. Ohio St., property records show. Buyers began moving in last August.

Silver Tower is the biggest completed downtown condo project to be hit with a foreclosure suit in the current downturn, but others may follow this year as more construction loans mature and more lenders run out of patience. So far, banks have preferred to modify loans, giving developers more time to sell their condos.

Housing consultant Tracy Cross blames Silver Tower’s woes on the high number of buyers who signed contracts for their condos when times were good but don’t show up when it comes time to close on their units. Some can’t get a loan, while others have soured on the investment as condo prices have fallen.

“The culprit is the walk-away rate,” says Mr. Cross, president of Schaumburg-based Tracy Cross & Associates.

Hope springs eternal …

Hines puts 300 N. LaSalle on the block
By: Thomas A. Corfman March 10, 2010

(Crain’s) — Despite the dormant market for mega-deals, developer Hines Interest L.P. is putting up for sale a new skyscraper anchored by Kirkland & Ellis LLP that could fetch a blockbuster price of $620 million.

The 1.3-million-square-foot tower opened early last year and is 95% leased, with Kirkland accounting for more than half the building …

Mr. McDermott declines to comment on the potential sales price. Some sources say bids could range from $570 million to $620 million. Houston-based Hines prefers an outright sale, but would consider selling a joint venture stake, Mr. McDermott adds.

The development firm, which a year ago was forced by the credit crisis to kill plans for a 1.1-million-square-foot tower on the west bank of the Chicago River, is now hoping the real estate finance markets are about to turn.

“Capital markets come and go, and move more quickly than anyone expects them to,” Mr. McDermott says.

Last year, just a single major office building was sold in downtown Chicago, for just $60.3 million.

Gov. Pat Quinn budget proposal: Borrow $4.7 billion
Ballooning debt, cuts in education, services could be opening gambit in bid to raise taxes.

SPRINGFIELD — - Gov. Pat Quinn on Tuesday unveiled a caustic budget plan that would borrow billions of dollars to stay afloat and push even more debt down the road, hoping to persuade leery lawmakers to instead raise taxes in an election year.

Quinn aides warned the plan would cost some 13,000 teachers and staff their jobs, cut off poor seniors from help in paying for costly prescriptions and shut down some health care programs for the indigent. But even after about $2 billion in cuts, the state would still be $11 billion in the hole.

The administration’s warnings served as the precursor for the Democratic governor’s Wednesday budget address before a joint session of lawmakers who want to wrap up their business in two months so they can focus on their re-election.

Quinn is expected to restate the unsuccessful call he made last year for higher taxes. But the political dynamics for a tax increase have grown only worse as the election-seeking Democratic governor confronts campaigning legislators who fear a voter backlash in the Nov. 2 general election.

Not sure if rising pessimism at small businesses is a recovery sign or a double-dip recession warning? I suppose this news might be interpreted from a contrarian perspective as suggesting that the business community is collectively working through the recovery from irrational exuberance.

Pessimism up at small businesses
Survey shows jitters persist about economy

By Dean Calbreath, UNION-TRIBUNE STAFF WRITER

Lori Weisberg, UNION-TRIBUNE STAFF WRITER

Tuesday, March 9, 2010 at 9:08 p.m.

Small-business owners remain skittish about the economy, with pessimism increasing slightly over the past month, according to a survey released Tuesday by the National Federation of Independent Businesses.

The fallback in confidence is occurring even as the economy seems to have bottomed out, with retail sales picking up nationwide and an increasing number of small businesses preparing to add workers.

“News about the economy is for the most part improving and therefore is an unlikely source of small-business uncertainty and declining optimism,” said William Dunkelberg, the federation’s chief economist. Instead, he said, small businesses are more skeptical of how politicians are handling the economy.

Yesterday’s survey showed that confidence among small businesses dipped 1.3 percent in February, back to December’s level.

But the poll also found that over the next six months, 13 percent of small businesses plan to create new jobs, up three points from January, and 8 percent plan to lay off workers, down two points from the previous month.

A similar poll, conducted by the Manpower temporary worker firm, showed that 15 percent of employers in San Diego County plan to hire new workers in the next quarter, compared with 11 percent who plan to lay off workers. Both numbers are a 1 percentage point improvement over last quarter.

Nevertheless, consumer confidence in the county slid between January to February, based on telephone surveys conducted by The San Diego Union-Tribune, mostly because of concerns that the business conditions will remain stagnant instead of improving.
…

Good thing the stock market is rallying, to take Wall Street’s attention away from the never-ending real estate crash underway behind the curtain of the MarketWatch and U.S. News & World Report financial headlines.

* The Wall Street Journal
* MARCH 10, 2010, 9:34 A.M. ET

Commercial Real Estate Owners Beginning To Walk Away From Properties

By Prabha Natarajan
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Commercial real estate owners are walking away from properties that have become untenable as investments, just as homeowners have walked away from houses they can no longer afford to pay off or sell.

The latest commercial property owner to do this is Vornado Realty Trust (VNO), the $13 billion real estate investment trust, which warned last week that it would walk away from two loans totaling $235 million.

The trend is likely to escalate in coming months as more loans mature and refinancing remains difficult and costly. As with residential properties, there is less incentive for owners to hold on to properties when the buildings are worth less than what is owed on their mortgages.

“Frankly, I am surprised that we have not seen a lot more,” said Rob Little, chief investment officer of Cornerstone Real Estate Advisers LLC, with $32 billion under his management.

Commercial mortgages are in the throes of a painful correction. Delinquency rates are up, property values are nearly 40% off from their peak valuations, occupancy rates and rents are down. Further, as loans mature, many find it difficult to obtain fresh capital, and so they seek extensions on current loans.

However, of late, some commercial property owners find that it makes more economic sense for them to stop making payments and servicing the debt, and walk away from a property. Since most of these commercial loans are non-recourse, there is no direct obligation or claim on the owners’ assets.

In the residential market, the phenomenon is referred to as “jingle mail,” a reference to homeowners who surrender their property by mailing the keys to the lender rather than go through a formal foreclosure process.

An added factor is that in this recent credit cycle the stigma attached to commercial real estate developers who walk away–which previously meant investors would boycott the companies–has faded. Investors have little recourse but to wait to see if protections built into the bond offer a cushion from losses.

Little said that owners of properties that are well underwater have been able to keep them afloat by taking advantage of low interest rates engineered by the Federal Reserve to try to revive the economy. But when it comes time to refinance, the numbers often don’t work anymore.

“Current valuation (on property) lurks out there when loans mature,” Little said.
…

J.P. Morgan: Foreclosure Sales Could Be Higher in Three Years
http://blogs.wsj.com/developments/2010/03/09/jp-morgan-foreclosure-sales-could-be-higher-in-three-years/

We have discussed at length here how the female nesting instinct is often a key factor in the decision to buy a home. At least some families have suddenly seen the light: Buying an expensive home with a monthly mortgage payment at over 28 percent of household income can eat away a huge slice of the family budget which might otherwise be allocated to the considerable expense of raising children.

I am wondering how easy it will be for the young couple featured in this article to summarily slip out from under their obligations and start over in a cheap rental?

Strategic defaults on homes on the rise

Carolyn Said, Chronicle Staff Writer

Monday, March 8, 2010

Jose and Anna Tolentino still live in their Novato condo that is underwater, but they stopped paying the mortgage in August.

Jose and Anna Tolentino moved into their Novato condo in August 2005, two days before Jose, a Navy reservist, shipped out to Kuwait.

“I was happy to have my wife in such a nice place while I was away,” he said.

But now, with the condo worth about half the $425,000 they paid, his attitude has changed.

“I don’t want to keep on paying when the house will never go back up to its value,” he said. “It’s better to cut our losses, get out of there and go rent.”

The number of people similarly choosing to cut their losses on their homes continues to rise. Studies estimate about one-quarter of all defaults are voluntary “walkaways,” also known as strategic defaults and jingle mail (for the sound the abandoned keys make in a mailbox).

The phenomenon reflects shifting attitudes toward debt and commitment. In an era where high-profile investors have walked away from multibillion-dollar real estate projects and more than 2 million Americans have gone through foreclosure, defaulting has begun to lose its stigma.

Being underwater - owing more than a home is worth - is a big trigger for those strategic defaults. Often another problem, such as job loss, divorce or higher monthly payments, is involved. But some homeowners just don’t want to be saddled with a huge mortgage when they have no equity.

‘Want to start a family’

“We could make our payment every month by doing a little bit of overtime,” said Jose Tolentino. “But we want to start a family. We could rent for half what we’re paying and afford to have kids.”
…
(Poll conducted alongside the article posted above:)

The Question

Should underwater homeowners who can afford their mortgages become walkaways?

- Yes, makes no sense to keep paying
- No, better to fulfill obligation and keep good credit rating
- Try to work something out with the bank first
- With rising sea levels, a lot of local homeowners will be underwater

Schadenfreude overdose alert: This SF Chronicle article about underwater homeowners is sobering. How many of the 11.3 million underwater U.S. households will stay the course with their money-losing real estate investments?

…
Of all U.S. mortgage holders, about one quarter, or 11.3 million households, are underwater, according to First American CoreLogic, which collects and analyzes mortgage data. In California, 35 percent of mortgage holders are underwater.

“Negative equity gives you the universe of homeowners who are vulnerable to default,” said Sam Khater, First American senior economist.

In the Bay Area, First American shows the Vallejo-Fairfield metropolitan market (essentially Solano County) with 61 percent of mortgage holders underwater. The next-highest concentration - but the biggest in numbers - is the Oakland-Fremont-Hayward metro area (Alameda and Contra Costa counties), where 35 percent of mortgage holders, or 192,726 households, have negative equity.

First American said a tipping point seems to come when homeowners have negative equity of 25 percent or more - owing $500,000 on a $400,000 house, for instance. At that point, owner-occupants default as frequently as investors.

“The reality is, if you’re 30 percent underwater, you’re effectively going to be a renter in that home while paying your mortgage for the next 1o to 15 years before you get back to break-even with your equity,” said Paul Leonard, director of the California office for the Center for Responsible Lending.
…

Posted: March 8, 2010
Solutions aren’t easy for underwater mortgages

BY GRETA GUEST
DETROIT FREE PRESS BUSINESS WRITER

Second of two parts. Read Part 1: Owners walk away from homes, values erode.

The underwater mortgage problem has no easy solution, particularly in places like Michigan, which has shed nearly a million manufacturing jobs in the past decade.

Some experts advocate for principal reductions. But that would be seen as “a big giveaway,” said Julia Gordon, senior policy counsel for the nonprofit Center for Responsible Lending in Washington, D.C.

“If there is anything the American public dislikes more than bailing out the bank, it’s (bailing out) their neighbor,” Gordon said.

Still, she said, the problem of underwater mortgages — where the homeowner owes a lender more than the house is worth — should concern everyone. “If your neighbor goes into foreclosure, it brings your home value down,” she said.
…

Obama and the L-Word
The president’s habit of telling untruths
Matt Welch from the April 2010 issue

Here’s how predictable the president’s slippery relationship with the truth has become: Hours before the State of the Union address, Washington Examiner reporter Timothy P. Carney posted a “pre-emptive fact check” that, among other things, prebutted any presidential claim to have “stopped the revolving door between government and corporate lobbying.” As it happened, that night Barack Obama made an even bolder (read: less truthful) claim: that “we’ve excluded lobbyists from policymaking jobs.”

In fact, more than 40 former lobbyists work in the administration, including such policy makers as Deputy Defense Secretary William J. Lynn (who was lobbying for Raytheon as recently as 2008), Office of the First Lady Director of Policy and Projects Jocelyn Frye (National Partnership for Women and Families), White House Director of Intergovernmental Affairs Cecilia Muñoz (National Council of La Raza), and Treasury Secretary Chief of Staff Mark Patterson (Goldman Sachs).

When Carney confronted a White House spokeswoman with the falsehood, she conceded nothing. “As the President said,” she wrote, “we have turned away lobbyists for many, many positions.” Just not all of them.

As such defiance suggests, this was no isolated slip of the tongue. The president, who promised in both word and style to usher in a “new era” of Washington “responsibility,” routinely says things that aren’t true and supports initiatives that break campaign promises. When called on it, he mostly keeps digging. And when obliged to explain why American voters are turning so sharply away from his party and his policies, Obama pins the blame not on his own deviations from verity but on his failure to “explain” things “more clearly to the American people.”

Take the issue he has explained more than any other: health care. In the State of the Union address, Obama claimed that the Congressional Budget Office (CBO) had estimated that “our approach” to health care reform “would bring down the deficit by as much as $1 trillion over the next two decades.” This is, strictly speaking, not true. The Democrats’ “approach” to health care reform includes a permanent change to the Medicare reimbursement rates for doctors, colloquially known as the “doc fix.” The CBO estimated that the doc fix, when combined with the health care reform legislative package, actually “would increase the budget deficit in 2019 by $23 billion relative to current law, an increment that would grow in subsequent years.” This is why House Democrats stripped out the doc fix from the health care bill, and passed it separately; it made the CBO scores look bad, making it harder for the president to present bogus claims about deficit neutrality.

That bit of mendacity only scratches the surface of how Congress and the administration gamed the system to produce nice-looking numbers. The CBO, by its own rules, has to take Congress at its word when a piece of legislation promises unspecified future “cuts” in spending, even though an overwhelming majority of promised future cuts never come to pass (a fact that the CBO itself has repeatedly warned in supplementary comments). The Senate promised more than $300 billion in such cuts. Furthermore, the CBO scores bills in 10-year windows. So the Senate delayed more than 99 percent of the reform package’s spending until 2014, thus allowing the decade of 2010–2019 to clock in under the magic $1 trillion number. Add to all that chicanery the fact that every major health care entitlement expansion in U.S. history has vastly exceeded initial cost projections, and you have ample reasons for why Americans believed, by a margin of more than 3 to 1, that health care reform would exacerbate rather than improve the deficit.

Even when addressing black-and-white examples of broken promises —such as his vow to televise each and every bit of health care legislative negotiations on C-SPAN—Obama can’t quite resist the temptation to plead gray. When confronted directly on the broken C-SPAN pledge during a January meeting with GOP lawmakers, the president said: “Look, the truth of the matter is that if you look at the health care process—just over the course of the year—overwhelmingly the majority of it actually was on C-SPAN, because it was taking place in congressional hearings in which you guys were participating.”

Presidential defiance, dissembling, and disinformation are nothing new, even if such political perennials are more disappointing coming from someone who still boasts (as he did in the State of the Union address) of “telling hard truths” to the American people and “doing what’s best for the next generation.” Voters pretty much knew that Bill Clinton was a slime ball when they sent him to the White House; Barack Obama held out the promise of being more dignified.

The difference between these two most recent Democratic presidents, substantial to begin with (especially in the crucial area of economic policy), may come into sharper relief in 2010. Clinton’s reptilian relationship with the truth, suffused as it always has been with a catch-me-if-you-can sense of personal preservation, actually turned out to have some uses for the nation when he changed course after the 1994 Republican revolution and began co-opting some of the limited-government policies proposed by his opponents. It’s easier for a chameleon to change his spots.

Obama’s dishonesty, by contrast, seems to spring from a different place. As a man who has spent most of his career wowing people with his words and very little of it converting those words into deeds, he has an activist’s gap between rhetoric and reality and a radio broadcaster’s promiscuous carelessness with cutting rhetorical corners. Sure, it’s not technically true that the administration’s day-one lobbying reforms served “to get rid of the influence of…special interests,” as he claimed in a January radio address (to the contrary: federal lobbying in 2009 set an all-time record), but it’s easy to imagine that the president feels his combination of tighter employment restrictions for ex-lobbyists and stricter disclosure requirements for current ones is, in the context of the Manichean fight between “the people” and “special interests,” good enough for government work. The perfect shouldn’t be the enemy of the good, and the critics who complain are just opportunistic literalists grasping for any club to beat back the march of progress. No need to give them an inch.

But there’s a less charitable explanation too. During the president’s nonstop gabfests before, during, and after the State of the Union speech, he kept repeating the fiction that the medical industry’s “special interests” were significantly to blame for scotching his health care legislation. In fact, the administration and Congress negotiated with those interests every step of the way, receiving crucial buy-in and millions in campaign contributions. Pro-reform lobbyists outspent anti-reform lobbyists on advertising by a factor of 5 to 1. There’s a three-letter word for blaming the defeat of his bill on health care lobbyists, and it rhymes with pie.

And yet it smacks of something worse still. When a politician cannot fathom opposition to his policies except as the manifestation of wicked manipulation by bad guys, remediable only by more thorough “explanations” from the good guys, it indicates an unseemly paternalism. And if he cannot take the hint that Bush-Obama bailout-and-spend economics are deeply and increasingly unpopular, that indicates something immovable about his core economic ideology. With those two factors as backdrop, it’s hard to say which would be worse: if the president didn’t really believe what he said, or if he did.

Matt Welch (matt.welch@reason.com) is editor in chief of reason.

Well, its official. The next bubble is in the stock market. Let the rationalization of why fundamentals have no bearing begin
(again).

Fleckenstein on inflation:

“Interestingly, the ‘devil’s food cake index,’ which notes the prices of the ingredients necessary to make a perfectly fine devil’s food cake, rose from just about 140 (again, where 2005 = 100) in early ‘09 to just above 180 in late January. In other words, inflation in food prices is, or at least was, apparent and obvious.”

Study finds median wealth for single black women at $5.00:

Tuesday, March 09, 2010
By Tim Grant, Pittsburgh Post-Gazette

Women of all races bring home less income and own fewer assets, on average, than men of the same race, but for single black women the disparities are so overwhelmingly great that even in their prime working years their median wealth amounts to only $5.00.

In a groundbreaking report released Monday by a leading economic research group, social scientists turned a spotlight on the grave financial challenges facing an often overlooked group of women, many of whom could not take an unpaid sick day or repair a major appliance without going into debt.

“It’s rather shocking,” said Meizhu Lui, director of the Closing the Gap Initiative based in Oakland, Calif., who contributed to the report “Lifting as We Climb: Women of Color, Wealth and America’s Future.”

Among the most startling revelations in the wealth data is that while single white women in the prime of their working years (ages 36 to 49) have a median wealth of $42,600 (still only 61 percent of their single white male counterparts), the median wealth for single black women is only $5.00.

Okay, so the Obama/Democrat plan has been killed. So, time for the Republicans/Insurance/Health Care Industrial complex to put up, or shut up.

Let’s start with me.

I’m a 50 something, non-smoker, non-drinker, with a weight problem, on blood pressure meds, and on cholesterol meds at my doctor’s recommendation (not that my number is high, the good/bad numbers have always been in the normal range). I’m also covering a 19 year old female with no health problems.

The only insurance I can get is COBRA thru my old employer at $900/month. Which is about 25-30% of my current take home pay. Every other place I’ve checked has flat out rejected coverage at any price. Maybe it’s just me, but I think 25-30% of my check is totally ridiculous.

It would nice if this insurance actually paid claims, instead of having a phalanx of people looking for reasons to reject the coverage/payment. What’s the point of insurance, if you have to worry if your coverage is any good?

Sooooooo. Let’s have a few “free-market” solutions.

My niece from Chicago will close on this house next Monday,in Providence,RI. Not exactly sure what the bottom line was, but I do know they offered a good bit below asking.

http://www.projo.com/projohomes/houseoftheweek/content/RE_OLEARY_10-31-09_K8G575Q_v30.24ee83b.html

Oil stored at sea could mean bigger problems and prices in future

Another Day and another demon for the market exorcists at the US commodity regulator.

By Garry White and Rowena Mason
Published: 9:47PM GMT 28 Feb 2010

“The use of temporary floating tankers became so popular that even the investment banks had begun to charter ships, leaving the market with a shortage of vessels for transporting other commodities. At one point, Citigroup’s trading arm was sitting on a huge repository of crude in the North Sea.

And now the regulators want to find out whether withdrawal of supplies from the market has contributed to the fact that oil prices are high, while demand is low, or taking capacity off the market is a natural, useful response to a glut.”

http://www.telegraph.co.uk/finance/markets/marketreport/7338826/Oil-stored-at-sea-could-mean-bigger-problems-and-prices-in-future.html

Forget Toyota. Chrysler’s got the most problems.

NEW YORK (CNNMoney.com) — The car company that is off to the worst start of 2010 isn’t Toyota. It’s Chrysler Group.

Industry experts say that even though Chrysler’s overall sales are down only 3% during the first two months of the year, estimates show more than half of Chrysler’s sales have been to fleet customers, such as rental car companies.

American consumers have essentially turned their backs on the Chrysler, Dodge and Jeep brands. By some estimates, the once proud member of America’s Big Three automakers fell to No. 7 in February in terms of sales to U.S. consumers.

Chrysler’s sales to consumers have plunged more than 44% so far this year, according to estimates by industry tracker Edmunds.com.

Unemployment rises in 30 states in January

WASHINGTON (AP) - Unemployment rose in 30 states in January, the Labor Department said Wednesday, evidence that jobs remain scarce in most regions of the country.

The data is somewhat better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states.

Still, five states reported record-high joblessness in January: California, at 12.5 percent; South Carolina, 12.6 percent; Florida, 11.9 percent; North Carolina, 11.1 percent; and Georgia, 10.4 percent.

Michigan’s unemployment rate is still the nation’s highest, at 14.3 percent, followed by Nevada, with 13 percent and Rhode Island at 12.7 percent. South Carolina and California round out the top five.

There were some signs of job creation. Thirty-one states added jobs in January, up from only 11 in the previous month. But the job gains weren’t enough, in many cases, to lower the unemployment rate.

* Breaking News
Unemployment on Treasure Coast at 14.4% in January

To walk away or not to walk, is that the question?

* BY PAUL OWERS Sun-Sentinel
* Posted March 6, 2010 at 7:52 a.m. , updated March 10, 2010 at 7:52 a.m.

Michael Keigans is “underwater” on his mortgage, owing $80,000 more than his Deerfield Beach house is worth.

Keigans figures it could take a decade or two to recover the lost equity, so he’s tempted to walk away, even though he has the money to pay. “Why keep putting money into a house that’s going down in value?” he asks.

It’s a question being debated in many households nationwide as the housing crunch continues. Some borrowers feel they have a moral obligation to pay the mortgage, but a growing number of homeowners and consumer advocates say walking away could be a smart business decision.

The scale of the problem is daunting: More than half of all residential mortgage holders in Broward County are underwater, California research firm First American CoreLogic said last week. In Palm Beach County, nearly half of mortgage holders fall in that category.

And there are several reason for the crisis: Homeowners who now are underwater have seen their property values plummet after they paid peak home prices from 2004 to 2006. Many of these borrowers bought with adjustable-rate mortgages, putting little or no money down. Some are underwater because they refinanced their homes at the market’s peak.

So should they walk? Hundreds of thousands of people are doing just that.
…

‘It’s Going to Be Inflation Everywhere:’ Deputy ‘Doom’
Wednesday, 10 Mar 2010 By: CNBC.com

The global economy is entering a next “supercycle” phase that will generate inflation necessary for recovery, a strategist and protege of noted economist Nouriel Roubini told CNBC.

Arun Motianey, director of fixed income strategy at Roubini’s RBG Capital, said the supercycles feature periods of commodity booms followed by busts, and the US economy is on the verge of an inflationary period that will generate a sharp rise in prices.

“We’re heading into a world of inflation because we are highly indebted and we are indebted here in the US economy in the household sector and in the financial sector,” said Motianey, author of the book “SuperCycles.”

Motianey said the inflation would likely drive up the prices of other US assets such as stocks. Central banks “have to start letting inflation into the system,” he added.

Housing recovery still predicted to begin one year out. For how long can the serial bottom callers maintain this stopped clock prediction without someone calling them on it?

And so far as the predicted 5% annual growth in home prices goes, I thought Shiller said the long run average real home price appreciation rate was something like 0.5% per year. Is Marple’s prediction for nominal price increases? If so, is he throwing in a prediction for 4.5% inflation on top of the long-run average appreciation rate of 0.5% per year? I’d love to see the basis for his “prediction,” as it sounds to me like he made it up on the spot.

Around the Street March 10, 2010, 2:33PM EST text size: TT
Experts Talk Budget Deficit, Wholesale Trade, Housing
What Wall Street economists and strategists had to say about key developments on Mar. 10
…
James Marple, TD Securities

After nearly three years of falling home sales, plummeting house prices, and moribund construction activity, 2009 saw signs of stabilization and recovery in the U.S. housing market. Key housing market variables have been so volatile in recent years that it is easy to lose track of what a recovered housing market would look like. Home prices rose by 42% between 2003 and 2006, then fell by 30% between 2006 and 2009. Housing starts peaked above 2.0 million in 2005, then fell to 550,000 in 2009. Not one of these numbers is anywhere near long-run sustainable levels.

At their current value, home prices are more likely to be modestly undervalued than significantly overvalued, and at just over 500,000, housing starts are running not only below the long-run pace of household growth, but barely enough to keep pace with depreciation.

The outlook for the housing market in 2010 will be a struggle between forces pulling the housing market back towards long run levels and those hindering this movement. Supporting growth will be renewed job creation and the improvement in housing affordability, while obstructing growth will be the unwinding of temporary stimulus and the looming supply of foreclosures. Under the weight of these countervailing forces, the housing market is likely to move sideways in 2010, before beginning a multiyear recovery in 2011.

In a recovered housing market, home price growth should return to roughly 5% annually—a pace consistent with growth in income and the cost of new construction. New housing construction should rise to 1.5 million, in line with the growth in households.

Spend on boyz…

U.S. Posts Record Budget Deficit of $221 Billion

March 10 (Bloomberg) — The U.S. budget deficit widened to a record in February as the government boosted spending to help revive the economy.

The excess of spending over revenue increased to $221 billion last month, compared with a shortfall of $194 billion in February 2009, according to Treasury Department figures released today in Washington. The figures show the deficit this year will likely surpass the record $1.4 trillion in the fiscal year that ended in September.

Wife of U.S. Rep. Conyers Gets 3 Years for Bribes ~ AP

A federal judge has denied ex-Detroit councilwoman Monica Conyers’ request to withdraw her guilty plea in a corruption case and sentenced her to three years and one month in prison.

A federal judge has denied ex-Detroit councilwoman Monica Conyers’ request to withdraw her guilty plea in a corruption case and sentenced her to three years and one month in prison.

As guards cleared the courtroom Wednesday, Conyers yelled that she planned to appeal.

Conyers suggested that she was the victim of “badgering” last summer when she acknowledged a conspiracy to take bribes for her support of a Houston company seeking a sludge contract. U.S. District Judge Avern Cohn says her plea deal was voluntary.

Conyers is the wife of Democratic U.S. Rep. John Conyers. She quit the council in June.

Prosecutors also want the judge to consider allegations that Conyers and an aide collected $69,500 from people seeking help from the city. Her lawyer denies the claims.

Note the family pictured in this NAHB $8K home buyer credit promotional ad. Is the program specifically targeted at luring minority families into making home purchases?

Frequently Asked Questions
About the First-Time Home Buyer Tax Credit

Wisconsin State Journal

Foreclosure filings up sharply in February

Excerpt:

After a rare decrease in January, foreclosure filings rose sharply in February locally and throughout Wisconsin.

Foreclosure filings in Dane County were up 32 percent in February compared to a year ago, with 148 new filings compared to 112 in February 2009, according to court records compiled by DaneCountyMarket.com…

Turns out the real deadbeats were not the guys who pay off their charge card balances every month, but rather the customers who walked away from their obligations last year in droves.

Credit Card Users: Not So Responsible After All?
Are credit card users really paying down debt? Analysis finds bank write-offs caused 2009 drop
By CANDICE CHOI AP Personal Finance Writer
NEW YORK March 10, 2010 (AP)

With unemployment high and personal wealth diminished, how was it that strapped consumers were paying down their credit card debt last year? It turns out they probably weren’t.

The bulk of 2009’s drop in credit card debt instead came because banks were forced to write off loans consumers failed to pay, according to an analysis of Federal Reserve data.

Loans are typically charged off by banks once they’re 180 days past due, under the assumption that the debt won’t be repaid.

In 2009, banks wrote off a record $83.27 billion in credit card debt. A study by consumer credit research site CardHub.com found that accounts for the bulk of the of $93.2 billion drop in consumer card balances reported by the Fed for last year.

“If you just look at the numbers, you think, ‘Oh my goodness, there was a big decrease in credit card debt,’” said Odysseas Papadimitriou, CEO and founder of CardHub dot com.

But Papadimitriou said it didn’t add up that consumers could make such a big dent in debt while under the financial pressure Americans faced last year.

The Federal Reserve’s reports on outstanding consumer loans don’t tease out the amount charged off by banks. By that measure, credit card borrowing fell for 16 straight months through January, suggesting consumers have been chipping away at balances and spending less.

When you consider how much banks are being forced to forsake in bad loans, however, consumers’ ability to pay off balances doesn’t appear as rosy.
…

Janesville man commutes to work in Texas

http://www.wkowtv.com/Global/story.asp?S=12113489

Heartwrenching story about how a local family with a man commuting from Wisconsin to Texas for his auto assembly job has finally had enough and has decided to sell the house and had to sell at a loss.

–
As I noted in my comments to the local television station

This is just bad reporting….

The family didn’t “decide” to stay in Janesville. It looks as though the plan all along was to sell the house and move to Texas. GM shut down December, 2008, and the house was listed for sale in March, 2009. There’s nothing wrong with the family planning this, but the reporting gave the storyy a completely different slant. Also note, technically the house is not yet sold.

As for selling the house for a loss? The house was built in 1993 and they were the only owners. I cannot believe they paid anywhere near $200,000 for that house seventeen years ago. They may owe more on the house than what they sold it for, but I’m positive they got more money than what they paid for the house.

Hey, wow, he just went up several notches in my “pokes’em-in-the-eyes” category!

Reaction to comments hits Hunter hard
By BILL PLUNKETT
THE ORANGE COUNTY REGISTER

“Hunter went on to say major-league teams pursue talent in Latin America “because you can get them cheaper. It’s like, ‘Why should I get this kid from the South Side of Chicago and have Scott Boras represent him and pay him $5 million when you can get a Dominican guy for a bag of chips?’”

“I was explaining that my friends or people come to me all the time and say you’ve got a lot of black players on the team and I always say, ‘What do you mean – there’s only two or three?’” Hunter said. “And they’re, ‘I saw six or seven black guys.’ ‘They’re Dominican. They’re not us.’ Simple as that. I’m not a racist. I’m just telling you, they’re not us.”

“I know Torii well. I know he has a lot of Latin American friends too. You hate to see any division of races in baseball or in this world we live in – especially when Torii is one of the guys who brings people together. … Like everything else, this too shall pass.”

It will pass without any apology from Hunter. (Hwy gives two BIG thumbs up! )

“I’m not going to sit here and plead my case and say, ‘Oh, I’m not a racist’ and beg,” Hunter said. “I’m not begging to anybody and explaining why I’m not a racist. Forget you. You can think what you want. I do great things. I’m not going to sit here like somebody who’s guilty and apologize because I’m not guilty of nothing.”

Ugh, this short sale business is a bitch!! I’m going nuts over here. It could take a while…

Researchers: Men want sex until almost dead

This proves at least 1x old theory: “Life is stranger than fiction”

By George Mathis
The Atlanta Journal-Constitution

Roh roh — SD unemployment has come in “much higher than expected.” So much for the incipient recovery.

I am trying to put into perspective the “encouraging” news that “only” 50,500 jobs were lost in the Jan 09-Jan 10 period. Since SD has about 3m population, about 1 percent of the overall U.S. population (about 300m), a commensurate loss of jobs for the entire U.S. if the whole country lost them as fast as San Diego did over the past year would be 5,050,000, which sounds pretty recessionary, given the recession already began way back in December 2007.

Local Breaking News
S.D. jobless rate jumps to 11.0%
By Thomas Kupper, UNION-TRIBUNE STAFF WRITER

Originally published March 10, 2010 at 2:25 p.m., updated March 10, 2010 at 2:39 p.m.

San Diego County’s unemployment rate jumped to 11.0 percent in January, reaching its highest level since the start of the economic downturn.

The state Employment Development Department reported Wednesday that nonfarm employment fell by 17,400 jobs during the month, including big declines in the hospitality and retail sectors.

Some of the decline is seasonal, as retailers in particular let go of extra workers they hired for the holiday season. But employment remained below year-earlier levels in nearly every sector the state tracks, with the one exception being educational and health services.

The local unemployment rate for December was revised to 10.3 percent, down from the previous recent high of 10.6 percent in October.

One sign of encouragement in the data was that the the reported decline of 50,500 jobs over the past year was the smallest such decline since January 2009. The local economy lost 83,300 jobs from July 2008 to July 2009, but that figure has since been steadily shrinking.
…

Is there any precedent for massive government asset price manipulation, as they’ve done in the real estate market?

Geithner has stated that real estate price “stabilization” is the government’s goal. I recall reading it in a Newsweek article.

Is there any history of this kind of market manipulation by the US government?

Mel Brooks, Blazing Saddles, History of the World Part I, Cheech and Chong… Those movies couldn’t be made today?

Have you checked out Harold and Kumar, or Sasha Cohen aka Borat and Bruno?

“I gave my baby a traditional African name: O.J.”

Marketplace
Subprime

The Federal Housing Administration is being criticized for underwriting subprime loans, which critics say could lead to another wave of loan failures. Senior Editor Paddy Hirsch explains subprime lending and its inherent risks.

Marketplace
Look out below!

Commercial real estate is giving Ben Bernanke a big headache. Senior Editor Paddy Hirsch explains why it’s such a threat to the economy.

I see no problems here that the porcine beautician brigade cannot clean up…

PIIGS

Five little PIIGS. Senior Editor Paddy Hirsch explains why problems with certain European countries’ sovereign debt could blow the house down.

Ich finde die fünf kleine Schweine nicht sehr hübsch.

Wednesday, March 10, 2010

Germany says ‘nein’ to rescuing Greece
Germany’s chancellor and Greece’s prime minister

Greek Prime Minister George Papandreou says in the future eurozone countries would be able to act like the IMF when member states get into difficulty. But his remarks may not go over well in Germany. Stephen Beard reports.

Kai Ryssdal: When last we heard from our man in Europe, Stephen Beard, that’d be yesterday, he was in Athens, giving us the street level view of the Greek debt crisis. And how people there are none too wild about new emergency budget cuts or restrictions that might come along with a rescue package from the European Union.

Stephen is back today with the second part of the story in which we hear how Europe’s biggest and richest economy — Germany — isn’t all that crazy about a rescue either.

STEPHEN BEARD: I’m on Unter Den Linden, the wide, elegant boulevard that runs through the center of Berlin. This is more than a 1,000 miles north of Athens. And a very different world. It’s very cold here today. In fact freezing. And there’s not much warmth or affection for the Greeks either.

Kick them out of the EU. Yes, kick them out says this cab driver.

He says: My father used to say a good gardener needs a hard heart and a sharp axe. Yes, cut the Greeks out. It’s that simple. What’s the problem?

The Einstein Coffee House, a few yards further along the road. This is a famous watering hole for politicians and commentators. Here there’s also a marked lack of sympathy for the Greeks’ predicament.

HEINZ SHULTE: When they joined the euro club we thought the Greeks understood the rules and played by them. But they didn’t. They fiddled the statistics. And that is something that the Germans don’t like.

Analyst Heinz Shulte says most Germans are appalled that Greek governments covertly borrowed four times the limit allowed under those euro club rules. And they’re not happy the Greeks buckled under the monetary discipline and then harped on Germany’s Nazi past.

SHULTE: Sorry. We didn’t storm-troop them into the euro. They wanted it. And they should have read the rules.
…

Seems CA is not alone in its public school funding crisis:

* MARCH 11, 2010

School Crisis Rattles Missouri
Kansas City Board Approves Plan to Shutter Nearly Half of District’s Buildings

By DOUGLAS BELKIN

The Kansas City Missouri School Board voted Wednesday night to shutter nearly half of its schools in an effort to avoid going broke.

The action closes 28 of 58 campuses and eliminates about 700 of the district’s 3,300 jobs, including 285 teachers.

Maggie Kolen, who has worked for the district for 37 years, reacts to the board’s ruling, which she said wasn’t a surprise.

“None of us like doing this but it was necessary, it had to be done,” said board member Arthur Benson after a tense five to four vote that was interrupted several times by upset parents.

The plan comes as school districts around the country, battered by the recession and budget cutbacks, are closing facilities to save money. Detroit closed 29 schools before classes began this fall, leaving the district with 172 schools, according to the Associated Press.

The Kansas City School District, which serves 18,000 students, was twice as large a decade ago. That decrease has led to cuts in state funding. The district now runs a $12 million monthly deficit and expects to run out of money by 2011.

The plan, dubbed “Right Sizing the District,” aims to end the deficit and address poor academic performance by consolidating services and cutting under-performing staff.
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Foreclosures: Housing defaults soar in Palm Beach County, Treasure Coast

By Jeff Ostrowski
Palm Beach Post Staff Writer
Posted: 12:19 a.m. Thursday, March 11, 2010

Foreclosure activity skyrocketed in Palm Beach County and the Treasure Coast in February, fanning fears that the housing market still faces strong headwinds.

About 4,490 homes in Palm Beach County received a foreclosure filing during the month, up 63 percent from January to February and 68 percent from a year ago, RealtyTrac, an information provider in Irvine, Calif., said today.

Martin County foreclosures were up 52 percent from the previous month and 13 percent from a year ago, while St. Lucie County defaults jumped 69 percent from January and 39 percent since February 2009.

Statewide, foreclosures rose 15 percent from January, while foreclosures nationally dipped 2 percent, RealtyTrac said.

For investors like Myles Minns, head of Continental Properties in West Palm Beach, the wave of defaults creates a “land of opportunity.” After snapping up five foreclosures a week, Minns said he’s taking a breather.

“We had to slow down, because we made offers not thinking people would accept them, and they accepted them,” Minns said.

He plans to fix most of the properties and resell or rent them.

Minns said he has noticed an increase in foreclosures in Palm Beach County, a trend he attributes in part to lenders growing more assertive about taking properties.

“Banks were holding off and holding off,” Minns said. “They really didn’t want to foreclose right off the bat because they wanted to wait and see what would happen with Obama.”

Mortgage banker Bill Davis, head of Private Funding Specialists in Palm Beach Gardens, said rising unemployment rates and falling home values have sent many borrowers into default.

“People were holding on, holding on, and now they’ve capitulated,” Davis said.