The Housing Bubble

Greenspan Says Crisis ‘By Far’ Worst, Recovery Uneven (Update1)

By Joshua Zumbrun

Feb. 23 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the financial crisis was “by far” the worst in history and called the recovery from the global recession “extremely unbalanced.”

The world economy has undergone “by far the greatest financial crisis globally ever,” Greenspan said today in a speech to the Credit Union National Association’s Governmental Affairs Conference in Washington.

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”

Greenspan said that the gross domestic product may recover to the level of previous peaks earlier this year, even though traditional drivers of growth such as housing starts and motor vehicles were “dead in the water.” He also said small businesses show few signs of improving because lenders are struggling with commercial real estate mortgages.

The “extremely unbalanced recovery” is being led by high- income consumers and large businesses that are benefiting from a recovery in stock prices, he said.
…

Greenspan hits back at claims he caused housing bubble

By Edward Luce and Tom Braithwaite in Washington

Published: March 19 2010 02:00 | Last updated: March 19 2010 02:00

Alan Greenspan will today offer his most sophisticated defence so far of his role as chairman of the Federal Reserve in the build-up to the 2008 financial meltdown, hitting back at claims that the Fed’s low short-term interest rates were the cause of the US housing bubble.

Mr Greenspan’s characteristically abstract assessment - in a 48-page paper he will present today for the Brookings Institution - is likely to fuel debate over how to prevent another asset price bubble at a time when US financial regulatory reform is nearing its endgame on Capitol Hill.

In his paper, entitled The Crisis, Mr Greenspan admits that regulators underestimated the scale of the asset price bubble. But he attributes the failing, among others, to overseas regulators, the US credit rating agencies, financial houses and mainstream economics.

“In the growing state of high euphoria, risk managers, the Federal Reserve, and other regulators failed to fully comprehend the underlying size, length and impact of the negative tail of the distribution of risk outcomes,” Mr Greenspan writes.

However, he adds: “To this day, it is hard to find fault with the conceptual framework of our [financial risk management] models as far as they go.”

The former Fed chairman, who in late 2008 admitted to Congress he was in a state of shocked disbelief over the failure of his ideological assumptions on how markets should function, also dismisses the growing view that central banks should adjust to the meltdown by incorporating asset prices into their measure of inflation.

Such a step, he says, would risk recessions as deep as those they were intended to prevent.

“Unless there is societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible,” he writes. “Assuaging their aftermath seems to be the best we can hope for.”
…

Facts presented in the Wealth, Income, and Power website (G. William Domhoff).

In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers).

In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2009).

In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America. (end of excerpt)

Here is a chart from the website:
wealth distrubition

According to the asset class breakdown on Wealth, Income, and Power, the bottom 90% owned 18.8% of all stocks and mutual funds in 2007. Since the bottom 60% own very little (only 22% of the bottom 60% own stock/mutual funds worth more than $10,000), and the bottom 80% own a mere 8.9% of all stocks/mutual funds, then the top 10% owns 81% of all stocks (of which the top 1% own 38%) and the “managerial/professional” slice between 80% and 90% owns about 10%.

Some 47% of the “middle class” (those between the bottom 40% with few financial assets and the top 20% with the vast majority of the assets) own stocks/mutual funds worth more than $10,000, but since the bottom 80% own a mere 8.9% of all stocks, it seems the Great American Middle Class owns about 7% of all the stocks and mutual funds in the U.S. (with the bottom 40% holding the remaining 2%).

According to BusinessWeek, the profits of the S&P 500 corporations rose in 2009 to over $500 billion–a vast sum presented as “yet more proof” that the recession is over.

Over for some perhaps, but not for the bottom 80%. It is no secret that the spurt in productivity which fueled those gargantuan profits was made by reducing headcounts and getting more work out of the remaining workforce. Bully for the S&P 500 managers and those who reap the profits.

Since there are about 130 million U.S. households and total corporate profits are around $1 trillion, we can do some simple math to see where all those profits flow.

If you dig through the BEA website and other sources, you find that Corporate profits were about 13 percent of GDP in 2007, their highest level in 40 years and significantly above the post-World War II average of 9.4 percent of GDP. Nonfinancial profits for 2006 were $1.08 trillion. Real GDP peaked in Q2 2008 at 13,415.3 billion; in Q3 2009 GDP was 12,973 billion (calculated annually).

Even assuming corporate profits have dropped back to 9% of GDP, we still get a number around $1 trillion in profit for 2009.

Based on the ownership of stock and mutual funds, we can estimate that 9% ($90 billion) of all that profit flowed to the bottom 80% of households (104 million), $100 billion flowed to the 13 million Managerial/Professional households (the 10% of all households between 80% and 90%), and $810 billion flowed to the top 10% (13 million households), of which $400 billion flowed to the top 1% (1.3 million households).

Since total household income runs about $9 trillion, then the $90 billion distributed among 104 million households doesn’t really ring a lot of chimes when the estimated loss of wealth in the U.S. as the credit bubble popped has been estimated at $15 trillion.

The rise in the stock market and corporate profits benefitted the relative few–yet is touted in the mainstream media as heralding the end of the recession for the entire nation. That is pure propaganda. How easy it’s been to manufacture a rising stock market, compared to engineering a recovery in the economy.

Do I need to mention that families living together reduces the demand for residential housing units? Everyone needs a place to live, but that doesn’t prevent them from doubling up households by sharing a housing unit with someone else.

WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal.

* March 18, 2010, 9:39 AM ET

Recession, Immigration Spur More Families to Live Together

By Conor Dougherty

The twin forces of recession and broad demographic shifts have sparked a return to the multi-generational household, according to this report from the Pew Research Center.

According to the report, about 49 million Americans, or about 16% of the population, lived in a household with at least two adult generations. That compared with 28 million, or 12% of the population, in 1980. That is a reversal from past trends: Between 1940 and 1980, the number of multi-generational households had declined to 12% in 1980 from 25% in 1940.

The Pew report, which was compiled through a combination of Census data and telephone surveys, charts several decades of social and economic trends that have seen American families move apart and back together. Between 1940 and 1980, Social Security and better health allowed more seniors to live alone later into their lives. At the same time, the immigrant population declined as the economy and suburbs boomed, leading to more independent households.

Much of that has reversed. Immigration is a driving force of the economy and the country’s demographics, with whites of non-European ancestry expected to make up less than 50% of the U.S. population by 2042. Asian and Hispanic immigrants, in particular, are more likely to see multi-generational dwellings. Also, people are waiting longer to get married and many of them “consider their childhood home to be an attractive living situation, especially when a bad economy makes it difficult for them to find jobs or launch careers,” according to the Pew Report.

Indeed, these long-term demographic changes have been accelerated by the Great Recession. According to Pew analysis of Census data, 2.6 million more Americans were living in multi-generational households than in 2007 — an increase that has seen across all racial groups. Those findings dovetail with a 2009 Pew Report that found that among 22- to 29-years-olds, one-in eight had suffered a recession-induced move-in after living on their own.
…

Govt rewarded bank auditors with big bonuses
Associated Press
March 18, 2010

WASHINGTON (AP) — As banks gambled on the risky mortgages that helped create the worst financial crisis in generations, the U.S. government handed out millions of dollars in bonuses to regulators at agencies that missed or ignored warning signs that the system was on the verge of a meltdown.

The bonuses, detailed in payroll data released to The Associated Press, are the latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses for doing “superior” work monitoring the banks.

The bonuses, released in response to a Freedom of Information Act request, were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the 2003-06 boom, the three agencies that supervise most U.S. banks — the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency — gave out at least $19 million in bonuses, records show.

Nearly all that money was spent recognizing “superior” performance. The largest share, more than $8.4 million, went to financial examiners, those employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists and criminal investigators also got awards.

Bernanke footnote: Fed wants end to ‘minimum reserve requirements’

Hosted on the Federal Reserve’s own servers, the written testimony of the bank’s chairman explains in plain text what expanding the Fed’s powers will do.

Footnote number nine
“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system,”

By Paul Owers
Sun-Sentinel Staff Writer
Posted: 8:04 p.m. Thursday, March 18, 2010

South Florida is one of the hardest-hit regions for construction job losses as a “depression” continues to strangle the industry, the Associated General Contractors of America said today.

Palm Beach County lost 6,500 construction jobs between January 2009 and January 2010, and its industrywide employment fell by 22 percent, the trade group reported after analyzing federal employment figures.

Broward County lost 9,700 positions and its construction employment declined by 23 percent during the year.

The two counties ranked among the 32 worst metro areas in the nation. The only other metro area in Florida with more construction job losses than Broward was Orlando, which shed 15,300 jobs.

“It isn’t pretty, is it?” said Len Mills, executive vice president of AGC’s South Florida chapter based in Sunrise.

Construction employment statewide dropped by 19 percent and the industry lost 80,000 jobs. Nationwide, 313 of 337 areas shed construction jobs during the year.

“It’s difficult to imagine that many regions will bounce back when so many construction workers are unemployed,” Ken Simonson, the national AGC’s chief economist, said in a statement. “Worse, with virtually every city suffering significant construction job losses, there’s nowhere to hide from what is clearly a construction depression.”

Why’s it so quiet in here? Where’d everybody go? Did you guys not tell me about a HBB meetup again?

Will the Fed follow through on its announced plan to exit the MBS purchase business? And if they do, what federal housing price support program will step up to replace their interest rate suppression program?
What even prompted the Fed to enter the MBS purchase business, and more generally, to assume duties as housing demand fluffer, to begin with — i.e., how does that even relate to their dual mandate to keep employment high and contain inflation if the prices of long-lived assets like housing are not even included in the CPI calculation?

Enquiring minds want to know.

WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal.

* March 16, 2010, 2:28 PM ET

What’s Next for the Fed and Mortgages?
By Sudeep Reddy

The Federal Reserve is bringing its mortgage-purchase program to a close. The Federal Open Market Committee said in a statement after its meeting today that the $1.25 trillion program of buying mortgage-backed securities would be completed, as expected, by the end of March. That will leave investors, homebuyers and the housing sector to watch nervously in the coming months as the industry tries to recover without new support from the Fed.

What did the Fed do for mortgages? The central bank announced in November 2008, in a particularly bleak period the economy, that it would purchase up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It raised that target to $1.25 trillion last March. (It’s also buying $175 billion in agency debt.) The Fed’s stated goal: “to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.” The move lowered mortgage rates by as much as a percentage point and offered new hope for the housing market at a low point.
…
What happens next? Even Fed officials would acknowledge a reasonable amount of uncertainty about how the mortgage market will function once its biggest buyer — the central bank — steps aside. Many pension funds, insurers and other institutional investors fled the market once the Fed showed up as a giant noneconomic buyer. (To reach its target, the Fed bought up not only most of the new agency MBS but also existing securities held in portfolios.) As a result, some investors have suggested over the past year that mortgage rates could shoot up by a percentage point as the Fed program ended.
…
The expiration of the homebuyer tax credit (for contracts signed by April 30) is likely to lead to new calls for Congress to take action to support the housing market in an election year. Even if credit availability for homebuyers improves over the next year, the rise in mortgage rates could raise new concerns about the sector and put new pressure on the Fed to do more for housing. A first possible step would be to reinvest some of the maturing securities to keep the Fed’s MBS stock from declining. But few central bank officials appear inclined today to support such a move.
…

Health care bill extends wage tax to investments.

For the first time, the Medicare payroll tax would be applied to investment income, beginning in 2013.

Go to where the money is. Willy Sutton would be proud.

http://finance.yahoo.com/news/Health-care-bill-extends-wage-apf-4049779336.html?x=0

Another conservative for Obama bites the dust.

David Brooks:

Deem and pass? Are you kidding me? Is this what the Revolutionary War was fought for? Is this what the boys on Normandy beach were trying to defend? Is this where we thought we would end up when Obama was speaking so beautifully in Iowa or promising to put away childish things?

Yes, I know Republicans have used the deem and pass technique. It was terrible then. But those were smallish items. This is the largest piece of legislation in a generation and Pelosi wants to pass it without a vote. It’s unbelievable that people even talk about this with a straight face. Do they really think the American people are going to stand for this? Do they think it will really fool anybody if a Democratic House member goes back to his district and says, “I didn’t vote for the bill. I just voted for the amendments.” Do they think all of America is insane?

And:

Yes, my own view may be distorted by the fact that I’m disappointed in the health care bill. But at least I violently opposed the nuclear option when the Republicans tried it a few years ago. I don’t think it is mere partisanship that makes me believe that representatives should have the guts to actually vote for the legislation they want to become law.

Either this whole city has gone insane or I have or both. But I’m out here on the ledge and I’m not coming in the window. In my view this is no longer about health care. It’s just Democrats wanting to pass a bill, any bill, and shredding anything they have to in order to get it done. It’s about taking every sin the Republicans committed when they were busy being corrupted by power and matching it with interest.

I’m observing nicer, newer, more substantial shacks hitting both GSE and private label REO lists. I can only imagine how these are going to eviscerate the price structure of entry level houses, both REO and non-REO. Most of it the nice stuff is grossly inflated but keep in mind it’s just hitting the market.

I haven’t been around here much. My dwindling available time dedicated to the net has pretty much been smacking down the Lying Realtors on Marketwatch but I confess that MrsExeter and I actually engaged the “services” of one these thugs and looked at a house. I have to admit that dealing with a realtor is challenging for me after 8 years of feeling utter contempt and rage for them. My behavior and language is appropriate but very firm. Anyways, we only looked at a house(REO) and I like it ALOT. However, I haven’t nor do I have any plans to make an offer. Time is on my side combined with the knowledge I’ve soaked up here(and some hardship gained wisdom) leads me to a point where I can confidently and maturely say if it sells to someone else then so be it. I even stated that the the used house sales-lady when she attempted to start that sense of urgency game that worked so well for them for years. Actually, my precise words were “we’ll if you have a buyer at that price, you better sell it in a hurry” during conversations preceding the showing of the house. We left Sunday afternoon with the position of “we’ll be in touch”. She emailed me Wednesday with the words “Just touching base, nice meeting you, hope you’re enjoying the warm weather”. My reply? “It was a pleasure meeting you too and we’re ready for the beach”. Not a word about the house. It’s empowering I guess. Although I really really like the shack, I don’t NEED it. Considering it’s been on the market since early last Semptember with no price changes, my sense is to make a 50% offer if and when I’m ready. The realtard already knows my fundamental position on everything so I’m sure she won’t be surprised.
By the way, some realturds accept a gratuity…. and some don’t.

Somewhat like California or New Jersey going to the IMF. And the IMF will attach their own strings…

————————-

The Greece Bailout Is Falling Apart
The Business Insider, March 19, 2010:

The Greek premiere is now threatening to go to the IMF for help if the Eurozone won’t come up with hard bail out numbers soon.

These are pretty tough words for someone asking for money:

Telegraph:

“We have the worst of the IMF and none of the advantages. This is where Europe must come in and provide what the IMF can offer. Or Greece will have to go to the IMF. We hope that will not be necessary,” he said.

“I prefer a European solution as part of the eurozone, to show the world that Europe can act together. This is not to ask for money
but to have an instrument on the table to stop the speculation. We expect the EU to live up to the challenge facing it. We are a eurozone country,” he said.

Some believe Greece can borrow money more cheaply from the IMF than from Europe.

Sources in Washington say Greece can expect to borrow from the IMF at around 3.25pc. While the EU has not specified its own terms, the Eurogroup said this week that any help would come at a punitive rate above the borrowing costs for other EU states, suggesting a rate of 4pc to 5pc.

So what’s the problem? Why might Europe be scared into caving to Greek demands? Because if Greece goes to the IMF, some believe credibility in the euro would be shattered since it would be seen as unable or unwilling to support its member countries when in trouble. Thus Mr. Papandreou is playing a game of chicken he thinks he can win.

At least somebody is trying to look beyond the present and plan for looming future challenges.

Knocking on the Central Bank’s Door
Thomas M. Hoenig
President
Federal Reserve Bank of Kansas City

Peterson-Pew Commission on Budget Reform Policy Forum
Washington, D.C.
February 16, 2010

Thank you for the opportunity to join you today, both to attend and to participate in this event on a topic of some urgency. The United States is moving into an era in which government finance is taking center
stage. Fiscal measures taken to bring the economy out of recession, mounting longer-term liabilities for Social Security and Medicare, and other growing demands placed on the federal government have invited a massive buildup of government debt now and over the next several
years. Congressional Budget Office (CBO) projections have the federal debt reaching an unsustainable level of two to five times our total national income within the next 50 years, which leads us to an inescapable conclusion—U.S. fiscal policy must focus on reducing this debt buildup and its consequences.

In managing our nation’s debt going forward, it strikes me that we have only three options.

- First, the worst choice for our long-term stability, but perhaps the easiest option in the face of short-term political pressures: We can knock on the central bank’s door and request or demand that it “print” money to buy the swelling amounts of government debt.

- Second, perhaps more tolerable politically, although damaging to our economy: We can do nothing so long as domestic and foreign markets are willing to fund our borrowing needs at inevitably higher interest rates.

- Or third, the most difficult and probably the least palatable politically: We can act now to implement programs that reduce spending and increase revenues to a more sustainable level.

I recognize that this last option involves hard choices and short-term pain. However, in my view it is the responsible path to sustainable economic growth with price stability. The alternative options inevitably lead to financial crisis and greater long-run losses in national
income and wealth.

The question of what combination of spending and revenue actions the country might choose is the purview of Congress and the executive branch. As a central banker, it is my responsibility to anticipate and avoid the consequences that an unchecked expansion of the debt
may have on monetary policy. It is a fact that the current outlook for fiscal policy poses a threat to the Federal Reserve’s ability to achieve its dual objectives of price stability and maximum sustainable long-term growth, and therefore is a threat to its independence as well.

The founders of the Federal Reserve understood this conflict. They understood that placing the printing press with the power to spend was a formula for fiscal and financial disaster. Aware of this danger, they designed our central bank to be responsible for stable prices and long term growth, and they gave it a degree of independence so that it could carry out this mandate. The goal of policy cannot be to “just get through” the current challenge, but rather to rebuild the foundation of a stable and prosperous economy, looking to our nation’s long-term future. It is in this context that I appreciate this opportunity to address what I see as our emerging fiscal challenges.
…

“Yes, I know Republicans have used the deem and pass technique. It was terrible then. But those were smallish items.”

Yes, they were only a little pregnant. Well, that’s what happens when you start down a slippery slope, it turns into a big slide. Like torture.

Due to changes in my job ( good ones, mostly ), I’m assuming a greater workload so unfortunately I’m not able to spend as much perusing the interesting posts and articles on this blog. I’m lucky if I get to look at it once a week. That being said, it still gives me quite a bit to think about whenever I do read it. All of the houses that were foreclosed on in our neighborhood have now been flipped, bought, or otherwise occupied. I’ve been quite amazed that there are no empties around us, after several years of having 7-8 unoccupied ones within a couple of blocks of us at all times. Our medical office hasn’t really generated any traffic, which isn’t surprising given the current state of the economy. We’ve had some talkers wanting to “rent” it, but we’re not really interested in that scenario. We’ll see what happens in the long run. It’s in pristine condition now, and leasing it would just scuff it up and make us have to have parts repainted, for very little monthly profit. Have a good weekend, e-1.

I just got a letter form Morgan Stanley smith barney that says they’ve just gotten into the HELOC market and they’d like to offer me one up to $2.5 million. Congrats to them for jumping in at such a wonderful time for real estate in this country.

This is a step in the right direction for the CA state taxing authorities. If they really want to get serious, I suggest they tighten the rules on property tax deadbeats, threatening to quickly seize properties with absentee owners who don’t pay taxes. They could thereby acquire and resell residential housing at affordable prices, enabling young families who will comprise CA’s future workforce to get a foothold in local housing markets. Absentee landlords who don’t pay their taxes are nothing but parasites; they should be plucked out of the economy like ticks off a dog’s hide.

Out-of-state property owners tax being enforced

By Roger Showley, UNION-TRIBUNE STAFF WRITER

Thursday, March 18, 2010 at 5:58 p.m.
INCOME TAX WITHHOLDING

Information about the state’s requirement to withhold taxes for rental income is available from the Franchise Tax Board in publication 1017. Call (888) 792-4900 or go to ftb.ca.gov

Come Wednesday, property managers throughout California will be required to pay the state 7 percent of rental proceeds to cover out-of-state owners’ estimated income taxes — a nearly 50-year-old requirement that is now being enforced as the state struggles with billions of dollars in budget deficits.

In response, managers have been frantically contacting owners to get their legally required consent to pay the tax, or they will find themselves in a no-win situation. State law would take away the managers’ real estate licenses if the consent is not given, yet a conflicting law requires them to pay the tax or face fines and jail time.

“I think it is ridiculous for a professional to have to choose between violating the real estate law or revenue law in the event their owner chooses not to authorize the withholding,” said June Barlow, general counsel of the California Association of Realtors.

State officials shrugged their shoulders when asked about the conflict, saying the best solution is to stop managing a property until the owner offers consent.

“If the (property) owner does not give the authorization, there’s not a whole lot the property manager can do if he wants to stay out of the cross hairs of the Franchise Tax Board,” said Tom Poole, spokesman for the Department of Real Estate.

Brenda Voet, spokeswoman for the tax board, which administers the state’s income tax collection system, said her agency is not concerned with what Poole’s department believes.

“For us, it’s a tax matter,” Voet said. “They are the withholding agent and from our perspective, that’s what the relationship is.”

Voet said the budget deficit did not prompt the clarification of state withholding law, which has been on the books since 1951. She said it’s just one of the periodic reviews of how tax laws are being followed.

“We realized a lot of real estate is owned by non-California residents,” she said.

She said there are no estimates of how many property owners and managers are affected or how much money the state stands to collect.
…

Dick Bove: Housing Market Will Fall 10%-15% When Fed Stops Subsidizing Home Prices
Posted Mar 19 ~ Henry Blodget in Recession, Housing

For the past year, the Fed has been buying mortgage-backed securities in an effort to keep mortgage rates low and provide some support to the housing market. On March 31, the Fed says, it will stop buying mortgage-backed securities.

So what will happen to mortgage rates and house prices?

No one knows, says Dick Bove, the wise and fearless analyst at Rochdale Securities.

No one knows what mortgage rates would be if the Fed weren’t subsidizing them. No one knows where house prices would be if the Treasury and other government agencies weren’t modifying mortgages and trying to bail homeowners out. No one knows what would happen if taxpayers weren’t funding tens of billions of dollars of losses at bankrupt Fannie and Freddie to provide yet another housing subsidy.

Even if the Fed stops buying mortgage-backed securities at the end of March, Bove says, some of the impact of the subsidy will still be felt through June. Also, for a while at least, Fannie and Freddie will continue to buy mortgages. So there won’t likely be a sudden change to the housing market or mortgage rates.

Over the longer term, though, we’ll begin to find out where house prices would be if the housing market were less subsidized. And Dick Bove expects that that level is 10%-15% below today’s prices.

North Texas home foreclosures hit new record monthly high
Dallas Business Journal

North Texas home foreclosure postings rose to a new record monthly high with 6,168 foreclosure notices filed for the upcoming April auction.

The total surpassed the previous monthly record set in July of last year, when 6,072 postings were recorded against area homes, according to Addison-based Foreclosure Listing Service Inc.

The statistics reflect filings in Dallas, Tarrant, Collin and Denton counties.

Posting activity for last July and for the upcoming April auctions marked the only time in history that Dallas-Fort Worth home postings topped 6,000 per month.

“Monthly postings have been on the high side for some time now,” said George Roddy Sr., president of Foreclosure Listing Service. “In 11 of the past 13 months, posting activity has surpassed 5,000 foreclosure filings per month.”

Roddy said he expects home foreclosure postings to continue at a high rate.

Wonder what CAT will do once they pass moonbat sickness care this Sunday? Looking good for the over seas factories.

Caterpillar: Health care bill would cost it $100M

Dow Jones Newswires | Caterpillar Inc. said the health-care overhaul legislation being considered by the U.S. House of Representatives would increase the company’s health-care costs by more than $100 million in the first year alone.

In a letter Thursday to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner of Ohio, Caterpillar urged lawmakers to vote against the plan “because of the substantial cost burdens it would place on our shareholders, employees and retirees.”

Caterpillar, the world’s largest construction machinery manufacturer by sales, said it’s particularly opposed to provisions in the bill that would expand Medicare taxes and mandate insurance coverage. The legislation would require nearly all companies to provide health insurance for their employees or face large fines.

The Peoria-based company said these provisions would increase its insurance costs by at least 20 percent, or more than $100 million, just in the first year of the health-care overhaul program.

Earl Grey’s seen his day?

Will Health Care Reform Kill The Tea Party? - Mother Jones article 3/19/10

http://coffeeparty.gather.com/viewArticle.action?articleId=281474978115420

During the Tea Party protests on Capitol Hill this week, conservative activists warned that if Congress manages to pass health care legislation, their movement would become more formidable than ever. Mark Meckler, a national coordinator for the Tea Party Patriots—one of the larger and better-organized national groups—predicted that if the bill passes, “the tea party movement will double in size almost instantaneously.”

But far from fueling the tea partiers’ cause, a sweeping new health care law could suck the air right out of their movement. Many tea party activists have a lot to gain from reform—because their ranks are dominated by aging baby boomers.

(The Article then goes on to list some of the plans benefits to aging boomers)

Given facts like that, it’s easy to see why Tea Party leaders might be more than a little nervous about the health care bill passing. Despite their predictions to the contrary, it won’t be the end of the world as
they know it—just possibly the end of their movement. Stephanie Mencimer is a staff reporter in Mother Jones’ Washington bureau.

Employment slips in 100 biggest markets
Business First of Buffalo

Private-sector employment declined in January in all of America’s 100 biggest labor markets, according to figures released Friday by the U.S. Bureau of Labor Statistics.

Los Angeles suffered the worst decline in raw numbers, losing 226,100 private-sector jobs between January 2009 and the same month this year. Wichita was hit with the worst drop in percentage terms, falling 7.7 percent during the past 12 months.

Buffalo did better than most major metros. Its year-to-year loss of 7,600 private-sector jobs ranked 23rd on a list that ran from the smallest to the biggest declines. And its percentage loss of 1.7 percent was the fifth-smallest in the nation.

Two markets joined Los Angeles with six-figure declines in private-sector employment. The New York City area lost 206,500 jobs, and Chicago lost 176,500.

Cheery thought for the day:

Stockton has been named the second most miserable city in America and the most obese, according to ABC News.

The New Math: I keep seeing ads and e-mails from my Friendly Neighborhood Realtor® for “10% down, no PMI” specials on his overpriced condo inventory. A new SFH (on the market for more than a year) around the corner from me has the same deal posted out front.

Anybody else seeing this kind of promotion? Is it a variation of the ol’ second loan plan we saw during the bubble, a softening of standards, or something else?

http://www.rollcall.com/news/44375-1.html

McCain lapdog and RINO Lindsey Graham joins Chuckie Schumer in unveiling a “comprehensive immigration reform” package that includes a “path to citizenship” for millions of illegals. The Dems pick up a vast new entitlements-for-votes demographic while Graham’s corporate cartel masters get legal wage slaves. Who pays the social and entitlement costs? I’ll leave it to you to figure that out.

Looks like we have even more fat kids… Perhaps moonbat care can fix that.

U.S. kids even fatter than believed
Study: Many face chronic health problems, shorter life spans.

WASHINGTON ~ MSNBC - Extreme obesity among American children is much worse than previously believed, putting them at greater risk of serious health problems as they age, U.S. researchers said on Thursday.

A study of more than 700,000 children and teens in southern California found that more than 6 percent, or 45,000, were extremely obese and more boys than girls were far too heavy, the researchers reported in the Journal of Pediatrics.

“This study is unique because it is the first time that we’ve had a large up-to-date snapshot of what’s happening with obesity in our children,” co-author Dr. Amy Porter of Kaiser Permanente health care system said in a video statement.

“The prevalence of obesity in children is much higher than we ever thought it was” Porter said. She said the study also showed that extreme obesity was rising in almost every group.

The slow steady jobs migration over seas is bound to keep right on growing…

BUSINESS: Powerwave closing plant in Estonia
The Daily Times • March 19, 2010

SANTA ANA, Calif. — Powerwave Technologies, the wireless component maker that closed a Salisbury facility in 2008, is closing a plant in Estonia and moving production to India and Thailand, according to an electronics industry Web site.

Evertiq reports that the move, which will happen in June, will result in 150 layoffs.

Powerwave had acquired the Salisbury plant when it bought a division of Filtronic Comtek in 2006.

While I’m on a a “medical-insurance cartel” rant…….

Can someone in the medical establishment please explain to me why 20 people always seem to be in the emergency room on all the “reality in the emergency room” medical shows?

Like most construction sites I’ve seen, it looks like (at best) half the people on site are actually doing something, while the other half are just standing around “just in case” or because they don’t have anything else to do.

In my line of work, the “just in case/nothing to do” crowd was laid off in about 1992.

Hey look! Green shoots:

Universal Orlando attendance falls 12 percent

http://www.orlandosentinel.com/business/os-universal-orlando-attendance-20100319,0,6142153.story

“Voters always grouse, but they do not rebel. This is assumed by Congress.” ~Dr. Gary North

In case you were worried about loing out on your >400K dream home

March 19 (Bloomberg) — The spread between rates for conforming and so-called jumbo mortgages signals the housing market will be restrained for some time.

The CHART OF THE DAY graphs the difference between rates on 30-year mortgages of less than $417,000, called conforming loans, and non-conforming mortgages of the same maturity using data from Bankrate.com. While the spread narrowed over the past year, the average 30-year rate on a jumbo mortgage is about 80 basis points higher. A basis point is 0.01 percentage point.

Before July 2007 during the housing boom, the difference was about 20 basis points. After a record number of foreclosures and two years of job losses, banks have been hesitant to make home loans, especially jumbo mortgages not backed by Fannie Mae or Freddie Mac.

The spread “absolutely means it’s more difficult for people who own those more expensive homes to sell them and less desirable for homebuilders to build those types of homes,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Brian Bethune, Gault’s colleague, said rates for both conforming and non-conforming loans may rise when the Federal Reserve ends its $1.43 trillion mortgage debt purchase program this month. “I’m not really convinced the credit markets and the housing market are strong enough to withstand” that, Bethune said.

Here’s just a little more change for the ones that think you can get something for nothing.The cry of it’s not fair will be heard far and wide!

Loan aid leads to drop in credit scores.
Many homeowners angry that program carries hefty penalty.

WASHINGTON~ MSNBC - Some homeowners who sign up for the government’s mortgage assistance program are getting a nasty surprise: lower credit scores.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration’s loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it’s unfair, especially because the news often comes as a surprise to homeowners.

Senate to remove “backdoor bailouts” from bill

ORLANDO, Florida (Reuters) - The U.S. Senate Banking Committee will remove a provision from the financial reform bill that bank regulator Sheila Bair said could allow for “backdoor bailouts,” a panel spokeswoman said on Friday.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, told a conference of community bankers earlier on Friday that the agency had “serious concerns” about a provision in the bill that seems to allow the Federal Reserve to rescue Wall Street firms if their functions were critical to the markets.

That provision will be removed in an amendment as the Senate Banking Committee debates the draft bill, committee spokeswoman Kirstin Brost told Reuters.

“If the Congress accomplishes anything this year, it should be to clearly and completely end ‘too big to fail,’” Bair said at a conference of the Independent Community Bankers of America.

Bair said small banks deserve an even playing field and that larger institutions are still enjoying benefits from an implicit government guarantee.

She said the largest banks have much lower funding costs than community banks and are attracting more deposits.

“These signs all point to a presumption in the marketplace that the largest banks are, indeed, too big to fail,” Bair said.

Russia to drill for oil in Gulf of Mexico while U.S. is going “Green”
The Jersey Journal

BPdrill.jpgAP photoBP oil rig is located in Gulf of Mexico, 250 miles south of Houston.While the United States is planning for alternative energy and considering a ban on offshore oil drilling, Russian oil platforms will go up in our backyard thanks to an offshore oil production deal with the Cuban government.

An editorial by The Washington Times chastises the Obama administration for wearing “green eyeshades” as the Russians extend their sphere of influence into the Western Hemisphere. While the United States is willing to spend time trying reach an energy utopia, Russia views oil as strategically important and as a part of an overall energy picture.

Oil is there and Russia will get it.

With huge deficits, a lack of jobs, and rising energy costs, is the Obama administration wrong in shunning the evil carbon emissions, as The Times concludes?

This story looks interesting. I am sure there is much more to tell beyond the details of why Lehman was allowed to fail when almost every other Megabank got bail. For instance, why did Main Street get the shaft after Wall Street Megabanks got loaned boatloads of helicopter money at zero percent?

Time to make more popcorn?

March 19, 2010, 2:29 p.m. EDT

Fed loses legal appeal; must disclose bailout details
Fed is considering its options for reconsideration or appeal to Supreme

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve will be required to identify the names of banks that could have collapsed if not for the central bank’s emergency lending, a federal appeals court said Friday.

The U.S. Court of Appeals for the Second Circuit in New York ruled that the Fed needs to disclose documents in response to Freedom of Information Act requests by Bloomberg L.P. and other news organizations.

The Federal Reserve is considering its options after the decision.

“We are reviewing the decision and considering our options for reconsideration or appeal,” said Fed spokeswoman Barbara Hagenbaugh.
What Did Lehman’s Fuld Know?

The 2,200-page report on why Lehman Bros. failed, unsealed last week, may open the door to lawsuits against the former management, Alistair Barr reports.

The Federal Reserve may seek to have the court re-hear their case or consider appealing the decision to the Supreme Court.

The news organizations filed a suit in 2008 seeking to have the central bank publicly release documents containing data about the names of the banks that have participated in its lending programs in the midst of the financial crisis.
…

What happened around 10a EST today to send the hope builders’ share prices into a tailspin?

Palm shares may hit $0: Analysts

NEW YORK (CNNMoney.com) — Palm’s future already looked bleak. But after reporting worse than expected results for the third quarter Thursday, some analysts think the company’s stock is now essentially worthless.

Shares of Palm (PALM) plunged 19% to $4.59 a share early Friday, a new 52-week low. Investors are becoming increasingly pessimistic about the company’s future and several analysts downgraded their positions on the stock to “sell.” Two analysts even lowered their price targets to $0.

Palm’s Pre smartphone has failed to live up to expectations. Some analysts question how much longer the company can survive.

In its quarterly earnings report Thursday, Palm posted a loss of 61 cents per share, substantially missing the 43-cent loss expected by analysts.

While the company touted its high volume of shipments, analysts are worried that major carriers such as Verizon (VZ, Fortune 500) and Sprint (S, Fortune 500) just haven’t been able to get Palm’s phones off their shelves.

Morgan Joseph & Co. analyst Ilya Grozovsky, one of the two analysts to cut its price target on Palm shares to $0, said “Palm is essentially an accelerating death spiral.”

One “crisis” to the next…
Quick, hurry up and head off this commercial crisis.

Florida AG McCollum warns of commercial foreclosure crisis
Tampa Bay Business Journal

A day doesn’t go by without some talk of the residential foreclosure crisis in the media. But the severity of that problem could be overshadowing yet a bigger problem looming on the horizon: commercial foreclosure.

Florida Attorney General and gubernatorial candidate Bill McCollum wrote a letter to Florida House Speaker Larry Cretul Friday bringing the potential commercial foreclosure crisis to the Legislature’s attention and sharing what his office has been doing about it since 2007.

“As I learn more about the potential for massive commercial real property mortgage foreclosures, I am convinced that swift legislative remedial action this legislative session would avert some of the more devastating consequences of such foreclosures,” McCollum wrote in the letter.

It looks like Lady Shiela is hostessing three pizza parties this evening.

Just a shoutout to PBear, Combo, alpha, and packman for the discussion on stocks from 3/13. I’m beginning to think that the longer term cycles up or down have more to do with the herd and the best time for those who know something about picking stocks might just be periods of flatness, like now.

Advisers have become so non-chalant at telling individual investors to throw money at “the market,” especially ETFs and funds that track the generic market. As long as everyone plays along things go up, which isn’t really investing.

Having said that, I think one can take advantage and ride on the back of the herd on the way up.