Bits Bucket For March 20, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Regulators shut 7 banks in 5 states; 37 in 2010
Regulators shut banks in Alabama, Georgia, Minnesota, Ohio and Utah; makes 37 this year
WASHINGTON (AP) — Regulators on Friday shut down seven banks in five states, bringing to 37 the number of bank failures in the U.S. so far this year.
The closings follow the 140 that succumbed in 2009 to mounting loan defaults and the recession.
The Federal Deposit Insurance Corp. took over First Lowndes Bank, in Fort Deposit, Ala.; Appalachian Community Bank in Ellijay, Ga.; Bank of Hiawassee, in Hiawassee, Ga.; and Century Security Bank in Duluth, Ga.
The agency also closed down State Bank of Aurora, in Aurora, Minn.; Advanta Bank Corp., based in Draper, Utah; and American National Bank of Parma, Ohio.
The FDIC was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits. The regulatory agency approved the payout of the bank’s insured deposits and it said checks to depositors for their insured funds will be mailed on Monday.
The failure of Advanta Bank is expected to cost the federal deposit insurance fund $635.6 million.
I saw Bernanke at the Staples on 42nd Street. His cart was loaded with toner cartridges and hard drives. I think he’s got it all covered.
He was also at Sams loading cases of “12 hour energy” into his cart.
TurboTax Timmy and the leadership of both parties on the Hill were loading up semi-trucks full of Vaseline. For what they’ve got planned for the taxpayers.
Save the lube. The new health bill will increase cap gains to 23.8% and tax unearned income (rent, div,interest) 3.8%.Obama’s guy says 5 million MORE unemployed. 30 million illegas get to vote.
“…semi-trucks full of Vaseline. For what they’ve got planned for the taxpayers.”
Some folks are in to that sort of thing. As for myself, thanks, but no thanks.
“The FDIC was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits.”
Oh,oh.
****Note to HBB posters:
Expect an acceleration of “Irresponsible butthead banks go under.”
Please make sure that your “Joshua Tree Insurance” is current and you aren’t “exposed”.
I guess the FED will just have to make these records disappear.
Federal Reserve Must Disclose Bank Bailout Records (Update5)
March 19 (Bloomberg) — The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.
The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.
The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.
No light will ever be shined on these vermin. Every attempt to lift that rock will be foiled. They do not answer to such things as the law. They are the law. The President is in bed with these demons. He is a Chicago mobster and you can bet he will not shrink at leaning on the judiciary to keep this from ever coming to pass.
Don’t forget that the Supreme Court is the last line of defense for the people. Does anybody have any faith in that den of vipers to do what is right? I know I don’t.
Don’t forget that the Supreme Court is the last line of defense for the people.
Ultimately, the people are the last line of defense for the people, always have been, always will be.
Now whether our drugged, distracted and divided Americans still have the capability of outrage, rage and organizing grass-roots mass protests remains to be seen.
It’s trash and shredders tell Supreme Court hears case in 2014 or later. No hurry, just the counrty going down. Fall of 2013 Federal Reserve can’t find documents as there was a fire in the basement. Sorry we “can’t recall and don’t remember all of the facts.
The only thing that discouraged entities from going to the Discount Window was that they weren’t usually allowed to go to the regulated Banks Discount window . Insurance Companies ,Hedge Funds ,Investment
Funds ,various Mortgage Companies here comes the Judge .
The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help.
Yes, because banks are always going to turn down free no-strings money.
Good we want banks to think twic before coming to the feds for a hand outs.
I seriously doubt that banks that are about to fail will hesitate about taking handouts. Remember the CEO’s paycheck depends on it.
Big bad bubble no mea culpa.
Economics focus
It wasn’t us
Alan Greenspan and Ben Bernanke still do not believe monetary policy bears any blame for the crisis
Mar 18th 2010 | From The Economist print edition
…the biggest gap between Mr Greenspan and conventional wisdom lies in the role of monetary policy in causing the crisis. In Mr Greenspan’s telling, central banks were innocent and impotent bystanders in a global macroeconomic shift. Thanks to the end of the cold war and reform in China, he argues, hundreds of millions of workers were absorbed into the global economy. As GDP growth in emerging economies soared, their consumption could not keep up with rapidly rising income, and saving rose. The rise in desired global saving relative to desired investment caused a global decline in long-term rates, which became delinked from the short-term rates that central bankers control.
This explanation is broadly similar to the idea of a “global saving glut” which Ben Bernanke, the Fed’s current chairman, has long espoused. The similarities between the two men’s defence of their monetary records do not end there. The most combative section in Mr Greenspan’s paper—arguing that monetary policy in the early 2000s was not a cause of the housing bubble—is strikingly similar to a speech given by Mr Bernanke at the American Economics Association’s annual meeting in January.
Both men make three broad points. First, they deny that monetary policy in the early 2000s was excessively loose by traditional central-bank rules of thumb. That is a criticism frequently made by John Taylor of Stanford University, author of the Taylor rule on how interest rates should change in response to movements in inflation and GDP. Mr Bernanke points out that based on contemporary forecasts for its preferred inflation measure, the Fed actually followed the Taylor rule reasonably closely.
Second, both men say there is no evidence that low short-term rates drove house prices upward. Mr Greenspan argues that the statistical relationship between house prices and long-term rates is much stronger than with the Fed’s policy rates, and that during the early 2000s the traditionally high correlation between policy rates and long-term rates fell apart. Mr Bernanke points to structural models which show that only a modest part of the house-price boom can be pinned on monetary policy.
Both are equally sceptical that the increase in adjustable-rate mortgages made short-term rates a more potent driver of house prices. Mr Greenspan says that the pace of adjustable-rate mortgage originations peaked two years before house prices, suggesting they were not driving the bubble. Mr Bernanke argues that the monthly payments on adjustable-rate mortgages were, on average, only 16% lower than those for fixed-rate mortgages—too small a gap to suggest that short-term rates propelled the boom.
Third, Messrs Bernanke and Greenspan point to the global nature of the house-price boom as proof that monetary policy was not to blame. Both cite new research from economists at the Fed showing that the looseness of monetary policy in different countries was not correlated with changes in house prices.
Protesting too much
There is something odd about central bankers denying any responsibility at all for long-term rates, which are, in principle, based partly on an assessment of a stream of short-term rates. Nor is it clear that low short-term rates were as irrelevant as Messrs Bernanke and Greenspan suggest. Jeremy Stein of Harvard University, a discussant of Mr Greenspan’s Brookings paper, points out that low policy rates may have mattered a great deal for income-constrained borrowers. He points out that adjustable-rate mortgages were used much more in expensive cities, a trend that became more pronounced as the fund rates fell.
By looking only at the effect of monetary policy on house prices, Messrs Bernanke and Greenspan also take too narrow a view of the potential effect of low policy rates. Several economists have argued convincingly, for instance, that low policy rates fuelled broader leverage growth in securitised markets.
Monetary policy may be a blunt tool to deal with asset bubbles. But that does not mean it is irrelevant. Interestingly, one American central banker has a more nuanced view, arguing that “in the current episode, higher short-term interest rates probably would have restrained the demand for housing by raising mortgage interest rates…In addition, tighter monetary policy may be associated with reduced leverage and slower credit growth.” That was Janet Yellen, president of the San Francisco Fed, who is likely to be Mr Bernanke’s new vice-chairman. With luck, she will prompt her boss to have a rethink.
“Denial” IS a river and it runs deep.
Anti-Flippers Buy And Hold Cheap Homes
investorsbusinessdaily
When Paul Gabrail and two partners snag a foreclosed home on the cheap, neighbors have good reason to cheer.
“We do brand-new everything: new roofs, new windows, new kitchens, new bathrooms, new plumbing,” he said. “We put granite in some of the properties. These are areas that have probably never seen granite tops.”
The partners of ADP Properties target Cleveland’s inner-ring suburbs, which were hit hard by the subprime crisis.
Call these investors anti-flippers. Instead of buying homes to sell fast at a profit — as flippers did in the boom — they buy, hold and upgrade, improving blighted neighborhoods. Not dependent on ever-rising prices, they plan to ride out any value setbacks from future foreclosures.
Many homes along Cleveland streets have been boarded up and taken back by banks. Prices are down as much as 85% from the boom.
http://finance.yahoo.com/news/AntiFlippers-Buy-And-Hold-ibd-313253572.html?x=0
Thank god, there are granite counter-tops. How could anybody live in a house that didn’t have granite counter-tops? It’s not only unfashionable it’s anti-American.
Do you remember those awful puke-green appliances from the 70’s?
They called that color avocado. Harvest gold was another popular color. I forget what marketing spin they put on the brown colored appliances.
They called the brown “earth tones”.
How about electric blue shag carpet? That was awesome. I love the pink tiled bathrooms.
Geez, guys. Call it as it was.
The shade of the 1970s was “baby sh*t gold”.
They called the brown “earth tones”.
Which matched my uncle’s Earth Shoes.
It also matches the residue of my “daily emissions” - well, hey, heY, HEY!!!!
You Kids, It was called “Coppertone” back when I sold appliances at Montgomery Ward, and it didn’t sell well.
“Do you remember those awful puke-green appliances from the 70’s?”
Hey, I resemble that remark! My fabulous new rental has an avocado stove that is a bit ‘period’. My new LL kindly offered to replace it, and I asked him not to. Not only does it have a nice “old” look to it, but it works perfectly fine, and I hate sending something that works well to the landfill. Oly would approve—we had that in common.
Nice, Prime!
I hope they’re not stopping at granite countertops. I mean, how about the Sub Zero refrigerator and the Viking range? How could anyone even BEGIN to prepare a meal in a kitchen equipped with anything less?
Want to see something really silly? Check out MLS #4302696. This is a modest little place in Tempe AZ built in the 70s. Decent house in a solid neighborhood, but nothing special. Some idiot bought it and tricked it out with every flipper cliche imaginable. It’s probably worth about $150 tops (less after the tax credit goes away), but he’s asking over $200 for it. What this clown doesn’t realize is that he’s made the classic mistake of upgrading it way beyond its intrinsic value. NOBODY is going to pay that kind of money for that house regardless of how “high end” the appliances and fixtures are. A Viking range in a 1400sf 3/2 house? Unless the buyers are planning on hosting state dinners or opening a short order restaurant, that’s just ridiculous.
Talon..
You should see the crap condozes they make here in NYC. Where having a double sink in the kitchen is a crime against humanity and a 2 huge glass bowl sinks that splatter water all over the bathroom is a godsend.
Granite counter tops are nukular — they give off poisonous radiation.
Wanted to link this thread from Piggington’s, as I think something sinister might be going on. Please read the comments (only 9), especially what I wrote near the bottom.
Anyone else get one of these packages from their lender? Anyone who did care to follow up to see what’s going on?
Ideas or comments appreciated!
————————-
Surprisingly I received an overnight package from Loan Modification/BAC Home Loans, including a pre-paid Fedex return label.
The letter states: “Thanks you for calling us recently to discuss your home load need. We understand that it is becoming increasingly difficult for you to make your mortgage payment. We want to help you stay in your home…”
I never call, and would certainly not qualify for any loan modification program.
http://piggington.com/loan_modificationbac_home_loans
“Anyone else get one of these packages from their lender?”
Nope. I’m one of those losers that chooses to throw my money away on rent.
Don’t forget the throwing away money on booze part!
With all due respect, you don’t know Jack, do you?
Au contraire, mon freire, we are very good friends!
I believe you throw money away on rent. You pi$$ money away on booze.
Always a pi$$er and a thrower be!
Comments about this potential program:
If you and [XXXX] (whose mortgage is paid off) got these notices, one has to wonder if they’ve sent them out to everybody, and whether or not every borrower is getting the opportunity to apply for a principal reduction. I wonder if there’s not some kind of program going on behind the scenes where the govt is going to guarantee more than they are publicly admitting for losses on principal reductions. BAC would only have an incentive to mail these out to everyone if somebody (govt?) was making an offer they can’t refuse, IMHO.
Also, IF they are only mailing these out to borrowers with conforming mortgages, might it be related to this (bold is mine):
At the time the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac into conservatorship in September 2008, Treasury established Preferred Stock Purchase Agreements (PSPAs) to ensure that each firm maintained a positive net worth. Treasury is now amending the PSPAs to allow the cap on Treasury’s funding commitment under these agreements to increase as necessary to accommodate any cumulative reduction in net worth over the next three years. At the conclusion of the three year period, the remaining commitment will then be fully available to be drawn per the terms of the agreements.
Neither firm is near the $200 billion per institution limit established under the PSPAs. Total funding provided under these agreements through the third quarter has been $51 billion to Freddie Mac and $60 billion to Fannie Mae. The amendments to these agreements announced today should leave no uncertainty about the Treasury’s commitment to support these firms as they continue to play a vital role in the housing market during this current crisis.
The PSPAs also cap the size of the retained mortgage portfolios and require that the portfolios are reduced over time. Treasury is also amending the PSPAs to provide Fannie Mae and Freddie Mac with some additional flexibility to meet the requirement to reduce their portfolios. The portfolio reduction requirement for 2010 and after will be applied to the maximum allowable size of the portfolios – or $900 billion per institution – rather than the actual size of the portfolio at the end of 2009.
Treasury remains committed to the principle of reducing the retained portfolios. To meet this goal, Treasury does not expect Fannie Mae and Freddie Mac to be active buyers to increase the size of their retained mortgage portfolios, but neither is it expected that active selling will be necessary to meet the required targets. FHFA will continue to monitor and oversee the retained portfolio activities in a manner consistent with the FHFA’s responsibility as conservator and the requirements of the PSPAs.
Treasury is making two additional changes to the PSPAs. Treasury will delay setting the Periodic Commitment Fee by one year to December 31, 2010. Treasury will also make technical changes to the definitions of mortgage assets and indebtedness to make compliance with the covenants of the PSPAs less burdensome [anyone know what that's about? -car] and more transparent in light of impending accounting changes.
http://www.ustreas.gov/press/releases/20...
Two words:
Identity Theft
How hard would it be for someone to collect high quality information for the price of a Fedex delivery?
Well, well, well, what an exciting weekend we have in store! While Congress tries to foist the shakedown known as “health care” (lol) on the nation, illegals will be demonstrating in Washington for their “rights”. Is this a great country or what?
Want to buy a house?
Hey Yo Illegals wanna green card………
Don’ send your underground earnings back to your country …invest in American Real Estate and put 33% down on a house and we will give you a green card. And don’t default or you lose it and we will have to ship you back….fair enough?
pure genius!
TARP money in action, no doubt!
As they are [apparently] destitute, how can illegals afford make to Washington anyway?
On taxpayer-funded buses?
Nothing like the government stealing your money to ensure that you don’t have any money in the future….
Chinatown buses, the best transportation bargain around.
“illegals will be demonstrating in Washington for their “rights””
Well that should make it easy for the INS to round them up.
Follow the money. The pro-immigration lobby is extremely well funded by corporations who seek the cheapest possible labor, and law firms for whom illegals and immigrants going through the citizenship process and bringing their relatives into the country are a gold mine. Meanwhile, most of the people who bitch about immigration don’t actually lift a finger to support those who are fighting uncontrolled immigration, such as NumbersUSA or VDare.
Don’t forget about the fine men and women of the US Border Patrol and Customs Enforcement.
I am looking forward with great interest to learning more about how the Fed makes its financial bailout allocation decisions. It is heartening to know that America still has a free press.
Court To Federal Reserve: Give Journalists Bank Bailout Documents
5:35 pm
March 19, 2010
A federal appeals court told the Federal Reserve to give journalists documents related to bank bailout loans the central bank made the height of the financial crisis.
The Federal Reserve Bank headquarters, Washington, D.C. (AP Photo)
By Frank James
A federal appeals court has ordered the Federal Reserve to make available to news organizations that requested them through the Freedom of Information Act documents related to loans it made to ailing banks at the height of the financial crisis.
NPR’s Yuki Noguchi reported the following for the network’s newscast:
The federal government launched its unprecedented bailout of financial firms in late 2008. It struck deals to lend trillions of dollars of public money to troubled banks largely behind closed doors.
The Fed sought to keep details about those controversial loans private, even after Fox News and Bloomberg News requested more information under the Freedom of Information Act. The Fed argued disclosure would reveal confidential trade secrets that might trigger a fresh sell off by investors.
The Manhattan Circuit court of appeals disagreed. It said the agency had not justified its protections of the information.
The Fed is reviewing the decision and whether to appeal.
The reason for all the secrecy is to prevent bank runs. If depositers knew just how weak their bank’s financials were then they’d line up to take their money out, which would push the bank over the edge.
That’s why the FDIC folks quietly arrive on Fridays, after the banks are closed.
One of the banks that closed last week had the FDIC there for weeks before it closed. They had to find a buyer for the bank. Plus, all of these banks are generally on the troubled bank list. They are most likely operating under MOUs or C&D orders for quite a while before being shut down. Anybody that is surprised when their bank gets shut down, in this day and age, didn’t pay any attention.
SSSSSHHHHHHHHH! You don’t want to panic the sheeple.
The regulators exist not to ensure that companies run their operations in accordance with sound and legal practices, but rather, to help them conceal the extent of the frauds they’re perpetrating to avoid upsetting “public perception.”
That’s why Ron Paul’s bill to audit the Fed is causing such panic among the Usual Suspects. They fear nothing like the harsh light of exposure. And why each and every one of us needs to keep on our representatives to pass it.
Perhaps it is too plainly obvious to all for me to bother saying this now, but one of the best possible ways to panic the sheeple is to perpetually make misleading announcements through a MSM megaphone which are later sharply contradicted by emerging data.
Here are some recent examples:
“Subprime is contained.”
“There will be no recession in 2008.”
“I see green shoots of economic recovery.”
Etc., etc., etc.
After a while, the sheeple become so flummoxed that the whole flock can easily be herded over the edge of the nearest cliff.
Many in this country, given the choice, would take the blue pill. They simply don’t want to know the truth.
Democrat Sen Schumer did just that. His memo was leaked and caused the run on INDYMAC. Cost the taxpayers $11 billion. Now that’s real money.
Do we have the rule of law or don’t we? You know that The Fed doesn’t want the rule of law, except for the peasants. Their big buddies are also saying how The Fed needs to maintain itself as a giant Black Hole. If the courts cave then it is obvious that we are a Banana Republic and the rule of law is dead.
“The Fed doesn’t want the rule of law, except for the peasants.”
We have the modern incarnation of Niccolò Machiavelli’s rule of law.
We have a winner.
What could possibly be so confidential regarding decisions on where to spend hundreds of billions in public money? Is it safe to say the Fed is the only federal entity whose leadership imagines itself to have carte blanche to make private financial allocation decisions of this magnitude above any level of public scrutiny whatsoever?
Perhaps the release of this information will help clear up the heretofore unresolved mystery of how Wall Street banks could continue paying billions and billions of dollars in bonuses immediately after appearing to have thrown away hundreds of billions of dollars into the sea.
Just in case the Fed succeeds in fending off this FOIA, I have a tip for other industries seeking future bailouts: Restructure into one extremely large and powerful conglomerate. This will serve to demonstrate that you are too-big-to-fail, and also help you to defend yourself against any future FOIA requests, on the grounds that you are a “person” and hence the bailout allocation decision is strictly confidential.
Appeals Court Rules Fed Must Release Loan Reports
By ALAN FEUER
Published: March 19, 2010
A federal appeals court in Manhattan ruled on Friday that the Federal Reserve Board must release a trove of secret documents identifying financial firms that received public money under a trillion-dollar emergency loan program put in place at the height of Wall Street meltdown.
The decision affirmed the ruling last summer of a lower court that ordered the Fed to release the same documents.
The federal court, the United States Court of Appeals for the Second Circuit, found in favor of Bloomberg News, which sued the Fed in November 2008 under the Freedom of Information Act. In a related case, the court ruled in favor of Fox News, which had filed a similar suit against the Fed.
In court papers, Bloomberg said it was trying to “break down a wall of secrecy” in seeking the release of so-called term reports, which contain information about the hundreds of billions of dollars that the Fed lent to banks through its discount window and other emergency programs.
The Fed had argued that the information in the reports was not the releasable kind generated by a government agency, but instead was obtained from “a person” — which is to say, the banks — and was therefore private and protected.
In its ruling, the court dismissed this claim, writing, “The only information sought is a summary report of actions that were taken by the government.”
The court also considered the Fed’s other chief argument: that the discount window, which provides money on a short-term emergency basis, is a lender of last resort, and that if depositors learned that a bank needed last resorts, it might suffer bank runs.
“The arguments are plausible, and forcefully made,” the court wrote. But it went on to say that “a test that permits an agency to deny disclosure because the agency thinks it is best to do so” would undermine the Freedom of Information Act.
The Clearing House Association, which is a consortium of the largest banks and which intervened on behalf of the Fed, released a statement saying it was disappointed by the ruling.
It said that an appeal to the Supreme Court would be considered.
“….The Fed had argued that the information in the reports was not the releasable kind generated by a government agency, but instead was obtained from “a person” — which is to say, the banks — and was therefore private and protected.”
See how quick “they” threw that in for a defense…love those 5-4 Supreme’s decisions, especially the one’s that are on the wrong side of Herstory…
Banks the only bidders at 2 foreclosure auctions -
Wells Fargo and Bank of Jackson Hole were the only bidders in two county foreclosure auctions during the past week.
On Thursday, Wells Fargo made the starting $1.34 million bid for a Love Ridge condo at 549 Snow King Loop.
On Tuesday, Bank of Jackson Hole made the starting $2.43 million bid for a single-family home near Jackson Hole Golf & Tennis Club.
For the month, mortgage lenders have submitted the top bids on seven properties. Seven more auctions are scheduled through the end of the month. Opening bids total about $7 million collectively
But but…it’s different here.
Why are lenders buying up properties at this stage of the game, when there is something like 10 million in shadow inventory that is going to have to pass through the pig-into-a-python residential real estate supply queue over the next few years? I thought banks were in the business of unloading REO, not deliberately accumulating it?
What Hard Rain is describing is almost certainly the function where banks legally take a property back at a foreclosure sale. It looks like they are buying or bidding, when in fact no money changes hands.
I tend to forget that it is booked as a “sale” with the “purchase price” equal to the outstanding principle balance of the loan when a bank takes back a home which won’t sell at the reserve price.
I am not sure to verify or refute this, but we have occasionally had discussions here about whether the data sausage manufacturing operations in the REIC (e.g. DataQuick, Radar Logic, etc) correct their “average sale price” statistics for these mislabeled “sales.” To the extent they fail to do so, their average price statistics (whether median, index or whatever) represent upwardly biased measures of market value for the area in question.
What is so “startling” about these bids?
1) They were big numbers.
2) There were no buyers willing to pay what the banksters were willing to accept.
Bloomberg
Fed Ends Bank Exemption Aimed at Boosting Mortgage Liquidity
March 20, 2010, 12:01 AM EDT
By Craig Torres
March 20 (Bloomberg) — The Federal Reserve Board removed an exemption it had given to six banks at the start of the crisis in 2007 aimed at boosting liquidity in financing markets for securities backed by mortgage- and asset-backed securities.
The so-called 23-A exemptions, named after a section of the Federal Reserve Act that limits such trades to protect bank depositors, were granted days after the Fed cut the discount rate by half a percentage point on Aug. 17, 2007. Their removal, announced yesterday in Washington, is part of a broad wind-down of emergency liquidity backstops by the Fed as markets normalize.
The decision in 2007 underscores how Fed officials defined the mortgage-market disruptions that year as partly driven by liquidity constraints. In hindsight, some analysts say that diagnosis turned out to be wrong.
“It was a way to prevent further deleveraging of the financial system, but that happened anyway,” said Dino Kos, managing director at Portales Partners LLC and former head of the New York Fed’s open market operations. “The underlying problem was solvency. The Fed was slow to recognize that.”
The Fed ended the exemptions in nearly identical letters to the Royal Bank of Scotland Plc, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Deutsche Bank AG, and Barclays Bank Plc posted on its Web site.
…
Of course the problem was solvency rather than liquidity . Hank Paulson saved insolvent entities and the “we need money for credit markets for Main Street” was bogus ,IMHO .
“The underlying problem was solvency. The Fed was slow to recognize that.”
—————
Once again, something that we all readily recognized, and many of us were trying to convey here and in letters to our political representatives and various regulators.
Good thing they were listening to all that expensive “talent” instead of listening to those of us who’ve nailed this thing every step of the way. And they are still looking to that same “talent” to make recommendations for how to handle things in the future.
You can’t solve a problem until you can correctly *define* the problem. They have still not correctly defined the problem (too much debt, not a lack of liquidity).
March Madness is a hoot!
Public, 2; Fed, 0
March 19, 2010 - 2:15 pm
Liz Moyer is a Senior Writer at Forbes
A federal appeals court in Manhattan dealt the Federal Reserve a blow Friday saying the central bank has to disclose documents identifying which banks borrowed through its emergency discount window in the worst days of the 2008 financial crisis.
If upheld, the ruling is a major victory for media outlets like Bloomberg LP, which initiated the case after being denied access to the documents in a Freedom of Information Act request. It’s also a major victory for those who think the Fed should be less secret and more transparent in its dealings, especially since $2 trillion of taxpayer money was used by the government (through the Fed’s system) to prop up the banking system.
The Fed argued against disclosing the information because it might harm banks on the list. Discount window borrowing carries a stigma with it — it is a sign that a bank can’t even get other banks to lend to it and has no other recourse to get overnight cash. After the collapse of Lehman Brothers in September 2008, the inter-bank loan market froze and discount window lending soared to over $100 billion a day, according to Fed statistical releases.
Bloomberg LP was joined in friend of the court filings by other news organizations. The FOIA request and lawsuit were driven by Bloomberg’s award winning investigative reporter Mark Pittman, who died unexpectedly in November before he could see his fight with the Fed to the end.
The court ruling, which upholds a lower court ruling last year, says the Fed can’t rely on an exemption it used to refuse to disclose information on grounds it is a trade secret, it was obtained from a person, and it was privileged. The lower court said in August the exemption didn’t apply to Bloomberg’s FOIA request, for loan and collateral records, because there wasn’t proof the banks named would be harmed.
In another similar case, the appeals court gave Fox Business Network a victory Friday, overturning a lower court ruling and ordering the Fed to disclose the names of banks that borrowed money and the details of the loans. Fox’s suit was also in response to denied FOIA requests for details on the financial institutions that got money from the Fed loan programs, including amounts and collateral pledged.
…
“It’s also a major victory for those who think the Fed should be less secret and more transparent in its dealings”
Haven’t we had enough transparency? All of that transparency Obama promised and has brought to the government has me downright dizzy. I like my government, and central bank, to be excessively opaque. I don’t want to think about these things. The government should just let us know what they’ve decided behind closed doors. That is so much simpler.
“The FOIA request and lawsuit were driven by Bloomberg’s award winning investigative reporter Mark Pittman, who died unexpectedly in November ”
Sheesh. Here we go with the unexpected deaths again.
The unanswered question:
Where did the bank bailout money go?
The U.S. Fed does not want to reveal which banks got what in the massive financial crisis bailouts - a lawsuit under way may open up that vault
Joanna Slater
New York — From Monday’s Globe and Mail Published on Sunday, Mar. 07, 2010 8:03PM EST
Last updated on Friday, Mar. 19, 2010 3:33PM EDT
It’s the question that just won’t go away.
In the depths of the financial crisis, as the U.S. flooded the system with cash in a desperate effort to stave off collapse, which banks got what?
Despite a fusillade of criticism, much of it in Congress, the Federal Reserve has remained a tightly closed vault, so to speak. Repeated efforts to pry open the inner workings of the bailout have met with stiff resistance and mostly outright failure.
Now a lawsuit wending its way through the courts is close to forcing the Fed to do something unprecedented – provide a loan-by-loan accounting of its emergency aid to banks.
…
At Bloomberg, editors said the case has always been about a bigger principle – “People have a right to know what’s being done with their money,” said Mr. Winkler – and not simply the particular information it requested, which is now nearly two years old.
Not so for Mr. Pittman. Like a true reporter, he just “wanted to know this stuff,” Ms. Bennett says, rather than prove a broader point.
Now this case will be a tribute to him. Only 52, Mr. Pittman died unexpectedly last November, still trying to get to the bottom of things. When he left the office for the last time, his computer screens were filled with information about collateralized-debt obligations, one of the complex derivatives that rotted the financial system from the inside.
After reading Ben’s Friday wrap yesterday, I followed the links to the CT Center for Economic Analysis (”No Jobs Recovery - When Will CT’s Misery End?”), as well as to the associated Courant article (”Economic Analysis: Both Cheer And Gloom For Hartford”) I was struck with relief that I was not crazy after all. I had started my working years during the recession of the 80s, and remember the mood on the street of manning up to the Volker prescription. I was there in the 90s recession, and watched 100,000 former middle managers grimly networking at the unemployment office after the nearly simultaneous rightsizings by GE, IBM and the insurance companies, one of which left Stamford for Texas. I remember wondering to myself, “How is this area ever going to reabsorb 100,000 nearly identical grinning idiots?” (- no offense - I was one of them, and opted to grin no more. Marketing edge, and all). The answer, of course, is that it couldn’t, and didn’t.
These two articles are the first public acknowledgement that CT has never recovered from the recession of the early 90s. I’ve been following the press and academic studies, for no other reason than to verify whether or not I was going nuts. As you all know, it tends to be disorienting when you observe one set of circumstances (”this is unsustainable”) while everybody around you behaves as if everything is business as usual.
OK. It has taken 15 years of mass delusion, during which house prices became stratospheric with no basis other than ez-debt.
From exeter’s post, after he looked at an overpriced house that has been on the market for seven months with no price moves, it appears that the Kool Aid is still flowing strong. More than fifteen years after the recession from which CT never recovered, there are still people who don’t understand that houses are only worth what people can pay. The J6P good jobs have gone, never to return. Delivery guys from Domino’s, and floor managers from Staples, will not be able to pay for a $400K house. Ever.
The hopium is strong in CT.
Jane and don’t forget the migration of the minorities from Stamford to Norwalk to Bridgeport to New Haven to New Britain to Hartford all those years…so they are stuck in your city..
“…I’ve been following the press and academic studies, for no other reason than to verify whether or not I was going nuts. As you all know, it tends to be disorienting when you observe one set of circumstances (”this is unsustainable”) while everybody around you behaves as if everything is business as usual.”
Well, on three different radio programs in the last week, the person being interviewed used these exact words to describe the perceived Deception & Delusion…
“everyone about me was a “TrueBeliever™”
Think I’ll have to give a “toss-one-back” to Mr. Hoffer on my wilderness walkabout today.
“hopium”… that about sums up America’s Foreign Wars in Iraq & Afghanistan
Many places never recovered from the recession of the early 1990s, not just CT. And while there were many factors that contributed to that recession, the S&L disaster that caused the RE collapse was the main driver.
But more than that, this country was basically gutted in the 1980s. Anyone remember “greed is good?” Deregulation? Offshoring? “Rightsizing?” (I forgotten that one Jane) “Who Moved my Cheese?” (stupidest damn book ever written and nothing but one huge brown nose apology for big business destroying middle class America)
For some reason, the PTB have decided that a 75% driven economy doesn’t need… consumers.
“Who Moved my Cheese?” (stupidest damn book ever written and nothing but one huge brown nose apology for big business destroying middle class America)
This one is more my style:
Who Moved My Smokestack?: America’s Failure to Protect Our Jobs and Stop the Erosion of the American Dream (Paperback)
Amazon dot com
Book Description
America’s failure to protect our jobs and stop the erosion of the American Dream. The greatest travesty of the 21st century is the impact of globalization, Petrolism, and monetized special interest driven politics. Rebuilding our American Dream should be the utmost priority for all Americans and those who serve us in this century. This is a blueprint for shifting todays paradigm from the perspective of economic development at the local level
I don’t know why anyone would want to lose the American dream .
Isn’t the American dream tied into equal opportunity to happiness ?
If government gives a favorable playing field for Corporations lets say ,those windfall profits would be at the expense of opportunity to Americans to work for a piece of the pie . The ill gotten gain would also be at the expense of more productive activity for a Society .
Inside people are now starting to come out and expose just how
unearned the excess profits of the CEO’s and commissioned employees of CDO securities were . It was more like here buy theses ,they are AAA rated . If a industry comes up with a Ponzi -scheme in order to increase their profits ,even causing real estate to become inflated to fund the scheme,than it’s ill gotten gain .
The beauty about having fairness is that it tends to create more productive expressions of the allocation of resources.
1. Massive deflation (20 years) followed by massive inflation.
2. Are we on the same road?
——————————–
Japan: Bubble prophet fears new disaster(sovereign default and hyperinflation)
Japan Times | 03/19/10 | REIJI YOSHIDA
Bubble prophet fears new disaster
Economist Noguchi warns soaring public debt may bankrupt Japan, bring back hyperinflation
By REIJI YOSHIDA
Prominent economist Yukio Noguchi is one of the few who correctly predicted the collapse of Japan’s bubble economy in 1987, warning the preceding euphoria was based on a major distortion in land prices.
Now the doomsday prophet is making another terrifying prediction: Japan is likely to be devastated by a snowballing public debt that will bankrupt its government and trigger catastrophic hyperinflation.
“There is little hope,” Noguchi said in an interview with The Japan Times at Waseda University’s Graduate School of Finance in Tokyo. “Japan’s fiscal conditions are so bad, it can no longer be fixed without causing inflation. I’m very pessimistic.”
Noguchi is not the only one deeply fretting the debt.
They may still be a minority, but an increasing number of economists and market players are voicing deep concerns about Japan’s fiscal sustainability and fear catastrophe may strike in the near future.
Compared with Greece, Japan’s gross government debt is far worse, at 181 percent of gross domestic product — the highest among the developed countries. Greece’s debt-to-GDP ratio is 115 percent.
Japan’s present debt-to-GDP ratio is only comparable with what it was at the end of World War II. At that time, the only way the government could reduce the debt was through hyperinflation, which wiped out much of the people’s wealth with skyrocketing prices.
“I can’t tell exactly what will happen (this time), but what actually happened after the war was that the price level surged 60 times in just over four years,” Noguchi said.
“If the same thing happens again, a ¥10 million bank account will have the same net value of just ¥100,000 today. It’s actually possible,” he warned.
What’s 181 percent when you have the IMF?
“There is little hope,”
I have a question.
How lasting and real can doomsday scenarios really be when the doomsday scenarios are based on collapsing systems of “money” that are not “real” anyway?
It’s not like human beings are not productive and adaptive. We are and were before “funny money” was created. Are we suddenly going cease to exist or be miserable forever because the dollar or yen crashes?
Let’s say it all collapses in America. OK we lose our ability to buy big screens and some stuff. Do you think Americans would be agreeable to letting themselves freeze and starve KNOWING that there are entities who still possess the means that could feed them? And we’d still be paying our debts to banks who rigged it?
There’s no way this could happen. We’ve fought wars over much less.
I think TPTB know this and are doing two things now.
1. Looting as much as they can now.
2. Desperately trying to extend the game.
But if a game can’t last then it won’t. The question is if a re-set will be doomsday or just a very difficult period leading to a more sustainable and honest economic system.
You’ve asked the correct question. You get a “gold” star.
Sorry, to blow your nads off, gold-istas but gold never goes to infinity. Gold rises to the point of chickens, eggs, and barter.
Money is the flip side of the coin of productivity. With debt or it’s buddy, savings, you are trading off productivity today for productivity tomorrow.
Isn’t this flippin’ obvious?
“Sorry, to blow your nads off, gold-istas but gold never goes to infinity. Gold rises to the point of chickens, eggs, and barter.”
Here is some egg price data (from the BLS):
Consumer Price Index - Average Price Data
Series Id: APU0000708111
Area: U.S. city average
Item: Eggs, grade A, large, per doz.
February 2000 $0.962
February 2010 $1.872
The Precious™ is currently going for $1107/oz (after yesterday’s $21 drop
). It was around $300/oz back in February 2000 (+/- epsilon).
So the current number of eggs per ounce of gold is
(12 eggs/$1.872)*($1107/ounce of nugget) = 7,096 eggs per ounce of nugget.
By contrast, back about a decade ago, your ounce of gold would have purchased
(12 eggs/$0.962)*($300/oz) = 3,742 eggs per ounce of gold.
Tentative conclusions:
1) The gold price of dollars has gone down, a lot (i.e., the same ounce of gold that will buy you 1,107 dollars today would only have bought you 300 dollars ten years ago).
2) The price of eggs has gone down a lot in gold (7,096 eggs per ounce today, versus only 3,742 eggs per ounce a decade ago).
3) The dollar price of eggs has nearly doubled in a decade — from $0.96 to $1.87 a dozen.
4) Sorry gramps, the value of your fixed-income pension has been trashed by the operation of the Fed’’s printing press.
Productivity of egg production (per capita) has risen a lot - as in, not a very useful skill any more.
You missed the obvious one.
Much of what you write strikes me as correct. It’s just that your “very difficult period” could be the entire lifetime of everyone now living. And, the “very difficult period” could entail extreme violence. Do you know what all your neighbors will do when EVERYTHING they ever counted on goes “poof!”? Given the way people in this country, my country, have been taught, I doubt sufficient numbers of them will be able to accurately identify the larger forces and actors in play, much less organize for a concerted, calm, effective effort to wrest control from those more powerful actors. Instead, my bet is most people will strike out at the closest available target. In case you missed my meaning, that would be YOU (and, for my neighbors, ME).
So, for all intents and purposes for everyone now living, the crash of the currency (especially if a worldwide phenomenon) would be the end of life as we know it. The other name that often goes by is DOOMSDAY.
IAT
IAT,
Thank you for responding to my question and you might be right (that’s why I asked because I don’t know) but I will also make the following comments.
I doubt sufficient numbers of them will be able to accurately identify the larger forces and actors in play, much less organize for a concerted, calm, effective effort to wrest control from those more powerful actors.
But we still have the vote, there could be a movement to wrest control from incumbents uninterested in term limits and campaign finance reform. I believe this would cause great, positive change and it really isn’t that destructive or messy compared to mass violence.
Do you know what all your neighbors will do when EVERYTHING they ever counted on goes “poof!
It won’t be pretty but it is happening in slo-motion now to those who have lost jobs, health insurance, most of their 401K’s and equity in their houses. I know that’s not everything but it’s a lot. And the government and Americans would never tolerate mass starvation.
As far as currency collapse, Brazil has had 3 currencies collapses since 1988, Crusero, Cruzado and Cruzado Novo. No one killed anyone in Brazil but I will grant you Brazilians (on a Macro level) are much less violent than Americans are. I’m just saying it’s happened many times to many people without civil war or doomsday.
Excellent posts, all.
I tend to agree with IAT. Perhaps we don’t give Americans enough credit, but in a heterogeneous society like ours, where people move around a lot and don’t have deep, multi-generational roots in their communities, I think they are far more likely to turn on their neighbors.
We’ve seen enough to show that we, as individuals, are powerless over those who control our destiny (politicians, corporations, banks, etc.). Average Americans can’t get to those people, so they’ll take from those nearest to them.
I think they are far more likely to turn on their neighbors.
Maybe but I have doubts that collapsing “fake” money can turn us from America to a Mad Max scenario. Has Iceland turned to anarchy? Did Brazil with 3 currency collapses in 23 years? They really didn’t and USA has a lot more going for it than Brazil. They don’t call us the “richest country on earth” solely because of our means of monetary exchange.
We’ve seen enough to show that we, as individuals, are powerless over those who control our destiny (politicians, corporations, banks, etc.).
Lately yes but I believe that the power to vote in mass against the PTB’s hand picked incumbents is more powerful than standing armies. This power just hasn’t been utilized to its potential because until now, it hasn’t needed to be. Will it? I don’t know. Should it? Yes.
I think a lot of this fear and dread of doomsday is the same kind of fear and dread that the banks and government used to rail-road the bailouts through. They played on our fear but what they need to remember is when you have nothing, you have nothing to lose. They were ill-advised to promote a system where so many who had something, now, have nothing left to lose.
I think that if you take a people that are use to having a decent standard of living and all of a sudden push them down ,the reaction might be different than a country that the people are use to being held down . The trick of getting Americans into debt for a while to finance their needs is slowly becoming apparent .
But ,I believe that more Americans will seek remedy in the voting process ,but they still seem to be confused with who are the bad guys and who aren’t .Like Ca renter suggests ,this
might cause them to strike out against their neighbor or actually support a trick cause .
The key difference between Japan and Greece is that Japan’s debt is almost entirely internal. The Japanese population has loaned huge amounts of money to the Japanese government at very low rates because they have had high savings and few alternative options.
A currency crisis is highly unlikely in this scenario.
Homeowners using Obama’s loan modification program seeing lowered credit scores
By Alan Zibel
The Associated Press
Posted: 5:13 p.m. Friday, March 19, 2010
WASHINGTON — 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.
“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” said Eileen Anderson, senior vice president at Community Development Corp. of Long Island.
But West Palm Beach Attorney Michael J Posner, who handles mortgage modifications, said it’s not a fairness issue.
“It’s just the nature of the FICO system,” said Posner, who added that most of his clients are already delinquent on their loans when they apply for a modification. “It’s a private company, this is America, this is the way we do it.”
“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” said Eileen Anderson, senior vice president at Community Development Corp. of Long Island.
It’s unbelievable how these people think. The handouts and coddling we give to our deadbeats is mindnumbing.
When did “fairness” become a cover word for “idiots who can’t compete?”
In the long run, the Fed’s discretion to use the discount window however it pleases above scrutiny is dead.
* MARCH 20, 2010
Fed Can’t Shield Discount-Window Use
By CHAD BRAY
NEW YORK—A federal appeals court ruled Friday that the U.S. Federal Reserve’s board of governors must disclose documents related to individual borrowing from its discount window and other “last resort” lending programs.
In separate rulings Friday, the U.S. Second Circuit Court of Appeals upheld a lower court’s decision granting a request by Bloomberg LP’s Bloomberg News for documents related to use of the Fed’s discount window and other programs and vacated a separate ruling denying a request for documents by Fox News Network LLC’s Fox Business.
Both news organizations had sought Fed documents under the Freedom of Information Act and ultimately brought lawsuits after the Fed denied their requests.
Matthew M. Collette, a lawyer for the Fed’s board of governors, argued in January that banks would be less likely to use the discount window and other lending-of-last-resort programs if they know their use would be made public. He said at the time that accessing the window carries a negative connotation if use was made public, even when a healthy bank suffering a short-term liquidity issue does it.
“The requirement of disclosure under FOIA and its proper limits are matters of congressional policy,” U.S. Circuit Judge Dennis Jacobs wrote in the Bloomberg decision. “The statute as written by Congress sets forth no basis for the exemption the Board asks us to read into it. If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”
…
Hey, Stucco, how many times are you going to post this? I know this is a good development but damn. That’s a lot of postings.
You learn after a while that it pays to say the same thing over and over again in the court of public perceptions.
Repetitio est mater studiorum.
When you realize the people who object to arguments raised here often have tin ears and marbles inside their skulls, it becomes readily apparent why we need to keep repeating ourselves over and over and over again to get through to them.
You’re right, PB.
Repeating what?
Court to Wrangle Documents From the Fed’s Cold Hands
By Megan Carpentier 3/19/10 5:13 PM
Bloomberg’s long-standing Freedom of Information Act request for a look at who in the financial system took part in the Fed’s now-secret $2 trillion loan program has been granted by a second court on the basis that there exists no exemption to FOIA rules for the continued economic health of private companies. The Fed is expected to continue its efforts to keep this basic information out of the hands of the Americans who paid for the bailout and the investors who might pull their funds from companies that would have otherwise bailed, in order to protect the companies that were saved from supposed imminent failure.
…
Some early morning thoughts:
If masses of FBs decide to stop paying on their mortgages - a trend that seems to getting well under way - then that means these FBs get to spend their mortgage money of toys and such. The economy should take a positive hit as a result of this spending.
But this positive hit is a false one, false in the sense that it is unsustainable. Sooner or later the FBs will get evicted and will have to go back to making some real-money outlays for rent.
Which means this Great Recession thing may be delayed a bit but is not anywhere close to being ended.
“…then that means these FBs get to spend their mortgage money of toys and such.”
Think of them as primary beneficiaries of the War on Financial Responsibility: Those who pay their mortgages and otherwise meet their financial obligations have less money to spend on fun stuff.
I dunno. I just bought a new toy (lens for my camera.)
I’m stimulating, baby!!!
I am having the boat seats reupholstered. I’m stimulatin too, but at a discount.
Well, I’m paying full price but I really really really want this lens. The design is stupendous, and that’s what I’m paying for.
I want it; I want it yesterday but it’ll only be ready a few weeks from now.
Did I say really really want it?
We stimulated a couple of bars last night. I will be eating bologna for a couple of weeks. We single-handedly helped to lift the downtown economy. Has anybody seen the aspirin? I could use a couple.
Here’s a double double instead!
Almost as good, and infinitely better at dealing with humanity.
We just bought a new coach. Stimulating and
sobering.
Sorry, I may be hungover but I’m not that hungover.
I can’t be the only one thinking this: what is a coach?
Like those horse-driven carriages? A coach that takes you to the ball?
I suspect that is farmer talk for the long cushioned thing that two can sit upon while traveling the airwaves. TV coach.
I think it’s a manpurse.
Like from Coach?
That was so passé ten years ago.
Details! How fast is it? What’s its focal length? What kind of camera is it for?
Fast. Very fast.
24mm f/1.4
You do the math.
Lol, as in “No good deed goes unpunished”.
But the tax man - the Great equalizer, the Great Punisher - wants to get his (boy, does he ever). These FBs don’t get to walk without suffering consequences.
These FBs are, in the long run, hosed. They can’t stash money away (but herin lies a good case for gold), which means they can’t plan for tomorrow because the tax man will always be right there, first in line, waiting to get his money.
What are you talking about? Correct me if I’m wrong, but I think that Congress in its wisdom did away with the tax penalty on FBs who walk. The IRS used to come after them for the difference between what they borrowed and what the bank ended collecting on their bad loans once their foreclosed house sold. Now there is no penalty, so FBs have no reason in the world not to walk away, except for the hit to their credit. Big deal. The banksters are too busy making reckless speculative bets in the stock and bond markets to be loaning money to people anyway, so what’s the real loss?
Another fine example of “unintended consequences.”
Maybe Congress did but I believe the State of California didn’t.
Can anyone clarify?
It looks as if it is a work in progress: http//www.mercedsunstar.com/2010/03/20/1356425/our-view-don’t-tax-homeowners-canceled.html
Hefty tax bill may hit those who lost homes.
http://www.sighonsandiego.com/news/2010/mar/03/hefty-tax-bill-may-hit-those-who-lost-home/
Well, that didn’t seem to work very well.
Google-up: “california walk away tax” and you’ll get there.
Hefty tax bill may hit those who lost homes.
I wonder if a loophole case could be made.
“Forgiveness of debt” can be 1099′d because it is like income.
However in California, a non-recourse state, doesn’t the contract state that if the debt is not paid, the house is given back to the bank? If the house is returned to the bank, then has not the borrower fulfilled the terms of the contract?
If the terms were honored, how is this “forgiveness of debt” when the house is returned, therefore there is no more “debt”?
How is this a real “forgiveness of debt” like it would be in cases where the collateral is not returned?
It is not like the homeowner gets to keep the house AND the debt is forgiven.
California is a non-recourse state BUT if the original loan has been modified then the recourse disappears.
This is how I understand it. Others are encouraged to clarify/dispute what I just stated.
Make that “the non of non-recourse disappears”.
California is a non-recourse state BUT if the original loan has been modified then the recourse disappears.
Thank you, I understand that however I’m wondering about the returned homes that had not had the original loans modified, no seconds etc.
If returned undamaged, I don’t understand how any debt has been “forgiven” because collateral has been returned as per terms of the contract.
“If returned undamaged, I don’t understand how any debt has been ‘forgiven’ because collateral hs been returned as per terms of the contract.”
This is true, as I understand it. It is only for those who’s loans have been modified does the tax apply, again, as I understand it.
But it’s a good bet those who left their loans untouched are in a minority.
This was the era of cash-out-and-grow-rich-in-the-process. We were told that those who didn’t cash out their equity weren’t managing their money properly. In some circles they were considered fools. Thousands of people cashed out their equity and erased the word “non” from their non-recourse loans in the process.
but I think that Congress in its wisdom did away with the tax penalty on FBs who walk.
Yes, and this amounted to a TRILLION DOLLAR tax give-away to the middle class, who will gleefully go to the polls and vote for soak-business-and-the-rich initiatives and representatives.
Theoretically, people are still liable for state taxes (unless the state had this deadbeat relief program, too), but AFAIK, no states are collecting. CA state aggressively goes after me and my business to get every penny, but Debbie Deadbeat can get way with 10s of thousands of dollars of unpaid taxes on forgiven debt with no repercussions.
No ,I think that in California on State taxes that if a lender has a loss on the debt not paid ,that its considered forgiven debt
and taxable . The tax people will be giving a right off to the bank for loss and making it up on the debtor that didn’t pay the
debt as in they gained .
The problem is in this market you have walkers creating losses
of 100’s of thousands per home on the principal ,never mind the interest not paid .The Federal exclusion on the forgiven tax
liability doesn’t last forever either (I forget when that goes back into effect )
I think the one loophole is if you can prove total BK and loss of everything and being without job and real hardship ,but don’t quote me on it , they keep changing the rules all the time .
You raise an interesting point. I think a lot of economists and government types feel that it is sustainable. The main idea being that it’s a self-fulfilling prophecy. This spending jump-starts the economy. Things pick up, people are more confident, etc. so they spend more and away it goes. Heck, even FedEx says the economy is picking up. I can no longer rule it out that the “recovery” isn’t sustainable - at least until I’m no longer solvent. What’s the next event that will make the government drop one of the many balls they’re juggling?
Maybe a FOIA request?
You mean that FedEx who’s founder and president once complained about onerous corporate taxation, when in reality almost half of all corporations, both foreign and domestic, pay no taxes in any given year? (Reuters)
Yeah, I’ll believe THAT guy.
Chatted w/two of my buddies yesterday who are pondering this exact decision… my advice was to bail out, with no questions asked … the mortgage is a simple business contract, and handing the keys back over is adhering to the terms of the contract if you don’t pay, for whatever reason..
Tell them to contact a lawyer before doing anything. “Walking away” is a bit of a misnomer. Throwing the keys on the roof may have consequences that could haunt them for years. They better make sure they know what they are doing.
Lawyers must be loving what they’re seeing these days.
How about another lawyer-based cable/prime time show? Because you can never have enough programming about legals eagles.
I mean, there’s only been perhaps 30 television shows about lawyers.
But this positive hit is a false one, false in the sense that it is unsustainable. Sooner or later the FBs will get evicted and will have to go back to making some real-money outlays for rent.
Plus - somewhere, someone took a lose. There is no free lunch.
Plus - eventually - someone, somewhere is going to come looking for that money.
Plus - they will look for it for years and years to include going after other assets and wages. Not even bankruptcy will keep them at bay.
Plus - if you were living in a house you knew you were eventually going to get kicked out of - how much maintenance would you do? In the best of times - A house is a quickly depreciating assets without maintenance.
If masses of FBs decide to stop paying on their mortgages - a trend that seems to getting well under way - then that means these FBs get to spend their mortgage money of toys and such. The economy should take a positive hit as a result of this spending.
Absolutely, combo, and I think this is one of the things that has propped up the economy in 2009. It’s the “Stimulus With No Name.” We’ve known about many “owners” who haven’t been paying their mortgages for months or years. If you figure there are at least one million people not paying their $2,000/month mortgages (a VERY, VERY conservative number), that’s $2 billion per month that was formerly allocated to debt service, now free to roam the economy (or at least not be a drag on the economy).
One might argue that the $2B isn’t really “new” money, as the creditors would have received this money instead; but creditors have a tendency to hoard money and loan it out, so it moves through the economy with a debt offset (plus interest), which is a drag on future growth. The FBs are more likely to just spend it, which means there is no debt offset — a much better kind of money movement, IMHO.
The U.S. housing market is not the only corner of the world economy with a severe capacity glut:
* MARCH 3, 2010
Baltic Drying Up as a Gauge
Armada of New Ships Sinks Accuracy of the Index as Measure of Global Health
By ART PATNAUDE And NEENA RAI
LONDON—Uncertainty over how many new ships will be built this year is expected to marginalize a popular measure of the global economy’s health: the Baltic Dry Index.
The BDI, a measure of shipping costs, gained importance over the last decade as a key gauge not just for the shipping industry but the global economy. Due to the shipping industry’s stable supply structure, the BDI was touted as a good proxy for overall demand of raw materials—the basic building blocks of an economy.
But now, with an unusually large number of ships scheduled to come into operation in 2010, the index no longer presents such a straightforward view of raw material demand, and hence economic growth.
The BDI “will be less responsive to shifts in demand as the oversupply of vessels becomes more pronounced,” said Plamen Natzkoff, dry bulks and freight strategist at Citigroup in London. While the index “will still reflect the supply-demand balance in the freight market,” its worthiness as a wider-ranging indicator will be limited, he said.
The index’s publisher defends it. “There are two elements to the BDI: demand and supply. When the supply of shipping is fairly stable, demand represents a good pointer to activity in primary industry,” said Jeremy Penn, CEO of the Baltic Exchange. “[The BDI] is a good indicator of dry bulk rates in the market—we have never made great claims for it to be more than that.”
…
View Full Image
BALTIC-pic
Bloomberg News
A glut of new ships coming on line this year is adding uncertainty to supply and demand. Here, container ships at the port of Keelung in Taiwan.
Great. By eliminating the space program, we have relegated the aeronautics and electrical engineering/physics intellectual capital in this country to obsolescence. Arguably, this IC was at the leading edge of the envelope, spawning countless second order discoveries and applications worldwide. The glut of ships will boomerang into a generational shutdown of structural engineering capability.
Project world dumbdown: 50% done. Next targets: civil (ez, no money for infrastructural improvements - in the bag), mechanical (second order effect from first paragraph - in the bag) and pure mathematics. In five years, we’ll be 90% there.
Break out the champagne, and please help me understand what’s in it for the real PTB - the ones who own 99.9% of the world’s wealth - to eliminate the thinking capability of the next tier down? The ability to think clearly is no threat to them. We have seen that popular protest has no effect on wealth transfers.
Ever hear of “feudalism?”
That’s what’s in it for them.
I missed the Greenspan thread yesterday, but need to add my 2 cents on this one.. For all his denial regarding his huge role in the housing and economic disaster, the thing that I think people will forget the most about the failings of Alan Greenspan is that, in the end, he really didn’t (and doesn’t) understand the U.S. economy… so, worse than charging him with helping create the housing bubble (which he sure did have a role in) is charging him with being an ignorant and poor economist, in general… he was and is, IMO.. frankly, I still don’t think he gets it or understands the U.S. economy and the role and impact of debt… he was a spectacular media creation, however..
Alan Greenspan is a man who needs to be liked. A good Fed Chairman shouldn’t need to be liked, he should need to be respected.
agreed..
Volcker is an icon of respect. It’s too bad, IMO, that the Prez is more interested in using Volcker than utilizing him.
+1
It’s hard for anybody, particularly the old, to admit that their lifelong philosophical belief system is a crock. Greenspan released the titans of Wall Street from the ties with which we lilliputians had bound them down - just as his muse/ex-girlfriend Ayn Rand had taught him. His belief was that these modern-day Atlases would never destroy the very system that he allowed them to rule with impunity- since the ‘great’ are, just like in Ayn’s books, morally better than the rest of us.
Well, it turns out that was a fairy tale. But who wants to admit late in a supposedly successful life, that, in fact,everything one believed was delusional, and the results of those beliefs have devastated a once-pretty-great country.
As Neitzche said: ‘I don’t admire a man for having the courage of his own convictions. I admire a man for having the courage to attack his own convictions.’ Something Greeny, and many others, could never do.
Greenspan: “I guess I was not so much as a pimple on a maestro’s a$$”. - I want to hear him say that.
Good analysis alpha-sloth…in fact great analysis IMHO .Based on Greenspans age I really wonder if enough air was getting to the brain on top of everything else ,I’m serious .
What’s scary is that you could get any Fed Chairman that is equally in
la la land who makes fatal mistakes . Greed is good ,but only if the greedy are moral .Really greed by easy money get rich quick schemes
is really a attempt at cheating ,as in not getting something the good old fashion way .
“As Neitzche said: ‘I don’t admire a man for having the courage of his own convictions. I admire a man for having the courage to attack his own convictions.’ Something Greeny, and many others, could never do.”
When was the last time you did this yourself, alpha-sloth? No, I’m not accusing you of anything. I’m just wondering.
I try to do it as much as possible- it’s a very challenging way to think. Whenever faced with a question, I try to determine my ‘gut reaction’, and then try to argue against that, using opposing arguments whenever possible. Oftentimes my ‘gut reaction’ loses.
It’s made me the bane of my liberal and conservative friends and family, who claim my positions are ‘all over the map’. I tell them I just go wherever my reasoning leads me, and it’s rarely to the same political/philosophical camp every time.
In fact, I’m dubious about anyone’s reasoning, if that reasoning always leads them to a certain political or philosophical camp. It makes me suspect their ‘reasoning’ is really a disguised (to themselves) way to arrive at a predetermined position. That’s why I mistrust all idealists, including libertarian free-marketers, because their thinking always leads in the same direction, facts be damned.
Agree 100%, alpha (and have had the same comments made about me).
Political parties and dogmatic belief systems exist to convince others to act according to what the “leaders” want, IMHO.
LOL. As one who has been subject to ad hominem attacks by Alpha, in which he consistently throws out logical non sequitur comments and mischaracterizations, it’s entertaining to see him getting called out on it.
Call and response, if you note. (The mother of jazz, blues, and hiphop- Louis Jordan was the master.) Unlike some, I enjoy being challenged- that’s why I post here.
And when have I engaged in ad hominem attacks? (Other than humorously?)
I don’t mind being challenged, as long as posters don’t mischaracterize what I said in the first place. Which you’ve done a time or two.
Give some examples. Otherwise you’re engaging in ad hominem attacks.
(Don’t make me take off my mumu…’cause then we’re gonna roll…)
“I admire a man for having the courage to attack his own convictions.”
That’s the game I like to play.
Greenspan released the titans of Wall Street from the ties with which we lilliputians had bound them down - just as his muse/ex-girlfriend Ayn Rand had taught him. His belief was that these modern-day Atlases would never destroy the very system that he allowed them to rule with impunity- since the ‘great’ are, just like in Ayn’s books, morally better than the rest of us.
I agree and PhD’s will be awarded to future candidates addressing the Greenspan/Randian/Chicago School’s obvious self-destructiveness.
In my opinion the Chicago School of Economics Dogma would prove mostly correct IN AN ECONOMIC VACUUM however its unquestioned embrace has been proven a failure as applied to our Republic.
In a Republic that has a campaign financing system that allows excessive corporate influence, and corporations manipulating both academics and politics, I see that a to-big-to-fail economy is a natural result of placing blind faith in the theories of, and changing laws to conform to the Greenspan/Chicago-School and other popular economic dogma.
The wholehearted embracing of efficient market hypothesis, and competitive market behavior by both political parties, perversely enabled too big to fail institutions and crony capitalism to emerge as it eliminated firewalls, regulations and protections that had prevented their formation before.
Incessant corporate promotion of the blind faith in the Chicago dogma fostered an environment that gutted such protections as Glass-Steagall thus spawning too-big-to-fail institutions which by definition are not required to follow capitalism’s basic premises of being subject to their own creative destruction or collapse due to bad decisions like making bad mortgages.
When something becomes too big to fail it is exactly that and when a crisis hit we changed from a perverted capitalist system into a disaster capitalism system requiring bailouts that violate most tenants of the Chicago-school dogma that spawned it.
And Greenspan was “shocked” that his “models” proved incorrect.
Alpha sloth, you’ve also touched on something else you may not have realized and that I am constantly having hard a time explaining here: the current situation was not controlled or created by the baby boomers, but by the WWII generation.
The groundwork was all planned and laid out and initially executed by the leaders that emerged from “greatest generation.”
My take on this is that Greenspan knew exactly what he was doing: setting up a crash that would take the looters with it. This is almost exactly what one of Rand’s heroes, Francisco D’Anconia did, by no coincidence at all.
“he was a spectacular media creation, however..”
How about; he was a spectacular media creation, only.
Compare the fawning MSM adulation of Greenspan during his tenure to the same treatment accorded to Bernanke. The recent write-up in TIME Magazine for Bernanke’s “Man of the Year” cover story was reminiscent of the breathless accolades one might see in the North Korean press for The Great Leader King Il-Song or the Dear Leader Kim Jong Il. No counterpoints allowed. Why anyone still subscribes to propaganda rags like TIME and NEWSPEAK is beyond me.
“…in the end, he really didn’t (and doesn’t) understand the U.S. economy…”
Matthew,
You are entirely correct. He did not understand what he was doing. I’ll go one further to state that he did even suspect that he didn’t understand. This is bad.
I have a specific instance that I have posted quite a few times over the years. Remember his “conundrum”? Mr. Magoo raised interest rates to attempt to cool the mortgage market after he lowered short term rates to historic lows. After a year to so, he publicly complained about the fact that mortgage rates did not rise as expected by naming a lack of understanding as a conundrum. In fact, rates actually dropped!
This is arrogance on Mr. Magoo. His mentor, Ayn Rand, is a complete fool who hasn’t done a shred of real work in her useless life. I am an academic, and I know of what I speak. There is nothing worse than an academic who is certain that a pet theory is correct. Worse, academics will find a pliable, weak personality to carry misconceived philosophy to a normally dreadful conclusion.
People always get hurt.
Give Mr. Magoo some of her special “stuff”, and he was putty in her hands. So to speak.
The skanks.
Roidy
I haven’t quite figured out the italics thingy yet.
Roidy
What did Ameriquest / New Century / 1st American Title / WaMu / Countrywide …all have in common just 3 short years ago? (besides a very lucrative scam) Big beautiful CORPORATION buildings in prime “bidness” location all over “The O.C.”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
(OK, OK, they did “sponsor” quite a few “Charity” events…)
First American sued for $535 million in loan losses
March 19th, 2010, by Jeff Collins OC Register
Bank of America has sued Santa Ana-based First American Title Insurance Co. and a sister firm over its refusal to pay claims on more than 4,500 properties in which owners defaulted on their mortgages.
The suit, filed earlier this month in the bank’s home state of North Carolina, maintains that title policies issued by First American and its sister firm, United General Title Insurance, made the firm liable for the bank’s loan losses.
The First American entities issued policies on the 4,500 properties insuring the lender against undisclosed liens, missing owner signatures and legal property description errors, the suit said. The bank maintains that all of the properties involved in the suit had defective deeds.
But rather than pay up, First American and United General denied 2,200 allegedly valid claims and failed to act on 2,300 others. In addition, the suit maintains, First American tried to delay action on claims by demanding copies of unneeded and irrelevant documents.
The Fed better print another trillion dollar bailout to pay the cost of the banks’ legal fees and lawsuit liabilities. Or we can borrow the money from China and let future generations pay for it.
“But rather than pay up, First American and United General denied 2,200 allegedly valid claims and failed to act on 2,300 others. In addition, the suit maintains, First American tried to delay action on claims by demanding copies of unneeded and irrelevant documents.”
Having been on the receiving end of a (medical) insurance company denying valid claims, I can’t help but smirk as a TBTF bank gets the same treatment. Well … kind of … unlike BoA in this example, we working grunts can’t sue our ERISA protected insurance companies to get their butts in gear.
Busy Friday for the FDIC:
March 19, 2010
F.D.I.C. Shuts Seven Troubled Banks
By THE ASSOCIATED PRESS
WASHINGTON (AP) — Federal regulators shut down seven banks in five states on Friday, bringing to 37 the number of bank failures so far this year.
The closings follow the 140 banks that succumbed in 2009 to mounting loan defaults and the recession.
The Federal Deposit Insurance Corporation took over the First Lowndes Bank, in Fort Deposit, Ala.; the Appalachian Community Bank in Ellijay, Ga.; the Bank of Hiawassee, in Hiawassee, Ga.; and the Century Security Bank in Duluth, Ga.
The agency also closed down the State Bank of Aurora, in Aurora, Minn.; the Advanta Bank Corporation, based in Draper, Utah; and the American National Bank of Parma, Ohio.
The F.D.I.C. was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits. The regulatory agency approved the payout of the bank’s insured deposits and it said checks to depositors for their insured funds would be mailed on Monday.
The deposits and assets at the remaining banks, all valued at less than $1 billion, were assumed by other nearby institutions.
My view of the burgeoning green shoots is blocked by all the people standing in food lines.
Saturday March 20th | Home » CA/Local »
Searching for Food in the Land of Plenty
Dianne de Guzman
Sadyrae Sommerville sits in the kitchen of her small home, which she shares with her daughter and grandson. The family struggles to make ends meet and Sommerville relies on delivered meals from the senior center in Colusa, for lunch and dinner.
March 19, 2010 | Dianne de Guzman and Sandy Tolan | Special to KPCC
The number of Californians fighting to ward off hunger, already at a crisis level, is worsening in the face of the lingering recession and high unemployment. Now, the problem may grow as the state faces a new round of budget cuts.
Over a six-month period, California Watch and the Annenberg School for Communication and Journalism at USC interviewed scores of county, state and food bank officials and dozens of Californians who face food shortages. The reporting found that record numbers are overwhelming food banks and county social service offices in every corner of the state and that the crisis is accelerating.
Food banks doled out 300 million pounds of meals and surplus commodities last year — the equivalent of eight pounds for every Californian. It represents at least a 30 percent rise from 2008, according to the California Association of Food Banks.
In Los Angeles, 983,000 individuals sought food assistance from soup kitchens, shelters and food pantries in 2009 – the highest number ever, and a 46 percent increase since 2005. In some wealthier counties, such as Monterey, the numbers nearly doubled, an indication of the recession’s impact on formerly middle-income Californians.
Fresno’s Community Food Bank gave out 6 million pounds of food in 2008, 14 million pounds last year and expects to distribute 30 million pounds in 2010. And across the state, county officials report lines of people going “out the door” or “around the block” to apply for food stamps and other assistance.
…
I don’t mean to sound cold blooded, because I’ve also been in that situation, but… a lot of Americans NEED to go on a diet.
We are one fat a$$ country.
Since San Diego has little winter weather, a February uptick in NODs must have been “a fluke.” Of course, if NODs were trending downwards, that would be a sign of ongoing economic recovery.
Notices of default up 24% in county
Analyst says February numbers might be fluke
By Roger Showley, UNION-TRIBUNE STAFF WRITER
Friday, March 19, 2010 at 9:11 p.m.
Homeowners in San Diego County defaulted at their highest monthly rate in more than a year in February, MDA DataQuick reported Friday.
Defaults totaled 2,166, up 24.4 percent from January’s 1,741, the biggest one-month jump since the figure jumped 121.3 percent from November to December 2008.
Meanwhile, there were 973 foreclosures, down from 986 in January in the sixth month-to-month decline in the past year. The number was down 21 percent from year-ago levels.
More notices of default normally signal spreading distress in the housing market. As owners fall three months or more behind in their monthly payments, lenders usually file this first formal action that often leads to foreclosure. The number spiked a year ago, when lenders were catching up on a backlog of defaults delayed through extended noticing requirements and moratoriums.
DataQuick analyst Andrew LePage said the default rise last month might be a fluke.
“You can’t just read too much into a single month,” he said. “There’s been a very irregular (pattern) of notice-of-default filings.”
But LePage said he detected a similar uptick in counties throughout the state.
“The bulk was in the areas hit hardest” by economic and housing distress, he said, and did not reflect problems spreading to higher-priced properties as many analysts have been predicting.
“That’s not the way it shaped up,” LePage said. “It was more of the same.”
…
The North County Times
HOUSING: Defaults and foreclosures bounce up
But they’re still down year-over-year
By ERIC WOLFF - ewolff@nctimes.com | Posted: March 15, 2010 5:15
The number of notices of default and foreclosures in the region rose in February, but remained well below the records set in 2009, according to data from ForeclosureRadar.
Analysts and real estate agents say the astronomical unemployment rate in the region will keep pressure on borrowers and possibly lead to more defaults. But they say slight improvements in the way loan servicers are handling short sales may prevent homeowners from going into foreclosure.
In North San Diego County, banks alerted 871 borrowers that they were 90 days or more overdue on their mortgages, up a third from January’s unexpected lows, but 37 percent below the number of notices sent in February 2009. Loan servicers foreclosed on 163 homes, up 79 percent from January, but down 44 percent from the previous February.
In Southwest Riverside County, 931 notices were sent out, up 23 percent from January, but down 39 percent from February 2009. The 207 foreclosures represented a 52 percent increase from January, but down 56 percent from the same month the previous year.
Statewide, 31,004 notices of default were sent out, up 19.7 percent from January, but down 37 percent from last year. San Diego County saw the same trends as North County, with 2,326 notices of default filed, up from 27 percent from January but down 37 percent from last year. In Riverside County, 3,219 notices were sent, up 19 percent from January, but down 47 percent from February 2009.
But pressure from the bad economy could lead to a second bump in the number of defaults in coming months.
“The main cause of foreclosure is lack of employment, and that pressure is still on,” said Mark Goldman, a real estate instructor at San Diego State University.
Even as the national unemployment rate held steady in January, San Diego County’s unemployment rose to 11 percent and Riverside County unemployment hit 15 percent.
…
Median home price $500,000 in February; more foreclosures of tenant-occupied homes
By JONDI GUMZ — Santa Cruz Sentinel
Posted: 03/18/2010 05:12:43 PM PDT
Updated: 03/18/2010 05:13:36 PM PDT
SANTA CRUZ - The median sales price for a single-family home in Santa Cruz County in February was $500,000, up from $380,000 a year ago, when the market bottomed out, but down from the boom level of $682,500 two years ago.
The median is the midpoint of what sold in the month.
Gary Gangnes of Real Options Realty tallied 93 sales, about the same as a year ago, with 48 percent involving “distressed” property, either bank-owned or a “short sale,” in which the lender accepts less than what is owed.
Usually the lowest sale prices are in Watsonville and San Lorenzo Valley, areas of the county hit hardest by foreclosure, but last month, a couple got a deal in Scotts Valley, buying their first home for $185,000.
“It was kind of sentimental,” said agent John Brown of Thunderbird Real Estate, noting the couple met at nearby Bethany University.
“The median home price is up 20 percent but that doesn’t mean the market has rebounded,” said Sebastian Frey of Thunderbird, who represented the seller on the transaction.
He predicts the market will remain weak for three more years unless the economy rebounds sooner and hiring picks up.
The asking price for the one-bedroom cottage at 505 Bethany Drive was $200,000 until an inspector estimated repairs at $30,000, including replacing the deck and roof.
The lender had foreclosed on the out-of-state owner who got a $375,000 adjustable-rate mortgage in 2006 and in three years owed more than $430,000.
…
“The median home price is up 20 percent.” I keep reading stories like this from various cities. Is there really such a strong rebound with almost 20% real unemployment, or is it something else, like the lag it took for substantial declines in higher priced homes which are moving now as prices are slashed? Has the CA bubble really resumed to peak appreciation rates?
‘No winter blues in housing sales’
‘We’re still seeing the more affordable properties selling,” said Kevin M. Sears, an owner and broker at Sears Real Estate in Springfield and president of the Massachusetts Association of Realtors. “I will tell you the higher end stuff is still sitting on the market.”
‘It was a statistical anomaly that the median price for the region could be up compared with last February, but the median prices for the three constituent counties were down compared with last year. ‘
http://www.masslive.com/chicopeeholyoke/republican/index.ssf?/base/news-26/1268810138171500.xml&coll=1
I think its the higher end homes starting to come down in price. I can show you high end houses in my area that have been sitting on the market for about four years. The sellers are unwilling or unable to lower their prices, even though some even larger homes have come on the market and sold for $100K less than those FBs asking prices.
Eventually the owners will have to lower their prices, or those homes will crumble into dust; not sure what will happen first in many cases…
This calculation is meaningless if inventory has stayed flat or increased. One can argue that houses that haven’t sold for over a year should be factored in the yearly average as a $0 sale….
Has the CA bubble really resumed to peak appreciation rates?
——————-
Natalie,
The housing market in Southern California is hot, but a lot of this action is driven by investors of various stripes (large, bulk buyers, and smaller, individual flippers/landlords).
Interest rates a way too low, so lots of cash is coming into the market trying to get some kind of return. In some areas, housing can be bought for cash and rented out — giving investors a better return than their 0% MM funds, CDs, or savings accounts; and only fools would be buying mortgages or other long-term bonds at this point, IMHO.
Some relatively large banks failed yesterday.
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/19/AR2010031902836.html?hpid=sec-business
Regulators on Friday shut down seven banks in five states, bringing to 37 the number of bank failures in the U.S. so far this year.
The FDIC was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits. The regulatory agency approved the payout of the bank’s insured deposits and it said checks to depositors for their insured funds will be mailed on Monday.
Community & Southern Bank of Carrollton, Ga., agreed to assume the deposits and assets of Appalachian Community Bank. The bank had $1 billion in assets and about $917.6 million in deposits. The cost to the insurance fund is expected to be $419.3 million.
“Some relatively large banks failed yesterday.” This happens every Friday. Hard to make money making $500k nonrecourse (whether by statute or economic reality) loans on $250k properties.
7 more in the ground. Just another day in the (financial) ghetto.
“The bank had $1 billion in assets and about $917.6 million in deposits. The cost to the insurance fund is expected to be $419.3 million.”
WTF? WTF? WTF? WTF? WTF?
How does it take so long to close a bank that the loss to the fund is over 40% of assets? Somebody needs to see jail time on this one.
Because this was part of the regulatory changes made over the last decade and was perfectly legal.
Home slashed $451,000 is the ‘bees knees’
March 19th, 2010, 11:07 am
posted by KELLI HART, THE ORANGE COUNTY REGISTER
A home in Laguna Beach received a nice price reduction this week.
Located at 1005 Skyline, the home has 4 bedrooms, 5.5 baths and 3,700-square-feet on a 8,296-square-foot lot. It also has ocean views and a pool.
The home was originally listed for $4,995,000 in October 2009. It dropped to $4,450,000 in January and dropped again to $3,999,000 yesterday.
However, it last sold for $1,950,000 in June 2007, according to public records.
The best part about this listing is the description:
“The perfect property with views, views and more views. This Laguna Beach masterpiece is the bees knees if you are looking for California outdoor living, a property that is designed for the consummate entertainer.”
The home was originally built in 1958 but was remodeled down to the studs and completed in 2009, per the listing description.
http://www.boston.com/news/local/massachusetts/articles/2010/03/20/ex_security_official_says_she_did_not_question_housekeeper/
Comforting when the senior officials responsible for securing our borders are themselves actively aiding and abetting illegal immigration.
Oh wait. The rules only apply to the little people.
All animals are equal. Some are more equal than others.
Four legs good. Two legs bad. Chant on my command, sheeple.
Actually, ‘four legs good, two legs bad’ has proven pretty accurate. (Hope that’s not ‘ad hominem’.)
Speaking of “little people”, Leona Helmsley was NOT an aberration.
The filthy, wealthy, rich, for the most part, really, really hate the less fortunate. Never forget this. Your life literally depends on it.
Snowstorms hamper rate at which foreclosures can be processed:
Home Foreclosures Approach Peak Range
By Luke Mullins
Posted: March 12, 2010
Although the U.S. housing market witnessed its smallest annual increase in foreclosure activity in four years last month, distressed-property tallies are expected to remain in an elevated range for some time. Foreclosure filings were reported on more than 308,000 American homes in February, RealtyTrac said Thursday. That’s a 2 percent decline from January but a 6 percent increase from a year earlier. All told, February represents the 12th consecutive month with more than 300,000 foreclosure filings.
The slight monthly decrease is linked to two key factors, says Rick Sharga of RealtyTrac. First, Uncle Sam’s sweeping housing rescue initiative—known as the Home Affordable Modification Program—has worked to slow the pace at which troubled mortgages go into foreclosure, as lenders try to determine if borrowers qualify for government assistance. In addition, the snowstorms that hammered the East Coast last month appear to have hogtied the process further. States like New Jersey, New York, Pennsylvania, and Delaware—all of which were pummeled by the winter storms—saw foreclosure filings drop 20 to 40 percent from the previous month. “Our field team that collects [data] reported back that clerks’ offices and courthouses were closed for a number of days over the course of the month,” Sharga says.
…
John G. Is 63 years old and owns a small business. He’s a life-long Republican and sees his dream of retiring next year has all but evaporated.
With the stock market crashing and new taxes coming his way, John assumes now that he will work to his dying day.
John has a granddaughter. Ashley is a recent college grad. She drives a flashy hybrid car, wears all the latest fashions, and loves to go out to nightclubs and restaurants.
Ashley campaigned hard for Barack Obama. After the election she made sure her grandfather (and all other Republican family members) received a big I told-you-so earful on how the world is going to be a much better place now that her party is taking over. Having lost both roommates, Ashley recently ran short of cash and cannot pay the rent (again) on her 3 bedroom townhouse…
Like she has done many times in the past, she e-mailed her grandfather asking for some financial help.
Here is his reply:
Sweetheart, I received your request for assistance. Ashley, you know I love you dearly and I ‘m sympathetic to your financial plight. Unfortunately, times have changed. With the election of President Obama, your grandmother and I have had to set forth a bold new economic plan of our own..”The Ashley Economic Empowerment Plan.” Let me explain.
Your grandmother and I are life-long, wage-earning tax payers. We have lived a comfortable life, as you know, but we have never had the fancier things like European vacations, luxury cars, etc..
We have worked hard and were looking forward to retiring soon. But the plan has changed.
Your president is raising our personal and business taxes significantly.
He says it is so he can give our hard earned money to other people.
Do you know what this means, Ashley? It means less for us, and we must cut back on many business and personal expenses..
You remember the wonderful receptionist who worked in my office for more than 23 years? The one who always gave you candy when you came over to visit?
I had to let her go last week. I can’t afford to pay her salary and all of the government mandated taxes that go with having employees.
Your grandmother will now work 4 days a week to answer phones, take orders and handle the books.
We will be closed on Fridays and will lose even more income to the Wal-Mart.
I’m also very sorry to report that your cousin Frank will no longer be working summers in the warehouse. I called him at school this morning. He already knows about it and he’s upset because he will have to give up skydiving and his yearly trip to Greenland to survey the polar bears.
That’s just the business side of things. Some personal economic effects of Obama’s new taxation policies include none other than you.
You know very well that over the years your grandmother and I have given you thousands of dollars in cash, tuition assistance, food, housing, clothing, gifts, etc., etc.
But by your vote, you have chosen to help others — not at your expense — but at our expense.
If you need money now sweetheart, I recommend you call 202-456-1111. That is the direct phone number for the White House… You can also contact the White House here:
http://www..whitehouse.gov/CONTACT/
You yourself told me how foolish it is to vote Republican. You said Mr Obama is going to be the People’s President, and is going to help every American live a better life.
Based on everything you’ve told me, along with all the promises we heard during the campaign, I’m sure Mr. Obama will be happy to transfer some stimulus money into your bank account.
Have him call me for the account number which I memorized years ago..
Perhaps you can now understand what I’ve been saying all my life: those who vote for a president should consider the impact on the nation as a whole, and not be just concerned with what they can get for themselves. What Obama supporters don’t seem to realize is all of the money he is redistributing to illegal aliens and non-taxpaying Americans (the so-called “less fortunate”) comes from tax-paying families.
Remember how you told me, “Only the richest of the rich will be affected”?
Well guess what, honey? Because we own a business, your grandmother and I are now considered to be the richest of the rich.
On paper, it might look that way, but in the real world, we are far from it. As you said while campaigning for Obama, some people will have to carry more of the burden so all of America can prosper… You understand what that means, right? It means that raising taxes on productive people results in them having less money; less money for everything, including granddaughters.
I’m sorry, Ashley, but the well has run dry.. The free lunches are over.. I have no money to give you now. So, congratulations on your choice for “change.”
For future reference, I encourage you to try and add up the total value of the gifts and cash you have received from us, just since you went off to college, and compare it to what you expect to get from Mr. Obama over the next 4 years. I have not kept track of it, Ashley. It has all truly been the gift of our hearts.
Remember, we love you dearly…..but from now on you’ll need to call the number mentioned above.
Your “Savior” has the money we would have given to you. Just try and get it from him.
Good luck, sweetheart.
Love, Grandpa
——————————————————————————–
Awesome.
Dopes Now!!!!!!!
BWAHAHAHHAHAHAHAHHAHAHHAHAHHAHAHAHHHHHHHHHHHH!!!
I doubt the authenticity of that letter but it sure is funny. Somebody did a good job with a little creative writing.
“I’m the tax man
Ooo, ooo, I’m the tax man
And you’re working for nobody
But me”
Or something like that. Taxes are going up in NYC. The thieves have to pay their supporters. The CityBoy is keeping his eye on the door. A getaway may be in order.
Amusing but the writer attributing the business owner’s current troubles only to Obama or one political party has to assume its target audience is grossly biased and/or ignorant of American economic and political history.
Any writer with half a brain could easily rewrite that letter just as effectively blaming Bush and Republican’s outsourcing, downsizing and profit-above-all motive for the business owner’s troubles.
This whole thing blaming one party or one President is a dog and pony show designed to appeal to the moronic tendencies in all of us.
USA! USA! USA!
Exactly, Rio.
That fake letter was lame. If he wanted to retire, why complain about the business taxes?
Last thing I knew, you only pay taxes on profits. If he’s paying more in taxes, it must mean he’s making a profit, no? This means he has to let go of his employees? It makes absolutely no sense.
More Boogeyman politics from those who want to get the sheeple all riled up.
Ditto,I love the line about WalMart .
The Wal*Mart line made no sense! A true republican wouldn’t want businesses regulated.
While I’m personally outraged about Obama’s plan to destroy business and disincent people from working, I do realize that the Republicans also believe in propping up real estate! Even McCain suggested in the 2nd debate that the Government buy up underwater mortgages.
Blaming this mess on the Democrats isn’t really fair. However, blaming it on people like the (fictitious) granddaughter in that letter is fair. The majority of our population now have their hands out, with only 5 or 10% of the population supporting the country.
A true republican wouldn’t want businesses regulated.
Of course they would. The ones that valued their country before money would. The past 30 years are not the total history of Republicanism.
One of our greatest Republicans, Teddy Roosevelt was “The Great Regulator, One of Roosevelt’s central beliefs was that the government had the right to regulate big business to protect the welfare of society.” source Millercenter. org
“The labor movement was born out of the threat of the loss of freedom through excesses of overbearing business monopolies. It has served well to bring the pendulum back from the extreme. I believe that unionism, in its proper sphere, accomplishes a positive good for the country. 1964 Barry Goldwater campaign brochure.
Richard Nixon 1974: “Three years ago, I proposed a major health insurance program to the Congress, seeking to guarantee adequate financing of health care on a nationwide basis. That proposal generated widespread discussion and useful debate.”
First, it offers every American an opportunity to obtain a balanced, comprehensive range of health insurance benefits;
Second, it will cost no American more than he can afford to pay;
Third, it builds on the strength and diversity of our existing public and private systems of health financing and harmonizes them into an overall system;
And finally, it is organized so that all parties would have a direct stake in making the system work–consumer, provider, insurer, State governments and the Federal Government.
Upon adoption of appropriate Federal and State legislation, the Comprehensive Health Insurance Plan would offer to every American the same broad and balanced health protection through one of three major programs:
–Assisted Health Insurance, covering low-income persons, and persons who would be ineligible for the other two programs, with Federal and State government paying those costs beyond the means of the individual who is insured; and,
The benefits offered by the three plans would be identical for all Americans, regardless of age or income. Benefits would be provided for:
There would be no exclusions of coverage based on the nature of the illness. For example, a person with heart disease would qualify for benefits as would a person with kidney disease.
As part of this program, every American who participates in the program would receive a Health-card when the plan goes into effect in his State.
No program will work unless people want it to work. Everyone must have a stake in the process.
Richard Nixon 1975 Kaiserhealthnews dot org
Wow! Who knew such an iconic bunch of Republicans were actually ‘Socialists’? (Of course, we always knew Teddy R was a little ‘pink’, with all that un-conservative conservationism.)
While that letter is more than likely fictitious, it does admirably illustrate one thing:
Being a liberal is easy, provided you can sponge off someone else.
I’m a liberal. It’s not all about sponging, honey-buns!
That you’re a liberal is obvious.
Take that as a neutral comment. Just stating a fact.
Others on this fair board are harder to determine.
The difference between me and a “liberal” or a “conservative” is that I won’t be happy till I see a grandma giving h_ndjobs by the highway for rent money.
Preferably, your grandma but hey! I’m not picky about these things. I just want proof that my brains and my logic were not wasted.
That’s why we’re getting death boards, grandpa.
Time’s up. You’ve used up your carbon quota.
Naw, no ignorant bias in that little missive.
About the only part I agree with is that she was a spoiled brat. Perfect trophy wife material.
Foreclosures take toll on US homeowners
By Suzanne Kapner and James Politi
Published: March 12 2010 02:00 | Last updated: March 12 2010 02:00
It does not take long for Dan Claggett, head of the foreclosure project at Legal Services of Eastern Missouri, to come up with an example of the suffering the US housing crisis is still causing for many Americans.
“It’s devastating,” says Mr Claggett. “We helped an 85-year-old woman who couldn’t get a loan modification. She lost the home that she lived in for 35 years”.
His organisation, a non-profit group based in St Louis, takes calls from people seeking legal help on impending foreclosures. Business has increased by 30 per cent over the past year - evidence that even as the US economy recovers from the recession, the housing sector is still struggling to find its footing.
“We’re not lacking clients, I can tell you that,” Mr Claggett says.
Recent data on the US housing industry - especially on new and existing home sales - have disappointed economists who were hoping for a swifter rebound as a consequence of exceptionally low mortgage rates and home prices.
And foreclosures are expected to hit an all-time high of 3m units this year - despite ramped-up efforts by the Obama administration to bolster loan modifications, which have so far yielded mixed results.
“I believe it will probably take until 2013 for the overall foreclosure levels to get back to normal,” says Rick Sharga, executive vice-president at RealtyTrac, the largest US database of foreclosed properties.
…
She just rented a house for 35 years, and now it’s hit-the-streets, grammy!
Hope you haven’t lost your ability to give h_ndjobs by the highway.
So many victim stories, so few victims.
Ain’t that the truth; ain’t that the truth?
Bank Failure Friday Report:
Seven more banks shuttered by the FDIC, bringing the total in 2010 to 30. Georgia once again led the pack with three closings.
This time last year (third week of March, 2009) saw 20 failures.
At the current pace there will be 50 more banks shuttered in 2010 than in 2009, which leads to the conclusion that we are on pace to see 230 banks closed (same trend as last week).
“Georgia once again led the pack with three closings.”
Don’t'cha kinda sorta wish Eddie were around to explain why these don’t matter?
Not really, no.
From time to time I miss the trolls but today’s not one of them. I had way too much of a good time last night, and now my head hurts so no.
As the number of banks that are closed increases the number of banks that remain decreases.
This means that as the pool of remaining banks shrinks the percentage of banks that fail will increase even if the rate of bank failures remain constant.
Unfortunately, it is the smaller banks failing. It is the banks that actually have roots in their communities. The minnows are being sucked up by the piranhas. And the sharks and whales swim peacefully in the ocean knowing that no harm can come to them.
If we had anything resembling a free market banks would fail and new banks would start up. This is not happening. New banks are not being allowed to start. The FDIC controls who gets those charters. The best time to start a bank is after a crash. You can lend on assets at prices that will most likely rise. The worst time to start a bank is right before a crash.
I will not debate the evils of banking here. If we are going to have fractional reserve lending then I would much rather have a lot of smaller banks than a few mega-banks. Too bad that is not the direction to which these closures point.
As the number of banks shrink the money-making process of loaning money into existence should also shrink. This seems to be what is happening (among other things).
Among those other things is banks are accepting payments from previous loans but are keeping the money instead of loaning the money out so it will go into the economy again where it can be circulated.
So, add it all up:
1. Less banks translate to less financial machinery to make loans which puts money into the economy.
2. The banks that survive FDIC closings are gun-shy about making loans because to do so may endanger their balance sheets and put them on the FDIC hit list. Less loans by surviving banks also means less money put into the economy.
Less is more. Less money circulating in the economy makes the money that does circulate more precious.
It also scares money out of circulation. People with money become reluctant to spend it when they discover how difficult it is hang on to what money they have.
Now that the tax man is being unleashed on every front (federal, state, county, city) people are going to become tighter with their money than ever before. The splurge on frivolity is ending (bye bye four-dollar lattes), now folks are going to focus on the basics.
All IMHO.
Pluuusss …
People walking from their houses, meaning walking from their mortgages, means the banks have more losses they have to eat.
More bank losses means more damage to bank balance sheets which means even less lending by banks.
Remember, bankers have the FDIC breathing down their necks. Bankers don’t want their banks to be closed down or taken over; Either way they are out of a job. Their only hope is to somehow find a way to keep payments flowing in. Somehow the “F” needs to be taken out of FB.
Or, if not taken out, made to think it has been taken out, or it WILL be taken out. Hope must be kept alive.
Who is better at dispensing hope than the NAR? Are they making any more land? Isn’t one’s house the biggest investment one will probably ever make? Shouldn’t one buy now or be priced out forever?
Love the NAR. They are spending their own money trying to keep hope alive, trying to convince FBs that they are not F’ed, trying to convince them that the bottom is in and thus they should keep up with their payments rather than be sold out at the bottom.
FBs that pay rather than walk are friends of the the bank, thus they are friends of the taxpayers. And we taxpayers need all the friends we can get.
Since the taxpayers bail out chosen banks now ,it’s a illusion to think that every person that walks isn’t costing you money as a taxpayer . If the contract was simply between the bank and the borrower ,than those parties to the contract would suffer only .
Just wait until the end of the $8K tax credit and the unwinding of the Fed’s residential real estate price support programs. You ain’t seen nothin’ yet…
Market Outlook
Is real estate rolling over?
By Prieur du Plessis on 03/19/2010 – 3:30 am PDT
David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, yesterday made the following observation: “To be sure, the Case-Shiller index has yet to roll over. But it has slowed, and being a three-month average, it may take time to show deflation again. The LoanPerformance home price index is down for four months running. Freddie Mac’s conventional home price index fell 0.7% in Q4. RadarLogic’s 25-city house price index is down for two months in a row and in four of the past five.”
…
oops, bad math - I meant to say “210 closings, same pace as last week”
Our society is missing one thing……discipline. More than anything else, we have a population that has never been punished for their actions. We have an entire generation of kids who have been coddled.
I am puzzled. Did you accidentally post on the wrong blog?
Try TheWhatsTheMatterWithKidsTheseDaysBlog.com…
Mr. Banner, you need to change your Troglodyte thinking and get on board with hope & change. These people you speak of are VICTIMS. And they are entitled to all the assistance government at all levels can provide.
No victim should be left behind.
And we are all victims. Except the productive working and middle class who are forced to bear the costs of all these government-mandated “fixes” and programs. They are … what’s the word … screwed.
Green shoots update in the biggest State of the Union:
“Nonfarm jobs in California totaled 13,842,100 in January, an increase of 32,500 over the month, according to a survey of businesses that is larger and less variable statistically. The survey of 42,000 California businesses measures jobs in the economy. The year-over-year change (January 2009 to January 2010) shows a decrease of 701,700 jobs (down 4.8 percent).
The number of people unemployed in California was 2,266,000 – up by 32,000 over the month, and up by 488,000 compared with January of last year.”
“Population
Estimates of the resident population.
California — July 2009
36,961,664″
California dependency ratio = number of non-employed residents divided by current workers (neglecting a few highly-productive farmers) =
(36,961,664-13,842,100)/13,842,100 = 1 2/3 non-employed residents per employed worker.
Not sure if that is high, low or in-between?
Kids haven’t changed. Parents have. Of course parents get little help nowadays. The schools are little political correctness machines that help to create monsters. Our popular culture is a cesspool that values attitude above competence, decency, integrity and hard work. It’s all about attitude.
Our phony prosperity has led to this mess. It was riches without work. It was reward without struggle. It was leisure without struggle. That will change. The transition will be painful. I hope that the grown up juvenile delinquents, that always blame others for their problems, will not burn everything down in their quest to find somebody to blame for their problems. After that we may be back to a society that values things of value.
The first step to ending the phony prosperity is holding the Fed, and the money changers, accountable. Start there and a lot of good things will follow.
During parent-teacher conferences a couple of years ago, my daughter’s teacher said they can always tell which kids were raised at home by loving but firm parents, and which ones were dumped at kiddie kennels, aka day care.
Ha ha ha! Funny!
Where do you think teacher’s kids go while their Mom’s are teaching?
I’m a stay at home Mom but I know it takes far more than a not working status to be a success. I saw plenty of kids of stay at home Moms repeatedly somewhere else while Mom was on the volunteer merry go round, and then off at the gym or tennis lessons or sadly every so often off w/a little male attention. How many stay at homes dumped their kids at ballet or lacrosse and never once stayed to watch. I remember cuz I was very often the only Mom there. Conversely, the working Moms might spend every single non-working moment w/their kids.
Nothing is black and white.
+1,000 CarrieAnn!
CarrieAnn,
Fair enough, I’ll clarify. To me stay-at-home parents are those who love their kids enough to actually do the hard but gratifying work of raising them, rather than dumping them in day care or other “organized activities.” And let me also make clear that many mothers, especially the single ones, simply don’t have the option of staying home with the kids. I just noted the teacher’s observation: she could tell which kids had been “home raised” and which ones were raised in day care. In general, the former were happier and more well-adjusted.
Our society is missing one thing……discipline.
Great point.
The lack of discipline is a societal trait that has been increasing for decades.
I wonder if this is just a trend that banks have taken advantage of to make more money, or if the trend itself was actually created by them to exploit.
How much of this “lack of discipline” has its roots solely on the availability of credit to “average” Americans? It seems to me that the Credit Culture changed this country in very fundamental ways. Who needs discipline when they have a VISA card?
Yes, I think the entitlement society was created by the Marketing
World. Your entitled to buy that car by easy credit ,you deserve it .Your entitled to easy money by real estate ,live the life you deserve.
Use leverage to your advantage ,fund your retirement by real estate .
How many people could say no to the easy money at the time ,when the marketing scam gave people a clear way of paying the debt by real estate appreciation . That belief that greater fools would pay
for debt that wages couldn’t cover was a exploitation of the people .
Are people lazy and greedy enough to go for get rich quick schemes ,most likely ,especially when wages aren’t keeping up with inflation and people didn’t save. How this mania became a National Ponzi-scheme was no doubt the work of the Power Brokers in mass brainwashing of the people combined with easy money faulty lending ,and fraud to the secondary market on securities ratings.
The scam :the easy way to achieve the American dream ,by selling to a greater fool .
Excellent post, Wiz!
I agree on the discipline, but I disagree when it started.
The lack of discipline in our current generational cycle was first apparent in the 1960s and 1970s.
What my older siblings (7-10 years older) got away with was incredible. By the time I was their age, high schools were locked up - with chains. Literally. (No, not all doors - the fire doors were not locked, but they would set off the alarms if opened).
I’ve had the theory for a while that the disciplined lifestyle came from the huge number of trained soldiers of WWI and WWII. With each generation the influence waned until we’ve gotten to where we are today….anything goes.
I think the “two income trap” is a contributing factor also. Parents have less time and energy to devote to raising kids properly.
Not just manners and morals, but ordinary things like making sure they get a good nights sleep, eat good food and aren’t all whacked out on sugar all the time.
My sister is a grade school teacher, she has kids who come to class and fall asleep because they were up too late watching TV or listening to mom and dad yell at each other. Some haven’t eaten ANY breakfast.
How can that kind of child NOT end up being “left behind”?
“she has kids who come to class and fall asleep… Some haven’t eaten ANY breakfast.”
When I was growing up, none of the school cafeterias ever thought of serving breakfast. Now, I am amazed at how many public schools do, even schools in wealthy or upper middle class areas.
Are they THAT helpless? We are in deep doo doo then
———————–
Some haven’t eaten ANY breakfast
As a former teacher, yes, there are many kids who go to school without breakfast. Also, there are plenty of kids who stay up late at night watching adult TV shows.
Wrong, wrong, wrong, you good folks are confusing cause and effect.
You see, every child now has a “syndrome” to explain their odd or bad behavior. It’s never their fault, or the parents’ fault, or a failure of discipline. You just need to identify the correct syndrome and medicate the hell out of them. Problem solved.
/sarcasm off.
I never had my sons checked for HDD disorder. I am reasonably sure that all of them would have qualified for medical treatment at the point in their lives when they were (naturally) hyperactive. I just don’t see the advantage of depriving boys of their competitive edge, which is highly correlated with annoying hyperactive behavior at certain points in their development.
Yes, we do lack discipline, but for many reasons.
High divorce rate.
“Dissatisfaction” marketing propaganda.
Two income requirement.
Repeated lack of reward for a job well done. In fact often the opposite. Pay cuts of lay offs.
Lack of any reliable security such as long term employment.
Ever changing rules and procedures creating more uncertainty and eventually apathy.
Unresponsive leaders who are obviously only in it for their own personal gain.
And last but most important, bad examples set by our leaders.
The average person doesn’t stand a chance. Nor are they meant to. The first rule of crime is to blame the victim.
Sorry, that should read, “…the first rule of oppression is to blame the victim by setting them up to lose…”
Well stated. Too bad all of society loses when the blamed victim victimizes others out of anger.
Sad but true.
“A society that does not dole out Justice in a fair and just manner is doomed to fail .” (Author unknown)
Human nature is such that its a sole killer to be treated
unjustly or unfairly . The anger that comes from that will justify
people becoming a victimizer in response. Bankers flaunting their bonuses will come back to haunt the power elite that
didn’t care about the moral hazard of those decisions . It’s already having a effect on Politicians having a approval rating of something like 16% overall .
Justice would also mean having a fair playing field . The shocking decision of the Supreme Court to increase the rights of Corporations ,will have a long term effect that isn’t good .
People being locked into their lot in life by unfair Governments that favor special interest groups will create a reaction of unintended consequences .
Business school grads flocking to Asia for jobs
Exodus of talent from U.S. may be part of structural shift in corporate world
By Michelle Conlin
updated 12:51 p.m. PT, Fri., March. 19, 2010
James Tsai is the sort of MBA corporate recruiters covet. He went to a good prep school, earned a degree with honors from Middlebury College, and made vice-president in Bank of America’s international wealth management group at the age of 26. Today, Tsai is about to graduate, straight A’s in hand, from Northwestern’s Kellogg School of Management, a top-rated program in America. And he’s hustling to land his first post-MBA job — in China.
Executive Class strivers like Tsai used to have just one post-grad career destination, the U.S. Not anymore. “I am doing everything I think I can to get over there,” he says.
…
“Talent”, my ass. Let them go. They can have the Poison Ivy League roaches that are sinking the USS America. Come to the big city and check out our “business leaders”. They are sociopathic sheep. They are leeches and termites. The first step to “success” for them is to convince themselves that all evils they perform in the pursuit of profit are justified and good. This is a group of “talent” we do not need. These innovators can innovate Asia right down the drain. Bon voyage, scumbags.
I don’t think that is fair. If you didn’t make a cr*p load of money during the bubble, it is very easy to say that if you offered to the opporturnity to legally make a few million a year you would turn it down, because you don’t think greedy sheeple should be fleeced. I don’t know you personally, but I can say that 95% or more of ppl that make such statements are being intellectually dishonest. As to “talent”, there is no question the Wallstreet gurus were brilliant. 15 years ago, most ppl would not believe that Wallstreet could have such power they could get ppl all over the Country to pay more than 2x for a house over its intrinsic value, yet they managed to do it. The only question is whether you would accept a high salary from a company that you think sells overpriced products. Most ppl, including those making less than 75k a year, would, so lets not pretend they are somehow better because they didn’t get the opportunity.
There’s a bit more to it than that, though. If you knew that you doing a “good job” would result in severe economic damage to small towns and businesses, would you still accept the job? I’m not saying I’m a saint and that it’s an easy or cut and dry decision, but we can’t completely ignore the damage done by these companies.
That wasn’t their mindset. Their mindset was, if I don’t do it someone else will, so why don’t I get mine - Those on the other side of the transaction were not being forced to enter into the agreements, and if they involved major sums of money, they are, or should be, armed with their own legal and financial advisor team. If someone is willing to assume the risk of a transaction, I cannot place much blame on the other side for not refusing to go through with it. If a legal activity places our Country at great risk, then it must be regulated intelligently. Assuming or expecting that people will not take advantage of legal get rich quick schemes because if done to the exteme in the aggregate it would cause great harm is unrealistic and, in my opinion, not worth much debate. When the government saw housing appreciation in excess of 8% per year, they had all the warning bells they needed to know that immediate action needed to be taken to figure out what was happening and how to fix it. When it passed 10% unless they were on notice we were entering into DEFCON1. They did nothing. They are the ones that let us down.
Bink and NYC - if you can point to any evidence or studies whatsoever that those graduating from MBA programs, or with similar degrees, are more likely to take advantage of others, especially compared to those with lower income income and education levels, I would like to see it. The IQ and education provides the opportunity, not the motive.
In many cases they knew they were perpetrating a fraud. They were misleading investors and customers. Exactly how far down the scale of immorality do they have to go before you say some employees were to blame for accepting those positions?
Bink and NYC - if you can point to any evidence or studies whatsoever that those graduating from MBA programs, or with similar degrees, are more likely to take advantage of others, especially compared to those with lower income income and education levels, I would like to see it. The IQ and education provides the opportunity, not the motive.
I’m not sure what NYC’s position is.. I know he can be a bit extreme. But that’s not at all what I was suggesting. I don’t believe in immoral college degrees*.
*: with the possible exception of marketing
The criminals involved in the financial disaster are a who’s who of Harvard Business School. I don’t need any f—ing study to show me that.
“I’m not sure what NYC’s position is.. I know he can be a bit extreme.”
A bit?
We are dealing with the biggest crimes perpetrated in the history of our country. We have a Congress that has sold us out. We have a president that lied his ass off to get elected. We have a Fed that is “printing” money at warp speed. We have a Wall Street community that is completely out of control and hell bent on destroying the middle class. We have a populous that acts like zombies most of their waking hours.
If this isn’t a time to be a little extreme in our thinking then please let me know when is. Natalie making excuses for these sociopaths seems incredibly extreme in its foolishness to me.
“In many cases they knew they were perpetrating a fraud.” Fraud is a red herring, as it was not a crucial element for the leverage game to work and is already illegal. The crucial element was creating a system of off balance sheet and leverage games (securitization, credit default swaps, etc.) that created sufficient distance between the originator and ultimate holder of loans such that by the end of the day there was no real due diligence to ensure that the loans were actually any good or that proper reserves were being maintained by the credit enhancers and liquidity providers, coupled with over reliance on legal but unrealistic modeling programs for determining necessary reserves and ratings, which included assumptions that real estate would continue to appreciate, etc.
“The criminals involved in the financial disaster are a who’s who of Harvard Business School. I don’t need any f—ing study to show me that.” Me thinks that has a lot more to do with the fact that they were the ones given control over the money supply rather than the fact that it was Harvard Business School that corrupted them. Our prisons are full of corrupt people that didn’t graduate high school. The only difference is what they were given control over, not much more than that.
I should add Havard MBA’s went to Wall Street, while community college graduates became Realtors, brokers and flippers. It’s all a matter of ones opportunities. Nothing more.
The premise that nobody would turn down the opportunity to make major bucks might be true ,but the idea that is was a legal opportunity ,rather than a breach of fiduciary duty and
scam of misrepresentation of securities ratings and breach of
lending standards or quality control is the elephant in the room .
This idea that nobody ,including the CEO’s of financial institutions, didn’t know anything and the commissioned sales people did’t know what they were pushing is absurd . In fact ,the more money that was made the more criminal the market became . Promotion of a Ponzi scheme ,by becoming increasing more criminal or more lacking in quality control (still rating it AAA paper) is a deliberate scheme to keep the party going .
Just as common sense dictated knew that it was a house of cards that must fall at some point, same is true of the buyers of the securities and homes. Obviously debt service that cannot be supported by revenue/income is an issue. Fraud is already a crime, and to the extent it existed it should be prosecuted. Selling interests in a risky business model that is too complex for most people to understand but they want to buy into anyway is not fraud - it is something that needs to be dealt with through regulation.
Your opinion that it isn’t fraud Natalie. Your statement suggesting that the investors in securities even knew it was a house of cards is not correct in my opinion .
. AAA paper isn’t usually a house of cards. There is all kinds of laws and regulations on the books that aren’t even discussed that were most likely violated . When you get bailed out you don’t have to face those allegations . Had
Standing law dictated the meltdown ,than these entities would of been sued silly for their acts ,IMHO. Your forgetting the bail-outs that have masked all kind of crimes . Borrowers aren’t even being prosecuted for loan fraud .
The mis-rating of securities by the entities themselves that sell them ,especially not changing the ratings
timely to reflect how poor the quality of that paper had become, is something that can’t we racked off to “We didn’t see it Coming.” Ponzi schemes are not illegal . Breach of Fiduciary duty to disclose ,underwrite ,or prevent fraud is
another issue .
If we follow your logic ,there would be no liability for Toyota for putting a faulty break system on the market and no liability for the correction and damage that might of been caused .
For you to try to say new regulations is the key ,is just saying forget what the regulations were and the violations
that occurred ,along with the accounting tricks, and lets just pass new regulations these crooks have to abide by . I bet ever crook on the planet would love for their crimes to be looked at that way ,in spite of untold damage that they might of done . And if you consider the lobbying power of
the crooks ,they are trying to keep the crooked casinos open with all the faulty misrepresentation ,but of course with built in bail-outs for their crooked schemes . New regulations,what a joke ,protection from bought off Politicians .
HW:
I have to disagree here….If you hire the most clueless chicky-poos and gamer hipster guys they would know zip about fraud or if it was Illegal. That’s why you never saw anyone smart on the front lines of the mortgage office.
And if they knew how corrupt it was why haven’t we heard of at least a few loan officers brokers etc. making millions shorting or buying puts on Indymac or WaMu?
This idea that nobody ,including the CEO’s of financial institutions, didn’t know anything and the commissioned sales people did’t know what they were pushing is absurd
Is the bottom line the Wall Street Banking cabal elites did it on purpose? Is the bottom line they were victims? Is the bottom line we all would have done it?
The bottom line for me is that the Ivy League MBA’s, America’s elites and the “smartest guys in the room” FAILED. Their failures will go down as one of he greatest failures in the history of America.
They FAILED capitalism as we used to know it.
They FAILED their companies ability to survive (without the perversion of capitalism)
They FAILED their people.
They FAILED their country.
They FAILED their fiduciary duty to countless parties.
They FAILED the continuing respect of their universities.
They FAILED the continuing respect of their institutions.
They FAILED the continuing respect of their government.
They FAILED to act honorably and honestly.
They FAILED so BIG history will not be re-written.
It will be looked at as one of the greatest proofs in economic and political history that the prima donna, Ivy League, Wall Street, banking and political elites were never as smart, honest and capable as they were perceived to be.
I think holders of undergraduate and graduate business degrees from second level state universities would have done a better job.
Why? Because of their lack of hubris, sense of entitlement and delusions of grandeur, a dangerous combination.
If a business transaction is a win/win situation ,than that might be OK . If a business transaction is based on one party being deceived in order for it to take place than not OK .
Is it acceptable to say that faulty business models are a valid
excuse for the financial sector to beat the rap . I suppose a crook has faulty business models also . Things are judged by the fruit they bear . The after the fact excuse of “we didn’t see it coming “,could be the same defense Bernie Madoff could come up with . I didn’t know people would be asking for their money
that I couldn’t come up with ,I was just using peoples money in
the way I liked to by investing it in my lifestyle .
Rio …I agree with you they failed . Thats why investment middle men can’t be lenders . They will breach their duty
every time and end up with faulty lending ,just so they can make commissions on the investment .
aNCdj. The front line loan agents were fraudulent with the loan packages . Whatever it took to make the loan package conform to the the loan rules on the loan for a big commission .. You would knowingly know you were doing it and if management was checking it or even encouraging it . What fool wouldn’t know they were committing fraud if they had to twist a package to make it conform to the loan requirements or tell the borrowers what to come in at.
Its like this :they have requirements for any given loan package . Customer comes in and loan agent says ,”this is what your loan package must say to meet the requirements of the loan “,rather than fill out the information in truth and lets see if you qualify for the loan .
Why do you think the real estate sales people had no problem taking people to properties they couldn’t afford or they didn’t really qualify for ? The news gets out that income is not relevant ,owner-occupancy intent isn’t being checked ,fraud is easy to get away with ,just turn it over to this agents or that agent .
Did the industry try to hire a bunch of commission loan agents that would pump up the numbers for their own
ill-gotten commission gain by doing anything …I think so .
Maybe a few were so green that they thought this was standard practice that you change numbers to make the person qualify rather than the numbers making the person qualify or not .
They FAILED capitalism as we used to know it.
They FAILED their companies ability to survive (without the perversion of capitalism)
They FAILED their people.
They FAILED their country.
They FAILED their fiduciary duty to countless parties.
They FAILED the continuing respect of their universities.
They FAILED the continuing respect of their institutions.
They FAILED the continuing respect of their government.
They FAILED to act honorably and honestly.
They FAILED so BIG history will not be re-written.
Many peoples failures is the by-product SUCCESS of a “select” few!
“Consequences, Schmonsequences, as long as I’m rich.” Daffy Duck
(Honed skills when he was working part-time at GoldenmanSucks Inc.)
Come to the big city and check out our “business leaders”. They are sociopathic sheep. They are leeches and termites. The first step to “success” for them is to convince themselves that all evils they perform in the pursuit of profit are justified and good.
I agree, NYCityBoy, only I’d call them wolves and not sheep. Science Daily offers perhaps the most plausible explanation for their mindset and behavior.
http://www.sciencedaily.com/releases/2010/03/100314150924.htm
Sammy — If the HBB had awards for “best link,” I would nominate this one:
Science News
Psychopaths’ Brains Wired to Seek Rewards, No Matter the Consequences
ScienceDaily (Mar. 15, 2010) — The brains of psychopaths appear to be wired to keep seeking a reward at any cost, new research from Vanderbilt University finds. The research uncovers the role of the brain’s reward system in psychopathy and opens a new area of study for understanding what drives these individuals.
“This study underscores the importance of neurological research as it relates to behavior,” Dr. Francis S. Collins, director of the National Institutes of Health, said. “The findings may help us find new ways to intervene before a personality trait becomes antisocial behavior.”
…
“…As to “talent”, there is no question the Wallstreet gurus were brilliant….”
Say what? Do you keep up with current events?
Now who’s being intellectually dishonest?
Another point .
There is a lot of contract law that states that if fraud is discovered with a contract,than it is a voidable contract ,or whatever a Judge decides to do about it .
AIG could of had a case that they didn’t have to pay on the bulk
of CDS’s because they were riddled with fraudulent loans and they were deceived as to the ratings on those loans The fact that Goldmans was paid 100% on the dollar was a trick to avoid what normal discovery would of found ,and what normal liability would of been . PMI Insurance Companies first look for fraud in a package ,before they pay off on a default .
A insurance Company might insure a famous painting ,but if they find out later that the painting was a forgery ,than they are off the hook because fraud was involved with the contract .
For instance ,if the banks wanted to go that route they could
turn a no recourse loan into a recourse loan if they could prove fraud in the loan application .
It is my belief ,that one of the reasons that the Investment Firms got their bail-outs was because it was a Obstruction of Justice to avoid the civil and criminal liability that would of been discovered . The bail outs weren’t only to keep them from BK .
The “We didn’t see it coming ” defense is one of the first
lines of defense against fraud charges .
Is anyone to believe that in spite of these FIRMS going to the discount window for months because of cash flow problems ,that they didn’t know that everything was falling apart .
The law has a concept about a party responsible that should of known . And nobody finds it odd that a Goldman Sakes man name Henry Paulson all of a sudden retires and becomes the Treasury Sec. right when the crisis begins .
I think the public is confused right now as to just what they bailed out .
More power to him.
Why should someone stay in the USA if he or she doesn’t want to?
Further, therre’s likely more opportunity over there for someone aged 26. Or 36. Even 46. The United States is top-heavy with those aged 50+, many of whom aren’t willing to vacate their well-paid positions.
Why should someone aged 26, 36 or 46 wait until they’re 60 to finally begin making some money?
If I were 26, I sure as h@ll would be weighing overseas options, too. And I’d advise the brightest and most ambitious to do the same.
many of whom aren’t willing to vacate their well-paid positions
They might not be “willing” but they are cetainly being laid off and replaced by youngers workers, both here and abroad.
How much of our population are from families that have only been here for a generation or two? So now that the grass is greener elsewhere we think the current crop of up and comings wouldn’t up and leave for the latest hotbed of opportunity? I think the fact that more neighborhoods are only bedroom communities w/little sense of interaction or roots would only allow a decision to jump all the easier.
But that’s not even true of just the new American families. I had a chat w/someone who grew up in the Bronx in the late 50s. He said he doesn’t even go back there anymore. It’s changed so much he says its painful to see. The families he grew up with are gone. The businesses are gone, the influences that shaped him are gone and he doesn’t know where they even moved to. There is no longer any sense of home there for him. Maybe our churning changing world is starting to catch up with us. With no sense of belonging, we are free to go.
Good post, CarrieAnn.
This article in the UK’s Daily Mail perfectly describes the imbecility of voters who are surrounded by evidence that their “leaders” are leading the country to ruin, yet they continue to vote for more of the same. The real problem isn’t the appalling caliber of “public servants” as it is the bovine stupidity of the herd that elects such Republicrat hacks and keeps them in office, while bitching all the time about how bad things are getting. And failing to make the connection between their own brain-dead voting habits and the subsequent mal-governance the follows.
http://www.dailymail.co.uk/debate/article-1259339/Max-Hastings-Britain-nation-denial-voters-just-deluded-PM-calamitous-state-country-in.html
Britain is a nation in denial and voters are just as deluded as the PM about the calamitous state the country is in.
Yet against this background of incompetence, fiscal recklessness and neglect of real priorities, millions of people seem willing to give Gordon Brown [Bush, Obama]another chance.
Their motives, I suggest, say more and worse things about such voters than about the shortcomings of the Tories or LibDems.
They reflect the sort of thinking to be expected from an obese ten-year-old grabbing for the sweetie jar.
As a society, we have become so soppy and resistant to hard choices or sacrifices that many embrace whichever party threatens them with the least personal pain.
Sammy - Your source is the ‘Daily Mail’. This is the ‘Little Englander’ tabloid who have ~5 ‘why oh why’ type of articles.
Britain is pretty set in it’s ways of voting. Only a small % actually are independent voters and like US, they have a piss poor choice to vote for.
Max Hastings is a well respected journalist. The reason UK voters, like their US counterparts, have a piss-poor choice to vote for is because UK voters, like the US counterparts, are complacent, doltish, easily manipulated sheep. A point I’ve made a time or two.
I believe the phrase you are looking for is “Fat, dumb and stupid.”
Shadow inventory tally: - 12*300,000/mo = 3.6 million foreclosed in past twelve months + 5-7 million more owners that are seriously delinquent = 10 million or so in shadow inventory?
I am ignoring recent sales, on the theory that it is better to be approximately right than precisely wrong.
New round of foreclosures threatens housing market
By Renae Merle
Washington Post Staff Writer
Friday, March 12, 2010
The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.
About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can’t obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.
As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.
…
Home Loans
FHA challenged on projected risk to taxpayers
By Dina ElBoghdady
Washington Post Staff Writer
Friday, March 12, 2010
The Federal Housing Administration will need taxpayer money because it failed to properly project how borrowers with FHA-backed loans are affected by job losses and diminished equity in their homes, New York University professor Andrew Caplin told a House panel Thursday.
The agency, which insures lenders against defaults, has nearly depleted the cash it must set aside to deal with unexpected losses. But a recent audit of FHA’s finances concluded that the agency will not need taxpayer money except in two catastrophic scenarios.
Caplin said the audit ignored the risks posed by FHA borrowers who owe far more than their homes are worth and yet managed to refinance into new FHA-backed loans. It treated those borrowers as if they were trouble-free, even though they would be vulnerable to foreclosure if they suffered a financial setback, said Caplin, who co-wrote a study on this topic with the Federal Reserve Bank of New York.
…
A guv’mint agency that “failed to properly project” an outcome? I am shocked, shocked!, I tell you. Clearly, underfunding is the problem.
Other day I was reading about more Americans are leaving with their parents or children and thus the number of the Mutigenerational households has gone up, this phenomenon is result of bad economy. But in parts or Europe and Asia it is quite common to see this.
But what do folks on this board thin about the Mutigenerational households, the pros and cons of it for the economy and families in general.
leaving= livingoops typo
Fewer demand for houses so even more oversupply and a bigger crash.
T-I-M-B-E-R
Back in my college days I lived briefly next to a multi-generational household, all of whom were prime candidates for court-ordered sterilization. I could work until my dying day and still not pay for all the state, local, and Federal tax dollars and resources those mutants were soaking up.
If the parents are flakes and the grandparent’s aren’t then multigenerational households may be a good thing.
My grandmother lived with us when I was growing up. Even though it meant we had to have a slightly large house, I suspect the benefits outweighed the disadvantages. She and my mother did most of the work in a garden the supplied all but a few vegetables used throughout the year. My grandmother did the majority of the cooking and housework, freeing my mother to make a good portion of the clothing worn by the female members of the family. My grandmother also looked after the four children when my mother needed to shop.
My SIL spends most of her day taking her 2 grandchildren to school and various activities so that her daughter can work. My niece has to work so they can make house and car payment. Meanwhile my SIL actually has a lot of the responsibility for the kids as well as her own living expenses. And both she and my niece worry about what will happen when she can no longer do all the running around. There is no one else to take up the slack.
My great-grandmother (!!!) lived with us when we were growing up. She died when I was 15.
This woman was a titan; she’d do the cooking and the housework, and run the house like a general. Even if she were tired, it was her way or the highway.
She pickled in summer, and commanded all of us little peons around like a commandant. I didn’t realize how much I had “absorbed” from her until I was grown up.
I know how to pickle - it’s “effin’-obvious” - but it wouldn’t have been “obvious” had I not done it like a little bee-yatch all the summers of my life.
I grew up in a house where the mother was an old fashioned Home Economics teacher and the dad was a Marine Corp Seargent. I not only learned to cook and can and mend my clothes, but to rise at the first call, take a shower in 120 seconds and make the bed before breakfast.
These are useless skills.
Talk to me after you can make your own ravioli.
Hey faster..my GF used to work for the Ravioli Store in Soho….what incredible types they made.
These are completely and utterly useless BS that people use to delude themselves.
Who cares if you woke up at dawn or 4pm?
Who gives a mofo if you take a crap in 120 seconds or in 22 hours?
Who cares if you made the bed once or if at all ever in your entire godd_mn life?
Do any of these put food on the table?
No? Then they are utter horsesheeyat that people use to delude themselves.
Actually, I do not like ravioli. I cooked and fed and clothed four children as a single dad. I am surely not as artful (at cooking) as you, but I do know how to put food on the table. Maybe it isn’t useful for you to get out of bed, but it was useful for Dad.
You just come out to visit Seneca Lake and bring a good bottle of wine. I’ll supply the Delmonicos. Ravioli my ass.
FPSS, I am a great fan of your trenchant wit and rapier-edged analytical ability. However, we WERE discussing eroding societal standards with respect to focus, discipline and self-control. IMHO, Blue’s comments are very much on the money here. I can think of lots of second order benefits derived from the ability to take two minute showers. The mindset of stripping things down to their essential components, for one. Mindfulness about time, for another.
Regrettably, such an upbringing would have been wasted on me. All I ever wanted to do was to read and dream without molestation. But I admire everybody who has this legacy, from which to draw useful skills.
“…dad was a Marine Corp Seargent.”
That makes you the son of a government worker, right?
I suppose in a way. He gave away all his stuff and went to Iwo. That was a couple of years. His retirement benefits consisted of nightmares.
I work for the government half of every day. Don’t you?
I used to have two government jobs and lucrative free lance occupation on the side.
Now that there is a Great Recession, I have but one government job, and lots of volunteer work in lieu of free lancing.
P.S. Just for the record, I am not opposed to health care reform. I just think the Obamanites made a hash of it.
“But what do folks on this board thin about the Mutigenerational households, the pros and cons of it for the economy and families in general.”
I believe it was I who posted the article you reference. My thoughts:
1) Robert Toll said this would happen, and he was right about the result but wrong about the reason; he thought ever-rising home prices would force young adults to move back in with mom and dad, but in fact it is a dearth of employment opportunities which explains the phenomenon.
2) Like FPSS already said (and I said yesterday), more instances of multiple households or adults living under the same roof implies lower demand for distinct housing units. The natural consequence is a “worse than expected” real estate crash, as everyone needs to live somewhere, but more than one household (or more than two adults) can live at the same place.
3) There is a cultural tradition of multiple generations under the same roof in many other countries, but when this occurs in the U.S., it is typically due to economic hardship imposing housing expenditure (budget) limits which constrain households away from their optimal configurations.
leaving = living
that was a typo
Relax Floridians, an army of Canuckians from the Great White is on the move south. They are helocing there overvalued homes in the burbs and cities to snap up all those cheap coastal properties while the Canuckian dollar is hot, hot , hot. My in-laws just informed me that they took out a home loan and went and got the deal of a lifetime in Port St. Lucie. I am so proud of the Canuckian people. Giving it their borrowed all to save our southern cousins. Please stop applauding, your making us blush.
We gave them acid rain, so now we’re even.
As long as they bring Tim Horton’s with them…
The rumour up here is that Timmy coffee has heroin or nicotine in it, but you didn’t hear it from me.
You mean the rich Canadian baby-boomers are going to save us? The United States of Goldman is most grateful.
Consider it a done deal. Up here it’s all sunshine and tulips. The economy is ready to explode, as soon as the U.S. economy gets into high gear, which we heard is any time now.So get going down there, your slowin things for us. Come on you can do it, we know you can. Think green shoots. Now don’t you feel better.
Couple of weeks back I was traveling to Newark ,NJ and stayed in Holiday Inn. I had used “name your price” on Priceline.com to get the room, name your price is basically auction kind of feature to book the room. I got that room for $38 and later I checked the Holiday Inn website to get their price and it was around $50.00. My gut felling says that $50.00 for that room was barely enough to cover the cost. Hotel was full as there were no parking spots available and the other hotels around were pretty much empty. If Priceline is charging me $38, I am assuming that the hotel is getting paid less than the $38.00.
Hotel Industry should be in trouble as the revenues are down due to lack of demand and this kind of competition where there is a price war to just get the customer in your hotel.
I see too many hotels on the Interstate exits with empty parking spots, that means no customers
Hotels and B&B are in deep doo-doo.
Not that I’m a big consumer but my modus operandi even during the boom was NEVER to book anything. I’d call from the road or even the day before to ask for pricing.
I almost always got something that was wayyyyyy above my “level” at a price I wanted.
Of course, you have to be ready and willing to stay at a crappy motel if things don’t work out which I did but only once in five years or so.
Smartypants-McSmarty economists like PB would call this an example of “risk-neutral pricing”.
That’s correct.
Do the same things when searching for rentals, and you’d be surprised at the deals you can make. Drive or walk around the hoods, write down the telephone numbers you see on some rentals, then call.
Always remember that at 3pm, if you call a B&B, they have a choice between making “some” money or none at all.
You shouldn’t be too shy about pointing this out either.
I’ve stayed in some seriously fancy places that I could never have afforded otherwise.
And afterwards, I was always told that minus the initial negotiation, I was one of their most gracious customers ever.
Well, DUH!!!
Works especially well if you’re in an area with lots of hotels.
Ask the desk clerk for the “walk-in” rate.
A very nice clerk at a hotel in Vail told us to reserve the room on a daily basis - that way we kept getting the walk-in rate. Otherwise the $89 room would be $289.
“Smartypants”
Olygal would point out that you, too, are a Smartypants-McSmarty economist…
The blackest pots that call kettles black are made in the Chicago School.
Your strategy would naturally work much better when lots of hotels have space to fill. I recently had to book hotel rooms for some visitors at work. The first few calls, the reservation staffer acted all snooty and quoted me 2006 prices. On the third call, I got what I wanted — luxury accommodations at affordable prices, within 1/2 mile of work.
Smartypants description of what happens: FPSS gets the spot price for hotel rooms; most people get the forward price, which includes a risk premium layer for the certainty that you will get the room you are promised in advance.
With astronomically high vacancies, FPSS’s strategy is likely to work like a charm for the near term future…
So why did it work during the boom?
It did. I got data.
(Best guess answer: boom was fake which we know.)
BTW, excellent description. I am going to steal this.
T.S. Eliot : Minor poets borrow; Major poets steal.
What I was shocked about is the radical difference between spot and forward.
I mean seriously - I know they are betting on statistics and all - but c’mon! - factor of 3 and 4?
They sure are in a uproar over the Health Care vote .
I got a idea . Since these Politicians can’t seem to draft anything that
isn’t a trick ,than just let everybody cancel their policies . Its going to happen eventually anyway because of the costs .
I’m at the point now where I believe boycotting is the only way to get rid of the corruption, the price fixing ,the monopolies ,Big Business hold over the Politicians . Maybe the elimination of Lobbying somehow (course the Politicians would need to vote for that,and they wouldn’t ).
We are in stuck mode.
“…elimination of Lobbying somehow (course the Politicians would need to vote for that,and they wouldn’t…”
Main Street USA’s conundrum…
I think term limits would be a better quick-fix towards a properly functioning democracy. Far more work than that needs to be done, of course.
I think I might be in favor of a single payer government plan which would cover basic care ,but with the option for additional upgraded
services if you want to pay for that Insurance (that would be close to the Germany system ). The thing is if the costs aren’t brought down on health care ,the government won’t be able to afford it as time goes by either . I think I also might favor that the first 1k to 2k in
health care be paid yearly out of pocket ,if we go to a government run system .
The things that bothers me a lot is how high of a percentage of
a persons monthly income goes to Health Care (and that would include the employer supplement is a form of wage .) Heck health care is exceeding the cost of rent and food .
Something doesn’t jive here ,just like it didn’t jive how high the price of real estate was .
I am really questioning all forms of Insurance systems ,and what has been going on with that in recent years ,and the fact that it’s becoming more and more of a racket rather than a viable system that serves the needs of a Society . It would especially be oppressive if one was forced to buy private insurance by government mandate . Isn’t the same concept with the car insurance mandate that you have to have min insurance .IMHO
Wall Street Volume:
Volume of DOW this week: 122 million shares.
Volume of DOW during the peak in 2006: 3.8 Billion shares July 1st - Oct 1st weekly average.
The DOW is up about 62%.
Weekly volumes are a tenth of what they once were. On a 62% rally.
Gee.
Roidy
“Volume of DOW this week: 122 million shares.
Volume of DOW during the peak in 2006: 3.8 Billion”
(122,000,000/3,800,000,000)*100 = 3.2 percent now of peak volume in 2006.
Sounds about right — around three percent of the population are enjoying Mr Market’s wild ride up while the rest of the population is sitting on the sidelines and watching. Of course, I may well be overestimating the percentage of the populace which is participating in the rally, as that 3.2 percent of the peak 2006 volume is most likely concentrated into an even smaller share of the population.
I expect that a little selling pressure on the Stock Market and the super fast computer traders will need to be halted for a few days to stop another crash.
How fast will it drop? Or will it drop? Will the bond market crash along with commodities therefore flushing all that “sidelines” money into the Stock Market? Will it go to cash?
Is this the quiet before another storm?
Me, I’m in cash for the moment.
The super thin trading numbers cannot hold this up.
Roidy
Been primarily in cash since taking chips off the table at the end of last year’s big runup (September or so). Meanwhile, Mr Market keeps having this big uptrend on ultra-low volume — I would call it a parabolic bubble price blowout, but I am not sure that terminology applies so soon after a massive crash (Fall 2008-Spring 2009).
My interpretation of the stock market’s recovery since March 2009:
THE LARGEST AND LONGEST DURATION DEAD CAT BOUNCE IN HISTORY
Qualification: The Fed’s printing press action could still suffice to make this a good time to buy stocks, relative to the unsavory alternative of finding one’s self long dollars during an incipient prolonged period of “higher than expected” inflation.
Historical reference: 1975-1980 (”WIN = Whip Inflation Now” button era)
At the end of the day, it all seems to depend on which asset class the Fed decides to peg, and which one it decides to screw.
PB describes the free market??? What ever the FED wants and thus those that have the inside scoop at the FED make all the money.
“What ever the FED wants and thus those that have the inside scoop at the FED make all the money.”
Wouldn’t that scenario constitute white collar crime (”insider trading”)?
Perhaps a Fed audit could explore your hypothesis…
Funny how The Economist writers seem confused about the relationship between housing prices and inflation. Don’t they know that housing is an asset, and hence excluded from inflation statistics?
United States
The inflation rate
Price puzzle
Inflation figures fuel a debate over when the Fed should tighten
Mar 18th 2010 | WASHINGTON, DC | From The Economist print edition
TRACKING American interest rates is like watching paint dry. At its meeting on March 16th the Federal Reserve left its short-term rate target between zero and 0.25% for the tenth consecutive time, and, given “subdued inflation trends”, said it would probably leave it there for an “extended period”.
But just how subdued is inflation really? Frustratingly, the latest data provide ammunition for both the hawks, who question the need for extended low rates, and the doves, who don’t.
…
Dave Greenlaw of Morgan Stanley notes that one component explains all the decline in core inflation: housing. America’s Bureau of Labour Statistics measures the cost of home ownership by what someone would have to pay in order to rent the house he owns. Falling home prices and high vacancy rates are pushing rents down. Since rent and the estimated equivalent of rent for owners comprise more than 40% of the core index, this has a huge impact on the direction of core inflation. When housing costs are excluded, core inflation has actually risen, to 2.6% in February (see chart). Mr Greenlaw predicts that housing inflation will stop falling, spurring the Fed to raise rates later this year.
Paul Ashworth of Capital Economics counters that rents have slowed by more than house prices and vacancy rates can explain: high unemployment is also at work. This means, he reckons, that lower rents must reflect genuine disinflationary pressure. Moreover, he notes an anomaly working in the other direction: core inflation is being pushed up by sharply higher prices for second-hand cars, supplies of which shrank after the success of last year’s cash-for-clunkers scheme. He expects those prices to fall back and, with them, core inflation, helped by steep declines in labour costs as productivity quickens and wages stall. His firm sees the rates on hold until 2012.
…
Can’t say we didn’t warn anyone who paid attention here from 2005 forward!
Quantcast
MORTGAGES
Option ARMs pose threat to housing market
Easy terms on the adjustable-rate mortgages, popular during the housing boom, are expiring. Higher bills could lead to more foreclosures, industry experts warn.
Option ARMs
Rock-bottom interest rates engineered by the Federal Reserve have taken some sting out of the payment increases under option ARMs. But that could change if, as many analysts expect, rates start going up next year. Above, a house in escrow in Los Angeles last month. (Reed Saxon / Associated Press / February 16, 2010)
By E. Scott Reckard
March 20, 2010
Home values are slowly rising, and interest rates are still at low tide. But some analysts see a hidden reef that could sink the housing market: option-ARM loans.
Option ARMs are adjustable-rate mortgages that give borrowers the option to make minimum payments that don’t even cover the interest owed, much less the principal. That unpaid interest gets tacked onto the principal, increasing the size of the loan.
But there’s a catch: The optional minimum-payment period usually lasts five or 10 years. Because most of the option-ARM loans were funded from 2005 to 2007, the easy-term periods have started to expire.
In a wave cresting through the coming two years, most of the estimated 900,000 borrowers who have option ARMs will lose their ability to make these teaser payments, according to First American CoreLogic, a Santa Ana real estate research firm.
“Unless option ARMs are restructured proactively, large proportions of them could end in foreclosure, leading to a potential double dip in housing prices in many California markets,” said Paul Leonard, director of the Center for Responsible Lending’s California office.
Others may be able to afford the higher payments but could choose to walk away. Median home prices in Southern California have fallen about 46% since 2007, when the last of the option-ARM loans were being written. That means many borrowers will face higher loan payments on homes worth substantially less than they were when they bought them.
…
Acorn on Brink of Bankruptcy, Officials Say
By IAN URBINA
Published: March 19, 2010
BALTIMORE — The community organizing group Acorn, battered politically from the right and suffering from mismanagement along with a severe loss of government and other funds, is on the verge of filing for bankruptcy, officials of the group said Friday.
Bertha Lewis, Acorn’s chief executive, blamed “relentless, well-funded right-wing attacks” reminiscent of the McCarthy era.
Acorn is holding a teleconference this weekend to discuss plans for a bankruptcy filing, two officials of the group said. They asked not to be identified because they were not authorized to speak to the news media.
Over the last six months, at least 15 of the group’s 30 state chapters have disbanded and have no plans of re-forming, Acorn officials said. The California and New York chapters, two of the largest, have severed their ties to the national group and have independently reconstituted themselves with new names. Several other state groups are also re-forming outside the Acorn umbrella, and will not be affected if the national organization files for bankruptcy.
…
What’s telling to me is that Acorn’s demise came about largely due to the most amateurish but effective “undercover investigation” I’ve ever seen, by those kids who were the most unconvincing pimp/prostitute duo ever. The MSM would never have touched this story. Some kinds of corruption are A-OK with them, as long as the Democratic party benefits.
How fair and balanced of you.
You have to admit there is something sweet about the way ACORN tried to help out the your pimp/hooker team.
Could be a non-story. They have opened up business under a wide variety of different names.
“ACORN branches change names, try to rebrand in bid to shed tainted group’s identity”
“Even the national office of ACORN, or the Association of Community Organizations for Reform Now, doesn’t blame affiliates for bolting from under its umbrella — conceding its entire 40-state network has been devastated by what backers characterize as right-wing attacks.”
http://www.baltimoresun.com/news/sns-ap-us-acorn-makeover,0,5393638.story
A turd by any other name would smell as rank.
Two recent court ruling have shown that ACORN was the victim of libel in that the “undercover” video was in fact, edited out of context and the law passed by Congress to specifically exclude ACORN from federal funding was unconstitutional as it amounted to a Bill of Attainder in violation of Article I, Section 9 of the United States Constitution.
Gershon’s judgment comes on the heels of the completion of a five-month investigation by the Kings County, NY District Attorney’s office examining the secretly-taped videos taken of ACORN Housing workers in Brooklyn and released by rightwing activists James O’Keefe, (now in the federal slam for B&E a sentor’s offcie.) Hannah Giles and Andrew Breitbart.
The D.A. released a statement finding “no criminality” last week, after which sources from their office told the New York Post that the videos amounted to a “‘heavily edited’ splice job that only made it appear as though the organization’s workers were advising a pimp and prostitute on how to get a mortgage…[with] many of the seemingly crime-encouraging answers…taken out of context so as to appear more sinister.”
It was after the release of the highly publicized release of those doctored video tapes — publicity which has recently been shown to have been a hoax and based on a number of out-and-out deceptions — that Congress quickly, and unconstitutionally, moved to defund ACORN.
So thanks to all you ACORN haters out there for showing us what absolute tools you are.
It seems like there is a conspiracy theory out there to explain almost everything that happens any more.
What ever happened to objective, unbiased reporting?
It was pretty much killed when the Business Roundtable was created in 1972 to act as THE lobbyist and propaganda clearing house for an organization made up exclusively of CEOs
from the top 200 financial, industrial, and service corporations.
Does this news mean there will be no more plunge protection measures for housing until at least next year?
US Treasury’s Geithner testifies Mar 23 on housing
Fri Mar 19, 2010 2:35pm EDT
WASHINGTON, March 19 (Reuters) - U.S. Treasury Secretary Timothy Geithner will testify March 23 on housing finance before the U.S. House of Representatives Financial Services Committee, a Republican aide to the committee said on Friday.
This week Geithner told lawmakers “fundamental reform” of the government’s role in the housing finance market is needed but that it will be next year before proposals are ready for Congress.
The hearing will take place at 10:00 a.m. (1400 GMT). (Reporting by Nancy Waitz; Editing by James Dalgleish)
…
U.S. House GOP calls for Fannie, Freddie phase out
Fri Mar 19, 2010 1:36pm EDT
WASHINGTON, March 19 (Reuters) - Republicans in the U.S. House of Representatives on Friday recommended the country’s two mortgage finance giants be phased out in four years in an effort to restore stability to the housing market.
The House Republicans offered 5 goals to guide the overhaul of Fannie Mae (FNM.N) and Freddie Mac (FRE.N), two Government-Sponsored Enterprises bailed out at the height of the financial crisis. The goals include reestablishing a housing finance market in which private capital is the primary source of mortgage financing.
The lawmakers put forward ten principles, among them winding down Fannie Mae and Freddie Mac and cutting their mortgage portfolio holdings 25 percent a year over four years.
“It is time to deal with bailed out companies, which were at the center of the mortgage market meltdown that caused the financial crisis, and have cost taxpayers hundreds of billions of dollars.” said Rep. Spencer Bachus, an Alabama Republican, and ranking member of the House Financial Services Committee.
The House Financial Services Committee, chaired by Rep. Barney Frank, a Massachusetts Democrat, will hold a hearing on Tuesday, March 23 looking at ways to improve the mortgage finance companies.
Treasury Secretary Timothy Geithner is expected to testify.
Fannie Mae and Freddie Mac were formed as government-sponsored enterprises with a mandate from Congress to provide liquidity to the U.S. housing market.
But in September 2008 the U.S. government seized control of the two firms to quell what had been a year-long credit market crisis that had helped push many economies toward recession.
In testimony on Wednesday Federal Reserve Chairman Ben Bernanke urged Congress come up with a new way of financing homes.
“My assumption is that sometime soon, I’d hope soon, that the Congress will reform Fannie and Freddie, perhaps break them up, perhaps make them officially governmental,” Bernanke said at a House Financial Services Committee hearing.
…
King Cash continues clobbering commodities.
* COMMODITIES
* MARCH 20, 2010
Commodities Get Hit By Growth Concerns
By BRIAN BASKIN
NEW YORK—Commodities sold off across the board, as suddenly cautious investors abandoned gold, oil and other markets for the U.S. dollar after India raised its interest rates, signalling a winding down of the Asian nation’s efforts to stimulate its economy.
The decision by India’s central bank to raise its borrowing and lending rates on its own isn’t likely to have a significant, direct impact on commodities demand or the amount of funds available to investors. Still, markets were spooked by the possibility that India’s move serves as an early warning that other central banks, such as China’s, will follow with rate increases of their own.
Many commodities, including oil, are deeply dependent on fast-growing emerging markets to boost demand this year, as large developed economies are only gradually recovering from the recent recession. Developing countries have posted faster expansion rates, leading to some inflation worries. Rate increases can prevent high inflation, but slow economic growth by making it more expensive for banks and businesses to borrow.
India’s rate increase “is only meaningful because it makes people jittery and the perception [is] that China may follow suit,” said Nicholas Johnson, co-manager of Pimco’s CommodityRealReturn Strategy Fund, which holds about $16 billion in assets.
The declines were biggest in oil and gold, which both have recently hovered near, but failed to break through, their 2010 highs. The price of the gold futures contract for March delivery shed $20, or 1.8%, to $1,107.40 an ounce, while April crude oil fell $1.52, or 1.85%, to $80.68 a barrel. March copper fell 2.3 cents, or 0.7%, to $3.3645 a pound.
Losses in these and other commodities, including corn and sugar, were compounded by a resurgent dollar, which has strengthened as investors look for a stabler alternative should Greece’s debt troubles or India’s rate increase slow economic growth more broadly. The ICE Dollar Index, tracking the dollar against a basket of other currencies, was recently at 80.925, from 80.440.
…
The Christmas light bandit update: I had my arrainment!
Although the HOA never helped in getting the lights down, I never even got to plead my case.
DA is willing to take participation in a $230 Community Accountablility Program/seminar in lieu of prosecuting this case. No record of any conviction, case dismissed!
I’ll take it instead of possible conviction, with $2500/60 days max penalty, plus the blemish on my baby’s bottom clean record.
Thank you to the lawyerly types who helped me here(Polly in particular)
HOA the last vestiges of communism in America
More like the front line. But having had to fix a lot (A LOT) of DIY projects by people who didn’t know which of a nail to hit and who think bright orange and maroon is wonderful color combo… for the outside and yard mowing is optional, I’ll take their brand of oppression versus my neighborhood turning ghetto.
But I would first try to find a neighborhood where an HOA isn’t needed because the neighbors do a good job on their own keeping the neighborhood nice.
I think there is enough oppression/discrimination in this country, and I can’t imagine i would ever want to pay extra for more.
I’ll take their brand of oppression
Me neither, hence my last sentence.
Arizona sheriff launches immigration sweep
“During the sweeps, deputies flood an area of a city — in some cases heavily Latino areas — to seek out traffic violators and arrest other alleged lawbreakers.”
“Critics say Arpaio’s deputies have racially profiled Hispanics. The sheriff says deputies approach people only when they have probable cause to believe people have committed crimes.”
http://news.yahoo.com/s/ap/20100319/ap_on_re_us/us_immigration_patrols
I’ve heard rumors that Sheriff Joe might be running for the Governor spot. Oh man, is that going to be a fun campaign.
He’d be an interesting candidate on the national level.
The financial crisis and the future of regulation
Blame game
Two influential economists take a potshot at financial policymakers. Why don’t their criticisms add up?
Mar 18th 2010 | From The Economist print edition
…
“13 Bankers”, which Mr Johnson co-wrote with James Kwak, a former McKinsey consultant, makes a narrower point, but has greater historical sweep and is the better read. The authors’ argument, first laid out in the Atlantic a year ago, is that America’s big banks act as an oligarchy, a group that has gained political power because of its economic power and then uses that political power for its own benefit.
Unlike oligarchs in emerging economies, Wall Street’s financiers do not use overt bribery or blackmail. Their tools are the soft power of campaign-finance contributions, the revolving door of jobs in government and on Wall Street, and the creation of a culture that equated Wall Street’s gain with America’s gain. But they are no less nefarious. Their power, the authors argue, explains why the Obama team chose the “blank cheque” option for dealing with the financial crisis.
To ensure the safety of the financial system and America’s democracy these behemoths must be broken up. The authors would like to limit the assets of any financial institution to 4% of GDP and those of each investment bank to 2%. That would mean dismantling six monster banks.
Suspicion of a financial oligarchy is a recurrent theme in America. From the fights between Thomas Jefferson and Alexander Hamilton over the “Bank of the United States” to Franklin Roosevelt’s Depression-era refashioning of finance, America has oscillated between admiration for and fear of bankers; between welcoming financial consolidation and preferring fragmentation. Messrs Johnson and Kwak deftly summarise this history before moving on to their description of how modern Wall Street—the most powerful and concentrated financial sector in the country’s history—both created the financial crisis and ensured a bail-out for its own benefit.
Like most conspiracy stories, “13 Bankers” contains a kernel of truth. Wall Street’s intellectual and political clout is considerable, and financial firms make far bigger campaign donations than any other industry in America, resulting in an unusual cosiness between financiers and Washington’s policy elite. That doubtless influenced the financial deregulation that preceded the crisis, helped shape the response and is plainly influencing post-crisis efforts at regulatory reform.
But, like many conspiracy theories, “13 Bankers” goes too far. It ignores evidence and arguments that do not suit its thesis. The Obama administration’s decision not to nationalise the banks is presented as prima facie evidence of the oligarchs’ power. The notion that there could also be some downsides to a wholesale government takeover of America’s big banks is given short shrift.
The authors argue that the banks’ oligarchic power stems from the size and concentration of American finance. No mention is made of the fact that America’s banking system is both less concentrated and smaller in relation to the economy than those of many other industrialised countries. Or that some of the most effective bank lobbying, for instance against a new consumer watchdog for financial products, has been by small community banks rather than Wall Street behemoths.
A broader perspective would have led to more nuanced conclusions. The origins of America’s financial “oligarchy”, for instance, might have more to do with campaign-finance rules and political appointees than banks’ size. The faith that Messrs Johnson and Kwak put in merely capping the size of banks is misplaced. The trouble is that such nuanced arguments would spoil the tale of villainy in “13 Bankers”. Their absence results in a book that is too crude to be convincing.
“…Suspicion of a financial oligarchy is a recurrent theme in America…”
Suspicion? That’s like suspecting rain is wet.
I wish I knew how and how much Megabank, Inc sways The Economist writers to do their dirty work for them.
I personally would go for food stamps immediately if I believed I legitimately qualified. What good is it to have government insurance programs if those who qualify are too proud to partake?
California’s food stamp participation rate is nation’s second-lowest
Fewer than half of residents eligible for food stamps received them in 2007. Recent changes may have boosted the rate, but critics say far too much federal money is being left on the table.
Complete series: “Hunger in the Golden State” at USC Annenberg School for Communications and Journalism
By Alexandra Zavis and Emilie Mutert
March 20, 2010 | 7:43 p.m.
Despite persistent economic woes, California leaves billions of federal food stamp dollars on the table each year that could help ease hunger and boost the local economy, officials say.
Only 48% of eligible Californians are enrolled in the nutrition program, according to federal figures from 2007, the most recent year available. That is well below the national average of 66%. Only Wyoming has a slightly lower rate.
California officials dispute the way the figures are calculated and say they do not reflect recent steps to improve the state’s record, including greater outreach and simplified procedures.
As of December, more than 3 million people, about 1 in 11 California residents, were receiving food stamps, according to state figures. That is nearly 46% more than in December 2007. Because the number of people eligible for the program has soared during the recession, it is unclear whether the participation rate has gone up.
Federal officials say the state has taken steps in the right direction but needs to do more to improve access to the program.
“We’re concerned that there are people, particularly in this economy, who need help putting healthy food on the table and aren’t getting that assistance,” said Jean Daniel, spokeswoman for the U.S. Department of Agriculture’s Food and Nutrition Service.
…
Despite persistent assurance that green shoots of recovery are burgeoning, California employment numbers do not reflect the story. In stark contarast to official rhetoric from DC, recent level of new claims for unemployment insurance are the highest since 1999.
BOOYAH!
Jan 08 200,000
Jan 10 350,000
Increase in CA rate of “initial claims” over past two years = 75 percent (give or take a little change).
I see “higher than expected” NODs in CA for the foreseeable future, due to households who lost their primary wage earner which cannot afford to keep paying the unaffordable mortgage.
The part of that EDD graph from Jan 2008 to the present remind me of the drive from Sacramento to the crest of the Sierra Nevada — in a word, STEEP!
“I see ‘higher than expected’ NODs in CA for the foreseeable future, due to households who lost their primary wage earner which cannot afford to keep paying the unaffordable mortgage.”
Add to the loss of a wage earner as a reason for the “higher than expected” NODs:
1. The pending ARM resets.
2. The insatiable hunger of the tax man who finds numerous ways to dip his hand into people’s wallets.
3. The shrinkage of the amount of money circulating through the economy coupled with a slowdown of velocity of the money that remains.
4. The fact that “California real estate always goes up.”
(Couldn’t resist blowing a hole in your impeccable logic
)…
Renting tips in difficult financial times
By Bill Loughborough
Credit Answers
Despite difficult financial times, the National Multi Housing Council reports that the apartment industry is not affected. In fact, affordable rental units will be coming available as desperate sellers try to rent out units that are just not selling in the current market, according to Bankrate.com, an online financial resource. Therefore, the number of renters is expected to increase. If you are currently renting or expect to sign a lease in the near future, below are some tips that you may want to keep in mind.
Renting May Be A Good Financial Move
There are many benefits of buying a home. Homeownership has often been equated with the American dream. However, this dream can easily turn into a nightmare for consumers that are not prepared for all of the costs associated with owning a home. In addition to a mortgage, purchasing a home also involves many other expenses such as maintenance, insurance, and property taxes. As a renter, your landlord or property manager is responsible for fixing major repairs like a broken furnace or a leaky roof. Expenses such as these could really break your budget, especially while you are focusing on settling your debts.
Read The Lease
If you are required to sign a lease before moving in to an apartment, make sure you read it. Leases usually include quite a few pages of small print and it can be tedious to read. But, keep in mind that you are signing a legal and binding contract and it is beneficial to understand the agreement. Pay close attention to the rent due date, late fees, and the contact information for repairs. You also want to review the policies on terminating a lease. Most property owners do not make it easy for renters. Make sure you understand the provisions in case circumstances arise that do not allow you to fulfill the terms of the lease.
…
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.
…
“…not as severe as foreclosure.”
Every dark cloud has a silver lining.
Obama’s mortgage aid can reduce credit score, not as severe as foreclosure
THE ASSOCIATED PRESS
Saturday, March 20th 2010, 4:00 AM
Signing up for the government’s mortgage assistance program comes with a nasty surprise for some homeowners: lower credit scores.
For borrowers making payments on time but 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 some jobs.
Housing counselors say it’s unfair, and often comes as a big surprise to homeowners.
“Why should people’s credit be hurt even worse when they’re trying to do the right thing?” asked Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group.
Many homeowners also are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath, a nonprofit group in Farmington Hills, Mich.
“It’s a feeling of being duped,” she said.
Still, the impact is far less severe than a foreclosure, where borrowers typically find their credit is in tatters for years.
…
Related News
* Million+ of struggling homeowners seek help from Treasury program
* Does Obama have enough votes to pass Health Care reform? Democrats disagree
* Dems and GOPers trade final blows as Obama pushes for health plan to clear Congress this week
* Dems unveil final health care plan, but passage is far from certain
* Capitol Hill protesters barrage pols with gay, racial slurs
“Housing counselors say it’s unfair, and often comes as a big surprise to homeowners.”
I go out of my way to teach my kids Rule #1 of Life:
LIFE IS UNFAIR. DEAL WITH IT.
Now if I could only internalize the wisdom of my own lesson…
P.S. First lesson in economics I ever learned (in physics class!):
THERE IS NO SUCH THING AS A FREE LUNCH.
I don’t know PB ,I have been seeing a lot of free lunches given out lately ,so I guess that goes back to rule # 1 that life is unfair .