The Housing Bubble

It is often hard to tell whether Fed insiders are truly confused about where inflation is headed, or if they are merely trying to confuse their audience.

* The Wall Street Journal
* APRIL 5, 2010

Inflation Fears Cut Two Ways At the Fed

By JON HILSENRATH

The Federal Reserve’s decisions to keep interest rates near zero and to flood the financial system with credit are sparking fears of an eventual outbreak of inflation.

But inside the Fed, an influential band of policy makers is fretting over the opposite: that the already-low rate of inflation is slowing further.

The presidents of the New York and San Francisco regional Fed banks, William Dudley and Janet Yellen, see the abating inflation rate as convincing evidence the economy still is burdened by excess capacity and needs to be sustained by the Fed.

Others, led by Philadelphia Fed President Charles Plosser, argue that current inflation measures are distorted by an epic decline in housing costs and could mask a buildup of inflationary pressures.

This intensifying internal Fed debate over the behavior of inflation comes as the central bank plots an exit from an unprecedented experiment in easy money. Its read on inflation will influence how quickly it moves to raise short-term interest rates—which impacts everything from mortgage rates to new business costs to stock performance—and drain huge sums it pumped into the financial system during the recession. Recent developments have given the inflation-rate-is-dropping camp an upper hand.

In 2008, overall consumer prices actually fell for the first time in half a century, but then rebounded as energy prices stabilized. Over the past 12 months, the consumer-price index has risen 2.1%. But measures of inflation that strip out volatile energy and food prices are decelerating. Excluding food and energy, consumer prices in February were 1.3% higher than a year earlier. That was the smallest 12-month increase in six years, and well below year-over-year increases of above 2% before the recession.

“When unemployment is so high, wages and incomes tend to rise slowly, and producers and retailers have a hard time raising prices,” Ms. Yellen, who is expected to be President Barack Obama’s nominee to become the Fed’s vice chairman, said in a speech last week. “That’s the situation we’re in today, and, as a result, underlying inflation pressures are already very low and trending downward.”

Mr. Dudley made similar comments in comments in Lexington, Va., last week. “The substantial amount of slack in productive capacity that exists today will likely only be absorbed gradually. Consequently, trend inflation, at least over the near term, should remain very low.”

In this camp, one worry is that inflation-adjusted interest rates—also known as real interest rates—could rise even if the Fed sits on its hands. Such a rise would be a disincentive for businesses to invest in new projects and for consumers to spend.

This unintended increase in rates could put a brake on the economic recovery.

The opposing camp believes the combination of low rates and more than $1 trillion the Fed has pumped into the financial system is a formula for inflation down the road. “As the economy improves and as lending picks up, the longer-term challenge we face will not be worrying about inflation being too low,” Mr. Plosser said in an interview. “The risk is really to the upside of inflation over the next two to three years.”

This camp focuses less on the amount of slack in the economy—the high unemployment rate and the number of empty office buildings, shopping malls and idle factories—and more on the risk that consumers and businesses will anticipate inflation and act accordingly. At the Fed’s mid-March meeting, Thomas Hoenig, president of the Kansas City Fed, argued for an increase in short-term interest rates “soon” to “lower the risks of…an increase in long-run inflation expectations.”

Surveys and bond price movements suggest Americans expect inflation of around 2% year-in and year-out, and Fed officials believe this helps keep the inflation rate stable. A change in inflation expectations in either direction could become important in Fed deliberations.

Mr. Plosser also argues that the recent decline in the inflation rate is a mirage, greatly influenced by an unusual decline in housing costs, which are heavily weighted in many price indexes. Excluding the cost of shelter, consumer prices were up 3.4% from a year earlier in February, pushed up in part by energy prices.

Excluding food, energy and housing, they were up 2.6% from a year ago. “I want to be careful not to read too much into one measure of inflation that is very influenced by housing,” Mr. Plosser said.

Researchers at the San Francisco and New York Fed are scheduled to release a retort to this argument Monday that shows that among 50 different categories of consumer spending—from computers to hotels to jewelry—inflation rates have slowed over the past 18 months from the earlier trend.

The Fed has said it would keep short-term rates low for an “extended period,” a phrase which means at least several months—as long as inflation is subdued, inflation expectations are stable and the economy is slack.

A persistent slowing of the inflation rate could push rate increases further into the future, possibly into 2011. But if officials dismiss recent data or if the pace of price increases accelerates, the Fed may boost rates before year-end.

Traders in futures markets anticipate the Fed will raise its benchmark federal-funds rate, which it has been holding near zero since December 2008, to 0.5% by November.
…

I am encouraged by articles like this one that the strengthening housing recovery will take away any further rationale for artificially propping up the market. The Fed, the Treasury, the FHA, the GSEs and all other federal government entities that have been pumping intravenous life support into the market now can take away the feeding tubes and let the market start feeding itself again.

* The Wall Street Journal
* AHEAD OF THE TAPE
* APRIL 5, 2010

House Call: Looking Past Real-Estate Woes

* By KELLY EVANS
…
The market may not be nearly as weak as is commonly assumed. Activity is down sharply from the boom, but that is arguably a positive development. Total sales, as of February, were running just about 10% below their long-run average, according to J.P. Morgan economist Michael Feroli. In addition, foreclosure-mitigation programs and an overtaxed court system are likely to keep inventory from immediately flooding the market. St. Louis-based Macroeconomic Advisers expects a steady rebound in home-building from its current depressed levels will add nearly a percentage-point to U.S. economic growth this year and next.

Even if the worst-case scenario does start to unfold—supply soars while demand stagnates and prices move down further—it isn’t clear that would be a disaster. With interest and mortgage rates already inching higher, falling prices would keep housing affordable for new buyers. Price declines pose a risk to banks’ profitability, but last year’s stress tests boosted capital requirements precisely to account for such a scenario. A negative-wealth effect could hamper consumer spending, but the rebounding stock market has already boosted household wealth by some $5 trillion from its trough.

In short, the odds of a stronger recovery now seem at least as likely as the odds of a weaker one. Fed officials remain confident they can quickly outrun any breakout of inflationary pressures.

Let’s hope the hound dogs have their nose on the right trail.

Let prices fall!!!
Let’s making ‘affordability’ actually mean something, again.

Who needs coffee when you have earthquakes to wake you up?

Nope — no inflation here, except for in the ‘volatile’ food and energy sector, and who needs food and energy, anyway?

Oil rises to near $86 as US jobs market improves

By ALEX KENNEDY, Associated Press Writer

Sunday, April 4, 2010 at 10:30 p.m.

SINGAPORE — Oil prices jumped to near $86 a barrel Monday in Asia, extending gains from last week as investors bet an improving U.S. job market will herald growing crude demand.

Benchmark crude for May delivery was up 80 cents to $85.67 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract climbed up $1.11 to settle at $84.87 on Thursday following a gain of $1.39 on Wednesday.

Global oil trading was closed for the Good Friday holiday.

Crude has jumped from $69 a barrel in early February on expectations a growing U.S. economy will eventually spark higher oil consumption.

On Friday, the U.S. Labor Department said employers added 162,000 jobs in March, the largest job gain in three years. The unemployment rate stayed at 9.7 percent for the third straight month.

“The market was positive before but now it’s been confirmed,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. “If the job growth can be sustained for several months, we’ll definitely see crude demand pick up.”
…

Who’s shorting bonds? Out yourselves!

Another thing people are finding tucked away in their CC&Rs: transfer fees

http://www.chron.com/disp/story.mpl/business/6937231.html?243254

Seems these developers want 1% every time the house ownership is transferred.

Bank of Mom and Dad Shuts Amid White-Collar Struggle.
WSJ 4-5-10

FAIRFIELD, Conn.—When Maurice Johnson was laid off a year ago from his six-figure salary as a managing director at GE Capital, it wasn’t his future he was worried about. It was his childrens.

The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson’s two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn’t sure whether he’ll be able to help her to go to college, or even to get the older kids to graduation.
Cutting Off the Kids

Mr. Johnson, who watched his own father struggle as an engineer without a college degree, was determined to do better for his own children.

“We saved like crazy from the minute they were born,” he says. “Then, it all fell to pieces.”

“Our economy is being transformed from a mostly capitalistic one to a mostly socialistic one.,” observes Peter Schiff. “More decisions are being made by politicians and lawyers in Washington and fewer by entrepreneurs……Through corruption or just plain ignorance, Congress and the Administration have embraced an ideology that has failed every time it has been tried.” ~Peter Schiff

Harsh words from Mr. Schiff. Can they be true? Has socialism always come to a bad end in the long run? Yes. For one thing, it’s contrary to nature. It’s based on a desire to equalize everything and everybody. It’s said to be the kindly “fair” thing to do, which is why modern liberals promote it. Conservatives, on the other hand, are seen as mean-spirited greedy people who resent being forced to give up their property (money) to a costly bureaucracy which distributes a portion of it to people more valued than the people who earned the money in the first place.

Comments attributed to Russia’s Vladmir Putin concerning the growing influence of “American communism.” It’s an exaggeration to call the U.S. “communistic,” but quite accurate to point out how socialist we have become. We claim to be a capitalist society, but when every business requires government approval (a license) to exist it’s clear that the country is morphing into a socialist system.

Tip toeing around the China question.

Treasury Secretary Geithner will not meet the April 15th deadline to determine if China’s currency is “misaligned” with the U.S. dollar.

“We are disappointed, but not surprised, by the administration’s decision,” Senator Charles Schumer a New York Democrat, said in an e-mailed statement yesterday. “After five years of stonewalling, punctuated by occasional, but halting action by the Chinese, we have lost faith in bilateral negotiations on this issue.”

Schumer, along with four other senators including South Carolina Republican Lindsey Graham, last month introduced legislation to require the Treasury to determine if there is a distortion between the Chinese currency and that of the United States. Parity

If Schumer, Lindsey, and others force the Chinese to change their peg to the U.S. dollar those “cheap goods from China” won’t be cheap any more. However, from the perspective of China stuff in America will be cheaper to buy.

Changes take effect Monday, providing standard paperwork and deadlines in hopes of streamlining the process for sellers and buyers.

By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 7:54 p.m. Friday, April 2, 2010

New Treasury Department rules to streamline short sales go into effect Monday, giving sellers, buyers and Realtors hope that the grueling process of getting bank approvals will soon ease.

In a short sale, a lender agrees to sell a home for less than is owed on the mortgage, usually because the borrower cannot afford the loan payments and is headed for foreclosure.

But assembling the paperwork needed for a short sale and getting the bank to sign off on an offer can be a months-long ordeal that often ends in buyers walking away in frustration.

The new rules, outlined in the Home Affordable Foreclosure Alternatives Program, require participating lenders to respond to preapproved offers within 10 business days, provide for standardized paperwork, and offer monetary incentives to servicers and lenders. The program also allows lenders to consider deeds in lieu of foreclosure.

“The biggest problem we’ve had in the past is lack of cooperation from the lenders and no uniform set of rules,” said Realtor Craig Fialkowski of Herman Group Real Estate in Palm Beach Gardens.

“Nobody does anything the same.”

Five years ago, Fial­kowski had no short sale listings. Now they make up half of his business, he said.

With Monday’s rule changes, a lender must offer the short sale program if a struggling borrower doesn’t qualify for a modification under the federal Making Home Affordable program.

But Peter Zalewski, a principal with Miami research and brokerage firm Condo Vultures, said the rules won’t solve the foreclosure crisis anytime soon.

Banks are already turning to short sales because foreclosing on a home has become a lengthy and expensive endeavor, he said.

Plus, there’s going to be a learning curve.

“In theory, all the new rules are a great thing,” Zalewski said. “In practicality, they will not resolve the problem in the foreseeable future.”

West Palm Beach Realtor Jared Dalto, who deals almost exclusively in short sales, agrees.

Because property values dropped so dramatically in Florida, Dalto said, it’s difficult to get lenders to take substantial losses, even with small monetary incentives.

“When the losses are so big, it’s like climbing Everest,” Dalto said. “When negotiations happen in short sales, it’s all about money.”

Under the plan, borrowers are eligible for $3,000 in relocation expenses and will not be required to pay the remainder of the loan to the first mortgage lender.

There’s even something in the plan for Realtors, whose commissions cannot be reduced by the bank after an offer on a property has been received.

What may be most critical in the new rules is the time element.

Fialkowski said buyers don’t want to wait months to hear back about their offers. Also, the value of the property — at least in recent years — can dramatically decline in the time it takes for a bank to respond.

“If they have to wait, they’re going to disappear,” Fialkowski said.

At the same time, he’s not sure 10 days is a realistic response time for lenders.

“I can’t get them to even pick up the phone for 10 days, let alone get an answer on something,” he said.

More people want to buy real estate, but don’t think prices have bottomed out
by Kim Miller
An annual real estate survey by Stuart-based Cotton & Company found that more people are considering buying property this year than in 2009, but aren’t sure the market has hit bottom yet.

The survey, which includes responses from 972 people, showed 44 percent of respondents said they may buy this year, compared to 36 percent last year. Of those, 56 percent say the purchase would be of a primary home, while 40 percent said the purchase would be an investment.

At the same time though, 29 percent of people said they are waiting for better pricing, while 32 percent said they aren’t buying because they can’t sell their current home first.

“There is a huge number of buyers sitting on the fence waiting,” said Stephann Cotton, president of Cotton & Company. “People are thinking there will be a sign saying ‘OK, the market is back.’”

Cotton said the survey, in its second year, was conducted to measure people’s thoughts about the market and get a sense of what the future might hold.

About 60 percent of people polled said the market has not reached bottom. Price reductions of between 20 percent and 40 percent, however, would motivate about 55 percent of respondents to buy immediately if they could.

“Nobody predicted how severe the bottom would be, why would anybody be able to predict how we get out of it,” Cotton said. “We ride the market, we can’t steer it.”

Appraisers say cheaper valuations open door for short-sale abuses

By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 9:20 p.m. Saturday, April 3, 2010

A run-up in housing prices contributed to the downfall of real estate, but now some appraisers fear low-ball valuations could lead to the next market muddle.

They say a new federal rule to speed up short sales will increase banks’ reliance on broker price opinions — cheaper, quicker and unregulated home valuations that some argue could lead to an emerging type of mortgage fraud called “flopping.”

Banks have increasingly used Realtors to do broker price opinions, or BPOs, to set list prices as the market swelled with short sales.

A short sale is when the bank agrees to accept less money for a home than the borrower owes on the loan.

Already losing money on the deal, a lender can pay a Realtor as little as $40 for a BPO and avoid a professional appraisal bill of about $350 to $500.

The new Treasury Department rule that goes into effect Monday streamlines the process for short sales, in part, by requiring participating banks to accept purchase offers that meet preapproved list prices, which can be determined by a BPO.

It’s all very dense, but consider a $1 million home that is inaccurately valued at $700,000, then sold at that amount. The bank is out the $300,000, and neighborhood values decline.

“If you pay an agent $50 to $85 to do the job of an appraiser who does it for $400 to $500, how much time and accuracy do you think you’re going to get?” said Realtor Jared Dalto of West Palm Beach-based Seawinds Realty .

Realtors who do BPOs argue appraisers are just angry about losing business. They say a BPO can actually be more accurate in some cases because Realtors know area market trends better than appraisers.

“We’re on the street every day. I’m seeing what’s happening,” said Realtor Frank Verna, who specializes in distressed property sales in northern Palm Beach County. “An appraiser may do a more in-depth study, but that doesn’t necessarily mean it’s correct.”

Another concern voiced by appraisers is that an agent doing a BPO could have a conflict of interest to assign a specific value to a property to help it sell.

The issue was stressed in March letters to Treasury Department officials from national appraisal groups, which noted concern that using BPOs exclusively could increase “flopping.”

The definition of flopping varies, but it generally includes a BPO assigning a lesser value to a home, which is then sold by the bank based on the discounted value. The buyer then flips the property, selling it at its true market value and giving a kickback to the Realtor who did the original BPO.

Palm Beach County Realtors and mortgage brokers interviewed for this story said they haven’t encountered flopping here, but Peter Zalewski, a principal with the Miami research and brokerage firm Condo Vultures, said he sees it in his area.

“It’s definitely happening,” Zalewski said. “If you have access and information, you can put a spread on anything today, and buyers are coming in with cash, which means there is no need for an appraisal.”

As paperwork piles up, so does desperation.
The Palm Beach Post

Don Cameron’s March 8 win in a Palm Beach County home auction is stalled somewhere on the third floor of the courthouse in stacks of foreclosure filings piled several feet overhead.

He’d like to start fixing up the three-bedroom house, renovate the kitchen, maybe get it ready for a first-time home buyer hoping to cash in on the waning days of the $8,000 tax credit.

But nearly a month after his $74,570 purchase, which he is required to pay for in full by noon the next day, the massive backlog of foreclosures in the Palm Beach County Clerk and Comptroller’s Office still has him waiting for the home’s title.

Despite tripling the number of employees who handle foreclosures, and scanning a feverish 30,000 case pages into the computer every day, staff can’t keep up with what amounted to about 2,500 foreclosures each month last year. (In all of 2005, there were 3,049 foreclosures in the county).

By statute, the clerk can’t release a title for 10 days, but waiting up to 60 days to claim ownership is cutting into Cameron’s profit margin and, some say, the economic recovery.

Getting foreclosures back on the market means paychecks for people who do renovations.

Buyers will purchase furniture and accessories.

Real estate and property taxes get paid.

“We can’t do anything. We can’t get our money back, we can’t work on the property, we can’t sell the property, we can’t market the property,” said Cameron, owner of real estate investment company Hi-Land Properties, a West Palm Beach subsidiary of We Buy Ugly Houses. “It’s a domino effect.”

EXTEND & PRETEND: Hitting the Maturity Wall!

How long can the government continue to extend & pretend? How long can public policy endlessly ‘kick-the-can’ down the road without addressing the underlying causes? Such a critical point is often academically referred to as a ‘Tipping Point’ or what newsletter writer John Mauldin refers to as a ‘Finger of Instability’. I am more pragmatic and as an investor, who is forced to call the timing, I refer to it as the Maturity Wall.

http://home.comcast.net/~lcmgroupe/2010/Article-Extend_Pretend-Hitting_the_Maturity_Wall.htm

Taxes on hotel rooms are rising
USA Today

More cities, counties and states are looking to raise taxes on hotel rooms as they battle budget shortfalls and cuts in services.

Among those increasing taxes or considering it: Baltimore; Scottsdale, Ariz.; Santa Clara, Calif.; and Connecticut.

Taxing visitors is an old habit for local governments. Revenue from taxes on hotel rooms and rental cars have been used to fund tourism promotion, build stadiums and repair roads.

While the taxes can infuriate travelers, they’re seen as a politically palatable option in tough economic times.

“The government entities are hurting financially and are looking for creative means to generate more revenue,” says Trisha Pugal, CEO of Wisconsin Innkeepers Association.

A report by the National Business Travel Association last year says taxes for a single night at the national average room rate of $95.61 were $13.12. The combined lodging taxes levied by state, county and city averaged 13.73%. Tax rates ranged from 10.05% in Burbank to 17.91% in New York.

ABC radio report this morning: “Oil over $85.00 due to U.S. economic recovery”

ITEM: “U.S. consumers plan to spend as much as $14 billion on candy-filled baskets, lamb dinners and colored eggs for the Easter holiday weekend, a sign that non-essential purchases are re-bounding”. Easter Spending

~ Encouraging! (??) American consumers are returning to their old habit of buying stuff they don’t need with money they don’t have. Is this a signal the worst is over and we’ll soon be back on the great spending spree?

JOEYINCALIF - on last night’s post you inquired about my fair share of the pie analogy. Your example contained a few premises that I was not using (which in a nutshell is the problem with many forms of socialistic ideology): (i) my fictional pie is not a zero sum game (i.e., when it comes to standards of living, it is not true that there are only X number of units to be distributed - the harder, smarter and more productive people work, the more units are created, and (2) my concept of “fair share” has abosolutely nothing to do with equal but much more to do with the amount taken v. the amount contributed in making the pie (albeit I do believe in reallocation for certain amounts of lack of contribution - e.g., I personally believe in minimum shares per person out of compassion, and compensation for extraordinary circumstances such as severe physical and/or mental impairment and temporary assistance for job loss, education, and escaping abusive environments).

We dropped our land line a year ago, didn’t need it, have two cell phones and don’t have a Fax machine.

AT&T plans up to 100 more job cuts in Birmingham
The Birmingham News

AT&T Corp. plans to cut as many as 100 more jobs from the Birmingham area, according to union representatives.

The Communications Workers of America Local 3902 in Birmingham has been told there is a surplus of employees in the telephone customer service department that serves the traditional land-line business, said Rhonda Taylor, president of the local.

“They are devastated,” Taylor said, speaking of the workers in the telephone customer support unit that are awaiting to hear of their fate. “It is Easter and they are supposed to be celebrating.”

The union contract — a new version of which was signed last month and is good for three years — permits AT&T to declare personnel surpluses and adjust accordingly. Dallas-based AT&T, the largest local and long-distance company in the republic, is the largest U.S. employer of union labor. But priorities are shifting: The company has lost 25 percent of its land lines in the past three years as wireless phones take over.

“Some parts of our business are growing and adding jobs,” said AT&T spokesman Marty Richter. “Others are shedding jobs as they decline. There just aren’t as many customer phone calls anymore about billing, new orders or repairs.”

A statewide open house. Yeah, that will do it. The smell of fresh-baked cookies will be everywhere.

http://www.news-journalonline.com/business/real-estate/2010/04/05/florida-realtors-plan-statewide-open-house.html

Natalie-
I read your follow up post to me from yesterday. Thank you. I as well, enjoy the world of Documentaries and so forth. Haven’t heard of Errol Morris, but I’ll look him up tonight.

Zeus Matuze
In a communications class, we skated through Edward Bernays and his “Engineering Of Consent”. It wasn’t until real adulthood, I got an interest in his body of work. Evil Genius.

Calif. climate law under assault in poor economy

SACRAMENTO, Calif.AP – Four years ago, California earned accolades for adopting a law that would slash its greenhouse gas emissions and serve as a model for national climate change legislation.

With the state mired in a crippling recession, the law that once looked like a landmark achievement is coming under assault. The regulatory effort Gov. Arnold Schwarzenegger set in motion is facing a political backlash and could come to an abrupt halt in the months ahead.

A coalition of businesses, financed largely by three Texas oil companies, is funding a ballot petition that would delay the law until California’s current unemployment rate is cut by more than half.

Leading Republican gubernatorial candidate Meg Whitman has vowed she would suspend the law on her first day in office, which she would have the authority to do.

Even Schwarzenegger, who has staked his legacy on environmental issues, has begun urging air regulators to take a go-slow approach. But he has vowed to fight the ballot initiative.

The possibility that a state that has set the national agenda on environmental change for decades might shelve its highly publicized climate regulations could have ramifications beyond California’s borders. In Congress, lawmakers are struggling to craft a national climate bill that uses California’s as a template, but are facing headwinds of their own.

“This could very well be an effort to focus on California with the goal of delaying federal legislation,” said state Sen. Fran Pavley, D-Agoura Hills, one of the law’s authors.

At issue: Whether imposing costly regulations on businesses is a smart move as the nation struggles to emerge from recession.

Under the measure, oil refineries, manufacturers, cement plants, utilities and other carbon polluters are to begin cutting their emissions in 2012.

RAHN: Learning from what works
Low taxes and financial privacy laws should be emulated
Richard W. Rahn ~ Washington Times ~ ZURICH

Economists, political scientists, reporters and pundits spend too much of their time looking at dysfunctional societies and trying to explain why there are poverty, joblessness and hopelessness. In many ways, Haiti is easy to explain - no rule of law and 200 years of corrupt and incompetent governments. Switzerland is the polar opposite. It has almost no corruption and has the rule of law with honest, competent judges and government administrators. The question should be, “What can we learn from the Switzerlands of the world about how to do things right” rather than, “What is wrong with the Haitis of the world?” Switzerland manages to run a smaller government as a share of gross domestic product than the United States and most other countries while providing a higher level of service, security, prosperity and freedom. How does it do that?

In many ways, Switzerland seems unlikely to be such a long-term global success story. It is a small country with religious and language differences; nevertheless, the Swiss have managed to live peaceably together for a long time. It has few natural resources, yet it has managed to have one of the highest per capita incomes in the world. It has a world-class health care system, which is privately run. Health care insurance is subsidized, and everyone has access regardless of income, but there is no “public option.”

Switzerland is not perfect, but it is clean, prosperous, well-managed, pleasant, humane and very free. In the more than three decades I have been coming to Switzerland, I have been convinced that the United States and the rest of the world can learn from many things the Swiss have done. The Swiss are practical rather than ideological, but they do revere liberty. They protect private property and free markets and restrain themselves from rampant deficit spending. The Swiss maintain a sound currency, which has been rising against the euro, dollar and pound. Capital, goods and services, with few exceptions, move freely into and out of the country.

http://www.washingtontimes.com/news/2010/mar/31/learning-from-what-works/

So the ongoing saga of buying a GSE foreclosure.

We hired a buyers agent(commission paid by seller) and came to a side agreement that she’d be compensated at a rate based on the full asking price irrespective of actual transaction price. In other words, she has to work the seller to accept our offer (62%) or she earns nothing. As a side note, our new buyers agent called ME yesterday to ask what her own house was worth… I about fell out of my chair when she asked. We’ve had long conversations on the market and pricing and she’s made the statement she’s never had these kind of conversations with buyers before. Anyways the formula is the old one kicking around here; (flat era transaction price)(3.2% inflation/yr)=actual value. Maybe GS can notate it properly but works on excel and calculator. Anyways, MrsExeter and I couldn’t care less if they accept. We like the place *at a price* and not a nickel more.

An interesting tidbit. Fannie and Freddie reps earn a commission on their REO.

Four female astronauts rendezvous 50 years after first woman in space.
From The UK Times ~ April 5, 2010

In the finest display of extraterrestrial girl power to date, four women astronauts are preparing to rendezvous in space nearly 50 years after the Soviet Union put the first woman into orbit.

The $100 billion (£66 billion) International Space Station (ISS) is to host the biggest non-Earth gathering of women, with one arriving on board a Russian Soyuz capsule yesterday and three more due to join her this week.

Dorothy Metcalf-Lindenburger, 34, Stephanie Wilson, 43, and Naoko Yamazaki, 39, are set to launch aboard the shuttle Discovery from Kennedy Space Centre at Cape Canaveral, Florida, at 6.21am local time today and dock at the ISS on Wednesday, linking up with Tracy Caldwell Dyson, 40.

While their arrival will set a record for the most women in space, the historic nature of the occasion appears to have slipped under the radar at Nasa. “Maybe that’s a credit to the system, right, that I don’t think of it as male or female?” said Bill Gerstenmaier, Nasa’s associate administrator for space operations, who was unaware of the pending milestone until it was pointed out to him at a press conference.

“I just think of it as a talented group of people going to do their job in space,” he said.

Although 13 American women passed the same Nasa training tests in 1963 as the Mercury 7 — America’s original all-male astronaut team — the space agency refused to admit women to its astronaut ranks until 1978. Valentina Tereshkova was the first women in space in 1963, but it was not until 20 years later that Nasa followed with an American, Sally Ride.

Maxine Sums Up The Health Care Bill

“Let me get this straight. We’re going to be gifted with a health care plan written by a committee whose chairman says he doesn’t understand it, passed by a Congress that hasn’t read it but exempts themselves from it, to be signed by a president who also hasn’t read it and who smokes, with funding administered by a treasury chief who didn’t pay his taxes, to be overseen by a surgeon general who is obese, and financed by a country that’s broke. What the hell could possibly go wrong?”

Stocks rise in early trading after Labor Department says employers added 162,000 jobs in March

NEW YORK (AP) — Stocks edged higher Monday following a jobs report that has boosted expectations for the economy.

The Labor Department said Friday that employers added 162,000 jobs in March. It was the biggest gains since the recession began in December 2007. However, the number was fewer than the 190,000 jobs economists forecast.

The stock market was closed Friday so investors didn’t have a chance to trade on the report before the weekend.

Private employers accounted for most of the gains. Temporary government hiring for the 2010 U.S. census did not pad the figures as much as economists had forecast, which helped keep the figure below expectations.

The unemployment rate remained at 9.7 percent for the third straight month.

“Dangerous Divergences” Lie ahead
Gary Dorsch ~ Global Money Trends magazine
Apr 5, 2010

“I guess, I should warn you. If I turn out to be particularly clear, you’ve probably mis-understood what I’ve said,” former Federal Reserve chief Alan Greenspan was fond of saying, when he controlled the Fed’s money spigots. For many Fed watchers, it was a great relief when “Easy” Al finally retired from the Fed, since there is nothing more vexing - than correctly interpreting Green-speak.

“Everything depends upon proper listening. Of ten individuals who listen to the same speech or story, each person may well understand it differently, - perhaps only one of them will understand it correctly,” an eighteenth century theologian observed. So it was of great interest, while listening to a March 27th interview on Bloomberg TV, with the maestro, - Mr Greenspan, who is settling into the twilight years of his life-time. This time, Greenspan spoke more clearly, about such arcane subjects such as “Asset Targeting,” and the manipulation of markets.

When asked about his outlook for the US-economy, Greenspan answered by saying everything depends upon the ability of the monetary authorities to influence the direction of the stock market, “Ordinarily, we think of the economy affecting stock prices. I think we miss a very crucial connection here in that this whole economic recovery, as best as I can judge, is to a very large extent, the consequence of the market’s bottoming last March, and coming all the way back-up. It is affecting the whole structure of the economy, as well as creating the usual wealth effect impact,” Greenspan said.

Thus, what Mr Greenspan is describing, is the contours of the monetary policy that he pursued as Fed chief – utilizing the Dow Jones Industrials index as a key instrument of national economic policy. By “actively managing” the direction of stock index futures contracts, the Fed could impact the wealth of tens of millions of US households, and by extension, influence consumer confidence and spending.

ST. PETERSBURG, Fla. (AP) — The federal government announced Friday that it is relaxing some rules to make it easier for communities to spend funds on redeveloping abandoned and foreclosed properties.

The changes, effective immediately, will allow cities, counties and states to buy properties in mortgage default and uninhabitable homes with lingering code violations through the $4 billion Neighborhood Stabilization Program.

The program was started in the midst of the nation’s foreclosure crisis, but a year later about a third of more than 300 local governments that got grants have barely made a dent in them, according to a recent report from the U.S. Department of Housing and Urban Development.

Some city, state and county officials say they have had trouble spending the grant money because federal rules are confusing and cash investors have often outbid them for residential properties.

“It became clear to us that the Neighborhood Stabilization Program as originally designed was too restrictive and limited the ability of our local partners to put this funding to work quickly, Mercedes Marquez, HUD’s assistant secretary for community planning and development, said in a statement. “We need to be more flexible so our local partners can respond to market conditions and reverse the effects of foreclosure in these neighborhoods as quickly as possible.”

James Miller, spokesman for the Florida Department of Community Affairs, which got $91 million to distribute to 24 cities and counties, called Friday’s announcement wonderful news.

Office vacancy rate hits 16-year high April 5, 2010 1:26 AM ET

All Thomson Reuters newsNEW YORK (Reuters) - The U.S. office vacancy rate in the first quarter reached its highest level in 16 years, but the decline in rents eased and crept closer to stabilization, according to a report by real estate research firm Reis Inc.

The U.S. office vacancy rate rose to 17.2 percent, a level unseen since 1994, as the market lost about 11.6 million net square feet of occupied space during the first quarter, according to the report released on Monday. The U.S. vacancy rate inched up 0.2 percentage points from a quarter earlier and was 2 percent higher than a year ago.

U.S. government a big commercial real estate player
Washington Post April 5, 2010

Evidence of the federal government’s growing influence on Washington area commercial real estate is illustrated in big deals it is working on both sides of the table: auctioning a 127,000-square-foot Bethesda building previously occupied by the National Institutes of Health and moving to snatch up vast spaces in buildings on the private market that have been vacant for months.

The General Services Administration is seeking to unload the 10-story building that the NIH vacated in 2002 when it consolidated offices into other buildings in Bethesda. The recommended opening bid for the online auction, which runs from April 30 to July 2, is $14 million.

At the same time, federal leasing activity is expanding, according to Jones Lang LaSalle, the real estate firm representing the government. The government signed deals for 750,000 square feet of space in the District in the first quarter of 2010, compared with 670,000 square feet in the city for all of 2009.

The government is taking advantage of the abundance of space in newly constructed buildings going for bargain prices. As leases are up and the government embarks on renovation projects, it is moving agencies into offices in such areas as NoMa, a neighborhood near Capitol Hill that was up and coming before the financial crisis ratcheted down demand for space.

From the same article today - “February home sales rise 8.2 percent as buyers take advantage of gov’t incentives . . . The number of buyers who agreed to purchase previously occupied homes rose sharply in February, far exceeding expectations, in a sign that the housing market may be coming back from the winter doldrums.” So which is it, recovery or stimulus?

I don’t get what this guy is talking about. Doesn’t he realize the Fed operates above the reach of U.S. law?

The Fed Admits To Breaking The Law
Karl Denninger

Now how long will it be before something is done about it?
…

Australia puts troops on standby to deal with ‘ticking timebomb’ of oil leak at Great Barrier Reef ~ UK Mail 05th April 2010

Australia’s army and navy have been placed on standby to help stabilise a stricken Chinese ship which is leaking tons of oil and threatening an ecological disaster on the Great Barrier Reef and the prestine Queensland coastline.

As the bulk coal carrier Shen Neng 1 continued to spill oil into the Coral Sea in northern Queensland Prime Minister Kevin Rudd said he would fly over the area tomorrow to examine the dire threat for himself.

The World Wide Fund for Nature said the ship was a ‘ticking environmental time bomb’.

Desperate: Chinese carrier Shen Neng 1 after running aground on the Great Barrier Reef near Great Keppel Island tourist resort

And there were demands from the Liberal opposition for Mr Rudd to take personal control of the salvage operation.

‘Right now, the Prime Minister, this day, should assume personal responsibility and take charge of protecting the Great Barrier Reef’, said opposition environment spokesman Greg Hunt.

The fate of the reef, a major attraction for tourists from around the world, lies in the skills of salvage experts who hope to carry out enough emergency work - perhaps with the help of military personnel - to prevent the 755ft- long ship from breaking up.

But the over-riding fear as the salvage operation to keep the ship afloat continues - with two tugs now in place to stabilise it - is that the calm weather with change for the worse.
Great Keppel Island Chinese Ship on Great Barrier Reef

If that happens, say experts, there appears little doubt that the badly-damaged vessel will break up with disastrous results for the reef and the Queensland coastline.

Montreal (Kitco News) — Demand for rhodium, a key element in catalytic converters, is expected to increase as automobile markets in China and emerging countries continue their rapid growth.

Ford Motor Co., announced today that its first-quarter sales in China leapt 84% from a year and that sales reached a record 153,362. It also said that March sales for India more than tripled from the previous month.

Last week’s announcement that Volvo was bought by China’s Zhejiang Geely Holding Group was a further signal that the Asian auto market is expanding rather than slowing. .

“In China and India, auto sales are skyrocketing; other emerging economies are also seeing strong growth in auto sales,” said Jeffrey Christian, Managing Editor of CPM Group told Kitco News. In the United States auto sales will probably be 10 to 15 per cent higher than they were last year. When you sell a car pretty much anywhere in the

I feel like were close to the next breaking point / leg down / other shoe / brown squirt, etc.

The takers weigh down the makers ~ Washington Examiner:

Here’s a question of vastly more than theoretical importance to current and coming generations of Americans: How much longer can the U.S. economy continue to produce enough wealth to sustain a growing class of people who depend on government for some or all of their daily necessities? To pose the question another way: Are we nearing a point when there are no longer enough taxpayers to support all of the tax consumers in America?

Such questions become increasingly important as Social Security, Medicare, Medicaid, federal civil service retirement, and legions of state and local pension funds approach their days of reckoning as millions of retiring baby boomers demand far more benefits than those programs have been prepared to pay out. And don’t forget the growing share of personal income that is derived from government transfer payments such as unemployment, veterans benefits, and the like.

If these ruminations sound ominous, they should. Consider this analysis by former Washington Post reporter Thomas Edsall, which appeared recently in the Atlantic: “According to the Federal Bureau of Economic Analysis, the share of total personal income in the United States that comes from government transfer programs — Social Security, Medicare, veterans’ benefits, unemployment compensation, etc. — has grown rapidly over the past six decades, from 5.9 cents of every dollar in 1950 … to 17.3 cents in 2009. In addition, according to BEA, another 9.8 cents of every dollar went, in 2009, to salaries for state, local and federal government employees, a figure that does not include costs of fringe benefits. In other words, more than a quarter of all personal income in the United States is paid for with tax dollars.”

Former British Prime Minister Margaret Thatcher once said, “The problem with socialism is that sooner or later you run out of other peoples’ money to spend.”

So, what happens if/when a state goes into default?

Muni Madness: The Next American Meltdown?
NYT~April 5, 2010

Just days after Treasury released a glowing report on the effects of Build America bonds, local governments like cities, counties and school districts are looking shakier, Rick Bookstaber says on his blog.

Mr. Bookstaber, a former risk manager at Morgan Stanley and Salomon Brothers, compares the market for municipal debt with pre-crisis mortgages, and sees some disturbing similarities.

Municipalities, for example, don’t have to adhere to the same disclosure rules as corporations, which means their balance sheet is more opaque, their financial situation less well understood.

A lot of them have seen their tax base hit with the collapse in real estate prices, which could have a cascading effect on the fiscal food chain.

Mr. Bookstaber seems to think a psychological barrier prevents many local governments from going into default, for the moment — but once a few have suffered that humiliation, others will be less hesitant.

If you think their debt is backed up by solid tax revenues, think again:[J]ust as homeowners took their income and locked it up via secondary loans, much of the tax base for municipalities is already mortgaged, through the sale of tax-related revenues streams like tolls and parking fees. Indeed, although general obligation bonds are considered the cream of the crop, they might just as well be regarded as the residual claim after anything with solid fee streams has been sold off.A case study for the financial difficulties those governments now face is Jefferson County, Alabama, which had to put about 1,000 public employees on furlough last year because it was $5 billion in debt. $5 billion. That’s over $7,500 for every man, woman and child, in a county with about 662,000 people and almost 11 percent unemployment.

Follow up to a posting on Sat. My niece and her new husband want to buy a B&B in a tourist area in Eastern Ontario,(Prince Edward County) nice place, we go there ourselves in the summer. House costs $425000. She thought that the house could be purchased with 5% down over 35 years. Seems Canada Mortgage & Housing Corp. C.M.H.C.. like Fanny Mae would insure at this rate for a house. Because it’s a B&B, C.M.H.C. will not insure the mortgage and now they need 20% down, which they don’t have.They have asked my wife and me for $63000 to help them buy the property.We can afford this. The deal would be formalized with proper payment schedules and a modest interest rate over 5-6 years. Any thoughts. P.S. I think the comments will be interesting.

Breaking Down is Hard to Do,

- or-

Long Yield, Short Bonds in 2010

Now, shorting the bonds may be hazardous to your financial health, but the charts are signalling lower prices (higher yields) ahead:

http://tinyurl.com/y8z6wtp

Disclaimer - This is my opinion only. You may wish to consult Tim Geithner for an opposing viewpoint.

Breaking and entering, must not be a crime in S.F.

Housing protest leads to takeover of duplex.

SAN FRANCISCO — A group of homeless people and housing activists took over a privately owned Mission District duplex on Sunday in what served as the climax of a protest designed to promote use of San Francisco’s vacant buildings as shelters for the needy.

But the owner of the property - who was targeted over his eviction of a tenant - said the demonstration was nothing more than breaking and entering.

“It’s not actually vacant. I use it for my own personal uses,” Ara Tehlirian of Daly City said in an interview, adding that he was in contact with the San Francisco Police Department. “I know nothing other than my property was apparently broken into.”

The takeover epitomized the tensions between property owners and tenant activists that have flared for decades in the city, and sometimes tip into outright hostilities near the peaks and troughs of the market cycle.

This time, more than fifty people marched in the rain through the Mission District, hoisting picket signs that read “House keys not handcuffs” and chanting “Whose city? Our city.” The action was organized by Homes Not Jails, a 20-year-old group affiliated with the San Francisco Tenants Union.

National debt seen heading for crisis level. SF Gate
(04-05) Washington — Health care may have been the last big bang of the Obama presidency.

With ferocious speed, the financial crisis, recession and efforts to combat the recession have swung the U.S. debt from worrisome to ruinous, promising to handcuff the administration.

Lost amid last month’s passage of the new health care law, the Congressional Budget Office issued a report showing that within this decade, President Obama’s own budget sends the U.S. government to a potential tipping point where the debt reaches 90 percent of gross domestic product.

Economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University have recently shown that a 90 percent debt-to-GDP ratio usually touches off a crisis.

This year, the debt will reach 63 percent of GDP, a ratio that has ignited crises in smaller wealthy nations. Fiscal crises gripped Canada, Denmark, Sweden, Finland and Ireland when their debts were below where the United States is shortly headed.

Japan’s debt is much higher, but most of it is held domestically, and Japan’s economy has been weak for 20 years. “I really don’t think we want to be like Japan,” said UC Berkeley economist Alan Auerbach.

One advantage the United States has - and it is a big one - is that it issues the world’s reserve currency and so can print dollars to service its debt.

The Obama budget will add $10 trillion to the national debt in the next decade and will not stabilize the deficit, the CBO found. Deficits are expected to dip as the recovery takes hold, but never below $724 billion a year. Interest costs alone will consume $5.6 trillion this decade. A balanced budget has been widely ruled out as unattainable.

Gold, silver, oil, DOW, up. Dollar down.

Feds: Gut Chinese drywall homes
South Florida Business Journal -

Two federal agencies said Friday that homes with contaminated Chinese drywall must be gutted of all drywall, wiring and plumbing to be considered safe.

The decision follows a federal judge’s ruling in Louisiana that had already thrown out a proposal by drywall manufacturers for a cheaper, less disruptive plan. Other proposals have included coating or spraying the high-sulfur drywall, or simply installing filters in an air-conditioning system.

“Based on the scientific work to date, removing the problem drywall is the best solution currently available to homeowners,” CPSC Chairman Inez Tenenbaum said in a news release. She said the decision provides a foundation for Congressional hearings on relief for affected homeowners.

The new guidance on a fix for Chinese drywall was issued by the U.S. Department of Housing and Urban Development and the U.S. Consumer Product Safety Commission. The drywall was imported during the building boom when domestic supplies grew slim. Millions of tons were installed in thousands of homes, mostly in Florida. Sulfur gas from the drywall corrodes metal and causes acrid odors.

“This guidance, based on the CPSC’s ongoing scientific research, is critical to ensuring that homeowners and contractors have confidence that they are making the appropriate repairs to rid their homes of problem drywall,” said Jon Gant, HUD’s director of healthy homes and lead hazard control.

KABUL – Afghan President Hamid Karzai threatened over the weekend to quit the political process and join the Taliban if he continued to come under outside pressure to reform, several members of parliament said Monday.

Karzai made the unusual statement at a closed-door meeting Saturday with selected lawmakers — just days after kicking up a diplomatic controversy with remarks alleging foreigners were behind fraud in last year’s disputed elections.

Lawmakers dismissed the latest comment as hyperbole, but it will add to the impression the president — who relies on tens of thousands of U.S. and NATO forces to fight the insurgency and prop up his government — is growing increasingly erratic and unable to exert authority without attacking his foreign backers.

Does anyone get the feeling that we are about to pull out of Afghanastan?? Not so much because of Karzi, I wonder if Karzi is acting this way because he knows we are going to be gone soon.

Happy Easter! Sanofi Again Lays Off Staffers Over a Holiday
Apr 5, 2010

Sanofi-Aventis (SNY) continued its tradition of using holidays to deliver layoffs by telling its employees as they returned from the Easter weekend that 400 of them no longer had jobs. The news was delivered in an email to staff this morning from Jerry Durso, vp/U.S. specialized therapeutics.

The company previously laid off a large number of contract pharmaceutical sales reps over Christmas and New Year, who followed 750 of Sanofi’s own employees out the door last Thanksgiving. Sanofi did the same thing in front of the July 4 weekend last year and at Thanksgiving in 2008.

The layoffs are a reaction to declining sales or generic threats on three brands: sleeping pill Ambien CR, osteoporosis drug Actonel and the antidepressant Aplenzi. None of the moves were a surprise, at least to Sanofi’s staff.

Energy Department Will Make Revisions to Its Monthly Report on Output
WSJ 4-5-10

The Energy Department is preparing to make sweeping revisions to its U.S. natural-gas production data after finding it has been overstating output, raising new questions about the government’s collection of energy information.

The monthly gas-production data, known as the 914 report, is used by the industry and analysts as a guide for everything from making capital investments to predicting future natural-gas prices and stock recommendations.

But the Energy Information Administration, the statistical unit of the Energy Department, has uncovered a fundamental problem in the way it collects the data from producers across the country — it surveys only large producers and extrapolates its findings across the industry. That means it doesn’t reflect swings in production from hundreds of smaller producers.

The EIA plans to change its methodology this month, resulting in “significant” downward revisions in some areas, according to Gary Long, the acting director of the 914 form, who led the review.

The Wall Street Journal last month reported that the EIA also has key deficiencies in its collection of market-moving oil-inventory data that has caused swings in its survey.

The EIA has been overtaken by advances in technology, oil-shale finds and changes in the industry and has been less able to account for smaller companies that increase or decrease production. Some commodities analysts and gas producers, such as EOG Resources Inc., have long suspected that the EIA has overstated domestic natural-gas output — a factor they argue has helped push prices to seven-year lows in 2009.

Bankruptcy up from February to March
Creditloan.com

An organization that tracks bankruptcies announced recently that March saw its fair share of filings.

According to Automated Access to Court Electronic Records, more than 158,000 bankruptcy filings were seen in federal courts in March. The number of filings represents a 35 percent increase over the statistics reported for February.

March also marks the highest number of filings seen new bankruptcy rules came in effect. In October 2005, the government put forward the new rules, which made it more difficult for people to qualify for Chapter 7 bankruptcy protection.

Rather, consumers may have to file for Chapter 13, wherein a five-year payment plan is established. In order to determine who can file for what, a test is conducted to see if consumers would have at least $100 left every month after paying certain expenses. If they do, then they must file for Chapter 13.

The increase continues an alarming trend in bankruptcy that is seeing more individuals and corporations filing. According to the Administrative Office of the U.S. Courts, 2009 saw a 31.9 percent increase in the number of bankruptcy filings made in federal courts.

Unwanted car leases linked to mortgage, divorce
South Florida Business Journal

Growing financial pressures of underwater mortgages and life changes from divorce are the two biggest reasons many escape from an unwanted car lease contract, according to data from LeaseTrader.com.

An online marketplace for car lease transfers, LeaseTrader on Monday revealed information it accumulated during the fourth quarter of 2009, when it analyzed reasons why a growing number of South Florida drivers use the marketplace to escape a car lease they could no longer afford.

LeaseTrader says South Florida drivers use its services to find credit-qualified individuals anywhere in the country to take over their remaining contract.

South Florida remains the third-most-popular region in the nation for LeaseTrader.com, as an increasing number of drivers look to escape or downsize out of a car lease without incurring expensive early lease termination fees.

“A car is typically the second-largest monthly bill for a household, so LeaseTrader.com is an easy way to get rid of an unwanted car payment for people dealing with a variety of financial and personal issues,” founder and CEO Sergio Stiberman said in a news release.

The reasons varying percentages of South Floridians gave for escaping a vehicle on LeaseTrader.com are:

* Underwater mortgage: 16.6 percent
* Divorce: 15.8 percent
* Leaving the area: 11.2 percent
* Job loss: 9.1 percent
* Buyer’s remorse: 7.4 percent

LeaseTrader says there is currently a growing waiting list of people looking to take over a car lease from a distressed driver.

Sexual predators on the loose, earthquakes, neighbors shooting neighbors… I guess there has never been a better time to buy a home in Poway?

Westside
L.A. NOW
Southern California — this just in

Three dead in Poway
April 4, 2010 | 11:44 pm

I just heard Larry Yun state on the KNX business hour that the drop in sales contracts out west was, “due to low inventory”.

Darn those banks holding shadow inventory off the market! We could have had a banner sales month.

AP Source: Report on Social Security delayed

WASHINGTON — The Obama administration is delaying release of the annual report on the financial health of Social Security and Medicare so that the new report can reflect the impact of the recently passed health care overhaul.

An administration official told The Associated Press that this year’s trustees report will be delayed until June 30, three months later than it usually comes out.

The official, who spoke on condition of anonymity before the formal announcement, said that the delay will allow the government to determine the impact of the massive overhaul of health care that President Barack Obama just signed into law.

In January, Richard Fisher, the chief actuary for Medicare, estimated that the Senate bill which passed on Christmas eve would extend the life of the Medicare hospital trust fund by 10 years. The legislation that finally passed Congress was the Senate bill but with revisions approved to win House support.

The administration official said that passage last month of the health care overhaul legislation had made the trustees report, which usually comes out around April 1, obsolete. This official said the decision was made to incorporate all of the changes made by the legislation to better reflect reality now that Congress has passed health care overhaul.

Sounds like you L.A. folks need to be more generous with your ‘donations’ to the city…

Los Angeles Controller Says City to Run Out of Cash in a Month

April 5 (Bloomberg) — Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.

Toyota Should Be Fined $16.4 Million, LaHood Says (Update1)

April 5 (Bloomberg) — Toyota Motor Corp. “knowingly hid a dangerous defect” that caused sudden acceleration and should be fined the maximum civil penalty of $16.4 million, U.S. Transportation Secretary Ray LaHood said.

Toyota, the world’s largest automaker, waited at least four months before it told the National Highway Traffic Safety Administration about vehicle accelerator pedals that may stick, LaHood said today in an e-mailed statement.

“We now have proof that Toyota failed to live up to its legal obligations,” LaHood said in the statement. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.”

The proposed fine is the largest civil penalty assessed by the auto safety regulator against a carmaker. Toyota, based in Toyota City, Japan, in January recalled about 2.3 million cars and trucks for sticky accelerator pedals. The company has recalled more than 8 million vehicles worldwide for flaws that may cause unintended acceleration.

Obama seeks market-based yuan

WASHINGTON/BEIJING (Reuters) - The United States on Monday reiterated its call for China’s currency to be market-based, as lawmakers warned they would act if there was no movement from China on revaluing the yuan.

Arpaio gets inmates moving on electricity-generating cycles.

PHOENIX — Maricopa County Sheriff Joe Arpaio is implementing a new inmate program at Tent City Jail called “Pedal Vision.”

The program uses inmate-powered cycles to generate electricity for televisions.

Reports say Arpaio’s recent visit to Tent City inspired the idea, when he saw that many of the inmates were overweight.

The stationary bikes are customized so that as an inmate pedals, a connected television is powered once the cycle generates 12 volts of electricity.

One hour of pedaling equals one hour of television viewing for the inmates, according to Arpaio.

Arpaio said the inmates will only be able to watch television in the television room if they choose to pedal.

“I started with the females because they seemed more receptive to the idea,” Arpaio said. “The only exercise the females get right now is speed-walking around the tents yard and few are doing that. This gives them a reason to get moving and a way to burn up to 500 calories an hour. They won’t be charged a monthly gym fee but they will have to sign a contract.”

Sheriff Arpaio debuted the pilot program on April 1.

Santelli: $4 Gas, $150 Oil Coming This Summer
04/05/2010

With summer driving season upon us, it’s important to note that there’s a traditional jump in gas prices. But will this seasonal adjustment benefit commodities, specifically oil and make the price of gasoline even higher? That could happen if those forms of energy lure investment from what seems to be an over-valued equities market, brought on by what some claim is cheap money.

On her April 5 program, “Closing Bell” host Maria Bartiromo asked CNBC’s CME Group floor reporter Rick Santelli if a move higher in commodities was due to inflation. However, according to Santelli, it’s not inflation but a move by investors out of a potentially over-valued equities market that will cause a rise in commodities.

“Well, you know, I don’t like to link the two together,” Santelli said. “I mean, many times you know, it is core [minus] food and energy. So I think throw all that away. I think the better question is, is that when people are afraid to put their money to work in treasuries, because rates may be going higher, maybe afraid that we are a little long in the tooth in the sugar-buzz rally of equities - boy, commodities is the place to be. Most of the good dollar trades probably already out there.”

From bucolic bliss to ‘gated ghetto’
Hemet’s Willowalk tract was family-friendly. Then the recession hit.

Reporting from Hemet - The gated community in Hemet doesn’t seem like the best place for Eddie and Maria Lopez to raise their family anymore.

Vandals knocked out the streetlight in front of the Lopezes’ five-bedroom home and then took advantage of the darkness to try to steal a van. Cars are parked four deep in the driveway next door, where a handful of men rent rooms. And up and down their block of handsome single-family homes are padlocked doors, orange “no trespassing signs” and broken front windows.

It wasn’t what the Lopezes pictured when they agreed to pay $440,000 for their 5,000-square-foot house in 2006.

http://www.latimes.com/business/la-fi-hemet30-2010mar30,0,4976165,full.story

Anyone want a free BMW? Feel free to claim it (from the e-mail I just received):

You won BMW X6 XDrive Car and a £750,000.00GBP.

contact E-mail:redeem_gregsmith06@hotmail.co.uk

This message and any attachments are confidential and intended solely
for the use of the individual or entity to which they are addressed. If
you are not the intended recipient, you are prohibited from printing,
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this message by mistake and delete it from your system.

Gov’t aims to help more “underwater” homeowners
Gov’t expands assistance for homeowners with property values under their mortgages April 5, 2010

WASHINGTON (AP) — The government launched a new effort on Monday to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it’s worth.

The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale — known as a short sale — or agree to turn over the deed of the property to the lender. It’s designed for homeowners who are in financial trouble but don’t qualify for the administration’s $75 billion mortgage modification program.

Owners will still lose their homes, but a short sale or deed in lieu of foreclosure doesn’t hurt a borrower’s credit score for as much time as a foreclosure. For lenders, a home usually fetches more money in a short sale than a foreclosure. And the bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.

http://finance.yahoo.com/news/Govt-aims-to-help-more-apf-331717632.html?x=0&sec=topStories&pos=3&asset=&ccode=

Gee, Professor Bear, this one reminds me of your comments yesterday. Seems our government believes there’s something to those pagen rituals. Why else would they arrest someone for putting a hex on J.P. Morgan Chase?

http://www.courthousenews.com/2010/04/05/26131.htm

“MANHATTAN (CN) - The self-ordained Rev. Billy Talen was arrested on Easter Sunday after putting a “holy hex” on JPMorgan Chase bank, which he calls the nation’s largest financier of coal-mining mountaintop removal. The former New York City mayoral candidate and his green-robed chorus put the hex on two bank branches, saying Morgan Chase has helped destroy more than 450 Appalachian mountains, deforested 800 square miles and polluted more than 1,200 miles of streams.”

Dallas/Ft Worth new home starts soar 59% in 1st. quarter.

http://www.star-telegram.com/2010/04/05/2090966/dfw-housing-starts-rose-59-from.html

“”The dramatic percentage increase in starts during the first quarter has more to do with the extremely low level of starts last year than anything else,” said David Brown, director of Metrostudy’s Dallas-Fort Worth offices.”