The Housing Bubble

There is something downright detestable about this blame game exercise, especially when you realize it amounts to no more than political Grand Kabuki Dance intended to defuse impetus for substantial financial reform.

You all should anticipate plenty of more financial meltdowns, bailouts and political blame games going forward in the coming decades, as it is becoming increasingly apparent that after the end of this poor excuse for entertainment, nothing will change going forward.

Greenspan reflects on crisis, deflects blame

By Dana Milbank
Washington Post Staff Writer
Thursday, April 8, 2010

Police in the Rayburn House Office Building had been planning an evacuation drill for Wednesday morning, but they called it off after realizing that it would interrupt Alan Greenspan’s testimony to the commission investigating the financial meltdown.

The cops needn’t have worried about involving the former Fed chairman in the evacuation: Greenspan is a master of escape — particularly escaping blame.

As Fed chairman, he reassured policymakers that everything was fine as he presided over the housing bubble that led the world economy off a cliff. Now we know that everything wasn’t fine — Greenspan himself called the financial crisis “the most severe in history” — and the 84-year-old wise man is claiming he knew it all along.

“I warned of the consequences of this situation in testimony before the Senate banking committee in 2004,” he informed the commissioners Wednesday. “In 2002 I expressed concern . . . that our extraordinary housing boom, financed by very large increases in mortgage debt, cannot continue indefinitely.”

While finding himself blameless, he assigned fault to, among others, Congress, the Bush and Clinton administrations, Fannie Mae and Freddie Mac, the Europeans, other regulators, and one of his Fed colleagues. They all contributed to what Greenspan, in his testimony, called “the most prominent global bubble in generations.”
ad_icon

It was, as the commission chairman, Phil Angelides, suggested, an elaborate case of “rewriting or forgetting history.” In fact, the Maestro spent a good bit of time fiddling while the bubble inflated. Here’s what he had to say to Congress’s Joint Economic Committee in June 2005:

“A bubble in home prices for the nation as a whole does not appear likely.”

“Home price declines . . . were they to occur, likely would not have substantial macroeconomic implications.”

“Nationwide banking and widespread securitization of mortgages make it less likely that financial intermediation would be impaired.”

When the collapse finally came, Greenspan acknowledged “a flaw” in his philosophy that unfettered free markets are best and regulations don’t work. But now that the economy has stabilized — thanks to government interventions that conservatives deride as socialism — he’s decided he had it right after all. Though acknowledging that the banking system had been undercapitalized for half a century, Greenspan shook his head to indicate “no” when asked whether there should now be higher capital requirements.

Angelides pointed out the multiple warnings that Greenspan received, going back to 1999, about the need to crack down on predatory lending practices and subprime mortgages. He noted that Greenspan’s regulatory responses “covered just 1 percent of the market,” and he recalled Greenspan’s resistance to regulating subprime lending by non-bank subsidiaries. “Would you put this under the category of ‘Oops, should have done it?’ ” the chairman asked.
…

The Financial Times
Greenspan mauled over role in meltdown
By James Politi and Alan Rappeport in Washington
Published: April 7 2010 14:03 | Last updated: April 7 2010 21:05

Alan Greenspan, once lauded as maestro of the financial system, was on Wednesday subjected to a rare public mauling on Capitol Hill, accused of causing or at least failing to prevent economic meltdown.

Phil Angelides, the former California state treasurer who leads the Financial Crisis Inquiry Commission, asked the former chairman of the Federal Reserve if the Bank’s failure to curb subprime lending as the housing bubble unfolded fell into the category of “oops”.

“My view is, you could have, you should have and you didn’t,” Mr Angelides said.

Mr Greenspan, 84, led the Fed between 1987 and 2006 and has been criticised for helping foster the conditions that led to the collapse of US mortgage markets and, ultimately, the global financial crisis two years after his departure.

Although Mr Greenspan admitted he had made mistakes, his tone was combative. “In the business I was in, I was right 70 per cent of the time, but I was wrong 30 per cent of the time”, he said. “What we tried to do was the best we could with the data that we had.”

In response to a question from Peter Wallison, a commissioner, Mr Greenspan said it was likely that Congress would have blocked any attempt by the Fed to rein in the subprime mortgage industry, since it was bolstering home ownership across the country. He said lawmakers were now suffering from “amnesia” about their stance on the issue.

“If the Fed as a regulator had tried to thwart what everyone perceived as . . . an unmitigated good, then Congress would have clamped down on us,” Mr Greenspan said. “[If] we had said we’re running into a bubble and we need to retrench, the Congress would say: ‘We haven’t a clue what you’re talking about.’ ”
…

The worst vice is ad-vice.

The Financial Times
Citi took outside advice on securities
By Francesco Guerrera in New York and James Politi in Washington
Published: April 7 2010 19:42 | Last updated: April 8 2010 00:41

Citigroup’s disastrous foray into complex securities before the financial crisis was partly based on the recommendation of outside consultants hired to advise the bank’s leaders, a former senior manager revealed.

In testimony on Wednesday to an inquiry into the turmoil, Thomas Maheras, a former co-head of Citi’s investment bank, lifted the lid on a move that led to more than $50bn in losses and forced the US government to bail out the company.

Mr Maheras said that, following a study by a consulting firm – said by people close to the situation to be Oliver Wyman – in 2005, Citi decided to ramp up parts of its fixed income business, including in collateralised debt obligations. Oliver Wyman did not respond to a request for comment.

“Based in part on a careful study from outside consultants hired by our senior-most management, the company decided to expand certain areas of our fixed income business that we believed at the time offered opportunities for long-term growth,” Mr Maheras told the Financial Crisis Inquiry Commission, which was appointed by Congress.

Citi’s decision came when it was led by chief executive Chuck Prince, a lawyer who had served as general counsel and had relatively limited capital markets experience.
…

Still window shopping in Flag. Sticky asking prices, it’s different here I guess.

When they run out of naive 1st time buyers (isn’t it nefarious that the govt targets the most gullible, dumbest, poorest, least experienced..) what will happen?

Seems around here like all the action is in the 1st timer bracket, with diddly squat moving in the move up range- not too many takers in the more “seasoned” buyer segment.

It sure is a relief to know the Greek crisis is over.

The Financial Times
Capital flight squeezes Greek banks
By Kerin Hope in Athens
Published: April 7 2010 18:37 | Last updated: April 7 2010 18:37

Greece’s four largest banks are seeking government support to help counter a liquidity squeeze resulting from a significant flight of deposits in the first two months of the year.

George Papaconstantinou, finance minister, said on Wednesday that the banks “have asked for access to the remaining funds of the support plan” – a €28bn ($37bn, £24.5bn) government package that was put together during the 2008 global credit crunch.

The banks’ request, which came as spreads on 10-year Greek bonds remained at record levels for a second day, flagged up concerns about the growing impact of the country’s debt crisis on the financial sector.

Local savers transferred about €10bn of deposits – equal to about 4.5 per cent of the total in the banking system – out of Greece in the first two months of the year, according to the central bank.

The transfers reflected “anxiety among wealthy Greeks about keeping assets here, given the increasing uncertainty”, said an Athens-based private banker.

Many savers had chosen to move funds to their banks’ subsidiaries outside Greece, including Cyprus and Luxembourg, rather than switch to foreign institutions. Others had transferred funds to local subsidiaries of foreign banks, the banker added.

“We would expect these funds to return swiftly once the crisis is resolved,” he said.

Several bankers dismissed rumours of savers withdrawing large-denomination notes such as €200 and €500 to put in safe-deposit boxes or hold in cash as “mattress money”.

Greece’s four biggest lenders – National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank – have asked for access to about €14bn in loan guarantees and €3bn of special bonds that could be used as collateral to borrow from the European Central Bank.

Because of high fees and administrative hurdles to disbursement, the funds had been left untapped while Greek banks were still able to raise money on international markets, one banker said.

Greek banks have increased their dependence on the ECB for funding after losing access to the international “repo” and wholesale markets because Greek sovereign bonds are seen as too risky to be accepted as collateral.

“The market has closed to Greek borrowers, even for very short-term ‘repos’ of a couple of weeks,” said a senior Greek banker.
…
EDITOR’S CHOICE
Short View: Greek contagion - Apr-07
Lex: Greece - Apr-07
Comment: Why rescue isn’t going to plan - Apr-07
Europe urged to focus on real economy - Apr-07
In depth: Greek debt crisis - Mar-28
Eurozone recovery stalled at end of last year - Apr-07

It’s 2:25pm here in E. Asia… where da peeps at? Wake up folks.

It’s disheartening to see what is going on with RE prices where.. INSANITY. Various regions gov’t have encouraged massive manipulation of prices using a combo of low interest rates, jaw-boning banks into easy lending and giving outright special treatment to large private financial entities to encourage them into loading up on RE, thus driving ordinary folks who aren’t in the game out of the market. This is much worse than what the Fed and GSEs back in the US did during much of the housing bubble, at least they weren’t as obvious about creating a bubble. Here it seems that is the official policy. We all have seen this song and dance before and when the music stops a lot of people will be left holding the bag. It’s like people don’t learn…. shocking I tell ya.

This article highlights a looming societal problem.

http://www.comcast.net/articles/finance/20100407/BUSINESS-US-USA-ECONOMY-LABOR/

“Young adults in the United States are being squeezed out of the labor force as older workers either delay retirement or seek jobs to rebuild nest eggs destroyed by the recession, a study showed on Wednesday.”

“With such little financial security, young workers have less freedom to wait out a downturn and so they frequently take whatever job is available, even if it pays less than a job that matches their skill level”

“This is a serious drain on labor market potential — lower earnings, lower output, lower productivity, and the displacement of less-educated workers. ”

What do we do with all of the boomers that can’t retire? Where are the entry level jobs for all of our high school and college graduates? We need our young people to be able to stand on their own two feet. If we have no pensions for our older generations, they have to keep clogging up the labor force.

U.S. MBA Mortgage Applications Index Declined 11% Last Week

(Bloomberg) — Mortgage applications in the U.S. declined last week as the biggest jump in mortgage rates since June led to a fifth straight drop in refinancing.

The Mortgage Bankers Association’s index fell 11 percent in the week ended April 2. The Washington-based group’s refinance measure plunged 17 percent, while the purchase gauge rose 0.2 percent.

The average rate on a 30-year fixed mortgage rose to the highest level since August as the economy showed signs of strengthening. The end of a tax credit for homebuyers and rising foreclosures this year represent hurdles to a sustained recovery in housing.

We made an offer yesterday…

Asking - $189,900.00
Offer - $139,900.00

The seller bought it in 2007, did a revamp with plans to flip. Didn’t work so he rented it and moved to Atlanta, Ga. Has sine lost his IT job and the renter moved out 6 months ago.

Doubt he’ll take it, but that’s our first and final offer.

Jack Diamond’s architectural firm closing; once Jacksonville’s ‘Mr. Downtown’

The curtain is falling on the Jacksonville architectural firm headed by Jack Diamond, a civic leader known as “Mr. Downtown” for his support of revitalizing the city’s core and designing its skyline.

Diamond, 65, said Wednesday that Rink Design Partnership Inc. faces severe financial problems. He said signing up new projects in the coming months would reverse the firm’s fortunes, but fellow partners do not want to borrow more money to keep the firm going until there is a turnaround.

“This is the worst stress that I’ve been through in 40 years in Jacksonville and 30 years as a leader of various organizations,” Diamond said.

Older workers taking jobs from young adults
1 in 4 unemployed Americans is under the age of 25, study shows.
MSNBC

WASHINGTON - Young adults in the United States are being squeezed out of the labor force as older workers either delay retirement or seek jobs to rebuild nest eggs destroyed by the recession, a study showed on Wednesday.

The size of the labor force fell 6.3 percent for young workers, but increased 8.5 percent for workers 55 years and older between December 2007 and January 2010, according to the study by the Washington-based Economic Policy Institute (EPI).

“This is a troubling development; young adults are less prepared to deal with unemployment than other age groups. Without significant prior full-time work experience, many may not qualify for unemployment insurance, or the social safety net,” the EPI said.

This could get interesting…

Five more states join in health reform lawsuit.
South Florida Business Journal

Five more states will join a federal lawsuit, led by Florida, challenging the newly passed health care reform law.

Florida Attorney General Bill McCollum announced that Indiana, North Dakota, Mississippi, Nevada and Arizona are adding their names to the list of plaintiffs that filed the case on March 23 in U.S. District Court for the Northern District of Florida.

The suit alleges that the new law infringes on the constitutional rights of Americans by mandating they have health care coverage or pay a tax penalty.

The bill requires individuals to obtain insurance coverage, and businesses that employ more than 50 workers would have to provide coverage or pay a $2,000-a-worker penalty if any of their employees receives government-subsidized coverage on their own.

In addition, McCollum said the bill would force states to spend billions of dollars they cannot afford.

“This burden comes at a time when Florida faces severe budget cuts to offset shortfalls in an already-strained budget,” McCollum said in a news release.

South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Colorado, Michigan, Pennsylvania, Washington Idaho, and South Dakota had previously joined Florida’s lawsuit. A hearing is scheduled for April 14.

Dozens Arrested in Sweep of Alleged $178M Online Gambling Ring

NEW YORK — Bookies operating two online sports gambling rings took in nearly $178 million in bets around the country in less than three years, prosecutors charged Wednesday after arresting 38 on enterprise corruption charges.

Suspected money collectors, agents and bookies were arrested in Nevada, Louisiana, Florida, New York and Arizona after a three-year investigation led by the New York Police Department’s organized crime division.

Three New York City employees, a firefighter, sanitation worker and a highway repairman, were arrested in the sweep. Six people from Louisiana, including William Bryant III, the premium sales manager for the NBA’s New Orleans Hornets, were also arrested.

A team spokesman said that Bryant was allegedly acting on his own outside of any team functions. “We were advised by federal authorities that the alleged activities do not involve the Hornets,” he said.

Charges also included money laundering, promoting gambling and conspiracy.

Queens District Attorney Richard Brown said the suspects operated two nationwide rings using sports betting Web sites filtered through Costa Rica. They took bets on professional and college football and basketball, as well as professional baseball and hockey games.

“Nearly 17 percent of Tampa Bay homeowners haven’t paid their mortgages for at least three months.”

http://www.tampabay.com/news/business/realestate/nearly-17-percent-of-tampa-homeowners-three-months-behind-on-mortgage/1085774

“The last time that [America] had no government debt, you had a Scottish president. His name was Andrew Jackson. Not only did he pay off the national debt, he also abolished the central bank and tried to close down all the commercial banks.”

- CLSA Strategist (and Scotsman) Russell Napier, March 24 CFA Society speech

I’ve talked to some people that I trust, and they all told me not to overreact with the FL bill and housing. I like making fast, concise, decisions, and not looking back, but there is no need for me to do that right now.

So, I won’t try to walk on the offer (yet), and I won’t freak out about my job (yet).

Black Market Cigarettes Killing Canada’s C-stores

MONTREAL, Canada — An increasing number of Canada’s convenience stores are closing because they simply can’t compete in a market rife with black-market, cut-rate cigarettes, according to the Canadian Convenience Stores Association (CCSA).

More than 2,300 corner stores — six a day, or roughly 10 percent of the total number of locations across the country — closed last year, as contraband tobacco sales siphoned off more than $2.5 billion in sales and $260 million in profits during that time, the Globe & Mail reported, citing a study released by the association this week.

“The contraband situation has been building up over the past five years, with sales taxes on legal cigarettes continuing to rise,” he said. “The industry is slowly being killed off.”

High sales tax on cigarettes continues to push cash-strapped smokers into doing business with suppliers of much cheaper black-market smokes, Gadbois added.

The CCSA estimates about 40 percent of Quebec’s cigarette sales and about half of Ontario’s are on the black market. The industry group has been urging the government to cut taxes on legal cigarettes to reduce the unfair advantage of illegal tobacco.

Convenience stores are heavily dependent on the sale of tobacco products and, in Quebec, beer and wine. About 75 percent of the 2,300 store closings last year were in Ontario and Quebec, the two principal markets for contraband cigarettes, the report said.

Nearly half of US households escape fed income tax
Recession, new tax credits have nearly half of US households paying no federal income tax

WASHINGTON (AP) — Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it’s simply somebody else’s problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization.

Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it’s still almost always better to file: That’s the only way to get a refund of all the income taxes withheld by employers.

In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax.

There once was a nation in trouble
Where housing got caught in a bubble
They tried to prop up their prices
Against HBB’ers advices
And watched their economy crumble

China Said Close to Announcing Currency Revision

HONG KONG — The Chinese government is set to announce a revision of its currency policy in the coming days that will allow greater variation in the value of its currency combined with a small but immediate jump in its value against the dollar, people with knowledge of the consensus emerging in Beijing said Thursday.

While there remains a possibility of a last-minute glitch that could delay the announcement, China’s central bank appears to have prevailed with its arguments within the Chinese leadership for a stronger but more flexible currency, these people said. They insisted on anonymity because of the sensitivity of the issue in Beijing.

SOME PREDICTIONS For 2010.

Bob Chapman
First 6 months of 2010, Americans will continue to live in the
‘unreality’…the period between July and October is when the financial
fireworks will begin. The Fed will act unilaterally for its own survival
irrespective of any political implications …(source is from insider at FED
meetings). In the last quarter of the year we could even see Martial law,
which is more likely for the first 6 months of 2011. The FDIC will collapse
in September 2010. Commercial real estate is set to implode in 2010. Wall
Street believes there is a 100% chance of crash in bond market, especially
municipals sometime during 2010. The dollar will be devalued by the end of
2010.

Gerald Celente
Terrorist attacks and the “Crash of 2010″. 40% devaluation at first = the
greatest depression, worse than the Great Depression.

Igor Panarin
In the summer of 1998, based on classified data about the state of the U.S.
economy and society supplied to him by fellow FAPSI analysts, Panarin
forecast the probable disintegration of the USA into six parts in 2010 (at
the end of June – start of July 2010, as he specified on 10 December 2008)

Neithercorps
Have projected that the third and final stage of the economic collapse will
begin sometime in 2010. Barring some kind of financial miracle, or the
complete dissolution of the Federal Reserve, a snowballing implosion should
become visible by the end of this year. The behavior of the Fed, along with
that of the IMF seems to suggest that they are preparing for a focused
collapse, peaking within weeks or months instead of years, and the most
certain fall of the dollar.

Webbots
July and onward things get very strange. Revolution. Dollar dead by November
2010.

WALL STREET JOURNAL- (2/2010)
“You are witnessing a fundamental breakdown of the American dream, a
systemic breakdown of our democracy and our capitalism, a breakdown driven
by the blind insatiable greed of Wall Street: Dysfunctional government,
insane markets, economy on the brink. Multiply that many times over and see
a world in total disarray. Ignore it now, tomorrow will be too late.”

Retailers report 4th consecutive month of gains
Shoppers hand retailers big March sales gains; earlier Easter also a boom

NEW YORK (AP) — Many retailers are reporting big sales gains for March, helped by an earlier Easter and shoppers who loosened their pursestrings for spring merchandise.

As merchants report their results Thursday, warehouse-club operator Costco, Victoria’s Secret parent Limited Brands Inc. and teen retailer Zumiez posted double-digit increases that beat Wall Street expectations.

Consumers are starting to spend more. But the figures are also helped because most Easter sales came in March, and the holiday came more than a week later last year. March 2009 was also when consumer frugality resulting from the financial meltdown and recession was near its deepest.

The figures for sales at stores open at least a year are an important measure of retailers’ health.

All Americans should cheer the Wall Street investment banks’ success in turning the TARP cash into a veritable gold mine of opportunities to prophet while Main Street workers stood in the unemployment line.

Posted Tuesday, April 06, 2010 2:48 PM
Why Investment Banking Revenues Are Heading Down
Matthew Philips

Investment banks may have wrecked the world economy in 2008, but they sure made money picking up the pieces. In 2009, the global investment-banking industry took in $311 billion in net revenue, a 50 percent jump from 2008 and only $17 billion off its 2007 peak. Profit margins last year were 24 percent, the highest ever. Leading the pack were the usual American suspects: Goldman Sachs, JPMorgan, Citi, and Bank of America. Armed with TARP cash–essentially, free money from the Fed–and facing a cleared field thanks to the demise of Lehman Bros. and Bear Stearns, i-banks took advantage of a lack of liquidity and huge spreads in credit and fixed-income markets. Trading revenues soared as leverage remained high. Those that dialed back on risk, like Morgan Stanley, came to regret it. For the most part 2009 was easy money.

But that party is over.
…

http://www.telegraph.co.uk/finance/economics/7564748/Sovereign-debt-crisis-at-boiling-point-warns-Bank-for-International-Settlements.html

Sovereign debt crisis has reached a “boiling point” warns the BIS. But all is well - green shoots thrive when boiling water is poured on them.

Foreclosure auction of Nicolas Cage’s mansion is a flop
LATIMES

The fate of the sprawling Tudor mansion owned by the actor, who won an Oscar for his role in “Leaving Las Vegas,” was decided Wednesday far from the baronial estate. It was up for auction Wednesday morning.

After a rapid-fire spiel by the auctioneer, the bidding was opened at $10.4 million, far less than the $35 million that Cage had tried unsuccessfully to sell the house for.

To put it mildly, the house, though impressive, was not to everyone’s taste. Real estate agent Bret Parsons, who toured it most recently in October, described the interiors as “fascinating and bizarre.”

“The design was ‘frat house bordello,’ ” Parsons said. “There must have been 300 comic book covers elaborately framed and hanging on the walls.” Model train sets on raised tracks a couple feet below the ceiling circled the inside of the breakfast room and two bedrooms.

There were also no takers in the courthouse sale, and in less than a minute the auction closed, with ownership reverting to the foreclosing lender — just one of six holding a total of $18 million in loans on the property.

The pattern of repeated borrowing against equity is familiar to Bob Baker, sales manager of County Records Research, a Huntington Beach-based company that supplies information about foreclosure properties. “This is a microcosm of what’s going on in our state,” Baker said. “We’ve seen as many as 13 loans on a house.”

When people keep borrowing, he said, it has “a snowball effect.” The final loans often are taken out to meet expenses, he said. “It’s a survival tactic.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aGFac_uXX5NM&pos=1

New jobless claims numbers out - and they show an “unexpected” increase of 18,000 people filing for first-time unemployment benefits. Unexpected by who? The same “nobody saw it coming” economists and self-described “experts” who failed to spot the tech, credit or housing bubbles.

Number of U.S. households falls by 1.2 million

CHICAGO (MarketWatch) — The number of American households dropped by an estimated 1.2 million between 2005 and 2008, even though the population increased by 3.4 million in 80 of the largest metropolitan areas during that time, according to a new study by a professor at the University of Southern California.

More young people are living with their parents instead of moving out, postponing the creation of their own households. Meanwhile, more families are combining households for economic reasons, including the loss of a home due to foreclosure, according to Gary Painter, associate professor in the School of Policy, Planning and Development at USC.

“With such a significant drop in households nationwide, it is clear the most recent recession impacted individuals’ decisions to move out on their own and caused many Americans to join already formed households,” Painter said in a news release Wednesday.

The decline in the number of households contributed to the excess supply of apartments and single-family homes on the market.

“The housing and mortgage industries will feel the impact of this reduction in the number of households for years to come,” Painter said in the report, which was sponsored by the Mortgage Bankers Association’s Research Institute for Housing America, a trust fund that aids research on mortgage markets and real estate finance.

Also, the recession caused a five-fold increase in the rates of overcrowding, he said. A household that has more than one person per room indicates overcrowding.

While the analysis incorporates data only through 2008, Painter said the decline in household formation likely continued through 2009. “Clearly, given the depth of the downturn in 2009, and the ongoing weakness in the job market through the beginning of this year, this study gives no reason to expect that household formation has picked up at all,” he said.

Owners say their Boise home was sold without their knowledge

In 2008, Zijad’s income dropped to barely half what he made the year before. The family struggled but kept making house payments until February 2009. They owed $220,000 and were paying $1,684.78 a month.

Last April, they applied to their loan servicer, MetLife, for a loan modification. The family said MetLife offered in May to let them pay $1,052.68 a month - a 38 percent reduction - through a three-month trial period while they were considered for a permanent modification under the federal Home Affordable Mortgage Program.

The Rudans made two more full payments for March and April, with late fees. In June, they said, the payments were sent back to them. Zijad Rudan said he called MetLife to ask why. He said he was told not to be concerned because the application for modification was still being processed. MetLife told him to start paying the reduced amount, he said. So he did.

The next month, the Rudans received a notice of trustee’s sale. Alarmed, they called MetLife again. The Rudans said a representative again told them not to worry, saying the modification process was moving forward and they should throw the notice in the garbage. The family was told that their July payment had been received and that all was well.

They continued to make the required modified payments each month. As MetLife continued work on the loan-modification application, it sought more information. The Rudans faxed numerous documents, such as paycheck stubs, sometimes several times, the family said.

The couple called March 4 to check on their status. They say they were told the modification was still being processes and they should call back March 10.

On March 12, a representative of Gorilla Capital Inc. showed up at their door. The Oregon company buys homes at foreclosure sales and says it sells them for about $20,000 less than comparable houses in the market.

The Gorilla representative said he’d bought the house at a foreclosure auction at 11 a.m. that day for $111,201, just $1 more than MetLife bid on it. The home is assessed at $191,900, said the Rudans’ attorney, Richard Eppink of Idaho Legal Aid.

The Gorilla representative started eviction proceedings against the family that day, court documents say. Since then, the family has been in turmoil, trying to find help and to work through the legal process.

Gorilla CEO John Helmick said he would be delighted to see the Zudans buy back their home as some other homeowners have done with homes his company acquired. He said he would sell it to them for $149,000 - one-third less than they owed to MetLife. Gorilla said his company followed the law.

If Employment Has Bottomed….
… why is it that unemployment claims data fails to show improvement?

In the week ending April 3, the advance figure for seasonally adjusted initial claims was 460,000, an increase of 18,000 from the previous week’s revised figure of 442,000. The 4-week moving average was 450,250, an increase of 2,250 from the previous week’s revised average of 448,000.

The obvious cacaphony to further extend unemployment (from the 99 weeks now possible in some states) will rise in volume with this report I’m sure, but unfortunately that sort of support is exactly backward. At some point people have to have an incentive to move to where the jobs are or start business interests of some point on their own, and continually extending unemployment benefits doesn’t accomplish either.

This is one of the giant “unintended consequences” of support for housing prices and “extend and pretend” policies. We should have forced the foreclosures through the system immediately and we still should do it now. A homeowner who is deeply underwater cannot move to where the jobs are, as they can’t sell their house for what they have out in mortgage(s). A renter can scoot much more easily. We live in a nation where even in the depths of this economic mess (and all messes past, present and future) there are jobs - they just might not be where you currently live. In addition forcing the foreclosures through the system will force prices lower, which means that the newly-mobile worker will find it easier to rent or buy a new house - where they relocate to.

While it sounds rude, after nearly two full years of unemployment payments you’re well beyond the “we’re helping you” point and into the “we’re paying you not to work” realm. A dynamic economy requires people who will become motivated to do whatever is necessary to find employment and sustain themselves. That “whatever is necessary” may involve pulling up the roots, and if it does, that’s what people should be have incentives to do.

The fact is that even in The Depression 75% of the people had jobs, and there were jobs to be had - in some parts of the country. There might not be where you live now, but there are jobs - somewhere in this country, even if you don’t like the hours, job description or pay.

I know nobody wants to hear things like this, and I’m sure I will be called names for suggesting “no more extensions”, but the Federal Teat cannot be the support system for people over periods of two years or more - irrespective of how bad the economy is, in the form of cash handouts. We can only increase GDP by actually increasing output, and that means people have to have an incentive to do whatever is necessary to accomplish that - even if it brings howls of protest, and it will.

(From the Market Ticker)

As predicted here, negative household formation.

http://www.msnbc.msn.com/id/36231884/ns/business-eye_on_the_economy/

“Brown represents one of the more than 1.2 million households lost to the recession from 2005 to 2008, according to a report issued this week by the Mortgage Bankers Association. That number doesn’t include data from 2009, when job losses and foreclosures continued to rise.”

I’m not sure they mean fewer households. They may mean fewer households than “expected” based on prior growth. But they may mean fewer households.

“The formation of new households isn’t expected to pick up again until at least 2012, according to the MBA study, even as the population continues to increase. Between 2005 and 2008, those 1.2 million households were lost even as the population grew by 3.4 million.”

The consequences of excess square footage per housing unit are becomming clear — shadow vacancy within housing units.

If the government owns GM, does it mean the taxpayers will end up paying for this?

——————

UAW Sues GM Over Retiree Health Care

The United Auto Workers sued General Motors on April 6, claiming the automaker bailed out by the government failed to honor a pledge to pay $450 million to a union trust fund for former GM parts unit Delphi.

The suit claimed that when GM went into bankruptcy last year with the support of the U.S. and Canadian governments, the company pledged to live up to earlier commitments to the union. But GM last November refused to make the payment after Delphi emerged from bankruptcy and “thus stands in breach of its contractual obligation.”

Sounds like a Fed rate hike may be needed sooner than BB expected, to contain burgeoning inflationary pressures during the nascent recovery.

April 8, 2010, 8:34 a.m. EDT

March sales are fresh signal that U.S. consumers are back
By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — In another signal that U.S. shoppers are back spending beyond essential things, retailers’ March sales exceeded already raised expectations and are on track to post their seventh straight monthly increase.
…

Initial jobless claims increase unexpectedly (AP)

I gotta stop drinking like this.

Study: 1.2 million households lost to recession
As friends and families double up, ‘overcrowding’ is up fivefold
MSNBC

Richard Brown, who lost his job and his home, says he now “couch surfs” at friends and relatives. Brown is one of 1.2 million households lost to the recession.

Since Richard Brown lost his job to the recession and his Boston home to foreclosure a year ago, he’s been working short-term consulting assignments until he gets back on his feet. In the meantime, he’s been “couch surfing.”

“I’ve lived with my brother, my cousin, my friend and my dad,” he said. “The IRS keeps calling me, asking me: ‘What’s your address?’ And I say, ‘What week is this?’”

Armed with college degree and an MBA, Brown, 49, built a solid resume over three decades as a corporate controller for several Fortune 500 companies, including W.R. Grace and Wal-Mart, before launching his own global consulting business with clients in Europe and Mexico. But when the Panic of 2008 sent clients scrambling, he was unable to keep up with a jump in his mortgage payments and lost his home to foreclosure.

Why are MSM-favored economists perpetually surprised by ongoing bad economic news? It is better to keep your mouth shut and appear dumb than to open it and remove all doubt.

Economic Report

April 8, 2010, 9:07 a.m. EDT
U.S. initial jobless claims up 18,000 to 460,000

Consumer debt falls by $11.5 billion in February

By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — The number of people applying for unemployment benefits rose 18,000 to a seasonally adjusted 460,000 in the week ended April 3, the Labor Department reported Thursday.

Economists surveyed by MarketWatch had expected a result of 442,000. The four-week average of initial claims — a better gauge of employment trends than the volatile weekly number - rose 2,250 to 450,250.
…

National ID card.

~Senators Lindsey Graham and Chuck Schumer are pushing a national ID card that would include a “unique biometric identifier.” Some of the likely candidates include finger prints, retinal scans, or even the layout of a person’s veins in the top of their hand. Employers who refuse to “swipe the card” would face “stiff fines” and “prison sentences,” the Senators note.

~Lindsey and Schumer say their proposal also creates a rational system for admitting lower-skilled workers. In essence the ID is a high-tech Social Security card and employers will have to buy $800.00 scanners to read them. Touted as a means of dealing with illegal immigrants, a lot of people view the scheme as another enlargement of government power, noting that every time the government gets stronger citizens lose power.

Spitzer face epidemic continues…

April 8, 2010, 11:17 a.m. EDT

Former Citigroup CEO Prince says he’s sorry for crisis
Panel express outrage over Citigroup CEO’s failure to foresee problems

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) — Former Citigroup Inc. Chief Executive Chuck Prince on Thursday told an exasperated financial crisis inquiry panel he was sorry that his management team could not have foreseen the “unprecedented market collapse” that unfolded in 2008.

“Let me start by saying I’m sorry,” Prince told the Financial Crisis Inquiry Commission on Capitol Hill. “I’m sorry the financial crisis had such a devastating impact on our country. I’m sorry for the millions of people, average Americans who have lost their homes and I’m sorry that our management team, like so many others, could not see the unprecedented market collapse that lay before us.”
…

Pan American Mortgage could cut almost 450 jobs

(Chicago) — Almost 450 workers may lose their jobs at a mortgage brokerage firm based on the Far Northwest Side that’s a subsidiary of Chicago-based Pan American Bank.

Pan American Mortgage LLC, based at 6232 N. Pulaski Road, sent layoff notices to 443 of its employees, according to an Illinois Worker Adjustment and Retraining Notification Act document. The state’s WARN rules require advance notice from companies that may cut at least 250 employees.

A manager at Pan American Bank’s main branch in Pilsen said the mortgage subsidiary has been shut down and is no longer part of the bank.

But an employee at Pan American Mortgage’s office says the business is still operating, and confirmed the current headcount. She referred additional questions to a Pan American Mortgage executive who didn’t return a voicemail left Wednesday afternoon.

The WARN notification says the first layoff date is to be May 9.

The mortgage company is in a 20,000-square-foot office building that was built in 1971, according to data provider CoStar Group Inc. The building, on a largely industrial stretch of Pulaski, is owned by a venture managed by Adam Dayan, who is a director of the bank and CEO of the mortgage company.

Sounds like there will be a jobs increase at the FDA

Many food makers unchecked by FDA for years
Agency must step up inspections, do better follow-through, U.S. report says

WASHINGTON - Federal inspectors are conducting fewer reviews of food manufacturing plants, with many facilities going more than five years without being checked, a government investigator said Wednesday.

The drop in inspections could make an outbreak of foodborne disease more likely, putting the public at risk, according to a report from the Department of Health and Human Services’ inspector general.

A shrinking workforce at the U.S. Food and Drug Administration is responsible for much of the drop in the number of facilities inspected, including those deemed high risk by the agency, the report said.

MO’ 2010 PREDICTIONS…

LEAP 20/20
2010 Outlook from a group of 25 European Economists with a 90% accuracy
rating- We anticipate a sudden intensification of the crisis in the second
half of 2010, caused by a double effect of a catching up of events which
were temporarily « frozen » in the second half of 2009 and the impossibility
of maintaining the palliative remedies of past years. There is a perfect
(economic) storm coming within the global financial markets and inevitable
pressure on interest rates in the U.S. The injection of zero-cost money into
the Western banking system has failed to restart the economy. Despite
zero-cost money, the system has stalled. It is slowly rolling over into the
next big down wave, which in Elliott Wave terminology will be Super Cycle
Wave Three, or in common language, “THE BIG ONE, WHERE WE ALL GO OVER THE
FALLS TOGETHER.”

Joseph Meyer
Forecasts on the economy. He sees the real estate market continuing to
decline, and advised people to invest in precious metals and commodities, as
well as keeping cash at home in a safe place in case of bank closures. The
stock market, after peaking in March or April (around 10,850), will fall all
the way down to somewhere between 2450 and 4125 during the next leg down.
Harry Dent (investor)
A very likely second crash by late 2010. The coming depression (starts
around the summer of 2010). Dent sees the stock market–currently benefiting
from upward momentum and peppier economic activity–headed for a very brief
and pleasant run that could lift the Dow to the 10,700-11,500 range from its
current level of about 10.090. But then, he sees the market running into a
stone wall, which will be followed by a nasty stock market decline (starting
in early March to late April) that could drive down the Dow later this year
to 3,000-5,000, with his best guess about 3,800.

Richard Russell (Market Expert)
(from 2/3/10) says the bear market rally is in the process of breaking up
and panic is on the way. He sees a full correction of the entire rise from
the 2002 low of 7,286 to the bull market high of 14,164.53 set on October 9,
2007. The halfway level of retracement was 10,725. The total retracement was
to 6,547.05 on March 9, 2009. He now sees the Dow falling to 7,286 and if
that level does not hold, “I see it sinking to its 1980-82 area low of Dow
1,000.” The current action is the worst he has ever seen. (Bob Chapman says
for Russell to make such a startling statement is unusual because he never
cries wolf and is almost never wrong)

April 8 (Bloomberg) — China’s property market is a bubble that may burst by as early as this year, according to hedge fund manager James Chanos.

The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction, said Chanos. The bubble may begin to “run its course” in late-2010 or 2011, he said in an interview on “The Charlie Rose Show” that will air on PBS and Bloomberg TV.

China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.”

Study: Triangle home prices to bottom out in 2010
Triangle Business Journal - 4-8-10

Home sale prices in the Triangle are expected to bottom out in the fourth quarter and return to their peak levels by the second quarter of 2013, according to new data and analysis from Fiserv Case-Shiller.

Many U.S. markets won’t see home prices return to peak levels for several years, but because the Triangle housing market didn’t experience the extreme highs that other markets in the hard-hit bubble states of California, Florida, Arizona and Nevada experienced, the local home value recovery will be much quicker.

Home price recovery for some markets, like Orlando, Sacramento, San Jose and Tucson, won’t return to peak levels until 2025 or later.

“Distressed” home sales levels near 2009 peak Apr 8, 2010

NEW YORK (Reuters) - Sales of foreclosed or other “distressed” homes are flirting with the peaks of the housing crisis in early 2009 when heavy inventory was pressuring home prices lower, according to First American CoreLogic.

Housing Market

Distressed sales accounted for 29 percent of all sales in January, the highest since April 2009 and just shy of the 32 percent seen in January 2009, the mortgage data company said on Thursday.

Distressed transactions have a strong negative influence on home prices, according to First American, which noted the lows in prices for 2009 coincided with a peak in bank-owned property sales. Distressed sales include short sales, in which lenders allow a home to sell for less than the outstanding debt.

The trend is worrisome to economists who have warned that federal home loan modification efforts and foreclosure moratoriums would result in a backlog of homes hitting the market, forcing prices lower and hurting the economy.

This “shadow supply” late in 2009 was estimated at seven million units by Amherst Securities Group.

Riverside, California and Las Vegas, Nevada had the largest percentage of distressed sales in January at 62 percent and 59 percent, respectively, First American said.

Legislature pushes for foreclosure relief
Chronicle Sacramento (04-08)

If you’re one of tens of thousands of Californians facing foreclosure or who has already lost a home, help may soon be on the way from Sacramento.

Lawmakers are working on three proposals they say are aimed at about 87,000 Californians facing foreclosure and nearly 500,000 who received default notices last year.

Two of the bills would give borrowers more power to demand reductions in their monthly mortgage payments before they default on their loans. The third would help people who have already lost their homes avoid huge tax bills.

The most immediate legislative relief could come for former homeowners as soon as next week under SB401, a bill that will bring California tax code in line with federal law. The bill, which lawmakers in both houses are expected to approve today, would exempt former homeowners from having to pay taxes on debt that is forgiven after a foreclosure or a short sale.

Currently, in a short sale, when a bank agrees to accept less than what is owed on a home, the difference between the mortgage balance and the sale price is counted as income, resulting in large tax liabilities for people who are already struggling.

Taxpayers to subsidize Viagra for sex offenders.

Sen. Tom Coburn drew ridicule last month for trying in vain to prohibit sex offenders from getting Viagra prescriptions under the new health care law.

But Coburn is now having the last laugh after the Congressional Research Service confirmed his assertions that sex offenders not in prison could get Viagra and other drugs treating erectile dysfunction under health plans subsidized by taxpayer dollars.

Retail Sales Up But America in “Dramatically Worse Shape” vs. a Year Ago, Davidowitz Says
Apr 08, 2010 by Aaron Task - Market Ticker

Optimists cheered Thursday’s stronger-than-expected March sales at retailers such as Kohl’s, Nordstrom, The Limited and even Gap as further proof of an improving economy and rebounding U.S. consumer. In fact, Thomson Reuters’ Same-Store Sales Index rose 9.1% last month to the highest level in the index’s 10-year history.

“The numbers were very strong,” admits noted cynic Howard Davidowitz of Davidowitz & Associates. “There are some positives” in consumer spending, even after adjusting for the boost many retailers got from Easter being earlier in April this year vs. last.

But (you knew that was coming, right?), Davidowitz believes it’s a “sucker’s rally” in retail stocks and any rebound in consumer spending will be short lived. “We’re in a bad place, heading for a worse place,” he says.

Regarding today’s chain-store sales data, the veteran analyst notes huge retailers were excluded, most notably Wal-Mart. “When you look at comp retail sales they don’t include the giants, they include some little dinky apparel chain doing a billion-five [in sales] and these analysts are dancing in the street.”

Furthermore, retailers such as Macy’s and Target warned the big jump in March sales would likely take a bite out of results in April, while Abercrombie & Fitch was a notable laggard in March; the Retail SPDR was essentially flat at midday.

More importantly, Davidowitz says the financial condition of the country is in “dramatically worse shape” than it was a year ago, when he was making dire predictions about America’s future.

With “no real jobs growth…deficits gone mad” and prospects for higher taxes for all Americans, Davidowitz is “exactly in the same place” as a year ago, despite the economy’s apparent revival. “There’s clearly pent up demand - there are needs [and] the consumer is jumping on those needs,” he says. “We’re in a cyclical economy. That doesn’t mean we’re better off.

The S&P is now trading at a P/E over 23, according to the most recent Barron’s report. Dave Rosenberg:

“No matter how we slice it, whether on a Shiller P/E, Tobin Q or historical profit basis, the US market is anywhere between 20% and 30% overvalued.”

Foreclosed? Here comes the tax man
April 8, 2010

NEW YORK (CNNMoney.com) — Did you lose your house to foreclosure this year? Did your lender forgive some of your mortgage debt because you sold it for less than it was worth? If so, you could be facing a big tax hit.

It is IRS policy to tax forgiven debt you are personally responsible for as if it is income. Say, for example, your credit card company settled a $10,000 debt for 50 cents on the dollar. You’d have a debt forgiveness of $5,000, which the IRS would count as income, just like your wages.

The same policy held true for most mortgage debt until 2007, when Congress passed the Mortgage Forgiveness Debt Act. That ended the liability for many homeowners — but not all.

In general, if you lose your home to foreclosure or short sale, where you sell your home for less than you owe, the IRS won’t add insult to injury by counting the difference as income. At least until 2012.

http://money.cnn.com/2010/04/08/pf/taxes/taxes_mortgage_debt/index.htm

Sioux City pork plant to close early
by Radio Iowa Contributor on April 8, 2010

A pork processing plant in Sioux City is closing this week — a week-and-a-half earlier than originally announced. More than 1,400 people who work at the John Morrell Plant were told in January that the plant would shut down on April 20th.

A spokesperson for Smithfield Foods, which owns the plant, says workers will be paid through the 20th. John Morrell is one of Sioux City’s largest employers and the closure will have a wide ranging impact other businesses, including health care services.

Siouxland Community Health Center C.E.O. Michelle Stephan says they serve over 1,000 patients that utilize insurance provided through John Morrell. She says those unemployed individuals can remain patients and qualify for a sliding fee scale. “Instead of having insurance reimburse for their services, they would pay a portion of their $20 copay if they qualify for the lowest slide,” Stephan said. “So, our reimbursement for those individuals has greatly decreased.”

Stephan believes the change could cost the center $400,000 a year. She’s hoping to cover the shortfall through grants or other federal dollars.

Las Vegas Schools Facing 1,000 Layoffs
Apr 08, 2010

LAS VEGAS — Cash-strapped Clark County school trustees are poised to lay off more than 1,000 employees by July 1 unless the Las Vegas-based district can find another way to close a big budget shortfall.

Board members of the nation’s fifth-largest school district approved a tentative spending plan late Wednesday that aims to close most of a $140 million budget gap left by reduced state funding and declining property tax revenues. The board has until June 8 to submit a final balanced budget to the state.

Administrators say classroom and administrative positions are on the block. But specifics haven’t been made public. Officials say they hope the district’s four employee unions will agree to concessions including salary reductions and furlough days to reduce the number of layoffs.

New college grads to make less $$$
April 8, 2010

NEW YORK (CNNMoney.com) — College students gearing up to graduate this spring are likely to make less on their first job than those who got their degree last year, according to a report released Thursday.

The National Association of Colleges and Employers said that average salary offers to 2010 bachelor’s degree candidates are down 1.7% to $47,673, compared to $48,515 last year.

Students seeking liberal arts degrees may face the hardest blow. Their average initial pay offers are down 8.9% to $33,540, based on data collected from college career services offices.

Starting salary amounts extended to graduates with positions in business management are down 8% to $42,094, and students with jobs in the marketing field have dipped 2.1% to $42,710.

Last year’s graduates had a tougher time landing jobs, but starting salaries only slipped 1.2% compared with 2008 graduates, said NACE employment information manager Andrea Koncz.

“This year, graduates are starting to get the jobs but at slightly lower offers,” Koncz said. NACE’s summer and fall surveys may provide a clearer picture since more students will have secured jobs by then.

From Chicago Public Radio:

(Academics and Uncle Sugar’s bottomless pockets)

A new study shows the decline in Cook County property values is pushing owners of many multi-unit buildings to the brink of foreclosure.

Nearly $13 billion of multi-family mortgages are at risk of default. That’s according to DePaul University’s Institute for Housing Studies.

Jim Shilling is a DePaul professor and the report’s author. He says the federal government needs to intervene.

SHILLING: And the most important thing, we think, that the federal government should be doing at this time is providing some financing support for landlords in this environment so that they can roll over those loans so that those properties don’t go into default and go into foreclosure.

Shilling says Fannie Mae and Freddie Mac must continue to provide liquidity and stability to the mortgage market.

Rental costs are generally going down, Shilling says. But the quality of housing is getting worse as landlords decrease expenditures and put off repairs.

NH Gov Calls For 30-35 Layoffs, Higher Tobacco Tax

CONCORD, N.H. (AP) ― Gov. John Lynch on Thursday proposed laying off 30 to 35 state workers and raising the tobacco tax by 20 cents as part of a plan to close New Hampshire’s projected $220 million budget shortfall over two years.

The plan includes $85 million in general fund spending cuts, compared to the $47 million proposed by House budget writers. Under the proposal, most agencies would face 2 percent reductions for the rest of the year and 8 percent next year.

“These cuts will not be painless, and services to some citizens will in fact be impacted. We recognize that,” Lynch said. “But I believe this is a balanced approach for what is admittedly a very difficult problem.”

He said he is open to suggestions from lawmakers for other places to cut, but he remains opposed to another revenue source some lawmakers have proposed: expanded gambling.

LOL! “I’m just shocked” dude get with the program, they ‘deserve’ the raise!

“I am just shocked and amazed that every time you ask a special interest, or a union, for some kind of sacrifice, the answer is either, ‘No!’ or ‘I’m going to sue you,’ ” Paterson added.

Paterson delays raises for 130,000 state workers
The Business Review (Albany)

New York Gov. David Paterson has delayed pay raises for 130,000 state workers, citing the state’s financial problems.

The 4 percent pay boost took effect April 1, adding about $480 million to the state’s payroll costs. The raises were scheduled to appear in paychecks for state workers later this month, beginning April 22.

On Thursday, Paterson said he will not include money for the raises in the next round of emergency spending bills that legislators will have to approve to keep the state running, since there is no budget in place.

“The delay is because we don’t have the resources to pay them right now,” Paterson said. “We are doing everything we can to keep the ship afloat.”

“I am just shocked and amazed that every time you ask a special interest, or a union, for some kind of sacrifice, the answer is either, ‘No!’ or ‘I’m going to sue you,’ ” Paterson added. “Some people are just reticent, or unable, to recognize the gravity of this crisis.”

More green shoots, wonder were the need dough will come from?

33 states out of money to fund unemployment benefits money.
CNN Money
April 8, 2010, 4:00 pm

With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.

A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency.

Debt-challenged California has borrowed the most, totaling more than $8.4 billion, followed by Michigan and New York, which have loans worth more than $3 billion. Nine other states have borrowed at least $1 billion from the federal government.

“The nation’s financing system for jobless benefits is under unprecedented stress,” said Andrew Stettner, deputy director of the New York-based advocacy group for the unemployed. “While the recession has certainly made things worse, this funding crisis has been developing for years.”

At the onset of the recession, only 19 states met the recommended funding level, which is one year of reserves equal to the highest amount of unemployment insurance paid out during prior recessions.

NAACP drops racial bias suit against Wells Fargo
Minneapolis / St. Paul Business Journal

The NAACP has dropped a lawsuit that accused Wells Fargo & Co. of steering African-American homeowners into sub-prime mortgages, the organization announced Thursday.

The National Association for the Advancement of Colored People (NAACP) sued Wells Fargo and more than a dozen other banks last year, saying the banks engaged in “systematic, institutionalized racism” when they steered homeowners of color into mortgages with higher interest rates than borrowers who had similar credit histories.

The NAACP dropped its suit against San Francisco-based Wells Fargo after working with the bank to identify ways of improving “fair credit access, sustainable homeownership and financial literacy for communities of color,” the organization said in a press statement. Wells Fargo, which denied the suit’s allegations, has also agreed to endorse a series of principles on fair lending developed by the NAACP.

Court freezes US Fidelis owners’ assets
St. Louis Business Journal -

A federal bankruptcy judge on Wednesday froze the assets of US Fidelis owners and brothers Cory and Darain Atkinson at the request of the company’s creditors.

Judge Charles Rendlen III “recognized that it only worked if both sides were frozen. The Atkinsons cannot transfer assets but the creditors cannot sue them in the meantime,” said David Warfield, a Thompson Coburn attorney who represents the company’s creditors.

Under Rendlen’s order, the assets will be frozen until July 8 and on that day, another hearing will be held to decide whether the order should made permanent, Warfield said.

US Fidelis is being operated by Chief Restructuring Officer Scott Eisenberg, managing partner at Amherst Partners, a Birmingham, Mich., turnaround firm. US Fidelis plans to sue the Atkinsons to recover some of the millions they took from the company. Rob Eggmann, a lawyer for U.S. Fidelis and a partner in the Clayton office of Kansas City-based Lathrop & Gage, had said he planned to file that suit by the end of next week.

US Fidelis is no longer selling vehicle service contracts but continues to provide customer service for its existing 260,000 contracts.

The Atkinsons and their real estate companies owe US Fidelis about $66 million, according to the Chapter 11 bankruptcy filed March 1.

There is a very sudden price uptick on Zillow in this past month for communities in my area (San Luis Obispo, Morro Bay, Atascadero). Any ideas about this? Maybe people rushing to buy due to the California tax credit?

With the CA budget issues, furloughs, school lay-offs, etc. it seems like this must be a reflection of some force from the outside, as things have not improved significantly locally (and, if anything, have continued to deteriorate).

http://www.npr.org/blogs/money/2010/04/the_tuesday_podcast_the_fed_wa.html

The Tuesday Podcast: The Fed Wants To Sell You A Mall In Oklahoma

The Federal Reserve owns the biggest mall in Oklahoma, and it’s looking to sell.

The mall is one of the many, many assets the Fed bought to bail out Bear Stearns a few years back. The assets were bundled into a special company called Maiden Lane I.

What is the difference between the Gambino crime family and Megabank? Both are businesses. Aren’t both net wealth extractors from society?

A business is supposed to create wealth - create a good or service that people want, creating more wealth, creating more satisfaction.

What’s the difference between Gambino and Megabank? Do either actually net create any wealth? Create satisfaction? Or do both just cause a net increase in suffering?

In the country of the blind, a one eyed man is king…

http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004?printable=true&currentPage=4