The Housing Bubble

Ooh, I’m finally early on the BB. Woohoo!

I haven’t been reading too much lately, so I wanted to solicit comments on the Joshua Tree Extension in case I missed any comments/complaints. I’m working on a few minor tweaks based on shortcomings I see while using it….certainly happy to hear what others have to say.

Feel free to email me directly via address on web page rather than cluttering up the forum here.

Bernanke Admits Printing $1.3 Trillion Out Of Thin Air
by Greg Hunter21 April 2010 USAWAtchDog Website

Fed Chairman Ben Bernanke admitted the central bank created $1.3 trillion out of thin air to buy mortgage backed securities. This shocking admission came from the Joint Economic Committee hearing on Capital Hill last week.

I was dumbfounded when I saw Bernanke shake his head in the affirmative as Representative Ron Paul said,
“Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system.”
I was amazed he admitted this. I looked up the original hearing on C-Span to make sure the clip was not edited. It was not.

What is even more shocking is I could not find a single mainstream news agency that covered this revelation. Congress just finished voting on the bitterly contested Obama health care bill that is supposed to cost nearly a trillion dollars over ten years. (Some contend it will be more than twice that amount.)

The mainstream media doesn’t even bat an eye over the Fed creating $1.3 trillion in a little more than a year to buy worthless debt no one else will touch. I do not get it. I guess we could have asked the Fed to print up a trillion dollars to pay for health care and avoided that drawn out battle in Congress.

Then, Rep. Paul brings up printing another $105 billion to bailout Greece.

Bernanke answers by saying,
“…I think one of the agreements that the G20 leaders came up with was sort of a mutual commitment to put more money into the IMF as a way of addressing the financial crisis around the world…”
Notice how Bernanke used the term “mutual commitment.”

I think what that really means is an agreement between all the G-20 nations of a “mutual debasement of their currencies.” I think this is why gold has been rising in price around the globe. I have been saying for months that we are going to have some very big inflation. (Real inflation is already at 9.5% according to shadowstats.com.)

I wrote about this last November in a post called “The Fix Is In.”

I think Bernanke just opened the Fed playbook and revealed money will be printed to fix all financial problems. I don’t think he’s even trying to hide it anymore. Rep. Paul also brought up the big debt trouble coming soon with many, many bankrupt cities and states such as Los Angeles and California. I think they will all be bailed out one way or another by the printing press.

New York Fed President William Dudley seems to be on the same page as his boss. Dudley recently said,
“The fact that our foreign indebtedness is for the most part denominated in our own currency is a huge advantage in the event the dollar were to come under significant downward pressure.”

F&F are one damn sick joke, that will continue to burn untold dollars…

Fannie, Freddie aid cost unclear: regulator

(Reuters) - It is unclear how much U.S. taxpayers will eventually have to shell out to help mortgage finance giants Fannie Mae and Freddie Mac, the regulator of the two companies said on Tuesday.

“The actual cost I do not know,” Federal Housing Finance Agency Acting Director Edward DeMarco said in response to a question from Kentucky Republican Senator Jim Bunning at a Senate Finance Committee hearing.

Fannie Mae said on Monday it would need an additional $8.4 billion from the U.S. Treasury. The two firms have now tapped about $145 billion from the government and the Obama administration has said it will backstop losses, no matter how high they go, through 2012.

As a result, some Republican lawmakers are pushing for Fannie Mae and Freddie Mac to be included among firms subject to a tax aimed at financial institutions that received government money during the financial crisis.

Schwarzenegger Preps ‘Terrible Cuts’ to Close Deficit (Update1)

(Bloomberg) — California Governor Arnold Schwarzenegger will seek “terrible cuts” to eliminate an $18.6 billion budget deficit facing the most-populous U.S. state through June 2011, his spokesman said.

Schwarzenegger, 62, who will introduce his revised budget plans on May 14, has said he won’t seek tax increases to bolster California’s finances. The Republican’s forecast for the budget gap may rise after revenue fell short of his targets last month.

“We can’t get through this deficit without very terrible cuts,” Schwarzenegger spokesman Aaron McLear told reporters in Sacramento. “We don’t believe that raising taxes right now is the right thing to do.”

California’s revenue in April, when income-tax payments are due, trailed the governor’s estimates by $3.6 billion, or 26 percent. The gap wiped out gains from the previous four months, leaving collections $1.3 billion behind projections for the budget year that ends in June.

Schwarzenegger’s newest plan will revise the proposals introduced in January to account for the tax-collection shortages. In January, the governor said California may have to eliminate entire welfare programs, including the main one that provides cash and job assistance to families below the poverty line, without an influx of cash from the federal government.

CNBC’s Rick Santelli Rips Key Democrat For Ignoring Fannie/Freddie Reform
Dems’ Financial “Reform” Leaves Taxpayers on the Hook for Government Mortgage Giants ~ Washington

Democrats still don’t get it, and they refuse to reform Fannie Mae and Freddie Mac, the government mortgage companies that sparked the meltdown by giving high-risk loans to people who couldn’t afford it. Standing up for American taxpayers, CNBC’s on-air editor, Rick Santelli teed off on Rep. Paul Kanjorski’s (D-PA) claim that Democrats’ couldn’t reform Fannie & Freddie in their financial regulation bill because it was “too complicated,” asking: “It’s too complicated?

You think taxpayers that go to work to pay the money you are subsidizing, it will end up a half a trillion, do you think they think complicated is an excuse?”

Good morning everyone. In a couple of hours, I am spending money in the worst possible according to this forum: plastic surgery!
I am having my nasal hump fixed!
And you know what? I paid cash!!!
I was able to get an appontment with a highly desired doctor within 5 weeks; plus, I got a nice discount for paying cash… Ha!
Wish me good luck!

Let taxpayers cover your mortgage
Tami Luhby, senior writer
May 12, 2010

NEW YORK (CNNMoney.com) — Unemployed? Owe more on your mortgage than your home is worth? Your state might one day pay your mortgage.

Giving people free money to cover their home loans is just one of the radical ways that four states — Florida, Michigan, California and Arizona — plan to use $1.4 billion the Obama administration is sending their way to help the unemployed and underwater avoid foreclosure.

Many consumer advocates have said the government should help cover the payments of these troubled homeowners, lest the mortgage crisis continue spinning out of control and dragging down everyone’s property values. But other housing experts warn that paying off loans creates a moral hazard and could actually dissuade people from looking for work.

Innovative programs, however, are exactly what the administration was hoping for when it unveiled the Hardest Hit Fund initiative in February. Officials are looking to help the unemployed and underwater, who are now at the heart of the crisis. Despite the administration’s best efforts to stabilize the market, home prices are still sliding and foreclosure filings are at record highs.

States have radical ideas to stop foreclosures
The federal government is doling out a total of $2.1 billion to 10 states, which also include Nevada, North Carolina, South Carolina, Rhode Island, Ohio and Oregon. The others have not yet submitted their plans to Treasury for approval or have not made them public.

Administration officials will spend the next few weeks reviewing the proposals, but Assistant Treasury Secretary Michael Barr told CNNMoney.com that they contained some good ideas.

But delinquent homeowners aren’t the only ones who would benefit from these subsidies. In fact, the banks would come away with a huge win, said Mark Calabria, director of financial regulation studies at The Cato Institute. Not only would they have government money securely in hand, but they’d avoid the time and expense of the foreclosure process.

Another concern is that these proposals will dissuade the unemployed from finding work or from relocating to an area with better job prospects, said Casey Mulligan, an economics professor at the University of Chicago. Such programs incent people to maintain their financial hardships.

“Why should anybody work if you are going to be in your house either way?” he said.

Another day, more oil spill. Wonder how it is going to end, or if. Just lower BP, Transocean and Halliburton execs into that containment dome and use them to plug the leak. Less fuss than useless Congressional hearings.

‘We are once again the schmucks of Europe!’ German media’s verdict as anger at Greek bailout swells.

German anger at the 750billion Euro Greek bailout is swelling as world markets slid after initial excitement at the bailout fizzled.

The headline on the front page of Germany’s biggest newspaper, Bild, summed up the national mood, declaring: ‘We are once again the schmucks of Europe!’

Meanwhile world stocks and the Euro dropped sharply today as the massive relief rally triggered by the plan to contain Europe’s debt crisis fizzled out.

Ignoring the Elephant in the Bailout
New York Times

If you blinked, you might have missed the ugly first-quarter report last week from Freddie Mac, the mortgage finance giant that, along with its sister Fannie Mae, soldiers on as one of the financial world’s biggest wards of the state.

But taxpayers should examine Freddie’s first-quarter numbers not only because the losses are our responsibility. Since they also include details on Freddie’s delinquent mortgages, the company’s sales of foreclosed properties and losses on those sales, the results provide a telling snapshot of the current state of the housing market.

Serious delinquencies in Freddie’s single-family conventional loan portfolio — those more than 90 days late — came in at 4.13 percent, up from 2.41 percent for the period a year earlier. Delinquencies in the company’s Alt-A book, one step up from subprime loans, totaled 12.84 percent, while delinquencies on interest-only mortgages were 18.5 percent. Delinquencies on its small portfolio of option-adjustable rate loans totaled 19.8 percent.

The company’s inventory of foreclosed properties rose from 29,145 units at the end of March 2009 to almost 54,000 units this year. Perhaps most troubling, Freddie’s nonperforming assets almost doubled, rising to $115 billion from $62 billion.

When Freddie sells properties, either before or after foreclosure, it generates losses of 39 percent, on average.

Freddie Mac said the main reason for its disastrous quarter was an accounting change that required it to bring back onto its books $1.5 trillion in assets and liabilities that it had been keeping off of its balance sheet.

None of the grim numbers at Freddie are surprising, really, given that it and Fannie have pretty much been the only games in town of late for anyone interested in getting a mortgage. The problem for taxpayers, of course, is that the company’s future doesn’t look much different from its recent past.

Even as its business suffers through a sour real estate market, Freddie must pay hefty cash dividends on the preferred stock the government holds. After it receives the additional $10.6 billion it needs from taxpayers, dividends owed to Treasury will total $6.2 billion a year. This amount, the company said, “exceeds our annual historical earnings in most periods.”

In spite of these difficulties, Freddie and Fannie are nowhere to be seen in the various financial reform efforts under discussion on Capitol Hill. Timothy F. Geithner, the Treasury secretary, offered a vague comment to Congress last March, that after some unspecified reform effort someday in the future, the companies “will not exist in the same form as they did in the past.”

‘Perfect Quarter’ at Four U.S. Banks Shows Fed-Fueled Revival

May 12 (Bloomberg) — Four of the largest U.S. banks, including Citigroup Inc., racked up perfect quarters in their trading businesses between January and March, underscoring how government support and less competition is fueling Wall Street’s revival.

Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesn’t break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said.

“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California- based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

The Financial Page
Debtor States
by James Surowiecki April 12, 2010

Another year, another crisis. If we spent last year worried that big banks were going to fail, the fear of the moment is that entire governments may go under. The anxieties about “sovereign debt” have been most acute in Europe, where the infelicitously named PIIGS countries—Portugal, Ireland, Italy, Greece, and Spain—have huge debt burdens, and where Greece in particular is in dire need of assistance. (It owes four hundred billion dollars, against an annual G.D.P. of around three hundred and forty billion and shrinking.) And now people are wondering if American state governments are headed for their own Greek tragedy. Last week, the Times suggested that the states could be plunged into a debt crisis, and the Wall Street Journal asked, “Who Will Default First: Greece or California?”

It’s not an outlandish question. Besides great climates and lovely beaches, California and Greece share a fondness for dysfunctional politics and feckless budgeting. While American states are typically required to balance their budgets annually, that hasn’t stopped them from amassing a pile of long-term debt by issuing municipal bonds. And, like Greece and other E.U. countries, states have used accounting legerdemain to under-report the amount they owe, even while accumulating huge, unfunded pension obligations. Just as a default by Greece (whose bonds are held by many big European banks) would have nasty ripple effects across the European economy, a state-government default would have all sorts of unpleasant consequences, as state bonds have traditionally been considered a thoroughly safe investment.

For all this, though, the comparison has been overblown. Our states’ debt burden, while sizable, is far more manageable than that of the PIIGS, which owe three times as much relative to G.D.P. as American state and local governments. And though states will certainly have to cut their budgets again this year, the cuts will be smaller (and therefore more politically palatable) than those of, say, Ireland, which is cutting government spending by almost nine per cent. Most important, the states have a fundamental advantage over euro-zone nations: they’re part of a country, not an ill-defined union, so they can count on help from the federal government.

Much of the assistance that the states get from Washington is close to automatic: in normal times, the government sends almost half a trillion dollars in aid (for everything from Medicaid to highways and education) directly to the states. And it can generally be counted on to step up its efforts in a crisis; last year’s stimulus sent more than a hundred and fifty billion dollars to state and local governments. There’s a long-standing tradition of this: one of the federal government’s first acts was to assume the debts that states had run up during the American Revolution. This meant that frugal states had to help pay the debts of profligate ones. But the assumption was that closing gaps between the states by some measure of redistribution was in the national interest. The theory is that we hang together in times of trouble lest we all end up hanging separately

Read more: http://www.newyorker.com/talk/financial/2010/04/12/100412ta_talk_surowiecki#ixzz0niXD3D88

Sounds like the EuroTARP has fixed everything, and markets are back to normal again now.

Wednesday May 12, 2010

Bloomberg
Bank Swaps, Libor Show Doubts on Europe Bailout: Credit Markets
May 11, 2010, 11:10 AM EDT

More From Businessweek

* Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show
* Barroso Says Any Attempt to Weaken Euro ?Will Fail?
* Weber Says ECB Bond Purchases Pose Significant Stability Risks
* Euro Is ?Oversold,? May Rally to $1.3115: Technical Analysis
* Crude Oil Rises After Chinese Refining Increases to a Record

By Abigail Moses and Shannon D. Harrington

May 11 (Bloomberg) — Money markets and the cost of protecting bank bonds from losses show investors are concerned Europe’s almost $1 trillion rescue plan may not be enough to contain the region’s sovereign debt crisis.

The Markit iTraxx Financial Index of credit-default swaps on European banks and insurers rose to 38 basis points more than the Markit iTraxx Europe Index tied to investment-grade companies from 31 yesterday. While the gap narrowed from 58 basis points before European leaders agreed to the rescue plan, the bank index on average has traded 10 basis points less the past three years. A measure of banks’ reluctance to lend also rose to more than three times the level from March.

The loan package for debt-laden nations including Greece is part of an attempt to stop a decline in the euro and stave off a sovereign default that would threaten recovery from the worst global recession since the 1930s. European financial companies, which hold more than 134 billion euros ($170 billion) in Greek, Portuguese and Spanish sovereign debt, are under scrutiny by investors concerned that they’re owed too much by Europe’s most- indebted countries.

“Sovereign risk hasn’t gone away in the slightest,” said Jim Reid, head of fundamental strategy in London for Deutsche Bank AG, Germany’s biggest bank. “What this package has done is massively reduce the tail risk in European markets without necessarily changing the medium- to long-term dynamics of financial markets.”
…

Bloomberg
Libor for Three-Month Dollars Climbs to Highest Since August
May 12, 2010, 7:47 AM EDT

By Keith Jenkins

May 12 (Bloomberg) — The rate banks say they pay for three-month loans in dollars rose to the highest level in almost nine months today.

The London interbank offered rate, or Libor, for such loans climbed almost 1 basis point to 0.430 percent, the highest level since Aug. 17, according to data from the British Bankers’ Association.

The Libor-OIS spread, a gauge of banks’ reluctance to lend, widened to 20.2 basis points, the most since Aug. 21.

Cover Story
April 1, 2010, 5:00PM EST

Goldman Sachs: Don’t Blame Us

When it comes to its role in the financial crisis, Goldman Sachs has a message for the world: Not guilty. Not one bit

Goldman Sachs Chief Executive Blankfein Chip Somodevilla/Getty Images

By Roben Farzad

The bankers at Goldman Sachs (GS), by traditional measures, ought to be on top of the world. Eighteen months removed from the depths of the financial crisis, Goldman posted a $13.4 billion profit in 2009, a Wall Street record. When Chief Executive Officer Lloyd Blankfein went on a recruiting trip to Stanford, he was greeted by an overflow crowd. Goldman cast off its Troubled Asset Relief Program yoke and proceeded to pay its employees more than $16 billion. The firm is moving into a new $2.1 billion headquarters on the Hudson River.

Goldman’s reputation with its clients—who must have at least $10 million to open an account—has never been better. Among the general public, however, the perception is that Goldman is the toxic epicenter of everything wrong with Wall Street. The firm’s 32,000 employees are seen as an army of Gordon Gekkos, greedy manipulators who pumped up the housing bubble, then bet opportunistically on its implosion as American International Group (AIG), its trading partner, buckled under massive debts. It is widely alleged—though unproven—that Goldman called on its close friends in government to arrange for an AIG bailout, effectively pocketing billions of taxpayer dollars. “Every game has a sucker,” says William K. Black, a professor of law and economics at the University of Missouri at Kansas City who was deputy director of the Federal Savings & Loan Insurance Corp., “and in this case, the sucker was not so much AIG as it was the U.S. government and taxpayer.”

Heads Goldman wins, tails you lose, America.
…

Debt induced large-ass:

Todd Harrison

May 12, 2010, 12:01 a.m. EDT

The war on capitalism
Commentary: European leaders take aim at free markets

By Todd Harrison

NEW YORK (MarketWatch) — The capital market machination cracked last week and stopped functioning in an orderly manner.

A few short sessions — and $1 trillion dollars — later, many in the mainstream media declared that all is well in the world.

While calmer heads are quick to put the panic into perspective — the S&P 500 (SPX 1,156, -3.94, -0.34%) is a mere 5% from fresh 18-month highs — the system broke, if only for a short period of time. That, by definition, is a crash.

As I wrote last week, there are a few ways to view what happened, ranging from the obvious to the conspiratorial to the nonsensical. At the end of the day — and from this day forward — the takeaway has little to do with the “why” and everything to do with the “what.” (Read Minyanville’s “The 1000-point plunge.”)

Politicians were quick to declare war on the perceived culprits; German Chancellor Angela Merkel lashed out, saying “speculators are our adversaries” and she’s “resolved to win the battle against markets.” Senator Chris Dodd, chairman of the Senate Banking Committee, said on Sunday that high-frequency trading created a “casino environment” where “finance is getting detached from the real economy.”

To be sure, there is plenty of blame to go around. As we’ve long posited in Minyanville, the spectrum of culpability stretches from over-extended consumers to institutions that financially engineered the markets to policymakers complicit by acceptance. While the system collapsed during the first phase of the financial crisis and snapped anew last week, those events were not the cause of concern — they were simply the effect.

Long-time readers of Minyanville understand the causal elements of cumulative imbalances and the societal ramifications of percolating class wars, as well as the potential pitfalls inherent in a finance-based, derivative-laced global economy. Those are among the reasons why we warned of “a prolonged period of socioeconomic malaise entirely more depressing than a recession” in the summer of 2006.
Emergency measures; deja vu!

We’ve long drawn the distinction between drugs that mask the symptoms and medicine that cures the disease, as well as the difference between a legitimate economic recovery and debt-induced largess.

Over the weekend, taking a page from the stateside playbook, the European Union crafted a $962 billion emergency loan package with hopes of containing the contagion. Read Minyanville’s “A Five-Step Guide to Contagion.”
…

Yesterday someone talked about salaries for Teachers. I wanted to talk more about salaries for PhDs getting hired in B-Schools in universities.

I can understand that salaries in top tier schools like Harvard etc. are high. Even the starting salaries range in 200K range for Assistant Professor at the top 10. But what about schools that are ranked like40th or 50th and starting salaries for Asst. Profs are still close to 150K for 9 months. And they make another 50K in summer.

One reasonI think is that many B-Schools have made their institutes as Factories to sell MBA, part-time MBA, Executive MBA etc. And they need more faculty to teach. This has created a huge demand in the past 6-7 years for Business Faculty.

But would this last for a long time. Google for DIamondback Salary Guide and it lists salaries for B-School in College Park. I didn’t see any Prof. making less than 140-150K and as high as 380K for 9 months.

Well, they write papers and educate the MBAs but looking at Wall Street it doesn’t look like this education is helping the country.

IS MBA degree a bluff?

BULLETIN Morgan Stanley loses 5% of market value in premarket trades following investigation report

MarketWatch dot com

Just got a new 2009 Maserati listed for $131k for 88K. Thanks Stepn2 for risking your life for me so I can get cheap gas. Only 10 miles per gallon.

Ohio house prices zooming upward…

http://cincinnati.bizjournals.com/cincinnati/stories/2010/05/10/daily22.html

YoY increases in median home prices (per NAR):

Cincy: + 14.5%

Other Ohio cities:

“Akron’s median price jumped 90 percent; Cleveland-Elyria-Mentor saw its median price rise 54 percent; Dayton was up 23 percent; and Toledo, 13 percent. Columbus, whose housing market suffered the least in Ohio, saw its median price jump about 6 percent over the year.”

NYC’s competitor across the pond is considering bank breakups. If NYC banks don’t follow suit, and remain in their current inefficiently gargantuan scale of bailout-worthiness, they may lose market share to competitively rightsized international rivals.

FSA might ‘survive’; Commission to investigate bank break-ups
Author: Katrina Baugh
IFAonline| 12 May 2010 | 10:00

Many advisers will be disappointed this morning the FSA is likely to survive as new Chancellor George Osborne has been forced to water down plans to hand over banking supervision to the Bank of England.

However, it is not all good news for the banking sector as an independent commission will consider breaking up big banks, which combine retail and investment banking arms. It will report back within a year, the Financial Times reports.
…

Beware of politicians who deal with Gollum.

Whitman’s words put spotlight on deeds

A lucrative Goldman Sachs deal, a Craigslist battle and personal investments raise questions.

In her autobiography, Whitman disavows Wall Street “self-dealing and fraud” and rejects as myth the idea that successful executives must “step on people, stretch the truth … and make heartless decisions based only on the bottom line.” (Paul Sakuma, Associated Press / April 23, 2010)
…
A lucrative deal that Whitman cut for herself with investment banking giant Goldman Sachs was called “corrupt” by the U.S. House of Representatives Financial Services Committee. The partnership she forged between EBay and online rival Craigslist landed in court and is still there; Craigslist has accused EBay of stealing trade secrets and fraudulent advertising. At another company, her dismissal of a subordinate executive resulted in an age-discrimination lawsuit and a secret court settlement.

As an investor, she put millions of dollars into private equity firms with a reputation for callous business practices. Subsidiaries of one of the “distressed asset” firms in which she identifies herself as a limited partner foreclosed on dozens of victims of Hurricane Katrina.

“It’s nice to say if you just behave ethically, you will make profits,” said Meir Statman, a professor of finance at Santa Clara University who focuses on ethics. “If that were true, life would be really easy. But . . . there are tradeoffs. And if you are a politician, you have to account for them.”
…

Report from the field. Lest you still think they are handing mortgages out to any Tom, Dick or Harry - here’s what I’m experiencing. I settle on Friday. My mortgage company called me last night to tell me they need some documentation from me (even though I applied for the mortgage weeks ago).

I’ve been divorced for 3 years, but never changed my withholding status on my paychecks from married. Because of this, they are requesting two things:

1) A letter from me stating why this says married if I’m not and
2) Proof that I’m not married (divorce decree)

They took it even one step further and said that, to be sure I wasn’t paying alimony, I need to provide my entire divorce settlement document. Not really happy having to involve anything to do with my ex in the single most independent thing I’ve ever done in my life, but I guess my bad for not changing the withholding status (though the IRS doesn’t care).

How dead people got mortgages in the past decade is beyond me.

Hello All,

Well, the family went out for a walk last night and we stopped to take a look at a home for sale.

A modest 3/2 in my fairly shabby hood in the slightly less of a war zone in Harbor gateway was offered at 495,000.

It has some company on the market though. A couple other homes listing at 400k range.

There is one listing under 400k as a short sale. Good luck while the bank ponders the other listings.

Our hood… well… we got multifamily dwellings on several of the major streets, lots of illegals working corners and some legals as well. A good bit of gang graffiti but not much other action. Saw some of the homeboys with their pit bull out on the walk. Wished I had my hand cannon with me. Don’t want my kid to get mauled. Some amount of crime here too.

Would say that incomes are under 75k per household here. So prices are floating around 5-8x income still. Plenty of houses with the do-not-enter stickers on them from the banks but not on the market.

Over a few blocks in Torrance proper, prices are even higher with plenty of 400k+ steals on 2+1 homes. That is in North Torrance snuggled up against crime ridden Gardena, also possibly in the El Camino enclave which has no school funding. Modest 3/2’s next to the railroad track with HOAs are 450K.

As you can imagine, I’m not considering buying for a while yet. Meanwhile we got reports of inflation running at 10% up above.

DETROIT – The war on vacant houses in Detroit took on new force Tuesday as officials announced plans to demolish about 450 of the most dangerous structures within the next two months, and immediately tore into the first home on the list.

Crews collapsed the chimney of a two-story bungalow in northwest Detroit in a ceremonial start to the $4.5 million project backed by Wayne County and faith-based groups. It’s the latest step in an aggressive effort to rid the city of thousands of vacant homes.

“It’s part of the rebirth we are going through,” County Executive Robert Ficano said, surrounded by other local officials and a dozen religious leaders. “These are havens for drugs and other things.”

Detroit’s mayor wants to tear down 10,000 vacant houses over the next four years and, with them, evict the illegal drug and weapons operations that often move in after residents move out.

Of course those illegal drug and weapons operations will just move to other neighborhoods. Seems like some homeless people could move into these houses??

Worker shortage in a few years? This is going to mean wage inflation.

http://tinyurl.com/32edxyf

“In a study done at Northeastern University earlier this year, Barry Bluestone and Mark Melnik say that in eight years, more than five million jobs may go begging unless there’s a big boost in what’s called the labor force participation rate — the percentage of Americans who seek work. The big driver here is that the numbers of Baby Boomers leaving the work force will exceed the supply of new workers coming from younger generations.”

Yesterday while driving back from SJ I heard an interview with Roubini hyping his book. I thought I might get insight into where we are heading but got absolutely nothing. In fact, I really wonder if he really has a clue to events to come or has joined the MSM trying not to talk badly of the current fiscal situation.

He said that we would definitely not have a black swan event, but a white swan event (as if he or we know all the precursors to any catastrophic event coming our way.

We print money out of thin air, hold property off the market, bail out foreign nations and our own, don’t create jobs in the private sector, extend EI to where people won’t even take lower level jobs available, and we are still going to come out of this unchaffed.

No, we have opened a new book and a new way of life to which the masses have yet to see.

The feds print money for fed projects, but who will bail out the States, the Counties, the Cities. Where will all that tax money come from?

“F&F are one damn sick joke, that will continue to burn untold dollars…

Fannie, Freddie aid cost unclear: regulator

(Reuters) - It is unclear how much U.S. taxpayers will eventually have to shell out to help mortgage finance giants Fannie Mae and Freddie Mac, the regulator of the two companies said on Tuesday.

“The actual cost I do not know,” Federal Housing Finance Agency Acting Director Edward DeMarco said in response to a question from Kentucky Republican Senator Jim Bunning at a Senate Finance Committee hearing.”

What is truly awe inspiring is the burn rate has only increased. One would like to think the gubberment could quickly to extinguish the fire. Instead, either knowingly or through stupidity (my bet’s on knowingly) have increased the size of the blaze. A pilot program to buy commercial real estate from troubled developers ??? I mean WTF who thinks this crap up:

“Freddie Mac hopes to securitize two CMBS offerings by the end of this year, then the program will be rolled out to the broader network of lenders. “When this thing is completely baked and rolled out broadly, we’re going to be known as the high-quality conduit,” said May.”

http://www.freddiemac.com/multifamily/termsheet_cme.html

I love looking at “urban ruins” websites.

See this abandoned shack, for example?

http://www.forgotten-ny.com/YOU‘D%20NEVER%20BELIEVE/seagirt/15.P4200490.JPG.jpg

(From the excellent website http://www.forgotten-ny.com)

It’s a beachfront bungalow in New York City! Somone once owned it as a summer home. Thought it would be a great investment, probably. After all, they’re not building any more land in New York city, are they?

Now there are hundreds of houses like this, in once upscale Brighton Beach and other areas.

Anyone who doesn’t think house prices can go all the way to $0 is mistaken!

Filed under: “Boy, they must really love ice hockey in Phoenix” ..or…”…them damn illegals again!”

“Less heartwarming hockey story: Glendale, Ariz., taxpayers are on the hook for $25 million of the Coyotes’ financial losses for next season if the team is not sold, which keeps the team from fleeing to Winnipeg for now, but at a price.”

Looks like the Fed’s War on Savers is succeeding wildly!

Full Post
Posted Wednesday, May 12, 2010 9:24 AM
Savings Rate Down as Americans Spend More
Newsweek

Leading Indicator

2.7%
The personal savings rate for Americans in March. The post-crash savings rate peaked at 6.4 percent in May 2009, and hasn’t been below 3 percent since October 2008.

For those of you who think life is just a matter of making smart investments:

http://today.msnbc.msn.com/id/37103788/ns/today-today_people/

The End of the Euro

How the crisis in Greece could lead to the demise of Europe’s most ambitious project.

By Niall Ferguson | NEWSWEEK
Published May 7, 2010
From the magazine issue dated May 17, 2010

Crisis—from the Greek “krisis,” for a turning point in a disease—is one of many English words we owe to the ancient Athenians. Now their modern descendants are reminding us what it really means.

Just when it seemed safe to start using the word “recovery,” a Greek crisis is threatening the world economy, and the very existence of the world’s second-biggest currency.
===========================================================
PHOTOS
A History of Greek Protest Dogs

Though there are many weapons available to the street protester, there is perhaps only one for which there is no defense: a really cute friggin’ dog.

Mange Against the Machine

An old friend sent me this link and asked me to comment, I’ve copied my reply below:

http://www.newsweek.com/id/237631

I generally like Roubini, and he has a very good track record as a forecaster. Two things not mentioned in the article were limits to size of these banks and the leverage they carry. I’ve seen it suggested that they could be limited to 1% of nominal GDP, for example. This would help avoid the “to big to fail” problem, but not if all of them fail together.

This brings up the second point he didn’t cover, which is limits on leverage. The greatest single prognosticator of bank failures has been the level of leverage they carried. It is precisely due to derivatives and CDS that the banks wrongly thought they could carry higher than the traditional 9X leverage.

Now my pesimistic side says there will be no change enacted to avoid another bust. The reason is that any change to actually protect against another bust would precipitate a crash because most firms operate above reasonable reserve requirements and a restriction would cause them to curtail lending drastically and send us into another phase of contraction.

As far as what to do, maybe a sane person or group could propose that we start backing off on the leverage point by point, month by month, until we get to safe levels, but I personally will go forward expecting one “unexpected” crash after another, that no one could have seen coming.

News from behind “The O.C.” Curtain:

Medical billing transgressions.. no worries, it’s “contained”

“Justice’s lawyer issued a statement saying Justice is “ashamed and repentant about his billing transgressions.”

BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)

Doctor in fraud case selling Newport mansion:
May 12th, 2010, by Jeff Collins OC Register

“Last week, he put his oceanfront home overlooking Little Corona Beach on the market.

At nearly $21 million, his Corona del Mar home is the 10th-priciest listing in Orange County

Respected oncologist. Cancer center director. USC clinical professor of medicine. President of the Orange County division of the American Cancer Society.

Justice treated victims in the Chernobyl disaster and cared for Vietnamese refugees in Northern California. He spent 10 days treating earthquake victims in Haiti, and planned to return there in June.

That reputation was marred last month, however, when Justice agreed to plead guilty to charges that he defrauded Medicare and other insurers of up to $1 million for injectable cancer medications that never were provided.”

This is rich, the ‘dingle’ Barry is giving economic advise to other countries.

Who’s running Europe? Now Obama pressures Spain over cuts after whispers he advised Merkel on saving the euro.
Mail Foreign Service 12th May 2010

Barack Obama is pressuring Spain to make austerity cuts as the European debt crisis rumbles on, it has emerged.

The U.S. President has also been credited with helping to save the Euro, after giving advice to European leaders on how to handle the debt crisis.

U.S. officials have been adamant that Europe must take the lead in resolving the crisis.

But amid fears for the impact on the American economy, behind closed doors the U.S. has been taking a far more active role.

Mr Obama and his aides have privately pressured European leaders to take bold action to calm the storm in financial markets.

Pressure: U.S. President Barack Obama has called Spanish Prime Minister Jose Zapatero to urge Spain to take ‘resolute action’

Yesterday he called Prime Minister Jose Luis Rodriguez Zapatero to discuss the importance of ‘resolute action’ by Spain.

Spain’s public finances, along with Portugal’s, have caused the most concern after those of Greece, which secured a European bailout.

The White House said Mr Obama was actively engaged in ensuring that Europe’s debt crisis did not hurt the global economy.

And it doesn’t include BB’s printing presses.

May 12 (Bloomberg) — The U.S. reported a budget deficit for April, the second such shortfall since 1983 for the month that typically sees an increase in income tax payments.

The excess of spending over revenue rose to $82.7 billion last month compared with a $20.9 billion gap in April 2009, the Treasury Department said today in Washington. It was the largest April deficit ever and exceeded the median forecast in a Bloomberg News survey.

Home prices could sink without tax credit ~ USA TODAY

Home prices are widely expected to fall now that a tax credit for home buyers has expired.

That’s raising concern about a possible double dip in home prices.

National housing prices stopped falling early last year and rose 0.3% over the 12 months ending in February, according to a study by real estate analytics firm CoreLogic.

The firm predicts prices will fall this year before starting to rise again in late 2010. Even so, next February’s prices are likely to be 4.2% lower, it forecasts.

“Home prices will struggle for maybe another year,” says Mark Fleming, CoreLogic’s chief economist.

A shrunken pool of buyers due to the tax credit’s expiration is one reason.

“The tax credit is the big reason home prices have been so buoyant, and sales will drop” with its expiration, says Paul Ashworth of Capital Economics. “You will see a double dip in housing prices.”

Another reason is the number of distressed houses — including foreclosures and short sales — that are on the market or that will be in coming months.

Distressed homes, typically sold at discounted prices, accounted for 36% of first-quarter sales, the National Association of Realtors reported Tuesday. The first quarter’s median single-family home price ($166,100) was roughly flat with a year earlier, despite gains in nearly two-thirds of 152 metro areas that the NAR surveys.

Ga. Regents approve up to 16 percent tuition hike

Georgia college students will pay up to $1,000 more in tuition in the coming school year under hikes passed by the state Board of Regents on Tuesday, a move that comes amid one of the worst state fiscal crises in recent history.

The tuition increases for the state’s 35 public colleges and universities hit hardest at research universities: Georgia Tech, the University of Georgia and Georgia State University. Many students will pay $3,535 per semester, a 16 percent increase over last fall.

LET ME SEE IF I GOT THIS RIGHT…

IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY YOU GET 12 YEARS HARD LABOR.

IF YOU CROSS THE IRANIAN BORDER ILLEGALLY YOU ARE DETAINED INDEFINITELY.

IF YOU CROSS THE AFGHAN BORDER ILLEGALLY, YOU GET SHOT.

IF YOU CROSS THE SAUDI ARABIAN BORDER ILLEGALLY YOU WILL BE JAILED.

IF YOU CROSS THE CHINESE BORDER ILLEGALLY YOU MAY NEVER BE HEARD FROM AGAIN.

IF YOU CROSS THE VENEZUELAN BORDER ILLEGALLY YOU WILL BE BRANDED A SPY AND YOUR FATE WILL BE SEALED.

IF YOU CROSS THE CUBAN BORDER ILLEGALLY YOU WILL BE THROWN INTO POLITICAL PRISON TO ROT.

IF YOU CROSS THE U.S. BORDER ILLEGALLY YOU GET:

1 - A JOB,

2 - A DRIVERS LICENSE,

3 - SOCIAL SECURITY CARD,

4 - WELFARE,

5 - FOOD STAMPS,

6 - CREDIT CARDS,

7 - SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE,

8 - FREE EDUCATION,

9 - FREE HEALTH CARE,

10 - A LOBBYIST IN WASHINGTON

11 - BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED IN YOUR LANGUAGE

12 - AND THE RIGHT TO CARRY YOUR COUNTRY’S FLAG WHILE YOU PROTEST THAT YOU DON’T GET ENOUGH RESPECT IN OUR COUNTRY

I JUST WANTED TO MAKE SURE I HAD A FIRM GRASP ON THE SITUATION…

Get ready for more street protests.

May 12 (Bloomberg) — Spain’s Socialist Prime Minister Jose Luis Rodriguez Zapatero performed a U-turn and cut public wages, caving in to pressure from the rest of Europe to reduce spending to avoid being dragged deeper into the Greek crisis.

Spain will cut public wages 5 percent this year and freeze them in 2011 while suspending a pension raise, Zapatero told parliament in Madrid today. A 2,500-euro ($3,168) subsidy for new parents will be scrapped and foreign aid trimmed, while public investment will fall 6 billion euros in 2011.

The government, whose members will take a 15 percent pay cut, aims to push the deficit to 6 percent of gross domestic product next year from 11.2 percent in 2009, in what would be the largest two-year reduction since at least 1980. Finance Minister Elena Salgado said as recently as February that Spain would honor wage agreements with public-sector unions.

Many American Students Entering College Need Remedial Courses

Davie, Fla. (AP) - Professor Derron Bowen teaches high school math to college students, patiently chalking equations on the board on basic arithmetic topics such as the speed of a driver on a a 20-hour trip.

Bowen’s class at Broward College in South Florida is for students who didn’t score high enough on an entrance test to get into college-level math. In all, about two-thirds of students entering the community college need to take at least one remedial course in math, English or reading.

Nationwide, about a third of first-year students in 2007-08 had taken at least one remedial course, according to the U.S. Department of Education. At public two-year colleges, that number rises to about 42 percent.

Education observers worry that the vast numbers of students coming to college unprepared will pose a major roadblock to President Barack Obama’s goal for the United States to once again lead the world in college degrees.

“We don’t get there from here,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia.

In October, the Education Department reported that many states declare students to have grade-level mastery of reading and math when they do not. In a 2007 ACT National Curriculum Survey of college professors, 65 percent said their states poorly prepare students for college-level coursework.

Canadian Home Swallowed by Sink Hole, 2 Family Members Dead, Dog Alive ~ NewsCore

All four members of a Canadian family were feared dead Tuesday after their farmhouse was swallowed by a massive sinkhole

All four members of a Canadian family were feared dead Tuesday after their farmhouse was swallowed by a massive sinkhole.

Police found the Prefontaine family — father Richard, his wife Line and their two daughters — in the basement of their home, CP24 reported.

Two were confirmed dead after their bodies were removed from the site, while the status of the other two was yet to be confirmed.

Incredibly, the family’s dog was found alive, although weak, after being dragged into the sinkhole.

It is believed all of the family were in the basement when the earth opened up and swallowed their country home on Monday night.

Their home is located in St. Jude, Quebec, approximately 55 miles northeast of Montreal.

Neighbors said the area’s soil is unstable and a similar landslide wiped out a small bridge a few years ago.

The two adults were in their 40s while the daughters were a fourth grader and a high school student, The Globe and Mail reported.

Police moved the security perimeter closer to the scene of the landslide on Tuesday. Surete du Quebec Police spokesman Ronald McInnis said the crater is 500 meters by 100 meters (1,640 feet by 330 feet) wide and 30 meters (98 feet) deep.

Three cars in front of the house were also swept away, as well as a nearby road, the Globe and Mail said. Five other houses in the area were evacuated.

30 billion was forecast… we hit $83 billion. Go team Barry, if you try really hard perhaps we can hit $100 billion this month!

U.S. April budget deficit $83 billion: Treasury

WASHINGTON (MarketWatch) — The U.S. government ran a $83 billion budget deficit in April, the Treasury Department reported Wednesday. Income was $245.3 billion, the Treasury said, 8% below the total recorded last April. Spending was $328.0 billion, up 14% year-over-year. The deficit in line with a Congressional Budget Office estimate and marked the 19th consecutive monthly budget shortfall. A year ago in April the deficit was $20.9 billion. For the first seven months of the fiscal year, the government incurred a budget deficit of about $800 billion, roughly the same as last year.

Funny how when the DJIA rallies, Uncle Buck tends to take it in the shorts. From Bloomberg:

CURRENCY VALUE CHANGE % CHANGE TIME
EUR-USD 1.2624 -0.0039 -0.3048% 15:38
GBP-USD 1.4826 -0.0129 -0.8649% 15:38
USD-CHF 1.1111 -0.0006 -0.0531% 15:38
USD-SEK 7.5574 -0.0534 -0.7020% 15:38
USD-DKK 5.8938 0.0167 0.2836% 15:38
USD-NOK 6.1583 -0.0332 -0.5365% 15:38
USD-CZK 20.1280 -0.0395 -0.1958% 15:38
USD-SKK 23.8640 0.0878 0.3692% 15:38
USD-PLN 3.1294 -0.0507 -1.5941% 15:39
USD-HUF 215.2300 -2.3650 -1.0869% 15:39
USD-RUB 29.9720 -0.1823 -0.6047% 12:59
USD-TRY 1.5230 -0.0131 -0.8528% 15:38
USD-ILS 3.7530 -0.0030 -0.0799% 15:38
USD-KES 77.7500 -0.1500 -0.1926% 10:06
USD-ZAR 7.4756 -0.0410 -0.5448% 15:38
USD-MAD 8.7738 0.0412 0.4712% 15:39

This is why more and more single women are buying houses:

Class of 2010.

Degrees Male Female Females per 100 Males

Associate’s 37.7 62.3 166
Bachelor’s 42.6 57.4 135
Master’s 39.7 60.3 152
Prpfessional 50.6 49.4 98
Doctor’s 48.4 51.6 107

mjperry.blogspot.com/2010/05/huge-college-degree-gap-for-class-of.html

I would imagine LA could fire 1700 and never miss them. Here in our little burg in central S.C. we could cut out a third of our shovel leaners and keep right on peculating.

Analyst: 1,700 Layoffs Needed to Close LA Budget Gap
May 11, 2010

The Los Angeles City Council’s chief legislative analyst Tuesday recommended eliminating more than 1,700 positions to help close a projected $492 million deficit in the budget for the fiscal year beginning July 1.

Councilman Bernard Parks, who chairs the council’s Budget and Finance Committee, said the “bulk” of those positions are currently occupied by city employees who would be issued pink slips unless alternative solutions are found to close the budget gap.

Mayor Antonio Villaraigosa’s original plan called for laying off about 750 employees and forcing thousands of others to take up to 26 furlough days.

Parks said those calculations were based on revenue projections that were “too ambitious.”

After adjustments were made by the Budget and Finance Committee, the $492 million deficit in the proposed budget grew by another $93 million.

To compensate, Chief Legislative Analyst Gerry Miller recommended eliminating 1,761 positions.

San Francisco landmark home for sale.
Address: 201 Buchanan St., Hayes Valley

Asking price: $1.575 million

Description: Built for John Nightingale, an early San Francisco pioneer, this Eastlake-style home was named San Francisco Landmark 47 in 1972. The property, known as the Nightingale House, also was the residence of San Francisco artist Jo Hanson, who died in March 2007.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/12/BU0P1DC9DL.DTL#ixzz0nkbrWjM0

http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2010/05/12/BU0P1DC9DL.DTL&object=%2Fc%2Fpictures%2F2010%2F05%2F11%2Fba-walkthrough12_0501654290.jpg

First time I have seen this. I know some on this blog said the April 30 cut off didn`t matter because they would just back date the contract if they could close by June 30. Well here is an active listing from realtor.com that says they can close on/or before 6/30. Why would that matter now if they weren`t going to back date the contract?

Property Information
in short sale process will be able to close on/or before 6/30 opportunity knocking at make an offer we have to get the banks approval on an accepted offer and we only deal with 1 contract 1Buyer until its final conclusion Property Features
•Single Family Property
•Status: Active
•Area: Stuart - South of Indian St
•County: MARTIN
•Year Built: 2000
•3 total bedroom(s)
•2 total bath(s)
•2 total full bath(s)
•Approximately 2044 sq. ft.
•Type: Single Family Detached
•Master bedroom
•Living room
•Dining room
•Kitchen
•Master bedroom is 14×14
•Living room is 23×14
•Dining room is 10×9
•Kitchen is 16×10
•2 covered parking space(s)
•2 car garage
•Attached parking
•Heating features: Electric/Central
•Central air conditioning
•Exterior construction: Concrete block, Concrete/Stucco
•Roofing: Asphalt/Fiberglass
•Approximate lot is 5488 sqft
•Call agent for details on association fee info.

So, if Lil’ Opie (The non-Hawaiian) wins this years “Dicky Boy” Cheney “Paddle Award”, do ya think he’ll present the award in person?

“…Barack Obama warned today that coalition forces in Afghanistan faced months of hard fighting, but said they had started to “reverse the momentum of the insurgency” by taking the fight to the Taliban.”

Lil’ Opie sounds more & more like a Republican from 1863:

“There are many difficult days ahead in Afghanistan. We face a determined and ruthless enemy but we go forward with confidence,” he said.

“We’ve had very frank discussions, and President Karzai agrees with me that we can’t win through a military strategy alone. That we’re going to have to make sure that we have effective governance, capacity building, economic development, in order for us to succeed.”

Hwy’s Authorial intrusion:
President Karzai: “…this includes my friends & family members, right?”

Obama says taking the fight to the Taliban is paying off:
Guardian UK

Reading about a community involved in a development controversy I came across the gem:

““We are not snobs who just don’t want the YMCA here,” she said. “We have real concerns about traffic and noise. We work four jobs to live here because we wanted to live in a nice, quiet neighborhood.””

Four jobs to live in a particular neighborhood! There’s a support to that argument you were making the other day, oxide.