The Housing Bubble

BankUnited failure cost $815M more than expected
South Florida Business Journal

The failure of BankUnited FSB in 2009 cost the Federal Deposit Insurance Corp. $815 million more than it initially expected.

That makes it the second-most-costly bank failure in FDIC history – behind only the $12.75 billion estimated cost of the failed IndyMac Bank in 2008.

The FDIC released updated figures for the cost of bank failures to its Deposit Insurance Fund (DIF), which is funded by assessments against banks. The estimates can move up and down over the life of bank receiverships, which can last from three to five years, FDIC spokesman David Barr said.

When Coral Gables-based BankUnited FSB failed in May 2009, the FDIC estimated the cost at $4.9 billion. In updated figures, the cost ballooned to $5.715 billion.

U.S. Home Seizures Reach Record as Recovery Delayed

(Bloomberg) — U.S. home foreclosures climbed to a record in April, a sign that government mortgage relief efforts have yet to turn the tide of property seizures, according to a report by RealtyTrac Inc.

“Right now it appears that the banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels,” Rick Sharga, RealtyTrac’s executive vice president, said in an e-mail. “We’ll probably see this trend continue for a while.”

Bank repossessions rose to 92,432 in April, up 45 percent from a year earlier, Irvine, California-based RealtyTrac said today in a statement. Foreclosure filings, including default and auction notices, fell 2 percent to 333,837. One out of every 387 households received a filing.

I am surprised the cry/whine for a reinstatement of the tax credit has not been louder.

Home Buyer Tax Credit Takes its Toll ~ CNBC

As the end of the home buyer tax credit neared last month, we all argued whether or not the increase in sales and the relative price stabilization could survive on their own.

The first clues indicate the answer is: No.

One full week after the tax credit’s expiration, mortgage applications fell 9.5 percent; this as mortgage interest rates dropped below 5 percent.

Sure, refis jumped, but that doesn’t help us much with the currently bloated inventory of homes on the market.

Another report today from Trulia.com showed home sellers losing that little bit of ground they had recently gained in pricing. The number of properties on the market as of May 1st that saw at least one price cut rose 10 percent.

“With more than a year of the federal government’s involvement, we are now re-entering the free market system.

As we read just to the free market, we expect to hit turbulence in some markets,” says Pete Flint, Trulia co-founder and CEO. “We won’t know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months. Only then will we have a better sense if the U.S. housing market can stand on its own two feet.”

That “turbulence” translates into a whopping $25 billion in home equity obliterated from our nation’s neighborhoods.

5th UPDATE:NY AG Subpoenas 8 Banks In Mortgage Ratings Probe

NEW YORK (Dow Jones)–New York Attorney General Andrew Cuomo has subpoenaed eight banks in a probe into whether misrepresentations were made about some securities backed by mortgages in order to improve their credit ratings, a person familiar with the investigation said Thursday.

The three major rating agencies–McGraw-Hill Cos.’ (MHP) Standard & Poor’s, Moody’s Corp.’s (MCO) Moody’s Investors Service and Fimalac SA’s (FIM.FR) Fitch Inc.–also have received subpoenas in the probe, the person said. The subpoenas were issued late Wednesday, the person said.

”Companies have just figured out, ‘We didn’t want to fire people … gut the middle class but now that they’re gone, we’ve realized that we can get by without them,”’

Millions of Jobs That Were Cut Won’t Likely Return NYT

The economy is strengthening. But millions of jobs lost in the recession could be gone for good.

And unlike in past recessions, jobs in the beleaguered manufacturing sector aren’t the only ones likely lost forever. What sets the Great Recession apart is the variety of jobs that may not return.

That helps explain why economists think it will take at least five years for the economy to regain the 8.2 million jobs wiped out by the recession — longer than in any other recovery since World War II.

It means that even as the economy strengthens, more Americans could face years out of work. Already, the percentage of the labor force unemployed for six months or longer is 4.3 percent. That’s the highest rate on records dating to 1948.

”Companies have just figured out, ‘We didn’t want to fire people … but now that they’re gone, we’ve realized that we can get by without them,”’ said John Graham, a Duke finance professor who directed the survey.

Productivity grew at an annual rate of 6.3 percent in the year ending in March, the Labor Department said this month. It was the largest increase in 48 years, though most economists think that pace isn’t sustainable.

Many economists say eventually, companies won’t be able to squeeze any more work out of their employees. That would force employers to step up hiring.

But Janet Yellen, president of the Federal Reserve Bank of San Francisco, cautions that this won’t happen anytime soon. She believes corporate America remains in the early stages of a drive for greater efficiencies.

”We may be in store for … high productivity growth for some time,” she said in a speech this year. ”If so, the rate of job creation will be frustratingly slow.”

http://www.nytimes.com/aponline/2010/05/13/business/AP-US-Jobs-Gone-for-Good.html

Mexico’s Calderon to protest Arizona law to Obama

MEXICO CITY (Reuters) - Mexican President Felipe Calderon will protest to U.S. President Barack Obama in Washington next week about Arizona’s crackdown on illegal immigrants, Calderon told Reuters on Thursday.

Calderon said a law that will come into force in Arizona in July, requiring police to check the immigration status of anyone they suspect is in the United States illegally, was already affecting relations between the two neighbors.

“It contains elements that are frankly discriminatory, terribly backward,” Calderon told Reuters in an interview.

He said he would bring Mexico’s protest over the law to a meeting with Obama and in front of the U.S. Congress during an official visit to Washington next week.

“The fact the law has introduced, regardless of all the nuances being used, the possibility of detaining, arresting somebody on the grounds of their physical appearance implies one of the most serious reversals that I remember,” he said.

“The euro is down to $1.2464. Earlier in the day it dropped to an 18-month low of $1.2433. The euro has dropped more than 6 percent since the beginning of the month.” European real-estate sounds like great buying opportunity for wealthy Americans.

From CNBC today. This one gave me a chuckle:

Rich Greeks Hide Their Swimming Pools

Residents in rich areas of the Greek capital Athens are scrambling to hide their swimming pools under tarpaulins as tax authorities resort to satellite images to identify the owners and make them pay…

Swimming pools are considered luxury goods in Greece and subject to tax.

For a pool of between 25 and 60 square meters, owners would have to pay up to 800 euros ($1,000) per year unless they can transfer 11,600 euros to a Greek bank account and use it for purchasing certain goods…

Only some 300 households in the north of Athens have declared owning swimming pools, but tax authorities discovered, with the help of satellite photographs, that there are about 17,000 pools in the area…

Owners are now covering them up with tarpaulins the color of grass or concrete to make them undetectable from air, the paper wrote.

Fighting tax evasion in the country of 11 million, where the “grey” economy is estimated at a third of gross domestic product, is one of the ways the government is hoping to raise revenue.

Deutsche Bank CEO doubts Greece can repay debt May 14, 2010 7:42 AM ET

All Thomson Reuters news FRANKFURT (Reuters) - Deutsche Bank Chief Executive Josef Ackermann cast doubt on Greece’s ability to repay its debt in a TV interview and said a $1 trillion euro zone rescue package will help stabilize Italy and Spain, while the situation in Portugal is more difficult.

Lost Another Bidding War

We got the news that our offer did not win. Mrs Lip is despondent. I’m happy. I wonder why this house buying thing is so important for her because now we can rent for about $400 less per month.

Its too soon to know for sure, but the winning bid was apparently much higher than ours and we were $5k over the asking price.

To the tune of “She’s come undone” by The Guess Who

Sleaze come undone
Sheeple didn’t know what they’re headed for
And when they found what they’re headed for
It was too late

Sleaze come undone
They built a mountain that was far too high
And when the resets proved it couldn’t fly
It was too late

It’s too late
Sleaze gone too far
Sleaze lost the sun
Sleaze come undone
FBs wanted wealth but all they got was lies
Came the time to realize
And it was too late

Sleaze come undone
J6P didn’t know what he was headed for
And when he found what he was headed for
Mama, it was too late

It’s too late
Sleaze gone too far
Sleaze lost the sun
Sleaze come undone

Too many debt mountains, and not enough tranches to climb
Too many brokers and not enough truth
Too many sheeple and not enough eyes to see
Too many REOs to bury and not enough time

It’s too late
Sleaze gone too far
Sleaze lost the sun
Sleaze come undone
(Doe-doe-doe-doe-doe doe un doe-doe-doe un doe-doe-doe)
(Doe doe-doe-doe-doe un doe-doe-doe doe-doe-doe)
(Doe doe-doe-doe doe doe-doe-doe doe doe)

[break]

It’s too late
Sleaze gone too far
Sleaze lost the sun
Sleaze come undone
Greece didn’t know what she was headed for
And when the EC found what she was headed for
It was too late

Sleaze come undone
TPTB built a mountain that was far too high
And then they found out they couldn’t fly
Mama, it was too late

It’s too late
Sleaze gone too far
Sleaze lost the sun
Sleaze come undone
(No no-no-no-no-no no)
(Doe doe doe-doe)

It seems that the graphs are getting around! Anecdotes:

A month ago I was in a discussion with a co-worker. He said that the economy was going to go into the crapper again. I agreed, and began to draw out the Credit-Suisse graph for him from memory. He countered by drawing out the Case-Shiller graph from memory. (he, btw, bought years ago so it doesn’t matter.)

Last week, another co-worker that I only barely know came right to my cubicle. I have the two-hump recast graph up on my wall, and he wanted came over to tell me that he too had not been suckered in by the idiot game. He had lived in Cali and all his co-workers were paying insane prices, so co-worker became a realtor to learn more, and saw the whole bogus charade for what is was. He still rents even though he has just had his second child. He would fit right into the HBB.

Yesterday on a shuttle bus, somebody asked me if the economic recovery was “real.” I told him no. But just that he asked me is significant. They all know that it’s government propping.

The economy is still going to crash like a plane. However, it seems as if the Obama Admin is flying the smoking plane with in-air refueling (gutenberg), circling the runway (volatile DOw) and skimming the tress (Lehman and FB) so that the plane crashes as softly as possible and save as many passengers as possible.

Standard litany in the wake of policy disasters: “Things would be so much worse now if we hadn’t acted however we did.”

Too bad we can’t run history again to find out if they are correct.

* The Wall Street Journal
* THE MONEY HUNT
* MAY 14, 2010

Bailout Missed Main Street, New Report Says
Loans to Small Businesses Dropped at Double the Overall Rate, Claims Watchdog Group; ‘Lending Is Not Springing Back’

By EMILY MALTBY

Government funding to U.S. banks has done little to ease the credit crunch for small businesses—and the situation doesn’t seem to be improving, according to a new report.

The value of large banks’ loans to small businesses shrank 9% between 2008 and 2009, more than double the 4.1% drop for overall lending, said a report released Thursday by the Congressional Oversight Panel, a group set up to oversee funds allocated by the federal government’s Troubled Asset Relief Program.

“Big banks pulled back on everyone, but they pulled back harder on small businesses,” said Elizabeth Warren, chairwoman of the oversight panel, in a discussion with reporters.

The U.S. Treasury Department’s TARP programs, launched during the depths of the financial meltdown, didn’t improve access to credit, the report claims.

“Treasury never required banks to lend their new money,” said Ms. Warren.

The squeeze on small-business credit “has been and remains a serious economic challenge,” said Gene Sperling, counselor to Treasury Secretary Timothy Geithner, in an interview. “There’s also little question that the crisis, the economy and small business lending would have been far worse without the swift and significant financial rescue efforts.”
…

* The Wall Street Journal
* THE MONEY HUNT
* APRIL 15, 2010

Real-Estate Bust Hurts Lending for Little Guys
By EMILY MALTBY

Since the mortgage meltdown, business owners can no longer reliably count on homes or commercial properties to secure financing.

Even as some segments of the economy bounce back, the lagging pace of improvement in the real-estate market continues to hamper owners’ efforts at landing credit. “As the big guys are doing better, people ask, why not the smaller firms? Well, this is a huge part of the reason,” says William Dennis, Jr., a senior research fellow at the National Federation of Independent Business in Washington.

Because business owners used real estate to support financing endeavors in a variety of ways, the subprime crisis hit Main Street particularly hard as it rippled through the credit markets. Before the real-estate bubble burst, home and business properties were a reliable source of collateral for many businesses.

And even those that were ineligible for a traditional bank loan could often draw capital from home values by writing loans against home equity. Unlike traditional loans, home equity loans and lines of credit are determined by the appraised value of the home, minus the mortgage, and are not issued on the basis of credit history or credit scores.

Experts such as Mr. Dennis say it will be a long time before real estate becomes a dependable borrowing mechanism again. Part of the problem, he says, is the inability to define what is normal, given the surge in property values that happened for years leading up to the meltdown. In August 2007, the Discover Small Business Watch survey showed that 30% of respondents tapped home loans for funding. Returning to those levels, he says, is doubtful.

Probably 10% “of those who historically qualified to use homes to gain capital could qualify for a similar loan today,” says Rob Grosser, president of Luxury Mortgage Corp., a residential mortgage banking firm in Stamford, Conn.
…

It looks to me like the eye of the toxic debt hurricane that hit shore in fall 2008 is past us now — just in time for the warmup to the fall 2010 U.S. election season.

Isn’t that where the fiatsco printing presses come into the game? Kind of explains gold hitting its all time high this week, too. Maybe the Chicago guys were right, after all, on that rational expectations thingee?

May 14, 2010, 12:01 a.m. EDT
The second debt storm
Who will bail out the countries that bailed out the world’s corporations?

By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — The financial crisis never really went away.

The debt mountain that brought down some of the world’s biggest banks and dragged the international financial system to the brink of disaster has simply shifted to governments. Now, it’s threatening countries around the globe and if left unchecked could rip the very fabric of Europe’s economic system and wreck economic recoveries in the U.S., China and Latin America.

The impact on markets has been severe. The euro has slumped more than 12% against the dollar since the sovereign debt crisis flared in southern Europe. Gold has marched to new highs as investors seek a safe haven and, perhaps most alarming, it is now more expensive to buy insurance against national default than it is to insure against corporate failure.

“The sovereign debt crisis spun out of control in the past week, and we see no easy way to resolve it,” said Madeline Schnapp, director of macroeconomic research at TrimTabs Investment Research.

Some investors and analysts are increasingly concerned that governments may be no more capable of repaying their debts than the banks and insurance companies they saved. And, they warn, if a major country comes close to default, it could trigger a financial meltdown that would eclipse the panic that followed the bankruptcy of Lehman Brothers in 2008.

The world has seen sovereign debt crises before. Latin America, Africa and Asia have all experienced upheavals sparked by excessive debt. These crises were all accompanied by stunted economic growth, inflation and weak stock market returns, which make it even harder to pay off debts. As investors and government officials ponder the current state of affairs, they see ominous signs that the developed world may be facing a similarly bleak future.

“The problem of the western world is that we have too much debt,” said Daniel Arbess, who manages the Xerion investment strategy at Perella Weinberg Partners. “Rather than reducing our debt, we’ve been moving it from one balance sheet to another.”

“All we’re doing is shifting chairs on the deck of the Titanic,” he added.
…

Just heard that lumber prices (commodity) have dropped 18% since home-buyer tax credit expired two weeks ago. !!! Do you think there could be a correlation?

Is anyone in the mood to date Cinderella’s stepsister?

Commodities Corner
Myra P. Saefong

May 14, 2010, 7:00 a.m. EDT
Gold’s ‘ugly sister’ gets a second look
Silver sparkles as gold plays fairy godmother

By Myra P. Saefong, MarketWatch

TOKYO (MarketWatch) — Investors are finally giving gold’s “ugly sister” a second look.

Silver’s gains in recent months have significantly outpaced gold’s, with silver climbing around 30% since early February, compared with gold’s nearly 17% price gain.
…

Thinks of all that money they wasted trying to prop up malinvestments like houses and the share prices and debts of companies that should have filed bankruptcy. From: (MarketWatch) — The financial crisis never really went away.

The debt mountain that brought down some of the world’s biggest banks and dragged the international financial system to the brink of disaster has simply shifted to governments. Now, it’s threatening countries around the globe and if left unchecked could rip the very fabric of Europe’s economic system and wreck economic recoveries in the U.S., China and Latin America.

The impact on markets has been severe. The euro has slumped more than 12% against the dollar since the sovereign debt crisis flared in southern Europe. Gold has marched to new highs as investors seek a safe haven and, perhaps most alarming, it is now more expensive to buy insurance against national default than it is to insure against corporate failure.

Holy flippin’ condos Batman!

There’s a 1 BDRM about a block from me that sold after foreclosure last year for just over $50,000. It’s now back on the market for a little over $200,000!

Talk about having the audacity of hope! The flips around here weren’t even that egregious in 2005.

Anyone here get the sense that we are back to having stock market declines on Fridays, because everyone is afraid of bad market moving news coming out over the weekend?

Nicolas Sarkozy threatened to pull France out of the euro zone unless other members promised to help Greece at the crucial meeting of ministers in Brussels last Friday, according to a report in Spain’s El Pais.

Details of the meeting were apparently revealed by Spain’s Prime Minister Jose Luis Rodriguez Zapatero as he met behind closed-doors with Socialist party leaders on Wednesday.

An unnamed source at that meeting relayed Zapatero’s account that at one point in Brussels, Sarkozy “banged his fist on the table and threatened to leave the euro, which obliged [German Chancellor] Angela Merkel to bend and reach an agreement.”

MarketWatch: Euro hits 17-month low…

Is there any truth to the new rumor that the Government botched its sale of Citi stock, causing the “fat-finger” plunge in the Dow?

LOWDEN, Wash. – Try to be a wine connoisseur in Dickinson, N.D.

Gordon and Sandee Schnell had a hard time until the state changed its rules in 2001 and allowed wineries to buy permits to ship directly to residents — one case of wine per person, per month.

But now Congress is considering legislation that could limit wineries’ ability to sell and ship directly to consumers. The wholesale distributors who proposed the legislation say it will keep wine from minors, limit alcohol consumption and ensure states control sales.

A BS regulation designed to enrich wholesale distributors over producers of wine.

Euro falls to 123.35. Selloff in equities intensifies.

Millions of jobs that were cut won’t likely return

By CHRISTOPHER S. RUGABER The Associated Press
Posted: 1:13 p.m. Thursday, May 13, 2010

WASHINGTON — Fewer construction workers will be needed. Don’t expect as many interior designers or advertising copywriters, either. Retailers will get by with leaner staffs.

The economy is strengthening. But millions of jobs lost in the recession could be gone for good.

And unlike in past recessions, jobs in the beleaguered manufacturing sector aren’t the only ones likely lost forever. What sets the Great Recession apart is the variety of jobs that may not return.

That helps explain why economists think it will take at least five years for the economy to regain the 8.2 million jobs wiped out by the recession — longer than in any other recovery since World War II.

It means that even as the economy strengthens, more Americans could face years out of work. Already, the percentage of the labor force unemployed for six months or longer is 4.3 percent. That’s the highest rate on records dating to 1948.

Behind the trend are the cutbacks businesses made in the recession to make up for a loss of customers. To sustain earnings, they became more productive: They found ways to produce the same level of goods or services with fewer workers. Automation, global competition and technological efficiencies helped solidify the trend.

Diminished home equity and investment accounts have made shoppers more cautious, too. And their frugality could endure well into the recovery. That’s why fewer retail workers, among others, will likely be needed.

Detroit Shrinks Itself, Historic Homes and All ~ WSJ

DETROIT—Wrecking crews are preparing to tear down a landmark 5,000-square-foot house in the posh neighborhood of Palmer Woods in the coming weeks, a sign that Detroit is finally getting serious about razing thousands of vacant and abandoned structures across the city.

In leveling 1860 Balmoral Drive, the boyhood home of one-time presidential candidate and former Massachusetts Gov. Mitt Romney, Detroit is losing a small piece of its history. But the project is part of a demolition effort that is just now gaining momentum and could help define the city’s future.

Detroit is finally chipping away at a glut of abandoned homes that has been piling up for decades, and intends to take advantage of warm weather and new federal funding to demolish some 3,000 buildings by the end of September.

Mitt Romney’s boyhood home is among 3,000 derelict structures Detroit plans to demolish by the end of September as it attacks blight and crime.

Mayor Dave Bing has pledged to knock down 10,000 structures in his first term as part of a nascent plan to “right-size” Detroit, or reconfigure the city to reflect its shrinking population.

When it’s all over, said Karla Henderson, director of the Detroit Building Department, “There’s going to be a lot of empty space.”

Mr. Bing hasn’t yet fully articulated his ultimate vision for what comes after demolition, but he has said entire areas will have to be rebuilt from the ground up. For now, his plan calls for the tracts to be converted to other uses, such as parks or farms.

Well that put an end to this fellows shoplifting career…

CVS Shoplifter Death Now An ‘Active’ Investigation
Pressure Escalating On Police, Prosecutors To Probe Circumstances Of Homicide CHICAGO CBS 2

No one’s denying what he might have done was wrong: allegedly stuffing crayons and toothpaste into his pockets and shoplifting.

But the fact that Anthony Kyser was killed after he was caught, and allegedly choked by a store employee — with an off-duty sheriff’s officer watching it happen — continues to hit a nerve.

Chicago congressman Bobby Rush calls it a case of political hot potato. First he sent a letter about Kyser to the Cook County State’s Attorney’s Office. He says that office put it off on police. So he sent a letter to the police, accusing the department of ignoring a homicide. Kyser’s ex-wife believes that to be true.

Ann Marie Balboa said she wants justice served.

“I want the man that killed my ex-husband to pay for what he did,” she said.

It was Saturday morning at a Chicago CVS Pharmacy. Police say Kyser shoplifted. A store employee went after him and made a citizen’s arrest – putting him in a choke hold. Published reports say Kyser resisted. He later died. The medical examiner ruled it a homicide.

The police initially said it was accident. But the department late Thursday issued a statement saying it has an “active” investigation open.

Property Taxes UP, Soda Tax Out in Philly
New $3.9 billion budget will leave city with only $40 million surplus, concerning the mayor.

If you live in Philadelphia, higher property taxes and a fee for trash pickup may be two things you’ll pay for next year.

Philadelphia City Council approved Mayor Michael Nutter’s $3.9 billion budget for 2011 with a vote Thursday evening.

To fill in a $150 million budget gap, officials made several tax increases, the most notable being a 9.9-percent jump in property taxes, officials told NBC Philadelphia. That increase will only last for two years.

The 9.9 percent temporary tax hike has to get final approval from council next week.

How do we restore prosperity in the Western countries?
My 2 cents. Have a tariff on all imports including energy. Have a tariff on all exports including information. Now people will ask how can you tax something like the internet? Easy learn something from China.

The transition will be difficult, but like the “Lion King” Hyenas and Lions can’t coexist in harmony.

I would like to support the Arizona economy by buying something they produce to offset San Francisco’s boycott any suggestions?

Before flaming me for supporting the Arizona law how would you like a human trafficer renting a home next to you?

Thousands of non-profits could unwittingly lose tax status ~ USA TODAY

Hundreds of thousands of small non-profits, from Little League teams to community soup kitchens, could lose their tax-exempt status on Monday because of an IRS filing requirement.

The 2006 Pension Protection Act included a provision requiring all non-profits to file an annual return with the IRS.

Previously, non-profits with annual revenue of less than $25,000 were excluded. Non-profits that fail to file a return for three consecutive years lose their tax-exempt status. On May 17, the three-year clock runs out for non-profits that haven’t filed a return since 2007.

The Urban Institute estimates that up to 365,000 non-profits could lose their tax-exempt status if they fail to file by Monday. Groups that miss the deadline will have to apply for a new exemption and pay a user fee of up to $850. They could also be liable for taxes on any revenue earned before their exemption is renewed.

The requirement does not apply to churches or church-related operations.

Donors won’t feel the impact right away, says Sarah Hall Ingram, IRS commissioner for tax exempt and government entities. When a non-profit loses its tax exemption, the IRS is required to issue a public notice. Until the notice is published, she says, donations to the organization are still deductible. The IRS doesn’t plan to publish the names of non-profits that lose their exemption until January, Ingram says, “So if somebody gives between now and when the name gets on the public list, the donor is protected.”

Teachers unions warn of 18,000 layoffs without tax hike
H&R Springfield Bureau Friday, May 14, 2010

SPRINGFIELD - Illinois’ two most powerful teachers unions Thursday said that more than 18,000 school layoffs statewide could occur unless lawmakers approve an income tax increase.

Their announcement comes even though the Illinois Senate last week advanced a budget that wouldn’t cut funding for schools.

Still, the unions said, there’s no money to pay for that spending.

“The sad fact is this is a budget that’s really built on quicksand, absent additional revenue,” said Steve Preckwinkle, director of political activities for the Illinois Federation of Teachers.

The state is $1.4 billion behind in payments to schools. Without an income tax hike to solve those cash flow problems, the layoffs may have to continue, said Ken Swanson, Illinois Education Association president.

“It means larger class sizes,” Swanson. “It means schools where music and art won’t be part of the curriculum next year. It means the curtailment of PE.”

“Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right … The United States has never developed an aristocracy really disinterested or an intelligentsia really intelligent. Its history is simply a record of vacillations between two gangs of frauds.”
-H. L. Mencken (1880-1956)

Stocks slammed as euro falls
May 14, 2010

NEW YORK (CNNMoney.com) — Stocks slumped Friday on worries that Europe’s economic woes could spread to the United States, while the euro fell to 18-month lows versus the dollar and gold hit fresh records.

Investors dumped stocks and fled to safe-haven areas of the market such as the dollar, gold and government debt.

Hey, The CORPORATIONS have already received a $411 Million insurance payout…How long you figure the CORPORATIONS are going to take to pay for the 11 lost lives + lost incomes…x1 month…x6 months…?????

Erica Werner, Associated Press Writer, On Friday May 14, 2010,

WASHINGTON (AP) — President Barack Obama angrily decried the “ridiculous spectacle” of oil industry officials pointing fingers of blame for the catastrophic spill in the Gulf of Mexico and pledged on Friday to end a “cozy relationship” between the oil industry and federal regulators that he said had extended into his own administration.

Obama said he shared the “anger and frustration” felt by many Americans, and he acknowledged differing estimates about just how disastrous the damage from the leak could become. He said the administration’s response has “always been geared toward the possibility of a catastrophic event.”

Obama slammed BP and other companies responsible for equipment involved in the spill for pointing fingers at each other instead of accepting responsibility.

But he said responsibility rests with the federal government, too, and that oil drilling permits had been granted without appropriate environmental reviews.

“That cannot and will not happen anymore,” Obama said. He announced a new examination of the environmental reviews that must happen before oil and gas development goes forward.

With millions of gallons of oil fouling the fragile Gulf ecosystem after a drilling rig exploded April 20 and later sank, Obama said: “It’s pretty clear that the system failed and it failed badly.” Eleven workers were killed in the accident.

“There is enough responsibility to go around, and all parties should be willing to accept it,” the president said.

He said he would not be satisfied until the leak was stopped, the spill was cleaned up and all claims were paid.

This week executives from three oil companies — BP PLC, which was drilling the well, Transocean, which owned the rig, and Halliburton, which was doing cement work to cap the well — testified on Capitol Hill, each trying to blame the other for what may have caused the disaster. Obama decried that scene.

“I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter. You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else,” the president said.

“The American people could not have been impressed with that display, and I certainly wasn’t.”

State to close parks, delay school aid.
NEWS ALBANY BUREAU

ALBANY — New York state is carrying through on its threat to close dozens of parks across the state beginning Monday, and the list includes Woodlawn Beach, Knox Farm and Joseph Davis parks.

In addition, for the third time since December, the Paterson administration said it needs to delay scheduled state aid payments to schools — this time more than $1 billion worth of money that was set to flow to districts on June 1.

Over the objections of lawmakers, the cash-starved state since February has been preparing to close 41 parks and 14 historic sites as a way to cut about $12 million in maintenance and seasonal payroll costs.

“We’ve been taking more of a passive approach,” Eileen Larrabee, a spokeswoman for the state parks department, said of closing the facilities.

That comes to an end Monday, when parks officials will ensure people do not use the affected facilities. Gates will be locked and park police will kick out anyone seen using the shuttered parks, Larrabee said.

Parks officials will ensure parks on the closure list are shuttered to help protect infrastructure, from playground equipment to restroom facilities, as well as to ensure public safety, Larrabee said.

TTT Sez…

Geithner Says He’s Confident Europe Will ‘Fix’ Debt Crisis

May 14 (Bloomberg) — U.S. Treasury Secretary Timothy F. Geithner said he’s confident European policy makers will contain the continent’s sovereign-debt crisis without harming America’s economy or financial markets.

“Europe has the capacity to manage through this,” Geithner said in an interview today on Bloomberg Television’s “Political Capital With Al Hunt.” “They’ve committed to fix this problem. And again, I think they have the ability to do that, and I think they will.”

Interest rates tumble as investors pour into Treasurys over concerns about European economy May 14, 2010

NEW YORK (AP) — Treasury prices soared Friday, pushing interest rates lower, as investors sought shelter from the latest market turmoil caused by worries over Europe’s economy.

Traders are dumping stocks and other risky assets because of concerns that the deep spending cuts being called for in countries like Greece, Spain and Portugal will slow down a recovery in Europe. The Dow Jones industrial average lost about 170 points and crude oil was down 4 percent.

Currency traders have been selling off euros throughout the week on growing doubts that Europe will be able to grow its economy out of recession and restore confidence in its shared currency, the euro.

Important comment: Paul Volcker, former chairman of the Federal Reserve, long-time associate of the Rockefeller family, advisor to Obama, and head of J. Rothschild, Wolfensohn & Co., has told students at the London School of Economics that the future of the Euro is in doubt. That means it is probably dead.

~~ The demise of the euro is not certain, but its future is definitely in doubt. Rumors are already flying about key European nations abandoning the euro.

Will France return to the franc? Will Germany re-adopt the mark? And on this side of the Atlantic what’s the fate of the U.S. dollar? How long before talk of a gold standard for currency begins in earnest?

Reloading I tell you. S&P cuts ratings on AAA mortgages from July last year.

May 14 (Bloomberg) — Standard & Poor’s cut to junk ratings certain securities, backed by U.S. mortgage bonds, that it granted AAA grades when Credit Suisse Group, Jefferies Group Inc. and Royal Bank of Scotland Group Plc sold them last year.

The reductions were among downgrades to 308 classes of so- called re-remics, or re-securitizations, created from 2005 through 2009, the New York-based ratings company said today in a statement. About $150 million of the securities were issued last year, as recently as July, according to data compiled by Bloomberg.

In other housing news….

Saw a new attachment sign (on top of a realtor’s lawn sign) in my neighborhood: “NOT A SHORT SALE”.

I guess people are so annoyed at the delays in short sales that they want to just buy a normal place.