The Housing Bubble

Guten Morgen. Es gibt nicht so gut in Europa.

The Financial Times
Schäuble says financial markets out of control
By Quentin Peel in Berlin
Published: May 20 2010 03:00 | Last updated: May 20 2010 03:00

Wolfgang Schäuble, Germany’s finance minister, has warned that the financial markets are “out of control” and called for “effective regulation” to ensure a properly functioning market, writes Quentin Peel.

In an interview with the Financial Times, Mr Schäuble said markets would not work properly “if the risks and rewards are completely unbalanced”. He called for the standardisation of products, regulation of over-the-counter transactions and measures to improve transparency “for all market participants”.

He also threw his weight behind new calls for a global financial transaction tax, arguing that it should be discussed “in an unbiased way” at the June summit of the G20 economies in Canada. If it was not agreed, the European Union should consider going ahead on its own, he said.

Mr Schäuble’s support for a financial transaction tax follows growing pressure for further measures to force banks to share the costs of the crisis. The German government faces a stormy debate in parliament this week over its participation in the €750bn stabilisation plan for the eurozone and the move on a transaction tax could persuade the opposition Social Democrats to support it.
…

I hope the social unrest contagion is not coming soon to California.

The Financial Times
Bangkok burns and Thai protest spreads
By Tim Johnston in Bangkok
Published: May 19 2010 03:15 | Last updated: May 19 2010 19:34

Smoke rises from Bangkok’s Central World shopping mall

Thailand’s army brought an abrupt end to more than nine weeks of anti-government demonstrations in central Bangkok on Wednesday but watched as protests spread to other parts of the capital and into the provinces.

As dusk fell over the city, the air poisoned by burning buildings, soldiers maintained a cordon around a large part of the city centre, where they hunted the remaining militants in the warren of back streets around the protest zone.

Bangkok and 21 other provinces were put under an 8pm to 6am curfew on Wednesday night as security forces struggled to round up protesters who had set fire to 20 prominent buildings in the city.

The buildings included the Thai stock exchange, a government-run television station, and Central World, south-east Asia’s second-biggest shopping centre, which burned unchecked.

The Financial Times
UK police body warns of riots and unrest
By James Boxell, Home Affairs Correspondent

Published: May 19 2010 21:37 | Last updated: May 19 2010 21:37

The chairman of the Police Federation, which represents thousands of rank-and-file officers, warned on Wednesday of mass 1970s-style social disorder were Britain to suffer a similar crisis to the one that has hit Greece.

Pointing to the recent violence in Athens, Paul McKeever said he was worried that the UK could suffer race riots and industrial unrest over the next few years.

“We could have that sort of distress on the streets again,” he told officers at the federation’s annual conference in Bournemouth.
…

The Wall Street Journal

* POLITICS
* MAY 20, 2010

Whitman’s Lead Narrows in California Race

By STU WOO

Meg Whitman appears to have lost much of her wide lead in the race to be the Republican contender in California’s November gubernatorial election.

Two months ago, Ms. Whitman looked to be cruising toward the Republican nomination. Polls showed the former eBay Inc. chief executive leading her main opponent, state insurance commissioner Steve Poizner, by 50 percentage points.

With three weeks to go before the June 8 primary, Mr. Poizner is pulling off an unexpected rally. A survey to be released Thursday shows Ms. Whitman’s advantage dwindling to single digits, with 38% of respondents saying they would vote for her, and 29% for Mr. Poizner.
…
“There will be a number of polls in the race,” said Whitman campaign spokeswoman Sarah Pompei. “We’re confident that on election day, Californians will reject Sacramento politicians and choose Meg…” Poizner spokesman Jarrod Agen said the survey showed that the momentum was behind his candidate, while Ms. Whitman was “just stumbling.”

Californians are now seeing the costly, cutthroat campaign that political analysts expected when Mr. Poizner and Ms. Whitman, both multimillionaire alums of Silicon Valley companies, announced their campaigns to succeed the termed-out Gov. Arnold Schwarzenegger.

The 53-year-old Ms. Whitman has given $68 million to her campaign so far, while Mr. Poizner, also 53, has contributed $24 million to his.

Many of the ads are negative. Mr. Poizner has blasted Ms. Whitman for her ties to Goldman Sachs Group Inc. and her opposition to Arizona’s strict immigration law, which he supports. This week, his campaign released an Internet video accusing Ms. Whitman of profiting from sales of pornography on eBay.
…

This story is sure to bolster stock market confidence. So much for that fat finger BS.

* The Wall Street Journal
* BUSINESS
* MAY 20, 2010

Trading-Firm Breakdowns Accompanied Market Chaos

By SCOTT PATTERSON

As the stock market spiraled out of control two weeks ago, two major firms that handle trades for retail brokerages suffered trading breakdowns.

One, the big Chicago hedge-fund firm Citadel Investment Group, stopped taking orders for a number of securities, according to an internal email and people familiar with the matter. Shortly after the market plunged, Citadel asked clients, including discount brokers such as E*Trade Financial Corp. and TD Ameritrade Holding Corp., to route orders elsewhere.

Citadel’s technical glitch, as well as woes at another firm that trades for retail brokers, Knight Capital Group Inc., show how some everyday investors unknowingly were caught up in the market maelstrom.

Citadel Execution Services, the hedge-fund outfit’s arm that makes markets, is one of the biggest players in executing trades for retail customers, from day traders to mom-and-pop online investors, executing and routing half a billion shares a day, according to its website. Citadel also ranks second among firms that provide liquidity on the Nasdaq Stock Market, the Nasdaq website says.

While it remains unclear what effect Citadel’s problems had on the market, its move is emerging as another example of a tripped wire in the market machinery on May 6.

Knight was handling so many orders that one of its computers “just blew up,” according to a person familiar with the matter. The breakdown led to a slight delay in handling orders and affected less than 1% of the firm’s orders, the person said.

The Dow Jones Industrial Average fell almost 1000 points within minutes that afternoon, before rebounding.
…

Question for GAO auditors to consider: Is it legal for the Fed to use freshly printed liquidity to snap up toxic mortgage debt in order to backstop the housing market?

The Fed’s own rhetoric seems to concede this is not a monetary policy tool, so what gives them the authority to allocate money to the Real Estate Industrial Complex?

* The Wall Street Journal
* ECONOMY
* MAY 19, 2010, 8:52 P.M. ET

Majority of Fed Opposes Selling Assets Anytime Soon

By LUCA DI LEO

Federal Reserve officials at the end of April were more optimistic about the U.S. economy, but a majority opposed selling anytime soon the mortgage-backed assets bought by the Fed to combat the recession.

Minutes of the Fed’s policy-setting meeting April 27-28, released after the usual three-week lag Wednesday, showed officials expect the economy to grow this year by around 3.5%, slightly more than forecast in January. That should help bring the high unemployment rate of 9.9% down a little by the end of 2010.

However, the huge slack left over from the worst economic downturn in 80 years is seen keeping inflation low for years to come. Most Fed officials projected that inflation could even stay slightly below the central bank’s informal long-run target of between 1.5% and 2% all the way into 2012.

The very tame inflation outlook, coupled with a jobless rate expected to stay above 8% until the end of 2011, suggests that higher interest rates and asset sales are still a long way off. At the end of their last meeting, which took place before Europe’s debt crisis intensified, Fed officials repeated they expected short-term rates to remain close to zero for an “extended period.”

To combat the financial crisis, the Fed slashed its benchmark federal-funds rate—which banks charge each other for overnight loans—close to zero in December 2008, and has kept it there ever since. When that wasn’t enough to lift the economy, the Fed flooded the financial system with cash by buying $1.7 trillion in assets. Most were mortgage-backed securities, purchased to help keep mortgage rates low.

Now that the economic recovery is gaining momentum, some Fed officials have been calling for the assets to be sold as soon as possible. However, the minutes showed that a majority of Fed officials wanted to hold off on the sales until after the central bank lifted its benchmark interest rate, which most economists don’t expect until 2011next year.

“Such an approach would postpone any asset sales until the economic recovery was well established and would maintain short-term interest rates as the Committee’s key monetary policy tool,” the Federal Open Market Committee minutes said.
…

Commercial Property Values Drop as Rebound Stalls (Update2)

(Bloomberg) — U.S. commercial real estate values fell in March, pushed lower by a quarterly drop in retail and office properties in the biggest metropolitan areas, Moody’s Investors Service said.

The Moody’s/REAL Commercial Property Price Index fell 0.5 percent from February, the second straight monthly decline, Moody’s Investors Service Inc. said today in a report. Prices slid 25 percent from a year earlier and are down 42 percent from the October 2007 peak.

“This is continued bad news for property owners,” Christopher Cornell, an economist at Moody’s Economy.com in West Chester, Pennsylvania, said in a telephone interview. “The trend is basically flat prices.”

More change, you can count on…

Lenders Agree to Prop Up Ailing ShoreBank
FOXBusiness

Some of the nation’s largest banks have agreed to contribute enough money to save Chicago-based ShoreBank, the community lender with strong ties to the Obama administration.

The banks have agreed to contribute $140 million to bail out the bank, while the federal government will donate tens of millions more, according to people close to the talks. In addition to major Wall Street firms like Goldman Sachs , which agreed to contribute $20 million to the bailout effort, as well as Citigroup and JPMorgan , General Electric’s GE Capital will also contribute $20 million to the rescue effort. All the firms have either received massive government assistance during the financial crisis or, in the case of Goldman Sachs, are facing multiple regulatory investigations into their business practices.

The bailout has been controversial. Senior Obama adviser Valerie Jarrett served on a Chicago civic organization with a director of the bank, and President Obama himself has singled out the bank for praise in lending to low-income communities.

U.S. drops its top ranking in world competitiveness
Triangle Business Journal

It’s a good thing Triangle universities such as Duke, UNC-Chapel Hill and North Carolina State University are forging ties with their foreign counterparts to develop curricula and international knowledge.

That’s because for the first time in decades, the United States has fallen in World Competitiveness rankings released by IMD Business School in Lausanne, Switzerland.

The U.S. was bested by Singapore, which took the top spot followed by Hong Kong. The U.S. was ranked third on the list released Wednesday.

Overhead Door to close Covington plant
Business Courier of Cincinnati

Overhead Door Corp. confirmed Wednesday that it will shutter its plant in Covington at the the end of the year, eliminating about 68 jobs.

The plant on West 43rd Street, which manufactures electric garage door components, will begin layoffs in July, continuing until the plant shuts down in December.

“We made this difficult business decision to increase efficiency, eliminate redundancies, lower costs in manufacturing and freight and remain competitive in this difficult economy,” said Ken Mahlke, vice president of human resources for Overhead Door in Dallas.

Orlando home prices fall 12.1%
Orlando Business Journal

Orlando home prices in March were down nearly 12.1 percent from the same period a year ago, according to CoreLogic’s Home Price Index report

The good news in the May 19 report, which included distressed sales, was the slide in home prices was less in March than it was in February — from 13.01 percent in February to 12.09 percent in March — and much better than the 28.58 percent decline posted in March 2009.

Excluding distressed sales, the fall in property values was 9.8 percent in March, compared to 10.83 percent in February and 22.07 percent posted in March 2009.

The median price of all existing homes in Orlando was $115,000 in April, a 4.5 percent increase from the $110,000 recorded a month earlier, but still down 11.5 percent when compared with April 2009’s $130,000, the Orlando Regional Realtor Association reported May 12.

Update: Central Falls in temporary receivership
CENTRAL FALLS, R.I — Central Falls says it’s broke.

City Solicitor John T. Gannon and Joseph S. Larisa Jr., the special counsel the city has hired, filed a receivership petition Wednesday morning in Superior Court.

The filing claimed that for 2009-10, the city was looking at a $3 million shortfall in its nearly $18 million budget and a projected deficit of $5 million in the 2010-11 budget.

“In light of its extreme fiscal stress, without the appointment of a receiver the city is unable … to bring its operating budget into balance or save its chief retirement plan, ” the petition says.

Don’t know where the WSJ comes up with “plateau” unless they mean new level before the next rise in foreclosures.The system is completely f’d up, gummed up, with all the gubmint intervention, it will be years before we get straighten out.

Delinquent Loans Plateau at High Level ~ WSJ
Troubled Mortgages Edged Up to 14% in Past Year, but New Cases Fell; People Stay in Homes Much Longer Before Foreclosure

The number of American households behind on mortgage payments appears to have reached a plateau at a high level as the economy recovers, a survey showed Wednesday.

At the same time, people who fall behind on their mortgages are staying in their homes longer as banks struggle with huge volumes of calls for help and with the complexities of federal and state foreclosure-prevention programs.

Diane B. Robertson of Oldsmar, Fla., said she had to stop making mortgage payments around the end of 2008 after a drop in her income. She said her lawyer advised her “to just sit tight because you may be sitting there for two years.” Seventeen months later, foreclosure proceedings are under way, but Ms. Robertson is still waiting to be evicted.

The Mortgage Bankers Association, a trade group, reported that 14% of mortgage loans on one-to-four-unit homes were 30 days or more delinquent or in the foreclosure process as of March 31. That represents about 7.3 million households. The rate was 12% a year earlier.

The portion of borrowers between 30 and 60 days overdue—mostly representing newly delinquent homeowners—declined to 3.45% as of March 31 from 3.77% a year earlier.

WTH? Where’s the “level” playing field, Barry. Mo change, you can count on…

Fuzzy Math: Tax Cut Doesn’t Add Up for Some

When the Obama administration unveiled the small business health care tax credit earlier this week, officials touted its “broad eligibility” but the details are easily lost in the fine print.

WASHINGTON(AP) — Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama’s health care overhaul law.

But when he ran the numbers, Hoffman discovered that his office furniture company wouldn’t get any assistance with the $79,200 it pays annually in premiums for its 24 employees. “It leaves you with this feeling of a bait-and-switch,” he said.

When the administration unveiled the small business tax credit earlier this week, officials touted its “broad eligibility” for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman’s workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn’t qualify.

Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

It’s an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help — people with health problems, families with young adult children and small businesses. Because of the law’s complexity, not everyone in a broadly similar situation will benefit.

Heavy oil hits Louisiana shore.

VENICE, Louisiana (Reuters) – The first heavy oil from a giant Gulf of Mexico spill sloshed ashore in fragile Louisiana marshlands on Wednesday and part of the mess entered a powerful current that could carry it to Florida and beyond.

The developments underscored the gravity of the situation as British energy giant BP Plc raced to capture more crude gushing from a ruptured well a mile beneath the surface. The spill is threatening an ecological and economic disaster along the U.S. Gulf Coast and beyond.

“This wasn’t tar balls. This wasn’t sheen,” Louisiana Governor Bobby Jindal said after a boat tour to the southernmost point of the Mississippi River estuary. “This is heavy oil in our wetlands.”

Here is a MSM article on “Why the Greek crisis could be good for America”. I figured the guy would say something like Americans need a wakeup call like this to get spending under control or that we should start reeling in credit as a source of growth. The article doesn’t say that AT ALL! Read what it says, there is no hope for this country.

http://finance.yahoo.com/banking-budgeting/article/109585/3-ways-the-greek-debt-crisis-might-be-good-for-the-us

An ABC news radio report this AM…By mid year 2010 more than 2.1 million gubmint employees will be ‘earning’ in excess of $120,000.00 per year.

The full article contains another refi sob story from some 61 year old named Dan Felipe. Comments from PB Post.

Mortgage delinquencies drag on economic recovery

By ALAN ZIBEL The Associated Press
Updated: 6:55 a.m. Thursday, May 20, 2010
Posted: 10:18 a.m. Wednesday, May 19, 2010

WASHINGTON — The mortgage crisis is dragging on the economic recovery as more homeowners fall behind on their payments.

Analysts expect improvement soon, but the number of homeowners in default or at risk of foreclosure will have a lingering effect on the broader economy.

Around 4.3 million homeowners, or about 8 percent of all Americans with a mortgage, are at risk of losing their homes, the trade group’s top economist estimates. They have either missed at least three months of payments or are in foreclosure.

5 COMMENTS

The Palm Beach County real estate market has turned the corner. Sales are up huge and the buyers are making deals. It is not all doom and gloom. How many people are walking away from their homes for no reason. This really scues the numbers. One more year and PBC real estate market will be on the way back up!!!!!
Pat

12:35 PM, 5/19/2010 Dream on! The delinquencies are going to keep adding up. People are walking away from their mortgages because it doesn’t make sense to keep paying for a property that is not worth half of what you paid for it. I was lucky to buy my house 10 years ago, but my neighbor who is a doctor and his wife a nurse, bought his house at the top of the market for $600,000 and that house is worth $250,000 now. He told me he is walking away from the mortgage and I don’t blame him.
David L.

1:32 PM, 5/19/2010 I thought obama was going to save us all? I guess not
I thought

4:45 PM, 5/19/2010 David L - then your doctor neighbour is a scumbag. He negotiated a price for a house and a bank loaned him the money to buy it. Man up and pay your debts you piece of garbage. It’s not Best Buy were you can get a refund if the product goes on sale after you purchase something. What if the market was hot and his house is now worth $800,000 would he give the bank the $200,000 because it’s their money he used to buy it? People make me nauseous.
People are pathetic

4:58 PM, 5/19/2010 Get real, Pat. I love when realtors immediately have to give people false hope. If I was David’s neighbor, I would walk, too.
JOhnW

“We need to recognize that the main problem with subsidies is that they make people dependent; and when you make people dependent they lose their innovation and their creativity and become even more dependent..”

~Maurice P. McTigue

Jobless claims rise 25,000 last week to 471,000- AP

The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The big surge was a setback to hopes that layoffs were declining.

Futures headed down fairly heavy this AM. Gonna need the PPT to do it’s thing. Gotta stay above 10,000 so everyone will ‘feel’ good about the market place.

Every looming budget crisis is eventually a political test — a test of political foresight and discipline, or a test of crisis management. And America is not exempt.

In 2009, the federal government spent $1.67 for every $1 it collected in taxes. The Obama administration’s budget proposals would dramatically increase publicly held debt as a percentage of the economy over the next decade, eventually slowing economic growth, fueling inflation and making America more dependent on the kindness of creditors.

How has our political system responded? Congress recently found $60 billion in savings in the federal student-loan program — and promptly spent most of it on other education projects. President Obama’s health-care reform cut more than $350 billion from Medicare spending — and soaked up all of it and more into new health entitlements.

~ Michael Gerson ~ Washington Post

Well known tax cheat TTT sez…

Geithner rejects GOP warnings of Greek-like debt crisis in U.S.

The Greek debt crisis is “not going to happen” in the U.S., Treasury Secretary Tim Geithner said Wednesday.

Geithner rejected comparisons, advanced in large part by Republicans in Congress, between the fiscal situation in the U.S. and the debt crisis in Greece that has roiled the European Union, sent Greece to the brink of default and weakened the euro.

“It’s not going to happen in the United States,” Geithner said during an appearance on CNBC.

The Treasury secretary said a better-than-expected economy would help strengthen government accounts and stave off any parallels to Greece.

“I think the important thing is you’re seeing the United States in a much stronger recovery than people expected even three months ago,” he said.

One of the worlds top financial annalists sez…

Cramer: Europe to Collapse in 48 Hours – or Never

“If we don’t see total capitulation in Europe over the next two days, Cramer said during Wednesday’s Stop Trading!, investors may have to admit that the Continent is “merely” suffering a downturn. Because the repercussions from the expectations of a collapse, which have fed the negativity in the American markets and driven down stocks, can’t continue for much longer without it actually happening”.

Bought some pasta at the store yesterday - only $0.99/box. The boxes sure did seem small, though. Turns out, yet another item where the unit of measure has shrunk. I believe boxes used to be 1lb of pasta. Now they’re only 12oz.

Does the average person not notice this?

UPDATE 1-Barcalounger files bankruptcy

NEW YORK, May 19 (Reuters) - Barcalounger Corp, which began making reclining chairs in World War II, has filed for bankruptcy protection and agreed to sell its assets, citing a sales downturn that left it unable to survive.

In a filing in the Wilmington, Delaware, bankruptcy court, Chief Restructuring Officer John Chapman said Barcalounger cannot generate enough profit to continue as a going concern because of “the dire turn in national furniture sales due, in large part, to the global economic downturn.”

According to the Chapter 11 filing, Barcalounger has between $1 million and $10 million of assets, and between $10 million and $50 million of liabilities. One affiliate also filed for protection from creditors.

Just keep screwing with small businesses, they have so little to do with our nations work force and economy…A-Holes

Small businesses’ credit card rates now 13.7% higher ~USA TODAY

New evidence that banks have sharply increased rates for small-business credit cards has rekindled calls for Congress to intervene.

Over the past six months, American Express, Bank of America, Capital One, Citi and Wells Fargo have raised interest rates for new small-business credit cards offered on the Internet roughly six times faster than rate increases on consumer credit card offers, according to BillShrink.com, a consumer help site that tracks credit card offers.

On average, interest rates for small-business cards were 13.7% higher in April than last October, while rates for consumer cards, on average, were just 2.4% higher.

That gap has stirred banking-reform advocates who failed last year to persuade Congress to include protections for small businesses in a new credit card law that restricts rate changes and other bank practices on existing consumer accounts. It took effect in February.

Looks like the stock market is getting stronger (falling closer to fair value) again.

Chart of the day - central bank liquidity swaps (i.e. QE between countries’ central banks).

Note the recent uptick back above 0, due to our IMF commitments for Greece. It’ll be interesting to see how high this hump goes.

The data comes out weekly, though I track it monthly, so the May value isn’t as high yet as it’ll probably end up.

DGP
is the double long gold.
i’m no gold bug but this thing will rocket after the next “rescue” package!!!

Agency considers new rules for speed traders
CFTC chairman says agency is considering new rules for high-speed traders after May 6 plunge ~ May 20, 2010

WASHINGTON (AP) — A federal regulator says his agency is considering new rules governing where high-frequency traders can locate computers in response to the May 6 stock market plunge.

Gary Gensler, chairman of the Commodity Futures Trading Commission, says in testimony for a Senate hearing that the agency is evaluating the location of the high-speed computers. Traders often position their computers close to the big exchanges’ data centers, a practice called co-location, which can cut their trade times by milliseconds.

Gensler and Mary Schapiro, chairman of the Securities and Exchange Commission, were appearing at the Senate hearing two weeks after the Dow Jones industrials dropped nearly 1,000 points in less than 30 minutes.

Minn. nurses strike at 14 hospitals

ST. PAUL, Minn. (AP) — Thousands of nurses at 14 Twin Cities hospitals voted overwhelmingly Wednesday to reject contract proposals and authorize a strike as early as next month in a dispute over pension benefits and staffing levels.
Minnesota Nursing Association spokesman John Nemo said more than 90 percent of the 9,000 nurses voting Wednesday backed a walkout, which the union says would be the largest nurses’ strike in U.S. history.

The union said it would limit a strike to one day. Nemo said the date hasn’t been picked, but it won’t be until after the current contract expires on May 31.

“It’s going to have the maximum impact on the employer, but cause the minimum amount of pain to the patients,” Nemo said.

PPT had best get on the stick…It’s only 10:30 EST.

Now, maybe I’m missing something here, but could someone please tell me where Rand said anything racially offensive?

http://www.cbsnews.com/8301-503544_162-20005474-503544.html

BTW, beware. The Repugnican party is trying to marginalize Rand Paul as “extreme”. How do I know? I had a very interesting phone conversation with a staffer for a state senator (republican). It started out as having to do with the senator’s withdrawal from a campaign for another state post, but morphed into a conversation about Rubio and Crist. During the conversation, the staffer spews a comment about the Pauls being “too extreme”. So when you hear that word “extreme”, tell ‘em to stuff it. I did.

Local radio keeps running an ad for the American Home Inspectors Institute…

“Enroll and become a certified home inspector, the industry is experiencing a shortage,due to a resurgence in the housing market”. “We will give you all the tools you need, the housing market is rebounding and you can earn between 3&$500.00 per inspection”…Call today and don’t delay.

This can’t be true, team Barry said they where “on it” from day one…

Scientists Fault Lack of Studies Over Gulf Oil Spill.

(WASHINGTON)Tensions between the Obama administration and the scientific community over the gulf oil spill are escalating, with prominent oceanographers accusing the government of failing to conduct an adequate scientific analysis of the damage and of allowing BP to obscure the spill’s true scope.

The scientists assert that the National Oceanic and Atmospheric Administration and other agencies have been slow to investigate the magnitude of the spill and the damage it is causing in the deep ocean. They are especially concerned about getting a better handle on problems that may be occurring from large plumes of oil droplets that appear to be spreading beneath the ocean surface.

The scientists point out that in the month since the Deepwater Horizon oil rig exploded, the government has failed to make public a single test result on water from the deep ocean. And the scientists say the administration has been too reluctant to demand an accurate analysis of how many gallons of oil are flowing into the sea from the gushing oil well.

Ed Dept: $437 million in grants to schools where teachers will be rewarded for student success.

WASHINGTON (AP) — The U.S. Department of Education will give $437 million in competitive grants to districts that reward teachers for improving student achievement in high-need schools.

The Teacher Incentive Fund aims to reform teacher and principal compensation programs, increase the number of teachers instructing poor and minority students, and boost student performance.

The fund was authorized in 2006 and is available to school districts, nonprofits and states. It has been implemented in 109 school districts so far, and the new push will award about 40 to 80 more grants.

The National Education Association, the country’s largest teacher union has opposed initiative. The union generally argues against performance pay and for higher salaries for all teachers.

The Public vs Government Workers
War is Coming - the Public vs. Government Workers

Government workers are paid much better than workers are paid on “Main Street”. It is hard to justify higher government wages even if Main Street is healthy and vibrant. It will be impossible while Main Street is suffering, especially when that suffering is to pay for government that is deeply in debt. How can conflict be avoided when the workers who do the paying earn less than the workers they pay?

http://www.foundingfathersfoundation.com/page10.php

These two Marketwatch bulletins are a pisser.

11:07a Europe must bring deficits under control: Tarullo

11:06aEurope must stop liquidity from drying up: Tarullo

OK, which is it? And isn’t that the problem for the U.S. too?

Gulf oil spill: Kevin Costner donates ‘Ocean Therapy’ invention to clean oil from sea; BP OK’s tests ~ DAILY NEWS ~ May 19th 2010

Kevin Costner is donating a $24 million centrifuge machine to help clean up oil-contaminated water.

Could there be a Hollywood ending to the Gulf oil spill?

Enter “Waterworld” star Kevin Costner, who has invented a device that cleans oil from sea water.

British Petroleum - desperate for ideas - gave the okay to test six of Costner’s gizmos Wednesday, after the Army Corps of Engineers gave the machine a thumbs-up.

Costner’s $24 million centrifuge machine has a Los Angeles-perfect name, “Ocean Therapy.”

Placed on a barge, it sucks in oily water, separates out the oil and spits back clean water.

“It’s like a big vacuum cleaner,” said Costner’s business partner, Louisiana trial lawyer John Houghtaling.

The “Field of Dreams” star told reporters he started paying a team of scientists millions to create the device after the 1989 Exxon Valdez spill in Alaska, while working on his epic 1995 flop “Waterworld.”

“I’m just really happy that the light of day has come to this,” Costner said.

“It’s prepared to go out and solve problems, not talk about them.”

Costner’s has 300 machines in various sizes, with the largest able to clean water at a rate of 200 gallons a minute, WDSU-TV reported.

A minimum of 210,000 gallons of oil per day is gushing into the sea from the well that exploded April 20. BP has tried several novel ways to stop the leak, but none have worked so far.

Wondering if the last two weeks ruined Goldman’s “perfect-record-winning streak”? Have a feeling it has in a big way. A big move like this could absolutlely slaughter JPM with their involvement in the derivatives “financial-dark matter” market. Something tells me this big drop was not in the script.

I wonder what a war in Asia and the collapse of the Euro would do for the US dollar?

Yowza on oil - down to $69 today.

It’ll be nice to not have the usual summer gas-price spike.

Freddie Mac: Mortgage rates hit yearly low.

WASHINGTON (AP) — Mortgage rates fell to the lowest level of the year this week, as rates fell on U.S. government securities. Fixed mortgage rates tend to be influenced by movements in the yield of 10-year Treasury notes.

The average rate on a 30-year fixed rate mortgage dipped to 4.84% this week from 4.93% a week earlier, Freddie Mac (FRE) said Thursday. It was the lowest level since mid-December, when rates averaged 4.81%.

Why 1-in-10 Current Borrowers Will Lose Their Homes to the Bank

Michael David White, On Thursday May 20, 2010, 8:11 am EDT

New Observations is forecasting that a minimum of one in ten homes with a mortgage today will be lost to foreclosure in the next two years and that this loss represents a staggering five-million-unit addition to inventory-for-sale.

A record high 4.63% of mortgages were in foreclosure at the end of March The Mortgage Bankers Association reported Wednesday. Much worse, a mammoth 9.54% of mortgages are 90-days or more past due.

Given cure rates are slim-to-nothing-at-all beyond a 60-day delinquency, in practical terms, all of these seriously-delinquent homes will be lost through a sheriff’s auction, a short sale, a deed-in-lieu passing title from borrower to bank, or some other variant of distressed sale. Amherst Securities Group in a Sept. 2009 report said of the cure rate: “The cure rate on 60+ loans has decreased from 66% in early 2005 to 5% in Q2 2009.”

What is obvious and apparent from the cure-rate chart (see above-click for a clear view) is that borrowers who miss a payment are giving up quickly. After two payments are missed, the mortgage is a goner. It’s a new phenomena and adds a serious risk of falling prices for those who currently own homes.

If 50 million homes carry a mortgage, and with 10 percent lost to the bank in the next two years, five million units will be added to the current for-sale inventory. The five million bank-repo homes works out to about 10 months of sales at an average rate. Amherst estimated 7 million liquidations to the bank, but it was unclear over what period of time. The numbers will have even a more exaggerated impact if mortgage-payment performance continues to fall.

Current inventory is at eight months. The recent inventory high was 11 months in April 2008. Our figures already show current supply for-sale at 3.6 million units – which we have estimated is excessive by over 900,000 units (see chart “Units For Sale”-click for a clear view). In an average month 500,000 existing homes sell.

In another derogatory sign, purchase applications fell 27 percent to their lowest point since May 1997. A government-paid down-payment program ended April 30th.

The guesstimate that one-in-ten mortgage borrowers will lose their home is not a wild proclamation. It’s basic math based on the cure rate. What is wild is considering what will happen to real estate prices should mortgage failure gain greater momentum. Serious delinquencies are 30% greater today than a year ago.

A crash has the same irrational exuberance as a mania, except that greed is liberating and fear is terrifying. We have already lost 30 percent of house prices nationwide. There is simply no question that a radical loss in value may still lie ahead. Mortgage performance has gone down hill, and only a strong employment recovery can change the math.

More banks are troubled even as industry recovers
Number of troubled banks keeps rising even as industry has best quarter in 2 years

WASHINGTON (AP) — The number of troubled banks kept growing last quarter even as the industry as a whole had its best quarter in two years.

The Federal Deposit Insurance Corp. said Thursday that the number of banks on its confidential “problem” list grew to 775 in the January-March period from 702 in the previous quarter. But banks overall posted net income of $18 billion. That was up from $5.6 billion in the same quarter a year earlier.

“The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility,” FDIC Chairman Sheila Bair acknowledged. But, she added, “The trends continue to move in the right direction.”

The largest banks showed the most improvement. But a majority of institutions posted gains in net income.

In another sign of health, the FDIC’s deposit insurance fund, which fell into the red last fall, posted its first improvement in two years. Its deficit shrank by $145 million to $20.7 billion.

We need to pack this a-hole Pepe Calderon up on a burrow and slap it on the ass pointed back to Mexico. He has gone as far as to blame their drug and gun violence on us. Funny how everything the U.S.’s fault, but when some country gets it’s tail in a crack they come running to Uncle Sam. Screw this punk.

Mexico’s President Slams Arizona Law, Urges Congress to Pass Immigration Overhaul ~ FOXNews.com

WASHINGTON — Mexican President Felipe Calderon on Thursday strongly denounced Arizona’s new law clamping down on illegal immigrants and urged members of Congress to pass “comprehensive immigration reform.”

In the first address to Congress by a foreign national leader this year, Calderon delivered a message that the two countries must cooperate to improve security along the often-violent border and control the flow of immigrants into the United States.

While Republican lawmakers welcomed Calderon’s call for improved relations between the two countries, they jeered his lecture on how to fix the U.S. immigration system and his criticism of Arizona’s new law.

“I think it’s inappropriate for him to come in and criticize our law,” Rep. Michael McCaul, R-Texas, told Fox News. “When we go down to Mexico, we don’t do that to the Mexicans.”

“The Arizona law is not the problem,” he added. “The problem is the growing violence down the border and securing the border and the Obama administration enforcing federal law.”

Federal Reserve is Fraudulent! -Ron Paul In “Why Gold & Silver?”

http://www.youtube.com/watch?v=uiOu0dATNOA

D.C. Council considers commuter income tax
Washington Business Journal

D.C. Council members said Thursday they would back budget language to implement a commuter income tax through an amendment to the Home Rule Charter.

As the council’s second day of televised budget talks got under way, Councilman Harry Thomas, D-Ward 5, raised the issue that has long needled District leaders: A half-million people work in the nation’s capital but live elsewhere, and their income cannot be taxed at the source.

Thomas proposed a Home Rule Charter amendment to “impose any tax on the whole or any portion of the personal income either directly or at source thereof of any individual not a resident of the District.” His colleagues expressed their support.

What a day! (Hwy glances at last nights video with Mr. Cole: “It was a short summer, Charlie Brown”)

BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)

“TrueFinancialCult™” …Shazam!…”TruePatriotCEO™”

Goldman Harvard Recruit Pledges to Do No Harm, Fights for Oath:

By Oliver Staley
May 20 (Bloomberg) — When Larry Estrada graduates from Harvard Business School next week, he’ll begin work at Goldman Sachs Group Inc. He’ll do so only after taking an oath.

Estrada, 30, joined about 150 fellow business school students and faculty worldwide to campaign for the acceptance of an MBA ethics pledge modeled on the Hippocratic Oath taken by doctors. The aim is to get as many as 6,000 graduates at 50 MBA programs to swear they won’t put personal ambitions before the interests of their employers or society

The current version of the oath, which has evolved during the last year, consists of seven principles that require its takers to obey the letter and spirit of the law, refrain from corruption, oppose discrimination and exploitation, and protect the right of future generations to enjoy a healthy planet.

“I recognize that my behavior must set an example of integrity, eliciting trust and esteem from those I serve,” the oath states. “I will remain accountable to my peers and to society for my actions and for upholding these standards.”

Houston commercial property sales drop 50% in one year
Houston Business Journal

Commercial property sales in Houston declined 50 percent in the 12-month period ending in March, according to research firm LoopNet Inc.

For the year ending March 31, total sales in the Bayou City were $2.36 billion, compared to $4.7 billion for the period ending in March 2009.

The multifamily market has shown the most resiliency, with deals closed worth $993 million as of March 2010 compared to $996 million a year earlier. The purchase price of multifamily properties rebounded during the past 12 months to $56.3 million compared to $42.2 million in the year-earlier period.

MF Global’s Quarterly Loss `Unacceptable’ as Corzine Plans Staff, Pay Cuts
May 20, 2010

MF Global Holdings Ltd., the futures and options broker headed by former New Jersey Governor Jon Corzine, posted an unexpected quarterly loss and plans to eliminate as much as 15 percent of its workforce.

“Let me state the obvious: our fiscal 2010 performance is completely unacceptable, as was our fourth-quarter result,” Corzine, who took over as chief executive officer in March, said today on a conference call with analysts. Investors “should not tolerate such earnings.”

The loss attributable to common shareholders in the quarter ended March 31 narrowed to $96.5 million, or 78 cents a share, from $119.3 million, or 98 cents, a year earlier, the New York- based company said in a statement. Excluding certain costs, the company lost 17 cents. On that basis, MF Global was estimated to earn 1 cent, according to a Bloomberg survey of 11 analysts.

The company will freeze hiring, eliminate 10 percent to 15 percent of its 3,200 workers this quarter and is restructuring, postponing or terminating “non-core initiatives” and associated “non-compensation expenses,” according to the release.

“We’re Seeing the End of a Global Free Market,” Says Ian Bremmer
May 20, 2010 Peter Gorenstein in Investing, Banking, China

The free market principles increasingly popular around the world over the last 40 years are suddenly less so. “We’re seeing the end of a global free market,” says Ian Bremmer president of the political consulting firm, Eurasia Group. “In the west, it’s indefensible to support the free markets publicly,” says the author of the The End of the Free Market.

Thanks to the financial crisis, high unemployment and a growing gap between the rich and poor, support for capitalism is waning while renewed populism takes hold. “You can’t support open borders, open trade with 17.2% unemployment in the United States,” he says, citing the recent illegal immigration law in Arizona as an example.

“There is massive anti-incumbency, anti-government sentiment throughout the West,” he notes, pointing to Gordon Brown’s resignation in the U.K., German anger over the Euro bailout and a Japanese populace that voted out the ruling party after 50 years of dominance. “And that comes hand in glove with support for populist economic policies that will hurt growth in the global economy,” he believes.

The alternative, of course, is a Chinese style state controlled economy which may gain popularity among emerging markets. While most of the developed world muddles through China continues to grow at a torrid pace. “The world’s second largest and fastest growing economy, China, is completely committed to a model that at base is fundamentally incompatible with free market capitalism.”

The PPT must have been out playing golf today! Getting dangerously close the the ‘psychological’ level of 10,000.

Stocks to Tumble Another 20%, Cash the Safest Place: Roubini
Thursday, 20 May 2010

Stocks are likely to continue their aggressive decline and shed another 20 percent in value as the world economy weakens, economist Nouriel Roubini told CNBC.

As the market slides into correction territory, Roubini said weakness in euro zone countries and a slowdown in the US and other developed countries will make things even more difficult for investors in the months ahead.

“There are some parts of the global economy that are now at the risk of a double-dip recession,” said Roubini, head of Roubini Global Economics. “From here on I see things getting worse.”

Why state pension funds may need a $1 trillion bailout

NEW YORK (CNNMoney.com) — Ready for another government bailout? Taxpayers could be on the hook within the decade if current state pension system isn’t reformed.

Even if they continue to rake in the projected 8% in annual returns, pension funds in at least seven states — Illinois, Louisiana, New Jersey, Connecticut, Indiana, Oklahoma, and Hawaii — could dry up by 2020, and 31 states could be in trouble by 2030, according to a recent study by Northwestern University economist Joshua Rauh.

What’ll they tax next?

Some states have already slapped taxes on blueberries, illegal drugs and fur clothing. But as budget shortfalls grow, state legislators are looking for even more creative ways to earn revenue.
View photos

Promised benefit payments are so astronomical that raising taxes would still fall short. The only solution would be to call on the federal government for a bailout, according to the study.

“This is a problem of monumental proportion,” said Rauh, an assistant professor of finance at the Kellogg School of Management. “Given that we see the same issue in many states, the total size of a federal rescue plan could exceed the seriousness of the recent economic crisis and potentially cost more than $1 trillion total.”

I suspect Thialand video’s will influence this sort of thing.

WASHINGTON – People who are out of work for long stretches would get expanded unemployment benefits through the end of the year under a bill Democratic lawmakers plan to pass next week.

The bill would also extend, for a year, about 50 popular tax cuts that expired in January. The bill would be paid for, in part, by tax increases on investment managers and some U.S.-based multinational companies.

House leaders said they plan to vote on the bill early next week, leaving just a few days for the Senate to act before Congress goes on a weeklong vacation for Memorial Day. House leaders had planned to vote this week, but they were still waiting for some cost estimates, and a few issues were unresolved.

Delays in extending the tax breaks have left thousands of businesses unable to plan for their tax liabilities. Delays in passing a long-term extension of emergency unemployment benefits have forced thousands of laid-off workers to live month to month with no certainty of income.

Unemployment benefits for many will start to run out June 2, unless Congress acts. The bill would extend unemployment benefits for up to 99 weeks in many states, at a cost of $47 billion.

The US will be Thialand on steroids.

I didn’t even know we had an “intelligence” director, has to be a tough job with all the morons in D.C.

National Intelligence Director Dennis Blair Resigns
FOXNews.com

National Intelligence Director Dennis Blair has resigned, Fox News has confirmed through senior congressional sources.

Blair’s resignation comes after a series of intelligence failures — in the Fort Hood shooting, the failed Christmas Day bombing plot and the attempted Times Square bombing.

President Obama already is interviewing candidates to replace Blair, according to ABC News, which first reported the story.

A retired Navy admiral, Blair is the third director of national intelligence, a position created in response to the 9/11 attacks.

Blair’s tenure as the overseer of the nation’s intelligence agencies was marked by turf battles with CIA Director Leon Panetta and controversial public comments in the wake of the Christmas Day airliner bombing attempt.

Ex-stockbroker Steven Mandala laughs in court as he admits to conning Merrill Lynch out of $780K

http://www.nydailynews.com/money/2010/05/19/2010-05-19_exstockbroker_steven_mandala_laughs_in_court_as_he_admits_to_conning_merrill_lyn.html

So as I’ve mentioned I stopped using my credit card over the last couple of months. I got a call from Discover with some lady telling me they wanted me to use the Discover card first and asking what it would take to get me to do that. I was working so I hung up, but then I opened my statment and realized it was the first one with no purchases on the card.

“TrueSerialEnablers™” profiting from the “TrueSerialLiquiditist™”

You go Al, make Minisota proud, Be well, do good things, keep in touch…

AAA Raters Score D in Credibility Department:

BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)

Commentary by Jonathan Weil May 20 (Bloomberg)

The idea is to make the raters more independent. “There is a staggering conflict of interest affecting the credit-rating industry,” said Senator Al Franken, the Minnesota Democrat who offered the amendment approved last week. “Issuers of securities are paying for the credit ratings. They shop around for their ratings.”

There’s a more difficult problem with the rating companies, though, that no law could ever fix. Even if their motives were pure, that wouldn’t necessarily mean their grades would be any more reliable.

Consider the wide divergence in ratings for a mortgage bond issued five years ago called Park Place Securities Inc. Series 2005-WHQ2. The eighth-highest tranche in that offering, dubbed the M-2 class, is rated AA+ by Standard & Poor’s, one rung below its highest level. Moody’s Investors Service rates the same bond B1, or four notches below investment grade. Fitch Ratings calls it CCC, signaling a high risk of default.

Just Clueless

And what do investors think of this bond? One company that owns it is a unit of Hartford Financial Services Group Inc., a tidbit I learned with help from the research firm SNL Financial, which tracks statutory insurance filings. Hartford pegged the bond’s fair market value at a measly 25 cents on the dollar as of Dec. 31, according to its latest annual report.

Lordy, what a day of revelation & affirmation!

SEC, Goldman Ambush Shorts in Cautionary Tale for Merkel:
Review by James Pressley, May 21 (Bloomberg)

“…Copper River might have survived this “mother of all short squeezes,” Sauer says. Only two of its shorts made the agency’s list, he writes, and many of the stocks in its short portfolio crashed within a few weeks. If Copper River had been able to hold onto its positions, it would have reversed all its losses, he says.

‘Faster, Faster!’

Unfortunately for Copper River, its prime broker of 20 years, Goldman Sachs Group Inc., was itself in crisis mode. Goldman started demanding more collateral, as other banks were doing at the time, and prohibited Copper River from making any transactions for any purpose than to reduce its short exposure, Sauer says. Every stock purchase made to trim that exposure threatened to push the shares higher.

Copper River faced “the prospect of digging our own grave with Goldman standing behind us yelling, ‘Faster, faster!’”

Estimated rate of oil spill no longer holds up:

By Steven Mufson and David A. Fahrenthold
Washington Post Staff Writer
Friday, May 21, 2010

Inquiring minds would like to know: “BP, how much oil do you “estimate” is leaking?”

BP: “…Well, so, here’s what we’re saying”:

1st day: “5,000 barrels a day”
2nd day: “5,000 barrels a day”
3rd day: “5,000 barrels a day”
4th day: “5,000 barrels a day”
5th day: “5,000 barrels a day”
.
.
.

33rd day: “5,000 barrels a day”

Inquiring minds reporter: “There are some estimating the leak at 80,000+ barrels a day…”

silence…

Inquiring minds reporter: “If a barrel equals 42 gallons then that equates to…
3 Million 360,000 gallons per day, is that correct?”

No worries, another American Oil Corporation is on hand to help…you think there’s a possibility they might make a profit on “The Bandaid Cure” ?

Exxon Mobil Ties
Corexit is a product line of solvents produced by Nalco Holding Company.

One variant was used in the 1989 Exxon Valdez disaster in Alaska. In 2010, Corexit EC9500A and Corexit EC9527A were used in large quantities in the Deepwater Horizon oil spill. On May 19, 2010 the EPA gave BP 24 hours to choose less toxic alternatives to Corexit, selected from the list of EPA-approved dispersants on the National Contingency Plan Product Schedule, and begin applying them within 72 hours of EPA approval of their choices. BP has used Corexit 9500A and Corexit 9527A thus far, applying 600,000 US gallons (2,300,000 l) on the surface and 55,000 US gallons (210,000 l) underwater.

Nalco has had ongoing ties to Exxon. In 1994, Nalco and Exxon Chemical Company announce the formation of Nalco/Exxon Energy Chemicals, L.P. to provide products and services to all facets of the petroleum and natural gas industries. Then in 2001, NALCO, which then was called “Ondeo Nalco,” strengthened its leadership role in the petroleum industry when Nalco/Exxon Energy Chemicals, L.P. became became part of the company through redemption of Exxon Mobil stock in the joint venture. Today, Daniel S. Sanders, who previously was president of Exxon/Mobil Chemical Company, a subsidiary of Exxon Mobil, serves on the company board of directors

Toxicity

A version of Corexit was widely used after the 1989 Exxon Valdez spill and, according to a literature review performed by the group the Alaska Community Action on Toxics, was later linked with health impacts in people including respiratory, nervous system, liver, kidney and blood disorders. But the Academy report makes clear that the dispersants used today are less toxic than those used a decade ago.“[5]

According to the EPA, Corexit is more toxic than dispersants made by several competitors and less effective in handling southern Louisiana crude. Corexit EC9500A (formerly called Corexit 9500) was 54.7 percent effective in handling Louisiana crude, while Corexit EC9527A was 63.4 percent effective in handling the same oil.

Separately, the EPA told BP officials Wednesday that the company had 24 hours to choose a less toxic form of chemical dispersant to break up the oil spill and must apply the new form of dispersant within 72 hours of submitting the list of options.

The move suggests that federal officials are concerned that the unprecedented use of dispersants could pose a significant threat to the Gulf of Mexico’s marine life. BP has been using two forms of dispersants, Corexit 9500A and Corexit 9527A, and so far has applied 600,000 gallons on the surface and 55,000 underwater.
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A spokesman for Rep. Jerrold Nadler (D-N.Y.) said that on Thursday, BP ordered 60,000 gallons of Dispersit — a less toxic dispersant preferred by many environmentalists and lawmakers.

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