The Housing Bubble

There has been a lot of banter about jobs, or the lack thereof this week. My recent experience shows me that the memory of bubble salaries may be the biggest impediment to growth in the economy.

I’ve recently tried to hire an ME or EE with 5 years experience and the salary expectations are insane. I expect it is due to the high level of debt carried by so many. They can’t make their payments if they don’t demand high pay, but business can’t hire them at those salaries with the risk of a double dip still hanging out there.

Am I way off base?

Not everyone in DC has a tin ear! And she is from Kansas!!

Bankster with bonus and bailout, OH MY!

* ECONOMY
* JUNE 25, 2010, 4:16 P.M. ET

Bair Says Bill Will End ‘Too Big to Fail’

By JESSICA HOLZER

Federal Deposit Insurance Corp. Chairman Sheila Bair said bank regulators would have the tools they need to banish “too big to fail” institutions from the financial landscape once a Wall Street overhaul bill becomes law.

In the first installment of The Big Interview, a WSJ.com video interview that will be posted at 10 a.m. EDT Friday, Ms. Bair said that new powers allowing regulators to seize and liquidate failing institutions would act like a threat hovering over the financial industry, deterring firms from growing oo large or reckless.

“This is a kind of a nuclear bomb that you hope you never have to use,” Ms. Bair said. “The fact that it’s there, I think, is going to be important. And if we have to use it, we will.”

The bill pending in Congress would empower the heads of the FDIC, the Federal Reserve and the Treasury to wind down a financial firm other than a bank, a provision intended to give the government a choice other than the messy bankruptcy of Lehman Brothers and the controversial rescue of American International Group. The FDIC, with its long history of resolving failed banks, would act as receiver, selling off the assets.

Ms. Bair said the existence of this new authority would prompt investors to shift capital away from the biggest financial firms toward smaller ones, strengthening them after a wave of consolidation in the financial industry created some competitive disparities. She predicted that investors would favor smaller firms whose risks are more transparent, raising capital costs for bigger ones.
…

Ben away for a long time. Death in the family, job went to crap. But things are picking up, found a new job (more money than before!). I now work in Plano Texas right across from the mall made famous for their attempt to buy a Home Depot so that no one would have to look at it from the mall parking lot. In fact they are still building “European Style Town Homes starting from $450k” next door to my office building. As far as I can tell, European Style means 3 floors with no elevators and no yard.

During my time off went camping in Big Bend National Park and drove through a lot of mid-size to little towns(Alpine, Marfa, Monahans, etc). One thing that stood out were all of the brand new hotels that seemed to have sprouted up like weeds. I just can’t believe there is that much demand or oil money to support all of them. (maybe its all of the wind farm money? They are an amazing sight to see though).

Marfa will be the last bastion of the housing bubble in Texas. An amazing amount of houses in almost tear down condition for sale at $250k+. This is a town with no jobs other than working in the border patrol or running one of the 20+ art galleries. Lots of NYC money in that town. And still only one bar in town.

Down around Big Bend it seems like every parcel of land is for sale. Several obvious attempts to buy a big acerage and sub-divide into $20-$100k lots. Lack of water seems to makes it seem like they are all trying to rook some city slickers out of their money.

Border patrol now drive four wheel ATVs and are all over down there. There is a checkpoint driving up from Big Bend where you are stopped, questioned and searched. Not too sure why Arizona is getting a bad rap when the Feds are doing the same thing.

A little video from Pensacola Beach. The Gulf coast is toast. Probably should be evacuated.

http://www.youtube.com/watch?v=qO193f8xAls

I think this is an investor newsletter that follows energy related stocks, etc. Interesting analysis of the Gulf spill and reaction.

http://www.petroleumworld.com/sf10062001.htm

In case you did not see my find posted too late yesterday…

Jim Cramer - “Why Obama is Bad for Stocks!”

http://tinyurl.com/2etlc4q

Here is one claim I hope BP does not pay.
“She’s out at least $48,000 in commissions”

Realtors along gulf lose contracts, hope as spill halts recovery of fragile market Enlarge Photo

Enlarge Photo In nearby Santa Maria Island, Joan Dickinson, 65, filed a claim with BP after buyers backed out of a contract for her home (pictured) last month, citing concerns about the oil spill. Dickinson has been trying to sell her home for more than two years. She’s got it on the market for $848,000. Photo courtesy of Joan Dickinson

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:50 p.m. Friday, June 25, 2010

Panhandle Realtor Deborah Orr has lost four home sales since the Deepwater Horizon oil spill branded the Sunshine State with a tar-spattered scarlet letter. She’s got the e-mails and canceled contracts to prove it.

“I have been up since 2 a.m. studying the spill. I believe the safest proactive move to make right now is to pull out,” a June 3 message reads.

Throughout the Panhandle and south to Monroe County, withdrawn sales contracts, abandoned vacation rentals and diminished property values are driving an increase in real estate claims made to oil giant BP.

And now there are numbers that begin to quantify the damage done to a fragile market just beginning to recover from the real estate crash.

According to claims data released by BP for Florida and other Gulf Coast states affected by the spill, 8,034 reports for loss of individual income from rental property have been filed, with BP paying more than $1.7 million in damages.

Individual loss claims from real estate sales gone awry totaled 817 as of Thursday, with BP writing checks for $138,212. About 1,450 commercial claims for rental and real estate values have been filed, with BP doling out $713,686.

It’s impossible to measure BP’s progress in responding to the real estate claims because its data don’t include the number of claims fulfilled or individual amounts. BP representatives said they could not locate that information despite repeated requests.

But Orr, whose Unique Panhandle Properties is in Panama City Beach, knows one thing: She’s out at least $48,000 in commissions because of the oil spill and BP hasn’t paid up yet. Orr filed four claims for herself and her agents nearly a month ago.

“I’m getting angrier and angrier,” Orr said about the oil reaching shore. “Our beaches have had it, they’ve gotten it, and every time I see what’s going on, I literally just start crying.”

There is a checkpoint driving up from Big Bend where you are stopped, questioned and searched.

And yet the illegals still slip through with near impunity.

Lookup:
“Baptist pastor beaten + tazed by Border patrol” on youtube.

I told them I was a US citizen.
I told them I was on a business trip.
I told them I had no drugs or humans in the car.

That wasn’t enough. They wanted to search the car, and I invoked my 4th amendment rights.

I DID NOT RESIST OR FIGHT BACK. YET I WAS TAZERED REPEATEDLY AND SHOVED IN BROKEN GLASS REPEATEDLY!

I was IN the United States!!! I had crossed no international border!!!

This occurred on the night of April 14/15, 2009

* OPINION
* JUNE 25, 2010

A Weakened U.S. Goes to the G-20
In Toronto, summiteers will be courting China—not the U.S.—as the world’s pre-eminent source of dollar financing.

By GEORGE MELLOAN

Behind the power panoply at the G-20 summit in Toronto this weekend there also will be high anxiety. European leaders fret over the future of the euro at a time when bond buyers are wary of government red ink soaking the continent’s southern tier. The Chinese are facing an asset bubble similar to the one that collapsed and scuttled Japan’s economic miracle 20 years ago. The Japanese still are mired in economic stagnation dating from that event.

Barack Obama and his aides, however, will be taking the Alfred E. Neuman approach: “What, me worry?” That was evident in the pre-summit article on this page Wednesday by Treasury Secretary Timothy Geithner and National Economic Council director Lawrence Summers. At a time of credit market jitters over rapidly rising international levels of government debt, the chief policy makers for a nation-state currently running a $1.5 trillion federal deficit are counseling their peers to be cautious about cutting back on spending.

Since the U.S. dollar is the world’s pre-eminent reserve and trading currency, that strange advice is a legitimate cause for concern. The economies these folks govern account for more than 80% of world production and trade.

The American leaders are under the illusion that their Keynesian spending and easy money policies actually have worked, 10% unemployment notwithstanding. They cite the weak recovery that has been underway in the U.S. since last summer as proof.

But what should trouble them is the fear that by borrowing hundreds of billions a year abroad to support spending excesses, the U.S. is rapidly tapping out its international credit card. Of some $5.5 trillion in marketable Treasury bonds outstanding, nearly $3 trillion are owned by foreigners, which makes the dollar subject vulnerable to international investor mood swings. It doesn’t reassure when U.S. economic policy makers say, in essence, that we can’t get off this merry-go-round without risking another recession. Cutting spending, it seems, is not an option in Washington’s view.

Ironically, it was only the European debt crisis that saved the U.S. from a dollar flight late last year. In an article recently published by the New York Council on Foreign Relations, University of Virginia economist Francis E. Warnock observes that at the end of the Federal Reserve’s crisis-driven direct purchases of Treasury securities late last year, the yield on 10-year Treasury bonds jumped 50 basis points to 3.75%. The dollar was sinking rapidly in foreign-exchange markets. But then Greek bonds came under attack and the euro crisis erupted. Foreign governments—China in particular—became fearful of the euro’s future and came scurrying back to the relative safety of the dollar. The dollar rose again and U.S. bonds stabilized.
…
Mr. Melloan, a former columnist and deputy editor of the Journal editorial page, is the author of “The Great Money Binge: Spending Our Way to Socialism” (Simon & Schuster, 2009).

The most important aspect of this current wave of articles questioning the wisdom of Keynesian stimulus is not so much that Keynes may finally be on his way to the grave, 50 years after his worldly demise, but rather the tacit acknowledgment that we are not out of the woods yet, withered green shoots rhetoric notwithstanding. Policy chaos may result if this debate gets carried too far.

* REVIEW & OUTLOOK
* JUNE 26, 2010

The Keynesian Dead End
Spending our way to prosperity is going out of style.

Today’s G-20 meeting has been advertised as a showdown between the U.S. and Europe over more spending “stimulus,” and so it is. But the larger story is the end of the neo-Keynesian economic moment, and perhaps the start of a healthier policy turn.

For going on three years, the developed world’s economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn’t turned out that way.

Now the political and fiscal bills are coming due even as the U.S. and European economies are merely muddling along. The Europeans have had enough and want to swear off the sauce, while the Obama Administration wants to keep running a bar tab. So this would seem to be a good time to examine recent policy history and assess the results.
***

Like many bad ideas, the current Keynesian revival began under George W. Bush. Larry Summers, then a private economist, told Congress that a “timely, targeted and temporary” spending program of $150 billion was urgently needed to boost consumer “demand.” Democrats who had retaken Congress adopted the idea—they love an excuse to spend—and the politically tapped-out Mr. Bush went along with $168 billion in spending and one-time tax rebates.

The cash did produce a statistical blip in GDP growth in mid-2008, but it didn’t stop the financial panic and second phase of recession. So enter Stimulus II, with Mr. Summers again leading the intellectual charge, this time as President Obama’s adviser and this time suggesting upwards of $500 billion. When Congress was done two months later, in February 2009, the amount was $862 billion. A pair of White House economists famously promised that this spending would keep the unemployment rate below 8%.

Seventeen months later, and despite historically easy monetary policy for that entire period, the jobless rate is still 9.7%. Yesterday, the Bureau of Economic Analysis once again reduced the GDP estimate for first quarter growth, this time to 2.7%, while economic indicators in the second quarter have been mediocre. As the nearby table shows, this is a far cry from the snappy recovery that typically follows a steep recession, most recently in 1983-84 after the Reagan tax cuts.

The response at the White House and among Congressional leaders has been . . . Stimulus III. While talking about the need for “fiscal discipline” some time in the future, President Obama wants more spending today to again boost “demand.” Thirty months after Mr. Summers won his first victory, we are back at the same policy stand.

The difference this time is that the Keynesian political consensus is cracking up. In Europe, the bond vigilantes have pulled the credit cards of Greece, Portugal and Spain, with Britain and Italy in their sights. Policy makers are now making a 180-degree turn from their own stimulus blowouts to cut spending and raise taxes. The austerity budget offered this month by the new British government is typical of Europe’s new consensus.

To put it another way, Germany’s Angela Merkel has won the bet she made in early 2009 by keeping her country’s stimulus far more modest. We suspect Mr. Obama will find a political stonewall this weekend in Toronto when he pleads with his fellow leaders to join him again for a spending spree.

Meanwhile, in Congress, even many Democrats are revolting against Stimulus III. The original White House package of jobless benefits and aid to the states had to be watered down several times, and the latest version failed again in the Senate late this week. (See below.) Mr. Obama is having his credit card pulled too—not by the bond markets, but by a voting public that sees the troubles in Europe and is telling pollsters that it doesn’t want a Grecian bath.
…

There is almost too much good news on U.S. housing right now to take it all in!

The Economist
The housing market
Double-dip drama
Feeble figures fuel fears

Jun 24th 2010 | Washington, dc

MORE than the European debt crisis is keeping American economic policymakers awake at night just now. Despite a year of government effort, a tentative recovery in the housing market appears to be on the verge of stalling.

Home prices have now fallen for the past six months, according to the Case-Shiller home-price index, after rising from their nadir for the five months before that. (Another index, from the Federal Housing Finance Agency, has, however, shown a slight uptick in March and April.) As for sales volumes, last September home sales soared in anticipation of the planned expiry of a government housing-tax credit, only to tumble thereafter, despite the extension of the deadline to April this year. As the new deadline approached sales duly climbed again. But the latest data show that even before the credit window closed, fewer sales were going through (see chart). Sales of new homes fell 33% from April to May, nearly the worst performance since the bust began.

It is not as if the government has not tried. After the housing crash, millions of homeowners—a full quarter of those with mortgages—had loans larger than the value of their homes. Barack Obama hoped to prevent defaults with a plan designed to encourage banks to refinance the mortgages of those unable to pay. On the demand side, the Federal Reserve held down mortgage rates by buying up mortgage-backed securities, while Congress offered a generous tax credit to qualifying buyers.

These programmes have not worked as well as had been hoped. Affordability is no longer the driving factor behind foreclosures; borrowers who took on more debt than they could handle defaulted on their loans long ago. Instead, the problem is negative equity. A borrower deeply underwater on his mortgage may have no choice but to default if he loses his job, since a sale would entail a huge loss. And a growing number of underwater borrowers are opting simply to walk away from mortgages that they can in fact afford.

Banks are balking at rewriting mortgages, despite incentives to do so. Too often borrowers default later on. The latest data on the government’s programme show that 400,000 loans have been renegotiated—far less than the goal of 3m-4m. Neither have government incentives to buy houses helped much. Credits may have done little more than move sales around.

The steady drumbeat of foreclosures has continued; they have been running at a rate of over 300,000 filings a month for the past 15 months. By some estimates, it will take more than eight years of normal sales to clear the stock of houses now held by banks. This overhang holds down prices, meaning that the road out of negative equity is a long one.

Yet policy failures can be blamed only so much. A new report from Harvard University’s Joint Centre for Housing Studies notes that, historically, sustained housing recoveries are far more dependent on job growth than on factors like the level of interest rates. So May’s disappointing jobs figures, showing that the private sector added just 41,000 workers, was doubly bad news. With nearly 15m Americans still out of work, a real turnaround could be a long time coming.

Get ready for the CRA apologist brigade to jump in here and correct me for once again bringing up their role in the recent collapse of U.S. credit markets.

* The Wall Street Journal
* LETTERS
* JUNE 26, 2010

Let’s Give Really Free Markets a Chance for a Change
…
Mr. Kaletsky still doesn’t get it. He takes it as a given that the most recent collapse of the financial system was the result of pathologies inherent within the capital-market system, specifically greed and fear. His answer—get ready for a really new idea—is more government regulation. In fact, the entire borrowing and lending process, which is the essence of every credit system will, if left alone, evaluate the capacity of those who borrow to pay what they owe and lend accordingly. (Mistakes are made but over time mistakes are, on balance, self-correcting.)

The present credit-system freeze is the product not of the normal credit process but of President Bill Clinton’s aggressive expansion of the 1977 Community Reinvestment Act and the assurance to primary mortgage lenders that the government would, through Fannie Mae and Freddie Mac, buy and resell bundled mortgages. The virus for eventual disaster was planted with the essential mandate that banks which didn’t participate would pay a price. In this setting the emergence of an international market for these “securitized investment vehicles” should have surprised no one. It also shouldn’t have been a surprise that a credit system in which pure economics has been displaced by pure politics cannot last.

It’s amazing that Mr. Kaletsky is still surprised. But how would his preference for government regulation have avoided this? What would regulators have needed to know and when would they have needed to know it? They would have needed to know that trillions of dollars were being loaned to people whose ability to service their debt was doubtful, and they would have needed to know this before it all began. But, most importantly, they would have needed to have had the power to stop the rest of the federal government from forcing banks to make such loans. Was there a problem? Of course. Was it a problem integral to the market process? No, it was an aberration. Did it originate on Wall Street? No, it originated on both ends of Pennsylvania Avenue. That’s where it will have to be solved, but not in the way Mr. Kaletsky seems to prefer.

Charles D. Van Eaton
…

What’s in the financial reform bill?

- Establishes new national minimum underwriting standards for home mortgages.

- Lenders are required for the first time to ensure a borrower can repay a home loan by verifying income, credit history and job status.

- Bans payments to brokers for steering borrowers to high-priced loans.

Barn door left open
All of the horses have fled
Hurry, shut the door!

Failure Friday Update
http://blog.taragana.com/business/2010/06/25/regulators-shut-down-banks-in-florida-georgia-new-mexico-marks-86-bank-failures-this-year-74038/

Bank overhaul fails to rein in “too big.”

Small wonder the bulls were running in the Street yesterday.

* HEARD ON THE STREET
* JUNE 26, 2010

A Bank Overhaul Too Weak to Hail

By PETER EAVIS

In democracies, the people are said to get the laws they deserve. But if American taxpayers had formulated a financial-overhaul bill, it likely would have looked very different from what will be known as the Dodd-Frank Act.

Of course, Congress and powerful interests always water down legislation to meet their own ends. The outcome for financial overhaul, however, is particularly relevant for taxpayers who spent and pledged hundreds of billions of dollars to bail out the system.

The act’s biggest failing: It does little to solve the too-big-to-fail problem that caused such trouble in the crisis. If any of the 10 largest banks, whose $10.4 trillion in assets are equivalent to nearly 80% of gross domestic product, hit serious trouble, the government would have to step in to prevent a systemic meltdown.

True, the overhaul tries to protect taxpayers in rescues, but it also enshrines the bailout architecture, and thus the too-big-to-fail distortions.

There was never any real chance that bank size would be reduced to the point where they would be made small enough to fail. But there was some hope that parts of the overhaul—like the “Volcker rule,” which focused on scaling back proprietary trading, and the Blanche Lincoln amendment, which aimed to force derivatives-trading risk out of federally insured lenders—would at least cut banks’ riskiest activities. But both Volcker and Lincoln were softened in the face of lobbying.

The bill leaves much of the responsibility for avoiding further banking crises on regulators. Although the banking system and economy became unstable in part under the Federal Reserve’s oversight, the central bank has retained huge responsibilities under the overhaul. How it and other watchdogs interpret the new rules and how proactively they use their new powers to head off problems will decide how safe the system really is.
…

This proverb certainly does apply to the knife catchers who took $8K in stimulus money as sufficient incentive to buy a home last year. Hair-of-the-dog ain’t all that!

Prov. If you marry someone you do not know well, or decide to marry someone without first carefully considering what you are doing, you will probably regret it for a long time. Sally wanted some time to consider Sam’s proposal of marriage; she had heard the saying, “Marry in haste, and repent at leisure.”

A special report on debt
Repent at leisure
Borrowing has been the answer to all economic troubles in the past 25 years. Now debt itself has become the problem, says Philip Coggan

Jun 24th 2010

MAN is born free but is everywhere in debt. In the rich world, getting hold of your first credit card is a rite of passage far more important for your daily life than casting your first vote. Buying your first home normally requires taking on a debt several times the size of your annual income. And even if you shun the temptation of borrowing to indulge yourself, you are still saddled with your portion of the national debt.

Throughout the 1980s and 1990s a rise in debt levels accompanied what economists called the “great moderation”, when growth was steady and unemployment and inflation remained low. No longer did Western banks have to raise rates to halt consumer booms. By the early 2000s a vast international scheme of vendor financing had been created. China and the oil exporters amassed current-account surpluses and then lent the money back to the developed world so it could keep buying their goods.

Those who cautioned against rising debt levels were dismissed as doom-mongers; after all, asset prices were rising even faster, so balance-sheets looked healthy. And with the economy buoyant, debtors could afford to meet their interest payments without defaulting. In short, it paid to borrow and it paid to lend.

The answer to all problems seemed to be more debt. Depressed? Use your credit card for a shopping spree “because you’re worth it”. Want to get rich quick? Work for a private-equity or hedge-fund firm, using borrowed money to enhance returns. Looking for faster growth for your company? Borrow money and make an acquisition. And if the economy is in recession, let the government go into deficit to bolster spending. When the European Union countries met in May to deal with the Greek crisis, they proposed a €750 billion ($900 billion) rescue programme largely consisting of even more borrowed money.

Debt increased at every level, from consumers to companies to banks to whole countries. The effect varied from country to country, but a survey by the McKinsey Global Institute found that average total debt (private and public sector combined) in ten mature economies rose from 200% of GDP in 1995 to 300% in 2008 (see chart 1 for a breakdown by country). There were even more startling rises in Iceland and Ireland, where debt-to-GDP ratios reached 1,200% and 700% respectively. The burdens proved too much for those two countries, plunging them into financial crisis. Such turmoil is a sign that debt is not the instant solution it was made out to be. The market cheer that greeted the EU package for Greece lasted just one day before the doubts resurfaced.
…

I went on vacation to Apalachicola, Fl last week. There was no oil and the sea was beautiful!
I did get a case of the Green Shoots, though. Bad case, too.

Roidy
(aka FS)

What will it be: Stagnation, default, inflation or growth?

And wither the symbiosis?

A special report on debt
In a hole
Stagnation, default or inflation await. The only way out is growth

Jun 24th 2010
…
The relationship between China and America has been described as vendor financing, in which the Chinese lend the Americans the money to buy their cheap manufactured goods; a collapse in American demand would cause substantial unemployment (and social unrest) in China.

The longstanding system of vendor financing may have encouraged the rich world to concentrate on consumption rather than investment and to enjoy the resulting “artificial” growth, like a child on a sugar high. Richard Koo, who wrote a book about the Japanese recession, “The Holy Grail of Macroeconomics”, refers to a debt-financed boom as “cherry-blossom” economics. He recounts the tale of the two brothers who bought a barrel of sake to sell to revellers at Japan’s cherry-blossom festival. But instead of taking money from the thirsty crowd, each brother charged the other for a cup of sake, then used the proceeds to buy a cup for himself, and so on. The brothers ended the day drunk and empty-handed.

Jeremy Grantham of GMO, a fund-management group, is a detached and cynical observer of the financial and economic scene. The way he sees it, “all debt seems to do is bring growth forward a little. If you get people to spend 1% more than their income every year, after 20 years they are going backwards because interest expense is eating up more of their salary.”

Robert Bergqvist, chief economist at SEB Group in Sweden, is equally pessimistic. “The leverage-led growth model is dead,” he says. “Households and corporates can increase borrowing and enhance today’s consumption and investments but that requires that we can assume higher future incomes and expected returns and/or rising asset values. And this is not certain.”
…

Flew out of ATL on Wednesday. North parking lot was 100% full. South lot was 99% full…got there and there were only 9 spots open. Some recession we’re having huh.

A special report on debt
Paradise foreclosed
The boom has left Florida with an excess of houses, shops and debt
Jun 24th 2010

THE giant iron gates are eerily reminiscent of the opening scene of the film “Citizen Kane”. Each bears an impressive-looking crest, CR, with a statue of a rearing horse standing guard. The view beyond the gates takes in roads, elegant streetlights and specially planted trees. The plans were for an “equestrian community” with 11 miles of bridleways and stables for 36 horses.

But if a modern Orson Welles were to pan his camera beyond the gates, he would not find a billionaire’s mansion. The gates are padlocked and the roads lead nowhere. This is the Cordoba Ranch, a few miles from Tampa in Florida, one of the many residential developments that were abandoned when the American housing market collapsed.

Florida, with a long history of property booms, played its full part in the subprime excesses. It has ranked first for mortgage fraud among American states in three of the past four years. In the fourth quarter of last year more than a quarter of all mortgages there were behind on at least one payment; more than a fifth were at least 90 days behind or already in foreclosure. Estate agents reckon that prices have fallen 40-50% from their peak.

The effect on the state’s overall economy has been huge. In the year to April 2009 Florida’s population fell for the first time in recent memory, by nearly 57,000. In a normal year it would be expected to grow by 200,000-400,000. Jobs have evaporated, particularly in construction, property and finance; the unemployment rate is 12%. With revenue from property taxes down, the state budget is $3.5 billion short. Since the government employs one in seven workers, that will mean fewer jobs and cuts in services across the state.

Florida’s best-known industry, tourism, has also suffered from the recession. A report by the Themed Entertainment Association found that although Walt Disney World in Orlando saw a small rise in visitors during 2009, both Universal Studios and Busch Gardens (in Tampa) suffered a substantial decline.

Sean Snaith, an economist at the University of Central Florida in Orlando, says this has been an “equal-opportunity recession, affecting professors and plumbers”. He reckons that Florida’s economy faces “a long and protracted climb out of a deep hole”, with unemployment remaining in double digits until 2012. It will be 2014 before Florida’s payrolls recover to pre-recession levels, he predicts.
…

Congress’ flood insurance lapse strands residents, home sales

By Laura Green Palm Beach Post Staff Writer
Posted: 10:07 p.m. Friday, June 25, 2010

Real estate broker Jess Acevedo expected a good month in June with the first-time home buyer credit about to expire, but now 14 deals he carefully shepherded to closing are on hold because Congress has failed to reauthorize the National Flood Insurance Program.

Among them are a Boca Raton couple with three children who were set to close Friday on a four-bedroom, two-story foreclosure. Now they are stuck in limbo, worried that their tax-credit window is closing, Acevedo said.

“They’re all frustrated,” he said.

With hurricane season upon us, it could not be a worse time of year for Floridians to be without flood insurance.

The National Association of Realtors estimates that for each day Congress delays, 1,400 sales are tied up. In Florida, it’s affecting about 175 deals a day.

The flood insurance program expired May 31. Since then, some lenders have been willing to accept binders, or promises, to write flood insurance policies as soon as Congress reauthorizes the program. But others are refusing to allow deals to go through without insurance.

U.S. Rep. Ted Deutch, D-Boca Raton, who voted to reauthorize the program, said Congress’ delay has brought an already weak real estate market to a “total standstill.”

“To say that Florida’s economy is in a fragile state would be an understatement,” he said. “In this uniquely perilous economy, if someone is prepared to buy a new home, they should be able to buy it.”

Anecdotal housing report from N. Louisiana:
I went “garage sale-ing” with my wife this morning, and I got to see the neighborhoods in the city that I live in. This burgh does have enough population to support the level of “high end” housing that I see. It has (or had) just enough.

I saw a lot of FSBOs and RE For Sale signs in the toniest neighborhood of the city. The basic issue is these houses are waaaayyy nice and waaay expensive $450k to $1M. No one is moving into the area The people who can afford this neighborhood already live in it. No one is really upwardly mobile meaning that there are no “up and comings” to sell to.

These are facts that pose a problem: So, who are they going to sell to and at what price?

Oh no, it’s not even over yet.

Roidy

Dylan Ratigan and the Huffpo say “Walk Away”…

www dot huffingtonpost dot com/dylan-ratigan/who-pays_b_624149.html?ref=twitter

Lest we forget…

TWENTY years ago the thermometer hit 122 in the shade, here in the PHX- Mesa- Scottsdale Arizona area.

Nice and toasty.

Have a hot one on us today!

Fannie collapsometer graph

Select “Max.” for the time span (above the graph) for maximum dramatic effect.

So much for being able to slice & dice anything…

Box-office futures ban headed toward law, dashing plans of proponents:

LA Times, June 25, 2010 by Ben Fritz

“…The provision, which was inserted as a result of lobbying by the Motion Picture Assn. of America and others on behalf of the six major movie studios, would make box-office results only the second type of commodity on which futures trading is banned by law, along with onions.”

“…In a significant and possibly fatal blow to controversial proposals for box-office futures markets, a ban on them has survived a marathon House-Senate negotiation over financial reform legislation and will likely be passed by Congress next week and then signed into law.”

You know we’re doomed when even the Chinese can figure it out, but we can’t:

http://www.google.com/hostednews/ap/article/ALeqM5i_yogDatphlnvBRsI-hMgucCofSwD9GIHVA00

China takes hands-off approach to labor strikes

By TINI TRAN (AP) – 23 hours ago

BEIJING — When workers at a Honda transmission plant in China went on strike for higher wages last month, they touched off a domino effect of high-profile labor disputes.

As the strikes, many of them at foreign-owned plants, rippled through China’s southern manufacturing heartland, the government — usually quick to crush mass protests of any kind — did not step in, but allowed them to spread.

That’s because it views the strikes less as a political threat these days than as an economic tool — a way to help restructure China’s current export-driven economy to a more self-sustaining one, driven by ordinary people with more cash to spend.

…”If incomes won’t go up, how can domestic demand be boosted? Strikes for better pay are very much in line with the big trend of Chinese economic development,” he said.