Bits Bucket For July 10, 2010
Post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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No full Social Security benefits until age 70?
WASHINGTON — Young Americans might not get full Social Security retirement benefits until they reach age 70 if some trial balloons that prominent lawmakers of both parties are floating become law.
No one who’s slated to receive benefits in the next decade or two is likely to be affected, but there’s a gentle, growing and unusually bipartisan push to raise the retirement age for full Social Security benefits for people born in the 1960s and after.
The suggestions are being taken seriously after decades when they were politically impossible because officials — and, increasingly, their constituents — are confronting the inescapable challenge of the nation’s enormous debt.
Social Security was created in 1935 with a retirement age of 65, but since then life expectancy at that age has increased by about six years, according to the National Center for Health Statistics .
So, life expectancy has increased six years since 1935 when SS was set up?
Let’s see: If a person retiring today gets, say, $2,000 a month in SS and lives for six years longer than projected when the SS numbers were run in 1935, then he will draw over these extra six years $144,000 more in SS payments than projected.
Plus: There will be many, MANY more retirees forming a line at the SS offices due to the baby bulge that began 64 years ago when all the GIs came home from the war and decided (along with their wives) to make babies.
Thus and Therefore: There is no logical choice but to either extend the SS retirement age or cut benifits - or a do a little of both.
That’s the LOGICAL choice; the POLITICAL choice may be a somewhat different one. We’ll see.
Look for articles and such designed to shape public opinion towards SS modifications similar to the articles and such we now see all around us designed to shape public opinion concerning public pensions.
Time to pop some more popcorn.
The SS liability problem is easily solved if we take the following (politically unpopular) steps:
1) Acknowledge that OASDI (Old-age, Survivors and Disability Insurance) was set up as an insurance program, not a retirement bonanza. In particular, it was meant to insure those who survived against surviving into retirement beyond average life expectancy.
2) Based on the above observation, set up a fast-track schedule to phase in an increase in normal SS retirement age to average life expectancy — what is it now, 79 or 80? — and to reduce benefits to their actuarial equivalent for those retiring earlier.
Best for Uncle Sam to act on this sooner than later, before the SS liability tanks our entire economy…
And best do it while the people who are most affected are the young, because they don’t vote yet.
I was born in 1959, but would not mind them raising the age I would get full benefits from 67 to 70. They should allow those people who delay retirement to 70 to extend the age limit on 401k distributions and traditional IRA distributions from 70 and a half to 75.
on both sides of my family people lived into their late 80s and 90s. But my mom died in her 60s due to poor preventive health habits such as being obese, sedentary, and eating a poor diet like a teenager. My sisters need to work into their late 60s to get full social security bennies. Two of them paid into social security for over 30 years. Unfortunately the oldest who is obese and needs ss most, started paying into the system in 2000 after my dad died. He supported her and her three kids after her divorce.
Still, I highly doubt that social security alone will provide enough for any of my sisters should they live past 70.
No one who’s slated to receive benefits in the next decade or two is likely to be affected, but there’s a gentle, growing and unusually bipartisan push to raise the retirement age for full Social Security benefits for people born in the 1960s and after.
As usual, the baby boomers will get theirs, and leave a scorched earth behind, as the generation continues its Sherman-like march to the Big Sea. Free love and no wars when they were young, low taxes and big deficits when they were in their prime earning years, and the last of the full bennies in their retirement years. It’s good to be the king!
I realize they had a war in their youth, but they hadn’t come into their own yet. They just needed the voting age lowered- and voila! It was lowered to 18, and we got out of Viet Nam. And never fought a major war again, until they were too old to fight. At which point we started fighting them again. It’s good to be the king!
I appreciate the music and the free love, though. And getting civil rights for all citizens- no small accomplishments. Still, you guys are a bunch of looters, even if it’s unintentional.
“It’s good to be the king!”
It’s very good to be an OLD king, old with lots of money, or at least enough money to get by on.
“Buffett was once asked what he would like written on his tombstone. His response: “Damn, he was old!”
“Damn, he was old!”
lol-I like it, but I’m sticking with ‘Priced Out Forever’.
BTW- Warren or Jimmy?
Actually, you have that all wrong. It is the previous generation that has been the looters. The so-called “greatest generation” set up all these benefits programs, and has been collecting on them all my working life.
I am now 55. I have been paying into SS for about 30 years or so, along with federal income taxes. My rate is about 7 percent, i think. The prior generation paid in 1% and then 2%. It was a ridiculous amount.
Since they never paid in enough money to cover their “benefits”, we have been paying for them to retire early and get 20-30 years of SS pay, plus medicaid, and lots of other stuff.
I never wanted to be in the system in the first damn place, but that is the LAW. Not by me, or my generation.
The problem, as i fear, is that my money has already been spent, and future generations will need to make up the shortfall, which simply won’t happen. The ponzi-finance “expansionary” economy can’t support more money without more “growth”. I see an austere future.
Not only will my money have been stolen from me to pay the past generation, there is already talk of nationalizing private retirement accounts, i.e. 401ks and IRA’s and pensions. It is my firm belief that the parasite culture that has developed over the past 30 years will go to “means testing” to determine who gets how much in “benefits”. If you have private “savings”, you lose. The welfare parasites will get the benefits you paid for.
That’s how governments work in a socialist state, which is where we now find ourselves.
Comrade Diogenes- Like most, you are forgetting the Silent Generation, people born before WW2 who were too young to fight in it. They got all the Greatest Generation’s bennies without any of the drama (unless they had to fight in Korea).
But your problem is you’re a little late in your generation (1955?). The leading edge of the boomers were the last to get defined benefit pensions and the like, but they didn’t necessarily pass this on to their younger brothers. It sucks to be the king’s younger brother!
Citizen Alpha-sloth,
You are correct in your python-choking-on-the -bulge concept that the middle boomers have been screwed by the leading edge.
There was a lengthy analysis done some time back, where i no longer have a source. Perhaps it could be googled. But I remember the implications.
The leading edge got ALL the benefits of the expansion, without the costs, and I am witness to it. The article basically broke down the “baby boomers into 3 segments of roughly 6years apart. It was something like 1947-1953, 1953-1959, 1959-1964, and compared how their prospects were for home-buying, jobs, careers, education, mobility and benefits, etc. They then projected this into overall retirement lifestyles that could be expected.
The leading edge got to buy houses at the prior groups CHEAP rate, got plenty of jobs, cheap college, high pay and all the benefits of the expansion we saw starting in the late 50’s. The are retiring well-off with all the benefits of being in the right place at the right time.
The second group fairs worse and will retire with relative comfort. The third group will struggle having to have paid higher prices for everything and getting less of any benefits.
Unfortunately, my family was low income. I had to pay for college by working and it took 7 years. My working years, beyond work done during Jr. High, High school and college started with the 3rd wave. So, though I am 55, my career time was more like age 48 to 50, wave 3. I suffer with my younger brother who has followed the big wave where all the best jobs were already taken, and the benefits and wages have fallen.
It is those in wave one who have all the success stories and don’t understand how anyone could complain about all the great opportunities we have here. They truly have lived in the “best of times”. They had no “globalization” to contend with and USA was the only game in town after WWII.
That’s all changing.
Google “sumner’s forgotten man”. He/she’s the one that always gets screwed. Generation is irrelevant.
I graduated with the third wave because I took too long to decide what I wanted my degree in. My own fault and responsibility. I learned the lesson and took whatever software job I could get where I could work while earning my MSCS. that was a good move and I don’t regret it. I think I about caught up to the second wave and without the addiction to credit. The dumb thing I did was buy a house after getting the MSCS. I should have been mobile and rootless all my adult life!
now I get a kick out of renting luxury and owning little. Some developer is working with Scottsdale to build 1100 high end luxury apartments in downtown Scottsdale. I am hoping that project gets built. Would be great to come home to from my consulting work and walk to bars, restaurants, or bike on the greenbelt path!
Renting is freedom!
I agree that the boomer generation should be split, but I think the cutoff at 1953 is wrong. I was born in 1952. I graduated HS into a recession in 1970, which I missed because I went to college.
I graduated in 3.5 years into the post oil crisis inflation of the mid 70s. This was NOT an easy time to save a down payment for a house. A college-educated couple with no kids (DINKS as they were labeled then) could do it fairly well. Others, not so much.
I also think the SS age should be raised, especially for the largest generation. It is silly for healthy people to retire, especially when family history indicates a life expectancy into the 90s. The downside to this is that it limits opportunities for generations that follow.
The year I had 3 kids in college and one in preschool (and one in elementary school), I realized I would start saving for retirement late. So my plans have been for a “retirement career”. Work helps people stay connected. Being connected is healthy for older folks.
As a society, we have to decide what our values are. What do we do about folks who cannot provide for themseves? How much medical care do we provide at the end of life? How much do we do for extremely premature babies? Is it every man (or family) for himself? What are the long term consequences of each choice? These are not easy questions and there are not easy answers.
I would eliminate insurance paid Breast reductions since 95% are cosmetic. Its just cash cow procedure. The money could be much better spent of real emergency needs.
Just like end of life its a cash cow for everyone, or else we could end our lives with dignity and have no one sued or arrested
As a society, we have to decide what our values are
I’ve got no problem with upping the SS retirement age, but instead of postponing it for 20 years and then upping it to 70, why not up it 1 year right now, and one more year every 5 or so years- you could probably spread it out longer if we started incrementally right now.
That way everybody gets at least a little taste of the sh– sandwich.
This makes sense, alpha. People can adapt to gradual changes.
Can I receive $0 SS benefits and just opt out of the entire mess? You can even keep the $150K or so I have contributed so far.
Dude — I hate to break it to you, but we are generation screwed when it comes to SS benefits versus taxes paid. Anyone born after 1960 is going to get hosed compared to those born previously.
May as well take the hit in one shot now, and restore SS to its original purpose as an insurance program rather than a pot of gold for anyone who lives long past age 65, than drag out the ordeal until the system collapses due to a crushing burden of unfunded benefit obligations.
I’ll be doubly screwed then. I’ll take the hit now and when I’m 65 or 70 or 90 or whatever the retirement age will be, I will be told sorry you’re too rich you get nothing. While the welfare receiving, 99 weeks on unemployment every 2 years “victims” of society will be hitting the links in Flordia on my dime.
I just want out of it. I don’t want it. I don’t need it, I want nothing to do with it.
If you want to have a good laugh go to the SSA website and use their calculator to estimate your future payments. It’s about as realistic as Obama’s claims of jobs created/saved by the porkulus.
You assume you will continue to be lucky. Your health will remain good. You will avoid drunk drivers. Your investments will continue to grow.
I don’t discount that you have managed your life well so far. Past experience is no guarantee of future returns. It takes a measure of luck as well.
Invest in the BRIC countries. they do not have the aging population of the developed countries, and that means faster growth. VEIEX and PRASX.
those who flap their jaws about free world trade (not necessarily you, cantakerous and Eddie) ought to STFU and profit from it.
Can’t speak for Eddie, but I am steadily pouring a flow of dollars into a foreign stock market fund, on the theory that in the long run, the best investing opportunities may lie outside the U.S.
Paradoxically, I am pouring an equal-sized stream of dollars into the U.S. stock market on the theory that the current appearance that the U.S. is a poor place to invest may eventually end.
I thought Russia and China have aging populations. And America actually doesn’t- due to our easy immigration.
Birth dearth in the U.S.
time to fire up the coffee pot…
catch a fire…
China’s customs agency on Saturday said exports were up 35 percent in June from a year ago, while imports rose almost 53 percent. The figures showed the largest monthly trade surplus so far this year, $20 billion, despite the debt problems of China’s largest trading partner, the European Union.
Apparently they are at pre crisis levels.
and
I have a bridge I want to sell you.
OK, the source of this article may amuse or rankle some, but I just cut and paste … you decide. The Austin neighborhood, as you can probably guess, is economically marginal. But it contains some beautiful housing stock.
Chicago’s foreclosure epidemic
The residents of Chicago’s Austin neighborhood have pleaded with banks to help them stay in their homes, to little effect.
CHICAGO–In the Austin neighborhood on the city’s far west side, 14 houses in a single block are in foreclosure. Several are boarded up, and the lawns have turned into small overgrown fields. At least 28 families have been displaced from these homes.
Other foreclosures are not so obvious. In some cases, families were forced out before they even had time to move, and their houses sit fully furnished, waiting to be broken into.
Austin residents and community organizers gathered June 30 to give tours of the devastation and speak to the media. The event was part of a national tour put on by National People’s Action to expose the impact of home foreclosures brought on by Bank of America, which–along with its subsidiary banks–is currently the loan collector of one in every four home mortgages in the country.
According to a report released by National People’s Action, Bank of America has initiated 1,700 home foreclosures in Chicago in the first six months of 2010 alone and is the largest owner of repossessed properties in the city. In 2009, Bank of America was responsible for 17 percent of Chicago’s 23,000 foreclosure filings.
The community of Austin has been especially hard hit by the recession and is currently burdened with the highest home foreclosure rate in Chicago. Looking around the neighborhood, it is not hard to see the evidence. In a single city block, our tour guides point out 14 different houses that are in foreclosure and explain that at least 28 families have been displaced from these homes.
“our tour guides point out 14 different houses that are in foreclosure and explain that at least 28 families have been displaced from these homes.”
Is this a typo? Even without the calculator I can figure out that what they are alluding to is that 2 families were in each home?
Either it’s faulty reporting, faulty editing, or an interesting street to live on with 2 families in each home.
Well it is a socialist rag. And when they do any kind of economics math, 2+2 = 17. As in we’ll double taxes and that will lead to twice as much revenue for the govt.
Well it is a corporate conservative rag. And when they do any kind of economics math, 2+2 = 17. As in we’ll double taxes and and tell you we’ve lowered them and then rob the government blind.
Just reminding you of your mindless hypocrisy EddieTard.
“In some cases, families were forced out before they even had time to move, and their houses sit fully furnished, waiting to be broken into.”
I call BS on that. A foreclosure in this state takes at least six months AFTER the lis pendens is filed and up to two freaking years. Those folks had enough notice, believe me.
“Theresa Welch-Davis told the story of 78-year-old Dorothy Daniels, who was unable to make it to the press conference because of health problems. Dorothy has lived in her home in South Austin for 40 years and has never missed a payment on her mortgage, but has been struggling to keep up.”
After 40 years that house should have been paid off in full. Why didn’t the reporter ask what she did with the HELOC money?
“After 40 years that house should have been paid off in full. Why didn’t the reporter ask what she did with the HELOC money?”
Hmmm I don’t know. Maybe because the newspaper is a socialist rag with an agenda to turn every deadbeat into a victim and further destroy the banking industry by portraying it as eeeevil and unfair? Just a guess.
The 2010 MLB All Star game is at the Anaheim (Los Angeles) Angeles.
The Advertiser Banner Marquee on the front of the stadium has changed:
1.) Der Wienerschnitzel
2.) Jet Blue…………….(new) ….(gone: Big O Tires)….. (gone: Ameriquest)
3.) Corona beer
4.) Pepsi………………..(new)…. (gone: vitaminwater)…(gone: Citi)
(Hwy wonders what ads are plastered @ the new 1.5 Billion $ NY Yankees stadium?)
(They’ve even spruced up the Amtrak station in the parking lot, plastered everything with MLB Logo’s…)
For $30.00 you can buy a scoreboard message, what would you like to see?
Hwy: “Happy Anniversary HBB & Ben Jones 7+ Years!”
2nd choice: “4.5%! What are you waiting for America! Buy Now! ;-/
3rd choice: “GoldenmanSucks…Doing God’s Work!”
“Jan Brewer; doing work Obamas won’t do”
I’m in AZ, and I’m no Jan-fan. But I do admire her moxie in standing up to the feds and their non-enforcement of immigration laws.
I agree Slim. I applaud Az’s effort. Enough is enough.
Let’s dispense with the formalities. Americans on this side everybody else on that side.
Which side are you on? If you happen to be on the side of this being one big happy planet with one big co-mingled checking account, I have this request of you. Please feel free to donate all of your time and energies to the “cause” as you see fit. Please excuse my time, energy, & hard earned monies from your donation pool.
Sincerely,
SV
Replace all taxes with a national sales tax and eliminate taxpayer-funded health care, housing subsidies, education for their anchor babies to anyone who is not a U.S. Citizen. THEN I would be for open borders, decriminalization of all drug laws. this would immediately halt the unfair advantage illegals have over responsible U.S. Citizens. This would also remove the housing subsidies and baby-making subsidies that give an unfair advantage over childless renters such as two of my sisters and me. No mortgage interest deduction would remove a big reason for people to buy homes. that would greatlynreduce demand for home ownership, which will mean existing home prices would have to drop further - more affordability! The decriminalization of drugs will remove the cartels from power in Mexico.
this all makes too much sense and cuts too much government power and government bureaucracy, and deals between LE and drug cartels, so it won’t happen in my lifetime.
Bill:
Grow your own but still make it illegal to sell…..
The decriminalization of drugs will remove the cartels from power in Mexico.
Bill,
Less that 30% of people itemize. The mortgage tax deduction is used by a small minority of tax filers. It has a much smaller effect on home prices than you think
“It has a much smaller effect on home prices than you think”
It is hard to precisely measure the effect of the mortgage interest deduction on home prices, but the incentive to buy more home than one needs, at a higher price than one would rationally pay without the mortgage deduction, seems completely clear. Above all, the mortgage deduction disproportionately benefits those with enough deductions, including sufficiently large principle balance on their mortgage, so that the interest deduction will push their Sch A deductions total far above the standard deduction.
By contrast, anyone whose itemized deductions, including mortgage interest payments, do not exceed the standardized deduction derive no benefit from the mortgage interest deduction. Hence the mortgage interest deduction is most beneficial to those with the biggest mortgages; this sounds to me like great incentive to buy the largest, most expensive home possible with the biggest mortgage you can get your favorite GSE or perhaps the FHA to insure.
But perhaps you know better than I on this, Eddie.
The option is paying $90 or paying $100 and getting $10 as a deduction. The effective price is the same with or without the deduction. The deduction - again in the long run - has no impact on what people buy.
This goes for any govt subsidy. A good example is the latest waste of govt money….tax credits for “green” cars. The Chevy Volt will sell for $40K. But anyone who buys it will get a $7K tax credit making the car effectively cost $33K.
Guess what the price would be without the credit? $33K of course. GM priced it at $40K knowing that $33K is what the marginal consumer will pay. All the $7K does is subsidize GM. Just like the mortgage tax credit subsidizes home builders. But for the consumer it’s 1/2 a dozen of one or 6 of the other.
“This would also remove the housing subsidies and baby-making subsidies that give an unfair advantage over childless renters such as two of my sisters and me.”
Sisters are barren too? The family tree stops here?
“The deduction - again in the long run - has no impact on what people buy.”
Point taken. In the long run, short-run arbitrage opportunities afforded by subsidies are fully reflected in the price.
rms,
I think one of my sisters had some “issues” and could not have a baby and has been divorced since her very early 20s. The oldest one had kids. The other sister never got married.
The three of us never considered having kids as important, but our own survival as important.
My parents were great parents (the best, IMO). And they never talked about grandkids to us. We grew up thinking there is no reason to have kids - simple as that.
The second oldest has no college degree, but an equivalent A.R.T. (for medical records, I guess). The rest of us have college degrees.
And of the new generation, my niece is going to college. The nephew worked one year in his life, could not handle education, and will suffer extremely when his mom is not there anymore for support. He will have to pick grapes for a living. Imagine, a blond haired n’er-do well who is sedentary and obese and older than 33 trying to keep up with a productive farmworker from Honduras!
This is partly why I don’t believe in buying but renting. Most of my wealth is going to the American Cancer Society and American Heart Association. I refuse to support a frog on a log waiting for a fly to come by.
America is becoming an idiocracy. You can call me and my childless sisters self-centered - and I agree. It’s either be self-centered or be a sacrificial animal in today’s world. Maybe we also were scared by our dad who told us there will be another great depression in our lifetimes. Who wants to be responsible for the sustenance of more than oneself in a great depression? Raise your hand!
Rms,
Yup. Four “kids” in our boomer family, had the most wonderful parents of the greatest gen. But they never ordered us to give them grandkids. We were a family of law abiding nonconformists. Only the oldest of us the mindless tradition of producing kids. The others of us had long term relationships and we are all “straight.” it just did not make sense for us to follow the herd. Had we done so, I am positive we each would be severely in debt and loved by the spendocrat party.
Bill:
have you thought maybe you could set up a trust to give mico loans to people for start up businesses.?? I’d rather think your $$$ could find another Bill Gates in the garage rather then paying a half a mill to a boated executive at these places….wadda U think?
———————
American Cancer Society and American Heart Association.
Geez, I stand corrected:
Yankee Stadium updated:
“Also controversial was the price tag of $2.3 billion, including $1.2 billion in taxpayer subsidies.”
I wonder how much Arod would be making if they had to pay for their on damn stadium.
Has anyone ever calculated how much public money has been flushed down the “Professional Sports” craptube?
Talk about “Privatizing the profits, and socializing the losses…..” Usually wrapped in the dogma of “You can’t be a first class city, without a professional sports team or two”
(Austin, Texas doesn’t have a professional team…..there aren’t
any teams in Silicon Valley either, the last time I checked. But we all know how much the professional teams in Cleveland and Detroit have done to stimulate progress and growth in those towns….)
Of course, they all have their studies (that they paid for) of all the economic benefits that pro teams generate. What they don’t consider is the amount of economic activity that could be generated if the same amount of money was spent to, say, provide college scholarships, or cut taxes on business that provide jobs for the locals, or you name it.
X-GSfixr,
We have the San Jose Sharks. The Oakland A’s are looking to move to San Jose. The 49ers appear to be headed to Santa Clara. All in SV.
Your point is well taken though. While I’m in favor of the subsidy being given to the 49er stadium effort (200+ million), I think there are cases where monies are better spent elsewhere.
Everything you ever wanted to know about HAMP:
http://www.makinghomeaffordable.gov
First Obama says the Feds will not bust pot clinics in Cali. Now he is dropping my interest rate from 6% to 5%, not including lowering my Heloc from 3% to 1% and the term from 10 yrs. to 40 yrs. Finally a president who has actually done something to help my life.
Oh and speaking of the big O, we now have the Obama Meal at McDonalds…you can order anything you want (no not at Alice’s Restaurant, Hwy50) and the guy in line behind you pays for it. Heheh.
That makes sense, but why name it after the guy who is second in line? Wouldn’t the “Bush” meal be more appropriate given the enormous structural deficit and mega-recession GW left us with?
Wouldn’t the “Bush” meal be more appropriate..?
You’re missing the point.
Obama is the “second guy in line” who get’s to clean up Bush’ “order”.
agreed…just a joke.
I think “progressive meal” would be the correct term.
This brings to mind the tale of Enron’s demise. Is it legal for banks to hide debt off balance sheet?
How about the “we didn’t intentionally deceive our investors” defense? That sounds pretty shaky to me — especially for a trust-based enterprise like banking.
* The Wall Street Journal
* BUSINESS
* JULY 10, 2010
BofA Admits Hiding Debt
Details Come as SEC Is Set to Unveil Review of Wall Street ‘Window Dressing’
By MICHAEL RAPOPORT
Bank of America Corp. admitted to making six transactions that incorrectly hid from view billions of dollars of debt, following a bid to cut the size of a unit’s balance sheet and meet internal financial targets.
The disclosure, made in a letter to the Securities and Exchange Commission, comes as the agency prepares to unveil the results of an inquiry into banks’ accounting for borrowing deals known as repurchase agreements, or “repos.”
BofA’s letter was sent in April in response to the inquiry, but this is the first time the details of the six trades in question have been disclosed. The bank had acknowledged in its last quarterly report that its accounting for the transactions, made at the ends of quarters from 2007 to 2009, was incorrect.
The bank’s disclosure also suggests the trades may be an example of end-of-quarter “window dressing” on Wall Street, in which banks temporarily shed debt just before reporting their finances to the public. The practice, which The Wall Street Journal has uncovered in a series of articles, suggests the banks are carrying more risk most of the time than their investors or customers can easily see, and then juggling it during quarter-end reporting of financials.
Window dressing isn’t illegal in itself. But intentionally masking debt to deceive investors violates regulatory guidelines. BofA said its incorrect accounting wasn’t intentional.
…
BofA said its incorrect accounting wasn’t intentional.
I believe them whole heartedly. Please some one sell me a bridge along with ocean floor property near Louisiana.
I am SHOCKED the “stress test” missed this. They must have run the accounting in TurboTax, all is forgiven.
I’m sure TTT’s under reporting of his tax liability was “unintentional” as well; after all, he used to work at Gollum!
“…especially for a trust-based enterprise like banking”
Are bankers similar in ethics & professionalism,…like accountants?
21 years ago seems like we had already re-invented this “wheel” of commerce.
Insert child nursery rhyme: “The wheels on the bus go round ‘ round….round ‘ round…round ‘ round”
WHERE WERE THE ACCOUNTANTS?
By LESLIE WAYNE
Published: March 12, 1989
“Why did accountants throughout the nation fail to detect the shenanigans that triggered one of the biggest financial calamities this country has ever seen?
In Congress, in courtrooms and in private conversations, that question is being asked as observers grapple with the savings and loan crisis - and try to find those with deep pockets who might soften some of the financial blows. A search for culprits has already targeted lax regulators, unforeseen economic downturns and shady industry executives. Now, it’s the accountants’ turn.”
But never before have accountants faced anything as brutal, or as potentially costly, as this onslaught. Whether it is from within the profession or from outside, many are wondering whether these hard-nosed pencil-pushing professionals lost what they valued the most: their cool logic, their skeptical air, their independent voice. Critics are saying that while accountants could not have stopped the crisis, they could at least have sent up a warning shot.
In recent weeks, the Federal Home Loan Bank Board disclosed it had lawsuits pending against 10 accounting firms that audited the books of failed savings units, and it said that more suits are on the way. Among the defendants are three of the nation’s largest firms - Deloitte Haskins & Sells, Coopers & Lybrand and Touche Ross & Company. The General Accounting Office released an examination of 11 failed savings units in the Federal Home Loan Bank’s Dallas district and found that, in six cases, auditors failed ”to meet professional standards.”
I guess TPTB didn’t want to harsh Mr. Market’s afternoon buzz yesterday which is why we’re reading that today.
I thought that’s what the “good accounting practice” of deferred interest was. FB pays the minimum Option payment, which is less than interest. Bank record fully amortized amount, which is full interest + principle. AFAIAK, that’s hiding debt too.
I have often said we will have blood in the streets before the housing market bottoms out, and we are already seeing it in Oakland, California, where “reading the riot act” has recently taken on a literal meaning.
Raw footage:
Oakland cops in riot gear, Foot Locker spree, snatched bedding
After a mostly calm day of protests following the Johannes Mehserle verdict, a group of rioters looted stores, torched dumpsters and smashed windows of shops in downtown Oakland last night. Here’s raw footage of an evening that ended in the arrests of nearly 80 people. Also, SFGate wants your photos and videos!
Oakland cops in gas masks and wielding clubs read the riot act, declaring an unlawful assembly.
…
YAWN……as i pointed out yesterday the dead guy was a career FELON…He already was tased on his last drug arrest…so he would have been killed anyway……no great loss to society
The officer made a mistake…and he will more then suffer for it.
Race had nothing to do with it…the guy was a thug fighting causing trouble…
But race had everything to do with the aftermath, as any time a verdict for a crime against a black man turns out against the mob’s liking, riots happen.
The Economist
Global house prices
Froth and stagnation
House prices in parts of Asia continue to soar, despite efforts to slow them
Jul 8th 2010
IN RECENT months several countries have experimented with measures to cool bubbly property markets. Yet since The Economist’s global round-up of housing markets was last published in April, house-price inflation has accelerated in some of the very countries where the authorities have intervened to slow its rise.
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Compare countries housing data over time at economist.com/houseprices
The prospect that house prices in China are about to fall sharply worries some. Kenneth Rogoff, a Harvard professor, said this week: “You’re starting to see that collapse in property and it’s going to hit the banking system.” But Sun Mingchun, chief economist for China at Nomura, an investment bank, reckons that high down-payment requirements and the preponderance of cash purchases by Chinese homebuyers will help to limit the effects of any falls on the real economy.
For America the balance of evidence points to a renewed housing slowdown. Although both the Case-Shiller national and ten-city indices are up year-on-year, the national index fell during the three months to the end of March. The FHFA index, which excludes houses that are financed with large mortgages, was still down compared with a year earlier. More recent home-sales data have been similarly downbeat. Sales of new homes declined by 33% from April to May, thanks to the expiry of a tax credit. Just 28,000 new units were sold during May, the lowest total on record for that month. In Asia policymakers are trying to prick a bubble. In America they are still dealing with the consequences of the last one.
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The Economist
Gold
Store of value
Low returns on other investments and fears about the world economy have caused the price of gold to soar. Don’t count on its continued rise
Jul 8th 2010 | Delhi and london
ON THE kind of hot, sultry day in which the brutal Delhi summer specialises, the attractions of lingering languidly over gold jewellery in air-conditioned comfort are easily understood. Yet customers are thin on the ground in the jewellery section of the Central Market, an unruly hive of commerce in the middle-class district of Lajpat Nagar. “Business has never been this slow in the 14 years that I’ve run this place,” complains Mrs Anand, owner of Hans Jewellers. Lajpat Nagar’s jewellers estimate that sales are down by 40% or more on a year ago.
In a typical year India soaks up perhaps a quarter of all the gold mined in the world. Now, however, not only are people not buying; more and more of them want to swap their gold jewellery for cash. Jyoti Pal, a shop assistant, reckons that these days about as many people come in to sell as to buy. Suresh Hundia, president of the Bombay Bullion Association, goes further: “There are only sellers in the market at these prices and most jewellers are buying back only old jewellery.”
Middle-class Indians have been turned from buyers to sellers by the rapid increase in the price of gold in the past couple of years. The seemingly insatiable demand of mainly Western investors, drawn to gold as a store of value rather than as an adornment, has driven the price from less than $700 an ounce in 2007 to more than $1,200 since May this year. Last month it reached its highest-ever point in nominal terms, $1,264.90. It has eased a little since, sliding below $1,200 this week. After adjusting for inflation (measured using American consumer prices), in recent weeks the gold price has been at its highest for 30 years—although only just over half its all-time high (see chart 1).
In both the Central Market and the international financial markets, there is no shortage of people who believe that the price will resume its ascent. Ronald Stöferle, an analyst at Austria’s Erste Group, points out that the value of American gold holdings amounts to about 1.85% of the country’s GDP. In 1940 it was above 20% and in 1980 close to 7%. This, he argues, points to continued demand for gold from investors. He expects the gold price to hit $2,300 by 2012.
The appetite for gold arises partly from the paltry, uncertain returns from more conventional investments. Gold’s main drawback is that it pays neither a dividend, like a share, nor a coupon, like a bond, nor a rent, like property. But monetary policy has been keeping official interest rates, and thus the opportunity cost of holding gold, low and seems set to do so for a while. The yields on the government bonds investors regard as safest, notably America’s and Germany’s, are also thin. Equity markets are weighed down by worries about economic growth. Investing in property, which lay at the root of the financial crisis, requires a boldness that many still lack.
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if RE is a foolish place to put your money (with an eye on the upcoming shortage of cheap oil), if precious metals are a bad place to put money, if commodities are a bad investment ready to tank, if stocks are going to crash lore than March 2009, if ZIRP will continue through the middle of the decade and tbills yield 0.3% for the duration, where would a cantankerous individual park his money?
“lore” = “lower.”
I’m doing what you have long recommended: Diversify, diversify, diversify.
One more small piece of advice: Given we are currently in an unsustainable central-bank-sponsored War on Savers, and that anything which cannot go on forever will eventually end, a long-term investor should consider what will do well whenever conditions revert back towards normalcy.
For instance, one would not want to be stuck in long-term Treasurys at the point when interest rates begin reverting back up towards historic norms. Short-term Treasurys and CDs will offer poor nominal returns over the period from now until reversion, but they will also provide a stable source of “mattress money” for investing when and if future opportunities arise, during the final death throes of the bear market over the next decade or so.
Whether stocks or real estate investments will look good at that point depends on how much further they correct to the downside over the next few years, which in turn depends on the efficacy of unannounced asset price stabilization programs. The more successful asset price stabilization programs are in the near term (e.g. housing price support measures), the less promising future asset price returns will be as of the end of the bear market.
This is all very confusing, but thinking about what will do well when extraordinary but temporary conditions eventually revert to historic norms is a good point of departure for evaluating options.
Very good point. This still bodes well for diversification and rebalancing and DCA. When you do all three you remove greed and emotion from affecting your nest egg. In the short term and intermediate term you will be protected from manias. In the long term, combined with maintaining a great reputation at work and never burning bridges, you will win.
There is nothing wrong with investing in The Precious™ at this point, provided one realizes he is gambling on correctly timing the parabolic price blowout phase of a bubble and on being able to unwind one’s position before the inevitable collapse in speculative demand.
“…
Between 2000 and 2007 global gold-jewellery demand slid from 3,205 tonnes to 2,417 tonnes; as a share of the total demand for gold, it declined from nearly 80% to just over 60%. The fall was precipitate in the Western world. Demand in India, the biggest jewellery market, was little affected until last year. Demand in China, the next biggest, has continued to rise.
As jewellery demand went down, investment demand went up: for gold in the form of coins or bars, for gold exchange-traded funds (ETFs) and for the services of online companies that allow investors to buy small amounts of pure bullion, stored in underground vaults. Buyers of jewellery might be put off by a rising price; investors are more likely to see it as a sign that the price will increase further still. Annual “identifiable investment”, as the World Gold Council puts it, was 611 tonnes in 2004-07, a little more than twice the average for the four previous years. That just about offset the fall in jewellery demand.
Since then, however, investment demand has accelerated and jewellery demand has collapsed. Last year, indeed, was the first in which investment demand exceeded jewellery demand. Purchases of gold for jewellery dropped to 2,193 tonnes in 2008 and then to 1,758 tonnes in 2009. Meanwhile, the signs of surging investment have been everywhere. This has more than made up for the slump in the jewellery trade: total demand in 2009 was the highest since at least 2000.
Investment in gold ETFs and similar products reached a record high in 2008, of 321 tonnes—and then almost doubled, to 617 tonnes, last year. The stock of gold held by such funds more than doubled to 1,839 tonnes in the two years to the end of 2009. John Paulson, a New York hedge-fund manager best known for making handsome sums betting on the collapse of the American subprime-mortgage market, holds $3 billion-worth of gold ETFs, the largest part of his $35 billion portfolio.
Coining it
The 229 tonnes of gold sold in the form of official coins last year was the most since 1986, thanks to demand from retail investors in America and Europe. In November demand for one-ounce American Eagle coins was so strong that the American mint ran out of supplies. Rand Refinery, producer of the blank coins which the South African mint turns into Krugerrands, raised its output to 30,000 ounces in the first week of June, the highest rate of production since 1985. In Abu Dhabi those seized by an urge to buy bullion can now head to the lobby of the Emirates Palace hotel, where the Gold-to-Go machine dispenses bars.
Adrian Ash, head of research at BullionVault, one of a number of web-based bullion dealers which allow customers to buy titles to gold bars stored in vaults deep beneath the ground in London, New York and Zurich, reports that business is booming. The sources of Mr Ash’s business are a guide to the sentiment driving many investors into gold, some of them for the first time. In the first half of May the crisis in the euro area was uppermost. Worries that the burden of some countries’ sovereign debt might precipitate a collapse in the euro were stemmed only by the extraordinary measures taken by the European Union, the IMF and the European Central Bank (ECB). At that time, 41% of BullionVault’s new customer deposits came from euro-zone banks, about twice the average since January 2009.
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i never buy something that has gone up 5x in price…be it stocks, houses or gold. only investors in ETF funds have driven the increase as inflation is no where to be found. if we had inflation i could justify the increase, but we have massive deflation and deleveraging across the globe. plus, huge supply of labor and factory utilization is low….no conditions for inflation. even all the printing by the fed has done nothing as it has been offset by banks liquidation of loans and pulling back on credit. gold is in a bubble, and it could get higher, and eventully i’d go short. but, bubbles can run for awhile so i’ll wait and see if it gets to mania with everyone buying gold.
“…targeted: Subway…..Foot Locker…Sears….drug store……jewelery store…”
Thank God there wasn’t a Tire and Wheel store…….somebody might have strained a nut, carrying off those 22 inch dubs.
Stereotypes would disappear, if people would quit acting stereotypically.
With a torrent of flight-to-quality cash flooding into gold and money market funds, it looks like Mr Market is setting up for a repeat of the Spring 2009 stock market bottoming out process. Invest in equities now at your own risk!
The Financial Times
Big inflows into money market funds
By David Oakley in London
Published: July 9 2010 19:58 | Last updated: July 9 2010 20:40
Investors have poured tens of billions of dollars this week into money market funds – considered to be among the safest assets – amid fears that a double-dip recession in the developed world could send financial markets tumbling.
The global funds, which are seen as a proxy for cash, enjoyed their biggest weekly inflows in 18 months, absorbing $33.5bn, research group EPFR Global said on Friday.
Some of the world’s biggest fund managers are now holding up to 40 per cent of cash in their portfolios. Before the financial crisis, they held as little as 5 per cent.
In spite of this week’s powerful rally in equities, driven by hopes the eurozone debt crisis may be past its worst, the large volumes heading into money market funds suggest investors are worried about the risk of another slide in share prices.
The fear of a debt default by one of the weaker eurozone countries, slowing growth in China and doubts over the strength of the US recovery have emerged as the main threats to the global economy.
Chris Tuffey, co-head of capital markets for Europe, the Middle East and Africa at Credit Suisse, said: “This is about capital preservation.”
Inflows into money market funds in the week to Wednesday were the highest since January 2009 when $37.7bn was put into the funds. The funds tracked by EPFR include US and some non-US funds. Of the $3,000bn tracked, about two-thirds are US funds.
Investors have also been investing money in gold as a hedge against the growing volatility in financial markets. The lure of gold and precious metals has helped commodities funds top a list of sectoral funds tracked by the group.
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it is scary to consider everybody and his brother parking money in MM’s. Didn’t this happen near the stock low in 2010? If so, what can be the conclusion of the valuation of stocks at this point in time? As in the baby boom discussion above, I am loathe to do what the trailing edge group is doing with their money. Those aged 46 to 50!
I meant stock low of 2009. Now it makes more sense!
Quantitative Easing to infinity!
U.S. marks 3rd-largest, single-day debt increase
$166 billion jump spurs concerns over policy
By Stephen Dinan
8:36 p.m., Wednesday, July 7, 2010
“The nation’s debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.
The one-day increase for June 30 totaled $165,931,038,264.30 – bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.
Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years – an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.
“What matters is the overall trend line, and the overall trend line is shooting up,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call.
Fears over red ink have stalled key parts of Mr. Obama’s agenda in Congress in recent weeks, including his push for another round of stimulus spending. Just last week, House Democrats had to use a tricky parliamentary tactic to pass an emergency war-spending bill, aid for teachers and new spending caps.”
Just another calamity during the Baroke Obummer reign of error. It happened on his watch, he owns it; as the Democrats were so fond of saying about events during the Bush years.
“Just another calamity during the Baroke Obummer reign of error. It happened on his watch, he owns it; as the Democrats were so fond of saying about events during the Bush years.”
The structural deficit was inherited from GW Bush, courtesy of unprecedented pork barrell spending, two wars, a prescription drug benefit, and a huge tax cut for the wealthy… none of which were paid for by increased revenues or cuts elsewhere. The rising deficit under Obama is due almost entirely to the effects of the Bush-inherited recession on government revenues.
There are a heck of a lot of things I don’t like about the way Obama has handled the financial sector (Summers and Timmy are stooges) but it is beyond ignorant to claim that Obama owns the fiscal deficit problem.
I will take beyond ignorant as a compliment in advance. Obama is a progressive just like Bush, he continues to keep the Bush spending while at the same time doubling down with his own new spending. They both have no respect for our fiscal house and both have no regard for the constitution.
But you didn’t say a word about Bushco when he was office so nobody pays attention to that hypocrisy.
I was completely against the Bush spending and I was also against the Iraq war. I had to sit here and take it up the rear end by so called conservatives and now I sit hear and take hope and change up the rear. Good times.
And never forget folks…. Realtors are Liars. Expect lies from them. Always.
Hey, I agree with exeter!
This OC County Gov’t story dovetails well with the post from a few days ago about “The OC’s” city manager salaries…
“The O.C.” = (Oh, Crap)
So, who came up with the idea of 100% your last year salary pension benefit?
Searchable database of OC’s $100,000 retirees goes live
July 9th, 2010, by Teri Sforza, Register staff writer OC Register
Saavedra and Campbell found that more than 500 former high-level county employees collect six-figure pensions — as much as $244,000 per year — and that they pocketed nearly $60 million in 2009 from the financially troubled Orange County Employees Retirement System.
There are some very familiar names on the list — such as felons Mike Carona and Bob Citron — and many more you may not have heard of. Some retirees are collecting close to 100 percent of their working-day salaries.
“Most people should be able to retire at 60 percent of their salaries. You don’t need 100 percent,” said County Supervisor John Moorlach, a long-time opponent of large public pensions.
Most people should be able to save for their retirement via 401k and 403b contributions. Defined pensions should be eliminated, period.
“Two mortgage refinance con-artists tried to get out of jail by representing themselves in court, then acting like total idiots, and finally appealing on the grounds that they were bad lawyers for themselves.”
Representing yourself and acting like you’re crazy isn’t a defense
Got my July copy of Aviation International News today…..
The headline…..”Repossessor advises banks against reclaiming aircraft”
“We are telling banks not to repo.” said Nick Popovich, president of Sage-Popovich, the global aircraft repossession, aviation parts and services company.
“The aircraft market is distressed and everyone knows it. I’ve seen it with my own airplanes. My Challenger went from a $9 million airplane to a $3 million airplane in eight months……if you have a $3 million note on an airplane that is now worth only one million, you have a $2 million deficiency, and now you have to insure it, store it, and worry about maintaining it.”
“…..they are forced to write down the value of the assets of all similar aircraft in their loan portfolio- a huge hit to their bottom line…..”
“They can also count on the owner suing them. “The banks have to be able to prove that they have done everything commercially reasonable to get the highest value for their aircraft” before they go after the owner to make up the gap between the value of the loan and the price obtained for the aircraft. Because of that, many repossessed aircraft have lengthy disposal times.”
“….typical time to process, document, repair, market, and resell an aircraft spans any period from 30 days to two years. He had a Boeing 747 in inventory for six years.”
“There were banks that were making aircraft loans without first inspecting the airplanes So when we got there to repossess, we would just find some parts, or even that the airplane had been destroyed years ago.”
“Some banks are in such trouble they just can’t comprehend it. I’ve got a bank with a $2 billion problem, and it just doesn’t know what to do.”
And…..a statement I found interesting. Maybe somebody who knows how big ticket items are financed can explain it:
“Ninety-nine percent of these people got in trouble because the value of their airplane dropped and the bank said “Hey, the value of your $4 million airplane just dropped to $3 million, and you need to come up with a million bucks”…How many people can come up with $! million cash?”
I’m glad my Special Light Sport Aircraft is holding its value. My 5 year loan comes due next year.
Buyer beware.
There’s never been a better time to buy an airplane!
Gollum = economic terrorists?
Kind of makes sense: Disaster capitalists make loads of dough by purchasing insurance that pays off when financial schemes blow up, then (usually figuratively) planting time bombs which explode at a future point, when the payoff is realized.
But I guess as long as the Smartest Guys in the Room at Gollum Sucks can prove they were clueless about the financial crisis, they should be able to get off scot free. This shouldn’t be hard, given they have sufficient wealth to buy justice.
Tough Case
A prosecutor best known for putting terrorists behind bars is about to take on one of the biggest challenges of his career—proving Goldman Sachs committed fraud.
Andrew Harrer / Bloomberg-Getty Images
Robert Khuzami, director of enforcement with the Securities and Exchange Commission
Robert Khuzami spent seven years making big bucks at Deutsche Bank, but it’s tough to find any mementos of his time there. Instead, Khuzami’s office at the Securities and Exchange Commission is decorated with souvenirs of his earlier incarnation as a U.S. prosecutor, the man who helped put Omar Abdel-Rahman behind bars after the 1993 World Trade Center bombing. On his office walls Khuzami has hung two framed court drawings of him taking on the “blind sheik.”
Now Khuzami, the SEC’s director of enforcement, is pursuing what could be an even more challenging prosecution, although it isn’t a criminal case. He is trying to prove that Goldman Sachs defrauded its clients by selling them a complex, mortgage-backed security that was secretly designed to plummet in value, all so “short-sellers” would make a bundle on the market drop. The investment bank, which has called the SEC civil fraud charges “completely unfounded,” is scheduled to deliver its formal response in court on July 19.
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Many Wall Streeters employ a defense similar to the argument used in the acquittal of two Bear Stearns hedge-fund managers last fall: we were clueless about the crash but not criminal; no one knew how bad things would get.
Khuzami says those earlier setbacks are “a reminder to think about how your evidence will play out in a courtroom.” But he insists those decisions won’t “chill” him from “bringing appropriate cases.” He is praised for putting together specialized investigative units that will closely monitor Wall Street’s various businesses. “I think it’s a brilliant move. You need to have SWAT teams and that’s what those things are,” says Joseph Warin, a onetime government prosecutor who was SEC chairwoman Mary Schapiro’s first choice to take Khuzami’s job, but turned it down. (Warin later became Cassano’s lawyer.)
The Justice Department is watching Khuzami’s moves closely. Khuzami points to a number of high-profile SEC cases underway—in particular, charges against former Countrywide CEO Angelo Mozilo and executives with New Century Financial and American Home Mortgage, two other major mortgage originators. Still, as Khuzami concedes, most SEC cases are settled in the end. And among some U.S. prosecutors, there is an increasing sense that most senior Wall Street executives will escape charges and conviction in the subprime scandal. “I think that’s a fair assessment,” says one prosecutor. Robert Khuzami’s got a lot of work ahead of him.
News stories about how much cheaper it is to buy a foreclosure tend to confound the price discount with the quality reduction due to former owners who failed to properly maintain their homes after running out of money. The relevant question seems to be whether there is any advantage to purchasing a foreclosure home versus one sold on the MLS, after taking into consideration the cost of sweat equity required to restore a beaten down foreclosure home to livable condition.
My guess is for the monetary value of a 30% discount on a $400,000 California McMansion ($120,000), one could quite easily afford to restore a home to livable status and have money left over in the bank.
Foreclosures sell at 30% discount
By Les Christie, staff writerJune 30, 2010: 12:13 PM ET
NEW YORK (CNNMoney dot com) — Foreclosures accounted for a third of all sales — and sold at a nearly 30% discount — during the first three months of 2010.
According to a new report from RealtyTrac, the marketer of foreclosed properties, 31% of all sales were foreclosures. And homebuyers purchasing those properties paid a whopping 27% less, on average, compared to sales of non-distressed homes.
These foreclosure sales include properties sold in short sales or after a bank repossession, known as REOs in industry terms. It does not include transfers from borrowers to banks, as in a sheriff’s auction.
REOs, those homes already taken back from borrowers, commanded lower prices than short sales and other pre-foreclosures. The average REO sold for 34% less than conventional sales while pre-foreclosures averaged only 15% less.
Part of the reason for the bigger price cut for REOs is that many of them come to the market in poor condition, their previous owners either unable to or unwilling to maintain them.
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Recession, bear markets hit the rich, too
By Joseph A. Giannone
NEW YORK | Fri Jun 25, 2010 1:00pm EDT
NEW YORK (Reuters) - Turns out the rich may not be so different from you and me: They, too, are falling behind on their mortgages.
The U.S. housing market crash triggered the 2008 financial crisis and fueled a wave of mortgage defaults and foreclosures over the past two years. Now, growing numbers of well heeled Americans, their portfolios hammered by depressed markets, have stopped repaying loans or even walked away from mortgages.
“The affluent are not immune to the recession. It just took a while to manifest itself,” said Jay Welker, chief executive of Wells Fargo Private Bank. “In this economy, the high net worth segment has had to de-leverage itself as well.”
The rich by definition can weather a job loss or down markets longer than the average Joe. Yet their wealth is linked to securities, properties and hard-to-sell assets such as private businesses. North America’s millionaires still have not yet fully recovered $11 trillion lost in the crisis.
“Early on in the crash, the weakness was in the lower-price tiers. In the past year, most of the biggest price declines have been in the upper tiers,” said Mark Zandi, chief economist of Moody’s Analytics. “That suggests high-end households are coming under increasing pressure.”
First American CoreLogic, which tracks U.S. real estate and mortgages, says the percentage of $1 million-plus loans more than 90 days delinquent rose to 13.3 percent in February, half again as high as the 8.6 percent overall delinquency rate.
The million-dollar delinquency rate has exceeded the overall delinquency rate since April 2008.
“The high end of the housing market has deteriorated at a worse rate than the market as a whole,” said Sam Khater, senior economist at CoreLogic. “This recession is unlike prior recessions. It hit the high end just as much as the low end.”
Last month there were 205 foreclosure filings for mortgages of $5 million or more, the third straight month such filings rose, according to RealtyTrac, which manages an online foreclosures marketplace. The 205 foreclosures totaled $813 million.
Analysts noted the recession did not start with Federal Reserve tightening, a spike in inflation or a slowdown in spending. Rather, the subprime freeze created a credit crunch that spread to every market.
“A lot of the wealthy are less wealthy. The stock market hasn’t fully recovered, taxes are on the way up, and real estate isn’t worth what it once was. That shakes people,” said Christian Magoon, an adviser to asset management companies and a former president of Claymore Securities.
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History shows agitators can turn protests into violent mobs
By Cecily Burt
Oakland Tribune
Posted: 07/10/2010 08:42:07 PM PDT
Updated: 07/10/2010 10:28:47 PM PDT
OAKLAND — Nearly 1,000 people filled the street in front of Oakland City Hall on Thursday evening. They gathered to vent, pray, and ask how a Los Angeles jury could find Johannes Mehserle, a white former BART police officer, guilty of involuntary manslaughter for fatally shooting Oscar Grant III, an unarmed, 22-year-old black man from Hayward, in the back.
At first, the crowd was electric, but not volatile. To respond with violence would dishonor Grant’s memory, they said. Hundreds of Oakland police officers watched and endured taunts, spits and rocks from a small group that tried, but failed, to incite other demonstrators. The officers, to their credit, did not retaliate.
But something happened when the sky darkened. And once again, Oakland made national headlines for all the wrong reasons. The earlier images of peaceful assembly were quickly exchanged for video of smashed windows, looters with boxes of shoes, and fires in trash bins.
From the Dec. 16, 1773, Boston Tea Party protest that helped found our nation to the 1960s civil rights marches in the South, history has shown that it doesn’t take much for rallies to escalate into trouble, whether it’s the protesters or the police who spark the violence.
But the agitators who spurred the window-smashing rampage through downtown Oakland last year and again last week had their own agenda, and it did not involve justice for Grant.
As business owners boarded up their windows and surveyed the wreckage of their stores Friday morning, Oakland police confirmed that all but 19 of the 78 people arrested for parole violations, arson, property damage or failure to disperse came from outside Oakland. In fact, 19 live outside the Bay Area and 12 were from other states.
So why were they here? Is it no longer possible to stage a demonstration or protest without outsiders showing up to cause trouble?
Robin Einhorn, a professor of history at UC Berkeley, said little has changed since the 18th century, when colonists demonstrated against taxation without representation. It didn’t take much to turn a peaceful demonstration into an ugly scene.
“Anything can cause crowds to go haywire,” Einhorn said. “In 1886, Chicago, it was the Haymarket riots. It started with a peaceful demonstration. The mayor was there, it was all good and he goes home. Then somebody, they don’t know who, threw a bomb at police.”
The ensuing riots sparked by that action lasted days and resulted in the deaths of six police officers. Several anarchists were hanged, even though the authorities were never sure who threw the bomb.
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