Bits Bucket For July 22, 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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Seabirds and turtles are not the only creatures who need to fear at-sea oil spills. And the U.S. apparently does not have any kind of monopoly on environmental disasters caused by oil spills.
Man rescued from drowning in China oil spill
Published: 7:31PM BST 20 Jul 2010
Dramatic pictures of an oil clean-up worker being saved from drowning in an oil slick in the Chinese port of Dalian.
Related Content
* Chinese oil pipeline fire
* China oil pipeline explodes
Just think what might happen if China should ever do a deep water “bidness” partnership with say…Cuba?
Cheap (as in free) property in Miami Beach?
Cantankerous Intellectual Bomb Thrower: don’t know how cantankerous and intellectual these guys are but they are bomb throwers:
http://www.ottawacitizen.com/news/Bail+hearing+charged+Glebe+bank+firebombing/3290339/story.html
well they are charged but not yet convicted, the justice system drags things out for years.
Ahead of the Bell: June home sales
Sales of previously occupied homes in June likely fell despite tax incentives. ~ July 22, 2010
WASHINGTON (AP) — Sales of previously occupied homes are expected to have fallen in June, indicating that the housing market is likely to remain stuck in reverse for the rest of the year.
Economists polled by Thomson Reuters forecast the National Association of Realtors will say sales sank to a seasonally adjusted annual rate of 5.18 million, down from 5.66 million in May.
The report, which is scheduled to be released at 10 a.m. EDT, counts home sales once a deal closes. So it will still capture some buyers who are in line to receive federal tax credits that boosted sales this year.
The deadline to get a signed sales contract and qualify was April 30. Buyers initially needed to close their purchases by June 30, but Congress pushed back that deadline until the end of September.
So what’s the over/under on the date when a new $8K ($15K?) tax credit is introduced. I say 9/5 and it will be introduced by Harry Reid to show his constituents that he really, really, really cares about them and buy their votes $8K($15?) at a time.
What does he care? He will be long dead before the bill comes due.
“So what’s the over/under on the date when a new $8K ($15K?) tax credit is introduced”.
I was truly surprised the 8k wasn’t extended, so it won’t be a shock if it pops up again. The system is on life support, I expect more stimuli.
The other day a good friend of my son’s-22 year old who works for Walmart-told me he thought he would buy a house since the government will help. He didn’t know that the tax credit is currently gone. He’s a nice guy and a hard worker, but if he qualifies for a loan, I’ll be shocked. All else aside he doesn’t like yard work. And his girlfriend keeps trying to talk him into moving half way across country to an area he hates. Disaster just waiting to happen.
“…likely fell…”
How are the numbers going to continue turning out ‘worse than expected’ if headline writers keep inserting ‘likely fell’ into their conjectures over future data releases?
March and April were revised down, I saw the numbers yesterday but now I can’t find them. Anyway, the revisions were not insignificant indicating a lot of deals did not close at all.
I was noticing a few of those SOLD signs aound town were getting awfully stale. Are the sellers tied to those buyers if they can’t come up w/financing after a particular length of time? I thought most contracts had a default clause regarding that.
SOLD signs around town were getting awfully stale……….
I can’t say for sure, but we know from the sales data that about 1/3 of the sales are short-sales or foreclosures.
I suspect that they just have failed to complete the closing. I witnessed several here last year that failed to close for 6 months due to problems processing the application through the bank or lender.
I also saw several that were “SOLD”, only to find the “for sale” sign back on the property several months later. I guess if you just don’t have a pile of cash, then financing and price reductions are hampering the “sale”.
D.
I don’t thing that the sellers are tied to those buyers by anything but the lack of other options. It’s not like buyers who CAN easily get financing are knocking down their doors.
Inventory here both residential & commercial is continuing to rise….95050-95054
Anyway, the revisions were not insignificant indicating a lot of deals did not close at all.
I suspect that this happened to one of my local, longtime clients. She and her husband put their rental house up for sale this past fall. At first, they went the FSBO route, then they listed with an agent who specializes in their area.
I spotted a “sale pending” sign by the street in April. But I never saw a “sold” sign, and this is an agency that spares nothing in announcing that they’ve done the deal. It’s almost to the point where they post blaring trumpets on their “for sale” signs.
Any-hoo, I went to the Pima County Assessor’s database earlier this week. Property still showing as being owned by my client and her husband.
Which explains why, in this client’s case, work from her has dropped off to a trickle. And her account used to be quite lucrative.
So, guess who’s been prospecting for other clients? Me, that’s who.
With home sales and prices continually slipping - and because of all the tightened lending standards - why hasn’t the federal gov’t lowered the FHA limits in many bubbly areas? It was raised here in Miami-Dade county to $423,000 despite the fact that home prices have dropped like rocks. So you can get into a 423,000 mortgage with 3% down. Until people have real skins in the game, isn’t this just delaying true market correction?
lowered the FHA limits ????
Have you gone completely MAD??
As we have noted previously, all government agencies have the sole purpose of EXPANDING their operations, sphere of influence, and importance, while increasing staff and selling the concept to their benefactors that they are indispensable to society at large.
WE NEVER get rid of, or reduce, any agency, even if the mission when begun was “temporary”.
Remember “HEAD START”??. It was supposed to give a “head start” to inner city black children who performed poorly on tests and under-achieved white children at the early grade levels. It was a temporary program till the integrated school system provide “equal” education opportunity. It failed.
The solution: EARLY HEAD START, an expanded version of the failed program. It has been going on for decades.
The FHA program was supposed to provide funding for LOW INCOME housing. It has morphed into expensive housing and helped to make housing unaffordable to many people by making loans so ridiculous that speculation was inevitable.
It should have been restricted to loans under $120,000 and minimum of 5% down with proof of income and NO seller assistance. The better solution is to get rid of it.
“The FHA program was supposed to provide funding for LOW INCOME housing. It has morphed into expensive housing and helped to make housing unaffordable to many people by making loans so ridiculous that speculation was inevitable.”
This is how the elite strip-mine a country’s wealth; programs.
The world seems divided between those who think the Fed’s policy of using newly-created dollars to prop up asset prices on a discretionary basis is a good policy and those who are not so sure.
Color me skeptical. I just don’t believe in the ability of central planners to get the prices right, compared to the ‘Wisdom of Crowds’ judgment embodied in the pricing mechanism of a free market.
In Bernanke We Trust?
Posted: July 22, 2010 at 5:31 am
Ben Bernanke, head of the Federal Reserve, is credited by many people for lifting America and much of the rest of the world out of the financial crisis of 2008 and early 2009.
He spoke and answered questions in front of the Senate Banking Committee yesterday, and while he was speaking, the stock market rapidly sold off.
All Bernanke said was that the economy is “unusually uncertain,” which is something that anyone with a high school education already knows. It is hard to tell which of two statements that Bernanke made spooked the market more. He said that the Federal Reserve still has dry powder to help if the economy weakens further. He also said there was no need to use it now, an expression of confidence that the uneven improvement in GDP will continue.
The Fed could ease again or buy more securities in the open market. It also might decide to not let maturing securities run off the central bank’s balance sheet. These actions were effective in the past and should be so in the future.
Perhaps what bothered the markets is that the Fed is even thinking about another intervention. It is a sign that the confidence that Bernanke and most other Federal Reserve Governors express in public is a facade. Potential Governors being examined by Congress for confirmation have also been upbeat, which may simply be a way to ingratiate themselves to legislators who are worried about another slowing of the economy and what it might do to their election prospects.
The markets should have held their own yesterday, or perhaps rallied. The head of the American central bank argued that he could pull the economy from a period of stagnation again, and more importantly he said that such an action is not necessary now. And, “now” is the foundation of what will happen later this year or next.
Douglas A. McIntyre
Read more: In Bernanke We Trust? - 24/7 Wall St. http://247wallst.com/2010/07/22/in-bernanke-we-trust/#ixzz0uPUK31FP
These actions were effective in the past
It all depends on how you define “effective” Bennie. They were most definitely effective at lining certain people’s pockets, for instance - I’ll agree with him on that.
Effective in furthering the long-term health of the economy? Not so much.
It all depends on how you define “effective” Bennie. They were most definitely effective at lining certain people’s pockets, for instance - I’ll agree with him on that
And we have a winner.
It’s all about preserving wealth at the expense of everyone else.
In the long run, price fixing measures intended to preserve wealth fail due to mallocation of resources to unproductive uses. Economic collapse is a likely outcome.
Exhibit A: The collapsed housing bubble.
Economic collapse is a likely outcome.
And sometimes not just economic.
“mallocation”
Not sure if that was a typo or an attempt to coin a new word, but if the latter, I love it…
I agree. Mallocation is a great word. Mis-allocation with malice and forethought.
Mallocation is a great word.
Malloc in C/C++ programming stands for “memory allocation”
Just remember to free that memory when you’re done using it.
Just remember to free that memory when you’re done using it.
bah, it’s a windows app. They’ll likely have to reboot some time today anyhow
The solution, as i’ve pointed out countless times is to join in with Ron Paul and END THE FED.
Listening to these intellectual arguments from morons is a waste of time and energy. The FED has created the “bubble” economies of the past 40 years by providing the backstop for financial and fiscal hazard.
If the banks knew they didn’t have the FED to prop them up and give them money as ZERO interest, then they would have been much more prudent.
Where are the arrests for FRAUD? Why aren’t speculators from AIG who wrote uncovered insurance policies in prison?? What kind of deals did Bernanke and Paulson, and Geithner work out with all the money they passed around? None of our business….it’s all a secret.
The money printing needs to end and the free gambling at the big 5 “banks” needs to be curtailed by breaking them up and restricting their operations. IF they want to gamble, then they can do it on their own book. None of this has been fixed and the FED just helps them keep the casino open………….at your expense.
While I don’t disagree with you that ending the Fed is a good thing (TM), I do disagree that ending the Fed will end bubbles. What it will end is government bailout of failed speculation at the cost of increased taxes and/or inflation when it happens.
I believe in the power of central planners to extend the economic pain much farther into the future than natural market forces would ever have allowed.
There is no such thing as “natural” market forces and never was.
Do you care to explain this ridiculous statement?
Are markets for mice or men?
Does an apple trade itself?
Since it is for, by and of men, it will always be manipulated and gamed and subject to the vagaries of human foibles. This view of “pristine, virgin” market is the first problem with modern economic theory. The bankstas know it’s bull, and use that against everyone else.
The only thing “natural” about markets is a natural disaster wiping out everyone’s bets.
That’s kind of like saying chess isn’t a game because it’s “subject to variances in intelligence”. Of course it’s subject to human foibles - that’s part of the naturalness of it.
“Natural” does not equal “pure”. If it did - then the markets would always be one very smooth curve that perfectly followed the productivity of people, rather than a series of ups and downs.
Obviously however there’s corruption in the system - e.g. the PPT, the PTB, whatever we wish to call it. However the existence of corruption doesn’t preclude the existence of uncorrupt (yet still subject to “foibles”) forces. These are the natural forces, and they do exist. GB’s statement doesn’t imply the non-existence of unnatural forces - in fact just the opposite.
“Wisdom of the crowds” is an oxymoron, with the emphasis on “moron.”
It is when the crowds vote for central planning.
Employers are looking at candidates credit scores. Be wary.
~ Fortune
Dear Annie: I’m sure I’m not the only one with this problem. I just came from a job interview — my first in 4 months, despite pounding the pavement every day — where the interviewer asked me to sign a form permitting the company to contact any or all of the three major credit bureaus for my current and past credit scores.
I signed, but now I’m worried this will cost me the job. Both my wife and I have been out of work for most of the past year, living on savings and, yes, credit cards.
Now our cards are maxed out, or pretty close, and we have been late with a couple of payments, so our credit scores are in the dumps. We’ve considered signing on with a credit repair service, but I’ve heard that many of them are scams. Is there any other way to fix the situation? –Desperate in Decatur
http://finance.yahoo.com/news/Employers-are-looking-at-hftn-918851820.html?x=0
Whoa we desperately need more HB1’s hurry they have good credit……..
We placed ads and no Americans can qualify….what is a business supposed to do?
If the employer expects the employee to have any sort of money-handling or fiduciary responsibilities, I’d say that a credit check is in order.
And, IIRC, a credit check is required for a security clearance. Feel free to correct me on this point.
Indeed it is. Security clearance means more than a credit check, depending on what level. If you have lots of debt, it’s a lever someone can use on you. Higher security clearances do spot checks on your transactions to see if there is any funny money movements.
Well I think millions HAD great credit till this crap hit them….
And most of those millions would be on the road to credit recovery if there was a real recovery in america…..aka a job.
Yet another way for our billionaire overlords to keep us in check.
for every job i ever have had they have checked my credit and have required a urine test also…these are not entry level jobs but mid level professional,most major employers ck credit and urine…can u say big brother…..
We hired an IT guy a few months ago. He mysteriously disappeared after 1 week. Word was he failed the drug test.
We hired an IT guy a few months ago. He mysteriously disappeared after 1 week. Word was he failed the drug test.
If I have options, I will refuse to take a drug test. I don’t want to do business with anyone who doesn’t trust me.
I’m with you, lavi d. Drug tests can have false positives, after all.
Unfortunately we do contract work and some of our customers require the drug testing.
Yeah lavi…they never drug test executives…..every 60 days gimme a hair sample or there is the door
Remember a coked up VP can steal 100 times more then a guy on the loading dock.
I’ve heard it depends on what coast your on. West coast is more lax about things. Not that I believe in recreational drug use or religion, but I’ve had good friends that went down pretty hard for really no good reason, over the whiz quiz.
A credit check for employment has been SOP since the 1990s.
I vote for Warren (even though I realize I have no vote!). She has consistently shown a willingness to stand up against the Wall Street Megabank, Inc cartel in favor of American interests.
* The Wall Street Journal
* REAL ESTATE
* JULY 22, 2010
Fight Over Consumer Agency Looms as Overhaul Is Signed
By DAMIAN PALETTA
Associated Press
President Obama signs the financial overhaul law Wednesday.
WASHINGTON—President Barack Obama on Wednesday signed into law the most sweeping financial overhaul since the Depression, putting the country on a course toward a more muscular regulatory framework.
The law gives the government authority to take over and liquidate failing financial firms, injects transparency into transactions involving financial instruments called derivatives and will restrict banks from making risky bets with their own capital. It directs agencies to write hundreds of new rules.
But one provision that barely survived will have the most direct bearing on millions of ordinary people’s lives: a new agency meant to protect consumers from abusive financial products, called the Bureau of Consumer Financial Protection.
The proposal was the source of some of the most intense debates in the long struggle over the financial-regulatory overhaul, and the battles are far from over.
The biggest looming one is over who will head the agency, and that heated up this week as liberal groups insisted the White House give the job to Elizabeth Warren of Harvard Law School—whose idea the agency was. Banking groups were urging key senators to oppose Ms. Warren, calling her an activist who would impose policies they argue would hurt the availability of credit, especially for those with low incomes.
With Democratic leaders in Congress joining liberal consumer groups and unions in pushing for Ms. Warren—and with many Republicans opposed—the contest is shaping up to have the intensity and drama of a Supreme Court nomination. Senate confirmation is needed.
Mr. Obama’s choice, expected soon, will be a momentous one because the first director will have great influence over agency’s direction, wielding a roughly $500 million annual budget that doesn’t require approval from Congress.
…
Huge discussions about this, based on half-rumors and hair-splitting of anonymous quotes. There are rumors that Geithner doesn’t like Warren, and a vague quote from Senator Dodd that she may not be “confirmable.” Republicans are sure to oppose her, because they would oppose anybody.
It will be interesting to see which way Obama goes. We know Obama is a big defender of Geithner, but at the same time Obama appears to be coming out of his bubble of supporting banks.
I personally think it would be a stroke of political genious to try to appoint her but keep a no-name in reserve. Let the Republicans in the Senate try to filibuster a very visible Advocate For the Little Guy, in an election year. The campaign ads will write themselves.
This Republican really likes Warren.
I think her political difficulty is that she doesn’t have any bank logo decals pasted on her fenders.
That Republican is not seeking campaign contributions. Those that are (and Democrats too) probably wouldn’t want Warren. But I would.
She wouldn’t always be right, and wouldn’t always be reasonable, but would present an opposing view that should be heard.
How about angello mozillo.He is looking for work.Chris dodd owes him a favor or two.
1) Both Democrats and Republicans are beholden to the FIRE sector.
2) The lobbyists will never, ever give up. They’re paid very handsomely not to.
3) Another compromise for the CFPA (besides it’s already not being a stand-alone agency) would be to appoint a very “Pro-Industry” chief. This would further gut the agency.
Like I say, it is imperative that the “regulatory-captured” politicians be replaced this November if we ever expect to get our financial house in order.
Ezra Klein, a blogger at the Washington Post, had a post yesterday that mentioned a few of the other names.
http://voices.washingtonpost.com/ezra-klein/
Scroll down to 7/20/2010 at 11:40 AM.
For anyone who follows DC very closely the names are Michael Barr and Gene Kimmelman. I believe Barr’s office (he is Assistant Treasury Secretary for Financial Institutions) may be in charge of (or at least instrumental in) the “banks volunteer to restructure your loan” program. I’ve never heard of Kimmelman, but vice president of Consumer’s Union is not bad background for this sort of position.
I nominate you, Polly!
And, with great enthusiasm, I second GrizzlyBear’s nomination.
Not in a million years. I have no interest in getting reamed by the members of various House and Senate Committees. A fate which inevitably awaits the person who wins that prize. Can you imagine it? Reps and Senators hauling out example after example of some business that they are sure could have gotten a needed loan if only it had been allowed to borrow money at 3000% or, altenatively, some person who was enticed to borrow money they didn’t really need at 3000% interest and ended up loosing house all that was well and good in his life. Why didn’t you fix this, Administrator Polly? Well, why? You’ve had 2 months and your 16th employee came on board last week.
Hey, Grizz. I thought you liked me. Why wish such a horrible fate on me? I’m a little sad.
Hey, Grizz. I thought you liked me. Why wish such a horrible fate on me? I’m a little sad.
Is it okay if I un-second my nomination?
Polly, I think you’re fantastic and that’s why I nominated you!
I thought a super smart, ethical gal such as yourself would do us a world of good. Alas, selfishly, I wasn’t thinking of the horrible effects it may have on you, personally. Forgive my oversight, and forget that stinkin’ idea!
“A fate which inevitably awaits the person who wins that prize. Can you imagine it?”
Sounds awful, and that’s another reason I think Warren is the right woman for the job. I believe she would not only stand up to the flack, but she would rise above it.
I think Warren actually enjoys sparring with Congress. It is something that being a law professor prepares you for very well. The whole back and forth thing is a lot like a law school classroom. Of course, the professor is generally used to being in charge…
“…Banking groups were urging key senators to oppose Ms. Warren, calling her an activist who would impose policies they argue would hurt the availability of credit, especially for those with low incomes.”
“These f@!king Guys!,” Jon Stewart.
I don’t trust her. She’s a socialist pretnding to be an acadamic.
I have listened to some of her interviews. She gets a lot right against the banks but never blames the borrowers. Borrowers are always right, that’s her mantra.
It takes two to tango, baby!
You’re referring to the author of The Two-Income Trap: Why Middle-Class Parents are Going Broke . Of course she will not blame the mistakes of the middle class on them/us.
http://www.amazon.com/Two-Income-Trap-Middle-Class-Parents-Going/dp/0465090907
There are the social climbing posers who never could face they really weren’t all that and so spent themselves into oblivion, and then there are the folks who’ve done everything right and are still going down with the ship and I think EW focuses on the latter. In reality nothing is black and white.
Well you have to flatter your readers to get their attention, or so it seems.
She thinks the borrowers are suckers and the lenders should know better.
Should the government protect people from themselves? Well, someone should have stopped what went on, that’s for sure.
I think she has a point that prior to Greenspan’s loosening of credit, banks were very careful about only offering what they knew you could pay back after taking a stringent peek at you’re entire fiancial situation.
Consumers never understood that that had changed and they had to now engage in doing that work themselves. They were under the impression the lenders were still protecting themselves by screening for affordability. No one could have known MBS and CMBS had changed everything!
My father has an MBA (of a rather old vintage) and in 2007 he had no idea that banks no longer held on to the loans they originated. I had to explain it to him the complete change of the business model to him.
My counterpoint would be that even if the banks had continued taking stringent looks at people’s financial situation they still would have approved the vast majority of the loans they made, including the ones that eventually went sour. As such - so would the people buying the homes.
The problem is that the calculations involved in determining whether or not someone could afford were based on two key things:
1. Interest rates, which during the 2001-2004 period were at then-record lows; truly allowing people to properly afford more house.
2.
One…
very…
big…
whopper…
of…
a…
an…
assumption…
…Housing always goes up.
If the banks were still holding on to the loans they originated for 5 to 7 years (average) and possibly for as long as 30 years (option of the borrower) they would have required higher down payments when interest rates got so low. At least I can’t see how they could have done anything else in non-recourse states. A change in interest rates from 5% to 8% will kill the value of the underlying asset. Unless they had some way to hedge for the loss, they would have had to up the downpayment requirements or at least required people to keep paying for private mortgage insurance until they had 30% or more of equity.
The business model is the problem. Allow people to transfer the risk of their actions to someone else and their actions will get riskier. Much, much riskier.
I think a lot of them though actually considered the near-term equity growth as a downpayment. As fast as prices were rising - even if someone put 0% down at closing - by the time they moved in, or by the time the MBS was sold, or (most importantly) by the time a delinquency and foreclosure would have come to fruition (6-12 months) the equity on most houses would already be up about 20%, in essence providing the down payment. Of course at the time it seemed moot since the foreclosure rate was so incredibly low; most foreclosures that did happen were more because of bankruptcy rather than underwater home values (I conjecture).
There were I know some prudent banks who knew the party wouldn’t keep going; that prices would at best level off and at worst would go down. They would have required downpayments - problem is then they would make hardly any loans, since very few of their competitors were requiring downpayments.
There’s a big deal made about requirements for banks to hold onto loans for X years. That’ll probably help; however it does actually increase risk in some aspects - e.g. a small bank that has a lot of loans in say Pensacola can get wiped out if a hurricane comes through. If instead they’re able to sell those loans in an MBS package, in essence that’s insurance against that kind of thing. The risk gets passed to the MBS buyer - but the MBS buyer (like an insurance company) should be combining that security with others from around the country, such that losses in that one security are offset by gains in others.
Of course the systemic risk is still there in the MBS purchases; the holders of the debt are once-removed from the issuers who know more about the nature of the debtors (the homeowners). In a normal market though this shouldn’t be a problem - an issuer that tries to put one over on the buyers will soon be out of business if an MBS they try to sell ends up flopping while others are sound; that issuer won’t be able to sell them in the future. The problem is of course we didn’t have a “normal market” over the past decade - we had a confluence of tremendous nation-wide influences on the housing market - all in the upward direction; none the least of which was historically interest rates of course.
These are the things that really should have been addressed in the Frank/Dodd Act that weren’t (that I see). There are things in place to measure and react to risk (Title I etc) - but there aren’t the key things to actually prevent risk; e.g. for instance regular audits of Fed policy.
P.S. meant to more directly address this comment:
Allow people to transfer the risk of their actions to someone else and their actions will get riskier. Much, much riskier.
Actually I disagree - vis a vis the Pensacola hurricane example.
A good analogy is insurance. The fact that I have life insurance doesn’t cause me to have a riskier lifestyle. The fact that I have auto insurance doesn’t contribute to me driving recklessly. The fact that I have homeowners insurance doesn’t make me careless with fire, etc.
The reason is because even though an individual occurrence (e.g. a car accident) may harm the insurer - in the long run, and often even in the short run, it also still harms me. After an accident my auto insurance goes up - and rightly so. The same thing would happen in the case of a mortgages going bad - any lender trying to sell mortgages after they go bad will simply not be able to sell them, or will have to settle for a rock-bottom price.
This assumes that everyone is held accountable for their actions, of course. Unfortunately bailouts short-circuit the accountability system, which is why they’re so wrong. The financial institutions don’t fear buying bad securities since they know if they blow up it’s not a big deal - they won’t end up in the poor house or jail; when in reality they should.
I don’t want them to hold on to a mortgage for X years (unless it is something like 10 which I’ve never even seen proposed). I want them to hold on the worst 10 to 20% of the risk forever. I don’t think you can get rid of securitization, but you could make the securitizer or the originator keep the riskiest tranche so they loose everything before any one else looses anything. And require that they KEEP it.
When I was a baby lawyer on Wall Street the partner in charge of securitization transactions required that the people putting together the package keep the worst 10%. They hated it. They fought him. And since they wanted an opinion from our firm on the deal, they always lost.
Um…packman, having life insurance only lowers the risk that you will leave your family destitute if you die. It doesn’t keep you from dying and so it follows that it doesn’t keep you from taking stupid risks. But all that proves is that there is a lot more to dislike about dying than not earning money anymore. Similarly with auto insurance. Being in an accident has many repercussions other than the medical bills and cost of car repair. The fact that the payment you might receive from your auto insurance doesn’t mean that you drive recklessly just means that the payment wouldn’t really be enough to make you indifferent to the fear, pain and inconvinience of having the accident.
But here we are just talking about money. Money pure and simple. Make sure that the bank (I’m actually inclined to make it the investment bank that puts together the bond package) has to bear the brunt of making bad decisions about which loans to put in the package by keeping all the risk of the first 10% of losses and you will find that the only loans that can be purchased have very high underwriting standards. Then if a local bank wants to make additional loans that don’t fit the standards because they know the area and are satisfied themselves, let them do it and keep the loans. If they make bad decisions, the owners can take the losses. The big banks are sufficiently diversified in area just by themselves that they are unlikely to have to worry about a single plant closing resulting in widespread community job losses.
Weather events are covered by the insurance policy, not the bank.
Problems are (and I know I’m arguing with an insider here, but what the hey):
- In this past bubble much of the 80-90% of the “safe” mortgages also went bad.*
- By requiring that the originator keep the riskier mortgages, you then make the supposedly-safe tranches appear even safer. Now supposedly all MBS would be safe; decreasing their cost and therefore increasing the demand.
* I realize that if the originators had been required to keep 10-20% in this past bubble that originators wouldn’t have made as many loans and/or would have been more prudent - in theory. However I’m not so sure. Since the housing market was going gangbusters, with very few foreclosures, most lenders probably still would have been making the loans; figuring they’d just pocket the interest over the long run rather than in the short run by selling them. So I’m not convinced that forcing lenders to hold their mortgages would have helped.
Additionally - this again gives the big lenders a big leg up. Even if they (BofA, JPM, WF, etc.) were required to hold a bunch of their loans; the fact that they had a government backstop in place but the small lenders don’t means they have a leg up; e.g. their borrowing costs are lower because their risk of default is lower.
In the end - to be blunt - I see these rules discussions as all just noise mostly. In reality all they cause (or smooth) is surface ripples in the credit markets; these however are overwhelmed by the big waves of credit expansion and contraction at the Fed, and legislation that exerts price pressure changes one way or another (e.g. tax credit changes, deduction rule changes, federal lending agency rule changes, bank capital ratio rule changes, etc.)
….The fact that the payment you might receive from your auto insurance doesn’t mean that you drive recklessly just means that the payment wouldn’t really be enough to make you indifferent to the fear, pain and inconvinience of having the accident.
But here we are just talking about money. Money pure and simple.
I think you belittle the power of money; or at least what the power of money should in an ideal world (and used to be). In an ideal world the pain of making these bad decisions - e.g. selling a batch of bad mortgages - would be bankruptcy and loss of a job, and possibly prison. For many people these things are worse than a car accident - heck for some even worse than death.
Thus in such a world (as mostly existed years ago) these risks - even though it was “just money” - were a lot more tangible. People were a lot more cautious about making loans, about saving money in reserve, etc.
FWIW - I’m actually not that much against requiring lenders (or MBS packagers) to maintain X% of their loans. It forces prudence, and prudence of course is a good thing. However I don’t like forced prudence. If people, or financial institutions, want to be risky then I think they should be allowed to be. The key is that they should be the ones to feel the pain when things go bad.
packman and polly: I think that the problem is that the originhators and other down the line didn’t think that they had hedged SOME of the risks as you do whenbuying insurance, they thought that they had hedged ALL the risks.
What allowed the housing market to go exponential was the fact that large loans were being made with no risk to the originator. This is an obvious factor in driving up prices. An originator makes a fee on this product - a loan - which he conjures out of thin air. A bigger loan equals more profit. There is every incentive then to make more loans and not be concerned with repayment. In this game, being concerned with repayment is the mark of a chump.
Always, one needs to ask, “Why would lenders make loans where they don’t care about the possibility of being repaid?”
We saw this game play out. It’s like a nuclear explosion. The explosion feeds on itself, prices go exponential till the fuel runs out.
Bad loans were at the core of the credit meltdown. Had lenders been forced to bear the consequence of a bad loan, it would have been a heavy brake on the price runup, and a mitigating factor in the resultant meltdown of bad debt, and the subsequent use of the taxpayer as a “bad bank” to absorb the toxic debt.
Re: the Pensacola example - every policy has costs and benefits. The cost of a extremely lax lending policy is the global debt crisis. The cost of a more rigorous lending policy would be that regional lenders would be stressed if an adverse event hit that particular region.
I much prefer the latter scenario. It is much easier to contain. And there is much more justice in that scenario.
Lax lending, as we can see, has caused gargantuan deficits which generations which had absolutely nothing to do the bad debt, to shoulder the cost of paying it back.
I’m thinking of the medical analogy. If I have an unscrupulous doctor who orders unnecessary medical tests because he owns a stake in the medical test company, is the patient a sucker for trusting the doctor and paying for the tests? Or do we tell the patient: “too bad, you should taken a class in ACL MRI interpretation” ? Sure, the patient needs to know a little bit, but for the msot part, doctors have a good-faith duty to charge the layman public only for necessary services. And if they don’t, there is a system established for second opinions. There is no such system for banking. Or, perhaps, your second-opinion banker is likely as corrupt as the first one.
Bankers, for sure, violated good faith. There used to be value-added in the safety of mortgages: partly because our parents and grandparents took responsibility for paying (please note this was in an environment where jobs were stable), but also partly because banks took responsibility to lend only to responsible people.
The banks went fully crooked in ~mid 2003 when they opened the I/O floodgates to the general public and sold mortgages up the food chain. The crooked specuvestors were just following the banks’ lead. The original value-added built from years of trust was fully measured and extracted in the form of gambling on lower reserves and suckering layman buyers who had no hope of understanding the fine print. That value-added is gone now…
What now? The monumental task is still to fish out the innocent buyers from the fake “victims.” Where do you draw the line, and on what evidence? IMO, I would single out true first-time* primary resident verified income buyers as innocent victims. Anyone else should have known better, and should prove their own innocence (good luck with that.)
——
* true meaning somebody’s first true house purchase…not buying then selling and renting for 3 years.
What on earth do you mean “pretnding [sic] to be an academic”? She is an academic. Where does the pretending element come in?
What on earth do you mean “pretnding [sic] to be an academic”? She is an academic. Where does the pretending element come in?
It comes from his wacko world.
I’ve never heard her say borrowers are always right. Borrowers made mistakes, made bad bets based on faulty information and a wall of realtor bank propaganda and poor understanding of what was going on, on the vision that housing prices were going through the roof, and of course greed.
If you only watched MSM you would have had no idea that a bubble was forming and what the causes of the bubble were.
The banks on the other hand had a full understanding and lobbied to create the playing field that lead to this disaster. They knew what was happening was not sustainable and banked on bailouts.
The Wall Street banking CEO’s have walked with huge bonuses, at best those who gambled on purchasing a home have walked away from debt or have been given trinkets but none are rich, most have been financially destroyed. That’s the difference you banking appologists just don’t get. The large banking cartel has also seen their competition destroyed and cemented their too big to fail status.
Since when does advocating for the middle class make one a socialist.
Not only did they bank on bailouts, but they saw that the profits from fees and being able to hide and then get rid of liabilities among the CDOs would more than outweigh the eventual losses from collapse.
Yet according to certain sock puppets, somehow that was the borrowers’ fault.
I’m still trying to figure out how borrowers managed to approve their own loans. Did they hold a gun to the loan officers head?
There is an unspoken perception that when you claim someone is an “academic” that they have the intellectual capacity to be engaged in academic pursuits.
While we have seen clearly that this not the case in most of the political class that has arisen in the past 20 years, that class, the HARVARD/YALE/PRINCETON/crowd still believes that they are intellectually superior to the rest of us.
Consequently, they know better then us, what is best for us.
That is why they are so dangerous.
Elena Kagan is another example.
She has no understanding of the Constitution, except to interpret it to mean anything she wants it to mean by some convoluted argument, even when the argument goes directly against the plain language of the document.
Intellectual pursuits are dangerous when they lead to fantasy, and often times, these same people can’t distinguish intellectual “concepts” from the real world reality.
Listening to them talk gives me hives.
Yes Elena Kagan and Elizabeth Warren don’t have the intellectual capacity to engage in academic pusuits??
Just say you don’t agree with them leave out the diatribe, and take some benadryl for the hives.
Umm…Diogenes, you do know that being an academic means you teach at a university - any university - not that you attended an elite institution? Both Warren and Kagan are law school professors. Well Kagan is the Solicitor General of the United States for a bit longer but she used to be a law school professor and the dean of that school as well. The fact is that you do not have to preceive (dis you mean assume?) that they are capable of doing the work of academics. They can. And they have.
The fact that you don’t like that work is an entirely different question.
Right on, polly.
Being the offspring of academics — Dad has taught in universities and has a Ph.D. and mom has a Master’s and taught in the public schools — I know firsthand that it’s not easy to pretend to be an academic.
Yes, you can fudge your credentials. There was a case of a community college president doing that here in Tucson. Like most fudge-ers, he was found out. The college fired him.
What followed was one of the most impressive examples of self-redemption that I’ve ever seen.
He threw himself into organizing community festivals. Good ones too. It was to the point that people like me would make a point to go because he was in charge of things. The guy was definitely worth whatever he was being paid.
He also went back to school and got a real doctoral degree. Then he went to work for the same university in student recruiting and mentorship. I’m told that he did a great job.
She’s a socialist pretnding to be an acadamic.
I know, but what we need is a fascist pretending to be a libertarian.
which definition of socialist are you using?
which definition of socialist are you using?
I was just kidding. I don’t think Elizabeth Warren is a socialist.
It just cracks me up how everybody throws the word “socialist” around because they hear it on the radio.
“Banking groups were urging key senators to oppose Ms. Warren, calling her an activist who would impose policies they argue would hurt the availability of credit, especially for those with
low incomesthe inability to perceive they are being led to the slaughter.”There! Fixed it!
BINGO
* THE WALL STREET JOURNAL
* WRITING ON THE WALL
* JULY 22, 2010
Anything Less Than Elizabeth Would Be Un-Warren-ted
* By DAVID WEIDNER
Do you hear music? Financial reform is the law of the land, but its success is hardly a matter of simply signing the document. Much of the law is open to interpretation.
Congress has written the music, but whether we get Handel or honking come performance time will depend on those picked to deliver on it.
David Weidner interviews Elizabeth Warren, chair of the Congressional Oversight Panel, about the financial-system bailout, TARP and the need for an independent, consumer protection agency.
Think of recent appointments to top regulatory jobs that have either energized staid agencies or dragged robust ones into conflict. There was Mike Brown’s disastrous reign at the Federal Emergency Management Agency, the steadying hand of Hillary Clinton at the State Department, John Dugan’s controversial time at the Office of the Comptroller of the Currency and Mary Schapiro’s energetic, if not always effective, impact on the Securities and Exchange Commission.
That’s why the biggest job to be created by the Dodd-Frank Financial Wall Street Reform and Consumer Protection Act already has created controversy about who should get it. Elizabeth Warren, the front-runner to lead the new Consumer Protection Financial Agency, faces mounting criticism that she’s unqualified and too anti-bank to do the job.
As the Journal’s Damian Paletta assessed Tuesday, the hand-wringing over Ms. Warren, 61, suggests an “intense fight” is coming.
It really shouldn’t be that way. There really is no other choice. Ms. Warren, a Harvard Law School Professor who has been chairing the House Oversight Committee minding TARP’s progress has been the CPFA’s biggest proponent since she floated the idea in 2007.
Giving the job to someone else would be like letting Steve Jobs come up with the iPad and then giving it to Microsoft Corp. to market. You’d almost certainly lose the soul.
…
Boynton Beach commission sets tax rate higher; city manager suggests furloughs.
BOYNTON BEACH — As three long days of budget workshops went down to the wire, City Manager Kurt Bressner brought up the possibly of employees furloughs.
Bressner also told city commissioners that if they don’t raise the city’s tax rate, Boynton Beach government will have no money in its reserve fund, the city’s savings account.
In the end, the commission voted to raise the tax rate to $7.2 per $1,000 of real estate value. The city’s current rate is $6.7. The tax rate is a proposed rate and could be finalized, or lowered, but not raised by the deadline of September.
Even Mayor Jose Rodriguez, who consistently resists tax hikes, voted for the tentative rate. “The party’s over, it’s been over,” said Rodriguez.
Yes. Rather, than cutting governmental waste and unnecessary employees, the best way to solve the problem of lost tax revenues resulting from falling real estate values is to increase real estate taxes. Problem solved. Of course there is no correlation between property values and real estate taxes, nor one’s ability to pay debt service on their mortgage.
We know how this plays out from experience in Upstate NY. It’s a downward death spiral that crushes property prices.
There are many who have yet to learn that.
Thanks Blue Skye. Was going to comment upping those property taxes is the NY boilerplate answer. But I have to admit the realtors have done well with that as many home buyers not used to paying such significant amounts don’t seem to pay attention to their taxes until after the home is purchased. Then they often leave w/in 3-5 years. The churn is a realtor’s dream. At least a local listing site finally caved to public pressure and started listing taxes along with other home characteristics. My taxes doubled my last home payment and that was in the relatively inexpensive county. Here they’re often double what I paid just 10 miles up the road and that’s about the school. And for 1/4 the land.
Exactly “why” proposition #13 passed in California…
Yep, pick-yer-spot and stay for awhile, or “suffer” the consequences!
In the end, the commission voted to raise the tax rate to $7.2 per $1,000 of real estate value. The city’s current rate is $6.7. The tax rate is a proposed rate and could be finalized, or lowered, but not raised by the deadline of September.
Is this on top of other property taxes? Or is it the only one. I ask because $7.2 per $1000 is less than 1%. I know that in many places that would be considered a low mill levy rate.
That’s for a city mill rate, I believe. .7% mill rate from a city is definitely high.
Probably depends on the schools - usually the majority of property taxes goes towards them. If the schools are city schools then the city rate is higher; if county schools the county rate is higher.
Drill Ban Hits Services Firms ~ WSJ
A 20-mile stretch of highway in this part of Louisiana is lined with companies that provide services to offshore drillers, from oil-rig caterers to equipment makers. None of them are eligible for BP’s compensation funds; many say they have seen their revenue drop in the two months since the federal government imposed the drilling moratorium.
Angry, frightened residents complain that while Washington has scrambled to put systems in place to cover losses for everyone from rig workers to restaurant owners in Florida, it has turned its back on the businesses that make the oil industry go.
The rally, which was organized by groups led by the Louisiana Oil and Gas Association, began with a solemn tribute to the 11 people who died on the Deepwater Horizon rig in April. But it quickly took on the feel of a political convention, each mention of President Barack Obama bringing a new round of boos.
Real estate agents want oil spill compensation.
WASHINGTON (AP) - The administrator of a $20 billion oil spill compensation fund said Wednesday he’s been besieged by real estate agents and brokers, demanding that they become eligible for payments.
Kenneth Feinberg, in congressional testimony singled out the real estate agents’ demands as one of many tough eligibility decisions he’ll have to make in the coming weeks.
Feinberg told the House Judiciary Committee he’s working only for victims, not BP or the Obama administration. Operations of the independent fund will begin next month, starting with six-month emergency checks that will be processed within a day and paid out within the next two days.
The emergency payments will not require a release from future claims. Long-term settlements—for current and future injury or loss—will require agreements to accept the offer as final payment. Victims can reject the money and pursue claims independently in court.
Kind of hard to keep all the pigs away when you create and fill a giant trough, apparently.
And now the shake down begins.
Stop the bailout madness! They just need to move where houses sell (basically no where right now).
Next the strippers will be asking for money because the fishing crews aren’t in spending like they used to.
That would be funny if it weren’t true.
Can someone please explain to me how foreclosures can ‘reduce a home’s value’? I honestly don’t get the logic of this claim, but I suspect their study results are compromised by missing variables which introduce bias.
For instance, if a home in foreclosure happens to sell for less than other homes of similar description because the former owner turned pigs loose inside to vent his rage, then it would be the pigs’ fault that the home sold for less than the comps, not the fact that the home went into foreclosure.
Foreclosures Reduce A Home’s Value By 27%, MIT Study Finds
Huffington Post | Nathaniel Cahners Hindman
First Posted: 07-21-10 12:38 PM | Updated: 07-21-10 01:53 PM
Thinking about defaulting on your mortgage? You might be putting a serious damper on the value of your neighbor’s home.
A single foreclosure can decrease value of homes within 250 feet by an average of one percent, according to a recent MIT study.
The study, which examined 1.8 million home sales in Massachusetts from 1987 to 2009, also found that the typical foreclosed home has its post-foreclosure price slashed by an average of 27 percent. (That number tends to be larger for houses with “low-priced characteristics in low-priced neighborhoods,” the study found.)
By contrast, the authors note, if a house is sold after the death of an owner, the value drops five to seven percent. If a homeowner declares bankruptcy, the study shows, the price only falls three percent.
Why do foreclosures cause such a large decline in a home’s price relative to other kinds of forced sales?
In the study’s working paper, MIT economist Parag Pathak and two Harvard researchers, John Y. Campbell and Stefano Giglio say that foreclosed houses sell at such low prices “both because they may have been physically damaged during the foreclosure process, and because financial institutions have an incentive to sell them quickly.”
…
Perhaps they should tie that number into density of foreclosures. At what point does that sought after address start to turn into what more closely resembles a slum? A single home won’t do it but how many does it take on a single street before the Mrs. starts to turn up her nose on the drive-by.
WHAT?
“Thinking about defaulting on your mortgage? You might be putting a serious damper on the value of your neighbor’s home.”
Like the Defaultres give a flying rats a$$ about their neighbor home value !!
What a scream!!
No kidding. Must have been a slow news day.
America,
It’s time to say NO to your government. NO to your politicians. NO to your banks. NO to special interests. NO to corrupt CEOs.
97% of those Washington do you not represent your interests — on BOTH sides of the isles. BOTH parties have contributed to America’s $13.5 Trillion debt.
What can you do? Stop following every word that’s disseminated by the MSM. Think for yourself. Make sound decisions with a rational mind. Take matters into your own hands.
~ Ronald Lewis
Denver, Colorado
“Think for yourself. Make sound decisions with a rational mind. Take matters into your own hands.” Ummm, most of the debt people took on was voluntary. Let’s not pretend they were victimized or didn’t come to the table with their hands covered in blood. Doesn’t sound like Ronald Lewis understood what happened.
I don’t think his advice is intended for those people (FBs).
A lax lending environment results in something like anarchy. You see someone taking out an obviously unwieldy loan. They use it to obtain the object you desire. You see more and more people doing it. After a while, you conclude the only way to obtain that object of desire is to engage in the same kind of behavior.
In anarchy, you see a crowd looting a grocery store. You see the shelves being stripped. You then conclude the only way to get groceries is then to join the crowd, before the groceries are gone.
I had lunch yesterday with an Anarchist who informed me: “What we are and what we want begins with a ‘no’.
We told Obama ‘no’ on health-care and they still did it. We said ‘no’ on bailouts and they still did it. ‘No’ doesn”t have much effect these days unfortunately.
That’s exactly what popped into my mind. On some state chat boards people say their rage will be unleashed when they vote incumbents out. They still don’t get it. Although there’s always a chance of a Peter Schiff or Ron Paul getting on a ballot what I see are developers, shifty lawyers and more of the same power structure just moving up ranks into the spotlight. Pay to play is keeping the avg concerned citizen out of contention. This is going to take a little bit more work than taking 20 minutes out of one day to pull a few levers. It’s going to take a bit more work than writing our congress critters too.
“We told Obama ‘no’ on health-care and they still did it.”
That is not really true. For years, polls showed American’s were for health care reform.
Just because special interests had worked some PR magic right before the crucial vote does not mean it was an accurate, lasting reflection on American’s feeling on the subject. This is why we are a Republic and not a pure Democracy.
Some headlines before the vote: 2009-10
Most Want Health Reform But Fear Its Side Effects Wash Post
Poll: Americans Want Dem Health Care Reforms, Not Dem Bills TPM
New Poll: 77 Percent Support “Choice” Of Public Option SurveyUSA
Study confirms most Americans want health care change but not abortion funding CNA
Another Poll Shows Majority Support for Single-Payer – Healthcare-NOW!
New Poll: 77 Percent Support “Choice” Of Public Option SurveyUSA
And I still do. So, count me as a proud 77-percenter.
Yep lets have the magic money fairy pay for the “public” choice.
What you mean by “we,” kemosabe?
There are a lot of “we” who said “no” to Bush and we got Bush anyway. There just weren’t enough of we.
There are a lot of “we” who said “no” to Bush and we got Bush anyway. There just weren’t enough of we.
There was, but the majority of nine folks on a bench somewhere made the final decision.
“the majority of nine folks on a bench somewhere made the final decision.”
I think they just stopped the corrupt political machine in Florida from inventing more Gore votes. You could also make a case that the Coleman/Frankin recount should have been taken to the supreme court….you know with convicted felons puting Frankin over the top and all.
It certainly does for my almost two year old.
“Do you want to do X?” “NO!”
“Do you want to not do x?” “NO!”
Two problems:
First, the government we have is representing the average American very well. Most people are stuck in a credit mess and spent more than they took in. Government the same.
Second, the political structure is such that politicians have you believe that by giving you a government program you are getting a better deal than your neighbor. Unless you are one of the 47% of the public who does not pay taxes, you are really paying out more than what you are getting. Some fat bureacrat is eating steak nightly because you sanction the system with your vote.
It’s beyond the time to drop out. Take direct action to cut your own taxes. You will be more effective starving government by effectively cutting your tax payments legally. I’m sure 90% of you are paying far more taxes than you legally should.
Politicians in govt reperesent the highest bidder.
Some fat bureacrat is eating steak nightly because you sanction the system with your vote.
BiLA - I really don’t see how a person choosing to vote legitimizes the system, and people opting not to (like yourself) somehow makes a difference?
All not voting does is give other people a larger voice in government.
All voting does is show you how overwhelmingly the morons outnumber you.
I’ve tried voting several times. It never, ever worked.
“I’m sure 90% of you are paying far more taxes than you legally should.”
And how do you recommend legally cutting them, Bill?
I pay a hefty chunk-o-change, but I don’t see any obvious legal way to pay less. The vast majority of my income is W2, and as a renter I just take the standard deduction most years.
You then, are the one paying the bills of a freespending, corrupt government.
“What can you do? Stop following every word that’s disseminated by the MSM. Think for yourself. Make sound decisions with a rational mind. Take matters into your own hands.”
Well I’ve been doin’ just that…but being in such a small minority makes me feel a litte Ted Kazinski-ish at times.
Montani semper liberi
Mountaineers are Always Free?
Ted K. was a fan of that Latin phrase.
NO to your banks. NO to special interests. NO to corrupt CEOs.
I’ve been doing that for some time, but they keep laughing while they cash their 7 and 8 figure bonus checks.
Same here, while I’m lucky to see a 5 figure income.
I remember reading once about a country that was founded on the basis of questioning authority, anyone know the name?
IIRC, they became quite fond of trading houses, exporting jobs, eating high sugar diets, and watching movies with anthropomorphic digital animals.
Hey - but they also sprayed lots of graffiti. That gave the authorities the what-for.
Remember, a lot of people have trouble with long division. Informed decisions with rational thought might as well be rocket science.
What do you do if a state needs Mo Money…
Sales tax proposal could slam South Carolina residents
Commission proposing sweeping overhaul; everything from water to iTunes could be included.
The Post and Courier ~ July 22, 2010
COLUMBIA — South Carolina consumers would pay more for food, water, electricity and prescriptions in exchange for a lower overall sales tax rate under a tax revision proposal given preliminary approval Wednesday.
And the proposed sales tax increases don’t stop at necessities. The state’s Tax Realignment Commission recommends that the state for the first time charge sales taxes on digital purchases from online stores, such as iTunes and Amazon.com, and pay more to buy a car as part of a massive makeover of the way the state collects taxes.
BASIC NEEDS: A tax would be added on water and electricity used in homes at 2.5 percent, and a tax on groceries would be restored.
MOTOR VEHICLES: The $300 sales-tax cap would be removed on motor vehicles. Car, truck and SUV buyers would pay up to $1,200 in sales tax until 2014.
PRESCRIPTION DRUGS: A 2.5 percent sales tax would be charged on prescription drugs, although Medicaid and Medicare would continue to be exempt.
No changes will happen unless the Legislature approves them.
Lawmakers created the commission, made up of 11 financial experts, to re-evaluate tax policies as a result of the recession that drained state coffers by more than $2 billion.
The state is so broke that lawmakers barely have enough money to provide core government services such as law enforcement, public education and health care. And more budget cuts are expected next year.
Some of the recommendations that call for taxing basic necessities, including water, electricity and food, will end up disproportionately hurting poor people because they spend more of their income on groceries and housing than those who are well off.
Come on people, the trend is obvious. Use this time to skinny it up and put it where it needs to be. Proposals like this are becoming widespread, take them as warnings.
MOTOR VEHICLES: The $300 sales-tax cap would be removed on motor vehicles. Car, truck and SUV buyers would pay up to $1,200 in sales tax until 2014.
Is that what they have in SC? Who does that benefit?
Yeah, during an economic slow during a time where a large percentage of vehicles are already upside down make sure to add $900 to the cost of a new car. That’ll work. The state will end up paying all that extra revenue back out in unemployment bennies when dealerships start laying off. Better tax all auto parts and shops next too cuz lots of people are going to be hanging on to their vehicles a lot longer.
Remember, voodoo, er (dang I can never get this right) SUPPLY side economics states that you raise prices when times are good and claim scarcity of product and you raise prices when times are bad and claim scarcity of income.
See? Win/win! Well, for those “that count” anyway.
The $300 cap on the auto sales tax helps the wealthy when they buy their $80,000 Mercedes.
Billy Bob, the six-fingered pizza delivery guy buys a five year old Kia for $6,000 and pays 5% sales tax, which is $300. Big Daddy Petigru, the Charleston attorney and lobbyist, buys a new Lexus for $60,000 and pays 0.5%, which is $300.
Nice, ain’t it? Talk about trickle-up.
Tax the middle class to bail out the rich.
The rich got their TARP and FED intervention and GSE’s
Fed Gov cuts aid to states and collapse forces states to raise revenue. They tax the middle class.
Fast track to third world wealth distribution.
It’s the 1980s all over again. Except no good music this time.
I’m thinking Wall Street will rally on this news, though I have no explanation to offer as to why it would do so.
market pulse
July 22, 2010, 8:30 a.m. EDT
Jobless claims jump 37,000 to 464,000
By Greg Robb
WASHINGTON (MarketWatch) — The number of people applying for initial state unemployment insurance benefits rose 37,000 to 464,000 in the week ended July 17, the Labor Department reported Thursday. Economists surveyed by MarketWatch had expected an initial claims level of 450,000. The four-week average of initial claims - a better gauge of employment trends than the volatile weekly number - rose 1,250 to 456,000. Continuing claims in the week ended July 10 fell 223,000 to 4.49 million.
…
The market was rallying before the news. While slighly higher than expected intitial claims will exhert some downward pressure, we are in earnings seasons which will be the driving force of the market today.
Yeah, right — the markets have already long forgotten Bernanke’s ‘unusually uncertain’ remark and are in party mode again today.
Who didn’t realize there was uncertainty before Bernanke mentioned it?
Does the fact that 652,000 recently dropped out of the U.S. labor force have implications for the continuing claims figure?
Don’t think it should. Continuing claims is a statistic that can be observed directly, the states know how many people they are paying benefits to under the initial 26 week unemployment program, which is what continuing claims represent. People dropping out of the labor force will affect the unemployment rate though as the size of the labor force is an assumption based economic statistic.
U3 hovering at 10%. U6 hovering at 16%. SGS reports that including the long term Unemployed (officially dropped from the statistic in 1994) the total unemployment is 22%. In the US during the GD the unemployment rate averaged around 16% (1930-1940) peaking at 25% in ‘32-’33. The folks in DC who have been saying we have been in a recovery cannot be that stooopid.
Just my take on it, but if you included also those who work for government as “unemployed” the numbers would look staggering, now vs then.
Just my take on it, but if you included also those who work for government as “unemployed” the numbers would look staggering, now vs then.
I think you might be understating the scope of the New Deal. It was quite huge. E.g. the WPA itself was the largest employer in the country until 1943. At it’s peak in 1938 there were 3.3 million people employed by the program - that would be the equivalent of about 9 million today, as a percentage of the total population.
Yes pack but we sure did get a lot out of it…..Rural electricity, new roads lots of schools with inside toilets….whew….what have we got for the trillions we just spent?
We cant even get our 2nd ave subway built…let alone fix the 59th st access roads…so many ruts bumps pot holes i’ve never seen it so bad.
Since the New Deal started around ‘35, we’re still scary close to the pre WPA stats. Is the New Deal really gone anyway?
The folks in DC who have been saying we have been in a recovery cannot be that stooopid.
They aren’t. The people who believe those statistics are, and that’s all that matters.
Extracting the most wealth out of the public treasury for the least cost has become a very specialized, very efficient science. There are legions of companies specializing in this.
Also, realize that a tremendous amount of money simply went to making debt-holders whole.
So these are some reasons the trillions spent so far have had little apparent effect.
I’m thinking Wall Street will rally on this news, though I have no explanation to offer as to why it would do so.
Easy. Increased joblessness equals lower wages for those still working. What is there to not love?
less worker payrolls = ?
How The Rich Are Winning
by Brett Arends
Tuesday, July 20, 2010
Reuters News:
“As for socialism: The Federal Reserve reports that the private sector is doing so badly that corporate profits just, um, rocketed to a new record high. The after-tax profits of corporate America rocketed 43% in the first quarter.”
SUCKERS!
“I’m thinking Wall Street will rally on this news, though I have no explanation to offer as to why it would do so.”
Poor employment report increases the odds that the Fed will unleash more crack-cocaine simulus. The market is jones’in and wants another hit.
..and, as stated above by In Colorado, the proles have to accept lower wages.
How the f*ck is GM allowed to buy a finance company???
THEY ARE ON TAXPAYER LIFE SUPPORT MONEY.
I think you may have answered your own question.
Right? I mean, was that a trick question?
Anyone looking at short sales?
Trulia has a recent article that is worth looking at. Here are some highlights:
Myth #5. That the bank “can’t” do X or “has to” do Y.
Fact: The seller’s bank in a short sale is being asked to waive debt that they are legally owed. They have the absolute right to simply refuse entirely to accomodate this debt forgiveness request. However, if they do choose to waive some or all of the shortfall, they also have the right to place whatever conditions on that waiver. They can ask for more money from the seller - or the buyer (and often do). They can ask the agents to reduce their commissions (and often do that, too). They can refuse to pay various closing costs, if they want. And the buyer or seller can counter, accept or refuse any or all of the bank’s demands, too, but know that the banks do have the right to place whatever conditions on the short sale they want. After all - he, she or it who has the cash (or the mortgage, in this case!) makes the rules!
Comment:
By Rosemary, Thu Jul 15 2010, 05:06
I have been representing a buyer in a shot sale for going on nine months. We got it approved and then the Bank auctioned it off right out from under them even with a fully executed purchase and sale. They have now come back to us after the auction trying to sell it to my clients for what they had orginally offerred! The shame on this is that they a. lost their 0% down fiancning tey had locked in and b.) probably lost their 8,000 tax credit. We have a state rep workingon this since this was in my opinion the most ludacris thing the bank could have done. The state representative has filed to sue BOA and Freddie Mac to fet this resolved.
By Janine Kowalski, Thu Jul 15 2010, 04:37
I still encourage my buyers to look at non short sales first. Buyers often think they have the patience to deal the process, but 90% get impatient ,back out then lay the blame on you, the Realtor, no matter the outcome. Escrow deposit disputes are also an issue as in most cases the Title company or the Attorney are holding the escrow.
Link to follow.
Ah,,, Bank of America
I know a RE Agent (Metro DC) that has lost 2 BOA Short Sale deals (that were ALL CASH) in the last 6 Months
She says she won’t even show any properties now that are BOA anymore -
I guess she can refer to B of A as the “Bank of lost Opportunity!”
Bank Of India, actually. ALL of their back room and back end transactions are processed in India.
I see many of you are not to be knowing this.
And you STILL aren’t banking at your local credit union?
Who, me? I’ve been with my CU for years.
It’s not the buyer who gets impatient, it’s the realtor. Why would a realtor do much more work to get the same or less commission? It’s much easier for these folks to convince the buyer “short sales aren’t worth it” and have them move to a non SS house.
Oh yeah, and it’s a great time to buy…….
Trulia short sale linky:
http://www.trulia.com/blog/taranelson/2010/07/5_new_short_sale_myths_-_busted
By Matthew Miner, Thu Jul 15 2010, 07:32
All the issues mentioned in these posts are do to agents lack of knowledge while conducting a short sale. Homes go to auction all the time during a short sale. The reason is the listing agent trusted the bank to communicate about the transaction with the trustee. BIG mistake. You must always find out who the trustee is and contact them as the listing agent.
Another issue I’m surprised this article did not cover is the approval letter. Banks are using cryptically written letters that sound as if they are forgiving the debt on first When in fact the banks are leaving all doors open for future legal remedy. Most agents and sellers do not know this. The borrower will sign off and three years down the road the bank comes after them for the deficiency on the first mortgage. Remember, in Washington state foreclosure is the sole remedy the mortgagor can pursue against the borrower on a primary mortgage. Not so with a short sale. Agents need to get the approval letters change or you may find yourself in a lawsuit in three or four years.
****************************
The comment section to this article is hbb gold. Definitely worth the time to see the insider’s perspective.
Hundreds of new Florida laws go into effect Thursday
Short sales (HB 109):
Changes: Lowers the amount of state taxes residents pay when they sell their homes through short sales, when the sale price is less than the outstanding debt. The state will not collect taxes on the canceled debt, or the difference between the sale price and what is owed on the house.
Impact: Short sales have become common due to the sharp decline in real estate values. Nearly half, or 46 percent, of homeowners in the Fort Lauderdale- Miami market are underwater on their mortgages, meaning they owe more than their house is worth, according to Zillow.com.
Florida has no income tax so I am not sure what taxes would not be collected. Florida sales tax does not apply to home sales either, so the only taxes I can think of that would be affected may be document taxes.
Property tax?
Property taxes are assessed and collected by the cities and counties - not by the state.
Sounds like even though Florida doesn’t have an income tax, they do still have a tax on forgiven debt. If note then the HB 109 thing above doesn’t make any sense.
If so though - I’d be curious how that works. IIRC (worked there years ago) in Florida you just don’t file any yearly state tax return. Maybe forgiven debt is a special thing filed on a per-occurrence basis? Or maybe per year, but only if you had forgiven debt (or other state taxable things) that year?
If
notenotI checked more deeply as I am a Floridian. The reference is to document transfer fees which are based on the transaction amount. The state will use the lower short sale amount instead of the note amount.
Here is the statute (partial):
(Chapter 201, Florida Statutes)
Documentary stamp tax is levied at the rate of $.70 per $100 (or portion thereof) on documents that transfer interest in Florida real property, such as warranty deeds and quit claim deeds. (The Miami-Dade County rate is $.60 on all documents plus $.45 surtax on documents transferring anything other than a single-family residence). This tax is usually paid to the Clerk of Court when the document is recorded. The Clerks of Court send the money to the Department of Revenue and the Department distributes the funds according to law.
I can’t figure who’s right in jobless benefit debate. ~ July 22, 2010
Near Chicago there are two 36-year-olds who will probably spend today playing video games, like they do most days. They had been collecting unemployment benefits for nearly two years until they reached the limit.
Now, with the passage of extended benefits, they hope to go back on the dole.
Meanwhile, over in New Jersey, there’s a middle-aged man who has been unemployed for nearly 24 months. When he was recently presented with a real job opportunity the man passed, saying he’s waiting for something in his field.
That’s the dark side of extending unemployment benefits up to 99 weeks — something that Washington finished doing yesterday.
Some people just don’t want to work, others aren’t flexible enough to function in a difficult job market.
Those in favor of the extension, of course, believe it is a real economic necessity.
Millions of families — unlike the guys mentioned above — could go hungry, lose homes and see their lives ruined if the government doesn’t step in.
In New York alone it’s believed that 16,000 people a month are seeing their jobless benefits expire.
Read more: http://www.nypost.com/p/news/business/can_figure_who_right_in_jobless_DvwmN44I0EbDuIVUDiynaK#ixzz0uPwzzwVF
I get 30-40 of those a week….of course lots of them are Negative income “jobs”
Yes a new term negative income jobs…a commission only job that you have to spend money on, that is not reimbursable by your “employer”, before you even make a sale which still could mean more negative income if it turns into a charge-back.
When he was recently presented with a real job opportunity
It is pretty tough to get a job outside your field, even in a good job market. The only place most displaced workers can turn to is retail and that’s pretty weak as well. My college aged daughter has seen hers and her coworker’s retail hours as low as 10 hours per week. She’s been looking for a second P/T job but has struck out so far, no one is hiring this late in summer.
So, if taking “any job” means grossing a mere $80 to $160 per week I can see why people are sticking with their meager unemployment bennies. When I was laid off last year my UE bennies would have been 1/4 of my lost income. Needless to say, with a mortgage and a family to feed I was very motivated. I was also very fortunate and found a job within 6 weeks that paid 95% of my old salary. Many of my peers have been less fortunate and more than a few are still on UE and burning through their savings while they frantically search for a new job.
Anyway, it must be nice to be a single 36 year old who can move back in with mom and dad and play video games all day. But I doubt that these people are typical, at least not in my neck of the woods.
If nothing else, the huge number of 55+/active senior communities means that a lot of people have parents living in places they aren’t allowed to live in long term.
In Arizona, the 55-plus communities tend to keep the sub-18-ers out. I think a 36-year-old would pass muster, especially if he/she is taking care of Mom and/or Dad.
So, if taking “any job” means grossing a mere $80 to $160 per week I can see why people are sticking with their meager unemployment bennies.
The thing is, UE bennies aren’t really measured in weeks so much as a dollar amount.
So, if you find a part-time job making half of what your UE is, you’ll be able to extend the time you’ll receive UE.
At least that’s how it worked for me, two years ago.
I was told here in Colorado that any job would disqualify me from receiving UE bennies. RIght after I was laid off the school district had a P/T interpreter position. I checked with the UE office and was told I would lose my UE benefits if I took that P/T job.
You NEVER lose your UI……instead you lose it NOW, but those 26 weeks are tacked on to the end when you get laid off again.
Now if you get fired you could Lose 8-12 weeks of benefits NOW, but again you don’t lose them when the penalty is over you are back to 26 weeks.
That’s what I meant. I would have been trading a $480 weekly UE check for a $200 weekely check with the school district
Nobody in their right mind takes a job that pays less than UEI.
Also, once you take a job, you have to start from scratch to re-qualify in the future. Many states require you to be employed at least 2 years before you can apply again and yes, PT jobs also disqualify you and count as starting over.
There are pros and cons of this new extension, but the biggest pro is that employers will not be able to hire engineers/accountants/experienced people for min wage any time soon. Or at least as many as they thought they could.
Nobody in their right mind takes a job that pays less than UEI.
Also, once you take a job, you have to start from scratch to re-qualify in the future.
Not true. 1) this is a state issue, and I’m sure different states have different rules, 2) perhaps w-2 and 1099 work are different. I did take contract work, and still was able to keep my UI once the contract gig ended.
You are right. It does vary from state to state.
Congress Ranks Last in Confidence in Institutions
Fifty percent “little”/”no” confidence in Congress reading is record high
PRINCETON, NJ — Gallup’s 2010 Confidence in Institutions poll finds Congress ranking dead last out of the 16 institutions rated this year. Eleven percent of Americans say they have a great deal or quite a lot of confidence in Congress, down from 17% in 2009 and a percentage point lower than the previous low for Congress, recorded in 2008.
The Gallup poll was conducted July 8-11, shortly before Congress passed a major financial regulatory reform bill, which President Obama signed into law this week.
Underscoring Congress’ image problem, half of Americans now say they have “very little” or no confidence in Congress, up from 38% in 2009 — and the highest for any institution since Gallup first asked this question in 1973. Previous near-50% readings include 48% found for the presidency in 2008, and 49% for the criminal justice system in 1994.
By disapproving Congress, the people who are surveyed are unknowingly disapproving themselves. Very ironic. The people who HELOCed, lied about their incomes to buy an oversized stucco box, are in severe debt, are mostly the ones who highly disapprove of their representatives! I’m ashamed of them.
I don’t disapprove Congress. I don’t disapprove Obama. I disapprove of those who elected them.
Agree.
The funny thing is 90% of these t8rds will be re-elcted later this year. So this is basically meaningless.
I would agree but for the fact they were not given any viable choices.
Two words: “Ron Paul.”
unfortunately he is not running in my district
OTOH, if you perceive the likes of Ron Paul is not a viable choice still,
THEN WHY FRIGGING WASTE TIME VOTING?
sorry. I am frustrated that even people on this blog accept the memes about voting. Those memes are manufactured by politicians.
Those memes are manufactured by politicians.
what memes are those?
Do you really think that if only 10% of the populace shows up to vote, the politicians will simply shrug, say “hrm…I guess that’s a vote of no confidence. We should just go home”??
I have a bridge to sell you if you think you can persuade 99.999% of the people to agree with your ideas for the rest of their lives. You may convince them to change from socialist to capitalist for one month or one year. But they may revert.
You essentially waste your energy trying to persuade others.
We are an aging democracy when 3/5 of the voters are wolves and the other 2/5 are sheople. And you still think you can make a difference?
Better to have gold and ammo (lots) than to vote.
As for the memes, a google search on “why voting is a waste of time” will give you the reasons.
“The HELOC you say!” (In Montana™)
By disapproving Congress, the people who are surveyed are unknowingly disapproving themselves.
I disagree. I didn’t vote for a single congresscritter in office. Being disapproving of them has no bearing on me…
As long as you voted for someone, I agree; if you choose not to vote, you are still to blame.
if you choose not to vote, you are still to blame.
agreed.
But the idiots will still re-elect their incumbents.
In 2008 general election, I voted for the *other* Democrat senate candidate instead of Lindsay Graham.
Amen!
As to Lindsay Graham, I can only hope that little puke does not get re-elected, I’ll do my part. He has continually pissed off a lot of people in these parts.
As to Lindsay Graham, I can only hope that little puke does not get re-elected, I’ll do my part. He has continually pissed off a lot of people in these parts.
Because he thinks for himself or because he puts his constitutional duty over his party?
Lindsey Graham stands apart from other Republican senators on Kagan vote
Wash Post 7/21/10
Alone in this empty quadrant of the committee table sat Graham. “Aye,” the South Carolinian said, nodding with self-assurance.
Graham delivered his “yes” vote — the only such vote by a Republican on the panel — with a rebuke for both sides, particularly his fellow Republicans who have become so reflexive in their opposition to Obama that they are distorting their constitutional duties.
“I think there’s a good reason for a conservative to vote yes, and that’s provided in the Constitution itself,” Graham told his peers before reading to them from Federalist No. 6, by Alexander Hamilton. “The Senate should have a special and strong reason for the denial of confirmation,” he read, such as “to prevent the appointment of unfit characters from family connection, from personal attachment and from a view to popularity.”
Graham said Kagan “has passed all those tests” envisioned by the Framers, then he challenged his colleagues: “Are we taking the language of the Constitution that stood the test of time and basically putting a political standard in the place of a constitutional standard? That’s for each senator to ask and answer themselves.”
I remember Feingold getting the same treatment. There are very few independent voices in Congress.
FWIW - this pretty much makes sense, given that we’re in the midst of the worst recession since the GD, and I’m guessing this poll didn’t exist back then. I’m guessing that there’s a quite-high correlation of this poll with our economic health.
The concept that government should (or can) fix everything is probably much more ingrained now than it was then.
Congress does NOT have an image problem. They have an INTEGRITY PROBLEM.
GM to pay $3.5B for auto financing company
DETROIT (AP) — General Motors Co. will buy AmeriCredit Corp. for $3.5 billion, a deal that allows the automaker to expand loans to customers with poor credit and offer more leases, key areas where GM must grow to accelerate its car sales.
But the acquisition, announced Thursday, also means that GM, which is 61 percent owned by the U.S. government, is getting back into the business of making risky loans. AmeriCredit is an independent auto financing company that already works with about 4,000 GM dealers.
GM executives have said for months that they were missing sales opportunities due to lack of credit for lease deals and financing for subprime buyers, those with credit scores below 620 on a 300-to-850-point scale. About 40 percent of U.S. customers have below prime credit scores, said Chris Liddell, GM’s chief financial officer.
“Clearly there’s an opportunity to bring more people into our showrooms and help them with finance,” he said.
Looks like a Car CRAsh is coming.
Now if we could just get people with low credit scores qualified to buy houses and commercial real estate…
I guess they’re worried that car sales are going to remain below replacement levels into the indefinite future. I guess they’re hoping that buyers will pay for the car first (along with the CCs) before paying the mortgage.
Tsk tsk tsk. When did everyone forget that people with poor credit (or little discretionary money) don’t get to buy nice things?
As if there aren’t enough used cars out there.
There’s a lot of demand for used cars. I’ve never seen such high and form prices. The fact that more used cars are reaching their end of life and being scrapped than new cars being sold will make this situation long lasting.
Cars have been sold for too long as “fashion items” that get swapped out every 2-3 years when with good care even sorta crappy ones will last 15-20 years.
Planned obsolescence has made car companies a lot of cash… I hope they’ve put it in the bank, because in tight times most people treat cars as “durable goods” and keep the a looooong time.
When I was a wee little Slim, my parents drove early 1950s-vintage used cars. By the time I came into the picture, in late 1957, those cars had definitely seen better days.
I can recall sitting in the passenger seat and telling Mom that I could see the road rushing by beneath the hole in the floorboard. Of course, being the toddler who was impressed by such things, I thought that watching the road was pretty cool.
My parents didn’t think so. I think this may have prompted their decision to go out to the airport and buy what Dad called “safety belts.” (There were no kiddie car seats back then. And seatbelts weren’t standard in cars until I was in school.) After Dad installed them, they were mandatory.
Nothing like the US government bailing one out for the stupidity of investing in a ponzi kabal. Earlier today, the FDIC decreed that it would increase deposit insurance for depositors in banks that failed in 2008 in the states of MO, AR, CA, FL, KS and NV. As a result of this action, 9,500 depositors would end up receiving between ten and hundred and fifty thousand dollars, courtesy of a retroactive increase in the “maximum deposit insurance amount to $250,000.” The rule was made retroactive beginning January 1, 2008. Pretty soon, all money ever lost, be it in bankrupt banks, or in bed investment will be recoupable, as the administration does everything it can to get some cash - any cash - in the hands of Joe Sixpack.
Tyler Durden
The rule was made retroactive beginning January 1, 2008.
Ugh. This is the thing that p*sses me off. If I make good, conservative decisions - staying beneath the FDIC limit, choosing a savings account rather than money market fund due to risk of loss, etc….I’m presumably getting less in return, but am taking on less risk.
Those who took the risk, got greater returns..and now the gov’t is retroactively taking the risk away. What. The. F.
Just makes me want to scream. Where’s the benefit in being conservative/smart?
Just makes me want to scream.
+1
And these post-hoc rule changes have unintended consequences written all over them.
Sounds pretty inflationary to me.
(at a macro level at least; at the micro-level it’s anti-deflationary)
J6P does NOT have 250k in the bank.
Cool now “we” are back in the lending bitness to those with crappy credit…
GM Agrees to Buy Lender AmeriCredit for $3.5 Billion
“Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings,” GM CEO Ed Whitacre said in a statement. Photographer: Steven Noreyko/General Motors Co. via Bloomberg
General Motors Co., the automaker 61 percent owned by the U.S., is buying subprime lender AmeriCredit Corp. for $3.5 billion to help it reach more customers with leases and loans to borrowers with faulty credit records.
GM and Americredit reached a definitive agreement, which has been approved by the boards of both companies. GM said the deal is expected to close in the fourth quarter. The price of $24.50 a share is 24 percent more than Fort Worth, Texas-based AmeriCredit’s closing price yesterday of $19.70 a share in New York Stock Exchange composite trading.
“GM Agrees to Buy Lender AmeriCredit for $3.5 Billion”
Where did they get the money?
Oh.
GM Still Owes Us
Jerry Flint, 04.21.10, 04:43 PM EDT
Far be it for me to rain on anyone’s parade, but don’t be fooled: General Motors has not paid its debt back to taxpayers.
The company got $50 billion from our government, and $10 billion more from Canada. They have paid the U.S. back $7 billion plus interest, as I understand it, including the latest payment of nearly $5 billion. So they say they paid us back. Not quite: That still leaves $43 billion.
GM can say they paid us back because of the $50 billion in total support, only $7 billion was counted as a loan and the rest was traded for equity in the company that emerged from bankruptcy. But that is really an accounting trick so that GM doesn’t have to pay interest on that money.
What seems to have happened is that of the $50 billion given to GM, the company burned through some, and then paid back $7 billion from what they didn’t spend.
J.S. I guess they spent some more.
20% of Americans hit by major economic loss
NEW YORK (CNNMoney.com) — A new study released Wednesday estimates that 20% of Americans suffered a significant economic loss last year - the highest level in the past 25 years.
The new Economic Security Index looks at the interaction of three key variables that have a direct bearing on a person’s economic security: income loss, medical expenses and debt.
The index, which tracks data since 1985, shows that economic insecurity has risen across all groups, not just among low-income families and those without much education.
The index was constructed by Yale political scientist Jacob Hacker and a team of researchers, and the project was funded by the Rockefeller Foundation.
“The index, which tracks data since 1985, shows that economic insecurity has risen across all groups, not just among low-income families and those without much education.”
Really, “economic insecurity has risen across all groups”…really?
Then who are these folks?
The rich are always complaining. Back in Edwardian England the aristocrats moaned about the servants.
Talk to any rich person, and they won’t tell you they’re doing well. They’re more likely to complain. After all, taxes are going up. And there’s that Black Panther communist in the White House spending us to rack and ruin on all this socialism.
Sure, the top rates of tax expected to go up at the end of this year, when the Bush tax cuts are due to expire (the debate about the new tax regime rages on). But that will only take rates up a bit — to the levels seen in the late 1990s. You remember how tough things were for the elite back then.
And who pays the top rate anyway?
Right now it only kicks in on each dollar of ordinary income over $374,000 a year. A recent study by the Congressional Budget Office found that the top 1% of Americans paid an average federal income tax rate of just 19% in 2007, the last year when data were available. The top 5% of earners paid an average rate of less than 18%. There are ways and means to minimize tax — like calling your income “capital gains.” That’s what private equity honchos do, where possible. In many cases, it means people making tens of millions a year are paying lower tax rates than their chauffeurs and receptionists. (There are proposals to change that, with predictable screaming).
At times like these, cash buyers are king.
These are not isolated incidents. According to consultants Cap Gemini, the wealthy saw their net worth bounce back sharply last year. And while those with $1 million or more did pretty well, the real story was the boom among the ultra rich: Those with more than $30 million to invest. “Ultra-HNWIs (High Net Worth Individuals) increased their wealth by a striking 21.5% in 2009, far more than the average in the HNWI segment as a whole,” Cap Gemini reported, adding: “A disproportionate amount of wealth remained concentrated in the hands of Ultra-HNWIs.”
There are fewer than 100,000 ultras around the world. A third of those are here in the U.S. Ultras make up 1% of the high net worth, according to Cap Gemini, but held 36% of the high net worth’s wealth.
How The Rich Are Winning by Brett Arends Tuesday, July 20, 2010
MarketWatch
These are not isolated incidents. According to consultants Cap Gemini, the wealthy saw their net worth bounce back sharply last year. And while those with $1 million or more did pretty well, the real story was the boom among the ultra rich: Those with more than $30 million to invest. “Ultra-HNWIs (High Net Worth Individuals) increased their wealth by a striking 21.5% in 2009, far more than the average in the HNWI segment as a whole,” Cap Gemini reported, adding: “A disproportionate amount of wealth remained concentrated in the hands of Ultra-HNWIs.”
The gov always puts out stats that mix the ultrarich in with the working rich. Even top 5% doesn’t tell the story. When you look at effective tax rates for the top 400 you see that they pay effective tax rates of around 15% and this doesn’t include money they’ve hidden in art, overseas, via accounting tricks etc.
As I’ve said, the rich do NOT pay the full tax rate of their bracket and only a sock puppet or the hopelessly naive think or say they do.
Looks like the DOW really likes the unemployment numbers.
As moonbat Polosi sez… “Unemployment is good for the economy”
It brings wages down and a smile to a billionaire’s face.
It’s GOOD to be the Banksta! YO!
The Jobless Effect: The Toxic Mix of Illegal Immigration and Unemployment
Protest rally against illegal immigration
As chief executive of a country emerging from a brutal recession, President Barack Obama faces a host of pressing issues. But two long-term problems have morphed into crises and have come to a head lately — immigration and joblessness. What’s not always so obvious is how closely linked the two issues have become.
In a July 1 speech, the President took the immigration problem by the horns, calling the much maligned Arizona immigration law “ill conceived,” and he reminded Americans that they live in a country of immigrants.
Polls, however reveal that a majority of Americans are on the other side of the President and support the bill, which requires police to question the immigration status of people they stop or arrest for other reasons.
Touching a Nerve
Beaten down from a long, hard economic downturn that has robbed many of their livelihood, the public is sending clear signals that during tough economic times like this, America can’t afford so many illegal immigrants.
Indeed, a recent TIPP poll released July 12 showed that 51% of Americans are in favor of the Arizona’s immigration law. Before that, a Quinnipiac University poll released in June also showed that 51% of American voters approved the Arizona law, and 48% say they want their state to pass a similar law. Rasmussen Reports found 61% people in favor of passing such a law in their state.
See full article from DailyFinance
“America can’t afford so many illegal immigrants.”
We can’t afford their children, either. If folks think the boomers are a demographic nightmare, wait’ll they see a massive generation of anchor babies raised on goobermint cheese. I saw a young girl the other day with a belly out to here, looked like she was 14, couldn’t have been more than 16. She was with her girlfriends, same age.
What happens when the goobermint cheese goes away?
“What happens when the goobermint cheese goes away”?
We can’t have that, we’ll simply raise taxes and print mo money, it just wouldn’t be “fair” other wise. Now, where’s my free stuff!
wmbz, we make jokes about this stuff, but in fact it is unsustainable and can’t go on forever. In my lifetime, I expect to the see the US split up, and I’ve probably only got about another 25 years at the outside. It’s probably really the only solution. Wars and welfare don’t mix.
No country for old men. Finally saw that flick over the past weekend. Bleak. But awesome.
Palmetto,
I know at some point somethings got to give, but the masses are totally conditioned to believe that more government, more laws,rules and regulation will fix any and all problems. It can’t and “they” can’t of course, but very little, the “little people” can do about it.
I have long contended that the system has to break down completely before it can be rebuilt. Nothing I see shows other wise. Just the facts, the way I see it. Not wishing for it, but that’s the road we are on, and have been for a long time.
In my lifetime, I expect to the see the US split up, and I’ve probably only got about another 25 years at the outside. It’s probably really the only solution. Wars and welfare don’t mix.
+1000
Once there is no more weath to strip mine from the middle class the US will be dissolved.
Also, open borders and the welfare state are incompatible. On the bright side once its gone all the freeloaders will move on to greener pastures. On the down side we’ll be stuck with the mess.
wmbz and Colorado, that’s where I believe this mess is headed. Breakdown. We’ll have Eric Holder to thank, btw, for delivering one of the final blows, when seven, COUNT ‘EM, SEVEN, Latin American countries are given standing in the courts to sue one of our own states. That’s it, that’s ball game. Why bother sending men and women to the bloody abbatoir of Afghanistan? To defend WHAT?
I’ve just spent the last half hour on the horn to my Senators and Rep wanting to know what legal precedent allows enemy countries to sue a US state in the Federal Court system. Make no mistake, these countries are enemies of the US and Holder is guilty of giving them aid and comfort. I spit on them all.
And here’s one of the sickest stories you’ll ever read about the sick legal system. An elderly man just trying to defend his property from known criminal foreign nationals, is charged with attempted murder while no charges are filed against the crimmigrants. Sick, sick, sick.
http://www.breitbart.tv/burglary-victim-charged-with-attempted-murder-for-shooting-at-illegal-immigrant-thieves/
That’s it, that’s ball game. Why bother sending men and women to the bloody abbatoir of Afghanistan? To defend WHAT?<
I think that the sooner the farce is over the better.
And did everyone know that Holder’s father was an immigrant realtor? Bwahahahaha!
If folks think the boomers are a demographic nightmare, wait’ll they see a massive generation of anchor babies raised on goobermint cheese ??
Exactly….+1 Palmetto
It’s actually scary, dave. I was fortunate to be raised in a household where both parents worked and paid for everything, including their four children. No handouts, no assistance. My parents didn’t even buy a home until I was 17. We were raised in a rental. (The greatest rental ever, but I won’t go into that.)
For better or for worse, a lot of what children learn, they learn from their parents. What are anchor babies being taught? To have more children, stand in line for assistance, get their free health care, free breakfast and lunch at school, subsidized housing, weekly food bags at the local charities, etc?. Heck, not just food bags, but furniture, appliances, clothing, etc.
Its not the light we see, Its the locomotive…
And something has got to give…Bill in L A has it correct I believe…Try and limit your tax & fee exposure any way you can because it is going to come at you from every conceivable angle…
All Aboard!
The Underground-”FLEE”-Railroad is ready to go!
Discount tickets located at the “Barter Window”
If folks think the boomers are a demographic nightmare, wait’ll they see a massive generation of anchor babies raised on goobermint cheese.
It’s worse than that. High school drop out rates are highest among the Hispanic population.
I sincerely wish this were not true because it is a bigger problem than jobs and low wages.
I can think of a case in point right next door. Kid hasn’t attended school on a regular basis since she was on probation back in ‘08. And I’m told that she’s only 16.
Lately, I’ve been seeing someone over there with a baby. It’s not her, but I can see where this is going. Sooner or later, she’ll just have to have one of those babies herself.
And our tax dollars will get to pay for it.
Not looking good for AZ in federal court right now.
If AZ goes down, that’s really it for the US. It will be open season on Anglo Americans, believe it.
61% sounds like a mandate to me. And yet “our politicians” won’t hear of it. As mad as we’ll get, they’ll make sure we pay for the unemployed illegals (AZ story), they won’t stop the illegals from working and meanwhile they’ll keep extending unemployment benefits and expanding the welfare rolls.
This is where conspiracy theories start looking believable.
Surprise!
“In a July 1 speech, the President took the immigration problem by the horns, calling the much maligned Arizona immigration law “ill conceived,” and he reminded Americans that they live in a country of immigrants.”
What a boob. Every country is a country of immigrants, if you go back far enough. Countries change, they shrink or expand, get new names, new borders, etc.
We are (or were) in fact a country of citizens and of laws. No citizens, no laws, no country.
And as I said in my post that hasn’t shown up, no country for old men.
I was told in my MBA program that the nation state is obsolete and will be replaced by corporations.
Which is basically fascism.
I was told in my MBA program that the nation state is obsolete and will be replaced by corporations.
No replacement needed. It’s much cleaner for the corporations to use the nation state as proxy for their power.
The key is to keep that proxy tie as weak as possible, by making the government the weak link in the chain of power. Big government = strong chain = more corporate power over the public.
What we were told was that the nation state would disappear and that local government would be the highest form of government. This would definitely put megacorps into the drivers seat as they could make demands on the townships that could not be refused.
I could actually envision this as being a good thing, provided certain local governments grew a backbone. There would be no fedgov with Eric Holder goons to prevent people from protecting themselves. There’d be corporate goons, but they can be handled by a fierce enough populace, even a local one.
What we were told was that the nation state would disappear and that local government would be the highest form of government. This would definitely put megacorps into the drivers seat as they could make demands on the townships that could not be refused.
There are approximately 50,000 municipalities in the United States. Did whoever presented this viewpoint to you honestly believe that it was more cost effective for a corporation to exert pressure on 50,000 municipalities than upon 1 federal government?
What school was this again?
To follow up - the largest lobbying corporation between 1998-2010 is GE, at $204Million, which is $16M per year. Divided among 50,000 municipalities that’d be $320 per year average. $320 doesn’t really buy a whole lot of influence.
Or put on a per-person basis, that’s about 5 cents per person per year.
It’s a lot more cost effective to centralize your influence, i.e. at the federal level. $16M divided out amongst a few hundred congresscritters and a president goes a lot further.
There are approximately 50,000 municipalities in the United States. Did whoever presented this viewpoint to you honestly believe that it was more cost effective for a corporation to exert pressure on 50,000 municipalities than upon 1 federal government?
I think so. Look at how they demand corporate welfare from munis now. Now with the feds gone megacorp can threaten to leave unless it gets what it wants: pollution exemptions, local labor law exemptions, etc. How can Anytown USA stand up to a few behemoth megacorps that pretty much control the regional economy. Imagine a world with no EPA, no Dept. of Labor. etc. It would be a corporations’ wet dream.
The don’t have to pressure all 50000 munis, just the ones where they want to set up shop. In any case with few exceptions (say Boulder CO) most towns will fight tooth an nail for these jobs anyway.
It’s a lot more cost effective to centralize your influence, i.e. at the federal level. $16M divided out amongst a few hundred congresscritters and a president goes a lot further.
I see your point.
But with no central gov you don’t need to lobby. You just tell Anytown USA that unless they give you what you want you’ll move the business elsewhere, to someplace that is hungry enough to not care about pollution or toxic waste. In a way that is already done, it’s just that Anytown is not allowed by federal laws to make certain concessions.
I was talking more along the lines of favorable treatment over the competition; on the retail side - that’s where the real power is exerted. Making the government set the rules, or even just behavior (e.g. bailout guarantees) in their favor.
Banks don’t really have a pollution problem, since they don’t have factories; same with a good number of industries these days - software etc.
Other production industries yes. And that’s where it is necessary to have environmental regulations, enforced by a central government.
Financially there’s no problem if a big corp exerts pressure on municipalities. E.g. if a company says “gives us tax breaks or we won’t build a factory in your town” then it’s in the town’s best financial interest to do so - the tax breaks are usually more than offset by the jobs that company provides. This happens all the time today - at the state and the local level - and is a very good model. It keeps the municipalities honest. California for instance has been hammered - rightly so - by companies moving out of state due to their very high corporate tax rates.
I was told in my MBA program that the nation state is obsolete and will be replaced by corporations.
Where did you get your MBA, at Toys R Us?
Corporations derive their very existence from governments. If the nation state ceases to exist, then so do corporations.
Where did you get your MBA, at Toys R Us?
Colorado State U.
And thanks for the cheap shot.
Corporations derive their very existence from governments. If the nation state ceases to exist, then so do corporations.
“None are so blind as those that will not see”
Lehigh, this country is by, for, and of the corporations and Wall St. is their Shangri La.
All municipalities need fresh water, electricity and waste removal to function.
Whoever controls those will be able to dictate terms. How many municipalities have farmed all those things out to corporations?
Hydraulic monopoly, in it’s harshest, literal form.
The spice must flow!
The Associated Press
Posted: 10:07 a.m. Thursday, July 22, 2010
WASHINGTON — Home sales sink 5.1 percent in June, indicate housing remains threat to economy.
“…indicate housing remains threat to economy.”
That is such an insipid statement when you think about it a bit. These fools posing as financial journalists still don’t seem to grasp that we are working off excesses from a mania that took decades to develop. It will take a number of years going forward to undo the damage.
In Houston, it took 6 years for prices to recoup from the S&L disaster and then move up from there.
Sorry if already posted
Gov’t watchdogs: mortgage program is not working
Bailout watchdogs say Obama mortgage program is failing to help homeowners facing foreclosure
Daniel Wagner, AP Business Writer, On Wednesday July 21, 2010, 11:27 am EDT
WASHINGTON (AP) — Government watchdogs told a Senate panel Wednesday that the Obama administration’s effort to help homeowners avoid foreclosure isn’t working and that the Treasury Department has failed to fix the program.
Special inspector general for the financial bailouts Neil Barofsky said the program has not “put an appreciable dent in foreclosure filings,” during a Senate Finance Committee hearing on the $700 billion bank bailout. He also said the Treasury Department has ignored earlier demands that it set clearer goals for the program.
Elizabeth Warren, who chairs a separate Congressional Oversight Panel on the bailouts, said Treasury’s failure to act more quickly could be hurting the recovery.
More foreclosures could force down the price of homes and further hurt the already-ailing housing industry.
The homeownership program aims to reduce mortgage payments for millions of homeowners who can’t afford their monthly bills. Recent data suggest it has helped about 400,000 households avoid foreclosure. About 530,000 have fallen out of the program.
The bailout has provided up to $50 billion for the mortgage modification programs. So far, about $248 million in bailout money has been spent on the program.
Barofsky said Treasury is giving mortgage companies too much leeway to decide which homeowners will qualify for a program to reduce the principal balance of their mortgages.
The program relies on voluntary cooperation from mortgage companies, Warren said. She said many of the mortgage debt collectors make more money when they foreclose than they do when helping homeowners.
“We have a crisis, and the consequences of not having cooperation from (mortgage) servicers is . . . felt by this entire economy,” Warren said. “We need a program with far more urgency and some real teeth in it.”
Also appearing at the hearing is a leader of the Government Accountability Office.
Their three offices are designated to provide transparency and oversight for the bailout program that Congress passed in October 2008.
Most of the financial bailout programs have ended as the financial system regained its footing. Treasury lent out a total of $385 billion from the $700 billion fund. As of June 30, about $198 billion had been repaid, according to the independent Government Accountability Office.
Treasury also has collected $25 billion in fees and interest payments from companies that received money.
President Barack Obama was preparing Wednesday to sign into law the most sweeping rewrite of financial regulations since the 1930s. The law includes changes aimed at reassuring Republicans, who worry the bailout fund could become permanent.
The size of the fund is reduced to $475 billion from $700 billion. Money that has been repaid must be used to repay the national debt, rather than expanding other programs. And the overhaul blocks Treasury from using the money to create new programs.
Well, here’s what Ol’ Hwy heard this morning on a radio interview with a CHASE Banking spokesperson:
Loan modification QUALIFICATION basically boils down to x1 thing:
Direct quote: (What is the properties)
“Net Present Value?”
Now, so there’s no miss understanding:
To qualify for a loan modification: (What is the properties)
“Net Present Value?”
“Net Present Value?”
“Net Present Value?”
“Net Present Value?”
“Net Present Value?”
“Net Present Value?”
Not sure if the trulia link came through I tried to post earlier. One of the comments on that story on short sales said the avg short sale price is only 13% below present market value. This after lots of comments of how much pain was involved in trying to get a short sale through.
The message one got loud and clear from that article and the comments was how tight of a stranglehold the banks have on the inventory, and how they weren’t above playing games w/earnest buyers like we were their enemy.
More and more as this thing progresses the last thing I want to do is form another relationship w/a bank. I’m kind of particular to the accounts where I hold all the strings.
That’s interesting. In finance NPV is the value that future profits generated by an investment today are worth in today’s dollars. It also includes the liquidation or “salvage” value of the investment.
So are they talking about the (possibly negative) NPV that the modified mortgage would generate vs. the underwater borrower defaulting and generating a loss for the lender?
Anyone know where to find state budget and population info? Had a discussion with some coworkers last week and want to follow up with some hard data. Would love to see my state’s (Washington) budget for the past 10 years, avg house price, and population data to show trends.
Found the Office of Financial Management website, but can’t find an actual budget on there, let alone a history of them.
Ideas?
State budgets are usually found on the state comptrollers website and is labeled CAFR, or Comprehensive Annual Financial Report. This is far more detailed than the standard budget summary which is usually passed off as the definitive to the public.
Be sure to look for their investments in the financial markets. You have to really dig to find it.
Population figures and correlations may or may not be on the same website, depending on the state.
Simply google (name of state) Comprehensive Annual Financial Report and it will link directly to it.
thanks, eco. I’ll do more digging tonight.
Leading indicators drop in June as recovery slows
By TALI ARBEL The Associated Press
Posted: 10:07 a.m. Thursday, July 22, 2010
NEW YORK — A private research group says its gauge of future economic activity dropped in June, the second decline in past 3 months, suggesting the economic recovery will weaken.
The Conference Board says its index of leading economic indicators fell 0.2 percent last month. Economists polled by Thomson Reuters had expected a drop of 0.3 percent.
The index was revised to a 0.5 percent increase in May from the initial report of a 0.4 percent gain. The April report was revised to a 0.1 percent drop from a prior estimate of no change.
The leading indicators gauge had risen almost every month since April 2009 as the economy rebounded from recession.
But weakness in the housing sector, faltering consumer spending and high unemployment have raised fears about a big slowdown in growth
“But weakness in the housing sector, faltering consumer spending and high unemployment have raised fears about a big slowdown in growth”
All but a complete moron knows where all this recent “growth” has come from. Now that extend and pretend has slowed down a little the cracks in the economic machinery start to reappear. So what’s the cesspool gonna do next?
All but a complete moron knows where all this recent “growth” has come from
Eddie said we were doing OK.
“Leading indicators drop in June as recovery slows”
That’s great! Another contrarian signal for the stock market to rally towards DJIA = 12K!!
Strong earnings, housing data push Wall St higher
July 22, 2010 11:10 AM ET
NEW YORK (Reuters) - Stocks jumped on Thursday as companies across a wide swath of the economy reported strong earnings and existing home sales fell less sharply than forecast, easing fears of a double-dip recession.
News from “The O.C.” :
O.C. bankruptcies up 40% in 2010
July 22nd, 2010,by Jan Norman, small-business columnist OC Register
“In the first six months of 2010, almost 6,500 Orange County individuals and businesses filed for protection from the federal bankruptcy court, 40.3% more than the same period of 2009, reports the federal bankruptcy court.
The year-over-year filings continue to grow but at a slower rate, both in Orange County and throughout the Central District of the U.S. Bankruptcy Court, which covers five counties from San Luis Obispo to the Arizona border. For example, June 2009 filings were 77% higher in Orange County than in June 2008.
However, Orange County isn’t out of the financial woods yet. June bankruptcies increased 8.6% from May, after two straight monthly declines in 2010.
Individuals continue to be affected by unemployment (9.5% in June), housing foreclosures (up 3.8% in the first half of 2010) and the hangover of consumer debt ($2.4 trillion as of May). And small businesses in California lead the nation in bankruptcies, according to Equifax Inc., affected by tight lending and slow sales.
In Orange County, small-business bankruptcies account for 8.6% of filings. That doesn’t include business owners who had to file personal bankruptcies.”
$110 billion to dead guys and typos:
You could not make this up.
http://www.msnbc.msn.com/id/38357313/ns/politics/
“Improper payments — from outright fraud to checks issued to the wrong person or for the wrong amount because of a typo — reached a high of nearly $110 billion last year, according to the White House. Federal auditors found that millions of dollars in benefits went to dead people, fugitives or others not eligible for them.”
Who’d have thunk dying could be so lucrative?
400 CPS teachers to get the ax this week ~ Sun-Times
LAYOFFS | 200 other staffers also targeted on eve of key budget talks
It has begun. The first round of the long-anticipated, school-based layoffs by Chicago Public Schools to deal with a record $370 million budget deficit will claim 600 staffers by week’s end.
Notices began going out Wednesday to 400 classroom teachers and 200 educational support personnel, a CPS official said. The 600 represent staff at about 200 Track E elementary schools that start their year earlier than most schools, on Aug. 10.
The notifications — actually confirmations of the layoff-possibility notices CPS and other districts were required by law to have sent teachers earlier this summer in the face of an Illinois cash crunch — come as the district and Chicago Teachers Union prepare for budget talks that start Friday.
CA state government are they bored ?? or just too big ??
While BP acts as if one of the worst oil disasters in history is no big problem, an Oxnard small-business owner finds himself in deep over a little spill that became a big production.
The incident started on an afternoon in late June when Steve Pettersen of No Regrets Painting upset a can of water-based paint inside his van, parked on a client’s driveway at Mandalay Bay.
Paint, once spilled, is harder to return to the can than worms. Nonetheless, Pettersen said, he was able to scoop up most of the contents of the toppled gallon and capture it in a container. A third-generation painter, he then sopped up the residue with rags, as he had learned to do through the process of getting his California contractor license.
Cleanups are messy affairs and a small quantity of the paint oozed onto the driveway. When it appeared the paint would stain his customer’s attractive and recently installed drive, he used the garden hose to rinse it off the pavement.
With the curb appeal restored, he went back into the house to complete the job.
A while later, he came outside to get something from his van and froze in his tracks.
Before his eyes were two firetrucks, each staffed by three firefighters, including paramedic and hazardous-materials specialists. There were two city of Oxnard code compliance officers. A Harbor Patrol vessel had been dispatched. A California Department of Fish and Game warden also responded. The scene was short only moon suits and a hovering helicopter.
In all, 13 public officials arrived on the scene.
Soon Pettersen was not a BP but an RP, as in responsible party, and a code compliance officer was impressing upon him the seriousness of the situation.
“Dude, you’re scaring me,” Pettersen recalls saying. “This is not BP.”
Because this neighborhood borders the harbor, anything in the storm drain goes directly into the sea. This is true anywhere in Southern California, but in this case it had to travel only 60 feet.
Responders discovered faint wisps of a whitish substance believed to be paint floating in the waterway nearby and proceeded to deploy a soft boom to keep the milky plumes from drifting into the main channel.
One problem: Since the paint was water-based, the boom could not soak it up.
After a few hours and much consultation, the decision was made to let nature take its course and to remove the boom when it was most likely that the tide would push the foreign substance out to sea, according to Oxnard Fire Battalion Chief Mike O’Malia, who responded to the incident.
Claire Lehr, the homeowner, was happy ocean pollution is taken seriously in this county but found the level of response “absurd.”
In the end, she said, officials carried away the evidence against Pettersen in a Mason jar that held “a dollop of color in it.”
This response was standard operating procedure, according to Steven Boychuck, of Oxnard code compliance. State regulations require nothing less, he said.
And a reasonable person has to ask: Was any living thing ever in danger?
The Fish and Game warden who responded had not returned my call by my deadline. But O’Malia, while emphasizing that he is no wildlife expert, said he saw no evidence any fish, seabirds or ocean mammals were imperiled by the spill.
Beyond that, manufacturers keep making paint greener. The can in question here — Dunn-Edwards Suprema — is labeled nontoxic.
Anything but clear water that goes into the ocean violates the law, O’Malia said, adding substances that are safe to humans can harm marine life.
So what was Pettersen supposed to do? Keep kitty litter nearby. Experts say that is the best way to soak up liquid spills.
By watering down the paint, Pettersen irrigated the problem, O’Malia said.
“Dilution is not the solution. By adding the water, he took a two-quart spill and expanded it to a 30- to 40- to 50-gallon hazardous discharge,” O’Malia told me.
What is happening in the Gulf to all the creatures of the sea is heartbreaking to watch. But I am also concerned about the survival of one of our threatened species — the small businessperson.
Pettersen believes he was made an example and that homeowners spill paint into storm drains every day in this county without being tarred with the gross polluter brush.
“They made it look like a circus. I was totally humiliated,” he said of the response.
The spill of aqua paint is going to put him in the red. He already has received a bill from the Oxnard Fire Department for $534. He also has been summoned to the Ventura County Hall of Justice to face charges he violated California Health and Safety Code. For that he faces up to $25,000 in penalties.
For small-businessman Steve Pettersen that is not exactly a drop in the bucket
CA state government are they bored ?? or just too big ??
Way, Way to big….
It’s hard to respond to something as absurd and retarded as what went on in this situation. Wonder who ratted on the guy, it’s a sad day when someone calls the fire department because a fellow spills a little paint.
Where’s the link to this story from a credible source?
http://www.vcstar.com/news/2010/jul/10/bp-in-oxnard-it-means-beleaguered-painter/#ixzz0uFN6Dqc2
Who cares about poor home sales and recession ??
Looks like big traders dominate this market pushing it up and down and long term goes nowhere. Secular Bear Market.
WASHINGTON (Reuters) - Sales of previously owned homes hit a three-month low in June while new claims for jobless benefits surged last week, the latest indications that the economy is on the ropes.
Another report on Thursday showed a gauge of the economy’s prospects fell last month, consistent with views the recovery was cooling and that the slowdown could persist through the end of the year.
NEW YORK (AP) — Stocks surged Thursday after another strong batch of earnings reports revived investors’ optimism about the economic recovery. Encouraging signs of growth in Europe added to investors upbeat mood.
Traders largely wrote off a jump in the number of people seeking unemployment benefits for the first time. The increase was likely skewed by seasonal factors. Instead, investors focused on earnings from a broad range of companies that showed businesses aren’t seeing a slowdown in the recovery. News of corporate acquisitions also gave investors hope that the pace of the rebound will pick up.
There are two economies:
1) Wall St., Corporate America and the upper class. Party on Garth.
2) Main St., small companies and the middle class. Burn baby burn.
There is no connection between the two. I’m beginning to believe that we could have 50% unemployment and Corporate America would be able to report fat profits.
Actually, I’m wrong. There is a connection.
The worse #2 does the better off #1 is.
Over the long term, I don’t think that true, but they ARE countercyclical. “from the weak hands to the strong hands,” and all that.
No joke In Colorado, in 2006 CITI issued a study in which it flat out stated that our 75% consumer driven economy no longer needed consumers and that we have acheived the 2nd Gilded Age.
Remember the Gilded Age? Child labor. Robber Barons. No labor or worker safety laws. Rampant pollution and short lifespans for the proles? It was another good time be the Banksta.
The PTB have out Marie’d, Marie Antoinette.
Reports can be found here:
http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1
and here:
http://www.scribd.com/doc/6674229/Citigroup-Mar-5-2006-Plutonomy-Report-Part-2
You only need to read the first few pages of opening statements.
It’s time for the monthly house price report from Tucson:
Median home price here off 9.4% from this time last year
Conspicuously absent from the story is any mention of how the median price compares to our local median income.
So, here’s some help from Slim: Our median income is in the high 30s/low 40s. Which means that a median house price of $149,450 is about 5x the local median income. So, house prices have a-ways to fall yet.
BTW, if you’re into reading story comments, this one has some juicy tidbits. Enjoy!
“…As I stated in summer 2008 the median will need to hit $130k before the bleeding stops. Almost there…” Craig W.
(What a cute thumbnail he has!)
Sen. Kent Conrad (D., N.D.) a senior Senate Democrat with influence over tax and budget policy, said Wednesday that Congress should not allow taxes on the wealthy to rise until the economy is on a more sound footing.
Conrad told Dow Jones Newswires in an interview outside the Senate chamber that Democrats should cancel plans to let the top individual income tax rates and capital gains rates rise for the wealthy at the end of this year. He said chronic unemployment and turmoil in European debt markets call those plans into question.
“As a general rule, you don’t want to be cutting spending or raising taxes in the midst of a downturn … At the same time, we know that very soon we’ve got to pivot and focus on the deficit,” he said. “But it probably is too soon to cut spending or raise taxes.”
MarketWatch First Take
July 22, 2010, 10:58 a.m. EDT
Rip the Band-Aid off housing and the blood gushes
Commentary: Tax credit was no cure-all; only jobs will heal
By MarketWatch
CHICAGO (MarketWatch) — The housing market is like a seriously ill patient who was being given extraordinary treatment in the hope that it would be strong enough after a time to recover on its own. Only the patient ran out of insurance. And the treatment stopped. And housing is sinking into a coma.
Housing’s extraordinary treatment was a tax credit, first directed solely at first-time buyers and later expanded to all qualified home buyers. It provided up to $8,000, money that could be made available at closing, thus providing light-on-savings first-timers with the means to a down payment and related transaction costs.
Much like the situation in which the government found itself when big banking institutions were on the brink, the decision to prop up a faltering housing sector seemed justified at the time on the reasoning that the collapse of such a vital industry would spell doom for the economy overall and surely trigger a second Great Depression.
You can argue now whether that philosophy in either case was flawed. But when it comes to housing, what has clearly been shown is that all the tax credit has done — besides cost the Treasury a good chunk of billions of dollars — is pull sales that might otherwise have occurred later into the time frame when the tax credit was available.
…
“Work ahead,…expect delays!”
“You can argue now whether that philosophy in either case was flawed”.
No argument necessary, the whole premise of the 8k credit was flawed from the get-go. Band-aids on bullet wounds don’t work very well, and eventually you bleed to death. I’m sure the lobbyist for the NAR are on their knees begging uncle sugar for more.
Rip the Band-Aid off housing and the blood gushes
The problem with that analogy is that with the human body the act of blood gushing is injurious. In the economy however the act of blood gushing (in this case housing market correction) is the opposite - it’s healing. Thus the band-aid should not have been applied in the first place.
More like projectile vomiting after binge-drinking. Throw up a few mcmansions and you will feel immediate relief.
Dow up 200.
Promise to hang around when it goes below 8000?
Dow up 200.
Which partly makes up for the plunge that followed your last bullish prediction…
Mortgage rates hit 4.56 pct., record low
Average rate on 30-year loan falls to 4.56 pct., fourth record low in 5 weeks. ~ July 22, 2010
NEW YORK (AP) — Mortgage rates fell to a record low for the fourth time in five weeks. But low rates haven’t been enough to lift a struggling housing market.
The average rate for 30-year fixed loans this week was 4.56 percent, down from 4.57 last week, mortgage company Freddie Mac said Thursday. That’s the lowest since Freddie Mac began tracking rates in 1971.
The last time home loan rates were lower was during the 1950s, when most mortgages lasted just 20 or 25 years.
Bring you own asswipe…
Newark Budget Cuts. ~ 22 Jul 2010
MYFOXNY.COM - Things are getting so bad in Newark that the mayor has ordered the government to stop buying toilet paper.
It’s part of Newark Mayor Cory Booker’s belt-tightening plans that include reducing most city workers to a 4-day work week and shuttering city pools. Booker estimates that the pool closures alone would save $250,000. He also says that no gas will be purchased for municipal vehicles that are not deemed critically important.
Police officers, firefighters and sanitation workers would not be affected by the furlough plan. City workers were already bracing for furloughs starting in August. The number of unpaid days would increase from 11 to 19 with Booker’s plan.
The city budget shortfall is $70 million and Booker plans to meet the revenue shortfall with budget cuts instead of property tax increases.
“Taxes can not be the answer,” Booker said.
Booker says property taxes in Newark have gone up 76 percent in last decade and 19 percent in the past five years.
At the news conference Booker was also quoted as saying, “Call me Mr. Scrooge, if you want, but they’ll be no Christmas decorations around the city.”
MYFOXNY.COM - Things are getting so bad in Newark that the mayor has ordered the government to stop buying toilet paper.
Hah. Our company once made a decision to stop using trash can liners as a cost-cutting measure.
Of course, the collective reaction was “Wtf. What stupid person made this decision?!”, as the company was flush with cash, and doing that introduced sanitary issues.
If you’re pinching pennies that bad, you better be turning all computers off overnight, not have any landscaping or gardener, no dead wood in your org, and everyone should have taken a pay cut…
If you’re pinching pennies that bad, you better be turning all computers off overnight, not have any landscaping or gardener, no dead wood in your org, and everyone should have taken a pay cut…
We did all that at HP. Except we were making record profits at the time. And not everyone cut was deadwood, as the 60-80 weeks the survivors had to put in will attest to.
At the news conference Booker was also quoted as saying, “Call me Mr. Scrooge, if you want, but they’ll be no Christmas decorations around the city.”
Call me Ms. Scrooge if you want, but here’s a confession:
I don’t put Christmas decorations up at the Arizona Slim Ranch. Why not? Because I don’t feel like giving any more of my money to the electric company than I have to.
So, why don’t I just hang a wreath on the door? Because I don’t feel like it. I’d rather expend my energy on other things.
“Bring you own asswipe…”
Eric Holder’s a little too heavy to cart back and forth to work every day.
LOL!
He would probably do a crappy job anyway!
Things are getting so bad in Newark that the mayor has ordered the government to stop buying toilet paper.
a cl assic example of a rash decision
:rimshot: !
“a cl assic example of a rash decision”
LOL… Priceless, Rio!
Gulf boats having trouble finding any oil: US official
WASHINGTON — Some 750 boats drafted in to scoop up oil from the Gulf of Mexico are having “trouble” finding any crude in the sea, a top US official said Wednesday, almost a week after a busted well was capped.
“We are starting to have trouble finding oil,” US pointman Admiral Thad Allen, who is in charge of handling the government’s response, told reporters.
The boats, which have been drafted in to skim oil off the surface of the Gulf, are “really having to search for the oil in some cases” around the area of the capped well, he added.
“We are starting to have trouble finding oil,” US pointman Admiral Thad Allen, who is in charge of handling the government’s response, told reporters.
Oh, please let this be true. Please.
Oh, please let this be true. Please.
yeah, because they used all that dispersant, so it’s not at the surface.
Don’t be fooled and think the oils not there and not fouling the eco system…they’ve just “hidden” it, and made it harder to clean up.
Wish I could agree with you, Slimmie, but I’d rather they found gobs of oil to skim instead of toxic droplets of Corexit.
Don’t swim in the Gulf, even if it looks clean, and DO NOT, under any circumstances, eat any seafood from the Gulf.
Incomplete story.
The west coast of Florida is looking better, but the Louisiana, Alabama and Mississippi coasts is still getting flooded with oil.
Regulators consider lobstering ban for Mass. to NC.
WARWICK, R.I. – Lobstermen are speaking out against a proposed ban on lobstering from Massachusetts to North Carolina, saying a bleak assessment of the stock’s health is way off.
Dozens of lobstermen traveled to Warwick, R.I., for a meeting of the board that advises the Atlantic States Marine Fisheries Commission on lobster rules.
The board is considering a five-year moratorium on lobstering south of Cape Cod to North Carolina to deal with a population crash. The region supplies about 7 percent of the Northeast’s total catch. A final decision is expected later this year.
Nick Crismale of the Connecticut Lobsterman’s Association says a moratorium would do “biblical” damage to the industry. Massachusetts lobsterman Albert Rosinha urged the committee to use conservation measures.
Use conservation measures? What does he think a ban on lobster harvesting is? To bad his parents didn’t have a procreation ban dropped on them.
And he can start complaining about biblical damage when he’s turned into a salt pillar.
I thought that the lobster population was booming because of overfishing of the the predator fish that eat the babies. Maybe that is just in more northern waters?
Nick Crismale of the Connecticut Lobsterman’s Association says a moratorium would do “biblical” damage to the industry.
And obliteration of the lobster population would be better for you how…?
And obliteration of the lobster population would be better for you how…?
C’mon, he’s a “bidnessman”. We all know that its genetically impossible for them to look at the big picture and make long term plans.
“Sustainability”? That’s for hippies!
White House Backs Bill to Collect Employee Pay Information from Businesses. ~ July 22, 2010
(CNSNews.com) – The Obama administration is backing legislation that includes regulations requiring U.S. businesses to provide to the government data about employee pay as it relates to the sex, race and national origin of employees.
In an orchestrated effort that included a statement by President Barack Obama and an event at the White House featuring Vice President Joe Biden, Attorney General Eric Holder and Labor Secretary Hilda Solis, the president and his cabinet endorsed the Paycheck Fairness Act.
The House approved the act in 2009, but the Senate did not approve it. In the 111th Congress, both the House and the Senate have offered legislation that covers a wide range of workplace requirements and regulations, including training girls and women to become better at negotiating pay and benefits, and the establishment of a data base of U.S. workers’ pay in both the public and private sector.
I’m fine with the government doing that for government positions. Public pay scales SHOULD be known to the people footing the bills. But private companies shouldn’t have to provide that kind of information.
Methinks that this could have the unintended consequence of creating more opportunities for those of us in the freelance economy. Where you’re hired on the basis of whether you can do the project, not what you look like and where your family came from.
I’ll drink to that, Slim.
No Fed Plans to Give More Support, Bernanke Says.
WASHINGTON — The chairman of the Federal Reserve, in saying that it had no immediate plans to provide additional support to the economy, dashed the hopes of some economists and executives who have been pushing for action to add momentum to the sluggish recovery.
Ben S. Bernanke, the Fed chairman, told the Senate Banking Committee that the recovery was continuing at a modest pace.
The chairman, Ben S. Bernanke, said Wednesday that the recovery was continuing at a modest pace, though with a “somewhat weaker outlook.”
He projected that the unemployment rate would remain well above 7 percent through the end of 2012, and the duration of President Obama’s current term. That, too, was a discouraging note to Washington incumbents facing tough re-election fights.
News from “The O.C.” :
“Because the cap is based on a statewide Consumer Price Index, a benchmark that fell in 2009 — the first drop since Prop. 13 passed in 1978.”
59,000 see taxable property value rise
July 22nd, 2010, by Jon Lansner OC Register
Some 59,000 Orange County property owners will get a likely unexpected surprise in their annual value review for tax purposes: their taxable values of these residences will rise a collective $2.9 billion.
In an era of falling property values, the Orange County Assessor found that some slices of Orange County are enjoying a bit of a real estate rebound. Many taxpayers forget that the county can raise your taxable value in excess of the mandated cap on increases (this year is a bit odd, so there’s no mandated increase) if your value has previously been pruned and remains below full Prop. 13 value.
And, remember, taxable values determines one’s tax bill. (The valuation notice is in the mail, by the way!) Also, values are set as of Jan. 1.
The Assessor notes that some of these 59,000 value restorations will see increases greater than 5% year to year. Assessor Webster Guillory notes that was no pattern as to where these value hikes occurred.
Overall, the Assessor report says …
* 300,000 property values were reviewed, including “single-family homes, townhouses, condominiums, multi-family apartments, commercial/industrial buildings and timeshares.”
* 148,000 of these Orange County properties got taxable values reduced or kept the same.
* 78,000 residences got further back-to-back decreases vs. over 160,000 last year. To the Assessor, “This reduction is reflecting a stabilizing residential real estate market.”
*Over 7,000 commercial, industrial, and multi-family properties got value reductions vs. about 1,800 last year to over 7,000 properties this year. To the Assessor, “The market for these properties continued to decline in 2009.”
One quirk this year is that the Prop. 13 cap on increases on taxable values actually was a decrease of 0.237% for this 2010-2011 tax year. Why? Because the cap is based on a statewide Consumer Price Index, a benchmark that fell in 2009 — the first drop since Prop. 13 passed in 1978. So for many taxpayers, those with market values in excess of their discounted Prop 13. values, their tax bill will fall modestly in the coming year.
When it all added up, Orange County secured property roll totaled $396.1 billion, down $1.69 billion or 0.43% than last year. Orange County’s unsecured roll — business personal property, plus marine and aircraft — was $20.6 billion, off $340 million or 1.61%. Combined, it’s $417 billion, down $2 billion in a year.
Since the Assessor’s Office does its valuations based on property trends, we had to ask if Guillory had seen evidence that the worst was over for local real estate. He told us:”We’re not there yet .. that a market bottom is here.” He adds: “Look across all property types, they’re all behaving differently … the market is not homogeneous”
Yah, a few people I know who bought in the bay area near the peak said “At least our taxes are going down.” I then explained that their taxable cap WASN’T going down, it was expanding at 2% a year from their purchase price, and that prices would have to rebound back to bubble years and beyond before they’d see any real protection from Prop 13.
There was some wailing and gnashing of teeth.
The Art of the Ann Arbor City Budget ~ July 22, 2010
The debate in Ann Arbor, where firefighters are being laid off due to a multimillion dollar budget deficit, is over an $850,000 piece of art.
That’s how much the city has agreed to pay German artist Herbert Dreiseitl for a three-piece water sculpture that would go in front of the new police and courts building right by the City Hall.
The city has the money to do it because in 2007, it agreed to set aside for public art 1 percent of money that went into capital improvement projects that were $100,000 or larger. Most capital projects involve streets, sewers and water.
Ann Arbor City Council member Stephen Kunselman, a Democrat, opposed the art deal.
“I think it is incredibly insensitive,” Kunselman said. “It is insensitive to the staff and their morale. It is insensitive to the community. There are people out there struggling financially, and here we are spending a large amount of money on a piece of art.”
Kunselman said the city is also eliminating the solid waste coordinator from the budget, which oversees trash pickup, and hiring an art coordinator.
Oh, brother. Shades of the Ann Arbor I knew when I was a University of Michigan student.
Which reminds me of a story:
A few years ago, when I was visiting Dear Ann Arbor Town, the cabbie was stuck in traffic down by I-94.
Then we got a break and moved forward. The cab passed a car that was sporting a very nice logo for a sundial company. My first thought: “Haven’t people in this town heard of clocks?”
Well, of course the people in the City of Trees have heard of clocks. Boy, have they. The University of Michigan’s Burton Tower chimes the Four Quarters well into the night. And the deep bass bells boom out the time at the top of the hour.
But I digress.
The point of my little story is to say that, in Ann Arbor, you must spend a lot of money on frills like sundials. And public art.
That’s why Slim no longer lives there. The high-priced pretentiousness got under my skin and stayed there.
They have lost their minds.
I’m an artist, so I’m all for art, but…
Once again, people with little money or discretionary income need to focus on what’s important, and generally can’t have nice nonessential things.
That includes cities… And countries.
Ohio pension funds join New York in BP lawsuit ~ July 22, 2010
NEW YORK (CNNMoney.com) — Four Ohio pension funds have joined the New York state retirement fund in filing a class-action suit against BP for allowing its stock to plunge in value, New York State Comptroller Thomas DiNapoli said on Wednesday.
The four Ohio funds — the Ohio Public Employees Retirement System, the State Teachers Retirement system of Ohio, the School Employees Retirement System of Ohio and the Ohio Police & Fire Pension Fund — have a combined value of $150 billion.
These funds joined the New York State Common Retirement Fund, worth $132 billion, in filing suit against BP (BP), which has lost about 45% of its market value since the company’s oil well blew up an offshore rig in the Gulf of Mexico in April, killing 11 workers and unleashing a massive spill.
a class-action suit against BP for allowing its stock to plunge in value
I didn’t realize this was a legal responsibility of publicly-traded corporations.
Anyone know a good securities lawyer? I have a lot of suits to file/losses to recover.
No kidding!
I am sure BP purposefully “allowed” their shares to drop, the gulf had nothing to do with it.
They’ll just knock 20 bucks off the current share price raising the money to pay the people for original loss of 20 bucks of share price. Sound good? Wait, you say you’re out ANOTHER 20 bucks per share because the company was hit by a class action lawsuit? Better sue the company for not protecting you from THAT loss either!
The “Right to Rent” act doesn’t address one major problem. If you own a house, things like fixing leaking roofs, burned-out hot water heater elements, etc. are the responsibility of the homeowner. If you rent, then that responsibility falls on the landlord. If you rent your own house, whose responsibility is it, yours or the banks?
He who holds the title.
I drove to Washington DC for another data center visit yesterday.
There were a ton of abandoned broke down cars on the side of the road. More than I’ve ever seen. Sign of the economic times I guess.
I’m seeing an uptick in abandoned cars here in Tucson.
In DC area?
Bankruptcy filings surge
Boston Business Journal ~ July 22, 2010
Bay State bankruptcy filings spiked 25 during the first half of the year compared to the same period last year, according to a new report from The Warren Group.
Boston-based Warren Group tracks the real estate industry and publishes “Banker & Tradesman.”
A total of 11,847 filers across Massachusetts sought protection under Chapter 7, Chapter 13 and Chapter 11 of the U.S. bankruptcy code during the first half of this year, up from 9,461 one year earlier, per the Warren Group report.
“Bankruptcy filings are considered a lagging indicator, and these bankruptcy filings really reflect earlier economic conditions. Many people struggle to hold on for as long as they can before seeking bankruptcy protection, but even though the economy is recovering, consumers are still hurting and struggling to pay off the debt they’ve accrued over the years,” said The Warren Group CEO Timothy Warren Jr., in a statement.
And it’s only going to get worse. I strongly suspect that we will soon see “BK reform II” sooner than we expect. Can’t let the little people get away with this. And if they can’t pay, then the debt should be transfered to their kids, and so on (OK, the last bit is far faetched … for now).
This is how bad it really is.
Despite the “reform” (HA!) in 2005 making it far more difficult to file bankruptcy, filings are at an all time record high.
And it is NOT “a lagging” indicator. It is THE indicator and the only one that matters.
Sounds like this clown is worried a carbon tax may hurt his chances…
REID SAYS SENATE WILL SHELVE LEGISLATION TO CAP CARBON INDEFINTELY…DEVELOPING STORY.
~ Clipped from Drudge
lil’ Opie (the Non-Hawaiian) “socialist-muslim” …ruining Cheney-Shrub’s Legacy # 112: “No-Bid” contracts
Obama to sign ‘improper payments’ legislation:
AP News / By Associated Press Writer Darlene Superville, Thu Jul 22
This morning, Obama will sign a new law designed to end mistaken government payments to contractors and other organizations. “These are payments made in the wrong amount, to the wrong person, or for the wrong reason,” says the White House schedule. “In 2009, improper payments totaled nearly $110 billion, the highest amount to date.”
Since taking office, Obama has taken steps to cut wasteful spending in part by reducing improper payments. Last month, he ordered creation of a federal “Do Not Pay List” — a database that agencies ultimately must search before cutting checks to individuals and contractors.
Agencies would face penalties for failing to comply with the law.
I can see now a lot of people with the same names are going to get screwed.
But let’s just keep giving Haliburton, et al, those billion dollar no bid contracts, shall we? No waste there, right?
Spill czar: ‘It’s my call’
NEW YORK (CNNMoney.com) — For Gulf businesses wondering if their oil spill claims will be paid, there’s one guy who’ll decide — Kenneth Feinberg, the former special master of the September 11th Victim Compensation Fund.
As the oil spill claims czar, Feinberg has access to the $20 billion pot of BP’s money that is in escrow to pay for damages.
* A restaurant in the North end of Boston that can’t get Gulf shrimp. Feinberg’s vote: “Highly unlikely.”
* A motel on a beach where there’s oil. Feinberg’s vote: “Pay them. Pay the claim.”
* Business at a golf course 50 miles from the Gulf is down 30%. Feinberg’s vote: “Dubious.”
BP has been paying individual claims, but many business claims have gotten stuck in a holding pattern.
That’s where Feinberg comes in.
Feinberg answers to no one. There are no committees. There is no bureaucracy.
“I’m totally independent. I do not answer to the administration, nor to BP,” said Feinberg at the Economic Club in D.C.
Man, to be in that guy’s position…
It’s a once-a-century opportunity Ken - go for the gold!
(or the green - whatever your preference)
He’s the Solomon of our age.
A pop quiz to begin today’s 5, live from Vancouver: How much money did the U.S. government inject into the American “financial system” from June 30, 2009, to June 30, 2010?
Drumroll…
$700 billion.
That’s right… the same amount promised to the financial system in TARP, back in 2008, when they were literally on the brink of destruction. Over the last 12 months, as the S&P 500 rose as much as 30% (up about 15% now, after the summer correction), evidently banks, brokers and lenders needed another $700 billion… just trust ’em… really.
“The current outstanding balance of overall federal support for the nation’s financial system… has actually increased more than 23% over the past year,” wrote TARP inspector general Neil Barofsky this week, “from approximately $3.0 trillion to $3.7 trillion — the equivalent of a fully deployed TARP program — largely without congressional action, even as the banking crisis has, by most measures, abated from its most acute phases.”
You’re supposed to feel better, we’re told, that most of the money went to Fannie, Freddie and the FHA.
No Banker Left Behind.
State Dept. planning to field a small army in Iraq
McClatchy Newspapers
WASHINGTON — Can diplomats field their own army? The State Department is laying plans to do precisely that in Iraq, in an unprecedented experiment that U.S. officials and some nervous lawmakers say could be risky.
In little more than a year, State Department contractors in Iraq could be driving armored vehicles, flying aircraft, operating surveillance systems, even retrieving casualties if there are violent incidents and disposing of unexploded ordnance.
Under the terms of a 2008 status of forces agreement, all U.S. troops must be out of Iraq by the end of 2011, but they’ll leave behind a sizable American civilian presence, including the U.S. Embassy in Baghdad, the largest in the world, and five consulate-like “Enduring Presence Posts” in the Iraqi hinterlands.
Iraq remains a battle zone, and the American diplomats and other civilian government employees will need security. The U.S. military will be gone. Iraq’s army and police, despite billions of dollars and years of American training, aren’t yet capable of doing the job.
The State Department, better known for negotiating treaties and delivering diplomatic notes, will have to fend for itself in what remains an active danger zone.
So this is the next step? Forget about joining the Army or the Marines! You can now be a mercenary in the employ of Haliburton. Of course you can probably forget about a pension after 20 years of service or other benefits that soldiers now take for granted. I wonder how many of these mercenaries won’t even be Americans. I guess we juts figure dout how to offshore the military. There goes another “American Core Competence” down the drain.
Interesting thought: so what happens when all soldiers are mercenaries in the employ of multinational corporations?
If you knew how big the mercenary industry was, you would break your jaw on the floor.
Read some William Gibson, some possibilities in there.
If it’s run by the Diplomatic Security Service, it’ll be okay.
It will be Xe (formerly Backwater) and the few mercs I’ve met hate those guys.
Wanna guess why?
“Under the terms of a 2008 status of forces agreement, all U.S. troops must be out of Iraq by the end of 2011, but they’ll leave behind a sizable American civilian presence, including the U.S. Embassy in Baghdad, the largest in the world, and five consulate-like “Enduring Presence Posts” in the Iraqi hinterlands.”
The massive U.S. airbases in Afghanistan and Iraq that sandwich Iran will persist so Israel can continue its creeping expansionist policies.
This lowlife POS should be charged with more than “ethics” violation, his tax cheating azz should be sporting an orange jump suit. He’ll get a wrist slap, nothing more.
Rangel charged with multiple ethics violations
New York Dem gave up Ways and Means gavel in February
A House investigative committee on Thursday charged New York Rep. Charles Rangel with multiple ethics violations, a blow to the former Ways and Means chairman and an election-year headache for Democrats.
The committee did not immediately specify the charges against the Democrat, who has served in the House for some 40 years and is fourth in House seniority. The announcement by a four-member panel of the House ethics committee sends the case to a House trial, where a separate eight-member panel of Republicans and Democrats will decide whether the violations can be proved by clear and convincing evidence.
I know nothing about NY politicians, so is this state or national?
National
The latest data point in the “strategic default meme is spreading” file:
Bernanke: Spend, Spend, Spend (Stick My Mortgage Up Your A$$ Ben)
And if you think the headline has bad words, wait until you read the story.
Looking on the bright side, I see a healthy divergence of views emerging in the international banking cartel. When central bankers disagree, the resulting policy is less likely to be one-sided and systemically destabilizing.
The Financial Times
ECB chief calls for global tightening
By Chris Giles in London
Published: July 22 2010 18:47 | Last updated: July 22 2010 18:47
Public spending cuts and tax increases should be imposed immediately across the industrialised world as evidence of a healthy European recovery mounts, according to Jean-Claude Trichet, president of the European Central Bank.
In a strident article for the Financial Times, Mr Trichet argues that policymakers who want to prolong the stimulus are mistaken and that cutting borrowing would have “very limited” effects on growth.
The view from Europe’s senior economic policymaker contrasts with continued US demands for fiscal tightening to be delayed at least until 2011 and suggests there is still little agreement over the best way to foster a strong global recovery from the financial and economic crisis of the past two years.
“We have to avoid an asymmetry between bold, if justified, loosening and unduly hesitant retrenchment,” Mr Trichet says in his article.
…
The Financial Times
Stimulate no more – it is now time for all to tighten
Jean-Claude Trichet
Published: July 22 2010 20:47 | Last updated: July 22 2010 20:47
The acute fiscal challenges across all industrial economies are no surprise. Our economies are emerging from the worst economic crisis since the second world war, and without the swift and appropriate action of central banks and a very significant contribution from fiscal policies, we would have experienced a major depression. But now is the time to restore fiscal sustainability. The fiscal deterioration we are experiencing is unprecedented in magnitude and geographical scope. By the end of this year, government debt in the euro area will have grown by more than 20 percentage points over a period of only four years, from 2007-2011. The equivalent figures for the US and Japan are between 35 and 45 percentage points.
The growth of public debt has been driven by three phenomena: a dramatic diminishing of tax receipts due to the recession; an increase in spending, including a pro-active stimulus to combat the recession; and additional measures to prevent the collapse of the financial sector. Because we avoided the catastrophic scenario of a financial meltdown, the third element does not represent a very significant volume of spending for most countries. But calculations by the European Central Bank show the volume of taxpayer risks earmarked to support the financial sphere, including all options – recapitalisation, guarantees, toxic assets etc – was as high as 27 per cent of gross domestic product. It is, remarkably, the same gigantic proportion on both sides of the Atlantic.
Taking account of these facts, there is a strong unity of purpose among the world’s policymakers to address our fiscal fragilities. It is reassuring that the consensus on the need for credible fiscal exit strategies, along with profound financial sector reform, is very broad. But the timing remains disputed. In the waiting camp, some argue that it would be desirable to maintain or even increase the fiscal stimulus to avoid jeopardising the economic recovery. Others claim that fiscal consolidation will have a negative systemic impact on the global economy by damping the growth environment. I disagree with both these views. We have to avoid an asymmetry between bold, if justified, loosening and unduly hesitant retrenchment. There are three main reasons for starting well-designed fiscal consolidation strategies in the industrial countries now, precisely to consolidate the present recovery.
…
The Financial Times
A double dip is a price worth paying
By Martin Feldstein
Published: July 22 2010 17:37 | Last updated: July 22 2010 17:37
Critics of the European countries’ decisions to front-load their deficit reductions miss the importance of seizing the current moment of crisis to take politically difficult budget actions.
If the timing of the fiscal consolidation were just a technical economic problem, the right policy would be to enact a multi-year budget that starts with little or no deficit reduction for the first two years, followed by a rapid return to budget balance. The slow start would be particularly appropriate in those countries where aggregate demand is now very weak.
But such a gradual adjustment strategy cannot work politically in countries where voters are sceptical about government promises of future deficit reductions. Immediate action is necessary to make future deficit cuts credible. And painful cuts in government pensions and in public payrolls as well as increases in personal taxes may only be possible while there is a sense of crisis throughout Europe.
Unfortunately, the front-loaded deficit reductions may push economically weak countries into recession for the next year or two. That is the cost of achieving the needed long-term deficit reduction in the current economic and political environment. The countries are nevertheless right to accept that bitter medicine in order to get on the right longer term path.
However, government officials are not warning the public that this is the choice that they have made. Instead they are claiming that the front-loaded fiscal deficit reductions will not weaken the economy in the short run. They argue that the increased confidence that will result from the prospect of lower deficits will lead to enough increased spending by consumers and businesses to actually raise the short-term pace of economic activity.
I think that is unlikely to occur.
…
The Financial Times
Time for true debate on Fannie and Freddie
By Gillian Tett
Published: July 22 2010 20:07 | Last updated: July 22 2010 20:07
When the results of bank stress tests are released on Friday in Europe, there will be a flurry of hand-wringing about the capital hole – and who is going to plug it, or bear losses.
But on the other side of the Atlantic, there is another black hole which badly needs to be discussed – this time in America’s huge government-sponsored enterprises, such as the housing giants Fannie Mae and Freddie Mac, and the interlinked Ginnie Mae and the Federal Housing Administration.
So far this year, this GSE issue has attracted scant political attention. Indeed – and astonishingly – the 2,300 page financial reform bill that President Barack Obama signed this week barely mentions these institutions at all.
But back in 2008 the US government effectively nationalised Fannie and Freddie, under the fig leaf of a “conservatorship” scheme. And it has now used some $145bn of taxpayers’ money to prop them up, more than was spent on direct injections into the US banks or car sector.
Worse still, that bill will almost certainly rise further in the coming years. After all, the volume of outstanding mortgages backed by Fannie and Freddie now stands at $5,500bn, around half the mortgage market. GSE entities have acquired private-label mortgage bonds too. In theory, this is limited to top quality loans. In practice, though, there is almost certainly plenty of rot there too.
Thus (guess)timates about the size of the future taxpayer bill now range from $390bn (the Congressional Budget Office) to almost a trillion dollars (from some private sector economists.) It makes the woes of Spanish savings banks seem almost tame.
So is there any chance of seeing a proper “stress test” on this exposure? Or exit strategy? Don’t bet on that soon. These days, the GSEs are the only thing keeping the US mortgage and housing sector afloat, because private sector securitisation has effectively collapsed: last year, for example, nine out of 10 mortgages were underwritten by Fannie and Freddie. And, unsurprisingly, the Obama administration does not want to upset that apple cart by implementing radical reform. Nor does it want to undermine the value of mortgage-backed bonds, given how many of these the Federal Reserve itself now holds.
Nevertheless, behind the scenes – and almost against the odds – there is now pressure building for a proper debate. That is partly because some Republican politicians are hoping to use the issue as another weapon to attack the Obama administration. However, some bank lobby groups are also keen to start a debate about the GSEs, partly because they hope this could deflect attention from the failures of private banks.
It remains to be seen whether any of this gets beyond political posturing. However, judging from a consultation exercise now being organised by the US Treasury, there are some interesting ideas floating around. These essentially fall into two camps. Parts of the Republican party – and some private sector banks – want to remove the state subsidy for the GSE altogether. One idea submitted to the Treasury, for example, calls for banks to organise a mutual, private sector insurance scheme to guarantee mortgages, without state support.
However, a second strand of ideas calls for the state subsidy to be maintained, both to ensure stability in the short term – and to guarantee that the mortgage market remains liquid and homogenous in the long term. Sifma, the banking lobby group, for example, says that it is crucial to maintain the so-called “to be announced” sector, to give the market depth.
…
“Sales of existing homes declined in June while the inventory of unsold homes rose, a combination that doesn’t bode well for prices in the months ahead.”
What about young families who have been patiently waiting for prices to return to affordable levels? Doesn’t the combination bode well for them?
I personally know a number of such young families. They often ask my opinion of whether it is a good time to buy; so far my answer has always been, “Not yet.”
* The Wall Street Journal
* HOMES
* JULY 23, 2010
Home Sales Dip as Unsold Inventory Persists
Glut of Properties on Market Hints at Falling Prices Through Rest of Year as Sector Adjusts to End of Buyers’ Tax Credit
By NICK TIMIRAOS
Sales of existing homes declined in June while the inventory of unsold homes rose, a combination that doesn’t bode well for prices in the months ahead.
In its monthly report on home-sale transactions on Thursday, the National Association of Realtors said sales were running at a seasonally adjusted annual pace of 5.37 million last month, down 5.1% from May but up 9.8% from one year ago.
Home sales surged in the spring as buyers rushed to take advantage of tax credits worth as much as $8,000. To qualify, buyers had to sign purchase contracts by April 30.
Sales fell in most parts of the country in June except in the Northeast, where they rose 7.9% from May. Existing-home sales were down by 9.3% in the West, the largest regional drop.
The Realtors’ data for June reflect completions of sales, most of which were based on contracts signed in April and May.
Newly signed contracts plunged by 30% in May from the previous month, when the tax credit expired.
“Given that, you are going to see a huge drop in closed sales in July, and it’s going to continue at a minimum until August,” said Thomas Lawler, an independent housing economist in Leesburg, Va.
Inventories of unsold homes rose by 2.5% in June to 3.99 million. That is 8.9 months’ supply at the current sales pace, up from 8.3 months in May and the highest level since August 2009.
The increase in the inventory of unsold homes was particularly disappointing because the tax credits had been designed to help clear through the glut of unsold homes.
…
THIS PROGRAM’S DESIGN WAS EVIDENTLY A FAILURE.
NEXT TIME, TRY USING A BULLDOZER TO CLEAR EXCESS INVENTORY.
Real estate agents want oil spill compensation
By LARRY MARGASAK The Associated Press
Posted: 11:49 a.m. Wednesday, July 21, 2010
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WASHINGTON — The administrator of a $20 billion oil spill compensation fund said Wednesday he’s been besieged by real estate agents and brokers, demanding that they become eligible for payments.
Kenneth Feinberg, in congressional testimony singled out the real estate agents’ demands as one of many tough eligibility decisions he’ll have to make in the coming weeks.
Feinberg told the House Judiciary Committee he’s working only for victims, not BP or the Obama administration. Operations of the independent fund will begin next month, starting with six-month emergency checks that will be processed within a day and paid out within the next two days.
The emergency payments will not require a release from future claims. Long-term settlements — for current and future injury or loss — will require agreements to accept the offer as final payment. Victims can reject the money and pursue claims independently in court.
Feinberg said he’ll need to work out a system for those who develop illnesses from the cleanup years afterward.
Feinberg said he has heard from many real estate agents and brokers about their lost income, and promised to address their concerns.
“The Realtors and real estate brokers are a major political force,” he said. “I’m hearing from them constantly. I’m not sure whether they have a valid legal claim. I’m not sure they can win if they litigate.
“If I am going to do justice here, we’ve got to do something.”