The Housing Bubble

I have a defeatist attitude today…Ill never be first again

Homeownership rate continues to slide. ~ USA TODAY

John Burns, CEO of John Burns Real Estate Consulting, a national housing market analyst based in Irvine, Calif., estimates that 6 million of the 8 million homeowners who are behind on their mortgages will lose their homes to lenders in the next two years.

Millions of houses on the verge of foreclosure threaten to send homeownership to its lowest level in 50 years, according to new industry estimates.

Fresh projections say the rate could plummet to about 62% as early as 2012 and almost certainly by the end of the decade. Homeownership rates haven’t been that low since they hit 61.9% in 1960.

The share of households that own their homes has been sliding since the housing bubble burst in 2006. The rate fell again in the second quarter of this year to 66.9% — the lowest since 1999 — from a peak of 69.4% in 2004, the Census Bureau says.

“Anybody who knows anything about housing thought it would be flat in the second quarter,” says John Burns, CEO of John Burns Real Estate Consulting, a national housing market analyst based in Irvine, Calif. “Homeownership fell during the quarter when government was offering a tax credit (to first-time homebuyers). What do you think is going to happen now that there’s no tax credit?”

As spending by wealthy weakens, so does economy.
Wealthy are watching their spending again, casting a cloud over the nation’s economic recovery.

WASHINGTON (AP) — Wealthy Americans aren’t spending so freely anymore. And the rest of us are feeling the squeeze.

The question is whether the rich will cut back so much as to tip the economy back into recession — or if they will spend at least enough to sustain the recovery.

The answer may not be clear for months. But their cutbacks help explain why the rebound could be stalling. The economy grew at just a 2.4 percent rate in the April-June quarter, the government said Friday, much slower than the 3.7 percent rate for the first quarter.

Economists say overall consumer spending has slowed mainly because the richest 5 percent of Americans — those earning at least $207,000 — are buying less. They account for about 14 percent of total spending. These shoppers have retrenched as their investment values have sunk and home values have languished.

In addition, the most sweeping tax cuts in a generation are due to expire in January, and lawmakers are divided over whether the government can afford to make any of them permanent as the federal budget deficit continues to balloon. President Barack Obama wants to allow the top rates to increase next year for individuals making more than $200,000 and couples making more than $250,000. The wealthy may be keeping some money on the sidelines due to uncertainty over whether or not they will soon face higher taxes.

We’re gonna need more BARF(bad assist relief fantasy) money…

AP analysis: US economic stress heads back up
Nation’s economic pain worsened in June after 4 months of improvement
August 2, 2010

After easing for four months, the nation’s economic stress worsened in June because more bankruptcies in the West and foreclosures outside the Sun Belt outweighed lower unemployment, according to The Associated Press’ monthly analysis of conditions around the country.

The setback halted a drop in month-to-month stress readings that had begun in February. In May, economic stress had declined from the previous month in 33 states. And in April, stress fell in every state but two.

But in June, bankruptcy rates rose in Utah, California, Colorado and Idaho. Higher foreclosures spread to the Midwest, particularly Illinois. This occurred even as foreclosures eased in states that have suffered most from the housing bust, such as Arizona, California, Florida and Nevada.

More than two-thirds of the nation’s 3,141 counties, and 37 of 50 states, endured more hardship in June than in May, the AP’s Economic Stress Index shows.

State-Owned Bidders Fuel China’s Land Boom

WUHU, China — The Anhui Salt Industry Corporation is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.

Now it has swaggered into a new line of business: real estate.

The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.

Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.

Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid $260 million for Beijing property where it plans to build luxury residences and retail outlets.

And in one of China’s biggest land deals yet, the state-run shipbuilder Sino Ocean paid $1.3 billion last December and March to buy two giant tracts from Beijing’s municipal government to develop residential communities.

All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.

“These are the ones that have the money to buy the land,” says Prof. Deng Yongheng at the National University in Singapore. “Because in China, it’s the government that controls the money supply and the spending.”

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

US Dollar Will Lose Reserve Currency Status, Harvard’s Niall Ferguson Says
Aug 1, 2010

The US dollar will eventually lose its status as the international reserve currency to the Chinese yuan, perhaps withing five years, Harvard University historian Niall Ferguson said at a presentation in the Diggers and Dealers conference in Kalgoorlie, Western Australia, today. Investors are moving toward a “de facto” gold standard, he said.

Fed Finding No Good Deed Goes Unpunished With Mortgage Bond Trades Failing.

For all the good the Federal Reserve’s $1.25 trillion of mortgage-bond purchases have done, they’ve also left part of the market broken.

By acquiring about a quarter of home-loan bonds with government-backed guarantees to bolster housing prices and the U.S. economy, the Fed helped make some securities so hard to find that Wall Street has been unable to complete an unprecedented amount of trades. Failures to deliver or receive mortgage debt totaled $1.34 trillion in the week ended July 21, compared with a weekly average of $150 billion in the five years through 2009, according to Fed data.

The difficulty of executing transactions may eventually drive investors away from the $5.2 trillion mortgage-bond market, which has historically been the most liquid behind U.S. Treasuries, potentially causing yields to rise, according to Thomas Wipf, who chairs an industry group that is trying to address the problem. The unsettled trades also stand to exacerbate the damage caused by the collapse of a bank or fund.

“You’re adding systemic risk into the market,” said Wipf, chairman of the Treasury Market Practices Group and the New York-based head of institutional-securities group financing at Morgan Stanley. “Investors are taking on counterparty risk in trades they didn’t intend to take on.”

60 years from now will Obama be remembered as the “Herbert Hoover” of our generation?

Or

the FDR?

Ouch. Jun-2007 $600,000 to $147,510 Aug. 2010

realtor.com today
16292 Robin Wy Jupiter, FL 33478
$147,510
$720/month|Change My Scenario|Get Mortgage Rates 3 Bed, 2 Bath | 2,809 Sq Ft on 2.5 Acres | MLS #R3126447 | Refreshed 14 minutes ago

—————————————————————————————-
Palm Beach County Property Appraiser
Location Address: 16292 ROBIN WAY
Municipality: UNINCORPORATED
Parcel Control Number: 00-42-41-07-00-000-5470

Jul-2010 23939/0965 $200,000 CERT OF TITLE WASHINGTON MUTUAL BANK
Jun-2007 21908/1108 $600,000 WARRANTY DEED MORELLO JOSEPH
Feb-2007 21478/0279 $10 QUIT CLAIM URBANEK LAWRENCE W

I have been working with a realtor for about 6 months. He won’t return my calls or emails anymore. LOL!

Next…

Cuba eyes more self-employment as massive layoffs loom

After the crash of the former Soviet bloc, Cuba’s cash-strapped government …

President Raul Castro expanded self-employment fields on Sunday, ahead of looming government plans to slash as many as one million jobs — 20 percent of communist Cuba’s work force — from state payrolls.

The economy, 95 percent of which is currently in state hands, does not have the ability to absorb such vast numbers of jobless. Castro’s move aims to try to reduce the socioeconomic fallout, but it will be an uphill battle.

The Council of Ministers “agreed to expand the range of self-employment jobs, and their use as another alternative for workers who lose their jobs,” Castro said as he gave a closing address at one of two annual sessions of the National Assembly.

After the crash of the former Soviet bloc, Cuba’s cash-strapped government in the 1990s approved a wide range of self-employment. Positions such as beauticians, dog groomers, small restaurant owners and even lighter refillers were legalized as long as workers got licenses and paid taxes.

But social resentment emerged as an issue when some workers, particularly in small private restaurants, achieved dramatic levels of success.

The government began increasing taxation and regulation, and decreasing license-granting, until the self-employed sector was largely rendered paralyzed, like the rest of the economy.

Realtors are incompetent.

Here is a new twist: A judge is defrauded out of his RE, and a dozen other judges (unwittingly?) facilitate this fraud.

http://tinyurl.com/3a8h57o

“Judge John L. Phillips said to me regularly that if all of these illegal activities can be successfully committed against a judge, they can be committed against anyone,” says Reverend Boykin.

“There were 12 judges involved in the Judge John L. Phillips Guardianship case, either involved in overseeing the case as presiding judges, issuing decision orders, judicial hearing judges, administrator judges, judges sealing records. We believe none of these judges are legally able to state they were not aware of the illegal activities going on in the Judge John L. Phillips Guardianship case…

In his letter to Assistant District Attorney Robert Renzulli in the Asset Forfeiture Bureau of D.A. Charles Hynes’ office, Boykin outlines how the Phillips estate has been systematically looted by mortgage fraud including “illegal conveyances, illegal sales and forgery of deeds.” And he asks if anyone is going to pay for these crimes?

Filed under: “Welcome home soldiers!…but ya best keep your FEDERAL “Gubmint” paid job, on account of lil Opie hasn’t quite RESTORED Cheney-Shrub’s Legacy Effect #11: “After 8 years, we’ve set the US economic stage for JOBS!, JOBS!, JOBS!, in the private sector…see ya!”

US President Barack Obama is to confirm the withdrawal of all combat troops from Iraq by the end of August.

Obama to confirm plan for US troop withdrawal from Iraq:
Barack Obama salutes while stepping off of Marine One helicopter on the White House’s South Lawn in Washington

2 August 2010 BBC News

“Shortly after taking office, I announced our new strategy for Iraq and for a transition to full Iraqi responsibility, and I made it clear that by 31 August, 2010, America’s combat mission in Iraq would end.

“And that is exactly what we are doing, as promised, on schedule.”

“Our commitment in Iraq is changing, from a military effort led by our troops to a civilian effort led by our diplomats.

Some 50,000 of 65,000 US troops currently in Iraq are set to remain until the end of 2011 to advise Iraqi forces and protect US interests.

Coming soon to a vacant McMansion in your ‘hood: Section 8 tenants.

* PAGE ONE
* AUGUST 2, 2010

Housing Bust Opens New Doors for Subsidized Tenants
Landlords Woo Folks on Government Aid to Fill Empty Homes

By DAWN WOTAPKA

[John Gurzinski for The Wall Street Journal

Shawnetta Newburn and her family at home. Landlords are wooing tenants who receive government subsidies.]

HENDERSON, Nev.—When Shawnetta Newburn left her drug-infested St. Louis neighborhood in search of a better life for her family in Las Vegas, she didn’t expect to live in a house with frills worthy of a McMansion.

But Paradise awaited.

That’s the name of the gated community where Ms. Newburn, a single mother who makes $10.50 an hour as a pawn-shop cashier, rents a three-bedroom townhouse with soaring ceilings, a gas-fueled fireplace and an oversize walk-in closet in the largest bedroom. The master bath even includes an enclosed toilet room, a feature popular in mini-mansions.

“The only time I ever saw that was on TV or something,” she says during a tour of the approximately 2,000-square-foot home. “I never thought I’d have anything like this.” The development has a kidney-shaped swimming pool.

Her previous apartment in St. Louis resembled public housing, she says, and her three sons were crammed into one bedroom. After her refrigerator caught fire, her landlord replaced it with an outdated brown model. She now has gleaming-white appliances.

Ms. Newburn can thank the housing bust. She participates in a government program for low-income families that subsidizes about half of her $1,400 monthly rent. The program, known as Section 8, has for decades put families in functional but basic homes and apartments, sometimes in less-than-desirable communities.

But overbuilding during the housing boom has left so many homes available that landlords, desperate for renters, are wooing Section 8 recipients, whose government subsidies, delivered electronically, guarantee the landlord gets paid. As a result, Section 8 recipients suddenly have a housing smorgasbord.

Plenty of average housing stock remains in many places, but in certain markets, there are also more upscale selections. On the website GoSection8.com, landlords nationwide tout boom-era showpieces—replete with “great rooms,” backyard swimming pools and built-in stainless-steel barbecue grills—that once sold for hundreds of thousands of dollars. Las Vegas has been one of the nation’s hardest-hit real-estate markets.

Some renters are getting pickier. “More and more, I’m seeing tenants turn down places,” says Arman Davtyan, owner of seven Las Vegas properties rented to Section 8 tenants. Instead, they’re going for “another property that’s either bigger or in a better area or has more bedrooms,” he says. “Before, they tended to take whatever they could get.”
…

http://www.zillow.com/homedetails/4676-E-Meadowview-Ct-Gilbert-AZ-85298/67400110_zpid/

Continuing to look in the East Valley of Phoenix metro area. Here is a pretty good haircut on this house. 1.3 million at the top and now on sale for 529,000. Still overpriced for me. Maybe $350,000 and I would be interested.

Well my hopes for a break in rent (in my Phoenix apartment) this year were dashed. My rent increased by $32 per month. Did some research on comparable apartment complexes, talked face to face with the manager on Saturday in Phoenix. Rent price is still among the lowest for my amenities in Ahwatukee and Chandler.

Better luck next Fall! I think that the earlier link above about 8 million houses probably coming on the market will drive my rent down when my lease is renewed next year.

Just got back from a quick trip to the Midwest. Permit me to offer the following observation:

If this is the summer travel season, then where the heck are the people? I went through four different airports, and only one of them (Houston Intercontinental) was even mildly busy.

As for the flights I was on, only one was completely full.

is it just me or do the housing prices in the DC metro area seemed to have stagnated…at least the ones inside or close to the beltway. i thought it would be a bloodbath…but…not so much.

RE/MAX= AX/ME

Find an AX/ME Agent or Office Connect with a local real estate expert.

Don’t Wait: The Time to Buy Is Now
When you get the facts … AX/ME®.Mortgage RatesEffective: 07/30/2010 Loan Type Rates APR Points

1 Year NO ARM 5.9% 3.8% 1.500%
5 Year NO LEG NaN% NaN% 0%
7 Year NO HEAD NaN% NaN% 0%

Why Choose AX/ME
The Time to Buy Is Now!
YOU`RE MOTHER KNITS SOCKS THAT SMELL!
BUY NOW! DAMMIT!
DAMIEN WHT DID YOU SELL ME THIS HOUSE?
SHUT UP! YOU`RE NOT MY MOTHER!
DAMIE WHT DID YOU SELL ME THIS HOUSE?
SHUT UP! SHUT UP! SHUT UP!
YOU`RE NOT MY MOTHER!

finance.yahoo.com/banking-budgeting/article/110194/are-the-helicopters-about-to-take-off?mod=bb-budgeting
Barrons

Bullard has been critical of the FOMC’s language that it expected to maintain exceptionally low levels of short-term interest rates for “an extended period.” He hasn’t joined in dissenting, however, with Kansas City Fed President Thomas Hoenig, who contends the “extended period” language will hamstring the Fed in raising interest rates when it’s called for to counter incipient inflation pressures.

But in a stunning about-face, Bullard writes that the “extended period” of ultra-low short-term rates could result in a scenario such as Japan’s persistent deflation and recurring recession despite holding short-term rates near zero. Bullard argues that Japan’s experience suggests persistent rock-bottom policy rates can result in falling inflation and inflation expectations. Every economic setback delays the eventual normalization of interest rates, leading everyone to expect more of the same.

The alternative, argues Bullard, is for U.S. officials to react to negative shocks with quantitative easing by purchasing Treasury securities rather than zero interest rates.

****Sounds to me like the FED is realizing that pumping a bunch of money into the hands of the elite will not stimulate the economy and prevent deflation, and now favors gov spending via the printing press. The problem of course (for the FED) is that the FED doesn’t control gov spending.

While that’s what’s mainly remembered from that speech, Bernanke effectively gave a blueprint for quantitative easing and other steps to ease policy when short-term rates hit the irreducible zero. Six years later, as Fed chairman, he got to put those ideas into practice.

But it’s ironic that Bullard ignores the concept both Friedman and his St. Louis Fed are most identified—the money supply. The M2 measure of the money stock, which consists of currency, checking, savings and consumer money-market accounts, has slowed to a crawl, only about 2% year-over-year.

The broader M3, which the Fed no longer publishes but is estimated by Shadow Government Statistics, is shrinking at a stunning 6% annual rate. According to Shadow Stats’ chief, John Williams, whenever real (inflation-adjusted) year-on-year M3 turns negative, the economy has always fallen into recession (or if it’s already in a slump, the downturn intensifies) six-to-nine months later. Shadow Stats’ M3 dropped below the zero line last December, it’s not surprising that any number of indicators are faltering, including the ECRI leading indicator. (See “Do You Believe in Technicals or Fundamentals,” July 28 for more on the ECRI gauge.)

Last month, the London Telegraph reported the Royal Bank of Scotland was advising clients that a “monster” QE was likely from the Fed because the global banking system and the global economy teetered on a “cliff-edge.” “Think the unthinkable,” Andrew Roberts, RBS’s chief of credit wrote.

Law creates paperwork fiasco for businesses
House rejects effort to repeal rule as parties disagree on covering cost

WASHINGTON — Talk about a paperwork nightmare: Tucked into the massive new health care law is a demand that nearly 40 million U.S. businesses file tax forms for every vendor that sells them more than $600 in goods.

House Democrats now want to repeal it. Republicans, too. But nothing is that simple in an election year.

The House on Friday rejected a bill that would have repealed the filing requirement. Democrats and Republicans disagreed on to make up the lost revenue.

The goal of the provision was to prevent vendors from underreporting their income to the Internal Revenue Service. The government must think those vendors are omitting a lot because the filing requirement is estimated to bring in $19 billion over the next decade.

Businesses already must file Form 1099s with the IRS when they purchase more than $600 in services from a vendor in a year. The new provision would extend the requirement to the purchase of goods, starting in 2012.

“The debt is like a cancer. It is going to destroy the country from within.” ~Erskine Bowles

The Buzz: Consumers aren’t spending. That’s a good thing.
cnnmoney

The economy is heading nowhere fast. That’s the bad news. But the good news is that it still seems like consumers may have actually learned a lesson or two about reckless fiscal behavior.

Yes, the latest figures from the government prove what most people with a pulse already knew. The economy is slowing down. That may lead to more worries about a so-called double-dip recession.

But that might be too gloomy of an outlook. When you look deeper into the numbers, it doesn’t seem that the economy is suddenly running out of gas and on the verge of collapse.

“There is hand wringing about softness in the economy but it may be overdone,” said Dan North, chief U.S. economist with Euler Hermes, a credit insurer in Baltimore.

Instead, the latest GDP report is further evidence that the economy is simply in a holding pattern, albeit an uncomfortable one. The recovery is going to be tepid as consumers adjust after a period of excess that led to the recession in the first place.

That’s why the fact that consumers don’t seem to be acting like a sailor on shore leave any more is very promising.

Personal consumption expenditures, the econobabble term used to describe consumer spending, rose just 1.6%. To put that in perspective, consumer spending was up nearly 3% in 2006 and 2.4% in 2007 — before the recession began.

Arizona Sheriff: ‘Our Own Government Has Become Our Enemy’

(CNSNews.com) – Pinal County (Ariz.) Sheriff Paul Babeu is hopping mad at the federal government.

Babeu told CNSNews.com that rather than help law enforcement in Arizona stop the hundreds of thousands of people who come into the United States illegally, the federal government is targeting the state and its law enforcement personnel.

“What’s very troubling is the fact that at a time when we in law enforcement and our state need help from the federal government, instead of sending help they put up billboard-size signs warning our citizens to stay out of the desert in my county because of dangerous drug and human smuggling and weapons and bandits and all these other things and then, behind that, they drag us into court with the ACLU,” Babeu said.

The sheriff was referring to the law suits filed by the American Civil Liberties Union and the U.S. Department of Justice challenging the state’s new immigration law.

“So who has partnered with the ACLU?” Babeu said in a telephone interview with CNSNews.com. “It’s the president and (Attorney General) Eric Holder himself. And that’s simply outrageous.”

Greenspan Says Drop in Home Prices Might Bring Back Recession
Aug. 2 (Bloomberg)

“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” former Fed Chairman Alan Greenspan said on NBC’s “Meet the Press.”

Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline.

“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press” broadcast yesterday.

Asked if another economic contraction, a so-called “double dip,” was possible, Greenspan said, “It is possible if home prices go down. Home prices, as best we can judge, have really flattened out in the last year.”

BP Spill May Cost Gulf Coast Homes $56,000 Apiece in Value

Gulf of Mexico coastal homes may lose as much as $56,000 each in value as buyers shun areas marred by the worst oil spill in U.S. history, according to CoreLogic Inc.

Waterfront properties in Gulfport, Mississippi, face the biggest average declines, followed by those in Mobile, Alabama, and Pensacola, Florida, the real estate data company said in a report. Losses along the coast may total $648 million in 2010 and $3 billion over five years, CoreLogic estimates.

The disaster threatens to wipe out the premium Gulf Coast homebuyers paid for ocean views and water access. BP Plc’s efforts to staunch the oil may not be enough to stem a drop in property prices, said Mark Fleming, chief economist of Santa Ana, California-based CoreLogic.

“It’s not only about whether the oil arrives,” Fleming said in a telephone interview from Vienna, Virginia. “There’s evidence something as catastrophic as this scares people away.”

The whole thing with living on the coast is to make your friends and family jealous. To say you live along the Gulf Coast no longer causes then envy. Hence, any property down there is a moneypit.

I also think they have figured out the insurance cost for property along the coast. Just more money tossed ito the pit.

Wall Street Journal ^ | August 2, 2010 | DAWN WOTAPKA

The program, known as Section 8, has for decades put families in functional but basic homes and apartments, sometimes in less-than-desirable communities.

But overbuilding during the housing boom has left so many homes available that landlords, desperate for renters, are wooing Section 8 recipients, whose government subsidies, delivered electronically, guarantee the landlord gets paid. As a result, Section 8 recipients suddenly have a housing smorgasbord.

Plenty of average housing stock remains in many places, but in certain markets, there are also more upscale selections. On the website GoSection8.com, landlords nationwide tout boom-era showpieces—replete with “great rooms,” backyard swimming pools and built-in stainless-steel barbecue grills—that once sold for hundreds of thousands of dollars. Las Vegas has been one of the nation’s hardest-hit real-estate markets.

Some renters are getting pickier. “More and more, I’m seeing tenants turn down places,” says Arman Davtyan, owner of seven Las Vegas properties rented to Section 8 tenants. Instead, they’re going for “another property that’s either bigger or in a better area or has more bedrooms,” he says. “Before, they tended to take whatever they could get.”

Though some neighbors have long contended that government-subsidized tenants increase crime and depress property values, some now say that having a house occupied is better than leaving it vacant, which attracts vandalism and other problems.

In Antioch, Calif., a San Francisco bedroom community where the number of Section 8 listings has skyrocketed in recent years, residents have mixed emotions about the new tenants. “I would concede, I wouldn’t be happy with an empty house,” says Walter Ruehlig, a longtime resident of Antioch. “It’s kind of like, ‘What poison do you choose?”‘

Dow 14,000 in 2011? Battered Bulls Feel Vindicated.

Cabot wrote: “Long-time readers know the best investing environments come when markets strengthen, yet investor sentiment remains negative, and that may describe the current situation to a T. According to the American Association of Individual Investors, investor sentiment was recently at its lowest level since 1987, when its record-keeping began. Yet the market is strengthening! Our [intermediate term] Cabot Tides buy signal remains in effect, and our longer-term Cabot Trend Lines could turn positive at the end of the week.”

Cabot is now 65% invested and has added two new buys: Riverbed Technology Inc. (NASDAQ: RVBD - News) and Salesforce.com Inc. (NYSE: CRM - News)

Cabot concludes with a surprisingly strong (for such a judicious service) endorsement of the venerable “Presidential Election Cycle” theory. It writes: “From the market’s low point in the year of the midterm elections (like 2010), to its high the following year (2011), the major averages have averaged a gain of nearly 50%. It’s true!”

Based on past performance, it projects: “With a Dow low of 9,687, a rally into 2011 could carry the index well above 13,000 and even to 14,000. It might sound crazy, but history suggests it’s not just possible, but likely!”

Just checked what the median list price is for homes on the SD MLS for the first time in ages. Here is what paying the full asked price on the median MLS-list-priced home will get you:

1101 AUGUSTA, Chula Vista, CA 91915** Short Sale
Neighborhood: Eastlake Greens School District: CHULA VISTA
ELEMENTARY

Beds: 4 Type: SFR Sq. Ft.: 3,141 Lot Size: N/A MLS #: 090013469
Baths: 3/1 Built: 2000 $/Sq.Ft.: $181 List Date: 02/28/09 On Market: 520 days

List Price: $570,000 Price reduced
Estimated Monthly Payment: $3,792

Description

Custom home in exclusive golf course with a beautiful view on the greens. Home is located in a private gated commumity with many upgrades.This is your chance for a great house at a great price.

Lawrence G. McMillan: Who’s buying all those S&P 500 put options?

Marketwatch

MORRISTOWN, N.J. (MarketWatch) — Traders are paying huge premiums for Standard & Poor’s 500 Index options expiring in September, October and November.

It is not unusual to see traders worry about what might happen to the market in the typically nasty September-October time frame, but this year, they’re really getting carried away.

We can see, in mathematical terms, how much they’re paying by looking at the implied volatilities of the S&P 500 options expiring in various months.

The premiums on the VIX futures are huge — some of the highest readings in history.

http://www.marketwatch.com/story/whos-buying-all-those-sp-500-put-options-2010-08-02?siteid=nbsh

PROPERTY APPRAISER RELEASES 2010 JULY 1st TAX-ROLL DATA
SHARP DECLINE IN COUNTY-WIDE TAX VALUES CONFIRMED
(MIAMI, 2nd July 2010) – In accordance with Florida law, Miami-Dade County Property
Appraiser Pedro J. Garcia yesterday released to each of the county’s taxing authorities their
respective 2010 Certification of Taxable Value.
As expected, the Tax Roll data confirmed the 13.4% county-wide decline in taxable property
values (some $29-Billion) indicated in June 1st Estimates which Mr. Garcia published last month.
At a news conference yesterday, Mr. Garcia noted that this was the third straight year that
Miami-Dade property values had declined. However, where new construction had helped to
offset the value declines in the previous two years, the 2010 Tax-Roll also saw a massive
decline in new construction.
…

News from “The OC”:

O.C. BK debt tops $375,000
August 2nd, 2010, by Mary Ann Milbourn OC Register

“Orange County residents who filed for Chapter 7 bankruptcy and others in the Southern California Central District owed a net $375,875 in debt last year, according to the new stats from the U.S. Bankruptcy Court’s Administrative Office.

The court reported that local bankruptcy filers had an average of $205,828 in assets and $384,619 in liabilities in 2009. The $375,000 net figure excludes debt that can’t be discharged, such as student loans and taxes.

Although that may seem high it was below the $450,128 net owed by Chapter 13 filers in the Northern California District and the $379,096 in the Southern District, which includes San Diego.

Maine averaged a whopping $2 million in debt and the Eastern Texas District came in at $568,835 outstanding.

Chapter 7 is the most common bankruptcy filing in which most of your debts are wiped out allowing you to start again with a clean slate. The disadvantage is the bankruptcy court can force the sale of your home or other assets to repay what you owe.

Chapter 13 filings require the debtor to repay some or all of their debt over three to five years.

In the Southern California, Chapter 13 filers in 2009 owed a net of $678,445. That included average assets of $645,714 and liabilities of $695,307.”

Dow up 220.

12k may happen quicker than I predicted. It feels so good to be right.

Union rejects operator’s offer; only limited routes run today
Sun Tran service limited by strike
Arizona Daily Star |August 2, 2010

Tens of thousands of public transit riders are stuck in the lurch today, victims of a breakdown in negotiations between the the company that operates Sun Tran and the now-striking employees’ union.

Michele Joseph, Sun Tran’s director of marketing, said Teamsters Local 104 rejected the new two-year contract proposed by the company. The contract included no wage increase and offered only to cover future increases in the employees’ insurance premiums.

Andy Marshall, executive director of Teamsters Local 104, said that out of 376 union employees, 369 voted against the new contract. The strike took effect at 12:01 a.m. today.

“We’re willing to settle this,” Marshall said. But the new contract gave no assurance against future layoffs, he said.

Mexican Drug Cartel Allegedly Puts a Price on Arizona Sheriff’s Head
$1M offered for Arpaio, $1K to join cartel. ~ Fox News

PHOENIX - He’s been at the center of the discussions and controversies surrounding illegal immigration enforcement in Arizona for quite a while.

On the day parts of Arizona’s immigration law, SB 1070, went into effect, Maricopa County Sheriff Joe Arpaio is in the news for another reason: there’s a price on his head - allegedly offered by a Mexican drug cartel.

The audio message in Spanish is a bit garbled, but the text is clear.

“It’s offering a million dollars for Sheriff Joe Arpaio’s head and offering a thousand dollars for anyone who wants to join the Mexican cartel.”

A man who wants to remain anonymous says his wife received the text message Tuesday evening. It also included an international phone number and instructions to pass the message along.

Bernanke Says U.S. Consumer Spending to Accelerate

Federal Reserve Chairman Ben S. Bernanke said rising wages will probably spur household spending in the next few quarters, even as weak job gains drag down consumer confidence.

Study: Health insurance costs rising up to 11% next year
Puget Sound Business Journal (Seattle)

The survey by actuarial firm Milliman of Seattle indicated that premium rate increases will exceed the government’s official rate of inflation next year, with estimated January 2011 renewal increases rising 9 percent for health maintenance organizations (HMOs) and rising 11 percent for preferred provider organizations (PPOs).

“It appears that group premium rates are likely to increase at a higher rate in 2011 than what we have seen in recent years … We can point to several potential contributing factors, including the possibility that the economy and employment worries are influencing utilization. There is also the question of how reform is affecting insurance rates,” said Doug Proebsting, co-author of Milliman’s 2010 Group Health Insurance Survey report, in a statement.

Smashed Car Windows Lead Dubious Insurance Claims, Group Says
Aug 2, 2010

Questionable insurance claims rose 14 percent in the first half of 2010, led by a fivefold increase for car windows that owners may have smashed, the National Insurance Crime Bureau reported today.

Almost half the 7,993 cases of suspected fraud were related to vehicles, the industry group said. Some policyholders deliberately damaged car windows or staged phony accidents, it said. The number of dubious claims for hailstorm damage to roofs of houses doubled.

While the first-half increase was less than the 20 percent in possible fraud during the first six months of 2009, the persistence of dubious claims “raises concerns,” said Joe Wehrle, president of the industry group.

Criminals “try to take advantage of the insurance company’s desire to pay claims as quickly and efficiently as possible,” he said.

The increase in phony claims comes as U.S. payrolls declined in June and are expected to fall again in July. The jobless rate reached a 26-year high of 10.1 percent in October and has averaged 8.6 percent in the past two years.

I think Basil Marceaux should give up his run for Gov. of Tenn. and run for the U.S. senate, he’d brighten up the place.

Dycom subsidiary to lay off 107 in Miami
South Florida Business Journal

Ivy H. Smith Co. LLC has notified the state it plans to permanently close two of its Miami facilities and lay off 107 employees.

The Greensboro, N.C.-based utility construction company said it will shutter its sites at 11900 S.W. 222nd St. in Miami and 3051 N.W. 129th St. in Opa-locka.

Ivy H. Smith is a subsidiary of Palm Beach Gardens-based Dycom Industries (NYSE: DY), which provides specialty contracting services.

Backyard Scofflaws Found on Earth — Google Earth
August 02, 2010 Associated Press

Google Earth is now being used to track down criminals, at least in one small town on Long Island.

RIVERHEAD, N.Y. — A town on New York’s Long Island is using Google Earth to find backyard pools that don’t have the proper permits.

The town of Riverhead has used the satellite image service to find about 250 pools whose owners never filled out the required paperwork.

Violators were told to get the permits or face hefty fines. So far about $75,000 in fees has been collected.

Riverhead’s chief building inspector Leroy Barnes Jr. said the unpermitted pools were a safety concern. He said that without the required inspections there was no way to know whether the pools’ plumbing, electrical work and fencing met state and local regulations.

“Pool safety has always been my concern,” Barnes said.

But some privacy advocates say the use of Google Earth to find scofflaw swimming pools reeks of Big Brother.

Lillie Coney, associate director of the Electronic Privacy Information Center in Washington, D.C., said Google Earth was promoted as an aid to curious travelers but has become a tool for cash-hungry local governments.

20 most stressed, 20 least stressed counties
AP Economic Stress Index shows 20 most stressed, 20 least stressed counties in June

http://finance.yahoo.com/news/20-most-stressed-20-least-apf-491618174.html?x=0&.v=2

EPA Geniuses Want to Regulate Farm Dust

OKLAHOMA CITY — The U.S. Environmental Protection Agency is considering a crackdown on farm dust, so senators have signed a letter addressing their concerns on the possible regulations.

The letter dated July 23 to the EPA states, “If approved, would establish the most stringent and unparalleled regulation of dust in our nation’s history.” It further states, “We respect efforts for a clean and healthy environment, but not at the expense of common sense. These identified levels will be extremely burdensome for farmers and livestock producers to attain. Whether its livestock kicking up dust, soybeans being combined on a dry day in the fall, or driving a car down the gravel road, dust is a naturally occurring event.”

Many in the Oklahoma farming industry are opposed to the EPA’s consideration. One farmer said the possible regulations are ridiculous.

“It’s plain common sense, we don’t want to do anything detrimental,” said farmer Curtis Roberts. “If the dust is detrimental to us, it’s going to be to everybody. We’re not going to do anything to hurt ourselves or our farm.”

3 percent salary increase is not enough, FAU faculty say, seeking extra 0.5 percent

By Samantha Frank Palm Beach Post Staff Writer
Posted: 4:50 p.m. Monday, Aug. 2, 2010

The faculty union at Florida Atlantic University is asking for an extra 0.5 percent raise, in addition to the salary increase of as much as 3 percent that the administration has offered.

FAU President Mary Jane Saunders announced last month that all full-time employees, excluding those with special employment agreements and adjunct faculty, will get a 1 percent raise and are eligible for another 2 percent merit raise. It is the university’s first across-the-board salary increase since 2006.

The faculty union said on its website this morning that it is asking for the additional raise to make up for not having had any raises during the 2009-10 school year.

The union says some administrators and non-bargaining employees received special pay increases during that period totaling more than $500,000.

Sharmila Vishwasrao, the faculty union member in charge of bargaining, said the union understands that it’s a tight budget year and appreciates the raises, but maintains it’s only fair to receive the additional raise to bring faculty members’ salary growth in line with those who received special increases.

Deutsche bags…

* The Wall Street Journal
* BUSINESS
* AUGUST 3, 2010

Dual Role in Housing Deals Puts Spotlight on Deutsche
By CARRICK MOLLENKAMP And SERENA NG

Federal probes of the collapsed mortgage-bond boom are shedding light on how Wall Street firms sometimes created securities and sold them to one set of investors, while advising others to bet against them.

One firm that was a major player in mortgage securities, Deutsche Bank AG, illustrates a pattern investigators are looking at. While creating and selling mortgage securities to some of its clients, the big German bank was not only advising other clients to bet the other way, but also sometimes doing so itself.

A Deutsche trader helped create an index that made it easy to bet against housing, and the bank itself then used the index to do just that.

After the collapse of mortgage securities led to a costly bailout of the firm that insured many such securities—American International Group Inc.—some of the federal cash that was sunk into AIG flowed to Deutsche, to cover bearish bets by its hedge-fund clients.

Deutsche’s actions are a vivid example of potential conflicts on Wall Street—the way big financial firms play both sides of the fence with investors. The issue became more extreme during the mortgage bubble and subsequent bust because of the size of the bets on Wall Street and subsequent losses on Main Street.

Regulators now are grappling with whether the business-as-usual conduct at financial firms merely looks bad in hindsight, or whether there were misrepresentations or other legal issues that need to be further investigated and guarded against in the future. “This is a gray area that we need more investigation into,” says Andrew Lo, a finance professor at Massachusetts Institute of Technology and a hedge-fund manager.

Deutsche says that helping investors bet either way—either for or against an asset—is part of doing business for a securities firm.

“Some clients sought more exposure to the housing market, while others sought less,” a spokesman for Deutsche said. “We served clients whatever their investment objective, but only after being satisfied that they had arrived at their view after thorough consideration.”
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Read Sowell’s book to get the straight story on the causes of the GSE collapse. The truth is not negotiable, and it is not fabricated from above by politically-motivated propagandists. The stigma of truth is destined to stick to those who precipitated this disaster.

* The Wall Street Journal
* REVIEW & OUTLOOK
* AUGUST 3, 2010

Rewriting Fannie Mae History
The effort is underway to resurrect the biggest housing losers.

If you want proof that the Washington establishment has learned nothing from the 2008 financial panic, look no further than the nearby letter from former Fannie Mae CEO Franklin Raines. Our old antagonist is signaling where the debate is heading as Congress finally begins to consider what to do about Fannie and its failed sibling, Freddie Mac.

Mr. Raines writes that “the facts about the financial collapse of Fannie and Freddie are pretty clear.” So let’s review those facts. In Mr. Raines’s telling, Fannie Mae was undone by a decision—made after he left in 2004—to purchase loans “with lower credit standards” just before the bust. But even this managerial decision wasn’t entirely the companies’ fault. Rather, according to the man who presided over one of the largest accounting scandals in history while at the helm of Fannie Mae in 2003, Fan and Fred’s big mistake was chasing Wall Street’s credit standards downward at the end of the boom.

What he doesn’t say is that Fan and Fred had a political and legal mandate to support low-income housing. At the end of 2004, the U.S. Department of Housing and Urban Development released its “housing goals” for Fannie Mae and Freddie Mac for 2005-2008.

The new rule required the two government-sponsored mortgage giants to increase each year the share of their business that went to low- and moderate-income borrowers, with subgoals for “underserved areas” and “special affordable” housing. The purpose, according to HUD, was to ensure that Fannie’s and Freddie’s mortgage purchases would “promote the national priority of increasing homeownership.”

The mandate had two effects. First, it meant that in order to keep growing, Fan and Fred had to grow their affordable-housing business even faster to meet the targets. But not every borrower is a prime borrower, and that goes triple for low-income borrowers. Fannie and Freddie could only meet their politically mandated lending goals by looking for new ways to extend credit to subprime borrowers.

So when Mr. Raines says that “the cause of the financial problems for Fannie and Freddie was bad decisions, not their government sponsored status,” well, let’s just say he’s not telling the whole story.

Mr. Raines also says that neither “leverage” nor mortgage-backed securities portfolios were a problem. Hmmm. In fact, the wonder twins were put into federal conservatorship in September 2008 because their losses in the first eight months of that year had very quickly overwhelmed their capital cushion, which under law needed to be the irresponsible level of less than 2% of their assets. Only some of those losses came from their portfolios directly; most of the rest came on MBS they’d guaranteed. But if the companies had been required to hold more capital (and less leverage) in the first place, they, and taxpayers, would have had a much larger margin for error.

Former Treasury Secretary Hank Paulson has also said explicitly that he rescued Fan and Fred in part to reassure foreigners that the U.S. government stood behind their debt. With some $5 trillion in liabilities at the time, they were too indebted to fail. So their leverage was a problem.

Of the many private companies that got into trouble in the fall of 2008, most have since rebuilt their balance sheets and repaid their TARP money. But not Fannie and Freddie. They’re direct cost to taxpayers so far, $145 billion, is only the beginning as Congress and the Obama Administration continue to use them to rescue homeowners from foreclosure.

Mr. Raines is signaling the coming political debate when he says “that Wall Street and the commercial banks have virtually abandoned the mortgage market.” But this is like murdering your parents and demanding clemency because you’re an orphan. No private bank can compete with the federal government’s borrowing costs, so no one can afford to compete with Fannie and Freddie. It was hard enough to compete when the two companies had to maintain a (subsidized) profit margin for their shareholders. Now that they’re being run at an intentional loss, it’s impossible.
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My housing saga continues. I sold in 2005 and cleared a tidy sum, but I’ve been renting ever since. I just moved to my third rental in 5 years this week. We’ve lived in La Verne, California, San Dimas, California, and now Diamond Bar, California. We’re renting a 5 bedroom 3200 sq. feet in DB for 2850 a month. The owners moved back to China because the wife missed home. Still waiting for the crash to occur in decent So Cal neighborhoods before I buy.