The Housing Bubble

Countrywide Financial agrees to pay $600 million to settle shareholders’ class-action lawsuits ~ August 3, 2010

LOS ANGELES (AP) — Countrywide Financial Corp. agreed to pay $600 million to settle shareholder lawsuits in the largest payout so far from the mortgage meltdown.

U.S. District Judge Mariana Pfaelzer in Los Angeles on Monday gave preliminary approval to the agreement, in which the defendants admitted no wrongdoing.

The settlement would end several class-action lawsuits that claimed Countrywide concealed mounting risks as it loosened its standards for loans during the housing boom.

The Calabasas company was once the nation’s largest mortgage lender and was acquired by Bank of America Corp. in 2008.

The settlement would clear former executives and financial firms that underwrote Countrywide stock and were named in the class-action suits.

Former CEO Angele Mozilo, former President David Sambol, former CFO Eric Sieracki and former board members were named in the litigation.

The company is being investigated by the Securities and Exchange Commission, which filed a lawsuit accusing Mozilo, Sambol and Sieracki of misleading investors.

The company and Mozilo are also under criminal investigation by the Justice Department and the attorneys general of California. Other states have also sued on behalf of borrowers.

U.S. Treasuries Rise as Report May Show Incomes, Spending Waning.
(Bloomberg) Aug 3, 2010

Treasury two-year yields extended their decline to record lows as traders bet the Federal Reserve will introduce additional measures to keep borrowing costs low as soon as its next meeting on Aug. 10 to boost the economy.

Ten-year notes rose, snapping a decline from yesterday, before a government report that analysts said will show personal income and spending cooled in June, a sign the economy is slowing. The London interbank offered rate, which banks pay for dollar loans, is tumbling partly because of speculation the Fed will start buying bonds again, Anthony Crescenzi of Pacific Investment Management Co. said in a report.

“More and more people are looking for additional easing at the meeting,” said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo. “Two-year notes still have enough yield” to attract investors.

This should be good for a DOW upward blast

Small Business Optimism PLUNGES: Firms See Lower Spending And More Layoffs Ahead. ~ Business Insider

The latest Wells Fargo/Gallup small business survey is out and it’s UGLY.

In keeping with other indications that the state of small business is very bad, the survey indicates a level of pessimism about future results that’s worse even that during the worst of the crisis.

What’s more, small firms see lower spending, lower cash flows, and lower headcount in the future.

D.R. Horton posts $50.5M profit for third quarter
Homebuilder D.R. Horton posts profit in fiscal 3rd quarter, but sees decline in new orders. ~ August 3, 2010

FORT WORTH, Texas (AP) — Home builder D.R. Horton Inc. says it reversed its year-ago loss in its fiscal third quarter as homebuyers raced to close on purchases before the end of June to qualify for federal tax credits.

But with the credits now expired, new sale orders dipped 3 percent.

Chairman Donald R. Horton says that, as expected, “market conditions in the homebuilding industry have become more challenging after the expiration of the tax credit at the end of April.”

JPMorgan’s Masters Urges No `Panic’ as Commodities Unit Slips.

Blythe Masters, JPMorgan Chase & Co.’s head of commodities, sought to reassure her team on an internal conference call after “extremely difficult” dismissals, defections and a first half in which some results were as much as 20 percent below expectations.

“Don’t panic,” she said in summing up the 35-minute call, a recording of which was obtained by Bloomberg News. “No one’s going to get screwed. We’re not going to do crazy things on compensation at the end of the year.”

Masters, who was named to run the business in late 2006, said the bank began dismissals on July 21, a day before the call, to trim overlap after buying parts of RBS Sempra Commodities LLP. The bank cut less than 10 percent of the combined front office, even as the oil unit lost “key people” who needed to be replaced, she said. She was discussing results with top executives after “we made a bit of a rookie error” that left the firm “vulnerable to a squeeze,” she said.

The 41-year-old banker, who helped develop credit-default swaps while at JPMorgan in the 1990s, delivered her talk from a conference room in New York, where the bank is based, less than a month after the firm closed its $1.7 billion RBS Sempra purchase.

I saw a commercial on TV last night - A family sits down to dinner then the phone rings. It keeps ringing while the mother and father look at each other. The VoiceOver said “Are you late on your mortgage and worried about foreclosure?”

The funny thing is that it looks like the same family who just five years ago were dancing around their couch while the VoiceOver said “Refinance with CountryWide and get a HELOC!”

I’m a landlord. Congratulations to me. Tenant moves in today, first rent check and deposit already cashed.

15 year mortgage at 4.125% with 25% down. ~$250 a month cash flow positive after piti, hoa, and setting aside $125 a month for repairs/maintenance. House is 5 years old so I don’t expect too much to break. House was a short sale. Price I paid was about 55% of what it was last purchased for in 2007.

Kind of odd to be a tenant and a landlord simultaneously. But it makes sense to me. The low end of the market has bottomed. I bought a low end property. The high end of the market is nowhere near a bottom, so I’m renting a high end property.

Now on to Florida to look at those $25K condos…..

ITEM: Nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. They will have trouble getting credit cards, auto loans or mortgages under the tighter lending standards banks now use.

Ah, but clever entrepreneurs have come to the rescue of those hapless folks with bad credit. They will provide a new Social Security number with which they can develop a brand new ID!

Hundreds of online businesses are using computers to find dormant Social Security numbers — usually those assigned to children who don’t use them — then selling those numbers under another name to help people establish phony credit and run up huge debts they will never pay off.

~ New ID Theft

Texas teachers pension plan sinking $0.5 billion into bankrupt mall operator. (Not old news, they really are doing this NOW.)

http://tinyurl.com/Texas-Pension-RE

They are paying $10.25/share for new issue stock, for an outfit whose TTM earnings is -$2.76/share, and a “positive book value” of $2.84/sh.

Note: General Growth’s liabilities before the bankruptcy (in April 2009) was $27 billion (with $25 billion in long term debt), their liabilities after the bankruptcy is STILL $27 billion (with $7 billion in long term debt). Their assets (before and after the BK) remained steady (market-to-myth?) at about $28 billion. I say their book value is N-E-G-A-T-I-V-E.

For this kind of fiduciary skill, the state of Texas may just as well hire high school dropouts ($10/hr) to manage their multi-billion dollar pensions. Same results at a lower cost.

Talked to a gentlman yesterday who said, if it were not for the money ($2,200 a month) he was collecting on his rental house that he was not paying the mortgage on. He would be hurting. I don`t think he understood why I was not happy for him.

Stressed States Are Forcing Workers to Retire Later ~ WSJ
States are deciding it’s time their workers retire later.

Lawmakers in at least 10 states have voted this year to require many new government employees to work longer before retiring with a full pension, or have increased penalties for early retirement. A similar proposal is pending in California. Mississippi, already among the states requiring more years of service for a pension, is weighing the additional step of increasing its retirement age.

A federal commission studying long-term U.S. fiscal issues is also entertaining the idea of changing the retirement age as one way to shore up Social Security, said a person familiar with the matter. A report is due to President Obama in December.

Individual states, meanwhile, are moving ahead as they respond to the widening gaps between the obligations made to workers and the money expected to be available to pay them, thanks to investment losses and recessionary budget pressures.

“It’s a very positive change that the age for receiving full benefits is increasing,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “Increasing the retirement age is the single most important thing [states] can do” to tame future pension costs, because it reduces the number of years the state is paying a benefit, she said.

Thieves are stealing health care

Medical identity theft is a growing problem, and recovering from the theft can be difficult. Here’s what to watch for and how to protect yourself.

By Liz Pulliam Weston
MSN Money
I recently wrote about how annoying it is to get asked for identification when using a credit card.

But that’s nothing compared with what can happen when you try to get health care in some areas.

Beware medical identity theft
At a recent mammogram appointment in Los Angeles, I was asked for my driver’s license when I checked in at the front desk and again when I met with the intake clerk who took my health insurance information. The woman who guided me back to the exam room didn’t demand my driver’s license, but she did ask me to rattle off my date of birth.

The reason they were so interested in making sure I was who I said I was? Health care identity theft, which is on the rise.

Sierra Morgan of Modesto, Calif., certainly wishes someone had asked for ID when a thief pretending to be her charged a $12,000 liposuction procedure to the health care credit account Morgan had opened to pay for braces for her teeth.

Morgan didn’t learn about the crime until she logged in to the account to pay the bill and saw the charge.

“I was like, ‘What do I do?’” recounted Morgan, 31. “I was freaking out.”

Morgan did have the satisfaction of seeing her doppelgänger arrested. Morgan worked with the clinic manager, who set up another appointment for the thief to get additional services. When the thief showed up, the clinic called the police, and she was hauled off to jail.

Other victims have been dunned for medical procedures, including childbirths, dental work, methadone treatments and even breast implants they hadn’t received, said Linda Foley, the director of the Identity Theft Resource Center in San Diego

“It’s a very positive change that the age for receiving full benefits is increasing,”

WHAT? You mean I get to work longer for the same benefits? How does this benefit people?

I’ve said it before and I’ll say it again: High unemployment and underemployment can be solved by getting these old folks to retire!!! What the heck is so hard about enjoying your golden years?

nice rental for short term, the guy is really honest about being in pre-foreclosure as well.

http://tampa.craigslist.org/hil/apa/1874592412.html

First was yesterday’s story about a firm predicting DOW 12,000 soon, and now Turbo Tax Timmy says the recession is over.

But despite these challenges, there is good news to report:

• The government’s investment in banks has already earned more than $20 billion in profits for taxpayers, and the TARP program will be out of business earlier than expected — and costing nearly a quarter of a trillion dollars less than projected last year.

Consumer spending and personal incomes were flat in June while savings rate rises.

WASHINGTON (AP) — Consumers did not boost their spending in June and their incomes failed to increase, further evidence that the economic recovery slowed in the spring. And Americans saved at the highest rate in nearly a year.

Personal spending was unchanged in June, the Commerce Department reported Tuesday. It was the third straight month of lackluster consumer demand. Incomes were also flat, the weakest showing in nine months.

The disappointing report on spending and income was among a raft of data released Tuesday that confirmed the economy ended the April-to-June quarter on a weak note.

Factory orders dropped 1.2 percent in June to a seasonally adjusted $406.4 billion, the Commerce Department said. It was the second consecutive decline after nine straight months of gains. Lower demand for steel, construction machinery and aircraft dragged down the figure.

Pa. CD, DVD manufacturer plans more layoffs
The Associated Press ~ 08/03/2010

OLYPHANT, Pa.—A northeastern Pennsylvania manufacturer of CDs and DVDs plans to cut more than 300 jobs at a plant where 150 others were just laid off.

Cinram Manufacturing Inc. has informed state regulators of a plan to layoff 310 employees at its facility in Olyphant, near Scranton. Those cuts would happen in December.

Cinram laid off 200 employees in March 2009. An additional 150 layoffs were announced in May and took effect on Monday.

Boeing to Cut 800 Jobs from Long Beach Workforce
Lower Operating Costs In Oklahoma Were A Factor In The Company’s Decision

LONG BEACH — The Boeing Co. announced Monday it will move two defense programs to Oklahoma City over the next 18-months, resulting in the loss of 800 jobs in Long Beach.

The reductions will involve 250 layoffs and 550 transfers beginning in early 2011.

Boeing will move its C-130 Avionics Modernization program beginning in the first quarter of 2011.

Completely of topic but the last paragraph has me LMAO

Three naked German women found in woods

Published: 2 Aug 10 14:34 CET
Online: http://www.thelocal.se/28142/20100802/

Dictionary tool Double click on a word to get a translation

A search party was called off in southern Sweden on Sunday as three naked German women lost in the woods eventually managed to relocate their holiday home without the aid of a police helicopter or sniffer dogs.

The naturist campers, 40, 50 and 56-years-old, wandered into the woods outside Karlshamn at around 4pm. Friends holidaying with the women raised the alarm when the nude ramblers failed to return to their cottage by Långasjön lake, newspaper Expressen reports.

Police deployed a helicopter and sniffer dogs to aid in the search but were quickly able to call off the hunt when the women returned to the cottage of their own accord at 10.30pm.

The women, who were naked when they set off on their stroll, told police they got lost shortly after leaving their lakeside cottage. They ended up groping around in the dark for the last hour of their wayward walk before eventually find their way back to their naturist companions.

The Securities and Exchange Commission announced that it had reached a $75 million settlement with Citigroup last week. In other words, a government agency accused and fined a bank that is in part owned by the government. The massive deceptions that accompanied the subprime collapse and financial crisis have left us suing ourselves, and raise some interesting ethical questions, The New York Times’s Andrew Ross Sorkin writes in his latest DealBook column.

Forgiveness may well be easier to get than permission, but Robert Khuzami, the S.E.C.’s director of enforcement, is trying to change that, and hopes the punitive action will serve to deter more wrongdoing.

For shareholders in the banks, his campaign is cold comfort, since they have already lost out with the original fraud, and are then asked to shell out for the lawsuits that follow. By going after corporations, whose costs are shareholders’ costs, the S.E.C. is letting the individuals truly responsible for bad decisions slip away

BINGO!

Russians are not used to heat waves. When the high temperatures that have overwhelmed Russia over the past six weeks first arrived in June, some 1,200 Russians drowned at the country’s beaches. “The majority of those who drowned were drunk,” the Emergencies Ministry concluded in mid-July, citing the Russian habit of taking vodka to cool off by the sea. But while overconsumption of vodka is a familiar scourge in Russia, extreme heat is not, and as the worst heat wave on record spawns wildfires that are destroying entire villages, Russian officials have made what for them is a startling admission: global warming is very real.

At a meeting of international sporting officials in Moscow on July 30, Russian President Dmitri Medvedev announced that in 14 regions of the country, “practically everything is burning. The weather is anomalously hot.” Then, as TV cameras zoomed in on the perspiration shining on his forehead, Medvedev announced, “What’s happening with the planet’s climate right now needs to be a wake-up call to all of us, meaning all heads of state, all heads of social organizations, in order to take a more energetic approach to countering the global changes to the climate.” (See pictures of Medvedev and Vladimir Putin on vacation.)

For Medvedev, such sentiments mark a striking about-face. Only last year, he announced that Russia, the world’s third largest polluter after China and the U.S., would be spewing 30% more planet-warming gases into the atmosphere by 2020. “We will not cut our development potential,” he said during the summer of 2009 (an unusually mild one), just a few months before attending the Copenhagen climate summit, which in December failed to reach a substantial agreement on how to limit carbon emissions

I love how a single event changes their minds, but mounds of data did not. It’s not real until it bites you.

Saturday night, Midwest town:

Three 24 year olds leave a bar and didn’t want to get a DUI so they decide to walk 3 miles home but didn’t want to walk on the highway but rather on the parallel Railroad tracks.

A passing train sees them, calls a RR canine cop who waits for them and tells the kids to halt or he’ll sick the biting dog on them. Hancuffs the 2 guys together and the girl separately while he harraings them for 45 min. and cites each one for trespassing saying the fine is going to be big. He will not just give them a warning.

The RR cop says that since 9/11 the RR does not even need to put “no trespassing” sighs out and can arrest on sight. Two local cops show up and ask the kids why they didn’t walk down the highway and the kids say because they were afraid they’d get stopped by the cops and the cops said, “yea, you’re probably right”.

Before they are let go, the RR cop gets all nice and understanding but says he can’t just give them a warning because he already wrote the tickets. “Have a nice night”.

BAC has a foreclosure/auction subsidiary, Recontrust, that is literally setting up thousands of auctions in 12 states or so, maybe trying to expedite the purgeing of problem loans. In our county it was 530 auctions one week ago, and 553 now. So they are setting up foreclosure auctions faster than they can liquidate the homes.

Does a home that does not sell to a third party (most of them, as opening bids are set at “wishing price” amts) at auction go back to the lender, or does anyone know what happens to them? They only release opening bids close to the auction date, and they are usually the loan amount, but when they dont sell I assume they remain on the banks balance sheet to be dealt with later. Pawned off to freddie mac, or what, but they must remain a problem, even though recontrust is trying to liquidate, the soaring numbers indicate only limited success.
What happens to us when our home becomes property of Bofa after it fails to sell at auction. Who is gonna pay 300k for a house they can get from Freddie Mac Homesteps for 192k. Or the house we sold for in 2006 for 350k in the same complex; now available for 165k(someone must have taken the furniture, never made a payment, stripped it, and took off, profiting on a 0 down loan. We remember paying closing costs to get the deal done). cuz noone seems to want to buy it after 2 yrs on the market now.
With such a glut of similar homes selling for 100k plus under most FB’s mortgage amts, why would BofA want us out even though we are no longer paying, I wonder.
Our opening bid at auction will likely be about 300k. Problem is, homes like ours are now selling for 220k. They are available from Homesteps(Freddie), our nasty neighbor of lore finally moved out a few doors down and the unit promptly went up for sale. These folks paid 360k, and are selling it furnished(20k expense), and are asking 240k! “Please just let us lose 140k plus realtor fees and lowball offer discount we will have to give. Freddie is asking 192k for a similar unit , and the pristine unit next door to us just went for 219k (they paid 380k).

So opening bid of 300k is not going to attract many greater fools, and my wife’s home will likely go back to the bank. This will happen in late november, Recontrust has sent us 20 letters, posted NOD’s and NOS’s on our door, telling us that our auction date is in November. If it goes back to the bank, do we still have to move out on or shortly after the auction date?

I have heard of deed in lieu, cash for keys, and banks leasing back props to FB’s. We have not talked to Recontrust—yet. But before the sale, we will want to explore the ways that they may be able to “help” us. We also want them to produce the original note that would prove to us their right to foreclose. Also we were surprised seeing my wife’s property assigned an auction date before ever notifying her of a NOD or NOS!

But BAC is acting quickly to try and liquidate their bad assets by setting up sales aplenty, but the opening bids at auction are not in line with comps so it is a somewhat futile effort, seems to me.

Well over 3700 auctions set up for this year in Oregon, and growing. Extrapolated times 50 states that means around 200k auctions nationwide, give or take, for just one of the loan companies. I wonder what % share of total USA mortgages were made by countrywide/Bofa?

Millions of homes going to the auction block this year! That will clog up systems.

Northrop Grumman closing Tallulah shipyard in La.
NEW ORLEANS

Northrop Grumman Corp. will close its Tallulah shipyard before the end of 2010, ending 95 jobs, and will lay off 110 workers at its Avondale yard slated for closure in early 2013, the company said Tuesday.

Northrop Grumman said work will end around Oct. 29 at Tallulah, followed by total closure of the yard around Dec. 3.

The layoffs will involve employees in both union and non-union positions, the company said.

No definite layoff date was announced for Avondale.

On July 13, Northrop Grumman said it would close both yards as it consolidates military shipbuilding at Pascagoula, Miss.

Premier Bank closes Denver headquarters to save cash
The Denver Post

Premier Bank has closed its headquarters at 1630 Stout St. in an effort to cut costs.

The expiration of a 15-year lease July 31 made the timing right to leave the bank’s signature location, said Kenneth So, Premier’s president.

“We have been working real hard to turn the bank around,” he said. “This is helping us save quite a bit on overhead.”

Premier got into trouble with regulators three years ago for having an unusually heavy concentration of Small Business Administration loans — about 90 percent of its loan portfolio.

Collecting payments on those loans was labor intensive for the small bank. When the economy turned sour, defaults rose, requiring more work to liquidate bad loans.

State and federal regulators in April slapped the bank with a cease and desist order.

The concentration of SBA loans has fallen to less than 14 percent, and Premier has reduced staff from more than 62 to 29.

Sea Ray cuts 18 more jobs in Tenn.
August 3, 2010

KNOXVILLE, Tenn. (AP) - A report from the Tennessee Department of Labor and Workforce Development shows Sea Ray Boats has laid off 18 workers in Knox County.

The Knoxville News Sentinel reported officials of parent company Brunswick Corp. could not immediately be reached for comment Tuesday.

The layoffs at the Forks in the River Industrial Park were effective July 15.

The reductions come after Sea Ray put its Riverview Plant in the industrial park up for sale earlier this year. In January of 2009, the Lake Forest, Ill.-based company idled the plant, laying off 300 employees.

PSL lays off more than 300 workers at Hancock Co. plant
August 3, 2010

BAY ST. LOUIS, Miss. (AP) — PSL North America has laid off about 300 workers at its Hancock County pipe manufacturing operation.

PSL CEO Brian Vail tells the Sea Coast Echo that the layoffs had more to do with the company’s current job ending than with any problems in the industry.

PSL North America is located at the Port Bienville Industrial Park.

Vail says PSL began a large project in January 2009 and that project is in its final stages. He says there is no pending work although the company is looking for business.

PSL came to Hancock County in 2007 after Hurricane Katrina. It manufactures, coats, and internally lines large diameter grade pipes.

Place Your Bet, Help the Debt. ~NBC San Diego

The state of California continues to struggle with debt ($19 billion and counting), has slashed many state jobs, furloughed many of the others, and has no budget in place because the Republicans and Democrats in the legislature can’t agree on what’s best. You have to wonder if they could agree on the color of orange juice.

Raising taxes is out. The Dems won’t let Gov. Schwarzenegger do it. The governor has cut just about everything he possibly could and he’s considering slashing even more school programs and programs for the elderly. In November, voters will go to the polls to decide whether marijuana should be legalized and taxed by the state. The grim economic reality is making for possible changes that would have seemed unimaginable a few years ago.

So how about gambling? It’s big business and it just might be legalized in California. That’s if State Sen. Roderick Wright has his way. He supports a lawsuit that’s been filed in New Jersey challenging federal law that only allows gambling in a few states. Like Nevada.

Saying Nope to SYEP
Does summer employment program deserve extra funds?

On Monday, District residents’ tax dollars went to pay Summer Youth Employment Program participants to attend a Council oversight session at which they lobbied for more funding for the program.

It’s just the latest outrage surrounding one of D.C.’s best-intentioned and worst-run programs.

SYEP, which hires about 20,000 D.C. youth for various minimum wage summer jobs, was budgeted at $22.7 million. But it’s already $11.5 million over budget — an overrun of 50 percent.

D.C. Auditor Deborah Nichols said Monday that “the lack of fiscal discipline in the design and execution [of SYEP] is irresponsible, poses a threat to other vital District programs and the District’s fiscal stability in these austere economic circumstances.” She said this year’s cost overruns are nothing new — SYEP overspent by more than $56 million over the past two years.

9 Killed, 2 Wounded in Shooting at Beer Distributor
August 03, 2010 ~ FoxNews.com

A company executive says a warehouse worker who had been called in to resign opened fire at a beer distributor in Connecticut and at least three people were shot.

A Connecticut official says nine people have died and two were wounded in a shooting at a beer distribution warehouse in Connecticut, Fox News has learned.

Police sources identified the gunman as Omar S. Thornton, whose body was found inside the warehouse where the shooting took place, Manchester Police Lt. Joe San Antonio said.

The two wounded individuals were transported the Hartford Hospital are expected to survive, police say.

FOX61 in Hartford is reporting that the shooting may have been racially motivated, and that Thornton reportedly told his girlfriend that he had been discriminated against, and that a supervisor did nothing.

The shooting occurred shortly before 7:30 a.m. at the Manchester facilities of Hartford Distributors, one of the state’s largest beer and wine distribution companies. At the time, there were about 35 or 40 people in the office and warehouse, said Brett Hollander, the director of marketing, whose family founded and owns the company. The Courant reported that Steve Hollander, another member of the family, was one of the wounded.

Thorton was described by John Hollis, a Teamsters Union official, as a recent hire who worked as a driver. Hollis told the Courant that “the union was bringing him in to meet with the company to remedy” a “disciplinary problem.”

Jonas, 32, sewed up his own leg after ER wait
3 Aug 10 08:27 CET

Dictionary tool Double click on a word to get a translation

A 32-year-old took the needle into his hands when he tired of the wait at Sundsvall hospital in northern Sweden and sewed up the cut in his leg himself. The man was later reported to the police for his impromptu handiwork.

“It took such a long time,” the man told the local Sundsvall Tidning daily.

The man incurred the deep cut when he sliced his leg on the sharp edge of a kitchen stove while he was renovating at home.

“I first went to the health clinic, but it was closed. So I rang the medical help line and they told me that it shouldn’t be closed, so I went to emergency and sat there,” the man named only as Jonas told the newspaper.

After an hour-long wait in a treatment room, he lost patience and proceeded to sew up his own wound.

“They had set out a needle and thread and so I decided to take the matter into my hands,” he said.

But hospital staff were not as impressed by his initiative and have reported the man on suspicion of arbitrary conduct for having used hospital equipment without authorization.

*BLOOD PRESSURE MEDICATION WARNING

Hipsters on food stamps — They’re young, they’re broke, and they pay for organic salmon with government subsidies. Got a problem with that?

http://www.salon.com/life/pinched/2010/03/15/hipsters_food_stamps_pinched

California Democrats Seek Higher Income Tax, Oil Levy.

Aug. 2 (Bloomberg) — California, the largest U.S. municipal borrower, began its fiscal year July 1 without a spending plan as Governor Arnold Schwarzenegger and Democrats remained deadlocked over how to best fill a $19.1 billion deficit. Bloomberg’s Matt Miller reports. (Source: Bloomberg)

California Democrats unveiled a plan to erase the state’s $19.1 billion budget deficit with higher income taxes and a new levy on oil producers to offset wholesale spending cuts proposed by Governor Arnold Schwarzenegger.

The plan from Democrats in the state Legislature would bring in $1.8 billion by increasing income-tax rates 1 percentage point on all but the wealthiest Californians. It would cut spending by $8 billion and raise $1.5 billion by increasing vehicle-registration fees, $600 million by taxing oil wells and $2 billion by suspending corporate tax breaks.

Schwarzenegger, 63, and fellow Republicans said they’ll block the proposals, continuing an impasse that has left the most-populous U.S. state without a budget since the fiscal year began on July 1. Controller John Chiang, a Democrat, has warned that he may need to issue IOUs instead of paying some state bills to save cash if the stalemate lasts into next month.

“Tax increases are dead on arrival,” Aaron McLear, Schwarzenegger’s spokesman, told reporters today. “Tax increases are not something we will support.”

“San Luis Obispo plans to crack down on landlords”

People who rent out their homes in San Luis Obispo and who don’t have a business license and tax certificate could face daily penalties if they do not come into compliance with a new city crackdown.

City officials say they will mail 3,900 enforcement letters later this month to property owners who appear to be renting homes without maintaining a required business tax certificate and license.

Those property owners will be given about a month to comply. If they do not, city officials say they will issue administrative citations up to $500 a day after the third straight day of non-compliance.

http://www.sanluisobispo.com/2010/08/03/1237228/san-luis-obispo-plans-to-crack.html

Kellogg (NYSE: K - News) shareholders are likely battling sour stomachs after last week’s earnings release, which not even a merry band of Keebler elves could couch in a positive light.

Second-quarter sales fell 5%, to $3.1 billion. Earnings per share fared worse, declining 14% — or $0.13 — to $0.79. A variety of factors contributed to the stale performance, including a product recall in the last several days of the quarter.

On June 25, Kellogg announced a voluntary recall of U.S.-shipped cereals,

Management estimates that this snafu was responsible for $0.10 of the $0.13 EPS dip.
But we still need to account for the other three cents, plus the additional six cents or so that would’ve been necessary to produce mid-single-digit EPS growth —

And this is where things get really ugly. Kellogg cited deflationary forces in the U.S. and U.K. cereal category, a

In North American Retail Cereal, a subsegment of the company’s largest reporting division, sales fell by a currency-neutral 13%. Now, only an estimated 5% of that sales decline owed to the recall, with the balance coming from negatives such as retailer inventory pullback and lower consumer consumption. In other words, not only are consumers once again growing cautious, but retailers, too, appear to be stepping back into cash-conservation mode.

In fact, grocer SUPERVALU (NYSE: SVU - News) recently reported that its item-per-customer sales metric was down, while food stamp usage has risen to the “highest levels since we’ve been tracking it.” Signs of deflation — that dreaded D-word — are popping up elsewhere in the consumer landscape. Amazon.com (Nasdaq: AMZN - News) has slashed prices on its Kindle e-reader at what The New York Times calls an “unusual” rate, pushing a price war with Barnes & Noble (NYSE: BKS - News) and Sony (NYSE: SNE - News) into overdrive.

I don’t mean to spark a panic here, but for investors whose portfolios are heavily weighted toward U.S. consumer names, I’d digest Kellogg’s results as reason for concern. Major concern.

If you thought the U.S. had a problem of too many vacant housing units, get a load of this:

Caixin Online

Aug. 3, 2010, 8:30 p.m. EDT
Fear empty flats in China’s property bubble
Commentary: Even worse than price bubble is quantity bubble of vacant flats

By Andy Xie

BEIJING (Caixin Online) — How many flats in China are sitting empty? The media recently floated a story — denied by power companies — that 64.5 million urban electricity meters registered zero consumption over a recent, six-month period. That led to a theory that China has enough empty apartments to house 200 million people.

Statistical transparency is lacking in this area, so the truth about empty apartments remains under wraps. Publishing accurate data should be of the highest priority, since the size of the nation’s unused apartment stock is perhaps the most important measure of the extent and seriousness of China’s property-market bubble. Indeed, it’s a grave concern for policy making, since unpublished data may indicate not only a price bubble but a quantity bubble burdening the market.
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Poor Uncle Buck…

Currencies
Aug. 4, 2010, 1:26 a.m. EDT ·CORRECTED

Dollar falls as Fed mulls symbolic policy shift
Aussie little changed as Australian central bank holds rates steady

By Deborah Levine and William L. Watts, MarketWatch

An earlier version of this report misstated the last time the dollar traded lower than 85.69 yen. The report has been corrected.

NEW YORK (MarketWatch) — The U.S. dollar fell Tuesday to its lowest level since April, weighed down by a news report that Federal Reserve officials will consider a slight policy shift next week amid concerns over the strength of the U.S. economic recovery.
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This just in - they’re still trying to figure out what caused this thing :
http://economix.blogs.nytimes.com/2010/08/03/did-low-interest-rates-cause-the-great-housing-convulsion/?ref=business

Anyone want to help ‘em out?