The Housing Bubble

`Buy and Bail’ Homeowners Get Past Mortgage Hurdles From Fannie, Freddie

Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home.

Real estate professionals call it “buy and bail,” acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s “underwater,” or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan.

The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of buy and bail underscores the lingering impact of the worst housing crash since the Great Depression.

Fed report: Recession more likely than expansion over next two years
Sacramento Business Journal

The San Francisco Federal Reserve Bank says a recession is more likely than an expanding economy during the next 18 to 24 months, according to the closely watched bank’s economic letter released Monday.

Declining consumer confidence and spending, and slower-than-needed hiring by private companies are greatly increasing the odds of a double-dip recession within the next two years, though an immediate drop into another recession seems unlikely, according to the report that looked at leading economic indicators.

“Any forecast 24 months into the future is very uncertain,” said the report by researchers Travis Berge, a graduate student at the University of California Davis, and Oscar Jorda, a UC Davis professor and visiting scholar at the San Francisco Fed. “At two years out, the odds of recession vary from almost three times more likely than expansion, to expansion being almost five times more likely than recession.”

Fed Efforts to Spur Growth May Move Markets More Than Economy
Aug 10, 2010

Federal Reserve policy makers meeting today may find the market reaction to any announcement of steps to spur growth will be bigger than the impact on the economy.

Options outlined last month by Fed Chairman Ben S. Bernanke include providing more information about the Fed’s pledge to maintain record-low interest rates, reducing the rate it pays on banks’ reserve deposits and sustaining or expanding the size of the balance sheet.

“If they’re small scale, the direct effects are relatively small,” said Marvin Goodfriend, a former research director at the Richmond Fed. “But to the extent that they signal the Fed’s concerns and what direction they are, and the Fed’s willingness to take actions given the signal of their concerns, they could have big effects.”

Investors would see new Fed efforts as foreshadowing more dramatic steps to come, including large-scale asset purchases, said Goodfriend, a professor at Carnegie Mellon University’s Tepper School of Business in Pittsburgh. Weaker job gains at U.S. companies since April and a slowdown in growth last quarter are among signs the recovery is stalling, increasing pressure for more Fed easing.

Chief Executives in U.S. Less Confident on Jobs, Survey Shows
Aug 10, 2010

Confidence among U.S. chief executive officers fell this quarter for the first time in a year as their outlook on sales, employment and the economy weakened, a private survey showed.

The Young Presidents’ Organization’s gauge of sentiment fell to 57.5 in July from 61 in April, according to the Dallas- based group. A reading higher than 50 shows more chief executives had a positive outlook than a negative one.

Sixty-two percent of CEOs surveyed said they plan to hold employment steady in the coming year, while fewer officials expect to boost staff. Companies hired fewer workers than forecast in July, a Labor Department report showed last week.

“Employment growth in the United States is likely to remain in neutral for the foreseeable future,” David Maney, spokesman for the survey and chairman and co-founder of Headwaters MB, an investment bank in Denver, said in a statement.

U.S. House Set to Pass State Aid as Lawmakers Return From Break
Aug 10, 2010 (Reuters)

U.S. House members are returning to Washington from summer recess to act on a $26 billion plan to aid cash-strapped state governments amid concerns the economy is stalling as November’s congressional elections approach.

Lawmakers convene today for anticipated passage of a Senate-passed bill aimed at preventing thousands of layoffs of teachers and other government employees. Republican House leaders oppose the measure; President Barack Obama scheduled a morning appearance in the White House Rose Garden to appeal for approval.

Levin: Democratic jobs bill push not union payback

By JIM ABRAMS
The Associated Press
Posted: 3:11 a.m. Tuesday, Aug. 10, 2010

WASHINGTON — A leading Democrat says it’s wrong to argue that a $26 billion measure before the House mostly amounts to a gift to public employee unions.

Michigan Democrat Sander Levin tells C-SPAN the bill before lawmakers called back to Washington Tuesday was sought by 45 governors, Republicans as well as Democrats, who asked Congress for help to avert massive layoffs in the already suffering economy.

Levin said “we’re talking about several hundred thousand” jobs at stake. He said “the notion that this is just unions, no. I think this is pressure from the public who want their teachers teaching.”

Republicans charge the bill is a payback to public employee unions that supported Barack Obama and in his presidential campaign

“Even though prices declined last year — down 0.2% from a year earlier as measured by the national price index for personal consumption expenditures — incomes fell even more. On average, personal income dropped 1.8% in 2009, following a 2.7% increase in 2007.”

http://blogs.wsj.com/economics/2010/08/09/us-incomes-tumbled-in-2009/

The Phoenix AZ Metro area had a decline of 5.2%, following a drop of 1.4% 2007-2008.

oh oh - “Shanghai sets bearish tone on domestic growth worries” - empty houses and housing bubble popping do not make for good stock market.

—————–

HONG KONG (MarketWatch) — Chinese shares suffered their worst fall in more than a month Tuesday, dragging down markets across Asia, as weaker-than-expected imports in July fueled worries that consumption on the mainland was slowing.

“What we are seeing is some knee-jerk reaction to this imports data … It’s being interpreted as disappointing and being a precursor to poor consumption on the mainland,” said Ben Collett, head of equities at Louis Capital Markets in Hong Kong.

The Shanghai Composite dropped 2.9% to end at 2,595.27, taking its worst percentage fall since June 29, while the Shenzhen Composite index tumbled 3.3% to 1,085.63. Hong Kong shares also responded in kind to the sharp fall, with the Hang Seng Index finishing 1.5% lower for just its second loss in 16 trading days.

I’m in Lakewood, CA. and have noticed a ton of homes that have recently popped up for sale. Literally, 3 per street. Has any else noticed this phenomena, or is “all real estate local”?

There are a lot of articles about Rio and Brazil decoupling from external economies and being able to thrive even when the USA and Europe suffer. I don’t know if that is possible but I’m wondering.

Investors go to Rio as opportunities flourish

http://www.smh.com.au/business/investors-go-to-rio-as-opportunities-flourish-20100716-10e66.html

Gartmore Investment Management’s Christopher Palmer needed only a day in Rio de Janeiro to scout for investment opportunities while visiting Brazil six years ago. Now half a week isn’t enough.

A half a century after losing its status as Brazil’s capital, Rio is becoming an engine of Latin America’s largest economy. The city has lured at least two dozen hedge funds in the past decade as well as the nation’s leading oil producers, the 2014 World Cup and the 2016 Olympic Games.

The governor, Sergio Cabral, forecasts the state of Rio will need as much as $US90 billion ($102 billion) in investment until 2013 for the expansion of the shipbuilding, iron, steel and nuclear power industries,

”It’s becoming a virtuous cycle,”…

They’ve pacified favelas you would have thought were impossible to occupy. Real estate prices have surged, …Higher production has helped the unemployment rate in Rio state drop to 5.9 per cent in April from 10.5 per cent in the same month in 2002,

Rio property values have risen as much as 47 per cent in a year, according to statistics from the real estate union.

Homicides had fallen 31 per cent in May from a year earlier, to a record low of 363. Vehicle theft was down 30 per cent and robberies of pedestrians fell 12 per cent

While Rio may not be luring banks, the city is becoming synonymous with the nation’s hedge fund industry. Ipanema, whose beach was named the ”world’s sexiest” by the Travel Channel in 2008, and Leblon have lured more than a dozen hedge funds.

Rio’s revival can be traced to the 2006 election of Sergio Cabral… The priority has been cleaning up the house,”… ”Rio is no longer the ugly duckling of the republic. We developed a new partnership politics in our state.

”The most important thing Cabral did above all was the inauguration of a new politics, molding together various parts of the government with the private sector.”

buy and bail homeowners get past mortgage hurdles from fannie freddie
http://www.bloomberg.com/news/2010-08-10/-buy-and-bail-homeowners-get-past-mortgage-hurdles-from-fannie-freddie.html

Freddie Mac narrows loss, but firm needs more government aid
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/09/AR2010080905798.html

New Housing Bailout? Try Old Housing Bailout -Diana Olick
http://www.cnbc.com/id/38626794

WTF? They don’t have QE in China? Dumbasses.

BRIC Economies

Jim O’Neill, Chief Economist for Goldman Sachs, initially predicted that by 2041 (now modified to 2032) the BRIC economies would overtake the six largest western economies in terms of economic might.

More than anything Jim O’Neill’s club of emerging countries has created a new way of perceiving the future, suggesting that in the not too distant future the western world might be relegated to playing second fiddle to BRIC’s first violin. What was unthinkable ten years ago has started to become an accepted norm.

Some say the BRIC story is marketing hype, just a tag for salesmen to hang a story on and a chance to generate even more fees and put Goldman Sachs further into the limelight.

So did the market crash and ensuing recession not dismantle the BRIC story? Not at all, Most of the BRICs emerged from the crisis well, relative to the economies of the western world. Their banking systems are intact (Russia may be the exception here), and their economies are still growing

http://www.theglobaldispatches.com/articles/bric-economies–2

Interesting article from a non-American point of view:

Is BRIC Triggering “New Thinking”?

http://orientalreview.org/2010/04/14/is-bric-triggering-%E2%80%9Cnew-thinking%E2%80%9D/

The BRIC countries – Brazil, Russia, India, and China – are no longer content with being invited to the G20 and G8 summits by the West. They just held their own BRIC summit in Yekaterinburg. And the London Economist has discovered that the BRIC economies have “decoupled” from the crisis in the West. Indeed, they have decoupled, but not just in economic and financial terms.

New power centres have emerged; in Asia, in the Gulf, in Latin America, even in Africa. The weights are shifting in the world. Compared to the last century, more states and regions will influence and shape the world.”

One day the West will wake up and find out that it has slept though a historical development“.

The geopolitical weight of the BRIC states on the world scene is undeniable and BRIC’s share in the world economy stands at roughly 25% – combined with an essentially unbroken growth dynamic, in spite of the supposedly “global” financial- economic crisis.

The unease, to put it mildly, with which Western politics and media treat SCO and BRIC is probably due to the fact that these are non-western cooperation formats. The USA, European Union and Japan are simply not involved. And exactly that makes the Yekaterinburg SCO and BRIC summits so special: No West there.

There are some basic political-epistomological patterns in the western mind: How could there be anything of importance in international affairs, if the West is not actively involved? After all, since 1492, one has been accustomed to the fact that all significant events – even in the most distant corners of the globe – are ultimately determined by Europe and/or America. This has been world political ontology for half a millennium. That the “others” get together now – without the West – is indeed a new and irritating experience.

Right “after Lehman,” a new defensive reflex set in: The Anglo-Saxon systemic failure was quickly reinterpreted as a “world financial crisis” or “worldwide economic crisis”. Suddenly, the whole world was “sitting in one boat“ – as if the whole world had acted in exactly the same way as the USA, Great Britain or parts of continental Europe.
But the “others” had behaved very differently. The political and economic leaders of Asia, in particular, must have rubbed their eyes on account of this “world financial crisis”. Ten years “before Lehman,” they had pulled the emergency brake and contained the worst Anglo-Saxon finance methods by regulation.

KKR Cancels Planned $500 Million Share Sale, Citing `Unfavorable’ Market
Aug. 10 (Bloomberg)

KKR & Co., the private-equity firm that moved its shares to the New York Stock Exchange last month, canceled a plan to raise $500 million in a stock sale and said second-quarter profit fell as investment income dropped.

The firm applied to withdraw a registration for the sale, citing “unfavorable market conditions,” it said yesterday in a regulatory filing. KKR reported a 29 percent decrease in economic net income as lower unrealized investment gains led to a decline in carried interest, or the portion of profit it gets from successful holdings, the firm said in an e-mailed statement from New York.

North Baltimore plant to close, over 200 out of work beginning in October

Over 200 people will be out of work when a North Baltimore factory closes its doors later this year.

Continental Structural Plastics plans to shut down operations, beginning October 11th. The announcement came in a letter last week to representatives of the United Auto Workers in Maumee.

Company reps did not give a reason for the closing, but officials had previously considered moving operations to Indiana due to expensive and unnecessary state regulations.

State officials had worked to come up with a deal to relieve the company of fees to operate a piece of machinery it no longer needs to meet environmental standards.

Longaberger below 1,000 workers
Company confirms 35 more layoffs Monday. ~ Central Ohio

NEWARK — The Longaberger Co., which ranked among the state’s 10 largest manufacturing employers in 2000, now has a work force of less than 1,000.

The company confirmed Monday that 35 full-time positions were eliminated last week, bringing its employment to 975, down from about 2,000 two years ago and more than 8,000 employees 10 years ago.

“This was part of a streamlining effort to ensure we remain as cost-efficient as possible,” Matthews said. “We value all the contributions these employees have made, and our hearts go out to those employees affected.”

It has been a difficult year for the basketmaker as the economy remains weak after a severe recession.

“We have to make hard decisions like many other companies do,” Matthews said. “We’re no different in that sense. While there are some signs of recovery, consumer spending is still sluggish and flat.

Although the slow economic recovery made things difficult, the company sees opportunities for growth in the future.

“Studies and expectations in the home and lifestyle areas see growth in coming years,” Matthews said. “And that bodes well for us.”

The company not only offers baskets, but also wall art, candles, pottery, wrought iron and fabric bags.

Bay Area home values rise overall, Zillow finds

Carolyn Said, Chronicle Staff Writer
San Francisco Chronicle August 9, 2010 04:00 AM

More Business

* Stocks falling ahead of Federal Reserve meeting 08.10.10
* Dollar gains ahead of Fed decision on rates 08.10.10

Bay Area home values experienced moderate increases over the past year, but it was a scattered revival as values still slumped in about a third of the region’s ZIP codes, according to a real estate report being released today.

Overall Bay Area home values in the second quarter rose 4.1 percent compared with the same period last year, hitting a median of about $497,000, roughly back to the level of late 2003, according to real-estate valuation service Zillow.com. By comparison, the national median fell 3.2 percent year over year, Zillow said.

“The Bay Area is doing a lot better than the rest of the country now,” said Stan Humphries, Zillow chief economist. “It has stabilized tremendously, and we’re seeing some robust housing appreciation. Still, the dynamics of the market remain very challenging because of larger macro-economic headwinds.”
…
High-end ZIP codes sag

Values sagged not just in foreclosure-ridden exurbs like Antioch and Pittsburg, where the median price is under $200,000, but also in pricey ZIP codes like Stanford and Stinson Beach, where the median price is north of $1 million.

“Some higher-end markets are seeing declines and super-declines that outpace the averages,” Humphries said. “It makes sense because these markets went into decline later than other markets. If you look at their fallout from the peak, the high end has fallen a lot less than the rest of the Bay Area.”

Still, every single ZIP code has lost significant value since its peak.

What does the future hold?

“I’m still cautious to say any market is out of the woods,” Humphries said. “Given increasing inventory levels, it’s quite possible we’ll see further price declines, but I’m optimistic we won’t reach the low point again.”

Thornberg said it’s hard to predict what will happen with foreclosures, since the government plans an autumn launch for a renewed foreclosure-prevention plan.

“It’s really a policy decision,” he said. “We know 6 million households in this country are not paying their mortgage, 12 million households are underwater and a substantial portion of those folks are in California. Eventually those homes will have to be cleared - we don’t know whether it will be through the foreclosure process or through a regulatory process.”
…

This is old but I don’t recall it being discussed here: the low level of new construction will eventually lead to a housing shortage as the economy recovers:

http://money.cnn.com/2010/06/15/real_estate/new_housing_bubble/index.htm

“Household formation — the technical term for people moving in together — has been on hold during the past few years as young people, especially, have been unable to find jobs. In the past, an average of more than 1.3 million households were formed each year, causing demand for 1.5 million new homes. (More homes than households are needed to replace those destroyed by fires, floods, teardowns and neglect.)”

That had been the average amount of new supply. Now there is a huge inventory overhang, and household formation is a record lows.

“The decline in household formation is artificial,” said Gaines. “The young are moving in with their parents. There’s even doubling up among working class people. There’s a pent-up demand coming if and when the economy recovers.”

The counter arguments are these:

1) The inventory overhang is huge, as a result of one 2 milllion-plus new home year after another.

2) Americans have overconsumed housing, their housing units are too big, and they are getting poorer. Before new supply is needed, some of these massive units will be subdivided, perhaps within, to cut operating costs.

(The alternative is abanondoment and the construction of new, smaller houses).

(Not that in Brooklyn, where I live, rowhouses built as one family Brownstone mansions are now often four unit buildings — after gentrification after a couple of decades as 12-unit rooming houses).

Just as I began to imagine I had noticed some green shoots of recovery, this story hit me like a bucket of water to the face. If this turns out anything like the early 1990s did for SoCal defense contractors, then the worst is yet to come. And so far as I recall, we did not have the accumulated debt from two protracted Middle East wars to contend with during the early 1990s defense industry pullback.

Huge defense cuts could affect S.D. companies
Monday, August 9, 2010 at 3:44 p.m.

U.S. Defense Secretary Robert Gates said today that the defense budget must be cut by $100 billion over the next five years, and that about 10 percent of that money will directly affect contractors, especially those who support or directly work in intelligence gathering.

Gates called for the elimination of the Joint Forces Command in Norfolk, Virginia, and the phasing out of scores of military and civilian executive positions. But it is unclear where other cuts will be made. The cuts — if they survive Congress — could impact San Diego County contractors, which are involved in a broad variety of work. The reduction has the potential to affect everything from orders for new unmanned spy aircraft to the repair of Navy ships.
…

Productivity falls 0.9 percent in second quarter
Productivity drops 0.9 percent in spring, first fall since 2008; labor costs edge higher.

WASHINGTON (AP) — Worker productivity dropped this spring for the first time in more than a year, a sign that companies may need to step up hiring if they hope to grow.

Productivity declined at an annual rate of 0.9 percent in the April-to-June quarter after posting large gains throughout 2009, the Labor Department said Tuesday. Unit labor costs edged up 0.2 percent in the second quarter, the first increase since the spring of 2009.

Clipped from Max Kieser:

Google’s betrayal of the public trust and abuse of the tax funded subsidy gifted to them – to bilk hundreds of billions in revenues from the publicly financed Internet – has made them public enemy No 2, right behind Lloyd Blankfein.

We will all be living in a virtual Gaza soon; a digital ghetto created by war profiteering, market and regulatory rigging scum that blast their poisonous lies over corporate media 24/7 – corrupting babies in the womb.

Children born in America today will be born into a Google-Verizon owned and operated digital ghetto. Next on the agenda will be new laws to legalize online gambling. This will be the final nail in the coffin of the country previously known as America.

I feel privileged, I have lived during the time of ‘Peak America.’ I feel horrible for those coming up now; grad school debt slaves working as pole dancers, MIT ‘quant’ geeks working as ‘fluffers’ for Goldman Sachs. They will never know what America was like before the womb robbing pigs and charlatans on Wall St. and Google sucked the marrow of the Declaration of Independence of its very last drops of hope.

New Jersey’s Xanadu Taken Over From Colony by Lenders
Aug 10, 2010

Meadowlands Xanadu, the unfinished $2 billion New Jersey shopping mall designed with an indoor ski slope and a Ferris wheel, was taken over by lenders from a group led by Colony Capital LLC after construction stalled.

The lenders are negotiating with new developers to complete the project, the group said in a statement today. The creditors, including Credit Suisse Group AG, Capmark Financial Group Inc. and an affiliate of Fortress Investment Group LLC, had given the Colony-led group until yesterday to raise additional equity, four people with knowledge with the matter said last week.

Xanadu, located about 10 miles (16 kilometers) west of Manhattan in East Rutherford, has been plagued by delays since construction began five years ago. Colony and investors including Dune Capital Management LP took over the project from Mills Corp. in 2006, agreeing to invest $500 million and arrange $1 billion in financing. Development ran into trouble after lender Lehman Brothers Holdings Inc. went bankrupt in 2008.

Update from the nabe: The house behind me, which was purchased by a University of Arizona student back in 2006 (an all-cash deal for $135k), is on the market for the third time.

Back in the summer of ‘07, he tried flipping the place. Didn’t work. So, he started renting it out. Most of the tenants have been just fine with me. The current crop are slobs, but, for the most part, they’ve been quiet.

Well, he listed it again this summer for ’bout a month. Didn’t sell. And, if you saw the condition of the yard and the exterior, you’d know why. (They all but scream “Needs work!”)

Now it’s on the market as a rent-to-own. And I pity the person who falls for that ploy, because not only will they be paying above-market rent, they’ll be buying a property with no street frontage and a lot of deferred maintenance and repairs. That is, if they can buy it. Quite often, R2O deals fall through.

Oh, about that all-cash deal back in ‘06: I strongly suspect that the kid’s parents HELOC-ed their residence so that he could get into real estate investing.

Hillary for Vice President? WSJ
The movement is gaining traction.

As President Obama sinks in the polls, Democrats and liberal pundits inevitably are searching for a scapegoat. The most likely victim appears to be gaffe-prone Vice President Joe Biden, who has become the focus of speculation that Secretary of State Hillary Clinton just might replace him on the 2012 Democratic ticket.

Former Virginia Gov. Doug Wilder, his state’s first African-American governor, touched off the controversy. Writing at Politico.com last week, Mr. Wilder argued that Mr. Biden’s tenure has been undistinguished and chock full of “too many YouTube moments.” He charged that Mr. Biden “has continued to undermine what little confidence the public may have had in him.”

By way of contrast, Mr. Wilder says that Hillary Clinton has excelled in her role. “Clinton has been nothing but a team player who has earned good marks since being asked to serve as secretary of state.” Having Mrs. Clinton join the 2012 ticket, he said, would revive the Democratic Party and reestablish the party’s working-class voters who found her appealing during the 2012 primaries against Mr. Obama.

Get ready for a slower HBB

But many of Google’s former allies in the Net-neutrality policy battle say Google’s description of its proposal did not tell the full story. “It’s the next Google in a garage in Palo Alto that will be hurt by this,” says Susan Crawford, a former White House technology adviser who now teaches at Cardozo School of Law. “This allows for the cable-ization of an Internet access provider.”

By cable-ization, Crawford is referring to the holy grail for current wireless phone and broadband providers, who are seeking new ways to raise revenues from the Internet access they control. Currently, broadband and mobile companies sell access to the entire Internet for a flat fee, and do not share in any revenues for the content that flows over their pipes. In the future, these same companies would like to offer premium services - new, faster, specialized information superhighways - that would allow them to charge subscription rates, in much the same way that cable providers now do for channels like HBO and ESPN. (See pictures of work and life at Google.)

Under the Google-Verizon proposal, which will be reviewed by lawmakers over the coming months, the existing public landline Internet would be protected from any prioritization of content. But companies that own data lines could also provide, according to the Google-Verizon announcement, “additional online services” over broadband wires that “could include traffic prioritization.” In other words, you could still watch YouTube videos online at current speeds, but other video products - first-run movies, for instance, or live sporting events - could become available at even faster speeds for a fee.

Furthermore, under the Google-Verizon plan, there would be no limits on wireless data providers who wanted to prioritize data. That means, for example, that if Wireless Phone Company X struck a deal with the National Football League but not Major League Baseball, it would be able to provide streaming footage of football games to iPhones or BlackBerrys at higher speeds than those of baseball footage. The hypothetical “two people in a garage” with a start-up who wanted you to see their videos would be encouraged to cut a deal with the wireless company to gain higher-speed access to customers.

In this case regulation that requires equal access speeds is the best for fostering creative companies and competition. Verizon Cable and Google want to cement their positions and crush all competition. The internet has been a great place of start ups and competition. If these pigs get their way we will have cable-ized internet where you will have access to MSM news and ESPN, but blogs will move slowly and will be dropped periodically requiring you to sign back in.

GoldMoney??

Does anyone here use GoldMoney? I have listened to the Turk guy, few times, he sounds very genuine. Is it a scam or a fraud?

If it’s legitimate, what are the benefits and risks?

So……..what can anyone tell me about the expat lifestyle in SE Asia?

Memo to Bernanke: Forget ‘QE2′, the Fed Should RAISE Rates to Help the Economy Aug 10, 2010

The Fed meets today against an economic backdrop that is “unusually uncertain,” as Ben Bernanke put it last month

Given the economy’s recent deceleration and comments from various Fed-heads, many market players are expecting and hoping the Fed today at least hints at more “tools” it can use to spur growth and hiring.

But not longtime Fed watcher Richard Suttmeier, chief market strategist at ValuEngine.com. “I think they’re talk about what they might do - quantitative easing if they need to - but I sure hope they don’t.”

Given the “unusually uncertain” backdrop Bernanke identified, Suttmeier believes the Fed is better off standing pat - or hint at raising rates if they’re going to do anything.

“It’s a condition where rates are so low, no one can make any money in a safe investment,” he says, amid reports of investors once-again ‘chasing yield’ in riskier assets, as well as speculating on commodities.

“I don’t think we need a zero percent interest rate from the Fed,” Suttmeier says. “We need prudent allocation of credit where credit is needed and warranted. We don’t want to go lend to people just to create more bad loans.”

“General Notions Are Generally Wrong.” ~Lady Mary Wortley Montagu

MRS. O’LEARY’S COW KICKED OVER A LANTERN AND STARTED THE GREAT CHICAGO FIRE.
No. The cow was innocent. Newspaperman Michael Ahearn made up that story, and admitted it before he died in 1927.

THE U.S. CONSTITUTION IS A CONTRACT AMONG CITIZENS.
No, it isn’t. And it’s not a set a rules by which we live. The Constitution controls the government, not individual citizens. A citizen does not sign it, does not pledge to it, nor in any other manner obligates to it - UNLESS he or she enters public office. Only then must a citizen swear to uphold the Constitution…as an officer of government.

TAXES ARE DUES WE PAY FOR FREEDOM.
Not at all. That misleading political slogan came from Justice Oliver Wendell Holmes. Money is property, and when the state takes a constantly increasing share of your property you are less free, not more.

THE FOUNDING FATHERS PUT “IN GOD WE TRUST” ON THE MONEY TO SIGNIFY A CHRISTIAN NATION.
They did no such thing. It began to appear on U.S. coins in the 1860s but was not imprinted on the one-cent coin until 1909. The motto didn’t show up on paper bills until 1957.

THE GOLDEN RULE IS A BIBLICAL ADMONITION.
No, it isn’t. “Do unto others as you would have them do unto you” appears nowhere in the King James version of the Bible. There are, however, similar statements, such as - “…Thou shall love they neighbor as thyself.”

“DIXIE” COMES FROM A REFERENCE TO THE MASON-DIXON LINE.
Not at all. The likely source of the word is an antique ten-dollar bill from French speaking New Orleans. A bank in that city issued the ten-spot bearing the French word for ten in large letters. “Dix.” Non-French folks called them “dixies.”

SHERLOCK HOLMES WAS FOND OF EXCLAIMING “ELEMENTARY, MY DEAR WATSON.”
The Great Detective never said it, although Basil Rathbone may have uttered the phrase in the movies. Nowhere in the 56 short stories or four novels by Conan Doyle does Sherlock Holmes make the remark.

THOMAS EDISON INVENTED THE ELECTRIC LIGHT BULB.
No, he didn’t. He merely improved upon work that had gone on before. As early as 1844, three years before Edison was born, Jean Foucault made an arc light strong enough to illuminate the Place de la Concorde in Paris. In 1860 an Englishman, William Swan, displayed a light bulb. He made a successful carbon filament lamp in 1878, several months before Edison “invented it.”

“The most costly of all follies is to believe passionately in the palpably not true. It is the chief occupation of mankind.” ~H.L. Mencken

“I said we’d build an economy that can compete in the 21st century — because the economy that we had even before the recession, even before the financial crisis, wasn’t working for too many Americans”.

~ B. Obama

In Washington State, it costs Obama’s annual salary to create or ’save’ one stimulus job.

Bellevue, WA – Washington State received over $6 billion in stimulus funds. Of that, $5,945,163,990 has been spent. According to recovery.wa.gov, the Washington State government site charged with keeping track of stimulus money spent throughout Washington State and the jobs saved or created from those funds, 14,495 jobs have been saved or created at an average cost of $410,152.74 per job.

Gates announced closure of the Joint Forces Command. Here where I live, they employ about 6000. Better paying contractor positions (avg $83K versus norm of $38k) in the region. Lots of people are going to be struggling. I have friends who are worrying about parents. Friends directly affected. I used to work there for a bit. It funded lots of nicer homes.

Scrolling Ads! …Yikes! I’m a cornfused as a baby in top-less bar.

… annnnnd the treasury bubble continues.

10-year down to 2.74% yield after the FOMC statement.

Cripes. Well I’ve said for some time that treasuries are the next bubble. There you have it.

If you thought the popping of the housing bubble was ugly - wait’ll this one pops. The last one resulted in a political regime change - this one will result in a political system change, I would imagine.

Quest announces new layoffs. ~ Aug 10, 2010

SANDPOINT, IDAHO — Quest Aircraft Co. announced Monday that 65 full-time employees have been laid off from the local plane manufacturer.
Quest CEO Paul Schaller met with the employees Monday and emphasized they would be eligible to be rehired once the economy picks up.

Quest now has 155 employees — down from 340 last year. A series of layoffs last September, January and April were needed to reflect a slowdown of orders for the $1 million Kodiak plane, he said.

Quest has now manufactured 42 planes here since 2005, with No. 42 going out the doors to New Guinea on Monday.

The layoffs came from each department, Schaller said.

“The whole airline business is in a very soft spot right now,” Schaller said. “We are trying to get through it by tightening our belts the best we can.”

The Quest facility is currently producing two planes a month and was producing three for a short time before the September layoffs. The facility now has the capacity to produce one plane a week, if the economy would cooperate, he said.

Fed Signals Further Easing Amid Slowing US Economy
Reuters with CNBC

The Federal Reserve on Tuesday took fresh steps to lower borrowing costs amid a softening economic recovery, announcing it would use proceeds from its maturing mortgage bonds to buy more government debt.

The decision to reinvest proceeds from the more than $1.3 trillion in mortgage-related debt the Fed holds, an effort to keep market-set borrowing costs down, represents a significant policy shift.

Just a few months ago, the central bank had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

“To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve’s holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities,” the Fed said in a statement.

The move was somewhat surprising.

Birmingham home sales drop 41% in July
Birmingham Business Journal

July home sales in Birmingham took a sharp turn for the worse, as the tax credit expiration stalled sales, said local real estate blog TomBrander.com.

Analyzing local Multiple Listing Service information for last month, Brander said sales dropped by 41 percent to $144.1 million from June’s $243.8 million and by 37 percent from last year’s $227.4 million.

Unit sales were down 36 percent for the month in the Birmingham area – 889 sold in July, compared to 1,397 in June and 1,298 in July 2009. New home sales fell 61 percent to 86 sold during the month, from 261 in June.

San Luis, Mexico businesses closing

San Luis, Mexico — Mexico’s National Chamber of Commerce says at least 20% of businesses in San Luis, Mexico have had to shut down this summer.

The chamber says most of the closures can be blamed on a combination of slow sales and high heat because business owners simply can’t afford to pay their power bills since they aren’t getting enough customers to offset the costs.

Many businesses in San Luis also suffered damages and inventory losses due to the Easter Sunday earthquake and have been unable to recover from that.

Found: Britain’s oldest house at 10,500 years old is uncovered by archaeologists. ~ 10th August 2010

It is cramped, draughty and unlikely to win any design awards.

But according to archaeologists, this wooden hut is one of the most important buildings ever created in Britain.

The Stone Age builders who created Britain’s earliest known house were nomads - tribes who wandered northern Europe following deer, wild cattle and elk.

Although Britain had been visited by hunter-gatherers for hundreds of thousands of years, it was only at the end of the last Ice Age 10,000 years ago - when the glaciers finally retreated from Scotland - that the country became permanently occupied.

At the time the sea level was hundreds of feet lower than it is today and Britain was connected to mainland Europe by a bridge of marshy, low lying land.

The discovery of red deer skulls used as masks near the site - and the fact that it was used for such a long period of time - raises the possibility that it was some kind of temple, used for strange, long forgotten rituals.

The creators of the hut wore animal skins and furs, stitched together with crude thread. The furs came from fox, beavers and pine-martins, while the skins were made from the hides of deer and wild cattle.

They were beginning to experiment with woven fabrics and had mastered basket weaving from reeds.

Thousands of miles away, in the Fertile Crescent of Mesopotamia, the earliest farmers were learning how to sow seeds and domesticate animals in a discovery that would transform the world - and herald the age of villages, writing and civilisation.

But in northern Europe, the hunter-gathering way of life that had served prehistoric man for millennia remained unchallenged

Built more than 6,000 years before Stonehenge, it provided shelter from the icy winds and storms that battered the nomadic hunters roaming Britain at the end of the last Ice Age.

Remains of the 11 ft wide building were discovered near Scarborough in North Yorkshire and have been dated to at least 8,500BC.

It stood next to an ancient lake and close to the remains of a wooden timber quay side.

A large tree trunk has also been uncovered by the team. Despite being 11,000 years old it is well preserved with its bark still intact.

The house predates what was previously Britain’s oldest known dwelling at Howick, Northumberland, by at least 500 years.

The centre of the structure had been hollowed out and filled with organic material. The researchers believe the floor was once carpeted with a layer of reeds, moss or grasses. The team believe there may once have been a fireplace.

None of the wood used to make the building has survived. Instead, archaeologists found the tell-tale signs of 18 timber posts, arranged in a circle.

Drugs, mental illness, or the sign of mounting anger in America?

http://www.syracuse.com/news/index.ssf/2010/08/lunchtime_links_woman_goes_int.html

Woman goes into drive-thru frenzy when she’s denied McNuggets (video)

Man, this is ugly.

North Korea offers ginseng to pay Czech debt
Warsaw ~ August 10 2010

Pyongyang’s cash-strapped totalitarian regime has offered to settle part of its debt to the Czech Republic with a large consignment of ginseng rather than eat into its limited funds.

With the domestic economy crumbling, North Korea is also feeling the pinch of tighter international sanctions imposed over its nuclear and missile programmes and the sinking of a South Korean warship. Its access to global markets is further hindered by outstanding international debts of about $12bn, two-thirds to former communist states.

Czech officials confirmed that Pyongyang had offered to settle 5 per cent of its Kc186m ($10m) in accumulated debt in ginseng, an invigorating root used in dietary supplements and teas that are supposed to improve memory, stamina and libido. Communist Czechoslovakia was a leading supplier of heavy machinery, trucks and trams to North Korea.

Non-cash trade and settlement of debt has been common among socialist countries. Cuba compensates Venezuela for discounted oil by sending doctors to work in deprived areas.

However, the now-capitalist Czechs are unconvinced they need an injection of vigour.

Fed Can’t Do Much More to Boost Economy: El-Erian
Published: Tuesday, 10 Aug 2010 | 9:43 AM ET

Despite all the anticipation over today’s Federal Reserve meeting, there’s little else the central bank can do now to help the economy recover, Pimco’s co-CEO Mohamed El-Erian told CNBC.
…
“Fed policy is not enough. You need to do more than that to get off that road,” he said.

Asked what needs to be done, he said, “First, selling a vision, a long-term vision as to what the policy response is to restore growth and employment. And second, to fill it out with proper structural policies.”

The Tuesday Fed meeting is likely to end with the central bank assuring markets it will use “all viable instruments” to prop up the economy, El-Erian said.

However, it is less certain “the extent to which the Fed will push banks to lend and will push investors to take more risks.”

He also expects the Fed to use the “unusually uncertain outlook” for the economy that Fed Chairman Ben Bernanke recently coined to describe the times ahead. El-Erian cited three reasons for the uncertainty.

“First, it’s very difficult to get consensus on the FOMC. Second, there’s a realization that policy effectiveness is going down. You get less outcomes for the same unit of reaction. And third, it’s the wrong thing to focus on,” he said.

“The country is facing structural issues and it needs structural solutions,” he added. “Just focusing on the Fed is like sending in a wide receiver to play quarterback. Yes, the wide receiver is a good athlete. But he’s not a quarterback and we need to focus on structural issues.”

Wow, so many bad news. I can’t bear it anymore.

North Jersey companies announce 441 layoffs
Tuesday, August 10, 2010 The Record

North Jersey companies have announced 441 layoffs at three facilities, including manufacturers of cardboard and cosmetics, and the Wayne office of Toshiba America Consumer Products, LLC, state records show.

President Container Group, a 63-year-old maker of cardboard packaging and point-of-purchase materials in Moonachie, said it will cut 234 jobs at the start of October, according to the New Jersey Department of Labor and Workforce Development website.

The labor department also said Toshiba America Consumer Products, will lay off 60 people at the end of September.

Plymouth contractor closes
The Business Journal of Milwaukee

Plymouth builder Jim Pankow Inc. is closing after 33 years of business and will auction off its equipment and tools in early September.

The contractor started building houses and then branched into commercial, industrial and institutional projects. Pankow hired Hansen & Young Auctioneers Inc., of Prairie Farm, to hold an online auction to sell its fleet of heavy equipment and tools. The company is selling about 17 pieces of heavy equipment, 12 work vans and trucks, scaffolding, construction site office trailers and concrete tools.

Dean Foods closes Florence PET dairy plant

FLORENCE,S.C. — Dean Foods is closing its PET dairy plant in Florence on Oct. 29, eliminating 151 positions in the process.

Production at the plant will be phased out over the next two months.

“We regret the impact that this will have on our employees. The decision to eliminate jobs and close locations in any part of our business is never an easy one. We operate in a highly competitive marketplace, so we must run our business in the most efficient way possible,” Dean Foods said in a press release issued Tuesday.

Dean Foods, based in Dallas, is the nation’s largest dairy processor. It made $44.8 million during the second quarter of 2010, which ended June 30. In 2009 Dean Foods made $64.1 million during the second quarter.

For the first time in 30 years, Engles told the Dallas Morning News, which reported the plans to shut down the Florence facility Aug. 4, the company is seeing differences in weekly buying trends, with sales spiking at the beginning of the month but trailing off by the end of the month when some households run out of money.

Two centuries after his name became synonymous with cotton, Barry Whitney is getting out of the family business.
August 10, 2010 ~ The Atlanta Journal-Constitution

Whitney — a nephew several times removed of cotton gin inventor Eli Whitney — found there is less use for businesses like his in the place where cotton was once king.

Whitney’s great-grandfather, his grandfather and his father were in the cotton business of marketing cotton for the farmers who grew it.

But now, 142-years after S.M. Whitney Co. opened in Augusta, it is closing.

The marketing is now done by large organizations or cooperatives, and this no need for the smaller “commission merchants” like S.M. Whitney.

“I’d hoped to leave it to my step-son but we’re just not handling enough cotton to stay in business,” said Whitney, 82. “We used to have fifty thousand, sixty-thousand, seventy-thousand bales of cotton a year. The past few years it’s been around 12,000.

“We’re going to shut down at the end of August.”

Diversified Information Technologies announces unspecified number of layoffs.~ August 10, 2010

Diversified Information Technologies Inc. will shed some employees as it moves toward more automation, the company’s top administrator said Tuesday.

“Change is never easy, but it is important that we stay ahead of what’s happening in the industry and the industry is moving toward a new automated environment,” said Scott Byers, president and chief executive of the Scranton-based information-management company. “We are changing the business model where there will be some staffing changes.”

Mr. Byers declined to say how many of the company’s 600 employees will be affected, which includes about 350 people in Northeast Pennsylvania.

“There will be some impact in Scranton,” he said, adding that transition will take months.

CareFusion Q4 Profit Declines On Tax Provision; To Slash 700 Jobs

(RTTNews) - CareFusion Corp. (CFN: News ) Thursday said its fourth quarter profit fell sharply from last year, hurt by after recording tax related charges, despite a 19% revenue growth. However, quarterly earnings results surpassed the Street estimates, as did revenues. The company also projected full year earnings, hinting to be in line with the estimate. Further, the company announced a restructuring plan that includes 700 job cuts.

CareFusion is a medical technology company formed from a spin-off from Cardinal Health Corp. (CAH) in 2009.

The company ventured for a company-wide restructuring, including 700 job cuts to eliminate layers of management and reduce the size of the company’s supporting infrastructure.

I’m watching PBS’s Nightly Business Report. They’re interviewing Kelly King, Chairman and CEO of BB&T bank. He’s also a director on the board of the Federal Reserve Bank of Richmond.

I thought, “Wait, what?” Then I looked at the Richmond Fed page:

http://www.richmondfed.org/about_us/who_we_are/board_of_directors/index.cfm

All captains of industry, mostly Finance, Insurance, Real Estate sector.

Uh… won’t they just direct the bank in ways that benefit themselves and their industries even if it hurts the rest of the economy? Especially when circumstances are dire?

The Fed tries to present itself as a government agency, but at least government agencies have to have lobbyists bribe them, not actually run them! :-0

That’s like having Andy Fastow run the Fed while he was also running Enron’s ponzi off-balance sheet “investment funds”.

Obama signs emergency bill to halt teacher layoffs

It`s always the teachers, police or firemen. They never mention….

The city of Bell California Robert Rizzo was raking in a salary of $787,637

By Ed Fletcher
efletcher@sacbee.com
Published: Friday, Jul. 30, 2010

The always sensitive issue of how much to pay local government officials became toxic this month with revelations that the city manager in the small Southern California city of Bell was raking in a salary of nearly $800,000 a year.

A Bee survey of the Sacramento region’s 22 cities and counties did not find any top executive salaries that would evoke the outrage unleashed over Robert Rizzo’s $787,637 salary, but it did reveal some interesting points:

• Lincoln City Manager Jim Estep’s salary of $215,000 a year makes him the seventh highest paid city or county executive in the region, equaling the pay offered the city manager of the much larger city of Sacramento. Among area cities, pay for Lincoln’s city manager has increased most – nearly 40 percent – since the beginning of the 2005 fiscal year.

By JIM ABRAMS
The Associated Press

WASHINGTON — Summoned back from summer break, the House on Tuesday pushed through an emergency $26 billion jobs bill that Democrats said would save 300,000 teachers, police and others from election-year layoffs. President Barack Obama immediately signed it into law.

Lawmakers streamed back to Washington for a one-day session as Democrats declared a need to act before children return to classrooms minus teachers laid off because of budgetary crises in states that have been hard-hit by the recession.

“It’s another sign that the momentum of the recovery has declined significantly,”

And the sign said everybody welcome, come in, kneel down and pray
But when they passed around the plate at the end of it all,
I didn’t have a penny to pay, so I got me a pen and a paper and I made up my own little sign
I said thanks Obama for thinking about me, I’m alive and doing fine

Sign Sign everywhere a sign
Blocking out the scenery breaking my mind
Do this, don’t do that, can’t you read the sign

Florida regions saw some of worst income drops in U.S.

By Jeff Ostrowski
Palm Beach Post Staff Writer
Posted: 10:05 p.m. Monday, Aug. 9, 2010

Margaret Soucy considers herself fortunate to have a job - but not so lucky to have a position that pays 20 percent less than her previous paycheck.

Soucy, who lives in West Palm Beach and is an administrative assistant, has cut back on movies, meals at restaurants and other little luxuries she once didn’t think twice about.

“There’s no living, there’s just surviving right now,” Soucy said.

That could be the mantra for millions of Floridians. Florida metro areas suffered some of the nation’s largest declines in income in 2009, the U.S. Bureau of Economic Analysis said Monday.

Personal income in the Miami metropolitan statistical area, which includes Palm Beach County, fell to $229.4 billion in 2009 from $234.8 billion in 2008. The 3.1 percent decline ranked 332nd of 366 metro areas.

Per capita personal income in Palm Beach, Broward and Miami-Dade counties fell to $41,352 in 2009, down from $43,013 in 2008 and $42,967 in 2007.

Treasure Coast personal income fell from $16.1 billion in 2008 to $15.5 billion last year, a 3.6 percent dive that ranked 346th nationally. Per capita income in the Treasure Coast fell to $38,216 in 2009, down from $39,777 in 2008 and $40,389 in 2007.

Naples had the nation’s largest decline in personal income, at 7.1 percent.

Strangely, official estimates of income in the region held steady from 2007 to 2008, even as the housing market tanked and jobless rates soared. The state’s weak economy finally took a bite out of Floridians’ incomes in 2009.

Because of Florida’s subpar job market, pay cuts here outpaced those elsewhere. Nationally, the average decline in income was 1.8 percent, but many Florida metro areas had bigger drops, including Orlando’s 2.9 percent, Sarasota’s 4.3 percent and Fort Myers’ 4.5 percent.

“It’s another sign that the momentum of the recovery has declined significantly,” said Sean Snaith, an economist at the University of Central Florida.

This strategy is doomed from the starting block. Building more homes in resort areas will suck up demand from existing homes, no matter how cleverly devised the marketing strategy. More downward pressure on prices will result.

* HOMES
* AUGUST 11, 2010

The Shrinking Second Home
Real-Estate Resorts Pitch Cabins, Cottages as ‘Affordable Housing for the Affluent’

By JULIET CHUNG

Even in the up-and-down world of real estate, this pitch may sound a little funny: “Affordable housing for the affluent.”

Same Island, Less Money

It’s the strategy developers of high-end vacation homes are devising as home sales slump in major markets across the country and inventories of unsold homes rise. They are building smaller, less expensive houses in resort communities. As a result, from Turks and Caicos in the West Indies to the Colorado Rockies, some vacation communities are getting just a bit less exclusive.

The goal is to avoid lowering the sales prices on existing homes and upsetting homeowners who paid more for their homes. The communities typically cater to people seeking a second, or third, or even fourth home as well as amenities like a clubhouse, beach access, or golf courses.

“We’re trying to get the point across that you can have a great place in a wonderful island for, quite frankly, a reasonable price,” says Steve Schram, who is developing a Turks and Caicos resort community which has a new push labeled “affordable housing for the affluent.”
…

Jamaica sounds like such a lovely place to retire!

* The Wall Street Journal
* AMERICAS BUSINESS NEWS
* AUGUST 11, 2010

Jamaica’s Growing Violence Threatens Retiree Economy
By JOEL MILLMAN

COMFORT CASTLE, Jamaica—Two elderly pensioners in this mountaintop village joined hundreds of Jamaicans with a grisly fate: expatriates who spent their working lives abroad, then moved home only to be killed.

Jamaica has the highest homicide rate in the hemisphere, and retired returnees from all over the globe are feeling targeted. WSJ’s Joel Millman reports.

Neighbors say they heard 84-year-old George Passley, a retired bus conductor from the U.K., screaming last November as his home burned but couldn’t rescue him. Eight days later, Mavis White, an 80-year-old widow who also returned from Britain, died in a house fire a mile from Mr. Passley’s. Authorities are investigating both cases as arson.

“Returned Residents” like Mr. Passley and Ms. White dreamed of retiring in their homeland, only to discover it wasn’t the Jamaica of their youth. The country they left behind was poor, but relatively safe. It is still poor, but shockingly violent.

This verdant island has one of the higher homicide rates in the world with 62 murders per 100,000 residents in 2009. Rising violence is an issue throughout the Caribbean, largely fueled by narcotics trafficking, according to a 2007 joint report by the United Nations and the World Bank.

The number of returning retirees—1,170 last year—has dropped in half since the 1990s. That’s a big deal in Jamaica, which counts on retirees and their money to help pump up its troubled economy.

Some 2 million Jamaicans live abroad, nearly as many as the 2.7 million who live on the island. Their exodus began in 1946 and continues today.

The Jamaican diaspora stretches from North American cities such as Miami, New York and Toronto to big British cities like London, Manchester and Birmingham. Many of the hundreds of thousands of Jamaicans living abroad long planned to stretch their modest pensions by moving back to their much cheaper native country.
…

At least the MSM recognizes the Indian bubble — the first step towards popping it!

* REAL ESTATE
* AUGUST 10, 2010, 2:03 P.M. ET

Indian Home Buyers Struggle with Bubble

By SHEFALI ANAND

India’s real-estate market has bounced back with a vengeance over the last year, and now experts worry that a price bubble could be forming in certain pockets of the country.

“I’m concerned about Delhi and Mumbai,” says Sanjay Dutt, chief executive officer for business at real-estate services firm Jones Lang LaSalle.

Prices for some large apartments under construction in central Mumbai already exceed the highs hit at the peak of the property market in 2007, he says.

In contrast, home prices in other Indian cities have risen only modestly, better reflecting the improvement in the economy. In some cities like Hyderabad, home prices have been depressed because of political unrest.

Historically, Mumbai and the National Capital Region, which includes New Delhi and neighboring cities like Gurgaon and Noida, have commanded the highest residential property prices in India. However, during the economic downturn of late 2008 and early 2009, home prices in these cities fell 25% or more.

That trend quickly reversed when the economy started gaining momentum again late last year.

Home buyers were attracted by the lower prices, while investors saw an opportunity to use their cash. Many developers then took advantage of the improved sentiment by launching new apartment projects. Some developers who previously built office space and malls as well as homes now are focusing more on residential property because there isn’t as much demand for commercial space.

All of this has led to a sharp increase in property prices, to what some experts call unaffordable levels, and an explosion of new planned buildings.

Some market observers are concerned about the large supply of apartments expected over the next three to five years. The glut, as well as inadequate infrastructure could depress prices over the next few years.
…