The Housing Bubble

Wall Street made a rise on general buying yesterday. It was up 1.37% on no economic news at all.

Hmm.

Roidy

Another Hearst “Castle” is going on the block. Such a deal - marked down from $165 million to “only” $95 million. This may be an HBB record for markdowns in wishing price.

In a sign of the times, the onetime Beverly Hills home of publishing magnate William Randolph Hearst and actress Marion Davies, which was listed for sale briefly three years ago at $165 million, is back on the market at the 2010 price of $95 million. Its owner, attorney-investor Leonard M. Ross, filed for bankruptcy protection last week.

Called Beverly House, the 1920s mansion has had fairy tale moments. John and Jacqueline Kennedy honeymooned there. But it was also used to film scenes from the movie “The Godfather,” including the one in which a horse’s head was found in a bed.

Here’s a new twist on house scavenging, and it’s even worse than stripping out appliances and copper pipe.

Burning down houses so you can return to collect the bricks. I am not making this up.

But the blaze, one of 391 fires at vacant buildings in the city over the past two years, may have had a more sinister cause. Law enforcement officials, politicians and historic preservationists here have concluded that brick thieves are often to blame, deliberately torching buildings to quicken their harvest of St. Louis brick, prized by developers throughout the South for its distinctive character.

“The firemen come and hose them down and shoot all that mortar off with the high-pressure hose,” ….. When a thief goes to pick up the bricks after a fire, “They’re just laying there nice and clean.”

Debate renews: Dream or nightmare of home ownership?

“To own or not to own” is once again a raging debate in the media. And it’s top of mind among renters wary of getting stuck in a home with declining value, and among existing homeowners trying to sell into a market of skeptical bargain hunters.

http://www.tampabay.com/news/business/realestate/article1122871.ece

The recession is over, except…

* OPINION
* SEPTEMBER 21, 2010

The Recession and the Housing Drag

The more the government tries to prevent prices from finding an equilibrium, the longer it will take for the economy to begin growing again.

By MORTIMER ZUCKERMAN

A decent house has long been a symbol of middle-class American family life. Practically, it has been a secure shelter for the children and provided access to a good public education. And financially, it has been regarded as a safe store of value, a shield against the vagaries of the economy and a long-term retirement asset.

All that seems a distant memory for the millions of American families who must confront the decline in the value of their homes. The pressure to meet mortgage payments on properties that have lost value has been especially shocking for those who have lost their jobs in the Great Recession. Their houses have become a ball and chain, restricting their ability to seek employment elsewhere. They cannot afford to abandon the remaining equity they have in their houses—and they can’t sell in this miserable market.

New home sales, pending home sales, and mortgage applications are down to a 13-year low, despite long-term mortgage rates that plummeted recently to an average 4.3% before rising slightly. New home prices have fallen by an average of 30%. According to David Rosenberg, chief economist at Gluskin Sheff, this has reduced home occupancy cost to 15% of family incomes, down from the conventional 25%.

The fall in house prices has eaten away at the equity Americans have in their homes. About 11 million residential properties have mortgage balances that exceed the home’s value, notes Mr. Rosenberg. And given the total inventory of homes and the shadow inventory of 3.7 million empty (foreclosed) homes, he notes that prices might fall another 5% to 10%. That would leave an estimated 40% of American homeowners with mortgages in excess of the value of their homes.

Disappearing equity invites strategic defaults. Homeowners with negative equity are tempted simply to mail in their keys to their friendly lender even if they can afford the mortgage payment. Yet banks don’t want to take the deflated properties onto their books because they will then have to declare a financial loss and still have to worry about maintaining the properties. Little wonder, according to Mr. Rosenberg, that foreclosure has not been enforced on a quarter of the people who haven’t made a single mortgage payment in the last two years.

A staggering eight million home loans are in some state of delinquency, default or foreclosure, Alan Abelson reported in Barron’s in July. He noted that another eight million homeowners are estimated to have mortgages representing 95% or more of the value of their homes, leaving them with 5% or less equity in their homes and thus vulnerable to further price declines.
…

Given that new home sales have dried up to a paltry trickle, I am puzzled by what is driving up home-builder earnings these days?

* LARGE STOCK FOCUS
* SEPTEMBER 21, 2010

Financials, Home Builders Lead Stocks Higher
By KRISTINA PETERSON

Stocks rallied to their highest level in more than four months as encouraging financial and home-builder earnings boosted confidence in the economic recovery.

The Dow Jones Industrial Average surged 145.77 points, or 1.4%, to 10753.62, its highest close since May 13 and its biggest point and percentage gain since Sept. 1. The measure has climbed 7.4% this month, its best September performance to date since 1939.
…

WSJ Blogs
MarketBeat
WSJ.com’s inside look at the markets

* Bond Buyers Beware!
* U.S. Stocks Look Peachy Keen, But Euro Spreads Don’t
* September 20, 2010, 9:40 AM ET

Theme of the Week: A Housing Data Hoedown
By Matt Phillips

Besides the Fed rate decision Tuesday, a deluge of housing data hits the market this week. In their always-helpful morning trading note, Credit Suisse market wonks lay out the week’s game plan:

The focus this week is clearly on housing, starting with the NAHB Housing Market Index at 10 a.m., which might set the tone for the subsequent reports. The consensus is looking for a 14 reading, after a 13 in August that was the lowest since March 2009. Tomorrow, aside from the one-day Fed meeting, we also get Housing Starts and Building Permits. No one is expecting any dramatic improvement in the housing data, nor is anyone expecting any further quantitative easing from the Fed (given recent glimmers of hope seen in the figures such as ISM). Wednesday delivers MBA Mortgage Apps and the FHFA House Price Index, not to mention the DOE Oil/Gas inventory results. Thursday brings Jobless Claims, Existing Home Sales, Leading Economic Indicators and RPX Housing Price data. Friday finishes up with more housing info in the form of New Home Sales, as well as Durable Goods numbers.

Homebuilder Confidence in U.S. Held in September at Lowest Level in a Year
By Courtney Schlisserman - Sep 20, 2010 8:48 AM PT

Confidence among U.S. homebuilders in September unexpectedly held at the lowest level in more than a year, showing the housing market remains depressed following the expiration of a government tax credit.

The National Association of Home Builders/Wells Fargo confidence index was unchanged at 13, matching the August reading as the lowest since March 2009, data from the Washington-based group showed today. The gauge was projected to rise to 14, according to the median forecast of 50 economists surveyed by Bloomberg News.

Home sales will be slow to improve as unemployment hovers near 10 percent and foreclosures mount, preventing builders including Hovnanian Enterprises Inc. from taking advantage of record-low mortgage rates. A tax incentive of as much as $8,000 provided only temporary relief for housing, the industry that precipitated the worst recession since the 1930s.

“It’s hard to see where the impetus for growth for housing is going to come from,” said David Semmens, an economist at Standard Chartered Bank in New York who forecast the index would be unchanged. “The employment situation keeps people very much on the back foot and remaining in their existing homes.”
…

Official end of recession doesn’t spell relief
Carolyn Said, Chronicle Staff Writer

Tuesday, September 21, 2010
…
On Monday, an authoritative assembly of economists said the recession that started in December 2007 has been over since June 2009.

That declaration is likely to be cold comfort for Americans seeking jobs, watching savings evaporate and struggling to stave off foreclosure.
…
Saying the recession has ended “has as much to do with good economics as saccharin does with French cooking,” said Peter Morici, an economics professor at the University of Maryland, who charged that the committee was dominated by Democrats trying to give their party an election-year boost.
…

Long-term increase in US unemployment ‘possible’, warns OECD

Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development (OECD) has warned, as it cautioned a full recovery from recession will take years.

By Richard Blackden, US Business Editor
Published: 5:43PM BST 20 Sep 2010
…

Just a passing thought…

You might be following the news that things are a bit heated between Japan and China. Also you might have seen the recent surge in the Japanese yen that is ringing alarm bells in Tokyo.

Now do you consider it plausible that the yen is being manipulated by China to stir the pot? I don’t have the sequence or causality worked out but the correlation is striking.

I have always been amazed at the moron shopping masses that will line up or camp out for a piece of plastic crap. They are well trained, so what will be the “must” have throw away toy for the little chidrens this year.

Cuteness likely to rule the holiday toy roost
As holidays near, cute and collectible reign among toys; can they duplicate Zhu Zhu success?

NEW YORK — It’s getting crowded in the race to succeed Zhu Zhu Pets as the next hot holiday toy.

From plush dolls that harmonize to tiny people and animals stored in bubbles in toy vending machines, collectibility and cuteness are off the charts for this year’s toys.

But with so many toys vying to win “Most Adorable,” it remains to be seen if any will duplicate the runaway success of the Zhu Zhu Pets, toy hamsters that squeak, zoom around on wheels and sell for just $10.

For toy sellers, making the right picks early is crucial so they have the right mixture of toys at the right prices to lure gift givers to buy. The right bet can mean the difference between being in stock or out of the year’s must-have playthings in a season that can account for the bulk of a toy retailer’s annual profit.

Toys R Us, which came out with its “hot toy” list on Tuesday, is betting on a few contenders for the cute crown. Those include Blip Toys’ Squinkies, tiny figures that fit inside a toy dispensing machines and come in 16 packs for $10; Mattel Inc.’s $12.99 Sing-a-ma-jigs, colorful plush dolls that harmonize; and $19.99 Pillow Pets, stuffed animals that convert into pillows.

Sept. 21, 2010, 12:01 a.m. EDT

Believe it or not
Commentary: If this is a recovery, what will the next recession be like?
By Irwin Kellner, MarketWatch

PORT WASHINGTON, N.Y. (MarketWatch) — The umpire of the business cycle has called the recession over but the players want to review the tape.

According to the National Bureau of Economic Research, the U.S. economy stopped falling in June of 2009. This implies that business conditions bottomed out some 15 months ago and have been improving ever since. See full story on NBER.

Hello? The real world would beg to differ with this call. If what we have experienced since June 2009 is a recovery, many would shudder to think what the next recession will be like.

The man or woman on the street views the economy through the prism of jobs. What they see depresses them.
…

The Entitlement Bubble: The Bust Is Going to Be a Nightmare (Worse than the Housing Bubble?)
National Review | 09/17/2010 | Kevin Williamson

The first and most obvious thing is that in much of the real world, liabilities of that type are defined as debt, as your favorite corporate accountant will tell you. One of the reasons that American companies started filing all those unhappy financial restatements after the passage of Obamacare was that they had a whole lot of new, measurable, real-world financial liabilities, and they are obliged to include those in their disclosures. As one of our commentators answered the above criticism:

Many promises to pay are categorized as debt according to GAAP and accounting body authorities. If government were required to report like public companies a lot of the promises would show as debt. So if you don’t believe that GAAP correctly classifies debt and that the thousands of SEC filings are wrong it’s your prerogative, but you’d better keep your day job and not become a CPA or one responsible to produce SEC financials.

Maybe you object to the word “debt,” but it’s still $100 trillion or so on the wrong side of the balance sheet.

…

Here’s the problem: Those “paper losses” were preceded by “paper profits,” meaning people thought that they had an extra $100,000 in assets, and they made consumption, borrowing, investment, saving, and working decisions accordingly. The simplest illustration: Your $100,000 house, which is paid for, has gone up to $200,000 on the market at the top of the bubble. If you took out a $50,000 home-equity loan against 100 percent equity in your (at the time) $200,000 house, you still had $150,000 of equity, no mortgage, $50,000 in cash, and a $50,000 equity loan to pay off. If the market value of your house crashes back to $100,000, you still have no mortgage, $50,000 in cash, and a $50,000 loan to pay off, and the same house; you haven’t really lost anything (other than opportunity cost), since the house is still worth what you paid for it; and you only make your paper losses real if you sell the house while the market is down.

But anybody who thinks your financial situation hasn’t changed is nuts. Your equity debt has gone from 25 percent of the value of your house to 50 percent. Your credit profile has changed. Any other debts have just become significantly larger relative to the value of your biggest asset. (And your other assets, like your 401(k), probably are not in great shape, either.)

Whatever you’d planned to do with that $50,000, you probably are going to think twice about doing. If it was straight-up consumption, you’ll probably forgo the bass boat and pay back your loan. If it was for home improvements, why sink another $50,000 into a house that’s worth half of what it was, making a $150,000 investment in a $100,000 house? Your economic decisions will change.

…

Which brings us back to the entitlements. It’s easy to say: Well, we’ll just raise the retirement age, or cut benefits, or means-test them, or raise taxes on the wealthy who receive them (which amounts to means-testing, but Democrats like that version better). And, yes, that probably is what we will do, eventually. But that does not get us out of the economic pickle: People have been making decisions for years and years — decisions about saving, investing, consuming, working, and retiring — based at least in some part on what are almost certainly faulty assumptions about what sort of Social Security, Medicare, and other benefits they will receive when they retire. When those disappear, a lot of consumption is going to have to be forgone — and a lot of capital dedicated to producing those goods and services for consumption will be massively devalued. Businesses will have to retrench, probably in a way that is more disruptive and more expensive than the housing-bubble recession necessitated.

Time Magazine Cover Story Says You Should Never Buy A House Again

Business Insider | 09/13/2010 | Jeff Matthews

The stock market may be dragging, but home prices are soaring, fueling a national obsession with real estate. Your house is now your piggy bank.

—“Home Sweet Home,” Time Magazine, June 2005

Buying a house is supposed to make us better citizens, better investors and better off. But that American Dream may well be a fantasy.

—“The Case Against Homeownership,” Time Magazine, September 2010

..

The Cover Story of all Cover Stories, as any investor with grey hair will tell you, is the fabled “Death of Equities” BusinessWeek cover story from August 13, 1979 (“How inflation is destroying the stock market”),

Fed to ponder whether bolder action needed
Fed wrestles with whether bolder action is needed to strengthen economy.

WASHINGTON (AP) — Federal Reserve policymakers are wrestling with what additional steps — if any — should be taken to strengthen the plodding economy and drive down near double-digit unemployment.

Lots of lively debate is expected at Tuesday’s meeting. But few expect any major programs to be unveiled. Instead, many will be looking to see if the Fed offers new clues about the timing of any new aid and what changes in the economy would trigger such a move. To give the Fed extra time for discussions, Tuesday’s meeting is scheduled to start around 8 a.m. — earlier than when it has two-day sessions.

There are differing views on the Fed’s main policymaking group — the Federal Open Markets Committee — about what should be done. And some pressure is off after a few mildly positive economic reports showed the pace of layoffs has slowed, shoppers’ appetites to spend has picked up and factory production is growing.

The reports have helped to ease concerns about the economy slipping back into a new recession, giving the Fed Chairman Ben Bernanke and his colleagues a little breathing room.

Bank of America Said to Fire as Many as 400 Employees

Bank of America Corp. , the largest U.S. bank by assets, is firing as many as 400 employees in its global banking and markets division after a management review, according to a person briefed on the matter.

Bank of America Corp., the largest U.S. lender by assets, is firing as many as 400 employees in its global banking and markets division as revenue from trading and advising clients declines, a person briefed on the matter said.

The moves follow a review led by Thomas Montag, the former Goldman Sachs Group Inc. partner who joined the Charlotte, North Carolina-based bank through the purchase of Merrill Lynch & Co. in 2009. Employees ranging in seniority from managing directors to junior analysts will be affected by immediate dismissals, the person said, speaking on the condition of anonymity because the decision hasn’t been publicly announced.

“Quite frankly, I’m exhausted. I’m exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are right now. I have been told that I voted for a man who said he was going to change things in a meaningful way for the middle class. I’m one of those people. And I’m waiting, sir. I’m waiting. I — I don’t feel it yet … Is this my new reality?”

http://www.youtube.com/watch?v=FYQ8sxTsllk

Ron Paul

This past week the administration announced its choice for the first credit czar at the new Consumer Financial Protection Bureau. This bureau was created as part of the supposed Wall Street reform bill recently passed by Congress. This new bureau, which represents nothing more than another layer of useless Washington bureaucracy, will be housed within the Federal Reserve– one of the most anti-consumer institutions in Washington.

The truth is that this new bureau is just more of the same ineffective and damaging regulation we typically get from a crisis. Just as the FDA serves big pharmaceutical companies, not patients, and just as the SEC serves Wall Street, not investors, this agency will end up serving the banks. All regulatory agencies eventually become co-opted by the industries they regulate, and they become chiefly concerned with restricting the entry of new competitors and protecting market share for the big players. This new bureau is not likely to straighten out Wall Street, so much as it will instill a false sense of security in the public about banking and investing again.

Late last night:

Comment by tj
2010-09-20 21:12:10

I’m still looking for the buying power of the dollar to INCREASE as the amount of dollars continue to disappear into Puffville

nothing reduces the amount of dollars already in existence. the amount of dollars in existence has been steadily climbing since dollar were created.

if i’m wrong you should be able to show me some kind of proof, like a valid authentic graph that shows a decline in the number of dollars. i say that there has never been a reduction of dollars in existence in all of history. not even the great depression.

Here you go, tj. Note the M3 YoY reduction for about the past year (YoY less than 0).

There is no official publication of M3 - the SGS site is about the closest thing, as far as I know. There used to be an official M3 published by the Fed, but they stopped publishing it years ago, and SGS picked up with what was supposed to be the same methodology.

So yes - something can reduce the number of dollars in existence - that being loan paybacks, which are the opposite of money creation in a fractional reserve lending system. Loan loss writeoffs also reduce the amount of money in existence.

UK Proposes All Paychecks Go to the State First

The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty’s Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

http://www.cnbc.com/id/39265847

Big development near me - One Loudoun facing foreclosure.

There has been tons of road work done already relating to this project, including a very expensive interchange that’s just now being completed. The development was required to put up most of this money up front; it appears what happened is they just didn’t get enough commercial/retail contracts to make up the debt on the back end.

This doesn’t bode well for the automakers, or for houses built in outer suburbs.

Generation Y Giving Cars a Pass
The generation gap is a growing, long-term headache for automakers.

By Jim Ostroff

Motorists aged 21 to 30 now account for 14% of miles driven, down from 21% in 1995.

They’re more apt to ride mass transit to work and use car sharing services — pioneered by Zipcar — for longer trips. And car sharing choices are expanding, with car rental firms moving into the market, making it convenient for young folks to rent with hourly rates and easy insurance. Connect by Hertz, for example, is rolling out its car sharing services in the New York metropolitan area, with plans to eventually expand them to around 40 college campuses nationwide.

“It’s a matter of mind-set far more than affordability,” says William Draves, president of Learning Resources Network, an association that studies consumer trends and provides education and training services.

“This generation focuses its buying on computers, BlackBerrys, music and software and views commuting a few hours by car a huge productivity waste when they can work using PDAs while taking the bus and train,” says Draves.

Moreover, in survey after survey, Gen Yers say that they believe cars are damaging to the environment. Even hybrid electric vehicles don’t seem to be changing young consumers’ attitudes much.

Re: the “end of the recession”: I present quite possibly one of the funniest pics of 2010.

(not my work)

I read, The End of the World As We Know It? I Doubt It, by Prof. Dom Armentano

In it he says, “In this recession, massive price declines and foreclosures in real estate, both residential and commercial, have done the job that they were intended to do: they have brought actual “supply” more closely into coordination with real “demand. Entrepreneurial opportunities now abound and the improvement in personal and commercial balance sheets and the increase in real savings set the stage for some economic improvement. ”

I doubt the doubter.

My fix:

Increase taxes on all government jobs to 50% of gross income.

Cuts for private sector jobs.

Incentive would be not to work for the government.

Lower mortgage rates. Headed for 2.5 %?

As to options for juicing up economic growth, Bernanke indicated a preference to launch a new program to buy large amounts of government debt. Such a move would be designed to lower already low rates on mortgages, corporate loans and other debt. The idea behind that is to entice people and businesses to spend more, which would strengthen the economy and lower unemployment.

From Yahoo Financial News

Housing Starts Unexpectedly Rise 10.5%- AP

Home construction increased last month and applications for building permits also grew. But the gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.

I was expecting someone to post this.

Home buyers can once again purchase a home using FHA financing with a zero down payment.

Previous zero down payment FHA loan programs were funded by seller contributions funneled through a nonprofit group which then donated the down payment to the purchaser. These seller-financed down payment programs were terminated in 2008 after the FHA experienced default rates three times higher than when buyers made a cash down payment.

The innovative zero down payment FHA home purchase program was recently introduced by The Lending Company of Phoenix, Arizona. In order to meet the FHA required 3.5% down payment, the borrower receives a 2.5% gift from a non-profit organization and the remaining 1% can be gifted from a family member.

The Lending Company notes that the program is not a seller-paid down-payment assistance program. To further reduce the amount of cash required by the purchaser, the seller is encouraged to provide seller concessions to cover closing costs. A borrower receiving both gift funds and seller concessions can potentially purchase a home without putting any cash into the transaction.

I didn’t realize that the sinkhole problem was so pervasive.
(could swallow insurerers)
http://online.wsj.com/article/SB10001424052748703305004575504143442161532.html

The recession may be over, but the depression is just getting started. Note the 2-year change in median family income:

“But Georgia’s whopping 13.1% loss of $6,710 to $44,696, made it the biggest loser.”

SOURCE: http://money.cnn.com/2010/09/16/news/economy/Americas_wealthiest_states/index.htm?section=money_latest

A trend in motion…

ROME (AFP) – Italian prosecutors launched an investigation into the Vatican bank’s top executives on Tuesday for allegedly violating anti money laundering legislation, triggering a quick rebuttal by the Vatican.

Prosecutors ordered the seizure of 23 million euros (30 million dollars) belonging to the the Istituto per le Opere di Religione (IOR) and opened an inquiry against chairman Ettore Gotti Tedeschi and another top executive.

I guess Blankfein the CEO of GS was right when he said he was doing God’s work?

Whay does the vatican have a bank?

Ah religion

There’s this cool site with a bunch of Tea Party slogans. Some are really quite good and meaningful. Some need a little editing:

We’re mad as hell and we’re not gonna take it anymore!!! we don’t know why…

I want my country back quacked!

We Are Not Tolerant of Treason!

Stop the Voter Frauds Broads!

If We Compromise Our Principles, There’s Nothing Worth Fighting For Big Money Involved

If You Don’t Understand This Protest, You Must Have Attended Government Grad Schools.

When You Stand for Nothing,You’ll Fall for Anything Freedomworks

Take Care of Our Seniors - They Made Our Country Great Broke

Americans Are Compassionate - We Can Take Care of Our Own Locally Kind

Socialist Corporatist Utopia: the Elite Party While the Slaves Work

Liberalism Masterbation is a Mental Disorder

GOP Leaders, You We Are the Problem! We Don’t Want Moderates.

Let It Not Be Said That We Did Nothing!

The Nazis Were Socialists Misunderstood

Oh, How I Miss You, President Reagan! Joseph McCarthy

Congress: If Your Health Plan Is So Great, Why Exempt Yourselves? Can’t We Have It?

CO2 Is Not a Pollutant! (it’s a puppy)

I’m a Conservative, Law-Abiding American and Obama calls me an Extremist! my Wife Says I’m Boring.

Sometimes You Need a Carter Before Prophylactic Or You Get a Reagan

Save the Dollar Too big to Fail.

First, We Protest…(Then we go to Applebees)

They’re Making Us Pay for Our Own Destruction Healthcare!

1. Nibblin on free-rent sponge cake
Watchin the banks fake
Their books when the defaults
Rise with the price of oil
Strummin my six-string
On my leased porch swing
Smell those tempers they’re beginnin’ to boil
Wastin’ away again in deadabeataville
Searching for my lost sense of fair play
Some people claim that there’s a banker to blame
But I know it’s nobody’s fault
I don’t know the treason
Why did I pay here all season
Nothin to show but McMansaboo
It’s a real beauty
A mexican cutie
How it got here I haven’t a clue
Wastin’ away again in deadabeataville
Searching for my lost sense of fair play
Some people claim that there’s a banker to blame
Now I think
Hell, it could be my fault…

apologies to jimmy buffett

http://latimesblogs.latimes.com/lanow/2010/09/bell-officials-arrested-as-prosecutors-are-set-to-file-criminal-charges.html

Breaking News: Eight officials in Bell, California, have been arrested in connection with their huge municipal salaries.

I call on all my HBB brethren & sisteren to rally around these embattled, devoted municipal officials, who were merely compensating themselves according to their arduous civic duties of this near-bankrupt crap-hole of a town. And following the example of the raptor capitalists on Wall Street, who are rewarded with obscene bonuses from taxpayer dollars rather than being subjected to perp walks.

House prices are stupid.

Exactly what did the Fed’l Reserve Open Market Committee say today?

“The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.” 9.21.10

< Translation: We’re prepared to create billions more dollars out of thin air to get the economy going again. We want more inflation than we have now. It is our mandate, dating back to 1913, to keep the economy on an expansionary course - - no matter what it takes.

Cessna cuts 700 more jobs
Wichita Business Journal

Textron Inc., the parent-company of Cessna Aircraft Co. announced Tuesday it would be laying off workers at the Wichita-based aircraft maker.

Textron plans to cut 700 jobs at Cessna.

The move comes after the company secured a seven-year work contract with the International Association of Machinists and Aerospace Workers this past weekend.

Abbott Labs to Cut 3,000 Jobs in Integration of Solvay Unit

Abbott Laboratories said it would cut 3% of its work force in one of the largest layoff announcements in its history, as it tries to wring savings from its recent acquisition of Solvay’s pharmaceutical unit.

The Abbott Park, Ill., maker of drugs and medical products had avoided the large-scale cost-cutting measures taken in recent years by rival drug companies that have faced more severe patent expirations and other pressures, though Abbott has made occasional small cutbacks. Abbott has seen revenue and profits grow steadily thanks to rising sales of the anti-inflammatory drug Humira and other products.

Investors seeing farmland as safer bet than stocks
Wary of fluctuations on Wall Street, more wealthy Americans, private funds and foreigners are putting money into parcels of cornfields, fruit orchards and other U.S. agricultural products.
Los Angeles Times

Reporting from Kern County, Calif. — As investors tire of Wall Street’s roller coaster, more of them are plowing their money into land farmland.

Few people understand this shift better than farm manager Carl Evers.

On a recent morning, Evers steered his pickup truck through a Central California almond grove, his drawling sales pitch at the ready. Evers is co-founder of Farmland Management Services, which runs about 30,000 acres of nut groves, fruit orchards and wine grape vines for a Boston investment firm. Sunburned and stocky, tugging down his wide-brimmed hat, he talked about how farmland and the food it produces is the safer bet these troubled days.

“You want to throw your money into something you can’t touch?” said Evers, 50. “Or do you want to put your money here, into soil and sun, into food that feeds people around the world?”

It’s the fourth time this year Evers has wandered through these trees and given his spiel to pension fund managers, hedge-fund operators and hungry investors on behalf of Hancock Agricultural Investment Group. He’s reeled it off many more times over the phone.

1. Do you think the economy will enter a double-dip recession?

Yes: 23%

No: 32%

I don’t care what economists say. The recession isn’t over: 45%

****************
Heh, heh, the media mouthpieces are losing control. The smoke and mirrors aren’t working anymore.

http://money.cnn.com/2010/09/20/news/economy/double_dip_economists_survey/index.htm

It gives me no pleasure to tout Brazil but I do it for comparison and contrast purposes. The America “free-market system” is shot yet the Tea-Party closes ranks to support Billionaire “job creators” (yea, job creators in China)

Brazil has serious trade protectionist policies, strong unions, strong job protection laws, 30 days vacation, attempted “universal” healthcare and a “Socialist” president with a 4th grade education. But they are growing fast and they have lifted 35 million souls out of poverty the past 8 years.

Brazil jobs squeeze could pressure wages higher

http://www.onepakistan.com/finance/news/world-business-news/8129-Brazil-jobs-squeeze-could-pressure-wages-higher.html

June Brazil’s unemployment fell to 7 percent, just over half that of from a recent 2004 high and among the lowest rates since the government began using its current methodology in 2002.That’s a stark contrast to countries such as the United States, with its 9.5 percent unemployment rate, aggravated by chronic long-term joblessness. Brazil’s economy created 1,655,116 new payroll jobs in the first seven months of 2010, according to official figures. The United States, with a population about 50 percent greater than Brazil’s, added just 654,000 jobs to non-farm payrolls over the same period.

Unlike still-gloomy labor markets in the United States and parts of Europe, workers looking for jobs in Brazil can find options just by walking down a street. (I know, there’s a joke there somewhere)

A new infrastructure report finds that 6 of the top 10 worst locally maintained roads are in California. San Jose leads the nation in percentages of crummy roads with 64% of its roads being crummy.

Percent of city streets and freeways in poor condition:
1. San Jose (64 percent)
2. Los Angeles (63 percent)
3. Honolulu (62 percent)
4. Concord (58 percent)
5. San Francisco-Oakland (58 percent)
6. New Orleans (55 percent)
7. New York (53 percent)
8. San Diego (50 percent)
9. Indio-Palm Springs (47 percent)
10. Baltimore (46 percent) </i.

Note that I consider #4 to be Concord CA, not Concord MA.

A watched pot never boils.

Sept. 22, 2010, 12:01 a.m. EDT
Housing isn’t close to stabilizing
Commentary: Shadow inventory paints a more dismal outlook
By Keith Jurow

BRIDGEPORT, Conn. (MarketWatch) — Much has been written about the so-called “shadow inventory” since the term was first coined a few years ago.

Some analysts and commentators have argued about whether it even exists. Let’s take an in-depth look at this shadow inventory and see whether it really is a threat to housing markets around the country.

Shadow inventory defined

Rather than joining the dispute about what the term actually means, I’ll simply define it in this way: The “Shadow Inventory” is comprised of all those distressed residential properties (other than MLS listings) which we know will almost certainly be coming onto the market in the not-too-distant future.
…

Try not to catch yerself a falling knife, in either the stock or housing markets.

Recession’s end is already priced into stock markets
By Adam Shell, USA TODAY

NEW YORK — Just because the Great Recession has been officially declared dead doesn’t guarantee that stock prices will shoot straight up in the months ahead.

Sure, it’s good news that the National Bureau of Economic Research said Monday that the recession that began in December 2007 officially ended in June 2009. But that doesn’t add up to an “all-clear signal” for investors, says John Stoltzfus, senior market strategist at Ticonderoga Securities.

The reason: The NBER’s declaration that the recession is over is a “lagging indicator.” In other words, it is old news to investors. Many Wall Street firms, as far back as the summer of 2009, were issuing reports saying the trough came in June 2009.
…

Top Economic Adviser Larry Summers Leaves Obama White House
Washington : VA : USA | Sep 21, 2010

What’s going on? Another one bites the dust on the Obama Economic team. Senior White House Economic Adviser Larry Summers returns to his job at Harvard at the end of the year. Could be a good thing.

New York Times reports:

“Lawrence H. Summers, who for nearly two years has been the architect of President Obama’s economic policies, is leaving the White House at the end of the year, the White House has announced.”

Romania needs to borrow $7.9 billion in 2011

The Associated Press
Posted: 6:47 a.m. Wednesday, Sept. 22, 2010

BUCHAREST, Romania — Romania needs to borrow almost euro6 billions ($7.9 billion) next year to cover its budget deficit and plans to sign a new deal with the International Monetary Fund in 2011 to shore up the ailing economy, the president said.

On Wednesday, authorities said some 5,000 people had gathered to protest in the capital of Bucharest against wage cuts and other austerity measures. They were demanding the government increases salaries to the 2009 level and stop layoffs of public workers.

Authorities slashed public sector wages and hiked sales tax to reduce the budget deficit, as the International Monetary Fund requested.

Romania needed euro20 billion (US$26 billion) in bailout loans from the IMF, the European Union and the World Bank in 2009. Part of the funds helped pay state wages and pensions last year, when the country’s economy shrank by 7.1 percent.

President Traian Basescu said the country still needed help with its finances.