The Housing Bubble

Good morning all… It’s another great day to be alive and a renter!!!
6 years ago toDay I sold my dream house in exchange for
freedom and travel…

Stat’s purchase 2/97 sold 9/04. … La jolla 3000 sft. Pool and views as far as the eye can see….

I want to thank Dio for the very interesting comments about MERS

Imagine if they tried to used a program like that for vehicle titles?

So it doesn`t matter that the mortgage has not been paid for 2 years?

GMAC troubles threaten to halt foreclosure sales

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:07 p.m. Friday, Sept. 24, 2010

The revelation this week that tens of thousands of Ally Financial Inc.’s GMAC foreclosures may have flawed court documents not only has implications for some of the nation’s largest mortgage companies, it could strangle the resales of bank-owned homes.

Attorneys are warning that title insurance companies may reject foreclosed properties for fear of future challenges to the procedures used in repossessing those homes.

Already, one Boca Raton real estate attorney said she has seen title insurance refused on a foreclosed property where the case was handled by one of Florida’s massive foreclosure law firms. The firm is one of four under investigation by the state attorney general for allegedly mishandling documents in a rush to move thousands of cases through the courts.

The reason for the title insurance denial: defects in the foreclosure.

“They may say it’s a technical defect, but it’s a very important technical defect,” said Chris Immel, a foreclosure defense attorney with Royal Palm Beach-based Ice Legal, who deposed Stephan in December 2009.

But Stephan isn’t the only “robo-signer” in the industry, Immel said.

In a May deposition conducted by Ice Legal of Chase employee Beth Ann Cottrell, she acknowledged signing thousands of foreclosure documents every month without knowing details of every case.

http://www.palmbeachpost.com/money/gmac-troubles-threaten-to-halt-foreclosure-sales-936241.html

Fla. home sales stable as prices drop

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:56 a.m. Thursday, Sept. 23, 2010

“The housing market is trying to recover on its own power without the home buyer tax credit,” said Lawrence Yun, chief economist for the National Association of Realtors. “Despite very attractive affordability conditions, a housing market recovery will likely be slow and gradual because of lingering economic uncertainty.”

Local Realtors say anecdotally that their September sales are on track to be some of the best all year, with a mix of buyers including those seeking second homes and first-time buyers who missed out on the tax credit but are still eager to buy.

http://www.palmbeachpost.com/money/real-estate/fla-home-sales-stable-as-prices-drop-933236.html - 81k

Cash for Clunkers Buyer’s Remorse:

http://hotair.com/archives/2010/09/07/cash-for-clunkers-buyers-remorse/

From Zero Hedge: “the government just seized three wholesale credit unions and has launched an “unusual plan” to manage $50 billion of troubled assets inherited from failed institutions. The unions taken into conservatorship include Members United Corporate Federal Credit Union in Warrenville, Ill., Southwest Corporate Federal Credit Union of Plano, Texas, and Constitution Corporate Federal Credit Union, Wallingford, Conn., which had a total of $19.67 billion in assets as of July.

As for the funding of the new bailout program: “To help fund the rescue, the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.” Once again, uncle Sam bails out those who have committed federal crime and sticks Joe Sixpack with the bill. How is it a crime? “Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets. But some institutions chased higher returns by loading up on securities backed by subprime mortgages or other risky loans. Their portfolios were decimated by the mortgage meltdown.”And here is the punchline: “Officials said the plan won’t cost taxpayers any money.” How can one not simply laugh at the continued lies and crimes that occur each and every day, and are perpetrated by every single person in charge of this collapsing country?”

http://www.bloomberg.com/news/2010-09-25/-black-swan-author-taleb-says-obama-s-stimulus-made-economic-crisis-worse.html

“Black Swan” author blasts Obama stimulus, says US needs to end tax breaks for mortgages.

This isn’t directly housing related, but I thouht it was pretty funny.

Weak Economy is Killing Off Office Romances

http jobs aol com/articles/2010/09/22/office-romances/?icid=main%7Chtmlws-main-n%7Cdl4%7Csec1_lnk1%7C173101

“In a time of massive uncertainty in the job market, there are many economic side effects. But one surprising product of a slimming job market has been the steep decline of office romances. But unlike the most likely of reasons - stress levels of workers - it’s actually because of an increase in legal complaints from third parties.

“It that seems a bit opportunistic to you, then you’d be right. It’s a tricky game of “let me get you fired before I get laid off” using whatever means are necessary. With a growth of nearly 23% in 2008, these types of complaints are starting to become more and more commonplace in the office.”

Eddie yesterday wrote:

Comment by Eddie
2010-09-24 14:28:46
Don’t look now sports fans, but Dow is within spitting distance of 11K.
12K by EOY. Still time to make some money. Or you can keep the money in a 0.0015% savings account if you prefer.

Even if you are right in your forecast, a ~10% gain by EOY is not sufficient return to justify taking the inherent risks that I currently perceive in the market.

Forest Gump went to public school, and his mother had to “persuade” the principal to get him in.

Despite criticism, a voucher program grows - and brings long-sought relief to parents

By Cara Fitzpatrick Palm Beach Post Staff Writer
Posted: 11:11 p.m. Friday, Sept. 24, 2010

Kasan Holme struggled to pay attention in fourth grade last year, getting in trouble so often that his teacher exiled him to the back of the room.

He languished there for months, far from the other students. He began begging his mother to let him leave school.

This year, the Wellington 10-year-old goes to a private school that promises help for his learning disability. He’s one of a growing number of special-needs children in Florida whose parents use tax money to subsidize their private education.

Can we expect the Wall Street Journal writers to soon do an expose on the Plunge Protection Team (another “group that doesn’t exist”) along the lines of this article?

* U.S. NEWS
* SEPTEMBER 24, 2010

On the Secret Committee to Save the Euro, a Dangerous Divide
By MARCUS WALKER, CHARLES FORELLE and BRIAN BLACKSTONE

BRUSSELS—Two months after Lehman Brothers collapsed in the fall of 2008, a small group of European leaders set up a secret task force—one so secret that they dubbed it “the group that doesn’t exist.”

Its mission: Devise a plan to head off a default by a country in the 16-nation euro zone.

When Greece ran into trouble a year later, the conclave, whose existence has never before been reported, had yet to agree on a strategy. In a prelude to a cantankerous public debate that would later delay Europe’s response to the euro-zone debt crisis until the eleventh hour, the task force struggled to surmount broad disagreement over whether and how the euro zone should rescue one of its own. It never found the answer.

A Wall Street Journal investigation, based on dozens of interviews with officials from around the EU, reveals that the divisions that bedeviled the task force pushed the currency union perilously close to collapse. In early May, just hours before Germany and France broke their stalemate and agreed to endorse a trillion-dollar fund to rescue troubled euro-zone members, French Finance Minister Christine Lagarde told her delegation the euro zone was on the verge of breaking apart, according to people familiar with the matter.
…

* INVESTING
* SEPTEMBER 25, 2010

Credit Unions Bailed Out
U.S. Backs $30 Billion in Bonds to Stabilize Key Institutions; Subprime Legacy

By MARK MAREMONT And VICTORIA MCGRANE

Two years after the peak of the financial crisis, the federal government swooped in to stabilize a crucial part of the credit-union sector battered by losses on subprime mortgages.

Regulators announced Friday a rescue and revamping of the nation’s wholesale credit union system, underpinned by a federal guarantee valued at $30 billion or more. Wholesale credit unions don’t deal with the general public but provide essential back-office services to thousands of other credit unions across the U.S. The majority of retail credit unions are sound, but they will have to shoulder the losses through special assessments over the next decade.

Friday’s moves include the seizure of three wholesale credit unions, plus an unusual plan by government officials to manage $50 billion of troubled assets inherited from failed institutions. To help fund the rescue, the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.

Officials said the plan won’t cost taxpayers any money. Still, it marks the latest intervention by the U.S. government into a financial system weakened by the real-estate bust. Bad bets on mortgage-backed securities have now killed five of the nation’s 27 wholesale credit unions since March 2009. The federal government, which now controls about 70% of the total assets at such credit unions, said the surviving institutions will be reined in so that they take fewer risks with their investments.

“Previously, we stabilized the system, and now we’re resolving the problem and reforming the system,” said Debbie Matz, chairman of the National Credit Union Administration, the U.S. agency overseeing credit unions.
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Hurdles Remain for Housing
9/24/2010 3:27:57 PM

New-homes sales data show the housing market is still hurting. Kelsey Hubbard talks with Jerry Howard, CEO of the National Association of Home Builders, and WSJ/Dow Jones Newswires Reporter Dawn Wotapka about the sluggish pace of the housing recovery and whether or not more government assistance is needed.

The Fed is all-in with respect to reflation efforts. Place your bets accordingly.

Nick Godt’s Market Medics

Sept. 25, 2010, 12:07 p.m. EDT
Stocks riding on a flood of liquidity: Risk is back on
Commentary: With no recovery, global central banks jump to the rescue

By Nick Godt, MarketWatch

NEW YORK (MarketWatch) — It might sound counterintuitive after the rally in stocks so far in September, not to mention in complete contradiction of the prediction of many Wall Street analysts, but the market is not betting on a U.S.or even a global recovery, for that matter.

That might sound hard to believe given that the Dow Jones Industrial Average (DJIA 10,860, +197.84, +1.86%) is up 8.4% so far this month, the tech-heavy Nasdaq Composite (COMP 2,381, +54.14, +2.33%) is up 12.6%, and the S&P 500 index (SPX 1,149, +23.84, +2.12%) , the broad gauge of the market most used by investment professionals, is up 9.5%.

In normal circumstances, this would be the type of rally that signals investors are betting the “all clear” on stocks, given a bright outlook for economic growth and profits.

But with retail investors mostly absent from the market, as they have been for the past two years, investment powerhouses are again relying on the same old trick that helped power stocks in March 2009.

What the market is betting on is lots more liquidity coming its way.

Faced with increasing signs of economic weakness, central banks in the U.S., Japan, and the European Union are stopping plans to remove liquidity, signaling more liquidity is on the way, or already intervening.

That’s a blessing for stocks, commodities, and gold.

Given the macro-nature of the global financial and economic crisis, assets have been increasingly trading in lock-step, meaning either risk on-type of assets such as stocks and commodities when things look up, or risk-off assets such as bonds, when things look down.

Renewed central bank moves towards liquidity are a clear green light:

“This is very much a risk-on environment given the ample liquidity,” says Mary Nicola, currency strategist at BNP Paribas.

But that’s very far from the market signaling it expects the economy to recover.

This past week the Federal Reserve summed it up nicely when it said it was worried about deflation and that it stood ready to take more extraordinary measures to reflate the economy.
…

Economic collapse is bound to be a fruitful subject for academic discussion over the next several decades. Viewed from that standpoint, perhaps all the various extraordinary, unprecedented intervention measures of the past two years should be viewed as a great success.

MarketWatch First Take

Sept. 24, 2010, 5:15 p.m. EDT
Contrary to Bernanke, economics did fail us
Commentary: Fed chief wrong to defend incomplete theories
By MarketWatch

WASHINGTON (MarketWatch) — Economists still have a lot to learn about how the recent economic and financial crisis unfolded, Federal Reserve Chairman Ben Bernanke begrudgingly acknowledged Friday.

However, in spite of the failures of economists to predict the crisis or to prevent it, Bernanke largely defended his profession in a speech on Friday at an economic research institute he helped found at Princeton University. Read our full story on Bernanke’s remarks.

It was not economic theory that failed us, he said, it was economic management and engineering. Economists have workable theories about how bank runs can erupt and how they can be stopped, and theories about how misaligned incentives or moral hazard can lead to excessive risk-taking.

The crisis was mostly a failure of design, not theory, he said.

Think of Bernanke’s argument this way: If a bridge collapsed, no one would think we should re-examine the theory of gravity; they’d blame the disaster on the designer or the builder, not on Isaac Newton.

But, of course, economic science is not as developed or as precise as physics. Even if economists can explain in hindsight how it happened, or suggest remedies for crisis management, the profession still has a lot to answer for.

We were assured from the highest authority that such a crisis was impossible.

Bernanke suggested to his former colleagues at Princeton some fruitful areas for further study, such as explaining under what conditions human behavior does not fit the quaint assumptions of perfect rationality, or how asset bubbles rise and fall.

Bernanke said standard models of the economy seem to work most of the time. Most of the time, he said, “serious financial instability is not an issue.” Most of the time, cancer isn’t an issue for physicians, either.
…

Outside the Box
Sept. 25, 2010, 12:01 a.m. EDT
The biggest losers
Commentary: Learning some hard lessons from the financial crisis
By Howard Gold

NEW YORK (MarketWatch) — The financial crisis that reached its most critical phase two years ago with the fall of Lehman Brothers had some big winners—in Asia, Latin America, and Scandinavia.
…
The countries that have lost the most lived way beyond their means — subsidized by speculative capital or the umbrella of a strong currency (the euro) to give their citizens a lifestyle they hadn’t earned in competitive world markets. Government entitlements grew, along with complacency. Eventually, the merry-go-round stopped and the horses came crashing down.

The biggest losers came from the European periphery, whose worst basket cases — Greece, Ireland, Iceland, and so on — have become to this decade what Brazil, Argentina, and Mexico were to the 1980s and early 1990s. In fact, some of the European walking wounded already have gotten the same kinds of massive international rescue efforts their Asian and Latin American counterparts received back in the day.

It’s a stunning role reversal. “Certainly from a debt perspective, they’re in much worse shape than the emerging markets right now,” says Alexander Young, international equity strategist for Standard & Poor’s Equity Services. “They’re much closer to the ‘crisis countries’ of 10 to 20 years ago than to the emerging markets of today.” Watch video of Ed Yardeni discussing whether Europe can be saved on MoneyShow.com.

So, here’s my list of the biggest losers. Stock-market returns and data on gross domestic product played the biggest role in the rankings, but I also weighed intangibles — the “how the mighty have fallen” factor. There’s no shortage of those.

1.Iceland. Although it’s by far the smallest of the countries on my list, with a population of barely 300,000, none was more devastated by the financial crisis. A magnet for the “party-hardy” crowd, Iceland went on a financial binge, too. Its big banks had big dreams and borrowed heavily to achieve them: Debt ballooned to six or seven times gross domestic product.

When credit disappeared after Lehman fell, Iceland went into cardiac arrest. Its stock market lost 90% of its value, GDP plummeted, and a massive devaluation of its currency, the krona, drove the population’s standard of living down. Britons and others who poured their savings into Icelandic banks also lost their shirts. A criminal investigation continues.

2.Ireland. Remember the Celtic Tiger? Well, she turned out to be a pussycat with a shamrock. Ireland was the hot country of the 2000s as youth from throughout the euro zone flocked there for jobs in finance, software development, restaurants, what have you. When we visited in 2004, Dublin was bustling and full of construction cranes. The impoverished Limerick the late Frank McCourt wrote about so vividly in Angela’s Ashes became a boom town.

That was then. A property bubble burst badly, leaving Irish banks technically insolvent and the government deeply in debt — its ratio of deficit to GDP, at 14.3%, is higher than that of Greece. Policy makers moved quickly to slash spending and shore up the banks, but it wasn’t enough. On Thursday, Irish debt traded at a record 4 percentage points over the equivalent German bonds.

The Irish government pledges to cut more, but you can’t get blood from a blarney stone. Ireland’s stock market, down 36.2% a year since Lehman’s fall and 23.5% annually over the past five years, is the worst in Europe of those tracked by MSCI, Inc. GDP plunged 7.1% last year.

The worst of the worst
Biggest losers from the financial crisis*
country 2-year returns (%) 1-year returns (%) 5-year returns (%)
Ireland -36.17 -28.03 -23.49
Greece -34.81 -48.49 -14.73
Austria -24.17 -15.51 -11.75
Italy -15.38 -18.69 -8.88
Finland -14.46 -9.13 -3.26
Belgium -11.80 0.50 -8.52
Hungary -11.25 1.40 -5.98
Portugal -7.15 -14.97 -1.32
Spain -4.74 -16.97 1.66

Hair-of-the dog hangover cures, backed by “free” (taxpayer-provided) federal guarantees have not yet gone out of fashion in DC.

Sept. 24, 2010, 8:18 p.m. EDT
Securitization used to fix toxic credit unions
$50 billion of toxic securities to be resold with government backing
By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — Credit unions are saddled with $50 billion of toxic asset-backed securities that have triggered several failures in this important corner of the U.S. financial system.

The solution, unveiled Friday, is to use a similar securitization approach that caused the problem in the first place. This time though, the securities will be backed by the full faith and credit of the U.S. government.
…

They (TBTF) won’t see the next crisis/collapse either, of course…

Who would hold them responsible anyways?

So much, for “The bailouts were needed to save society”

http://www.bloomberg.com/news/2010-09-25/-black-swan-author-taleb-says-obama-s-stimulus-made-economic-crisis-worse.html

This article forgets to mention Ben Bernanke. I guess with him and Geithner still in power, the central bankers are fully in charge.

Larry Summers resigns
The brains trust dissolves
All the president’s economic principals are leaving, bar the treasury secretary

Sep 23rd 2010 | Washington, dc
Back to the ivory tower

HISTORIANS may one day label the first two years of Barack Obama’s presidency as the most activist in economic policy of post-war history. For that, credit both circumstance and the star-studded economic team Mr Obama assembled when he took office.

That team is now breaking up. On September 21st Larry Summers, the director of the National Economic Council and the president’s chief economic policy co-ordinator, said he would return to Harvard after the mid-term elections. Christina Romer, chairman of the Council of Economic Advisers, recently returned to Berkeley. Peter Orszag, the budget director, kicked off the exodus, leaving on July 30th. Washington loves palace intrigue but the reasons for the departures are mainly mundane: they want to get on with their lives. Only Tim Geithner, the treasury secretary, looks set to stay on, a chirpy survivor.

Many will say good riddance. Voters think the stimulus plan didn’t work. Businesses bemoan the overly academic cast of the team and the administration’s interventionist tilt on everything from union-set pay requirements in stimulus spending to the drilling moratorium following BP’s oil spill. Republicans have called for both Mr Summers and Mr Geithner to be sacked.
…

If Obama wants to put a CEO in the Treasury Secretary position, perhaps one of Angelo Mozilo, Ken Lewis, Dick Fuld or Jimmy Cayne are still available?

Where Are They Now? Seven Villains of the Financial Crisis
By BRUCE WATSON
Posted 3:01 PM 09/15/10

In 2008, as the economy seemed to be in free-fall, pundits, politicians and the public cast about in search of the ultimate villain, the Wall Street weasel who could assume the blame for massive foreclosures, skyrocketing unemployment, and plummeting stock values. While the disaster was too big to pin on any single schemer, a handful of likely candidates quickly emerged.

Some, like Ken Lewis and Jimmy Cayne, seemed merely inattentive and inept, while others like Angelo Mozilo and Fabrice Tourre appeared to be actively involved in cheating the public. Yet, whether their position was in Wall Street or Washington, the CEOs office or the analyst’s desk, all seven of the people on our list carried some measure of the blame for the events of 2008.
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How the World Works
Wednesday, Sep 22, 2010 11:56 ET
The awesome stupidity of replacing Larry Summers with a CEO
If Obama’s advisors think the president has an “anti-business” problem, they should be fired
By Andrew Leonard

If the Obama administration appoints a corporate executive to replace Larry Summers as National Economic Council director then the White House fully deserves the thumping it will get in November.

The ostensible reason for this colossal misunderstanding of the current political situation, sourced to anonymous adminstration officials, is that the White House wants “to allay the business community’s doubts about administration policies.”

This is nonsense. …

The metaphor this cancer survivor chose to characterize the nature and effects of Obama’s economic stimulus is most fascinating:

Obama Stimulus Made Economic Crisis Worse, `Black Swan’ Author Taleb Says
By Frederic Tomesco - Sep 25, 2010 7:36 AM PT

U.S. President Barack Obama and his administration weakened the country’s economy by seeking to foster growth instead of paying down the federal debt, said Nassim Nicholas Taleb, author of “The Black Swan.”

“Obama did exactly the opposite of what should have been done,” Taleb said yesterday in Montreal in a speech as part of Canada’s Salon Speakers series. “He surrounded himself with people who exacerbated the problem. You have a person who has cancer and instead of removing the cancer, you give him tranquilizers. When you give tranquilizers to a cancer patient, they feel better but the cancer gets worse.”
…

If people signed a mortgage contract, they should have to honor it, plain and simple. Giving them the advantage of the same low monthly payments that renters get to enjoy along with all the rights and privileges of home ownership would be patently unfair to renters. It would also create a windfall for current owners, by artificially propping up home prices above fundamental levels, and would help keep current renters who might want to some day own a home of their own priced out of the market. I also believe his proposed policy would violate U.S. contract law, but I defer to legal eagles on that question.

Real Estate Weekly
Sept. 24, 2010, 5:27 p.m. EDT
…
A recent report from the Center for Economic and Policy Research suggests a different way to address the country’s foreclosure problem: Homeowners facing foreclosure should have the right to rent their home at a fair market price.

“With roughly one in four mortgages underwater, the loan-modification plans put forth so far have done little to help homeowners facing foreclosure,” said Dean Baker, co-director of CEPR and an author of the report, in a news release. The policy would benefit millions and provide many families with housing security, Baker said.

The report compares the savings from renting in 2010 versus the cost of paying a mortgage on a home bought in 2006 or 2007, in 16 major metropolitan areas. It looks at savings both before and after taxes.
View the report at the CEPR website.

“Ordinarily, the gap between owning and renting is not that large.” Baker said. “Due to the enormous run-up in house prices over the housing bubble years, however, ownership costs now vastly exceed rental costs in many of the bubble markets and homeowners in these markets have much to gain from having the opportunity to remain in a home as a renter following a foreclosure.”
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Topic: Corporate scams and rackets
GMAC Mortgage in Hot Water with the Courts.
Courts in 23 states are questioning the foreclosure paperwork of the fourth largest mortgage provider in the country.
by Gene DeNardo
Saturday, September 25, 2010

Twenty three states require mortgage holders to obtain a court order before foreclosure proceedings on defaulted housing loans can begin. These states require a signed and notarized affidavit by an officer of the mortgage company {or holder} in effect swearing that they have witnessed and examined loan documents that prove ownership of the mortgage note and default of payments. GMAC, the fourth largest mortgage lender in the country, has admitted that they have falsely or inadequately filled affidavits in twenty three states.

GMAC was the housing arm of General Motors. Instead of concentrating on improving the quality of their auto division and avoiding intervention by the federal government to save them from liquidation, they thought it might be a good idea to jump into the sub prime housing loan market. It wasn’t. Last year GMAC received 17 billion in funds from the Feds and re branded themselves as Ally Financial. The federal government is now the majority stockholder of Ally.

Jeffery Stephens is one of the document signers for GMAC in Pennsylvania. In a sworn court statement, he admitted to signing up to 10,000 loan documents a month. Although the courts require the documents to be thoroughly studied and verified in the presence of a notary, he admitted to barely scanning the name of the foreclosed party and a few other minor details. There is serious doubt that they were ever notarized at the same time and there is question as to whether the notarization was forged.

There are 160 hours in a four week workweek. That would give us 9600 minutes, over one signature a minute. The guy was fast. Apparently, these “robo signers” are prevalent in the industry. This may be only the tip of the iceberg.
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Since mortgage lending is in the doldrums, I guess only deep-pocket flippers armed with superlow-rate Fed funds are buying these days?

US mortgage loan demand falls
By Alan Rappeport in New York

Published: September 22 2010 14:58 | Last updated: September 22 2010 14:58

Demand for home loans in the US fell last week, with refinancing and purchasing declining as the housing market continues to wobble.

The Mortgage Bankers Association said on Wednesday that mortgage loan volume fell by 1.4 per cent last week, dropping to its lowest level in six weeks. Purchases were off by 3.3 per cent and refinancing fell by 0.9 per cent.

Mortgage applications have fallen for three weeks running.

The Federal Reserve said on Tuesday that home construction remains “depressed” as it described a slowing economic recovery.

Interest rates on 30-year fixed rate mortgages fell to 4.44 per cent from 4.7 per cent, MBA said. The 4.43 per cent rate reached last month was the lowest in more than 30 years.

However, in spite of such low rates refinancing increased to account for 81.1 per cent of total applications, up from 80.5 per cent the week before.
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Costs too high to build, developers say
HOUSING: August permit activity second-lowest since records kept

By ERIC WOLFF - ewolff@nctimes.com North County Times - Californian | Posted: Thursday, September 23, 2010 7:50 pm

San Diego County house builders applied for 76 permits in August, the second fewest in 22 years, according to data from an industry group.

August permit applications fell 52.5 percent from July and 23 percent from August 2009, according to the Construction Industry Review Board, a building industry nonprofit. In February 2009, builders applied for 73 permits, the lowest such figure since the board started keeping track in 1988.

“While this might be a great time to buy a house, it’s not a great time to build a house because it’s not cost-effective,” said Matt Adams, head of government affairs for the Building Industry Association of San Diego.

Construction of apartment complexes showed some improvement, as builders applied to build 141 units of apartment buildings, way up from the 6 units applied for in August 2009. The August numbers bring the 2010 total to 985 apartments, up 26 percent from the same period in 2009.

The new numbers may reflect renewed interest in San Diego County’s apartment market. The price per unit reached $148,000 in the spring, up 26 percent from the 2008 bottom.
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What a maroon…the abysmal scientific ignorance of backwoods America is an increasing source of embarrassment on the world stage.

September 25, 2010 8:24 AM
Christine O’Donnell Clip: “Evolution Is a Myth”

Christine O’Donnell in an appearance on “Politically Correct” from 1998.

After last week’s viral video clip in which the Republican Senatorial nominee from Delaware spoke of having “dabbled into witchcraft,” Bill Maher lobbed another blast from Christine O’Donnell’s past on his show last night.

In a clip from the Oct. 15, 1998 episode of his old ABC series, “Politically Incorrect,” O’Donnell is shown saying “Evolution is a myth.”

When Maher challenged her to justify the anti-science statement, O’Donnell says, “Well, then why aren’t monkeys still evolving into humans?”

Last week Maher said that he would air more clips of O’Donnell from his old show until she agreed to come onto his HBO series, “Real Time.”
…

Three Obamanomics tsars down, one to go (not counting Big Ben).

Price again calls on Summers, Geithner to resign

* September 22nd, 2010 7:06 pm ET

A day after White House National Economic Council Director Larry Summers said he is leaving his post at the end of the year, a Congressman from Georgia called for his immediate resignation.

U.S. Rep. Tom Price, R-Ga., on Wednesday reiterated his call for Summers and Treasury Secretary Tim Geithner to step down from their posts.

“Economists say the recession officially ended in June 2009, yet we’ve continued to shed jobs and the unemployment rate has climbed in the past fifteen months of so-called recovery,” Price said in a statement. “Even the President’s economic team says they do not expect unemployment to leave the 10 percent range any time soon. Yet they stubbornly refuse to admit failure or consider better ideas to encourage hiring and investment.

“Geithner and Summers both need to resign immediately,” Price added. “The American people cannot afford one more day of the President’s failed economic strategy. It’s time to wipe the slate clean and find people who actually know what it takes to survive and thrive in the private sector.”

Price first called for Summers’ and Geithner’s resignations last month.

Pardon my lapse into disestablishmentarianism, but may the top leaders of both U.S. political parties burn in Hell.

Financial bailout chief announces resignation
By MARTIN CRUTSINGER (AP) – 3 days ago

WASHINGTON — Herb Allison, the head of the government’s $700 billion financial bailout program, announced on Wednesday that he would resign. He is the latest in a series of departures from President Barack Obama’s economic team.

Allison, who had served as head of the bailout program since April 2009, said in a letter to colleagues at the Treasury Department that they had accomplished a great deal and helped to stabilize the financial system.

The Troubled Asset Relief Program, the formal name for the bailout program that began during President George W. Bush’s administration, has been widely criticized by the public as a rescue for wealthy bankers who took extraordinary risks.

Allison will be succeeded as head of the program by Tim Massad, 54, who will become acting assistant Treasury secretary for financial stability while the administration looks for a permanent successor.

Before joining government, Massad had been a partner for 17 years at the New York City law firm of Cravath, Swaine & Moore.

Allison’s resignation is the latest departure from the administration’s economic team, which has been under fire from Republicans in Congress and many voters. Peter Orszag, Obama’s budget director, and Christina Romer, head of the president’s Council of Economic Advisers, departed in recent weeks. The White House announced Tuesday that Lawrence Summers, the president’s top economist, would leave at the end of this year.

Treasury Secretary Timothy Geithner is the only member of Obama’s top-tier economic advisers to remain with the administration. There was speculation that Obama might turn to a corporate executive to replace Summers as a way to deflect criticism that the administration is antibusiness.

With unemployment remaining stuck at painfully high levels, Democrats are bracing for heavy losses in the upcoming congressional elections.
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This is beautiful. So long as the U.S. has a functioning fiat money press and many unemployed construction workers, it makes sense to take stock of our enduring iconic natural treasures and refurbish them for future generations.

Friday, September 24, 2010

A new direction for St. Louis Arch
St. Louis Arch grounds redesign

The St. Louis Arch is set to get a facelift of sorts. A design jury in St. Louis awarded the multi-million-dollar contract to a New York design firm. Their charge — undo decades of bad infrastructure planning and transform the Arch into a world-class tourist destination. Adam Allington reports.
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I can explain what’s going on in the housing market in a word:

IT’S FUBAR.

Friday, September 24, 2010

What’s going on in the housing market?

Sales of new single-family homes were flat last month. And the supply of houses on the market reached a 42-year low. Reporter Alisa Roth talks with Steve Chiotakis about the latest housing numbers and whether Americans are moving away from home ownership.

This home is available in Miami, Fla. (Joe Raedle/Getty Images)

STEVE CHIOTAKIS: Sales of new single-family homes were flat last month. And the supply of houses on the market reached a 42-year low. Earlier this week, we heard builders were starting more new homes. But most of those were multi-family, as in apartments, not single family. Marketplace’s Alisa Roth is with us live from New York to tell us what’s going on. Good morning, Alisa.

ALISA ROTH: Good morning.

CHIOTAKIS: So what is going on in the housing market?

ROTH: Well, I hate to say this, but it’s hard to know. It’s certainly better than it was, say, last year. But it’s certainly not in great shape. I talked to Sam Chandan this morning. He’s chief economist at Real Analytics, which is a real estate research firm. He says people are still scared.

SAM CHANDAN: Americans are still seeing that the outlook for the economy is fairly weak. We’re certainly not creating jobs in a way that would allow people make the transition from renting to home ownership.

He also made the point that yes, mortgage rates are unbelievably low. But since it seems like housing prices are going to stay low for a while, too, nobody’s in a big hurry to buy.
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Thanks to Professor DeLong for helping to avoid the whitewashing of recent history.

Citigroup’s View of the Obama Administration in February 2009…

On 25 February 2009, Ryan O’Connell and Jerry Dorost of Citigroup’s research arm wrote an “Industry Flash” about Obama Administration banking policy:

New Treasury Stress Test Guidelines Do Not Appear Onerous

*Treasury’s plan appears relatively bank-friendly and investor-friendly — The Treasury has released guidelines for new stress tests for the largest US banks and the terms for the banks to issue convertible preferred securities to the government to address any capital shortfalls. The Treasury’s announcement indicates, in our opinion, that the US government is following a relatively bank- friendly, investor-friendly approach.

* Treasury’s goal is to increase banks’ capital — We think that several banks may need to increase their capital because of the new stress test. However, the Treasury’s goal, in our view, is to increase banks’ capital while minimizing the amount and duration of any government’s direct ownership of common stock.

* Stress scenarios do not seem onerous or draconian to us — The guidelines require the banks to estimate their potential losses under a baseline scenario and a “more adverse” scenario for a two-year period. These scenarios do not seem onerous or draconian to us; indeed, they appear fairly close to the scenarios that JP Morgan discussed this week when it announced its dividend cut. We think that most banks may be using similar assumptions in running their own stress tests.

* Emphasis on common equity — The Treasury did not set a target equity ratio and said that it was not imposing a new capital standard, while pointing out that common equity should be the “dominant” component of Tier 1 capital. We interpret this statement to mean that common equity should be at least half of Tier 1, which would indicate a ratio of tangible common equity to risk weighed assets of 3%, although it could be somewhat higher (i.e., 4%). Although the banks and regulators will discuss the stress tests, the Treasury made it clear that bank regulators would determine the amount of equity capital that banks need.

Today–nineteen months after this document was written–it is of historical interest only: none of Citigroup’s paying clients would pay a cent for the information contained in it, for nobody could in any way profitably trade today on Citigroup’s February 2009 analysis of the policies of the Geithner Treasury.
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Don’t let the door hit you on the way out, Professor Martha Focker. Now if we could only get Ben and Tim to relinquish their posts, perhaps we could get on with the work of jailing the perpetrators at Megabank, Inc, and reinstitute a rule of law in the banking system.

I can’t begin to express the depths of disdain I feel for those who perpetrated, then legitimized, this financial disaster. May they all justifiably burn in Hell.

Great Recession
Saturday, Sep 25, 2010 11:01 ET
War Room
The Larry Summers hall of shame
By Maxwell Strachan

This week’s announcement that Larry Summers will be stepping down as director of President Obama’s National Economic Council may have been most notable for the passionate reaction it prompted from his critics. “Good riddance,” wrote the Progressive’s Matthew Rothschild, adding that “Summers has a resume of disaster.”

The outpouring shouldn’t have been surprising. If nothing else, Summers, in his stints at Harvard, the World Bank and in two presidential administrations, has emerged as an accomplished lightning rod for controversy. As he prepares to decamp Washington for Harvard Yard — he’s going to be a professor — we remember the 10 most shameful moments that Larry has brought us.

10. Asking Chris Dodd to remove post-recession caps on executive pay…

9. Gambling away $1 billion of Harvard’s money…

8. Pushing for regime change in Indonesia…

7. Joking about dumping first-world waste in third-world countries…

6. Bailing out white-collar criminals…

5. Blaming the California energy crisis on excessive regulation…

4. Vehemently opposing regulation of the derivatives markets…

3. Ragging on unemployment insurance…

2. Advising Bill Clinton against signing the Kyoto Protocol…

1. Lobbying for the repeal of the Glass-Steagall Act…

Really?:

Market Watch: Small Biz Over-rated, Doesn’t Create Jobs

http://mindbodypolitic.com/2010/09/23/market-watch-small-bi-over-rated-doesnt-create-jobs/#comment-82732

Serious question: Has there ever, in the course of economic history, been a more predictable ongoing crash than that of U.S. housing? If it weren’t so fascinating to watch it play out in perpetuity, I would be seriously bored by the predictability of the situation.

Sept. 24, 2010, 3:51 p.m. EDT

In charts: What we learned about the economy

By Steve Goldstein, MarketWatch
Existing-home sales improve…

First, the good news on the housing front, or least not as bad news: existing-home sales rose 7.6% in August. As impressive as that percentage sounds, it comes after a 27% nosedive in July…

It’s too bad that Volcker is two years older than my old, tired, retired dad, as he may be the only man with the will and integrity to restore trust in the U.S. banking system. May God grant him strength and perseverance!

It’s high time for meaningful (as opposed to sham Dodd-Frank) financial reform. The alternative may well be a collapse of the U.S. government.

Volcker Blasts Banksters, Financial System in Impromptu Speech at Chicago Fed
By: David Dayen Friday September 24, 2010 10:03 am

I wish Paul Volcker had a late-night show like Stephen Colbert so this speech could get the same kind of attention:

Former Federal Reserve Chairman Paul Volcker scrapped a prepared speech he had planned to deliver at the Federal Reserve Bank of Chicago on Thursday, and instead delivered a blistering, off-the-cuff critique leveled at nearly every corner of the financial system.

Standing at a lectern with his hands in his pockets, Volcker moved unsparingly from banks to regulators to business schools to the Fed to money-market funds during his luncheon speech.

He praised the new financial overhaul law, but said the system remained at risk because it is subject to future “judgments” of individual regulators, who he said would be relentlessly lobbied by banks and politicians to soften the rules.

“This is a plea for structural changes in markets and market regulation,” he said at one point.

Wow.

I was talking to someone recently who worked for Volcker at the President’s Economic Recovery Advisory Board during the financial reform bill debate, and he told me that basically, despite the meager stature of that office, there were several times during the negotiations when Volcker would slip into Washington unannounced and go from office to office in Congress to present the facts and protect his priorities in the bill. And then, bankster lobbyists would go into those same offices and the representatives, armed with actual information, would tell them, “Yeah, but Volcker said…”

The man has gravitas. And in his advanced age, he’s using it to rip the banksters a new one. Now you will never hear from these whiners that Paul Volcker is anti-business; they would rather deflect that over to Obama. But it’s Volcker, and certainly not Obama, making the most direct critiques of the crime spree they call their business practices. Here are just a couple of his observations:

Banking — Investment banks became “trading machines instead of investment banks [leading to] encroachment on the territory of commercial banks, and commercial banks encroached on the territory of others in a way that couldn’t easily be managed by the old supervisory system.”

Financial system — “The financial system is broken. We can use that term in late 2008, and I think it’s fair to still use the term unfortunately. We know that parts of it are absolutely broken, like the mortgage market which only happens to be the most important part of our capital markets [and has] become a subsidiary of the U.S. government.”
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Investment Banking
Bearish on Wall Street, Bullish on Goldman
September 24, 2010, 2:13 pm

Nelson D. Schwartz, a DealBook colleague, reports:

Reality is finally kicking in for the analysts who cover Wall Street. With less than a week left before the third quarter ends on Sept. 30, it’s clear the pickup in activity recently won’t make up for the trading drought in July and August.

So each day brings more reductions in earnings estimates for Wall Street’s goliaths, including Goldman Sachs. A week ago, analysts were looking for Goldman to earn $3.33 — as of today, the consensus is down to $3.03.

On Thursday, Richard Bove, who has been bearish on Goldman’s third quarter for a while, weighed in:

It is typical for analysts who follow brokerage stocks to wait for the very end of a quarter before they publish their final estimates for that quarter. That being the case, it is likely that in the next few days there will be a series of estimate cuts on Goldman Sachs. My estimate, established a month ago, is about $1.00 per share below consensus.

A day earlier, Michael Carrier of Deutsche Bank slashed his third quarter number for Goldman to $1.95 a share, from $3.

What’s surprising, however, is that Mr. Bove and Mr. Carrier, like many analysts, remain bullish on Goldman’s shares.

Mr. Bove rates the stock a buy, with a target price of $169. While the stock usually trades lower amid downward earnings revisions, he thinks this time might be different, “The reason is that an impressive backlog is now building in both new issues and acquistions.”

Mr. Bove added: “It appears that the first half of 2011 could be quite strong. Plus, the year-over-year operating earnings comparisons could be unusually good at that time. Investors might focus on that possibility rather than the problematic third quarter.”

Mr. Carrier is even more optimistic about Goldman’s stock, putting a $200 price target on the bank — Goldman’s stock is currently at just over $147 a share.

Goldman reports results on Oct. 19th — but expect the consensus to keep dropping as more analysts throw in the towel on the quarter, if not the stock.
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Saw this tonight, and was delighted and amazed at the number of favorite HBB topics from years gone by that were covered: moral hazard, too-big-to-fail, bailouts, etc. It is amazing how only a few short years ago, Big Hank Paulson was saying, in effect, “Just don’t call it a bailout,” and the subjects of moral hazard and too-big-to-fail were primarily limited to discussion in the blogosphere. Thanks to Oliver Stone for immortalizing this episode in financial history on the silver screen.

Now if we could just get on with the real-world version of those perp walks!

Wall Street, the sequel
Goldman whacked
Egged on by hedge funds, Oliver Stone turns on Goldman Sachs

Sep 16th 2010 | New York
Dinner jackets are for wimps

TWENTY-THREE years after he first championed greed, Gordon Gekko is back. Michael Douglas reprises his role as the slick-haired financial barbarian in Oliver Stone’s “Wall Street: Money Never Sleeps”, due for release on September 24th.

Half-reformed after prison, Gekko is more anti-hero than villain this time. He is still dazzled by lucre, but also determined to give warning of the dangers of excessive leverage. The real baddies are Bretton James and the securities firm he runs, Churchill Schwartz—perhaps the least disguised fictional name ever. Executives at Goldman Sachs are said to be unamused.

James, played by Josh Brolin, is nothing like Goldman’s top brass. He wields phallic cigars, races superbikes and smashes his copy of Goya’s “Saturn Devouring His Son” on a lamp when fingered for manipulating the share price of a rival firm.

But the script is sprinkled with echoes of Goldman: Churchill Schwartz bets against markets that it makes, including subprime mortgages; its credit-default swaps are bailed out at par; and it has friends at the Treasury. An exposé of the firm, written by Jake Moore, a disillusioned prop trader and the film’s central character, begins: “The first thing you need to know about Churchill Schwartz is that it’s everywhere.” A damning Rolling Stone article on Goldman in 2009 opened with precisely those words, the name apart.

As the financial crisis unfolded, the story was reworked to cast Goldman in a more nefarious light. In the original version, the villain was a hedge-fund manager. But script advisers from the financial world persuaded Mr Stone that an investment banker would be more realistic, since it was banks and securities firms, not “alternative” money managers, that had blown up the system.
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Is this site up and running? Test. Good luck to all.

OK. For some reason, my browser didn’t pick up today’s B&B thread until now. Please disregard this notice.

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