Bits Bucket For October 25, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
October 25, 2010
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This one’s for you, Eddie:
How Bush Destroyed the Economy In Only Eight Short Years
posted at 2:50 pm on October 24, 2010 by directorblue
The conventional wisdom among the denizens of the left is that George W. Bush took a surplus and destroyed the economy in only eight short years. The following illustrated story shows just how he pulled off this difficult task.
In 1997 President Clinton’s HUD secretary, a man named Andrew Cuomo, claimed Fannie Mae had exhibited “racial discrimination” and proposed that 50 percent of the GSEs’ (Fannie and Freddie) mortgage loan portfolio be made up of loans to low- and moderate-income borrowers by 2001.
In August of 2008, Wayne Barrett at the Village Voice wrote, “[Clinton appointee] Andrew Cuomo… made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that… helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration…into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded ‘kickbacks’ to brokers that have fueled the sale of overpriced and unsupportable loans.”
At the time, Cuomo said “GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas.”
As the housing market unravelled thanks to these policies, even The New York Times‘ Paul Krugman admitted that, “homeownership isn’t for everyone,” adding that “as many as 10 million of the new buyers are stuck now with negative home equity… So many others have gone through foreclosure that there’s been a net loss in home ownership since 1998.”
From 2001 to 2008, the Bush administration tried more than 18 times to bring Fannie and Freddie under heel.
For example, Richard Banker opened testimony on October 6, 2004 in the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises with an almost unbelievable summary of a report entitled, “Allegations of accounting and Management Failure at Fannie Mae.”
“[This] is indeed a very troubling report… it is a report of extraordinary importance [to] the taxpayers of this country who would pay the cost of cleanup. ….[the report questions] the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise…”
“We all know that the Enterprise is very thinly capitalized, but the potential effect of requiring a responsible capital level would be to adversely affect earnings per share, and consequently make the payment of bonuses [to Fannie executives] much less likely…
…I also wish to inform members of the Committee of another troubling incident… About a year ago, I corresponded with the Director’s office making inquiry about the levels of executive compensation at the enterprise for the top twenty executives…
…Now I understand why the Enterprise [Fannie Mae] was so anxious not to have public disclosure of compensation of an entity that was created by the Congress, and supported by the taxpayer… As a direct result of abhorrent accounting practices, executives have been able to award themselves bonuses they did not earn and did not deserve.”
…
There are plenty of folks on this blog, yours truly included, who place the blame for the current crisis on both the Donkey and Elephant boys. Both have had a hand over the past 30-40 years into getting us where we are today.
The link to the Village Voice piece provides a much better view of HUDs role in all this. Though I think even that article overdoes Cuomo’s responsibilty. He definitely helped get the whole thing started as HUD secretary, but I fail to see how he was still responsible for far greater increases in crap loan purchases under the Bush admin. (Check some of the numbers- they get outrageously high during Ws admin, but the author still assigns blame for them to Cuomo.)
Nevertheless, the Village Voice piece is a must-read.
Catherine Austin Fitts once worked at HUD in 1989 and says it lived up to its reputation as the sewer of the federal government.
“While my experience as Assistant Secretary cleaning up significant mortgage fraud that lost the government billions during the 1980s confirmed that HUD’s financial reputation was deserved, leading the FHA provided invaluable insight into how government management of the economy one neighborhood at a time really harms communities.”
Sound familiar?
Both Bush and Obama have had little choice in what is loaded into the teleprompter, so one might as well view the American presidency as a Charlie McCarthy role.
The Soros/Blankfein ticket is always the winner.
“The Soros/Blankfein ticket is always the winner.”
What is amazing to me is that the U.S. voter never seems to catch on that YOU DON’T VOTE THE BANKSTERS IN OR OUT. They are the promoters of professional racketeering and above any law or election. And just like professional wrestling, you can have your favorites, you can yell or cheer or scream and groan; but in the end, it’s all rigged for your “entertainment”.
That is, if you consider being financially raped by billionaire sociopaths as entertainment.
What we need are politicians who are representatives of the people, not representatives of the highest bidder.
With all the sound and fury I’ve heard from the chattering classes this election season, I have not heard that concept. At all.
I think it is that sense - that the people are getting screwed by politicians in servitude to the highest bidder - is what is really brewing discontent.
People seem to be looking for some kind of Unified Theory of who got us into this mess but I just don’t think it’s possible.
Corporate Communist Capitalism©®™
Basically, despite our “empire”, we got left behind. Russia had its “reformation” and so China and Europe.
Us? We stayed with Cold War economics and business as usual.
As long as Raines and Johnson paid off the Dems 75% and the Reps 25% nothing was going to happen re control of the unsafe lending practices.Obama had his hand out there too.
Economic Beat | SATURDAY, OCTOBER 23, 2010
Misdirected Outrage
By GENE EPSTEIN | MORE ARTICLES BY AUTHOR
Our economics editor dons his movie reviewer’s hat, and reports on Inside Job, the documentary about the 2007-2010 financial crisis.
“A MASTERPIECE OF INVESTIGATIVE nonfiction moviemaking,” wrote the film critic of the Boston Globe. “Rests its outrage on reason, research and careful argument,” opined the New York Times. The “masterpiece” referred to was the recently released Inside Job, a documentary film that focuses on the causes of the 2008 financial crisis. These raves are fairly typical; according to http://www.metacritic.com, Inside Job got a “metascore” of 88 out of a possible 100, well within the range of “universal acclaim.”
The distribution of documentary films that bear on complex economic issues—Al Gore’s An Inconvenient Truth and Bjorn Lomborg’s forthcoming Cool It, both on global warming, also come to mind—has stretched the talents of our film critics, some might say well beyond their limits. If Inside Job were a book, its reviewers probably would have some recognized expertise in the subject it covers, and its metascore might be far lower.
Consider just one howler—it bears on the film’s fatally lopsided view of the root causes of the meltdown. Rep. Barney Frank, addressing the camera, casts a disapproving eye on the practice of buying mortgages in the secondary market, rather than leaving them with the originator, an activity generally referred to as securitization. If securitization really is harmful, hearing Barney Frank denounce it as such is like suffering through a diatribe against Ponzi schemes delivered by Bernard Madoff.
In fact, contrary to the message of the film, securitization and the associated use of that now-anathematized investment instrument, derivatives, can be beneficial. For example, the activity of securitizing credit-card debt has been functioning for decades. Much depends on the underlying assets on which the derivatives and securities are based. When they are subprime mortgages, you just might have a problem.
Barney Frank has left a long trail as an aggressive supporter of the government-sponsored enterprises Fannie Mae and Freddie Mac, financial institutions that did not originate mortgages, but only bought them in the secondary market. The basic nature of the GSEs’ business was therefore securitization, and increasingly of the subprime kind, which Frank extolled.
…
ISTR our very own polly saying that she worked on securitizations when she was a corporate lawyer. Done properly they can work quite well. However, the key word in the previous sentence is “properly.”
The thing about securitizations is that you get out what you put in. Garbage in gets you garbage out, or it does once people can’t pay off the “in” garbage with a cash out refi.
The purpose of securitization is to allow for a bit more risk in the system. That isn’t a hopelessly horrible thing as long as you don’t go overboard and that risk is properly identified, accounted for in the ratings and disclosed in the offering documents. That requires complex, hard to enforce regulations. Not so great. My preference is to skip most of the regulation, but force the securitizer to keep the riskiest few percent. That means they have an incentive to keep the quality up and you don’t have to staff up the SEC to do a few scores of millions of mortgage application audits to check the quality of the pool. The securitizers HATE this. If they have to keep some of the risk, not only do they risk their own equity money, but the volume necessarily goes down. Just like you get fewer mortgages if people have to have a good solid 20% down than you do if you allow 3.5% down and let the builder provide that plus closing costs. You still get more mortgage money available than you would if you relied on the highly regulated commercial banks to do all the lending, but no where near as much as you get when you trust the investment banks to just do their own thing. You could even have the regulator keep an eye on lending standards and increase the percentage of the pool the securitizers have to keep when overall lending standards go down too much. Sets up a nice, nearly automatic process for popping a bubble before it really gets going.
One more thing, I mentioned it once, but for all the folks who were yelling and hollering for fraud prosecutions or at least civil suits a year or two ago. The recent revelation that the banks that did the securitizations knew the loan quality was falling off a cliff and used that information to get lower prices when they bought those loans and then securitized them and still charged the same for the bonds they created, that is the “smoking memo” in these cases - the smoking memo being the white collar equivalent of a smoking gun. Someone will still have to prove that the disclosure they gave (the *exact words* used in the bond offerings) was not sufficient disclosure, but by demanding a lower price, the banks proved that the information was information that a reasonably prudent investor would need to know to decide whether to invest or not at the price offered. It is a beautiful example of “hoist by [their] own petard.” It is going to be very interesting to watch it play out.
Slim here.
I was hoping that, by posting my recollection of your account of your corporate law days, you’d add a bit of detail.
Well, you went way beyond what I was hoping for. You added a ton of high-quality detail.
TYVM for doing so!
Poetic justice is a rare, but beautiful thing.
It’s also about the limits of pooling as a method of risk mitigation.* Pooling mortgages across a broad geographic region DOES decrease the chance that losses (from say, an earthquake, or plant closure) will be above a given threshold, say 3%. Then the payments from these mortgages were tranched so that some people got their payments first, and others only got paid if there was enough money comming in after the other got paid. And those others got a higher rate of interest to compensate for their higher risk. But the stupid happend when the bright ones on Wall Street would buy bonds from those riskier, higher interest tranches, pool them AGAIN and then cut THOSE payments into differen tranches. But since the underlying bonds were ALREADY somewhat geographicly diverse, there’s NO REASON WHATSOEVER to believe that re-pooling would reduce risk. In fact since the original bonds were largely rated according to the same rules, there was little reason to tranche them. There rates of default were likely to be (and in the event, were) highly correlated. Either vary few of them would default, or most of them would. Which is exactly what happend. Very few of them defaulted while prices were inflating quickly and once they stopped the defaults happend quickly, especially those based on the worst underlying loans.
*I know you’re clear on this polly, but not everybody is.
+1 Crystal.
Of course my point would have been clearer if I had mastered the art of closing my italics after the word correlated.
Thanks Jim. Well put.
A Rube-Goldbergian system of regulations would be gamed as severely as the current system was.
Complexity breeds loopholes breeds fraud.
The core issue to prevent future debt bombs lies in this question: “Why would lenders not care about being repaid?”
Answer that question, and you provide the fix.
And the answer is - “Because they sold off the loans.”
The way to prevent future financial crises is: “Tie lenders to repayment risk. Tightly.”
Any other route will lead to further looting of the public treasury. The people doing the looting could not care less about the health of the society, as long as it is viable enough to fill their private coffers. Look at any banana republic with a destitute population and a fabulously wealthy elite.
This is from someone who saw it coming…
* OPINION
* OCTOBER 25, 2010
How to Privatize the Mortgage Market
Europeans manage just fine without Fannie and Freddie-type agencies.
By DWIGHT M. JAFFEE
Despite the Dodd-Frank financial reform enacted in July, the mortgage market remains frozen and effectively nationalized. Today 90% of the $14 trillion in outstanding residential mortgages is controlled by the Federal Housing Administration (FHA), the Department of Veterans Affairs, or Fannie Mae and Freddie Mac—with the latter two under government conservatorship.
The solution? Privatize the mortgage market.
…
I just read the article, and I like the plan. It recognizes that the former GSE’s are the only thing keeping the market from collapsing right now, and proposes and plan to phase them out. It makes a lot of sense to me.
Wouldn’t the current owner have to clean up the toxic dump site before it could be “sold” to private interests?
“clean up the toxic dump site”
That is what the TARP (Troubled Asset Relief Program) accomplished, right?
No TARP necessary, not even a drop-cloth. The FED directly buys toxic paper for one hundred cents on the dollar.
But the Euros are commies! Right?
But the Euros are Socialist commies! Right?
Those backward lefties don’t even have food stamps. Completely uncivilized!
Ummmm - as a brit I can tell you that no-one starves over there.
Europe gets along just fine? You mean like Greece and Iceland and Spain?
Privatize the mortage market… Didn’t we already try that? Fannie and Freddie WERE privatized; their US government backing was only implied.* As a result, they were beholden to shareholders and expectations to hit-the-numbers, and were therefore forced to engage in the same shenanigans as the private banks. Throw in a corrupt executive class (Raines & Co.) and ooops! Gee, it would be nice to have a private mortgage market, but not if it threatens the housing of millions of the general public.
It’s easy to toss around phrases like “take over the mortage market” or “socialist agenda” but let’s not forget WHY the government had to step in. Government isn’t stepping in because they have some secret plot to turn the US into a socialist paradise; they are stepping in because the private sector had its chance and failed, miserably, taking down the entire economy with it. (I’ve pounded this for months.)
———–
* and the backing was there because the government thought –justafiably — that home ownership acted to stabilize society. Assuming a normal market and stable jobs, this is true.
Homeowners and would be homeowners are not the members of this critical so-called “society”. It is made up of Wall Street banks and foreign governments. It is for them that we stabalize the mortgage industry.
“* and the backing was there because the government thought –justafiably — that home ownership acted to stabilize society. Assuming a normal market and stable jobs, this is true.”
No! Assuming normal mortgage lending practices of the 50’s and 60’s and definitely not the sell the house every two years for a tax free windfall of cash, nor a home deduction for second home, motor home, etc.
I can’t figure out if you’re agreeing or disagreeing? I agree that using the typical 20% down payment + 2.5x income + stable income + stay in the house 5 years, then yes, home ownership is worth it. But no, NOT the current environment.
Problem is, banks cut costs by removing the safety nets from under the trapeezes. And then they convinced the ratings agencies that the safety nets were still there, and sold the trapeeze act anyway. The government got there too late to save it.
oxide …I agree with your posts regarding the GSE’s ,you hit it right on the nose .
I just don’t understand when the lending industry let go of
insurance for any loans to value under 20%. I don’t think F&F let go of PMI insurance for low down loans .Often times in the past loans were seasoned and held onto for a couple of years before they were sold to the Secondary market .
My point being that risk use to be covered by Insurance and
often times low down loans went through double underwriting
by the Insurance Companies . If low down loans were replaced
with the concept that securities spread out the risk than that concept failed .
I think a lot of the problems with the loans were they were low down loans as well as faulty designed loan product in which you could qualify at a artificial teaser rate ,that wasn’t really qualifying long term for the loan, plus you had the potential for major increases in the loan payments .Add to that loans that you just state your income and the paper should of been rated high risk . In addition I guess lenders
where breaking up low down loans into first and seconds to
avoid PMI . So as I see it ,all the loan product was designed to be deceptive on what the risk factors were and it was a excuse to make bad loans . Also you add to all this that the
originators of loans breached their duty to prevent fraud and really underwrite the loans knowing they could just sell them
off to the Secondary Market .Add to this that it became a speculation market mania in which borrowers became gamblers and serial equity extractors rather than borrowers interested in long term ownership and it just became a fraud
market in every way ,including the appraisals.
The people in the loan and real estate business were making
such big profits off marketing this Ponzi-scheme by taking their cut off every transaction, but at the same time they all breached their duty to prevent fraud and they encouraged leverage and flipping real estate and liar loans .Real estate
people didn’t care anymore if a borrower really qualified for
a loan, it was a matter of what loan agency could get a unqualified borrower qualified . The appraisers were even
blackballed if they didn’t go along with the real estate always goes up BS with the “hit the mark appraisals .”
At some point in the RE boom years people didn’t care what type of loans they went on because they just wanted to get in and make money and sell to a greater fool or equity extract , so leverage and toxic loans were the name of the game.
Never mind the fact that many of these borrowers couldn’t pay for the houses long
term ,the goals were short term ,as the money goals were short term for the Kingpin creators of the Ponzi-scheme .
The ratings on the loans for the secondary market were deliberate fraud on the part of the Kingpin and they should of just rated all those loans” f” based on the gamble that real estate always goes up so it will hide all fraud in faulty product and loan fraud .
The rah rah cheer-leading for real estate as a leverage investment that you couldn’t loose on was in large part because everybody from the Kingpins to the borrowers that thought they could offload the shack to a greater fool artificially increased the value and demand for real estate through faulty lending and fraud on all levels until it crashed .
Just like we would not except a car company designing faulty breaks and would feel they were liable for the damage they caused ,why are we accepting the faulty products and system
that the Kingpins peddled for profit ,including absurd
low risk ratings for junk loans broken up into trenches and all the fancy stuff ?
“the government thought –justafiably — that home ownership acted to stabilize society”
The idea of white picket fences, kids, and a dog — stable society — went out the window in the 90’s. It became flip this house NINJA investor: You’re entitled to 100K with each purchase plus a Hummer and a European vacation via the housing ATM. It was not about stability. It was about excess and greed.
New Rule: If you can’t bring 10-20 pct down to the table and pay the mortgage off within 15 years (where >50 pct of mrtg pmnt goes toward principal), you can’t afford the home; otherwise, you’re just speculating. You’re betting appreciation will cancel interest and other expenses. Physical assets depreciate over time; expect losses.
I’ve asked this question before on HBB, but no one has attempted to answer it:
So what would be the ideal percentage of home ownership and WHY?
There is an agreement that too people own homes that they can’t afford. But is there some percentage of home owners vs. renters that is better than another?
If housing becomes affordable again, wouldn’t it be better to have more homeowners? Or should the minority be property owners and the rest renters?
At what point does the minority owning most of the property become inequitable? Of course, this is a moral, value-laden question, but I am interested in people’s thoughts on this.
Taking lunch break now, maybe some responses to read when I get back?
That’s a tough question because it depends on a lot of things: for example job security, variety in existing inventory, personal responsibility, and government help. Let’s take the ideal case. Assume everybody has secure job, or at least a secure series of jobs in the same city so they don’t have to move.* Assume that there is inventory in every price range — from a small shack to a mansion - within reasonable commute of work. Assume that everybody can put away for the initial hump of a down payment, or qualifies for equivalent government assistance. Finally, assume that everybody lives within their means– that is, they responsible enough to buy a house within their price range (2.5x), that their other expenses like health insurance don’t skyrocket, that they put away for unexpected expenses like a root canal or a dropped transmission, and that they can can stick to their payments. Finally assume that everyone stays healthy and married.
Given all that, then home ownership should be around 80-100%. Of course, there are far too many variables for that. Historically, the non-idealisms in the system like sickness, divorce, job loss, unexpected expenses, and some irresponsibility shook down system. The % home ownership figure equalized at a figure around 60-65%.
The variables are catching up with us. Idiots in government thought that housing led the variables, not the other way around. It’s true that staying healthy and married promotes home ownership, but buying a home certainly doesn’t keep people married, not as much. But idiots tried to force home ownership anyway, which helped create this crisis. Homebuilders refused to build decent homes in a variety of prices ranges. They only built condos (bad for families) or McMansions (bad for the economy) because that’s where the profit was. People were not responsible; even if they refrained from Starbucks, they still bought pricier than they should have. The cost of college loans and health insurance skyrocketed, so fewer young people can enter the market. The automation and offshoring boom are killing the most important variable: job security.
Given the economy now, ideal home ownership should, IMO, dip to about 55% at most by the time they foreclose on everybody (if they do). And don’t forget that much of the home ownership are retirees who own homes outright. 10 years from now we won’t have those retirees. Will the same % of today’s boomers own their homes outright? I doubt it. I don’t expect the % to rise back up to 60%. The New American Economy — and its lack of jobs — will never support that figure.
—————
*Or, assume that if they have to move, they can do a total uproot and relocation relatively quickly and still mostly break even.
Actually oxide, it’s about collusion between Wall St. and the government FOR the benefit of the private sector.
I’ve mentioned there are many similarities and parallels to the Saving & Loan disaster. Here’s another excerpt from Catherine Austin Fitts memoirs:
“Shortly after arriving at HUD in April 1989, I began to learn about the FHA Coinsurance program. Since 1984, HUD/FHA had allowed private mortgage bankers to issue federal credit to guarantee multi-family apartment projects. After issuing $9 billion in mortgage guarantees, HUD/FHA was to lose something approaching 50% of the value of the portfolio — a level of losses hard to explain with mortal logic. When my staff approached me with a proposal to bail out a mortgage company so they could continue to lose money for us, I asked why we should spend money to lose more money in a way that would harm communities. After a long silence during which 30 staff members intently studied their feet, one brave soul explained to me that the mortgage bank was owned and run by a major Republican donor. Shocked, I said. “I am a major Republican donor,” and pointing to my presidential cufflinks that were adorning my French cuffs, “I got a pair of cuff links. You get cuff links. You don’t get $400 million of federal credit to throw down the drain.” My staff looked at me like I was so naive and clueless that there was no point in trying to communicate with me — better to let me learn the hard way.
Within minutes, a screaming Jack Kemp, furious that I had not provided illegal subsidy to keep the mortgage banking company going (despite his orders to stop anything corrupt or illegal), called me on the carpet.[30] The problems were compounded by the opinion of HUD General Counsel Frank Keating, who had joined from DOJ, that we did not have to honor our contracts. Rather we could abrogate contracts and ignore the law. If those who had been harmed sued us, Frank said, by the time they won “we will be gone.” Frank was to help write and pass new laws and administrative policies to use HUD as a source of War on Drugs activities and enforcement revenues. After many dirty tricks and much ranting and raving, HUD was to turn the defaulted coinsurance portfolio over to a private contractor named Ervin & Associates, a newly created company founded by John Ervin, a former employee of Harvard’s HUD property management company, NHP.”
Yes, look at Spain! They designed their GREEN economy just like our resident RINO the governator is trying to do in mexifornia. Unemployement above 25%, total disaster. The green fuitcakes should not be believed, and their policies should not be practiced !!!
You’ll know we are nearing the bottom when they restructure the GSE’s and or make them sell their MBS for pennies on the dollar. When GS is buying the stuff with all the free cash the FED handed to them.
I think the other sign we are nearing a bottom will be the tax code. If the tax commision gets congress to roll back the mortgage interest deduction I’d say we have about 2-3 years to the bottom. That will be the nail in the coffin
Didn’t the UK recently get rid of its home mortgage interest deduction?
That was in 1990 The announcement in advance of the government scrapping MIRAS led to “panic buying” of houses and subsequent fall in prices after MIRAS was abolished.
http://en.wikipedia.org/wiki/Mortgage_Interest_Relief_At_Source
exactly, once all of the bad debt has been sold to FED and GSE’s then interest rates will rise and the mortgage deduction will disappear. You will see a rapd crash. You will see the GSE’s restructured with most of their debt sold off to the bankers who will be flush with FED dollars. They will sell all of the treasuries they are currently holding to the FED and purchase the MBS.
Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study
By Edward Pinto | AEI Online
(October 21, 2010)
The major cause of the financial crisis in the U.S. was the collapse of housing and mortgage markets resulting from an accumulation of an unprecedented number of weak and risky Non-Traditional Mortgages (NTMs). These NTMs began to default en mass beginning in 2006, triggering the collapse of the worldwide market for mortgage backed securities (MBS) and in turn triggering the instability and insolvency of financial institutions that we call the financial crisis. Government policies forced a systematic industry-wide loosening of underwriting standards in an effort to promote affordable housing. This paper documents how policies over a period of decades were responsible for causing a material increase in homeowner leverage through the use of low or no down payments, increased debt ratios, no loan amortization, low credit scores and other weakened underwriting standards associated with NTMs. These policies were legislated by Congress, promoted by HUD and other regulators responsible for their enforcement, and broadly adopted by Fannie Mae and Freddie Mac (the GSEs) and the much of the rest mortgage finance industry by the early 2000s. Federal policies also promoted the growth of over-leveraged loan funding institutions, led by the GSEs, along with highly leveraged private mortgage backed securities and structured finance transactions. HUD’s policy of continually and disproportionately increasing the GSEs’ goals for low- and very-low income borrowers led to further loosening of lending standards causing most industry participants to reach further down the demand curve and originate even more NTMs. As prices rose at a faster pace, an affordability gap developed, leading to further increases in leverage and home prices. Once the price boom slowed, loan defaults on NTMs quickly increased leading to a freeze-up of the private MBS market. A broad collapse of home prices followed.
Edward Pinto is a resident fellow at AEI.
Edward Pinto does not know how to use foreign expressions like en masse. Very hackish.
AEI is a second-rate conservative think tank.
(wikipedia)
“Among the prominent former government officials now affiliated with AEI are former U.S. ambassador to the U.N. John Bolton, now an AEI senior fellow; former chairman of the National Endowment for the Humanities; Lynne Cheney, a longtime AEI senior fellow; former House Speaker Newt Gingrich, now an AEI senior fellow; former Dutch member of parliament Ayaan Hirsi Ali, an AEI visiting fellow; and former deputy secretary of defense Paul Wolfowitz, now an AEI visiting scholar”
Is a strawman argument the only thing you can respond with?
I was responding to In Montana’s point about the writer being a bit dim. I was explaining why.
As to writer’s points, well, no one denies the government played a major role in the housing bubble. It’s the second-rate Wall Street apologists (like AEI) who try to make it sound like it was ALL the government’s fault, and that Wall Street was forced (by the politicians it owns) to make billions off securitizing, selling off, and then betting against these mortgages.
The reason gov played a roll is because Wall Street directed them too. Follow the money. Our gov is failing because Wall Street and corporate America and the elite can determine who get’s elected. The Supreme Court has cemented their power.
Both sides are purchased. Feingold put through motions to at least make sure that the public could find out where all the political add money came from. The Dems of course tabled it until after the election. Then they will be able to say we tried but we just don’t have a majority now and those mean old republicans won’t let us bring it to a vote.
The reason gov played a roll is because Wall Street directed them too. Follow the money.
What Caused the Current Financial Crisis?
http://www.stock-market-investors.com/stock-investment-risk/what-caused-the-current-financial-crisis.html
When examining the causes for the financial crisis most people start directly with the real estate market (the place where the crisis really began) focusing on the subprime mortgages and unscrupulous lenders….
…it is not the whole story. The whole real estate bubble originated mainly as a response to the huge demand of financial assets. And since not many places can actually provide such assets, naturally in such situations speculative bubbles come on the stage and become part of the supply response of financial assets to the demand of such assets.
This was the case with the real estate bubble too and that was one of the main factors leading to the current financial crisis: the excess capital globally pushed an enormous amount of money into the US mortgage market thanks to the securitization and the fact that almost 80% of the US mortgage market is securitized.
The reason gov played a roll is because Wall Street directed them too. Follow the money. Our gov is failing because Wall Street and corporate America and the elite can determine who get’s elected. The Supreme Court has cemented their power.
A point that was made in a book I read over the weekend. Title: The Great American Stickup. Well worth the read.
Takeaway from the book: Both major political parties are to blame.
Funny thing is, I like AEI and I tend to agree with the argument, and I want it to be perfect.
Rather than commenting on irrelevant editorial details, how about addressing what he says about the eventual effect of the government’s loosening of lending standards to promote affordable housing?
I addressed it below, bear. I have another one:
“causing most industry participants to reach further down the demand curve ”
Causing? There’s a nice vague verb: “cause.” Let me use a favorite HBB phrase: “Nobody held a gun to the banks’ heads and forced them to” approve the mortgages. The exact same way that nobody held a gun to the heads of the FBs and made them sign the mortgages. Maybe banks should have practiced the vaunted “personal responsbility” and “morals” that they love to shove down the throats of the evil FB’s.
I agree that the NTM’s were at fault, but AEI, as usual, blames it all on the eeeeevil government. In fact, they think that government is so eeeevil that they want it for themselves!
“Hoisted by their own petard.” “Held a gun to the banks head.”
I see I’m getting quoted a bit here, today.
PB I agree it’s a petty comment, but see above..I actually agree with the rest. Where are the damn editors at AEI? Is it just every man for himself anymore?
“Government policies forced a systematic industry-wide loosening of underwriting standards in an effort to promote affordable housing.”
I call BS on the AEI. Government policies didn’t “force” anything. Those loose standards have been around for decades; it was just that the banks were reluctant to extend those policies to anyone but the very rich. Bansk could be burned by such risky mortgages and they knew it.
The problem is that government allowed loosening of underwriting standards, counting on banks to take their own risks. That is, government refrained from “telling the banks how to run their business.” Like the banker pundits on TV always say that they want, you know?
Industry gladly loosened those standards so that they could rubber stamp more mortgages, book more profit from mortgages payment that they thought they would receive 10 years in the future, and collect more fees up front which they would use to buy diamonds for their mistresses. The GSE’s, which were private entities at the time, were forced to follow the same short-term lame-brain policies just to keep up.
Securitization
Loosen underwriting, sell worthless loans to third party conservative investors.
GSE’s
Pensions
Insurance co
Retired people
It’s easy to separate a fool from his money, but much harder to take money from a conservative investor. Securitization was a tool used to take money from conservative investors.
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‘Securitization was a tool used to take money from conservative investors.’ Exactly!
Who is (supposed to be) more conservative than pension fund managers, insurance co’s and retired people? No one I can think of.
They all knew better than to gamble on the RE boom.
It’s NOT easy to take their money. They normally abhor high risk, and you need some sort of.. mania.. before they’ll get involved.
The problem is that when one pension fund takes the leap and shows a profit, it puts pressure on the others to follow suit.
They willingly accepted high RE loan risk (and potentially high gains) because they got greedy. No other reason.
Securitization is just one of several ways to do that, and can’t be “blamed”.
I’d love to know what you do in real life Joey, you are the biggest banking apologist I’ve ever seen.
You really think all these people understood the risk??
Didn’t you know this stuff was rated triple A as good as a treasury.
Then you had investment houses giving bonus money to brokers that got their conservative investors to park cash in these vehicles. They told them up and down how safe they were.
Securitization and compensation that rewards fraud were the two central reasons we had a bubble.
Securitization is just one of several ways to do that, and can’t be “blamed”.
Maybe you should email the pension fund’s and even Pimco’s lawyers and explain that to them.
The Foreclosure Mess:
http://moneywatch.bnet.com/economic-news/blog/daily-money/the-foreclosure-mess-the-start-of-another-bank-bailout/1468/
Securitization has played a huge rule in the financial crisis. Instead of holding on to mortgages issued during the housing bubble, banks sliced them into hundreds or thousands of pieces and sold them to investors. This process divorced lenders from the risk that a borrower might not be able to pay up, and led to the explosion in irresponsible housing loans that inflated the housing bubble. When home prices collapsed and mortgage defaults skyrocketed, investors like Pimco and BlackRock were left holding securities now worth far less than they paid for them. Through their lawyers, they are now crying foul.
measton, your argument hinges on the presumption that pension fund managers and other conservative investors are idiots and/or dupes.
You, otoh, are not. What makes you so different and superior?
My argument is based on a simple fact of life. ALL of us have a greedy streak, which makes us vulnerable.
rio.. we been through this plenty of times before.
if a bank doesn’t sell their mortgages (aka securitization), they soon run out of money, can’t make loans, and are useless to the community.
“ALL of us have a greedy streak”
Some people suppress it because they’d feel guilty now if they didn’t.
Some people suppress it because, even though it would pay off now, it would cost them more five years from now.
The remainder of the population is too busy shopping for Senators to bother with pesky problems like concience and a few years’ time.
Joey, I thought banks used to make their money by receiving interest payments on yesterday’s mortgage, which allowed them to grant a new mortgage today — to worthwhile borrowers, of course. Doing it that way, they could count on the future, but they could only grant new mortgages slowly and they made less prof…
…Yeah, I guess you’re right. Quick cash on shoddy product is all the fashion these days, why should banks be any different?
They all knew better than to gamble on the RE boom.
Until the banks bought off the ratings agencies to issue bogus AAA ratings. Or, until the NAR and their ilk bought off the housing appraisers to issue comps that were 40% higher than historically logical.
Conservative investors thought they were putting money into the penny slots, but the money slot led straight to the roulette table. They were LIED TO, plain and simple.
oxide.. you’ve got many millions of dollars, and you want to invest some small portion of it in RE.
You don’t want to be a landlord, and you don’t have the time or the expertise required to make loans on your own.
Why is it wrong for you to just buy a note from a bank that’s willing to sell it to you for a reasonably small fee?
Joey, there’s nothing wrong with buying a AAA note for a small fee… provided that the property is actually AAA.
oxide..
AAA has the least risk and the lowest returns. It might suit some, but not everyone.
There are plenty of people who desire, or need higher returns, and no law says they can’t invest in B grade or lower.
but back to the poor MBS ratings..
——-
How can a mortgage bond be less than AAA when every house is appreciating by 15% a year?
How can there be a bad borrower when even an unemployed burger flipper can forever refi his mortgage, buy a BMW and a boat, and have money left over?
Was there any risk investing in RE while the bubble expanded? If so, where?
———
Ultimately, just a few bond ratings were proven inaccurate. Not necessarily “less than AAA”.
Poorly rated. Badly rated. Inacurate Even a BB bond might be inaccurate, and the result was risk could not be properly assessed.
It was inaccuracy which caused FEAR and uncertainty to spread. Nobody knew how many CDOs or MBS were or weren’t rated properly.
Due to that uncertainty, the secondary market froze solid. The securitization money stopped pouring in, and the bubble stopped expanding.
More than anything, investors’ fear and uncertainty is what actually popped the bubble, caused the credit crunch and caused the recession.. not bad loans. There was no such thing as a bad loan.
How can a mortgage bond be less than AAA when every house is appreciating by 15% a year? ……Was there any risk investing in RE while the bubble expanded? If so, where?
are those some of them trick type questions?
was there any risk?
To get an inkling of how deceptive the bubble was, consider how many people invested in it and compare that to how few actually profited from it.
Even if you include the people “in the business” who made commissions, salaries, bonuses etc from all the trading and flipping, along with those lucky few who got out at the peak, the ratio of losers to winners has to be near 10,000 to one.
———
Were the big bonus Wall Street types too smart to get personally involved?
Did the various lenders, from local banks to big investment banks load their own portfolios with MBS?
How about the RE agents and mortgage brokers.. did they get sucked into their own hype, buying multiple properties for themselves?
While a few were lucky and stayed out for some reason, nobody was immune to the lure of big gains.
Rio, it’s the usual timescale issue. “Gimme my bonus NOW. The mortgages and the FB’s? Who cares? I’ll just run off with my pile.”
AAA has the least risk and the lowest returns. It might suit some, but not everyone.
Wouldn’t those “some” be…CONSERVATIVE INVESTORS, which is what this conversation was about?!?
oxide.. I took your comment to mean something else.
AAA was a sub-topic, and we don’t disagree on your point. AS long as the AAA really is AAA, there’s no problem buying some.
—
But the main topic proposal, brought up by measton, was that securitization is evil in itself, and it’s existence alone forced even the most conservative investors to act stupid and gamble with OPM.
For some reason, he feels investors should not be allowed to take on the risk (and gains) in loans originated by the banks.
In that light, even conservative investors desiring to invest in certified AAA bonds is somehow viewed as wrong.
The question we asked on this blog was WHY was this happening? How could a burger flipper or strawberry picker pay back 750,000 USD loans?
And in talking about that question - that loan quality was extremely debauched, with NINJA loans and the 750K strawberry picker loans - even we, anonymous internet posters - realized that eventually things would level off. And that a mere leveling off would end the ponzi scheme.
The reason the money managers “blindly” invested in this stuff is because they would pad their own pockets. And that they did. And now, that push has come to shove, the executives in the financial industry walked away with kings’ ransoms in their personal accounts.
You all were talking about tranches above. Ponzi schemes have tranches too. First in get paid first. Bagholders don’t get paid.
The executives weren’t stupid. They were willing to risk other people’s money to enrich themselves. It’s not difficult to understand.
How many of them lost networth during the credit boom? Precious few I’d wager.
Securitization without effective regulation should be banned. The fact is that without securitization and compensation rewarding fraud this bubble would not have formed period.
1. Securitization should have been regulated. Say banks required to keep 25% of the pool, and a buy back provision should be included for fraudulant loans.
2. Rating agencies should be limited to giving ratings so that they can’t be bribed by consulting fees.
3. Issuers should note allowed to select the rating agency.
4. 5% of randomly selected MBS should be rated by several rating agencies.
5. Bonus money for executives and employees should include mostly long term options, say 10 years that can’t be sold.
The question we asked on this blog was WHY was this happening? How could a burger flipper or strawberry picker pay back 750,000 USD loans?
and the answer is the home buyers never had to pay it back, nor was that a concern to anyone.
Property prices rose, banks refinanced, and millions of investors across the globe anxiously bid on that new, larger mortgage. They had an insatiable appetite for more RE investments, and profits.
That’s who paid those mortgages.
Investors believed home prices would only rise further, and willingly financed the bubble.. until the day of reckoning came, and they lost faith.
“Since 1984, HUD/FHA had allowed private mortgage bankers to issue federal credit to guarantee multi-family apartment projects. After issuing $9 billion in mortgage guarantees, HUD/FHA was to lose something approaching 50% of the value of the portfolio…
“HUD/FHA had allowed private mortgage bankers to issue federal credit ”
“allowed.”
These policies were legislated by Congress.
In other words, the AEI is writing a fancy report to blame it all on the Community Reinvestment Act, as usual. IIRC, the CRA didn’t “force” banks to approve mortgages; it just forced banks to look at applications on the basis of individual means rather than blanket redlining of entire neighborhoods. A bank could still disapprove a mortgage, and they did. The CRA was started 30 years ago. If the government had “forced” approvals, wouldn’t we have had this mess 30 years ago instead of now?
Oh, private industry hates them some government, like, say, that evil mortgage interest reduction. I’m sure that back in those days, banks were kicking and screaming in protest that the government was “taking over the industry” and “forcing” banks to accomodate the higher demand for mortgages…. at 12-15% interest each. Right?
“…the CRA didn’t “force” banks to approve mortgages; it just forced banks to look at applications on the basis of individual means rather than blanket redlining of entire neighborhoods…”
It seems like CRA was the thin edge of the wedge which community organizing groups used to hammer lenders into submitting to lax underwriting standards. My recollection of the details is hazy, but it is covered at length in Sowell’s book. I suggest you obtain a copy and educate yourself.
From your link:
——–
“reason: Do you see or anticipate Obama’s reactions being sufficient to turn this downturn into another lengthy depression?
Sowell: I hope not, but what we’ve seen in these past few months is an exercise in unprecedented powers. I mean, to fire the chairman of General Motors, to tell credit card companies how they should run their business, tell GM what kind of cars it should be making, and there’s no sign of an end in sight yet. Obama’s policies are a work in progress. So a lot depends on how far he will push, but I see no signs of him turning back. I see no substantial resistance in Congress. But you never know, as things start to unfold voices of sanity may prevail.”
————
Admittedly, this was 18 months ago, but there are the free-market catch phrases already, which I had mentioned. Tell GM what kind of cars? If it hadn’t been for Obama, GM would be making NO cars at all, there would be NO chairman at all. Admitedly, government put some limits on credit cards, but where did government force credit card companies to approve credit in the first place? I remember that we at HBB argued over what were the causes of the housing bubble. We listed a lot of causes — Greenspan’s low interest rates as the earliest player — but I don’t remember some government law ordering Thou Shalt Approve Mortgages on that list.
As for the CRA, I agree that it was probably a wedge, but i don’t think it was the government that opened the floodgates. I blame that on Angelo Mozilo and the like.
Don’t forget that the CRA worked just fine for a couple of decades, then, in an extraordinary coincidence, caused all sorts of problems- right after the repeal of Glass-Steagall.
“Don’t forget that the CRA worked just fine for a couple of decades, then, in an extraordinary coincidence, caused all sorts of problems- right after the repeal of Glass-Steagall.”
Alpha hits another home run.
IIRC, the CRA didn’t “force” banks to approve mortgages; it just forced banks to look at applications on the basis of individual means rather than blanket redlining of entire neighborhoods.
Slim here.
I live in a neighborhood that, historically, has been redlined.
Matter of fact, one of my neighbors, who has lived here for decades, said that the redline was at Grant Road, which is a major east-west street that’s just .25 mi. north of the Arizona Slim Ranch.
Simply put, if you were black in Tucson, Arizona, you simply could not buy property north of Grant. That’s why neighborhoods like this one were predominantly black for many years.
Nowadays, this area is one of the most ethnically diverse in the entire city. However, there’s still a black core — mostly elderly and very prim and proper — that you’d best get on the good side of if you move in here and start fixing up a house. If you work ethic and your character meets with their approval, well, watch out, honey, you’re gonna get adopted.
There are black people in Arizona?
what are they doing there?
Quite a few of them have been here since the post-Civil War era. They came out here to serve in the U.S. Army (ever heard of the Buffalo Soldiers?) or to work on ranches or in forestry.
Speaking of forestry, there’s a town in northern Arizona (near Pinetop-Lakeside) called McNary. Little town out in the woods that was settled by blacks who were brought out from Louisiana so they could work a sawmill. Ruins of that sawmill can still be seen north of the town.
The CRA was USED, on purpose, by the lenders to make risky loans that they knew the government would make whole if they failed.
…ignoring the lenders who weren’t rescued, and who did fail.. including a couple of the biggest bankruptcies in history.
Strange But True: Dodd-Frank May Actually End Too Big To Fail
By Barbara A. Rehm, American Banker
October 21, 2010
During the financial crisis, the big got bigger.
But over the next handful of years, the giants may become smaller, simpler and safer as regulators use tools provided in the Dodd-Frank Act to make it expensive and inconvenient to be big and complex.
This is not the conventional wisdom. After the bloodbath that was Lehman Brothers, most people believe the government will always cave in a crisis.
When large financial firms get into trouble, “the political authorities will blink and will bail them out,” the Nobel Prize-winning economist Joseph E. Stiglitz said at a recent conference hosted by Financial Times. “There is no doubt about that.”
That may be because the debate over “too big to fail” is still mostly talk. And not terribly convincing talk at that.
…
Everyone hates Dodd-Frank
Posted by Colin Barr
October 21, 2010 6:35 am
Americans aren’t exactly in love with their banks, but they surely prefer them to Congress.
More than half of those surveyed in a new poll say they are dissatisfied with the landmark Dodd-Frank Act. This finding comes from the Chicago Booth/Kellogg School Financial Trust Index, a quarterly record of Americans’ views on the markets, the banks, mutual funds and their interaction with the government.
Just 12% of the thousand-odd respondents to the survey describe themselves as satisfied with the legislation, which was signed into law in July in reaction to the meltdown two years ago of the financial system. That compares with 54% who say they are dissatisfied.
Even the banks aren’t quite this unpopular, though the survey was conducted before the latest uproar about rampant corner-cutting in the foreclosure process.
The headline financial trust number dropped to 25% in September from 26% in June, which amusingly was the all-time high for the series, going back two years. As it happens, banks have been the strongest performer in the index, scoring approval ratings near 40% — twice that of the stock markets and generic big companies, both of which have been languishing in the teens.
The trust number ticked down as Americans grew angrier about high unemployment. Anger hit 51% in the latest poll, its highest level since last fall. Meanwhile, respondents continue to have complicated views about mortgage problems. Four in five think it is morally wrong to default on mortgages they can afford, but 44% might walk if the mortgage is held by a bank accused of predatory lending, the survey shows.
Joblessness and housing aren’t the only things making survey respondents mad. In a less than surprising development, eight Republicans in 10 say they are dissatisfied with Dodd-Frank. The law, more than a year in the making, has been widely attacked as too long (2,300 pages) and as failing to convincingly address the most egregious problems in a deeply imbalanced U.S. financial sector — such as too big to fail and the unclear status of the housing GSEs, Fannie Mae (FNMA) and Freddie Mac (FMCC).
But in a less than uplifting sign for the congressional Democrats who pushed the bill through, 54% of independents identify themselves as dissatisfied with the legislation. Even among Democrats, just over a third said they were either satisfied or very satisfied with Dodd-Frank.
“I was shocked by how little satisfaction there was,” said Paola Sapienza, a professor of finance at the Kellogg School of Management at Northwestern University and a co-author of the study with Luigi Zingales of the University of Chicago. “Reform is perceived as pretty much of a failure.”
…
Meanwhile, 999 of the thousand respondents had no effing clue what was in the bill. The number of those claiming to be satisfied was astounding.
The basic concepts are not that hard to grasp. More big government and much higher transaction costs, with no meaningful risk reduction.
999 of the thousand respondents had no effing clue what was in the bill.
Exactly. I guarantee 9 out of 10 people have no idea what’s in the bill, and their reactions were mostly based on how the question was worded.
“Just 12% of the thousand-odd respondents to the survey describe themselves as satisfied with the legislation.” I bet 100% of those were people like many on here that didn’t read and understand it, but just believe that all bank legislation is good. I have been flamed on here many times explaining how bad it is for this Country.
I have read a summary and my reaction is that it is about control freaks rearranging and padding each other’s chairs. Is there actual “law” in it or just new agency powers? Reform, IMO, would strangle the Fed, not fatten it.
Many sections just say the government will create X to do Y with the details to provided in the future. As with the healthcare legislation, the Obama administration really didn’t care what it said as much as making sure it got passed before the Republicans took control of Congress again and would begin to question it.
How do you explain this guy?
Ron Feldman of the Federal Reserve Bank of Minneapolis has spent his career arguing against big-bank bailouts.
The senior vice president for supervision, regulation and credit, along with his former boss, Gary Stern, wrote a book a few years back prescribing ways to end “too big to fail.”
Feldman is not an easy person to convince that the “too big to fail” era is over, and yet he views Dodd-Frank as nearly perfect on this front.
“I can’t think of any serious idea other than taxation that is not in the bill,” Feldman said in an interview. “I don’t think there is any serious reform that is not in the bill or we don’t have the power in the bill to then implement later. That is pretty remarkable.”
“. . . or we don’t have the power in the bill to then implement later.” How do I explain a guy that is doing nothing more than saying he reads the bill to say he can do whatever he wants under the bill in the future and that is pretty freaking remarkable? Ummm, I think Ben may ban me if I expressed my real opinion as to my feelings as to such people. For all of those that think I’m against due process in general because I think it is irrelavant if a robosigner signed your paperwork if you were not paying your mortgage, here is an example of one of the real elephants in the room. I am sure I will be making many challenges to such wishful thinking.
I find your response inscrutable, but my point was here’s a guy with a lot of experience trying to end too-big-to-fail, and he’s saying the Frank-Dodd bill will do just that. Here’s more (this is from the article (this is from “Strange But True: Dodd-Frank May End Too Big To Fail” that PBear linked to a few posts back.):
“The reform law did not mandate that large financial firms be broken apart, as some had advocated. Instead it uses a belt-and-suspenders approach that may make being large simply not worth the cost or effort.
For example, under Dodd-Frank, any financial firm can be designated as “systemically important” and subjected to close scrutiny by the Fed. So long shadow banking system.
And any firm tagged “systemically important” will face higher capital and liquidity requirements as well as “credit exposure requirements, concentration limits, contingent capital requirements, enhanced public disclosures, short-term debt limits, and risk management requirements,” according to the law.
Dodd-Frank also extended the “prompt corrective action” policy to holding companies for the first time; as a company’s capital declines regulators will be able to bar dividend payments, block acquisitions or restrict growth. When things get really bad, regulators will be able to limit transactions with affiliates, force asset sales or even remove management.
Any company deemed to pose a grave threat to financial stability also could face constraints on its leverage.
As one senior regulator in Washington put it, “Once you get this [systemically important] designation, you fall into a world where you are going to be feeling a lot more supervisory intensity.”
The law also gave the FDIC the authority to resolve any failing financial firm. The law forbids a conservatorship; the FDIC must close the firm and unwind it. To assist with this, the FDIC and the Fed will require big firms to design “living wills,” or road maps for their resolution in the event of failure.
Shareholders and long-term debtholders will be wiped out; there is some wiggle room for short-term creditors, but the law bars even these investors from being repaid more than they would get in a bankruptcy.
New clearing houses will bring transparency to the murky derivatives market; netting will reduce total exposure and it will be easier to figure out who owes what to whom.
Feldman says — and he is backed up by other supervisors, who preferred to remain anonymous — that if Dodd-Frank is implemented effectively, large financial companies will voluntarily choose to downsize because their funding costs will increase as creditors realize they will not be protected in a failure.
“If we get this right and we get rid of the subsidy they have, they are going to figure out whether they need to get smaller,” he said. “Maybe they will hold more capital, maybe they are going to make themselves simpler, maybe they will just sell assets, or maybe they will just take on less risk. … I don’t know which one it’s going to be, but that will be the sign” of whether the regulators have done their jobs.
“Two or three years out, if we don’t see some of that then something is not working right,” Feldman said.
Another regulator is blunter.
“The cost of credit to those firms that have benefited from ‘too big to fail’ historically is going up, and in relative terms they are going to be smaller. It’s a logical implication — and not a bad one.”
“…discovered errors in 10 to 25 out of the first several hundred foreclosure cases it examined starting last Monday.”
To make a conservative estimate of the overall number of problem cases in BofA’s foreclosure files, let’s assume the “first several hundred” was 1000 and “10 to 25″ was 10; that’s a 1% error rate, which, applied to 102,000 files would imply 1,020 problem files.
Not sure whether that is an unusually high error rate for foreclosure files, but it is important to recognize that these files are used as the basis for throwing families out on the street. Would 1,020 wrongful evictions be an unacceptably high number for BofA?
P.S. Why is the WSJ incorrectly (but deliberately) referring to residential real estate as “commercial”?
* COMMERCIAL REAL ESTATE
* OCTOBER 24, 2010
BofA Finds Foreclosure Document Errors
BY DAN FITZPATRICK
Bank of America Corp. for the first time acknowledged finding some mistakes in foreclosure files as it begins to resubmit documents in 102,000 cases.
The Charlotte, N.C., lender discovered errors in 10 to 25 out of the first several hundred foreclosure cases it examined starting last Monday. The problems included improper paperwork, lack of signatures and missing files, said people familiar with the results. In certain cases, information about the property and payment history didn’t match.
…
“Would 1,020 wrongful evictions be an unacceptably high number for BofA?”
Except for the one case where one BOA department sold the property in short sale while another proceeded with foreclosure, the evictions themselves weren’t wrongful, just the the sloppy manner in which the banks did the paperwork.
Keep in mind that many of the paperwork problems comming to light are problems with the original loan documents. Crappy loans begat crappy foreclosures.
let’s assume the “first several hundred” was 1000 and “10 to 25″ was 10; that’s a 1% error rate, which, applied to 102,000 files would imply 1,020 problem files.
And, just for fun, let’s assume the ‘first several hundred’ was 300 and ‘10 to 25′ was 25; that’s an 8.3% error rate, which, applied to 102,000 files would imply 8,466 problem files.
That’s a lot of potential lawsuits.
This was posted late yesterday but I think needs way more attention.
This little cottage industry is going to grow and grow and grow as pensions/institutions cram back mortgage investments back onto the banks who will then try to cram them back on to the home buyer because of fraud (which is rather ironic)…
I think another cottage industry that will also grow will be tracing down the original mortgage notes/deeds for foreclosures that have been suspended.
————
Home loan auditor is hot on the trail of mortgage fraud
Insurers, lenders and investors hire Robert Simpson’s firm to dig up falsifications of the borrower’s employment, income and debt load. It’s lucrative work: Simpson expects more than $12 million in revenue this year.
By E. Scott Reckard, Los Angeles Times
The gig: President of Investors Mortgage Asset Recovery Co. The Santa Ana firm audits home loans that have gone bad, looking for falsifications of the borrower’s employment, income, debt load and other details. Clients typically are mortgage insurers that are on the hook for some or all of the losses on the loans — unless fraud is found.
.
Quote: “Insurers have obligations to pay legitimate claims. They also have a duty to their shareholders to deny false claims.”
.
Knowledge base: A UCLA economics major and a Duke University law-school graduate, Simpson was a mortgage broker for nearly a decade before spending three years at a law firm working on large loan-fraud cases. “I bring a lawyer’s judgment about standards of proof combined with a loan officer’s eye for, ‘Hey! I know what happened here.’”
.
The entrepreneur: Simpson and a partner formed IMARC in 1999 to work for insurers, lenders and investors. Clients hired IMARC to dig up evidence and pursue damages from mortgage brokers or real estate agents liable for misrepresentations, then split any funds recovered. In the firm’s first seven years, the typical settlement was $50,000; the largest recovery was $1 million.
.
Frauds uncovered: In addition to the usual bogus jobs and overstated incomes, deceptions included borrowers who supposedly occupied homes but really were speculative investors. “Remember when grocery checkers used to talk about owning three or four condos in Palm Springs? How do you think they got them? Who helped them?”
http://www.latimes.com/business/la-fi-himi-20101024,0,7059209.story
“I think another cottage industry that will also grow will be tracing down the original mortgage notes/deeds for foreclosures that have been suspended.”
ISTR a news article a couple of years back that mentioned how when a small subprime mortgage lending shop imploded, boxes of mortgage documents were found in the dumpster behind the building. At the time, identity theft from the social security numbers on those documents was a bigger concern than “someday someone may have to produce this note (or a copy) in court”.
boxes of mortgage documents were found in the dumpster behind the building.
That, or something similar, is what I suspect happened to a lot of the original notes.
Of course. Because it was sold to Wall St. who sold it to investors who resold it to other investors.
Or because they had scanned them all into a document management system.
Is the document management system holding the guy’s 1.5 million dollar note that no one can seem to produce? Because if so, it’s not working very well.
Which leads to a question: Iif there is a title, the last name on the note is the owner, up to the break in chain. What if there is NO title at all?
You mean no note or no title? If no title has ever been on record, I suppose its government land (does conservation land have titles??). No note… well… if there really is no note or copy whatsoever to be found, it would be in the lenders interest to offer a loan modification ASAP in order to generate new loan docs.
IIRC, our county recorder of deeds office lets you order a copy of the title and note on any property for a small fee. I don’t know if all Recorder of Deeds’ offices across the country keep a copy of the note on file, though (sure might solve a lot of problems if they did). That doesn’t mean the note hasn’t been sold (i.e. if the banks sold it and failed to record the note sale properly). In which case, only the noteholder on record can foreclose. It seems the note buyer has a couple of options, all of which take time and additional money, and possibly lawyer/court fees:
1. If the terms of sale require the note seller to re-record the note, the note buyer could argue that failure to have done so invalidates the sale of the note, so note buyer could force the note seller to take back the note. Note sellers won’t want to do this because the property is not generating payments anymore and is almost certainly worth less than the note.
2. Show proof of sale and force the note seller to record it properly, after which the notebuyer could foreclose.
3. With proof of sale in hand, the note buyer could do a loan mod on the property, which generates fresh paperwork to be filed with public records.
4. Reach a deal, if this is legal, with the original note seller to foreclose on note buyers behalf.
Bank of America, JPMorgan Chicago Evictions on Hold
Foreclosure evictions by Bank of America Corp., JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC will be suspended next week in Cook County, Illinois, which includes Chicago, Sheriff Tom Dart said.
Dart said yesterday he is halting evictions until he receives assurances that they are legal. His decision, effective Oct. 25, affects about 1,500 pending cases, he said.
“I need them to tell me that everything was done properly,” Dart said at a press conference, referring to the lenders. He is demanding affidavits to support the banks’ cases, he said.
…
“The sheriff faces re-election for that post and said he is contemplating a run for mayor of Chicago, the third- largest U.S. city.”
That’s what its really all about.
“I need them to tell me that everything was done properly,”
Isn’t that what the Judge is there for?
And the bank-signed affadavits meant so much the first time around!
Buffett makes a mint from Goldman Sachs stake
By Michael Baxter 22 Oct 2010
“My favourite timeframe for holding an investment is forever,” said Warren Buffett once. Well, it doesn’t look like his stake in Goldman Sachs, bought in September 2008, will last so long. Even so, our Warren has pocketed himself a tidy fortune. Maybe the government should take a leaf out of Mr Buffett’s book.
…
That’s why I doubled down in BRKB early this year -
I’m pretty sure Buffett is as just as dirty as the rest of the criminal banksters and could get cuffed for multiple counts of securities fraud. Remember, Ken Lay was a hero once upon a time.
Letter:” Whitman has few redeeming qualities
Chico Enterprise-Record
Posted: 10/25/2010 12:35:37 AM PDT
How could anyone vote for Meg Whitman?
Why vote for someone who has shirked her civic duty by not voting over the past 30 years?
Why is she spending so much money trying to get a job that pays one-third of what she is spending? What’s her hidden agenda? If she cares so much about California people, even one-third of the money she spent campaigning would have gotten several homeless people or families off the street.
When she had to pay back money when she was at Goldman Sachs, how could we trust her not to do that again?
…
It seems Whitman has a monumental ego. As someone who has sold on ebay and had to deal with her constant edicts and changes over the years (and those of her acolyte, Donahoe), it gladdens my heart to see her flush a good chunk of her personal fortune down the toilet. May she never recover a cent of it. Brown holds a double digit lead. But keep on spending, Meggie!
Wow, she really got sandbagged by Brown & Co.
Meg only admitted that she had a husband in the last week. I am an admitted liberal, but what’s up with Meg and Carly as megalomaniac control freaks with more money and ego than common sense or compassion?
Egomaniacal male candidates for top office typically at least have the basic sense of human decency to let their wives take a public role in the campaign.
Human decency? More like election prop.
No one knew both Bush wives were pro-choice until after their husbands were out of office. They were told what to say and trotted out on stage when appropriate.
I have little doubt that both Bushes were pro abortion rights as well. W’s fundy facade was just that, a facade.
“election prop”
It beats invisibility.
W was deeply fundamentalist and had Billy Graham on speed dial. There are many stories of him calling Graham for advice on issues while Gov.
“W was deeply fundamentalist and had Billy Graham on speed dial. There are many stories of him calling Graham for advice on issues while Gov.”
The fact that he made it publicly known that he made those phone calls is indicative to me that it was for public consumption/image building.
I can already hear those phone calls:
“Hello Rev. Graham. I want your opinion on whether or not we should invade Iraq”
“Well, Mr. President, a lot of innocent people will suffer and die if we do that. Might not there be another solution?”
“Thanks Reverend. I’ll look into that.”
It was more esoteric - like do Jews go to Heaven?
I heard (from a friend, so take the following with a grain of salt) that Laura Bush is:
1. Pro-choice
2. A smoker
3. A Democrat
Don’t ask me how my friend knows the above — she’s a retired high school librarian — but that’s what she said.
Meg and Carly as megalomaniac control freaks with more money and ego than common sense or compassion?
Basic inGREEDients for “TruePurity / TrueHypocrite™” political pancakes,… add Monsanto canola butter & Aunt Jeremiah corn syrup maple flavored synthetic tax cuts benefits from the top down,…ummmm, ummm good!
Czarly has kept a low profile during the campaign. I suppose that it comes of the “open mouth/insert foot” syndrome she suffers from.
That “Demon Sheep” internet ad told me all I needed to know. I can see why HP employees couldn’t stand her.
That’s not true, Robin. Meg Whitman has been married to Griff Harsh III, neurosurgeon for years and they seem to have a tight relationship. But you’re right that she’s a megalomaniac. $140 million on a campaign? We have received as many Meg Whitman mailings as all the others combined this election cycle, and her ads innundate the TV. It’s legal, but it’s not right.
Meg, IMHO, has a bottomless hole deep in her psyche that she is desperate to fill, and this is source of the overpowering force that rules within her.
Perhaps she should try moving on to a Hollywood acting career?
Hollywood and politics both draw to them the same type of people.
In Hollywood and in politics the winners are generally the ones what will do WHATEVER IT TAKES to win.
This is not always true but is generally true.
its not just hollywod and politics. read the book snakes in suits…read the fable of the frog and the scorpion.
society is filled with these people (scorpions) at all levels and places.
they are sinsiter.
Anyone, of either political persuasion or either gender, who runs for office is first and foremost on a power trip. They desire that power over their fellow citizens. It’s the motivator at every level, from HOA board to county council to state legislator to federal office.
I also suspect sociopathic traits for any politician.
Sounds like Ms. Meg is a narcissist.
I hate to say it, but she seems like just another high-achieving striver looking for a suitable followup to her splendid career in private industry - won’t her OLD classmates be impressed1…no real ideas there, just move on.
An Agatha Christie quote:
“Most successful people are unhappy. That’s why they are successes - they have to reassure themselves about themselves by achieving something that the world will notice.
“The happy people are failures because they are on such good terms with themselves they don’t give a damn.”
Money can’t buy happiness - but it sure can rent it for awhile…
You may have nailed it, In Montana. It makes more sense than anything else one could think of.
Voting is for delusional suckers:
http://tinyurl.com/36ca8xz
You have been a voter for 30 years?
Now I know who to blame for what government has become.
Change takes serious work not pulling a booth handle.
“Change takes serious work not pulling a booth handle.”
I’ve never seen a voting machine like that.
They are awsome. I miss the NYC and NJ voting machines with the huge handles that you have to shove over nearly two feet to register your vote. They are mechanical rather than electronic. The thud that completes your vote is very satisfying. And I like the actual curtain that closes behind you so you are really alone when you toggle the switches.
The thud that completes your vote is very satisfying.
I can just picture Oly writing one of her soliloquies on the above. (Dang, I miss her!)
I didn’t read the stuff on your website, lint, but what’s the harm in voting AND getting more involved?
Political Hotsheet
October 25, 2010 12:21 PM
Meg Whitman, Down in Polls, Calls California Governor Race an “Unhappy Choice”
Posted by Stephanie Condon
Trailing her opponent in the California gubernatorial race by 13 points in the latest poll, Republican candidate Meg Whitman appears to acknowledge in her latest campaign ad that she is not popular with voters.
“I know many of you see this election as an unhappy choice betwen a longtime politician with no plan for the future and a billionaire with no government experience,” Whitman says in the ad.
…
I am wrapping up my week long trip to DC and NYC. It’s hard to say there’s any sign of recession in both of the cities. Locals are as intense as always, shops are packed, streets are packed and tourists are pouring in. What’s recession and where does it live?
People are definitely on the move, but don’t confuse traffic with actual purchasing activity. Anyway NY and DC are “different”, these two cities are joined at the hip and parasitic on the rest of the country. Money flows to NY and DC, much of the rest of the country sucks hind tit.
Isn’t that the way it is with all big metro areas? From my experience, the highest wages and best opportunities have been in big cities. Woe to whoever is unemployed in a small town and stuck as a mortgage slave.
FWIW uemployment is sky high in SoCal and the Bay Area.
Don’t be fooled by dee-cee. Despite what you saw, people are nervous about what is happening because they know the money flow into it depends on the economy everywhere else.
People may PRETEND everything is all right, but they are quietly making changes in their personal life to prepare for whats coming.
In addition, you can’t use it as an economic measure because as Dave Chappelle pointed out, there are no poor white people in DC.
Its totally disconnected from reality.
Tough Times Head West After Recession
Unemployment In Western States Rose Faster Last Year Than Other Regions
CHRISTOPHER S. RUGABER, AP Economics Writer
Posted: 5:46 pm EDT October 22, 2010Updated: 7:43 am EDT October 25, 2010
WASHINGTON — A delayed decline in home prices and drops in manufacturing and tourism have caused unemployment in western mountain states to rise faster in the past year than in any other region.
The jobless rate in the eight-state Mountain West region has jumped to 9.3 percent from 8.7 percent a year ago. That’s still lower than the 9.6 percent national average. But the gap is narrowing with the rest of the nation. The jobs crisis in regions with higher unemployment has mainly stabilized.
The lagging pace represents a sharp turnaround for a region that had been growing at a healthy pace before the recession. And it illustrates how broadly the Great Recession and its aftershocks are affecting the country.
…
Seems like there’s always a delayed reaction, which allows Realtors to claim it’s different here for an extra year or two.
Maybe tourism is the only hope, because a pet boarding and store in our old nabe closing up after 35 years, cant afford to stay open anymore
2 new factory type buildings with for rent/ sale in Long island city…more long term businesses gone.
Sure it would make sense to tear down some of these old buildings and put affordable or public housing..(luxury wont sell since they wont have any views of Manhattan)…but with NYC housing authority so behind on repairs it wont happen, yet they are good locations near subways buses…
Places are packed because they aren’t jetting off somewhere else. Roads are packed because there aren’t enough roads and the subway system is falling apart. Did you know that the roof of my subway station has stalactites?
NYCDJ, those are really poignant observations.
And Oxide - Say it ain’t so! I thought you were here around DC!! I’m pretty jaded, but I always perceived the DC Metro stations as comparatively spotless and in good repair!
Fraud as business model for big banks
Clearly fraud as business model has failed to be viable long term. As with any failed business model in a free market economy it should be history by now. It survives and thrives to this day through massiv infusion of taxpayer cash, ZIRP and the suspension of the rule of law for big banks. In particular mark to fantasy accounting and foreclosure fraud.
Our politicians scarificed the rule of law and free markets in favor of criminals that make huge campaign contributions. Both parties are equally guilty of enabling and extending this fraud. Unfortunately the voters are to ignorant to see this. They believe what is fed to them via the regular news channels which are controlled by the same interest that controls our politicians.
One noteworthy exception appear to be the state general attorneys. Where is Eric Holder? I am afraid those investigating the big banks will face a lot of pressure to cease their inqueries. How much pressure and who will cave in remains to be seen. I am sure the banks are busy digging up dirt on the GAs. Hey mister G. A. if you play nice I have a sweet job for you serving at Mega Bank Inc., otherwise we’ll be serving up a sex scandal. We also have a witness that can testify you sold quarter bags back in college.
“Where is Eric Holder?”
You mean Eric “Nation of Cowards” Holder? Why, he’s too busy righting wrongs in Arizona, suing the state for trying to protect itself from gangs, drug cartels, illegal immigrant parasites, that sort of thing. You know, instead of seeing that the government does its duty by protecting the border and repelling criminal organizations and foreign invaders. It takes a lot of manpower at the Injustice department to coordinate all those countries like Mexico and other third world sh*tholes that want to sue Arizona, too. Oh, not to mention, when those two kids up in Pennsylvania were found not guilty of violating the civil rights of an illegal immigrant, the Injustice Department had to work hard to dig up a Federal housing statute to try the case again, but no worries, this time they nailed those little white trash buggers, with lots of help from LaRaza and Maldeff, etc.
Yessir, that Holder is one heckuva legal beagle.
Hey, folks, you wanna see what international justice is like? Watch these cases. That’s international justice. It resembles third world kangaroo courts.
Oh, by the way, did everyone know that Eric Holder’s father was a realtor? Bwahahahahaha!
Don’t forget Holder’s soon to be enforcement of Federal drug laws in California should that Prop pass.
Cali’s effort to legalize certain substances in the state is another effort to defend from drug cartels, a job the fedgov won’t do.
What a complete putz Holder is.
Here’s what Holder’s justice department is up to. If this wasn’t a lynching, I don’t know what is. Probably got some real jollies out of it.
http://www.diggersrealm.com/mt/archives/003482.html
Holder is only doing what his boss wants him to do.
There is a sea-change in personal integrity occurring in the world at this time. Lying as a means to get what one wants is now seen as acceptable. The kids see the parents doing it and the trend will only get worse. Personal accountability is at an all-time low. There is a price…
“…otherwise we’ll be serving up a sex scandal.”
There has never been a better time for state AGs to avoid pricey escort services.
The lesson to be learned - always pay cash.
Paying cash keeps you out of all sorts of problems.
“Clearly fraud as business model has failed to be viable long term. As with any failed business model in a free market economy it should be history by now.”
So I guess we’ve never had a free market economy in history.
Mortgage Mess: Shredding the Dream
By Peter Coy, Paul M. Barrett and Chad Terhune
The foreclosure crisis isn’t just about lost documents. It’s about trust—and a clash over who gets stuck with $1.1 trillion in losses
In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents stopped making payments on his $1.5 million mortgage.
The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents’ promissory note, If his mortgage holder couldn’t prove it held his mortgage, it couldn’t foreclose.
Eight years after defaulting, Lents still hasn’t made a payment or been forced out of his house. Lents’ debt has grown to about $2.5 million, including unpaid taxes, interest, and penalties. As the stalemate grinds on, Lents has the comfort of knowing he’s no longer alone. When he began demanding to see the I.O.U., he says, “I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me” asking for advice. Lents is irked when people accuse him of exploiting a loophole. “It’s not a loophole,” he says. “It’s the law.”
http://www.businessweek.com/magazine/content/10_44/b4201076208349.htm - 55k -
Lents is free to spend at will as he lives without the expense of serivicing/repaying the $2.5 million. Squatting is good for the economy.
“It’s the law.”
So is paying your taxes and paying back money you borrowed.
His reward is to try to get to sleep while one ear is tuned to that inevitable knock on the door by the sheriff.
i mean think about it.. would you feel comfortable just leaving your house for an hour knowing you may return to find it boarded up? That’s no way to live, imo.
Didn’t he enter into a legally binding contract to repay the loan?
I assume his response would be that he’ll pay back the owner of the note. But no one seems to be able to produce the note.
it must have been recorded at the recorder’s office.. but the court won’t accept a computer file?
It needs to see the original piece of paper?
IIUC, the court needs to either see the note and mortgage, or a signed affidavit that the note and mortgage exist as represented and can be produced if asked. And there’s the rub. People are starting to ask.
IIRC, the official homeownership in the loose money era topped out at 68%. I have watched it climb over the years and actually taken some civic pride in its success. I truly believed it to be a worthy goal.
After assessing how that figure was so recently accomplished by fraud and deception along with inflated home prices and stagnant or falling wages and jobs, I am compelled to reconsider. Is 50% a lofty goal nowadays?
BTW PB, I still firmly believe some real estate is astonishingly local. Sunset Beach, Del Mar, or other beach communities like Newport?
You don’t create a nation of homeowners using no-money-down interest-only adjustable rate mortgages. You create a nation of indentured serfs, perpetual interest paying serfs. That’s the furthest thing away from ownership.
Furthermore, you don’t promote affordable housing by wasting billions of dollars keeping prices artificially elevated. Let prices fall and homes will become affordable. With affordable homes people will have money left over to buy cars, furniture, and so on.
This home investment obsession, this mania, this unreasonable expectation of wealth and money for nothing, has to stop.
Oh it will end eventually. Just like it always does in history.
Badly.
Home ownership doesn’t change much.. it’ll never go down to 50%.. probably never even go down to 60%.
Probably never rise above 70% unless we experience an even BIGGER housing bubble than this one.
Here’s a chart from 1965 to present..
http://www.aier.org/research/briefs/533-home-ownership-in-the-united-states
Sometimes you gotta let people follow their own logic in order for them to understand why it won’t work.
An economics professor at a local college made a statement that he had never failed a single student before, but had once failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan”.
All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy… As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.
Who said Obama’s goal was to make the Country a better place? As a community organizer he made his money by exploiting groups he claimed to represent but did not belong to considering the totality of the circumstances. He served as nothing more than a parasite. Remember, ACORN is pretty much defunct now because of all the illegal activity that occurred within the organization.
Sometimes you gotta let people follow their own logic in order for them to understand why it
won’t work.doesn’t apply logically to what they are trying to force it to apply it to.This would be a tenured professor that can never lose his job saying Socialism doesn’t work, right? Teaching a class of students who received goverent backed loans, right? In a state sponsored institution, right?
Its a cute story, but it’s moral is bogus. Rewards are not distributed evenly in socialist societies. Heck, that didn’t even happen under communism.
A made up story to be sure.
The professor could have devised another test. In a class of 100 people
3 of the students would be put on Team A. Instead of taking the exams Team A would go through the graded tests from Team B and take correct answers. They would have to take 20 correct answers for each question to get it right. The other students would get the answer wrong if the Team A raided their test question.
After Test 1 Team A all got A’s and the rest of the class averaged a D. Even the people who studied and worked hard got a D’s.
Test 2
Team A got a B
the rest of the class failed.
Test 3 Team A and B both failed because no one from Team B showed up to take the test.
This is the model of oligopoly and entrenched corporate power that allows a few to siphon off the productivity of the many.
PS
What you describe in your example is communism not the socialism that exists in Europe.
Indeed. Lenin and Stalin described what they were doing as socialism in order to make it sound better than it was. So pointing to the USSR and saying “Socialism is a proven disaster” is rather missing the point.
In actuality, what Europe, Australia, North America have are a number of countries, all with mixed economies involving capitalist and socialist systems. Some mixes work well, some not so well, and what works in one culture does not necessarily work well in another. The point is not whether one country is better than another, but whether, in any given culture, the mix of socialism and capitalism is optimal in terms of efficiency and social and moral values.
In the US we are less troubled by inequality than most other places, as we prefer liberty to fail and succeed as an important aspect of equality itself. This is true up and down the socioeconomic ladder. This is more important than an argument about whether one version of a system is more efficient. If it is what we want, it is what we should do. And if we, as a people want a socialist system in some respect that is less efficient, it is our rights as a free people to choose it.
In the US we are less troubled by inequality than most other places, as we prefer liberty to fail ,
Not exactly true are system allows a sellect few to never fail and to always be bailed out.
+1
Repeating those little neocon “homilies” is the intellectual equivalent of a tramp stamp.
What do you do when facts and intellect elude you?
Make up stories!
From
http://www.businessweek.com/magazine/content/10_44/b4201076208349.htm - 55k -
Even if the documentation problems turn out to be manageable—as Bank of America (BAC) and others insist they will be—the economy will still suffer long-term consequences from the loose underwriting that caused the subprime housing bubble. According to an Oct. 15 report by J.P. Morgan (JPM) Securities, some $2 trillion of the $6 trillion in U.S. mortgages and home-equity loans that were securitized during the height of the bubble, from 2005 through 2007, are likely to go into default. The report says the housing bust will ultimately cause losses of $1.1 trillion on those bonds.
…which is why they are about to get sued and resumed foreclosures.
Mortgage break facing ax?
The hugely popular mortgage-interest tax deduction could be targeted by a bipartisan commission aimed with finding ways to chop the U.S. deficit, according to a report published Monday.
Hugely popular? Even amongst renters and outright owners?
Before any tinkering is done to income taxes, the mortgage interest break needs to go bye bye.
I couldn’t agree more. If nothing else, the break needs to be capped (at a % of median home price, for example), it’s a tax break to the wealthy. Even if it was capped at 1M dollar loan amounts (which would ONLY effect the very, very wealthy) it would have an impact and do more to prevent this “debt spending” spree that we’ve been on for so long.
The reason they won’t mess with the deduction though? It’s one of the reasons that many people buy houses (even people in low tax brackets buying 150K houses with 100K mortgages). Almost nobody understands it, and even fewer understand that a median buyer is going to have almost no positive impact from it. However, it’s a remarkably effective sales tool for Realtors!
And for that reason alone, I think it’s here with us for a long time.
Just cap the max mortgage amount, that’s really the right way to handle this crazy deduction. Or, better yet, make all interest deductible again. Encouraging people to mortgage their house to buy cars/boats/jet skis/etc is bad policy, either all interest is deductible or none is. Make up your mind.
It is already capped as the AMT(non inflation adjusted) comes into play.
I thougth this too but when I messed around with Turbotax it didn’t seem to affect it??
If they roll back this on all homes it’s a huge hit to the middle and upper middle class which pay a much higher percentage of their income for homes than the elite. Also they are more likely to take out loans. If they cap it I suspect it will be a big hit to the upper middle class which seems to be their target. Can’t tax people without money can’t tax people with Wall Street money because they own the gov.
The only way that they could consider doing this is to remove the deduction going FORWARD, and grandfather in everyone with the deduction today. Home prices would fall in response to this action, making the overall impact on new buyers negligible. Those who own homes already would take a hit when the go to sell, and would lose the deduction when they bought again (but, also wouldn’t pay “bubble prices” for homes because of interest deductions).
Yes, it’s a hit to the middle and upper classes. It’s something that needs to be done though; encouraging borrowing through the tax code is stupid policy. You should get more deductions the more equity you build in your house, not the other way around!
I’d just point out that the effective tax rate is highest not for the top 0.1% or top 1%. The top 400 tax payers pay effective tax rates of 16% while those in the upper middle class pay 25-30% and many near the middle pay close to 20%.
“…and even fewer understand that a median buyer is going to have almost no positive impact from it.”
I’m one of those fewer. Can you elaborate? Is it because any benefit is ultimately outweighed by sellers charging more for there homes as a result?
Sleepless,
Well, yes, the “charging more” is an issue, but it’s really impossible to quantify.
The reason most people around median income don’t benefit very much is that they have to give up the standard deduction to get it. The deduction for a married couple is currently 11,400 dollars, so, when you buy a house (and itemize) until you hit 11,400 you’re just “breaking even”.
Let’s put together an example:
200K house, 160K MTG at 5%
RE taxes of 4K/yr.
Year 1 (the best year for interest), you will pay ~8K in interest. It will only go down from here.
When you itemize (assuming no other big deductions), you’ll be able to take your RE taxes and interest as itemized deductions, bringing you to 12K/yr in itemized deductions.
However, to get that 12K/yr, you have to give up the 11,400 dollar deduction, so you’re net change is only +600 in deduction. Not very much, and, by year 3-4 (when you’re paying less interest) this will only continue to fall. Also, most of your income is probably not in a terribly high tax bracket (as a median earner), so the deduction (even if you did have a lot to deduct) is worth less than a higher earner.
Now, take the example of a 600K house with a 500K mortgage:
500K MTG at 5%
10K/yr in RE taxes
Year one you will pay ~32,000 in interest.
Same thing applies, you give up the std deduction (11,400), but now you put in it’s place a 42,000 dollar deduction. You get to erase about 30K in income. And, that 30K of income is probably at the 28% or 33% tax bracket. So, in many cases, the deduction, year one, for a high income earner could be worth (net, after subtracting out what give up losing the standard deduction) ~10K or more (30K income that’s no longer taxes).
Until you start looking at MTG amounts of 250+ the deduction is probably almost a wash. At 300-400K, it starts to make a pretty big difference. And, at the higher numbers, it really starts to add up.
Thing is.. Median income in this country is ~50-60K. Which means that max affordable house is 150-180K. These folks see almost no (or no) advantage from this deduction.
Hope that helps, and, if I messed up any of the numbers, someone please feel free to fix them!
Sorry. When you said median I was thinking you meant median home price… (in which case I guess its still the same case assuming the median income earner buys the median priced home)
Could this be another reason NAR is/was pushing people into buying houses they can’t afford?…ie - if you buy the median priced home as a median income earner there’s no benefit; spend to get more…
“Could this be another reason NAR is/was pushing people into buying houses they can’t afford?…”
I don’t think most RE shills honestly know the breakpoints (where it starts to really matter), they just use it as a sales tactic. I’ve heard them talking to folks (at new home sales offices) looking at 150K homes about “think about how much you’ll save on taxes”. It’s simply a sales tool for them, they don’t actually know/care if actually does (helps) anything, they just know that people have heard that “buying a home saves a ton on taxes”. And, it’s true, as long as you’re a high income family buying an expensive house. But, given that ~80% of the country can’t afford a house >300K (because their income is <100K), it’s a huge misnomer; it saves on taxes (sometimes HUGE) for the expensive houses. But for most people, it’s a non-event (or should be, assuming they are spending an appropriate amount on a house).
“(in which case I guess its still the same case assuming the median income earner buys the median priced home)”
And that’s the most important statement right there. Median home prices and median incomes are inexorably linked. It’s the thing that most people forgot during the boom, but, for 95% of the country, if you want to know what the median house costs, all you need to know is what the median income for that area is. The exceptions are vacation spots and places with “old money” wealth. Everywhere else, that’s (median income) the only number you really need to know.
yep, to actually receive a tax deduction on your mortgage, you have to be paying huge amounts of money to the bank………they don’t quite balance out, do they?
Here are the top five discretionary budget items (2010):
Discretionary spending: $1.368 trillion (+13.1%)
* $663.7 billion (+12.7%) – Department of Defense
* $78.7 billion (−1.7%) – Department of Health and Human Services
* $72.5 billion (+2.8%) – Department of Transportation
* $52.5 billion (+10.3%) – Department of Veterans Affairs
* $51.7 billion (+40.9%) – Department of State and Other International Programs
I can’t believe the DOT expenditure is so low. Texas seems to get almost that much every year.
That will work great for oldsters like me who can pay off their mortgages, but not so great for the young. The silver lining is that it will help prices fall, thus making it more likely in the long term that the young can buy a house with a small mortgage.
Existing Home Sales in U.S. Probably Rose for a Second Month
Sales of U.S. existing homes probably climbed in September for a second month as the industry that precipitated the worst recession since the 1930s struggled to overcome mounting foreclosures, economists said before a report today.
Can’t wait for the first month the Great American Foreclosure Fiasco shows up in the existing home sales data…
Title of article: “Home sales up 10 pct.”
Last line of article: “The median sale price was $171,700, down 2.4 percent from the same month year ago.”
Clear Capital™ Reports Sudden and Dramatic Drop in U.S. Home Prices
Most recent data shows a two-month 5.9% price decline representing a magnitude and speed of decline not seen since March 2009; similar declines for September and October expected to appear in other industry indices in coming months.
TRUCKEE, Calif. – Oct. 22, 2010 – Clear Capital (www.clearcapital.com), is issuing this special alert on a dramatic change observed in U.S. home prices.
“Clear Capital’s latest data shows even more pronounced price declines than our most recent HDI market report released two weeks ago,” said Dr. Alex Villacorta, senior statistician, Clear Capital. “At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.”
“At the national level, home prices are clearly experiencing a dramatic drop from the tax credit-induced highs, effectively wiping out all of the gains obtained during the flurry of activity just preceding the tax credit expiration.”
We HBB-ers predicted that this very thing would happen. (Cue up the applause and take a bow, everyone!)
It was really a no-brainer; hardly even worth accepting the credit for being right on it. But any of the MSM-favored experts who missed it deserve to be forced to wear dunce hats and to get sent to the corner for an extended period.
But any of the MSM-favored experts who missed it deserve to be forced to wear dunce hats and to get sent to the corner for an extended period.
And, after that, send them to bed without supper. That’ll learn ‘em!
“Probably?” In others words, a non-story and waste of time and space.
Precious metals are also rising.
Remember, you can’t eat a house.
Nor can you eat precious metals.
I do use silverware to facilitate eating.
I understand they are low on calories but aren’t they hard to digest?
Combo, in the 5,000 year history of gold as a holder of value, particularly the opposite of paper money, I imagine that not one human considered that yellow metal as a tasty treat!
It was used to treat arthritis not too many years ago.
Said to cure stye’s on the eye. Rub a gold wedding ring on the stye.
Oh yes you can eat precious metals.
Gold is used in desserts that do look yummy.
Silver is “eaten” for medicinal reasons.
link to picture of a gold dessert you can eat:
http://www.trendhunter.com/trends/25000-nyc-dessert-guinness-record-frrrozen-haute-chocolate
“A $25,000 chocolate sundae made the Guinness Book of Records today, officially earning it title for world’s most expensive dessert…”
I understand that even toxic mortgages are edible. Taxpayer feed.
Case in point, Montana’s candidate, Blue Man.
http://tinyurl.com/afvc
That was the tragedy of King Midas. Everytime he picked up his food to eat it, it turned to gold. Poor guy starved to death.
Precious metals are also rising.
…for no reason other than people believe they are rising.
“…for no reason other than people believe they are rising.”
Or because, unlike housing, there are supply concerns.
And because it’s a good store of wealth, and if you don’t have any while facing a default in the national currency as was with Argentina, you might pay more to use that storage vehicle.
Right now, you can trade $1,340.50 for an ounce of gold.
…but if you already have an ounce of gold, nobody will give you $1,340.50 for it. You’ll get substantially less.
So, which is worth more.. 1,340.50 fiat dollars or an oz of gold?
So, which is worth more.. 1,340.50 fiat dollars or an oz of gold?
Neither, compared to your fear of gold.
Joeyincalif is wrong again. Take a look at this search on ebay. Note: completed auctions have had higher prices than this today but you have to be signed in to see them.
Good morning all! Next week I’m heading downtown to go to an auction. This is my first time going to one and I’m sort of excited/interested in seeing what it is all about. Anyone here ever been to a RE auction? Have any interesting stories?
The reason Im going is to check out a REO house I have been tracking for a few months now. Nice little place, some updates, decent sized lot for the area - It sold in 2006 for 510K, listed earier this year for 450K, then 399K, then 329K, now the opening bid for the auction is 149K. I have no desire to bid on it, but if it doesnt sell my initial offer will be WELL below the 149K opening bid.
“Anyone here ever been to a RE auction?”
I went to a small one. It was for a couple lots of waterfront property, and the auction was held in a small tent on one of the properties being sold. The parcels sold for close to wishing prices too, but this was just after the market peak and not a lot of folks were off the kool-ade yet. We weren’t bidding anyway, though.
It wasn’t a complete waste of our time. The auctioneers served up a free buffet of cru d’etes and assorted treats, and it was very entertaining and educational. And the peaceful lakefront view and warm gentle breeze made for a very pleasant backdrop.
From what I understand the REDC auctions are a lot different - more crowded, loud music, with bikini clad women cheering on the “winning” bidders.
Anyone here ever been to a RE auction? Have any interesting stories?
I have. Best advice I can offer is to take someone with you to be your witness. Your witness is there to observe. Nothing more, nothing less. He/she will share thoughts with after you’ve left auction.
I’ve been the witness at an auction. In that role, I just stood there quietly, taking everything in.
Im going by myself, just to be a witness. I’ve heard different stories - from loud pumping music and comedians getting people fired up to quiet, boring types that make CSPAN look like MTV.
I’ll see if I can get the bidding for the house Im looking at on video, and then ask Ben how I can post a video on here.
They have shills in the audience, forcing the bidding up. Or there’s a minimum bid. Be careful.
Did anyone take this moonbat seriously? She has proven what she is good at though.
Debt Has Increased $5 Trillion Since Speaker Pelosi Vowed, ‘No New Deficit Spending’ ~ October 25, 2010
(CNSNews.com) - When Rep. Nancy Pelosi (D-Calif.) gave her inaugural address as speaker of the House in 2007, she vowed there would be “no new deficit spending.” Since that day, the national debt has increased by $5 trillion, according to the U.S. Treasury Department.
“After years of historic deficits, this 110th Congress will commit itself to a higher standard: Pay as you go, no new deficit spending,” Pelosi said in her speech from the speaker’s podium. “Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.”
Was that before or after of her saying she promised to “drain the swamp and to stop the corruption and ethical violations in Congress”?
Oh? Take a wild guess where this news comes from.
The federal government budget deficit shrank in fiscal 2010, but the big gap was only $122 billion lower than the record high set a year ago.
The U.S. spent $1.294 trillion more than it collected in the fiscal year that ended Sept. 30, the Treasury Department said Friday.
The deficit amounted to 8.9% of gross domestic product. That’s down from fiscal 2009, when the deficit of $1.416 trillion was 10.0% of GDP.
Spending fell and revenues rose in fiscal 2010 as the economy recovered from the deep recession that contributed to the nation’s troubled fiscal condition.
I’d bet that 99.99% of all the politicians who ever existed have said essentially the same thing.
No takers?
“The truth is, the last Republican Administration that shrank government was Warren Harding’s in 1921! What we have gotten instead is a series of utterly meaningless clichés such as ‘I will eliminate waste, fraud, and abuse.’ “’ will run government like a business.’ ‘I will cut taxes but won’t tell you how I will pay for it.’ I can tell you that GOP politicians will feed you these lines of nonsense as long as you let them get away with it—as long as we keep voting for them after they tell us nothing about what they will do if elected.”
~James Ostrowski
Government has not shrunk since 1787.
The last budget surpluses were under Clinton with a Republican congress/senate.
Did you really believe that was a surplus? Haha!
unemployment is around 9% too.
and don’t forget about the candy crapping unicorns.
Did you really believe that was a surplus?
If not, don’t you believe at least that it was the least worst deficit in your lifetime?
I saw a graph through 2009 that suggested that in dollar terms gov spending is on the same gradually rising slope over the last decade, what’s changed is that tax revenue has crashed.
QE2 Shock and Awe is on the way…
MarketWatch
9:27 AM EDT
October 25, 2010
Latest News
1. Ten-yr yields down to 2.10% on big Fed buys: HSBC
2. Dollar to fall 2-3% on large Fed QE plan: HSBC
3. Gold to $1,400/oz. on large Fed easing plan: HSBC
Fed cash is king.
As many of you know, I informed people asking about what to with cash, on which they had trouble finding a decent return, to invest it in market on the severe corrections and consider taking it off the table at around 2000 on the S&P as we got closer to election day to the extent they dont want to keep it in long term, pocketing a fast 15%. I was called about every curse word in the book. To the extent anyone took my advice, this is the week. Good luck and happy investing. Not everyone here wears a tinfoil hat.
Good job Natalie.
There are no easy investment answers right now.
Cash gets 0.001%.
Stocks can vaporize overnight. Stops will not save you.
The dollar is tanking.
Gold is very high on specualtion. Maybe not a time to buy.
Maybe GNMA paper? Backed by the US Government and paying about 3.5%.
It is tough out there. The best investment (I think) for right now and to get out of debt and stay out of debt.
I am comfortable with 1200 on the S&P long term and will continue to put my 401k contributions into the market, but it doesnt make sense as a sort term investment at these levels. I will probably put my house fund into cash equivalents and wait for better opportunities later. I am torn between buying a house this Winter and putting little down, playing an arbitrage game, or waiting until interest rates rise and using 100% cash. The way things are so screwed up right now, it may take longer than initially projected for rates to rise.
To the “best investment” list, I’d also add your health. Taking good care of yourself pays all sorts of dividends.
Exactly, Az Slim!
Every few years from when I was in my late 20s I met sedentary folks who were too lazy to get in shape. I wondered how they could make themselves like cows during those times. And now many of them are on meds. One I know is diabetic.
Go figure. A lot of these health costs could have been mitigated by prevention, but most people are too lazy to exercise to avoid obesity.
A lot of these health costs could have been mitigated by prevention, but most people are too lazy to exercise to avoid obesity.
True but I’ve been thinking. Are they really “lazy”? Exercise just to stay in shape is not a “natural” human behavior is it? I mean throughout history didn’t most people get their exercise as a bi-product of their survival in the world? Jobs were physical, we had to walk, farm, hunt etc.
Now that this has only changed recently in evolutionary terms, is it fair to say that people are “lazy” because they do not do something that they never had to do before?
One thing is for sure, there probably hasn’t been this much bruhaha over a mid-term election ever. We were on the road this weekend I don’t ever recall hearing a populace as politically polarized as ours is at the moment. So, it’s probably wise to factor that into the equation this time around.
Did you make 15%?
The dollar index in June was 90 and now it is 76. 76 is 84% of 90.
Gold and the S & P 500 haven’t gone up 15%. They have just not gone down 15%, at least from a global perspective.
Food for thought.
I am up about 20% (with respect to money investmented this year, much greater than that on earlier investments). I rarely recommend stocks on blogs as timing is everything and you have to know when to get out which information may not be relayed timely. The only two that I did recommend on here were FCX and LVS because the opportunity was so great. Either would have made you at least 30%.
Natalie - While there maybe individual success stories which are truly unique, all “risk” assets are up because of all of the money printing…and the Street expects the mother of all printing to be announced November 3. Gold is a stupid investment, but right now, the best of any to maintain your value. No profit margins to be squeezed, no taxes to be increased - at least to hold the metal, no overpaid CEOs to rob you blind, and now legacy financial debacles to pay off. Other countries will be playing games with their fiat currencies and financials so going foreign is no help.
I believe the street will be disappointed in whatever number is announced Nov 3 (I think Zero hedge is quoting a 4 trillion dollar Goldman number just to “keep us even”). I plan on liquidating a few leveraged gold plays just before 11:15 announcement and buy more precious metals with the anticipated disappointment.
It is really sad that investing has become all about how to play the manipulation of the market and currencies by the powers that be.
2000 should have been 1200, and yes all US equity indexes are up around 15% from the bottom.
I was called about every curse word in the book…Not everyone here wears a tinfoil hat.
The expression “Tinfoil hat” makes me a little uncomfortable.
Because what’s up with “tinfoil”? What is really going on here?
I mean is there even tinfoil nowadays? Let’s think. Isn’t it really aluminum foil? I notice older people sometimes call aluminum foil “tinfoil” but even young people say “tinfoil hats”. (If they even know what it means but most actually don’t which is peculiar) So I don’t understand why “tinfoil hats” are not called “aluminum foil hats”. What’s the real reason not to?
And why do the Brits constantly mispronounce aluminum to our faces? It’s like they say (a-lu-MEN-i-an) instead of (a-LU-min-um). Sometimes I wonder if they’re just messing with us because they really seem to get a kick out of it.
People still say dialing someone’s number. “Dialing” a number went out with the stone age.
Yeah - AND
Why do we drive on parkways and park on driveways?
I say - there is something strange there - for sure!
And after someone finishing building something we call it a building.
Such are the questions that have challenged the mind of man since time immemorial.
“And why do the Brits constantly mispronounce aluminum to our faces?”
I know you’re just kidding us but I’ll throw in my two cents worth: It was us yanks who dropped the “i” from “aluminium”. It has the “i” in just about every other language: for instance in Spanish it’s “aluminio”, in French it’s “aluminium”, in Italian its “alluminio”.
This guy is making lemonade:
http://www.latimes.com/business/la-fi-himi-20101024,0,7059209.story
The gig: President of Investors Mortgage Asset Recovery Co. The Santa Ana firm audits home loans that have gone bad, looking for falsifications of the borrower’s employment, income, debt load and other details. Clients typically are mortgage insurers that are on the hook for some or all of the losses on the loans — unless fraud is found.
I Wonder who is held responsible for the fraud?Would it be the homeowner or the lender who did not due their research on the loan?
…or the loan processors who created the false information to get the processing fee?
(see yesterday’s articles in Bit Bucket)
Wow, this is a great find. Fraud needs to be uprooted at all levels, IMHO.
September numbers for socal are out from Dataquick.
http://dqnews.com/Charts/Monthly-Charts/LA-Times-Charts/ZIPLAT.aspx
How’s that foot feeling, Rancher?
1. Asset bubbles end in
2. Financial crises that cause
3. Debt deflation that forces
4. Governments to deficit-spend to reduce unemployment that results in
5. Fiscal crisis that leads to
6. Sovereign debt crisis that ends in
7. Currency crisis that causes
8. Decline in the exchange rate value of the asset bubble host country’s currency
eric janszen - itulip.com
Why does the Fed rely on Gollum to conduct its PR operation? Don’t they have their own propaganda department?
Oct. 25, 2010, 11:14 a.m. EDT
Fed could target $2 trillion in asset buys, Goldman says
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — The Federal Reserve could make $2 trillion in government bond buys, according to a research note from Goldman Sachs that was making an impact on the market on Monday.
The Fed is widely expected to announce a new program of asset purchases, or quantitative easing, at the conclusion of its next policy meeting which wraps up on Nov. 3.
…
21 Mexican universities on the verge of insolvency.
http://www.eluniversal.com.mx/notas/718651.html
Sorry, it’s in Spanish, but here is the zinger:
“La falta de recursos para enfrentar el pago de sus trabajadores jubilados y pensionados ha puesto en situación “crítica, muy crítica o insostenible”a 21 universidades públicas”
The lack of resources to make good on pension payments to retired employees has placed 21 public universities in a “critical, very critical or unsustainable” situation.
I’d say the lack of oil revenue and crashing tourism due to drug violence are there main problem. Mexico is swirling the drain right now and this will be another big problem for the US over the next decade.
Crashing tourism has been a big problem for a long time. Permit to explain:
Here in southern Arizona, you don’t have to go very far before you meet someone who, because of something that happened to him/herself, or to someone he/she knows, is not going to Mexico ever again.
I am one of those people.
Why might this be? Because of what happened to the daughter and son-in-law of a close friend. They’d gone south of the border as tourists, and were shaken down a few miles inside of Mexico.
The shaker-downers were dressed in military uniforms. And the couple, whom I knew from when they lived in Tucson, had no choice but to comply. After all, these military guys were very well armed.
The couple now lives out of state, and their mother now lives in northern AZ. AFAIK, no one from this family has set foot in Mexico since the aforementioned shakedown.
Newark layoffs are a frightening prospect
They’re not all fat-cat public workers, earning six-figure salaries (or close to it), with pension and health benefits that make taxpayers’ blood percolate. Some are like James Bass, a Newark sanitation worker who is about to lose his job.
Bass, who is 60 years old and has worked all his life, earned approximately $45,000 in 2009 for cleaning up behind the residents of Newark. The city plans to lay off 251 sanitation workers — 30 percent of the 850 layoffs scheduled to take effect Nov. 12. Sanitation jobs eventually will be privatized to save the city $5 million to $10 million a year, officials say.
On a furlough day, before sunrise last week, Bass was among a group of 40 sanitation workers who reported to work. That’s how they protested the layoffs — by offering to work for free. At a time when many public workers are depicted as living the high life, Bass and his colleagues, most of whom earn between $24,000 and $40,000 a year, sent up a flare: Somebody, please, help us.
“Sanitation jobs eventually will be privatized to save the city $5 million to $10 million a year, officials say.”
Divide those numbers by 250 workers and thats 20K-40K savings per laid off worker.
“Bass, who is 60 years old and has worked all his life, earned approximately $45,000 in 2009 for cleaning up behind the residents of Newark.”
Something is missing from this story. I’m guessing that the private contractor intends to do the same work with fewer workers.
In our little burb we all get these standardized trash carts which are picked up via a robotic arm and the truck is manned by a single person, the driver.
In our little burb we all get these standardized trash carts which are picked up via a robotic arm and the truck is manned by a single person, the driver.
That’s what we have here in Tucson. There’s one driver for the recycle truck. Another for the trash truck.
I’ve met both guys, and I make a point to say hello to them if I’m outside when they come by.
They might be switching to once a week service at the same time.
That’s what we have here.
BTW, there was a recent trash rate hike, but I was able to minimize mine by downsizing to the smallest trash container available. It’s a cute little thing.
Even with the smallest container, I’m only putting it out once a month, and it’s only 1/3 full.
Slim’s not much of a thrower-outer. I am a BIG recycler.
Insane pensions and gold plated medical benefits can easily double the true cost of a public servant from base salary.
I went back to Detroit in 2009 for a meeting and drove through my old downriver neighborhood. I got stuck behind a garbage truck, which drove slowly down the street, followed by two young men who grabbed garbage bags from the street and threw them on the back of the truck. I guess a city has to be wealthy enough to buy the cans and the automated trucks. The old ‘hood looked the same as it did in the 60’s, only more worn out.
That’s how they protested the layoffs — by offering to work for free. At a time when many public workers are depicted as living the high life, Bass and his colleagues, most of whom earn between $24,000 and $40,000 a year, sent up a flare: Somebody, please, help us.
Help? lol!! wAAAAAAAHHHAAAAA!
Wrong country dude. We work for OUR money. We’re gunning for parasites like you. We’re going to lay you off and you better get a new job FAST and don’t even think about foodstamps and welfare because we’re going to cut those too for lazy moochers like you and rightfully so.
You’re 60 and take out trash? And “worked all your life”? Right…….It’s time to do a higher value added job. American’s don’t need sanitation workers making 25 K per year, we can get some for 18K and then won’t have to pay benefits for the “entitled”. You need to update your skill-set anyway. Get out there and network, go to jobs fairs in America the land of opportunity best country in the world cheer up we’re number one, I don’t care if you have diabetes or “issues” we got COBRA or go to the emergency room for the best health care in the world!!! USA USA USA!
I believe if the jobs are being outsourced, then the laid off workers can work for the contracting company.
Today, 25 October, is Saint Crispin’s Day.
This day is call’d the feast of Crispian.
He that outlives this day, and comes safe home,
Will stand a tip-toe when this day is nam’d,
And rouse him at the name of Crispian.
He that shall live this day, and see old age,
Will yearly on the vigil feast his neighbours,
And say ‘To-morrow is Saint Crispian.’
Then will he strip his sleeve and show his scars,
And say ‘These wounds I had on Crispian’s day.’
Old men forget; yet all shall be forgot,
But he’ll remember, with advantages,
What feats he did that day. Then shall our names,
Familiar in his mouth as household words-
Harry the King, Bedford and Exeter,
Warwick and Talbot, Salisbury and Gloucester-
Be in their flowing cups freshly rememb’red.
This story shall the good man teach his son;
And Crispin Crispian shall ne’er go by,
From this day to the ending of the world,
But we in it shall be remembered-
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne’er so vile,
This day shall gentle his condition;
And gentlemen in England now-a-bed
Shall think themselves accurs’d they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Saint Crispin’s day.
I am envisioning Kenneth Branagh giving that speech on the silver screen…
Dennis, that was the high point of my day. I frequently ‘talk’ to my son the Marine in Okinawa - he of the pure heart, who I always thought would be suited to an ascetic life - about the philosophy of being a warrior. In civilian life, we rarely get to be involved with a sense of mission. I can see how the 5 AM runs, the incessant training, the sense of covering one another’s backs - I can see how he thrives thrive in that environment. Amongst a band of brothers.
I suffer by comparison. Anyway, thanks for bringing to mind that rousing speech, given by Henry V in 1415 prior to the battle of Agincourt, one of history’s turning points, in which a sodden, starving, disheartened, outnumbered English band with no horses met the pride of France, horsed, fed, armed and arrogant. And decimated them.
I like the archetypal bit about the underdog getting the belly bite. Regrettably, in the age in which we live, our victories will be measured in months endured in a ZIRP environment. Not the same kind of thing at all. It calls forth grim determination, the sort of grey deliberation which will never inspire poetry. Nevertheless, there you have it. Thank you again.
More Beechcraft layoffs
Hawker Beechcraft distributed 60-day layoff notices to 350 salaried employees Friday and confirmed a timeline by which it will eliminate about 800 union jobs.
Hawker Beechcraft, which employees about 6,000 people in Wichita, initially announced the nonunion layoffs in September.
The market for new production aircraft is not improving as the company hoped, CEO Bill Boisture has said. He said the market has been flat to slightly down, and conditions suggest an upturn is at least a year away.
Boisture said that the 820 Machinists union layoffs, announced last week, will be completed by August 2011 and the work will be transferred to plants in Mexico and third-party suppliers.
Time to start the Hawker Beech Death Watch.
It’s pretty pathetic. Their management is deluded. They are trying to force concessions on the bargaining unit, but the bargaining unit is smarter than they are. Like some on this blog, they assume all union contracts are like UAW contracts. They don’t understand that 25 years of crappy, not keeping up with inflation contracts has made it possible for Jiffy Lube and Starbuck’s to offer competitive wage/benefits to their skilled employees.
They threaten to move to Baton Rouge because of some BS bribe by the local government. Yeah, lets see how that works out, training a workforce building airplanes from scratch in Louisiana. Nobody in Wichita needs to move to Louisiana to take a 20% pay cut.
The word is out that the Hawker 4000 is a giant piece of steaming dog crap. The Premier is going to get it’s azz kicked by the new Embraer jet. King Airs are becoming a niche market. The only think keeping them on life support is their government contracts, and I’m not betting on any of those surviving cuts in the Defense budget.
X-GSfixr - it is better to argue with some facts.
They threaten to move to Baton Rouge because of some BS bribe by the local government. Yeah, lets see how that works out, training a workforce building airplanes from scratch in Louisiana. Nobody in Wichita needs to move to Louisiana to take a 20% pay cut.
1. Louisiana has some high tech industries. The one that pops into my mind is that the Space Shuttle Fuel tanks and parts of the manned mission to the moon are made there. I am sure there are others. 6,000 high tech jobs could be coming. Only union insanity could let it happen - which means it will.
2. No freaking WAY is Jiffy Lube paying $24.30/hour ($27-10%) plus a full PENSION plus medical plus dental plus vacation plus…
In fact, after these cuts, I am willing to bet a few beers that these Hawker Beech jobs are still the best paying jobs in Wichita.
In addition to the 10 percent cut in base pay, the offer to the machinists includes a provision to reopen the contract in 2014 for the limited purpose of evaluating wage increases, pension and other benefits. The average pay at the company is now $27 an hour.
Pension benefits remain unchanged, but employees will be progressively shouldering a greater share of their health care insurance costs.
From:
http://www.tri-cityherald.com/2010/10/13/1207376/hawker-beechcraft-offer-seeks.html
I just gave the article a looksie:
“The average pay at the company is now $27 an hour.”
I suspect that average is skewed by the ages paid to white collar workers.
X-GSfixr is a veteran of the front lines of mechanical aircraft work and has a pretty good idea what machinists are being paid these days, which is low.
“And before Louisiana reportedly offered the debt-ridden aircraft maker millions in incentives to lure its 6,000 jobs to Baton Rouge.”
What I can’t help but wonder is why is dirt poor Lousiana trying to bribe a company that is in less than ideal financial health to come to their state? We all know what the eventual outcome will be: moving offshore (maybe being bought out by Embraer?)
Isn’t Boeing going to pay its workers in South Carolina something like $14/hr to assemble 787s? I can only image what Jiffy lube pays in the prosperous, pro-business south. I suspect that it won’t be long until we see the minimum wage disbanded altogether.
Yep and then you will work 7 days a week 12 hours a day for food and shelter. You’ll be in debt to the company so if you try to leave they’ll throw you in jail.
Progress??
$14hr to build aircraft?!
Oh crap oh crap oh crap oh crap… that is NOT good.
I least I’ll know not to fly on a 787.
I suspect we won’t het the chance to fly on the plastic fantastic, as most US carriers are to broke to buy or even lease them. While passengers in Asia will fly on the 787 we in the USA will get herded onto old dilapidated 757s.
More like the 737s.
More likely Greyhounds
It speaks for itself.
Oct. 25 (Bloomberg) — The late Bloomberg News reporter Mark Pittman asked the U.S. Treasury in January 2009 to identify $301 billion of securities owned by Citigroup Inc. that the government had agreed to guarantee. He made the request on the grounds that taxpayers ought to know how their money was being used.
More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as “Did you just try to call me?” and “Monday will be a busy day!”
None of the documents answers Pittman’s request for “records sufficient to show the names of the relevant securities” or the dates and terms of the guarantees. Even so, the U.S. government considers the collection of e-mails a partial response to an official request under the federal Freedom of Information Act, or FOIA. The Justice Department in July cited an increase in such responses as evidence that “more information is being released” under the law.
President Barack Obama vowed to usher in a new era of open government. On Jan. 21, 2009, the day after his inauguration and a week before Pittman submitted his FOIA request, Obama directed agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA.”
Limits of Transparency
The saga of Pittman’s request shows that the promise of transparency has its limits when it comes to the government’s intervention in the financial industry, which at its peak reached $12.8 trillion in commitments. From the 2008 Bear Stearns Cos. rescue to the Federal Reserve’s policy of quantitative easing in 2010, the Obama administration has delayed disclosures and defended its right to secrecy in court, said Tom Fitton, president of Judicial Watch Inc., which describes itself as a conservative foundation.
President Barack Obama vowed to usher in a new era of open government. On Jan. 21, 2009, the day after his inauguration and a week before Pittman submitted his FOIA request, Obama directed agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA.”
I distinctly remember Obama saying this.
And, IIRC, there was quite an effort to open up the government by making it easier to access government-gathered data. Anyone remember data.gov? Is that site still up?
That statement was prior to the meeting with the megabankers where Obama was forced to wear a leather thong outfit with a red gag-ball in his mouth and walk around on all fours with a studded dog collar and a leash. His backside still bears the whip-marks.
So true. Treasury Shielding Citigroup as Deletions Make FOIA Meaningless ought to inspire a lot of liberals to vote for more lies, deceit, and tyranny. This kind of arrogance coupled with wanton neglect of foreclosure due process just makes ubber liberals want to scream, “Thank you, Sir; may I have another.”
Ummm, pressboardbox, you’re on to the basic premise of the book, The Great American Stickup. In essence, the book says that, after his March 2008 Cooper Union speech, Obama got ‘jacked by the bankstas.
data.gov is still up.
US winning currency war! Thai baht best performing currency in the world!
Sara Eisen, Bloomberg surveillance
Best Orwellian headline ever. Winston Smith ROTFLHAO.
Isn’t the limiting factor on currency war how much your citizens make. If people are already working for food and shelter and nothing else, a small amount of inflation is going to cause riots. Thus the US has much more room to inflate than the other countries.
50 million people in this country would NOT agree with you.
http://finance.yahoo.com/news/Owners-Seek-Short-Sales-as-nytimes-3208549596.html?x=0&sec=topStories&pos=7&asset=&ccode=
‘Bank of America and GMAC are firing up their formidable foreclosure machines again today, after a brief pause. But hard-pressed homeowners like Lydia Sweetland are asking why lenders often balk at a less disruptive solution: short sales…Ms. Sweetland tried such a sale this summer out of desperation. She had lost her high-paying job and drained her once-flush retirement savings, and her bank, GMAC, wouldn’t modify her mortgage. After seven months of being unable to pay her mortgage…she owes $206,000 and found a buyer who would pay $200,000. Last Friday, GMAC rejected that offer and said it would foreclose in seven days, even though, according to Ms. Sweetland’s broker, the bank estimates it will make $19,000 less on a foreclosure than on a short sale.’
OK, so I’m asking NYT, does this make any sense? Obviously, there’s more to the story. Maybe a second note that would be wiped out in the foreclosure. Perhaps this ‘buyer’ won’t qualify.
‘Banks are historically reluctant to do short sales, fearing that somehow the homeowner is getting an advantage on them,’ said Diane E. Thompson, of counsel to the National Consumer Law Center. ‘There’s this irrational belief that if you foreclose and hold on to the property for six months, somehow prices will rebound.’
That’s not it either. Here in Flagstaff, even short sales that are successful take almost a year to find a buyer. All that time, the lender is losing more money. Gee, I wonder why they aren’t interested? And this is important: I talk to UHS doing short sales all the time, you know what?
There is always an offer or a buyer who’s going to bite any minute now. Always. Some times they even lie and say it’s in escrow, when it’s not. If I know this, don’t you suppose the banks do? And why doesn’t the media look a little deeper?
‘I guess I could salute and say, ‘O.K., I’m walking, here’s the keys,’ says Ms. Sweetland. ‘But I need a little time, and I don’t want to just leave the house vacant. I loved this neighborhood.’…the bank attached a condition: Ms. Sweetland must come up with $2,000 in closing costs or pay $100 a month for 50 months to the bank. Ms. Sweetland, however, is flat broke. ‘After this, I’ll never buy again,’ Ms. Sweetland says. ‘This is not the American dream. This is not my American dream.’
‘I need a little time’
But you can’t come up with $2000? Who’s being irrational?
Ms. Sweetland, get some boxes.
“…even short sales that are successful take almost a year to find a buyer.”
Because
– ta da –
THE RESERVATION PRICE IS TOO HIGH TO SELL IN LESS THAN A YEAR.
But in a world where interest rates are near zero, I suppose it makes sense for banks to hold out for a long time to find a qualified and willing buyer to pay top dollar on a short sale.
“Ms. Sweetland must come up with $2,000 in closing costs or pay $100 a month for 50 months to the bank.”
That’s a sweet deal. Big Sis had to sign an unsecured note promising to pay the mortgage insurer 25K over 10 years before they’d o-k one of her short-sales.
Perhaps Ms. Sweetland is enjoying living rent free and doesn’t mind waiting until eviction. Perhaps her strategy is to drag out the process as long as possible, saving money for a new beginning. Perhaps this is the new American Dream, until the sheriff’s knock at the door wakes em up of course.
Ben,
Would you kindly expound on your post above? I don’t understand WTF you’re trying to say.
The Buzz
Dollar doldrums: No end in sight
By Paul R. La Monica, editor at large
First Published: October 25, 2010: 12:13 PM ET
NEW YORK (CNNMoney.com) — All hail the puny dollar?
The greenback slipped once again Monday morning, falling to a new 15-year low against the yen. The dollar also fell against the euro and pound.
The renewed dollar sell-off comes after global financial ministers pledged to avoid currency wars at the conclusion of the G-20 meeting in South Korea Saturday.
Accusations of currency manipulation have roiled financial markets, with U.S. officials expressing frustration about how artificially low they believe the Chinese yuan is when compared to the dollar.
But global traders are continuing to sell the dollar. And that’s because, somewhat ironically, many investors feel that the U.S. may be doing some manipulation of its own — intentional or not.
…
People tell me (mostly liberal white people) that I cannot oppose homosexuality because “its not a choice, its how God made them…”; the old they were born that way, get over it routine…
so,
can people be born white supremacists?
and if so,
should we all accept the practice since “its not a choice, its how God made them, they were born that way…”
can people be born white supremacists?
No, that is very different. But speaking of white….
I just ate some of my first batch of home-made yogurt that I’ve ever made in my life and it’s very good! And it’s alive! I know it is or it wouldn’t have worked. As we speak, I also have live buttermilk cultures being sent to me from the USA as there is no buttermilk in Rio. Yet.
I used this recipe for the yogurt:
http://www.makeyourownyogurt.com/make-yogurt/what-you-need
I can make for $5 what would cost $15 at the grocery store as raw food is cheap in Brazil but anything processed is expensive.
And every package is small. The biggest milk carton is one liter and almost all yogurt is in small 180 gram cups. The biggest cottage cheese package is almost the same size as the smallest one in America and cost’s about $4.
“can people be born white supremacists?
No, that is very different. ”
How is it different?
They are both preferences right?
They are both behaviors right?
I’ve seen no evidence that the spectrum of orientation is an elective preference.
And, too, the worry about preference is something of a straw man, an evil thing to build, that straw man.
Choices of others that do not affect you disproportionately, really are not your business.
And so forth.
On this whole rights thing, too, perhaps the US military can take lesson from what likely is the best per-capita military out there, Israel’s. They have no limits on “asking” or “telling” and it appears not to compromise their military function.
“I’ve seen no evidence that the spectrum of orientation is an elective preference.”
Oh yeah?
well, Nicole Simpson can’t rap.
The opinions here depart from the conventional PC wisdom only with regard to the housing bubble, spook.
Spookie, go take up distance running or somethin’. You are well advised to burn off some of that resentment. Believe it or not, even though I’m white, I would not last long in my cushy do-nothing job if I had a chip on my shoulder that was quite that big. It would throw me off balance whilst filing my nails. And we know that nail filing is a requirement of the job.
Get some rennet and make your own mozzarella (warm up the curds in the microwave and stretch it out - easy) and then boil the whey to make your own ricotta. There are tons of websites explaining how to do it, but don’t waste money on anything but the rennet. And don’t forget to add a bit of vinegar to the milk so it is acidic enough to curdle properly!
Get some rennet and make your own mozzarella
Thanks for the tip! Mozzarella (one of the less expensive cheeses here) is about $19 a kilo ($8.50 a pound) at the supermarket near me.
With milk at $1.35 a liter ($5 per gallon) and Mozzarella at $19 a kilo, ($8.50 a pound) any idea if I’d save money making my own mozzarella at home?
I think you would, but not lots and lots. If I am doing my mental maths right 4 gallons of whole milk will make almost two kilos… so you would save half the price so long as you forget to count the other inputs, and time, and opportunity cost, and so on.
Do it if you like doing that sort of thing, and if you have lots of olive oil, fresh tomatoes, and basil, you are in earthly paradise.
Geez….partial skim-milk mozzarella is $2 a pound here in Idaho. But then again we’re the #3 dairy state behind CA and WI.
Which reminds me…..got to make a batch of pizza dough tomorrow morning.
Rio! It’s sounds like you might have found nice little side business!
People don’t make fun of idiots because that’s how god made them. So that’s all I can say about your post Spook.
Actually, the lord made people who do laugh at idiots. And on this board, that occurs regularly
Don’t you have an abortion clinic to protest?
USDA says food inflation ‘to accelerate” into 2011
SAN FRANCISCO (MarketWatch) — Food inflation will “accelerate” during the final months of 2010 and into the first six months of 2011, the U.S. Agriculture Department said Monday. “Although inflation has been relatively weak for most of 2009 and 2010, higher food commodity and energy prices are now exerting pressure on wholesale and retail food prices,” USDA food economist Ephraim Leibtag said.
Gas is slowly approaching $3/gal. More tough times coming for broke people. Makes you wonder how the stock market continues its unfettered rise.
No mystery. The big boys just trade with their programs to each other.
… commodity and energy
pricesspeculators are now exerting pressure…Like many more states, got to get down to some serious gubmint job whacking.
California Cut 37,000 Government Jobs In September And There’s Much More To Come
The LA Times reports Government job cuts ravage California
Weighed down by a struggling economy, government agencies in California shed 37,300 workers last month — more jobs than were lost in the private sector — as cities and counties made their biggest payroll cutbacks since at least 1990.
Interesting. California might try to pull off a Great Britain austerity program. Works for me.
more layoffs, more foreclosures…
Cover Story October 21, 2010, 1:45PM EST
Mortgage Mess: Shredding the Dream
The foreclosure crisis isn’t just about lost documents. It’s about trust—and a clash over who gets stuck with $1.1 trillion in losses
Joseph Lents hasn’t paid his mortgage Ofer Wolberger
By Peter Coy, Paul M. Barrett and Chad Terhune
This Issue
magazine cover
In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.
The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents’ promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: “When you say you lose a $1.5 million negotiable instrument—that doesn’t happen.” DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn’t prove it held his mortgage, it couldn’t foreclose.
Eight years after defaulting, Lents still hasn’t made a payment or been forced out of his house.
…
“$1.1 trillion in losses”
Pardon my amazement, but wasn’t the purpose of the $700 bn Fall 2008 TARP to clean up the toxic asset mess? How come we are even discussing it any more?
8 years for ‘free’ not bad. Wonder who has been paying the property taxes? Surely he hasn’t been, so wouldn’t the county and state be inline to get paid, or seize the property?
October 25, 2010
Who Owns Your House? (.pdf)
Emivest Aerospace files bankruptcy
CHARLESTON, W.Va. — The value of the state’s $2 million investment in an aircraft maker is unknown, now that the company has filed bankruptcy.
The West Virginia Jobs Investment Trust - the state’s venture capital fund - invested $2 million in the Sino Swearingen Aircraft Co. in the early 1990s, when the Taiwanese government controlled the company.
In 2008 the Emirates Investment and Development of Dubai, the United Arab Emirates, acquired an 80 percent interest in the company. Sino Swearingen’s name was changed to Emivest Aerospace Corp.
The private aircraft business went into a tailspin in 2008 when the nation’s economy and the economies of many other nations went into a recession. The aircraft manufacturer had hundreds of orders for its jet, but could not find the financing it needed to ramp up production.
Last week Emivest announced it has filed Chapter 11 bankruptcy, which means it intends to restructure. The company said it will operate normally during the bankruptcy.
When the local yahoos that don’t know squat about the airplane business start “investing” public money into the GA airplane business, it time for you and your money to pack up and GTFOOD.
Ask Mew Mexico how their “investment” in Eclipse Aviation turned out.
or the Spaceport or investing in Hollywood productions?
How can you have hundreds of orders for jets and NOT get financing?
There’s something else going on here…
i was thinking the same thing.. the angel fund got cold feet for some reason.. No doubt it was a good reason.
“……hundreds of orders…….”
Orders don’t mean squat. Vern Raburn bragged about his “2000 orders”…….which went MIA when he actually started delivering airplanes.
The deal is, there are all kinds of people willing to put down a $10-50K deposit, on the one in a thousand chance you actually ARE able to pull a miracle airplane out of your azz. If it isn’t a miracle airplane, they walk.
Here’s how it works…..
-Go to the EAA or NBAA conventions with a “paper” airplane, promise twice the performance at half the cost. Tell everyone how much smarter you are than all those dumb$hits in Wichita and Savannah.
-Take orders, usually with no/minimal deposits. Brag about how many “orders” you have.
-Use the order book as “proof” to the local government development and venture cap guys that your airplane is legit.
-Because you are living off government and venture cap. charity, it takes you forever to build and certify an aircraft.
-If you actually get it certified, it will cost as much as the aircraft designed and built by the major OEMs. With no product support to speak of. And performance that doesn’t meet what was promised. Of course, nobody could see it coming…….
You had me at “no deposit.”
April 2003, S/N 002 crashed during flight testing..
ouch!
But it was certified in Oct of 2005..
http://en.wikipedia.org/wiki/Sino_Swearingen_SJ-30
nice looking plane if you ask me..
Bottom line is there’s no easy money in pursuing it, or investors would be climbing over each other to provide the money.
Sounds like the story of Montana since the natural resources bust. A few promoters get the public to invest in technology no one really understands, under the assumption that someone does. All in the name of green energy and JOBS…Then it all goes TU.
Dollar at Risk of Becoming ‘Toxic Waste’:
CNBC October 25, 2010
The dollar’s slump could get far worse if the dollar index takes out last year’s low, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.
“If the (dollar index) takes out the low that was made roughly a year ago I really think that will not only encourage more sales, it will cause a little bit of minor panic,” Griffiths said. “A year ago it was deemed too cheap, if it goes any lower than that it’s actually become toxic waste.”
The dollar (New York Futures - CEC: .DXY) resumed its recent downtrend Monday in the wake of a meeting of finance ministers from the Group of 20 nations at the weekend. The meeting failed to yield a definitive agreement on currencies, putting selling pressure on the greenback.
“The dollar is being trashed, we’ve actually had effectively devaluation of about 14 percent in the last two months,” Griffiths said.
Headlines like this could be a contrarian sign.
Are the American people really ready to throw the bums out and give up all the goodies from uncle sugar? It may seem that way in some local races, but on a large scale I think not. We are passed the point of no return…too many either working for government or receiving benefits.
I can see the future - and it is Greece. Except without the Moussaka..
You do know that federal contractor employees outnumber regular federal employees, right?
And that only “people” who are receiving “goodies” are the rich and the connected.
So true, eco. We spend so much time deriding government employees and forget the hundreds of billions spent by our treasury on the likes of KBR (Halliburton) in the wasteful, corrupt “rebuilding” of Iraq. Seems to me that Iraqis have a lot more experience in building than we do (e.g. one of the seven wonders of the world, the Babylon Hanging Gardens.) Let’s get out of there and let them rebuild themselves.
Don’t forget all those good contractor folks (except we don’t call them that) at NPR, ACORN, unions, the ACLU, etc.
follow the money banana
See WMBZ’s post that show the top 70 earners in the US saw their income quintouple from a mere 50million a year on average to 519 million. All paying less than 16% effective tax rates, ie much less than most on this board.
Then take a look at the massive decline in union membership and strenth over the last decade or two, 1 and the pittance given to NPR. As far as I know the ACLU gets no money from the FEDS.
Then come back and tell me where the problem is.
PS
The ACLU receives funding from a large number of sources. For example, in 2004, the ACLU and its affiliate, the American Civil Liberties Union Foundation reported revenues totaling $85,559,887. Of that total, 87% was from donations and dues from the public, 1.8% from program services, including awards of legal fees, royalty income, and literature sales, and the remainder from investment income and income from sale of assets.
I know they stand in the way of the religious theocracy you crave, but I don’t think you are funding them. My guess is I give more to religious universities via government loans.
“And that only “people” who are receiving “goodies” are the rich and the connected.”
Take out the word “only”, replace it with “a large portion” and you have no argument from me.
Some talking head “David Callahan” on CNBC is discounting bloggers because they “don’t have strong economic credentials.” Does he mean the same strong credentials as those “experts” whose policies brought the country to it’s knees?
Who cares, so long as the likes of Joseph Stiglitz eventually repeat what we say?
I think I just hurt myself laughing at both comments!
You mean Kudlow, Hubbard and extremists from Cato, Heritage and the white collar criminal corporatists at AEI?
Cities Weigh Letting Noncitizens Vote
PORTLAND, Maine — Like his neighbors, Claude Rwaganje pays taxes on his income and taxes on his cars. His children have gone to Portland’s public schools. He’s interested in the workings of Maine’s largest city, which he has called home for 13 years.
There’s one vital difference, though: Rwaganje isn’t a U.S. citizen and isn’t allowed to vote on those taxes or on school issues. That may soon change.
Portland residents will vote Nov. 2 on a proposal to give legal residents who are not U.S. citizens the right to vote in local elections, joining places like San Francisco and Chicago that have already loosened the rules or are considering it.
Noncitizens hold down jobs, pay taxes, own businesses, volunteer in the community and serve in the military, and it’s only fair they be allowed to vote, Rwaganje said.
“We have immigrants who are playing key roles in different issues of this country, but they don’t get the right to vote,” said Rwaganje, 40, who moved to the U.S. because of political strife in his native Congo and runs a nonprofit that offers financial advice to immigrants.
If passed, it will be struck down. It’s clearly unconstitutional.
“We have immigrants who are playing key roles in different issues of this country, but they don’t get the right to vote,” said Rwaganje, 40, who moved to the U.S. because of political strife in his native Congo and runs a nonprofit that offers financial advice to immigrants.
So…much…irony…in…this…sentence…
October 25, 2010 at 10:15 AM
The Ben Show: Fed’s mortgage oversight has gotta be a comedy, right?
Posted by Jon Talton
Hahahahahahahahah. This guy is killing me!
…
“Homeownership is only good for families and communities if it can be sustained.”
Yea BB is a regular laugh riot, that should be capsuled up and shot off into space. Along with Greasepan and a whole host of comedians running the money show.
Home sales up in Sept. but more troubles ahead
(AP) – 2 hours ago
WASHINGTON (AP) — Sales of previously occupied homes rose last month after the worst summer for the housing market in more than a decade. And fears over flawed foreclosure documents could keep buyers on the sidelines in the final months of the year.
Sales grew 10 percent in September to a seasonally adjusted annual rate of 4.53 million, the National Association of Realtors said Monday.
Home sales have declined 37.5 percent from their peak annual rate of 7.25 million in September 2005. They have risen from July’s rate of 3.84 million, which was the lowest in 15 years.
Most experts expect roughly 5 million homes to be sold through the entire year. That would be in line with last year’s totals and just above sales for 2008, the worst since 1997.
Still, sales could fall further if potential lawsuits from former homeowners claiming that banks made errors when seizing their homes make consumers fearful of buying foreclosed properties.
…
Most experts expect roughly 5 million homes to be sold through the entire year. That would be in line with last year’s totals and just above sales for 2008, the worst since 1997.
Ummm, wasn’t the housing bubble just starting to puff upward around the end of 1997? BTW, I’m using this graph as my reference.
three words - dead-cat-bounce
off of a ledge with another 20 stories to go.
I mentioned Saturday that a lot of houses have been showing up as contingent (under contract) on our MLS. Its very strange, given a lot of them happened after foreclosuregate came to light. It should be interesting to see how many of these actually close. Some are teardowns and likely will require construction loans (harder to get than traditional mortgages these days).
Three years ago we went to a FSBO open house. It was a retired elderly couple - lived in the house for a couple decades at least (in talking with them DH realized he knew their kids from their school days) - trying to sell and move to Florida (or somewhere with no snow). The house sat and sat on the market for years. I drive by it every day on my way out of this subdivision. I think it was sometime last winter when the sellers broke down and hired an agent. The house right across the street also went on the market. Both houses sat. Recently the “for sale” sign was taken down. I looked it up on the public records. It sold for about 1/3 less than original asking as a short sale. These people were retired, having lived in their house for decades, and selling their house as a short sale. Oy vey!
Clipped from the 5min forecast:
Over the weekend, China joined the long list of G-20 nations who told Treasury Secretary Tim Geithner to go fly a kite. Geithner proposed Friday at a summit of G-20 finance ministers in South Korea that the nations agree to limit their trade surpluses and deficits to 4% of GDP.
Since China was the clear target of Geithner’s proposal — it’s a backdoor way to revalue the renminbi — China was content to let everyone from Japan to Russia dis it first.
Geithner’s Saturday went from bad to worse when the German economic minister said loose monetary policy in the United States amounted to “manipulation” of the currency — the very thing boorish U.S. politicians accuse China of. Oooh, that one hurt.
Sunday, Geithner was reduced to a follow-up meeting with China’s vice premier, after which he admitted the Chinese “need the flexibility to run their policies in a way that makes sense for China. And that requires that their exchange rate move up over time as they’re now doing…”
The part about “on a timetable of their choosing” was merely implied.
Is it just me, or are other people noticing an increase in aggressive panhandling? My latest data point:
Yesterday afternoon, I was pedaling toward downtown Tucson, and a woman emerged from a house and starting walking right at me. As I kicked up my speed so I could get away, I heard her say something about if I could do her a favor.
I knew what was coming next, and, no, I didn’t have any spare changed.
This house is just a couple of blocks south of mine, and I’ve had my suspicions about it. Seems to be turning into one of those “How many illegals can we cram into one house?” places.
Now, I know from past experience that calling ICE or the Border Patrol is next to useless. Neighbors have done the same thing re: a house up the street from them.
But, around the time that SB 1070 was signed into law, there was a rumor going around that said that if you were reported for having a barking dog, you could get deported.
I don’t know if this actually happened to anyone, but it’s worth trying out. Because this particular house has a world-class barker than cranks up around 5:30 a.m. every morning.
It’s so loud that it can be heard all the way up here at the Arizona Slim Ranch. And if there’s one thing that Arizona Slim doesn’t like, it’s being rousted out of her beauty sleep by barking.
Wait until the rise in muggings start, because that is next. If food prices start rising unemployment stays high or rises and unemployment checks stop. You will have a big rise in crime.
The elite will be safe behind towering walls surrounded by Blackwater security.
“The elite will be safe behind towering walls surrounded by Blackwater security.”
If the future is anything like what I’ve read about in Argentina, not even They will be safe. Armored cars, body guards, none of it will be enough. All will feel the pain.
I haven’t noticed the panhandling, though I suspect I might if I spent more time in Chicago proper.
Last night on the local news they were talking about how shelters and charities are having to turn down certain donations for fear of bedbug contamination. So instead of asking for gently worn coats, blankets and such, they’re asking for cold hard cash (good luck with that) so they can buy new. (Yes, cash is king!)
DD’s National Geographic Kids subscription has been soliciting renewals a full two years ahead of when her subscription actually expires. Her Nana, who sponsors that particular reading material, is pissed.
America’s Debt Crisis
Watchdog: Funny math used on AIG bailout
WASHINGTON (CNNMoney.com) — The Treasury Department made an overly rosy prediction of taxpayer losses on the AIG bailout by changing its accounting practices, the special investigator for the federal bailouts said in a report released Monday.
Special Inspector General Neil Barofsky’s latest report to Congress also heaps new criticism on Treasury for taking credit for failed attempts to help homeowners with mortgages exceeding their home’s value to secure modified loans.
Reporting directly to Congress, Barofsky reviews all the programs that came about due to the original $700 billion Troubled Asset Relief Program (TARP) that Congress passed during the height of the financial crisis in October 2008.
While Treasury can no longer spend any new money, due to the fund’s expired lifespan of two years, Barofsky reported that $178.4 billion in bailout funds remain outstanding. In addition, Treasury has the ability to “obligate” another $80 billion that can still be spent under existing TARP programs.
“In short, it is still far too early to write TARP’s obituary,” the report concluded.
The mortgage interest deduction finally to go bye-bye?
That would help finally lower prices for real.
Of course, I suspect they lack the… gumption… to do it.
http://online.wsj.com/article/SB10001424052702304354104575568643889337142.html
Actually, this would be the best time to take away an expensive benefit that the US can no longer afford. I’m sure it will be one of the ideas floated by the deficit reduction commission. If you can’t get rid of the deduction with interest rates at historical lows and a big chunk of homeowners not able to pay their mortgage anyway, when can you get rid of it?
Got 20 pct down?
Oct. 25 (Bloomberg) — Home lenders are making it tougher to get loans as investors step up demands for refunds on defective mortgages, damaging the housing market, executives said today at an industry conference.
Already beset by billions of dollars in forced buybacks, originators have imposed standards on new loans that are stricter than those set by mortgage buyers and insurers, according to Todd Chamberlain, an executive vice president who oversees mortgage lending at Birmingham, Alabama-based Regions Financial Corp.
Mortgage Lenders Say ‘Enough is Enough’ as Buybacks Curb Loans
“Got 20 pct down”?
If 20% down were to become a requirement, it would be a whole new ball game in a hell of a hurry.
But wouldn’t the end-users w/ 20% down be competing with banks & GSEs that can afford to hold on to vacant homes forever, thanks to Fed-funded 0% bailout loans and taxpayer-covered perpetual GSE losses?
And we would probably hear from Neil again. I think it was Neil who said he wasn’t buying until the 20% down requirement came back for any loan.
Meanwhile, he keeps munching on the popcorn.
Highest Earners’ Pay Quintupled in 2009, Government Data Show
As the recession pushed U.S. incomes down last year, America’s highest earners — 74 people who made more than $50 million — saw their pay more than quintuple on average to a record $519 million each.
Those top-end Americans earned a combined $38.4 billion in 2009, up from $11.9 billion earned by 131 individuals with wages above $50 million in 2008, according to Social Security Administration data. Nationally, the average annual wage fell by $384 to $39,269 and the median wage fell by $253 to $26,261 during the worst economic slump since the Great Depression.
The Social Security Administration statistics, released Oct. 15, come as Congress faces a debate after the Nov. 2 elections over whether to extend Bush-era tax cuts for all or some Americans. Tax cuts are set to expire Dec. 31.
Good to know that they will be paying <16% effective tax on that money. That doesn’t even include tax scams and hiding money in foreign banks. The rest of you slobs who go to work pay a higher effective tax rate greater than 20%.
“Those top-end Americans earned a combined $38.4 billion in 2009, up from $11.9 billion earned by 131 individuals with wages above $50 million in 2008, according to Social Security Administration data.”
Those bailouts worked like a charm!
Joey will tell you we needed those bailouts.
numbers.. numbers.. 74 people?
Rich getting richer?
A couple weeks ago i found an article about how the number of billionaires in the world shrank by about a third over the last year or so.. Do i need to dig it out again?
As I’ve said a number of times there are many in this world that consider themselves elite. When push comes to shove many will find themselves thrown to the wolves along with the middle class. I suspect you will find that the billionairs who have seen their wealth explode are predominantly well connected Hedge Fund managers and Wall Street Titans. The billionairs who have fallen are those that created products for the middle class. CEO’s across this country are going to be destroyed by consolidation, favored companies will borrow for 0% and purchase the competition. Many will go bankrupt. This will leave a smaller # of CEO positions and further concentrate wealth. Wealth in the future won’t come from creating a product and selling it it will come from controlling government, having monopolies on things like phone service and food production and controlling natural resources.
As the recession pushed U.S. incomes down last year, America’s highest earners — 74 people who made more than $50 million — saw their pay more than quintuple on average to a record $519 million each.
This is why I support ALL Tea Party candidates.
You mean the ones that want to keep taxes down for those 74 people?
keep taxes down?
According to the Tax Foundation, the top 1 percent of households, those with adjusted gross incomes above $380,354, paid 38 percent of all federal income taxes in 2008. The bottom 95 percent, those with adjusted gross incomes below $159,619, paid 41.3 percent.
So:
top one percent paid 38% of fed income taxes.
top 5% paid 58.7% of all fed income taxes?
if that’s down, what’s up?
Yet us lowly wages slaves pay 50% of our total income in taxes and fees while the top 10% of wage earners pay less than 15% of theirs.
RunJoeyRun… my 12 year old daughter disguises her patronizing more effectively than you.
exeter..
If i give a bum $2, and he spends half his “income” ($1) on a bottle of wine, is wine too expensive?
you might not have gotten the one about the bum, so i’ll make it simpler.
if a car costs $10,000, and you make $20K a year and buy it, the car cost you half of your income.
If a doctor who makes $200K a year wants to buy that same car, should he be forced to pay $100K (half his income) for it?
So:
top one percent paid 38% of fed income taxes.
top 5% paid 58.7% of all fed income taxes?
if that’s down, what’s up?
What is up is their and your perception of their self-worth and their political power but not their importance to their country nor their taxes.
Interesting article from Fox on the Juan firing… seems NPR affiliates are none to happy to with NPR.
The gift that won’t stop giving.
http://politics.blogs.foxnews.com/2010/10/25/npr-affiliate-managers-voice-discontent-firing-juan-williams
Y’know, I used to enjoy listening to Juan back before our local NPR affiliate went to all talk! all the time! programming. He’d pop up on one of the news programs, say something really cool, then he’d be off to wherever else he went.
As for our local affiliate, I stopped listening. Too much talk. Not enough tunes. I like tunes, but not the corporate schlock. So, you know what I switched to, because I talk about it all the time.
WASHINGTON (Reuters) – The Obama administration’s latest estimate of taxpayer costs of the Wall Street bailout is too rosy and could ultimately damage public trust in government, the top bailout cop said on Monday.
In its quarterly report to Congress, the Special Inspector General for the Troubled Asset Relief Program said the Treasury Department’s bailout cost estimate for American International Group was an example of using misleading numbers to paint a positive pre-election account of the program.
The administration on September 30 slashed its estimate of the overall cost of the U.S. financial bailout by more than half to less than $50 billion on the back of a new plan to sell the government’s stake in insurer AIG.
The SIGTARP report said the Treasury Department, in coming up with the fresh estimate, had changed its calculation method to estimate a $5 billion cost for AIG. That was a shift from an earlier projection of $45 billion that used a broader measure to calculate the cost.
Public anger at the bailout of Wall Street has been a major factor in congressional races ahead of a November 2 election in which Republicans are poised to make major gains against Democrats who now control Congress.
The Treasury failed to make clear it had changed its calculation method and that it was relying solely on recent stock market prices for AIG shares in making the new estimate, the SIGTARP report said. It concluded that Treasury needed more transparency in its public disclosures about TARP costs
Really is there any public trust left to damage.
Certainly it is not overly difficult to differentiate between homes which are vacant and those which are currently occupied? Perhaps the lenders embroiled in the Foreclosure Fiasco could be required to at least make sure they have the legal right to foreclose on currently occupied housing before proceeding? Aren’t there stiff punishments for wrongfully forcing a family out onto the street?
FDIC’s Bair sounds alarm on foreclosure litigation
Housing Market
By Dave Clarke
ARLINGTON, Virginia | Mon Oct 25, 2010 3:26pm EDT
ARLINGTON, Virginia (Reuters) - Litigation arising from foreclosure paperwork problems could be “very damaging” to the housing market, a top U.S. banking regulator said on Monday.
Federal Deposit Insurance Corp Chairman Sheila Bair said she did not believe legislation would be needed to address concerns over whether the paperwork was properly done so long as investigations show the issue was mostly “procedural.”
State and federal officials are investigating allegations that for years banks have not reviewed foreclosure documents properly or have submitted false statements to evict delinquent borrowers.
“I fear that the litigation generated by this issue could ultimately be very damaging to our housing markets if it ends up unduly prolonging those foreclosures that are necessary and justified,” Bair told a housing conference in Arlington, Virginia.
“The regrettable truth is that many of the properties currently in the foreclosure process are either vacant or occupied by borrowers who simply cannot make even a significantly reduced payment and have been in arrears for an extended time.”
…
“The regrettable truth is that many of the properties currently in the foreclosure process are either vacant or occupied by borrowers who simply cannot make even a significantly reduced payment and have been in arrears for an extended time.”
She’s pretty well sized up the Tucson market. Or at least what’s happened around this nabe.
The foreclosed houses are of the see-through variety. And they’ve been that way for many months, if not a year or more.
America hasn’t improved much over past 3 decades, Jimmy Carter says
Desert News
America is no better off now than it was in the late 1970s and early 1980s, says former President Jimmy Carter. From national politics to relationships with other nations, there is a lot of room for improvement.
“We had almost complete harmony with every nation on Earth,” the Nobel Peace Prize winner said of his administration. “We not only preserved peace for our country, we never went to war. We never dropped a bomb. We never fired a missile.”
Many of the issues that were pertinent during Carter’s administration still face American leaders, he said. Some 30 or 40 of those items, including Middle East peace, relations with China and with Iran, and the search for clean, cheap energy, remain high profile.
While the above issues may be similar, today’s American political scene is vastly different. Carter says he had wonderful bipartisan cooperation, with Democrats and Republicans in both the House and the Senate supporting him.
That doesn’t exist now.
…..American political scene is vastly different.
for example… Prior to Carter, ex-presidents had the decency to keep their mouths shut and not interfere with matters of state.
Ex presidents never had 8 years of Bush jr.
That’s true. Recall that after Nixon’s resignation, he pretty well dropped out of the limelight. Yes, he wrote books and made occasional public appearances, but that was about it.
OTOH, Carter did things like put Habitat for Humanity on the map. I’ve never worked with him on a build site, but I know people who have.
He doesn’t show up with his tool belt and look pretty for a few hours. Nope, he’s there for the duration of the project.
And, if you’re on his crew, you’d better be bustin’ your hump because he has no patience for slackers. Don’t know how to do something? Well, that’s no excuse for standing around. He’ll get down on the floor and work with you on jobs like setting toilets.
The GOP won’t let Dubya out in the open until after the elections.
Iran taking our hostages was “almost complete harmony”?
No comment
U.S. population growth is irrelevant to housing demand; the relevant statistic is household formation.
U.S. Economy
Home Sales Up 10%, But Market Still On Shaky Footing
Agustino Fontevecchia, 10.25.10, 03:25 PM EDT
Increase comes amid uncertainty over foreclosures and putbacks.
The National Association of Realtors said existing home sales increased 10% in September, but subdued prices and ongoing scrutiny over the foreclosure practices of America’s largest mortgage lenders make it likely the housing market is still scraping along the bottom.
September’s seasonally-adjusted reading showed 4.53 million existing home sales on an annual basis, up 10% from August’s tally of 4.12 million, but 19.1% below the 5.6 million sold in September 2009. The median price tag was $171,700, down 3.3% from a month ago and 2.4% from last year. Distressed sales accounted for 35% of all sales in September.
“This is the biggest monthly gain in 28 years, even though we should be closer to 5 million [monthly home sales] given the rate of population growth,” says NAR spokesman Walter Molony. “Buyers are responding to low interest rates, but what hurts is the anemic pace of job growth,” he explains.
…
Chicago Storm May Beat 1975 Gale That Doomed Edmund Fitzgerald
OCT. 25th, 2010
A storm stronger than the one that sank the freighter Edmund Fitzgerald in 1975 is expected to slash across the Midwest tomorrow, snarling Chicago travel and whipping waves as high as 30 feet across Lake Michigan.
A line of severe thunderstorms driving wind gusts of 50 miles (80 kilometers) per hour will arrive before 10 a.m., said Andrew Krein, a National Weather Service meteorologist in Romeoville, Illinois.
“The morning commute is going to be really messy,” Krein said. “Visibility is going to be almost nothing at least for a short time.”
The storm will be a cyclone, with projected central pressure, a measure of its strength, forecast to be 28.35 inches. That would make it the second most severe system to strike the Great Lakes, according to the weather service.
The Edmund Fitzgerald sank on Nov. 10, 1975, in Lake Superior about 17 miles north-northwest of Whitefish Point, Michigan, with a crew of 29, according to the Great Lakes Ship Wreck Museum’s website. “The Wreck of the Edmund Fitzgerald” by Canadian singer Gordon Lightfoot climbed to No. 2 on the Billboard pop charts in 1976.
The Edmund Fitzgerald storm had a central pressure of 28.95 inches. The strongest storm recorded in the lakes was the “Great Ohio Blizzard” of January 1978, which had a central pressure of 28.05 inches.
The Edmund Fitzgerald sank on Nov. 10, 1975, in Lake Superior about 17 miles north-northwest of Whitefish Point, Michigan, with a crew of 29, according to the Great Lakes Ship Wreck Museum’s website. “The Wreck of the Edmund Fitzgerald” by Canadian singer Gordon Lightfoot climbed to No. 2 on the Billboard pop charts in 1976.
On that day, I turned 18. I was a freshman at the University of Michigan in Ann Arbor, and those gales of November were finally roaring into town. Man, they were fierce.
All of my Michigander classmates, who kept telling me that winter was coming, and oh, would I be cold, were talking about how fall was finally over and the real freeze was on the way.
Oh, yes, they also wished me happy birthday. But, since it was during the school week, not much of a party for Yours Truly. After all, we all had to study.
It wasn’t until a day or two later when we learned about what happened up on Lake Superior.
As I’ll be out riding in it, I’ll let you know firsthand how bad it gets.
Last March we had a gale off the lake that was pretty bad. Just east of Oak Street beach the waves were completely washing over the bike path. Ahead of me a fellow biker was swamped by a wave and when it receeded it dragged him and his bike about forty feet to within a yard of the water’s edge. Had I not seen it, I would never have believed it was possible. Nevertheless, there he was helplessly sliding while trying to get a handhold. It can get pretty bad out there, but it’s kind of exciting in a caveman sort of way. Perhaps I need to get a helmet cam, because the images would be quite stunning during some of our storms.
UTC Cutting 2,000 More Jobs; Not Clear How Many In Connecticut
A day before it opens labor contract talks with more than 3,000 Connecticut union workers, United Technologies Corp. said it would cut a total of 3,300 hourly and salaried employees in 2010 and in 2011.
The company did not say how many, if any, of the cuts would come in Connecticut. It also did not say how many of the cuts would be layoffs and how many by attrition.
In a document filed today with federal securities regulators, UTC said it had already cut 1,300 of the jobs in 2010.
WATSONVILLE, Calif.–(BUSINESS WIRE)–Granite Construction Incorporated (NYSE: GVA) today announced continued actions to reduce its cost structure, enhance operating efficiencies and strengthen the business to achieve long-term profitable growth. As part of its Enterprise Improvement Plan, the Company is initiating a reduction in force of approximately 227 employees, or approximately 13 percent of its salaried workforce.
“These steps, however, are an important part of our plan to be more competitive, restore long-term profitable growth and create value for our shareholders.”
Actions associated with the reduction in force are expected to reduce the Company’s cost structure by approximately $20 to $24 million annually. Granite will record a pre-tax charge in the fourth quarter of approximately $10 to $12 million associated with severance and benefits-related costs.
WOW! these guys do huge business with CalTrans I thought.
Granite Construction Incorporated
I sort of know a guy who works for them. I rented a house from his dad, a very fine man and a WW2 vet. I sometimes wondered if he (the son) looked down on me because I was a renter. I always thought the son had a lot of money because he lived in a million dollar house and drove really big and new SUV’s.
Fast forward to today: The son lost his “million dollar” house and now lives in the same rental that I used to rent from his dad. I hope he isn’t now losing his job too.
F*** the SUV; tell us about the trophy wife.
F*** the SUV; tell us about the trophy wife.
I didn’t want to mention her. But you can guess that part too I think.
Housing Apocalypse Now……
“Smell that! You smell that?…… Fried Bankster, son. Nothing in the world smell like that.
I love the smell of Fried Bankster in the morning. You know, one time we had this Investment Bank in civil and criminal court for 12 years straight. We didn’t find one of them, not one stinkin’ Bankster body……the smell, you know that Fried Bankster smell, the whole building……smelled like Victory…..
Someday this war’s gonna end…….”
“Fried Bankster”
Great vampire squid calamari, anyone?
Hi All:
I hope I’m not writing in too late for a comment.
The other day, I posed a question about how to determine the fundamental value of a luxury home. I am trying to see this from an investor’s point of view, which is why I wanted Ben’s input, since I think he has an investment fund these days.
If I were an investor, and I saw a luxury home at auction, there may be a great opportunity for me to spend maybe $500k on repairs, and then sell the place to a person with a mortgage, thereby adding like $2 MM in value. But I would have to be really, really good at predicting what I could sell the place for. The downside on something like that could be horrid if you didn’t get it right. As discussed earlier, the normal measures (rents, incomes, comps, construction cost) are not really realiable for luxury houses right now.
I’m thinking the best thing to do would be to come up with some sort of ratio of luxury prices to regular prices. Maybe a historical chart or something that shows how much higher the prices are in luxury markets compared with regular markets. What do you guys think about that?
Think what will hapen if they do away with the mortgage interest deduction and raise rates after your purchase.
“But I would have to be really, really good at predicting what I could sell the place for. The downside on something like that could be horrid if you didn’t get it right.”
IMHO, an investor already owns their own home, and likely has ready cash on hand to see an investment through a rough patch. If you have neither of the above then the planets must line up for you to realize a profit.
FWIW, I’m not a member of the investor class. I’ll own my home free and clear sometime next year, but my children will be ready for college in four years, so the above title won’t apply in my lifetime.
* REAL ESTATE
* OCTOBER 26, 2010
Fannie Mae Halts Law Firm’s Foreclosure Work
By NICK TIMIRAOS
Fannie Mae and Freddie Mac said on Monday that the mortgage giants had suspended all activity on foreclosure cases that had been referred to a Florida attorney under investigation by state officials.
Fannie and Freddie had previously stopped referring new cases to the Law Offices of David J. Stern, of Plantation, Fla., earlier this month. On Monday, Fannie said its latest move would affect all cases that “are not already subject to a foreclosure pause” by banks and other firms that service mortgages owned by Fannie, said a company spokeswoman. Freddie Mac said late Monday it had also suspended new referrals and current activity.
…
* HOUSE TALK
* APRIL 2, 2010, 10:18 A.M. ET
Sell to Renter or Short Sale?
By JUNE FLETCHER
Q: My wife and I want to sell the four-bedroom home she owns in Suisun City, Calif. She refinanced it in 2006 for $310,000, but it’s only worth $180,000 now. We want to sell it to get rid of the financial burden, so my wife can quit her job and we can start a family. But we can’t do it without a short sale. We have a good tenant renting the place right now who may want to purchase it. What should we do?
—West Sacramento, Calif.
A: A short sale is the quickest way out of your dilemma, but it will wreck your wife’s credit for years to come. Given that she will be out of the work force, limiting her ability to rebuild her credit, I’d consider this only as a last resort.
In the meantime, look into these other options:
* Consider a loan modification. Because this home is now an investment property, and not your primary home, it won’t qualify for any refinancing programs sponsored by the federal government.
…
Now that PB has moved over to first shift it’s kind of quiet here at night.
Not that that’s a good thing.
I don’t know, Big V, it seems like your model depends on a huge dose of cetarius paribus, what if that isn’t the case? What if things change, a lot?
What if things get to be more like what I read about life in Argentina?
The rich might prefer lock-down multi-story type buildings, or super gated communities with houses with extra deep concrete walls with no windows at ground level. Not quite the stuff many upper class housing is made of these days. You might ask yourself, how well do window bars fit onto the existing windows?
Housing that doesn’t meet these requirements might not be worth squat, to the rich anyway. Might be good for raising hogs in though.
The Super rich popsicle-stick McMansions of today might go the way of the 1800’s Victorian style housing? Why? Because criminals might be prone to using sledge hammers to bust their way through a wall rather than go through through the back door and most American homes are Not set up to counter this.
Or, you might see a McMansion secluded in the wilds out in the middle of nowhere with a beautiful view and think it’s a steal. But according to some who have lived through the default in Argentina, such a place is a trap where being tortured endlessly by criminals seeking riches is all that it amounts to. What happens to the value then?
Consider also, that at the height of the bubble in Japan in the 1980’s, many rich people lived in what Americans would call “huts” maybe there’s a reason besides earthquakes and tradition they did this? Heating and cooling? Taxation? Idk.
Many say the U.S. is turning Japanese,… or going the same way, anyway.
Or consider the qualities of the housing for the rich in Mexico right now. How close does American upper class housing fit into that mold?
The better the fit, the higher the value?
Beauty and value are in the eye of the beholder, subject to changing perceptions.
But then again, maybe it’s different this time? Eh? Idk, no one does. But it seems to me that one thing’s for sure, no one can take the attitude of, “hey, lets just sit back and do nothing while eating popcorn while we watch it all unravel.”
And of course, the U.S. would never default,… nooo, and as many say, it would go to war first to prevent such from happening, maybe? The gamble is, would war prevent the U.S. from turning Japanese, or going the way of Argentina, in spite of war, or after a default?
If you think WWII got us out of the Great Depression in the 1930’s rather than the removal of taxation and such all the way up until the 1940’s, you might dismiss all this.
Blinders on, and earplugs in?… and body armor on?
“But according to some who have lived through the default in Argentina, such a place is a trap where being tortured endlessly by criminals seeking riches is all that it amounts to.”
That sounds pleasant — NOT…
Why not a little housing market gloom to get you into the Halloween spirit?
P.S. Given that the last wave of alt-A and prime ARM resets is not scheduled to crest until 2013, I don’t understand the forecast for a bottom by late 2012. And it seems like I was just reading how the IMF predicted no housing bottom until much later — maybe 2018 or so? (I wasn’t sure when their predicted 8-year real estate bust period supposedly began.)
* BUSINESS
* OCTOBER 26, 2010
Housing Gloom Deepens
Home Sales Rise, but Economists Don’t See Prices Bottoming Till Late ‘11 or ‘12
By NICK TIMIRAOS
Home sales picked up in September, but the long-term picture for housing is growing grimmer, say analysts and economists who are pushing back forecasts for a housing recovery.
Earlier this year, the housing market appeared poised for a turnaround, three years after it peaked. Federal tax credits for buyers spurred a flurry of activity, and the economy was adding jobs. That led some economists to forecast housing would hit bottom and begin to recover this year.
Now, some economists don’t see a recovery until late next year or early 2012. “In most markets, the tide seems to be going back out,” said Stan Humphries, chief economist at Zillow.com, a real-estate site. “The momentum is easing.”
Adding to the mounting worries is the foreclosure crisis. Some banks suspended sales of foreclosed homes late last month to address questions about the integrity of the foreclosure process. If a substantial part of the market freezes for some weeks, that could further crimp sales.
…
Americans Underestimate U.S. Wealth Inequality
October 7, 2010
Morning Edition
The term wealth inequality refers to the unequal distribution of financial assets among a group of people. In the U.S., the top 20 percent of people have 85 percent of the wealth. Harvard professor Michael Norton, co-author of a forthcoming paper on misconceptions about wealth equality, talks to Steve Inskeep about what Americans think they know about wealth inequality.
Picking up nickels in front of an inflationary steamroller is a pleasant distraction from the burgeoning foreclosure fiasco.
Debt sales highlight abnormal conditions
By Aline van Duyn, Michael Mackenzie and Nicole Bullock in New York
Published: October 26 2010 00:29 | Last updated: October 26 2010 00:29
The abnormal state of the credit markets came into focus as the US Treasury sold bonds with negative interest rates for the first time and Goldman Sachs prepared to issue its first 50-year debt deal.
Both developments on Monday highlighted the difficult choices facing investors at a time when interest rates are at historical lows and the Federal Reserve is moving towards more asset purchases aimed at boosting the economy and staving off deflation. Investors who believe the Fed will succeed in its efforts – which would lead to higher inflation – accepted a yield of minus 0.55 per cent on $10bn of Treasury Inflation Protected Securities – or Tips – which compensate holders if the consumer price index rises.
At the same time, retail investors looking for higher yields in the current low interest-rate environment were targeted by Goldman, which prepared to sell $250m of 50-year bonds that are expected to pay interest of up to 6.25 per cent.
“The Fed has been sending the message that its cheque book is ready and it will do what it takes to reflate the economy,” said Jan Loeys, head of global asset allocation at JPMorgan Chase. “What no one knows is whether inflation will start to show in two weeks or two years.”
Mr Loeys added: “We are seeing longer-term thinking clients becoming increasingly wary of bonds and hedging against inflation. Shorter-term thinkers are still willing to still buy bonds, on the presumption that they are nimble enough to get out when inflation comes to push yields up.”
…
Foreclosure practices under intense scrutiny
By Tom Braithwaite in Washington
Published: October 25 2010 14:31 | Last updated: October 25 2010 23:41
US regulators are “intensively” probing banks’ foreclosure practices and expect to produce results next month, but some officials want to give the industry legal shields to stop the housing market being snarled up with litigation.
Ben Bernanke, chairman of the Federal Reserve, said on Monday that regulators were “looking intensively at the firms’ policies, procedures and internal controls . . . and seeking to determine whether systematic weaknesses are leading to improper foreclosures”.
Some of the largest US banks halted action to claim back homes from borrowers who are failing to make payments after it emerged that mortgage servicers had cut corners in preparing paperwork. State attorneys-general are investigating fraud allegations.
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, stressed that foreclosures had to continue to allow the housing market to bottom out and litigation arising from the repossessions debacle could “ultimately be very damaging” to the market.
She told a joint Fed-FDIC housing finance conference that regulators needed to engage in emergency “triage” on foreclosures, perhaps providing “safe harbour” assurances that would shield banks that were trying to carry out foreclosures on vacant property or on homes where borrowers had been offered a large reduction in payments and still could not make them.
Data on Monday failed to provide positive signals for the market. Sales of homes jumped 10 per cent between August and September, according to the National Association of Realtors. But sales are still down almost a fifth compared with the same period last year.
“More than 20 per cent of borrowers owe more than their home is worth, and an additional 33 per cent have equity cushions of 10 per cent or less, putting them at risk should house prices decline much further,” said Mr Bernanke. “With housing markets still weak, high levels of mortgage distress may well persist for some time to come.”
There was more bad news on mortgage modifications, with the Treasury announcing that 27,840 delinquent borrowers had qualified for permanent alterations through its Home Affordable Modification Programme, bringing the total to 495,898 out of an initial goal of 3m.
That was a 5.9 per cent increase from August, the smallest gain in more than a year. Of the 1.37m trials started under the programme, 53 per cent have been cancelled.
Paul Willen, an economist at the Federal Reserve Bank of Boston, said the programme had failed to bring about enough renegotiated mortgages. Despite widespread disappointment, the Treasury continues to insist it is a success.
…
“New attitude to ownership” heh heh…
More like a new version of the Golden Rule:
SCREW UNTO BANKSTERS AS THEY SCREW UNTO YOU.
P.S. Is there any way for home owners with mortgages to ascertain whether banks can produce the paperwork to show they have not already paid off their mortgages in full? I am thinking I see the potential here for a new cottage industry…
Foreclosures spawn new attitude to ownership
By Aline van Duyn
Published: October 22 2010 19:58 | Last updated: October 22 2010 19:58
Jeff Horton has a job, two cars and money in the bank. Yet, he stopped paying his mortgage a year ago. With shoddy documentation by mortgage lenders now delaying foreclosures across the US, Jeff thinks he will continue living for free for at least another six months, and probably longer.
The 33-year-old IT specialist is keen to put an end to his disastrous home purchase that will likely leave his bank with a loss of at least $100,000. Until the bank actually makes him leave, he will keep living in the Orlando house, and pocket the $2,200 he used to pay on his monthly mortgage. “I’m not stupid,” he says. “I will live for free until the bank takes over the house.”
Shasta Gaughen, an anthropologist living in California, stopped paying her mortgage in February. She has no idea when her home will actually be taken over. “I have been able to save significantly,” she says. “Every penny that was supposed to go to my mortgage went into savings, around $1,200 a month.”
Both Mr Horton and Ms Gaughen are the types of people banks like to lend to. They made payments on time, they have jobs. However, the plunge in US house prices – which has been particularly severe in California and Florida – left both of them with mortgages worth much more than their homes. Not having put any of their own money into the homes – 100 per cent financing was a common feature of the housing bubble – they decided to walk away from their mortgages.
Historically, homeowners have been reluctant to do this. Part of it reflects the fact that people want to “do the right thing”. “Borrowers are likely to stay in their houses until they are well beyond the book value underwater mark,” a Federal Reserve Bank of San Francisco analysis said this week.
Whether more of the millions of homeowners now facing “negative equity” decide to follow the path of Jeff and Shasta is making plenty of banks, regulators and investors very nervous. More defaults, especially by people still making monthly interest payments, increases losses for banks and the investors owning billions of dollars of securities backed by mortgage payments.
A particular worry is whether the tales of shoddy documentation completed by so-called “robo-signers” at mortgage lenders and growing foreclosure delays will affect people’s behaviour. It could for three reasons.
First, a longer gap between stopping payments and being evicted from the property allows people to build up a nest-egg. In many states, homeowners do not owe the bank anything more than the keys to their home if they default on a mortgage.
Second, a slowdown in foreclosures creates an ever-growing backlog of unsold homes, which will at some point be sold, pushing house prices lower. If people think home prices will not recover, they are more likely to throw in the towel.
Third, it further damages the reputation of the banks who made the mortgages, and this could make borrowers more unwilling to pay. “More bad news and uncertainty creates more anger against the banks and frustration with the system,” says Chris Mayer, Professor at Columbia Business School. “That’s not helpful.”
Indeed, Jeff tried to get his bank to reduce his monthly mortgage payments so that he could rent out the property. The bank was inflexible. When he read about million-dollar bonus payments to bank executives last year, he decided to stop making payments. “The bonuses were the last straw,” he says.
Jon Maddux, who runs YouWalkAway.com, which advises people on the foreclosure process, says calls about foreclosures have increased recently. “The banks are cutting corners in the foreclosure process and in some cases breaking the law and that sends the message to homeowners that, if the banks are not honouring their promises, why should the homeowners?” he says.
…
Foreclosure chaos boosts distressed mortgage debt
By Aline van Duyn
Published: October 18 2010 19:14 | Last updated: October 18 2010 22:14
The value of some of the most distressed bonds in US debt markets has jumped sharply, benefiting from the chaos that has engulfed foreclosures in many US states as thousands of home repossessions and sales have been put on ice.
Banks have suspended foreclosures after it emerged that staff rubber-stamped thousands of documents without checking their accuracy.
Fixing the so-called robo-signing problems will, at the very least, add further delays to a legal system already struggling to cope with record defaults on US home loans.
The confusion could have big implications for the value of mortgage-backed securities, repackaged mortgages that were at the heart of the financial crisis and which caused thousands of billions of dollars of losses for investors around the world.
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June 21, 2008
Homeowner Destroys House Before Foreclosure
Angry Vegas flipper goes on a rampage. Just say NO to foreclosure, Destroy the property!
October 25, 2010
How Bernanke Will Keep a Fire Lit Under Stocks Until Year End – And Which Sectors Will Soar
By Jon D. Markman, Contributing Writer, Money Morning
While many investors have solid reasons to remain concerned about the broader economic picture, there are some market sectors roaring forward that no one can afford to miss - and they will continue to provide profit opportunities thanks to the work of U.S. Federal Reserve Chairman Ben Bernanke.
Stocks rattled around in 295-point range of the Dow Jones Industrial Average over the past five days like pebbles in a maraca, but ended quietly — a fraction above flat. The big-cap indexes have now posted six of their past seven closes within half a percent, hemmed in by some sort of spooky gravitational pull.
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Double Your Money on Wall Street’s “Biggest Lie”…
This is Wall Street’s biggest lie yet, find out how to play it just right.
I have an inkling about why Megabank, Inc outsourced this work.
U.S. probing foreclosure processors
By Ariana Eunjung Cha
Washington Post Staff Writer
Tuesday, October 26, 2010
The more banks foreclosed on homes, the more a little-known company in Florida called Lender Processing Services saw its revenue and stock price soar.
For a fee, the Jacksonville company would locate and assemble the documents necessary for a lender to foreclose on a borrower who defaulted on a mortgage. Working on behalf of the biggest names in the industry, including J.P. Morgan Chase, Bank of America and Citigroup, LPS says it handles more than half of all foreclosures in the country.
Now, amid reports of shoddy and possibly fraudulent paperwork, LPS as well as a handful of other document processors and law firms are coming under scrutiny for the criminal investigations into the foreclosure debacle.
Law enforcement authorities on both state and federal levels are probing whether individuals at these foreclosure companies and at the banks that hired them committed an array of possible crimes - mail and wire fraud, money laundering, conspiracy and racketeering.
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Stories like this one give me the heebie-jeebies.
Friday, Oct 22, 2010 16:23 ET
More trouble for Meg Whitman’s son
Griff Harsh, son of the California gubernatorial candidate, was accused of rape in 2006
By Alex Pareene
The actions of a candidate’s child are relevant to a campaign only to the degree that the candidate leans on his or her record as a parent to sell him or herself to the voters. (Unless the kids are working for the campaign or acting as surrogates, obviously.) California gubernatorial candidate Meg Whitman doesn’t even have photos of her adult sons on her campaign website — although her excuse for never voting was that she was focused, at the time, on being a mother. She’s got a reputation as something of a bully, and there’s a wealth of evidence that her sons, Griff and Will Harsh, are monstrously entitled. And as Gabriel Winant wrote, the last time news of Griff’s misadventures made the news, “the Harsh boys are neither vulnerable nor irrelevant.”
So. Gawker revealed today that Whitman’s son Griffith Rutherford Harsh V, known to friends as Griff, was accused of rape in 2006 by a Princeton classmate. He claimed it was consensual sex after a night of drinking at undergraduate dining clubs. She awoke the next morning with bruises and a black eye — and, she claimed, no memory of the night before. Harsh claimed to think she was sober enough to consent, and said the injuries came from an accidental fall. The Princeton disciplinary panel decided it didn’t have enough evidence to discipline Harsh, and the woman never pressed criminal charges.
The question is: Would a student whose mother hadn’t donated $30 million to the school have had the complaint go away without further incident? And would the woman have pressed charges against a man who wasn’t a billionaire? There’s no way to know. But Griff was arrested that same year for breaking a woman’s ankle in a bar (the charges were eventually dismissed), and Princeton, again, did not discipline him.
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I’m sure this is a common sort of occurrence around Princeton?
After the illegal immigrant domestic, and now this, it kind of sort of makes you wonder what other skeletons are hidden in Meg’s walk-in closet.
Meg Whitman’s son, Griffith Harsh V, accused of sexual assault of Princeton classmate: report
By Corky Siemaszko
DAILY NEWS STAFF WRITER
Monday, October 25th 2010, 11:14 AM
Meg Whitman, former chief executive officer of EBay Inc. and the Republican nominee for governor of California, on the campaign trail.
James/Bloomberg
Former eBay honcho Meg Whitman, who is vying to become California’s next governor, was grappling Monday with a damaging report that her oldest son was accused of raping a Princeton classmate four years ago.
Griffith Harsh was hauled before a Princeton disciplinary board after the woman claimed she woke up with a black eye, a bruised face - and Whitman’s son on top of her.
“He was like, ‘You need the morning-after pill,‘” the woman’s friend told Gawker.com, which broke the story. “And she was like, ‘Why, what happened?’ She didn’t remember having sex, she didn’t remember consenting, she didn’t remember any of it.”
Harsh admitted he and his accuser had been drinking but insisted the sex was consensual. He blamed her injuries on an accidental fall.
“If I’m to be branded a rapist, for the rest of my life then there should be some evidence of it,” Harsh said in 2006 statement that was obtained by Gawker.com.
Harsh’s accuser, however, was reluctant to press charges because Whitman gave Princeton $30 million to build a college that bears her name and she feared “social repercussions,” the woman’s friend told Gawker.
“She didn’t want to press charges because it’s Meg Whitman’s son,” the friend said. “She didn’t want to go through that. She didn’t go to the police. She didn’t get a rape kit.”
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“I’m sure this is a common sort of occurrence around Princeton?”
I’m sure this is a common sort of occurrence on EVERY college campus.
If someone doesn’t remember what happened the night before (e.g. they were black-out-drunk), they are not a very good witness that anything occurred, including a rape.
And why assume it was rape under these circumstances? Rapists don’t typically fall asleep and wake up with their victims, then encourage them to go get the morning-after pill.
Presumption of innocence should be pretty strong in a case like this.