The Housing Bubble

Review of When Money Dies by Adam Fergusson.

Improving stock market, higher capacity utilization rates (closer to normal), improved corporate earnings, better productivity, slightly better employment.

Increasing interest rates, slower stock market, lower house prices.

Can anyone make sense of this?

House Appraisals Under Fire ~ The Wall Street Journal
Computerized Models Are Assailed as Inaccurate; There Goes the Credit Line

Home appraisals, which were blamed for being too generous during the housing boom, are now being criticized by some homeowners for being too stingy, preventing them from refinancing or borrowing against their houses.

The criticism is being leveled at computerized real-estate appraisals, which depend on models that use prices from home sales and other data to determine the value of a house. Because of the volatility in the housing market, they are underestimating prices, some homeowners, real-estate agents and fee appraisers say.

Lenders use computerized appraisals primarily for home-equity loans, pre-approvals for mortgage refinancing, loan modifications and mortgage origination’s of less than $250,000. Automated appraisals are cheaper and faster than in-person appraisals. They run as little as $20, whereas appraisals done by people can cost hundreds of dollars.

When realtors, banksters, corporatists and their minions and other unsavory thugs of various types are called out for what they are, a very small minority of of reactionary non-thinking blog contributors immediately respond by;

1) Defending them

2) Accuse other of being angry

It happens here every day. Watch, read and observe. Then ask yourself this simple question….. Why would a peon publicly embarrass himself by making excuses for the very thugs that oppresses him?

Half Moon Bay Faces Financial Brink ~ WSJ
New City Manager Leads Effort to Prepare Residents for Likelihood of Steep Budget Cuts; Policing Could Be Outsourced

HALF MOON BAY—This coastal city next month will begin an aggressive campaign to warn residents of severe budget cuts that lie ahead, as the cash-strapped town tries to avert insolvency.

Laura Snideman, appointed earlier this month as Half Moon Bay’s city manager, says she and the five-member city council and top managers will meet in the next few weeks with residents to alert them about impending changes, such as potentially outsourcing the town’s 15-person police department to an outside agency.

The financial troubles of Half Moon Bay have made the coastal city a poster child for the problems plaguing Bay Area municipalities.

The city has planned as many as a dozen meetings and will have a town hall gathering at the end of January, says Ms. Snideman. She adds that Half Moon Bay hasn’t embarked on such an aggressive public outreach before and plans to walk residents through the city budget to show where cuts need to come from.

“The choices are no longer hard, they’re painful,” says Ms. Snideman, formerly an economic development manager in the city of San Mateo. She adds that she hopes by making the case for cuts, some residents will offer ideas or even volunteer to save some services and programs.

Florida is No. 3 in nation for slow pace of foreclosing on delinquent homeowners

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 6:49 p.m. Wednesday, Dec. 29, 2010

The average Florida homeowner who went into foreclosure in November hadn’t paid his mortgage in 10 months.

The 307-day delay between the first late payment and a foreclosure referral, reported in a study released this week, was called “flabbergasting” by one financial expert who said mortgages typically go to foreclosure by the third delinquent payment.

The average Maryland home doesn’t go to foreclosure until 358 days following the first late payment. New York is at 344 days. California tops the list at 367 days.

“I am absolutely, utterly flabbergasted that this could be true,” said Skip McDonough, a broker with Family Mortgage in Jupiter. “It flies in the face of prudent management and due diligence on the part of the lender.”

Herb Blecher, senior vice president of LPS Applied Analytics, said it’s the first time the company has done a state-by-state measure of pre-foreclosure loan delinquency.

The data include homes that are in foreclosure for a second time, possibly following a loan modification or short-sale attempt. Those loans, which Blecher said are not a majority, would extend the time to foreclosure because the report measures from the first late payment to the most recent foreclosure referral.

The report also found that 18 percent of loans nationwide with 24 or more missed payments are not in foreclosure. About 15 percent of loans with 18 months of no payments remain out of foreclosure.

“We are looking at a very large pool of very delinquent loans,” Blecher said.

Many struggling homeowners undoubtedly see delays in the foreclosure process as a benefit. But for homeowner associations trying to collect late fees and neighbors of vacant properties, foreclosure postponements can mean lower home values and a reduction in property maintenance.

Bob Clinton, president-elect of the Florida Association of Mortgage Professionals, Palm Beaches chapter, said the federal loan modification plan and the sheer volume of bad loans are contributing to the foreclosure delay.

About 505,000 homeowners nationwide have received permanent lower monthly payments through the Making Home Affordable program, according to a Treasury Department report this month.

But 774,000 homeowners have dropped out of the $30 billion plan. That’s about 54 percent of the more than 1.4 million who have applied.

“It’s pretty restrictive and a huge failure,” Clinton said of the federal program. “Many homeowners who end up in foreclosure had made an attempt to modify.”

Clinton said the banks are “notoriously” unprepared to handle the millions of foreclosures nationwide, as well as the loan modifications.

“They don’t have the staff or depth of talent that this economy calls for,” Clinton said. “It used to be foreclosure was a big, big deal. Nowadays, it’s like someone turned on a faucet and they can’t stop it.”

December 29, 2010, 2:18 PM ET.
Four Housing Issues To Watch in 2011.

1. Jobs: Call it a cop out because it’s so obvious, but without more tax credits to juice sales, the housing market needs job growth.

First, who’s going to buy a house when they’re not certain they’ll have a job in six months and when it looks like home prices are likely to fall another 5%? Mortgage rates spent much of 2010 at a level that hadn’t been seen since the Eisenhower administration, but it didn’t do to increase buyer demand.

2. Foreclosure delays: In September, some of the nation’s largest banks, including units of Bank of America Corp. and J.P. Morgan Chase & Co., suspended foreclosures due to potentially fraudulent document-handling procedures. Foreclosure filings were down sharply in November, a sign that the foreclosure machinery is proving to be slower to restart than the banks’ initial folks-there’s-nothing-to-see-here guidance.

3. Washington: Next month, the Obama administration is set to issue an initial set of recommendations for how to remake Fannie Mae, Freddie Mac, and the broader mortgage market. Deficit hawks also have their sights set on scaling back the mortgage-interest deduction, though immediate action isn’t expected.

Meanwhile, regulators are also writing new rules on provisions outlined in the Dodd-Frank Act that will clarify how banks must retain some of the risk on loans that are bundled and sold off as securities and define what constitutes a “qualified residential mortgage” that is exempt from such rules.

4. Lending standards and rates: The government continues to dominate the mortgage-lending landscape, with more than nine in 10 new loans backed by Fannie Mae, Freddie Mac or government agencies such as the Federal Housing Administration. Policymakers might try to create more room for private lenders to return by allowing expanded conforming loan limits to fall in September. If mortgage rates continue to rise, that could lead buyers to scale back their purchases, putting pressure on home prices.

http://blogs.wsj.com/developments/2010/12/29/four-housing-issues-to-watch-in-2011/ - -

CHICAGO (AP) — Through a combination of procrastination and bad timing, many baby boomers are facing a personal finance disaster just as they’re hoping to retire. Starting in January, more than 10,000 baby boomers a day will turn 65, a pattern that will continue for the next 19 years.

< Heard this on radio yesterday. 10,000 people a day turning 65 - - for the next 19 years! Not all will sign up for Social Security, however. A few will wait ’til they’re 70 because the monthly checks are substantially higher for those able (and willing) to hold off.

Bottom line - a big surge in the Social Security rolls starting next month. How long will the trust fund last?

“Housing busts have historically been about three years from peak to trough, I’m told by the people who analyze these things.”

However, given the myriad market-distorting interventions which the government undertook in a futile effort to soften the impact of the housing bust, plus the fact that the housing bubble was by far the biggest boom in the history of modern real estate, there is a great likelihood the collapse phase will play out for far longer than the recent historic norm.

Housing Prices Headed Further Down?

Dec 29 2010, 2:24 PM ET 39
Words to strike terror in the heart of any homeowner: “And Now House Prices Will Now Drop Another 20%”. That’s what Garry Shilling argues in a rather exhaustive piece for Business Insider, in which he lays out a whole bunch of reasons to think that home values still have a little farther to fall. Most of those reasons come back to three factors that have considerable interplay: unemployment; tighter underwriting standards; and a huge unsold inventory. In essence, demand remains depressed because too many people can’t get mortgages; while inventory is building up, not only the conventional inventory but the “shadow inventory” of houses that need to be sold in the near future, but which aren’t on the market yet: defaults that haven’t yet been foreclosed, foreclosures that haven’t been put on the market, and homes owned by people who ought to sell, for one reason or another, but can’t quite bring themselves to take the loss yet.

Housing busts have historically been about three years from peak to trough, I’m told by the people who analyze these things. But housing busts have never before seen the sort of government interventions we’ve had to prop up the housing market. So it’s entirely plausible that the market will fall still further–indeed, likely, looking at the Case-Shiller index, which remains above its historical level.
…

Can an elephant change its spots?

Why Are Republicans Changing Their Tune on Fannie and Freddie?
Dec 29 2010, 11:08 AM ET

One of the most common Republican battle cries over the past year has been to wind down government sponsored mortgage companies Fannie Mae and Freddie Mac (F&F). They played a major role in creating the housing bubble that led to the financial crisis. The taxpayers’ loss on their rescue will exceed $150 billion, which is several times the cost of the rescue for the rest of the financial industry. Yet a new report indicates that Republicans might not be so eager to tear down F&F after all.

What has changed?

Actually, let’s take a step back. What are Republicans actually saying now? The report comes from Alan Zibel from the Wall Street Journal. Here’s an excerpt that helps to explain:

“We recognize that some things can be done overnight and other things can’t be,” said Rep. Scott Garrett (R., N.J.), incoming chairman of the House Financial Services subcommittee, which oversees Fannie and Freddie. “You have to recognize what the impact would be on the fragile housing market as it stands right now.”

Contrast that attitude with this:

Republicans were backing a bill by Rep. Jeb Hensarling (R., Texas) to start cutting the government’s ties to the mortgage giants or begin winding them down in two years; if they were deemed financially viable, they would become fully private within five years.

Essentially, they’ve gone from trying to quickly eliminate F&F to saying that a slower, more prudent approach is necessary. Clearly, something has happened to soften their once aggressive attitude.
…

Ohio AG Cordray Urges Courts to Take Action in Foreclosure Cases
Wed, 2010-12-29 16:57

In a letter sent today to Ohio judges, State Attorney General Richard Cordray has requested that the state courts continue to pay close attention to foreclosure cases that may have affidavits signed by robo-signers. In support of continued vigilance, Cordray highlights several courts that have taken action to address the situation.

“In tracking these cases throughout the state, we have found that judges are finding different ways to handle them,” said Attorney General Cordray. “Judges from Cuyahoga to Trumbull to Butler Counties have all found ways to deal with affidavits that may be fraudulent. I strongly urge other courts to consider options that will work best for them as our office decides how to handle the individual cases.”
…

Announced job cuts surged in November

CHICAGO (UPI) — Announced job layoffs at U.S. firms rose 28 percent in November over October, employment research firm Challenger, Gray & Christmas said Wednesday.

The number of announced job cuts was the highest since March, but the year’s total through November remain 60 percent below the number for the first 11 months of 2009, the firm said.

In November, U.S. firms announced they were eliminating 48,711 jobs.

In November, 79 chief executive officers left their jobs, the lowest number of CEO departures since April.

To date, 1,227 CEOs have left their jobs this year, Challenger, Gray & Christmas said.

U.S. weekly jobless claims drop 34,000 to 388,000

WASHINGTON (MarketWatch) — The number of U.S. workers filing new applications for jobless benefits fell 34,000 to a seasonally adjusted 388,000 in the week ended Dec. 25, hitting the lowest level since July of 2008, the Labor Department reported Thursday.

the year that was
Vote Now For The Biggest Business Debacle Of 2010
By Chris Morran on December 29, 2010 12:30 PM

We asked for your input in nominating the biggest business screw-ups of the year and you responded. Now is your chance to vote for a loser from the final five nominees.

In no particular order, the most nominated debacles are:
Foreclosure Fracas, aka Robosigners Revealed:
2010 saw Bank of America and other lenders putting a temporary halt to foreclosures after it was revealed that, among other idiotic actions, banks had hired so-called “robosigners,” untrained rubber-stampers, to process mortgage paperwork. BofA was also the source of numerous stories of improper foreclosures and seizures.
…

Catching up with yesterday’s insightful comments. Oxide argued that wishing prices may be budging here in DCVAMD, but that it would be a horse race between two duelling variables, house affordability and house deterioration. Grim prospect. It’s not like anything around here in Northern VA was ever built to last, and the building codes permit really crappy construction. At the same time, rent prices ARE rising precipitously. Maybe the Repubs coming in in January will finally get something going with chasing the illegals out.

On the erstwhile home front. I have previously noted that I was fortunate to have escaped the Northeast, CT in particular, some time before the bubble burst. It was clear that something very, very bad was going to happen, what with the tweeked up hustling and such. People may have sensed that the CT e-CON-omy had switched from private sector to public over the previous fifteen years. If so, it was never expressed aloud, only with the general desuetude and grim set of shoulder. CT was stagnant then, and it is rotting now.

One of my friends - really - is a realtor, and her husband was a builder. There were so many couples with this configuration that it’s sort of like macaroni and cheez. He built ‘high end’ houses - he actually has taste - and she sold ‘em. Both had been doing this since after the 80s bust. When the bubble burst, they got stucco holding several of said houses. Which they lost. There are things you don’t talk about when you’ve known people for a long time, and when you have genuine fondness for them. When I went to visit them, I was in a celebratory mood, having paid off all of my debt (about which I crowed here, quite immodestly and at great length) without dipping into my assets. The old je ne sais quois flashed, briefly - “we don’t have any debt either!”

She is now doing foreclosures and short sales, and says they are like pulling teeth, they take a year to close. She says she retired, and is drawing Social Security. She has found hedonic substitutes, although she has become subdued. She follows the stock and financial instrument market, and has permitted
herself a round number that she places into positions on the basis of discussions and research with her investment club. It is a productive way to fill time, and you do learn something from it. He retooled in his 50s, learned a new industry - securing, bundling and reselling bandwidth - and spends most of his time at a desk, the only greybeard among 20 somethings. The only employee who can talk to the site services managers comprising their core customers. I figured he’d wind up OK - he has humor and cynicism as well as practicality, and is the son of an old world craftsman. His father taught him a thing or two, and he took the training to heart.

That area of CT has become damped down and muffled. The apologists are strident. This is THE Chosen Land, beyond whose borders there is no known civilization. Nobody actually leaves other than the kids who couldn’t make it into an out of state college and get left behind.

The discussion that proved fruitful was, “wages are flat and declining. Heating oil price has gone steadily up. How comfortable are you with staying warm, given one of the highest electricity costs in the country (thanks for the graph, DennisN!) , and given that you have to fill up your heating oil tank a minimum of every two weeks from October 1st to March 30th?”

My long time friend cloaks herself with the trappings of dignity, as occasion demands. Nevertheless, after two days, we were talking reasonable criteria, and decision rules, for Plan B. For when life DOES get worse, heaven forbid. For when heating oil DOES go to $4/gal again, and stays there forever or gets even more expensive. For when there have been no closings whatsoever for a year, when he is faced with a salary cut, or a precipitous increase in co-pays, or…or…etc.

I told ‘em my Plan B. The Oil City Plan, with the additional twist of 40 acres, running water, a woodlot and a mule. In view of my observation that we as a society may be in in a post industrial decline. That our grid control systems are susceptible to incursions and exogenous disruptions. We agreed that water, garden space and a woodlot would be key. She then said we all ought to buy up a couple of hundred acres of farmland in depopulating upstate New York - and we left that as a reasonable stalemate until next time.

I would, in fact, find it pleasant to be around both of my old friends, in some kind of proximity, during the Plan B scenario. Our senses of humor play off of one another nicely. At the moment, though, until the Medicare kicks in, they need health insurance (which the
private sector job provides).

“…six biggest lenders in the state (including some of the biggest banks in the country)…”

Any guesses as to the identities of these mystery lenders?

‘Robo-signing’ foreclosures / N.J. courts step in
Posted: Wednesday, December 29, 2010 12:01 am | Updated: 8:49 am, Tue Dec 28, 2010.

When a bank wants to foreclose on your home - and that’s something that has happened to more than 225,000 New Jersey families in the last five years - an officer of the bank must prove in sworn statements that the bank, in fact, owns the mortgage and that the mortgage is, in fact, in default, with the amount owed clearly specified.

These are basic legal protections afforded to borrowers. But with record numbers of foreclosure cases these days, banks are cheating. They are hiring so-called “robo-signers” to process hundreds of foreclosure affidavits a day. These low-level workers are, in effect, attesting to what they cannot possibly attest to truthfully, considering the volume they are handling - that the banks’ claims against the borrowers are indeed accurate and documented.

It may sound rather petty - like one of those “legal technicalities” that so many people disparage. But these technicalities prevent people from errors and outright fraud. They prevent families from being thrown out of homes that they have a right to stay in.

It’s a national problem, but the New Jersey Supreme Court has taken it upon itself to address the issue and protect homeowners’ rights.

Last week, Chief Justice Stuart Rabner appointed Judge Mary C. Jacobson, of Mercer County, to oversee foreclosure matters in the state. She immediately signed an order requiring the six biggest lenders in the state (including some of the biggest banks in the country) to appear in her courtroom on Jan. 19 to show cause why the processing of residential foreclosures should not be suspended in New Jersey as a result of the robo-signing.
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Wednesday, December 15, 2010

Do we really know how many foreclosures are out there?
A foreclosure sign in front of a home

Marketplace’s Alisa Roth looks into why foreclosure figures vary so widely from source to source.

Oil Could Push to $110: Charts

It’s “certainly possible” that the price of a barrel of oil will push above $100 a barrel, Daryl Guppy, CEO of Guppytraders.com, told CNBC Thursday. “Once you move above $100, then $110 is just clear freeway straight to that level,” Guppy added.

California faces gloomy New Year
by Bob Morris
Thu, Dec 30th 2010

The non-partisan Institute for Truth in Accounting has released its latest report on California (PDF), and it makes grim reading indeed. Not only is California so deep in debt that default or bankruptcy might seem a blessed relief, it appears the accounting gnomes in Sacramento have been engaging in the MSU Method of Accounting. Yup, they’re Making Stuff Up again.

Among other such inabilities of these accountants to use their calculators and spreadsheets accurately, the report found $81 billion in off-balance sheet retirement liabilities in the 2009 financial report. That bears repeating. The official report neglected to include $81 billion in pension liabilities.
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Why Are Republicans Changing Their Tune on Fannie and Freddie?
http://www.theatlantic.com/business/archive/2010/12/why-are-republicans-changing-their-tune-on-fannie-and-freddie/68651/
(Just a link, not a political bias.I’m a Political Atheist)

Four Housing Issues To Watch in 2011
http://blogs.wsj.com/developments/2010/12/29/four-housing-issues-to-watch-in-2011/

This house was just listed today. It is in the same neighborhood that a gentleman who worked in Ft. Lauderdale purchased a home in a little over a year ago for $215k using the First Time HB Tax Credit. There was an article about the great deal he got and how happy he was that was posted and commented on here. That dude has lost over $100k in a little over a year. But at least he got his $8k for a down payment and a couch.

For sale today
9187 Reed Dr Palm Beach Gardens, FL 33410
$86,000
3 Bed2 Bath1,308 Sq Ft
———————————————————————–
Last sale $83,500 Dec. 1996

Location Address: 9187 REED DR
Municipality: PALM BEACH GARDENS
Parcel Control Number: 52-42-42-13-03-046-0020
Dec-1996 09577/1550 $83,500 WARRANTY DEED

If the Fed ought to exist, and if then it is best that it is not influenced by politicians, can’t we at least see what its operations are?

It is incredible to me that the taxpayer is not even allowed to fully view what The Fed is doing.

$5 Gas Predicted Under Obama — What, No Pitchforks? ~ Larry Elder

Five dollars per gallon of gas by 2012! A former president of Shell Oil considers this likely. The average price on Christmas Day for a gallon of regular gas reached $3.28 in Los Angeles County, the highest price since October 2008. In one month, the price rose 13 cents, up 35 cents year to year.

Where are the calls to sic Obama’s Justice Department on Big Oil to hold the oil companies accountable for “market manipulation”? Why aren’t we hunting down the amoral “oil speculators” responsible for repealing the law of supply-and-demand in order to line their pockets?

Does debt-influenced pricing lead to monopoly pricing?

Monopolies are considered bad because they extract every last ounce of value from the consumer. There is no net benefit for the consumer as it has paid everything that the good is worth to them. Under normal competition, companies make profits, and the consumer doesn’t pay the very most he can, leaving no net benefit.

When people take on debt to buy depreciating assets or consumer goods, the price is again bid up, since the immediate costs (the “howmuchamonth’ers”) seem affordable. But that drives up the cost of the good. Does it drive it up to monopoly pricing levels?

I’ve recently been hearing, in the DC metro area, about a lending service that advertises that if you have direct deposit and a job, they will lend to you. They say they are a replacement for payday loans, or “if you just need your paycheck now”.

I realized I have no problem with adults - ill-informed or unable to put off gratification as they might be - to enter into contracts and go into debt. My problem is that the current system is set up so that if they default, I get to pay the bill, either through taxes or a zero-interest-rate policy.

This is directly a result of too-big-to-fail (”We can’t let that institution fail, no matter how poorly it was operated”), and lenders not being forced to hold onto repayment risk (”What do we care if the loan defaults? We just sell it off after we make it.”)

How can the society prevent itself from being held hostage by existing financial institutions? I don’t believe government can set debt limit rules for private citizens. Politicians are feckless and venal, and ultimately it is at their feet that I lay the blame for the financial crisis and the bubbles, as they write the rules. I think the most effective steps that can be taken to stop society from being held hostage by the financial sector are 1) eliminate in all forms, too big to fail, and 2) Force lenders to be inextricably tied to repayment risk.

There are other follow on issues that the EU is pursuing - limiting executive pay, tying it to profitability - but that’s icing on the cake, IMHO.

(Getting my semi-daily posting out of my system in the morning rather than at 10 PM EST

Since I have been looking for a home to purchase since about 2004, a year before I sold my place. I have watched as over priced houses got snapped up in a week to languishing on the market for years, when they are not pulled and re listed as new. Some places have the “word of the day” I have decided to have the ” Hurry! It won`t last” Listing of the day.

16189 74TH AVENUE NORTH
Palm Beach Gardens, FL 33418
$217,000
4 Bed2 Bath 1,870 Sq Ft 1.15 Acres

Drum Roll…………..

Days on site 779 days

Seriously, why are some “socialists” so much better at capitalism than the “capitalists? Because they eat saurkraut? Because they’re mostly “white”? Because of cheap labor? No. But I’d say laws, structures, social safety-nets, more equal pay, national investment in private sectors and higher pay have something to do with it. But we can learn nothing from others? Ever?

Germany’s private sector union membership is officially around 22% compared to USA’s around 7.4% (sources: EIRO/Eurostat, BLS) but due to German labor protection laws and structures including the German Works Constitution and Works Councils basically ALL German factory workers are unionized compared to the USA. Germans have some of the highest pay in the world, get universal healthcare and good pensions but they are the world’s leading exporter per-capita and the second leading exporter in the world. And:

German Q3 exports up by 21.5 pct on the year AP 12/30/10

Germany is the world’s second-biggest exporter after China. Growing exports this year have been accompanied by signs of improving domestic demand at home.

Thousands without fresh water in N. Ireland
Water crisis stretches into ninth day after frozen pipes burst following cold spell.

A big winter freeze followed by a swift thaw left burst mains and pipes across the province, affecting 40,000 homes and businesses in Belfast as well as 77 other towns and villages, NI Water said.

Some people have been left without water for more than a week and others have had sewage flooding their homes.

Council-run leisure centers offered free washing and showering facilities across the province, freestanding pipes were erected in streets to provide supplies and Scotland will send 160,000 liters of drinking water. Farmers were also worried about getting water for their livestock.

Public health emergency
“There is now really a public health emergency. Young families have been left without drinking water and unable to flush toilets. This is unacceptable,” Peter Maguire, a general practitioner near Newry, told the BBC.

Sorry, Eddie, but your DJIA = 12K by year-end prediction has failed. Better luck next time.

Dow Jones Industrial Average
DJIA 11,566
Change -18.96 -0.16%
Volume 16.27m

Dec 30, 2010 10:20 a.m.

Average rate on 30-year mortgage up to 4.86 pct.
Rate on 30-year mortgage climbs to highest level since mid-May; rate on 15-year loan rises too

NEW YORK (AP) — The average rate on 30-year fixed mortgages rose this week to the highest level in seven months, reflecting higher yields on long-term Treasurys.

Freddie Mac says the rate increased to 4.86 percent from 4.81 percent in the previous week. It hit a 40-year low of 4.17 percent last month.

The average rate on the 15-year loan rose to 4.20 percent from 4.15 percent — the highest reading in six months. It fell to 3.57 percent in November, the lowest level on records starting in 1991.

Rates have been rising since November as investors shift money out of Treasurys and into stocks. Many expect the tax-cut plan will fuel economic growth and increase inflation. Yields tend to rise on fears of inflation. Mortgage rates track the yields on the 10-year Treasury note.

Obama forgives Michael Vick but…..

http://www.grouchyoldcripple.com/archives/004668.html - 21k -

With buyers coming back and the housing market in “gradual recovery” mode, there has never been a better time to sell!

Economic Report
Dec. 30, 2010, 10:11 a.m. EST
Pending home sales up 3.5% in November

The National Association of Realtors said its pending-home-sales index rose to 92.2 from a downwardly revised 89.1 in October.

The index is still 5% below November 2009 levels.

The data reflect contracts and not closings, which normally occur after a lag time of one to two months. The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales.

The NAR said the figures suggest a “gradual” recovery into 2011, reflecting housing affordability and an improving economy.
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BRITAIN’S winter is the coldest since 1683 and close to being the chilliest in nearly 1,000 years.

Latest figures reveal that the average temperature since December 1 has been a perishing -1C.

That makes it the second coldest since records began in 1659.

The chilliest on record was 1683/84, when the average was -1.17C and the River Thames froze over for two months.

But with January and February to come, experts believe we could suffer the most freezing cold winter in the last 1,000 years.

The Met Office’s Charlie Powell said: “It’s rare to have cold this prolonged, with temperatures falling incredibly low.

I just put under contract a 640 acre parcel of land near Bar Harbor, ME that I plan on building a second home on eventually. I am paying under $160/acre, it is an estate sale where the heirs need money (they are both broke realtors in FL). Absolutely beautiful area about a mile from the water. Brutal winters (unless you snowshoe, cross-country ski, ice-fish, snowmobile etc.) but great summers/fall. I think I am getting a pretty decent deal overall, and amazingly the realtor has been great to deal with. I’m still very bearish on housing overall.

No need for charges, he is the son of a good Union Officer.

Son of Sanford cop caught on video in sneak attack on homeless man

By Rene Stutzman, Orlando Sentinel
8:01 p.m. EST, December 29, 2010

Prosecutors are expected to decide in the next several days whether to charge the 21-year-old son of a Sanford police lieutenant with a crime for sucker-punching a homeless man, leaving him sprawled on a sidewalk in downtown Sanford with a broken nose.

A video shot by a witness shows Justin Collison attacking the man then walking away and punching another man Dec. 4.

WFTV-Channel 9 broke the story Tuesday, reporting that Sanford officers that night had the video of the attack and interviewed Collison but did not arrest him. He is the son of Lt. Chris Collison of the department’s patrol division.

Acting Sanford police chief Capt. Jerry Hargrett said late Wednesday afternoon that his officers made “blatant” policy violations that night, including not handcuffing Collison or patting him down.

http://www.orlandosentinel.com/news/local/breakingnews/os-video-man-attack-homeless-man-20101229,0,4989756.story - -

“3.1 percent” LOl.

Palm Beach County, Treasure Coast to see prices fall again in 2011, Veros says

by Jeff Ostrowski

Home prices have pulled out of their free-fall, but property values in Palm Beach County and the Treasure Coast will keep falling in 2011, says Veros Real Estate Solutions of Santa Ana, Calif.

Veros expects Treasure Coast prices to drop by 6.3 percent in 2011, the fifth-weakest showing among 300 metro areas the company examined. Veros expects Palm Beach County prices to fall by 3.1 percent.

Supply still outpaces demand, a reality that will continue to push down prices, says Veros’ Eric Fox. But in a bit of good news, plunging prices mean that investors now can rent homes for more than it costs to own them, and that’s helping to stabilize prices.

“Now that prices have gotten to such an affordable level, investors swoop in and buy homes, and that sort of puts a bottom on the market,” Fox says.

Veros says San Diego home prices will post a 3.5 percent gain next year, best in the country, while Reno’s 7.2 percent decline will be the worst.

A big thank you to Lola and Professor Bear. On Tuesday I asked about a guy advising a diversified asset portfolio. Seems that not only is he trying to sell books but he is an investment manager, no advertising, who charges 1% of the money he manages as a fee. I asked for specifics and he replied that I was being suspicious and wouldn’t deal with me. Any one have a similar story? Thanks again.

From Edmunds on Yahoo.

The U.S. deficit reduction commission report won’t make it to Congress, and dying on the vine with it is the suggestion of a 15-cent increase in the federal per-gallon gas tax.

A gas tax increase was likely to rile the public, but we at Edmunds.com believe that a gas tax can actually be beneficial … but only at a much higher rate than 15 cents per gallon, and only as part of a “grand bargain” that lightens the load for taxpayers in other areas and simplifies the tax code.

The deficit commission’s mandate was to reduce the deficit, hence the modest 15 cents per gallon increase. But thinking more broadly, increasing the gas tax is also an opportunity to finally align market demand with the need to lower gasoline usage and emissions.

What if the government announced a new tax on gasoline that stabilizes the price at, say, $5 per gallon beginning in 2013? The variable tax could act like a shock absorber, sheltering both consumers and the automakers from fluctuating gas prices.

It would be critical to announce an increase in the gas tax at least two years in advance so that Americans could prepare accordingly. And prepare they would. Looking at the car sales patterns of recent years, it is easy to see the correlation between rising gas prices and the purchase of more fuel efficient vehicles.

Consumers and automakers suffer when gas prices fluctuate wildly. Consumers regret purchase decisions and often scramble to replace their vehicles, getting a lower value for a vehicle in lesser demand. Automakers suffer from long-cycle product planning and production decisions that often result in them missing the market when gas prices drastically change.

But how could a gas tax increase possibly make it through Washington? To make it more palatable for voters, the tax increase could be revenue-neutral for low-income families and others who would qualify for relevant credits. And the grand bargain should minimize another tax, generating only the revenue the deficit reduction commission is already proposing and not burdening taxpayers further. This could actually simplify the tax code, which would provide welcome relief for all.

I’d add that instead of VAT they could have an energy content tax on all products. So shipping from China would automatically make your product more epensive.

We could slash payroll taxes with the revenue thus making labor in the US cheaper.

the property was heavily cut in 2001, but there are a lot of younger white and yellow birch and balsam fir on the parcel, so down the road it would be ripe for selective cutting. There are about 100 acres of streams and small ponds so the wildlife there is great. Raptors, deer, moose, and turkey frequent the area. I know of the show you mention, American Loggers or something like that, about the Pelletier family, tough way to make a living.

I’m sure the level headed Chavez is all shook up over this…

U.S. revokes Venezuelan ambassador’s visa
Move is apparent retaliation for rejection of U.S. envoy to Caracas

In a briefing earlier on Wednesday, another State Department spokesman repeated the U.S. position that Venezuela could suffer consequences because of its objection to President Barack Obama’s selection of Larry Palmer to serve as Washington’s ambassador to Caracas.

Minimum wage earners in 7 states are getting New Year’s raises as the cost of goods goes up.

DENVER (AP) — It will be a happier New Year for nearly 650,000 workers earning minimum wage. They’re getting small raises in seven states that tie their salaries to the cost of living.

The minimum wages in those states will go up between 9 cents and 12 cents an hour Saturday because their consumer price indexes rose in 2010.

The extra pennies can’t come soon enough for Joe Martinez of Denver, who works odd jobs such as lawn maintenance for minimum wage. In Colorado, the wage is rising 11 cents, from the federal minimum of $7.25 an hour to $7.36 an hour.

“The prices of everything are going up — food, rent, electricity,” Martinez, 55, said on his lunch break Wednesday. “I know it’s not a lot of money, but any extra money will help, you know?”

Poverty advocates say the rising minimum wages shouldn’t be seen as raises, just adjustments to keep the working poor at the same level as prices of goods rise.

American Cities That Are Running Out Of People

Posted: December 27, 2010 at 11:11 pm

Unfortunately, the populations of most of the cities on this list continue to decline and the situation could get worse for years. This loss of residents has caused severe drops in the social services that many of these cities can provide. Property and other taxes have fallen so much that the support that residents of other cities take for granted is at risk in the municipalities on this list. There is no longer any guarantee that they can maintain police and fire departments at reasonable levels. Some of these cities cannot continue to manage large neighborhoods which have become almost deserted as residents have left unoccupied homes behind. Home vacancy rates tell a great deal about how much a city’s population has dropped.

7. Rochester, NY
6. Pittsburgh, PA
5. Dayton, OH
4. Buffalo, NY
3. Cleveland, OH
2. Flint, MI
1. New Orleans, LA

http://247wallst.com/2010/12/27/american-cities-that-are-running-out-of-people/ - 75k -

2010 regular IRA conversion to Roth IRA. A couple questions please:

1. Is today the last day to convert for 2010 year or is it April 15?

2. If one converts say 30K of a regular IRA to a Roth is that 30K treated as regular income as far as taxes?

China is preparing for conflict ‘in every direction’, the defense minister said on Wednesday in remarks that threaten to overshadow a visit to Beijing by his US counterpart next month.

“In the coming five years, our military will push forward preparations for military conflict in every strategic direction,” said Liang Guanglie in an interview published by several state-backed newspapers in China. “We may be living in peaceful times, but we can never forget war, never send the horses south or put the bayonets and guns away,” Mr Liang added.

China repeatedly says it is planning a “peaceful rise” but the recent pace and scale of its military modernization has alarmed many of its neighbors in the Asia-Pacific, including Japan which described China’s military build-up as a “global concern” this month.

DJIA = 12K, we never knew thee.

Dollar weakens broadly, stocks lose ground
By Walter Brandimarte

NEW YORK | Thu Dec 30, 2010 12:38pm EST

NEW YORK (Reuters) - The dollar weakened broadly on Thursday on expectations of low bond yields continuing into 2011, while U.S. and European stocks gave back part of the recent gains that had taken global equities close to September 2008 highs.
…

Former NYC Mayor Ed Koch intellegently puts the banksters and the state legislators who cut deals for public employee pension enhancements in the same category, and notes that they are both still in charge — while people blame the President. He’s got it right IMHO.

http://www.realclearpolitics.com/articles/2010/12/29/unfinished_business_the_great_recession_108372.html

Stocks edge lower as investors worry over mortgage rates, brush aside positive economic data.

NEW YORK (AP) — Investors are brushing aside some positive economic news on lingering concerns over the housing market.

He is correct IMO but not damn thing will be done about. As to the guvmint being able to create jobs and lift the value of houses, we see how that’s working out…

“Many who ran Wall Street before and during the debacle are either still there making millions, if not billions, of dollars, or are in charge of our country’s economic policies which led to the debacle”.

“Yes, in the recent mid-term elections, the American people did replace 63 Democrats with a like number of Republicans, but will that really change things for the better? Time will tell, but I doubt it. Neither do I see the Obama administration, with all its good intentions, succeeding in the areas where the public has suffered the most: jobs and home values”.

* OPINION
* DECEMBER 30, 2010

Home Prices Are Still Too High
They would have to decline another 20% just to get back to the historical trend line.
By PETER D. SCHIFF

Most economists concede that a lasting general recovery is unlikely without a recovery in the housing market. A marked increase in defaults and foreclosures from today’s already elevated levels could produce losses that overwhelm banks and trigger another, deeper financial crisis. Study after study has shown that defaults go up when falling prices put mortgage holders “underwater.” As a result, the trajectory of home prices has tremendous economic significance.

Earlier this year market observers breathed easier when national prices stabilized. But the “robo-signing”-induced slowdown in the foreclosure market, the recent upward spike in home mortgage rates, and third quarter 2010 declines in the Standard & Poor’s Case–Shiller home-price index—including very bad October numbers reported this week—have sparked concerns that a “double dip” in home prices is probable. A longer-term view of home price trends should sharply magnify this fear.

Even those economists worried about renewed price dips would be unlikely to believe that the vicious contractions of 2007 and 2008 (where prices fell about 30% nationally in just two years) could return. But they underestimate how distorted the market had become and how little it has since normalized.
…
From my perspective, homes are still overvalued not just because of these long-term price trends, but from a sober analysis of the current economy. The country is overly indebted, savings-depleted and underemployed. Without government guarantees no private lenders would be active in the mortgage market, and without ridiculously low interest rates from the Federal Reserve any available credit would cost home buyers much more. These are not conditions that inspire confidence for a recovery in prices.

In trying to maintain artificial prices, government policies are keeping new buyers from entering the market, exposing taxpayers to untold trillions in liabilities and delaying a real recovery. We should recognize this reality and not pin our hopes on a return to price normalcy that never was that normal to begin with.
…

Rare hurricane-strength winds batter L.A. area; more snow and ice on way

A rare blast of hurricane-strength winds was topped by a 94 mph gust measured by the National Weather Service at 3:57 a.m. Thursday at Whitaker Peak.

Forecasters said the winds in valley and mountain areas will continue at least until noon Thursday. A wind warning for the San Fernando and San Gabriel valleys is in place until then.

Florida Doctor Strangled by Electronic Neck Massager, Authorities Say
FoxNews.com

A South Florida doctor has died after authorities say she was accidentally strangled by a electronic neck massager on Christmas Eve.

Kenneth Gegerson called 911 after finding his wife’s body on the bedroom floor next to the neck massager. Paramedics pronounced 37-year-old Michelle Ferrari-Gegerson dead at the scene. Authorities believe her necklace got caught in the massager and it quickly tightened around her neck.

According to Broward Sheriff’s authorities, Ferrari-Gegerson spent the evening wrapping gifts and getting ready for work while using the massager to relieve neck pain.

Ferrari-Gegerson, a radiologist at Jackson Memorial Hospital, was the mother of a 1-year-old, the Miami Herald reports.

Severe Debt Scarcity Coming to US

If US consumers believe it difficult to borrow now, just wait! In the next few years credit conditions are likely to go back seventy years when private debt was difficult to obtain. Most Americans intuitively believe there is too much debt at every level of society. But the economic and political vested interests do not want them worried about that. They want to give them credit to infinity to keep this economic mess from imploding.

The US Federal Reserve’s new round of quantitative easing (QE2) is clear evidence of that. However, Americans are right about their inordinate debt load, and future economic conditions are likely to create a severe debt scarcity.

http://english.alrroya.com/content/severe-debt-scarcity-coming-us

2011 by Paul Craig Roberts

”Dissent is what rescues democracy from a quiet death behind closed doors.”
- Lewis H. Lapham

The year 2011 will bring Americans a larger and more intrusive police state, more unemployment and home foreclosures, no economic recovery, more disregard by the U.S. government of U.S. law, international law, the Constitution, and truth, more suspicion and distrust from allies, more hostility from the rest of the world, and new heights of media sycophancy.

2011 is shaping up as the terminal year for American democracy. The Republican Party has degenerated into a party of Brownshirts, and voter frustrations with the worsening economic crisis and military occupations gone awry are likely to bring Republicans to power in 2012. With them would come their doctrines of executive primacy over Congress, the judiciary, law, and the Constitution and America’s rightful hegemony over the world.

http://original.antiwar.com/paul-craig-roberts/2010/12/27/2011/

Great article on the coming Canadian crash. Here are a few snippets..

“Statistics Canada released data Monday showing that Canadian household debt has risen to 148 per cent of disposable income. The eye-popping figure is all the more alarming considering it’s the first time since the 1990s that Canada’s ratio has been higher than that of the U.S.

Alarm bells rang everywhere from the Bank of Canada to the Finance Department on Monday, and Canadians were urged to tighten their belts and prepare for a time of austerity.”

“”Cheap money is not a long-term growth strategy,” Carney said. “Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning.”

In an interview with The Globe and Mail, Mr. Clark said that no bank wants to be the first to impose stricter requirements on borrowers out of fear that it will suffer a major loss of customers to rivals. Personal banking “is a highly competitive industry,” Mr. Clark said. “If we said ‘Look, we’re going to be heroes and save Canada from itself, and we’ll impose a whole new [mortgage] regime on everyone else,’ the other four [large] banks would say ‘Let’s carve them up.’ ”

Canada’s banks clearly don’t care what happens as long as they can pass the trash to the CMHC, the Canadian equivalent of Fannie Mae.

Clark’s statements, as well as statements made by the chief economists of BMO and Toronto-Dominion, put a spotlight on the decidedly stupid moral-hazard mess the Bank of Canada has gotten itself into by backstopping mortgages of Canadian borrowers.

But hey, look on the bright side. The music is still playing. In memory of Chuck Prince, Keep on Dancin’

Rise in signed contracts gives housing market lift- AP

People are starting to buy homes again, lifting a battered industry that is bracing for its worst sales year in more than a decade.

Things that make you go hmmm??

The price of benchmark crude tumbled Thursday after the Energy Department’s Energy Information Administration weekly supply report. The EIA said oil supplies declined by 1.3 million barrels last week. A drop in supplies often supports higher prices, but analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., thought the drop would be bigger — around 3.2 million barrels.

Investors worried that the report showed demand for energy was not picking up, despite positive economic news.

I have a bleg…

Does anyone know the story of this famous “glam realtor” shot? I could swear I’ve seen it all over as a source of ridicule of used home sellers.

http://www.sfgate.com/cgi-bin/blogs/ontheblock/detail?entry_id=80024&tsp=1

Hard to believe that an MSM newspaper ran this article.

From the free-spending eat out twice-a-week orgy of the past, to pocketing the supermarket coupons today, we bring you comfort food making a comeback - pigeon

Trap ‘em with that army/navy thrift store netting you get on sale. bring back to your cave, I mean worth less house. Make sure your sink is empty and you have a garbage can nearby.

Bleed and gut. Pluck. Cut off head. Put in stew pot with cold tap water, scraps of tomato, onion, carrot, celery. Add 1/4 pound diced smoked ham hock. Stew for two hours on low skimming occasionally. Yummy.

See you in the park soon with your net!

I saw Black Swan (not Taleb) today… worst.movie.ever.

Total ripoff of Fight Club.

BORN IN THE USA?

Hawaii guv suddenly ‘mum’ on Obama birth ‘certificate’
After blizzard of attacks on ‘birthers,’ Abercrombie now avoids interviews.

Although Hawaii’s newly elected Democrat governor, Neil Abercrombie, has recently given a flurry of high-profile media interviews condemning “birthers” who question Barack Obama’s constitutional eligibility to occupy the Oval Office, suddenly he is declining to answer a few hard questions.

Abercrombie, 72, a former member of the U.S. House, may be trying to quell the surge of doubt among Americans – polls show nearly six in 10 doubt Obama’s own eligibility story – by promising he will try to release additional records on Obama from his state’s Department of Health vault.

He has, in just recent days, expressed his disdain toward “birthers” in the New York Times, the Los Angeles Times, the Chicago Tribune, on CNN, as well as the local Star Advertiser and Hawaii News Now.

His startling remarks appear to be in response to the recent polling results as well as the rapidly growing list of high-profile personalities and leaders publicly raising questions about Obama’s eligibility.

Read more: Hawaii guv suddenly ‘mum’ on Obama birth ‘certificate’ http://www.wnd.com/?pageId=244797#ixzz19dgbZOIE

I wonder if this will help sell houses:

http://www.syracuse.com/news/index.ssf/2010/12/community_group_raising_money.html

“The F-M Community Sports Facility Association, a group of about 25 residents spearheading the drive to raise private donations for a new all-weather turf field, needs to raise $1.8 million by March 1. The group has raised about $1.1 million so far.”

“Alumni who have been contacted have stepped up to the plate including a 1975 graduate who lives in the Silicon Valley giving a “generous” contribution, he said.”

Private donations. The community came out and said no taxes for turf so these families put their money where their mouth was and came up w/it themselves w/in a matter of months.