Bits Bucket for May 13, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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When Mortgage Borrowers Don’t Pay, Should Taxpayers Be On The Hook?
01:12 pm
May 12, 2011
by Jacob Goldstein
Or, to re-phrase the headline in a more boring way: What, if anything, should replace Fannie Mae and Freddie Mac?
It’s a hugely important question. The bailout of the two companies has cost taxpayers well over $100 billion.
And the mortgage market is still being propped up by the federal government. For roughly 90 percent of the new mortgages being issued in this country, taxpayers are on the hook if borrowers don’t pay.
…
“What’s more, the private companies would be required to hold more capital then [sic] Fannie and Freddie — in other words, they’d have a bigger financial safety cushion.”
News editing at its best!
How about loaning reasonable amounts to reasonable people?
20% down for good credit and stable job - 50% down for poor credit and or unstable income. No more than 2x annual salary on the loan and only fixed rate mortgages.
I know with terms like this the bubble would never have happened but neither would we be talking about tax payer bailouts.
The fact is debt is basically not a good thing and loans need to be very hard to get.
Do banks make more profit from people with bad credit that get high-interest or adjustable-rate (or both) loans or from 20% down high-FICO 30 year fixers? I’d really like to know -
Developments
Real estate news and analysis from The Wall Street Journal
May 11, 2011, 5:12 PM ET
House Lawmakers Spar Over Lending Rules
By Alan Zibel
A handful of House lawmakers spent Wednesday afternoon arguing about whether new rules designed to encourage more prudent lending activity will wind up hurting the U.S. economy by making credit tough to obtain, or whether they are a responsible reaction to the housing bust.
The Dodd Frank financial-overhaul law, passed last summer, restructures the market for assets such as mortgages that are packaged into securities. The law mandates that issuers of such securities hold 5% of the credit risk on their balance sheets, under the thinking that lenders will make sounder loans if they have “skin in the game.”
…
You would think that it would be BLINDINGLY obvious at this point that bad loans are not good for the economy. But the money from the debt pushers is so influential that any attempt to slow their process of making sausage from poo encounters strong resistance on captiol hill.
Anyone want to guess who opposes it? The usual suspects:
“however, GOP lawmakers said the law could constrict credit and make it more difficult for the government to reduce its support for the housing market. “Our families and businesses cannot afford overreaching government policies that increase the cost of credit and stifle economic growth,” said Rep. Patrick McHenry (R., N.C).”
Why do people confuse “debt growth” with economic growth? If the lender is not willing to put even 5% down, then they must not think it’s a winning proposition. If it’s not a winning proposition, then it gets a C rating. Wouldn’t that be even more “constricting” than this simple rule?
Because for the banks (Wall St) debt growth IS economic growth. After all, that’s how they make their money, isn’t it?
The rest of us don’t matter.
Just out of curiosity alpha…what party does Barney Frank claim? What if any responsibility does he have in this mess?
Barney Frank is a Democrat. His responsilibility in this mess is that he had to water the bill down to please enough bought-off Republicans to get the bill through Congress. The blame does not lie with Barney Frank; it lies with the guys who forced him to water down the bill — ie. folks like McHenry.
The democrats cant do their job because of those damn republicans. The republicans cant do their job because of those damn democrats. I see a pattern.
The Republicans want lax lending standards.
But they support “red-lining”.
Consistancy is not a Republican strong point.
They also want dismantle all social safety nets, but won’t end tax breaks for sending our job offshore.
Really the big conflict between the mainstream parties is over who can kowtow to Wall Street money the fastest.
Oh no, the Repubs have the lock on that.
Not so sure. Dems seem to have their hands deep in the till too!
The Dems tried to pass a bill last Sept to end tax breaks for sending jobs offshore.
Guess who defeated it?
Banks are whining that they need to have 5% skin in the game? Aren’t these the same gentile folk who demanded 20% cash skin in the game for us little people for decades? F ‘em.
It’s a start!
And the 5% skin in the game is only in the event the loans don’t meet higher standards (higher down payments, etc.). If the loans meet the higher standards, the 5% becomes 0%…
Seems to make sense to me…
No, it doesn’t. I’ve repeated this so many times you guys must be sick of it. When I was an attorney on “Wall Street” (really a bit further south, but within spitting distance of Goldman Sachs), the partner in charge of the securitization deals required that the securitizer (the trust) keep 10% of any deal. It didn’t matter how good the the loans were. You had to keep a 10% equity tranche and not just 10%, but the WORST 10%. None of this keep x% of the highest rated tranche and the 5% of the next highest and so on. Flat out, the 10% of the deal most likely to fail had to be retained by the securitizers. They took ALL the losses unless there was more than a 10% loss on the entire pool.
These weren’t housing loans - mostly cars and industrial equipment and a few credit card deals. The clients whined, but they still did the deals.
…but within spitting distance of Goldman Sachs
O-o-o-ohhh, the temptation…
Yeah, I thought most people within range of those buildings ended up swallowing.
And when did you leave? Because the decline in credit quality went asymptotic as the ammount of credit balooned during the bubble. It wouldn’t surprise me if what was considerd a standard rational practice in 1999 was already regarded as hopelessly quaint and old fashioned and obstinate by 2005.
I think in the end of the bubble 100% of the loan pool was equity just mis-labeled as investment grade
so keep 10% and short with leverage the other 90%
to me it looks like some investment bankers are way smarter than others and who cares if it’s dishonest and hurts the country
Really bad behavior bailed out by lawmakers sets a bad example. Maybe we will all start cheating a little bit more now ? is that what they want ? because they are sure getting it with buy and bail, etc.
Or maybe politicians thrive on this chaos and it gives them an excuss to clamp down and control everything ?
Oh, I left that firm in the 90’s. Was still in private practice, but the next firm did more general and M&A work, less pure financial transactions.
I still think that the practice may have been eliminated because of the adoption of the check-the-box regulations on entity determination. I’ve asked at least one person who should have had some idea (he was a former SEC commissioner), but it was a public talk and he just didn’t answer. Anyway, before those regulations, one reason for the 10% hold back was to make sure that the corporation (I think corporate treatment was a backup in case the thing lost recognition as a special purpose pass through entity, but I’m just not sure) was not too thinly capitalized. If it was, you risked ALL of the bonds being recharacterized as equity which means all of the payments would have been dividends and none of it would have been deductible. Would have cut close to 35% off the top of the amount that could be paid out.
I never did one of those deals after the check the box regs were issued, so I don’t know how the paperwork changed.
I understand that two private parties might negotiate something different. Sometimes we require a 10% co-invest by people who bring us deals, sometimes it’s 20%, and sometimes it’s 3%. Each situation, each deal is different.
At some point, the deal needs to be between the seller of the security and the buyer. When the amount of debt involved rises to the level of residential mortgages, the public has some interest in stability, and thus it makes sense to have some ground rules.
As I understand it, the current proposed rules are:
If the pool of loans all include 20% down, there is no obligation to keep any on the books.
Otherwise, it’s 5%.
If the buyers of the securities want more, they can demand more, or not participate in buying the securities.
I think the bigger problem that has not been addressed is the ratings agencies. If I was king of congress, I would pass a simple law outlawing anyone from opining on the credit quality of a loan or pool of loans where the ability to repay has not been demonstrated/verified. By very definition they are speculative.
There. No more AAA rated securities for stated income mortgages. Add on a 20% down payment requirement to the rating law, and let the government step back completely. At that point, the only loans that institutions would be buying would be loan pools where everyone put down 20%, and every borrower documented their income.
Whether the entity creating the security puts down 5 or 10%, or the borrower puts down 20%, there is skin in the game by someone.
The other way to go about it would be to require the total “equity” in the pool to be 20% or greater. That can be either in form of down payments by borrowers, or equity tranches held by the financial institutions. If you are only requiring 5% down, you need to keep the first 15% loss position. 10% down = 10% loss position and so on.
“I think the bigger problem that has not been addressed is the ratings agencies”
Well there’s your problem.
Prices have declined by almost 40 per cent throughout the country since the peak. In Dublin, prices have declined by 47 per cent while the rest of the State saw a fall of 35 per cent.
http://www.irishtimes.com/newspaper/breaking/2011/0513/breaking24.html
In the UK we are on average down 20%. Some way to go I do fear, before we reach the bottom.
They still have a LONG way to go.
At least another 50%.
But everyone in Ireland was “rich” for a few years…
Oh yeah, I recall reading articles about Irish hipsters in their 20’s buying 600,000 Euro condos. And from what I recall reading is that all mortgages on that side of the pond are recourse and that they do come after you for the money (a good time to move to Boston or NY I suppose).
1850 - Irish pototo famine - millions of irish leave for America
2010 - Irish housing equity famine - millions of irish leave for America
???
This time it might be a wee bit harder to get that green card.
The Irish are emigrating to England (as always, most of the North West of England have some sort of Irish connection) and mostly to Australia (how I envy them that choice).
http://www.workpermit.com/news/2011-01-24/ireland/irish-emigration-at-record-high.htm
According to the report, Irish nationals mainly emigrated to six countries:
24,000 - Austrlia
11,000 - UK
4,444 - New Zealand
3,462 - Canada
1,700 - United States
600 - Germany
Banana is related to Dan Quayle -
Alan Blinder Fires First Shot Across QE3 Bow: Says We Need More Stimulus To Boost Employment. By Tyler Durden on 05/12/2011
A little under a year ago Moody’s Mark Zandi and Princeton economist and former Fed vice chairman Alan Blinder penned a paper titled “How we Ended the Great Recession” which did nothing but extoll the virtues of spending trillions in both fiscal and monetary stimuli and preventing U3 from hitting 16% (of course how one proves a counterfactual is irrelevant: just remember - if the Fed disclosed its top secret bailout plans the world would end. Same thing here - accept it - after all the guy is a professor at Princeton). In a nutshell Blinder is nothing but Paul Krugman on steroids: a man who believes that there is nothing worse in this world than establishing fiscal (and monetary) discipline now.
Well, in an interview with Tom Keene earlier, Blinder fired the first shot across the QE3 bow, telling his Bloomberg host that the US needs “somewhat more” fiscal stimulus once again in order to boost employment (hold on: didn’t we end the Great Recession, and certainly the normal one in the summer of 2009 according to the NBER?). How this would be accomplished in the current climate is not explained. Instead what Blinder says makes one wonder just who is on the tenure committee at Princeton - when asked how we bring the deficit in without austerity, the Princetonian responds: “Unfortunately I think it is very subtle for most political processes especially for the political process in the US.
What we should be doing is somewhat more fiscal expansion but at the same time legislating into law fiscal consolidation for the future. Starting 2 years from now, 3 years from now, 18 months from now. But not now.” Of course never now: why bite the bullet now when it can be kicked to some other administration in the indefinite future? Especially when tenure money and/or Wall Street bribes are at stake…
They definitely fall into the “God grant me chastity and temperance, but not just yet” school of thought.
“… school of thought.”
Now there’s a phrase to ponder.
And here is another:
The School for Scandal
Well if unemployment hit 15% I’m not sure that we could rule out QEIII. But for now the political will to borrow (much less tax) and spend that kind of dough just doesn’t exist.
We can ease our financial woes by eliminating the artificial incentives that US corporations have been given to offshore their productive capacity. That way, we could actually earn our living instead of borrowing it. Charge tariffs on imports to compensate for currency disparities. Not that difficult.
“We can ease our financial woes by eliminating the artificial incentives that US corporations have been given to offshore their productive capacity.”
That was attempted (as we all know), but the 1%er’s party blocked it.
I was chatting with a guy from Singapore, telling him about all the insanity going on here. He was simply aghast that our PTB were leading the US to destruction because it allowed them to feather their nests.
He had no idea that the situation here was so dire, completely unaware of how we’ve hollowed out and gutted our economy.
was chatting with a guy from Singapore, telling him about all the insanity going on here. He was simply aghast that our PTB were leading the US to destruction because it allowed them to feather their nests.
It’s not hard to believe when you understand that our PTB is made up of control fraudsters.
I have the same amazement when I see dictators in small republics loot their country’s wealth. Same kind of thing here. Except with mahogany paneling and suited lawyers.
There is no reason to stop trying now.
Watched “inside job” last night. I thought the connection to academia and the “who’s who” list of the Obama economic advisory team was bold and fascinating. The status quo is well maintained that’s for sure.
The tenured academics in their ivory towers — the last group people believed might not be bought.
We’re all salesmen now. And nobody gonna pay you to tell the truth.
spot on WT, to find where the bodies are buried, more than ever, just follow the money…
Oh pleeeeezzz!
we got bin laden?
what more do you want?
USA!
USA!
USA!
“And noboby gonna pay you to tell the truth.”
The numbers is where the truth resides. Words are used to explain away the numbers.
If words say one thing and numbers say another then go with the numbers.
Until they start fixing the numbers, or make them go away.
I’ve been writing about public finance for years using data from the Census Bureau’s goverments division. That data will be radically cut back after 60 years. Budget cuts.
Kids talked me into an Imac. I can’t download data from the Federal Transit Administration or the Centers for Medicare and Medicaid anymore — it won’t unzip on an Imac, or their extraction software won’t work there.
The Republicans opposed the census long form. They didn’t want Americans to know other Americans were getting poorer, and not buy the line that it was all their fault. So the Census Bureau replaced it with a smaller sample American Community Survey. Now the official Republican Party platform calls for the elimination of the ACS. Too nosy, and what we don’t know won’t hurt us.
Since Democratic think tanks are better a manipulating the numbers, the Republicans want to get rid of them all together.
The Republicans opposed the census long form. They didn’t want Americans to know other Americans were getting poorer, and not buy the line that it was all their fault.
There it is.
Florida State University’s economics department needs to reconsider its relationship with billionaire Charles G. Koch, who pledged $1.5 million to the school as long as professors hired with the money hew to Koch’s Libertarian philosophy. The arrangement reeks of pandering and undermines academic freedom, the cornerstone of American higher education.
Under the terms of a 2008 deal with the Charles G. Koch Charitable Foundation, FSU’s economics department is scheduled to receive $1.5 million over six years to hire professors. But faculty members hired with foundation money must be approved by an advisory committee handpicked by Koch. That means Koch effectively holds veto power, an arrangement rarely found in the academic community and that threatens independent thinking.
FSU, like many colleges and universities throughout Florida, struggles with increasing budgetary constraints. The very fact the university would be willing to forgo its independence in hiring for just $250,000 a year is disturbing, but perhaps should not be unexpected given the continuing cuts in state funding and the state Legislature’s limits on tuition. After all, lawmakers have told higher education to be more creative in finding outside support.
But such blatant pandering undermines the institution’s credibility and would be just as improper if a wealthy liberal benefactor such as George Soros demanded his own professors for hire.
There is no question students should be exposed to and debate wildly divergent ideas in the classroom. That is, ideally, the essence of higher education and what, for centuries, has led public and private benefactors to support it.
But students also have to know their professor is engaged in intellectually honest discourse without fear that if they happen to deviate from their benefactor’s ideologically guidelines they could lose their jobs. And students need be confident their grades are not predicated on becoming acolytes of a donor’s political beliefs
tampabay.com/opinion/editorials/koch-gift-too-costly-for-florida-state/1168851
The state should eliminate their funding altogether, and then yank their accreditaion as well. A university that takes bribes in exchange for telling thinly-veiled lies does not deserve recognition by the state.
The three senior professors must come in with tenure, and FSU must continue to fund them for at least four years past the project period.
The Advisory Board of SPSFC and EEE is allowed to review all publicly provided material submitted by applicants for the Professorship positions.
The Advisory Board will determine which candidates qualify to receive funding.
No funding for a professorship position or any other affiliated program or position will be released without the review and approval of the Advisory Board.
An undergraduate program will be devised and funded for $30,000 per year for three years. The committee responsible for the program will report to the Advisory Board.
Other strings spell out the right of the [Charles G. Koch] Foundation to annually review the work of funded professors, publications, publicity, etc., and to pick up their marbles and go home if not satisfied.
How is this any different than the Harvard economics department being on the payroll of the NAR all these years?
To be honest, I oppose the census long form too. The long form has 4th Amendment implications.
Is the BLS allowed access to IRS data? A couple hundred million tax returns, and you can leave out the names…
“The Republicans opposed the census long form. They didn’t want Americans to know other Americans were getting poorer, and not buy the line that it was all their fault.”
Partisan nonsense.
The Republican and Democrat establishment are both corrupt and both facilitate the enrichment of the well connected while seeing to it that the middle class is gutted. That being said, I do believe that most vocal opponents to the long form were of the belief that the extra information is nobody’s f’ing business.
Also note measton’s post above, about the Kochs’ attempts to stifle academic freedom at FSU.
I just saw a really funny video about a street protest outside the Koch Theatre in NYC. One of the protesters put a sticker above the building name. Sticker said “I fund the Tea Party.” Or words to that effect.
And, in a hotel across the street, someone set up a projector so that a movie could be shown on the side of the theatre. Movie was about the influence of the Koch Brothers over government, current discourse, etc.
V,
States don’t accredit universities. Accrediting bodies do. They are private.
Oxide,
I don’t think the IRS is allowed to release their data to anyone other than the stats they already put out. Maybe the state taxing authorities in very limited circumstances. It is supposed to make people feel better about sending in their tax forms, but since no one knows about it, I don’t see how effective that is.
Oh, and expecting government computer systems in different agencies to talk to eachother in any meaningful way is hopeless. Besides, there are lots of people who don’t file taxes (and some of them aren’t required to). They are, understandably, mostly poor and self-employed. Whatever data you were trying to get about employment would be severely skewed by using IRS data. The census has its issues, but at least with the census they have ways of getting to the un/under counted populations.
“A university that takes bribes in exchange for telling thinly-veiled lies does not deserve recognition by the state.”
Not going to happen. “Birds of feather…” and all that.
“If words say one thing and numbers say another then go with the numbers.”
Even when those numbers show universal health care insurance is far superior to our system?
And that Social Security is really not in any long-term economic trouble that couldn’t easily be solved by exposing higher incomes to the payroll tax?
No, no, no! That’s when you’ve got to go with ‘common sense’, and ignore those lying numbers!
There is not a problem in the liberal mind that can’t be solved with higher taxes.
“The liberal mind” …
You discredit yourself when make no attempt at civility.
There is not a problem in the neocon mind that can’t be solved with lower wages.
Although 2banana is a bit disingenuous in his statement, I have yet to hear of a broad program of spending cuts to start living within our means NOW from democrats.
I don’t disagree that the republicans are avoiding tax increases on the rich, but that is also the current status quo and has been for both democratic and republican control of congress. I don’t understand why we can’t look at our current inflows, balance the budget at that point, then go after tax breaks for the rich to work on the budget deficit. It’s not like just getting to break even will solve our problem, we actually have to get out of debt…
If the dems and repubs want to bicker over *which* programs to cut, then we are making some progress. In the meantime, we are arguing over should we cut or tax. No matter how high you raise taxes, if you don’t spend less than you bring in, there will still be a net deficit. So lets get our spending under our revenue FIRST, then use tax increases once it’s been shown lawmakers are being responsible with the money.
There isn’t one that will work NOW, unless you want to turn the US into a Dickens book.
There ways to do it, and they have already been mentioned here.
1. Let banks fail. Period. No more QE, no more AIG/Fannie/Freddie bailout, no more discount window BS.
2. Bring most troops home and put them on the borders.
3. Universal health insurance payment system.
4. Even out the tax system to where labor is rewarded, wealth is taxed, and accounting games are punished. (many examples of this)
5. Let housing fall. FB’s need to get over themselves and live in 3/2 raised ranches where they belong. Offer then a BK option that’s easier to recover from.
6. Somehow, bring back those jobs, which will entail kicking out the illegal workers at Chipotle to the sweatshop workers in Sri Lanka, tarriffs, to getting serious about the tax structure, to making stay-at-home parenthood an economic possibility again to shrink the labor pool. Low skill…semi-skill…high skill jobs…lots to choose from if you don’t want to go to college.
That’s a few things, some a little draconian. But to be honest, this is how the country used to run 40 years ago (except for the health care).
“Figures never lie, but liars always figure.”
“I thought the connection to academia…”
“Long-Term Capital Management” = “We are so damn smart…”
LTCM was founded in 1994 by John Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers.
Board of directors members included Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences.
Initially enormously successful with annualized returns of over 40% (after fees) in its first years, in 1998 it lost $4.6 billion in less than four months following the Russian financial crisis and became a prominent example of the risk potential in the hedge fund industry. The fund was closed in early 2000.”
LTCM was also highly leveraged they had to be bailed out. There mistake almost collapsed the entire hedge fund system back then.
In other words, it would have caused what we just saw happen.
Don’t ever think the PTB didn’t learn. They did. They learned how steal even more the next time.
That was surely the big eye-opener for me in that movie.
The great government fire sale is on
Towns and cities with ravaged revenues are selling municipal treasures to pay the bills
To proponents, selling government property is an efficient way to plug budget holes. That’s one reason the Obama administration has looked at unloading office towers, courthouses, warehouses and shacks. Private owners who develop the properties can inject vibrancy into municipal dead zones, the thinking goes. Buildings that were once exempt from property taxes are put back on the rolls.
But to critics, these sales are as misguided as pulling money out of your house to pay your bills. They point out that the government is letting go of a long-term, valuable asset in exchange for a one-time payment. When the asset is a building, a municipality then has to spend more money on leasing it back or renting another facility.
“This is tantamount to selling the family china only to have to rent it back in order to eat dinner,” says economist Yves Smith, author of the top-rated business blog Naked Capitalism
http://finance.yahoo.com/news/The-great-government-fire-apf-1293264663.html?x=0&sec=topStories&pos=9&asset=&ccode=
Burn the furniture and then rent-to-own. Yeah, that’s a good idea. NOT.
It is if you’re the rental/lender company, isn’t it.
Why are they doing this? Where is all this money going?
Oh yeah:
Local and state governments made promises about their retirement benefits but often failed to set aside the money to make good on those promises. Now those governments say they simply can’t afford them. Illinois’ pension fund, for example, is only 45 percent paid for. Actuaries recommend 80 percent.
Amazing what democrat controlled city/county/state governments will do before they touch one public union salary/benefit/pension…
They know who go them elected…
To the citizens of these places. Yes - you pay taxes. Just don’t expect any services. What do you think government is for - serving its citizens?
“Amazing what democrat controlled city/county/state governments will do before they touch one public union salary/benefit/pension…”
And what Republicans will do before they default on the debts they always want to run up.
In most of the country, Democrats screw the future with pensions and Republicans do it with debt.
But here in New York, both Republicans and Democrats do it with both debts and pensions. All the deals pass without a single no vote.
“Democrat controlled”
See, that’s where you lose people. Democrats like to tax and spend, but Republicans like to borrow and spend. Which is worse?
The spending.
Republicans do not spend less than Democrats.
that’s why we gotta toss ‘em ALL out.
Does the idea ever occur to anybody that it is our democracy caused the mess. Everyone votes for their best interest, but most do not have foresight. Everybody will vote to maximize his own short-term benefit, do not care about its sustainability. Be it worker’s pension, free health care, potent military force, longer death penalty list, lower tax, and so on the, politicians can manipulate voter’s minds do their bidding. Election and elections, we see deficits continue to grow and go above roof, who want to live within him mean if he do need to.
I am afraid we will collapse like previous Soviet Union, and eventually live within our means again.
Yes, this idea has of course occurred to many people for the last two + centuries, most pointedly to the founding fathers.
This is exactly why our system of gov’t is a representative democracy, as opposed to direct democracy. In a direct democracy, everyone will vote their personal self-interest, eventually creating a myriad of opposing and unfunded mandates (see California’s initiative process for a perfect example of that).
Our representatives are supposed to be able to see the bigger picture, and understand the more complex details. That is why we vote for them. It is their full-time job to mediate what is best for everyone. Checks and balances are built into the system at every step.
Unfettered capitalism has interfered with this vision: I do not think the founding fathers could have imagined the degree to which money influences politics.
We no longer have a true democracy - we have a country run by large moneyed interests.
Does the idea ever occur to anybody that it is our democracy caused the mess. Everyone votes for their best interest, but most do not have foresight. Everybody will vote to maximize his own short-term benefit, do not care about its sustainability. Be it worker’s pension, free health care, potent military force, longer death penalty list, lower tax, and so on the, politicians can manipulate voter’s minds do their bidding. Election and elections, we see deficits continue to grow and go above roof, who want to live within him mean if he do need to.
I am afraid we will collapse like previous Soviet Union, and eventually live within our means again.
Our representatives are supposed to be able to see the bigger picture, and understand the more complex details. That is why we vote for them.
Which would be fine, except that our representitives vote in THEIR best interest even more than the peons do — their best interest being their re-election.
The only other option is to hand the reins over to someone else. A person who, naturally, would manage the nation according to his/her own interests, which would be worse than our collective self interests.
Anyway, I think the Supreme Court is full of people who are too old to make rational decisions anymore. I wish they would put a term on Supreme Court judges, or an age limit or something. If it weren’t for coporate pershonhood, for example, then a lot of these problems wouldn’t be happening. When they originally decided to make Supreme Court judges appointed for life, they didn’t know that people would one day live to be 100 years old, with 100-year-old, shriveled, dottering minds to boot.
Which would be fine, except that our representitives vote in THEIR best interest even more than the peons do — their best interest being their re-election.
And their re-election is based on how much money they raise. So, yes, of course, the elected have only the interests of the moneyed to worry about.
Vicious cycle fueled by money. And controlled by those with money.
Big V,
No, the only option is to create strict rules on the amount of money candidates are allowed to accept and use for a given election.
For example, if candidates for a House or Senate seat were limited to how much they could spend on their campaign, and organizations and corporations were also limited - then the playing field would allow for more diversity. Currently the only folks who can run for office are rich guys.
The only other option is to hand the reins over to someone else. A person who, naturally, would manage the nation according to his/her own interests, which would be worse than our collective self interests.
Yeah, sfrenter, I think we should have publicly funded campaigns (no private spending allowed).
“Unfettered capitalism has interfered with this vision: I do not think the founding fathers could have imagined the degree to which money influences politics.”
They did indeed. The Revolutionary War was over economic oppression. The Declaration of Independence is a literal shopping list of economic grievances.
You should read it sometime. There is no doubt. The chief culprit? One of the first transnational, global, giant corporations… The East India Co.
The East India Co WAS the government of England.
We have become the very thing the founding fathers fought against.
Well, it’s not just the Democrats:
“In Wisconsin, the center of the state budget battles, legislators lobbied for the budget repair bill to allow politicians to sell any state-owned heating, cooling or power plant to anyone for any price at any time — without public approval or a call for bids.
Critics of Republican Gov. Scott Walker charged that Koch Industries, an energy conglomerate that made a $43,000 donation to his campaign, the biggest from any corporation, might stand to benefit.
The provision was removed from the budget bill just before it passed. But it is expected to be taken up again later this year.”
“a $43,000 donation to his campaign,”
LOL…Soros donates hundreds of millions to every mutant anti-capitalist organization working to destroy this great nation and that is the most damning evidence you Sorosistas can find?
“The Kochtopus is a group of minarchist organizations founded by Charles G. Koch. They include the Cato Institute (which plays a central role in the Kochtopus), Reason Foundation, Property and Environment Research Center, Students for a Libertarian Society, The Libertarian Review, Institute for Humane Studies, Council for a Competitive Economy, Heritage Foundation, Federalist Society, and the Mercatus Center at George Mason University. The power structure of the Kocktopus changed over the years, from being simply Charles Koch and his aide George Pearson, to a setup in which Libertarian Party national chairman Ed Crane was equal in power to Pearson.”
wikibin
Also note measton’s post above, about the Kochs’ attempts to stifle academic freedom at FSU.
Soros donates hundreds of millions to every mutant anti-capitalist organization working to destroy this great nation and that is the most damning evidence you Sorosistas can find?
I never knew he gave money to the Koch brothers and Goldman Sachs!
In New Jersey, it was a Republican governor who decided that the pension was overfunded and the money could be better spent elsewhere.
2banana, you lose me when you blame Democrats. If you left it at state governments, I would agree that they were remiss to underfund them. You also lose me when you blame unions. Would they have had no pensions if they weren’t unionized?
In some cases, it was failed investments of pension fund managers that caused the problem. In other cases, decreasing revenues due to economic decline caused the problem. And in still other cases, changes in tax distributions from states to municipalities caused revenues to decline.
As an individual, I worry about retirement. There are pitfalls that could destroy a lifetime of savings in a very short period of time - medical problems, unemployment, failed investments, scams. I don’t understand how anyone believes they can have enough set aside for 30 years of not working.
Yeah…A one time fix…After that, they can blame the landlord raising the rent for the need to raise your taxes….
1. Step one print a lot of money and give it to the banks.
2. Step two sell public assets for pennies on the dollar as the market bottoms, to the elite who are allowed to borrow at 0%.
3. Step 3 lease back the property to the state and crank up the lease rates overtime.
This is a way for elite to directly access the tax wealth of a state or nation. Once this is done and they sign some long term contracts the tax payer may as well make their check out to GS.
Realtors Are Liars
RAL, I’m sorry, can you remind me of something? What type of person is it that always lies again? I keep forgetting.
why…… why…. I believe it is Realtors that always lie.
Is that what you recall?
OH YEAH!
thx
Coming soon, food leasing…
LEAP Auto Loans Provides Financing Alternatives for Consumers Facing Repossession or Bankruptcy
SAN DIEGO–(BUSINESS WIRE)–After a year of testing and development, LEAP Auto Loans, an auto leasing company serving consumers that have difficulty obtaining credit, has introduced a new leasing program that helps consumers facing repossession or bankruptcy keep their cars. LEAP works with lenders to mitigate their losses on defaulted auto loans, while allowing consumers to keep their vehicles in this difficult economy.
The LEAP program offers distinct advantages for both borrowers and lenders. Borrowers benefit as the vehicle is leased back to them by LEAP at a reduced monthly payment to better fit their circumstances. Lenders can sell repossessed vehicles to LEAP for more money than they can realize through the auction process. The program is transparent and affordable; there are no costs to inquire or apply.
“While there has been a lot written about mortgage modification solutions, we realized there was a void in the auto lending space for this type of product,” says Tim Condon, president and founder,
http://www.businesswire.com/news/home/20110512005586/en/LEAP-Auto-Loans-Financing-Alternatives-Consumers-Facing
Haven’t there been noises about doing this for houses? FB defaults on home, bank “repo’s” the house and rents it back to the FB for market rent.
Questions:
What is the market rent on a $700K McMansion. (by the usual ratio, it’s about $5800/month.)
Can a strawberry picker afford the rent? (Can anyone?)
“What is the market rent on a $700K McMansion. (by the usual ratio, it’s about $5800/month.)”
There must be a helluva lot of $700K homes for rent in San Diego,
because I check rental listings quite often and can’t recall seeing many for anywhere near $5800/mo.
“What is the market rent on a $700K McMansion. (by the usual ratio, it’s about $5800/month.)”
The market rent would be whatever similar houses in the same or similar neighborhoods were renting for.
This idea make some sense. The bank doesn’t have the expense of foreclosing and maintaining (or not) the house, the neighborhoods will have less empty houses, with all their problems.
The houses should be for sale, with the renters/previous ‘owners’ having the right to match any acceptable offer made by someone else. If not, maybe they could get a free move to another REO, with the same deal.
Back when our 860k home (in 2004 anyway; sure its much less now but still about 600k I think) the rent was $2500 for the 3/2 plus $1000 for the granny flat apt. It was a few miles from Santa Barbara proper, but convenient to UCSB.
It had rented for $2100 total when it was purchased by me for 270k in 1995. I just wanted to park some cash and live affordably in the granny flat. Which lead to this digression that can be perused only if you wanna hear a story….
Worked out great but jaded me to making money for nothing and chicks for free; I was the young landlord who never fixed much and rented to just about any college students I could find. If they were good looking girls; well that was alright by me, but I rented to partiers, studiers, professors, girls, boys, people here from other countries (Germans and Spaniards, a couple from Jeruselum, a young man from S Korea). Ah the memories….
Some good tenants, mostly they paid their rent. Once rented it to a lady with a wolf pack. That, needless to say, did not end well..D’oh. But the money inexplicibly kept coming in month after month, year after year.
Mortgage was $1500, rented it for $2500 and also either occupied or rented out the flat.
It was a money machine turned money pit; luckily the money pit part happened after we sold that 50’s vintage POS.
The new owners paid 860k, pumped 300k into in; and sold it for 860k.
New roof, tree roots growing under the house and up into the attic and into the lines leading up to the toilets. The improperly installed shower pan by some previous owner meant major water leak under the whole master bedroom; water leaching up the wall hidden to us and a clever panelling job to hide the foot of the wall water damage. Darn those guys for selling us a pig in a poke for 270k! I guess we forgive them though for the appreciation!
Termites, two kinds, one ground based which meant the tenting done at sales time included drilled injections into the foundation through the floor. Rat-infested fence rotted through and held up by ivy, toxic mold galore (10k mold mitigation costs when we sold it; for two little spots under a couple sinks, after we had already hired somone to rewall 1/2 the inside which was the only big repair we ever did. Luckily he was a handyman and not a contractor at that point and did not therefore have to report the mold he found to the mold police) sewer lines encroached by roots out to street, sidewalks buckled(city redid these) new driveway, cracked foundation; but money from Russia came and snapped that baby up for us!
Worth a cool mil at one point but we were happy we got out when we did. Did one cash out refi at one point which paid for the repairs I did (wall replacements, less costly mold mitigation without the haz mat suits and reverse pressure vacuum, shower re-done, realtor and mold and fumigation costs). It was a luckily timed investment on my part that made me feel, well, invincible. Turns out I was just lucky.
All this appreciation allowed for much more tomfoolery on our part; buying and selling houses that is ending with one soon in foreclosure but one paid for house.. Bought a house in Utah at one point to live among the Mormons. Since we did not convert the neighbors would not let our chillun play with theirs and school was like, “down from heaven makes a 7″. So we sold that in 09 for a loss of 80k.
But yeah, renting is a good deal in coastal CA. And the new property taxes were near $10k per year but ours never climbed above $3500.(prop 13)
Yep, anyone who bought at a good time on the coast had a money machine on their hands. I rented a POS “$1.2 million” cottage for $2200/mo.
Any time that monthly mortgage payments on a place would be 3x higher than monthly market rent, you know something is terribly wrong.
It was a luckily timed investment on my part that made me feel, well, invincible. Turns out I was just lucky.”
You had lots of company I meet some guy from Santa Barbara wanting to buy new construction in Camarillo , said ” my equity is wasted just sitting in my Home in Santa Barbara, I had to think about that for awhile , like years awhile. why anyone would play Russian roulete with their equity ? The government assured me there was no inflation Do-Uh
Eventually I sold my Moorpark townhome in 2006 and have been renting ever since .
Born in Oxnard, Somis raised, Camarillo High. UCSB to organic farming to selling Goleta raised veggies in LA. Back then(when I was a kid back in the 70s) we called Moorpark by its backward spelling and it was due to the rural nature. Takin’ the 118 to the 126 to Magic Mountain! Or Indian Dunes! Our best friends lived on Grimes Cyn., Sand Canyon and Santa Rosa Roads.
My how it has gentrified; I remember my parents investing in the first big shopping center back in early 80’s
That’s a lot of words to just say they will buy the note or offer short loans and charge WAY higher interest.
The SFH market in Backwater NY appears to be experiencing a change this spring. While there are still plenty of listings at fantasy double the assessment prices, for the first time in this drama there are listings way below assessment. There are a few in my radius that are asking 60% of assessment. I’ve been watching since 2006 and haven’t seen this before. We’re really behind the curve out here, but it looks like a good whiplash is appraoching.
Good observation Blue. Thank you.
Ya know… The handwriting has been on the wall for NY since about early 2008. Here we are 3 years later…. and still deep in denial. Still holding on to the Realtor Lies, heels dug in and holding on tight as reality begins to dislocate shoulder joints.
So many in eastern upstate NY and VT are “waiting for the housing market to come back”. That’s a quote because I heard it just last week from another fool standing in front of the rotting corpse called the housing market. Sales volume is still declining and a mere fraction what it was….. stasis……. monolithic mud slide yet the Housing Crime Syndicate still tells the least informed that better days are just around the corner.
Note to Housing Crime Syndicate—–
Stop lying. Begin telling the truth or starve.
“Stop lying. Begin telling the truth or starve.”
exeter, I have come to the sad conclusion that many people, perhaps the majority, WANT to be lied to. WANT to believe in fairy tales. WANT to be shilled within an inch of their lives.
They don’t thank you for telling the truth.
My point is, realtors are more likely to starve if they tell the truth.
“My point is, realtors are more likely to starve if they tell the truth.”
Absolutely. No different than a used car salesman.
A friend of mine has a very nice Victorian for sale in Watkins. Listed at comps from last year. Her realtor told her to lower the price if she wanted any chance of selling. Realtor did not advise her to stage the house or spend any money improving it. It’s only one data point, but still…
Well??? How many cents did she lower the price? Or did she raise the price by 50%?
Ha! She’ll follow the market down, no doubt.
So many in eastern upstate NY and VT
Such beautiful places. You would think people who just love to live there.
But insane housing prices and even more insane property taxes (yes - in nowhereville eastern NYS) will keep these places in the gutter for the next 20 years.
But insane housing prices and even more insane property taxes
Don’t forget those insane public pensions.
That is what the property taxes are paying for
Eventually - most of the public will see the connection
Such beautiful places. You would think people who just love to live there.
Spend a week there anytime between October and end of April and come back and tell me how “beautiful” it is.
You know not what you’re saying.
Watkins Glen area may not be so bad… I think it’s out of the lake-effect belt. But I wouldn’t want to haul groceries up and down the hills on ice.
We have stores down on the flat.
My neighbor used to have the same model car as I do until it was totaled recently. So she was cleaning our her shed Tuesday and she gave me four snow tires for her old car that she no longer had any use for. I said thanks, and put them in my shed. I should have said “You moved here from up North, didn’t you?” because almost nobody in Maryland buys snow tires. When you live where it snows, you equip and train yourself to deal with snow.
Don’t tell Carrie Anne. It will ruin her passive-aggressive troll story about the immune rich people in New York. All’s I can say is “neener-neener-neener“.
NY IS GOING DOWN!
NY IS GOING DOWN!
You’re quite correct Vee.
Big V, Western New York is positive, laid back, and outgoing in ways that many people can’t understand.
I see Carrie’s disposition as a representation of this, not trolling. A lof of people on this blog can’t even get into a crap shack or 1/1 condo at less than $250k. In WNY that can get you a nice colonial in an amazing school system in a quaint village with zero crime. It’s trolling, it’s the real thing. Life is really that good up there if you can swing it.
You can’t imagine the difference between the upstate and downstate crowd. That being said, yes, the taxes are nuts, but at least you get something back. Here in Florida, we have low taxes, crappy services, but then are annihilated with insurance.
I can’t say it enough: if I could wave a magic wand I will be in WNY right now… forever.
It’s that nice.
Mugz….. c’mon now. You’re idealizing in a very big way. It’s nice for 2.5 to 3 months.
I understand this take, completely. For reals.
BUT, I find the blazing sun here in FL oppressive. I love pensive falls, and gloomy winters, and bursting springs, and lazy summers…
I agree the winters are crushing, that’s why you have to hike, or ice fish, or go to poetry night or whatever…
POND HOCKEY!
But for the fact that my mother married my dad, who spent most of his working career in PA, she’d probably be hippety-hopping back to Western NY.
I think that sometimes, too. Lived in upstate NY (Binghamton area) for 6 years and loved it.
But now after 20 years in CA…nope, couldn’t do those winters anymore. I *think* I miss the snow, but nothing a week in Tahoe doesn’t cure.
Always happy to come back to the Pacific and go surfing. The wetsuits are high tech nowadays and downright toasty.
I can’t say it enough: if I could wave a magic wand I will be in WNY right now… forever.
It’s that nice.
But one thing I really do miss is riding my motorcycle on country roads in late September when the leaves are changing.
I can’t say it enough: if I could wave a magic wand I will be in WNY right now… forever.
I dunno, I think Richmond is pretty nice. The houses aren’t done falling around here, but $250k will get you a gorgeous place.
ol’ virginny is nice country.
http://www.charlotteobserver.com/2011/05/13/2292660/mortgage-fraud-list-may-grow-to.html
Mortgage fraud list may grow to 70 defendants
Wax House probe, which now involves 37, could expand, prosecutor tells federal judge.
U.S. District Judge Frank Whitney reminded defendants this week that they had played small parts in the nation’s mortgage crisis. Many Wax House homes, selling in the $1 million range, foreclosed after false or “straw” buyers didn’t make payments on their loans. They were among skyrocketing foreclosures nationwide that cost lenders and government agencies billions in losses. At the same time, property values spiraled downward, particularly in neighborhoods with many foreclosures.
Wax House? That’s a start, but what about Goldman Sachs, Bank of America, etc? Remember the Countrywide “probe”? What a joke. And now we have Wax House.
Ladies and Gentlemen, I now present The Cost of Not Bribing the Right People. Curtains!
When the government does not follow its own laws (or goes around them) - why should we?
—————————
FACTBOX-U.S. Treasury’s tools to delay hitting debt limit
Reuters | 5/11/11 | wire service
The U.S. Treasury is expected to start dipping into federal pension funds on May 16 to give Congress more time to raise the $14.3 trillion debt limit, which caps the amount the country is legally allowed to borrow. On Friday, Treasury Secretary Timothy Geithner was forced to start employing the first of the department’s special accounting measures to give the government room to borrow funds to meet its obligations.
As of May 11, the total U.S. public debt was just $14 billion below the ceiling. The United States has until Aug. 2 before it will start defaulting on its obligations, such as interest payments. Following is a rundown of some of the measures the Treasury has employed and plans to use in May as well as other steps it could take to stave off the day the current debt limit becomes binding. The Treasury has already drawn down a $200 billion Federal Reserve emergency lending account to $5 billion to free up borrowing capacity.
Everyone:
The only way to solve this debt thing is to cut it out with the offshoring so that people can get back to working for good wages. That way, we can actually start paying it off instead of perennially increasing the number and veering toward default.
DUH!
You mean we should stop buying what we cannot pay for? Come on, that’s just a silly idea.
Gosh Big V, are you sure? On all the news and stuff everyone is saying that “we don’t have a revenue problem, we have a spending problem.” Lots of people are using that exact same phrase. Senator Mitch McConnell (R-KY)used it just last night on the PBS News Hour. Why, I think we might even see it here on HBB a few times.
Even if they eliminated DoD, SS and Medicare (while still collecting the payroll tax) there would still be a deficit.
We have a revenue problem.
Slash payments to Medicare, Medicaid for seniors and Social Security. For a month or so. After all its their debts. And that would be one educational month about what really has happened in the United States.
+100. You know, I was rooting for the government shutdown for just that reason. Yes, I would have furloughed, but it would have been worth it.
The last government shut down would not have stopped SS payments, only new SS applications. As Jim pointed out yesterday, the real meaning of “entitlement” is that the money doesn’t have to be appropriated in order to get paid out. The only issue with SS recipients already in the system is that it requires a few people to get the money out, but not that many. Those employees would have been exempted from the furlough.
If they don’t extend the debt ceiling, everything is on the table. There will be some money coming in so some functions can be kept going, but everything that costs money will be at risk. If they don’t extend the debt ceiling, SS money might not go out.
I’m not sure what was going to happen with Medicare under the last possible shut down. The money to make the payments doesn’t have to be appropriated, but processing the payments takes a lot more people than sending out SS checks does.
The debts are yours as well, even more so with every day.
Slash payments to Medicare, Medicaid for seniors and Social Security ??
Yeah, and use the savings to expand the military…I mean, its what we do best right ??
We know that is what the ultimate goal is, as military spending not mentioned when there is talk of cutting spending. It’s our sacred cow, and it speaks volumes about who we have become and why the rest of the world is less that positive about us. We like to think we are “freedom fighters”, while the rest of the world uses a different word: “imperialists”.
“Slash payments to Medicare, Medicaid for seniors and Social Security. “
Yeah, just kick them to curb. They have it way to easy on $1200 a month and $800 a month medical bills. Dang freeloaders!
Happy Friday, all.
The house across the street from me is for sale now. This is the one where the tree branch fell on the kid. I knew that branch thing was an omen. Falling mushrooms, falling tree branches, falling house prices. Sometimes life gets so excited about itself, that it can’t wait for things to happen on their own.
Another landlord bites the dust in Richmond, Virginia.
Friday the 13th, no less.
A tree branch just randomly fell and killed a kid? Or did the kid live?
Here an hour and a half south of Richmond I think housing prices are still bubbly. But I haven’t looked heavily.
frankie said this above, In Dublin, prices have declined by 47 per cent while the rest of the State saw a fall of 35 per cent.
It reminded me of this article:
here http://danster82.com/2011/04/10/real-value-of-property-fell-197-4-since-2001/
I wrote an article on how property value has dropped 194% since 2001 which was the top of the market according to value not price when measured against a basket of commodity’s.
“I wrote an article on how property value has dropped 194%…”
Did you get any confusing feedback on that?
??
???
????
I wrote an article on how property value has dropped 194% since 2001
Math can be sweet dream to some and a nightmare to others…
So if I “buy” a house in Ireland (for $0) I get a truckload of money with it?
Where do I sign up?
Read the article it explains the % drop is not in price but value when weighed against commodity’s.
Tip from Palm Beach Gardens woman spurs wide search for papers ‘Linda Green’ OK’d
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 8:54 a.m. Friday, May 13, 2011
Officials from several states are pulling court documents bearing the name of the now infamous robo-signer Linda Green following a 60 Minutes exposé on foreclosure fraud that featured a Palm Beach County homeowner.
In Michigan, Massachusetts and North Carolina registers of deeds have combed through filings looking for Green, documenting irregularities in signatures and forwarding their findings to law enforcement, federal regulators and attorneys general.
In Palm Beach County, a spokeswoman for Clerk of Court Sharon Bock said the Linda Green issue does not fall under “our purview to investigate or take action.”
“The clerk does not have authority under the statute to question the validity of a signature on a document presented for recording,” said spokeswoman Julie Nicholas.
“It is the role of the homeowners and/or attorneys representing homeowners to raise any legal issues that they believe may assist a homeowner in a foreclosure case.”
Palm Beach Gardens homeowner Lynn Szymoniak was featured on 60 Minutes on April 3 after uncovering the Linda Green issue in researching her foreclosure.
Green, a former employee of a now-defunct document processing company, signed papers as vice president of at least 14 banks and mortgage companies.
Green’s co-workers also acknowledged in interviews with 60 Minutes that they were paid $10 an hour to sign Green’s name.
Because her signatures appear on assignments of mortgage and satisfactions of mortgage, homeowners could have trouble getting clear title to a property.
“It’s really a disaster and the one thing I’ve been saying is I don’t know the scope of this,” said Bill Bullard Jr., register of deeds in Oakland County, Mich., who is also searching for Green’s name.
“I’m suspecting there are hundreds of thousands of forged signatures around the country, maybe more.”
1 COMMENT
The Director of FDIC has said that millions of foreclosures may be infected from bank fraud like robo-signing:
http://www.nakedcapitalism.com/2011...
rOn cOn cOMa
9:34 AM, 5/13/2011
Good find.
Dumb question of the day: With Uncle Sam so cash strapped and facing difficult choices of what to cut from the budget, why on God’s earth is propping up the housing market at unaffordable price levels such a cherished policy priority?
Because a deflationary spiral will expose the Fed for what it is.
The pols think if housing collapses, they will all be tossed out. Housing became the sure-fire path to riches (at least that was the perception) until 2005. On top of that game, if housing continues to drop (and it will), the fear is there will be even more layoffs, less consumer spending, then more layoffs, rinse and repeat.
If consumer spending drops (and it will, outside of govt. subsidies), then aggregate tax revenues drop, making the federal balance sheet look even worse. Every attempt using smoke and mirrors has been tried and failed, maybe next the govt. will actually start bulldozing houses to reduce supply, since they can’t seem to stimulate the demand side…
“The pols think if housing collapses, they will all be tossed out.”
Where is the downside?
Goldman Sach will have to start cultivating all over again. Think of all the lost sunk costs! Geez Bear get with the program.
“…maybe next the govt. will actually start bulldozing houses to reduce supply…”
Compared to just colluding with lenders to get them to withhold inventory off market, bulldozing is expensive and relatively more wasteful. It’s much cheaper to let homes off the market gather dust and gradually fall apart than to hasten the process with bulldozers. Then on the other hand, bulldozing does create economic stimulus…
It’s not about what we can afford PB, it’s about preserving, or actually increasing, the wealth and power of the elite at the expense of everyone else. If they crash the system after extracting all the cash, why then they can just come in and purchase everything.
Correcto-mundo
why on God’s earth is propping up the housing market at unaffordable price levels such a cherished policy priority ??
At this point Pbear, I think is a policy of survival vs a policy of priority…None of us know the real picture…Its all buried in the books of the big banks, pension funds etc…I would like nothing more than to see the market clear but honestly, I think its a policy of fear…They are scared s%i%le$$……
My best guess is that they are “bank-centric” in their views. Being bankers themselves, they believe that the banking/financial sector is the most important sector in the economy. So, letting house prices slide would further erode the value of bank balance sheets.
But wait - wasn’t mark-to-market suspended for banks? Essentially allowing them to value their loans at face value? So an 800,000 loan to strawberry pickers on a small single family home is plus 800K on their balance sheet, not plus 30K?
But of course, this leads to zombie banks. Whose balance sheets are pure fiction to informed observers, but officially to the government and other large entities in the financial ecosystem, the banks are solvent.
Summary: my best guess is they professionally believe the banking/financial sector is the cornerstone of the economy and probably have social ties to many in these companies as well. They have the discretion to choose how to direct this money (command economy anyone?), and thus choose the option to buoy house prices at bubblelicious levels (recall that the Case/Schiller index is only about halfway down from its stratospheric levels, where it hovering).
Oh - and actually, the real reason, from:
http://www.opensecrets.org/orgs/index.php
Top 10 Political Donors, 1989-present:
1) ActBlue — $51,552,980
2) American Fedn of State, County & Municipal Employees — $45,037,993
3) AT&T Inc — $40,800,955
4) National Assn of Realtors — $39,494,410
5) National Education Assn — $36,188,345
6) Service Employees International Union — $35,854,539
7) American Assn for Justice — $33,664,771
9) Laborers Union — $31,183,767
10) American Federation of Teachers — $31,021,128
Based on data released by the FEC on March 27, 2011.
Well you have to pay for those tax breaks on yachts and private airplanes somehow, right?
UPDATE 2-U.S. banks and states meeting on foreclosure probe
By Dave Clarke
WASHINGTON, May 11 (Reuters) - U.S. state attorneys general are pressing five large banks to reduce loan balances for troubled borrowers as part of a settlement over mortgage servicers’ foreclosure practices.
The two sides — which include Bank of America Corp (BAC.N), JP Morgan Chase & Co (JPM.N), Citigroup Inc (C.N), Wells Fargo & Co (WFC.N) and Ally Financial — began meeting on Tuesday and the talks are expected to last most of the week.
“We are still far apart on some issues,” Connecticut Attorney General George Jepsen said on Wednesday.
The negotiations have been going on for months and to kick off this round the states and their partner federal agencies, which include the departments of Justice and Housing and Urban Development, revised an earlier 27-page settlement proposal sent to banks in March.
…
“U.S. state attorneys general are pressing five large banks to reduce loan balances for troubled borrowers ”
And stupid just keeps getting bigger and bigger. The balances they reduce will just lower the price of housing and the tax structure attached to it but won’t keep those bailed out from stopping their payments and living for free. They won’t pay their property taxes, won’t save money, won’t maintain the property but that’s ok because the true design of the bail out is to give these low life’s more disposable income to keep the economy going. In reality they will just transfer debt to CC’s, etc and soon will have nothing left but to service new debt.
I for one intend to do my part to help the government out by spending as little as possible, buy for cash and avoid sales tax when possible. As for buying a house, not until the government steps away and lets the market decide what a property is worth.
FDIC Calls Robo-Signer Probe Narrow
Posted by Carole VanSickle on Friday, May 13th 2011
FDIC Chairman Sheila Bair says that it will probably be a long time before the true extent of the damage done by robo-signers within the lending and a foreclosure industry is actually known[1]. Although Bair praised the federal regulators currently involved in investigating the issue of “deeply flawed [mortgage] servicing practices,” she called the overall effort “narrow” and warned that “there appears to be the potential for further losses” in a speech to the Senate Banking Committee about the implementation of the Dodd-Frank act. She also warned that the housing market could not recovery until the issues were “tackled in a forthright manner and resolved.”
Bair went on to describe the robo-signing process as an “infection” that might impact millions of foreclosures that have yet gone undiscovered[2]. This was a direct contradiction to what Acting Comptroller of the Currency, John Walsh, told officials last month when he insisted that problems were “limited in scope.” The Office of the Comptroller has already faced criticism for “going light” on lenders in a settlement designed to resolve uncertainty about the lending and foreclosure industries in the wake of last fall’s robo-signer fiasco. Bair also threatened that lenders might be forced by government-controlled GSEs Fannie Mae and Freddie Mac to buy back more defaulted loans as the extent of the damage done by faulty foreclosure practices becomes clearer.
…
Now that Sheila Bair’s in short-timer mode, she’s speaking out. Methinks she’ll have some more interesting things to say in the coming weeks.
And methinks that John Walsh’s sentiment about robo-signing troubles being “limited in scope” sounds a lot like Bernanke saying that housing’s problems were contained in subprime. Remember that? We know how it turned out, don’t we?
On the inflation front?
My MIL went out and purchased a bunch of clothes for the kids. Pants 3 bucks ie 1 dollar less than I paid a year ago. Shirts 2 bucks.
Made in Kenya no less. This may be the reason china fears raising the value of their currency.
Pair of pants & a shirt for basically the cost of a gallon of gasoline….Go figure…
So its already happening. The race to the bottom continues.
Are these used items purchased from the Salvation Army?
Brand new Walmart
The one time I went to Walmart I was completely shocked at how cheap some stuff was.
Sometimes I feel like I am the only one who shivers in fear at brand new clothes that cost $2.00. Others see a bargain while I see slave labor, degradation of the environment, and all the other hidden costs that make it possible to buy something that has been shipped from the other side of the planet for less than $5.00.
OH, my bleeding heart.
Brand new Walmart
The same though crosses my mind.
Except that you can go into a Macy’s or JCPenny and pay $50 for a garment that was also manufactured by near slave labor and shipped from the other side of the world.
I was able to buy some American made socks at Walmart, and contrary to the “we gotta import that kind of stuff” crowd, the price was very reasonable.
I agree, Colorado. I would have no problem buying expensive clothes if I knew the $50 was going to actual workers and honest materials. But for Macy’s stuff you’re just buying them extra profit.
I went on a small shopping spree to shape up my wardrobe, but I am DONE shopping for now. Now I’m only buying food and health/beauty consumables, generally with cash.
And thats the deal.
Used to be that a $50 product had $10 worth of US labor in it.
Then some bright Harvard MBA schmuck figured out that if he shipped the factory off to China or Mexico, he could pay the Chinese or Mexican serf 50 cents for the same labor, and pocket that extra $9.50.
Then, as usual, they figured if some outsourcing is good, too much is just enough.
Throw in a little “those effing serfs aren’t going to tell me how to run my business” thinking, and here we are.
This works fine, until 95% of everything made comes from China, everybody here is out of work, and can’t afford your product anymore.
Are these those tiny little underwear shirts and shorts you put on babies?
Buy Fruit Of the Loom undergarments, made by Berkshire Hathaway. I do, and it will help my retirement -
“Oh Good, Another Housing Collapse”
http://gawker.com/5801290/oh-good-another-housing-collapse
The blurb is good, but the comments section is the real gold mine. You can almost taste the emergent realization of the snarky NY hipstergentsia that we are all in deep, deep doodoo.
It is amazing how the people who actually have to pay for socialism really don’t want to live under it.
————————–
New Yorkers under 30 plan to flee city, says new poll; cite high taxes, few jobs as reasons
New York Daily News.com | May 13,2011 | Kenneth Lovett
Escape from New York is not just a movie - it’s also a state of mind.
A new Marist College poll shows that 36% of New Yorkers under the age of 30 are planning to leave New York within the next five years - and more than a quarter of all adults are planning to bolt the Empire State.
The New York City suburbs, with their high property values and taxes, are leading the exodus, the poll found.
Of those preparing to leave, 62% cite economic reasons like cost of living, taxes - and a lack of jobs.
“A lot of people are questioning the affordability of the state,” said Lee Miringoff, director of the Marist College Institute for Public Opinion.
Really banana, if you want to push the meme of insane taxes, you need to edit out pesky little phrases like: and a lack of jobs. .
Lack of affordable housing is right there behind no jobs. In Manhattan you’ll pay $800 to share a room with someone.
Really banana, if you want to push the meme of insane taxes, you need to edit out pesky little phrases like: and a lack of jobs.
Well banana’s
If this is a real change which I doubt (ie many people want to live in NY when they are young and then move out). Then it is more likely related to higher costs and lower income then to taxes which have always been high.
“Of those preparing to leave, 62% cite economic reasons like cost of living, taxes - and a lack of jobs. ”
Funny they didn’t break this down more, was it intentional. You bet.
Bingo. Lack of jobs.
You build an infrastructure with supporting tax structure based on the current and long-standing job situation, and then a bunch of globalists go and strip out the tariffs, and then all the jobs disappear.
Suddenly, the young people CANNOT pay those taxes.
Like I keep saying, the basic malfunction is the lack of protectionist trade policies. We need to bring those back. Germany has them, and they’re doing great. We were doing great back when we had them too. It is really not that hard.
If you did the same poll anywhere in the US, you would get the same results, even out here in the low tax, Tea-Bagger Plains states.
Property taxes and cost of living aren’t even on the radar screen when there aren’t any decent paying jobs.
If the 30 and under New York thinks things suck there, wait until they get a load of the job market in FlyoverLand. Read the news stories for the past 20 years. Towns out here drying up and going away, because none of the kids can make a living out here.
“If the 30 and under New York thinks things suck there, wait until they get a load of the job market in FlyoverLand. ”
Yup. That’s what I keep telling my brother in Raleigh, but he doesn’t get it.
Sounds like they’re leaving because they don’t want to pay 750K for a crap shack in Long Island.
Of course, once they move to Raleigh or Atlanta, they’ll find other things to complain about.
“Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide.”
-John Adams
Churchill
Democracy is the worst form of Gov except for everything else.
You could say the same about capitalism.
What was the saying
A capitalist will sell you the rope you plan to hang him with.
“Good intentions will always be pleaded for every assumption of
authority. It is hardly too strong to say that the Constitution was
made to guard the people against the dangers of good intentions.
There are men in all ages who mean to govern well, but they mean
to govern. They promise to be good masters, but they mean to be
masters.”
–Daniel Webster (1782-1852)
“Necessity is the plea for every infringement of human freedom.
It is the argument of tyrants; it is the creed of slaves.”
–William Pitt (Earl of Chatham), speech in the House of Lords,
November 18, 1783
“Of all tyrannies, a tyranny exercised for the good of its victims may
be the most oppressive. It may be better to live under robber barons
than under omnipotent moral busybodies. The robber baron’s cruelty
may sometimes sleep, his cupidity may at some point be satiated; but
those who torment us for our own good will torment us without end, for
they do so with the approval of their consciences.”
– C.S Lewis
“A Democracy cannot exist as a permanent form of Government. It can only exist until the voters discover they can vote themselves largess out of the public treasury. From that moment on the majority always votes for the candidate promising the most benefits from the public treasury with the result that a Democracy always collapses over a loose fiscal policy, always to be followed by a Dictatorship—-Alexander Fraser Tytler, 18th century historian.
“………From the moment THAT THE BANKSTERS AND TOP 5%ERS BUYS OFF the candidate promising the most benefits from the public treasury……..”
There, me fix……..
“De plane! De plane!”
-Tattoo Fantasy Island 1978
Food prices are higher than normal these days because so much farmland was converted to residential houses. Now the Mississippi is flooding a bunch of farmland from over the dam. Time to plant a garden, folks.
My mother shops at a farmer’s market that’s on the farm where the produce is grown. Owner of the market proudly displays a sign that says “Support local agriculture. Or count houses.”
Mom really likes that sign.
Excellent!
There are those that look at things the way they are, and ask why? I dream of things that never were, and ask how in the hell did you ever think that POS $150k house was worth
$500k.
“I dream of the way things used to be, and wonder WTF happened……”
X-GSfixr, 2011
X-GSfixr
Congratulations!
Hope the new job works out well for you.
Class act.
Killebrew ends fight vs cancer, moves to hospice
By DAVE CAMPBELL, AP
2 hours ago
MINNEAPOLIS (AP) — Harmon Killebrew announced Friday that he no longer plans to fight his esophageal cancer and has settled in for the final days of his life, saddening friends and fans of the 74-year-old Hall of Fame slugger.
In a statement released jointly by the Minnesota Twins and the National Baseball Hall of Fame, Killebrew said “it is with profound sadness” that he will no longer receive treatment for the “awful disease.”
He said the cancer has been deemed incurable by his doctors and he will enter hospice care.
“With the continued love and support of my wife, Nita, I have exhausted all options,” Killebrew said. He added: “I have spent the past decade of my life promoting hospice care and educating people on its benefits. I am very comfortable taking this next step and experiencing the compassionate care that hospice provides.”
Killebrew, who’s 11th on baseball’s all-time home run list with 573, thanked his well-wishers for their support.
“I look forward to spending my final days in comfort and peace with Nita by my side,” he said.
I’ll never forget that All-Star game when he tripped and fell over first base. ISTR that the resulting injury put him out of action for the rest of the season.
As a parent, I soon learned that when the kids fight, there are usually two sides to every story.
As a Foreman/Supervisor, and part time Judge/Juror/Executioner, I found that some adults grew out of their childish behavior, and some didn’t. You soon learned who you could believe and had credibility, and who you had better double check.
So we get to our Neuvo Republicans, whose modus operandi is to spew half truths via Internet or e-mails to generate outrage over “wasteful government spending”, and hope that no one checks the facts. Bringing us to 2banana’s story yesterday about the Superior Township Michigan Fire Department.
-His source was the “Michigan Capital Confidential”, whose editor used to be campaign manager and Chief of Staff to some mysterious, unnamed “State Representative” (why wasn’t he/she named?). Take a gander at it………not what I would call unbiased. Looks like it’s put out by the Michigan Teabagger Association.
-Nowhere does it say one way or the other if the Superior Township guys are union or not.
-Mentioned in the story (but unmentioned by 2banana) is that the firefighters salary is based on working 2756 hours/year, or 53 hour weeks. Basically, it appears that they have to work 53 before they get O/T.
-Also unmentioned was a quote from a Superior Township Supervisor…”McFarlane says the firefighter overtime was planned…..said it was cheaper than hiring three more firefighters.”
-To say nothing of the impression that the lazy bastards only had to work 10 fires for the whole year. What about the traffic accidents? Medical calls? Cats in trees? Recurrent training? Hazmat spill response?
As usual, there’s probably more to the story that you won’t hear, if you source all your info from the Republican Outrage Network. (R.O.N……maybe I should copyright that…..)
Please Nuevo Republicans, spare us the cherry-picked “outrageous waste by union thugs” stories. It raises my blood pressure, because I know that it’s BS about 95% of the time, and it hurts your credibility with everyone but the true believers.
That’s right, X-GS.
The Republican party has always held corporate interests above the citizenry. They have always attempted to vilify the worker and the common man. They do this because it’s the only way to trick people into denying their own interests.
You don’t want to be associated with those immoral, lazy jerk firefighters do ya? No? Well, you’re an American, aren’t ya? And a Christian, right? Well then, by darnit, you vote Republican and join the club of greatness!
yeah right
I would highly recommend that anyone who wants to beat up on “welfare mothers” and “lazy union janitors” move to a school district with some low income kids, and see how the rest of America lives.
Single parents juggling 2-3 part time jobs to barely pay for transportation and a roof over their heads. Kids whose parents bounce in and out of drug addiction/jobs/jail, many of them depending on what they get at school for their primary meals (and compared to the lunches we had back in the 60s, theirs are barely edible (I’ve had a few)…….Army Field Kitchen food is an improvement). All kinds of hurdles to clear before you can get any kind of public assistance. Kids with no positive role models, or exposure to normal family life, so their fooked up world is considered normal. So the cycle is repeated.
Here’s the deal…..yeah, maybe the parents “brought it on themselves” Do you then screw the kids, and therefore insure that the cycle repeats?
I’m becoming cynical enough about Republicans motivations to believe they WANT 10-20 million people as government dependent, spending just enough to insure that the cycle repeats. Why? Because if we spent enough to actually FIX some of these problems, they wouldn’t have “welfare mothers” to beat up any more.
We’ve currently spent about a TRILLION dollars in Iraq and Afghanistan. About 900 million of which was “nation building”. There’s always money to “defend our interests” (whatever that means), or bail out Wall Street, but none to bail out Main Street. We all get to sink or swim.
Thanks X-GSfixr…it’s the truth.
And those very same folks are the ones who are trashing teachers because those kids are not performing well on the standardized tests.
“There’s always money to “defend our interests” (whatever that means)…”
I know that you know better, gentile.
To be fair, the firefighter’s union goes over the line too. The local department has a bad habit of undermining the authority of new Chiefs and their staffs, unless the union “approves”.
And don’t get me started about the (former) Police Department “Flying Club”.
(FYI…..it’s a defacto “flying club” when the pilot’s are trained from scratch from the senior personnel of the force “volunteering”. No reason to do this, when there are all kinds of US Army trained pilot’s out there. It isn’t like flying a helicopter around in a circle required a unique skill set).
Good work GS.
I’m stealing a line from Kunstler here, but we don’t have a lot of leaders that can manage contraction and the convulsions occurring right now.
The way I see, my wife and I should be o.k. in our school district, but we are going to have to hustle and for the next few years. We have many clueless shot callers around.