The Housing Bubble

Realtors Are Liars

Troubled Banks Grow in First Quarter: FDIC
By: AP

The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the first three months of 2011, the highest level in 18 years.

That proportion is about the same as in the October-December quarter last year, though the increase in the number of banks on the Federal Deposit Insurance Corp.’s confidential “problem” list is slowing. The FDIC added only four banks to its list in the January-March quarter.

That brought the total to 888 from 884. Banks on the list are deemed by examiners to have very low capital cushions against risk.

U.S. housing crisis not over yet
Home ownership may dip before long-term improvement settles in
By: The Economist
Posted: 05/24/2011 1:00 AM

WASHINGTON — At the ripe old age of five years, America’s housing bust is still very much alive and kicking. House prices dropped 3.3 per cent in the year to February according to the S&P/Case-Shiller index, the fastest decline since November 2009. The Federal Reserve’s preferred measure, the CoreLogic house-price index, showed an even worse one-year decline of 7.5 per cent in March. And Zillow, an online real estate database, recently said that prices fell 8.2 per cent in the year to March. Zillow has reported falling prices for 57 consecutive months.

The latest housing hiccup has Americans worried that a new phase of the crash is under way. Two years ago, housing appeared to hit bottom. Prices and sales leveled off thanks to low interest rates and a generous housing tax credit. But that respite ended last summer. The tax credit expired just as a broader economic chill descended, and price declines resumed. Some forecasters expect another five per cent to 10 per cent fall in prices before the market rights itself. Robert Shiller, of Case-Shiller index and irrational exuberance fame, thinks a further 25 per cent decline is not out of the question.
…

Outlook for S&P 500 and Economic Growth Cut: CNBC Survey
Published: Tuesday, 24 May 2011 | 9:48 AM ET
By: Steve Liesman
Senior Economics Reporter

The Federal Reserve will execute a gentle, staged exit strategy that won’t begin until the end of this year at the earliest and will put the Fed Funds rate just 50 basis points higher 13 months from now, according to the latest CNBC Fed Survey.

The 62 participants in the survey actually lowered their outlook for the Funds rate in June 2012 to an average of 75 basis points, down from 90 basis points in the April survey.

Even in December 2012, the Funds rate only rises to an average of 1.37 percent, compared with 1.67 percent in the April survey.

Respondents, who include economists, fund managers and strategists, also cut their outlook for growth and the level of the S&P 500. They now see growth of just 2.77 percent this year, compared with a 3.07 percent forecast in April. The S&P is seen hitting 1367 in December, about 2.7 percent lower than the prior forecast.
…

Did somebody give journalists the world over stupid pills? Yesterday I pointed out repeatedly here and elsewhere that the U.S. new home sales figure released was down 23.1% year-on-year (April 2010-April 2011). Yet this and every other news story I have seen reports it as an “increase.” Don’t home sales typically increase each spring from March to April “to the highest level this year”?

Go figure…

US stocks fall despite positive housing news
May 25, 2011 - 6:42AM

US stocks fell, with benchmark indexes falling to one-month lows, as a drop in automobile and other industrial companies offset a report showing that sales of new homes rose to the highest level this year.
…

I question the “cushion to families in no-recourse states” comment in the following piece: If a family has been paying the mortgage for years, then suddenly can no longer afford to do so, then won’t they potentially lose a large share of their (supposed) life savings when the bank eventually takes back the home?

What am I missing here?

Construction Forecasts
News & Analysis
U.S. new and existing home sales move in opposite directions in April
05/24/2011 by Alex Carrick, RCD Chief Economist
…
Some aspects of the U.S. housing market will be the subject of serious academic study in the years ahead. For example, what role has “no recourse” played in destabilizing the market? This is the practice whereby, in many states, lenders are not allowed to go after delinquent mortgage payers for the difference between the selling price of the house and the outstanding loan amount.

Typically, no-recourse loans (since they are riskier) are granted only for lower loan-to-value ratios, such as 50% to 60%. They are big in commercial markets. In residential markets, they almost always appear only in first mortgages, not seconds. Nevertheless, the out-sized drop in home prices (-33% nation-wide) has brought them attention in the latest housing market cycle.

There has been some correspondence between large price adjustments and “non-recourse” states. Some of the latter with “no recourse” are Arizona, California, Washington D.C., Washington State, Oregon, New Hampshire, Nevada and Texas (only to some degree for the latter two).

One must acquire legal expertise in these matters, depending on where one lives. “Anti-deficiency statutes” in some states determine the degree to which lenders do or do not have “recourse” against borrowers. Another factor also plays a role in determining the financial commitment of the homeowner - whether or not the state requires judicial foreclosure (i.e., court action) or non-judicial (only requiring public notices that follow legislated guidelines.)

“No recourse” may have played a significant role in setting the stage for the housing market collapse. Since it limits liability, it promotes bidding wars, leading to speculative price bubbles.

While it is hard on lenders, it does provide a cushion to many individuals and families. In “no recourse” states, it can sometimes be clearly to the homeowner’s advantage to mail in the keys if they are not able to make the monthly payments. Such actions are labeled “strategic defaults.”

There can be huge savings in monthly payments. Furthermore, administrative detail and a reluctance to take action have left some delinquent homeowners in their houses an extra eight months. This may be a partial explanation for how U.S. retail trade has come back so quickly.
…

Reading about these killer twisters makes me wonder why more Midwestern folks don’t build so-called “safe rooms,” which can withstand winds up to 250 mph (higher than the Joplin tornado generated). What is stopping them if the technology is there (plus a 75% subsidy from FEMA)?

U.S. NEWS
MAY 25, 2011, 8:27 A.M. ET

Storms Kill at Least 13 More

Storms that moved through the central U.S. late Tuesday and early Wednesday left at least 13 people dead in Oklahoma, Arkansas and Kansas.

Oklahoma Medical Examiner’s Office spokeswoman Cherokee Ballard on Wednesday said at least five people, including a young child, died in the Oklahoma City metropolitan area. She didn’t have further details.

At least three people died as the storms hit Franklin and Johnson counties in Arkansas, state Department of Emergency Management spokesman Tommy Jackson said. One person died after a tornado swept through the tiny western Arkansas community of Denning early Wednesday. Another person died in an area called Bethlehem, in Johnson County.

A number of people were injured in Franklin and Johnson counties, though officials weren’t sure exactly how many. A rural fire station in Franklin County was left without a roof as emergency workers rushed to the wounded. Downed trees and power lines tossed across roadways also slowed search-and-rescue crews’ efforts.

In Kansas, police said two people died when high winds threw a tree into their van around 6 p.m. near the town of St. John, about 100 miles west of Wichita. The highway was shut down because of storm damage.

The storms followed Sunday’s tornado that killed at least 122 people in Joplin, Mo. On Tuesday, teams of firefighters, police officers, search dogs and volunteers fanned out across Joplin, picking their way through flattened homes, churches, schools and other buildings in search of hundreds of missing people.
…
More
Seven Bodies Recovered at a Home Depot
Riding With the Rescue Team
Twister Season Proves Deadliest Since 1953
Harrowing Scene at Joplin Hospital
Coroner: ‘We Are Getting More Bodies’

Just because the spring rapture was a fraud doesn’t mean the fall rapture isn’t for real!

Stupid is as stupid believes.

Brett Arends’ ROI
May 25, 2011, 12:06 a.m. EDT
Rapture’s back on! Should I sell my home?
Commentary: Doomsday is Oct. 21, so get your finances in order
By Brett Arends, MarketWatch

BOSTON (MarketWatch) — The world is coming to an end. Again.

Harold E. Camping, the radio “Rapture” guy out in California, has told his followers that the world will end — or, at least, that all the Chosen Ones will get raised up to Heaven — on Oct. 21. (Camping gave this update after Saturday’s big letdown, his second.)

I know what you’re thinking: “What does this mean for my personal finances?”

Harold Camping, the broadcaster who predicted the world’s end on May 21, says he got it wrong — but not completely.

Well, here at MarketWatch we’ve always got your back. So if you’re getting ready for the Rapture, here are my 10 personal-finance tips.
…

To add to yesterday’s dismal new home sales figure (the widely-misreported “increase” that was off 23.1% since April 2010):

Durable orders fall in April

U.S. orders for durable goods fall sharply, mainly because of lower demand for aircraft and automobiles, government data show. Fewer bookings for Boeing and automotive supply-chain disruptions are cited.

My takeaway from this article is that labor costs in China are rising. Soon the pesky peasants will hire union goons and demand gold-plated benefits and insane pensions. I remember when all those “Made in Japan” stickers were replaced with “Made in China.” I guess those “Made in China” stickers will be replaced with “Made in mudhut for 1/9 bowl of rice in 3rd-world-nation-du-jour.”

———
Toy Prices Rise as China Wages Increase
By Bloomberg News - May 24, 2011 7:13 PM ET

Hundreds of toymakers at the China Import and Export Fair, the country’s largest, are charging more as the world’s second- largest economy battles inflation that soared to an almost three-year high of 5.4 percent in March. Mattel Inc. (MAT), which makes Barbie dolls, and Hasbro Inc. (HAS), owner of the Transformers brand, raised prices earlier this year as Chinese factories pass on higher costs for raw materials and labor.

“If you take into account everything Chinese toymakers are dealing with — labor, material, exchange rate — a price hike is only a natural consequence,” said Hua Zhongwei, a macroeconomic analyst with Huachuang Securities in Beijing. “There is a big chance for shoppers in the U.S. to face higher prices for Christmas gifts this year.”

Stagflation: it’s what’s for breakfast

Banks Face $17 Billion in Suits Over Foreclosures
wsj.com

State attorneys general told five of the nation’s largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, according to people familiar with the matter.

The figure doesn’t cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department. State and federal officials haven’t proposed a specific comprehensive settlement figure, but Tuesday’s discussions represented the first effort to formally quantify potential liability.

Representatives of the nation’s largest banks met in individual meetings on Tuesday with state and federal officials designed to highlight the potential costs they will face if a settlement isn’t reached.

Banks and federal officials have made halting progress over two months to settle allegations of abuses related to mortgage servicing, and the numbers floated Tuesday indicate that the two sides are still far apart on the size of the penalty.

Banks have proposed a $5 billion settlement that would be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes. Federal and state officials have dismissed that as insufficient. Some officials have pushed for a total price tag of more than $20 billion to resolve foreclosure-handling abuses that surfaced last fall.

For those of you renting in NYC

——————–

Here’s Why New York City’s Rent Is Still Too Damn High
Real Clear Markets | 05/25/2011 | Stephen Meister

With New York City’s rent laws set to expire June 15, “tenant” activists are decrying the catastrophic consequences should Albany’s Republican-controlled Senate fail to renew them. But these laws actually harm most tenants: By protecting long-term residents at the expense of newer (not wealthier) ones, they’ve caused huge increases in the City’s overall rents.

Given over 8 million people call the Big Apple home - only a million of whom are fortunate enough to live in rent-regulated apartments - the wild popularity of the rent stabilization laws among New York Democrats only proves that a cohesive voting bloc has enabled a tyranny of the minority, and the perpetuation of common-sense defying and grossly unjust laws.

The complex labyrinth of State and City rent laws imposes price controls on buildings built before 1974 (and some newer ones where the owners have sought special property tax breaks). Protected tenants (including their children if they remain in the apartment after their parents die) must be given a never-ending series of lease renewals at the “legal” rents.

That means as these older buildings obsolesce, they can’t be demolished and replaced with modern high rises containing far more apartments because there’s no way to evict the protected tenants.

That’s why New York City’s streetscape is still littered with thousands of old tenements - low-rise “walk ups” with outdoor fire escapes I wouldn’t want to put to the test. In a free-market, developers would assemble several adjacent tenements, raze them and build a modern high-rise containing hundreds of apartments to replace the handful lost.

But, because of the rent laws, even a single protected tenant, can block a major development; either that, or the “hold-outs” end up with massive pay-offs to vacate.

The laws also encourage protected tenants to hoard apartments too large for their needs: As they grow older and their children move out, or spouses die off or divorce, it doesn’t pay for them to scale down to a smaller apartment because then the tenant would be forced to enter the free market and pay more for the appropriately sized apartment.

more

Maybe there is hope…

——————

The U.S. fiscal solution: Follow Canada’s fiscal lead
Globe and Mail | 05/25/2011 | David Rosenberg

As we have seen time and again, every country pursuing profligate debt-financed fiscal policies ultimately hits some sort of wall - as was the case in Iceland recently, not to mention the Club Med countries in the euro zone. The United States may, too, if it doesn’t get its fiscal act together, as the recent Standard & Poor’s credit outlook warning attests.

Canada did hit that debt wall nearly two decades ago as its deficits and debts became increasingly difficult to reverse. The federal government, both Liberals and Conservatives, borrowed and spent like drunken sailors for a long time. Similar actions unfolding in the U.S. today may well create the illusion of prosperity, but as any Canadian will tell you (or perhaps anyone from New Zealand a decade earlier), there is no such thing as a free lunch.

Canada endured not just the ignominy of credit downgrades but also recurring financial market gyrations that frequently disrupted business activity. The Liberal government that found its way to power in 1993 spent most of the next five years enacting tough deficit-reducing policies that it never campaigned on.

Indeed, at a time when the world is looking for leadership, especially when it comes to fiscal rectitude, Canada has evolved as the poster child for how to do things right. After years of massive deficit financing from the late 1960s to the early 1980s, Canada headed into the 1990s in very rough shape from a national balance-sheet perspective.

The problem for the U.S. is that the deficit ratio is about twice what it was in Canada, and in Canada we had a government with a majority that could take charge without special-interest groups exerting an influence on the decision-making process. Sacred cows were slaughtered, just as unaffordable U.S. handouts like mortgage-interest deductibility will be, once real tax reform eventually comes their way.

U.S. Mortgage Applications Climbed 1.1% Last Week on Purchases
~ Bloomberg - May 25,

Mortgage applications in the U.S. rose for the fourth consecutive week as home purchases and refinancing gained.

The Mortgage Bankers Association’s index of loan applications climbed 1.1 percent in the week ended May 20. The group’s purchase index was up 1.5 percent and a measure of refinancing increased 0.9 percent.

The data are consistent with a government report yesterday that showed purchases of new houses rose in April for a second month, helped by job creation and borrowing costs close to a six-month low. At the same time, the excess supply of unsold homes and foreclosure-driven price declines are preventing a sustained rebound in housing.

“There is still a long way to go before the sector becomes normal or healthy,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Demand will remain constrained by high unemployment, constrained credit conditions and fears of further price falls.”

The average rate on a 30-year fixed loan increased last week to 4.69 percent from the prior week’s 4.60 percent that was the lowest since the end of November, today’s report showed. Borrowing costs reached 4.21 percent in October, the lowest since the group’s records began in 1990.

The average rate on a 15-year fixed mortgage rose to 3.78 percent from 3.75 percent.

‘In a free-market, developers would assemble several adjacent tenements, raze them and build a modern high-rise containing hundreds of apartments to replace the handful lost.’

Economic incentives for construction jobs?

Note:Now the IMF says they will take the Greeks gold as collateral! Screw the damn IMF, I hope

~From: Aaron Task of The Daily Ticker.

ITEM: Financial markets shuddered Monday as fears over Europe’s sovereign debt crisis resurfaced yet again. Still, the Dow closed off its worst levels of the session amid the conventional view that Greece’s debt crisis can be managed.

But Endgame author John Mauldin says Greece won’t be any more “contained” than subprime mortgages were in 2008.

“It’s not something that stops at the European waters,” Mauldin says. “Just like the subprime crisis didn’t stop in California…I’m worried this one has a lot of contagion and it’ll affect the world.”

As for the mechanism for that contagion, Mauldin lays out the following scenario in the event of a Greek default:

- Greece has to nationalize its banks.
- Greek citizens are forced to take deposits in drachmas, rather than euros.
- Greek consumers and businesses then default on all debts because of the resulting haircut, which he estimates at 50%.
- French and German banks are forced to take write-downs on their Greek exposure.
- The ECB is forced to take a write-down on its exposure to Greek debt.

Such a scenario would not go unnoticed in Portugal or, especially, Ireland, where voters have already shown their displeasure with having to pay for bank bailouts, Mauldin notes.

Meanwhile, U.S. banks have written credit-default swaps to European banks. Most of these positions are hedged but “you’re only balanced as long as both of those counterparties are good,” Mauldin says. “If you have a bad counterparty, now you’re out of balance.”

If you’ll recall, it wasn’t the failing subprime mortgages per se that caused the real crisis in 2008, but banks refusal to trade with other banks. It was this “counterparty risk” which caused the financial system to seize up, which is why policymakers here and in Europe are doing everything and anything to prevent a repeat.

Mark Haines passes away.

http://www.cnbc.com/id/43167028

Note: Now the IMF says it will accept Greece’s gold as collateral. Perfect time for Greece to say, up-yours IMF default and get the hell out of the EU.

ITEM: Shades of 2008: A Greek Default Won’t Be ‘Contained’, John Mauldin Says. By Aaron Task | Daily Ticker –

Financial markets shuddered Monday as fears over Europe’s sovereign debt crisis resurfaced yet again. Still, the Dow closed off its worst levels of the session amid the conventional view that Greece’s debt crisis can be managed.

But Endgame author John Mauldin says Greece won’t be any more “contained” than subprime mortgages were in 2008.

“It’s not something that stops at the European waters,” Mauldin says. “Just like the sub-prime crisis didn’t stop in California…I’m worried this one has a lot of contagion and it’ll affect the world.”

As for the mechanism for that contagion, Mauldin lays out the following scenario in the event of a Greek default:

- Greece has to nationalize its banks.
- Greek citizens are forced to take deposits in drachmas, rather than euros.
- Greek consumers and businesses then default on all debts because of the resulting haircut, which he estimates at 50%.
- French and German banks are forced to take write-downs on their Greek exposure.
- The ECB is forced to take a write-down on its exposure to Greek debt.

Such a scenario would not go unnoticed in Portugal or, especially, Ireland, where voters have already shown their displeasure with having to pay for bank bailouts, Mauldin notes.

Meanwhile, U.S. banks have written credit-default swaps to European banks. Most of these positions are hedged but “you’re only balanced as long as both of those counter-parties are good,” Mauldin says. “If you have a bad counter-party, now you’re out of balance.”

If you’ll recall, it wasn’t the failing subprime mortgages per se that caused the real crisis in 2008, but banks refusal to trade with other banks. It was this “counter-party risk” which caused the financial system to seize up, which is why policymakers here and in Europe are doing everything and anything to prevent a repeat.

“The attempt to maintain stable prices through monetary manipulation became a swamp which the Federal Reserve entered in 1923, and in which it has been mired ever since.” ~Elgin Groseclose

~ We should abandon our debt-based currency and establish a sound money system. At some point in time the fiat dollar will go bye,bye no matter what the fed does. They are certainly doing a fine job of dollar destruction, getting better at it every day.

Fewer government jobs during tough times
But payroll costs continue to grow
By Brian Joseph
Tuesday, May 24, 2011 at 5:35 p.m.

In this time of crushing budget deficits and guaranteed public pension plans, one sentiment seems widespread among voters: government always grows. Even with cutbacks and a floundering economy, many Americans clearly believe that government only gets bigger.

But in California, government has indeed shrunk by one metric: the number of employees on the payroll. Employment numbers independently collected by the state Employment Development Department show that since the housing market collapsed in 2008 more than 100,000 federal, state and local government jobs have been eliminated in California, creating the worst job market in that sector since at least 1990.

All of those lost jobs can be attributed to cuts made to address the state’s chronic, multi-billion budget deficit or to the economic conditions that contributed to the deficit, California economists say.

“It’s indicative to how very wired government is into the economy,” said Christopher Thornberg, founding principle at Beacon Economics in Los Angeles.

State Budget Watch is a project to give readers a deeper understanding of the scope, impact and reasons behind California’s fiscal problems, and to explore the stakes involved in potential solutions. The project includes Sacramento reporters Michael Gardner of The San Diego Union-Tribune and Brian Joseph of the Orange County Register and editor Daniel Weintraub of California Health Report, a website that focuses on health and public policy issues in the state.

More than 3,600 government jobs have been lost, on average, each month since June 2008, when government employment in California peaked at more than 2,522,000. In all, more than 118,000 government jobs — or about 5 percent — were lost through March 2011.

That doesn’t compare to the pain faced by the construction industry, which lost 280,000 jobs (33 percent) during that period, or the manufacturing industry, which lost more than and 201,000 jobs (14 percent). But over the last year, the government sector has been the biggest drag on California’s job recovery while construction, manufacturing and other industries have begun to rebound.

In government, the hardest hit were employees of school districts, counties and cities, who combined accounted for the vast majority of the lost government jobs. State government, on the other hand, lost a few thousand jobs while the federal government actually increased its job offerings in California by a few thousand, all in the Department of Defense.
…
Jobs lost

How the reduction of government jobs at all levels in California compares to other hard hit sectors since June 2008.

Government: 118,000

Manufacturing: 201,000

Construction: 280,000

Source: California Employment Development Department

Stink bug spread worries growers across nation
Associated Press

EMMITSBURG, Md. — An insect with a voracious appetite, no domestic natural predators and a taste for everything from apples to lima beans has caused millions of dollars in crop damage and may just be getting started.

The brown marmorated stink bug, a three-quarter-inch invader native to Asia, is believed to have been brought first to the Allentown, Pa., area in 1998. The bug began appearing in mid-Atlantic orchards in 2003-04 and exploded in number last year.

This spring, stink bugs have been seen in 33 states, including every one east of the Mississippi River and as far west as California, Oregon and Washington.

“All that we do know for certain is that a tremendously large population went into overwintering in fall 2010. So, if they survived, there could be a very large population emerging in the spring,” said Tracy Leskey, a research entomologist at the U.S. Agriculture Department’s Appalachian Fruit Research Station in Kearneysville W.Va.

Growers in the mid-Atlantic region have reported the worst problems, and the apple industry appears hit hardest, with $37 million in damage to growers in Maryland, Pennsylvania, Virginia and West Virginia, according to the U.S. Apple Association. That’s about 18 percent of the Mid-Atlantic crop.

Mark Seetin, the association’s director of regulatory and industry affairs, called it the worst threat to farmers he’s see in his 40 years in agriculture.

Growers in Washington state, the nation’s biggest apple producer, haven’t seen major damage so far, said Mike Willett, vice president for scientific affairs for the Yakima, Wash.-based Northwest Horticultural Council. The bug was first spotted in the state a couple years ago.

The bug, named for the foul smell it gives off when crushed, will feed on nearly anything, including cherries, tomatoes, grapes, lima beans, soybeans, green peppers, apples and peaches. It uses a needle-like mouth to pierce the skin of its host fruit or vegetable, leaving behind a spot that is disfigured and discolored.

Stink bugs wiped out up to 40 percent of Tom Haas’ peaches last season at his Cherry Hill Orchards in Lancaster, Pa. The peaches looked so bad that Haas let the fruit fall to the ground, where it rotted.

“This is the worst, probably, that I’ve dealt with in 25 years,” said Haas, the owner of the family-run orchard. “The damage they do to fruit is horrendous.”

market pulse

May 25, 2011, 11:45 a.m. EDT · CORRECTED
House prices slip 2.5% in first quarter, FHFA says
By Steve Goldstein

(Fixes description of price drop from April 2007 peak.)

WASHINGTON (MarketWatch) — U.S. house prices fell a seasonally adjusted 2.5% in the first quarter and 0.3% in March, the Federal Housing Finance Agency said Wednesday, using home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages. The March index is 19.8% below its April 2007 peak.
…

WASHINGTON (Reuters) – Testimony by White House consumer adviser Elizabeth Warren before a House subcommittee broke down into acrimony when the panel’s Republican chairman accused her of lying about the terms of her appearance.

Warren testified on Tuesday before a House of Representatives Oversight and Government Reform panel about her efforts to set up the new Consumer Financial Protection Bureau, an agency Republicans and Wall Street do not like and want to gut.

The hearing focused on disputes over the scope of the agency’s power, but her appearance ended in heated wrangling over how long she would testify.

About an hour into the hearing Republicans sought to temporarily adjourn for votes. Warren objected to sticking around for more questions upon their return, saying her afternoon was packed with meetings and that the committee had agreed she would only stay an hour.

“Congressman, we had an agreement,” she told Republican subcommittee Chairman Patrick McHenry after some back-and-forth.

[ For complete coverage of politics and policy, go to Yahoo! Politics ]

“You had no agreement, you are making this up, Ms. Warren,” McHenry responded.

The committee’s lead Democrat, Elijah Cummings, jumped in, telling McHenry, “I’m trying to be cordial here, you just accused the lady of lying.”

Tuesday’s mini-drama of Democrats vs. Republicans vs. Warren has played out for months and would escalate if the Obama administration formally nominates her to become the director of the consumer agency.

Warren, a Harvard law professor who previously served as a watchdog for the government’s $700 billion financial system bailout, has run into strong opposition from Republicans, who say she would be too confrontational with the financial industry.

Anyone else think that a little confrontation with the financial industry might be a good thing. Seriously who supports the GOP here. We’ve just been raped by WS and they are worried about a little confrontation, F them.

news.yahoo.com/s/nm/us_financial_regulation_warren

Nevada wants to make it easier for buyers to overpay for housing by making appraisers lie.

http://www.msnbc.msn.com/id/42849615/ns/business-personal_finance/

“Nevada state Sen. Mike Schneider is trying to fight back with proposed legislation that aims to set a floor under prices, which have fallen well over 50 percent on average in the Las Vegas area over the past five years. A few months ago, he sponsored a bill proposing a radical new mandate for appraisers: Stop paying attention to those “distressed” sales. Legislators in other states and industry executives are watching closely.”

“The legislation’s legality has been called into question because it runs counter to the Uniform Standards of Professional Appraisal Practice, the federal regulations home appraisers are required to follow.”

“Opponents — who include professional appraisers and their trade association, as well as some skeptical realtors — say there’s no way such a law can be worded that wouldn’t require appraisers to violate those regulations.”

If everyone knows they are lying because that’s the law, their lies would be less valuable.

I can’t help but wonder whether all this stormy weather won’t put a damper on the otherwise red hot summer sales season for Midwest homes?

‘Major Tornado Outbreak’ Seen for Midwest
By Brian K. Sullivan - May 25, 2011 10:33 AM PT

A “major tornado outbreak” is expected to develop in the central U.S. states surrounding the area where the Mississippi and Ohio rivers meet, according to the U.S. Storm Prediction Center in Norman, Oklahoma.

The National Weather Service is currently tracking two storms capable of producing tornadoes in western Missouri, including Kansas City.

A tornado watch, meaning the deadly storms may develop, was issued from Missouri to Indiana, including Indianapolis and St. Louis, according to the weather service. Memphis, downstream from where the Mississippi and Ohio rivers meet in southern Illinois, is covered by the storm center’s forecast for later today.

“The potential is increasing for a major tornado outbreak,” the center said. “Widespread wind damage and large hail are also a prominent concern through the evening hours.”

Today’s outbreak comes a day after tornadoes swept across Texas, Arkansas, Kansas and Oklahoma yesterday, killing 14 people, according to the Associated Press. Earlier this week, at least 122 people were killed by a tornado in Joplin, Missouri, the single deadliest U.S. twister on records going back to 1950.
…

If the residential housing bubble hasn’t been a total laugh riot, well, save your yuks for the collapse of commercial real estate. Data point from Tucson:

Foothills’ Gallery Row faces foreclosure

This is a ritzy shopping center in the most well-off part of the Tucson area. Fun story comment:

“the whole intersection of campbell/skyline is a MASS FORECLOSURE

“lots of debt up there for lenders to cramdown - ie take losses on

“don’t worry, it’s only a $100-200 million in losses

“glad we don’t have to eat that”

Wonder what the libs think about one of their own saying things like this about their leader. Plenty of them are very disappointed in Barry.

ITEM: Did Peter Fonda Commit a Federal Offense by Threatening President Obama? (AP)

While promoting a new documentary at the Cannes film festival in France last weekend, Peter Fonda made comments that could be construed as threats against President Obama.

“I’m training my grandchildren to use long-range rifles,” the actor told The Daily Telegraph at the international film festival. “For what purpose? Well, I’m not going to say the words ‘Barack Obama,’ but …”

With those words, the “Easy Rider” star may have committed a federal crime.

“Clearly, there is a federal law that prohibits threatening the president,” Washington, D.C.-based attorney Ross Nabatoff tells FOX411.com. “Now, the question is, is that a threat as opposed to him expressing his First Amendment rights? But you could conceivably construe that as a threat—he names the president. It’s a federal offense. He could be incarcerated.”

Fonda’s comments could attract the attention of the Secret Service, Nabatoff said.

“They take threats against the president pretty seriously these days,” explains Nabatoff. “There’s a lot of angry people.”

The Secret Service had no comment on the matter.

Fonda’s attorney did not return a request for comment, and Fonda’s representative was unable to reach the actor.

Back at Cannes, the actor wasn’t finished.

“We are heading for a major conflict between the haves and the have nots,” Fonda said. “I came here many years ago with a biker movie, and we stopped a war. Now, it’s about starting the world.”

“There’s no room any more for a sissy and, like I said, don’t forget that I’ve got grandsons who I’ve trained with long-distance rifles,” Fonda repeated. “We have to run like mofos to change this world.”

The fact that Fonda, 71, made his comments overseas could work in his favor should legal trouble ensue.

“The federal courts may not have jurisdiction in France,” Nabatoff said.

Fonda was in Cannes promoting “The Big Fix,” a documentary about the BP Gulf oil spill, a movie critical of Obama’s handling of the crisis.

Last week while promoting the film, Fonda said that he “sent an email to President Obama saying, ‘You are a f***ing traitor,’ using those words… ‘You’re a traitor, you allowed foreign boots on our soil telling our military — in this case the Coast Guard — what they can and could not do, and telling us, the citizens of the United States, what we could or could not do’.”

This years Christmas Toy prices are going up :
http://www.bloomberg.com/news/2011-05-24/toy-prices-rise-as-china-wages-increase.html

I’ll be brief:

BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)

“The O.C.!”

Agent hopes to save mansion from foreclosure
May 25th, 2011, by Jeff Collins / OC Register

At one point, McMonigle was asking $87 million for the property, then listed it for $57 million when it officially was added to the multiple listing service database in May 2010. He eventually lowered the price to $37 million, although it’s still the highest-priced house on the Orange County market.

In addition to the Newport Coast mansion and his headquarters, three other delinquent properties will be surrendered to the bank since they’re worth less than is owed on them, he said.

~ I am sure this clown preacher loved the bank when they lent the money…

Faith Christian files for bankruptcy
S. BRADY CALHOUN / News Herald Writer

PANAMA CITY BEACH — Faith Christian Family Church has filed for Chapter 11 bankruptcy protection and staved off, for now, a foreclosure auction against the church building and property.

According to court documents, SunTrust bank loaned the church $2.8 million in August 2008, taking the deed on the church at 13300 Back Beach Road as collateral. The church stopped making payments in October of 2010, the documents state, and SunTrust filed for foreclosure earlier this year. An online auction of the church had been set for Thursday.

Markus Bishop, the pastor of Faith Christian, said he sat down with executives from SunTrust when the church was only two months behind and tried to work out a repayment plan but they refused to take anything that was “remotely reasonable.”

“First of all we intend to pay 100 percent of all our debts and we’re only here because we have been forced into a position to defend ourselves against SunTrust bank,” Bishop said. “We’re not going to lay down and let somebody foreclose” on a building that has $4 million in equity.

SunTrust officials said they make every effort to work with every customer in distress but declined to comment further on the situation.

Instead of a foreclosure, the church will attempt to sell any assets it has under judicial guidance in order to pay off its debts. Bishop’s multi-million parsonage is already up for sale and has been for some time, he said.

“That doesn’t fit who we are today,” Bishop said. “Who we are today is much different than who the man was who built that house.”

However, Bishop’s home is also at the center of a lawsuit between the church and the Bay County Property Appraiser’s Office, who refused to grant it tax exemption status as a parsonage.

Eliminating the Mortgage Interest Deduction:
“before the bell…”

It’s Professor Bear…vs…”The poor, poor, Wealthie$”

Tax Scenario

The scenario includes interest payments of 5 percent on a $400,000 mortgage, Fleming said. If the mortgage deduction is eliminated, the family’s tax bill would increase 19 percent to $150,080 in 2013 from 2011, according to the analysis.

Investments are the main asset of the wealthy while for the middle class it’s their home, said Edward Wolff, a professor of economics at New York University. The top 10 percent of wealth holders in 2007, the latest data available, owned 81 percent of stocks, Wolff said. “The preferential tax treatment of capital gains and dividends in the tax code definitely mainly benefits the rich,”

WOW! This comes as a shock! Not…

Financially-Fragile Americans Lack Emergency Savings
By Kate Rogers May 25, 2011| FOXBusiness

So much for that old golden rule of having three-month’s salary saved up for a rainy day. According to a recent study, if an unexpected emergency warranted nearly half of American households couldn’t come up with $2,000 in 30 days.

In a recent study “Financially Fragile Households: Evidence and Implications,” published by the National Bureau of Economic Research, 28% of respondents said they “certainly” would not be able to put together the $2,000 in 30 days, while 22% said they “probably” would be unable to do so. These respondents were in households making between $100,000 and $150,000 annually.

The study was conducted among a random sample of 2,100 adults. It asked, “How confident are you that you could come up with $2,000 if an unexpected need arose within the next month?”

The study also found that 19% of respondents would rely, at least partially, on pawning or selling possessions or taking payday loans.

Study leader, Annamaria Lusardi of the George Washington School of Business, said America puts so much emphasis on financial security in the long-run for retirement that people don’t see the importance of saving for short-term needs.

“People are really not able to buffer themselves against a potentially small shock,” Lusardi said. “This speaks to why it’s so hard and painful if you don’t have a buffer.”

Although this was not included in the study, Lusardi said it is her own belief that the saving trend has been zero toward savings, and prior to the recession, the economy was running on credit. Those who do not have a precautionary fund rely on borrowing, however things have changed since the economic tornado.

“We have less opportunity now to rely on borrowing, because credit was also related to housing. Now with negative equity, that has gone away,” she said. “You don’t want to borrow at a high interest rate when a shock happens. That strategy is a dangerous strategy.”

Al Lewis

May 25, 2011, 2:04 p.m. EDT
The name is Dimon, not Demon
Commentary: Vilified CEO says the anger has surprised him
By Al Lewis

NEW YORK (MarketWatch) — It’s not easy to stump a world-class executive who commands more than $2.2 trillion in assets, but one shareholder activist succeeded at J.P. Morgan Chase & Co.’s annual meeting in Ohio last week.

“As a person of faith, my God believes you shouldn’t take advantage of people when they are down,” Dawn Dannenbring told the bank’s CEO Jamie Dimon, highlighting casualties in the mortgage mess. “Do you believe in the same God I believe in?”

Dimon’s response was appropriately circumspect: “That’s a hard one to answer.”

I asked Dimon about this encounter after he spoke at a scholarship dinner for the University of Colorado-Denver Business School on Thursday.

“I didn’t know what to say,” Dimon told me. “It’s a complicated question.”

It also underscores some fundamental differences between how people think on Main Street versus Wall Street. Is there really an old man in the sky watching over this confusing tangle of transactions we call the economy?

Dimon could have answered this theological inquisition by saying he believed in the God who commands, pay your debt. He could have quoted Psalm 37:21. “The wicked borrow and do not repay.”
…

Number of home buyers plummets ‘as people were distracted by Royal Wedding and Easter’ By Daily Mail Reporter 25th May 2011

Bank holiday weekends made a significant dent in the property market last month after mortgage approvals dropped and buyers were rocked by economic uncertainty.

The number of mortgages agreed fell by 6 per cent during the month to 29,355 - almost a fifth lower than the previous April, according to the British Bankers’ Association (BBA).

The drop in the number of home owners remortgaging was even sharper, down 12 per cent from March to 20,844, the lowest level since January last year.
Slump: Mortgage approval rates in the UK took a dip in April after a run of bank holiday weekends

Slump: Mortgage approval rates in the UK took a dip in April after a run of bank holiday weekends

The BBA partly blamed the drop on the Easter and Royal Wedding bank holiday weekends in April, which distracted people from the property market as they made the most of the time off work.

~ Clipped from The 5Min Forecast…

As long as we have housing on the brain, we see no sign of recovery in one of the nation’s worst-hit markets for home-builders. The Southern Nevada Home Builders Association says closings on new construction could fall to as few as 4,000 this year — down from the 2006 peak of 35,000.

No doubt the Vegas housing market is still hurting because of overcapacity. But one home-builder appears to be doing gangbusters business…

The bailout era gets weird…

Habitat for Humanity Las Vegas ranks No. 3 on a list of rapidly growing charities ranked by Charity Navigator — the website that tracks what percentage of your donations actually help people, instead of going for overhead. Programs and services by Habitat’s Vegas division have grown 90% in the last three years.

So let’s see if we have this straight. The banks refuse to unload foreclosed houses because they don’t want to book a loss… and Habitat is building new houses for the people who’ve lost their homes to foreclosure. There’s no way a big glut in empty houses can’t form in this environment.

“The nasty things that you think are coming always take longer to arrive than you think they will, but once they get here, they make up for their tardiness by being worse than you thought they’d be.”

-Richard Maybury

News from Tucson: Man shoots self during standoff, police say

From the story:

A man facing foreclosure triggered a six-hour SWAT standoff in a northwest Tucson neighborhood Tuesday. Police said it ended when he took his own life.

It started Tuesday morning when Pima County’s regional SWAT team and Marana Police were called to a home off of Cortaro Farms Road. Deputies were there to serve civil paperwork to Neil Francis McHugh, 65, who was being evicted for the foreclosure of his home.

“This was not a surprise visit. Mr. McHugh knew his home was being foreclosed and that the deputy was going to serve paperwork to him that morning,” Marana Police Sgt. Tim Burnenkant told KGUN9 News.

Krugman apparently overlooked the potential for “Ghosts of Bubbles Past” when he opined that the Fed had run out of bubbles.

Technology
Ghosts of Bubbles Past Make Their Return
By Matt Egan
Published May 25, 2011 | FOXBusiness

Whether the gravity-defying price explosion was taking place in tech stocks, real estate or commodities, the bubbles of recent past all carried similar warning signs that signaled the party would soon be coming to a screeching halt.

These common threads included justifying surging prices by ignoring traditional metrics, a false belief that prices would always rise and overestimating the potential of new technologies that connect people.

Watch for these clues in the mushrooming social-networking space as some believe last week’s shocking $9 billion LinkedIn IPO signals another bubble is brewing in the tech world.

“People do lose their heads,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. “There’s that herd mentality and there’s always this tremendous bullish bias, regardless if we’re talking about Internet stocks, commodities or housing.”

Shelter as Securities?

The U.S. economy is still attempting to recover from the bursting of the incredible housing bubble, which was created by a flood of credit, a belief prices would never fall and fraud in the financial industry.

At the peak of the bubble, the hottest markets like Las Vegas and Miami were enjoying ridiculous price increases of 3% to 5% a month.

“Houses became almost like securities,” said Richard Sylla, an economics professor and financial historian at NYU. “The places were not even built yet and people were buying them and selling them before construction even started.”
…

Something is messed up with my mail.com account. I haven’t been getting emails from anyone! Argh!

HBB braintrust, what is a reliable, SIMPLE email provider? I would use pine again if I could! I refuse to use gmail.

Maybe storm shelter construction can occupy Midwest construction workers for the time being, as demand for housing adjusts to the Baby Boomer retirement era.

Storms Create a Scramble to Install Shelters
Joe Songer/THE BIRMINGHAM NEWS, via Associated Press
Danny Cole, at left, helped his girlfriend, Teresa Fugate, out of a shelter in the town of Phil Campbell, Ala., early this month.
By KIM SEVERSON
Published: May 25, 2011

ATLANTA — Gloria Jones climbed out of a relative’s storm shelter in an Oklahoma City suburb on Wednesday night and saw only rubble where the house used to be.

A shelter in Piedmont, Okla., northwest of Oklahoma City, where deadly storms struck Tuesday.

Eight people and two dogs had packed into that shelter, dodging a tornado that killed at least 10 people.

As soon as she gets over the shock of the disaster and helps her neighbors get back on their feet, she will order a shelter for her own house.

“I won’t go through that again without one,” she said. “It saved our lives.”

She, like thousands of others, is joining a storm shelter gold rush.

What is on track to be the deadliest tornado season in the nation’s history has prompted record-breaking sales for companies that sell safe rooms and shelters designed to withstand the powerful storms that have killed hundreds of people this spring.

From Minnesota to Texas — and especially in the tornado-ravaged South and Midwest — people are begging installers to get to their houses as soon as possible.

“We are having such a bad season that people say, ‘I thought about it for two years and put it off, but now I really need to get one,’ ” said Alisa Smith, director of sales for the Arkansas branch of Family Safe Shelter. Her company is scrambling to install more than 40 shelters a day around the country.

“Everybody would like to have one, and they want them yesterday,” she said.

But only in select cases are people required to build them. Government regulations mandating storm shelters, either public or private, are inconsistent. There are some regulations for apartment buildings, and some states, like Minnesota and Kansas, require that shelters be built near mobile home parks. Many areas, like Williamson County in Illinois, commandeer churches or schools to serve as voluntary shelters.

Alabama passed a law this year that requires shelters to be built into new schools. But cities do not require residents to build their own storm shelters.

“People in Alabama get very sensitive when you start to talk about government mandating certain things,” said William Bell, the mayor of Birmingham, which was hit with a deadly storm in April. “If you are going to put a mandate on people, how are you going to help them pay for it?”

When a tornado or hurricane is coming, people are largely on their own.

Perhaps less than 3 percent of the homes in the United States have storm shelters, said Ernst Kiesling, a professor of civil engineering at Texas Tech University and executive director of the National Storm Shelter Association.

The group began in 2000 as a way to increase the number of storm shelters in the country and improve industry standards. While some municipal building codes outline what constitutes a proper safe room or shelter, the field is largely unregulated.

A shelter can cost from about $3,000 for a concrete bunker to tens of thousands of dollars for elaborate steel rooms. A good one should have at least three deadbolts on the doors and walls that can withstand a piece of debris slamming into it at 100 miles per hour. It needs to be anchored to concrete pads, or, if buried underground, designed not to collapse when air pressure changes, according to the shelter association.

Not all of those on the market meet those standards, Dr. Kiesling said. Some are little more than septic tanks rigged to accommodate people, or use materials so flimsy the doors could be ripped off in a high wind.

“Almost anyone can start up a shelter business and build shelters,” he said.

Although the value of the storm cellar has long been recognized among rural Americans, the above-ground shelter has been around for about 30 years, said Dr. Kiesling, although the interest in storm shelters began to rise only recently.

For more than a decade, the Federal Emergency Management Agency has encouraged states to use disaster relief money to help homeowners and cities offset the cost of installing storm shelters. The program will pay up to 75 percent of the cost of approved shelters.
…