The Housing Bubble

Realtors Are Liars

abolish the Fed!

Defining a Safe Mortgage: Has It Gone Too Far?
usnews - Yahoo

A little-known regulation sparked by the 2008 housing meltdown has the potential to fundamentally change the landscape of the housing and mortgage markets, further tightening the stranglehold on credit availability and deepening the housing market downturn.

Known as the qualified residential mortgage (AMEX: QRM - News), this draft rule currently being debated by regulators could require prospective homebuyers to have at least a 20 percent down payment and face more stringent debt-to-income ratio standards to qualify for mortgages with the best interest rates. Opponents call the draft rule too narrow and say the tough requirements could severely restrict credit access to a broad swath of prospective homebuyers, effectively shrinking the pool of potential buyers needed to soak up the excess supply of homes in the struggling U.S. housing market.

“Real estate is 20 percent of the GDP, and you would do tremendous harm to real estate in this country,” says Jim Gillespie, CEO of Coldwell Banker Real Estate. “To me, the percent down isn’t nearly as important as [the borrower's] job, what their income is, what their assets are, and what their liabilities are. [Regulators] need to be a lot more realistic because you’re going to harm middle-income Americans, and you’re going to really harm first-time homebuyers.”

The QRM rules and other regulations outlined in the controversial Dodd-Frank financial reform legislation are designed to better align the cost and risk for loan originators and compel higher lending standards by requiring lenders to keep at least 5 percent of the risk of loans issued on their books–”skin in the game,” as it’s called–even if they repackage and sell the loan. That requirement is waived, however, for loans meeting QRM standards.

FBI informs family they bought stolen house in MurrietaTuesday, June 14, 2011

MURRIETA, Calif. (KABC) — A family is being told the house they thought they bought in Murrieta actually belongs to someone else. The family says they can’t stop making their mortgage payments.

Officials said it started when the original owners of the property vacated the house because they thought the bank was going to foreclose on them. That never happened, and the alleged scam artists swooped in and fraudulently sold it to the Zaharis.

The family said neither the title company, First American Title Insurance, nor the bank have done much to help answer how the title company allowed the purchase of the home in the first place.

Bank of America also said they’re a victim too and they’re working with the title company for a resolution.

http://abclocal.go.com/kabc/story?section=news/local/inland_empire&id=8191109 - 63k -

The only, and I mean THE ONLY article you’ll ever have to read to understand the bankster system and why it has to go.

http://www.counterpunch.org/hudson06172011.html

Bachmann vs. the Bailouts
When Only “Crazies” See the Bank Giveaway for What It Was
By MICHAEL HUDSON

Financial crashes were well understood for a hundred years after they became a normal financial phenomenon in the mid-19th century. Much like the buildup of plaque deposits in human veins and arteries, an accumulation of debt gained momentum exponentially until the economy crashed, wiping out bad debts – along with savings on the other side of the balance sheet. Physical property remained intact, although much was transferred from debtors to creditors. But clearing away the debt overhead from the economy’s circulatory system freed it to resume its upswing.

That was the positive role of crashes: They minimized the cost of debt service, bringing prices and income back in line with actual “real” costs of production. Debt claims were replaced by equity ownership. Housing prices were lower – and more affordable, being brought back in line with their actual rental value. Goods and services no longer had to incorporate the debt charges that the financial upswing had built into the system.

Financial crashes came suddenly. They often were triggered by a crop failure causing farmers to default, or “the autumnal drain” drew down bank liquidity when funds were needed to move the crops. Crashes often also revealed large financial fraud and “excesses.”

“Of all the mortgage woes at Bank of America, one of the less-publicized ones could turn into one of the most expensive: home-equity loans.”

Read more: http://www.charlotteobserver.com/2011/06/19/2389757/home-equity-loans-bring-major.html#ixzz1PjTIMuNh

Filed: Medical Inc.$ + ProFEE$$ional = fewer & fewer remain to be caught.

Published: June 17, 2011

Buena Park doctor faces discipline for multimillion-dollar tax fraud
By COURTNEY PERKES / THE ORANGE COUNTY REGISTER

When he was arrested, state agents seized more than $450,000 in cash and $50,000 in cashier’s checks at his Buena Park home. The investigation was done by the Los Angeles County District Attorney’s Office, the U.S. Department of Health and Human Services and the tax board.

Happy “1/2 of genetic-cominglulation” day Mr. Bear:

Should lenders speed up foreclosures?
June 19th, 2011, by Jeff Collins

SAN ANTONIO — Efforts to keep defaulting homeowners from losing their homes have largely failed, leaving few options apart from letting foreclosures take their course, attendees at a national real estate writers conference were told.

Speaking at the National Association of Real Estate Editors’ annual conference, Shaun White, RE/MAX Real Estate’s VP of corporate communications, said the foreclosure process needs to pick up speed.

For example, White said, the typical foreclosure — from default notice to auction — took 400 days in the first quarter of this year, vs. 340 days in the first quarter of 2010 and 151 days in 2007.

Lenders are only about halfway through an estimated 7 million to 8 million expected foreclosures. The federal loan modification process — Home Affordable Modification Program — has resulted in 670,000 successful loan modifications, too few to “put a dent in the problem.” said White:

“To end this, I think we need to sell houses. We need to start the foreclosure process on these houses and get them to move quicker. … A lot of these folks will have to move on and become renters.”

Austin Legal Aid attorney Robert Doggett vehemently disagreed.

What happened to efforts to reform housing regulations, give bankruptcy judges power to reduce loan balances and keep homeowners from losing their homes, he asked. The solution is not to put everyone out on the street. He said:

“The market didn’t really work. Why should we be so wedded to this response? … What did the homeowners get? They got massive job losses … It’s kind of appalling to me that it’s all about letting the market work. We paid the taxes. We paid the bills. We got no bailouts.”

(The Burritophiles pontificate about all things burrito.
Word of the Day:

comingulation: the ultimate state of melty gooshiness only achieved through perfect integration of burrito ingredients.)

Uh-oh. Sounds like a liquidity freeze-up hitting Eurozone banks - just like we saw before Lehman Bros crashed and nearly took down the whole financial house of cards system with it in 2008. I fully expect the Fed to orchestrate yet another bailout of hundreds of billions of new printing press dollars to the EU banksters to keep the global Ponzi scheme afloat for a bit longer.

http://www.telegraph.co.uk/finance/financialcrisis/8584442/UK-banks-abandon-eurozone-over-Greek-default-fears.html

Senior sources have revealed that leading banks, including Barclays and Standard Chartered, have radically reduced the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system.

Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks.

Barclays has also cut its exposure in recent months as senior managers have become increasingly concerned about developments among banks with large exposures to the troubled European countries Greece, Ireland, Spain, Italy and Portugal.

In its interim management statement, published in April, Barclays reported a wholesale exposure to Spain of £6.4bn, compared with £7.2bn last June, while its exposure to Italy has fallen by more than £100m.

One source said it was “inevitable” that British banks would look to minimise their potential losses in the event the eurozone crisis were to get worse. “Everyone wants to ensure that they are not badly affected by the crisis,” said one bank executive.

Fed Stimulus Ends Soon; Do We Still Need It?
by Jim Zarroli
Weekend Edition Sunday

“In this context, monetary policy cannot be a panacea,” Federal Reserve Chairman Ben Bernnake [SIC] says.
Enlarge Jim Watson/AFP/Getty Images

June 19, 2011

With the economy growing at a tepid pace last fall, the Federal Reserve made an unprecedented move.

It began buying up long-term government bonds from investors as a way of pouring money into the economy.

Many economists say the program probably helped stimulate growth, at least a little. Now it’s supposed to expire — and Fed officials say it won’t be coming back.

Fed officials never use the term themselves, but a lot of people have taken to calling the Fed’s stimulus program “quantitative easing.”

“The purpose is to perk up the economy, which it did — at least for a while,” California State University economist Sun Won Sohn says. He says the first round of quantitative easing took place in 2008 when the Fed bought up mortgage-backed securities. In a second round of quantitative easing last fall — commonly known as “QE2″ — the Fed bought up $600 billion worth of long-term treasury bonds. It’s a huge amount of money.

“When you flood the economy with money, reducing the long-term interest rates like mortgage rates, housing and mortgage markets are obviously helped,” Sohn says. “Also, with more liquidity in the economy, the value of the dollar declined, and that promoted our exports.”

Not everyone agrees that QE2 had its desired impact. The economy grew in the months after the program was started, but that could have been due to other factors. Economist Louis Crandall of Wrightson ICAP concedes that by flooding the markets with money, the Fed probably lowered mortgage rates a bit. But, he says, “the cost of this is that we’ve set a really ghastly precedent.”

Crandall points out that by buying treasury bonds, the Fed is essentially lending the government money. That’s not a big problem now, because interest rates are low and there are plenty of people who want to buy U.S. government debt. But he worries that if conditions tighten, the Fed may come under pressure to buy more debt as a way of helping the government solve its budget problems. That, he says, could lead to higher inflation.

As of now, QE2 is set to expire at the end of the month. In a speech in Atlanta this month, Fed Chairman Ben Bernanke noted that the economy faces a number of headwinds, like higher oil prices.

“In this context, monetary policy cannot be a panacea,” Bernanke said.

To economist David Malpass, president of the consulting firm Encima Global, Bernanke’s words were a clear signal that the Fed is done trying extraordinary measures like QE2 — at least for a while.

“He’s just saying, ‘Look, let’s be realistic, the Federal Reserve can’t cause growth, can’t cause employment, and so there’s going to have to be other tools, hard work within the economy,’ and I think he really meant better policy out of Washington in other areas,” Malpass says.
…

June 19, 2011, 9:00 a.m. EDT
U.S. economy’s rough patch: Here to stay?
Downturn in data stokes fresh concerns; Fed under microscope
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The latest dip in U.S. growth is widely viewed by economists as temporary, but worries are growing that the current “soft patch” could turn into quicksand.

No wonder. The engine of the recovery, the manufacturing sector, has cooled off. The stock market is in sharp retreat. Hiring seems to have slowed. Consumer confidence has fallen. And the specter of a financial crisis in Europe looms large because of the Greek debt imbroglio.

The Federal Reserve is expected to acknowledge this week that the U.S. economy has stumbled once again, though Chairman Ben Bernanke insists it will be a short-lived condition.

Maybe, but he has a lot of persuading to do.
…
MarketWatch consensus
See economic calendar
date report Consensus previous
June 21 Existing home sales 4.80 mln 5.05 mln
June 23 Jobless claims 415,000 414,000
June 23 New home sales 310,000 323,000
June 24 GDP revision 2.0% 1.8%
June 24 Durable goods orders 1.6% -3.6%

There goes your McMansion tract home development demand:

Diary of a Recession Baby
June 16, 2011, 12:01 a.m. EDT
Your well-paid, middle-class job is in danger
Some highly paid workers may find they need to switch careers
By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — The job market is changing, and it’s not just manufacturing jobs that are disappearing. Even some highly-paid workers may find themselves needing to re-tool their skills in the years ahead.

The ongoing movement of jobs to countries where labor is cheaper, plus the development of new technologies, may mean fewer opportunities for some well-paid positions in the U.S. over the next decade, said Larry Katz, an economist at Harvard University.

“Employment growth has stopped, or even declined, among many middle- class jobs that are high wage” and don’t require a college degree, Katz said.

“A lot of traditional middle-class, upper-middle-class jobs have been disappearing. If you look at general managers and middle-management jobs, those are ones that have been in decline and will decline further,” he said.

Workers making about $40,000 to $80,000 a year constitute the bulk of labor costs for many companies, and these workers may be on the chopping block, said Jeffrey Joerres, chief executive of ManpowerGroup, a Milwaukee-based staffing services firm.

“That’s your middle class,” Joerres said. “Companies are finding ways to reduce the number of people in those areas, and change the jobs to make them more simple, to reduce the skill that is required.”
…

“There’s no way to rule innocent men. The only power any government has is to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted–and you create a nation of law-breakers–and then you cash in on guilt. Now that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with. — Dr. Floyd Ferris

Meanwhile, the list of “offenses” that brings one to the malevolent attention of our for-profit legal system and bureaucrats continues to grow inexorably. The societal costs of such arrests is going to be staggering, as anyone so convicted is going to have a difficult if not impossible time finding employment with a “domestic violence” conviction on their record. And jobless people can’t pay their rent or mortgages. Now the Nanny State tells us it’s illegal to spank our kids - as if we don’t already have a surplus of indisciplined little monsters entering society.

http://www.volunteertv.com/national/headlines/Mom_pleads_guilty_to_spanking_own_child_124072014.html

The number of voices concerned about a new financial crisis grows…

“You should be scared,” says Neil Barofsky, who was inspector general of the $700 billion TARP program to bail out the banks until last spring. “I am scared.”

“You can’t not be scared,” he tells Dan Rather in a new interview. “You can’t look at what happened in the run-up to 2008 and see how it is not going to repeat itself, given what we have done.”

With comments like these, Barofsky made a lot of enemies, starting with Treasury Secretary Tim Geithner.

Time and again, Barofsky raked Geithner and his minions over the coals for their decisions — especially the one to pay AIG’s trading partners — Goldman Sachs, Deutsche Bank, etc. — 100 cents on the dollar for their toxic stew of worthless derivatives.

“The largest banks are now 20% larger today than they were going into the crisis,” Barofsky told Corporate Crime Reporter last week. Standard and Poor’s “estimated that the upfront costs of another bailout could be up to $5 trillion.

“And when you think about the focus on our budget issues, our deficit and our debt — what happens with the next crisis and we have to come up with another $5 trillion to bail out our system once again?

“It’s a terrifying concept.”

Which brings us back to our original question: What would trigger a crisis so massive as to spur a bailout seven times the size of the last one?

U.S. banks have $41 billion of exposure to Greece, according to a new report from the Bank for International Settlements (BIS). What form that exposure takes is something the report leaves to the imagination.

“We can only make educated guesses,” says economic consultant Kash Mansori — who reckons most of it is in the form of credit default swaps with European banks.

That is, if Greece defaults and the European banks take a bath on their Greek government bonds, they can come to the U.S. banks to collect on the “insurance policy” they took out.

All told, European banks have $165 billion in outstanding loans to Greece.

Ironically, that’s the same figure Greece is at risk of defaulting on come July 11.

According to this morning’s action in the credit default swaps market, traders give Greece a 78.5% probability of default — down slightly from yesterday’s 78.9%.

No wonder Alan Greenspan emerged from wherever he emerges from these days to tell Charlie Rose a Greek default could put U.S. banks “up against the wall.”

But even if U.S. banks could absorb a $41 billion hit from Greece, that’s not the whole story.

It turns out 44.3% of U.S. money market fund assets are invested in the short-term debt of European banks, according to a report from Fitch.

Yes, money market funds — the place where your money is supposed to be rock-solid safe. Until it’s not.

As happened the week of the Lehman-AIG meltdown in 2008, when the Reserve Primary Fund “broke the buck” and its net asset value fell below the customary $1 per share.

Moody’s, meanwhile, says 55% of these money-market holdings in Europe are in the commercial paper of French banks with massive Greek exposure — Societe Generale, BNP Paribas, Credit Agricole. French banks account for nearly one-third of the outstanding loans European banks have to Greece.

~ Clipped from The 5Min Forecast

Measures Amid Increasing Risk, Tsang Says
By Sophie Leung and Stephanie Tong - Jun 19(Bloomberg)

Hong Kong’s government may take more measures to curb property-price gains in the city as “risks” are rising, Financial Secretary John Tsang said.

“The current market situation is abnormal,” Tsang wrote in his official blog today. “It is difficult to predict the outlook of the property market but one thing for sure is that risks are increasing continuously,” he said. “We have no hesitation to increase the intensity of measures if necessary.”

Senior government officials have in the past year warned of an asset bubble in the Chinese city, where home prices have surged more than 70 percent since the start of 2009 on record low interest rates and an influx of buyers from other parts of China. Since late 2009, the government has raised minimum down payments for mortgage borrowers, increased land supply and imposed additional transaction taxes to curb real estate value.

“The government measures were not intended to bring down the property market,” Tsang said. “I am aware of some public concerns that the property market may soon enter a downward cycle and that more drastic measures may lead to a hard landing.”

Hong Kong’s “soaring” real-estate market may be at risk of a “sharp correction,” Standard & Poor’s said on June 15. The city’s Chief Executive Donald Tsang said on June 17 home prices are “quite frightening’’ as China’s growing wealth fuels increases of 2 percent a month. Tsang also said the government may introduce more measures to slow the property market.

California Man Faces Jail Time for Spending Tax Refund Given in Error
June 19, 2011 | FoxNews.com

Los Angeles – A Laguna Beach man faces jail time after failing to notify IRS authorities after a deposit of $110,000 was mistakenly put into his bank account, KCAL Reports.

Stephen McDow is charged with one felony count of grand theft by misappropriation of lost property, with an enhancement for taking property worth over $65,000, after finding the money in his own checking account.

The funds were supposed to be transferred to a Los Angeles woman but she provided the IRS with a bank account that had been closed. The account number was then later reassigned to McDow.

After the woman’s attorneys contacted McDow regarding the mistake, he informed her he had already spend around $60,000 to pay off student and car loans. He offered to return the money in monthly payments but the woman was unsatisfied with the suggestion.

If convicted, McDow faces up to four years in prison.

Special Report: Breakaway Wealth
With executive pay, rich pull away from rest of America
WASHINGTON POST -

It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

The evolution of executive grandeur — from very comfortable to jet-setting — reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening.

For years, statistics have depicted growing income disparity in the United States, and it has reached levels not seen since the Great Depression. In 2008, the last year for which data are available, for example, the top 0.1 percent of earners took in more than 10 percent of the personal income in the United States, including capital gains, and the top 1 percent took in more than 20 percent. But economists had little idea who these people were. How many were Wall street financiers? Sports stars? Entrepreneurs? Economists could only speculate, and debates over what is fair stalled.

Now a mounting body of economic research indicates that the rise in pay for company executives is a critical feature in the widening income gap.

The largest single chunk of the highest-income earners, it turns out, are executives and other managers in firms, according to a landmark analysis of tax returns by economists Jon Bakija, Adam Cole and Bradley T. Heim. These are not just executives from Wall Street, either, but from companies in even relatively mundane fields such as the milk business.

The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms. An additional 18 percent were managers at financial firms or financial professionals at any sort of firm. In all, nearly 60 percent fell into one of those two categories.

“There goes your McMansion tract home development demand:”
1. That’s fine with me. Two-story stucco canyom fish bowl living is not living. Add the HOA and it’s a toxic mix. We learned that lesson.
2. Baby Boomers who over leveraged will be moving down to a real home. Palatial will become a thing of the past, imo. (We don’t like the demographics, so don’t next door to us.)

Happy Father’s Day and Happy Hubby Day (child-free) HBB’ers!
Happy Men’s Day to all you unattached fellows.

Realtors need to be killed with a wooden stake to the heart.

After another 2 hours looking through listings and big suprise, asking prices for decent homes are actually going up. Bigger suprise, they are selling.

Many overpriced houses are still languishing on the market for in some cases years, many people are still living in homes they are not paying for in many cases for years and LLs are still collecting rent on houses that they are not paying the mortgage on. But the asking and selling price of new to the market decent houses in this area is IMHO going up.

At what point does it become the rational choice for homeowners with deeply underwater mortgages to simply go into default with the prospect of living rent free for years to come, while the banks ever so slowly work through their foreclosure backlogs? I would think all the news stories about the banks having years-worth of foreclosure backlogs to work through would encourage many, many homeowners to simply stop making payment. Needless to say, each homeowner who goes into default adds to the number of years worth of backlog the lenders face.

This story makes one point perfectly clear: THE U.S. MORTGAGE LENDING SYSTEM IS FUBAR.

Backlog of Cases Gives a Reprieve on Foreclosures
By DAVID STREITFELD
Published: June 19, 2011

Millions of homeowners in distress are getting some unexpected breathing room — lots of it in some places.

In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.

In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’” said Herb Blecher, an LPS senior vice president. “Now you’re probably not losing any sleep.”
…

This is from a NY Times article I just posted, hopefully soon to appear. There is something deeply wrong with a a mortgage lending system which enables people who have strategically defaulted on their loans to move out and collect rent on the money they borrowed, which they have stopped repaying, even though they have the means to make payment. Isn’t this pretty much a case of felony theft from the lender?

I have far more sympathy for those who are in default because they lost their income stream and simply don’t have the money available to make their mortgage payments.

…
To increase their odds of staying put, the foreclosed who can afford it are hiring lawyers, a move that can drastically slow down a case.

Mr. Stopa, the Florida lawyer, said he divided his clients into three groups. Some are unemployed or disabled and just getting by. Others are able to save money and improve their financial situation as their case drags on. The third group are those who have strategically defaulted. They can afford to pay but are taking advantage of the banks’ plodding pace. Often the members of this group rent out the foreclosed home and keep the proceeds.
…

How China Could Yet Fail Like Japan
Published: Tuesday, 14 Jun 2011 | 9:08 PM ET
By: Martin Wolf

Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precursor of surprising failure? The answer is: yes.

Japan’s gross domestic product per head (at purchasing power parity) jumped from a fifth of U.S. levels in 1950 to 90 percent in 1990. But this spectacular convergence went into reverse: by 2010, Japan’s GDP per head had fallen to 76 per cent of U.S. levels. China’s GDP per head jumped from 3 percent of U.S. levels in 1978, when Deng Xiaoping’s “reform and opening up” began, to a fifth of U.S. levels today. Is this going to continue as spectacularly over the next few decades or could China, too, surprise on the downside?
…

I’m hearing more and more of this “Run government like a business” crap.

Do we REALLY want government to be “run like a business”? Especially the way businesses are “run” in early 21st Century America?

I’ve worked in large and small businesses, and business has no claim on virtue, when it comes to managing their operations.

Imagine if all the countries laws were reviewed, using the “are they good for business” standard.

Some people need to be reminded that “excessive government regulation” is mainly due to people using their power (money and otherwise) to screw other people over.

The banksters/1%ers/MNCs have taken us hostage, and, according to the FBI, 27% of people who are taken hostage suffer from “Stockholm Syndrome”.

Which, coincidentally, is about the same percentage as registered Republican voters.

My impression is that the economics profession overplays the role of pessimism in spending habits and underestimates the role of budget constraints. Broke households and firms don’t spend much, no matter how irrationally exuberant they are over the green shoots meme.

Does gathering gloom raise risk of double dip?
With recovery limping along, pessimism could begin weighing on growth
By John W. Schoen Senior producer
updated 6/17/2011 1:34:32 PM ET

This month marks the second anniversary of an economic expansion that began at the end of what is now being called the Great Recession. But for millions of small businesses and households, the economic recovery has yet to arrive.

Frank Goodnight, owner of Diversified Graphics, a Salisbury, N.C., printing company with 12 employees, is among them. In 37 years, he has survived some tough economic times. But never like this.

“This recession is equal to the other four doubled,” he said. “Business has just been so bad for so long that right now we’re just hunkered down trying to survive.”

Consumer sentiment worsened more than expected in June on renewed concerns about the outlook for the economy, a survey released Friday showed . It was just the latest in a series of surveys that have pointed to a marked downward shift in the outlook for jobs, housing and the stock market.

Economists say the lingering effects of the Great Recession help explain why so many businesses, investors and consumers remain so gloomy about the outlook for the U.S. economy. The mood appears to be worsening, leading to a concern among economists and others of a self-fulfilling prophecy — that worried consumers will slow spending, further hampering the recovery, and perhaps raising the risk of a double-dip recession or at least yielding years of sluggish growth.

“Even though the US will probably escape another recession, the inability and reluctance of households to spend will result in a number of years of sub-par economic growth,” said Paul Dales, senior U.S. economist at Capital Economics.

“If you think things are going to get bad and you stop buying, things will get bad,” said Goodnight, the printing company owner. “And that’s where we are right now. Everyone is afraid of the deficits. They’re afraid of the new regulations that are coming down fairly soon. They’re afraid about health care. And no one’s going to make a major investment when there’s this much uncertainty in the air.”
…

Happy Father’s Day to all you HBB dads out there!

It really is time to leave the country. Go while you can.

Wall St. can now lie to investors.

So says the Supreme Court

http://www.activistpost.com/2011/06/supremes-make-it-official-wall-st-and.html

In its far-reaching Janus decision, a divided Supreme Court on June 13 issued a 5 to 4 Decision that virtually immunizes investment and corporate managers against civil fraud actions by investors and the SEC when they knowingly lie to the investing public in certain easily replicated circumstances.

Free deadbeat living for 62 years:

http://www.msnbc.msn.com/id/43456544/ns/business-us_business

500,000 homes in Florida’s shadow inventory:

Florida’s foreclosure backlog among nation’s worst
Nearly 10 percent of loans nationally and 20 percent in Florida are either in foreclosure or seriously delinquent on payments, according to the Mortgage Bankers Association.
By Kimberly Miller
Palm Beach Post Staff Writer
Updated: 11:09 p.m. Wednesday, March 17, 2010
Posted: 5:41 p.m. Wednesday, March 17, 2010

A crushing backlog of foreclosure cases has pushed Florida’s courts to request a one-time payment of $9.6 million to help purge the system and quicken a market recovery.

The Florida State Courts Administration estimates 500,000 property foreclosures are pending, including 55,000 in Palm Beach County.

Without additional resources to clear the cases, judges fear the bottleneck will continue to drag down home values, which aren’t expected to stabilize until the glut of foreclosures moves through the system.

It’s routine in Florida for foreclosures to take more than a year to settle, leaving deteriorating homes, unpaid association fees, and families facing uncertain futures.

“We want to be good partners in the economic recovery, not part of the problem,” said Peter Blanc, chief judge of the 15th Judicial Circuit Court in Palm Beach County. “We want to get properties through the courts and back onto the market. The numbers are just overwhelming.”

A Barclays Capital report last week found Florida has one of the highest foreclosure backlogs nationally, even singling out South Florida — Miami-Dade, Broward and Palm Beach counties — saying it is “remarkable” that the area may only be 18 percent finished with liquidating its delinquent property loans through foreclosure.
…

Interesting, isn’t it, that the reported 4.2m number of homes in shadow inventory is nearly double the number currently on the market for sale? Does the REIC actively limit the number of homes for sale, or is it just that the lenders are too overwhelmed with the number of homes in default to bring them to market on a timely basis?

I guess it is different in Florida.

June 16, 2011, 7:00 AM ET

More Homes Listed and Lingering, Data Show
By Nick Timiraos

More homes hit the market in May but asking prices dropped, providing further evidence of a disappointing run for the spring sales season.

Data from Realtor.com show that the number of homes listed for sale increased by 3.5% in May, the largest monthly increase of the year, to around 2.34 million listings. While more sellers typically list their homes for sale in the spring, inventories were down 14.3% from one year ago, when home-buyer tax credits had temporarily boosted home prices.
…

Is it good or bad if your community’s home values are at or near their bubble area peaks? I suppose the answer depends in large part on whether or not you own a home there.

JUNE 20, 2011

How to Tell if Your Housing Market Has Hit Bottom
Three essential clues may signal if better times are ahead
By DAVID CROOK

At first glance, you’re not likely to see a lot of similarities between stately Cambridge, Mass., and sprawling Denton, Texas.

Amid the continuing gloom in the U.S. housing market, you can find small pockets of home-price stability — communities that are actually recovering from the housing bust. WSJ’s David Crook talks with Kelsey Hubbard about what those communities can teach today’s home buyers and sellers.

Cambridge (population about 105,000) was already more than 200 years old when Denton (120,000) was founded in 1857. From the center of Cambridge, it’s an easy stroll across the Charles River into Boston. Denton, in contrast, sits where Interstate Highway 35 divides—to the west, it’s 41 miles to Fort Worth; to the east, 39 miles to Dallas.

But both are college towns. Cambridge is well known as the home of Harvard University and the Massachusetts Institute of Technology. Denton has North Texas State University and Texas Woman’s University.

They have something else in common, too. Both have pretty much recovered from the five-year-and-counting housing recession. And both provide invaluable clues for those looking to decipher whether their own markets have seen the worst of the crisis.

According to a statistical analysis performed for The Wall Street Journal by the online real-estate information and search firm Zillow, home values in a handful of communities are where they were just before the most frenzied days of the real-estate bubble. Focusing on communities with sufficient sales activity to produce statistically valid value estimates, Zillow spotted 25 places that are within single-digit percentage points of their home-value peaks. (Zillow found no communities where values have surpassed their high-water marks.) Not bad considering that home values in some major metropolitan areas are at half their bubble-era peaks.
…

Is inflation really the cure for unrepayable debt? Or does it just create moral hazard for more fiscal profligacy down the road?

As to the theory that what we need is a good round of inflation to erase our debt problem, I wonder what a new retiree facing the next thirty years of life on a fixed-income pension would say to this suggestion? I’m guessing retirees will find themselves getting the shaft if Mr Arend’s remedy is followed, much as they did during the Great Inflation of the 1970s. And I note that the 1970s era inflation led directly into the past 30 years of financial profligacy, demonstrating the pernicious effects of moral hazard to which I alluded above.

MONEY
JUNE 19, 2011

What This Country Needs Is a Good 5% CPI
By BRETT ARENDS

Inflation is heating up. The news last week was that the official rate, which had been rising all year, surged to 3.6% in May. That’s three times the level it was just last summer and the highest rate in nearly three years.

Markets were alarmed, and stocks sold off.

But is this news as bad as it sounds? Here’s a heretical thought. Maybe we actually need a serious dose of inflation to get this economy moving again — something like a sustained 5% annual rise in the Consumer Price Index (CPI).

Sure, it sounds crazy. And a lot of people won’t like it.

But everybody knows what really ails the U.S. economy. It isn’t, say, a lack of consumer confidence, or sluggish exports or worries about Greek government bonds.

It’s the debt, stupid.

Do we need a serious dose of inflation to get this economy moving again? It sounds like a crazy thought. Off the wall. And, doubtless, unpopular with many folks. But is it right? Brett Arends explores the issue.

Today American families owe $13.3 trillion — in mortgage debt and home-equity loans, credit-card debt and other revolving loans. As recently as 1999, it was less than half as much. Paying the interest, and trying to pay down the principal, siphons off so much of their spare cash. If they also get hit by higher gas prices, or they lose their jobs, the amount left over to spend down at the mall vanishes completely.

And despite four years of trying, they have barely made a dent in the amount they owe. Household debt has fallen less than 4% from its peak. And a lot of that has been write-offs by the banks.

Throw in corporate and U.S.-government debt and the total is at least three times the size of the gross domestic product. We are the most indebted nation in the history of the world. No one comes close. Modern America is to borrowing what Renaissance Italy was to the arts and Shakespeare’s England was to the theater.

We’re No. 1. The all-time champs. They can retire the cup.

How we got into this mess is one story. But how do we get out of it?

The last time we were in this kind of trouble was, of course, the Great Depression. And what really cured the problem was World War II.

Sure, it boosted demand for munitions. And it destroyed our economic competitors. But the most visible way it cured the problem was by injecting a massive amount of inflation into the U.S. economy. From 1940 through 1948, the consumer-price index rocketed 70%.

Inflation cures a debt hangover. It may be the only known cure. The reason? The value of the debt stays the same in dollars, but there are more and more dollars to go around and pay the debt off.

Naturally, each dollar is worth less. It is a default by stealth.

It has to be general inflation. You need wages and asset values to rise, not just consumer prices.

Sure, it sounds topsy-turvy. After all, we all hate inflation, right? We hate seeing prices rise at the gas pump. We hate seeing prices rise in the store. This year’s jump in prices, from food to fuel, has us all grinding our teeth.
…

Tiny oil town, mired in debt, is under investigation for targeting Latino drivers, taking cars
By Associated Press, Sunday, June 19, 8:01 AM

( Tracie Cone / Associated Press ) - In this photo taken June 13, 2011, a sign warning motorists on Highway 166 that some Maricopa police tactics might be heavy handed is seen near the Shell gas station in Maricopa, Calif. Its own county grand jury has recommended that this tiny San Joaquin Valley community be dissolved because It’s too poor to be a town anymore. Though surrounded by oil derricks, the Kern Coiunty [SIC] community is hopelessly in debt, can’t pay its bills and has no source of revenue to contribute to a recovery.

MARICOPA, Calif. — For nearly a century the fortunes of this tiny town were tied to the oil fields that surrounded it and the people who worked them.

They came by the thousands but have dwindled to 1,154 — a combination of oilers, farm workers and retirees drawn to a place of unrelenting sun and tumbleweeds 50 miles southwest of Bakersfield.

Now on the eve of Maricopa’s 100th anniversary the county grand jury is calling for its dismantling, describing a place in political chaos:

A city council clueless about its rights and responsibilities. An acting police chief hiring a tow company to impound vehicles of unlicensed drivers, then recruiting volunteer officers to write the necessary tickets, mostly to Latinos. A city mired in debt, borrowing tow company money to make payroll, unable to pay for even its county fire service.

“I care about this place very deeply, but I don’t know how we’re going to handle this,” said Council Member S. Cynthia Tonkin, 75, who said she ran to reclaim her seat on the board last fall after a 15-year absence because police tactics were giving the town a bad reputation.
…