The Housing Bubble

Regulators shut banks in Illinois and Colorado

Posted on Friday, 07.08.11

The Associated Press
WASHINGTON — Regulators shut down a bank in Illinois and two in Colorado on Friday, boosting to 51 the number of U.S. bank failures this year.

The latest closings come even as the overall pace of bank failures has slowed as the economy gradually improves and banks work their way through the bad debt accumulated during the financial crisis. Through July 9 last year, regulators had closed 90 banks.

The Federal Deposit Insurance Corp. on Friday seized First Chicago Bank & Trust in Chicago and Colorado Capital Bank in Castle Rock, Colo., and Signature Bank, in Windsor, Colo.

http://www.miamiherald.com/2011/07/08/2305920/regulators-shut-banks-in-illinois.html - -

This high unemployment saga seems as though it’s going to continue through 2016 at least. For years I figured 2012 will be the bottom of RE prices, then a flat valley for ten years. Now I’m thinking 2016 will be the bottom relative to 2006 and then a flat valley through 2026.

We will have an austerity deal pulled on us. And it will be so painful that it will greatly discourage home ownership for a generation. We will have higher taxes and less government spending, higher unemployment.

But it could save the dollar.

Cash is king, as Combo says. Debt-Free is part of that deal.

Found this nugget searching for my non-profit scam of the week. Anyone concerned FBs might receive undo benefits from Federal homemoaner programs, rest easy. By the time the credit counseling parasites siphon their share, little will remain….

Non-Profit Working to Help Unemployed Western Massachusetts Homeowners Access $5 Million Through Federal Relief Program

(PRWEB) July 07, 2011
The Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the United States Department of Housing and Urban Development to implement the Emergency Homeowners’ Loan Program (EHLP), which is designed to assist homeowners who’ve experienced a substantial loss of income due to unemployment, underemployment, or medical condition. Non-profit housing counseling agencies across the country have been charged with qualifying homeowners for EHLP. Local services for the program are available through Cambridge Credit Counseling Corp. in Agawam.

http://news.yahoo.com/non-profit-working-help-unemployed-western-massachusetts-homeowners-190215832.html

Appears Cambridge Credit Counseling is still at it:

Some nonprofit credit counselors are essentially call centers with sales staff pushing consumers into debt management plans with hidden high fees, a Congressional report charges. Debtors seeking help receive little or no counseling. And millions of dollars that debtors pay in fees end up going toward executive salaries or are funneled to for-profit affiliates that provide processing designed to enroll as many debtors as possible into plans that charge exorbitant fees that are funneled to affiliated for-profit companies, the report alleges.

Also absent was John Puccio, founder and president of Massachusetts-based Cambridge Credit Counseling Corp. He reportedly suffered a stroke Tuesday. A Cambridge Credit spokesman said the subcommittee’s “bias” contributed to Puccio’s illness.

Cambridge’s executive pay has raised eyebrows. Puccio allegedly received $624,000 in 2002. By comparison, a director of a traditional credit counseling agency in Minnesota testified that he earned $60,000

http://www.consumeraffairs.com/news04/credit_counseling.html

More:

Non profit credit counseling agencies benefit in so many ways from their non profit label. One of the greatest benefits is the tax exemption they receive. These agencies are federal tax exempt and in most states, they are exempt from state taxes as well. Being tax exempt makes them eligible for grants, both private and public. In some states non profit companies are not subject to consumer protection laws, which is a great benefit. Also, Fair Share Contributions require non profit status therefore creditors are more favorable to non profit credit counseling companies.Though many credit counseling companies are very proud of their non-profit status most exist solely to make money. But the non-profit label works as nice bait to draw customers in

Article Source: http://EzineArticles.com/1699977

A credit counseling agency typically receives most of its compensation from the creditors to whom the debt payments are distributed. This funding relationship has led many to believe that credit counseling agencies are merely a collections wing of the creditors. This fee income, known as “Fair Share,” are contributions from the creditors that originally earned the agency 15% of the amount recovered. However, in recent years, Fair Share contributions have dwindled steadily, with contributions of 4-10% being the most common.
Still the NFCC considers bankcard companies to be one of their primary “constituents,” and the NFCC website promotes the fact that they collect $5 billion for creditors each year. It also promotes their efforts to steer consumers away from bankruptcy.

http://www.telegraph.co.uk/news/worldnews/asia/china/8620759/Guangzhou-Opera-House-falling-apart.html

Guangzhou Opera House, one of the showcase edifices of China’s speculation-fueled construction boom, is falling apart. Who’d have thunk.

Wonder what will happen when all those Chinese Trump-wannbes realize the tower block apartments they purchased for 8 X median income or more are literally falling apart around them. Something tells me they won’t be happy. Neither will their lenders, once they stop paying.

NC Officials Warn of Flood of Fake Property Claims

http://www.beaumontenterprise.com/news/article/NC-officials-warn-of-flood-of-fake-property-claims-1458511.php

WEDDINGTON, N.C. (AP) — Officials at Charlotte-area courthouses say they are seeing epidemic of frivolous paperwork filed by people claiming the right to seize foreclosed property.

The bogus deeds are being filed by people who claim to belong to the Moorish Science Temple of America, an obscure religious sect founded in the 1920s with beliefs loosely connected to Islam.

In one incident, a real estate agent and a couple viewing a foreclosed $700,000 home in the Union County town of Weddington were confronted on June 1 by two men who produced a deed claiming the home in the name of the Moorish Science Temple, The Mecklenburg Times reported.

“These two guys came in, showed the purported deed and said the Moorish Temple now owned this house,” Detective Brian Keziah of the Union County Sheriff’s Department. “They took over the house.”

http://www.bloomberg.com/apps/quote?ticker=GBTPGR2:IND

Italian bonds are going parabolic. Spain’s are shooting up too. These country’s debt load is several multiples larger than Greece and Portugal combined. Who thinks this is going to end well?

Psalm 37:21 NIV

The wicked borrow and do not repay, but the righteous give generously;

Well that`s not what I have been reading…..

Bruce Marks, the CEO of the Boston-based NACA

The righteous borrow and do not repay, because the wicked don`t know who owns their loan;

http://www.bloomberg.com/news/2011-07-08/caterpillar-accused-of-demoting-tax-whistleblower.html

What are the odds of the Republicrats going after corporate grifters for unpaid taxes? Nil, I’d say.

Desperate homeowners line up for mortgage modification marathon

By Kimberly Miller Palm Beach Post Staff Writer
Updated: 10:18 a.m. Tuesday, Aug. 31, 2010
Posted: 6:52 a.m. Friday, Aug. 27, 2010

WEST PALM BEACH ­- The Palm Beach County Convention Center filled again Friday with tales of mortgage woe.

More than 50,000 people are expected to attend the five-day, around-the-clock event, said Bruce Marks, the CEO of the Boston-based NACA. Considering many people come in pairs, that could mean as many as 25,000 home loans will be worked on by the army of NACA counselors, who wear yellow T-shirts bearing the NACA slogan: “Loan Sharks Beware.”

Marks said he doesn’t use the federal Making Home Affordable program, which allows lenders to extend a loan to 40 years and award a modification with a five-year expiration date.

Instead, he said he negotiates deals with banks that work with him because “it makes good business sense.”

“We get the job done, and we get it done in one shot,” said Marks, whose group has received $41.5 million in federal aid from the National Foreclosure Mitigation Counseling Program.

NACA also gets a $500 payment for every permanent modification that results in three successful mortgage payments, Marks said.

“We are suing Chase,” Marks said to uproarious applause from the crowd. “We want to make Chase the example of don’t mess with NACA and don’t mess with homeowners.”

“I would encourage everyone to be patient because NACA is really doing a great job,” said West Palm Beach resident Jean Kercius, 38, who was pulled to a podium in the center of the convention center floor to announce his successful loan modification.

Kercius, who recently lost his job as a nursing assistant, got a fixed 2 percent interest rate and a principal reduction that cut his monthly payment from $1,333 to $716.

“I am overwhelmed and overjoyed,” he said.

http://www.palmbeachpost.com/money/real-estate/desperate-homeowners-line-up-for-mortgage-modification-marathon-882338.html - 80k -

Item: A dismal June employment report shows that employers are adding nowhere near as many jobs as they normally do this long after a recession has ended.

Unemployment has climbed for three straight months and is now at 9.2 percent. There’s no precedent, in data going back to 1948*, for such a high rate two years into what economists say is a recovery.

← The unemployment number (9.2 percent) is the result of “seasonal adjustment” and “smoothing” by the U.S. Department of Labor. Economists of every stripe generally agree that total unemployment in the United States is well into the double-digit range.

So - where are the soup lines made famous during high unemployment in the 1930s? We’ve outgrown old fashioned acts of charity. We send out checks, instead, so that people may buy their own soup.
High unemployment numbers are a setback. This puts even greater pressure on the Administration and Congress to stand out of the way and let the economy recover on its own.

Fans of big government will be aghast. The economy should recover “on its own?” That’s blasphemy! Everyone knows it takes the wise minds of our government leaders to mend a broken economy and set the nation back on the path to prosperity and happiness.

But the economy is in near shambles. Government tinkering has been enormously expensive, time consuming, and unproductive. We have been led to the brink of - - what? A long, dreary depression recession?

In the long-ago of sound money, bubbles occurred now and then. They would eventually pop - they always do - and a financial panic would sweep in to clear out the deadwood. Very painful. Gamblers were ruined. Many innocents, too. The government had no tools to do much about it and the panic was usually ended in a year or two.

By the 1930s the federal government had come into the economic management business and stretched the economic correction that started with the Wall Street crash of 1929 into a decade of misery, ended only by the war emergency of the early 1940s. The Great Depression would have been much briefer had Uncle Sam kept out of the way.

Poor guy! He keeps making the same mistakes!

http://www.thejakartapost.com/news/2011/07/09/imf-agrees-give-greece-3-billion-euros.html

IMF hands Greece $4.2 billion dollars ($780 million from US taxpayers who fund the IMF). Thank you, Republicrats, for throwing our money down another rathole.

Not directly related to housing, but about the current trend of rewarding the law-breakers:

“Illegal immigrant in-state tuition begins in Connecticut”

http://www.theday.com/article/20110708/NWS12/307089953/1070/BIZ04

An ILLEGAL alien can now get reduced in-state tuition in CT (an average saving of $17K/yr, or $70K for a four year degree). Meanwhile, legal, law-abiding, tax-paying US citizens from the neighboring states of NY, RI, and MA will have to continue to pay out-of-state tuition.

Ain’t law-breaking sweet!

Realtors Are Liars

Gubmint worshipers will fall head over heals in love with this…

From Simon Black of Sovereign Man

Boiling Frog Alert: Congress Wants Automatic Wage Deductions To Pay Down The Debt

Folks… you just can’t make this stuff up.

On July 6th, just two days ago, at least a dozen busybody Congressmen sponsored the introduction of HR 2411, the “Reduce America’s Debt Now Act of 2011.” They always come up with fantastic names for these pieces of legislation… and rest assured, the better/more patriotic the name, the more ominous the bill. This one follows the pattern.

HR 2411 states that every worker in America should be able to voluntarily have a portion of his/her wages automatically withheld and sent directly to the Treasury Department for the purposes of paying down the federal debt.

“Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury…”

That’s right. Uncle Sam is so broke that he wants to give all the good little Americans out there the opportunity to contribute an even greater portion of their paychecks to finance government largess.

Desperate? Hmmm…. Don’t worry, it gets better.

Obviously, if an employee feels so compelled and should elect to have a portion of his/her paycheck withheld, the onus of responsibility is now on the employer to make it happen. The employer has to do all the paperwork, withhold the money, send the payment to the Treasury, maintain the account records, and probably submit to all kinds of new filing requirements.

You can imagine that, if passed, the bill will result in a host of new IRS regulations, complete with a battery of penalties for employers who don’t fill out the paperwork properly, submit filings on time, or make some administrative mistake.

Think about it: if a small business owner has one single employee who is dumb enough to think that it’s his patriotic duty to pay down the debt and decides to contribute $1/month, that owner will have the responsibility for all kinds of new forms and filings, plus submit to new ‘debt reduction audits.’

But don’t worry, it gets even better.

So let’s say there are millions of sheep out there who elect to donate a portion of their toil and sweat so that the Chinese and big financial institutions don’t have to worry about an American default. How does Congress plan on rewarding its most patriotic citizens? By sticking it to them on their taxes, of course.

HR 2411 stipulates that any contribution made to the Treasury in order to pay down the federal debt IS NOT TAX DEDUCTIBLE.

“The [Treasury] Secretary shall include. . . a reasonably conspicuous statement that any amounts deducted and withheld from wages. . . are not deductible as charitable contributions for Federal income tax purposes.”

Imagine this scenario: You make $100,000/year. In a fit of complete insanity, you decide that you want to withhold your entire annual salary to pay down the debt. Hey, you can always move in with mom for the next year, right?

Well guess what– Uncle Sam will gladly take your money… and then STILL expect you to pay taxes on the $100,000 that you earned, so you’d have to come out of pocket with an additional $40,000 or so.

Don’t worry, though. The Social Security and Medicare wages are reduced by the amount that you withhold, making you only liable for state and federal taxes. Seems like a good deal, eh comrades?

There are so many things utterly wrong with his piece of legislation, it’s hard to know where to begin other than by saying that such intellectual and philosophical perversion is only capable of springing from unprincipled sociopaths whose sole capability is the destruction of value.

There’s a great quote from Atlas Shrugged that comes to mind which sums this all up:

“[W]hen you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you. . . you may know that your society is doomed.”

We’ve discussed the story of the boiling frog so many times before– a frog, when put into a pot of water and slowly brought to a boil, doesn’t realize that he’s in danger until its too late. I think the boiling frog just got a little hotter. Have you hit your breaking point yet?

Consumers borrowed more for 8th month in May
Consumers borrowed more in May and increased credit use for only 2nd time in nearly 3 years.

WASHINGTON (AP) — Americans took on more debt in May and used their credit cards more for only the second time in nearly three years. Consumers stepped up their borrowing just as the economy began to slump and hiring slowed.

The Federal Reserve said Friday that consumer borrowing rose $5.1 billion in May, the eighth straight monthly increase. It followed a revised gain of $5.7 billion in April. Borrowing in the category that covers credit cards increased, as did borrowing in the category for auto and student loans.

The overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion in May. That was just 1.7 percent higher than the nearly four-year low of $2.39 trillion hit in September.

Borrowing is a sign of confidence in the economy. Consumers tend to take on more debt when they feel wealthier. That boosts consumer spending. Ultimately, it gives businesses more faith to expand and hire. But an increase in credit card debt can also be a sign of people falling on harder times.

The economy added just 18,000 jobs in June, the fewest in nine months, the Labor Department said Friday. It was the second straight month of feeble job growth. The unemployment rate rose to 9.2 percent, the highest rate of the year.

Here’s an item from the website “Gawker” that helps understand how the zombies operate:

John Cook – The White House released its annual salary report last week, and as usual, it’s nice to work for Barack Obama: Most staffers who were there for more than a year got a salary bump. A bigger one than you did.

The last time we checked in on White House salaries, we found that an astonishing 75% of continuing staffers got raises from 2009 to 2010 – a huge number given the fact that, according to compensation experts, most companies had skipped routine raises that year in reaction to the economic crisis that the White House was busy failing to solve. This time around – from 2010 to 2011 – the ratio is a little less dramatic. Of the 270 White House staffers who have been there for more than a year, 146 – or 54% – received raises. The average salary increase was 8%. If you look at only staffers who got raises, the average increase was twice that.

That’s a much bigger raise than the average white-collar worker got. According to a survey conducted last year by the human resources consulting firm Mercer, most firms were projecting a 3% increase in base pay for executives. White House workers did nearly three times as well.

One of Obama’s first acts as president was to freeze the salaries of all White House officials earning more than $100,000 because “during this period of economic emergency, families are tightening their belts, and so should Washington.” Two years later, he extended that policy to all federal workers, using the same logic: “Small businesses and families are tightening their belts. Their government should too.” But the across-the-board freeze didn’t take effect until January 1, 2011, so the most recent report (which goes back to July 2010) features some eye-opening raises, like special assistant to the president for economic policy Matthew Vogel’s $59,000, 82% raise to an annual salary of $130,500, or director of African American media Kevin Lewis’ $36,000, 86% pay hike.

How about that…a “director of African American media?” On the White House payroll. Just what the country needs.

Read more: Imperial Suicide http://dailyreckoning.com/imperial-suicide/#ixzz1RcYoCHSO

The problem with the US over the last 40 or 50 years is that there’s too much free money…

We raise three generations of population who are untied from the basics of monetary education – millions of minds poisoned by Economics 101 in universities across the land. “Elastic currency,” courtesy of the Fed.

Media & political classes are no smarter than the dummies who walk the land, so they make policy based on “free” money from the Fed… Deficits don’t matter.

Currency circulates and inflates the general price levels… People learn to live with it. Even make a virtue of it, doing things like “buy as much house as you can afford; the market will rise and you’ll make money.” That kind of idiocy.

There’s all this excess currency sloshing around the economy, leading to people doing stupid things like drugs, too much alcohol, divorce (Cherchez les femmes), food (obesity), theft, etc…

“Wars cost much silver,” wrote Sun Tzu. [Lack of money] kept a lot of nations out of a lot of trouble over the years. Not any more. Who needs silver when you can just print up bricks of paper cash and fly it over to Iraq and such.

Kind of gives a whole new meaning to the term American Exceptionalism… yep, we’re exceptional. That’s for sure. More prisoners in jail than anywhere else. We fight longer wars than anyone else…and don’t win. We give more welfare to more idle people than anywhere else on earth…and we’re proud of it.

There’s so much money that we don’t know how to say no. No limits. Just raise the debt ceiling…spend until you can’t spend any more. Then spend some more.

Well, there are no limits until there are limits. Per Ayn Rand… “You can avoid reality. But you cannot avoid the consequences of avoiding reality.”

In the space of 40 years the US lost its winning ways. Real, hourly wages stopped growing in 1973. Stock prices, in real terms, peaked out in ’99…about the same time that real, per capita private sector growth came to a halt. The number of full time jobs topped out about two years later…and housing hit its peak in 2007.

“The people will be crushed under the burden of taxes,
loan after loan will be floated; after having drained the
present, the State will devour the future.”

- Frédéric Bastiat, French libertarian economist, 1850

How bad is it? Pawn shops, payday lenders are hot
Down on the US? Consider stocks that rise when things fall. Pawn shops, payday lenders are up

NEW YORK (AP) — As the jobless rate inches up and the economic recovery sputters, investors looking for a few good stocks may want to follow the money — or rather the TV, the beloved Fender guitar, the baubles from grandma, the wedding ring.

Profits at pawn shop operator Ezcorp Inc. have jumped by an average 46 percent annually for five years. The stock has doubled from a year ago, to about $38. And the Wall Street pros who analyze the company think it will go higher yet. All seven of them are telling investors to buy the Austin, Texas, company.

Is the economy still just in a soft patch? A hard patch? Will the market rise or drop? Even experts are just guessing. In investing, it’s often better to focus on what you can safely predict, even if that safety is found in companies that thrive on hard times. One good bet: The jobless aren’t likely to find work anytime soon. And companies profiting from their bad fortune will continue to do so.

-This sounds like a grand way to waste several hundred billion, most of which will come from the U.S. taxpayer. The parasite just keeps feeding and growing.

U.N. Eyes Playground for Site of Second Expensive NYC High-Rise
By George Russell July 08, 2011| FoxNews.com

The United Nations, which is already spending $1.9 billion to renovate its New York headquarters, hopes to build a second high-rise nearby on two-thirds of an acre that is currently used as a city playground.

The new building, which could be as much as 900,000 square feet in area, could rise as high as the U.N.’s landmark Secretariat building, and according to a New York City real estate expert consulted by Fox News, could cost anywhere from $370 to $475 million—excluding land costs. Those figures do not include any additional costs for security features, which could hike the total much higher.

The United Nations hopes to build a second building in New York that could rise as high as its landmark Secretariat building.

The proposed addition to the U.N. headquarters could also pose extensive new security concerns for the U.N. and for New York City. Only last February, the U.S. government agreed to foot the bill for $100 million in security improvements to the current U.N. headquarters campus, after city officials expressed intense behind-the-scenes frustration at the vulnerabilities of the existing U.N. complex.

I’ll never understand why people pay for these “services” when they can handle it themselves. I know, I have been through it, takes time and perseverance but it is doable. You can work out a settlement with the IRS yourself.

JK Harris stopped making payments
Firm still owes $4 million in class-action settlement
By David Slade postandcourier.com Saturday, July 9, 2011

GOOSE CREEK — Tough economic times may sound like a growth opportunity for a company that sells tax-dispute resolution services, but officials at JK Harris said the company was not spared by the recession.

And that’s why the locally based company, which bills itself as the nation’s largest tax representation firm, stopped making payments on a $6 million class-action settlement reached in 2007 with more than 18,000 former clients.

“We weren’t in a position to continue making the payments, so the attorneys went back in for a new order,” said Heidi Benton, vice president for legal affairs. “If we had the money of course we would pay it, because we don’t want this looming over our head.”

The company still owes about $4 million toward that settlement. No payments have been made since early last year.

The plaintiffs were people who contacted JK Harris for help negotiating a reduction in tax debt owed to the IRS. In that case and in many others brought by state attorneys general, the company was accused of taking money from clients who did not qualify for the government program known as “offers in compromise.”

The settlement specified 16 business practices the company agreed to modify, mainly related to advertising and billing. Despite that agreement, complaints kept coming.

Cleveland Daniels of North Charleston is among former clients upset with JK Harris. He said he ran into a large IRS tax debt after cashing out a retirement fund to comply with a divorce settlement, and sought help from the company about three years ago.

“I seen their commercial on TV - the pretty guy with the jacket,” Daniels said. “I paid them about $3,600. After a year and a half of paying them, they said they couldn’t help me and have a nice day.”

Benton said the company couldn’t discuss an individual client’s case without a signed release from the client.

The S.C. Department of Consumer Affairs has received 137 complaints about JK Harris in the past three years, according to Carri Grube Lybarker, the acting administrator.

One of those complaints came from Dot Scott, also of North Charleston, who complained to the department about her 2009 experience with JK Harris. Like Daniels, Scott said she saw a company ad and sought help negotiating a reduction in a five-figure federal tax debt.

She said the company accepted her payment, later told her she wouldn’t qualify for an “offer in compromise,” and balked at returning her money.

“I was unrelenting,” said Scott, who is head of the Charleston NAACP. She said she eventually got half her money back.

The complaints by Daniels and Scott came several years too late to have been eligible for the class-action case.

JK Harris spokeswoman Gina Anton said changes were made in 2009 to address procedures that may have led to complaints. She said there have been few complaints since then.

“We analyze a person’s tax problems and, from there, present the options available from the IRS,” Anton said. “Each step costs a certain amount, and if the client isn’t happy they are welcome to cancel the service and ask for a refund, which would be determined on a pro-rata basis.”

Swiss Parliament to discuss gold franc
Right-wing party seeks way back to gold standard

ZURICH (MarketWatch) — The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.

The initiative is part of “Healthy Currency,” a campaign sponsored by politicians from the right-wing Swiss People’s Party (SVP) — the country’s biggest — that is seeking to capitalize on popular fears about global financial turmoil and inflation to reverse the government’s current policy on gold.

“I can imagine that this will spark some sort of debate about gold and there may be some pressure to accept the parallel currency,” said Dr. Gebhard Kirchgaessner, an economics professor at St. Gallen University. “But it won’t have any real effect on the economy. It seems incredible to imagine that there are people out there willing to buy millions of these things.”

Switzerland, which in 2000 became one of the last countries to decouple its currency from gold, is not the only place to contemplate a change in the precious metal’s role amid controversy over government involvement in the economy. In March, Utah became the first state in the U.S. to legalize gold and silver coins as currency, while similar legislation was considered in Montana, Missouri, Colorado, Idaho and Indiana.

“I want Swiss people to have the freedom to choose a completely different currency,” said Thomas Jacob, the man behind the gold franc concept. ”Today’s monetary system is all backed by debt — all backed by nothing — and I want people to realize this.”

Madam Moombat should run for prez. she is right on top of things and has a wonderful grasp of how to fix the problems…

Has Nancy Pelosi Been Marginalized in the Debt Debate?
By Jay Newton-Small Friday, July 8, 2011 |swampland.time.com

At Thursday’s White House meeting between President Obama and congressional leaders, Treasury Secretary Tim Geithner laid out in stark terms the awful economic repercussions of allowing the debt ceiling to lapse. Everyone in the room agreed that defaulting on U.S. debt would be disastrous and that something must be done. At that point, Nancy Pelosi asked: Why couldn’t the debt ceiling be decoupled from deficit reduction?

Her query, after so many weeks of reports and talks centered on deficit reduction tied to a debt ceiling deal, visibly surprised some leaders in the room, several Republican and Democratic sources say. Obama politely informed the House Minority Leader, those same sources say, that that train had left the station weeks ago.

To be fair, many Democrats would love to raise the debt ceiling with a clean vote, without conditions, but House test votes last month proved such a move to be impossible in the current climate. And Pelosi had already pledged herself earlier in Thursday’s meeting to passing a large deficit reduction package. So, why not pass the debt ceiling now, she reasoned, and give negotiators more time to hash out the bigger package? “Leader Pelosi and the House leadership have worked closely together to achieve consensus and unity of message in the caucus,” said her spokesman, Drew Hammill. “With respect to the ongoing negotiations, Leader Pelosi is committed to finding a balanced, bipartisan package that doesn’t cut Medicare and Social Security benefits.”

But some Republican and Democratic sources point to Pelosi’s question in Thursday’s meeting as one that highlights how out of touch Pelosi has become on policy as she crisscrosses the country fundraising and recruiting candidates, working to regain the majority and her speakership. The President, these same sources suggested, could rely on House Minority Whip Steny Hoyer to deliver moderate Democrats to help pass the debt ceiling, thus circumventing Pelosi.”I think it’s clear she is not taken seriously by White House, Senate and Republican leadership,” said one Democratic member on the condition of anonymity. Pelosi’s staff, while confirming that she posed the question in Thursday’s meeting, scoffed at the idea she’s not deeply involved in policy. “Leader Pelosi knows how to walk and eat chocolate at the same time,” Hammill said.

Why not just fire up the QE unlimited express and quit clowning around. It’s plain for everyone to see that to “fix” this mess we must go to straight to hell in deeper debt. It will be different this time. Print bastards, print!

Unemployment Puts Pressure on Fed for Third Stimulus Round, Economists Say. (Bloomberg)

Pressure is increasing on the Federal Reserve to stimulate the economy through a third round of bond purchases after a U.S. government report showed employers hiring at the slowest pace in nine months, economists said.

U.S. businesses expanded payrolls by 18,000 in June and the unemployment rate rose to 9.2 percent, marking the third consecutive monthly increase. The rise in payrolls fell below the most pessimistic forecast in a Bloomberg News survey of economists, which called for a 105,000 gain.

Should unemployment climb and growth slow in coming months, then “another round of bond buying would be a distinct possibility,” said Sung Won Sohn, an economics professor at California State University-Channel Islands. “If the unemployment rate were to rise to 10 percent, a psychologically important figure, there would be a hue and cry for the Fed to do more, especially from politicians,” he said.

The Fed started a program in November to buy $600 billion in Treasury securities, known as quantitative easing, when the unemployment rate was 9.8 percent. The rate hit a post-recession peak of 10.1 percent in October 2009. It was the highest rate in 26 years.

Fed Chairman Ben S. Bernanke said at a June 22 press conference that “frustratingly slow” economic growth is due to transitory factors such as high energy prices and that the recovery should pick up in the second half. Policy makers released forecasts that day indicating they estimate unemployment will fall to 8.6 percent to 8.9 percent by December.

Fear$! Fear$! Fear$!

gobble… gobble… gobble…

http://market-ticker.org/akcs-www?post=189666

The debt: What would Jesus do?

Home closings in Charlotte,N.C. fall in June, Realtors say
Posted: Saturday, Jul. 09, 2011

Charlotte’s housing market remained slumped in June, the Charlotte Regional Realtor Association said, as closings fell 8 percent compared to June 2010.

There were 2,332 closings in June 2011, about 200 fewer than the same month last year. The median sale price fell 3.7 percent, to $156,750. About 31 percent of those sales were classified as distressed properties. The figures are from Carolina Multiple Listing Services, which accounts for most homes on the market.

Still, the latest report contained some bright spots. The number of pending residential contracts, or home sales that haven’t yet closed, jumped 18 percent in June, to 2,358.

And the share of distressed properties entering the listings fell to 16.1 percent in June. That’s down from 23.1 percent of new listings classified as distressed in the same month last year.

Major grocer getting rid of self-checkout lanes
Albertsons will replace computers, wants more human contact
~ MSNBC

One of the nation’s major grocery store chains is eliminating self-checkout lanes in an effort to encourage more human contact with its customers.

Albertsons LLC, which operates 217 stores in seven Western and Southern states, will eliminate all self-checkout lanes in the 100 stores that have them and will replace them with standard or express lanes, a spokeswoman said.

“We just want the opportunity to talk to customers more,” Albertsons spokeswoman Christine Wilcox said. “That’s the driving motivation.”

Wilcox said the replacement of automated checkout lanes with human-operated lanes likely would mean more hours available for employees to work.

The move marks a surprising step back from a trend that began about a decade ago, when supermarkets began installing self-checkout lanes, touting them as a solution to long lines. Now some grocery chains are questioning whether they are really good for business.

Kroger, the largest grocery chain in the U.S. (with some 2,500 outlets), is experimenting with removing all self-checkouts in at least one Texas store, reports StorefrontBacktalk, an industry publication. Publix, another major chain, is “on the fence” about self-checkout, according to a report quoted in the story.

Self-checkout industry leader NCR Corp., which counts Albertsons among its clients, does not see the grocery chain’s move as a threat to its business, said company spokesman Cameron Smith.

Bernanke is finished, says David Stockman; and in one of the toughest talk show interviews yet, he backs it up with the facts.

As the world economy continues to slowly tank in a complete disconnect from market prices, it seems apropos to review Dylan Ratigan’s interview June 23 with Stockman.

Stockman, a former CBO director, shows why politicians around the world were desperate to perpetually protect the banks at the expense of hundreds of millions of people on Main streets around the world… wealthy, poor, old, young…

Here’s why Bernanke has sung his swan song, according to Stockman (rough draft):

Bernanke’s fabulous exercise in money printing - QE1, QE2, zero interest rates - has been a calamity of historic proportions. The only thing it did – and we know this now, today - was to bring a huge windfall of speculative gains, literally tens of billions to Park Avenue, and left Main Street high and dry with double digit food and energy inflation and with zero digit interest on bank accounts… The problem we have in our economy is a 30 year buildup up of debt, nothing like we’ve ever seen in history… $52 trillion of public and private debt… 360% of GDP compared with a normal ratio of 160%…

And what did Bernanke do over the last two years? He tried to drive zero rates to negative, thinking that we just needed to borrow more money, stimulate some more credit and the problem would be solved … That’s backwards, the problem is in the financial system… we needed to address the disaster that we have in the banking system, not print more money and encourage massive speculations in commodities, currencies… and all the other things that are tearing up the whole world…

The household sector still has a massive amount of deleveraging to do, the business sector has $11 trillion of debt, the highest ratio of debt to net worth in decades; and we know where the government debt is - out of control… This is a debt problem that can’t be solved by printing more of it…

Main Street wasn’t heading down the black hole; a great depression wasn’t anywhere in sight along the length and breadth of America… This was a panic on Wall Street that was served up by Bernanke and Paulson…a problem in the financial system - where we needed to allow the correction to take place - and if Goldman Sachs went bankrupt, Goldman Sachs should have gone bankrupt - it would not automatically have rolled into the rest of economy, that’s just urban legend… The 700,000 jobs lost a couple of months in late 2008 and 2009 were a one-time disappearance of excess employment funded by the phony prosperity of borrowing $4 for every dollar of GDP when we went to the peak; those weren’t real jobs… the economy wouldn’t have gone down the drain…

Where would we be if Bernanke had done the right thing and left interest rates where they were and restructured the banking system? We would have been better off today…

This wasn’t a great depression, this was the blackberry panic of 2008… We have gone in exactly the wrong direction for two years now; the Fed is only making it worse and it’s led by people who basically are in the thrall of Wall Street and Keynesian economics that just say print debt and somehow prosperity will return…

Jeffrey Immelt’s claim that GE was within a few days of collapse was utter nonsense - GE needed a massive equity offering and a dilute of their stockholders… Immelt needed to restructure his company and debt… Instead GE got a $60 billion lifeline from the Fed because some crony capitalist by the name of Jeff Immelt calls up Hank Paulson and says my hair’s on fire… GE’s price structure should have gone to $1 and GE’s CEO should have been looking for new employment… that would have solved the problem…

As an alternative to allowing the financial system to correct, according to Ratigan, hundreds of millions of people around the world took the hit… all to preserve a tiny cabal of bank capitalists …

http://www.youtube.com/watch?v=GHLjoAI2-iQ&feature=youtu.be

Good news the jobless recovery remains right on track… Next stop Hope&Change Ville.

State and local governments bleeding jobs
WASHINGTON

(Reuters) - U.S. state and local governments cut thousands of jobs in June, pushing their payrolls down to the lowest in five years, according to Labor Department data released on Friday, and analysts do not expect the losses to end any time soon.

Local governments shed 18,000 jobs and state governments cut 7,000 in June. The level of local government employment — 14.143 million employees — is the lowest since June 2006. State government employment is the lowest since August 2006.

“Today’s employment report reflects continued belt-tightening at the state and local level and the trend we have previously noted, a trickle-down in budget cuts from the state to the local level,” wrote Natalie Cohen, senior analyst at Wells Fargo Securities, in a research note.

The National League of Cities, which represents civic officials, foresees further job cuts for at least the next 18 months. In a statement commenting on the Labor Department report, the group voiced concerns that continued public job losses will also dampen job growth in the private sector.

Altogether, nonfarm payrolls rose by 18,000 in June, and the unemployment rate notched up to 9.2 percent.

Cuts have been particularly deep in education. In June alone, local governments shed 12,600 education positions. Since last August, when concerns about mass layoffs at public schools spurred Congress to send states millions of dollars, local education has lost 124,300 jobs.

Cohen noted the Labor Department also reported the educational services category in the private sector dropped 17,400 positions in June.

“With the layoffs in public education at the state and local levels and the reduction among private school employees, students shifting into public education are likely to see larger class sizes and fewer resources come this fall. It is our view that we are also likely to see a similar pattern next month,” she wrote.

The housing bust, financial crisis and recession devastated state and local tax revenues. For more than three years, states have cut spending, hiked taxes, borrowed and turned to the federal government for help in keeping their budgets balanced. Now, with few places left to find savings, they are rolling back funds for cities, counties and school districts.

The resulting layoffs could become a drag on the national economy. The recession officially ended in 2009, and typically during a recovery period, government employment grows, according to the Economic Policy Institute, a think tank.

This fellow was only trying to help his family & friends…

Ex-attorney charged in Ponzi scheme
Henry K. Lee, Chronicle Staff Writer - SAN FRANCISCO –

A former San Francisco attorney has been indicted by a federal grand jury for allegedly defrauding friends and relatives of $7 million in a Ponzi scheme that spanned more than five years.

Robert Tunnell, Jr., 72, of San Francisco was charged in the indictment handed up Thursday with seven counts of mail fraud, 13 counts of wire fraud and one count of money laundering.

Tunnell, a graduate of Dartmouth College and Harvard Law School, was an attorney from 1971 to 2001, when he resigned from the State Bar of California while charges pending, including allegations that he stole $300,000 from his law firm and diverted it to his personal trading account, authorities said.

Tunnell then held himself out as a skillful investor, promising substantial returns while representing that he would invest funds in a conservative, low-risk way, federal prosecutors said.

“Tunnell falsely told investors that he invested money as a favor, because he liked to help people, that he was highly successful as an investor and that he would not and did not receive any financial gain for doing so,” the indictment said.

He told one alleged victim - his girlfriend - that he was a “semi-retired international attorney” who had “made a lot of money investing his own money in commodities such as copper and coffee,” FBI Special Agent Jeremy Desor wrote in an affidavit filed in U.S. District Court in San Francisco.

Instead, Tunnel engaged in risky trading activity with his investors’ money, losing about $7 million of the $10 million that investors had entrusted to him from 2006 until his arrest in June of this year, authorities said. Most of the investors were family members of personal friends, the indictment said.

Tunnell used most of the remaining money from his investors to repay other investors, hallmarks of a Ponzi scheme, and to pay off a debt he owed to a bank after he had failed to repay a loan, authorities said. Tunnell falsely reported gains to his investors and created false documents grossly overstating his assets and net worth, investigators said.

Tunnell is free on a $10 million bond.

We all need a laugh around here:

In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.

“South Florida,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.”

BWAHHAHAHHAHAHAHHAHAHAHHAHAHHAHHHHHHHHHHHHHH!!!!!!!!!!!!!!

More than half of county’s fire-rescue employees earn more than $90,000

By Jennifer Sorentrue and Adam Playford
Palm Beach Post Staff Writer

Posted: 4:57 p.m. Saturday, July 9, 2011

More than half of Palm Beach County Fire-Rescue’s employees were paid over $90,000 in the 2010 budget year, according to a Palm Beach Post analysis of the department’s payroll.

Twenty-eight of the county’s 50 highest-paid employees worked for the department, the analysis showed.

Six fire-rescue employees, including three special operation captains, were paid more in gross pay, which includes overtime and various allowances, than was Fire-Rescue Chief Steve Jerauld, whose gross pay totaled $180,724, The Post found.

One of those employees made more than $60,000 in overtime, and three made at least $30,000 through extra shifts.

The county’s top paid fire-rescue employee, Michael Southard, a former deputy chief of fleet maintenance, brought in $212,188 last budget year, but that was boosted by big payouts for unused vacation and sick time that he received because he was retiring after 30 years with the department.

Without payouts for the unused time, Southard said there was “no way I would have beat out the chief.”

Taxpayer watchdogs say the department’s salaries and benefits have ballooned out of control and want Palm Beach County administrators to cut them in upcoming contract negotiations.

The county fire-rescue department’s average base salary was $90,776 in 2010, and the average gross pay was $93,144. Those are averages for all of the department’s roughly 1,450 employees, from secretaries to the chief.

In comparison, the average salary for a firefighter in Florida is $50,010, according to the national Bureau of Labor Statistics. That’s less than the post-probation entry-level pay of $52,119 for a Palm Beach County firefighter.

“Do I feel that the compensation our people receive is appropriate?” Jerauld said. “Absolutely. And the reason being: There is not an emergency situation that could occur in this county that we wouldn’t be expected to respond and to mitigate. Oftentimes that means putting our people at risk, and for that, that’s part of the reason the receive the compensation that they do.”

Still, Jerauld says the department is taking steps to cut the salaries of newly-hired firefighters and paramedics.

The county’s three-year contract with the firefighter’s union expires this year. Under the current deal, firefighters have received 3 percent raises each of the past two years, but agreed to hold salaries flat in the first year.

Jerauld said that first year’s concession was the first time the union agreed not to seek raises.

“I believe it reflected the union leadership’s acknowledgement of the difficulty economically the county was facing,” he said.

In the negotiations for the new contract, county administrators are seeking a 22 percent cut in the department’s pay ranges, although that would apply only to new employees.

The Taxpayer Action Board has called on its supporters to attend.

“Several folks told us it will probably tone down the discussion,” said Scheibl, who attended the last negotiating session. It marked one of the first times a resident showed up at fire-rescue union bargaining session, county officials said.

The Palm Beach County Clerk and Comptroller’s Office estimates that each property owner covered by county Fire-Rescue pays about $580 for the service each year, making it one of the most expensive county agencies.

http://www.palmbeachpost.com/news/more-than-half-of-countys-fire-rescue-employees-1594849.html?cxtype=rss_news - -

Conn. changing law on renters’ security deposits
July 9, 2011

HARTFORD, Conn.—Connecticut landlords will no longer have to repay 1.5 percent minimum interest on renters’ security deposits under a newly adopted law.

The change does not start until Jan. 1, 2012, but landlords’ and tenants’ groups are spreading the word so both sides are prepared.

Currently, Connecticut landlords must pay at least the average savings deposit rate to renters yearly on the money they hold for security deposits, but it cannot be less than 1.5 percent.

The new law eliminates that minimum, which property owners called unfair to landlords in the poor economy.

Legal assistance groups opposed the change, saying several banks have accounts that would pay the landlords at least 1.5 percent interest. State law requires landlords to keep tenants’ security deposits separate so they are protected from landlords’ creditors.

http://www.boston.com/news/local/connecticut/articles/2011/07/09/conn_changing_law_on_renters_security_deposits/ - -

I believe the who problem started with the issuance of credit cards, somewhere in the sixty, where it gave the public quick access to credit at low interest rates , that could be repaid on a monthly basis. The governmental organizations that approved that though it would be good for businesses and could not wait for it to be approved.

And then the states eliminated the interest caps on the accounts and the banks started coining money. Excess profits breeds ruinous competition and the banks started to give cards without consideration for ability to pay.

This brought the banks into the housing , and second loan , fields as the saw the tremendous returns on loans with little security, and , wham, we go to subprime mortages, and everyone is getting rich.

The possible solution to the whole problems is cut the interest rates of credit cards to below 10%, and then either eliminate the cards after a time, or collect a tax on the issuance of money, which , of course credit cards are a part of.

Perhap a 5% tax of the issuance of credit would solve a lot of problems.

I say so, you may disagree.