The Housing Bubble

Realtors are prone to have dishonest tendencies.

Stagflation?… Wait, I thought this was a Recovery?

http://www.marketwatch.com/story/whiff-of-stagflation-may-come-in-q2-gdp-report-2011-07-28

Debt deal or not, weak economy is likely to suffer
Pick your poison: However Washington handles the debt dispute, the economy is likely to suffer

WASHINGTON (AP) — No matter how the debt crisis ends, the economy will probably take a hit. The question is how big.

Failing to raise the federal borrowing limit would force the government to slash spending immediately and possibly cause a default, frightening financial markets and sending interest rates up.

If Washington reaches a deal and does raise the limit, it will probably include long-term spending cuts. The cuts would withdraw government stimulus at a time of weak economic growth and damage the already feeble recovery, at least in the short term.

“Pick your poison,” says Ben Herzon, senior economist at Macroeconomic Advisers, an economic forecasting firm.

Macroeconomic Advisers studied the impact of the $2.2 trillion in spending cuts proposed by Senate Majority Leader Harry Reid, D-Nev., and $916 billion in cuts proposed by House Speaker John Boehner, R-Ohio. Both would be spread over a decade.

It estimates Reid’s plan would cut annual economic growth by one-fourth of a percentage point through September 2015. It estimates Boehner’s would shave annual growth by a tenth of a point over the same period.

Neither of those is huge. But economic growth has already slowed to its weakest since the recession ended two years ago.

Federal Reserve Chairman Ben Bernanke and other economists agree that cutting the government’s massive debts is critical to the long-term health of the U.S. economy. Republicans argue the cuts should be imposed sooner.

But many, including Bernanke, worry about cutting so soon.

Analysts estimate the economy grew at an annual rate of just 1.7 percent in the April-June quarter, held back by weak consumer spending and high unemployment.

It takes 2.5 percent growth just to keep unemployment from rising, and 5 percent to lower it significantly. Economists foresee only slightly stronger expansion in the current July-September quarter.

“The economy is still fragile and cannot afford a policy mistake,” economists at Bank of America Merrill Lynch wrote in a research note last week.

Republicans postpone vote on debt bill- AP

Republican leaders in the House of Representatives, facing a conservative revolt, unexpectedly put off a vote Thursday night on a bill to increase the U.S. debt limit, creating more turmoil as a deadline for avoiding a government default was only days away.

PulteGroup, D.R. Horton expect profitable turn
Homebuilders see demand for homes stabilizing now, but recovery hinges on lift in economy

LOS ANGELES (AP) — The CEOs of the nation’s two largest homebuilders say demand for new homes appears to be stabilizing, if still at very low levels.

PulteGroup Inc.’s Richard Dugas and Donald Tomnitz of D.R. Horton Inc. weighed in on the market trends Thursday after each company reported financial results for the April-to-June quarter.

The builders reported lower home closings for the quarter and contracts for new homes that landed just about even with their prior-year results.

They also reported increases in their backlog of homes under contracts — a positive indicator of future activity.

Tomnitz said demand is back to a normal seasonal pattern following last year’s homebuyer tax credit, which expired last spring and led to a drop off in sales later in the year. He also said D.R. Horton is now solidly in position to be profitable for its full fiscal year.

Dugas said demand for new homes remains stable, if at a low level. The executive also said his company is on track to return to profitability in the second half of the year.

The sales trends and executives’ remarks are positive in light of this year’s spring home-selling season, which ended up being a disappointment despite increases in traffic by prospective buyers.

But neither builder was bullish on a more robust pickup in sales just yet.

“To be frank, most all of our markets are soft, softer and softest,” Tomnitz said. “Nothing’s really strong out there.”

He added he doesn’t anticipate much of a turnaround this year, or next.

“I would anticipate that 2012 will be better than 2011, but I don’t expect it to be significantly better,” Tomnitz said.

Obama faces legal bind if time runs out
By Robin Harding in Washington - FT.com

If Congress does not raise the debt ceiling on time then President Barack Obama and the Treasury will struggle not to break one or other law passed by Congress.

The law will fence the administration in; but the ambiguity of the situation might also free it to invoke all manner of creative legal arguments, including a claim that the debt ceiling is illegal under the 14th amendment to the constitution.

If there is no increase in the debt ceiling by August 2, then the Treasury will not have enough money to meet all its commitments without borrowing more money, which it will not be able to do without breaking a wartime law from 1917 that created the debt ceiling.

But it is also bound by laws that tell it to make various payments, including the latest appropriations act passed by Congress in the spring, as well as an apparent instruction in the constitution to keep paying US debts.

The 14th amendment, adopted in 1868, says that “the validity of the public debt of the United States … shall not be questioned”.

The purpose of the clause – originally formed to settle any doubt that the US would pay debts it incurred during the civil war – was tested in a Supreme Court case after the US left the gold standard to fight the Great Depression in 1933.

The court said that Congress could not tear up its promise to bondholders to pay them in gold and interpreted the 14th amendment as applying to “whatever concerns the integrity of the public obligations”.

“The Supreme Court, citing the 14th amendment among other law, has made it clear that Congress does not have the power to alter its own contracts,” said Michael Bradfield, former general counsel of the Federal Reserve Board and author of a memorandum being circulated among Capitol Hill staffers looking to bypass a congressional vote on the debt ceiling.

By that logic, Mr Bradfield said, “if an impasse were to occur, the legal case for invoking the 14th Amendment would be very strong”.

There are legal, political and practical counter-arguments, however. A practical argument is that doubt would hang over any Treasury bonds issued in defiance of the debt limit pending a Supreme Court review.

Bill Clinton, former president, has said he supports using the 14th amendment, but how it would play politically if Mr Obama were to override Congress to keep on borrowing is unclear. Mr Obama’s advisers have suggested that they do not think invoking the 14th amendment is an option. At least one Republican congressman has said that such a decision would be an impeachable act.

A legal counter-argument is that, if Mr Obama were to prioritise debt payments, then he could satisfy both the 14th amendment and the debt ceiling law.

It is not certain, however, that Mr Obama has the power to prioritize payments. “On the question of legality, I think it’s very unclear that the administration has the legal power to choose between Congress’s spending priorities,” says Jay Powell, visiting scholar at the Bipartisan Policy Centre in Washington. The Treasury might be obliged simply to pay what bills it can as they come due.

Even if the president decided that a debt ceiling crisis would allow him to use emergency powers to prioritize payments, then he would have few good options to make the necessary cuts of 40 to 45 per cent.

According to simulations run by Mr Powell, if the administration chose to prioritize big spending programmes such as Social Security and Medicare, then it would have to shut down almost everything else – from nuclear security to federal prisons.

Some points are worth further discussion, so as to bring culture and refinement where knowledge is lacking.

“Comment by alpha-sloth
2011-07-28 19:33:24
“My mother, the Home Economics teacher, would explain to you in detail, and at length, that the tomato is a vegatable”

And, alas, she would be wrong. Have her ask the biology teachers.”

Alpha, it’s a riddle. The fruit of all plants is vegetable by nature. Things vegetable bear fruit. When is something vegetable a fruit and when is fruit a vegetable?

New NASA Data Blow Gaping Hole In Global Warming Alarmism

from Forbes via Yahoo

Apparently, the word “alarmist” has to work extra hard to catch up to the word “denier”.

comotechie’s deflation rears it’s head. Sony and other major electronics makers have also warned. Word of caution to Apple philes, at some point people will choose food over apps …..

TOKYO (AP) — Shares of Nintendo Co. took a beating Friday, losing more than a fifth of their value at one point, after the Japanese video game giant announced a worldwide price cut for its new 3DS in an effort to salvage poor sale.

http://finance.yahoo.com/news/Nintendo-shares-plunge-after-apf-3763915429.html?x=0&sec=topStories&pos=6&asset=&ccode=

I’d be willing to bet that Palin 2.0’s shelf life will be substantially shorter than the original.

Bachmann says she, not husband, running for office

“I’m running for the presidency of the United States. My husband is not running for the presidency. Neither are my children. Neither is our business,” she said.

“I am more than happy to stand for questions on running for the presidency of the United States,” she continued. “I have no doubt that every jot and tittle of my life will be fully looked at and inspected prior to November of 2012.”

http://news.yahoo.com/bachmann-says-she-not-husband-running-office-201319758.html

Dynasty Trusts Let U.S. Wealthy Duck Estate, Gift Taxes Forever
By Elizabeth Ody - Jul 28, 2011 12:32 PM ET (bloomibergi)

“Dynasty trusts have gained popularity since 1986 when Congress overhauled the generation-skipping transfer tax and since then several states, including Delaware, have eliminated their rules against perpetuities.

Thomasson, who lives in Indianapolis, said he’s funding a so-called dynasty trust set up in Delaware with $8 million of equity from the expanding financial advisory business he owns, Oxford Financial Group. Putting the assets in a trust, which he figures could be worth more than $100 million by the time he dies, means the money should go to his heirs without triggering federal gift, estate or generation-skipping transfer taxes.

A dynasty trust is used to pass money on to multiple generations of descendants while paying as little in taxes as possible. The trusts have no expiration date and there are no required minimum distributions, meaning their assets may grow for an unlimited number of future generations. While the trusts can be set up in many states, Delaware offers extra breaks, including stronger protection from creditors and potential exclusion of assets in divorce proceedings. ”

[the article goes on to describe how families may borrow from a trust to buy stock or gain rates within of return which is put back into the trust at only 2% tax. This works for family-owned businesses.]
————–

The playing field has tipped so far that it’s a cliff…

How ’bout we hire Irving Picard as trustee of TARP?

Madoff clients get $1b in deal
Settlement with MassMutual unit among largest

A hedge fund group owned by Massachusetts Mutual Life Insurance Co. has agreed to pay more than $1 billion to customers of the now-imprisoned Bernard Madoff, in one of the largest settlements with the trustee in the bankruptcy case that resulted from the largest investment fraud in US history.

http://www.boston.com/business/articles/2011/07/29/massmutual_unit_to_pay_1b_to_fund_for_madoff_clients/

This is not a cyclical slowdown. We’ve reached the structural dead end of the debt based economy.

The housing bubble is a symptom of efforts to shove ever more debt into an already debt saturated economy.

Microsoft’s Use Of Low-Tax Havens Drives Tax Bill To 7 Percent Of Profit
Microsoft Taxes

FAIRFIELD, Connecticut (Lynnley Browning) - If you want to know why tax from surging corporate profits isn’t making much of a dent in the United States’ crippling budget deficit, a glance at Microsoft Corp’s recent results provides some clues.

Things were rosy in the giant software company’s just-ended fiscal fourth quarter, which produced record sales of nearly $17.4 billion, a 30 percent increase in after-tax profit, and a 35 percent gain in earnings per share.

But for the Internal Revenue Service and foreign tax authorities, things weren’t so rosy. Microsoft reported only $445 million in taxes in the U.S. and other foreign countries, just 7 percent of its $6.32 billion in pre-tax profit.

Given the rancor in Congress and in the country about how to tackle the nation’s budget deficit and debt, including how companies stash profits overseas and enjoy lucrative tax breaks, it is instructive to see how the top brass at Microsoft’s Redmond, Washington, headquarters achieved this eye-popping tax result.

Partly it was because the company had a one-time refund of $461 million from the IRS for previous overpayments and because of its over-estimation of tax rates in previous quarters. There may be increased sales of products to consumers overseas, though it is not clear from company disclosures how much of a factor this might be.

But Microsoft is straightforward about the core reason for its lower tax bill: It is increasingly channeling earnings from sales to customers throughout the world through the low-tax havens of Ireland, Puerto Rico and Singapore.

Today’s houses.

http://www.zillow.com/homedetails/10-Plummer-Ct-Germantown-MD-20876/37218641_zpid/#{scid=hdp-site-map-list-address}

It’s a nice 4/3 2278 sq ft from the 1970’s. Beautiful lot. Granite and hardwood floors, but “needs work.” Strange price history.

Sold 2000 for $230K.
Sold 6 months ago for $275K.
Now listed for $229K.
Zestimate: $432K (WTF)
Days on Zillow: 7

I wonder what happened? Serial refiance/foreclose/cement in the toilet? I expect this one to be snapped up and fixed and flipped.

We’ve given up on a grand bargain and are now arguing about whether the next debt extension will be in the middle of the next election or not until after.

So, what possible compromise?

Wow… CNBC just had Ben Quayle on… followed by Steny Hoyer. OMG the way the anchors handled them was disgraceful.

They let Ben Quayle talk. Hoyer, they will hardly let him get a word in edgewise.

Quayle question: Would you be willing to accept broadening the base and lowering rates if it was revenue positive instead of revenue neutral?

His answer, and they let it go… “Well, growing the economy is revenue positive.”

Hoyer kept explaining that it is the Tea Party wing of the Republican party that is refusing to compromise, and they kept interrupting him to ask why the Democrats won’t compromise. He tried to list all tehy were willing to give up, and then they interupt to ask why he won’t compromise. He tried to explain all the the bipartisan work that has been done, that fell apart becuase the Tea Party Republicans would not go along, and they interrupted to ask why the democrats won’t compromise.

Really disgusting.

“Politics has no relation to morals.” ~Niccolo Machiavelli

For anyone needing a few laughs and with 1/2 hour to “waste”… check out season 3 episode 7 of Tracey Ullman State of the Union @ Hulu.

From March 2010, but with some great housing bubble related humor.

GDP 1.2%

I’m afraid that the USA without trillions of dollars of borrowed government “stimulus” would have NO ECONOMY WHATSOEVER.

Stocks up or down upon “default”?
First of all, the US is not going to default on their debt obligations. There’s still plenty of tax $$ coming in to pay for interest and SS plus some other essentials. “We” will still be able to pay about 60% of expenditures. Some programs that were appropriated by big spenders might no longer see funding. Wars (wishful thinking), ridiculous subsidies (ethanol, farming, oil), department of “sitting on my butt and picking my nose” (justice, homeland security, agriculture, education and energy come to mind), etc.
What will stocks do? I know, futures are down this morning. But I am looking past this morning to the weeks that will follow. If the AAA credit rating is under attack then long term US treasuries are most definitely not the place to be. Neither are EURO-bonds. Cash in the bank? That’s risky in case big banks default and you get a bank run. High quality corporate bonds, but the supply is rather limited. I could see gold and good quality stocks that pay dividends be considered a save haven. I am looking at INTC, MO, XOM, LO, COP, DUK and similar stocks. Most of them pay higher dividends than 10 year US treasuries and have so for over a decade. If not stocks and sovereign debt, then what? Real estate? Beanie Babies? Sports cards? Guns ‘n ammo?
“The money has to go somewhere.” Does it? Can everything crash all at once? Somebody always owns part of that everything and the amount of cash doesn’t really change by trading assets. For every buyer there is a seller. So some people prefer to hold low priced assets (stocks, bonds, gold, real estate, etc.) while others prefer to hold cash. Cash in the bank? Very risky indeed, the FDIC will be overwhelmed by another banking crisis. Cash under the matress also has some drawbacks. Personally I am more leaning towards holding asset instead of cash. Any thoughts?

Narrow-minded architecture: The Keret House
The Keret House by Polish architect Jakub Szczęsny measures only 4 feet across at its widest, making it not only the skinniest home in Warsaw but perhaps in the entire world.

http://www.mnn.com/your-home/remodeling-design/blogs/narrow-minded-architecture-the-keret-house

Tomorrow morning I leave for Poland for two weeks to visit the ancestral homeland for 2 weeks. Since 2006 any time I took a vacation I went back and read all the HBB posts that I missed after I got back home. Not sure if this one will end that habit or not. I kinda already know everything that will be said, but it’s still hard to resist…

Realtors Are Liars®

Hey Muggy,

Per yestedays comment, give us a road report.

THE MORNING LINE — July 29, 2011 at 8:35 AM EDT
Decision to Delay Debt Vote Produces Only Losers
By: David Chalian and Terence Burlij

Thursday night’s decision by Republican leaders to scrap a vote to raise the debt ceiling dealt House Speaker John Boehner a stunning — albeit, perhaps, temporary — loss, despite the fact that the plan’s prospects had been uncertain given the strident opposition among GOP conservatives and a united wall of Democratic dissent.

While the outcome may have been an initial defeat for Rep. Boehner, it’s hard to imagine the result produced any winners with the country now standing on the precipice of a potential default on its financial obligations in just four days.

Republican leaders hoped to bring the Boehner plan back to the floor for a vote Friday, but only if they have the 217 members in hand to deliver a victory. The math is likely to get sorted out at 10 a.m. ET Friday, when all 240 House Republicans meet at the Capitol for a closed-door conference session.

Reports indicate that Speaker Boehner and his leadership team engaged in a good amount of arm-twisting Thursday night to try to pick up votes.

The Washington Post’s Lori Montgomery and Paul Kane write:

“Outside the House chamber, Boehner summoned members of the holdout GOP South Carolina delegation to his second-floor office just off the Capitol Rotunda. But he appeared to make little headway and, within minutes, freshman Reps. Mick Mulvaney and Jeff Duncan left the meeting, saying they were heading to a nearby chapel to pray for their leaders.

“Rep. Tim Scott (R-S.C.) later joined them, and the trio, stalwart conservatives who have steadfastly opposed efforts to grant the Treasury additional borrowing authority, told reporters that Boehner’s pitch had not been persuasive.”
…

They keep saying that the growth rate was the lowest since “the recession ended.” Methinks their dashboard indicators for recession are not correct.

I’m reminded of the Airbus Air France Flight 447 crash. The crew could not interpret the inputs they were receiving from the instruments. They thought they were climbing, with the engines on full blast and the aircraft in a climbing attitude. Yet they were falling flat. The computers dutifully kept the aircraft flat and stable during the rapid descent, till they slammed into the ocean.

I posted some time ago on virtual economic items versus actual goods and services. Virtual economic items are logical constructs, while actual goods and services are physical goods and services.

I don’t want to make it sound like virtual economic items are bad things - the earliest virtual item was currency. Why would someone accept a coin in return for something physical. Why would a coin be worth a basket? Because currency is a logical construct. Enough people accept the construct, so it has value to them.

Why does a subset of people pay big money for beanie babies? Because these too have a currency-esque type logical construct associated with them.

I think there is a spectrum of products, ranging from pure logical construct, to pure physical good/service.

For example, debt was probably the second logical construct, and stocks the third. Debt, if properly collateralized, leans toward the physical side of the spectrum. If you don’t pay, the physical asset worth the value of the debt is taken by the lender. A NINJA loan (No Income No Job or Assets) is a purely logical construct - a promise to pay only.

Individual stocks are logical constructs - shares of ownership with no practical value other than what someone else would pay. They become more physical as one amasses more stocks and more ownership value in a company.

Just something I’ve been mulling over.

Oxide: Could you please post the regulations.gov link for credit risk retention?

I’ve been on the site, found the credit risk retention entry, but when I last checked, there were list of comments one could browse. I didn’t see that this time.

I want to add my $0.02 briefly, before the comment period is done.

Economic policy seeks to shape human behavior as it pertains to economic activity.

How then, is rewarding bad behavior (moral hazard) going to encourage anything but more of the same? The bad behavior which led to the recession (the creation of vast amounts of bad debt) is rewarded with bailouts and bonuses.

A mug shot picture is worth a thousand exclamations! :-/

she routinely slept in the shower with no pillow or cover after having wet her bed.

The incident in which the girl died was discipline for her having taken a popsicle without asking permission

Girl found suffocated was locked in box as punishment:
By David Schwartz / PHOENIX | Thu Jul 28, 2011

Police said the child was 4 feet, 2 inches tall and weighed just 59 pounds. The box she was locked in was less than 3 feet long, 14 inches wide and about a foot deep.

African-American Middle Class Eroding As Unemployment Rate Soars
By John Roberts July 28, 2011| FoxNews.com

The unemployment situation across America is bad, no doubt. But for African-Americans in some cities, this is not the great recession. It’s the Great Depression.

Take Charlotte, N.C., for example. It is a jewel of the “new South.” The largest financial center outside of New York City, it’s the showcase for next year’s Democratic National Convention. It was a land of hope and opportunity for many blacks with a four-year college degree or higher.

According to an analysis by the Economic Policy Institute, in Charlotte, N.C., the unemployment rate for African-Americans is 19.2 percent. If you add in people who have given up looking for jobs, that number exceeds 20 percent, which, according to economists Algernon Austin and William Darity, has effectively mired blacks in a depression.

“You’re looking at a community that is economically depressed in my opinion,” Austin said. “And we need action that will address that scale of joblessness.”

Vanessa Parker worked hard to get ahead. She was an administrative assistant at IBM in Charlotte. She went to night school to better herself, graduating with a bachelor’s degree in finance. Parker and her husband saved up enough money to move from a bad neighborhood to a quiet, middle-class street. But instead of moving up in the company, IBM moved out. Now she works at a big-box store for minimum wage.

“It’s very frustrating and it makes you wonder why are you doing it,” she told me. “Because it seems like the more that you try to get ahead, seems like you’re falling back.”

“It takes time to build anything. But it doesn’t take very long to destroy it,” says Patrick Graham of the Urban League of Central Carolina.

His organization runs classes on empowerment, hoping to raise the self-esteem of the unemployed and give them the confidence to take charge of their lives.

“It’s heartbreaking,” he told me. “In a sense that you watch people who are viable who have talent who can’t necessarily find the job opportunity that they need.”

Derrick Foxx is another example of how deeply this recession has affected the black middle class. Foxx was laid off from Phillip Morris Tobacco 2 years ago and hasn’t worked a day since.

Like Vanessa Parker, Foxx was trying to better himself, attaining an MBA. Though he has sent out more than 1,000 resumes, and contacted more than 1,000 companies, he is still unemployed.

“I got out of school and didn’t get the job I was looking for,” he says. “Then I went back, got an MBA degree, you know, and I’m almost like – wow – was this really worth it?”

It’s quite a sign of the times that people are questioning whether their education was worth all the time, effort and expense. Education is supposed to be the gateway to prosperity. But according to economist William Darity from Duke University, education does not provide the same key for African-Americans to open that gate as it does for others.

“It’s really, actually, a tragedy because people have invested a tremendous amount of effort – devoted the motivation and time to acquire degrees,” he said. “But it doesn’t provide them with the same degree of protection that it provides others in this society.”

There are jobs to be had in Charlotte. But African-Americans are not sharing in the recovery in the way others are.

Devah Pager, a sociologist at Princeton University, conducted groundbreaking research in Wisconsin and found that black men were less likely to be called back on a job application than white men with a criminal record. The statistics went like this:

Job call-backs:
White non-criminal: 34%
White criminal: 17%
Black non-criminal: 14%
Black criminal: 5%

According to Darity, “The differential in unemployment between blacks and non-blacks in the U.S. is perhaps one of the most dramatic indicators of discrimination in this society.”

So – what to do about it?

The Congressional Black Caucus has been leaning on President Obama to address the epidemic of black unemployment on his watch. So far, the president has resisted the notion of job programs specifically targeting African-Americans. His position is that a rising tide will lift all boats. But the tide remains out as far as job creation goes.

The Urban League’s Patrick Graham believes small business should be the major driver to employ African-Americans.

“It’s gonna really not just take hard work, but it’s gonna really take some creative thinking in terms of entrepreneurship and other things to really get us out of this,” he said.

The recession – or depression — in the black community is rapidly eroding the black middle class.

At its convention in Boston this week, the National Urban League released a troubling report on that topic. It found that the recession has virtually wiped out all of the economic gains blacks made in the past 30 years.

And a new report from the Pew Research Center drives home just how bad things are out there.

It found that in 2005, the average net worth for white households was $134, 992. For black households, it was $12,124. (That’s not a typo.)

In 2009, the number dropped to $113,149 for whites and a paltry $5,700 for blacks.

Hey Christine! Quick question? Where does your IMF get the bulk of it’s funding? In case you forgot…it’s none other than the U.S.of A.

IMF’s Lagarde Says U.S. Dollar May Lose ‘Privilege’ Amid Debt-Limit Crisis (Bloomberg)

International Monetary Fund Managing Director Christine Lagarde said the dollar’s standing as the world’s main reserve currency may be diminished as U.S. lawmakers fail to lift the nation’s debt limit.

The U.S. currency has had an “exorbitant privilege because it was the reserve currency that most central banks had,” Lagarde said in an interview on PBS’s “Newshour” yesterday. “If there was a dent in this exorbitant privilege and the confidence that most people have towards the dollar, it would probably entail a decline of the dollar relative to other currencies.”

And now for some off-topic news:

2012 Toyota Prius Plug-In Hybrid - First Drive Review

http://www.caranddriver.com/reviews/car/10q2/2012_toyota_prius_plug-in_hybrid-first_drive_review

“The Prius PHV is essentially just a Prius whose nickel-metal hydride battery pack has been swapped for a far pricier, far heavier, and far more potent lithium-ion pack. The new batteries can be fully charged in three hours from a simple household 110-volt outlet or an hour and a half from a 220-volt plug. The battery swap allows for more miles on electricity alone and a commensurate boost in real-world fuel economy… Keep your driving grandmotherly, though, and a Prius PHV with a full charge can travel up to 13 miles in electric mode.”

No wonder Toyota is keeping this low-key. 13 miles to a charge is almost not worth it, but then again, Orville’s Wrights contraption didn’t go very far either.

So what’s wrong with 20% down?

Return of 20% Home Down Payments Looms
July 29, 2011

BOSTON (TheStreet) — Hopeful homebuyers may soon need to shell out more money upfront before being approved for a mortgage.

The public comment period concludes Monday for potential mortgage-related provisions spawned by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Among the potential outcomes is that homebuyers could be required to front a higher down payment — as much as 20% — before they can legally qualify for a mortgage loan.
Government regulators are cracking back into mortgage reforms that could create hurdles for buyers: a return to 20% down payments for homes.

The proposed changes are being reviewed by federal regulators, among them the Treasury Department, Federal Reserve Board, Federal Deposit Insurance Corp., the SEC, the Federal Housing Finance Agency and Department of Housing and Urban Development. There is no set timeline for when final decisions will be made.

Many in the real estate sector have joined forces to fight such a change aimed at so-called Qualified Residential Mortgage loans, arguing that a 10% or 20% down payment mandate would deliver yet another damaging blow to the floundering housing market.

In past decades, a 20% or more down payment was standard. The lower the down payment, according to conventional wisdom and ongoing research, the greater the risk of default.

As housing prices soared and mortgage lenders dove head-first into what would be the subprime crisis, that common practice fell by the wayside. You may pay more in interest, closing costs or PMI, but just 5% down is enough for many banks and lenders. FHA loans, insured by the government, typically require only a 3.5% down payment.

The Mortgage Bankers Association, in written testimony, says the proposed QRM definition “is so restricted that 80% of loans sold to Fannie Mae or Freddie Mac over the past decade would not meet these requirements.”

According to the National Association of Realtors, drawing upon national savings rate data, “it would take 9.5 years for the typical American family to save enough money for a 10% down payment and closing costs, and fully 16 years to save for a 20% down payment and closing costs.”

Insiders Selling at Unusually Fast Pace
by Mark Hulbert July 29, 2011 MarketWatch

Bad news, stock-market bulls: Corporate insiders are selling their companies’ shares at an abnormally fast pace.

In fact, one measure of that selling activity shows insiders of NYSE- and AMEX-listed companies recently were selling at the fastest rate since data began being collected in the early 1970s, four decades ago.

On the theory that insiders know more about their companies’ prospects than do the rest of us, this is an ominous sign.

Corporate insiders, of course, are a company’s officers, directors and largest shareholders. They are required to file a report with the Securities and Exchange Commission more or less immediately upon buying or selling shares of their companies, and the SEC makes those reports public.

One firm that gathers and analyzes the data is Argus Research, which publishes its findings in the Vickers Weekly Insider Report. One indicator that the firm calculates is a ratio of the number of shares that insiders have sold in the open market to the number that they have purchased.

In the week ending last Friday, according to the latest issue of the Vickers report, this sell-to-buy ratio stood at 6.43 to 1. This is higher than 95% of other weeks’ readings over the last decade.

That’s ominous enough, but consider last week’s sell-to-buy ratio for just those issues listed on the NYSE or AMEX. That came in at 13.10 to 1, which is the highest reading for this ratio since when Vickers began collecting the data, which was October 1974.

Merck to Cut Up to 13,000 Jobs (Bloomberg)

Merck & Co., the second-largest U.S. drug maker, plans to eliminate an additional 12,000 to 13,000 jobs by 2015, expanding a restructuring program to save as much as $4.6 billion a year.

As much as 14 percent of the company’s 91,000 employees will lose their jobs, based on the size of the workforce at the end of last month. The Whitehouse Station, New Jersey-based drug maker also reported today that second-quarter earnings excluding one-time items were 95 cents a share, matching the average estimate of 17 analysts surveyed by Bloomberg.

Merck is cutting costs, expanding in emerging markets and spending on research and development as the company tries to gain momentum before it loses patent exclusivity next year on its Singulair medicine for asthma. The company just introduced a new hepatitis C drug, Victrelis, and is testing an experimental treatment to raise good cholesterol in a 30,000-patient trial.

“They are focusing on costs,” said David Maris, an analyst at CLSA in New York, in a telephone interview. “That is exactly what they need to do under the new environment we operate under.”

Good News…

Improving Mexican economy draws undocumented immigrants home from California. - sacbee.com

There are fewer undocumented immigrants in California – and the Sacramento region – because many are now finding the American dream south of the border.

“It’s now easier to buy homes on credit, find a job and access higher education in Mexico,” Sacramento’s Mexican consul general, Carlos González Gutiérrez, said Wednesday. “We have become a middle-class country.”

Mexico’s unemployment rate is now 4.9 percent, compared with 9.4 percent joblessness in the United States.

An estimated 300,000 undocumented immigrants have left California since 2008, though the remaining 2.6 million still make up 7 percent of the population and 9 percent of the labor force, according to the Public Policy Institute of California.

Among metropolitan areas with more than 1 million residents, Sacramento County ranks among the lowest, with an unauthorized population of 4.6 percent of its 1.4 million residents in 2008, according to Laura Hill, a demographer with the PPIC.

The Sacramento region, suffering from 12.3 percent unemployment and the construction bust, may have triggered a large exodus of undocumented immigrants, González Gutiérrez said.

The best-paid jobs for undocumented migrants are in the building industry, “and because of the severe crisis in the construction business here, their first response has been to move into the service industry,” González Gutiérrez said. “But that has its limits. Then, they move to other areas in the U.S. to find better jobs – or back to Mexico.”

Hill said it’s hard to know whether the benefit of having fewer undocumented migrants outweighs the cost to employers and taxpayers.

California may have to provide less free education to the children of undocumented immigrants and less emergency medical care, she said, but it will also get less tax revenue.

In 2008, at least 836,100 undocumented immigrants filed U.S. tax returns in California using individual tax identification numbers known as ITINS, said Hill, who conducted the tax survey.

Based on those tax returns, the study found there were 65,000 undocumented immigrants in Sacramento County that year, far fewer than in many other big counties.

Reid, Obama, McCain: Shut Up. You Lost.

http://market-ticker.org/akcs-www?post=190985

“You know how I describe the economic and social classes in this country? The upper class keeps all of the money, pays none of the taxes. The middle class pays all of the taxes, does all of the work. The poor are there just to scare the shit out of the middle class. Keep them showing up at those jobs.” - George Carlin

July 29, 2011 10:36 pm
America’s debt ceiling face-off: The audacity of hopelessness
By James Politi and Stephanie Kirchgaessner in Washington

Tea for one? John Boehner, Republican speaker of the House (left), with Barack Obama last Saturday. Talks are continuing with still no resolution in sight

With a week to go before the US faced a potentially disastrous default on its debt, Kevin McCarthy was thinking of ways to quash a rebellion from a group of conservative Republicans in no mood for compromise.

To persuade them that the party’s plan to raise the debt ceiling was not a sell-out, the third-ranking Republican in the House of Representatives showed them a clip from The Town, a modern-day gangster film.

In the scene, a bank robber played by Ben Affleck tells a friend he needs help for something. “I can’t tell you what it is,” he says. “We’re gonna hurt some people.” In the next scene the two men, wearing masks, beat their rivals with tyre irons and shoot one in the leg.

As the US edges closer to not being able to pay its bills next Tuesday, the nature of divided government – a Democratic Senate and White House, a Republican House of Representatives – dictates that the two parties will have to negotiate an agreement to increase the federal debt ceiling. But Mr McCarthy’s cinematic inspiration goes to the heart of the atmosphere that has settled on Washington: it is one of destruction, not dealmaking.
…

Posted at 03:13 PM ET, 07/27/2011
McCain erupts: Conservatives are lying to America
By Greg Sargent

So the debt limit debate has come to this: John McCain, who you may recall was the GOP’s 2008 standard bearer, is now openly accusing conservatives of actively misleading America with their completely unrealistic demands, which he labeled “deceiving” and “bizarro.”

In a seminal moment in this debate, here’s some video of McCain on the Senate floor today, unleashing an angry tirade at conservatives who are still holding out for a balanced budget amendment as part of any compromise on the debt ceiling. McCain accused them of “deceiving” America into believing such a thing can pass the Senate:

There are Republicans in both the House and Senate who are still pushing for another vote on the balanced budget amendment, even though “cut cap and balance,” which contains such an amendment, has already failed in the Senate. Tea Party GOP senators such as Jim DeMint and Rand Paul are calling on colleagues to reject John Boehner’s proposal for a two-tiered debt-ceiling increase and are instead demanding another vote on “cut cap and balance.” Meanwhile, House conservatives such as Mike Pence are also urging another vote on a modified version of a balanced budget amendment.

To such conservatives, McCain offered a simple answer: You’re in fantasy-land, and you’re doing your constituents a disservice by perpetuating the falsehood that such a thing can ever happen.

“What is really amazing about this is that some members are believing that we can pass a balanced-budget amendment to the Constitution in this body with its present representation — and that is foolish,” McCain said angrily. “That is worse than foolish. That is deceiving many of our constituents.” McCain went on to rip the idea as “bizarro.”
…

http://seattletimes.nwsource.com/html/businesstechnology/2015743261_mastro28.html

Some poor banker loaned him 325 million unsecured.

Just got an email from a friend in Belize who is freaking out about Washington DC and wanted to know if there was a right-wing coup in progress. I laughed and told him he hasn’t been paying attention, the coup happened back in 2000 when the Supreme Court picked ‘Bush the lessor’ over Gore. Everything is chronicled in the sacred archives of “YouTube” and Comedy Central.

Meanwhile, it’s time to kick the deadbeats out of all those nursing homes and make room for the really needy.
“Nursing Homes Drop as Medicare Says It Will Cut $3.87 Billion in Payments”

http://www.bloomberg.com/news/2011-07-29/nursing-homes-drop-as-medicare-says-it-will-cut-3-87-billion-in-paymemnts.html

The Financial Times
July 29, 2011 9:37 pm
US Treasury makes plans for default
By Michael Mackenzie in New York and Tom Braithwaite in Washington

US Treasury officials raised the possibility of delaying its benchmark quarterly debt sales in August at a meeting with big Wall Street dealers on Friday held at the Federal Reserve Bank of New York.

The Treasury decided against releasing a contingency plan on Friday but – with one eye on Capitol Hill and another on Wall Street – officials could announce as soon as the weekend guidance over any potential problems with the payment system.

According to a note from Morgan Stanley, the meeting with the 20 primary dealers – who underwrite Treasury debt sales and deal with the markets desk of the New York Fed – focused on the bill auctions next week and a possible delay of the quarterly debt refunding sales, which involves the auction of new three-year, 10-year and 30-year securities.

The news accelerated the fall in Treasury yields in mid-afternoon trading on Friday, with the 10-year note at 2.79 per cent, down 16 basis points – its lowest level since November.

As it stands, the sale of three-month and six-month Treasury bills on Monday will go ahead.

If the debt ceiling is raised before Wednesday morning, the Treasury will announce details of the refunding and hold the debt auctions the following week.

“People are coming to the realisation that there is a bigger debate over the debt ceiling and that ups the ante for risk assets and people fly to safety, which ironically are US Treasuries,” said Jim Caron, head of global interest rate strategy at Morgan Stanley.
…

This one’s for ComboTechie:

The Wall Street Journal

MARKETS
JULY 30, 2011

For Investors, Cash Is King
Washington Stalemate Spurs Flows Out of Markets and Into Bank Accounts
BY LIZ RAPPAPORT AND MATT PHILLIPS

Investors, companies and small savers are stashing billions of dollars in plain-vanilla bank accounts, taking cash out of short-term markets, in an effort to shield themselves from any market convulsions caused by Washington’s stalemate over the debt ceiling.

The movement of money, akin to that during the peak of the 2008 financial crisis, is one more sign that skittishness is on the rise as officials in Washington remain deeply divided about ways to reduce the deficit and lift the debt ceiling ahead of the Aug. 2 deadline.
…