The Housing Bubble

L.A. Mayor Targets Cali. Tax Law in ‘Grand Bargain’
(Bloomberg)

Los Angeles Mayor Antonio Villaraigosa proposed dismantling California’s Proposition 13, which helped begin a nationwide anti-tax movement, in favor of a “grand bargain” that would boost levies on business property.

The Democrat who leads California’s largest city called on Governor Jerry Brown not to shrink from making sweeping changes in state tax laws that Villaraigosa, 58, said could produce as much as $36 billion a year in new revenue.

Villaraigosa urged the removal of Proposition 13’s limits on commercial-property assessments while retaining its cap for homes. The mayor said boosting tax revenue in the most-populous state would shore up the University of California system, promote budget stability and restore public-school funds.

“It’s time to address the unfairness inherent in a system that allows Wall Street hedge-fund managers to devise complex real-estate investment trusts that give the super-rich a free pass on taxes every ordinary homeowner in California has to pay,” Villaraigosa said in a speech at the Sacramento Press Club. “Let’s apply, as an idea, Proposition 13’s protections to homeowners and homeowners alone.”

The 1978 referendum, which allows unlimited reassessments for tax purposes only when property is sold, excludes some commercial transactions in real-estate investment trusts, or REITs, according to the mayor.

- Good news, we are not going to slip back into a recession, so get out and buy a new car.

ITEM: Automakers rebound in July to lift factory output
Factory output rose in July by most since Japan crisis; single-family home construction fell

WASHINGTON (AP) — U.S. automakers rebounded in July to boost factory production by the most since the Japan crisis. But builders broke ground on fewer single-family houses, leaving home construction at depressed levels.

The mixed data suggest that the economy remains fragile but is not on the cusp of another recession.

Overall industrial production, which includes output by utilities, mines and factories, rose 0.9 percent last month, the Federal Reserve said Tuesday. That’s the largest gain this year.

Factory output, the biggest component of industrial production, climbed 0.6 percent. It was the greatest increase since the March 11 earthquake in Japan disrupted supply chains and slowed production at some U.S. auto plants.

The auto industry accounted for nearly all of the factory production gains. Motor vehicles and parts jumped 5.2 percent. Excluding that category, factory output grew only 0.2 percent.

Also driving industrial production higher was an unseasonably hot summer. That led more people to leave their air conditioners running. Utility output jumped 2.8 percent, the most since December. Mining output also increased.

The strong rise in output “suggests that the U.S. economy is not in a recession now, and it’s a fairly encouraging sign that it won’t slip into one, either,” said Paul Dales, senior U.S. economist with Capital Economics.

Still, growth is likely to stay weak in the second half of the year. High unemployment and a dismal housing market will weigh on consumer spending, Dales said.

The Commerce Department said builders began work on a seasonally adjusted 604,000 homes last month, a 1.5 percent decrease from June. That’s half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market.

Single-family homes, which represent 70 percent of home construction, fell 5 percent. Apartment building rose more than 6 percent.

Mercedes, BMW Cars Burned in Berlin Protests - Bloomberg

Berlin resident Renate Langanke woke up shortly after midnight to a loud explosion. When the pensioner peeked out her window, she saw flames billowing from two Mercedes-Benz brand cars parked across the street.

“Fire and smoke was everywhere, you could smell burned rubber, it was awful,” said Langanke, who lives in a sleepy area with tree-lined alleys in white-collar western Berlin. “I’ve always felt safe here, now I’m scared.”

Arsonists have set fire to 26 cars in the German capital in the last two days, mainly from Daimler AG (DAI)’s Mercedes, Bayerische Motoren Werke AG (BMW) and Volkswagen AG (VOW)’s Audi, police said today. That brings the total number torched this year in Berlin to at least 138, more than double the figure for all of 2010.

The rise in Berlin car burnings coincides with widespread lawlessness that erupted last week across England. More than 1,500 people were arrested as rioters looted shops, attacked bystanders and burnt autos. In Berlin, far-left extremists are specifically targeting German luxury cars, symbols of the country’s wealth and export prowess, police said.

“The arsonists want to hit what they say are ‘Fat Cats,’” Berlin police spokesman Michael Gassen said. A special unit is investigating the fires as political crimes after the police received letters claiming responsibility that derided globalization, gentrification and rising rents, he said.
Political Discontent

While the attacks are spread out over the year, police usually see a spike during the summer months, Michael Maass, a Berlin police spokesman, said today. Maass declined to comment on how the attacks happened, saying police are seeking to avoid copycat crimes. In the past, arsonists have lit a car’s hood on fire after hosing it with accelerant. No arrests have been made.

The fires come amid worsening economic data and political discontent in the country. German growth, last year the motor of Europe’s recovery, almost ground to a halt in the second quarter. Gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter, the Federal Statistics Office in Wiesbaden said yesterday.

Almost two years into the European debt crisis that began in Greece, restiveness over Germany’s contribution to rescues is also weighing on Chancellor Angela Merkel’s coalition as voters rebel over providing aid to fellow euro countries.

Perhaps after Merkel and Sarkozy “fix” the euro-zone they can jet over here and give us a few tips.

ITEM: European Economy Slows More Than Forecast as Debt Crisis Saps German Might- Bloomberg

Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement today. That’s the worst performance since the euro region emerged from a recession in late 2009. Economists had forecast the economy to expand 0.3 percent, according to the median of 34 estimates in a Bloomberg News survey.

Europe’s economy may struggle to gather strength as governments from Italy to Spain step up budget cuts to fight the debt crisis. In Germany, Europe’s largest economy, growth almost stalled in the second quarter. German Chancellor Angela Merkel will meet French President Nicolas Sarkozy today in Paris under pressure to do more to combat the fiscal crisis.

“Growth may virtually stagnate in the second half and there’s a threat of a renewed recession,” said Martin van Vliet, senior economist at ING Groep NV in Amsterdam. “It’s up to Merkel and Sarkozy to prevent further contagion to the economy; the longer the turbulences persist, the higher the risk of a recession.”

Chinese Speculators Fuel Property Market With Fake Divorces to Skirt Curbs By Bloomberg News - Aug 15, 2011

Frank He said he faked a divorce from his wife of 10 years to skirt China’s ban on third mortgages and obtain a bank loan for a third property, a 12 million yuan ($1.9 million) suburban villa.

“My wife and I love each other, but as long as we can get the mortgage from the bank for the deal, we’ll take it,” said He, a 40-year-old manager at a chemical company. The forged document, which cost the Shanghai couple 20,000 yuan, helped them get a loan amounting to 60 percent of the purchase price, he said.

Chinese homebuyers and developers are finding loopholes as they come under pressure from government policies to curb gains in residential prices, such as limits on the number of properties owned. Builders are refraining from cutting prices, offering free parking lots and attics instead, as they face higher borrowing costs after Standard & Poor’s downgraded their outlook in June.

Their actions may hamper the government’s efforts to prevent a bubble in the housing market. Sales surged 25 percent in the first seven months from a year earlier and prices climbed in 67 of 70 cities monitored by the government in the first half.

“These are actually price cuts in disguise,” Sun Mingchun, Hong Kong-based economist at Daiwa Securities Capital Markets, said in an interview. “Developers are reluctant to offer discounts and are playing games with the government.”

Some sellers are throwing in gardens and basements, according to a Century 21 China Real Estate report in June. In Shanghai, properties with the additional offerings draw 30 percent more customers to display homes than those without, according to the country’s second-biggest real estate brokerage firm with 22,000 employees.

Cash-Flow Crunch

Chinese developers are facing a strain on liquidity. Almost 70 percent said their cash-flow conditions worsened in August from July, independent investment advisory firm CEBM Group Ltd. said in an Aug. 5 report, citing a monthly survey of real-estate companies in 12 cities. That compared with 22 percent in July.

Cash flow in the first quarter dropped 38.9 billion yuan, the most in at least five years, based on Bloomberg calculations from financial statements of 136 developers based in China and listed on the mainland and Hong Kong exchanges.

Developers may have to cut prices to stave off a capital shortage as the government tightens the market further, said Danny Ma, Shanghai-based director of China research for CB Richard Ellis Group Inc. in an interview. Home prices rose at the slowest pace in 11 months in July, according to SouFun Holdings Ltd.

THE BANKERS’ MANIFESTO OF 1934

“Capital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law, the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of wealth, under control of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal men now engaged in forming an imperialism of capital to govern the world. By dividing the people we can get them to expand their energies in fighting over questions of no importance to us except as teachers of the common herd. Thus by discrete action we can secure for ourselves what has been generally planned and successfully accomplished.”

Rep. Ron Paul, the candidate news media ignore because they disagree with him, explains that the government takes in some $2.2 trillion in taxes. But it spends $3.7 trillion. “We must enhance revenue” say Democrats, meaning “We must raise taxes.” Dr. Paul brazenly suggests that runaway government spending is the problem, not the American people having too much money - more of which they must ship to the U.S. Treasury Department to fund the federal spending spree.

Says Paul, “The only way to avoid chaos is for Congress to immediately reduce federal spending and take the Constitution seriously again. The welfare/warfare state will end [one way or another], but winding it down responsibly is a far better way to do it. .Stating the Obvious.

He sounds like a real whacko. Imagine trying to sell the American people on such schemes as running the government according to the U.S. Constitution, balancing budgets, or re-establishing a system of sound money. The majority of voters cannot conceive of such a thing and will cling to the failed framework of government they have grown used to. They have lived since 1940 under creeping price inflation. They can’t picture buying a cup of coffee for a dime or a loaf of bread for fourteen cents.

The paper dollar is based only on faith and it takes more and more of them just to get along in the 21st century. The people’s faith in printing press money is beginning to fade, but they’re still counting on Dr. Bernanke and the banking system to “get us back on track” and for Uncle Sam to maintain modern day soup lines as long as necessary.

Clinton opposes budget cuts
AFPAFP – 18 hrs ago

US Secretary of State Hillary Clinton warned against budget cuts that could force an abrupt pullout of the US security presence in the Pacific at a time when China’s power is rising

US Secretary of State Hillary Clinton warned Tuesday against budget cuts that could force an abrupt pullout of the US security presence in the Pacific at a time when China’s power is rising.

The debate over reducing the US debt “does cast a pall over our ability to project the kind of security interests that are in America’s interests,” Clinton told officers at the National Defense University.

“We need to have a responsible conversation about how we are going to prepare ourselves for the future and there are a lot of issues that are not in the headlines but are in the trendlines,” she said.

“We are asserting our presence in the Pacific. We are a Pacific power. That means all elements of our national security team have to be present,” the chief US diplomat said in a conversation with Defense Secretary Leon Panetta.

“And we can’t be abruptly pulling back or pulling out when we know we face some long-term challenges about how we are going to cope with what the rise of China means,” she said in the conversation moderated by CNN television.

Experts said the deal to avert a US debt default should have little effect on the Pentagon’s huge budget in the short term, but leaves the door open to sharp cuts that could force a strategy overhaul.

Imagine that a gubmint program bogged down in bureaucratic BS.

ITEM: Seattle’s ‘green jobs’ program a bust
By Vanessa Ho, Seattlepi.com Published: Aug 16, 2011

Last year, Seattle Mayor Mike McGinn announced the city had won a coveted $20 million federal grant to invest in weatherization. The unglamorous work of insulating crawl spaces and attics had emerged as a silver bullet in a bleak economy – able to create jobs and shrink carbon footprint – and the announcement came with great fanfare.

McGinn had joined Vice President Joe Biden in the White House to make it. It came on the eve of Earth Day. It had heady goals: creating 2,000 living-wage jobs in Seattle and retrofitting 2,000 homes in poorer neighborhoods.

But more than a year later, Seattle’s numbers are lackluster. As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program. Many of the jobs are administrative, and not the entry-level pathways once dreamed of for low-income workers. Some people wonder if the original goals are now achievable.

“The jobs haven’t surfaced yet,” said Michael Woo, director of Got Green, a Seattle community organizing group focused on the environment and social justice.

“It’s been a very slow and tedious process. It’s almost painful, the number of meetings people have gone to. Those are the people who got jobs. There’s been no real investment for the broader public.”

‘Who’s got the money’

The buildings that have gotten financing so far include the Washington Athletic Club and a handful of hospitals, a trend that concerns community advocates who worry the program isn’t helping lower-income homeowners.

“Who’s benefitting from this program right now – it doesn’t square with what the aspiration was,” said Howard Greenwich, the policy director of Puget Sound Sage, an economic-justice group. He urged the city to revisit its social-equity goals.

“I think what it boils down to is who’s got the money.”

Organizers and policy experts blame the economy, bureaucracy and bad timing for the program’s mediocre results. Called Community Power Works, the program funds low-interest loans and incentives for buildings to do energy-efficient upgrades. They include hospitals, municipal buildings, big commercial structures and homes.

Half the funds are reserved for financing and engaging homeowners in Central and Southeast Seattle, a historically underserved area. Most of the jobs are expected to come from this sector.

But the timing of the award has led to hurdles in enticing homeowners to bite on retrofits. The city had applied for the grant at a time of eco-giddiness, when former Seattle Mayor Greg Nickels was out-greening all other politicians except for Al Gore. Retrofits glowed with promise to boost the economy, reduce consumer bills and lower greenhouse gas emissions.

“A triple win,” is how Biden characterized it.

If anyone had any doubt that TARP restrictions are toothless, check out one Mr Campanelli. SERP payments, the simple work around for looting taxpayer dollars….

That’s repulsive. Getting 8.4 million dollars for running an underperforming bank? How can I get that sweetheart deal? And people wonder why there’s no confidence in Wall Street? Eventually it’ll poll lower than Congress, if that’s possible. Sovereign Bancorp Inc. CEO Joseph P. Campanelli stands to pocket at least $8.4 million from a golden parachute that rewards him with two years’ salary, bonus pay and an enhanced retirement plan, U.S. regulatory filings show. . As CEO, Campanelli’s base salary in 2007 was $826,923, plus he received a $1.25 million stay-on bonus, which was not tied to performance.

Rick Green of courant says, “Don’t worry, welfare for bankers won’t end” Just as everyone is telling us it’s the right thing to do to bail out Wall Street, comes news that the ousted CEO of Sovereign Bank is walking out the door this week pushing a wheelbarrow full of money

http://ceoworld.biz/ceo/2008/10/02/sovereign-bancorp-joseph-p-campanelli%E2%80%99s-repulsive-84m-parachute

Retired Citizens Republic Bancorp CEO to draw $6.9-million payout

While some have questioned paying the retirement money to Hartman while the company is receiving TARP money, there is nothing under current TARP law that would prohibit a retired executive from receiving a SERP payout, said Alan Levine, an attorney partner in the executive compensation practice at Morrison Cohen law firm in New York City.

“There’s no restrictions,” Levine said, adding things could be different if an executive was fired and the company was receiving TARP funding.”

http://www.mlive.com/news/flint/index.ssf/2009/03/hartman.html

As losses accelerate at Flagstar so do “supplemental” pension payments to Mr. Campanelli. Nearly four million in 2010…nice

From the 2011 Flagstar def14a:

 The SERP provides a lump sum payment equal to the actuarial equivalent of an accrued annual benefit payable for 23 years. The annual benefit is the sum of monthly accruals of 1.022% of Mr. Campanelli’s eligible compensation, for a maximum of 60 months provided Mr. Campanelli is employed by us on the date of each such monthly accrual. Eligible compensation includes base salary and share salary. The accrued annual benefit equals the annual benefit less any other retirement benefits provided and funded by us, as well as 50% of the benefits to which Mr. Campanelli is entitled from Social Security. As of December 31, 2010, the aggregate of the monthly accruals with respect to the SERP was $406,245 and the actuarial equivalent of the lump sum payment of such amount for 23 years was $4,752,587. The amount accrued with respect to the supplemental retirement pension, assuming a discount rate of 4.25%, in 2010 was $3,822,124 and, in total, $4,752,587 has been accrued since Mr. Campanelli joined us in 2009.

Won’t be long before the QE-3 casts off her dock lines and sails off on another “stimulus” voyage, once she runs out of fuel we’ll tow her back in for a re-fueling. Ain’t unlimited printing great!

ITEM: President Weighs Asking Panel for Stimulus Measures
BY CAROL E. LEE AND JANET HOOK - WSJ

President Barack Obama is considering recommending that lawmakers on a deficit committee back new measures to stimulate the lagging economy, people familiar with White House discussions said Tuesday.

The plan Mr. Obama is considering also would recommend the congressional committee come up with a package that reduces the federal budget deficit by much more that its mandate of $1.5 trillion over the next decade, a senior administration official said, through changes in the tax code and social safety-net programs.

“There’s no reason to stop at $1.5 trillion,” the official said.

Hey California, just raise taxes and fees, problem solved.

ITEM: California July Revenue Missed Budget Forecast by 9.2%, State Agency Says. (Bloomberg)

California revenue fell short of budget estimates by $541 million or 9.2 percent last month, the first of the 2012 fiscal year, the state Finance Department reported.

The data was in line with figures from Controller John Chiang, who said Aug. 9 that cash receipts for the month missed the forecast by $538.8 million. Chiang said the miss may mean further budget cuts are needed for fiscal 2012.

Of the $541 million shortfall in the Finance Department calculation, $166 million was likely due mostly “to the timing of deposits,” according to the Finance Department bulletin. The amount included receipts from tribal gaming and regulatory fees.

Chiang, a Democrat, warned of “drastic” cuts to universities, home health care and social programs if the trend continued. A series of “triggers” written into the most- populous state’s $86 billion general-fund budget would cut spending in those areas as well as libraries if revenue falls $1 billion short of plan. A $2 billion gap would mean a seven-day cut in the school year and an end to busing subsidies.

New forecasts for revenue in the current spending plan will be drawn up in November and December “based on the economic and cash data available at those times,” H.D. Palmer, a Finance Department spokesman, said by e-mail. The new forecasts “will determine whether the ‘trigger’ budget reductions will be implemented.”

Freddie Mac hopes to lure condo buyers with $1,500 in association dues

by Kim Miller
Palm Beach Post

Freddie Mac owned condo in Delray Beach for sale with a list price of $12,000

Federal mortgage giant Freddie Mac is offering $1,500 in homeowners association dues to anyone buying a repossessed condominium from its HomeSteps program.

The program, called “Condo Cash”, is limited to buyers who submit offers between August 15 and Nov. 15, and close the sale on or before Dec. 30. It is also valid only on condominiums that have been on the market for at least 120 days.

A two-year Home Protect limited home warranty that covers electrical, plumbing, air conditioning, heating and other major systems and appliances if offered on some eligible HomeSteps homes. Home Protect also provides discounts of up to 30 percent on the purchase of appliances

On Shaky Financial Ground? 3 Reasons Why Loan Modifications Won’t Solve Your Problems | FoxNews.com August 16, 2011

Editor’s note: This is the second of a four part series on “Shattered Dreams” by attorney and Fox News Legal Analyst Bob Massi.

Let’s assume you live in one of the geographical areas hardest hit by the home mortgage crisis. The economic boom that your lender assured you would continue to boost the value of your home has turned into an economic bust and the house you extended yourself to buy—because it would be such a great investment—is now your biggest risk for financial ruin.

You feel like you are trapped, throwing good money after bad every time you make a payment.

Maybe you can’t even make the payments. Circumstances have turned against you and you’ve lost your job, or maxed out your credit, or have been forced to take a job at reduced pay. Whatever the reason, you can’t afford your mortgage payments and you are desperate for a solution.

The banks and the federal government would like you to believe that a simple modification to your mortgage loan is all it will take to put you back on the path to financial stability. Here’s why you shouldn’t believe them:

1. To qualify for a loan modification, you need to jeopardize your credit rating. In order for a lender to see you as enough of a risk to offer loan modification, you need to be at least 90 days behind in default of your monthly payments. Being 90 days late can drop your FICO score by over 100 points. The lowered credit score can negatively impact your ability to refinance the loan or to rent in the future.

2. If you qualify after a financial review, you still have to make regular payments during the bank’s “trial period.” If this isn’t a scam, I don’t know what is.

Assuming, after submitting extensive financial documentation, your bank approves you for a loan modification trial period, they ask you to make three months of payments while the modification is prepared.

Once you’ve made the three months of (full) payments, you’ll receive a letter from the bank saying that since you have been able to make fully payments they will need to review your application for relief – and please make three more months of payments. At the end of six months of making full payments, the bank will say that based on your ability to pay over the past six months, you no longer qualify for a loan modification!

3. Loan modifications don’t solve the bigger problem. Even if you qualify for, and receive a loan modification, you are still paying on a house that is worth less than you owe on it. Loan modifications do not reduce the principle amount due on the mortgage. –They merely provide relief on the amount of interest due.

So, if you owe $200,000 in principle, that is still how much you must pay back–even if your house is now only worth $120,000. No wonder 70% of loan modifications fail!

If you are adamant that you must keep your home–no matter what–then a loan modification is your first option. Plan to endure a lot of frustration and shame while dealing with your lender who will make the process as long and drawn out as possible.

Plan to have days when you honestly resent living in the home that has forced you into this position.

And be sure your financial picture is improving over time, because whatever extra savings you hope to gain in the short term with a loan modification will be used up on the back end, when the difference gets tacked back on to the end of the loan.

Did you know?

Did you know “it’s different” in California? There are a couple lying realtor apologists here and they say so. According to them, materials prices in California are double digits higher than any other state in the country… even NY.

California’s “different” because our own little blog Housing Crime Syndicate says so.

OT - I’m used to a buy premium for PM, but a sell premium? is this normal? had to walk out of the shop over that one.

I’ve recently noticed a large amount of new listings on Trulia ascribed to GOVLISTEDdotcom. There’s very little infromation about the properties, and they all have the following statement, “This is a notice of trustee sale property and will go through an auction process.” I follow markets in a number of different states and they all have these entries. They seem to have appeared just in the past week. Anyone else notice them? Have any ideas what it means, or how large dumps of foreclosure like this might affect the local markets?

A broken debt-generation system led to the skyrocketing of housing prices. It allowed people to take out loans on ever larger sums of money with ever less downpayment.

This led to the avalanche of bad loans, which led to the global financial crisis.

Geithner has on multiple occasions stated it is the policy of the government to prop up housing prices.

How do they do this then?

1) Continue the broken debt generation system (FHA 3.5% down anyone? etc, etc)

2) Limit the inventory

3) Other?

Regulations are like the immune system. If the immune system is turned up too high, you get autoimmune diseases. If it’s too low, you get external diseases. There needs to be a balance for optimal health.

The same goes for regulation. Too little = Somalia. Too much = Soviet Union. We need a balance for optimal societal health.

Newsflash-

Mrs. RAL just rang. Stated she got talking with a realt-liar at the store this morning and said realt-liar started having a meltdown about her oppressive mortgage payment. Mrs. RAL encouraged her to walk away and realtliar said “I’ve been thinking about it and was just waiting for someone to encourage me”.

Score one for us.

Got stagflation?

U.S. ECONOMY
PPI hints at hotter inflation

Producer prices up 0.2% in July, with the core PPI rate increasing 0.4% — both higher than forecast.

This guy was Fuld of it.

Aug. 17, 2011, 9:53 a.m. EDT
Taking it to the shorts, again
Commentary: Europeans try to instill confidence through regulation
By Al Lewis

NEW YORK (MarketWatch) — Some believe that in times of crisis, little angels come down from heaven to rescue the few who would only try to hear them.

These mysterious beings are called shorts.

You might conclude that shorts are indeed of celestial origin when you consider the people who revile them the most: bankers, CEOs, beholden politicians and delusional investors caught unaware in a financial calamity that has so obviously been brewing for years.

“When I find a short seller, I want to tear his heart out and eat it before his eyes while he’s still alive,” is what one Wall Street chieftain said in 2008. You may remember him. You may not. His name was Richard Fuld. He was CEO of what used to be called … um, Lehman Brothers.
…

Transit Agencies in U.S. Plan Higher Fares, Less Service
(Bloomberg)- Aug 17, 2011

More than half of U.S. public transit agencies may increase fares or trim service this year amid budget shortfalls and a threatened loss of federal funding, according to a study.

Officials at 56 percent of 117 agencies surveyed in March said they were considering cost savings, according to the report released today by the American Public Transportation Association, a Washington-based trade group for transit providers. One in four agencies contemplated a combination of both measures, the study found.

“The overarching trend points toward a public that wants more public transportation,” Art Guzzetti, the group’s vice president of policy, said in a telephone interview. “What’s on hold is public investment.”

Transit agencies have already reduced staff and benefits as they reeled from post-recession revenue declines. Fifty-one percent of agencies said they’d already increased fares or reduced service this year, according to the study by the group, which has 1,500 members serving more than 90 percent of riders in the U.S. and Canada.

Since 2008, the Orange County Transportation Authority in Orange, California, has reduced service 20 percent while raising fares by the same amount, said Joel Zlotnik, a spokesman. The operator of buses and a commuter-rail system lost $40 million in state funding during the time, he said.

This month, the Port Authority of New York and New Jersey proposed toll increases for bridges and tunnels that would boost the cost to enter Manhattan to as much as $17. Rides on its PATH trains under the Hudson River would increase $1 to $2.75. Board members will vote on the plan this week.
Soaking the Straphanger

“It’s not fair to ask people already hit hard to pay more,” said Michele Markowitz, a 21-year-old college student who lives in Manhattan and rides the Metropolitan Transit Authority’s subway every day.

“We’re told to ‘go green’ and take mass transit, but it’s becoming too expensive to do so,” said Markowitz, who was having a beer at the Subway Inn on 60th Street with her boyfriend.

Thirty-five percent of the agencies projected budget gaps in the coming fiscal year totaling more than $600 million, the study said. Officials cited a dearth of local and state funding and rising fuel costs as the biggest stresses to operating budgets even as ridership is projected to grow.

Cool, so the Germans will gain control of Europe after all. In just a little different fashion!

ITEM: French, German Leaders Urge Elected Eurozone Chief- AP

The leaders of France and Germany said Wednesday that they want the heads of the euro-zone countries to elect the president of a new “economic government” who would direct regular summits to respond to the continent’s financial crisis.

S&P Rating agency at it again. What are the names associated w/oking these statements I have to wonder. They basically downgraded future growth predictions for US and made a swipe at the Fed for suggesting the weak first half of 2011 was “transitory”. They also made a statement that this situation would be much more severe than 2008.

From the S&P statement: “The markets’ violent swings in early August resurrected fears of the market meltdown, such as the one in 2008 when Lehman Brothers went under and Reserve Fund broke the buck. Currently, the crisis is considered to be much more severe, with U.S. sovereign debt at risk of default. The low Treasury yields indicated that markets were expecting Congress to come to its senses and reach a deal. However, the wait and the last-minute deal, which left a lot to be desired, only increased worries that the government will do more harm than good. Confidence in the recovery and in U.S. policymaking has hit new lows. After U.S. sovereign debt lost its triple-A status and financial markets unwound, consumer confidence hit a 31-year low and manufacturing sentiment readings contracted.”

Looking for a link I can get through the censors but I am having trouble downloading certain pages this week: Marketwatch, Bloomberg, indexq.org. I thought it was Time Warner issues but is anyone else having this trouble? Will follow up as different sites start linking to this.

Hardball—-

Is this legal? Don’t know much about union law since no one in my family has ever belonged to one.

Verizon Communications Inc. (VZ) told 45,000 striking workers that it will suspend certain benefits at the end of the month if they haven’t returned to their jobs, a move that a union official called a “scare” tactic.

Workers at two unions that have called strikes will lose basic health-insurance, dental, vision and prescription-drug benefits, said Richard Young, a spokesman for the New York-based telephone company. Verizon stopped funding the workers’ pensions when their former contract expired Aug. 6.

http://www.bloomberg.com/news/2011-08-17/verizon-tells-striking-workers-it-plans-to-suspend-benefits.html

I see team Barry went to Canada to get those fancy $1.2 million dollar buses built by Provost. To bad we don’t have any manufactures here in the U.S. capable of building a bus for a 3 day tour. Of course when you have to have the rock-stars choice you have to go north of our boarder.

Uh oh…dive for the bunkers. I think this is a sign of hell freezing over or Armageddon or something equally frightening:

Lawrence Yun, chief economist at the National Association of Realtors, told a meeting of the National Conference of State Legislatures last week that he has increased the probability of another recession from 10 percent three months ago to 30 percent today. A recent USA Today survey of 39 economists reached the same conclusion. A reason for the pessimistic forecast, Yun said, is “all the weapons to fight the economic downturn have already been used.”

http://www.stateline.org/live/details/story?contentId=594199

Moody’s downgrades US growth outlook:

http://blogs.wsj.com/economics/2011/08/15/moodys-lowers-economic-growth-outlook/

I made an earlier post of an S&P downgrade. This Moody’s coverage from WSJ showed up but still looking for the link to back up the S&P news. That post has not yet shown up. Perhaps Ben is waiting for me to get that link. The Moody’s downgrade is still much more positive than the S&P downgrade.

Obama: Another Year or More for Housing Turnaround- AP

President Barack Obama says it likely will be another year to 18 months before home prices start rising again and sales start to pick up.

X-GSfixr’s latest Revenue generation plan:

We’ve been seeing and hearing the stories of all of the crazy money the Banksters and Ponzi schemers pi$$ away. A significant percentage of which seems to be spent in “exotic entertainment establishments” and “Gentleman’s Clubs”

So, the answer stares us right in the face: A STRIPPER/HOOKER TAX!

Or call it a “User Fee”, which is closer to being accurate.

Start with a 10% across the board “user fee” for all services rendered.

Although some of us could have some fun figuring out ways to “fine tune” the user fee, to make it more equitable.

Example: P x 2 x CPS x T = total user fee

Where:

P = Little Jimmy’s length (inches)

2 = Length of one full insertion/retraction cycle

CPS = cycles per second

T = Time (in seconds)

A user fee based on this formula would be “fairer” to the guys with hair triggers.

Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)

“Boycott ‘em!™” + “Move-yer-monie$-now!™” = See ya!

Wells Fargo to test $3 debit card fee
Wells Fargo to start testing $3 monthly debit card fee in the fall:

The industry’s experimentation with fees is partly a response to a new regulation that will sharply reduce the revenue that banks collect on checking accounts. Starting this fall, a new cap will limit how much banks can collect from merchants whenever a customer swipes a debit card. It’s not clear exactly how much banks will lose. In 2009 banks collected an estimated $19.7 billion in such fees from merchants, according to the Nilson Report, which tracks the payments industry.

Wells Fargo has said it plans to recover about half the revenue it loses from the new regulation, either through product changes or volume growth. Earlier this year Wells Fargo announced that it was ending its debit rewards program. Chase has also ended its debit rewards program and PNC Bank will no longer give customers with free checking accounts rewards for debit card purchases.

Being Like Soros in Buying Farmland Reaps Annual Gains of 16%
- Bloomberg

Perry Vieth baled hay on a neighbor’s farm in Wisconsin for two summers during high school in 1972 and 1973. The grueling labor left him with no doubt about getting a college degree so that he’d never have to work as hard again for a paycheck. Thirty-eight years later, and after a career as a securities lawyer and fixed-income trader, Vieth is back on the farm.

Except, now, he owns it. As co-founder of Ceres Partners LLC, a Granger, Indiana-based investment firm, Vieth oversees 61 farms valued at $63.3 million in Illinois, Indiana, Michigan and Tennessee. He’s so enthusiastic about the investments that he quit a job in 2008 overseeing $7 billion in fixed-income assets at PanAgora Asset Management Inc., a Boston-based quantitative money management firm, to focus full time on farming, Bloomberg Markets magazine reports in its September issue.

On a spring afternoon, Vieth, 54, barrels along backcountry roads in a Jeep Cherokee in Indiana and Michigan to scout a fruit orchard and corn and soybean farms to buy. Rural towns with names such as Three Rivers pass by in a blur, separated by a wide horizon of fields with young crops popping up.

“When I told people I was leaving to start an investment fund in farmland, they said, ‘You’re doing what?’” says Vieth, in a red polo golf shirt and khakis. “It will always be difficult for Wall Street firms to understand. It’s not like buying stocks on a computer.”

It’s much better: Returns from farmland have trounced those of equities. Ceres Partners produced an average annual gain of 16.4 percent after fees from January 2008, just after the firm started, through June of this year, Vieth says.

Study: 1 in 5 U.S. children live in poverty. - CBS News

LAS VEGAS - Karla Washington worries how she will afford new school uniforms for her five-year-old daughter.

Washington, an undergraduate student, earns less than $11,000 a year from a part-time university job. The salary must cover food, rent, health care, child care and the occasional splurge on a Blue’s Clues item for her only child.

“My biggest fear is not providing my daughter with everything that she needs to be a balanced child, to be independent, to be safe, to feel like she is of value,” said Washington, 41.

Washington’s economic woes are seen throughout Nevada, where the nation’s highest unemployment and foreclosure rates have combined to devastate families and empty neighborhoods and construction yards.

The Annie E. Casey Foundation state-by-state data center

A national study on child well-being to be published Wednesday found Nevada had the highest rate of children whose parents are unemployed and underemployed. The state is also home to the most children affected by foreclosures — 13 percent of all Silver State babies, toddlers and teenagers have been kicked out of their homes because of an unpaid mortgage, the study found.

Across the nation, the research by the Annie E. Casey Foundation found that child poverty increased in 38 states from 2000 to 2009. As a result, 14.7 million children, 20 percent, were poor in 2009. That represents a 2.5 million increase from 2000, when 17 percent of the nation’s youth lived in low-income homes.

In the foundation’s first examination of the impact of the recession on the nation’s children, the researchers concluded that low-income children will likely suffer academically, economically and socially long after their parents have recovered.

“People who grew up in a financially secure situation find it easier to succeed in life, they are more likely to graduate from high school, more likely to graduate from college and these are things that will led to greater success in life,” said Stephen Brown, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas. “What we are looking at is a cohort of kids who as they become adults may be less able to contribute to the growth of the economy. It could go on for multiple generations.”

The annual survey monitored by policy makers across the nation concludes that children from low-income families are more likely to be raised in unstable environments and change schools than their wealthier peers. As a result, they are less likely to be gainfully employed as adults.

There are other social costs. Economically disadvantaged children can result in reduced economic output, higher health expenditures and increased criminal justice costs for society, the survey concludes. The research is based on data from many sources, including the Mortgage Bankers Association, National Delinquency Survey and U.S. Census Bureau.

“Even if you don’t care about kids and all you care about is your own well-being, then you ought to be concerned,” said Patrick McCarthy, president of the Baltimore, Md.-based charity. “… We’ve got to think about what kind of state, what kind of country we can expect to have if we are not investing in the success of our children.”

NASA Joins The Rap Game
Earnest “Nex” Cavalli | 17 Aug 2011 12:20 pm
Filed under: earnest “nex” cavalli, music, nasa, rap, space

http://www.escapistmagazine.com/news/view/112381-NASA-Joins-The-Rap-Game

Conforming loan limits coming down starting now…let’s see what happens to sales volumes…

http://www.cnbc.com/id/44178578

Wells Fargo Lowers Conforming Loan Limits

http://www.cnbc.com/id/44178578

The deadline for ending temporarily higher loan limits at Fannie Mae, Freddie Mac and the FHA is October 1st, but they are effectively ended now.

A Wells Fargo spokesman confirms, “August 15th was the deadline for applications and rate locks for FHA and conventional conforming loans with balances above the limits we expect will be in place after September 30th.”

The loan limits were raised by Congress in 2008 temporarily from $417,000 to $729,000 in the highest priced markets in order to help bring much-needed liquidity to the mortgage market after the sub-prime meltdown that sent investors fleeing. There has been heavy lobbying by the Realtors, mortgage bankers and home builders to extend the limits, but so far to no avail.

Even though the rule goes into effect on October 1st, all loans have to be funded, sold and shipped to the GSE’s by then. Refi volume has been so high lately that it can take 45 days to do a loan, so lenders have to cut off in time.

Obama is on road trip looking for economic ideas….

You want some economic ideas?

UNDO everything we’ve been doing for the last 60 years.

1) End free trade and add large trade tarrifs on imports to plug internation trade imbalances.
2) Item 1 jacks up prices, making room for more domestic production. Strengthen labor laws to ensure those jobs pay sufficient wages to allow people to buy goods and services, driving demand, without ever increasing debt. Switch from a supply-side economy where people borrow money they need to buy goods, to a demand-side economy where poeple make enough wage to drive demand without debt.
3) Eliminate the SS/MC payroll taxes and roll it into income taxes.
4) Eliminate virtually all income tax dedutions. 20% income tax upto median household income, 40% upto 2x, 60% upto 3x medain huosehold income, then top marginal income tax rate to 80% on anything over 3x the median household income. Eliminate capital gains, estate, etc taxes. Roll ALL income into the income tax, regardless of the source.
5) Eliminate corporate income tax. Replace it with a corporate property tax on cash assets on their balance sheets. Encourage companies to spend on property/plant/equipment or distrubute cash to owners who get charged income tax, rather than sitting on fat cash balance sheets. The exception is foreign based corporations which pay a tax on all money removed from the USA (foreign investment and dividends to foreigners) at a rate the same as the import tarrif.
6) Large cuts to programs intended to help people that do not have high enough income. EIC is gone, per child tax credits gone, student lunch programs gone. Food stamps, housing assistance, Medicare, disability, etc, all take massive hits, like 50% plus. We need jobs that pay enough that people can live without government assistance, not more public assistance so that companies can sell products to people that otherwise can’t afford them.
7) Let the too big to fail banks, fail. Reinstate FASB157 and watch them all implode. Cash injections go to proping up small to medium banks, not to proping up the large banks.
Let housing prices crash. Force liquidations of inventory. Make changes to bankruptcy laws to speed foreclsoures.
9) Bring back the old bankruptcy laws making it easier for people burried in debt to get out from under that debt.
10) Public option national healthcare paid for out of income taxes.
11) Undo banking deregulation. No interstate banks. No bank/brokerage hybrids. 10% reserve requirements. No securitized debt obligations without margined reserves. Larger limits on exposure to certain market segments.

Attack trade imbalances that have caused excess money and debt creation. Attack the pools of money. Collapse the excessive debt. Switch back to a demand-side, wage based economy from our supply-side, debt based economy. STOP doing the things that brought us to the verge of collapse. TURN AROUND AND START DOING THE OPPOSITE.

How hard is that to figure out?

Coca-Cola / x110 long grain trains?…80 year old Uncle Warren’s having an interesting retirement.

Many attribute the larger-than-expected demand to a growing middle class that is changing its tastes more quickly than anticipated. As the Chinese population becomes wealthier, for example, it is eating more pork. And the Chinese government is pushing its farmers to adopt Western methods of raising their pigs, including feeding them more corn. Citizens are also slurping up juices and other products that include corn-based sweeteners: Coca-Cola Co. said that its volume in China spiked 21% in the second quarter.

Chinese Hunger for Corn $tretches Farm Belt:
By SCOTT KILMAN And BRIAN SPEGELE

China already buys about a quarter of all U.S. soybeans. But its sudden demand for corn caught many off guard. China, which hadn’t been a net importer of corn for 15 years until last year, has a vast corn belt of its own and for many years strove to be self-sufficient. And because China is secretive about the levels of commodities it holds in its strategic reserves, the rest of the market can only guess what its supply needs are.

China’s need for corn—which forms the basis of sweeteners, starch and alcohol as well as feed for livestock—was on stark display in July when the nation ordered 21 million bushels of U.S. corn in one hit, more than the U.S. government thought the country would buy in a year. The purchase surprised the market and came as an intense July heat wave was shrinking the potential size of the Midwest crop. China bought another 2.2 million bushels of U.S. corn early this month.

Still, the threat of instability might well work in the favor of U.S. farmers. China’s ruling Communist Party worries in particular about food inflation, which could put social stability at risk. In an effort to preserve domestic supplies, the government has already stopped construction of factories that convert Chinese corn into ethanol fuel.

U.S. companies are already investing with China’s ever-expanding appetite in mind. Decatur, Ill., grain exporter Archer-Daniels-Midland Co. said in July that it would build a shuttle-loading grain elevator near St. Cloud, Minn., with the capability of loading trains that are 110 cars long.

Biotechnology giant Monsanto Co. has had talks about deepening ties with Sinochem, the state-owned chemicals conglomerate with which it has had a corn seed-breeding venture in China since 2001.

doubling of per-capita meat consumption in China so that it matches the U.S. level would require the country to use an additional 24 billion bushels of corn, or about twice what the U.S. produces in a year.

“There’s not enough grain in the world for them to do that,” Mr. Swanson says. “But just moving in the direction is staggering to consider.”

Is it just me, or does Rick Perry look like about 3/4ths of the used truck salesmen in America?

I’m not a stickler for fashion, but my God man, you are the Governor of Texas……..spring for the full Supercuts treatment, and quit going to the barber college.

Where does this Texas tough talk against the Fed come from? Since when is the normal conduct of monetary policy an act of treason?

Perry Links Federal Reserve Policies and Treason
Charles Dharapak/Associated Press

Gov. Rick Perry of Texas campaigned for president Tuesday in Iowa with his family. From left, Mr. Perry; his wife, Anita; his son, Griffin; his daughter-in-law, Meredith; and his daughter, Sydney. More Photos »
By JEFF ZELENY and JACKIE CALMES
Published: August 16, 2011

DUBUQUE, Iowa — Gov. Rick Perry did not back down on Tuesday, but he did not repeat his suggestion that the monetary policies of the Federal Reserve were potentially “treasonous” and could warrant “ugly” treatment should the Fed chairman, Ben S. Bernanke, ever pay a visit to Texas.

“Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous in my opinion,” Mr. Perry said Monday, taking a voter’s question about the Fed and criticizing the possibility of the central bank’s taking further steps between now and the election to keep interest rates low.

He added, “I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas.”
…

http://www.telegraph.co.uk/news/worldnews/europe/italy/8707154/Italy-could-recover-billions-in-taxes-by-setting-up-licensed-brothels.html

Leave it to governments to deal with fiscal mismanagement by promoting the spread of vice, then taxing it.

I’m starting to see some serious price drops $249 to $199k. Good stuff, but we’re not done.

The more the bubble deflates, the less I want to be locked into a house.

Debt sucks.
Cash is king.
Drink lots of wine (from a box).

Shazam!

“Florida teachers can get a free year of annual passes to Legoland Florida, the theme park currently under construction in Winter Haven.”

http://blogs.orlandosentinel.com/features_orlando/2011/08/legoland-florida-free-annual-passes-for-teachers.html

How are banksters going to ever be brought to justice if the evidence is routinely put through shredders?

SEC accused of shredding
Information had been collected for fraud investigations

“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” said Sen. Chuck Grassley, Republican of Iowa, in a letter to the agency’s chairman, Mary Schapiro.
…

Allena, how are you doing this days?

http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

Matt Taibbi’s latest: Is the SEC covering up Wall Street Crimes?

Professor Bear’s late night, seat-of-the-pants predictions:

2) Somebody in the press will ask Rick Perry to explain his accusation that the Fed’s QE manoeuvre is tantamount to treason.

Aug. 18, 2011, 12:01 a.m. EDT
‘R’ is for recession, not recovery
Commentary: Humpty Dumpty perches on Wall Street
By Jon Markman, MarketWatch

SEATTLE (MarketWatch) — Call it a cyclical slowdown, a correction, a bear market if you will, but the fact is that the trend of the economy, wages, prices and share values are all pointing south. Until the Fed tries to save the day by announcing a third round of quantitative easing — and possibly not even then — figure it’s 10 minutes ’til sunset for the bulls.

Market leadership is petering out. Big industrials such as Caterpillar Inc. (CAT -1.91%), 3M Co. (MMM -0.80%) and Ingersoll-Rand Co. (IR -2.85%) look like the cat’s breakfast, and tech titans Google Inc. (GOOG -1.09%) , Oracle Corp. (ORCL -0.36%) and Texas Instruments Inc. (TXN 0.00%) have all lost their power cords.

This is no way to run an expansion. It’s not even the way to run a recovery.

If that makes you bummed, and who could blame you, light a candle, say a novena and pray that the Bernank has one more miracle in his back pocket when the Federal Reserve meets for its annual retreat in Wyoming later this month. Couldn’t hurt, right? Anything is worth a shot at this point.
…

Enough already. The American people need to stand up and demand that justice be served to the Wall Street crime syndicate and any politicians who participated in covering up criminal activity. But where is the political leadership to bring this about?

Make a convincing offer to send Wall Street criminals and their Washington, DC protectors to prison, right where they belong, and you have my vote.

S.E.C. Files Were Illegally Destroyed, Lawyer Says
By EDWARD WYATT
Published: August 17, 2011

The destroyed files comprise records of at least 9,000 preliminary inquiries into matters involving notorious individuals like Bernard L. Madoff, as well as several major Wall Street firms that later were the subject of scrutiny after the 2008 financial crisis, including Goldman Sachs, Lehman Brothers, Citigroup and Bank of America.
…

18 August 2011 Last updated at 00:07 ET

US senator wants SEC’s answers on destroyed files claim
Bernard Madoff walks out from court in Manhattan in January 2009 Files relating to Bernard Madoff, major banks and hedge funds were allegedly among those destroyed

A US senator is demanding answers to an allegation that America’s top financial regulator has destroyed thousands of preliminary investigation records.

Senator Charles Grassley has written to the Securities and Exchange Commission (SEC) to query the claims by an internal whistleblower.

The SEC is said to have destroyed files on initial inquiries linked to Bernard Madoff, major banks and hedge funds.

A spokesman for the watchdog said it did not need to retain every document.

According to an SEC attorney-turned-whistleblower, Darcy Flynn, the regulator has destroyed more than 9,000 files on preliminary investigations since the early 1990s.
…

Business as usual at the SEC?

SEC accused of dumping records of financial firms
By David S. Hilzenrath
The Washington Post / August 18, 2011

WASHINGTON - The SEC has violated federal law by destroying the records of thousands of enforcement cases in which it decided not to file charges against or conduct full-blown investigations of Wall Street firms and others initially suspected of wrongdoing, a former agency official has alleged.

The purged records involve such major firms as Goldman Sachs, Citigroup, Bank of America, Morgan Stanley, and hedge fund manager SAC Capital, the former official claimed. At issue were suspicions such as insider trading, financial fraud, and market manipulation.
…

Realturds are truly liars, and here’s why:

March 2011 A home that we liked the front of comes on the market, and is sold quickly. Turns out it was a SS. (Disclosure is many times hidden upfront.)Falls out of escrow. Weak buyer.

May 2011 Comes back on the market, so we preview it. Our Buyer’s Broker tells us that they have 5 OFFERS in 3 DAYS, since the listing priced dropped. 1 cash, 2 -20% down, and 1 other. Hurry up, if you like what you’re about to see…opens door to listing.
Fwy noise, major fixer, bad remodel in master. We pass. It shows pending for months as “Under Contract” with the second buyer.

Aug 2011 Get a call from our Buyer’s Broker Assistant. Our Buyer’s Broker is the listing agent on the SS. Current buyer walked. It’s an opportunity says his assistant, not communicating with her boss that we didn’t want it. They have 14 days to find a buyer. We’re cash and want a one-story. I repeated how we work. We find the house, she’s the door opener, that’s all. She got snotty with me, and I hung up. We’re thinking about breaking our contract.
You would think a cash buyer would be someone not to tick off. Lies and attitudes. Oh I forgot, they are realturds.