The Housing Bubble

No one could have seen it coming…

PALM BEACH — Lydian Private Bank was born during one bubble and died in the aftermath of another.

Federal regulators Friday closed Palm Beach-based Lydian in a bank failure that’s expected to cost the Federal Deposit Insurance Corp.’s Deposit Insurance Fund $293.2 million.

Regulators said Lydian had an “inadequate level of capital” and must hire “experienced and qualified managers and lending staff.” The order also said Lydian’s board “failed to exercise adequate supervision” and cited the bank for filing inaccurate financial reports.

Lydian’s failure follows a promising start for a company originally envisioned as a high-tech bank. Founder Rory Brown, a former executive at Ocwen Financial Corp., launched VirtualBank as an online institution based on PGA Boulevard in Palm Beach Gardens.

In 2002, Brown decided to morph the company into a high-end private bank with a fancy office at Royal Palm Way and County Road in Palm Beach. Brown changed VirtualBank’s name to Lydian Private Bank, a nod to the Lydian society of ancient Asia Minor, which invented gold and silver coins.

However, Lydian Private Bank never completely transformed itself into a private bank in the style of Northern Trust or Bessemer Trust. Institutions that followed the traditional wealth-management business model have survived the banking meltdown. In an ill-fated move, Lydian started a mortgage origination arm during the real estate boom.

http://www.palmbeachpost.com/money/palm-beach-based-lydian-private-bank-fails-1764146.html

Hope he doesn’t have to close any of the wings…

http://virtualglobetrotting.com/map/rory-browns-house/view/?service=1

More comments:

http://www.palmbeachpost.com/money/palm-beach-based-lydian-private-bank-fails-1764146.html

http://www.palmbeachpost.com/money/palm-beach-firm-lydian-sued-by-microsoft-executive-1474098.html

http://www.palmbeachpost.com/money/palm-beach-bank-chairman-stepping-down-1471590.html

http://www.ripoffreport.com/mortgage-companies/virtualbank-a-divisi/virtual-bank-lydian-bank-lydia-dm9d9.htm

Obviously, we took a wrong turn.
The party ended and no one is sure how to start it again.

There’s always a downside to putting on a really glorious party without knowing how you’ll pay for it. When the champagne runs out and the band packs up, what then? What if we can’t raise the money to pick up the tab?

The Obama Administration and Congress are caught in that dilemma right now and there are no answers in sight - - unless you have faith in the Congressional Super Committee to solve the matter in the next several weeks. In the meantime, the President is vacationing at Martha’s Vineyard and is surely giving a lot of thought to the problem. He has promised, after all, to return from vacation with a plan to create jobs.

Columnist Pat Buchanan remarks, “The nation Obama leads is facing a deficit-debt crisis that comes of an inescapable truth: Whether we are talking about commitments to go to war to defend scores of nations or commitments to entitlement and Great Society programs such as Social Security, Medicare, Medicaid, earned income tax credits, food stamps and Pell grants, we Americans have handed out promissory notes we no longer have the means to meet.

“We can no longer deliver what we have promised.”

~ The U.S. is in dire need of a leader to ride into the scene behaving like an old-fashioned statesman who is not afraid to explain what’s wrong and say what it will take to fix it. He’ll have to get us to swallow programs of austerity and sacrifice in order to unwind the huge imbalances on the federal books. No one will be happy.

But that’s the way it is after long-running excess. The hangover must be endured. Pass the aspirin, please.

PIMCO: Treasuries reflect likelihood of recession
By Jennifer Ablan and Daniel Burns
NEW YORK | Fri Aug 19, 2011 4:06pm EDT

(Reuters) - Bill Gross, manager of the world’s largest bond fund, said on Friday the decline in Treasury yields to 60-year lows reflect a high probability of recession in the United States.

Gross, the co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion, also told Reuters Insider television the U.S. is running out of monetary and fiscal policy options.

“It is increasingly apparent to us that policy options are limited and that economic growth is slowing down,” said Gross said.

Thursday, Morgan Stanley warned in a research report the United States and euro zone are “dangerously close to recession,” joining a number of firms that have slashed forecasts for global growth in the second half of the year. Not only are economists and investors bracing for a slowdown in the U.S., they are concerned about a deceleration in China’s growth rate to persistent sovereign-debt turmoil in Europe.

Morgan Stanley cut its global GDP forecast to 3.9 percent growth from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.

“There’s no doubt that (U.S.) growth from the standpoint of employment or unemployment and growth from the standpoint of corporate profits is definitely a risk — whether or not we see a positive 1 percent real GDP number I think is besides the point.”

Gross said low Treasury yields are flashing recessionary conditions.

“They certainly reflect, in terms of their yields, not only a potential for a recession but the almost high probability of recession and the result of lowering of inflation — that is key.”

On Thursday, the yield on the benchmark 10-year U.S. Treasury note dropped below 2 percent to 1.98 percent. Friday, the 10-year yield stood around 2.08 percent.

In May, Gross told Reuters the only way he would purchase Treasuries again is if the United States heads into another recession.

Gross, who manages the $245 billion Total Return Fund, reiterated that sentiment on Friday: “I don’t think there is any value there unless you see a recession.”
…

Note that the “surprise” factor is one of the arrows remaining in the Fed’s quiver. An about face in policy from what pundits expect is an effective means to administer electroshock therapy to a moribund economy.

That said, I would personally be surprised by a QE3 announcement next week, given recent evidence of building inflationary pressures on consumers and producers, coupled with record-low Treasury yields last week. Perhaps QE3 is already underway, though as yet unannounced, as suggested by a 50-year low on long-term Treasury yields against a backdrop of rising inflation?

Analysis: Fed may have bullets left, but are they blanks?
By Steven C. Johnson
NEW YORK | Wed Aug 17, 2011 6:22pm EDT

(Reuters) - When Federal Reserve Chairman Ben Bernanke takes the podium next week at the central bank’s annual meeting in Jackson Hole, Wyoming, his sense of deja vu may be overwhelming.

Stocks have been giving up gains won after last year’s speech, when Bernanke hinted at plans to pump more money into the financial system. Oil prices are higher and there’s been little improvement in the job market. Bond yields are down, though, because the economic outlook has deteriorated.

It’s almost as if QE2, the Fed’s $600 billion bond-buying program first mentioned at last year’s meeting and designed to boost the struggling economy, never happened.

That’s not to say investors doubt the central bank’s resolve to act again if the U.S. economy keeps losing steam. Last week, it surprised markets with an unprecedented pledge to hold interest rates near zero until at least 2013.

But given questions about the efficacy of monetary stimulus to date and a growing political backlash against the Fed’s policies, investors expect the U.S. central bank to keep its powder dry at this year’s Jackson Hole symposium from August 25-27.

“The Fed already shocked the world when it indicated its ultra-low interest rate policy would remain in place until 2013,” said Fred Dickson, strategist at D.A. Davidson & Co in Lake Oswego, Oregon. “That telegraphed the economy is going to stay weak. But monetary and fiscal policies haven’t worked very well, so I don’t expect we’ll get a QE3 announcement. That would really catch everybody by surprise.”
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Are you putting your money into the stock market these days? If so, beware of liquidity black holes, which can suck your lifetime 401(K) retirement savings into Wall Street coffers in the blink of an eye.

Try not to catch yerself a falling knife playing the stock market!

Insight: The madness of Wall Street
By Matthew Goldstein, Lauren Tara LaCapra, Jennifer Ablan and Joseph Giannone
NEW YORK | Fri Aug 19, 2011 11:54am EDT

(Reuters) - The best thing to be said of the recent stomach-churning turmoil on Wall Street is that it’s taking place in August, a time of year when many people are lounging at the beach or camping in the woods and not paying attention to stocks.

But for everyone else not on a ’stockation,’ watching the markets rise and fall like giant ocean swells has been an unnerving experience that some finance professionals worry could reshape investor behavior for months and years to come.

“Everyone felt this was idiotic,” says Susan Kaplan, president of Kaplan Financial Services, referring to last week’s volatility. “Most clients didn’t want to deal with the markets anymore and went back to their summer vacations,” said Kaplan, whose firm manages about $1.3 billion in customer money.

In the short term, doing nothing may well prove to be the best strategy for dealing with the kind of dizzying gyrations that occurred the week of August 8 in the U.S. stock market. At one point, the S&P500 was down 8 percent for the week before it erased all of those losses and then some in the ensuing days.

Thursday brought another August storm. The S&P500 plunged 4.46 percent and the benchmark 10-year Treasury note yield fell below 2 percent for the first time in 70 years. And the trouble is this turmoil may not be some temporary anomaly.

FREE FALLIN

Experts say investors should expect even more volatility in stocks, as herd trading by hedge funds, knee-jerk trader reaction to news and lightning fast computer programs combine to make for a new and uncomfortable normal on Wall Street.

This new trading frontier even has its own signature milepost, something called “a liquidity black hole.” It’s a trading phenomenon in which there’s so much intense selling pressure in big-cap stocks that it sucks all the oxygen out of the market and stocks plunge precipitously - as on August 8 when every single stock in the S&P500 ended the day in the red.

“We have to be aware that we can be hit by one of these liquidity black holes with ever increasing frequency,” says G. Andrew Karolyi, a finance professor at Cornell University Johnson Graduate School of Management. If you are a long-term buy and hold investor you better be aware of these and not panic when you see it.”
…

Death Cross rocks Wall Street
By Rodrigo Campos
NEW YORK | Fri Aug 19, 2011 8:28am EDT

(Reuters) - Before the stormy trading of August, many stock investors probably thought “death cross” was the name of some heavy metal band.

But after a period in which the S&P 500 plunged more than 15 percent, daily trading volumes spiked by 70 percent and the United States lost its vaunted ‘triple-A’ rating, a death cross and other technical analysis terms are something investors have had to become increasingly familiar with.

For chartists and market technicians, the death cross is a strong bearish signal that indicates a major shift in trading momentum.

In the case of the S&P 500, a death cross occurs when the 50-day average for the index sinks below, or crosses over, its 200-day average.
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Does anyone else see the exact parallel between the housing bubble and the college tuition bubble? In both cases, well-meaning policy makers in DC tried to make a desirable good (housing) or service (college education) more “affordable” through subsidized lending. Instead, what happens is a ginormous, debt-fueled price bubble forms, manifested in unaffordable housing prices in the case of real estate and unaffordable tuitions in the case of higher education. In the aftermath of the bubbles’ collapses, many of those who took the offer of “affordability” loans are saddled with unrepayable debt.

Barn door left open
All the horses are long gone
Hurry, shut the door.

STUDENT DEBT: America’s Next Bubble?
By James Rosen
Published August 19, 2011 | FoxNews.com

Dismay is growing among educators, economists, parents, and students over what some are calling America’s next bubble: the skyrocketing volume of student loan debt.

“I still have student loans,” David Guard, a graduate of Gettysburg College and American University, told Fox News recently, as lawmakers and the White House bickered over the debt ceiling. “I could see an increase in those interest rates.”

Such fears are commonplace and spreading, as educators, economists, parents, and students watch with growing dismay what some are calling America’s next bubble: the skyrocketing volume of student loan debt.

Figures provided by the Federal Reserve Bank of New York show that since 1999, outstanding student loan debt has grown by more than 511 percent. Over that same period, all other household debt in America – the sum total of all credit card bills, all auto loans, even all mortgage debt assumed during the great housing boom and bust that triggered the financial crisis – grew by about 100 percent.

Rising by $100 billion a year, outstanding student loan debt now stands at about $930 billion, and is expected to reach $1 trillion by year’s end.

“Student loan debt has become a macroeconomic factor; it affects the economy,” said Mark Kantrowitz, publisher of the financial aid website http://www.finaid.org. “Students who graduate with excessive debt are more likely to delay buying a car, buying a house, getting married, having children, saving for their retirement….They’re spending less because they first have to tackle their student loan debt.”

Tackling that debt, at a projected monthly rate of .5 to 1.0 percent of the overall amount due, means that an estimated $5 to $10 billion is being sucked out of the economy each month.

What’s more, the country’s dismal job market leads to rising rates of delinquency and default. Unemployed, and under-employed, college graduates have a tougher time making payments on their student loans; as a consequence, the rate at which such payments are falling more than 90 days past due is on the rise.
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Boy, HP sure took it on the chin yesterday. And simply because they admitted what everybody already knows:

1) Apple owns the tablet world.
2) You can’t make a lot of money selling WInTel boxes and laptops.

The worse thing for HP is that the golden age of printers is over. The printer division bet the bank that everyone would print their digiat camera photos at home. Instead people are posting them on Facebook.

I once attended an all hands meeting where VJ (Vyomesh Joshi) the head honcho of printers shared an interesting anecdote: He bought his daughter an HP computer/printer bundle. She never unpacked the printer and just shoved the box into her closet.

HP’s digital cameras were a joke, OEMd from 2nd and 3 tier manufacturers they almost always got clobbered in CNet reviews.

But that’s what happens when you fire everyone and you buy everything from Taiwanese ODMs and OEMs.

HP is now betting the farm on printers, servers and cloud computing, and something tells me that even more work is headed to India and China.

Good luck HP, you’re gonna need it.

Suppose the Fed invoked stealth QE3, but accidentally triggered a recession, as markets misinterpreted ultra-low Treasury bond yields?

I don’t believe the Fed would have to publicly announce QE3 in order to execute it; for instance, recall the many trillions of dollars in unannounced bailouts they executed in the wake of the Fall 2008 global financial meltdown, which only came to light much later, after Bernie Sanders forced disclosure.

Current Yield | SATURDAY, AUGUST 20, 2011
One Note Under the Line
By RANDALL W. FORSYTH

The Treasury 10-year note slides briefly under the 2% mark for the first time in more than 50 years.

The Treasury 10-year yield fell below the bond market’s version of the Mendoza Line as the benchmark note traded briefly under the 2% mark last week. Just as the Mendoza Line is baseball jargon for an anemic batting average of .200, the slide in the 10-year Treasury yield to less than 2%—along with the plunge in equities—reflects rapidly weakening economic prospects around the globe.

The 10-year yield touched 1.974% Thursday, which was widely reported as a “record low,” since it was under the 2.03% reached in December 2008 in the crisis following the Lehman Brothers failure. In actuality, however, the record-low U.S. Treasury 10-year yield was 1.665% in February 1946. William O’Donnell and John Briggs, who head up Treasury strategy for RBS Securities, helpfully informed readers of that in one of their twice-daily market missives.

The 10-year note ended the week at 2.069%, down 17 basis points from the previous Friday. (A basis point equals 1/100th of a percentage point.) The big winner (in price terms, since bond prices move inversely to yields) was the 30-year bond; its yield tumbled 31 basis points on the week, to 3.393%.

But the plunge in the Treasury long-bond yield to below the 2010 lows is an “ominous sign” to Michael T. Darda: “Although some (mistakenly, in our opinion) associate low rates with easy money, we view the collapse in yields across the Treasury term structure as an unambiguous sign of weaker nominal growth.”
…

It’s hard to believe stock markets are tanking already two months before October arrived. It must seem to bond traders like Christmas arrived early this year.

Investing|8/19/2011 @ 4:33PM
Bonds Flag at End of Torrid Week
Andrew Wilkinson, Contributor

After an aggressive bout of risk aversion this week, Friday’s trading was more subdued. But the scars left across the landscape remained there for all to see. Global government bond yields moved decisively lower for a second week as equity investors dug an early grave figuring that the plunge in valuations signaled a move to a lower growth trajectory rather than greater value. The loss of confidence with policymakers’ response is adding to real data that has again this week created gasps across Wall Street’s dealing rooms. The resulting official growth downgrades by major investment bankers lends its seal of approval to the bearish tone.

Eurodollar futures – With the 30-year long bond yielding 3.38% representing a 34 basis point slump on the week in response to growing financial market stresses, you have to look back to December 2008 to find a time when yields plunged deeper. At the heart of the financial crisis during that time the yield on the long bond dropped like a stone falling 49 basis points in a single week. This week the 10-year yield reached a record low at 1.9735% and looks set to end the week with a gain of 15 pips at a close at around its current 2.09%. Output expectations are currently very much under the microscope with reports of the fastest contraction in Philadelphia-area manufacturing in two years contributing to economists’ downgrade for growth. However, the current bout of reevaluation still seems at odds with official projections. Take Cleveland Fed Chief Sandra Pianalto for example. In a recent speech she said she’d voted in favor of “additional support to the recovery” by agreeing to the change in wording of the Fed’s statement when the FOMC said that the environment called for the current stance at virtually zero. In the cold light of day Ms. Pianalto’s 2% prediction for 2011 now looks ambitious while 3% in 2012 and 2013 look like equally tall orders. I’m not entirely sure that if such rosy projections were likely the Fed would have needed to offer investors another crumb of comfort.
…

Realtors Are Liars®

It’s reassuring to know that panic selling of stocks briefly subsided yesterday morning, before resuming in the afternoon. Nonetheless, it seems traders are still looking for Bernanke to pull another rabbit out of his hat during his Jackson Hole speech next week, just as he did last year.

TREASURIES-US bond yields up as markets panic subsides for now
Fri Aug 19, 2011 11:45am EDT

* US bond yields rise as investors take profits

* Market still prone to quick turns

* Euro zone, economic fears remain key market factors

(Recasts, adds comments, updates prices, changes byline)

By Burton Frierson

NEW YORK, Aug 19 (Reuters) - U.S. Treasuries prices slipped in volatile trade on Friday, pulling yields up from their lowest in at least 60 years as the previous session’s panicked selling of stocks took a pause.

However, bond traders were aware that markets could change direction quickly, and a brief rise in U.S. stocks .SPX was enough to temper enthusiasm for safe-haven Treasuries.

Fears of another U.S. recession still overshadowed trading after Thursday’s dismal reading on regional business activity. There were no signs of a solution to the euro zone financial problems that have dogged investor sentiment.

However, absent any new signs of deterioration or market anxiety, investors may postpone additional bond purchases. Many are also awaiting Federal Reserve chairman Ben Bernanke’s speech on Aug. 26 for hints on how policymakers will handle the financial turmoil.

“We’ve had some really big moves this week. It’s hard to extend gains after what we’ve seen,” said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.

“We’re waiting for more data and then Bernanke next week.”
…

Ah, today I shall once again head to Monterey and Carmel to watch the wealth on display. Fancy cars parked for viewing, fancy car auctions, etc. It is amazing to see the disconnect with how people value the worth of their money. For some, money is just a means to survival, for others it defines their character or lack thereof.

Home sales dropped 3.5 pct. in July, hit 2011 low
By DEREK KRAVITZ, AP Real Estate Writer – 1 day ago

WASHINGTON (AP) — The number of people who bought previously occupied homes fell in July for the third time in four months. This year is on pace to be the worst in 14 years for home sales, as more Americans worry that the economy could slip back into another recession.

Home sales fell 3.5 percent last month to a seasonally adjusted annual rate of 4.67 million homes, the National Association of Realtors said Thursday. That’s far below the 6 million that economists say must be sold to sustain a healthy housing market.

The dismal report on home sales contributed to a rough day on Wall Street. Stocks plummeted in midday trading on fears that the global economy is slowing. The Dow Jones industrial average fell more than 400 points within the first hour of trading.

Many people are reluctant to purchase a home two years after the recession officially ended. Sales are lagging behind last year’s 4.91 million sold — the weakest in 13 years.

Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes have kept many would-be buyers away. Even people with good credit and enough money for a down payment are holding off because they are worried home prices will keep falling.

First-time homebuyers made up just 32 percent of sales. First-time buyers are critical to strong housing markets and normally make up about half of all sales. Their purchases of low and moderately priced homes also allow sellers to move up to pricier homes.

The weak data show “the housing market will not save the U.S. economy,” said Paul Dales, senior U.S. economist at Capital Economics.

Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Declining home prices and super-low mortgage rates haven’t been enough to boost sales this year.

The average rate on a 30-year fixed mortgage fell to 4.15 percent this week — the lowest level on records dating back to 1971.
…

May you live in interesting times.

- Ancient Chinese curse

The Eurozone debt crisis seems to be shaping up as a replay of the Fall 2008 Wall Street financial meltdown across the pond, with one important exception: The availability of commensurate political and financial firepower with that needed to muster the ginormous bailouts employed in the aftermath of Fall 2008 is in serious question.

Banks brace for more troubles
Ailing European financial institutions and layoffs at BofA trigger more concerns.
By Jim Puzzanghera, Los Angeles Times
August 20, 2011
Reporting from Washington—

Bank of America Corp. disclosed another round of layoffs, but federal regulators and industry analysts believe the bank and the financial industry in general are healthy.

It’s the European banks they’re worried about.

Just as the collapse of the U.S. housing market three years ago and Wall Street’s subsequent credit crunch sent shock waves around the world, federal officials fear the European debt crisis could hurt big banks there and trigger major problems here, perhaps dragging the U.S. into another recession.

“Like Europe was vulnerable in the crisis of ‘08, the U.S. is vulnerable now,” said Nicolas Veron, a senior fellow at the Bruegel think tank in Brussels. “At this point, there are big risks in Europe, but the situation has not exploded.”

Federal regulators are closely monitoring events in Europe. Many banks there are saddled with large holdings of bonds from troubled nations such as Greece, Italy and Spain, but regulators in the decentralized European Union have less power to stem a crisis should it arise.

“We’ve been in close communication with our counterparts in Europe on the situation there for many months. It’s clear they’re working hard to address the situation,” said a U.S. official who was not authorized to speak publicly and requested anonymity. “They face a difficult challenge, but we believe they have the ability and the will to meet their obligations.”
…

http://www.ronpaul2012.com/

For those not inclined to follow the sheep in blindly pulling the lever for one of the corporatocracy’s Republicrat Tweedle Dees or Tweedle Dums in 2012, Ron Paul is having a Money Bomb fundraiser today. Since he, unlike his Establishment-appointed, media-annointed rivals, relies on small private donations, any assistance from awakened citizens is much needed and appreciated.

http://www.nationalreview.com/corner/275048/obama-issues-executive-order-diversity-roger-clegg#

Obama issues new executive order on “diversity” in Federal hiring. Translation: White males need not apply.

http://www.dailymail.co.uk/news/article-2028160/Michele-Bachmann-keeping-eye-Soviet-Union–20-years-dissolved.html

Obama to Lloyd Blankfein: I’m in trouble! The dupes who voted for hope ‘n change in 2008 are going to be no-shows in 2012! I give you and Da Boyz endless bailouts and the Bernanke Put; now what are you going to do for me?

Lloyd Blankfein: Not to worry. Our GOP partners have a candidate made-to-order to ensure you get reelected, and she’s a doozy. Oh, and just to avoid any surprises, we’ve reinforced to our media arm that the blackout on Ron Paul must be maintained at all costs.

Obama: You rock, Lloyd. See you at the Hamptons.

For all those who “love” Michele Bachmann:

http://www.youtube.com/watch?v=7gVZsypIKGc

Made it back from Poland a week ago. Decided to be a masochist and catch up on what I missed here (kinda OCD, I know). I started over two weeks behind and I’m up to about a week ago now…I need to check drumminj’s site and see if there’s an update to the plugin yet for FF6, since it keeps whining at me to update.

I am perpetually impressed with the ability of porcine beauticians to see a silver lining in double-digit unemployment rates that show no sign of decreasing. And what about that debt ceiling deal: Given SoCal’s heavy dependence on the defense industry, isn’t there a pretty high chance of higher SoCal unemployment going forward, in case deficit reduction measures hit defense contractors where it hurts?

Update: San Diego unemployment rises to 10.5 percent

Sara Hahne, manager of the new Encinitas Kohl’s, tracks applicants during the interview process. More than 500 people came to the La Costa Resort and Spa on Monday to interview for one of 150 jobs. The new store is slated to open Sept. 28. — John R. McCutchen

Unemployment in San Diego County ticked up in July to 10.5 percent, up from a revised 10.4 percent in June, reaching a high not seen for nearly a year, according to data released Friday by the state Employment Development Department.

“Initially people might be discouraged that the unemployment rate was up,” said Alan Gin, economist at the University of San Diego. “But typically the unemployment rate rises in July, and the one-tenth of a percent increase is lower than it has been in past Julys.”

Mid-summer unemployment figures usually spike because of the influx of students into the workforce, summer employment and education-related transitions, experts said.

The county lost 6,500 jobs overall between June and July. In the past year the county added 20,100 jobs.

San Diego is faring slightly better than the state.

California’s seasonally adjusted unemployment rate rose in July to 12 percent, up from 11.8 percent in June. The state added 4,500 jobs in July after adding 28,800 jobs in June. The state now ranks second in joblessness, just below Nevada where unemployment is 12.9 percent. The unadjusted unemployment rate was 12.4 percent, up from 12.1 percent in June.

“This is the pattern we’re likely to see through 2011,” said Michael Bernick, former EDD Director and a fellow at the Milkin Institute. “There is no short-term fix.”

Nationally, the unemployment rate in July was 9.1 percent, down slightly from 9.2 percent in June.
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The debt ceiling ’super committee’ is proving to be a lucrative cash cow for Congressional bribery — er, I mean, Constitutionally-protected “free speech” financial donations from Wall Street firms to Congress folk.

Wall Street firms donated $11.2mn to members of ’super committee’
Sat Aug 20, 2011 2:18PM GMT

The bipartisan “super committee” created by the debt ceiling deal is comprised of lawmakers who have received big bucks from special interest groups, according to a report by MapLight.

The committee is tasked with finding at least $1.2 trillion in deficit cuts over ten years.

In total, the twelve members appointed to the Joint Select Committee on Deficit Reduction got nearly $64.5 million from special interests groups over the past decade, with legal firms donating about $31.5 million and Wall Street firms donating about $11.2 million.

Of that $11.2 million, Goldman Sachs, Citigroup, Bank of America and JPMorgan Chase donated approximately $2 million combined.

The members appointed to the committee are Sens. Pat Toomey (R-PA), Jon Kyl (R-AZ), Rob Portman (R-OH), Patty Murray (D-WA), John Kerry (D-MA), and Max Baucus (D-MT) and Reps. Jeb Hensarling (R-TX), Fred Upton (R-MI), Dave Camp (R-MI), Chris Van Hollen (D-MD), Xavier Becerra (D-CA), and Jim Clyburn (D-SC).
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The word “panic” has crept back into MSM articles on the global financial market situation. Some of us HBB posters recognized the panic way back in August 2008, at the onset of the so-called “Credit Crunch.” Will historians properly label this period as one of the all-time great financial panics, or will they stick with a boring description such as “Great Recession”? Time will tell.

Markets continue to slump as panic persists
Nina dos Santos, World Business Today Anchor
August 19th, 2011
05:18 PM GMT

London (CNN) – As markets fall and economists talk up the prospect of a new recession, the end of this week will bring some welcome relief to investors who have seen $6 trillion wiped off global stocks in the past month alone.

Markets in Asia have lost 15% while shares in the U.S. are down between 5% and 9% as of Friday’s start of trading in New York. Yet it’s European stocks that have suffered the most –down nearly 20% year to date – reflecting persistent concerns that the eurozone is fast unravelling.

Scott Shellady, of ICAP U.S. in Chicago told us on the show “I have a European passport and I don’t know what it will be worth in 12 months time.”’ He adds the region could by then have “confederate money for all I know.”

So are will there be a double dip?

It depends who you ask and where they are.

During the past week, I’ve found that (over an admittedly low sample size) European investors are more bearish, whereas those across the pond –whilst sober- are optimistic the U.S. might just scrape past without shrinking growth.

When asked if we were heading back to 2008, London-based Michael Hewson of CMC Markets cautioned that little had actually changed since the credit crunch. “I don’t think we’ve really solved any of the problems,” he said.

According to Hewson, we are seeing a hangover from policymakers’ decisions to bailout the banks. Now that debt has found its way onto countries’ balance sheets. “It’s just filtered across,” he added.

Some economic indicators in the U.S. have already returned to levels we saw during the last financial crisis. Notably, the Philly Fed Index of manufacturing activity in the American mid-Atlantic, which went negative for the first time since July 2009.

A recent Gallup poll published before the last two week’s sharp losses found confidence in the economy was perilously close to readings in 2008 at the start of August.
…

My question is who changed the long term systems that allowed for the top 15 % to amass this level of weath ,verses the opposite with the rest of America . Who were able to take the money and run and who were left holding the bag ( or who they would like left holding the bag ,)

Accepting the premise that 85% percent of the population is left holding the bag and the pain and all the ” give up” campaign BS is
the first mistake everyone is making .

Realize it is the 85% that actually makes everything tick and their give up or demise ,actually sinks the big boat .

Rosemary thinks the American Dream of home ownership is a right…especially because she’s educated. Well Rosemary, looks like the school of hard knocks is teaching you a better lesson than college.

Rosemary speaks about 55-sec into this clip:
http://tinyurl.com/3uplhp4 (msnbc nightly news)

Housing experts say time to buy is now
By PAUL BELL
Posted: Aug. 20, 2011 | 2:01 a.m.

Q: I’m wondering if you’re seeing more people like my friends and family members, who’ve been talking about buying a home for some time but don’t seem to be doing much about it. Don’t you think there are more of these “fence-sitters” today than ever before? — Chuck J., Las Vegas

A: I don’t have any statistics on this topic, but I suspect you’re right that there are more would-be homebuyers sitting on the sidelines today than any time in recent memory.

In fact, this situation has become so important that the National Association of Realtors has launched a nationwide public awareness campaign aimed at getting potential buyers off the fence and into a home. You can see this campaign at realtor.org/pac.nsf/pages/fencesitters.

As NAR’s campaign points out, homebuyers should make decisions based on the needs of their own families, not based on national news reports. As anyone in this industry can tell you, all real estate is local. And local market conditions vary dramatically around the country.

Southern Nevada is a classic example. While our high foreclosure and unemployment rates have made national news, few people outside of Las Vegas seem to know that we’re selling homes at a near-record pace, with many of them selling for less than what it would cost to build that same home today. Meanwhile, local home prices have largely stabilized after falling for a few years following our historic housing boom in the middle part of the last decade.

NAR Chief Economist Lawrence Yun addressed this issue in a recent column.

“Those potential homebuyers who have been waiting for the true bottom will come to understand that we are pretty much there already,” he said.

“With interest rates expected to rise, such ‘fence-sitters’ could start to make the move into buying. Indeed, quick-footed investors have already done so. The ’smart money’ of investors, since they have an option of putting money in other instruments like gold or stocks or bonds, has been increasingly chasing real estate since late last year — and those real estate purchases have been mostly all-cash transactions. Investors recognize the already great bargains in home prices and the potential for rent increases.”
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Mortgage rates in all categories are at a 52-week low.

Las Vegas Review-Journal
Aug 18, 4:54 PM EDT

Mortgage rates for the past 52 weeks, at a glance

The average rate on the 30-year fixed mortgage fell this week to 4.15 percent, its lowest level on records dating back to 1971, Freddie Mac said Thursday. The average rate on the 15-year fixed mortgage dropped to 3.36 percent, hitting a record low for the third straight week.
Here’s a look at rates for fixed and adjustable mortgages over the past 52 weeks:

Current week’s average Last week’s average 52-week high 52-week low
30-year fixed 4.15 4.32 5.05 4.15
15-year fixed 3.36 3.50 4.29 3.36
5-year adjustable 3.08 3.13 3.92 3.08
1-year adjustable 2.86 2.89 3.53 2.86

Investing
|8/19/2011 @ 12:55PM |776 views
Ten Rules For Surviving a Market Crash

Pay attention because my entire career has been spent against the backdrop of one big slow-motion crash amid the secular bear market that began in the spring of 2000 and probably won’t end until later this decade. I’ve had my ass kicked a million times by crashes but have gotten better at avoiding these things with each successive postmortem I’ve conducted.

You want to survive this crash and the next one? Then follow Downtown Josh Brown’s Rules for Surviving a Crash:

1. Acknowledge that its a crash. Once we’re past down 10% in the Dow Jones Industrial Average from wherever the peak was (yes, the Dow is a way better crash gauge than the S&P 500), you can stop saying correction and start saying crash.
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2. Pencils Down! Whatever trendlines or individual stock research you were working on needs to be shelved for the moment. Your drawings and calculations will not work here.
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3. Don’t listen to “stockpickers” or sell-side equity analysts. They are only looking out from within their own little bubble and they cannot comprehend the other little bubbles around them let alone the whole bathtub.
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4. Ignore the asset-gatherers and the brokerage firm strategists, their job is to calm markets and soothe investors.
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5. Make sacrifices by reducing stock exposure by beta and volatility. This is my iron-clad rule. The moment you recognize the crash, kick the small caps, biotechs, emerging markets etc.
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5a. Also, margin balances must get cleaned up immediately, take the losses, I don’t care.
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6. Make two lists. The first list everyone knows about and talks about – the “if they get cheap enough I’ll buy it at that price” shopping list. Fine, but don’t forget the “things I will sell on the next bounce list”.
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7. Watch sentiment more closely than technicals or fundamentals. Pay attention to the squishier things in a crash moreso than you would normally. Are people screaming in pain? Or are they still looking for a bottom? Or have they given up entirely?
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8. Abandon any hope or intention of catching the bottom. You won’t and it is unnecessary.
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9. Suspend disbelief. “Bank of America could NEVER be a $5 stock!” “How could Bear Stearns possibly go out of business, its a hundred-year-old firm!” “No way this stock should trade at 5 times earnings, it’s a Dow component!” “How could the market go down 5% four days in a row?” Guys, anything can happen in a crash, there are machines making the trades and they have no respect for the prestige or standing of a particular company.
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10. Stop being a know-it-all and shut up.
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Anyway, I’ve been through a lot of these, and I promise you I’ll find myself standing tall on the other side of this one. Following these rules will give you a shot at doing the same.

Freakin’ freak. The house two doors down just closed for $270k. I guess I am priced out of my neighborhood.

FPSS, checked in on the other thread - thanks for your advice.

Just went in to grab a bag of dog food at a local supermarket (Port Orang, FL) and got behind an EBT-card fumbling Harley guy. He was having real trouble with his card and finally had to use his debit card to pay for his four dollars of groceries. Upon his departure I asked the cashier (who was actually a manager filling in) what percentage of shoppers are paying with EBT cards in his store these days. Without batting an eye the guy tells me somewhere between 65 and 70 percent!!! what?? Are you kidding me?

No, the man was not kidding.

Note: Port Orange is one of the better local areas of town, but this was a somewhat low-end supermarket (Save-a-Lot).