The Housing Bubble

It appears the central bank bailout liquidity fire hose is running on high blast yet again, in an effort to put out the Eurozone debt crisis inferno. Should we anticipated record 2012 profits for systemically important Megabanks?

Which conditions (given in the IMF paper I have linked below) to make Emergency Liquidity Financing (ELF) available in the situation at hand are met, and which are not? The situation hardly meets the “nobody could have seen it coming” criterion (the fourth point in the list).

IMF LEGAL DEPARTMENT AND IMF INSTITUTE SEMINAR ON
CURRENT DEVELOPMENTS IN MONETARY AND FINANCIAL LAW
May 7 – 17, 2002
Emergency Liquidity Financing by Central Banks:
Systemic Protection or Bank Bailout?
Ross S. Delston and Andrew Campbell

I. Introduction

The aim of this paper is to consider the ways in which emergency liquidity funding (“ELF”) may be provided by central banks to individual banks that are experiencing financial difficulties. ELF takes the form of loans from, or guarantees by, the central bank that are designed to assist one or more commercial banks that are either undergoing a run on deposits as a result of concerns about safety and soundness or that are experiencing a systemic financial crisis.
…
By way of background, the fundamental principles of this type of assistance are relevant.

First, ELF should be given by the central bank only to banks which are illiquid and not insolvent.

Second, the loan or other financing should be subject to a penalty rate of interest.

Third, collateral (or security) should be provided.

Fourth, its use must be discretionary and there should be no expectation that such help will be available. It has also been described as “the discretionary provision of liquidity to a financial institution (or the market as a whole) by the central bank in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source.”
…

Rent now or be priced out….

Report: Boston office rents to rise on white-collar hiring

Boston firms are expected to expand their office-worker head counts in the second half of the year, according to real estate industry research published Friday by national commercial real estate brokerage Marcus & Millichap Marcus & Millichap. The third-quarter report predicts 22,000 new white-collar jobs in Boston in 2011, a 2 percent increase that will return the Hub to its 2007 employment levels.

Established office districts like the Back Bay, Fenway and Boston’s central business district will likely see the most benefit, as tenants fill up discounted Class A space – but space won’t be plentiful for long, the report predicts. By the end of the year, Marcus & Millichap expects increased demand will give owners leverage to raise rents and cut concessions.

http://www.bizjournals.com/boston/news/2011/09/16/hiring-fuels-boston-office-market.html

The Fed certainly does seem to be making great strides these days towards increasing transparency in its operations.

Why didn’t the Fed release a statement on the dollar liquidity bailout?
Sep 16, 2011 18:00 EDT

Felix here. I’m about to head out of town for a couple of weeks, on a mini European tour. I’ll try to check in occasionally, but I’m not sure how often that’ll be, so I’m experimenting with guest postings. With any luck, there’ll be some fabulous stuff coming up from Mark Dow and Barbara Kiviat. But also, I’m trying to take advantage of all the great blog posts that Ryan McCarthy is finding as he edits Counterparties. The idea is that if we find something wonderful, we’ll ask if we can reprint it, while linking back to the original. Edward Harrison has already said yes, so here’s his post today on the Fed. Enjoy!

By Edward Harrison

Overnight, a group of us were exchanging e-mails on the recent coordinated central bank action to provide European banks the funding being denied them by the markets. I haven’t been active on the e-mail chain, but I did find some of the commentary interesting.

I had a few comments of note I wanted to address, but here’s why I am writing this post:

See NYT report which says clearly that the Fed did nothing to cooperate since the swap was already in place and would make no statement.

When I read that I realised it was true. Look at the post yesterday from the BoE, “Additional US dollar liquidity-providing operations over year-end”. At the end of that press release, there is a link to the statement of every other central bank participating in the liquidity measure… except the Fed. In fact, I was looking for the Fed statement yesterday and didn’t find it. And that’s when I went to the BoE and saw they linked out to the other CB statements (sans Fed).

I think this is curious messaging because the US Treasury Secretary Timothy Geithner is over in Europe right now banging the table about the need for a Euro TARP. Cullen Roche calls it a Euro TALF. Whatever you call it, its a bailout; the original TALF sure was. Is this why the Fed went all radio silent?

I think that’s it exactly. The last post I wrote on The European Bank Bailout talks a lot about how unpopular these bailouts are; and since this is effectively a backdoor bank bailout, it makes sense that Ben Bernanke would want to keep mum, “to keep his powder dry” for QE3 as one of my friends e-mailed.
…

Crisis bailout Grand Kabuki dance in progress; record investment bank profits soon to follow.

FTSE boosted by central bank manoeuvres
Fri Sep 16, 2011 4:55am EDT
By Tricia Wright

LONDON, Sept 16 (Reuters) - Britain’s FTSE nosed higher on Friday, lifted by coordinated action from global central banks and hopes the euro zone would boost its bailout fund as U.S. Treasury Secretary Timothy Geithner and European finance ministers prepared to meet.
…

What is this difference from what this guy did to GS, JPM, Chase, etc.

———————————

KC man who created his own bank found guilty of fraud
Kansas City Star | Wed, Sep. 14,

A Kansas City man who marketed and sold $100 million in worthless financial documents was found guilty of multiple federal fraud charges Wednesday.

Denny Ray Hardin, 52, who ran the Private Bank of Denny Ray Hardin out of his home, was convicted of 11 counts of creating fictitious obligations and 10 counts of mail fraud. A judge found him guilty after a three-day trial in U.S. District Court in Kansas City.

According to trial testimony, Hardin used his home computer to produce more than 2,000 “bonded promissory notes,” which he claimed were backed by a U.S. Treasury Department account and could be used to pay off debts. Hardin charged a fee to purchase the notes, which he claimed he was authorized to sell because he was a private banker.

Worker bees will see none of it…

Twitter Inc. gets green light to expand restricted stock awards

Social media company Twitter Inc. has been ramping up its restricted stock awards to employees and this week secured a no-action letter from the Securities Exchange Commission that says the company does not have to register the securities.

An Aug. 23 letter on Twitter’s behalf from law firm Fenwick & West LLP Fenwick & West LLP said Twitter has recently begun to grant restricted stock units to employees as part of their compensation. And in the future, Twitter may grant the restricted stock to directors and consultants, too

http://www.bizjournals.com/boston/news/2011/09/16/twitter-restricted-stock-awards.html

No spinning this.

Obama is toxic. His policies are toxic. 2012 is going to be a landslide.

And just wait until NYC housing prices really start heading into the toilet. They are only down (maybe) 10-15% off peak

———————————

I was sunk by Obama: Weprin
NYPost with AP | Sept. 16, 201i | CARL CAMPANILE

Democrat David Weprin said yesterday that President Obama’s sagging popularity among Queens and Brooklyn voters cost him the election for ex-Rep. Anthony Weiner’s congressional seat.

In a stunning upset, Weprin was trounced by Republican Bob Turner, whose campaign had tied him to the president.

“The message of the campaign was ‘Send Obama a message,’ ” said Weprin, a Queens state assemblyman. “I think the problem was that he’s the president and people are frustrated, and it’s just natural to take it out on the top guy — or the top guy’s party.

Democrats outnumber Republicans 3 to 1 in the district.

During one press conference, Weprin refused to say whether he backed Obama’s re-election. In fact, he did not mention the president in his literature, nor did he seek Obama’s endorsement.

Sounds as though helicopter drops of dollars are raining down on the debt-burdened Eurozone. The Fed’s cargo cult lives!!!!! Buy stocks now or get priced out forever!!!!!!

Central Banks Pour Dollars Into Europe
The world’s leading central banks joined forces to offer Europe’s beleaguered banks easy access to dollars.
—————————————————————————-
Dollar deluge shores up banks
By James Mackintosh
Published: September 15 2011 20:42 | Last updated: September 15 2011 20:42

Here we go again. In January 2008, the US Federal Reserve slashed interest rates 75bp at an emergency meeting as Jérôme Kerviel’s rogue trades were being unwound by Société Générale, the French bank. On Thursday, the Fed said it would pour dollars into Europe, via local central banks, just hours after UBS revealed losses of $2bn from alleged rogue trades. The timing appears coincidental. But the outcome could be depressingly similar.
…

Yesterday unemployment in Texas reached levels not seen since 1983. Most of the losses were in industries and sectors that depend on government money like defense/security/education. Also the local Lockheed plant (largest payroll in Fort Worth) announced 600 job cuts this week and yesterday the Obama Administration blocked republican efforts to sell 66 new F-16s to Taiwan worth over 5 billion. Instead they approved a update to the 20 year old fighters Taiwan bought in 1992 from Bush. This will put a dent in our local markets because these jobs paid really good with benefits. Why would Obama do this? Looks like we caved to China on this one and Taiwan will be funneling money to the GOP candidate in 2012.
Two things to consider: 1) If Taiwan reunites with China in the future then the Chinese would end up with 66 brand new F-16s. 2) Taiwan is unlikely to find any other country willing to tic off the #2 largest economy by selling them front line weapons.

I’m starting to take the impression that French banksters are even shadier than their American counterparts.

REVIEW & OUTLOOK
SEPTEMBER 16, 2011

Dollars to the European Rescue
As central banks help French banks, we get a phone call.

The world’s central banks rode in on their Brinks trucks yesterday to stem the global run on European banks, creating new vehicles for access to U.S.-dollar liquidity. European bank stocks promptly soared, and now it would be nice if Europe’s political and financial leaders finally used this reprieve to address their solvency issues.
…
In its official statement, BNP Paribas said only that its borrowing from U.S. money funds had recently declined to €36 billion outstanding from €46 billion, so we asked the bank to support its claim that it was “fully able” to meet its dollar needs. BNP’s treasurer, Michel Eydoux, elaborated in an interview that “some of the money market funds have not renewed” their loans and others are of shorter maturities—generally one month instead of three to 12 months previously.

He said BNP is thus relying more on foreign-exchange swap contracts for its dollar needs. The counterparties to these swaps are, according to Mr. Eydoux, “banks and corporations who want the same maturities” that BNP is seeking and can no longer obtain from the money markets. The bank is also trying to expand its dollar deposit base among corporations and governments in Asia and Middle East that need someplace to keep their dollars.

Much to our surprise, BNP Paribas also requested that the French equivalent of the SEC, the Autorité des Marchés Financiers, “open an investigation into the publication of erroneous information about its funding in dollars in an article in the Opinions section of the Wall Street Journal.”

The AMF is “tasked with safeguarding investments and maintaining orderly financial markets in France” and it can also conduct investigations, although by its own account its jurisdiction does not normally extend to the press. An official at the AMF declined to say how often newspaper articles lead to investigations.

Meanwhile, a senior French government official called us “as a reader,” he said, to express his shock that we had published Mr. Lecaussin’s op-ed. The article, he said, “was quite damaging to this bank and to French banks generally.” At least he conceded that perhaps he was “abusing his position” as a top government official to express his displeasure.

We certainly hope the French government and BNP intention isn’t to shut down reporting on French bank problems. We can’t imagine, say, White House chief of staff Bill Daley calling us about a story on Bank of America, or BofA siccing the SEC on us. Relations between banks and the government are closer in France than they are in the U.S., but we’d have thought French politicians had enough problems without picking a fight over press freedom.
…

BUSINESS WORLD
SEPTEMBER 16, 2011, 7:20 P.M. ET

When Greece Defaults
Countries must be allowed to go broke if the euro zone is ever to have discipline.
BY HOLMAN W. JENKINS, JR.

Greece says it’s not leaving the euro, and everyone else says Greece must default on its euro debt. What does such a scenario portend?

Athens, no longer able to borrow euros and hardly able to extract enough euros from its own population, won’t be able to pay its bills. Many of the hundreds of thousands in the Greek government’s employ stop coming to work because they stop receiving paychecks. Many private businesses that depend on their patronage also cease to function and cease to pay their employees. Savings vanish in a rash of bank failures.
…

Realtors Are Liars®

Law firm warns of foreclosure ruling’s effect

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 8:15 p.m. Friday, Sept. 16, 2011

WEST PALM BEACH — The national law firm of Greenberg Traurig issued an alert this week warning its lawyers that a 4th District Court of Appeal ruling in favor of Palm Beach County homeowners could “dramatically change the foreclosure landscape in Florida.”

The Sept. 7 decision in the case of Gary and Anita Glarum vs. LaSalle Bank says that an affidavit of indebtedness submitted by the bank was hearsay because the person who signed it did not have personal knowledge of the case. It reversed a 2010 Palm Beach County Circuit Court summary judgment that said the Glarums owed the bank $422,677.

“This decision could have broad, sweeping application in the lending and loan servicing industries and affect thousands of foreclosure cases, among other types of cases, currently pending in Florida courts,” says the alert posted on Greenberg Traurig’s website.

The Orlando-based firm of Butler & Hosch represented LaSalle Bank in the case, but Greenberg Traurig also is a bank representative.

The amount the circuit court said the Glarums owed was based on an affidavit of indebtedness signed by loan servicer employee Ralph Orsini, who pulled the information from a company computer - a move that appeals court judges said amounts to hearsay.

The court’s ruling means the home can’t go to foreclosure sale until the bank either gets another summary judgment or goes to trial. The plaintiffs have 15 days to file for a rehearing.

Ice Legal of Royal Palm Beach represents the Glarums, who have been in foreclosure since 2008 and continue to live in the home.

Ice Legal founder Tom Ice said the alert is a “transparent attempt to influence” the court to change its ruling .

“Being denied a prohibited shortcut may cost the banks a little more, but given that they are the deep pockets here, pockets lined with our own taxpayer money, the ruling is hardly unfair or earth- shaking,” he said.

Greenberg Traurig writes that the Glarum decision is the first case to specifically hold that an affidavit of a loan servicer relying on computer records is inadmissible hearsay because the affidavit was unable to identify who made the data entries, or how or when they were made.

“In the context of foreclosure matters, Glarum is especially concerning given the fact that the lending community uniformly relies upon computer data, including data from prior servicers, when drafting affidavits of indebtedness in support of summary judgment motions,” the alert notes.

It says the appeals court sent a “strong statement” that “may have achieved the unintended result of dramatically changing the foreclosure landscape in Florida.”

COMMENTS (none of them mine)

For all you holier than thou commenters that are surely going to comment on this article of how if people can’t pay they should lose their homes. Go Fxxxk yourself. This is a victory for the consumer. It is amazing to me that people who are not aware of someones circumstances are so quick to say….they deserve to lose their homes. So when the bank sales the home at 1/2 the price in a foreclosure sale. It is their fault! Right?. People are such morons….

diver4life8:50 PM, 9/16/2011

Greedy little piggies bought too much house, along came the big bad wolf and blew the house down. Now the rest of us pay for deadbeats to stay in thier Mcmansion free.

JB
9:18 PM, 9/16/2011

Hey diver4life - pay your bills so the rest of us don’t have to. Sincerely,

American Taxpayer
taxpayer
9:24 PM, 9/16/2011

So, banks can’t use computer data. Can we all now forget about our computer generated tax bills?

LOL
9:43 PM, 9/16/2011

Thanks to Tom Ice. A good lawyer working for the people. No really. All the PI guys say it but its not true. Ice is doing a good job.

Hearsay is not admissable. The amazing thing is that Banks and Credit Card companies have been allow by Judges for years to admit hearsay to nail their customers illegally.

Its very easy to put ANYTHING up on a computer screeen. If you did not prepare the numbers what you are reading is hearsay and could very easily by forged data. THisis a good ruling

Hearsay is not admissable
9:55 PM, 9/16/2011

These leaches have been living mortgage free since 2008, and continue to live in the house. What scum.

smitvict9:58 PM, 9/16/2011

http://www.palmbeachpost.com/money/foreclosures/law-firm-warns-of-foreclosure-rulings-effect-1862934.html - -

When your hometown newspaper has an article like this - you know things are bad.

This ONE scandal is going to hand around obama’s (and the dems) neck for the next 12 months. And there are more coming…

Along with a double dip and housing prices that will continue to slide.

I predict in 2012 that democrat candidates will not use the word “obama” or “democrat” in their political ads…

——————————————

Obama’s Solyndra scandal reeks of the Chicago Way
Chicago Tribune | September 18, 2011 | by John Kass

The Solyndra scandal cost at least a half-billion public dollars. It is plaguing President Barack Obama. And it’s being billed as a Washington story.

But back in Obama’s political hometown, those of us familiar with the Chicago Way can see something else in Solyndra — something that the Washington crowd calls “optics.” In fact, it’s not just a Washington saga — it has all the elements of a Chicago City Hall story, except with more zeros.

And now the Tribune Washington Bureau has reported that the U.S. Department of Energy employee who helped monitor the Solyndra loan guarantee was one of Obama’s top fundraisers.

Fundraising? Contracts? Imagine that.

Steve Spinner was the Obama administration official in charge of handing out billions and billions of tax dollars to “green” energy deals. According to the Tribune story, Spinner the other day invited Obama’s national political finance committee to a meeting in Chicago.

The name of the Obama fundraising initiative?

“Technology for Obama.”

The idea of the Obama fundraisers getting together, talking “green,” and perhaps offering taxpayer loan guarantees to insider businesses in the interest of helping the environment — it all seems rather fresh.

Like a mountain meadow.

There are the guys who count. The guys who bring the cash. They count because they do the counting. They have leverage. They’re always there at the fundraisers. And so they’re the ones who are allowed to gorge at the public trough.

The “reasonably” price single 60 year old “2″ family house next street over
is still here 69 days….

http://www.trulia.com/property/3057290732-Single-Family-Home-Sunnyside-NY-11104

But it does have a nice sized backyard big enough for a round pool…maybe a shed, BBQ, nice trees kids would love having a nice play area….its at the top of a hill so the yard is flat and opposed to the bottom where the yard goes downhill..

Whatever taboo Hank Paulson instated during his tenure as Secretary Treasury against uttering the word “bailout” certainly has ended.

Bailout delay squeezes Greece
Phillip Inman
September 18, 2011

Desperate … a police officer rushes to douse a man who set himself on fire outside a bank in Thessaloniki, Greece. The man was taken to hospital with injuries that were not life-threatening. Photo: AFP

LONDON: European finance ministers have pressured the Greek government to accelerate its privatisation program and implement deeper spending cuts, after they told Athens a €8 billion ($10.7 billion) bailout payment would be delayed until next month.

The Luxembourg Prime Minister, Jean-Claude Juncker, who chaired a meeting of the group of single currency finance ministers in Poland, said officials recognised renewed efforts by Greece to meet its fiscal targets, but a decision on releasing the next tranche of cash would not be taken until October.

The move was met with incredulity by Greek officials. They have already warned they will be out of money by mid-October and are reported to be making contingency plans to lay off public sector workers.
Advertisement: Story continues below

The US Treasury Secretary, Tim Geithner, who flew to Poland on Thursday to emphasise Washington’s fears of a second financial meltdown, urged euro zone countries to expand their bailout fund to better tackle the debt crisis. He warned the crisis posed a ”catastrophic risk” to financial markets.

”What is very damaging [in Europe] from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict … you need … to work together to do what is essential to the resolution of any crisis,” Mr Geithner said.
…

Trichet responds to Geithner’s ‘damage from Europe’ comment: EUX.TV
Uploaded by EUXTV on Sep 17, 2011

Jean-Claude Trichet, President of the European Central Bank, on Saturday said that the advanced nature of international economies requires increasing international cooperation between regulators such as central banks and finance ministries when it comes to dealing with crises.

Trichet made his comment in answer to an EUX.TV question, asking for his reaction to a comment made a day earlier by United States Treasury Secretary Timothy Geithner, who spoke on Friday to eurogroup ministers after the “damage caused to us from Europe.”

Geithner’s comment was accidentally made public by the audiovisual services working for the Polish EU presidency at the finance ministers meeting in Wroclaw, Poland.

bail·out
noun \ˈbā-ˌlau̇t\
Definition of BAILOUT
: a rescue from financial distress

Examples of BAILOUT

government bailouts of large corporations

First Known Use of BAILOUT
1951

Humpty-dumpty sat on the wall.
Humpty-dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.

CNNMoney.com’s bailout tracker

The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here’s how you can keep tabs on the bailouts.
By David Goldman, CNNMoney.com staff writer

CNNMoney.com is tracking developments in the economic rescue as they happen. Click the links to the right or scroll down to find out how much the government is putting on the line.
Chart Links

Troubled Asset Relief Program
Federal Reserve rescue efforts
Federal stimulus programs
American International Group
FDIC bank takeovers
Other financial initiatives
Other housing initiatives
List of bailed out banks
List of failed banks
Obama mortgage plan servicers
Glossary of terms

Thousands of protesters to ‘Occupy Wall Street’ on Saturday
By Julianne Pepitone @CNNMoneyTech September 16, 2011: 7:06 PM ET

A flyer for Occupy Wall Street, in which thousands of protesters are slated to flood the Manhattan financial center.

NEW YORK (CNNMoney) — Egyptians did it for democracy. So did people in Tunisia, Yemen, Bahrain and Syria. Now, activist groups are hoping Americans will launch their own uprising — in the form of thousands of protesters descending on Wall Street this weekend.

Occupy Wall Street is a “leaderless resistance movement” spearheaded by activist magazine Adbusters. Organizers want people to swarm into lower Manhattan on September 17 and set up camp for two months, then “incessantly repeat one simple demand.”

What’s that demand? They haven’t decided yet.

The plan is to crowdsource the decision. Protestors are set to meet and discuss the issue at the iconic Wall Street Bull statue at noon Saturday, as well as at a “people’s assembly” at One Chase Manhattan Plaza at 3 p.m.

The protestors’ demand will likely be focused on “taking to task the people who perpetrated the economic meltdown,” says Kalle Lasn, the editor-in-chief of Adbusters.

“The demand could be some stupid lefty thing like ‘overthrow capitalism,’” Lasn says. “We’re hoping it’s something specific and doable, like asking Obama to set up a committee to look into the fall of U.S. banking. Nothing extreme about that.”
…

BAILOUT
By Merle Hazard and Wolf Jackson. Based on an idea by David Shayne.

I was working one day down at Treasury, when Bear Stearns gave me a call.

They said “Merle, we’re almost broke right now. We’re headed for a fall.

So I called up Ben Bernanke, and told him Bear was as good as dead.

He said, “Merle, let’s structure a massive loan, with a guaranty from the Fed!”

We got a little bailout, ain’t it fine to see?

Yeah we got a little bailout, from Fed and Treasury

Hope you like our bailout. Each brokerage and bank

Is getting extra capital so markets do not tank

Bailout! (Bailout)

Bailout! (Bailout)

Uh, Ben, I hate to say it, but the banks are afraid to make loans…. Yeah, yeah, and the money markets are totally frozen too. Isn’t it a little bit like Japan, or, really a lot like it? … Well, sayonara to you too, good buddy.

I thought that might be the end of the problems in our e-conomy

But we had some failures at regional banks, taken over by the F-D-I-C.

The problems kept a growin’, ‘twas a non-stop panic attack

We set up a federal conservatorship of Fannie Mae and Freddie Mac

We have a swelling bailout. We hope you won’t dispute

The rapid way we’re spending. The problems are acute.

Come on support our bailout, we’re working ‘round the clock

To buy up toxic paper, and help the banks sell stock

Bailout! (Bailout)

Bailout! (Bailout)

I’m checking right here Ben, the T-bill yields yesterday were NEGATIVE. And unemployment could easily hit 11 percent, that is not a stretch….uh pitchforks in the street is about right, 10-4……Uh, yeah, we just can’t let them know that WE messed up.

Lehman filed for Chapter 11. Merrill had to sell to B of A

Morgan Stanley and Goldman are commercial banks now, it’s easier to tap the Fed that way

AIG, a big insurance firm, had some problems with derivatives they wrote

We’re sending billions to Detroit just to keep the auto industry afloat

He never showed me all the loans he made, but Ben kept printing up more cash.

Seems the more we did, the worse it got. Then we had a brutal stock market crash!

So we scrambled some jets from the federal fleet. We dropped ten trillion from the planes,

Plus some reprinted copies of “The General Theory of Employment” by John Maynard Keynes

We got a great big bailout, ten trillion bucks and more

Unprecedented bailout, it costs more than a war

We bailed out even big banks, like Citi and WaMu

Yes we got a great big bailout, but there’s more left to do!

Bailout! (Bailout)

Bailout! (Bailout)

The entire system? Borderline insolvent Ben? You’re right, I CAN’T handle the truth. So the hundred billion we gave Citi and B of A wasn’t enough? …10-4 Ben, just keep printing!

Some say to just shut down failing banks when problems start

And fire the boards and CEOs but, we don’t have the heart.

It’s easier to patch and mend and temporize away

Immediate cost is tough, we favor gradual decay

Bailout! (Bailout)

Bailout! (Bailout)

Setting a bad example? Messing around with incentive structures? Ben, you really are an academic. Remember what Tim Geithner said: those things don’t really matter any more…and don’t listen to Sheila Bair. All right…just keep kickin’ that can down the road and we’ll worry about that some other day, good buddy…Over.

Copyright 2009 Merle Hazard, Wolf Jackson and David Shayne.

HOUSE TALK
SEPTEMBER 16, 2011

Will Expiring Loan Limits Kill My Sale?
By JUNE FLETCHER

Q. My house is for sale for $878,000. I have already dropped the price three times, and can’t afford to drop it any lower. I am very worried about the upcoming expiration of conforming loan limits, and what that will do to the pool of buyers that can get a mortgage to buy my house. Your thoughts?

–Arlington, Va.

A. The current caps on so-called “jumbo conforming” loan limits are set to expire on Sept. 30, although lobbying groups for home builders and real estate agents are pushing Congress to extend them. In high cost areas like yours, the cap for these federally-backed loans will drop to $625,500 from $729,750. A Federal Housing Administration study showed that the lower limits will affect a fifth, or 669 out of 3,334 counties, that are eligible for its insurance. The National Association of Realtors estimates that some five million homes will be affected by the change.

So to get a jumbo conforming loan, buyers who agree to your asking price now have to come up with a $148,250 down payment, or 16.8% of the purchase price. After the limits expire, they will have to put down at least $253,000, or 28.8% of the price. If they can’t, they will have to find alternative or supplemental financing.

One obvious possibility is a true jumbo loan. However, these typically require at least 20 percent down and usually are more expensive and harder to get than government-backed loans. Hybrid adjustable-rate jumbo loans are another possibility, although with today’s low interest rates, the savings are not likely to offset the bigger down payment.

Alternatively, buyers could find a lender who will provide a piggyback loan that allows a lower down payment. Such lenders generally are community or niche banks that keep such loans in their own portfolios. For instance, in your area, First Place Bank is offering an 80/10/10 loan that requires a 10% minimum down payment. The bank makes a first loan up to the conventional limit in tandem with a second. So in this instance, the buyer would put down $87,800, and then have a first loan of $729,500 and a second of $60,450.
…

WEEKEND INVESTOR
SEPTEMBER 17, 2011

Who Killed Private Pensions?
How Companies Helped Hasten the End of Retirement Plans and Benefits
By ELLEN E. SCHULTZ

Gary Skarka had a rewarding middle-management career at AT&T, along with some of the best retirement benefits in the country. But instead of enjoying a comfortable retirement, he is working as a security guard. “I know I will have to work at menial jobs until I die,” he says.

Mr. Skarka’s financial predicament isn’t the result of investment losses or runaway spending. He is among millions of Americans who encountered an unexpected risk to their retirement: their employer.

Over the past two decades, companies have cut pensions, slashed retiree health coverage and killed other benefits. Many have reduced their contributions to 401(k)s as well.

Companies say they are the victims of a “perfect storm” of unforeseen forces: an aging work force, market turmoil, adverse interest rates. Certainly, these all contributed to the retirement crisis. But employers have played a big and hidden role in the death spiral of pensions and retiree benefits as well.

Workers with a significant portion of their net worth tied up in employer-sponsored retirement plans should be aware of the hidden risks they face. Here are some to watch out for:
…

STUDENT LOANS
SEPTEMBER 16, 2011, 12:46 P.M. ET

For Student Borrowers, a Hard Truth
More people are defaulting on their student loans — and discovering the consequences are far-reaching.

By ANNAMARIA ANDRIOTIS

As many students and parents struggle to make payments on their student loans, many are finding this debt comes with some serious strings attached.

After years of economic difficulty and rising college tuition, the recent news that the default rate on federal student loans has risen came as little surprise to many. Nearly one in ten federal student-loan borrowers defaulted during the two years ended Sept. 30, 2010, meaning they failed to make a payment on their loans for more than 270 days, according to the Department of Education. That’s up from 7% in 2008. Much of that increase came from for-profit colleges, whose students’ default rate jumped to 15% from 11.6%, but the default rate among students at public and private, four-year universities also increased.

What many people may not realize, however, when taking out a student loan is just how different it is from other kinds of debt. Credit-card debt, for example, can be wiped out in bankruptcy. Mortgages can be discharged through foreclosure. For borrowers with crippling student loan debt, financial failure offers no such fresh start. The loan still must be paid off, and often with new collection costs tacked on, making it much more expensive than before. On top of that, up to 25% of a person’s wages can be deducted until the loan is paid back in full. (Private lenders must get court approval for wage garnishment and the amount they can take varies.) With federal loans, the government can also keep your federal and state income tax refunds, intercept future lottery winnings and withhold part of your Social Security payments. “Defaulting can be completely devastating to a family’s finances and sense of well being,” says Mark Kantrowitz, publisher of FinAid.org and Fastweb.com.
…

September 16, 2011, 10:43 AM ET

Study: Lightly Regulated Lenders Made Riskiest Mortgages
By Nick Timiraos

A new working paper from economists at the International Monetary Fund finds that counties that had higher shares of mortgages sold by lightly regulated independent lenders also had higher foreclosure rates, a finding that suggests lax regulation of mortgage lending may have fueled the housing bubble.

The paper uses econometric analyses to show how these non-bank, independent originators contributed to riskier lending at a disproportionate rate relative to more-heavily regulated banks. “The market share of these independents as of 2005 is a strong predictor of the increase in foreclosure rates between 2005 and 2007,” write IMF economists Jihad C. Dagher and Ning Fu.

The findings, of course, don’t absolve banks. Instead, they argue that mortgage brokers and non-bank originators, such as Ameriquest, New Century, and WMC Mortgage, “contributed disproportionately” to the credit bubble. (Consumer advocates have also criticized bank regulators for failing to do anything to stem a deterioration in mortgage lending and for preempting more aggressive efforts by states to head off risky practices.)

The research suggests that deregulation played a significant role in fueling the mortgage boom and bust. It takes data on foreclosures, home prices, and the market share of independent lenders to make a series of findings:
…

September 14, 2011, 11:03 AM ET

Report: Housing Inventory Hits 2011 Low
By Nick Timiraos

Housing inventory dropped for the fourth straight month, falling in August to the lowest level of the year.

The number of homes listed for sale in August fell by 1.9% from July. Overall, the number of homes listed was down 19% from one year ago, according to data from Realtor.com.

The 2.27 million homes listed for sale was the lowest of the year. Inventories tend to increase by around 2% in August over the past 28 years, according to Zelman & Associates, a research firm, as sellers make one last push before the beginning of the school year.

The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country.

The data show that the summer selling season drew to an early close, as consumer confidence sustained multiple shocks from the debt-ceiling drama, the eurozone crisis and the stock market volatility.

Normally, a decline in inventory would be a positive sign, but in the current market, that isn’t necessarily the case. Instead, low sales volumes and declining inventory suggests that there aren’t many opportunities for “price discovery.” The upshot is that buyers and sellers, uncertain about whether they’re overpaying for a home or under-pricing the one they’re selling, are further frozen on the sidelines.

Moreover, there’s still millions of properties in some stage of foreclosure or where borrowers have missed three or more straight mortgage payments. This “shadow inventory,” plus sellers that are waiting on the sidelines until demand picks up, will loom over housing markets for years.
…

September 15, 2011, 11:12 AM ET

Buying and Selling Homes in Hard Times: Stuck in Miami
By Robbie Whelan

We continue our series today profiling buyers and sellers navigating the housing market. See past profiles.

Athena Kaiman is ready to leave the sun and sand of Miami for the country-music culture of Nashville, Tenn. Aside from her favorite musicians, Nashville offers affordable homes, low property taxes and proximity to an important business client.

But Ms. Kaiman, like so many other Americans ready to buy a home, is stuck. The problem isn’t just that banks are demanding a steep down payment. (She and her husband, who own a small book publishing-related company, have saved up enough money for that.) Falling prices are holding them back.

“We’re sitting on the fence, because however much money you have left over, the prices are sinking further and further, and you can’t see the bottom. It’s terrifying,” she says. “I would like to leave, but I am trapped here. I’m kind of heartsick about it.”

Ms. Kaiman lives with her husband and daughter, who is in law school, in a home she bought for $750,000 in 2006 on North Bay Island, which sits in Biscayne Bay between Miami and Miami Beach. She and her husband took out a home-equity loan as a rainy-day fund for their business, and are still saddled with $375,000 in house-related debt, Ms. Kaiman says. Meanwhile, home prices in Miami have fallen by more than half in Miami, according to the S&P/Case-Shiller 20-city composite index, to levels not seen since 2003.

When the economy worsened in 2008, Ms. Kaiman says, her bank ended her line of credit, without explaining why, a potential threat to her business. Even though she has a credit score in the 800s, Ms. Kaiman says lenders in Nashville are asking for down payments as high as 50%. Credit standards have tightened, and the couple are considered self-employed since they own their own company.

“I’m self-employed, but I might as well just say I’m unemployed when it comes to a bank,” Ms. Kaiman says.
…

so how’s #occupywallstreet going? I don’t have cable.

Oops…

September 14, 2011, 7:27 PM ET

Billions in Unemployment Benefits Paid in Error
By Sara Murray

Nearly $19 billion in state unemployment benefits were paid in error during the three years that ended in June, new Labor Department data show.

The amount represents more than 10% of the $180 billion in jobless benefits paid nationwide during the period. (See a sortable chart of each states’ overpayments) The tally covers state programs, which offer benefits for up to 26 weeks, from July 2008 to June 2011. Layers of federal programs that help provide benefits for up to 99 weeks weren’t included.

The figures were released Wednesday as the Obama administration promotes its bid to reduce waste at federal agencies. The federal government foots the bill for administering the programs, and states are supposed to pay for the benefits. Many states exhausted their unemployment insurance trust funds during the long recession and slow recovery, prompting them to borrow from the federal government to replenish their funds.

Improper payments most often occur when recipients claim benefits even though they have returned to work; employers or their administrators don’t submit timely or accurate information about worker separations; or recipients don’t correctly register with a state’s employment-service organization.

The Labor Department launched a plan to crack down on the improper payments, targeting Virginia, Indiana, Colorado, Washington, Louisiana and Arizona in particular for their high error rates. Those states will undergo additional monitoring and technical assistance until their error rates dip below 10% and remain there for at least six months, according to the Labor Department.

“The Unemployment Insurance system is a unique partnership between the federal government and the states. States bear the responsibility of operating an efficient and effective benefits program, but as partners the federal government must be able to hold them accountable for doing so,” Labor Secretary Hilda Solis said in a release.
…

POLITICS
SEPTEMBER 17, 2011

In California, More Cuts Are in the Cards
By VAUHINI VARA

California Gov. Jerry Brown already anticipates relying on spending cuts and forgoing higher taxes to balance his state’s budget next year, sobered by his deadlock with Republicans over revenue issues this year.

“There will be no taxes, as far as I know, by the legislature,” he said in an interview this week.

The Democrat also said he hasn’t decided whether to seek a ballot measure next year that would allow him to bypass the legislature and ask voters to boost taxes—apparently backing off earlier plans to do so. “I’m talking to groups…but we don’t have a clear path forward,” he said.

On Sept. 9, the last day of the legislature’s eight-month session, Mr. Brown failed to pass a plan to rework state tax breaks after GOP senators balked. It was the 73-year-old’s latest letdown after he unsuccessfully tried to pass a budget pairing deep cuts with the extension of some expiring tax increases. Those higher taxes would have been subject to voter approval.

Although the Democrats control both houses of California’s legislature by wide margins, many types of laws—such as raising taxes or suspending an annual education-funding requirement—require the support of at least two-thirds of lawmakers, making it imperative that a governor be able to reach across the aisle. While predecessors, including Republican Arnold Schwarzenegger, also struggled to strike bipartisan deals in their first legislative sessions, Mr. Brown, a former two-term governor, campaigned on the idea that his experience would help him navigate the state’s structural and political minefields.

“The most skilled politician will run into a buzzsaw” because of California’s dysfunctional system, said political analyst Larry Gerston of San Jose State University.
…

2 accused of grim, real-life ‘Weekend at Bernie’s’

Posted on Saturday, 09.17.11

By STEVEN K. PAULSON
Associated Press

DENVER — Two men are accused of driving around Denver with a dead friend, running up a bar tab on his account and using his ATM card at a strip club in what appeared to be a disturbing reflection of the movie “Weekend at Bernie’s.”

Robert Young, 43, and Mark Rubinson, 25, have been charged with abusing a corpse, identity theft and criminal impersonation.

It’s unclear how Jeffrey Jarrett, 43, died, but the men are not charged in his death. The coroner said toxicology tests were pending. Young and Rubinson are free on bond but couldn’t be reached for comment Friday.

In the 1989 Hollywood comedy, two ne’er-do-wells find their boss dead at his ritzy beachfront home and escort his body around town, attempting to save the weekend of luxury they had planned.

In Denver last month, according to a police affidavit that gives an account of a story first reported by the Denver Post (http://bit.ly/nEgeF4), Young arrived at Jarrett’s home and found him unresponsive.

But rather than call the authorities, police say, Young went to find Rubinson.

The duo returned to Jarrett’s home and put his lifeless body into Rubinson’s SUV and headed to a nightspot where they spent more than an hour drinking - leaving Jarrett’s body in the vehicle, according to police documents. Police say the two men used Jarrett’s card to pay for the drinks on Aug. 27, noting “they did not have Jarrett’s consent.”

Rubinson and Young then drove to another restaurant to hang out, Jarrett’s body slumped in the back along for the ride, police say.

They then returned to Jarrett’s home, carried him in and put him in bed, according to court papers.

From there, police say, Rubinson and Young went to get gas and made a stop at a burrito joint, again using Jarrett’s card. The two men then went to a strip club, where authorities say they used Jarrett’s card to take out $400 from an ATM.

As the men left the Shotgun Willie’s strip club parking lot, one told the valet and a police officer standing nearby that “they were driving around with a dead guy and they didn’t know what to do with it and they were just going to go home really fast,” general manager Matthew Dunafon said.

Police went to Jarrett’s home and found the body.

Police say Young told them Jarrett was obviously dead while they were at the first stop of the night.

http://www.miamiherald.com/2011/09/17/2411396/2-accused-of-grim-real-life-weekend.html

The Wall Street Journal
September 8, 2011, 6:10 PM ET

Does Perry Owe ‘Texas Miracle’ to the Fed?
By Patrick O’Connor

Mitt Romney isn’t the only person who thinks Rick Perry is taking too much credit for the strength of the Texas economy.

Scott Lilly, a senior fellow with the liberal Center for American Progress Action Fund, argued in a blog post Thursday that Texas owes its riches more to the Federal Reserve than any initiative Mr. Perry put in place during his decade as governor.

Just as the Fed hurt farmers and oil drillers in the 1980s by increasing interest rates to tame inflation, Mr. Lilly says the central bank’s decision to keep rates low to spur economic growth led to the recent spikes in oil and commodity prices – spikes that helped Texas create nearly 40% of the jobs in the U.S. since the recession began in 2009. according to the Dallas Fed.
…
As the race drags on, don’t expect Mr. Perry to thank Fed Chairman Ben Bernanke for juicing commodity prices, given how many of his rivals for the Republican presidential nomination have threatened to replace the Fed chief. But you can expect to hear Democrats – and maybe even some Republicans – repeat these arguments as they seek to explain the job growth in Texas during the decade Mr. Perry has served as governor.

September 8, 2011 9:07 AM
Rick Perry doubles down on Ponzi
By Walter Shapiro

Republican presidential candidate Texas Gov. Rick Perry speaks during a Republican presidential candidate debate at the Reagan Library Wednesday, Sept. 7, 2011, in Simi Valley, Calif. (AP Photo/Jae C. Hong)
(The New Republic)

In his inaugural presidential debate, Rick Perry had a choice. He could have emulated sports heroes like Charles Barkley in 1991 and Terrell Owens in 2006 and claimed that he was misquoted in his own autobiography.

Instead, the Texas governor invoked the never-retreat spirit of the Alamo and bravely repeated his description of Social Security as a “Ponzi scheme” and a “monstrous lie to our kids.” That decision spoke volumes about Perry’s literary integrity, but it also may have left him about as electable as Barry Goldwater.
…

A Question For Rick Perry When He Slams Bernanke’s Money Printing
07:00 pm
August 25, 2011
by Frank James

Texas Gov. Rick Perry greets supporters at Tommy’s Ham House in Greenville, SC, Aug. 20, 2011.
Enlarge RICHARD SHIRO/AP

Texas Gov. Rick Perry did a phone interview with Laura Ingraham’s radio show Thursday and it didn’t take long for the new frontrunner for the Republican presidential nomination to go after the Federal Reserve once more.

He didn’t threaten Federal Reserve Chair Ben Bernanke by name again as he infamously did recently. He did, however, express unhappiness with the central bank for “printing more money.”

Americans get it about this Federal Reserve printing more money and devaluing the dollars that are already not worth what they were two years ago because of the just absolutely horrible monetary policies and stimulus and debt creation that this president, his administration and, frankly, a complicit Congress were involved in.

Here’s the question someone should ask Perry the next time he pursues this argument. What would he have done about the deflation threat that worried central bankers and many economists in 2009 and 2010?
…

Meetings on European Debt Crisis End in Debate, but Little Progress

Seems like truth comes out when the markets are closed. When markets are open, nothing but lies, propaganda and rumors……

REAL ESTATE - ON THE BLOCK
Mortgage deduction: Should this sacred cow be slain?
By Samantha Masone | sammasone@yahoo.com
Published online 5:05am Thursday Sep 15th, 2011
and in print issue #1037 dated Thursday Sep 15th, 2011
…
But just how helpful is that deduction?

Presently, only the 35 million tax-paying homeowners who itemize deductions (roughly 40 percent of all those eligible) can claim the MID, which allows homeowners to deduct the interest on loans up to $1,000,000 and home equity lines up to $100,000. According to the Joint Committee on Taxation, the average benefit to a taxpayer making $50,000 to $75,000 a year is approximately $1,227 while those earning more than $200,000 annually see a benefit of around $6,600. Given these figures, it’s easy to see why critics view this as a tax break that favors the wealthy and provides an incentive to borrow more money, a factor some economists believe played a significant role in creating the housing bubble.
…

I don’t see any reason that politicians can’t keep talking about eliminating the unfair, regressive mortgage interest deduction while endlessly kicking the can down the road — same as they have done so far with proposals to wind down the GSEs.

Mortgage interest tax deduction: safe until after 2012 election?
Supercommittee’s likely course coming into focus
By Ken Harney, Tuesday, September 13, 2011.
Inman News™

Congress’ supercommittee — the bipartisan, 12-member panel assigned the task of cutting $1.5 trillion from the federal deficit in the next 10 weeks — met for the first time last Thursday, appointed top staff, and took preliminary peeks at alternative combinations of spending reductions and revenue increases that could get them to their goal by Thanksgiving.

Severe cutbacks or elimination of longtime tax preferences as the mortgage interest deduction and local real estate write-offs were on some of the menus that floated into the staff.

For example, the influential, bipartisan private-sector Committee for a Responsible Federal Budget urged members to “go big” and “go long” — well beyond $1.5 trillion — and offered several options on the mortgage interest deduction, including elimination of second-home interest write-offs outright, capping the primary home mortgage interest deduction at $500,000, and turning it into a credit.

Over a 10-year period, the group estimated that by limiting mortgage interest deductions and other itemized write-offs for high earners — presumably those with household incomes above $250,000 or individual incomes above $200,000 — it could knock $250 billion off the deficit.
…

Israel descends deeper into fascist corporatism

http://www.philosophyoffreedom.com/node/5537

Israel continues to be such a bountiful source of internationally reported examples of the suppression of the individual that I can’t seem to get away from it. Israel has now passed a new law outlawing citizens and organizations from advocating for boycotts against any Israeli person or entity.

This is what the Israeli Govt wants for everyone.

College Grads Behind Increase in Bankruptcy Filings
A new report suggests that advanced education can’t protect people from financial reality.
By Greg Howard | Posted Tuesday, Sep. 13, 2011, at 1:01 PM EDT

College graduates represent the fastest growing demographic of consumers who have filed for bankruptcy over the past five years, according to a new report out Tuesday.

Wait, really? Our high school guidance counselors always told us that a college degree guaranteed financial success down the road.

Not necessarily so, according to the survey by the Institute for Financial Literacy, which found that wealthier, more educated households are driving the recent spike in bankruptcy filings.

“We’re told that if you do go and get advanced education, you’re going to be almost guaranteed this economic success,” Leslie Linfield, the group’s executive director, told the Washington Post, which got an early look at the report. Linfield added that the recession proved that “higher education was no guarantee that you weren’t going to be at risk.”

The percentage of debtors with bachelor’s degrees rose from 11.2 percent to 13.6 percent between 2006 and 2010, and debtors with graduate degrees increased from 4.9 percent to 6.7 percent. In the same span, there was a decline in the percentage of bankruptcy filers who didn’t finish college, though they still accounted for about a third of all bankruptcies, the Post reports.

The institute also found sharp changes in the ages of consumers filing for bankruptcy. While the number of consumers between 18 and 34 who have filed since 2006 has fallen 31 percent, the amount of people 55 and older who have filed has increased 25 percent.
…

Interview with William Black. The FBI is no longer chasing white collar criminals.

http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/09/14/william-k-black-phd/why-nobody-went-to-jail-during-the-credit-crisis

Syracuse with frost and “hard freeze” warning for tonight. Mid Sept. Sigh, where did the summer go. This won’t be good for housing prices

GM, UAW agree on profit-sharing in new contract

The Associated Press

GM CONTRACT: General Motors Co.’s 48,500 workers will get $5,000 signing bonuses and the possibility of sweeter profit-sharing checks as part of a new four-year contract agreement. The deal also includes pay raises for entry-level workers and guarantees new products at plants in Spring Hill, Tenn.; Romulus and Warren, Mich.; and Wentzville, Mo.

BACK STORY: This is the first contract agreement since GM’s bankruptcy in 2009. GM and the United Auto Workers reached the agreement after nearly seven weeks of bargaining.

WHAT’S NEXT: GM workers vote on the agreement over the next 10 days. The UAW now bargains with Chrysler and Ford.

September 17, 2011 06:02 PM EDT

I admit, I found it funny a fellow should post here that because Israel had a knesset (parliament) vote for a law he might not like, that he posted a major harshing here about Israel. I appropriately smacked it down, showing comparison to real problems, like Syria killing 40,000 of its non-violent citizens for supporting an opposition party.

So, naturally, hours later I see this in the news:

Hundreds of people marched near Wall Street in New York in a failed attempt to occupy the heart of global finance to protest greed, corruption and budget cuts.

“The one thing we all have in common is that We Are The 99 Percent that will no longer tolerate the greed and corruption of the one percent,” said a statement on the website Occupy Wall Street.

Now, this all is fine, really. But, would folks not find it weird if I posted, ,”look! The USA is worse than Egypt!!!”

That is why I object to simplistic “bashing” posts. Good and decent countries (USA and Israel) have laws we don’t like, have checks and balances (Israel’s left-leaning supreme court more often overturns laws from Parliament than does USA’s less left-leaning supreme court), and have contention. But, we don’t take a snippet to try to de-legitimize the country, Lying Realtors notwithstanding

Zelman & Associates (regarding a posted article on housing today)- Their client list reads like the who’s who of the housing building industry. Sprinkle in home improvement box stores and related products. Even the REITs are clients.

Oh yeah, objective article. NOT

Reminds me of Christopher Thornberg’s career. I use to respect Ivr Zelman, too.

U.S. jobs crisis may get bloody
Bloomberg, experts warn of riots
By Brendan Lynch
Saturday, September 17, 2011 - Updated 13 hours ago

New York City Mayor Michael Bloomberg warned yesterday if the national jobs crisis doesn’t end soon, the United States would see riots in the streets.

“We have a lot of kids graduating college, can’t find jobs,” Bloomberg said on his radio show. “That’s what happened in Cairo. That’s what happened in Madrid. You don’t want those kinds of riots here.”

Thomas Kochan, a professor at MIT’s Sloan School of Management, agreed with Bloomberg’s assessment.

“There’s so much frustration at the lack of jobs,” Kochan said. “I’m surprised there aren’t more visible signs of anger already. The American public is very tolerant and not prone toward civil unrest, but we’re living on borrowed time with this economy.”

And the hits keep coming — yesterday the Federal Reserve released a report saying U.S. household income fell for the first time in a year, dropping .3 percent to $58.5 trillion. Earlier this week, the Census Bureau put the U.S. poverty rate at 15.1 percent, the highest since 1993. And the national unemployment rate held steady at 9.1 percent as the U.S. added zero jobs in August.

But Bay Staters may not be as ready to riot as New Yorkers. Massachusetts’ unemployment rate dropped to 7.4 percent in August and Kochan said the state’s strong, diversified, innovation-based economy creates high-paying jobs.

“That doesn’t absolve us,” he said. “Young people have also been leaving the state because of high costs and because they’re having a hard time starting families here.”
…

London riots rupture the ruling class
DOUG SAUNDERS
LONDON— From Saturday’s Globe and Mail
Published Saturday, Sep. 17, 2011 2:00AM EDT

In the month since my city exploded in flames and mob violence, much has been swept clean. The burned-out blocks in Tottenham, Croydon and Clapham have been boarded up, the glaziers have repaired thousands of smashed shop windows and the courts have tried 1,715 looters, most of them young and male.

The violence is done, for now. But what’s opened up is a rupture in the ruling classes over how the riots should be understood and confronted. Prime Minister David Cameron’s Conservative Party has spoken in three distinct and disharmonious voices.

It’s worth listening to each of them, because they’re talking about something that extends far beyond the grey skies of London, confronting the major cities of most of the Western world’s economies.
…

Weather ‘right’ for riots
Causes sought as Watts smoulders

Alistair Cooke, New York
The Guardian, Sunday 15 August 1965 06.25 EDT

Today Watts, one of the eighty or hundred small towns that interlock across the beach meadows, the mountains, and inland valleys of Southern California to form the weird urban complex known as Los Angeles, was said to be becalmed or cowed or smouldering, according to the colour and temperament of one’s informant.

At any rate, it is at bay, which is only to be expected of any small town between Cyprus and South Vietnam where you have ten thousand soldiers patrolling, manning machine gun emplacements, and erupting out of “staging areas”.

In the sooty pall of uncounted fires and the rubble of a thousand looted stores, the Californians are , in their energetic fashion, calling in their heads of police, their Governor and his cabinet, their State senate, their sociologists (in a city whose university school of sociology is especially distinguished) to find out how it happened and why.

It is very early to isolate first causes or assign blame, but there has been no foot-dragging among resident Civil Rights spokesmen; institutional psychiatrists and liberals, who overnight have put together these “reasons” for the explosion of a routine drunken driving charge into the most mindless orgy of race-rioting that has happened in this country since the second world war, or in California since the anti-Chinese riots of the last century.

Watts has the lowest per capita income of any part of Los Angeles except its downtown “Skid Row” section for chronic drunks. Its population is 90 per cent Negro. Its crime rate is the highest of the Los Angeles suburbs: it had a record of close to 200 murders, rapes and felonious assaults, and 800 other crimes in the last three months. Unemployment is if anything, worse that the usual Negro rate. The school drop-outs are about normal for a Negro community.
…

Housing Market May Be Better Off Left Alone—Economists
Published: Wednesday, 14 Sep 2011 | 12:28 PM ET
By: Karina Frayter, CNBC Markets Producer

President Obama’s proposal to expand access to mortgage refinancing has reignited a debate about the appropriate role for government in supporting the housing market. Some economists argue that the best way to spur the recovery is to stop intervening, let matters run their course, and allow home prices to normalize naturally.

The new initiative, briefly mentioned by the president in his jobs speech last week, seeks to help homeowners to refinance their mortgages at lower interest rates with hopes to stimulate consumer spending and boost economic growth.

Anthony Sanders, professor of real estate finance at George Mason University, says it’s a mere extension of The Home Affordable Refinance Program, which has helped only a small number of homeowners. In his view, the initiative is unlikely to have any significant stimulative effect on the economy.

“At best, that plan will generate $90 billion in additional borrower income. But that is only one tenth of one percent of personal consumption expenditures,” Sanders told CNBC.

“Households will appreciate the additional $150-$300 per month, but those will be taken from pension funds and others who invested in Agency (Fannie, Freddie, FHA) mortgage-backed securities,” adds Sanders.

In a recent working paper, Congressional Budget Office also expressed skepticism about potential benefits of a large-scale mortgage-refinancing program.

“Because the estimated gains and losses are small relative to the size of the housing market, the mortgage market, and the overall economy, the effects on those markets and the economy would be small as well,” concluded the report.

Some argue that government efforts to help struggling homeowners would alleviate labor mobility, which has been hampered by the housing woes.

But Stijn van Nieuwerburgh, associate professor of finance at NYU Stern Business School, says labor mobility has not been a big issue. “All areas in the U.S. are affected, and it is not the case that there are abundant jobs anywhere.”
…
Nieuwerburgh’s argument misses the point, which is that with affordable housing, workers with specialized skills can afford to relocate to places where those specialized skills are in demand. You don’t need “abundant jobs” for this to work — just enough jobs with specialized skills demanded where the would-be workers can’t come due to unaffordable housing prices for a potential drop in the local unemployment rate to not happen.

Coffee Talk
House prices continue to fall
By: Gulf Coast Business Review
September 15, 2011

Federal government data on house prices continue to paint a grim picture of housing values on the Gulf Coast.

Using data from Fannie Mae and Freddie Mac for the purchase and refinance of homes, the federal government showed second-quarter drop in prices in every area of the Gulf Coast except Fort Myers.

Nationally, using data from mortgages for acquisitions and refinancing, house prices were 1.9% lower in the second quarter compared with the first quarter and down 4.5% for the full year.

The table below shows the wreckage of the economic downturn on house prices over the last five years.

Three areas of the Gulf Coast experienced five-year declines of more than 50%.
…

Property prices fall in more Chinese cities in August
(Xinhua)
12:19, September 18, 2011

BEIJING, Sept. 18 (Xinhua) — More cities reported lower or unchanged property prices in August amid cumulative government efforts to cool the market, according to the National Bureau of Statistics (NBS).

In August, some 46 cities out of the statistical pool of 70 major cities saw new home prices decline or remain unchanged from a month earlier, compared with 31 cities in July, the NBS said in a report.

Sixteen cities saw month-on-month declines in new home prices in August, up from 14 in July. Meanwhile, prices in 30 cities remained unchanged, according to the NBS.

As for resold housing units, 26 cities reported second-hand home price declines month-on-month in August. Second-hand home prices stayed unchanged in 17 major cities in August from July, according to the NBS.

In the latest effort to curb property prices, the State Council, China’s Cabinet, required local governments to establish new home price control targets based on economic growth and increases in disposable income.

The government has started to prepare home purchase restrictions in the country’s second and third-tier cities to prevent prices from further increases.

Previously, the government has restricted residents in major cities from buying second or third homes. Home buyers were also required higher down payments for mortgages, and property taxes have been levied in the cities of Chongqing and Shanghai.

September 13, 2011, 7:01 pm Legal/Regulatory
Regulators Aim to End ‘Too Big To Fail’
By BEN PROTESS
Martin J. Gruenberg, the acting chairman of the F.D.I.C.Andrew Harrer/Bloomberg NewsMartin J. Gruenberg, the acting chairman of the F.D.I.C.

Nearly three years to the day that Lehman Brothers filed for bankruptcy and Wall Street teetered on the brink, federal regulators are seeking to wipe out the infamous phenomenon that Wall Street is too big to fail.

The Federal Deposit Insurance Corporation unanimously approved two sets of rules on Tuesday that would mandate so-called living wills at the nation’s largest financial firms, a crucial step in enforcing the Dodd-Frank financial regulatory overhaul passed in the wake of the financial crisis.

One new rule will force huge bank holding companies like Goldman Sachs and JPMorgan Chase — along with other sprawling corporations that present a systemic risk to the economy — to spell out plans for unwinding their business through bankruptcy should they once again fall on hard times.

Under a separate rule adopted on Tuesday, the F.D.I.C. will require the depository arm at the nation’s 37 largest banks, those housing more than $50 billion in total assets, to create their own contingency plans. The so-called resolution proposal would allow the F.D.I.C., acting as receiver, to dismantle the banks outside the bankruptcy process.

“These two rules will ensure the comprehensive and coordinated resolution planning for both the insured depository and its holding company and affiliates in the event that an orderly liquidation is required,” the F.D.I.C.’s acting chairman, Martin J. Gruenberg, said in a statement. The Federal Reserve must now bless the living will plan for it to become official, a move that is expected to come as soon as this week.

The rules underscore the changing regulatory landscape unfolding since the financial crisis, when Washington enacted a $700 billion bailout for banks, the automotive industry and the giant insurer American International Group. At the time, the Bush and Obama administrations said they had no choice but to rescue the firms. After all, they were so large and interconnected that their collapse would have further imperiled the nation’s already fragile economy.

But under the F.D.I.C.’s new living will plan, big financial firms must provide a road map of their business to regulators, who can then keep an eye on Wall Street’s health. The documents will open a window into the financial industry’s investments, trading counterparties and concentration of risk. The firms also must share what amounts to a Plan B — details for how the company can be wound down through the bankruptcy process.
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Posted at 06:00 AM ET, 09/16/2011
Say ‘good-bye’ to ‘too big to fail’
By Dominic Basulto

A Wall Street sign hangs on a signpost in front of the New York Stock Exchange (LUCAS JACKSON - REUTERS)

Three years ago, as the world’s largest banks teetered on the edge of collapse, the global financial system nearly experienced the financial equivalent of Armageddon. When Lehman Brothers finally went under in September 2008, the chaos that ensued was largely blamed on a wide-scale embrace of the “too big to fail” mentality. Put simply: America’s largest financial institutions were considered too large, too complex and too hopelessly interconnected to ever be allowed to collapse. That is no longer the case, now that the FDIC, Federal Reserve and Financial Stability Oversight Council have united on the mandatory creation of “living wills” for the largest banks in the country.

The idea behind these “living wills” is simple — before a large financial institution is ever allowed to reach the precipice, it will be required to lay out, point-by-point, exactly how its assets would be distributed in the event of its demise. Contrary to the wonderfully elegant risk calculation models of the Wall Street moneymen, there are, indeed, Black Swans in the financial universe — and far more than might be expected. Making sure that banks like Citigroup, J.P. Morgan Chase and Bank of America have contingency plans in effect is a way of ensuring that a $700 billion bailout of the banking system will never be required again.

By next July, the nation’s largest banks with more than $250 billion in assets — the likes of Citigroup, J.P. Morgan Chase, and Bank of America — will be required to detail how they should be broken up if they, indeed, need to be broken up in the future. By Dec. 2013, any bank or bank holding company with more than $50 billion in assets will be required to present an orderly plan for how their assets can be liquidated before they file for bankruptcy. Even foreign banks with significant exposure to the U.S. market will be required to put together a comprehensive contingency plan.
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