The Housing Bubble

Ganzanging is the new gazumping: Latest peril in buying a new home (and 54,000 have fallen victim this year)

Read more: http://www.dailymail.co.uk/news/article-2038972/Ganzanging-new-gazumping-Latest-peril-buying-new-home-54-000-fallen-victim-year.html#ixzz1YNfEP0xD

The term is used to describe when a buyer is ‘left hanging’ as a seller pulls the plug on a deal at the last minute,

Ok, here is my housing bubble idea of the day. Probably everyone will especially hate this one.

whereas the tax deduction for interest on mortgage payments is unfair to renters and those who cannot afford to own and

whereas taxes on unreported rental income is “lost revenue” to the federal and state governments and

whereas the working poor of this country are in dire need of extra money,

I hereby propose that legislation be instituted to make the first $1000 of rent paid monthly per household ($12000 anually) deductible from gross income for calculating income taxes (and not a tax credit)in addition to either the current standard deduction or as an additional line in an itemized return, so long as total rent paid is documented by 1099 to the landlord and a copy attached via tax return.

This is in response to yesterday’s thread about more pending sales…

Interesting that you guys are all noticing an uptick in pending sales.

In our ‘hood (North County Coastal San Diego), the market seems to have fallen off a cliff. Very little is pending, and there are quite a few BOMs and listings removed from the market. Some homes that had multiple offers in the spring have been relisted, and they are now sitting without any offers at all.

If you’re seeing more activity in your areas, I’m quite sure it has to do with mortgage rates being near 60-year lows. From what I’ve seen, this is the first time in over 10 years of closely watching local markets that a drop in interest rates like this hasn’t spurred sales. As a matter of fact, it seems like the low rates and drop in sales happened about the same time.

Again, this is the first time I’ve seen this in over 10 years — there is a definite change this year. Even during the financial “crisis,” people were still out there trying to outbid one another in our area. Only in the second half of 2007 did we see a slowdown. Once the govt got involved in 2008, it was off to the races, once again.

IMHO, the second leg of the downturn has begun, and I think the political climate has changed enough that they won’t be allowed to throw money at housing in an attempt to keep prices artificially inflated. The risks have largely been shifted from the private market to the public, which means they can now allow prices to drop.

Need to vent about lying, scumbag realtors.

I mentioned the house around the corner that came on the market the other week — pretty much a dream home/location for us. We approached the sellers directly and made a verbal offer on the spot (we know the house, neighborhood, and all the neighbors). After having another offer we made get undercut by an “inside” buyer of the listing agent who got the house for ~$68,000 less than our offer, we’ve decided to ALWAYS approach the seller directly instead of going through the agent. From this point forward, all of our offers will be handed directly to the sellers.

Anyhow, the sellers are the heirs of their mom’s estate and they came from out of state to take care of her at the end and to handle the estate. The house was priced too high — we know the area and all the past listings since we’ve lived here for over 7 years — but I figured we’d make the offer at list and then let the appraisal do the negotiating for us. Well, as expected the appraisal came in lower than they wanted, but their agent is trying to claim that the appraiser doesn’t know what he’s talking about (he does, he’s spot on, actually).

This is a tract neighborhood, and while the lot is superior/large, it backs to a school that doubles as a park on weekends with soccer and baseball games, so you always have lots of noise from the school. We’re willing to pay a $25K premium for the lot, plus pay $10K toward our agent’s commission vs. an exact model match in a better location, but with a smaller yard. Not only that, but the listing agent of the house we want was the listing agent on the comp, but she is now claiming that it’s not a good comp! This is a tract neighborhood with very simple tract homes. Finding comps is not rocket science, and no houses like this have sold anywhere near their price in years.

We’re very strong buyers, agreed to a 10-day contingency, and can close in 2 weeks (the sellers want to get this done so they can go home). The agent oversold this listing to the sellers and gave them unrealistic expectations about the home’s value. Now, she’s trying to tell them that the appraisal isn’t valid. She has relisted the home on the MLS, but our contract was not officially cancelled.

I’m not signing off on the inspection contingency (expired last Friday) until she says we’re under contract, but she won’t commit. Now, the listing agent wants us to release the contingency. WTF??? I told her that the clock stopped ticking on our side when she put us on hold. We told her to get their own appraisal and my agent even offered to pay for it if we end up buying the house. At first, she said they wouldn’t do it because they had spent enough money on the house (it’s mostly original, they just cleaned it up), then agreed to getting their own appraisal. Will hopefully see what happens with it Monday.

Their agent is a fly in the ointment. The sellers and I were getting along very well, and I think we could get the deal done if not for their agent. I can’t tell you how many times I’ve seen agents get in the way of a transaction. They insist on controlling everything when they are not even a party to the transaction. I’ve sold properties without agents before, and they were so much smoother and easier on everyone’s part!

I hate these idiotic realtors!

Good article for the aging HBB coders. I was in the same boat shortly after Y2K. My shop consisted of semi-retired IBM guys padding their pensions and H-1B imports from India and Russia. When the smell of curry began to overwhelm that of Lectric Shave one could see the writing on the wall. Part of it was simply better technology, reports that once required Easytrieve could now be done with Office. Anyway, turning Forty and not liking my prospects (or coding for that matter) I bailed….

Tech hiring is tough on veteran workers
Keeping up with the latest gets ever-harder

Brewster Smith specialized in mainframe systems for 35 years in the technology industry, recently converting his employer’s mainframe to servers that use newer programming languages. When Smith completed the project in July, his company laid him off because his skills no longer fit the new system.

Elliott Kleinrock, a programmer from Burlington, Conn., who writes C++ code that “moves money around,’’ has been laid off four times since 1993, but has never had such a hard time finding another job. Kleinrock found plenty of job openings for Java programmers, but very few that matched his older C++ skills. After 10 months of looking, he recently landed a position at one of the dwindling number of companies that still uses C++

http://articles.boston.com/2011-09-18/business/30173049_1_software-engineers-technology-microsoft-windows

CA renter
Fabulous first post.
I’ve been wondering if NAR is fighting tooth and nail not to have the shadow inventory bundled to the investor wolves and to be rented out, or even a straight rental agreement through FHFA? Going forward, if anyone of the rental deals goes through, more agents will starve. Any opinion?

In east Ventura County the market is constipated. A trickle of new listings, mostly in bad locations or just overpriced fixers. I agree, low rates haven’t been effective in moving listings. Housing is still way overpriced.

Realtors Are Liars®

Funny how it is a UBS economist who insists on the need for a Greek bailout, given other recent UBS-related news.

Are the fear factors he raises real, or is he just talking Megabank, Inc’s book?

Greek Bailout a Must, as Cost of Euro Breakup ‘Horrendous’: Economist
Published: Friday, 16 Sep 2011 | 5:59 AM ET
By: CNBC.com

As European ministers meet to find a solution to the euro zone’s debt crisis, one economist says the European Union must bail out Greece, as the cost of a euro breakup will be “colossal.”

“You have to do bailout. The cost of break-up is horrendous,” said Paul Donovan, Managing Director and Deputy Head of Global Economics at UBS told CNBC on Friday.

“We did a rough estimate…for a disastrous scenario like this, it can only be a rough estimate, but for a country like Greece to leave the Euro, it would cost it (Greece) between 40 and 50 percent of its GDP.”

UBS calculates that for a weak economy like Greece leave the euro zone, it would cost citizens between 9,500 and 11,000 euros in the first year, and 3,000-4,000 euros per subsequent year. For a stronger economy like Germany to exit, it would cost 6,000-8,000 euros per person in the first year of exit, or 20-25 percent of the country’s GDP, its says.

“You’re devastating trade, you’re devastating the banking systems,” Donovan said. This is not a fixed exchange rate. This is a monetary union… this is a huge problem.”

“Almost no monetary union has broken up in the last 150 years without some kind of dictatorship or military government or civil war. The cost of these are unimaginably high,” he added.
…

We are waiting to see what the Greeks will do about all their national debt . Hope they just do the Iceland thing , and just say “”We prefer not to pay the greedy bankers”. And live to thumb their noses at them .

The conundrum:

Privatize profits, socialize losses…

Decision on new Greek bailout funds delayed until October
By Michael Birnbaum, Published: September 16

BERLIN – The European Union will not decide whether to give Greece a new installment of bailout money until October, officials said Friday, lengthening the uncertainty about whether the troubled country will default on its debts.

Investors had hoped for a quicker sense about the direction of the bailout. Greece’s financial troubles are threatening to spark a wave of credit problems for banks and countries around the euro zone, drawing an unusual visit from U.S. Treasury Secretary Timothy F. Geithner to a meeting of European finance ministers in Poland Friday and Saturday.

Geithner’s attendance at the meeting is a sign of American worry about the potential for the European problems to set off another recession.

Geithner chided European officials over “loose talk about dismantling the institutions of the euro,” saying that “governments and central banks have to take out the catastrophic risks from markets,” Reuters reported.

On Thursday, the Federal Reserve decided to open its vault to other central banks in an attempt to avoid a credit freeze, in which banks are too afraid of each other’s balance books to loan each other the cash that helps lubricate the daily transactions of financial markets.

Markets continued to be buoyed Friday by the news, with Asian markets closing higher and most European markets up slightly in trading. But U.S. stock futures were lower ahead of the market’s open.

A bitter debate has emerged about whether the European Central Bank should support troubled countries by buying their bonds, which is outside its core mandate of fighting inflation.

Portions of German Chancellor Angela Merkel’s fractious coalition have suggested that Greece may default, worrying investors.
…

It looks like traders who assumed a great big fat Greek bailout was “in the bag” are slightly disappointed.

Sept. 19, 2011, 8:00 a.m. EDT
U.S. stock futures sink as Greece worries mount
President Barack Obama due to unveil deficit-cutting plan
By Polya Lesova and Greg Morcroft, MarketWatch

NEW YORK (MarketWatch) — Wall Street was set to open sharply lower Monday, as concerns escalated over the possibility of a Greek debt default, while the spotlight in the U.S. will be on President Barack Obama’s plan to reduce the federal deficit.
…

Sept. 19, 2011, 12:00 a.m. EDT
Lordly Geithner castigates Europeans
Commentary: U.S., China take turns giving advice, some of it welcome
By David Marsh, MarketWatch

LONDON (MarketWatch) — He came, he saw, he castigated.

What a pleasingly lordly duty for the American Treasury secretary to turn up in Poland and rebuke the finest of Europe’s finance over their painful failure to resolve the euro debt crisis.

Forty years after John Connally, Treasury secretary under President Richard Nixon, famously told European finance ministers in Rome the dollar was “our currency but your problem,” Tim Geithner says the euro has become a problem for the whole world. Connally’s heir lectured the latest generation of finance ministers in Wroclaw on Friday that they should stop squabbling with the European Central Bank and curb a “catastrophic risk” to financial stability.
…

Apparently retired military will be added to the list of “goons and thugs” (actually, when you think about it, that is what they are paid to be, at least that’s what people in other countries think of our soldiers).

http://www.msnbc.msn.com/id/44575140/ns/us_news-the_new_york_times/

“Military retiree benefits vulnerable as Congress struggles to cut debt”

I wonder how they will react to having their cheese taken away? I hope those guys remembered to save for their golden years.

Chinese Solar Company employees riot over toxic pollution at factory.

http://www.bangkokpost.com/news/asia/257302/china-shuts-factory-after-pollution-protests

“The protesters broke into the factory in Zhejiang province, ransacking offices and overturning vehicles before being forced back by police in a three-day protest that began on Thursday, according to state media reports. (We will) go all out to maintain stability and seriously deal with those who are suspected of violating laws in the incident in accordance with the law.”

Now that this is in the press I would not be surprised to see some company executives executed to placate the mob.
This is some hard evidence that China has had an economic policy to undercut our manufacturing base. China solar products should have a heavy tariff levied against them until this stops.

Trolls must be sleeping late today, as they seem to be missing in action.

It’s funny how I find them highly annoying when they post here, yet miss their company when they are absent. I even occasionally yearn to hear from Eddie — I could use some reassurances just about now about how the stock market is about to take off to the upside.

How many goons do we have here on the blog? I’m not a goon. Most of the guys on my site are goons though. Do you work with goons? Is your spouse a goon? How about your kids? Are they goons? Or maybe goony-goo-goo’s?

Home builders’ sentiment seems permanently stuck in the basement. It’s not the change (”dips slightly”) that matters here, but the permanently-moribund level.

Sept. 19, 2011, 10:00 a.m. EDT
Home builders index dips slightly in September
By Steve Goldstein

WASHINGTON (MarketWatch) - Confidence in the market for newly built single-family homes dipped slightly in September to remain in very low territory, according to an index released Monday. The National Association of Home Builders/Wells Fargo Housing Market Index fell by a point to 14, on a seasonally adjusted index where readings above 50 are considered good. The index, which correlates closely with single-family housing starts, has held between 13 and 16 for the last six months. Economists polled by MarketWatch had expected a 15 reading.

Interesting aside. Yesterday my wife wanted to replace a broken mini blind (58″ X 47″: white). Went to J.C. Penny’s as they had a sale going at 70% off. Standard item that we all bought in the 90’s, 2000’s for $20. The price was $190 but with 70% reduction only a mere $58. When did such inflation on cheap, crappy window products arise? I then went to Homedepot where they were still high at $38! I think I’ll watch garage sales.
The other thing we noticed was that Sear’s, J.C. Penny’s and other similar stores seemed to be getting rid of their section on bedding. Soon the mortar and brick stores will be e-online stores the modern version of J.C. Penny, Sears, and Montgomery Wards catalog store of yore.

What do I like about Dr. Doom? The guy understands how to skip to the chase.

Sept. 19, 2011, 7:12 a.m. EDT
Greece should default, exit euro, Roubini says
By William L. Watts

FRANKFURT (MarketWatch) — Greece should begin an “orderly” default and voluntarily leave the euro in order to escape a “vicious cycle of insolvency, low competitiveness and ever-deepening depression,” economist Nouriel Roubini said in a guest column published Monday in the Financial Times. Other options, such as a sharp weakening of the euro, a rapid reduction in Greece’s unit labor costs or a rapid deflation in prices and wages appear unlikely or impractical, said Roubini, a New York University professor and chairman of Roubini Global Economics. While the process would be traumatic, a return to the drachma and a sharp depreciation in its value “would quickly restore competitiveness and growth, as it did in Argentina and many other emerging markets which abandoned their currency pegs,” he said.

Nobody put guns to the heads of the bankers who made subprime loans to Greece — did they?

Transcript: Emergency Global Forum: Will This Debt Crisis Be Worse Than 2008? (Edited, as needed, for clarity)
Martin D. Weiss Ph.D. | Monday, September 19, 2011 at 7:30 am

Martin Weiss: We stand on the threshold of one of the most dramatic financial disasters of our lifetime: The default of the oldest democracy in the history of Western civilization — Greece — is threatening the largest economies in the history of civilization — the European Union and the United States.

I’m Martin Weiss, and this is the Weiss Research Emergency Global Forum. We’re here today to tell you what the consequences will be and what to do about it.
…

Their foray into capitalistic banking practices is bound to end badly for Red China.

Sept. 18, 2011, 8:42 p.m. EDT
More warnings on China’s debt
Commentary: Shadow banking sparks new worries
By Craig Stephen

HONG KONG (MarketWatch) — Three years ago, China’s banks were widely applauded as they lent their way out of the last financial crisis, hauling much of the world with them. But now with these loans coming due and interest rates on the rise, officials and analysts are increasingly sounding the alarm.

Throw into the mix new revelations about the escalation of shadow banking, and it’s little surprise “China” and “subprime” are increasingly talked about in the same breath.

So far, the loans causing most unease are with local-government investment vehicles, estimated at up to $1.7 trillion. Cheng Siwei, a former vice-chairman of the standing committee of the National People’s Congress told the World Economic Forum last week in Dalian:

Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults.

But this is by no means the only lending worry on the horizon.
…

ABREAST OF THE MARKET
SEPTEMBER 19, 2011

Wall Street’s Optimism Fades
By JONATHAN CHENG

After a summer of denial, reality has caught up with Wall Street strategists.

Having spent much of the year making ever-higher predictions for the Standard & Poor’s 500-stock index, and sticking to them through August’s turmoil, many strategists are now cutting their forecasts.

It is about time, some investors say—and a sign that expectations may now be better calibrated to the realities of a global market crippled by a European debt crisis and sluggish U.S. growth prospects.

David Bianco, a high-profile strategist left Merrill Lynch last week, just days after reaffirming his year-end target of 1400 for the S&P 500 and raising his 12-month forecast.

“At the beginning of the year, everyone was tripping over themselves to raise their S&P 500 targets, and now it’s the opposite,” said Scott Migliori, U.S. chief investment officer for money manager RCM, a subsidiary of Allianz Global Investors.

Goldman Sachs last Wednesday ratcheted down its end-of-year prediction for the S&P 500 to 1250, from its previous forecast of 1400. Last Monday, Wells Fargo dropped its forecast to 1250 from 1390. And on Friday, Citigroup lowered its target to 1325 from 1400.

The S&P 500 ended last week at 1216.01, which leaves most of the predictions still looking relatively bullish. Strategists on average expect the S&P 500 to end the year at 1309, according to Birinyi Associates—a rise of 7.6% from Friday’s close through year end.

At the beginning of 2011, strategists were looking for an 8.5% gain for the entire year, predicting a year-end close of 1365.
…

Week Ahead: Fed Expected to Launch New Program While Europe Debt Troubles Bubble
By: Patti Domm CNBC Executive News Editor

The Fed in the week ahead is widely expected to pull the trigger on a new easing program, as the European debt crisis continues to boil.

The housing market will also be a focus when new and existing home sales data is released Tuesday and Wednesday. New data this past week showed a jump in foreclosure starts, signaling that a big wave of foreclosed properties will hit the struggling housing market early next year.

The Dow and S&P 500 had their best week since July and second best week since July 2010, as European officials showed support for Greece. The Nasdaq did even better — jumping 6.3 percent, for its best week since July, 2009.

Market expectations are high that the Fed will announce a new program — dubbed “operation twist” — at the end of its two-day meeting Wednesday.

“Twist” is different than the much larger scale “QE2″ quantitative easing program which involved the purchase of $600 billion in Treasury securities. Fed watchers expect this program to raise the duration of the securities the Fed holds, not the amount. The program, in theory, could reduce long-term interest rates as the Fed buys more securities in the middle and longer end of the yield curve.

“It’s not their job to bail out the whole world, but next week there’s high expectations for the Fed,” said Nomura Americas Treasury strategist George Goncalves. The Fed this past week joined with the European Central Bank and others to provide more dollar liquidity for euro zone financial institutions.

European finance ministers ended their meeting in Poland with no signs of progress in handling the sovereign debt crisis. Some traders were looking for the officials to provide some clarity on the purchases of sovereign debt, which so far has fallen to the ECB. The euro zone countries are in the process of voting on enhancing the powers of the European Financial Stabilization Facility bailout fund, or EFSF.

In the coming week, the IMF meets in Washington and Europe will certainly be on the agenda. Ahead of that meeting, representatives of the BRICS (Brazil, Russia, India, China, and South Africa) are expected to meet to discuss whether they can help the European situation.

Meanwhile, Greek Prime Minister George Papandreou canceled his trip to the U.S. He said in a statement that the coming week is “particularly critical for the implementation of the July 21 decisions in the euro area and the initiatives which the country must undertake.”

Inspectors from the IMF, EU and ECB will be working with Greek officials this week as they struggle to get approval for their next 8 billion euro funding tranche, without which Greece would default.

Has anyone thought about the pros and cons of taking out a 3.5% FHA loan, and just doing a strategic default if you need to sell?

The government is pushing this angle by creating the conditions which encourage it. It helps the banks and that is the goal of the government. The government is intent on dragging on the housing market price correction as long as possible, Japan-style.

I guess my question is - what is the blowback here, the consequences? I have some thoughts:

1) If you’re in a recourse state, they can garnish your wages or otherwise come you - true? If so, what can they do?
2) It will hurt job prospects because of the damage to credit rating - but what exactly would be the damage? If I have an 800 FICO and do a strategic default, what exactly will my credit rating be after this.
3) Security clearances - would a strategic default affect the chances of getting one?
4) Future home buying would be harder - true? For how long?
5) Future renting would be harder - true? For how long?

Other thoughts?

I’ve been renting for a while, and if the full force of the US government is to support the NAR (one of the largest political contributors) and the banks - is it time for “If you can’t beat ‘em, join ‘em”?

First day back online after a trip to NW Montana to visit the spectacular Glacier National Park. We spent a day in Whitefish and Kalispell, which allowed me to play my favorite “Could I live here?” game.

The area appears fairly prosperous. Neat and tidy, very few empty storefronts. Tourism is big business both summer (golf, water sports, fishing, the national park nearby) and winter (skiing, fishing), along with ranching. I don’t know what else keeps the economy going there–oil & gas? Mining? Logging?. Home prices aren’t as low as I might have thought (far off the beaten path for a city dweller!) Particularly on the area’s lakes– Flathead and Whitefish–prices seemed astronomical. Saw one ad for a Flathead Lake waterfront home with a boat slip, asking price $399,500. That appeared reasonable until I saw another ad for the same property that specified it’s a CONDO. The few homes for sale on Whitefish Lake, which is on the edge of the cutesy-hip town of Whitefish, are in a similarly exorbitant seven-figure range as what you’d find in Chicago’s north suburbs on Lake Michigan.

As elsewhere, it’s all about supply and demand, with a dose of wishful seller pricing thrown in.

—— Obama to call for broad tax increases
Wants three dollars in taxes for each dollar of new cuts”

By Stephen Dinan

-

President Obama on Monday will propose a deficit plan that calls for about three dollars in new tax increases for every dollar in additional spending cuts as he seeks to put his imprint on the ongoing talks over reducing the government’s staggering debt burden————–

Hmmm…. This will end well.

—Those HELOC for side business and rainy day use will getcha everytime—

Athena Kaiman at her Miami-area home. Falling prices are giving her pause about moving to Nashville, Tenn.

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, 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.

Still, Ms. Kaiman could be tipped over the edge, she says, with the right incentive. She and her husband missed out on the first-time homebuyer tax credit, but if a lender offered loan incentives, she would consider taking the plunge. That would mean reducing fees and shaving points off of her mortgage, or a lower down payment — incentives that are sometimes offered by new home builders and their in-house mortgage units.

But barring those or another incentive, Ms. Kaiman says she’ll continue to wait until she feels better about the economy, or at least Miami’s housing market, to try and sell her North Bay Island home.

“I could probably do it if I were willing to put myself through it but … I would have to be willing to give up a good chunk of my life savings,” Ms. Kaiman says. “You don’t sleep. You’re in a constant state of agitation. You feel trapped … Where am I supposed to live?”

I liked this response to the Florida Lady who cannot move away—

——This lady is nuts. I bought my Florida home in 2003 (mid-boom) and it is worth 20% less than I paid (it’s almost paid off though because it was within my means, not some exotic gamble dependent upon wishful thinking that homes will increase in value regardless of circumstances, in spite of the government’s best efforts to make it so. Sometimes sacrifices need to be made- I took an out of state job in 2006 and lived in an apartment 1/3 the size of my home for three years. Lifestyle took a hit, but I own my obligations. I tried to sell but the market had literally frozen at the time so I converted it to a rental property that almost was just a little cash negative. (three months earlier I could have stood in my driveway with a sign and sold the place). Of course, I drive a paid for Honda- boring as hell but it beats a $600/month payment on the BMW.

Too many people, including Baby Boomers that drove this train off the rails, (I’m a few years younger) seem to think that they should have no ramifications for poor decisions. The government shouldn’t have bailed out banks, and they shouldn’t bail out consumers, and perhaps this lady should “downsize” (egad!) and reassess her priorities. Remember people- its just stuff. Please spend your idle time at a Food Kitchen or some other environment in which people are truly struggling, not lamenting your inabliity to flip one luxury home for another.
———

From the “SPIN AND WHAT ARE THEY SMOKIN’” File

———-

Of the many financial reforms in Dodd-Frank, a requirement that lenders retain a share of the risk in mortgages they sell to investors seemed like a no-brainer. If lenders were on the hook, too, the thinking went, they would tighten standards and avoid the kind of defaults that contributed to the collapse of the housing marketand the financial crisis.

Regulators defined qualifying residential mortgages very conservatively, requiring a 20 percent down payment, caps on a borrower’s debt-to-income ratio, restrictions on loan terms, and other limits designed to restrict the number of loans that would qualify for the exemption.

Shakin out da mess:

LOS ANGELES (AP) — Banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments, setting the stage for a fresh wave of foreclosures.

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”

Obama Proposes New Czars
9/19/2011 | Lurita Doan | Townhall.com

As the Obama agenda proves increasingly impotent, Americans have witnessed Obama’s czars crash and burn or run for cover over the past thirty months. From Van Jones to Kevin Jennings to Nancy-Ann DeParle to Todd Stern to Ron Bloom, Obama’s style of management–bypassing the senate-confirmed agency heads–has failed to yield the results promised to the American people. You would think Obama would give up on the failed idea of using a curious collection of White House czars to manage complex economic and regulatory issues. No way.

Instead, in the American Jobs Act, Obama is proposing a new group of czars as a part of his “jobs” act– the American Infrastructure Financing Authority (AIFA) czars. President Obama’s newest czars will be given the authority to manage over a trillion dollars of federal funding for roads, bridges, buildings, waterways, dams and other infrastructure.

Here we go again. No doubt, Obama hopes that few legislators or American citizens will read the deadly details buried within the 199 pages of his proposed American Jobs Act that will establish this latest czar-ship, nor understand just how expensive AIFA is going to be.

As with Obama’s other czars, the AIFA czar comes with infrastructure requirements of his own: staff, office space and technology needed to perform the job. Managing what is in reality a trillion dollar budget is going to require a huge new staff that will, essentially represent an entire new federal agency. Of course, nowhere does President Obama tell us why a new czar is required to manage infrastructure projects. More importantly, Obama does not explain why the vast federal bureaucracy now responsible for these activities must be bypassed and a new, redundant agency is built.

Make no mistake: the AIFA Czar position is redundant. All of the infrastructure projects and tasks identified to be performed by Obama’s new Czar are already the responsibilities of the Senate-confirmed heads of Department of Transportation, the U.S. General Services Administration and the Department of Energy.

Weren’t falling house prices supposed to lessen the property tax liability? What ever happend to the ’silver lining’?

(Crain’s Chicago Business) — If it seems like property taxes on your house have been rising while its value has been dropping, they have.

A new report being issued on Monday by the Civic Federation says that the “effective property-tax rate” on residential property — the percentage of a home’s real value that must be paid in taxes — rose in every corner of the metropolitan area in 2009, the latest for which data is available.

In Cook County, for instance, the effective property-tax rate on residential property rose 8.3% in Oak Park and 10.7% in Chicago between ‘08 and ‘09. Bad as that sounds, the numbers were far worse in the other 11 towns surveyed by the Civic Federation, ranging from 11.1% higher in Arlington Heights to 12.1% in Evanston, 17.1% in Glenview, 27.8% in Schaumburg and 28.5% in Chicago Heights.

Destiny is Demography
Bill Bonner

The San Francisco Federal Reserve bank came out with a gloomy forecast last month. Its analysts said that stocks were likely to earn paltry returns over the next 10 years. The reason cited was simple enough; stockholders don’t live forever.

‘Demography is destiny,’ said Auguste Comte. ‘It works the other way around too,’ he might have added. If they thought they were going to live longer, America’s most ubiquitous age cohort — the baby boomers — might continue to buy stocks. Instead, the cold hand of the grave is on their shoulders and on the whole economy. The boomers are retiring at the rate of 10,000 per day over the next 18 years. They will sell stocks to finance their remaining years.

Old people have always been a drag on an economy. Migrating tribes left them behind. Eskimos put them out on the ice. Old people generally bowed to their fate with good grace. In times of famine, for example, they stopped eating so the young might live.

Mortality has doomed the stock market, says the S.F. Fed. P/E ratios will likely be cut in half. Investors are unlikely to see their stocks return to 2010 levels, says the report, until 2027. And this assumes that US companies will continue to grow profits as they did since 1954. Not very likely. Because democracy, energy, and financial quackery are destiny too. Jointly and severally, they are responsible for the biggest financial debacle in history.

This week, Deutsche Bank came out with a report of its own. It, too, is confident that the “Golden Age” — 1982-2007 — is over. In its place is a “Grey Age.” Instead of the nominal 12.8% gains of the Golden Age, investors have gotten returns of — 2.8% per annum for the last 4 years. Deutsche Bank expects stock market investors to lose about 10% of their money — in real terms — over the next 10 years, while the economy goes through 3 recessions!

But what would you expect? Everything droops. For the last 3 or 4 centuries the winning formula for developed economies and their governments has been simple: More energy. More output. More people. More credit. More promises. This formula has been so effective for so long people began to think it was destiny itself. It’s not. Instead, it is slave to destiny not its master.

By 2007, the slave was put in his place. The business cycle turned sour. Native populations in Europe and Japan are falling. Energy use per person in the developed world has leveled off. Private sector credit is shrinking. So is real private sector output.

The feds responded to this challenge as they had to every post-WWII slowdown. They added more — more money, more credit. The government itself spent more money and used more energy. But the economy did not react in the old manner.

An obvious reason: people are no longer as young and sans-soucis as they used to be. A young man’s eye may be drawn to fast German cars or slick Italian suits. But an old man can barely see at all. The baby boomers no longer roll their joints; they rub them. And they are no longer the source of an economic boom; now, they are the proximate cause of the bust.

But there’s more to this new Grey Age than demography. People too are subject to the law of declining marginal utility. They wear out. But so do even the most enduring and impressive economic trends. There were only 450 million people on the planet in 1500. It took 99,000 years to reach that level. Then, over the next 5 centuries — the population soared 10 times. Today, it is hard to find a parking place in any major city. How was such a big jump in population possible? Destiny was demography. With ready, cheap energy at hand, man could grow more food. And then he could ship it all around the world. And he could put his talents to work making more and better machines…which would vastly increase his output and his standard of living.

But the Machine Age ages too. The first tractors appeared more than 100 years ago. They may have increased production 10…20…100 times. Since then, improvements have been incremental, not revolutionary. We have bigger, faster, better tractors — that use more energy than ever.

Meanwhile, energy itself came to be more expensive. When the price of energy rose in the ’70s, the “30 glorious years” that followed WWII were soon over. Hourly wage rates stopped increasing and have not gone up since.

Yes, there is plenty of energy around. But it is net output that you get from energy that counts, not the raw output. If a gallon of gasoline costs $5…it must produce more than $5 in additional output or the economy gets poorer. As the price rises fewer and fewer new energy apps pay off.

Likewise, credit is subject to the law of declining marginal utility too. In 1950, an additional dollar of credit added about 70 cents to GDP. By 2007, the US economy was adding more than $5 of debt to produce a single new dollar’s worth of GDP. Now, the feds’ new credit inputs produce negative real returns.

The jig is up. More no longer works.

Regards,

Bill Bonner,
for The Daily Reckoning

Historic central Pennsylvania seed company in danger of closing launches online campaign
ANDREW SHAW The York Dispatch

NEW FREEDOM, Pa. — A 227-year-old New Freedom company that at one point supplied seed to George Washington and is one of the oldest continuously operating companies in America is in danger of going out of business.

Now staff members are using a fervent online campaign and plea for help to help support the D. Landreth Seed Co., which needs to raise hundreds of thousands of dollars this fall to remain open.

Landreth started in Philadelphia in 1784 and moved around the region until settling in New Freedom around 2006 after being purchased by Barb Melera and her husband, Peter.

Landreth has long been well-known in the gardening world for its heirloom seeds, Melera said.

That’s not to mention Landreth’s introducing America to zinnias and the white-fleshed potato, among other achievements.

Now the company is in danger of folding because of more than $400,000 in loan payments to investors due immediately.

The money was originally due two years ago, and was caught up in courts until a judge recently ordered a freeze on Landreth’s bank accounts.

Landreth is hoping to raise at least $250,000 by the end of the month through donations and sales, particularly off its full-color 2012 seed catalog.

Without at least that much, the accounts will likely remain frozen, bills won’t get paid and 227 years of history and growth — in all senses of the word — vanish.

Melera said she’s not upset people who had lent Landreth money sought payment.

“These people have every right,” she said.

The money was due in 2009, and Melera’s plan to return the company to profitability was behind schedule because Landreth had several broken pieces of equipment and was way behind on technology.

“Accounting had been done on index cards. They were using a typewriter,” Melera said of how things were done before 2003.

The loan was to help update Landreth “after 75 years of neglect,” Melera said. The company has since become profitable again, she said.

Vendors and customers have both stood by the company’s side, she said with tears in her eyes, offering to make deals to keep Landreth afloat in the short-term.

“It’s been overwhelmingly positive,” she said.

The online campaign through Facebook has helped drum up about $50,000 in catalog orders, and about $800 has been donated.

The Huffington Post, as well as several gardening blogs around the country, asked readers to support Landreth as well.

Now Landreth hopes to get some big donors or investors willing to buy thousands of catalogs to help raise enough money to make up the significant gap.

The $5 catalogs are Landreth’s bread-and-butter, as the company specializes in 800-plus organic, heirloom vegetable, fruit and flower seeds hard to find in chain stores.

“It’s a resource if you want to know the history of the things you eat,” Melera said.

Plus, the catalogs are full of advice, something Landreth officials started including in the mid-1800s to help immigrants.

That’s what Melera said she is hoping to protect, more than just saving a locally owned and operated business.

“This is our legacy. It’s not the Enrons and AIGs. This is as much America today as it was 200 years ago,” she said.

Tragic, but not surprising.

http://seattletimes.nwsource.com/html/health/2016250767_apusmedchildabuserecession.html

An increase in child abuse, mostly involving infants, is linked with the recent recession in new research that raises fresh concerns about the impact of the nation’s economic woes.

The results are in a study of 422 abused children from mostly lower-income families, known to face greater risks for being abused, and the research involved just 74 counties in four states. But lead author Dr. Rachel Berger of Children’s Hospital of Pittsburgh said the results confirm anecdotal reports from many pediatricians who’ve seen increasing numbers of shaken baby cases and other forms of brain-injuring abuse.

…

“The counties studied included Pittsburgh and western Pennsylvania; central and southern Ohio; and a handful of counties in northern Kentucky and in the Seattle area. The researchers examined medical records and national labor statistics for 2004 through November 2007 and compared them with data from the recession.

Federal government data suggest that the recession did not affect child abuse rates. But the study authors said those numbers are based on reports from child protective services, not medical diagnoses, and did not address brain injuries specifically.”

…

“Most parents who abuse young children aren’t “ill-intentioned,” he said. “Most of it is kind of just snapping…maybe being sleep-deprived and just losing it. It’s something that can happen to anyone. Economics is just another stress” that can increase the risks, Sherman said.”

Holding down several part time jobs could increase sleep deprivation. And stressed parents or hunger could contribute to fussiness in children.

Liberals vow to challenge Obama in Democratic primaries
By Seth McLaughlin

President Obama’s smooth path to the Democratic nomination may have gotten rockier Monday, after a group of liberal leaders, including former presidential candidate Ralph Nader, announced plans to challenge the incumbent in primaries next year.

The group said the goal is to offer up a handful of candidates from various fields and areas where the president either has failed to stake out a “progressive” position or where he has “drifted toward the corporatist right.”

“Without debates by challengers inside the Democratic Party’s presidential primaries, the liberal/majoritarian agenda will be muted and ignored,” Mr. Nader said in a news release. “The one-man Democratic primaries will be dull, repetitive, and draining of both voter enthusiasm and real bright lines between the two parties that excite voters.”

In search of candidates, Mr. Nader and the others sent out a letter, endorsed by 45 “distinguished leaders,”to elected officials, civic leaders, academics and members of the progressive community who specialize among other things in labor, poverty, military and foreign policy. The list, they said, also includes progressive Democrats who have held national and state office and have fought for progressive reforms.

“We need to put strong Democratic pressure on President Obama in the name of poor and working people,” said Cornel West, author and professor at Princeton University who has been highly critical of Mr. Obama’s tenure since helping him get elected in 2008. “His administration has tilted too much toward Wall Street, we need policies that empower Main Street.”

Mr. Nader and Mr. West are joined by Christ Townsend, of the United Electrical, Radio and Machine Workers of America, and Brent Blackwelder, president emeritus of Friends of the Earth.

40% of consumers slash spending
By Deborah Brunswick September 19, 2011

NEW YORK (CNNMoney) — Worries about the economy and the stock market caused 40% of consumers to cut their spending over the past two months, according to a study on financial security from Bankrate.com.

Americans across all income groups reduced their spending in the last 60 days. Among those earning $75,000 a year or more, 37% cut back. And 43% of households making less than $30,000 spent less.

“This type of widespread cutback in consumer spending, if sustained for any length of time, is how recessions are born,” said Bankrate’s senior financial analyst Greg McBride.

Bankrate’s Financial Security Index for the month of September rose slightly from the previous month, indicating that Americans are feeling better about their personal finances. In August, the index fell to an all-time low amid the debt-ceiling crisis.

However, with 46.2 million people now living in poverty and median incomes on the decline, consumers are feeling less financially secure than they were a year ago.
Hustling ways to make extra cash

More Americans over the age of 30 reported a lower net worth compared to last year, the study found. And across all education levels, more people said their net worth is lower today than it was last year.

Job security was a big concern. Only 23% of respondents under age 30 said they felt more secure in their jobs than they did 12 months ago. Among those between the ages of 50 and 64, only 10% felt more secure in their jobs.

Oh I wish I were a Deadbeat victim loaner

That is what I`d truly like to be

For if I were a Deadbeat victim loaner

I would get to live somewhere for free

Will interest rates ever go up? I am tempted to buy now only because rate are close to 4%. At 8% that $250k house is expensive again.

This is in someways a look back at Oly Gal…who viewed Zions Bank as the LDS bank of Utarrr….

There’s an empty “hole” in the most prime location in downtown Boise: the corner of 8th and Main. A building there burned down in 1987 - that’s 24 years ago - and developers who wanted to build there have all come a cropper.

Today Zions Bank announced plans to build a 15 story building there, which will house their Idaho headquarters.

http://www.idahostatesman.com/2011/09/19/1805227/zions-bank-will-build-15-story.html

I’m not sure why they want to spend the money but one would think a bank would know better…..

Funniest comedy ever!

Federal housing program faces barriers in Florida market

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:24 p.m. Sunday, Sept. 18, 2011

A $15 billion housing program in President Obama’s recently proposed American Jobs Act may face challenges in Florida as similar federal plans toil to overcome a real estate market rife with investors and light on lending.

Dubbed Project Rebuild, the program intends to spur construction jobs with grants to for-profit and nonprofit groups and government entities to buy, renovate and sell foreclosed and abandoned homes in hard-hit neighborhoods.

Florida could receive $2.7 billion from Project Rebuild, which also would allow money to go to homeowners through assistance programs approved by the U.S. Department of Housing and Urban Development.

The current Neighborhood Stabilization Program has pumped $6.82 billion nationwide to struggling communities hit by high foreclosure rates and with the same basic idea as Project Rebuild: Refurbish and resell.

There’s no question families have benefited from the program, which awarded its first grants in 2009. About 15 rehabbed homes in Palm Beach County have new owners or are leased.

But there have been barriers to success. Program administrators say they’ve been undercut by cash investors when trying to buy foreclosures and stymied by banks with tighter lending standards that exclude too many homebuyers. They also have struggled with competition from homes in nicer communities selling for comparatively low prices.

“It creates the perfect storm against trying to attain your ultimate goal, which is to put income-eligible households into homes,” said Mike McManaman, neighborhood stabilization administrator for Lake Worth’s Community Redevelopment Agency.

Palm Beach County’s take from three Neighborhood Stabilization allocations is about $90 million. Boynton Beach was awarded about $4 million, Lake Worth received $23.2 million and West Palm Beach has $6.4 million to spend. While there is flexibility on how the money can be used, including offering mortgages and building homes, much of it has been directed toward the buy-and-resell approach.

The Lake Worth CRA has closed on about 60 homes in a small area surrounding the city’s downtown and has completed renovations on five townhomes and one condominium. None has sold yet. McManaman expects to have a tally of jobs created from the work in October when the next quarterly report is due to HUD.

Nearly 300 jobs were generated with a portion of Neighborhood Stabilization money awarded to buy and rehab homes, according to the Community Land Trust of Palm Beach County, which is based in West Palm Beach. The trust was a recipient of federal money that flowed through the county. It has purchased seven homes, resold two and has two under contract. Another 11 have been purchased and are being rehabilitated but have not been resold.

But it also has wrangled for properties with cash buyers and faced other obstacles, such as imperfect inspections and appraisals coming in below the agreed-upon purchase price.

“For a first mortgage buyer, the condition of the home has to be excellent for the bank to consider it,” said Cindee LaCourse-Blum, executive director of the trust. “Items that haven’t been issues in forever are now required to be checked off.”

Wellington got about $680,000 through the county for five homes. The homes, one of which is in a gated community, have been on the market since May with no takers yet.

Assistant County Administrator Shannon LaRocque said the county anticipated some of the problems with reselling the homes. Not wanting refurbished but unsold homes, it put much of its Neighborhood Stabilization money into mortgage programs for homeowners who buy foreclosures.

As of last week, 73 homebuyers had received mortgages through the county plan.

“When you buy homes and sell them, so much is depending on the banks’ lending,” LaRocque said.

Still, the county has had to work out kinks. One of its plans was to offer supplemental or second mortgages to homebuyers. The problem was not enough homebuyers could get first mortgages. The county had to request a change in its spending plan, which LaRocque said took eight months for HUD to approve.

Her advice for Project Rebuild: Be more flexible.

“They have to be able to respond very quickly to change,” LaRocque said.

PIIGCS

Italy downgrade adds to eurozone contagion fears
Standard and Poor’s drops credit rating to A from A+, blaming sluggish economy and ineffective government reforms
Reuters
guardian.co.uk, Tuesday 20 September 2011 00.59 EDT

Italy has had its sovereign credit rating cut by Standard and Poor’s , with the ratings agency keeping the country’s outlook on negative in a major surprise that adds to contagion fears in the debt-stressed eurozone.

The agency cut Italy’s government debt rating to A from A+ and said Italy’s economic growth prospects were getting weaker, with planned reforms by the government not expected to help much.

“We believe the reduced pace of Italy’s economic activity to date will make the government’s revised fiscal targets difficult to achieve,” S&P said in a statement.

Italy follows eurozone partners Spain, Ireland, Greece, Portugal and Cyprus in having its credit rating downgraded this year.
…

Top All-Time Donors, 1989-2012

LEGEND: Republican Democrat On the fence

= Between 40% and 59% to both parties
= Leans Dem/Repub (60%-69%)
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http://www.opensecrets.org/orgs/list.php - 61k -

Is ‘intentional foreclosure’ ethical?
By Steve McLinden • Bankrate.com

Dear Steve,
I bought a home two years ago that’s now worth $120,000 less than I paid for it. Ouch! What’s more, the bank won’t touch a refinance. But I do have about $80,000 in savings. If I used it for a down payment to buy another home, then let the other go into foreclosure, could the bank come after the equity in the more recently bought home? Yes, it’s a shady thing to do, but I feel it’s my only option.
–Stephen K.

Dear Stephen,
I have been besieged with similar questions. First, it’s unlikely but not impossible that the bank would go after your equity in such a scenario. That said, I can’t in good conscience just say go ahead and arrange such an “intentional foreclosure,” even as the practice becomes increasingly common, particularly in parts of the country that saw huge artificial run-ups in home values earlier this decade.

The first effort on the part of borrowers should always be to seek loan remediation agreements with their lenders/servicers. However, based on media and trade reports, there have been relatively few good outcomes from attempting to do this. The reality is that there are tens of thousands of people out there in similarly challenging situations who are watching as homes just like theirs sell for far less than what they still owe.

I must note that there’s no absolute guarantee in most states that a buyer can just buy another house and walk away unscathed from the other one, aside from absorbing that big, ugly credit splotch, of course. That’s because states often give lenders latitude to sue borrowers in such cases.

However, such “recourse” practices are seldom employed these days because of the expense and the fact that people in these upside-down situations typically have little nonhousing wealth to pursue. Ironically, some credit experts say it will be faster and easier to re-earn a decent credit score after a foreclosure than after a bankruptcy — especially if you have established a new mortgage in the interim.

There are numerous blogs dedicated to the practice that you’re considering and some businesses, such as San Diego-based You Walk Away. Opponents to your strategy have called this “underhanded,” “cheating,” “unethical” and say that agents who facilitate this practice are just coaching people into bigger mistakes. Others say it’s the only way for some people to emerge as homeowners out of this mess.

Hopefully, there’s an important history lesson here for an industry that aggressively marketed so many risky low-down-payment or 100-percent loans with ARMs attached and a government that at least tacitly encouraged them. It’s actually an old lesson: The less skin you have in the game, the easier it is to walk away from the table.

If you do proceed, you would be wise to spend a little of that $80,000 nest egg on a legal representative to review your loan documents to determine if you will be on the hook for anything.

Read more: Is intentional foreclosure ethical? http://www.bankrate.com/finance/real-estate/is-intentional-foreclosure-ethical.aspx#ixzz1YUIbPMUF

“We’re hoping to reach a whole new audience of people, some of whom will be shocked by graphic images that maybe they didn’t anticipate seeing when they went to the PETA triple-X site,”

I think they what happens to the animals will be shocking too.

PETA to launch porn site in name of animal rights

By Ray Sanchez
Reuters
Posted: 2:56 p.m. Monday, Sept. 19, 2011

People for the Ethical Treatment of Animals, no stranger to attention-grabbing campaigns featuring nude women, plans to launch a pornography website in the name of animal rights.

The nonprofit organization, whose controversial campaigns draw criticism from women’s rights groups, said it hopes to raise awareness of veganism through a mix of pornography and graphic footage of animal suffering.

“We’re hoping to reach a whole new audience of people, some of whom will be shocked by graphic images that maybe they didn’t anticipate seeing when they went to the PETA triple-X site,” said Lindsay Rajt, PETA’s associate director of campaigns.

Spanish schools hit by strike over staffing cuts

Anger over Spain’s financial woes spread to schools as Madrid teachers strike over staff cuts

MADRID (AP) — Anger over government austerity measures spread Tuesday to Spain’s education system, as public secondary school teachers in Madrid went on strike to protest staff cuts.

The work stoppage in some 300 schools is to last at least two days and perhaps three, and teachers elsewhere in the country also plan strikes or protests this month against budget cuts.

Teachers say education should be spared as Spain tightens its belt to resurrect its economy, allay fears it might need an international bailout and reinvent itself for the future with a modern, educated workforce after the collapse of an economy fueled largely by a real estate bubble

“We are on strike to improve state education. It is not true that we are on strike because we have to work more. The timetable is the same as we had last year. What we want is better conditions for public teaching,” Pilar Hortal, a 57-year-old English teacher standing at a picket line in Madrid, told The Associated Press.

http://biz.yahoo.com/ap/110920/eu_spain_financial_crisis.html?.v=1 - -