The Housing Bubble

Here we go again. Colin Powell is shaking off the mothballs…

The State Department is warning Americans around the world of the potential for terrorist attacks against U.S. interests following the exposure of an alleged Iranian plot to assassinate Saudi Arabia’s ambassador to the United States.

In a new worldwide travel alert issued late Tuesday, the department said the foiled scheme could be a sign that Iran has adopted a “more aggressive focus” on terrorist activity. It said Iranian-sponsored attacks could include strikes in the United States, where the alleged plot against the Saudi envoy was supposed to have taken place, as well as other countries.

http://news.yahoo.com/us-issues-terror-alert-iran-plot-exposed-031657340.html

Realtors Are Liars®

Of course any of these candidates (except Ron Paul imo) would just install one of their cronnies…

(Reuters) - Ben Bernanke, if a Republican wins the White House in 2012: you’re fired.

The Federal Reserve Chairman, architect of unconventional policies to shore up the shaky U.S. economy, came under attack at the Bloomberg/The Washington Post Republican Presidential Debate at Dartmouth College in New Hampshire on Tuesday night.

And unlike the eight candidates, who had the chance for a rebuttal any time their name was mentioned, the criticisms of Bernanke were left to stand.

Newt Gingrich led the charge. Asked if the nationwide Occupy Wall Street movement had a valid grievance about income inequality and the out-sized influence of big banks, the former House speaker pivoted:

“If they want to really change things, the first person to fire is Bernanke, who is a disastrous chairman of the Federal Reserve,” said Gingrich.

“Bernanke has in secret spent hundreds of billions of dollars bailing out one group and not bailing out another group. I think it is corrupt and it is wrong for one man to have that kind of secret power.”

Bernanke, a former Princeton professor, was appointed to lead the Fed by Republican President George W. Bush — he also served as chairman of Bush’s Council of Economic Advisers for a time — and was reappointed by Democrat Barack Obama in 2009. His term as chairman ends in January 2014.

“I wouldn’t keep Bernanke in office. I would choose someone of my own,” said Republican front-runner Mitt Romney, who did not include Bernanke when doling out praise to Bush and Treasury Secretary Henry Paulson for pulling the financial system back from the precipice in late 2008.

For Congressman Ron Paul, needling the Fed has been a decades-long endeavor spanning various leaders.

“If I had to name one person who did a little bit of good, that was Paul Volcker,” the Fed chairman from 1979 to 1987, Paul said, adding that “nobody satisfies me.”

Paul termed Bernanke’s predecessor, Alan Greenspan “a disaster” because of policies that fueled investment bubbles such as the early 2000s Internet stock boom and bust.

“Bernanke compounds the problem,” Paul said. “He’s inflating twice as fast as Greenspan was.”

Herman Cain, the Godfather’s Pizza magnate, drew a distinction between the good Fed of yore, when he served on the board of the Kansas City Fed in the 1990s, and the bad Bernanke version.

“I don’t agree with the actions of this Federal Reserve. I don’t agree with the actions that have been undertaken by Ben Bernanke,” said Cain, who said he had some good chairman candidates in mind.

How Renters Could Save the Housing Market
Enticing real estate investors could help heal the housing market

By Meg Handley

October 6, 2011 RSS

It might seem counterintuitive, but increasing rental activity might be the medicine the ailing U.S. housing market needs to get back on its feet.

Virtually every corner of the industry has been languishing since the 2008 financial meltdown, and experts say even if the U.S. manages to contain the domestic impact of the ongoing financial crisis in Europe, the albatross of a weak housing market will continue to drag down the economic recovery stateside.

In short, there will be no economic recovery without a housing recovery.

Some cities have considered bulldozing vacant homes to address excess supply, but the political viability of such a move is questionable on a larger scale. Perhaps more realistically, others have suggested introducing financial incentives for real estate investors to encourage them to purchase vacant homes and convert them into rentals. We’re seeing that to some extent now, says Patrick Newport, economist at IHS Global Insight, but not to the degree it needs to be to make a dent in the huge housing inventory.

But if more investors could be enticed to buy, it could help dry up the excess supply that continues to depress home prices and keep homeowners underwater on their mortgages.”Congress could give investors the incentive to buy vacant houses now by allowing them to write off the value immediately, as long as they hold on to the properties for some number of years and rent them out,” Peter Orszag, vice chairman of global banking at Citigroup and former director of the Office of Management and Budget under President Barack Obama, wrote in a recent Bloomberg column.

Reducing the number of vacant home on the market could help treat another disorder afflicting the housing market. Millions of Americans have negative equity in their homes, many of them facing foreclosure and unable to refinance mortgages at lower rates to free up cash. But if a decrease in supply pushes housing prices up, over time homeowners could potentially avoid foreclosure, recoup lost equity, and refinance their mortgages at lower interest rates.

“The government has tried many things and none of them did all that much good,” Newport says. “It’s not clear that there’s that much more the government can do, but it can do something. If it could make it easier for homeowners to refinance that would be good for the housing market, too.”

http://www.usnews.com/news/articles/2011/10/06/how-renters-could-save-the-housing-market - 39k -

Realtors: Las Vegas home prices off 8.6 percent from September 2010
By Steve Green - Vegasinc.com

Las Vegas-area home prices in September fell from year-ago levels while sales stayed strong thanks to investors snapping up homes at bargain prices, the Greater Las Vegas Association of Realtors reported today.

In a market still influenced by high foreclosure and unemployment rates, the Realtors said the median price of single-family homes sold in September was $123,400. That’s up 2.8 percent from $120,000 in August, but down 8.6 percent from $135,000 one year ago.

The median price of local condominiums and townhomes sold in September was $56,500, up 0.9 percent from $56,000 in August, but down 13.1 percent from $65,000 one year ago.

The GLVAR, whose report focuses on existing properties as opposed to new construction, said the total number of local homes, condominiums and townhomes sold in September was 4,108. That was down from 4,693 sales in August – the second-best month ever for existing home sales in Southern Nevada.

But September’s sales total was up from 3,603 sales one year ago.

“This month’s report is about what we expected,” GLVAR President Paul Bell said in a statement. “Local home sales usually fall a bit in September after peaking in the summer.”

The pool of buyers in Las Vegas has been limited by the elevated unemployment rate, which was 14.2 percent in August.

Investors, in the meantime, continue to find bargains as research firm RealtyTrac reported that in August, Nevada and Las Vegas led its national lists of home mortgage default notices for states and cities, respectively. These notices are the first step in the foreclosure process.

In response to Awaiting’s post yesterday (in case you didn’t see it in the other thread)…

Comment by CA renter
2011-10-12 03:01:36
Awaiting,

This is exactly the situation we bought into. Our elderly neighbor (to our rental) passed away, and her kids (grandparents, themselves) came from out of state to sell the house.

We offered list, and let the appraiser do our heavy lifting — we knew it wouldn’t appraise for list. We were tired of trying to offer a lower price, being turned down, then watching another buyer offer list and negotiate down during escrow (sometimes lower than our offer); so, we did it ourselves.

They balked at the appraisal, we cancelled, they came back the next day and took our offer. We made everything very easy for them, and offered to close within days of the inspection because we were in the same position as you. This is why they decided to take our offer, even though they think we were lowballers (we weren’t, IMHO).

Like you’ve said, it’s free money to heirs.

BTW, we are not moved in yet, and probably won’t be moving in for at least another 2-3 months. Since it’s our toe-tag house, we’re trying to get *everything* done first so we can hopefully avoid having workers/construction going on in the house once we’re in.

We’re taking advantage of the fact that we live a few houses away and can easily manage all the work.

Absolutely NO buyer’s remorse. None. Like you, we’ve pulled out of our share of escrows because one thing or another was off. With this one, we knew it was the right one, so I acted very decisively and quickly, and dealt directly with the sellers before getting any agents involved.

Stand your ground. Prices are NOT going up from here, IMHO. Time is definitely on your side. When the right one comes up, you’ll know it.

You can e-mail me to get details about how we structured our offer. You can PM me through the Piggington site — CA renter. The “messages” function is at the top left of the page in the “user forums” section, IIRC. You might have to create a username there, but it shouldn’t be a problem. If that’s too complicated, leave your e-mail address here, and I’ll check back later.

Good luck on the new find!

More budget cuts to come as Florida economy yielding $1.6 billion less in taxes than expected

TALLAHASSEE — Analysts said Tuesday that Florida’s feeble economy is yielding almost $1.6 billion less in tax collections than expected, a sign that a new round of belt-tightening and layoffs is looming for schools, health services and other state-backed programs.

With sales-tax receipts down sharply since mid-summer, state economists reduced revenue forecasts $600 million for this year and $968 million for 2012.

Combined with rising costs in education and Medicaid spending, lawmakers could face a $2 billion budget shortfall in the election year ahead.

The revised outlook coincided Tuesday with Gov. Rick Scott giving a broad-brushed glimpse of his legislative and budget goals for his second year as chief executive. The self-described “jobs governor” leads a state plagued by 10.7 percent unemployment.

“We thought we were going to have a nice budget surplus but we’re not. Now we’re going to have a budget deficit,” Scott told a lunchtime gathering of Tallahassee business leaders.

Scott said his proposals for next year pivot around “job creation and economic growth priorities.” But he conceded souring tax collections mean, “We’re going to have to go through the same thing: How do you prioritize those dollars?”

The scaled-back forecast comes about a month after state economists issued a three-year financial outlook that predicted steadily growing tax receipts and no budget shortfalls through 2015.

But even then, these same analysts warned that consumer spending was slowing as foreclosures choked the state’s economy and close to 1 million Floridians remained out of work.

Why Occupy Wall Street isn’t about a list of demands
By Julianne Pepitone
@CNNMoneyTech October 12, 2011: 6:01 AM ET

Occupy Wall Street is still going strong after 25 days.

NEW YORK (CNNMoney) — A lot of lip service has been paid to the idea that Occupy Wall Street lacks focus. The critics ask: What’s the goal of these protests? Everyone wants something different.

Which is exactly the point.

It’s easy to trivialize Occupy Wall Street — even as it inspires similar protests around the country — by saying the movement lacks an end game. The group is trying to crowdsource its list of goals, which all but guarantees that no major ones will be set.

A demand list of sorts has appeared on the official Occupy Wall Street page, serving as an ever-changing document on which people can comment with their own suggestions. It has also served as fodder for critics like Fox News, which posted a version of the list and suggested that readers “try not to laugh.”

But no list has been endorsed by the “general assembly” at Occupy Wall Street, says press team member Mark Bray, who added that “making a list of three or four demands would have ended the conversation before it started.”

Occupy Wall Street has already achieved what it set out to do.

Like the “Arab Spring” uprisings that inspired its tactics, the word-of-mouth demonstration has tapped into a collective anger. Some protesters are upset about taxation; for others, the big issue is the high unemployment rate. Or corporate greed. Or the distribution of wealth.
…

OMG, I hate Win7 right now. I had a long post written and was almost ready to submit when the freaking POS decided to reboot to install updates. Yes, I saw the popup yesterday saying that I needed to reboot, but was putting it off—mea culpa—but it’s still a HORRIBLE user-experience to have it reboot without so much as a by-your-leave.

Grrrrrrrr……

This old man, he bought four
He flipped two and bought six more
With a knick-knack paddywhack,
Got another loan
This old man came rolling home

This old man, refied eight
Now he`s really feeling great
With a knick-knack paddywhack,
Got another loan
This old man came rolling home

This old man, he can`t sell
Now he`s saying what the hell
With a knick-knack paddywhack,
Got another loan
This old man came rolling home

He can`t sell, he can`t pay
He rents them out anyway
With a knick-knack paddywhack,
Can`t get another loan
This old man came rolling home

This old man, starts to say
Why`d they loan me anyway
With a knick-knack paddywhack,
NACA on the phone
This old man came rolling home

This old man, Robo signed
Those eight houses should be mine
With a knick-knack paddywhack,
Don`t need another loan
This old man want`s eight free homes

I suppose we will hear more about Richard Sulik in the coming years.

Slovakia blocks euro rescue fund
By Jan Lopatka and Ingrid Melander
BRATISLAVA/ATHENS | Wed Oct 12, 2011 8:31am EDT

Chairman of Freedom and Solidarity party Richard Sulik attends the Slovak Parliament session on the vote on the euro zone rescue fund tied with Slovak government confidence vote in Bratislava, October 11, 2011. REUTERS/Petr Josek

(Reuters) - The parliament of tiny Slovakia stalled the expansion of a bailout fund to rescue the euro zone from its debt crisis on Tuesday, but international lenders said they were likely to grant a loan to Greece next month, buying time for a broader response.

European Central Bank chief Jean-Claude Trichet said the debt crisis had become systemic and must be tackled decisively.

Slovakia is the only country in the 17-member currency zone that has yet to approve giving new powers to the European Financial Stability Fund. The expansion was agreed by euro zone leaders in July but must be ratified by each country.

The EFSF is Europe’s main weapon to respond to a debt crisis that threatens the European common currency, the region’s banks and potentially the global financial system.

The government of Slovak Prime Minister Iveta Radicova fell on Tuesday after a small party in her ruling coalition refused to back the plans. The outgoing government still expects to be able to enact the measure as a caretaker administration by the end of this week with support from an opposition party.

“There is an assumption that the EFSF, one way or the other, will be approved by the end of the week,” Finance Minister Ivan Miklos told parliament ahead of the vote.

The failure in the Slovak parliament underlines the difficulty of forging a united response to the worsening debt crisis in a currency zone where all 17 member states must act in concert, and voters are increasingly angry at the growing costs.

Leaders are struggling to find a response that would protect euro zone banks if Greece defaults on its debts.
…

Domestic violence law repealed in Topeka, Ks., to save money
Joe Lambe
The Kansas City Star

TOPEKA — The Topeka City Council on Tuesday voted to repeal the city’s law against misdemeanor domestic battery, the latest in a budget battle that has freed about 30 abuse suspects from charges.

One of the offenders was even arrested and released twice since the brouhaha broke out Sept. 8.

It started when Shawnee County District Attorney Chad Taylor announced that a 10 percent budget cut would force him to end his office’s prosecution of misdemeanor cases, almost half of which last year were domestic battery cases.

With that, Taylor stopped prosecuting the cases and left them to the city. But city officials balked at the cost.

Tuesday’s 7-3 vote to eliminate the local domestic violence law was designed to force Taylor to prosecute the cases because they would remain a crime under state law.

The matter has gotten Topeka national attention — and scorn.
…

Lawmakers, White House regroup on jobs
President Barack Obama waves as he exits Air Force One at Andrews Air Force Base, Md., Tuesday, Oct. 11, 2011.
By Andrew Taylor
Associated Press / October 12, 2011

WASHINGTON—Congress and the White House face the choice of continued fighting or a shift toward bipartisan bargaining after the Senate voted to kill President Barack Obama’s $447 billion jobs plan.

They’re likely to do both as they seek to produce results sought by a discontented public while also drawing bright political lines for voters as the 2012 campaign heats up.

Obama’s plan died at the hands of Senate Republicans on Tuesday, even though the president had been campaigning for it across the country for weeks. The $447 billion plan died on a 50-49 tally in the 100-member Senate, falling well short of the 60 votes needed to crack a filibuster by Republicans opposed to its stimulus-style spending and tax surcharge for the very wealthy.

The tally had been 51-48 but Majority Leader Harry Reid, D-Nev., switched his vote to “nay” to reserve the right to force a re-vote. Sen. Tom Coburn, R-Okla., is recovering from surgery and did not vote.

Now, the White House and leaders in Congress are already moving on to alternative ways to address the nation’s painful 9.1 percent unemployment, including breaking the legislation into smaller, more digestible pieces. And on Wednesday, both the House and Senate are poised to approve long-stalled trade pacts with Korea, Panama and Colombia.

“Tonight’s vote is by no means the end of this fight,” Obama said in a statement after the vote. “Because with so many Americans out of work and so many families struggling, we can’t take `no’ for an answer.”
…

This “risk-on, risk-off” discussion among financial analysts suggests bailout prospects, not fundamentals, are the driving force behind asset price movements.

European Stocks, U.S. Futures Advance; Copper, Euro Strengthen
October 12, 2011, 7:43 AM EDT
By Paul Armstrong and Shiyin Chen

Oct. 12 (Bloomberg) — European stocks and U.S. index futures rose, while 10-year Treasuries dropped for a sixth day, on investors’ optimism Europe will contain its debt crisis. Copper gained the most in four days and the euro strengthened.

The Stoxx Europe 600 Index climbed 1 percent as of 12:17 p.m. in London. Standard & Poor’s 500 Index futures climbed 1 percent while the Shanghai Composite Index jumped 3 percent, the biggest gain in a year. The 10-year Treasury note yield increased six basis points to 2.21 percent, copper added 1.9 percent and the euro gained 1 percent against the dollar and yen.

European Economic and Monetary Affairs Commissioner Olli Rehn said today the region is moving toward a consensus on resolving the “calamity” of the sovereign crisis. Slovakia, the only country that hasn’t ratified a revised bailout fund, was poised for a second vote after failing to approve the package yesterday. Euro-area leaders said this week they’ll have a plan by November to recapitalize banks.

“There are two main drivers of the current risk-on environment: market expectations for a recapitalization of the banking system and for a leveraging of the European Financial Stability Facility,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam.
…

Fitch Says Slovakia’s EFSF Rejection May Extend Euro Crisis
October 12, 2011, 7:23 AM EDT
By Svenja O’Donnell

Oct. 12 (Bloomberg) — Fitch Ratings said Slovakia’s rejection of a proposal to increase the powers of the euro area’s rescue fund will contribute to the region’s crisis persisting for “an extended period.”

The decision “highlights the continued political and technical complexity of establishing the necessary effective institutions in the euro area,” Fitch said in a statement in London today. “Political uncertainties, such as this one, will contribute to the euro-area crisis persisting at varying degrees of intensity for an extended period rather than just a few months.”

Slovakia is the only country in the 17-member region yet to approve the European Financial Stability Facility, and Prime Minister Iveta Radicova wants to start talks with the opposition on a second parliamentary vote, spokesman Michal Lukac said today.

Fitch said that while the nation “appears to be heading toward an agreement,” a second rejection would leave the European Central Bank with “little choice.” The ECB would have to continue to absorb sovereign and bank risk onto it balance sheet, or increase the risk of systemic sovereign default, it said.

“Nevertheless, the agency believes the euro area will eventually reach a hybrid compromise, that prevents break-up but which falls short of full fiscal union, but which will restore confidence,” Fitch said.

– Editors: Fergal O’Brien, Jeffrey Donovan

Deadbeat Poets Society

He coveted the squatter’s wealth;
He saw the squatter’s daughter:
Two-Hundred-Thousand upside down?
This place is underwater.

So let me get this straight: When bailouts are in play, or bailout prospects are high, risky assets are snapped up, sparking a “risk-off” rally in stocks and commodities?

Who pays the price?

OCTOBER 12, 2011, 7:10 A.M. ET

UPDATE: Asian Shares End Mostly Higher; China Banks Extend Rally
By Sarah Turner and Nick Godt

Major Asian equity markets finished off lows Wednesday, as gains for Chinese banks worked to offset losses connected to weak results from U.S. aluminum giant Alcoa and a snag for Europe’s bailout-fund expansion.

Hong Kong’s Hang Seng Index rose 1% to close at 18329.46 after dropping as low as 1.9%, while the Shanghai Composite index surged 3% to 2420.00, South Korea’s Kospi advanced 0.8% to 1809.50 and India’s Sensex rose 2.6% to 16958.39.

The Australian S&P/ASX 200 index lost 0.6% to 4204.30 while Japan’s Nikkei Stock Average closed at 8738.90, with a 0.4% loss.

Asian stock markets were sitting on weekly gains after France and Germany recently pledged to support the European banking sector and China’s sovereign-wealth fund bought up shares in selected banks.

However, a stumbling block emerged in the path toward resolving Europe’s debt woes late Tuesday, after the Slovakian parliament rejected a plan to expand the area’s EUR440 billion ($600 billion) bailout fund.

The rejection was not unexpected, as the ruling party had struggled to obtain support for the plan, and approval was expected later in the week, but the news was enough to derail investor enthusiasm for stocks.

“In the absence of an expected resolution in Slovakia, and a lack of fresh drivers, the risk rally spluttered,” said strategists at RBC Capital Markets.
…

Harrisburg City Council votes 4-3 in favor of Chapter 9 municipal bankruptcy protection ( PA )
The Patriot-News | October 12, 2011 | ERIC VERONIKIS,

Harrisburg City Council answered the state’s takeover threat by voting to seek Chapter 9 municipal bankruptcy protection Tuesday night, essentially adding the courts and more turmoil to the fight over the capital city’s fate.

The same majority who voted down the state-sponsored Act 47 plan and Mayor Linda Thompson’s followup fiscal-recovery plan voted 4-3 to hire Philadelphia-area lawyer Mark Schwartz to fight the takeover and then 4-3 to file for bankruptcy as soon as possible.

…

“Wake up, Harrisburg. Wake up and look around,” Smith said. “I’m tired of being bent over and spanked in the corner. We should have been filing for bankruptcy in 2010.”

As Ron Paul said - who else is on this list?

————————-

Killing Citizens in Secret
NY Books | 10/09/11 | David Cole

Sunday’s New York Times reported that the Justice Department’s Office of Legal Counsel has produced a fifty-page legal memo that purportedly authorized President Obama to order the killing of a US citizen, Anwar al-Awlaki, without a trial. Last month, the US carried out that order with a drone strike in Yemen that killed al-Awlaki and another US citizen traveling with him. The strike was front-page news, and apparently was undertaken with the approval of Yemen authorities, yet as it was a “covert operation,” the Obama administration has declined even to acknowledge that it ordered the killing.

So now we know that there is a secret memo that authorized a secret killing of a US citizen—and both the memo and the killing remain officially “secret” despite having been reported on the front page of The New York Times. Whatever one thinks about the merits of presidents ordering that citizens be killed by remote-controlled missiles, surely there is something fundamentally wrong with a democracy that allows its leader to do so in “secret,” without even demanding that he defend his actions in public.

http://market-ticker.org/akcs-www?post=195841

OWS: The risks facing America today.

“Washington got involved in a self-inflicted wound with the debt ceiling fiasco.” [This, and other] things, I think, led to both consumers and businesses taking a big step backwards and saying, we are just not sure where this thing is going.”

~Barack H. Obama

(North Tustin is 8 miles as the crow flies from the roof tiles of the former SEC Bulldog , crissy “Enforcer” cox’s Newport Beach, CA $helter)

Morning news from CA, GOPville,…”Thee O.C.!”

SEC: Ponzi schemers lived large in O.C.:
October 11th, 2011, by Ronald Campbell

The SEC charged that Aubrey, his brother Timothy of Moreno Valley, Brian S. Cherry of Newport Beach and Aaron M. Glasser of Costa Mesa sold fake oil wells to more than 200 investors through Progressive Energy Partners. The company operated from 2005 until April 2010.

PEP claimed to be drilling oil wells in West Virginia. In fact, the SEC alleged, the company stopped drilling wells after the first of its five investment deals but continued soliciting money. Of the $11 million it raised from investors, the SEC said, the company spent just $887,000 drilling for oil.

Give Jerry L. Aubrey credit: He knew how to live.

His three-story, 4,000-sq.-ft. North Tustin home had a tennis court, big-screen TVs and giant fish tanks filled with exotic fish and miniature sharks. He rode in a limo to Staples Center, where he enjoyed Lakers games in a box seat. He bought his girlfriend a Lexus.

Best of all, other people paid for his lifestyle.

PEP offered private placements, which are supposed to be sold only to sophisticated investors who can afford to lose every penny. The price for a single unit was $25,000.

PEP used a traditional “cold calling” strategy: “Fronters” made unsolicited calls to potential investors, whose names and phone numbers were purchased from lead brokers. Tim Aubrey supervised the fronters.

“Closers” called those who showed interest, pressing them to make the deal. Jerry Aubrey supervised the closers.

The SEC is seeking a court order requiring the Aubreys, Cherry and Glasser to disgorge ill-gotten gains. The government also wants a court order permanently barring Jerry Aubrey from selling unregistered securities.

Looking for a rental, I stumbled upon this post on our local Craigslist, entitled “$1900 Bend landlords please read”. Spot on analysis of what landlords are doing here, jacking up the rent right up to the amount that people were unable to pay on their mortgages. Used to be that $1000 would get you a decent home to rent; now it’s more like $1500 or more; note typos are the poster’s, not that I don’t make plenty myself… And if vacancies are lingering, well that doesn’t matter too much as app fees at management companies are about $40..and there are plenty of suckers willing to apply.

We almost applied to a desirable rental; CL ad said dogs OK. 40 bucks per adult app fee. Saw on their other website that pets were NOT preferred. Could have thrown 80 bucks down that hole……

Dear landlords. I’m not too sure what’s been happening in Bend over the past year or so, but it appears to be price gauging–something we’ve all felt at the gas station for a number of years. I guess you are all just capitolizing on all the poor people who’ve lost their homes and have no alternative but to pay the exhorborant rents you all are charging. If people had decent credit, they could easily buy for MUCH MUCH less than you are charging for rents. Also, when you have to pay over 4000 just to get into a home, then pay 1400 and up a month for a decent place..then you ask for a credit check???? Seriously…if people had decent credit, do you think they’d be foolish enough to rent when they could buy for LESS? How do you all expect normal, working people in bend, on bend’s wages, to afford rents at 1400 a month and up?? I urge you dear landlords…you DON’T'T have to keep up with the property management companies who have continued to hike the prices…you could just do the right thing, and make the rent affordable for a family. Thanks for reading. Hope someone gets to read this before itks flagged to quickly

The market is booming.
But where are all the buyers?
Shadow inventory is looming,
Realtors are Liars.

Oct. 11, 2011, 6:36 p.m. EDT
Fewer will get a mortgage next year
Next year, mortgage volume is expected to be lowest since 1997
By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Mortgage rates will continue to remain near lows for the year ahead, while home prices are expected to remain flat, the Mortgage Bankers Association’s chief economist said on Tuesday.

And both are expected do little to inspire anyone to buy a home.

Right now, many renters are content to continue renting, said Jay Brinkmann, chief economist for the group, speaking at the MBA’s annual convention in Chicago this week. “As we start seeing the first stories of prices going up, that will pick up the markets somewhat,” he said.

Rates on the 30-year fixed-rate mortgage are expected to average 4.4% next year, after averaging about 4.5% in 2011, according to the MBA’s forecast. Rates are expected to climb to an average 4.9% in 2013.

This expectation of low rates and low prices is part of what is keeping consumers standing pat.

“Consumers are pretty well in tune,” said Doug Duncan, chief economist for Fannie Mae, adding that they “have a good grip on the fact prices are not going to go up anytime soon.”

The housing market is in the fifth year of a 10-year adjustment in prices, said Duncan, who briefed reporters at the convention. He expects a 3% decline in prices from now until early next year, excluding distressed sales, with prices flat the rest of 2012.

And that means another weak year for the mortgage industry.

In total, $900 billion in mortgage originations are expected for 2012 — the lowest volume for the industry since 1997, according to the MBA. Originations are expected to total $1.2 trillion in 2011. Next year, refinancing is expected to drop significantly, coupled with only a slight increase in mortgages to purchase a home.

Of course, any forecast these days comes with a slew of caveats.

Europe may already be in a recession, and the default of Greece is a foregone conclusion, Brinkmann said. A recession across the pond could pull the United States into a mild recession, he added.

“If the economy tips into recession, rates would stay lower for longer, but we do not anticipate they would drop significantly. If the economy recovers more quickly, even with the Fed’s Operation Twist, longer-term rates could rise faster,” Brinkmann said.
…

The Tan Man ripped them off
Flippers and homoaners without fail
A bigger con-man than Madoff
Why isn’t he in Jail?

Today’s Homes: Lee Highway Edition

House 1: Reston, VA

http://www.zillow.com/homedetails/10860-Grovehampton-Ct-Reston-VA-20194/51711366_zpid/#{scid=hdp-site-map-list-address}

1998 5/3.5 on 0.21 acres. Standard issuse white-siding McM with all the goodies except granite. Big rooms, man cave, small yard, two-car garage.

The high end is still in wishing-price land, as if there were no bubble out here.

Jul 1998: Sold $324K.
Jun 2010: Sold $775K.
Oct 2011: Listed $759K. Gimme a break.

House 2: McLean, VA

1982 4/3.5 Got the nice amenities: hardwood, granite, stainless, lots of room, fireplaces.

Jun 1991: Sold $230K
Feb 2002: Zestimated $397K
May 2011: Listed $647K

Oh by the way… this is a rowhouse

House 3: McLean again

1959 3/3 rambler on 0.25 acre. This is a nicely kept home very similar to what I’ve been looking for, only a lot bigger. Hardwood floors, middle-class kitchen. Nice price, too! Listed for just $650K!

House 4: You must be a member of Congress

http://www.zillow.com/homedetails/1068-Bellview-Rd-Mc-Lean-VA-22102/51725930_zpid/#{scid=hdp-site-map-list-address}

2000 7/8.5 on 5 acres. Pool, 10 cars garage, in-law suite included, Viking/granite/SS/etc.

there’s a home tour with pix, but it’s not working well for me, go here: http://pix1.homevisit.com/mlsTour/?id=53776&skin=&ver=1&fp=

Talk about a wishing price:

Oct 2011: Zestimated $2.066M
Oct 2011: Tax assess $1.923 M
Oct 2011: Listed $5.45 M

I wonder if those containers are water tight? or lots of holiday gifts are really underwater

http://news.yahoo.com/stricken-ship-cracks-captain-faces-nz-court-114754126.html

California is doomed. It will continue to sink into the public union goon financial black hole (and pandering to illegals swamp) until the last productive worker leaves.

They will cry for bailouts again and agian. They will print IOUs. And they will not understand why no one wants to work/live there or start a business there anymore (except if you are in a public union - of course)…

—————————

Gov. Jerry Brown is giving unions most of what they seek
Los Angeles Times | 10/12/11 | Michael J. Mishak and Anthony York

When the dust settled on Gov. Jerry Brown’s first legislative session in nearly three decades, no group had won more than organized labor, which heralded its largest string of victories in nearly a decade.

…

Those unions and others helped bankroll Brown’s campaign last year.

Brown has long compared governing to steering a canoe — you paddle a little on the left, he says, and a little on the right. And indeed, he signed some measures desired by key interest groups this year while vetoing others.

Labor was no exception: He rejected a proposal to unionize tens of thousands of child-care workers, a measure to hamper new development by big-box retailers such as Wal-Mart and one to limit fees that banks can charge on workers who use company pay cards — debit cards issued by employers instead of paychecks.

But in the end, no group scored as much as labor. Brown embraced much of its wish list, an agenda his predecessor had thwarted.

“Finally, after seven long years of [Gov. Arnold] Schwarzenegger, we’re moving in the right direction again,” said Steve Smith, a spokesman for the California Labor Federation.

Brown has said he reviewed each bill on its merits after considerable research. “There were some tough calls, but in each case he acted in the best interests of the people of California,” said Brown spokesman Gil Duran.

The governor has a complicated relationship with labor. ..

Last year .. Brown pledged to be a “hard bargainer for the public interest,” saying he had the freedom to buck special interests in the twilight of his political career. Still, labor invested heavily in him, spending more than $29 million on his behalf and contributing millions more directly to his campaign.

Another example of how we do fraud in Texas. The ignorant people here in Texas are a ‘feature’ not a bug. According to our next president Mr. Perry we’re the #1 destination for new ‘business’.

“Fine in Mansfield man’s Ponzi scam upped to $19 million”

http://www.star-telegram.com/2011/10/11/3437435/fine-in-mansfield-mans-ponzi-scam.html

“To carry out the scheme, White told current and prospective customers that, because of his company’s purported success in foreign exchange trading, it would be able to generate returns of up to 8 percent a week — a dubious annual rate of return of 416 percent, according to a court order.”

Always a popular subject:
the strategic defaulter

The share of strategic delinquencies among the total has risen to about 26 percent to 27 percent from 20 percent a year ago, according to the report.

Amherst Securities Group LP analyst Laurie Goodman said lenders need to reduce principal for homeowners to stem the foreclosure crisis, which otherwise may engulf more than 10 million additional properties, she estimated.

A record of almost 33 percent of the $1.2 trillion of so- called securitized non-agency loans are at least 30 days delinquent, in foreclosure or have been turned into seized property, according to Bloomberg data based on August bond reports. That also reflects a slowdown in liquidations of bad loans amid probes into servicers’ use of flawed paperwork.

http://www.bloomberg.com/news/2011-10-03/strategic-mortgage-delinquencies-as-high-as-27-jpmorgan-says.html

like Herman Cain…at least he has a plan…something lacking from the others….He doesn’t have an army of 12 paying them 6 million dollars of MY tax money(…sort of like his Solyndra, Fast and Furious Money. and even Nancy Piglosi’s company ( her husband’s)) to keep them sealed. He didn’t go to Occidental College as a “foreign” student. He had to actually work and not be given anything…Oh yeah, he didn’t get “free rides” at any public “preparatory” school. His dad had to work for a living…..I believe as a barber, janitor, and chauffeur BUT, nobody wants to hear any yukky details.

Read more: http://www.mcclatchydc.com/2011/10/11/126946/herman-cains-9-9-9-jobs-plan-at.html#disqus_thread#ixzz1aaW6dw48

The girl I have talked about living off the equity in her house accounced last weekend that she got a job in the Amazon warehouse in Phoenix. I have read about some very poor working conditions - Does anyone have any first hand experience with this?

……. because Realtors Are Liars®

Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News) may shed the “bank holding company” classification in order to skirt the Volcker rule banning propriety trading with the firm’s own capital, according to Susquehanna Financial Group analyst David Hilder.

Seriously ?@#$?!#@$?%

GS became a bank to get some of that sweet TARP and FED money, now that there may be one or two strings poof their investment houses again.

Layoffs loom in Matthews
Structural Preservation Systems, a Maryland-based construction firm, to close office, lay off 125 workers.
By Ely Portillo elyportillo@charlotteobserver.com Oct. 12, 2011

About 125 construction employees are set to lose their jobs, as a Maryland-based building firm has filed papers with the state saying the company will close its Matthews office.

Structural Preservation Systems sent a letter to N.C. officials last week under the Worker Adjustment and Retraining Notification Act. The law requires employers to notify the state of mass layoffs.

The company said it will permanently close its branch office on Matthews-Mint Hill Road, with layoffs of the 125 workers based there beginning within 30 days. The employees include skilled construction workers, field technicians, project managers, engineers and estimators, Structural Preservation Systems said, and they were told of the closure last week.

Cathy Ullery, the company’s human resource head, couldn’t be reached Tuesday afternoon for comment. The company has more than a dozen offices nationwide.

Unemployment remains high in Mecklenburg County, with an August jobless rate of 11 percent and more than 50,000 people looking for work.

The construction sector has been hit hard as projects stalled. The most recent data from the N.C. Employment Security Commission shows construction was the hardest-hit employment sector locally, with the biggest year-over-year decline in jobs.

This Atlanta deal was snapped up for a song, wonder if it was Mr.& Mrs. Eddie?

ITEM: Real estate dream turns into a nightmare after $45m mansion sells for just $11.5m By Rachel Quigley 12th October 2011

They thought they were building a dream home.

But the dream soon turned into a nightmare when a $45million Atlanta mansion was foreclosed and then sold at a massive 75 per cent drop at only $11.5million.
Forsyth County Estate Le Rêve - French for ‘the dream’ - was foreclosed in late 2010 after taking three years to build with no expense spared by Hubert and Norma Humphrey.

Read more: http://www.dailymail.co.uk/news/article-2048025/Forsyth-County-Estate-Le-R-ve–45m-mansion-sells-just-11-5m.html#ixzz1ab7xeVbU

America’s commutes start earlier and last longer

Working in the city and living on one’s own land far out in the countryside has always been a goal for many Americans. The recession has turned hours of commuting to and from work into a reality that’s hard to escape.

Every morning, Catherine Fortney’s alarm rings at 03:30 and by the time the clock strikes 06:00, she must be at the nearby bus stop

http://www.bbc.co.uk/news/magazine-15207973

Be easier to sleep in the office.

Eyes’ll be brief, while-in-my-briefs:

BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)

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

heheeeheeeheehaahaaahaaheeehaahaaa… (Hwy50™)

Goldman, Morgan Stanley May Shed ‘Bank’ Status:

Goldman Sachs (NYSE:GS - News) and Morgan Stanley (NYSE:MS - News) may shed the “bank holding company” classification in order to skirt the Volcker rule banning propriety trading with the firm’s own capital,

“The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that and not proprietary trading in disguise,”

Ra$h Limpbaugh$: Election 2012, “Cain is able vs Hussein Obama” = a dark day in American Politics,…(check back for updates)

NBC/WSJ poll: Cain now leads GOP pack:
By Mark Murray Deputy political director

Fueled by Tea Party supporters, conservatives and high-interest GOP primary voters, former Godfather’s Pizza CEO Herman Cain now leads the race for the Republican presidential nomination, according to the latest NBC News/Wall Street Journal poll.

And in yet another sign of how volatile the Republican race has been with less than three months until the first nominating contests, the onetime frontrunner, Texas Gov. Rick Perry, has plummeted to third place, dropping more than 20 percentage points since late August.

1210 DOM

http://www.zillow.com/homedetails/16005-2nd-St-E-Redington-Beach-FL-33708/46986876_zpid/#{scid=hdp-site-map-list-address}

WTF

The clock is ticking on homeowners who want to take advantage of Bank of America’s recently announced short-sale incentive program.

http://www.tampabay.com/news/business/realestate/clock-ticking-on-bank-of-america-short-sale-cash-offer/1196523

Little hints that the low end job market will be looking better in the months ahead. Wonder if the price of chicken will rise?

http://www.miamiherald.com/2011/10/12/2451173/immigration-backfire.html

Immigration backfire

OUR OPINION: State anti-immigrant measures harm their own economies
By The Miami Herald Editorial
HeraldEd@MiamiHerald.com

The latest news from the war-against-immigrants front: Hispanics in Alabama skipped work on Wednesday to protest the state’s toughest-in-the-nation immigration law, forcing at least six poultry plants to close down or scale back operations and hurting business across the state.

“I don’t think it’s going to be just today,” lamented a spokesman for one of the major processors, the Wayne Farms poultry plant. It normally employs 850 people, but on Wednesday the parking lot was empty and the plant was idle.”

Spotted this too. Transient immigrates drop by 70% from 2005 peak.

Immigration from Central America to Mexico Plummets, Mexican Official Says:

http://latino.foxnews.com/latino/news/2011/10/11/immigration-from-central-america-to-us-plummets-mexican-official-says/

Economist Nouriel Roubini’s Firm Is For Sale

“According to people who have seen the offering book for the sale, the firm is projected to have revenues of $14 million this year and it will post a loss of roughly $2 million dollars…”

Lol…economics research firm FAIL.

http://www.cnbc.com/id/44859944

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/8823463/Wall-Street-Journal-in-circulation-scam.html

Neo-con propaganda outlet the WSJ caught inflating its subscription numbers.

Another sleazy politician uses laundered money to brainwash voters.
Ben Nelson hold the record for democrats voting with the Republicans in the Senate. I remember his vote on the Affordable Health Care Act where he killed the public option at the same time he cut a deal to have the other 49 states pickup his state’s Medicaid bills. I hope he looses this election.

http://www.nytimes.com/2011/10/13/us/politics/ben-nelsons-campaign-ads-may-break-new-ground.html

Democratic Senator’s Ads May Break New Ground
By ERIC LICHTBLAU
Published: October 12, 2011

WASHINGTON — A new series of political advertisements on behalf of an embattled Nebraska senator could open the door to a flood of similar ads financed by outside groups and even businesses working directly with political candidates — a sharp departure from past practice.

From God’s lips to your ears:

Bloomberg
Buffett’s Son Defends Occupy Wall Street to ‘Make Things Happen’
October 13, 2011, 12:22 AM EDT
By Andrew Frye and Alan Bjerga

Oct. 13 (Bloomberg) — Howard Buffett, the Berkshire Hathaway Inc. director and son of Chairman Warren Buffett, said Wall Street protesters were provoked by abuses from corporations amid a widening disparity between rich and poor.

“I think it takes that to make things happen sometimes,” Howard Buffett, 56, said of the demonstrations in an interview yesterday in Des Moines, Iowa. Over the past 15 years, “we saw large corporations really screw people.”
…

These bailout stories make your brain go numb after a while.

Europe eyes bigger Greek losses for banks
An employee of the Ministry of Labour blows a whisle and holds a black flag during a protest by public sector workers outside the Greek parliament in Athens
October 12, 2011. REUTERS/Yannis Behrakis

By Jan Strupczewski and Harry Papachristou
BRUSSELS/ATHENS | Wed Oct 12, 2011 5:19pm EDT

(Reuters) - Euro zone countries will ask banks to accept losses of up to 50 percent on their holdings of Greek debt, officials said on Wednesday, as part of a grand plan to avert a disorderly default and stem a crisis that threatens the world economy.

Ahead of a make-or-break summit of European leaders on October 23 at which a comprehensive new Franco-German crisis plan is expected to be discussed, four euro zone officials told Reuters that a “haircut” of between 30 and 50 percent for Greece’s private creditors was under consideration.

That is far more than the 21 percent loss they had asked banks, pension funds and other financial institutions to accept in July as part of a second rescue package for Athens. Since then, the Greek economy has sunk deeper into recession, fanning fears of an outright default and forcing euro zone leaders to consider more radical action to stem their crisis.

To restore confidence in the banking system, they are also working on plans to shore up the balance sheets of banks through recapitalizations.

An EU source told Reuters that the European Banking Authority, which is conducting an assessment of bank capital needs, was likely to mark down their holdings of sovereign debt to market value and apply a 9 percent core Tier 1 capital ratio when deciding whether they need more funds.

European Commission President Jose Manuel Barroso said on Wednesday that the bloc should take a fully coordinated approach to recapitalizations and only use its rescue fund, the European Financial Stability Facility (EFSF), as a last resort — a key demand by Europe’s biggest economy Germany.

He also called for a permanent rescue fund to replace the EFSF from the middle of next year instead of in 2013, an idea that German Finance Minister Wolfgang Schaeuble also backed.

The German banking association hit back at elements of Barroso’s proposals, saying his idea to ban banks from paying out dividends pending recapitalization would hamper efforts to raise capital.

Greece’s debt mountain is forecast to climb to 357 billion euros this year, or 162 percent of its annual economic output. So far, euro zone governments have failed so far to come up with a convincing plan for how to cope with it.

“We are negotiating in every way to lighten this debt,” Greek Prime Minister George Papandreou told a cabinet meeting on Wednesday.

A euro zone official told Reuters the final level for private sector participation had not been set and it was unclear as yet how banks would react to the new demands.

“A voluntary participation is the target, for now at least, and many feel strongly that we must avoid any risk of a full default,” the official said, requesting anonymity.
…

How does taking a principled stand on behalf of one’s own citizenry earn a politician the title of “Public Enemy No. 1″?

OPINION
OCTOBER 12, 2011, 6:43 P.M. ET

Slovakia Says No to Europe’s Bailouts
The country has made painful reforms and is now asked to pay the bills of countries like Greece, which haven’t.
By MATS PERSSON

Richard Sulik has emerged as Brussels’s public enemy No. 1. As leader of Slovakia’s Freedom and Solidarity party, or SaS, Mr. Sulik has consistently and vocally opposed euro-zone bailouts. SaS parliamentarians’ refusal to back changes to the European Financial Stability Facility (EFSF) led to the collapse of the Slovak coalition government on Tuesday.

Mr. Sulik’s opposition to paying for what he describes as other people’s mistakes led Germany’s Handelsblatt newspaper this week to label his anti-bailout movement a “central European tea party.” Yesterday Slovak lawmakers reached a deal to pass the EFSF expansion in a fresh vote before the end of the week. But at what cost?

There are strong arguments in favor of approving the changes to the EFSF, especially if it will be used to strengthen Europe’s banks. But consider this: In 2010, Slovakia’s GDP per capita was €11,692 ($16,114), while Greece’s was €19,822. Going into this crisis, average earnings in Slovakia stood at €8,700 per year, while in Greece they were around €23,900. Meanwhile, the average Slovak pension was €250 per month, compared to €830 a month in Greece. You can see why sympathy for Athens is in short supply in Bratislava.

There is another and arguably more compelling reason why Slovaks should question the need to cough up in the name of so-called European “solidarity.” Slovakia has benefited from euro-zone membership and from EU funds. But Slovakia has also paid a price. Over the last two decades, the country has undergone painful structural reform on the path from communism to a market economy, and later to EU and euro-zone membership. By streamlining its tax code, labor market, and social welfare and pension systems, it reduced unemployment, attracted foreign investors and created a base for long-term economic growth.

Richard Sulik, has emerged as public enemy number one in Brussels.

The immediate effects of reform have not always been easy to swallow. Between 1999 and 2001, the liquidation and restructuring of Slovakia’s publicly and privately owned banks cost the economy between 11% and 15% of GDP, leaving the banking sector almost completely in the hands of foreign owners. But Slovakia’s financial system emerged stronger than it was before. And yet, having walked this difficult road, Slovakia is now being asked to provide loan guarantees to bail out countries that failed to enact similar reforms. You can see the potential for moral hazard on a huge scale.

First, banks in several triple-A economies, including Germany, continue to live under the protection of sovereign bailouts and European Central Bank liquidity. They have not been forced to restructure and recapitalize, even though this is an absolutely necessary part of any long-term solution to the crisis.

Second, the sovereign bailouts have transferred private-sector risk to the books of taxpayer-backed institutions. This has created perverse incentives, possibly leading banks to chase profits through higher yields on peripheral sovereign debt and thereby increasing their exposure to the crisis. The toxic mix of moral hazard and political failure has left Europe fighting for survival on two fronts, facing both a systemic banking crisis and an increasingly desperate fiscal crisis.

Are sovereign governments learning these lessons? The Slovak parliament rejected the EFSF amendments on the very same day that the EU and the International Monetary Fund signaled that Greece would receive the next tranche of its original bailout, even though the country has clearly failed to meet its austerity and deficit targets.

Moving forward, it is encouraging that euro-zone leaders are now considering ways to manage a hard Greek default while finally looking at ways to recapitalize euro-zone banks. But as EU leaders look for clever ways to leverage the financial stability facility, possibly quadrupling it in size without increasing the existing loan guarantees—and as the euro zone reluctantly moves towards more fiscal integration—it must keep one vital lesson in mind: Conditionality is king.
…

The Wall Street Journal
OPINION
OCTOBER 12, 2011, 5:03 P.M. ET

Wall Street’s Gullible Occupiers

The protesters have been sold a bill of goods. Reckless government policies, not private greed, brought about the housing bubble and resulting financial crisis.

By PETER J. WALLISON

There is no mystery where the Occupy Wall Street movement came from: It is an offspring of the same false narrative about the causes of the financial crisis that exculpated the government and brought us the Dodd-Frank Act. According to this story, the financial crisis and ensuing deep recession was caused by a reckless private sector driven by greed and insufficiently regulated. It is no wonder that people who hear this tale repeated endlessly in the media turn on Wall Street to express their frustration with the current conditions in the economy.

Their anger should be directed at those who developed and supported the federal government’s housing policies that were responsible for the financial crisis.

Beginning in 1992, the government required Fannie Mae and Freddie Mac to direct a substantial portion of their mortgage financing to borrowers who were at or below the median income in their communities. The original legislative quota was 30%. But the Department of Housing and Urban Development was given authority to adjust it, and through the Bill Clinton and George W. Bush administrations HUD raised the quota to 50% by 2000 and 55% by 2007.

It is certainly possible to find prime borrowers among people with incomes below the median. But when more than half of the mortgages Fannie and Freddie were required to buy were required to have that characteristic, these two government-sponsored enterprises had to significantly reduce their underwriting standards.

Fannie and Freddie were not the only government-backed or government-controlled organizations that were enlisted in this process. The Federal Housing Administration was competing with Fannie and Freddie for the same mortgages. And thanks to rules adopted in 1995 under the Community Reinvestment Act, regulated banks as well as savings and loan associations had to make a certain number of loans to borrowers who were at or below 80% of the median income in the areas they served.

Research by Edward Pinto, a former chief credit officer of Fannie Mae (now a colleague of mine at the American Enterprise Institute) has shown that 27 million loans—half of all mortgages in the U.S.—were subprime or otherwise weak by 2008. That is, the loans were made to borrowers with blemished credit, or were loans with no or low down payments, no documentation, or required only interest payments.

Of these, over 70% were held or guaranteed by Fannie and Freddie or some other government agency or government-regulated institution. Thus it is clear where the demand for these deficient mortgages came from.

The huge government investment in subprime mortgages achieved its purpose. Home ownership in the U.S. increased to 69% from 65% (where it had been for 30 years). But it also led to the biggest housing bubble in American history. This bubble, which lasted from 1997 to 2007, also created a huge private market for mortgage-backed securities (MBS) based on pools of subprime loans.

As housing bubbles grow, rising prices suppress delinquencies and defaults. People who could not meet their mortgage obligations could refinance or sell, because their houses were now worth more.

Accordingly, by the mid-2000s, investors had begun to notice that securities based on subprime mortgages were producing the high yields, but not showing the large number of defaults, that are usually associated with subprime loans. This triggered strong investor demand for these securities, causing the growth of the first significant private market for MBS based on subprime and other risky mortgages.

By 2008, Mr. Pinto has shown, this market consisted of about 7.8 million subprime loans, somewhat less than one-third of the 27 million that were then outstanding. The private financial sector must certainly share some blame for the financial crisis, but it cannot fairly be accused of causing that crisis when only a small minority of subprime and other risky mortgages outstanding in 2008 were the result of that private activity.

When the bubble deflated in 2007, an unprecedented number of weak mortgages went into default, driving down housing prices throughout the U.S. and throwing Fannie and Freddie into insolvency. Seeing these sudden losses, investors fled from the market for privately issued MBS, and mark-to-market accounting required banks and others to write down the value of their mortgage-backed assets to the distress levels in a market that now had few buyers. This raised questions about the solvency and liquidity of the largest financial institutions and began a period of great investor anxiety.

The government’s rescue of Bear Stearns in March 2008 temporarily calmed the market. But it created significant moral hazard: Market participants were led to believe that the government would rescue all large financial institutions. When Lehman Brothers was allowed to fail in September, investors panicked. They withdrew their funds from the institutions that held large amounts of privately issued MBS, causing banks and others—such as investment banks, finance companies and insurers—to hoard cash against the risk of further withdrawals. Their refusal to lend to one another in these conditions froze credit markets, bringing on what we now call the financial crisis.

The narrative that came out of these events—largely propagated by government officials and accepted by a credulous media—was that the private sector’s greed and risk-taking caused the financial crisis and the government’s policies were not responsible. This narrative stimulated the punitive Dodd-Frank Act—fittingly named after Congress’s two key supporters of the government’s destructive housing policies. It also gave us the occupiers of Wall Street.

Mr. Wallison is a senior fellow at the American Enterprise Institute. He was a member Financial Crisis Inquiry Commission and dissented from the majority’s report.

It looks increasingly likely that global stock market bulls were right to anticipate a bodacious euro zone bailout.

Slovakia Deal Revives Hope on Fund to Save Euro
By STEPHEN CASTLE and NICHOLAS KULISH
Published: October 12, 2011

BRUSSELS — The day after Parliament in tiny Slovakia voted to reject the expansion of a European rescue fund, causing the government to fall and threatening efforts to end Europe’s debt crisis, politicians there struck a deal that should permit the expansion of a rescue fund for the euro after all.

The changes to the fund need to be approved in all 17 European Union countries that use the euro. Slovakia, a small, former-Communist country of 5.5 million, is the only holdout.

The fall of the coalition government was the price it paid for tying the fund changes to its own survival in a confidence vote in Parliament. Parties in the departing coalition reached an accord on Wednesday with Robert Fico’s opposition party, Smer, allowing the vote to pass through Parliament in exchange for early elections. “There is an agreement,” said a spokesman for Mr. Fico’s party, Erik Tomas. “Smer agrees to support the financial mechanism and the coalition agrees to elections on March 10.”

For some, the episode has illustrated the contrast between Europe’s slow, cumbersome decision making and the ruthless speed of the financial markets. Ultimately, the effort to stave off the debt crisis was almost hijacked by internal political maneuvering in one of the euro zone’s smallest economies.

Before the agreement was reached with Smer, the European Union’s most senior officials appealed to Slovak politicians to stop their squabbling.

“We call upon all parties in the Slovak Parliament to rise above the positioning of short-term politics, and seize the next occasion to ensure a swift adoption of the new agreement,” said a joint statement from José Manuel Barroso, president of the European Commission, and Herman Van Rompuy, the president of the European Council. Slovakia’s new vote to approve changes to the rescue fund known as the European Financial Stability Facility is expected Thursday or Friday.

“The agreement makes it possible that either tomorrow night or at the latest Friday morning the fund and the laws tied to it will be approved,” Mr. Fico said, Reuters reported. The changes to the bailout fund not only expand it but also give it new powers to help strengthen Europe’s vulnerable banks. “If we are held hostage to every parochial problem, then our efficiency is severely impaired,” said one European diplomat, who spoke on the condition of anonymity because of the delicacy of the issue.
…

Gold rises on Slovakia deal, European optimism
Gold and silver bars are pictured in front of a safe door at the Austrian Gold and Silver Separating Plant ‘Oegussa’ in Vienna August 26, 2011. REUTERS/Lisi Niesner
By Frank Tang and Jan Harvey
NEW YORK/LONDON | Wed Oct 12, 2011 3:42pm EDT

(Reuters) - Gold rose on Wednesday in tandem with riskier assets, as the dollar fell on hopes the euro zone debt crisis will be contained after Slovakian parties agreed to boost the region’s bailout fund.

Wall Street and industrial metals also posted sharp gains after Slovakian lawmakers said they would approve a plan to expand the powers and size of the European EFSF rescue fund. Bullion broke above the 20-day moving average, which inspired technical buying.

The precious metal has risen 2.5 percent in the past three sessions. Optimism about a plan to tackle Europe’s debilitating crisis prompted gold, traditionally a safe haven, to move in sync with equities and commodities.

“Investors are less concerned that what’s going on in Europe will develop into some type of Lehman event,” said Leo Larkin, metals equity analyst at S&P Capital IQ.

“As long as people are confident that gold is not going to be sold off in panic, it can continue to go higher.”
…

Oct. 13, 2011, 12:01 a.m. EDT
The return of risk
Commentary: The market looks tired
By Kevin Marder

LOS ANGELES (MarketWatch) — Shares breezed higher for the sixth time in seven tries Wednesday, as participants returned to the risk trade worldwide amid progress on Europe’s fiscal bailout package.
…

Fraud charges filed against SF bank execs who accepted millions in bailout
By: Ari Burack | 10/11/11 9:30 PM
Examiner Staff Writer
Bank fraud
United Commercial Bank branches spanned three countries. (Courtesy photo)

San Francisco bank executives cooked their books and lied to auditors just before they accepted a $298 million taxpayer bailout, federal prosecutors said Tuesday.

They now have the distinction of being the first senior executives of a bank that received federal bailout funds to be criminally charged in connection with a scheme to defraud the government and American taxpayers.

The Securities and Exchange Commission charged former United Commercial Bank CEO Thomas Wu and vice presidents Ebrahim Shabudin and Thomas Yu with illegally obscuring their bank’s mounting losses. A separate indictment charged Shabudin and Yu with securities fraud, conspiracy, falsifying corporate books and records, and lying to auditors.

Prosecutors accused them and others of hiding the bank’s true condition starting in September 2008. Two months later, facing growing losses, the bank received $298 million from the Bush administration’s Troubled Asset Relief Program, which arose from the 2008 banking crisis.

In November 2009, United Commercial Bank filed for bankruptcy and became the first recipient of TARP funds to fail.

That failure will cost taxpayers dearly. None of the TARP funds have been repaid, and the indictment predicts that final losses to the Federal Deposit Insurance Corp. could run $2.5 billion, not including the lost TARP funds.

“Shabudin and Yu are the first senior executives of a TARP bank charged in connection with a scheme to defraud investors, which included the Treasury, and by extension the American taxpayer,” acting TARP Special Inspector General Christy Romero said in a statement.

United Commercial Bank was one of the largest banks serving the Chinese-American community, with branches throughout the U.S., as well as China and Taiwan.

“It was the first U.S. bank to acquire a bank in the People’s Republic of China, and Wu was considered a rising star in the banking industry,” the SEC said in a news release. “By 2009, however, Wu found himself at the helm of a bank on the brink of failure.”
…