Bits Bucket for November 12, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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My old house inside the Beltway has been sold again. It sold for not quite 8% more than I sold it for in early ‘08. Amusingly enough, it was zero down and over $5k seller’s assistance. My realtor said it was an obvious FHA loan (I think). She had a name for it which I forget. I can’t believe these loans are still being made and backed by the government. When you factor in commission and seller’s assistance the seller didn’t make a dime… which is probably a disaster for the DC area.
How long before 125% Adjustables (ARMs) are again the standard?
Pathetic.
Want a loan on the pink slip on your car? Readily available.
Pathetic.
Want to re-fi your HELOC? There are companies advertising this product in SoCal (like that’s gonna work out well).
Amazing!
“I can’t believe these loans are still being made and backed by the government.”
The American free market system. /sarc
“I can’t believe these loans are still being made and backed by the government.”
I can’t believe these loans are still being made and back by us.
Bink–are you still in Hawaii? What’s the news on the ground there?
Prices are still falling, albeit slowly, on Oahu. Several properties in my area have been on the market for months and months with no price drops. We even have a couple foreclosures that have been on the market for over a year. Some places will go under contract for way too much money and then pop back on the market like a sub resurfacing. “Available again! Don’t miss out this time!”
People say we rely more on the Japanese economy here than the American economy. Looking around my neighborhood that’s probably true.
APEC is in town this week. Seeing all the motorcades and checkpoints has me homesick for DC. I’ve been flying Cessnas out of Honolulu and it’s fun to check out all the foreign planes parked around the airport.
Sellers don’t want to lower their demands of price.
Amazing.
ANother subj..
How a Financial Pro Lost His Way
http://finance.yahoo.com/news/financial-pro-lost-house-191003606.html
That article is priceless, especially the comments. Thanks!
“She had a name for it which I forget.”
Mortgage default special?
Der Binkster!
Good to see you again. Where are you hiding out these days?
Oh, I’m still around and lurking. I don’t post much. We’ve got a 1 month-old newborn that often keeps me from typing. Still waiting for another meetup. Especially since my brother now lives in Vegas. Cheap flights are available from Hawaii.
“We’ve got a 1 month-old newborn that often keeps me from typing.”
Beautiful — enjoy!
bink
Congrats on the baby. What are the stats?
She was born after 4 short days of labor (hah). 6 lbs. 9 ounces. Everyone says she looks like me, which I think is a terrible thing to say about a woman.
Got waylaid yesterday by a virus called privacy.exe. It took all day to eliminate it. Good luck if that file or a pop-up ad that tries to get you to install security software called “Privacy Protection” shows up on your computer.
I’m waiting for the Mac version.
we just suffered through ‘data restore[not]‘..
Got Acronis True Image and backup the computer to a USB HDD nightly. It’s the fastest/easiest way to get back to a “good” config when you have something like this happen. I work in IT, and have used tons of imagining applications, Acronis is great and it’s home user focused, I used it on all the computers in my house.
I got a nasty virus months ago, and my registry is still jacked. I managed to clean it myself with many different applications, but a bunch of my files are still hidden, and I think I need to do a system restore. I actually backed up my system on an external hard drive, but I’m not sure if the external is infected, too. I’m stupid about this stuff.
I just ran an anti-virus program I downloaded from the web that indicated it found and eliminated 23 trojan files. Unfortunately, the ping.exe program which keeps hogging my processor power is still running, which leads me to suspect the problem is unresolved.
A acquaintance of mine used to have virus problems routinely. He used to use some free software. I told him to get Norton Internet Security. It’s a resource hog, but it’s kept him virus free for like a year now. He credits it with keeping his computer free of virii.
YMMV, but FYI.
Try CCleaner the free version from priform, It will clean the registry, save the changes to the registry also run the cleaner. You might have to run it a few times till it clears everything. I have been using it for a while and it works great.
Thx — trying it presently.
otherwise known as crap cleaner…
Average foreclosure wait grows 10 percent in Florida
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 8:03 p.m. Friday, Nov. 11, 2011
The average time for a Florida foreclosure to wend its way through the system is 749 days - a little more than two years - according to the latest data from analysts at RealtyTrac.
The foreclosure timeline for the third quarter of 2011 is a 10 percent increase from the second quarter but keeps Florida in third place nationwide for the length of time it takes to repossess a home.
New York is in the top spot at 986 days, followed by New Jersey at 974 days. The national average is 336 days.
At the same time, both RealtyTrac and the Palm Beach County Clerk of Courts reported this week that new foreclosure filings increased during the month of October.
Last month, 955 Palm Beach County homeowners lost their property during the county’s online foreclosure auction, according to clerk records. Of those sold, 825 went back to the plaintiff in the proceeding - typically a bank or mortgage company - while 130 were sold to a third party.
Auction cancellations also are nearly back to normal, with about 30 percent being called off before the sale. In October 2010, as banks froze foreclosure proceedings and halted sales, 52 percent of auctions were called off.
Long waits
Top five states with longest timelines to foreclosure:
1. New York, 986 days
2. New Jersey, 974 days
3. Florida, 748 days
4. Maryland, 594 days
5. Connecticut, 584 days
Source: RealtyTrac
http://www.palmbeachpost.com/money/foreclosures/average-foreclosure-wait-grows-10-percent-in-florida-1963521.html - 75k
Maybe their strategy is that if they wait long enough to foreclose, the market will have rebounded by then.
I wonder what the wait was pre-bubble? Anyone know?
I believe it was less than six months in NY pre bubble.
It appears to be a good financial decision to purchase a house in New York or NewJersey, no money down, never make a single payment, then save all of your money for nearly three years in order to purchase another place cash.
We Warned You: FHA Bailout Coming
Written By Elizabeth MacDonald
Published November 11, 2011
FOXBusiness
Two years ago, in November 2009, we warned you that U.S. taxpayers would likely have to bail out yet another big government housing agency, and it wasn’t Fannie Mae or Freddie Mac.
We said it was the Federal Housing Administration, which sells lenders a 100% guarantee against defaults on home mortgages typically for lower income people. FHA has seen defaults skyrocket on these loans.
But the Federal Housing Administration fought us vigorously on our story. So did liberal economic research groups.
Turns out they were wrong.
…
This has to end. How?
That’s pretty easy to predict. You get what you reward.
Oops, sorry, misunderstood your post. I guess you mean how to end it? Doesn’t look possible, as long as we have the goobermint we have.
As long as the sheeple continue to vote for crony capitalism (privatized profits, socialized liabilities) our national decline and insolvency will continue to accelerate. Until the crash, that is.
“the FHA faces around $50 billion in losses in coming years.”
This is the sole fact in that entire opinion piece. How many years, Fox? Are you gonna tell us? Got a number on how many of those loans are “potentially” bad? (My guess is 5 years, and yes, 10 billion is a lot, maybe AIG can sacrifice a little bit.)
(And take out the Fannie/Freddie references and focus on FHA alone, please, unless you would also like to remind your readers that Fannie/Freddie racked up most of that bad behavior when they were a PRIVATE COMPANY when you-know-who was President.)
It’s interesting that these are loan guarantors, not lenders. HUD is holding more houses than ever here in AZ. What should concern the public is the standards for these loans. All 3 are still in some cases making low or no down loans, if you factor in closing cost assistance, appliances, etc.
IMO, there are 2 questions here. 1 should the govt be guaranteeing any house loans, and 2 if yes, what should the terms and standards be.
What is the objective for the 1st question? Availability? Affordability? It seems to me the objective is keeping prices from falling.
Another aspect of this is, all 3 are providing loans on some of their own foreclosures. In this they are the seller and lender, and this role is larger than it’s ever been. All together, the US govt is the largest single housing owner (and lender) in the country by far.
Ben,
Fannie, Freddie, FHA and HUD are all loan guarantors, not lenders?
That’s how it started off. I don’t know how the loans work if you buy a Homepath/Homesteps (GSE) foreclosure, or a HUD foreclosure. But for the most part, to buy a house you go through Wells Fargo for example, and they try to qualify you for a loan like this because it’s the best terms for the buyer. If they weren’t there, who knows what the mortgage market would look like. We won’t know until they get out of the way.
This is why you see a house “owned” by Bank of America for a year or two, then it transfers to HUD/GSE because they guaranteed the loan. It’s kinda like the end of the road for REO ownership. In fewer cases it’s the FDIC, when they close a bank and take on the bad loans. Sometimes the loan wasn’t guaranteed by anybody, and the name you see is actually the loan servicer. But often if you look up who is paying the taxes on the house, the true owner can be identified.
Thanks Ben for the explanation. Most illuminating. Especially the part about who is paying taxes on the house as being the true owner.
Thank you Ben.
“This is why you see a house “owned” by Bank of America for a year or two, then it transfers to HUD/GSE because they guaranteed the loan.”
I see this constantly. What is confusing is I’ll see a house on HSBC and months or years later I see the same house on BofA or JP Morgan.
“We won’t know until they get out of the way.”
Is there any reason to expect this to ever happen?
Time to end the taxpayer guarantee of mortgage investors
Published: 9:11 AM 11/10/2011
By Christopher Papagianis & Anthony Randazzo
It is time to reform the housing finance system. Frankly, it was time three years ago when Fannie Mae and Freddie Mac (GSEs) were taken into conservatorship (a fancy way for the government to avoid technically declaring them bankrupt) back in August of 2008. Really, it was time in the early 2000s when the GSEs were going through an accounting scandal and contributing to the housing bubble with their low underwriting standards. Okay, yes, reform was ripe back in 1986 too when the Reagan administration failed to address the deduction of mortgage interest as a part of its broader tax reform.
In short, it has been time to fix government policy towards housing finance for decades, yet no Congress or president has been able to rise to the challenge.
On Tuesday, Fannie Mae announced it lost an additional $5 billion in the third quarter and will require an additional $7 billion from taxpayers. This brings the total taxpayer bailout for the two mortgage giants to an eye-popping $182 billion. Against this backdrop, the chief housing regulator in this country, Ed DeMarco, provided some new fuel to the reform debate when he testified before a House subcommittee last Friday. Noting the difficulty of housing finance reform, Mr. DeMarco warned the GSEs “cannot operate indefinitely in conservatorship” and that “despite the benefits derived from the Treasury support … conservatorship is not a long-term solution.”
At least someone gets it.
…
An RTC for housing through the back door?
It is politically easier to do things by accident with no announcement than on purpose with a plan.
WT Economist
Yep. What’s that old saying?
“It’s easier to ask forgiveness than permission.”
“It’s easier to ask forgiveness than permission.”
It’s easier to steal in the dark of night than in broad daylight.
Actually, it is easier to steal in broad daylight. No one questions the moving van. Everyone is away at work etc.
And, see WS and banks stole from us in the glowing light of day, daily.
Let’s not forget all those subprime car loans Government Motors is making to clear inventory off the lots. John Q. Taxpayer is going to be on the hook for that, too.
Being that used car prices remain very high, the General (and other lenders) probably won’t lose all that much (if anything) if they have to repo a car and resell it. A quick looksie at cars.com shows that the asking price for a replacement for my 5 year old car is as high as 60% of what I paid for it new. We have another car, 2 years old, and it’s worth WAY more than what we owe on it. If we were repo’d the bank would come out just fine.
Plus we all know that people are making the CC and car payments before the mortgage anyway.
The problem with car loans is that so many are “balloon” loans in order to get the monthly payment down to the affordable level, and it’s been this way for decades. Also amazing is the number of owners each vehicle has before it ends up in the wrecking yard. There’s more money made from originating the loans and the interest than ever before.
I must have dinosaur thinking. My car was bought new 17 years ago. I pay them off and drive them forever, squeezing every last mile out of them. Then off to car heaven, eulogized as a life in service.
I truly hate the payments.
Payments SUCK.
Thinking of repainting my 95. Good sturdy Cam Wagon.
Lots and lots of sand pitting in windshield..
Note to self: do not drive west during late afternoon.
Hate car payments too!
“It seems to me the objective is keeping prices from falling.”
Same here.
And further, it seems to me they made a faulty assumption that their price support scheme would actually work.
“All together, the US govt is the largest single housing owner (and lender) in the country by far.”
Though housing is intrinsically a private good, it was publicly owned in the Soviet Union, to disastrous ends.
Which raises the question, why is Uncle Sam working so hard to make the same mistakes?
Long waits
Top five states with longest timelines to foreclosure:
1. New York, 986 days
2. New Jersey, 974 days
3. Florida, 748 days
4. Maryland, 594 days
5. Connecticut, 584 days
Could I Have This Dance lyrics
Anne Murray
I’ll always remember the day we stopped payin’
The first payment missed and I knew
Refied in the bubble, now we`re in trouble
Now I ask this of you
Could I have this house for the rest of my life?
My lawyer told me, your in for a fight
Being a Deadbeat it feels so right
Could I have this house for the rest of my life?
I’ll always remember that magic moment
When we said we`ll live for free
Then came the Robo, we said tough luck Bro
That`s all I’ll ever need
Could I have this house for the rest of my life?
My lawyer told me your in for a fight
Being a Deadbeat it feels so right
Could I have this house for the rest of my life?
“3. Florida, 748 days”
Bwahahaha! Who says Florida is backwards compared to the Nawtheast? Heck, there are some things we do just as well as any Nawtheastern state, and California, too, for that matter.
+1 again! I’m amazed you were able to dash off these lyrics 30 minutes after your original post.
Are you a songwriter? You certainly have a lyricist’s gift.
“Are you a songwriter? You certainly have a lyricist’s gift.”
No, I`m a Drywall guy. Back in 1983 I was a grunt on a hanging crew on my second day. It was about 3PM and I had been hanging lids since 7AM. I was beat to sh#t and about ready to say fuque this when the old dude from up state New York who had been working me like a dog all day looked at me, smiled and started singing….. Ceilings, nothing more than ceilings… Ceilings, wo wo wo ceilings. Well there was nothing I could do but laugh and grab the end of the next board.
I stayed in Drywall and through the years we had hits like The Who… That deaf, dumb blind kid sure hangs mean Drywall or The Rightous Bros. Bring back that 8 ft. ceiling wo oh that 8ft. ceiling, Bring back that 8 ft. ceiling cause it`s gone, gone, gone wo oh wo oh wo.
So now you know, all my lyrical training came from a buch of old drunk Drywall guys. But they were good guys, except for the one who ended up on the FBI`s most wanted list. And really, even he was a good guy when I knew him. But that`s a story for another day.
“…all my lyrical training came from a buch of old drunk Drywall guys.”
All the more impressive!
What a great story, Jeff.
Realtors Are Liars®
Realtors are extremely concienscous and reliable people who have their clients best interest at heart.
“Realtors are extremely concienscous and reliable people who have their client’s best interest at heart.”
And Pinocchio’s nose grew so big it crashed all computers for miles around.
I saw a realtor association all stars video from the local association the other day. It was all about sounding believable, being positive, and the high producers didn’t really care what they knew about housing, the financial markets, or even a little about construction. It was all about image, time mgmt, and finding that bonding niche. It was very telling. They don’t care what we think and they are all narcissists was my take-away. No wonder I didn’t fit in. Those people might drive a MBZ (all stars-high producers), but I don’t like the human beings.
It was all about image, time mgmt, and finding that bonding niche.
Isn’t that the universal description of anyone who is in any form of commissioned sales?
I’m just saying, a bunch of your non-realtor neighbors fall into this category. They might just sell high end servers for IBM or software or cloth by the mile or (fill in the blank).
In Colorado
The difference is they admit they don’t need to know anything at all. They are selling the biggest purchase of your life, and don’t care about you or the product. I find that appalling personally. We’re talking about 100’s of $1,000’s here. I get your drift, but most sales people need to know about their product. Of course you’re right.
Today’s houses: top of the price range edition (~$300K)
The $210 - $240K price range was the range of trashed illegal flophouses. The $300K range shows a whole other category: the granite countertop houses. It seems that fully half these houses have started as $210K trashed flophouses and undergone HGTV-style kitchen and floor reno — it’s pretty obvious from the location, and from the impression that little has been done to improve the yard. (All the $$ went to the granite.) I will stay away from these properties because a) I don’t want to live with a pretentious reno b) nobody wants to “give away” a house with granite.
House 1: Over-reno overpriced cape
http://www.zillow.com/homedetails/505-Stirling-Rd-Silver-Spring-MD-20901/37315702_zpid/
1942 3/2 cape on 0.16 acres. Granite/SS or no, I don’t like the kitchen. NOBODY who has done any real cooking would have installed a tiny sink, or put wood in front of a window. No yard improvement, roof not looking so good. I admit I like the inside. But the location is almost right on top of the cloverleaf where Georgia Ave hits the Beltway. Yikes. They’ve scrubbed the price history, likely to hide the cost of the reno.
Dec 2001: Zestimated ~$220K
Dec 2005: Zestimated ~$440K
Jun 2011: Listed $375K
Nov 2011: Listed $315K (Not that bad of a price for this, compared to some wishing prices I’ve seen)
House 2: Cool contemporary at a good price
http://www.zillow.com/homedetails/10415-Insley-St-Silver-Spring-MD-20902/37287667_zpid/
1953 3/1.5 cubic contempo on 0.13 acre. Although I prefer something homey-er, this is a good design for a contempo. Two decks, tasteful kitchen, open plan, nice use of the small property. I’m guessing it was built by a forward-thinking dude way back when.
Apr 2000: Sold $79K (the house was worth more than that, I’m sure)
Aug 2002: Zestimated $250K
Apr 2011: Listed $364K
Oct 2011: Listed $269K
Price is a little high, but I hope somebody buys this and loves it. It’s got the entertainment feel to it.
House 3: Love thy neighbor… because they’re on top of you
http://www.zillow.com/homedetails/919-Gabel-St-Silver-Spring-MD-20901/37310681_zpid/
1955 3/2 rambler on 0.15 acres in tony Kensington (near DC border). Open backyard, close to neighbor’s backyard. Lots of light, senior citizen bathtub, good condition, open usable basement. But for this price, where’s the granite, darnit??!?
Dec 2001: Zestimated $200K
Aug 2006: Zestimated $442K
Aug 2011: Listed $320K (considering no reno, this price is inexcusable, I’m not paying $100K just because the place wasn’t trashed)
Oct 2011: Listed $300K. <— $20K reduction, big whoop. By gum, they aren’t giving this one away!!
“nobody wants to “give away” a house with granite.”
I think granite is code for FB and you know they are not going to just give it away.
House I bought for 240k in 97, sold in 2001 for 240k, went to 990k
is now down to 349k.
Owners didn’t do a darn thing to it all these years.
AND they really need to stage the thing.
It is a mess.
Near “hoarding’ visually.
I fully expect it to be near what I bought/sold it for in a year.
Doncha think?
Don’t want it though..just saying and observing.
http://www.farmtoconsumer.org/quail-hollow-farm-dinner.htm
“He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.”
The Declaration of Independence
July 4, 1776
What did Jefferson have to say about outsourcing of industry to China?
Jefferson mumbled something, then smoked some hemp and played with his slaves.
I don’t know what Jefferson said, but if it wasn’t for Thomas Edison we’d all be reading the HBB by candlelight.
Heh, heh, heh.
Owners of NYC condos discover that they have to cut prices when trying to sell if the building is a few years away from losing its property tax exemption/reduction. Seems that an increase in monthly carrying costs of well over $1000 a month has an impact on how much the new buyer is willing to take out as a mortgage. Who knew?
The 421a Tax Exemption: Don’t Say You Didn’t Know
http://www.nytimes.com/2011/11/13/realestate/the-421a-tax-exemption-dont-say-you-didnt-know.html?pagewanted=all
Includes some interesting stuff on how the do the valuation (using comparable rent even if the unit is owner occupied) and how rent control can impact what the comparable rent numbers are.
Top five states with longest timelines to foreclosure:
1. New York, 986 days
How is this relevant to the article? Seriously. I have no idea.
“Owners of NYC condos discover that they have to cut prices when trying to sell if the building is a few years away from losing its property tax exemption/reduction”
I don`t think that is the only reason they have to cut prices.
Home foreclosures plummet in city
Staten Island’s 84% drop seen as sharpest, while they slipped 34% in Brooklyn and 68% in Queens; declines come despite a big surge in co-op and Manhattan foreclosures.
Amanda Fung
July 11, 2011 1:43 p.m.
http://www.crainsnewyork.com/article/20110711/REAL_ESTATE/110719997 - 70k - Cached -
So the fact that it takes forever to foreclose means they have to sell quickly? I still don’t have any idea what your point it. This is a very straightforward relationship. Their monthly carrying costs are going up so the price is being forced down.
“Their monthly carrying costs are going up so the price is being forced down.”
When you put it like that I guess I have no point. That means I`m pointless. Oh god, I rent from a Deadbeat and I`m pointless. What next.
“Who knew?”
With the insanely high level of government intervention in the private goods market for U.S. houses, it is remarkable when fundamental considerations play a role in setting prices.
HAHA polly I pointed that out a few years ago to a few idjits who thought the 421a would be extended past the original 10-15 years
Gallup:
“The percentage of American adults who get their health insurance from an employer continues to decline, falling to 44.5% in the third quarter of this year.”
It was 46% before Obamacare was passed.
A friend just went from temp to perm in Accounting, and if she added her husband to her employer’s policy, it would have been 1/4 her net. They couldn’t afford it.
Yes, and overall global temperature has increased just as the number of pirates has decreased. Your point?
I’d love to see universal health care at this point. Even if you are employed in the private sector, the employee share is just too high. Obamacare isn’t too blame for all our ills, it’s a health care system that has been broken for decades.
Thanks Awaiting for reminding the others whats what.
In fact, the majority of the INS coverage won’t be here till 2014.
The number of pirates has increased dramatically in the past few years.
“The percentage of American adults who get their health insurance from an employer continues to decline, falling to 44.5% in the third quarter of this year.” It was 46% before Obamacare was passed.
Maybe the more it falls, the more people will be asking again for a public option or for a new system.
It was 46% before Obamacare was passed.
The ongoing trend (fewer covered by employer provided insurance) remains unchanged. This isn’t surprising, as our byzantine, for profit system can’t keep costs under control. If the status quo continues (10-15% annual increases in premiums) private health insurance policies in 10 years will cost 260 to 400% of what they cost today. That 44.5% will continue to fall until it is 0%.
Also, another reason for the decline in employer provided health insurance is the fact that more and more Americans are losing their F/T jobs and becoming either self employed or work multiple P/T jobs.
In the end I think “Obamacare” has little to do with it. It’s probably more like people are shifting to medicaid because they are joining the ranks of the working poor. Lucky Duckies don’t get employer provided health insurance, since it costs more than the wages they receive.
The main portions of the ACA that impact regular employers haven’t even kicked in yet. There are some arguments that it will be cheaper for employers to stop offering care and let their employees go to the exchanges (I think they pay a fine depending on their size) but that has not been implemented yet.
The main item that effects employers is letting the kids between 24 and 26 stay on the employee plans of their parents. In this case, the parents have to pay the full cost of covering the additional person, and, by scewing their risk pool a bit to cheaper to cover young adults, the companies are probably paying a tiny bit less than they would without it. They sure aren’t hiring a bunch of young employees to keep the stats on their risk pool good.
However, GEG’s implication isn’t properly connected. You have to know how quickly companies were dropping coverage before the ACA passed and then do a regression analysis on all the other factors that effect company decision making to determine if any of the loss is attributable to ACA. And you have to explain which provisions that are currently in place caused them to drop it.
And, when you think long term about employer provided health care in the US, you have to remember it really became a factor when we had salary controls. You couldn’t give people raises to attract better employees so the companies added benefits. Well, how hard is it to attract employees these days? With MBA’s fighting each other over mall store retail positions, I don’t think they have to provide much incentive to get applications. They can’t lower the wages beyond minimum, and besides wages are sticky on the way down. This is just a pay cut in a market when employer’s have pretty much all the power.
High deductible plans are being pushed hard at my company.
Until proven able to pay for a few thousand bucks of care out of pocket, a lot of hospitals consider high deductible patients to be pretty much the same as uninsured (though they get the negotiated rate, not the rack rate).
A lot of the people who end up in those plans aren’t doing it because the prefer it but because they have no choice at all or can’t afford anything else. I hope you continue to have the ability to choose.
Thankfully we’ve still got access to the Preferred Provider Plan….for about +$400 more than last year, that is.
Plus I noticed last year we were nickled and dimed in extremis. Medical providers are billing for the difference instead of just adjusting prices down to the insurance’s suggested rate. Hundreds went out in some labwork here, a collection of biopsies there. Of course, I was being treated for a potentially serious illness. It really could have been a lot worse.
CarrieAnn
I hope your medical issue is under management or resolved.
Those high deductible plans are bad news for the consumer, and keep the cash flow coming in per Wendell Potter.
If you are using network providers, they may not be allowed to bill for the difference. You are supposed to get the rate that your insurance company negotiated for you. Of course, you have to know the terms that your particular insurance has with that provider.
Please check on this.
http://www.guardian.co.uk/business/2011/nov/12/chins-threatens-us-with-new-debt-downgrade
China’s rating agency is talking about downgrading US debt, for the blindingly obvious reason that Ben’s deranged money-printing and our profligate spending are catching up to us. Fitch, Moodys, and S&P would have downgraded us months ago if they weren’t in bed with Wall Street.
Is a non-U.S. based rating agency allowed to downgrade US debt? What constrains them against doing so, if that is their honest opinion?
https://secure.aclu.org/site/SPageServer?autologin=true&s_subsrc=111109_GPS&emsrc=Nat_Appeal_AutologinEnabled&pagename=111108_GPS_CellPhone&emissue=technology_and_privacy&emtype=advocacy
For the non-sheep out there who don’t appreciate Big Brother using cell phone data to snoop on you, please make your opposition known.
I don’t trust the assumption that banks create value by bulldozing homes. It sounds to me like millions of dollars worth of real estate wealth is undergoing destruction in order to prop up the value of millions of other homes. It seems like this strategy can only pencil out when the banks undertaken the action have massive market power (which they do). I am guessing the U.S. taxpayer somehow picks up the loss; perhaps the principle on these bulldozer teardowns is federally guaranteed?
Bulldoze: The New Way to Foreclose
Posted by Stephen Gandel
Monday, August 1, 2011 at 5:00 am
Meredith Jenks / Getty Images
UPDATED (5:29 PM)
Banks have a new remedy for America’s ailing housing market: bulldozers.
There are nearly 1.7 million homes in the U.S. in some state of foreclosure. Banks already own some of these homes and will soon repossess many more. Many housing economists worry that a near constant stream of home sales by banks could keep housing prices down for years to come. But what if some of those homes never hit the market?
Increasingly, it appears that banks are turning to demolition teams instead of realtors to rid themselves of their least-valuable repossessed homes. Last month, Bank of America announced plans to demolish 100 foreclosed homes in the Cleveland area. The land will then be donated to local government authorities. BofA says the donations in Cleveland are part of a larger plan to rid itself of its least-salable properties, many of which, according to a company spokesperson, are worth less than $10,000. BofA has already donated 100 homes in Detroit and 150 in Chicago, and may add as many as nine more cities by the end of the year.
And BofA is not alone. A number of banks are ramping up their efforts to not just rid themselves of their unwanted homes but also fully dispose of them. Fannie Mae has a program to sell houses to local municipalities for a few hundred dollars. Wells Fargo has donated 800 homes since 2009. While some of those homes have been demolished, a spokesperson for the bank says many of the homes have been given to not-for-profits with plans to renovate the homes, not tear them down. JPMorgan Chase says it was one of the first banks to donate houses it couldn’t sell or didn’t think were repairable. Since 2008, JPMorgan has donated or sold at a discount 1,900 houses to city or county officials.
The banks do the deals because once the properties are donated, they no longer have to pay taxes or for upkeep. Tax experts say the banks may also be able to get a write-off for the donations. That appears to be a better strategy than trying to repair some of the homes, which according to a BofA spokesperson are more economical to demolish than fix up. Local governments like these deals because they get free land to develop or use for open space. Cleveland-based Cuyahoga County Land Reutilization Corp., which inked a contract with BofA, has been one of the most aggressive local-government organizations in striking these deals. And housing economists like these deals because they remove homes from the market that would otherwise sell for a low price or not at all, dragging down home prices in general. An oversupply of homes on the market has been one of the big problems plaguing real estate. According to the most recent data, it would take 9½ months for the current number of homes on the market to sell. The housing market is generally considered healthy when supply equals six months of sales. So taking some of these homes off the market for good could remove some of the inventory drag.
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Can anyone explain how the government sponsored enterprises, whose mission was to provide affordable housing, morphed into the agencies they are today, whose mission is to keep housing prices unaffordably high?
Giving a corporation an allegedly public purpose and then making it a private enterprise with implied government backing and executives who get paid millions of dollars to compete with private lenders.
You can have a private enterprise with appropriate incentives for the executives to not run it into the ground (very few corporations come close to that these days) or you can have a government entity with a public purpose and the executives make less than $200K a year no matter how well they do their jobs.
But you can’t pretend that executives making millions with implied government backing are fulfilling a public purpose. It doesn’t work.
Right — I entirely forgot about the private sector’s de facto business model:
“Privatize profits, socialize losses.”
Schadenfreude alert! This program is coming on KPBS San Diego public radio in fifteen minutes.
P.S. My virus problem is only partially resolved; when I try to do quick online research, my web browser is summarily redirected to another site.
Marketplace from American Public Media
Which Way Home?
America Underwater: The mortgage crisis in data
by Matt Berger
Nov 11, 2011
This week, Marketplace Money and The New York Times teamed up to tell the story of home ownership in America three years after the housing bubble burst. In a special report called “Which Way Home,” we share the stories of the people who own homes, want homes, and have lost homes during this turbulent period.
While our reporting teams were hard at work finding, recording, and telling the stories that appeared in Wednesday’s issue of The Times (now online at NYTimes.com), and on the public radio airwaves this weekend on Marketplace Money, we on the digital team went in search of data to tell the story.
We put to work former Marketplace intern Ryan Faughnder, a USC journalism graduate student who has compiled the data for a number of our Marketplace Maps. What he put together for us this time stark. It revealed a nation underwater.
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Listening now; this program is a wonderful chronicle of the viral thinking that led to the parabolic price blowout and subsequent collapse of the housing bubble.
Now quoting Brent White, U of Arizona law professor, who explains the ugly choice between paying off an underwater mortgage at a loss, or walking away and destroying one’s credit rating.
What Should You Do if You Owe More on Your Home than It’s Worth?
Underwater Home is both an emotional and practical guide for the underwater homeowner. Professor White explains when it makes financial sense to stay in your underwater home and when it makes sense to get out. He explains your options and gives you the facts that will empower you to make the best decision for your family, free from guilt or fear, and with clarity, confidence, and peace of mind.
Now talking about the resurrection of the Miami real estate investing craze. The investors are sure the market has bottomed out and will soon go up in value. 63% are buying with 100% cash, on the assumption that real estate always goes up.
Now interviewing a Las Vegas FB, who happens to be a financial adviser, and his wife, who lost their home in a gated community through a short sale. Wasn’t it just a few short years ago when the most pitiful U.S. housing market participants were the priced out renters? The worm has turned, folks; now is the time to pity the bitter, short-sold former owners.
Tess Vigeland hits the interviewer’s equivalent of a home run: “You’re a financial professional. How did you get yourself into this situation?”
Followed by: “Who do you blame?”
To his credit, the financial adviser says, “There is nobody to blame but ourselves.”
You can go to marketplace.org to share with MarketPlace what you thought of this program. I thought it was fantastic.
I didn’t get to listen. Did they say anything about low-life renters who knew enough to avoid the whole thing?
No show is perfect, this one included, as the focus was on the crazy and stupid decisions of homeowners. Prudent renters were not interviewed.
That seems to be a consistent pattern.
I get the feeling shining the light on the prudent renter story is prohibitted.
Prudent renters were not interviewed.
Here is the America Underwater map from American Public Media’s Marketplace. There are some eye-popping figures available at a click of the mouse; for instance, here are the California stats:
Number of Mortgages 6,830,077
Percent Underwater 30.2
Total Mortgage Debt $1,965,425,128,718 (say $2 trillion)
House Price Index (HPI) $400,710
HPI Fall From Peak 37.2 percent
Foreclosure Rate 1.13% (1/88)
According to that map, New York has the lowest percentage of underwater houses in the US- even lower than N Dakota. Surprising.
Perhaps there is a connection to the recent news that New York has a fifty-year supply of shadow inventory on tap.
linky?
November 11, 2011
In A Couple Years, These Will Not Be The Prices
It’s Friday desk clearing time for this blogger.
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“In New York and New Jersey, where courts imposed new rules last fall, it would take lenders more than 50 years at their current pace to clear pipelines of homes that are seriously delinquent or already in the foreclosure process, according to LPS Applied Analytics. In New Jersey, foreclosure activity was curbed after a court requirement that leading companies prove that their foreclosure processes were sound. The companies received clearance in August and September to resume foreclosures.”
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Are they not underwater or is it just that w/the longest days to foreclosure state (psssssttt….as in they don’t foreclose) means prices have not been allowed to drop yet.
meansMaybe. But New Jersey, Florida, Connecticut, and Maryland are the other top five slowest to foreclose, and it’s not keeping their number of underwater houses down. Not sure why it would only have that effect in NY.
Broken homes: American household incomes plunge
Scott Olson/Getty Images
So much for McMansions. An unfinished home under construction is offered for sale in Palatine, Illinois.
by David Brancaccio
Marketplace Index for October 10, 2011
Today the stock markets rocketed up on news of a plan to protect European banks from the sovereign debt crisis. But there was also stark new evidence why the mood of many Americans doesn’t match that of the markets.
Two researchers looked at U.S. Census Bureau figures for the two years extending from when the recession in the U.S. officially ended, in June 2009. So during the two years of slow economic growth that followed, here’s what happened to typical household income: It fell 6.7 percent even as U.S. gross domestic product was supposedly rising. That’s twice the drop recorded during the actual recession.
The study, reported in today’s New York Times, was a startling reminder of how unemployment is hurting millions of Americans, and how a lot of people lucky enough to have jobs are struggling to make ends meet.
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“unfinished home under construction”
Unfinished under contruction may as well be a teardown IMO.
When I look at Zillow, I occasionally look at land prices. Sub-acre plots sell for upwards of $1M / acre, usually not yet hooked up to services. My only chance would be to live in a trailer.
“He says if you look at the situation of American men over the last four decades, you’ll find that, adjusted for inflation, annual earnings are down 28 percent. And Looney says this is caused both by a stagnation in wages and by the fact that a surprising number of American men no longer work at all.”
A short, nasty and brutish life for the innumerate.
Now talking about the mortgage interest deduction, which is supposedly on the federal government’s chopping block for elimination.
I’ll believe the elimination of this welfare-for-the-wealthy federal revenue transfer program when I see it. The lying Realtor lobby is waging an all-out propaganda war to maintain it.
Nonetheless, I am encouraged that Congress is at least still talking about limiting the MID.
Durbin: ‘Breakthrough’ by GOP in debt talks
Urges Democrats to put cuts on table
By Sean Lengell
The Washington Times
Wednesday, November 9, 2011
The Senate’s No. 2 Democrat called the GOP’s willingness to consider new tax revenues to help lower the nation’s debt a “breakthrough” and encouraged his party to reciprocate by putting entitlement reforms and spending cuts on the table.
Republicans on the debt-reduction supercommittee Monday offered limits on popular tax breaks, such as the mortgage-interest deduction, in exchange for significantly lower income-tax rates. Democrats then countered with an equal blend of spending cuts and tax revenue over the next decade, details of which were reported late Wednesday.
The two parties still aren’t close to reaching a debt-reduction agreement before a Thanksgiving deadline. But Senate Majority Whip Richard J. Durbin’s comments, along with the competing partisan deals that offer fresh concessions, suggest a possible thaw in the ongoing negotiations to lower the nation’s $14.9 trillion debt.
“I assume that what we heard from Republicans is a breakthrough that can lead to an agreement, and that’s what we need,” the Illinois Democrat told reporters at the Capitol on Wednesday.
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I’m making do today in the face of my virus issues.
Will reinstall my OS soon…
Despite Critics, Mortgage Deduction Resists Change
By PAUL SULLIVAN
Published: November 8, 2011
IF you ask most people about the possibility of reducing or eliminating the tax deduction for interest on home mortgages, you will generally hear the same things that you would if you suggested altering Social Security benefits.
It’s political suicide. It will crush an already anemic economy. It’s downright un-American.
Talk to most economists, though, and they are likely to question the rationale of having a tax deduction at all. They will tell you that countries like Australia, Canada and Britain do not have a deduction for mortgage interest, yet have higher rates of homeownership than the United States. And they will ask, what behavior is the United States government trying to encourage by favoring homeowners over renters?
Homeownership would be the obvious answer, but it is an incomplete one. “Its intention was to increase the rate of homeownership,” said Celia Chen, a senior director and housing economist at Moody’s Analytics. “It hasn’t helped to expand homeownership, but it’s helped to support purchases of larger homes.”
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Why do these ijits have to be cut it all, or keep it all?
a) keep the MID for the first $X dollars of primary home
b) chuck it for the rest.
Oh wait, that’s two thoughts. Too complex for the MSM journalists, I guess.
There is already a subsidy for home ownership inherent in the system that my income tax prof used to mention occasionally.
If you buy stock, you have to pay taxes on the dividends and capital gains. Not that much these days, but you have to pay.
If you buy a house, it relieves you of the expense of paying rent, but you don’t pay tax on that imputed income.
It took quite a while for most of us to even get what he was talking about, but there is a point there. You can live in a house. This relieves you of a major expense. And you don’t pay any tax on that benefit. A stock certificate doesn’t have the same benefit. Neither does an interest bearing bank account.
If you buy stock, you have to pay taxes on the dividends and capital gains. Not that much these days, but you have to pay.
If you buy a house, it relieves you of the expense of paying rent, but you don’t pay tax on that imputed income.
Is there not a fundamental difference between income (dividends, cap gains), and lack of outflow (not having to pay a major expense)??
Polly, by that reasoning, there should be NO MID for second homes, since you don’t live in your second home. Even if you live in two homes during the year, you can’t live in both homes at the same time.
Does the flow of bailout euros from the ECB into Italian debt effectively signal the end of the eurozone debt crisis?
Who ultimately pays for bailouts funded through the action of a fiat money printing press, anyway? And whose decision is it to determine who the ultimate bailout bagholders will be?
Portugal PM says ECB should not pay for EU’s sinners
LISBON | Sat Nov 12, 2011 12:08pm EST
(Reuters) - The European Central Bank should not print money to pay the debts of countries that have failed to keep budget discipline, Portuguese Prime Minister Pedro Passos Coelho said on Saturday, assuring that his country can put its finances in order.
“If the ECB had to solve the problems of undisciplined countries, printing more euros, this would be, purely and simply, a terrible signal to everyone,” Passos Coelho said in televised remarks.
Portugal earlier this year became the third euro zone country after Greece and Ireland to get a bailout. It is now enacting painful and unpopular austerity measures to meet the targets of its 78-billion euro EU/IMF bailout.
“We have to demonstrate confidence, show that we can put our finances in order, and this cannot be done by saying: ‘I don’t want to pay, the ECB is going to pay‘. I cannot embark on this simplistic talk that ECB has to pay Portugal’s debts,” he said.
The ECB has been buying bonds of struggling euro zone governments on and off for more than a year but many economists suspect the crisis can now only be solved by broader and more aggressive action involving the bank — something that is firmly opposed by Germany.
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Judging from this weekend’s news, there are more shoes to drop in the eurozone debt crisis — perhaps an entire millipede’s worth of shoes! The myopic eurozone sovereign debt markets provide clear indication this is not over yet (see bold highlighted paragraph below).
The not-so-stealthy ECB bailout of Italian debt merely provides further moral hazard encouragement for other sovereigns to take loans they will never be able to repay, on the assumption that the ECB will hold the interest rate to below-market levels on an as-needed basis. For now, it appears sovereign debt owners (including anyone long euros or fixed euro-denominated obligations) may eventually pay the price, in the form of “higher than expected” future inflation.
The euro rampage won’t stop at Rome: Spain is more at risk than Italy
By Mary Ellen Synon
Last updated at 5:16 PM on 12th November 2011
Spanish Economy Minister Elena Salgado should be wary about how dangerous Spanish investments now are
Italy and its debt disaster are pretty spectacular, so attention has been drawn away from the disaster that is Spain. Give it a few more days. The bond markets are going to take another look at the figures coming out of Madrid and widen their eurozone field of fire. (Yesterday Spanish spreads on ten year bonds were already at 4.2 percent.)
So far, the only reason Spain has not had to follow Greece, Portugal and Ireland into handing over control of its finance ministry to Brussels-appointed eurocrats is because its level of public sector net debt, relative to GDP, is still below that of Germany and the euro area average. (Meanwhile by the end of this year, Italy will have the second highest level of public sector net debt, relative to GDP, in the eurozone.)
However, according to a report out yesterday from the economist Jamie Dannhauser at Lombard Street Research, Spain, relative to Italy, faces a much bigger task in reducing its fiscal deficit and placing the debt stock on a declining path:
‘Whereas the Italian budget should be in balance this year before interest payments are taking in account, the Spanish look like running a so-called “primary” deficit equal to around six percent of GDP. Official projections that it could get down to four and a half percent of GDP look wildly optimistic with Spain almost certainly back in recession.’
But here’s what really sets Spain apart from Italy, and shows how dangerous Spanish investments now are: the vast scale of borrowing that took place within the private sector before the crisis and the consequent asset price boom.
And that’s not just the Spanish property market bubble.
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A closely-watched pot never boils over.
Get ready for Monday’s bond selloff
November 11, 2011, 2:40 PM
U.S. Treasury prices are expected to drop like a rock, sending yields up, when trading resumes on Monday after a slew of positive developments out of Europe on Friday. U.S. bond markets were closed Friday for the Veteran’s Day holiday. But other markets were open, and sentiment was largely moving against safe havens.
“The combination of news out of Europe and a higher-than-expected reading on the U. of. Michigan consumer sentiment [survey] is causing a risk on trade and futures indicate that Treasury yields would be moving sharply higher if the bond market was open,” said Mike Pond, a Treasury strategist at Barclays Capital.
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Italian austerity plans pass…Burlusconi resigns
The vote in the lower chamber was 380-26, according to the Associated Press. The Italian Senate had already approved the measure in a 156-12 vote, a move that saw European and U.S. equities rally, while the euro turned higher.
Berlusconi announced his resignation Saturday night, following the vote in the lower house.
Monti, an economist and former European Union commissioner, is a top contender to lead the country, according to reports.
Analysts say momentum remains behind calls for Monti, 68, to head a technocratic government that will aim to implement austerity measures and other reforms to open up the nation’s labor market, among other aspects of the economy.
Unaligned with any of Italy’s major political parties, Monti served two terms in the European Commission.
From 1999 to 2004, Monti was the commissioner for competition policy, where he led Europe’s antitrust case against Microsoft Corp. In his previous term, he served as commissioner for the internal market, services, customs and taxation.
“While the policy agenda of the new government is still to be unveiled, we think Mr. Monti’s main focus will be on the liberalization of non-tradable goods sectors and labor market reforms,” said Fabio Fois, an economist at Barclays Capital.
http://www.marketwatch.com/story/italy-expected-to-ok-economic-reforms-2011-11-12?link=MW_home_latest_news
MARKETS
NOVEMBER 12, 2011
Investors’ Dread-Letter Day: 11/23
Mystery Surrounding Budget ‘Supercommittee’ Keeps Markets in Limbo as Deadline Nears
By BRENDAN CONWAY
Associated Press
The co-heads of the so-called deficit-reduction supercommittee, Rep. Jeb Hensarling (R., Texas) and Sen. Patty Murray (D., Wash.), have investors on edge as the panel’s progress on a deal by Thanksgiving remains shrouded in mystery.
Call it Wall Street’s other geopolitical driver, one played out not in Athens or Rome, but close to home in Washington.
WSJ’s Janet Hook reports on yet another week ending without a deal from the congressional deficit supercommittee. Plus, what is likelihood that the deficit negotiations will come down to the 11th hour?
As stock-market investors fret over sovereign-debt contagion in Europe, a Nov. 23 deadline for the U.S. Congress’s so-called budget supercommittee is fast approaching. The committee is assigned to devise at least $1.2 trillion in deficit-reduction measures over 10 years, or else automatic cuts ordained by Washington’s summer debt-ceiling agreement are triggered.
Friday’s market action gave little hint that investors remain perturbed over Europe’s debt situation, much less any happenings in Washington, as the Dow Jones Industrial Average surged by triple digits. But the gains came on the kind of light volume that usually suggests a lack of participation.
The outcome in Washington is a large unknown for the stock market, which is a creature vastly more wary of mystery than bad news. Bad news can at least can be analyzed and quantified. A large political unknown, by contrast, is all but sure to be a source of market volatility.
The Joint Select Committee on Deficit Reduction’ is a big name. It’s also the big, 800-pound gorilla facing the markets. Brendan Conway visits Mean Street to explain.
The underlying fear is that lawmakers’ cuts are too small to persuade credit-rating firms to maintain their current ratings on U.S. government debt. If that happens, stocks could engage in a replay of their plunge in August, which followed Standard & Poor’s downgrade of the U.S. credit rating. That action coincided with a surge of fears over Europe’s sovereign-debt crisis from which the market is yet to fully recover.
“The lack of transparency and communication from Washington about any political compromise is troubling,” said Christopher Wolfe, investment chief of the Private Banking and Investment Group at Merrill Lynch.
And, since financial markets, while volatile, have been largely on an upswing since August, he added that “there’s a risk that Washington misreads improvement in the stock market and bond market as an opportunity to continue fighting along polarized lines, when it’s really not.”
Wall Street views the budget-cutting subject cautiously in part because there are so many possible scenarios. Moody’s Investors Service said recently that gridlock itself wouldn’t necessarily mean a credit-rating downgrade, but that view was premised on lawmakers keeping intact the automatic cuts. Sen. John McCain (R., Ariz.) is one lawmaker reportedly eager to shield the defense budget from automatic cuts. There also are potential negative scenarios for stocks in other industries heavily dependent on government policy and spending, like health care.
“Politics and government are playing a major role in market performance and market volatility,” BlackRock Inc. chairman and chief executive Larry Fink said on the money manager’s earnings conference call last month. “With governments not focusing on [the] long term and with governments, in many cases, just doing the wrong thing, we have many clients world-wide who are confused, frozen, and looking for answers.”
That is what happens when market-moving policy decisions are held tightly by Washington insiders and then are suddenly made public, as some fear could happen this time.
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A first for me visiting Denver: Billboards adverstising help short selling your house.
I think CNY was the PTB’s test market for what the rest of the nation will become. Housing prices closer to 3x median income w/ sky high taxes to make up the difference.
A few year’s ago (actually, six years ago) my wife and I drove from FL to NY through the deep south. It was amazing to see how the various billboards changed.
FL: your dream retirement home next exit! Golf!
LA: Call (Lawyer) to get your insurance company to pay Katrina bill.
MS: don’t kill yourself, teen pregnancy line, god will save you, etc.
TN: Visit Opryland!
OH: new homes, next exit!
“It was amazing to see how the various billboards changed.”
List of 2006 Petco Park billboards which were missing in action during the 2011 San Diego Padre’s baseball season:
- Toll Brothers Homes
- KB Homes
- Hovnanian Homes
- Countrywide Mortgage
- Ameriquest Mortgage
- New Century Mortgage
etc etc etc
Whats that old saying? ” those who can do do those who can’t teach”
September, 2009: UCLA: Home prices have hit bottom
“Now that prices have adjusted to levels which make existing homes more affordable, sales are increasing and conditions are becoming ripe for new residential construction,” wrote Jerry Nickelsburg, a senior economist with the Anderson Forecast and the author of the California economic outlook.
June, 2009: Housing recovery set to begin, forecast says
“Our employment forecast suggests that it will be late in 2009 before prices are tempting enough and supply is low enough for the market to stabilize. When it does, the contraction in residential construction will, finally, after more than three years, cease to be a drag on the California economy.”
June, 2009: UCLA: Hard times to last another year
After retreating to 2002 levels, home prices are about to start going back up, with buyers coming off the sidelines at the mid-point to latter part of 2009. The surplus of homes for sale has evaporated.
October, 2008: UCLA sees mild rebound for O.C. economy in 2009
“We are not forecasting a freeze up in the financial markets,” Nickelsburg said.
June, 2007: UCLA Anderson Forecast: U.S. Economy Not In A Recession, “But It Is Certainly Close.”
In his national report, UCLA Anderson Forecast Senior Economist David Shulman notes that if the current (and continuing) forecast is close to the mark, then the period from second quarter 2006 through first quarter 2008 will mark an historically anomalous long period of below trend growth. But he remains consistent with the story the Forecast has been telling for some time, that a recession is not imminent for the U.S. economy.
June, 2006: No Statewide or National Recession Seen
Leamer, who does not expect real estate prices to fall significantly, notes that sales volume is what typically drops, and drops more precipitously than prices, as the price cycle lags behind the volume cycle. The number of homes sold will drop as owners decline to sell in a weak housing market. Prices, however, should hold.
“June, 2006: No Statewide or National Recession Seen
Leamer, who does not expect real estate prices to fall significantly, notes that sales volume is what typically drops, and drops more precipitously than prices, as the price cycle lags behind the volume cycle.”
Was this the ‘warning on the bubble’ the abc news story attributed to the UCLA Anderson forecasters? Because it sounds to me like they missed it.
About the same time as this, HBB posters were consistently predicting an imminent, incipient housing crash.
These bailouts aren’t democracy. What’s worse, they aren’t even a rescue
The idea that Italy’s and Greece’s new technocratic governments will be apolitical is nonsense. And it’s becoming clear that, in Athens, austerity is already turning a crisis into a disaster
Heather Stewart
The Observer, Saturday 12 November 2011
Prime minister Lucas Papademos of Greece: his supposedly technocratic government will have to make hugely politically contentious decisions.
Investors are breathing a sigh of relief after a tumultuous week, with at least a semblance of stability restored to Italy and Greece. But the past seven days have also flipped the euro to reveal a new face – and it wasn’t a pretty one.
The deeply undemocratic nature of the euro project had already been laid bare in Cannes by the European elite’s outraged response to George Papandreou’s announcement that he would hold a referendum on the latest “rescue” package for his country.
Papandreou may have had his own tactical reasons for demanding a vote. But given that the bailout package involves further hardship for an already restless populace, it didn’t seem unreasonable that, in order to avoid the nation becoming ungovernable, he felt the need to ask for a fresh mandate.
Last week, it was Italy’s turn to face intense pressure from financial markets – and, in turn, from its eurozone partners. As Berlusconi showed few signs of carrying out his promise to resign, France began openly calling for regime change in Rome. Now, there’s no doubt that Silvio Berlusconi is both odious and ineffectual; but for Italy’s neighbours to be demanding the departure of its democratically elected leader was hardly a shining moment for European democracy.
Of course, the fig leaf is that Berlusconi’s Yale-trained successor, Mario Monti, will lead a “technocratic” government that will implement drastic spending cuts and necessary structural reforms to nurse the economy back to health. Exactly the same story is being told about ex-central banker Lucas Papademos in Greece. But there are two major flaws in this argument. First, there’s no such thing as a harmless, neutral technocrat; and second, the plan they are toting won’t work.
The recipe of privatisation, deregulation and welfare cuts that is being presented as the only solution to Italy’s woes is a deeply contentious one. Decisions on how the professions should be regulated, how easy it should be to fire staff, and how much of the national infrastructure should be owned by the state, for example, will be fiercely contested, and have profound implications for the distribution of resources in society. Sir Mervyn King may be a fine monetary policymaker, but would you want him in charge of deciding how many Sure Start centres should be shut? He would say it wasn’t the kind of decision he should make.
As Peter Chowla of the Bretton Woods Project, which monitors the work of the IMF, says: “You need an understanding of what these crises mean for different segments of the population.”
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Europe unsure it can bail out Italy
English.news.cn
2011-11-11 14:07:56
BEIJING, Nov. 11 (Xinhuanet) — As the Italian debt crisis comes to the fore with Prime Minister Silvio Berlusconi’s impending resignation, there are growing fears that Italy’s crisis could put the global economy in a downturn if not successfully managed. On Wednesday, Italy’s key borrowing rate once spiked to a high of 7.25 percent. That was over the level that eventually forced other eurozone countries like Greece and Portugal to seek bailouts.
An ominous arrival at the Bank of Italy in Rome.
Among these men, financial experts sent by the European Union to look at the state of Italy’s finances.
They’ll almost certainly not like what they see.
Despite Prime Minister Silvio Berlusconi’s promise of resignation on Tuesday, Italy’s inability to deal with its massive debts continues to have a dramatic effect on the country’s ability to raise money.
Italian bond yields -the amount of interest the country must pay those who buy its debt- have risen above 7 percent for 10 year bonds, reflecting investors’ uncertainty that they’ll get their money back.
Portugal and Ireland were forced to ask for an EU and IMF bailout when their bond yields reached similar levels.
IMF head Christine Lagarde said: “Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of a downward spiral of uncertainty, financial instability and potential collapse of global demand. Ultimately, we could run the risk of what some commentators are already calling the lost decade.”
Italy is the euro zone’s third largest economy - much larger than Greece, Ireland and Portugal which have received bailouts.
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Slovak PM says ECB shouldn’t buy govt bonds
BRATISLAVA | Sat Nov 12, 2011 9:40am EST
Nov 12 (Reuters) - The European Central Bank (ECB) should focus on its key monetary policy mission and role of a last resort lender to the banking sector rather than buy bonds of distressed euro countries, Slovak Prime Minister Iveta Radicova said.
Traders said the ECB bought Italian bonds aggressively this week to contain a spike in yields that has pushed financing costs on its sovereign debts of 1.9 trillion euros ($2.6 trillion) above sustainable levels.
The bank has been buying bonds of struggling euro zone governments on and off for more than a year but many economists suspect the crisis can now only be solved by broader and more aggressive action by the ECB — something that is firmly opposed by Germany.
“The central bank in a currency union should focus mainly on monetary policy and role of last resort lender for the financial sector. It (the ECB) should, for sure, not buy bonds of distressed countries,” Radicova said in a speech delivered at the Oxford University.
Slovenian central bank chief Marko Kranjec, a member of the ECB’s governing council said on Saturday the bank was willing to support sovereign borrowers as long as it does not put price stability at risk.
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Eurozone Rarranges Deckchairs on Titanic
John M. Curtis, LA City Buzz Examiner
November 12, 2011
Inside the inner sanctum of Frankfurt-based European Central Bank, a boiler-room containing public relations’ experts manufacturer stories about how the 1999 euro is supposed to survive Europe’s modern-day version of the Black Death or Bubonic Plague. This time around the contagion is not bacteria but a failed experiment at a common currency designed to compete with the U.S. dollar. Led by Germany and France, 15 other sovereign nations joined the euro, promising unprecedented economic prosperity. Twelve years into the experiment, and some of Europe’s most stable economies, including Italy, Spain, Portugal, Ireland and Greece, teeter on bankruptcy, forcing Germany and France to bailout Eurozone’s failing economies. Tossing out Italian Prime Minister Sylvio Berlusconi doesn’t change the euro’s fundamental flaw: No common tax base.
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11/07/2011
‘Run For Your Lives’
Euro Zone Considers Solution of Last Resort
Photo Gallery: A Common Currency at Sea
The ink on the most recent European Union summit agreement was hardly dry before it became clear that it was insufficient. With investors now increasingly wary of Italy, the consensus is growing that the European Central Bank — and the IMF — will have to play an even greater role. But will it be enough?
By SPIEGEL Staff
When government heads from Germany and the US get together, protocol usually calls for as much pomp as possible: honor guards, hymns, flag parades and the like.
But the tone was decidedly more businesslike at the G-20 summit in Cannes last Thursday. German Chancellor Angela Merkel and US President Barack Obama, together with US Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schäuble, met in a mundane conference room at the five-star Intercontinental Carlton Hotel. The group had serious issues to discuss.
Merkel reported on the results of a meeting held a day earlier — during which she and French President Nicolas Sarkozy had told Greek Prime Minister Georgios Papandreou exactly what they thought about his (now cancelled) plans to hold a national referendum on the euro bailout package. Obama and Geithner, however, were not impressed. The euro crisis continues to worsen, the pair grumbled. It is time, they said, for Europe to finally take decisive action. The decisions taken at the European Union summit in late October were not enough, they complained.
In response, Merkel and Schäuble recited the long list of measures the Europeans had recently initiated. But in reality, they had little to offer in reply to Washington’s analysis. The euro crisis, Obama warned, now threatens the global economy.
Too little, too late. That has been the global public’s assessment of European efforts to rescue its currency — for the last one and a half years. And there is every indication that it will remain that way, even after the most recent G-20 meeting. Indeed, concurrent to the meeting in Cannes, the euro zone experienced what was likely the most ridiculous week of events since the crisis began: a Greek referendum announced on Monday, a reversal on Thursday, a national unity coalition promised in Athens on Friday and Papandreou’s resignation on Sunday. Things changed almost by the hour, it seemed. And there is still little reason for optimism.
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i don’t know about the rest of you folks, but I take the rather strong impression that the eurozone debt crisis is not over yet.
Markets hit by European debt crisis as threat of eurozone breakup persists
FTSE and global stock markets endure more losses amid fears Italy’s rising borrowing costs may force bailout
Julia Kollewe
guardian.co.uk, Thursday 10 November 2011 03.59 EST
Article history
Italian Prime Minister Silvio Berlusconi
Italy’s rising borrowing costs, which have contributed to the departure of Silvio Berlusconi (left) have also led to increased fears the country will need a bailout. Photograph: Gamma-Rapho via Getty Images
Global stock markets suffered sharp losses on Thursday morning as the political chaos in Athens and Rome continued and the eurozone teetered on the brink of breakup.
The ongoing financial turmoil saw the FTSE 100 in London open nearly 100 points lower at 5360.19. Asian markets also fell, with Japan’s Nikkei closing down 2.9% while Hong Kong’s Hang Seng lost nearly 5% and Singapore’s Straits Times shed 3.1%.
In the bond markets, the yield – or interest rate – on Italy’s 10-year bonds traded around 7.3%, close to the record highs hit on Wednesday. The yield on Spain’s 10-year debt increased to 5.9%, nearer to the “danger zone” where countries risk losing the confidence of the financial markets.
Soaring Italian borrowing costs have stoked fears that the eurozone’s third-largest economy will need to be bailed out. Italy has now replaced Greece as the focus of the debt crisis, with Italian interest rates reaching levels that triggered bailouts in Portugal, Greece and Ireland. But amid fears that Italy is too big to rescue, reports have surfaced from Brussels suggesting Germany and France have begun preliminary talks on a breakup of the eurozone.
Brent crude oil dipped below $112 a barrel as the escalating European debt crisis overshadowed robust demand for oil from China. Spot silver shed nearly 2% to $33.40 an ounce.
China’s foreign ministry expressed hope on Thursday that European countries would overcome their difficulties. Ministry spokesman Hong Lei added that China also hoped Europe would stabilise financial markets and push for economic recovery and growth.
Gary Jenkins, head of fixed income at Evolution Securities, said: “Italy had a particularly bad round on Wednesday and it may prove to have been a seminal event in European history.”
He added: “Italy is too big to bail, which leaves us with the nuclear options of getting the printing presses working overtime or common bond issuance as we head towards a fiscal union. Neither option is politically palatable and both would be in breach of existing treaty agreements, but then rules have been twisted before and a treaty change may be a lot more palatable than a eurozone in which the largest debtor and third-largest economy cannot access markets and the EU (and the financial system) collapses.”
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Furore over Herman Cain sex claims becomes first dirty tricks battleground of 2012 US elections
High-profile US lawyers have come out fighting as the controversy over the sexual harassment claims against Republican contender Herman Cain has become the first dirty tricks battleground of 2012 US elections
By Philip Sherwell in Ypsilanti, Michigan
8:01PM GMT 12 Nov 2011
She is a celebrity lawyer who has represented numerous women in headline-making claims against the likes of OJ Simpson, Dodi Fayed, Arnold Schwarzenegger and Tiger Woods.
He is a combative defamation attorney described as “the pit bull chained to a stake guarding your house” who has worked on some of America’s most high-profile cases.
And in ever-litigious America, Gloria Allred and Lin Wood have now emerged as key players in the battle over the growing array of sexual harassment accusations swirling around Herman Cain, a surprise frontrunner in the Republican presidential stakes.
At stake is the candidacy of the former fast food tycoon and political outsider who has defied the political pundits with his campaign to become the first black Republican nominee for the White House.
It is the latest in a long line of sex scandals that have unfolded during presidential campaigns since Bill Clinton overcame his “bimbo eruption” to win office in 1992. And amid a poisonous storm of claims and counter-claims, the lawyers are now involved and allegations of dirty tricks are flying.
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The Kenneth Star Republican witch hunt against Bill Clinton’s private life is going to deservedly bite the RNC in the back of the neck.
Herman Cain accusers and Anita Hill: how do they compare?
Twenty years ago, it was Anita Hill’s word against Supreme Court nominee Clarence Thomas. With Herman Cain, several women have charged him with sexual harassment, and public attitudes have changed.
By Brad Knickerbocker, Staff writer / November 12, 2011
Herman Cain’s problems with alleged sexual harassment against women recall the episode 20 years ago when Anita Hill accused Clarence Thomas, nominated to the United States Supreme Court, of the same offense. Ms. Hill was a young lawyer who had worked for Mr. Thomas at the Equal Employment Opportunity Commission.
Mr. Cain’s defenders (and the candidate himself) have raised the comparison with the phrase “high-tech lynching,” the same thing Mr. Thomas accused his critics of during his Senate confirmation hearings. And the other day at a campaign stop in Kalamazoo, Mich., Cain joked with a supporter that perhaps Ms. Hill would endorse him – something he later felt compelled to say was “in no way intended to be an insult.”
A day earlier, Cain had to apologize for referring to former House Speaker Rep. Nancy Pelosi as “Princess Nancy,” a phrase many took to be borderline sexism.
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