The Housing Bubble

The next financial crisis will be hellish, and it’s on its way

By Addison Wiggin
Forbes – Wed, Nov 16, 2011

“There is definitely going to be another financial crisis around the corner,” says hedge fund legend Mark Mobius, “because we haven’t solved any of the things that caused the previous crisis.”

We’re raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. We raised it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.

Speaking in Tokyo, he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world’s major banks are tangled up.

Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius’ guess of 10 times the world’s annual GDP. “Are the derivatives regulated?” asks Mobius. “No. Are you still getting growth in derivatives? Yes.”

In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.

What could it be? We’ll offer up a good guess, one the market is discounting.

And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here’s another factor behind our heightened state of alert.

“Through quantitative easing efforts alone,” says Euro Pacific Capital’s Michael Pento, “Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS).”

Think about that for a moment. The Fed’s entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.

“As the size of the Fed’s balance sheet ballooned,” continues Mr. Pento, “the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.

“Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out.”

Mr. Pento’s and Mr. Mobius’ views line up with our own, which we laid out during interviews on our trip to China this month.

http://news.yahoo.com/next-financial-crisis-hellish-way-204303737.html - 255k -

Scalpel.
Here you are Doctor.
Fix-a-flat.
I need some suction here.
Alright let`s close this up, Crazy Glue.

‘Doctor’ accused of injecting cement into woman’s buttocks

By JULIE K. BROWN
Miami Herald

Posted: 10:36 p.m. Friday, Nov. 18, 2011

This was no ordinary flat repair.

Oneal Ron Morris took a look and went to work.

Not on a tire. But on the backside of a Miami Gardens woman who was seeking the derriere of her dreams.

Instead, she got a tush full of toxins.

Morris, a self-proclaimed doctor, injected a concoction of “fix-a-flat’’ — cement, mineral oil and Super Glue — into the woman’s buttocks, police said.

The materials eventually spread through her body and nearly killed her.

The woman, whose name is not being released because of medical privacy laws, went to three different hospitals before doctors finally figured out the cause of the mystery ailment that caused pneumonia-like symptoms and left large, infected welts on her backside.

On Friday, Miami Gardens police finally caught up with the elusive “doctor,’’ a transgender woman whose own butt is the size of a truck tire. Investigators suspect she is part of an underground network of scam artists who have been offering “pumping parties” and home buttocks augmentations across South Florida for years.

http://www.palmbeachpost.com/news/doctor-accused-of-injecting-cement-into-womans-buttocks-1980015.html -

Banks closed in Iowa, La; 90 failures in 2011

The Associated Press
Posted: 8:03 p.m. Friday, Nov. 18, 2011

WASHINGTON — Regulators on Friday closed small banks in Iowa and Louisiana, lifting to 90 the number of bank failures in the U.S. this year.

The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 149 banks.
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The next financial crisis will be hellish, and it’s on its way

By Addison Wiggin
Forbes – Wed, Nov 16, 2011

“Through quantitative easing efforts alone,” says Euro Pacific Capital’s Michael Pento, “Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS).”

Think about that for a moment. The Fed’s entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.

First Criminal Charges Filed in Association with Robo-Signing Scheme
Posted in Financial News , Foreclosure , Mortgage Rates
November 18, 2011

Nevada’s Attorney General announced on Thursday that two people have been indicted for allegedly being involved in a “massive” robo-signing mortgage scheme. A spokeswoman for Attorney General Catherine Masto said she believed the indictments will represent the first criminal charges filed in association with robo-signing, an illegal act of falsifying foreclosure documents.
…

Warnings of impending foreclosures on Md. homes spike in Nov.
Robo-signing slowdowns could be at an end, officials say
November 17, 2011|By Jamie Smith Hopkins, The Baltimore Sun

Mortgage servicers have started the countdown to foreclosure on more than 18,000 Maryland homes so far this month, a big uptick that is worrying state officials and could signal an end to about a year of delays related to robo-signing.

The increase is in the number of notices sent to borrowers saying that their servicers intend to file a foreclosure case against them — a warning that must come at least 45 days ahead of any action. Fewer than 11,000 notices were filed in all of November 2010, according to state records. The figure for the first half of this month is already 70 percent larger.

“That doesn’t mean all will result in foreclosure, but that’s clearly an alarming number,” said Anne Balcer Norton, the state’s deputy commissioner of financial regulation.
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Fewer mortgages going bad but foreclosures expected to increase
The Mortgage Bankers Assn. says it could take three or four years to return to a normal pattern of delinquencies and foreclosures.
By E. Scott Reckard, Los Angeles Times
November 18, 2011

Fewer home loans are in trouble these days, but despite some improvements, the nation is not even halfway through cleaning up the foreclosure mess, industry experts said.

It could take three or four years to return to a typical pattern of delinquencies and foreclosures, the Mortgage Bankers Assn. said in releasing its quarterly delinquency report Thursday.

An economist for the trade group declined to estimate how many households had lost their homes since the mortgage meltdown four years ago, or how many more foreclosures were to come.

But the Center for Responsible Lending, a nonpartisan advocacy group that accurately predicted a foreclosure tidal wave in 2006, issued its own assessment Thursday: 2.7 million American households had lost their homes as of February, with an even greater number to come.

The advocacy group, which analyzed 27 million home loans made from 2004 through 2008, estimated that an additional 3.6 million mortgages were in foreclosure or likely to fail.

“That means the nation is not yet midway through a foreclosure crisis that mires the economy,” the Durham, N.C., group said in releasing its study.

The mortgage industry stopped funding high-interest subprime mortgages and other risky loans in 2007, when the meltdown made it impossible to sell them. But the backlog of soured mortgages from that era was enormous and has been compounded by lingering unemployment of about 9% nationally and about 12% in California.

Things are slowly improving, said Mike Fratantoni, the mortgage bankers’ economist. The number of borrowers who had missed at least one payment but were not yet in foreclosure dropped below 8% for the first time since the fourth quarter of 2008. Just a year ago, it was 9.13%.

The percentage of home loans mired in the foreclosure process was up slightly from a year earlier at 4.43%, compared with the 1% that once had been considered normal, Fratantoni said.

The backlog remains high in part because lenders eased up on foreclosures for much of 2011 after revelations that they had mishandled legal paperwork and procedures when repossessing homes in the past.
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The race for the exits from European sovereign debt is clearly underway now.

Europe Fears a Credit Squeeze as Investors Sell Bond Holdings
Chris Ratcliffe/Bloomberg News
A pedestrian passed a BNP Paribas bank in Paris.
By NELSON D. SCHWARTZ and ERIC DASH
Published: November 18, 2011

Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral.

Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations.

If this trend continues, it risks creating a vicious cycle of rising borrowing costs, deeper spending cuts and slowing growth, which is hard to get out of, especially as some European banks are having trouble meeting their financing needs.

“It’s a pretty terrible spiral,” said Peter R. Fisher, vice chairman of the asset manager BlackRock and a former senior Treasury official in the Clinton administration.

The pullback — which is increasing almost daily — is driven by worries that some European countries may not be able to fully repay their bond borrowings, which in turn would damage banks that own large amounts of those bonds. It also increases the already rising pressure on the European Central Bank to take more aggressive action.

On Friday, the bank’s new president, Mario Draghi, put the onus on European leaders to deploy the long-awaited euro zone bailout fund to resolve the crisis, implicitly rejecting calls for the European Central Bank to step up and become the region’s “lender of last resort.”

The flight from European sovereign debt and banks has spanned the globe. European institutions like the Royal Bank of Scotland and pension funds in the Netherlands have been heavy sellers in recent days. And earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.

At the same time, American institutions are pulling back on loans to even the sturdiest banks in Europe. When a $300 million certificate of deposit held by Vanguard’s $114 billion Prime Money Market Fund from Rabobank in the Netherlands came due on Nov. 9, Vanguard decided to let the loan expire and move the money out of Europe. Rabobank enjoys a AAA-credit rating and is considered one of the strongest banks in the world.

“There’s a real sensitivity to being in Europe,” said David Glocke, head of money market funds at Vanguard. “When the noise gets loud it’s better to watch from the sidelines rather than stay in the game. Even highly rated banks, such as Rabobank, I’m letting mature.”

The latest evidence that governments, too, are facing a buyers’ strike came Thursday, when a disappointing response to Spain’s latest 10-year bond offering allowed rates to climb to nearly 7 percent, a new record. A French bond auction also received a lukewarm response.

Traders said that fewer international buyers were stepping up at the auctions. The European Central Bank cannot buy directly from governments but is purchasing euro zone debt in the open market. Bond rates settled somewhat Friday, with Italian yields hovering at 6.6 percent and Spanish rates around 6.3 percent; each had been below 5 percent earlier this year.

For Spain, the recent rise in rates means having to spend an extra 1.8 billion euros ($2.4 billion) annually to borrow, rapidly narrowing the options of European leaders. For Italy, every 1 percent rise in rates translates to about 6 billion euros (about $8 billion) in extra costs annually, according to Barclays Capital.

If officials simply cut spending to pay the added interest costs, they face further economic contraction at home. If they ignore the bond market, however, they could find themselves unable to borrow and pay their bills.

Either situation risks choking off growth in Europe and threatens the stability of the Continent’s banks, which would further undermine demand and business confidence in the United States and around the world.

Experts say the cycle of anxiety, forced selling and surging borrowing costs is reminiscent of the months before the collapse of Lehman Brothers in 2008, when worries about subprime mortgages in the United States metastasized into a global market crisis.
…

European Stocks Drop for Second Week in Three as Crisis Spreads
November 19, 2011, 3:31 AM EST
By Peter Levring

Nov. 19 (Bloomberg) — European stocks declined for the second week in three as sovereign borrowing costs surged to record levels in the euro area and policy makers disagreed over their response to the spreading debt crisis.

Cable & Wireless Worldwide Plc sank 35 percent after suspending future dividends. Dexia SA and KBC Groep NV, Belgium’s biggest lenders, slumped more than 20 percent. PSA Peugeot Citroen and Renault SA paced losses on a gauge of the region’s automakers. Voestalpine AG fell the most in more than three months after cutting its earnings outlook.

The benchmark Stoxx Europe 600 Index dropped 3.7 percent this week to 232.17, its lowest close in six weeks, as Italian, Spanish and French bond yields soared, renewing concern that contagion from the debt crisis is infecting more euro members. The European Central Bank was said to have bought government bonds throughout the week offering bouts of respite to equities.

“If rates stay where they are now it’ll trigger a recession in Italy and Spain,” said Morten Kongshaug, chief equity strategist at Danske bank A/S in Copenhagen. More bond- buying would be needed for stocks to stop reacting to every surge in bond yields, he said.

ECB bond purchases failed to stem the spread of the crisis as yields in Italy, the euro-area’s third largest economy, increased for the sixth consecutive week and the extra yield investors demand to hold French, Spanish or Belgian debt instead of benchmark German bunds jumped to the highest since the euro was created.
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Imagine the consternation if Ben Bernanke were suddenly installed as unelected U.S. president. I, for one, would prefer any present U.S. presidential hopeful to a technocratic central banker at the helm of government. Keep the man behind the curtain where he belongs, please.

New spectre of technocracy is haunting Europe

by: Brendan O’Neill
From: The Australian
November 19, 2011 12:00AM

IMAGINE how much international hand-wringing there would be if, say, Nigeria and South Africa decided to club together and put extraordinary pressure on Swaziland to get rid of its elected leaders and replace them with unelected suits.

There would be uproar. Western politicians would hold press conferences to denounce these coup-like antics on the Dark Continent. The UN would have an emergency session.

Yet when the same thing happens in Europe, when powerful West European nations use extreme financial pressure to force a change of government in less powerful European nations, no one seems to mind.

During the past week, something extraordinary has taken place in Europe: two elected governments have been swept aside, largely on the say-so of Germany and France, and replaced by gaggles of unelected experts.

First in Greece, then in Italy, democratic governments have found themselves being finger-wagged out of office by bigwigs based in Brussels, who have decided it would be better, in this era of economic crisis, if technocrats rather than democrats were running these fragile nations.

And there has been very little gnashing of teeth over this behaviour. No emergency UN session. No threat of sanctions against Paris, Berlin or Brussels. It seems that if you are white and you wear a nice suit, and you’re a member of the European cultural elite’s most beloved club, the EU, you can get away with as much tyrannical behaviour as you like.

A new spectre is haunting Europe: the spectre of technocracy. Finally completely exasperated with democracy, the EU elite is doing away with it in favour of sending cliques of experts to govern European nations.
…

China Home Price Drop Has Analysts Betting on Policy Change
By Bloomberg News - Nov 17, 2011 2:35 AM PT

High rise residential and commercial buildings stand in Beijing, China. Residential property accounted for 6.1 percent of the country’s gross domestic product last year, according to Citigroup Inc. Photographer: Nelson Ching/Bloomberg

Traffic passes in front of a housing complex in Shanghai, China. The government’s October home prices data for 70 Chinese cities is due tomorrow. Photographer: Kevin Lee/Bloomberg

Chinese housing data may show prices in the nation’s four biggest cities are falling as Premier Wen Jiabao pledges to maintain a one-and-a-half year battle to lower prices to a “reasonable” level.

Housing prices in Beijing, Shanghai, Guangzhou and Shenzhen — home to 66 million people — dropped from a month earlier by as much as 0.3 percent in October, a government report will show tomorrow, according to five analysts surveyed by Bloomberg News. Prices in the cities have stalled since July, data has showed.

Analysts at firms including Barclays Capital Research and asset managers such as CBRE Global Investors are betting price declines will force a policy reversal as the tightening weighs on economic growth. A rout in prices and drop in new developments would be felt from Australia and Latin America, where raw materials exports are fueling growth, to Europe and Japan, where machinery makers rely on Chinese sales.

“If the property sector slumps and ends with a hard landing, it will lead to a hard landing for the Chinese economy,” said Liu Li-gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. “There’s no other industries in China that can replace real estate in the short- term as a new economic growth engine.”

Residential property accounted for 6.1 percent of the country’s gross domestic product last year, according to Citigroup Inc. China’s real estate investment rose 31.1 percent in the first 10 months, compared with 36.5 percent in the same time last year, while industrial output in October grew at the slowest pace in a year, according to the statistics bureau.
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Does anyone besides me recall how the Soviet Union effectively bankrupted itself with a war of attrition in Afghanistan?

With Defense Budget Cuts Come Challenging Costs
by Rachel Martin

Audio for this story from Weekend Edition Saturday will be available at approx. 12:00 p.m. ET

Defense Secretary Leon Panetta testifies on Capitol Hill on Nov. 15. Debate over Pentagon spending cuts is heating up as a bipartisan congressional panel tries to come up with a plan to cut the federal deficit.

November 19, 2011

The congressional supercommittee has only a few days left to come up with a plan to cut $1.2 trillion from the federal deficit. One of the areas on the chopping block is the nation’s defense budget, and Pentagon officials are pushing back against any cuts beyond the $450 billion they’ve already been asked to make.

The defense budget is an easy target when it comes to cutting the deficit, because it makes up half of the federal government’s entire discretionary budget, says Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments.

For this reason, he says, it’s always a target. The second reason is that the budget is not just big, it’s growing.

When including war funding, the Department of Defense grew by more than 70 percent over the past decade, says Harrison, an expert on the U.S. defense budget. And even excluding war funding, the budget still grew by nearly 40 percent.

The main reason for the increase isn’t the number of active duty officers — which remained about the same over the past decade — but skyrocketing personnel costs, mainly incentives to keep service members from quitting during wartime. Congress added pay raises for troops every year and the Pentagon keeps paying more for health care and pensions.

“So as a result, the cost per person in the military increased by 46 percent in real terms over the past decade,” Harrison says.

The Pentagon has already been asked to cut more than $450 billion from its budget, but if the supercommittee fails to make a deal, then automatic defense cuts kick in — up to an additional $600 billion. Even if there is a deal, the Pentagon could face a couple of hundred billion more in cuts.
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Southern California Home Prices Fall 4.8%
By Dan Levy - Nov 15, 2011 2:59 PM PT

Sales of high-end properties in Southern California dropped last month to the lowest level in more than two years after the size of mortgages backed by the government was reduced, according to DataQuick.

Coastal markets with the priciest real estate had a “sharp drop” in purchases as so-called conforming loan limits were cut to $625,500 from $729,750 in Los Angeles and Orange counties on Oct. 1, DataQuick President John Walsh said in a statement today. Home sales of $500,000 or more accounted for 17 percent of all transactions, the lowest portion since May 2009.

“The market continues to struggle with a difficult lending environment, uncertainty among potential buyers, underwater homeowners who can’t move up and a weak job market,” Walsh said. It will be up to private lenders to “fill the void” left by government finance agencies, he said.

The median paid for houses and condominiums was $270,000 in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, down 4.6 percent from $283,000 in October 2010 and the eighth straight decline on a year-over-year basis, DataQuick said today in a report. Prices fell 3.6 percent from $280,000 in September.

Sales in the region rose 0.5 percent from October 2010. Foreclosures and short sales, where the price paid is less than the amount owed, accounted for almost 53 percent of the total.
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Higher FHA loan limits reinstated for high-cost housing markets
November 18, 2011 | 3:10 pm

Uncle Sam has thrown California and other high-priced housing markets a lifeline.

President Obama on Friday signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Los Angeles and Orange counties, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change became effective Friday.

Similar ceilings applying to loans that can be backed by Fannie Mae and Freddie Mac will not increase. The California Assn. of Realtors and its larger national partner association had lobbied for all of the loan limits to be reinstated.

The group is “pleased the Senate and House were able to come to a reasonable compromise,” LeFrancis Arnold, president of the group, said in a statement Friday. “However, we are disappointed that the Senate and House could not agree on increasing the loan limits for Fannie Mae- and Freddie Mac-insured loans.”

A bipartisan group of California lawmakers had sought the increase of all of the old limits, but the House Appropriations Committee had raised concern that Fannie and Freddie, which have received more than $150 billion in financial rescue money from taxpayers, have received public scrutiny for “questionable business practices,” The Times previously reported.

The FHA has also come under increased scrutiny as that agency said in a report to Congress this week that it could be headed for its own taxpayer bailout.
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F.H.A. Audit Sees Possible Bailout Need
By ANNIE LOWREY
Published: November 15, 2011

WASHINGTON — Chances are nearly 50 percent that the Federal Housing Administration will need a bailout next year if the housing market deteriorates further, the agency’s independent auditor said in a report released Tuesday.

The F.H.A., which offers private lenders guarantees against homeowner default, has just $2.6 billion in cash reserves, the report found, down from $4.7 billion last year.

The agency’s woes stem from the national foreclosure crisis. In the last three years, the F.H.A. has paid $37 billion in insurance claims against defaulting homeowners, shrinking its cash cushion.

The auditors determined the agency’s level of supplemental cash reserves by projecting losses on its mortgage portfolio and counting them against expected premium revenue. This year, the audit found that the F.H.A. supplemental reserve was less than one-quarter of a percentage point of its current portfolio: $2.6 billion against a $1.1 trillion mortgage portfolio, as of Sept. 30. Legally, the housing agency is required to keep a 2 percent cash buffer, a target it has not met since 2008.

F.H.A. officials argue that the likelihood the 77-year-old agency will need its first taxpayer bailout is slim. “It would take very significant home price declines to create a situation in which the portfolio would require any additional support,” said Carol Galante, acting commissioner. “There is no evidence or widespread prediction that home prices are going to decline to the kind of levels” requiring a bailout, she said.
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FHA might need taxpayer bailout next year
By Jim Puzzanghera
Los Angeles Times

WASHINGTON — There might yet be another casualty in the real-estate market: the Federal Housing Administration.

With home prices still seeking their bottom, the federal agency that insures more than $1 trillion in mortgages faces a nearly 50 percent chance that it could need a taxpayer bailout next year, according to a government report released this past week.

If the housing market fails to rebound next year, the FHA would need as much as $43 billion from the U.S. Treasury to stay afloat, the report said.

That would add to the combined $150 billion already spent to rescue seized housing finance giants Fannie Mae and Freddie Mac.

The FHA’s projected losses on loans made mostly before 2009 continue to increase, eating away its cash reserves.

The agency is dangerously close to being in the same dire position as many homeowners — upside down on its housing finances.

“They have no margin for error right now,” said Richard Green, director of the University of Southern California Lusk Center for Real Estate.
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November 17, 2011, 5:27 PM ET

Prime-Mortgage Standards Tighter Than Pre-Boom Levels
By David Wessel

Lending standards for prime mortgages are tighter now than they were even prior to the housing boom.

A chart accompanying the Capital column on mortgages this week showed graphically how lenders raised the bar on making loans after the housing bust — and still haven’t returned it to anything resembling what once was normal.

Five years ago, in September 2006, hardly anyone with a credit score below 637 got a prime mortgages — that is high-quality, conventional mortgages, often guaranteed by Fannie Mae and Freddie Mac, as opposed to subprime mortgages made to riskier borrowers. The median credit score was 729.
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REVIEW & OUTLOOK
NOVEMBER 17, 2011

The Housing Lobby Strikes Again
Republicans try to slip a boost for the FHA past the tea party.

It took a $142 billion taxpayer bailout to convince the Obama Administration to pledge in February to wind down Fannie Mae and Freddie Mac, rein in the Federal Housing Administration and encourage the revival of a private mortgage market. So it’s distressing to see Congress move in exactly the opposite direction less than a year later, with the quiet approval of the White House.

Mary Kissel on Fannie Mae and Freddie Mac executives’ bonuses and why Republicans want to expand the FHA.

While cable TV is chasing the trivia of Fannie and Freddie bonuses, the real news is that late Monday a bipartisan Congressional committee announced an agreement to increase FHA’s maximum mortgage limits to $729,750 from $625,500 through Dec. 31, 2013. The bill is linked to a continuing resolution to fund Congress past Saturday, increasing the likelihood that this backroom deal will become law. The House is scheduled to vote on the bill today without debating these changes, in what ought to be an embarrassment to Speaker John Boehner and Majority Leader Eric Cantor.

The National Association of Realtors is lauding this idea as great for housing “stability,” by which it means that the taxpayer subsidies for its industry will keep coming, even for fancy homes. The median sales price of existing single-family homes nationwide in the third quarter was $169,500, according to the Realtors’s own data. Politicians from higher-cost regions argue that higher loan limits are needed, but even Los Angeles has seen median prices fall to $324,800 from $402,100 in 2008—well below $729,750.

This FHA payoff to the housing lobby comes as the agency has had to publicly reveal the extent of its financial travails. In its annual report to Congress Tuesday, the Department of Housing and Urban Development and an independent auditor reported the FHA has a 0.24% capital reserve, well below its statutory 2% minimum for the third year running. Take $1.1 trillion of outstanding loan guarantees divided by $2.6 billion in capital reserves and you get a 422-to-1 leverage ratio, up from 33-to-1 in 2009. By this standard, Lehman Brothers was risk-averse.

So how much would a bailout cost, even before the proposed loan-limit increase? University of Pennsylvania real-estate finance professor Joseph Gyourko noted in a paper last week that FHA “systematically” underestimates future default risk, not least because it lends to borrowers with very little equity in their homes and uses rosy economic assumptions. Mr. Gyourko estimates that FHA is “materially underreserved by at least $50 billion, with the true figure likely higher.”

These numbers are no surprise, given FHA’s inherently risky business model. It provides 100%, explicitly taxpayer-backed mortgage loans to first-time, moderate- to low-income borrowers. Down payments can be as low as 3.5%, at a time when most private lenders are prudently insisting on 20% after the housing bust. In fiscal 2011, 85% of FHA loans had a down payment of less than 5%.
…

U.S. Congress Votes to Raise FHA Mortgage Limits to $729,750
November 18, 2011, 4:28 PM EST
By Phil Mattingly

Nov. 17 (Bloomberg) — The U.S. Congress approved higher limits for mortgages backed by the Federal Housing Administration, bypassing the objections of Republicans who said the increase could threaten the agency’s stability.

Lawmakers voted today to increase the limit to $729,750 as part of a $182 billion spending bill that included funding for the government through Dec. 16. The legislation was passed by both chambers, with the House approving the measure 298-121 and the Senate clearing it for President Barack Obama’s signature 70-30. The measure was opposed by 101 members of the House’s Republican majority, some of whom said they opposed the measure primarily because of the loan-limit increase.

“This is an irresponsible action by the folks that should be the fiduciary for the American taxpayer,” Representative Patrick McHenry, a North Carolina Republican, said in an interview. “We need to be reining in our government housing finance programs so the private sector can step in.”
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From the Albany Times Union this morning. “A Waterford attorney convicted in a large-scale mortgage fraud case was officially disbarred for the second time Thursday.

Kevin P. Wheatley, 38, formerly of the now-defunct Rivertown Investments on Central Avenue, pleaded guilty to grand larceny and scheming to defraud, both felonies, in June.

He admitted stealing $428,000 in mortgage proceeds in a “systematic ongoing course of conduct with intent to defraud” property owners, banks, mortgage lenders and title insurers between May 2005 and March 2008. He faces 3 1/2 to 10 1/2 years in state prison when sentenced Nov. 22 by Judge Stephen Herrick in Albany County Court.”

Newly approved Miami condo tower ($560,000,000) lets you ride the elevator in your car to park in front of your apartment, assisted by robotic arm, allowing great view of ocean as you ride up still in your car.

http://www.miamiherald.com/2011/11/17/2507333/at-planned-miami-beach-condo-cars.html

This should end well.

One of the constant criticisms the 1% like to taunt the Occupy Wall St. movement with is they don’t have a political voice like the Tea Party has with Dick Armey’s Freedom Works or the Koch Brothers.
Well it turns out OWS does have a political candidate, It’s Buddy Roemer.
Check out this guy. Quote “Roemer has adopted the slogan ‘Free to Lead’. He rails against corruption, special interests, and money in politics, and has expressed support for the Occupy Wall Street protests.”

Wikinews interviews Buddy Roemer, U.S. Republican Party presidential candidate:
http://en.wikinews.org/wiki/Wikinews_interviews_Buddy_Roemer,_U.S._Republican_Party_presidential_candidate

http://www.thechinamoneyreport.com/2011/11/10/chinese-fund-managers-sentenced-to-death-after-cheating-investors-out-of-1-billion-usd/

Chinese Fund Managers Sentenced to Death after Cheating Investors out of 1 Billion USD

HANGZHOU – Two brothers and their father were sentenced to death on Monday for cheating 15,000 investors out of over $1.1 billion in east China’s Zhejiang province.

Ji Wenhua, president of the Yintai Real Estate and Investment Group, was sentenced to death for the crime of fund-raising fraud, said the Intermediate People’s Court in the city of Lishui, where the company was based.

However, his brother, Ji Shengjun, and father, Ji Linqing, could be spared execution as their death penalties have a two-year reprieve.

The family, along with others, had illegally raised over 7.04 billion yuan ($1.12 billion) between 2003 and 2008 before they were taken into police custody in 2008, holding the truth from investors that their company had been losing money for years, according to the court.

A third brother, Ji Yongjun, was sentenced to life imprisonment.

The four men also had their political rights deprived for life and personal property confiscated.

The court also sentenced two other people involved in the case to three years in prison each.

Realtors Are Liars®

Interesting story about Washington lobbying firm proposing methods to discredit OWS:

“CLGC’s memo proposes that the American Bankers Assoc. pay CLGC $850,000 to conduct “opposition research” on Occupy Wall Street in order to construct “negative narratives”.

http://openchannel.msnbc.msn.com/_news/2011/11/19/8884405-lobbying-firms-memo-spells-out-plan-to-undermine-occupy-wall-street

Low-risk detainees avoid deportations

By John Lantigua Palm Beach Post Staff Writer
Posted: 11:59 p.m. Friday, Nov. 18, 2011

The implementation of a new national policy on deportations of illegal immigrants didn’t come a day too soon for Anibal Mazariegos of Indiantown.

His attorney, Daniel Yibirin of Boynton Beach, received an emailed letter early Thursday from Immigration and Customs Enforcement officials announcing they had canceled his client’s scheduled removal from the United States.

Mazariegos, 37, who works as a landscaper, was released later in the day from Broward Transitional Center in Pompano Beach, where he had been held for three weeks. Guards at the detention center had told him to pack his bag, because he was being shipped back to his native Guatemala after living for 20 years in the U.S. and raising a family in South Florida.

“He was very, very close to being deported,” Yibirin said. “Basically, he would have been on a plane next Wednesday.”

The Department of Homeland Security, which oversees ICE, announced Thursday that ICE was immediately beginning to train its immigration prosecutors to exercise “prosecutorial discretion” in dealing with the country’s 300,000 pending deportation cases. That policy is designed to suspend the deportations of thousands of undocumented people with no serious criminal records - many in South Florida - to diminish the onerous caseload on immigration courts and to allow immigration authorities to more quickly process the cases and removals of undocumented immigrants who are considered threats.

“Beginning immediately, ICE attorneys nationwide will review all incoming cases in immigration court,” the Department of Homeland Security said. “This review will help reduce inefficiencies that delay the removal of criminal aliens and other priority cases by preventing new low-priority cases from clogging the immigration court dockets.”

“Any American concerned about immigration needs to brace themselves for what’s coming,” Crane said when the policy changes were first floated. “This is just one of many new ICE policies aimed at stopping the enforcement of U.S. immigration laws in the United States.”

Morton and his leadership team visited cities around the U.S. over the past month, including Miami, to instruct ICE agents and immigration prosecutors on the new policy.

Beginning Dec. 4, the Homeland Security and Justice departments will launch pilot programs in the Baltimore and Denver jurisdictions, reviewing all cases pending in immigration courts. For the next six weeks, immigration judges in those two locales will concentrate on cases of people currently in detention, to clear those cases and help establish a plan for the entire country.

Hey folks. Just wanted to follow up on the comments directed towards my situation yesterday….

You can give people your skills and your time much more easily than you can ever give them money. See what you can do that emphasizes that. Networking and referring work are all good things. Help finding a cheaper place is great. Help with budgeting assumes that your friend can get over the initial embarrassment of revealing very detailed financial info.

Good advice, Polly. Thanks.

Muggy, I’m not sure why you’ve gotten such a negative impression. My friend is not a slacker/loser nor a pothead. Made bad decisions? Sure. But not the type to take advantage of someone as you seem to believe.

Neuromance - Some good questions/suggestions. I know my friend is putting a lot of effort into job hunting and interviewing (I hear about all the interviews). As everyone here knows, for lower-skilled jobs there are a ton of applicants for every posting. My friend is still being a bit picky, which is something I’m trying to help them move past. I think things are at a point where they must take a job - any job - to help them survive at this point. An “ideal” job can be a secondary goal, but survival is key now.

ahansen - I’m not sure what other information I can give, as I’m trying not to share too many personal details. My friend is looking for house-sitting and pet-sitting gigs. That’s the type of gig almost anyone can do though - it’s more about connections/trust - so it’s hard to find those kinds of jobs. That’s where I’m trying to help with my network/referrals.

As far as giving my friend a place to stay - I’m trying to keep that as a last-ditch kind of thing since my lease doesn’t allow me to keep my friend’s pets at my place(cats). I imagine I can get them to budge on that, but I don’t expect it to go too smoothly. If there weren’t animals involved I wouldn’t have any reservations about that.

Thanks for the input, guys.

http://www.guardian.co.uk/world/2011/nov/18/supercommittee-failure-credit-downgrade-warning

Our economy is in such capable hands. Thank you, Obama voters. Thank you, McCain voters.

Heinz’s bottom line has taken a hit because of higher commodity prices, prompting the company to increase prices on many of their products and to trim costs with plant closures and layoffs. Consumer data reviewed by Heinz shows that many consumers are now purchasing smaller package sizes in virtually every category of Heinz products as a result of the weak economic environment. Heinz makes its namesake ketchup, Ore-Ida frozen potatoes, and Weight Watchers Smart Ones frozen meals.

H.J. Heinz Co. Planning More Plant Closures:
Posted by Toi Williams on Nov 19th, 2011

Chief Executive William R. Johnson said, “Given the economic headwinds we’re facing and the difficulties we’re encountering in U.S. foodservice and Australia, we expect to get to our full year [earnings per share] target in a different way.” He added, “Those who are not pushing aggressively into emerging markets are going to wake up one day and find out that the world left them behind.”

[So, how might this forecast event$ in America for 2012?]

In response, the company has decided to move up the roll out of items that will appeal to those consumers, including a new, 10-ounce version of Heinz ketchup, retail sizes of mustard, Worcestershire sauce, and Heinz 57 sauce, and a new line of Heinz Home Style Beans, all sold for around $1 per unit. Mr. Johnson said “Importantly, these new products will enhance our ability to serve the rapidly growing number of U.S. households with incomes below $50,000,” a segment of society that has grown three times faster than households with incomes above that threshold.

No pillows in coach, but it’s sundae time up front

By SCOTT MAYEROWITZ The Associated Press
Posted: 10:11 a.m. Saturday, Nov. 19, 2011

NEW YORK — Flying has never been so good — for those able to splurge.

While most Thanksgiving travelers will fight for overhead bins and go hours without a snack or room to stretch their legs, life in first class is stress free. It’s always been a special place on the other side of the curtain. Now, it’s getting even cushier.

U.S. airlines, profitable again after a disastrous decade, are spending almost $2 billion to upgrade amenities for their highest-paying customers. On the most profitable international routes, high fliers are being treated with preflight champagne, flat-screen TVs and seats that turn into beds. Flight attendants greet them by name, hang up jackets and serve meals on china.

The lavish treatment is meant to keep people like Tim Carlson happy. Carlson, the chief financial officer of a semiconductor materials company, has taken 189 flights in the past two years, traveling 353,176 miles on United and its partners.

After the pilots, Carlson might just be the most important person on the plane. United will do anything to make sure another airline doesn’t steal his business. Agents call him about delays and reroute him so he doesn’t miss meetings.

“I go to the top of the list for the next flight,” Carlson says.

On a recent trip from Newark, N.J., to Brussels, he was met at the curb with a boarding pass and escorted to the front of the security line. Four minutes after being dropped off, he was past the checkpoint.

Most of the 3.4 million Americans expected to fly this holiday week won’t get anything close to that treatment. They’ve paid a little under $400 for their round-trip tickets. And it’s a cutthroat business. To save $5, passengers are likely to choose another airline.

So, it’s no surprise that the most loyal customers, and those willing to pay more for better services, are the ones airlines want to reward.

First-class and business-class passengers make up only 8 percent of international travelers but account for 27 percent of revenue, according to the International Air Transport Association. While a round-trip coach ticket between Chicago and Beijing might run $1,000, business class costs $4,000 and first class $12,000.

“There is a war going on for the profitable passenger,” says Henry H. Harteveldt, co-founder of the travel firm Atmosphere Research Group.

Funny thing there were 374 listings on Realtor.com for 33458 last night and that was down from an average of 470 a couple of months ago.

33458
309 Listings Found
Listings last updated 8 minutes ago

Location Address: 10117 OAK BARK LN

Owner Information
Name: BAY HOLDINGS INC
Mailing Address: 7815 NW 148TH ST
HIALEAH FL 33016 1554

Sales Information
Sales Date Book/Page Price Sale Type Owner
May-2009 23714/1353 $368,000 WARRANTY DEED BAY HOLDINGS INC
May-2007 21782/1230 $10 QUIT CLAIM GALEGO FRANCISCO A &
Apr-2005 18451/0726 $415,000 WARRANTY DEED FISCHER SANDRA &

MLS#: R3223346
10117 Oak Bark Lane
Orig. LP: $239,900
List Price: $ 199,900
DOM: 74
Short Sale: No

What makes sense about this? We recently sold a Homepath townhome (condo association) for $160K. Homepath required 3% down and gave the seller 3% towards closing costs which put their out-the-door investment at under $6K. Our client really wanted to by another unit that was for sale in the same development with a nicer location and nicer view for the same money but that seller, a private party, didn’t qualify for FHA financing due to the number of owners who were upside down in the development. So someone buying his unit needs 20% down plus closing costs, which would be about $38K. What do you think this does to the value of his unit and those of his neighbors?

http://www.guardian.co.uk/business/2011/nov/18/tobin-tax-city-london-john-major

Plutocrats shrieking about Tobin Tax (on financial transactions). All the more reason to implement it to rein in Wall Street-City of London rigged casino markets.

Anyone else notice that the crowd who doesn’t mind water-boarding is also the crowd that is cheering on the cops and their pepper spray at the Occupy protests?

They probably got acclimated by frying ants with a magnifying glass when they were kids.

I am thankful for Ben and this blog. Another check is in the mail, dude.

Thank you, and Happy Thanksgiving.

Gathering $trength: “Fee$ on MegaBankers “Bidne$$” transaction$”

Time to Distract the peon$:

Onward ye Militarized-Police-Toll$, attack the passive-peons!

Davis, CA:
(CBS/AP) Last Updated 2:34 p.m. ET
Video of a tense standoff between police and Occupy demonstrators at the University of California, Davis shows an officer using pepper spray on a group of protesters who appear to be sitting passively on the ground with their arms interlocked.

Several videos, which were posted on YouTube, were shot Friday as police moved in on a tent encampment on the campus.

In the video, an officer displays a bottle before spraying its contents on the seated protesters in a sweeping motion, walking back and forth.

Most of the protesters have their heads down, but at least one is hit in the face.

Some members of a crowd gathered at the scene scream and cry out, then chant, “Shame on You,” as the protesters are arrested. The officers retreat minutes later with helmets on and batons drawn.

Nashville, Tenn:

A group of Occupy Nashville protesters disrupted a discussion with former Defense Secretary Donald Rumsfeld about his memoir, “Known and Unknown,” and were ejected by security.

The group said in a press release that an anonymous donor purchased four $125-a-plate dinners that allowed protesters to enter the Thursday night event, which was sponsored by the conservative Washington think tank the Heritage Foundation at a downtown Nashville hotel. They mingled with the crowd before standing up, one by one, and accusing Rumsfeld of being a war criminal. They also suggested Rumsfeld should go outside and submit to a citizen’s arrest.

Outside the hotel where Rumsfeld was appearing, Occupy protesters noticed a van with blacked-out windows marked to appear like a van from Nashville Electric Service, but a call to NES revealed it was not one of theirs. Computers screens were visible through the front window, and what appeared to be a camera was mounted on top, but the driver had disappeared into the back, leaving the engine running.

In video posted by Occupy Nashville, protesters heckled the van’s occupant(s), and called the police. (It was parked illegally.) When police came to inquire, the van sped away.

Eugene, Ore.:

As many as 300 Occupy Eugene protesters spent an afternoon demonstrating at bank offices, and 17 were arrested. Members of the group told police in advance Thursday they were planning civil disobedience, and the police told bankers they wouldn’t move against the protesters unless people refused to move on when asked. The Eugene Register-Guard reported that arrests, mostly for trespassing, were made at two bank offices, Bank of America and Chase, but not at three others. One person was charged with resisting arrest. Most of the banks managed to carry on at least some customer business during the protest.

Philadelphia, Pa.:

Police arrested about a dozen members of the Occupy Philadelphia movement who were protesting at a bank downtown. The protesters refused to leave the Wells Fargo branch on Friday evening and were arrested peacefully. About two dozen members of Occupy Philadelphia were arrested on Thursday during a protest on the Market Street bridge.

NAR is counting on the Congre$$ional Repubican’s to extend ‘em some helpful housing$ handout$.

“But a close second to that issue, we have a whole bunch of regulatory issues and congressional action going on, and it really impacts the industry.

And those things include conversations about QRM (qualified residential mortgage), which is the 20% down desire of some members of congress; the QM (the qualified mortgage requirement that the borrower have a reasonable ability to repay the loan), which is a more complicated issue; the loan limits being reduced, and then a larger conversation about the national debt and how the mortgage interest deduction is acknowledged and treated by this government.”

Realtors think 20% down is too high:
November 19th, 2011, posted by Jeff Collins / OC Register

As 2011 president of the National Association of Realtors, Rhode Island broker Ron Phipps faced a housing market that sinking back into the morass while battling a host of reforms that sought to reduce government support of homeownership and raise loan qualification standards.
Phipps passed the gavel to his successor during NAR’s annual conference held in Anaheim last weekend. We caught up with him there and asked him to reflect on his year as president and describe the challenges ahead for his successor …

Part of our challenge in dealing with regulatory issues and legislative issues is it’s a process, and sometimes success is being able to maintain the status quo.

Us: Are you disappointed that Congress and the White House didn’t do more to help the housing market recover?

Ron: We think that history is a great teacher when you look at the fact that housing has led this country out of recovery in every single recession in the last 75 years with two exceptions, when war led us out of recession. We believe, in Bernanke’s words, that we can’t have recovery without housing, that that wisdom is finally coming to rest in the consciousness of policy makers, and we think that’s a good start.
Part of the challenge is there’s an awful lot of rhetoric, and it’s hard to separate reality from rhetoric. But for the average American family, their home is one of the best measures of their perception and their understanding of their financial wellbeing, and we think that’s relevant.

And what we’re looking for government to do is simply do no harm. And what that means is that things like the mortgage interest deduction, which was part of the tax code since 1913 needs to stay in place. It needs to include second homes.

We did see that the (Fannie Mae and Freddie Mac) loan limits were reduced as of the 30th of September. We were very pleased we were able to get 60 Senators to agree with us that the loan limits should be higher, at least temporarily until the housing market is stabilized, and we look forward to being able to prevail with the House of Representatives with that same agenda.

Part of what we’re doing now is lobbying the House of Representatives to get them to concur with the Senate to reestablish the higher loan limits until 2013. (Editor’s note: On Nov. 17, Congress reinstated higher limits for FHA loans, but kept the lower “conforming” loan limits in place for Fannie and Freddie.)

Print it, post it, do it.
http://obeygiant.com/headlines/occupy-hope

PS: Yes it’s that same guy who did the Obama poster.

Was Charles Darwin the Father of Economics as Well? - PBS News Hour:

http://www.youtube.com/watch?v=9QXXllapF24&feature=player_embedded

Kids these days I tell ya!

America [AA+] Day: # 106!

(Hey, cut with the negative wave$ Kelly, It’s gonna be a mother beautiful [AA+] bridge-to-somewhere!)

Fold-up speakers launch O.C. company:
It’s Your Business / By JAN NORMAN / THE ORANGE COUNTY REGISTER

The partners, now 28, tapped a basic need with a potentially huge market with a fun inexpensive product and jumped with extraordinary opportunities came their way. Their experience exemplifies what can be done, even in a bad economy, to build a business.

Co-founders Jason Lucash and Mike Szymczak were on the road 200 days a year for their marketing jobs at backpack maker Jansport. They liked listening to their own music while traveling. They looked at a Chinese food take-out box and figured a fold-up paper speaker could pack easily, be inexpensive and environmentally friendly.
The result was Fold ‘n’ Play, made of recycled materials, that works with any music-playing device with a headphone jack. It costs $19.95.

Then preparation met opportunity, what some say is the definition of luck. An editor at Time Magazine bought a Fold ‘n’ Play at an airport and decided to include it in the magazine’s 50 Best Inventions feature.
“He called me and at first I thought it was some friend goofing with me,” Szymczak said. But he sent samples and information and the product was featured in the spread along with NASA’s Ares rockets, tank-bred tuna, an Arkansas football coach’s “no-punt” offense and human-powered vending machines.
The day the publication hit the Internet and news stand, Lucash’s cousin called him. “Turn on the television. Your speakers are on the Today Show.” That first day the firm sold 2,000 speakers; in three days they were sold out.
The Parade magazine, inserted in hundreds of newspapers wanted to feature Fold ‘n’ Play in a pre-Christmas issue. “We took a gamble and said ‘to ship before Christmas,’ added a third production line and air freighted the order to Chicago,” Lucash said. “Time’s reach is worldwide and Parade brought more orders. This was our chance: we didn’t want to miss it.”
About 15,000 speakers sold.

Hey now, lookie here:

Lao Tzu’s “Tao Te Ching,” still proudly full of wisdom today, stands as a reminder that disruption, individualism and innovation are inherently heretical in many traditional societies — and if they occur in one area of a traditional society, a backlash typically follows in another. Gandhi’s spirit, with its vigorous opposition to consumer capitalism, is hardly extinct.
Meanwhile, America is the best at being America, because America is the closest thing to a society that unambivalently enjoys being American. The United States has cultural and demographic traits that remain unique — for better and worse.

The myth of America’s decline:
By Rob Asghar, Special to CNN, Thu November 17, 2011

Editor’s note: Rob Asghar is a Fellow at the University of Southern California’s Center on Public Diplomacy and a member of the Pacific Council on International Policy.

Los Angeles (CNN) — China is poised to become the world’s largest economy within a decade, according to some economists. Rising giant India already has a middle-class population that is larger than the entire United States population, according to others.

Such nuggets fuel an industry of prophetic warnings of decline, exemplified by the phrase “How America Fell Behind in the World It Invented” in the subtitle of Thomas Friedman and Michael Mandelbaum’s recent best-seller.
The rapid growth of China and India and other Asian tigers does not mean that the United States has “fallen behind,” however. It takes a panicked perspective to even ponder the point.

China and India have immense economies, each with state-of-the-art technological centers that put others to shame. But they are also ranked 125th and 162nd, respectively, in GDP per capita (according to the CIA’s World Factbook), lacking clean water and safe food for too many citizens.

Both face massive environmental and infrastructural challenges within the next decade. Neither country is in range of providing an American level of services to its citizenry, much less the comfortable level typical of flourishing Northern European economies.

And if we consider the deeper cultural dimensions of globalization and innovation, one could go so far as to argue that the globalization game is and will remain rigged in America’s favor, with other nations not being able or even willing to catch up.

In truth, many societies in East and South Asia are confronting ambivalence and resistance to developments that we might see as progress but that their traditionalists see as moral and social decline.
Iran and Pakistan are just two examples of nations whose rapid modernization was undercut by underlying reactionary cultural forces. For related reasons, the various proud Asian tigers are not on an unbendable trajectory.

http://www.telegraph.co.uk/news/uknews/prince-philip/8901985/Wind-farms-are-useless-says-Duke.html

The Duke of Edinburgh calls wind farms “absolutely useless.” True, but taxpayer-subsidized “renewable energy” scams offer the perfect vehicle for well-connected Obama and DNC cronies to kick back some of their involuntary taxpayer donations to keep the fraud going.

p-fraud-wall-street-fraudsters-get-bailouts-20111117

Taibbi’s latest: Woman gets jail for lying on food-stamp application, while banksters who cost the government trillions enjoy complete impunity.

From the Denver Post article on today’s Occupy Denver march, an enlightened reader comment by “John Galt”:

Occupiers = LOSERS !!

These creeps are the pond scum of our society. Their motto is “Gimme, gimme, gimme !”

I just got back from a wonderful day of golf that I deserve because (1) I studied hard and got an education in business and science, (2) I got a job and worked hard for my money, (3) I paid off my school loans, (4) I didn’t do drugs or get drunk, (5) I saved money and made wise investments, (6) I voted for politicians that promote personal responsibility and low government growth.

These creeps don’t deserve more than what the Constitution says - the right to life, liberty and the “pursuit” of happiness. It does not say that they are guaranteed happiness or the right to the property of others.

If these creeps can’t understand that, then the hell with them. I would not mind seeing the police resort to even stronger measures to get that message through their heads.

My philosophy is if they throw a brick or a stone; then the police should be allowed to shoot back. It’s only self-defense at that point.

I see the politicians squeezing the electorate from all sides, to support their big contributors.

They won’t allow foreclosures to come to market so house prices stay high. People are moving towards rentals so the rental market stays tight. This latest spike in oil prices - I call shenanigans.

Are they trying to pick the pockets of the public with extreme fury one last time before they are all flushed out? Because, while its the big contributors who give them money and gifts, it’s the public who actually has to elect them (for now anyway).

Inflation numbers as of November 16th:

http://www.bls.gov/news.release/cpi.nr0.htm

All items’ prices increased 3.5%.

All items minus food and energy increased 2%.

Food increase 4.7%

The move to reinstate the FHA conforming loan limit at $729,750, a level which could only be of use to millionaire home buyers, only makes sense when you consider how many Congress folk number among the 1%.

Congress Supports Homes for the Wealthy Over the Poor
By Daniel Indiviglio
Nov 19 2011, 10:06 AM ET 28

Somehow the government is managing to do exactly the opposite of what it should be doing: it’s subsidizing home ownership for the rich while cutting funding for affordable housing for the poor

When Congress allowed the conforming mortgage limit to decline slightly to $625,500 in October from $729,750, it was an important test. Could the private market step back in and take on this small portion of mortgage risk? The test was short-lived. This week, Congress reinstated the higher limit for loans guaranteed by the Federal Housing Authority. To make matters stranger, it simultaneously cut funding to build and renovate housing projects for the poor.

Lending Very Wealthy First-Time Homeowners a Helping Hand

Let’s start with the conforming limit news. In fact, Congress did not raise the conforming limit for loans that Fannie Mae and Freddie Mac can buy or guarantee. It only raised the limit for FHA loan guarantees. This is a very odd move.

The FHA exists to help first-time home buyers and those on the cusp of being able to afford to buy a home. It does this by allowing borrowers to make very low down payments along with the purchase of mortgage insurance. This is distinct from Fannie and Freddie, which exist more to provide market liquidity.

Think about the implications for the mortgages we’re talking about here — those between $625,500 and $729,750. What first-time home-buyer needs a low down payment for a loan that big? If the goal is to make housing more affordable, then surely a first-time buyer could just aim for a more affordable home to begin with. Even in high-cost areas, starter-homes can be found for less than $650,000 (about the maximum cost of a home with an FHA guarantee before the higher limit was reinstated).

Do borrowers who can afford to pay a mortgage in excess of $625,500 really need the government to subsidize their home ownership?

Shutting Out the Poor

The logic gets more bizarre. This same week that Congress agreed to help out Americans who don’t need it by backing giant mortgages, it cut funding for housing projects. Let’s go to Debbie Cenziper at the Washington Post for the news:

Housing advocates immediately condemned the nearly 38 percent cut to the HOME Investment Partnerships Program, which for two decades has provided grants to local governments for housing construction and renovation, home repairs and down payment assistance. Under a partial budget bill passed by the House and Senate on Thursday, the HOME program’s budget would drop to $1 billion, down from $1.6 billion last year.

“I’ve never seen anything else that steep,” said Sheila Crowley, president of the National Low Income Housing Coalition. “The impact is huge. It will have a ripple effect throughout the system.”

If the economy was flourishing and unemployment was 4%, this might not be so alarming. Sadly, that isn’t the situation we’re in. We live in a time when one-in-six Americans are underemployed. Foreclosures continue to plague the nation. This combination could lead to more Americans than ever having no choice but to turn to the government for housing assistance. Yet a housing program meant to help those who might need it most is cut by 38%.

Juxtaposing this move with increasing the FHA loan limit should appall anyone — progressive and conservative alike. If the government has any role in the housing market, then it should be to help those who need assistance the most — not the least. What is Congress thinking?

Short-sighted budget math may explain these actions. Raising the FHA limit may have no direct budgetary implications at all — even if it leads to losses one day for the FHA. Meanwhile, it slices $600 million from the budget by cutting an affordable housing program. What makes no sense to anyone who actually thinks about it continues to make perfect sense in Washington.