Bits Bucket for November 20, 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.
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Name:Ben Jones
Location:Northern Arizona, United States
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My buddy in Boston just found out that the restaurant (Other Side) that he works at will be closing because they are losing their lease to a furniture store.
Seriously? Is it 2007?
Blood pressure meds / wine / xanax / special place:
“Kathy Ehrlich-Scheffer and her husband bought a modest ranch house in San Diego in 2006, expecting to settle there for a long time. But when they grew disenchanted with the area and decided to move back to the Rochester region, they couldn’t sell their home and ultimately lost everything in the 2008 Southern California housing crisis.”
WAIT FOR IT…
“A personal trainer since 2005 and an indoor cycling enthusiast since 1998, Ehrlich-Scheffer initially landed a teaching job at a small gym in Hilton and soon realized that with her high-level certifications and contacts in the industry, she could open her own cycling studio.
The bank gave her good news, declaring that the lessons she’d learned from her recent struggles made her a stronger loan candidate because she understood risk firsthand.“
The bank gave her good news, declaring that the lessons she’d learned from her recent struggles made her a stronger loan candidate because she understood risk firsthand.
Whiskey Tango Foxtrot.
“Whiskey Tango Foxtrot”
Maybe the bank is loaning her Bill’s savings?
Is this 2005 again? At the peak of the bubble, you could find an army of personal trainers at peak times at my local gym. The last couple of years rarely more than one or maybe two at any one time. So there’s still loan money to open up a private studio for something that’s clearly in much lower demand?
I knew a guy that charged $70 an hour. He’s doing something else now (and it pays a lot less).
“her recent struggles made her a stronger loan candidate because she understood risk firsthand.”
I bet she declared BK, and they know she can’t do it again for 6 (?) years.
Are you offened by all the housing bailouts? I am..i have to get a free turkey this year cause my wallet only has chicken feed in it.
I got a coupon for a free turkey (or ham) from my electric service provider. Over the summer they sent me a coupn for free ice cream and chocolate topping.
So I am pretty stoked about that.
jeff can you clarify your question to me from yesterday? I was out and about so I didn’t see it until later. And I’m not sure exactly what you are asking. The owners of the bonds are the owners of the bonds. I expect a lot of them to eventually find their way into the hands of hedge/private equity funds who will figure out a way to value them and buy them at a price sufficiently lower than that to make a hefty profit. I’m sure they have quite a bit already and are experimenting with how to get the most money out of them. They will need to figure out, state by state, what is the best way to get the most money out of the rights they represent.
One of the biggest issues will be how long they wait to go after the recourse loans. Another will be how they make sure they own enough of the bonds issued by a particular trust so they have enough voting power to modify the servicing agreements. Long process, but these groups are already getting into financing tort claims - getting people the money they need to bring a suit so they don’t have to accept a lowball offer by the company that hurt them - in exchange for a big chunk of the settlement. They can handle the risk.
Good morning Polly… do they need to gather 50.1% in order to change the serving agreements or do they need some kind of super majority?
And recourse loans how does the SOL play out? People who haven’t paid a mortgage in 5+ years and the banks haven’t even started foreclosure can they even be sued?
So bondholder are being financed to sue say GS instead of getting say 30% today on the hopes they can recover 60-70% 3-4-5 years down the road?
It depends on how the documents were written. They might need a majority or even a supermajority in every tranche of bonds. The drafting in this stuff is very complex. This is why it is not being resolved quickly. But resolved it will be eventually.
Statute of limitations issue are a little more complicated. This isn’t a debt that was due 4 years ago and no one has even tried to collect it. The mortgage contemplates payments for years. And then you have state real estate laws which are really very complicated. This is a state by state thing. I wouldn’t even venture a guess as to what the most common result would be, though my wild-assed guess is that it is pretty favorable to the lenders.
And the financing for tort claims that I mentioned are for personal injury and such, mostly defective product claims (lots of potential for punitive damages = $). At least, that is the article that I read. There is a limit as to how long a lawyer/law firm can keep going on a very complicated claim if they get no money unless they win. Both the injured person and their lawyers need money now so they settle before they can really figure out what the claim is worth. But if a private equity fund puts up enough money so they can get through anouther few months and a few truckloads of documents, the claim may become much, much more valuable. There could be enough more money for both the injured person and their lawyer to get a lot more money and the private equity fund to get a substantial return on its investment. It is a pretty new business model.
Thanks Polly…you make it pretty easy to follow ….
mostly defective product claims (lots of potential for punitive damages = $
Didnt realize they could sue for punitve damages for paper losses (bonds)
I’m not talking about bonds being defective products. I’m talking about actual products. Consumer goods. Stuff that people use and it kills or injures them.
“Stuff that people use and it kills or injures them”
Pretty accurate description of a Mortgage-Backed Security, Neg-AM, or NINJA loan, if you ask me.
Realtors Are Liars®
Ex,
I got busy yesterday and didn’t get a chance to respond to your post (catharsis) but it seems you and I have arrived at the same place my friend. Once you get a peek behind the curtain it hardens your heart. Not to the innocents but to the boyz.
Never forgive.
Never forget.
Yeah the corrupt boyz are behind all of it. At the same time, the delusion that one is somehow entitled to or deserves a piece of my labor floors me. Have a conversation with these SS drawing, selfish blue-haired pigs sometime. These welfare cases have the audacity to point out “those people who are on the take” yet completely forget that I’m floating their dead @sses. They have nothing but contempt for OWS yet the OWS crowd(which is us middle aged working class and younger) is supporting them. If it weren’t for the contributions of the current working people, these selfish bastards wouldn’t get a SS check every month.
I’m not laying claim on anybody elses earnings, either past, current or future. NOBODYS. As I’ve stated here before, I expect to work until I drop. Yet I’m expected to pay passage for a bunch of selfish arrogant pigs?
These people had everything handed to them. Lifetime jobs, pensions, full medical coverage, etc. They have NO clue what it’s like working in the current environment. They wouldn’t last 2 weeks if they had to do it again.
Testify, RaL! The boomers are the most feckless, self-absorbed, worthless generation in this nation’s history. If young people weren’t so lobotomized by “weapons of mass distraction” i.e. mindless texting and the pursuit of instant gratification from electronic entertainment, and so dumbed down by our “everyones’ a winner” educational system, it might dawn on them how well and truly screwed they are thank to the cumulative errors of the hellspawn of the “greatest generation.” By this time next year there may be some un-cordial exchanges around the Thanksgiving table as young people finally realize the full magnitude of the shafting grandma and grandpa boomer have given them.
Inter generational arguments are just another divide and conquer technique. I am as appalled at the above comments as I was by the cheering for the death of the uninsured patient at the Republican debates.
The “easy, high paid, benefit laden jobs for life” that these people enjoyed is exactly whats missing from the current employment scenario and a direct result of the decimation of unions, “right to work laws” and other misnomer laws that have diluted the strength of the working man. When the truckers went on strike, you didn’t shop where they delivered until the strike was settled. You didn’t cross a picket line and you surely didn’t apply for that job. If you did, you were a scab and shunned by all the people you tried to interfere with.
Buying American and buying Union goods insured the middle class would continue to thrive. One of the constant themes on this board is that trade imbalance is the root cause of our economic woes as a global economy is maybe not such a good idea. United we stand, divided we fall. Still applies..maybe more than ever.
Your indignant sputtering does nothing to change the fact that future generations have been royally screwed by the boomers and greedy AARP oldsters. Your benefits, their unpayable debts.
“Your benefits, their unpayable debts.”
Huh?
Well Edddieamond you are correct in your assessment but what direction is is going in? Do you really believe we’re going back to smokestacks, strong labor, strong manufacturing? I don’t. The trend is going in the opposite direction. The self-entitled blue hairs are still living in the 1960’s while the rest of us have operate in this new crappy economy. I’ll stand by my statement that they couldn’t function in this environment. They’d crumble. They had it all handed to them yet they seem to believe us working class shouldn’t complain and keeping paying their freight because “they’re owed SS”(I’ve heard one of the say “I deserve SS” very recently). And when I tell them SS likely won’t be there for us to the extent it was for the previous generation, there response is one of indifference. A shrug of the shoulders….. “oh well” is what they said to me. Well guess what Mr. and Mrs OldTimer? I’ve paid more into SS than you two paid COMBINED. And I’m not done yet. Yet they have the audacity to shrug there shoulders when I say it won’t be there for me?? Well #$% you too buddy. That’s not intergenerational warfare. It’s self-entitlement gone hyper.
BULLETIN to Congressmen:
Step up to your phony rhetoric you libertarians and conservatives in congress. Shut down SS. You won’t because you use it to divide. Like all your other pet “issues”, you won’t do a thing because if you did, the division would evaporate. You’re a bunch of corrupt, bribe accepting criminals that need a rope around your necks. You think it will never happen but there’s 30 years of rage hitting a wall. You got your personal military that you’re now turning against us. Go ahead. Crank it up some more. DO IT.
Lol. Two headlines from Yahoo Finance:
“Rise in economic guage suggests brighter outlook”
“Deep spending cuts pose new threats to US economy”
So, which is it?
They must be “hedging”
Whatever happens next, they can claim to have “predicted” it.
“That which is cast down must first have been risen.” Lao Tzu
The economy will continue to falter, while the Department of Truth will continue to publish encouraging statistics.
High gas prices are encouraging, because that increases household spending on all sorts of things while they do with less stuff.
Store closures are really good, because that makes same store sales look rosey.
Deficit Government spending is the absolute good, because that’s what GDP is all about.
Is war machinery deployed considered as part of the trade balance??? There is some good in there, must be.
The economy will continue to falter, while the Department of Truth will continue to publish encouraging statistics.
The chocolate ration has been increased. It’s double plus good.
Raise your glass of Victory Gin!
“Rise in economic guage [sic]
Yahoo needs to get some real editors to write their headlines, instead of letting the IT kids do it.
“Oly, how do you spell guage?” (Old Ate-Up always had trouble with that one).
Oly lives on in her grammarian yet non-pedantic ways!
Today’s Houses: Cactus wants to go Oil City edition:
This weekend, HBB poster Cactus posted some mortgage numbers for a ~$480K house, and asked a hypothetical(?) question about buying vs. renting and waiting to do Oil City plan.
House 1: Mariposa, CA
http://www.zillow.com/homedetails/5717-Mono-Ct-Mariposa-CA-95338/70398853_zpid/
1977 2/2, 1500 sq ft raised ranch on an acre. House is functional but clearly needs cosmetic work. Still has the 1970’s kitchen and bathroom. Open floor plan, as was common in the 70’s. Treed lot with a long driveway, some views of the Sierra Nevada. It’s a Fannie Mae foreclosure. But really, this looks like a nice house with some updating. $56/ sq ft.
Oct 2003: Sold $172K
Feb 2007: Zestimated $356K
May 2011: Listed $153K
Nov 2011: Listed $90K.
House 2a and 2b: Escape from CA to WA
I looked at what Bend had, but that’s full of wishing prices and save-me-from-foreclosure prices. However, just go 25 miles down Route 97 to LaPine, and it’s a different story. 25 miles is nothin’ for a serious Oil City-er, since there’s no commute.
http://www.zillow.com/homedetails/15938-Cascade-Ln-La-Pine-OR-97739/60598331_zpid/
1991 2/2 on 1.27 acres in LaPine, CA. Cutie patootie rambler on the edge of town. Bright and airy floor plan. Big detached garage. Seems a little dry to this easterner, but that’s the West.
Looking at Zestimates, the “rolling bubble” appears to have mostly passed LaPine by.
Feb 2005: Sold $108K
Jan 2008: Listed $159K
Oct 2011: Listed $94K
2b. If that not sufficiently low, try this 1974 single-wide camp on a half acre for 40K:
http://www.zillow.com/homedetails/52250-Caribou-Rd-La-Pine-OR-97739/60599019_zpid/
I’m not sure what I would do with the “miscellaneous outbuildings.”
House 3: You call this a flip?
Want hilly country and more rainfall? Escape back east. Bentonville AK (Wal-mat HQ) is priced like Bend, but I found the tiny town of Gravette 30 miles west.
http://www.zillow.com/homedetails/302-2nd-Ave-SE-Gravette-AR-72736/70675184_zpid/
1970 4/1 on a quarter acre in town. “Tons of potential” and I believe it. I don’t believe the 1970 date; the overall look and floor plan where the bath is right off the kitchen suggests a much older house. Very nice yard in a quiet town. They installed a new water heater and a new toilet (wowie), and for that they want to double the price.
Jul 2001: Sold $34K
Apr 2010: Listed $55K
Aug 2011: Sold $23K
Nov 2011: Listed $50K.
I think the place could be bought and fixed up nicely for $100K total. You could work at Dollar General or Special Edition video.
OK, sorry, House 2a and 2b are both in OREGON, not WA and not CA.
La Pine…You get what you pay for. School is in district but shorted on money but long on lice…
When we moved here(Bend) in 2000 for the first time, it was known for its meth producing labs. “A pit bull for every trailer…” Its woodsy, 1000 feet higher and out of the rain shadow, so its snowy. Lots of skinny folks with stringy hair and no teeth; gotten a bit better since the statewide control of psuedoephedrine; so the meth has been coming up the I-5 instead. Not too long ago L.A. Pine supplied lots of the PNW with meth, though. It also has water quality issues due to groundwater contamination from shallow water table or something like that. Requiring some homeowners to abandon their septic systems and pay for expensive infastructure improvements/conversion to sewer en masse, costing some owners or potential developers some fee of something like $2000 per lot (not sure about the details; its been a couple years) Its pretty ghetto….but yes, the wishing prices here are still a bear.
I would suggest Prineville, about the same distance away, but to the east. We bought a short sale there for 117k from a belly up builder in a “fancy” planned development with the last of our bubble cash 1.5 yrs ago. Have since foreclosed on wife’s property; Fannie paid her $1400 in a cash for keys deal 5 weeks after the auction(thanks!). Now in rental in Bend while we keep Prineville pad rented out to a good tenant. Its about a wash, we like Prineville just fine, in its nicer areas, for the vistas, the sunshine, and the less snow, but our kids are happy in their school. Prineville is also a hunter’s/hiker’s mecca as undeveloped woods lie 20 miles further east. Some people call it Prinetucky, but the pines of La Pine leave me a bit claustrophobic.
All of Central Oregon is a bit “methy”; less so after the Californification that occurred during the bubble, but still a factor. But I don’t know what is worse, methheads or garden variety jerks. Wait, I came from Cali, so I resemble that statement (lays on horn)
House 1: Having lived in the Mother Lode as a child, I’m liking that house. Although I would not get anything on less than 20 acres these days. The countryside is beautiful. It gets snow there sometimes, but normally is warmer in the daytime in winter than the farm region in the flatlands below because Mariposa is above the fog.
“I would not get anything on less than 20 acres these days.”
You’re a sucker for the real property assessor.
these country squire wannabes always think big, then end up in a condo in the nearest town.
Exactly.
Fools. My own father cleared land in the Sierra Nevada foothills using a tractor and chains. Legally blind! You are the city slickers.
(As kids ages 5 to 11 our job was to tell our father which end of the rattlesnakes we encountered was the head. He’d guillotine the snakes with a shovel. Typically he carried either a cane or a shovel and wore a hardhat while working the acreage.
Why do you need 20 acres, unless you have horses or want to cut your own firewood, or want to do farmer’s market scale farming? If you’re just going to live, a half-acre is plenty. Enough to grow anything you need, but if that’s too much work it’s not that much to mow.
Nope. You know nothing about the GD. My dad grew up on a farm in Ohio during the GD. He said you need five acres per person to grow food for one person. I’m thinking for four people.
“I’m thinking for four people.”
Bringing some of your strippers?
Sure thing Daniel Boone. You couldn’t fix a knotter on a baler or jerk an ounce out of a cow if I was standing there telling you how to do it.
Bill, your five acres is based on Ohio, with good soil and lots of rainfall. I doubt that number will work in Arizona or most of California. You’ll need double that in a dry area, or you can move back east.
I question that 5-acre number anyway. Barbara Kingsolver, in Animal Vegetable Miracle, tried it herself with gardening and chickens and concluded that she could feed four people on one acre. With another acre you could grow two cows. There’s a LOT of beef on one cow.
Shuck it all then and pay with cash. You know very well there are good deals on houses in Tucson (I would say Phoenix, but Tucson has much cleaner air and if you aim toward southeast of Tucson, such as Vail, you would have an average of eight to ten degrees cooler weather than in Phoenix all year.
I work with a 70-something guy who bought a huge house in the Atlanta area near the top of the bubble. He’s paying $4,000 per month PITI. I “pity” him for the PITI. But anyone over 67 should not have ever put themselves in a position to pay any mortgage after age 67.”
excellent advice I once cashed out of CA 2006 with over 200K then I went to Phoenix for awhile , keep thinking I could do it again but no its just wistful thinking. the worm has finally turned and it’s an end of an era of growth and housing inflation.
Tucson is indeed my oil city plan but the beauty is with this cash ( still have it ), I can dream about oil city anywhere.
I’m transfering this cash as fast as I can to a 401K by putting the full amount into my 401K from my paycheck and withdrawing any shortfall for day to day living expenses from my house stash cash. I fear large amounts of cash ( large for me) are easy to take for any number of reason ( judgement goes against me if somone throws themsleves in front of may car,etc) much harder if they are in a retirment account ( think OJ simpson)
So I can setup a withdrawl in oil city when the time comes, pay less taxes as well.
buying a really expensive house in Moorpark at age 51 is not in this plan as everyone has pointed out
Thanks!!
I understand. With that pile of money though you could afford an umbrella insurance policy or set up a trust or LLC (oops, HBB people hate corporations, but it’s your hide you should worry about, not the opinions of the anti-corporation crowd here).
About Vail. Some properties in that area (outside Tucson) are above 3,000 feet. So it can snow there two or three times a year. And yeah it’s cooler than Tucson’s central area.
With that pile of money though you could afford an umbrella insurance policy or set up a trust or LLC ”
Yes thats right thanks for reminding me I’m supposed to see a lawyer about this I keep putting it off
Good man!
or set up a trust or LLC (oops, HBB people hate corporations
Bill, do you really have such a problem differentiating? Do you think that’s the size of corporations that HBB “people hate.”
All three properties are isolated, IMHO. Is there a reason for that, and have you thought about transportation being a variable expense?
Our Prineville pad we could walk to supermarket(about 2/3 mile), dentist, school, hospital, etc. Honda is calling me regularly asking if I would be willing to sell one or both of my 2006 CRVs, as the lot is having trouble ATM finding inventory (some of it may be floating over slowly from Japan in the post-earthquake flotsam). Meaning the disaster has messed up the foreign production line. May be a good time to sell our used vehicles, as we purchased them for 18k or so, and they are worth 12-15k 5 years later? Japanese production will eventually recover, I assume.
Moving there and getting rid of vehicles could be very helpful for us. No gas, no insurance, no problem getting groceries/to the doctor. What’s not to like about that given our crappy incomes?Thinking about biting the bullet and having our kids do high school there, it is not so far as to make them drop their freinds from school.
rms, these are “oil city” homes: houses in podunk where you would live for cheap and either work a cheap job nearby, like walking to McD’s, or a teacher’s aide, or work from your home, or for someone retired. So there’s no long everyday commute. These houses are clearly not a good idea if you get cabin fever, or you like to go to Wal-mart every other day, or you don’t want to plan a month of food in case you’re snowed in, or you travel a lot and you want to be near an airport.
I think of most of the West as isolated. I’m an uabashed lover of the right coast.
If you are retired, proximity to a hospital is key.
The Gravette house is within two miles of Ozark community hospital. For anything more serious, Bentonville is not far away.
That’s the beaty of the east coast. There are plenty of cities to live 50 miles away from.
The first house lists an attached 2 car garage, however, looks more like a car port. Wonderring if these are typically classified as a garage out in CA.
30 Year Fixed:3.848% $352 /mo
What’s your $it-U-A-shun?
Cash. Still too early.
This weekend, HBB poster Cactus posted some mortgage numbers for a ~$480K house, and asked a hypothetical(?) question about buying vs. renting and waiting to do Oil City plan.
Oil City Plan thanks Oxide I think that early retirment out in the boonies is for people who have killer pensions and can quit work in their 50’s or 60’s.
I like the idea but have doubts it’s realistic for me. I’ll have to wait until kids are done with high school thats 7 years. then I’ll probably try and move to a lower tax state than CA and still work but not as frentic as I do now. Maybe just design PCB boards and not have to manage vendors, be a test engineer, manage assembly, and be a test technician.
I think CA is on the road to Greece and don’t especially want to pay for the early retirment of public workers when I can’t really ever retire.
really I’m a little cautious about buying now and not being able to move in 7 years and get all my money back because on a 450K house I’ll need to put down at least 20% thats 100K. It would take me 10 years of hard work to save that up again and I don’t know how many 10 years of hard work I have left?
Yes. When you suggested that, everybody chimed in and said to keep renting, even if the rent is high. Sounds like you have upcoming college costs too. Lots to think about. And no, you won’t get your money back in 7 years.
And no, you won’t get your money back in 7 years.’
I am afraid you are right
hi cactus
If you’re not going to buy a toe-tag home in our area, then don’t buy. The REO we rescinded on is down $20K from when we put an offer in.Speaking as a spouse of an EE, as you get older, even if you’re accomplished (patent- like my husband) you become a dinosaur. Think long term cactus. My husband is a decade older, and boy it’s tough out there. Don’t trap yourself. Our area will still be deflating. Just my humble opinion.
We’re cash and know we’re going to take a hit long term. We have multiple rents going and our cash flow is down. When we buy, our living expenses will be very, very low. Time for analytics, not emotions regarding buying a home.
Speaking as a spouse of an EE, as you get older, even if you’re accomplished (patent- like my husband) you become a dinosaur.”
yep
mostly has to do with your health you get expensive to insure as you get older, companies don’t like that.
Plus younger workers can work longer hours = less money per unit work
Yep, I hear you on both fronts. It’s also trying to make a decent dime with the experience you’ve aquired.
I have an obese girlfriend, whom at 57, went temp to perm. I was surprised they hired her, being as you say, a very expensive health insurance premium expense/risk.
Plus, I don’t think it’s feminine. Land whales look unkept.
http://www.nakedcapitalism.com/2011/11/mark-ames-austerity-fascism-in-greece-%E2%80%93-the-real-1-doctrine.html
Speaking of Greece, meet some of the “technocrats” installed to ensure the banksters get their money.
UT EconoMeter preview
EconoMeter panelists grade candidates
…
Norm Miller, University of San Diego
Answer: No
Michelle Bachman: F, Does not understand that the U.S. does not control world oil prices. Herman Cain: F, 9-9-9 NOT! Lives in a dream world if he thinks he can ever get 5 percent growth out of the GDP in his first year. Newt Gingrich: C- He “advised” Freddie Mac for $300,000, so he knows something about market systems. Barack Obama: C- He is learning on the job what not to do. Ron Paul: C- Less regulation, no bail outs and start digging for gold! Rick Perry: What was the question again? Mitt Romney: C- as he can actually name the GSE’s [government-sponsored enterprises, Fannie Mae and Freddie Mac].
November 19, 2011
Looking For the 1 Percent? Check on Capitol Hill
Talk about the 1 percent.
A new study shows about half the lawmakers in Congress are millionaires, and that their net worth has risen steadily since 2008 despite the financial crash.
The analysis by the Center for Responsive Politics found that 250 members of Congress have an estimated net worth of at least $1 million. Though some members of Congress have tried to cozy up to the Occupy Wall Street protests and their message of representing 99 percent of America, assets of more than $1 million would easily put those lawmakers in the top 1 percent.
…
http://thehill.com/blogs/pundits-blog/presidential-campaign/194609-newt-a-painful-lesson-in-semantics
‘When it was first revealed last week that former House Speaker Newt Gingrich was once a paid contractor for Freddie Mac, he figured he could pass the $300,000 sum off as a simple exchange of ideas. His response — so painfully Newtonian — was that he was paid as an “historian.”…But by Wednesday, when Bloomberg broke the news that the payout was actually more than $1.6 million, his description was no longer applicable. Suddenly those history lessons became “strategic advice.”
‘Yes, as a former Speaker, Newt explained, he was knowledgable about these issues and advised Freddie Mac on how to expand homeownership. In order to expand the number of people owning homes, they needed to expand the number of people “capable of owning homes,” Gingrich explained. “You don’t just give people a house, because they have no idea what they’re doing,” he added.’
‘Ka-ching!’
‘Ka-ching!’
New Twit / $ame $tory.
Can the latest “not-Romney” GOP hopeful rise above his past as a consultant for Freddie Mac? I guess time will tell. Perhaps with their ginormous bounty of “free speech” financial contributions, the RNC can hire enough propagandists to eliminate the stench?
Nov 16, 2011
Gingrich under microscope as he rises in GOP polls
By Catalina Camia, USA TODAY
Updated 3d 20h ago
Updated 4:21 p.m. ET
Newt Gingrich is getting all kinds of scrutiny now that he’s climbed to the top tier in the GOP presidential race.
Bloomberg News reports that the former House speaker was paid “between $1.6 million and $1.8 million in consulting fees” by Freddie Mac. Gingrich was asked about $300,000 from the mortgage company during the recent GOP presidential debate in Michigan.
The report comes as a new poll shows Gingrich is more electable than anyone else in the GOP field. Gingrich trails President Obama in a hypothetical matchup by two percentage points — better than Mitt Romney, who is the next closest GOP candidate, according to the McClatchy-Marist Poll.
…
You would think that these ethical issues would automatically exclude someone from being a candidate for either party.
Obviously, the people who support these guys don’t think that this stuff is a problem. And it isn’t, until a national spotlight is turned on them. This suggests to me that the leadership is as ethically challenged as the candidates.
Gingrich Campaigning as Change Agent Profited as an Insider
November 20, 2011, 6:49 PM EST
By Julie Hirschfeld Davis and Kristin Jensen
Nov. 18 (Bloomberg) — When U.S. House Republican leaders in 2003 were short of votes to pass a $395 billion Medicare prescription drug benefit, they recruited former House Speaker Newt Gingrich for help.
In a hushed room on Capitol Hill, Gingrich told his former Republican colleagues that if he could endorse the measure, they should be comfortable with it, too, said two former, senior House aides who attended the closed-door session.
Two days later, after a vote was held open for three hours as leaders corralled the final ayes, the measure passed and was eventually signed into law by President George W. Bush.
What Gingrich didn’t mention during the Republican caucus meeting was that he was also building a for-profit, health-care research company and seeking financing from drugmakers, which were investing $128.6 million in lobbying for passage of the new benefit for seniors.
His founding of the Center for Health Transformation in 2003 was a critical step in Gingrich’s formation of a set of private companies that traded on his name and made him millions. The health-care policy center collected at least $37 million, the Washington Post reported.
“It undercuts his message that he’s a ‘change agent,’” said John Pitney, a former Republican Party strategist who teaches political science at Claremont McKenna College in Claremont, California. “It’s not that he necessarily did anything unethical, but it cements his image as a Washington insider. That’s not illegal, it’s just politically very unpopular.”
…
“he’s a change agent”
$1.6 million.
“not that he necessarily did anything unethical”
We’ll have to think about that, but not for long.
“… assets of more than $1 million would easily put those lawmakers in the top 1 percent.”
One million dollars? Only one million dollars of assets makes someone a One Percenter?
Surely this cannot be correct.
According to USA Today you need 9 million to be a 1%er
http://www.usatoday.com/news/washington/story/2011-11-15/congress-wealthy-1/51216626/1
According to wikipedia, the top 1% controlled 50.3% of assets in 2004. I’m guessing that even within the 1% there is a great deal of disparity.
Wow, did you notice that 24 members of Congress are reported to have a _negative_ net worth?? That blows my mind.
Shouldn’t we be inclined to elect someone who can at least run their personal finances in the black?
Is this perhaps because they are underwater on their real estate investments?
Vicinity of $9 million is what all the reasonable news sources that I have checked are saying. $1 million doesn’t even get you close to the 1% in terms of assets. And since the 1% annual income cut off is close to $500,000, it would be pretty darned embarrassing for the bottom rungs of the 1% if their assets were only two times their income.
Not to imply that the 1% by reason of income are necessarily the same people who are 1% by reason of assets. My guess is that that they aren’t necessarily the same people, expecially at the lower end.
Let’s just talk about 1% by permanent income and call it a wash whether due to accumulated or prospective wealth.
There is no such thing as permanent income.
Barron’s Business Dictionary:
Permanent Income
A long-run measurement of average income, in which temporary fluctuations in income do not have much effect upon consumption. Many economists believe that consumers view their incomes in this way, and do not change their consumption patterns much in response to what they believe are temporary income changes.
So you want to talk about the 1% based on the income they think they have, not the income they actually have?
No, thank you.
Where the heck did Darrell Issa get half a billion dollars? When someone says billionaire, I think Bill Gates, and he really earned that money. But Issa… what did he do?
There’s a very telling line from “Wall Street” where Gordon Gekko’s deal is about to go down the tubes and he says “heck, so we only amke $10 million.” That’s enough to sustain everybody at HBB put together, but for him it’s a loss.
“Where the heck did Darrell Issa get half a billion dollars? ”
Go read his entry in wikipedia. It’s very…interesting.
Gates became a gazillionare through a govt. granted monopoly. He’s no less a con-man than Issa. And Issa is a con-man of con-men.
Euro Loses Most Since September as Debt Yields Surge in Crisis
November 20, 2011, 10:17 AM EST
By Allison Bennett
Nov. 19 (Bloomberg) — The euro had its biggest loss versus the yen since September as European borrowing costs at almost euro-era records sapped confidence the region’s governments will be able to deal with their debt crisis.
The 17-nation currency rose for the week against the New Zealand and South African currencies amid reports talks may start on the European Central Bank lending to the International Monetary Fund for sovereign bailouts. The U.S. dollar gained against all of its 16 most-traded peers but the yen as investors sought safety, sending stocks and commodities lower as a Nov. 23 deadline loomed for Congress’s deficit-reduction supercommittee.
“Sovereign spreads have become a huge risk barometer, more so than equities,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York, said yesterday. “You need to see a meaningful decline in Italian benchmark yields before the market and the euro can think about shrugging this off.”
…
Heh. DC News radio was posting an odd story about how the Euro was doing great. It sounded like a push-news story:
http://www.wtop.com/?nid=628&sid=2282814
It’s interesting how the Republican candidates dismiss concerns about income inequality as “class warfare.” Take it from members of the 1% club!
Growth November 16, 2011, 11:15 PM EST
How Inequality Hurts the Economy
The gap between the rich and the rest makes for short recoveries
By David J. Lynch
The public discussion about the widening gap between rich and poor hasn’t been this loud since the Great Depression. Warren Buffett has condemned the disparity, Occupy Wall Street has inveighed against it, President Barack Obama cites it to justify higher taxes on the wealthy. Much of the debate, though, has focused on inequality’s moral dimension. Somehow it just doesn’t seem right that so many Americans struggle while a handful prospers. What many are missing is the actual impact rising inequality is having on the U.S. economy. Hint: It isn’t good.
Since 1980 about 5 percent of annual national income has shifted from the middle class to the nation’s richest households. That means the wealthiest 5,934 households last year enjoyed an additional $650 billion beyond what they would have had if the economic pie had been divided as it was in 1980, according to Census Bureau data.
The typical U.S. household, meanwhile, has yet to regain the ground it lost during the recession. The median income of $49,445 at the end of 2010 remains a shade below the level reached in 1997, adjusted for inflation. “Income inequality in this country is just getting worse and worse and worse,” says James Chanos, president and founder of money managers Kynikos Associates. “And that is not a recipe for stable growth.”
…
Your View: GOP accusations of class warfare are hypocritical
By Kenneth Pottel
Kenneth Pottel lives in Fairhaven.
November 09, 2011 12:00 AM
Leaders of the Republican Party are responding to President Obama’s call for “Shared Sacrifice” by accusing the president of class warfare.
Obama understands that the deficit must be dealt with. He is asking that in 2013 when the Bush tax cuts end that those who make more the $250,000 a year pay what they paid before the Bush tax cuts. He is also proposing a tax on millionaires and billionaires so that they pay at the same rate as everyone else. As it stands now, most of the oligarch’s income is derived from capital gains and dividend income, which means that the taxes are capped at 15 percent. So when one of the wealthiest Americans, Warren Buffet, states he is paying a much lower rate then his secretary is paying, he is correct. The question that the Republicans must answer is, Who should shoulder the deficit? Their answer is: the old, the poor, the middle class and the young will be called on to make the sacrifice.
…
“He is also proposing a tax on millionaires and billionaires so that they pay at the same rate as everyone else.”
It makes no sense to me that the couch this as a “new tax” on millionaires and billionaires.
Why don’t they just change the capital gains tax rate to be the same as the income tax rates?
I find it amusing that the 1%er are having a hissy fit about paying tax rates that J6P routinely pays.
Which makes me ask the question. Is their success due to “hard work”, “creativity”, and “superior decision making”? Or is it due to manipulation of the rules/laws/tax code in their favor?
The best ROI in the country is buying a Congressman.
Then why would people like me want to invest in stocks if I get taxed at ordinary rates? I buy company stock. I cannot sell for at least a year, which means any profits, I get the 15% rate on the gain.
I see that you don’t incur any capital gains. You just keep your money under your mattress or only hope for social security for your retirement? Nanny stater!
I don’t make enough to invest in anything. Mainly because all I have to sell is my labor. Which is taxed at about 50%, when you add up all the income, FICA taxes on my direct pay, all of the taxes I pay on stuff I need to do my job (fuel taxes, mandatory insurance, sales taxes on tools, parts). Some of my costs get passed on, after I pay 60 days of interest on them.
I’ll make it up on volume, as soon as I can figure out how to bill out 40 hours a day.
Nonsense! Even my late uncle, retired from working on the railroad decades ago dabbled in stocks.
You don’t have to have $100,000 to get started. There are brokerage places that allow DRIPs on deposits under $100.
If it was not for mutual funds, which I started out with on $50 per month back in the mid 1990s, I would have been into DRIPs.
“Then why would people like me want to invest in stocks ”
What else are you gonna do with it?
“Why don’t they just change the capital gains tax rate to be the same as the income tax rates?”
The essence of the lower tax on capital gains is that you get to avoid the inflation tax that those who do not speculate must pay. Since I am a saver, my first demand would be eliminate the inflation tax, it is killing me and grandma. Second request is eliminate the ZIRP welfare for the speculative class, it is also killing me and grandma. Then a flat income tax, all income.
And while word of grievous job prospects is finally reaching undergraduates — there was an a 11.5 percent drop in applications this year — there were no empty seats in any of the 200 law schools in the country.
http://www.nytimes.com/2011/11/20/business/after-law-school-associates-learn-to-be-lawyers.html?_r=1&ref=business
At a place where I used to work we had a lawyer who passed the bar working as a SW Tester for about $50K.
Wiki says:
“Law schools generally portray law school as a good investment, citing high salaries and employment rates. The National Association For legal Career Professionals produces and annual report summarizing the employment data fo law schools in the United States that suggests otherwise. As of the 2009 report, out of 44,000 law school graduates, less than 80 percent (35,002) reported any form of employment (full or part time) within 9 months of graduation. Over 25 percent of all employed respondents were employed in a temporary position, bringing the number of graduates employed in non temp jobs of any kind (legal or othewise) to under 60 percent. Only 45 percent of graduates were employed in non temporary attorney jobs and less than 40 percent of all graduates were employed as full time non temporary attorneys.”
Wiki also says:
“According to the National law Journal, 40% of law school graduates default on their student loans, incuring collection fees of 29% when the loans are turned over to collection agencies. Law shool graduates default more often than doctors, engineers, and business school graduates.”
Like everything else, the 1%ers skew the “average/median” stats, making it look like people are doing better than they actually are.
If you read comments on the AbovetheLaw blog these attorneys and wannabe attorneys are obsessed with money and prestige ala the chrome ax wielding wacko Patrick Batemen in American Psycho. It’s rather depressing–not that we don’t all aspire to making a decent living, but there’s a flood of law students purely inspired by a get rich fantasy rather than doing something useful. Nasty whiff of entitlement. So when they complain about their student loans Honey Badger doesn’t give a $hit.
Congress corners insider market
Sunday, November 20, 2011
By Len Boselovic, Pittsburgh Post-Gazette
What’s the difference between Raj Rajaratnam and members of Congress?
Mr. Rajaratnam, a billionaire hedge fund kingpin, was sentenced to 11 years in prison and fined $92.8 million for insider trading. Chances are slim that a member of Congress would ever be cited for trading on inside information.
The “60 Minutes” piece last week on the free pass members of Congress get when it comes to trading on nonpublic information they routinely receive opened a lot of eyes. But it came as no surprise to reform advocates or academicians who have studied the investing skills of federal lawgivers for years.
A 2004 study concluded that U.S. senators outperformed the stock market by 12 percent annually during the 1990s, about twice as well as corporate insiders did. A more recent study concluded that members of the House of Representatives outperformed the broad market by about 6 percent annually.
“We find strong evidence that members of the House have some type of nonpublic information, which they use for their personal gain,” authors of that study concluded.
…
Will Congressmen turn to real estate investing, now that it looks like a ban against their insider trading on the stock market may go through?
STOCK Act boosted by ‘60 Minutes’
By Jerry Zremski
NEWS WASHINGTON BUREAU CHIEF
Published:November 19, 2011, 10:58 PM
Updated: November 20, 2011, 12:44 PM
WASHINGTON — A week ago this morning, the “STOCK Act” was a fairly typical piece of legislation. Almost nobody had ever heard of it.
But that was before “60 Minutes” aired a piece last Sunday night that showed members of Congress from both parties apparently trading stocks on the basis of insider knowledge — and getting away with it.
The next morning, the lawmaker who had been pushing the STOCK Act for six years — Rep. Louise M. Slaughter — quickly learned that her bill had gone from life support to center stage overnight.
“I got to the Rochester airport and I was besieged by people who said: ‘I watched ‘60 Minutes’,” Slaughter said.
And that was just the start.
Now Slaughter, a Democrat who represents a district that stretches from Rochester to Buffalo, is besieged by colleagues clamoring to sign onto what is suddenly one of the hottest bills in Congress.
As of late Friday, Slaughter’s “Stop Trading on Congressional Knowledge Act” had 91 co-sponsors — up from a measly nine on Monday morning.
Meanwhile, Sen. Kirsten E. Gillibrand, D-N.Y., led a bipartisan group of nine senators in introducing a version of the STOCK Act on the Senate side.
To Slaughter, who began work on the bill years ago after reading Wall Street Journal reports about day trading among House Republican staff members, it’s about time the measure picked up some momentum.
For years, she pushed the STOCK Act, to little notice from her colleagues.
“We tried, but there was no interest whatsoever,” she said. “Nobody thought it was a problem.”
…
I just read about how Volcker was not happy about how watered down the Volcker rule had become. I’m pretty confident the STOCK Act will go through but will be quietly castrated before it ever becomes law.
http://www.nytimes.com/2011/10/22/business/volcker-rule-grows-from-simple-to-complex.html?pagewanted=all
Capitalism and the Wall Street Protesters - by Lew Rockwell:
http://lewrockwell.com/armentano-d/armentano28.1.html
Capitalism, as currently practiced in the US of A, isn’t working too well for the 99%.
Which is the whole point of OWS.
I’m working 60-70 hour weeks. To make less (inflation corrected) than I did as a newbie mechanic in 1980 (and even then, I was never going to get rich on that salary). I’m like a hundred other guys in my business, and many other businesses
You think I should be pi$$ed about “high taxes”. Why are my taxes high? To make up for the fact that capital is more mobile than labor, and the government is spending trillions of dollars in direct and indirect subsidies to the banksters and multinationals……in bailouts, military interventions to protect their markets and interest….the list can go on and on.
What lesson are we supposed to draw from this? Other than I should have found a bankster mentor, and turned into one of them?
(And I am doing “good”, all things considered. I don’t own a house, or have a huge amount of personal debt)
The good news is that I’m bringing myself around to being a Ron Paul supporter.
Not that I think he’d be any good. All his ideology will do is give even more power to the 1%ers, and make me poorer (by even more cost shifting onto me), and by constant turmoil (I won’t be able to buy the protection that the 1%ers can afford when all of the “socialist” programs are ended, and the riots/crimewave starts).
His only advantage is that the Republicans and Democrats are even crappier.
You did not read the column (sigh).
Just another ‘get out of the way and the market will solve everything ‘ crock. Without ‘evil’ government regulation, the market becomes crony capitalist. Always.
Think before writing, statist.
Explain how an unregulated market doesn’t become crony capitalist.
It does not become crony capitalist because there are no unequal laws which protect the big companies from the small in a free market economy.
What stops the big boyz from squeezing out the little guys?
Or simply buying whatever laws they want?
It does not become crony capitalist because there are no unequal laws which protect the big companies from the small in a free market economy.
Have you ever taken a course in your life other than some kind of math course Bill?
Have you read many books other than Ayn Rand’s nutjobb ones?
Corporations such as Apple and Wal-Mart and Allstate are all large organizations that compete in an open market with other businesses (large and small) for the favor of consumers. Their overall success depends not on any government grant of “power” but solely on their internal efficiency and their ability to convince consumers to purchase their products and services every hour of every day; if they fail, they get smaller, and their employees and investors suffer.
Lew is full of Shiat.
He thinks Goldman Sach, Bank of America, General Motors, etc. can fail.
Its like he has been in a coma for the past 6 years.
You did not read the column (sigh). Here’s what Dom Armentano was saying in his column: He was claiming the OWS protesters are protesting capitalism and it’s unwarranted.
“Under capitalism, there would be no government bailouts; no Federal Reserve; no Fannie Mae or Freddy Mac; no state restrictions on competition (so-called antitrust laws); no tax-supported schools and no government supported monopolies of any kind. Crony capitalism, after all, is not real capitalism.
“Now what exactly are the Wall Street protesters protesting? A few are legitimately protesting the special privileges and economic distortions associated with crony capitalism. Fine. Most, however, are confusing crony capitalism with real capitalism. For example, they think corporations are too “powerful” or they are upset about the dearth of jobs (and blame the free market), or they want incomes more evenly “distributed” or, more generally, they want more government control of the marketplace.”
“Corporations such as Apple and Wal-Mart and Allstate are all large organizations that compete in an open market with other businesses (large and small) for the favor of consumers. Their overall success depends not on any government grant of “power” but solely on their internal efficiency and their ability to convince consumers to purchase their products and services every hour of every day; if they fail, they get smaller, and their employees and investors suffer.
Do the protesters object to growth and success based on efficiency and consumer choice? Would they restrict that choice or hamper that efficiency to keep firms small? And if small is more expensive, why is this good?
Protesters also say that they are concerned about the fact that the jobless rate is stuck at 9%? But whose fault is that? In all previous post WW2 recessions the economy has always recovered and the U.S. job market has always expanded. There are two exceptions: the 1930’s and the last three years. Interestingly, these are the only recessions where Keynesian economic policies were used by the federal government in an attempt to “stimulate” the economy and bailout ailing corporations and financial institutions. I think that there is a lesson here if only the protesters would pay attention.
On the matter of income distribution, let’s be clear: Incomes are not “distributed” but are earned when owners of land, labor, or capital sell or rent their property. The distribution is unequal because the original endowment (talent, inheritance, etc.) is always unequal and because free market prices and wage rates are different for different products and services.
Consumers place a higher value on Lady Gaga’s services than they do on my services and, thus, her income is far higher than mine. Under capitalism, Lady Gaga (certainly a member of the 1% club) is entitled by right to keep what she earns in free trade…or give it away if she chooses. By what right would protesters advocate that government confiscate some of that income and “distribute” it to people who didn’t earn it? Sounds like theft and not “social justice” to me.
Notice that the general theme accepted by most of the protesters is that government power is always necessary to correct the free market choices that consumers and businessmen make every day. I say: Get some historical perspective. Nations have tried those sort of regimes for centuries and they have proven both illiberal and inefficient. Real capitalism, is the newest and freest and most productive economic system ever tried and we must salvage, not wreck, what’s left of it. Perhaps a field trip to Greece (or Cuba) for the Wall Street protesters is in order.”
Mr. Armentano is not a blind supporter of protest for the sake of protest. He sees the OWS people for what they really are.
“He sees the OWS people for what they really are.”
People who realize that without progressive taxation, consistent rule of law and regulation, and government safety nets, wealth becomes concentrated in the hands of the very few, and society as a whole is the worse for it?
They’re not anti-capitalist, Bill. They’re trying to save capitalism from itself- a continuous struggle.
Has communism ever arisen in a country with a comfortable and stable middle class?
That is retarded. Super retarded. The real result of the so-called “progressive” taxation is regression into a big government interventionist state and getting bigger and bigger and raising taxes more and more to finance socialist engineering all over the planet.
Sweden is your perfect socialist meca. ever think of moving there?
“Sweden is your perfect socialist meca [sic]. ever think of moving there?”
Yes.
One word, bila:
Monopoly.
“Notice that the general theme accepted by most of the protesters is that government power is always necessary to correct the free market choices that consumers and businessmen make every day.”
Not “correct the free market choices”. More like reign in, through regulation, likely disastrous choices. Because in a truly free market, short-term market choices will likely be made that will wreck societies in the long term. (Yes, govt. is very capable of this too, but with far less stealth and efficiency).
Way off topic, but is there anyone else out there that thinks the Subway commercials (that have the adults with the little kid voices) are the most annoying commercial series in the history of television?
Especially when the hot chick sweet talks the schlub out of his sandwich by promising to be his girlfriend.
Where’s Terry Tate when you need him?
Not sure if it is THE most annoying, but definitely in the Hall of Shame. What I dislike most is that one of the kids has the same speech impediment I used to have (non-articulated r). I keep screaming — send that kid to speech therapy!!
Suggestion for a new HBB T- shirt.
“Ask me about the “Oil City Plan” “
Yea I love it
Oil City Plan funny
Is solar power allowed under the Oil City Plan? -
Keep fighting the power man!! Oh and by the way, can you pass the Grey Poupon when you have a chance.
“A key Occupy Wall Street leader and another protester who leads a double life as a businessman ditched fetid tents and church basements for rooms at a luxurious hotel that promises guests can “unleash [their] inner Gordon Gekko,” The Post has learned.
The $700-per-night W Hotel Downtown last week hosted both Peter Dutro, one of a select few OWS members on the powerful finance committee, and Brad Spitzer, a California-based analyst who not only secretly took part in protests during a week-long business trip but offered shelter to protesters in his swanky platinum-card room.”
Is there any way to get to the bottom of the pepper spray incident? Either the cops decided on this course of action on their own, or somebody higher up the chain of command ordered them to do it.
At any rate, we are collectively screwed if even our law enforcement officials are not held accountable to a rule of law. I would love it if it turned out a Kochtopus was the instigator, and he served prison time as a consequence.
L.A. NOW
Southern California — this just in
UC Davis officers placed on leave after pepper spray incident
November 20, 2011 | 12:47 pm
Two UC Davis campus police officers have been placed on paid administrative leave over their controversial use of pepper spray on student protesters, university officials announced Sunday.
A video that showed an officer dousing a group of students who were huddled on the ground Friday quickly went viral on the Internet, drawing outrage and calls for the chancellor’s resignation.
“I spoke with students this weekend, and I feel their outrage,” UC Davis Chancellor Linda P.B. Katehi said in a statement. “I am deeply saddened that this happened on our campus, and as chancellor, I take full responsibility for the incident. However, I pledge to take the actions needed to ensure that this does not happen again.”
…
He gets paid in excess of $100k as a campus policeman.
I bet Chancellor Katehi looses her $300k job.
I hope.
Keep floggin’ that horse, GAG.
http://www.bloomberg.com/news/2011-11-17/solyndra-loan-decisions-mine-chu-to-tell-republican-led-panel.html#
US taxpayers being bent over for more hope ‘n change. That $535 million in US government (taxpayer) guaranteed loans to Solyndra?Color that money gone.
NY REAL ESTATE RESIDENTIAL
NOVEMBER 19, 2011
Homes Under Pressure
By JOSH BARBANEL
Those looking for signs of a recovery in New Jersey home values may need to take the long view, as more than 100,000 homeowners are dealing with foreclosures that are stalled in court and another 48,000 are way behind on mortgage payments.
The numbers were among the results of a national mortgage delinquency survey released this week that suggest a backlog of unresolved foreclosures in New Jersey could be a drag on home prices for years to come.
“Foreclosures place downward pressure on neighborhoods,” said Jeffrey G. Otteau, an appraiser and housing consultant. “Home prices are falling fastest in those urban and rural markets most affected by foreclosures.”
Sarah G. Laks, who runs a real estate and construction business, fought in court to head off a foreclosure auction on her five-bedroom home in Lakewood, NJ. She said the backlog of foreclosures was “hurting the building industry,” and she blamed the backlog on the difficulties in negotiating reduced payments with banks.
The delinquency survey, by the Mortgage Bankers Association, found that 8.1% of homes in New Jersey were in foreclosure in the third quarter.
It ranked second, after Florida, in the percentage of mortgages in foreclosure, surpassing Nevada, which was hard hit during the downturn. New York ranked fifth among all states, with 5.7% of homes in foreclosure, while Connecticut ranked ninth, with 4.8% reported in foreclosure. The figures are based on a survey of all homes with mortgages.
A backlog of unresolved foreclosures could be a drag on home prices for years to come.
The high rankings were reported even though the region was spared the worst of the housing downturn, and has shown strong signs of stabilization: The shares of homeowners with newly delinquent mortgages were below average in the region, and a small fraction of those in Florida and Nevada.
The foreclosure figures were so high in the region because New York, New Jersey and Connecticut all require that foreclosures be handled through court proceedings. These in turn were delayed by complaints about robo-signing: bank employees signing documents without knowing they were accurate.
In New Jersey, major banks suspended most mortgage filings last December, until banks could demonstrate that there were no irregularities in their foreclosure practices. The banks were permitted to resume mortgage activity in August and September, but an appellate court decision in August added new requirements and uncertainty for banks, further delaying many foreclosures, court officials said.
…
Wealthy Qualifying for Loans Intended for Low-Income Borrowers
November 08, 2011, 3:19 PM EST
By Lorraine Woellert
Nov. 8 (Bloomberg) — Colorado’s San Miguel County is known as a winter playground with world-class skiing and mountain vistas, a place where homes can sell for millions of dollars.
If you’d like to buy, the Federal Housing Administration — the agency created to aid low-income and first-time homebuyers - - can help. Not far from the ski resorts of Telluride, an FHA- approved borrower can pick up a five-bedroom, four-bath house with stainless steel appliances and a two-car garage for about $600,000.
The agency, created during the Great Depression, has found itself insuring high-dollar loans in hundreds of counties across the country, from New Jersey to Florida to Arizona. Such loans are drawing renewed scrutiny as lawmakers debate whether to expand FHA lending to even wealthier borrowers.
…
I guess it was the Democrats who pushed through this “low-income loans for millionaires” increase in the FHA loan guarantee limit? Who’d've thunk the party of the poor and the oppressed would sink so low?
U.S. House Backs FHA Loan-Limit Boost Over Republican Objections
By Phil Mattingly - Nov 17, 2011 1:44 PM PT
The U.S. House of Representatives 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 for increasing the limit to $729,750 as part of a $182 billion spending bill that included funding for the government through Dec. 16. The legislation, approved in a 298-121 vote, 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.”
…
FHA might need a bailout
If the housing market doesn’t rebound next year, agency may need as much as $43B
By Jim Puzzanghera / Los Angeles Times
Published: November 16. 2011 4:00AM PST
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 Tuesday.
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.
Home prices in major U.S. cities rose for five straight months through August, when they ticked up 0.2 percent, according to Standard & Poor’s/Case-Schiller Index. But many analysts predict troubles ahead as foreclosure activity continues to rise, particularly in hard-hit regions such as Southern California.
The median sale price for Los Angeles and Orange counties was $270,000 in October, down 3.6 percent from September to the lowest level since January, San Diego real estate information service DataQuick reported Tuesday.
The drop was triggered by a decrease starting last month in the size of mortgages that are guaranteed by the FHA, Fannie Mae and Freddie Mac, part of an effort by Washington to start pulling back government support for the housing market.
But some lawmakers complained that the market in Los Angeles and some other high-priced areas remained too fragile to stand on its own. Pushed by a bipartisan group of California lawmakers, Congress is close to restoring the higher loan limit through 2013, but only for FHA-insured loans.
A provision to raise the limit back to $729,750 in high-cost markets from $625,500 is part of a budget deal the House and Senate probably will vote on before Thanksgiving. But Tuesday’s report on the FHA makes approval of that provision less certain.
“In light of this bleak outlook for the FHA, it makes no sense to increase the size of loans the FHA can insure,” said Rep. Scott Garrett, R-N.J., chairman of the House subcommittee that oversees Fannie and Freddie.
…
50 billion here, 150 billion there, pretty soon, you’re going to be talking about some real money!
Today my ‘hood was crawling with out-of-staters slowing down for ‘For Sale’ signs.
Bah.
Fears that eurozone may break up are spreading
Alan Clendenning, Associated Press
Friday, November 18, 2011
Madrid –
Fear, that contagious emotion, spread from country to country in Europe on Thursday as panicky investors worried that the euro currency union could be heading toward an ugly breakup.
Spain and even France, one of the continent’s core economic engines, were forced to pay sharply higher interest rates to raise cash to fund government spending.
While the European Central Bank was suspected of intervening in bond markets to fight the rise in the borrowing rates, many analysts say it needs to act more aggressively to contain the crisis. But Germany, Europe’s paymaster, once again blocked any such move on concerns it would let profligate governments off the hook.
Uncertainty is now eroding the appeal even of top triple-A government bonds from countries like France as investors prepare for worst-case scenarios like the deconstruction of the eurozone.
“Basically, if you look at any country that is not Germany, the contagion effect is major,” said Oscar Moreno of Madrid brokerage house Renta4.
In Spain, an auction of 10-year government bonds left the country paying interest rates of nearly 7 percent. That’s the highest rate since 1997 and a level that economists see as unsustainable. Greece and Ireland received rescue loans from the European Union after their bond yields jumped above the same level.
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http://ca.news.yahoo.com/insight-anger-mounts-mf-global-clients-see-3bln-190836206.html
Anger of MF Global bagholders is “mounting.” Somehow I can’t feel too sorry for anyone who trusted their money to the likes of Jon Corzine.