The Housing Bubble

Good morning, I just wanted to acknowledge Alpha ignoring my questions and trying to get me on the hook emotionally by somehow making a tenuous connection that if “the system” is not “saved” my kids will starve to death. And that I am so cheap and stupid that having “health care” makes the historic theft of trillions of dollars o.k.

I’m calling you out again, dude. I think you’re a bankster. The MERS debacle favors banks more than FBs at the moment. You love that. You l’uh that like a fat kid l’uh cake. That tells me you’re FIRE, or close to it.

Please tell me what industry you’re in. You don’t have to be too specific if that makes you a uncomfortable. For example, I work in education RAL works in construction, Ben in property mgt. etc.

My other guess is that you’re a Trustafarian.

You’ve never explained your love for “the system.” Help me understand… you don’t want my kids to starve to death do you?

Commander William B. Ault (US Naval Acadamy-1922, Naval Aviator since 1925) on May 8, 1942 was “Commander, Lexington Air Group” and the most senior pilot (43 years old) still flying from aircraft carriers for either the US or Japan.

This was during a time when even peacetime flying was hazardous; aircraft radios and navigation aids were less than 10 years old, and operated in the HF band, which is highly susceptable to atmospheric interference, and lack of accurate weather/wind forecasts. Navigation errors of 20-30 miles were not uncommon. Unfortunately, visibility was 10 miles or less frequently. Add to this the fact that the “airport” (aircraft carrier) could be 50 miles from where it was supposed to be, especially if their carrier came under attack. And if you were lost, most of the time, nobody could come looking for you……especially if the enemy was around. In 1942, many aircraft never returned from the daily scouting missions when the carrier was at sea.

On May 8, Ault led the Lexington Air Group’s attack on the Japanese carriers Shokaku and Zuikaku. His command section of four SBD dive bmbers was attacked by Japanese fighters, and both Ault and his radioman-gunner were wounded.

Unfortunately, as they were attacking the Japanese carriers, the Japanese were attacking USS Lexington and USS Yorktown. Lexington was (as it turns out) fatally damaged by Japanese torpedo hits, and Yorktown was badly damaged by bombs. And, unfortunately for the US aircraft still flying, Lexington’s radar and radio communications, and both Lexington and Yorktown’s “Y-E” homing beacons were also knocked out due to battle damage.

Only one aircraft from the command group returned. Yorktown was in communication with Ault, but never picked him up on radar, and had no beacon for him to home in on (assuming that the Y-E receiver on the aircraft wasn’t damaged, and his wounded gunner was physically capable of working the equipment)

At 2:49, Ault radioed that he had 20 minutes of fuel left. Yorktown advised him that they were unable to guide him back, and recommended he try to head north and make landfall…..unfortunately, the nearest land was 200 miles away.

Commander Ault (probably knowing very well what that meant) replied, “OK…..So long people. We put a 1000 pound hit on the flattop”.

Lexington and Yorktown had approximately 180 aircraft between them on the morning of May 7. By sundown May 8, Lexington was gone, and there were 35 surviving aircraft on Yorktown. Yorktown withdrew to the south, and no search was ever made for Ault. No trace of him or his aircraft has ever been found.

Just a reminder that “victories” have some tragedies that go with them.

1942 would see four major battles between Japanese and US carriers. On January 1, 1942, the US had six combat worthy aircraft carriers. By the end of October, we would be down to two, with one in drydock at Pearl Harbor to repair torpedo damage, and the other damaged by bombs, and locally repaired to keep it in action. The Japanese suffered similar attrition in men, ships and aircraft. (By the end of 1942, almost all of the Japanese Navy dive bomber and torpedo bomber squadron leaders who led the attack at Pearl Harbor would be dead.) Carriers wouldn’t meet in combat again until June 1944.

Realtors Are Swindlers®

Yeah, but then they came home full of commie ideas like taxing the heck out of the super-rich for the benefit of society at large, and making sure the playing field was level for everybody, not a private field for the crony-capitalists and their kids. We’d have been better off losing, the other guys had some respect for austerity.

From Yesterdays B&B.

“Comment by GrizzlyBear
2012-05-08 21:42:18
There is no good argument in this world for “eradicating” wolves. What a despicable, narcissistic, bloodlusting perversion.”

Spare me GBear on the sanctimonious BS. Wolves will be killing people as their footprint grows. What would you say to a mother thats just had her small child ripped to shreds? Get real. It’s only a matter of time.

And, I have 7 domestic pets so before you brand me a someone with a “bloodlust” think again.

I wonder if facebook investors will lose their ??? like groupon and zenga investors?

“Honolulu Realtor Charged With Bank Fraud”

http://www.khon2.com/news/local/story/Honolulu-realtor-charged-with-bank-fraud/cc7QbXQ9xkSiHRvUFIv6SA.cspx

I ran across an article yesterday by Jim Puplava, a financial writer and blogger. It supports my opinions that “immigrants” from the south are a net drain on the U.S. and NOT ‘doing the jobs Americans won’t do’.
And, of course, the Latino populations are proud to point out that California is the first State where White folks are no longer a majority population as they leave the State and Latinos move in. Here is a short excerpt:
Jim Puplava cites some very troubling and eye-opening statistics collected by Professors Boskin and Cogan of Stanford University.

Between 1985 and 2005 the population in California grew by 10 million people. And it is, and still remains, the most populous state in the union. But here’s the significant point: out of the 10 million new residents that moved into the state of California, we only got 150,000 new taxpayers. So, in other words, 98.5% of that 10 million population influx are non-taxpayers. So you have a tax base of 1.5% that is supporting the other 98.5%; and the statistics get even better…California has 12% of the nation’s population but it has one-third of the nation’s welfare recipients. 1 out of 5 residents of Los Angeles are on welfare.

As a long-time resident, Puplava also notes that “when you drive throughout California you really get a feel for why they use to call this the Golden State. If you look at California’s economy, why it is one of the 7th or 8th largest economies in the world: It has manufacturing, it has technology, it has biotechnology, it has agriculture, it has mining, it has energy…it has tourism, it has the military…it is really almost mind-boggling how you can take one of the richest states in the country and drive it into bankruptcy.”

Yes, illegal immigration and “multiculturalism” are working just great. Look at your local schools and tell me that this Orwellian nightmare is working for Americans. Oh, I forgot, those kids of illegals born on this side of the border are our “new americans”. Forget housing. We need border enforcement.

FHA New Foreclosures Jump as Modified Loans Default: Mortgages

May 9 (Bloomberg) — The number of Federal Housing Administration-insured home loans entering foreclosure jumped in March after half the mortgages it modified to ease repayment terms were in default again a year or more later.

The FHA’s role in lending to first-time buyers with poor credit and limited cash expanded after the 2008 collapse of the mortgage market put it at the center of government efforts to revive housing. The FHA allows down payments as low as 3.5 percent for borrowers with a credit score of 580, below the 640 defined as subprime by the Federal Reserve.

“The credit standards are way too loose — you can get into a house with very little skin in the game, and if home prices drop by a small amount, you’re underwater,” said David Lykken, managing partner at Mortgage Banking Solutions, an Austin, Texas-based consulting firm. “We’ve got to start getting reasonable about standards. What they’ve done so far, some very slight attempts at tightening, don’t really count.”

http://washpost.bloomberg.com/Story?docId=1376-M3PZ0K1A1I4H01-32BOVJ5VTLHBST59RQIUCKJ3I4

Articles like this one make me wonder whether major structural reforms lie ahead for the Fed. The implication: We still face major known unknowns as regards the end game for this banking crisis, as nobody can reasonably predict what effect a major Congressional overhaul of the Fed’s mandate might have on the operation of the global economy.

May 8, 2012, 1:35 p.m. EDT
Fed reform plans percolate on Capitol Hill
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — Key members of Congress presented distinctly different measures Tuesday to fundamentally reform the Federal Reserve, a sign that the central bank remains very much under the microscope in the wake of the extraordinary policy steps it took during and after the financial crisis.

Rep. Kevin Brady, an eight-term Republican from Texas, used a hearing of the House Financial Services subcommittee on monetary policy to make a strong pitch for his bill, which would strip the Fed of its dual mandate and see it focus solely on inflation.

At the moment, the Fed must follow two objectives set by Congress. The central bank is mandated to insure that prices remain stable while also trying to maintain conditions for low unemployment.

Brady’s measure reflects the fact that many Republicans are strongly opposed to the Fed’s purchases of trillions of dollars’ worth of bonds, commonly called quantitative easing.

John Taylor of Stanford University, a supporter of the Brady legislation and a frequent critic of Fed Chairman Ben Bernanke, said a clear price-stability goal would eliminate the Fed’s “more unpredictable, discretionary policies.”

He noted that quantitative easing has ballooned bank reserves to $1.5 trillion from about $10 billion before the crisis in 2008.

“This large expansion of reserve balances creates risks. If it is not undone, then the bank reserves will eventually pour out into the economy, causing inflation. If it is undone too quickly, banks may find it hard to adjust and pull back on loans,” Taylor said.
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There has never been a better time to own, or issue, Treasurys!

May 9, 2012, 9:12 a.m. ET

Treasurys Gain On Euro Fears; 10-Year Sale Poised To Offer Record-Low Yield
By Cynthia Lin
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–U.S. Treasurys gained Wednesday as euro-zone tensions rose, dragging the yield on 30-year bonds below 3% and positioning 10-year notes to sell at the lowest yield ever at this afternoon’s auction.

In familiar fashion with last summer’s rally, U.S. government bond markets recently have gone back to trading in sympathy with developments out of Europe, showing muted reaction to economic and supply events at home.

This time around, concerns about Spain and its banking system are fueling much of the safe-harbor buying. Meanwhile, Greece is in the midst of a political shuffle, threatening to unravel an overhaul that was to ensure the debt-plagued nation gets the financial help it needs.

“The choice of buying 10-year [notes] when yields are below 1.90% is relatively simple: it’s a decision that the current leg of the European Union crisis will continue to get worse, and soon,” said John Briggs, bond strategist at RBS. “This is not an unreasonable position, but if the crisis alleviates even for a day, you’ll be under water.”

In early New York trading, benchmark 10-year notes rose 11/32 in price to yield 1.797%. The 30-year bond gained 23/32 to yield 2.987%, while two-year notes edged up a fraction in price to yield 0.254%. Bond prices move inversely to their yields.

While yields on U.S. government bonds hover around all-time lows, those on peripheral euro-zone bonds are edging higher. Spanish 10-year bond yields tipped back above the much-watched 6.0% mark recently, while same-maturity Italian bonds yielded 5.609%.

The Treasury Department is scheduled to sell $24 billion in 10-year notes this afternoon in the second leg of this week’s debt auctions. If sold at the current 1.797% yield, the notes would feature the smallest rate the government has ever had to pay at a sale of this maturity.

Investors traditionally attempt to push prices down ahead of a sale to get paid a better yield during the auction. But recent anxieties about Europe is interrupting this process, instead dragging yields closer to their historic lows.
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Is the future value of euro-denominated debt in the event of a Eurozone breakup more of a known known or a known unknown?

May 9, 2012, 7:00 a.m. ET

UPDATE: European Debt Insurance Costs Rise On Greek-Exit Fears

– iTraxx CDS indexes push wider as Greek concerns weigh

– Political stalemate in Athens increases risk of euro exit

– Germany pays record low yield at five-year bond auction

(Rewrites throughout; adds detail, comment, updates levels.)

By Sarka Halas and Ben Edwards
Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–The cost of insuring European debt against default rose Wednesday as sentiment remained soured by political uncertainty in Greece and the possibility it may seek an exit from the currency union.

Talks among Greece’s leading political parties to form a coalition government were unsuccessful Tuesday, increasing the likelihood of another election in June.

The political instability in Greece has once again raised fears that the country may not be able to implement agreed budget cuts and reforms it must undertake to secure bailout funds from its international lenders, fueling speculation that it may leave the euro zone.

“It is difficult to see why the country would do this but then again it only takes one angry politician to change history,” said Gary Jenkins, an analyst at Swordfish Research.

Should support for the mainstream parties slide further in a second election next month, a Greek exit would become very likely, researchers at JPMorgan Chase & Co. wrote in a note.

Elsewhere in the euro zone, Germany paid a record low yield as it sold EUR4.032 billion of five-year notes, boosted by investor demand for safe assets. The German Bundesbank retained EUR968 million for market-tending purposes, lifting the total issue size up to EUR5 billion.
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Poll time. Stocks are falling because:

1) They are reacting to unadjusted developments, or:

2) They were too high to being with, given an average S&P 500 dividend yield below 2.0% and the headwinds to U.S. growth, and had been bid up based on speculation and excess liquidity.

How unpopular can Obama get?
Daily Mail Online ^ | 05/09/12

Just how unpopular is President Obama in some parts of the country? Enough that a man in a Texas prison received four out of 10 votes in West Virginia’s Democratic presidential primary. Inmate Keith Judd, 53, is serving 17 years for extortion at the Beaumont Federal Correctional Institution.

For some West Virginia Democrats, simply running against Obama is enough to get Judd - or Inmate Number 11593-051 - votes.

‘I voted against Obama,’ said Ronnie Brown, a 43-year-old electrician from Cross Lanes who called himself a conservative Democrat.

‘I don’t like him. He didn’t carry the state before and I’m not going to let him carry it again.’

When asked which presidential candidate he voted for, Brown said: ‘That guy out of Texas.’

Hurricane season is fast approaching as indicated by the strong left-handed swirl on the HBB.

Manufacturing jobs fell by a third in the US in the first decade of this century. Wow.

Back to making stuff
Manufacturing still matters, but the jobs are changing
Apr 21st 2012 | The Economist

FOR OVER 100 YEARS America was the world’s leading manufacturer, but now it is neck-and-neck with China (see chart 1). In the decade to 2010 the number of manufacturing jobs in America fell by about a third. The rise of outsourcing and offshoring and the growth of sophisticated supply chains has enabled companies the world over to use China, India and other lower-wage countries as workshops. Prompted by the global financial crisis, some Western policymakers now reckon it is about time their countries returned to making stuff in order to create jobs and prevent more manufacturing skills from being exported.

http://www.economist.com/node/21552899

10 housing markets set for double-digit price gains

http://money.cnn.com/2012/05/09/real_estate/home-prices/

Realtors are lying lying lying once again.

Obama supports gay marriage! That’s great. I am thrilled.

Next up: rule of law.

I’ve got a big time bet going short on the S&P 500, and I’m still losing 4000 dollars on it. That doesn’t make me too upset because I made 15,000 last year with my correct bets on BP, Toyota, and Market shorts last year. But I’ll reiterate my call, even though I’ve been wrong about 3 times this year, that we are really going to see a dramatic fall in the market right now. I hope others of you are observing, because there will be ample opportunities to start a position LONG when this bear blows off its steam.
I’ve already started building my position long in carefully, and I do mean carefully selected oil stocks.

Step right up, Californians, and receive your $100K in unearned principal-reduction income!

Developments
Real estate news and analysis from The Wall Street Journal

May 7, 2012, 6:06 PM

California Pushes Write-Downs Under Obama Program
By Alan Zibel

California is revamping its efforts to aid homeowners who owe more on their mortgages than their homes are worth.

The California program was launched as part of an Obama administration push to let states work out their own responses to the foreclosure crisis. California, Nevada and Arizona — states with steep home-price declines — chose to aid “underwater” homeowners.

But the states had trouble getting going after mortgage-finance giants Fannie Mae and Freddie Mac refused to allow loan write-downs and much of the lending industry (with the notable exception of Bank of America) declined to participate. Loan write-downs involve eliminating a portion of the amount outstanding.

As a result, California risked not spending the $2 billion it has been allocated under the federal program. So the state on Monday announced a revamp of the program.

Effective next month, California has eliminated a requirement that mortgage-servicing firms provide a 100% match of federal funds. The program will now fund up to $100,000 in principal write-downs, with no match required. The money will be provided in the first year rather than in three installments.

“We are making these changes to encourage more (mortgage) servicers to participate,” in the principal reduction program, said Claudia Cappio, executive director of the California Housing Finance Agency in a press release. “Unfortunately, we had limited participation among servicers with the existing program and thousands of homeowners could not qualify for assistance.”

As a result of the changes, Ms. Cappio said “the major obstacles to servicer participation have been cleared.”

Since the revamped California program does not require investors in mortgages to take losses, Fannie and Freddie could now participate. The government-controlled mortgage companies “will work with (California) to apply its new program” to their loans, said a spokeswoman for the Federal Housing Finance Agency, which regulates Fannie and Freddie.

Haven’t we seen this movie before…in multiple reruns?

Will more mortgage reductions come to CA?
Written by Lily Leung
7:03 a.m., May 9, 2012

Melanie and Lee Cole, of Paradise Hills, are among the recipients of Keep Your Home California mortgage aid. Photo by Peggy Peattie, U-T San Diego.

A key change in a $2 billion state-run program to help hard-hit borrowers could make way for more principal reductions in California.

That’s if banks bite.

The writedown of mortgage principal, which has been a hard sell to both banks and investors, has been used to bring borrowers down to more affordable monthly mortgage payments.

By June, Keep Your Home California will no longer require mortgage servicers to match program money dollar-for-dollar in order for a principal reduction to happen — as long as they agree to either a term or rate cut, or both.

Who then would foot the bill for the entire principal writedown? Keep Your Home California, which is funded by money from the bank bailout, promises to contribute as much as $100,000 per qualified household.

To make the deals work, there must be give and take. Banks must get borrowers’ debt-to-income ratios down to 31 percent and to a 120 percent loan-to-value goal, said program director Di Richardson.

“In lieu of requiring a funding match from servicers, the rate and term requirement will ensure that Keep Your Home California funding is still being leveraged to provide the best possible outcome for the homeowner and will help stabilize communities,” Richardson said.

“We don’t want to simply offer a principal reduction, and leave the homeowner with an unaffordable monthly mortgage payment, which could lead to a foreclosure down the road,” she continued. “So, every principal reduction will be coupled with an actual loan modification for the borrower.”

State housing officials said they’ve had to make this drastic change to lure more servicers to this slice of the mortgage-aid program.

More than 60 servicers take part in all parts of Keep Your Home California, but only 14 servicers are signed up to do principal reductions. Bank of America is the only major bank among the 14, but its officials have only agreed to writedowns on limited terms.

“Unfortunately, we had limited participation among servicers with the existing program and thousands of homeowners could not qualify for assistance as a result,” said Claudia Cappio, executive director of the state’s housing finance agency, which administers the program.

The change will go into effect in June, so no new servicers have been added yet to the principal-reduction program.
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What’ll those crazy Clownifornians think up next?

Why the Homeowner Bill of Rights is “consumer protection run amok”
Written by Lily Leung
6 a.m., May 8, 2012

The Homeowner Bill of Rights aims to stem future foreclosure abuses in California. The proposals would require banks to assign a single point of contact for troubled-loan cases and fine banks $10,000 for each robo-signing incident, among other things. Norm Miller, real estate professor at University of San Diego, weighs in on the package of bills in this guest column. A guest column arguing the other side will follow in an upcoming post.

With respect to the Homeowners Bill of Rights, I think it is consumer protection run amok or at the very least least typical California unbalanced legislation. The politicians with their names on these bills may think they are doing something positive for California, but they are not. Consumer protection has its place, but what is needed in California is a Lender’s Bill of Rights at the same time.

Please understand my context: Mortgage brokers and Fannie and Freddie deserve much blame for causing the housing crash by lending and buying mortgages where the loan-to-values were so high that the homeowner barely had any real equity in the house and fueling the home price run-ups. The rating agencies totally missed the riskiness of these mortgages, and so they deserve some blame for fueling the fire with new capital.

But the current and recent legislation has attempted to force lenders to abandon contracts and encouraged borrowers to presume that they can always get a second chance and that any small violation of due process, no minor how minor, gives them some significant boost in their rights to homestead for free in a home where, often, they had little equity in the first place. I do feel bad for the conservative homeowners who have never defaulted and will not in the future as they are unfortunate victims of past lending practices to high-risk-taking neighbors taking loans that for the most part were generated by sub-prime lenders no longer in business.

So the current legislation does things like add a 90-day delay before eviction proceedings are possible on tenants in foreclosed property, fees for filing default notices and fines for not trying to mitigate and modify a loan that is in default or robo-signing even though 99.9 percent of those loans were in default. And once we move to risk-based pricing, we will see two effects from this type of regulation. First, loans in California will need higher premiums (higher rates) to cover all the additional risks, delays and regulatory compliance requirements. Second, many lenders will simply not make loans in those states where foreclosure costs and risks are too high. None of this regulation is free although the legislators seem to not know that and they ignore the other side of the market.

What is the other side? A Lender’s bill of rights would require that homeowners considering abandoning their home will need to pay a filing fee and tell the lender 90 days in advance so that maintenance and utilities won’t become problems or property tax payments — and these homes won’t become eyesores for the neighbors bringing down property values. Second, those consumers who practice strategic default should pay a fee to the government that would be used to help take care of abandoned homes and swimming pools.
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Check out the news from Asia concurrent with everyone’s underwear getting into a bunch over the Eurozone situation:

ft dot com
May 10, 2012 5:41 am
China surplus jumps on weak imports
By Robin Kwong in Beijing

China’s trade surplus jumped in April as imports and exports both further decelerated, renewing fears of a harder than expected landing for the world’s second-biggest economy.

Exports grew by just 4.9 per cent from a year ago, compared to 8.9 per cent growth in March. Imports rose 0.3 per cent year-on-year, compared to March’s 5.3 per cent increase, according to official data released on Thursday.

China’s surplus jumped to $18.4bn in April, compared to $5.25bn in March. This was nearly double the amount that Chen Deming, commerce minister, forecast last week at the US-China Strategic and Economic Dialogue.

These latest trade data indicate slowing external and internal demand in China. “It shows that global demand is still pretty fragile”, said Wei Yao, economist at Société Générale.

The Chinese figures correlate with other recent evidence pointing to a slowdown in overseas demand. Export orders at last week’s Canton Fair, the world’s biggest trade fair, shrank by 2.2 per cent compared to a year ago, the first decline since the global financial crisis. April exports from Taiwan and South Korea, two other big Asian exporters, fell by 6.4 and 4.7 per cent respectively.
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