The Housing Bubble

Same question as yesterday: So many pundits (including FOMC members) seem to assume a near-term exit by the Fed is necessary.

But why does the Fed ever need to exit anything? Can’t it simply keep the assets it has bought buried on its balance sheet forever?

Sep 6, 2012

THE BEAR’S LAIR
An exit strategy from Bernanke
By Martin Hutchinson

Mitt Romney has now said he would not reappoint Ben Bernanke as chairman of the Fed. What a relief! (Or maybe not; I still reckon Obama has a 50-50 chance of winning in November, and he will now presumably get Bernanke’s help, including a dose of QEIII at either the September or October Fed meetings, whenever Bernanke thinks it will do the most “good”.) Still, even if Romney wins and persuades Bernanke (whose term ends in January 2014) to forego a year of lame-duckery, there’s still the question of how we exit from Bernankeism. Four, six or 17 years of loose money, however you count it, have left a huge number of vulnerabilities in the economy, so exit has the potential to be both painful and destructive.

When you include fiscal policy, there are three separate exits to be considered. There’s the rise in interest rates needed to get short-term and long-term rates safely above the rate of inflation, thus bursting the pervasive global asset and commodity bubbles and restoring positive real returns to savers. There’s the reversal in “quantitative easing” by which the Fed must sell its portfolio of more than US$2 trillion of Treasury bonds and Federal Agency securities, thus removing risk from its balance sheet and ceasing to fund the federal deficit. And there’s the fiscal recovery, eliminating the annual $1 trillion deficits, part of which might conceivably be achieved by faster economic growth, but most of which must be achieved by higher taxes and lower spending.

Then, on top of managing these three processes, the exit has to be integrated with the needs of the global economy, avoiding crashing the market in Japanese government debt, now at a highly unstable level of 220% of GDP, while allowing a reasonable exit for the weaker sisters of the eurozone. The US does not have direct responsibility for these problems, but at least needs to tailor its policy so as to avoid making them intolerably worse.

Various policy reversal strategies would be counterproductive. To take the most extreme example, it would be foolish to attempt to reverse “QE” without doing anything about the deficit. That would double up on the strains to the financial market from financing the deficit, making the annual net cash flow drain on the market perhaps $2 trillion rather than $1 trillion. Almost certainly, this would cause a liquidity crunch, producing an economic lurch downward that would both worsen the deficit and bring even more misery to the American working class.

The British strategy under Prime Minister David Cameron, of making modest back-loaded spending cuts, allowing spending to increase in real terms in the short term, while raising taxes immediately, is also counterproductive. In Britain’s case, the authorities have staved off severe problems by massive doses of quantitative easing, financing a high percentage of the budget deficit through the Bank of England. Needless to say this has resulted in more misery for Britain’s unfortunate savers and a further economic lurch downward, albeit a mild one. It does not offer an attractive path forward.

It thus follows that reversing QE must come late in the Bernanke reversal process; that lowering the deficit must take a top priority and that spending cuts should precede or at least coincide with tax cuts. Passing legislation takes time, so monetary steps should logically precede fiscal ones.

The first step to take is thus to raise interest rates.
…

Pull the string, and it will follow wherever you wish. Push it, and it will go nowhere at all.

– Dwight D. Eisenhower

Tuesday, September 25, 2012 - 13:27
Fed’s Plosser: Concerned Might Have Reached Limits Of Monetary Policy
By Brai Odion-Esene

PHILADELPHIA (MNI) - Philadelphia Federal Reserve Bank President Charles Plosser Tuesday voiced his fear that in its strong push to support the economic recovery, the central bank’s policies might have passed the point at which they continue to be effective.

Taking questions from the audience after a speech, Plosser argued that over the years, expectations of what monetary policy can do have built up “beyond what we are capable of delivering on.”

He warned that if the Fed is setting itself up for a big fall if it keeps feeding into those expectations.

The central bank needs to display more humility, he said, and make it clear to Americans that there are limits to what monetary policy can do.

“I’m very concerned that we are reaching those limits — if not already there,” he said. “Some humility about acknowledging that actually could benefit the economy over the longer term.”

Plosser said the Fed’s quantitative easing measures have been successful in battling deflation, but subsequent programs have not been as effective in terms of impact on the real economy, with the impact of the asset purchases on employment and output growth not clear.

The results have been “less than spectacular,” so far, he said, adding the efforts being pursued by the central banking will have a “minimal” impact.

On the other hand, Plosser again warned that the risks from the Fed’s aggressive actions to boost the recovery could be quite “substantial,” and voiced his concern.

The Fed’s plan to buy $40 billion in mortgage-backed securities a month, in addition to its maturity extension program or ‘Operation Twist,’ have complicated the exit strategy.

Also the Fed’s goal will be to shrink its balance sheet gradually when the time comes, and the central bank must be aware of the consequences, he said.

The Fed is Trapped, Gold is the Exit
– Posted Wednesday, 26 September 2012
…
On September 13th, the Fed announced QE3, a policy of open-ended bond purchases which would add $1 trillion annually to the Fed’s balance sheet. The Fed’s decision to provide liquidity ad infinitum, i.e. QE etc, was framed in reasonable and carefully chosen language:

…These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative…

The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and debt ponzi-scheme functioning while searching for a solution that doesn’t exist.

CAPITALISM’S CONSTANTLY COMPOUNDING DEBT IS THE DEVIL’S WHIP OF GROWTH

In capitalist economies, capital, i.e. money, is introduced by central banks into the economy in the form of loans; and because interest constantly compounds, economies must constantly expand in order to pay down and/or service those loans. This is why economists in capitalist systems are obsessed with growth.

Capitalism is, in actuality, a smoke and mirrors shell game where credit and debt have been substituted for money; and, as long as capitalism expands no one is the wiser because the fraud is so subtle. Capitalism, however, is no longer expanding. It is contracting.

Capitalism reached its peak in 2008 when Greenspan’s historic credit bubble burst. What investors believed was a finely-tuned balancing act between credit and debt orchestrated by Fed Chairman Alan Greenspan turned out instead to be a speculative bubble fed by Easy Al’s easy credit from the Fed’s 24/7 discount window.

While Greenspan presided over the greatest credit expansion in the history of capitalism, Greenspan also presided over two of its largest speculative bubbles—the 1996-2000 dot.com bubble and 2002-2007 US real estate bubble. Greenspan would later refer to evidence of these bubbles as ‘froth’; to those who lost homes and fortunes, it was blood.
…

My view of the improbability of a QE exit has some high-level support.

More from Gross: Fed stuck with bad bonds forever
Pimco boss doesn’t foresee full unwinding of obligations from quantitative easing
By Dan Jamieson
September 21, 2012 2:49 pm ET

In wide-ranging comments on Thursday, Pimco founder Bill Gross detailed what the unwinding of quantitative easing might look like.
…
When asked what the ultimate unwinding of the Fed’s inflation trades might look like, Mr. Gross predicted there would be no exit — that the Fed would be stuck with “dead” bonds.

His full comments:

There are a number of ways it can play out. An exit at the moment is dependent on unspecified but increasingly specific targets. [Federal Reserve] governor [Narayana] Kocherlakota [president of the Minneapolis Fed on Thursday] basically said the Fed’s target is 5.5% unemployment. That seems a little bit of a stretch to me, but clearly at 8.1% or 8.2% [unemployment now], I think they have 6% unemployment targeted. So the exit … won’t occur until we get to 6% or lower unemployment, or as [Mr. Kocherlakota] couched it, inflation at 2.25% or 2.5% and accelerating. So, those are the two conditions. … I’m basically going so far as to say [the Fed is] not going to exit, that all those mortgages, all of those Treasuries on the balance sheet, they’re never coming off. That’s why I tweeted yesterday or the day before, ‘Central banks are where bad bonds go to die.’ Think about it. In euro land, the ECB has been buying Greek bonds, and now they’re buying Italian and Spanish bonds, and we can accurately say those are dead bonds. But in the U.S., a 10-year Treasury at 1.7% and a 30-year Treasury at 2.8%, those are bad bonds, because they’re bubbled and they’re overvalued. And so, a central bank is where bad bonds go to die. So is it like a zombie — do they spring alive again, and come back out of the balance sheet and go home to the private market? It’s possible. And that’s what [Fed chairman Ben] Bernanke speaks to all the time, about the exit strategy. I think basically an investor has to understand there’s no exit. That those bonds are there, they’re going to mature, and that it’s only a question of how long the central bank continues the process of QE3.

When would the central bank stop all this nonsense? When would a central bank realize you can’t cure a debt crisis with more debt? Well, probably only at the point where inflation begins to accelerate as [Mr.] Kocherlakota talked about [Thursday]. And realistically, to 3% and 4% and 5% [inflation], at some point the Fed would say, ‘Hey, we’ve got a dual mandate here and at least we’ve got to stop buying, I may not be able to sell these things, but at least I have to stop buying.’ So the ultimate outcome of all of this is, as I spoke to [earlier], in terms of the reflationary versus the deflationary tilt, if the Fed writes checks over the next 12 months of a trillion dollars, and they probably will, if the ECB writes another trillion dollars of checks, then ultimately it comes out in inflation. It might not come out in real growth. … Ultimately monetary policy ends when inflation begins to accelerate, when the dollar begins to go down and is trashed, and investors like the Chinese and Pimco and others … basically say a 1.7% yield in a 4% inflationary world is not my cup of tea. … So that’s how it ends.

How long is that from now? We’ll just have to see. [Mr.] Bernanke has promised that in addition to QE3, if this doesn’t work, there’s more behind this. And I’m not sure what that might be, because the Fed basically is limited to Treasuries, mortgages, and short-term municipals believe it or not. And to buy foreign bonds which I can’t believe Bernanke would ever do because that’s a political type of thing. So there’s only so many mortgages [and] Treasuries to buy before all of the sudden they become handcuffed in terms of more buying. So maybe that’s an outcome, too. … It’s not an outcome an investor really wants to face unless they’re protected with inflationary-protected types of assets.

Greek riots, Spanish marches shatter market calm
Published: September 26, 2012 Updated 13 hours ago
By ELENA BECATOROS — Associated Press

ATHENS, Greece — Europe’s fragile financial calm was shattered Wednesday as investors worried that violent anti-austerity protests in Greece and Spain’s debt troubles showed that the continent still cannot contain its financial crisis.

Police fired tear gas Wednesday at rioters hurling gasoline bombs and chunks of marble during Greece’s largest anti-austerity demonstration in six months. The protests were part of a 24-hour general strike, the latest test for Greece’s nearly four-month-old coalition government and the new spending cuts it plans to push through.

The brief but intense clashes by several hundred rioters among the 60,000 people protesting in Athens came a day after anti-austerity protests rocked the Spanish capital.

In Madrid, thousands of angry protesters again swarmed as close as they could get Wednesday night to Parliament, watched by a heavy contingent of riot police. There was no fresh violence, but the demonstrators cut off traffic on one of the city’s major thoroughfares at the height of the evening commute.

The protesters chanted for the release of 34 people detained Tuesday night in clashes that injured 64 others. They also demanded new elections to oust Prime Minister Mariano Rajoy and his conservative government, which has imposed cutbacks and tax hikes, deepening the gloom in a country struggling with recession and unemployment of nearly 25 percent, the highest among the 17 nations using the common euro currency.

Spain’s central bank warned Wednesday the country’s economy continues to shrink “significantly,” sending the Spanish stock index tumbling and its borrowing costs rising.

Across Europe, stock markets fell as well. Germany’s DAX dropped 2 percent while the CAC-40 in France fell 2.4 percent and Britain’s FTSE 100 slid 1.4 percent. The euro was also hit, down a further 0.3 percent at $1.2840.

The turmoil Wednesday ended weeks of relative calm and optimism among investors that Europe and eurozone might have turned a corner. Markets have been breathing easier since the European Central Bank said earlier this month it would buy unlimited amounts of government bonds to help countries with their debts.
…

Metal prices fall as unrest grips Greece and Spain and uncertainty hangs over world economy
By Associated Press, Published: September 26

NEW YORK — The prices of gold, most other metals and crude oil fell Wednesday, following the stock market down, as unrest grew in Europe and uncertainty lingered about the world economy.

Gold for December delivery fell $12.80 an ounce to finish at $1,753.60 an ounce. Gold has pulled back this week after a summer-long rally took it from about $1,550 an ounce to almost $1,800 an ounce on expectations that stimulus measures would be imposed in Europe and the U.S. to help boost economic growth.

Credit agencies are under greater scrutiny as consumer advocates question the accuracy of the scores.

Benchmark crude fell below $90 as protests raged in Greece and Spain over spending cuts and tax increases designed to resolve a debt crisis. Oil finished the day at $89.98 per barrel, down $1.39.

Police fired tear gas at rioters hurling gasoline bombs and chunks of marble during Greece’s largest anti-austerity demonstration in six months. At least 38 people were arrested and 64 injured in protests in Spain.

The protests in Europe shattered a relative calm and raised investor fears that the region still does not have control of its three-year-old debt crisis, despite a bold plan by the European Central Bank to buy bonds of indebted countries.

The unrest in Europe led traders to abandon risky assets, said Sterling Smith, a futures specialist with Citi in Chicago.

With U.S. economic figures “mixed at best,” he said, global economic concerns are also taking a toll, and what he called the “half-life” of the Federal Reserve’s latest efforts to help the economy is getting shorter.
…

RPT-UPDATE 3-Japan auto makers to slow output in China amid darkened outlook
Wed Sep 26, 2012 1:57am EDT

* Nissan to extend China holiday production halt

* Toyota says to suspend production at 2 factories from Wednesday

* Suzuki says cuts one of two shifts in China

* Output adjustments come on top of cuts linked to slower China econ

By Norihiko Shirouzu

BEIJING, Sept 26 (Reuters) - Japanese automakers including Toyota Motor Corp and Nissan Motor Co. are cutting back production in China in the wake of anti-Japan protests that shuttered dealerships and darkened their sales outlook in the world’s biggest car market.

Production slowdowns are a normal feature of the auto industry in mature markets like the United States and Japan, where they are used to keep inventories from ballooning and avoid pressure for automakers to offer deep discounts that erode profitability.

But the steps by the Japanese automakers to cut output in China are an anomaly in a market that has driven the industry’s global growth over the past decade and where most automakers had been adding capacity until China’s economic slowdown in recent months. That caused production to outpace sales, resulting in larger-than-normal inventory levels at many car dealers.

“For the time being I think you’re going to see Japanese automakers’ sales in China down by 20 to 30 percent,” said Koji Endo, auto analyst at Advanced Research Japan.
…

Mortgages & Real Estate
Housing market cool down widespread across Canada
Julian Beltrame, Canadian Press | Sep 24, 2012 11:36 AM ET | Last Updated: Sep 24, 2012 4:56 PM ET

Toronto new home sales fall to record low for August

In yet another sign the housing sector in Canada is slowing down, Toronto new home sales in August were the worst ever for that particular month.
Read more.

OTTAWA — Canada’s housing market appears to be cooling across the board in the face of tighter mortgage rules that affect many first-time buyers of modest means, a new analysis from the Conference Board shows.

The think-tank’s snapshot of resales for August shows a widespread decline in sales of existing homes, with 21 of 28 metropolitan markets registering a drop from July, and 16 of the markets showing a falloff of five per cent or more.

As well, listings fell in 17 of the 28 markets, an indication that owners were reluctant to place their homes for sale due to soft conditions.

Senior economist Robin Wiebe of the Conference Board said there was evidence of cooling in some markets — particularly Vancouver and Victoria — before the new rules went into effect July 9. But the new data shows the slowdown has spread to most markets and from coast to coast.

“When you see sales down in three-quarters of the market, that means it’s pretty widespread,” he said. “It’s knocked down previously high-flying markets like Regina and Saskatoon down a peg. Vancouver had been showing signs of cooling, now it’s spread out into the Fraser Valley.”
…

Bet they do.

National Australia Bank Ltd (NAB) has defended itself and the broader banking industry against accusations that bank profits are too high, saying that investors would flee the banking sector if it was unable to consistently deliver strong returns, according to The Australian

“If we’re not making $6 billion, they’re going to want to take their money out,” Mr Joiner said, according to The Australian. “We don’t sit on a pile of gold coins and yell, ‘Yipee!’”.

http://www.businessspectator.com.au/bs.nsf/Article/Bank-profits-dont-deserve-sharp-criticism-NAB-pd20120926-YHQ9X?opendocument&src=rss

Are buyers to blame for housing bubbles?

It’s easy to blame bankers and real estate agents for the housing mess, But maybe it’s also time to take a good hard look in the mirror.

Karl Case and Robert Shiller recently collaborated on new research that looks at the power of belief in driving up home prices.

The dynamic duo, founders of the vaunted Case-Shiller housing index, laid out their case last Friday before a Newport hotel hall packed with mortgage bankers.(OK, blaming the buyers also probably went over well given the audience, but I will leave that for another post.)

Here’s an observation from Case - as reported by Banker & Tradesman - that gets right to the point.

“It’s the people who have the highest willingness to pay that drive the price,” Case said.

Think about the implications of that - it’s pretty frightening. It’s not the savvy buyers sticking with a budget who are driving this train.

http://www.boston.com/realestate/news/blogs/renow/2012/09/are_buyers_to_b.html?comments=all#comments

The NAR is nothing but a terrorist organization and spends millions each year on political lobbying efforts to push their agenda.

goon squad employer?

A $23 million mansion avoids auction: Rodney P. Hunt built a 20,000-plus-square-foot mansion on the Potomac River in McLean as a monument to what he’d achieved as co-founder of RS Information Systems, a government contracting firm. The house, with its indoor basketball court, two-lane bowling alley and 15-car garage, was facing a foreclosure auction this week. The entrepreneur owed more than $9.4 million to Bank of America, public records show, for money borrowed against the house, which was once featured on MTV’s “Teen Cribs.” On Wednesday, Hunt was able to convince the bank that he can make payments on the loan, and the auction was cancelled.

http://www.washingtonpost.com/local/foreclosure-auction-is-off-for-23-million-mclean-mansion/2012/09/26/9154aaec-081e-11e2-a10c-fa5a255a9258_story.html?wprss=rss_local

Why the Q-poll is a Qrock, Counting too many Democrats, NY Post

In the Q-polls released yesterday, the spread between Democrats and Republicans each exceeded Obama’s 2008 advantage.

In Florida, the 2008 actual result was D +3; yesterday’s Q-poll had it at D +9.

In Ohio, it was D +8 in 2008, D +9 in the Q-poll.

And Quinnipiac gave us D +11 in Pennsylvania, versus a 2008 result of D +7.

Mind you, each of these states has seen dramatic changes in party preferences since 2008 — electing Republican governors, flipping the state legislatures to GOP control, etc.

http://www.nypost.com/p/news/opinion/opedcolumnists/why_the_poll_is_qrock_56LUGAzegy7yn9zE8PsymK

In other words, these polls are being used as a political tool to push support to Obama, or to suppress Romney support. FYI, voting results are going to be much more slanted towards Romney as the conservative vote is motivated, widely dispersed and totally committed toward getting our government back from the Prez.

Will Romney win? I think so, but time will tell.

Euro near two-week lows, market awaits Spain budget
Analysis & Opinion
Counterparties: The never-ending story of the Euro crisis
Euro bank recap battle line limits solidarity

Euro notes are pictured at a bank in this photo illustration taken in Seoul June 18, 2012. REUTERS/Lee Jae-Won

By Nia Williams

LONDON | Thu Sep 27, 2012 8:11am EDT

(Reuters) - The euro traded close to a two-week low against the dollar on Thursday as investors awaited a draft budget from Spain that could pave the way for the country to request an international bailout.

Uncertainty about when Spain will request a rescue program has weighed on the euro in recent sessions, with the single currency coming under pressure as Spanish 10-year bond yields hovered near 6 percent.

Spain is expected to present its 2013 budget draft later on Thursday. A credible budget along with comprehensive structural reforms could build the foundation for meeting conditions for a Spanish aid package and intervention by the European Central Bank in the bond market, analysts said.

The euro was close to flat at $1.2862, just above a two-week low of $1.2835 set the previous day. The euro has support at the 200-day moving average near $1.2826 and around $1.2740, the 38.2 percent retracement of the July to September rally.

“All eyes have been on Spain for the last week or so. We have had a big shift in euro positioning recently so going into the budget investors are probably positioned fairly neutral,” said Michel Sneyd, FX strategist at BNP Paribas.

Adding to concerns over Spain, the indebted Castilla La Mancha region may seek 800 million euros ($1 billion) in emergency funding from the central government, regional and party sources said on Thursday.

Most strategists said the euro was likely to appreciate if and when Spain requests a bailout to trigger ECB bond-buying, although gains would be curbed by concerns about Greece.

“The reaction to the Spanish budget and whether Spain is going for a bailout or not in the near term along with the clear and present danger that Greece presents will be factors that will keep gains limited,” said Simon Derrick, head of currency research at Bank of New York Mellon.

Demonstrators clashed with police in Athens and Madrid this week in protest over new austerity measures.

Greece’s international lenders are at loggerheads over how to respond to its debt crisis, threatening more trouble for the euro in the coming weeks.

A Moody’s review of Spain’s ratings is also expected this week. A cut could take the country below investment grade and put further pressure on policymakers.

CHINA EASING TALK

Talk that Chinese authorities might take steps to prop up the country’s stock markets had earlier bolstered riskier currencies like the Australian dollar and lent some support to the euro against the safe-haven dollar and Japanese yen.
…

Updated September 19, 2012, 7:08 a.m. ET

MONEY TALKS
Undeclared Currency Wars
By ALEN MATTICH

What ever other arguments central bankers make for quantitative easing, the one they don’t readily admit to is an effort to beggar their neighbors.

The result is seemingly endless rounds of QE.

The latest started with the Bank of England’s decision to restart bond purchases in July. Not to be outdone, the European Central Bank followed suit with a promise to make unlimited purchases of short-dated sovereign debt so long as the relevant sovereign agreed to fiscal conditions. Then the Federal Reserve launched its third QE program to buy fixed monthly quantities of mortgage-backed securities, with no pre-set end. And now the Bank of Japanhas launched yet another round of its own brand of QE.

Although central banks argue primarily that QE is there to circumvent the broken financial sector as a means of getting money to households and companies that need credit, there’s the less readily admitted boost to domestic industry through currency weakening.

The Bank of England has probably been clearest in seeking to rebalance the U.K. economy towards manufacturing and exports and away from domestic consumption through the mechanism of a falling pound.

If, as many central bankers believe, the world is demand constrained, then they are hoping to use currency weakness to stimulate demand and are effectively taking some more of that fixed pool of demand for themselves. In other words, beggar thy neighbor.

But if everyone’s doing it, surely QE won’t work. Right?
…

Japan launches QE8 as 20-year slump drags on
Japan has launched an eighth round of quantitative easing to weaken the yen and cushion a slide back into recession.
By Ambrose Evans-Pritchard
7:29PM BST 19 Sep 2012

The Bank of Japan (BoJ) is to buy a further 10 trillion yen (£79bn) of bonds, bringing the total accumulated so far in its battle against deflation to 80 trillion yen, or 20pc of Japanese GDP.

Jun Azumi, Japan’s finance minister, praised the bank’s “bold” efforts to hold down the yen, lending credence to suspicions that the real motive is to counter “beggar-thy-neighbour” currency devaluations by other powers and prevent the strong yen choking Japan’s export industry.

Yunosuke Ikeda, from Nomura, said the Bank of Japan had yielded to “immense political pressure” after months of criticism. Governor Masaaki Shirakawa is a champion of orthodoxy, a soulmate of Germany’s Jens Weidmann.

Mr Shirakawa stated on Wednesday – almost with regret – that Japan now has the “easiest monetary conditions” in the rich world. “I do not think that you could argue that the BoJ is less bold than the Fed,” he said.
…

Opinion: Ben Bernanke declares war on the Canadian economy
Monetary policy will raise the value of the loonie, but we can compete by making high-quality products that sell
By Bruce Stewart, Special to the Sun September 25, 2012

Did you smile or cheer when U.S. Federal Reserve chairman Ben Bernanke announced Quantitative Easing III (and the markets went up)?

He just declared war on your job, and the whole Canadian economy.

Of course, so did the European Central Bank, the Central Bank of the People’s Republic of China and others.

All of them are engaged in the same practice. They’re printing money. Gobs of it, in programs that have no end point.

Some are doing it to apply stimulus to revive their economies. Some are doing it to play extend-and-pretend games to hold their banks together.

For a country like Canada, with an economy in reasonably good shape, a government that’s not out of control, banks that are healthy and dependent on exports, it’s a declaration of war.

The game everyone else is playing is “beggar thy neighbour.” All this excess cash, whatever its stated purpose, is designed to bring their currencies down.

Like a see-saw, as they push their currency down the honest Canadian currency goes up. That’s why the Canadian dollar is worth so much more lately relative to the U.S. dollar and the other world currencies. It’s a measure of their weakness more than it’s a measure of our strength, but it doesn’t matter. It kills our exports just the same.

Worse, the weaknesses in other countries’ economies affects our resource exports just as much as it does our manufactured goods and our services sold overseas.

Well, we could play the game: Mark Carney could drop our interest rates to zero, and print money like it’s going out of style. The government could launch a larger Economic Action Plan II and rack up the deficits. Both would lower the Canadian dollar.

It would also send the price of a litre of gasoline and a week’s groceries through the roof — food and fuel have gone up 35 to 40 per cent in the countries that are playing the “print and hope” game — and anyone living on a fixed income, or anyone planning to collect their pension, would be in deep trouble. It’s hard to live on zero interest.
…

from the bottom of yesterday’s bits bucket:

“How does the Fed’s new easing benefit equity REITs?

The Federal Reserve’s latest round of money stimulus and extended low interest rates should bolster real estate valuations and provide a tailwind for equity REITs amid gradually improving fundamentals. The fundamentals — gradual recovery in jobs and housing — indicate a poised pattern of slow economic growth.”

I’d like to understand more about the QEternity program. In the meantime my imagination is active.

No one will much question the Fed for bailing out the GSEs in the name of “JOBS!”. If the government gave 50 billion to the GSEs it would bring on a public scandal, like Solyndra x 100 every month.

The GSEs will sell the stinkiest mortgages to the Fed first? 250,000 dodgey mortgages a month just vanish, with money stolen from us.

Jeepers! Just at the point when the U.S. housing market is finally back on its feet, we get this terrible news from the market for other durable goods (besides housing).

What gives? Could it be that people who bought overpriced housing have no money left over in their meager budgets to buy other big-ticket items?

Sept. 27, 2012, 8:30 a.m. EDT
U.S. orders for durable goods sink 13.2% in August
By Jeffry Bartash

WASHINGTON (MarketWatch) — Orders for durable goods sank 13.2% in August, the biggest one-month decline in more than three years, as bookings for autos and aircraft fell sharply, the Commerce Department reported Thursday. Economists polled by MarketWatch had expected a decline of 5.3%. Excluding the volatile transportation sector, whose bookings can swing sharply from month to month, orders fell a much smaller 1.6%. And orders for core capital goods, which exclude defense and aircraft, actually rose 1.1% after a 5.2% decline in July. Shipments of durable goods fell 3.0% in August, while inventories rose 0.6%. Orders for July were revised down to a 3.3% increase from an initial report of a 4.1% gain. Shipments of core capital goods, a number used to help calculate gross domestic product, fell 0.9% in August to mark the second straight decline.

September 15th, 2012 02:19 PM ET
11 days ago

Ryan calls Federal Reserve actions ‘insidious’
Posted by CNN Political Reporter Peter Hamby

Oldsmar, Florida (CNN) - Republican vice presidential candidate Paul Ryan called the Federal Reserve’s latest effort to stimulate the economy “insidious” during a speech to Floridians on Saturday.

The Federal Reserve this week announced a new round of quantitative easing, the central bank’s program to increase the money supply by buying up billions of dollars worth of debt held in mortgage-backed securities.

The week’s move by the Fed, known as “QE3,” has become a campaign talking point for Republicans, including GOP presidential candidate Mitt Romney.

Critics say the central bank’s effort is inflationary, and argue it’s yet another sign that President Obama has failed to turn around the limp economy.

“One of the most insidious things a government can do to its people is to debase its currency,” Ryan said at an outdoor rally in Oldsmar, Florida. “We want honest money; that means we want honest government. It’s one and the same. Now the secret to prosperity is not more money printing.”

Ryan said QE3 might help banks on Wall Street but will do little to help middle-class families.

“We don’t need sugar high economics; we don’t need synthetic money creation,” he said. “We need economic growth. We want wealth creation. We don’t want to print money. We want opportunity and growth. And when they do this to our money, it undermines the credibility of our money.”
…

September 14, 2012 3:05 PM

THE RACE: Fed move lifts its political profile

The Federal Reserve under Chairman Ben Bernanke is trying to help the economy by doing something President Barack Obama and Congress can’t and which Mitt Romney opposes: electronically creating money, mostly out of thin air.

The Fed says it will “buy” $40 billion a month in mortgage bonds until stubbornly high unemployment eases substantially. The Fed’s new move is on top of its $85 billion-a-month purchases of Treasury securities under an existing program.

It hopes to hold down long-term interest rates long enough to stimulate more private-sector borrowing and hiring.

Democrats generally welcomed the step, although Obama’s camp won’t comment on Fed actions. Republicans called it further confirmation that Obama’s policies are failing.

“The president’s saying the economy’s making progress, coming back. Bernanke’s saying, ‘No, it’s not. I’ve got to print more money,’” Romney told ABC.

If elected, the Republican says he won’t reappoint Bernanke when his chairman’s term expires in January 2014.

The Fed has kept a key short-term rate — on loans between banks — near zero for over three years and pumped hundreds of billions of dollars into the financial system.
…

FOSTER: What Fed policy says about Obama economy
By J.D. Foster - Special to The Washington Times
Tuesday, September 25, 2012

ANALYSIS/OPINION:

Has Federal Reserve Chairman Ben S. Bernanke gone all political on us? Very unlikely, though it may look that way. But he does seem deeply worried about the sliding U.S. economy under President Obama’s policies.

The Fed’s recent announcement of the third round of bond-buying stimulus known as Quantitative Easing 3 (“QE3”) was criticized by some as appearing to be intended to boost Mr. Obama’s re-election prospects. Nothing like a little Fed-driven stock market boomlet just before an election. Now that’s Chicago-style politics big time! Money pumping beats dead people voting every time.

The opposite is far more likely. Mr. Bernanke almost surely launched QE 3 despite grave reservations about the timing coinciding with the hyper political season. The Fed, and likely anyone who’s ever thought about monetary policy and monetary history, know that politicizing a central bank is a major no-no. Central bank independence of political pressures is essential to its credibility as an inflation fighter.

The Fed’s counterpart in Europe, the European Central Bank, knows this all too well. It regularly succumbs to the “Desperate Housewives” version of European policymaking in defense of a failed monetary union. Mr. Bernanke wouldn’t risk the appearance of playing politics if he thought he could prudently avoid it.

So if they are so deeply reticent to inject the Fed into a political environment, why did Mr. Bernanke & Co. launch QE3 now? The answer is plain enough: Mr. Bernanke and his colleagues are so worried about the sliding, stumbling, suffering U.S. economy they felt they couldn’t wait just two short months to get past the election.
…

Posted: Sept. 26, 2012 at 10:27 AM
Alex Tokarev
Ben’s big bluff: The political implications

Last week I listed some of the possible economic perils of unleashing a new round of “quantitative easing.” The events have, as usual, a political aspect that needs attention. With just a few weeks left until the 2012 elections, the Fed’s mid-September monetary intervention makes short-term speculation more profitable. Rewarding such market behavior through record low interest rates could boost the Wall Street numbers long enough to create the illusion of a robust economic recovery. The White House relies on just such developments to persuade undecided voters from the so-called “battleground states” to favor the current administration.

QE3 may get Barack Obama reelected despite a pathetic economic record, making him the first incumbent in more than seven decades to win another term by prolonging a depression. It may help Ben Bernanke to be reappointed to the most powerful office in the world, Fed chairman. It may also earn a few CEOs obscenely large bonuses. What QE3 cannot do is create incentives for governments to live within their means and for households to save for their future. Neither can it inspire confidence in our entrepreneurs to invest the mountains of idle cash in productive activities that create conditions for long-term expansion.

The new phase of monetary easing (and note how the Fed avoids using the term “stimulus,” which has become a dirty word thanks to President Obama’s policies of the last four years) increases volatility in the housing and energy sectors with predictable economic and political repercussions. It creates additional traps and roadblocks for our economy in the years to come. It fuels the progressivist propaganda machine that portrays capitalism as an unstable system. It makes it much easier for future generations to swallow the “noble lie” that government interventions in the market are indispensable.
…

2012 US campaigns have cost more than $4bn, election commission says:

http://m.guardiannews.com/ms/p/gnm/us/sLXFEL9yxdx1OI7nF8dg6uA/view.m?id=15&gid=world/2012/sep/26/2012-us-campaigns-cost-4bn&cat=world_us-elections-2012

Union-busting Wis. governor calls for return of NFL’s union refs after call seals Packers loss

(Mike Roemer/ Associated Press ) - Green Bay Packers fan Mike LePak holds a sign in front of Lambeau Field on Lombardi Avenue, Tuesday, Sept. 25, 2012, in Green Bay, Wis., in protest of a controversial call in the Packers 14-12 loss to the Seattle Seahawks, Monday night in Seattle. Just when it seemed that NFL coaches, players and fans couldn’t get any angrier, along came a fiasco that trumped any of the complaints from the weekend.

By Associated Press, Published: September 25

MADISON, Wis. — Nothing brings political enemies together in Wisconsin like the Green Bay Packers.

Following a controversial game-ending call by replacement referees that cost Green Bay a win over the Seattle Seahawks on Monday Night Football, Wisconsin officials from across the political divide united behind the Packers.

Even Gov. Scott Walker and a Democratic state senator who were bitter opponents in the 2011 battle over Wisconsin public workers’ collective bargaining rights found themselves on the same side Tuesday.

Walker, whose union-busting efforts have made him the darling of fiscal conservatives, posted a message on Twitter calling for the return of the NFL’s locked-out unionized officials.

“After catching a few hours of sleep, the (hash)Packers game is still just as painful. (hash)Returntherealrefs,” Walker tweeted early Tuesday.
…

Living (And Dying) Under Drones:

http://www.counterpunch.org/2012/09/25/living-and-dying-under-drones/

It seems like nobody in the MSM is capable of connecting the dots between the Fed’s indefinite QE and the pension crisis. If nearly every state is facing problems with their pension, doesn’t it seem plausible something bigger is in play than local budget issues? The situation brings to mind the days when there was no housing bubble, as “All Real Estate is Local.”

Wake up, people!

ECONOMY
September 21, 2012, 8:02 p.m. ET

Pension Crisis Looms Despite Cuts
Almost Every State Trims Public-Employee Benefits but $900 Billion Retirement Funding Gap Remains
By MICHAEL CORKERY

Almost every state in the U.S. has made cuts to its public-employee pensions, seeking to dig out from the economic downturn, but so far the measures have fallen well short of bridging a nearly $1 trillion funding gap.
…

Hmmm…

Colorado said the following about my housing choices and wanting to stay in downtown Austin, but I didn’t have time to respond.

——–
“2012-09-26 10:01:37
You see, he wants to live downtown and be cool. An apartment in the burbs is the epitome of uncool.

I see this same nonsense in downtown Denver. You pay a huge premium to be there.”
——–

There’s always somewhere cheaper to live than your current place. Why not move to Detroit? Houses are cheap!!!

Some of us are active and social people, yet intelligent. Being downtown provides convenient access to many features that fit MY lifestyle. I hate being home doing nothing; I hate watching tv, playing video games, cleaning or reading a book. I like to be out doing something whether is kayaking, working out, having a drink or just walking around.

And you know what? There’s nothing wrong with that. You are no better than someone hair because you live in a small town, suburb and $ave money.

At the end of the day, I don’t live to work; I work to live… And being downtown close to my friends and the activities I enjoy makes me HAPPY! And I stay well within my budget; zillow says I should be able to afford up to 380k with my salary, but I’m smarter than that.

“The New Price of American Politics” The Atlantic

Not since the Gilded Age has our politics been opened so wide to corporate contributions and donations from secret sources. And the new era of big money has just begun. Jim Bopp, its intellectual architect, believes this is a good thing—the more money, the better, he says. Reformers (and most voters) disagree. Their battle is over the most-basic ideas of our democracy; at stake—according to both sides—is either the revitalization of politics, or its final capture by the powerful.

By James Bennet

http://www.theatlantic.com/magazine/archive/2012/10/the/309086/

From Natural News ,Sept 27,staff writer Ellen A. Hutt .

“Nearly Every Major Drug Company Convicted Of Criminal Behavior In
Three Years ,11 Billion sweep .

From the article ;

“…Two new papers published in New England Journel of Medicine (NEJM)suggest that drug industry corruption is so pervasive nowadays
that even the most rigorously conducted studies and trials are not taken seriously by many doctors . ”

” Over the past three years ,nearly every major drug company on the planet has been convicted of some kind of criminal behavor ,whether
it is fudging drug safety data; or conducting fraudulent clinical trials.
Collectively ,these companies have been forced to pay roughly 11 billion in fines for theses and other crimes, which have apparently become a normal part of their corporate operating procedure .”

Big Pharmas culture of corruption reminds me of the real estate lending fraud that caused such World wide financial destruction .
Because over 4 billion prescriptions are written yearly and this makes up a large part of the medical system these days ,this is a major issue
regarding the absurd cost of medical care that would have this much corruption . Big Pharma Companies have been found to be bribing doctors to write more and more prescriptions ,including off label use
which isn’t even approved by the FDA .

Because you have 3 major monopolies tied into the medical system,
being the AMA ,the Insurance Industry and the Pharma Industry ,one has to wonder how much of this is really good or needed medical care . The stats keep rising on preventable or premature medical deaths per year ,whereby some stats are at 700 thousand a year .making medical care a major cause of death .

And the people are set up to pay the increasing costs of this system
that has become questionable in that corrupted and criminal Big Corporations are cashing in by the trillions on this Big Pharma medical approach . Not only are the costs becoming a National burden , this form of Corporation greed profit motive can kill you .

This is one of the areas that needs a major overhaul because in spite of being fined ,no CEO of big Pharma has gone to jail ,and the fines are peanuts compared to the profit margins from deadly and damaging drugs ,even if they have to take them off the market eventually .

It is my contention that the rise of Big Monopoly Corporations and their increasing power over” close their eyes” Regulatory agencies and Politicians ,coupled with de-regulation, has created a culture of
corruption that is spaning to many areas ,including food production .
Corruption everywhere ,at the expense of the people .

Home prices may not return to peak until 2023

By Les Christie | CNNMoney.com – Wed, Sep 26, 2012 6:28 AM EDT..

Home prices are showing signs of life, but have a long way to go to make up for losses from the housing bust.

U.S. home prices dropped by a third from the start of 2007 to the start of 2012, according to Fiserv, an analytics firm.

Fiserv forecasts prices will bounce back an average of 3.7% a year for the next five years — a rate that would still leave prices 20% below the peak. At that forecasted growth rate, the national average high of $238,000 would not be hit again until 2023.

It could take even longer in some areas. “In some hard-hit markets, prices could take decades to recover,” said Fiserv economist David Stiff.

Among those facing a long haul: Arizona, California, Florida and Nevada, the states most caught up in the speculative feeding frenzy of the mid-2000s.

In California, for example, home prices should grow a little faster than the national average. Fiserv projects 4.4% gains during the next five years. But the hole is also deeper, with prices having fallen nearly 46% from early 2007 to early 2012. Break even won’t come until after 2026.

Homeowners in Nevada may have to wait the longest to make up lost ground. Home prices in the state plunged nearly 60%, and Fiserv projects annual gains of just 2.3%. It would take some 40 years at that pace to get back to 2007 levels.

Real estate, of course, is local, and there are many housing markets that never bubbled during the boom. In those places, buyers who bought in 2007 are much more likely to be in the money today. In South Dakota, Texas and West Virginia, prices are already slightly higher than they were five years ago.

In North Dakota, a housing shortage driven by the oil boom has sent prices soaring 17.7% over the past five years.

Iowa, Oklahoma and Nebraska, are nearly back to peak, as are Kentucky, Vermont and Alaska. These were all housing markets that recorded only mild price increases during the boom.

View this article on CNNMoney

http://finance.yahoo.com/news/home-prices-may-not-return-102600405.html -

“Break even won’t come until after 2026.”

In The Year 2525 lyrics

In the year 2525
If HARP is still alive
If Deadbeats can survive
They may find

In the year 3535
Ain’t gonna need to tell the truth, tell no lies
Everything you think, do, and say
Is in a workout plan you just got today

http://www.youtube.com/watch?v=1FgSmdfRUus - 158k -

The Fed and ECB have managed to restore calm to financial markets and lower borrowing costs for governments across the G7 and European periphery. The boss of Bond giant Pimco told CNBC on Wednesday that he is hoovering up the very same debt the Fed and ECB plan to buy as part of their respective unconventional programs and expects to make a healthy return.

“We continue to anticipate what the Fed is buying,” said Bill Gross on CNBC’s Street Signs “They’ve told us they will buy $40 billion to $70 billion of agency mortgages every month until the cows come home. It pays to own these mortgages even though they’re overvalued.”

Pimco is also looking to get ahead of any ECB move to buy Spanish and Italian debt. “They told us they are going to buy Spanish and Italian 1- to 3-year debt should those countries apply for a rescue,” Gross said.

Hope and Change!

Four more years!

FORWARD!

and we can always blame bush…

————————-

More Proof The U.S. Economy Is Falling Apart
Forbes | 9/27/2012 | Abram Brown

A series of new economic figures this morning cast fresh gloom on the health of the U.S. economy.

The economy grew much less than expected in the second quarter, new Labor Department estimates show. Second quarter GDP was revised lower to 1.3% from an earlier 1.7%. (Economists believed that GDP would be revised lower to 1.6%.) Declining consumer spending and business investment combined to weigh mightily on economic activity.

More troubling still is what this suggests about the third quarter. Little has surfaced to point to a pick-up, meaning that it’s unlikely the economy will grow much more than before. In short, today’s data sends “a notable red flag for U.S. growth,” says Action Economics‘ Michael Englund.

U.S. economic growth turned even more anemic after the first quarter, when GDP grew by 2%. Manufacturing, a key driver of the economy earlier in the recession, has cooled, the result of an uncertain U.S. political outlook and slowed global demand.

What’s more, durable goods orders, a measure of factory activity, plunged last month in the largest drop in more than three years, data released by the Commerce Department this morning shows. Orders fell 13.9%. The last time that factories slowed this much: January 2009, when the economy was in the depths of the recession.

This data point also stymied economists, who predicted that orders would fall 5%.

“Stocks are up.”

Suck ‘em in, shake ‘em out.

19 PERCENT OF FAMILIES IN DEBT FOR COLLEGE
Enrollment, tuition increases drive up student loan borrowing
By HOPE YEN • ASSOCIATED PRESS
12:01 a.m., Sept. 27, 2012
Updated 4:01 p.m. , Sept. 26, 2012

With college enrollment growing, student debt has stretched to a record number of U.S. households — nearly 1 in 5 — with the biggest burdens falling on the young and poor.

The analysis by the Pew Research Center found that 22.4 million households, or 19 percent, had college debt in 2010. That is double the share in 1989, and up from 15 percent in 2007, just before the recession — representing the biggest three-year increase in student debt in more than two decades.

The increase was driven by higher tuition costs as well as rising college enrollment during the economic downturn. The biggest jumps occurred in households at the two extremes of the income distribution. More well-off families are digging deeper into their pockets to pay for costly private colleges, while lower-income people in search of higher-wage jobs are enrolling in community colleges, public universities and other schools as a way to boost their résumés.

Because of the sluggish economy, fewer college students than before are able to settle into full-time careers immediately upon graduation, contributing to a jump in debt among lower-income households as the young adults take on part-time jobs or attend graduate school, according to Pew.

As a share of household income, the debt burden was the greatest for the poorest 20 percent of households, or those making less than $21,044. In all, 40 percent of U.S. households headed by someone younger than age 35 owed college debt, the highest share of any age group.

“Comparing the debt to their economic resources, the lowest-income fifth of households are the ones experiencing the greatest stresses,” said Richard Fry, a senior economist at Pew who analyzed the numbers.

Noting that college enrollment has continued to climb since 2010, Fry added: “Until college enrollment peaks, I would not expect the amount of outstanding student debt to level off.”
…

(Data links below) So, if I’m reading this correctly, new house sales were 31,000 in August 2012. It last reached that level around March-August 2009. Before that, those numbers were seen back in March-July 1982.

NAR provides the numbers for the Commerce department. And NAR is constantly playing with the numbers, as some research on their site indicates. I don’t know why Commerce does this as NAR is a sales organization first and foremost. They’re not going to say or do anything that’s going to hinder their agenda. I’m not saying it’s good or bad, it’s just a description of reality.

Anyway, NAR says annual existing house sales are at 4.8 million, the level last seen in 2002 and 2007 (both sides of the bubble plateau). Can it be true that existing house sales are back into bubble territory, yet new house sales are at levels which existed in a recession 30 years ago? NAR says house prices are back in bubble territory as well.

So - the bubble was driven by bad lending (driven by lenders not retaining repayment risk) resulting in toxic mortgages. Now, the government and The Bernank are putting the full firepower of the Fed behind trying to get prices and volumes up to those toxic-mortgage-driven bubble levels.

Your tax dollars at work. Actually, more like you children’s, grandchildren’s and great grandchildren’s tax dollar at work.

Data sources:

Existing house sales up to 2010, from commerce.gov/census.gov (data provided by NAR):
http://www.census.gov/compendia/statab/2012/tables/12s0977.pdf

New house sales, 1963 - August 2012, from census.gov:
http://www.census.gov/construction/nrs/pdf/soldreg.pdf

Existing house sales, 2009 to 2012, from NAR:
http://www.realtor.org/news-releases/2012/09/august-existing-home-sales-and-prices-rise

432,000 MAY COLLECT IN MORTGAGE SETTLEMENT
Relief process to start for Californians who lost homes to foreclosure
Written by
Lily Leung12:01 a.m., Sept. 27, 2012
Updated 6:10 p.m. , Sept. 26, 2012

More than 432,000 Californians who lost their homes to foreclosure may get money through a historic mortgage settlement between 49 states and major banks, according to the state Attorney General’s Office.

Eligible borrowers may receive at least $840, but the exact amount depends on how many people submit claims, Nick Pacilio, a spokesman for the AG’s office, said Tuesday. The higher the number, the smaller the claim amount will be.

Consumers who receive letters from the Attorney General’s Office were chosen because their homes were foreclosed upon between Jan. 1, 2008, and Dec. 31, 2011, and because they had home loans serviced by the banks named in the $25 billion mortgage settlement. They are Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo.

The deal, approved in court five months ago, required those lenders to provide relief to homeowners in the form of principal reductions, loan refinances, restitution and short sales. The relief was the answer to allegations that mortgage servicers approved loan documents without proper review, abuse also known as robo-signing.

Borrowers should expect to receive packets by mail starting this week and through Oct. 12. Packets include a claim form that should be filled out and details about the settlement.

The Attorney General’s Office has urged borrowers to fill out the claim form and return it by Jan. 18, either by mail or at nationalmortgagesettlement.com.
…

Dot com mania 2.0, we barely knew thee!

SMALL BUSINESS
Updated September 27, 2012, 11:34 a.m. ET

Internet Funding Boom Ends as Fast as It Began
By PUI-WING TAM And AMIR EFRATI

The falling stock prices of Facebook Inc., Zynga Inc. and Groupon Inc. are causing some investors to pull back from Web start-ups.

Jeff Tangney recently experienced the change firsthand. Mr. Tangney, chief executive of Doximity Inc., a social network for doctors, said venture capitalists clamored to invest in his San Mateo, Calif., start-up earlier this year. At the time, the investors “encouraged focus on user engagement, not revenue,” he said.

But when Mr. Tangney hit the fundraising trail last month with the goal of amassing $20 million, he got a different reception from investors. By then, Facebook had held its botched initial public offering and its share price—along with those of Zynga’s and Groupon’s—was quickly dropping.

In the aftermath, investor questions turned “a complete 180 degrees” and they wanted to know how Doximity would make money, said the entrepreneur.

This month, Mr. Tangney disclosed Doximity’s new financing. But instead of snagging $20 million, he got $17 million and his company was valued 30% lower than what he anticipated. Only half the number of venture firms that had made verbal offers to Doximity earlier in the year ended up making formal offers last month, he added.

“I underestimated how tough this round would be,” said Mr. Tangney. “In hindsight, I should have raised earlier in the year because that’s when the market was hot.”
…

Is Megabank, Inc legally permitted to redline areas which had the biggest housing bust?

BUSINESS
Updated September 26, 2012, 7:16 p.m. ET

Need a Loan? Where Do You Live?
Banks Boost Consumer Lending in Smaller Cities That Skirted Mortgage Crisis, but Big Cities Trail
By DAN FITZPATRICK

The long-awaited recovery in bank lending to consumers is well under way in some smaller U.S. cities but remains depressed in large metropolitan areas on the East and West coasts, according to an analysis of data by The Wall Street Journal.

The geographic divergence in new credit highlights the uneven recovery in different parts of the U.S. In some smaller population centers across the Great Plains and Midwest that rely on energy, food processing and manufacturing industries, banks are taking as much risk as they did precrisis.

But new lending still is trailing in larger coastal areas that were dominated by construction and finance.

In Cedar Rapids, Iowa, the 177th-largest metropolitan area in the U.S., banks made 11% more new consumer loans in 2011 than they did at the peak of the U.S. housing boom in 2006, data from Equifax Inc. and Moody’s Analytics show. The amount of new loans in the fourth quarter alone was 52% higher than the same period in 2006.

The jump in Cedar Rapids was the largest among roughly 200 U.S. metropolitan areas cataloged by Equifax and Moody’s, a population mass that comprises more than 80% of all U.S. borrowers.

The largest drops were in cities scattered across California and Florida, the states hardest hit by the U.S. housing bust. New lending in Merced, Calif., which experienced one of the worst housing collapses in the U.S., ended last year 81% below the peak in 2006. The three largest U.S. cities—New York, Chicago and Los Angeles—experienced decreases of 38%, 44% and 55%, respectively.

All told, U.S. consumer-loan originations were down 40% in 2011 compared with 2006, the data show.

“A lot of these places that were not hit hard that tend to be concentrated in the Midwest are recovering more quickly,” said Mike Shires, an associate professor at Pepperdine University’s School of Public Policy who specializes in economic development and local finance. “The urban areas will have to follow for us to feel like it’s a true economic recovery.”

U.S. banks took flak during the financial crisis for clamping down on lending to conserve capital as a cushion against mounting loan losses. Loan demand also fell as companies shelved expansion plans and consumers trimmed spending. That combination made it harder for the U.S. economy to rebound.

Now, loan portfolios at U.S. banks are growing and loan demand is returning, but it is largely in the form of new lending to small and midsize businesses. Such loans were up 17% in the second quarter of 2012 compared with the same year-ago period, according to banks surveyed by Keefe, Bruyette & Woods. Consumer loans, on the other hand, were down 0.9% in the second quarter compared with the same period last year, according to KBW.

The cities in the middle section of the U.S. that experienced the largest increases in consumer lending share several characteristics. They all have low jobless rates, stable employers and real-estate markets that avoided speculative bubbles—leaving them with stronger household credit conditions. These include the college towns and state capitals of Madison, Wis., and Lincoln, Neb., as well as the agricultural centers of Davenport, Iowa, and Omaha, Neb.
…

Pending Home Sales Crater

http://www.businessweek.com/news/2012-09-27/pending-sales-of-existing-homes-in-u-dot-s-dot-fell-2-dot-6-percent-in-august

In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc.

If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: “I Dig It.”

The sale of DoubleClick shares received before the company went public, detailed in previously unreported securities filings reviewed by Bloomberg News, sheds new light on Romney’s estate planning — the art of leaving assets for heirs while avoiding taxes.

So his effective tax rate is 13%
But he has over 100,000,000 million in a trust that he uses to dodge taxes so that get’s him down to around 10 cents on every dollar
But he has 100,000,000 in an IRA which he doesn’t pay income tax on so that get’s him down to around 7 cents on every dollar.
But then he has had or continues to have off shore accounts that don’t report income or he hides assets at BAIN that does this for him.
So that get’s him down to an effective tax rate of around 5 cents on every dollar.

The poor in my state pay more than this in sales taxes.

How anyone can stomache this is beyond me.

Denninger posted a nice essay.

The Speech That Wins The Election

My fellow Americans:

Almost exactly four years ago the stock market began a sickening plunge that would shake the world. Declining from just over DOW 11,000 to under 7,500 in two short months, only to fall another 1,000 points in the next three, this period marked an unprecedented time of government intervention that you were told was for all of our good, and the good of our nation.

You were lied to.

The intentional expansion of debt unbacked by anything was the cause of the market crash. This intentional fraud perpetrated upon all of you went back to the Tech Crash in 2000, and goaded Americans into taking out loans that could not be repaid to cover up the malfeasance of those who had systematically looted Americans’ retirement accounts and offshored their jobs during the 1990s.

Nobody makes bad loans on purpose under ordinary circumstances, because doing so guarantees a loss. So these Wall Street and Banking swindlers did something very creative — they sold that debt, which they knew was bad when it was originally issued to Americans all over the world to various pension funds, insurance companies and other investors. They lied about the credit quality of the borrowers, they lied about what they had put into the securities and they skimmed off billions in fees and bonuses. By doing so they shifted the loss onto others — your pension, your state, your personal investment account.
…

http://market-ticker.org/akcs-www?post=211989

Re: Romney’s roll-down windows in airliners, from the other day.

Some ideas are just too stupid to refute.

Next time I fly the airlines, I’m going to sneak a window crank on the airplane, and Super Glue it on the wall, below the window.

A day for agreeing cuts

Greek political leaders have broadly agreed on a nearly €12 billion austerity package despite reservations over wage and pension cuts to bring Athens closer to a final deal on the contentious plan.

After weeks of haggling over the budget cuts, Prime Minister Antonis Samaras’s allies have struck a deal on the composition of the package and are ironing out final details of how salary and pension cuts will be spread, officials said.

Nearly 70,000 Greeks marched to parliament yesterday in one of the biggest demonstrations yet against cuts that threaten a new round of wage and pension cuts for tens of thousands of the population. That is putting pressure on coalition politicians but the government is pressing ahead with steps to secure the next batch of bailout funds - vital to keeping the state solvent.

“There is a basic agreement, we’re moving forward to the final negotiations,” Finance Minister Yannis Stournaras said after a meeting of the three leaders in Mr Samaras’s conservative-led government.

http://www.irishtimes.com/newspaper/breaking/2012/0927/breaking42.html

The Spanish government has unveiled another round of tax increases and budget cuts as it tries to avoid a full-blown bailout.

Spanish 10-year bond yields fell as the 2013 budget was announced by deputy Prime Minister Soraya Saenz de Santamaria, who insisted the axe would be accompanied by 43 new laws to restructure the economy to help ensure growth and competiveness.

http://news.sky.com/story/990254/spain-budget-imposes-more-cuts-and-tax-hikes

The University of Georgia intends to move forward with budget cuts that would eliminate about 130 positions, President Michael Adams said Thursday.

Many of the positions are vacant or filled temporarily by rehired retirees, according to plans submitted to the state. The plans also show dozens of jobs currently filled by full-time staff would be eliminated.

College presidents typically contend budget cuts will have minimal impact on students, but Adams didn’t say that.

“Everything you do ultimately impacts students,” Adams said during a briefing with reporters. “To say there is no impact on students, I simply can’t do that.”

http://www.ajc.com/news/news/uga-ready-to-implement-budget-cuts/nSNTx/

MORROW, Ga. — The Georgia Archives, which holds both historical curiosities and virtually every important state government document ever created, is about to become nearly impossible to visit.

In November, a round of government budget cuts will reduce the staff to three, one of them the maintenance man. Thousands of documents that pour in every month are likely to languish because no one will be available to sort through them, archives officials said. People who view accurate and open government records as the bedrock of democracy are outraged.

The move will make Georgia the only state without an archives open to the public on a regular basis. But this closing is simply the most severe symptom of a greater crisis facing permanent government collections in nearly every state, professional archivists say.

http://www.nytimes.com/2012/09/27/us/budget-cuts-to-limit-public-access-to-georgia-archives.html?_r=0

On the road with the -fixr……..two months on the road in Cornhusker land, baby-sitting the “C” Check.

Priority #1……GTHOOD on home game Saturdays.

Local fishrap did a story on how the local pharmacutical company is substituting Cornhuskers for lab rats in their trials. Seems that, unlike the lab rats, the lab techs don’t get emotionally attached to the Cornhuskers.

Its the peons fault:

http://www.forbes.com/sites/halahtouryalai/2012/09/27/wall-streets-brutal-job-cuts-are-about-to-much-get-worse/

The spat over the Diaoyu or Senkaku islands has escalated dramatically in the past month with violent protests across China.

But with a national election approaching in Japan, and a change of leadership in China, politicians on both sides have refused to step back from the brink, afraid that they will appear weak.

“There is a danger of China and Japan having a military conflict,” said Yan Xuetong, one of China’s most influential foreign policy strategists, and a noted hawk.

“One country must make a concession. But I do not see Japan making concessions. I do not see either side making concessions. Both sides want to solve the situation peacefully, but neither side can provide the right approach,” he added.

http://www.telegraph.co.uk/news/worldnews/asia/china/9571032/Military-conflict-looms-between-China-and-Japan.html

Hope this is just sabre rattling.

crater!!!!!!!!!!!!!!!!!!!!!!!!!!!

http://earthquakesandplates.files.wordpress.com/2008/05/earthquake.jpg

Realtors snort coke. A LOT.

Property developer James Brown’s habit was so bad his nose collapsed after nine years of daily cocaine use.

http://www.dailymail.co.uk/news/article-2208318/Millionaire-cocaine-habit-jailed-police-drugs-stash-folding-roof-Bentley.html?

Move over Peggy!

Obama Voter Says Vote for Obama because he gives a free Phone …
http://www.youtube.com/watch?v=tpAOwJvTOio -