The Housing Bubble

Ex-Governer Romney’s unfortunate comment about “binders full of women” last night conjurs up images of the fundamentalist Mormon (and evangelical Xtian) “Joy Books” in which fathers advertise their nubile (and often underage) daughters for “binding” with church elders.

Perhaps it was coincident, but when was the last time you heard anyone use that word in such a creepy context?

Push coming to shove in the Empire State?

According to (NY Post’s Fred) Dicker’s sources, a coalition of cities - including Syracuse, Yonkers and Rochester - has come together to seek more financial help from the state. Dicker reported that these cities have started to talk about bankruptcy, and that the Cuomo administration is sick and tired of hearing these same Upstate complaints.

“The mayors have got to come to the state with a plan that explains what’s causing their problems and how they plan to solve it,” a source close to Cuomo told Dicker. “To come to us year after year for a handout as they have been doing, only to come back next year asking for the same handout, is a nonstarter. It doesn’t work.

The author of this Syracuse Post Std article offers this nugget of truth: In Syracuse, a municipality already cordoned in by frozen boundaries, roughly half the existing property is tax exempt - in a community that is home to thousands of residents who live in poverty.

Half the buildings are tax exempt in a city? Who are the power centers benefitting from this situation and why is it just now being discussed at the upper levels of government as we are about to hit the wall? Yes, my rant is rhetorical. I understand the tax exempt organizations and the people in upper levels of our state government or very often one in the same.

http://www.syracuse.com/kirst/index.ssf/2012/10/post_338.html

Crate of wine …. check
Nibbles ….. check
Comfy seat …. check
Light fuse …. check

How did the debate go?

Let the fireworks commence

Anyone replace patio door sliders lately?
Anyone have experience with Argon Gas
and climate control? STC (sound transmission class) is another issue. We have train whistle noise. (not horrible)

Had French Doors in our last home, and decided we wanted to revert back to sliders (screen doors a plus), but not sure of what to buy. A 15′, 12′ and a 6′ opening.
Any feedback?

If you bought a house 1998-2012, you’ve lost money. Alot of money.

Norway’s Housing Boom Could Turn to Bust
CNBC - Holly Ellyatt - 10/17/2012

Norway, which chose to remain outside the EU and the euro currency, enjoys an enviably stable economy and a booming housing market - but it could be going down the perilous route taken by Spain and Ireland, according to economists and recent analysis.

According to a report by Bank of New York (BNY) Mellon, Norway’s housing sector, which has seen prices jump by almost 30 percent since 2006 - could end up replicating a pattern of housing booms and busts seen across the globe, from the U.S. to Japan to Spain and Ireland.

Indeed, Norway’s house price rise has been so dramatic that the San Francisco Federal Reserve wrote a paper on the subject in June that made parallels between the lead up to the U.S. housing crisis and the “irrationally exuberant bubble” of Norway’s present boom.

Written by an advisor to Norway’s central bank (Norges Bank) Marius Jurgilas and San Francisco Fed’s senior economist Kevin Lansing, the paper stated that Norwegian property prices are currently 125 percent of the historic price-to-income ratio and around 170 percent of the historic price-to-rent ratio - a full 50 percent above their last major peak 20 years ago.

Home prices continue to rise sharply with the Association of Norwegian Real Estate Brokers (NEF) reporting an 8.1 percent annual increase in August.

Mellor added that as house prices rise, household debt in Norway is also rising.

“In the case of Norway, the ratio of household debt-to-income has risen dramatically over the past decade and currently stands at around 210 percent - well above that seen in the U.S. before its own bust in 2007 (with debt/income at 130 percent).”

“My suspicions are Norwegians are infected with a success story for their own country that makes high home price increases seem plausible to them,” a success only aggrandized when compared to its economically ailing euro zone neighbors.

“They feel smug in their superiority with regard to the European crisis. They didn’t even join the EU, let alone the euro. They don’t have to bail out any irresponsible southern countries. They have North Sea oil. They have low unemployment. [In short] they are doing everything right, and lots of people want to come to Norway.”

However, Shiller notes that there is a paradox in the Norwegian success story.

“Norway is just about the last country to expect a housing bubble to appear, at least not a rational bubble, since it has so much empty land.”

“If home prices get elevated, there should be a prompt supply response, new houses will be built, bringing prices down, unless there is some kind of political or zoning problem. Even such political problems tend not to last forever. “

It looks like the policies outlined in the Fed’s White Paper are coming to fruition, and the homebuilding sector is set to build the U.S. economy’s way to recovery.

Housing starts surge to fastest pace since 2008
An available building sit inside a new townhouse construction complex in Fairfax, Virginia, outside Washington February 29, 2012. REUTERS/Larry Downing
WASHINGTON | Wed Oct 17, 2012 8:40am EDT

(Reuters) - Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector’s budding recovery is gaining traction.

The Commerce Department said on Wednesday housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units. That was the quickest pace since July 2008, though data on housing starts is volatile and subject to substantial revisions.

Augusts’ starts were revised to show a 758,000-unit pace instead of the previously reported 750,000.

Economists polled by Reuters had forecast residential construction rising to a 770,000-unit rate.

The housing starts rate is now about 40 percent of its peak in January 2006. The housing market, the Achilles heel of the recovery from the 2007-09 recession, is slowly healing.

September groundbreaking for single-family homes, the largest segment of the market, rose 11 percent to a 603,000-unit pace - the highest level since August 2008. Starts for multi-family homes climbed 25.1 percent.

Building permits grew by 11.6 percent to a 894,000-unit pace in September. August’s permits were unrevised at 801,000 units.

Economists had expected permits to rise to a 810,000-unit pace last month.

(Reporting by Jason Lange; Editing by Neil Stempleman)

After seeing The Daily Show’s take on Paul Ryan’s soup kitchen charity work, I understand why one of our neocon posters foamed at the mouth like a rabid hound dog over a very innocuous remark I made about the incident in yesterday’s Bits Bucket.

Can you spot the Obama bounce in this graph? (It’s the wee little bitty brand new one developing just to the right of the big Romney bounce…)

2012 US Presidential Election Winner Takes All Market

Not all markets are efficient these days (especially those subject to heavy government regulation and/or manipulation), but this one seems to be very efficient…

Sheila Bair: “I’m sure Vikram still blames me”
By Shawn Tully, senior editor-at-large
October 16, 2012: 12:00 PM ET

Fortune columnist and former head of the FDIC Sheila Bair discusses the ouster of Citi CEO Vikram Pandit.

FORTUNE — Sheila Bair, head of the FDIC during the financial crisis, was strongly critical of Vikram Pandit in her new book Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself. Bair was appalled that Pandit, a hedge fund manager, was chosen to rescue one of the world’s largest banks, and clashed with Pandit over Citi’s failed attempt to buy Wachovia. So it was only natural for Fortune to seek Bair’s reaction to today’s stunning news. Bair is a Fortune contributor. Shawn Tully, Fortune Editor-at-Large, conducted the interview.

Were you surprised by the news today that Vikram Pandit is resigning as ceo of Citigroup (C)?

I viewed his resignation as a positive. The board is doing its job, by opening up a new chapter for Citigroup. I take at face value what the board said about his departure. The Citi board is being responsible to shareholders. The bank’s performance under Pandit was very bad. Citi’s board is opening a potentially new direction, and should be commended.

As FDIC chief, you were influential in arranging Wells Fargo’s purchase of Wachovia during the financial crisis. Pandit had wanted to buy Wachovia to expand its undersized branch network. How do you view Citi’s failure to buy Wachovia and had that lost deal might have affected its future?

I think a purchase of Wachovia by Citi would have had a very bad result. There were discussions with the NY Fed about Citi buying Wachovia, supposedly with support of the FDIC, without my knowing about it, and with government assistance. There were also discussions between Wells and Wachovia to make what would have been a stabilizing transaction.

We learned from the s&l crisis that putting two sick institutions together ends badly. Wachovia had bought Golden West, which had an extremely troubled mortgage and commercial real estate portfolios, and was still originating bad option arm loans. Neither Wachovia nor Citi were well-managed banks. As analyst Mike Mayo said, if the deal had gone through, it would have been like putting two drunks together. It could have blown up in the FDIC’s face. We needed good management, and Wells was much more experienced at managing troubled assets than Citi.

I’m sure Vikram still blames me, and thinks that all these problems would have gone away if he’d been able to buy Wachovia, with a big subsidy from the government.
…

It is true. Liberals can never run and win on what they really believe. They always sound conservative in their ads and debates.

Why didn’t obama talk about raising taxes, growing the size and scope of government, abortion at any time or place paid for by taxpayers, growing the debt by $5 Trillion, socializing medicine, letting us know about his private KILL list, giving more and more power to public unions, etc.

Why? - because he would lose in a landslide.

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Debate II: Obama goes conservative
Chuck Morse Speaks | Oct 17, 2012 | Chuck Morse

I can’t count the number of times I’ve debated liberals on my show who responded to the confrontation by effortlessly and seamlessly turning themselves into conservatives. This is because it is much easier to shape-shift than to have to defend or explain their irrational positions on issues or their indefensible beliefs.

This is exactly what President Obama did in Debate II at Hofstra University. Suddenly Obama became the champion of the middle class and small business in spite his lack of any identifiable initiative on their behalf in his four years as president. Suddenly Obama becomes the champion of tax cuts in spite of his fight to raise taxes over the objections of conservative Republicans and Democrats in Congress. And never mind tax-amageddon, the biggest tax increases in history, which are scheduled to kick in next year if he is re-elected.

Notice how Obama stood up for Planned Parenthood, not because they are the largest abortion provider in the country, a word that Obama avoided uttering, but rather because they provide services to women that conservatives support. Notice how Obama stood up for fair wages for women without mentioning that women in his own office earn less than to men doing the same types of jobs.

Obama suddenly became the champion of austerity and budget cutting while he portrayed Mitt Romney as a supporter of increasing the budget deficit by 8 trillion dollars. In other words, it was Obama who was the conservative when it came to deficit spending. Never mind the fact that he increased the National Debt by almost 5 trillion dollars.

On immigration, Obama sallied forth as the strong standard bearer of upholding immigration laws. Never mind that he sued Arizona for attempting to enforce laws that were already on the books at the Federal level. Obama became the advocate of the second amendment in spite of efforts by his State Department to negotiate an international gun ban through the auspices of a U.N. treaty.

The choice comes down to which candidate would be the more conservative president as there appears to be a consensus in this country that conservative policies are what are needed going forward into the next four years. And while there are some legitimate questions regarding Mitt Romney’s conservative bona fides, the request should nevertheless be made: Will the real conservative please stand up?

Oct. 17, 2012, 5:31 a.m. EDT
10 greatest market crashes
By MarketWatch
The modern record

Some 25 years ago, Wall Street saw its biggest one-day percentage slide ever sparking familiar worries about small investors and depressions. The long-term damage wasn’t as severe as the 1929 crash, but the 1980’s bubble pop was spectacular by any measure. Here’s a look at 10 other great market crashes and some of their unusual consequences.

Dirty shoes? How did steroids get contaminated? scary stuff

Was it some moldy ceiling tiles? The dusty shoes of a careless employee? Or did the contamination ride in on one of the ingredients?

http://apnews.myway.com/article/20121016/DA1USHDO0.html

Those stand-up, rugged, bootstrapping, Government-is-the-problem guys at Koch Industries, continue their expansion into the Government Cheese business….

http://tinyurl.com/cmf8pzh

Koch brothers start plans to fight Obama literally days after the election, get upset when people call them names, threaten to send a Democrat to their room for saying “BS”, and want government cheese to business/poor people/everybody eliminated (well, except for their cheese….., see previous link)

http://tinyurl.com/9rmkyn6

While telling their employees that their jobs will be threatened, if Obama is re-elected.

http://tinyurl.com/d7w3qy3

(My favorite line is how their father developed a hatred of “Socialism” while building refineries for Stalin in the 30s. But didn’t hate them enough to cancel the contract, or return their checks)

Yes - he is a democrat.

The lefties and democrats are funny.

The want bigger and bigger government and higher and higher taxes but NEVER WANT TO PAY FOR IT.

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LA County Assessor John Noguez arrested amid corruption probe
KABC News | 10/17/2012

Los Angeles County Assessor John Noguez has been arrested amid an on-going corruption investigation.

Assessor’s office employees had complained they were pressured to lower property taxes for clients who were prominent contributors to Noguez’s campaign .

Comment by nickpapageorgio
2012-10-16 18:53:27
“The Southern Democrats are now Republicans and switched over civil rights. But you knew that.”

You guys keep trying that one…the jig is up. It’s patently false, how stupid do you think people are? Do they teach that lie in communism 101 or 102?. Oh, and he left out Bull Connor, he was also a Democrat.”

In response to nickpapageorgio’s disputing of the shift of white southern Democrats to the Republican party after the 1964 Civil Rights Act, here is an interactive graph that shows the shift. The shift of southern states did not happen gradually. This is not speculation or propaganda, simply fact. Only hard core Republican apologists dispute it.

http://www.nytimes.com/interactive/2012/10/15/us/politics/swing-history.html

And the graphic is pretty cool. Utah has been Republican as far back as the graph goes and DC has been consistently Democrat.

Now is a great time to squat!

Rent?
Buy?
Short sale?

Why when it`s a squatters market. Why pay anyone for a place to live when you can squat. It`s the fiscally responsible thing to do.

This article is blatantly Squatist

How to Deal With Squatters in Your Neighborhood

14 authors | 40 revisions | Last updated: June 9, 2012

Squatters are people who move into abandoned, foreclosed, or otherwise unoccupied homes or premises. Generally, under United States law, the owners can have a squatter evicted for violating loitering or trespassing laws, unless the squatters can establish that they have tenants’ rights or can gain adverse possession due to the property having been completely abandoned by the owner.[1][2] Other countries have similar laws, although you should seek specific advice dependent on where you are.

In the current difficult economic climate, squatting is on the increase. Read on for what to do if you suspect that a squatter has taken up residence in your neighborhood and you want to play it safe.

Ask questions early on if places in your area suddenly become vacant

Know your neighbors and your neighborhood.

Try to keep an eye out for signs of squatters moving in

Learn the laws in your city and state regarding abandoned property

Call or visit your local police station.

Call the utility companies and inform them that the new people are not the original owners

Avoid interacting with the squatters

Call the bank and notify those responsible for handling the relevant property.

Write down their license plate number if the squatters have a vehicle

Sit back and let the bank and police handle it

Stand up for yourself

http://www.wikihow.com/Deal-With-Squatters-in-Your-Neighborhood - 60k

Fun with effective tax rates:

A school teacher that works with special needs children makes $ 100 a year and donates no money to charity.

A hedge fund manager makes $ 200 a year and donates $ 100 to charity.

The marginal tax rate for both is 50%.

The school teacher and the hedge fund manager both pay $50 in tax and both take home $ 50 after tax and donations to charity.

The school teacher’s effective tax rate is 50% while the hedge fund manager’s effective tax rate is 25%.

Fun with tax policy:

Now…we got to make sure that rich bastard pays his fair share right? What do you think is going to happen to the donations to charity in order for that rich bastard to still take home $ 50 after taxes?

“The problem with Americans today is that they are in-numerate.” – said someone once

An article on housing:

http://www.bloomberg.com/news/2012-10-17/private-equity-in-atlanta-after-picking-phoenix-clean-mortgages.html

This is a so funny.

http://www.businessinsider.com/kimmel-debate-reactions-2012-10

I want a cheap house.

I’m waiting.

“Wealthy individuals from as far away as China, Nigeria, Russia and Australia are spending tens of millions of dollars to build classrooms, libraries, basketball courts and science labs for American charter schools.

The reason? Under a federal program known as EB-5, wealthy foreigners can in effect buy U.S. immigration visas for themselves and their families by investing at least $500,000 in certain development projects. In the past two decades, much of the investment has gone into commercial real-estate projects, like luxury hotels, ski resorts and even gas stations.

Lately, however, enterprising brokers have seen a golden opportunity to match cash-starved charter schools with cash-flush foreigners in investment deals that benefit both.

“The demand is massive - massive - on the school side,” said Greg Wing, an investment advisor. “On the investor side, it’s massive, too.”

http://www.reuters.com/article/2012/10/12/us-usa-education-charter-visas-idUSBRE89B07K20121012

Once again, David Dayen rains on the housing recovery parade…

House Starts Balloon to “Well Below Average” from “Catastrophically Below Average”

Includes a fun comparison of short-term and long-term graphs! And supper-happy quotes like this one!

[O]ddly enough, housing seems to be the only thing picking up in the economy, and it’s “picking up” in very idiosyncratic ways, determined by artificial supply constraints and years of underbuilding. Manufacturing has halted amid a global slowdown. Businesses, wary of the fiscal cliff and poor sales, have stopped investing. The consumer, perhaps feeling a wealth effect from this housing snap back, is still spending, but once they get a 2% net pay reduction from the expiration of the payroll tax cut, that could change quickly. The economy still looks jittery for 2013, especially if Congress bungles their response.

Regarding today’s hot topic, Nintendo nerds will recall that Samus Aran was revealed to be a woman at the conclusion of the game.

http://upload.wikimedia.org/wikipedia/en/5/5d/Metroid_boxart.jpg

http://en.wikipedia.org/wiki/Metroid_%28video_game%29

Posted: 6:22 p.m. Wednesday, Oct. 17, 2012

Unpaid mortgage debt targeted for revenue stream

By Kimberly Miller

Palm Beach Post Staff Writer

Floridians who lose a home to foreclosure may be more doggedly pursued for their unpaid mortgage debt after a federal audit that says lender losses can be recovered by demanding payback.

That kind of collection process, called a deficiency judgment, is allowed in Florida, but has so far been rare.

The report, released Wednesday by the inspector general of the Federal Housing Finance Agency, says that recouping the debt can increase revenue to mortgage backers Fannie Mae and Freddie Mac, which own or guarantee about half of all U.S. mortgages.

“In addition,” the report notes, “pursuit against such borrowers may deter others who are considering default despite being financially able to make their mortgage payments.”

Florida law gives lenders five years to file for a deficiency judgment and up to 20 years to collect payment on that judgment. The amount is typically the difference between the unpaid loan balance owed by the borrower and how much the home fetches at foreclosure auction or resale.

Whether because lenders are too overwhelmed to pursue the debt or don’t feel it’s worth the effort, foreclosure defense attorneys report seeing few deficiencies filed.

“Given the way the market has been the last two years there has been more interest in pursuing them, but they still seem to be the minority of cases,” said John Bancroft, executive editor of the trade publication Inside Mortgage Finance. “I think in the past banks didn’t feel the success rate was going to justify the effort.”

In 2011, Fannie Mae and Freddie Mac pursued 35,231 deficiencies nationwide with a combined total value of about $2.1 billion. Of that, just $4.7 million, or 0.22 percent, was actually recovered, according to Wednesday’s audit.

Fannie and Freddie were taken over by the government in 2008 to prevent their financial meltdown. The two enterprises buy up home loans from banks, guarantee them against default and sell them to investors. Their nearly 31 million home loans are worth $5 trillion.

Fannie Mae has 1.2 million loans in Florida, of which about 167,000 are delinquent. Freddie Mac has 724,000 Florida loans with 96,000 that are delinquent.

Wednesday’s report says it should not be “construed as encouragement to aggressively pursue borrowers who do not have the ability to pay their mortgages.” But it also notes that other such government agencies that have housing programs as the Department of Agriculture and Department of Housing and Urban Development emphasize seeking deficiency judgments against so-called “strategic defaulters.”

A strategic defaulter is defined as someone who can afford to make their mortgage payment but chooses to go into foreclosure for other reasons, such as the home’s value has decreased. Seeking repayment of their debt is an “opportunity for (Fannie and Freddie) to strengthen their financial positions and to reduce the need for future taxpayer support.”

“They are talking about some moral obligation but I don’t see them talking about that when folks on Wall Street strategically default,” said South Florida foreclosure defense attorney Roy Oppenheim. “For them to go after the homeowners like this, I find it offensive.”

Federal Housing Finance Agency officials agreed with the report’s recommendations that it should standardize and oversee how deficiency judgments are sought. They said they also will assess the ability to identify strategic defaulters.

In 2010, Fannie Mae announced it would bar strategic defaulters from getting a new loan for seven years and pursue them for the unpaid debt. A Fannie Mae spokesman said Wednesday it was not releasing any information on how many strategic defaulters it has identified.

Joanne Epstein, a Realtor with the Keyes Company/Ragbir Team, said many homeowners don’t even know about the deficiency judgment when they’re making a decision on whether to short sell their home or go into foreclosure. Epstein, a short sale specialist, said most lenders will waive the deficiency in a short sale.

“People aren’t considering the consequences or that it will be a mark on them for years and years to come,” she said about foreclosure.

Posted: 7:23 p.m. Wednesday, Oct. 17, 2012

Feds seek 8 years for ex-Goldman director in NY

The Associated Press

NEW YORK —

The government says a former Goldman Sachs board member convicted in New York of insider trading charges should serve at least eight years in prison.

Written arguments were filed in Manhattan federal court Wednesday over the fate of Rajat Gupta. The former board member for Goldman and Procter & Gamble Co. faces sentencing Oct. 24.

Gupta is from India. He was convicted in an insider trading case that resulted in convictions for 24 other people, including a one-time billionaire hedge fund founder from Sri Lanka.

The government says a prison term between eight years and 10 years is necessary to reflect the seriousness of the crimes and deter others.

Gupta’s lawyers want him spared time behind bars.

Copyright The Associated Press

I thought this was interesting. Texas landowners suing the company building the TransCanada pipeline.

http://seattletimes.com/html/businesstechnology/2019449459_apusoilpipelinetexaslandowners.html

SUMNER, Texas —
Oil has long lived in harmony with farmland and cattle across the Texas landscape, a symbiosis nurtured by generations and built on an unspoken honor code that allowed agriculture to thrive while oil was extracted.

Proud Texans have long welcomed the industry because of the cash it brings to sustain agriculture, but also see its presence as part of their patriotic duty to help wean the United States off “foreign” oil. So the answer to companies that wanted to build pipelines has usually been simple: Yes.

Enter TransCanada.

As the company pursues construction of a 1,179-mile-long cross-country pipeline meant to bring Canadian tar sands oil to South Texas refineries, it’s finding opposition in the unlikeliest of places: oil-friendly Texas, a state that has more pipelines snaking through the ground than any other.

In the minds of some landowners approached by TransCanada for land, the company has broken the code.

Nearly half the steel TransCanada is using is not American-made and the company won’t promise to use local workers exclusively; it can’t guarantee the oil will remain in the United States. It has snatched land. Possibly most egregious: The company has behaved like an arrogant foreigner, unworthy of operating in Texas.

To fight back, insulted Texas landowners are filing and appealing dozens of lawsuits, threatening to further delay a project that has already encountered many obstacles. Others are allowing activists to go on their land to stage protests. Several have been arrested.”

Crybabies will cry.

But lets get real here: Debaters who can’t follow the rules need to be reined in. It’s just that simple.

Politics
Crowley Interrupts Romney, Social Frenzy Erupts

CNN’s Candy Crowley is being criticized by the republican right for interrupting Mitt Romney at several points in the debate.

10/17/2012 4:24:00 PM1:08