The Housing Bubble

I guess a lot of the folks who lost their homes are back in the housing market creating bidding wars again.

merry xmas to all!

Alpine squad task force at Monarch Mountain yesterday:

http://www.picpaste.com/2012-12-24_10-09-32_516-GQhofsiO.jpg
http://www.picpaste.com/2012-12-24_10-20-38_750-1DZdSXsp.jpg
http://www.picpaste.com/2012-12-24_12-42-23_168-7FCrkEls.jpg

With housing demand fallen to1997 levels and sinking, it’s a very Merry Christmas.

If taxes go up then disposable income will go down unless more income is earned. But if more income is earned then more taxes will end up being paid - especially if the added income shoves one into a higher tax bracket.

So, what is one to do? One answer: Keep expenses down. If one’s expenses are kept down then he will not need to earn the added income. Not needing to earn the added income translates into not paying the added taxes.

Nice to wake up to a newly renovated (90% finished) paid for home and feel blessed.

Unloading a lot of stuff and oversized furniture (big house stuff). Salvation Army will make $ off it.
Turned on our Conservatory Grand Player Piano this morning and enjoyed some Christmas tunes. Now, with the housing hunt behind us, I can resume lessons.

Merry Christmas and Happy Healthy New Year!

Now that you all have survived the Mayan calendar Armageddon, good luck at surviving your Christmas Day weather!

Snow, rain, tornadoes in Christmas Day forecast
Janet McConnaughey, Associated Press
10:27a.m. EST December 25, 2012

While snow is likely in parts of the U.S., forecasters warn some states could see tornadoes.
snow
(Photo: Abbey Oldham, AP)
Story Highlights
Twisters are possible in some Gulf Coast states
Severe weather could snarl holiday travel
A blizzard watch has been posted in Ind., Ky.

NEW ORLEANS (AP) — Forecasts of blinding snow, sleet and freezing rain threatened to complicate Christmas Day travel around the nation’s midsection Tuesday as several Gulf Coast states braced for a chance of twisters, high winds and powerful thunderstorms.

A blizzard watch was posted for parts of Indiana and western Kentucky for storms expected to unfold Tuesday amid predictions of up to 4 to 7 inches of snow in coming hours. Much of Oklahoma and Arkansas braced under a winter storm warning of an early mix of rain and sleet forecast to eventually turn to snow.

Some mountainous areas of Arkansas’ Ozark Mountains could get up to 10 inches of snow amid warnings travel could become “very hazardous or impossible” in the northern tier of the state from near whiteout conditions, the National Weather Service said.

After dawn Tuesday, the Oklahoma Department of Public Safety said bridges, overpasses and highways in several counties were already becoming slick and hazardous. Also, Kathleen O’Shea with Oklahoma Gas and Electric said the utility was tracking the storm system to see where repair crews might be needed among nearly 800,000 customers in Oklahoma and western Arkansas.

Elsewhere, areas of east Texas and Louisiana braced for possible thunderstorms as forecasters eyed a developing storm front expected to spread across the Gulf Coast to the Florida Panhandle, raising the threat of any tornadoes.

Quarter-sized hail reported early Tuesday in western Louisiana was expected to be just the start of a severe weather threat on the Gulf Coast, said meteorologist Mike Efferson at the weather service office in Slidell, La. He told The Associated Press by phone on Tuesday that Lake Charles, La., was placed under a tornado warning and a tornado watch was in effect over a wider area of southeast and south-central Louisiana until 2 p.m. ET.
…

Are We Facing a Decade of Financial Repression?

Dec. 20 (Bloomberg) — In today’s “Single Best Chart,” Bloomberg’s Scarlet Fu displays how we may be in for a painless deleveraging process as bond yields are lagging U.S. debt-to-GDP. She speaks on Bloomberg Television’s “Bloomberg Surveillance.”

I’m expecting great U.S. stock market investing opportunities in 2013, due to unresolved disagreement between Congress and the President on the federal budget. Happy New Year!

What will happen to stocks if we go over the cliff
By Stephen Gandel, senior editor
December 21, 2012: 1:58 PM ET

The market might have a good reason to be shrugging off the fiscal cliff.

FORTUNE — For months the predictions for what would happen if we go over the fiscal cliff have been bordering on horrific. The Congressional Budget Office says the chance of recession is 100%. Moody’s says it will be much harder for companies to issue debt. PIMCO’s CEO Mohamed El-Erian says our children are all but guaranteed to be worse off than us.

Based on that, it seems like going over the fiscal cliff would be an absolute disaster for stocks. Yet the market reaction has been mostly a shrug. Even Friday, with the news that Boehner and Obama look farther than ever from a deal with just days to go before the end of the year, the Dow Jones industrial average was down less than 200 points. Not great. But not really the type of market move you expect if we are headed for a recession. Even after that drop the S&P 500 (SPX) is still up 13% this year.

One interpretation is that investors still don’t think we will go over the cliff, or not completely. That’s been the predominant line of market strategists for a while now. Markets aren’t rational. We could still wake up one day, January 2 perhaps, and the market will be headed toward a 1,000 point fall. And I guess you can still believe that, but the number of days you can stick with that analysis are dwindling.
…

Six Month + Delinquent Mortgages Amount To More Than Half Of Bank of America’s Market Cap

Submitted by Tyler Durden on 12/19/2012 08:02 -0500

For those curious why many people are scratching their heads how the market cap of Bank of America has nearly doubled in the past year, here it is: “Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.” $64 billion is more than half the market cap of Bank of America as of this moment.

In other words, by keeping tens of billions of mortgages off the market, Bank of America is hoping to limit the supply of houses in the market, creating an artificial shortage, in the process pushing up the prices of all other house higher, and only then to start dumping its pre-foreclosure inventory to a witless housing market.

And of course, this number excludes any of the tens of billions of mortgages that are in process of discharge and full write off, as well as the tens of billions in associated Reps and Warranties legal fees, which will go from accrued to paid out status as soon as Bank of America loses the MBIA litigation.

Also, recall “Foreclosure Stuffing” aka the most obvious housing subsidy in the past 4 years? There you have it. And there are those who wonder why we are experiencing merely the fourth dead cat bounce in the housing market.

http://www.zerohedge.com/news/2012-12-19/six-month-delinquent-mortgages-amount-more-half-bank-americas-market-cap - 113k -

Halloween decorations carry haunting message of forced labor

By Rachel Stark, The Oregonian The Oregonian
on December 23, 2012 at 9:00 AM

“If you occasionally buy this product, please kindly resend this letter to the World Human Right Organization. Thousands people here who are under the persicution of the Chinese Communist Party Government will thank and remember you forever.”
The graveyard kit, the letter read, was made in unit 8, department 2 of the Masanjia Labor Camp in Shenyang, China.

Chinese characters broke up choppy English sentences.

“People who work here have to work 15 hours a day without Saturday, Sunday break and any holidays. Otherwise, they will suffer torturement, beat and rude remark. Nearly no payment (10 yuan/1 month).”

Ten yuan is equivalent to $1.61.

“People who work here, suffer punishment 1-3 years averagely, but without Court Sentence (unlaw punishment). Many of them are Falun Gong practitioners, who are totally innocent people only because they have different believe to CCPG. They often suffer more punishment than others.”

The letter was not signed.

The anonymous letter evoked skepticism, too. Written largely in English scrawl, it was almost too bold of an act to seem plausible. Still, U.S. authorities on China took note.

“We’re in no position to confirm the veracity or origin of this,” said Sophie Richardson, China director at Human Rights Watch. “I think it is fair to say the conditions described in the letter certainly conform to what we know about conditions in re-education through labor camps.”

China’s re-education through labor is a system of punishment that allows for detention without trial. Various reports allege followers of the banned spiritual group, Falun Gong, are sent to the reform camps – claims supported in the letter – but the facts are difficult to confirm.

Masanjia labor camp is located in the industrialized capital of the Liaoning Province in northeast China. A Google search of the camp yields pages of grim results.

“If this thing is the real deal, that’s somebody saying please help me, please know about me, please react,” Richardson said. “That’s our job.”

http://www.oregonlive.com/happy-valley/index.ssf/2012/12/halloween_decorations_carry_ha.html - 81k -

Thanks to BiLA for this late post yesterday:

Exodus: California Tax Revenue Plunges by 22%
by Chriss W. Street
13 Mar 2012

State Controller John Chaing continues to uphold the California Great Seal Motto of “Eureka”, i.e., ‘I have found it’. But what Chaing is finding as Controller is that California’s economy as measured by tax revenues is still tanking. Compared to last year, State tax collections for February shriveled by $1.2 billion or 22%. The deterioration is more than double the shocking $535 million reported decline for last month. The cumulative fiscal year decline is $6.1 billion or down 11% versus this period in 2011.

While California Governor Brown promises strong economic growth is just around the corner, Chaing proves that the best way for Sacramento politicians to hurt the economy and thereby generate lower tax revenue, is to have the highest tax rates in the nation.

California politicians seem delusional in their continued delusion that high taxes have not savaged the State’s economy. Each month’s disappointment is written off as due to some one-time event.

The State Controller’s office did acknowledge that higher than normal tax refunds for February might have reduced the collection of some personal income taxes. Given that 2012 has an extra day in February for leap year, there might have been one day more of tax refunds sent out. But the Controller’s report shows personal income tax collections fell by $325 million, or 16% versus last year. Furthermore, leap year would have added another day for retail sales and use tax collection, but those revenues also fell during February-by an even larger $813 million, 25% decline from 2011.

The more likely reason tax collections continue falling is that businesses and successful people are leaving California for the better tax rates available in more pro-business states.

Derisively referred to as “Taxifornia” by the independent Pacific Research Institute, California wins the booby prize for the highest personal income taxes in the nation and higher sales tax rates than all but four other states. Though Californians benefit from Proposition 13 restrictions on how much their property tax can increase in one year, the state still has the worst state tax burden in the U.S.
…

In the last twenty years, a grand total of twenty-four out of nearly 14,000 (that’s FOURTEEN THOUSAND) peer-reviewed published articles have attempted in various ways to discredit climate change. Obviously, they haven’t made their case. Lay opinion notwithstanding, political speculation is not science. It’s just not.

But on the other hand, statements like “global warming is real,” whatever that means, are political, not scientific. And they help pave the way for more research funding into climate change, global warming, etc.

Matt Taibbi

Glenn Hubbard, Leading Academic and Mitt Romney Advisor, Took $1200 an Hour to Be Countrywide’s Expert Witness

http://www.rollingstone.com/politics/blogs/taibblog/glenn-hubbard-leading-academic-and-mitt-romney-advisor-took-1200-an-hour-to-be-countrywides-expert-witness-20121220

The Redefaulters are coming.

Zombie loans.

Mortgage Defibrillator

CLEAR!!

He’s current again Doctor, but not for long.

Bummer, underwater and underwater.

Home underwater, plus water damage

Realty Q&AAugust 24, 2012|Lew Sichelman

QUESTION: Here’s a tough one for you. In late 2007, we bought a house in Manassas, Va., on Lake Jackson and financed $520,000. To get the loan approved, the gave us two loans—a $405,000 first mortgage, and a $115,000 second. A recent appraisal said the house was only worth $325,000. But he compared our lake house to simple tract homes. We still owe $500,000: $400,000 on the first lien and $100,000 on the second. I am retired Navy and we have great income and perfect credit—but we don’t have much in savings since it all went into the house when we bought it. We cannot refi with a VA-guaranteed loan because of the second mortgage and being so far underwater, but we may be eligible for an FHA 203(k) rehab loan, though I am not sure.

To complicate matters, we suffered damage in July’s wind storm and extended power outage. Tree limbs damaged the metal roof on our house and it is leaking and will probably need to be replaced, as metal roofs are not easily repaired. Also, the huge and unique wood paneled ceiling is warping and delaminating and will probably have to be replaced as well. And water leaking from the fridge during the power outage warped the kitchen floors, so the flooring will need to be replaced, as will the floor boards underneath

http://articles.marketwatch.com/2012-08-24/finance/33344230_1_rehab-loan-metal-roof-power-outage - 45k -

Will 2013 be the year when Fannie Mae and Freddie Mac are finally wound down?

BofA CEO: Don’t Get Rid of Fannie and Freddie
Published December 14, 2012
Reuters
Brian Moynihan, Bank of America CEO, BofA CEO
REUTERS

Bank of America (BAC) Chief Executive Brian Moynihan on Friday said the taxpayer-supported mortgage giants, Fannie Mae and Freddie Mac, should not be eliminated as policymakers calibrate the right balance of government support for home buying.

Regulatory uncertainty is holding back the return of private capital to the mortgage market, Moynihan said. But he cautioned that Fannie and Freddie should not be eliminated without first building a housing finance system for the future.

Moynihan, in remarks before a panel at the Brookings Institution in Washington, said that a government withdrawal that goes too far would put homeownership out of reach for many borrowers. Some of the “the old assumptions” designed to support home buying should be revisited, and there are steps that can be taken to ease the government out of the market, he said.

“I don’t think changing Fannie and Freddie in some abrupt fashion is wise policy,” he said. “We need Fannie and Freddie. They are critical to the transition.”
…

Fannie, Freddie Will Live Forever: Street Whispers
By Shanthi Bharatwaj - The Street Nov 27, 2012 3:05 pm

If you are waiting for a plan from Washington to wind down mortgage finance giants Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC), don’t hold your breath. They aren’t going anywhere.

Far from ending their dominance, policymakers are drafting new rules governing the origination and securitization of mortgages that might only strengthen the stronghold of Fannie and Freddie, according to FBR Capital analyst Paul Miller.

“We foresee a continued dominance of the implied government guarantee. While Fannie Mae and Freddie Mac may be ended ‘in name,’ Congress will keep the infrastructure in place to further its homeownership goals,” Miller wrote in a report titled the “Future of the Housing Market: Winners and Losers.”
…

Merry Xmas to all of my HBB friends and family. We may be dysfunctional; we may argue a LOT; but in the end, there is something that keeps bringing us back together.

Happy holiday to you all!

Is this guy a fairly typical NRA member?

Merry Christmas

Its fight night!

Lennox VS Dawkins heavy weight title fight (science VS religion)

For example, 3th round, Lennox starts finding the range at the 7 minute mark and begins landing the jab on the inside, Dawkins attempts to counter but Lennox lands a left hook that catches Dawkins off guard at the 7:26 mark when he says: (well who made it?) From that point on Dawkins is on the defense cause that rocked him hard. He even tried to create some breathing space for himself by accusing Lennox of “putting words in his mouth”.

But Lennox was having none of it, he smells blood in the water finally, at 8:46 in a brilliant chess move, Lennox uses Dawkin’s own best selling book to smash him with the rational for the existence of a Creator.

Now Dawkins is a fighter (he’s the Marvin Hagler of atheism), so he’s not gonna give up; but for the first time you see him forced backwards into his main sub routine of “things progress from the simple to the complex”, instead of refining that concept into a denser and more lethal collection of new words.

The entire fight is basically a draw but I give it to Lennox on points because Dawkins has this nasty habit of “getting nasty”.

It would be interesting to know if these guys really don’t like each other. Each probably has great contempt for the other given their respective disciplines; but as chosen representatives of their crafts, they can’t afford to act a fool. For one, Lennox probably knows that Dawkins, being an atheist, may get up and throw him off the stage if he really gets pissed; “what happened to yo God ni88a? Where is he now…”

And Dawkins probably knows that if Lennox stabbed him in the neck, maybe nobody would call an ambulance, because if were all just animals, why should we care if yo ass bleeds out?

If the origin of life was an event resulting from the random mixture of elements and the application of energy, should we be using scientists, logic and theory to try to repeat it?

Or should we lock a thousand monkeys in a thousand laboratories with a thousand wrenches?

*listen to my instructions and protect yourselves at all times.

Understood?

Understood?

Good, lets get it on*

http://www.youtube.com/watch?v=JxF73wIcrjw

I held my nose while buying it, but my Vanguard REIT has gone up 3.2% since I purchased it in midyear 2012.

Investors fleeing the ghost of recession past
Article by: WHITNEY KISLING , Bloomberg News
Updated: December 24, 2012 - 9:09 PM

Americans stung by the last financial crisis cashed out of stocks, leaving $200 billion in potential gains behind as stocks recovered.

Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis.

Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor’s 500 Index’s 94 percent advance, according to data compiled by Bloomberg and Morningstar Inc. The proportion of retirement funds in stocks fell about half of a percentage point, compared with an average rise of 8.2 percentage points in rallies since 1990.

The retreat shows that even the biggest gain since 1998 failed to heal investor confidence after the financial collapse, which wiped out $11 trillion in U.S. equity value. That collapse was followed by record price swings in equities, a market breakdown that briefly erased $862 billion in share value amid the slowest recovery from a recession since World War II. Individuals are withdrawing money as political leaders struggle to avert budget cuts that may throw the economy into a new slump.

“Our biggest liability in the stock market has been the total destruction to confidence,” said James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion.

The S&P 500 climbed 1.2 percent to 1,430.15 last week, extending the 2012 gain to 14 percent, led by financial stocks and consumer companies. The benchmark index from American equity has risen from a low of 676.53 on March 9, 2009, though it is still 8.8 percent below its record high on Oct. 9, 2007.

Much of the damage to investors is self-inflicted as U.S. growth improves and companies whose earnings are most tied to economic expansion reap the biggest rewards. Of the 500 companies in the benchmark index, 481 are higher now than they were in March 2009 or when they entered the gauge.

Individuals are selling into the rally, cutting the proportion of assets in stocks to 72 percent from 72.5 percent in 2009, according to 401(k) and IRA mutual fund data from the Washington-based Investment Company Institute compiled by Bloomberg. Investors are lowering the proportion of stocks they own in retirement funds during a bull market for the first time in 20 years.

The percentage of households owning stock mutual funds has also fallen, dropping every year since 2008 to 46.4 percent in 2011, the second-lowest since 1997, according to the latest ICI annual mutual fund survey.

The technology bubble in the 1990s saw equity mutual funds expand twice as much as the S&P 500. Stocks’ representation in 401(k) and individual retirement account funds rose to about 90 percent in 2000 from 77 percent in 1992.

Money has gone to the relative safety of fixed-income investments. Managers who specialize in corporate bonds and Treasuries have received nearly $1 trillion in fresh cash since March 2009, ICI data show.

Outflows from stocks muted gains as reduced demand kept companies from going public or expanding through mergers and acquisitions, according to Paul Zemsky, head of asset allocation for ING Investment Management.

“Imagine where we could be if we had had positive inflows,” Zemsky said. “It would be very helpful to get those flows reversed and have that money come out of bonds and into stock funds.”
…

Deliquent Mortgages Amount To More Than Half of Bank of Americas Market Cap

http://www.bloomberg.com/news/2012-12-19/bank-of-america-delinquent-loans-mean-losses-mortgages.html

See how these problems don’t go away? The delayed outcome becomes far worse than the medicine if were administered early.

If you bought a house in the last few years, you’re in deep deep trouble.

Would now be a good time for dips to buy?

Obama to Leave Hawaiian Vacation to Return to Work on Fiscal Deal
By JEREMY PETERS
Published: December 25, 2012

KAILUA, Hawaii — President Obama was planning to cut his Christmas vacation short and return to Washington to make a last-ditch push for a compromise on a tax and spending dispute with Congress that remains stubbornly unresolved.

A White House official said on Tuesday that the president could depart as early as Wednesday.

Meanwhile, both chambers of Congress will come back from their holiday hiatus on Thursday and return to work. While there are growing signs that some members of both parties are prepared to accept a deal that raises taxes on people at the highest income levels, there is considerable distance between Republicans and Democrats and no guarantee that an agreement could pass.

The president and Congress left Washington late last week after House Republicans rejected a plan that would have left tax rates in place for all but those with incomes above $1 million.

Mr. Obama has since called for a less ambitious approach to avoid the so-called fiscal cliff on Jan. 1, when a series of automatic budget cuts and tax increases will go into effect if Congress and the White House cannot come up with an alternative course of action.

The White House has been seeking a resolution through talks with Senate Democrats, who control the chamber and have gained the tacit support of some of their Republican colleagues.

But the Senate Republican leader, Mitch McConnell of Kentucky, has given no indication that his members would not seek to block a deal that includes tax increases.

The main obstacle remains the Republican-led House, where a bloc of conservatives has ruled out any tax increases whatsoever.
…

Look for the ‘fiscal cliff’ to turn out to be a mirage.

I call B.S. on the “representative example” below, which assumes $15,000 in mortgage interest payments. At current rates circa 3.5%, this implicitly assumes a mortgage balance of $15,000/3.5% = $428,571, which clearly only applies to a small minority of wealthy homeowners.

Commentary: Mortgage interest deduction claims, facts
By Kathleen Pender
Published 11:53 am, Monday, December 24, 2012

Few tax breaks stir as much emotion — and hyperbole — as the deduction homeowners get for mortgage interest. Although this tax break is not one of dozens set to expire at year end if we go off the fiscal cliff, there is talk of reining it in as part of a broader effort to reduce the nation’s deficit and/or stick it to the rich.

This has supporters and foes of the deduction out in force. The housing lobby (Realtors, home builders and mortgage bankers) paint it as mom and apple pie. Critics call it a sop to the wealthy since it mainly benefits taxpayers with big mortgages in high tax brackets.

Here’s a look at some claims that have been made about the deduction, and the facts behind them.

Claim: The mortgage interest deduction was intended to promote homeownership.

Fact: When the federal tax code was introduced in 1913, all interest was deductible. At that time, relatively few Americans except farmers had home mortgages, says Martin Sullivan, a contributing editor with Tax Analysts, a publication for tax professionals. “I’m pretty sure nobody intended it as a subsidy for the great American dream.”

In 1986, when Congress overhauled the tax code, it eliminated the interest deduction for most consumer debt, including auto loans and credit cards, but kept it for mortgages used to buy, build or substantially improve a home. This exception was a result of “brilliant lobbying” by the housing industries, says University of Southern California real estate professor Richard Green.

In 1987, Congress limited the deduction to interest on up to $1 million in mortgage debt on a first and second home. But it also created the home-equity deduction that lets homeowners deduct interest on up to $100,000 in mortgage debt used for purposes other than buying, building or improving a home. This was a back-door way of letting homeowners (but not renters) once again deduct interest on consumer debt.

It’s hard to see how the home-equity deduction promotes homeownership since it subsidizes people who use their houses like piggy banks, thereby depleting their home equity. Even real estate lobbyists have a hard time defending it, other than to say now is not a good time to be messing with the oh-so-fragile housing market.

Claim: The mortgage interest deduction is wildly popular.

Fact: In many surveys, it enjoys strong support. In practice, only 25 percent of households that filed a federal tax return in 2010 claimed the deduction, even though the homeownership rate was about 67 percent.

To claim it, homeowners must itemize their deductions; but for many, their standard deduction is higher than their itemized deductions combined, meaning they get no benefit from the mortgage interest deduction.

So why is it so popular? Even if you are not claiming it now, you may have claimed it in the past, hope to claim it in the future or think the person who will buy your home can claim it, says Leslie Appleton-Young, chief economist with the California Association of Realtors. The association surveyed 800 people who bought a home in 2012, and 79 percent said the mortgage interest and property tax deductions were “extremely important” in their home-buying decision.

However, some people who claim the deduction may be overestimating its value, says Dennis Ventry, a professor at the UC-Davis School of Law. Its true value, he says, is the amount by which your interest payments, when added to your other potential itemized deductions, push you beyond the standard deduction, multiplied by your marginal tax rate.

Suppose you are married and in the 25 percent marginal tax bracket. You pay $15,000 in mortgage interest, $4,000 in state income taxes and make $1,000 in charitable contributions. Without the mortgage interest, you would take the standard deduction — $12,000. With the interest, you claim $20,000 in itemized deductions.

The value of the mortgage interest deduction is $8,000 ($20,000 minus $12,000) multiplied by 0.25, or $2,000. If, instead, you were in the 33 percent tax bracket, the benefit would be $8,000 multiplied by 0.33, or $2,640.

Claim: The deduction makes homes more affordable.

Fact: Lenders do not take the deduction into account when they qualify borrowers for a loan. It does reduce the after-tax cost of a mortgage, but whether this makes homes more affordable is debatable.
…

Europe’s Debt Crisis
Britain feels strain as austerity bites
By Mark Thompson @CNNMoney December 24, 2012: 8:33 AM ET
British households are facing financial strain
LONDON (CNNMoney)

Millions of Britons are facing a bleak holiday season worried about falling incomes and how to repay debt, as economic reports raise questions about whether the country’s austerity measures can restore growth.

A survey released Monday showed 43% of households expect their finances to deteriorate in 2013, compared with only 24% who expect an improvement.

“The vast majority of households anticipate that their financial well-being will either worsen or stagnate next year,” said Tim Moore, senior economist at financial data provider Markit, which compiled the report.

“With three-quarters of all households not expecting any improvement in their finances, the latest survey suggests that domestic consumer demand will remain under pressure in the near term — especially since inflation perceptions remain elevated and job insecurities are prevalent across the U.K.”
…

Is another half-decade a reasonable guess of the remaining duration of the Eurozone crisis, or is that overly optimistic?

20 December 2012 Last updated at 21:54 ET
Gavin Hewitt, Europe editor
Eurozone crisis: Troubling year ahead

Nun passing by a beggar in Rome, 10 Dec 12 Beggar in Rome: Italy’s debt mountain remains a source of anxiety

Eurozone crisis

Europe’s leaders, at the start of the year, would have settled for how 2012 is ending.

The worst of the predictions did not come true. The eurozone has survived intact, but it is still a currency in intensive care.

Recently I asked the German Finance Minister, Wolfgang Schaeuble, how far we were through the crisis and he thought somewhere between 50 and 60%.

Positive signs

Firstly - for those who see the glass half-full.

Europe’s leaders demonstrated their absolute commitment to defend the euro and the markets have started to believe them.

The President of the European Central Bank (ECB), Mario Draghi, was the star of the year. By promising to do whatever it takes to defend the currency he brought down the borrowing costs of countries like Spain and Italy. His promise remains untested, but the markets are wary of betting against the bank.

To the often-asked question of what stands behind the euro - the answer is now the ECB.

One of the ratings agencies said “the future of the euro will be decided at the gates of Rome”. Under Prime Minister Mario Monti’s stewardship, Italy’s borrowing costs shrank and reforms are being pushed through.

Europe has committed itself to a banking union - and a European supervisor of the eurozone’s big banks. It will involve a large transfer of national authority to a European institution - the ECB. Considering the banks have been at the heart of the crisis, this is a hugely significant step.

Once the banking supervisor is in place, troubled banks will be able to apply for help directly from the permanent bailout fund, the European Stability Mechanism (ESM). It should mark the end of banking problems ending up on government books and forcing up their debts.

Greece did not leave the euro - something many German MPs and officials had suggested as recently as July. The word “Grexit” is no longer heard in the land. Greek Prime Minister Antonis Samaras is judged “serious” and “reliable”.

Frau Europe - Angela Merkel - is almost certain to be re-elected as German chancellor in September, although it may make her even more cautious in the short term.

And now the bad news...

Secondly - for those who see the glass as half-empty.

If you look at the real economy, instead of the eurozone’s new architecture, the outlook for 2013 is bleak. More countries are heading into recession and unemployment is still rising.

The Greek problem has been rolled over. Almost no one believes that its debts are sustainable. Sooner or later some of its debt will have to be written off. The German taxpayers, at some stage, are likely to be told they will lose money in Greece.

Spain’s economy is caught in a cycle of decline. Almost no one expects it to emerge from recession in 2013. It has proved the critics wrong so far, but early next year the question will return - will Spain need a full bailout? That is a problem unresolved. Its social fabric is fraying. Every large-scale demonstration has become more violent.

Italy has entered a period of political instability. Silvio Berlusconi may prove to be less of a player than imagined just a few weeks ago, but there is still likely to be jockeying for power. Mario Monti, the market’s favourite, may yet be anointed as the next leader, but the reforms are far less impressive than heralded and Italy is stuck in recession.

Anti-austerity backlash
…

Eurozone crisis as it happened: Greek euro exit still a risk, warns finance minister

Graeme Wearden and Nick Fletcher
guardian.co.uk, Thursday 20 December 2012 04.53 EST

Yannis Stournaras, who has predicted a ‘make or break year’ for Greece in 2013 Yannis Stournaras, who has predicted a ‘make or break year’ for Greece in 2013. Photograph: Georges Gobet/AFP/Getty Images

8.18am GMT
Greek finance minister: bankruptcy is still a risk

Good morning, and welcome to another day of rolling coverage of the eurozone financial crisis, and other key events in the world economy.

Greece’s finance minister has slightly deflated the sense of optimism as we ease into the Christmas break, by warning that the country faces another difficult year.

Yannis Stournaras has cautioned against getting carried away by recent progress, pointing out that things could unravel next year “if the political system finds the situation too difficult to handle”.

He made the comments in an interview with the Financial Times, published just a day after Greece’s credit rating was upgraded.
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POLITICS
December 25, 2012, 8:00 p.m. ET

Budget Talks Cloud Outlook
Hopes Dim for a Big Deal on Fiscal Cliff, Prolonging Uncertainty for Economy
By SUDEEP REDDY

Washington’s budget gridlock is unsettling consumers and businesses, raising the risks that economic growth would be hurt next year no matter what Congress does in the coming days.

Lawmakers returning to town this week will see whether they can agree on a plan to avoid the full brunt of the fiscal cliff, the combined $500 billion in tax increases and spending cuts set to begin next week. Little if any progress was made in the talks before Congress and President Barack Obama left town last Friday for Christmas.

Aides in both parties say they expect a potential solution to start taking shape by the end of the week. But with so little time, hopes are dimming for anything other than a partial agreement, which would prolong the uncertainty and leave in place some tax or spending measures that act as a serious drag on the weak recovery. This could even trigger another recession, exacerbating the global economic slowdown.

“We’re all sitting on the sidelines right now wondering what’s going to happen to us,” said John Odland, chief financial officer at MacMillan-Piper Inc., a freight-transport firm in Seattle. “A lot of my contemporaries are feeling the same way, saying, ‘Let’s just wait and see what these knuckleheads do.‘ ”
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How Washington’s failure to reach a tax deal could spoil your 2013
Published December 25, 2012
FoxNews.com

Call it the not-so-happy new year.

Unless Congress wrangles a deal in the next few days, Americans will ring in 2013 with champagne, funny hats — and a knock-you-off-your-feet cocktail of tax hikes.

The Washington-imposed financial headache goes beyond higher taxes. Due to the inaction on Capitol Hill, certain industries could be hit particularly hard by budget cuts and millions of taxpayers could be held up in filing their 2012 returns.

Here is an overview of all the ways the failure of Washington to reach a compromise could impact you:

Tax hikes

Wondering why passions are so heated in Washington over the looming fiscal crisis? The answer: $536 billion in tax increases.
That’s what’s in store next year without legislation to avert or curb them. Together, they amount to the largest tax increase in American history.

The biggest hit comes from the roll-back of the Bush-era tax rates. Families making between $50,000 and $75,000 would see taxes jump roughly $2,400, according to one non-partisan study.

As part of that jolt, investment taxes would rise as well — the capital gains rate would rise from 15 to 20 percent for most. Dividends would be taxed like regular income, as opposed to a flat 15 percent rate. And the estate tax would expand to catch more and more families.

The financial pain doesn’t stop there. A short-term Social Security payroll tax cut seems likely to expire no matter what, with the rate rising on Jan. 1 from 4.2 percent to 6.2 percent.

And the so-called alternative minimum tax — a provision originally meant to ensure the wealthy pay a minimum amount to the government, but which has over time affected middle-class families — would expand to 28 million more taxpayers without an agreement to avert it. The average increase? $3,700.

Spending cuts, threatened jobs

Congress last year drafted a $1.2 trillion set of spending cuts so devastating, so unbalanced that it was supposed to motivate lawmakers to come up with a more reasonable deficit-reduction plan. They never did. As a result, the first installment of $110 billion in cuts is poised to hit next year. Half of that hits defense, and half hits other federal departments.

For the Pentagon, that means a roughly 9 percent budget cut. At the very least, this threatens contracts for the thriving defense industry. Across the government, though, some federal workers could be furloughed or laid off to cope with the cuts.

The combination of steep cutbacks and steep tax hikes is expected to have a broader impact. The Congressional Budget Office predicts the country could lose up to 3.4 million jobs.
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Sally Pipes, Contributor
I cover health policy as President of the Pacific Research Institute
Op/Ed
12/25/2012 @ 6:39PM |23,766 views
In 2013, Millions Of Americans Face Obamacare Tax Hikes

As part of the negotiations over the fiscal cliff, Congress and President Obama are battling over whether to raise marginal tax rates at the very top of the income ladder.

Regardless of how these talks turn out, millions of Americans are already facing tax hikes thanks to Obamacare.

Obamacare’s authors chose to offset about half of the trillion-dollar cost of the law through higher taxes. Since the Supreme Court upheld the law’s individual mandate and allowed states to opt out of its Medicaid expansion, though, the cost estimate has swelled to $1.76 trillion between 2012 and 2021.

In 2013, a number of Obamacare’s taxes will go into effect. Each will increase the cost of health care, yield job losses, and deprive our struggling economy of investment. These are the true costs of Obamacare.

Let’s look at some of these taxes individually.
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I confess to having personally done little this year to alleviate weak holiday retail sales. After blowing lots of dough this year on high gasoline prices, we had little spare change at year-end to fund Christmas gift purchases.

US Holiday Retail Sales Growth Weakest Since 2008
By DANIEL WAGNER AP Business Writer
WASHINGTON December 26, 2012 (AP)

U.S. holiday retail sales this year grew at the weakest pace since 2008, when the nation was in a deep recession. In 2012, the shopping season was disrupted by bad weather and consumers’ rising uncertainty about the economy.

A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmas increased 0.7 percent, compared with last year. Many analysts had expected holiday sales to grow 3 to 4 percent.

In 2008, sales declined by between 2 percent and 4 percent as the financial crisis that crested that fall dragged the economy into recession. Last year, by contrast, retail sales in November and December rose between 4 percent and 5 percent, according to ShopperTrak, a separate market research firm. A 4 percent increase is considered a healthy season.

Shoppers were buffeted this year by a string of events that made them less likely to spend: Superstorm Sandy and other bad weather, the distraction of the presidential election and grief about the massacre of schoolchildren in Newtown, Conn. The numbers also show how Washington’s current budget impasse is trickling down to Main Street and unsettling consumers. If Americans remain reluctant to spend, analysts say, economic growth could falter next year.

In the end, even steep last-minute discounts weren’t enough to get people into stores, said Marshal Cohen, chief research analyst at the market research firm NPD Inc.

“A lot of the Christmas spirit was left behind way back in Black Friday weekend,” Cohen said, referring to the traditional retail rush the day after Thanksgiving. “We had one reason after another for consumers to say, ‘I’m going to stick to my list and not go beyond it.’”
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I think I found the HBB theme song:

http://www.youtube.com/watch?v=M_8CMEAnkIo

Does he look like Ben????

http://www.youtube.com/watch?v=smk6STESfaE

Massive holiday homecoming big problem for rural town in Ireland
RATHKEALE, Ireland — Christmas in Ireland turns this little town into the only place in Ireland where armed police officers patrol the streets 24 hours a day to deter internecine feuds and other disorderly conduct.
For about six weeks of the year, the town’s population swells to 4,500 from 1,500, and ostentatious displays of wealth are common. Expensive sport utility vehicles create gridlock in the narrow streets and alleyways, trailers and mobile homes clutter the sidewalks and young men speed through the surrounding country lanes in their sports cars.
A long history of violence between clans hangs like a cloud over the travelers. When they congregate at Christmas, brawls involving knives, cudgels, iron bars and screwdrivers have been known to erupt, and traffic violations multiply.
Over the past couple of decades, the travelers have bought or built houses in Rathkeale. The rows of extravagant, mock-Georgian mansions that have sprung up just off the main street are boarded up for most of the year but come alive around Christmas when their owners return, mainly from Britain but also from increasingly far-flung places.
But in recent years, a growing body of evidence has fueled suspicions that not all of the money flowing into Rathkeale comes from strictly legal transactions and that the property deals are a form of money laundering.
“People won’t say a bad word against them in public because they’re afraid of getting a bottle through the window — or something a lot worse,” said one Rathkeale resident, who did not want to be named. “Who really believes tarring driveways or fixing gutters gets you those massive houses or flashy cars?”
“You would get the impression it’s not safe to walk out your door, but it’s simply not the case,” the local butcher said. “The vast majority of travelers are very good people. There are a few bad apples, but that’s the same in every part of society.”

But he also said that he might as well close his shop earlier than usual because the sheer concentration of outsiders was enough to deter year-round residents from coming out.

“Locals from the surrounding areas prefer to shop in the mornings because they know the lads are still sleeping off the night before,” he said.

America’s Debt Challenge
World aghast at fiscal cliff mess
By Mark Thompson @CNNMoney December 21, 2012: 11:04 AM ET

Stocks fell around the world as prospects for a U.S. budget deal faded
LONDON (CNNMoney)

Fiscal cliff was one of Collins dictionary’s words of 2012, along with Gangnam Style and Eurogeddon. But those who hoped the phrase would be redundant next year might be disappointed.

Washington is winding down for the holidays without a plan to prevent New Year tax increases and spending cuts that could send the U.S. into recession.

Lawmakers will have a last chance this year to cut a deal on the fiscal cliff when they return on Dec 27.

With much of Europe, and Japan, already in recession and China yet to return to the double-digit expansion of recent years, failure would spell trouble for the world economy as it struggles to return to sustainable growth after the financial crisis.

World markets reacted accordingly on Friday. Stocks fell, the euro was weaker and oil prices were off as investors sought safe haven assets such as the dollar and gold and took some profits after recent gains fueled in part by hopes of a deal between President Obama and Congress.

But the failure of House Speaker John Boehner to muster enough support among his Republican members for a “Plan B”, including tax hikes for those earning over $1 million a year, was linked by financial market players to the doomsday Mayan prophesy that the world would end on Friday.
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How will going off the ‘fiscal cliff’ affect the U.S.?
Even if no deal is reached, doomsday predictions are overblown, many say.
Associated Press
December 26, 2012

You’ve heard the predictions for what happens if the country goes over the “fiscal cliff”: The economy will shrink, nervous consumers will stop spending, and the stock market will plunge.

But those doomsday predictions are overblown, some professional investors say.

Even if Congress and the White House can’t reach a deal, the higher taxes and lower government spending that would follow would kick in only gradually. A recession is not guaranteed.

What’s much more important to the stock market, the experts say, are economic fundamentals.

“History has shown that the economy is going to do what the economy is going to do,” said Scott Carmack, co-portfolio manager at Leader Capital in Portland, Ore. “And politics don’t create some sort of disaster.”

Regardless of what happens, the “fiscal cliff” — sweeping tax increases and government spending cuts set to take effect Jan. 1 — is going to dominate the headlines and the market for the next week.

What’s going to happen in the stock market between now and the budget deadline of Dec. 31?

The market hates uncertainty. If there’s no deal, expect stocks to fall.

“We always knew we were going to get some volatility here,” Carmack said. “Depending on leaders in Washington to come to some kind of agreement is like pulling teeth.”

Besides, there are other incentives for people to pull money out of the market. Some professional investors are selling to lock in gains for the year. Others are selling because investments could be taxed at higher rates next year.

“It’s been a pretty good year in the market,” said Peter Tuz, co-manager of the Chase Growth and Chase Mid Cap Growth mutual funds in Charlottesville, Va. The Standard & Poor’s 500 index is up more than 13% in 2012.

“People might look at that uncertainty and say, ‘I’m happy with that, and now I’ll take some money aside, and sell,’” he said.

What about after Jan. 1?

Deal or no deal, many investors don’t expect the effects of the fiscal impasse to linger in the stock market for too long.

One big reason is that everyone has seen it coming for months.

“We’re not overly concerned,” said David Hefty, chief executive of Hefty Wealth Partners in Auburn, Ind. “The thing to keep in mind is that what hurts investors, what hurts the market, are things that are unexpected.”

He added: “Everybody has 2008 burned into their minds. They think the ‘fiscal cliff’ will be the next 2008 event. A 2008 event is when nobody sees it coming, and everyone is blindsided. Nobody’s going to be blindsided by this.”

Hefty said he’d watch whether the Federal Reserve continues its policy of pumping money into the economy, and fundamentals such as housing and unemployment, to decide how to invest in 2013.

“We’re looking at two key things that matter the most,” he said. “The ‘fiscal cliff’ isn’t one of them.”
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Fiscal cliff have you concerned?

Don’t worry: A closely-watched pot never boils.

Editorial: Where’s the urgency on fiscal cliff?
Published: 25 December 2012 09:12 PM

If your paycheck is a little thinner in January, don’t fault your boss. Blame rests squarely at the ends of Pennsylvania Avenue.

Congress, which returns to session tomorrow, and President Barack Obama have about five days to agree on a stopgap measure to avert massive tax hikes and spending cuts on New Year’s Day.

If they don’t act, most Americans will pay at least $2,000 more in federal taxes next year. Medicare providers would receive payment cuts, some of which could hit vulnerable senior citizens with higher out-of-pocket costs.

For business owners, today’s paralyzing uncertainty over spending and tax policies could balloon into full-fledged economy-stifling retrenchment in spending and hiring, which in turn could rekindle another recession. Likewise, the military would be smacked with a 10 percent across-the-board cut that would hurt military families and programs.

And the negative impacts of gridlock don’t stop there. Global financial markets had counted on the Senate, House and White House coming to their senses with a deal — or at least a framework — for a broader agreement on taxes and spending early next year. Even after a compromise failed last week, investors avoided a widespread, confidence-rattling sell-off. However, if the new year begins without at least the hope of a deal, we can all expect one more hit on our bottom lines, as 401(k) accounts tank.

These dire consequences are avoidable if Congress and the White House somehow could seize victory from the jaws of defeat. Early last week, the two sides seemingly had made progress on a deficit reduction plan that included new revenue, spending cuts and entitlement changes. But that all fell apart when Democrats screamed about changes to entitlements and Speaker John Boehner was unable to get his own “Plan B” proposal through the House.

Ironically, the actual dollar gap between their positions is narrower than the ideological chasm; Boehner and the president were moving toward a tax cut for most Americans, an increase for the wealthiest and roughly $1 trillion in spending cuts. It’s philosophical rigidity that is holding the nation hostage; ideologues in each party prefer to play chicken with economic disaster rather than give an inch. Never mind that some sharing of the pain will be necessary to solve both long- and short-term debt issues.

The sort of brinksmanship playing out in Washington is especially dangerous now that the fiscal cliff deadline is only a few clock ticks away. Inaction is not an option, nor is it leadership. This intransigence will hurt average Americans and send another signal that the nation’s lawmakers are better at talking big than governing well. Congress must end this nonsensical impasse now before it mires the nation in another economic crisis.
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Get set for homeowner bailouts unplugged in 2013. Renters, get ready to open your wallets in order to make underwater homeowners whole again.

POLITICS
Updated December 25, 2012, 9:44 p.m. ET
Refi Program Expansion Eyed
By NICK TIMIRAOS

The Obama administration is considering expanding its mortgage-refinancing programs to include borrowers whose mortgages aren’t backed by the government and who owe more than their homes are worth, according to people familiar with the discussions.

Such a move would benefit borrowers and provide a boost to the economy by unleashing cash that homeowners could spend elsewhere. But one proposal being considered would also transfer potentially riskier loans held by private investors into the taxpayer-supported mortgage giants Fannie Mae (FNMA -2.29%) and Freddie Mac (FMCC -2.37%).

About 22% of all homes with a mortgage, or around 10.8 million homes, were worth less than the outstanding balance at the end of June, according to CoreLogic. That number has fallen from 12.1 million at the end of last year as home prices have picked up, but around 10% of all homeowners with a mortgage are still deeply underwater.

Fannie and Freddie own or insure about half of all home loans, and most underwater borrowers with their backing can refinance to get a lower mortgage rate as long as they are current on their loans. That initiative has benefited holders of more than 330,000 underwater mortgages through October this year, up from around 60,000 in all of 2011. “It has been unbelievably successful,” said Scott Simon, who heads the mortgage-backed securities group at Pacific Investment Management Co., or Pimco, a unit of Allianz SE (ALV.XE -0.09%).

Officials at the Treasury Department and the White House now would like to include borrowers who have been locked out because their loans aren’t backed by the firms. Those loans are held by private lenders or investors, and some of them were issued by subprime lenders and bundled into securities by Wall Street firms.

Because such a move would transfer billions of dollars of these mortgages to the government-backed mortgage companies, it would require congressional authorization to temporarily change Fannie’s and Freddie’s charters. Under the proposal, Fannie and Freddie would be allowed to charge higher rates to borrowers in order to compensate for the risk of guaranteeing refinanced loans that are underwater and more likely to result in default. Some economists argue that those borrowers could be relatively good credit risks because they have been paying their mortgages through the financial crisis, and that Fannie and Freddie could turn a profit on such mortgages while helping the housing market.

But industry officials say such a program would work only if banks were given immunity from having to buy back any loans they refinance that subsequently default, and that such a shield would boost the risk for the taxpayer-backed companies.

Fannie and Freddie “have already proved that they really weren’t good at pricing higher-risk assets” during the housing bubble, said David Stevens, chief executive of the Mortgage Bankers Association. “What gives us the belief they can price it better today?” Allowing the firms to “reload up their balance sheets…will ultimately be a taxpayer expense,” he said.
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