The Housing Bubble

Greece reported recently that it has reached a primary budget surplus, the Holy Grail of austerity, meaning that once you exclude interest payments on the country’s massive debts, the country is finally taking in more revenue than it spends.

This news should be worthy of a ticker-tape parade, after three years of Draconian retrenchment and a partial writedown of privately held Greek debt. Cruelly, however, the main beneficiary of a return to primary surplus may not be Prime Minister Antonis Samaras and his pro-bailout government, but the main opposition Syriza party, which is pushing for the country to refuse further austerity measures and declare a moratorium on its debt payments.

In reality, the Finance Ministry was premature with its announcement. It said the government reached a non-consolidated primary surplus in 2012 — but on a consolidated basis the country still ran a small deficit. Plus, the calculations exclude any IOUs the government has run up, of which there are many, particularly from the second half of last year when Greece waited for delayed bailout funding and had no other way to pay its bills.

http://www.bloomberg.com/news/2013-02-17/greece-may-get-cruel-reward-for-its-success.html

NEW DELHI: Global rating agency Moody’s today warned that India’s widening trade deficit is “credit negative” for the country and also raises its vulnerability to global shocks.

At present, Moody’s has a ‘Baa3′ (lowest investment grade) rating for India with a stable outlook and any downward revision from here could pull the country’s credit rating into junk grade.

Commenting on the latest government data showing an increase in India’s trade deficit to USD 20 billion as on January 31, Moody’s said: “India’s widening trade deficit is credit negative… These rising deficits are being financed by increased foreign-currency borrowing, raising India’s vulnerability to international financial volatility.”

http://economictimes.indiatimes.com/news/economy/indicators/widening-trade-gap-credit-negative-for-india-moodys/articleshow/18554984.cms

Home ownership is the path to massive household financial losses.

Investment Outlook
February 2013
Credit Supernova!
William H. Gross

This is the way the world ends…
Not with a bang but a whimper.
–T.S. Eliot

They say that time is money.* What they don’t say is that money may be running out of time.

There may be a natural evolution to our fractionally reserved credit system which characterizes modern global finance. Much like the universe, which began with a big bang nearly 14 billion years ago, but is expanding so rapidly that scientists predict it will all end in a “big freeze” trillions of years from now, our current monetary system seems to require perpetual expansion to maintain its existence. And too, the advancing entropy in the physical universe may in fact portend a similar decline of “energy” and “heat” within the credit markets. If so, then the legitimate response of creditors, debtors and investors inextricably intertwined within it, should logically be to ask about the economic and investment implications of its ongoing transition.
…

Would forced modifications of prime loans and option ARMs primarily benefit wealthy coastal home owners?

Feb. 13, 2013, 11:46 a.m. EST
Federal mortgage insurer FHA under fire
By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — A federal insurer of home mortgages came under fire during a Wednesday Capitol Hill hearing, with Republican lawmakers attacking the Federal Housing Administration for shaky finances.

“The FHA is flat broke, and I fear soon that FHA will prove to be bailout broke,” said Republican Rep. Jeb Hensarling of Texas, chairman of the House Financial Services Committee. The agency is in a “dire” situation, he added.

Rep. Randy Neugebauer, another Republican from Texas, questioned whether FHA Commissioner Carol Galante understood the agency’s financial position.

“Do you actually know where you all are,” he said. “I question whether you even know what reserves you need.”

Galante defended the FHA, noting that the agency monitors its portfolio, and said she expects finances to improve during the recovery.

“The trend is much better than it was [during] the economic crisis,” Galante said.

Wednesday’s hearing, the committee’s second this Congress focusing on the FHA, was scheduled to review a recent report that showed exposure to troubled loans in recent years has taken a serious toll on FHA’s finances. Losses from loans that FHA insured between fiscal 2007 and 2009 “continue to place a significant strain” on funds used to insure mortgages, according to the report.

Indeed, the fund behind FHA’s single-family mortgage-insurance programs had a negative capital reserve ratio in fiscal 2012, meaning that reserves would be insufficient to cover projected losses. Specifically, if FHA stopped insuring new mortgages and had to cover projected losses, it would lose $16.3 billion, according to officials.

Looking to shore up its finances, FHA recently announced rules to raise annual insurance premiums for most new mortgages, and lengthen the period during which borrowers pay mortgage-insurance premiums, among other steps. These changes, along with other factors, should push the FHA fund’s capital ratio into positive territory in the near term, cutting the chances that the U.S. Treasury Department will need to step in, officials said.

FHA is an important player in the housing market. With relatively low down-payment requirements, FHA insurance helps first-time homeowners and lower- and moderate-income borrowers obtain credit. On Wednesday Galante defended FHA against Republican lawmakers who accused the agency of lax standards.
…

Senate Republicans Take a Stand Against the Public Interest
Robert Scheer
February 15, 2013

Chuck Hagel testifies during his confirmation hearing. (AP Photo/J. Scott Applewhite.)
 
This story originally appeared at Truthdig. Robert Scheer is the author of The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Nation Books).
 
It is bizarre that Chuck Hagel, a war hero with a long record of sensible views on the deployment of military power, gets blocked as the president’s nominee to run the Pentagon, while Jack Lew, steeped in Wall Street greed, sails through as Treasury secretary.

Those responsible for the crisis continue to be rewarded, as Timothy Geithner’s Treasury Department approves tens of millions of dollars in bonuses for Goldman Sachs executives with ties to the Obama administration.

There is, of course, nothing new about a Treasury secretary having profited from high-level Wall Street connections. After all, Robert Rubin and Hank Paulson, two former honchos at Goldman Sachs, headed the Treasury in the Clinton and Bush administrations, respectively. And Timothy Geithner, whom Lew would be replacing, was head of the New York Federal Reserve when it acted to bail out the too-big-to-fail financial hustlers led by AIG and Citigroup. The revolving door between Wall Street and the Treasury is the key cause of the Great Recession.

So, what’s the big deal that Lew ran two divisions at Citigroup for three years when homeowners were swindled out of their life savings? What’s a $2 million payout to Lew compared with the well over $100 million that Rubin got at that same bank during the years he helped steer it to disaster? In Lew’s case there was also the matter of his investing in one of Citigroup’s offshore schemes on the Cayman Islands that President Obama had roundly condemned, but the few Republicans who brought it up at the nominee’s confirmation hearing this week offered only a mild rebuke for such chicanery.

The big deal, ignored by Democrats on the Senate Finance Committee and underplayed by the Republican critics, is that the Treasury Department, under two presidents during this financial crisis, has bailed out the banksters while doing next to nothing to help the victims of those institutions. Even now, in the third stage of a “quantitative easing” that will leave $4 trillion in taxpayer debt, the Federal Reserve, with the Treasury’s blessing, continues to bail out the banks by taking toxic assets off their books while the banks refuse to undertake any serious mortgage readjustments.
…

If you pay current massively inflated prices for a house, you’re going to lose a lot of money. A LOT of money.

Whad’ya know: Pushing on a string works no better in the present episode than it did back in the Great Depression.

LUETKEMEYER: Following Japan on disastrous quantitative easing policy
Time to reverse course before it’s too late
By Rep. Blaine Luetkemeyer
Friday, February 8, 2013

This week, Ben S. Bernanke announced that the Federal Reserve would continue its misguided quest to ease our financial woes with purchases of $85 billion per month in mortgage-backed securities and Treasuries. This follows years of quantitative easing that has loosened our grip on sound monetary policy and created what many believe to be an artificial recovery.

What few in the Federal Reserve are discussing — but what everyone else seems to understand — is that continued quantitative easing comes with very real risks, including a dramatic increase in inflation rates, asset bubbles and long-term economic stagnation. Additionally, given the low rate of success that similar plans have had in other countries, it seems the Fed’s current program will pose significant dangers to the U.S. economy in the long run.

While many in Washington continue to focus on the economic crisis facing Europe, it is equally important to look west and examine the eerie similarities between Japan’s monetary policy and our own.
…

Coming to a sky near you:

Drones over U.S. get OK by Congress
By S. Smithson
The Washington Times
Tuesday, February 7, 2012

U.S. Customs and Border Protection uses qualified pilots to operate Predator drones for surveillance along the border. Under the FAA Reauthorization Act, drones eventually could be used by police agencies and private companies across the U.S. (Associated Press)

Look! Up in the sky! Is it a bird? Is it a plane? It’s … a drone, and it’s watching you. That’s what privacy advocates fear from a bill Congress passed this week to make it easier for the government to fly unmanned spy planes in U.S. airspace.

The FAA Reauthorization Act, which President Obama is expected to sign, also orders the Federal Aviation Administration to develop regulations for the testing and licensing of commercial drones by 2015.

Privacy advocates say the measure will lead to widespread use of drones for electronic surveillance by police agencies across the country and eventually by private companies as well.

“There are serious policy questions on the horizon about privacy and surveillance, by both government agencies and commercial entities,” said Steven Aftergood, who heads the Project on Government Secrecy at the Federation of American Scientists.
…

Poll: Do you think Congress will step in and save the military from the looming sequester cuts?

Yes

No

Undecided

Other

Dr Doom says quantitative easing will create zombie banks, firms and borrowers

Nouriel Roubini said at Davos that central bankers risked saddling the economy with debt-burdened QE addicts

Heather Stewart in Davos
The Guardian, Wednesday 23 January 2013 14.37 EST

Nouriel Roubini has warned of the dangers of too much QE. Photograph: Keith Bedford/REUTERS

Nouriel Roubini, the economist dubbed “Dr Doom” for predicting the credit crunch, has sounded a stark warning about the long-term effects of relying on quantitative easing to keep crisis-hit western economies afloat.

At a lively debate in Davos, Roubini, who runs a New York-based consultancy, said central bankers risked saddling the economy with debt-burdened banks, businesses and consumers that should have been allowed to go bust.

“Over time, you get zombie banking, zombie corporates, zombie households, which is damaging in the long term,” he said. The phrase “zombie banks” was coined in Japan, to describe insolvent lenders propped up by cheap cash.

Roubini stressed that “QE” had been critical in fending off a new Great Depression after the collapse of Lehman Brothers in 2008. But, asked to argue against the motion, “The short-term benefits of QE outweigh the long term risks,” he offered nine reasons why such unconventional monetary policy could damage the economy in the longer term.

Roubini went head to head with Adam Posen, the outspoken former member of the Bank of England’s monetary policy committee, who pushed for an extension of QE during his time in Threadneedle Street.

Posen said central bankers should be “humble” about what they can achieve but there was no evidence from the past five years that QE was sowing the seeds of a future crisis. And in response to the increasingly widely aired argument that QE could lead to a Japanese-style economic stagnation, he said: “If you look accurately at the data, being Japan wasn’t so bad: in the five years to 2007, per capita growth in real GDP was higher than anyone else in the G8.”

Instead, Posen said opposition to QE in the current circumstances could only come from a “deep spiritual belief that somehow this must create inflation”.
…

Criticism of ‘quantitative easing’ intensifies ahead of G20 meeting
Anthony Halley | February 9, 2013

Critics of central banks’ massive stimulus programs (’quantitative easing’) are on a media blitz ahead of the G20 finance ministers’ meeting in Russia next week.

Famous commodities investor Jim Rogers says that now is the time to bet against long term US treasuries, bond market guru Bill Gross warns of ‘inflationary dragons,’ and US Congressman Ron Paul is staying on message, lambasting central banks in Europe, Japan and the US for their excessive monetary expansion.

Paul told Bloomberg today that whilst quantitative easing may be intended to stimulate growth, the policy amounts to currency debasement. This will end badly, said Paul, as public faith in fiat currency will eventually match the declining value.

Having a weak currency is tempting because it will often boosts exports, one of the main drivers of economic recovery. But having so many countries simultaneously engaged in aggressive devaluation is causing international tensions.

Developing nations, and in particular Brazil, have repeatedly voiced their concerns about expansionary monetary policy in the developed world. Many emerging economies depend on export competitiveness to sustain their development paths.

Next week, at the G20 finance ministers and central bankers meeting in Moscow, currency exchange rates and monetary policy will surely top the agenda.

Kumbaya, my Lord, Kumbaya…

FOREIGN EXCHANGE
February 17, 2013, 10:35 p.m. ET

G-20 Moves Toward Common Ground on Currencies
By IAN TALLEY

MOSCOW–The world’s largest economies took a step toward common global guidelines for exchange-rate policies with a pledge Saturday to refrain from targeting their currency policies to gain a competitive trading advantage.

The pledge, in a statement produced by finance ministers and central bankers from Group of 20 industrial and developing nations following two days of meetings here, marked the first time the group had agreed to such an explicit guideline on the issue. It came as officials sought to defuse global tensions over volatile exchange rates.

Members also promised that those with tightly managed currencies–largely a reference to China–would move more rapidly toward market-determined rates, although there was no specific timeline. At the same time, the group said it would seek a clearer understanding of the ways in which members can cope with the effects of each other’s actions.

Germany’s central bank president, Jens Weidmann, said it was clear at the meeting that G-20 members agreed that “politically driven devaluations can’t sustainably improve competitiveness, don’t solve structural problems and produce backlash reactions.”

Veterans of G-20 gatherings said the meetings Friday and Saturday marked a step forward in the task of building trust among a large number of nations with widely differing economies.

“I’ve been here for five years and the subject of market-based exchange rates has been discussed in one way or another over that period and rarely have I seen as much agreement around a proposition as I saw today,” said Australian Treasurer Wayne Swan.

A U.S. administration official said that as the vows taken Saturday are implemented, the world will increasingly have a broader set of countries that adhere to the same set of parameters for exchange-rate policies.
…

Feb. 17, 2013, 10:42 a.m. EST
Stock market wild card: big spending cuts
Year’s rally largely intact as sequestration deadline looms
By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) — With a deadline nearing in the latest battle over the U.S. budget, a key question for equity investors in the next week is whether the likelihood of federal spending cuts will spur a correction in a market that’s sitting at multiyear highs.

March 1 is when $85 billion in reductions to defense and domestic programs through the fiscal year ending Sept. 30 will go into effect unless Congressional leaders and the White House work out a deal to replace the automatic budget cuts. The pending cuts are part of a larger program known as sequestration, aimed at slicing federal spending by roughly $1 trillion over nine years.
…

Why Now’s the Time to Kill the Mortgage Interest Deduction
By Motley Fool, February 07, 2013, 11:28:03 AM EDT

The fiscal-cliff compromise on New Year’s Day made substantial changes to existing tax law and permanently implemented a number of decade-old tax breaks for the vast majority of taxpayers. Yet even though some lawmakers have argued that the tax increases they agreed to marked the full extent to which they were willing to concede for the sake of higher government revenue, many believe that further revenue-generating measures may come in future battles over sequestration, the debt ceiling, and the passage of a federal budget.

One place that many policymakers have looked to as a potential source of revenue is to eliminate the mortgage interest deduction. With the housing market having suffered so greatly in the past five to seven years, fears that taking away the deduction would lengthen housing’s decline deterred lawmakers from seriously considering cutbacks on mortgage interest. But if there were ever an ideal time to get rid of the deduction, it’s now, because a number of factors are lining up perfectly to make its disappearance as painless as it’s ever going to be.
…

Happy George Washington’s Birthday! They call it President’s Day, but today I commemorate Washington, thank him for his courage, and apologize for what this country has become.

I am sorry, General. I wish I could have done more for the country. But you never know, maybe I will yet.

My republican friend got into fight with his liberal neighbor. The liberals have an 18 y.o. who has moved out and and is drawing UE. This makes my repub friend mad as this is an able bodied kid who could work for the republican at his landscaping business.

I used UE for a few months once when between jobs. I also used SNAP and Oregon Health Plan for the kids and have received EITC for years.

Now that my wife has a job; kids will go on her insurance, SNAP will go by-by; and we will make too much money to claim EITC. But those are programs extending help to those who need it; at least having low incomes.

But by moving us into that first tax bracket I as our income should soar up above 41k/yr; we will not get $7000 eitc or $6000 in food stamps. Or free health care for our kids. Plus we will have to pay income tax. Wife will make 15k gross more than she was as lunch lady. It does hardly pay to go to work but “pride goeth over the falls” meaning the ability to say we did it on our own will be worth it. We don’t want our republican friends mad.

So for 1200 extra hours of work/yr. on my wife’s part, the net gain for our bottom line will be negative, as the benefits no more plus the taxes add up to 19k. So belt tightening will need to occur as we will be making do with 4k less while making 15k more. Is that why some folks just don’t work but collect handouts for life?

But not draining on the taxpayers (no more taking the dole), feels so worth it.

Posted: 5:41 p.m. Sunday, Feb. 17, 2013

Obama, Tiger Woods play golf on second day of president’s Treasure Coast visit

By Carlos Frias

Palm Beach Post Staff Writer

PALM CITY —
Take the traveling circus surrounding the president of the United States and team it with the perpetual buzz around the world’s greatest golfer and what you get stops traffic — on land, sea, air and Internet.

President Barack Obama might have envisioned this visit to the Treasure Coast as just a three-day “boys’ weekend” golfing in Palm City as the first lady took the first daughters on a Colorado ski trip. But the sections of Martin and St. Lucie counties surrounding the posh Floridian Yacht & Golf Club turned into a virtual “no-anything” zone when the president invited Tiger Woods to play for the first time.

The two met the weekend Obama was inaugurated in 2009, but they had been trying to set up this golf summit ever since. And what you got between Secret Service agents and the ultra-private Woods was this, outside the closed gates of the private club:

• In three days, F-16s intercepted three planes that drifted into the temporary no-fly zone imposed around the Floridian.

• The news media including the regular White House press corps were kept outside the gates during the president’s golf weekend and housed all the way up in Port St. Lucie.

• And you think street traffic is bad when the president comes to town? Even the website for the Floridian crashed because of all the traffic, instead displaying a “Bandwidth Limit Exceeded” message as the server went down.

The president’s foursome teed off around noon, according to Golf World senior writer Tim Rosaforte, who tweeted from the course. Obama went out with Woods, Floridian owner Jim Crane — who also owns the Houston Astros and is a major Obama supporter — and outgoing U.S. Trade Representative Ron Kirk, according to a White House statement.

On Saturday, the president got one-on-one tips from Woods’ former swing coach, Butch Harmon, and played another 27 holes with the group of Crane and Kirk.

“The president said to Tiger, ‘The last tournament you played was fun to watch. It’s good to see you play well again.’ You could tell he meant it,” Harmon told Golf Digest. “It just wasn’t a throw-it-out compliment.”

All the while, quiet Palm City became an impromptu fortress. F-16s and Coast Guard helicopters beat the air with thunderous patrols, and two 45-foot Coast Guard vessels circled the inlet, a spokeswoman said.

On Sunday morning, a Cessna ventured into restricted airspace and was met by fighter jets. It was the third small plane to fly where it shouldn’t during the president’s visit.

The plane was intercepted about 9:30 a.m. near Port St. Lucie and landed at Okeechobee Airport, where the pilot was met by local authorities, said Army Lt. Col. Mike Humphreys of the North American Aerospace Defense Command.

The Federal Aviation Administration said it is investigating the incident, since pilots who follow proper procedure and check FAA notices before taking off would be aware of the restrictions, Humphreys said.

The first plane to fly astray was a Cessna 152 intercepted near Palm City about noon Saturday. The Cessna 152 “violated the temporary flight zone and it was escorted until it landed,” Humphreys said. The plane landed at its original destination at Stuart’s Witham Field, according to the FAA, which did not have information on where the flight originated.

At about 5 p.m. Saturday, a smaller two-seater Lancair wound up in no-fly sky. According to the FAA, that flight originated in Boca Raton and ultimately landed in DeLand after being escorted out of the restricted airspace.

The FAA is investigating these incidents as well.

http://www.palmbeachpost.com/news/news/national-govt-politics/obama-woods-play-golf-on-second-day-of-presidents-/nWRZn/ - 94k

@Joe Smith
Thank you for reading my stuff. And when you disagree you don’t pile on the hate, I appreciate it.
I know I am verbose and it does scream newbie what with the walls of text.

As for my having the kush; you got that right. Just can’t use it as my pain management doc won’t permit it because the feds don’t recognize MJ’s benefits just yet. And there are other meds (opiods) that are much more important to my being able to work. Did successfully give up the name brand nerve med that is for fibromyalgia. Nothing under the sun will get them to cover the med that they target people like me with their advertising. which I helped pay for. Have a buddy who gets it for 20 bucks. Glad to be dependent on one less drug though.

I was motivated to quit taking it because the price went up from $300/month(should have pulled the plug on it years ago in hindsight) to $670/month here in 2013.

After my doc appt, where since last year sometime, I get to pee in a cup for the doc, I will indulge in some Chem Dawg brownies. Or maybe some Jack Herer. Don’t smoke anymore but edibles are abundant here in Bend and I enjoy those effects much more as smoking leads to some negative side effects; which is why I quit 15 years ago. Plus the tar in smoke can’t be too good; vaporizing is also an option if I want. BTW, Pot is 1/2 the price I than it was in college back in 1986.

Some here would prefer that I just STFU permanently. Joe Smith, you have helped me not quit this blog; that and Bjones not banning me just yet. People who attack you don’t deter you from commenting on the issues at large. Or posting from your experiences/POV regardless of likely sentiments being hurled at you in a mean way. I know I have thrown a couple at you.

I respect your attitude because the larger conversation is more important and we should not be letting the jabs get in the way. It is not our real names are out there, so it is easy to “drive-by” post knowing it will incite some . I commend you for taking mean comments and letting them roll off you. I am guilty of inciting PW just for giggles; but that does not add to the conversation; unless he pulls something original like the good post he made last week about if the HBB was a physical place. I liked that one even though I would not be safe at his HBB.

I may be able to avoid going back for my masters if I follow plan B and open a small business. I could still work 1/2 time as a substitute teacher if I only ask for a substitute license. Then the other 1/2 of the time I could work on a new venture. Another option besides teaching would be to go to law school with same pile of money to start. But that option would include going into debt.

I am looking at buying a small established business to replace the rental house income. Looking for advice I know local artisans who make cheese, beer, etc. I also know how to find high quality organic produce from years in the industryI also have lots of connections from CA so could be offering things just not available here in Bend.

Major problem would be shipping veggies from Central California to Central Oregon. I can get boxes to SF at 1.00 per box. I could get them sent on the train to Chemult; one hour south of here. Not sure the cost of the train shipping method. Or I could modify the plan and not carry veggies from CA. But heirloom tomatoes sound lucrative and they are high dollar items which would help on the shipping. Assuming it Costs two dollars to ship a 12 dollar box of lettuce; it would also cost a dollar to ship a 40 dollar box of tomatoes. Need to find a way to use soft tomatoes; when I managed a store the losses of perishables were big.

Downsides: losing my shirt on the business.

I was reading about the meteorite in Russia and I learned something I didn’t know. All the gold we have, and that is available in the upper earth’s crust, is from meteorites. The gold present when the earth was formed is near the core, due to its density.

So a piece of gold is a meteorite. Makes me kind of like it more.

Conversely, maybe someday alien gold miners will stop by and crack us open like an egg, extract our core gold and leave. Probably serve us right.

100,000 state foreclosures cleared in six months! Well this shouldn`t take any longer than 20 years.

More than 100,000 state foreclosures cleared in six months

by Kim Miller

Florida’s overwhelmed court system cleared 105,020 foreclosure cases between July and the end of December as additional judges and case managers worked to clear a stubborn backlog.

Despite the number of foreclosures taken out of the system, an additional 98,432 new cases filed during the same time period means pending cases at the end of December were still at a whopping 371,119, according to the most recent Office of the State Courts Administrator foreclosure report.

That’s a net clearance of just 6,588 cases statewide. Also, of the cases disposed during the 6-month period, about 42 percent were dismissed. Depending on the type of dismissal, those cases could be filed again.

Palm Beach County courts cleared 8,403 cases between July and December, but with 7,104 new cases added, there remains a backlog of 31,678.

On average, Palm Beach County cleared 1,051 foreclosures per month. December marked the highest number of cleared cases at 1,526.

Foreclosure Stuffing

Submitted by Tyler Durden on 09/13/2012 11:13 -0400

Finally, what hasn’t declined, is the number of people who now and going forward will live completely mortgage free just to perpetuate the illusion that “housing has rebounded.” Consider them sunk costs in this latest attempt to reflated housing. Also, thank them if suddenly that home you have wanted to buy is once again just out of purchasing reach.

As for those who have a mortgage, and are wondering if they should continue paying it or not: why pay? It is now not only the administration, but the banks who are effectively handing out free housing.

Remember: in this New Socialist Normal, “just say no” when asked to pay for anything.

http://www.zerohedge.com/news/foreclosure-stuffing - 239k -

Follow-up from yesterday.

Comment by In Colorado
2013-02-17 16:15:31
Whatever Exxon, GE, AIG get in “handout” pales compare to what they pay in taxes

You mean like the zero income tax bill that GE pays, in spite of making billions in profit every year?

Taxes are for the little people.
____________________________________________________________

Colorado,

GE might not pay income tax. But it does collects billions in payroll, excise, property, etc.. Shareholder pay on dividends.

I say collect because businesses unlike the government can’t just print money. The taxes are overhead like raw materials, rent, utilities and as such get added to the price of every gallon of gas, loaf of bread, or pair of shoes. Politicians love having businesses collect taxes because they’re somewhat hidden. And naïve people think that the business is paying. If you feel better paying taxes built into the cost of everything you buy so be it. Saying that businesses pay taxes is like saying that the seller pays the real estate commission. Who brings the money to the table?

Kate Upton is a penguin lover.

http://www.theregister.co.uk/2013/02/17/facebooks_mighty_tax_dodge/

Bloomberg is reporting that Facebook has managed to parlay a billion-dollar profit for 2012 into a tax refund of US$429 million.

Damn unions and overtaxed corporations!

Oh wait…

How come financial journalists aren’t required to at least pass a first college course in economics?

Could China ride to gold’s rescue this week?
February 18, 2013, 10:05 AM

Gold (GCJ3 -1.59%) could get a break this week, maybe, in the form of China.

That country is back from the Lunar New Year’s holiday and gold bugs will be scanning the horizons for signs of a pickup in physical buying demand and anything that could put a floor on recent gold selling. Getting lots of people nervous, gold dipped below that psychologically important support level of $1,600 an ounce on Friday.

“What can and will probably make a dent in the recent downward direction is the opportunistical buying to take advantage of the sharp recent price decline,” says Frederic Panizzutti, senior vice president at MKS Finance Geneva. “All factors that led gold toward higher levels over the last 3 years are still intact and we would see no reason why the medium term trend would have changed.”
…

Beware of geeks bearing grifts.

You think your rents are high?!

$1650 for JUST the master bedroom: http://santabarbara.craigslist.org/roo/3611880514.html

Schiff: Gold always goes up, in the long run.

Schiff on Gold’s Holding Pattern in 2013

Euro Pacific Capital’s Peter Schiff on the stagnation in the precious metals market.
Duration 5:31
Date Feb 18, 2013

Originally published February 16, 2013 at 6:22 PM | Page modified February 17, 2013 at 3:42 PM

Misstep in gun bill could defeat the effort

One of the major gun-control efforts in Olympia this session calls for the sheriff to inspect the homes of assault-weapon owners. The bill’s backers say that was a mistake.

By Danny Westneat

Seattle Times staff columnist

Forget police drones flying over your house. How about police coming inside, once a year, to have a look around?

As Orwellian as that sounds, it isn’t hypothetical. The notion of police home inspections was introduced in a bill last week in Olympia.

That it’s part of one of the major gun-control efforts pains me. It seemed in recent weeks lawmakers might be headed toward some common-sense regulation of gun sales. But then last week they went too far. By mistake, they claim. But still too far.

“They always say, we’ll never go house to house to take your guns away. But then you see this, and you have to wonder.”

That’s no gun-rights absolutist talking, but Lance Palmer, a Seattle trial lawyer and self-described liberal who brought the troubling Senate Bill 5737 to my attention. It’s the long-awaited assault-weapons ban, introduced last week by three Seattle Democrats.

Responding to the Newtown school massacre, the bill would ban the sale of semi-automatic weapons that use detachable ammunition magazines. Clips that contain more than 10 rounds would be illegal.

But then, with respect to the thousands of weapons like that already owned by Washington residents, the bill says this:

“In order to continue to possess an assault weapon that was legally possessed on the effective date of this section, the person possessing shall … safely and securely store the assault weapon. The sheriff of the county may, no more than once per year, conduct an inspection to ensure compliance with this subsection.”

In other words, come into homes without a warrant to poke around. Failure to comply could get you up to a year in jail.

“I’m a liberal Democrat — I’ve voted for only one Republican in my life,” Palmer told me. “But now I understand why my right-wing opponents worry about having to fight a government takeover.”

He added: “It’s exactly this sort of thing that drives people into the arms of the NRA.”

I have been blasting the NRA for its paranoia in the gun-control debate. But Palmer is right — you can’t fully blame them, when cops going door-to-door shows up in legislation.

Later, a Senate Democratic spokesman blamed unnamed staff and said a new bill will be introduced.

http://seattletimes.com/html/localnews/2020373291_westneat17xml.html - 77k -

I don’t usually get an 3r3ct!0n lasting more than four hours but when I do, I go to this web site. Be safe, my friends!

“O Sh!t” moment approaches in San Diego on sequestration:

Officials Sound Alarm Over U.S. Budget Cuts
By Gene Cubbison | Monday, Feb 18, 2013 | Updated 3:52 PM PST

San Diego’s economy is now on the verge of what officials say could be a real downturn, if Congress doesn’t quickly head off a round of automatic cuts to the federal budget.

Those across-the-board cuts, under the legislative euphemism of “sequestration”, are scheduled to take effect March 1. One in four jobs throughout the region, the world’s largest military-industrial complex, is tied to federal spending.

A ten percent hit could have a harsh ripple effect on jobs and commerce.

In case all this is lost on the respective parties’ leaders on Capitol Hill, one of two freshmen in San Diego’s five-member Congressional delegation is speaking out publicly to get their attention, in hopes they’ll reach a last-ditch compromise.

“We can solve these budget problems over time,” Rep. Scott Peters (D-52nd District), said during a Monday news conference at the Tenth Avenue Marine Terminal. “But the whole notion that you have to solve them with this meat axe today is really misguided — and really threatens the recovery that we’ve spent so much time achieving, as slow as it’s been.”

Peters expressed frustration that Congress is not in session this week, leaving only for (SIC) days next week to pull avert the cuts: “The (members of Congress) who were elected for the first time in November — and there’s 85 of us — all heard the same message — which was ‘Stop fighting and start fixing.”
…

Happy George Washington Day. We are having Family Day here.

The USA battled for it’s freedom (the first), and because they did, Canada was able to negotiate (the first) ours.

Slavery in Canada was almost never present, even though it was legal for a while in the beginning. We did operate the underground railway terminals here and received many persons who became very productive citizens.

I used to own a building beside Lake Erie and the history of it showed where they would come across in row boats only to have to take shelter underneath the house’s crawl space (about 18″) to avoid detection from Buffalo’s slave hunters. Once the coast was clear they went on to places like Hamilton, Toronto, etc.

From reading about the General I admire him very much. But I also admire those citizens who braved 20 miles of open water of Lake Erie just to get their freedom too.

Blue Skye can tell you how treacherous that lake’s waves can be.

Dumb question of the day: Are any San Diegans sufficiently brave or foolish to be in the market for a home in the face of the looming sequester?

What’s really going on in CA

California imposed a new law on banks innocuously called “Homeowners Bill of Rights” which forces banks to switch over to a judicial foreclosure process, which they can opt to do on their own, but takes a year or more to renegotiate contracts and compensation structures for the foreclosure law firms who do all the leg work for the banks. And while those changes are being made… it makes it appear that foreclosures have slowed down dramatically in the state.

The reality?

Defaults (undeclared) are spiraling upward that yet have to pass through the foreclosure pipeline.

The truth?

California is still the highest foreclosure state in sheer volume and percentage.

The low-down?

Resale housing is still massively overpriced as a result of unprecedented interference by individual states and the federal government. The market distortions will be removed and the down draft will continue allowing the market to correct.

If you play with fire, you will get burned.

Go ahead folks….. take a look around Zillow…. and you’ll uncover some truth there. You’ll find houses for sale that aren’t listed on MLS yet they have an MLS number. You’ll find a lot of them.

There is a deliberate effort to deceive the public about the number of houses for sale.

Here is yet another reason why the Fed can never, ever again allow interest rates to rise off the floor.

Financial Times
February 18, 2013 4:54 pm
Fears at Fed of rate payouts to banks
By Robin Harding in Washington and Tom Braithwaite in New York

US Federal Reserve officials fear a backlash from paying billions of dollars to commercial banks when the time comes to raise interest rates.

The growth of the Fed’s balance sheet means it could pay $50bn-$75bn a year in interest on bank reserves at the same time as it makes losses and has to stop sending money to the Treasury.

Officials at the US central bank fear it could create a public-relations nightmare after the Fed was lambasted for rescuing banks during the financial crisis. It is one factor prompting some inside the Fed to reconsider the eventual “exit strategy” from easy monetary policy.

In an interview with the Financial Times, James Bullard, president of the St Louis Fed, said: “If you think of the profitability of the biggest banks, if you’re going to talk about paying them something of the order of $50bn – well that’s more than the entire profits of the largest banks.”

Mr Bullard said that neither interest paid to banks nor possible losses on exit made any difference to the substance of monetary policy.

“I think it’s more just a question of the optics, and how you’re going to play the optics,” he added, referring to the perception of losses by the central bank. “And since it shouldn’t matter in a monetary policy sense you might as well play the optics in a better way than the one we’ve got planned.”
…

Financial Times
January 8, 2013 5:07 pm
Fed injects new sell-off risk into Treasuries
By Michael Mackenzie in New York

Bond investors have endured the worst start to a year for US Treasuries since 2009. As debt worries in Washington have receded with a deal on the fiscal cliff and the Federal Reserve looks to trim its heavy bond-buying, the question is whether the sharp jump in yields – and fall in prices – has further to run.

The game-changer has been twofold. First, came the mini-deal on the cliff that hit the Treasury market particularly hard because it did not saddle the US economy with the kind of tax hikes and spending cuts that would merit a 10-year note as low as 1.50 per cent.

This was followed by minutes of the Fed meeting in December, in which several officials expressed concern at the open-ended nature of the central bank’s current round of quantitative easing, dubbed “QE3”. The minutes pointed to a split in the Fed over whether it should continue buying $85bn a month of US Treasury and mortgage debt for most of the year.

The upshot has been a rise in the 10-year yield, which moves inversely to prices, towards 2 per cent, a level not breached since April, from 1.70 per cent in a matter of days. While the market has stabilised this week, the selling has shaken the view that yields can stay this low indefinitely.

The Fed, the biggest buyer in the market, has been the driver of artificially low Treasury yields. Lacklustre economic growth, accompanied by the recent gridlock in Washington over the fiscal cliff, have also kept yields low. The Fed’s policy stance is therefore of huge importance to the market’s direction. A shift could have wide repercussions.

“We began 2013 with the Fed minutes adding a new element of risk and uncertainty for the bond market,” says William O’Donnell, strategist at RBS Securities. The big risk for the bond market, he says, is that the Fed could pull back from its bond-buying sooner than many expect, leading to higher yields later this year.
…

No surprises here, but the writers for the Financial Times completely miss the echo bubble and its causes…

Financial Times
February 18, 2013 7:11 pm
Housing: The long climb back
By Shahien Nasiripour and Robin Harding in Washington

Investors made a killing after the US bubble burst, but for average Americans the recovery is likely to be gradual

To the Green brothers, everyone seemed to be getting rich off the great Florida housing boom of the last decade except them. Their fledgling construction company couldn’t compete with cash-rich rivals who had been building houses in Cape Coral, a city carved out of a mangrove swamp on the Gulf Coast.

By 2008, the Greens were in trouble. “Our margins were razor-thin and we were constantly being outbid on jobs,” says Bill Green, a bearded former construction worker with a degree in real estate from Florida State University.

They had borrowed from friends and family, and their savings were nearly depleted. It was becoming obvious that the downturn in housing was less a dip than a disaster. As the crisis spread and banks began to foreclose on houses in Cape Coral, the Greens changed tack. Instead of building houses, they would buy them.

The Greens bought a foreclosed house for about $31,000. They renovated it, rented it out – and discovered a successful new business model. Today they own 76 homes, most of them painted with a signature blue front door.

“Our farming upbringing of being frugal with our money and hard work got us through a very rough period, for us and for Lee County,” says Ben Green, the clean-shaven accountant of the pair, of the housing crash. “But it presented a great opportunity for us”.

Now the Greens have a different problem: there are no cheap houses left to buy.

The nature of the recovery in Cape Coral and similar areas is bringing back bad memories: it is bubbly, driven by financial investors, and focused on the same “sand states” as the last boom. In Cape Coral, one of the hardest-hit markets in the country, prices are up by 13 per cent on a year ago; in Phoenix, Arizona, they are 24 per cent higher.

But this is not the start of a new US housing bubble, nor is one likely for years to come. After five years in free fall, US houses are now at something like fair value, and new regulation means there is little mortgage helium to inflate prices again.

More likely, the US housing market is in the first, volatile stage of a return to normality, with gently rising prices and the return of new construction. That should support growth in the US economy – but not dominate it like a decade ago. This means Americans still hoping to build most of their wealth from their houses – a persistent notion even after the experience of the past five years – are likely to be disappointed.

A stable housing recovery can only happen if prices really are back to normal. The six-year bubble upset all notions of what a house is truly worth. Sleepy little bungalows in Florida doubled in price; your house, suddenly, could make you rich.

There is no good way to define fair value for houses, says Robert Shiller, a Yale professor who warned of both the internet and housing bubbles. Today, he says US home prices are close to their long-run trend. The median sale price for an existing home was $178,900 in the fourth quarter of 2012, according to the National Association of Realtors, up 10 per cent on a year ago.

The US has plenty of land, so outside big cities the main cost of a house is construction, and the main cost of construction is labour. That means that in the long run, house prices should track rising wages – but not run ahead of them.

“House prices have gone up a little bit since 1890 in real terms,” says Mr Shiller. With prices about right relative to history, there is no reason to expect big moves up and down over the next decade or two.

Another requirement – absorbing unwanted houses built during the boom – also seems to be met.

Although the US housing crash evokes an image of endless stretches of unwanted houses in a desert, over-construction was only a small part of the US housing bubble from 2003 to 2006. In fact, new building never matched its 1970s peak.

“I think the excess was in terms of home price appreciation and the excess was in terms of home ownership,” says Michelle Meyer, a housing economist at Bank of America Merrill Lynch in New York.

The slump in building during the credit crunch, however, was prolonged, extreme and spread across the whole country. Even today, construction is barely above the lowest levels of past slumps. “We’ve more than offset any overbuilding that we’ve seen,” says Ms Meyer.
…

Easy money mortgage lending standards, here we come again…

And since the loans are federally guaranteed, all Americans will have the privilege of helping to provide for easy money lending to “responsible” borrowers.

Financial Times
February 18, 2013 10:34 pm
Obama echoes calls to ease mortgage rules
By Shahien Nasiripour
Move to more stringent regulation could be reversed

In his State of the Union address to Congress last week, Barack Obama, US president, indicated that a post-crisis lurch to more stringent mortgage regulation could be reversed.

“Right now, overlapping regulations keep responsible young families from buying their first home. What’s holding us back? Let’s streamline the process, and help our economy grow,” he said.

Mr Obama’s words echoed a chorus from policy makers and housing industry executives who have argued that regulation is choking credit.

Most of the debate surrounds two new but little-known provisions. These regulate, first, what kinds of loans will grant legal protection to lenders if borrowers in default sue to stop home repossessions. Second, they determine which loans will be exempt from new risk-retention requirements.

The so-called “qualified mortgage” provision, known as QM, seeks to gauge borrowers’ ability to repay housing loans by setting caps on the ratio of debt to income. In return, lenders that make these loans are granted protections against borrowers in default who wish to stop home seizures.

QM was finalised in January. Its companion rule is the “qualified residential mortgage”, or QRM. This creates a class of home loans that are exempt from a requirement of the Dodd-Frank banking reforms that financial groups issuing mortgage-backed securities should retain a 5 per cent slice of the loans they bundle and resell.

US financial regulators had proposed in 2011 that loans with large downpayments would meet the QRM criteria and be exempt from risk retention mandates.

That proposal will probably be retracted, regulators say, and reformulated so it is more focused on debt-to-income ratios and thus better aligned with QM.

Housing industry executives have spent three years trying to persuade regulators and lawmakers that the rules could restrict credit. In the case of QM, their protestations succeeded. The industry praised the provision after regulators gave them enhanced protections against lawsuits and allowed for loans sold to US-backed mortgage financiers Fannie Mae and Freddie Mac to qualify as QM loans.

Don’t forget to include an offer to feed the squirrels.

Buying a home? Turn in a cover letter
By Lily Leung
4:24 p.m.Feb. 18, 2013

A neighborhood in Carmel Valley. — Howard Lipin / Union-Tribune staff

Linda Lee, president of the San Diego Association of Realtors, is the author of this guest post. The U-T San Diego will periodically feature real estate advice columns from the association in this blog.

It is hard not to feel like you’re just part of the crowd if you are looking into purchasing a home these days.

Home sales were surprisingly high in December, considering the holiday season and total home sales have increased 13.5 percent since last year. The market’s upward turn and the lower-than-normal inventory throughout San Diego County is creating a seller’s market and a large number of investors and cash buyers are taking advantage.

So how do you make your offer stand out from competitive bids of investors and those willing to pay with cash?

Include a cover letter.

I’ve seen well-written cover letters close deals and save buyers $5,000, $10,000 or even $25,000 on the final sale price. There is, of course, a difference between a cover letter saying, “We’d like to buy the house for X because that’s what we want to spend,” and a letter stating the exact reasons behind your offer.

The clincher is including your personal story. How long have you been looking for a home? What is it you love about this house? Why is it so perfect for you and your family? A powerfully written cover letter will not only help you negotiate the price of the home you are trying to purchase, but it will also give you a face as a person, not just a buyer.

I tell my clients, “You wouldn’t send your resume to a potential employer without introducing yourself, so why not include a personal letter with your offer? It could land you your dream home.”
…

Feb. 18, 2013, 12:03 p.m. EST
U.S. stock futures edge up as yen falls
Year’s rally largely intact as sequestration deadline looms
By Kate Gibson and Carla Mozee, MarketWatch

NEW YORK (MarketWatch)—U.S. stock-index futures on Monday tilted slightly higher in limited trade, with U.S. markets shut for Presidents Day; European shares and industrial metals fell on concerns about the global economy, in particular the euro zone, with Italian elections adding to investor uncertainty.

The yen (USDJPY -0.34%) continued its decline against other currencies, including the U.S. dollar, after leaders from the world’s 20 largest economies vowed not to devalue their currencies to bolster exports and bypassed criticizing Japan for indicating its expansionist monetary policies would continue.

Worries about an unclear outcome in Italian elections held Sunday and Monday hit European equities, with yields on Italy’s 10-year government notes climbing above 4%.

Futures for the Dow Jones Industrial Average rose 6 points to 13,954. Those for the Standard & Poor’s 500 gained nearly 1 point to 1,517.90. Futures for the Nasdaq 100 rose 3.25 points to 2,764.50.

Crude futures for March delivery fell 31 cents to $95.56 a barrel in electronic trade in New York. The more active April contract declined 34 cents to $96.07 a barrel.

And, with a deadline in the battle over the U.S. budget just 11 days away, equity investors are considering whether likely federal spending cuts will spark a market correction from multiyear highs.

March 1 is when $85 billion in reductions to defense and domestic programs through the fiscal year ending Sept. 30 go into effect unless congressional leaders and the White House cut a deal to replace the automatic cuts.

Part of a larger program known as sequestration, the cuts aim to trim federal spending by roughly $1 trillion over nine years.
…

Feb. 19, 2013, 12:18 a.m. EST
China, Japan stocks fall as rest of Asia wavers
By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Chinese stocks slipped Tuesday, with casino operators skidding in Hong Kong and property stocks falling on the mainland, while Japanese blue chips also lost ground in a mostly range-bound session for Asian markets.
….
“Investors [are] struggling to rediscover the bullish tone that has pushed many regional indices to multiyear highs,” said Perpetual Investments investment market research chief Matthew Sherwood.
…