The Housing Bubble

I’m thinking about buying more FB shares today.

“Get what you can get for your house today because it’s going to be much less tomorrow for many years to come.”

Beware the stockmarket.

Incandescent Light Bulbs are a winner this winter . These are the regular ones like Edison invented generations ago ,most of them are outlawed by now. In the heating season every bulb is a little heater ,producing both heat and light,what could be greener then that ?. In summer that is not needed ,the heat that is.
The odd thing is that all those expensive fancy smancy spaghetti bulbs that cost so much, hardly ever outlast a simple older type bulb.In spite of what the package says , and the new fangled ones are all made in China…Quality be gone.
We still have a good stash of the older ones for winter use ,like a 50 year supply…….

So 200,000 underwater mortgages just moved from -B grade debt up to A-. Does that mean the amount owed is less than the value of the equity + appraised value of the property? At least it will give some people a chance to cash out. Will they rent or re-enter the market at some different price point?

“A 5 percent gain in prices would return another 1.8 million homes, or 3.7 percent of all residential properties with a mortgage, to positive equity, CoreLogic said.”
http://www.bloomberg.com/news/2013-03-19/u-s-underwater-homeowners-regain-equity-as-prices-rise.html

What are the chances of “ensuring financial stability” through putting arcane academic theory to work in the real world while pursuing a rock-bottom rate policy?

MARKETS
Updated March 18, 2013, 12:03 p.m. ET

Inside a Warier Fed, Watch the New Guy
By VICTORIA MCGRANE And JON HILSENRATH

Wall Street is watching Jeremy Stein.

Still not a year into his tenure on the Federal Reserve’s board of governors, the 52-year-old has grabbed the attention of investors, traders and his own Fed colleagues by publicly airing concerns about overheating in some sectors of the credit markets.

Fed Chairman Ben Bernanke and Vice Chairwoman Janet Yellen have referred to Mr. Stein in recent speeches, acknowledging his concerns but playing down the immediate risks.

Jeremy Stein has aired concerns about overheating in credit markets.

Still, the notice senior Fed officials are giving to a junior governor on leave from his job as an economics professor at Harvard University shows how much he is helping shape internal debate at the Fed.

“Pay attention to the new guy,” Vincent Reinhart, a Morgan Stanley economist and former head of the Fed’s powerful monetary affairs department, said in a written commentary.

Fed officials gather Tuesday and Wednesday for a policy meeting where they will discuss how long to continue their low interest-rate policies. In the past, Fed officials saw inflation as the main danger of such policies.

Now, a bigger worry for many Fed officials is that low rates could cause markets to overshoot and create a new mess. Mr. Stein publicly elevated that risk in a February speech.

Fed policy makers are likely to decide this week to keep the low-rate policies in place, while remaining on high alert for trouble.

Mr. Stein is a brainy, former college gymnast who spent most of his career as an academic. In Washington, he is trying to put arcane academic theory to work in the real world.

In an interview, Mr. Stein said his goal is to make a mark at the Fed as it reorients its mission to include ensuring financial stability, one of Mr. Bernanke’s top priorities. The interview took place before the Fed’s traditional blackout period, which starts a week before Fed officials gather for a policy meeting.

Fed officials were humbled by the central bank’s failure to foresee or prevent the financial crisis. The Dodd-Frank financial-overhaul law gave the Fed more responsibility.

Mr. Bernanke has reorganized the central bank to pay more attention to dangers lurking in the financial system. His moves include a new Office of Financial Stability Policy and Research to look out for risks and come up with strategies for preventing another crisis.

Low interest rates are starting to cause investors and lenders to “reach for yield,” or take on new risks in search of higher returns, Mr. Stein said in a February speech. Too much risk-taking could lead to trouble for certain firms, he added, especially if they borrow heavily to fund their holdings.
…

Here’s what $525,000 buys in Los Osos, CA, 20-min to Cal Poly, SLO:
http://www.homefinder.com/CA/Los-Osos/1135-15th-St-94731038d#wgt=homefinder

Featuring no sewers, no sidewalks, an unincorporated county area.

March 19, 2013, 9:56 a.m. EDT
Stocks rise after positive housing report
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By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — U.S. stocks started modestly higher on Tuesday after data illustrated that the recovery in the U.S. housing market continues and as Wall Street brushed aside concern about Cyprus.

Ahead of the open, the Commerce Department reported housing starts climbed 0.8% in February, slightly better than expected. Meanwhile, a vote on a euro-zone proposal to tax bank deposits in Cyrus to help fund a rescue of the island nation did not appear imminent.Read more about home construction data

“The housing market recovery continues,” said Gus Faucher, senior economist at PNC Financial Group.

“There’s a little concern, but the general consensus is Cyprus is not going to be a major factor for the U.S. economy going forward,” he added.

The Dow Jones Industrial Average (DJIA +0.16%) rose 54.06 points, or 0.4%, to 14,506.12, with Bank of America Corp. (BAC +2.11%) leading gains among all but one of the index’s 30 components.

The S&P 500 index (SPX -.00%) gained 4.79 points, or 0.3%, to 1,556.89, with consumer stapes faring best and energy the worst-performing of its 10 major sectors.

The Nasdaq Composite (COMP -0.07%) added 11.66 points, or 0.4%, to 3,249.25.
…

Let housing prices CRATERRRRRRRRRRRRRR!!!!!!!!

March 18, 2013, 2:20 p.m. EDT
Fed to signal it will keep punch bowl full
No hint of tapering or ending QE3 likely next week
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Federal Reserve will use its policy meeting next week to try to convince investors that it has no intention of slowing down or ending its ultra-loose monetary policy anytime soon.

Although the economy has looked unexpectedly robust so far this year, “talk of tapering in the near term is nuts,” said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.

Fed Chairman Ben Bernanke and his majority on the Fed are concerned that markets may start to price in some tapering, and higher rates could harm the recovery.

“Market participants always come to expect more tightening sooner than is appropriate for sustained expansion,” said Vince Reinhart, Morgan Stanley’s chief U.S. economist.

The Fed doesn’t want to feed these expectations, analysts said.

“My judgment on where they are now is they do not want to change the broad signals they have sent about policy,” agreed Lewis Alexander, chief economist at Nomura Securities.

Since December, the Fed has been buying $85 billion per month of Treasurys and mortgage-backed securities in an open-ended program that it said would continue until there was a substantial improvement in the labor market. It has held its short-term interest-rate target close to zero since December 2008.
…

March 18, 2013, 8:03 a.m. EDT
10 signs your stocks are about to tumble
Commentary: Winter’s rally is over and bears are hungry
By Jeff Reeves

Editor’s note: This column is the first in a two-part series. Part two will publish Tuesday and detail the market’s bullish signs.

ROCKVILLE, Md. (MarketWatch) — As U.S. stocks hover at record highs, many investors rightly wonder if the rally will last.

Unfortunately, it may not.

Don’t take my word for it. Check out these 10 negative headlines and economic data points that could trigger a 5% to 10% downturn over the next several months.

Feel free to share your own observations below. And for balance, check back Tuesday for 10 reasons the market could move even higher.
…

Investment Banking | DealBook Column March 18, 2013, 8:49 pm
A Bank Levy in Cyprus, and Why Not to Worry
By ANDREW ROSS SORKIN

A rally against the deposit tax in front of Cyprus’s Parliament on Monday drew about 800 participants.

Never mind.

The last 72 hours have been filled with breathless proclamations of impending disaster after the European Union and International Monetary Fund indicated that they planned to take money directly from depositors with bank accounts in Cyprus as part of a bailout of that country.

Analysts and politicians compared the bailout plan, the first to include a levy on deposits that were considered to be insured, to government-sponsored larceny, and said it would cause a run on banks across Europe, if not a full-fledged global crisis.

“The very nature of banking has been shaken to its roots with this decision, for banking depends upon trust,” Dennis Gartman, the investor, wrote in a note to his clients. “Trust that has now been shattered; torn asunder, broken … destroyed.”

Jim O’Neill, chairman of Goldman Sachs Asset Management, called the decision an “astonishing move” with “little thought of contagion to the rest of the euro zone, and indeed perhaps the world.”

Mark J. Grant, a market commentator who has been predicting an economic apocalypse in Europe for years, went so far as to compare the terms of the bailout with “rape.” He said: “Pay attention please. The European Union and the European Central Bank and the I.M.F. have just advocated the confiscation of private property for their own indulgence.”

Even President Vladimir Putin of Russia got into the debate, given that much of the deposits in Cypriot banks are Russian. “Mr. Putin said that such a decision, if adopted, would be unfair, unprofessional and dangerous,” a spokesman said.

And yet here we are. And, well, nothing bad has happened.

There have been no re-enactments of “It’s a Wonderful Life,” with people lined up around banks in Italy or Spain — considered the next dominoes, if you believe the doomsayers. The stock markets in Europe dropped less than 1 percent. In the United States, investors shrugged their shoulders, too.

Why?
…

The real reason for the extreme mortification over the Cyprus situation: Once the central banker cartel replaces a rule of law in the banking system with ad hoc improvisation, there is no guarantee your savings to be safe, unless you convert them to gold and hide them well.

The power of gerrymandering

The 2010 elections, in which Republicans won the House majority and gained more than 700 state legislative seats across the nation, gave the party the upper-hand in the process of redistricting, the once-a-decade redrawing of congressional seats. The advantage helped them design safer partisan districts and maintain their House majority in 2012 — even as they lost the presidential race by about 5 million votes. Also nationwide, Democratic House candidates combined to win about 1.4 million more votes than Republicans, according to data compiled by Bloomberg News.

U.S. NEWS
March 19, 2013

Workers Saving Too Little to Retire
By KELLY GREENE and VIPAL MONGA

Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement. Kelly Greene reports. Photo: AP.

Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.

New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.

Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.

The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history.

The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.

While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans.
…

Legal/Regulatory
March 18, 2013, 8:34 pm
Former Calpers Chief Indicted Over Fraud
By PETER LATTMAN

Federico R. Buenrostro was the top official at the California Public Employees’ Retirement System, or Calpers, from 2002 to 2008Linda Spillers for The New York TimesFederico R. Buenrostro was the top official at Calpers from 2002 to 2008.

As head of the country’s largest pension fund, Federico R. Buenrostro wielded vast influence in the money management world.

From 2002 to 2008, Mr. Buenrostro served as chief executive of the California Public Employees’ Retirement System, or Calpers, which allocates more than $200 billion to investment firms across the globe.

Federal prosecutors say that Mr. Buenrostro abused that position. In an indictment filed in Federal District Court in San Francisco on Monday, the United States attorney charged Mr. Buenrostro and his friend, Alfred J. Villalobos, with defrauding the private equity firm Apollo Global Management.

The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how their state pension funds were invested.

The scandals focused on the role of middlemen, or placement agents, who charged lucrative fees to help money managers win business from state pension funds. In some cases, placement agents proved to be unlicensed fixers who received illegal kickbacks from pension officials. A number of pension officials and middlemen have served prison time, including Alan G. Hevesi, the former head of New York’s state pension fund.

The government claims that Mr. Buenrostro and Mr. Villalobos invented a crude scheme that tricked Apollo, one of the world’s largest private equity firms, into paying Mr. Villalobos at least $14 million in fees for his help in securing an investment from Calpers.

“We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,” Rob Feckner, the board president of Calpers, said in a statement.
…

Can the price history be right?

10227 Winecreek Ct, San Diego, CA 92127
Bedrooms :5 beds
Bathrooms: 5 baths
Single Family: 4,854 sq ft
Lot: Contact for details
Year Built:2006
Last Sold: Oct 2010 for $1,270,000

Zestimates
Value Range 30-day change $/sqft Last updated
Zestimate What’s this? $1,331,911 $546K – $1.96M +$18,298 $274 03/17/2013
Rent Zestimate What’s this? $6,158/mo $4.5K – $9.4K/mo +$347 $1.27 03/18/2013

Price History
Date Description Price Change $/sqft Source
10/29/2010 Sold $1,270,000 -2.2% $261 Public Record
09/25/2010 Listed for sale $1,299,000 – $267 Shay & Associates
09/02/2010 Listing removed $1,299,000 – $267 Re/Max Ranch & Beach
08/21/2010 Listed for sale $1,299,000 -16.2% $267 Re/Max Ranch & Beach
07/31/2006 Sold $1,550,000 -86.7% $319 Public Record
03/30/2005 Sold $11,683,296 – $2,406 Public Record

Rep. Betsy Ritter, a Waterford Democrat, not only has sponsored a “combined reporting” bill, but she has also proposed a hoarder’s tax. This would place a levy on liquid assets — companies with a lot of money in the bank — and dedicate the proceeds to job creation programs.http://www.ctmirror.com/story/19238/despite-no-tax-hike-pledge-malloy-budget-sparks-ideas-raise-revenue

and we elect these idiots

Who would buy with a $6000 monthly, and why?

P.S. Note the Dutch auction price action since this home was recently listed, and the bizarre price spike in the Zestimate™ graph. Try not to catch yourself a falling knife.

16266 Winecreek Rd, San Diego, CA 92127
For Sale: $1,699,888
Price Increase (Mar 11): $888
Zestimate®: $1,402,676
Est. Mortgage:
$6,088/mo

Bedrooms:4 beds
Bathrooms:5 baths
Single Family:4,205 sq ft
Lot:21,861 sq ft
Year Built:2006
Last Sold:May 2006 for $1,235,000
Heating Type:Forced air

Price History
Date Description Price Change $/sqft Source
03/11/2013 Price change $1,699,888 -5.6% $404 Realty Experts
02/04/2013 Price change $1,799,888 -0.0% $428 Realty Experts
12/29/2012 Listed for sale $1,800,000 45.7% $428 Realty Experts
05/24/2006 Sold $1,235,000 – $293 Public Record

I will agree with Housing pimp owning a house is a pain in the butt

I now have a very slow water leak dripping from somwhere “up” and showing up at the inlet openning for the furnace down at ground level. I think its a drip and is running down a copper pipe but because there is insulation in the wall it diffuses.

So I call the warrenty and they send out a plummer who decides its from poor caulking around the shower.

60 bucks service charge for really lame advice. I tried to explain how wrong he was over the phone but between the phone having this annoying echo and his Tradesman’s studity I agree to caulk the tub with silicon epoxy. He did not do this. He says he checked the water meter and it was not running so not leak and he said wall was dry ( BS I got home and it was still dripping from inside wall )

Its like a HMO plummer I have to use versus a PPO plummer because its an insurance calim.

Short story Plumber will be back out tomorrow ( after 24 hours cure on the caulking what BS ) and I will be there to explain yes you will have to cut holes in drywall to find leak and I would start behind vanity which happens to be directly above pipe ( I measured with tape measure what a novel idea) which seems to be dripping and if we pull the vanity away from wall and cut drywall a rough repair won’t look so bad and yes its hard work mr plumber so sorry.

If it was a rental and I just went to work not worring about it God knows the plumber would probably start cutting holes all over the place starting up from leak at ground level , up the wall then in ceiling, who knows ?? He might do this anyway I’m sure he doesn’t want to move the vanity ( built in ) which has 2 sinks and is directly above the leak so would be the obvious place to start.

“Financial Pollution” - public costs imposed by financial products.

Financial pollution is anything where financial activities impose public costs, like effluvia from a tannery dumps pollution into a river. The tannery gets to keep the profits, and the public suffers the costs. Sounds familiar.

Probably the simplest way to limit financial pollution is to prevent government backing of private debt. And to prevent Wall Street from linking consumer deposits to their gambling activities. “Ring fencing” consumer deposits, like Iceland did. And the US used to do, before Glass Steagall was gutted, then eliminated.

Limiting public costs from financial activities should be a focus of the society. Just like limiting public costs from any other economic activity. Like pollution.

Government should have a department, perhaps in the CFPB, that deals with financial pollution.

Chart from Pat Buchanan’s magazine describing conservative media:

http://theamericanconservative.com/images/beyond-fox-news-chart.jpg

Note that Breitbart is labeled “Hysterics as investigative journalism”

If you liked the residential SFR bubble of the last decade, well, you will just absolutely love the latest bubble. Yup, it’s buying to rent on a massive scale.

Key point from the above linked story: Suddenly, the market for single-family rental homes—unlike apartments, which cater to different people—has turned into an elbow-to-elbow affair. The pressure on rents is huge. Year-over-year, rents edged up only 0.5% in Atlanta and dropped 1.7% in Las Vegas. For Phoenix, Bloomberg cited Fletcher Wilcox, a real estate analyst at Grand Canyon Title Agency: median rent per square foot rose 3% year-over-year in February 2011, and 1.5% in February 2012. But in February 2013, it fell 3%.

This tendency was confirmed by others. On the west side of Phoenix, where investors have concentrated their purchases of single-family homes, rents dropped by $100 a month last year—a stunning 10%!—according to James Breitenstein, CEO of Landsmith which has dumped most of its Phoenix properties. He is seeing similar pressures in Las Vegas and Atlanta. “There’s a whole bunch of rental supply that’s coming on that used to be sitting empty in bank portfolios,” he said.

Timing couldn’t be worse. Occupancy rates of single-family rental homes are already low— 53% for Colony Capital. But investors are buying ever more properties and flood the rental market with them. Just when the stream of people who’ve gotten kicked out of their foreclosed homes is tapering off. With rising costs and declining revenues, the rental part of the business model collapses.

BERLIN (Reuters) - The European Central Bank said on Tuesday after Cypriot lawmakers overwhelmingly rejected a key element of a proposed bailout that it was in contact with its IMF and EU partners and remained committed to providing liquidity within certain limits.

“The ECB takes note of the decision of the Cypriot parliament and is in contact with its troika partners,” the bank said in a statement. “The ECB reaffirms its commitment to provide liquidity as needed within the existing rules.

Cyprus unlike other EU partners has realized that the EU can’t let these banks and bonds fail as it will lead to failure of other banks at the heart of the EU. Thus why should conservative investors have to pay.

Gas went down to 3.99 a gallon for regular in Oceanside. When I thanked to guy at the gas station, he said he pays the tanker thirty-five thousand!

Read more: http://www.foxnews.com/politics/2013/03/19/california-businesses-fuming-over-retroactive-120m-tax-grab/#ixzz2O2MWRN5C

California’s top-end taxpayers — already steamed over a recent hike in the nation’s highest state income tax — are now fuming over a new $120 million retroactive tax grab on small business owners.
In December, the state’s tax authority determined that a tax break claimed over the past few years by 2,500 entrepreneurs and stockholders of California-based small businesses is no longer valid and sent out notices of payment.
“How would you feel if you made a decision, which was made four years ago, (and) you absolutely knew was legally correct and four years later a governing body came in and said, ‘no, it’s not correct, now you owe us a bunch more money. And we’re going to charge you interest on money you didn’t even know you owed’,” Brian Overstreet told Fox News from his office north of San Francisco.
Last year, Overstreet and his fellow investors sold Sagient Research Systems and immediately reported the sale to the California Franchise Tax Board, the state’s version of the IRS. “It was good for the shareholders, it was good for the employees and good for those of us who founded it,” Overstreet said about the sale of the data mining company. “We paid the tax based on the law at the time.”
But the FTB changed its interpretation of the law after a state appeals court ruled unconstitutional a qualifying provision of the break requiring companies to maintain 80 percent of their workforce in California. Instead of asking the legislature for guidance on what to do, the FTB suspended the break in its entirety and ordered anyone who’s claimed it in the last five years to pay up.
“What that translates into is tens of thousands, if not literally hundreds of thousands, of potential jobs,” Overstreet contends.
Overstreet said he’s learned more about the workings of state government in the last two months than he ever knew before and he’s become the point person for others like him who were surprised by the FTB’s decision. “It’s going to cause not only significant financial hardship but real personal stress on a lot of people who shouldn’t be worried about this,” he said. “They did what is right. They paid their taxes. They should be off working away at their next business — instead they’re having to spend their time fighting this stuff.”
Overstreet wouldn’t disclose the exact amount the FTB says he owes but said it was “well into the six figures,” and calls it a sucker punch from the state.
The taxpayers fighting the FTB won an early victory in their fight when the tax board announced a temporary delay in issuing actual bills, technically called Notices of Proposed Assessments. It’s believed the additional time is to allow the state’s political leaders time to figure out a solution.
“Once the revenue is identified, those folks up in Sacramento will figure out how to spend it already,” warns former state Sen. George Runner. “And that’s what makes this so difficult. Even though it has this great bipartisan support as being wrong.”
Earlier this month, lawmakers from both parties introduced legislation that would force the FTB to scrap the retroactive tax bills. “Californians planned and based their actions on the language of the law as it existed,” Democratic Sen. Ted Lieu said in a statement. “Going backward in time and changing the rules innocent taxpayers relied upon violates the very essence of the rule of law.”
Republican Assemblyman Jeff Gorell’s companion bill would prohibit the state from charging interest and penalties in similar situations in the future.
“We want to unwind this poor decision and bring relief to small business owners throughout the state, while also setting prohibitions against this kind of surprise tax increase again for the future.”
What’s not as clear is what Gov. Jerry Brown thinks of the issue. “Quite frankly, we haven’t heard from the governor on this and the governor could solve this,” Runner, a Republican, said. “Ultimately, the legislature can try to fix it, but ultimately the bill still has to end up on the governor’s desk.”
Brook Taylor, a spokesman with the governor’s business development office, told Fox News in an email that the tax credit “provided a real boost to entrepreneurs” and that the court’s ruling was unfortunate. Taylor added that, “we are reviewing the situation to determine how best to help these business owners given the court’s decision.”
California’s high tax rates, strong environmental regulations and a Democratic lock on many public offices have led some to conclude the state is anti-business. Texas Gov. Rick Perry, among other state executives, has made repeated overtures to the state’s business leaders to relocate. Those criticisms have been regularly rebuffed by Brown and his staff.
During a recent dust-up over a radio ad promoting Texas, Brown reportedly said, “you go where the gold is” and that Perry is “not going to Lubbock, or whatever those places are that make up that state.”
What’s not addressed by the pending legislation is what to do about the future of the tax credit. It’s been around for 20 years to promote job-growth and investment — especially in the computer technology and bio-research industries. “California has always prided itself in the ability to be that incubator for high-tech, for entrepreneurial investment,” Runner said. “And this just goes to the core of that. Undermines our credibility, if you will, on that particular issue.”
Overstreet’s main focus has been on retroactive part of the FTB’s action but he also said if lawmakers allow for the tax break to go away entirely it will have consequences for the state. “As a going-forward problem if entrepreneurs are no longer allowed this kind of incentive, there’s no longer any reason for us to intentionally grow our companies here in California. We are going to take our business to where it is the cheapest and most effective place to hire people.”

Read more: http://www.foxnews.com/politics/2013/03/19/california-businesses-fuming-over-retroactive-120m-tax-grab/#ixzz2O2MWRN5C

Financial Times
Global Market Overview
Last updated: March 19, 2013 8:08 pm
Stocks fall as Cyprus uncertainty mounts
By Dave Shellock

Tuesday 20:00 GMT. Uncertainty over the situation in Cyprus made for another nervous session in the markets, as the country’s parliament overwhelmingly rejected a tax on bank deposits, throwing into question plans for an international bailout.

“This is a major concern,” said Kathleen Brooks at Forex.com. “Cyprus needs to get its hands on cash urgently, its cash reserves are running dry and it can’t afford to fund its troubled banking sector as its banks’ collateral is too low quality to even meet the basic standards required to access cheap, unlimited funds at the European Central Bank.”

The ECB responded to the Cypriot vote by reaffirming its commitment to provide liquidity, within existing rules. That helped the euro pare an earlier fall that had seen it touch a four-month low against the dollar.

Global equities also rallied off their lows, with the FTSE All-World index trading 0.3 per cent lower and the S&P 500 ending down 0.2 per cent. In Europe, where stock markets had already closed by the time the news of the vote emerged, the FTSE Eurofirst 300 finished with a loss of 0.4 per cent.

Spanish and Italian stocks came under greater pressure amid fresh concerns about the potential for contagion from Cyprus. The Ibex 35 index in Madrid fell 2.2 per cent and the FTSE MIB in Milan shed 1.6 per cent.

Steve Barrow, strategist at Standard Bank, argued that Cyprus did not represent a systemic risk to the eurozone. “If policy makers had thought it was a systemic threat they would have presumably stumped up the money; after all, when you’ve already bailed out Greece alone to the tune of well over €200bn, what’s €6bn if your credibility could be at stake?” he said.

“But it is clearly a mark of the concern among larger eurozone countries, especially Germany, that these bailouts are turning into black holes and politicians sense that electorates want every last cent costed out.”

The extent of the nervousness among investors was evident from a “flight to safety”, notably in highly-rated government bond markets such as the US and Germany.

The yield on German two-year government bonds turned negative for the first time since early January, while that on the 10-year Bund dipped 6 basis points to 1.35 per cent, a low for the year The 10-year US Treasury yield was down 6 basis points at 1.90 per cent.

Other assets regarded as “havens” also moved higher. Gold was up 0.4 per cent to $1,612 an ounce, even as the dollar gained 0.4 per cent against a basket of currencies. The Japanese yen also benefited from the jittery mood in the markets.
…

CALIFORNIA, RHODE ISLAND LEAD STATES IN UNEMPLOYMENT

by WILLIAM BIGELOW 18 Mar 2013 72 POST A COMMENT VIEW DISCUSSION
Among the 50 states, California in the West and Rhode Island in the East tied in January for the highest jobless rate in the nation, 9.8%, while North Dakota was the lowest at 3.3%, according to the Bureau of Labor Statistics.

And unsurprisingly, Texas led the nation in payroll job growth, just as it did in January of last year.

As BLS documented, California’s employment was poor despite the fact that most Western states grew in job growth over the last 12 months.

The Northeast, more closely linked with the European economy, fared much worse. Its job growth was 1.1%. The Midwest’s results fell between the West and the Northeast’s.

Even though I think it is probably higher, is 4 out of 10 borrowers being underwater really something to brag about?

Only two in five Palm Beach County borrowers underwater, CoreLogic says

by Jeff Ostrowski

Research firm CoreLogic reports a rapid decline in the share of Palm Beach County homeowners who owe more than their homes are worth.

In the fourth quarter of 2012, 40 percent of Palm Beach County homeowners were underwater, CoreLogic says. Normally, that would be a disastrous number, but it’s falling fast, thanks to rising home values.

The share of Palm Beach County homeowners with negative equity topped at 47 percent in late 2009 and early 2010. Homeowners who are upside down in a loan can’t sell easily and don’t have the same incentive to make their monthly payments as owners who have a cash cushion.

This entry was posted on Tuesday, March 19th, 2013 at 4:49 pm and is filed under Foreclosures, Real estate bust. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Thought y’all would get a kick out of this….
Headline: “Why higher mortgage rates will help the housing market”

http://finance.fortune.cnn.com/2013/03/18/interest-rates-housing/

Key snippets:

If anything, slightly higher rates could reflect that slightly more risky borrowers are being offered credit following years of tighter lending standards. And this could be a good thing, says Barney Hartman-Glaser, real estate finance professor at Duke University.

“Although important, rising interest rates alone are not enough to slow down the housing recovery,” says Hartman-Glaser, adding that “my sense is that underwriting standards are getting easier to satisfy, and so we would expect rates to rise as slightly more risky borrowers are brought into the fold.”

My screenplay is on the ground in L.A.
Wish me luck.

Time marches on.

Suddenly, Things Are Going “Terribly Wrong” for the Big Banks
By Aaron Task | Daily Ticker – Mon, Mar 18, 2013 12:59 PM EDT

Monday’s stock selloff is largely being attributed to the drama in Cyprus, which is potentially a big deal and certainly weighed on global markets overnight. But U.S. proxies weren’t down nearly as much as international bourses – or as initially indicated.

Related: Why Cyprus Is a Bigger Deal Than You Think

In fact, U.S. stocks might be solidly in the green now if it weren’t for another development that bears watching: Weakness in financials.

Monday’s slide is also being attributed to Cyprus, which has revived fears of “contagion” emanating from Europe and the related counterparty risk faced by banks. But bank stocks were under pressure before the Cyprus “bail in” hit the headlines.

Starting late Thursday, the financials had a really bad weekend when a Senate report found JPMorgan had misled regulators (and investors) in its disclosures surrounding the now infamous London Whale trade.

Related: ‘London Whale’ Isn’t Dead Yet: JPMorgan Is Out of Control, Rosner Says

The bank’s disclosures “were incomplete, contained numerous inaccuracies, and misinformed investors, regulators and the public” said Senator Carl Levin (D-MI), chairman of the Senate’s Permanent Subcommittee on Investigations.

The 300-page report was just an appetizer for Friday’s hearing, when JPMorgan executives were grilled under oath and former CFO Douglas Braunstein essentially admitted the bank kept regulators in the dark about its mounting losses.

“Things went terribly wrong,” testified Ina Drew, who ran the firm’s Chief Investment Office before stepping down under pressure after the London Whale losses first surfaced last spring. The Senate report and subsequent testimony could expose JPMorgan to additional litigation risk, which is a problem for a number of big banks these days.

Related: Size Counts: Small Banks Are King, The Big Guys Still Have Lots of Problems, Says Whalen

Indeed, things kept going terribly wrong for JPMorgan on Friday when the Federal Reserve gave only conditional approval to its capital plans. But that wasn’t just a JPMorgan story as the Fed said the same of Goldman Sachs.

Both firms had “weaknesses in its capital plan or capital planning process that were significant enough to require immediate attention, even though those weaknesses do not undermine the quantitative results of the stress tests,” the Fed declared.

In addition, all the big banks were in the crosshairs Saturday when Dallas Fed President Richard Fisher laid out his plans to break up the “too big to fail” banks at the annual Conservative Political Action Committee (CPAC) conference.

As discussed here last week with Josh Rosner of Graham Fisher (no relation) and co-author of Reckless Endangerment, the fact a speech about breaking up the big banks was delivered at CPAC is an eye-opening development.

Growing conservative support to get tough on big banks “is a sea change and under-appreciated,” Rosner says.

Related: ‘Too Big to Fail’: Conservatives and Liberals See Eye to Eye

Anti-bank sentiment represents an opportunity for rare bipartisan agreement in Washington. Think about it, there probably aren’t that many things that Rand Paul (R-KY) and Bernie Sanders (I-VT) agree on but they do find common ground here.

Sen. Paul doesn’t support breaking up or heavily taxing the big banks, as Sen. Sanders has advocated. But the rising star of conservative politics has expressed support for “something like Glass-Steagall” as well as a limit to FDIC insurance on individual accounts which Rand believes “helps limits the size of banks.”

So while breaking up the ‘too big to fail’ banks is highly unlikely anytime soon, it’s now plausible we could see more serious consideration to a combination of the following:

* Reinstatement of Glass-Steagall, which separated commercial and investment banking and/or full adaptation of the so-called Volcker Rule, which bans banks from trading their own accounts, i.e. “prop trading.”

* Requirements to list derivative transactions on an exchange, if not actually regulate the trading thereof.

* Higher reserve requirements and/or lower maximum leverage ratios.

Many, including my colleague Henry Blodget, remain skeptical that politicians will ever approve regulations with any teeth and bank stocks had been on a tear prior to this recent selling squall. But the reality is the recommendations above make both good policy and good politics. You don’t have to be a political genius to see there’s no love lost on Main Street for the “fat cats” on Wall Street. Indeed, some Republicans might now see that running a former private equity executive as their standard-bearer didn’t help their cause in November. (To be fair, Republicans may have the reputation as the “party of big business” but going back at least to the Clinton years, Democrats have spent as much time in bed with Wall Street as the GOP.)

More than five years after the financial crisis began in earnest, we may finally have arrived at a moment where there’s bipartisan support to “get tough” on the big banks.

Better late than never.
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‘The non-oil domestic exports of Singapore declined by 30.6 percent year on year in February, the trade promotion agency International Enterprise Singapore said on Monday. International Enterprise Singapore said the decline in February was due to a contraction in both electronic and non-electronic exports. The contraction in non-electronic NODX was led by structures of ships and boats, which went down 99.4 percent, as well as the pharmaceuticals and electrical machinery, which fell by 56.5 percent and 54.5 percent, respectively.’

‘Exports to nine of the top 10 markets decreased in February. The top three contributors to the export contraction were the European Union, the United States and China’s Hong Kong.’

http://www.globaltimes.cn/content/768787.shtml#.UUkgpTd6jKw

‘Australian Treasurer Wayne Swan on Sunday warned of a “dramatic” hit to the government’s bottom line due to commodity price falls, steeling voters for an austere budget in an election year. Swan said government revenues had taken a “massive hit” from a plunge in its terms of trade—the value of exports measured against imports—with prices for its key mining products down but the Australian dollar remaining high.’

“This has contributed to subdued prices pressures and weaker profitability across the economy, which means that nominal GDP—the value of the goods and services we produce—has grown more slowly than real GDP for three straight quarters,” said Swan in his weekly economic note. “This run is unprecedented since records began.”

http://www.daily-sun.com/index.php?view=details&archiev=yes&arch_date=18-03-2013&type=Australians-warned-of-%C3%A2%E2%82%AC%CB%9Cdramatic%C3%A2%E2%82%AC%E2%84%A2-budget-plunge&pub_no=441&cat_id=1&menu_id=3&news_type_id=1&index=15

The contraction in non-electronic NODX was led by structures of ships and boats, which went down 99.4 percent

jiminy cripps…. how can that be?

Cyprus could trigger bank runs and eventual eurozone break-up
by Scott Livermore
19 March 2013

The EU and IMF could have avoided calling on depositors by using the oil and gas reserves in Cyprus as collateral for part of the bail-out instead

The proposed bail-out package for Cyprus could prompt a credit crunch, cutting eurozone gross domestic product by around 3 per cent. This would be equivalent to almost €300bn, to raise under €6bn from depositors. And it could trigger a eurozone break-up, lopping as much as 10 per cent off the single currency bloc’s GDP.

The European Union and International Monetary Fund reached a deal with the government of Cyprus over the weekend deal to restructure the island’s banking sector. It includes the now familiar package of an EU/IMF loan – in this case worth €10bn – with conditions attached. In relation to other bail-out packages, this one is small but the details are highly contentious.

In particular, €5.8bn of the total €17bn package is to be funded by a levy on deposits with banks in Cyprus. The details are still to be agreed between the EU and Cyprus but the initial proposal was to impose a ‘tax’ of 6.75 per cent for deposits up to €100,000 and 9.9 per cent for larger deposits. Forcing depositors to contribute in this way effectively reneges on the supposed state guarantee for deposits of €100,000 or less, and creates a potentially dangerous precedent.

There is a significant risk that depositors in other countries panic and withdraw money from local banks, fearing a similar fate. A massive credit crunch is the most immediate risk if depositors withdraw their savings from banks in peripheral eurozone countries such as Spain and Italy, fearing that their deposits are no longer guaranteed.

If deposit withdrawals force banks to tighten credit conditions as much as they did after the collapse of Lehman Brothers, funding costs would rise and eurozone GDP would shrink by around 3 per cent below the central forecast. This is equivalent to wiping almost €300 billion off output for the sake of raising under €6bn from depositors in Cypriot banks and highlights the disproportionate risks that leaders are taking.

And the consequences may not end there. Rising unemployment and increased social unrest could yet trigger a eurozone break-up. This would be far more costly, lopping as much as 10 per cent off GDP. This latest move by single currency governments contains several hidden messages. Given the small size of Cyprus – its economy accounts for only 0.2 per cent of eurozone GDP – the other member states could easily have funded a larger share of the deal.
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March 20, 2013, 1:54 a.m. EDT
Cyprus vote raises more doubt over euro membership
By Sarah Turner, MarketWatch
Reuters

Lawmakers raise their arms to vote against a controversial bill to tax deposits in Nicosia March 19, 2013. Cyprus’s parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing euro zone efforts to rescue the latest casualty of the currency area’s debt crisis into disarray.

SYDNEY (MarketWatch) — The Cypriot parliament’s rejection of a bailout proposal has left plans to shore up the country’s banking sector in disarray and opened the door a bit wider to the possibility of its exit from the currency bloc, say analysts.

Still, markets appear to be taking the rejection of the 10 billion euro ($13 billion) bailout plan — which had at its center a controversial deposit tax — in their stride at present. U.S. stocks had mostly ended mildly lower on Tuesday, and Asian stocks were split between gains and losses Wednesday.

One reason for the recent relatively sanguine market reaction, analysts say, is that there is still time for lawmakers to present a more palatable agreement to the Cypriot parliament, before bank branches reopen on Thursday after an extended holiday.

No bank tax in Cyprus

The latest on the financial situation in Cyprus.

“We do not believe that the move by the Cypriot parliament should be seen as the ultimate ‘no’ vote to the bailout; banks in Cyprus are closed until Thursday and we expect a new deal to emerge over the next 24 hours,” said Vassili Serebriakov, currency strategist at BNP Paribas.

Details of a new proposal “remain highly uncertain at this point, although it appears that bank deposits under €100,000 (i.e. those covered by deposit insurance) will likely not be part of the contribution to the bailout,” said Serebriakov.
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March 19, 2013, 12:12 p.m. EDT
Cyprus: Has the next global crisis arrived?
Commentary: Traders caught off-sides into quarter-end
By Todd Harrison

Reuters
A closed branch of Bank of Cyprus in Nicosia on March 19.

NEW YORK (MarketWatch) — Cyprus — officially the Republic of Cyprus — is an island country in the eastern Mediterranean Sea, east of Greece, south of Turkey, west of Syria, Lebanon, northwest of Israel and north of Egypt. I had to search Wikipedia for that information as I, like most of you, wasn’t quite sure exactly where this Aegean island was.

This euro-zone country, with population just north of one million, three-quarters of whom are Greek and most of the others Turkish, has dominated recent financial news. In a stunning shift from previous aid packages, EU finance ministers — the folks up north, primarily German — asked Cypriots savers to forfeit a portion of their deposits in return for a $13 billion bailout.

While that may not sound like a big deal, remember that few foresaw how meaningful the Microstrategy Inc. news was in March 2000, when Securities and Exchange Commission accusations of accounting irregularities pricked the sentiment surrounding the technology bubble.

Ditto American Home Mortgage in August 2007, when the lender opened 80% lower and triggered what would eventually morph into the sub-prime lending crisis.

One could intelligently argue that both of those situations were symptoms rather than the cause of those respective crises, and the same can be said of Cyprus, which is seemingly a guinea pig for a new approach from those pulling the policy strings.

Cue the unintended consequences (the potential for bank runs across Europe) and moral hazard (word on the street is that wealthy Russian oligarchs have size holdings in the heretofore stealth sunny island); in an interwoven finance-based global economy, credit of a different breed — that of credibility, as posited in 2007 — is the issue at hand for markets at large.
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Can a country with a population of one-third that of San Diego County possibly spark a global financial crisis?

Why would the Fed ever allow this?

March 20, 2013, 12:02 a.m. EDT
Bond crash dead ahead: tick, tick … boom!
Commentary: ‘Investors have no idea what’s about to happen’
By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) – InvestmentNews latest cover is so powerful you can actually hear sirens atop a flashing neon billboard, megawarning in huge bold type: “Tick, Tick … Boom!”

A warning: InvestmentNews wants to make damn sure its readers, the 90,000 professional financial advisers who rely on timeliness and accuracy of every INews forecast: “What will your clients’ portfolios look like when the bond bomb goes off?” Get it? Not if but when it happens.

Yes, they do expect the bond bomb to explode and are publishing “a special report on the impending crisis in the bond market.”

Yes, you heard them. “Tick, Tick … Boom!” Wake up, it’s an “impending crisis,” dead ahead. And to punctuate their message, InvestmentNews added an alarming photo of an alarm clock with huge bells, wired to rolled up bonds looking like a stack of dynamite sticks. “Tick, Tick … Boom!”
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