The Housing Bubble

I’m definitely on board with the notion of TBTF megabanks and insurers making their own funeral arrangements AND prefunding them!

Allianz Joins AIG on List of Too-Big-to-Fail Insurers
By Carolyn Bandel & Zachary Tracer - Jul 19, 2013 7:59 AM PT

A “Too big to fail” sign is held up by Occupy Wall Street movement demonstrators at Union Square in New York. Insurers identified as too big to fail will have to hold higher reserves and draw up recovery and resolution plans to limit the economic fallout should they go bust, the International Association of Insurance Supervisors said. Photographer: Victor J. Blue/Bloomberg

American International Group Inc. (AIG) signage is displayed outside of the company’s offices in New York. AIG received a U.S. rescue that began in 2008 and swelled to as much as $182.3 billion to save the firm from collapse, after bets tied to housing soured. Photographer: Scott Eells/Bloomberg

American International Group Inc. (AIG) and Allianz SE (ALV) are among insurers deemed systemically important by global financial rule makers, meaning they may face tougher capital standards and tighter regulation.

The list of nine too-big-to-fail insurers, including MetLife Inc. (MET) and Prudential Financial Inc. (PRU) in the U.S. and France’s Axa SA (CS), was published late yesterday by the Financial Stability Board, the Basel, Switzerland-based body set up by the Group of 20 nations.

The FSB, led by Bank of England Governor Mark Carney, is coordinating global regulators’ response to the worst financial crisis since the Great Depression to prevent a repeat of the turmoil that followed the collapse of Lehman Brothers Holdings Inc. and bailout of AIG.

“Today marks an important step toward more broadly addressing the risks associated with systemically important financial institutions,” Carney said in a statement on the FSB’s website. “A sound capital and supervisory framework for the insurance sector is essential for supporting financial stability.”

Also on the list are Prudential Plc and Aviva Plc (AV/) of the U.K., China’s Ping An Insurance Group Co. (2318) and Italy’s Assicurazioni Generali SpA. (G)

Systemic Risk

“Even though we continue to be of the opinion that the insurance business in general and Allianz in particular does not represent a systemic risk, we acknowledge the decision of the FSB and will continue to support its efforts for more stable financial markets,” Dieter Wemmer, chief financial officer of Munich-based Allianz, said in a statement today. “We are well positioned to manage the new requirements.”

Allianz shares dropped as much as 1.2 percent and were down 0.2 percent at 4:41 p.m. in Frankfurt trading, valuing the company at 53.6 billion euros ($70.3 billion). Aviva shares dropped 0.1 percent and Generali slid 0.4 percent. Prudential Plc (PRU) shares rose 0.3 percent in London.

“The FSB’s decision on this issue is not a rational but rather a political one,” said Stefan Schuermann, a Zurich-based analyst with Vontobel Holding AG. (VONN) “As we don’t have any global solvency standards, we don’t really know yet what the implications will be for the companies on this list.”

‘Loss Absorbency’

Insurers identified as too big to fail will have draw up recovery and resolution plans to limit the economic fallout should they go bust, the International Association of Insurance Supervisors said.

Implementation details for higher “loss absorbency requirements” are to be developed by the end of 2015 and will apply from January 2019, the FSB said. The nine companies on the list, which will be revised every year, will immediately face stricter supervision, the FSB said.

“Since the financial crisis, supervisors across the sector have worked diligently to address risks to the global financial system from systemically important financial institutions,” Peter Braumueller, chairman of the IAIS executive committee, said in a statement. “The measures and framework put forward by the IAIS today complete a major piece of this reform in a manner specifically designed for the insurance sector.”
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New Glass-Steagall Is Needed to Protect Main Street From Wall Street: Ritholtz
By Matt Nesto | Breakout – Thu, Jul 18, 2013 9:43 AM EDT

It’s called the 21st Century Glass-Steagall Act and it’s aimed at breaking up the country’s 29 systemically important institutions, typically referred to as being “too big to fail.”

Industry opposition to the proposed return of Glass-Steagall has been predictably strong, with most big players claiming any curtailment of the size and scope of their businesses would put them at a competitive disadvantage to their global peers. Critics also claim it will eliminate much-needed diversity in their business models that helps financial institutions survive when times get tough.

In spite of the arguments, Barry Ritholtz, the CEO of Fusion IQ and author of Bailout Nation, isn’t buying it.

“You can’t stop fraud but you can make the penalties so severe that most people won’t engage in it,” Ritholtz says in the attached video, adding “that’s what we have moved away from over the past few decades.”
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Megabank, Inc’s campaign to thwart efforts to end TBTF must be pretty intense. How much of their Monopoly money profits are they devoting to this effort?

Does America need a 21st century Glass-Steagall Act?
Sen. Elizabeth Warren thinks so, and is gearing up for some “financial rabble-rousing”
By Sergio Hernandez | July 19, 2013
Comments
Watch out, Wall Street.
Watch out, Wall Street.

Elizabeth Warren (D-Mass.) is gearing up for some “financial rabble-rousing,” said Kevin Roose at New York. Last week, she introduced a bill that would force big banks to split apart their commercial and investment banking operations. Dubbed the “21st Century Glass-Steagall Act” because it reinstates key provisions of the repealed 1933 Glass-Steagall Act, the bill aims to “make the entire banking system safer and less crisis-prone” by shrinking big banks and making it harder for those with federally insured deposits to engage in “risky stuff.” Even with the co-sponsorship of Sen. John McCain (R-Ariz.), the bill has “virtually no chance of passing,” but that’s not Warren’s true aim; she’s really playing a “long game” of convincing legislators that “on issues involving Wall Street, the center isn’t where you think it is.” A shift in the political consensus “will do much more damage to Wall Street in the long term than simply breaking up a few banks.”
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Investment Banking | Legal/Regulatory July 11, 2013, 9:04 pm
Senators Introduce Bill to Separate Trading Activities From Big Banks
By PETER EAVIS
11:32 a.m. | Updated

Senator Elizabeth Warren on Thursday introduced an aggressive piece of legislation that intends to take the financial industry back to an era when there was a strict divide between traditional banking and speculative activities.

The bill, which is also sponsored by Senator John McCain, Republican of Arizona, and two other senators, is named the 21st Century Glass-Steagall Act. Its intention is to create a modern version of the seminal Glass-Steagall legislation from the 1930s, which placed firm limits on what regulated banks could do. It was fully repealed in 1999, laying the groundwork for the mergers that created some of the biggest banks of today. If passed, it could force many of those banks to let go of their trading operations.
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For the sake of my kids and the rest of the next generation, I certainly hope the effort to rein in Megabank, Inc and its grab bag of financial tricks and traps is wildly successful!

Dodd and Frank = WOLVES IN SHEEPSKINS.

And never forget that Dodd was a Friend of Angelo.

Ted Kaufman, Contributor
7/19/2013 @ 9:30AM
Set Up To Fail: Dodd-Frank Leaves Bank Regulators Overwhelmed, Underfunded
President Franklin D. Roosevelt is shown at the White House as he signed the Glass-Steagall Banking bill, Aug. 23, 1935. Among the bill’s merits: Congress wrote specific rules for regulators to follow, rather than asking regulators to flesh out the details, as Dodd-Frank did. (AP Photo)

This is the third in an 11-part series on the failed promises of the Dodd-Frank financial reform package and the continued, dangerous imbalances in our financial system. Click here for part 1 and part 2.

With the third anniversary of the signing into law of the Dodd-Frank Wall Street reform act approaching Sunday, one might assume that all the regulations called for in the legislation would be in place by now.

Not even close. According to the law firm Davis Polk, Dodd-Frank required the regulatory agencies to institute a total of 398 rules. To date only 155 have been finalized.

What are the consequences? Sheila Bair, former head of the FDIC, said it best: “This stuff doesn’t get any better with time. The longer you wait to finalize the rules, the more they get watered down, the more exceptions that get built in, people’s memories about the crisis start to fade and the pressure isn’t there.”

How did this happen? I believe failure was baked into Dodd-Frank from the beginning, when the President and Congress decided against writing a law with specific provisions that would solve the problem. Instead, Dodd-Frank provided vague guidelines to the federal financial regulators. It was up to them to produce the actual rules. And, as always, the devil is in the details.

Many of us in Congress fought this approach. We wanted to do what the President and Congress did after the 1929 stock market crash and the beginnings of the Great Depression. They created the Pecora Commission to study what had happened and to make specific recommendations. The result was the 37-page Glass-Steagall Act of 1933. It fundamentally changed our banking industry, and it helped protect us from a major financial crisis until it was repealed in 1999.
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Sounds like the effort to end too-big-to-fail is serious,

Of course they want it to _sound_ like the effort is serious; that’s good PR.

The reality? We are now five years past the point where the issue could no longer be ignored, and how much progress has there been?

Negative progress, that’s how much: TBTF is bigger than it ever was.

I wouldn’t want to confuse Too Structured To Fail with Too Big To Fail.

The too are not quite the same thing.

ft dot com
Last updated: July 1, 2013 12:31 pm
Banks charged with blocking CDS market
By Alex Barker in Brussels and Philip Stafford in London

Investment banks’ 20-year grip over credit insurance markets has come under regulatory assault as Brussels served charges against 13 banks for allegedly conspiring to block exchanges from challenging their business model.

The formal European Commission charge-sheet, running to almost 400 pages, alleges collusion to ensure the insurance-like contracts remained an “over-the-counter” (OTC) product – preserving the banks’ lucrative role as middlemen.

Investigators claim the banks from 2006-2009 protected their indispensable position in the $25tn global market through “control” of a trade body and information provider, which vetted whether new exchanges should be licensed.

Credit Default Swaps provide insurance against a default on bond payments and are used by investors to manage risk and bet on creditworthiness. During the eurozone crisis some European politicians railed against the contracts as symbols of reckless speculation.

If the commission acts on the charges, the 13 banks, the International Swaps and Derivatives Association (Isda), a derivatives trade body, and Markit, the main data handler for CDS, could face fines of up to 10 per cent of global turnover.

Brussels alleges that the harm from blocking exchanges, such as Deutsche Börse and CME Group of the US, went beyond trapping investors in the relatively more costly OTC market.

Joaquín Almunia, the EU’s competition chief, said keeping CDS in the opaque OTC market weakened the financial system, increasing counterparty risks that were brutally exposed after the collapse of Lehman Brothers.

“Over-the-counter trading is not only more expensive for investors than exchange trading, it is also prone to systemic risks,” he said.

New global rules coming into effect will require most swaps deals to be processed through clearing houses, which stand between trading parties and guarantee deals. Many OTC swaps, such as interest rate swaps, have already made the switch but the CDS market has been relatively untouched.

According to Isda only about 10 per cent of a market with an average outstanding notional value of $25tn was cleared last year. Many trades in Europe are cleared via IntercontinentalExchange, a US exchanges operator. Mr Almunia said several banks “also sought to shut out exchanges in other ways, for example by coordinating the choice of their preferred clearing house”.

US antitrust authorities are also investigating the CDS market and the relationship between Markit and the banks that part-own it. Banks and data providers are already facing private suits in the wake of the regulatory scrutiny. A pension fund for Ohio-based sheet metal workers argued that banks’ “collective dominance” inflated CDS prices by about 17 to 34 times compared to more transparent exchanges.
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Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, …

Jul. 14, 2010
A Roosevelt Moment for America’s Megabanks?
Simon Johnson
Illustration by Paul Lachine

WASHINGTON, DC – Just over a hundred years ago, the United States led the world in terms of rethinking how big business worked – and when the power of such firms should be constrained. In retrospect, the breakthrough legislation – not just for the US, but also internationally – was the Sherman Antitrust Act of 1890.

The Dodd-Frank Financial Reform Bill, which is about to pass the US Senate, does something similar – and long overdue – for banking.

Prior to 1890, big business was widely regarded as more efficient and generally more modern than small business. Most people saw the consolidation of smaller firms into fewer, large firms as a stabilizing development that rewarded success and allowed for further productive investment. The creation of America as a major economic power, after all, was made possible by giant steel mills, integrated railway systems, and the mobilization of enormous energy reserves through such ventures as Standard Oil.

But ever-bigger business also had a profound social impact, and here the ledger entries were not all in the positive column. The people who ran big business were often unscrupulous, and in some cases used their dominant market position to drive out their competitors – enabling the surviving firms subsequently to restrict supply and raise prices.

There was dominance, to be sure, in the local and regional markets of mid-nineteenth-century America, but nothing like what developed in the 50 years that followed. Big business brought major productivity improvements, but it also increased the power of private companies to act in ways that were injurious to the broader marketplace – and to society.

The Sherman Act itself did not change this situation overnight, but, once President Theodore Roosevelt decided to take up the cause, it became a powerful tool that could be used to break up industrial and transportation monopolies. By doing so, Roosevelt and those who followed in his footsteps shifted the consensus.
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“The U.S. authorities’ decision to let Lehman Brothers fail will be severely criticised by financial historians—the next generation of Bernankes.”

Here is a more optimistic view: The next generation of financial historians will thank the 2008 U.S. authorities for letting Lehman Brothers fail, as the first step towards ending too-big-to-fail.

That’s the upstate mentality. “Bend over and take it. We deserve it.”

So, to protest against the price of a product you plan on consuming more of it?

the local news’ FB page gauging reaction

Selection bias.

Detroit Bankruptcy: As Its Own Worst Enemy, the City Got What It Deserved
Posted: July 19, 2013 at 6:10 am

If the residents of the city of Detroit want to blame any person or organization for its Chapter 9 filing, they only need to look as far as the unions that controlled labor there and the politicians who ran it over the past four decades. Detroit earned its bankruptcy the easy way — through greed, the desire for political power and poor planning.

Kevyn D. Orr, the city’s emergency manager, offered all interested parties a likely way to avoid the bankruptcy filing just weeks ago. Employees of Detroit, past and present, could share the pain of the restructuring of financial obligations with bond holders. Each blamed the other for the city’s problems. Each said the other should absorb the brunt of a restructuring. Neither budged. Orr ran out of options, as two city pension funds went to court to try to protect their assets, motivated by a final grab for Detroit’s money.

The media’s take on Detroit was to post pictures of rundown and vacant homes and to publish the estimates of Detroit’s obligations — about $19 billion. The press also has pointed out the clear conclusion that bond owners will take cents on the dollar. Unions will have parts of pension obligations voided. City workers will lose their jobs. The two largest employers in Detroit are the school system and the city itself. These workers dwarf the number employed by General Motors Co. (NYSE: GM) and Chrysler. Ford Motor Co. (NYSE: F) barely has a presence in Detroit any more. Detroit is a city where the employee base is tilted away from private enterprise — a rarity, if not a uniqueness.
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rack up more debt and then have it dissolved?

One take-home lesson:

Cities willing to tolerate a crime rate that drives out law-abiding citizens can lose their population and industry, leading to eventual collapse.

(Observation by a refugee from a high-crime rust belt city…)

Analysis: Detroit filing sends benefits’ warning to other cities
Detroit Emergency Manager Kevyn Orr waits to address the media during a news conference about filing bankruptcy for the city of Detroit in Detroit, Michigan July 19, 2013. REUTERS/ Rebecca Cook
By Tiziana Barghini
NEW YORK | Sat Jul 20, 2013 8:11am EDT

(Reuters) - Many U.S. cities have a much better economic outlook than struggling Detroit, but the Motor City’s bankruptcy filing on Thursday should still set off alarm bells elsewhere as the cost of paying retirement benefits swells.

In recent decades, many municipalities have provided their workers with generous retirement benefits, both pensions and health coverage, often in lieu of pay increases. But this has created an unsustainable future burden for budgets that has only been exacerbated by the loss of real estate and other tax revenue in the financial crisis.

In particular, cities like Chicago and Santa Fe, New Mexico, have worryingly high pension liabilities compared to revenue, investors and analysts say.

Detroit’s bankruptcy was years in the making, a result of severe financial mismanagement and a unique decline in Detroit’s population triggered by job losses in the auto and other manufacturing industries, and the exodus of many residents to neighboring areas as the crime rate soared.
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Looks like Megabank, Inc lined up its ducks to come out relatively unscathed, while hapless Detroit pensioners may end up holding the bag.

Analysis & Opinion
Disaster in Detroit
Buying bonds in muniland
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Then there are Detroit’s retirees, who, Felix writes, may be getting the worst of this deal. UBS and BofA will get 75 cents on the dollar in a reported deal with Detroit, the WSJ says, while retirees could get just pennies on the dollar. BlackRock, Jason Windawi, and Long have all questioned whether Detroit’s emergency manager is inflating how big the city’s pension problems are: accounting changes caused the city’s unfunded pension liabilities to balloon to $3.5 billion from $650 million over two years, BlackRock says. (This wouldn’t be the first time Detroit’s pension math had been manipulated. More on that multi-decade farce here).

Still, Long writes, “Detroit’s pensions are not, on the surface, excessive.” Neither, says Alec MacGillis, is the auto industry to blame. The larger problem, as Matt Yglesias says, is demographic. Detroit’s population has been cut in half to 700,000 since 1970, steadily destroying the city’s tax base. And MacGillis notes that Detroit encompasses 139 square miles — enough to fit all of Boston, Manhattan and San Francisco in its borders. That land isn’t an asset, he writes: rather, it’s a resource-draining curse. — Ryan McCarthy

OPINION: Lessons from the Detroit disaster
Jul. 19, 2013 7:53 PM
Written by P.G. Sittenfeld

Detroit is an iconic American city, and it was once the fourth largest in the country. While we wish that community the best as it addresses bankruptcy, we should also take away cautionary points and act on protecting Cincinnati’s future.

• Shrinking is dying: Detroit has been diminished from 1,800,000 residents in 1950 to 700,000 today. Cincinnati’s population has decreased by half over the same time period. What is encouraging is that our population is now stabilizing for the first time in 50 years. Growing our population and growing our tax base are essential - not just for vibrancy, but also for solvency.

• Negative cash flow isn’t sustainable: Detroit has run operating budget deficits since 2008; Cincinnati has done so every year since 2000. There’s a pretty simple rule here: If your expenses consistently outpace your revenue – whether in your family budget or our city budget – the future grows bleaker by the year. We must achieve a structurally balanced budget. The city’s ongoing operating deficits are part of why Cincinnati saw our bond rating downgraded just this week: a signal to be taken very, very seriously.

• Don’t govern with yesterday’s tools: Another factor cited as central to Detroit’s demise is that their city services were “crippled by aged computer systems.” Modern technology can play a transforming role in increasing both the efficiency and the effectiveness of government operations. We need to make timely choices in using the best tools available.

• Deliver on the basics first: In Detroit, a staggering 40 percent of streetlights simply don’t work. If we can’t take care of such basics, we’re not likely to be able to win on the big stuff, either. Let’s get our priorities straight. ⬛

P.G. Sittenfeld is a member of Cincinnati City Council.

How many other American cities have shrunk to half their former size since 1950 like Detroit did?

Legal battle brews over Detroit bankruptcy filing
Detroit: Snapshot of a city in trouble

On July 18, Detroit became the largest U.S. city to file for bankruptcy. The city struggles with high unemployment and diminishing city services. A look at some statistics that shape Detroit:

Oh, no, they can’t sell Howdy Doody!

Kevyn Orr: Howdy Doody Not For Sale In Detroit’s Bankruptcy
July 19, 2013 11:14 AM

DETROIT, UNITED STATES: Howdy Doody, one of America’s best-loved puppets as he makes his debut at the Detroit Institute of Arts(D.IA) 06 April 2001 marking his first time on display for the public since the Howdy Doody Show went off the air in 1960. Howdy’s appearance at the DIA. followed a January 2001 decision by US District Court Judge Christopher F. Droney to honor a 1967 contract between Howdy Doody puppeteer Rufus Rose and NBC. The contract specified that Howdy Doody enter the museum’s collection after Rose no longer needed the puppet. AFP PHOTO/Jeff KOWALSKY (Photo: JEFF KOWALSKY/AFP/Getty Images)

DETROIT (CBS Detroit) Among the many questions to come out of Detroit’s historic bankruptcy filing was this: “What happens to the art?”

The Detroit Institute of Art is considered a jewel in the city’s crown, with many valuable pieces of art including the Diego Rivera Detroit Industry Frescoes, works by Wyeth and Whistler, Vincent Van Gogh’s Self-Portrait and William Randolph Hearst’s armor collection.

It turns out the city also owns the original Howdy Doody marionette from the 1950s TV show, from the estate of puppeteer Buffalo Bob Smith — and that has become an odd flashpoint as people across the region try to figure out how the bankruptcy filing hits home.

Howdy Doody One, worth by many estimates at least $1 million, is part of the DIA permanent collection, though it hasn’t been displayed since 2009. The puppet sits in a warehouse.

Since Detroit’s broke, will it be the first thing to go? No, according to state-appointed emergency manager Kevyn Orr.

“Nothing is for sale, including Howdy Doody,” Orr said during his first public comments on the bankruptcy during a Friday press conference.
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Should Hamtramck Erect A 12-Foot Wall To Keep Out Detroiters?

CBS Detroit
Posted on Friday, July 19, 2013 7:20:03 PM
by dynachrome

DETROIT (WWJ) – Prosperous suburbs surrounding Detroit — and even the struggling enclaves within — are working to distance themselves from a city in financial ruin.

In Hamtramck, one City Council candidate is taking that idea to the extreme.

Richard Fabiszak has proposed that Hamtramck build a 12 or 14-foot wall around the city, keeping out Detroiters, and requiring state-issued identification to get in.

“That sounds crazy to me,” one Hamtramck resident told WWJ Newsradio 950′s Sandra McNeil. “I never heard of such a thing. That sounds like something you’d see in a movie — some kind of science fiction movie.”

Resident Felicia Coldhoffer agrees.”Wall off the city and you need ID to come in? That’s insane,” she said.

But, is the crime situation Detroit such that plan like this would make sense to protect Hamtramck?

“It’s getting a little rough and tumble, but, I mean, that’s not the way to fix it. Ya know, you build for the bottom up. You don’t wall it off,” Coldhoffer said.

With a population just over 20,000, Hamtramck is surrounded by the city of Detroit — except for a small portion on the west side that borders the similarly surrounded city of Highland Park.

(Excerpt) Read more at detroit.cbslocal.com …

http://www.freerepublic.com/focus/f-news/3045133/posts -

Public unions + free sh*t army + undisputed democrat control for 60 years = a bankrupt and destroyed city in which 2/3 of the population has left.

Soon to be repeated in Philly, Chicago, Camden, Cleveland, Newark, Buffalo, Syracuse, etc.

It would also be repeated in NYC if not for the trillions in obama bailouts to wall street (think NYC in the 1970s)

Detroit has a huge inner city ghetto, and how this dependency issue that is unmanageable without adequate funding is resolved will set the cadence for the rest of the country.

“Sen. Rand Paul (R-KY) said he will use every resource he has at his disposal to stop President Barack Obama from bailing out newly-bankrupt Detroit because he believes the city can and must save itself and learn from its fiscal mistakes. “I basically say he [Obama] is bailing them out over my dead body because we don’t have any money in Washington.”

“There’s some good things that come out of bankruptcy,” Paul said in a phone interview from Iowa. “One is you get to start over. Bankruptcy lets you be forgiven of your debt. And you do so by getting new management, better management, and by getting rid of unwieldy contracts, contracts that give you where public employees are getting paid twice what private employees are and things come back more to normal. That’s the way cities and businesses can recover.

http://www.breitbart.com/Big-Government/2013/07/19/Exclusive-Rand-Paul-Obama-bails-out-Detroit-over-my-dead-body

“Since Detroit can’t maintain the accouterments of a modern American city with its current tax base, the most practical solution to its problems is regional consolidation. Detroit should merge with its suburbs, as Miami, Indianapolis and Toronto did. A megacity composed of Wayne, Oakland and Macomb counties would contain 3.9 million people, making it the second-largest city in the United States. Detroit could consolidate its police and fire services — which consume nearly 60 percent of its general fund budget — with surrounding departments.

So far, that has been politically impossible, because of black-white resentment and urban-suburban enmity dating back to the 1967 riot, and encouraged by such race-baiting politicians as Detroit Mayors Coleman Young and Kwame Kilpatrick, and Oakland County Executive L. Brooks Patterson. Detroiters didn’t want to share power with the suburbs, and suburbanites didn’t want to share tax revenue with Detroit. Now that Detroit has become a ward of the state, with Mayor Dave Bing’s powers usurped by the emergency manager, the city’s objection is moot. Suburbanites would still resist, but they’d benefit from the efficiency of a single local government, and from a stronger central city, which would make the entire area more attractive to out-of-state business. As for complaints that the suburbs would be forced to subsidize the city’s underfunded-by-$3.5-billion public pension system, well, hundreds of thousands of suburbanites grew up in Detroit, where they were educated by schoolteachers and kept safe by cops and firefighters who are now in danger of having their retirement benefits cut. Moving across 8 Mile Road should not relieve them of all responsibilities to the city they fled.

http://www.salon.com/2013/07/12/white_people_killed_detroit/

UK Guardian - Bankrupt Detroit pins its hopes on becoming arts and technology hub:

“Creativity may be the key to the city’s revival. Cheap industrial and residential spaces and a plentiful supply of raw materials make Detroit a potential alternative to art market centres such as New York and Los Angeles. Detroit native Jack White recently paid back taxes on the historic Masonic Temple, a famous performance space for rock bands.

http://www.guardian.co.uk/world/2013/jul/20/bankrupt-detroit-pins-hopes-creative-hub

6:20 pm Jul 18, 2013
Bankruptcy
Detroit’s Bankruptcy: 40% of Street Lights Don’t Work, 66% of Ambulances Out of Service
By Mike Cherney

Detroit’s bankruptcy petition paints a bleak picture for the Motor City: more than 100,000 creditors, more than $18 billion in accrued obligations and a homicide rate that is at its highest level in nearly 40 years.

Detroit filed for bankruptcy protection Thursday afternoon, becoming the largest ever municipal bankruptcy case. It becomes the latest in a small but high-profile list of municipalities to file after the recession. The cities of Stockton and San Bernardino in California filed last summer and Jefferson County, Ala., did so in November 2011.

The city was steered into bankruptcy by an emergency manager, Kevyn Orr, who did not secure agreements with enough bondholders, pension funds and other creditors to restructure the city’s debt out of court. The Wall Street Journal previously reported that creditors such as Bank of America Corp. BAC -0.07% and UBS AG were in discussions with the city.

The decision to declare bankruptcy “comes in the wake of 60 years of decline for the city, a period in which reality was often ignored,” Gov. Rick Snyder wrote in a memo authorizing the case, which was filed with the bankruptcy petition.

“I know many will see this as a low point in the city’s history,” Mr. Snyder continued. “If so, I think it will also be the foundation of the city’s future—a statement I cannot make in confidence absent giving the city a chance for a fresh start, without burdens of debt it cannot hope to fully pay.”

Mr. Snyder said the city cannot meet obligations to its citizens or its creditors. He noted that citizens wait an average of 58 minutes for the police to respond to their calls, compared to a national average of 11 minutes. Only 8.7% of cases are solved, compared to a statewide average of 30.5%.

About 40% of the city’s street lights were not functioning in the first quarter of the year, and only a third of its ambulances were in service. Its population has declined 63% from its peak and there are about 78,000 abandoned structures.

As a result, Mr. Snyder said, even if the city could raise taxes to pay its obligations, its citizens would not be able to afford it. In any event, Detroit tax rates are at their current legal limits.

“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,” wrote Mr. Snyder. “The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.”
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doesnt your girl suze say certain debt is good debt?

There is no way in hell that most folks in CA can buy a house without becoming a debt serf. You either get on board and pay to play or sit on the sidelines and cry.

Leases imply gap insurance? Really?

That’s correct, the problem is that defaulting on a mortgage used to have true consequences - such a social embarrassment and lack of options to get credit. But due to government interference in the market, there’s really no downside to default if you live in a non-recourse state. And again, risk is mispriced in the current mortgage market, and as Alan Greenspan said to the effect that “history hasn’t dealt kindly to periods of low risk premiums”.

Of course, it seems easy that the FHFA would be able to determine who lied on federally guaranteed mortgages, specifically the owner-occupant type losses that were flips, investments, rentals, etc.

I don’t think you understand what depreciation is.

people are chasing free equity dude. once they run out of buyers it will crash like last time. as we go deeper into it you can see they are trying to recruit more buyers by lax lending standards. Its a house of cards based on asset bubbles.

Bought an overpriced shack in 2009; sold it at an even more inflated price in 2012. Thanks dead cat bounce!
It depreciated at such an astounding rate that I sold it for a little more than I paid for it in 2013.
But the claimed depreciation on this property allowed me to make less paper profits from the rental income; so depreciation worked in my favor.

So yes property depreciates. Still made money selling it; more so by claiming the depreciation allowed by the IRS. It helped to offset the rental income received, allowing me to turn a real profit into a paper loss.

So it depreciated in my favor. I am sure you disagree but I still came out of the deal having more $$ than I did going in so I am ok with whatever malarkey you my opine. Amused by it, even.

The kind of depreciation my shack suffered I can live with(minimal expenses maintaining the new house); leaving the expensive repairs for the new owner down the road. BTW I have no debt so don’t even try calling me a debt donkey; as Inch by Inch owes nothing on her shack she can’t really be a debt donkey either. NO DEBT=not a debt donkey. Think of a fresh insult and maybe try using current articles to link to rather than the same old articles and stuff cuz info gets outdated. Have a pleasant day; I will.
Hope you get your LOLZ today; may lower your BP.

I have been thinking of buying a steel front/rear door for a while now. Seems like that would keep most criminals and police out.

He’s so ineffective he can’t even get this done. Now if the big banks wanted race riots …

How about we teach black teens how to build bombs in pressure cookers and set them off at marathons?

That way they could end up on the cover of Rolling Stone as teen heart throbs.

http://www.salon.com/2013/07/19/how_america_profiled_trayvon_martin_and_dzhokhar_tsarnaev/

I still have yet to hear anyone on NPR mention that Zimmerman was in the process of getting assaulted when he got out his gun.

I guess this detail is irrelevant to the discussion of Mr. Martin’s close resemblance to 1960s-era civil rights martyr Medgar Evers?

Across the pond, The Economist writers are just as content as their U.S. counterparts to ignore that Zimmerman was in the process of getting physically assaulted at the point when he got out his gun.

There have been quite a few Trayvon Martin commemorative rallies in SoCal. It was quite thoughtful of the Bash Mob to kick off their activities with a prayer vigil for Trayvon.

‘Bash mobs’ sweep through Southern California
Long Beach police brace for a possible “bash mob.”
By Ari Bloomekatz
July 19, 2013, 11:59 a.m.

Organized “bash mob” crime rampages of roving groups attacking innocent people and businesses have been striking cities around the United States. Law enforcement agencies in Southern California have reported few similar problems — until now.

In the last several days, there have been several reports of such group crime waves in South L.A., Hollywood, San Bernardino and Victorville. Long Beach police are bracing for another one Friday.

These so-called bash mobs of “flash mob” crime waves are organized through social media and have been a problem in Chicago, Philadelphia and Washington. In April, 28 Chicago youths were arrested on suspicion of attacking pedestrians along the city’s famed Magnificent Mile. Illinois Gov. Pat Quinn signed legislation in May enacting stiffer penalties for people who text or use social media to organize mob attacks.

Long Beach police warned in a statement that participants could face severe penalties.

“The mere participation in such an event can result in felony charges including conspiracy, and are punishable by imprisonment in the state prison,” according to the statement.

Police said they feared bash mob organizers planned to hit Long Beach at 2 p.m.

Long Beach experienced such a gathering July 9, when more than 100 people descended on stretches of downtown in an organized, sudden crime rampage.

On Monday, a group of unruly young people broke off from hundreds gathered for a Trayvon Martin prayer vigil and rushed into a Wal-Mart on Crenshaw Boulevard, where they tossed merchandise and tried to break into a jewelry display case.
…

A liberals liberal, who cares except the MSM.

“Admirals Cove”

In Palm Beach Gardens? Are you a contractor in the area? If so, we might need to hook up sometime; I’ve had terrible luck trying to find people who can read and return e-mails or phone calls!

Hit and run is now an “execution”?

A physician I once knew was treated the way you were while he was on vacation in Yellowstone National Park with his family. He was staying in one of those tourist cabins near a hotel. Police raided the place at 0300 & hauled him out of there. Of course he had ID which, of course, the police refused to give any credence to. He gave the phone number of his hospital’s administrator as a reference. Of course the police called collect, and the administrator refused to take that call. Eventually things were straightened out, and the story became a joke the physician told on himself.
He did resemble a suspect wanted for a felony at the time.

The yuuts voted for Obama 65-35. May they all suffer for decades to come for their actions. Eff ‘em all.

A flip side of the current job market is that many jobs that did NOT (and should not) require a degree now do (i.e. electronics technician jobs that now require an B.S. engineering degree, etc.)….not good for non degreed job seekers and can’t imagine the overqualified who get these jobs will be happy with them in the long run either…but given the oversupply of graduates I guess it is inevitable, have read that the situation was similar during the Great Depression.

Easily amused in Idaho?

‘The new ‘Spin Cycle’ ride at Silverwood is a popular attraction. The ride takes thrill seekers 104 feet in the air and is the tallest of its kind in the US. The new ride came to Silverwood earlier this year and is helping the park have another record year.’

Wow, I think I’m gonna go out and buy a house…

Just wait until the Canadian housing bubble bursts. The loonie is going to crash just like a duck taking a load of birdshot.

I haven’t seen any in North Texas since that Montelongo guy came through earlier in the Spring.

Some are…. (Still) Waiting for the Fall

While….

Boomerang buyers return to market after foreclosure

By Les Christie @CNNMoney March 11, 2013: 6:12 AM ET

NEW YORK (CNNMoney)

Borrowers who lost homes to foreclosure during the housing bust are starting to buy again.

Since the housing bubble burst, 4.8 million borrowers have lost their homes to foreclosure, and another 2.2 million gave them up in short sales, according to RealtyTrac. While many are still struggling to recover financially, a growing number are starting to bounce back — and they are looking for a new place to call home.

http://money.cnn.com/2013/03/11/real_estate/foreclosure-homes/index.html - 66k -

The map would be much more informative if it superimposed the Detroit city limits on the dot distribution (see bottom map in the article linked below).

P.S. At least with a home price to income ratio on the order of $40,000/$26,000 = 1.5, Detroit has affordable housing, and plenty of shadow inventory to boot.

DETROIT
JULY 18, 2013
The Decline of Detroit in Five Maps
BY NATE COHN
…
Over the last decade, Detroit’s population fell by nearly 26 percent. Detroit’s suburbs have lost residents too, but not nearly as many.

It is not quite right to say that Detroit is empty. 700,000 people still live there. But at its peak, the city housed 1.8 million people, and thousands of homes are now abandoned. In some neighborhoods, half of all homes are vacant.

Detroit’s urban core is deeply impoverished. The median household income is just $26,000–the map below shows areas where households make less than $30,000 per year.

Home values are extraordinarily low. In some neighborhood, the median home is worth less than $40,000.

And no discussion of Detroit is complete without mention of race and segregation. In 1950, when Detroit’s population was at its peak, the city was 82 percent white. After decades of white flight, that number is reversed: the city is now 82 percent black and 10 percent white. On the map below, Detroit’s city limits are obvious—especially its northern boundary, along the infamous “Eight Mile Road.”

After I hit the Add Comment button on my last post, I realized I still hadn’t quite managed to post the Detroit political boundary map. But here it is.

Unsurprisingly, the blue-red dot boundary aligns closely with the Detroit city limits. I wonder why the blue dot people prefer to live inside the city and the red dot people prefer to live outside the city boundaries (except for the red dot Hamtramckers)?

How does the melting pot of Hamtramckers map to the four-color dot scheme? I’m guessing those not of Asian origin typically fall under the “white” (red dot) classification, in furtherance of the politics of race to which U.S. “civil rights leaders” desperately cling.
…
According to 2010 census figures, 14.5 percent of Hamtramck’s population is of Polish origin; in 1970, it was 90 percent Polish. Over the past 30 years, a large number of immigrants from the Middle East, particularity Yemen, and South Asia have moved to Hamtramck. The 2010 survey estimate the city’s foreign-born population at just over 41 percent.
…

St Louis is a most fascinating case. Here is the political boundary map between city and county and here is the race map. Inside the city limit, there is a clean north-south divide between black (blue dots) to the north and whites (red dots) to the south.

Two decades back, I lived on the north-south racial boundary (between Washington University and the Central West End, shown near the blue-red divide on the map), which one guy in my circle at the time referred to as the “Demilitarized Zone.” I knew white guys who were too scared to drive their cars through North or East St Louis in broad daylight; also had a black college roommate whose conferred advice was “if I were a Caucasian, I wouldn’t go into East St Louis at night.”

Thank god that I don’t have cable….I would hate to be contributing to these idiots’ salaries.

There are so many ways to get ahead in America.

“A Lantana man who allegedly threatened to chop a woman’s head off with a machete was arrested Thursday, authorities said.

Ludovic Alexandre, 40, is accused of aggravated assault with a deadly weapon. He was released Friday on $15,000 bond.”

In principle, could his victim have legally shot him and got off with self defense under the Stand Your Ground law?

And would it matter if the guy wielding the machete had been a black teenager?

You had best get a clue because the days of the USA retaining its World Reserve Currency Status are WANING RAPIDLY.

Bill, i don’t think losing reserve currency status would hurt us. it might actually help us.

losing reserve status just means that we’d have slightly higher transaction costs. we would have to change currencies into their currency. nothing but a tiny transaction cost.. but then there would then be much less incentive to counterfeit our currency. right now, it’s believed that some countries governments are actually involved in the counterfeiting. and they they are making near perfect bills. if they stopped counterfeiting ours to counterfeit the new reserve currency, it would help improve the value of the dollar.

Uh oh. That means wages might go up. We can’t have that.