August 6, 2013

Bits Bucket for August 6, 2013

Post off-topic ideas, links, and Craigslist finds here.

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Comment by ahansen
2013-08-06 01:39:31

Your questions (expurgated, please) for Obama’s online convo with Zillow CEO, Spenser Rascoff, tomorrow?

HBB ought to represent on this one — if only by symbolically submitting them for consideration.

Comment by Housing Analyst
2013-08-06 09:22:07

Comment to Fraudsters: Fuh-Q.

Comment by Neuromance
2013-08-06 11:39:00

1) Do you think the ability of mortgage lenders to shed all repayment risk, and then having government insure that private debt leads to a more or less stable financial system?

2) High house prices typically result in more debt for the purchaser, resulting in less disposable income for other goods and services. Has this effect been considered in government housing policy?

3) Increasing house prices benefit certain segments of society but harm others. As a result, do you think goverment and central bank policies should be designed to influence house prices, either up or down?

4) Should government be involved in guaranteeing private housing debt?

5) Should government and/or the central bank implement policies designed to increase house prices? Or should house prices be determined by markets?

Comment by Neuromance
2013-08-06 11:44:30

6) Congress has looked to the Federal Reserve for leadership in recovering from the Great Recession. Should economic recovery be the Federal Reserve’s mission, or should Congress take the lead?

Comment by United States of Moral Hazard
2013-08-06 13:10:09

7) Have you, or anyone in the government, considered the fact that unaffordable housing prices led to the housing meltdown, and asked yourselves why the target is the same high housing prices which caused a depression?

8) What do you say to the people who see right through your transparent attempts to save the banks at the expense of society? Why can you not let house prices fall, and bad banks fail, and reward the prudent individuals and businesses instead of the reckless?

9) Do you realize you are no different than George Bush?

Comment by michael
2013-08-06 13:14:10

Love number 9

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Comment by Biggvs Richardvs
2013-08-06 15:06:43

Sshhhhhh! don’t tell our resident troll(s) - they may not be able to handle the cognitive dissonance.

Comment by Dudgeon Bludgeon
2013-08-06 02:16:58

Is housing really the only string you have available to pull in our current economy?

Comment by Combotechie
2013-08-06 05:20:50

Well, there are jobs, other than housing construction, that can be worked to support out consumer-based ecnonomy but the problem (for us at least) is these jobs can be worked somewhere else. Housing construction is one of those jobs that cannot be worked somewhere else.

So housing construction puts money directly into our economy.

The problem is this money doesn’t stay in our economy. Once the money is earned here it flows out and ends up somewhere else, because somewhere else is where the things are made that we like to buy.

Comment by Whac-A-Bubble™
2013-08-06 05:44:30

Another string to pull: Dump your bonds and buy stocks instead.

Comment by Whac-A-Bubble™
2013-08-06 05:47:33

BREAKING NEWS Trade Deficit in U.S. Narrowed 22.4% in June to $34.2 Billion

Berkshire Avoids Rout as Buffett Sidesteps Bonds

By Noah Buhayar - Aug 5, 2013 6:55 AM PT

Warren Buffett’s preference for buying stocks and whole companies rather than bonds is helping Berkshire Hathaway Inc. (BRK/A) weather a spike in interest rates better than other insurers.

Book value rose 2 percent to about $122,900 per Class A share in the three months ended June 30, Omaha, Nebraska-based Berkshire said Aug. 2. Insurance competitors including Allstate (ALL) Corp., American International Group Inc. (AIG) and Travelers (TRV) Cos. posted second-quarter declines in the measure of assets minus liabilities.

Interest rates surged in the period after Federal Reserve Chairman Ben S. Bernanke signaled the central bank could begin to taper its $85 billion-a-month bond purchases this year. That wiped billions of dollars from insurers’ portfolios, which consist mostly of fixed-income securities. Buffett’s firm owns stocks valued at more than three times as much as bond holdings.

Comment by azdude
2013-08-06 06:54:00

s cal is awesome today. cruisn around in carmel valley feeling like somebody.

Going down to la jolla for some breakfast. Have a nice stroll on the beach today too. hit one of the famous breweries tonight.

A house will get you somewhere.

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Comment by goon squad
2013-08-06 07:14:18

‘feeling like somebody’

feeling like you are tom vu?

how much does the national association of realtors pay you to post here? mom says you need to mow the lawn today, and to bring all your dirty dishes upstairs from the basement.

Comment by azdude
2013-08-06 07:20:39

man s cal is awesome. everywhere I go 80’s tunes are crankn.

The money is just flowing down here. I can see why professor bear is so happy.

maybe a round of golf today too.

u really should shop for a house.

Comment by rms
2013-08-06 07:31:35

“A house will get you somewhere.”

+1 Remember…losers only have one house.

Comment by Joe S
2013-08-06 07:55:20

carmel is nowhere near la jolla.

but really i’m missing the point of your post?

Comment by cactus
2013-08-06 08:40:15

Carmel Valley is very close to la Jolla.

Even closer to Del Mar. I used to work off Lusk Blvd, nice Ocean Views from the parking lot. Check out Torrey Pines if you get the chance.

Carmel however is not, its in Central CA.

Comment by cactus
2013-08-06 08:43:01

If you ever want to see what Costal CA used to look like take a boat ride out to Santa Cruz Island off Ventura CA.

Fantastic view if the weathers right.

Comment by In Colorado
2013-08-06 09:02:24

I think he means Carmel Valley, just north of Del Mar

Comment by Joe S
2013-08-06 09:22:31

nevermind, I thought he meant Carmel, as in the quaint coastal town with the ridiculously good golf course.

I still don’t see the point of his recent posts.

Comment by goon squad
2013-08-06 09:34:48

‘don’t see the point’

he posted recently about ‘pulling some equity’ to buy a new car. other posts included buying steak, lobster, fine wine with the equity money. today is just more of the same douchebaggery.

Comment by Carl Morris
2013-08-06 09:41:36

I really think he’s stirring the pot :-).

Comment by polly
2013-08-06 09:46:15

“I still don’t see the point of his recent posts.”

Living free in HAs (and other posters) heads. They react so he keeps doing it. Wouldn’t be surprised if he/she/it has never had a HELOC in his life.

Comment by Housing Analyst
2013-08-06 09:51:00

And once again you got your characters mixed up.

Comment by My failure to respect is unacceptable
2013-08-06 14:28:02

I think the dude is just playing. The dude doesn’t abide to the propaganda.

Comment by Biggvs Richardvs
2013-08-06 15:19:54

That’s just like….your opinion…

Comment by Whac-A-Bubble™
2013-08-06 05:50:53

Japan $80 billion public fund may shift funds to stocks from bonds: sources
By Chikafumi Hodo
TOKYO | Mon Aug 5, 2013 10:36pm EDT

A pedestrian holding an umbrella walks past a stock quotation board displaying various stock prices outside a brokerage in Tokyo July 29, 2013. REUTERS/Yuya Shino

(Reuters) - The pension fund for Japan’s civil servants is considering changing its ultraconservative investment strategy to allow more of its $80 billion to go into stocks and less into domestic government bonds, people familiar with the matter said.

Comment by Whac-A-Bubble™
2013-08-06 05:57:12

Apparently individual investors worldwide were sold into believing long-term bond mutual funds were “less risky” than stock mutual funds. My geriatric father’s investment adviser offered similar insight.

Returns on debt mutual funds crash in July, scenario may continue
Biswajit Baruah, ET Bureau
Aug 1, 2013, 06.53AM IST

MUMBAI: Returns from debt mutual funds have plummeted 6.5% in July, its worst monthly performance in nearly four years, after government bond yields surged over 80 basis points during the period, according to data from Value Research, a fund-research company.

In July the Reserve Bank of India took a raft of measures to prevent the rupee from falling against the dollar, which impacted debt markets. The medium and long-term bond and gilt funds were the worst hit, which are ironically considered less risky among investment asset classes.

Comment by yensoy
2013-08-06 08:58:38

So the whiz prof who predicted the subprime mortgage crisis ( today got appointed Governor of the Reserve Bank of India which is roughly equivalent to the Fed Chairman.

He is a good theoretician but somehow I don’t think he has an idea how things work (or don’t work) in India.

Here’s a clue:
A good economist is not a substitute for good governance.

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Comment by Bill, just South of Irvine, CA
2013-08-06 06:07:26

riiiiight. Corporate bonds and emerging market stocks are sufffering. So I’m loading up on them, of course along with physical precious metals.

one quarter ounce eagles again this month. Got another pill bottle to fill with those coins.

Comment by Housing Analyst
2013-08-06 07:18:01

If you take on mortgage debt at current massively inflated housing prices, you’ll enslave yourself for the rest of your life.

“Debt is bondage.”~ Suze Orman, May 11, 2013

Don’t Be A Debt Donkey®

Comment by goon squad
2013-08-06 08:02:22

Speaking of debt donkeys…

“Americans have made progress putting their finances in order and are ready to borrow again — giving the world’s largest economy another driver of spending and growth.”

Because the only path to Recovery® is by broke ass loosers borrowing money and paying interest to buy sh*t they don’t need and can’t afford.

Comment by In Colorado
2013-08-06 09:13:33

Because the only path to Recovery® is by broke ass loosers borrowing money and paying interest to buy sh*t they don’t need and can’t afford.

Well, in many cities you do need a car. And few people have the resources to pay cash for one.

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Comment by Housing Analyst
2013-08-06 09:19:44

“And few people have the resources to pay cash for one.”

So they don’t sell…… then what happens?

Comment by Housing Analyst
2013-08-06 02:47:27

Lawyers and attorneys trolling top financial blogs and websites…… ask yourselves why…. just ask yourselves why.

Comment by jose canusi
2013-08-06 05:21:34

Looking for clients? Looking for the next litigation trend?

Comment by jose canusi
2013-08-06 05:25:47

Looking for people to sue? C’mon, HA, you tell me. Why?

Comment by Nancy Kerrigan
2013-08-06 05:35:10

Why-y-y-y-y-y? Why-y-y-y-y-y?

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Comment by azdude
2013-08-06 06:49:49

looking for suckers like you?

Comment by Housing Analyst
2013-08-06 07:12:25

$hitHouse Poet! How ya been my underwater friend?

Comment by azdude
2013-08-06 07:22:04

your real original there pal.

keep sleppn at your job while I spend some equity.

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Comment by Housing Analyst
2013-08-06 07:25:38

$hitHouse Poet…. what are your losses so far?

Comment by goon squad
2013-08-06 07:30:30

Mom says no more playing X-Box until you register for that GED class and fill out applications at Carl’s Jr and Target.

Comment by azdude
2013-08-06 07:36:56

spending equity is real tough. thank u ben bernake :)

Comment by Blue Skye
2013-08-06 11:23:23


Comment by Joe S
2013-08-06 08:00:40

He lives in your skull, rent free.

Comment by Housing Analyst
2013-08-06 08:08:53

Hey Lib.

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Comment by Joe S
2013-08-06 07:57:01

Because we’re in the housing/rental market like everyone else?

Because we like to ocassionally talk about larger economic trends?

Because we’re fascinated with why the fed gov’t and big banks built up this “ownership society” business model that has helped to wreck the economy?

Comment by Housing Analyst
2013-08-06 08:10:17

You’re a fraud Lib.

Comment by Joe S
2013-08-06 09:27:26

So I’m a NAR lobbyist now, eh? I do work conveniently close to K St.

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Comment by goon squad
2013-08-06 09:46:50

Coastal elitist.

Comment by Joe S
2013-08-06 11:09:47

You forgot bedwetter.

Comment by Housing Analyst
2013-08-06 09:56:07

Answer up Liars.

Comment by jose canusi
2013-08-06 10:58:25

Fair enuf, but why, HA? You’ve got my curiosity going. Why are they trolling?

Comment by Housing Analyst
2013-08-06 11:17:38

They’re not trolling. Let’s see which liars respond. They know who they are and so do I.

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Comment by phony scandals
2013-08-06 04:32:26

DHS ‘Constitution Free’ Zones Inside US Ignored By Media

Anthony Gucciardi
August 6, 2013

In what should be front page news blasted out nationwide as a breaking news alert, the DHS has openly established extensive ‘Constitution free zones’ in which your Fourth Amendment does not exist.

It’s not ‘conspiracy’ and it’s not fraud, the DHS has literally created an imaginary ‘border’ within the United States that engulfs 100 miles from every single end of the nation. Within this fabricated ‘border’, the DHS can search your electronic belongings for no reason. We’re talking about no suspicion, no reasonable cause, nothing. No reason whatsoever is required under their own regulations. The DHS is now above the Constitution under their own rules, and even Wired magazine authors were amazed at the level of pure tyranny going on here.

This ‘border’ even includes where the US land meets oceans in addition to legitimate borders with Mexico and Canada. As a result, you have over 197 million citizens suffocated in these 100 mile ‘border zones’ that include major cities like New York City, Houston, Los Angeles, and Philadelphia. Checkout the graphic below for a visual representation, with the orange area representing the Constitution free zone as designated by the DHS:

What’s even more amazing, is that this has been going on since 2008. That’s about 5 years of absolute unconstitutional abuse of power by the Department of Homeland Security that the media fails to even document. That’s 197 million citizens living without a Constitution as far as the DHS is concerned, and apparently the Department of Justice (DOJ) must be pretty content too. Amazingly, no one has challenged this besides the ACLU, which was contacted following the case of a man who was actually detained within the 100 mile ‘border’ area.

Not only was this man’s laptop searched for no reason, as is ‘allowed’ under DHS code now, but they ended up finding pictures designated to be linked up with ‘terrorist’ groups. In response, the man was thrown in a cell while DHS agents went through every piece of data on his entire laptop. The ACLU is now suing over this event, but there’s no telling how the case will go with such limited media exposure. The DHS is literally gutting the Constitution and declaring itself higher than the law of the land by doing this, and it spells out major trouble for the entire Bill of Rights at large.


Because if the DHS can simply ‘overrule’ the Fourth Amendment for 197 million citizens, it can also ‘overrule’ the First and Second Amendments as well. What’s stopping them? It’s highly illegal under the Constitution, but it appears they truly don’t care. And to demonstrate just how little they truly care, they have even gone and ‘reviewed’ themselves for their own actions following outcry from some legal experts.

To break it down: back in 2008 there was outrage from those who actually value the Constitution and understand how the bloated DHS entity works, so the DHS promised to prove within 120 days that what they were doing was constitutional and legal. Years later, the report came out to reveal that the DHS actually reviewed itself and determined that it was acting 100% properly. It also founds that everything it was doing was ‘constitutional’ because it was not actually removing the Constitution from United States soil, only the ‘border’.

The ‘border’ that expands 100 miles and includes 197 million people.

This news should be on the front page of every single news organization in the world, but the sad reality is that it’s not. It’s up to the alternative news, the real news, to report on this. It’s up to me to make videos about this, it’s up to the alternative news to syndicate it out, and it’s up to you to share this. It’s time to reclaim our Constitution and tell the DHS we won’t live in Constitution free zones any longer. - 71k -

Comment by 2banana
2013-08-06 06:00:36

First they came for the 2nd Amendment, and since I didn’t own guns and I was a progressive, I didn’t say anything…

Comment by Bill, just South of Irvine, CA
2013-08-06 06:19:12

People here I work with find it odd that I hang onto my Arizona residency. It’s because of my firearms being legal there an illegal here. Got CCW, which can’t get here. The gun grabbers won’t give up. Hillary will be elected by the majority wolf voters and they will get Hillary phones (they work by “point point, clap clap”).

Comment by 2banana
2013-08-06 06:24:09

“I stand in support of this common sense legislation to license everyone who wishes to purchase a gun. I also believe that every new handgun sale or or transfer should be listed in a national registry, such as Chuck [Senator Schumer] is proposing.” ~~Hillary Clinton, 2000

“Many of you are well enough off that . . . the tax cuts may have helped you. We’re saying that for America to get back on track, we’re probably going to cut that short and not give it to you. We’re going to take things away from you on behalf of the common good.” — Sen. Hillary Rodham Clinton, political fund-raiser in San Francisco, June 2004

“When we got organized as a country and we wrote a fairly radical Constitution with a radical Bill of Rights, giving a radical amount of individual freedom to Americans… And so a lot of people say there’s too much personal freedom. When personal freedom’s being abused, you have to move to limit it. That’s what we did in the announcement I made last weekend on the public housing projects, about how we’re going to have weapon sweeps and more things like that to try to make people safer in their communities.”
–President Bill Clinton, MTV’s “Enough is Enough”, April 19, 1994

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Comment by Bill, just South of Irvine, CA
2013-08-06 06:40:57

Yup, I’ll hang onto my guns, ammo, and gold. Will keep driving my Toyota so I can invest more and save more for the time I will finally work where I live.

I love California (I sense the mental disease of progressivism has yet to make a serious dent into Orange County). But California is doomed to float faster and faster in smaller circles through the porcelain trumpet until gone.

I’m bullish on tech in Orange County, but I want to help bring more tech into the “high tech corridor” along Price Rd in Tempe and Chandler, AZ. I love my current work at the new company. It’s leading edge and very difficult.

Two words for Shrillary: Molon labe.

Comment by aNYCdj
2013-08-06 15:52:40


What would a gun owner say if..we just attacked the illegal gun problem? 5 years no bail for an illegal gun on public property.

We get the police to use IR and confiscate all illegal guns and throw the thugs in jail for a long time….would make the streets safer.

Comment by Bill, just South of Irvine, CA
2013-08-06 18:57:03

So you mean when we become like Germany under Hitler, where murderous people in the Nazi government would be on German government property, then we could not properly follow Thomas Jerfferson’s advice in the Declaration of Independence and start another revolution against renewed tyranny?

“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”

Comment by ecofeco
2013-08-06 06:22:07

Your rights were lost decades ago and the remainder have been taken little by little since and I didn’t see ANY gun right groups actually, you know, fight against it… with their guns.

So save the brag for the gullible.

Comment by 2banana
2013-08-06 06:25:11

You would make a good german…

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Comment by phony scandals
2013-08-06 06:30:31

“Your rights were lost decades ago and the remainder have been taken little by little since and I didn’t see ANY gun right groups actually, you know, fight against it…”

So does that mean that it is not OK to wake up to it now?

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Comment by In Colorado
2013-08-06 12:04:29

I think the point being made is that the gun crowd will stand by idly as our rights are taken away one by one, while boasting about being patriots.

Comment by goon squad
2013-08-06 07:04:05

george w. bush warned us that we have to fight them over there so we won’t have to fight them over here. since obama and the democrats in congress took away all the money to fight them over there and gave it to solyndra and to pay for obama phones, now we have to fight them over here.

Comment by Steve J
2013-08-06 09:36:16

Please pass me the bong.

Comment by goon squad
2013-08-06 09:52:47

What do you want to pack it with? I have Blackberry Kush, Dutch Dragon, and Sour Diesel.

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Comment by 2banana
2013-08-06 14:02:54

Purple Drank anyone?

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Comment by AbsoluteBeginner
2013-08-06 07:50:12

Gee, the DHS could never hire a Edward Snowden type could they? I mean, after all the trouble the NSA has caused, the DHS is smarter than that.

Comment by jose canusi
2013-08-06 05:03:09

Obama proposes shuttering Fannie and Freddy. Hmmm…Surprising. What would be the implications of this?

Comment by 2banana
2013-08-06 06:05:13

Do we get a chance to read what is in the bill before we have to vote on it this time?

Another campaign stop.


Comment by rms
2013-08-06 07:41:12

“Obama proposes shuttering Fannie and Freddy.”

Where will congress put their offspring who have “challenges?”

Comment by Oxide
2013-08-06 09:10:08

More importantly, where will banks put their mortgage loans? On their own books?

Comment by Housing Analyst
2013-08-06 09:15:03

Not really.

What’s important is your ongoing charade. ;)

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Comment by Al
2013-08-06 10:19:15

Don’t forget the FHA. Until all the federal and quasi federal bag holders are gone, the game will continue.

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Comment by Neuromance
2013-08-06 12:00:04

So, the government has been issuing nearly 100% of mortgage backed securities during the past 5 years (PDF, p.10). (Original article here.)

My interpretation of this is that they are buying nearly all the mortgages out there and packaging them for resale.

I don’t think it increases financial stability to have the government guaranteeing private debt, and especially so for debt for which the lender holds no repayment risk.

Obviously, there’s very big money opposed to any change of the current system, as it is a massive wealth pump to the FIRE sector, which is the biggest contributor to government over the last 20-some years.

Net result? It’s a tentative first step to get an idea of the pushback they’ll get. It’s a trial balloon.

Lenders being concerned with whether or not the loan will be repaid seems like a quaint concept today, but lack of repayment risk has led to a lot of financial instability and capital misallocation.

Comment by Whac-A-Bubble™
2013-08-06 21:53:05

It goes beyond shuttering F&F.

The other unmentioned part is transferring their current roles in propping up the housing market either to another or to a new federal agency. If the fate of the housing market were truly privatized, as in no government subsidies used to prop up the market, prices would actually revert to affordable levels for ordinary American families. This would be an economic catastrophe for investors who recently bought with a plan to get richer than Croesus by just waiting for prices to go higher.

Comment by Whac-A-Bubble™
2013-08-06 23:39:44

Obama simply can’t mean what he says when he claims to wants to get the government out of the housing market. Given the extreme level of government intervention in current housing policy, including the Fed’s $40 bn/month in MBS purchases plus ubiquitous federal guarantees from Fannie Mae, Freddie Mac, the FHA and numerous other federal agencies, truly pulling the plug on all these subsidies would serve to pull the rug out from under the hapless all-cash Chinese and Canadian real estate investors. And it would be just plain mean to withdraw U.S. taxpayer-provided wealth transfers to the all-cash foreign investor class.

News Analysis
Washington Steps Warily on Housing
A house for sale in Indianapolis earlier this year. With the housing market on the mend, Mr. Obama said it was time to “wind down” Fannie Mae and Freddie Mac.
Published: August 6, 2013

WASHINGTON — In the seven years since the housing market started to fall apart, politicians of both parties have promised repeatedly to build a better system for financing the American dream of owning a home. There is little sign of progress.

Instead, the stopgap nationalization of housing finance has hardened into one of the most enduring legacies of the Great Recession. The federal government guaranteed about 87 percent of new mortgage loans last year, through Fannie Mae and Freddie Mac and the Federal Housing Administration, effectively setting the terms and providing the money for nine out of 10 home purchases and refinanced loans.

In a speech on Tuesday, President Obama signaled that Washington may finally be returning to the place where the financial crisis started. With the housing market on the mend, Mr. Obama said it was time to “wind down” Fannie Mae and Freddie Mac.

“I believe that our housing system should operate where there’s a limited government role and private lending should be the backbone of the housing market,” Mr. Obama said in Phoenix, a city that is a symbol of both housing booms and busts.

Comment by Whac-A-Bubble™
2013-08-06 06:00:27

Is there anyone foolish enough to remain in bond funds at this point, given how obvious it is that the stock market always goes up?

Comment by Whac-A-Bubble™
2013-08-06 06:02:28

12:15 pm Aug 2, 2013
Capital Markets
Pimco’s Total Return Bond Fund Suffers $7.5 Billion Outflow in July
By Min Zeng

Bond king Bill Gross’s $261.7 billion Total Return Fund at Pacific Investment Management Co. suffered a $7.5 billion net outflow last month, according to data from fund tracker Morningstar Inc. (MORN -0.26%) on Friday.

It is the third straight monthly outflow for the fund, on the heels of nearly $10 billion in redemptions in June. Clients have yanked $15.6 billion from Gross’s fund in 2013 through July.

Gross’s fund eked out some gains in July after a quarterly loss during the second quarter. But the July outflow signaled continued investor anxiety over rising bond yields and falling prices.

Pimco Total Return returned 0.49% in July, Morningstar said, outpacing the 0.14% gain on the benchmark Barclays U.S. Aggregate Bond Index. Pimco is a unit of Germany’s Allianz SE (ALV.XE -0.33%).

The fund is still a laggard this year, hurt by a record quarterly loss of 3.6% between April and June. The fund was down 3.08% in 2013 through Thursday, compared to a loss of 2.84% on the benchmark index, according to Morningstar.

Fears that the Federal Reserve will soon cut back bond purchases have sent funds out of fixed-income assets over the past few months. The benchmark 10-year Treasury yield has risen about 1 percentage point since the start of May. Bond prices fall when their yields rise.

Comment by azdude
2013-08-06 06:56:11

risk on dude, buy some equities. facebook will lead you to riches.

Comment by Whac-A-Bubble™
2013-08-06 06:04:55

Bond funds worldwide suffer $1.6 billion outflow: Bank of America
NEW YORK | Fri Aug 2, 2013 10:38am EDT

(Reuters) - Bond funds worldwide suffered outflows of $1.6 billion in the latest week as investors awaited signs from the Federal Reserve regarding its bond-buying stimulus, data from a Bank of America Merrill Lynch Global Research report showed Friday.

The outflows from bond funds in the week ended July 31 came after investors gave $4.4 billion to the funds the previous week, the report showed, also citing data from fund-tracker EPFR Global.

Over the week, investors awaited Wednesday’s statement from the Federal Open Market Committee regarding the pace of its $85 billion in monthly purchases of Treasuries and agency mortgages. Investors fear a further rise in interest rates if the Fed cuts its stimulus.

Comment by Whac-A-Bubble™
2013-08-06 06:07:16

Bond Funds Swing To Record Outflow On Fed-Taper Fears
Posted 07/30/2013 05:47 PM ET

Still reacting to fears that the Federal Reserve will soon taper its bond buying, investors pulled money out of bond funds at a torrid tempo in June.

Bond funds swung to an outflow of $60.47 billion, a single-month record, passing September 2009’s $48 billion hemorrhage, according to the Investment Company Institute. May’s revised figure was inflow of $12.20 billion.

Comment by Ol'Bubba
2013-08-06 06:15:53

That was a tongue-in-cheek post, wasn’t it?

When bond funds tank they drop in value by 2%-10%. When stock funds tank they drop in value upwards of 50%.

My investments include some balanced “fund of funds” index funds which hold some bond funds. At this point I don’t expect the bonds to provide any upside, but I do expect them to provide some downside protection for the portfolio.

Or is it safe to assume that it’s different this time?

Comment by Bill, just South of Irvine, CA
2013-08-06 06:21:20

PB is being sarcastic here. Yes I have been in bond funds quite awhile. A couple years of going down don’t bother me. I just put another $1,000 into VWESX. As for emerging markets I put in $2,000 the last 35 days into VEMAX. Normally only $2,000 per year.

Comment by 2banana
2013-08-06 06:26:51

I have a pantry full of Jack Daniels…

This investment has yet to go down in value.

Maintenance fees are high…

Comment by Whac-A-Bubble™
2013-08-06 06:16:10

Fed’s Fisher says stimulus tapering should begin this fall
Richard Fisher, president of the Federal Reserve Bank of Dallas, speaks during a House Financial Services Committee hearing in Washington in June. (Andrew Harrer / Bloomberg / June 26, 2013)
By Jim Puzzanghera
August 5, 2013, 11:36 a.m.

WASHINGTON — Federal Reserve policymakers must “gird our loins” to start tapering the central bank’s bond-buying program this fall after the drop in the unemployment rate to 7.4%, a top official said Monday.

Richard Fisher, president of the Federal Reserve Bank of Dallas, likened the central bank’s stimulus efforts to “a monetary Gordian Knot” — a complex tangle of programs that must be “gingerly” unwound to avoid havoc in financial markets.

The process needs to start soon, said Fisher, who in June said the Fed should not live in fear of pulling the plug on what he dubbed “monetary cocaine.”

Comment by Whac-A-Bubble™
2013-08-06 06:18:53

Aug. 6, 2013, 9:10 a.m. EDT
Treasurys fall ahead of $72 billion in new supply
By Ben Eisen

NEW YORK (MarketWatch) — Treasury prices edged down on Tuesday before a series of new auction supply hits the market. The benchmark 10-year note (10_YEAR +0.72%) yield, which moves in the opposite direction as price, rose 1.5 basis point to 2.655%, while the 30-year bond (30_YEAR +0.54%) yield rose 2 basis points to 3.748%, and the 3-year note (3_YEAR +1.34%) yield rose half a basis point to 0.601%. The Treasury Department will sell $32 billion of 3-year notes Tuesday at 1 p.m.

Comment by Whac-A-Bubble™
2013-08-06 06:20:40

Aug. 6, 2013, 8:43 a.m. EDT
U.S. trade gap in June smallest since 2009

Gap falls 22.4% to $34.2 billion; second-quarter GDP boost likely
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The U.S. trade deficit shrank in June to the lowest level since the fall of 2009, a decline likely to give a boost to the nation’s lackluster 1.7% growth figure for the second quarter when it’s revised.

The trade gap plunged 22.4% to $34.2 billion from a downwardly revised $44.1 billion in May, the Commerce Department said Tuesday. Economists surveyed by MarketWatch had forecast the deficit to fall to $43 billion on a seasonally adjusted basis.

Comment by Whac-A-Bubble™
2013-08-06 06:36:15

Massive drop in trade deficit = FASTER GROWTH

Aug. 6, 2013, 9:09 a.m. EDT
Fed’s Lockhart: Don’t rule out Oct. for taper
By Greg Robb

WASHINGTON (MarketWatch) - The initial cut in the Federal Reserve’s bond buying program could come at any of the three remaining policy meetings this year: September, October or December, said Dennis Lockhart, the president of the Atlanta Fed Bank on Tuesday. In an interview with MNI, Lockhart said October should not be ruled out even though Fed Chair Ben Bernanke is not scheduled to hold a press conference after the meeting. Lockhart said he was not disappointed by the July unemployment report and said he’ll be watching data closely for “the next few weeks” to see if the economy is on track for faster growth.

Comment by Whac-A-Bubble™
2013-08-06 08:02:48

There seems to be no lack of “taper talk” these days.

Aug. 6, 2013, 10:40 a.m. EDT
U.S. stock indexes tumble on ‘taper’ talk
By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) — U.S. stocks fell sharply on Tuesday, furthering Wall Street’s retreat from records highs, after one Federal Reserve official reportedly said central-bank reductions in its monthly asset purchases could come as soon as September

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told Market News International the Fed could start curtailing its bond-buying program at any of three remaining Federal Open Market Committee meetings this year.

Lockhart’s comments came ahead of afternoon talk from another Federal Reserve official, Chicago Fed President Charles Evans, which could shed more light on the timeline for changes in the central-bank’s program.

Evans is a “well-known uber dove so his opinion on tapering right now is a big focus,” Peter Boockvar, chief market analyst at the Lindsey Group, emailed of the comments expected at 1 p.m. Eastern.

Comment by Whac-A-Bubble™
2013-08-06 06:38:23

Bond market selloff looks a lot like 1994 and 2003: NY Fed
August 6, 2013, 9:21 AM

As bond yields rose sharply through much of May and June, market-watchers fought back against the notion that 2013 could be a repeat of the dreaded selloff of 1994 (See: Bond market generals fight the last war: 1994).

But despite that resistance, the fraught comparison seems to be taking hold. Tobias Adrian and Michael Fleming, economists at the Federal Reserve Bank of New York, point to 1994 and 2003 selloffs as comparisons to 2013 in a great Monday analysis. They explain:

Returns based on the ten-year, zero-coupon yield (10_YEAR +0.57%) were -9.8 percent for the two-month (forty-two-day) period ending July 5. The decline is large by historical standards, but somewhat smaller than that observed in two-month windows in 1994 (‑12.6 percent), 2003 (-14.4 percent), and other recent periods (for example, -10.3 percent in late 2010).

The year 1994 was considered to be especially painful for bond investors when Federal Reserve Chairman Alan Greenspan hiked interest rates with little notice to the fixed-income markets. Bonds sold off rapidly, the stock markets fell, and knock-on effects were pinned on the downturn, like the bankruptcy of Orange County, Calif.

Comment by Steve J
2013-08-06 09:38:01

Interest rates will not change until Bernake is replaced.

Comment by Housing Analyst
2013-08-06 09:39:37

Doesn’t matter. The long end of the curve is rising with or without him. And that’s all that matters.

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Comment by Whac-A-Bubble™
2013-08-06 17:04:21

Not sure which interest rates you meant, but long-term Treasury yields have been spiraling up since early May with no end in sight.

Treasury Yield Curve Widens as Economic Reports Back Fed Taper
By Susanne Walker
August 06, 2013

The difference in yields on Treasury five-year and 10-year securities reached the widest in almost two years as a narrowing U.S. trade deficit added to signs the economy is recovering as the Federal Reserve considers reducing its bond-buying plans.

Benchmark 10-year notes pared losses as the U.S. sold $32 billion in three-year securities at a yield of 0.631 percent, compared with a forecast of 0.636 percent in a Bloomberg News survey of eight of the Fed’s 21 primary dealers. Fed Bank of Chicago President Charles Evans indicated that a tapering of the central bank’s bond-buying program in September is possible.

“There’s a steepening of the curve,” said Justin Lederer, an interest-rate strategist at Cantor Fitzgerald LP in New York, a primary dealer. “We’re looking at data and we’re seeing what the Fed does. We’ll see if the September tapering is in place or if it gets pushed backed.”

The benchmark 10-year yield climbed one basis point, or 0.01 percentage point, to 2.64 percent at 4:59 p.m. in New York, according to Bloomberg Bond Trader prices. The 1.75 percent note maturing in May 2023 dropped 2/32, or 63 cents per $1,000 face amount, to 92 11/32.

The yield on the current three-year note was little changed at 0.6 percent.

The difference between yields on five-year notes and 10-year Treasuries reached 1.26 percentage points today, touching the widest since September 2011. Historically, a steeper so-called yield curve reflects investors anticipating faster economic growth.

Treasury trading volume at ICAP Plc, the largest inter-dealer broker of U.S. government debt, was $248 billion, down from the average of $316 billion this year.

Volatility in Treasuries as measured by the Merrill Lynch Option Volatility Estimate MOVE Index was 78.18. The figure has fallen from 117.89 on July 5, which the highest level since December 2010.

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Comment by 2banana
2013-08-06 06:07:38

We bombed Yemen four times in the last 10 days?

And the nobel peace prize president told me killed Osama and saved Detroit.

But now Americans are on the run….


Drone strikes kill militants in Yemen; Americans urged to leave ^ | 8/6/2013 | Elise Labott and Mohammed Tawfeeq

A pair of suspected U.S. drone strikes killed four al Qaeda militants in Yemen as the United States maintained a heightened security alert in the country and urged all Americans to leave immediately.

Security sources told CNN about the strikes but didn’t offer additional details. A Yemeni official said four drone strikes have been carried out in the past 10 days.

Comment by goon squad
2013-08-06 06:58:12

yemen is in africa. obama was born in africa. he is our elected commander in chief, and an expert on africa since he grew up there, so america should trust in the leadership of our president.

Comment by yensoy
2013-08-06 09:03:37

Please go to your library and look at an atlas. Or just go to to verify your first statement. Your second statement also has the truth of the first.

Comment by Oxide
2013-08-06 09:18:16

Goon squad has been breathing sarcasm for a few months now.

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Comment by polly
2013-08-06 09:57:03

I think goonie has risen to the level of satire. He isn’t languishing in sarcasm.

Comment by Steve J
2013-08-06 09:39:48

Are there really Americans vacationing in Yemen?

Or is this a warning that any Americans will now be declared hostiles and subject to execution by drone?

Comment by ahansen
2013-08-06 21:56:53

Many Americans are working in Yemen. Big oil. Big money. Big national “security” mercenaries.

Comment by Whac-A-Bubble™
2013-08-06 06:13:43

David Paul
President, Fiscal Strategies Group
President Obama Should Nominate Larry Summers Just for the Spectacle of It All
Posted: 08/06/2013 2:53 am

I would like President Obama to nominate Larry Summers to be the new head of the Federal Reserve Bank.

I do not know anything about Janet Yellen. And truth be told, I really do not know who would be the best candidate for the job.

I can already hear the howls of protest. I know Larry’s history, the warts and all. I have read the diatribes of those outraged by the prospect of his selection, and the fawning commentaries of those lobbying for him. And I have marveled at the fact that this is about the position of Chairman (sic) of the Board of Governors of the Federal Reserve Bank. This is not a position that generally garners much commentary outside of Wall Street and the financial community. And if Larry Summers were not a prospective nominee, no doubt the topic would once again recede to the back pages of the New York Times, if not the front pages of the Journal.

My motivation is different. I just want to watch the confirmation hearings.

It is now a half a decade since the 2008 financial crisis shook the world economy, and a half a decade since the head of the U.S. Federal Reserve Bank effectively became the central banker for the world. Perhaps that is why more people should care about who is appointed to lead the Fed this time around. In a world where D.C. politics have ground to a dysfunctional halt, where the Euro continues to struggle on the precipice of failure, and where the growth rate of China is grinding downward, the head of the Fed has become a figure of global importance. Perhaps in some respects eclipsing that of the President.

And surely no person views himself as more prepared to step out onto that stage, and lead the world through a precarious financial future than Larry Summers.

Comment by phony scandals
2013-08-06 06:23:19

“Surfin Usa”

Since everybody is a suspect
Across the U.S.A.
That’s why they gotta be watchin’
Just what you think and say

We’ll all be gone by the summer
We’re on safari to stay
Tell your friends you got busted
By the NSA

They caught ‘em surfin’ at Del Mar
Ventura County Line
Santa Cruz and Tressels
Australia’s Narabine

All over Manhattan
And down in Tampa Bay
Everybody caught surfin’
By the NSA

We’ll all be planning out a route
We’re gonna take real soon
They’re readin’ all your e-mail

They couldn’t wait for June

We’ll all be gone by the summer
We’re on safari to stay
Tell your family you’re busted
By the NSA

At Haggerty’s and Swami’s
Pacific Palisade
Everybody caught surfin’
By the NSA

Everybody caught surfin’
By the NSA

Everybody caught surfin’
By the NSA

Everybody’s gone

Comment by inchbyinch
2013-08-06 07:24:58

Great lyrics, phony.
Thanks for the tune in my head. lol

What happened to all the
Chinese cash buyers?

Did Blackstone, Colony
and American Homes 4
Rent squeeze them out?

Comment by ahansen
2013-08-06 22:00:05


Comment by Whac-A-Bubble™
2013-08-06 06:41:44

Is there any end in sight to the housing market rally?

Aug. 6, 2013, 8:01 a.m. EDT
Home-price growth near seven-year high
Nevada tops annual gains with rise of 27%; Mississippi, Delaware prices slip
By Ruth Mantell, MarketWatch

WASHINGTON (MarketWatch) — Annual home-price growth in June was close to the fastest pace in seven years, as inventories of existing and new homes remained low, according to data released Tuesday.

Home prices, including distressed sales, rose 1.9% in June, and were up 11.88% from a year earlier, according to CoreLogic (CLGX -0.56%), an Irvine, Calif.-based analysis firm. In May, prices were up 11.93% from the prior year, the fastest annual growth since February 2006.

Excluding short sales and other distressed properties, prices rose 1.8% in June, and were up 10.97% from the year-earlier period, reaching the fastest annual pace since February 2006.

“The U.S. housing market experienced robust price appreciation during the first half of 2013 and our forecast calls for double-digit growth through July,” said Anand Nallathambi, CoreLogic’s chief executive. “Despite their rebound of late, home prices remain reasonable in a historical context, with most states near peak affordability levels.”

Comment by 2banana
2013-08-06 06:51:00

As long as:

obama racks up $1 trillion deficits per year and borrows 49 cents of every dollar it spends
the obama Fed buys $85 billion of QE per month and keeps interest artificially low
the obama fannie/freedie guarantees 90%+of ALL mortgages

the answer is…

housing will keep going up

Comment by Housing Analyst
2013-08-06 07:20:58

“Why get ripped off on a house at theses massively inflated prices? Rental rates are half the monthly cost of buying. Buy later, after prices crater for 70% less.”


Comment by azdude
2013-08-06 07:23:36

rubbish u missed the boat again didnt you. too busy posting about doomsday scenarios?

Comment by Housing Analyst
2013-08-06 07:29:34

“Falling housing prices to dramatically lower and more affordable levels is positive bullish optimism.”

True indeed.

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Comment by phony scandals
2013-08-06 06:59:37

I smell Robo renters.

I don’t have to pay my rent because they can’t prove who my Landlord is.

And that’s gonna lead to RAP A $20 billion (Rent Affordable Program)

Blackstone, Deutsche Bank in Talks to Sell Bond Backed by Home Rentals


July 30, 2013, 3:41 p.m. ET

Two major Wall Street firms are in detailed discussions to create and sell the world’s first bond backed by home-rental payments, people familiar with the matter say.

Blackstone Group LP BX -0.14%is in negotiations to bundle monthly rental payments on about 1,500 to 1,700 of its homes. The private-equity giant is among the firms that have spent billions buying homes out of foreclosure, an investment strategy that has helped to bolster demand and strengthen the U.S. housing market.

The bond comprised of the Blackstone homes would be structured and marketed to investors by Deutsche Bank AG, DBK.XE -1.07%the people say.

The creation of a new type of security shows that Wall Street’s financial engineering, blamed for deepening the financial crisis, is revving back up.

Some investors and analysts have said they are wary of a bond backed by rental payments, citing the dearth of long-term data on how often tenants living in previously foreclosed homes pay their rent on time

Also, some investors and analysts have raised concerns about how quickly firms have purchased thousands of homes, and whether they have the management track record and expertise to oversee the maintenance of properties scattered across the country.

But investors still are hungry for the high returns that are likely to accompany a first-of-its-kind deal, which would be viewed as more risky than well-known securities. - 231k

Comment by AbsoluteBeginner
2013-08-06 09:18:36

‘Two major Wall Street firms are in detailed discussions to create and sell the world’s first bond backed by home-rental payments, people familiar with the matter say.’

A company for carrying on an undertaking of great advantage, but nobody to know what it is.

Comment by Beer and Cigar Guy
2013-08-06 11:22:39

Ahhh, yes….. The South Seas again. Count me in!

Comment by Whac-A-Bubble™
2013-08-06 20:25:00

What will happen to the value of said bonds when rents drop, due to an unprecedented number of real estate investors who bought residential properties with a plan to rent them out for profits?

Comment by goon squad
2013-08-06 07:10:48

bailouts are coming, the free sh1t army demands it

wall street journal - many can’t pay student loans:

‘just four in 10 borrowers with direct federal student loans are paying them back, according to a report released monday that offers the first comprehensive snapshot of the program since the government created it in 2010 … excluding borrowers who don’t yet have to make payments because they are still in school or within the grace period, more than a fifth — 22 percent — are in default or forbearance.’

Comment by goon squad
2013-08-06 07:27:48

If you take out student loans to study STEM, nursing, accounting, etc, no bailouts for you.

If your degree is in Black Studies, Latino Studies, Womyn Studies, Gender Studies, LGBT Studies, you get a bailout and a free Obamaphone.

If your degree is from a bottom tier law school, you get a bailout and a job at the Justice Department.

If your degree involved reading books written by dead white males, no bailout for you, and you will be sent to the Re-Education Camp to have all those racist thoughts purged from your brain.

Comment by Steve J
2013-08-06 09:41:52

College == job training.

Comment by jose canusi
2013-08-06 09:46:49

priceless, goon, thank you!

Comment by aNYCdj
2013-08-06 15:59:58

Little by little maybe turning in your degree in exchange for cancelling your debt might happen.

And then the employers would be able to discriminate against and fire those who didn’t have a valid degree….

Lots of ads on CL say MUST (in capitals) have a 4 year degree… you wouldn’t even be able to apply for those jobs…..

Comment by Housing Analyst
2013-08-06 07:13:45

“Hold on to your cash because you’re going to need it.”

Comment by azdude
2013-08-06 07:24:49

ben will turn your cash into trash. you have to be in risk assets.

Comment by Housing Analyst
2013-08-06 07:26:43

You in particular will need it more than anyone. lmao.

Comment by azdude
2013-08-06 07:39:19

it is nice to have equity.

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Comment by Housing Analyst
2013-08-06 07:52:38

“Equity” doesn’t exist. Cash does.

Comment by goon squad
Comment by Housing Analyst
2013-08-06 07:15:26

San Francisco Bay Area Rental Rates Crumble 5%

Comment by Housing Analyst
2013-08-06 07:19:40

“A ‘housing recovery’ is falling housing prices to dramatically lower and more affordable levels by definition.”

Considering housing prices were never allowed to correct to the long term price trend, it appears housing hasn’t recovered. Nor will it recover…… until prices fall to dramatically lower and more affordable levels.

Comment by Housing Analyst
2013-08-06 07:23:47

“Housing Prices Crater 11% In Exclusive Los Angeles Neighborhoods”

Comment by azdude
2013-08-06 07:40:44

more cherry picked data today?

Comment by Housing Analyst
2013-08-06 07:59:26

“Housing Prices Crater 11% In Exclusive Los Angeles Neighborhoods”

That’s what happens when prices are grossly inflated.

Look out below.

Comment by inchbyinch
2013-08-06 07:30:47

Ms Yellen vs. Mr Summers.
Whac posted a great find yesterday.
Thank you, Whac.

Comment by Beer and Cigar Guy
2013-08-06 11:24:01

Meh. Thing1 and Thing2.

Comment by phony scandals
2013-08-06 07:40:06

Do You Live In The Constitution-Free Zone Of The US?

Earlier this week, we wrote about the latest defense by Homeland Security of their laptop search policies that (they claim) give them broad coverage to search laptops within 100 miles of the border. The latest bit of news was that an internal review found that there was minimal benefits to one’s civil liberties in not searching their laptops, so it was okay (think about that sentence for a bit).

The 100 mile “buffer zone” part of that story gets most of the attention, but it isn’t a new thing. They’ve been claiming that for a while. It’s just that this is yet another attempt by them to give themselves additional support for those kinds of searches. In our comments, someone pointed us to a useful (and horrifying) map that the ACLU put together highlighting just how much of our country is within 100 miles of border/coastline, creating the Constitution-Free Zone Map — which happens to cover about 2/3 of all American citizens. - 367k

Comment by phony scandals
2013-08-06 08:19:26

You put the The Constitution-Free Zone map together with the Wildlands Project map and you don’t have 2/3 of all American citizens in the Constitution-Free Zone, you have 3/3.

UN Agenda 21: Environmental Piracy

By Dr. Ileana Johnson Paugh
Tuesday, September 18, 2012

I am not sure when subsequent generations, our children, grandchildren, and great-grandchildren will no longer be permitted access in zones marked off-limits to human habitation and trespassing in accordance with the dictates of UN Agenda 21 and the now infamous Wildlands Project map.

President Bill Clinton facilitated President Herbert Walker Bush’s initial commitment by signing an executive order which created the President’s Council on Sustainable Development to translate UN Agenda 21 into U.S. public policy under the guise of ecosystem management.

One World Governance in the name of protecting the environment, racial justice, and social justice/equity is a communist system that redistributes wealth and promotes universal health care as a human right.

Harvey Rubin, the Vice Chair of ICLEI, proclaimed his vision of a communistic sustainable world in which “Individual rights must take a back seat to the collective.”

One World Governance will control:

•Energy production, delivery, distribution, and consumption via Smart Grid, Smart Meters, and Renewable/Clean/Green resources
•Food growth and production via FDA regulations, and Codex Alimentarius
•Education control via a curriculum centered on environment and Mother Earth and global citizenship (i.e., No Child Left Inside Act in Maryland)
•Water through irrigation denial in agriculture, home use, recreation activities; destruction of dams and reservoirs; abolishing hydroelectric generation use of water as a contributor to the now discredited theory that greenhouse gases cause global warming

•Land control through abolishing of private property
•Finances (one world currency to replace the U.S. dollar as the world’s reserve currency)
•De-population (restructuring the family unit and reducing population to “manageable levels” through sterilization and eugenics)
•No borders/no sovereignty
•No national language and culture (a multi-cultural hodgepodge devoid of a nation’s history, and shameless promotion of global citizenship)
•Mobility restriction to 5 minutes-walk/bike from work, school, shopping
•Longer distance travel through rail use
•Homestead by stacking people in high-rise tenements in order to designate formerly privately owned land for wildlife habitat

The One World Governance of the UN Agenda 21 requires that every societal decision be based on the environmental impact on global land use, global education, and global population control and reduction. They have deemed “not sustainable” most human activities that form our modern civilization: private property, fossil fuels, consumerism, farming, irrigation, commercial agriculture, pesticides, herbicides, farmlands, grazing of livestock, paved roads, golf courses, ski lodges, logging, dams, reservoirs, fences, power lines, suburban living, and the family unit. - 43k -

Comment by goon squad
2013-08-06 08:52:55

What’s wrong with depopulation?

The planet has too many eaters already.

Comment by 2banana
2013-08-06 07:42:50

That is one cool house.


Eco-couple told to pull down their ‘hobbit home’ made entirely out of natural materials
dailymail | 1 August 2013 | By Stuart Woledge

Eco-couple told to pull down their ‘hobbit home’ made entirely out of natural materials . . . but without planning permission

Family of three is made homeless by planning inspector’s decision They built their home from scratch, but have been ordered to tear it down The couple admit they built it without first getting planning permission Their labour of love was branded ‘harmful’ to the countryside

A young couple have been left heartbroken after planners ordered their unique ‘hobbit home’ to be bulldozed, effectively leaving them homeless.

Charlie Hague and Megan Williams, both 25, built the roundhouse from scratch with their own hands, using only natural materials.

But the couple lost their appeal today against a planning enforcement notice telling them to tear their pride and joy home down.

Charlie and Megan, who have a one-year-old son Eli, built the house on private land in Glandwr, North Pembrokeshire, last summer.

Locals nicknamed it the hobbit home, although most people did not even know it was there because it is so secluded.

But Pembrokeshire County Council ordered the couple to demolish their home because it was built without planning permission.

Comment by Steve J
2013-08-06 09:43:28

Failure to obtain permits is always a failure.

Comment by AbsoluteBeginner
2013-08-06 09:51:15

Can’t Jeff Bezos buy it and have some hobbits work out of it as an Amazon warehouse?

Comment by Housing Analyst
Comment by Whac-A-Bubble™
2013-08-06 07:59:14

Watch out below for falling BRICs.

Aug. 6, 2013, 10:47 a.m. EDT
HSBC: Emerging market output shifts to contraction
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By Barbara Kollmeyer

MADRID (MarketWatch) — Manufacturing output for the major emerging market countries, Brazil, Russia, India and China, showed contraction for the first time since April 2009, according to the HSBC Emerging Markets Index released Tuesday. The index fell to 49.4 in July from a prior 50.6, the first time it has dropped below 50 in over four years, indicating an “overall contraction of output in global emerging economies,” said HSBC. July data also signalled a decline in new business for the first time in over four years. “Emerging markets are not yet feeling a lift from stabilizing demand in the United States, Europe, and Japan,” said Frederic Neumann, co-head of Asian economic research. “There are signs that domestic headwinds are stiffening as well.” He said the main risk for emerging markets is that the cyclical downturn in manufacturing and softer service-sector activity will lead to a weak job market, which could weigh on household spending.

Comment by Whac-A-Bubble™
2013-08-06 08:08:22

Buy now, or get priced out forever!

First-time home buyers face difficulties
Justin Sullivan/Getty Images
New homes are seen at the Pulte Homes Fireside at Norterra-Skyline housing development on March 5, 2013 in Phoenix, Arizona.
by Andrea Gardner
Marketplace Morning Report for Tuesday, August 6, 2013

President Obama will speak in Phoenix today, talking up homeownership for the middle class. But there is tension between Obama’s message and the reality for many first time home buyers in the area who are facing low inventory, rising prices, and competition from investors.

In the month of June, 24 percent of homes in Phoenix’s Maricopa County were bought by investors, who often use cash to flip the properties or rent them. According to real estate researcher Michael Orr from Arizona State University, investors are interested in mostly inexpensive properties, buying 42 percent of the homes that sold for less than $150,000 in June.

“If you want to make a certain cash-on-cash return, the most favorable areas are the cheapest, where you can buy very inexpensive homes, but you still get quite a decent rent out of them,” Orr said, explaining why inexpensive property appeals to investors who intend to become landlords.

For this reason, first time home buyers often find themselves competing with investors for homes in the lower-price ranges. And with small down payments and the baggage of an FHA loan, these first time buyers are often struggle to have their offers considered by sellers or are outbid, said Phoenix realtor Renee Slagter.

There’s a lot of frustration because they know that if they wait too long they will no longer be able to afford a home in this market,” she said.

Slagter and Orr say higher inventory would stabilize prices, and construction is picking up in Phoenix, however most new homes being built are aimed at higher-priced buyers.

Comment by Housing Analyst
2013-08-06 08:29:57

Remember….. Orr is paid to distort the truth about housing.

Comment by AnonyRuss
2013-08-06 18:01:05

“There’s a lot of frustration because they know that if they wait too long they will no longer be able to afford a home in this market,” she said.

I am glad that Phoenicians learned their lesson about the perils of a housing bubble mentality.

Comment by Whac-A-Bubble™
2013-08-06 08:10:56

Beware the FB sell signal!

Aug. 6, 2013, 6:00 a.m. EDT
The Facebook indicator says sell
Commentary: Social network’s stock gauges an overheated market
By David Weidner, MarketWatch

SAN FRANCISCO (MarketWatch) — Do you use Facebook to keep tabs on your friends, family and the latest entertainment and news?

Well, there’s more. Facebook Inc.’s (FB -2.60%) stock is also useful. Not only can it tell you whether the social media site is overvalued, it hints at the same over-exuberance in the broader stock market.

And guess what? What it’s saying now ain’t pretty.

Comment by Housing Analyst
2013-08-06 08:20:39

“Home Affordability: Prices Are Still 40% Higher Than ‘Normal’”

Just think how massively inflated current asking prices of resale housing is in light of the fact they were 40% overpriced in 2010.

“If you pay current asking prices for resale housing, you’re going to lose alot of money. ALOT of money.

Comment by Housing Analyst
2013-08-06 08:28:06

Considering construction costs (material, labor, profit) is $55/sq ft, If you’re paying more than 35-$40/sq ft for a used house, you’re getting ripped off.

Comment by goon squad
Comment by Steve J
2013-08-06 09:44:48

Obama really screwed up big time when he set up those pensions 80 years ago.

Comment by goon squad
2013-08-06 10:03:32

Chicago is a cesspit of Democrat party corruption and mismanagement.

And Obama was there when Chris Farley overdosed in his Chicago apartment in 1997. Obama cooked up the fatal speedball shot that killed him.


Comment by jose canusi
2013-08-06 09:53:16

lol, the next Detroit. They’re keeping the flash mob news under wraps as much as they can, but the YouTube eye in the sky sees all.

Poof! Poof! Poof!

Speaking of poof, didja see where Obama sent Lindsey Graham and John McCain to Egypt on a “diplomatic” mission to comfort Morsi and maybe negotiate his freedom? You have to wonder what Obama’s reasoning is behind this, but I’m pretty sure he wants them out of the way, stirring up trouble elsewhere besides the US. Kinda like how he had Hillary flying all over.

Will the two depraved gangstas return to the US? Stay tuned.

Comment by goon squad
2013-08-06 10:07:25

The flash mobs assaulting and robbing whites, Asians, Hispanics on the Magnificent Mile are non-existent in the bedwetter media.

Comment by Steve W
2013-08-06 11:08:03

Ehh, it’s been quiet lately. The occasional idiot crime. It’s Chicago.
The only people assaulting me on my daily walk to and from work down the Mag Mile are the fricking hateful amnesty international/greenpeace/children international clipboard holders that Won’t Get Out Of My Way When I’m Trying To Get Home.

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Comment by Steve J
2013-08-06 12:40:06

Amazing how two Republicans think enough of Obama to do his bidding like that. Especially John McCain, as I never thought he went anywhere a donor wasn’t paying for.

Comment by Housing Analyst
2013-08-06 09:45:17

“Mortgage delinquencies take a sharp turn up”

And they’ll continue rising for as long as transactions occur at massively inflated prices.

Comment by Rental Watch
2013-08-06 19:47:25

Wait, that data was from LPS (a source I often quote), according to you , aren’t they untrustworthy? Or, since this data matches with your world view, do you agree with it?

You forgot to mention that a Q1 to Q2 uptick in delinquencies has happened 17 times in the last 19 years, and that the uptick from Q1 to Q2 2013 uptick is BELOW average in size.

You also forgot to mention that serious delinquencies are continuing to trend downward.

Go to the source, don’t listen to Diane Olick. Just Google “LPS Mortgage Monitor” and read the June report.

Comment by Housing Analyst
2013-08-06 20:05:43

No. It’s YOU that is untrustworthy but we already knew that.

Comment by cactus
2013-08-06 10:16:25

The only Deflation we are going to see here in America is our Standard of living

“Consumer spending in Brazil, Russia, India and China accounted for 8.1 percent of global gross domestic product in 2010, according to IHS Global Insight. It is expected to reach 12 percent by 2015. U.S. consumption as a percentage of GDP peaked at 22 percent in 2002 and is expected to be roughly 14 percent by 2015.

That emerging middle class pushes prices higher, because there are more people vying for resources and products. Rising wages, which help create a middle class, also inflate prices because goods are more expensive to produce, Plunkett said.

“The long-term effect is going to be pretty dramatic,” he said.

Consumers are likely to notice first-and may have noticed already-with basic items such as groceries and gasoline.

“When people get a higher income, they want to eat more meat,” said Chris Christopher, an economist with IHS Global Insight. Prices for a pound of ground chuck and whole chicken are up 20 percent and 28 percent, respectively, in the past five years, according to the Bureau of Labor Statistics.

Comment by Housing Analyst
2013-08-06 11:15:44

Considering were in a deflationary spiral, are you on another planet?

Comment by Steve J
2013-08-06 12:42:12

I know right? I mean gasoline is only $1/gallon and my prescription drugs are almost free. I saw Harvard just cut the cost of tuition back to $1k a year.

Comment by Housing Analyst
2013-08-06 18:05:47

That’s not deflation. *Learn* the difference.

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Comment by Lou camm
2013-08-06 10:28:28

Is your housing market hot or not- it all comes down to the employment market

Comment by Housing Analyst
2013-08-06 11:13:28

Hey liar, there is no employment that will rationalize current grossly inflated asking prices.

BTW, MW will never recover its former glory.

Comment by Patrick
2013-08-06 10:33:22

If over 90% of all mortgages are insured by F&F then why don’t the banks just foreclose on the shadow inventory; get their money out -
could their liquidity be that bad that they cannot absorb a 5% loss ? Has F&F set a quota ?

Something is really amiss.

Does anyone believe the Dow will continue upwards when QE ends ? Crash ?

Deficits, Shadow Inv., bubble stocks, interest hikes, mediocre economy, huge distortions (pensions, etc), bankrupt cities, - not like the old days.

Time to make sure you have no debts and a very stable customer list.

Comment by Steamed Bean
2013-08-06 13:34:33

F&F don’t do second liens. The big banks have tons of second liens on their balance sheets. If they foreclose on the first, the second gets written off too and loss severities would be close to 100% on those loans. During the height of the madness, most new loans were done 80/20, 80% LTV first and 20% LTV second with no money down by the buyer.

Comment by Patrick
2013-08-06 17:09:57

Steamed Bean

I thought F&F insured the banks for their mortgage lending operations, much like we have here in Canada with CMHC, etc.

Do you mean that the banks lent 80% on a first mortgage and then 20% on a second mortgage LTV and kept all of the loans on their books without insuring them ? In Canada we would call that a Wrap Around Mortgage.

Although it is hard to see them losing 100% I would imagine, eg condos, that if they just walked away they really would lose 100%.

Comment by Steamed Bean
2013-08-07 06:12:02

The 80% first lien is sold to F&F, not held on balance sheet. F&F guarantees repayment. The banks hold the 20% second lien.

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Comment by Patrick
2013-08-07 08:41:30

Steamed Bean

Thank you. Was the 80% loan actually sold to FF or was it bundled with others and sold to X by Y with Y reselling to Z, etc and the individual 80% loans insured by FF ?

I always thought that the mortgage when taken out was insured instantly (with a fee) by FF in over 90%.

I can see that with 20% at stake a better reason for the banks to be reluctant to foreclose. A fully insured mortgage in Canada can go to 95%.

Comment by Steamed Bean
2013-08-07 09:06:44

The 80 LTV loan is sold to F&F. F&F package groups of similar loans into mortgage securities and sell them as Agency Pass-Through securities to investors. The securities are a huge part of the U.S. bond market representing $5-$6 trillion in aggregate market value. F&F guarantees the performance of the loans to the investors in the securities. If a loan in the pool defaults, F&F pays the loan off in full so the security does not experience a loss. The default essentially looks like a prepayment. F&F collect a fee for doing this. for example, they combine loans with a 4% mortgage rate into a pool that pays a 3.5% coupon to investors. F&F clip the .5% as a servicing and guarantee fee.

Comment by Patrick
2013-08-07 16:30:11

Steamed Bean

Wow, have you ever opened my eyes. Of the 21 primary dealers, three are Canadian. I understand that 40 B a month is going toward the purchase of these securities, handled by these dealers - plus the private market.

This could mean that we Canadians might have a serious contingent liability on US mortgages - even though we do not originate them, guarantee them, or even factor them. We simply sell them ! With all the representations that go with it !

Steamed Bean, if you ever come up to Canada (west of Toronto area) let me buy you a coffee. Thank you for clarifying this topic better. What part of the States are you at?

Comment by Steamed Bean
2013-08-08 11:26:35


Remember, the Fed is currently buying 40b a month in mortgage securities as part of its QE program so I don’t think the canadien banks are holding the contingent liability. Even if the cad banks are holding agency mortgage securities, the guarantee from F&F is currently an explicit guarantee of the U.S. govt as the Obama admin granted F&F unlimited financial support in a little publicized order issued on x-mas eve, 2009 just before the previous $400 billion of financial supprt was to expire on 12/31/2009.

I’m in Minneapolis. If I make it to Toronto I’ll let you know. I get to T-bay once in awhile.

Comment by Patrick
2013-08-08 14:03:04

Steamed Bean

Thank you for your advice. I, too, am in Thunder Bay occasionally on business.

If you do come to TO (Toronto) please come when there is a hockey game (doesn’t matter who wins) or when the Blue Jays are slated for winning (seldom).

Comment by spook
2013-08-06 14:51:50

Whats going to happen if white people don’t have a secret plan to fix the economy?

The more I understand about it, the less I want to know.

Now get to work!

Comment by Carl Morris
2013-08-06 15:01:02

Whats going to happen if white people don’t have a secret plan to fix the economy?

They don’t, unless by “white people” you actually mean TPTB. In which case their plan is to gather up all the resources for themselves and then isolate themselves from the rest of us just far enough to be safe but still use us for slave labor. So the economy they save will be theirs, not ours.

Comment by phony scandals
2013-08-06 16:14:22

“In which case their plan is to gather up all the resources for themselves and then isolate themselves from the rest of us just far enough to be safe but still use us for slave labor.”

Don’t be silly. Why if they were going to do that they would need a seed vault or something.

“Doomsday Seed Vault” in the Arctic -

Bill Gates, Rockefeller and the GMO giants know something we don’t

On this God-forsaken island Bill Gates is investing tens of his millions along with the Rockefeller Foundation, Monsanto Corporation, Syngenta Foundation and the Government of Norway, among others, in what is called the ‘doomsday seed bank.’ Officially the project is named the Svalbard Global Seed Vault on the Norwegian island of Spitsbergen, part of the Svalbard island group.

The seed bank is being built inside a mountain on Spitsbergen Island near the small village of Longyearbyen. It’s almost ready for ‘business’ according to their releases. The bank will have dual blast-proof doors with motion sensors, two airlocks, and walls of steel-reinforced concrete one meter thick. It will contain up to three million different varieties of seeds from the entire world, ‘so that crop diversity can be conserved for the future,’ according to the Norwegian government. Seeds will be specially wrapped to exclude moisture. There will be no full-time staff, but the vault’s relative inaccessibility will facilitate monitoring any possible human activity.

Did we miss something here? Their press release stated, ‘so that crop diversity can be conserved for the future.’ What future do the seed bank’s sponsors foresee, that would threaten the global availability of current seeds, almost all of which are already well protected in designated seed banks around the world?

Anytime Bill Gates, the Rockefeller Foundation, Monsanto and Syngenta get together on a common project, it’s worth digging a bit deeper behind the rocks on Spitsbergen. When we do we find some fascinating things.

The first notable point is who is sponsoring the doomsday seed vault. Here joining the Norwegians are, as noted, the Bill & Melinda Gates Foundation; the US agribusiness giant DuPont/Pioneer Hi-Bred, one of the world’s largest owners of patented genetically-modified (GMO) plant seeds and related agrichemicals; Syngenta, the Swiss-based major GMO seed and agrichemicals company through its Syngenta Foundation; the Rockefeller Foundation, the private group who created the “gene revolution with over $100 million of seed money since the 1970’s; CGIAR, the global network created by the Rockefeller Foundation to promote its ideal of genetic purity through agriculture change.

CGIAR and ‘The Project’

As I detailled in the book, Seeds of Destruction1, in 1960 the Rockefeller Foundation, John D. Rockefeller III’s Agriculture Development Council and the Ford Foundation joined forces to create the International Rice Research Institute (IRRI) in Los Baños, the Philippines. By 1971, the Rockefeller Foundation’s IRRI, along with their Mexico-based International Maize and Wheat Improvement Center and two other Rockefeller and Ford Foundation-created international research centers, the IITA for tropical agriculture, Nigeria, and IRRI for rice, Philippines, combined to form a global Consultative Group on International Agriculture Research (CGIAR).

CGIAR was shaped at a series of private conferences held at the Rockefeller Foundation’s conference center in Bellagio, Italy. Key participants at the Bellagio talks were the Rockefeller Foundation’s George Harrar, Ford Foundation’s Forrest Hill, Robert McNamara of the World Bank and Maurice Strong, the Rockefeller family’s international environmental organizer, who, as a Rockefeller Foundation Trustee, organized the UN Earth Summit in Stockholm in 1972. It was part of the foundation’s decades long focus to turn science to the service of eugenics, a hideous version of racial purity, what has been called The Project.

To ensure maximum impact, CGIAR drew in the United Nations’ Food and Agriculture Organization, the UN Development Program and the World Bank. Thus, through a carefully-planned leverage of its initial funds, the Rockefeller Foundation by the beginning of the 1970’s was in a position to shape global agriculture policy. And shape it did.

Financed by generous Rockefeller and Ford Foundation study grants, CGIAR saw to it that leading Third World agriculture scientists and agronomists were brought to the US to ‘master’ the concepts of modern agribusiness production, in order to carry it back to their homeland. In the process they created an invaluable network of influence for US agribusiness promotion in those countries, most especially promotion of the GMO ‘Gene Revolution’ in developing countries, all in the name of science and efficient, free market agriculture.

Genetically engineering a master race?

Now the Svalbard Seed Bank begins to become interesting. But it gets better. ‘The Project’ I referred to is the project of the Rockefeller Foundation and powerful financial interests since the 1920’s to use eugenics, later renamed genetics, to justify creation of a genetically-engineered Master Race. Hitler and the Nazis called it the Ayran Master Race.

The eugenics of Hitler were financed to a major extent by the same Rockefeller Foundation which today is building a doomsday seed vault to preserve samples of every seed on our planet. Now this is getting really intriguing. The same Rockefeller Foundation created the pseudo-science discipline of molecular biology in their relentless pursuit of reducing human life down to the ‘defining gene sequence’ which, they hoped, could then be modified in order to change human traits at will. Hitler’s eugenics scientists, many of whom were quietly brought to the United States after the War to continue their biological eugenics research, laid much of the groundwork of genetic engineering of various life forms, much of it supported openly until well into the Third Reich by Rockefeller Foundation generous grants.2

The same Rockefeller Foundation created the so-called Green Revolution, out of a trip to Mexico in 1946 by Nelson Rockefeller and former New Deal Secretary of Agriculture and founder of the Pioneer Hi-Bred Seed Company, Henry Wallace. - -

Comment by ahansen
2013-08-06 22:17:02

You know, jetro, we can all go to infowars ourselves when we need a dose of conspiracy porn. Hows about we stick to more germane topics and you start your own blog if you’re so interested in logical overreach?

At the very least, can you have the courtesy to summarize and just post the link? Your daily hijacking of Ben’s blog/wasting his bandwidth is getting a bit tedious, even to longtime ct-buff, me.

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Comment by spook
2013-08-06 16:53:17

Well thats just great Carl, but I can’t tell black people that!

What about some white magic? Can’t ya’ll predict an eclipse or somethin?

Come on man, work with me on this!

Comment by phony scandals
2013-08-06 17:54:43

“Can’t ya’ll predict an eclipse or somethin?”

I predict a total solar eclipse that will be visable in parts of Europe, parts of Asia, Africa, parts of North America, parts of South America, Pacific, Atlantic and Indian Oceans on Nov 3, 2013 - 32k -

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Comment by samk
2013-08-06 17:04:53

Just spitballin’, but…what if we actually started making stuff?

Comment by walt behrens
2013-08-06 15:06:19

Newt says he made mistake about Afghan and iraq. Sorry bout that.


Comment by walt behrens
Comment by prayer walker
2013-08-06 16:56:05

I think this is huge. I was expecting this in Bush’s second term….nonetheless I am happy to hear that some neocons are openly doubting the last decade.

On other note, when do you think they will accept that the Fed’s policies are ruining the middle class and transferring wealth from masses to the elites few?

Comment by samk
2013-08-06 17:07:12

I heard chicken and beef are going up because people are making so much more money these days.

Comment by ahansen
2013-08-06 22:19:21

Newt “rethinks” his political affiliations every time a new election cycle comes around. He’s a bigger slut than McGraham.

Comment by Bill, just South of Irvine, CA
2013-08-06 19:10:09

Whoo boy! The Obama lovers on this blog missed a good one

Am I ever so glad I’m renting. Like his predecessor, Obammy is pushing for an “ownership society.”

Doublespeak “debtor society.”

Comment by Whac-A-Bubble™
2013-08-06 21:44:12

Obama FHFA Pick Mel Watt’s Radical Vision For Fannie
Posted 07/26/2013 08:05 AM ET

President Obama announces his nominee for the Federal Housing Finance Authority director, Rep. Mel Watt, on May 1, 2013, at the White House. AP

A pre-crisis bill written by Democratic Rep. Mel Watt — President Obama’s nod to run the Federal Housing Finance Agency — reveals that his ideas for regulating Fannie Mae and Freddie Mac are more radical than he lets on.

On the eve of the financial crisis, Watt actually proposed the creation of the regulatory agency he now seeks to run — only, he designed it not to reform Fannie and Freddie but to pressure them to underwrite even more affordable housing, exposing them to even more risk.

The bill he co-sponsored with then-banking panel Chairman Barney Frank — the Federal Housing Finance Reform Act of 2007 — would have forced the federally backed mortgage giants to meet even tougher quotas for affordable lending, while contributing to an “Affordable Housing Fund” to rebuild blighted urban areas.

The real benefit of this bill is that it will provide a big stimulus for more affordable housing,” Watt said at the time, ignoring concerns the agencies already were overexposed to low-income loans.

Such affordable housing quotas, set by the Department of Housing and Urban Development, led to the insolvency and $188 billion taxpayer bailout of Fannie and Freddie, now nationalized and under the control of the Federal Housing Finance Agency.

As President Obama’s nominee to head FHFA, Watt has dodged questions about what he would do at the helm of the powerful agency. A career politician once voted the most liberal member of Congress, Watt has gone on a charm offensive to win over Senate Republicans, who have expressed strong reservations about his pick and plan to block a floor vote on his nomination.

During a recent Senate confirmation hearing, Republicans complained Watt offered few specifics in response to questions about his plans for Fannie and Freddie.

Comment by Whac-A-Bubble™
2013-08-06 23:28:43

The Democratic party’s housing policy involves getting po’ folks on the hook for mortgage debt they will never, ever be able to repay, then coming to their rescue when they default and face foreclosure.

Comment by Whac-A-Bubble™
2013-08-06 21:37:14

After years of wondering how the likes of Yahoo, Google, Facebook and other internet companies made money, I finally get it: They are in the spying business.

Russia seeking Snowden’s help on data security
Russia’s upper house of parliament is planning to ask former NSA contractor Edward Snowden to advise the country on improving Internet privacy and security.
By Fred Weir, Correspondent / August 6, 2013

In this video still image taken Thursday, Aug. 1, 2013 and made available Sunday Aug. 4, 2013, by Russia24 TV channel, US National Security Agency leaker Edward Snowden, third right, is shown as he leaves Sheremetyevo airport outside Moscow with his Russian lawyer Anatoly Kucherena, second right, on Thursday, Aug. 1, 2013.

The upper house of Russia’s parliament will invite ex-National Security Agency (NSA) contractor Edward Snowden to participate in a probe of how the privacy of Russian citizens is being violated by big Internet companies who, according to Mr. Snowden, allow the personal data of users of Facebook, Yahoo, Google, and other big global Internet companies to be accessed by a “third party.”

Snowden, who was granted temporary asylum in Russia last week, may soon find himself acting as “Exhibit A” in a concerted Russian effort to beef up national electronic security and assert something lawmakers are calling “digital sovereignty” in the wake of the recent revelations about NSA Internet-snooping around the world.

Comment by Whac-A-Bubble™
2013-08-06 22:00:06

The DOD folks in my circle are suffering under the furloughs.

Romney warns against gov’t shutdown
AP 7:35 p.m. EDT August 6, 2013
In a Tues. speech, former Republican presidential candidate Mitt Romney warned of the negative consequences of government shutdown, a strategy GOP politicians angry with Obamacare have proposed.

WOLFEBORO, N.H. (AP) — Former Republican presidential nominee Mitt Romney jumped into the debate over the GOP’s future Tuesday night, warning congressional Republicans against forcing a government shutdown in their quest to stop President Barack Obama’s signature health care law.

Romney addressed more than 200 donors on the shores of Lake Winnipesaukee at a fundraiser for the New Hampshire Republican Party, staged just four miles from the vacation home where he has spent much of the summer with his family. The event was closed to the media, but his office released his prepared remarks.

Romney, 66, warned congressional Republicans against letting emotions drive their decisions.

“I badly want Obamacare to go away, and stripping it of funds has appeal. But we need to exercise great care about any talk of shutting down government,” Romney said in the first speech of its kind since his November election loss to Obama. “What would come next when soldiers aren’t paid, when seniors fear for their Medicare and Social Security, and when the FBI is off duty?”

He continued: “I’m afraid that in the final analysis, Obamacare would get its funding, our party would suffer in the next elections, and the people of the nation would not be happy. I think there are better ways to remove Obamacare.”

Comment by Whac-A-Bubble™
2013-08-06 23:44:40

Mortgage market must remain too-big-to-fail, post-Fannie Mae and Freddie Mac.

ft dot com
August 6, 2013 10:33 pm
Obama says private lending should be ‘backbone of housing market’
By Stephanie Kirchgaessner in Washington and Stephen Foley in New York
US President Barack Obama speaks on home ownership for the middle class at Desert Vista High School on August 6 2013 in Phoenix, Arizona

Barack Obama called for the protection of the 30-year-mortgage, a fixture of the “American dream” of home ownership since the Great Depression, whose future is uncertain amid calls for the government to minimise its role in housing finance.

“We should preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage. That’s something families should be able to rely on when they make the most important purchase of their lives,” the US president said in a speech in Phoenix, Arizona, a city that was devastated by the mortgage crisis.

Mr Obama endorsed a bipartisan effort in the Senate to wind down Fannie Mae and Freddie Mac, the two mortgage giants that were bailed out in 2008, and called on private investors to take a bigger role in the mortgage market.

“I know that must sound confusing to the folks who call me a raging socialist every day,” he said. “But I believe that while our housing system must have a limited government role, private lending should be the backbone of the housing market.”

There is a rare political consensus among Democrats and Republicans in the Senate on the need for the US to allow the private sector to take the lead in accepting mortgage risk. But the question dividing lawmakers is the extent to which the government should serve as a backstop to provide catastrophic reinsurance on some mortgages in the event of a crisis.

Comment by Whac-A-Bubble™
2013-08-06 23:51:24

20 Cities That May Face Bankruptcy After Detroit
Tuesday, 06 Aug 2013 09:23 PM
By Steve Moore

Think Motown is the only major U.S. city in a boatload of financial trouble? Think again.

Detroit’s bankruptcy filing sent shivers down the spine of municipal bondholders, government employees, and big-city urban residents all over the country.

That’s because many of the 61 largest U.S. cities are plagued with the same kinds of retirement legacy costs that sent Detroit into Chapter 9 bankruptcy this summer.

These cities have amassed $118 billion in unfunded healthcare liabilities. These are legal promises to pay healthcare benefits to municipal workers beyond the employee contributions to finance those funds. This is a giant fiscal sink hole — and because of defined benefit plans, the hole keeps getting deeper.

Detroit may be the largest city in American history to go bankrupt, but it is not alone. The city raced to the financial insolvency finish line before anyone else in its class.

Keep an eye on “too big to fail” cities like Chicago, Philadelphia, and New York.

According to an analysis by the Manhattan Institute, several Chicago pension funds are in worse financial shape than the worker pensions in Detroit. One is only 25 percent funded, and where the other 75 percent of the money will come from is anyone’s guess. And there are about a dozen major California cities having systemic problems paying their bills.

Here is my worry list, based on bond ratings and other data, of the top 20 cities to watch for financial troubles in the wake of the Detroit story:

1. Compton, Calif.
Compton has teetered on the brink of bankruptcy after it accrued a general-fund deficit of more than $40 million by borrowing from other funds, depleting what had been a $22 million reserve.

2. East Greenbush, N.Y.
A New York state audit concluded that years of fiscal mismanagement — including questionable employment contracts and illegal payments to town officials — left East Greenbush more than $2 million in debt.

3. Fresno, Calif.
Fresno had the ratings of its lease-revenue bonds downgraded to junk-level by Moody’s, which also downgraded its convention center and pension obligation bonds due to the city’s “exceedingly weak financial position.”

4. Gulf County, Fla.
Fitch Ratings warned that Gulf County’s predominately rural economy is “narrowly focused,” with income levels one-quarter below national averages and economic indicators for the county also comparing unfavorably to national averages.

5. Harrisburg, Pa.
Harrisburg is at least $345 million in debt, thanks largely to municipal bonds it guaranteed in order to finance upgrades to its problematic waste-to-energy trash incinerator.

6. Irvington, N.J.
Irvington has a violent crime rate six times higher than New Jersey’s average, with Moody’s citing “wealth indicators below state and national averages and tax-base and population declines due to increased tax appeals and foreclosures.”

7. Jefferson County, Ala.
Jefferson County, home to the city of Birmingham, has been dealing with the collapse of refinancing for a sewer bond. It filed for bankruptcy protection in 2011 over a $3.14 billion sewer bond debt.

8. Menasha, Wis.
Menasha defaulted on bonds in 2007 it had issued to fund a steam plant which has since closed and left the city permanently in the red and, as of 2011, had $16 million in general fund revenue, but had $43.4 million in outstanding debt.

9. Newburgh, N.Y.
Newburgh was cited by Moody’s for “tax base erosion and a weak socioeconomic profile,” with 26 percent of its population below the poverty line and its school district facing a $2 million budget gap.

10. Oakland, Calif.
Oakland is trying to get out of a Goldman Sachs-brokered interest rate swap that is costing it $4 million a year. According to a recent city audit, Oakland has lost $250 million from a 1997 pension obligation bond sale and subsequent investment strategy.

11. Philadelphia School District, Pa.
Philadelphia’s school district, the nation’s eighth-largest, faces a $304 million deficit in its $2.35 billion budget, and is seeking $133 million from labor-contract savings to prevent further cutbacks.

12. Pontiac, Mich.
Pontiac, where the emergency manager has restructured the city’s finances, was downgraded by Moody’s, reflecting the city’s history of fiscal distress and narrow liquidity.

13. Providence, R.I.
Providence, rumored to be filing for bankruptcy for more than a year, experienced consecutive deficits through fiscal 2012, has a high-debt burden and significant unfunded pension liabilities, as well as high unemployment and low income levels.

14. Riverdale, Ill.
The credit rating for Riverdale is under review by Moody’s because the city has not released an audit of interim or unaudited data for the year that ended April 30, 2012.

15. Salem, N.J.
Salem is under close fiscal supervision after it issued bonds to finance the construction of the Finlaw State Office Building, which was delayed by construction issues, and its leasing revenues are not enough to cover the debt payments and the maintenance fees.

16. Strafford County, N.H.
Strafford County regularly borrows money to cover its short-term cash needs after it spent two-fifths of its budget on a nursing home, which lost $36 million from 2004 to 2009.

17. Taylor, Mich.
Taylor has a large deficit and is vulnerable due to significant declines in the tax base, limited financial flexibility, and above-average unfunded pension obligations.

18. Vadnais Heights, Minn.
The Minneapolis suburb of Vadnais Heights had its debt rating downgraded to junk last fall by Moody’s after the city council voted to stop payments to a sports center financed by bonds.

19. Wenatchee, Wash.
Wenatchee defaulted on $42 million in debt associated with the Town Toyota Center, a multipurpose arena, and has ongoing financial issues due to the default.

20. Woonsocket, R.I.
Woonsocket faces near-term liquidity shortages necessitating an advance in state aid, a high-debt burden and unfunded pension liabilities, with Moody’s citing the city’s continuing difficulties in making spending cuts because of poor management and imprecise accounting.

The stock market rally in the first half of 2013 has helped many of these cities as they invest pension contributions and get higher returns. But another market downturn could send these teetering cities back into the red.

And the states can’t bail them out because Illinois, California, New York, and Pennsylvania face their own money challenges. Republicans in Congress have been insistent that Washington, D.C., won’t be tossing a life-preserver to troubled cities, either.

The view among conservatives in Washington is that a federal bailout would only reward cities for their own bad behavior. But that won’t stop the unions from trying.

Comment by Whac-A-Bubble™
2013-08-06 23:53:43

ft dot com
August 6, 2013 10:45 pm
Fed officials say asset buying could slow next month
By James Politi in Washington

Two Federal Reserve officials said the US central bank might start slowing asset purchases as early as next month, suggesting last week’s sluggish payrolls data were not sufficiently weak for them to take such a move off the table.

Charles Evans, one of the more dovish officials at the Federal Reserve, said he would “clearly not” rule out the tapering of bond buying at the next meeting of US monetary policy makers on September 17-18.

The remarks by Mr Evans, the president of the Chicago Fed, are significant because he is known as a staunch defender of the US central bank’s quantitative easing programme, and this year is a voting member of the Federal Open Market Committee, which sets interest rates.

Mr Evans said the Fed was “quite likely to reduce the flow purchase rate starting later this year” though he added that “I couldn’t tell you exactly which month that will be”.

His comments show that the US central bank is not overly concerned that job creation in the US economy slowed to 162,000 positions in July, a weaker reading than predicted by economists. It indicates that a moderately strong report on the labour market for August – even if it is not stellar – could tilt the Fed towards tapering its QE programme at its next meeting, assuming other economic data are also relatively upbeat.

“We’ve seen good improvement in the labour market, there’s no question in my mind about that,” Mr Evans said. “I’m still wanting to see greater evidence that it’s a sustainable improvement,” he added.

Separately, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, who does not hold a vote on the FOMC this year, also suggested Fed tapering could begin next month, assuming some improvement in the data.

“If we see the growth pick up in the second half and if we see job gains … at a higher range, say 180-200,000 – I think with other fundamentals improving we probably are in a position to remove … the extraordinary policy programme over the medium term,” Mr Lockhart said in an interview with Market News International.

But Mr Lockhart noted that the timing of slower asset purchases would depend on the incoming economic data. “[With a] kind of ambiguous picture of mixed data that signal neither accelerating strength nor necessarily deterioration, but that kind of moping along in the middle, then I think it’s not a foregone conclusion that the asset purchase programme should be removed or be removed rapidly,” Mr Lockhart added.

The comments by both Mr Evans and Mr Lockhart signal that Fed officials are also quite confident that the increase in mortgage rates and other borrowing costs in recent months is not tightening financial conditions to the point that it is damaging the economy.

Comment by Whac-A-Bubble™
2013-08-06 23:56:14

ft dot com
Markets Insight
August 6, 2013 9:56 am
Forget ‘taper’ risk: China is a bigger threat
By George Magnus
Deflation looms as Beijing rebalances economy

Developed country equity and credit markets snapped back quickly after the Federal Reserve tapering wobble a few weeks ago. From the crow’s nest, markets have accepted that Fed policy normalisation will be gradual, become more confident about economic prospects, and put to one side earlier concerns about the risk of deflation. At the coalface, though, things look more nuanced, and suggest that Fed tapering is much less of a risk than rising concern over a ‘fin de siècle’ moment in emerging markets, especially China, which could spark new deflation fears.

Since early May, the top-performing equity markets have been the US and core Europe, putting Japan and southern Europe in the shade. Nearly all developed market indices are outgunning emerging markets, which have lost almost all the gains made from last summer to January, and the continuing slide in commodity prices is undermining countries such as Australia and Brazil.

The tapering announcement, expected after the September meeting of the Fed’s Monetary Policy Committee, has already been well discounted, with US 10-year government bond yields up by nearly 1 percentage point since June. Markets know there is a country mile between tapering and a reversal of quantitative easing, let alone a rise in policy rates. That said, some uncertainty remains about the behavioural consequences for investors, banks and borrowers as the monetary policy regime of the past four years starts to change.

Elsewhere, although the Japanese government is expected to confirm in October the planned two-stage consumption tax increase, starting next year, Europe is a bigger cause for concern. Claims that recent economic indicators portend a return to sustainable growth in southern Europe look way off the mark, and are overshadowed by the absence of aggregate demand, the unsustainability of debt levels and default risk, and the difficult politics of austerity.

Moreover, the new German coalition government, emerging after next month’s elections, is most unlikely to accede to demands for a change in Germany’s macroeconomic policies, or for the transfer mechanisms and fiscal backstops needed to build a credible banking union, and a more stable European banking system.

But the most immediate and transparent threat to markets is already evident in the funk in emerging market equity, local currency bond, and currency markets, as well as in global commodity markets. Predictably, China is centre stage.

It has already figured prominently in the economic forecasting industry’s downgrades, but there is a still a way to go. Analysts and investors have not yet embraced fully the idea that the China problem is not about a cyclical and easily countered economic detour, but about the implications of what a fundamental transformation of the country’s economic model means for China’s GDP growth and supply chains, and for global commodity markets and industries.

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