Wednesday, April 23, 2014

Thursday April 24 Housing and Economic stories


Nomi Prins | The Real Vice-President of the United States Is Wall Street - ( In "All the Presidents' Bankers: The Hidden Alliances That Drive American Power," Wall Street journalist (and former Goldman Sachs executive) Nomi Prins writes a painstakingly researched history of the financial industry's collusion with the White House to create a self-serving United States financial policy. Get the book directly from Truthout by clicking here. Prins' book uses short passages to weave together in understandable terms a longterm relationship between economic and political power that has remained unchallenged. Yes, there were occasional periods when Wall Street did not receive everything that it wanted from the White House (such as in the New Deal). However, adding up the ledger of government policy toward Wall Street results in a decisive victory for the financial titans.

China tells banks to manage bad loans, stress tests planned: paper - ( The China Banking Regulatory Commission (CBRC) has said it will conduct regional and national stress tests after banks saw a spike in bad loans last year, the Shanghai Securities News reported on Friday, reflecting growing concerns over credit risk. "All (CBRC) offices, supervisory departments, must organize stress tests of banking institutions in a timely manner so as to analyze the impact of unfavorable situations in individual banks and the banking system and urge banking financial institutions to make emergency plans," the regulator was quoted as saying in guidelines sent to banks in March. Chinese banks' non-performing loan (NPL) ratio rose to 1.0 percent at the end of December, its highest level in two years, the CBRC reported in February. It was unclear, however, to what extent the latest guidelines are a departure from previous practice.

China Cash Shortage Brings IOUs to Fore - ( Xie Daoliang's business survives by trading almost exclusively in a virtual currency, but not by choice. Mr. Xie makes bulldozer treads and other parts for heavy machinery. These days, when he makes a sale he seldom gets paid in cash. Instead, he gets a piece of paper with a value printed on it and a promise from a bank that it will pay at an arranged point in the future. In China's economic slowdown, businesses are having troubles paying suppliers, and banks are getting shy about lending, so cash is scarce. The notes—a form of IOUs known as acceptance drafts – are increasingly being used instead, and Mr. Xie says they really get around. Sitting in his cavernous factory office with chalky white walls a 40-minute flight south of Beijing, Mr. Xie pulls an acceptance draft from his briefcase. With a face value of 30,000 yuan ($4,800), the draft was issued in mid-January to a machine dealership two provinces away. Since then, Mr. Xie says, it had been used to pay a machine maker in another province, and then an aluminum company in yet a third. It then went to a power generator in Shanghai, which used it to pay Mr. Xie's company—Jining Chine Heavy Construction Machinery Ltd. Mr. Xie says he might use it to pay his steel supplier. The bill matures in mid-July.

Foreclosure Mill Attorney Goes Nuts After Judge Rules Against Him - ( A hotheaded big shot corporate lawyer named David Dunn,  a Manhattan partner in the international corporate law firm Hogan Lovells, became so enraged when a Brooklyn judge ruled against his client, Bank of New York-Melon in a foreclosure case that he attacked the opposing attorney Bruce Richardson as he was leaving the court room. Richardson was representing a homeowner as he was leaving the court room. Dunn allegedly knocked Richardson to the ground and then hit Richardson with his briefcase so hard the injured lawyer needed back surgery. Richardson is now suing Dunn in Brooklyn Supreme Court. The Ivy League-educated Dunn allegedly knocked Richardson down and then climbed over Richardson while hitting him in the chest and face with his brief case as he rushed to exit the courtroom in March 2013. Dunn, who appeared to be annoyed that he had to attend the  hearing allegedly stormed out of the court room and assaulted Richardson after a foreclosure referee ruled against his client, Bank of New York-Melon.

Welcome to Feudalfornia: the golden sarcophagus and the investor. Acceleration to price out masses - (  California housing affordability may seem like an oxymoron.  Many younger buyers are priced out in many markets across the state.  The latest data from the California Association of Realtors (CAR) finds that still only 1 out of 3 families can actually afford to buy a home in the state in which they live.  We also have a record number of young potential buyers (more likely potential renters) living at home with their parents.  Starting in 2008 a large portion of housing sales started going to investors.  These investors may have different timelines on when they will release property out into the market.  In fact, this might be another big reason as to why so little inventory is out in the market.  Some investors are looking to securitize cash flows and may be limited in terms of selling.  Instead a regular buyer potentially looking to capitalize on equity and move up in more traditional times, you have different motivating factors.  Since 2008 over 30 percent of all California home sales went to this group.  

Tuesday, April 22, 2014

Wednesday April 23 Housing and Economic stories

Investors Clamor for Risky Debt Offerings - ( Buyers Grab Securities With Weak Ratings, Tired of Lower Yields on Safer Deals. Risky debt is flying off the shelves. Investors are snapping up low-rated securities backed by companies, home mortgages and car loans at a clip rarely seen since the financial crisis, as fund managers and others tire of paltry yields on safer assets. Buyers poured $3.42 billion into taxable U.S. high-yield mutual funds and exchange-traded funds in the first quarter, outpacing the year-earlier period's $1.76 billion total, said fund tracker Lipper, and following a full-year outflow of $4.98 billion in 2013. At the same time, robust demand for the lowest-rated portions of some asset-backed securities has enabled issuers to cut offered yields, investors said. The actions highlight the widespread expectation that the Federal Reserve will keep interest rates low for at least another year even as the economy picks up speed. The conditions should keep defaults low, investors said, enabling purchasers of the debt to pocket returns above those from more highly rated offerings.

Criminal Inquiry Said to Be Opened on Citigroup - ( Just as Citigroup was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government’s cross hairs again. Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup’s Mexican unit, according to people briefed on the matter, one of a handful of government inquiries looming over the giant bank. The investigation, overseen by the F.B.I. and prosecutors from the United States attorney’s office in Manhattan, is focusing in part on whether holes in the bank’s internal controls contributed to the fraud in Mexico. The question for investigators is whether Citigroup — as other banks have been accused of doing in the context of money laundering — ignored warning signs.

How An Alleged San Francisco Gangster Ended Up With A 'Letter Of Congratulations' From US Senator Diane Feinstein - (  By his own account, Raymond "Shrimp Boy" Chow, one of the central figures in massive criminal probe that ensnared California State Senator Leland Yee last month, once ruled over the criminal underworld in San Francisco's Chinatown. However, after being released from federal prison in 2006, Chow claimed to have turned over a new leaf. He gave speeches to schools and community groups and even created a Facebook page. He described himself as a "reformed soldier" and posted a trio of honors from politicians featuring his name, including what Chow labeled a "letter of congratulations" from Democratic Sen. Dianne Feinstein. In the wake of Chow's arrest on money laundering charges and allegations from the FBI that he "holds a '489' position in the Triad, which is an internationally-based Chinese organized crime group," the official recognitions he has received have raised eyebrows, and a spokesperson for Feinstein explained to Business Insider how Chow ended up with the letter. Chow was named as a "change agent" at the "In The Trenches" award ceremony held July 21, 2012. The awards are presented by Bayview Hunters Point Multipurpose Senior Services and are given to people "who have changed their lives for the better ... change agents, who have made positive impacts in people’s lives ... [and] community leaders." The letter from Feinstein was dated July 21, 2012 and was addressed to the director of the Dr. George W. Davis Senior Center, Suzy Tyner. It featured Chow's name along with all the other "In The Trenches" honorees.

Old Math Casts Doubt on Accuracy of Oil Reserve Estimates - ( Jan Arps is the most influential oilman you’ve never heard of. In 1945, Arps, then a 33-year-old petroleum engineer for British-American Oil Producing Co., published a formula to predict how much crude a well will produce and when it will run dry. The Arps method has become one of the most widely used measures in the industry. Companies rely on it to predict the profitability of drilling, secure loans and report reserves to regulators. When RepresentativeEd Royce, a California Republican, said at a March 26 hearing in Washington that the U.S. should start exporting its oil to undermine Russian influence, his forecast of “increasing U.S. energy production” can be traced back to Arps. The problem is the Arps equation has been twisted to apply to shale technology, which didn’t exist when Arps died in 1976. John Lee, a University of Houston engineering professor and an authority on estimating reserves, said billions of barrels of untapped shale oil in the U.S. are counted by companies relying on limited drilling history and tweaks to Arps’s formula that exaggerate future production. That casts doubt on how close the U.S. will get to energy independence, a goal that’s nearer than at any time since 1985, according to data from the U.S. Energy Information Administration.

Did Michigan Dems Just Slap Victims Of Illegal Foreclosures In The Face? - ( Likely Democratic Michigan Gubernatorial Candidate Mark Schauer’s campaign announced yesterday that Schauer has picked Oakland County Clerk/Register of Deeds, Lisa Brown as his running mate in the upcoming November election against Republican Governor Rick Snyder. As anyone who follows the MFI-Miami blog knows, I have helped dozens of homeowners battle Brown’s brother Randall S. Miller and his multi-state foreclosure mill, Randall S. Miller and Associates to keep homeowners in their homes on at least a two dozen occasions. I am currently working with at least three homeowners battling Miller’s office for filing bogus vacancy affidavits on public record against people who are fighting their foreclosures and who are still residing in their homes. As I have been writing about for nearly two years, Miller’s firm has also been involved in multiple cases of robo-signing documents on the public record throughout Michigan that were allegedly created by their employees and by their mortgage clients.

Monday, April 21, 2014

Tuesday April 22 Housing and Economic stories

Anti-austerity leftist promoted in French cabinet reshuffle - ( A fierce critic of budget austerity was named French economy minister on Wednesday in a reshuffled government packed with strident personalities, including President Francois Hollande's former live-in partner Segolene Royal. Hollande has charged the new cabinet with halting France's economic decline after 22 months in power during which his poll ratings have collapsed to record lows, leading to the trouncing of his Socialists in weekend local elections. While his first government was accused of blandness, this cabinet includes a powerful role for leftist Arnaud Montebourg, known for attacks on big business and the European Commission, who rises from industry minister to take charge of an enlarged economy ministry.

China’s Overnight Rate in Longest Rising Streak Since October - ( China’s overnight money-market rate climbed for a seventh day, the longest stretch in five months, after the central bank drained cash from the financial system. The overnight repurchase rate, a gauge of funding availability among banks, climbed nine basis points, or 0.09 percentage point, to 2.95 percent as of 4:46 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. It touched 2.96 percent earlier, the highest since March 20. The seven-day repo rate fell one basis point to 4.20 percent. The People’s Bank of China absorbed 72 billion yuan ($11.6 billion) issuing repurchase agreements yesterday, having pulled a net 974 billion yuan since the Lunar New Year break at the beginning of February. Xuzhou Zhongsen Tonghao New Board Co., a closely held Chinese building materials company in Jiangsu province, failed to pay interest on bonds due March 28, the 21st Century Business Herald reported yesterday. China had its first default in the domestic bond market last month when Shanghai Chaori Solar Energy Science & Technology Co. failed to pay interest due March 7.

Disturbing Trends in Small Business Hiring - ( Small businesses suffered a rough winter on the hiring front, which many analysts blamed on a series of particularly brutal snowstorms. However, even with the weather heating up last month, small employers were still slow to add new openings. Which begs the question — is there something else going on here? Small businesses added a modest 72,000 jobs in March, down slightly from 76,000 the month before and well off a peak of 113,000 back in November, according to report published by payroll company ADP on Wednesday. Of those, companies that produce tangible goods (as opposed to services firms) added only 9,000 jobs. Meanwhile, Intuit, a business software company, reported that small-business hiring ticked up a minuscule 0.01 percent in March, following zero job growth in February. But it gets worse. Small firms’ share of the nation’s net new jobs (191,000 in March) dipped below 40 percent for only the second time in the past year, according to ADP. Since the start of 2013, the only time small businesses have accounted for a smaller portion of job gains was last October, whenthe government shutdown brought small-business hiring to a screeching halt across the country.

Following more than 100 aftershocks, Californians fear The quake from Hell - ( Experts now fear that the 5.1 magnitude earthquake that rocked Southern California on Friday evening could be a mere sampling of what’s to come if more seismic activity occurs along the Puente Hills thrust fault. That break in the Earth’s crust is far less renowned that the more famous San Andreas fault that has been a major cause of concern for residents of the Los Angeles area for ages. Activity along the Puente Hills thrust is now being blamed for last week’s quake, however, and in turn has rekindled discussion about the potential catastrophes that could occur if a larger tremor takes LA by surprise once again. Although the Puente Hills thrust is far less famous than the San Andreas fault, experts say another serious tremor there could cause grave consequences for Southern California. Friday evening’s incident was reportedly centered near the city of La Habra, around 20 miles southeast of downtown LA, and spawned upwards of 100 aftershocks throughout the region. The Puente Hills fault extends through a critical part of Southern California, though, and could have caused exponentially more damage if it was stronger and its epicenter was elsewhere.

A 57-cent part at the center of GM's crisis - ( A problem with a tiny, 57-cent part inside the ignition switch has led to a massive recall of 2.6 million General Motors vehicles, numerous federal probes and at least 13 deaths. The faulty part was redesigned in 2006, but the part number was never changed. Typically, any time a car part is redesigned, the manufacturer changes the part number. The fact that the part number wasn't changed prevented federal safety investigators, and even some GM employees, from figuring out what caused the accidents. Accidents declined in newer vehicle models, but investigators could not figure out why, since there didn't appear to be any change in how they were manufactured. Critics of the company allege that the lack of a new part number is the sign of a deliberate cover up.

Sunday, April 20, 2014

Monday April 21 Housing and Economic stories


Chicago mayor's pension fix: raise taxes, cut benefits - ( Chicago Mayor Rahm Emanuel proposed raising property taxes and reducing retirement benefits for some city workers in order to ease a severe pension funding problem, according to details of the plan released by his office on Tuesday. Under the plan, the city would collect $250 million more in property taxes over five years while workers' current 8.5 percent contributions to the city's municipal and laborers retirement systems would rise an additional 2.5 percent over five years. Annual 3 percent compounded cost-of-living pension increases would also be tied to inflation and skipped in certain years. In addition, the city would tap separate funds for its airports and utilities to cover pension funding increases for workers in those departments. Chicago warned that the two systems face insolvency within nine to 17 years. The funding shortfall is $8.4 billion for the municipal system and $1 billion for the laborers system, according to city documents. A coalition of public labor unions, We Are One Chicago, blasted the plan as unfair to current and retired workers.

Maryland Drops $125M Obamacare Exchange Site - ( Maryland has decided to abandon its expensive state-run health care website, which was created to comply with Obamacare. The Washington Post reports the site, which cost Maryland taxpayers more than $125 million, is "broken beyond repair." State officials are reportedly going to use technology used to run Connecticut's healthcare website instead. Other states like Oregon, Minnesota, and Hawaii have experienced major problems with their healthcare exchanges as well.

Fran├žois Hollande poised to react to election blow  - ( French President Fran├žois Hollande is expected to launch a rapid shake-up of his Socialist government following a second defeat in local elections on Sunday, with big gains for the main opposition UMP party and far-right National Front. But in a relief for the two main parties, the FN fell short of the scale of victory it had hoped for after making a big breakthrough in the first round of voting last Sunday. The main winner of the night was the centre-right UMP, party of former president Nicolas Sarkozy. It was set to gain more than 100 municipalities, capturing a majority of larger towns from the ruling party, including Toulouse, Reims, Angers and St Etienne. According to one exit poll, the UMP and its allies won 49 per cent of the vote in all towns larger than 3,500 inhabitants, against 42 per cent for the Socialists and other parties of the left, and 9 per cent for the FN.

China Burns Speculators as $5.5 Billion Lost on Yuan Bets - ( China is succeeding in making its currency less predictable. Investors are paying the price. Clients of U.S. commercial banks have lost about $2 billion this year on $332 billion of options betting the yuan would appreciate, while Chinese companies lost $3.5 billion on $150 billion wagered on a benchmark forwards contract, according to data compiled by Morgan Stanley and the Depository Trust & Clearing Corp. in Washington. These contracts, when including bearish bets, account for more than a third of global trading in the Chinese currency. After almost a decade of gains, speculators had come to regard the yuan as a one-way trade, leading to a surge incapital inflows that stands to leave the country vulnerable to a sudden shift in investor sentiment. Policy makers responded by selling the yuan and widening its trading band, encouraging a record 2.4 percent quarterly decline that was the biggest among Asian currencies.

Yellen’s Real-Life Examples of Unemployed Omit Criminal Records - ( In her first speech as Federal Reserve chair, Janet Yellen told the stories of three people who had trouble finding work to illustrate her concern about the unemployed -- omitting the fact that two had criminal records that might have influenced employers’ decisions on whether to hire them. One was Dorine Poole, who lost her job processing medical insurance claims when the recession hit. “When employers started hiring again, two years of unemployment became a disqualification,” Yellen said in her speech yesterday to a community development conference in Chicago. “Even those needing her skills and employment preferred less-qualified workers without a long spell of unemployment.” Poole was convicted of felony theft 20 years ago after she fell in with a “bad circle,” she said in a telephone interview. She was 18 at the time and served two years of probation. Jermaine Brownlee, a skilled construction worker and apprentice plumber, “saw his wages drop sharply as he scrambled for odd jobs and temporary work,” Yellen said. Brownlee said in a telephone interview that he was convicted of possession of heroin last year and currently is on parole.

Euro Inflation at Lowest in Over 4 Years Misses Estimates - (

Thursday, April 17, 2014

Friday April 18 Housing and Economic stories

California suspends 3 Democrats, including 1 who allegedly took bribes for guns – ( The Democratically controlled California Senate has voted to suspend three Democrats who face charges in separate criminal cases, after the latest lawmaker to be hauled into court refused to step down. Friday's 28-1 vote in the 40-member chamber came amid one of the most severe ethical crises in modern times for the Legislature in the nation's most populous state. The resolution prevents Democratic Sens. Ron Calderon, Leland Yee and Rod Wright from exercising any power of their office until the pending criminal cases against them have been resolved. Even so, they will continue receiving their $95,291 annual salaries. Senate President Pro Tem Darrell Steinberg of Sacramento acknowledged the public criticism of the chamber but defended his leadership and the integrity of the 37 senators who have not run afoul of the law. Nevertheless, he said he has been shocked by having 7 percent of the chamber face felony charges this year, which will be his last as leader. "One is an anomaly, two a coincidence, but three? That's not what this Senate is about," Steinberg said to his fellow lawmakers before the vote. or bust! Millions flood Obamacare sign-up  - ( What a difference six months makes to Obamacare. A massive flood of health insurance shoppers deluged the government-run exchanges over the weekend and into Monday, rushing to beat the midnight enrollment deadline under the Affordable Care Act. The influx of up to 1.5 million visitors by noon on the federal exchange led to a brief lag in its ability to handle new applications at midday, but that was quickly resolved. The surge came as a new report suggested that at least 9.5 million previously uninsured people have obtained health coverage since the October launch of Obamacare plans and Medicaid marketed by the exchanges. That report also suggested fewer than 1 million previously insured people had been left uninsured because their old plans did not meet new ACA requirements.

Tokyo Money-Market Rate Turns Negative for First Time - ( Holders of Japanese government debt could get paid to borrow against the securities as the availability of sovereign bills and bonds wanes amid unprecedented monetary stimulus by the central bank. The benchmark rate for borrowers using such debt as collateral fell to negative 0.011 percent from 0.038 percent yesterday, according to data compiled by the Japan Securities Dealers Association. The one-day rate for transactions starting the next business day has never been below zero since at least October 2007, figures from the JSDA and the Bank of Japan show. The nation’s so-called repo rate is the difference in interest that a loan borrower and bond borrower pay each other. Demand for funds wanes as the BOJ buys an unprecedented 7 trillion yen ($69 billion) of government notes every month in addition to buying an amount of treasury discount bills that’s not predetermined. “The BOJ’s purchases have sapped available bonds and T-bills in the market,” said Toshiaki Terada, a researcher at Totan Research Co., a money-market brokerage in Tokyo.

Pento Censored from CNBC Interview for Revealing Numbers of US/Japan Sovereign Debt Collapse - ( I think it was the fact that I laid out the math behind a sovereign debt collapse in both Japan and the United States.  I think so much of the quiescence in yields in the bond markets in both America and Japan depends on confidence. So it’s really in the best interest of both Japan and the United States to do everything they can to maintain that confidence at all costs.  And when someone comes on TV, or in the financial media, and threatens the already fragile confidence that exists today, apparently decisions are now being made to censor. I laid out in no uncertain terms that the Federal Reserve and the Bank of Japan have laid the groundwork for insolvency, and set up these bond markets for a tremendous interest rate shock.  When someone so cogently lays out those facts, obviously it’s in some entities best interest to pretend that individual was never part of that segment.”

Realtor Jailed for Inflating Real Estate Prices and Paying Kickbacks - ( Trina Tahir, 58, Oklahoma City, Oklahoma, has been sentenced to twenty-four months in federal prison and ordered to pay $382,290.82 in restitution for her role in obtaining fraudulent mortgage loans. A grand jury indicted Tahir along with two co-defendants, Derrick Reuben Smithand Michael Gipson, in July of 2010. According to the indictment, Smith recruited two individuals to buy two new homes in Edmond in mid-2006 and early 2007 for $425,000 and $435,000 respectively. The builder of both homes agreed that Tahir’s real estate brokerage, T&T Realty, would receive large commissions and bonuses totaling $51,950 and $77,950 respectively. The indictment alleged that after the closings, Tahir caused T&T Realty to write checks to Gipson, an agent at T&T Realty, for $27,059.86 and $58,000 respectively. Gipson then bought cashier’s checks in those same amounts payable to “MP Services,” a business that Smith operated. Smith paid $20,000 to the person who served as the buyer of the first house and used the rest of the money for his own purposes.