Monday, August 31, 2009

Tuesday September 1 Housing and Economic stories


Delinquency rate on bank loans up to record 6.49% - ( Delinquency rates for loans and leases at U.S. banks increased to a record 6.49% in the second quarter from 5.58% in the first quarter, the Federal Reserve announced Monday. The Fed began collecting the data in 1985. The charge-off rate rose from a record 2.03% to a record 2.65%. Before this recession, the highest charge-off rate had been 1.70%. Delinquency rates for real estate loans rose from 7.10% to 8.27%, the highest since the data began in 1987. Delinquency rates for commercial and industrial loans rose from 3.12% to 3.73%, while delinquencies for consumer loans rose to from 4.69% to 4.92%, also a 22-year high.

US banker found guilty of $1B subprime fraud - ( A former Credit Suisse banker has been found guilty of fraud after deceiving investors into buying risky investments that led to $1bn (£610m) of losses. A jury in New York needed less than a day's deliberation to find against Eric Butler. His co-defendant, Julian Tzolov, had already pleaded guilty. The two sold high-risk US sub-prime investments to people who were told they were buying much safer products. They did this as it meant they received much higher commissions. Unknown risks: The fraud started to unravel towards the end of 2007 when the US housing market began to stall, and bad debts in the sub-prime mortgage market started to be revealed. Butler faces a prison sentence of up to 45 years. Tzolov may get a lesser sentence because he agreed to help prosecutors, and testified against his former Credit Suisse colleague. "The defendants' fraudulent misrepresentations saddled investors with unknown risks they did not bargain for," said Benton Campbell, the US Attorney for the Eastern District of New York. Butler and Tzolov deceived a number of corporate clients including drugmaker Roche, semi-conductor business ST Microelectronics, and Canadian fertiliser firm Potash Corporation. "It was a bait-and-switch scheme," said Assistant US Attorney John Nowak. "They deceived clients who had trusted them."

Cash for Clunkers didn't boost hybrid sales - ( The federal Cash for Clunkers program is getting a lot of trucks and sport-utility vehicles off the road, but it hasn't made best-sellers out of the Prius or other gas-efficient hybrids. The purpose behind the program was twofold: boost anemic consumer spending while loweringgasoline consumption. There's no doubt that Cash for Clunkers accomplished the former, though interest now appears to be tapering off. It's less clear what the trade-in program has accomplished on the environmental front. Much to the chagrin of public-interest groups, a fair number of U.S. consumers are turning right around and buying new light trucks with their credits from the Car Allowance Rebate System, or CARS. The Toyota Prius and Honda Insight, two of the most popular and fuel-efficient hybrids, are noticeably absent from the top-10 list of new cars purchased to replace turned-in clunkers. "It appears that despite some of these glowing (federal) reports we've seen on the environmental benefits of the program, a lot of light trucks and SUVs are being purchased through the program," said Lena Pons, a policy analyst Public Citizen, the Washington, D.C.-based advocacy group. Public Citizen has filed a Freedom of Information Act request seeking more information on the CARS program, charging that the Obama administration has not provided details on clunkers being traded in and new cars being purchased., the Santa Monica-based auto information site, has been doing its best to keep score. According to Edmunds, the top 10 list of clunkers being turned in by U.S. consumers to date is an all-American-brand affair dominated by light trucks. The Ford Explorer SUV tops the list, with 10.2 percent of all clunker turn-ins nationwide. Edmunds' top 10 list of new vehicles purchased via the CARS program includes some gas-sippers such as the Ford Focus, Honda Civic and Toyota Corolla. But it also includes full-size trucks such as the Ford F-150 and Chevrolet Silverado. The Ford F-150, which gets less than 20 miles per gallon in combined city/highway driving, was second on the clunkers-turned-in list, at 8.6 percent. The Silverado likewise gets less than 20 mpg in city/highway driving. Most using the CARS program are turning over a 1984 or younger vehicle getting less than 18 miles per gallon in combined city/highway driving. If the fuel economy improvement on the new car is 4 to 9 mpg, the federal credit is $3,500. If the improvement is at least 10 mpg, the credit is the maximum $4,500. The rules vary for SUV, minivan or non-full-size pickup truck buyers. If the fuel economy improvement is 2 to 4 mpg, the credit is $3,500. If the improvement is at least 5 mpg, the credit is $4,500. If buying a full-size pickup or large van, the standard for a $3,500 credit is a 1 mpg improvement; it's 2 mpg to get a $4,500 credit. Jessica Caldwell, a senior analyst at Edmunds, said she was not surprised that some consumers were turning in old big vehicles to get new big vehicles.

Advertisers deserting Fox News' Birther Glenn Beck - ( In what is shaping up to be one of the more effective boycott campaigns in years, advertisers are abandoning the "Glenn Beck" show on Fox News following the host's incendiary comments that President Barack Obama is a "racist" and has a "deep-seated hatred for white people." Among the advertisers to pull spots from the popular cable talk show are Geico, owned by Warren Buffett's Berkshire Hathaway (BRK A 100,940, +1,940.00, +1.96%)(BRK B 3,275, +45.00, +1.39%); Procter & Gamble (PG 52.45, -0.01, -0.01%); Sargento Cheese; and Progressive Insurance (PGR 16.02, -0.07, -0.44%), according to the companies and Color of Change, one group that is organizing a campaign against the program. Beck, who made the remarks during another Fox News program late last month, is among the network's biggest draws, pulling in an average of about 2 million viewers. (Fox News is a unit of News Corp. (NWS 12.51, +0.28, +2.29%), which also owns MarketWatch, the publisher of this report.) Geico didn't respond to a request for comment but sent Color of Change an email saying it had "instructed its ad-buying service to redistribute its inventory of rotational spots on [Fox] to their other network programs, exclusive of the Glenn Beck program." Privately held Sargento told its media buyer not to put any of its ads in Beck's show, said a spokeswoman. "We market our products to people regardless of their political affiliations," she said. "Yet we do not want to be associated with hateful speech used by either liberal or conservative television hosts."

Florida's population declines for the first time since 1946 - ( Florida lost population for the first time in 63 years, spelling potentially tough times for teachers and others. TALLAHASSEE -- For the first time since the end of World War II, the growth state of Florida lost population, researchers say, in a sign that the economic recession is even worse than many had feared. In all, the state lost about 58,000 people from April 2008 to April 2009, according to a new estimate from the University of Florida's Bureau of Economic and Business Research. ``It's such a dramatic shift from what we've seen in the past,'' said Stan Smith, the bureau's director. ``Florida's economy is, in a lot of ways, driven by population growth,'' he said. ``Perhaps more importantly, population growth is a reflection of how the economy is doing both in Florida and in the nation.'' Smith said the decline doesn't look like a trend. Instead, he sees it as a deviation from previous decades of growth upon which Florida's development-based economy relies. He also said the decrease is a ``drop in the bucket'' compared with Florida's 18.3 million population. Smith said the last time Florida lost population, in 1946, it was because so many soldiers left the state's military bases to go home. This population loss, he said, is solely due to the bad economy. The decline all but guarantees that state economists will likely revise downward state budget projections released just last week, when they forecast that Florida will receive $147 million less in taxes this budget year than they had previously anticipated. With fewer Floridians, classrooms will likely be a little emptier than forecast. Already, the state had projected that, in the current budget year, nearly 10,000 fewer kids would be in class. That estimate is likely to change now as well, and it could mean trouble for teachers because classroom funding is pegged to class size. ``If you have fewer students, it's not like you can't pay for the students, but you might have to let the teacher go,'' said Amy Baker, the head of the Legislature's Office of Economic and Demographic Research. With 400,000 empty homes on the market, Baker said, the smaller population also means there aren't as many potential buyers. For months, Gov. Charlie Crist has cheered glimmers of apparently good news in the state's economy. However, the new estimates show just how badly financial conditions have deteriorated in Florida. The state has shed a record 392,800 jobs in a year, unemployment is headed toward 11 percent and one in every 154 Florida homes are in some form of foreclosure.

Taking Wall Street Advice in Rally Means Owing $6,000 - ( Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades. Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show. The recommendations didn’t work because companies with the worst earnings led the 46 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago. Securities firms that failed to foresee that the hardest-hit stocks last year would recover fastest steered investors to drug and energy producers, which have trailed the MSCI World Index by more than 24 percentage points, the data show. “Analysts are attached to fundamentals,” said Romain Boscher, who helps oversee $18.5 billion as head of equities at Groupama Asset Management in Paris. “This is a technical rally, a rally of sentiment. Analysts were too defensive. There was an inflection point and they didn’t see it.”


Southern California House Prices Fall on Foreclosures - (

Hawaii real estate market to fall further - (

Unemployment Spike Compounds Foreclosure Crisis - (

Renters enjoy impact of foreclosures - (

How mortgage shopping could change - (

Property Porn.. revisiting a hypnotised nation - (

Tales from the deep -- underwater - (

Bull Turned Bear - (

This Is Reform? - (

California's stressed IOU holders waiting for cold cash - ( California is winding down its IOU business, but the end won't come soon enough for struggling state vendors like Gloria Freeman.

Oil rises to near $70 on US crude inventory drop - (
Study: Financial executives see growth in 2010 - (

S&P takes California off negative credit watch -- (

Sunday, August 30, 2009

Monday August 31 Housing and Economic stories


Tax Bills Put Pressure on Struggling Homeowners (as JP Morgan Chase profits) - ( Hard times are causing more homeowners to fall behind on their property taxes. But in thousands of cases, they are not responsible to their local governments, but to private companies that charge double-digit interest and thousands of dollars in service fees. This is because in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder. It seemed a painless way to turn old debts into cash to finance schools or public services. But housing advocates say the private companies may be exacerbating the foreclosure crisis, pushing out homeowners faster than would governments, which are increasingly concerned about neighborhoods becoming wastelands of abandoned properties. “In the beginning, you’re getting this immediate windfall of cash,” said Anita Lopez, the auditor of Lucas County, Ohio, which sold off more than 3,000 tax liens for $14.7 million. The county includes Toledo. “But when you think about abandoned properties, foreclosed properties — the cost to the community is far more expensive than the short-term benefits.” Investors say the arrangement actually benefits everyone. School districts, fire departments and public parks get an infusion of cash. The investors take on a risky but potentially high-yielding investment. And taxpayers do not have to pick up the slack from scofflaw landlords or tax evaders. Governments, of course, can charge interest and penalties too, and they foreclose on properties for back taxes. But governments charge interest rates that are half what private investors charge — often offering no-interest payment plans — and are also more likely to be concerned about the long-term prospects of neighborhoods. In Toledo, one of the areas hardest hit by the downturn and by private lenders holding tax liens, homeowners like Richard Fix are facing foreclosure for a few thousand dollars in overdue taxes. Mr. Fix said he lost his job with Chrysler in January 2008 and took a lower-paying job. As he and his family struggled to pay their mortgage, credit cards and other bills, he said they fell behind on $5,900 in taxes. “I’m in a no-win situation at this point,” he said. With the economy faltering and property values plunging, homeowners and landlords are falling behind on their bills or abandoning their property, just as governments are facing huge budget shortfalls. Private investors step in and buy tax liens, paying governments upfront all or part of the value of the taxes. The investors then get the right to foreclose on the properties, taking priority over mortgage lenders, and to charge interest rates as high as 18 percent on the unpaid taxes. “It beats the heck out of any certificate of deposit,” said Howard Liggett, executive director of the National Tax Lien Association. Because the sales occur in a patchwork of cities and counties across more than two dozen states, there are no figures tracking the number of tax-lien sales nationwide. The liens that are sold come from cases in which homeowners pay taxes to the local government, not through their lenders. But Mr. Liggett, whose group represents tax-lien investors, said they generated about $10 billion every year. In 2006, Lucas County began selling off its overdue tax certificates to a New Jersey company named Plymouth Park Tax Services, a subsidiary of JPMorgan Chase. It also operates under the name Xspand. The company, once run by the former governor of New Jersey, James J. Florio, was sold to Bear Stearns and then absorbed into JPMorgan after Bear’s collapse last year. Today, Plymouth Park is one of the largest players in the tax-lien business. Plymouth Park has filed more than 1,000 foreclosure actions against delinquent taxpayers, more than any single mortgage lender in the county. But it says that it has only foreclosed on 56 of those filings.

Radisson hotel at LAX files for bankruptcy - ( The Radisson hotel at Los Angeles International Airport entered bankruptcy proceedings after its owner, Harp Group of Chicago, failed to renegotiate the 580-room property's $120 million of debt. A Chapter 11 petition for the hotel was filed in U.S. Bankruptcy Court in Chicago. Another Harp property, the InterContinental Chicago O'Hare hotel, also entered Chapter 11.

Dear California, I'm dumping you - ( I thought it would last forever, but you've changed and I want out. Dear California, I've been thinking about this for a very long time, and I've come to the conclusion that we should go our separate ways. I thought I loved you and it would last forever, but I was so very wrong. I know that our relationship has lasted 50 years and that we should fight to stay together, but you've changed so much that, frankly, I don't know who you are anymore! When we first met I was young and rather naive, and I loved you unconditionally. I spent years running with abandon across your sandy beaches in the bright sunshine, playing in your beautiful parks and attending your top-rated schools, which were a national model for the other states. For 18 years or so, I can honestly say that I was truly in love with you, but then came your first major transgression: Proposition 13. Oh sure, you tried to tell me that property taxes were bad for our relationship, but I knew you were lying. Low taxes, you said, would bring us closer together. You wanted to have your cake and eat it too. You said we could build schools and roads and parks without that tax money, but even back then I knew you were in denial. I didn't leave because I thought you'd get over it and we'd still have a future. But, to be totally honest, I stayed with you mostly for your weather. No other state has your perfect little sunsets (don't get me started on that sexy Pacific Ocean), your 364.5 days of sunshine each year and your mild climate even in winter. I know you occasionally turned on me with your random earthquake tantrums, and you tried to chase me away with flames more than a few times, but I forgave you. I always forgave you, which I suppose says something about me. I was weak when it came to you, California. But now you're hurting everyone we know, and I can't stand by and watch. You've totally lost perspective, and I'm sinking into depression! We can't pay our bills, and the phone is ringing off the hook with creditors calling from all over the world. Children across the state are losing healthcare, more than 766,300 Californians lost their jobs in the last year, and we're at the top of the foreclosure charts. You need to change, and you refuse to admit it. For the first time in our relationship, I'm embarrassed to say that we are together. There's no doubt that I still have feelings for you, but since I lost my job in the newspaper industry and my house is being sold under duress, I want out. I'm leaving you, California, and you might as well know the truth; there's another state and I'm falling for it hard. Never mind where it is, let's just say that it's above you and leave it at that. What I will tell you is that I can afford to live there without stressing every day that my expensive electricity will be shut off, or that my water, which I can use only sparingly, will dry up.

Slideshow: The Decline of Dubai - ( Great photos. Deserts have a way of reclaiming whatever is built upon them. In the case of Dubai, the global financial implosion has sent that process into overdrive. After six years of frenzied expansion, during which the emirate's population grew at 7% annually and nearly $600 billion went into construction (the world's tallest building! the world's largest shopping mall! the biggest man-made island! an indoor ski resort!), reality has come rushing into view. Dubai's expansion was as ambitious as it was improbable. Dubailand, a $64 billion mixed-use development initially planned at 107 square miles, was to be the world's largest collection of theme parks, shops, residences, and hotels. For now, though, its roller coasters, life-size dinosaurs, snowy mountainscape, and polar bears will remain a fantasy, one of the gaudier casualties of the economic downturn. While formal cancellations are rare in Dubai, a number of other projects have been delayed or scuttled, including an underwater hotel; a Tiger Woods golf course; a residential community set among full-scale replicas of the Seven Wonders of the World; a rotating skyscraper; and a beach designed by Versace, complete with chilled sand. With requisite hookah and a jeroboam of Champagne, a group of German businessmen celebrate their purchase of an Alaskan oil field at Plastik Beach Club, a playground touting itself as "exclusively for the filthy rich and aesthetically perfect." Public intoxication and displays of affection are jailable offenses in Dubai, but private clubs are quietly ignored by the authorities, often rendering them happy havens of vice. Plastik offers a helipad and a dock for its wealthy guests, many of them Russian; as the economy crumbles, they party on. One American expat says that while Dubai's promise has faded in the economic downturn, "people who dream of a better life dream of coming to Dubai. You can call it the American dream." Dubai was a modest trading settlement until the 1980s. Fueled by cheap credit, tax-free living, and limitless ambition, the city-state pushed into the desert and up to the sky, culminating in the frenetic growth of the past six years. Now, with cash scarce and many of Dubai's expats moving away, the cranes (a quarter of the world's supply) have quieted and the streets are all but empty. A resident from Ireland reflects that living in Dubai during the rush was "like being on a drug. Every six months, the city would morph into something completely new." Kayla, a South African, recalls, "Everyone was talking about how it couldn't go on like this. Then, all of a sudden, everything changed."

Pimco, Goldman Sachs exit Fed mortgage bond program - ( The Federal Reserve Bank of New York plans to get along without the help of bond giant Pimco or Goldman Sachs Group as the central bank continues its massive purchases of mortgage-backed securities. The New York Fed on Monday said it had "streamlined" its 8-month-old, $1.25-trillion program to buy mortgage bonds from four investment managers to two. Saying the changes were "not performance related," the bank said it was retaining Wellington Management Co. and BlackRock Inc. Newport Beach-based Pacific Investment Management Co. and Goldman Sachs Asset Management will exit. The bank said it had "anticipated that it would make adjustments to its use of external investment managers as it gained more experience with the program. . . . The New York Fed is committed to implementing its programs in the most efficient and cost-effective manner possible." The bank didn't indicate why Wellington and BlackRock won out over Pimco and Goldman, or whether the latter two wanted out for some reason. A Goldman spokeswoman said the firm had no comment. A Pimco spokesman couldn't be reached. The mammoth purchase program is aimed at keeping a lid on mortgage rates by providing a constant source of demand for home-loan-backed bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae. Bloomberg News calculates that Pimco and Goldman each stood to earn $7.8 million in fees per quarter once the Fed's holdings of bonds reached $1 trillion. The Fed has purchased $742 billion of mortgage bonds so far, according to Bloomberg's tally. Pimco in July surprised Wall Street by dropping out of the running for the Treasury's program of partnering with money managers to buy rotting mortgage bonds from banks.

L.A. budget deal threatens to unravel - ( Strategies to close a $530-million budget shortfall appear to be in jeopardy as plans to get union concessions falter and contract talks with police and firefighters grow increasingly acrimonious. Nearly three months after he signed off on a plan to eliminate a $530-million shortfall, Los Angeles Mayor Antonio Villaraigosa still has not won enough concessions from city workers to avert deep cutbacks that could hit L.A.'s police hardest. The City Council left last week for a summer recess even though solutions to the budget crisis threaten to unravel. Contract talks with public safety employees have grown acrimonious, with Villaraigosa denouncing a publicity campaign by the firefighters' union against more cuts. A proposal to give early retirement to 2,400 civilian workers -- slashing $200 million each year from the payroll -- has run into problems over how the city would pay for it. And city financial advisors privately have begun warning that even if the council signs off on early retirement and wins new agreements with public safety employees, the city will still fall short by an estimated $40 million. In the meantime, the Planning Department has been hit by furloughs. The Fire Department has begun shutting down rescue units and ambulances on a rotating basis. And Police Department commanders have begun developing a contingency plan to furlough officers at least two days a month starting in October. If negotiations with police and fire unions reach an impasse, the city has the authority to unilaterally slash paychecks for officers and firefighters -- as well as the number of hours they are on duty. "We are moving toward impasse and that's a shame because . . there is a way out," Villaraigosa said last week. "I certainly understand that it's tough to make those sacrifices. But what's the alternative, to go into bankruptcy? No, we can't do that." Villaraigosa and council leaders have asked police to accept a 14% cut in overall compensation -- salaries, bonuses, overtime and benefits. At the same time, the mayor has vowed to continue his campaign pledge to expand the department by 1,000 officers, saying it is essential to holding down violent crime.


Lies, Damn Lies, and the Real Estate Recovery - (

No quick recovery ahead for housing - (

Few expect boom after this bust - (

Brace for Wave of Foreclosures, Dam About to Break - (www.Mish)

Why the New American Real Estate Dream Is Renting - (

Ten Key Charts on Property Values - (

Wall Street sees shoppers as key to rally's future - (

Commercial property sales plummet - (

Does the US have enough money to solve its problems? - (

You think Ireland is bad? Look at Spain - (

Some saw housing bubble and sold; trick now is spotting the bottom - (

California real estate: No light yet in tunnel - (

Greetings from Bulgaria - (

America's Japanese Banks - (

Birthers! Banks and insurers profit from your fears - (

How insurance firms twist debate - (

Fear is weapon of choice for opponents of reform - (

Health Care War! - (

Saturday, August 29, 2009

Sunday August 30 Housing and Economic stories


RBS uber-bear issues fresh alert on global stock markets - ( Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts. Britain's Uber-bear is growling again. After predicting a torrid "relief rally" over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears. "We are now in the middle of a parabolic spike up," he said in his latest confidential note to clients. "I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September 'tipping zone', driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets." The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice. He expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said. Mr Janjuah, RBS's chief credit strategist, has a loyal following in the City. He was one of the very few analysts to speak out early about the dangerous excesses of the credit bubble. He then made waves in the summer of 2008 by issuing a global crash alert, giving warning that a "very nasty period is soon to be upon us" as – indeed it was. Lehman Brothers and AIG imploded weeks later. This time he expects the S&P 500 index of US equities to reach the "mid 500s", almost halving from current levels near 1000. Such a fall would take London's FTSE 100 to around 2,500. The iTraxx Crossover index measuring spreads on low-grade European debt will double to 1250. Mr Janjuah advises investors to seek safety in 10-year German bonds in late August or early September. While media headlines have played up the short-term bounce of corporate earnings, Mr Janjuah said this is a statistical illusion. Profits were in reality down 20pc in the second quarter from the year before. They cannot rise much as the West slowly purges debt and adjusts to record over-capacity. "Investors are again being sucked back into the game where 'markets make opinions', where 'excess liquidity' is the driving investment rationale. "The last two Augusts proved to be pivotal turning points: August 2007 being the proverbial 'head-fake' when everyone wanted to believe that policy-makers had seen off the credit disaster at the pass, and August 2008 being the calm before the utter collapse of Sept/Oct/Nov… 3rd time lucky anyone?" The elephant in the room is the spiralling public debt as private losses are shifted on to the taxpayer, especially in Britain and America. "Ask yourself this: who bails out Government after they have bailed out everyone?" Mr Janjuah said governments might put off the day of reckoning into the middle of next year if they resort to another shot of stimulus, but that would store yet further problems. "If what I fear plays out then I will have to concede that the lunatics who ran the asylum pretty much into the ground last year are back in control." Over at Morgan Stanley, equity guru Teun Draaisma thinks we are through the worst. "We were on course for a Great Depression in February, but Armageddon was avoided. Governments did not repeat the policy errors of the 1930s." "We have seen the lows of this crisis. This is a genuine rebound rally, and it has been short by historical standards so far," he said. Mr Draaisma, who called the top of the bull market almost to the day in mid-2007, has crunched the worldwide data on 19 major stock market crashes over the last century. They show that the typical rebound rally (as opposed to bear trap rallies, when markets later plunge to new lows) lasts 17 months and stocks rise 71pc. The 1993 rally in the US was 170pc over 13 months. Finland's rally in 1994 was 295pc. Hong Kong rallied 159pc in 2000. This rebound is only five months old. The key indexes have risen 49pc in the US and 42pc in Europe. Mr Draaisma advises clients to stay in the stocks for now, but stick to telecom companies, utilities, and oil. Yet he too expects a nasty correction once this rally falters. The usual trigger at this stage of the cycle is when central bankers start to make hawkish noises, typically a couple of months before the first turn of the screw (normally a rate rise, but in this case an end to "quantitative easing". "As long as policy-makers are talking about how fragile the recovery is, equities are unlikely to go down much." This moment can be hard to judge. There has already been rumbling from some governors at the US Federal Reserve and from the European Central Bank's Jean-Claude Trichet. Markets are pricing in rates rises by early next year. The pattern after major financial bust-ups is that the rebound rally gives way to another fall of 25pc or so, lasting a year, followed by five years of hard slog as stocks bounce up and down in a trading range, going nowhere. Mr Draaisma suggests taking a close look at the chart of Japan's Nikkei index from 1991 to 1999. Gains were zero. We are in uncharted waters, however. Monetary and fiscal stimulus has been unprecedented. Russell Napier at Hong Kong brokers CLSA says a powerful bull market is already taking shape as the American giant reawakens. Perma-bears will be left behind. He said: "It is dangerous to be in cash." When the finest minds in the business disagree so starkly, the rest of us can only shake our heads in confusion.

More than half of Sacramento-area mortages under water - ( Santa Ana-based First American CoreLogic just minutes ago released a grim look at the mortgage crisis, reporting that 32.2 percent of all U.S. mortgages were tied to homes worth less than the amount of their loans. In California, it says, 42 percent of mortgages are in that condition often referred to as "under water." The report says 2.9 million California mortgages are in a state of negative equity and 3.1 million more are nearing it as the housing crisis persists and the economy worsens. Nationally, 15.2 million mortgages tied to $3.4 trillion worth of residential property are in a negative equity position, and consequently in some danger of foreclosure, says First American. The firm didn't immediately have a Sacramento-area breakdown, but in the past has said that more than one-third of the region's mortgages were in that condition. We have an email into the firm to try and get the regional picture. "Negative equity continues to be the dominant driver of the mortgage market because it leads to foreclosures in the event a borrower experiences some kind of economic shock such as a job loss, illness or other adverse situation. Given that negative equity did not increase this quarter and home prices declines are moderating or flattening, we may be at the peak of the negative equity cycle. However, until negative equity recedes and unemployment declines, mortgage risk will continue to be very elevated," said Mark Fleming, chief economist for First American CoreLogic.

Commercial real estate suffering - ( Even as the housing market starts to show signs of recovery, fortunes for commercial real estate are looking increasingly grim, and that could spell trouble for the fragile U.S. banking sector. The weak economy and rising unemployment have forced businesses to cut back on rental space, resulting in declining revenue for many landlords. Tighter underwriting standards and falling real estate values have made it much harder for them to refinance, too. The rate at which property owners are defaulting on loans is climbing at an unparalleled pace. Many banks are stuck with malls, hotels and office buildings they've repossessed and can't sell. Scores of banks have been closed this year, many of them, including Horizon Bank in Pine City, Minn., and Omni National in Atlanta, because of sour commercial loans. "The bottom line: Defaults are exploding," said Richard Parkus, an analyst with Deutsche Bank. "It's terrible. It's going to be worse than in the early '90s." The delinquency rate on commercial property loans pooled together into investments, estimated at $750 billion, hit nearly 3 percent in the second quarter, nearly tripling from where it was at the end of last year, according to Reis Inc. "We haven't seen the end of these delinquencies and defaults," said Edward Leamer, a senior economist at UCLA. The commercial real estate market in the Northern San Joaquin Valley is struggling, too. Area experts say a large number of Stanislaus County office buildings are empty and likely to stay that way for a while because the ranks of office workers have shrunk. The residential housing market crash contributed to a dramatic decline in office workers. Space once filled with mortgage brokers, title insurance officers, real estate agents, developers, engineers, architects and planners is empty or occupied by smaller staffs. From the bankruptcies of large retailers such as Gottschalks and Mervyn's to closures of mom-and-pop restaurants and shops, scores of business failures have created vacancies of all sizes in every city. Even the most desirable commercial areas have empty buildings and storefronts. As the real estate market declined and prompted more office vacancies, the fallout from the downturn spread to other businesses and the unemployment rate soared to levels not recorded in more than a decade. The housing market has shown signs of stabilizing, but unemployment continues to plague the region's economy. In all, there is about $3.5 trillion worth of commercial real estate loans held by banks, or tied up in commercial mortgage-backed securities or held by other institutions.

Foreclosures hitting hard in Kona, Hawaii - ( The Big Island represents two ends of the spectrum in the ongoing flurry of foreclosures.While Kona leads the state in homeowners who decide to cut the strings to their property, Hilo is near the bottom of the scale. That's because many of the homes in foreclosure are investment properties and second homes, said Jackie Parkinson, executive director of the Hawaii Island Board of Realtors. 'That's what's hitting Kona so hard," Parkinson said. "People are just walking away." Kailua, Kona had 78 foreclosure filings in July, which represents one home out of every 200, according to the Mainland-based research firm RealtyTrac. Waikoloa had 23 filings — or one out of 125 homes — and the Waimea-North Kohala area had 16 filings, which represents one out of 286 homes. Not to say East Hawai'i is without difficulties. Puna and Ocean View have significant foreclosure rates, mostly investment homes, Parkinson said. Puna and portions of Ka'u east of Pahala had 21 foreclosure filings in July, which represents one filing for every 264 homes. Besides investments and second homes, other dwellings that are in trouble are primary homes that the owners bought or refinanced in the past couple of years, Parkinson said. That's where the Big Island's 11.5 percent unemployment rate may be coming most into play, as residents struggle to make their house payments, buy gas and put food on the table. Hilo had 34 foreclosure filings in July — one out of every 613 homes.

City budget could doom iconic Petaluma Veterans Day parade: Story shows all he subsidies going to various groups – ( Petaluma’s shrinking budget could soon claim another victim — the city’s annual parade honoring military veterans. City officials say they can no longer afford police overtime and other expenses connected to the Nov. 11 event and have asked a veterans group to pick up the tab. But officials at American Legion Post No. 28 say they can’t cover it, either, in part because the city has stopped its subsidies to the organization. Steve Kemmerle, post commander, said unless a private donor comes forward with $12,500, the Veterans Day parade likely will be canceled. “If we can’t pay the city we can’t have a parade,” said Kemmerle, a Vietnam-era veteran. “It’s that simple.” The change comes as cities all over Sonoma County slash budgets to make up for dwindling tax revenue. In the fiscal year that began July 1, Petaluma laid off 10 employees and eliminated services to balance a $36 million general fund budget that was about 10 percent smaller than last year’s spending plan. With its reserves gone, the city will need to be reimbursed for any additional expenses, including police and Public Works employee support at the parades, City Manager John Brown said. According to a city memo, the cost for six officers, a sergeant and other police services to handle the parade that draws up to 7,000 people would be nearly $5,000. Barricade and sign installation plus other security would be an additional $7,500. Brown suggested the vets adopt a shorter parade route to reduce costs or start fund-raising. “This is money we really don’t have,” Brown said. “We have to ask people to offset these costs.” Other cities in Sonoma County seek reimbursement for similarly sized parades. Santa Rosa sends a bill to organizers of the Rose Parade and Sebastopol passes along costs to Apple Blossom officials. However, the cities also provide the groups with annual subsidies that cover the events. Petaluma doesn’t give the American Legion any money. The group has in the past received a small share of hotel occupancy taxes. This year, the city expects to divide about $180,000 in hotel taxes between organizers of the Butter & Eggs Day parade, hosts of a popular 1950s cruise event and the visitors center, City Councilman David Glass said. With a smaller pot available this year, the city allocated the money where it would get the best return, Glass said. “They are part of the fabric of this community and are part of what generates revenue,” Glass said. “It doesn’t mean they are more worthy of support. I have to look at this in a cold-hearted way.” Veterans said they were getting short shrift. Rich Granger, commander of the Veterans of Foreign Wars in Petaluma, said many of his 250 members risked their lives for the country and “shouldn’t have to pay for a parade to themselves.” “It’s a sad state of affairs we’re in when the veterans can be chopped,” said Granger, a Vietnam veteran. “It cuts deep.” Kemmerle, whose group has run the parade since 1989, said the American Legion shouldn’t be asked to draw down its small bank account to pay the city. Many of its 280 members are World War II veterans who are too old for fund-raising. “People are dying,” Kemmerle said. “We’re getting smaller.” If the city insists on being reimbursed, the parade featuring 900 participants and airplane flyovers could come to an end. “Patriotism isn’t what it used to be,” he said.

Reader's Digest Plans for Prearranged Chapter 11 - ( Another private equity deal that has gone bad, with the company leveraged to the hilt with debt. Reader's Digest Association, publisher of the widely-read Reader's Digest magazine, said Monday it would likely file for Chapter 11 bankruptcy for its U.S. businesses to cut its debt load. The media company, known worldwide for its family-friendly namesake magazine, been trying to slash costs and boost growth since it was taken private in 2007 by an investor group led by Ripplewood Holdings. The bankruptcy would take the form of a so-called pre-arranged filing, Reader's Digest said in a statement. A pre-arranged filing comes after a company has already reached deals with its lenders to cut its debt. The Chapter 11 filing will apply only to the company's U.S. businesses. Its operations in Canada, Latin America, Europe, Africa, Asia and Australia-New Zealand will not be affected. "Restructuring our debt will enable us to have the financial flexibility to move ahead with our growth and transformational initiatives," said President and Chief Executive Officer Mary Berner, in a statement. Reader's Digest calls itself the the world's largest paid-circulation magazine in the world. The Pleasantville, N.Y., media company said the bankruptcy would help facilitate an agreement with lenders to exchange a portion of its $1.6 billion in senior secured debt for equity, and transfer company ownership to the lender group.


There's no quick fix to the global economy's excess capacity

Experts Agree, Recession Is Over

The Quick Buck Just Got Quicker

Elizabeth Warren Video - Banks problems are going to get worse - (

Nearly one-third of all mortgages underwater - (

US Houseowners Cut Asking Prices $27.8 Billion - (

The Rentership Society - (

Housing Glut Pushes Rental Inflation to Record Lows - (

Slowing US Rents Push Inflation Lower, May Delay Fed - (

The Real Impact of Deflation - (

Google Maps Now Shows Houses For Sale, Incl Foreclosures - (

Fair-Value Accounting Is Horror Flick Monster - (

Toxic Loans Topping 5% May Push 150 Banks to Point of No Return - (

Bernanke, Do You Have The Cojones To Raise US Interest Rates? - (

Weird old text about credit bubbles - (

Competing Ads on Health Care Plan Swamp the Airwaves - (

Why We Need Health Care Reform - (

US healthcare town halls: Anger, fear and lunacy - (

Jon Stewart Eviscerates 'Birther' Movement - (

Friday, August 28, 2009

Saturday August 29 Housing and Economic stories


Rahm Emanuel Freddie Mac Connection Aired on Beck By Democratic Pollster - ( – Good video. We reported on this in much greater detail on March 26th. Click through above for video. Rahm sat on the board of Freddie Mac, and made $16M in 2 years between Freddie Mac and another financial firm. He was there while Freddie Mac was cooking the books. Look at the crooked connections between Rahm, Whitacre, Mayor Daley and of course Jim Johnson (Fannie Mae).

Banks Help Small Debt Become a Big One – ( In his briefcase, Imar Hutchins carries a certified check for $25,000. It is a crazy amount to walk around with, but for the last nine months, a series of banks have refused to take the money, even though Mr. Hutchins owes it toward a mortgage on a small apartment building in Harlem. In fact, the $25,000 check is the fourth and largest payment that Mr. Hutchins has tried to make after he fell one month behind last year. Since then, the banks have rejected every penny he has sent. At bewildering speed, and without telling him, the original bank — Washington Mutual — invoked a clause in the lending note and moved to seize the building, at 763 St. Nicholas Avenue, near 148th Street. So many foreclosures are hitting the courts, the stories of greed and folly by all parties could fill volumes. But the machinery of foreclosure also has a brainless side. Even generally responsible people can get trapped among the shards of the global financial crisis. In 2005, lenders filed foreclosures on an average of 14 properties a day across the city. This year, it is 65 per day. “Banks get bought by other banks, they change their philosophies,” Mr. Hutchins said. “The people fall through the cracks. No one is really looking out for the customer.” While Mr. Hutchins’s case is just one foreclosure among thousands now moving through the courts, a judge saw it as an example of how things should not be done. “The facts in this case, in their simplicity,” wrote Justice Emily Jane Goodman, “illustrated the state of property foreclosures in New York and the economic relationship between banks and their borrowers, as well as the surrounding ironies.” Mr. Hutchins, 39, who, among other things, co-founded an elementary school in Atlanta while he was a student at Morehouse College, ran a vegetarian restaurant in Washington, and got a law degree from Yale, has lived in Harlem for the last five years. His grandfather Lyman T. Johnson sued the University of Kentucky to force it to admit black students in 1949. “My father was a Realtor,” Mr. Hutchins said. “I tried like hell to do anything but real estate.” In May 2006, he bought 763 St. Nicholas Avenue, which has seven apartments and a storefront, taking out a $470,000 loan. As tenants left, he renovated the apartments and began to collect higher rents. A few days ago, Mr. Hutchins welcomed a visitor into a ground-floor apartment that he is using as an office. The new floor had a high gleam. “The wood is from a Brazilian tree that grows up in water,” he said. “We got it because the guy upstairs kept flooding the apartment, and I thought it would do better in a flood.” Generous as the guy upstairs was with water, he did not pay his rent for a year and a half, Mr. Hutchins said. Another tenant got sick and couldn’t pay for a year. That meant two out of seven apartments in the building were a dead loss. A year ago in May, Mr. Hutchins missed a mortgage payment of $3,730. The lender, Washington Mutual, was then on the verge of the largest bank collapse in United States history. “First, I tendered $3,730 — that was a month late,” Mr. Hutchins said. “I didn’t want it to go 60 days. They rejected that. It made me look bad later. Then I tried to pay $7,500. I Fedexed the check to the bank. They returned it uncashed with a form letter.” Later, he tried to pay $17,500, and eventually the $25,000. Although lawyers for the bank did not respond to a request for comment, for Justice Goodman the central facts were not in dispute. “There is no evidence whatsoever that Defendant intended to ignore, neglect or default in this matter,” she wrote, adding that Mr. Hutchins “made numerous efforts to pay the two months that were late, and even attempted to pay more.” While Mr. Hutchins had regular communications with bank lending officers, no one told him that the bank had begun foreclosure. The notice was served on a tenant in the building rather than the owner, suggesting, Justice Goodman wrote, “bad faith by Washington Mutual, especially when taken with their refusal to accept payment.” With no reply from Mr. Hutchins, he was declared in default. When he learned of the action, he went to court, and Justice Goodman agreed to lift the default. Now Mr. Hutchins and the successor to Washington Mutual will meet in court to settle the amount he owes. Why wouldn’t a bank take money that it was owed? There are only guesses. One possibility, Mr. Hutchins said, is that the building is worth around $700,000, considerably more than the $470,000 original mortgage. The judge also wondered why. “Despite the Owner’s undisputed efforts to pay the Bank,” she wrote, “the Bank nevertheless brought proceedings to foreclose because, as stated by Plaintiff’s counsel at oral argument, ‘that’s their choice.’ ” That would fall under the unilluminating doctrine of “because they feel like it.”

Collapse Of The "Ownership Society" - (Mish at Bush's "ownership society" has collapsed under the dead weight of debt. There is too much debt and too little income to support it. Please consider President shifts focus to renting, not owning. The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities. The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates. Analysts say the approach takes a wrecking ball to Bush’s heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan’s recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home. In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis. Barney Frank The Hypocrite: "I’ve always said the American dream should be a home - not homeownership," said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration’s push to put mortgages in the hands of low- and moderate-income people. What a distortion of reality. Barney Frank was in the pocket of Fannie Mae and Freddie make and their biggest supporter for years. Now he plays on semantics in an unbelievable lie. He would have been better off keeping his mouth shut, but political hacks seldom if ever can.

Downsizing the dream - ( or most Americans, until the recent past, home ownership was a dream and the pile of rent receipts was the reality. From 1900, when the census first started gathering data on home ownership, through 1940, fewer than half of all Americans owned their own homes. Home ownership rates actually fell in three of the first four decades of the 20th century. But from that point on forward (with the exception of the 1980s, when interest rates were staggeringly high), the percentage of Americans living in owner-occupied homes marched steadily upward. Today more than two-thirds of Americans own their own homes. Among whites, more than 75% are homeowners today. Yet the story of how the dream became a reality is not one of independence, self-sufficiency, and entrepreneurial pluck. It's not the story of the inexorable march of the free market. It's a different kind of American story, of government, financial regulation, and taxation. We are a nation of homeowners and home-speculators because of Uncle Sam. It wasn't until government stepped into the housing market, during that extraordinary moment of the Great Depression, that tenancy began its long downward spiral. Before the Crash, government played a minuscule role in housing Americans, other than building barracks and constructing temporary housing during wartime and, in a little noticed provision in the 1913 federal tax code, allowing for the deduction of home mortgage interest payments. Until the early 20th century, holding a mortgage came with a stigma. You were a debtor, and chronic indebtedness was a problem to be avoided like too much drinking or gambling. The four words "keep out of debt" or "pay as you go" appeared in countless advice books. As the YMCA told its young charges, "If you can't pay, don't buy. Go without. Keep on going without." Because of that, many middle-class Americans—even those with a taste for single-family houses—rented. Home Sweet Home didn't lose its sweetness because someone else held the title. In any case, mortgages were hard to come by. Lenders typically required 50% or more of the purchase price as a down payment. Interest rates were high and terms were short, usually just three to five years. In 1920, John Taylor Boyd Jr., an expert on real-estate finance, lamented that "increasing numbers of our people are finding home ownership too burdensome to attempt." As a result, there were two kinds of homeowners in the United States: working-class folks who built their own houses because they couldn't afford mortgages and the wealthy, who usually paid for their places outright.

‘Jingle Mail’ Comes to Hotels . . . - ( ‘Jingle mail” isn’t just for homeowners anymore. From San Diego to Dearborn, Mich., an increasing number of hotel owners in the U.S. market are simply walking away from money-losing properties and forfeiting them to lenders. The rise in hotel forfeitures is the product of the worst hotel market since the early 1990s, with revenue declining by double-digit percentages. That has pushed the value of many hotels to less than the balance on their mortgages. Just like homeowners who mail their house keys back to the bank — so-called jingle mail — hotel owners see no hope in renegotiating their loans . . . To be sure, a delinquency doesn’t immediately or always translate to foreclosure. It often takes several months for a lender to foreclose on a property with a delinquent mortgage. And some delinquent borrowers manage to negotiate with lenders to avoid foreclosure or file for bankruptcy protection to thwart it. What is striking about the current trend is that several of the companies forfeiting hotels are publicly traded.“ (emphasis added)

Tax-Cheat Showdown: Fess Up or Stay Quiet? - ( The Internal Revenue Service is staging a massive poker game. It has invited 52,000 UBS AG account holders to the table. Now that the U.S. and Swiss governments have resolved a longstanding dispute about disclosing the identities of secret Swiss bank accounts, the holders face an acute dilemma: Do they confess their tax-evasion sins and possibly give up a large portion of their offshore accounts? Or do they stay quiet, hoping to avoid detection, but risk far greater penalties or even criminal prosecution if exposed to authorities? Their decision is made harder because the IRS is doing its best to keep account holders in the dark about both the timing and reasons for which names are disclosed. That is because the IRS hopes to use the threat of disclosure as leverage, coaxing offshore tax evaders to come clean on their own. At this high-stakes game, numbers matter. A Swiss newspaper recently reported that the Swiss government will turn over 5,000 names, which is only a fraction of the total 52,000 accounts the IRS believes are used to avoid U.S. taxes. Some U.S. taxpayers hold more than one of the 52,000 accounts. While holders of secretive Swiss accounts are reluctant to talk to the media, their lawyers say many are still undecided. One factor in play: The IRS only has resources to prosecute about 1,000 criminal tax cases each year. "I'm surprised at how many are willing to gamble," said Kevin Packman of Holland & Knight in Miami. At least until recently, said George Clarke of Miller & Chevalier in Washington, the cost of a disclosure was persuading many with offshore accounts to take their chances: "For everyone I have talked to who decided to go forward with a disclosure, there are five who did not." Attorneys say that many of those who confess are likely to pay 40% or more of the total account value in taxes, penalties and interest, plus state taxes, penalties and interest. That doesn't factor in legal and accounting fees, which can run from $20,000 to more than $50,000 per taxpayer in an expensive area like New York. The IRS has vowed to be even more severe for those who don't step forward, by imposing massive, congressionally authorized penalties on offshore evaders. One recent example put the taxes and penalties on a hypothetical $1 million at $2.3 million, plus interest and the possibility of criminal prosecution. Then there are the odds that any particular name will be on the list. If no one can figure out how names were chosen, it becomes harder for tax cheats to game the system and avoid disclosure. "The best thing for the IRS would be if they get a large number of names and it's not clear how they were chosen," said Barbara Kaplan, of New York law firm Greenberg Traurig, who has UBS account holders as clients.


Retailers See Slowing Sales in Back-to-School Season - (

Bears prowl Wall St as insiders dump stock - (

A rally with troubling aspects - (

On Deals, Two Judges Just Say No - (

There Goes The Prize - (

Drops in Consumer Confidence, Prices Temper Recovery Hopes - (

White House Appears Ready to Drop 'Public Option' - (

Week Ahead: Stocks Could Pull Back as Earnings End - (

Clunkers' Program Slows Car Gifts to US Charities - (

Consumer sentiment falls in August - (

Regulators seize 1 Nevada, 2 Arizona banks - (

UBS Naming 5,000 Accounts Under US Deal: Report - (

North Korea to Reopen Border With South - (

Madoff Scandal Settlement Rejected by Massachusetts - (

GM and Chrysler steer different paths to recovery - (

U.S. Weighs Action Over Citi’s $100 Million Man - (

Deficit attention disorder - (

The Quick Buck Just Got Quicker - (

Answers to Clunker Questions - (

Thursday, August 27, 2009

Friday August 28 Housing and Economic stories


Buyer wants money back for townhouse "hell" - ( When Pamela Hart paid $275,000 for a townhouse in one of Cornerstone Group’s new developments in Riviera Beach, she thought she was making a great purchase. The 59-year-old county employee said she received a $10,000 discount when she bought what she believed was the last unit for sale in Sonoma Bay. But in 2007 soon after moving in, she said she learned that most of the units were vacant and that she had moved into a development plagued by crime, foreclosures, questionable sales and some unwanted renters. After trying to get out of what she describes as a “living hell” that makes her fear for her safety and unable to sell her unit, she recently filed a lawsuit in Palm Beach Circuit Court against Cornerstone’s Sonoma Bay Inc. seeking to return the unit and unspecified punitive damages. Hart claims the developer marketed the property as an owner-occupied community but turned it into a rental community that is poorly maintained and is dangerous to live in. “There is limited security, robberies, drug sales, unqualified renters, untagged vehicles and rat infestations in the garbage area,” she said. Hart said she has tried to sell her townhouse but on the day of an open house prospect buyers were scared away because “some guys had a dog fight” in front of her property. She said the apartment next to hers was recently set on fire and last weekend there were “some kids outside shooting bullets up in the air.” “I have become a prisoner of my own home,” she said. Riviera Beach police and the mayor are aware of the problems at Sonoma Bay. They recently attended a homeowners association meeting at the development and made suggestions to the developer — which still controls the association because it owns more than 10 percent of the units — on how to improve safety in the community. Among the police proposals: adding round-the-clock security guards. The residents at the Sonoma complain that the developer’s sales staff said a gated entrance would be staffed. Jorge Lopez, a Cornerstone partner, said the company did not make any promises to provide 24-hour security and said there is a guard at the property at various times but the homeowners association — which is financially strapped because the majority of owners, many in various stages of foreclosure, aren’t paying fees — can’t afford to pay a guard full-time. Lopez said he is in talks with the police and expects there will be changes in security within 60 days. He declined to detail his plan saying it is still in discussion. Representatives of the Riviera Beach police department did not return a call by deadline. Section 8 renters: According to the lawsuit, Sonoma Bay has rented some of the 60 developer-owned units in the 302-unit community to low-income renters under the federal Section 8 program. The city of Riviera Beach has an ordinance that prohibits developers from renting to recipients of Section 8 vouchers, the lawsuit said. In a letter to the U.S. Department of Housing and Urban Development which administers the program, Police Chief Clarence Williams told the agency that the Sonoma Bay master plan approved by the City Council does not allow any part of the development be used for subsidized rental housing. Lopez said Cornerstone is renting “a few” of the units it owns to Section 8 renters but other owners in the development also are accepting Section 8 renters.

Where did that bank bailout go? Watchdogs aren't sure – ( Although hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation's financial sector, it's still difficult to answer some of the most basic questions about where the money went. Despite a new oversight panel, a new special inspector general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don't have all the weapons they need. Ten months into the Troubled Asset Relief Program, some members of Congress say that some oversight of bailout dollars has been so lacking that it's essentially worthless. "TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested," a special inspector general over the program reported last month. The "very credibility" of the program is at stake, it said. Access and openness have improved in recent months, watchdogs say, but the program still has a way to go before it's truly transparent. For its part, the Treasury Department said it's fully committed to transparency, and that it's taken unprecedented steps to report the status of TARP to the public. It regularly posts information on which banks have received money, as well as details about each of those transactions. Further, Treasury said, it doesn't agree with all of its watchdogs' recommendations, which it said could hamper the program's effectiveness. TARP was passed in the midst of last fall's financial meltdown as a way to keep American banks from falling deeper into the abyss. The program was controversial from the start. Its supporters say it's helped spark bank lending in the country, but critics say it's unfairly rewarded the big banks and Wall Street firms that pushed the economy to the brink. The program also has undergone a major transformation. When the Bush administration first went to Congress for the money, TARP's main purpose was to buy up hundreds of billions of dollars in bad mortgages and so-called mortgage-backed securities that were bought and sold on Wall Street. Today, TARP consists of 12 programs that sent those hundreds of billions of dollars to big banks, but it's also bailed out auto companies, auto suppliers, individuals delinquent on their mortgages, small businesses and American International Group, the big insurance company. The watchdogs now must oversee the maze that TARP has become. Just because a lot of people are watching, however, doesn't mean they get everything they want to see.

Colorado foreclosures filings hit record high - ( State housing officials say foreclosure filings hit a record high in the second quarter with 12,135 homes entering the initial proceedings of bank repossession. "The second quarter was a very active quarter and so there were certainly more new . . . foreclosures opened than in any other quarter . . . we expect that is larger than numbers say 20 years ago," Ryan McMaken of the Colorado Division of Housing said. Nearly 5,000 foreclosures were completed, meaning the homes were returned to the bank, according to Colorado Division of Housing figures released Thursday. Metro area counties showed declines in completed foreclosures while Mesa County experienced the sharpest increase at 143 percent. Completed foreclosures in El Paso County increased 30 percent. "The counties that in the past have faired the worst, like Adams County, Arapahoe County, Denver County, have done relatively well lately. We're starting to see renewed growth or really some very unexpected growth in places like El Paso County, Douglas County, but Weld County, which has long been a challenging county for foreclosures continues to have fairly high numbers," McMaken said. During 2008, there were 39,333 total foreclosure filings and 21,301 total completed foreclosures. McMaken spoke at length about why the numbers seem to be reversing a trend where foreclosure numbers appeared flat. "Well, there were nationwide as well as in Colorado a variety of actions taken by big mortgage companies and investors like Fannie Mae who put moratoria on mortgages. That meant that they weren't moving mortgages forward, they were taking their time to see if their were strategies that could be employed to slow foreclosures down. "Now in March they started to phase those out and so what that means is that during the second quarter you had a lot of people having new foreclosures filed and foreclosures were moving quickly toward the final foreclosure sale at auction and so we just generally saw more foreclosure activity during the second quarter than the first quarter and that's why we saw the increases. "Fifteen percent in both new foreclosures filed as well as completed foreclosures. And so that's what concerns us. If you compare actually the first half of this year to the first half of last year it's still fairly flat but we now need to keep an eye on what things are going to do this year because of that growth from the first and second quarter," he said. Going forward, McMaken says it is important to follow adjustable rate mortgages as well as unemployment numbers.

Paulson & Goldman Sachs, The Plot Thickens - ( SCARY VIDEO. A reader emailed us this excellent video from Channel 4 News in Great Britain. Their economics reporter is Faisal Islam, and he's put together a little clip that you'll enjoying seeing. Interestingly, on he laments the lack of transparency with the UK bailouts and praises our own. Odd in that most observers here make the same complaint about our own particular bailout bastion of disaster. But the plot has thickened over the connections between the former US Treasury Secretary Hank Paulson and his former company Goldman Sachs. It centres on the decision made to bailout AIG, which saw some $13 billion of US taxpayers money go to Goldman, its biggest counterparty. On this blog last week I wrote: ‘Fascinatingly, Mr Paulson was aware of the potential for a conflict of interest in those decisions so he went to the lawyers. “It would have been wrong to recuse myself, so I got a waiver from the ethics agreement from the Government ethics office,” he recently told Congress, in little-reported remarks. That waiver has now been published here after sterling investigative work from the New York Times. It can be viewed here. It was granted by a White House counsel on the day of the decision about AIG, which is not the normal course of events according to the New York Times. The newspaper also found out through freedom of information about the disproportionate number of telephone calls being made by Paulson to Lloyd Blankfein, Goldman’s CEO at the time of the bailout. Two things I would draw from this. First, why don’t we have similar disclosures about the UK bailouts? Second, Hank Paulson’s forthcoming book should make for rather interesting reading.

Forced DNA Tests on Patients – ( Like a good joke, the conspiracy theories and rumours that get legs are the ones with a grain of truth in them. Of course, if they actually are true, so much the better. Here's a look a few of the gams that recently have been exposed. FBI and Healthcare: If you'd like to experience the full savagery of the health-care system/big pharma triangulated with a government agency and the insurance companies, try having a chronic health condition. Some time back, I spent two years in pain management, have friends who are still pain-management patients and so I know of what I speak. Pain management doctors and patients around the country are hounded by both insurance companies and the DEA to severely ration medication. The insurance companies restrict treatment because they don't want to pay for any chronic condition since it affects their profits. The DEA is involved in pain management because legal drugs encroach upon its territory and, therefore, its profits as well. Here's the shocker and if I didn't know both the doctor and patient I might be sceptical, but I do and I'm not. In the last few weeks the FBI has descended on doctors' offices in New York, and presumably elsewhere, to demand that patients' mouths be swabbed for DNA samples . . . and whatever other information can be gleaned from a mouth swab, but, really, it's for the DNA. If you think this is one of the most egregious invasions of civil rights in the past few weeks and wonder why no one stands up to them, it's because there are immediate consequences. If the doctor does not comply, his or her license to prescribe opiates is suspended; if the patient refuses to comply, he or she won't be given medicine. So, a near 100% level of cooperation guaranteed. The FBI's recent involvement in healthcare is in addition to the DEA's, which for years has been raiding doctors' offices -- in front of patients and staff -- to confiscate patient files and intimidate the sick and their caregivers. They pick off the weak, chronically sick who are defenceless in every way. Although seemingly minor by comparison, something similar happened to me at the PA Department of Transportation the other day. I had to remove my glasses for a drivers'-license-renewal picture because they might impair the retinal-recognition feature built into the new card. Here's an unintended consequence for you: I'm an organ donor. If my eyes end up in someone else's head does that mean he or she will inherit my driving record and any other records linked to a drivers' license? In the meantime, I'm curious to know where this is all going and under what ruse we'll be micro chipped.


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