KeNo's Housing and Economic Portal: Thursday April 15 Housing and Economic stories

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Teachers Unions: The Child Molester’s Best Friend - (www.bigjournalism.com) Imagine if you could get full salary and benefits for a decent paying job and you didn’t have to work to get it. All you had to do was be accused of a crime. What crime, you ask? How about molesting school kids? That’s what the teachers‘ unions in states like California and New York State are doing: coddling accused criminals — at your expense. And it’s probably going on elsewhere as well. Believe it or not, New York is a lot tougher on them than California. From the New York Post: At the beginning of his 32-year career as a math teacher in Queens, Francisco Olivares allegedly im pregnated and married a 16-year-old girl he had met when she was a 13-year-old student at his Corona junior high, IS 61, the Post learned. He sexually molested two 12-year-old pupils a decade later and another student four years after that, the city Department of Education charged. But none of it kept Olivares, 60, from collecting his $94,154 salary. He hasn’t set foot in a classroom in seven years since beating criminal and disciplinary charges. Chancellor Joel Klein keeps Olivares in a “rubber room,” a district office where teachers accused of misconduct sit all day with nothing to do. That would be $94K a year for sitting around drinking coffee and reading the paper. Sounds like a DMV job, without the actual “work.” The reason he wasn’t fired is “state laws” and “union rules.” The unholy alliance of unions and government is one of the things that has led us to the mess we’re in now. When you can’t fire government workers, you’re stuck with the dregs sucking away tax dollars in the form of their bloated salaries and benefits. And in many cases, they will get well-funded retirement packages for years of incompetence, thievery or worse. All in the name of “public service.” But Olivares’s fate in New York is hard time compared to the Golden State. In California, accused teachers are paid to stay at home. In just the Los Angeles Unified School District alone, the cost of these teachers sitting on their hands is helping drive the state into bankruptcy.

High-End Repo Man Takes Back Toys From the Over-Leveraged Rich - (online.wsj.com) Ken Cage is racing through a private aviation terminal near Orlando when his BlackBerry buzzes with bad news. The plane he is about to repossess is scheduled to take off for Mexico in three minutes. Even worse, the Cessna's owner and pilot is on his way back from lunch—and he is rumored to be six-feet, six-inches tall. "I'd rather not stick around to find out," Mr. Cage says. Mr. Cage, 44, stands guard by the door as his partner Randy Craft walks onto the tarmac and approaches a shiny white turbo-prop. He quickly picks the lock on the door and ushers in the repo team's pilot, Dave Larson. The plane's propellers roar to life, and after clearance from the control tower, the $350,000 ride lifts off the runway and into the sky. Mr. Cage and Mr. Craft climb back into their Ford pickup and tear out of the parking lot, just as the plane's owner pulls in. "He's a minute late," says Mr. Cage, peering out the window. "Lucky for us." Ken Cage isn't your typical repo man. Rather than snatch cars from an over-extended middle class, he takes back yachts, planes and other toys from the over-leveraged rich. Business is thriving, even as the economy begins to improve. His company, Orlando-based International Recovery Group, repossessed more than 700 boats, planes, helicopters and other property last year valued at more than $100 million. Business, he says, is up six-fold from 2007. He has reclaimed everything from $18 million Gulfstream jets and Bell helicopters to 110-foot Broward yachts, $500,000 recreational vehicles and even a racehorse. Before the financial crisis, most of the luxury items he pulled in were valued between $30,000 and $50,000. Today, they are valued at $200,000 to $300,000—meaning defaults are hitting people at a much higher income level. He has reclaimed everything from $18 million Gulfstream jets and Bell helicopters to 110-foot Broward yachts, $500,000 recreational vehicles and even a racehorse. Before the financial crisis, most of the luxury items he pulled in were valued between $30,000 and $50,000. Today, they are valued at $200,000 to $300,000—meaning defaults are hitting people at a much higher income level.

Private sector already handles over 75 percent of nation's garbage collection - (www.reason.org) Over the first 15 years of Phoenix's competition program, the inflation-adjusted costs of solid waste collection declined by 38 percent citywide. Charlotte realized savings of $14 million over the first five years of its program, and a 2007 study of 15 North Carolina cities found that Charlotte's collection costs per ton of garbage were 35 percent less than the statewide average. A large body of research has revealed that such savings figures are typical, with savings ranging from 20 to 60 percent. A 2007 Ontario Waste Management Association study estimated that the city of Toronto could save at least $10 million a year by contracting out residential waste and recycling collection. The report also notes that private sector waste companies in the area provide the same service for about 20 percent less than the public sector, and that the average private sector waste collection worker is more than twice as productive as the average city of Toronto worker.

There is every reason to believe we would see similar cost reduction by privatizing prison guards and fire departments. In regards to teaching, poor teachers would be weeded out and the quality of education rise if we went on a voucher system where parents could shop alternatives instead of being stuck with whatever garbage the public union system throws at us.

Rich Stunned by Recession Sell Munis for First Time - (www.bloomberg.com) For the first time in decades, the rich showed no confidence in state and local governments during a recession. The wave of selling began in the summer of 2007, when hedge funds and some mutual funds were forced to raise cash to meet redemptions. Municipal bonds retained the most value, and the rich didn’t hesitate to sell. Such selling accelerated in 2008, as the subprime meltdown claimed securities firms Bear Stearns Cos., sold at a fire sale, and Lehman Brothers Holdings Inc., which was forced to declare bankruptcy. The Dow Jones Industrial Average plunged to 7,449 from 13,364 at the start of the year. Real estate prices collapsed. Municipals went begging. Tax-exempt yields, normally around 90 percent of Treasuries, surged to more than 200 percent. Issuers canceled bond sales. The rich did the unthinkable. They sold municipal bonds. Fear of a second Great Depression and the crackup of capitalism trumped the allure of tax-exempt income and a historical default rate of less than 1 percent. U.S. Treasury notes and insured certificates of deposit became the new investments of choice for those with the most to lose.

U.S. banks pay lip service to second mortgages - (blogs.reuters.com) JPMorgan this week became the latest in a trickle of big banks willing to modify second mortgages for some struggling U.S. borrowers. While it’s a baby step in the right direction, it won’t do much to fix America’s foreclosure woes. Second-lien loans, essentially top-up mortgages, look like a good place to start addressing the problem of borrowers who can’t keep up with payments. After all, second liens are subordinate to first mortgages. So when it comes to cutting interest or principal payments, they should logically come first. But the U.S. government has primarily tackled first mortgages — and hasn’t got that far even there. The Home Affordable Modification Program (HAMP), which is designed to facilitate mortgage payment reductions, is aimed at several million struggling borrowers. Of 1.4 million trial modifications offered so far, only 170,000 have resulted in adjustments that the program sees as “permanent”. In reality, even after modification many borrowers are still overburdened, and further defaults look inevitable.

Exiled Queens teacher on payroll despite knocking up student - (www.nypost.com) Three strikes and he wasn't out. At the beginning of his 32-year career as a math teacher in Queens, Francisco Olivares allegedly im pregnated and married a 16-year-old girl he had met when she was a 13-year-old student at his Corona junior high, IS 61, The Post learned. He sexually molested two 12-year-old pupils a decade later and another student four years after that, the city Department of Education charged. But none of it kept Olivares, 60, from collecting his $94,154 salary. He hasn't set foot in a classroom in seven years since beating criminal and disciplinary charges. Chancellor Joel Klein keeps Olivares in a "rubber room," a district office where teachers accused of misconduct sit all day with nothing to do. DOESN'T ADD UP: Math teacher Francisco Olivares hasn't been in a classroom in seven years but is still getting paid. The DOE insists it can't get rid of him. "The department's hands are tied by state law and union rules," said spokeswoman Ann Forte. She said tenured teachers can be fired only if an arbitrator approves. "The department twice tried to terminate this teacher, and both times, an arbitrator decided to keep him on the payroll," she said. Most of the 660 rubber-room teachers on the city payroll are awaiting disciplinary proceedings, but Klein has exiled "a handful" of duds like Olivares even though they have been legally cleared to return to class.