Sunday, August 15, 2010

Monday August 16 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Compensation gap between federal, private jobs doubles - (www.usatoday.com) At a time when workers' pay and benefits have stagnated, federal employees' average compensation has grown to more than double what private sector workers earn, a USA TODAY analysis finds. Federal workers have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade. Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available. The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year. Public employee unions say the compensation gap reflects the increasingly high level of skill and education required for most federal jobs and the government contracting out lower-paid jobs to the private sector in recent years. "The data are not useful for a direct public-private pay comparison," says Colleen Kelley, president of the National Treasury Employees Union.

‘Buy and Bail’ Homeowners Get Past Fannie, Freddie Loan Hurdles - (www.bloomberg.com) Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home. Real estate professionals call it “buy and bail,” acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s “underwater,” or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan. The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of buy and bail underscores the lingering impact of the worst housing crash since the Great Depression. “People were holding on, hoping the market would turn around,” Collier, who won’t work with applicants who intend to go into foreclosure, said in a telephone interview. “But now they’re giving up because there’s no light at the end of the tunnel in places like Florida.”

Britain Reels as Spending Cuts Begin - (www.cnbc.com) Last month, the British government abolished the U.K. Film Council, the Health Protection Agency and dozens of other groups that regulate, advise and distribute money in the arts, health care, industry and other areas. It seemed shockingly abrupt, a mass execution without appeal. But it was just a tiny taste of what was to come. Like a shipwrecked sailor on a starvation diet, the new British coalition government is preparing to shrink down to its bare bones as it cuts expenditures by $130 billion over the next five years and drastically scales back its responsibilities. The result, said the Institute for Fiscal Studies, a research group, will be “the longest, deepest sustained period of cuts to public services spending” since World War II. Until recently, the cuts were just election talking points, early warnings of a new age of austerity. But now the pain has begun. And as the government begins its abrupt retrenchment, the implications, complications and confusions in the process are beginning to emerge. “It feels like they’re just sticking a finger in the air and guessing,” John Mutton, leader of the City Council in Coventry, said of the government’s methods for deciding which programs to cancel and which to cut.

Small-Business Owners Still Downbeat About Future - (www.cnbc.com) Small business owners became more downbeat in July as expectations of weaker economic growth in the second half of the year reinforced a reluctance to hire, according to a survey published on Tuesday. The National Federation of Independent Business (NFIB) said its optimism index fell 0.9 point to 88.1 in July. "We don't have any confidence that the economy is going to get fixed, that it's going to improve," William Dunkleberg, the group's chief economist, told CNBC. "We really crashed when it came to expectations for business conditions. Not good." Dunkleberg said the main reason for the drop in sentiment was because of weaker expectations for business conditions in six months. Only 2 percent of respondents said they had plans to create new jobs. That actually represented an improvement from June's 1 percent reading. Data released last week showed the U.S. labor market is still in a rut, with a net loss of 131,000 jobs for July.

Pentagon to cut thousands of jobs, defense secretary say - (www.washingtonpost.com) Defense Secretary Robert M. Gates said Monday that the Pentagon will cut thousands of jobs, including a substantial chunk of its private contractors and a major military command based in Norfolk, as part of an ongoing effort to streamline its operations and to stave off political pressure to slash defense spending in the years ahead. Gates said he will recommend that President Obama dismantle the U.S. Joint Forces Command, which employs about 2,800 military and civilian personnel as well as 3,300 contractors, most of them in southeastern Virginia. He also said he will terminate two other Pentagon agencies, impose a 10 percent cut in intelligence advisory contracts and slim down what he called a "top-heavy hierarchy" by thinning the ranks of admirals and generals by at least 50 positions. The reduction in funding for contract employees -- by 10 percent annually over three years -- excludes those in war zones. Although the moves will save an unspecified amount of money, defense officials characterized them as a political preemptive strike to fend off growing sentiment elsewhere in Washington to tackle the federal government's soaring deficits by making deep cuts in military spending. The Obama administration has exempted national security from its budget reductions, but Gates said he fears that Congress might not be able to resist for long.

Social Security, the trust fund and funny money - (www.washingtonpost.com) There's real money, then there's funny money -- stuff that looks real but isn't. Today, let's talk about one of the world's biggest piles of funny money -- the $2.54 trillion Social Security trust fund. It matters now because Social Security revealed plans last week to tap the fund for $41 billion this year and will begin tapping it on a regular basis in less than five years. This year's cash deficit, the first since the early 1980s and the biggest ever, means the government will have to borrow money to redeem some of the Treasury securities in the trust fund. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money. Here's why the trust fund is funny money. Let's say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenue is below its expenses, Social Security would have to cash in about $3,400 of its trust-fund Treasurys each month to get the money to pay me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow money to pay me, regardless of how big the trust fund is. It's not surprising that Social Security is now running a negative cash flow -- I predicted a year ago that it was likely to happen this year, and wrote in February that it had happened.

OTHER STORIES:

Armageddon Sells: Permabears Now Becoming Cool - (www.cnbc.com)

Wal-Mart Rollbacks Ending? JPMorgan Sees Prices Rise - (www.cnbc.com)

If Fed Decides to Ease, Will Others Follow? - (www.cnbc.com)

SF Fed Warns of Recession - (www.cnbc.com)

Economists Cut Outlook - (www.cnbc.com)

Fed Will Meet With Concerns About Deflation Rising - (www.cnbc.com)

Merrill’s Risk Disclosure Dodges Are Unearthed - (www.cnbc.com)

Fed leaders meet as U.S. economic recovery loses steam - (www.washingtonpost.com)

Fed faces key decision on monetary policy - (www.ft.com)

Chief Executives in U.S. Less Confident on Jobs, Survey Shows - (www.bloomberg.com)

Fed Efforts to Spur Growth May Move Markets More Than Economy - (www.bloomberg.com)

Significant chance of recession next 2 years: SF Fed - (www.reuters.com)

Wall St turbulence hits big US banks - (www.ft.com)

Merrill’s Risk Disclosure Dodges Are Unearthed - (www.nytimes.com)

The Rise of the Permabears - (www.nytimes.com)

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