Sunday, February 28, 2010

Monday March 1 Housing and Economic stories


Governor Christie Declares "New Jersey on Edge of Bankruptcy" - (Mish at New Jersey is in a state of fiscal emergency. Expect to see more states follow suit. Please consider Christie to freeze $1.6 billion in NJ spending. Gov. Christie today declared that New Jersey had veered to the edge of bankruptcy and ordered a broad array of state cuts in an effort to make up a $2.2 billion deficit in the current budget amid falling revenues. Christie froze aid to more than 500 school districts and public colleges and universities, ordered the end to several state programs and the Office of Public Advocate, and seized unspent money across state government. "Today, we come to terms with the fact that we cannot spend money on everything we want," Christie told a special joint session of the legislature. "The days of Alice in Wonderland budgeting in Trenton are over." The state's sales tax revenues are 5.5 percent below projections, corporate business tax receipts are down 8 percent, both below what had been planned under former Gov. Jon Corzine's administration, Christie said. Christie also announced the state would not contribute $100 million toward pensions costs and signaled that he would push for massive pension restructuring. Christie highlighted the benefits for unnamed individual teachers as an example: a retired teacher who contributed $62,000 in total toward her pension who would be expected to receive $1.4 million in pension payments and $215,000 in medical benefits over the rest of her life. "Is it fair for all of us and our children to have to pay for this excess?" Christie said. Christie said the state would have to pay $7 billion a year to make up unfunded pension and medical liabilities. ""We don't have that money. You know it and I know it," Christie said.

IMF offers to help Greece; EU disappoints markets - ( Greece's economy shrank more than feared last quarter and the government on Friday sharply revised down its figures for the previous three quarters as well, increasing doubts over its ability to resolve its debt crisis. A European Union government source said meetings of the region's finance ministers next week were unlikely to put together an aid package for Greece, suggesting governments remained unable to decide on how to prevent the crisis from hurting financial markets' faith in the euro zone. "They (EU leaders) try to keep the pressure on Greece as high as possible, as well as on Portugal and Spain, to do whatever they can now," the source said. The euro sank to a fresh eight-month low of $1.3529 against the dollar in response, while spreads for the government bonds of Greece and other heavily indebted states in the south of the zone widened. Greece's gross domestic product contracted 0.8 percent in the fourth quarter, much deeper than the 0.5 percent forecast in a Reuters survey, the government announced.

Cities aren't hitting panic button -- yet - Cities and other municipalities are in a world of budgetary hurt. Is a wave of bankruptcies on the way? The odds are against it, given the rules that restrict who can file for protection from creditors under Chapter 9 of the federal bankruptcy code. States, for instance, can't file, while in many cities, towns and other government bodies can seek bankruptcy only in limited circumstances. Yet with Greece's fiscal problems blaring from the headlines and governments across the United States bracing for another round of draconian cuts, municipal bond investors have been keeping an eye out for a rare event: a default on bonds issued by a local government. "I've been investing in muni bonds for 25 years, and I have never had to focus on this side of it until now," said Matthew Dalton, who runs muni bond investor Belle Haven Investments in White Plains, N.Y. "We're keeping an eye out for something that comes out of left field." Harrisburg, Pa., could be in the ballpark. A top city official said this week that the capital of the sixth-most-populous state may file for protection from its creditors as soon as March 1. The city, straining under a $282 million mountain of debt issued earlier this decade to pay for a trash incinerator, could also take state aid, as cities including Pittsburgh have. Golden State on the brink: The bigger issue though is what happens in California, which as the epicenter of the housing bust is chock full of distressed municipalities -- including the Bay Area city of Vallejo, which filed in May 2008 for bankruptcy. The Vallejo case attracted notice because city managers said the filing would help them slash their payroll for police officers and firemen. The idea of purging costly labor contracts through the court system is sure to appeal to some municipal managers at a time of tumbling tax collections and soaring costs.

How markets attacked the Greek piñata - ( Wall Street loves a piñata party – singling out a company or country, making it the piñata, grabbing their sticks and banging it until it breaks. As in the child’s game, the piñata is left in shreds. Unlike the child’s game, in the Wall Street version the piñata is stuffed with money for the bankers to scoop up with both hands, instead of sweets. We see this game being played today, with Greece as the piñata. Investors trying to understand why their portfolios have begun to melt down for the second time in five years are becoming experts in the fiscal policy of Greece. A look at the piñata party might make things clearer. Greece’s travails are often measured by reference to the market in credit default swaps (CDS), a kind of insurance against default by Greece. As with any insurance, greater risks entail higher prices to buy the protection. But what happens if the price of insurance is no longer anchored to the underlying risk? When we look behind CDS prices, we don’t see an objective measure of the public finances of Greece, but something very different. Sellers are typically pension funds looking to earn an “insurance” premium and buyers are often hedge funds looking to make a quick turn. In the middle you have Goldman Sachs or another large bank booking a fat spread. Now the piñata party begins. Banks grab their sticks and start pounding thinly traded Greek bonds and pushing out the spread between Greek and the benchmark German CDS price. Step two is a call on the pension funds to put up more margin, or security, as the price has moved in favour of the buyer. The margin money is shovelled to the hedge funds, which enjoy the cash and paper profits and the 20 per cent performance fees that follow. How convenient when this happens in December in time for the annual accounts, as was recently the case. This dynamic of pushing out spreads and calling in margin is the same one that played out at Long-Term Capital Management in 1998 and AIG in 2008 and it is happening again, this time in Europe.

‘Volcker rule’ gives Goldman stark choice - ( Goldman Sachs and other banks should give up their bank status if they want to avoid the ban on proprietary trading proposed by the White House, Paul Volcker, head of President Barack Obama’s Economic Recovery Advisory Board, said. “The implication for Goldman Sachs or any other institution is, do you want to be a bank?” Mr Volcker said in a video interview with the Financial Times. “If you don’t want to follow those [banking] rules, you want to go out and do a lot of proprietary stuff, fine, but don’t do it with a banking licence.” Mr Volcker, a former chairman of the Federal Reserve, was thrust into the centre of the financial reform debate last month, when Mr Obama endorsed his proposal to separate proprietary trading from commercial banking, naming the policy the “Volcker Rule”. Markets are wondering how the rule would affect groups such as Goldman Sachs and JPMorgan Chase, which have proprietary trading desks and private equity units. The two groups also enjoy financial holding company status and the consequent right to borrow money from the Federal Reserve and accept retail deposits. Institutions that give up their bank status to continue proprietary trading would lose “the special privileges of a bank”. “Don’t expect the support you would get from being a bank within the club of insured deposits and access to the Federal Reserve and all the loving attention you get as a bank organisation,” Mr Volcker said.


EU pledge on Greece fails to calm fears - (

Fannie, Freddie Spreads Narrowest in 17 Years: Credit Markets - (

Sparse U.S. Listings Prompt Rush on China I.P.O.’s - (

China Raises Bank Reserve Ratio to Cool Fastest-Growing Economy - (

EU Leaders Deploy ‘Bazooka’ to Repel Attack on Greece - (

Merkel Rallies EU on Greece, Fails to Convince Allies - (

EU stops short of immediate aid for Greece - (

Europe Commits to Action on Greek Debt - (

With Greece’s Woes, Nations Rethink Push Into Euro Zone - (

China Inflation Slowdown May Be Only Temporary ‘Blip’ - (

German Recovery Unexpectedly Stalled in 4th Quarter - (

Retail Sales in U.S. Increase More Than Anticipated - (

Saturday, February 27, 2010

Sunday February 28 Housing and Economic stories


Lenny Dykstra Is Back - ( I'm not sure where he's living, but Lenny Dykstra is back in the investing game. The baseball great who filed for bankruptcy last year and lost both of his homes now has a Web site called Nails Investments. "Each week we provide our subscribers with Key Option plays designed to make $1000 or more," the Web site says. For fees ranging from $89 a month (The Single) to $899 a year (The Homerun), you can have access to Dykstra's forecasts. The Homerun also gives you access to a monthly live conference call—"Speak with and Ask Lenny Questions"—and an autographed baseball. What kind of stock picks does Dykstra provide? Dow Chemical is today's pick. To find out why, you have to pay. The site also posts the original Bernard Goldberg profile of Dykstra on HBO's Real Sports from March 2008. It neglects to post the follow-up story when Goldberg discovers Dykstra has fallen on hard times. Nor will you find my interview with him from last summer anywhere on the Web site.

Five decades of failed housing subsidies are enough - ( With trillion-dollar deficits as far as the eye can see, policymakers need to scour the federal budget for departments to cut and eliminate. They should start with ones that are not just wasteful, but actively damaging to the economy. Top of the list would be the $60 billion Department of Housing and Urban Development. HUD's negative impact on the economy is far larger than its multibillion-dollar budget. HUD's policies played a key role in causing the housing boom and bust and then the recession in its wake. Weak lending standards on HUD-insured mortgage loans helped fuel risky non-prime lending. HUD also put pressure on banks and the failed housing giants Fannie Mae and Freddie Mac to make risky loans to underqualified borrowers. Thanks to those policies, Fannie and Freddie went bankrupt and already have received $112 billion in taxpayer bailouts. Steady increases in home-buying subsidies in recent decades were motivated by political attempts to curry favor with special interests such as the Realtor and homebuilder lobbies. Politicians justify the subsidies on their claimed civic virtues. But, as we've seen in the wake of the housing bubble's bursting, there's nothing virtuous about putting people into homes they can't afford.

GM's New Union-Free Mantra - (Mish at In a welcome turn of events, GM appears to have adopted a union freemantra. Please consider GM and Delphi Ditching UAW For New “Green” Production Jobs. As GM tools up for production of its Volt extended-range electric car, Automotive News has noticed something interesting: workers at GM’s new battery pack assembly plant are not represented by the United Auto Workers. Located in the heart of UAW territory (Brownstown Township, MI), the Volt battery plant represents the very jobs that local politicians and GM leadership hailed as the green future of the auto industry. though GM only has 25 workers currently working the Brownstown plant, that number will increase, and the symbolism is far more important than pure numbers. The plant is part of a new wholly-owned subsidiary called GM Subsystems Manufacturing LLC, and GM spokesfolks confirm that non-union labor was an important factor in maintaining competitive manufacturing costs. Though electric motor production at Maryland’s White Marsh plant will be a union shop, GM’s biggest supplier Delphi is also taking measures to keep its EV component factory in Kokomo, IN, free from union representation (in line with its new union-free mantra). Kokomo Local 292’s president calls the decision a “smack in the face” for the union, which is facing a decades-long slide in membership.

Take this bank and shove it - ( When Abel Collins decided to end his three-year banking relationship with Bank of America earlier this year, he simply wanted to make a statement. The 31-year old Rhode Island-resident said he never had a problem with BofA specifically. But he switched from the nation's biggest bank to a local credit union to protest what was happening in the financial sector more broadly, namely that banks had become "too big to fail" and Washington wasn't doing enough about it. "I basically figured if Congress wasn't going to take action to reduce the size of banks or at least regulate the activities they were involved in, I'd remove my part of the money they [Bank of America] controlled," Collins said. Collins isn't the only one to put principles over convenience these days. Even though BofA, Wells Fargo, Citigroup and other big banks continued to attract more deposits in the fourth quarter, countless other Americans have suddenly found themselves more willing to switch to smaller banks.

Star bond-fund manager sues former boss - ( More drama in the dispute between ousted star bond-fund manager Jeffrey Gundlach and his former employer, TCW: Gundlach claims in a suit filed Wednesday that TCW fired him and generally mistreated him as part of a “scheme” to avoid paying Gundlach and his team their due. Quick recap: TCW fired Gundlach in December, accusing Gundlach of plotting to start a rival firm and alleging he took confidential information, including client data, with him. TCW also called Gundlach erratic and egotistical, and said in its lawsuit it found pot and porn in Gundlach’s offices. Gundlach — who took roughly 40 TCW employees with him to his new firm, DoubleLine Capital — alleged last month that TCW invaded his privacy by searching his offices and that the firm was throwing all sorts of mud around to harm his new business.

The Unceremonious Fall from Entitlement - ( Many cling to lifestyles of the Great Housing Bubble unable to accept reality of living within the confines of their wage income. Today we examine the inevitable and ignominious fall from entitlement. The Great Housing Bubble cultivated a gentility of entitlement, a sordid societal residue, a system of reliance, a conviction among people that they may possess anything they wish just because; deserving without earning; Grace. Divine acceptance is given; whereas, worldly possessions are earned -- a basic truth lost through possessory entitlement. Few construct and contribute to the greater good, and many expect easy money from lenders, Governments, housing and stock markets or free-money Ponzi Schemes. We are impaired by our lender's failure and our Government's response to the crisis our lenders created; a wound that lingers as a festering sore no bailout balm can remedy. The emotional fall from Grace has barely begun. The amend-pretend-extend dance will continue until lenders tire of paying the piper. Shadow Inventory contains the new entitlement class; while unemployed renters sleep in shelters, unemployed homeowners squat in luxury, sustain false lives on lender largess, and exalt their status in preparation for the unceremonious fall from entitlement. When famous people fall, it makes news, but when plebs fall, no notice is given; no ritual is performed. The silent souls quietly abandon their perceived privilege while the raucous proles forcefully defend their binding birthright through procedural delays and faithlessly modified promises. In the end, all fall to the support of their own resources and suffer to the degree they resist reshaping their lives to reflect reality. We witness this fall as HELOC abuse posts, short sales and Trustee Sales. Like forensic examiners, we follow clues in the property records looking for what methods were used and what motivated homeowners to borrow and spend their family homes. This work is consequential because unless we see conditions for what they are, unless we see people's defective reasoning and overriding emotional gambits for what they are, we may fall victim to the same Siren's Song.

40 percent of South Florida mortgage holders 'underwater' - ( Roughly four in 10 single-family homeowners with a mortgage in South Florida owe more than the property is worth, said Wednesday. About 41 percent of the 836,723 single-family home mortgages in Palm Beach, Broward and Miami-Dade counties are "underwater," according to a fourth-quarter report from Zillow. The Seattle-based real estate firm compiles data from public property records. The percentage of borrowers with so-called negative equity has decreased slightly since it hit 47 percent in the second quarter of last year. It dropped to 46.2 percent in the third quarter. Still, the problem here remains far greater than it is nationwide, where 21.4 percent of single-family mortgage holders are underwater. Because prices have fallen so far, it will take a decade or longer for many of these borrowers to sell their homes for what they paid. But some won't wait around and instead will walk away from the mortgages, adding to the glut of foreclosures.


Stocks dip on Bernanke plan, Europe worries - (

AIG: No more retention bonuses - (

Google testing super-fast broadband network - (

Iran to suspend Google's Gmail - report - (

Hard luck job hunters catch a break - (

Hired! A pilot's job search takes off - (

The Buzz: Greece bailout may be bad news - (

Fed ready to curb easy money - (

Apple can build a $500 iPad for $240 - (

Bay Area Housing Losses Per Square Foot - (

California Housing Losses By County and City - (

Early signs of a 'double dip' in housing prices - (

Bay Area house prices "may" drop, real estate firm warns - (

Broward property values fall - (

One-Fifth of U.S. Houseowners Owe More Than Properties Are Worth - (

House Underwater? Walk Away from Geithner's Perverse 'Relief' Plan - (

Strategic Default: Smart For Wall, Smart For Main Street (

Obama softens stance on Wall Street bonuses - (

How Goldman Sachs Helped Greece to Mask its True Debt - (

Take this bank and shove it - (

Which Country's Debts Are Truly the Worst? - (

Talking Aboot Canada's Housing Bubble - (

Is a new house price crash round the corner? - (

Would you relocate to Texas? - (

Freddie, Fannie escalate insane purchases of their own crap loans - (

Get busy, Democrats - (

Friday, February 26, 2010

Saturday February 27 Housing and Economic stories


Housing Crisis Getting Uglier in 2010 - ( Nearly 6 Million Foreclosures in Past 3 years - 3 Million More Expected in 2010. CBS News correspondent Ben Tracy report the American Dream is now a nightmare for many of the 75 million Americans who own a home. The housing report card is ugly. In the past two years, the housing market has lost an estimated $4.9 trillion dollars, as 59 million homes have declined in value. Nearly 1 in 4 homeowners -- 10.7 million households nationwide -- are underwater on their mortgages. They owe more than their home is now worth. The housing market is so bad in California, that a bank demolished 16 nearly completed homes - because it was cheaper to knock them down, than to finish them. Home building across the country is almost non-existent. In 2005, 2 million housing units were built in this country. Last year, that number dropped to nearly a quarter of that. That's left former boom towns like Las Vegas with a lot of roads to nowhere, as builders ran out of money and buyers for the homes they once planned to build here. Then, there's foreclosure. Nationwide, nearly 6 million households have been taken back by the bank in just the past three years - pushing down home values, and leaving some neighborhoods looking like warzones. People are still losing their homes, preventing a housing market recovery. "Disaster is not too strong a word and crisis is not too strong a word," said Michelle Johnson of Consumer Credit Counseling Services. All of those risky loans that banks gave to homeowners are still wreaking havoc.

China military officers urge sell-off of Beijing's U.S. Treasurys - ( Several high-ranking Chinese military officers want Beijing to sell off U.S. Treasurys as a part of measures to punish Washington for its recent approval of new arms sales to Taiwan, according to a report Wednesday. A U.S. sovereign-bond sale was part of broad retaliation measures under study by military personnel at the National Defense University and Academy of Military Sciences, according to a Reuters report citing interviews with the officers that appeared in the state-run Outlook Weekly. The Chinese weekly cited comments by three military officers -- two of major general rank and one senior colonel (the Chinese equivalent of a brigadier general) -- with a sell-off of U.S. bonds among an array of retaliation moves, also including stepped up military spending and troop deployments focused on Taiwan. China's military has no direct role in setting policy for the management of the nation's foreign-exchange reserves, however, and it's not believed that Chinese policy makers are seriously considering dumping their U.S. Treasury holdings.

The Transfer of Risk from Wall Street to Main Street - ( How the Bailouts Shifted 3 Gigantic Risks from Wall Street in Housing, Banks, and Jobs to Average Americans. There is a false security in our current economy. The belief that the current banking industry is now healthy simply because the government supports it is misguided in valuing the real risk inherent in back stopping Wall Street. Or the idea that deposits are safe up to $250,000 in commercial banks because the FDIC seal is on the door. Keep in mind the FDIC insurance fund is now insolvent. Or the notion that jobs are no longer needed for a recovery. This of course is all false. What has occurred under the veneer of stabilizing the banking sector is that the ultimate risk has now been transferred to the American taxpayer. It has already been made clear to Americans that no too big to fail bank will fail. Yet does this somehow fix the trillions in toxic assets that still remain? It doesn’t but what it does do is shifts the risk to the average American.

False Profits: We Will Be Suffering from Fed's Ineptitude for a Long Time - ( An $8 trillion housing bubble fostered by the Federal Reserve has burst, and with it much of the wealth of America's middle class. As the nation struggles to recover from the worst economic downturn since the Great Depression, the people who got us here are desperately working to rewrite history. The basic story of this economic collapse is very simple. The Federal Reserve Board, guided by its revered chairman, Alan Green span, allowed an $8 trillion housing bubble to grow unchecked. Arguably, the Fed even fostered the bubble's growth, seeing it as the only source of dynamism in an economy that was suffering from the aftershocks of the collapse of a $10 trillion stock bubble. Greenspan repeatedly insisted that the housing market was just fine, even as a small group of economists and analysts raised concerns about the unprecedented run-up in house prices. He also dismissed concerns about the questionable mortgages the banks were issuing on a massive scale during the bubble years. In fact, he even encouraged people to take out adjustable-rate mortgages (ARMs) at a time when fixed-rate mortgages were near a 50-year low.

Las Vegas apartment market deteriorates in fourth quarter - ( Southern Nevada's apartment market continued its deterioration in the fourth quarter with dropping rents and rising vacancies, CB Richard Ellis reports. Job losses, shadow rental homes and new apartment deliveries fueled a market decline that could cause property loan defaults. Southern Nevada's influx of apartment-using new residents has diminished amid the recession and fewer boom growth opportunities. The Las Vegas Valley now has a 13 percent unemployment rate, the Nevada Department of Employment Training and Rehabilitation reports. The state has borrowed $200 million to cover unemployment benefits thus far; the Nevada Division of Employment Security recently announced the need to borrow up to $1 billion more to cover the growing number of unemployed. Construction and hospitality had long been the region's top two economic drivers. Together, they shed a combined 44,200 jobs in 2009. "Much of the market recovery depends upon employment growth," said CB Richard Ellis Senior Vice President Spencer Ballif, who specializes in multifamily properties. "Things are still going to get worse but they aren't going to be at the same pace of decline as 2009."

Fitch Says Prime Jumbo RMBS Near 10% Delinquent - ( The performance of US prime jumbo loan performance within residential mortgage-backed securities (RMBS) slipped again in January as serious delinquencies (60+ days past due) rose for the 32nd consecutive month and edged closer to 10%, according to the latest market commentary from Fitch Ratings. Prime jumbo loan delinquencies began to rise in Q207 but accelerated since then. In 2009, the rate of delinquency nearly tripled during the year. The serious delinquencies rose to 9.6% in January from 9.2% in December. “The new year has brought no relief from declining jumbo loan performance,” said Fitch managing director Vincent Barberio. “The trend line for delinquencies indicates the 10% level could be reached as early as next month.”


Forget the Mortgage, I'm Paying My Credit Card Bill - (

Senior and son mutually benefit from mortgage transfer - (www.Mish)

MLS challenge could change the way houses are sold - (

How a New Jobless Era Will Transform America - (

Bankrupt Builder Pays Millions To Advertise During Super Bowl - (

Fannie, Freddie Exist To Lose Money, Keep House Prices Artificially High - (

Fannie and Freddie Stagger On as Troubled Wards of the State - (

The Fed is a Monetary Superpower - (

Alan Greenspan's Does Not Admit Error - (

U.S. Losing AAA Is Way to Rein in Pelosi, Reid - (www.and the Fed!) - (

Brady, Bush, Bechtel & the Boys - (

Thursday, February 25, 2010

Friday February 26 Housing and Economic stories


Menendez Prodded Fed to Aid Lender - ( Sen. Robert Menendez of New Jersey urged the Federal Reserve last July to approve an acquisition to save a struggling bank in his state. He didn't mention that the bank's chairman and vice chairman were big contributors to his political campaign. If the acquisition had been approved, it would have prevented the two executives from losing what was left of their investments in the bank. In his letter to the Fed July 21, Mr. Menendez said there was a strong likelihood that First BankAmericano, of Elizabeth, N.J., would fail in three days, which would "send yet another negative message to consumers and investors and further impact our fragile economy." The one-page letter, obtained by The Wall Street Journal under the Freedom of Information Act, urged Fed Chairman Ben Bernanke to approve a sale of the bank to JJR Bank Holding Co. of Brick, N.J. The Fed didn't act on the request from Mr. Menendez, a Democrat, and First BankAmericano, which was closely held, failed July 31. While lawmakers routinely forward requests from constituents to government agencies, it is rare for them to make specific requests along the lines of this letter asking specific actions, bank attorneys and congressional aides said. One reason is to avoid any appearance of trying to influence the regulatory process for political ends. The chairman of First BankAmericano at the time of the letter, Joseph Ginarte, is a high-profile attorney with offices in New York and New Jersey. He has given a total of about $30,000 to Mr. Menendez and his political-action committee since 1999, according to federal records.

No Exit in Sight for U.S. As Fannie, Freddie Flail - ( When Charles E. Haldeman Jr. became Freddie Mac's chief executive officer in August, the ailing housing-finance giant had already consumed $51 billion of government money to stay afloat. It's likely to need even more. Freddie's federal overseers nevertheless have instructed Mr. Haldeman to focus on something that isn't likely to make the bleak balance sheet look any better: carrying out the Obama administration plan to allow defaulted borrowers to hang onto their homes. On a recent afternoon, employees at Freddie's headquarters here peppered Mr. Haldeman with concerns about the company's future. He responded that they were "fortunate" to have such a clear mission—the government's foreclosure-prevention drive. "We're doing what's best for the country," he told them. Freddie and its larger rival, Fannie Mae, were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.

End of TALF Means Bond Spreads Fivefold Wider: Credit Markets - ( The end of a Federal Reserve program that helped unlock credit markets is spurring sales of asset- backed bonds with relative yields five times wider than on debt secured by car loans. The expiration of the Fed’s Term Asset-Backed Securities Loan Facility is driving companies to sell bonds tied to loans that would otherwise require higher yields. Borrowers are offering bonds backed by subprime auto loans, mortgage-servicing payments and assets that have proved hard to sell after the worst credit seizure since the Great Depression. “What we are seeing in the last couple of rounds are issuers in non-traditional asset classes and weaker issuers looking to fund as much as they can before the window closes,” said James Grady, a managing director at Deutsche Asset Management in New York. The firm has $240 billion in assets under management, including asset-backed securities.

Californians Push Budget Reform - ( The prospect of more California-statehouse dysfunction this year is adding momentum to two efforts to overhaul California's budget process—including one that could rewrite much of the state's constitution. California legislators are heading this month into what promises to be another season of bickering over the state's big budget shortfall for the current fiscal year, ending June 30, and the next. Last year, they passed two austere budgets after impasses that forced California to delay payments and issue IOUs to creditors. Credit agencies cut the state's rating to the lowest in the nation, and the California statehouse became the butt of jokes nationwide. Two groups are pushing ballot initiatives they say would purge that chaos from Sacramento's budget process. A bipartisan group, California Forward, is pushing a reform to let legislators pass budgets by a simple majority instead of the current two-thirds threshold. Repair California, which is affiliated with a pro-business group, is gathering support to hold a constitutional convention to rewrite state laws. Such a convention could alter the budget process and other facets of governance in California.

Massive tax hike about to hit - ( Employers are getting hit with a massive tax hike at a time when they can least afford it. Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies. The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold. Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates. The states are scrambling to restore their unemployment insurance trust funds, which cover claims. State trust funds have been decimated by the Great Recession, forcing a record 26 states to borrow a total of more than $30 billion from the federal government. The numbers are expected to grow to 40 states borrowing $90 billion by 2012, said George Wentworth, policy analyst at the National Employment Law Project.

Scarlett Johansson selling her L.A. pad - at a loss - ( Even starlets are subject to the faltering real estate market. Just three years after buying her Los Angeles home, Johansson is selling it for $2 million less than she paid.

Scarlett Johansson bought this Hollywood Hills villa in 2007, about nine years after the "The Horse Whisperer" launched her career. At the time, she paid $7 million, according to data from Zillow. Now the 1931 home is priced to go at $4.59 million.


Greece's Fiscal Woes Bring Bailout Questions - (

Traders make $8bn bet against euro - (

S.E.C.’s Cop on the Beat - (

Jumbo Mortgage ‘Serious Delinquencies’ Rise to 9.6% - (

Junk Bonds Show Ebbing Distress on Record Sales: Credit Markets - (

Mortgage Bankers sells headquarters at a loss -WSJ - (

China’s Loan Growth, Inflation Probably Accelerated - (

China confirmed as global export champion - (

ECB Trichet departure sparks Greece rescue talk - (

After Buying Spree, China Owns Stakes in Top U.S. Firms - (

India’s January Car Sales Rise 32% to Record on Economy, Rates - (

China January Passenger-Car Sales Surge on Stimulus - (

Russian Central Bank Says Credit Risks, Bubbles Are Main Threat - (

Federal Reserve hopes clear exit strategy will boost market confidence - (

As Data Flows In, the Dollars Flow Out - (

Snowstorm heaps more economic misery on stores - (

Wednesday, February 24, 2010

Thursday February 25 Housing and Economic stories


Growing Movement To Disband Police Departments - (Mish at In response to Hoschton Georgia Dissolves Police Department I received an email from "Adam" who writes .. Mish, The city of Pewaukee, Wisconsin voted to do the same towards the end of 2009. As of the new year, the department was eliminated. Police protection is now handled by the Waukesha country sheriff's department where the majority of the old officers now work. Of course, the union is suing to reverse the vote of the people. Please consider Waukesha Sheriff Takes Over in Pewaukee: The sign at the city hall building still reads the City of Pewaukee Police department but Friday there was a new sheriff in town...quite literally. "11 pm on December 31st Waukesha County took over," said Lt. Neil Dussault with the Waukesha County Sheriff's Department. But Dussault says if you weren't paying attention in Pewaukee, you may not have known about the take over. The squad cars, at least for now, still read Pewaukee Police, but driving them are deputies dressed in their brown uniforms with new Pewaukee arm patches.

Ken Lewis: If I'm Going Down, Paulson and Bernanke Coming With Me - ( No WAY is Bank of America CEO Ken Lewis going to be the only one to answer for the acquisition of crappy Merrill Lynch and its crappy bonuses, "a person close to Lewis's defense team" (who may or may not be Ken Lewis himself) tells Charlie Gasparino today on the Daily Beast. NO WAY will he be a scapegoat, alone, for the people who twisted his arm to go through with the Merrill deal by telling him he would be fired if he didn't. "If this thing goes to trial you can expect both Paulson and Bernanke to be on the witness list." If he's going down, he's bringing them down, too. Bringing them down to Chinatown. Order in the court!

Sales of million-dollar-plus houses way down - ( Times are tough in the mansion market. Last year's sales of $1 million-plus homes in California were paltry compared to the boom days, according to a real estate report released Thursday. Tight credit, skittish buyers and sagging prices caused the number of homes changing hands for more than $1 million to fall 23.8 percent in 2009 compared with 2008, according to MDA DataQuick, a San Diego real-estate firm. A total of 18,621 California homes sold for more than $1 million last year. That's barely a third of the 54,773 such homes that changed hands in 2005. Even among millionaires, a new frugal aesthetic is at work. "In the same way you don't see many new Porsches driving around anymore, we don't market homes as trophy properties anymore," said D.J. Grubb of Oakland's the Grubb Co., which specializes in high-end homes in the East Bay. "We sell them as large homes, comfortable estates - it's a repositioning in marketing. Bragging rights are not as popular today as they were in 2005."

Phoneix Real Estate Prices Still Falling On Foreclosure Sales - ( n December 2009, Phoenix existing home sales rose to their highest level for a December in four years, but more than half of the homes sold were foreclosure sales. Median sales prices for existing homes, existing condos and new homes were down in December 2009, compared with December 2008. See the following article from DQNews for more on this. Sales of existing homes in the Phoenix region rose to the highest level for a December in four years as home price measures trended lower and investor activity rose. The percentage of sales involving a foreclosure held steady after declining for eight consecutive months, a real estate information service reported.
In December, 52.2 percent of the houses and condos that resold had been foreclosed on in the prior 12 months, the same as in November but down from 61.9 percent in December 2008. Such foreclosure resales hit a high of 66.2 percent of all homes resold last March, according to MDA DataQuick, a San Diego-based firm that tracks real estate trends nationally via public property records. A total of 8,826 new and resale houses and condos closed escrow in the combined Maricopa-Pinal counties metropolitan area in December, up 3.3 percent from November and up 30.5 percent from a year ago. A rise in sales between November and December is normal for the season. On average, sales have risen about 10 percent between the two months over the past 15 years.

Jumbo Mortgage Serious Delinquencies Rise to 9.6% - ( U.S. prime jumbo mortgages at least 60 days late backing securities reached 9.6 percent in January from 9.2 percent in December, the 32nd straight increase for “serious delinquencies,” according to Fitch Ratings. “The trend line for delinquencies indicates the 10 percent level could be reached as early as next month,” Vincent Barberio, a Fitch managing director in New York, said today in a statement. The rate almost tripled in 2009, Fitch said. Soured debt across loans backing so-called non-agency securities ballooned last year amid new defaults caused by slumps in home prices and employment, and as the federal government pushed loan servicers to consider debt modifications and states moved to slow foreclosures, reducing property liquidations after borrowers stopped paying. The share of borrowers current the previous month and that then turned delinquent fell to 1.2 percent in the month covered by January bond reports, down from 1.3 percent as of December reports, Fitch said. The jumbo sector of the non-agency market was the only one in which so-called roll rates -- or the amount of loans turning delinquent -- rose from a year ago, according to the statement.

Rash of retirements pushes Social Security to brink - ( Social Security's annual surplus nearly evaporated in 2009 for the first time in 25 years as the recession led hundreds of thousands of workers to retire or claim disability. The impact of the recession is likely to hit the giant retirement system even harder this year and next. The Congressional Budget Office had projected it would operate in the red in 2010 and 2011, but a deeper economic slump could make those losses larger than anticipated. "Things are a little bit worse than had been expected," says Stephen Goss, chief actuary for the Social Security Administration. "Clearly, we're going to be negative for a year or two." Since 1984, Social Security has raked in more in payroll taxes than it has paid in benefits, accumulating a $2.5 trillion trust fund. But because the government uses the trust fund to pay for other programs, tax increases, spending cuts or new borrowing will be required to make up the difference between taxes collected and benefits owed.

Greek Ouzo crisis escalates into global margin call as confidence ebbs - ( For the third time in 18 months the global financial system risks spinning out of control unless political leaders take immediate and radical action. Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity – while admirable in one sense – is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes. Barclays Capital says the net external liabilities of Greece are 87pc of GDP, or €208bn (£182bn). Spain is worse at 91pc (€950bn), and Portugal worse yet at 108pc (€177bn); Ireland is 68pc (€123bn), Italy is 23pc, (€347bn). Add East Europe's bubble and foreign debts top €2 trillion. The scale matches America's sub-prime/Alt-A adventure and assorted CDOs and SIVS of the Greenspan fling. The parallels are closer than Europe cares to admit. Just as Benelux funds and German Landesbanken bought subprime debt for high yield with AAA gloss, they bought Spanish Cedulas because these too had a safe gloss – even though Spain's property boom broke world records. They thought EMU had eliminated risk: it merely switched exchange risk into credit risk.


G7 talk on Greece will not soothe global investors - (

Corporate Bond Spreads Rise Most Since November - (

Priced Out Forever? Vancouver Renters and Basement Suites - (

Yes, There Are Foreclosures in Upscale Coral Gables, FL - (

FL's Broward property values take a nose dive - (

Metro Atlanta Foreclosures Jump In February - (

Money pit: What buying a foreclosure really costs - (

American mortgages: Return to lender - (

Gold and oil down. But not out? - (

Compared to West, Asia Has Few Debt Problems - (

US dollar will fall against yuan, but less so against rupee - (

Quiet Conflict With Goldman Helped Push A.I.G. to Precipice - (

Goldman's Banksters and Indymac - (

Corruption, Culpability and Short-Termism - (

Some Things Never Change - (

When healthcare coverage is insurance in name only - (