Wednesday, March 31, 2010

Thursday April 1 Housing and Economic stories


Defaulted loans may haunt seniors - ( A little–noticed law could soon result in smaller Social Security checks for hundreds of thousands of the elderly and disabled who owe the U.S. money from defaulted loans and other debts more than a decade old. Social Security benefits are off–limits to creditors, such as credit–card companies and banks. But the U.S. can collect debts to federal agencies by "offsetting," or withholding Social Security and disability payments. The Treasury currently withholds benefits of 3.1 million Social Security recipients to recover defaulted student–, farm– and small–business loans, unpaid income taxes, amounts veterans owe for health care, and other debts to the government. Previously, the U.S. hasn't been able to withhold Social Security payments to recover most debts delinquent for more than ten years. But a provision in the 2008 Farm Bill lifted the ten–year statute of limitations on the government's ability to withhold Social Security benefits in collecting debts other than student loans—for which the statute of limitations was lifted in 1997—and income taxes, where the limit remains 10 years. This means that a person who defaulted on a small–business loan in 1995, for example, and who is receiving Social Security could be notified that his benefits may be reduced each month until the debt, with interest, fees, and penalties, is paid. The Treasury can withhold 15% of the benefit, though it can't be reduced to below $750. Tax debts have no floor.

Las Vegas Mayor Says City Should Fire All Workers - ( If Las Vegas can't get the desired wage concessions out of its employee unions, the city should simply fire everyone and offer to rehire them to work a shorter workweek, Mayor Oscar Goodman said Wednesday. "I'm trying to save jobs. I really am," Goodman said. "If it's a strong-arm tactic, so be it. "If it's legal, I'm going to propose it to the council. I think it's the only way we're going to save jobs." Goodman ordered the city attorney to study the possibility. The idea didn't go over well with the unions. Several union presidents went so far as to call the mayor a bully. Councilman Ricki Barlow also said he disagreed with the mayor. There are 146 people's jobs on the chopping block right now as the city prepares for the 2011 fiscal year, which starts July 1. The City Council approved a preliminary budget plan Wednesday containing layoffs and service cuts that aren't as severe as what was initially proposed. There was extra money in the Fire Department's budget to stave off layoffs, and a community push to salvage programs at the Reed Whipple Cultural Center worked -- at the expense of an extreme sports program the city runs. The city faces a $70 million budget hole to fill and most likely a $40 million deficit in the next fiscal year, and the proposed solution to that hasn't changed. All employees, Goodman said, should forgo their scheduled raises and accept 8 percent pay cuts in each of the next two years.

Two Sets of MD Pension Books: One with Real Salaries, the other Includes What Government Documents Refer to as "Phantom" Cost-of-Living Adjustments - (Mish at As noted on numerous occasions, public union greed and arrogance has no bounds. Worse yet, today we have yet another major example that shows many elected politicians still have zero political willpower to do anything serious about it. In Montgomery, Maryland, the politicians are even willing to cook the books for the benefit of unions. Please consider Montgomery, Md., pension deal eases sacrifice for unions. The politics of shrinking government spending can lead to tortured math and bureaucratic back flips. In one of the Washington area's wealthiest counties, recession has prompted a bout of creative bookkeeping and something called the "Phantom COLA." As state and local officials from California to Miami have sought to cut payroll costs, officials in Montgomery County last year pressed government employees to forgo part of their negotiated pay raises. They did. But some of the county's powerful public employee unions also benefited from an unusual deal. Employee pensions -- already a major cost -- will be calculated as if employees had received their full raises. To manage that financial sleight of hand, county computer programmers must essentially set up two sets of books, one with employees' real salaries and another that includes what government documents refer to as the "phantom" cost-of-living adjustments.

Selling mansion? Expect to wait 3 years! - ( The latest O.C. home inventory report from Steve Thomas at Altera Real Estate says it may take nearly 3 years to sell the typical O.C. mansion by his math … “At the current pace, the overall market is a seller’s market without much appreciation at all. The number of distressed homes within the Orange County housing market is keeping a lid on appreciation. On the other hand, the higher end price ranges are experiencing a deep buyer’s market, the higher the price range, the deeper the buyer’s market. The hottest price range is homes priced between $250,000 and $500,000, with an expected market time of 1.75 months. Contrast that with homes priced above $4 million with an expected market time of 33.89 months.”

Kansas City School District Faces Bankruptcy, Closes 29 of 61 schools; Every Child Left Behind For Decades - (Mish at Please consider Kansas City Closing 26 Public Schools: Facing potential bankruptcy, the board that governs the once flush-with-cash Kansas City school district is taking the unusual and contentious step of shuttering almost half its schools. Administrators say the closures are necessary to keep the district from plowing through what little is left of the $2 billion it received as part of a groundbreaking desegregation case. The Kansas City school board narrowly approved the plan to close 29 out of 61 schools Wednesday night at a meeting packed with angry parents. The schools will close before the fall. Emotional board member Duane Kelly told the crowd of more than 200 people Wednesday night, "This is the most painful vote I have ever cast" in 10 years on the board. Some chanted for the removal of the superintendent, while one woman asked the crowd, "Is anyone else ready to homeschool their children?" Under the approved plan, teachers at six other low-performing schools will be required to reapply for their jobs, and the district will try to sell its downtown central office. It also is expected to cut about 700 of the district's 3,000 jobs, including about 285 teachers….. Simple Question: This problem did not happen overnight. School enrollment is half what it was 10 years ago. So why did it take 10 years for the district to do something? Please note that Covington took the job in July 2009 according to Wikipedia. On that basis he can be commended for doing a job long neglected for 10 years.

US budget deficit hits record $221bn - ( The US government recorded a budget deficit of $221bn (£147.6bn) in February - the largest monthly deficit in its history. The total deficit since the beginning of the fiscal year in October now stands at $651.6bn, the figures from the US treasury show. That puts it on track to beat last year's record annual budget deficit of $1.4tn. Treasury Secretary Timothy Geithner called the deficit "unsustainable". However, he maintained that running the deficit was helping the US continue its recovery from the recession in the short-term. Like the UK, the US is suffering from a fall in tax receipts due to tough economic conditions, while relying on increased spending to drive the recovery. But analysts called the figures "frightening". Earlier this year, the Congressional Budget Office (CBO) said it expected the budget deficit to fall this year as the recovery takes hold.


Origin of Housing Bubble: The "National Homeownership Strategy" - (

Central valley foreclosures increase by 6 percent in February - (

Weekly Unemployment Claims at 462,000 - (www.Mish)

Unemployment rate hits record high in Southern California - (

Credit Card Excess Contracting for First Time in 40 Years - (

A good deal on a bridge in Brooklyn - (

Politics, shaky economy create no rush to restructure Fannie and Freddie - (

GMAC bailout could cost taxpayers $6.3B - (

Greece's crisis could presage America's - (

Europe bars Wall Street banks from government bond sales - (

Goldman Sucks - (

Buying A House - (

Grayson introduces pay-as-you-go public option act - (

Tuesday, March 30, 2010

Wednesday March 31 Housing and Economic stories


Pelosi: We have to pass the health care bill so that you can find out what is in it - ( Youtube video where Nancy Pelosi said, "But we have to pass the [health care ] bill so that you can find out what is in it."

Virginia State Police Help With Budget Crunch (and job preservation) by Flooding Highways With Cops - ( A federally funded ticketing blitz in the state of Virginia landed a total of 6996 traffic tickets this weekend. The blitz, dubbed “Operation Air, Land & Speed” coincided with frantic efforts by state officials to close a$2.2 billion budget deficit. Supervisors ordered state troopers to saturate Interstates 81 and 95 to issue as many tickets as humanly possible over the space of two days. “The safety of Virginia’s highways begins the minute a vehicle is put in ‘drive,’” Virginia State Police Superintendent W. Steven Flaherty said in a statement. “Those split second decisions to choose not to drive drunk, to choose to wear a seat belt and to choose not to speed or drive aggressively really do make a difference in preventing and/or surviving a crash.” Officers had no trouble delivering the requested number of speeding tickets with a total of 3536 ordinary speeding citations written. In addition, another 717 “reckless driving” tickets were filed, although these most often are simple speeding tickets that happen to carry a fine of up to $2500. Driving as little as 10 to 15 MPH over the limit can qualify for this enhanced punishment. On the other end of the scale, some 310 tickets were handed to drivers who either forgot to wear their seatbelts or made a choice not to do so. Activists with the National Motorists Association pointed out that enforcement efforts may have concentrated on areas where speed limits are expected to rise to 70 MPH following Governor Bob McDonnell’s signature on legislation raising the state’s maximum speed limit (view law). This would mean a significant number of tickets were issued for conduct that will be perfectly legal in a matter of months. The group also indicated that state police tactics may run afoul of state law. “All officers making arrests incident to the enforcement of this title shall be paid fixed salaries for their services and shall have no interest in, nor be permitted by law to accept the benefit of, any fine or fee resulting from the arrest or conviction of an offender against any provision of this title,” Virginia Code Section 46.2-102 states.

Valley National Buys Two Banks in Two Days Amid Lender Failures - ( Valley National Bancorp, operator of more than 200 branches in New Jersey and New York City, acquired its second failed bank in as many days as U.S. lenders continue to collapse amid losses tied to real estate. Valley National agreed to acquire the $494.5 million of deposits held by Park Avenue Bank in New York City, which was shut yesterday by state regulators. It also agreed to buy “essentially all” of Park Avenue’s $520.1 million in assets, the Federal Deposit Insurance Corp. said in a statement. Wayne, New Jersey-based Valley National agreed to buy the deposits of LibertyPointe Bank, also in New York City, on March 11. U.S. lenders are collapsing at the fastest pace in 17 years amid losses on residential and commercial real estate loans made at the height of the market.“Problem” banks climbed to the highest level since 1992 in the fourth quarter and FDIC Chairman Sheila Bair said on Feb. 23 that the pace of failures will exceed last year’s total of 140. “There are a lot of bad banks out there,” said Jeffrey Rulis, a banking analyst at D.A. Davidson & Co. in Lake Oswego, Oregon. “As time passes the situation can only get worse and to the FDIC that only means more losses.” Gerald H. Lipkin, Valley National’s chief executive officer, said the bank picked up eight branches with the two transactions, which will immediately boost earnings. The FDIC said it agreed to share in losses on a total of $561.3 million of assets in the LibertyPointe and Park Avenue deals. Three U.S. lenders were seized yesterday, with total assets of $1.08 billion and deposits of $1.02 billion. Regulators have seized 30 U.S. banks this year after 140 lenders collapsed in 2009.

In Hard Times, Lured Into Trade School and Debt - ( One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools. At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year. But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students. “If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment,” said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. “They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.”

Retirement, what's that? - ( There's some news from the front lines of retirement in America, and it's not good. The latest annual survey by the Employee Benefit Research Institute (EBRI), which represents businesses, pension funds, unions, and others, shows that despite a giant stock market rally since last March, American workers' confidence that they will have a secure retirement remains near 2009's rock-bottom levels. A mere 16% of workers surveyed by EBRI said they were very confident they would have enough money for a comfortable retirement -- up slightly from 2009's Armageddon-like 13% -- while 19% of retirees said the same thing, roughly even with last year's numbers. But although their confidence has "stabilized," as EBRI puts it, their actual situation has deteriorated. Some 69% say they and/or their spouses have actually saved for retirement, down from 75% last year, and only 60% are currently saving for retirement -- a decline from 2009's 65%.

Apple’s Spat With Google Is Getting Personal - ( IT looked like the beginning of a beautiful friendship. Three years ago, Eric E. Schmidt, the chief executive of Google, jogged onto a San Francisco stage to shake hands with Steven P. Jobs, Apple’s co-founder, to help him unveil a transformational wonder gadget — the iPhone — before throngs of journalists and adoring fans at the annual MacWorld Expo. Google and Apple had worked together to bring Google’s search and mapping services to the iPhone, the executives told the audience, and Mr. Schmidt joked that the collaboration was so close that the two men should simply merge their companies and call them “AppleGoo.” “Steve, my congratulations to you,” Mr. Schmidt told his corporate ally. “This product is going to be hot.” Mr. Jobs acknowledged the compliment with an ear-to-ear smile. Today, such warmth is in short supply. Mr. Jobs, Mr. Schmidt and their companies are now engaged in a gritty battle royale over the future and shape of mobile computing and cellphones, with implications that are reverberating across the digital landscape.

New Jersey plans to privatize state jobs - ( Gov. Chris Christie today will create a commission to privatize as many as 2,000 state jobs beginning next January, officials said Wednesday night. As he grapples with an $11 billion deficit in the budget he will present on Tuesday, Christie is also considering invoking the Disaster Control Act to suspend Civil Service rules to make it easier for him to lay off higher-paid workers, according to two administration officials. The Republican governor today plans to sign an executive order creating the task force to cut the size and cost of the state payroll. Three officials familiar with his plans last night said the commission will identify which jobs or agencies would be operated by the private sector and how that would be accomplished. The officials declined to be named ahead of the announcement. Privatizing jobs would require layoffs. By beginning them in January, Christie would not be subject to a deal between former Gov. Jon Corzine and state worker unions that would require the state to pay millions in raises to remaining workers if he orders layoffs before then. Suspending civil service would allow Christie to order layoffs of higher-paid unionized state employees with many years of service, rather than the usual practice of layoffs that affect lower-paid new employees first, the officials said. Currently, workers with more seniority can "bump" less-experienced workers from their jobs. Christie's office declined to comment last night beyond a brief statement about his schedule, saying he will create "a task force to study and make recommendations on the potential efficiencies to be gained from privatizing certain functions of state government."


Findings on Lehman Take Even Experts by Surprise - (

Dodd to Unveil a Broad Financial Overhaul Bill - (

U.S., Europe at odds over global financial reform - (

GOP wants Dodd to slow down on financial reform legislation - (

Repos Played a Key Role in Lehman's Demise - (

Tensions escalate over China’s currency - (

Six imperatives for financial regulation: Summers - (

Wen Rebuffs Yuan Calls, Is ‘Worried’ About Dollar - (

Euro finance ministers to agree on Greek aid: source - (

Chinese premier slams U.S. 'protectionism,' says yuan is not too low - (

China calls currency pressure ‘protectionism’ - (

Trichet Says Rating Firms Will Respect ‘Courageous’ Greece Plan - (

China's new generation picky about factory jobs - (

Obama Focuses on 3 to Fill Fed Board - (

‘Black Swan’ Author Concerned About Hyperinflation - (

U.S. Michigan Consumer Sentiment Index Fell to 72.5 - (

AIG Was Unprepared for Financial Crisis, Former Top Lawyer Says - (

Google ‘99.9 Percent’ Sure to Shut Down in China - (

Private Equity’s Trojan Horse of Debt - (

Monday, March 29, 2010

Tuesday March 30 Housing and Economic stories


Teachers' union leads list of biggest political spenders - The California Teachers Association has spent more than $200 million on campaign contributions and lobbying efforts in the last decade, leading what the Fair Political Practices Commission calls a "billion-dollar club" of moneyed political interests. The FPPC's report, entitled "Big Money Talks," delves into the 25 biggest - at least in financial terms - political players in the state, which have collectively spent $1.3 billion on political action in the last 10 years. "This tsunami of special interest spending drowns out the voices of average voters," FPPC chairman Ross Johnson said in a statement, "and intimidates political opponents and elected officials alike." The $211.9 million spent by the CTA is nearly twice as much as the $107.5 million committed by the second-highest spender, the California State Council of Service Employees, but after those two union groups, the remaining 13 on the Top 15 list are all either business groups, such as No. 3 Pharmaceutical Research and Manufacturers of America ($104.9 million), individual corporations or casino-owning Indian tribes, which have three of the 15 top spots.

Kansas City, Facing Bankruptcy, Closing Half Its Schools - ( Facing potential bankruptcy, the board that governs the once flush-with-cash Kansas City school district is taking the unusual and contentious step of shuttering almost half its schools. Administrators say the closures are necessary to keep the district from plowing through what little is left of the $2 billion it received as part of a groundbreaking desegregation case. The Kansas City school board narrowly approved the plan to close 29 out of 61 schools Wednesday night at a meeting packed with angry parents. The schools will close before the fall. Although other districts nationwide are considering closures as the recession ravages their budgets, Kansas City's plan is striking. In rapidly shrinking Detroit, 29 schools closed before classes began this fall, but that still left the district with 172 schools. Most other districts are closing just one or two schools. Emotional board member Duane Kelly told the crowd of more than 200 people Wednesday night, "This is the most painful vote I have ever cast" in 10 years on the board. Some chanted for the removal of the superintendent, while one woman asked the crowd, "Is anyone else ready to homeschool their children?" Kansas City Councilwoman Sharon Sanders Brooks said the closure plan had prompted some housing developers to consider backing out of projects.

Strike Paralyzes Greece; Protests Turn Violent - ( reek public and private sector workers went on strike on Thursday, grounding flights, shutting schools and halting public transport in the second nationwide walkout in two weeks in protest against austerity plans. Athens' streets echoed with loud-speakers blaring slogans calling for the rich to pay for a severe debt crisis, as thousands marched against cuts in civil servants' income, tax hikes, a pension freeze and increase in the retirement age. "No sacrifice for the rich!" protesters chanted, beating drums and holding banners reading: "Where did the money go?" Greek police fired teargas at groups of stone-throwing youths in central Athens. Police first fired teargas at a group of 50 youths in the anarchist neighbourhood of Exarchia, away from the main protest. But soon after, clashes erupted at the march with some 30 youths hurling sticks and stones at police, who returned with several rounds of tear gas. There were no reports of injuries. An official at the Citizen Protection Ministry said some 200 youths, whom he described as anarchists, were participating in the march.

Europe's banks brace for UK debt crisis - ( UniCredit has alerted investors in a client note that Britain is at serious risk of a bond market and sterling debacle and faces even more intractable budget woes than Greece. The Italian-German group, Europe's second largest bank, said Britain's tax structure will make it hard to raise fresh revenue quickly enough to restore confidence in UK public finances. "I am becoming convinced that Great Britain is the next country that is going to be pummelled by investors," said Kornelius Purps, Unicredit's fixed income director and a leading analyst in Germany. Mr Purps said the UK had been cushioned at first by low debt levels but the pace of deterioration has been so extreme that the country can no longer count on market tolerance. "Britain's AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that," he told The Daily Telegraph. "Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points."

Geithner warns of rift over regulation - ( Tim Geithner, US Treasury secretary, has delivered a blunt warning to the European Commission that its plans to regulate the hedge fund and private equity industries could cause a transatlantic rift by discriminating against US groups. A letter sent by Mr Geithner this month to Michel Barnier, Europe’s internal market commissioner, makes it clear that the European Union is heading for a clash with Washington if it pushes ahead with what the US – and Britain – fear could be a protectionist law. The debate over the shape of future financial regulation has reached a critical point in Brussels. Diplomats were on Wednesday night moving closer to a compromise on the sweeping overhaul that has angered the industry and worried institutional investors. The draft EU directive would impose tighter restrictions on hedge funds, private equity and other alternative investment funds. It has caused alarm in the City of London, where some in the industry say it is a thinly veiled attempt by France and Germany to undermine the UK’s dominance of financial services.

Obama’s Student Loan Overhaul Endangered - ( With Democratic Congressional leaders and the White House struggling on Wednesday to finalize the details of major health care legislation, House Democrats were desperately trying to prevent another of President Obama’s top legislative priorities – an ambitious overhaul of student loan programs – from becoming a casualty of the health care battle. But Democrats in the Senate, where the private student lending industry has strong allies, predicted on Wednesday night that the education bill would not be part of an expedited budget measure containing the final revisions to the health care legislation. Some Democrats said that such a move would stall the student loan changes at a minimum for several months, and perhaps kill the overhaul altogether. Mr. Obama’s plan would end a program in which the government pays private, for-profit student lending companies to make risk-free loans using taxpayer money. Instead, the proposed overhaul would broaden the government’s existing direct-lending program, saving billions of dollars that the president had proposed using to expand Pell grant scholarships for low-income students.

Politics, shaky economy create no rush to restructure Fannie and Freddie - ( The federal government has spent the past half year seeking to roll back its emergency efforts at propping up the financial markets -- with the notable exception of its involvement in mortgage giants Fannie Mae and Freddie Mac. As the government has pledged more and more money to cover the companies' losses, it has assured the public that planning was underway for overhauling the firms so the bailouts would end. As recently as December, the Obama administration said it expected to release a preliminary report on how to remake Fannie Mae and Freddie Mac around Feb. 1. But no plan was produced, and in response to questions from lawmakers, Treasury Secretary Timothy F. Geithner clarified last month that it would be another year before the government proposes how to restructure the firms. Sixteen months after they were seized to prevent their collapse, the companies remain wards of the state, running a tab that has now exceeded $125 billion in what has become the single costliest component of the federal bailout for the financial system.


Beneath the U.S. jobs data, signs of rot - (

Dollar reverses gains after U.S., Chinese data - (

Stocks trade flat on concern about China inflation - (

Senate Bill on Finance to Include Agency That Tracks Financial Risk - (

Senate’s Dodd Plans to Release Financial Overhaul Bill - (

Credit Market Springs to Life - (

Sovereign Funds Rise to $3.51 Trillion, Preqin Says - (

Pimco’s El-Erian Says Public Finance Shock May Deepen - (

Bond Spreads at Narrowest This Year Lure GMAC: Credit Markets - (

New York may have to borrow to bridge deficits - (

Goldman Deal-Maker Now Advocates Regulation - (

Private-Equity Acquisitions May ‘Thrive’ This Year, Gogel Says - (

China’s Inflation Quickens as Industrial Production Climbs - (

Greeks Hold National Strike Over Budget Cuts - (

China February New Lending Falls, Easing Risk of Asset Bubbles - (

Trade Gap in U.S. Unexpectedly Falls as Imports Drop - (

Jobless Claims in U.S. Declined Last Week to 462,000

Unemployment tops 20% in eight California counties - (

Foreclosure rates up by smallest amount in 4 years - (

BofA under regulatory pressure to shrink: report - (

Sunday, March 28, 2010

Monday March 29 Housing and Economic stories


Aurora, CO City Council approves "blight" plan to benefit developers - ( An empty field at the intersection of Interstate 70 and E-470 was deemed blight Monday in a narrow vote, paving way for a controversial public financing plan for a private developer. The vote was part of their regularly scheduled meeting. After a public hearing on the issue, city council members voted 6-4 to blight the vacant field, setting in motion the beginnings of a $1.5-billion, mixed-use development project that would be partially public-financed. Council members Molly Markert, Ryan Frazier, Renie Peterson and Melissa Miller opposed the project. Lend Lease, an Australian-based developer with offices in Denver, plans to develop the 503-acre parcel of land into the Horizon Uptown project, which would include office space, residential homes, a school and a library. Lend Lease has asked the city for $90 million by way of a Tax Increment Financing district. About $60 million would be diverted from school districts to fund the project and would be backfilled by the state. At the hearing, critics of the plan said public money shouldn’t be given to private developers, and farmland shouldn’t be considered blight. “I am opposed,” said Aurora resident Elizabeth Watson. “It’s out on the prairie and I can’t understand why it would be a blighted area.”

Miami-Dade hospital system nears insolvency - ( The city's major hospital network, which runs Miami's only round-the-clock trauma center and is a safety net for the poor and uninsured, is running out of money and could close, a predicament that illustrates the precarious financial state of many hospitals around the country. The Jackson Health System will have little cash on hand by the end of March if it does not receive a $67 million advance from the county, said Marcos Lapciuc, treasurer of the Public Health Trust, the institution's governing board. "We are very close, if not already in, a health care death spiral," Chief Operating Officer David Small said. Jackson could run out of cash and shut by May or sooner, Lapciuc said, and the county mayor said officials were preparing to advance the hospital some money. "Sadly, it's not all that unique," Larry S. Gage, president of the National Association of Public Hospitals & Health System, said of financial difficulties like the one Jackson is facing.

County responsible for paying Jackson's union workers - ( With Jackson set to run out of cash in two or three months, the county attorney says Miami-Dade must keep paying Jackson's union workers -- but not others. If the Jackson Health System runs out of cash, the county would be responsible for paying Jackson's 10,500 union workers, but not necessarily the other 1,500 employees, according to a legal analysis by County Attorney R.A. Cuevas Jr. It's unclear exactly how big a tab that might be, but it would be a huge chunk of the $86 million of salaries and benefits that the public hospital system spends each month. At present, Jackson is expected to run out of cash in May or June unless drastic cuts are made. This revelation on the county's responsibility comes just before a special meeting scheduled for Wednesday by the Miami-Dade County Commission ``to really understand the issues . . . being faced by the community's safety net hospital,'' according to the memo from Chairman Dennis C. Moss, who ordered the meeting. Cuevas' memo explores many issues in the relationship between Jackson and the county and raises the possibility that Gov. Charlie Crist might set up an oversight panel to administer the financially troubled institution, much the same way that Gov. Lawton Chiles created a financial emergencies board in 1996 to get the city of Miami back on track.

Can California declare bankruptcy? What about Greece? - ( California passed a gas tax last week to help make up for its nearly $20 billion budget gap, the latest in a series of measures to right the state's teetering economy. The country of Greece is in even worse shape, with accumulated debt higher than 110 percent of GDP, set to reach 125 percent this year. Can a state declare bankruptcy? Can a country? No and no. Chapter 9 of the U.S. bankruptcy code allows individuals and municipalities (cities, towns, villages, etc.) to declare bankruptcy. But that doesn't include states. (The statute defines "municipality" as a "political subdivision or public agency or instrumentality of a State"—that is, not a state itself.) For one thing, states are said to have sovereign immunity, as protected by the 11th Amendment, which means they can't be sued. In other words, they don't need any protection from angry creditors who would take them to court for failing to pay their debts. As a result, states can simply borrow money ad infinitum.

Developers New Scam: transfer tax paid to developers, forever - ( Apparently, developers feel they haven't been getting theirs. With new home development stalling, developers seem to think that the only way they can increase profitability is to build it into their work. Behold then, the latest financial scheme from the housing industry: a flip tax that gets paid to the developer every time the home gets sold. Not surprisingly, developers are embracing the private transfer fee -- a sort of lien attached to a newly built house (or land), reports the Washington Post. Every time that house is sold over a 99 year period (thank God we're not talking about 100 years!!), 1 percent of the price gets kicked back to the original developer and, in some cases, is shared with their investor partners. When you figure that the average homebuyer these days keeps a house for about 6 years, that's one hell of a revenue stream for developers and their investors! Reportedly, a New York company, Freehold Capital Partners, is signing up developers for this fee scheme left and right, though it refused to tell the WashPo just how many clients it now has. It's Web site, however, claims the owners of $300 billion in real estate projects have now gone into business with it.

Defaults Signal Bursting Muni Junk Bubble After Surge - ( Investors in search of better returns poured $7.8 billion into high-yield municipal bond funds last year, pushing assets to a two-year high. They may start experiencing losses as early as this year as default risks grow. “People are starving for yield because rates are at zero,” said Paul Tramontano, co-chief executive officer of New York- based Constellation Wealth Advisors, which manages about $4 billion. “They’re taking more risk than they think.” Below-investment grade munis are typically issued by companies raising debt through a municipality for a project with a public interest such as hospitals, nursing homes, housing developments and sports stadiums, said Eric Jacobson, director of fixed-income research for Morningstar Inc. “In order to be muni-junk, you really have to be junk,” said Gary Pollack, who helps oversee $12 billion as managing director of fixed income for Deutsche Bank AG’s Private Wealth Management unit in New York. “I wouldn’t touch them.”


High-end home prices in a freefall - (

U.S. Businesses Continued to Cut Inventories in January - (

FHA, Fannie, Freddie, etc, all make housing LESS affordable - (

Florida's Defaulting Real Estate Municipal Bonds - (

Why California Is Doomed - (Charles Hugh Smith at

Fed sees 'little change' in West's housing - (

Are we facing a second house price crash? - (

Most Americans still unprepared for retirement - (

Public Pensions Are Adding Risk to Raise Returns - (

The Magic Disappearing Act of American Jobs - (

Jobless face credit checks, despite growing criticism - (

Are You Sure It's A Bull? It Tastes Like Chicken - (

Four Scariest Words Of Markets: "It's Different This Time" - (

Saturday, March 27, 2010

Sunday March 28 Housing and Economic stories


Public Pension Funds Are Adding Risk to Raise Returns - ( States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement. Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds. But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk. “In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.” Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now. The Texas teachers’ pension fund recently paid Chicago to receive a stream of payments from the money going into the city’s parking meters in the coming years. The deal gave Chicago an upfront payment that it could use to help balance its budget. Alas, Chicago did not have enough money to contribute to its own pension fund, which has been stung by real estate deals that fizzled when the city lost out in the bidding for the 2016 Olympics.

Proposed initiative aims at Muni drivers' pay - ( A San Francisco supervisor is following through on his plan to curb Muni's labor costs and on Monday submitted a proposed initiative for the November ballot. The plan takes direct aim at a controversial salary formula enshrined in the city charter that for more than four decades has guaranteed Muni drivers their spot as the second highest-paid transit operators in the nation. It also would eliminate a trust fund for Muni operators that has resulted in yearly payouts of up to $3,000 for full-time operators. The fund originally was established to help defray health care costs for dependents, but operators can use that money any way they choose. Under the proposed charter amendment, the city would be required - in the first contract only - to provide the same health coverage to Muni operators as the majority of other city employees. Supervisor Sean Elsbernd believes that by making the big-ticket costs of salaries and benefits part of contract negotiations, management may have more leverage to enact changes in work rules, such as scheduling and discipline, to make the system more efficient.

San Francisco Infested with Union Parasites and Pestilence; Outrage Over Transit Worker Pay - (Mish at In San Francisco, greedy public unions finally overplayed their hand. It's happening all across the country actually, but every city, county, township thinks "It's different here". The news of the day for unions and their sympathizers is the public is finally fed up being raped by public unions. The San Francisco Chronicle reports Outrage grows over Muni operators' pay. The city's Muni operators are about to have one of those "uh-oh" moments. You know, that awkward instant when a group realizes that it overplayed its hand - badly. Even in San Francisco, a union town where labor issues are treated with kid gloves, politicians and transit riders are teeing off on the drivers like they stole rent money from little old ladies. "There is no question in my mind that they completely misread the public," Mayor Gavin Newsom said Wednesday. "Either they step up or the people of San Francisco will." Friday, the Municipal Transportation Agency will vote on ways to balance its budget.

Merkel calls for urgent CDS clampdown - ( Germany and France are stepping up the pressure for urgent action by the European Union to regulate speculation in sovereign debt markets, in the wake of the Greek debt crisis. Angela Merkel, German chancellor, called on Tuesday for the “fastest possible” adoption of new rules to clamp down on the most speculative elements of derivatives trading, including so-called naked transactions, which do not hedge the value of real assets. Speaking after talks with Jean-Claude Juncker, the Luxembourg prime minister, and chairman of the Eurogroup of finance ministers from the eurozone, she said: “We are all agreed that we must put a stop to financial speculation.” Mr Juncker also pledged his support for the longer-term German initiative to set up a European Monetary Fund to deal with national debt crises within the 16-country eurozone. But France and Germany seem to be going slow on that idea in favour of their anti-speculation drive, after criticism in both countries. Axel Weber, president of the German Bundesbank, described the debate over a monetary fund as “unhelpful” and “a sideshow that will distract from the necessary (fiscal) consolidation”.

Making Sure Wrong Home Isn't Seized - ( Reports of lenders repossessing the wrong home are further tarnishing the banking industry's image, already bruised by bailouts and bonuses. The mix-ups have been perpetuated by the sheer number of foreclosures being processed today as well as the various layers of communication involved. Addresses and other information passed from one department to another, or from a contractor to a subcontractor, can get garbled along the way. "It's what you call a new weakness," said Joe Bada, chief executive of Five Brothers Mortgage Co. Services and Securing Inc., a Warren, Mich., company that inspects and manages foreclosed properties for lenders. "There's just so much happening at the same time. The means of communicating haven't been refined. Information is not moving fast enough from one department to the other." Though such gaffes are rare, they have happened enough times to lead at least one major servicer to rethink and retool its default-management process. Bank of America Corp., the nation's largest servicer, is updating its contractor-training tools and adding a step when securing a property to ensure that the right home receives the repossession notice. B of A "rekeys" - changes the locks - on about 16,000 properties a month, said Rebecca Mairone, the Charlotte company's head of servicing. In the last seven months, B of A is aware of just 11 mistakes. That gives it an accuracy rate of about 99.99%. Still, B of A has been burned. Many of the more recent stories in the news about foreclosure mistakes have involved the company. There's the case of Alan Schroit, for example, who filed a lawsuit against B of A in January claiming the lender mistakenly seized his Galveston, Texas, vacation home. According to the suit, Schroit did not have a mortgage with B of A, or any other lender. His case in federal court in Texas is still pending. Similar incidents involving B of A have been reported in Spring Hill, Fla., in January and Trenton, N.J., in December.


States, Cities Likely to Slash Jobs as Stimulus Dwindles - (

Greece says finance problems a broader issue - (

World stocks off 6-week high; oil tumbles - (

Bailed-Out Financials Surge on Optimism About Assets - (

Citi Pricing Preferred Offering: Pisani - (

Yuan Faces Appreciation Pressure on Rates, SAFE Says - (

World equities up 73 percent a year after crisis low - (

Greece to Press U.S. to Crack Down on ‘Speculators’ - (

Toyota, US Officials Investigate Runaway Prius - (

US Looking to Legally Challenge China Censorship - (

China May Raise Rates ‘Within Weeks’ as Prices, Exports Climb - (

NY Fed warns against rapid sale of assets - (

Cisco Introduces Faster Router to Lure Carriers - (

Citigroup Selling TruPS After Repaying Bailout: Credit Markets - (

Look Ahead: Stocks Adrift a Year Back from Brink - (