Friday, April 30, 2010

Saturday May 1 Housing and Economic stories


Owners demand lower tax valuations (but higher selling prices) - ( Local Property Taxes Bloated Because of Assessment Lags; Big Delays in Nevada, Connecticut. Never judge a house by its tax bill. That's the lesson Don Newby, 65, is learning. The construction manager from Gibbsboro, N.J., is paying boom-era property taxes on a home that has lost 20 percent of its value in the past three years. He blames the Gibbsboro tax authorities, who haven't reassessed property values in the town since 2003. "That's absurd," says Newby, who pays $14,000 a year in taxes on a four-bedroom, bi-level modern house in the New Jersey township near Philadelphia. Newby, who was unemployed for a year after the economic collapse, says he believes the government is intentionally delaying new assessments to benefit from the lag as long as possible. "When you watch how property values have come down, it appears I could save almost $2,000 in taxes," he says.

Destitute and desperate, Icelanders opt for exile - ( Anna Margret Bjoernsdottir never thought she would be forced to leave her once wealthy homeland, but after 18 months of economic upheaval she has decided to join the biggest emigration wave from Iceland in more than a century. "I just don't see any future here. There isn't going to be any future in this country for the next 20 years, everything is going backwards," lamented the 46-year-old single mother, who plans to move to Norwayin June. The former real estate agent who lost her job when Iceland's housing market disintegrated two years ago said she feared she could soon be forced out of her large house in Mosfellsbaer, some 15 kilometres (nine miles) from Reykjavik. "I don't want to sell it," she said, vowing to "fight to keep" the comfortable wooden dwelling she, her daughter Olavia, their cat Isolde Tinna and their dog Candit the Bandit have called home since 2004. Bjoernsdottir is not alone in planning to leave Iceland's economic mess behind and seek a new future abroad. Most people in Reykjavik have someone in their surroundings who has already packed their bags and left. Emigration has rapidly picked up speed since the Atlantic island nation's economy crumbled in late 2008, dragged down by the collapse of its major banks. Last year it marked the largest exodus from the country since 1887.

Gold Fraud Bombshell: Canada's Only Bullion Bank Gold Vault Practically Empty - ( Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA's Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: "The game ends when the people who own all these paper obligations say enough and take physical delivery, and that's when the mess will occur."

Mountain of foreclosures in Colorado resort communities - ( Harry Cessna admits he has struggled to make payments on the modular home he bought in Gypsum in 1989 with his soon-to-be wife. He was late a couple of times as he helped his wife fight cancer for two years, a battle she lost in 2007. Without her salary, Cessna, a house painter, could barely make payments on the acre-lot home bought for $55,000. He used his G.I. Bill money as a down payment. Now, painting jobs in the Vail Valley have dried up along with the rest of the construction industry. He has filed for bankruptcy. Last month, the bank foreclosed on his home. While foreclosure sales have been on the downturn along the Front Range, mountain communities are experiencing increases often of triple-digit percentages as homeowners from the wealthy on down lose their properties. "I sat here — happy and content in my little home — and watched all these big boys play with money, and I saw how greedy everyone got, selling and going bigger and selling and going bigger. Now I'm getting punished along with the rest of them," said Cessna, 52, who has a teenage son. One of those "big boys" is John, a former top-producing loan officer for Bank of America who owes $1.2 million on his 5,000-square-foot home in Edwards and is in foreclosure.

Greenspan says goal of housing trumped all - ( Federal Reserve Chairman Alan Greenspan said Congress would have intervened had the central bank tried to slow down the risky housing bubble. Testifying for the Financial Crisis Inquiry Commission in Washington, Greenspan said there was "a fairly broad consensus" concerning a goal of supporting housing and that "Congress would have clamped down on us," had the Fed interfered with that goal, The New York Times reported Wednesday. Greenspan, who said the Fed issued warnings about risky lending in 1999 and 2001, met with harsh questioning from Brooksley Born, a member of the panel examining the causes of the financial crisis. Born said Greenspan "appropriately" considered regulation "preventative" in nature. "But the Fed utterly failed to prevent the financial crisis ... the housing bubble …predatory lending … (and) our biggest banks and holding companies from engaging in activities that would bring them to the verge of collapse," she said. Greenspan said it was inaccurate to assume "my views on regulation were predominant and effective at influencing the Congress."

Foreclosures Surge in CA's Central Valley - ( Foreclosure rates across the Central Valley increased in February compared to the year before, according to a report released Wednesday by First American CoreLogic, a real estate information company based in Santa Ana. In Chico the rate of foreclosures among outstanding mortgage loans was 2.26 percent for the month of February, an increase of 0.95 percentage points compared to February 2009 when the rate was 1.31 percent. But foreclosure activity in Chico is lower than the national foreclosure rate, which was 3.17 percent for February 2010, representing a 0.91 percentage point difference. Also in Chico, the mortgage delinquency rate has increased. According to First American CoreLogic data for February 2010, 7.77 percent of mortgage loans were 90 days or more delinquent compared to 4.36 percent for the same period last year, representing an increase of 3.40 percentage points. Foreclosure rates in Fresno also increased for the month of February over the same period last year, according to First American CoreLogic.


Your house value hasn't changed - (

Yet China Has High Speed Rail Which The US Does Not - (

Big House Price Declines Still to Come in SF Bay Area - (

SF Bay Area Rent Distribution vs Price Distribution - (

Fed's Hoenig Urges Raising Fed Funds Rate "soon" - (

Only Story Is Deflation; Consumer Spending Up Due To Mortgage Walkaways - (

Bank's real estate equity horror - (

Canadian Housing Boom-Boom Around The Corner - (

China on Treadmill to Hell Amid Bubble - (

Southern California apartment rents are expected to keep falling - (

Nearly 17 percent of Tampa houseowners three months behind on mortgage - (

Thursday, April 29, 2010

Friday April 30 Housing and Economic stories


Sheriff's friends benefit from foreclosures - ( The foreclosure crisis that has impacted Summit County homeowners has been a financial boon for a select few friends of Sheriff Drew Alexander. Fifteen men, mostly retired police officers with little or no appraising experience, combined to earn more than $1.2 million working part time setting property values for the sheriff's office last year. The group includes former Akron police Capt. John T. Cunningham, Alexander's campaign treasurer, whose appraisal work paid him $131,361 last year. Since 2004, Cunningham has earned more than $570,000. Eight appraisers working part-time hours earned more than $109,000 in 2009, topping Alexander's annual salary. In kind, the appraisers were equally generous, contributing more than 16 percent of Alexander's campaign funds since 2008, the sheriff's finance reports show. The lucrative work, established by law seven decades ago in Ohio, is drawing closer scrutiny by newspapers across the state as governments scrounge for revenue and office holders like Alexander are laying off workers. Last year, the sheriff laid off 30 deputies to save $1.7 million as the appraisers were pulling in more than a million dollars to perform an obligatory task that does little more than set the opening bid at a sheriff's sale. In an interview last week, Alexander, a former Akron officer, said he has only hired trusted friends and political supporters to fill the spots. In fact, two of his predecessors, former sheriffs Robert Campbell, who died in 2008, and David Troutman, who died in 2009, worked as appraisers under Alexander. Alexander said the fees are high, but an aberration, bloated only because of the widespread foreclosures that have plagued the county and state for five years.

Mayo property prices worst hit in Ireland since bubble burst - ( THE housing market in Mayo has been the worst hit in the country since the collapse of the property bubble. Asking prices for second-hand houses in the county have plummeted by more than a third since its peak. The latest property barometer issued by property website makes for depressing reading with homes in Co Mayo dropping by a staggering 34.6 per cent in three years. Sligo has also been hit hard with a 27.5 per cent drop in second-hand prices since the recession. The average asking price of a three bed semi-detached home in Sligo now stands at €204,964. Galway has been the least affected county in the West and one of only a few counties in the country with a drop in property prices of less than 20 per cent. Asking prices have only fallen by 19.44 per cent and a three bed semi in the Tribes county will cost in the region of €246,759.

Destitute and desperate, Icelanders opt for exile - ( Anna Margret Bjoernsdottir never thought she would be forced to leave her once wealthy homeland, but after 18 months of economic upheaval she has decided to join the biggest emigration wave from Iceland in more than a century. "I just don't see any future here. There isn't going to be any future in this country for the next 20 years, everything is going backwards," lamented the 46-year-old single mother, who plans to move to Norway in June. The former real estate agent who lost her job when Iceland's housing market disintegrated two years ago said she feared she could soon be forced out of her large house in Mosfellsbaer, some 15 kilometres (nine miles) from Reykjavik. In 2009, more than 10,600 people left the country of fewer than 320,000 inhabitants, according to official statistics, with 4,835 more people moving away than immigrating. In a March 6 referendum, more than 93 percent of Icelandic voters rejected a deal to repay Britain and the Netherlands at a high interest rate. Reykjavik has since said it will try to secure a more favourable agreement. Bjoernsdottir was among those who voted down the deal -- and says the debacle strengthened her determination to leave Iceland. "I don't want my daughter to have to pay for this," she said. "I just have such a bad feeling about what's happening here."

Property Tax Rebellion Brewing After Real Estate Collapse - ( Americans grumble that local tax assessors haven't caught up with the real estate downturn, leaving homeowners with unfairly high property taxes. Many disgruntled homeowners are challenging authorities, either by appealing their tax bills or mobilizing groups to push for tax-law overhaul. The National Taxpayers Union, a Washington-based advocacy group, estimates that 30-60 percent of homeowners are over-assessed each year. The problem stems largely from a simple technicality: Home values in most states are reassessed every few years, according to data from Therese McGuire, real estate professor at Northwestern University's Kellogg School of Management. In Nevada, for example, one of the states hit hardest by the housing crunch, the average time between assessments is five years, while in Connecticut the average cycle is 10 years. U.S. homeowners paid a median $1,897 in property taxes in 2008, according to the Tax Foundation, a Washington-based advocacy group, with New Jersey residents paying the highest bill at $6,320 annually, 1.74 percent of home values. New Jersey doesn't have the highest property rates, however. Texas wins that distinction, with localities on average charging homeowners property taxes worth 1.76 percent of their home value. The assessor in Illinois' Cook County, the nation's second-largest county, lowered assessments last year for all the homes under his jurisdiction, estimating home values by measuring foreclosure rates and sales data. Cook County includes Chicago and its sprawling suburbs. In other localities, however, governments can't afford to lose tax revenue. In many areas where reassessments have already taken place, governments have simply raised property tax rates to make up for the loss.

Judge Holds Off Boston Scientific Unit Plea in Probe - ( A federal judge reserved ruling on a guilty plea by Boston Scientific Corp.’s Guidant unit to charges it hid problems with its implantable heart defibrillators, citing objections raised by plaintiffs suing the company. U.S. District Judge Donovan Frank in St. Paul, Minnesota, said yesterday he will rule on the plea and a related settlement within three weeks when he decides whether to put the company on probation and order restitution. Boston Scientific agreed to pay $296 million in November to settle a U.S. Justice Department probe of the unit’s handling of the devices. “I have a locker full of angry letters from plaintiffs,” Frank said. The medical device-maker agreed to plead guilty to two misdemeanors for excluding defibrillator-malfunction reports from product updates sent to doctors and failing to alert the U.S. Food and Drug Administration to the defects.

Subprime warnings ignored, ex-Citi executive says - ( Citigroup management ignored an internal warning that most of the mortgages it was selling were defective, a former executive testified Wednesday. Former executives at Citigroup Inc. and New Century Financial Corp. told the Financial Crisis Inquiry Commission on Wednesday how their firms helped create and sell the subprime mortgages and mortgage-backed securities that fueled the housing bubble. The executives testified to the commission right after former Federal Reserve Chairman Alan Greenspan left the hearing room after a morning of testimony. Read complete story on Greenspan's defense of his actions. Greenspan fefends his tenure at Fed: Former Federal Reserve Chairman Alan Greenspan denied that the U.S. central bank helped inflate housing prices and isn't to blame for the subprime fiasco. Courtesy of Reuters. Richard Bowen, who was business chief underwriter during his time at Citigroup, said he warned executive committee chairman Robert Rubin about the destructive practices occurring in the company's mortgage arm. Bowen said he discovered in 2006 that "60 percent of the mortgages bought and resold by the company were defective," meaning they were not up to Citi's guidelines.

Health insurance to be required for UNCW students ~ Fall 2010 - ( Beginning in Fall 2010, health insurance will be required for all UNCW students. This may be insurance the students bring with them (family, employer, etc), insurance they purchase through the school, or a combination of both plans. Students who have their own insurance and do not want to purchase the insurance through the school will need to complete an on-line waiver each fall, providing details about their current insurance plan. Any student who does not waive out of the insurance plan will be charged the premium and automatically enrolled in the program. Pearce & Pearce will be the insurance vendor and the annual premium will be $673. Plan highlights include $1,000,000 lifetime maximum coverage; a $300 deductible; coverage for immunizations, prescriptions and wellness services; and no deductibles or co-pays at the Student Health Center.


Owners demand lower tax valuations - (www.but higher selling prices) - (

Mortgage rates jump, forcing house prices down - (

Housing Won't Heal Until the Renters Come Back - (

Landlords: How Long Before You Lower Asking Rent? - (

Chase Allegedly Told Houseowner To Stop Payments, Then Foreclosed - (

Foreclosures Will Drive the National Economic Recovery - (

Destitute and desperate, Icelanders opt for exile - (

The Canada bubble - (

Steep Increase in Personal Bankruptcies in March - (

Bernanke Says Joblessness, Foreclosures Pose Hurdles - (

FOMC Minutes on Housing - (

Panel: Ex-Fed Chief Fueled Meltdown With Low Rates - (

Greenspan says goal of housing trumped all - (

Greenspan: Don't Blame Me - (

Thanks to Greenspan and Bernanke next crisis could be "even scarier" - (

Citigroup executives: "we warned about mortgage risk" - (video –

Wednesday, April 28, 2010

Thursday April 29 Housing and Economic stories


Another brutal day for Greece - ( Despite rescue plan, country's borrowing costs hit new highs Wednesday and stock market sags as investors worry about possible default. After enacting painful austerity measures and winning a deal for a European and International Monetary Fund financial backstop, Greece is back in a familiar position: Borrowing costs have skyrocketed and the stock market is sagging. Predictions of default or an expensive bailout are again on the rise, leaving investors to wonder: what's next for the country's struggle to pull itself out of the debt crisis? Prime Minister George Papandreou on Wednesday said a joint euro zone-IMF financial rescue plan, agreed in Brussels on March 25, had helped his country's recovery effort. “This was clearly a great success for our country ... it guaranteed a safety net for Greece and another country that could face a similar problem,” he said. “We got a breathing space, we gained time.” But Mr. Papandreou's upbeat message was undermined by another brutal day for Greece in the markets, and increasingly dire predictions by analysts.

U.S. Banks Hid Risk by Lowering Debt Before Reporting - ( U.S. banks masked their true risk levels by temporarily lowering debt before reporting it, the Wall Street Journal said, citing data provided by the Federal Reserve Bank of New York. Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and 13 other banks all understated the amount of debt used to pay for securities trades by cutting them by an average of 42 percent at the end of five quarterly periods; the debt levels were then boosted midway through each quarter, the newspaper said. After the collapse of Lehman Brothers Holdings Inc., spurred in part by excessive borrowing, in 2008, banks have become more concerned that reporting high debt levels could jeopardize share prices and credit ratings, the Journal said. While not illegal, the practice can distort investors’ impression of risk being taken by banks, the report said. Hong Kong-based spokespeople for Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup declined to comment on the Fed data or the report. Banks not identified in the report confirmed that they temporarily cut borrowings at the end of a quarter and some noted their regulatory filings tell investors debt levels can rise and fall during the quarter, the Journal said.

Las Vegas Apartment market said to need decade to recover - ( Apartment market said to need decade to recover. 2009 marked a 90.5 percent drop in sales from three years ago. Southern Nevada's beleaguered apartment sector is hoping for brighter days ahead. It may be a while, though. The apartment market suffered an ugly downturn in 2009, with plunging rents, soaring vacancies and virtually no sales. A return to normalcy could take a decade or more, says one industry official. "We had a gold rush taking place between 2004 and 2007, with a population and hotel building boom," Hendricks & Partners apartment specialist Carl Sims said. "We were on a honeymoon. Our forecast is it could take 10 years for things to return to normal. Prices are back to 2003 on a per square foot basis. There were only three sales of apartment complexes in 2009 with 100 units or more."

Rice Lake Wisconsin Elects 19 Year old Ron Paul Fan as Mayor - (Mish at In what I sure hope is a harbinger of political change this fall, Rice Lake Voters Elect 19-Year-Old Mayor: A young man wearing a Hollister T-shirt, shorts and sandals picked up election signs Wednesday in Rice Lake, Wis. The 19-year-old wasn't a campaign volunteer. Romaine Quinn is the new mayor. Quinn, who served one year on the Rice Lake City Council before being elected mayor on Tuesday, said, "Age, I don't think, necessarily makes a difference, I mean, it's about the issues." "Apparently, a lot of people wanted change," said 78-year-old Del Hanson, who voted for Quinn. Romaine's big win had a lot to do with what happened on Manwaring Avenue and other roads around town. "They cut down trees that were 40 and 50 years old and put in sidewalks nobody needed or wanted," said Richard Cerminar. "They just didn't listen," said George Erickson. "Basically everybody on this street didn't want a sidewalk." The "improvements" being made by the city are effectively taking away half of Erickson's front yard. Quinn cites Ron Paul, the libertarian-leaning Republican congressman from Texas, as his political role model. During his campaign, Quinn told voters he wants to hold the line on taxes, replace the city administrator and, of course, reconsider plans to put sidewalks all over Rice Lake.

Faith in houseownership drops, Fannie Mae poll shows - ( Despite turbulence in the housing market during the past three years, most people still think homeownership is important and preferable to renting, but many remain skeptical that home prices will rebound soon, according to a survey by Fannie Mae to be released Tuesday. The survey is Fannie Mae's first attempt to gauge how the foreclosure crisis has affected public attitudes about homeownership. The crisis was unprecedented in many aspects, including the widespread decline in home values and the prevalence of risky subprime loans, company officials said. With some homeowners feeling burned by the housing crisis, the survey found that many people are less likely to take risks related to buying a home. "We have been through a serious dislocation of the housing market," said Mike Williams, Fannie Mae's chief executive. "What we're trying to determine is what are the effects for consumers." Among the major shifts the survey found is that the public is less likely to view a home as a safe investment. In 2003, 83 percent of those interviewed in a similar study by Fannie Mae said real estate was a safe investment, compared with about 70 percent in the most recent survey. "That is one of the big changes we have seen in attitudes. We need to figure out whether this is a sustainable shift," said Doug Duncan, Fannie Mae's vice president and chief economist.

Pfizer Caught Illegally Marketing Bextra, Feds Won't Prosecute Because "Pfizer Too Big To Nail" - (Mish at CNN Health has an interesting article detailing illegal marketing practices at Pfizer. However, government officials looked the other way because Pfizer too big to nail. Imagine being charged with a crime, but an imaginary friend takes the rap for you. That is essentially what happened when Pfizer, the world's largest pharmaceutical company, was caught illegally marketing Bextra, a painkiller that was taken off the market in 2005 because of safety concerns. Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra. Pfizer said in court that "the company's intent was pure": to foster a legal exchange of scientific information among doctors. But an internal marketing plan called for training physicians "to serve as public relations spokespeople."


Mortgage Rates on 30-Year U.S. Loans Jump to 5.21% - (

Rosenberg Sees 10% U.S. Unemployment Rate as Credit Contracts - (

Consumer Credit: OUCH! - (

Sovereign debt crisis at 'boiling point', warns Bank for International Settlements - (

Americans still naive about housing - (

Foreclosures Are Rising - (

Hold Your Breath: Borrowers Could Stay Underwater For Years - (

California Housing: Years of Problems - (

A grim assessment of L.A.'s finances - (

U.S. Apartment Rents Decline as Vacancies at Record - (

Gov't financial crisis panel pretends to investigate risky mortgages - (

Australia Raises Key Interest Rate to 4.25% - (

No Question U.S. Dollar to Weaken in Long Run, Yu Says - (

Is Gold A House Of Cards? - (

Metals Market Manipulation Update - (

What Makes a House Valuable? - (

Tuesday, April 27, 2010

Wednesday April 28 Housing and Economic stories


Former regulator, CEO blame each other for Fannie's failure - ( A former regulator of Fannie Mae blamed "greed, excessive risk-taking and abuse" on the part of the company's executives for the events that led to the mortgage giant's failure and bailout. But Fannie's former chief executive blamed the struggles on an "impossible" set of choices foisted on the District-based company by its government overseers, the Federal Housing Finance Agency. It was a familiar question of culprit or casualty on Friday during the third day of hearings by the Financial Crisis Inquiry Commission, which is investigating the causes of the economic calamity of the past two years. Was Fannie Mae, which backed a huge chunk of the nation's home loans, a primary instigator of the crisis? Or was it a victim of flawed public policy and a housing downturn that was worse than anybody could have imagined? Fannie and its rival, Freddie Mac of McLean, were seized by the FHFA in September 2008 and have since received more than $125 billion in aid to stay afloat. The panel's hearing comes as the Obama administration is preparing to launch a process to decide the companies' fate. Questions by the commission's six Democratic and four Republican members were aimed at revealing whether executives at Fannie and Freddie rushed into buying hundreds of billions of dollars of risky home loans in pursuit of more business, fatter profits and, ultimately, bigger paychecks. Former Fannie chief executive Daniel H. Mudd accepted responsibility for the company's struggles and said he was "sorry" that he could not strike a balance that would have allowed the company to survive without government aid.

Villaraigosa Has The Biggest, Most-Expensive Mayor's Office In Decades - ( We said Mayor Antonio Villaraigosa practically looked heroic earlier this month when he stepped up to call for the agonizing cuts -- 1,000 workers -- that the City Council avoided in the face of L.A.'s $212 budget deficit. But over the weekend La Opinion newspaper pointed out that Villaraigosa's own office budget has its own villainous attributes. La Opinion staffer Isaias Alvarado reports that, despite the office taking a 10 percent hit this fiscal year in the name of belt-tightening, Villaraigosa's City Hall operations spend nearly $8 million a year -- $1.8 million more than predecessor Jim Hahn, and $1.4 million more than Mayor Richard Riordan before him. In early February Villaraigosa seemed quick to make a dubious order to cut 1,000 workers from the city's payroll, a move he might not have authority to make. But his own budget has been somewhat of a sacred cow. Alvarado used California Public Records Act requests to find out that the mayor spent a whopping $9 million on his office, staff and salaries in 2008-2009 fiscal year. The mayor's office, according to the report, employs 173 workers. Hahn had 121. Riordan had 114. Villaraigosa's operations employ 12 deputy mayors (who have once assistant each), 10 financial advisers, eight communication advisers, seven energy-and-environment advisers, six transportation advisers and three international-trade advisers. The biggest divisions inside the office include neighborhood community services, with 25 employees, executive services, with 23, and legislative and intergovernmental relations, with 19.

L.A. to Run Out of Cash in a Month - ( Los Angeles will run out of cash on May 5, city ControllerWendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills. The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn’t send an anticipated $73 million payment to the city’s general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller. “The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.”

Consumers in U.S. Face the End of an Era of Cheap Credit - ( Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates. That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession. The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing. “Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.” The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.

South Carolina Bank Becomes 42nd to Fail This Year - ( Regulators shut down a bank in South Carolina on Friday, the 42nd bank failure in the United States so far this year amid mounting loan defaults, especially in commercial real estate. The Federal Deposit Insurance Corporation took over Beach First National Bank, based in Myrtle Beach, S.C., with $585.1 million in assets and $516 million in deposits. Bank of North Carolina, based in Thomasville, N.C., agreed to assume the assets and deposits of the failed bank.

Mysterious U.S. Treasuries buyers may be banks - ( An analysis by a primary dealer in the U.S. Treasuries market shows that domestic banks could account for a large increase in direct bidders for government debt. The presence of direct bidders, one of three main categories of participants at Treasury auctions, has increased during recent auctions of securities. Primary dealers, the banks and investment firms authorized to deal directly with the government and help the Federal Reserve carry out monetary policy, have fretted over the unpredictability of the direct bid, as well as the paucity of information on the identity of the bidders. A report from Nomura Securities analyzing the Treasury Department's investor allotments and auction data theorizes that domestic banks account for part of the increase in direct bidders. "With banks still reluctant to lend and the saving rate on the rise, bank assets have been shifting from loans to securities, benefiting from the steep curve," wrote George Goncalves, a fixed income strategist at Nomura. Treasury data shows banks increased their purchases of longer-dated Treasuries just as the percentage of direct bidders began to increase. The department, which is aware of the identities of bidders but does not disseminate the information, welcomes the added participation in auctions as the government continues to issue new debt at a breakneck pace.


US and China continue dance over currency policy - (

In Currency Games, the Prize May Be a Trade War - (

Gold hits 2010 high as Greece fear boosts buying - (

CDS trial shows how connected markets are - (

Two Treasury Forecasts: a Grand Canyon-Size Gap - (

Greece Wins More Than EU30 Billion in EU, IMF Aid - (

Germany Said to Accept Compromise on Loan to Greece - (

China Reports March Trade Deficit on Surging Imports - (

Polish President, Bank Chief in Plane Crash, Reports - (

Greece may use EU safety net if needed: Greek PM - (

Europe Said to Firm Up Terms of Greek Loans - (

Greek Bank Credit Ratings Cut by Fitch on Sovereign Downgrade - (

China Vice President Emphasizes Consumption to Bolster Economy - (

Soros Says Pound Devaluation Is Option for Next U.K. Government - (

Innovation, by Order of the Kremlin - (

The Well-Off Are Spending Again — but Carefully - (

Views Conflict on Fannie Meltdown - (

Don’t Bet the Farm on the Housing Recovery - (

Monday, April 26, 2010

Tuesday April 27 Housing and Economic stories


Greece Plunges Deeper into Crisis, Banks, Euro Hit - ( Markets pounded Greek bonds and banking stocks on Thursday, driving the debt-stricken euro zone member's borrowing costs to new highs and pushing it closer to tapping a last resort EU/IMF safety net. The government struggled to reassure markets it can stay solvent after the premium investors demand to buy Greek rather than the benchmark German government debt surged for the third day in a row to a record high since Greece joined the euro. But skepticism at a dearth of details surrounding the European Union and International Monetary Fund lifeline continued to pile pressure on a country already struggling to cover its wide fiscal gap and huge public debt load. Chris Pryce, senior Greece analyst for rating agency Fitch, said Athens' only choice now was to ask for help. "Despite everything the EU and the euro zone have done there is still a lack of clarity (and) confusion about what they intend to do, when they intend do it and how much would be involved," he told Reuters.

Nearly Half of US Households Escape Fed Income Tax - ( Maybe we should only allow those who pay taxes to vote. Of course the 50% of those who pay no taxes will keep voting to get something for nothing (i.e., health care benefits, food stamps, etc.) when they own half the votes. About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization. Most people still are required to file returns by the April 15 deadline. The penalty for skipping it is limited to the amount of taxes owed, but it's still almost always better to file: That's the only way to get a refund of all the income taxes withheld by employers. In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17, according to a separate analysis by the consulting firm Deloitte Tax. Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year. The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

L.A. to Run Out of Cash in a Month – ( Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills. “The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.” Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as “an urgent cash need.” The controller’s financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.

Food Stamp Usage Hits Record 39 Million, 14th Consecutive Monthly Increase - (Mish at Food stamp usage is up again except the program is now called SNAP (Supplemental Nutrition Assistance Program). Inquiring minds are looking at a SNAP Participation Table that shows a record 39,430,724 receive SNAP benefits, a 22.4% increase from a year ago. Household SNAP participants increased from 12,728,981 in Fiscal Year 2008 to 15,232,105 in fiscal year 2009, a 16.4% increase. For comparison purposes, watch the growth in household participation. Clearly the recession took its toll, and will continue to do so until there is a dramatic decrease in the unemployment rate.

A grim assessment of L.A.'s finances - ( City Controller Wendy Greuel declares an 'urgent financial crisis' and says the only way to continue paying bills in the short term is to begin draining the city's already limited emergency reserve. The city's top financial official issued a grim assessment of the escalating budget crisis Monday, warning that Los Angeles could be unable to pay its bills in just over four weeks. City Controller Wendy Greuel declared an "urgent financial crisis" and said the only way to continue paying bills in the short term was to begin to drain the city's already limited emergency reserve. Greuel's announcement was the latest development in an increasingly bitter standoff between the City Council and the city's Department of Water and Power over how much the municipal utility should charge ratepayers and how much it should contribute to the city's treasury. DWP officials have proposed rate increases that would range from roughly 9% for most users to as high as 28% for some. The council has blocked those increases, responding to irate reactions from constituents. DWP officials have said that without the extra money, they cannot meet their commitment to send the city an additional $73.5 million on which budget officials say they have been counting.

Health Insurers Stop Offering New Coverage to Small Businesses and Individuals in Massachusetts in Battle Over Rates - (Mish at The battle over health care costs in Massachusetts has intensified. Insurers want to hike rates while the regulators say no. In a showdown on regulatory power, Health insurers sue to raise rates. A half-dozen health insurers yesterday filed a lawsuit against the state seeking to reverse last week’s decision by the insurance commissioner to block double-digit premium increases — a ruling they say could leave them with hundreds of millions in losses this year. The proposed rate hikes would have taken effect April 1 for plans covering thousands of small businesses and individuals. Insurers wanted to raise base rates an average of 8 percent to 32 percent; tacked on to that are often additional costs calculated according to factors such as the size and age of the workforce. That Did Not Take Long: Less than a week ago, in Health Care Price Controls Hit Massachusetts I noted that state regulators denied rate increases to Massachusetts health insurers.


Fitch Analyst: Greece Should Ask for EU/IMF Cash Now - (

Faith in houseownership drops, Fannie Mae poll shows - (

Americans still naive about housing - (\

Foreclosures Are Rising - (

Hold Your Breath: Borrowers Could Stay Underwater For Years - (

California Housing: Years of Problems - (

Las Vegas Apartment market said to need decade to recover - (

U.S. Apartment Rents Decline as Vacancies at Record - (

Australia Raises Key Interest Rate to 4.25% - (

No Question U.S. Dollar to Weaken in Long Run, Yu Says - (

Is Gold A House Of Cards? - (

Metals Market Manipulation Update - (

What Makes a House Valuable? - (

Gov't financial crisis panel pretends to investigate risky mortgages - (