Friday July 25 Housing and Economic stories

Top Stories:

U.S. Congressman Warns Major Economic Disaster Imminent - (www.thetrumpet.com) Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation,” the U.S. Congress was told earlier this month. On July 9, Texas Rep. Ron Paul warned the House Financial Services Committee that “big events” were about to occur. “… I have days, growing more frequent all the time, when I’m convinced the time is now upon us that some big events are about to occur,” he said. “These fast-approaching events … will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed” (emphasis ours throughout). Paul continued: There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. … The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical care costs; the collapse of the housing bubble; the bursting of the nasdaq bubble; stock markets plunging; unemployment rising; massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?

FDIC Chairman Sheila Bair Is Out Of Control - (globaleconomicanalysis.blogspot.com) - "In a sad twist of irony Sheila Bair is accusing blogs of being "out of control". Sadder still is the fact that San Francisco Business Times writer Mark Calvey agrees. Please consider the incredibly inane article FDIC learns it ignores bloggers at its peril. The federal agency insuring bank deposits learned that it can't afford to ignore the blogs following its seizure this month of IndyMac Bank, the largest bank failure since the 1980s. "The blogs were a bit out of control," Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the San Francisco Business Times after a speech in San Francisco this week. That's putting it mildly. Following the FDIC's takeover of IndyMac on July 11, widely followed blogs were speculating on bank runs on some of California's largest banks based on nothing more than people waiting for their branch to open or large deposits moving between financial institutions. The FDIC plans to pay closer attention to the blogosphere in the future. "We're very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it," Bair said. "The misinformation that came out over the weekend fed a lot of depositors' fears."

Why wasn't IndyMac on FDIC problem list? - (www.sfgate.com) - Why wasn't IndyMac Bank, whose problems were well known in the financial community, not on the Federal Deposit Insurance Corp.'s list of troubled institutions until shortly before its failure this month? And if IndyMac - one of the three largest institutions ever seized by the FDIC - didn't make this list, could it be understating problems in the banking system? Each quarter, the FDIC discloses how many banks and thrifts are on its problem list. It does not name which institutions make the list because if it did, depositors would yank out their money and they would almost surely fail.

Ridiculous Lawsuits Fly At Taxpayer Expense - (globaleconomicanalysis.blogspot.com) In the last few days there has been a pair of ridiculous lawsuits that are no doubt a waste of time and money for all involved. Inquiring minds may wish to consider San Diego sues Bank of America to halt foreclosures. San Diego's city attorney Michael Aguirre said on Wednesday he filed a lawsuit against Bank of America Corp (BAC) and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a "foreclosure sanctuary." Here is my take: This is a needless waste of taxpayer money. All it does is make it look like the city attorneys have work to do. If this is typical of the "work" San Diego is paying its attorneys to do, San Diego ought to fire the whole lot of them.

Grand jury investigates subprime lenders - (cnn.money.com) Of course, they are only going after companies that have failed or been acquired. Pretty lame: A federal grand jury is investigating subprime mortgage lenders Countrywide Financial Corp., New Century Financial Corp. and IndyMac Federal Bank, a person familiar with the situation told The Associated Press on Thursday. Subpoenas seeking documents have been issued to all three companies, according to the person, who was not authorized to speak publicly about the case and requested anonymity.

Schwarzenegger To Slash State Workers' Pay Till Budget Passes - (globaleconomicanalysis.blogspot.com) - The situation in California is getting interesting. Three days ago I wrote Schwarzenegger Needs To Face Reality: California Is Insolvent. In a better late than never scenario, Schwarzenegger is getting tough. The LA Times is reporting Schwarzenegger plans to slash state workers' pay till budget passes. Gov. Arnold Schwarzenegger is planning to cut the pay of about 200,000 state workers to the federal minimum wage of $6.55 an hour until a budget is signed, according to a draft of the governor's order obtained by The Times. Administration officials said Schwarzenegger is expected to sign the order early next week as part of an effort to avert a cash crisis. The controversial move, likely to be challenged in court by public-employee unions, would save the state about $1 billion a month, the officials said. Workers would be repaid their lost earnings once a budget was in place.

2.2 million vacant homes for sale - (cnn.money.com) Some 2.8% of homes, excluding rental properties, were empty and on the market from April through June, according to Census Bureau figures released Thursday. The vacancy rate hit a record high of 2.9% in the first quarter of 2008. It was 2.6% a year ago. "They are still not showing a downward trend," said Christian Menegatti, U.S. lead analyst at RGEMonitor.com, an economic research and consulting group. "That's the bad news. The numbers are telling us that prices have to fall more."

The speculator sideshow U.S.: Oil shenanigans - (cnn.money.com) – It is a well-known fact the big US financials are the worst offenders of commodity speculation and manipulation. Of course, the CFTC goes after a small overseas speculator. As the CFTC trumpets its charges against a Dutch hedge fund, the fundamental supply-and-demand factors that govern the price of oil haven't changed. Watch out, speculators: The Commodity Futures Trading Commission is getting tough on crime. But since, as the CFTC has said, speculation hasn't pushed up prices, the crackdown will benefit its image more than the economy. Under increasing pressure from Congress in recent months to crack down on speculative activity in the oil futures markets, today the CFTC filed civil charges against Optiver, a Dutch hedge fund, plus two subsidiaries and three employees, alleging manipulation of crude oil, heating oil and gasoline futures prices on the NYMEX. According to the charges, the defendants attempted to manipulate short-term prices on 19 different occasions in March 2007, were successful at least five times, and netted an illicit profit of $1 million.

WaMu Slumps as Gimme Credit Cites Liquidity Concern - (www.bloomberg.com) - Washington Mutual Inc. tumbled more than 20 percent for a second day as Gimme Credit LLC said unsecured creditors were ``pulling funds'' from the biggest U.S. savings and loan.

San Diego sues Bank of America to block foreclosures - (www.ml-implode.com)


Other Stories:

Debt capitalism self-destructs - (www.ml-implode.com) - Quite the thesis by Liu. It is long, but worth reading for it history of the GSEs and many gems of insight. For example: The ...
Housing bill bonus: Alleviate debt ceiling - (www.ml-implode.com) - "The Treasury Department appeared open to the pending housing bill, since it would also expedite action this week on Secretary H...

Senate due to back housing bill, GSE shares slide - (www.ml-implode.com) - "The U.S. Senate is due to vote finally on Saturday to approve a major housing market rescue bill, including federal financial a...
Second Quarter Vacancy Rates Slip from Previous Quarter - (www.ml-implode.com)
Freddie Mac: 30-yr fixed-rate mortgage up on inflation woes - (www.ml-implode.com)
Existing-Home Sales Fall to 10 Year Low; Shadow Inventory Grows - (www.ml-implode.com)
The Philadelphia Manhole Cover Indicator - (www.ml-implode.com)
At Downey Savings, a Shake-Up as Losses Mount - (www.ml-implode.com)
No sign yet of a bottom in home prices - (www.ml-implode.com)
Existing Home Sales Fall 2.6% to 4.86 Million in June - (www.ml-implode.com)

Home sales at 10 year low Mortgage rates up - (cnn.money.com)
Fannie's new watchdog: All bark? - (cnn.money.com)
WaMu shares get pummeled again - (cnn.money.com)
UBS hit with multibillion-dollar suit Video - (cnn.money.com)
Ford's worst quarterly loss ever New Euro look - (cnn.money.com)
Oil: Magic price for a stock rally Drilling debate - (cnn.money.com)

U.S. Stocks Drop as Financials Have Biggest Decline in 8 Years - (www.bloomberg.com)
States Slammed by Tax Shortfalls - (online.wsj.com)
Sales of U.S. Existing Homes Fell to 10-Year Low - (www.bloomberg.com)
Fed Report Portrays Stressed Economy - (www.washingtonpost.com)
States Slammed by Tax Shortfalls - (online.wsj.com)
USDA Expects Higher Food Prices - (online.wsj.com)
Even now, retailers see a blue Christmas - (www.chicagotribune.com)
Minimum wage set to rise 70 cents, but higher costs across the board eat into the raise - (www.chicagotribune.com)
Will central banks act to rescue the dollar? - (www.financialweek.com)
Housing legislation a help but no magic wand - (www.reuters.com)

Potential downgrades are still at a historic high level - (www.cfo.com)
Mortgage rates rise for 6th straight week - (money.cnn.com)
Rule would require more info on 401(k) fees - (www.chicagotribune.com)
FDIC head says more banks skirting failure - (www.chicagotribune.com)
Toyota takes driver's seat in sales - (www.latimes.com)
MBIA, Ambac Sued by Los Angeles on `Unnecessary' Bond Insurance - (www.bloomberg.com)
Changes ahead for dollar menu - (www.chicagotribune.com)

Eurozone slowdown worsens - (www.ft.com)
German Business Confidence Drops Most Since Sept. 11 - (www.bloomberg.com)
U.K. June Retail Sales Drop Most Since at Least 1986 - (www.bloomberg.com)
Eurozone slowdown worsens - (www.ft.com)
Malaysia's inflation soars to 26-year high in June - (www.marketwatch.com)
Inflation Alarms Ring Out - (online.wsj.com)

Doctors switch to 'concierge' practices - (www.azcentral.com)
Plan turns Habitat for Humanity into an investment - (www.ajc.com)