Wednesday September 3 Housing and Economic stories

Top Stories:

Restaurant robberies making diners uneasy - (www.sfgate.com) All up and down College Avenue (in Oakland Rockridge neighborhood), robberies are the table talk. It seems the only thing in the news this month, besides Olympics and Democrats, has been the robberies. The mayor wrings his hands. Rewards are offered. Anonymous tip lines are announced. Customers, those who remain, vow not to give in to the bad guys. Other customers give in and stay home. Business is down, no one knows exactly how much. Burkhardt said he was beaten up in front of his Oakland home earlier this year by three guys who mistook him for another man. So staying home is not the answer. The bad guys are everywhere. Since the robberies began, Gay said, practically everyone is paying with credit cards. About half his customers used to pay by cash. Now only about 1 in 10 does. "No one wants to be carrying cash anymore," he said.

Abandoned homes easy targets for theft, police say - (www.contracostatimes.com) Burglary is not a new problem for police. But with the housing market slumping, and many vacant homes sitting in foreclosure, police are dealing with a new kind of theft.
Houses abandoned by foreclosed owners are being gutted — either by former residents trying to salvage as much as possible, or by thieves who recognize an easy target when they see one. "When Realtors are getting ready to list the homes, they are finding air conditioners stolen and sometimes appliances," Antioch police Lt. Leonard Orman said. Police aren't alone in noticing the trend. Real estate agents and banks also are seeing signs of theft. And it's not just valuable copper and other metals that are disappearing. At one foreclosed home in Brentwood, police said, the previous residents took everything including the palm trees from the front yard.

S.F.'s $300,000- A-Year Parking Cop - (www.sfgate.com) – Why is Muni boss Nathaniel Ford writing parking tickets? Anyone wonder if this politician is writing tickets to help preserve his own job and salary? Only in SF and East Bay do you see cops, firemen, politicians, and BART transit workers making over $200K a year (plus benefits) for a job they have no competition with. If I were governor trying to balance the budget, I would cut any worker making over $200K and knock these political lifers down to $150K or less. If they don’t take it, open the position up for bidding or interviewing to find the best candidate that will take the reduced salary.

Deficit looms for California's unemployment benefit fund - (www.latimescom) Yes, while politicians in CA worry more about national conventions, they can’t balance a budget. With joblessness at a 12-year high and expected to head higher, California's fund for paying unemployment benefits is about to go broke. The fund, sustained mainly by taxes on employers, is projected to be deeply in the red as soon as March. And the administration of Gov. Arnold Schwarzenegger is alarmed that it may have to keep the fund afloat by borrowing from the federal government and using state money to pay nearly $100 million in interest over two years. At stake is the stability of a 73-year-old program that began during the Depression. In July, California paid unemployment benefits worth $567.4 million and received 267,000 new claims for jobless benefits. Under the program, eligible workers can receive maximum benefits of $450 a week, depending on their previous earnings. Benefits last as long as 26 weeks, and many out-of-work people can qualify for a 13-week extension, recently approved by Congress.

cbs5.com - California Budget Impasse Sets New Record - (www.cbs5.com) The California state legislature is a record 63 days late and nowhere close to announcing a budget agreement. Political consultant Leo McElroy said those Schwarzenneger pay cuts for state workers are a real possibility now. "In past years they have always managed to cobble a compromise together," he said. McElroy says the budget impasse -- Democrats arguing for tax hikes and Republicans for programs cuts -- could go on for weeks, or more. And the public will get angrier and angrier with little possibility they'll vote their representatives out of office.

Desperation at WaMu Puts Taxpayers at Risk - (Mish at globaleconomicanalysis.blogspot.com) Desperation is in the air at Washington Mutual (WM). That WaMu is offering 5% on CDs should be proof enough. From LastNightInVegas. If the 5% rate WaMu is offering on CDs isn't indication enough that there's trouble brewing, the fact that WaMu is promoting it with a hand drawn white board sign certainly clinches it. This is a different form of death spiral financing. WaMu is paying 5% on CDs at a time the Fed Funds Rate is 2.0% and the discount rate is 2.25%. Where can WaMu invest money safely and return 5%? The answer is nowhere. It is a moral hazard that WaMu can even offer CDs at 5% with FDIC guarantees. Money is increasingly flowing to such endeavors, at taxpayer risk. Supposedly FDIC is self insured. I say supposedly. And although I am certain that FDIC guarantees will be honored, I am increasingly suspicious of how those guarantees will be honored. LondonBanker has an excellent article on this subject called Is the FDIC another troubled monoline? It's a good read. Please take a look.

Pakistan Sets Floor on Stock Prices - (Mish at globaleconomicanalysis.blogspot.com) Those looking for absurd government manipulation can find it here: Pakistan Sets Floor on Stock Prices to Stop Plunge. Pakistan set a floor for stock prices on the benchmark exchange, moving to halt a plunge that has wiped out $36.9 billion of market value since April. Securities can trade within their daily limit of 5 percent "but not below the floor-price level" of yesterday's close, the exchange said on its Web site, without giving details. The exchange is working to restore confidence after President Pervez Musharraf quit on Aug. 18 to avoid impeachment, and ruling alliance members nominated rivals for the presidency. Investors stoned the exchange last month after it removed a 1 percent daily limit on price declines.



Other Stories:

Hedge funds face struggle for survival - (www.reportonbusiness.com) – Of course it is caused by external factors (when they do poorly) but was the excellent money managers when performance was good. Black clouds have been building over the hedge fund industry for much of the year, and a storm could break in coming weeks as investors receive their second set of lousy monthly results from funds that are meant to do well in good markets and bad. A series of challenges, some unrelated to the hedge funds' investment strategies, have combined to create lower returns and investor redemptions. Industry experts expect some funds will be forced to close down as clients walk away.
The Fading American Superpower - (www.rgemonitor.com) - In an essay for the Washington Post this month, Fukuyama, a professor at Johns Hopkins University, conceded that "today, U.S. dominance of the world system is slipping; Russia and China offer themselves as models, showing off a combination of authoritarianism and modernization that offers a clear challenge to liberal democracy. They seem to have plenty of imitators." " Do we have a liberal democracy?

Deficit looms for California's unemployment benefit fund - (www.latimes.com)
Fed's response to crisis hurt its key role: Hoenig - (www.reuters.com)
Deficit looms for California's unemployment benefit fund - (www.latimes.com)
Study: Bankruptcies soar for senior citizens - (www.usatoday.com)
Lehman in talks with KDB to raise $6 billion: report - (www.reuters.com)
Sony's Stagflation Worries Are Proving Prescient: William Pesek - (www.bloomberg.com)
Troubling Signs From Fed's Jackson Hole Conference - (www.nakedcapitalism.com) - The world's top central bankers gather at their annual U.S. mountainside symposium today with a sense there's not much more they can do to repair credit markets and rescue the global economy.... ``All the central banks can provide now is time for the banking system to heal,'' Myron Scholes, chairman of Rye Brook, New York-based Platinum Grove Asset Management LP and a Nobel laureate in economics, said...
Why No Questions About Special NYMEX Trading Session? - (www.nakedcapitalism.com) Reader Paul e-mailed about the special, early opening of the NYMEX to permit pre-Gustav trading. As he correctly noted: I have NEVER heard of a US market opening early due to macro events; the usual move is to CLOSE during exceptional circumstances. Neither have I. This looks pretty suspicious. Did some influential parties need to rearrange their positions, or did some hope to use a probably-thin market to their advantage? How many were aware of this session when it opened? How much advance notice was there, and how was this disseminated? It is almost certain no questions will be raised. Any reactions from informed readers very much appreciated.
Oil, Gas Fall as Gulf Hurricane Weakens, Easing Damage Concern - (www.bloomberg.com)
U.K. Mortgage Approvals Drop, Manufacturing Contracts - (www.bloomberg.com)
China to Make Loan Policies More Flexible for Growth - (www.bloomberg.com)
Rate of UK mortgage approvals lowest ever - (www.ft.com)
U.K. Interbank Lending Fell 68% in July From Year Ago, BOE Says - (www.bloomberg.com)
Oil, Gas Fall as Hurricane Gustav Weakens, Easing Damage Fears - (www.bloomberg.com)
Holiday Read: American Labor Story - Real Blood, Sweat and Tears - (www.worldpress.com) Jones’s biographer Dale Fetherling claims that Mother Jones learned a great deal about unions and about the psychology of workingmen from her husband. And later, when much of her work was with women, she tried to pass on to them what she had learned: “That is, the wife must care for what the husband cares for if he is to remain resolute.” Life was relatively good for Mary Harris Jones until 1867. That year, when she was 37 years old, within one week her husband and their four small children died in a yellow fever epidemic. After the epidemic had run its course, she returned to Chicago where, once again, she began to work as a dressmaker. But tragedy followed Mother Jones. Four years later, in 1871, she lost everything she owned in the great Chicago fire. That event also changed her life drastically, and she discovered a new path to follow. She became involved in the labor movement and began to attend meetings of the newly formed Knights of Labor “in an old, tumbled down, fire scorched building.”
"Inequality and the Credit Crisis" - (www.nakedcapitalism.com) Steve Waldman has a great little post on how the end of the consumer credit bubble is going to expose rifts papered over by the illusion of rising living standards for all. In fact, average real wages have been stagnant since the mid-1970s; the gains in income have accrued entirely to those at the top of the food chain."

Money Market Disruption to ``Continue,'' BIS Says - (www.bloomberg.com)
Running a hedge fund loses its allure - (www.iht.com)
Slowing Economy Boosts Volatility of U.S.-Focused Firms - (online.wsj.com)

HUD To Be Commended For Not Bowing Down - (www.rismedia.com) - Last week, the American Homeowners Grassroots Alliance (AHGA) thanked the Department of Housing and Urban Development (HUD) for standing by its decision to reform the Real Estate Settlement Procedures Act (RESPA). AHGA believes that the major real estate sector corporations and trade associations now need to stop whining and refocus on sound and ethical business practices in order to regain the trust of American homeowners. For these reasons AHGA commends HUD for refusing to bow to their lobbying pressures, and for HUD’s commitment to go forward with the implementation of the new RESPA regulations.
Mortgage Insurance Update - Speculators May Now Control Purchase Market - (www.ml-implode.com) - Last month home sales surged in many states around the nation especially in CA where they jumped to 39,500, up 12.2% June. However, values also fell 3%, foreclosures ran over 30k units and foreclosure-related sales as a percentage of total sales surged to 45%. This means ‘organic’ sales were running in the 20k range, the slowest July in recent history
When Will Southern California Home Prices Bottom? - (www.ml-implode.com) - Seen another way, nominal SoCal median house prices will not bottom until prices return to the '99-'01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter

'Experts' Who Actually Know What Is Going On - (www.ml-implode.com) But I would be remiss if I failed to point out that there are a small number of individuals and groups who have lived up to their billing as "experts." Among them is the Bank for International Settlements, which I have made reference to in earlier posts, including "Prescient, Again?" and "The Week's Big Story." In "Money Market Strains to Continue 'for Some Time,' BIS Reports," Bloomberg's Gavin Finch details the latest call-it-as-they-see-it pronouncement from the central bankers' central bank.

Why did Johnny Mac pick Sarah Palin? - (www.ml-implode.com)
Britain’s mortgage lenders may be sitting on millions of pounds of worthless loans - (www.ml-implode.com)
Lenders face huge hit on mortgages fraudulently obtained by crime gangs - (www.ml-implode.com)