Saturday February 14 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Fort Myers Suburb Real Estate Prices down 80% from Peak - (www.cnbc.com) In Lehigh Acres, homes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006. President Obama is scheduled to visit Fort Myers on Tuesday to promote his economic stimulus plan. But residents here tend to view it as the equivalent of an herbal remedy — it can’t hurt but it probably won’t heal. Instead, in church groups and offices, people call for “industry” and repeat one telling question: “What do we want to be when we grow up?” “That’s one of the things we struggle with: What is our identity?” said Joseph Whalen, 37, president of the Lehigh Acres Chamber of Commerce. “We don’t want to be the bedroom community of southwest Florida; we don’t want to be the foreclosure capital.” A Legacy of the ’50s: Lehigh Acres, like much of Florida and many suburbs nationwide, was born with speculation in its DNA. The area got its start in the 1950s when a Chicago pest control baron, Lee Ratner, and several partners bought thousands of acres of farmland and plotted about 100,000 lots. With Fort Myers, 15 miles to the west, developers left little room for schools, parks or even businesses. What they sold was sun and quiet living. “They used to bring 20 busloads a day,” said Bob Elliott, a former salesman for Mr. Ratner’s company who struck out on his own in 1982. “We had 300 customers, seven days a week.” By 2000, the lots had been sold, but most stayed empty. Only about 30,000 people were living in an area roughly four times the size of Manhattan. The builders really started to arrive in 2004, setting up model homes on Lee Boulevard next to Mr. Elliott’s office with the faded wooden sign that said “$50 lots.” Bill Spikowski, a city planning consultant in Fort Myers, said that because Lehigh Acres had so many parcels and few restrictions on what could be built, smaller companies battled for customers. From 2004 to the end of 2006, developers completed 13,183 units in Lehigh Acres — nearly doubling the total stock of 15,216 that existed in 2000, according to Lee County figures.

Watch out for crooked CA politicians – Watch their use of the word “fees’ instead of “taxes” - (www.mercurynews.com) Governmental agencies are digging deeper into the pocketbooks of motorists and transit riders across California in an attempt to compensate for the loss of hundreds of millions of dollars as the recession deepens and revenue sources veer sharply into the red. Fee increases run the gamut from a few more bucks to register our vehicles and pay fix-it tickets to higher fares to ride BART and Caltrain. And we could be seeing the first increase in the state gas tax in nearly two decades, along with higher tolls to cross Bay Area bridges. In addition, the Valley Transportation Authority in a year could open the first express lane at the interchange of Highway 237 and Interstate 880. This would enable solo drivers to use the carpool lanes on those ramps for a fee, a plan that will gradually spread throughout carpool lanes in the Bay Area. The lack of a state budget and the projected $40 billion shortfall means drastic cuts in funding for everything from filling potholes to synchronizing traffic lights to running commuter trains, which surprisingly remain almost full despite the loss of so many jobs. "Voters are beginning to see how this affects them," said Jim Earp, executive director for the California Alliance for Jobs. "It's been a long train wreck for about seven months, but it's now just beginning to catch the attention of a lot of people." BART faces a budget shortfall of $90 million, leading to fewer trains, higher fares and steeper parking fees. San Francisco MUNI's deficit may hit $100 million by July 1, and monthly fares may rise from $45 to $58. AC Transit has a $42 million deficit and will likely raise bus fares July 1 from $1.75 to $2 per ride, despite a parcel tax increase from $48 to $96 that was supposed to prevent fare increases and cuts in service.
So far, the VTA has avoided cutting service or increasing fares on buses or light rail. But that may not last, as sales tax revenue that cover the cost of running its fleet plunged $6.1 million from July through September. "Some negative impacts will be unavoidable," said board chair Dolly Sandoval. "The board has not yet talked about any specific measures to close any revenue gaps, but I suspect this will be on our agenda for the next few months." Craig Gawlick of Santa Cruz often wonders "when enough is enough." "Taxes, fees, charges and surcharges, all having to do with the car I drive, the fuel I put in it, and the roads I drive on," he said. "Doesn't California already have the highest gasoline prices in the country as well as high auto registration fees?" If not the highest, they're among the highest. But overall, commuter reaction seems mild, and voters have shown a willingness to raise funds to improve transportation. In 2006 and 2008, they approved $30 billion in bond measures to pay for road improvements such as widening Highway 101 and I-880 through San Jose and building a high-speed rail down the spine of the state. And in Santa Clara County, a new tax to help bring BART to the South Bay won at the ballot in November, as did several similar county measures across California. The test of voter tolerance may come if the state gas tax is raised, as has been proposed by Democrats in the state Legislature. This is always a controversial debate, and a regional survey last fall indicated fewer than two out of five voters in the Bay Area would support a 10-cent-per-gallon gas tax increase. A gas tax increase would be tied to inflation, and could boost the current tax of about 33 cents a gallon by an additional 13 cents.

Obama's Pick to Head SEC Has Record Of Being a Regulator With a Light Touch – (online.wsj.com) When President-elect Barack Obama nominated Mary Schapiro to lead the Securities and Exchange Commission, he criticized regulators for having "dropped the ball" in a "failure of oversight" in the markets meltdown and the Bernard Madoff scandal. But a close examination of Ms. Schapiro's record as a regulator shows she has infrequently pursued tough action against big Wall Street firms. A regulatory-agency merger that Ms. Schapiro oversaw shifted power to larger financial firms at the expense of small ones. The agency she heads, called the Financial Industry Regulatory Authority, or Finra, missed the mortgage crisis and Bernard Madoff's alleged $50 billion Ponzi scheme. Last year, amid historic market convulsions and Wall Street scandals, Finra often filed tiny cases against small players. During the past few years of Ms. Schapiro's career as a regulator, which earns her over $3 million a year, enforcement fines against firms have plunged. Ms. Schapiro, whose Senate confirmation hearing is Thursday, has broad regulatory experience. She was an SEC commissioner and led the Commodity Futures Trading Commission and the National Association of Securities Dealers, or NASD, a securities-industry body that was a predecessor of Finra. People close to Ms. Schapiro, 53 years old, say she can be tough on Wall Street. They say she has shut down "boiler rooms" whose brokers engaged in fraudulent sales tactics; has gone after improper variable-annuity sales; led the adoption of tougher sales-practice rules; and focused on abuse of senior citizens by brokers. In addition, as head of the regulatory arm of the NASD in the 1990s, she greatly expanded her enforcement staff and levied some big fines for abuses during the tech-stock bubble. "She has been an advocate for investor protection," says Steven B. Caruso, who represents investors in claims against brokerage firms. Finra is a private agency set up by Wall Street to regulate itself and is the first line of defense in policing the activities of securities firms and protecting investors. It was created in July 2007 by combining the enforcement arm of the NASD and part of the New York Stock Exchange's regulatory apparatus. Among other things, Finra monitors brokerage firms' sales practices to determine that investors are being sold products suitable for their needs. It reviews brokerage firms' capital positions and makes sure customer funds are handled properly. It seeks to ensure that firms have adequate procedures to price hard-to-trade securities and monitors customer complaints firms receive concerning both sales practice and operational issues.

New Deal prolonged the Great Depression - (theaustralian.news.com.au) THE New Deal is widely perceived to have ended the Great Depression. This has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that Franklin Delano Roosevelt's policies shortened the Depression, or that similar policies will pull our nation out of its economic downturn. The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18 per cent below their 1929 level between 1930-32, but were 23 per cent lower on average during the New Deal (1933-39). And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover, remaining 25 per cent below its trend level throughout the New Deal, and per-capita non-residential investment averaged about 60 per cent below trend. The Great Depression clearly continued long after FDR took office. Why wasn't the Depression followed by a vigorous recovery, like every other cycle? It should have been. Productivity grew rapidly after 1933, prices were stable, real interest rates were low and liquidity was plentiful. We calculated on the basis of just productivity growth that employment and investment should have been back to normal levels by 1936. Nobel Laureate Robert Lucas and Leonard Rapping calculated on the basis of just expansionary Federal Reserve policy that the economy should have been back to normal by 1935. So what stopped a blockbuster recovery from starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net with social security and unemployment benefits, and by stabilising the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. These anti-market policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s. The most damaging policies were those at the heart of the recovery plan, including the National Industrial Recovery Act, which tossed aside the nation's anti-trust acts and permitted industries to collusively raise prices provided they shared their newfound monopoly rents with workers by substantially raising wages well above underlying productivity growth. The NIRA covered more than 500 industries, ranging from automobile and steel, to ladies hosiery and poultry production. Each industry created a code of "fair competition" which spelled out what producers could and could not do, and which were designed to eliminate "excessive competition" that FDR believed to be the source of the Depression.

Credit Freeze Has Commercial Developers Shivering - (www.npr.org) You can get very rich buying and selling commercial real estate in New York City. And you can also lose everything you have. These days, some of the biggest office and retail developers in the city are fighting for their financial lives. Rents on prime Manhattan office space are tumbling, and credit is virtually impossible to come by. A lot of people in the industry want the federal government to help. The sleek, 41-story office tower at 666 Fifth Ave. is on one of the most desirable corners in midtown Manhattan. When the building was sold in 2007 to the young developer Jared Kushner and his family, it fetched a U.S. record: $1.8 billion. As the economy slowed, Kushner had trouble making the payments, says Peter Slatin of the research firm Real Capital Analytics. Kushner was counting on rent and building values to escalate. But amid the economic downturn, key tenants such as Citigroup have vacated parts of the building, and the building's value has plunged 25 percent to 30 percent since Kushner bought it, Slatin says. The company has been able to sell some of the building's retail properties and refinance some of its loans. A spokesman for Kushner strongly denies the building is in distress. But a lot of people in the industry are skeptical. Unrealistic expectations: Whatever happens, Slatin says, the way Kushner financed the deal — using lots of short-term debt and unrealistic earnings projections — was typical of the way Manhattan developers operated during the boom years. "Basically, financing was available to, as people like to say, a warm body," Slatin says. "You could go in and you could get non-recourse financing — which means you're not personally liable for it — with a little bit of equity, and then borrow your equity and then borrow your debt, which sounds pretty amazing. But you can put down very little in down payment. I call it the commercial real estate of the subprime loan." For commercial developers like Lawrence Fiedler, it was all too easy to get the financing needed to buy office buildings. Fiedler says you only had to hold out your hand and someone — a bank, a pension fund, a sovereign wealth fund from overseas — would put money in it.



OTHER STORIES:

Housing Prices Will Continue to Fall, Especially in California - (www.newgeography.com)
Predicting 60% Decline for Manhattan Property - (www.seekingalpha.com)
Honolulu's house values drop 7.1% - (www.starbulletin.com)
Hawaii housing still grossly overpriced after declines - (www.ponderlicious.com)
Tide of bad mortgages to swell more - (www.intuitiveblogger)
Another fudged real estate statistic: absorption rate - (www.patrick.net)
Foreclosure is the answer, not the problem - (www.seekingalpha.com)
Need is for long-term solution, not bailouts - (www.marketwatch.com)
Stimulus Brings Out City Pork Lists - (online.wsj.com)
Credit Ratings Slashed on Thousands of Mortgage-backed Bonds - (www.housingwire.com)
Payback time for execs? Unlikely - (www.ocregister.com)
The Paradox of Gluttony - (optionarmageddon.ml-implode.com)

First-quarter layoffs - (articles.moneycentral.msn.com)
Taking advantage of falling rents - (www.walletpop.com)
Patrick.net launches nursing home blog - (www.patrick.net)

With Allstate, you’re NOT in good hands - (www.ml-implode.com)
Taxpayer Can't handle the Truth - (www.ml-implode.com)
You Want Numbers, I’ll Give You Numbers! - (www.ml-implode.com)
In Florida, Despair and Foreclosures - (www.ml-implode.com)
Lawmakers in 20 states move to reclaim sovereignty - (www.ml-implode.com)
J.P. Morgan's Executive Bonuses more Abusive than Merrill's - (www.ml-implode.com)
U.S. Weighs Fed Program to Loosen Lending - (www.ml-implode.com)
New Plan to Help Banks Sell Bad Assets - (www.ml-implode.com)
Late Payments on US Credit Cards Reach Record High Levels - (www.ml-implode.com)
Obama Hypocrite or Psychopathic Liar - (www.ml-implode.com)