Tuesday March 10 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Ron Paul: Stimulus for Who? - (www.dailypaul.com) This bill delivers an additional debt burden of $6,700 to every American man, woman and child. This week the House is expected to pass an $825 billion economic stimulus package. In reality, this bill is just an escalation of a government-created economic mess. As before, a sense of urgency and impending doom is being used to extract mountains of money from Congress with minimal debate. So much for change. This is déjà vu. We are again being promised that its passage will help employment, help homeowners, help the environment, etc. These promises are worthless. This time around especially, Congress should know better than to pass anything of this magnitude without first reading the fine print. There a many red flags that I have found in this bill. At least $4 billion is allocated to expanding the police state and the war on drugs through Byrne grants, which even the Bush administration opposed, and the COPS program, both of which are corrupt and largely ineffective programs. To help Big Brother keep a better eye on us and our children, $20 billion would go towards health information technology, which would create a national system of electronic medical records without adequate privacy protection. These records would instead be subject to the misnamed federal “medical privacy” rule, which allows government and state-favored special interests to see medical records at will. An additional $250 million is allocated for states to nationalize individual student data, expanding Federal control of education and eroding privacy. $79 billion bails out states that haphazardly expanded their budgets during the bubble years, but refuse to retrench and cut back, as their taxpayers have had to, during recession years. $200 million expands Americorps. $100 million goes to “faith-and-community” based organizations for social services, which will further insinuate the government into charity and community service. Private charities are much more efficient and effective because they are directly accountable to donors, while public programs tend to get rewarded for failure. With its money, the Federal Government brings its incompetence and its whims, while creating foolish dependence. This is sad to see. Of course the bill is rife with central planning projects. $4 billion for job training, much of which will be used to direct workers into “green jobs”. $200 million to “encourage” electric cars, $2 billion to support US manufacturers of advanced batteries and battery systems, which is yet another function of government I can’t find in the Constitution. Not to mention $500 million for energy efficient manufacturing demonstration projects, $70 million for a Technology Innovation Program for “research in potentially revolutionary technologies” in which government, not supply and demand, will pick winners and losers. $746 million for afterschool snacks, $6.75 billion for the Department of Commerce, including $1 billion for a census. This bill delivers an additional debt burden of $6,700 to every American man, woman and child. There is a lot of stimulus and growth in this bill – that is, of government. Nothing in this bill stimulates the freedom and prosperity of the American people. Politician-directed spending is never as successful as market-driven investment. Instead of passing this bill, Congress should get out of the way by cutting taxes, cutting spending, and reining in the reckless monetary policy of the Federal Reserve.

Beware When the Angry Mob is Middle Class - (www.dailymail.co.uk) A summer of discontent? It seems a real possibility. Senior officers in the Met are worried. Of course, there are always groups which want to stir up disorder on the slightest excuse or none. The question in these deeply depressed times is how many people who would normally stay aloof might feel like joining them? It is difficult to think of a time when so many people of so many ages at so many levels of society have cause to be fed up and fearful for their futures. They range from the unemployed to savers who have seen their investments, principally for old age, brutally devalued in the stock markets. There are those who have lost their homes after being lured into excessive mortgages. There are students, many of whom were not qualified for higher education, who are being told that the jobs market is never likely to offer them serious employment. Add to this - as the police fear - a number of single issues such as Heathrow, or power stations alleged to cause global warming, or the business preference for immigrant workers, or events in the Middle East. Do the sums and you come up with a powerful cocktail which differs from previous periods of anger and dissent - because there is so much middle-class anger in it. The normally staid who would not join protests may do so now. A desire to protest is a common feature of adolescence and has regularly led to silly disturbances in the past. This time, the danger is that parents may feel like joining in. The situation is made worse by the fact that the Government, whatever confident attitudes it may strike in public, is plainly fumbling in its efforts to prevent a long-term economic depression. Comparisons with the past can be useful - or misleading. The Met thinks back to disturbances in the Eighties. Many of these were, in fact, little more than local looting. But that, too, could reappear under a general air of 'political' protest. A more serious parallel is with 1968 when French dissent - les evenements - spread through other countries including Britain, where the American Embassy in London's Grosvenor Square was so nearly invaded. The French riots, to some extent being repeated today on economic issues, led to President De Gaulle fleeing, if briefly, to a military base in Germany. It was kept a secret then. Those riots were led by protesting students - sneered at by the Communist Party leader as 'sons of the upper bourgeoisie'. It may be the bourgeoisie, not just its sons, who take to protest this time.

US Consumer Confidence Falls to Record Low - (www.bloomberg.com) Confidence among U.S. consumers unexpectedly fell in January to a record low as job prospects remained dim. The Conference Board’s index of consumer confidence fell to 37.7, from a revised 38.6 in December, the New York-based private research group said today. Records began in 1967. Measures related to Americans’ views on incomes deteriorated. Caterpillar Inc. and Home Depot Inc. were among companies yesterday that said they will cut at least 74,000 workers from payrolls in coming months as sales drop and the recession deepens. President Barack Obama is trying to drum up support for quick passage of a stimulus plan that aims to create jobs, cut taxes and boost infrastructure spending.

Credit Losses Could Balloon Unpredictably with Unemployment - (online.wsj.com) Despite all the pain in the financial sector, bank executives' biggest fear has yet to materialize. Now, it is rearing its ugly head. Bankers' worst nightmare is the unemployment rate climbing toward 10%, a level at which credit losses could balloon unpredictably because of high defaults among people with previously strong credit histories. Right now, bank balance sheets don't appear in a position to deal with unemployment moving sharply higher from its current 7.2% rate. Building up bad-loan reserves to deal with a 9% to 10% rate could produce enormous losses and pulverize capital when banks are trying to preserve the thin cushions they have. And fear of rising unemployment could deter lending when the government wants banks to expand credit. True, the Obama administration's stimulus plan could reduce unemployment expectations. But right now, banks are hoisting their joblessness forecasts. Last week, consumer lender Capital One Financial increased its unemployment forecast to 8.7% by the end of 2009, from its previous expectation of 7% by midyear. And Capital One added that it is building more-severe unemployment scenarios into lending decisions.

The Next Real Estate Crisis: Shuttered Stores and Empty Malls - (www.alternet.org) For a picture of the US real estate crisis, imagine New Orleans wrecked by Hurricane Katrina, and before the waters even begin to recede, a second Katrina hits. The 1,120,000 lost US retail jobs in 2008 are a signal that the second stage of the real estate bust is about to hit the economy. This time it will be commercial real estate -- shopping malls, strip malls, warehouses, and office buildings. As businesses close and rents decline, the ability to service the mortgages on the over-built commercial real estate disappears. The over-building was helped along by the irresponsibly low interest rates, but the main impetus came from the slide of the US saving rate to zero and the rise in household indebtedness. The shrinkage of savings and the increase in debt raised consumer spending to 72% of GDP. The proliferation of malls and the warehouses that service them reflect the rise in consumer spending as a share of GDP. Like the federal government, consumers spent more than they earned and borrowed to cover the difference. Obviously, this could not go on forever, and consumer debt has reached its limit. Shopping malls are losing anchor stores, and large chains are closing stores and even going out of business altogether. Developers who borrowed to finance commercial ventures are in trouble as are the holders of the mortgages, derivatives and other financial junk associated with the loans.

California's Newly Poor Push Social Services to Brink - (www.bloomberg.com) In California’s Contra Costa County, 40,000 families are applying for just 350 affordable-housing vouchers. Church-operated pantries are running out of food. Crisis calls have more than doubled in the city of Antioch, where the Family Stress Center occupies the site of a former bank. The worst financial crisis in seven decades is forcing thousands of previously middle-income workers to seek social services, overwhelming local agencies, clinics and nonprofits. Each month 16,000 people, including many who were making $60,000 to $100,000 annually just a few years ago, fill four county offices requesting financial, medical or food assistance. “Unless we do things differently, not only will we continue to be on life support, but the power to the machine is going to die,” said county Supervisor Federal Glover, who represents Antioch and the cities of Pittsburg and Oakley about 50 miles (80 kilometers) east of San Francisco. Contra Costa, an East Bay suburban region of more than 1 million, turned thousands of farmland acres into housing in the past two decades, becoming an affordable alternative to San Francisco. Now, the area is being hit by a double whammy, as rising unemployment increases demand for social services, while plunging home values shrink tax revenue and squeeze agency budgets


OTHER STORIES:

Bad News: We're Back to 1931. Good News: It's Not 1933 Yet - (www.telegraph.co.uk) Ghost Malls: Coming Soon to a Town Near You - (www.seekingalpha.com) Rents Drop Nationwide as Vacancies Spike - (finance.yahoo.com) Bank Nationalization Gets a New, Serious Look - (www.nytimes.com) Home Values Fall 18% - (www.marketwatch.com)Global Depression: Japan Takes Stakes in Ailing Companies - (www.nytimes.com)

Ron Paul Grills Volker on Financial NWO - (www.dailypaul.com)Obama Says US Combat Mission in Iraq Will End Aug, 2010 - (www.bloomberg.com)US Economy Shrank 6.2% in Fourth Quarter - (www.bloomberg.com)Jobless Claims Rise; New Home Sales Fall - (www.nytimes.com)Time: Despite Crash, Housing Still Too Expensive - (www.time.com)JP Morgan to Cut 2,800 - (www.bloomberg.com)US Government to Take 36% Stake in Citi - (www.marketwatch.com)Rocky Mountain News Closes after 150 Years in Business - (www.cnn.com) Japan's Recession Deepens; Output Plunges - (www.bloomberg.com)Why the Japanese Hate the iPhone (Hint: It is too low tech for their tastes) - (blog.wired.com)

Stocks slide on Citi - (money.cnn.com)
GE slashes dividend by two-thirds - (money.cnn.com)
Will the banks survive? - (money.cnn.com)
Bank failures may cost FDIC $80 billion - (money.cnn.com)
GDP slides 6.2% on slower spending - (money.cnn.com)
Louisiana bank returns TARP funds - (money.cnn.com)
In one town, recession bridges cultural rift - (money.cnn.com)
McDonald's: Coke, no Pepsi - (money.cnn.com)
Robin Hood of taxes - (money.cnn.com)
The coming deficit reckoning - (money.cnn.com)
AIG: The bailout that won't quit - (money.cnn.com)