Wednesday April 8 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Roubini Says Stocks Will Drop as Banks Go Belly Up - (www.bloomberg.com) U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year’s economic crisis. “The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.” The global equity rebound in March that sent the Standard & Poor’s 500 Index to its best monthly advance in 17 years is a “bear-market rally” and U.S. Treasury yields will “remain relatively low” as investors flock to the safest assets, Roubini said. Treasury Secretary Timothy Geithner’s new plan to remove toxic debt from financial companies won’t be enough for insolvent banks, he said. Roubini’s outlook contrasts with predictions this week from Templeton Asset Management Ltd.’s Mark Mobius and Traxis Partners LLC’s Barton Biggs, who said that equities are poised to rally as government efforts to revive the economy and banking system begin to work. Investors are “way too optimistic” about the prospects for a recovery in the economy and earnings, Roubini said.

Project HOPE for Houseowners - remember that one? - (money.cnn.com) Hope for Homeowners prevents 1 foreclosure: HOPE for Homeowners has been a failure. But Congress thinks some tweaks will revive it. If HOPE for Homeowners, the foreclosure-prevention plan passed last summer, was a soft drink, it would be New Coke. If it was an automobile, it would be an Edsel. A movie? Howard the Duck. In the five months since it has been in effect, HOPE has helped exactly one homeowner to avoid foreclosure. This despite Congress having made $300 billion available to back these loans and estimating that the program would benefit as many as 400,000 families. "As it stands now, we've only gotten 752 applications," said Federal Housing Authority spokesman Brian Sullivan. "And only insured one loan. Needless to say, the program isn't working terribly well." Rep. Michael Castle (R - Del.), who sits on the House Financial Services Committee, agreed, calling HOPE "one of the most failed programs we've had in a long time."

Land of the Free to Whine - (thelastgoodidea.blogspotcom) And home of the over-entitled. So, our President, in his entire web enabled glory, invited us, his loyal subjects to the White House website to submit questions on a variety of subjects. Obviously the one that most interests and concerns us, was his housing forum. The range of the questions was pretty narrow and most questions came in a few different forms, but the overall theme of the questions was sadly narrow.
- Krysty from Corsicana, TX asks: Instead of bailing out banks, why can't we pay off the mortgages in foreclosure so banks would still get the $$ AND people can keep their homes? If we can give away $$ to huge corporations, why can't we give it to the American people who pay for it? Well, Krysty with an extra 'y', its like this. You’re proposing a massive welfare state, which this country just isn't quite ready for, in spite of the socialist leanings of our President. Besides, how long will it be before someone like you is whining that someone down the street or around the corner got their bigger house paid for by this magical program you’re suggesting? Corporate welfare isn't optimal, but far more people depend on the big banks and the infrastructure they provide, than depend on the individuals staying in their over priced ill financed homes. I think it will take less than 5 minutes. This problem is far bigger than many people truely comprehend. Then there is this fool...
- Jenn from Honolulu, Hawaii states: My husband and I work FOUR jobs to stay current on our mortgage. I was forced into an ARM and am afraid of my mortgage adjusting. No one will refinance our loan and I would need to default for loan modification. What options are available? Well Jenn, I admire your aggressive effort and willingness to work FOUR jobs, but nobody forced anyone into an ARM, most people ran head long into an ARM, as they irrationally pursued homeownership with all the trimmings. The only option that should be available is foreclosure and a market correction to more normal pricing. The American Dream, as the cliché of homeownership has become is really a privilege, not a right. Same goes for refinancing.
- Alan McVickers from Hagerstown, MD, not far from our nations capitol seems to think otherwise. We pay our house on time (bought in 2007), have great FICO but can't refinance due to housing loan to value issues (economy based). What plan is there for people like us to get a lower rate without points, more cash down and no mortgage insurance? Sorry Alan, if you couldn't afford it, you shouldn't have bought it.

AIG director named to Obama tax task force - (www.americablog.com) One of the people named this week to President Obama's new Task Force on Tax Reform is a member of the AIG board of directors. Martin Feldstein, a professor of economics at Harvard University, has been on the board of American International Group since 1988. He also was a prominent economic adviser to Presidents Ronald Reagan and George W. Bush. Asked about the AIG connection, a senior administration official said Friday that the White House declined to comment on the story. Like the others named to the tax reform task force, Feldstein also serves on Obama's Economic Recovery Advisory Board, which is headed by former Federal Reserve Chairman Paul Volcker.

Obama Asks Volcker to Lead Panel on Tax-Code Overhaul - (www.bloomberg.com) President Barack Obama is putting former Federal Reserve Chairman Paul Volcker in charge of a tax-code review aimed at closing loopholes, streamlining the law and generating revenue, budget Director Peter Orszag said. Volcker, 81, who heads the president’s Economic Recovery Advisory Board, is being asked to take a look at the laws in an effort to rebalance the tax system. Orszag said the review, given a deadline of Dec. 4, is being ordered to make recommendations on steps to simplify the code, built over the last 96 years, in ways that would reduce tax evasion and what he called “corporate welfare.” “There are hundreds of billions of dollars in uncollected taxes each year,” Orszag said in a conference call. The Volcker board “will be examining ways of being even more aggressive on reducing the tax gap.” The tax gap is the difference between the amount of taxes owed by taxpayers and companies and the amount collected. Orszag cited academic studies suggesting that the difference is $300 billion or more. That is “ a lot of money,” he said, adding that the administration is going to be “as aggressive as possible” in reducing it. Obama made a tax overhaul part of his platform during the presidential campaign. One goal is to close loopholes that he said reward companies that move jobs overseas.

Anti-China Tensions on the Rise in Australia - (www.cnbc.com) Australia's Sinophile Prime Minister Kevin Rudd is fighting perceptions he has become a "running dog" for Beijing as anti-China sentiment mounts at home, threatening billions of dollars worth of Chinese investment. With Rudd urging a greater IMF role for China at a meeting this week of major economies in London, Australia's conservative Opposition Leader Malcolm Turnbull accused Rudd of having become a "roving ambassador for the People's Republic of China". Even a shock decision last Friday to refuse a bid by Chinese state-owned Minmetals to buy Australian miner OZ Minerals on national security grounds appears to have backfired, with media accusing the government of belated chest-beating. "The government has thrown up a series of arbitrary investment barriers apparently to look like it is 'standing up to China'", the Sydney Morning Herald newspaper said on Monday. "It has sent a message to the Australian public that Chinese money is inherently dangerous. The result is red peril hysteria." The Mandarin-speaking Rudd, elected in late 2007, was expected to take Australia's relations with China to a new high with his expert understanding of the country, learned in Beijing as a junior diplomat. But Chinese investment bids now before Australia's foreign investment watchdog, including a $19.5 billion tie-up between Chinese state-owned metals firm Chinalco and Anglo-Australian mining giant Rio Tinto, have sparked public unease.

Wall Street To Washington: "I Want My Campaign Contributions Back" - (tpmmuckraker.talkingpointsmemo.com) Yes, that was an actual sentence spoken -- or more specifically "groused" -- by an anonymous Wall Street executive concerned for his "personal safety," though not enough to be dissuaded from attending or talking to a reporter at yesterday's Wall Street Journal 'Future Of Finance' Conference, where the future sounded like it had gone back in time and purchased a hundred billion dollars worth of extra credit protection, which is to say suspiciously like Finance Past. It looks like Wall Street, no doubt emboldened by the recent 20% runup in the S&P 500, the fourteen bucks in matching leverage the government is offering them for every dollar they invest in toxic/"legacy" assets and the prospect of better-than-awful numbers at Citigroup and Credit Suisse, got its hubris back along with its proverbial groove. In the six months since it nearly triggered global financial Armageddon, the investment banking community has seemed, if not quite chastened, at least somewhat subdued amidst the nation's ever-heightening awareness that their industry engineered the ever-intensifying economic morass. But not anymore! This morning the New York Times ran as an op-ed the resignation letter of one Jake DeSantis, a securities trader and executive vice president at AIG's infamous financial products division and recipient of one of those million dollar bonuses ($742,006.40 after taxes.) That's right: he's keeping it. And don't ask him if he feels guilty about it because he will tell you: NO. I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.'s or the federal government's budget.

Why I Moved To Ecuador - (www.counterthink.com) Why the End of America is Closer than You Think. I recently moved to Ecuador. Not for a vacation. Not for a month or two. I moved to Ecuador for good, as a permanent resident. Upon hearing my plans for living in South America, many people who knew me in the States asked things like, "Well what about the stability of Ecuador as a nation?" To which I would respond, "Oh, you mean the stability of banks that don't make loans and don't invest in derivatives? You mean the stability of a nation where the population still has the courage to march in the streets and throw corrupt officials out of its capitol?" These questions make Americans pause. Most tend to think of public demonstrations as signs of a political instability. But in fact, public demonstrations are a sign of a healthy Democratic process. And Democracy is alive and well in Ecuador (with the usual level of corruption you find in any democracy). It is in America, where the sheeple have been terrorized into staying inside the boundaries of their little "protest zones," that you find a fragile, unstable nation. Through complacency and fear-mongering, most Americans have become cowards when it comes to political activism. They think emailing their Senator a few times a year is all that's required to defend freedom and preserve a nation. Marching in the streets is seen as uncivilized... or even unpatriotic! The government agrees with this, too, now labeling anyone who protests in public a "potential terrorist" and targeting them for FBI investigations. Why America's currency -- and government -- is headed for total collapse: That's why I say America's days are numbered. The America as we know it, at least. This repeated creation of trillions of dollars in new money by the Federal Reserve is the last great looting of the U.S. economy by the wealthy elite. The Titanic is sinking, and high officials have monopolized the life rafts, leaving everyone else to drown with the ship. And while they're rowing away from the doomed vessel that's taking on water, they shout back to the low-income workers clinging to the rails, "Don't worry! The ship isn't really sinking. It's just 'correcting!'" The truth is that America IS sinking -- and it's not just the currency I'm talking about here: America's criminal health care system has sickened the population and outlawed any real healing practices, too. Meanwhile, the FDA and FTC have attempted to destroy all knowledge of natural remedies that can prevent and cure disease, further compromising the future of the American People. On the dollars-and-cents side, America's economy is a fictitious mish-mash of corporations selling poisons to the people, and people buying junk they don't need, and everybody paying through the nose for disease care services that ultimately provide no net benefit to the population. America's infrastructure is crumbling, its industries are already gutted, and its exports resemble third-world agricultural nations more than first-world developed nations. Its political leadership is, with very few exceptions, a band of diseased, ignorant influence peddlers who sell out their constituents at every opportunity. Perhaps more importantly, America has abandoned the principle of law. Laws no longer matter in America because they are selectively enforced only against those who threaten powerful institutions or corporations. America is no longer a nation of freedom and justice for all. Rather, it is a nation of greed and profit for the few, followed by oppression and bankruptcy for everybody else.

South Park Banking Episode - (www.youtube.com)

Star Lobbyist Closes Up Shop as Criminal Inquiry Heats Up - (www.nytimes.com) Lawmakers on Capitol Hill are hearing echoes of the Jack Ambramoff scandal after federal prosecutors raided the office and home of Paul Magliocchetti, one of K Street’s top lobbyists. For most of the last three decades, the lobbyist Paul Magliocchetti might have been mistaken for an owner of the Alpine, a wood-paneled Italian restaurant across the Potomac River from Washington where he routinely presided over boisterous tables of lawmakers and their staff members. “Get me some oysters! Get me some steamed crabs! Get me a rack of lamb!” Mr. Magliocchetti would tell the cooks, strolling into the kitchen. “Every day a different thing,” the chef and owner Ermanno Tonizzo recalled fondly. “I don’t think he has ever seen the menu.” That impresario act — pulling bottles from the private wine locker labeled “Mags” to entertain lawmakers at the clubby Capital Grille steakhouse, sending gift baskets or wine to lawmakers and their aides, or leasing each of his lobbyists a Lexus — helped Mr. Magliocchetti, a protégé of the powerful Representative John P. Murtha, build his lobbying firm into one of the 10 biggest in Washington. Now, however, Mr. Magliocchetti’s generosity is coming to an abrupt halt: his firm, the PMA Group, is closing its doors next week, after reports that federal prosecutors had recently raided his office and his home. And many on Capitol Hill, recalling the scandal that mushroomed around the lobbyist Jack Abramoff, are wondering who else will be ensnared in the investigation as prosecutors pore over the financial records and computer files of one of K Street’s most influential lobbyists, known both for the billions of dollars in earmarks he obtained for his clients and for his open hand toward those he sought to influence. Former PMA staff members familiar with the inquiry say prosecutors’ initial questions have focused on the possibility that Mr. Magliocchetti used straw campaign contributors — a Florida sommelier and a golf club executive, for example, appear to have given large sums in coordination with PMA — as a front to funnel illegal donations to friendly lawmakers, a felony that could carry a minimum sentence of five years. More alarming to lawmakers and aides, however, is that prosecutors may turn their attention to the dinners at the Alpine and Capital Grille or other gifts they might have accepted from Mr. Magliocchetti — potential violations of longstanding Congressional ethics rules that could lead to more serious bribery charges if linked to official acts. “All the combustibles are here for a very salacious set of allegations that could go far beyond his campaign finance problems,” said Stanley Brand, a veteran Washington criminal defense lawyer known for representing Democrats.

New Task Seen for Fannie, Freddie - (online.wsj.com) The regulator of Fannie Mae and Freddie Mac is considering giving the government-backed mortgage companies another role: helping to finance small mortgage banks. A spokeswoman for the regulator, the Federal Housing Finance Agency, said it is looking at ways that the two companies might help revive the market for so-called warehouse loans, which are loans made to mortgage banks. This possible role for Fannie and Freddie is the latest sign of how they are being used increasingly as instruments of government policy rather than corporations focused on shareholder returns. Demand for mortgages is surging as low interest rates prompt millions of Americans to refinance. New U.S. first-lien home-mortgage loans granted this year will surge to $2.78 trillion, up 72% from 2008's depressed level, the Mortgage Bankers Association predicts. But mortgage banks have been hobbled in recent months by a dearth of credit, making it hard for them to respond to that demand.



OTHER STORIES:

AIG Said To Delay Funds to Real-Estate Ventures - (www.cnbc.com)
Regulators See New Role for Fannie, Freddie - (www.cnbc.com)
Spain Bails Out First Bank of Financial Crisis - (www.cnbc.com)
Defaults Rise on FHA-Insured Mortgages: Report - (www.cnbc.com)
The Steadfast Optimist Who Oversaw G.M.’s Long Decline - (www.nytimes.com) Despite many challenges to his leadership of General Motors, Rick Wagoner had managed to keep a firm grip on his job in recent years.
Smaller Cities Buck The Credit Crunch - (online.wsj.com) Consumer-lending activity has increased in numerous midsize cities in the U.S., a sign they are riding out the recession better than big cities and rural towns.
Exactly when Congress sold out to the banks: 1999 - (www.nytimes.com)
Jobless rolls swell again, meaning fewer buyers - (finance.yahoo.com)
Why house ownership is U.S. obsession - (marketplace.publicradio.org)
Bring on the bargains in NY - (www.ny.therealdeal.com)
Cutting through the NAR's latest bull - (www.seekingalpha.com)
Rebound in house sales? Hardly. - (www.patrick.net)
A Comment on Geithner's Plan - (www.solari.com)
Again, Tim Geithner Gets It Exactly Wrong - (www.realclearmarkets.com)
Fixed Mortgage Rate Manipulated By Fed to Lowest on Record - (www.bloomberg.com)

The AIG Death Threats - (www.huffingtonpost.com)
Profile of NYU Economist Roubini - (www.portfolio.com)
The global housing market goes from bad to worse - (www.economist.com)
Rahm Emanuel's profitable stint at mortgage giant - unbiased? - (www.chicagotribune.com)
Our New Financial Product - (www.dilbert.com)

US Autos Task Force Rejects General Motors, Chrysler Plans - (www.cnbc.com) The Obama administration autos task force Monday rejected the turnaround plans of GM and Chrysler and warned both could be put through bankruptcy to slash debts.
Detroit in Crisis: Remaking GM - (www.cnbc.com)
GM's CEO Wagoner Is Forced Out - (www.cnbc.com)
Geithner Won't Say if More Bailout Cash Needed - (www.cnbc.com)
Japan Output Slides But Signs of Rebound Emerge - (www.cnbc.com)