KeNo's Housing and Economic Portal: Friday June 12 Housing and Economic stories

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TOP STORIES:

Republican Senators [attempt to] neuter Federal Reserve Transparency bill - (www.lp.org) - R 1207, the bill to Audit the Fed, now has 179 co-sponsors. Currently the leadership of the two parties has not addressed this legislation until recently. A Senate audit bill that is unrelated to HR 1207 titled “HC-45” was introduced to audit the Fed and was promptly amended to limit the scope. It appears now that a so-called limited government Republican by the name of Richard Shelby did the watering down of the bill. Apparently he has written into the margins of the bill in pencil "with respect to a single and specific partnership or corporation." That means that the scope of the GAO’s audit has been severely limited. This modified version of the amendment does not give GAO authority to look at all of the additional taxpayer risk. Why the secrecy congressmen? Senator Charles Grassley conceded to the amendments, and has therefore shown his stripes as willing to compromise the financial security of the United States citizenry for his own political gain.''

Tony Fratto: The White House "Jobs-Saved" Deception - (www.cnbc.com) I agree with the story, although CNBC was as gullible as any other network in believing the CEOs and corporations that all was well during the financial crisis. After nearly twenty years in Washington I thought I've seen every trick ever conceived, but the White House claims of "jobs saved" attributed to the stimulus bill is unrivaled. What causes the jaw to drop is not just the breathtaking deception of the claim, but the gullibility of the Washington press corps to continue reporting it. News stories from President Obama's event last week hailing the 100-day mark since the stimulus was passed typically repeated the assertion that the stimulus has already "created or saved 150,00 jobs." ("And that's just the beginning," the President crowed.) Here's an important note to my friends in the news media: the White House has absolutely no earthly clue how many job losses have been prevented because of the stimulus bill. None. Not Christina Romer. Not Jared Bernstein. Not Austen Goolsbee. Each of these distinguished economists would have failed Statistics 101 for making such a laughable claim. But we see them now repeating these assertions to reporters who have seemingly abandoned all skepticism.

Forget that only a trickle of stimulus spending has yet made its way into the real economy. Set aside your views on whether or not the stimulus has any job-saving or -creating impact. And leave for another day the White House's failing to account for changing macroeconomic conditions and seasonal adjustments.

Mom Guilts Sons Into Robbing People to Pay Bills - (www.cnbc.com) While Wall Street is pontificating the proverbial recovery, it’s still pretty bad out there for the average American. How bad is it? It’s so bad that a recently unemployed mom in Phoenix guilted her sons into robbing people, while she drove the getaway car, to help pay the bills. And you think it’s not fair you have to clean up your room? Pfffff. In all, Cynthia Roberson, who is divorced, her two sons, ages 12 and 14, and five other recruits, ages 14 to 20, committed 20 robberies, the AP reported. The boys did the robbing but police believe she was the ringleader. In one instance, she coached a 14-year old because he was having trouble stealing a cellphone. With the abundance of Great Depression and 1930s references we’ve had lately, this is one you probably didn’t expect: A return to “Ma Barker”-style family gang robberies. It evokes a hand-cranked black-and-white film, where the feisty old “ma” hits her bone-headed sons on the back of the head before the cops come, and — cue the cops-and-robbers piano-chase music. Only, this is 2009, and this mom-led gang of robbers was mostly stealing iPods and cellphones from teenagers. One victim told police he was sitting on the street corner eating tater tots when they beat and robbed him. Another was beaten but the only thing in his pocket was an orange lollipop.

Foreclosure starts hit one million mark - (www.thetruthaboutmortgage.com) Foreclosure starts, the first step of an often lengthy process, already hit the one million mark this year, according to estimates from the Center for Responsible Lending. The group expects foreclosure starts to hit a whopping 2.4 million in 2009, reducing theproperty values of 70 million households by a staggering $502 billion, or $7,200 per family. “The escalation of foreclosures on all types of loans is alarming,” said Michael Calhoun, President of CRL. “It’s easy to think, ‘Well, that’s tough luck for the families that lose theirhomes.’” “The truth is that foreclosures are costing neighboring families hundreds of billions of dollars and dragging down the entire economy. Foreclosures started today’s crisis, and foreclosures will keep the crisis going if this epidemic continues.” Through 2012, the CRL expects foreclosures to rise to at least 9 million, costing 92 million families $1.9 trillion in lost home value. Despite loan modifications ostensibly doing very little to slow defaults and foreclosures, the group called on loan servicers to ramp up such efforts to keep more families in their homes. According to the CRL, a new foreclosure start happens every 13 seconds, amounting to about 6,500 a day, though not all of these will actually end up in foreclosure.

Blame it on Reagan - (www.blownmortgage.com) Economist Paul Krugman is any way in a New York Times Op-Ed. Krugman blames Reagan and his advisors for planting the seeds that would has become the worst economic crisis since the Great Depression. Krugman points to the 1982 signing of the Garn-St. Germain Depository Institutions Act that deregulated mortgage financing, encouraged absurd levels ofpersonal debt and ushered in a period of government deficit spending that while curtailed by Clinton was exacerbated by Bush to a point where we were caught with our pants down for the payoff of 25 years of deregulation and debt-binging. Definitely worth the read: The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry — whose deposits were federally insured — a license to gamble with taxpayers’ money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money. But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down. These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped. Together with looser lending standards for other kinds of consumer credit, this led to a radical change in American behavior.

Merkel attacks central banks - (www.ft.com) Angela Merkel, the German chancellor, criticised the world’s main central banks in surprisingly strong terms on Tuesday, suggesting that their unconventional monetary policies could fuel rather than defuse the economic crisis. The attack on the US Federal Reserve, the Bank of England and the European Central Bank is remarkable coming from a leader who had so far scrupulously adhered to her country’s tradition on never commenting on monetary policy. “What other central banks have been doing must stop now. I am very sceptical about the extent of the Fed’s actions and the way the Bank of England has carved its own little line in Europe,” she told a conference in Berlin. “Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds,” she said. “We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years’ time.” Ms Merkel’s decision to ignore one of the cardinal rules of German politics – an unwritten ban on commenting monetary policy out of respect from central bank independence – suggests Berlin is far more concerned about the route taken by the ECB than had hitherto transpired. Berlin is concerned that the central banks will struggle to re-absorb the vast amount of liquidity they are pouring into the markets and about the long-term inflationary potential of hyper-lose monetary policies. The ECB’s efforts have been focused on pumping unlimited liquidity into the eurozone banking system for increasingly long periods. But last month (May), it followed the US Federal Reserve and Bank of England in announcing an asset purchase programme to help a return to more normal market conditions. The ECB announced it had agreed in principle to buy €60bn in “covered bonds”, which are issued by banks and backed by public sector loans or mortgages. The covered bond purchases, however, were only agreed after extensive discussions within the 22-strong ECB governing council. According to one version of May’s meeting, the council had discussed a €125bn asset purchase programme that would also have included other private sector assets, but only the purchase of covered bonds was agreed.

OTHER STORIES:

California Leads Nation to Bond Default Abyss - (www.ml-implode.com) - ``California is in crisis because state spending is so high that even those hefty taxes aren’t enough to balance the budget... ...

California Attorney General Brown Issues Directive to Foreclosure Consultants - (www.ml-implode.com) ``The overriding point is that loan modification firms do, for the most part, offer to save a homeowner from foreclosure and tha...

AmeriDream: Downpayment Assistance Programs Shouldn't Burden the U.S. Taxpayer - (www.ml-implode.com) - Ann Ashburn, President of AmeriDream, Inc., today responded to the U.S. Department of Housing & Urban Development's announcemen...

Construction Spending: Don't Let the Headline Fool You - (www.ml-implode.com)

Federal Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirements - (www.ml-implode.com)

Northwestern Mutual Makes First Gold Buy in 152 Years - (www.ml-implode.com)

Freddie Opens Tender Offer to Go Long - (www.ml-implode.com)

More Prime Foreclosures; More Re-Defaults - (www.ml-implode.com)

US Manufacturing Contracts 16th Consecutive Month; China Expands 3th Month - (www.ml-implode.com)

Home Builders' Losses Expected to Narrow - (www.ml-implode.com)

Hedge funds take aim at Florida real estate - (www.ml-implode.com)

After crash, has twilight come to the Sun Belt? - (news.yahoo.com)

Planning Perfect Escape From Underwater House - (www.patrick.net)