KeNo's Housing and Economic Portal: Sunday August 16 Housing and Economic stories

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Cemetery In Foreclosure - (voices.washingtonpost.com) IMPERIAL VALLEY, Calif.--Plastic flowers bloom across the cracked, thirsty ground of a California cemetery, each fake blossom marking a grave. Yellow roses – Milton S. Jackson, 1904-1991. Pink roses – Arley R. (Hale) Jackson, 1906-2006. Beneath their names on a shared marker, the words: "Married Aug, 10, 1924. I’ve fought a good fight. I have finished my course. I have kept the faith." In some spots, rows of flowers mark a line of headstones with the same last name. The Presleys – from Stanley “Slim” Presley to Nellie Presley – rest in five plots, side by side. Roses follow calla lilies follow carnations. Other graves sit alone. Pink Carnations – Winfred Lee Reeves, “Our little Boy.” August 11, 1963 to August 14, 1963. Look closely and cemeteries tell as much about the life of a community as they do about the deaths that occurred there. Headstones read like poems, revealing who lived in a place, for how long and how they were remembered once they were gone: Beloved mother, loving father, a good soldier. “Querido esposo,” reads one marker at the cemetery, revealing the community's proximity to the Mexican border. “Recuerdos de sus hermanos,” reads another. Graveyards are among the last places one expects to find a foreclosure sign, and yet there it was, in big red letters at the entrance to Memory Gardens Cemetery and Memorial Park. "Cemetery in Foreclosure," the sign said, followed by the phone numbers of local officials. Life in Imperial Valley was fragile even before the recession, with financial struggles stretched far across this community, but now, it seems, the economic downturn has made even the dead here vulnerable. When Michael and I walked into the cemetery's office, it was in ruins. The walls were ripped of their panels and the bathroom sink blackened by fire. We found signs someone had been living there. A pair of Rustler jeans, size 38x34, lay on the ground next to a green duffel bag filled with matches, Band-Aids and bullets. Burnt pieces of wood jutted out of a metal trash can that had probably been used as a fireplace or stove. Empty food containers littered the floor. We couldn't help but wonder: How bad must life get for someone to choose to live among the dead. Red roses – Ed H. Siefker, 1893-1973. Father. White and pink carnations – Nellie Mae Siefker, 1901-1966. Mother. Sunflowers – Andy F. Siefker, 1931-2008. Beloved Son.

Rescues Unlimited: Government as Wall Street's Enabler - (www.nytimes.com) MANY people were outraged when Goldman Sachs returned $10 billion in federal bailout money just in time to report its biggest quarterly profit ever, along with a plan to pay $11 billion in employee bonuses. Barry Ritholtz, who writes The Big Picture, a popular financial blog, wasn’t heartened by the news, either. Mr. Ritholtz, however, tried to keep his sense of humor. He posted a satirical story on his Web site by the comedian Andy Borowitz, titled “Goldman Sachs in Talks to Acquire Treasury Department: Sister Entities to Share Employees, Money.” This is very much in the spirit of Mr. Ritholtz’s book,“Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy” (Wiley), in which he argues that the American financial system has been twisted beyond recognition by cynical bankers and their Washington enablers, who champion the free market in good times but cry out for government rescue when times are hard. The author writes with the fury of an insider mortified by the behavior of his heretical peers. Mr. Ritholtz is himself a creature of Wall Street — the chief executive of FusionIQ, an online equity research firm that profited last year by shorting the shares of companies like A.I.G. and Lehman Brothers. The way the author sees it, there are two kinds of people on Wall Street. There are the ones, like himself, who believe that the industry should be a “brutal meritocracy” where “you eat what you kill.” Then, he writes, there are the ones at the top of some institutions that made billions of dollars disappear in the last 12 months through misuse of numbingly complex derivative products. When it appeared that they might go hungry, they hurried to Washington to feed on the government’s bailout package, which the author calculates will leave taxpayers with $14 trillion in liabilities if you also factor in the rescues of General Motors,Fannie Mae and Freddie Mac. “Yes, that’s $14 trillion (plus) — about equal to the gross domestic of the United States in 2007,” Mr. Ritholtz laments. “And as 2008 came to a close, even more industries caught the scent of easy money: Automakers, home builders, insurers, and even state and local governments were clamoring for a piece of the bailout pie.” Many argue that the government averted a catastrophe by pumping money into the banking system. Mr. Ritholtz isn’t so sure. He thinks the rescue of Bear Stearnsemboldened the ailing Lehman Brothers to brush off potential saviors like Warren E. Buffett, who were ready to invest in it.

Economist warns China could cause commodity price slide - (www.telegraph.co.uk) Nouriel Roubini, the respected US economist, has warned that commodity prices could sag in the coming months as a consequence of a likely slowdown in China's aggressive stockpiling programme. Professor Roubini, an academic at New York University and one of the very few prominent economists who predicted the magnitude of the financial crisis, said he feared that China had overstocked and prices would slide as the economic powerhouse cut its rate of accumulation in the second half. Speaking at a mining conference in Kalgoorlie, Australia, Prof Roubini said that while he expected most commodity prices would continue to recover gradually in line with the global economy, China's short-term "massive stockpiling of commodities" had potential ramifications for prices. "My concern is that China might have accumulated an inventory of commodities that is probably excessive to the growth of its economy," he told delegates, adding that the recession would "continue to the end of the year". China has stockpiled heavily following a sharp contraction in global demand for industrial staples including metals and oil. It imported 1.8m tonnes of refined copper in the first half – up 160pc on the same period a year earlier – while primary aluminium imports increased 16-fold. China has also been acquisitive in the mining sector, with state-owned Minmetals buying most of the assets of Oz Minerals, an Australian mining company, in a A$1.73bn deal (£863m) earlier this year, and Chinalco, another state-owned company, making a failed bid to increase its holding in Rio Tinto. Chinese buying has helped buoy prices on the Shanghai and London metal exchanges this year, with copper prices up by about 80pc. The scale of the financial crisis has bolstered the profile of Prof Roubini, whose warnings of a brewing economic storm at International Monetary Fund meeting in September 2006 were broadly met with scepticism. Prof Roubini had said that the US was likely to face a once-in-a-lifetime housing bust, sharp declines in consumer confidence and deep recession – forecasts that all proved accurate. Last month he warned that a "double-dip" recession was possible unless governments that had embarked on monetary stimulus strategies and gorged on debt found a clear strategy for exit.

Federal Tax Revenues Plummet Most Since 1932 - (finance.yahoo.com) Plummeting tax revenues starve government just as Obama embarks on big plans. The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab. The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion. Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever. The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression. "Our tax system is already inadequate to support the promises our government has made," said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation. "This just adds to the problem." While much of Washington is focused on how to pay for new programs such as overhauling health care -- at a cost of $1 trillion over the next decade -- existing programs are feeling the pinch, too. Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining. The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies' spending by 11 percent in 2010 and military spending by 4 percent.

Shifting sands of bad debt hit UAE banks - (www.marketwatch.com) I owe about seventy-five grand on my house in Montreal. I'm good for it. I've got a job in Abu Dhabi, where, quite honestly, if the housing here weren't so darn expensive, I might be able to accelerate payments on my property back home. But that's the way it is. For now, I'm renting it and not quite covering the mortgage and property taxes. When my wife and I bought the house, the bank did what banks do: it did a credit search to establish my history of loans and repayments; it wanted to make sure I had a steady job and what my income was, and what other assets and debts I might have. By that point, I'd been working at The Gazette newspaper in the city for nine years. I had a decent salary. My wife was doing okay as a freelance writer. We had no debts. We were a good risk. Just six years before, however, attempting to get a personal loan of $10,000 to cover the costs associated with adopting our daughter, I was told I would have to have a co-signer. I hadn't been working long enough and hadn't lived in the country long enough for the bank to see me as someone who would pay back the money. Ridiculous, I thought. I'm about to start a family, I'm putting down roots. Don't you want to help? But such arguments wouldn't have washed with the bank manager. We took our money out of that bank, found another that would give us the loan and we've been with it ever since. Had all banks operated this way, with a certain dubious glance at potential loan clients, maybe the United States wouldn't have experienced the subprime mortgage crisis and the huge number of foreclosures of recent years. But it's too late for that now. The world is in financial crisis mode and its repercussions are felt everywhere -- including the oil-rich countries of the Arab Gulf. The Abu Dhabi Commercial Bank, First Gulf Bank and the Abu Dhabi Islamic Bank announced late last month they had set aside millions of dollars as cushions against losses caused by bad loans. All three banks made loans to Saad Group, a conglomerate based in Saudi Arabia that has seen hard times like the rest of us. ADIB lent Saad $66.7 million in 2007 to build a warehouse company in Abu Dhabi. It's not a lot of money given the stratosphere in which these groups and banks usually work, but still, it turned out to be a bad loan. First Gulf is owed $55 million by Saad and Ahmad Hamad Al Gosaibi and Brothers. The three are among 10 UAE banks to have taken a hit by the Saudi developers. Greater was the loan ADCB gave Saad and the Al Gosaibi group: $500 million. Both the Saad and Al Gosaibi groups have defaulted on their debts and forced the banks to set aside a serious amount of money as provisions against losses on the loans. The banks' profits subsequently fell even though, as in the case of the ADCB, which would have reported the best quarter in its history, with revenues up 8%, deposit growth up 6% and loans up 5%.

Bailout cash leads to fraud - (www.nytimes.com) Agents with the F.B.I. and the Treasury Department’sTroubled Asset Relief Program raided a bank and a wholesale mortgage lender in Florida on Monday after the collapse of a proposed partnership that could have brought them more than $500 million in federal bailout money. Christopher Sharpley, deputy special inspector general for the Treasury program, would not comment on why the bank, the Colonial BancGroup, Florida’s sixth-largest bank, and the mortgage lender, Taylor, Bean & Whitaker, based in Ocala, Fla., were being investigated. Standing outside the offices of Colonial Bank in downtown Orlando — where witnesses said about 50 agents appeared around 9:30 a.m. — Mr. Sharpley said only that search warrants were being executed. But the inquiry appears to reveal the largest case by far being investigated by the bailout inspector general, given that about $550 million in bailout money is involved. In previous cases made public by the inspector general’s office or its partners in investigating cases of malfeasance involving the bailout, the figures have been substantially lower. In one case earlier this year, a man in Tennessee, Gordon Grigg, pleaded guilty to embezzling $11 million in his clients’ investment funds. Calls to Taylor, Bean & Whitaker were not returned. Merrie Tolbert, a spokeswoman for Colonial, which is based in Montgomery, Ala., but has more than a third of its assets in Florida, said the company had received a search warrant and was cooperating and staying open, with “business as usual.” Banking experts said the investigation seemed related to an arrangement set up by the Treasury Department that required Colonial to obtain at least $300 million in private investment before being granted a bailout. The goal, regulators said, was to raise the bank’s risk-based capital ratio to 12 percent by Sept. 30, to offset losses from loans tied mainly to real estate in Florida.