KeNo's Housing and Economic Portal: Saturday September 19 Housing and Economic stories

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Annie Leibovitz on brink of losing life's work‎ - (www.theaustralian.news.com.au) Photographer Annie Leibovitz could be one day away from losing the copyright to her entire life's work unless she can pay back a $US24 million ($28m) loan. Art Capital Group, a New York company that issues short-term loans against fine and decorative arts and real estate, has refused to back down from the bid to sue the celebrity photographer for breach of contract. Her deadline to repay the loan is tomorrow. "We have clear contractual rights and will protect them in any scenario," ACG spokesman Montieth Illingworth said over the weekend. "Our preference is for this to be resolved." Leibovitz, who turns 60 next month and is the long-time partner of writer and feminist Susan Sontag, had a victory last week when the New York Supreme Court granted her an extra month to respond to an ACG lawsuit. The ruling had no effect on her obligation to repay ACG, Bloomberg reported. Legal experts told the agency that ACG may be reluctant to enforce tomorrow's deadline in case that pushed Leibovitz to declare bankruptcy. Leibovitz's images of musicians, presidents and Hollywood glitterati are cultural touchstones. Her portrait of John Lennon curled up naked with Yoko Ono was taken just hours before the former Beatle was assassinated in 1980. She used the cover of Vanity Fair to show a pregnant Demi Moore naked and reveal the newborn daughter of superstar couple Tom Cruise and Katie Holmes. So her decision to gamble the rights to her work is inexplicable to many. "Jaw-dropping," art lawyer Peter Stern said. Last year, Leibovitz put up her homes and the copyright to every picture she has ever taken - or will take - as collateral to secure a loan to pay off her mounting debt: unpaid bills, mortgage payments and tax liens, ACG said. The mortgage debt on all her properties totals about $US15m. This includes the $US1.2m loan she took out on two Greenwich Village townhouses, and another $US2.2m three years later, according to New York magazine. Court records show she piled up years of federal, state and city liens and judgments from vendors for unpaid bills - all presumably now satisfied with the $US24m she borrowed. Federal records show Leibovitz owed a total of $US2.1m in unpaid taxes for tax years 2004, 2006 and 2007. She had New York state tax liens of $US247,980 for six years, including $US135,915 in 2007. And she owed New York City several thousand dollars for three years. Some experts say filing for bankruptcy reorganisation could be the best option for Leibovitz, who has put up as collateral her three historic Greenwich Village townhouses, an upstate property and work. She bought two of the townhouses in 2002, embarking on extensive renovations to combine them into one property. That spurred protests from historic preservationists and a $US15m lawsuit by a neighbour. Her editorial agent, Contact Press Images, has declined to comment on the case, saying it is a private matter. Her spokesman, Matthew Hiltzik, has accused ACG of harassment. "There has been tension and dispute since the beginning ... For now, her attention remains on her photography and on continuing to organise her finances," Mr Hiltzik said. A reorganisation filing would suspend all litigation against Leibovitz and place her finances under the protection of a federal judge, said bankruptcy lawyer Paul Silverman.

States Cut Back and Layoffs Hit Even Recipients of Stimulus Aid - (www.nytimes.com) It was just five months ago that Vice President Joseph R. Biden Jr. made the New Flyer bus factory here a symbol of the stimulus. With several cabinet secretaries in tow, he held a town-hall-style meeting at the factory, where he praised the company as “an example of the future” and said that it stood to get more orders for its hybrid electric buses thanks to the $8.4 billion that the stimulus law devotes to mass transit. But last month, the company that administration officials had pictured as a stimulus success story began laying off 320 people, or 13 percent of its work force, having discovered how cutbacks at the state level can dampen the boost provided by the federal stimulus money. The Chicago Transit Authority did use some of its stimulus money to buy58 new hybrid buses from New Flyer. But Chicago had to shelve plans to order another 140 buses from them after the state money that it had hoped to use to pay for them failed to materialize. The delayed order scrambled New Flyer’s production schedule for the rest of the year, and led to the layoffs. One of those laid off was David Wahl, 52, who had worked there for a decade and who sat behind the vice president at the town-hall-style meeting, soaking up the optimism of the moment. “With mass transit being pushed so hard,” Mr. Wahl recalled, “I figured I’d be able to work until I was 75.” The layoffs at New Flyer are a vivid illustration of the way that some of the economic impact of the $787 billion federal stimulus law is being diluted by the actions state and local governments are taking to weather the recession. While the stimulus law cut federal taxes to inject money into the economy quickly, at least 30 states have raised taxes since January, according to the Center on Budget and Policy Priorities, a liberal fiscal policy group. The stimulus will spend $27.5 billion in federal money on highway projects, but at least 19 states are planning to cut their highway spending this year, according to the American Road & Transportation Builders Association, a trade group. And as the stimulus devotes $8.4 billion to mass transit, transit systems across the nation have been forced to cut service, raise fares and delay capital spending. Dean Baker, an economist who was an author of a paper called “The State and Local Drag on the Stimulus,” said that while the stimulus had undoubtedly helped states, the cutbacks and tax increases at the state and local level threaten to offset much of its economic impact. “The economy doesn’t care whether the dollars are coming from the federal or the state and local level,” said Mr. Baker, a co-director of the Center for Economic and Policy Research. Mr. Biden did not respond directly to news of the layoffs at New Flyer, but another administration official said the stimulus money was expected to help transit agencies buy almost 8,000 new buses, which would help New Flyer and its competitors. Sasha Johnson, a spokeswoman for the Department of Transportation, said stimulus dollars had helped bus companies survive the economic downtown, and would have an increasing effect through the year.

Rising Taxes Drive Out FL Residents - (news.yahoo.com) There are many things public officials probably shouldn't do during a severe recession, but no one seems to have told the leaders in Florida about them. One thing, for instance, would be giving a dozen top aides hefty raises while urging a rise in property taxes, as the mayor of Miami-Dade County recently did. Or jacking up already exorbitant hurricane-insurance premiums, as Florida's government-run property insurer just did. Or sending an army of highly paid lobbyists to push for a steep hike in electricity rates, as South Florida's public utility is doing. And you wonder why the Sunshine State is experiencing its first net emigration of people since World War II. A few years ago, journalists - citing the chasm between Miami's high cost of living and its low level of income - began predicting that South Florida and its perpetual population-growth machine would soon face the unthinkable: a falling head count. Now it's official. The region - Miami-Dade, Broward and Palm Beach counties - lost 27,400 residents between 2008 and 2009, while Florida as a whole lost 58,000. That's not exactly a mass exodus for a state of 18 million; but it's the first net outflow in 63 years for a state that considers itself the new California. "It's difficult for the working middle class to justify living here," Mike Jones, president of the Palm Beach County Economic Council, conceded to the South Florida Sun-Sentinel. "As much as they may love the sunshine, as you squeeze them out, they may find it in their best interests to move." Jones gets it, but residents are starting to question whether the rest of their leaders do. Homeowners, especially in Broward and Miami-Dade, have been falling out of their flip-flops in recent days as they open their preliminary property-tax notices to find increases of 15% or more. That's sizable in a low-income region where the median property-tax bill is already some $3,000, and it's doubly frustrating given that property values have slid by some 25% during Florida's housing bust. Residents have barely digested the recent news that their hurricane-insurance premiums, which can top $5,000 a year for most South Florida homes, will rise 10% a year for the next three years (vital, officials claim, for handling claims from the next big storm). And their public utility, Florida Power & Light (FPL), is lobbying the state for a 30% rate hike (vital, FPL execs insist, for upgrading infrastructure). "It all seems out of control to people here at the time when they can least absorb it," says Dr. Jose Valladares, president of the conservative Fair Property Tax for All in Miami-Dade. Granted, most local governments often have to raise taxes when they're staring at fiscal craters like the $427 million shortfall in Miami-Dade's proposed $7.83 billion budget. But the less than sunny mood in Miami-Dade is made darker by the feeling among most residents that their fiscal jam is not just a result of falling revenue, but also years of profligate mismanagement. The final determination on their property taxes will be made soon by the Miami-Dade County Commission - a feckless, corruption-tainted body, many of whose members ran up hundreds of thousands of dollars in police overtime costs recently by using cops as their personal chauffeurs. (None of the commissioners face any sanctions for it.)

US Consumer Bankruptcies Rose 24% in August - (www.bloomberg.com) U.S. consumer bankruptcy filings rose 24 percent in August from the previous year to 119,874, according to the American Bankruptcy Institute and National Bankruptcy Research Center. “Consumers continue to turn to bankruptcy as a shield from the sustained financial pressures of today’s economy,” said Samuel Gerdano, the executive director of the American Bankruptcy Institute. “As a result, we expect consumer filings to top 1.4 million this year.” While the August figure was an increase over the prior year, filings declined from July’s total of 126,434, the groups said in a statement. The current wave of consumer bankruptcies has swept up celebrities such as actor Stephen Baldwin, former baseball player Lenny Dykstra and celebrity photographers Markus Klinko and Indrani Pal-Chaudhuri.

Middle classes turn to car park handouts - (www.ft.com) At first glance it seems as if no one has turned up to meet June McCauley and his giant refrigerated truck. But, as he drives into the car park, the inert cars suddenly bristle with life. Arms shoot out from car windows, each brandishing a fistful of empty plastic bags. Mr McCauley climbs out of the truck and starts unloading heavy crates of tomatoes, onions, potatoes, milk cartons and bread on to the hot tarmac. Sitting on the kerb nearby, Barbara Britton's eyes widen. "Ooh they've got some bread, they've got potatoes. We got some good stuff this time," the 52-year-old says. "Cabbage, carrots - oh, I can make a good dinner this Sunday when I've got the children." This is a 21st-century breadline. A few volunteers collect the plastic bags from the cars' occupants and start packing them with food. After a while they tell drivers of the 50 or so vehicles - each of whom was given a ticket when arriving - to line up and drive past slowly. A few bulging bags are heaved into each vehicle, and off they go. Ms Britton and her elderly mother are the only ones on foot. Scenes like this are playing out quietly across the US. Much less visible than the queues of down-and-outs emblematic of the Great Depression, they nevertheless offer a window on to the hidden impact of the nation's worst economic downturn since the 1930s. More than 7m people have signed up for free food stamps from the government since the recession started, bringing the total to more than 35m Americans, or 11.6 per cent of the population. But even those figures do not tell the whole tale. Millions of middle- and lower-middle-class Americans remain ineligible for the stamps, which in many states are only available to those with less than $2,000 (€1,400, £1,225) in the bank. Yet some have found themselves stretched to breaking point by slashed hours, furloughs or unemployment. Things quickly unravel from there, as overleveraged families find themselves scrambling to keep homes. More than one in eight US mortgage borrowers were behind on payments or facing foreclosure at the end of the second quarter, according to the Mortgage Bankers Association. Some are turning to places like this car park in Maryland, where the Community Ministry of Prince George's County conducts its ritual three times a month. "As they collect unemployment, their resources are diminishing. Many of the families that we're trying to serve are just trying to hang on to their homes, trying to hang on to any assets that they have," says Vicki Escarra, chief executive of Feeding America, which runs a network of 200 food banks across the US. At the last count, in 2005, Feeding America served 25m Americans, the majority of whom were not on food stamps.

Obama's 'Great' mistakes - (www.telegraph.co.uk) Barack Obama accused of making 'Depression' mistakes. Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan. His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says. There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs. In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years. The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows." Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron." The paper, which recommends that the US return to a more laissez-faire economic system rather than intervening further in activity, has been endorsed by Nobel laureate James Buchanan, who said: "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."