KeNo's Housing and Economic Portal: Saturday November 14 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Chicago Ponders Privatizing Its Water System - (cbs2.chicago.com) If the parking meter deal put a bad taste in your mouth, try swallowing this: Chicago is considering leasing its water system to help fix the budget. The new boss could charge whatever they want for water, CBS 2's Roseanne Tellez reports. Could it happen here in Chicago? It already has nearby. Homer Glen in Will County relies on Lake Michigan water, but the supply comes from a German-owned firm. Locals say there's a lot more than water going down the drain. It's a vital resource you can't live without. But in Homer Glen, the question is can you afford water. Residents say rates are breaking the bank. Homer Glen resident Lillie Gajda said her family has tried to cut back to offset high rates. "Oh, we do everything -- we've changed out toilets, we've changed our showerheads, we've changed faucets, we've changed dishwashers," she said. Mayor Jim Daley says residents pay about three times more than those in neighboring communities. He said Illinois-American Water Co. offers the same explanation. "They simply say that they have infrastructure improvements they need to make, that they can show their costs," he said. "What we're saying: It's absolutely absurd." But Could Chicago be next? A trade publication says the city's Department of Water Management is "considering a lease of its water and wastewater system." Alderman Scott Waguespack has heard similar rumblings. "We've already heard inklings that they're thinking about it," he said. "They've had discussions. Why is the public not at the table?" Waguespack was one of the few holdouts on the City Council when the parking meter deal went through. Under that controversial plan, the cash-strapped city agreed to lease its parking spaces for 75 years to a private firm that would collect higher parking rates. It netted the city more than $1 billion in cash. "Why are we having a fire sale on everything in the city?" Waguespack said.

60 Minutes: The $60 Billion Fraud: Medicare and Medicaid fraudsters are beating U.S. taxpayers out of an estimated $90 billion a year - (www.cbsnews.com) f all the problems facing the United States right now, none are more important than health care. President Obama says rising costs are driving huge federal budget deficits that imperil our future, and that there is enough waste and fraud in the system to pay for health care reform if it was eliminated. At the center of both issues is Medicare, the government insurance program that provides health care to 46 million elderly and disabled Americans. But it also provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half trillion dollars that are paid out each year in Medicare benefits. In fact, Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable, crimes in America. This story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy. If you want to find Medicare fraud, the first place you should look is South Florida, where 60 Minutes and correspondent Steve Kroft were told it has pushed aside cocaine as the major criminal enterprise. It's a quiet crime - there are no sirens or gunfire. The only victims are the American taxpayers, and they don't even know they are being ripped off. FBI Special Agent Brian Waterman, who 60 Minutes rode with for several days, told us the only visible evidence of the crimes are the thousands of tiny clinics and pharmacies that dot the low-rent strip malls. You don't even know they're there because there's never anyone inside. No doctors, no nurses and no patients. "This office number should be manned and answered 24 hours a day," Waterman explained, standing outside one of those small, unstaffed businesses. The tiny medical supply company billed Medicare almost $2 million in July and a half million dollars while 60 Minuteswas there in August, but we never found anybody inside, and our phone calls were never returned. Sometimes, they don't even have offices: we went looking for a pharmacy at 7511 NW. 73rd Street that billed Medicare $300,000 in charges. It turned out to be in the middle of a public warehouse storage area. "They've already told us that there's no offices here," Waterman told Kroft. "There are no businesses here. In fact they are not even allowed to have a business here." Waterman is the senior agent in the Miami office in charge of Medicare fraud. And Kirk Ogrosky, a top Justice Department prosecutor, oversees half a dozen Medicare fraud strike forces that have been set up across the country. The office Kroft visited operates out of a warehouse at a secret location in South Florida and includes investigators from the FBI, Health and Human Services, and the IRS. "There's a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare," Waterman explained.

George Bush to Become Motivational Speaker - (www.telegraph.co.uk) Months after leaving office with a dismal 22 per cent approval rating, George W. Bush is embarking on a new career as a motivational speaker. On Monday, the former US president - whose policies inspired millions of Americans to vote Democrat in the 2008 election- will headline at a popular Get Motivated programme, appearing at a seminar about, among other things, "How to master the art of effective leadership". Mr Bush's wars in Afghanistan and Iraq provoked widespread criticism, and his steering of the US economy drew censure. But he is likely to be paid around $100,000 (£61,000) for a 40-minute speech on his experiences as leader of the free world - so he may yet have the last laugh. Touted as a "motivational mega-show [that] packs more inspirational firepower than a stick of dynamite," the seminars, aimed at businessmen and women, have become hugely successful in the US and frequently feature high-profile speakers, including other former presidents. Mr Bush's wife, Laura, has also been booked to speak at three events, meaning between them the couple could earn $500,000 (£305,000) from their speeches. Mr Bush will speak at an event in Fort Worth, Texas on Monday and another one in San Antonio in December. The disclosure of Mr Bush's post-presidential role has already inspired jokes at his expense. Professor Larry Sabato, professor of political science at the University of Virginia, said: "Maybe it will be 'I'm the model of what you shouldn't be'." Mr Bush, who famously declared "I am the decider" when his decision not to sack Donald Rumsfeld, then secretary of defence, was queried, swill give advice on making decisions and how to lead large organisations, his spokesman said. He also intends to talk about his achievements and setbacks while in office. Appearing alongside Mr Bush will be Rudy Giuliani, the former mayor of New York, and Colin Powell, the former secretary of state.

George W. Bush is embarking on a new career as a motivational speaker

Total vacant land in Detroit now occupies an area almost the size of Boston - (www.reuters.com) In a crowded ballroom next to a bankrupt casino, what remains of the Detroit property market was being picked over by speculators and mostly discarded. After five hours of calling out a drumbeat of "no bid" for properties listed in an auction book as thick as a city phone directory, the energy of the county auctioneer began to flag. "OK," he said. "We only have 300 more pages to go." There was tired laughter from investors ready to roll the dice on a city that has become a symbol of the collapse of the U.S. auto industry, pressures on the industrial middle-class and intractable problems for the urban poor. On the auction block in Detroit: almost 9,000 homes and lots in various states of abandonment and decay from the tidy owner-occupied to the burned-out shell claimed by squatters. Taken together, the properties seized by tax collectors for arrears and put up for sale last week represented an area the size of New York's Central Park. Total vacant land in Detroit now occupies an area almost the size of Boston, according to a Detroit Free Press estimate. The tax foreclosure auction by Wayne County authorities also stood as one of the most ambitious one-stop attempts to sell off urban property since the real-estate market collapse. Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days. The county had no estimate of how much was raised by the auction, a second attempt to sell property that had failed to find buyers for the full amount of back taxes in September. The unsold parcels add to an expanding ghost town within the once-vibrant town known worldwide as the Motor City. Critics say the poor showing at the auction underscores the limits of using a market-based system to clean up property tax problems. They say the system has enriched a few but failed to deliver a way for Detroit to staunch its dwindling population and could worsen the vacancy crisis. One proposed alternative would have officials take control of the tax foreclosure process through a land bank program of the kind being used to revitalize the nearby city of Flint.

Mish: US Facing Second Lost Decade - (Mish at globaleconomicanalysis.blogspot.com) Japan has gone through two lost decades, in and out of deflation, with nothing to show for it but increasing debt to GDP and a stock market still 70% below its peak. Now, Richard Koo of Nomura Research Institute Ltd. says that the US is risking a Japan-like “lost decade” with its stimulus exit. US officials contemplating an exit from record fiscal stimulus are in danger of repeating mistakes that plunged Japan into its lost decade of stagnant growth, according to Richard Koo of Nomura Research Institute Ltd. “This isn’t a cold, its more like pneumonia,” said Koo, author of Balance Sheet Recession, a 2003 book about the malaise that hit Japan after its stock and real-estate markets crashed in 1990. “We still need more government spending,” he said, adding it could take “three to five years to get out of this mess, even under the best of circumstances.” Koo’s comments echo the view of economists including Nobel laureate Paul Krugman, who warn that the US’s likely return to growth in the second half of 2009 doesn’t mean a sustained recovery is assured. The Obama administration aims to rein in a record $1.4 trillion budget deficit as growth returns, seeking to safeguard the value of a declining dollar. “If you learn your lesson from the Japanese experience, you don’t remove your fiscal stimulus until private sector de-leveraging is over,” Koo, 55, chief economist at the research arm of Japan’s biggest brokerage, said in an interview at his Tokyo office last week. “When we see the private sector coming to borrow again, I’ll be the loudest person on earth arguing for fiscal reform. That’s the exit." Koo calculates that the bursting of Japan’s asset bubble in 1990 erased 1,500 trillion yen ($16 trillion) in wealth, equivalent to three times the size of the economy. Companies focused on repaying debt rather than undertaking new projects, causing demand to plummet and triggering a cycle in which cash flows fell, asset prices dropped, and balance sheets deteriorated. This time it’s the US consumer that’s inundated with debt. Household debt soared more than 10% each year from 2002 to 2005, when the economy expanded an average of 2.75%. “We have zero interest rates and still nothing’s happening,” Koo said. Businesses and households don’t want to borrow money even at zero rates; they’re too busy rebuilding savings and paying off debt, he said. “We had these false starts,” Koo said. “The economy would begin to improve and then we’d say ‘oh my god, the budget deficit is too large.’ Then we’d cut fiscal stimulus and collapse again. We went through this zigzag for 15 years.”