KeNo's Housing and Economic Portal: Sunday January 24 Housing and Economic stories

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Chavez Threatens Businesses that Boost Prices - (www.cnbc.com) President Hugo Chavez threatened on Sunday to seize businesses that raise prices as a result of last week's devaluation of Venezuela's currency. Economic analysts called the warning a futile attempt to control 25 percent inflation that is already the highest in Latin America and stands to be worsened by the weakening of the bolivar. Chavez disputed that his decision to devalue the currency for the first time in nearly five years should spur a sharp rise in consumer prices. "There is no reason for anybody to be raising prices," he said on his weekly radio and television program. The socialist leader urged his supporters to "publicly denounce the speculator" and warned business owners that his government would "take over any business, of any size, that plays the bourgeoisie speculation game." The devaluation aims to stretch oil earnings further by increasing their value in the local currency, and thus help the government counter a recession by boosting spending. But critics said the measure will unavoidably push inflation even higher. Oscar Meza, director of the local Cendas think tank, which tracks economic data, predicted the devaluation would propel annual inflation above 33 percent this year, with food prices rising as much as 36 percent.

FHA's dilemma - subsidize crap loans or stay solvent? - (www.sfgate.com) Keally McBride and her husband both have good jobs and credit scores, but they would not have been able to buy their three-bedroom home in Oakland's Grand Lake area if not for Federal Housing Administration insurance that allowed them to put down just 3.5 percent. McBride and buyers like her boosted the popularity of FHA-backed mortgages to historic highs in the Bay Area and across the nation in 2009 after subprime financing evaporated and as private insurers became increasingly reluctant to cover mortgages with down payments of less than 20 percent. But now 1 in 6 FHA borrowers nationwide is behind on payments, and the FHA's backup reserve fund is below the congressionally mandated minimum. McBride, who is in good standing on her loan, is not among them. The delinquencies have led to concerns by members of Congress and a call by FHA administrators for program changes by the end of January. As reforms are being debated, the FHA is trying to strike a delicate balance. The agency must ensure that its program remains solvent, while not making changes that are so restrictive that they knock a large number of buyers out of the market - and stymie the burgeoning housing recovery. "The people I know who are trying to buy a home for the first time have strong salaries and credit, but they don't have the 20 percent for a down payment," said McBride, a University of San Francisco professor who sold a $300,000, six-bedroom house in Philadelphia and moved to the Bay Area in 2007. While some in Congress want a minimum 5 percent down payment for all future FHA loans - the current requirement is 3.5 percent - the FHA has not announced a down payment change.

California Teachers Union in rare legislative loss - (www.sacbee.com) The California Teachers Association is used to getting its way. The union that represents 340,000 public school teachers has traditionally been one of the most powerful forces in the Capitol. In the past decade, it spent $38 million on lobbying – more than anyone else in the state. So it was an unusual loss for the CTA when the Legislature last week approved the Race to the Top education bills that the union and its allies opposed. Gov. Arnold Schwarzenegger made a veiled reference to the union's influence when he signed the bills Thursday at a Los Angeles middle school. "I know it was very tough for the Legislature, because you can imagine all those special interest groups up there pulling and pushing and … more interested in what's good for the grownups rather than what's good for the children," he said. "But they focused and they stayed focused and they made the right decision, so here we are today." Among the crowd by Schwarzenegger's side during the signing ceremony were two teachers union enemies: Sacramento Mayor Kevin Johnson and education adviser Margaret Fortune. Both were instrumental in turning Sacramento High into a charter school in 2003, getting rid of the teachers and replacing them with a nonunion staff. Teachers unions fear that kind of change could spread across California under the Race to the Top laws, which give parents and school administrators new clout to make major changes in the lowest-performing schools – including converting them to charters and canning teachers.

45% would replace Congress with names drawn randomly from telephone book - (www.dvorak.org) A new Rasmussen Reports national telephone survey shows that 45% of likely U.S. voters now think a group of people selected at random from the phone book would do a better job addressing the nation’s problems than the current Congress. That’s up 12 points from October 2008, just before the last congressional elections. Thirty-six percent (36%) disagree, and another 19% are not sure.

Ponzi Scheme: Fed Bought 80% Of Treasuries In 2009 - (www.theeconomiccollapseblog) No, the headline is not a misprint. According to CNBC, the Federal Reserve bought approximately 80 percent of the U.S. Treasury securities issued in 2009. In other words, the Federal Reserve has been gobbling up the massive tsunami of U.S. government debt that has been created over the past year. This is absolutely unprecedented, and it is yet another clear indication that the U.S. financial system is on the verge of a major economic collapse. You see, the Federal Reserve is not part of the federal government. In fact, the Federal Reserve is about as "federal" as Federal Express is. The Federal Reserve is a private bank owned and operated for profit by a very powerful group of elite international bankers. It is this private central bank that controls the money supply and the issuance of currency in the United States. When the U.S. government need to borrow more money (which happens a lot) they go over to the Federal Reserve and they ask them for some more green pieces of paper called Federal Reserve Notes. The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. Now normally the Federal Reserve takes these U.S. Treasury bonds and they sell them all to other buyers. But in 2009 there were not nearly enough buyers. So in 2009 the Federal Reserve sold itself about 80 percent of this debt. This is even being admitted on CNBC. The video below is from January 8th, and at the 1:45 mark CNBC anchor Erin Burnett drops this bombshell along with a comment about how it is a Ponzi scheme.... So why is it a Ponzi scheme? Well, basically the Federal Reserve is creating money out of nothing, loaning it to the U.S. government and then collecting interest on the loan. That is nice work if you can get it.

Actual unemployment rate higher than shown by official numbers - (www.bloomberg.com) An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said. Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York. “The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged. About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years. December’s 10 percent unemployment rate matched the median forecast of economists surveyed by Bloomberg News. It was shy of the 26-year high of 10.1 percent reached two months earlier. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- rose to 17.3 percent in December from 17.2 percent. The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994.