KeNo's Housing and Economic Portal: Sunday February 28 Housing and Economic stories

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TOP STORIES:

Lenny Dykstra Is Back - (www.cnbc.com) I'm not sure where he's living, but Lenny Dykstra is back in the investing game. The baseball great who filed for bankruptcy last year and lost both of his homes now has a Web site called Nails Investments. "Each week we provide our subscribers with Key Option plays designed to make $1000 or more," the Web site says. For fees ranging from $89 a month (The Single) to $899 a year (The Homerun), you can have access to Dykstra's forecasts. The Homerun also gives you access to a monthly live conference call—"Speak with and Ask Lenny Questions"—and an autographed baseball. What kind of stock picks does Dykstra provide? Dow Chemical is today's pick. To find out why, you have to pay. The site also posts the original Bernard Goldberg profile of Dykstra on HBO's Real Sports from March 2008. It neglects to post the follow-up story when Goldberg discovers Dykstra has fallen on hard times. Nor will you find my interview with him from last summer anywhere on the Web site.

Five decades of failed housing subsidies are enough - (www.washingtontimes.com) With trillion-dollar deficits as far as the eye can see, policymakers need to scour the federal budget for departments to cut and eliminate. They should start with ones that are not just wasteful, but actively damaging to the economy. Top of the list would be the $60 billion Department of Housing and Urban Development. HUD's negative impact on the economy is far larger than its multibillion-dollar budget. HUD's policies played a key role in causing the housing boom and bust and then the recession in its wake. Weak lending standards on HUD-insured mortgage loans helped fuel risky non-prime lending. HUD also put pressure on banks and the failed housing giants Fannie Mae and Freddie Mac to make risky loans to underqualified borrowers. Thanks to those policies, Fannie and Freddie went bankrupt and already have received $112 billion in taxpayer bailouts. Steady increases in home-buying subsidies in recent decades were motivated by political attempts to curry favor with special interests such as the Realtor and homebuilder lobbies. Politicians justify the subsidies on their claimed civic virtues. But, as we've seen in the wake of the housing bubble's bursting, there's nothing virtuous about putting people into homes they can't afford.

GM's New Union-Free Mantra - (Mish at globaleconomicanalysis.blogspot.com) In a welcome turn of events, GM appears to have adopted a union freemantra. Please consider GM and Delphi Ditching UAW For New “Green” Production Jobs. As GM tools up for production of its Volt extended-range electric car, Automotive News has noticed something interesting: workers at GM’s new battery pack assembly plant are not represented by the United Auto Workers. Located in the heart of UAW territory (Brownstown Township, MI), the Volt battery plant represents the very jobs that local politicians and GM leadership hailed as the green future of the auto industry. though GM only has 25 workers currently working the Brownstown plant, that number will increase, and the symbolism is far more important than pure numbers. The plant is part of a new wholly-owned subsidiary called GM Subsystems Manufacturing LLC, and GM spokesfolks confirm that non-union labor was an important factor in maintaining competitive manufacturing costs. Though electric motor production at Maryland’s White Marsh plant will be a union shop, GM’s biggest supplier Delphi is also taking measures to keep its EV component factory in Kokomo, IN, free from union representation (in line with its new union-free mantra). Kokomo Local 292’s president calls the decision a “smack in the face” for the union, which is facing a decades-long slide in membership.

Take this bank and shove it - (money.cnn.com) When Abel Collins decided to end his three-year banking relationship with Bank of America earlier this year, he simply wanted to make a statement. The 31-year old Rhode Island-resident said he never had a problem with BofA specifically. But he switched from the nation's biggest bank to a local credit union to protest what was happening in the financial sector more broadly, namely that banks had become "too big to fail" and Washington wasn't doing enough about it. "I basically figured if Congress wasn't going to take action to reduce the size of banks or at least regulate the activities they were involved in, I'd remove my part of the money they [Bank of America] controlled," Collins said. Collins isn't the only one to put principles over convenience these days. Even though BofA, Wells Fargo, Citigroup and other big banks continued to attract more deposits in the fourth quarter, countless other Americans have suddenly found themselves more willing to switch to smaller banks.

Star bond-fund manager sues former boss - (money.cnn.com) More drama in the dispute between ousted star bond-fund manager Jeffrey Gundlach and his former employer, TCW: Gundlach claims in a suit filed Wednesday that TCW fired him and generally mistreated him as part of a “scheme” to avoid paying Gundlach and his team their due. Quick recap: TCW fired Gundlach in December, accusing Gundlach of plotting to start a rival firm and alleging he took confidential information, including client data, with him. TCW also called Gundlach erratic and egotistical, and said in its lawsuit it found pot and porn in Gundlach’s offices. Gundlach — who took roughly 40 TCW employees with him to his new firm, DoubleLine Capital — alleged last month that TCW invaded his privacy by searching his offices and that the firm was throwing all sorts of mud around to harm his new business.

The Unceremonious Fall from Entitlement - (www.irvinehousingblog.com) Many cling to lifestyles of the Great Housing Bubble unable to accept reality of living within the confines of their wage income. Today we examine the inevitable and ignominious fall from entitlement. The Great Housing Bubble cultivated a gentility of entitlement, a sordid societal residue, a system of reliance, a conviction among people that they may possess anything they wish just because; deserving without earning; Grace. Divine acceptance is given; whereas, worldly possessions are earned -- a basic truth lost through possessory entitlement. Few construct and contribute to the greater good, and many expect easy money from lenders, Governments, housing and stock markets or free-money Ponzi Schemes. We are impaired by our lender's failure and our Government's response to the crisis our lenders created; a wound that lingers as a festering sore no bailout balm can remedy. The emotional fall from Grace has barely begun. The amend-pretend-extend dance will continue until lenders tire of paying the piper. Shadow Inventory contains the new entitlement class; while unemployed renters sleep in shelters, unemployed homeowners squat in luxury, sustain false lives on lender largess, and exalt their status in preparation for the unceremonious fall from entitlement. When famous people fall, it makes news, but when plebs fall, no notice is given; no ritual is performed. The silent souls quietly abandon their perceived privilege while the raucous proles forcefully defend their binding birthright through procedural delays and faithlessly modified promises. In the end, all fall to the support of their own resources and suffer to the degree they resist reshaping their lives to reflect reality. We witness this fall as HELOC abuse posts, short sales and Trustee Sales. Like forensic examiners, we follow clues in the property records looking for what methods were used and what motivated homeowners to borrow and spend their family homes. This work is consequential because unless we see conditions for what they are, unless we see people's defective reasoning and overriding emotional gambits for what they are, we may fall victim to the same Siren's Song.

40 percent of South Florida mortgage holders 'underwater' - (www.sun-sentinel.com) Roughly four in 10 single-family homeowners with a mortgage in South Florida owe more than the property is worth, Zillow.com said Wednesday. About 41 percent of the 836,723 single-family home mortgages in Palm Beach, Broward and Miami-Dade counties are "underwater," according to a fourth-quarter report from Zillow. The Seattle-based real estate firm compiles data from public property records. The percentage of borrowers with so-called negative equity has decreased slightly since it hit 47 percent in the second quarter of last year. It dropped to 46.2 percent in the third quarter. Still, the problem here remains far greater than it is nationwide, where 21.4 percent of single-family mortgage holders are underwater. Because prices have fallen so far, it will take a decade or longer for many of these borrowers to sell their homes for what they paid. But some won't wait around and instead will walk away from the mortgages, adding to the glut of foreclosures.