KeNo's Housing and Economic Portal: Tuesday March 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Harry Markopolos: “Don’t Trust Your Government” - (www.senseoncents.com) In an interview on the Today show this morning (video clip after the fold), Harry Markopolos dropped a few bombshells. Harry’s statement that he had purchased a gun and mentally prepared himself to kill Bernie Madoff in self-defense if need be will likely grab the most attention. It shouldn’t. Markopolos’ biggest bombshell this morning is his warning to America, “don’t trust your government.” No surprise thatToday host Matt Lauer did not probe deeper. I am not confident that other outlets will delve deeper into Harry’s statement, either. I wonder why Harry himself is reticent to specifically point out the individuals and the instances which lead him to make that statement. Recall that a year ago Harry defined the SEC as merely incompetent while simultaneously defining FINRA (Financial Industry Regulatory Authority) as ‘in bed with the industry’ that is Wall Street.

Well, it does not take an advanced degree to connect Harry’s grenade toss into FINRA’s backyard a year ago with his volley this morning. Who is the central figure coarsing across the landscape of the NASD (FINRA’s predecessor), FINRA, and now the SEC? Mary Schapiro…. When will Mary Schapiro be compelled to answer questions not only about her relationship with Bernie Madoff, but about her tenure at the NASD and FINRA? I certainly would like to get answers to a whole host of questions surrounding Ms. Schapiro. What questions? As I wrote last December and repeat today, “Mary Schapiro Owes America Some Answers”: Mary Schapiro, the current SEC Chair and formerly the head of FINRA, possesses a wealth of information on a number of topics for which America would like greater detail. What are some of these topics?

1. Did FINRA possess material, non-public information and act upon it in the liquidation of its $671 million auction-rate securities position in mid-2007 as the ARS market was failing?

2. Did FINRA invest its own funds in Bernard Madoff, as alleged in the complaint Amerivet Securities vs. FINRA.

3. What was the nature and full depth of Mary Schapiro’s relationship with Bernie Madoff? Bernie himself characterized Mary as a ‘dear friend.’

4. Did Mary Schapiro and her fellow FINRA execs lie verbally and in a proxy statement regarding the merger of the NASD with NYSE Regulation to form FINRA?

California job losses grow - (www.contracostatimes.com) alifornia's ailing job market is much more feeble than analysts thought was the case a few weeks ago, according to a new report that provides an early glimpse into statewide employment trends. "The economy was a lot worse than everybody thought," said Howard Roth, chief economist with the state's Department of Finance. "The job market is weaker than we figured." It appears California lost 871,000 jobs in 2009, suggests an estimate provided by the state Employment Development Department. "This is the worst recession for California since the Great Depression," said Brad Kemp, director of regional research with Beacon Economics. If those estimates hold up when final revisions are released this month, the actual job losses in the state would be far more grim than first believed. In the initial EDD estimate, released Jan. 22, the EDD reported California employers chopped 579,000 jobs from payrolls in 2009. "We will have a really big downward revision," Roth said. That would translate into an 292,000 more jobs that were lost, on top of the prior losses.

Fannie Mae Lost $74B In 2009 And May Have Changed Mission Statement - (www.portfolio.com) Mortgage giant Fannie Mae requested another cash infusion, this time $15.3 billion, from the government after posting a loss of more than $74 billion for all of 2009. It may have changed its mission statement to put less emphasis on keeping interest rates low for home buyers. Its new mission statement focuses on providing liquidity for lenders, according to some mission statement changes noted by blog Housing Doom. Housing Doom noticed that the company's mission statement has changed from 2008, when it pledged to "…ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates." The new mission is to "…enhance the liquidity of the mortgage market by providing funds to mortgage bankers and other lenders so that they may lend to home buyers." The new statement was found at the bottom of a press release.

Smell the Change: Ohio Mayor Suggests It's Time To Eliminate Public Sector Unions. - (directorblue.blogspot.com) ...as we now know, the jobs creation promise of 2009 nationally has more closely resembled a nightmare. With unemployment a year ago at 8%, it is currently over 10% and since the signing of the stimulus bill, we have lost 2.8 million jobs. These job loss figures clearly have a direct effect on state and city budgets. Cuyahoga Falls is no exception. Cities essentially rely on two forms of revenue: property taxes and income taxes. In 2009, we saw both of these revenue sources decline. In response to these significant drops in revenue, we mandated that the non-bargaining employees accept a wage freeze along with six furlough days. Additionally where applicable, we would cease the ability to sell back vacation and sick leave. I am proud of the AFSCME union which was the first union to step forward and agree to our proposal. Our Fire union, the UWUA electric union and finally the dispatchers, followed shortly. Unfortunately, we did not get concessions from the two police unions, which necessitated the loss of three patrolmen and a community service officer. Additionally, four sergeants were reduced to patrolman status. In Cuyahoga Falls, we will be negotiating with all six of our public employee unions. We do not anticipate these negotiations will be easy, however, with a keen eye on fiscal responsibility, the administration will be resolute in its demands to lower expenses. And indeed, with payroll representing 75–80% of our general fund budget, the public sector unions are the obvious place to go. Which brings up the question that I have raised in this forum in the past: Is it time to eliminate public sector unions? The history of public sector unions goes back to 1962 when President John F. Kennedy signed executive order 10988 allowing unionization of the federal workforce. This changed everything in the American political system. President Kennedy’s order swung open the door for the unrelenting rise of the unionized public workforce in many states and cities.

And of course, 47 years ago, the American workforce landscape looked very different. As recently as 1980, there were more than twice as many private sector union members than there were public sectors. Today 51.4% of Americans 15.4 million [union] workers are employed by the government. This is the first time in American history that there are more public sector union members than there are private. So my question is, can we the taxpayers continue to afford this expense? ...As we can see from the desperate economic and fiscal woes of California, New Jersey, New York and other states with dominant public unions; this has become a major problem for the U.S. economy and smaller “d” democratic governance. The agenda for American political reform needs to include the breaking of public unions' power to capture an even larger share of private income.

Unused vacation time draining CA of millions - (www.sfgate.com) Amid a crippling state fiscal crisis, managers throughout California's government have routinely allowed their employees to amass vast amounts of unused vacation time, enabling hundreds of workers to end their public-service careers with payouts topping $100,000, a California Watch investigation has found. One worker combined vacation and compensatory time to walk away with more than $800,000, records show. In the past four years, almost 500 government workers earned six-figure paychecks mostly for unused vacation. In total, the state spent $486 million between 2006 and mid-2009 to pay more than 52,000 employees for time-off benefits - which includes a small percentage of unused comp time and holidays that weren't taken. That's enough state money to pay the salaries of more than 7,000 public schoolteachers, based on the state average teacher salary.

Governor Christie: "Time to Hold Hands and Jump Off the Cliff" - Chris Christie For President? - (Mish at globaleconomicanalysis.blogspot.com) In an amazingly candid appraisal of the sorry state of affairs in New Jersey, Governor Chris Christie laid it on the line in a speech to about 200 mayors at the New Jersey League of Municipalities. The speech is 24 minutes long and well worth a listen because it is both an honest admission of the problem, and a refreshingly accurate appraisal of what the solutions are. He chastised the legislature, unions, municipalities, and affordable housing initiatives while promising to do something about all of those. Unfortunately I cannot find a transcript, nor is there a YouTube video but you can Watch Chrstie's Speech To League of Municipalities on public television. It starts out with an ad you have to listen to, but it quickly picks up once Christie starts speaking. He starts off in fine fashion calling the legislature's budget "Alice In Wonderland Budgeting" Partial Transcript: In the time we got here, of the approximately $29 billion budget there was only $14 billion left. Of the $14 billion, $8 billion could not be touched because of contracts with public worker unions, because of bond covenants, because of commitments we made accepting stimulus money. So we had to find a way to save $2.3 billion in a $6 billion pool of money. When I went into the treasurer's off in the first two weeks of my term, there was no happy meetings. They presented me with 378 possible freezes and lapses to be able to balance the budget. I accepted 375 of them.

There is a great deal of discussion about me doing that by executive action. Every day that went by was a day where money was going out the door such that the $6 billion pool was getting less and less. So something needed to be done. People did not send me here to talk, the people sent me here to do. So we took the executive action we did to stop the bleeding. As we move forward, and we evaluate what we need to do three weeks from now in our fiscal year 2011 budget address, you all need to understand the context from which we operate. Our citizens are already the most overtaxed in America. US mayors hear it all the time. You know that the public appetite for ever increasing taxes has reached an end. So when we freeze $475 million in school aid, I am hearing the reverberations from school boards saying now you are just going to force us to raise taxes. Well there is a 4% cap in place as you all know, yet school boards continue to give out raises which exceed that cap, just on salary. Not to mention the fact that most of them get no contribution towards the spiraling increase in health care benefits. Now, we are going to reduce spending at the state level. And we are going to continue to reduce it because we have no choice but to do so. Our obligation to you is twofold. One, is to let you know that. So I'm' letting you know that. Second to work with the legislature to give you the tools helping you to reduce spending at the municipal level. Now the pension and benefit reform package that was passed unanimously in the senate this week begins to give you some of those tools.

OTHER STORIES:

Jumbo Mortgages, Jumbo Problems - (www.scoop.co.nz)

$1 trillion worth of ARMs still face resets - (www.snl.com)

House-Price Drop in U.S. Supports Low-Rate Outlook - (www.bloomberg.com)

In Nevada, begging for a lower house value - (www.latimes.com)

Vegas Investing - How To Turn A Small Loss Into A Big One - (www.loansafe.org)

Bank meltdown offers chance to change, if we take it - (www.lvbusinesspress.com)

Tax credit for houseowners not helping sales - (www.heraldtribune.com)

What Will Happen to the Housing Market When Tax Credits Expire? - (www.palletenterprise.com)

Geithner's Money-Laundering Scheme Exposed; Markopolos Says "Don't Trust Your Government"(Mish)

How a global debt crisis trickles down to investors - (www.investmentnews.com)

8 reasons wall street loses another 20 in this decade - (www.finance.yahoo.com)