KeNo's Housing and Economic Portal: Wednesday March 17 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

California Delays Payments, Ponders IOUs Again, Demands 80% of Income Tax Paid Before It's Even Earned - (Mish at globaleconomicanalysis.blogspot.com) California Demands Income Tax Payments In Advance: Reader "Paul" just pinged me this news affecting business owners and self-employed contractors. Hi Mish, I just picked up tax documents from my CPA. California require me to pay 30% of my estimated tax for the year on 04/15/10 and another 50% by 06-15-10. The balance of 20% is due on 01-15-11. They want 80% of my annual estimate after 6 months, taxing me on money I have yet to earn for the year. Only in La-La Land could one think these actions should impress the bond market. Then again, the stock market soared mid-day after Bernanke repeated for the 40th time that he was not hiking soon. So hey, who knows?

Concerns grow over China's sale of US bonds - (www.telegraph.co.uk) Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first. A front-page story in the state’s China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, giving it a stronger imprimatur. It follows a piece last week in China Daily, the Politburo’s voice, citing an official from the Chinese Academy of Sciences praising the move to "slash" holdings of US debt. This was published on the same day that US President Barack Obama received the Dalai Lama at the White House, defying protests from Beijing. "There are ongoing spats between the US and China on so many fronts so you have to assume that this is some sort of implicit threat," said Neil Mellor, a currency expert at the Bank of New York Mellon, who cautioned that it can be hard to read the complex signals from China. "We still think China will have to continue buying US Treasuries by the bucket load. Where else can they invest in a liquid market. The euro has become a tarnished currency," he said.

11.3 million houseowners underwater on mortgage - (www.marketwatch.com) More than 11.3 million homeowners -- nearly one-fourth of all Americans with a mortgage -- owe more on their loan than their home is now worth, according to a report released Tuesday by FirstAmerican CoreLogic. More than 10% of people with mortgages owe 25% more than their home is worth. The number of underwater mortgages increased by about 620,000 from the third quarter, the firm said. Another 2.3 million mortgages had less than 5% equity in their home, which could be wiped out if home prices fall further. In the fourth quarter, national home prices fell 1.1% compared with the third quarter, Standard & Poor's reported in a separate report on Tuesday. Once the mortgage is underwater, owners cannot easily sell their home or refinance their loan.

New house sales hit record low in January - (www.washingtonpost.com) Sales of newly built homes unexpectedly plummeted in January to their lowest level in nearly five decades, providing more evidence of the housing market's fragility. Purchases of new single-family homes dropped 11.2 percent in January from December to a seasonally adjusted annual rate of 309,000, the Commerce Department reported Wednesday. Sales fell in every region except the Midwest, and the raw number of new homes on the market rose for the first time in nearly three years. "No sugarcoating these numbers," Mike Larson, an analyst at Weiss Research, wrote in a note to clients. "They stink." The figures are the latest in a string of mixed indicators about the housing market's health and renew questions about whether the federal government should follow through on its plans to soon end initiatives aimed at stimulating sales. Those efforts include a Federal Reserve program that helped pull down interest rates and a tax credit for first-time buyers and others.

California Passes Bill to Guard Cash as Bond Delayed - (www.bloomberg.com) California’s Assembly passed a bill allowing it to delay payments to programs including schools to avoid running out of cash, a move aimed at boosting confidence in bonds sold by the most-populous U.S. state. The passage comes a day after Treasurer Bill Lockyer told lawmakers the bill was needed to send a signal to investors that California is taking steps to adequately manage its cash as it faces budget deficits through June 2011. Lockyer postponed a $2 billion sale that was initially scheduled for next week. Assemblywoman Noreen Evans, the Democrat who chairs the budget committee, said the bill was needed so the state can return to the bond market to finance public projects that provide a jolt to the economy. “The state does not want to add to the unemployment rate,” Evans said. Controller John Chiang said last month that California may be forced to issue IOUs for the second year in a row because it’s spending more than it collects in revenue. The bill is aimed at preventing cash shortages projected as soon as next month by empowering officials to delay certain payments, including those to schools, universities and local governments, to conserve money for debt service and other key expenses.

Two Dozen States’ Unemployment Funds in the Red, Nine More Within Six Months - (www.propublica.org) The record 20 million Americans who collected unemployment insurance benefits last year landed on a safety net that was already deeply frayed. New Interactive: ProPublica Predicts if Your State's Unemployment Insurance Fund Is About to Hit the Skids A historical compromise has left responsibility for unemployment benefits largely in the hands of states, and they have fulfilled this charge with varying degrees of effectiveness. In a series last summer with public radio’s Marketplace, we reported that only a handful of states had built up reserves sufficient to weather the Great Recession – and forecast a spate of borrowing by states where reserves ran out. Half a year later, the direst predictions seem to be coming true: So far 25 states have borrowed more than $25 billion to keep benefits flowing after their trust funds ran dry. In many other states the situation is deteriorating fast.

OTHER STORIES:

Mortgage Purchase Applications at Lowest Level Since May 1997 - (www.calculatedriskblog.com)

Million Dollar House or $3,500 a Month Rental? - (www.doctorhousingbubble.com)

Housebuilders get gray forecast - (www.dispatch.com)

Daily Job Cuts - (www.dailyjobcuts.com)

Regulators report 27 percent jump in problem banks - (www.finance.yahoo.com)

Alan Greenspan was DY-NO-MITE! - (www.themessthatgreenspanmade.blogspot.com)

Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs - (www.bloomberg.com)

Goldman Fleeces The Public Take Two - (www.seekingalpha.com)

No Banker Left Behind - (www.truthdig.com)

A snapshot of income disparity - (www.latimes.com)

Bumping along the bottom of the credit cycle - (www.theautomaticearth.blogspot.com)