KeNo's Housing and Economic Portal: Saturday April 10 Housing and Economic stories

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TOP STORIES:

States Say We Don’t Need No Stinkin’ Health Reform - (www.bloomberg.com) If Democratic leaders ever get a health-care overhaul through Congress, they could find themselves only halfway through the slog. While no arm is left untwisted, no parliamentary maneuver ignored on Capitol Hill, state legislatures have been busy themselves passing laws to defeat whatever package emerges. Idaho wants no part of any overhaul dreamed up in Washington. Neither does Virginia or Arizona, their legislators say. “The citizens of our state won’t be subject to another federal mandate or turn over another part of their life to government control,” Idaho Governor Butch Otter declared this week when he became the first governor to sign into law a so- called Health Freedom Act. Or, as he might have put it in “The Treasure of the Sierra Madre,” they don’t need no stinkin’ health-care reform. That lots of people are riled up about health care and the way it’s being handled, that Republicans have made it their mission to stop it, we know already. That health care is now injecting new energy into a reborn states’ rights movement means reformers may have a long way to go after they reach the finish line in Washington. The obstacle doesn’t have to be a killer, not if court precedent determines the outcome. But the U.S. Supreme Court that John Roberts heads has shown a willingness to topple precedent and even redefine the issues in a case to get the outcome it wants.

Phoenix real estate agent pleads guilty in fraud scheme - (www.abc15.com) The U.S. Attorney announced Thursday that a Phoenix real estate agent has pleaded guilty for her role in a fraud scheme. Prosecutors said 31-year-old Natasha Swallows-Feagins was approached by two co-defendants to represent three straw buyers. Straw buyers use or allow their credit to be used for the purchase of a property they never intend to use or control. The U.S. Attorney said Swallows-Feagins withheld information from lenders detailing cash back paid to coconspirators in the amount of $785,500. All nine home sales that Swallows-Feagins was involved in went into foreclosure including her own residence. The home was sold to a straw buyer and Swallows-Feagins received $37,000 in proceeds. Swallows-Feagins has not responded to a request to comment. She will likely get probation.

Florida foreclosures create logjam in courts - (www.miamiherald.com) A crushing backlog of foreclosure cases has pushed Florida's courts to request a one-time payment of $9.6 million to help purge the system and quicken a market recovery. The Florida State Courts Administration estimates 500,000 property foreclosures are pending, including 36,880 in Broward, 80,100 in Miami-Dade and 55,000 in Palm Beach. Without additional resources to clear the cases, judges fear the bottleneck will continue to drag down home values, which aren't expected to stabilize until the glut of foreclosures moves through the system. It's routine in Florida for foreclosures to take more than a year to settle, leaving deteriorating homes, unpaid association fees and families facing uncertain futures. ``We want to be good partners in the economic recovery, not part of the problem,'' said Peter Blanc, chief judge of the 15th Judicial Circuit Court in Palm Beach County. ``We want to get properties through the courts and back onto the market. The numbers are just overwhelming.'' A Barclays Capital report last week found Florida has one of the highest foreclosure backlogs nationally, even singling out South Florida -- Miami-Dade, Broward and Palm Beach counties -- saying it is ``remarkable'' that the area may only be 18 percent finished with liquidating its delinquent property loans through foreclosure.

Former Soviet Union to blame for housing bubble: Greenspan - (www.financialpost.com) Greenspan still making some very shaky arguments and excuses. Former Federal Reserve chairman Alan Greenspan, whose legacy has been tarnished by the global financial crisis, on Thursday laid out a scholarly defence of why Fed policy did not fuel the housing bubble. He did offer somewhat of a mea culpa, though, noting that the regulatory system failed by not demanding financial firms hold much larger capital buffers. Mr. Greenspan, who led the U.S. central bank from 1987 to 2006, has been criticized by some analysts who argue he kept short-term, benchmark interest rates too low for too long in the early 2000s. The former Fed chief defended the central bank's actions, saying that the seeds of the housing boom were sown by geopolitical events that were out of the Fed's control, an argument he has presented a number of times in the past. The fall of the Soviet Union led to hundreds of millions of workers entering the global marketplace, he said in a paper to be presented to a Brookings Institution conference. This new market-based workforce, Mr. Greenspan said, helped push up growth in the developing world. This in turn fuelled a global savings glut that drove down long-term interest rates, leading to an "unsustainable boom" in house prices, he said.

KB House ex-CEO tried to keep stock option scheme secret - (www.latimes.com) A former human resources director says he and former chief Bruce Karatz, who prosecutors say made more than $6 million from his options, tried to keep investigators from discovering the backdating. ormer KB Home chief Bruce Karatz engineered a massive stock option scheme that made him millions of dollars and then fought to keep it secret from investigators, a longtime company executive testified Wednesday. Gary Ray, who served as KB's human resources director from 1996 to 2006, told a federal jury in Los Angeles that he and Karatz backdated stock options to make them more valuable to themselves and employees and then concealed it from company shareholders and the Securities and Exchange Commission. When the company launched an internal investigation in 2006, he said Karatz told him "to put the best interests of the company ahead of the truth," and deny that they had carefully selected dates when the stock price was low to make options more valuable. The scheme had enabled Karatz to make more than $6 million in additional profit from his options, prosecutors say.

Unusual Admission that National Debt Will Never Be Paid - (www.thenation.com) For this reason, the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It's not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession--even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment. To put things crudely, there are two ways to get the increase in total spending that we call "economic growth." One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that's basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors--public deficits or private loans--has to be in action. For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in "net financial wealth." Ordinary people benefit, but there is nothing in it for banks.