KeNo's Housing and Economic Portal: Sunday July 25 Housing and Economic stories

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A Market Forecast That Says 'Take Cover' - (www.nytimes.com) WITH the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely. Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years. In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory — a technical approach to market analysis that he embraces with evangelical fervor. Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously.

"Probably 2 to 3 times as much inventory as what Realtors are saying on MLS" - (www.miamiherald.com) After slimming down to about half its peak size over the past 20 months, South Florida's inventory of existing homes for sale has slowly begun to expand again, according to a report published Monday by real estate consultancy Condo Vultures. In the month of June, the number of condos, townhomes and single family residences on the market in Miami-Dade, Broward and Palm Beach counties rose by about 2.5 percent, posting increases for each of the last four weeks, the report found. It's the first time South Florida's supply of residences on the market -- which play a crucial role in determining home prices -- has risen four consecutive weeks since Condo Vultures begun tracking in 2008, said Peter Zalewski, a principal at the Bal-Harbour-based consultancy. ``This is the first time since Nov. 4, 2008 that we have three let alone four weeks of increase,'' he said. ``It's only four weeks, but if that turns into 12 weeks, [the South Florida housing market] could be in trouble.'' The number of residences on the market increased to 66,850 on Monday, up from 65,220, the report found. The increase, while relatively small, comes after nearly two years of consecutive month-over-month decreases in inventory, as South Florida's glut of homes for sales has fallen from its peak of more than 100,500 residences.

California Cities Shutting Police Forces to Close Budget Gaps - (www.bloomberg.com) San Carlos, a Silicon Valley suburb that calls itself the City of Good Living, will hire contractors to maintain parks and negotiate with county officials to take over policing, becoming the latest California community eliminating basic services to close budget deficits. Measures passed by the City Council last night may save the community of 28,000 residents about $2.5 million a year, according to Mayor Randy Royce. San Carlos faces a $3.5 million deficit for the fiscal year that begins July 1, on a budget of $25.8 million. About 70 percent of U.S. municipalities are cutting jobs to cope with declining tax revenue, according to a survey published last month by the National League of Cities in Washington. One in five communities cut public-safety spending and revised union contracts, and almost one-quarter reduced health care.

Illinois Stops Paying Its Bills, but Can't Stop Digging Hole - (www.nytimes.com) Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo. Payback Time: He picks the papers off his desk and points to a figure in red: $5.01 billion. “This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office. Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.” For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

With the US trapped in depression, this really is starting to feel like 1932 - (www.telegraph.co.uk) The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation. "The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing." "Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said. California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit. Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."