KeNo's Housing and Economic Portal: Sunday August 15 Housing and Economic stories

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Jobless and Staying That Way - (www.nytimes.com) Americans have almost always taken growth for granted. Recessions kick in, financial crises erupt, yet these events have generally been thought of as the exception, a temporary departure from an otherwise steady upward progression. But as expectations for the recovery diminish daily and joblessness shows no sign of easing — as the jobs report on Friday showed — a different view is taking hold. And with it, comes implications for policymaking. The “new normal,” as it has come to be called on Wall Street, academia and CNBC, envisions an economy in which growth is too slow to bring down the unemployment rate, while the government is forced to intervene ever more forcefully in a struggling private sector. Stocks and bonds yield paltry returns, with better opportunities available for investors overseas. If that sounds like the last three years, it should. Bill Gross and Mohamed El-Erian, who run the world’s largest bond fund, Pimco, and coined the phrase in this context, think the new normal has already begun and will last at least another three to five years.

Stocks to Fed: Spike that punchbowl, please - (www.marketwatch.com) In July, earnings came just in time to provide evidence that the government-engineered recovery over the past two years has helped big business get back on its feet. So why the sad face on Friday? As seen again in the July jobs report, firms aren't doing enough hiring and spending to compensate for the massive hit to capacity and the job losses incurred by the biggest financial and economic crisis since the 1930s. Why should they? Serious big businesses never jump ahead of a recovery until it's already clear to almost everyone. So what now? This recovery, it needs to be reminded, was engineered by massive interventions from central banks and governments to stimulate financial conditions -- the liquidity that is the lifeblood of the global economy -- and economies and jobs through fiscal spending. Through incredible prowess at masking reality, or maybe through powerful ideological denial, conservatives around the world have convinced many that this fiscal spending, which was not big enough in the U.S. to start with, was bad and should now be curtailed, just as its positive impact is starting to fade markedly. Stocks, all considered, could be slumping much more. But next week, the Federal Reserve, the people who control how much zest to put in the proverbial financial punchbowl, will meet to talk -- and most likely not about interest rates. The key rate controlled by the Fed is fixed in a band near zero and can't move any lower. But speculation, strengthened by recent comments from several key Fed officials, has been mounting that the central bank is preparing another shot at the creative measures it took in late 2008 and early 2009 -- just before stocks began a massive rally that ended in April of this year.

Congress cares about taxes on richest 1% of population, not about the unemployed - (www.nytimes.com) I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think. Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal. And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality. Not long ago, anyone predicting that one in six American workers would soon be unemployed or underemployed, and that the average unemployed worker would have been jobless for 35 weeks, would have been dismissed as outlandishly pessimistic — in part because if anything like that happened, policy makers would surely be pulling out all the stops on behalf of job creation.

Winning bid on mortgage buys family heartache - (www.sfgate.com) As usual, lazy investors think it is not their responsibility to do their own research anymore. Roberta and Randall Strand took $97,606 out of their paid-off house to buy a foreclosed home at a courthouse auction. Five months later, they found out they actually bought the second mortgage, and that the bank planned to foreclose on the first mortgage, leaving them out in the cold. The family received and recorded a "trustee's deed upon sale" in November 2009, shortly after the auction, without realizing that they had bought a second mortgage. They showed a locksmith this deed to have the house's locks changed, which they said the auctioneer had suggested. The Strands' daughter, Hayley Strand, and her fiance, Bryan Janbay, moved into the house, about a mile from her parents in the Santa Cruz County town of Boulder Creek. They spent more than six weeks and $13,000 fixing up the house, which they described as in terrible shape with broken windows and no plumbing, light fixtures or appliances. "They were born and raised here, and we bought the house to keep them close," Roberta Strand said. "The plan was that we would float them the cash for the home, then they would get their own mortgage and pay us back."

Affluent counties evade property tax better than poorer ones - (www.latimes.com) Residents of wealthier cities generally pay lower property tax rates than those in poorer cities, according to L.A. County tax records. The information, provided by the L.A. County auditor-controller's office, comes amid debate about city salaries and taxes in the working-class community of Bell. The Times' Kim Christensen reported last week that while Bell was paying its city manager nearly $800,000 a year, its residents paid the second-highest property tax rate in the county, 1.55%. Neighboring working-class cities, including Compton, San Fernando, El Monte, Huntington Park, Maywood, Montebello and Inglewood, also have high property tax rates. Indeed, of the 10 cities with the highest rates, six had median household incomes below $50,000. The city of Los Angeles ranked No. 13, with a property tax rate of 1.22%. Cities with the lowest rates tended to be more affluent. The bottom 10 included Manhattan Beach, Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills, Rolling Hills Estates, Cerritos and La Habra Heights. Of the bottom 10, seven had median annual household incomes of at least $100,000 and six had median incomes of at least $128,000.