KeNo's Housing and Economic Portal: Thursday December 9 Housing and Economic stories

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TOP STORIES:

Ghost Estates and Broken Lives: the Human Cost of the Irish Crash - (www.independent.co.uk) They stand empty across Ireland: 300,000 unoccupied homes, a silent reproach to those who built them believing that the country's economic boom would never end. As Europe's finance ministers laboured in vain to reach an agreement on how to ease Ireland's economic misery last night, the so-called ghost estates were an awful reminder that the "survival crisis" the politicians were warning was under way had already hit ordinary people. Dave O'Hara was one of those who bought into the "Celtic Tiger" at the beginning of the decade, eschewing a seven-generation family tradition of carving headstones in favour of a piece of the country's building boom. He founded a firm that constructed bespoke windows and doors for the thousands of upscale homes being built. The firm grew into a multimillion-euro enterprise, until the recession – and the collapse of the building industry – hit in September 2008. Now his company is in liquidation, and Mr O'Hara, 41, who has one child, is on the dole. He owes the Bank of Scotland more than ¤1m (£850,000).

Greece May ‘Shut Down’ on Cash Shortage - (www.bloomberg.com) Parts of Greece’s government may be forced to “shut down” as early as next week if the country isn’t able to cover a revenue shortfall after its European Union partners delayed its next tranche of aid money, High Frequency Economics Ltd. said. “With a big tax revenue shortfall, cash requirements are surely greater than the 6.5 billion euros ($8.95 billion) Athens was meant to receive next week,” Carl B. Weinberg, chief economist at Valhalla, New York-based High Frequency wrote in a note to clients today. “Unless the government gets funds soon after Nov. 30, it will run out of cash,” Weinberg said. “If so, the government will have to shut down, at least in part.”

Lawmaker Questions Legal Fees for Ex-Execs at Fannie, Freddie - (blogs.wsj.com) Rep. Randy Neugebauer wants to know how much taxpayer money has gone toward paying the legal bills of former Fannie Mae and Freddie Mac executives. In a letter sent Monday to Edward DeMarco, acting director of the Federal Housing Finance Agency, Mr. Neugebauer said he wants to find out how much financial assistance is being provided to the executives facing legal action over the accounting scandals at Fannie and Freddie earlier in the decade. At a hearing last week of the Financial Services Committee, Mr. DeMarco said that money has been advanced to several former executives to help pay for legal representation, but his testimony was cut off before he had provided much detail. Mr. Neugebauer, a Texan who is one of the committee’s senior Republicans, demanded the FHFA provide a full accounting for how much taxpayer have paid for the executives’ legal bills. The two mortgage giants were taken over by the federal government two years ago.

Washington is making the housing crisis even worse - (www.csmonitor.com) Bad policy and a bad economy make it a terrible time to buy. Instead of pushing cheap credit, Uncle Sam must let the market lower prices. Our long national bender of house price inflation has finally ended. Now all that remains is for the government to get out of the way and let the housing market sober up completely. Unfortunately, Washington is still tempting Americans to have one more drink – "on the house." Real value of a house: As I explain on my website, http://patrick.net, the value of a house depends entirely on what it would rent for. It doesn't depend on what you paid for it, or on how much you spent to build it. If you can save money every month by renting the same quality house in a nearby location, then it is foolish to buy at that asking price. The price is just too high. Rents, in turn, depend on salaries. Try walking into a bank and asking for a loan to pay your rent. You know what the answer will be. So why is it that the bank will lend us vast amounts of money to take out a mortgage and take on expenses that will be much higher than rent for the same place?

Much of what investment bankers do is socially worthless - (www.newyorker.com) A few months ago, I came across an announcement that Citigroup, the parent company of Citibank, was to be honored, along with its chief executive, Vikram Pandit, for “Advancing the Field of Asset Building in America.” This seemed akin to, say, saluting BP for services to the environment or praising Facebook for its commitment to privacy. During the past decade, Citi has become synonymous with financial misjudgment, reckless lending, and gargantuan losses: what might be termed asset denuding rather than asset building. In late 2008, the sprawling firm might well have collapsed but for a government bailout. Even today the U.S. taxpayer is Citigroup’s largest shareholder. The award ceremony took place on September 23rd in Washington, D.C., where the Corporation for Enterprise Development, a not-for-profit organization dedicated to expanding economic opportunities for low-income families and communities, was holding its biennial conference. A ballroom at the Marriott Wardman Park was full of government officials, lawyers, tax experts, and community workers, two of whom were busy at my table lamenting the impact of budget cuts on financial-education programs in Vermont.

Foreclosure expert predicts new wave of bank repossessions - (www.miamiherald.com) A foreclosure investor said bank repossessions will return to record numbers in mid-2011, once the robo-signing scandal has blown over. The foreclosure slowdown initiated by banks will lead to a sharp drop in bank-owned properties and an increase in short sales in the short term, followed by a new wave of bank-repossessions, foreclosure investor Rich Meyer told a group of Miami real estate professionals this week. Meyer, a veteran of Broward County's courthouse foreclosure auctions, said the current halt in new foreclosure inventory would be temporary, and predicted a return to record-high bank repossessions by mid-2011. ``There's a backlog of future filings,'' said Meyer, who now teaches investors how to navigate the foreclosure world. ``Once the litigation is settled, it's going to be a wave.'' About 30 potential investors attended the Condo Vultures workshop, looking to hear about what the foreclosure freeze means for the hottest sector of South Florida's housing market.