KeNo's Housing and Economic Portal: Thursday January 13 Housing and Economic stories

Wednesday, January 12, 2011

Thursday January 13 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

For-Profit College Share Slump Converges With Surging Student Life-Debtors - (www.bloomberg.com) Ronnie Franklin borrowed to pay his tuition at a for-profit college that advertised its success in preparing graduates for better jobs. That decision haunts him. Frustrated that his degree didn’t lead to work in electronics, Franklin -- now a $12-an-hour housepainter -- decided to go to a community college this year. He can’t qualify for a federal grant that would have paid the cost because he defaulted on $20,000 of his earlier U.S. student loans. Debt from a for-profit college education also shadows Christina Bergschneider and Michael DiGiacomo. Landlords rejected Bergschneider’s apartment applications more than 20 times because of her unpaid student loans. DiGiacomo, who works in a copy shop, forfeits 15 percent of his after-tax income when the U.S. Education Department garnishees his paycheck to collect on $30,000 in federal loans for two different for-profits.

Niall Ferguson: "The United States Is On A Completely Unsustainable Fiscal Course With No Apparent Political Means Of Self-Correcting" - (www.businessinsider.com) "Imperial declines...are nearly always associated with fiscal crises," and these fiscal crises are the result of the rising costs of servicing debt, according to Niall Ferguson (via Zero Hedge). In a speech to the Center for Independent Studies in Australia, Ferguson breaks down why empires fall and the current threat to the U.S. through its own emerging fiscal crisis. Beneath is the introduction, but the full speech is worth watching. He walks step-by-step through previous examples of imperial downfall. And the similarities between those empires, and the U.S. Pay particular attention to this portion, focusing on the United States. Also, Ferguson's breakdown of the U.S. fiscal position he makes here puts into perspective how our interest payment problem is about to get out of control. And, in the concluding segment, Ferguson makes the allegation, "the United States is on a completely unsustainable fiscal course with no apparent political means of self-correcting," suggesting China, now selling U.S. Treasuries, may now be taking this view.

2011 Will Bring More de Facto Decriminalization of Elite Financial Fraud - (www.huffingtonpost.com) The role of the criminal justice system with regard to financial fraud by elite bankers in 2011 is likely to reprise its role last decade -- de facto decriminalization. The Galleon investigation of insider trading at hedge funds will take much of the FBI's and the Department of Justice's (DOJ) focus. The state attorneys general investigations of foreclosure fraud do focus on the major players such as the Bank of America (BoA), but they are unlikely to lead to criminal liability for any senior bank officials. It is most likely that they will lead to financial settlements that include new funding for loan modifications. The FBI and the DOJ remain unlikely to prosecute the elite bank officers that ran the enormous "accounting control frauds" that drove the financial crisis. While over 1000 elites were convicted of felonies arising from the savings and loan (S&L) debacle, there are no convictions of controlling officers of the large nonprime lenders. The only indictment of controlling officers of a far smaller nonprime lender arose not from an investigation of the nonprime loans but rather from the lender's alleged efforts to defraud the federal government's TARP bailout program. What has gone so catastrophically wrong with DOJ, and why has it continued so long? The fundamental flaw is that DOJ's senior leadership cannot conceive of elite bankers as criminals.

Baby boomers facing retirements in jeopardy - (www.msnbc.msn.com) Through a combination of procrastination and bad timing, many baby boomers are facing a personal finance disaster just as they're hoping to retire. Starting in January, more than 10,000 baby boomers a day will turn 65, a pattern that will continue for the next 19 years. The boomers, who in their youth revolutionized everything from music to race relations, are set to redefine retirement. But a generation that made its mark in the tumultuous 1960s now faces a crisis as it hits its own mid-60s. "The situation is extremely serious because baby boomers have not saved very effectively for retirement and are still retiring too early," says Olivia Mitchell, director of the Boettner Center for Pensions and Retirement Research at the University of Pennsylvania.

Foreclosure Inventory Rising, 2 Million Loans 90 days+ Delinquent Not Yet in Foreclosure - (Mish at globaleconomicanalysis.blogspot.com) A press release from LPS' Mortgage Monitor Report showsForeclosure Inventory Rising for 5th Straight Month: The November Mortgage Monitor report released by Lender Processing Services, Inc. (LPS) shows that the volume of loans moving to REO continued to drop as moratoria further delayed foreclosure sales. While the 90+ delinquency category has steadily declined, the number of loans moving to seriously delinquent status beyond 90 days far outpaced the number of foreclosure starts. Nearly 2.2 million loans are 90 days or more delinquent but not yet in foreclosure.