KeNo's Housing and Economic Portal: Tuesday May 17 Housing and Economic stories

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House Panel OKs New Way to Fund Home Mortgages - (www.cnbc.com) A bill to create a new market for financing mortgages that would help wean the $10.6 trillion U.S. mortgage market off government support advanced in the House of Representatives Tuesday. The bill aims to establish a market for covered bonds, securities issued by banks and backed by pools of loans. The loans underlying covered bonds remain on the issuer's balance sheet. That is different from the current U.S. mortgage system, where lenders sell many of the loans they make to government-sponsored Fannie Mae andFreddie Mac, which then repackage them as securities for investors. The Obama administration supports the legislation in the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises which is backed by voice vote legislation from Republican Representative Scott Garrett.

Running in the red: How the U.S., on the road to surplus, detoured to massive debt - (www.washingtonpost.com) The nation’s unnerving descent into debt began a decade ago with a choice, not a crisis. In January 2001, with the budget balanced and clear sailing ahead, the Congressional Budget Office forecast ever-larger annual surpluses indefinitely. The outlook was so rosy, the CBO said, that Washington would have enough money by the end of the decade to pay off everything it owed. Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds. “In the end, the floodgates opened,” said former senator Pete Domenici (R-N.M.), who chaired the Senate Budget Committee when the first tax-cut bill hit Capitol Hill in early 2001. Now, instead of tending a nest egg of more than $2 trillion, the federal government expects to owe more than $10 trillion to outside investors by the end of this year. The national debt is larger, as a percentage of the economy, than at any time in U.S. history except for the period shortly after World War II.

Argentina Firing of Inflation Expert Signaled Start of Dubious Price Data - (www.bloomberg.com) The night before Graciela Bevacqua finished a report projecting the biggest monthly increase for Argentina’s consumer prices in more than four years, she told her three children she might quit her job as director of the inflation index. The next day, the decision was made for her. Bevacqua’s boss at the national statistics institute told her on Jan. 29, 2007, that she had to step down because then-President Nestor Kirchner“wanted my head,” the 51-year-old mathematician said in an interview with Bloomberg News. A week later, Argentina reported prices for January 2007 had risen 1.1 percent from the previous month, compared with Bevacqua’s estimate of 1.9 percent. Bevacqua’s demotion -- she worked in two, lower-level, positions before finally quitting the government in January 2009 -- signaled the start of what former deputy economy ministers Orlando Ferreres and Jorge Todesca call the government’s “takeover” of the Buenos Aires-based institute. Kirchner wanted to show slower inflation before the 2007 presidential election and also damp union efforts to get higher pay, according to Ferreres.

Thornburg trustee sues big banks for $2.2 billion - (www.reuters.com) The trustee for bankrupt Thornburg Mortgage Inc has sued Goldman Sachs, Barclays and other big banks for a combined $2.2 billion, blaming them for the former home loan company's bankruptcy. The trustee filed four separate lawsuits, the most extensive of which blames a "collusive scheme" by units of JPMorgan Chase & Co, Citigroup, Royal Bank of Scotland Credit Suisse and UBS for driving the company into bankruptcy. The trustee, Maryland lawyer Joel Sher, accused the five banks of acting together to use a series of unjustified margin calls to extend their control over Thornburg, which was once a leading provider of "jumbo" home loans. The lawsuit seeks to recover $2 billon for fraudulent conveyances and transfers by the banks, which had financed Thornburg's mortgage-backed securities. The trustee said the banks eventually drove the Thornburg into Chapter 11 in May 2009. It sought protection from creditors with $36.5 billion in assets, making it one of the larger bankruptcies during the financial crisis.

What Is The Best Place To Live In The U.S. To Prepare For The Coming Economic Collapse? - (www.businessinsider.com) What is the best place to live in the United States? I get asked that question all the time. My answer can be summed up in two words: it depends. The truth is that the answer is going to be different for each person. All of us have different goals and different needs. If you have a very strong network of family and friends where you live right now, you might want to think twice before moving hundreds or thousands of miles away. If you have a great job where you live right now, you might want to hold on to it. You should not just assume that you are going to be able to pick up and move to another part of the country and be able to get a similar job right away. The United States is in the midst of a very serious economic decline right now, and wherever you live you are going to have to provide for your family.