KeNo's Housing and Economic Portal: Thursday June 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Iceland's Big Economic Thaw - (www.nytimes.com) If you want to understand what happened in Iceland — the whole story of the crash, the banks failing, the recent signs of recovery — start at the prime minister’s office in downtown Reykjavik and continue east for a bit until you ascend a steep bluff overlooking the icy waters of Faxafloi Bay. There you will arrive at a used-car lot. Ask for the owner of this establishment, who is a short, 61-year-old man with extremely thick glasses named Gudfinnur S. Halldorsson — he goes by the name Guffi (pronounced Goofy) — and have him to tell you the story of the Porsche that kept on giving. During Iceland’s boom years, which lasted from 2003 until 2008, a customer showed up at Guffi’s dealership wanting to buy a Porsche on credit, no money down. Guffi didn’t inquire about the man’s line of work; in fact, he didn’t care if the man paid back the loan — that was the bank’s problem, not his. Guffi sold the Porsche, and the customer drove it for a month or so until the first payment was due. The man had no interest in making the payment, and so Guffi, who always aimed to please, helped the man resell the vehicle for a profit. Guffi did the same thing a month later, and again a month after that; all told, Guffi sold the same car five times in six months, amazingly charging a higher price on each successive sale..... Guffi sold a lot of cars during the boom, but he didn’t save much. When I asked him what he spent his money on, he replied that he traveled widely, skied often and entertained a number of girlfriends from abroad. “Take a look at the beautiful girls from Ukraine and Switzerland,” he told me wistfully. “You’re like a kid in a toy store. Several times, I’ve brought them home so that they can have a vacation here. Then I show them Iceland.” He added, thoughtfully: “What I was doing was good for the tourism business.”

Banks Push Consumer Bureau to Hide Complaints - (www.bloomberg.com) The new U.S. consumer agency, which has yet to begin formal operations or write a rule, is already being squeezed between banks and advocacy groups over how to set up a complaint hotline. Under the Dodd-Frank regulatory overhaul, the Consumer Financial Protection Bureau must establish a way for banking customers to submit reports about their problems with products and services. At issue is what happens after they’re filed. Nonprofit groups such as Consumers Union and the Sunlight Foundation are pushing for an open system that would allow anyone to scan the raw submissions. Industry groups including the American Bankers Association argue that making them public could allow frivolous complaints to damage reputable brands. “The point of banking supervision is to get the system working properly, not to air dirty laundry and scare capital away from banks,” Richard Riese, senior vice president at the bankers association’s Center for Regulatory Compliance, said in an interview.

Real estate nightmare for retirees! - (finance.yahoo.com) Five short years ago, many learned men and women warned Americans against thinking that rising home prices would eliminate or lessen the need for them to save for retirement. Institutions and advisers alike warned people against relying on the equity in their homes to finance part if not all of their consumption needs in retirement. Today, that's no longer the case. In fact, today, we have almost the opposite situation. With home prices falling for nearly five years, many Americans now must consider what to do with their homes should prices continue to collapse and the equity in their homes -- if they are still lucky enough to have any equity -- disappears completely. Should they stay in place and wait it out? Or should they bail out now and downsize? If they stay in place, should they pay down their mortgage, if they have one? And if they have a home equity loan, should they refinance that or, if possible, accelerate the payments on that debt?

Growing number of consumers pay credit card debt before mortgage - (www.washingtonpost.com) A significant number of Americans are now willing to lose their house to save the stuff that’s in it. That kitchen-table calculus provides a window into the deep-seated changes in consumer psyche wrought by the financial crisis. Traditionally, home loans have perched at the top of the payment hierarchy as families have strived to ensure that a roof stayed over their heads. But as Americans unload more than $100 billion in debt leftover from the economic boom, many households face a daunting question: What to pay off first? The answer increasingly has become the credit card. According to statistics from credit bureau TransUnion, the number of consumers who default on their mortgages but continue to pay their credit cards on time has remained well above normal even as the country has moved into an economic recovery. The steady climb — up from 37 percent before the recession to more than half at the end of last year — has some financial experts questioning whether the shift reflects a permanent change in how families manage their personal balance sheets.

Senate Bill Is Big Step Toward Government Censorship - (www.wired.com) Under the old COICA draft, the government was authorized to obtain court orders to seize so-called generic top-level domains ending in .com, .org and .net. The new legislation (.pdf), with the same sponsors, narrows that somewhat. Instead of allowing for the seizure of domains, it allows the Justice Department to obtain court orders demanding American ISPs stop rendering the DNS for a particular website — meaning the sites would still be accessible outside the United States. Either way, though, the legislation amounts to the holy grail of intellectual-property enforcement that the recording industry, movie studios and their union and guild workforces have been clamoring for since the George W. Bush administration. “As the guilds and unions that represent 400,000 creators, performers and craftspeople who create the multitude of diverse films, television programs and sound recordings that are enjoyed by billions of people around the world, we unequivocally support this bill which, by providing protection for our members’ work, clearly shows that our government will not condone or permit the wholesale looting of the American economy and American creativity and ingenuity — regardless of how that looting is disguised on the internet to fool the American consumer,” (.pdf) a host of unions said Wednesday, including the American Federation of Musicians, American Federation of Television and Radio Artists and the Directors Guild of America.