KeNo's Housing and Economic Portal: Wednesday June 15 Housing and Economic stories

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TOP STORIES:

11 Things You Should Know About The U.S. Postal Service Before It Goes Bankrupt - (www.businessinsider.com) The cover story of this week's issue of Bloomberg Businessweek examines the United States Postal Service as it hurtles toward insolvency at an alarming rate. Facing a projected $6.4 billion loss this year, the Postal Service is expected to hit its own debt ceiling by the end of this fiscal year on Sept. 30. The federal government will then have to choose between letting the agency default on its massive pension obligations or bailing it out to the tune of more than $50 billion. The Businessweek article, written by Devin Leonard, looks at the drivers behind the agency's financial woes, including its cushy relationship with postal workers unions and its flailing efforts to stem its customers' migration to the Internet. At the end, the article asks whether the U.S. will be able to follow in Europe's footsteps and reinvent its postal monopoly to regain relevance and profitability. If it cannot, Leonard concludes, the postal service is at serious risk of collapse.

Dana Point goes after million-dollar houseowners for late taxes - (www.ocregister.com) Dana Point is going after four property owners in one of the city's most expensive neighborhoods, saying they owe more than $86,000 in special property taxes and penalties. The City Council voted 5-0 on Monday night to collect delinquent taxes and penalties from fiscal 2010-11, and if the owners don't pay up, the city plans to start foreclosure proceedings. The homes are part of The Strand at Headlands, a multimillion-dollar neighborhood on one of the most valuable coastal plots in Southern California. This property in The Strand at Headlands community is delinquent on $28,978 in special taxes, according to the city of Dana Point. The property is listed as a short sale for about $8 million. The properties in question are part of a Mello-Roos district, which sells bonds to pay for public amenities such as streets, sewage and other infrastructure. Property owners in the district pay special taxes that are used to make payments on the bonds' principal and interest. "It's the same if you don't pay your property taxes to the county – they can go after you," said Mike Killebrew, assistant city manager. "If you don't pay us your taxes, we can also."

College graduates go into massive debt and enter a low wage job market - (www.doctorhousingbubble.com) I found the above data reported this week rather startling. Of the class of 2010 22 percent are not working. Ironically in the survey many reported that they were going on to graduate school and going further into student loan debt. I’m all for higher education and owning a home if purchased correctly. This is the absolute nucleus of the issue here. The only reason housing ever increased to the levels that it did was first, Wall Street juiced the market and turned it into a casino and second the government was there to backstop the entire mess. The same is happening with higher education being privatized by sub-prime non-profits that simply push out degrees that are one step above junk mail. You might as well go online and stream free courses for some of these institutions. This only can happen because of Wall Street turning education into another sector to be exploited but also massive government loans that have also infiltrated the private and state college systems chasing tuition up.

GOP proposes increase in FHA down payments - (www.washingtonpost.com) A Republican-led proposal circulated Monday would boost the down payment requirement for mortgages backed by the Federal Housing Administration, a move some industry experts said would shut potential home buyers out of the market. Borrowers who take out FHA-insured mortgages are permitted to put down as little as 3.5 percent, making those loans an especially attractive choice for first-time home buyers. But as defaults rose during the housing market’s worst days, FHA’s cash reserves dwindled, creating concerns that taxpayers may have to come to the agency’s rescue. The Republican proposal would require most FHA borrowers to put down at least 5 percent. Those who support the idea say that forcing borrowers to have more equity in their homes would better protect homeowners against default and thus improve the agency’s finances. The issue will be discussed Wednesday at a House Financial Services subcommittee hearing led by Rep. Judy Biggert (R-Ill.).

The New Fiscal Nightmare: 2012 State Budgets Cuts - (www.businessinsider.com) After nearly three years of economic recovery, the crisis in state and local budgets continues to worsen. Even though state tax revenues are picking up, mandated spending obligations and the loss of federal stimulus money still put heavy pressure on state finances. The squeeze on local governments is intensifying, reflecting cutbacks in state aid and the effect of the housing recession on property taxes. All this will exert a downdraft on economic growth and employment in the coming year, and the strains will continue at least until growth in the private-sector economy shifts into a higher gear. Fiscal 2012 will be one of the toughest on record, says the Center on Budget and Policy Priorities (CBPP). That’s because the options for eliminating the gaps between revenues and spending, as required by balanced-budget laws in 49 states except Vermont (which usually balances its budget anyway), are now fewer and more difficult. States already have acted to address gaps totaling $431 billion heading into the fiscal years 2009, 2010, and 2011.