KeNo's Housing and Economic Portal: Thursday December 22 Housing and Economic stories

Wednesday, December 21, 2011

Thursday December 22 Housing and Economic stories

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TOP STORIES:

Secrets of the Bailout, Now Revealed - (www.nytimes.com) A FRESH account emerged last week about the magnitude of financial aid that the Federal Reserve bestowed on big banks during the 2008-09 credit crisis. The report came from Bloomberg News, which had to mount a lengthy legal fight to wrest documents from the Fed that detailed its rescue efforts. It is dispiriting, of course, that we are still learning about the billions provided to various financial firms during the crisis. Another sad element to this mess is that getting the truth requires the legal firepower of an organization as rich as Bloomberg. But that’s the way our world works. Billions are secretly showered on troubled financial institutions to stave off disaster. Individuals get little or no help. Here are some of the new figures: Among all the rescue programs set up by the Fed, $7.77 trillion in commitments were outstanding as of March 2009, Bloomberg said. The nation’s six largest banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — borrowed almost half a trillion dollars from the Fed at peak periods, Bloomberg calculated, using the central bank’s data.

Real Estate Prices Fall in China, Inciting Anger and Applause - (www.bloomberg.com) Early in the morning on Nov. 25, Ren Zhiqiang -- one of China’s wealthiest, most famous and arguably most detested real estate developers -- posted a question to his 5 million followers on Sina Weibo, China’s most popular microblog. He asked: “Is there any country in history that has managed to grow its economy stably after a property bust?”

This was no philosophical inquiry. Over the course of the last two months, government officials have tried to turn China’s heated property market into something more equitable for middle-class home buyers. As a result, they have forced home prices down in at least 33 cities. That would be bad enough for Ren Zhiqiang -- and the many Chinese homeowners who now find themselves with negative equity. But for Ren, what makes it considerably worse is that this crash is, in large part, a bureaucrat’s bet that the long-term health of the Chinese economy is best served by purposely tanking the real estate market now, rather than waiting for it to tank on its own. He took obvious exception to this on Weibo:

Millennials are starting to become turned off by debt - (www.deseretnews.com) Eric Richardson and Tyson Lloyd's headlamps shine on the side of the canyon in Logan, Utah. After securing their Vietnam War-era tent, lacing up their hiking boots and loading their backpacks, the two make their way to the car below. They must arrive by 6 am or they will be late to Utah State University where they attend classes. Since May, the two college juniors have lived in a tent where the closest thing to an address is the numbers on nearby telephone poles. Richardson and Lloyd are part of a growing number of young adults who fear debt and spending. After maturing during one of the Nation's worst recessions, they are doing all they can to avoid any personal credit crisis. "I hate spending money," Richardson said. "It doesn't matter how much money I have in my bank account, I just won't spend it. I'm scared to death to take out student loans." The two men use on-campus showers, free lockers to store food and clothes and keep a schedule of events that serve free food on campus all in the name of debt aversion and saving a penny.

Maine senator acquiesces on surtax on rich - (www.pressherald.com) U.S. Sen. Susan Collins of Maine broke with fellow Republicans Thursday night and voted to raise taxes on millionaires to pay for an extension of the Social Security payroll tax cut that's due to expire Dec. 31. But dueling proposals by Senate Democrats and Republicans to extend the tax cut failed amid charges of election-year politics. Collins said she plans to pursue a bipartisan compromise next week that would exempt small-business owners from the surcharge on millionaires. Collins said in a phone interview Thursday night that her goal is to make sure "working families aren't faced with a tax increase come January, frankly at a very bad time given the fragility of our economy."

End welfare for the wealthy - (www.cnn.com) Every year, politicians on both sides engage in a process of reverse Robin Hood in which they steal $30 billion from low- and middle-income Americans and provide handouts to the rich and famous. Millionaires receive tax earmarks and deductions crafted by both parties that allow them to write off billions each year. These write-offs include mortgage interest deductions on second homes and luxury yachts, gambling losses, business expenses, electric vehicle credits and even child care tax credits. Meanwhile, direct handouts for millionaires have included $74 million in unemployment checks, $316 million in farm subsidies, $89 million for preservation of ranches and estates, $9 billion in retirement checks and $7.5 million to compensate for damages caused by emergencies to property that should have been insured. Millionaires have even borrowed $16 million in government-backed education loans to attend college since 2007.