Tuesday January 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

The Fed's Sleazy Idea Of “Transparency” - (www.implode.com) The Fed announced on the New Year’s Holiday that it is going to start releasing its internal forecasts of short-term interest rates. Advocates of Fed transparency (I am one) might reflexively welcome this prospect. However, even the New York Times article (sourced above) is not so naive. At least, this was apparent when it was originally published, as it said in this version of the article (apparently the copy at that location didn’t get changed — try again, guys!): In January 2012 the Fed board adopted a plan to publish a forecast of its own actions, inaugurating a policy that is intended to magnify the power of those actions by shaping market expectations. The article even opens with a comment about the Fed asserting its power to influence the economy through manipulating interest rates and engaging in quantitative easing (asset purchases). Oddly enough, the replacement version of the same article only uses the word “power” to suggest the Fed is powerless… “to address the most important issues weighing on growth, including a lack of demand from gloomy consumers, high levels of debt throughout the economy and the depressed condition of the housing market”.

Ponzi Planet: The Danger Debt Poses to the Western World - (www.spiegel.de) The most spectacular case was that of New York financier Bernard Madoff, who was responsible for losses of about $20 billion by 2008. Snowballs are set into motion, becoming bigger and bigger as they roll along. In the worst case, they end in an avalanche that takes everything else with it. Western economies have not acted much differently than the fraudster Madoff. In 2011, they were virtually inundated with bad news and old sins. Almost everyone -- in Europe and in the United States -- has been living beyond their means, from consumers to politicians to entire countries. Governments have become servants to the markets upon which they have become dependent.

Bigger Snowballs

On an almost weekly basis, the reports have become more worrisome and the sums of money involved more staggering. Many are now concerned that, as 2012 begins, the snowballs will only get bigger -- and roll faster:

§ There are the banks in Europe, which will have to repay about €725 billion in combined debt in 2012, including €280 billion in the first quarter alone. With the private market largely off-limits to them, the banks have had to rely on the European Central Bank (ECB) to bail them out. The ECB is now lending them fresh money -- as much as they want -- at minimal interest rates.

Fed urges entrapment of more Americans with mortgage debt - (www.reuters.com) The Federal Reserve has launched a potentially controversial push to revive the battered U.S. housing market, calling on other government officials to act after largely exhausting its own tools to support the fragile economic recovery. After the Fed slashed interest rates to near zero more than three years ago and amassed $2.3 trillion in bonds to spur growth, the U.S. economy showed some momentum toward the end of 2011. But many analysts are doubtful the recovery will achieve take-off velocity in 2012 and housing is one of the biggest drags. House prices have fallen 33 percent from their 2006 peak, resulting in an estimated $7 trillion in household wealth losses, the Fed said last week as it took the unusual step of making an array of recommendations on housing policy to Congress.

Wall Street's Big Banks Are The Real Threat To Our Economy - (www.foxnews.com) Rebuilding our economy and restoring trust in our government will require a leader with the independence to implement bold reforms that take on the establishment, from Washington to Wall Street. Thus far, however, we are the only campaign willing to confront honestly and directly one of the greatest threats to our long-term economic prosperity: Too-Big-To-Fail Wall Street banks. In 2008, with the nation’s economy in crisis, Washington and Wall Street offered American taxpayers a Sophie’s Choice: spend hundreds of billions of dollars to save big banks from failure, or witness the collapse of our financial system and irreparable economic harm. This was not only a betrayal of the public’s trust; it was also a betrayal of our free market system, which only works when every business plays by the same rules.

As house prices fall, more borrowers walk away - (www.msn.com) When David Martin and his wife bought their north Seattle condo five years ago, they figured they had plenty of time to downsize if they needed to before they retired. Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call "strategic default." "Guilt and morality are one side, and objective financial analysis are on the other side," Martin said. "They're coming to two opposite conclusions. I wonder how many other people are struggling with the same question." Strategic defaults like the one contemplated by Martin are on the rise. A survey last year by two Chicago-area finance professors, Paola Sapienza at Northwestern University and Luigi Zingales at the University of Chicago, found that roughly three out of 10 mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22 percent in 2009.

OTHER STORIES:

November house prices still in free fall - (www.centralvalleybusinesstimes.com)

Commercial real estate stalls after rebounding - (www.latimes.com)

Housing market blooms in Cuban provinces - (www.reuters.com)

Table Of Total Mortgage Debt Outstanding - (www.federalreserve.gov)

America's Unlevel Playing Field - (www.nytimes.com)

The cost of shopping for health insurance - (www.washingtonpost.com)

This Ripe Moment - (www.kunstler.com)

Want to pursue the American Dream? Move to Canada or Europe! - (www.rt.com)

The myth of Japan's failure - (www.nytimes.com)