Friday August 10 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

What Percent of California’s State AND Local Budgets are Employee Compensa - (www.unionwatch.org)  Earlier this week UnionWatch posted an analysis that estimated about two-thirds of California’s state budget covers state employee compensation expenses. This was in response to a widely quoted estimate that the number was only about 12%. Due to the huge disparity in these claims, and the implications having the correct number may have on the debate over public employee compensation, we decided to dig a little deeper. For expert information, we talked with two individuals at the California Office of Legislative Analyst, Jason Sisney, the Director of State Finance, and Nick Schroeder, Public Employment and Fiscal Oversight. Both of them confirmed that state government employees compensation consumes about 12% of the state general fund budget. But the devil is in the details.

Why Real Estate Everywhere Will Eventually Drop Over 50%  - (www.seekingalpha.com) During 2005-2006, we experienced a housing bubble in the United States which was accompanied by valuations in many regions trading at more than twice their normal historic levels. Today, we have similar housing bubbles in many countries with prices that are at twice or thrice their typical valuations relative to rents, incomes, and most other standard-of-living benchmarks. An important question is what will happen with neighborhoods which are experiencing highly elevated housing prices. There are numerous theories, with some analysts suggesting that prices will simply move sideways for a decade or more until inflation and an increasing population eventually causes valuations to return to normal without having to actually decline. Others have projected dramatic collapses for real estate. Obviously this is a significant question, since the last global recession was largely caused by the demise of the U.S. housing bubble and its impact on mortgage-backed securities which led to the bankruptcy of Lehman Brothers and ultimately a global credit crisis.

Pension Plans Increasingly Underfunded at Largest Companies - (www.nytimes.com) AFTER years of poor investment returns, the pension funds of the United States’ largest companies are further behind than they have ever been. The companies in the Standard & Poor’s 500 collectively reported that at the end of their most recent fiscal years, their pension plans had obligations of $1.68 trillion and assets of just $1.32 trillion. The difference of $355 billion was the largest ever, S.& P. said in a report. Of the 500 companies, 338 have defined-benefit pension plans, and only 18 are fully funded. Seven companies reported that their plans were underfunded by more than $10 billion, with the largest negative figure, $21.6 billion, reported by General Electric.

Crackdown proposed on tax-dodge sellers - (www.ft.com) Sales people promoting abusive tax dodges will be forced to hand over client lists, under proposals aimed at cracking down on those who “artificially and aggressively” reduce their tax bills. The Treasury is also considering extending the financial services mis-selling rules to penalise advisers who market schemes that clearly do not work, as part of new measures aimed at prising open schemes and warning taxpayers of the risks of aggressive avoidance. The crackdown is being floated in a consultation paper launched on Monday aimed at “lifting the lid” on avoidance schemes. The initiative, promised in the Budget, comes in the wake of a public outcry last month over reports of tax planning by celebrities such as Jimmy Carr, a comedian.

HELOC abusers and lenders face day of recast reckoning - (www.ochousingnews.com) … During the initial years of home equity credit lines, borrowers must pay only interest. Borrowers can also pay down principal if they wish, but many homeowners, short on cash, haven’t done so. At Wells Fargo, for example, in the quarter ended March 31, some 44 percent of the bank’s home equity borrowers paid only the minimum amount due. Being required to pay only the interest on these loans has made them easier for troubled borrowers to carry. But these easy terms are about to get tougher. What’s known as the initial draw period for home equity lines of credit is coming to an end for many borrowers. Soon, they will have to pay principal as well. That is the definition of a recast. The problem with these loans isn’t resetting to a different interest rate. With today’s record low rates, that would not be a problem. The issue is recasting to fully amortizing payments, and that will increase the repayment burden on all borrowers. This will be devastating to the Ponzis because in our weak economy and conservative lending environment, they don’t have other sources of borrowing to cover the payments.

OTHER STORIES:

describes how agents manipulate forums  - (www.cryptome.org)

Greece Will Need More Debt Restructuring: EU Officials - (www.cnbc.net)

Jim Rogers Hits Out at Hendry, Edwards on China - (www.cnbc.net)

Where is that Tsunami of foreclosures?  - (www.patrick.net)

Relentless Pressure Pushes Spain Closer to Bailout - (www.cnbc.net)

Five Reasons for Spain's Colossal Economic Troubles - (www.cnbc.net)

How to bet against a housing market?  - (www.patrick.net)

Meet the Front Group Leading the Fight Against Taxing the Rich  - (www.motherjones.com)

Thursday August 9 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Italian mayors slam spending cuts - (finance.yahoo.com) Mayors from across Italy, holding up flags and wearing their tricolor sashes, demonstrated in front of the Italian Senate on Tuesday against spending cuts planned by the government. "We have reached our limits," said Mayor Andrea Marchi of the northern town of Ostellato, echoing big city Mayor Gianni Alemanno of Rome about threats to public services. The mayors planned to meet with Senate President Renato Schifani and the Cabinet minister for relations with parliament Piero Giarda. Graziano Delrio, president of the association of Italian cities, says the cuts will be "lethal" for many cities and that it's not too late for the legislature to modify the government decree. The government of Premier Mario Monti has said it is hoping to save a total of €26 billion ($31.7 billion) over the next three years with spending cuts in various sectors of government.

Trading Surges Boosted Whale Positions Before Audits - (www.bloomberg.com) Trading surges that temporarily boosted the value of credit derivatives held by JPMorgan Chase & Co. (JPM) may provide clues about whether traders at the bank masked losses that have spiraled to $5.8 billion. Spikes in late January and again at the end of February, which more than doubled the volume of trades in an index tied to the creditworthiness of companies, lowered the cost of the index, raising the value of the bank’s holdings. The surges came just before end-of-the-month bank audits to verify prices. The trading patterns offer a road map for investigators after the biggest U.S. bank by assets restated first-quarter earnings to account for a larger loss on the derivatives than previously disclosed. JPMorgan, which shut the London-based group responsible for the trades in its chief investment office, said an internal probe found evidence, without providing specifics, that employees may have tried to hide losses.

Brazil’s Scrapped IPOs Follow Worst Stock Rout In BRICs - (www.bloomberg.com) Brazilian companies are canceling initial public offerings at the second-highest rate among the biggest emerging markets as slowing economic growth makes the country’s benchmark stock index (SHCOMP) the worst performer this year. Three IPOs in Brazil were scrapped this year, while seven were announced, compared with zero withdrawals in China and less than a third of offerings this year in India, data compiled by Bloomberg show. One initial share sale was announced in Russia as well as one cancelation. Brazilian companies raised a combined 3.88 billion reais ($1.9 billion) in 2012 through IPOs, down 40 percent from the same period a year ago.

Spain Edges Toward Rescue as Regions Aided: Euro Credit  - (www.bloomberg.com) Spain’s bailout of its regions risks pushing the nation closer to a full international rescue after investors charged the nation more to borrow for five years than for a decade, threatening its access to debt markets. Spain’s five-year borrowing costs briefly rose above 10- year yields today, and traded 5 basis points below the 7.57 percent rate on benchmark 10-year debt at 11.30 a.m. in Madrid. Bonds issued by Catalonia continued to fall after the region said it may tap the government’s rescue fund. “It’s almost a waiting game now until they seek a sovereign bailout,” Lyn Graham-Taylor, a fixed income strategist at Rabobank in London, said in a telephone interview. The regional bailout plan was “the straw that broke the camel’s back,” he said.

Eurozone danger mounts as Spain spins out of control - (www.telegraph.co.uk) Spain is battling to avert a fully-fledged sovereign rescue after borrowing costs spiralled out of control, with dangerous knock-on effects in Italy and Eastern Europe. The yields on closely-watched two-year debt surged by 78 basis points to a modern-era high of 6.42pc, leaving it unclear how long the country can continue funding itself. Italy’s two-year yields vaulted to 4.6pc.

“We can’t keep going like this for another 15 days,” said Prof Miguel Angel Bernal from Madrid’s Institute of Market Studies. “The European Central Bank has to bring out its heavy artillery.”

 

OTHER STORIES:

Euro-Area Manufacturing, Services Shrink For 6th Month: Economy - (www.bloomberg.com)

Financial recovery plan agreed for Sicily- Italy PM's office - (www.reuters.com)

China Manufacturing Gauge Shows Slowdown May Be Ebbing: Economy - (www.bloomberg.com)

Hollande Transaction Tax Drives Investor Quest For Loopholes - (www.bloomberg.com)

Spain's De Guindos to meet Schaeuble on Tuesday - (www.reuters.com)

Greek recession seen deeper than 7 percent this year: PM - (www.reuters.com)

French Business Confidence Falls To Lowest Since 2010 - (www.bloomberg.com)

German private sector woes mount - (www.ft.com)

In Euro Zone, Debt Pressure Tightens Grip - (www.nytimes.com)

Raskin Says Fed To Debate Benefit Of New Bond Buying Plan - (www.bloomberg.com)

Home Values Post First Year-Over-Year Increase Since 2007 - (www.bloomberg.com)

UPS Cuts 2012 Forecast as Slowing Economy Press Profit - (www.bloomberg.com)

Wednesday August 8 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Spain, Italy Ban Short Selling of Stocks to Slow Market Turmoil - (www.bloomberg.com) Spain and Italy reinstated a short- sale ban on stocks as bank shares plunged to record lows, bond yields rose and the euro traded below its lifetime average against the dollar on concern the debt crisis is growing. Spain’s CNMV market regulator banned the creation of negative bets on equities through shares, derivatives and over- the-counter instruments for three months. Italy’s Consob prohibited the practice on 29 banking and insurance stocks for one week, citing “grave tensions” in financial markets. Today’s move echoes decisions in August last year by the two nations plus France and Belgium after European banks hit their lowest levels since the credit crisis of 2008 and 2009. Most bank stocks extended their decline once the bans were lifted.

Italian provinces warn cuts may close schools - (www.reuters.com) Italian regional authorities may not be able to open schools after the summer break if spending cuts planned in the government's latest spending review are carried through, the head of the Union of Italian Provinces (UPI) said on Monday. "With these cuts we won't be able to guarantee the opening of the school year," UPI President Giuseppe Castiglione told reporters in Rome. Piero Lacorazza, president of the province of Potenza in southern Italy, said the comment was "not an exaggeration", adding that "half of the provinces are in serious financial difficulty".

Sicily’s Fiscal Problems Threaten to Swamp Italy - (www.nytimes.com)  As Prime Minister Mario Monti fights to protect Italy from the contagion driving up its borrowing costs to perilous levels, one region in particular has been in the spotlight: Sicily, which some fear has become “the Greece of Italy” and is at risk of defaulting on its high public debts. Mr. Monti wrote to Sicily’s regional president last week warning that he had “serious concerns.” The day before, an official in the Sicily branch of Italy’s leading industrialists association called for the island to be put into receivership by the central government to clean up its finances. When headlines about a potential Sicilian default ricocheted the globe, the government quickly played down concerns and said it would send 400 million euros, about $486 million, to ease Sicily’s liquidity crunch so it could continue to pay salaries and pensions. 

LCH Raises Extra Margin for Trading Italian, Spanish Bonds - (www.bloomberg.com) LCH Clearnet Ltd., Europe’s biggest clearing house, raised the extra deposit it demands from clients to trade some Spanish and Italian government bonds, it said today in a statement on its website. The margin for trading Spain’s securities maturing in seven to 10 years will increase to 12.2 percent from 11.8 percent, according to the statement. For debt due in 10 to 15 years it will climb to 16 percent from 14.7 percent, and for 15- to 30- year bonds, the charge will be 20 percent, up from 17.9 percent. Spain’s government bonds plunged today, pushing 10-year yields to a euro-era record of 7.57 percent, amid concern the nation will need to offer financial support to its regions. Rates on similar-maturity Italian debt jumped as much as 26 basis points, or 0.26 percentage point, to 6.43 percent, the highest since January.

Slovenia’s Fate Rests With Spain as Bonds Punished - (www.bloomberg.com) Spain may hold the key to Slovenia needing a bailout for its banks, as contagion from the region’s fourth-largest economy threatens to engulf one of its smallest. Yields on Slovenia’s nine-year bonds are rising and falling almost in parallel with Spain’s, and topped 7 percent last week as investors added to bets that Europe’s debt turmoil may lock both nations out of the market. While borrowing costs in Belgium, Austria and France have dropped to records, Slovenia’s have surged on concern that it will have to channel funds to its banks as bad loans climb.  “Whether Slovenia has to take a bailout or not is really out of their control,” said William Jackson, an economist at Capital Economics in London. “Slovenia is a small economy and it is very susceptible to risk aversion.” Yields on Slovenia’s 4.375 percent bond, maturing in January 2021 surpassed 6 percent every day in the past month and closed above 7 percent on seven trading days, approaching levels that prompted bailouts for Greece, Ireland and Portugal. 

OTHER STORIES:

Germany, Netherlands Rating Outlooks Cut to Negative by Moody’s - (www.bloomberg.com)

Spanish Debt Risk Soars To Record As Regions Ask For Assistance - (www.bloomberg.com)

IMF to Stop Further Aid Tranches to Greece, Spiegel Says - (www.bloomberg.com)

Euro Turns Carry Traders’ Favorite In Worst Year Since 2003 - (www.bloomberg.com)

Spanish Recession Deepens With 0.4% GDP Drop, Bank Of Spain Says - (www.bloomberg.com)

Japan Sees Wider Global Slowdown as China Growth Cools: Economy - (www.bloomberg.com)

Texas Instruments Sales, Profit Forecasts Miss Estimates - (www.bloomberg.com)

Google facing force of aggressive E.U. regulators - (www.washingtonpost.com)

'Dark Pools' shines light on electronic stock trading - (www.latimes.com)

Tuesday August 7 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Bank Contractors Break Into Occupied Homes, Terrify Residents, Lawsuits Say - (www.huffingtonpost.com) It usually happens when homeowners are at work or out of town. In Clawson, Mich., Nancy Cox returned home to find her possessions in the front yard, smashed with a sledgehammer, and a chalk drawing of a clown face on her garage with the tagline, "another job well done." For Kenneth and Margaret Karpa in Pittsburgh, china and photos of their daughter were damaged. Missing belongings included a coin collection and the family cat. In Kansas City, Allen Danforth discovered his elderly parents' furnishings -- tables, chairs, family heirlooms -- gone. These homeowners allege in separate lawsuits that a contractor hired by a major bank to preserve abandoned properties against damage, mistakenly entered their homes while they were still occupied. In most cases, it appears that the contractor, known as a property inspector or property preserver, broke in after ignoring obvious signs of occupation: lights turned on, grass mowed and homes fully furnished.

Indebted Valencia asks Spain government for help - (www.reuters.com) Spain's heavily indebted eastern region of Valencia said on Friday it would apply to Madrid for financial help, spooking markets and complicating central government efforts to stave off a full-blown bailout. Separately, the government cut its economic growth forecasts for 2012 and 2013, indicating they now expected the country to stay mired in recession well into next year. It will use the revised forecasts as a base to draw up the 2013 budget, for which the ceiling has been set at 127 billion euros compared to 119 billion euros in 2012.

Rajoy Sets Course Against Spanish Protests As Investors Flee - (www.bloomberg.com) Prime Minister Mariano Rajoy will begin mapping out Spain’s economic path through the next 18 months today in the face of mounting pressure from protesters and investors, who pushed bond yields above 7 percent. Rajoy will approve spending limits for 2013, the first stage of the budgeting process, and forecast the impact of austerity on the economy at a Cabinet meeting at 10 a.m. in Madrid. European finance ministers will also sign off on a 100 billion-euro ($123 billion) rescue package for Spain’s banks. Tens of thousands of protested across the country late yesterday against a 65 billion-euro austerity package that failed to stem a surge in the government’s borrowing costs. Investors are shunning assets in indebted euro nations while accepting negative yields on debt fromGermany, Finland and the Netherlands on concerns the currency union is creaking.

IMF loses all faith in the euro project - (www.telegraph.co.uk)  The euro area crisis has reached a new and critical stage. Despite major policy actions, financial markets in parts of the region remain under acute stress, raising questions about the viability of the monetary union itself." The adverse links between sovereigns, banks, and the real economy are stronger than ever. Financial markets are increasingly fragmenting along national borders. It said the eurozone is unworkable in its current form, a half-baked currency union that spreads contagion like wildfire without the backup machinery to contain the damage: The euro area is in an uncomfortable and unsustainable halfway point. While it is sufficiently integrated to allow escalating problems in one country to spill over to others, it lacks the economic flexibility or policy tools to deal with these spillovers.

Two Years After Dodd-Frank, Why Isn’t Anything Fixed? - (finance.yahoo.com)  The lesson of all of this goes directly against two decades of the mantra of "self-correcting" markets. Financial institutions cannot be relied upon to do the right thing, when doing the wrong thing will line their pockets. Regulators, not banks, need to set the rules and they must be clear, straightforward, and readily enforceable. Yet, still, we see regulators who are too timid to take on major financial interests. Instead of just saying "no" they try to placate industry lobbyists by creating this clarification or that exception, resulting in indecipherable rules that are hundreds, and in some cases, thousands of pages long. The horrendously complex rules serve as competitive barriers for smaller institutions which cannot afford the high priced legal help required to decipher them. They also make it difficult for outsiders -- media, academics, and reform advocates -- to conduct meaningful analysis of the rules. And the irony is that once the rules have ballooned into Rube Goldberg monstrosities, the lobbyists who sought all the clarifications and exceptions ridicule the regulators for being heavy handed bureaucrats who are drowning the industry in red tape.

OTHER STORIES:

Investors Whipsawed by Hourly Price Swings in IBM, Coca-Cola - (www.bloomberg.com)

Insider Traders Face Longer Sentences As Judges Get Tough - (www.bloomberg.com)

Libor Scandal Shows Many Flaws in Rate-Setting - (www.nytimes.com)

China Profits Sinking May Pressure Wen to Reduce Taxes: Economy - (www.bloomberg.com)

Spain Insists $15 Billion Aid For Regions Won’t Swell Debt - (www.bloomberg.com)

U.K. Budget Deficit Widens, Casting Doubt On Fiscal Targets - (www.bloomberg.com)

Wall Street Seeks Patience After Worst 1st Half Since ’08 - (www.bloomberg.com)

The Road to Global Accounting Rules Just Got Longer - (www.nytimes.com)

Monday August 6 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

World grain price surge triggering defaults - (www.reuters.com) Grains suppliers are starting to default on previously agreed sales to major importers, including top wheat buyer Egypt, rather than deliver on contracts that are now losing money because of the huge rally in prices sparked by the U.S. drought. The worst drought in more than 50 years is wilting crops in the U.S. Midwest and sending prices into overdrive, with corn alone surging by around 50 percent in the last month. Soybeans have also hit record highs, with wheat not far behind. Crop downgrades in Russia, Ukraine and Kazakhstan as drought followed a bitterly cold winter have added to global price rises, stoking fears of unrest especially in Middle Eastern countries, where high food prices can trigger political protest.

Post Office Might Miss Retirees' Payment - (online.wsj.com) While lawmakers continue to fight over how to fix the ailing U.S. Postal Service, the agency's money problems are only growing worse. The Postal Service repeated on Wednesday that without congressional action, it will default—a first in its long history, a spokesman said—on a legally required annual $5.5 billion payment, due Aug. 1, into a health- benefits fund for future retirees. Action in Congress isn't likely, as the House prepares to leave for its August recess. The agency said a default on the payment, for 2011, wouldn't directly affect service or its ability to pay employees and suppliers. But "these ongoing liquidity issues unnecessarily undermine confidence in the viability of the Postal Service among our customers," said spokesman David Partenheimer. The agency says it will default on its 2012 retiree health payment as well—also roughly $5.5 billion, due Sept. 30—if there is no legislative action by then.

Behind Credit Default Swaps Market, a Cartel Left Open to Collusion - (www.nytimes.com) The rate-manipulation scandal has demonstrated that banks will collude with one another for their own benefit. Banks didn’t report the rate at which they were borrowing from other institutions. They could report a made-up rate that, not surprisingly, turned out to serve their economic interests at the time. So, it might come as a worry that there is another, multitrillion-dollar market — the credit-default swap market — that operates under a similar principle. Credit-default swaps are insurance-like derivatives, or side bets, that protect investors from bad events like a company going bankrupt or a country failing to pay its debts. Whether a company has defaulted on its debt might seem unambiguous to some naïve souls out there. But that’s hardly the case, especially when there are lawyers involved and billions of dollars at stake. Because credit-default swap contracts can be worthless when they expire, the timing of insolvencies can make the difference between making and losing a great deal of money.

Spanish Borrowing Costs Surge As Demand Weakens At Debt Sale - (www.bloomberg.com) Spain sold 2.98 billion euros ($3.66 billion) of notes, in line with its maximum target, and its borrowing costs surged as demand for the securities weakened. The country’s bonds fell after the sale. The Madrid-based Treasury sold notes due in 2014 at an average yield of 5.204 percent, compared with 4.335 percent when they were last sold on June 7. It sold five-year notes at 6.459 percent, compared with 6.072 percent on June 21 and seven-year securities at an average yield of 6.701 percent. Demand for the two-year debt was 1.9 times the amount sold, compared with 4.26 last month and the bid-to-cover for the 2017 securities was 2.06, compared with 3.44 in June, the Madrid- based Treasury said. It set a maximum target of 3 billion euros for the sale.

Feeding Frenzy Seen If Wall Street Sues Itself Over Libor - (www.bloomberg.com) Wall Street, grappling with mounting regulatory probes and investor claims over alleged interest-rate manipulation, may face yet another formidable foe: Itself. Goldman Sachs Group Inc. (GS) and Morgan Stanley are among financial firms that may bring lawsuits against their biggest rivals as regulators on three continents examine whether other banks manipulated the London interbank offered rate, known as Libor, said Bradley Hintz, an analyst with Sanford C. Bernstein & Co. Even if Goldman Sachs and Morgan Stanley forgo claims on their own behalf, they oversee money-market funds that may be required to pursue restitution for injured clients, he said. Because Libor is based on submissions from only some of the world’s largest banks, the probes threaten to pit firms uninvolved in setting the rate against any implicated in its manipulation, Hintz said. Libor serves as a benchmark for at least $360 trillion in securities.

OTHER STORIES:

Central bankers eyeing whether Libor needs scrapping - (www.reuters.com)

Libor scandal explained and what rate-rigging means to you - (www.usatoday.com)

Rate probe turns to four major banks - (www.ft.com)

Spain Sells Bonds In Market Test As Street Protests Loom - (www.bloomberg.com)

China Q2 property loans rebound with sales - (www.reuters.com)

Australia Business Outlook Dims As Rate-Cut Calls Mount: Economy - (www.bloomberg.com)

U.K. Retail Sales Rise Less Than Forecast As Rain Curbs Food - (www.bloomberg.com)

Sales of Existing U.S. Homes Fell to Eight-Month Low in June - (www.bloomberg.com)

Americans Hold Dimmest View on Economic Outlook Since January - (www.bloomberg.com)

Jobless Claims in U.S. Rise as Auto Layoff Effects Ease - (www.bloomberg.com)

Jobless Claims in U.S. Rise as Auto Layoff Effects Ease - (www.bloomberg.com)

Bernanke Says Fed Can Remove ‘Punch Bowl,’ Curb Inflation - (www.bloomberg.com)

Deutsche Bank, HSBC Traders Investigated In Libor Probe - (www.bloomberg.com)

Big Banks Prepare Another Round of Cuts - (online.wsj.com)

Friday August 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

California has nation's worst credit rating, Pew study finds - (www.sacbee.com) California has the worst credit rating of any state now and the nation's worst credit rating record over the past 11 years, according to a new nationwide compilation by the Pew Center on the States. The compilation is based on Standard and Poor's credit ratings and covers every year since 2001. Thirteen states sit atop the Pew chart with AAA credit ratings while California is alone at the bottom at A-minus and is the only state to dip to the worst possible rating, BBB, during the 11-year period. That happened in 2003, during a state budget crisis so severe that then-Gov. Gray Davis was recalled. The highest rating California achieved during the period, A-plus, came in 2006. "The states with the lowest grades typically have trouble keeping their spending in line with their tax revenues." Pew's Stephen C. Fehr writes in an explanation of the research. That observation applies to California, which has struggled to balance its budget for the past decade and whose current budget assumes that voters will approve sales and income tax increases in November.

A County Considers Rescue of Underwater Homes - (www.nytimes.com)   Browning lawns surround the otherwise neat houses in these once-sparkling developments where foreclosures have become more common than neighborhood cookouts. Each patch of dead grass is a reminder of the inescapable truth: many homes here, as they are elsewhere around the country, are worth half what they were just five years ago. Desperate for a way out of a housing collapse that has crippled the region, officials in San Bernardino County, where Fontana is one of the largest cities, are exploring a drastic option — using eminent domain to buy up mortgages for homes that are underwater. Then, the idea goes, the county could cut the mortgages to the current value of the homes and resell the mortgages to a private investment firm, which would allow homeowners to lower their monthly payments and hang onto their property.

OC Shadow Inventory: What it really is and how large it really is  - (www.ochousingnews.com) Rather than allowing delinquent borrowers to remain hidden in shadow inventory, State law in New York requires every delinquent borrower be noticed. If these numbers were widely reported, there would be no inventory in the shadows, and we would all know how bad the problem really is. The Division published preliminary figures in October 2010 but has never updated these numbers. … Through the end of March 2012, a total of 192,000+ pre-foreclosure notices had been sent to delinquent owners in NYC. This does not include delinquent investor-owned properties because the law did not require servicers to send notices to them. There are lots of 2-3 family homes in the four outer boroughs of NYC. I estimate that there are roughly 75,000+ delinquent investor-owners. This means there are roughly 265,000 seriously delinquent homeowners in NYC who have not yet been foreclosed. Why so many? The banks do not foreclose in NYC. As of May 24, foreclosure.com reported a total of 301 foreclosed properties on the active MLS and 103 in Brooklyn. Together, these two boroughs have a total of 4.7 million residents. … Hard as it may be to believe, the situation is even worse on Long Island. With fewer than 3 million occupants, Nassau and Suffolk Counties showed a total of 175,000 pre-foreclosure notices sent out as of the end of March.

Drought In U.S. Now Worst Since 1956; Food Prices To Spike, Economy To Suffer  - (www.nwsource.com) The nation's widest drought in decades is spreading, with more than half of the continental United States in some stage of drought and most of the rest enduring abnormally dry conditions. In its monthly drought report, the National Climatic Data Center in Asheville, N.C., announced that 55 percent of the country was in a moderate to extreme drought at the end of June. The percentage of affected land is the largest since December 1956, when 58 percent of the country was covered by drought, and it rivals even some years in the Dust Bowl era of the 1930s, although experts note that this year's weather has been milder than that period, and farming practices have been vastly improved since then.

Are Millennials the Screwed Generation? - (www.newgeography.com) Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the “greed, shortsightedness, and blind partisanship” of the boomers, of whom he is one, for having “brought the global economy to its knees.” How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit. The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.

OTHER STORIES:

Romney’s Bain Yielded Private Gains, Socialized Losses  - (www.bloomberg.com)

U.S. Building Criminal Cases in Libor Scandal; Where Does Mish Stand?  - (www.blogspot.com)

Drought In U.S. Now Worst Since 1956; Food Prices To Spike, Economy To Suffer  - (www.npr.org)

How to Get Our Citizens Actually United  - (www.nytimes.com)

Vote set for quixotic bill that would reveal attack ad funders  - (www.iwatchnews.org

More Details On Our 4-Year Legal Battle With Wells Fargo Bank  - (www.patrick.net)

Mitt Romney Bain Capital Document Lists Him As 'Managing Member' In 2002  - (www.huffingtonpost.com)

Thursday August 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Market Savior? Stocks Might Be 50% Lower Without Fed - (www.cnbc.com) A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank. Theoretically, the S&P 500 would be more than 50 percent lower—at the 600 level—if the bullish price action preceding Fed announcements was excluded, the study showed. Posted on the New York Fed’s web site Wednesday, the study sought out to explain why equities receive such a high premium over less risky assets such as bonds. What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes.

Here Comes the Catch in Home Equity Loans  - (www.nytimes.com) During the initial years of home equity credit lines, borrowers must pay only interest. Borrowers can also pay down principal if they wish, but many homeowners, short on cash, haven’t done so. At Wells Fargo, for example, in the quarter ended March 31, some 44 percent of the bank’s home equity borrowers paid only the minimum amount due. Being required to pay only the interest on these loans has made them easier for troubled borrowers to carry. But these easy terms are about to get tougher. What’s known as the initial draw period for home equity lines of credit is coming to an end for many borrowers. Soon, they will have to pay principal as well. Ten days ago, the Office of the Comptroller of the Currency published some frightening figures about the looming payments. In its spring 2012 “Semiannual Risk Perspective,” it said that almost 60 percent of all home equity line balances would start requiring payments of both principal and interest between 2014 and 2017.

                                                                                                                                                                                                                                                        

JPMorgan Traders May Have Hidden Losses - (www.washingtonpost.com)  JPMorgan Chase revealed Friday morning that its traders may have hid the losses incurred from a multibillion-dollar trading blunder by the bank’s chief investment office in London. The bank now estimates that the “London Whale” trades dealt the bank a $5.8 billion blow in the year to date — nearly three times the amount the firm had originally estimated. “Recently discovered information raises questions about the integrity of the trader marks, and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio during the first quarter,” JPMorgan said in its most recent filing to the Securities and Exchange Commission. The London Whale transactions were massive bets on U.S. corporate bonds that went wrong. The trades were supposed to be a hedge against risk, but their size and nature have raised the suspicion that the traders involved were betting to make big profits.

Goldman Sachs and the $580million black hole - (www.nytimes.com) THE business deal from hell began to crumble even before the Champagne corks were popped. The deal, the $580 million sale of a highflying technology company, Dragon Systems, had just been approved by its board and congratulations were being exchanged. But even then, at that moment of celebration, there was a sense that something was amiss. The chief executive of Dragon had received a congratulatory bottle from the investment bankers representing the acquiring company, a Belgian competitor called Lernout & Hauspie. But he hadn’t heard from Dragon’s own bankers at Goldman Sachs. “I still have not received anything from Goldman,” the executive wrote in an e-mail to the other bank. “Do they know something I should know?” More than a decade later, that question is still reverberating in a brutal legal battle between Goldman and the founders of Dragon Systems — along with a host of other questions that go to the heart of how financial giants like Goldman operate and what exactly they owe their clients.

Govt. erects wall of secrecy for govt. while it erodes individual privacy - (www.capitalismwithoutfailure.com) While individual privacy is being eroded, government is erecting a wall of secrecy for itself: At the same time that the government is enacting legislation to deprive every citizen of privacy, the government has been erecting an enormous wall of secrecy to protect government from prying eyes. The US government reflexively labels everything that it does "classified" and "secret". This is a radical reversal of how things are supposed to work: There is supposed to be transparency for government; individuals are supposed to live in a sphere of privacy. This basic tenet of democracy has been reversed.

OTHER STORIES:

World economy heads for another perfect storm - (www.telegraph.co.uk)

Fed fiddles as America slides back into recession - (www.telegraph.co.uk)

Retail Purchases in U.S. Unexpectedly Decrease 0.5% - (www.bloomberg.com)

Citigroup’s Profit Down 12%, but Beats Estimates - (www.nytimes.com)

Surveys give big investors early view from analysts - (www.nytimes.com)

Is the world's second largest economy is headed for a hard landing. - (www.telegraph.co.uk)

China's five apocalypses signal global recession - (www.marketwatch.com)