Wednesday February 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Colton considering cost of disbanding fire department, contracting out - (www.sbsun.com) In the latest effort to find better - and cheaper - ways of operating, Colton officials are exploring the possibility of disbanding the city fire department and contracting with an outside agency. The City Council unanimously approved contracts totaling $187,570 with San Francisco-based consulting firm Harvey M. Rose Associates, LLC to perform "operational performance audits" of the Fire Department and Colton Electric Utility. A work plan for the fire audit states auditors will evaluate alternatives for paramedic services, such as "private and/or public service providers." The costs and benefits to contract with CalFire, the state's fire agency, the San Bernardino County Fire Department and nearby cities will be analyzed, the plan states. "I'm going to have to look at all the options here very close," said Councilman David Toro. "The people of Colton are going to expect that same level of service. If there's a cheaper way of doing it, that may be an alternative we're going to have to take a good look at." The city's fiscal woes are well known. The recession has forced the closure of many businesses, resulting in huge drops in sales tax, the city's top income source. State adjustments have further dwindled sales tax income. Some residents and council members say mismanagement by former top administrators has exacerbated financial troubles. Over the past 12 months, the city's work force has been slashed to deal with multi-million dollar deficits. About 90 employees were laid off or had their contracts severed and 16 employees have accepted early retirement offers to save the city money. The city's fire union and other employee groups have accepted pay cuts and other salary and benefit concessions to cut costs. New City Manager Rod Foster, who began his tenure in December, proposed the audits so an unbiased outside source could evaluate the fire and electric departments for efficiency and provide recommendations for increasing revenue to help fund city services. Both audits will begin this week and should be completed within three months, Foster said. The hope is that the audits will provide several recommendations that will save money to help close a $950,000 deficit city officials have projected at the onset of the fiscal year that begins July 1.

Mortgage Bankers Association Sells Headquarters at Big Loss - (www.washingtonpost.com) Even the pros are taking a beating. The Mortgage Bankers Association, its membership expert in real estate, sold its $90 million headquarters in downtown Washington on Friday for $41 million. The three-year-old, 10-story building at 1331 L St. NW -- built just before the office market soured -- was bought by the CoStar Group, a commercial real estate information firm that plans to move its headquarters from Bethesda to the District. The city, which has been negotiating with CoStar for several months, offered the company a $6 million break on its property taxes to lure it from Maryland. "We have a huge demand for space for our headquarters. This was too great an opportunity to pass up," said Andrew Florance, chief executive of CoStar Group. "It's a quality building at a rock-bottom price," he added. "We think we'll save tens of millions of dollars over the next decade." The sale comes as commercial real estate troubles are rapidly multiplying in the Washington area. At least 20 percent of commercial properties in the region are worth less than their mortgages, experts say, compared with less than 1 percent before the recession. The Mortgage Bankers Association moved into the building in 2008 just as the real estate market was crashing, and ended up paying millions of dollars more when interest rates rose. Moreover, the leasing market slowed considerably and the association had trouble getting other tenants into the 168,000-square-foot building.

Unions Threaten More Strikes Against Greek Govt - (www.cnbc.com) Greek civil servants warned on Monday they could call more strikes if the Socialist government unveils tough austerity measures to cut its deficit and ballooning public debt. The ADEDY public sector union already plans a 24-hour strike on Wednesday as Prime Minister George Papandreou puts the finishing touches to a deficit-cutting plan, endorsed by the European Commission to pull Greek finances back from the brink. His socialist government has promised to tighten one of Europe's leakiest tax systems and freeze public sector wages in a bid to slash Greece's deficit from 12.7 percent last year to below the EU's 3 percent ceiling by 2012. "We will strike on Wednesday to defend our dignity, to put an end to our sacrifices on the altar of financial markets. These are pointless sacrifices," ADEDY President Spyros Papaspyros told a news conference.

Saugatuck Township asks voters to approve new tax to fight lawsuits seeking lower property taxes - (www.mlive.com) A ballot referendum for an 0.5 mill, two-year levy to build a $205,000 budget for fighting land issue in court will face township voters on the May 4 ballot. Township Board Trustee Jim Hanson said lawsuits by developers and people who trying to get property taxes reduced are draining the township's budget. During 2008-09, the township spent nearly $50,000 defending its regulations. This year, it has already chalked up $45,000 in legal fees to fend off a 40 percent tax reduction case brought by Singapore Dunes LLC on a $20 million piece of land that was formerly of the Denison estate. "If our voters want us to continue defending our land use policies and fair taxation, they're going to have to let us know by voting for this millage," Trustee Chris Roerig said. If approved, the millage would cost homeowners $50 a year on a $200,000 market value home.

European Central Bank in a Squeeze - (www.nytimes.com) ther he likes it or not, Jean-Claude Trichet is not just the president of the European Central Bank. Mr. Trichet, 67, is also the de facto president of Europe, at least for the 16 nations that rely on the euro as their common currency. On paper, the European Union has just established a new president in Brussels, and the central bank’s sole responsibility is to keep inflation in check. Moreover, the bank, based here, has almost no formal policy tools to help an ailing member country like Greece. But as investor alarm about Greek, Spanish and Portuguese indebtedness increases, the crisis has highlighted the fundamental weakness of the European monetary union. With no strong political arm to ensure that members observe debt limits set by treaty, the responsibility falls to Mr. Trichet to try to resolve the crisis. In the current situation, said Jörg Krämer, chief economist at Commerzbank in Frankfurt, only the bank’s president “has the authority and the expertise” to manage the situation.

TrimTabs: Here's Why The Real Jobs Loss Number Was 5x Worse Than What The BLS Reported - (www.businessinsider.com) TrimTabs thinks the jobs data was MUCH worse than what the numbers suggested this morning. TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 104,000 jobs in January. Meanwhile, the Bureau of Labor Statistics (BLS) reported the U.S. economy lost 20,000 jobs. We believe the BLS has underestimated January’s results due to problems inherent in their survey techniques. In addition to their regular report, the BLS published benchmark revisions to their employment estimates derived from an actual payroll count for March 2009. As a result, job losses from April 2008 through March 2009 were revised up a whopping 930,000, or 23% from their earlier revisions. In addition, the BLS revised their job loss estimates for 2009 up 617,000, or 14.8%. While the BLS originally reported job losses of 4.2 million in 2009, TrimTabs reported 5.3 million, a difference of more than a million lost jobs. We consistently reported that based on real-time tax data, job losses were much higher than the BLS was reporting. This past January, the BLS revised their job loss estimate to 4.8 million, an increase of almost 600,000 lost jobs. The new total brought the BLS’ revised estimates much closer to TrimTabs’ original estimate based on real-time tax data.

OTHER STORIES:

Is Trichet the De-Facto President of Europe? - (www.cnbc.com)

Pimco Prefers German Bonds to US Treasurys - (www.cnbc.com)

World's Tallest Tower Lookout Suddenly Shut Down - (www.cnbc.com)

CIT Group Picks John Thain, Ex-Merrill Boss, as New CEO - (www.cnbc.com)

CVS Caremark Profit Tops View; Sales Fall Short - (www.cnbc.com)

Hasbro Profit Beats Street; Sees Growth in 2010 - (www.cnbc.com)

Testy Conflict With Goldman Helped Push AIG to Edge - (www.cnbc.com)

Toyota to Extend Recall to 2010 Prius Model Soon - (www.cnbc.com)

Corporate Bond Spreads Rise Most Since November: Credit Markets - (www.bloomberg.com)

Ailing securitisation market hits Citi asset sales - (www.ft.com)

Stock investors see threats from all directions - (finance.yahoo.com)

Geithner Says U.S. Will ‘Never’ Lose Aaa Debt Rating - (www.bloomberg.com)

Japanese Bank Lending Declines Most in Four Years - (www.bloomberg.com)

Asia Sails Smoothly Through Debt Waters - (www.nytimes.com)

Australia to End Bank Guarantee; Debt Costs May Rise - (www.bloomberg.com)

Fed to Bare Tightening Plan - (online.wsj.com)

Thain back from wilderness to head CIT - (www.ft.com)

Tuesday February 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

California Sheriff Takes Home $640,000 a Year; Automatic Muni Raises in SF; Oregon Pension Board Buries Head In Sand - (Mish at globaleconomicanalysis.blogspot.com) Double Dipping Sheriffs: Thoroughly disgusted minds are reading about sheriff officials double and triple dipping. Though highly unusual, the methods San Luis Obispo County’s two top sheriff officials have adopted to double and even triple their incomes are entirely legal. In an interesting twist, San Luis Obispo County Under Sheriff Steve Bolts is taking home between $640,000 and $772,000 this year in retirement benefits and an hourly salary, while his boss, Sheriff Pat Hedges, takes home $340,000, according to calculations based on dates provided by Bolts. “I can see people saying this is double or triple dipping,” Bolts said. “But this is the pension plan and I am not hiding anything. All of that money is mine anyhow.” The principal reason for Bolts’ hefty income is the Deferred Retirement Option Program (DROP). Adopted by the board of supervisors in October 2006, DROP allows county employees to simultaneously collect both their full wages and benefits along with their full retirement for a period of no more than five years. Currently, sheriff’s department personnel retire under a pension formula that allows members to retire at age 50 with 90 percent of their salaries. Question of Relativity: This kind of behavior will not change until public outcry forces it. Pray tell, exactly what does it take for the taxpaying public to revolt against this kind of union greed and arrogance? I have had several email exchanges with teachers who just do not get it, and thankfully many more who are interested in an actual discussion of the issues. The issue at hand is the defined benefit pension system is flat broke. The issue is NOT that police unions are worse (they are), firefighter unions are worse (they are), transportation unions are worse (they are), but rather what is actually mathematically supportable. All public unions are a problem. Inevitably I hear about "living wages". Well one of the reasons living wages are so high in the first place is unions (all of them) demand a free lunch (to varying degrees) that the private sector does not get.

Phoenix gives OK to 2% tax on food - (www.azcentral.com) Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year. The 2 percent food tax will take effect April 1 and expire after five years, though Mayor Phil Gordon said the council has the option of reversing its decision after it hears from the public during 15 budget hearings planned for this month. The tax on milk, meat, vegetables and other food purchased by shoppers will generate an estimated $12.5 million for the fiscal year that ends June 30. It will raise another $50 million for fiscal 2011. Food purchased with food stamps will not be taxed. The extra tax revenue means Phoenix will have more money in its coffers to help close a $241 million general-fund budget deficit through June 2011. Last week, budget officials proposed cutting $140 million in services. Other special funds for things like transit also could get money. City Manager David Cavazos proposed eliminating 1,379 citywide positions, including nearly 500 police officers and firefighters. Among the dozens of targeted cuts, libraries and senior centers would be closed, an after-school program would be dismantled, and bus and light-rail service would be significantly reduced. It's unclear exactly where the extra money would be allocated. On Feb. 9, Cavazos and other staff will offer options of how they can reverse proposed cuts using food-tax revenue. Phoenix shoppers who buy paper towels, toothpaste and other non-food items at a grocery store already pay an 8.3 percent sales tax, 2 percent of which goes to the city. But Phoenix has not taxed food items since the early 1980s.

Phoenix food tax increase a sign of failure - (www.goldwaterinstitute.org) On Sept. 11, 2007, Phoenix voters were asked to approve an 11 percent increase on the general sales tax that, it was promised, would result in 500 more police and firefighters. On Tuesday, the Phoenix City Council voted to impose a five-year, 2-cent sales tax on food purchased from grocery stores – to save the jobs of 500 police and firefighters. Media reports say Phoenix officials intend to use the food tax revenues to stop staffing cuts announced in January for the police and fire departments. Taxes are a poor substitute for doing the heavy lifting of re-thinking, reorganizing, and re-prioritizing government. Phoenix City Councilman Sal DiCiccio has pointed out that the average cost for a Phoenix city employee is $100,000. In just the past six years, the City of Phoenix budget grew by 59.6 percent, more than double the sum of inflation and population growth. The current economic downturn started early in 2007, but the fiscal 2010 budget was the first time that Phoenix actually reduced overall spending. Operating expenditures were cut by just 0.6 percent. The General Fund budget, currently only 44 percent of the total budget, saw its first reduction in fiscal 2009. Clearly, there is a failure by the City of Phoenix to address fundamental reform in the face of shrinking tax revenues. Public safety should be the city’s first priority for funding, not an afterthought that depends on the promise of additional taxes. Many of the funds in the city’s total budget are dedicated for various purposes such as public art. Phoenix Mayor Phil Gordon said it’s possible the council could cancel the food tax after hearing from the public during budget hearings in the next few months. Perhaps now is the time to ask the voters for their priorities.

Automatic Raises For Muni Drivers - (www.sfgate.com) So much for the idea of saving $8 million by having Muni drivers give up their raises next year. Even if Muni drivers were game, they can't forgo their raise because they are required in the city charter, which guarantees that they are the second-highest paid transit operators in the nation. The extra financial hit to the agency has not been factored into the minimum $52.7 million Municipal Transportation Agency deficit projected for the upcoming budget cycle. The new bit of information, which trickled out Tuesday, throws a crimp in the heated negotiations between the administration and Transport Workers Union Local 250-A to come up with cost-saving alternatives. With the raise issue off the table, the union is being pushed to consider other concessions, such as allowing Muni to use part-time drivers and ending or reducing premium pay benefits for such things as working at night or training other drivers. Or, Muni operators could start contributing to their retirement account. Supervisor Sean Elsbernd has another option: pass a proposed ballot measure he's pursuing for the June ballot that would remove the formula-based pay provision and make the pay scale for Muni operators subject to collective bargaining. Elsbernd's proposal, vehemently opposed by the transit union and generally given a cool reception from several of his colleagues and the mayor, will be considered by the Rules Committee on Thursday for placement on the ballot.

Oregon Public pension board to vote on employer rate increases - (www.oregonlive.com) Under current rate-setting rules, public agencies and the taxpayers that support them face a 170 percent spike in biennial pension contributions starting in 2011 -- a collective $1.5 billion budget hit -- to start digging out of the pension fund's actuarial hole. The market plunge lopped $17 billion off the value of the Oregon Public Employee Retirement Fund. Despite a strong recovery last year, the $51 billion fund still has a shortfall of approximately $14 billion, with 75 cents in assets for every $1 in liabilities. The board has been lobbied by public employers and unions to temper any rate increases because of the impact on the already strained budgets of municipalities, school districts and public agencies across the state. The dilemma is whether it can do so without further compromising the funded status of the system or pushing the obligation off on future generations. PERS-covered employers currently pay an average rate of 12.4 percent of payroll to cover retirement benefits. The system has a contribution rate collar that normally limits rate changes to 3 percent of payroll per biennium. But when individual employer's funded status is less than 80 percent the collar doubles, and their rates jump by 6 percent of payroll costs. A 6 percentage point increase would leave average employer rates above 18 percent in 2011. The depressing reality in Mercer's models is how little the increased contributions under either the current or revised policy actually budge the system's funded status. Even if the pension fund's investments earn 8 percent annually for the next decade, the system's funded status only reaches the 80 percent level in 2019. If that's the case, employers will face further rate increases in 2013 and 2015.

OTHER STORIES:

Real Estate Is Top Giver to Cuomo Campaign - (www.cityroom.blogs.nytimes.com)

U.S. May Lose 824,000 Jobs as Employment Data Revised - (www.bloomberg.com)

Know your asset bubbles - (www.theprovince.com)

Biggest Bubble in History: China's currency reserves - (www.bloomberg.com)

House Hunting in ... Amsterdam - (www.nytimes.com)

Sales of pricey California houses drop - (www.latimesblogs.latimes.com)

Foreclosures soar in Chicago in fourth-quarter - (www.chicagotribune.com)

3 identical houses on same street - (www.doctorhousingbubble.com)

Fannie, Freddie Hold Plenty Off the Books - (www.thestreet.com)

Walking Away From Underwater Mortgages Is Perfect Capitalism - (www.theatlanticwire.com)

Bailouts Are Incentive To Stop Paying Mortgage - (www.seekingalpha.com)

Former Bank of America CEO Charged With Fraud By Cuomo - (Mish at globaleconomicanalysis.blogspot.com)

Space: It's Still a Frontier - (www.opinionator.blogs.nytimes.com)

It Is Mathematically Impossible To Pay Off U.S. National Debt - (www.theeconomiccollapseblog.com)

Future of the dollar - (www.atimes.com)

Fannie Violates Own Policy by Throwing Tenants Out After Foreclosure - (www.tenantstogether.org)

Leaders put too much stock in encouraging people to "own" houses - (www.dailyastorian.info)

Canadian Moral Superiority - Prudent Housebuyers - (www.catharticranter.blogspot.com)

Double standard in mortgage walkaway - (www.insidebayarea.com)

Image made by patrick.net readers Rick and Donna - (www.patrick.net)

Monday February 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Goldman Sachs and Lloyd Blankfein (doing God’s work) Helped Push A.I.G. to Precipice - (www.nytimes.com) Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months. A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world’s biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer. A.I.G. executives wanted some of its money back, insisting that Goldman — like a homeowner overestimating the damages in a storm to get a bigger insurance payment — had inflated the potential losses. Goldman countered that it was owed even more, while also resisting consulting with third parties to help estimate a value for the securities. After more than an hour of debate, the two sides on the call signed off with nothing settled, according to internal A.I.G. documents and an audio recording reviewed by The New York Times. Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in. With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

How Unions Destroyed Greece; Union Greed and Gall in Nevada; Union Protests In Utah; Taxes on Food in Phoenix - (Mish at globaleconomicanalysis.blogspot.com) The New York Times has an interesting article Is Debt Trashing the Euro? It could easily be subtitled How Unions Destroyed Greece. The same thing is happening here. Let's take a look. DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year. “Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.” As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget. “The risk of contagion is a real one,” said Scott Thiel, the head of European fixed income at the asset management firm BlackRock in London. “Investor sentiment is now focused on countries like Spain and Portugal, where fundamentals are weakest.” He said that for now, he saw little risk for Italy, given the relative stability of its economy. “We have a centralized monetary policy, but we allow budgets and wages to move in different directions,” said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. “Without a political union, in the long run the euro zone cannot last.” Indeed, as core economies like those of France and Germany show signs of economic recovery, Greece, Portugal, Ireland and Spain are just entering savage recessions. Spain, the largest of the peripheral economies, announced last week that the number of its unemployed had reached four million — the highest in its history — and warned that the country’s deficit might be worse than previously thought. TO be sure, Mr. Damianidis is among the smallest of actors in this saga. Yet his sense of entitlement shows how hard it will be for governments in Portugal, Spain and Italy to persuade their citizens to accept cuts demanded by Brussels as well as bond investors. Yet his sense of entitlement shows how hard it will be for governments in Portugal, Spain and Italy to persuade their citizens to accept cuts demanded by Brussels as well as bond investors. The bonuses, he concedes with a smile, have nothing to do with his skill as a high school teacher. “Over the years, whenever workers would strike, they would in some cases get a bonus,” he said, as he sat in a local union office here. For decades, both conservative and socialist governments in Greece have rewarded the demands of public sector unions with higher pay and more jobs. In 2009, striking farmers were paid 400 million euros by the government — and this year they are back again, having briefly closed Greece’s border with Bulgaria. Protesting dockworkers extracted big payouts from the government in November. And the country’s tax collectors went on strike on Thursday even though their services are needed more than ever.

G7 talk on Greece will not soothe global investors - (www.reuters.com) Investors are skeptical of assurances European finance ministers gave to their Group of Seven counterparts this weekend that the euro zone's debt crisis is under control. The 16-country currency bloc is facing its biggest ever test after concerns about Greece's huge public debt and deficits spread to several other euro zone countries, pushing the euro to a near nine-month low against the dollar. A sell-off of Greek, Portuguese and Spanish debt last week, which hurt global stock markets, pushed Greece's debt woes onto the agenda of the meeting of Group of Seven rich nations' finance ministers and central bankers in Canada's remote north. European ministers told their G7 peers on Saturday they would make sure Greece sticks to its budget-cutting plan. European Central Bank President Jean-Claude Trichet issued a statement to express confidence in that plan while U.S. Treasury Secretary Timothy Geithner said the Europeans "made clear to us they will manage this with great care."

Ailing securitisation market hits Citi asset sales - (www.ft.com) The securitisation market’s failure to recover from its slump during the crisis is complicating efforts by Citigroup and other troubled financial groups such as AIG to sell unwanted assets and repair their balance sheets, bankers and executives say. People close to the situation said that Citi had opened talks with private equity groups and hedge funds over the sale of $3bn-worth of car loans as part of its efforts to cleanse its balance sheet of billions of dollars in troubled assets. To make the business more attractive, Citi is believed to have offered to provide the buyers of the loans with finance for a few years after the sale. Bankers said that the initial response from potential bidders had been encouraging. Some of the Citi loans have already been securitised under the term asset-backed securities loan facility (Talf), a US government programme aimed at supporting the ailing securitisation market. However, some private equity groups and hedge funds that have looked at the assets said that the lack of a thriving market for securitised bonds, which are backed by cash flow from loans, made the assets less attractive. They added that the absence of a fully functioning securitisation market increased the uncertainty over how buyers could fund the loans once Citi’s credit facility expired. “Private equity can’t make a bid on anything where the business model requires a bet that the external funding markets and securitisation comes back,” said the head of capital markets at a big private equity firm.

Out of work, burnt out, giving up - (money.cnn.com) Amy Shropshire; Age: 29; Hometown: Columbus, Ohio; Job wanted: Marketing manager; I've been looking for work since July 2007 but haven't applied to a single job in about 6 months. I graduated with my M.A. in marketing July 2007 in London and decided that I would look for a job there. I applied for about 400 jobs. I had three interviews but I knew that not having a visa, it would be difficult. I moved back to the U.S. in June 2008 and spent a few months coming to terms with moving back in with my parents, but started diligently applying for jobs a few months later. I kept track -- since then I've applied for 759 jobs, have heard back from 23, and interviewed with two. I have 6 years experience in project management in the nonprofit sector. But even when friends pass along jobs to me, I just don't get excited about them anymore, knowing that odds are I'll do all this work putting something together and not even get an acknowledgment from the company. A few months ago, I just stopped looking because I've been doing volunteer work to try to keep my skills up and am putting in over 40 hours a week doing that.

UNION PROTEST: Education supporters rail at rally - (www.lvrj.com) raucous crowd of more than 600 teachers and parents blasted potential state budget cuts for K-12 education during a rally Saturday at Chaparral High School organized by the Clark County Education Association, the teachers' union. While state Democratic leaders and school and union officials all spoke, some of the biggest applause lines were shouted from the gymnasium bleachers. Audience members chanted "Recall (Gov. Jim) Gibbons" and called the Review-Journal "a rag" after Stephen Augspurger, director of the principals' union, the Clark County Association of School Administrators, cited opposition from the "R-J editorial board." Thirteen-year-old Jakob Brounstein, an eighth-grader at Hyde Park Middle School, stole the limelight with a speech he said was inspired by Martin Luther King Jr. and President Barack Obama. Brounstein told the assembled that America had grown too decadent to support education. "It seems America's brightest minds are its least valued," he said. Signs like "Will teach for food" and "A pay cut is a tax increase" expressed anger at the governor's recommendation to cut teachers' salaries by 6 percent to help close a budget gap brought on by the economic crisis. Another sign, "Taxes not axes," uttered what was missing from politicians' speeches: the mention of any new taxes. The sign holder was Joan Kissling, a science teacher at Brinley Middle School.

OTHER STORIES:

Recovery, debt woes to hound stocks - (www.reuters.com)

Stock investors see threats from all directions - (finance.yahoo.com)

Financial overhaul hits partisan obstacle - (www.latimes.com)

Is Debt Trashing the Euro? - (www.nytimes.com)

G-7 Vows to Keep Economic Stimulus Even as Budget Deficits Grow - (www.bloomberg.com)

G7 agrees banks must help pay crisis costs - (www.reuters.com)

US shoppers splash out on luxury items - (www.ft.com)

This Crisis Won’t Stop Moving - (www.nytimes.com)

Prius brake fix near, Toyota tells dealers - (money.cnn.com)

Obama pushes Congress for small biz action- (money.cnn.com)

Madoff's penthouse has a buyer -- peek inside - (money.cnn.com)

Goldman's Blankfein collects $9 million bonus - (money.cnn.com)

Chase CEO gets $16 million bonus - (money.cnn.com)

America's Biggest Ripoffs - (money.cnn.com)

Meet the market's 10 biggest losers - (money.cnn.com)

Alan Greenspan fights back - (money.cnn.com)

Sunday February 21 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Villaraigosa orders 1,000 city job cuts - (www.latimes.com) Stubborn and clueless Villaraigosa finally gets a clue, as city is on verge of bankruptcy. Los Angeles Mayor Antonio Villaraigosa moved Thursday to eliminate 1,000 city jobs and begin planning layoffs of city employees, one day after the City Council failed to muster the votes to do so to deal with an ongoing budget crisis. “We’re living beyond our means, we have difficult choices to make, we must protect our economic future,” Villaraigosa said during a late afternoon news conference. “Unfortunately, instead of making progress, we are headed in the wrong direction. That ends today.” “If you think I’m not going to move ahead, you don’t know me well,” Villaraigosa told reporters. “I don’t do this because I want to, I do this because I must.” A day after the City Council delayed action on the job cuts for 30 days, Villaraigosa sent a letter to department heads stating he would first use powers provided within the City Charter to eliminate jobs, moving as many employees as possible to other vacant positions. Two city officials said the mayor’s layoff action would most immediately apply to members of the Engineers and Architects Assn., which represents roughly 6,500 city employees, as well as workers who are not represented by any union. The city’s labor agreement bars Villaraigosa from laying off workers with the Coalition for L.A. City Unions, which represents another 22,000 civilian employees. That process cannot occur until July 1 at the earliest.

Kaptur Exposes Tim 'Goldman Sachs' Geithner - (www.dailybail.com) Great video of Congresswoman Marcy Kaptur ripping Tiny Tim Geithner a new one. Video: Congresswoman Marcy Kaptur questions Turbo on AIG, Goldman Sachs, and NY Federal Reserve actions regarding AIG counterparty payouts at PAR. It shows Geithner looking like a Goldman shill.

Kaptur: A lot of people think that the president of the New York Fed works for the U.S. government, but in fact, you work for the private banks that elected you. Can you provide —
Geithner: No, that is not true.
Kaptur: Can you provide for the record the names of the bankers that elected you in 2002?
Geithner: That is a matter of public record, and of course we can do that.
Kaptur: Thank you. Goldman —
Geithner: But Congresswoman, can I just say, what you just said is not true. I work for the public interest, officials in the Federal Reserve work for the public interest and they for the government.
Kaptur: But the people don't elect you, the heads of the Fed around the country don't elect you, it's the individuals that sit on the board of the New York Fed that elect you.
Geithner: It's slightly more complicated than that. [Geithner smirks, then slowly continues in a manner that distinctly says, "Let me speak slowly, so that it sounds like I'm being helpful when, in fact, I'm trying to figure out ways to have you locked in a vault beneath the Treasury Department.] You see, what the Congress did in setting up the Fed, is set up a system where the presidents of the regional reserve banks are elected by the board but it requires the approval of the chairman of the board in Washington for them to serve. It's a delicate system of checks and balances, and Congress designed that system. [Cocks an eyebrow: Isn't that interesting, Marcy? People just like you! Well, not exactly like you. Smarter.]
Kaptur: Yes, but it was largely private banks that elected you and I would like you to admit that for the record.
Geithner: Yes, that is a matter of public record.
Kaptur: Uh, number three: Goldman Sachs was the largest domestic recipient of funds, in this AIG counterparty arrangement. Let me ask you, your chief of staff is the gateway for access to you. Can you provide his name?
Geithner : [Lifts eyebrow, affects exaggerated patience.] His name is Mark Patterson?
Kaptur: And, um, for whom did he work before you selected him as your chief of staff?
Geithner: He worked for the president's transition team.
Kaptur: No, who did he work for before that?
Geithner: [Eye roll] Before that—and this is a matter of public record and you know the answer to this question—he worked for Goldman Sachs, but —
Kaptur: Thank you.
Geithner: But Congresswoman — [Getting pissed.]
Kaptur: Thank you, Mr. Secretary, you answered the question.
Geithner: But Congresswoman —
Kaptur: [Lifts hand.] YOU ANSWERED THE QUESTION.
Geithner: But —
Kaptur: YOU ANSWERED THE QUESTION!

Kaptur later called Geithner's performance weak and said it showed that "he shouldn't have been appointed in the first place." "but removing him would be an empty change without eliminating the revolving door between Washington and Wall Street."

Stocks Plunge Risk at Highest Since April 1984 - (www.bloomberg.com) Expectations that U.S. stocks will tumble 10 percent or more rose to highest level since April 1984 this week, according to Investors Intelligence’s weekly survey of newsletter writers. The proportion of investment writers who anticipate a so- called correction climbed to 38.9 percent in the week ended yesterday, an increase from 36.7 percent in the period ended Jan. 27. The New Rochelle, New York-based company has tracked the projections of newsletters since 1963. Mohamed A. El-Erian, whose firm runs the world’s biggest mutual fund, said today that the largest stock market decline in 11 months may worsen amid persistent U.S. joblessness and economic growth that trails analysts’ forecasts. “Investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes,” El-Erian, 51, wrote in a column published by Bloomberg News. He is the chief executive officer of Pacific Investment Management Co., which manages $1 trillion from Newport Beach, California.

It's now official government policy to overcharge house buyers - (www.housingwatch.com) With home prices continuing to plummet every month, it may be hard to believe. But it's now officially government policy to keep those home values as high as possible. And Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program, doesn't like it one bit. In his latest quarterly report to Congress, Barofsky accuses the Obama administration of recklessly reinflating the real estate bubble in an attempt to keep the housing market going and prevent the collapse of financial institutions. SIGTARP -- not a Bond villain but Barofsky's shorthand title -- sums up all the sundry spending in one handy place. The Federal Reserve has been buying mortgage-backed securities and other mortgage-related debt in enormous volume, projected to reach $1.2 trillion by the time the effort expires at the end of March. Treasury is spending hundreds of billions more to capitalize Fannie Mae and Freddie Mac, so the agencies can continue to finance home mortgages. Congress has extended the $8,000 tax credit for first-time homebuyers and added a $6,500 credit for existing owners buying new homes. And while Treasury's $75 billion Home Affordable Modification Program is designed to forestall foreclosure for homeowners, its direct (and intended) effect is to keep home prices high.

Mortgage lenders "pursue" homedebtors even after foreclosure - (money.cnn.com) As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right? Wrong. Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes. It can even happen to people who got their bank to approve them selling their home for less than it is worth. Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it. "My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."

California Deadbeats Ditch Their Mortgage, And Save Their Cash For Their Credit Card Bills – (www.businessinsider.com) Credit history company TransUnion has found that Americans are shifting their priorities when it comes to paying down debt. Consumers are paying down their credit cards while ignoring their mortgage payments. The company's most recent study found that a rising percentage of Americans are current with their credit cards but delinquent on their mortgage payments. At the same time, a falling percentage are deliquent on their credit card while current on their mortgage. Moreover, this shift in debt payment priorities has been most striking in California and Florida:

OTHER STORIES:

As Values Slide, More Weigh Walking Away From Mortgages - (www.nytimes.com)

Banks Desperately Trying To Scare Debtors? - (www.patrick.net)

More Borrowers Pay Credit Card Than Mortgage - (www.finance.yahoo.com)

Forget The "Flat" Pending House Sales Number, Here's The Real Disaster- (www.businessinsider.com)

5 Million Houses Will be Worth Less than 75% of Mortgage - (www.dailyfinance.com)

Why We Keep Getting Poorer: High-Cost Housing - (Charles Hugh Smith at www.oftwominds.com)

Source of 23.7 Trillion Bailout Cost? SIGTARP Report Summary - (www.geldpress.com)

For Fannie and Freddie, the Future Looks Cloudy - (www.nytimes.com)

The Future of Housing Demand: 4 Key Demographic Trends - (www.usnews.com)

California State Debt Yields May Revisit 2009 Peak - (www.Read: Trouble)- (www.bloomberg.com)

Ford rolls out software fix for hybrid brakes - (money.cnn.com)

Ex-BofA chief Lewis charged with fraud - (money.cnn.com)

$14.3 trillion - New limit on U.S. borrowing - (money.cnn.com)

Poof: 800,000 more jobs disappear - (money.cnn.com)

Where rent is cheap and jobs (sort of) plentiful - (money.cnn.com)

Experian sued over FreeCreditReport.com - (money.cnn.com)

Saturday February 20 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Largest-ever federal payroll will hit 2.15 million - (www.washingtontimes.com) The era of big government has returned with a vengeance, in the form of the largest federal work force in modern history. The Obama administration says the government will grow to 2.15 million employees this year, topping 2 million for the first time since President Clinton declared that "the era of big government is over" and joined forces with a Republican-led Congress in the 1990s to pare back the federal work force. Most of the increases are on the civilian side, which will grow by 153,000 workers, to 1.43 million people, in fiscal 2010. The expansion could provide more ammunition to those arguing that the government is trying to do too much under President Obama. "I'm shocked that the 'tea party' hasn't focused on it yet, and the Obama administration only has a thin sliver of time to deal more directly with it, I believe," said Paul C. Light, who studies the federal bureaucracy as a senior fellow at the Brookings Institution and a professor at New York University. "When you talk about big government, you're talking about a big employer."

School Crisis In Nevada; Governor Seeks To Cancel Collective Bargaining With Schools Because The State Is Broke – (Mish at globaleconomicanalysis.blogspot.com) Nevada has an $881 million budget deficit and drastic cuts are on the horizon for education. Governor Gibbons is investigating options of canceling collective bargaining agreements with school districts. Unfortunately that maneuver is likely illegal. State revenue shortfall $881 million: It's official. The state government revenue shortfall that legislators and the governor must eliminate through spending cuts later this month is $881 million. State Budget Director Andrew Clinger said today that the shortfall has been formally calculated at $881.4 million, which would necessitate a 20.2 percent cut in state spending between March and June 30, 2011. Legislators so far have not said where they want to reduce spending. They are scheduled to meet with Gibbons' staff later today, when they will be given the governor's proposed list of cuts. So far, Gibbons has announced publicly he will support no more than a 6 percent cut in state employee salaries, a 10 percent reduction in public education spending, and layoffs of 300 state employees. He also wants to temporarily suspend collective bargaining rights for school employees and to close the Nevada State Prison in Carson City.

Moody’s warns US of credit rating fears - (www.ft.com) Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit. In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”. Steven Hess, senior credit officer at Moody’s, said the deficits projected in the budget outlook presented by the Obama administration outlook this week did not stabilise debt levels in relation to gross domestic product. “Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note. This week, the White House forecast a $1,565bn budget deficit for 2010, which represents 10.6 per cent of gross domestic product and is the highest such ratio of debt to GDP since the second world war.

Greece unveils austerity measures - (news.bbc.co.uk) Greek Prime Minister George Papandreou has announced tough austerity measures aimed at cutting his country's soaring public debt. Mr Papandreou said a public sector pay freeze and fuel duty increases were essential because the economic crisis was propelling Greece towards a cliff. He said the EU was pressuring him to curb the budget deficit, which is four times higher than the 3% permitted. The European Commission will meet later on Wednesday to consider his measures. Earlier, one of the principal architects of the euro warned against any financial rescue of Greece, saying it could destabilise the currency. The German economist Otmar Issing told the BBC that after years of violating rules and cheating on its statistics, Greece had to reform its own economy without a bailout from Brussels. "These reforms which are needed will be blood and tears... but without that, Greece will never overcome the difficulties," he said. 'Unprecedented crisis': In a televised address on Tuesday, Mr Papandreou urged the public and his political rivals to support his austerity programme. "This is an effort to stop the country's course towards the cliff," he said.

Greek officials strike over cuts - (news.bbc.co.uk) Customs officials and tax inspectors in Greece are holding a two-day strike to protest against government austerity measures, including wage cuts. The strike is disrupting Greece's import market, with lines of trucks being held at the country's borders. The austerity measures have been introduced to try and tackle Greece's huge budget deficit and national debt. The EU approved the plan on Wednesday, but insisted on inspecting Greece's notoriously unreliable accounts. Part of the government's plan relies on tax collectors recovering billions of euros lost to tax evasion. The BBC's Malcolm Brabant in Athens says the tax inspectors are the most feared people in Greece, with the power to descend on any business without warning and go through the books. They have a vital role in Greece's economic recovery, which is contingent on clawing back as much tax as possible, adds our correspondent. On Tuesday, Greek Prime Minister George Papandreou announced a public sector salary freeze, a higher retirement age and a hike in petrol prices. Other measures already announced include the non-replacement of departing civil servants and the tax crackdown. Greece is one of several EU countries struggling with a gaping deficit and heavy debt, preventing them from spending their way out of recession.

UK halts $320bn stimulus scheme - (news.bbc.co.uk) The Bank of England has decided against further quantitative easing (QE), the policy designed to stimulate growth in the UK economy. Under QE, the Bank has pumped new money into the economy by buying assets such as government bonds, as a way to boost lending by commercial banks. Last week, it revealed it had spent all of the £200bn it created for QE. The Bank also kept interest rates on hold at a record low 0.5% for the 11th consecutive month. 'Further purchases': While halting QE, the Bank said the £200bn already injected into the economy through the programme would "continue to impart a substantial monetary stimulus to the economy for some time to come". But it did not close the door on further spending. "[The Bank] will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them." One area that it will be looking at is banks' lending to businesses and consumers, as QE was designed to help boost lending.

Not Another Wall Street Conspiracy Theory, These are Facts - (www.moneymorning.com) What the House Committee heard, overwhelmingly, on Wednesday was that AIG had to be bailed out because if it wasn't, the financial implosion that would result would send unemployment to 25% and America into the tailspin of another Great Depression. U.S. Treasury Secretary Timothy Geithner and former Treasury Secretary Henry M. "Hank" Paulson Jr. both testified that the systemic risk resulting from the bankruptcy of AIG would destroy the company's insurance businesses, devastating millions of Americans and resulting in economic ruin. Let's start there. The reality is that at the time of the government's initial $85 billion infusion into AIG on Sept. 16, 2008, for which it received a 79.9% ownership interest, there was no mention of AIG's endangered insurance subsidiaries. In fact, New York Insurance Superintendent Eric Dinello, who oversaw AIG's insurance businesses, was confident enough in the subsidiaries to consider transferring $20 billion in excess reserves from the insurance subsidiaries to their AIG parent. What was really sucking the life out of AIG were collateral demands - in other words, margin calls. A wholly owned, London-based financial-products subsidiary of AIG had written hundreds of billions of dollars ofcredit-default-swap contracts on exotic collateralized debt obligations (CDOs). The derivative swaps on the CDOs were insurance policies that would protect the buyers of those CDOs against losses on underlying subprime mortgage pools. As losses on subprime mortgages mounted, the insured parties demanded more collateral from AIG. AIG ran out of cash to make the collateral calls.

OTHER STORIES:

Sovereign debt worries rattle investors - (www.ft.com)

China curbs companies’ capital raising - (www.ft.com)

Shanghai Bad-Loan Ratio Would Triple With 10% Home Price Drop, CBRC Says - (www.bloomberg.com)

New Zealand Unemployment Rate Soars to 7.3%, Highest in More Than 10 Years - (www.bloomberg.com)

Banks concede reform is inevitable - (www.ft.com)

Cisco data signal ‘second phase of recovery’ - (www.ft.com)

Airbus, Boeing Forecast Plane Sales to Slump Until 2012 on Global Slowdown - (www.bloomberg.com)

Pacifica, CA Property Values Plummet - (www.pacificariptide.com)

Observations on SF East Bay Housing Market - (www.taxhome.blogspot.com)

Hawaii bankruptcy filings up 32.7% compared with January 2009 - (www.starbulletin.com)

Rising FHA default rate foreshadows a crush of foreclosures - (www.washingtonpost.com)

Distress Inventory Still Dominating Market In CA - (www.financemymoney.com)

China Property Market Bubble Set to Burst - (www.bloomberg.com)

The Chinese Real Estate Bubble - (www.businessinsider.com)

China Regulator Said to Seek to Curb Third Mortgages - (www.bloomberg.com)

Warning of new housing crash because FSA's reform plan too weak- (www.timesonline.co.uk)

Obama Added a New Twist to Financial Reform Talk - (www.nytimes.com)

The Bernanke Reappointment: Be Afraid, Very Afraid - (www.globalresearch.ca)

Fiscal Stimulus in a Real Depression - (www.dailyreckoning.com)

Our debt time bomb is ready to go ka-boom - (www.marketwatch.com)

A Decade of Enormous Deficits May Alter American Politics and Power- (www.nytimes.com)

Corporation Mulls Bid for House Seat - (www.miller-mccune.com)