Monday September 27 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

We're $12.3 Trillion Poorer Than We Were Three Years Ago - (www.businessinsider.com) The Federal Reserve released the Q2 2010 Flow of Funds report yesterday: Flow of Funds. According to the Fed, household net worth is now off $12.3 Trillion from the peak in 2007, but up $4.7 trillion from the trough in Q1 2009. This is the Households and Nonprofit net worth as a percent of GDP. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. Note that this ratio was relatively stable for almost 50 years, and then we saw the stock market and housing bubbles. This graph shows homeowner percent equity since 1952. Household percent equity (as measured by the Fed) collapsed when house prices collapsed in 2007 and 2008.

Labor Tries to Organize Carwashes in Los Angeles - (www.nytimes.com) The carwashes of Los Angeles would appear to be an unlikely target for a unionization drive. Many of the estimated 10,000 workers in the business here are illegal immigrants, who are too scared to speak out or give their bosses any excuse to fire them. Many carwash companies have just two or three outlets, not 20 or 30, requiring scores of separate organizing efforts. And carwash owners, who invest a million dollars or more in each facility, are fiercely resisting the prospect of being tied down by collective bargaining and union rules. Nonetheless, labor organizers have set out to unionize this city’s carwash workers, hoping to improve their paltry pay and end widespread abuses. The unions, led by the United Steelworkers, acknowledge that it is a struggle, but they voice confidence that they can organize the first carwashes in the next few weeks or months, and that this will start a domino effect once other owners realize that unionized businesses can survive and even thrive. California officials have estimated that two-thirds of the 500 carwashes in Los Angeles violate workplace laws. Many workers say they are paid just $35 for a 10-hour workday — less than half the minimum wage — and some say they are not paid for time during which no cars go through the wash. Others complain that they are not given gloves or goggles even though they often use stinging acids to clean tire rims.

Legislators feeling sting of Illinois' deadbeat ways - (www.herald-review.com) State Sen. Dave Luechtefeld was in session in Springfield earlier this year when he got a call from the secretary in his district office. She was calling from her cell phone because the district office phones, which are paid for by the state of Illinois, had been disconnected for nonpayment. "That was the first time," recalled Luechtefeld, R-Okawville. His office phones were later cut off again, with the state still months behind in paying for the service. He's now getting renewed threats from the phone company of a third cutoff. "It's laughable," he said, "but it's not." It's the same story at the district offices of Illinois' elected legislators across the state: Phone, utilities, garbage and rent payments months behind, prompting a monthly flurry of terse late notices and cutoff threats to offices with the state emblem on the doors. Of course, in a state where teachers are getting laid off, hospitals are struggling and small businesses are failing because the state isn't paying its bills, the office budget plight of a relative handful of politicians isn't going to cause anyone to take to the streets. But the news of a northern Illinois legislator who was forced to shut down her district office because the state had stiffed her landlord for so long certainly drives home the depth of Illinois' $13 billion budget crisis

Teachers union has labor trouble of its own - (www.dispatch.com) Ohio's largest teachers union is having labor problems of its own. Labor-relations consultants, who help local teachers unions negotiate contracts with school districts, and other employees of the Ohio Education Association walked off the job this morning. Most of the 110 striking workers - all members of the OEA's Professional Staff Union - earn more than $100,000 a year, according to reports filed with the U.S. Department of Labor. For instance, labor-relations consultants - who make up about 80 percent of the striking workers - were paid an average salary of $111,350 in 2009. That is about $10,000 more than the average Ohio school-district superintendent made last school year, and more than double what the average teacher made, according to the state statistics.

Union-Led Group Halts Ads Attacking Whitman in California Race - (www.bloomberg.com) A union-funded group that spent almost $9 million on negative advertising targeting Meg Whitman, the Republican running for governor in California, has suspended its campaign, designed to help Democrat Jerry Brown. The ads were halted because Brown, the state attorney general, has kept competitive with Whitman, a billionaire who has dug into her personal fortune to finance her campaign, according to members of the group.
One ad accused Whitman of raising fees and creating “huge losses from failed mergers” while chief executive officer of EBay Inc. “It’s rock-solid proof that there is seamless coordination between what is essentially the same political organization: Jerry Brown and the government unions that control him,” Andrea Rivera, a Whitman campaign spokeswoman, said by e-mail.

OTHER STORIES:

Christie Will Propose New Jersey Pension Rollback - (www.bloomberg.com)

Trimet and taxpayers: Bus riders' dismay grows one nickel at a time - (www.oregonlive.com)

Here's Why Ford Is Surging And You Need To Take Notice - (www.businessinsider.com)

DEFLATION? Who Are They Kidding? Commodities Prices Are Going Through The Roof - (www.businessinsider.com)

Cardholders Prefer Debit as Credit-Card Use Falls - (www.bloomberg.com)

Another Taxpayer Handout to Organized Labor - (www.heritage.org)

Why Ben Bernanke Should Completely Ignore The Commodity Inflation All Around Him - (www.businessinsider.com)

Britain's Former Treasury Chief Blames The Germans For Sovereign Debt Chaos - (www.businessinsider.com)

Recessions Will Be Far More Frequent Now That The Debt Super Cycle Is Over - (www.businessinsider.com)

Sunday September 26 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

SEIU Helps Bank Workers Become Whistleblowers - (www.huffingtonpost.com) Union's new campaign part of larger effort to unionize banks. One of the best kept secrets of the financial reform bill passed in July is tough whistleblower laws to protect bank workers who expose shady lending, credit card and fee practices. But do U.S. bank workers actually know about the new protections? A new Service Employees union campaign aims to make sure they do. SEIU is launching a campaign encouraging bank customers to do two things when at the bank, says SEIU Financial Director Stephen Lerner. "One: do your normal banking. And then two, inform bank workers of their rights under the new whistleblower laws." The union is encouraging its members, community allies, and activists to print up these whistleblower fliers and give them to tellers and personal bankers anytime they're banking.

Audit of Federal Stimulus Funds in Los Angeles Shows $111 Million in ARRA Grants Has Only Created 55 Jobs - (www.huffingtonpost.com) I released two very disappointing audits today of how the City of Los Angeles has used American Recovery and Reinvestment Act (ARRA) funds. The audits looked at the how the two departments that have received the largest amount of ARRA funding so far - the Department of Transportation (LADOT) and the Department of Public Works (DPW) - have used those funds and how many jobs were created. Los Angeles has become the largest City in America to conduct an audit of how ARRA funds have been expended. DPW has received $70.65 million and created or retained 45.46 jobs, though they are expected to create 238 jobs overall (the fraction of a job created or retained correlates to the number of actual hours works). LADOT has been awarded $40.8 million and created or retained 9 jobs, though they are expected to create 26 jobs overall. Overall, the Departments have received $111 million in federal stimulus funds out of the $594 million the City has been awarded so far and created or retained 54.46 jobs. I'm disappointed that we've only created or retained 55 jobs after receiving $111 million in ARRA funds. With our local unemployment rate over 12% we need to do a better job cutting the red tape and putting Angelenos back to work.

New York Pension Fund Drop = Tax Rise - (www.timesunion.com) Mandatory pension contributions for the state as well as municipalities -- including cities, towns and counties -- will jump 37 percent within two years thanks to a drop in the value of the recession-battered pension fund, Comptroller Thomas DiNapoli said Thursday. And that likely means higher property taxes, deep cuts, or a combination of the two are just around the corner. "Unfortunately, it takes the economy a lot longer to climb out of a hole than it takes to fall in it," DiNapoli said when he announced the rising contributions. The percentage of their payrolls that governments will have to pay toward pension benefits will rise from an average of 11.9 percent to 16.3 percent for the payments due in February 2012. Many municipalities make that payment several months earlier to get a modest discount. For police and firefighters, who are in a different, more generous pension system, the contribution will go from 18.2 percent of payroll to 21.6 percent. That's a 19 percent rise. The bad pension news was pounced on by Republican Harry Wilson, who is challenging Democratic incumbent DiNapoli for the comptroller's job.

NJ gov. decries generous `fairy-tale promises' - (finance.yahoo.com) After telegraphing his intentions for months, Christie spelled out the details of his proposal Tuesday. They include: repealing an increase in benefits approved years ago; eliminating automatic cost-of-living adjustments; raising the retirement age to 65 from 60 in many cases; reducing pension payouts for many future retirees; and requiring some employees to contribute more to their pensions. "We must reverse the damage caused by fairy-tale promises that have fattened benefits and pensions to unsustainable levels," the governor said. Christie has warned that New Jersey's pension fund will go belly up unless something is done to close the $46 billion gap between how much the state expects to bring into the system and how much it has promised to workers. Other states' pension funds are in shaky condition, too. Keith Brainard, research director for the National Association of State Retirement Administrators, says it may be unprecedented that so many states at once are raising employees' pension contribution rates.

How Debt Can Destroy a Budding Relationship - (www.nytimes.com) Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days. Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.” Ms. Tidwell, 26, is involved in a serious relationship with Stefan Kogler, an architect who is a native of Austria and living in Vienna. To Europeans, who often pay little or nothing toward their university studies, the idea of going deeply into debt to get educated is, well, foreign. Ms. Tidwell feels no guilt about the $250,000 in debt she will probably run up, including some from a master’s degree program she completed in London, where she and Mr. Kogler met. “I didn’t acquire it because I go out and shop a lot,” she said. “It’s because I’m doing something that I’ll love for the rest of my life.”

OTHER STORIES:

Obama Demeans His Own Supporters - (www.huffingtonpost.com)

Krugman: GOP Is 'Pointing A Gun At The Heads Of Middle-Class Families' Over Tax Cuts - (www.nytimes.com)

A State of Emergency: We Need to Address Rising Poverty Now - (www.huffingtonpost.com)

Private Banks Battling for Advisers to Super-Rich - (www.cnbc.com)

Housing 'Expectations' Shifting Due to Stimulus - (www.cnbc.com)

Elizabeth Warren: The Right Appointment at the Right Time - (www.huffingtonpost.com)

Social Marketing for Global Brands: How Many Facebook Pages? - (www.huffingtonpost.com)

US Banks Brace for More Bad News on Trading Results - (www.cnbc.com)

Household wealth takes a dive - (money.cnn.com)

America's wealthiest (and poorest) states - (money.cnn.com)

Harley-Davidson's aging biker problem - (money.cnn.com)

Saturday September 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Americans struggle to regain their shrunken wealth - (www.google.com/hostednews/ap) Americans' long journey to regain the wealth they lost in the recession is stalled. Households failed even to run in place during the April-June quarter as sinking stock prices eroded wealth. Stocks have since recovered about two-thirds of those losses. But based on last quarter's data, household net worth would have to surge 23 percent to reach its pre-recession peak. Net worth — the value of assets like homes and investments, minus debts like mortgages and credit cards — fell 2.7 percent last quarter, or $1.5 trillion, the Federal Reserve said Friday. It now stands at $53.5 trillion. That's above the bottom hit during the recession, $48.8 trillion in the first quarter of 2009. But it's far below the pre-recession peak in wealth of $65.8 trillion. The drop from April to June was the first quarterly decline in Americans' wealth since early 2009. Before then, net worth had risen slowly for four straight quarters. Economists generally think household wealth has ticked up in the July-to-September quarter so far, because of higher stock prices. Yet given last quarter's setback and expectations of scant gains ahead, some economists have pushed back their forecast for when Americans will regain all their lost wealth: Not until the middle of this decade.

Fort Worth pension bubble will blow up in our faces - (www.star-telegram.com) To understand why Fort Worth's pension system is such a financial disaster, look at one month's list of recent retirements. In January, a 53-year-old policeman retired with an annual benefit of $90,312 for life, plus $256,000 in a lump sum payment. Another policeman, 57, got almost $74,000 annually, plus $313,000 in a lump sum. A 54-year-old firefighter got an annual pension of $90,130, plus $178,000 in cash. With an average age of 50 for the police and 54 for the firemen in this group, they're likely to spend more years in retirement than they worked. An analysis for the City Council, presented in July, projected that the retiring policemen would collect $3.1 million in pension pay. You don't have to be an actuary to know that this pension plan will end badly. The technical phrase is "trending toward insolvency." Except that the city is on the hook for all the promised benefits. Taxpayers will have to pony up hefty contributions for years, even generations, and the city may have to cut services to afford it. The pension for city employees is currently projected to pay out $432 million more than it brings in over the next 30 years. And that's the optimistic scenario. If investment returns average 7 percent, rather than the dreamy 8.5 percent in the assumptions, the unfunded liability could approach $1 billion. The pension will require $60 million in city funds next year, and it's already a drag on a strapped city budget that has to close swimming pools and libraries and impose furloughs. Every year, the pension hole grows, because the benefits keep piling up. "This is the elephant in the room," Mayor Mike Moncrief told the council in late July. "Not only for this budget, but for all the budgets to come."

Washington State budget deficit hits $520 million, 6.3 pct cut next - (www.komonews.com) Low tax collections are driving a new state budget deficit of about $520 million through mid-2011, leading to spending cuts of about 6.3 percent from Gov. Chris Gregoire.
Thursday's state revenue forecast showed continuing weakness in the national and state economies following the Great Recession. Arun Raha, the state's chief economist, said the economic picture is still in "uncharted territory." Tax collections for the following two-year budget period are projected at about $670 million lower than previously expected. That makes the total drop in expected revenues about $1.4 billion, and the projected deficit for the upcoming 2011-2013 budget around $4.5 billion. Spending cuts won't touch certain areas, such as basic education, pensions and debt service. But Marty Brown, Gregoire's budget director, said social services, corrections and community colleges will clearly face significant losses. That could lead to larger community college classes, fewer services for ill people and more. Any plan that will not touch education or pensions is as advisable as pissing in the wind.

Calpers in Talks With Schwarzenegger on $2 Billion Budget Loan - (www.bloomberg.com) The California Public Employees’ Retirement System said it is in talks with Governor Arnold Schwarzenegger’s administration on a proposal to borrow $2 billion from the fund to help the state balance its budget. Anne Stausboll, the fund’s chief executive officer, said her staff has been holding informal discussions with Schwarzenegger’s department of finance on a proposal that office has floated to credit the state with $2 billion this year as an advance on the roughly $74 billion the governor estimates the state would save during the next 30 years from his proposals to roll back pension benefits for government workers. California has been without a spending plan since the July 1 start of its fiscal year as Schwarzenegger and Democrats who lead the Legislature remain deadlocked over how to fill a $19 billion deficit. The Republican governor has vowed not to sign any final budget unless it’s accompanied by legislation to permanently cut the state’s cost to finance workers’ retirement benefits.

Gov: ‘No Choice’ But To Lay Off State Workers Early - (newyork.cbslocal.com) Going back on a pledge not to layoff state workers before Jan. 1, Gov. David Paterson said Thursday a round of layoffs will begin before the end of 2010 to close New York’s massive budget gap. It’s always that last question that produces the bombshell: “Why aren’t you calling a spade a spade and talking about the unions in this state?” And Paterson did not hesitate. “They have left us no choice. We will probably, in fact, we will lay off workers before the end of the year,” Paterson said. Patricia Baker is the VP of the Public Employees Federation, which represents 59,000 New York State professional, technical, and scientific employees. The state unions have a written agreement with the governor that he will not lay off workers before Dec. 31. “We do have an agreement with the governor and we’re gonna hold him to that agreement,” Baker said. “They have fought and tried to restrain our administration at every turn,” Paterson said.

OTHER STORIES:

Treasury Notes Gain on Speculation Irish Debt Crisis Deepening - (www.bloomberg.com)

Monetary easing fears lift gold to record high - (www.ft.com)

Raising the curtain on the private nature of derivatives - (www.ft.com)

U.S. woes are not our fault, Chinese economists say - (www.reuters.com)

Japan Weighs More Risk in Pension - (online.wsj.com)

Germany seizes on big business in China - (www.washingtonpost.com)

New Fed Rules Are Being Questioned - (online.wsj.com)

America’s Great Recession Wasn’t the Worst - (www.nytimes.com)

Friday September 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Fannie Mae to Sell Foreclosed Houses With Subprime Lending Terms - (www.housingwatch.com) Thought those great low down-payment deals were gone? Think again. If you're willing to buy a home foreclosed by Fannie Mae through the new HomePath program, you may be able to purchase one with as little as 3 percent down. Even better, that 3 percent can be a gift from a family member or other third party, or a loan from a nonprofit, or a state or local government. Sound a lot like those subprime loans that started this housing mess? The terms are similar, but the big difference now is that to qualify for those favorable terms in the HomePath program, you must choose one of Fannie Mae's foreclosed homes, and you must buy it "as is." Here are the terms you can expect:

· Low down-payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only).

· You may qualify even if your credit is less than perfect, as low as 660, when most lenders want a minimum of 700.

· You can qualify as an investor or owner-occupant.

· Down payment must be at least 3 percent for an owner-occupant, but it must be funded by your own savings or by a gift, a grant or a loan from an employer, a nonprofit organization, or a state or local government. Investors must come up with 10 percent down.

· No appraisal is required.

· No mortgage insurance is required, but the terms of the loan may not be as favorable. You need to look at the options with your lender.

'Pain comes roaring back' on foreclosure front - (www.southcoasttoday.com) Foreclosure numbers continued their steady climb last month, according to numbers released Tuesday by real estate data firm The Warren Group. In Bristol County, completed foreclosures more than doubled in July, jumping from 58 in July 2009 to 121. The region has been experiencing growth in foreclosures since December. Foreclosure numbers "got better last year because there were an awful lot of programs and laws ... that encouraged them to slow down," said Vincent Valvo, editor-in-chief of Banker and Tradesman, a publication of The Warren Group. "But it's an awful lot like taking aspirin when you've got a toothache: It makes it feel better for a little while, but then the pain comes roaring back." Plymouth County saw 114 foreclosures in July, up 70 percent from the July 2009 total of 67. The number of completed foreclosures in the area began rising in March. On Cape Cod, the number of foreclosure deeds filed in July was 144 percent higher than during the same month last year, jumping from 27 in July 2009 to 66 last month. This increase marks the eighth straight month in which foreclosure numbers in Barnstable County have exceeded the previous year's total after several months of declining foreclosure levels.

Fed sees weakened Western housing - (www.ocregister.com) Fed’s San Francisco unit says Western housing “weakened somewhat” this summer in the 6th version of the “Beige Book” report for 2010. This is a Federal Reserve Board summary on regional economic conditions that’s done eight times a year. This summer admission of regional housing malaise is a stark contrast from relatively upbeat asessmenst we saw in the spring. We note that the Fed researchers found enough housing angst in the western U.S. 12th District for their July report to say demand for housing “appeared to deteriorate somewhat” vs. “largely stable” in April and “little changed” in June.

Federal aid coming to underwater debtors, to harm buyers - (www.heraldnet.com) The Obama administration is trying to jump-start its sputtering attempts to tackle the foreclosure crisis with an effort to assist homeowners who owe more on their properties than their homes are worth. On Tuesday, the Federal Housing Administration agreed that lenders can give these borrowers refinanced loans backed by the government. The lenders will be required to forgive at least 10 percent of the original mortgage amount. Investors who have control over the mortgages as part of their large portfolios will select which borrowers are invited to participate. The plan was first announced in March. Its rollout represents the latest of numerous efforts by the administration to address the housing bust. So far, the government has only nibbled around the edges of the crisis, as its programs have run into numerous problems. The lending industry was ill-prepared for a crush of distressed homeowners, the economy worsened and millions of homeowners had taken on so much debt that their financial woes have been nearly impossible to resolve. Nearly half of the 1.3 million homeowners who have enrolled in the Obama administration's main mortgage-relief program -- overseen by the Treasury Department -- have already fallen out over the past year.

How house prices and debts build ugly tensions between parents and children - (www.blogs.telegraph.co.uk) The gap between baby boomers, who continue to enjoy the wealth-enhancing effects of decades of house price inflation, and their adult children, who are burdened with soaring debts and the worst financial crisis since the 1930s, is growing wider. Several independent reports published today suggest these macroeconomic trends are creating ugly tensions in millions of homes and there may be trouble ahead for many parents and their grown-up children. First, and most encouragingly for those of us of a certain age who bought our homes more than a couple of decades ago, there is research based on Land Registry and Office for National Statistics figures which shows that Britain’s pensioners own property worth an eye-stretching total of £775bn. Better still, despite the recent mortgage famine causing prices to fall at the first-time buyer end of the housing market, pensioners – who tend to own their homes outright – continued to enjoy property price rises in most regions of the country. As a result, according to Key Retirement Solutions, homeowners aged over 65 saw their wealth in bricks and mortar rise by an average of more than £1,700 during the last three months alone. As you would expect, these riches are distributed very unevenly; nearly a third of all the country’s property wealth is owned by pensioners in London and the South East. They own housing, unencumbered by mortgages, with a market value of £250bn.

OTHER STORIES:

Wilbur Ross, Carlyle to Buy Troubled Irish Bank - (www.cnbc.com)

As HAMP, HARP slow down, some analysts not happy with results - (www.snl.com)
The Bears and the State of Housing - (www.nytimes.com)
San Bernardino: Two brothers charged with foreclosure fraud - (blogs.pe.com)

NY Times contemplates letting the housing market correct itself - (www.csmonitor.com)
Time to stop propping up the housing market? - (www.sfgate.com)
Gold Fever Strikes Mom and Pop Prospectors in US West - (www.cnbc.com)

Germany Asks US to Give up its IMF Veto - (www.cnbc.com)

Let housing prices fall where they may - (www.doctorhousingbubble.com)
Subprime 2.0 Coming Soon to a Suburb Near You - (www.bloomberg.com)
Retirement on Hold: American Workers $6 Trillion Short - (www.cnbc.com)

Home Loan Demand Drops, Refinancing Loses Luster - (www.cnbc.com)

If You Thought the Housing Bubble Was Bad - (blog.american.com)
Think tanks says rate hikes will soften Canadian housing market - (www.toronto.ctv.ca)
Refinance activity drops off, and house purchases remain unpopular - (community.nasdaq.com)
House sale listings rose in August - (www.reuters.com)
Scary Housing Numbers - (www.sandiegoreader.com)

Thursday September 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

DMV workers pay big time for 'Missed Monday' - (www.sfgate.com) Heads are rolling at the Department of Motor Vehicles' San Francisco office over the "Missed Monday" we told you about a couple of weeks back. In all, 19 of the Fell Street office's 34 staffers were no-shows Aug. 23 - the Monday that followed a forced "Furlough Friday" without pay. The mass no-shows created a huge backup at the office, with the lines going around the block. Sources tell us that two of the "ringleaders" have been canned and seven others with histories of taking unauthorized days off have been suspended for 15 days without pay. Ten first-time offenders were given 10 days without pay. An office insider tells us replacement workers from outside the city were brought in to cover while the accused had their disciplinary hearings. DMV spokesman Mike Marando said the department was barred from discussing personnel actions, but said, "We do look at each case very seriously." The Service Employees International Union Local 1000, which represents the DMV workers, promised to get back to us just as soon as it got to the bottom of the case. We're still waiting.

Union vs. Union in a Battle in California - (www.nytimes.com) During his two decades building one of the largest union locals in California, Sal Rosselli earned a reputation as a cunning strategist and street fighter — someone who often vilified hospital chains during contract battles. These days, he is using those brass knuckles on his former colleagues at the Service Employees International Union in a battle that threatens to rip a giant hole in the most powerful union in the nation’s largest state. The S.E.I.U.’s national leadership ousted Mr. Rosselli last year after a power struggle that ended with a jury finding that he had improperly used member dues to form a breakaway union. Shortly after being ousted, Mr. Rosselli did create a rival union, and now he is trying to lure many of his former members — 43,000 workers at Kaiser Permanente, the largest health care provider in the state. On Monday, workers at 331 Kaiser facilities across California began voting by mail on whether to bolt the S.E.I.U. and join Mr. Rosselli’s group, the National Union of Healthcare Workers. A victory would give a vital boost to Mr. Rosselli’s fledgling 6,000-member union, all but assuring its long-term survival. It would also be a huge blow to the 1.9-million-member service employees union, since Mr. Rosselli’s group would gain the stature and dues money to finance a broader war for far more S.E.I.U. members.

PG&E backs bid to bill public for disasters - (www.sfgate.com) State regulators will take their first look Tuesday at a proposal backed by Pacific Gas & Electric Co. that would require customers to pay all costs of catastrophic fires, such as last week's gas line explosion in San Bruno, that exceed a utility's insurance coverage. It's not clear whether the plan, if approved by the state Public Utilities Commission, would trigger a PG&E rate increase to help pay the utility's cost from Thursday's disaster. In a filing Monday with the U.S. Securities and Exchange Commission, the utility said it has $992 million in fire insurance and a $10 million deductible, and "believes that most of the costs related to the San Bruno event will be covered." Even if the company has enough insurance, however, the proposal would make rate hikes more likely if PG&E caused fires in the near future. Under current rules, utilities in California can seek a rate increase if the costs of a disaster exceed their insurance coverage. But the PUC can veto the request and force utility shareholders to pay the bill.

Broke Los Angeles Spent $578 Million On This Extravagant Public School - (www.businessinsider.com) The largest city of the brokest state in America just opened the doors on the $578-million RFK School. Built on the site of the historic Ambassador Hotel, the K-12 facility is now the most expensive public school in the country. So how did LA spend that much money? They gave the school a state-of-the-art swimming pool, underground parking, historically recreated sections of the hotel, "talking benches" that describe the site's significance, a teacher's lounge modeled after the famous Cocoanut Grove Night Club -- and they got in a bidding war with Donald Trump. Poor taxpayers! We've got designs of the gorgeous school from architectural firm Gonzalez Goodale.

The Subprime Of Europe May Be About To Blow, And Once Again Banks Are Caught Red-Handed - (www.businessinsider.com) This is a buzzy topic that gets talked about in th niche financial press, but probably hasn't gotten as much attention as it ought to... Homeowners across Europe's periphery are saddled with mortgages denominated in foreign currencies -- like the Swiss Franc -- and could easily explode in expense as their home currencies fall. So, for example, Hungarian homeowners are in big trouble if the Forint falls hard against the Swiss Franc, since that sends the cost of mortgages soaring. At VoxEU, Martin Brown Karolin Kirschenmann Steven Ongena have published a study of 100,000 foreign currency mortgage made at a Bulgarian bank between 2004-2007. What they've found is that banks aggressively pushed these loans: Looking at the supply of FX loans we find striking evidence that our bank is “pushing” euro loans. Roughly one-third (32%) of all loans extended in euros in our sample and nearly one-quarter of the euro loan volume (23%) are loans that were initially requested in lev. Examining the sub-sample of loans which were requested in lev, we find that the bank is more likely to switch the loan to euros if the firm is of lower observable credit risk. Worryingly though, we also find that the bank is hesitant to offer large and long-term loans in local currency. Further, the bank is more likely to switch a loan to euros after it has received additional customer funding in euros. However, we do not find that the bank pushes FX loans after it has received more wholesale funding in euros. The latter results suggest that while FX lending may be driven by customer funding in FX, the causality between FX lending and wholesale FX funding might go the other way.

OTHER STORIES:

U.S. posts $90.53 billion budget deficit in August - (www.reuters.com)

Contrarians Find Betting on Recovery a Lonely Job - (www.nytimes.com)

Geithner Urges Action on Economy - (online.wsj.com)

Fatal Gas Blast Prompts Scrutiny of Aging U.S. Fuel Pipelines - (www.bloomberg.com)

Crisis to Speed Up Power Shift to Emerging Economies, CEBR Says - (www.bloomberg.com)

Microsoft Said to Plan Debt Sale to Pay for Dividends, Buybacks - (www.bloomberg.com)

At Goldman, Partners Are Made, and Unmade - (www.nytimes.com)

A eurozone banking crisis left unresolved - (www.ft.com)

Defaults on U.S. Student Loans Climbed in 2008 Crunch - (www.bloomberg.com)

Harrisburg, Pennsylvania, Bond Default Averted With State Aid - (www.bloomberg.com)

A New World Since Lehman's Fall - (online.wsj.com)

Bond Buyers Who Went Long Get Burned on Yields: Credit Markets - (www.bloomberg.com)

Hedge-Fund Group Opposes New Rules for High-Frequency Traders - (www.bloomberg.com)

Europe’s liquidity habit is hard to shake - (www.ft.com)

Wen Says China in ‘Good Shape,’ Signaling Confidence in Economy - (www.bloomberg.com)

EU Raises Growth Forecast, Sees Moderate Second Half - (www.bloomberg.com)

Wednesday September 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

John Boehner Scrambling After Caving To Obama On Taxes - (www.businessinsider.com) We mentioned earlier how John Boehner appeared to cave to Obama on the tax question, admitting that the GOP could possibly support a bill that extended the Bush tax cuts for the middle class, even while ending them for the rich. Here was the exchange: Bob Schieffer: "I want to make sure I heard what you said correctly: you're saying that you are willing to vote for those middle class tax cuts, even though the bill will not include ... extending the tax cuts for the upper bracket American." Rep. Boehner: "Bob, we don't know what the bill's going to say, alright? If the only option I have is to vote for those at 250 and below, of course I'm going to do that. But I'm going to do everything I can to fight to make sure that we extend the current tax rates for all Americans." Uh, just like that is he rolling over? Already team Boehner is trying to spin things. Talking Points Memo: A Boehner aide told our Christina Bellantoni: "Despite what Obama says, Republicans are not holding middle-class tax cuts hostage and we're not going to let him get away with those types of false claims. Our focus remains on getting bipartisan support for a freeze on all current rates, because that is what is best for the economy and small business job creation. Boehner's words were calculated to deprive Obama of the ability to continue making those false claims, and as a result we are in a better position rhetorically to pressure more Democrats to support a full freeze."

Left-Wing Terrorism Surges In Europe, As Governments Dismantle Social Safety Net - (www.businessinsider.com) With European governments paring back the social safety net, and businesses blamed for creating a crisis, left-wing terrorism in Europe is on the march, according to a new report from EuroPol (the European Police Office). EuroPol: Spain, Greece and Italy reported a total of 40 attacks by left-wing and anarchist groups for 2009. This constitutes an increase of 43 % compared to 2008; the number of attacks more than doubled since 2007. As in previous years, most attacks were carried out successfully and mainly targeted government and business interests. The majority of these attacks were arsons, reported by Spain, and caused only property damage. The percentage of IED attacks decreased from 43 % in 2008 to 20 % in 2009; the majority of these bomb-ings occurred in Greece. In Greece, six left-wing terrorist organisations carried out a total of 15 attacks in 2009. As this chart shows, left-wing terrorism dwarfs right-wing terrorism in Europe -- perhaps surprising given the attention paid to Europe's far right. Islamist and Separatist terrorism, however, remain the largest categories.

Volatile Housing Market Baffles Houseowners - (audio - www.npr.org) Tax credits for buyers, mortgage help for homeowners and new rules for lenders haven't stopped the slide in the housing market. Some economists argue the best way to balance the market in the long term is to let it crash in the short run. Many homeowners and prospective homeowners are unsure if it's time to buy, to rent, or to wait. Since the bottom fell out of the housing market almost three years ago, trying to understand what's going on in real estate has been confusing, sometimes terrifying - and for many Americans, a necessity. So much of our wealth, as individuals and a nation, is bound up in the houses we own. We know we should make informed decisions about - say, buying versus renting, or refinancing or just walking away, but how to make sense of it all? Today, we're going to leave behind the torrent of dense, jargon-filled economic reports, and do our best to understand what's going on in the housing market and what it means to us: the homeowners, buyers, sellers and renters.

The Policy of Screwing Prudent Renters to Benefit Loan Owners - (www.irvinehousingblog.com) The Obama Administration's open policy of keeping house prices high benefits loan owners at the expense of renters and first-time buyers. One housing bubble phenomenon was that the right ones -- prudent people who knew what they could afford -- were kept out, and the wrong ones -- kool aid intoxicated fools -- were let in. That mistake was bad enough, but now our own government is frantically working to repeat this mistake. Rather than doing something corrective, like letting house prices fall, our government is going to extreme lengths to keep the right ones out and keep the wrong ones in. Perhaps the administration is finally seeing the light, and in an amazing turn, they might actually let house prices fall. Grim Housing Choice: Help Today’s Owners or Future Ones: The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid. Eager to avoid? Every policy rolled out over the last 3 years from the plethora of Bailouts and False Hopes to the Federal Reserves manipulation of interest rates has been designed to keep inflated house prices high. All of these policies force future buyers to pay for the mistakes of bubble buyers. Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

California Realtors To Pay Political Fee To Corrupt Our Laws - (www.realtytimes.com) When the 2011 dues billing cycle comes around a few months from now, members of the California Association of Realtors® (CAR) will see a new assessment of $49 in addition to their regular dues. Labeled the "Realtor® Action Assessment" (RAA), its purpose is to raise funds for CAR political activities. The assessment is not optional, although individuals will have a choice as to which way their $49 is to be directed. (1) It can go to CAR political action committees which provide funding support for candidates, or (2) it can go the general fund for political purposes such as "education and mobilizing members on issues of importance to the real estate industry and not to specific candidates." Just about every California Realtor® is aware of the fact that legislative activity constantly affects the real estate business. Moreover, most know that it is only because of CAR's involvement that the business hasn't been even more negatively affected than has been experienced. In the past year alone, CAR has influenced legislation on topics ranging from deficiency judgments to income tax withholding for independent contractors to point-of-sale retrofit requirements that would have drastically increased the cost of selling a home. The list goes on and on.

OTHER STORIES:

Our Government Is Now So Huge That It's Choking The Private Sector - (www.businessinsider.com)

Dick Bove: The Loneliest Analyst - (www.businessinsider.com)

Poverty Explodes To Record Highs Under Obama - (www.businessinsider.com)

Housing Inventories Rise for Eighth Straight Month - (www.blogs.wsj.com)
'Prime' house prices may crash harder than the rest - (www.moneyweek.com)
Will Government Let Housing Market Crash - (and lose those CAR donations)? - (www.rejournalonline.com)

True Cost Of The Wall Street Bailout - (www.dailybail.com)
Shock Therapy for the Housing Market - (www.thenewamerican.com)
Walking Away From a Mortgage - (www.kiplinger.com)
House Equity Lines Of Credit: The Next Looming Disaster? - (www.businessinsider.com)
Urban Legends: City vs Suburbs - (www.foreignpolicy.com)
From owners to renters, foreclosure is complete - (www.edhtelegraph.com)
Do houseowner regulations go too far? - (www.starnewsonline.com)
For rent in Los Altos, only $18,000 per month - (www.patrick.net)