Thursday January 24 Housing and Economic stories

TOP STORIES:

Illinois Lawmakers Fail to Act on Fixing Pension Deficits - (www.bloomberg.com) Illinois lawmakers missed another chance to restructure the worst-funded state retirement system in the nation, officially ending their 2012 session yesterday without acting on measures to shore up pensions. In failing to deal with a $97 billion unfunded liability that rises by $17 million each day, Illinois risks more downgrades from bond-rating companies, which have urged the state to stem the ballooning deficits. The inability to broker a solution mirrored a special legislative session that ended almost five months ago with nothing accomplished.  “It’s confounded Illinois legislatures and governors for 70 years -- there have been 12 governors, 13 Speakers of the House and 12 presidents of the Senate that have grappled with this issue,” Democratic Governor Pat Quinn said. With the streak of frustration preserved, lawmakers begin a new session today with pledges to try again, albeit with a heightened sense of concern about a credit-rating cut.

The European Bailout That Everyone Forgot About Is Running Into Trouble – (www.businessinsider.com)  After some time out of the limelight, European politicians are bringing contentious bailout negotiations back to center stage in the euro crisis plot line. In June of last year, Cyprus requested a bailout from the "troika" of eurozone creditors at the European Commission, the European Central Bank, and the International Monetary Fund. The small eurozone member's outsized banking system was rocked by the Greek bond swap that took place earlier in the year – Cypriot banks were big holders of Greek debt and were forced to take serious writedowns as part of the deal, which necessitated a bailout from the state. This, in turn, forced Cyprus to request aid from the troika. The deal between Cyprus and the troika still has not been consummated, and today, reports surfaced in the German press that the deal will be postponed until March, and Cypriot banks may require even more cash to be recapitalized than was previously expected. The new estimate is €11 billion, up from €9 billion.

Site lists NYC gun owners - (www.sfgate.com) In an effort destined not to offend any gun owners whatsoever, Gawker published a list of registered pistol permit holders in New York City. After the Journal News set the internet afire, publishing the home addresses of every gun owner in three suburban New York counties, Gawker responded to a comment made by conservative commentator Ann Coulter, who said “If we’re producing lists of gun permit owners, I want them for Manhattan. I want to know how many rich liberals with their body guards have gun permits.” Conveniently, Gawker’s John Cook noted that he had obtained said list from the NYPD back in 2010 for a previous story: “You’re in luck, Ann. I happened to have just such a list in my filing cabinet.

Spain’s Allure Unsullied by Bond Writedown Clauses: Euro Credit - (www.bloomberg.com) Spain’s introduction of clauses that make debt restructuring easier is doing little to temper a rally that has pushed borrowing costs to an almost 10-month low. That’s good news for Prime Minister Mariano Rajoy, who can still afford bond-market funding after last month reasserting his intention to avoid a European Central Bank bailout. Auctions tomorrow, Spain’s first of the year, include a new 2015 note with so-called collective-action clauses, which limit investors’ rights to oppose write-downs. “The market is engaged in a hunt for yield,” said Russel Matthews, a fund manager at BlueBay Asset Management Ltd. in London, which oversees $47 billion and owns Spanish bonds. “There may be a lot of investors who are underinvested in risky assets and are afraid they are going to miss out on the rally. I don’t think CACs are making a major difference.”

Oakland museum hit by 2nd burglary - (www.sfgate.com) A burglar made off with valuable Gold Rush artifacts in the Oakland Museum of California's second break-in in less than two months, police said Tuesday. The latest theft happened at about 3:15 a.m. Monday, when at least one burglar got into the museum at 1000 Oak St. and stole a quartz and gold box dating to the Gold Rush, museum and police officials said. That object includes ornamentation depicting early California and could be valued at more than $800,000.

OTHER STORIES:

U.S. Drought Persisting Seen as Threat to Corn, Soybeans - (www.bloomberg.com)

Button-Down Central Bank Bets It All - (online.wsj.com)

Former SAC Analyst Cooperates in Insider Trading Case - (www.nytimes.com)

China-Japan Dispute Takes Rising Toll on Top Asian Economies - (www.bloomberg.com)

Merkel Economy Shows Neglect as Sick Man Concern Returns - (www.bloomberg.com)

China Loan Share Seen at Record Low as Data Show Risks - (www.bloomberg.com)

Exclusive: BOJ may ease again, double inflation target - (www.reuters.com)

Special Report: How Mario Draghi is reshaping Europe's central bank - (www.reuters.com)

Obama said to name Jack Lew to replace Geithner at Treasury - (www.washingtonpost.com)

A Bold Dissenter at the Fed, Hoping His Doubts Are Wrong - (www.nytimes.com)

Morgan Stanley Said to Cut 1,600 Investment-Banking Jobs - (www.bloomberg.com)

Wednesday January 23 Housing and Economic stories

TOP STORIES:

State comptroller: NY government debt tops $63B - (online.wsj.com) The state government's debt has topped $63.3 billion, with New York on track to approach its borrowing limit in early 2014, the comptroller's office reported Monday. That debt burden, averaging $3,253 per resident, is almost three times the national median, according to the report. New York's state-funded debt is second only to California's $96.4 billion and 80 percent higher than New Jersey, which is third. New York paid $6.8 billion on its loans in 2011-12, though borrowing has continued to outpace payoffs. The $63.3 billion debt as of last March 31 was $1.6 billion higher than a year earlier.

Blame flies as Illinois pension plan stalls - (www.chicagotribune.com) The last-minute push to start fixing Illinois' massively indebted government worker pension system stalled out Monday when supporters couldn't round up enough votes in the House as a lame-duck session lumbers to a close. While no issue is ever dead at the Capitol until the gavel hits the wood block for the final time, the blame game commenced — a political tradition that continued even as the state's pension shortfall approaches $96.8 billion. Mistrust ran deep among lawmakers, many of whom questioned whether any pension fix was calculated to fail as they pointed to a lack of political will. Many in the House did not want to take up a controversial issue when the Senate isn't even around to consider it. Some Democrats refused to commit to voting for the plan when they didn't know how many Republicans also were willing to stick out their necks.

Rajoy Stealth Order Adds to Off-Balance Sheet Debt: Euro Credit - (www.bloomberg.com) Spanish Prime Minister Mariano Rajoy added more than 3 billion euros ($3.9 billion) to his debt load in the closing hours of 2012 with a New Year’s Eve order removing a cap on utilities’ government-guaranteed losses. The decision, announced in the official gazette, added to the snowballing power-tariff debt, which isn’t included in the public accounts. The shortfall exceeded 20 billion euros at year end, according to government filings. Spain’s government-controlled electricity system has raised less revenue from consumers than it pays to power companies for most of the past decade. Officials have covered the difference with bonds in the so-called FADE program.

European leaders hail breakthrough in debt crisis - (www.washingtonpost.com) After more than three years of global market turmoil, political upheaval and nail-biting summits, European leaders are declaring that the worst of the continent’s debt crisis is behind them. In New Year’s speeches and congratulatory comments, leaders across the region are crediting fresh rounds of painful austerity, a hard-fought new role for the European Central Bank and steps toward deeper integration with achieving a breakthrough. Borrowing costs for troubled nations, they note, have come down steadily from last year’s dangerously high levels, pulling a string of countries back from the brink of imminent financial collapse and defying naysayers who predicted a quick breakup of the euro zone last year. Yet any suggestion of victory in Europe may be viewed as the economic equivalent of President George W. Bush’s “Mission Accomplished” speech on Iraq aboard the USS Abraham Lincoln in 2003. Though market panic is subsiding, the region appears to be simply trading a crisis of financial markets for one rooted in its ailing economies.

The distinction between good debt and evil debt - (www.ochousingnews.com) On the other hand, signatory debt is slavery. Signatory debt is money given to a borrower simply based on the borrower’s promise to repay. It has nothing to do with an asset, and if the borrower chooses not to repay, recovering signatory debt can be very difficult because it is not backed by tangible collateral. Signatory debt provides no useful purpose. It provides a short-term economic boost as demand is pulled forward, but once it is consumed, money that would ordinarily have been spent by the borrower on consumer goods is instead diverted to the lender for debt service. It’s only when signatory debt is expanding that the economy is stimulated. The expansion of signatory debt is a Ponzi scheme.

OTHER STORIES:

Gold Lures Japan’s Pension Funds as Abe Targets Inflation - (www.bloomberg.com)

Japan to Buy ESM Bonds Using FX Reserves to Help Weaken Yen - (www.bloomberg.com)

London Quantitative Hedge Funds Report Second Year of Losses - (www.bloomberg.com)

Euro-Area Unemployment Rate Rises to Record 11.8% Amid Recession - (www.bloomberg.com)

China Loan Share Seen at Record Low as Data Show Risks - (www.bloomberg.com)

German trade, industry data point to economy shrinking - (www.reuters.com)

German Exports Dropped More Than Forecast in November - (www.bloomberg.com)

Japan PM orders stronger surveillance near disputed isles - (www.reuters.com)

In Japan, a Painfully Slow Sweep - (www.nytimes.com)

US May Hit Debt Ceiling by Mid-February: Report - (www.cnbc.com)

Cracks widen in US debt ceiling debate - (www.ft.com)

Tuesday January 22 Housing and Economic stories

TOP STORIES:

CONGRESSMAN: Here's Why I'm Introducing Legislation To Ban The Trillion-Dollar Platinum Coin - (www.businessinsider.com) The idea of minting a trillion-dollar coin has picked up as an option that would allow the Treasury to temporarily print money to pay the country's bills and work around the debt ceiling. It has turned into a Twitter campaign (#MintTheCoin), and supporters have created a petition urging the White House to mint it. Walden took interest in proposing legislation to ban the option because he thought the idea of minting a platinum coin to work around the debt ceiling was a particularly absurd idea that exemplified "the problem of people in Washington not understanding the reality" of the national debt. Walden also thought that if the Treasury did mint the coin, it would lead to a "very inflationary" period.  "The notion that we could mint a trillion-dollar coin ... and all of a sudden, your debt issue is gone — it's so absurd and laughable, except people were being serious," Walden said. "This just has to stop. So that's why we're drafting legislation today."

Good luck figuring your new tax rate! - (money.cnn.com) The legislation that edged our country away from the alleged "fiscal cliff" isn't named properly. Instead of calling it the American Taxpayer Relief Act of 2012, Congress should have called it the Accountant Full Employment Act of 2012. That's because the legislation, which supposedly doesn't increase taxes for anyone other than "the rich" with adjusted gross incomes of $400,000 for a single filer and $450,000 for a married couple, made an already incomprehensible tax system even more incomprehensible.

Bank Settlement May Leave Tiny Slices of a Smaller Pie - (www.nytimes.com)  IF you were hoping that things might be different in 2013 — you know, that bankers would be held responsible for bad behavior or that the government might actually assist troubled homeowners — you can forget it. A settlement reportedly in the works with big banks will soon end a review into foreclosure abuses, and it means more of the same: no accountability for financial institutions and little help for borrowers. Last week, The New York Times reported that regulators were close to settling with 14 banks whose foreclosure practices had ridden roughshod over borrowers and the rule of law. Although the deal has not been made official and its terms are as yet unknown, the initial report said borrowers who had lost their homes because of improprieties would receive a total of $3.75 billion in cash. 

Fitch warns home prices overvalued - (www.housingwire.com) Despite national home prices increasing by more than 2%, the largest gain since before the market peak, Fitch Ratings believes national prices are 10% overvalued. However, during correction, home prices will likely drop by no more than 2% from today due to inflation. Fitch reports technical factors behind the appreciation will eventually mute growth in the future, much to the opposition of current market predictions. The latest report from the Standard & Poor's/Case-Shiller Home Price Indices, for example, revealed that home prices continued to rise in October with prices up 4.3% annually. While Fitch agrees that it’s hard to not be upbeat with home prices on the rise, indicating a healthy housing rebound, the ratings company is remaining cautious in its outlook based on the past few quarters.

Here's How The Government Would Actually Make A $1 Trillion Coin To Avert A Debt Ceiling Crisis - (www.businessinsider.com) Specifically, people are intrigued by a law which says that the Treasury has the ability to create coins of any denomination out of platinum, and use that to fund the government. The debate over the economics and legality of this option is being hotly debated. But let's take a step back. How do you literally create a new coin. We put together images from a Science Channel and History Channel special on how our coins get made. We hope you find it instructive.

OTHER STORIES:

Banks to pay $8.5 billion in foreclosure settlement - (money.cnn.com)

BofA in $10 billion settlement with Fannie Mae - (money.cnn.com)

Gun sales jump, but some gun shows are canceled - (money.cnn.com)

Further evidence that bankers control their regulators - (www.nytimes.com)

Renters get more bang for their buck - (www.housingwire.com)

Credit availability will get even tighter in 2013 - (www.ochousingnews.com)

Manhattan Property Sales Spike on Fears of Tax Hikes - (finance.yahoo.com)

Is the threat of shadow inventory truly manageable? - (www.ochousingnews.com)

Mortgage applications fall for third straight week - (finance.yahoo.com) 

Monday January 21 Housing and Economic stories

TOP STORIES:

'Fiscal Cliff' deal favors reflation of housing bubble - (www.ochousingnews.com) The housing market is on firmer ground today, as two major tax provisions survived the “fiscal cliff.” Congress did not touch the mortgage interest deduction, and it extended tax relief for one year on mortgage debt forgiveness. It’s worth noting that the debate on the mortgage interest deduction is merely delayed. In all likelihood, the mortgage interest deduction won’t get touched directly, but when Congress takes up tax reform later this year, we may see an overall cap on deductions will will render the home mortgage interest deduction much less valuable to the high-wage earning households that utilize it.

Secret and Lies of the Bailout - (www.rollingstone.com) The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come. t has been four long winters since the federal government, in the hulking, shaven-skulled, Alien Nation-esque form of then-Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to rescue Wall Street from its own chicanery and greed. To listen to the bankers and their allies in Washington tell it, you'd think the bailout was the best thing to hit the American economy since the invention of the assembly line. Not only did it prevent another Great Depression, we've been told, but the money has all been paid back, and the government even made a profit. No harm, no foul – right? Wrong. It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

Contractors quietly optimistic following sequestration delay - (www.washingtonpost.com) Last year, some of the largest contractors were vocal about the need to stop sequestration. They appeared on Capitol Hill and warned that they might have to issue layoff notices to employees. Some even hosted rallies attended by workers nervous about their jobs. After postponement of the sequestration, many contractors were hesitant to say much. The Arlington-based U.S. unit of BAE Systems issued a statement that said the company was pleased by the delay. However, “the prolonged uncertainty associated with sequestration, which has already made it virtually impossible to plan near- and long-term business decisions, will persist for yet another two months,” the company added.

Bond Vigilantes Of Yore Cowed by Central Banks - (www.cnbc.com) Have the fearsome bond vigilantes been rendered obsolete by central banks? As Congress and President Barack Obama lurch from one crisis to the next in an era of record budget deficits and a debt load flirting above $16 trillion, this once feared group of investors has gone strangely silent. Bond vigilantes were credited with forcing up Treasury bond yields to just over eight percent, pressing the Clinton administration to confront the U.S. budget deficit in protest of fiscal and monetary policy. These same bond scourges helped bring Europe's debt crisis to a boiling point, by sending yields in Greece, Italy, Portugal and Spain through the roof. Some market observers are perplexed by the reasons why the vigilantes haven't come out of hibernation. Yet others point the finger at the Federal Reserve and their global central banking cohorts, who are trying to keep the global economy afloat though massive quantitative easing. 

Drought threatens to halt critical barge traffic on Mississippi - (www.washingtonpost.com) On a stretch of the Mississippi River, the U.S. Coast Guard has been reduced to playing traffic cop. For eight hours a day, shipping is allowed to move one way in the 180 miles of river between St. Louis and Cairo, Ill., depending on the hour. For the other 16 hours, boats go nowhere, because the river is closed to traffic. The mighty Mississippi, parched by the historic summer drought, is on the verge of reaching a new low. That could mean that tugboats hauling barges loaded with billions of dollars’ worth of cargo — enough to fill half a million 18-wheelers — would not be able to make their way up and down the river. Through the night, contractors for the U.S. Army Corps of Engineers remove rocks from a stretch near Thebes, Ill., that threaten to cut boats to shreds. The corps has assured state officials, farmers and coal barons who rely on the shipping that it can maintain the nine-foot level it says makes navigation safe.

OTHER STORIES:

Berlusconi Renews Alliance With League, Signals He May Step Back - (www.bloomberg.com)

Abe Seen Spending 12 Trillion Yen to Boost Japan’s Economy - (www.bloomberg.com)

White House sees promise in revisiting elements of ‘grand bargain’ on taxes, spending - (www.washingtonpost.com)

McConnell Takes Taxes Off the Table in Debt Limit Discussion - (www.bloomberg.com)

Battle Lines Drawn on Budget - (online.wsj.com)

Cracks widen in US debt ceiling debate - (www.ft.com)

Friday January 18 Housing and Economic stories

TOP STORIES:

Gerard Depardieu Leaves France Because of Tax Hikes - (www.accountingtoday.com) French actor Gerard Depardieu has said he is surrendering his passport and moving to Belgium after the French government raised taxes. In a letter published Sunday in the French newspaper, Journal du Dimanche, the award-winning actor responded bitterly to French prime minister Jean-Marc Ayrault, who called the 63-year-old actor “pathetic” for leaving his home country for the Belgian village of Nechlin. “I am handing over to you my passport and Social Security, which I have never used,” Depardieu wrote, in a translation by the Edmonton Journal. “We no longer have the same homeland. I am a true European, a citizen of the world, as my father always taught me.”

AllState Used This Couple's Sandy-Destroyed House In An Ad But Won't Pay Their Claim - (www.businessinsider.com) When an AllState ad paying tribute to its 1,000 employees who put customers first during Hurricane Sandy even when their own houses were ravaged played on Thanksgiving Day, Shelia and Dominic Traina didn't get that warm and fuzzy feeling that the insurance company was going for. In fact, "I got disgusted," Mr. Traina told the New York Post. That's because AllState used images of the Staten Island couple's house, obliterated by Sandy, when it is refusing to pay the Traina's full claim. AllState offered a $10,000 payout for the house the Trainas called home for 43 years. Mr. Traina continued that “They’re claiming that water took the house down, not the wind. [But] we had a witness next door who told us the house fell down from the wind.” “The commercial said how caring their agents are,” Mrs. Traina told SI Live, "but they are not caring at all."

Credit availability will get even tighter in 2013 - (www.ochousingnews.com) Credit standards are not tight by historic standards. Compared to the complete lack of enforced standards of the housing bubble, credit is very tight, but compared to what preceded the housing bubble, credit standards have merely reverted to what was normal. Prior to the housing bubble, lenders verified a borrower’s income and made sure the payment burden was manageable to ensure the loan was repaid. Today, lenders are doing the same. The notion of “tight” lending standards stems from the perceived entitlement to free money by people who have dubious repayment prospects. There is little reason to believe lenders will return to their bubble-era ways any time soon, particularly now that the GSEs and the FHA who control more than 90% of the mortgage market are forcing lenders to buy back bad loans when there is the slightest deviation from their standards.

How to read ‘quirky’ December jobs report - (www.marketwatch.com) Figuring out how many jobs are created each December is never easy because of the holiday season and end-of-the-year quirks. Cold weather sets in and alters hiring patterns, for one thing, and companies add and subtract lots of temporary workers to handle the rush of Christmas shoppers. More than likely, the level of hiring in December will track closely with the trend in job growth over the past two years. Economists surveyed by MarketWatch estimate 160,000 net jobs were created last month, just above the two-year monthly average of 152,000. The unemployment rate is expected to remain flat at 7.7%. In short, the labor market is little changed. The economy is adding jobs, but at a slower rate than is typically the case at this later stage of a recovery.

School Board Member Allegedly Rams Teen With Her Car In Fight Over Walmart Parking Space - (www.businessinsider.com) A school board member in Georgia was arrested after allegedly hitting a 17-year-old with her SUV in a dispute over a parking space at Walmart, according to WBSTV. WBSTV reported the teen girl was standing in a parking spot to hold it for a friend who had just given birth when Angela Cornett told her to move.  The teen told police she refused and then, Cornett allegedly hit her with the car. Cornett's side of the story is that the girl leaned into her car.  The teen didn't have any serious injuries, just a few cuts and scrapes.  Cornett was taken to jail and charged with misdemeanor reckless conduct. She also resigned from her school board post. 

OTHER STORIES:

Euro-Area Consumer Prices Rise More Than Estimated on Food - (www.bloomberg.com)

Record India Deficit May Limit Rate Cuts as Rupee Drops - (www.bloomberg.com)

China Home Prices Gain in 7th Month on Recovery: SouFun - (www.bloomberg.com)

U.K. Services Unexpectedly Shrinks as Recession Risk Increases - (www.bloomberg.com)

Payrolls in U.S. Climb 155,000 as Jobless Rate Holds at 7.8% - (www.bloomberg.com)

The Fed isn’t very bullish on ’13, and five other takeaways from the new minutes

FTC: Google did not break antitrust law with search practices - (www.washingtonpost.com)

Auto industry posts best U.S. sales year since 2007 - (www.reuters.com)

Thursday January 17 Housing and Economic stories

TOP STORIES:

Payback time, Florida homeowners foreclosing on banks - (www.cnn.com) Since the housing bubble burst in Florida five years ago, more than 400,000 borrowers have had their homes foreclosed on by their lenders. But for some, it's payback time. Hundreds of homeowners and condo associations are foreclosing on banks that have failed to pay dues and other expenses on the properties they've repossessed. When banks foreclose on a home they become responsible for paying fees to the homeowners association -- both any unpaid fees going back as far as 12 months and all expenses going forward. In many cases, however, banks are failing to pay, leaving these associations short on cash, according to Miami-based attorney Ben Solomon. But now, homeowners groups are putting liens on the properties until banks pay up and foreclosing on them if they don't.

Dust Bowl Wilting U.S. Wheat as Funds Turn Bearish: Commodities - (www.bloomberg.com) The worst U.S. drought since the 1930s Dust Bowl is damaging wheat crops across the world’s biggest supplier, at a time when hedge funds are the most bearish on prices in seven months. About 61 percent of the country is mired in a dry spell that the government says will last at least until March in states growing the most winter wheat. With dormant crops already in the worst condition since records began in 1985 and global inventories headed for a third annual drop, Chicago futures may rise as much as 25 percent to $9.50 a bushel this year, the median of 32 analyst estimates compiled by Bloomberg shows. That raises the prospect of prices reversing their 20 percent drop since a July peak, a retreat that spurred hedge funds to start betting on more declines in December. The prolonged drought is increasing concern that supplies will tighten because there is also dry weather in Argentina and Australia. 

Risk Seen in Some Mortgage Bonds - (online.wsj.com) After a surge in bonds backed by mortgages on commercial properties, some investors are finding cracks in the foundations. Investors piled into these bonds, which are made up of pools of loans linked to properties such as shopping malls and hotels, because of the relatively high yields they offered. But that demand has sent prices soaring, and yields tumbling to record lows. As well, some investors remain worried that defaults on these loans remain at historically high rates.

Did Generation X Cause the Housing Crisis? - (www.usnews.com) The largest percentage of households in foreclosure belonged to those in Generation X—in particular, Gen-Xers who had high average household income ($59,500) and years of education (14.8 years). It seems counter intuitive that a well-educated and affluent group of families would lead the foreclosure charge. Yet this group of households made up more than 1 in 10 foreclosures. How do affluent families end up in foreclosure? Luckily, the researchers provided statistics about the types of mortgages that were in foreclosure. Mortgages with High Loan-to-Value. The size of the down payment at closing can vary greatly. FHA loans can require as little as 2.5 percent of the purchase price. A review of mortgages in foreclosure found that the median mortgage had a loan-to-value of about 65 percent. Mortgages in foreclosure had a median of 96 percent.

What is actually going on in Iceland - (www.studiotendra.com) Why are these myths being spread about Iceland? Why do people think that Iceland is a progressive paradise …. ? Why is Iceland being paraded by the occupy movement as an example of how things should be done? I don’t know. My theory, born out by the names of those who seem to be the sources of the biggest myths, is that there is a group of Icelanders who are blatantly lying to foreigners. Possibly they are doing this to balm their wounded nationalistic pride, have convinced themselves that it’s true and that Iceland really is great and unique. Possibly its because they see profit in lying to gullible foreigners. The latter was a national sport during the banking bubble and has been a standard Icelandic tactic throughout the ages, but I can’t rule out the role of idiotic nationalism in this nonsense. I don’t know. The only thing I know is that you are being lied to and that Icelanders are very good at lying to themselves. If they weren’t, we wouldn’t be in this mess.

OTHER STORIES:

Weak loan data highlight euro zone economic woes - (www.reuters.com)

Monti Says Bersani May Need to Abandon Allies to Govern Italy - (www.bloomberg.com)

China Service Industries Grow at Faster Pace as Economy Rebounds - (www.bloomberg.com)

Jobless Claims in U.S. Rose More Than Forecast in Holidays - (www.bloomberg.com)

Manhattan Apartment Listings Plunge in Sign Sale Prices to Climb - (www.bloomberg.com)

Budget deal leaves U.S. defense sector in limbo - (www.reuters.com)

CEOs pan fiscal cliff deal, vow to continue debt fight - (www.reuters.com)

Obama’s Warning to Boehner Started Road to Budget Plan- (www.bloomberg.com)

'Fiscal cliff' deal has billions in business tax breaks - (www.latimes.com)

Business leaders say ‘cliff’ deal won’t ease economic uncertainty - (www.washingtonpost.com)

How Deal Was Made, Unmade, Then Saved - (online.wsj.com)

Lawmakers Gird for Next Fiscal Clash, on the Debt Ceiling - (www.nytimes.com)

Fresh Budget Fights Brewing - (online.wsj.com)

Wednesday January 16 Housing and Economic stories

TOP STORIES:

Zynga puts 'PetVille' out of its misery - (www.sfgate.com)  The loss of a pet can be traumatic, even when it's a virtual pet. Players of Zynga's "PetVille" have lamented this week's shutdown of their favorite Facebook game. The end itself wasn't news - the game was one of a dozen underperforming titles the struggling San Francisco company decided to ax as part of a strategy announced in November to cut costs and reallocate resources. But this month on Zynga's online community forums, "PetVille" players seemed to be holding out hope that the company would spare one of its oldest games and save the virtual pets they spent time and money raising. Non-players might view such games as a waste of time. But Zynga intentionally designed titles like "FarmVille" and "CityVille" as places players could enjoy daily as virtual extensions of themselves and their creativity.

Obama Issues Executive Order Granting Pay Raises to Congress, the Vice President, Judges; Any Raise is Too Much; Congress Approval Rating is 18% - (Mish at globaleconomicanalysis.blogspot.com) Congress has done such a beautiful job handling the fiscal cliff and debt ceiling that president Obama felt it mandatory to issue an Executive Order Giving Biden, Congress Pay Raises,  President Barack Obama issued an executive order to end the pay freeze on federal employees, in effect giving some federal workers a raise. One federal worker now to receive a pay increase is Vice President Joe Biden. According to disclosure forms, Biden made a cool $225,521 last year. After the pay increase, he'll now make $231,900 per year. Members of Congress, from the House and Senate, also will receive a little bump, as their annual salary will go from $174,000 to 174,900. Leadership in Congress, including the speaker of the House, will likewise get an increase.

Fiscal-cliff bill retains aid for struggling homeowners - (www.marketwatch.com) Congress’s fiscal-cliff deal extends a tax break for struggling homeowners that advocates say is key in supporting distressed communities and the housing market. The Mortgage Forgiveness Debt Relief Act of 2007, signed into law by President Bush, enables struggling homeowners to avoid paying taxes on forgiven mortgage debt from short sales or loan modifications. The tax break was scheduled to expire in the new year, but has been extended through 2013. Without the break, forgiven debt can be treated as taxable income, and already struggling homeowners would face taxes from a short sale or loan modification. For example, an underwater homeowner in the 25% tax bracket could pay $12,500 in taxes for a short sale in which his house sold for $150,000, but he previously owed $200,000. With the tax break, the homeowner would not have to pay taxes on the $50,000 of forgiven debt.

Mutual Guarantee Society: Spain Proposes State Guarantee of Bank Loans to Small and Medium Businesses - (Mish at globaleconomicanalysis.blogspot.com) Lending in Spain has all but dried up. Banks don't want to (or cannot) lend because they are capital impaired and there are too few creditworthy risks. In such an environment, lending is not wise. It will lead to more losses. But that is not how government bureaucrats think. Prime minister, Mariano Rajoy is preparing measures to 'desbancarizar' save the economy and SMEs…The Government is considering the creation of new instruments for SMEs operate with the State guarantee, which is considered key to boost economic activity. At the same time, they want to boost mutual guarantee societies, an instrument in the hands of the regions that did not just start with all its potential. In parallel, the Ministry of Economy is betting big on the credits of the ICO for SMEs, about 22,000 million euros in 2013 for self-employed and SMEs.

Former Icelandic bank executives jailed for fraud – (www.indepdendent.ie) A Reykjavik court sentenced Glitnir's former chief executive, Larus Welding, and former head of corporate finance, Gudmundur Hjaltason, each to nine months in jail, of which six months were suspended for two years. They had denied the charges. Prosecutors said the two approved a loan to a company which owned shares in Glitnir so that the company could in turn repay a debt to Morgan Stanley. The decision, taken outside the regular decision-making process, meant Glitnir was too exposed to the company and cost the bank at least 53.7 million euros ($71 million), the prosecution said.

OTHER STORIES:

Foreclosure Review Scrapped On Eve Of Critical Watchdog Report, Congressman Says - (www.huffingtonpost.com)

Big Hedge Fund Whacked - Bruce Krasting – (www.zerohedge.com)

Sarasota author suing biggest U.S. bank over foreclosure - (www.heraldtribune.com)

Michigan Homeowners Face Stealth Tax Increase Thanks To A DINO And The GOP - (www.mfi-miami.com)

Euro Zone Factory Downturn Deepens in December - (www.cnbc.com)

Bearish Hedge Funds Outfoxed by Euro Zone in 2012 - (www.cnbc.com)

Top Goldman Sachs Execs Get Shares on New Year's Eve - (www.cnbc.com)

Latvia Accepts Austerity, and Its Pain Eases - (www.cnbc.com)  

Armed Robbers Hit Paris Apple Store - (www.cnbc.com)