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To those of you who are easily offended, please accept my apologies in advance for the closing few seconds of this video clip that is just too funny not to share (hat tip ES).
According to this CNN/Money report, unless Congress acts quickly, March is going to be a pretty miserable month for many of those without jobs, particularly in California.
One million could lose jobless benefits in MarchWhile it is an entirely different situation for those who are supporting families with their jobless benefits, the phrase "funemployment" is increasingly heard regarding the condition of much younger workers or, in this case, would-be workers.
More than 1 million people could lose their jobless benefits and health insurance subsidy in March if Congress doesn't act fast.When it returns from the President's Day recess on Monday, the Senate will have one week to extend the deadlines to apply for federal unemployment benefits and the COBRA health insurance subsidy. Currently, the jobless have until Feb. 28 to sign up.
Without an extension, people receiving state jobless benefits won't be able to apply for additional federally paid unemployment insurance, and anyone already receiving those checks could be cut off.
About 11.5 million people currently depend on jobless benefits. Nearly one in 10 Americans are out of work and a record 41.2% have been unemployed for at least six months. The average unemployment period lasts a record 30.2 weeks.If memory serves, California has approximately 200,000 state employees, about the same number of unemployed that could lose their jobless benefits next month.
While unemployment benefits now run as long as 99 weeks, depending on the state, not everyone will receive checks for that long a stretch. Those who run out of their 26 weeks of state-paid coverage after Feb. 28 would not be able to apply for federal benefits. The jobless currently receiving extended federal benefits, which are divided into tiers, would stop getting checks once they complete their tier.The law project would like to see the deadline extended to the end of the year so "workers don't fall hostage" to the machinations within Congress, Conti said. Julian agrees, saying waiting for lawmakers to act has been "a living hell."
State agencies are expected to start mailing notices to the jobless to alert them to the impending end of their benefits.
Terry Hoskins does what many other homeowners would probably love to do - bulldoze the house that the bank had planned on taking back via foreclosure.
Well, someone at the Bureau of Labor Statistics has been poking around here this afternoon and they spent a fair amount of time here. Hey! That's my taxpayer money, isn't it?
It still seems to me that, despite what you may have read in the mainstream media and elsewhere today, monthly core inflation did not decline for the first time since 1982.
Reuters filed this report about the latest mortgage delinquency and foreclosure data from the fourth quarter, a time when things clearly didn't improve for homeowners with mortgages.
Do you think we'll still be talking about this in 2011, 2012, and 2013?The Mortgage Bankers Association said on Friday the combination of loans in foreclosure and one payment in arrears was 15.02 percent on a non-seasonally adjusted basis, the highest ever in the survey.
...
A sizable number of the loans in the 90-plus day delinquent bucket are in loan modification programs. They are carried as delinquent until borrowers demonstrate they will make the payments agreed to in the plans.
The pattern of mortgage delinquencies now very much follows the pattern of unemployment, which was at 9.7 percent in January, according to the Labor Department.
"Therefore, until the issue of this large segment of long-term unemployed is resolved, many of the longer-term mortgage delinquencies will remain a problem with a strong likelihood of turning into foreclosures down the road," said Jay Brinkmann, MBA chief economist.
It's hard to believe that, less than five years ago at the annual Federal Reserve gathering in Jackson Hole, Wyoming as the U.S. housing bubble was fully inflated and seeking out a pin, former Fed chief Alan Greenspan was lauded as the "greatest central banker ever".
Today, according to this story in the Wall Street Journal, some people are hiding portraits that they paid outlandish prices for under their beds or in the back of closets.
There are lots more details in the WSJ report:In the years before the 2008 financial crisis, Wall Street and Mr. Greenspan's reputation boomed in tandem, and an obscure young artist, Ms. Crowe, gained notice for her distinctive oil portraits of the Fed chairman, now 83 years old. Working from photographs she found online and in newspapers and magazines, Ms. Crowe produced colorful, whimsical canvasses that highlighted Mr. Greenspan's wrinkled forehead, pursed lips, droopy ears, hand gestures and oversize glasses.
The potential good news in all of this, expressed by Mr. Schirmer above, is that the portraits are likely to increase in value after Alan Greenspan passes on.
A gallery in the Hamptons that exhibited her paintings in the summer of 2005 sold every one within a couple of days, recalls Sally Breen, who organized the show with Rebecca Cooper. She had a second Greenspan show in downtown Manhattan. Ms. Crowe says she produced upwards of 50 canvasses of Mr. Greenspan. All were snapped up, some for as much as $5,000 to $10,000, she says.
As her popularity grew, Ms. Crowe flew business class to Hong Kong, where she painted portraits of leading financial figures, including Hong Kong's chief executive and the head of its Monetary Authority. She realized that she'd found her niche: painting financial gurus. The future looked dazzling.
She painted one of the portraits on live television when Mr. Greenspan retired. It fetched $150,400 for charity in an online auction.
Now, the man who bought that painting, Tampa Bay-area businessman Matthew Schirmer, says he keeps it under his bed.
Bloomberg reports that, in a speech to be delivered today, President Obama will propose that another billion dollars or so be thrown at the nation's housing crisis in an attempt to forestall more foreclosures.
While this is just a "drop in the bucket" as compared to other housing-related rescue efforts, it does just help to push the problems farther into the future by providing an artificial support to the market.The president plans to announce today in Las Vegas $1.5 billion in funding for housing finance agencies in states where the average prices for homes have fallen more than 20 percent from their peak, according to an administration fact sheet.
The funds, from money earmarked for housing in the Troubled Asset Relief Program, will be provided for state programs such as those to assist unemployed homeowners and mortgage holders who owe more than their houses are worth, the fact sheet says.
This morning's inflation report is generating all sorts of headlines about core consumer prices falling for the first time since 1982. In looking at the screen shot of the detailed data from the Labor Department below, there is clearly some sort of a math problem associated with changes that were recently made to category weightings (note that only the relevant data is included below from a much larger table).
It appears that they are mistakenly weighting the -2.1 percent decline for lodging away from home at a much higher level and, since housing is a major component of core inflation, the first negative reading in 28 years was the result.
[Major news outlets are reporting that core inflation has fallen for the first time since 1982, however, there appears to be a problem with the re-weighting of categories within the consumer price index - more on that later.]
The Labor Department reported that consumer prices rose 0.2 percent in January, paced by a surge of 4.9 percent in the cost of energy commodities, and, as the worst of the year-over-year energy price comparisons continue, annual inflation now sits at 2.6 percent.
By category, the report showed the same well established trend of recent months - steadily rising prices for medical care and education with huge year-over-year increases for the energy components within both the housing and transportation categories.
In the case of housing, energy price gains such as home heating costs were offset by falling shelter costs that reportedly tumbled 0.5 percent in January leading to the overall monthly decline for the housing category as a whole.
TOP STORIES
Study: States must fill $1 trillion pension gap - AP
Discount-Rate Hike Signals End to Emergency Measures - Bloomberg
Bleak Economy Pushing Health Insurers to Raise Rates, Analysts Say - NY Times
Politics in America: What's gone wrong in Washington? - Economist
Banks: We'll give you money to save money - CNN/Money
Senate panel mulls watered down "Volcker rule" - Reuters
Wall Street's Bailout Hustle - Taibbi, Rolling Stone
Debt-tastrophe - Hoenig, NY Post
According to data released a short time ago, the Federal Reserve took down another big slug of mortgage backed securities over the last week - some $53 billion as indicated below - in what is supposed to be their second-to-last mid-month buying spree that has produced the regular stair-step pattern in the chart.
After becoming a celebrity economist down under as a result of being one of the few dismal scientists to see the global financial market meltdown coming a few years back, Steve Keen has learned to take the good with the bad, that is, unless it crosses some sort of line, which, according to this entry at his blog, Jessica Irvine at the Sydney Morning Herald just did.
Here's the offending piece from today's paper:I normally don’t comment on articles about me, since I am aware that now that my views are part of the public debate, I have to take the good with the bad in coverage. I wouldn’t have written this either, were it not for the line “If only his predictions were so reliable” in Jessica Irvine’s piece in today’s SMH “Walking on a wire stretched between stimulus and debt“.
In a newspaper that sees itself as a paper of record, I would have expected a bit of context here–some acknowledgment of the fact that I was calling a serious financial crisis from December 2005, whereas conventional economic forecasters were predicting falling unemployment and rising inflation–rather than a throwaway line like that.
You've got to hand it to Steve Keen, the mild-mannered house price Cassandra of Sydney's western suburbs: he knows how to get a headline and he sticks to his guns. If only his predictions were so reliable.In fairness to Keen (and while acknowledging that I'm far from an expert on the local economy), conditions in Australia would undoubtedly be much different if not for the fact that they are a natural resource rich country located close to China where stockpiling commodities financed through one of the most rapid expansions of bank credit in history appears to be a national obsession.
The 57-year-old academic will embark on a 224-kilometre hike from Canberra to the top of Mount Kosciuszko in April, wearing a T-shirt reading ''I was hopelessly wrong on house prices. Ask me how!'' He lost a bet against a Macquarie Bank economist, Rory Robertson, that house prices would fall.
If only the financial market innovation seen on Wall Street over the last few decades could somehow be adapted to space exploration...
In this item over at Barry's Big Picture blog, Paul Brodsky and Lee Quaintance of QB Partners explain why the world's most enduring ongoing bull market is not understood by the mainstream investment community.
The whole thing is worth reading as it goes a long way in explaining why, despite its wonderful record over the last decade, most investment advisers still have no use for the metal. As for top-ticking the market, keep an eye on Money Magazine because, in my view, you'll know when it's time to get sell your gold when Money Magazine says that you should buy it.Investing in gold is tough because it challenges the investor to come to terms with the faults of his or her government, and then to act upon them. It requires the admission that there is risk in holding cash. This is counter-intuitive to this generation’s vintage of financial asset investor accustomed to thirty years of a credit build-up alongside declining interest rates.
There is certainly much more chatter in the press than in years past surrounding gold, and there certainly is more US retail investment (through ETFs) than there has been. That has been reflected to some degree in its rising price, no doubt. An ounce of gold has risen from about $250 in 1999 to current levels, having moved higher in each year and making it one of the best performing assets over the last ten years. So then, is a person that pays $1,100 an ounce today top-ticking the market by entering a crowded trade that has little upside and great downside? We don’t think so.
Well, it looks as though the gold price is now recovering nicely from the announcement yesterday by the IMF (International Monetary Fund) that they intend to sell another 191 tonnes of gold bullion on the open market.
A graphic depiction of the damage that was done yesterday is shown below from this item at the International Business Times, but, since this chart was created last night, the gold price has risen smartly back up to almost $1,120 an ounce.
The most recent announcement is part of a program that was approved last fall to sell 403 tonnes of gold bullion and this follows the surprising move by the Reserve Bank of India a few months ago to buy almost the entire first half of the overall sale.
For years, the threat of IMF gold sales has been hanging over the market and what happens with the 191 tonnes now offered up for sales could have a big impact on the gold price. While the sales are to be "phased in" over time, the IMF is still open to off-market sales and many believe that an Asian central bank such as China would be a willing buyer at lower prices.
TOP STORIES
IMF announces 192 tonne gold sales - MarketWatch
China seen allowing stronger yuan in 2010 - Reuters
US bank lending falls at fastest rate in history - Telegraph
US state pension funds have $1 trillion shortfall: Pew - Reuters
Asian central banks seen as buyers for 192 tonnes of IMF gold - Mineweb
AIG to keep up to $500B in controversial assets - CNN/Money
Moody's downgrades Sacramento County ratings - Reuters
The United States: Debtor and Leader? - WSJ
David Walker, former U.S. Comptroller General and current head of the Peter G. Peterson Foundation, talks with Bloomberg about the U.S. budget deficit and the mounting debt.
Boy, for a group of policymakers at the nation's central bank who, in a best case scenario, are going to just sit on their hands for at least the rest of the year, there sure has been a lot of talk about an "exit strategy".
That is, how the Federal Reserve plans to withdrawal the trillions of dollars in asset purchases, emergency lending facilities, and liquidity measures that have been undertaken over the last year that purportedly saved us from another Great Depression.
While it's probably a good idea to begin thinking about this sort of thing, the way Fed chief Ben Bernanke and others at the central bank have been talking lately, you'd think that the economy is about ready to fire on all cylinders again and that there's a pressing need to begin dialing back on some of the aid they've been providing.
What they should probably be worried about instead is the massive wave of foreclosures now washing up onto shore and the waning inventory rebuilding cycle that, when combined, will require more assistance in the form of money printing in the year ahead, not less.
Just this morning, Philadelphia Federal Reserve Bank President Charles Plosser said that he would favor selling some of the $1.25 trillion in mortgage-backed securities that have been piling up on the Fed's balance sheet "sooner rather than later", as if, he really thinks that the economic recovery we've been experiencing over the last six months - built mostly on government bailouts and handouts - is going to last.
Last week, it was Chairman Ben Bernanke who detailed a plan to Congress that would have the central bank adjusting the interest paid on "excess reserves" - money held by member banks at the Fed - in order to keep credit from expanding too rapidly and realizing the worst of the inflation hawks' fears - runaway inflation.
Shouldn't the question of what will happen to the market for home loans when the Fed stops their monthly purchases of between $60 to $100 billion worth of mortgage-backed securities next month be a more pressing concern?
Sure, they now own a considerable amount of the souring mortgage debt in the U.S., but they'll probably have to buy at least another trillion dollars or so to keep the housing market propped up, that is, unless there is some other plan in the works where, with their loss limits recently removed, wards of the state Fannie Mae and Freddie Mac can take on the job.
Goldman Sachs weighed in last week with something about the Fed not raising interest rates until 2012 and there are more than a few who think that we'll be turning Japanese this decade in a very big way, as in, ZIRP (Zero Interest Rate Policy) for as far as the eye can see.
Maybe all this talk about "exit strategies" is simply a way for policymakers to generate confidence that might not otherwise be there.
For example, anyone looking at consumer spending, consumer confidence, or the unemployment rate could easily come to the conclusion that we've got a long way to go before the economy begins to grow again in any substantive sort of way.
But, if they were to listen to the Federal Reserve talking about how they're going to get out of the business of printing money on a scale never before seen by Mankind, then maybe they'll think that, just maybe, the Fed knows something that they don't know.
Then again, the more likely explanation is that economists at the central bank are just as clueless about where the economy is headed today as they were a few years ago before we all experienced the worst financial market crisis and the sharpest economic contraction since the end of World War II.
In case anyone needs to be reminded, here's what Fed chief Ben Bernanke thought about the economy and financial markets back in the middle of the last decade.
Why are we still listening to this guy?
Is there any reason to think that he'll do any better in this decade than he did in the last one?
Isn't this talk of the Fed's "exit strategy" way too premature?
There have been a number of close calls in the last few hours, but today could be another one one of those relatively rare occurrences where there are no crossings on the Kitco three-day gold chart - it's got to get back up above the $1,120 an ounce mark to make that happen.
Also, according to recently released SEC filings, gold bullion remains the number one holding at John Paulson's hedge fund, still totaling over $3 billion, and George Soros was a big buyer of the metal late last year, doubling his holdings to about $663 million.
The LA Times reports on the latest proposed spending cuts in California, part of an ongoing process aimed at closing a $20 billion budget gap following last year's shortfall of about three times this amount that, if not for the billions of dollars in Federal stimulus money, would have produced an even more disastrous outcome.
Apparently, most legal immigrants are provided with a broad range of federal assistance after living in the U.S. for five years and, given the commitment of support from the U.S. families who sponsored them, this does seem to be a reasonable approach, however, it seems clear that a lot of people have become dependent on this aid.Gov. Arnold Schwarzenegger's latest proposals to close California's budget shortfall would end public assistance for most new legal immigrants, eliminating emergency cash, food and medical aid for those who don't yet qualify for federal welfare.
The proposal would represent an about-face for the state. In 1996, Congress denied access to welfare for most legal immigrants who weren't citizens. California and other states established programs to fill the gap.
Now, officials say the state can't afford the price tag. Schwarzenegger's plan would save $304 million but leave tens of thousands of elderly, disabled and impoverished people with no safety net in a deep recession.
...
When families petition to bring relatives to the U.S., they are required to sign affidavits agreeing to support them financially for up to 10 years. But many of these families have fallen on hard times.
The Census Bureau reported(.pdf) a larger than expected increase in housing starts last month, however, there was an equally surprisingly decline in permits for new construction, all part of what is likely to be a very long process of rebounding from record low activity in the homebuilding sector last year.
Permits for new construction, a leading indicator for the homebuilding industry, fell 4.9 percent from December to January, from 653,000 units into 621,000, an increase of 17 percent from a year ago but down 73 percent from the highs seen in late-2005 at the height of the housing bubble.
Given that there are now millions of homes working their way through the foreclosure process, set to hit the resale market in the year or two ahead, don't look for much of an improvement in the business of home construction for a while.
TOP STORIES
Elders of Wall St. Favor More Regulation - NY Times
California's sorry state a major threat to U.S. - Globe and Mail
New wave of foreclosures by end of 2010 is feared - LA Times
White House touts job creation on stimulus anniversary - MarketWatch
Will We Have to Blow Up a Continent (Again) Before We Stop Wall Street? - New Deal 2.0
The Fed's Exit Strategy: Unlegislated Bailout of Fannie and Freddie - Hussman Funds
The trouble with bubbles: They're elusive - Globe and Mail
Tax audits: Uncle Sam wants you! - CNN/Money
But, not the kind of tricks that you were probably thinking of when you read the title directly above - these are much more subtle tricks that went into the building of the Parthenon.
Teri Buhl of Hearst CT News files this report about New York Times reporter Zach Kouwe lifting material from both The Wall Street Journal and The Mortgage Lender Implode-O-Meter in yet one more interesting nexus of old and new journalism.
The business media was shocked to see the New York Times issue a quasi apology to the Wall Street Journal yesterday over one of its Dealbook reporters, Zach Kouwe, copying story lines and not sourcing original reporting to other news publications. There was also mention that ‘other publications’ had fallen victim to story lifts by Kouwe and a note that the New York Times was investigating the situation. The New York Observer printed a copy of the letter from the WSJ editors to the NYT editors detailing the specific infractions.In probably the most surprising part of this story, Kouwe commented, "I don’t know what to tell you. Things move so quickly on the Web that citing who had it first is something that is likely going away, especially in the age of blogs."But for some who had closely followed stories reported by Kouwe at the NYT’s online business blog, Dealbook, this was not so much of a shock. Examples of his copying other journalists’ reporting and sourcing it as his own went back to 2008 – a few month after he left the New York Post and started with NYT’s Dealbook.
On Dec. 26, 2008, an online publication covering the housing market, Mortgage Implode-O-Meter, published an exclusive news report that a group of financial services firms, led by Steven Mnuchin of Dune Capital, would be buying failed IndyMac Bank from the FDIC. IndyMac was one of the first large thrift banks to be seized by the FDIC at the start of the financial crisis.
A day later, Kouwe reported for the NYT’s Dealbook that Dune Capital was expected to buy IndyMac and added two other names of buyers, JC Flowers and John Paulson, to the story. Kouwe’s report did not credit Mortgage Implode-O-Meter for first breaking the fact that 1) a private equity group was buying IndyMac 2) Dune Capital was involved.
Wire services picked up the NYT’s story and the rest of the business press ended up sourcing Kouwe for breaking the news on the sale of IndyMac to a private equity group.
Former CEO of and acting Chairman of BB&T, one of the nation's largest banks, John A. Allison talks about the current monetary system, debt, the Federal Reserve, and the possibility that we'll eventually move back to a system of private banking with gold backed money.
Somehow, you just know this is going to end badly someday...
The BBC reports that the government's survey of U.K. property prices showed a 2.9 percent gain for 2009, paced by an increase of almost five percent in London.
Policymakers in the U.S. must be scratching their heads, wondering how the Brits could not only have succeeded in stopping house prices from falling, but made them rise smartly again after their housing bubble had grown even bigger than ours just a few years ago.Prices rose 3% in England, 3.8% in Scotland and 1% in Wales, but fell 6% in Northern Ireland, the Department for Communities and Local Government said.
The figures suggest that the recovery in house prices last year was not as strong as suggested by lenders.
Both the Nationwide and the Halifax have said that UK house prices rose by nearly 6% last year.
...
Howard Archer, chief UK economist at Global Insight, said: "Virtually all house prices measures, including the DCLG, indicate that house prices troughed in the early months of 2009 and have been firming ever since.
"The revival in house prices since the early months of 2009 is a consequence of buyer affordability and interest being lifted by sharply reduced mortgage interest rates."
A second mortgage credit crunch that will send UK house prices into a new tailspin is looming, economists and credit experts have warned.My guess is that, as the year 2009 begins to fade further into the rear view mirror, a surprising amount of the improvement we saw in the global economy - aided by the largest burst of money printing in the history of the world - will also prove to be 'transitory'.The squeeze on debt will begin to be felt in January next year, when lenders are due to start repaying £319bn borrowed from the Government during the original crisis in 2007 and 2008 – a quarter of the UK's entire £1.3 trillion stock of mortgages.
To pay the money back, credit-rating agency Moody's said, banks and building societies may "limit their lending through tighter credit criteria" – in other words reducing availability and making mortgages more expensive.
Capital Economics added: "The prospect of a fresh mortgage credit squeeze later this year or during 2011 hardly inspires confidence in the durability of the housing market recovery."
...
Moody's added that the benign environment of low interest rates and "other Government stimulus [which] have helped borrowers" may just have been "transitory".
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