Nationally, prices rose 2.6 percent in August, according to a repeat sales index from Lender Processing Services. Prices are up an even stronger 4.6 percent from the beginning of 2012. Much of the gains are due to big drops in sales and volumes of distressed properties (foreclosures and short sales).
The share of distressed properties in total home sales fell to a record low of 38.6 percent in September according to an index from Campbell/Inside Mortgage Finance. That is based on a three-month moving average. The “Housing Pulse” index is down 10 percentage points from the near-record-high 48.7 percent recorded in February of this year.
“The precipitous drop in the share of distressed properties in the housing market is largely attributable to fewer foreclosed properties or real estate owned (REO) being put up for sale by banks,” according to the report. “HousingPulse respondents reported in October that major banks appear to be keeping many REO properties off the market this year. But they also suggest banks may be looking to unload significant amounts of REO next year — a move that could put downward pressure on home prices.”
The impact the the dwindling number of foreclosed properties is having on home prices is most obvious in markets like Phoenix, where distressed sales made up the bulk of the market for the last few years. Prices there are up 17 percent from a year ago, although still down 41 percent from their peak in 2006, according to LPS.
2--Stiglitz on inequality, Daily Ticker
"America has the least equality of opportunity of any of the advanced industrial economies," Stiglitz says. In short, the status you're born into — whether rich or poor — is more likely to be the status of your adult life in America vs. any other advanced economy, including 'Old Europe'.For example, just 8% of students at America's elite universities come from households in the bottom 50% of income, Stiglitz says, even as those universities are "needs blind" — meaning admission isn't predicated on your ability to pay.
"There's not much mobility up and down," he says. "The chances of someone from the top [income bracket] who doesn't do very well in school are better than someone from the bottom who does well in school."
Because the children of those at the top of society tend to do better than those at the bottom — thanks, in part, to better education, health care and nutrition — the income inequality that's slowly emerged over the past 30 years will only widen in the next 10 to 20 years.
If the root causes of income inequality go unaddressed, America will truly become a two-class society and look much more like a third world economy, Stiglitz warns. "People will live in gated communities with armed guards. It's a ugly picture. There will be political, social and economic turmoil." (Hence the book's subtitle: 'How Today's Divided Society Endangers Our Future')
The good news is Stiglitz believes this "nightmare we're slowly marching toward" can be avoided, citing Brazil's experience since the early 1990s as an example of a country that has reduced income inequality. Among other things, he recommends improving education and nutrition for those at the bottom of society, and eliminating "corporate welfare" and other policies which "create wealth but not economic growth." ...
"What I want is a more dynamic economy and a fairer society," he says, suggesting income inequality is ultimately detrimental to those at the top, too. "My point is we've created an economy that is not in accord with the principles of the free market.
3--How Barack Obama Vindicated 'The Cult of the Presidency', Atlantic
Published in the spring of 2008, Gene Healy's book The Cult of the Presidency argued that the Bush Administration's alarming expansion of executive power couldn't be completely explained by fear of Islamist terrorism, the ideology of Dick Cheney, or the machinations of David Addington and John Yoo. Critics were right to decry their excesses at home and abroad, and to worry about an Imperial Presidency taking hold in America. "But the problem cannot be solved simply by bringing a new administration to power," Healy wrote. "The fault lies not in our leaders but in ourselves. When our scholars lionize presidents who break free from constitutional restraints, when our columnists and talking heads repeatedly call upon the 'commander in chief' to dream great dreams and seek the power to achieve them -- when voters look to the president for salvation from all problems great and small -- should we really be surprised that the presidency has burst its constitutional bonds and grown powerful enough to threaten American liberty?"
4--Orders for U.S. Capital Goods Stagnate as Spending Slumps, Bloomberg
5--Further cuts leading to collapse of Greek health system, WSWS
Every newly released detail of the fifth Greek austerity package demonstrates that the European Union is prepared to resort to the most brutal measures to secure the profits of speculators. One of the hardest hit victims of the austerity program dictated by the EU and the IMF is the Greek health sector. In the heart of Europe a large proportion of the population is being deprived of any sort of health care.
On Wednesday a number of newspapers reported that the Greek government has agreed to a new austerity package with representatives of the IMF and the EU. A final decision will be made on Sunday. According to the reports, the package includes not only further cuts to wages and pensions and mass redundancies but also more cuts to the health system. Already decided are savings in health care totaling €2 billion. Part of this sum is to be achieved by laying off 10 percent of doctors and other staff in public hospitals.
This decision could lead to the ultimate collapse of the country’s hospitals. There are already daily protests by doctors, nurses and patients all over the country directed against the catastrophic conditions in the health sector. In June the Greek Medical Association brought the seriousness of the situation to the attention of the United Nations.
According to the aid organization “Doctors without Borders”, the funding of public hospitals has plummeted by 40 percent since 2008, while demand for treatment has increased significantly. Serious shortages have developed because health service suppliers cannot be paid on time under such circumstances.
In some cases vital operations cannot be carried out because suppliers refuse to provide the necessary medicines and/or equipment. The Greek daily Ta Nea reported on a clinic in Thessaloniki, which is no longer able to perform heart surgery due to a lack of stents. In the hospital of the central Greek city of Larisa toilet paper was unavailable for a period of time. Other practices and hospitals have reported a lack of pharmaceutical alcohol for cleaning wounds
6--A new downturn in the global economy, WSWS
There are increasing signs that the global economy is about to enter a new period of financial turbulence, coupled with deepening recession in a growing number of countries.
In the immediate aftermath of the global economic breakdown that began in 2008, set off by the collapse of the US investment bank Lehman Brothers, governments around the world took on increased debt as they made available trillions of dollars to prevent a complete collapse of the financial system. Meetings of the Group of 20 were dominated by pledges there would be no return to the conditions of the 1930s and assurances that the lessons of history had been learned.
The writings of John Maynard Keynes, the British economist of the 1930s who advocated increased government spending to counter depressions, were suddenly back in vogue. But a sharp turn came in June 2010, when a meeting of the G20 initiated a turn to austerity, emphasising the necessity to impose “fiscal consolidation.” The essence of this program was to claw back the money given to the banks through massive cutbacks to government spending, especially on social services.
However, this program brought a contraction in economic growth leading to decreased profit opportunities for major corporations. Faced with this situation, the US Federal Reserve initiated a policy of “quantitative easing”—the provision of unlimited supplies of money to banks and financial institutions. Central banks around the world cut interest rates to record lows and followed that up with their own versions of quantitative easing (QE). Under conditions of a stagnant real economy, these measures were aimed at boosting the value of financial assets, thereby providing a new avenue for finance houses to realise speculative profits.
While the QE program and its equivalents have been touted as a means of preventing a slide into global recession—US Fed Chairman Ben Bernanke claimed the recently enacted QE3 program was motivated by continuing high unemployment—they have done virtually nothing to boost the real economy. Their only significant impact has been to increase profits through financial manipulation, with the ultra-cheap money provided by the central banks.
But now there are signs that a new stage in the global breakdown is underway, marked by growing recessionary trends, as the impact of the central bankers’ program wanes...
Overall, US corporate profits and earnings are expected to fall for the first time since 2009. The latest data on the US economy show that gross domestic product (GDP) grew at an annual rate of only 2 percent in the third quarter, well below that required to maintain employment levels. Were it not for the effect of an increase in defence spending, the figure would have been significantly under market expectations.
The most significant feature of the US GDP data was investment spending. Its continuing decline reduced the overall growth figure by 0.1 percentage points for the quarter, while imports and exports both fell, taking off 0.2 percentage points.
While the central bankers will continue to pump money into financial markets, these measures will do nothing to turn the situation around. This week, in a major speech, the governor of the Bank of England, Mervyn King, noted that every increase in the money supply had a declining impact on the real economy.
His warnings are confirmed by historical trends. Writing in the Financial Times, financial analyst Satyajit Das pointed out that between 2001 and 2008, borrowing against the rising value of houses contributed about half the growth in the US. “But ever increasing borrowings are needed to sustain growth. By 2008, $4 to $5 of debt was required to create $1 of US growth, up from $1 to $2 in the 1950s. China now needs $6 to $8 of credit to generate $1 of growth, an increase from around $1 to $2 15-20 years ago.”
At the meetings of the G20 in 2009, government leaders insisted there would be no return to the protectionist measures of the 1930s which had such a devastating impact on world trade. But the QE program is producing a twenty-first century version of the beggar-thy-neighbour policies of the Great Depression. The flood of money from the US Federal Reserve has pushed down the value of the US dollar, hitting the export markets of its competitors and leading to the development of “currency wars” as they try to maintain their position.
Furthermore, the boosting of financial assets under conditions of slowing economic growth threatens to replicate the conditions that sparked the 2008 collapse on an even broader scale. This is because, unlike the situation four years ago, the central banks themselves are now heavily involved in financial markets and stand to lose massive amounts in a market collapse.
The central bankers and capitalist politicians claim that while their actions may not have promoted growth, they have at least averted a return to the conditions of the 1930s. These claims are belied by the conditions in Spain and Greece, where unemployment is already at 1930s levels.
Moreover, when viewed from an historical perspective, their self-congratulations are somewhat premature. The Great Depression came after a decade of financial and economic turbulence set off by the breakdown of global capitalism that began with the outbreak of World War I in 1914.
This time around, the capitalist breakdown began with a financial crisis that has now set in motion a deepening contraction in world economy.
Like their counterparts in an earlier period, the ruling elites have no response to the historic crisis of the profit system other than a social counterrevolution against the working class, militarism, and the imposition of dictatorial forms of rule.
Far from ending, the global economic crisis is only just beginning
7--NSA’s secretive surveillance program goes to the Supreme Court, RT
8--Canada’s Hot Housing Market Chills in September as Prices Drop, WSJ
Canadian home prices in September fell the most in nearly two years, suggesting that recent changes to the country’s mortgage rules have reined in Canada’s once-hot housing market.
9--The case against Countrywide, Reuters
10--U.S. sues BofA, calling loan fraud 'brazen' , LA Times
The $1-billion civil suit alleges that BofA's Countrywide fraudulently deceived mortgage finance giants Fannie Mae and Freddie Mac into believing the company's risky loans were safe and sound.
Full Spectrum adopted High-Speed Swim Lane, abbreviated as HSSL or Hustle, so loans would "move forward, never backward" at increasing speed, the suit said.
"To accomplish these goals, the Hustle removed necessary quality-control 'toll gates' that could slow down the origination process," the U.S. attorney's office said.
For example, it said, the Hustle eliminated quality-control underwriters from loan production, even for many high-risk loans, such as stated-income loans. "Instead," it said, "the Hustle relied almost exclusively on unqualified and inexperienced clerks, called loan processors" — employees previously deemed unqualified even to answer questions from borrowers.
Employee compensation was shifted to reward only the volume of loans pushed through, not the quality, alleged the suit, which said Countrywide's own systems detected an unusually high number of defective loans.
Ultimately, the volume of defective loans became eight to 10 times the average for Fannie and Freddie mortgages, the suit said. Countrywide concealed that from big loan buyers and set up a bonus plan for employees who managed to overrule the internal classification of loans as defective, according to the suit.
One case cited in the lawsuit involved an Altadena mortgage that defaulted in 10 months. The borrower's listed monthly income of $8,500 was at a nonexistent company with the same name as the borrower, the appraisal overstated the property value 31%, and the loan was put through an automated loan-checking system 58 times before it was approved, "which by itself suggests fraudulent manipulation of data," the suit said.
The suit also accuses BofA of refusing to buy back flawed loans from Fannie and Freddie or compensating them for the damage caused by the loans