Wednesday, January 30, 2013

Today's links

1---(archive--July, 2012) ‘Shadow REO’: As Many as 90% of Foreclosed Properties Held Off the Market, Estimates Suggest“, naked capitalism
As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It’s a testament to lenders’ fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.
Online foreclosure marketplace RealtyTrac recently found that just 15 percent of REOs in the Washington, D.C., area were for sale, a statistic that is representative of nationwide numbers, the company said..
And the article presents the obvious conclusion, that keeping homes off the market is leading to higher prices than you’d see if they were put up for sale:
In fact, if lenders turn their REO release valve to full blast, the deluge of foreclosures cascading onto the market could plunge the country into a recession, said Thomas Martin, president of consumer advocacy group Americas Watchdog.
“If they let the dam essentially break. It could be a catastrophic disaster for the U.S. economy,” he said, predicting that some major banks would fail and home prices would nosedive by 20 percent.
That doomsday scenario has many industry professionals supporting lenders’ tactics of holding onto most of their REOs. Otherwise, they would be “causing the floor to fall out from underneath the entire market,” Faranda said. He added that banks don’t have the manpower to push the paperwork required to put all their foreclosures on the market.
 
2--NYSE Margin Debt Rises To Fresh Five Year High As Short Interest Slide Continues, zero hedge

According to the latest NYSE margin debt data, the December of margin debt used for various leveraging activities rose for the fifth consecutive month, reaching $331 billion - the highest since February 2008, when the market was declining, and back to the levels from May 2007 when the market was ramping ever higher to its all time highs which would be hit 3 short months later, and just as the subprime bubble popped.

3---The delinquency rate today on student loans that were originated from 2005-2007 is 12.4 percent. The comparable figure for student loans that were originated from 2010-2012 is 15.1 percent, representing an increase in the delinquency rate by nearly 22 percent, zero hedge

4---Obama Recession’ or Full Employment?, counterpunch

There are lots of interesting economic stories in the last week, but we want to focus your attention on two topics. One shows the only path out of the economic collapse. The other shows the direction that will most assuredly take us into deeper collapse. So far, the bi-partisans in Washington, DC are on the path to an ‘Obama Recession.’
First, the wrong path: austerity. Great Britain has shown the world what austerity will bring – deeper recession. Britain may be going into its third economic collapse in four years with a 0.3% decline in its GDP in the last quarter and its worst year for manufacturing on record. David Cameron was elected on the promise of austerity and he delivered. The result is Britain has the worst economy on record dating back to 1830. That’s right, since the before the reign of Queen Victoria!...

Jobs. Job creation is the one solution that has not been tried by government. Jobs are the solution to so many economic problems. The deficit, which the bi-partisans in Washington are fixated on, is directly related and the only path to reducing the deficit is moving toward full employment. Full employment solves so many other problems: poverty and hunger, eviction and foreclosure, personal debt, retirement savings – all are ameliorated by full employment. But, when was the last time you heard any elected official utter the phrase “full employment”?

5---Grading the deficit hawks, counterpunch

Instead of focusing on the fact that the economy is down more than 9 million jobs from its trend growth path, and that the real wage of the typical worker has risen by just 2 percent over the last decade, the policy people in Washington are debating the best way to reduce the deficit. This makes about as much sense as debating the right color to paint the White House kitchen.

6---U.S. homeownership rate continues to slip, Housingwire

12---Treasury 10-Year Yield at Almost 9-Month High Before Fed, Bloomberg

13---Real GDP decreased 0.1% Annualized in Q4, calculated risk

14---Shiller on Housing: "Maybe housing will go down...People should think of it as a risky investment.", WSJ (video)  "Experts do not think we are going back to the same boom. But the rhetoric--the "cheap talk"--is that we are "off to the races again". But among the people who think about it seriously, doubt it". (Shiller dismisses housing recovery idea)

15---“The True Story of the Bilderberg Group” and What They May Be Planning Now, global research

16---Obama's regressive immigration plan, wsws

Obama made clear that his vision of immigration “reform” was based on the same draconian principles as those advanced by the bipartisan Senate group. He touted his administration’s record number of deportations—nearly 410,000 last year alone and 1.2 million in his first term—and doubling the number of “boots on the ground” at the US-Mexico border compared to 2004.
.......In a move toward establishing a form of national identity card, the plan would also mandate development of a “fraud-resistant, tamper-resistant Social Security card” as well as creating “a voluntary pilot program to evaluate new methods to authenticate identity and combat identity theft.”

17---Bad news for Bernanke: 10 year Treasuries touch 2%, Bloomberg

Benchmark 10-year notes yielded 2 percent for a second day, the highest level since April, amid better-than-forecast economic data. The five-year notes drew a yield of 0.889 percent, versus an average forecast of 0.887 percent in a Bloomberg News survey of seven of the Fed’s primary dealers. Investors increased bets to the highest level since 2011 that the price of Treasuries will drop, a JPMorgan Chase & Co. surveyed showed. Trading in options that profit if Treasury yields rise surged yesterday to the highest since 2007.

“There’s a shift in sentiment on where the next level is in the marketplace,” said Scott Graham, head of government bond trading at Bank of Montreal (BMO)’s BMO Capital Markets unit in Chicago, one of the 21 primary dealers required to bid at U.S. debt auctions. “This 2 percent level will be a meaningful buy level for accounts.”
The 10-year note yield rose four basis points, or 0.04 percentage point, to 2 percent at 5 p.m. in New York,

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