After victims of Hurricane Sandy expressed outrage at the 112th Congress’ failure to pass the $60.4 billion disaster aid package, the US House and Senate on Friday approved a $9.7 billion portion of the measure.
The $9.7 billion aid will be used to cover the costs of flood insurance claims made by those who whose homes and businesses were damaged by Superstorm Sandy in late October.
The bipartisan vote came after legislators and the American public expressed outrage over a decision made by Congress to hold off on the vote, leaving it to the 113thCongress to deal with. Leaving the urgent bill to the next Congress would have drastically delayed the time it takes for storm-afflicted states to receive the financial aid they are in such dire need for.
But after Speaker of the House John Boehner announced that the outgoing Congress would not vote on the disaster aid, New York and New Jersey legislators erupted in anger, referring to the delay as a “betrayal”.
Rep. Eliot Engel, D-NY, told the Associated Press that “the speaker should hang his head in shame”, while Rep. Peter King, R-NY, accused Congress of “walking away from a natural disaster” and “walking away from responsibility”.
Residents of storm-afflicted areas were equally as outraged. Just days before President Barack Obama was re-elected president, he promised to assist the victims as quickly as he could. Embracing New Jersey business owner Donna Vanzant, a photo was taken of the president showing intense compassion. The image went ‘viral’ on the Internet but now the woman, who owned a marina that was destroyed in the storm, says she is barely surviving and is still waiting for government assistance.
“The people of this country that have been devastated are looking at this as a betrayal by the Congress and by the nation, and that is just untenable and unforgivable,” said Rep. Michael Grimm, R-NY.
In an interview with the Philly Post, Vanzant said the president’s promise to “immediately get [her] the help that she needs” was not met.
“I have probably suffered $500,000 in losses,” she said. “And we’ve lost all of our docks and our bulkhead, and the estimate for that is $200,000, and you can’t get insurance on your docks or bulkhead.”
For three days after Boehner announced the delay of a crucial vote, US residents have expressed intense outrage and feelings of abandonment by a government that promised them immediate assistance.
“What do I think? I think they’re lucky we’re not armed,” 68-year-old Staten Island resident Rose Mazz yelled out of the window in his storm-damaged home, as reported by Yahoo! News.
To alleviate the anger, the Congress voted on the $9.7 billion portion of the bill, with the other $51 billion to be voted on by the new Congress by Jan. 15.
The partial vote seems to have calmed some of the legislators, with King admitting that he was satisfied with the response. Reps. Grimm and Chris Smith, R-NJ, said they would support Boehner’s reelection.
But the initial decision made by Congress to delay something as urgent as disaster aid for struggling Americans has left its mark on the victims.
“It is why the American people hate Congress,” New Jersey Gov. Chris Christie said in a televised news conference. “Unlike people in Congress, we have actual responsibilities
2---Real unemployment=12.5%, naked capitalism
Real unemployment: 12.206 million (U-3 unemployment) + 8.204 million (undercount) = 20.410 million (up 75,000 from 20.335 million in November)
Real unemployment rate: 20.410 million / 163.715 million = 12.5% (up from 12.4% in November)
Real disemployment: Real unemployment + involuntary part time workers = 20.410 million + 7.918 million = 28.328 million (down 183,000 from 28.511 million in November)
Real disemployment rate: 28.328 million / 163.715 million = 17.3% (down 0.1% from November)
The long term unemployed, those without a job who have been looking for one for 6 months or more, changed little, decling 18,000 to 4.766 million.
By race, unemployment among whites increased slightly (0.1%) seasonally adjusted to 6.9%. African American unemployment which tends to be more volatile even seasonally adjusted increased 0.8% to 14.0%. White teen unemployment, seasonally adjusted, was 29.1%. African American teen unemployment was 40.5%.
3---Next week there might be an early definition and parameters of a “Qualified Mortgage”, oc housing
4---Triple-dip threat rises as UK service sector shrinks, Telegraph
Britain's services sector shrank for the first time in two years in December, increasing the likelihood that the country is "triple-dipping" back into a recession.
5---Global Economic Downturn Ahead, Trim Tabs
Wall Street over the four years since 2009 has been trained to believe that the Federal Reserve will keep stock prices rising. However, now that interest rates are at zero, I’ve got to ask how much longer investors will keep believing that the emperor is fully clothed? To repeat what I’ve often said before: Wages and salaries and not GDP are the best indicators of the state of the US economy. And you can now track wages and salaries as well new job creation on our trimtabs.com/blog site.
Remember, the US is not an island, but part of the global broadband economy. If US wage and salary growth stops, that will not help European and Asian exports. Without growth in exports, Europe will collapse even faster than it has been. And Asian growth also has to slump without higher US demand.
So if Europe and Asia slump that probably will push down US economic activity even further in the second half of this year. Therefore, my best guess right now is that US individual taxable income will slump in the first quarter of this year, have a slight rebound in the Q2 comparatively speaking. But then if Europe and Asia falter so will the US later this year.
But as of right now, recent economic activity looks good having been boosted by $60 billion in extra December 2012 wages and salaries and who knows how many extra billions in realized capital gains. That means there was lots of extra cash in consumers’ hands, which explains why fancy car and trophy real estate sales boomed at year end.
However, now that we are in January most of that extra money has likely been spent or invested. Therefore, it will not be until the end of the month before the decline in wages and salaries will start to show up in economic numbers. And it probably will not be until the middle of February before the magnitude of the already existing economic downturn begins to be felt on Wall Street.
6----Home Price Gains May Slow in 2013, CNBC
Low prevailing mortgage rates, the limited supply of existing homes for sale (either due to the few foreclosure completions or the number of underwater borrowers who cannot sell), and the anemic levels of new home construction are facilitating affordability and feeding demand," noted analysts at Fitch Ratings. "These factors are offsetting weak fundamentals that would otherwise hinder home price growth, such as high structural unemployment and lackluster wage growth."
Fitch contends that home prices remain overvalued and that price growth is not being driven by fundamentals but by technical factors that could easily change. As more homes move more quickly to final foreclosure, especially in states that require a judge in the process and have seen huge delays over the past few years, supply will expand, possibly dramatically in some regions.
7---An Unhappy New Year for Bonds, Barrons
Somewhere down the road, inflation must kick in, and with it, growth. That bodes well for stocks. It doesn't bode well for bond funds that have sheltered investors over the past few years, especially when many types of bonds now trade above par value and are acutely exposed to small movements in interest rates.
The bond market dodged a bigger selloff Friday when the Labor Department reported tepid job growth that fell just short of economists' estimates, with the U.S. adding 155,000 jobs in December and the unemployment rate standing at 7.8%, matching November's upwardly revised figure. A separate private-sector jobs report a day earlier had painted a rosier picture, stoking concerns that a similarly robust Labor Department reading could have instigated a broad investor flight from bonds.
8---Venezuelan Government Denounces “Psychological Warfare”Regarding Chavez’s Health, venezuelanalysis
The Venezuelan government has responded to opposition and private media accusations that it is being “mysterious” regarding information on Chavez’s health situation, and has called such statements as well as rumours being spread on social networks “psychological warfare”.
“The government of the Bolivarian Republic of Venezuela warns the Venezuelan public of a campaign of psychological warfare unleashed by the international media regarding the health of the head of state. This campaign aims ultimately to destabilize the Bolivarian Republic of Venezuela, ignore the popular will expressed in the presidential elections last October 7, and end the Bolivarian Revolution led by Chavez,” said Ernesto Villegas, minister for communication last night as he read out the government statement in a national broadcast.
Accusations of lack of “transparency”
Vice-president Nicolas Maduro yesterday also asked the people of Venezuela to “trust the national authorities, who are more united than ever”, saying that since Chavez’s operation for reoccurring cancer in Cuba on 11 December, the government has released 26 official statements informing the public about the state of Chavez’s health and “always tells the truth”.
9---Investors Pushing to Buy Housing Other Than Foreclosed Properties, firedog lake
interesting thing Lawler finds is this:
So investors have shifted from merely scooping up foreclosure properties to scooping up all kinds of other properties. This suggests that demand from Wall Street is moving investor purchases into other areas of the mortgage market. Maybe you have motivated sellers using short sales to push properties into the hands of investors. Or maybe investors are over-extending themselves. Having set a budget for a certain level of properties, and finding the foreclosure markets more scarce, maybe they’re buying homes they think are undervalued, regardless of the fundamentals of that decision. Maybe this will make it harder to eventually sell them on the back end, if they’re not getting them for a steal.While most areas have experienced a significant decline in the foreclosure share (as well as the overall “distressed-sales” share of home sales this year, it’s sorta interesting to note that the all-cash share of homes purchases has not fallen, at least in areas where data on financing are available. [...]
While in most of these areas the foreclosure sales share of resales in November was down considerably from last November, as was the overall “distressed” sales shares, the all-cash-financed share of home sales was actually higher this November than last November in many areas, and in other areas it was little changed from a year ago. Most analysts (and realtors) believe that investors make up a substantial share of all-cash purchases. Given that the all-cash share of purchases is flat to higher while the foreclosure share of purchases is down considerably, it appears as if investors have considerably increased their purchases of non-foreclosure properties over the last year.
10---Another hosuing windfall for the banks, firedog lake
From the Wall Street Journal:
Whether you agree or disagree with the Federal Reserve’s MBS buying program – in what world does Wall Street need further subsidy from the Fed?The Federal Reserve’s intensified campaign to push mortgage rates lower has hit a wall, in part because a shift in the lending landscape has made some banks unable, or unwilling, to pass along cheaper credit.
While current rates are the lowest in generations, some economists argue that they should be even lower—perhaps 2.8% based on the historical relationship between mortgage rates and yields on mortgage-backed securities. The economists posit that banks are keeping the rates artificially high, boosting profits and depriving the economy of the full benefit of the Federal Reserve’s efforts.
11---Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, firedog lakeCommercial banks reported a record $9.4 billion in income from mortgage-banking during the third quarter of 2012, according to an analysis of data by Inside Mortgage Finance, which says it is the highest since it began tracking such data in 2002. The third-quarter figure was up 18.7% from the second quarter and 72.3% from one year ago, and it was more than what the industry earned in 2007 and 2008 combined
First of all, here’s a fairly astonishing stat:
I would focus less on how routing these $64 billion in mortgages into the foreclosure pipeline will affect prices and sales (though that will happen) and more about how the people behind those $64 billion of mortgages will survive without their house. Your talking about several hundred thousand if not millions of people, and this is but one mortgage lender.Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined [...]
The data, published last month by the monitor of the settlement, highlight Bank of America’s vast backlog of delinquencies, and the years it will take to work through them as borrowers fall further behind and losses mount for investors in mortgage-backed securities. While the Charlotte, North Carolina-based bank has begun modifications for many of its 275,000 homeowners at least 180 days behind as of Sept. 30, some will join the already clogged U.S. foreclosure pipeline.
Meanwhile, the mortgage market is now entirely a government-sponsored enterprise:
12---Yes, We’re Still in the Middle of a Foreclosure Crisis, firedog lake…with little planning and paltry public discussion, the government has almost completely taken over the American home mortgage market. Banks and other for-profit financial services companies lend money to homeowners, but without the guarantees and other support the government provides, the housing market would barely be functioning now.
Fannie Mae and Freddie Mac, the taxpayer-controlled housing giants, guaranteed 69 percent of new mortgages in the first nine months of the year, up from about 27 percent share in 2006, according to Inside Mortgage Finance. Meanwhile, the Federal Housing Authority and the Department of Veteran’s Affairs currently back another 21 percent of mortgages, up from just 2.8 percent in 2006. Altogether, 9 of every 10 new mortgages are backed by the U.S. taxpayer, up from three in 10 in 2006, when the government share hit a decade-low, according to the publication
These just aren’t good numbers, and they suggest continuing softness in the sector. Worse, home seizures have begun to rise for the first time in two years.
As Thomas Cox indicated, just because lenders “have figured out how to play the foreclosure game” doesn’t mean they are playing it legally.Home seizures in the U.S. rose 5.4 percent last month, the first annual gain in two years, as lenders seek to manage the flow of distressed properties without disrupting the housing recovery, according to RealtyTrac.
Banks repossessed 59,134 homes, up from 56,124 from November 2011, the Irvine, California-based data firm said today in a report. The increase was the first since October 2010, when foreclosures slowed after allegations that lenders were using faulty practices to take property from delinquent homeowners. Seizures climbed 11 percent from the previous month.
“Lenders have figured out how to play the foreclosure game in this new world where they’re getting a lot more scrutiny,” Daren Blomquist, RealtyTrac vice president, said in a telephone interview. “Everybody involved in the foreclosure industry has finally got a good handle on how to manage these properties to create a more managed and stable flow.”
13---In Last Meeting, Fed Officials Debated Length of Program to Stimulate Job Market, NYT
14---Narula’s No. 1 Hedge Fund Gains 38% Betting on Mortgages, Bloomberg
The best trade in 2012 was being long subprime,” says Kuhn, who has an economics degree from Harvard University. “It’s nice to be right about that one.”
In November 2011, Pine River bought subprime-mortgage- backed bonds as cheaply as 42 cents on the dollar. A year later, they had risen to 72 cents. Pine River reduced its subprime holdings through 2012, as other investors poured into the market.
“We like to say some of the new entrants are going to pay a tuition price,” he says. “They don’t know the market as well as we do.”
15----Kaboom! The sound of Canada crashing, greater fool
speaking of Vancouver, that real estate board has just shoveled out the heartache for everyone who bought there in the last two years.
- A paltry 1,142 sales last month, down 31.1% from the previous December. Ouch.
- Sales crashed 32% from November. Yes, this past November.
- Sales for all of 2012 – which included the frenzy last Spring which I told you at the time was the market top – crashed 23% from 2011, and were 25.7% below the ten-year average.
- The average detached home in Van has lost 1% of its value every month since June.
- Listings (as I told you yesterday) are plunging. Shell-shocked sellers have retreated from the market, and are desperately hoping there will be a spring revival. And Jesus is coming
As for price, the average property has gained just $17,000 in a year, to $333,140, but the value of all houses sold last month took a 12.3% tumble. Hell, the average price of a property in Edmonton was lower in December than it was back in August, while it took 22% longer to sell a house.
How is this “Home $weet Home”? Who peed in the water trough?
“The Finance Minister toyed with the mortgage qualification rules at the beginning of the year but otherwise this market operated in a smooth and stable manner,” fibbed board prez Doug Singleton.“ Realtors and their clients could trade in real estate with confidence and certainty.”
You can be confident, all right. 2013 will be one to remember....
. As you know, sales romped lower last month by 31% in Vancouver and 19.5% in Toronto – compared to the previous December. Van detached homes are now devaluing by 1% a month, while the price melt is just coming to the GTA....George Athanassakos with the headline, “Why housing prices aren’t coming back.”...
I believe a perfect storm is coming in the housing market. Canada will experience significant “secular,” or long-term, decline in house prices starting around 2015, when the population ratio is about to turn upward based on Statistics Canada projections. The extent of this correction will surprise many people. Once the cyclical decline in housing is thought to be over and everyone prepares for an upturn in the housing market, the long-term impact of demographics will make itself felt and it will not be pretty.”
The perfect storm in the real estate market, now starting to feed the media, and becoming a tenet of Main Street thinking. As more people – especially the virgins – see the potential for loss and financial entrapment, that house horniness we’ve been living with will ebb. Meanwhile those parts of the world where citizens have tackled debt, devalued real estate and deleveraged, move closer to renaissance.
Don’t fight it.