Friday, February 7, 2014

Extra weekend links

Today's quote: "“When you’re born, you get a ticket to the freak show. When you’re born in America, you get a front-row seat.” George Carlin


1---Abenomics: Financial market volatility may hurt economy, JT


Investors are paying close attention to how Janet Yellen, who formally became the new chief of the U.S. central bank Monday, will address the ongoing market turmoil, ahead of a meeting of Group of 20 finance chiefs Feb. 22 and 23 in Sydney.


“The crux of the matter is whether Yellen will indicate the Fed will rethink the pace of its tapering program,” a foreign exchange trader at a financial institution in Tokyo said.
The Fed decided last week to cut a further $10 billion from its $75 billion monthly asset purchases, brushing aside concern over the future course of emerging economies.


“Unless Yellen expresses wariness over emerging economies, more players could let go of risky assets and buy the safe-haven yen, dealing a heavy blow to the Japanese economy,” the trader said.
Analysts have begun to warn that the recent instability in emerging markets suggests a recurrence of the Asian currency crisis that started in July 1997 with the collapse of the Thai baht.


“We have a past trauma,” said Hideo Kumano, executive chief economist at Dai-ichi Life Research Institute.
After the consumption tax rate was raised to 5 percent from 3 percent in April 1997, the economy fell into recession several months later not only because of the tax hike itself but of a drop in exports caused by a slump in emerging economies, he said.


“It is difficult to completely erase the past painful memory,” Kumano added.


2--- What the banks really want: Corker-Warner bill will allow private financial institutions to issue MBS with a government guarantee. , CEPR


The Corker-Warner bill touted in the piece makes the financial deregulation of the 1990s looks like a model of cautious reform by comparison. Instead of having Fannie Mae and Freddie Mac, which are now essentially government-run companies, guaranteeing mortgage backed securities (MBS), it would allow private financial institutions to issue MBS with a government guarantee. The only protection is that the investors would have to eat  the first 10 percent of the losses.


Goldman Sachs, Citigroup, and the rest of the wall Street gang had no problem passing off their dreck in the housing bubble years when investors could not count on any guarantee. Now the Post is telling us that only a senile old fool would question the wisdom of setting the same crew lose again, but this time being able to tell investors that in a worse case scenario they could only lose ten percent. If questioning the wisdom of that approach is senility, we could use a lot more of it in this town


3---The Coming Mortgage Delinquency Disaster, Keith Jurow


The key statistic is the cumulative total of 636,548 notices sent out in these seven counties over the last four years. Since we have fairly solid figures on the number of first mortgages outstanding in these counties, it turns out that more than 40% of all borrowers in Suffolk County have received a pre-foreclosure notice and roughly 35% in New York City....


The reason is quite simple – servicers do not foreclose on seriously delinquent borrowers throughout the entire NYC metro area. Completed foreclosures have actually declined rather dramatically throughout the nation in the past two years. The difference is that in the NYC metro, the servicers have not been foreclosing since the spring of 2009...


This chart shows the number of monthly foreclosure filings (known as lis pendens) in Suffolk County on Long Island. Keep in mind that from the first table in this article, we learned that more than 180,000 pre-foreclosure notices had been sent to delinquent borrowers in Suffolk County.
You can see that for the last four years, fewer than 1,000 foreclosure filings had been served each month in Suffolk County. At that rate, it would take more than ten years to foreclose on all the outstanding delinquent properties in the county.


4---Do investor home sales mask a sick housing market?, HW
Experts warn fundamentals just aren't there

In the pre-meltdown market, about 85% of home sales were individuals purchasing with a mortgage, about 10% were all-cash sales, and about 3-5% were distressed sales.
Flash-forward to 2013 and that sanity is absent — something like 40% of home sales were individuals using a mortgage, 40% were all-cash, more than about 15% were distressed sales and 5% were flips.


More specifically, distressed sales rose to a three-year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012.


RealtyTrac’s numbers show that cash deals were 42% of all U.S. house sales in December, up from 38% in November, and up from 18% in December 2012. In Florida, Wisconsin, Alabama, South Carolina and Georgia cash sales were more than 50% of homes sold in 2013.
Given all the talk of the housing and economic recovery, it does seem strange that distressed sales are high and still rising....


The steady climb of interest rates since mid-2013 has thrown a little cold water on investor mania, but total investor purchases were almost 30% of all home sales since 2009.  And mortgage applications are residing at 1997 levels, down 65% from the 2005 highs.
And yet despite this, national home prices grew by 14% in 2013, coming on the heels of a 9% rise in 2012.
“The simple reality is that there has really been very little actual recovery in housing," says Lance Roberts, at STA Wealth Management. "The optimism over the housing recovery has gotten well ahead of the underlying fundamentals. While the belief was that the Government, and the Fed's interventions would ignite the housing market creating a self-perpetuating recovery in the economy — it did not turn out that way.


“Instead, it led to a speculative rush into buying rental properties creating a temporary, and artificial, inventory suppression," Roberts says.
U.S. housing is now the most unaffordable that it ever has been, says Anthony Sanders, distinguished professor of real estate finance at George Mason University.


“Real median household income (has been declining) since peaking in 1999 and is now $5,000 lower or 9% lower,” Sanders says. “Average U.S. house prices are, on the other hand, 68.4% higher today than in December 1999.”
First-time homebuyers now account for just 27% — a record low — compared to the pre-crisis level of 40%...


Most metros had a large increase in the share of their housing stock that was single-family rentals. Among the 100 largest metros, Kolko looked at the top 10 with the biggest increases in institutional investments (from one to ten) – Las Vegas, Nev.; Phoenix, Ariz.; Cape Coral-Fort Myers, Fla.; Memphis, Tenn.; Riverside-San Bernadino, Calif.; Tuscon, Ariz.; El Paso, Texas; Lakeland-Winter Haven, Fla.; Fresno, Calif., and Sarasota, Fla.


5---Consumers Max Out Their Credit Cards In Month When Personal Savings Tumble, zero hedge




One week ago we remarked that in the month of December, in order to fund their purchases of Holiday gifts and year-end trinkets, Americans burned through a whopping $46 billion in personal savings, in the process taking the US saving rate down to a one year low of 3.9% and dropping.


Today, we got the credit side of the ledger with the December consumer credit report, in which we learned that in addition to the now traditional draw of Car and Student loans, which came out to $13.8 billion, or exactly in line with the 12 month average draw, sending the total notional to a record $2.24 trillion, it was revolving credit, i.e., credit cards, which saw a substantial $5 billion increase in outstandings - the most since May 2013 - bringing total revolving credit to $862 billion if still far below the nearly $1.1 trillion in student loans outstanding.


6---The housing recovery is a bank-promoted pump-and-dump scheme, OC Housing


The distressed sales aren’t even close to the biggest distortion of this housing market. The RealtyTrac report reveals that all-cash purchases accounted for 42% of all U.S. residential sales in December, up from 38% in November, and up from 18% in December 2012. Does that sound like a trend of normalization? There were five states where all-cash transactions accounted for more than 50% of sales in December – Florida (62.5%), Wisconsin (59.8%), Alabama (55.7%), South Carolina (51.3%), and Georgia (51.3%). In the pre-crisis days before 2008, all-cash sales NEVER accounted for more than 10% of all home sales. NEVER. This is all being driven by hot Wall Street money, aided and abetted by Bernanke, Yellen and the rest of the Fed fiat heroine dealers...


The fact that Wall Street is running this housing show is borne out by mortgage applications languishing at 1997 levels, down 65% from the 2005 highs. Real people in the real world need a mortgage to buy a house. If mortgage applications are near 16 year lows, how could home prices be ascending as if there is a frenzy of demand?....




7---Falling Interest Rates Fails to Stimulate Demand, ds news


8---US regime-change operation in Ukraine exposed in leaked diplomatic phone call, wsws


9---George Carlin unplugged, Burning Platform


“I sort of gave up on this whole human adventure a long time ago, divorced myself from it emotionally. It gives me an artistic detachment that I find valuable. I think the human race has squandered its gift, and I think this country has squandered its promise, for the sake of cell phones and Jet Skis.”


“Consumption. This is the new national pastime. Fuck baseball, it’s consumption, the only true, lasting American value that’s left . . . buying things . . . People spending money they don’t have on things they don’t need . . . So they can max out their credit cards and spend the rest of their lives paying 18 percent interest on something that cost $12.50. And they didn’t like it when they got it home anyway. Not too bright, folks, not too fuckin’ bright.”


“Religion easily has the best bullshit story of all time. Think about it. Religion has convinced people that there’s an invisible man . . . living in the sky. Who watches everything you do every minute of every day. And the invisible man has a list of 10 specific things he doesn’t want you to do. And if you do any of these things, he will send you to a special place, of burning and fire and smoke and torture and anguish for you to live forever, and suffer, and burn, and scream, until the end of time. But he loves you. He loves you. He loves you and he needs money.”


“When you’re born, you get a ticket to the freak show. When you’re born in America, you get a front-row seat.”
“The IQ and the life expectancy of the average American recently passed each other in opposite directions.”


“What’s all this stuff about motivation? I say, if you need motivation, you probably need more than motivation. You probably need chemical intervention or brain surgery. Actually, if you ask me, this country could do with a little less motivation. The people who are causing all the trouble seem highly motivated to me.”


“We’re so self-important. So arrogant. Everybody’s going to save something now. Save the trees, save the bees, save the whales, save the snails. And the supreme arrogance? Save the planet! Are these people kidding? Save the planet? We don’t even know how to take care of ourselves; we haven’t learned how to care for one another. We’re gonna save the fuckin’ planet? . . . And, by the way, there’s nothing wrong with the planet in the first place. The planet is fine. The people are fucked! Compared with the people, the planet is doin’ great. It’s been here over four billion years . . . The planet isn’t goin’ anywhere, folks. We are! We’re goin’ away. Pack your shit, we’re goin’ away. And we won’t leave much of a trace. Thank God for that. Nothing left. Maybe a little Styrofoam. The planet will be here, and we’ll be gone. Another failed mutation; another closed-end biological mistake.”


“Actually this is just a place for my stuff, ya know? That’s all, a little place for my stuff. That’s all I want, that’s all you need in life, is a little place for your stuff, ya know? I can see it on your table, everybody’s got a little place for their stuff. This is my stuff, that’s your stuff, that’ll be his stuff over there. That’s all you need in life, a little place for your stuff. That’s all your house is: a place to keep your stuff. If you didn’t have so much stuff, you wouldn’t need a house. You could just walk around all the time. A house is just a pile of stuff with a cover on it. You can see that when you’re taking off in an airplane. You look down, you see everybody’s got a little pile of stuff. All the little piles of stuff. And when you leave your house, you gotta lock it up. Wouldn’t want somebody to come by and take some of your stuff. They always take the good stuff. They never bother with that crap you’re saving. All they want is the shiny stuff. That’s what your house is, a place to keep your stuff while you go out and get . . . more stuff! Sometimes you gotta move, gotta get a bigger house. Why? No room for your stuff anymore.”

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