Archive for the ‘mortgages’ Category

Britain showing signs of heading towards 1930s-style depression

March 16, 2009

Britain is showing signs of sliding towards a 1930s-style depression, the Bank of England says today for the first time.

By Edmund Conway, Economics Editor
Telegraph (UK)
The country is displaying early symptoms of being trapped in a so-called “debt deflation trap” where families find themselves pushed further and further into the red every month, according to a Bank report published today.

The stark warning will cause serious concerns, since it was this combination of falling prices and soaring debt burdens that plagued the US in the 1930s.
The Bank is using its Quarterly Bulletin to highlight the threat posed to the economy by deflation – where prices fall each year rather than rise.

Although inflation is currently in positive territory, it is expected to become negative in the coming months.

The Bank is worried that this may combine with high levels of indebtedness to squeeze families further.

It says that families with high debts could fall prey to the debt deflation trap. This means that the cost of their debts, which are fixed, would rise compared to average prices throughout the economy. While inflation erodes debts, deflation makes them relatively higher.

The Bank’s paper suggests that Britain is particularly at risk because there is a high proportion of families with significant levels of debt, and many of them are on fixed mortgage rate, which means they will not benefit from rate cuts.

Britons’ total personal debt – the amount owed on mortgages, loans and credit cards – is, at £1.46 trillion, more than the value of what the country produces in a year.

Read the rest:
http://www.telegraph.co.uk/finance/financetopic
s/recession/4996994/Britain-showing-signs-of
-heading-towards-1930s-style-depression-sa
ys-Bank.html

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Mortgage relief stalls on Hill

March 14, 2009

Disagreement among Senate Democrats over how many struggling homeowners should qualify for court-ordered mortgage relief has stalled a key part of President Obama‘s foreclosure prevention plan on Capitol Hill.

Behind the scenes, top Democrats are offering banks and credit unions sweeteners to drop their opposition to the plan, hoping that even tepid support from lenders might win a few vital votes from skeptical Democrats and Republicans. The bill would give judges new power to lower the interest rate and principal on a primary home loan as part of a bankruptcy settlement.

The measure passed the House last week – but only after a small revolt by moderates forced Democrats to narrow who might qualify.

They made sure the help was restricted to people who couldn’t afford their mortgages without a court-ordered rewrite to lower their monthly payments, and those who had already tried to work out more affordable terms with their mortgage company.

The House bill also lets bankruptcy judges consider whether a homeowner has already been offered a deal by the lender that matched the guidelines Mr. Obama recently laid out in his housing rescue plan – one with monthly payments amounting to no more than 31 percent of the owner’s income.

Lenders cheered the changes as an improvement but were still opposed to the final bill. They have long argued that the measure would impose steep and unpredictable costs that would be passed on to homeowners as higher interest rates. A multimillion-dollar industry lobbying effort helped kill the measure last year.

Seeking to avoid a similar fate this time, Sen. Richard J. Durbin, Illinois Democrat, is drafting an even narrower alternative.

One option essentially would prohibit anyone who could get a reasonable deal with the lender from seeking mortgage relief in bankruptcy, according to top Democratic aides and lobbyists familiar with the discussions. They spoke on the condition of anonymity because they were not authorized to disclose the negotiations.

Sen. Evan Bayh, Indiana Democrat, is working on a rival plan that would allow still fewer homeowners to qualify for home loan rewrites imposed by a bankruptcy judge. Mr. Bayh and Republican Sen. Arlen Specter of Pennsylvania are discussing a measure that would be limited to subprime mortgages.

Mr. Bayh said the House bill would ultimately increase the cost of lending. “We have to work to strike a better balance and take into account some of the long-term concerns about driving up the costs of mortgages,” he said.

Mr. Durbin, Sen. Charles E. Schumer of New York and other senior Democrats are shopping for a deal with industry figures that could win the support of key centrists in their party, plus a few Republicans.

Mr. Schumer has floated the idea of attaching a legislative gift that credit unions have long coveted – killing a decade-old limit on the amount they can lend to businesses – in exchange for their support, according to people close to the talks.

Currently, just 12.25 percent of a credit union’s lending can go to businesses. Efforts to lift the cap have run into fatal opposition from the banking industry, which doesn’t want the added competition.

Backing from credit unions could bring critical votes to the bankruptcy measure, because they are spread throughout the country and can activate a powerful grass-roots network on Capitol Hill.

So far, however, credit unions aren’t biting.

Democrats had hoped to move the measure through the Senate this week, but short of the 60 votes that would be needed to advance it past procedural hurdles, they held off. Majority Leader Harry Reid, Nevada Democrat, recited a March to-do list Thursday that omitted the housing measure.

The delay has emboldened critics to redouble their efforts to kill the bill – or at least try to exact a steep price for supporting it.

Sen. Bob Corker, Tennessee Republican, said the measure is losing steam as moderate Democrats express concerns and Mr. Obama fleshes out his broader homeowner rescue plan with many other options for working out burdensome mortgages. “The momentum has swung against it now,” he said.

http://www.washingtontimes.com/news/2009
/mar/14/mortgage-relief-stalls-as-senators-
examine-options/

Plan to cut mortgage interest deduction stirs opposition

March 14, 2009
Obama’s proposed budget would reduce the tax break for households earning more than $250,000. Some see the plan as targeting real-estate rich states like California and New York.
By Peter Y. Hong
Los Angeles Times
March 14, 2009
The Obama administration’s budget threatens to cut a benefit many Americans view as practically a right — the mortgage interest tax deduction — and powerful real estate interests are fighting back.

The move would affect only households earning $250,000 or more, but opponents say it could prolong the housing crisis by slowing already torpid home sales and deal another blow to home values ravaged by the market crash.

Read the rest:
http://www.latimes.com/business/la-fi-de
duct14-2009mar14,0,6494844.story

Obama: Playing not to lose

March 12, 2009

President Obama is not playing to win.  He’s playing not to lose.  After 50 days in office he is trying to run out the clock: with 1,410 days to go.

He’s playing not to lose the next election.

A president playing to win would have started on the economy on day one: and would never have delivered the inauguration address Barack Obama did.  A president playing to win would have declared war on the economy by now, fired Tim Geithner by now, and delivered a plan based-upon a well thought out national mission we could all hold on to.  The way the nation is going is more like Alice in Wonderland than the economic “catastrophe” we face in reality.

And the thought that we can still start spending on a host of new initiatives including universal health care, education, energy and climate change reminds me of the Yellow Brick Road.

Barack is behind the curtain: where he signed the shameful omnibus pork bill yesterday instead of declaring a veto as part of his “new boss in town” approach.  Instead our approach is: we can have it all.

Well: first get some jobs and houses back, Barack.  And you’ll need to fix the banks to do that.

Stop playing not to lose.  Playing not to lose is great for lawyers, professors and community organizers.  But we are no longer in a law firm, a class room or in Reverend Wright’s church.

ACORN and “God Damn America” won’t work here: and if you think it will good luck.  But remember: you’re gambling with my money, my childrens’ money, my grandchildrens’ money and China’s money.

The casino Barack Obama is spending our money in is the world and China, which holds much of the U.S. debt, and China could break his legs…..

President Obama says we need a total rebuilding of American health care, education and energy: but we’ll just push reset with the rest of the world….It just seems like a sophomoric and socialistic thought process that can’t work.  The Soviet Union spent itself to death trying to keep up with U.S. military advances.  Now China and Russia will just watch as America spends itself to death with $1 billion dollars an hour of borrowed (much from China) money….

We cannot fix everything until we fix one thing: the economy.

John E. Carey
Wakefield Chapel, Virginia

Related:
 Buffett: Obama not at war; has toxic message machine on economy

53% Say It’s Likely the U.S. Will Enter a Depression

Obama Reelection Effort Begins

Hey Obama: You had me at “hello.”

From January 21, 2009:

My expectations for Barack Obama starting on this Inauguration Day could not be higher.

He’s a gifted public orator with a huge election win under his belt and “political capital” like few ever before him.  As the throng on the mall this morning shows, people from all over America love this man and expect greatness from him.

He has to deliver.

He has to change the nation’s course and perhaps that of the world.

I want to hear his real vision.  Not rhetoric.  I want to hear a master plan from a Harvard educated black man that has risen as high as any American can go.

I want to hear “We Americans are no longer the land of pork barrel spending, party divisions, racial strife and discord.  We will meet any challenge, climb any mountain….”

Above from our inauguration day hopes…
Obama: Nation’s Hopes Never Higher, Times Seldom Tougher, Give Us Your Highest Vision

Now:

We can have it all got us into this economic mess, which Barack Obama chased after to solve.  The presidency was not “inherited.” And with this economy it seems we can not have it all….

Obama’s three-pronged economic strategy: delay, delay and delay

March 12, 2009

We are in a world-wide economic disaster.  We are bleeding out, as doctors say.  And so far the United States has a tourniquet but there is no heartbeat.

The number of households threatened with losing their homes rose 30 percent in February from last year’s levels, RealtyTrac reported Thursday.

After the stimulus and omnibus what do we have: lots of pork and debt but still a very uncertain picture on what all economist say we need: jobs and a fix for the banking and housing sectors.

Economists’ main complaint centers on the administration’s plan for the banking sector. “The most important issue in the short run is the financial rescue,” said Stephen Stanley of RBS Greenwich Capital. “They overpromised and underdelivered. Secretary Geithner scheduled a big speech and came out with just a vague blueprint. The uncertainty is hanging over everyone’s head.”

In stark contrast with Obama’s popularity with the public, a majority of the 49 economists polled by the Wall Street Journal are dissatisfied with the administration’s economic policies.

Reaf a report from The Wall Street Journal:
http://online.wsj.com/article/SB123
671107124286261.html

[forecast] 

The number of households threatened with losing their homes rose 30 percent in February from last year’s levels, RealtyTrac reported Thursday.
http://news.yahoo.com/s/ap/200903
12/ap_on_bi_ge/foreclosure_rates

****************

Here’s David Ignatius of the Washington Post:

For all the legislative commotion surrounding the economic crisis, we are still living in the equivalent of “the phony war” of 1939 and 1940. War has been declared on the Great Recession, but it’s basically politics as usual. The bickering and mismanagement that helped create the crisis are continuing, even though we elected a president who promised a new start.

History tells us that phony war doesn’t last forever and that when it ends, all hell breaks loose. World War II officially began with Germany’s September 1939 attack on Poland, but for months it was just skirmishing on the sidelines. That hiatus ended on May 10, 1940, when Hitler invaded Belgium and its neighbors. Neville Chamberlain was out as British prime minister, and Winston Churchill arrived as the avenging angel.

We’re still in the Neville Chamberlain phase when it comes to the economic crisis. The government is talking about sacrifice and solutions, but it hasn’t yet made the tough decisions that will put the economy back together. Economist David Smick had it right in The Post this week when he said the administration had a three-pronged strategy: delay, delay and delay. The administration announces a rescue package but doesn’t deliver details; it promises budget discipline but saves the hard decisions for later.

One reason this season feels so political is that Obama has stacked his administration with politicians and former government officials. You might think that with the greatest financial crisis of his lifetime, the president would want a few business leaders with experience managing large organizations in crisis. But no.

Here’s the un-businesslike Obama Cabinet: At Treasury, a former government official; at State, a former senator; at Commerce, a former governor; at Defense, a former government official and university president; at Energy, a former professor; at Homeland Security, a former governor; at Health and Human Services, a former governor; at the White House as chief of staff, a former congressman; at the White House as economic czar, a former university president and government official.

All fine people, no doubt. But as thin on business experience as a Hyde Park book club. Maybe Obama sees business executives as too tainted by the financial crisis to be useful, or confirmable. The closest he comes is Paul Volcker’s Economic Recovery Advisory Board — which includes Jeffrey Immelt, chief executive of GE; Jim Owens, chief executive of Caterpillar; and venture capitalist John Doerr.

The culture of immobilism starts on Capitol Hill. These people are still working a four-day week, taking Fridays off so they can run home and tell constituents how diligent they are. They may talk about a crisis, but they don’t act like it’s real.

Republicans and Democrats are sticking to party-line votes on many key issues. The Democrats were egregious in packing the stimulus bill with pet projects that won’t stimulate much except campaign contributions and in sticking with earmarks — a symbolic outrage that Obama promised during the campaign he would eliminate. But the Republicans have been even worse in their strategy of opposing recovery plans, which has given a legislative face to Rush Limbaugh’s “I hope he fails.”

The legislative pettifoggery was captured by a New York Times headline this week: “Obama’s Budget Faces Challenge by Party Barons; Panel Chairmen Oppose a Tax Plan but Want to Reduce Debt.” This nonsense has to stop, folks. The party’s over.

Read the rest:
http://www.washingtonpost.com/wp-dyn/co
ntent/article/2009/03/11/AR2009031103
214.html?hpid=opinionsbox1

******************

You don’t get something for nothing….

Obama says we need a total rebuilding of American health care, education and energy: but we’ll just push reset with the rest of the world….It just seems like a sophomoric and socialistic thought process that can’t work.  The Soviet Union spent itself to death trying to keep up with U.S. military advances.  Now China and Russia will just watch as America spends itself to death with $1 billion dollars an hour of borrowed (much from China) money….

And despite spending $1 billion an hour in Obama’s first 50 days, the economy hasn’t rebounded and will need (likely) much more money and much more work….

Treasury island: Geithner’s lost crew

March 7, 2009

If President Barack Obama wants to boost confidence in his economic recovery plan, he’s going to have to assure the markets that there isn’t just one guy working on it.

Treasury Secretary Timothy Geithner is trying to stabilize the nation’s banking industry, implement a housing rescue plan and prop up a plunging stock market – all with about 18 vacant senior positions, virtually the entire upper echelon of his department.

The staff is so faceless that lobbyists have begun trading jokes about a “ghost” bureaucracy, given the many empty picture frames hanging on the department’s walls.

Administration officials told POLITICO they will soon submit to the Senate a slate of candidates for the posts, including replacements for two who bowed out Thursday, one of whom was Geithner’s pick for his top deputy.

Most of the people who have been tapped to fill the top positions are already working in the building; they just don’t have their titles, their offices and their portraits yet.

But without those particulars, Geithner’s quiet colleagues can’t publicly represent the administration, robbing Obama of the opportunity to work multiple media outlets to pitch the program or to flood Capitol Hill with a show of force – and action – that could impress lawmakers, investors and the public.

By Jeanne Cummings, Lisa Lerer
Politico

Read the rest:
http://news.yahoo.com/s/politico
/20090306/pl_politico/19723

Related:
NYT: After March 6 Economic News, “2009 is Probably a Lost Cause”

Obama’s First Weeks: Economic Disaster, Socialist Agenda, Congressional Pork, Limbaugh Attacked, and “We Won”

Dow’s Decline Is Fastest for a New President in Nearly a Century

Geithner’s Top Two Treasury Assistants Withdraw; 17 Unfilled Top Jobs At U.S. Treasury

Most Obama “Economic Advisors” Raised Money for Democrats

 Obama’s Economic Strategy Akin To LBJ’s Vietnam Fiasco: “Pour In More”

Obama’s Brazen Deception: Why The Stock Market Won’t Recover Soon

March 6, 2009

Forget the pork. Forget the waste. Forget the 8,570 earmarks in a bill supported by a president who poses as the scourge of earmarks. Forget the “2 trillion dollars in savings” that “we have already identified,” $1.6 trillion of which President Obama’s budget director later admits is the “savings” of not continuing the surge in Iraq until 2019 — 11 years after George Bush ended it, and eight years after even Bush would have had us out of Iraq completely.

By Charles Krauthanmmer
The Washington Post
.
Forget all of this. This is run-of-the-mill budget trickery. True, Obama’s tricks come festooned with strings of zeros tacked onto the end. But that’s a matter of scale, not principle.

All presidents do that. But few undertake the kind of brazen deception at the heart of Obama’s radically transformative economic plan, a rhetorical sleight of hand so smoothly offered that few noticed.

The logic of Obama’s address to Congress went like this:

“Our economy did not fall into decline overnight,” he averred. Indeed, it all began before the housing crisis. What did we do wrong? We are paying for past sins in three principal areas: energy, health care and education — importing too much oil and not finding new sources of energy (as in the Arctic National Wildlife Refuge and the Outer Continental Shelf?), not reforming health care, and tolerating too many bad schools.

Read the rest:
http://www.washingtonpost.com/wp-dyn/co
ntent/article/2009/03/05/AR200903050
2951.html?hpid=opinionsbox1

Realted:
Stock Markets: When Will the Bull Return?

 Households, Businesses Have Stopped Spending; Now It’s Congressional Responsibility Time

Senate Halts Obama Spending; At Least For The Week End

March 6, 2009

The United States Senate came to its senses Thursday and refused a $410 billion measure that would have funded U.S. government operations until the end of this fiscal year in September.  The “omnibus” bill, containing some 9,000 “earmarks” that critics call pork-laden, could not get enough votes in the Senate to pass.

This means a special continuing resolution will have to be passed today to keep the U.S. government operating at last year’s levels.

The omnibus will be considered again starting Monday.

After the more than $700 billion stimulus, the debate on health care, foreclosure bailout, bank bailout, the troubles of such giants as AIG and GM, lawmakers can apparently see that spending money we don’t have will now be the legacy of this administration and this Congress…

Add in a revolution in the energy sector, “cap and trade,” new taxes, and a tanking stock market and well, maybe the Senate is waking up….

Related:
http://news.yahoo.com/s/ap/20090306
/ap_on_go_co/congress_spending

Related:
Obama Urged Investors to “Buy,” But Stocks Dive Again Thursday

NYT Urges Obama To “Bail Out” Third World Too

 Most Americans Now Say America Could Go Bankrupt

 Obama Can’t Revive Economy With Socialism

American Workers, Businesses Cut Back; Obama Launches Spending Spree

Presidency of Fear

Obama’s Brazen Deception: Why The Stock Market Won’t Recover Soon

 Obama plan to prevent foreclosures won’t help many California homeowners

Michelle:
http://michellemalkin.com/2009/03/05/fi
nally-a-show-of-cojones-senate-gop-forces-
delay-on-omni-pork-bill/

Senator John McCain, Republican of Arizona, has criticized a $410 billion omnibus spending bill as being bloated with earmarks.  Brendan Smialowski for The New York Times

We note that the New York Times blamed the lack of a vote on the omnibus on Republicans in their headline and first paragraph; admitting later that Republicans are joined by some Democrats who oppose this bill…..

http://www.nytimes.com/2009/03/0
6/us/politics/06spend.html?hp

Obama plan to prevent foreclosures won’t help many California homeowners

March 6, 2009
Nearly a third of the state’s mortgage holders are underwater on their loans, many of them by amounts that would disqualify them for government-sponsored refinancing.
By E. Scott Reckard and Peter Hong
Los Angeles Times
10:38 PM PST, March 5, 2009
The Obama administration’s plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans — many of them by amounts that would disqualify them for government-sponsored refinancing.

The problem is likely to be especially acute in areas like the Inland Empire, where homes have lost more than 40% of their value in the last year and nearly half the homeowners owe more on their loans than the properties are worth.

Read the rest:
http://www.latimes.com/business/la-f
i-housing6-2009mar06,0,2516760.story

Foreclosed home auction A sign in front of a house in Palmdale announces an auction of foreclosed homes.  David McNew / Getty Images

How Banks Are Worsening the Foreclosure Crisis

February 13, 2009

The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won’t spur an economic recovery.

Business Week

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan — whatever its details — can’t possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

So far the industry hasn’t shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges.

Read the rest:
http://news.yahoo.com/s/bw/20090213/bs_b
w/0908b4120034085635

A foreclosure sign is posted in front of a townhouse in Herndon, ... 
A foreclosure sign is posted in front of a townhouse in Herndon, Virginia. President Barack Obama’s quest to bridge Washington’s sharp political divides has been dealt another blow with the surprise exit of his commerce secretary pick, Republican Judd Gregg.(AFP/File/Paul J. Richards)