My issue with that is that these houses held off the market are not going to maintain themselves.  That would concern me if I were in the loss prevention department at a bank.  While the lender owns the property, it is responsible for maintenance and property taxes, which are often not cheap even on ostensibly cheap homes.  If the lender does not actually take ownership of the property but simply forecloses and does not execute (i.e., does not have the sheriff sell the property and issue a writ of possession to the buyer, which will usually be the bank), the lender is nominally not responsible for the maintenance or property taxes, but the foreclosed homeowner is likely to be not paying the property taxes and may be scrimping on the maintenance as well, which depletes the value of the bank's collateral whether or not the bank has collected it.

 

(That said, a homeowner who still lives there, even in foreclosure, may do more maintenance than the bank is inclined to do with its own funds, and also deters theft more than a vacant property does--assuming the homeowner himself isn't inclined to walk off with whatever he can grab, of course.)

^I agree that uncompleted foreclosure/toxic title is a bigger issue, though technically the REO inventory that the these articles are describing is, by definition, only the property for which title has already passed to the "lender," so maintenance obligations are more or less clear cut [with some exceptions for redemption periods and tenancies]. And modern landbanks and re-written tax forelcosure processes in MI and OH have greatly improved the outcomes for these uncompleted foreclosures.

 

This withheld REO inventory "scandal" is really tiresome, IMHO.  So, what if one of these reporters just asked, say, Fannie Mae why so few of its REOs were on the market at any one time?  Fannie Mae (which owns about a quarter of all REO properties) might explain that:

14% of its REOs are still in the redemption period so can't be sold free and clear yet to a third party buyer

13% are still occupied by the homeowners because they haven't yet been evicted, so the properties can't yet be marketed

8% are being occupied by homeowners through pilot programs to keep homeowners in their homes

Another couple percent are in a bulk pool that will be sold to investors later this year (I can only imagine the headlines when this well publicized, non-secret pilot sale closes).

http://housingwire.com/news/nearly-half-fannie-reo-unable-reach-market

 

But it definitely seems possible, maybe even likely, that some servicers are holding back some REO properties till prices go up...no different from the thousands of individual homeowners/commercial property owners doing the same thing.  I'm still not seeing the problem in a market with participants deciding when they want to want to transact.  REO owners do not have the real estate market cornered and there's no evidence that they collude.  It's like worrying that used Honda dealers will form a cartel to manipulate car prices. 

 

My take: there are a lot of unhappy real estate brokers whose pipeline of easy REO sales is drying up for various reasons and they are making some serious noise.  This, plus some superficial data from national aggregators, possibly cherry picked (why just report DC when RealtyTrac collects data nationally) = scandal!

REO owners do not have the real estate market cornered and there's no evidence that they collude.  It's like worrying that used Honda dealers will form a cartel to manipulate car prices. 

 

If they are holding 90% of the REO off the markets, then its not a coincidence.

China announces £800bn stimulus to boost confidence

"China has announced a total of 8 trillion yuan (£800bn) of "stimulus projects" to try to boost confidence in an economy that appears to be cooling faster than expected."

"Meanwhile, Wen Jiabao, the Chinese premier, promised over the weekend that the Chinese government would intensify its efforts to boost the economy in the second half of the year."

http://www.telegraph.co.uk/finance/china-business/9500548/China-announces-800bn-stimulus-to-boost-confidence.html

^^There are two immediate issues here.  First, just because REO owners are acting similarly, it doesn't mean they are colluding.  Chrysler and Ford were not colluding in the 1990s when they both ramped up SUV production--they were responding to the same market environment.  Second, and closely related, REO properties are not the entire real estate market! Servicers cannot corner the real estate market by holding back inventory, at least not long term.  There are hundreds of thousands of other homeowners who have been keeping their properties off the market, not to mention all the properties that are already on the market (maybe they're in on the plan too!).  If banks are trying to corner the market, why are they allowing short sales?  Plus, we have homebuilders.  Outside of of a few markets (which, like Boston, NYC and core county LA, SF happen to have very few REOs), our housing supply is amazingly elastic given a little lead time.

 

So yes, it's entirely possible the cumulative REO owner behavior is propping up housing prices to some extent in the sort term.  But I think anything stronger than that is sensationalist silliness. Just my informed opinion.

But it definitely seems possible, maybe even likely, that some servicers are holding back some REO properties till prices go up...no different from the thousands of individual homeowners/commercial property owners doing the same thing.  I'm still not seeing the problem in a market with participants deciding when they want to want to transact.  REO owners do not have the real estate market cornered and there's no evidence that they collude.  It's like worrying that used Honda dealers will form a cartel to manipulate car prices.

 

This has been my take on the issue as well.  There's nothing qualitatively distinguishing owners who decide not to sell into the teeth of a bear market, whether those owners gained title via foreclosure or via regular open-market purchase (i.e., ordinary homeowners).

 

Also, at least in the Akron area, the signs of recovery so far have been created by higher selling prices at the high end, where foreclosures are still not unheard-of but are at least less common.  The nascent recovery has been primary driven by higher prices per unit, not more units sold.  I find it very difficult to believe that there are large quantities of luxury homes that are REO or under lis pendens in Akron that are being held off the market in order to drive up the price of other luxury homes.  And while it's technically true that reduced inventory at the low end could have ripple effects at the high end, one should rationally assume that those ripple effects are smaller (i.e., ripple effects) than the direct effects one would expect from lower inventory of other modestly priced homes.

 

I don't know if that has been the pattern of the rest of the country ... I could certainly believe that there are other markets in which there actually was a significant overbuild of luxury units, and an attendant wave of foreclosures of luxury residential properties.  It certainly hasn't been the story in my neck of the woods, though, at least not so far.  Bath Township and Richfield (Joel Kotkin and Stanley Kurtz's dream communities), full of newer-build, sprawling luxury developments, have not been hit all that hard by foreclosures, at least not yet.

I'm pretty sure the banks and other REO holders would rather have the cash than the houses, even if they have to sell them at a discount. But, if REOs are assets for them then they can use them as collateral to borrow money for other things. Perhaps it's more complex than that, though.

I wouldn't believe any of the conspiracy theories unless more details were know.  Just one example/thought..... but wouldn't it be safe to assume that a lot of foreclosed homes are simply not sale-ready.  Surely, many of them are either not habitable (missing pipes and other fixtures) and/or have code violations requiring costly repairs.  Like or not, the banks are simply letting a lot of these properties sit and sit until the point that the local government forecloses due to mounting tax liens and then tears them down.  It saves the banks the repair and/or demolition cost and lets that toxic asset slip off their books. 

 

For the life of me, though, I can't imagine why the focus would be on how the banks are doing this^ and not how they ended up in that situation in the first place....

America the Undertaxed

there's just a snippet of the article for free - basically it says certain tax rates in the U.S. might be higher than other countries but the other countries tax stuff the U.S. doesn't so comparing things like 'top corporate tax rates' isn't too useful.

http://www.foreignaffairs.com/articles/137838/andrea-louise-campbell/america-the-undertaxed?cid=soc-tumblr-in-essays-america_the_undertaxed-082312

^^Definitely some share of the REO properties not being listed are just in the normal pipeline of inspection, repairs, broker hiring, etc.  But just to clarify, it's pretty rare for a bank to abandon a property it's actually taken title to (i.e., REO homes) and let it slip into tax foreclosure, so I don't think walk-aways really explain the low percentage of REO homes being marketed as described regerunner's articles. If a property is worth nothing or has negative value due to condition, the bank simply skips the end of the foreclosure process, as is its prerogative, and title and maintenance responsibility stay with the homeowner (that's the traditional rule anyway, some recent legal changes have tried to alter this) until tax foreclosure kicks in.  In that case, the property is never part of the denominator. Or, if the bank does end up with title to such a lousy property, it often hands it directly to a land bank/non-profit, sometimes with a check for demolition.

^^There are two immediate issues here.  First, just because REO owners are acting similarly, it doesn't mean they are colluding.  Chrysler and Ford were not colluding in the 1990s when they both ramped up SUV production--they were responding to the same market environment.  Second, and closely related, REO properties are not the entire real estate market! Servicers cannot corner the real estate market by holding back inventory, at least not long term.  There are hundreds of thousands of other homeowners who have been keeping their properties off the market, not to mention all the properties that are already on the market (maybe they're in on the plan too!).  If banks are trying to corner the market, why are they allowing short sales?  Plus, we have homebuilders.  Outside of of a few markets (which, like Boston, NYC and core county LA, SF happen to have very few REOs), our housing supply is amazingly elastic given a little lead time.

 

So yes, it's entirely possible the cumulative REO owner behavior is propping up housing prices to some extent in the sort term.  But I think anything stronger than that is sensationalist silliness. Just my informed opinion.

 

I know it will probably not help to change your opinion, which is fine, but I have talked with RE Brokers, that do only foreclosure sales for the big banks and they even say the banks are coordinating in the amount of homes release on each market.

I wouldn't believe any of the conspiracy theories unless more details were know.  Just one example/thought..... but wouldn't it be safe to assume that a lot of foreclosed homes are simply not sale-ready.  Surely, many of them are either not habitable (missing pipes and other fixtures) and/or have code violations requiring costly repairs.  Like or not, the banks are simply letting a lot of these properties sit and sit until the point that the local government forecloses due to mounting tax liens and then tears them down.  It saves the banks the repair and/or demolition cost and lets that toxic asset slip off their books. 

 

For the life of me, though, I can't imagine why the focus would be on how the banks are doing this^ and not how they ended up in that situation in the first place....

 

I think one of the main topics of this thread is how they got in this situation to begin with.

 

That was also the focus of my comments on the banks with holding REOs.

Low interest rates, unsustainable housing prices vs incomes, etc.

We are simple starting the same cycle over and if we blow another housing bubble (just as we did in the past) we will experience a very similar fallout.

 

How do you think they got in this situation?

US Consumer debt near record levels again. This should play out well.

 

US consumers cut back on credit card use in June

CHRISTOPHER S. RUGABER, AP Economics Writer

"Consumer borrowing rose by $6.5 billion in June from May to total $2.58 trillion, the Federal Reserve said Tuesday. That's just below the all-time high reached in July 2008.

Auto and student loans rose by $10.2 billion to $1.71 trillion in June."

Read more: http://www.greenwichtime.com/news/article/US-consumers-cut-back-on-credit-card-use-in-June-3769426.php#ixzz24mDReXar

 

 

Chart showing the consumer debt levels.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/08-2/20120827_debt1.png

 

I think one of the main topics of this thread is how they got in this situation to begin with.

 

That was also the focus of my comments on the banks with holding REOs.

Low interest rates, unsustainable housing prices vs incomes, etc.

We are simple starting the same cycle over and if we blow another housing bubble (just as we did in the past) we will experience a very similar fallout.

 

How do you think they got in this situation?

 

When you bemoaned pricing falling too quickly...... I said let them fall.  Then, when prices not falling quickly enough fits the narrative, you allege some illicit conspiracy.

 

To be clear, I think we got into this situation because financial gamers figured out how to rig (technically in a legal way albeit perhaps morally repugnant) the system so that they could still profit on the net while thousands of borrowers lost their homes when crushed in debt.  Irresponsible lending and irresponsible borrowing.  Those are the practices that needs to stop.  A higher degree of ethics and standards, similar to that imposed on other professions, needs to be injected into financial lending  I don't see the connection between that and the banks seeking to protect their investments by not flooding the market and I know of no legal obligation they have to meet your demands.  If they want to sit on properties, that is fine by me.  It's probably good for me as a homeowner who is not under water, as a matter of fact.  What I care about is the actions they take to sell the properties once they've put the inventory on the market....... i.e. whether they will continue to sell the house to people they know won't be able to afford it. 

I think one of the main topics of this thread is how they got in this situation to begin with.

 

That was also the focus of my comments on the banks with holding REOs.

Low interest rates, unsustainable housing prices vs incomes, etc.

We are simple starting the same cycle over and if we blow another housing bubble (just as we did in the past) we will experience a very similar fallout.

 

How do you think they got in this situation?

 

When you bemoaned pricing falling too quickly...... I said let them fall.  Then, when prices not falling quickly enough fits the narrative, you allege some illicit conspiracy.

 

To be clear, I think we got into this situation because financial gamers figured out how to rig (technically in a legal way albeit perhaps morally repugnant) the system so that they could still profit on the net while thousands of borrowers lost their homes when crushed in debt.  Irresponsible lending and irresponsible borrowing.  Those are the practices that needs to stop.  A higher degree of ethics and standards, similar to that imposed on other professions, needs to be injected into financial lending  I don't see the connection between that and the banks seeking to protect their investments by not flooding the market and I know of no legal obligation they have to meet your demands.  If they want to sit on properties, that is fine by me.  It's probably good for me as a homeowner who is not under water, as a matter of fact.  What I care about is the actions they take to sell the properties once they've put the inventory on the market....... i.e. whether they will continue to sell the house to people they know won't be able to afford it. 

 

Really. I am bemoaning prices falling, what are you reading? My main point on this thread and on the first housing thread has ALWAYS been that prices are to high, they need to return to the historic level of 30% of income and are causing a negative economic impacts on main street. Any action that is taken not to allow housing to return to historic levels I have pointed out as a determint to the long term stability of the US economy. I am amazed how often you misread this thread.

 

 

Well....  I don't "read" or "misread this thread" like it is a blog so you'll have to excuse me if I miss some of the more finite details of your overall theme.  But I do take notice when on one page you cite falling home prices as more evidence of doom and gloom, and then (when the opportunity presents) suggest that home prices need to fall faster and "any action" to not allow that to happen is detrimental to long term stability.   

Consumer confidence falls to 9-month low

Americans more worried about economy, job prospects

"WASHINGTON (MarketWatch) — Consumer confidence fell to a nine-month low in August as Americans grew more worried about the economy and the chances of finding a job, according to a survey released Tuesday.

The Conference Board said its confidence index dropped to 60.6 last month from 65.4, marking the lowest level since November. Economists surveyed by MarketWatch had forecast the index to rise slightly to 66.0."

http://www.marketwatch.com/story/consumer-confidences-falls-to-9-month-low-2012-08-28

 

 

U.S. home prices continue upward move in June

"WASHINGTON (MarketWatch) — U.S. home prices bounced higher for a second month in June, according to an index released Tuesday which showed the strongest back-to-back monthly advance in the more than decade-long history of the price gauge."

http://www.marketwatch.com/story/us-home-prices-continue-upward-move-in-june-2012-08-28

Interesting read.

 

The “Pauperization of Europe”

Wolf Richter  www.testosteronepit.com

 

"It started on Monday. “Poverty is returning to Europe,” said Jan Zijderveld, head of Unilever’s European operations, in an interview. The British–Dutch consumer products company, third largest in the world, was adjusting its commercial strategy to this new reality, he said, by redeploying to Europe what worked in poor countries of the developing world. Now the stars of the industry are affirming it. “The logic of pauperization,” L’Oréal CEO Jean-Paul Agon called it on Wednesday."

 

“If Spaniards are down to spending on average €17 per shopping trip, I can’t sell him detergent for half of his budget,” Zijderveld explained. “In Indonesia we sell individual packages of shampoo for 2 to 3 cents and still earn a fair amount.”

 

"By looking at Europe, particularly Southern Europe, as a market with the characteristics of developing countries, Unilever has transitioned from seeing the debt crisis as a temporary event to seeing it as a trend to which it had to adjust its strategies. So now in Spain, it sells its “Surf” detergent in packages that are good for five loads. In Greece, it sells mashed potatoes and mayonnaise in small packages. And in Great Britain (!), it’s implementing the same strategy. Because people are running out of money. And it’s been successful. Since they started this in 2011, sales have stopped falling; and in the first half of the year, they edged up 1.1%. But higher input prices have exerted pressures on margins and profits."

 

“I agree, there is a movement of very sharp pauperization in Southern Europe,” Michel-Edouard Leclerc said on Wednesday—they’re now all coming out. He’s the CEO of E.Leclerc, the number one retailer in France with a market share of 18% and 556 semi-independent hypermarkets, supermarkets, and specialty stores. It also has numerous stores in Italy, Spain, Portugal, and other countries. And the company is adjusting to the new reality. In Italy, for example, where the stores used to sell yoghurt only in multipacks, they’ve started to sell them as single items."

http://www.zerohedge.com/contributed/2012-08-29/%E2%80%9Cpauperization-europe%E2%80%9D

Bernanke: QE has and can work more

Fed chairman expresses “grave concern” about the labor market

 

"In a speech at the Fed’s Jackson Hole retreat on Friday, Bernanke did not pre-commit to taking action. But he did reinforce the case for more asset purchases."

 

"Bernanke called current growth “tepid” and said the economy was “far from satisfactory.”

“Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor-market conditions in a context of price stability,” Bernanke said."

 

"With the Fed’s traditional interest-rate tool stuck between zero and 0.25% since December 2008, the Fed has had to rely on asset purchases and forward guidance to support the recovery. Using these policies for the first time has been challenging, Bernanke said. As a result, the bar for use of these policy tools is higher than for traditional policies, he said." 

http://www.marketwatch.com/story/bernanke-qe-has-and-can-work-more-2012-08-31-101031933?dist=lcountdown

July construction spending down 0.9%

"WASHINGTON (MarketWatch) -- Construction spending fell 0.9% in July, missing analysts' estimates, to a seasonally adjusted annual rate of $834 billion, the Commerce Department said Tuesday. Analysts polled by MarketWatch had expected a July gain of 0.5%. Private residential construction fell 1.6%, while private nonresidential construction fell 0.9%."

http://www.marketwatch.com/story/july-construction-spending-down-09-2012-09-04-10911431?dist=lcountdown

 

 

ISM factory index weakens to 49.6% in August

"WASHINGTON (MarketWatch) - Activity for the nation's manufacturers showed contraction for the third straight month in August, the Institute for Supply Management reported Tuesday. The ISM index fell slightly to 49.6% in August from 49.8% in July. This was weaker than expected. The consensus forecast of estimates collected by MarketWatch was for the index to rise to 50.2%."

http://www.marketwatch.com/story/ism-factory-index-weakens-to-496-in-august-2012-09-04?dist=lcountdown

 

 

Asia stocks down after China manufacturing falls

"Asian stock markets are mostly lower following data that showed a contraction in Chinese manufacturing for August.

An industry report said that China's purchasing managers index fell to 49.2 in August from July's 50.1 on a 100-point scale. Numbers below 50 show a contraction. It was the group's weakest reading to date."

http://www.thetelegraph.com/news/ap_news/asia/article_4fb34ad0-5ff3-5847-88f7-7d31e53d3ddf.html

 

 

 

June Foodstamp Recipients Hit All Time High As Three Times As Many Americans Enter Poverty As Find Jobs

"Indicatively, the 173,600 increase in Foodstamps recipients in June was three times greater than Americans finding jobs (64,000, most of which part-time) according to the BLS."

http://www.zerohedge.com/news/june-foodstamp-recipients-hit-all-time-high-three-times-many-americans-enter-poverty-find-jobs

As Financial Scandals Mount, Individual Investors Flee Stocks

 

“The public has never been more disconnected. At the end of the day, the citizenry has lost trust and confidence in the underlying mechanism. What used to be an investors’ market is now thought of as a traders’ market.”

—NYSE Euronext CEO Duncan Niederauer, testifying before the U.S. House of Representatives’ Financial Services subcommittee."

 

"At the same time, “other strategies may be recognized as unacceptable,” like “stepping ahead or front running of investors’ orders, manipulation of orders, fraudulent trading.”

 

"The faith of individual investors was severely damaged by the financial crisis and it has yet to recover, because the financial markets keep throwing one more unsettling event after another right at them:

 

•Barclay’s $455 million settlement with U.S. and U.K. regulators of charges it attempted to manipulate the London Interbank Offered Rates (LIBOR).

•The loss by J.P. Morgan of over $2 billion in what was supposed to be a hedging strategy to reduce risk in the bank’s loan portfolio.

•The Facebook IPO trifecta: NASDAQ trading glitches in the first hours of trading, a 20%+ aftermarket decline in the price of FB shares, and last minute disclosures by analysts of downward revisions in Facebook’s revenue growth rates.

•The bankruptcy of MF Global and the alleged disappearance of $1.6 billion in customer funds, despite rules prohibiting the commingling of corporate and customer assets.

•The rolling, escalating European sovereign debt crisis.

•The almost unimaginable spectacle of the United States of America flirting with default in the summer of 2011 (which we may yet revisit after the Presidential election).

•The Flash Crash of May 2010, where the market dropped almost 1,000 points in an hour. Yes it recovered, but no one has ever come up with a plausible explanation for what exactly happened.

 

We have reached the point where perceptions (largely negative perceptions) have become reality. Individual investors are easily spooked and are interpreting almost everything as yet another reason to stay out of the equity market."

http://www.forbes.com/sites/ciocentral/2012/07/11/as-financial-scandals-mount-individual-investors-flee-stocks/

From Fed Chief Bernaike's complete comments:

 

Second, fiscal policy, at both the federal and state and local levels, has become an important headwind for the pace of economic growth. Notwithstanding some recent improvement in tax revenues, state and local governments still face tight budget situations and continue to cut real spending and employment. Real purchases are also declining at the federal level. Uncertainties about fiscal policy, notably about the resolution of the so-called fiscal cliff and the lifting of the debt ceiling, are probably also restraining activity, although the magnitudes of these effects are hard to judge.  It is critical that fiscal policymakers put in place a credible plan that sets the federal budget on a sustainable trajectory in the medium and longer runs. However, policymakers should take care to avoid a sharp near-term fiscal contraction that could endanger the recovery.

 

http://www.marketwatch.com/story/text-of-bernanke-speech-at-jackson-hole-2012-08-31?pagenumber=2

 

IOW, austerity as implemented by Governor Kasich is slowing down economic growth.  Kasich overstated the state deficit.  When he found that there was excess funds coming back to Ohio government, he and his Republicans started another tax cut.  The tax cut is not going to stimulate the economy. 

IOW, austerity as implemented by Governor Kasich is slowing down economic growth.  Kasich overstated the state deficit.  When he found that there was excess funds coming back to Ohio government, he and his Republicans started another tax cut.  The tax cut is not going to stimulate the economy.

So you're saying Kasich cut spending more than necessary and is looking to cut taxes to rid the excess? Heaven forbid. Somebody organize a recall.

Yes.  He is making tax cuts possible by leasing the Ohio State Parks to oil companies for gas and oil development.

(BTW, Ohio does not have a "recall").

Yes.  He is making tax cuts possible by leasing the Ohio State Parks to oil companies for gas and oil development.

(BTW, Ohio does not have a "recall").

 

In other words, not only is Mendo right, but Kasich is also enabling Ohio's natural resource wealth to actually be utilized for the betterment of millions, American citizens, notably including Ohioans.

More likely, the Saudi sovereign wealth fund will walk away with the profits.  Who do you think owns the oil companies?

Yes.  He is making tax cuts possible by leasing the Ohio State Parks to oil companies for gas and oil development.

(BTW, Ohio does not have a "recall").

 

In other words, not only is Mendo right, but Kasich is also enabling Ohio's natural resource wealth to actually be utilized for the betterment of millions, American citizens, notably including Ohioans.

 

At a low low cost too which is their birthright!  [sarcasm]

 

I think the only reason Kasich proposed the drilling tax was because he knew it wouldn't pass?  Reading all this praise about the oil and gas industry's relationship with Ohio makes me sick.  We have natural resources, they want to exploit them.  Why should we let them do it for free?

 

 

Stocks waver; FedEx sinks after profit warning

 

"NEW YORK—U.S. stock prices bounced between small gains and losses Wednesday, held in check by a warning from the huge package delivery company FedEx that its profits would be hurt because of a slowdown in the global economy."

"It's one more piece of news that suggests that the global economy is slowing and therefore makes central bank action more likely," said Brian Gendreau, market strategist at the investment advisory firm Cetera Financial."

 

Read more: Stocks waver; FedEx sinks after profit warning - The Denver Post http://www.denverpost.com/businessbreakingnews/ci_21471558/us-stock-futures-down-after-fedex-profit-warning#ixzz25cyDOhRk

Read The Denver Post's Terms of Use of its content: http://www.denverpost.com/termsofuse

The world has been saved today. So debt will be transfered from one hand to another hand and that debt still will not be able to be paid back.  :-o

 

Draghi unveils ECB bond-buying plan

Sweden cuts key rate, while Bank of England stands pat

"FRANKFURT (MarketWatch) — European Central Bank President Mario Draghi on Thursday said the central bank is prepared to buy government bonds in unlimited quantities in order to eliminate harmful distortions in financial markets fueled by fears of a euro breakup, but reiterated that participating countries must promise to abide by strict conditions.

The new Outright Market Transactions, or OMT, program “will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro,” Draghi told reporters at his monthly news conference."

http://www.marketwatch.com/story/bank-of-england-policy-unchanged-focus-on-ecb-2012-09-06?dist=lcountdown

 

 

Debt crisis: live

"Markets hit five-month high after Mario Draghi announced that the ECB will buy bonds on the secondary market in a bid to curb the debt crisis, as the OECD slashes the UK's growth forecasts for 2012 from 0.5pc to -0.7pc."

 

"Germany's economy ministry has said that ECB bond-buying cannot be a permanent solution and structural reforms must be the priority."

 

"Bailouts – whether by government or the ECB – can, at best, buy time. At worst, however, they act as an outright disincentive for necessary reforms. This risk was eloquently highlighted by Professor Leszek Balcerowicz – former Polish Finance Minister (and central bank head), famous for implementing the Polish structural reform plan following the fall of communism – at an Open Europe event last week.

"All bailouts, he said, come with "moral hazard". But if mishandled, ECB bond-buying could actually turn out to be the worst form of Eurozone bailout, as it completely de-links the bailout cash from reforms needed, creating a moral hazard problem of massive proportions (in addition to creating a number of other problems such as undermining the rule of law and making ECB susceptible to political influences). We’ve seen the signs already. As ECB board member Jörg Asmussen noted recently, "There cannot be a repeat of the mistakes with Italy in the summer of last year, when the ECB bought Italian sovereign bonds and the time was unfortunately not used for necessary adjustment measures".

http://www.telegraph.co.uk/finance/debt-crisis-live/9523681/Debt-crisis-live.html

 

 

Private payrolls post largest gain in five months

Labor Department report on nonfarm payrolls due on Friday

"Private-sector payrolls rose by 201,000 in August, led by small businesses and the service-providing sector, beating Wall Street’s expectations."

http://www.marketwatch.com/story/private-payrolls-post-largest-gain-in-five-months-2012-09-06?dist=lcountdown

 

 

U.S. jobless claims drop 12,000 to 365,000

"Hurricane Isaac did not affect applications for benefits

WASHINGTON (MarketWatch) — The number of people filing for state unemployment benefits for the first time fell 12,000 to a seasonally adjusted 365,000 last week, the biggest drop since mid-July, the Labor Department reported Thursday."

"The four-week average of new claims inched higher, up 250 to 371,250. The four-week average smooths out the data to minimize the impact of one-time changes due to weather, strikes or holidays."

http://www.marketwatch.com/story/us-jobless-claims-drop-12000-to-365000-2012-09-06?dist=lcountdown

NEW YORK (CNNMoney) -- Things could be looking up for the job market.

 

Paycheck processing firm ADP said private companies added 201,000 jobs last month, up from 173,000 in July.

 

 

http://money.cnn.com/2012/09/06/news/economy/adp-jobless-claims/index.html?hpt=hp_t1

Andrew Sulllivan:

 

Jobs Report Reax

 

"Crisis is the New Normal"....and take a look at the chart that accompnaies the blog round-up.  As I suspected we are locking-in to a 7.5% to 8.5% range as "structural unemployment (hovering around 8%, it seems) in an era of slow growth....

 

 

From one of Sullys links (the Economist artcile):

 

The details of the report were worse than the headline. Revisions reduced employment in June and July by 41,000 in total. The unemployment rate fell for the wrong reasons: 368,000 people left the labour force and the participation rate, the share of the working-age population either working or looking for work, slumped to 63.5%, a three-decade low, from 63.7%. The household survey, which often diverges from the larger survey of employers, found that the number of employed people actually fell in August by 119,000 from July.

 

(bolding mine)

 

 

^More of the same. The unemployment rate dropped to around 8% because people fell off the unemployment rolls, retired early, or just dropped out entirely. All that matters is labor participation, and that's what the media/politicians should be focusing on (plus median incomes, real inflation, etc.). The other numbers are distractions.

 

On the Ohio level, I don't think there has been a significant labor recovery. What's the labor participation rate today in the state compared to 2007? Or better yet, 2000? (I doubt Ohio fully recovered from the 2001 recession). It would be interesting to see labor participation numbers between the states.

Andrew Sulllivan:

 

Jobs Report Reax

 

"Crisis is the New Normal"....and take a look at the chart that accompnaies the blog round-up.  As I suspected we are locking-in to a 7.5% to 8.5% range as "structural unemployment (hovering around 8%, it seems) in an era of slow growth....

 

Excellent read, and thanks for posting. What's really disturbing is the labor participation rate for men, which is the lowest ever recorded since 1948.

But, but, on Thursday the sky was the limit. All was well, the stockmarket shot up so well it even ignored the poor employment data. Once again it the same cycle, hope equals more hope but reality continues to be very different than most of the headlines.

 

Debt crisis: ECB's Draghi Plan doused by rebellions in Germany and Greece

"A delay to the highly anticipated German court decision on bail-out funding and a rebellion in the Greek government over austerity doused hopes that the European Central Bank will be able to stem the crisis after all."

 

"Germany’s federal constitutional court said it might be forced to delay its ruling on the legality of the European Stability Mechanism (ESM) because of an eleventh hour objection by an MP. Peter Gauweiler, a member of Angela Merkel’s ruling coalition, argued that the court ruling, due on Wednesday, should take time to assess the impact of the ECB’s “outright monetary transactions”, announced last week."

 

"Meanwhile, Antonis Samaras, the Greek prime minister, failed to deliver the approval of his two coalition partners for the €11.5bn (£9.2bn) programme of cuts needed to secure the next tranche of international aid."

http://www.telegraph.co.uk/finance/financialcrisis/9534043/Debt-crisis-ECBs-Draghi-Plan-doused-by-rebellions-in-Germany-and-Greece.html

 

 

Soros: Germany’s heading into depression

"SAN FRANCISCO (MarketWatch) — Europe’s recession will intensify and spread to Germany, the euro zone’s largest economy, within six months, said George Soros, chairman of Soros Fund Management."

 

“The policy of fiscal retrenchment in the midst of rising unemployment is pro-cyclical and pushing Europe into a deeper and longer depression,” Soros said in prepared remarks for a Monday speech in Berlin. “That is no longer a forecast; it is an observation. The German public doesn’t yet feel it and doesn’t quite believe it. But it is all too real in the periphery and it will reach Germany in the next six months or so.”

http://www.marketwatch.com/story/soros-germanys-heading-into-depression-2012-09-10?dist=afterbell

If you needed more proof that the government isn't a "family at the dinner table" or even a business, Moodys is going to reduce our credit rating if we don't start bringing in less money and spending more.

 

http://www.npr.org/blogs/thetwo-way/2012/09/11/160945121/moodys-warns-of-downgrade-if-congress-doesnt-move-on-fiscal-cliff

More reporting on downward mobility...ignore the political spin provided by the source and look at the numbers...thought these are about peoples' perceptions of where they fit in....vs hard numbers....

 

Survey: One-Third Of Americans In ‘Lower Classes’

 

 

According to the Pew Research Center, Americans who say they are in the lower-middle or lower-class has risen from 25 percent to 32 percent in the past four years, in the national survey of 2,508 adults.

 

Not only has the lower class grown, but its demographic profile also has shifted. People younger than 30 are disproportionately swelling the ranks of the self-defined lower classes. The shares of Hispanics and whites who place themselves in the lower class also are growing.

 

Among blacks, the story is different....

 

...and news about the evolving two class society/winner-take-all economy:

 

Census: Rich-poor gap widens

 

The income of American households continued to shift dramatically in 2011, falling sharply for middle-income and working-age people while rising for top earners and seniors, the Census Bureau reported Wednesday.

 

Overall, median household income fell 1.5% to $50,054 last year, the fourth consecutive annual decline after adjusting for inflation, the bureau said. The typical household has lost ground in seven of the past 10 years and now takes in less cash than it did in 1996 when adjusting for inflation...

 

So gains of the 1990s boom are being wiped out....

 

Apparently 15% of the population are in poverty, too, according to reports....

 

 

 

 

 

No matter what your take is on QE3 (good or bad), it clearly shows we are still in a noticable economic hole, because these QEs are only used for economic crisis situtations.

 

From ‘awful policy’ to a ‘logical action,’ reactions to QE3

September 13, 2012, 3:38 PM

 

"Stock market bulls are in no doubt about their reaction to the Fed’s move Thursday to launch a new round of quantitative easing to boost the labor market. But other observers are having mixed reactions to the open-ended bond purchases plan.

From around the web, here’s a sampling of key statements by the Fed and reaction to them."

http://blogs.marketwatch.com/thetell/2012/09/13/from-a-major-shift-to-a-logical-action-reactions-to-qe3/

Fed reports a decline in industrial production

 

and (on what th numbers mean):

 

US industrial production fell 1.2 percent

 

 

WASHINGTON — U.S. industrial production fell in August by the largest amount in more than three years as factories produced fewer cars and other manufactured goods and Hurricane Isaac triggered shutdowns along the Gulf Coast.

 

Industrial production dropped 1.2 percent last month compared to July, the Federal Reserve said Friday. It was the biggest setback since a 1.7 percent decline in March 2009 when the country was in recession.

 

 

 

I wonder how many jobs will be cut in their cost-cutting effort?

 

FedEx profit down 1.1% on manufacturing slowdown

"--FedEx says a weak economy drove a shift to non-premium services

--Volume in its priority international export segment was down 2%

--The company plans to detail its cost-cutting effort during a meeting next month"

http://www.marketwatch.com/story/fedex-profit-down-11-on-manufacturing-slowdown-2012-09-18?dist=lcountdown

 

 

If Goldman said it, its got to be true. Such a fine outstanding company.

 

Home-builder optimism hits 6-year high

Goldman Sachs sees favorable recovery scenario for U.S. market

"The National Association of Home Builders/Wells Fargo housing market index gained 3 points to a seasonally adjusted reading of 40, the highest the index has been since June 2006. Economists polled by MarketWatch had anticipated a reading of 38.

The index still isn’t at the 50 level indicating “good” conditions but has climbed back from as low as 8 during the recession. The index didn’t even break 20 until December 2011."

http://www.marketwatch.com/story/builder-optimism-in-september-hits-six-year-high-2012-09-18?dist=lcountdown

 

 

So the average joe on main street gets the shaft again. What part of a sustainable economic recovery is QE creating. Lets see, artificially higher prices on metals and commodities and some nice extra profits for Wall Street. Main street then pays more for necessities, food, gas, etc.

 

3 sectors poised to benefit from QE 3

"This time around, a growing number of investors want to be ready to take advantage of the opportunity to benefit from their own "economic recovery" plans, and focus on those sectors which are likely to produce the best results during QE 3.

Based on what we have seen during previous quantitative easing programs, the most likely sectors to produce big gains are the precious metals and commodities sectors."

"While economists and analysts debate the pros of cons of QE 3 and how it could help or hurt the economy, it seems clear that quantitative easing is good for investors. How long these beneficial tailwinds will last is unknown, but the current environment could provide another opportunity for investors to fatten their portfolios over the coming weeks and months."

http://www.marketwatch.com/story/3-sectors-poised-to-benefit-from-qe-3-2012-09-18?dist=lcountdown

 

 

Spain just keeps going deeper into the hole and the head of Bundesbank talks about the print shop.

 

Debt crisis: Spanish bad bank loans climb - live

"Jens Weidmann defends his right to speak out about concerns over ECB policy, and uses Faust's Mephistopheles to describe printing money to help governments as temptation from the devil."

 

"Jens Weidmann, the head of the Bundesbank, has once again criticised unlimited bond buying by central banks.

Although he did not directly refer to the ECB's bond buying plans, Mr Weidmann said that central banks that promise to create unlimited amounts of money risk fuelling inflation and losing their "credibility". In a speech in Frankfurt, he said:

If a central bank can potentially create unlimited money from nothing, how can it ensure that money is sufficiently scarce to retain its value? Is there not a big temptation to misuse this instrument to create short-term room to manoeuvre even when long-term damage is very likely? Yes, this temptation is very real, and many in the history of money have succumbed to it.

If one looks back in history, central banks were often created precisely to give the monarch the freest possible access to seemingly unlimited financial means. The connection between states’ great financial needs and a government controlling the central bank often led to an excessive expansion of the money supply, and the result was devaluation of money through inflation.

The independence serves much more to establish with credibility that monetary policy can concentrate without hindrance on keeping the value of money stable."

http://www.telegraph.co.uk/finance/debt-crisis-live/9549698/Debt-crisis-Spanish-bad-bank-loans-climb-live.html

Beijing hints at bond attack on Japan

"A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea."

 

"Writing in the Communist Party newspaper China Daily, Mr Jin called on China to invoke the “security exception” rule under the World Trade Organisation to punish Japan, rejecting arguments that a trade war between the two Pacific giants would be mutually destructive.

Separately, the Hong Kong Economic Journal reported that China is drawing up plans to cut off Japan’s supplies of rare earth metals needed for hi-tech industry.

The warnings came as anti-Japanese protests spread to 85 cities across China, forcing Japanese companies to shutter factories and suspend operations.

Fitch Ratings threatened to downgrade a clutch of Japanese exporters if the clash drags on. It warned that Nissan is heavily at risk with 26p of its global car sales in China, followed by Honda with 20pc. Sharp and Panasonic both have major exposure."

http://www.telegraph.co.uk/finance/china-business/9551727/Beijing-hints-at-bond-attack-on-Japan.html

A quick look at some of the job cuts announced over the last week.

 

Alpha closing 8 mines, cutting 1,200 jobs in all

"Coal producer Alpha Natural Resources said Tuesday it was cutting production by 16 million tons and eliminating 1,200 jobs companywide, laying off 400 workers immediately by closing mines in Virginia, West Virginia and Pennsylvania."

http://seattletimes.com/html/nationworld/2019187163_apusalphalayoffs.html

 

 

Siemens to lay off 615 in Iowa, Kansas, Florida

"DES MOINES, Iowa — Wind energy equipment manufacturer Siemens Energy Inc. will lay off 615 workers in Iowa, Kansas, and Florida in part because Congress has not renewed a tax credit for wind energy, the company said Tuesday."

http://www.cbsnews.com/8301-505244_162-57515251/siemens-to-lay-off-615-in-iowa-kansas-florida/

 

 

American Airlines Expects About 4,400 Job Cuts, Warns 11,000

"DALLAS (AP) _ American Airlines is sending layoff warning notices to more than 11,000 employees although it expects job losses to be closer to 4,400."

http://www.kcautv.com/story/19579603/american-airlines-expects-about-4400-job-cuts-warns-11000

 

 

FirstEnergy to lay off 200 in Akron; details in November

http://www.ohio.com/news/break-news/firstenergy-to-lay-off-200-in-akron-details-in-november-1.335714

 

 

Bank of America to Cut 16,000 Jobs by Year-End: Report

"Bank of America is planning to cut 16,000 jobs by year end as it speeds up a company-wide cost-cutting initiative amid declining revenues, The Wall Street Journal reported on Wednesday."

http://www.cnbc.com/id/49098399

 

 

There should be a law where you can't lay off if you are making a profit.

Summarizing:

 

US economy hobbled by weak hiring, manufacturing

 

WASHINGTON (AP) - A trio of reports Thursday offered a reminder that the U.S. economy is struggling to grow and add jobs.

 

The number of people seeking unemployment benefits last week stayed near a level that signals only weak hiring in September. Manufacturing shrank for a fifth straight month in the Philadelphia region, a sign that weaker global growth has hurt demand for American-made goods. And a measure of future economy activity declined for the second time in three months.

 

The data followed a poor month of hiring in August and the Federal Reserve's move last week to launch new stimulus measures to give the hobbled recovery a jolt.

 

 

 

...in bold...a drop in a leading indicator?

 

 

There should be a law where you can't lay off if you are making a profit.

 

And in such a world, in the one single quarter in which you show a net loss due to one-time charges or impairments, you also have the incentive to lay off everyone you possibly think *could* be deadweight because you might never get another chance to trim the fat for many more quarters.

And it's easy to game the numbers to make it look like you lost money.

Siemens to lay off 615 in Iowa, Kansas, Florida

"DES MOINES, Iowa — Wind energy equipment manufacturer Siemens Energy Inc. will lay off 615 workers in Iowa, Kansas, and Florida in part because Congress has not renewed a tax credit for wind energy, the company said Tuesday."

http://www.cbsnews.com/8301-505244_162-57515251/siemens-to-lay-off-615-in-iowa-kansas-florida/

The oil industry and their anti-science Tea-Party lackeys in Congress have prevailed.  Congratulations /sarcasm

You can't legislate away numbers,  Wind energy is ridiculously expensive per kWh and has not been coming down the way, say, solar has.

You can't legislate away numbers,  Wind energy is ridiculously expensive per kWh and has not been coming down the way, say, solar has.

 

Many other energy sources have additional cost to them. Including environmental cost and with oil the cost of keeping it flowing throughout the world.

You can't legislate away numbers,  Wind energy is ridiculously expensive per kWh and has not been coming down the way, say, solar has.

 

Many other energy sources have additional cost to them. Including environmental cost and with oil the cost of keeping it flowing throughout the world.

 

So does wind, in addition to its higher direct costs, especially when you're talking about massive wind farms.