Tag Archives: zHousing

"This One Time…..In Band Camp…"

I’m relatively new to really REALLY watching politics.  I guess, in the past, I didn’t care.  Mostly I was single, renting and didn’t make enough money to care about taxes.  The last decade has seen that ALL change.  I am no longer single, I have children, own a home, make more money and am seriously considering starting my own business.  I also spend more time at home than I used to spend before all the changes aforementioned.   Combine this with the very compelling story of last year’s election; first time in many years that a  President or Vice President wasn’t running, and you have good drama.  AND we would have the opportunity to see America’s first woman or black Presidential candidate.  All good political drama.

Back to my point.  I am really pretty new to political theater.  So, maybe as I say this, it’s really not so unusual.  Could even be par for the course.  But to me, this is absolutely stunning.  Not only in the hypocrisy of it all, but in the sheer ignorance of any semblance of economic thinking.

WASHINGTON (Reuters) – The Obama administration pledged on Thursday to back beleaguered mortgage finance giants Fannie Mae and Freddie Mac no matter how big their losses may be in the next three years.

Serious?  Banks are paying BACK their TARP funds and these guys are asking for, and getting, more money?  At least they’ll have to be smart in their use of it, right?

It also jettisoned a demand that the two companies cut the size of their mortgage-related investment portfolios next year, allowing them to provide even more support in the near term for a housing market recovering from its worst slump in decades.

Nope.  Business as usual; continue to sell money to people who can’t afford it.

So, how is it that some businesses are capped and controlled and can’t WAIT to get out from under government control while others seem unable to even WANT to get out?  Is it political or is it simply a way of life?  Is it really possible that the Obama administration is giving political favors to supporters or, perhaps, does he simply think that a fascist* banking system is the most effective method by which to establish financial systems?

The Treasury’s announcement came just hours after the companies said their chief executives would be paid up to $6 million on an annualized basis for 2009.

Fannie Mae and Freddie Mac are congressionally chartered companies that buy up mortgages from banks and other originators to keep mortgage markets liquid. Some of the debt is repackaged as securities and sold off to investors, and the government has been buying an increasing share.

Sadly, for Liberty loving people, it would seem that the answer is “Both”.  Obama is both paying political favors, $6 million to the CEOs, AND feels that economic fascism is the preferred method of financial systems.

Like I said, I am new to this.  Maybe this is business as usual.  But from the cheap seats, this is ugly.

*   From wiki:  Fascists promoted their ideology as a “Third Position” between capitalism and communism.  Italian Fascism involved corporatism, a political system in which the economy is collectively managed by employers, workers and state officials by formal mechanisms at national level.  Fascists advocated a new national class-based economic system, variously termed “national corporatism”, “national socialism” or “national syndicalism”.  The common aim of all fascist movements was elimination of the autonomy or, in some cases, the existence of large-scale capitalism.

Fascist governments exercised control over private property but did not nationalise it. They pursued economic policies to strengthen state power and spread ideology, such as consolidating trade unions to be state or party-controlled.

California: Part IV

I just got done posting on some crazy talk coming out of California.  Not 10 lines down the page and I saw this gem:

Tenant advocates got a win at the San Francisco Board of Supervisors Tuesday with initial approval of a plan to extend eviction protections to rental housing built within the past 30 years…

Supervisor John Avalos, chief sponsor of the legislation, said the change is needed “to assure equal protections for tenants in all rental units, in San Francisco. This legislation’s really about fairness.”

Avalos – responding to concerns raised by tenant advocacy groups – said he drafted the legislation after seeing the growing number of evictions of tenants living in properties foreclosed on by banks. Foreclosure is not considered a just cause for eviction.

Look, whenEVER a politician says anything related to “This legislation’s really about fairness” run.  Run far far away.

But there is hope; albeit ‘prolly pretty small:

Colin Gallagher, who owns a condo with his husband in the city’s South of Market, said they would not have purchased their home had they known the rules would be changed after the fact. Their plan is to rent out their condo some day and they don’t want to be restricted with eviction controls. “We certainly feel this would negatively impact our investment,” said Gallagher.

Strange that, huh?  Rules implemented that affect the ability to realize return on investment might reduce said investments?

But hey, don’t let economics get in the way:

Proponents’ message: “In a city with 60 percent renters, a severe housing shortage and an economic crisis, this fix in the law should be a no-brainer,” said Sara Shortt, executive director of the Housing Rights Committee of San Francisco.

Gentle Miss Sara.  “No brainer”  You have NO idea.

You Have to Try to be This Dumb

Or, maybe, you just have to have never done it.  Check out this bit of information describing the Obama Administration:

Hat Tip The Enterprise Blog via Carpe Diem

Rookie QB, RB and WR. Wonder why we have zero points?

We are witnessing a deadly combination; A powerful government expansion into the private sector coupled with an administration that has not one single clue how to run an organization within that private sector.  The Entrepreneur in Chief himself has never held a single position that required him to run an organization of people, accomplish a goal and do it well or be fired.  Shift managers at McDonald’s have more experience running a shop than this guy.

And so it is that while I shake my head in wonder, I find myself understanding how this can continue to continue:

WASHINGTON – The Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on mortgage companies to do more to help people remain in their homes, officials said Saturday.

… the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.

Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.

So, to be clear, the government “stepped up pressure” on firms to borrow people money so that they could get into a home.  Then, when those people who couldn’t afford to buy a home actually start to demonstrate that they can’t afford to own a home, the government is going to “step up pressure” on those companies to help those people who can’t afford to be in a home stay in the home that they can’t afford to be in.


And why are we going to do this?

Rising foreclosures depress home prices and threaten the sustainability of the fledgling economic recovery.

Ahhh, yes.  Of course.  And so, in an effort to help fix the problem, ol’ Unc Sam is gonna step in and hold those home prices artificially high.  See, right now, there are a number of people holding onto assets [homes] at a price that isn’t sustainable.  Given their marginal risk and marginal gain, they are determining that keeping the house is not an option.  If left to normal devices, the house would foreclose and the surrounding properties would adjust their value; almost assuredly downward.  This in turn sends a signal to home BUILDERS that new homes are not needed and therefore they won’t be built.  In time, the value of existing homes will find a level at a sustainable price and people will again begin to buy homes.

But no.  Obama wants tp keep prices artificially high.  This in turns keep people in their homes sending signals to builders that we need more homes.  Further, because these value stay high a whole segment of the population is not able to realize THEIR dream of buying a home; they are priced out.  In any event, the bubble that was is now becoming the bubble that continues to be.

The best part?

Under the $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.

We get to spend a TON of money that we don’t have on a government program that is going to beg, BEG, for fraud and abuse.

At this rate; Sarah Palin, heck, anyone, will be able to beat Obama in 20112.

The Recession – How Bad Is It

About three weeks ago, I posted a bit on the status of the economy.  I wanna go back to that and review again.

I have a friend who, like  me, is a political news junkie.  I think that we use each other as our own personal foils.  Anyway, the topic of economic indicators came up, and this list came up:

  1. Unemployment
  2. Housing Starts
  3. Consumer Price Index
  4. Inflation
  5. Industrial Production
  6. Bankruptcies
  7. GDP
  8. Broadband Internet Penetration – I don’t agree with this one as a historical reference.
  9. Retail Sales
  10. Stock Market
  11. Money Supply

Let’s review some.

From the top.  Let’s take a look.


Right now, with the January numbers in, we are looking at a 7.6% unemployment rate.  To be sure, that is a historical high; a RECENT historical high.  In fact, you would have to go all the way back to September of 1992 to find a rate higher than where we are now.  And that’s a long way back, really is.  But–it’s no where near, not even close, to as bad as it’s ever been, or even as bad as it’s been since the Great Depression.  Now, the thing about that September 1992 value is that it was in the middle of a run of 21 straight months of 7.0% or higher; 21 MONTHS!  For referance, we are in the middle of, ummm, 2.  Only two!

Way Back MachineIf you dial the Way Back Machine to the year 1980, specifically May of 1980, you will be looking 68 straight months of unemployment higher than 7.0%.  Imagine!  Imagine having to go through the last two months for most of 6 years!  In fact, there were 78 months above 7.0% missing only one which came in at 6.7%  And to make it even worse, at the height of it, the rate stood at 10.8%.  Almost 11%.

Is 7.8 high?  Recent history suggests that it is.  Is it the worst since the Great Depression?  Hardly.  In fact, so far, it’s not even as bad as it was in 1992.  And the run in 1992 really had lasted from 1990 through 1994.  Now, clearly we are not sure where, or how high, we are going with these numbers.  But that’s not the use of this statistic.  These numbers represent what is going on in the nation today.  [Or last month as it were.]

Housing Starts

Without even looking, I think that this one is going to be bad.  In fact, this could be as bad as we have seen it.  And there is a reason for that; the whole reason we are in the place we are in is due to the burst of the housing bubble.  So, while I think that it is worth taking a look at the housing market [if only to act as a guide when we begin to turn], I hesitate to use this as any significant historical model.

And now that I have taken a look, I was right.  This indicator isn’t in good shape.  With data that I have going back to 1969, we are at the lowest level on record.  We reported only 550,000 new homes in December, 2008.  For an annual perspective, from Dec 2007 to Dec 2008, we saw a 45% decline.  This is the highest such decline on record.  To be sure, there have been other periods where we saw declines in the high 30’s, but this level is unprecedented.

Now, as I mentioned above, it is my feeling that it is the housing market that has us in this dilemma to begin with.  That is, there was a housing bubble and we are now contracting that bubble.  I am not surprised to see that we are reducing our output of new homes at just the same time that we are trying to move through our excess supply.  In fact, given our past spending on homes, I would be concerned if housing starts were NOT contracting.  With all of that said, however, we will not truely be able to say that we have come through the other side until this metric turns.


Foreclosure rates, on the rise for some time, have dropped sharply in January, with California rates at their lowest in nearly 14 months.  Further, pre-floreclosure filings also dropped, indicating that the falling rate may be sustainable.  Lastly, one of the most interesting aspect of a liberal media bias is that while rising oil prices are reported as horrible news for consumers, the price of housing is reported exactly opposite.  Why is it bad news when the affordability of housing is trending positive.  Right now, the affordability of housing is about 35-40% below the histroic rate.  All of this points to an ending of the housing correction.