More Evidence To Let Banks Fail

Inquiring minds are reading yet another piece of evidence that banks should have been allowed to fail. The NYTimes’ article shows how new companies are stepping into the breech to fill the needs of lending:

Amanda Keppert is convinced that she would have lost Mandy’s Korner, her hot dog stand in San Jose, Calif., if she had not received a type of loan that is more common in the third world than in the United States.

Last year, as fewer people ate out and layoffs mounted in Silicon Valley, sales plunged more than 60 percent at the once-thriving Mandy’s Korner. “My business was drowning and I was afraid it would go under,” Ms. Keppert said. While she picked up catering work at a local concert site, it wasn’t enough to pay her expenses. She had invested all of her savings in the business, and she did not want to see it go under.

But her loan applications were rejected repeatedly at banks in San Jose. Then she found Opportunity Fund, a local microlender that has teamed up with, one of the best-known international microlenders. Kiva, which has lent more than $150 million in 53 countries, had just begun a pilot program lending to business owners in the United States.

Through Kiva, Ms. Keppert obtained a $6,500 loan that she has three years to pay back and that carries a 6 percent interest rate. She used the money to buy an ice maker, a generator to save on propane costs and large signs to advertise her business.

The rest of the article is very informative on what is happening in “small” lending and should be must reading.


Foreclosures up in 75 pct

Inquiring minds are looking aghast at the new data showing US metro foreclosures are up 75%. And that means people on the edge, wishing for price appreciation, are seeing their hopes dim well:

Foreclosures rose in three of every four large U.S. metro areas in this year’s first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday.

Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said.

“We’re not going to see meaningful, sustainable home price appreciation while we’re seeing 75 percent of the markets have increases in foreclosures,” RealtyTrac senior vice president Rick Sharga said in an interview.

And near term future doesn’t look rosy either:

Foreclosure actions, which include notice of default, scheduled auction and repossession, in the first half rose in 154 of the 206 metro areas with populations of 200,000 or more.

And the drumbeat continues…

Fed Board Member’s Deflation Warning Hints at Policy Shift

Inquiring minds are looking at the warning of deflation by St. Louis Fed President James Bullard. Bullard has been more prescient than most on the board in seeing the near-term future.

James Bullard, the president of the Federal Reserve Bank of St. Louis, warned on Thursday that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”

The warning by Mr. Bullard, who is a voting member of the Fed committee that determines interest rates, comes days after Ben S. Bernanke, the Fed chairman, said the central bank was prepared to do more to stimulate the economy if needed, though it had no immediate plans to do so.

A subtle but significant shift appears to be occurring within the Federal Reserve over the course of monetary policy, amid increasing signs that the economic recovery is weakening. Mr. Bullard had been viewed as a centrist, and associated with the camp that saw inflation, the Fed’s historic enemy, as a greater threat than deflation.

Does this mark a distinct policy shift? Does this mean the chances of a pro-longed deflationary period have just increased?

Does President Obama hate the United States.

It is a weird question to say the least. Asking if a democratically elected leader hates his country. Inquiring minds are reading Roger Kimball over at Pajamas Media. His new article, “Thanks for the memories, Barack: Or, how to bankrupt a country in three easy steps” is just wonderful at explaining what damage is being done to the US by this president and presenting the case for his hatred.

Here is a small tidbit to whet your appetite:

Of course, you are a special case, Mr. President. Your dislike of America has the added ingredient of what, for lack of a better term, I’ll call metaphysical ambivalence. At its core, as Samuel Huntington pointed out in Who We Are, the United States is based upon certain “Anglo-Protestant values” that generations of immigrants had absorbed and made their own in the process of becoming American citizens. (Oh, how the left hated to have that pointed out!) Your filiations lie elsewhere, which perhaps explains why you bow to Saudi princes, why you forbid the conjunction of the adjective “Islamic” with the noun “terrorist,” why, to take an example from the day before yesterday, you pretended to criticize the release of Lockerbie bomber Abdel Baset al-Megrahi — all Americans, you said, were “surprised, disappointed and angry” that the Scots released him. But then it turns out that your State Department explictly, if secretly, told British authorities that you preferred his release for “compassionate” reasons. “All Americans” — did that include you Mr. President? I’m not asking about where you were born: I am asking about where your fundamental allegiance lies.

You are encouraged to please read the entire article. Here is another link here.



Phoenix Metro Housing Market To Worsen

Inquiring minds are reading with horror a FoxPhoenixTV article on thier website entitled “Analysts: Valley Housing Market Will Get Worse” and asking, “How?”:

For four years now, we’ve been watching housing prices fall across the nation. It was starting to look like that trend might be over — but experts are saying it’s going to get worse before it gets better.

Here is the why:

he Phoenix metro area is expected to be harder hit than most other U.S. cities. Analysts say values will drop by at least 10 percent over the next year.

Right now short sales — where the bank is willing to sell the home for less than it’s worth and cover the difference — make up nearly 1 out of every 3 sales. In June, 21 percent of home sold were short sales — in July, the number rose to 28 percent.

The economy, worries about job security and challenges in getting a home loan are all contributing to the problem.

Just how bad is it going to be in California when the OC shadow inventory begins to show up in the MLS?

401(k): How much do you pay in fees? has a timely minute-long video on the fees being charged for inquiring minds.

The Labor Dept. is moving ahead on rules to help both employers and workers better understand 401(k) fees. Some folks say this is more information than needed, yet a survey finds otherwise, reports MarketWatch’s Andrea Coombes in the Personal Finance Minute.

The video can be found here.