Worthless Homes Where? ‘Centrally’ located

Inquiring minds are looking for the answer to just that question. And The Central Valley Business Times has the answer: Throughout The Central Valley…

Mortgages exceed home values across the Central Valley, with more than six out of ten homes in Stockton, for example, underwater, according to new reports Thursday from real estate information company CoreLogic Inc. of Santa Ana.

While Stockton is the deepest underwater market reported by CoreLogic, it has plenty of company.

The list of cities is more a role call:

Modesto 59.6% or 58,892 homes
Stockton 62.3% or 80,505 homes
Fresno 46.8% 71,850 homes
Metro Sacramento 43.4% 214,468 homes
Visalia-Porterville 44.8% 31,027 homes
Bakersfield-Delano 52.0% 79,891 homes

Maybe Pat Hill will change the FSU Bulldog’s helmet to green with a red ‘$’ on it instead of the green ‘V’.

For those who don’t know, Pat Hill began the green ‘V’ to show solidarity for the Valley farmers. Maybe it is time for the great coach to come to the aid of the Valley homeowner.


Worst Summer Youth Unemployment Since WHEN?

Inquiring minds are finding out that this is the worst summer for youth employment for 62 years. That’s right…the worst summer for youths of America since 1948:

The share of young people aged 16 to 24 who were employed this summer fell to 48.9 percent — the lowest rate on record since 1948.

Meanwhile, the raw number of youth who held jobs in July 2010 actually rose by 1.8 million from July 2009 to 18.6 million.

But as a percentage of the population, the share of workers in that age group fell, according to annual data from the U.S. Bureau of Labor Statistics, released today.

The youth employment rate always rises in the summer — and it went up this year by 571,000 from April. But that was half as much as in each of the two previous summers, the bureau said.

For the summer of 2010, the youth labor force totaled 22.9 million workers in July, an 11.5 percent growth from April youth payrolls.

And our President (and Vice President) say this is the Summer of Recovery? And that things are getting better? How does someone…anyone, make that statement?


Anthem Blue Cross is Hungry

Inquiring minds are seeing the supposedly impossible: healthcare costs rising in the age of Obamacare. Remember the ‘good ole days’ where President Obama promised Socialized medicine was the way to less expensive healthcare?

California insurance regulators cleared the way Wednesday for Anthem Blue Cross to implement scaled-back rate hikes after a previous increase was canceled amid an uproar over its size.

Anthem said it intends to put the new rates — averaging 14% and as high as 20% — into effect Oct. 1 for nearly 800,000 individual California policyholders.

Regulators also allowed one of Anthem’s nonprofit competitors, Blue Shield of California, to move ahead with rate increases — averaging 19% and as high as 29% — for 250,000 individual policyholders.

But Anthem wanted to raise their rates much more:

Anthem backed off its initial plan to increase premiums as much as 39% in March after consumers, regulators, lawmakers and even President Obama criticized it, and after a consultant hired by state regulators found major math errors in its filing.

Anybody have a problem with an Insurance company that must have a 39% premium increase but ‘can settle’ with a 20% increase? Facism is so profitable for large corporations, isn’t it?

UK: Nightmare Rates at 8% Can Come True

Inquiring minds are watching what is happening in Britain and it isn’t pretty. In “UK: Interest Rates at 8%?” the word nightmare may not be strong enough:

With the recovery faltering, the deficit yawning and the Treasury axe being sharpened, you might have thought that the present economic picture could hardly get worse.

But if one expert’s chilling prediction is right, then far grimmer times may lie ahead for British homeowners.

What might this be:

As if they did not have to shoulder enough burdens already, they could end up facing mortgage repayments three times today’s level, with horrific consequences for our economy.

That is the bleak picture Andrew Lilico, chief economist of the Policy Exchange think-tank, painted yesterday. He believes that next year the British economy will plunge back into recession – and that the future will be even worse than most of us dare imagine.

If Mr Lilico is right, then the economy will soon bounce back from the dreaded double-dip recession.

But once recovery is under way, he thinks, then the Bank of England’s quantitative easing scheme, which pumped £200 billion into the economy in the wake of the credit crunch, will have terrible consequences.

Sound familiar, America? Well, here is their future:

With the money supply out of control, inflation could surge as high as 10 per cent, a level unknown in Britain since the late 1980s.

And to make matters even worse, the Bank of England would then have to raise the base rate to as high as 8 per cent, leaving hard-pressed homeowners facing mortgage rates at an eye-watering 12 per cent.

With house prices and debt at record levels, this would be a catastrophe.

Fed sends global markets reeling

Inquiring minds are reading about the negative effect The Fed is having on world markets.

Wall Street and Western bourses have until now brushed aside worries that recovery in the US, Japan and southern Europe may be stalling – as have commodity markets – betting the lords of finance will come to the rescue with more liquidity if needed.

Equity investors learned this week that they had misjudged the risk of a relapse as fiscal stimulus wears off, and misread the willingness of the US Federal Reserve to respond. Wrongly viewing Ben Bernanke’s Fed as a soft touch, they took a fresh blast of quantitative easing for granted before it was agreed.

What has emerged since the acrimonious Fed meeting on August 10 is that Bernanke was unable to marshal a consensus behind fresh QE. Seven members argued that Fed should not take such a drastic step until the economy was in serious trouble, according to Wall Street Journal Fed-watcher Jon Hilsenrath.

They settled on a compromise that the Fed should roll over holdings of bonds as they reach maturity to avoid passive tightening. But there was no deal on further action. Philadelphia’s Charles Plosser grumbled that the Fed had sent “a garbled message”.

More ominously, some Fed officials fear the central bank is already “pushing on a string” and does not have the means to revive the economy. Whether or not they are right, this comes as a psychological shock for investors schooled by the “Greenspan Put’ into thinking that there is a deus ex machina in the wings.

And housing was mentioned:

In the US, the 27pc collapse in existing homes sales in July leaves no doubt that America’s property market cannot stand on its own feet without the prop of homebuyer tax credits. “Home sales are in free-fall. These are truly dismal numbers,” said Teunis Brosens from ING.”

Notice how it is always back to housing?

Intel’s Chief Lets It Fly

Inquiring minds are reading what Intel Chief Executive Officer Paul Otellini has to say at a dinner for the Technology Policy Institute’s Aspen Forum. And his remarks were not endearing to the Obama administration:

ASPEN, Colo.–Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Otellini’s remarks during dinner at the Technology Policy Institute’s Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: unless government policies are altered, he predicted, “the next big thing will not be invented here. Jobs will not be created here.”

Otellini’s remarks were dark. Very dark regarding the future. His comments covered many areas:

The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe–this is the bitter truth.”

Not long ago, Otellini said, “our research centers were without peer. No country was more attractive for start-up capital…We seemed a generation ahead of the rest of the world in information technology. That simply is no longer the case.”

He didn’t stop there. He spoke about how the Democrats and their Keynesian economic experiment, tax policy, immigration policy, and much more. But the most important might have been:

“Our corporate tax rates are the second highest in the world,” and Congress has repeatedly failed to make an R&D tax credit permanent, Fiorina told the Aspen audience. It’s time to start “acknowledging the reality that companies go where they’re welcome,” she said. (The effective U.S. corporate income tax is 35 percent, far over the industrialized-nation average of 18.2 percent.)

Chris Marangi, associate portfolio manager at Gamco Investors in Rye, N.Y., said Tuesday: “Capital is agnostic. It doesn’t have a religion. It doesn’t have a philosophy. It goes where it finds the highest returns.” The problem, Marangi said, is that many other “countries have a more friendly regulatory regime than we do.”

Beware America. Beware. Decisions are being made that can not be undone quickly.

Why nobody wants to buy a house

Buyers in this housing market

Inquiring minds are looking a bit amusedly at MarketWatch.com’s article “Why nobody wants to buy a house“. Why smile at an article about such a sad subject? Maybe it has to do with the tagline (what used to be called a ‘sub-title’):

Commentary: With government bribe money gone, so is any sane demand

That is refreshing. And the opening paragraph is almost as good:

Oh, sure, a lot of gullible first-time buyers got lured into the market over the last 18 months to take advantage of an $8,000 federal tax credit (not realizing how little difference that money will make when the first property-tax bill hits at the same time the roof springs a pesky leak and the city hits you with a special assessment for sidewalk repair). But that tax credit has expired — and, with it, any semblance of demand for homes.

The “What, why, how” of July:

The July data on existing-home sales show just how much the tax credit skewed the housing market in the months it was in effect. Sales plunged 27.2%, the biggest one-month drop on record, and inventories of unsold homes jumped to 4 million, a 12.5-month supply at the current sales pace, the worst level that measure has seen in at least 11 years. Read more on the plunge in existing-home sales.

Because of the original timing of the tax credit — you had to sign a contract on a house by April 30 and close by June 30 (the closing deadline was later extended to Sept. 30) — it was obvious that sales would get an artificial boost in June as buyers rushed to beat the deadline (since existing-home sales are reported once they close, not at the contract signing). And, by extension, there would be a big drop in July.

And will come in August?

Don’t think, though, that July is a one-month aberration. Sure, the numbers are record-breakingly bad, and August isn’t likely to see any such extremes. But August isn’t likely to show any increase in activity, either. And don’t hold your breath for September. Or October, November, December. In fact, don’t hold your breath at all waiting for a rebound in housing because all you’ll do is turn blue and suffocate.
Nobody wants to buy a house because in order to buy a house you have to have some bit of confidence in the future. And today there isn’t much confidence in anything that has to do with the economy.

Forget about talk that another big drop in housing prices is needed to spur demand. Prices have already fallen 25% or more from their peak in many areas as distressed sales made an outsize impact in the market. That demand, too, has been slaked.

Look out below!!!

We are off the cliff and on the express route down.