MOVE MOVE MOVE MOVE
economists have been puzzled about why the latest recession produced such a feeble recovery, but here’s one important new clue: The portion of Americans moving from place to place has fallen close to record lows, inhibiting people’s ability to go where the good jobs are or remake themselves in one place after flaming out in another.
Labor mobility, as it is known, has always contributed to the dynamism of the U.S. economy and, usually, to brisk recoveries
By Ilyce Glink | CBS MoneyWatch
You can sum up the U.S. real estate market this year in one word: recovery.
Across the nation as a whole, prices have grown by more than 10 percent, and double or even triple that rate in some regions. Some of the hardest-hit states -- California, Florida, Nevada -- are also growing the fastest. Even cities like Modesto, Calif., were real estate prices went off a cliff during the housing crisis are coming back. Although home prices in Modesto are down 49 percent from their pre-crash peak, they have grown 30 percent from this time last year.
But not every town and city is on the comeback trail. At the other end of the spectrum, there are places like Farmington, N.M. Home prices there plunged 20 percent from their peak during the meltdown and are up only 0.03 percent this year. At that rate, it would take centuries for the city's housing market to recover. The reality is that homeowners in the city may never recoup their losses.
And Farmington is in better shape than the communities around the country on this list, which have yet to show any signs of rebounding from the meltdown. Using data compiled for CBSNews.com by real estate analytics provider, we looked not only at cities where home prices have the farthest to go to climb back to their pre-bubble peak, but also where prices are still declining
1. Kankakee, Ill.
Growth needed to match peak: 39.2 percent
Growth this year: -3.5 percent
Creative Commons
Kankakee faces a similar problem as Rockford, Ill. The population is stagnant and its unemployment rate hasn't been below 10 percent since mid-2008. Even selling the city's many foreclosed properties is unlikely to boost home prices much. Unless the city sees a serious economic turnaround, it will be nearly impossible to recover that 39 percent drop in home values.
2. Rockford, Ill.
Growth needed to match peak: 31.5 percent
Growth this year: -3 percent
Residents of two cities in Illinois have the bleakest prospects of seeing home prices rebound. The state's high unemployment rate is the biggest factor restraining prices. At the peak of the recession, Rockford's jobless rate shot up to a whopping 20 percent unemployment rate, and it remains high at around 10 percent.
Following is an excerpt from: http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story_1.html These are causes according to the columnist.
And what about those facts? To be clear, no single issue was the cause. Our economy is a complex and intricate system. What caused the crisis? Look:
●Fed Chair Alan Greenspan dropped rates to 1 percent — levels not seen for half a century — and kept them there for an unprecedentedly long period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).
●Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities. Nearly all of them failed to do adequate due diligence before buying them, did not understand these instruments or the risk involved. They violated one of the most important rules of investing: Know what you own.
●Fund managers made this error because they relied on the credit ratings agencies — Moody’s, S&P and Fitch. They had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.
4 Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.
5 The Securities and Exchange Commission changed the leverage rules for just five Wall Street banks in 2004. The “Bear Stearns exemption” replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. In its place, it allowed unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage leaves very little room for error.
6Wall Street’s compensation system was skewed toward short-term performance. It gives traders lots of upside and none of the downside. This creates incentives to take excessive risks.
7 The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations. The Fed could have supervised them, but Greenspan did not.
8 These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to get creative with underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.
9 “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.
Despite what the Republicans loudly proclaim, Americans do not buy into economic theories that were disproved 25 years ago. What the new poll and others show is that most do not see the deficit and “big government” as the main problem, and they do not buy the endless calls for slashing spending and reckless deregulation.
A solid majority said creating jobs should be the highest priority for the government now and that payroll taxes should be cut to help with that. A whopping 8 in 10 think building bridges, roads and schools is important, which means — gasp — spending money.
Read the rest by clicking on the following: http://www.nytimes.com/2011/09/18/opinion/sunday/leadership-crisis.html?_r=1&hp
convert $49.1 billion in preferred shares purchased with money from the Troubled Asset Relief Program into common stock in AIG. The move will increase the U.S. ownership stake in the insurance giant from 80% to 92%, but allow the government to sell the shares over time in the open market to end the taxpayer support.
Click on the following for more details: AIG, U.S. agree on plan for repayment of $100 billion in bailout money - latimes.com
The National Bureau of Economic Research, a panel of academic economists based in Cambridge, Mass., said the recession lasted 18 months. It started in December 2007 and ended in June 2009
To make its determination, the NBER looks at figures that make up the nation's gross domestic product, which measures the total value of goods and services produced within the United States. It also reviews incomes, employment and industrial activity.
Unemployment usually keeps rising well after a recession ends. Four months after the 2007 downturn ended, unemployment spiked to 10.1 percent in October 2009, which was the highest in just over a quarter-century. Some economists believe that marked the high point in joblessness. But others think it could climb higher -- perhaps hitting 10.3 percent by early next year.
Click on the following for more detail: Economic panel says recession ended in June 2009 - Yahoo! Finance
employees at the company's Financial Products division who agreed recently to accept 10 to 20 percent less money than AIG had initially promised them two years ago. In return, they are to receive their payments more than a month ahead of schedule.
These payments are tied to employment contracts from 2007 that fell outside the jurisdiction of the Special Master [Feinberg] and the law,"
Read more of the details by clicking on the following: AIG plans to pay $100 million in another round of bonuses - washingtonpost.com
voters are petrified of losing their jobs, their homes, and what’s left of their savings. Nothing counts more than the economy.
What happens next November depends both on the extent of joblessness and the direction the economy is moving in.
Obama and the Dems are in a box. The only sure-fire way to get jobs back is for them to do more deficit spending. After all, consumers are still in no mood to spend, businesses won’t invest without consumers to buy the fruits of such investments, and exports are still in the tank. Government remains the purchaser of last resort.
Deep and continuing economic stresses bring out demagogues, xenophobes, racists, and opportunists who channel people’s fears and anxieties into resentments against other people
Click on the following for the rest of the story: Robert Reich
Sparked by a key tax credit for first-time homebuyers, the real estate business showed signs of a strong turnaround in the second half of the year. Stephenson County home sales in November 2009 outpaced sales from November 2008 by more than $1 million and, through the first 11 months of the year, home sales in the Freeport region had fallen by only 3 percent compared to 2008 figures.
The outlook was not as bright in the Galena region, where home sales dipped by approximately 40 percent in 2009. The precipitous decline was likely caused by Chicago residents’ reluctance to buy secondary homes in the Northwest Illinois market.
2009 IN REVIEW: Real estate battles the recession - Freeport, IL - The Journal-Standard
a report Tuesday showed that Chicago tied for second in month-to-month home-price declines among 20 major metropolitan areas.
The turnaround in home prices seen in the spring and summer has faded, with only seven of the 20 cities seeing month-to-month gains," said David M. Blitzer, chairman of the index committee at Standard & Poor's in New York.
Click on the following for more details: Chicago home prices drop :: The Courier News :: Business
Since June 10, 2009 this blog has been requesting action from the county board on this federal stimulus program. See the posting at: http://boonecountywatchdog.blogspot.com/2009/06/northwest-herald-recovery-bonds-clear.html It looks as if at long last the board will vote on the issue tonight. Please read the next posting regarding what Sterling, Illinois did with the private portion of their Recovery Bonds. There also is a public portion which could be used by a school district or other government unit.
Click on the photocopy to enlarge:
One out of four homeowners is now under water, owing more on their homes than the homes are worth. Why? The biggest single factor behind the housing crisis is rising unemployment. According to the latest ABC-Washington Post poll, one out of every three Americans has either lost their job or lives in a household with someone who has lost a job. Today it takes two and sometimes three incomes to buy the groceries and pay the mortgage or the rent. So if one of those incomes is gone, a homeowner can't make the payment. For more of Mr. Reich’s opinions and analysis go to: http://www.robertreich.blogspot.com/
What an unbelievable price!
An unidentified Canadian real estate company was the winning bidder for the Silverdome, snatching it up for a
mere fraction of its original value.
A Toronto-based family-owned company bid $583,000 for the under-used stadium on Monday, which is currently owned by the City of Pontiac, Mich.
Click on the following: winning-bidders-to-turn-silverdome-into-soccer-stadium: Personal Finance News from Yahoo! Finance
The injunction filed Monday afternoon in Oakland
Circuit Court was too late to stop the auction, according to Bloomfield Hills attorney H. Wallace Parker, who has headed the Silver Stallion Development Corporation. But it may be able to stop the sale of the Silverdome, which went for $583,000 Monday in a closed door auction between four top bidders.
See more details: http://www.detnews.com/article/20091117/METRO/911170416/1411/METRO02
Lawmakers in both parties fret that large budget deficits preclude more stimulus, lest the burden of debt outweigh the benefit of deficit spending. Both arguments are wrong.
If anything, ongoing economic problems are a sign that stimulus needs to be bolstered. Deficits are a serious issue, but the immediate need for stimulus trumps the longer-term need for deficit reduction.
The Senate could take a step in the right direction by extending unemployment benefits without further delay. That is the single most effective way to boost consumption
Next, Congress and the administration should agree on ways to ease the dire financial condition of the states
Without another round of effective stimulus, the worst recession in modern memory will likely become — at best — the weakest recovery in modern memory.
Click on the following for this editorial: Editorial - The Case for More Stimulus - NYTimes.com
More than 5 percent of US jobs have disappeared since the recession began in 2007, some 7 million in all. That compares with job losses in the neighborhood of 1.5 to 2 percent during the previous two recessions.
If jobs could grow at a mid-1990s pace of 3 million a year, it would take about five years. If jobs grow at a mid-2000s pace of 2 million a year, it would take a lot longer.
lawmakers are considering a range of additional policies.
These include:
• Extending the first-time homebuyer tax credit, worth up to $8,000.
• Extending unemployment benefits and health benefits for laid-off workers.
• Tax breaks for businesses that hire new employees or spend on new equipment and facilities.
• Additional federal spending on infrastructure, or aid to state governments.
two-year tax credit that is refundable against payroll taxes so that non-profits, corporations, and even public employers would get the credit, …. [this] EPI proposal calculate that the tax credit would create 2 million to 3 million jobs.
Click on the following for more details: What will it take to bring back 7 million jobs? | csmonitor.com
For the first time this year, retailers were comparing their sales to the abysmal numbers they began posting last fall, when the markets collapsed. Stores also benefited from a calendar shift that pushed Labor Day, as well as the usual back-to-school shopping rush, later in September.
This action will allow Boone County to borrow funds at very favorable rates for both private and public projects. Assuming the action is taken, Boone County will be joining Stephenson, McHenry, DeKalb, Kane, Lake and Cook counties and the City of Chicago in this stimulus program.
The proposal will be discussed at the Tuesday, September 8, Finance Subcommittee meeting. Expect a decision on the matter at the next full board meeting on Wednesday, September 16.
Click to enlarge the photocopies:
Here is a new wrinkle to Boone County’s federal recovery bonds—give them to a county which will use them.
approved by the [McHenry]County Board, the request would take up more than half of the $27.5 million in federal bonding authority allocated to the [McHenry]county under the economic stimulus bill for private businesses.
Munaretto said [McHenry] county was working with the Upper Illinois River Valley Development Authority to see if other Illinois counties were willing to part with some or all of their unused bonding authority.
See my earlier postings on this issue: http://boonecountywatchdog.blogspot.com/2009/08/thinking-prudently-daily-chronicle.html
http://boonecountywatchdog.blogspot.com/2009/08/distressed-kane-county-fits-zone-tag.html
http://boonecountywatchdog.blogspot.com/2009/08/public-hearing-on-countywide-recovery.html
Click on the following for the rest of the McHenry County Stadium story:
Northwest Herald | Stadium developers line up for fed stimulus bonds
And where is Boone County—not thinking at all?
The [DeKalb] county board is considering making DeKalb County a “recovery zone,” another program of the stimulus package that would bring $15 million in a different kind of low-interest bonds to the county.
Taxpayers are understandably hesitant to embrace borrowing by local governments. In appearances alone, spending millions during a recession is a tough case to make. But it could also be the financially prudent thing to do, and for that reason local governments should strongly consider using these programs
Click on the following for the entire editorial: Thinking prudently | Daily Chronicle
How late will Boone County be. in obtaining this bonding power authority?
Doing so would allow [Kane] county to issue slightly more than $25 million in private-activity, or "Build America," bonds for new development.
Declaring Kane a recovery zone would make it easier for developers to secure financing for new projects through private-activity bonds, Economic Development Director Chris Aiston said. Private-activity revenue bonds are a means of financial assistance for economic development.
The whole point is to make more money more readily available, or at least cheaper to borrow," he said.
These bonds are unlike other kinds of bonds. They do not count against a county's debt limit or credit rating. Furthermore, should a developer or investor on whose behalf the bonds are issued default, the county would not be held liable for repaying the debt.
developers would receive a 45 percent refund on the federal taxes payable on the bond proceeds. The bonds would carry a lower interest rate as well.
Read the rest of the story: Distressed Kane fits 'recovery zone' tag :: The Courier News :: Local News
