Monday, November 23, 2009
Housing Recovery Built on Sand
Barron's reports:
prospective buyers have an array of houses available to them in most regions at knock-down prices. But there's no reason for them to hurry while apartment rents are tumbling. Builders, meanwhile, would be loath to build new houses on spec, even if their banker would provide the financing.Anyone interested in the housing market should read this one.
All of which points to an extended period of depressed housing activity after the excess supply from the boom built on absurdly easy credit is worked off. This is an example of what economists of the Austrian school call "malinvestments," which are the inevitable result of a credit inflation. The boom results in an inevitable bust, during which past excesses have to be corrected, however painfully.
Sunday, November 22, 2009
Fears over tough US anti-fraud legislation
The Financial Times reports:
Foreign companies could be sued more easily in US courts under legislation working through Congress that has led to concerns in the European Commission.
The Investor Protection Act (IPA), approved by the House financial services committee this month, contains a provision to make it easier for investors to sue public companies in the US even if they are based abroad and listed on overseas exchanges.
Treasury Bills Yielding Zero as Stocks Soar Make Bernanke’s 1938 Moment
Bloomberg reports:
For the first time in seven decades, Treasury bills are paying no interest while stocks continue to appreciate -- a divergence in U.S. financial markets that might be perilous if Federal Reserve Chairman Ben S. Bernanke didn’t know all about 1938.
S.F. commercial properties seek tax relief
The San Francisco Chronicle reports:
Landmark skyscrapers, signature hotels and upscale retailers glitter in the San Francisco skyline and enhance its cachet. But with commercial real estate slumping, they soon may subtract badly needed cash from the city's coffers.
Trophy buildings, including One Market Plaza, Bank of America Center, Crocker Galleria, the Marriott Marquis, the Westin St. Francis and One Sansome Street, lead the list of more than 1,000 commercial properties in San Francisco asking to have their property taxes slashed.
Collectively, those office towers, hotels, shopping centers and apartment buildings have an assessed value of $21.25 billion - but their owners say they're worth about half that amount. If those claims stand, that could wipe $115.78 million off the property taxes the city collects. Residential appeals could erase another $13.47 million in property tax revenue.
The Dodd-Frank bills for unlimited bailout authority
The Wall Street Journal reports:
We won't have a real market-based financial system until it is safe to let a financial firm fail," Federal Reserve Chairman Ben Bernanke said last week. He's certainly right, though you wouldn't know it from Mr. Bernanke's own actions the last two years. Meanwhile, the politicians are preparing to give the Fed and Treasury more power to bail out all and sundry companies on an unprecedented scale, and so far without any objection from the Fed chairman.Creeping socialism
Reading the pending bills to "resolve" failing financial houses from Representative Barney Frank and Senator Chris Dodd, the challenge is to conceive of someone who is not eligible for unlimited taxpayer funds. The list of potential bailout recipients under both bills runs from bank holding companies to hedge funds to auto makers, consumer retail chains and just about anyone else engaging in finance of one kind or another.
While most scholarly investigations of the too-big-to-fail phenomenon start from the premise that it's a problem, Messrs. Dodd and Frank appear to view it as the cornerstone of our financial system. This may not be surprising given their history. Mr. Frank is famous for saying he wanted to "roll the dice" with Fannie Mae and Freddie Mac.
Federal Government Faces Balloon in Debt Payments
The New York Times reports:
With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.Can America really afford government run health care?
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.
The potential for rapidly escalating interest payouts is just one of the wrenching challenges facing the United States after decades of living beyond its means.
Armed Pols: A Chicago Tradition
Steve Chapman looks at the rather strange situation in Chicago concerning handguns:
U.S. Sen. Roland Burris, another Chicagoan, has endorsed a nationwide ban on handguns and, in 1993, organized Chicago's first Gun Turn-in Day. But the following year, while running unsuccessfully for governor, he admitted he owned a handgun -- "for protection," he explained -- and hadn't seen fit to turn it in along with those other firearms. Lesser mortals apparently can protect themselves with forks and spoons.For a look at Chicago's handgun ban as a racketeering enterprise.
Most (and least) affordable cities to buy a house
CNN Money rates Indianapolis at number 1:
America's most affordable housing market is the 33rd largest metro area in the United States, with 1.7 million people.You'll want to read this one.
The median family income is fairly high -- $68,100 -- and home prices are a very reasonable median $107,000, according to the National Association of Homebuilders and Wells Fargo Housing Opportunity Index.
Chicago's City Council Puts Family Members on Secret Payroll
The Chicago Tribune has an interesting editorial on the Chicago Way:
The quote of the week comes from Ald. Isaac Carothers, 29th, who shrugged off a report about the City Council's incestuous hiring practices just as Mayor Richard Daley announced that illegal patronage in Chicago is dead.For a look at Alderman Burke putting a Chicago Mob associate on Chicago's payroll. For more on the real boss of Chicago.
"All of us have family members on the payroll," Carothers said. "That's nothing new."
Carothers, who is facing federal bribery charges, won't even say whether the William Carothers on his payroll is his father or his brother. It's none of your business who he hires with your tax dollars.
Tribune reporters found dozens of questionable employees -- relatives, campaign workers, friends and friends of friends -- who were being paid out of a $1.3 million fund designated for miscellaneous office duties.
The guidelines are conveniently vague: The money can be used to hire people for "secretarial, clerical, stenographic, research or other functions related to the office of aldermen."
And oversight is virtually nonexistent. Payments have to be approved by Finance Committee Chairman Ed Burke.
Five cities that will rise in the New Economy
Christian Science Monitor reports:
In Houston, the Texas Medical Center is expanding so quickly that it will soon become the seventh largest downtown in the US. By itself. The hospital complex brims with restaurants, shops, and hotels, and employs 100,000 people – the population of Billings, Mont.An interesting article.
In Seattle, the erector-set cranes along the waterfront and big forklifts at the airport are loading exports into containers with the constancy of a piston: plywood to Beijing, halibut and crab to Tokyo, Granny Smith apples to Moscow. Last year, Washington was the only state to ship more goods to China than it receives.
In Fort Collins, Colo., town fathers are aggressively transforming the heart of the city into a zone that generates as much electricity as it consumes – making it a showcase for the city’s quest to become the Silicon Valley of clean energy.
As the United States emerges from the worst recession in 80 years, a new economy is taking root that will help create the next tier of powerhouse cities in America. Just as the Industrial Revolution of the late 1800s and the Information Age of the past 40 years helped shift the urban and regional balance of power in the US, forces are now at work that will shape who prospers in the economy of tomorrow.
Saturday, November 21, 2009
56% in New York Say State Likely To Be Bankrupt By Year’s End
Rasmussen reports:
New York voters aren’t very optimistic about the financial solvency of their state, but they're also sending their elected representatives mixed signals. They oppose budget cuts in a couple key areas but are against tax hikes even more.
A new Rasmussen Reports telephone survey in the state finds that 56% of voters say it is at least somewhat likely that New York will be bankrupt by the end of the year. Twenty-one percent (21%) say it is very likely.
The Fate of Commercial Real Estate
New Geography reports:
A year from now, the landscape of America will be forever changed. The office and retail markets will be vastly different than they look today. Not much of it will be good. Five years from now, will empty shopping centers and auto dealerships remain shuttered or will they be rebuilt or torn down and their use converted to something more productive? Will our politicians cease their meddling in the market and allow the market to heal itself? These are questions that will haunt our economy for the next decade.
Ohio Sues Rating Firms for Losses in Funds
The New York Times reports:
Already facing a spate of private lawsuits, the legal troubles of the country’s largest credit rating agencies deepened on Friday when the attorney general of Ohio sued Moody’s Investors Service, Standard & Poor’s and Fitch, claiming that they had cost state retirement and pension funds some $457 million by approving high-risk Wall Street securities that went bust in the financial collapse.
Girl accuses Sacramento mayor of offering her hush money
McClatchy reports:
Sacramento Mayor Kevin Johnson offered to pay $1,000 a month to one of three girls who had accused him of inappropriately touching her while she was involved in his St. HOPE Hood Corps program, the girl told federal agents during their investigation of Johnson's nonprofit St. HOPE organization last year.Obama's friend: Mayor Kevin Johnson.
The girl — unnamed in a newly released report by two ranking Congressional Republicans — was interviewed by agents Jeffrey Morales and Wendy Wingers with the Corporation for National and Community Service's Office of Inspector General during an investigation of St. HOPE's misuse of $800,000 in federal AmeriCorps grants. Investigators say the girl alleged Johnson had offered to pay her $1,000 a month while she remained in the St. HOPE program, but she refused.
The details of that federal investigation, not previously released, are outlined in a report released today by Rep. Darrell Issa, R-Vista, and Iowa Republican Sen. Chuck Grassley, ranking Republican members of the House Committee on Oversight and Government Reform and Senate Finance Committee.
Their report is critical of the Obama administration's dismissal of Gerald Walpin, the inspector general who directed the investigation into Johnson and St. HOPE.
Friday, November 20, 2009
Ski resort for super rich files for bankruptcy
Reuters reports:
Exclusive ski and golf community Yellowstone Club, in Montana, has filed for bankruptcy protection, a sign that the financial crisis roiling the real estate and leisure industries is not limited to the low end of the market.
Berkeley Students Occupy Building in Protest Over Fee Increases
The Wall Street Journal reports:
Students occupied a building Friday on the campus of the University of California, Berkeley, in an escalation of protests over large fee increases at UC campuses statewide that echoed the unrest here during the 1960s.Struggles of Blue America.
The takeover by as many as 50 students and their sympathizers took place before dawn Friday, a day after the UC Board of Regents approved a 32% increase in student fees to cope with California's long-running fiscal crisis.
Campus police made three arrests in the occupied Wheeler Hall classroom building after discovering furniture and other items propped up against doors at about 5:30 a.m. Friday, a school spokeswoman said. There were unofficial reports of at least one person arrested outside for allegedly crossing a police line marked by yellow tape.
By Friday afternoon, the standoff continued, as an estimated 500 other students and supporters assembled around the building, despite a driving rain. They banged drums, chanted and cheered as some of the occupants of the building used megaphones from a second-floor window to shout encouragement.
Housing bust halts growing suburbs
USA Today reports:
The recession and housing collapse have halted four decades of double-digit growth for nearly half of the nation's biggest rapidly expanding suburbs.
Twenty-four of the 53 cities of 100,000 or more that grew by at least 10% every decade since 1970 lost population from 2006 to 2008.
Fifteen are likely to end the decade with less than a 10% gain in population, largely because of recent losses. Among them: Bellevue, Wash., near Seattle; Coral Springs, Fla., near Fort Lauderdale; Fullerton, Calif., near Los Angeles; and Lakewood, Colo., near Denver.
"They will drop out of boomburb status," says Robert Lang, professor of sociology at the University of Nevada-Las Vegas. "Some boomburbs have gone bust; some are still thriving."
Chicago Police Sergeant Union President accused of stealing from police sergeants' union
The Chicago Sun-Times reports:
A Chicago Police sergeant was arrested this morning on allegations he stole hundreds of thousands of dollars from the Chicago Police Sergeants Association, sources said.No word from master jewel thief and former Chicago Police Chief of Detectives William Hanhardt on this one.
Sgt. John Pallohusky, president of the association, was the target of a joint investigation by the Chicago Police Department and the Cook County state’s attorney’s office, the sources said.
Officials are expected to reveal more details of their investigation this afternoon.
In 1989, Pallohusky was one of 11 people who pleaded guilty to a misdemeanor fraud charge in connection with a petition drive to put a 1986 nonpartisan mayoral referendum on the ballot, according to newspaper reports.
Calpers Performance Claims Deserve SEC Scrutiny
Forbes reports:
The California Public Employees' Retirement System, Calpers, is sick and tired of "uninformed" critics taking swipes at it recently. The fund, which manages $200 billion in assets for California government employees, has seemingly had little time to grapple with the ongoing financial crisis amid the need to fend off a stream of allegations that its ranks are corrupt and its operations mismanaged.
Among the criticisms thrown at Calpers: Board-member junkets, under-the-table placement fees from outside agents to fund officials, payments by money managers to top investment staff, conflicts of interest involving investment consultants, collapsed real estate deals and multi-year rip-offs of the fund by banks handling its foreign exchange trade.
Goldman Holders Miffed at Bonuses
The Wall Street Journal reports:
Some of the largest shareholders in Goldman Sachs Group Inc. have urged the Wall Street firm to reduce the size of its bonus pool, arguing that it should pass along more of its blockbuster earnings to investors, according to people familiar with the situation.An interesting article.
The investors hold tens of millions of shares in Goldman Sachs, which is on track to make the biggest employee payout in the firm's 140-year history.
Their complaints in private conversations with the company and at analyst meetings show how anger over its big-money culture is spilling into the ranks of investors who typically shy away from debates over Wall Street pay.
One frustration: Despite record net income and compensation at Goldman as markets rebound and the firm outmuscles weakened rivals for business, analysts expect its 2009 earnings per share to be 22% lower than in 2007 and roughly equal to its 2006 earnings, according to Thomson Financial.
Thursday, November 19, 2009
San Francisco facing $500 million deficit
The San Francisco Chronicle reports:
The mayor's budget chief is expected to announce today that the projected deficit for the next fiscal year teeters near $500 million - a more ominous outlook than had been revealed Monday.
TribCo.-owned Conn. paper sued for plagiarism
Crain's Chicago Business reports:
A small, family-owned Connecticut newspaper sued the state's largest newspaper Thursday, saying it repeatedly plagiarized stories after cutting its own reporting staff to save money.You'll want to read the whole article.
The Journal Inquirer of Manchester accuses the Hartford Courant of "pirating" at least 11 local news stories in August and September, then publishing them as its own work under Courant reporters' bylines.
The Courant is owned by Chicago-based Tribune Co.
The Journal Inquirer's lawsuit, filed Thursday in Hartford Superior Court, alleges the Courant violated the Connecticut Unfair Trade Practices Act and federal copyright law. It seeks at least $15,000 in damages, plus court and attorney fees.
It claims the Courant saved money by cutting back on some local coverage, then took credit for its smaller competitor's work on bread-and-butter stories such as town zoning board actions, school administrator appointments and local political skirmishes.
Teamsters buck Senate health bill over tax
The Washington Times reports:
The powerful Teamsters union on Thursday broke with President Obama over Senate Democrat's health care bill that would slap an excise tax on insurance companies for so-called "Cadillac" health plans, the high-priced and benefit-rich coverage that unions have fought hard to win for their members.
Movie popcorn still a nutritional horror, study finds
The L.A. Times reports:
A medium-sized popcorn and medium soda at the nation's largest movie chain pack the nutritional equivalent of three Quarter Pounders topped with 12 pats of butter, according to a report released today by the advocacy group Center for Science in the Public Interest.
General Growth wins extensions on almost $9 billion
Crain's Chicago Business reports:
General Growth Properties Inc. said Thursday it has tentative deals to extend almost $9 billion in secured mortgages for an average of more than six years.The big shopping mall news of the day.
The agreement means that 170 of the entities that were put under bankruptcy protection in April could emerge by the end of the year. A tentative hearing date for a plan of emergence from bankruptcy was set for Dec. 14.
The agreements cover 70 loans.
Greater Optimism About U.S. Health System Coverage, Costs
Gallup reports:
As Congress debates a possible major expansion of health insurance in the United States, Gallup finds 38% of Americans rating healthcare coverage in this country as excellent or good, the highest (by eight percentage points) in the nine-year history of this question, and 12 points above last year's level.
Microsoft Says Windows 7 Selling Well
The Wall Street Journal reports:
Microsoft Corp.’s Windows 7 has outsold by two times any previous version of the operating system in the same length of time, Chief Executive Steve Ballmer said.
Speaking at the Redmond, Wash., company’s annual shareholder meeting, Mr. Ballmer described the reception to Windows 7 as “fantastic” in the nearly one month since it went on sale.
A company spokeswoman confirmed that the sales figures Mr. Ballmer cited include both boxed copies of Windows 7 and the copies it sells to PC makers for inclusion on their systems.
Fighting a Coercion Clause
George Will has an excellent piece on the limits on government and the U.S. Constitution.
Americans Deserve a Transparent Fed
Ron Paul and Jim Demint have an op-ed piece in the Wall Street Journal:
For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed's unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed's financial transactions.
While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn't have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.
Wall Street Plays Hardball With Local Governments
Business Week reports:
Detroit Mayor Dave Bing is struggling to save his city from fiscal calamity. Unemployment is at a record 28% and rising, while home prices have plunged 39% since 2007. The 66-year-old Bing, a former NBA all-star with the Detroit Pistons who took office 10 months ago, faces a $300 million budget deficit—and few ways to make up the difference.You'll want to read the whole article.
Against that bleak backdrop, Wall Street is squeezing one of America's weakest cities for every penny it can. A few years ago, Detroit struck a derivatives deal with UBS (UBS) and other banks that allowed it to save more than $2 million a year in interest on $800 million worth of bonds. But the fine print carried a potentially devastating condition. If the city's credit rating dropped, the banks could opt out of the deal and demand a sizable breakup fee. That's precisely what happened in January: After years of fiscal trouble, Detroit saw its credit rating slashed to junk. Suddenly the sputtering Motor City was on the hook for a $400 million tab.
California: The Housing Bubble Returns?
New Geography reports:
To read the periodic house price reports out of California, it would be easy to form the impression that house prices are continuing to decline. Most press reports highlight the fact that house prices are lower this year than they were at the same time last year. This masks the reality of robust house price increases that have been underway for nearly half a year. The state may have forfeited seven years of artificially induced house price escalation in just two years but has recovered about one-fifth of it since March.You'll want to read the whole article. Another great one from Wendell Cox. Check out the table in the article.
California Housing Market Since 2000: In 2000, the average median house price among California markets with more than 1,000,000 population was $291,000. The Median Multiple (median house price divided by median household income) was 4.5, making houses in California approximately 50% more costly relative to incomes than in the rest of the nation.
According to the California Association of Realtors, the average median price peaked at $644,000 between 2005 and 2007, depending upon the particular market. This nearly 140% price increase translated into a more than doubling of the Median Multiple, to 9.2.
Median prices fell rapidly from the peak, dropping at their low point to an average of $315,000. The average Median Multiple fell to 4.4, slightly below the 2000 level, but still well above the national level. All markets reached their low points in the first part of 2009.
MSNBC Blames Recession on a Racist, Wall Street Conspiracy; NAACP President Becomes the Voice of Reason
3rd big trade show may check out of Chicago
The Chicago Tribune reports:
Chicago's standing as a trade show center faces yet another challenge as the National Restaurant Association weighs whether to take its 2012 trade show elsewhere, according to sources close to the negotiations.Great moments in unionized Chicago.
An exit by this McCormick Place star -- a top show here for more than a half-century -- would be a third brutal punch to the city, which in the last week lost two other shows.
The plastics industry trade show, a triennial event, announced Tuesday it will move its 2012 and 2015 shows to Orlando after nearly four decades in Chicago. And the Healthcare Information and Management Systems Society last week said it would move its 2012 annual meeting to Las Vegas. Both cited the cost of doing business in Chicago as the major factor in their decisions.
Though restaurant show attendance fell 24 percent this year, to 54,000 exhibitors and potential buyers, the event still pumped an estimated $86 million into the local economy, the Chicago Convention and Tourism Bureau said. The show is committed to remain here in 2010 and 2011.
Friends & family fund for Chicago aldermen : Shadowy $1.3 million payroll helps them get around ban on patronage hiring
The Chicago Tribune reports:
As City Hall struggles to pay for basic services, a stealth budget account worth millions has allowed Chicago aldermen to put family members, campaign operatives and those with political baggage on yet another taxpayer-funded payroll.The Chicago Way.
Operating without scrutiny, one alderman hired the mother of a former top mayoral aide later convicted of rigging city hiring. Another hired a city worker ousted for sexual harassment allegations. Several others hired relatives.
"All of us (aldermen) have family members on the payroll," said Ald. Isaac Carothers, 29th, who has paid a relative more than $30,000 since January 2008. "That's nothing new."
The revelation comes as Mayor Richard Daley prepares to ask a federal judge to end decades of court supervision over City Hall's clout-heavy hiring practices, arguing that illegal patronage is dead. But the city's hiring compliance officer told the Tribune he didn't know about the payroll of about $1.3 million a year.
A Hedge-Fund King Comes Under Siege
The Wall Street Journal reports:
Hedge-fund titan Kenneth Griffin lost $8 billion of his clients' money last year.
Now, he is trying to persuade investors to trust him with more.
"We showed a level of human fallibility," he told his staff at a late-September lunch in Manhattan.
The price of fallibility: a 55% loss in the big hedge funds at his firm, Citadel Investment Group. His funds' declines far outstripped the 19%, on average, that hedge funds lost as a whole, according to Hedge Fund Research Inc. For the past year, Citadel prevented investors from withdrawing money they wanted to take out from his two main funds, Kensington and Wellington.
Work site arrests of illegals fall dramatically
The Washington Times reports:
Arrests of illegal immigrant workers have dropped precipitously under President Obama, according to figures released Wednesday.
Criminal arrests, administrative arrests, indictments and convictions of illegal immigrants at work sites all fell by more than 50 percent from fiscal 2008 to fiscal 2009.
Fed May Not Increase Rates Until 2012, Bullard Say
Bloomberg reports:
Federal Reserve Bank of St. Louis President James Bullard said past experience suggests policy makers may not start to raise interest rates until early 2012, while concern borrowing costs have stayed “too low for too long” may prompt an earlier move.
“If you look at the last two recessions, in each case the FOMC waited two and a half to three years before we started our tightening campaign,” Bullard said today in a speech in St. Louis. “If we took that as a benchmark, that would put us in the first half of 2012.”
Wednesday, November 18, 2009
Chicago and Illinois finances clobbered in new reports
Crain's Chicago Business reports:
Two new reports are strongly criticizing the financial condition of local government, with one saying the city of Chicago now faces "unsustainable" deficits and the other warning that per capita Illinois debt is nearing the worst in the nation.Great moments in Blue America.
The first report, from Chicago's Civic Federation, urges aldermen to reject Mayor Richard M. Daley's proposed $6.14-billion 2010 budget.
"The city proposes to close 93.8% of its deficit with $370 million from its asset lease reserves and $118 million in savings from debt restructuring," the report says. "The Civic Federation cannot emphasize enough that these one-time revenues will not be available to close what are almost certain to be significant deficits next year and the year after."
In fact, Chicago has run up a budget deficit each of the past 10 years, and needs to begin dealing with that reality rather than relying on asset sales to "prop up the budget and avoid necessary cuts," federation President Laurence Msall said.
Gold Is Not Just An Inflation Hedge
Forbes reports:
As central banks around the world add gold to their reserves, the market for the precious metal has changed.
Chicago's Tough Year Has It Feeling Blue
The Chicago Tribune reports:
The death of Michael Scott, president of the Chicago Board of Education, is the latest blow to the city's psyche.For more on Chicago's decline.
Scott's body and a gun were found at 3 a.m. Monday on the edge of the cold Chicago River downtown. Whether it was suicide (as the medical examiner says) or murder (as the noir theorists imagine), the violent death of a man eulogized as one of our civic fathers comes as another assault on the collective well-being of a city that has taken a lot of punches recently to its heart and pride.
Think about the past year:
Chicago resident Rod Blagojevich is indicted and kicked out of the governor's office. His close friend, Chris Kelly, days away from prison, dies of an overdose of pain medication. Fenger High School students beat a fellow student to death. Chicago's Olympic bid fails.
There's more:
The city plots to sell its assets to solve its budget crunch. In the past week, two big trade shows pull out of McCormick Place. The jobless can't find jobs.
University of California student fees could increase by more than $2,500
The L.A. Times reports:
A UC Board of Regents committee is expected to recommend a series of highly controversial increases in student fees today that would raise undergraduate education costs by more than $2,500, or 32%, in two steps by next fall.
The first will be a $585 rise in undergraduate fees for the rest of the current academic year. Then for next fall, students will see another $1,344 on top of that. It will bring the basic UC education fees to $10,302, along with about $1,000 in campus-based fees.
That does not include room, board and books, which can add another $16,000.
U.S. health plans have history of cost overruns
The Washington Times reports:
As President Obama and Congress craft the largest national health insurance program since the creation of Medicare and Medicaid in 1965, they insist that the final product will add "not one dime" to the federal deficit.Today's politicians can only guess what future politicians will vote on to expand an existing program.
But cost projections are notoriously unreliable, and history is filled with examples of federal programs - especially in health care - that cost far more than originally predicted.
In 1965, the House Ways and Means Committee estimated that the hospital insurance program of Medicare - the federal health care program for the elderly and disabled - would cost $9 billion by 1990. The actual cost that year was $67 billion.
In 1967, the House Ways and Means Committee said the entire Medicare program would cost $12 billion in 1990. The actual cost in 1990 was $98 billion.
Agencies stiff-arm GAO on info
The Hill reports:
The investigative arm of Congress has been denied information repeatedly by various government agencies, indefinitely delaying lawmaker-requested probes, according to a letter obtained by The Hill.
Condo Owners Struggle to Salvage an Almost-Empty Building
Chicago Public Radio reports:
Since 1997, Chicago has added almost 150,000 condos to its housing stock. The people who bought those units maybe didn’t fully realize it at the time, but they’re taking part in a big experiment in communal living. Everyone has to pool their money to fix the roof or keep the elevator working. And if your neighbors stop ponying up, you’re on the hook. Now the foreclosure crisis is pushing many condo buildings to the verge of collapse. And one expert says that here and around the country, the whole grand experiment may be falling to pieces.The struggles of condensed living.
Fannie, Freddie Woes Hurt Apartments
The Wall Street Journal reports:
The deteriorating commercial real-estate market is hitting Fannie Mae and Freddie Mac, the housing-finance giants that were taken over by the government last year after billions of dollars in losses on residential real estate.A rather interesting article from the Journal.
The firms, which together have taken more than $110 billion in capital infusions from the Treasury, stepped up their lending for apartment buildings as the commercial real-estate market peaked, and they are now facing rapidly rising loan losses.
Fannie, which has been more active than Freddie, faces the biggest problems. Its serious delinquency rate, or loans that were 60 days or more past due, stood at 0.62% at the end of September, up from 0.16% a year ago. One troubling sign: one-quarter of the $180 billion of apartment-building loans on Fannie’s books were originated near the top of the market in 2007 and those loans account for nearly half of all its commercial-loan delinquencies.
Fannie increased to $1.2 billion its reserves for losses on multifamily loans at the end of September, up from $104 million at the end of 2008. In a statement, Fannie Mae said market fundamentals “will remain under pressure in the near term” and that the company is taking steps “to mitigate risks associated with weak rental demand.”
The losses from Fannie’s and Freddie’s $300 billion in apartment-building loans will be a fraction of their losses on single-family homes, where the two firms back $5 trillion of loans. But the bigger impact could be on the market for apartment buildings. The firms were responsible for 84% of all multifamily lending last year, up from 34% of the market in 2006, according to the Federal Housing Finance Agency.
Chicago Mob Linked John Daley: Don't bring my nephew into this
The Chicago Sun-Times reports on Mayor Daley's brother John, who's a member of the Cook County Board. John Daley is also a son in law of the late Chicago Mob member Louie "the barber" Briatta.
View more news videos at: http://www.nbcchicago.com/video.
Trump Cuts A Casino Deal
Business Week reports:
He’s back. After seeing his New Jersey casino empire slide into bankruptcy for a third time, real estate baron Donald J. Trump has returned to the table.
As part of a deal cut with bondholders and announced today, Trump will receive a 10% stake in a newly recapitalized company, which owns three casinos in Atlantic City that carry the Trump name.
In exchange Trump and his daughter Ivanka, both former board members, agreed to drop a lawsuit they had against the company. Trump will be free to use his name on other gambling ventures, just not in five neighboring states.
Trump left the board of Trump Entertainment Resorts in February. It is struggling under $1.7 billion in debt. “I have always felt a tremendous responsibility to New Jersey, and especially to Atlantic City,” he said after cutting this new deal.
2 Trump hotel unit owners face foreclosure
Crain's Chicago Business reports:
Donald Trump’s ritzy new downtown hotel is attracting guests no property owner wants to see: foreclosure lawyers.Great moments in real estate.
In another bad sign for the New York developer, lenders have filed foreclosure suits on two condominium-hotel units in his 92-story Chicago skyscraper, which has been clobbered by the condo bust and the worst hotel market in decades.
The investors who bought the two units from the developer last year are trying to sell them at steep discounts through so-called short sales, or for less than the debt owed on the units. One hotel room is on the market for less than half of what it sold for in March 2008.
Foreclosures and short sales have become routine in the current real estate market, and two lawsuits don’t represent a trend. But they rarely happen so quickly at high-end projects like the Trump International Hotel & Tower, which just opened last year.
Republicans who endorsed Holder have second thoughts
The Washington Examiner reports:
Last January, several Republican legal stars wrote a letter to the Senate Judiciary Committee supporting Eric Holder's nomination to be attorney general. Now, in light of Holder's decision to grant 9/11 mastermind Khalid Sheikh Mohammed full American constitutional rights and try him in federal court in New York, some of those veteran lawyers are having second thoughts.Does Rod Blagojevich believe Eric Holder to be an "extraordinary lawyer" to the tune of $300,000?
The January letter called Holder an "extraordinary lawyer" of "unfailing integrity" who is "superbly qualified" to lead the Justice Department and whose appointment as the first African-American attorney general "should be hailed as a milestone." "From his experience Eric fully understands and appreciates the constant threat posed by al Qaeda and Islamic extremists," the GOP lawyers wrote. "[He] is the right man at the right time to protect our citizens in the critical years ahead."
Housing Starts in the U.S. Unexpectedly Plunged in October
Bloomberg reports:
Builders in October unexpectedly broke ground on fewer U.S. houses as the sales outlook darkened with the looming expiration of a government tax credit and mounting joblessness.
The 11 percent plunge in starts to an annual rate of 529,000, the lowest level since April, followed a 592,000 pace the prior month, Commerce Department figures showed today in Washington. Building permits, a sign of future construction, also decreased.
Florida: No Money to Fund Unemployment Compensation
Bay News 9 reports:
Owning a small business can be difficult and starting soon local entrepreneurs will be dishing out a lot more cash to the government.
The annual fee employers pay to fund unemployment benefits is about to go up drastically.
The fee is jumping from $8.40 per employee to $100.30.
"That'll have a huge burden on the small business man and woman -- any business in the state of Florida -- who are struggling right now," said state Sen. Mike Fasano.
Postal Service loses $3.8B even after cuts
USA Today reports:
The Postal Service reported a loss of $3.8 billion last year, despite a reduction of 40,000 full-time positions and other cost-cutting measures.
The loss was $1 billion more than the year before despite job cuts and other efforts designed to save billions of dollars. "Our 2009 fiscal year proved to be one of the most challenging in the history of the Postal Service," Chief Financial Officer Joseph Corbett said Monday.
The post office has struggled to cope with a decline in mail volume caused by the shift to the Internet as well as the recession that resulted in a drop in advertising and other mail. Total mail volume was 177.1 billion pieces, compared with 202.7 billion pieces in 2008, a decline of almost 13%. For the fiscal year that ended Sept. 30, the agency had income of $68.1 billion, $6.8 billion less than in 2008. Expenditures were down $5.9 billion to $71.8 billion.
ADL : Glenn Beck Hatemonger
The New York Daily News reports:
Weep for joy, Glenn Beck: the Anti-Defamation League has cited you as the national media's fear-monger-in-chief.No word yet on whether Glenn Beck has ever attended Rev. Wright's church.
In a new report examining the wave of anti-government hostility that's spread across the country since Barack Obama won the White House, the ADL cited Beck as the "most important mainstream media figure who has repeatedly helped to stoke the fires of anti-government anger."
Beck, a right-wing talk host with a TV show on Fox and popular syndicated radio program, is in a league of his own, the report from the Jewish anti-hate watchdog group asserts.
Michael Scott's use of board credit card probed
The Chicago Tribune reports:
In recent weeks, Chicago school board President Michael Scott was facing scrutiny for using his board credit card to pay for a trip to Copenhagen to lobby for the city's Olympics bid.
The amount in question was not large -- about $3,000 -- and there's no indication that the matter had anything to do with Scott taking his life early Monday.
California faces a projected deficit of $21 billion
The L.A. Times reports:
Less than four months after California leaders stitched together a patchwork budget, a projected deficit of nearly $21 billion already looms over Sacramento, according to a report to be released today by the chief budget analyst.
Push to curb credit-card rates fades: Democrats resist consumer outcry
The Boston Globe reports:
Efforts in Congress to cap credit-card interest rates are faltering because of opposition from Democrats and a lack of specific support from the White House, despite growing consumer outrage over a rush by banks to impose rates as high as 30 percent.
During the 2008 presidential campaign, Barack Obama vowed to back a strict limit on credit-card interest rates. But the White House is not yet behind any particular plan this year. While Obama has chastised credit-card companies, his spokeswoman declined to say this week how he planned to follow through on his campaign pledge.
Obama finds the behavior of credit-card lenders “outrageous’’ and “looks forward to reviewing additional legislation that caps interest rates,’’ but he has not taken a specific position, spokeswoman Jen Psaki said.
Vice President Joe Biden, whose home state of Delaware is headquarters to many credit-card companies, did not respond to requests for comment.
Tuesday, November 17, 2009
Silverdome Sells For Only $583, 000: Built for $55.7 Million
The Detroit News reports:
Nearly 35 years after taxpayers spent $55.7 million building the Pontiac Silverdome and a year after a $20 million sale fell through, city officials have sold the arena once called the most desirable property in Oakland County.Great moments in real estate.
The price: $583,000.
"This was a giveaway," said David J. Leitch, a broker with an Auburn Hills based realty firm.
"The property alone, at $10,000 an acre, should have gone for more than that. And you have the Silverdome, its contents, and the infrastructure already in place. I had estimated it would probably go for between $1.2 million and $3 million. I can't believe it."
Washington Times editorial page editor files discrimination suit
The Washington Times reports:
The editorial page editor of the Washington Times has filed a discrimination complaint against the paper, saying he was required to attend a Unification Church weekend that culminated in a mass wedding conducted by the church's leader, the Rev. Sun Myung Moon.
Cook County commissioners vote to cut in half Stroger sales tax increase
The Chicago Tribune reports:
Emboldened by a new state law, the Cook County Board today voted 12-5 to reduce the county sales tax by a half-cent.A defeat today for the Obama endorsed Cook County Chairman Todd Stroger. A victory for the man leading the revolt against high taxes in Cook County: Tony Peraica.
Today's vote is the latest development in a political struggle between commissioners and Board President Todd Stroger, who pushed through a penny-on-the-dollar sales tax increase last year. The unpopular tax hike pushed the sales tax rate to 10.25 percent in Chicago.
Stroger has vetoed past attempts this year by commissioners to cut or repeal the sales tax increase and was able to preserve the tax hike because the board could not muster the 14 votes required to overturn his veto.
But state law recently changed, allowing commissioners to override a Stroger veto with 11 votes. So if Stroger tries to block today's attempt to cut the sales tax, only 11 of 17 commissioners would have to band together to cut taxes.
Supreme Court ruling could play in 2010 governor's races
USA Today reports:
If the Supreme Court opens the door to more corporate money in political campaigns, it could affect laws in nearly two dozen states and a host of governor's races next year, including high-profile contests in Texas and Connecticut, experts say.
Twenty-two states ban corporate spending in state candidate races, and gubernatorial contests are underway in 17 of them. Fourteen are rated as competitive by election handicappers, such as The Cook Political Report.
"The Supreme Court decision has the potential to open the floodgates," said Paul Ryan, of the non-profit Campaign Legal Center, which supports campaign-finance restrictions.
In Virginia, one of six states with no contribution limits, business interests spent more than $4 million to aid Republican Gov.-elect Bob McDonnell, according to a USA TODAY analysis of donations larger than $20,000. That's nearly 10 times what companies gave to his Democratic opponent Creigh Deeds and nearly twice what unions gave the Democrat.
Freelancers Vs. ObamaCare
Forbes reports:
Sara Horowitz won a MacArthur Foundation "genius" award for her work creating the Freelancers Union, a loose affiliation of 130,000 creative workers who pool together to buy health insurance and retirement funds. She has the kind of liberal credentials that got her invited to the White House in June for the launch of its new office of Social Innovation.The same jerks that run Medicare will tell you what can be in your health plan.
But now she is furious at the White House. She worries that health reform will disrupt the group she's spent years building.
Her health plan is designed specifically for independent photographers, designers and writers who are not full-time employees of a company. Yet the health reform bills in Congress don't recognize this kind of specialized coverage.
Instead, the bill passed by the House of Representatives would force all insurance companies to offer plans rubber-stamped by federal regulators. These plans will have to accept anyone who applies and offer a standardized rate and a standard menu of covered treatments. That could make coverage offered by the Freelancers Union much more expensive to its members.
Oakland considers selling convention centers
The San Francisco Chronicle reports:
Oakland sank deeper into the financial abyss just a few months after officials drastically slashed spending, according to a new report Monday that showed the city ended its first quarter with a $19 million deficit.
Goldman Sachs, Buffett Said to Plan Aid for Small Businesses
Bloomberg reports:
Goldman Sachs Group Inc., under fire in Washington for setting aside billions of dollars for bonuses a year after getting a taxpayer bailout, is preparing to team up with Warren Buffett to provide assistance to small businesses, said people familiar with the matter.
The FHA's nose dive: Another housing agency takes taxpayers for a dangerous ride
The Washington Post reports:
THE COST of the housing bailout continues to rise. The government-run mortgage giant Fannie Mae requested another $15 billion from the Treasury this month, to help cover a loss of $19.8 billion in the third quarter. That brings the total tab for rescuing Fannie to $60 billion so far. Fannie's twin, Freddie Mac, has received $51 billion. And now comes news that the capital reserves of the Federal Housing Administration (FHA) have fallen to $3.6 billion, which is just one-half of 1 percent of the $685 billion in loans insured by the agency and well below the statutory minimum of 2 percent.Uncle Sam , the leverage man.
Does this mean that Congress will soon be shoveling more billions into the FHA? Possibly. But it's important to understand the precise nature of the FHA's predicament. Whereas Fannie and Freddie are in the business of securitizing mortgages, the FHA insures them directly. Borrowers of modest means can get houses with as little as 3.5 percent down; if they default, the FHA pays off the lender from accumulated insurance premiums.
Chicago loses plastics convention to Orlando
Crain's Chicago Business reports:
Chicago has lost yet another key convention as the plastics trade group announced it’s moving its 2012 and 2015 gathering to Orlando.I guess not everyone wants to hold a convention in former Chicago Mafia politician Fred Roti's old stomping ground. For a look at a history of Chicago Mob control of Chicago's union movement click on this RICO complaint.
Chicago has hosted the Society of the Plastics Industry Inc.’s national show, which is produced every three years, since 1971.
The decision, announced Tuesday, comes within a week after the Healthcare Information and Management Systems Society said it was taking its 2012 event to Las Vegas.
SPI President and CEO Bill Carteaux, in an email to SPI board members Tuesday, said cost savings was key.
The FDA and Coercion
Lew Rockwell reports:
Government is the institution that builds and manages the roads on which tens of thousands of people die every year. Government is the institution that starts the wars that have killed tens of millions of people. They not only send people to be killed in foreign lands, but actively recruit the youth into this "job," bribing them with free education that they can enjoy if they happen to emerge alive and not brain-damaged at the end of their indentured servitude. Government is the institution prepared to beat you and shock you with electricity, and put you in a dirty cage, if you do not comply with its arbitrary demands.
Can we really believe that the FDA bureaucrats are worried about our health and well-being? That these lifetime looters of the taxpayer are fretting about our intake of caffeine and liquor and are seeking to do what is best for us, like overbearing parents or pastors of the local fundamentalist congregation? I seriously doubt it.
I.R.S. Releases Criteria to Get Names in UBS Case
The New York Times reports:
The Internal Revenue Service on Tuesday disclosed the criteria being used by the Swiss banking giant UBS to select names of American clients that will be turned over to the agency as part of a settlement of a tax evasion case.
UBS agreed under legal pressure last August to turn over the names of about 4,450 American clients suspected by the I.R.S. of using the bank’s offshore services to evade taxes.
The I.R.S. disclosed in the documents that it needed a minimum of 10,000 UBS client names from all sources, including from UBS and from clients who come forward voluntarily, by Jan. 1 in order to drop its legal case against UBS seeking the names.
The Ford Foundation finds a needy cause: teachers unions
The Wall Street Journal reports:
We hate to say it, but don't be misled by headlines. The biggest headline in education circles last week was that the Ford Foundation is making a whopping $100 million grant "to transform secondary education in the nation's most disadvantaged schools."You'll want to read the whole disturbing editorial from the Journal. For more on the subject of the Ford Foundation's subversive history: read this book.
Our eyes raced to see which piece of the vibrant school-reform movement Ford was going to support. Would it be America's 4,600 charters schools, many outperforming their traditional school peers and some even closing the race gap? Maybe it would be Teach for America, busting at the seams and turning down Ivy League applicants by the hundreds. Or, who knows, maybe Ford's really on the leading edge, and would want to support voucher programs in cities like Washington.
Would you believe the recipients of Ford's largesse are the teachers unions? Yup. The folks at Ford are giving new meaning to the word "retro."
Ballyhooing the $100 million, the foundation's president Luis Ubinas said, "Improving our schools, and giving the most vulnerable young people real educational opportunities, benefits all of us. With this initiative we want to shake up the conversations surrounding school reform and help spur some truly imaginative thinking and partnerships."