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Articles Posted by whitedog57

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  • Taper Tantrum: The Fed, Inflation, Unemployment and House Prices

    12/15/2013 1:22:49 PM PST · by whitedog57 · 6 replies
    Confounded Interest ^ | 12/15/2013 | Anthony B. Sanders
    The Federal Reserve Open Market Committee meets on Tuesday and Wednesday of this week. To taper or not to taper, that is the question. Hamlet-to-be-or-not-to-be3 Let’s take a look at inflation thus far. Since 1947, there have been only three periods of deflation where the consumer price index (CPI) has fallen for consecutive months: 1949-1950, 1954-1955 and most recently, 2009. inflationcpi121413 Notice that inflation (as defined by year–over-year changes in the consumer price index) has been declining since September 1981 when inflation hit 11%. The latest measure of inflation is 0.9% YoY for October 2013. At the same time, house...
  • Agency MBS Index Earned -0.55% Over Past Year As Fed Purchases $40 Billion Per Month

    12/13/2013 8:18:40 AM PST · by whitedog57 · 1 replies
    Confounded Interest ^ | 12/13/2013 | Anthony B. Sanders
    The Federal Reserve currently purchases $40 billion per month in an effort to keep mortgage rates low and stimulate the housing market recovery (or bubble?). Over the past year, the RMBS index has earned -0.55% in spite of (or because of) The Fed’s $40 billion per month in agency RMBS purchases. And if we compare the BRMBS index to PIMCO’s vaunted total return fund, you will see similar performance until September 2013 when RMBS rallied in terms of price compared to PIMCO’s Total Return Fund. So, despite The Fed’s $40 billion of agency MBS per month, the Bloomberg MBS index...
  • Corker-Warner GSE Reform Similar To Single-Payer Healthcare (It Won't Work Either)

    12/12/2013 6:45:34 AM PST · by whitedog57
    Confounded Interest ^ | 12/12/2013 | Anthony B. Sanders
    It doesn’t look like any GSE (housing finance) reform will be taken up in 2013. Partly because the leading contender, the Corker-Warner housing finance “reform” bill is so flawed. What does Corker-Warner do exactly? It shuts down two enormous mortgage insurance companies (Fannie Mae and Freddie Mac) and creates one gargantuan government insurance company (Federal Mortgage Insurance Corporation). Ah, nationalized mortgage insurance. This is particularly bizarre given that the FHA already exists as a national mortgage insurance agency for mortgages. Like single-payer healthcare systems (as in UK’s NHS), you take what the government decrees for you. But Obamacare is really...
  • Bland Bargain: Paul Ryan Surrenders On Federal Budget, Outfoxed By Former Pre-School Teacher

    12/11/2013 2:16:11 PM PST · by whitedog57 · 27 replies
    Confounded Interest ^ | 12/11/2013 | Anthony B. Sanders
    Paul Ryan (WI-VR) and Patty Murray (WA-D) have announced a “bland bargain” on the Federal budget. The proposal would “restore” $65 million in automatic spending cuts currently in law and increase federal spending from $967 billion next year to roughly $1 trillion. In other words former Vice Presidential candidate Paul Ryan was outfoxed by former pre-school teacher Patty Murray. This will add $70 billion to Federal spending both this year and next. The result? The Federal debt load will be $25 trillion by the end of the next Presidential cycle. What happened to the downsizing of the Federal government that...
  • Mel Watt And The Flat-lined Mortgage Purchase Application Problem (Real Household Income Falling)

    12/11/2013 10:50:40 AM PST · by whitedog57 · 7 replies
    Confounded Interest ^ | 12/11/2013 | Anthony B. Sanders
    There are two pieces of mortgage application index news today. First, Mel Watt (D-NC) was confirmed by the U.S. Senate as the new FHFA Director by a vote of 57-41. Only two Vichy Republicans, Bob Portman (VR-OH) and Richard Burr (VR-NC) voted for the confirmation of Mel Watt, a person with no regulatory experience and an affordable housing hawk. Watt will now be the “regulator” for Fannie Mae and Freddie Mac, the mortgage giants in conservatorship with the FHFA. Why would President Obama nominate someone (and the Democrats confirm) with NO regulatory experience for perhaps the most important regulatory job...
  • The 106.2% Solution? Top 40% Paid 106.2% of Income Taxes While Bottom 40% Paid -9.1%

    12/10/2013 3:58:50 PM PST · by whitedog57 · 11 replies
    Confounded Interest ^ | 12/10/2013 | Anthony B. Sanders
    According to the Congressional Budget Office, the top 40% of Americans paid 106.2% of income taxes. How can the top 40% pay MORE than 100% of income taxes? Simple. The bottom 40% of Americans paid -9.1% of income taxes. And they received an average of $18,950 in government transfers. Of course, we know that real median household income has been falling generally since 2000 and especially since 2007. And house prices have been falling, but house prices have changed course and have been rising since 2012. csrealinc Seriously, how can the US have a dynamic housing market with such a...
  • ANOTHER Housing Crisis? This Time In Rental Markets (Real Problem Is Declining Real Income)

    12/10/2013 11:06:49 AM PST · by whitedog57 · 8 replies
    Confounded Interest ^ | 12/10/2013 | Anthony B. Sanders
    “We are in the midst of the worst rental affordability crisis that this country has known,” said Shaun Donovan, U.S. Secretary of Housing and Urban Development. There are now 43 million renter households, or 35 percent of all U.S. households, the highest rate in more than a decade for all age groups, according to Harvard’s Joint Center for Housing Studies. That’s 4 million more renters today than there were in 2007. For those aged 25 to 54, rental rates are the highest since the center began record keeping in the early 1970s. Wait a minute. The Clinton Administration wanted to...
  • Merry Christmas? Detroit's Emergency Manager Weighs Pension-Fund Takeover (20 Cents On The Dollar)

    12/10/2013 8:45:38 AM PST · by whitedog57 · 4 replies
    Confounded Interest ^ | 12/10/2013 | Anthony B. Sanders
    Kevyn Orr, Detroit’s emergency manager, is threatening to take over one of Detroit’s pension funds after a report found that retirees received extra payments while the funds lost value. Mr. Orr proposed for Detroit to pay 20 cents on the dollar for the $3.5 billion that the city says it owes its two pension funds, one for 20,500 nonuniformed retirees and one for 12,700 retired police and firefighters. Detroit, of course, is the largest municipal bankruptcy in U.S. history, although New York City and Cleveland came close. This comes after another Detroit-area fiscal meltdown, the infamous General Motors bailout. Treasury...
  • FHFA Raises Guarantee Fees For Fannie Mae and Freddie Mac (DeMarco's Last Stand)

    12/09/2013 3:45:34 PM PST · by whitedog57 · 1 replies
    Confounded Interest ^ | 12/09/2013 | Anthony B. Sanders
    Today, FHFA directed Freddie Mac and Fannie Mae to raise guarantee fees in three components: • The base g-fee (or ongoing g-fee) for all mortgages will increase by 10 basis points; • The up-front g-fee grid will be updated to better align pricing with the credit risk characteristics of the borrower; and • The up-front 25 basis point adverse market fee that has been assessed on all mortgages purchased by Freddie Mac and Fannie Mae since 2008 is being eliminated except in the four states whose foreclosure carrying costs are more than two standard deviations greater than the national average....
  • Oh We Got Trouble, Right Here In Bubble City: Real Income Fallinbg While House Prices Rise

    12/09/2013 11:31:31 AM PST · by whitedog57 · 2 replies
    Confounded Interest ^ | 12/09/2013 | Anthony B. Sanders
    There are cheers from the media about the latest jobs report. While some speculated that it was so good that The Fed would begin tapering their assets purchases, few noticed that the 10 year Treasury yield actually fell on the jobs report. But let’s look at the longer term picture. House prices are rising rapidly despite declining real median household income. Problem 1: Labor’s share of nonfarm business have been falling for decades, but it’s decline has been accelerating since 2000. laborsharelt No problem, many economists say. The U.S. has been moving towards a service economy for decades. But, …...
  • Since Oct 2008, 4.6 Million Foreclosures Completed, Foreclosure Inventory Falls 30.6% YoY

    12/09/2013 6:54:03 AM PST · by whitedog57
    Confounded Interest ^ | 12/09/2013 | Anthony B. Sanders
    The CoreLogic National Foreclosure Report is out for October 2013. The good news! Foreclosure inventory in the U.S. fell 30.6% YoY in October. sersleinf120913 Florida leads the U.S. in foreclosure inventory as a percentage of mortgaged homes at 7.1%, followed by New Jersey at 6.7% and New York at 4.9%. clforecinvstate The lowest state in terms of foreclosure inventory? Wyoming at 0.4% followed by Alaska and Nebraska at 0.6%. If we compare judicial and non-judicial foreclosure states, we see a glaring difference. The worst states for percent of homes in foreclosure at judicial states (FLA, NJ, NY). The best states...
  • FHA To Drop Loan Limits (Lowering The Brad Pitt Mortgage Limit), Hawaii Still The Highest

    12/08/2013 11:51:10 AM PST · by whitedog57 · 2 replies
    Confounded Interest ^ | 12/08/2013 | Anthony B. Sanders
    According to Nick Timiraos at the Wall Street Journal, Housing Agency (FHA) Will Reduce Mortgage-Loan Limits next month. The maximum for single-family homes in certain “high-cost” housing markets including Los Angeles, San Francisco and New York will fall to $625,500, from the current level of $729,750. This is an attempt to bring the FHA back in line with their original mission of supporting first time homebuyers, not the Brad Pitts of the world. Why does the Federal government insure mortgages in expensive cities that are far more costly than middle America? Ask your Congressman. Example. Honolulu leads the nation in...
  • Coastal Fats: Millionaires Defaulting On Mortgages In Record Numbers While Others Struggle

    12/08/2013 7:51:35 AM PST · by whitedog57 · 14 replies
    Confounded Interest ^ | 12/08/2013 | Anthony B. Sanders
    While foreclosure activity as a whole has been declining in the U.S., there are still some unnerving aspects to the housing and mortgage recovery. So, it’s time for “The Good, The Bad and The Ugly.” The good. According to RealtyTac, overall U.S. foreclosure activity is down 23 percent year-to-date through October 2013. The bad. Foreclosure activity on properties in the $5 million-plus value range is up 61 percent from the same time period in 2012. And most of it is concentrated in Florida and Los Angeles. I designate Atlanta as an honorary coastal city since Georgia does have properties on...
  • The Pelosi/Ellison "Pain Dispeller" Tonics: U6 Underemployment Above 13% For 60 Straight Months

    12/07/2013 8:10:26 AM PST · by whitedog57 · 5 replies
    Confounded Interest ^ | 12/07/2013 | Anthony B. Sanders
    Yesterday’s jobs report was tremendous … if you have been dumbed down. The sad facts are that U6 underemployment has been above 13% for 60 months, the last month below 13% was November 2008. U6RATE_Max_630_378 And there are still 91.27 million people NOT in the labor force. nilf120713 Income inequality, as measured by the GINI coefficient, continues to rise. ginicoef2005 While real median household income has been falling since 2000 and house prices have been rising rapidly for the past two years. realmedincomcase What are the solutions to the employment problem? Nancy Pelosi (CA-D) made the following statement this past...
  • The Bernankeburg Omen: The Hindenburg, Elliott Wave And The Fed Balance Sheet

    12/06/2013 4:55:54 PM PST · by whitedog57 · 1 replies
    Confounded Interest ^ | 12/06/2013 | Anthony B. Sanders
    The S&P 500 stock market index rose a blistering +1.12% today on positive economic news, albeit much of it seasonal. The run up in stock prices following the collapse in 2008 (both stock market and house prices) has fueled speculation of another Hindenburg Omen event. That is, another stock market correction. But with Ben Bernanke and The Fed supporting asset bubbles with the expansion of The Fed’s Balance Sheet (green dotted line), investors continue to roll the dice on the stock market rising. Likewise, the Elliott Wave is being sustained by The Fed’s Balance Sheet. Let’s see what happens when...
  • 203k Nonfarm Payroll Jobs Added (Bartenders Lead Again), Personal Income Declines -0.1%

    12/06/2013 6:41:29 AM PST · by whitedog57 · 7 replies
    Confounded Interest ^ | 12/06/2013 | Anthony B. Sanders
    The November jobs report is out from the Department of Labor and nonfarm payrolls rose more than expected. 203,000 jobs were added versus the expectation of 185,000. However, most jobs added were low paying jobs and holiday season related. The unemployment rate fell to 7.0% while the underemployment rate dropped to 13.2%. Labor force participation rate rose to 63.0% from 62.8%. WHERE were the jobs created? The biggest winners were low paying jobs related to the Holiday season for the most part: Food services and drinking places 17.9 General Merchandise Stores 13.8 Temporary Help Services 16.4 Home Health Care Services...
  • On West Coast, Along With House Prices (Another Affordability Crisis In Housing?)

    12/05/2013 3:26:29 PM PST · by whitedog57 · 7 replies
    Confounded Interest ^ | 12/05/2013 | Anthony B. Sanders
    Trulia released its price and rent monitor today. In November, asking home prices rose 12.1 percent year-over-year (YoY), increasing in 98 of the 100 largest U.S. metro areas. Regaining a bit of steam since the slowdown began in July, asking prices rose 1.0 percent month-over-month (MoM) and 3.0 percent quarter-over-quarter (QoQ). In fact, the quarterly increase is the fastest in five months, though still lower than in the spring. The west coast along with Atlanta and … Detroit(?) are still growing in price at a rapid rate, but that rate is slowing down. askrpicertrulia Rents on the west coast are...
  • Big Trouble In Little Catskills? Chinese City Coming To Upstate New York (EB-1 Visa Scam?)

    12/05/2013 11:59:59 AM PST · by whitedog57 · 6 replies
    Confounded Interest ^ | 12/05/2013 | Anthony B. Sanders
    China’s legendary ghost cities are coming to the USA! Here is an excellent video on China’s ghost cities. China is known for building replicas of London and Paris in China to attract people. But like many of China’s efforts at planned cities, housing is quite expensive and has not caught on. And there is even a fake Epcot in China! Unfortunately, quite empty. ghost_arcade Senator Elizabeth Warren (MA-D) campaigned on centrally planned construction as a solution for the economy. Perhaps the Chinese are taking her advice. With the growing presence of Chinese in the U.S housing market, particularly on the...
  • Q3 Real GDP Rises To 3.6% While Personal Consumption Expenditures Drop To 1.4%

    12/05/2013 8:03:17 AM PST · by whitedog57 · 14 replies
    Confounded Interest ^ | 12/05/2013 | Anthony B. Sanders
    The good news. Real GDP growth was revised for Q3 up to 3.6%. The bad news. Personal consumption expenditures fell to 1.4% for Q3. There has been a steady decline in personal consumption expenditures since 1998. The good news. Private investment in residential real estate rose 13.0% in Q3! And nonresidential structures grew at 13.8%. The bad news. Real median household income (only through 2012) continues to decline. We have a “GINI Paradox.” Since 2007, real median household income has fallen while income inequality (GINI) has risen. AND we have rising residential real estate investment? The US needs real GDP...
  • Housing Finance Reform, Corker-Warner And The Rule Of Law (Federalist Society Panel)

    12/04/2013 2:54:18 PM PST · by whitedog57
    Confounded Interest ^ | 12/04/2013 | Anthony B. Sanders
    There was a tremendous panel discussion today in the U.S. Senate hosted by the Federalist Society. The discussion concerned the proposed Corker-Warner bill to “reform” the housing finance system. The moderator was Troy Paredes and the speakers included Ronald Case, Bernard Weinstein and myself. Going forward, what should happen to the mortgage giants Fannie Mae and Freddie Mac? Weinstein argued that they should be kept in place, but regulated to avoid Congress from forcing them to take on too much risk. Case gave an eloquent discussion of the necessity for the rule of law in whatever happens going forward. What...