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More HAMP Cancellations = Less Debt Slaves

On July 20, 2010, in Housing, by Tim

CNN/Money reports on the latest data from the government’s mortgage modification program where the number of canceled loan modifications now exceeds the number of permanent ones. When you think about it, this is probably a good thing because all the permanent loan mods really do is lock the borrowers into years of debt servitude.

Many don’t qualify for Obama’s foreclosure prevention

More delinquent homeowners learned last month that they don’t qualify for foreclosure help in the Obama administration’s program, according to federal data released Tuesday.
…
Some 91,118 people in trial modifications were canceled in June, bringing the total to 520,814 since the program began in the spring of 2009. More than 60% of those who dropped out last month had been in trials for at least half a year.

Homeowners usually are kicked out of the trial program because they do not make the required payments, meet the qualifications or submit the needed paperwork.
…
More people also received lasting help from the administration’s main foreclosure rescue program. Some 51,205 troubled homeowners received long-term mortgage modifications in June, bringing the total to 389,198.
…
“Early indications are the modifications are sustainable,” said Phyllis Caldwell, who heads the Treasury Department’s Home Preservation Office.

It’s not clear what part of median back-end debt-to-income ratios of 64 percent for permanent loan mods is sustainable but, apparently, they’re sustainable for the time being.

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China and their Energy Consumption

On July 20, 2010, in Asia, Commodities, by Tim

China was quick to dispute findings by the IEA (International Energy Agency) that concluded they have surpassed the United States and are now the world’s biggest consumer of energy.

Most people probably look at the 9 million bpd (barrels per day) of oil consumed in China versus the 19 million bpd day in the U.S. and stop there. Apparently, they’re much closer to the U.S. when coal, nuclear energy, natural gas, and other energy sources are included.

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Faith in Social Security Continues to Falter

On July 20, 2010, in Debt, Our Culture, by Tim

A new poll that forms the basis for this report in USA Today indicates that Americans’ doubt over the promises of the Social Security system continue to grow.

Battered by high unemployment and record home foreclosures, most Americans seem to have lost faith in another fundamental part of their personal finances: Social Security.

A USA TODAY/Gallup Poll finds that a majority of retirees say they expect their current benefits to be cut, a dramatic increase in the number who hold that view. And a record six of 10 non- retirees predict Social Security won’t be able to pay them benefits when they stop working.

Skepticism is highest among the youngest workers: Three-fourths of those 18 to 34 don’t expect to get a Social Security check when they retire.

The public’s views are more dire than the calculations of Social Security’s trustees. Last year, they projected the system would begin running in the red in 2016, as the Baby Boom generation retired, and the trust fund would be exhausted in 2037.

Practically speaking, this is not all bad – the public increasingly understands that the system is unsustainable. It doesn’t require four years in college to do the math behind the retirement age-life expectancy gap that has been allowed to grow for the better part of a century. Of course, we should all thank former Fed chief Alan Greenspan for making the system appear to be sustainable over the last few decades as his ground-breaking work on the system in 1983 sent him on to even more destructive tasks at the central bank.

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Changes Come to Public Sector Payrolls

On July 20, 2010, in Economy, Our Culture, by Tim

Given what has happened in the world over the last few years – the last few decades, for that matter – it’s hard to imagine that reports like this from the New York Times should come as a surprise to public sector employees, many of whom are working on borrowed time.

A City Outsources Everything. Sky Doesn’t Fall.

Not once, not twice, but three times in the last two weeks, Andrew Quezada says, he was stopped and questioned by the authorities here.

Mr. Quezada, a high school student who does volunteer work for the city, pronounced himself delighted.

“I’m walking along at night carrying an overstuffed bag,” he said, describing two of the incidents. “I look suspicious. This shows the sheriff’s department is doing its job.”

Chalk up another Maywood resident who approves of this city’s unusual experience in municipal governing. City officials last month fired all of Maywood’s employees and outsourced their jobs.

While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone.

Maywood sounds like a very unusual place. Just south of Los Angeles with as many as 50,000 residents packed into just one square mile and a police force that sounds like it was completely dysfunctional before it was disbanded, bankruptcy was the city’s only alternative to letting all 66 city employees go.

Nonetheless, a growing number of people across the land are realizing that it makes little sense for the city worker mowing the courthouse lawn to be making $50,000 or more in wages and benefits when a contractor could do the same job for a fraction of the cost.

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New Home Construction at Eight-Month Low

On July 20, 2010, in Housing, by Tim

The Census Bureau reported(.pdf) that housing starts reached their lowest level since last October, down 5.0 percent, from an annualized rate of 578,000 in May to 549,000 in June. Permits for new construction rose 2.1 percent, from a rate of 574,000 to 586,000, but they remain quite depressed, moving up from one-year lows reported last month.

The end of the homebuyer tax credit in May is surely responsible for what some are now calling the “2010 mid-year housing wasteland”, where checks of between $6,500 and $8,000 from the government have pulled summer demand forward into the spring leaving far fewer buyers during the peak selling season. Existing home sales will be reported on Thursday.

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Tuesday Morning Links

On July 20, 2010, in Uncategorized, by Tim

MUST READS
China Tops U.S. in Energy Use – WSJ
After Job Training, Still Scrambling for a Job – NY Times
Hugh Hendry: ‘If There Was A Way To Short Obama, I Would’ – HuffPo
Spain, Ireland, Greece Sell Debt as Funding Pressure Eases – Bloomberg
Battle looms over new job heading financial watchdog – Washington Post
Treasury Auction Bids Hit Record, Investors Surpass Bond Dealers – Bloomberg
SEC needs to add 800 jobs due to reform law – CNN/Money
The LEAST Educated Cities In America – HuffPo
Welfare & Warfare – Burning Platformg

MARKETS/INVESTING
Oil hovers below $77 amid mixed signs on economy – AP
Gold holds above $1,180 but further losses eyed – Reuters
Bad January, Bad First Half: A Gloomy Omen For Stocks – CNBC
Pimco Sells Black Swan Protection as Wall Street Markets Fear – Bloomberg
Fundamentals for gold remain but seasonal doldrums drag on – Mineweb
Leading money manager now believes deflation is coming – MarketWatch
CARPE AURUM – Gold Scents

ECONOMY/WORLD/HOUSING/FED
Double-dip looks doubly certain – MarketWatch
Senate Set to End Stalemate and Extend Jobless Aid – NY Times
China downcast on exports as EU debt woes bite – Reuters
British government June borrowing tops forecasts – MarketWatch
Six Million to Lose Homes in Next Two Years – The Truth About Mortgage
Need a Mortgage? Don’t Get Pregnant – NY Times
Why Housing Data Are Misleading: The Tax Credit Angle – WSJ
Elizabeth Warren Could Head CFPB Without Senate Confirmation – HuffPo
More on the Fed’s Balance Sheet – The Big Picture

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