so many people losing their homes

What I love about the real estate crash……that the same parasites (realtors) who helped fan the flames of speculation will be just as motivated to get sellers to lower prices. After all, they have to have transactions to make a living.

Globalisation and the rise of inequality

Rich man, poor man
Jan 18th 2007
From The Economist print edition
http://www.economist.com/opinion/displaystory...

A poisonous mix of inequality and sluggish wages threatens globalisation

GLUERS and sawyers from the furniture factories in Galax near the mountains of Virginia lost their jobs last year when American retailers decided they could find a better supplier in China. At the other end of the furniture industry Robert Nardelli lost his job this month when Home Depot decided it could find a better chief executive in his deputy. But any likeness ends there. Mr Nardelli's exit was as extravagantly rewarded as his occupation of the corner office had been. Next to his $210m severance pay, the redundant woodworkers' packages were mean to the point of provocation.

That's the way it goes all over the rich world. Since 2001 the pay of the typical worker in the United States has been stuck, with real wages growing less than half as fast as productivity. By contrast, the executive types gathering for the World Economic Forum in Davos in Switzerland next week have enjoyed a Beckhamesque bonanza. If you look back 20 years, the total pay of the typical top American manager has increased from roughly 40 times the average—the level for four decades—to 110 times the average now.

These are the glory days of global capitalism. The mix of technology and economic integration transforming the world has created unparalleled prosperity. In the past five years the world has seen faster growth than at any time since the early 1970s. In China each person now produces four times as much as in the early 1990s. Having joined the global labour force, hundreds of millions of people in developing countries have won the chance to escape squalor and poverty. Hundreds of millions more stand to join them.

Indian IT majors continue hiring spree
http://timesofindia.indiatimes.com/IT_majors_...

NEW DELHI: It rained jobs for IT professionals with the country's top five software firms alone adding over 23,200 employees to their payrolls in the last quarter of 2006, while taking their total headcount to near 2,92,000.

The Fab Five of the Indian IT space -- TCS, Infosys, Wipro, Satyam and HCL Technologies -- hired a total of 23,265 people in the three-month period ended December 31, with TCS coming out with highest number of additions at 7,835.

The collective employee strength of the country's five biggest firms at the end of October-December quarter stood at 2,91,830.

The robust hiring momentum has virtually shrugged off the concerns related to soaring wages eating into the company's profitability as all the five companies have reported impressive financial results for the quarter ended December 30, the experts feel.

TCS continued to maintain the lowest attrition rate in the industry at 10.8 per cent. At the end of the quarter, the total employee strength of the company was 83,500, with employees coming from 60 different nationalities.

The country's second largest software exporter Infosys' headcount reached 69,432 at the end of December 2006. Infosys added 6,092 employees this quarter at a gross level, of which 1,676 employees were with prior experience. The attrition rate increased slightly to 13.5 per cent compared to 12.9 per cent last quarter.

It plans to hire another 5,000 people in the next quarter, which will take the total number of people recruited for the year to 30,000.

Foreclosures in New Jersey are everywhere and growing fast! 5 out of the 8 homes we saw in Bergen County this past weekend were bank-owned!!!

A recent study by the Center for Reponsible Lending estimates that 2.2 million homeowners will lose their home via foreclosure. Based on what I’m seeing, that number seems grossly under-estimated.

And I also read about more mortgage companies closing down. A friend who works on the MBS desk of a large financial company tells me that his firm has started unloading it’s mortgage bonds.

I’m both excited and frightened about the coming housing collapse because it is going to be very big folks.

Existing Home Sales Plummet in 2006
Thursday January 25, 10:40 am ET
By Martin Crutsinger, AP Economics Writer
Sales of Existing Homes Plunge by Largest Amount in 17 Years

WASHINGTON (AP)-- Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years.
The National Association of Realtors reported that sales of existing homes were down 0.8 percent last month, a bigger decline than had been expected. For the year, sales fell by 8.4 percent, the biggest annual decline since 1989, when existing home sales fell by 14.8 percent.

The sales figure underscored the sharp contraction that is going on in the once high-flying housing market, which before last year had set sales records for five straight years.

Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005.

After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries.

But economists said they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession.

The 0.8 percent drop in sales in December came after two straight months of improving sales, the first back-to-back sales gains since the spring of 2005.

David Lereah, chief economist for the Realtors, said that even with the December setback, he still believes that sales of existing homes have hit bottom and will start to gradually improve.

He said that in 2005, 40 percent of the market represented purchases of second homes and investors buying homes looking to resell them for quick profits.

He said that speculators had now left the market and that should leave sales at a more sustainable level.

"With fingers and toes crossed, it appears that we have hit bottom in the existing home market," he said.

I had an argument two years ago with my brother in law here in Burbank about the out of control real estate prices in the L.A. area in general. He is quite happy with the current values of the homes in this area and doesn’t want anyone telling him it isn’t real. When I tried to explain that wages don’t support current prices by a long shot he countered that people in burbank make a lot more money than I think they do and added that average household incomes these days are well over $100,000. He ultimately told me ” This is the new reality! Get used to it, quit complaining about it or move!” When I got home I googled Burbank and found that the city has a web site which states that the median household income in Burbank is $47,467. Meanwhile the typical Burbank home is $750,000? You don’t have to be a genius to know that when the typical home is 15.8 time the median household income something has got to give. This situation is also having an effect on the ability of businesses to attract new employees- especialy from out of state. The business jet that I maintain went without a full time copilot for six monthes. We interviewed a lot of very qualified pilots from other states that were very interested until they took a look at housing costs here and suddenly they weren’t interested anymore. It’s getting difficult to find mechanics for the same reason. Anyone that’s paying attention knows that a correction is coming. The only real question is how long will it take?

The dirty little secret of our private-market sector is capitalism has a socialist heart. Companies take the profits, but they spread the invisible social costs across the backs of American taxpayers.

It's an old capitalist habit in democracies: socialize risk, privatize profit. Let the taxpayers take care of all the invisible infrastructure, what economists call "externalities," but keep the profits for the shareholders.

Since most of us don't even recognize corporate socialism, we don't blame the companies, we blame the immigrants.

"See what's it's costing us for you to work here!" we say. "Go home!"

But it's not the immigrants who are getting the free ride — they're just answering the siren call of a job. It's the legal businesses who draw the "illegal aliens" across the border and then wait for America to pay the price tag.

When the wall came down on the Soviet border, state socialism died. Wouldn't it be an irony if we put a wall up on the Mexican border because corporate socialism has been reborn here in the USA?

10 million loans could go into default over 18 mo
Backdraft from the Bubble
http://community.eons.com/groups/topic/31172-... -

There are signs that the bursting housing bubble is poised to unleash an explosive backdraft with negative and potentially far-reaching implications for Wall Street and Washington.

In recent years, writes the The New York Times,

borrowers have flocked to riskier mortgages that gave them the means to keep up with an overheated housing market. Now some advocacy groups say that as delinquencies and foreclosures mount, so too will lawsuits against lenders.

“I think a class action is coming,” said John Taylor, the chief executive of the National Community Reinvestment Coalition, a Washington group that is an advocate for low-income borrowers.“It’s a storm cloud that’s waiting to really open up and rain on the lenders’ parade.”

Taylor contends that lenders have marketed their riskiest loans to low-income borrowers in violation of so-called fair-lending laws, which require that a loan be made only when there is a substantial likelihood of repayment.

What's more, according to the Mortgage Foundation, the

fallout from the surge in subprime and bad credit mortgages taken out during the housing boom could become a major issue in the 2008 national elections, political analyst Charlie Cook told the National Association of Realtors at advocacy training sessions in D.C., this week.

As many as 10 million loans could go into default over the next 18 months as borrowers run into financial problems when the low-interest introductory period of their loan terms ends...

Speaking at a luncheon, Cook said that the number of potential foreclosed loans is so large that problem subprime/exotic/ bad credit mortgages like interest-only home loans could “be a big political issue” while 2008 national campaigns are underway.

“The issue is not on the political radar screen today but it could be in 18 months,” he said.

those stupid people deserve whatever they get....trying to keep up with the Jones bit them in the ass and do I feel sorry? NOPE

Bring on the housing slump
http://www.latimes.com/news/opinion/commentar...
L.A.'s economy cannot survive insanely high home prices.
By Joel Kotkin, Joel Kotkin, an Irvine fellow at the New America Foundation, is the author of "The City: A Global History" (Modern Library Paperback).
January 28, 2007
FOR THE LAST five years, speculators, big developers and homeowners have gorged on Los Angeles real estate. The huge run-up in prices — more than 135% from 2001 to 2006 — has greatly increased the spending power of property owners. Yet there has been a worrisome consequence: Working and middle-class families are moving out — and failing to move in — because they cannot afford a house here. Long term, that's not good for the local economy. As perverse as it sounds, what L.A. needs now is a real estate bust.
Recent history is illustrative here. The big and rapid declines in property values in the early 1990s, after the last real estate bubble popped, helped open the door to homeownership for a new generation, many of them immigrants. New owners of delinquent or moribund commercial properties, especially downtown, fueled a spike in business activity, much of it stemming from immigrant and minority entrepreneurship.
This time, the L.A. real estate bubble is more likely to deflate gradually than burst. Unlike in the early 1990s, the local economy is not tanking. Since 2000, job creation and income growth have kept pace with the national averages. But home prices have clearly shot up faster than the economy would justify. They have surged 20% higher here than in such economically booming cities as Las Vegas, Phoenix and Reno. L.A. housing costs have risen twice as high as in Portland, Ore., and Seattle and four times as high as in Dallas, Houston and Atlanta.
The biggest losers have been middle-class families looking to buy a house in greater L.A.. By last year, less than 15% of L.A. families could afford to buy a median-priced home of about $500,000 — compared with about 50% for home buyers in the rest of the country. Not surprisingly, this has accelerated the movement of working and middle-class families to more affordable regions.
One indication of middle-class flight is the rate at which people with bachelor's degrees and higher are leaving Los Angeles. According to the most recent community survey from the U.S. census, such people are moving out at a higher rate than in the late 1990s. From 1995 to 2000, for instance, a net 28,000 people with bachelor's degrees and higher moved out of Los Angeles and Orange counties. In 2004-05, the rate of exodus was almost twice as high.
This isn't to say that Los Angeles can't draw some of the world's most talented people. Those at the top — or aiming for it — of the employment pyramid in entertainment, finance and technology can either afford housing at any price or will sacrifice homeownership, at least for a while, for career reasons. And with its great climate, cultural assets and cache, wealthy people will live or at least own a house here.

New home sales fell in 2006 by the largest amount in 16 years. Will this year show an improvement?
Yes 31%
No 46%
Results will be flat 24%
41613 Votes to date

Defaults cause Fremont to end ties to 8,000 brokers

http://today.reuters.com/news/articleinvestin...

LAS VEGAS, Jan 29 (Reuters)- Subprime mortgage lender Fremont Investment and Loan on Monday said it severed ties last quarter with some 8,000 brokers whose loans were responsible for some of the highest delinquency rates in the industry.

Such moves to improve loan quality have helped trim the number of early defaults on Fremont mortgages to a 3 percent rate from almost 6 percent in mid-2006, Mike Koch, a Fremont vice president of marketing, told investors at the American Securitization Forum meeting in Las Vegas. The so-called early payment defaults were close to 1 percent in 2005.

The brokers "released" were "highly correlated" to the sudden rise in defaults on Fremont loans, he said in response to questions from investors.

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"First and foremost, increased loan quality is the No. 1 initiative for the year," Koch said.

Fremont was the fifth-biggest originator of subprime loans last year, with about $33 billion of loans issued.

A surge in defaults across the industry from low levels in 2003-2005 came as subprime underwriters loosened standards to help maintain volume in a shrinking market. The loans, most destined for the $575 billion home-equity, asset-backed bond market, are being returned by investors at an alarming pace, hurting profits.

Pumping Up Your Reverse Mortgage
New 'jumbos' are giving retirees the cash they need to stay in their houses

From the living room of her Huntington Beach home, Jean Ingram enjoys sweeping views of pristine California wetlands and, off in the distance, Catalina Island. She and her late husband paid $135,000 for the 2,200-square-foot Tudor-style home in 1978, and it's now valued at about $1.2 million. Yet until late last year, the 69-year-old widow, awash in home equity but light on monthly income, feared she would have to sell.

Ingram was able to hold on to the house by taking out a jumbo reverse mortgage on the property--"jumbo" because the amount was $388,000, and conventional reverse mortgages would not offer as much on a $1.2 million home. Either way, these financial deals allow homeowners 62 and older to take the equity out of their houses without having to make monthly payments to the bank. The balance comes due when the homeowner moves out or dies. Then, the mortgage holder or the heirs have to sell the property or use other funds to pay off the loan if they want to keep it.
...
Ingram's mortgage, like most of its ilk, is variable, with the interest rate tied to the widely quoted London Interbank Offered Rate. Her rate is currently 8.42% and can readjust every six months, up to a maximum of 14.92%. The 8.42% rate is about two points higher than the interest on a regular adjustable-rate mortgage. What significance is the interest rate if you're not making monthly payments? It's the basis for calculating how much Ingram or her heirs will eventually have to repay the lender.

us american think we are to good to do the jobs that mexicans do.are youth is very lazy just worried about going out and partying insteed of taking advantage of all the things we have here just want everything handed to them!!!!!!!!!!

When the price of housing, energy, food, transportation, utilities, and government go up and wages remain stagnent or decline they used to call it inflation. Now they call it a booming economy.

>Now they call it a booming economy.
To save himself Bush will save anything.

When the housing bubble bursts, we'll all pay

Not to gloat, but "I told you so" - about two years ago, if I remember correctly. Today, nearly one in four mortgages (23.8 percent) in the Vallejo-Fairfield area are expected to be in foreclosure. That's a 405 percent increase since the 1998-2001 rates of 4.7 percent and the highest in the nation. Ain't it great to be Numero Uno?

Remember the slides from the presentation I gave back in 2005 regarding foreclosures in the last six months of 2004? I only wish that I could predict the outcome of horse races and stocks as well as this. Unfortunately, horses and stocks are pretty much based on chance, not stupidity, which makes it much easier to detect and predict the outcome.

My biggest concern is how much will the bailout of the stupidity and greed in the lending industry cost us taxpayers for the rest of our lives - and our descendants' lives? There are billions of dollars in bad paper floating around out there that will eventually end up in some sewer farm to be paid off by us. We are still paying off the bailout of the Lincoln Savings & Loan collapse, which was totally caused by fraud on the CEO's part.

And, by the way, Allen "Everything is Wonderful" Greenspan was a Lincoln financial consultant
who pronounced its financial status as excellent just months before the scandal broke. His next job, of course, was chairman of the Fed, probably based on his excellent resume.
Thank you, Mr. Greenspan, for rescuing us from the "Internet bubble" by creating a "housing bubble" that we will pay off for generations - unless China forgives our debt in return for ownership of the United States. Better have our children practice their Chinese.

Last year I relocated to Moab, Utah, and when I returned to Vacaville for the holidays, I noticed, but was not surprised by, the city's new "strip mall," that was supposed to be the resurrection of the Nut Tree, with a conference center, hotel, etc.

Funny how predictable these things are. Project promises and deliveries are rarely even identifiable as coming from the same developers and politicians who originally proposed and approved them. They are just quietly swept under the rug in City Hall, where they are trampled in the endless quest for more, bigger, better, until there is no more and my hometown is just another asphalt wasteland.

Thanks for letting me vent. Unfortunately, this tragic comedy is only just beginning. No one knows what Acts II and III will bring.

I believe that home equity loans might not be as advantageous as people might think. If I recall, home equity loans came into prominence when people could no longer deduct the interest paid on car loans. I thought that when this happened, a person might run into trouble because it was too easy to keep borrowing on your home, and therefore you would never accumulate a substantial equity in your home. What has bothered me is that the banks encouraged this activity on the part of homeowners, without stressing that you could lose your home if you could not repay the home equity loan.

Wells Fargo President and COO John Stumpf said:“It’s a very different story at Wells,” citing the fact that most of the subprime mortgages it issues are sold to Wall Street banks which then assume the risks.

In the first half of 2006, 72 percent of the bank’s subprime mortgages were co-issued with Wall Street firms, he said.

“They take those risks and they sell that off to investors so we never get into the chain of ownership,” he said.“It’s that simple.”

The bank's main goal in selling subprime loans has been to increase its servicing portfolio, the business of collecting payments on mortgages, he said.

"These portfolios are preforming as we would expect and its a good business for us," he said.

He added that most subprime loans the bank makes are for borrowers using their home as a way to consolidate debts and lower their overall interest payments, safer than some other suprime loans which are for second mortgages which can overextend borrowers.

“The robot homebuilder

By NATHAN HALVERSON
THE PRESS DEMOCRAT

Imagine a giant robot that works 24 hours a day churning out custom houses, moving from one job to another without complaint, fatigue or injury.

Behrokh Khoshnevis, a University of Southern California engineering professor, imagined just such a machine more than 10 years ago. Today, he is only months away from debuting a working prototype.

Khoshnevis, who will speak Thursday in Rohnert Park at Sonoma State University’s Engineering Lecture Series, is working to develop a programmable machine that can build houses at a mere fraction of the time and cost of traditional construction.

It is no small endeavour. Khoshnevis hopes robotic automation will make it possible to build a 2,000-square-foot home in 24 hours and at one-fifth the cost of traditional construction….”