Fausta’s Blog

Today’s headline: New home sales unexpectedly fall in December

Sales of newly built U.S. single-family homes fell unexpectedly in December, data showed on Wednesday, the latest indication that the government-led housing recovery might be losing some steam.

The Commerce Department said sales fell 7.6 percent to a 342,000 unit annual rate from an upwardly revised 370,000 units in November. It was the second straight month that new home sales declined.

Last week, jobless claims “unexpectedly” worsened: Jobless Claims in U.S. Unexpectedly Rise on Backlog

More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays.

Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labor Department figures showed today in Washington.

Before that, foreclosures rose, also “unexpectedly“.

Considering we’re in a recession, and the Obama administration continues to castigate private business, it’s difficult to ascertain why the above three rose “unexpectedly“. It is to be expected.

The Price for Fannie and Freddie Keeps Going Up
Barney Frank’s decision to ‘roll the dice’ on subsidized housing is becoming an epic disaster for taxpayers. Bad news now,

On Christmas Eve, when most Americans’ minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.

Bad news then,

Fannie and Freddie’s congressional sponsors—some of whom are now leading the administration’s effort to “reform” the financial system—have a lot to answer for. Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, sponsored legislation adopted in 2008 that established a new regulatory structure for the GSEs. But by then it was far too late. The GSEs had begun buying risky loans in 1993 to meet the “affordable housing” requirements established under congressional direction by the Department of Housing and Urban Development (HUD).

Most of the damage was done from 2005 through 2007, when Fannie and Freddie were binging on risky mortgages. Back then, Mr. Frank was the bartender, denying that there was any cause for concern, and claiming that he wanted to “roll the dice” on subsidized housing support.

Roll the dice he did, and the Republicans were not able to stop him,

There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.
…
An Alt-A mortgage is one in which the quality of the mortgage or the underwriting was deficient; it might lack adequate documentation, have a low or no down payment, or in some other way be more likely than a prime mortgage to default. Fannie and Freddie were also reporting these mortgages as prime, according to Mr. Pinto.

It gets worse. Go read the rest of the article.

Thomas Sowell explains what politicians are after when making disastrous policy:
Solving Whose Problem?

No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems– of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.

Dr Sowell looks at Barney Frank’s role in the mortgage crisis:

Very few people are likely to connect the dots back to those members of Congress who voted for bigger mortgage guarantees and bailouts by the FHA. So the Congressmen’s and the bureaucrats’ jobs are safe, even if millions of other people’s jobs are not.

Congressman Barney Frank is not about to cut back on risky mortgage loan guarantees by the FHA. He recently announced that he plans to introduce legislation to raise the limit on FHA loan guarantees even more.

Congressman Frank will make himself popular with people who get those loans and with banks that make these high-risk loans where they can pocket the profits and pass the risk on to the FHA.

So long as the taxpayers don’t understand that all this political generosity and compassion are at their expense, Barney Frank is an odds-on favorite to get re-elected. The man is not stupid.

What is stupid is believing that politicians are trying to solve our problems, instead of theirs.

While you’re at it, don’t bet on the Community Reinvestment Act to stop being law any time soon.

——————————————-
And a side comment:
Townhall.com, where the Sowell article is posted, now has the most obnoxious, by far, website. As Gerard put it, it’s become a

crapulous example of graphic sludge, popovers, popunders, animations, blink tags and other web page bullshit gone wild

As if that weren’t enough, the RSS feeds are screwy, too.

If any of you guys in charge of that mess are reading this, I urge you to please clean up the mess.

At Forbes, news on the next economic catastrophe, this time involving credit unions, insurance companies and mortgage lenders, not just banks:

A Poisonous Cocktail
Expanding the Community Reinvestment Act.

The White House and Congress want to expand a 30-year-old law–the Community Reinvestment Act–that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks to seek the permission of community activists to get regulatory approval for bank expansions and mergers. Often this means striking a deal with activist groups such as ACORN or unions like the Service Employees International Union (SEIU) and agreeing to allocate credit to poor and minority areas that are underserved.

In short, the CRA encourages banks to make loans they would not ordinarily make. What’s more, these agreements often require that banks offer no-money-down mortgages and remove caps on how much debt a borrower can take on. All of this is done in the name of “financial democracy.”

Take a look at the amount of CRA-commitments forced on banks in the run-up to the 2008 financial crisis:

Scott Johnson:

As for the speculative action on Wall Street that contributed to the crisis, Peter points out that Washington had a hand in that too. Peter argues that the Clinton administration fueled the speculation by bailing out big investment houses such as Goldman Sachs and Morgan Stanley five times during the Clinton years. The Clinton team not only pulled their chestnuts out of the fire from derivative investments around the world, they ensured that they actually profited from their risky behavior.

In finance they call this “moral hazard.” It’s like bailing a friend with a DUI charge out of jail, giving them the keys to the car, and throwing a six pack in the back seat.

Look who’s involved:

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort.

President Obama has been a staunch supporter of the CRA throughout his public life. And his recently announced financial reforms would make the law even more onerous and guarantee an explosion in irresponsible lending. Obama wants to take enforcement of the CRA away from the Federal Reserve, the FDIC and other financial regulators who at least try to weigh bank safety and soundness when enforcing the law, and turn it over to a newly created Consumer Financial Protection Agency (CFPA). This agency’s core concerns would not be safety and soundness but, in the words of the Obama administration, “promoting access to financial services,” which is really code for forcing banks to lend to those who would not ordinarily qualify. Compliance would no longer be done by bank examiners but by what the administration calls “a group of examiners specially trained and certified in community development” (otherwise called community activists). The administration says, in its literature about the reforms, that “rigorous application of the Community Reinvestment should be a core function of the CFPA.”

For good measure, Obama’s plan also calls for the CFPA to work closely with the Department of Justice to combat perceived discrimination in lending.

What this will amount to is the worsening a financial crisis through expanding bad debts, while at the same time there’s a credit crunch affecting small businesses.

Insane.

Or, as Dennis, who sent me the link, said, “Folks, this is Loony Tunes.”

Experts: Some foreclosed homes too damaged to sell

A “Washington-based group that supplies data to private mortgage industry analysts” is just finding out now that some foreclosed houses are heavily damaged and may not find a willing buyer. I was selling real estate twenty years ago and could have told them that.

Even back in the olden days you could find houses in such condition that they could not get a certificate of occupancy. The Husband and I even considered purchasing one such house.

There are homeowners out there who don’t give a damn about their homes. Even if their houses are fully paid and won’t be foreclosed, some people don’t mind (and I’ll even say, apparently enjoy) living in a pigsty. I showed houses where the sellers still lived where you wished you had worn a flea collar. These properties were not in blighted areas; they were in very desireable neighborhoods. Some were small and “affordable”, at least one qualified as a mansion.

Other homeowners who are about to be foreclosed will destroy what they can no longer have.

Here’s the situation:
Any given house will sell at the right price.
It may not qualify for a mortgage.
It may have to be bulldozed.
But any given property has a price at which it will sell.

The most dramatic example of this was a house one of my customers wanted to buy. The house had burned down to the foundation. My customer, who was a builder willing to pay cash and had no contingencies built into the purchase, was outbid by another buyer.

Why?

The house in question had lake rights.

UPDATE
video now here
Please also read Robert’s comment on how to view it via bit torrent
Judith sent the link to the Saturday Night Live skit,

Michelle Malkin has the full transcript and screenshots of SNL’s Soros/Sandler bailout satire, in case the youtube disappears. Pat Dollard links to the Sandler defends Golden West in Wachovia debacle; ‘SNL’ skit stings. I certainly hope it stings, since, as Michelle points out,

As Todd Thurman at Heritage notes, the Sandlers are left-wing moguls who built “a mortgage company whose major product was subprime mortgages and they sold it to Wachovia for $24.2 billion in 2006. And what do the Sandlers do when they are not peddling subprime garbage? They are busy writing checks to leftist groups like the Center for American Progress, the American Civil Liberties Union, and Association of Community Organizations for Reform Now (ACORN). Yes that ACORN.

As far as NBC goes, the video’s been scrubbed.

More at Memeorandum here and here.

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IBD Editorial: The Real Culprits In This Meltdown

Big Government: Barack Obama and Democrats blame the historic financial turmoil on the market. But if it’s dysfunctional, Democrats during the Clinton years are a prime reason for it.
…
As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.

Other Clinton cronies, including Janet Reno aide Jamie Gorelick, padded their pockets to the tune of another $75 million.

Raines was accused of overstating earnings and shifting losses so he and other senior executives could earn big bonuses.

In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk.

But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America.

At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households.

The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today’s nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.

Obama’s character assassins target another National Review journalist

Barack Obama caught in bed with Fannie Mae

ACORN, Fannie Mae and Motor Voter

Playing the blame game in the Wall Street crisis

Special thanks to Larwyn for the links.

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A few links on the bailout:

Barney Frank, Fannie Mae’s Patron Saint

John McCain & Sarah Palin promise: We’ll Protect Taxpayers From More Bailouts

Politics and the Fannie Mae Piggy Bank
Franklin Raines, Jamie Gorelick, and some very cooked books.

Larry Kudlow blogs More Fan-Fred Questions than Answers

Overseas debt drives bailout of Fannie, Freddie
Some U.S banks take big loss

It’s official.

One Hand On Your Wallet Dept. (Note: this link didn’t show the first time I posted it, and now the HTML is correct. Sorry for the omission.)

Last but not least, Maxed Out Mama’s roundup and opinion.

I hope they’ll truly privatize Freddy and Fannie and take it off the government’s hands. Sometime.

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UPDATE
After 24 hours during which none of my posts showed, things seem to be back to normal here.

But not to worry – first there’s my article on Chavez’s threat to cut off oil to the EU, which you can read at Newsvine. Then there’s yesterday’s podcast, where Monica Showalter reminded us that Hugo’s threat seems to match Putin’s similar threat, too.

Later today I’ll have another article at NJ Voices.

On a personal note, I’m looking for a good recipe for Yorkshire pudding; if any of you would like to contribute, please add it in the comments section.

But enought about me (at least for now), let’s do a quick roundup:
They say a picture’s worth a thousand words, and Brian Faughnan’s speaks volumes.

No Mas, Senator, says Cassandra, who’s got the race card. Obama says Republicans will use race to stoke fear. It’s the Republicans who can’t keep themselves from calling attention to anyone’s race, I tell you!

Then there’s the seal of Obama. Macranger asks,

As I noted before the seal shows what appears to be an eagle in retreat with it’s back turned on the Flag. Couple this with Obama’s desire to “Remake” and “Disarm” America and we have all the reason in the world to be alarmed and ask questions.

OBAMA STARTING TO CREEP ME OUT, for sure.

Bonus
Via Alcibiades, The Great Seal of Obamaland?

UPDATE
“Vero possumus”

Considering that most Americans don’t speak Latin, and that possums are known for sleeping, having the word “possum” in there is … unfortunate.

And then there’s Dame Edna, who always refers to “possums”, too.
Today’s issue of Bus and Driver
Obamath: producing more oil won’t produce more oil
More on the race card at Nice Deb and Baldilocks

Sunday 22 June
And . . . . Cassandra Blows the Lid Off Melanin-Gate!
Obama blinks on playing the race card
Here comes the race card.

Larwyn’s been keeping up with things, and she’s sent a truckload of links – here are a few:
The FHA time bomb

The Federal Housing Administration – the very agency the Bush Administration and Congress trumpet as the solution to the mortgage crisis – has announced that it suffered a $4.6 billion loss last year. This is one of the worst financial performances ever for the government’s multibillion-dollar mortgage insurer.

Seriously folks, seeing how government does things, do you really want to turn over your health care to them?

Sen. Kent Conrad, (D-N.D.) is angry about negative publicity on his beach cottage, while Sen. Chris Dodd (D-Conn.) let his lender write the bailout bill.

UPDATE
In Mahmoud’s World

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Via Maria, Victor Davis Hanson writes about The Moral Economy (also at Real Clear Politics) :

…despite the politicians’ rhetoric, it is not hard to understand why America is in trouble.

First, there has been too much madcap real estate speculation. In recent years, housing prices were driven sky-high on the expectation that almost anyone, often with little security, could profit by borrowing easy money to buy and sell property.

Too many investors lost the old pedestrian notion that the purpose of a house was to be a home in which to live, to raise a family and to take pride in ownership. Its acquisition used to be a multi-year, if not once-in-a-lifetime, investment — not quite comparable to the easy buying or selling of volatile paper stocks and bonds. Others did not have the means to afford the type of home they purchased, once risky variable interest rates climbed.

Back when I lived in Convent Station, Morris County, NJ, I used to sell houses.

I advised every single one of my two-salaried customers to buy the house they could afford with only one salary.

I always had the customer speak to a mortage rep and discuss not only the no-documentation, low-downpayment adjustable rate mortagages but also the fifteen-year 25% down mortages. Once the customers could make the numbers and see the difference, a surprising number opted for the 15-yr mortagage.

Each one of those customers is free of mortgage debt right now.

A lot of real estate agents (who rely on a commission to make a living, and the commission is paid by the seller most of the time) would insist that their buyers overstretch with the wildest possible financing. Obviously I have a different mindset from theirs.

The reason was simple: I started a carreer in real estate when my husband got laid off from his job at Allied Corporation, and I knew there were more layoffs coming. He was not in a unique situation: within two years, the major employers in the Morris County area, Allied, AT&T, Henkel and Exxon had major layoffs. I mean ALL of these employers, at the same time. I wasn’t psychic, I just had enough contacts that worked in managerial/supervisory jobs in those companies to know there was reason to be cautious.

People who had purchased the most expensive house they could – most frequently having only enough money left to buy a kitchen table and chairs, furnish the bedroom(s) they slept in, and purchasing a sofa and a TV for the family room – were left in desperate straits when one of the salaries disappeared.

There was a glut of ten-room houses on the market. Imagine hundreds of ten room houses with most of their rooms empty signalling to the buyers that the owners are hurting and have to sell. The ones that overstretched ended up owing money to the bank when the houses finally sold at a much lower price than they bought them.

Economies are cyclical. As a homeowner, it is your personal responsibility to you and your family to not gamble on your family’s basic need for shelter.

In the larger issue of the economy, VDH continues,

First, at this late date, Republicans shouldn’t vote for any candidate who promises another tax cut without first offering a matching slash in expenditures. And Democrats should reject any candidate who promises another multi-billion dollar entitlement without detailing how the additional revenue is to be raised.

Second, instead of demanding new billion-dollar programs for health care and education, we should take more responsibility for our own welfare.

Americans need to readjust their budget priorities. One might be able to believe that a $200 dollar a month private catastrophic health plan is out of the reach of most Americans — if we were also to hear that sales of video games, cell phones and plasma televisions have crashed.

Third, we need to ignore the alarmist hysteria, calm down and appreciate that life is better than at any time in the last 5,000 years of civilization. People are living longer; we’re healthier; and millions of Americans have the opportunities to travel, communicate and avoid physical drudgery that were once reserved only for a tiny aristocracy. There is plenty of excess in modern American life that can be shed without real hardship.

Finally, we must view our present economic challenges in a larger philosophical and ethical framework — and redefine success as being able to pay off what we owe, and spend only what we earn.

Amen to that!

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