HawthorneVillager.com

Jobless claims up but they blame the snow. Didn't stop us from working.
W

And only in america does 2 negatives equal a positive

Contracts for pending sales of previously owned homes rose faster than expected in December after the prior month's sales were revised lower, data from a real estate trade group said Thursday.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, was up 2 percent to 93.7 from a downwardly revised reading of 91.9 in November.

Economists polled by Reuters had expected pending home sales to rise by 1.0 percent.

The index has risen in five of the last six months, though it is still 4.2 percent lower than the 97.8 level of a year ago.

Lawrence Yun, the association's chief economist, said the latest figures suggest sales activity is close to what he called a healthy level above 5 million units annually.

“The era of deleveraging is still in first half,” said Steve Cortes of Veracruz Research. “For this reason, the Fed's efforts to inflate the economy are not working. The effects of rising commodity prices are more than offset by the deflationary forces of deleveraging, especially in property arena, where a double dip is already a reality in many cities, and soon will be nationally.”

The latest Standard & Poor’s/Case-Shiller data showed that housing prices fell again across most of the major cities, with eight markets such as Las Vegas and Miami setting new lows since the housing crisis. Data released today showed a much higher than expected jump in weekly jobless claims, dampening hopes of an increase in wages anytime soon.

By:  John Browne
Thursday, January 27, 2011
Following the huge gains made by Republicans in the midterm elections, it was widely expected that President Obama would use the State of the Union address to signal a major policy shift toward the center of the political spectrum. On the surface, at least, he appeared to do just that, hinting that he took budget management very seriously and that Americans should be prepared for shared sacrifice. However, as the final applause still echoed in the House chamber, many astute pundits were left trying to make sense of the many contradictory policy prescriptions the President proffered.

Classical political maneuvering dictates that when clouds are grey, politicians must offer good news, tell jokes, and remind us warmly of our childhood (or in Obama's version, America's triumph over Russia in the Space Race). Disclosure of specific measures should be avoided at all costs. President Obama followed these tactics closely.

While he did address plans to cut non-defence, discretionary federal spending - a small fraction of the overall budget - the President also announced his intention to increase spending on several existing and new initiatives. The scope of the new initiatives will surely eclipse the modest cuts pledged.

The President was careful to refer to all his spending plans as "investments." The word is used in order to illicit a pleasant feeling among voters who instinctively favor capitalism over socialism, not because any thinking person expects these resources to be better allocated than they would have been by the market. Governments don't make investments because they aren't subject to profit-and-loss feedback. Governments provide public goods for which no profit can be measured or expected - or else we would just have the private sector take care of it. This disingenuous use of the word investment disguises the fact that the President simply intends to borrow even more money to spend on public-sector jobs.

The essential point is that while jobs in the private sector create wealth, public sector jobs actually consume wealth. When I was a Member of the British Parliament, I represented a county that spent the least amount per pupil on education of anywhere in the entire country. Yet, the achievement level of the students was by far the highest. It was vivid proof that it is not the amount of money that is crucial to success, but the quality of the spending. If the President were to lower taxation, cut the number of government regulations, and replace a political atmosphere of uncertainty with one of certainty, he might stand a chance of reviving wealth creation.

More seriously, the President made no mention of the massive debt problems facing US state governments, such as California and Illinois. The potential eruption of these debt and currency problems could well dominate investment strategies for 2011.

Yesterday, the Congressional Budget Office issued a highly embarrassing assessment that the federal deficit for 2011 would rise from the previously projected $1.1 trillion to $1.48 trillion. At a stroke, this nullified the President's debt reduction plans. The CBO also pointed out that Social Security posted a $45 billion deficit in 2010 and will bleed more than $600 billion over the next ten years. I assume these estimates to be conservative. It is clear that the President, and the rest of Congress for that matter (with the possible exception of Congressman Paul Ryan whose austere recommendations have been ignored by most of his fellow Republicans), are dancing around the bonfire of our sovereign credit and hoping that their twirls will distract us from the conflagration.

Also yesterday, the Federal Reserve's policy statement claimed that its massive stimulus plans are working, and that it will maintain both QE II and near-zero rates well into 2011. If the economy were indeed improving, as Messrs. Bernanke and Obama claim, why would the Fed and the Treasury need to keep administering life support? Clearly the White House and the Fed have little confidence in their own assertions; so, how should average investors react to more promises which are highly unlikely to be kept?

Rather than buying into Washington's scripted recovery propaganda, investors should focus on the bottom line. Low interest rates are distorting the value of money and the key investment relationship between risk and reward. One side effect is that investors are being incentivized to favor equities over fixed income. A lack of viable alternatives has likely played an unsung role in supporting the current stock market rally.

Investors would be well-advised to retain a jaundiced view of all political statements, especially those of central bankers and politicians positioning themselves for the next election. In 2011, investors should focus their eyes not on the sky, but at the brick wall our Union is fast approaching.

Warning signs growing. Could cmhc go down the same road as fannie and freddie. Well depends how ugly things get....

TORONTO — The federal government should limit taxpayer exposure to potential problems in the housing market by reducing the role of the Canada Mortgage and Housing Corp. in the provision of mortgage insurance, CD Howe Institute said in a report Monday.

The CMHC has a pervasive presence in the domestic mortgage market, potentially resulting in “unmanageably large risks in financial markets” that are ultimately borne by the Canadian public, according to the report.

Under current rules, people who borrow more than 80% of the value of the home they want to buy must also take out insurance, and the CMHC is by far the most dominant player in that market.

According to the report by Finn Poschmann, vice-president of research at the CD Howe Institute, the CMHC now backstops mortgages equivalent to more than 30% of Canada’s gross domestic product.

That’s left Canadians exposed to “large, ill-defined risks,” said the document, which argues that Ottawa should crank back the CMHC’s presence in mortgage insurance and allow more room for private sector insurers.

Originally conceived as a vehicle for executing public policy, CHMC insurance levels have expanded dramatically, especially in the wake of the financial crisis as the government encouraged banks to hike lending by allowing them to securitize more home loans.

Critics worry that the unintended consequence of government policy was that mortgages became too easy to get, pushing up real estate prices across much of the country to unsustainable levels.

“Beyond the presumed benefits of promoting home ownership, [activities of the CMHC] have had some clearly harmful and well-understood consequences, as well as other less well-understood but also harmful consequences in world financial markets,” Mr. Poschmann said.

The CD Howe recommendation comes on the heels repeated warnings from the Bank of Canada that Canadians have become over leveraged and need to start paying down debt.

One of the main concerns about the CMHC is the lack of disclosure about the quality of its mortgages and details of the types of loans it insures. For instance, when the government announced earlier this month that home equity lines of credit, or HELOCs, would no longer qualify for CMHC insurance, many analysts expressed surprised that such loans were ever allowed to be part of the CMHC program in the first place.

Canada is hardly alone in its policy of boosting home ownership as the United States and many other countries have adopted similar initiatives. But Canada is one of the few western nations that have not so far been hit with a steep decline in real estate prices in the wake of the financial crisis.

The report also makes the case for beefed up oversight of CMHC as right now its relationship with the Office of the Superintendent of Financial Institutions is primarily a courtesy arrangement under which the crown corporation is not compelled to follow OSFI directives.

According to Mr. Poschmann, Ottawa should adopt new legislation to remove the ambiguity from the relationship by legally requiring the CMHC to comply with guidelines laid down by the federal regulator.

Financial Post

these same points were all made south of the border pre crash....

Home ownership isn't a right. If you don't have at least 30 percent to put down , you shouldn't buy. Skin in the game is needed to stop the speculating


TORONTO — The federal government should limit taxpayer exposure to potential problems in the housing market by reducing the role of the Canada Mortgage and Housing Corp. in the provision of mortgage insurance, CD Howe Institute said in a report Monday.

The CMHC has a pervasive presence in the domestic mortgage market, potentially resulting in “unmanageably large risks in financial markets” that are ultimately borne by the Canadian public, according to the report.

Under current rules, people who borrow more than 80% of the value of the home they want to buy must also take out insurance, and the CMHC is by far the most dominant player in that market.

According to the report by Finn Poschmann, vice-president of research at the CD Howe Institute, the CMHC now backstops mortgages equivalent to more than 30% of Canada’s gross domestic product.

That’s left Canadians exposed to “large, ill-defined risks,” said the document, which argues that Ottawa should crank back the CMHC’s presence in mortgage insurance and allow more room for private sector insurers.

Originally conceived as a vehicle for executing public policy, CHMC insurance levels have expanded dramatically, especially in the wake of the financial crisis as the government encouraged banks to hike lending by allowing them to securitize more home loans.

Critics worry that the unintended consequence of government policy was that mortgages became too easy to get, pushing up real estate prices across much of the country to unsustainable levels.

“Beyond the presumed benefits of promoting home ownership, [activities of the CMHC] have had some clearly harmful and well-understood consequences, as well as other less well-understood but also harmful consequences in world financial markets,” Mr. Poschmann said.

The CD Howe recommendation comes on the heels repeated warnings from the Bank of Canada that Canadians have become over leveraged and need to start paying down debt.

One of the main concerns about the CMHC is the lack of disclosure about the quality of its mortgages and details of the types of loans it insures. For instance, when the government announced earlier this month that home equity lines of credit, or HELOCs, would no longer qualify for CMHC insurance, many analysts expressed surprised that such loans were ever allowed to be part of the CMHC program in the first place.

Canada is hardly alone in its policy of boosting home ownership as the United States and many other countries have adopted similar initiatives. But Canada is one of the few western nations that have not so far been hit with a steep decline in real estate prices in the wake of the financial crisis.

The report also makes the case for beefed up oversight of CMHC as right now its relationship with the Office of the Superintendent of Financial Institutions is primarily a courtesy arrangement under which the crown corporation is not compelled to follow OSFI directives.

According to Mr. Poschmann, Ottawa should adopt new legislation to remove the ambiguity from the relationship by legally requiring the CMHC to comply with guidelines laid down by the federal regulator.

Financial Post

My dad bought his 1st home in 1974. It wasnt bad for everyone. Kind of like stocks. If they tank, its an opportunity to buy. It sucks for the people that own homes/stocks. Its great for people with cash looking to get in the game.

Money flow cannot continue at this rate. Interests rates will rise dramtically in the next year. Commodities will collapse just like they did a few years back. I would take money off the table here and over the next few months.


Jmho
Not sure if you read dr doom but here he is



Bernanke, BLS Lie About Inflation: Dr. Doom Faber
CNBC.com | February 02, 2011 | 08:19 AM EST
Global inflation is far higher than official statistics reveal, Marc Faber, editor and publisher of the “Gloom, Boom and Doom” report told CNBC on Wednesday, with increases in the cost of living amounting to between five and eight percent in the United States and just below that in Europe.

In its latest release, the Bureau of Labor Statistics said the consumer price index (CPI) increased 0.5 percent in December, while the latest figures in for the euro zone show the inflation rate rose to 2.4 percent in January.

“I guarantee you … the annual cost of living increases are more than 5 percent, and the Bureau of Labor Statistics is lying,” Faber told CNBC at the Russia Forum in Moscow.

“Mr Bernanke is a liar; inflation is much higher than what they publish. I would imagine for most households it’s between five and eight percent per annum in the United States and in Western European countries maybe a little bit lower but also around four and five percent per annum,” he said.

In addtion, Faber said high food prices, which have sparked political unrest in Egypt, would next cause turmoil in Pakistan.

“You may not have the problem in Saudi Arabia and the Emirates because there the governments can heavily subsidize food if they want to, but I’m particularly worried that what has happened in Egypt will happen in Pakistan,” he said.

Asked whether Pakistan would indeed see an Egypt-style uprising, he said: “I think that will be the case.”

“I think Egypt is a reminder to people that politics and social events and geopolitics have a meaningful impact on asset markets,” Faber said, adding that what the world was currently witnessing was “a wake up call where the US outperforms emerging markets for a while.”

“That doesn’t mean that the US goes up. It just may go down less than the others,” he said.

Turning to the global economic recovery, Faber said the West was bottoming out and recovering, which meant the global economy looked “OK” for the next six months.

But “we’re all doomed in the long run,” he said.

“We have to realize it’s an artificial recovery driven by ultra-expansionary, monetary policies and also ultra-expansionary fiscal policies.

In other words, the deficits of governments are huge and that will lead down the road to renewed problems,” he said.

Hard times are coming boys and girls. And a lot sooner than you think. I still predict a 20 percent haircut in home values that will leave a lot of you underwater. Start saving your pennies for a rainy day.....

Stiglitz warns Europe of ‘disastrous’ austerity

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Paul Abelsky and Agnes Lovasz, Bloomberg
Wednesday, Feb. 2, 2011

Many European countries are pursuing “excessive austerity,” risking a marked slowdown in economic growth, Nobel Prize-winning economist Joseph Stiglitz said.

“There’s this disastrous policy that even in the countries that don’t need to have austerity,” such as the U.K., they “are going for much more excessive austerity than they need,” he said at an investor conference in Moscow Wednesday. “We are already seeing around Europe the consequences of this austerity. The clear implication is that growth will be slower.”

European governments are stepping up efforts to narrow budget deficits after the region’s sovereign-debt crisis threatened to trigger defaults and undermine the euro. Leaders are considering boosting the 750 billion-euro ($1 trillion) rescue fund and adopting more stringent deficit rules to avoid the future turmoil after rescues of Greece and Ireland.

While both those nations had “no choice” but to tighten fiscal policy, measures adopted by some other countries such as the U.K. aren’t justified, Stiglitz said. Britain, where the economy contracted in the fourth quarter, is already seeing the fallout, he said.

Prime Minister David Cameron’s government is implementing the largest fiscal squeeze since World War II to tackle the U.K.’s record deficit. The economy unexpectedly shrank 0.5% in the final three months of 2010 as the coldest December in a century hampered services and retailing, a report showed on Jan. 25.

‘Marked’ Slowdown

“Whether it goes to double dip isn’t clear, but that it will be slower is very clear,” Stiglitz said. “We’ve gone through this experiment over and over again of what will be the consequences of austerity, and it is a marked economic slowdown.”

Global inflation pressures from soaring food and commodity prices will also weigh on the economic recovery, according to Stiglitz. European economies will suffer as governments curb spending to narrow budget deficits and central banks rush to raise interest rates, he said.

“In Europe it’s going to play out worse because the budget-deficits problems are worse and the European Central Bank is much more committed to fighting inflation,” Stiglitz said. “The U.S. is a little bit more balanced in monetary policy and so they will be more willing to tolerate inflation.”

http://www.financialpost.com/m/news/hou ... story.html

Toada so as rickie would say

I have to agree, this is the End Times, it is all biblical. We are encroaching on all predictions in the bible. Look around yourself everything is falling apart Global Warming, High Debt the anti christ in America. We cannot go on like this. This the End Times!!!

But there is a way out for you! ASK William he Knows where the KEY to The Gates.

Only in america can they spin the bad into good , the good into bad and well if its dire, let's just confuse them

To put the following article in perspective .....they need to creat over 300 k jobs just to bre' even.

In other words, 150k more people have lost an opportunity to taste employment. A lost generation ????

Look for real estate prices to fall at least another 50 percent to 1990 levels. Then I will call a bottom.

Goodluck

http://www.financialpost.com/m/news/job ... story.html

We are coming out of the recession whether you like it or not. THe world is NOT coming to an end!

There were opportunities in the 1930's and there are opportunitities NOW.

I have friends who are buying LISTEN BUYING Real Estate in THE Great USA and are making great returns RENTING THEM OUT.

This is what you need to look for. Had you not buried your head in the sand you could of made a PILE OF MONEY.

Hey Citigroup Stock fell to $1.00 I bought 25,000 shares SOLD it at $5.01.

Kept 5000 SHARES made a cool $100,000 and I still own 5000 shares. NOT BAD for a years work.

I hope your right about REAL ETATE IN CANADA!!! I am going to LOAD UP and make my self RICHER.

THere is a saying Warren Buffet if you know who he is. AND DONT TELL ME LOST MONEY IN 2008. HE NEVER LOST A PENNY! HE MAKES SO MUCH CASH FROM FREE CASH FLOW FROM THE COMPANIES HE OWNS WHEN YOU SELL HE BUYS UP YOUR SHARES. THAT IS A FACT JACK.

I LOVE THE DOOM SAYERS THE CUP IS ALWAYS HALF EMPTY. PLEASE LET ALL THE PROPERTY OWNERS TO SELL NOW I'LL BUY AT A 50% DISCOUNT

Mama mia. Jack

OL SCHOOL IM HAPPY TO KNOW, YOU ARE PSYCHIATRIST NOT A FORTUNE TELLER BECAUSE THE STUFF YOU TALK ABOUT IS JUST THAT!

NOW SURE WHAT ANGLE YOU COME FROM BUT I AM HAPPY YOU ARE FOLLOWING ME.

HMMM OLD HMMMM SCOOL HMMMM

WHEN COMMENTING IT IS EASY TO GO EXTREME ISN'T IT! YOU CAN GIVE ALL KINDS OF BS AND DOES STICK.

HAPPY CAPITALISM

Maybe this was posted before but I don't remember hearing much media coverage about this.
Just in case people thought Canadian banks didn't receive bailout money...from the Americans.

http://www.theglobeandmail.com/report-o ... le1820857/

Canada’s major banks were among numerous financial institutions across the globe which accessed funding from the U.S. Federal Reserve as part of its efforts to stave off economic collapse.

Among the thousands of transactions revealed by the Fed on Wednesday were a number involving Canadian banks, which took advantage of one program to borrow roughly $111-billion (U.S.) through their operations in the U.S.

Obliged to disclose the information under a new financial-reform law, the Fed provided an unprecedented look Wednesday inside a host of programs it used starting in 2007 to shore up a tottering U.S. banking system. The records show in stark terms how the Fed acted as a lender of last resort to a variety of players in the U.S. and beyond, extending low-cost loans and other sources of funding in a desperate effort to get financial markets functioning again.

Five Canadian banks – Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto-Dominion Bank – tapped into Fed loans through their U.S. units.

The five banks all borrowed money through a program known as the Term Auction Facility, which was created in late 2007 so banks could access Fed funding without the stigma attached to its traditional avenue for lending, known as the discount window.

Canada was far from the only country whose institutions tapped the program. Banks from Japan, Germany, South Korea, Israel, and Brazil also utilized the loans, which the Fed said were given to institutions in “generally sound financial condition.”

In exchange for the loans, the banks posted a broad range of collateral, from U.S. Treasury bonds to commercial real estate loans to mortgage-backed securities. All the loans made under the program were repaid in full, with interest, the Fed noted, and it wrapped up the facility in the spring of this year.

Canadian banks said the moves to seek loans from the Fed were dictated by strategy and not by necessity.

RBC accessed funding from the Fed “purely for business reasons – better pricing and collateral rules – and because they were the best deal for our shareholders at the time,” said Gillian McArdle, a bank spokesperson. “Our access to funding remained very strong through the entire crisis.”

Ms. McArdle later added a clarification, noting that “banks were generally encouraged to use these facilities by the Fed” to help kick-start lending in the economy.

For TD, participating in the Fed program was a chance to supplement our “already strong liquidity reserves and to do so in an economical way,” said Matthew Fortier, a spokesperson.

RBC borrowed the most of any Canadian institution, drawing on $43.6-billion in 2008 and 2009. The loans were made partly to its RBC Bank unit, which is headquartered in North Carolina, but the lion’s share went to the Royal Bank of Canada operation in New York.

The Bank of Nova Scotia and TD were next on the list, borrowing $27.7 billion and $27.5 billion respectively. A Scotiabank spokesperson noted the program provided “cost-effective funding.”

Bank of Montreal, which received loans of $6.8-billion under the facility, said its borrowing amounted to “testing and maintenance,” as demonstrated by the fact that it accessed the program “for short periods and [in] modest amounts,” according to a spokesperson.

A few Canadian institutions also participated in other Fed programs, including one set up to ease the blockage in the market for commercial paper, which are short-term borrowings critical to the finances of many companies. Both BMO and Scotiabank sold commercial paper to the Fed in October of 2008.

A representative for CIBC didn’t respond to a request for comment.