You’d think the housing market is in fine shape, based on the sizzling optimism of the National Association of Home Builders, which just released its Housing Market Index. It rose to 55 in August – above 50 means more builders view conditions as good than poor – the third month in a row of gains, and the highest level since January.
Think again.
Read more...Even though there has been a big uptick in news stories on rising economic inequality, and more chatter among economists about the idea that high levels of inequality are associated with lower growth, much of the messaging has come from the Democrats desperate to use the one dog whistle that might rally their badly abused base. Even though inequality has risen under Obama, thanks to policies that favored rescuing banks and enriching the medical-industrial complex over helping ordinary citizens, the Democrats are all too willing to rely on their perceived lesser-evilism relative to the Republicans. After all, it was only Romney’s billionaire warts that kept Obama from what would otherwise have been a well-deserved 2012 defeat.
But while the Administration has been pushing inequality as a useful campaign theme (the signal was inviting Thomas Piketty to meet with Treasury Secretary Jack Lew), in parallel, it also appears that some of the expressions of concern about inequality among the policy classes are genuine.
Read more...Yves here. I’m serving an extra heaping of contempt on the latest giveaway bank settlement, this one with Citigroup for a headline figure of $7 billion which is really $4.5 billion in cash and the rest in various chits. We’re turning the mike over to Bill Black, who excoriates Attorney General Eric Holder.
Read more...It’s not hard to notice the contrast between the posture of a Republican state attorney general in Colorado, John Suthers, who opened up an investigation when the Denver Post exposed pervasive overbilling by foreclosure mills, versus the conduct of a Federal task force dedicated to pursuing foreclosure fraud.
Read more...A Florida appeals court nixed clearly bogus foreclosure documents in a short, gratifying ruling.
Read more...Yves here. China is cracking down on flight capital, starting with Australian banks. As the most casual readers of the business press know, the international wealthy, particularly Russians and Chinese, have been using residential real estate in “world cities” as their favorite lockbox. As we’ve written, it’s stunning to see how much real estate has been hoarded in London. Mayfair was depopulated during the petrodollar recycling of the 1970s; now much of Belgravia, Chelsea near Sloan Square, and Kensington are visibly underpopulated. Vancouver has been bid to the sky by Chinese flight capital. New York is a big destination for Russian and Chinese investors, and Chinese money has been pouring into Australian real estate.
The Chinese move may be an admission of stress on the financial system.
Read more...Yesterday, we wrote about a major loss by the electronic mortgage registry, MERS, in a major Federal court case in Pennsylvania. MERS suffered an additional blow via an important adverse decision in the Maine Supreme Court, against Tom Cox, the attorney who first made robosigning a national issue.
Read more...As Georgetown law professor, Adam Levitin, said succinctly by e-mail, “MERS hasn’t lost a case like this before.”
Read more...Private equity firms are the ultimate smart money on Wall Street; they know how to wring out the last dime from their own clients, such as pension funds and rich individuals, through hidden fees, obscure expenses, elaborate expense shifting, lackadaisical disclosure, and “zombie advisers,” to the point where SEC Inspection Chief Andrew Bowden singled them out in a speech in May. Now the lawyers are circling.
And these private equity firms invented a whole new business: buying vacant homes out of foreclosure and from banks and renting them out. But how do they exit at a profit?
Read more...Yves here. This article pokes at a topic near and dear to my heart, which is the generally reverential treatment of Thomas Piketty’s Capital in the 21st Century. It appears to be a classic example of the cognitive bias called halo effect, in which people have a tendency to see things as all good or all bad. Because there is a lot to recommend Piketty’s work, for instance, the fact that it is exceptionally written, that it has made inequality into one of the hottest topics in economics, and that Piketty has done an admirable and exhaustive job of finding and analyzing the returns on certain types of income producing assets are all highly commendable.
But as readers may know, one of my pet peeves is that Piketty has made a very strong claim, in the form of his formula r>g, or the rate of return on capital (which he also calls “profit”) exceeds the growth rate of the economy, when his data falls short of what would be necessary to prove that assertion.
Read more...Even though foreclosures and bank servicing abuses have virtually disappeared in the eyes of the media, it’s quite a different story in the courtrooms of America. Banks continue to proceed with foreclosures, too many of which are based on bogus charges or other servicing abuses.
Fortunately, more and more judges seem to be recognizing bank bad conduct. Wells Fargo proceeded with a foreclosure on a clear bad-faith basis, and then made some eye-rolling arguments before a judge who is on to Wells’ game and is none too impressed.
Read more...Repeated foreclosure attempts against an on-time borrower reveal why servicing remains hopelessly broken. That also means government guaranteed mortgages are here to stay.
Read more...Now that homes are coming on the market in large numbers, buyers, faced with sky-high prices and higher mortgage rates, went on strike.
Read more...Yves here. It’s been astonishing to see members of the Fed in denial about their own handiwork, so when St. Louis Fed President James Bullard berates his fellow central bankers for their abject refusal to notice pre-crisis bubbles, it’s an all too rare departure from their usual insularity and willful blindness.
Read more...Larry Summers, like Tim Geithner, wants the public to believe that rescuing banks and leaving citizens to rot was the right crisis response. But neither experts, nor people who followed the crisis, nor voters at large are buying what Team Obama is trying to sell.
Read more...