Items of Interest:
Paper Avalanche Buries Plan to Stem Foreclosures -- Somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit.
Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November...
Housing in Peril as Obama Fails to Get Breakthrough -- Bankers’ reluctance to finance buyers who won’t live in properties is one barrier to a turnaround. Stricter qualifying rules and a rise in the cost of residential loans to 5.42 percent have impeded new mortgage lending, which is at a 13-year low. An inventory of 2.1 million unoccupied houses on the market, created by the fastest foreclosure pace in history, may be a drag on a revival...
Bill Fleckenstein / MSN Money:
Realty Fervor Takes Aim at Reality -- The real-estate balloon has deflated, but there's still plenty of hot air surrounding home prices. Let us now appraise industry lobbying efforts to lift valuations.
As the aftermath of the real-estate/credit bubble enters its second year, let's begin by devoting our attention to two key cogs in that wheel: the National Association of Realtors and the National Association of Mortgage Brokers.
For both organizations, the operative words are: long on bombast, short on shame...
When Is It Cheaper to Ditch a Home Than Pay? -- Foreclosures aren’t only due to homeowners facing a cash crunch. One out of four defaults on mortgage loans is “strategic,” a new study says, due to a mortgage’s value exceeding the value of a house even if the homeowner can afford to pay.
Strategic default is most likely when home values have fallen by more than 15%, according to the study by authors of the Financial Trust Index, a joint project of the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management...
Calculated Risk: New Research on Walking Away
Seeking Alpha: The Paradox of Strategic Mortgage Defaults
Living With Less -- The human side of the global recession.
Reader Photos: Picturing the Recession
Are Parents Thinking Differently About Education? -- The phone keeps ringing at the Upper West Side office of Robin Aronow, an educational consultant and schools guru: anxious families suddenly rethinking whether they can afford private school, distressed parents wondering what to do if their children don’t make it into vaunted gifted and talented programs.
As well-off families confront the new contours of their budgets, education may emerge as an attractive, if painful, place to cut. Families who shunned the public school system may now be tempted to transfer to the nearest P.S., and those just starting a family may look to move to a neighborhood with a rich concentration of esteemed public schools...
The quiet Americans -- Employees are proving stoical in the face of pay cuts and compulsory unpaid leave
BACK when times were better and the newspaper industry wasn’t fighting for dear life, reporters at the Cleveland Plain Dealer would regularly grumble at the measly pay increases their union negotiated. Last month, when the union announced it had negotiated a 12% pay cut in exchange for a promise of no lay-offs, there was applause. “It took me aback,” says Harlan Spector, a medical reporter and one of the negotiators.
Like many long-standing economic relationships, “wage stickiness” is being tested by the savagery of the recession. Ordinarily, when unemployment shoots up wages do not tend to fall: they simply grow more slowly. Why the price of labour responds less to demand than that of other commodities is a bit of a puzzle. In the 1990s Truman Bewley of Yale University interviewed hundreds of employers and discovered that, faced with a slump in demand, they would rather lay some workers off than cut the pay or hours of everybody. The sackings devastated those directly affected, but broad cuts to pay and hours hurt everybody’s morale. “The main drawback of pay cuts is that they fill the air with disappointment and an impression of breach of promise, which dissolve the glue holding the organisation together,” he wrote in 1997...
Recovery threatened by toxic assets still hidden in key banks -- Taxpayers around the world still face potentially large losses because governments have failed to act quickly enough to remove toxic assets from the balance sheets of key banks, the world's leading central bankers warn today...
Real GDP -- Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 5.5 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to final estimates released by the Bureau of Economic Analysis. In the fourth ...
KeithHennessey.com / Economics Roundtable: Understanding first quarter GDP
Auto Sales Expected to be near 10 Million SAAR in June -- There will be a flood of data released over the next three days, including the June employment numbers on Thursday. Other highlights include Case-Shiller house prices tomorrow and auto sales on Wednesday. Several analysts expect an increase in auto sales in June, compared to May, on a seasonally adjusted annual rate (SAAR) basis...
Ford boosts production 16% as June car sales show strength — Ford is boosting its third-quarter production schedule after seeing more demand for its cars and trucks in June, the company ...
Joe Weisenthal & Kamelia Angelova / Clusterstock: Madoff's Little Helpers
Allan Dodds Frank / The Daily Beast: The Madoff Family SplintersJill Schlesinger / The Huffington Post: Madoff: 150 Years Doesn't Seem Like EnoughSteve M. / No More Mister Nice Blog: YOU THINK THIS IS VENGEANCE? I'LL SHOW YOU VENGEANCE.Tom Watson / My Dirty Life & Times: Death to Madoff! — I know he's committed the financial crime …Jeralyn / TalkLeft: Bernard Madoff Sentenced to 150 YearsHamilton Nolan / Gawker: Locked Up for Life: Madoff Sentenced to 150 Years In PrisonMelissa McEwan / Shakesville: Madoff Sentenced — Let me be perfectly clear: I have no sympathy …
Scott Reeves / Minyanville: Madoff To Be Free in July, 2159Joe Windish / The Moderate Voice: Madoff Gets 150 Year SentenceJeremy Taylor / Asylum: Book of Justice Hits Friendless Bernie Madoff HardLibby Spencer / The Impolitic: Madoff pays, Banksters still freeJosh Weiner / Air America Media blogs: Madoff To Receive Sentence TodayTruthdig: 150 Years in the Slammer for Madoff
- Things Are Still Bad and Will Remain That Way - Doug Kass, TheStreet
- Chinese Banks: "An Accident Waiting to Happen" - Naked Capitalism
- Green Shoots and a Grain of Salt - John Hussman, Hussman Funds
- The Science of Economic Bubbles and Busts - Gary Stix, Scientific American
- Caveat Mortgagor - James Surowiecki, The New Yorker
- Wall Street's Selective Memory - Allan Sloan, Fortune
- The World Finance Crisis & America's Mission - R. Skidelsky, NYR of Books
- A Funding Roadblock Ahead for Clean Energy - Kate Galbraith, NY Times
- Bail Out California and Fire Schwarzenegger - Michael Maiello, Forbes
- 'Reforms' Won't Prevent Future Crises - Robert Samuelson, Washington Post
- Is It Death by Obamanomics? - Irwin Stelzer, The Weekly Standard
- Why We Need a Second Stimulus Package - John Judis, The New Republic
- Looking Ahead, Into the Economic Dark - Diane Francis, National Post
- 2013: Cap and Trade Bill Clogs Congress - Bill Frezza, RealClearMarkets
- Fed Must Reassure Markets On Inflation - Martin Feldstein, Financial Times
- With Inflation, the ECB Trumps the Fed - Anatole Kaletsky, Times of London
- Why Stagflation Is Coming - David Burton & Cesar Conda, Washington Times
- Doubters Aside, It's Still Top Dollar - Desmond Lachman, The American
- China's Banks: Accident Waiting to Happen - A.Evans-Pritchard, Telegraph
- Bernanke Break Means Reappointment Given - Kevin Hassett, Bloomberg
- Hard Times? It Depends Where You Live - Alan Berube, Los Angeles Times
- The Dirty War Against Clean Coal - Gregg Easterbrook, New York Times
- Saving the World Economy from Peter Mandelson - John Tamny, Forbes
- Climate Change, Trade and President Obama - Paul Krugman, NY Times
- U.S. Companies Seek New Tax Havens - Jena McGregor, Business Week