V-shaped Yes, Recovery No

http://indexuniverse.com/index.php?section=6&id=1894

Look Out Below
Mar 29, 2007



U.S. home prices fell 0.6 percent in January of 2007, after dropping 0.7 percent in December 2006, according to new data from the S&P/Case-Shiller Home Price Indexes. Prices fell in 17 of 20 measured cities in January; prices were flat in Chicago and Seattle, and rose 0.4 percent in Charlotte, North Carolina.

On an annual basis, prices are now down in the 11 of the 20 markets tracked by S&P/Case-Shiller, with the worst performance in Detroit (-6.9 percent) and Boston (-5.6 percent). Seattle enjoys the best performance, with prices up 11.1 percent over the past twelve months.

“The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “The 10-City and 20-city Composites are both showing negative annual returns, a striking difference from the 15.1 percent and 14.7 percent returns they reported this time last year. The dismal growth in the 10-City composite is now at rates not seen since January 1994.”

Dire … dismal …. clearly, Shiller thinks the real estate market is getting ugly.

A look at the chart of annual price gains is shocking. Since early 2004, price gains have fallen off the cliff, and there is no sign that the trend is decelerating or changing directions.

The U.S. Commerce Department reported Monday that sales of single-family homes fell 3.9 percent in February, following a 15.8 percent plunge in January. The sales rate in February was the slowest pace in nearly seven years. The backlog of unsold homes now tops 540,000. At current rates, it would take 8.1 months to eliminate that backlog, the longest period for that measurement in 16 years according to the San Jose Mercury News.

With the sub-prime market imploding and the Fed showing no signs of lowering rates, many expect prices to fall further as we enter the traditional spring selling season.

‘Buying a house is not really for people who don’t have money.’

From The Housing Bubble Blog
The St Petersburg Times reports from Florida. “Subprime companies found fertile ground in the Tampa Bay area as home values soared in 2004 and much of 2005. The old rule of thumb, no mortgage within seven years of a bankruptcy, went out the window as lenders scrambled to make loans to borrowers they once would have shunned. ‘It’s risk vs. reward,’ says Richard Doyle, a Pinellas County real estate agent. Lenders ‘get higher interest in return for higher risk.’”

“Among Doyle’s clients is a resident of upscale Belleair Beach who got a $576,000 loan at 8.65 percent interest from Fremont in 2005 even though he had filed a personal bankruptcy four years earlier. He defaulted on the payments, and the house is now in foreclosure, slated for public sale in April unless a buyer can be found before then.”

“The property was originally worth the loan amount, but housing values have dropped in Pinellas ‘absolutely without question,’ Doyle says. ‘There’s an unprecedented level of inventory.’”

“In 2002, Hattie and Jerry Jones bought a house in the Port Tampa area with a Fremont mortgage at 8.9 percent. On his Social Security and her modest wages as a nurse’s aide, the Joneses can barely make the $603 monthly payments, which don’t include taxes or insurance, and keep up with their other bills.”

“Mounting debts forced the couple into bankruptcy court two years ago. They are determined to hang on to their home, even though they realize they would have been far better off renting.”

“‘I don’t want to walk away, but I sure feel like it,’ Hattie Jones says. ‘Buying a house is not really for people who don’t have money.’”

"The fault, dear Brutus, is not in our stars, but in ourselves."

Washington Post:
Congress will want to know whom to blame for this reckless lending and borrowing. The usual suspects come to mind: the Fed for pushing interest rates down to half-century lows, the bond-rating agencies for sugarcoating the risk on mortgage-backed securities and the lenders who competed with one another to see who could operate in defiance of the greatest number of canons of prudent credit practice. It was Congress itself that eliminated tax deductions on interest for nearly all consumer debt -- but let them stand for residential mortgages.

But our lawmakers should not forget to call human nature to account. In 1886, 40 years before the birth of former Fed chief Alan Greenspan, the Great Plains was the scene of a terrific real-estate boom, financed by the most reckless kind of lending. There was no Fed, and there were no rating agencies, just lenders and borrowers taking leave of their senses. They returned to them, eventually. They always do.

Mrs. Jellyby and the Return of the Caliphate

From a thoughtful Muslim, Amir Butler:

In Charles Dickens’ Bleak House, Mrs Jellyby is described as, “a lady of very remarkable strength of character who devotes herself entirely to the public.” Dickens continues, “She has devoted herself to an extensive variety of public subjects at various times and is at present (until something else attracts her) devoted to the subject of Africa.”

Mrs. Jellyby, as readers may recall, has committed herself to what she terms, “The African project”; a project that, she says, “employs my whole time. It involves me in correspondence with public bodies and with private individuals anxious for the welfare of their species. It involves the devotion of all my energies, such as they are; but that is nothing, so [long as] it succeeds; and I am more confident of success every day.”

At the same time, Mrs. Jellyby’s own personal life languishes in a state of utter disarray. Her hair is unbrushed because, as Dickens writes, “she was too much occupied with her African duties to brush it.” Her home is likewise a mess and she neglects her children. Even when one of her children falls down the stairs, Mrs. Jellyby fails to even notice because, as Dickens writes, her eyes “had a curious habit of seeming to look a long way off. As if they could see nothing nearer than Africa.”

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But, people will never be reformed if we only pursue those paths that make us feel good: talking about the problems of the world, protesting, and discharging emotional energy with angry political rants about this government or that ruler. Instead, we are required to do good and that means practicing the religion properly, avoiding what is forbidden and exerting ourselves, as much as we are able, to do what is required of us.

As Muslims, this is where the locus of our concerns should really be: with ourselves; our families; our communities and those we are able to influence for the better. Or, as I told my activist friend, if you wish to see the return of the Caliphate then perhaps the best thing to do is to stop working for it.

Don't Confuse Me with Facts

http://gregmankiw.blogspot.com/

Walter Reed Highlights Need for Universal Healthcare

Democrat presidential contender Sen. Hillary Clinton today decried the allegedly poor conditions, stifling bureaucracy and negligent care at Walter Reed Army Medical Center and throughout the VA healthcare system, but added,“Just think how bad it would be if it weren’t a government run system.”

As military patients and their spouses testified before a Senate panel about vermin-infested, moldy rooms, neglect and miles of red tape, Sen. Clinton told reporters, “This crisis serves only to highlight our desperate need for a tax-funded, government-managed universal healthcare system for all Americans.”

“When I’m president,” she said, “I’ll give the average American the same excellent quality of care we now provide for our nation’s heroes…but without the rats, mold and bureaucracy. I’ll sign legislation outlawing that kind of inefficiency, mismanagement and public employee apathy.”

This is a joke, of course. But it brought to mind this more serious article published in the New York Times on January 27, 2006:

Health Care Confidential
By Paul Krugman

American health care is desperately in need of reform. But what form should change take? Are there any useful examples we can turn to for guidance?

Well, I know about a health care system that has been highly successful in containing costs, yet provides excellent care. And the story of this system's success provides a helpful corrective to anti-government ideology. For the government doesn't just pay the bills in this system -- it runs the hospitals and clinics.

No, I'm not talking about some faraway country. The system in question is our very own Veterans Health Administration, whose success story is one of the best-kept secrets in the American policy debate.