CNBC: housing numbers mark the end of the drought

As much as everyone would like this to be the case, it's difficult to accept the word of a Wall Street cheerleader who has so much to gain from the market bouncing back. While there may be a case to be made for housing starts nearing a necessary low which will enable inventory to finally sell, this also misses the point of increasing unemployment and continuing banking problems. There are few who think the banks have bottomed out yet and until they are stabilized, lending will be tight. The bigger problem will be the unemployment numbers that are expected to grow in excess of 9% if not 10%. Sure people need a roof over their heads but people have also been losing everything and many more will be evicted or lose their current homes as the recession gets worse.

Hoping for the best is great, but it still won't replace the real world problems created by the cheerleaders. From CNBC:

Importantly, housing completions fell a record 24.2% to a record low 776k annualized rate, the first reading below 1.0 million since 1982. The is extremely important because until now builders were still completing homes at a pace too strong for current conditions, preventing inventory levels from falling more rapidly than they recently have. Now that fewer homes are hitting the market for sale, the growing U.S. population will have fewer homes to choose from. This will accelerate the recent decline in home inventories. Have no doubt: this is a game changer for inventories and prices.

Doubters on the inventory idea will surely point to the difficulties that prospective homeowners face in obtaining credit to purchase homes. In doing so they will ignore the most important top-down concept, which is to compare the net change in the housing stock to population growth and household formation.

The concept is simple: a basic element of human survival is shelter and the need for shelter increases along with the population. Housing starts have now fallen to levels well below what is needed to support population growth. Whether people can afford to purchase a home or obtain the credit necessary to do so is not as important as the fact that they need shelter and will rent space if necessary. The bottom-line is that empty homes will become occupied one way or another so long as builders under-build relative to population growth.

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Corporate CEOs are the least popular group in new study

Surprise, surprise. They should feel lucky for being in double digits.

The chief executive officers of the nation's largest corporations are viewed favorably by just 22% of American adults, lower even than the ratings earned by members of Congress .

The latest Rasmussen Reports national telephone survey shows that 26% now have a favorable opinion of the nation's legislators. Both CEOs and those in Congress are viewed Very Favorably by only three percent (3%) of Americans.

Stockbrokers and financial analysts (37%) as well as journalists and reporters (38%) are held in higher regard. Lawyers (41%) and bankers (44%) do even better.

At the top of the list in terms of favorability are small business owners (92%), those who start their own businesses (88%) and pastors and other local religious leaders (72%).

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Federal Reserve forecast for US economy looks even worse

Here we go again. We need stability and a few positive surprises before this ship is righted and this downgrade - which will surely be downgraded again - is not helping.

The Federal Reserve on Wednesday sharply downgraded its projections for the country's economic performance this year, predicting the economy will actually shrink and unemployment will rise higher.

Under the new projections, the unemployment rate will rise to between 8.5 and 8.8 percent this year. The old forecasts, issued in mid-November, predicted the jobless rate would rise to between 7.1 and 7.6 percent.

The Fed also believes the economy will contract this year between 0.5 and 1.3 percent. The old forecast said the economy could shrink by 0.2 percent or expand by 1.1 percent.

The bleaker outlook represents the growing toll of the worst housing, credit and financial crises since the 1930s. All of those negative forces have plunged the nation into a recession, now in its second year.

Tell me again why the Democrats are allowing the GOP to give lectures on the economy? This is the GOP's fault and they still can't accept any responsibility let alone a decent idea on how to get us out of this recession

NOTE FROM JOHN: Again, why do the Democrats refuse to lay the blame squarely on George Bush and 8 years of Republican rule? Had the Democrats done this to the economy, the Republicans would make sure that we paid the political price for the next 100 year. There is no way to stop the Republicans from destroying the economy further, and again, until we force them to take the blame. Read More......

Privacy group filing charges with FTC against Facebook

UPDATE: Facebook backs down.

Obviously Facebook isn't able to self regulate either, so now they're going to have the pleasure of working with the federal government on developing a clear policy.

The backlash against Facebook's updated privacy policies is about to expand. The Electronic Privacy Information Center (EPIC) is preparing to file a formal complaint with the Federal Trade Commission over the social network's updated licenses, PC World has learned.

"We think that Facebook should go back to its original terms of service," says EPIC Executive Director Marc Rotenberg.

EPIC expects to have its complaint submitted to the FTC by the end of Tuesday.

The wave of reaction, of course, is hardly limited to official organizations. More than 38,000 Facebook users have joined a user group protesting the change, and countless blogs and news sites have written extensively about their concerns. The issue comes down to a couple of alterations within the company's terms of use that, it would seem, give Facebook eternal ownership of your personal content--even if you decide to delete your account.

The changes were actually made in early February but not widely noticed until Sunday, when The Consumerist's Chris Walters stumbled upon the subtly shifted language. The section in question explains how Facebook has an "irrevocable, perpetual" license to use your "name, likeness, and image" in essentially any way, including within promotions or external advertising.

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Anger rises over NY Post cartoon that many think depicts President Obama as monkey shot dead by police

And after you read the "excuse" given by the newspaper's editor for the dead monkey cartoon about Obama's economic stimulus package, you really need to check out the same cartoonist's other cartoons, including depicting gays as people who screw sheep, and a cartoon showing Al Qaeda celebrating the Democrats' electoral victory in 2006. This guy really exemplifies what's become of the conservative movement. The best argument they can make about how to proceed in the face of our economic crisis is a racist joke about the assassination of our first black president. The party of Limbaugh, Palin and tax-cheat plumbers lives on.

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Obama to push country of origin food labeling

It's about time but this would have looked very different under a Republican administration. The US is far behind on this issue and consumers deserve the right to know more details on the food they buy. (Consumers should also know if something has been genetically modified as well, but one day at a time.) Looking at the countless food related problems out of China and other countries last year, country of origin is important. As the cook in the house, I keep a close watch on the country of origin and am reluctant to buy products from certain countries who have a poor reputation for quality and safety.

The Obama administration is throwing out food labeling rules proposed by the Agriculture Department just before George W. Bush left office, saying it wants labels for fresh meat and other foods that would show more clearly where an animal or food came from, according to consumer groups who've been briefed on the issue.

Agriculture Secretary Tom Vilsack told several consumer groups Tuesday in a conference call that he will ask the meat industry to voluntarily follow stricter guidelines for new package labels designed to specify a food's country of origin, according to three people who were on the call. If the industry does not comply, the administration will write new rules, according to those who spoke with Vilsack.

The labeling requirements, which would apply to fresh meats and some perishable fruits and vegetables, long have been debated in Congress and were enacted as part of a wide-ranging farm bill last year. While the meat industry and retailers responsible for the labels have protested the changes — saying they are burdensome and could lead to higher prices — consumer groups and northern states ranchers who compete with the Canadian beef industry favor them.

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Pelosi should school the Pope on the need to protect the born from genocide

The Nazi-enabling Pope is at it again. This time, he's lecturing Nancy Pelosi about her support for abortion rights. Which is kind of ironic, since the Pope himself, a former member of the Hitler Youth, isn't very concerned about genocide when it's conducted against those already born. A German-born Pope who refuses to adopt a zero-tolerance policy on the Holocaust is in no position to be lecturing others about their morality. Read More......

The end of rampant consumerism in America?

As much as many Americans treat shopping as a sport of actual activity, this could be quite a shock. The Republican system of economics based on credit and fantasies of never-declining house prices have put the country in a challenging situation. Casting aside excessive consumerism is not such a bad thing, but it does not mean it won't be hard. There's an excellent video inside so click through for more.

There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.

But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:

* An $8 trillion negative wealth effect from declining home values.
* A $10 trillion negative wealth effect from weakened capital markets.
* A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies."

"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."

Going forward, the veteran retail industry consultant foresees higher savings rate and people trading down in both the goods and services they buy - as well as their aspirations.

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Chicago Tribune to Senator Burris: Resign

It's starting to look like the Senate term of Roland Burris may be very, very short. And, that's his own fault. Every day, we're learning more about his contacts with Rod Blagojevich's fundraising operation -- keeping mind that Burris testified under oath that there really weren't any.

The Chicago Tribune Editorial Board has had enough and wants Burris to resign:

The benefit of the doubt had already been stretched thin and taut by the time Roland Burris offered his third version of the events leading to his appointment to the U.S. Senate. It finally snapped like a rubber band, popping him on that long Pinocchio nose of his, when he came out with version four.

Let’s see if we have it right: Burris had zero contact with any of Gov. Rod Blagojevich’s cronies about his interest in the Senate seat being vacated by President Barack Obama— unless you count that conversation with former chief of staff Lon Monk, and, on further reflection, the ones with insiders John Harris, Doug Scofield and John Wyma and, oh yeah, the governor’s brother and fund-raising chief, Robert Blagojevich. But Burris didn’t raise a single dollar for the now ex-governor as a result of those contacts because that could be construed as a quid pro quo and besides, everyone he asked refused to donate.

The story gets worse with every telling.

Enough. Roland Burris must resign.

The sooner the better at this point. While a single newspaper editorial isn't determinative, this one seems to encapsulate the growing consensus. U.S. Senate Democrats aren't springing to the defense of Burris. This line, from The Hill, says a lot:

On Capitol Hill, Democratic leaders largely stayed silent Tuesday.

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Obama addresses housing crisis today in Phoenix, but McCain will be a no-show

Your president is in Phoenix today to talk about housing -- and trying to fix the massive housing crisis, which is another disastrous by-product of the Bush presidency. As you can see from the post below, the situation isn't getting any better. It's getting worse. Here's an excerpt from Obama's prepared remarks:

The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in sub-prime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.

At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has become scarce as the markets have been overwhelmed by the collapse of securities backed by failing mortgages. In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are interconnected. We cannot successfully address any one of them without addressing them all.

He's right. It's just unfortunate and disturbing that the Republicans don't want to address any of these crises in a responsible or realistic manner.

Phoenix has been particularly hard hit by the housing crisis:

Last year, a record 40,000 Valley homes were foreclosed on. Foreclosures and foreclosure sales drag down home values, which is part of the overall collapse of the area housing market.

Home building has slowed to a crawl. More than half of metro Phoenix's home sales are foreclosure homes being resold for bargain prices. The median sales price of an existing home fell to $136,000 in January, down 49 percent from the peak in 2006.

You'd think with numbers like that the Senators from Arizona would be out front trying to solve this crisis. Wrong. You may also recall that Arizona's senior Senator wasn't even sure how many homes he owns when asked that simple question back in August.

People of Arizona shouldn't expect any help from McCain or their other Senator, Jon Kyl, a real Neanderthal. They won't even be at Obama's event, although both were invited. McCain is still spending his time bitching about Obama:

McCain, Obama's defeated Republican rival, and Sen. Jon Kyl, R-Ariz., on Tuesday staged what might be termed a "pre-buttal" to Obama's visit.

Both GOP senators vigorously opposed the president's economic-recovery plan. They said it is too much wasteful Washington spending and contains the wrong kinds of tax breaks. But they acknowledged Arizona is hurting from the housing crisis and suggested that Obama's trip to the state is not only appropriate but also overdue.

"Of course, the first question that needs to be asked is why didn't the stimulus package address the housing crisis when home values are at historical lows and foreclosures at historical highs?" McCain asked during a news conference with Kyl at Arizona State University's New College campus in the West Valley.

Actually, a better first question is why McCain and his GOP allies let this crisis happen in the first place. McCain is in no position to attack Obama (although the pundits will love it.) Why would anyone want any input from the Republicans, including McCain, who endorsed and enabled the economic calamity foisted upon us by George Bush.

McCain and the GOP own the housing crisis affecting so many Americans -- even if McCain doesn't know how many houses he owns. Read More......

January housing starts fall 16.8%

There remains no reason to expect anything better until we find a bottom. We also need to exceed expectations at least once, if not a few times, before we can see positive movement in the market. Reuters:

New U.S. housing starts and permits dropped to record lows in January, data showed on Wednesday, as builders held back on construction amid an overhang of unsold houses and a slump in demand.

Housing starts tumbled 16.8 percent to a seasonally adjusted annual rate of 466,000 units, the lowest since the Commerce Department started keeping records in 1959, from December's upwardly revised 560,000 units. That was the biggest percentage drop since January 1994, the Commerce Department said.

Analysts polled by Reuters had expected an annual rate of 530,000 units for January.

New building permits, which give a sense of future home construction, dropped 4.8 percent to 521,000 units, also an all-time low, from 547,000 units in December. That was below analysts' estimates of 530,000.

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Wednesday Morning Open Thread

Good morning.

Obama is in Phoenix today to talk housing (more on that shortly.) But, perhaps while Obama is in Arizona, he can get the answer to one of the most perplexing questions from the campaign: How many houses does John McCain really own?

Since the election ended, I've developed a new t.v. addition: Family Guy. I know I'm a bit late, but that show is funny. It hasn't replaced "South Park," which is still my show of choice, but I'm really starting to get into "Family Guy" via all the reruns. I am also quite excited that the new season of South Park starts three weeks from today, on March 11th. (The South Park website has a countdown clock.) It's interesting to me that the most relevant and hysterical shows on all of t.v. are cartoons (and, of course, I still include "The Simpsons" after all these years.)

Anyway, let's start threading the news... Read More......

Why don't we have more like Leonard Abess?

Especially in banking and especially now, but why stop there?

Lots of bosses say they value their employees. Some even mean it.

And then there's Leonard Abess Jr.

After selling a majority stake in Miami-based City National Bancshares last November, all he did was take $60 million of the proceeds -- $60 million out of his own pocket -- and hand it to his tellers, bookkeepers, clerks, everyone on the payroll. All 399 workers on the staff received bonuses, and he even tracked down 72 former employees so they could share in the windfall.

For longtime employees, the bonus -- based on years of service -- amounted to tens of thousands of dollars, and in some cases, more than $100,000.

At a time when financial titans are being paraded before Congress to explain how they blew billions on executives' bonuses even as they received a taxpayer bailout, the big-hearted banker's selfless deed stands out.

''I retired seven years ago, and all of a sudden I get this wonderful letter and phone call,'' said Evelyn J. Budde, who spent 43 years at City National Bank of Florida, rising to vice president.

''I was shocked,'' said William Perry. In 43 ½ years at City National, he climbed from janitor to vice president. Like many longtime City National employees, he forged an unbreakable bond with the bank that continued into retirement. Perry returns regularly for the annual employees' dinner.

Abess didn't publicize what he had done. He didn't even show up at the bank to bask in his employees' gratitude on the day the bonus envelopes were distributed. He was inundated with letters soon afterward.

Asked later what motivated him, Abess said he had long dreamed of a way to reward employees. He had been thinking of creating an employee stock option plan before he decided to sell the bank.

''Those people who joined me and stayed with me at the bank with no promise of equity -- I always thought some day I'm going to surprise them,'' he said. ``I sure as heck don't need [the money].''

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New "massive fraud" case must be wrong

After all, the SEC is targeting a "Sir" for gosh sakes. How is it remotely possible that a "Sir" or a "Lord" could be involved in such a scandal? Titles are so important to some circles in the UK though it remains to be clear why. It's pathetic that such a great country tolerates something so silly and backwards though at least the title crowd is proving themselves to be as corrupt and disgraceful as ever. (Sir Fred Goodwin who grew Royal Bank of Scotland into ruin also comes to mind.) Maybe they can help bring an end to this antiquated system that is better left to the days of serfs and the plague. Read More......

British Secretary of State for Business is a bit sensitive about UK economy

Touchy, touchy. The former Blair boot-licker and master of spin sounds like he's struggling with the economy he helped create. What else are people supposed to say about an economy that was based on banksters? Blair and Mandelson had no problem accepting the high flying days of yesteryear when the banks were booking ridiculous profits - which we now know were false and based on nothing - but this cuts both ways. Banking and finance generated around one third of the UK economy so bouncing back from that won't be easy, no matter how many tirades a pompous "lord" might have.

This should also serve as an example to Democrats who think you can appease the extreme right and take on their bad business ideas. They will be there with you during the good times and as soon as the situation changes, they are gone and blaming you for using their failed policies.

The business secretary, Peter Mandelson, yesterday launched an extraordinary tirade against the head of the Starbucks coffee empire, accusing him of spreading gloom and overly denigrating the state of the British economy.

Angered at remarks by the coffee company's chairman, Howard Schultz - who said the UK was in an economic "spiral" with "very, very poor" consumer confidence - Lord Mandelson accused him of spreading unnecessary misery and speaking out of turn.

Speaking at a diplomatic cocktail reception in New York, he said: "Why should I have this guy running down the country? Who the fuck is he? How the hell are they [Starbucks] doing?"

Mandelson's remarks, made in front of journalists at the official residence of the British consul-general, came amid mounting concern in diplomatic and ministerial circles over hardening US opinion towards Britain's economic woes.

British officials have been trying to persuade US economists and commentators that alarm over the country's recession is becoming exaggerated.

Earlier in the day, Schultz singled out Britain as a source of anxiety for Starbucks - which has stores in 49 countries - during an interview with the CNBC television channel.

"The place that concerns us the most is western Europe, and specifically the UK," he said. "The UK is in a spiral."

He said it had taken a year to 18 months from the beginning of the credit crunch for consumer confidence to fracture in the US, but that the deterioration had happened far more quickly in Europe once financial cracks appeared.

Asked about his biggest concerns, Schultz said: "Unemployment, the subprime mortgage crisis, particularly in the UK, and I think consumer confidence, particularly in the UK, is very, very poor."

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Lowlights from the media coverage of the economic recovery package

The political press has been particularly pathetic during the debate over the economic recovery package. We keep dwelling on this subject because the coverage was so outrageous. It really seems like many of the media types have no idea just how horrific the economic situation is. Maybe they all just talk to each other and it is an elitist (well-paid) little cabal. Media Matters has compiled some of the lowlights from the pathetic press corps. They had plenty of material:

As President Obama signs the economic recovery package into law, Media Matters for America looks back at how the media too often let politics drive the debate and failed to give the public an accurate and honest assessment of what is in the legislation. Since Obama took office, Media Matters has relentlessly debunked numerous myths and falsehoods in the media's coverage of the economic recovery package and today released a video detailing some of the most ridiculous attacks.

It's really annoying, actually beyond annoying:
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