Linking ≠ endorsement.
↑ Would you bypass a bank for your next mortgage?
While securitizing loans helps SoFi find other parties to shoulder some of the loan risk and share the cost of interest, it does call to mind the role that such bundles—albeit less creditworthy, and on a much larger scale—were one of the biggest culprits of the financial crisis.
SoFi executives are quick to point out that in its eight years, with nearly 14,000 borrowers, not a single loan that has been underwritten has gone into default.
Well, that is a track record worth considering. The issue is with how much standards will be lowered when competition heats up.
↑ Unattended torch sets Tucson townhomes on fire
According to Baker, the torch was being used to keep mosquitoes away and the residents forgot about the torch and left it unattended.
↑ Fire displaces more than 150 MSU dorm residents; no injuries
STARKVILLE — Part of a Mississippi State University dormitory remained closed Monday following a Sunday fire.
No injuries were reported, but more than 150 female students stayed elsewhere overnight after a fire began around 8 p.m. in one wing of the dormitory.
“The fire suppression system engaged in Oak Hall exactly as it was designed to do,” Broyles said in a statement. “We’re grateful to be able to report that we had no injuries.”
↑ 5-alarm fire in Boston leaves 2 firefighters injured, 34 people homeless | masslive.com
BOSTON (AP) — Boston fire officials fought an overnight five-alarm fire that destroyed two buildings has left 34 homeless, caused more than $1 million in damage and injured two firefighters.
↑ Arizona residents hurt by monsoon flooding can get loans
PHOENIX — Arizona business owners and residents affected by flooding earlier this month can apply for federal loans.
The U.S. Small Business Administration announced Thursday that low-interest disaster loans are available for Arizonans who sustained extensive damage from monsoon storms that hit Sept. 8.
↑ Why we need more data on shadow banking – Forum:Blog Forum:Blog | The World Economic Forum
In our analysis, we’ve found that shadow banks are both a boon and a bane for countries. Many people are worried about institutions that provide credit intermediation, borrow and lend money like banks, but are not regulated like them and lack a formal safety net. The largest shadow banking markets are in the United States and Europe, but in emerging markets, they have also expanded very rapidly, albeit from a low base.
↑ BBC Radio 4 – Analysis, Peston and the House of Debt
Many people have Atif Mian and Amir Sufi wrong. They aren’t laying the blame solely on borrowers or solely on the banks in the housing crash. Both are at fault, and both should share the loss. One side only should not be bailed out. Neither should be bailed out, per se. Check the radio segment where Robert Peston, the BBC’s Economics Editor, interviews Mian and Sufi.
↑ mainly macro: The mythical debt crisis
A constant refrain, from both the Conservative and LibDem party conferences, is how the current government saved the country from a crisis. Here is Osborne: “Four years ago, our economy was in crisis, our country was on the floor.” Or LibDem Danny Alexander: “We’ve seen the economy through its darkest hour ..” Now someone from outside the UK would immediately think Osborne and Alexander had got their counting wrong: the Great Recession was in 2009, which was five not four years ago. But of course they do not mean that little old crisis – they are talking about the Great Government Debt crisis. The only problem is that this debt crisis is as mythical as the unicorn.
↑ Morning Agenda: More Trouble for Big Banks – NYTimes.com
While cases stemming from the financial crisis were aimed at institutions, prosecutors are planning to eventually indict individual bank employees over currency manipulation, using their instant messages as incriminating evidence. The charges will probably focus on traders and their bosses rather than chief executives. “As a result, critics of the Justice Department might view the cases as little more than an exercise in public relations,” Mr. Protess and Ms. Silver-Greenberg write.
And they’ll be right.
↑ Recession worries mount as German manufacturing falls at sharpest rate since financial crisis | GDP,Germany,IP,Manufacturing | Markit Commentary
…there can be little doubt that Germany’s mighty industrial sector (which accounts for more than 20% of the economy) has lost considerable momentum since the start of the year. The manufacturing PMI is currently tracking around seven points lower than its January reading, slipping into slight contraction territory in September as Russian sanctions and geopolitical uncertainties weighed on performance.
↑ Manufacturing stagnation looms as UK production trend weakens | Eurozone,Manufacturing,Output,UK | Markit Commentary
The growth surge enjoyed by UK manufacturing over the past year is running out of steam. Factory output growth has slowed sharply since earlier in the year, as producers suffer from the twin headwinds of weak economic growth in key exports markets and an appreciating exchange rate.
Although only representing around 10% of economic activity, the deteriorating picture of the manufacturing sector and the associated weakness of the eurozone economy will no doubt cause any Bank of England policymakers to take a pause for thought before considering higher interest rates.
↑ Presidents and Jobs – NYTimes.com
…the assumption that tax cuts sharply boost economic growth — a key feature of budget estimates. There is, of course, zero evidence for this proposition and lots of evidence against.
↑ Calculated Risk: Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama
…the public sector has declined significantly since Mr. Obama took office (down 668,000 jobs). These job losses have mostly been at the state and local level, but more recently at the Federal level. This has been a significant drag on overall employment.
Yes, and we should have had a new WPA and CCC effort only greatly enhanced. The recovery would have been over ages ago.
↑ Gross Domestic Product — The Economic Lowdown Video Series – YouTube
GDP data are among the most important economic data available for measuring economic growth, but measuring the output of a large, dynamic economy is a complex task. In the seventh episode of the Economic Lowdown Video Series, economic education specialist Scott Wolla explains what GDP measures, how it is calculated, how it is useful in determining whether and how quickly the economy is growing, and how GDP can be used as indicator of standard of living.
Compare Gross National Product (GNP).
↑ Newark may use liens to collect on city maintenance of neglected properties | The Columbus Dispatch
NEWARK, Ohio — Has your grass not been touched this summer? Didn’t get around to dealing with that pile of tires and trash in the side yard? Is your house the one that neighbors whisper about?
If you live in Newark, the city eventually will take care of the problem. Be forewarned, however: The city doesn’t work cheap.
The Newark City Council introduced an ordinance on Monday night to authorize the Licking County auditor to place tax liens on 176 properties in the city, totaling more than $131,000.
Since 2012, that’s how Newark has been dealing with negligent properties — by doing the maintenance, then billing the recalcitrant landowner. If the owner won’t pay, a lien is placed against the property.
↑ Rebirth of housing market calls for moving past Fannie and Freddie – The Washington Post
…because there is no alternative secondary market, mortgage lenders must follow the GSEs’ requirements and remain boxed into uniformity.
While we sympathize with aspects of the article, it was lenders not conforming to good lending-practices that caused the housing crash in the first place.
What we don’t need is a laissez-faire market place in mortgages because even if we allow all failed lenders to be liquidated, it would leave a huge potential for highly damaging volatility.
We are opposed to a return to the deregulation days that brought on the crash.
Just because a person has a pulse doesn’t mean he or she should have a home loan. There’s nothing wrong with renting in general. In fact, there a many advantages to it (speaking of liberty).
↑ SolarCity to begin Offering Loans for Rooftop Solar Power Systems | Uncover California
SolarCity Corp will start offering loans for rooftop solar power systems with an aim to reach consumers who want to own the panels on their roofs rather than lease them or pay cash.
↑ Study — Seattle is Safest City in America for Pedestrians, Detroit the Most Dangerous
A new study from Liberty Mutual Holding Co. suggests that Seattle is the safest city in the United States for pedestrians, while Detroit, ironically the nation’s automotive capital as it has been for years, is conversely the most dangerous.
According to the insurance provider, Seattle isn’t just a city where there are few pedestrian fatalities, but also one where city officials have invested in structures that make it safer to walk for individuals.
↑ Falling rates offer home buyers a push
We like how Diana Olick isn’t afraid to say that the “experts” were wrong. She may not always be able to predict what’s going to happen, but she always tells it like it is when things don’t go the way the “experts” said they would.
There’s no point in sugarcoating or hyping the reporting. It doesn’t help investors. There’s no good, objective reason for a journalist attempting to psych up the market. Those who do it aren’t interested enough in sustainability. They’re interested in brownie points from the shortsighted segments of the real-estate industry and not the best interests of the nation as a whole.
Lower rates seem to be the only bright side to the housing market today, which is experiencing a drop in demand due to higher home prices and fewer fall listings. While the gains are shrinking, prices are still rising, and higher mortgage insurance premiums are only adding to home buyer costs. All those factors have caused several banking analysts to lower their expectations for home values and home construction, heading into 2015.
Flipping and new construction will slow as margins tighten. That will keep inventory tight and prices elevated. Residential landlords will reasonably prosper but rent rates will be held back by low wages and low hours of work per week for tenants.
The Fed will see all of this as head winds along with the rising dollar. They should hold off on raising interest rates until they see real, consistently higher price inflation and not worry at all about decreases in the unemployment rate. Put everyone to work at sub-3% inflation that the economy can stand. That’s our minimum recommendation.
↑ Obama OKs aid for New Mexico storm, flood damage | Albuquerque Journal News
Local governments and some other entities in New Mexico are now eligible for federal assistance to recover from flooding and storm damage suffered during last summer.
↑ Judge sentences woman to 8 years in Cheyenne arson – SFGate
CHEYENNE, Wyo. (AP) — A federal judge on Wednesday sentenced a woman to eight years in prison for torching a failing restaurant she owned in a Cheyenne hotel two years ago, an act prosecutors say endangered more than 50 people staying there.
↑ The Charleston Gazette | 911 mix-up sends Cabell fire crews to wrong city
Media outlets report that 911 dispatchers sent fire crews to Davis Street in Huntington early Saturday after receiving a report of a house fire. The fire was about 5 miles away on Davis Road in Barboursville.Records show the mix-up delayed firefighters’ response to the fire by about four minutes.
↑ Erie to rework rental inspections after court loss – Houston Chronicle
ERIE, Pa. (AP) — The city of Erie will revamp its rental inspection ordinance after the Pennsylvania Supreme Court refused to hear the city’s appeal of a ruling that limited the law’s scope.
A landlord sued after the city ruled a stairwell in a 1926 building he wanted to rent out was unsafe. The Commonwealth Court agreed with the landlord who argued the city could use the ordinance to unfairly force renovations of older buildings even if they were safe.
↑ Judge: New law can’t stop ‘Big Oil’ lawsuit suit
BATON ROUGE — A state judge in Baton Rouge ruled Monday that Louisiana’s Legislature missed its mark when it passed a bill seeking to halt a south Louisiana flood board’s lawsuit against dozens of oil, gas and pipeline companies over coastal damage.
↑ Chinese Drywall: Nearly 4,000 May Get Damages in Lawsuit | TheLedger.com
NEW ORLEANS | A federal judge has ruled that nearly 4,000 homeowners who say Chinese drywall ruined their homes are eligible to share any further damages he may award in lawsuits against Taishan Gypsum Co. Ltd., a government-owned manufacturer that failed to show up in court.
↑ Misgen found guilty of arson, insurance fraud – Owatonna MN: Owatonna Peoples Press
OWATONNA — Jurors took a short time to reach a unanimous verdict Tuesday in the arson trial of Mark Allan Misgen, finding the 43-year-old Ellendale man guilty of first-degree arson and insurance fraud, both felonies.
The conviction stems from two fires in 2011 that destroyed the family’s home.
↑ Earthquake hits south-west China | World news | theguardian.com
A strong earthquake has shaken south-west China, killing at least one person, damaging buildings and prompting thousands to camp outside as aftershocks continued to strike the area, officials have said.
The remote mountainous region near the border with Myanmar is prone to earthquakes. A 6.1-magnitude quake in northern Yunnan in August killed at least 615 people and left more than 100 others missing. In 1970 a magnitude-7.7 earthquake in Yunnan killed at least 15,000 people.
↑ What the Dollar’s Rise Tells Us About the Global Economy – NYTimes.com
If it persists, this dollar rally will create winners and losers in the United States, depending on if something is imported or exported. If you frequently fill up your car with imported oil or drink French wine, it’s good news. If you are Boeing competing against Airbus, or General Electric competing against Siemens, or Cadillac competing with Mercedes-Benz, it is terrible news.
Even as officials will surely start to get an earful from American exporters, they can take solace in the fact that the rally is being driven by a long-awaited pickup in domestic economic activity. And the United States, they are concluding, has more to gain from Europe and Japan getting their policies right and getting their economies on track than it has to lose from American companies facing a less advantageous exchange rate for the time being.
The problem in the US remains wages and hours worked. Exporting jobs to where labor and environmental standards are lower is exactly the wrong approach. It was wrong the first time, and nothing has changed.
↑ The ECB’s Faulty Weapon by Daniel Gros – Project Syndicate
QE is a special instrument used when a central bank’s short- and medium-term policy rates are already at zero and it wants to lower long-term interest rates. This implies that QE can be effective only in economies in which changes in long-term (market) interest rates play an important role in the private sector.
But this is not the case in Europe, where most investment is financed via bank loans that typically do not have long-term maturities — often less than five years — because banks themselves have little secure long-term financing. Moreover, the interests rates charged on these loans are not linked to market rates, but rather to the bank’s refinancing cost, which is already close to zero.
In the eurozone, lower long-term rates for government bonds are thus unlikely to improve the corporate sector’s financing conditions and boost investment demand. By contrast, in the US, a much larger proportion of investment is financed by issuing bonds, which can have a longer maturity than bank loans. Moreover, these bonds are priced as spreads on the government-bond yield curve, implying that QE will have an immediate impact on enterprises’ financing costs.
↑ Change to Chinese outbound investment legislation to boost global real estate | The Investor
A change in legislation that came into effect on October 6th from China’s Ministry of Commerce (MOC) has provided domestic Chinese companies with the ability to more easily invest in overseas projects, presenting an opportunity for real estate markets around the world.
The new measures, which were first unveiled in April, will allow domestic firms to invest overseas without prior approval, although they must first register their investment with the authorities. Under the previous rules, any overseas investment project worth more than US$100 million required approval from the MOC.
They said they don’t want huge outflows but do that? Is it a plan to reward the elite (themselves as leaders) before an internal crash?
↑ Monetary Policy Normalization: If Not Now, When? – Federal Reserve Bank of Chicago
Highlights of an excellent overview, by Charles Evans, President of the Chicago Fed., of the US economic situation:
I feel that before the Fed raises rates, we should have a great deal of confidence that we won’t be forced to backtrack on our moves and face another painful period at the ZLB. And once we start, at least initially, we should raise rates slowly to make sure the economy can weather less accommodative financial conditions. In sum, we should be exceptionally patient in adjusting the stance of U.S. monetary policy — even to the point of allowing a modest overshooting of our inflation target to appropriately balance the risks to our policy objectives.
…we still aren’t back to full labor market health. At 5.9 percent, the unemployment rate remains above what most people think of as its long-run neutral level. For example, according to the central tendency in the FOMC’s latest Summary of Economic Projections, the estimate of the neutral unemployment rate is between 5-1/4 to 5-1/2 percent, with my own judgment at the bottom of this range. This leaves a significant gap between our goal and current conditions.
Moreover, the labor force participation rate has dropped a good deal. Most of the decline in labor force participation since 2000 is due to demographic trends, such as baby boomers moving into retirement age, and long-running trends, such as reductions in male and teenage labor force participation. These trends are structural in nature, and monetary policy is not the appropriate policy tool to address them. Nonetheless, the labor force participation rate has fallen somewhat more than what would be expected given these structural trends. And it is also lower than what would be expected from its historical relationship with the unemployment rate. Other indicators — such as long-term unemployment, the rate of involuntary part time work, and the job finding rate — also point to more slack in labor markets than that indicated by t he unemployment rate alone.
In addition, it is hard to imagine a robust labor market without solid growth in wages. With productivity growth of around 1 to 2 percent and an inflation target of around 2 percent, we should be seeing wages and benefits rising at around a 3 to 4 percent rate. But that is clearly not the case. Although some in-demand occupations may be experiencing stronger wage growth, overall compensation growth has been around 2 percent over the past six years. Taken altogether, these and other measures lead me to conclude that there remains significant underutilization of labor resources — and likely somewhat more slack than what is indicated by the unemployment rate alone. So, while good progress has been made, we have yet to achieve our full-employment goal.
For the United States, slower growth abroad reduces demand for our exports and, with it, U.S. production. In addition, weakness abroad could translate into a higher exchange value for the dollar against other currencies, further reducing net exports. A higher dollar also would result in lower prices for imports, which, in turn would hold down inflation and delay progress toward our 2 percent inflation target.
Like my colleague Minneapolis Fed President Narayana Kocherlakota, I think that policy at all times must be goal-oriented. Our experiences since the crisis began and current economic conditions are highly unusual. The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not currently relevant for the conditions needed to attain both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook.
I believe that the biggest risk we face today is prematurely engineering restrictive monetary conditions. …
Past experience with the ZL B also counsels patience. History has not looked kindly on attempts to prematurely remove monetary accommodation from economies that are in or near a liquidity trap. Three occasions come readily to mind: the Great Depression (which was resolved only with the massive fiscal expansion of World War II), Japan over the past 20 years, and the recent European experience. Indeed, both of the more recent episodes are ongoing today, though Japan finally appears to be making important headway toward raising inflation and eventually exiting the ZLB.
↑ Calculated Risk: Fed: Q2 Household Debt Service Ratio near Record Low
This data suggests household cash flow is in much better shape than a few years ago.
We have to look at many parameters, however, to know when deleveraging ends.
↑ MoneySupply: The new world economy in four charts | FT Alphaville
Now it is official. In 2014, the International Monetary Fund estimates the size of the US economy was $17.4tr and the size of China’s economy was $17.6tr as in the chart below.
↑ CONVERSABLE ECONOMIST: Shadow Banking: U.S. Risks Persist
It is discomforting to me to read that for the U.S., shadow banking risks are “slightly below precrisis levels.” In general, the policy approach here is clear enough. As the IMF notes: “Overall, the continued expansion of finance outside the regulatory perimeter calls for a more encompassing
approach to regulation and supervision that combines a focus on both activities and entities and places greater emphasis on systemic risk and improved transparency.”
↑ Stinky bugs laying siege to Western Washington – Local – MyNorthwest.com
The brightly colored Western conifer seed bug is laying siege to Western Washington, says Arlo Pelegrin, an entomologist with the Washington State Department of Agriculture.
The bugs are harmless, but they can be a big nuisance. And they aren’t afraid of us at all.
“They know they have this chemical weapon inside them, so that predators aren’t going to mess with them. They don’t fly away, they don’t run away,” Pelegrin says.
That chemical is pretty smelly.
↑ Special Fannie Mae loan program comes to a close – Tom Kelly: Real Estate Today – MyNorthwest.com
The country’s biggest provider of mortgage money has eliminated its popular financing plan for foreclosed properties, another sign the housing market has returned to healthy and hearty.
The Fannie Mae HomePath program terminates [terminated] October 6.
↑ London property prices drop: Further to fall? Analysis
LONDON, Oct 9 (Reuters) — London house prices fell last month for the first time in more than three years, and prices nationwide showed their smallest increase in 15 months, a majorhouse price survey showed on Thursday.
↑ Houston’s real estate market is unstoppable: Home sales keep climbing – CultureMap Houston
Houston real estate recorded its strongest September on record last month, as the home buying spree showed impressive staying power.
… The inventory of homes for sale dipped to a 2.9-months supply in September, an extremely thin supply that can make finding a home very difficult in some parts of town. A lot of people are turning to rental properties instead of buying.
“As long as consumers continue to snap up homes at the current pace, replenishing our housing inventory will be a slow process,” says HAR chair Chaille Ralph of Heritage Texas Properties. “Rental numbers were strong in September, suggesting that many would-be home buyers are continuing to go the lease route until the market bears the homes they’re looking for at the price point that suits them.”
↑ Rebuilding Tarnished Properties
Omaha’s Municipal Land Bank is designed to help deal with problem properties by giving the city the ability to redevelop neighborhoods. But the process of getting properties on the Land Bank’s list remains unclear.
If investors aren’t stepping up, we don’t see anything wrong with this plan at all.
↑ New report: Dallas joins the ranks of world’s top real estate investment markets | Dallas Morning News
A new report ranks Dallas among the world’s top cities for real estate investment.
The Dallas-area placed ninth in the list with other markets including New York, London and Tokyo in Cushman & Wakefield’s “growth cities” report.
Dallas recorded $14.1 billion in real estate investments for the 1-year period ending with second quarter of 2014 an increase of 32.5 percent from the previous year.
That pushed Houston out of the top 10 list and puts Big D right behind Chicago and Washington, D.C. ….
It will last as long as fracking does.
↑ Dollar Drops to Three-Week Low as Fed Bets Pared; Ringgit Gains – Businessweek
The dollar declined to a three-week low against the yen as investors pushed back bets for when the Federal Reserve will increase interest rates.
The greenback fell versus most of its 31 major peers, dropping the most against Asian currencies including Malaysia’s ringgit and India’s rupee, after minutes of Fed policy makers September meeting, released yesterday, showed officials said slowing global growth and a stronger currency pose potential risks to the U.S.’s outlook. Group of 20 finance ministers and central bank governors, who last year pledged to avoid deliberately weakening exchange rates, meet in Washington today.
↑ German forecasters slash growth, urge spending boost – The Economic Times
BERLIN: Germany’s leading economic institutes on Thursday slashed their forecasts for growth this year and next year and said the government needed to increase spending in order to boost growth.
The German economy, Europe’s biggest, would grow by just 1.3 per cent in 2014 and 1.2 per cent in 2015, the institutes predicting.
This is much lower than the 1.9 per cent and 2.0 per cent they had previously expected.
Will Merkel end the failed austerity program?
↑ Phoenix residents bugged by mosquito surge | azfamily.com Phoenix
PHOENIX (AP) — Arizona’s barrage of rain storms in recent months has created an unlikely pest infestation for the desert region: mosquitoes.
Standing water created by rain and flooding can lead to a surge in mosquito breeding. Hundreds of thousands of them can emerge in as little as three days if mosquito larvae are left in a pool of water.
That’s why homeowners need to inspect their property after it rains, Dilone said. Clearing debris from swimming pools, draining pet water dishes and buckets or other containers are ways to stop mosquitoes from laying eggs.
↑ Return of the King Tide: Miami Beach Braces for Tidal Flooding
The 2013 King Tide resulted in roadway flooding across Miami Beach, a city of 91,000 people, but since then, new storm water management systems have been constructed and put into place.
“The flooding potential certainly increases as sea level rises,” McNoldy said. “Instead of the water level being 3.1 inches on a street somewhere, it could be 3.5 inches for example. Just add the amount of sea-level rise to whatever the astronomical tide is generating. But in flat areas, an inch or two in vertical elevation can extend several yards or more in the horizontal. It could make the difference between being completely dry and having some standing water.”
McNoldy said the infrastructure being constructed by the city of Miami Beach can help reduce tidal flooding now, but will not provide an overall solution to rising sea levels threatening the area.
“It does seem that the new infrastructure will be somewhat effective in reducing the routine flooding in Miami Beach,” he said. “But it is more of a patch than a solution.”