Saturday, August 21, 2010 / US / Economy & Fed - California faces issuing IOUs again / US / Economy & Fed - California faces issuing IOUs again: "California will be forced to issue IOUs to public workers and other creditors in lieu of cash in the next two months if a budget deadlock cannot be broken, the state’s financial controller has warned."
La de da, la de da. Off the cliff the California legislature and governor go, with Illinois state government hurrying to catch up with them.

Homeowners association battle threatens homes

Homeowners association battle threatens homes

- Residents in a retirement community here say they are being threatened with lien and foreclosure notices because of a legal battle with their homeowners association.

"There was a 93-year-old woman, and they told her, 'If you don't pay your dues, we're going to take your house away from you,'" said Conklin Houle, 73. "You can't do that to somebody who's lived in their house 30 or 35 years."
And the owner of that home with the brown lawn is likely in a heap of trouble with the HOA.

Friday, August 20, 2010

Regulators Shut 4 California Banks

Regulators on Friday shut down four California banks, a big community bank based in Chicago, and banks in Florida and Virginia. The closures boosted to 118 the number of U.S. bank failures this year. The Federal Deposit Insurance Corp. on Friday took over the California banks: Butte Community Bank, based in Chico; Pacific State Bank, based in Stockton; Los Padres Bank, in Solvang; and Sonoma Valley Bank, in Sonoma.
The hangover from the 2003-07 bash continues....pass the Excedrin.

Lake Mead's Water Level Plunges as 11-Year Drought Lingers -

Lake Mead's Water Level Plunges as 11-Year Drought Lingers - NYTimes.comLake Mead, the enormous reservoir of Colorado River water that hydrates Arizona, Nevada, California and northern Mexico, is receding to a level not seen since it was first being filled in the 1930s, stoking existential fears about water supply in the parched Southwest.
You do realize that Las Vegas is fated to become a ghost town, right? They can go ahead and spend billions of our money to build a bullet train line from Anaheim to Vegas because Harry Reid says so, but that whole part of the country is going to run out of water. It's just simple math. The ground water has been pumped down to levels that will take hundreds if not thousands of years to recharge. And there is the Colorado River, and you can read about that--Lake Mead hasn't been this low in 50 years. Why? Every year they take out of Lake Mead 1.6 million acre feet more water than flows into it. Vegas, Henderson, Phoenix, Mesa, and those other growing desert cities are artificial creations that depend on massive infusions of water from elsewhere, and there is no way the flow can be sustained. Try and tell that to a real estate developer or a local booster mayor, though. They won't hear it. And of course the hordes of retirees who flock there to lie around the pool and play golf on those massively watered courses have no idea what is going on.

Kenneth R. Harney - FHFA's proposed ban on private transfer fees could cost homeowners

Kenneth R. Harney - FHFA's proposed ban on private transfer fees could cost homeowners: "Andrew Fortin, vice president of government affairs for the 30,000-member Community Associations Institute, which represents homeowners and association managers nationwide, said that banning investments in mortgages on properties with transfer fees payable to associations 'is potentially a big problem.' Among other negatives, it could force associations to increase annual assessments on individual homeowners.

Fortin said his group 'shares the concerns of FHFA about programs that create neo-feudal arrangements' with outside investors, but believes the agency needs to better distinguish between profit-motivated transfer fees and those that benefit public interest and nonprofit organizations."

Thanks to Fred Pilot for the link. CAI seems to want to protect HOAs power to assess transfer fees. Fred predicted they would take that position, by the way.

Blagojevich Jury Holdout Remaining Silent; Source Identifies Her As Jo Ann Chiakulas -

Blagojevich Jury Holdout Remaining Silent; Source Identifies Her As Jo Ann Chiakulas - "Sources tell CBS 2 News that the holdout juror is Jo Ann Chiakulas, a retired state employee. She used to work for the Illinois Department of Public Health, had been a director of teen counseling for the Chicago Urban League and once handed out campaign literature for a relative who ran for public office."
And she is somebody who should never have been on that jury in the first place, because the US Attorney's office should have bounced her. I picked her as the holdout while the jury was still deliberating. Ask my son if you don't believe me.

Nearly 50 percent leave Obama mortgage-aid program -

Nearly 50 percent leave Obama mortgage-aid program - "A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That’s about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.

The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say."

Borrowers say the program is "a bureaucratic nightmare." Banks lose their paperwork and then claim the borrowers never turned it in.

Thursday, August 19, 2010

Cable TV: Homeowners associations buck cable bills -

Cable TV: Homeowners associations buck cable bills - "For years, subdivision developers have locked their homeowners associations into blanket caCable-television contracts that force the associations to pay for every home in a community — even if a house is empty or the owners are behind on their homeowner fees.

But now, with associations racked by record foreclosures and delinquent homeowner fees, some communities are balking at paying for unused cable service in vacant houses or service to homes where the owners long ago stopped paying their association fees."

Thanks to Beth for this instructive story. It is fascinating to hear industry advocates waxing eloquent about the supposed contract that the owners entered into with their fellow residents, thus indenturing themselves forever. Deals like, this, though, show what really happens. The developer writes whatever he wants, sells out, and leaves, and the residents are stuck with whatever situation he created for them. But when things like this happen...when it is the association that wants to break what looks like a bad deal...then watch the industry advocates switch sides and talk about the need to rewrite the deal to save the association in these hard times. As someone once said, where you stand depends on where you sit.

HOA to Laguna Niguel man: Get rid of pet pigeons

HOA to Laguna Niguel man: Get rid of pet pigeons

After neighbors raised a flap over early morning bird noises, a Laguna Niguel pet owner has a tough choice to make. Wei Lu will have 10 days to get rid of about 50 pigeons in his back yard or face a lawsuit after receiving a formal complaint from his homeowners' association. The homeowner says if he does not fight the complaint in court, he will be forced to kill the birds as the specially-bred racing pigeons are trained to return to his back yard.

Deflation Watch

For all you deflation hawks out there who appreciated my posts on the prospect of deflation: Check out my Deflation Watch blog.

I make no predictions as to whether deflation will occur. But I believe U.S. economic and demographic factors (such as Baby Boomers taking early Social Security retirement benefits) are lined up such to make deflation a clear and present danger.

I'll post developments and observations there from time to time. Please share your thoughts and comments on the blog.

Broke States Should Save Themselves By Selling Off Roads, Colleges, And Other Assets

Broke States Should Save Themselves By Selling Off Roads, Colleges, And Other Assets

One of the many looming financial crises in the United States is the horrendous budget shortfall faced by many states.

James Altucher, managing director at Formula Capital, floats an innovative solution to this problem.

Instead of raising taxes, cutting spending, or going even deeper in debt, Altucher says, states should sell off some assets.

What assets?

Assets like roads, bridges, state parks, public transportation systems, and universities.

If New Jersey were to sell the New Jersey Turnpike, for example, it would immediately raise tens of billions of dollars, which would radically improve the state's financial health. And a private road operator might do a better job of running the turnpike than the state can.


For the past three decades, local governments privatized local government as mandatory membership HOAs to cut costs. Now financially strapped states can do the same thing by privatizing their infrastructure, including universities. Query: Will our esteemed professor McKenzie retain tenure if the community association industry decides to buy the University of Illinois?

BBC News - Southern Sudan unveils plans for animal-shaped cities

BBC News - Southern Sudan unveils plans for animal-shaped cities Sure. With 90% of the population living on less than one dollar per day, why not a $10 billion plan to make cities shaped like animals and fruit?

What price liberty? Up to $50K -

What price liberty? Up to $50K - "The municipality of Clarington is clamping down on a studious celebration of Canadian liberties, charging its rural hosts with a zoning offence carrying a hefty fine. “The irony isn’t lost on me,” said Peter Jaworski whose parents, Marta and Lech, have been charged under a bylaw for letting him hold — for the tenth time — the annual Liberty Summer Seminar on their 16 hectare spread east of Oshawa."
Richly ironic tale of libertarian activists being shut down by the nanny state. Thanks to Mystery Reader for the link.

The Associated Press: Philadelphia housing director facing foreclosure

The Associated Press: Philadelphia housing director facing foreclosure: "A bank has foreclosed on a $615,000 condominium owned by the head of the Philadelphia Housing Authority, who earned $350,000 last year leading the nation's fourth-largest public-housing agency. Carl R. Greene, PHA's executive director, bought the three-bedroom, 2,100-square-foot condo in the upscale Naval Square development in 2007. He put down $215,000 in cash and took out a $400,000 mortgage, city records show. Greene, 53, stopped making payments on or around April 1, and three months later owed more than $7,500 in missed payments and late fees, according to the bank's July 27 lawsuit."
Good grief. It seems that he has over $386,000 left on the mortgage. Now, in Chicago a public official could take care of that fairly quickly...Thanks to Tom Skiba for the link.

Real Estate & the Economy: Death of the 'McMansion': Era of Huge Homes Is Over - CNBC

Real Estate & the Economy: Death of the 'McMansion': Era of Huge Homes Is Over - CNBC: "In the past few years, there have been an increasing number of references made to the “McMansion glut” and the “McMansion backlash,” as more towns pass ordinances against garishly large homes, which are generally over 3,000 square feet and built very close together."
I won't miss them.

"Sovereign citizens" taking over homes |

DA: Paper terrorists stealing homes �| "They call themselves “sovereign citizens” and believe they are immune to state and federal laws. They assert, among other things, that banks can’t own land and that any home owned by a bank – including the thousands throughout Georgia – is free for the taking.

Police and prosecutors take a different view. The FBI has listed them on the domestic terrorist list, saying their crime of choice is paper terrorism and attempting to disrupt the U.S. economy."

This could get ugly.

Tuesday, August 17, 2010

HOA, residents fight over "Don't Tread on Me" flag | Denver | Colorado's Online News Leader | HOA, residents fight over flag: "Last week, he received a letter from the East York Villas Homeowner's Association stating: 'Tea Party flags are not permitted. Please Remove.' The letter threatened a fine of up to $100 per month if the flag is not removed.

The flag has also had connections to the U.S. military. But in recent years, the Gadsden flag has been a fixture at Tea Party rallies, making some think of it as a political symbol for that party."

Thanks to the anonymous contributor who sent this along. Seems the Tea Party and the Gadsen flag aren't popular with the HOA crowd. Maybe it's that anti-authoritarian, pro-individual liberty message.

Illinois Town Wants To Outlaw Eye-Rolling - The Consumerist

Illinois Town Wants To Outlaw Eye-Rolling - The Consumerist: "The idiocy stems from a recent city council meeting where an Elmhurst resident was ejected from the room after rolling her eyes in reaction to something that was said by a council member.

Members of the Elmhurst city council have asked the City Attorney to look into the creation of a 'disturbance and disorderly conduct' violation and to see if eye-rolling could somehow be shoehorned into its definition."

Proving once again that city councils can be just as stupid as homeowner association boards.

Karzai Orders Private Security Firms To Disband

Karzai Orders Private Security Firms To Disband: "Security operators – both Afghan and foreign – have become a point of contention between the government and coalition forces and the international community as complaints have mounted that the firms are poorly regulated, reckless and effectively operate outside local law."
Sounds like things in Afghanistan are a lot like the US.

Private Transfer Fee Covenants |

Private Transfer Fee Covenants | "The Federal Housing Finance Agency (FHFA) is proposing to issue a Guidance, 'Guidance on Private Transfer Fee Covenants,' to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the Enterprises), and the Federal Home Loan Banks (the Banks) that the entities it regulates should not deal in mortgages on properties encumbered by private transfer fee covenants. Such covenants appear adverse to liquidity, affordability and stability in the housing finance market and to financially safe and sound investments."
This is a notice of a proposed rule change. Fred Pilot sent it along, with a note that CAI will probably oppose it. I keep hearing about HOAs and condos that are levying these private transfer fees.

Sunday, August 15, 2010

Op-Ed Contributor - Universities Are Heading Toward Academic Bankruptcy -

Op-Ed Contributor - Universities Are Heading Toward Academic Bankruptcy - "What we’ve seen with California’s distinguished state university system — huge cutbacks in spending and a 32 percent rise in tuition — is likely to become the norm at public and private colleges."
Parents and students taking out huge loans to go to expensive "prestigious" private colleges, take it from a university professor: think that over very, very carefully before doing it. Did you know that you can't discharge student loans in bankruptcy?

Banks to benefit most from Obama administration's effort to fight foreclosures - The Hill's On The Money

Banks to benefit most from White House effort to fight foreclosures - The Hill's On The Money
Well, my goodness. Who would have thought such a thing could happen?