Bits & Pieces (Wednesday Night Open Mic)

Posted on February 1, 2012 by Kevin S. Willis

The days fly by. Already hump day, and I haven’t finished the stuff I meant to get done on Monday.

Startfire Sure Wears Less Clothes Than She Did When I Read Teen Titans (of course, she's not in the Teen Titans anymore).

The 5 Most Ridiculously Sexists Superhero Costumes.

Scientists say sugar is as toxic as alcohol, and there should be a drinking age for soda.

Some fly-by-night web startup called Facebook filed their IPO, which values the company at $100 zillion dollars.

Republicans direct police to detain documentary crew to keep them from filing a hearing on natural gas. Oh, that doesn’t make them look like a collect group of mustache-twirling Snidely Whiplashes.

And right under that on Dvorak, do you think Big Brother should be watching everybody? Well, now there’s an app for that.

Back to Starfire. How would someone even wear something like that? It would have to be painted on. Sheesh.

That’s it. Blessing and karma to all! — KW 

Filed under: Bits and Pieces, comics | Tagged: , , , | 103 Comments »

Citizens United? The Social Security Act is How you Buy Votes

Posted on February 1, 2012 by novahockey

 

Nothing new, but Medicare, Social Security and other so-called mandatory spending are busting the budget.  But that spending makes for a sizeable re-election war chest. 

 

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Morning Report

Posted on February 1, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1315.7 7.5 0.57%
Eurostoxx Index 2457.8 41.1 1.70%
Oil (WTI) 98.79 0.3 0.31%
LIBOR 0.5371 -0.005 -0.97%
US Dollar Index (DXY) 78.801 -0.477 -0.60%
10 Year Govt Bond Yield 1.80% 0.01%

Markets are rallying this morning on no real news.  Portuguese yields are again lower and have retraced the big spike from Monday. Amazon.com stunk up the joint last night with a miss on the top line and disappointing guidance.

In economic data, mortgage applications were down in January.  The ADP report suggests 170k jobs were added in January.  The bulk of the jobs were added in small business and services.  The January number was lower than expected.  December was also revised downward from 325k to 292k.  The takeaway is that the labor market is improving, albeit slowly.

The rumors are true:  Obama plans to do a no-questions-asked refi program for anyone who is current in their mortgage.  The program will be financed with a fee on banks with $50 billion in assets. The details have yet to be released, but the fee is probably going to act as a poison pill.  As I have said before, the flaw in the plan is the originator.  By definition, underwater loans are non-conforming (i.e. in contravention of FHA lending standards) and the government has the right to force the originator to buy it back.  Originators are not going to take that put-back risk for no compensation, especially when there are plenty of good quality mortgages to underwrite.  At any rate, banks are especially stingy with their warehouse lines these days, so originators are unable to make as many loans as they would like.  Nobody is going to tie up precious warehouse capacity with non-conforming loans that can end up back in their lap.

It raises the question whether Obama understands this problem.  My sense is that he does – that is why the poison pill bank fee was put in.  This is just so much political theater – a chance to make an election year point.  “See, I wanted to lower your mortgage payment, but those 1% bankster defending, do-nothing Republicans wouldn’t let me.”

Obama did roll out a pilot program on REO-to-rentals.  FHA will sell foreclosed properties in bulk sales to investors who will turn them into rentals.  It is an interesting idea.  The rub will be pricing and scalability. The Cleveland Fed has already weighed in on the idea for its area and admitted it probably won’t work in the Rust Belt, where population loss is driving up vacancy rates and properties are spread out.  This plan could work in dense places like South Florida and Las Vegas perhaps.  Pricing will be problem as well.  Currently, foreclosures are trading around 85% of Broker Price Opinion.  Professional investors are probably going to need larger discounts to generate the returns necessary to attract capital.  Since the government isn’t going to allow Wall Street Wiseguys to flip this stuff, they will require a multi-year holding period.  No pension fund or endowment is going to tie up capital for 3 years at a high single-digit rate of return.

Filed under: Morning Report | 38 Comments »