Wednesday, June 17, 2009

Sad News in Music

The Ventures guitarist Bob Bogle dies at 75

LOS ANGELES (Reuters) – Pioneering guitarist Bob Bogle, whose rock-instrumental band the Ventures scored a pair of hits in the 1960s with "Walk, Don't Run" and "Hawaii Five-O," has died, the group said on Tuesday. He was 75. Bogle died on Sunday of non-Hodgkin's lymphoma at a hospital after falling ill at his home in Vancouver, Washington, according to bandmate Don Wilson. The Ventures were "the most popular instrumental rock 'n' roll band of all time" and are worshiped as "gods" in Japan, rocker John Fogerty said at the band's Rock and Roll Hall of Fame induction last year. Influenced by the likes of Les Paul and Chet Atkins, the Ventures helped pave the way for surf music, and sent 38 albums into the pop charts between 1960 and 1972. They continue to perform to this day with a slightly different lineup.

I love the twangy surf-guitar sound. I prefer the older tunes. Here is a video of the Ventures performing the "Hawaii Five-0" theme (I don't see the horn section anywhere)!

Here is another favorite: "Walk, Don't Run"

"Wipeout" Originally by the Surfaris. (Jan and Dean and the Beach Boys also covered this classic).

Lastly an all-time favorite: "Pipeline"

Tuesday, June 16, 2009

Must Read !

Tight Spot for Fed, Blind Spot for Investors

Housing Recovery!

Well, maybe not so much...

Funny how misleading it is when they "forget" to mention that housing starts *always* pick up in the spring.

This is not unlike how river flows increase every spring as the snow melts (Look Maw, the river is up and so the drought must be over!!!)

For realistic comparison purposes, it's best to compare housing starts for the month with the same month of the previous year to eliminate normal seasonal swings. Look for the bold text in the article below if you want clarity rather than spin.

Below the article is a chart with a tiny circle showing the true housing activity level this article refers to...

Plucked from the Yahoo headlines.

May housing construction jumps by 17.2 percent

May housing construction climbs by largest amount in 3 months, building permits also rise

* Martin Crutsinger, AP Economics Writer
* On Tuesday June 16, 2009, 9:02 am EDT

WASHINGTON (AP) -- Construction of new homes jumped in May by the largest amount in three months, an encouraging sign that the nation's deep housing recession was beginning to bottom out.

The Commerce Department said Tuesday that construction of new homes and apartments jumped 17.2 percent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction fell in April to a record low of 454,000 units.

In another encouraging sign, applications for building permits, seen as a good indicator of future activity, rose 4 percent in May to an annual rate of 518,000 units.

The better-than-expected rebound in construction was the latest sign that the prolonged slump in housing is coming to an end, which would be good news for the broader economy.

The current recession -- the longest since the Great Depression -- was triggered by a collapse in the housing market that led to soaring loan losses and a banking system crisis. A healthy home market is needed to support an economic recovery.

President Barack Obama is scheduled to unveil on Wednesday the administration's plan to overhaul financial regulation in an effort to crack down on the lending abuses that triggered the most severe upheaval in the nation's financial system in seven decades.

Even with the encouraging news, analysts don't expect a quick rebound in housing, since the economy is still shedding jobs and home prices are falling in many places, making people hesitant to commit to buying a new home.

Many economists say home construction likely will stop falling in the current quarter but any sustained rebound isn't expected to take hold until next spring. That's partly due to the huge overhang of unsold homes and a record wave of mortgage foreclosures dumping more unsold homes on the market.

With foreclosures and other distressed properties for sale at deep discounts, builders often can't compete. Rather than launching new developments, they are waiting for signs of a broader recovery. Many economists believe that home prices will keep falling until next spring and that sales won't start to show significant gains until the summer of 2010.

The 17.2 percent rise in housing construction for May still left activity 45.2 percent below where it was a year ago.

The jump reflected a 7.5 percent rise in construction of single-family homes, the third consecutive increase in this critical segment of the market.

Construction of multifamily units rose 61.7 percent in May to an annual rate of 131,000 units. This volatile part of the market plunged 49.4 percent in April.

Construction rose nationwide led by a 28.6 percent surge in the West. Construction rose 6.8 percent in the South and 11.1 percent in the Midwest. The Northeast had the smallest gain of 2 percent in May.

The National Association of Home Builders said Monday its housing market index slipped by one point in June, reflecting many builders' uncertainty about when their business prospects might improve. The Washington-based trade association said the index fell to 15. It was the first decline since January, when the index dropped to a record low of 8.

That report was "proof that the rise in U.S. mortgage rates lately is dampening activity," Jennifer Lee, an economist with BMO Capital Markets, wrote in a research note.

Earlier this month, major builders Toll Brothers Inc. and Hovnanian Enterprises Inc. reported smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes. Industry executives, however, say the recession and fear of job losses are keeping many would-be homebuyers on the fence.

Here's the impressive new housing starts data (circled at bottom right) that this glowing article is based on.
(click image to enlarge)

Monday, June 15, 2009

Chart theft

I stole this chart from Clusterstock. I think it shows quite well the problem we are facing with housing. It's California-specific, but the problems are national, and to some extent, global.

You can see the short term effect when the first foreclosure moratorium went into effect in September of last year. You can also see that the long-term effect of the moratorium was negligible.

Houses are being foreclosed at roughly twice the pace of sales. Are banks holding all these foreclosed houses off the market, hoping (praying) for pricing to improve before they attempt to sell them? If so, are banks disclosing this fact in their financial statements?

What if mortgage rates spike and nobody can afford to buy all Repo'd McMansions we built over the past decade at prices the banks need to get?

Unarmed Robbery

From the Fresno Bee

Looks like the state is stealing from counties because the state cannot get its fiscal act together.

State may borrow millions from Fresno, Clovis
Published online on Sunday, Jun. 14, 2009
By Marc Benjamin / The Fresno Bee

Clovis may have to borrow from its own city funds to save jobs and keep its reserve intact for emergencies.

The state is considering borrowing $2 billion in property tax revenue from cities and counties -- a projected $9.24 million from Fresno and $1.66 million from Clovis -- to help close its budget gap.

With the state's financial noose tightening, cities are considering ways to find money to replace what could be lost. The city's building and equipment reserve and self- insurance funds are being targeted by Clovis officials, said Robert Woolley, the city's finance director.

He said they city already has tapped its self-insurance revenue to work on the city's landfill.

The possibility of borrowing likely will be discussed when the Clovis City Council holds budget hearings tonight.

Other issues to be discussed today will be ways to reduce a $5.3 million shortfall because of falling property- and sales-tax revenue.

The city is seeking 5.74% in concessions from employees, city administration and council members beginning July 1 to avoid layoffs.

The city also is proposing an early-retirement incentive for public safety employees to avert eight possible layoffs.

If the state does take property tax revenue, borrowing will reduce the need for more layoffs.

The city has about $3 million in emergency reserves, but that money -- about 6% of the city's general fund -- needs to be kept available if there is an emergency, such as a larger than expected need for police or firefighter overtime or other one-time emergency costs.

"It's hard to say what we are going to do, whether we are going to have to make more drastic cuts," said Clovis Mayor Harry Armstrong, a League of California Cities board member. "It doesn't look good. Everyone is trying to pull a genie out of the bottle."

Fresno is in the same boat, proposing $26.8 million in cuts this year and next year to make up for a $21.2 million revenue decline since last year, said Renena Smith, Fresno's budget director.

Fresno Police Officers Association members are considering giving up a 2% salary increase for the fiscal year that begins July 1. Members also would have to accrue more than twice as many holiday hours before they could cash them in for pay.

"We will have to do borrowing of some sort," Smith said. "We have actually planned for that, but the loss of cash is not going to help our situation any."

Fresno's cuts take into account the revenue decline, costs for retirement contributions and money for borrowing to pay for loans if the state takes property tax revenue.

"It's a similar approach many cities are evaluating as the state looks to take billions of dollars to finance its deficit," said Michael Coleman, a financial adviser with the League of California Cities. "If [cities] have other funds they can borrow from on a short-term basis and feel confident those funds can be re-paid, then that's a perfectly reasonable thing to do."

And property taxes are not the only item on the table for the state. Another $1.6 billion of money used for street maintenance and construction could be tapped, too, Coleman said.

If Clovis borrows from itself, the plan is to return money at an interest rate the city would have received if the money remained invested.

That interest rate would be lower than going to a lender, City Manager Kathy Millison said.

Another option may be available, allowing communities to pool property tax revenues through a state agency in exchange for an up-front payment from a lender that would take a percentage, Coleman said.

In 2005, during another state financial crisis, cities faced losses in vehicle- license funding. Under a statewide authority, cities were given 92% of the money up front and investors took the risk that the state would pay back 100% of the amount plus interest.

Coleman said times are different now and investors may not be inclined to bank on California's ability to pay that money back with interest.

With the state's bond rating taking a beating, Coleman said creditors have their doubts. Even if they do agree to a similar program, lenders may offer less than 92% of the amount.