November 1st, 2010
NEW YORK (CNNMoney.com) -- The robo-signing controversy is just another issue that the already sluggish housing market didn't need -- but most analysts do not think it will have far-reaching impact.
Nevertheless, the housing market still faces many problems: a weak economy, sluggish hiring, tight mortgage underwriting, falling home prices, and slowing sales.
Then there's the potentially disastrous number of foreclosures that may occur over the coming years.
"The market faces much bigger problems than the robo-signing issue," said Mike Larson, a housing market analyst for Weiss Research.
Prime among them are declines in home prices. And while cheaper homes are good for buyers, they also speak to a housing market that won't stabilize.
Fiserv, a market analytics company, has scaled back its home price projections considerably. In February, it forecast national price gains of about 4% through the end of 2011. The company's latest prediction is for a 7.1% drop in prices between June 30, 2010 and June 30, 2011.
In fact, after five months of gains, prices in the 20 largest metro areas fell 0.2% in August, according to the latest S&P/Case-Shiller report.
The good news is, "There'll be no vicious, self-reinforcing spiral down," according to Mark Zandi, chief economist with Moody's Analytics.
But, he added, "more home price declines are coming."
He's forecasting another 8% drop in home prices through the third quarter of 2011, which will put the total peak-to-trough decline at 34%.
Even after that, in 2012, he sees very little price growth.
Home prices continue to fall because sales aren't taking off. Without buyers, the market can't bottom out.
New home sales continue to languish around historic lows, barely exceeding an annual rate of 307,000. Existing home sales did rise to a 4.53 million annualized rate in September, up 10% compared with a month earlier, but are still well below the boom years.
Of course, nobody is buying homes when they can't find jobs. And still more people can't hang on to their homes because they're out of work.
Nearly a million homes are expected to be repossessed this year, and analysts seem to be competing to issue the most dire forecast for future foreclosure numbers.
- Morgan Stanley reported that about 3.1 million borrowers are seriously delinquent with many expected to lose their homes.
- Zandi said more than 4 million are in trouble with half of those expected to go to foreclosure.
- And Laurie Goodman, of Amherst Securities, estimates the number of homes in danger of foreclosure at a whopping 11 million.
- Real estate analyst Kyle Lundstedt of LPS Applied Analytics said serious delinquencies will continue to spike and will not return even to the current rates -- which are already at peak levels -- until late 2012 or early 2013.
"The housing market is very fragile," said Goodman.
However, Zandi sees a few factors that are positive.
These include: Low interest rates; FHA, Fannie Mae and Freddie Mac all lending to qualified buyers; and an improving job picture.
Zandi is especially confident that the employment picture is about to brighten. Corporate profits have spiked and, historically, hiring follow profits -- with a lag of eight to 10 months. That means companies should start hiring workers very soon, Zandi said.
And once Americans start returning to work, they'll find home prices are very reasonable. Housing is the most affordable it's been since the pre-boom years. During the boom, Zandi said, prices were overvalued by about 50%; today it's close to zero.
That has attracted many investors, including foreign buyers. They've been scooping up single-family-homes and condos in hard-hit markets like Florida, the Southwest and the Midwest and renting them out.
"The reason they're in these markets is because they see value," said Zandi.
But, he added, "If they see the robo-signing issue continue, they could begin to exit the market. If they do, there could be more price declines. That's one reason why a foreclosure moratorium could be destructive."
November 1st, 2010
November 1st, 2010
London, England (CNN) -- Alcohol ranks "most harmful" among a list of 20 drugs -- beating out crack and heroin -- according to study results released by a British medical journal.
A panel of experts weighed the physical, psychological and social problems caused by the drugs and determined that alcohol was the most harmful overall, according to an article on the study released by The Lancet Sunday.
Using a new scale to evaluate harms to individual users and others, alcohol received a score of 72 on a scale of 1 to 100, the study says.
That makes it almost three times as harmful as cocaine or tobacco, according to the article, which is slated to be published on The Lancet's website Monday and in an upcoming print edition of the journal.
Heroin, crack cocaine and methamphetamine were the most harmful drugs to individuals, the study says, while alcohol, heroin and crack cocaine were the most harmful to others.
In the article, the panelists said their findings show that Britain's three-tiered drug classification system, which places drugs into different categories that determine criminal penalties for possession and dealing, has "little relation to the evidence of harm."
Panelists also noted that the rankings confirm other studies that say that "aggressively targeting alcohol harms is a valid and necessary public health strategy."
The Lancet article was co-authored by David Nutt, a professor and Britain's former chief drug adviser, who caused controversy last year after he published an article saying ecstasy was not as dangerous as riding a horse.
"So why are harmful sporting activities allowed, whereas relatively less harmful drugs are not?" Nutt wrote in the Journal of Psychopharmacology. "I believe this reflects a societal approach which does not adequately balance the relative risks of drugs against their harms."
Nutt later apologized to anyone offended by the article and to those who have lost loved ones to ecstasy. He said he had no intention of trivializing the dangers of the drug and that he only wanted to compare the risks.
In the article released by The Lancet Sunday, ecstasy's harmfulness ranking -- 9 -- indicates it is only one eighth as harmful as alcohol.
The study was funded by the London-based Centre for Crime and Justice studies.
October 31st, 2010
N, D.C. -- Publicly, Democratic campaign officials are putting a brave face on predictions of House losses, with House Campaign Chairman Chris Van Hollen claiming that the party might hold the chamber, meaning that they would lose fewer than a net of 39 seats. Other officials are pegging the expected losses at 50-55 seats, in line with consensus independent public forecasts, such as those of Charlie Cook and Nate Silver.
But within the last 12 hours I've spoken to two top Democratic consultants -- very active on the battlefield this fall and with 60 years of on-the-ground experience between them -- who told me some shocking news.
Separately, and privately, they each told me that they thought the Democrats could lose 70 seats on Tuesday. That would be a blowout of historic proportions.
For the record, the biggest one-day loss for the president's party in modern times was in 1938, when voters expressed their impatience with the Depression and FDR's New Deal by voting out 71 Democrats.
It seems likely now that Tuesday could exceed the two other benchmarks: a loss of 55 seats in 1942 and 52 in 1994.
"A lot of incumbents are going to wake up on Wednesday morning and not know what hit them," one of the consultants told me. "Anyone who isn't at 50 percent in the final polling will lose -- and even some who are above that line will."
These consultants may be wrong -- but the fact that they are that grim, if not beyond grim, can have a self-fulfilling effect.
From an exuberant high of two years ago, the Democrats are as down as I have seen them since the darkest of Bill Clinton's days.
But maybe that comparison is its own ray of hope. The GOP overplayed its hand in 1995 and 1996 -- and may well do so again.
And don't forget that Clinton was reelected.
October 31st, 2010
Cr Editor's Note: This article was featured On Greta Van Susterin's show "On The Record" with guest Sarah Palin
Top Republicans in Washington and in the national GOP establishment say the 2010 campaign highlighted an urgent task that they will begin in earnest as soon as the elections are over: Stop Sarah Palin.
Interviews with advisers to the main 2012 presidential contenders and with other veteran Republican operatives make clear they see themselves on a common, if uncoordinated, mission of halting the momentum and credibility Palin gained with conservative activists by plunging so aggressively into this year’s midterm campaigns.
There is rising expectation among GOP elites that Palin will probably run for president in 2012 and could win the Republican nomination, a prospect many of them regard as a disaster in waiting.
Many of these establishment figures argue in not-for-attribution comments that Palin’s nomination would ensure President Barack Obama’s reelection, as the deficiencies that marked her 2008 debut as a vice presidential nominee — an intensely polarizing political style and often halting and superficial answers when pressed on policy — have shown little sign of abating in the past two years.
"There is a determined, focused establishment effort … to find a candidate we can coalesce around who can beat Sarah Palin," said one prominent and longtime Washington Republican. "We believe she could get the nomination, but Barack Obama would crush her."
This sentiment was a nearly constant refrain in POLITICO interviews with top advisers to the candidates most frequently mentioned as running in 2012 and a diverse assortment of other top GOP officials.
Nearly all of these interviewees insisted on keeping their views on background, fearing the wrath of conservative grass-roots activists who are enthralled with the former Alaska governor and who have made plain that the establishment’s disdain for Palin and her devotees is mutually reciprocated.
Top Republicans, from presidential hopefuls Mitt Romney and Tim Pawlenty to highly influential advisers such as Karl Rove and Ed Gillespie, are said to be concerned she will run, and could win, according to the officials.
A Palin adviser declined to comment.
Most, if not all, of the top GOP presidential contenders will hold off on formal announcements until next spring, in part to get a better handle on what Palin will do. Instead, they will focus on lining up key supporters and raising enough money to prove their viability by the end of March. The officials said the price of entry to compete credibly in Iowa and New Hampshire will be roughly $35 million.
The stop-Palin talks are by no means coordinated among the various campaigns. But top advisers for most of the 2012 hopefuls told us the candidates — as well as many establishment figures — are fixated on the topic, especially on how to keep her from running or how to deny her the nomination if she does run.
A longtime Republican leader said party elders hope to thwart Palin by strengthening the Republican National Committee, which has been a magnet for controversy and has seen lackluster fundraising under current Chairman Michael Steele, and outside groups such as those blessed by Rove and Gillespie and now spending heavily on congressional races.
This would represent "a strong counterweight to some kind of guerrilla effort Palin might try to launch." This leader said the party needs to create a unified job creation theme to offset the "cult of personality" that is Palin. "You deter someone by creating stronger opposition."