Yearning for the days of easy money

From the WSJ:

Tighter Lending Crimps Housing

The percentage of mortgage applications rejected by the nation’s largest lenders increased last year, spotlighting how banks’ cautious lending practices are hampering the nascent housing market recovery.

In all, the nation’s 10 largest mortgage lenders denied 26.8% of loan applications in 2010, an increase from 23.5% in 2009, according to an analysis by The Wall Street Journal of mortgage data filed with banking regulators.

Although lenders were expected to pull back from the freewheeling conditions that helped inflate the housing bubble, some economists argue they are now too conservative, and say that with the U.S. economy still wobbly, mortgages need to be easier to obtain for qualified borrowers, not harder.

“As the noose on credit availability tightens, credit is being choked off at a time when the housing market is extremely fragile,” says Laurie Goodman, senior managing director at Amherst Securities Group LP.

Christopher Thornberg, a housing economist at Beacon Economics in Los Angeles, counters that “banks are doing what they need to do” to change lending standards in the wake of a “crazy bubble. ”

He adds, “You had decades where credit standards were tougher than they are even now.”

Among the would-be borrowers having a harder time are those who have seen their incomes fall or interrupted by a period of unemployment, scenarios that have become increasingly common in recent years. Some self-employed applicants are also hitting barriers to loans—hurdles they didn’t face in the past.

Lending standards are still tight in part because government entities Fannie Mae, Freddie Mac, and the Federal Housing Administration, which collectively account for more than nine in 10 loans being made today, are under heavy pressure to avoid any losses.

Those firms don’t make loans directly but instead purchase or guarantee mortgages that meet their standards, and so have significant influence over which loans banks are willing to approve.

The mortgage data analyzed by The Wall Street Journal included loan applications filed by consumers who wanted to refinance existing mortgages as well as those planning to buy a home. Among home-purchase applications, lenders denied 19.9% of applications, up from 18.2% in the previous year, while 27.2% of refinance applications were denied, up from 24.4%.

Recent surveys by regulators show no sign of credit easing so far this year. Nearly four in 10 banks reported tighter mortgage lending conditions for the 12-months ended in February, according to a survey published this week by the government’s Office of the Comptroller of the Currency. Just 8% said that standards had loosened.

The Journal analysis found that insufficient collateral was the most common denial code flagged by lenders when they rejected loan applications.

Other top denial reasons included inadequate debt-to-income ratios and poor credit histories.

This entry was posted in National Real Estate, Risky Lending. Bookmark the permalink.

78 Responses to Yearning for the days of easy money

  1. Fabius Maximus says:

    Friskies

  2. Kettle1^2 says:

    Eaters

  3. Linda says:

    Good morning…off to a wedding of a young lady that I have known almost since birth…aaahhh…sunrise/sunset…speaking of horrendous houses…my least fav house in the neighborhood got another price cut…started at 970k and is now down to…wait for it…739. Yikes, that is MORE than a haircut…more like a serious round of chemo…BTW…same price as houses that sold around here in 2000…

  4. Mikeinwaiting says:

    “The Journal analysis found that insufficient collateral was the most common denial code flagged by lenders when they rejected loan applications.

    Other top denial reasons included inadequate debt-to-income ratios and poor credit histories.”

    A good % of people who fueled the housing boom have been taken out of the pool of potential buyers. This is a factor you rarely here from the “pant up” crowd. “Got demand” per BC I believe, yes we do but no we don’t because these folks are not going to get a loan.

  5. Mikeinwaiting says:

    Ket you got mail.

  6. Kettle1^2 says:

    Mike

    there is very little qualified demand. Most of those who can easily qualify ate on a beach with a fruity drink

  7. stan says:

    I see that negotiating with the unions in CT got Malloy far. I don’t agree with all of Christies actions but the simple fact is he got something done.

    The rejection of the creampuff deal, even after raising taxes, shows how out of touch the public unions can be. This will really come back to bite the CT unions in the arse.

  8. Shore Guy says:

    Tighter lending standards are just what the doctor ordered.

  9. Shore Guy says:

    He would have done well on Wall Street, demanding money from Fedco and Congress R Us:

    http://www.cnn.com/2011/US/06/17/blackbeard.terror.tactics/?iref=obnetwork

  10. Shore Guy says:

    “started at 970k and is now down to…wait for it…739. Yikes, that is MORE than a haircut…”

    It may be no haircut at all. it all depends on the original purchase price. Heck, for all we know it is a tidy yearly return.

  11. Shore Guy says:

    Whatever happened to having beer and wine with dinner? This sounds like something straight out of JJ’s mouth (the story that is):

    snip

    Shots of horse-semen have reportedly become a hit in New Zealand this month as the country celebrates its 14th annual Monteith’s Beer and Wild Food Challenge.

    snip

    Varley told The Dominion Post that the concoction was most popular amongst his lady customers and admits to having tried some himself, describing the taste as “like custard.”

    snip

    http://www.myfoxorlando.com/dpp/news/national/foxnews/Horse-Semen-Shots-a-Hit-With-Kiwi-Connoisseurs_00984995

  12. Shore Guy says:

    When your banker says no, your 401(k) says yes.

    That is what many employees nationwide seem to think. This week, publicly traded companies have been disclosing how much their workers have borrowed from their retirement accounts—and loans from 401(k)s are way up. In a society already drunk on debt and an economy struggling to recover, people are even hocking their own retirement funds. Most of them are making a mistake.

    snip

    http://online.wsj.com/article/SB10001424052702304231204576405902730644780.html?mod=WSJ_article_MoreIn_Taxes

  13. Shore Guy says:

    By SHELLY BANJO
    GREENWICH, Conn.—If the battle brewing in this wealthy school district is any indication, money alone can’t buy a good education.

    Greenwich schools receive more than half of the gold coast enclave’s tax revenue—even before additional costs for pension payments and capital improvements are factored in—yet the school district ranked 46th in the state last year, according to an analysis of test scores by education website Schooldigger.

    That’s only one part of the problem. The fourth superintendent in 11 years resigned last month amid accusations that he had sidestepped the board of education on financial and policy decisions. After spending six years as superintendent in Dobbs Ferry, N.Y., Sidney Freund served in Greenwich for less than two years. His resignation came after months of political infighting among town administrators and board members who said Dr. Freund had illegally taken $87,000 from the schools operating budget to cover cost overruns for a parking-lot expansion, and that he was trying to push through large-scale, costly programs and capital improvements without appropriate approvals

    http://online.wsj.com/article/SB10001424052702303339904576405884005629292.html?mod=WSJ_NewYork_NewsReel

  14. Shore Guy says:

    Stu/Gator,

    Sound familiar?
    snip
    Of the state’s 167 districts, Greenwich is among the seven highest spenders on education, shelling out nearly $18,000 per student to keep class sizes small and to attract well-heeled families with offerings such as Mandarin Chinese and Shakespeare competitions.

    After steady improvement during the 1990s, the percentage of students performing at or above nationwide goals in reading, writing and mathematics leveled off or dipped slightly over the last four years. In 2009, the district launched a three-year improvement plan to boost test scores but failed to meet 44 of 53 achievement targets in its first year of the implementation. snip

  15. 3b says:

    JC: From yesterday. ALso considering Park Ridge and Montvale, but there is very little inventory on the market iright now in both of those towns.

  16. Kettle1^2 says:

    Shore

    GREENWICH, Conn.—If the battle brewing in this wealthy school district is any indication, money alone can’t buy a good education.

    <b.SHOCKING! Shocking I tell you! The decades of education research and the billions in experimental programs and we are just now earning this.

  17. cobbler says:

    shore [13]
    …And this is just one of the many reasons why 401(k) were a terrible idea from the start, and another free market failure…

  18. House Whine says:

    So without pensions, 401k’s, that leaves older workers with just social security. And now that’s under the knife too. Short of working into their 70’s, I don’t see how life in the U.S. will remain pleasant for older people. Better hope they are on the best of terms with their children, nieces, or nephews because that’s who they are going to have to depend upon. Or else, accept a much lower standard of living as they age.

  19. JC says:

    Some song parody lyrics for you today (especially for Jets12).

    From Act II, entitled “Beating a Dead Horse” of the upcoming musical, “The Book of Morons”, with sincere and heartfelt apologies to Trey Parker, Matt Stone, and Robert Lopez:

    Ree V’r Edge, Noo Jerzee

    My mama once told me of a place
    With waterfalls and unicorns flying
    Where there was no suffering, no pain
    Where there was laughter instead of dying
    I always thought she’d made it up
    To comfort me in times of pain
    But now I know that place is real
    Now I know its name

    Ree V’r Edge, Noo Jerzee
    Not just a story mama told
    But a village in Noo Jerzee
    Where the roofs are thatched with gold
    If I could let myself believe
    I know just where I’d be
    Right on the next bus to paradise
    Ree V’r Edge, Noo Jerzee

    I can imagine what it must be like
    This perfect, happy place
    I’ll bet the goat-meat there is plentiful
    And they have vitamin injections by the case
    The war-lords there are friendly
    They help you cross the street
    And there’s a Chinese takeout on every corner
    With all the moo-shu you can eat!

    Ree V’r Edge, Noo Jerzee
    The most perfect place on Earth
    Where flies don’t bite your eyeballs
    And every house has worth (up 26%!)
    It isn’t a place of fairytales
    Its as real as it can be
    A land where depreciation doesn’t exist
    Ree V’r Edge, Noo Jerzee

    And I’ll bet the people are open minded
    And don’t care where you’ve been
    And all I hope is that when I find it
    I’m able to fit in
    Will I fit in?

    Ree V’r Edge, Noo Jerzee
    A land of hope and joy
    And if I want to get there
    I just have to follow that Weichert boy

    You were right, mama
    You didn’t lie
    The place is real
    And I’m gonna fly!

    I’m on way
    Soon life won’t be so shitty
    Now salvation has a name
    Ree V’r Edge, Noo Jerzee

    (Seriously, folks. Buy the original cast recording of “The Book of Mormon”. The songs are great and it’s the funniest thing you will ever hear in your life. Because God knows you’ll never be able to get tickets.)

  20. A.West says:

    Good stuff JC,
    Life in NJ is like living in the best dream you ever had. You just have to believe in your realtor, town officials, and teachers union, and all your wishes will come true!

  21. Essex says:

    22. I love Hooters.

  22. Orion says:

    Ridiculous tight lending: my cousin (780 fico) is married, no kids, wife (750 fico), both have excellent paying jobs, cash in bank, trying to buy house in FL. Bank is putting them through the ringer. They can pay cash and just might have to. Ridiculous.

  23. FL banks don’t want to lend against housing, no matter how creditworthy the buyer.

    Besides, the buyers who can make serious moves there (i.e., seasoned and professional investors) only pay cash.

    FL is a bottomed-out market where prices in many areas correspond to the household income of the potential buyer pool and other rule-of-thumb affordability metrics all look good.

    This is yet another tell on where the banking industry thinks housing prices are headed.

  24. Bocanegra and Goodson better put that candy ass Chicharito on the ground. They should do it early, then do it often.

    If they let him run the middle channels, we lose. If they stop him, we win.

  25. Barbara says:

    23.
    What Hobo said. Its over priced. Tell the sellers the bank said no and let it ripen for another 6 months, then offer 40% less and pay cash. Or just wait for the short sale/REO.

  26. Neanderthal Economist says:

    Too late chicharito already got through… were playing great offense horrible defense. Adu looks awesome.

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  30. Never saw a better example of how a team lives and dies with its back four.

    Disappointing. We seem to have a knack for blowing 2- goal leads.

  31. China goes to the international casino. Actually, I think scratchers might be worth more than Hungarian bonds these days.

    “In continuing its recent pursuit of “white knight on full retard tilt” policies vis-a-vis the endless European bailout, and throwing good money after bad after horrible after totally lost, today Chinese premier Wen Jiabao said that not only would China do everything in its power to preserve the EUR (after all that CNY needs to be cheap against some currency) and “work for expeditious recovery and stable growth” but also unveiled that it is now preparing to go ahead and buy Hungarian bonds. As if owning Greek, Portuguese, Spanish and Irish debt was not enough. It seems China has learned from the best, and either knows something others don’t (except for the SHIBOR market of course) or is actively preparing to become Too Biggest To Fail by making sure that should something bad happen to it literally the entire world will follow it into the depths of hell. Which, as Jamie Dimon, Vik Pandit, Lloyd et al have known for the past 3 years, is not a bad strategy. Look for China to keep buying up ever more European debt as it intertwines its fate with that of the rest of the central planning cartel: a development we can only compare to the ever deteriorating Spanish Cajas desire to buy up as many semi-healthy banks as they possibly can to prevent a policy determination to shut them, and their billions of bad debts, down.”

    http://www.zerohedge.com/article/chinas-european-bailout-and-tbtf-bid-hits-overdrive-wen-jiabao-now-market-hungarian-bonds

  32. Bernankicide:

    “The problem in the housing market had nothing to do with mortgage rates but they didn’t understand that. It’s amazing how when you put all these smart people together how stupid they can be. It’s the problem with group think. When the FOMC gets together, it’s like having all these geniuses in the room coming up with idiotic decisions. They all have the same motivation – to become the next Fed Chairman. The way to do that is to comply with the mad scientist running the show. Bernanke’s whole life has been an ongoing doctoral dissertation in which he tries one experiment after another, based on the crap he wrote when working on his PhD.

    The problem we’re experiencing now is that the system is imploding. It’s a slow motion implosion.”

    http://www.zerohedge.com/article/bernankensteins-monster

  33. Shore Guy says:

    I remember a 1,000-post weekend. Now, I wonder if, minus bots, we might witness a 50-post weekend.

  34. serenity now says:

    Re#24 Clot- Florida is ripe for investors? Any thoughts on the Carolinas?
    Perhaps a year behind Florida?

  35. Carolinas are a funny market. The opportunities are, natch, where the big job losses are (Charlotte). Other markets there (Chapel Hill, Research Triangle) appear to be stronger.

  36. Let me be clear: overall, I don’t think very many US markets are what I’d call ripe for investors. It is still too early, and prices are being artificially levitated by banksters and the gubmint. There will be even more pain to come. Nothing will begin to normalize until there is a cataclysmic, all-encompassing supernova of a collapse.

  37. Comrade Nom Deplume says:

    Hobo,

    We seem to have a knack for letting mexicans run thru us. Who was on our defense, the Border Patrol???

  38. Shore Guy says:

    Ket,

    Interesting read about how the Ft. Calhoun operator resisted the NRC’s efforts to get them to put in place the flood prevention that has, so far, prevented the mid-west version od Fuk-U-Shima.

    http://www.nytimes.com/cwire/2011/06/24/24climatewire-a-nuclear-plants-flood-defenses-trigger-a-ye-95418.html

    Pictures of the Fort Calhoun nuclear power plant north of Omaha, Neb., show it encircled by the swollen waters of the Missouri River, which reached a height of nearly 1,007 feet above sea level at the plant yesterday.
    snip

    NRC inspectors concluded that at flooding levels above 1,008 feet, the plant “would experience a loss of offsite power and loss of intake structure” and water pumps providing essential cooling water to the plant. In that case, “the plant would be incapable of reaching cold shutdown” with normal operations — a fundamental safety requirement imposed by the NRC. The commission’s Region IV office in Arlington, Texas, issued a notice of violation against the plant on Oct. 6 last year, finding that the issues were of “substantial importance” to the plant’s safety.

    OPPD challenged the NRC’s inspectors’ conclusions in a series of conferences before bowing to the commission staff’s demands and agreeing to install the additional defenses this year. The AquaDam water berm was installed beginning June 4.

    snip

  39. freedy says:

    NJ has been lost to the mexicans . walk the streets . its like an invasion without a fight.

  40. Shore Guy says:

    plus this:

    A still-unresolved issue in the dispute is the NRC’s contention that OPPD received, but did not properly act on, a warning by the U.S. Army Corps of Engineers in 2003. It said high-water threats to the plant should be raised by 3 feet based on a new assessment following severe Missouri River floods in the mid-1990s. “The performance deficiency existed for many years,” the NRC said in an Oct. 6, 2010, letter to the Omaha utility.

  41. Mikeinwaiting says:

    http://seekingalpha.com/news-article/1331512-chinese-prime-minister-offers-support-for-euro
    Hobo some more on our Chinese friends bond buying.

    “A recent report by Standard Chartered Bank said that Beijing appeared to be buying fewer American assets _ a possible sign that the country was pushing more money into European bond purchases.

    China is seeking to diversify its foreign investment and reduce its reliance on U.S. bonds in the long-term, but it is likely not ready to take the risk of buying significant amounts of Greek or Portuguese bonds, said Marie Diron, head of European macro services at the UK-based consultancy Oxford Economics.

    She warned that any Chinese help in buying European debt is probably limited to a small amount of financing and will be more effective as a morale-booster than a solution to Europe’s structural problems.

    “I would expect some reassuring statements that would defuse some of the current tensions,” Diron said. “But the problems are mainly eurozone’s own problems. The bulk of financing should and can only come from Europe.”

  42. Shore Guy says:

    But wait, there’s more. Can anyone say TEPCO?:

    When NRC inspectors decided to take a close look at Fort Calhoun’s flood protections in 2009, they found a range of barriers that reached nearly to the 1,010-foot level. The precise level — 1,009.5 feet — is written into the plant’s operating licenses as a flooding “design basis” threat that the plant must be guarded against. But OPPD had also committed to protect the plant’s reactor systems against floodwaters reaching 1,014 feet, the NRC says — a level that might be reached if the Gavins Point Dam upriver on the Missouri in South Dakota were breached.

    OPPD planned to extend the barrier to 1,014 feet by stacking sandbags on top of some steel floodgates that protected the auxiliary building, and to use more sandbags to safeguard the water intake structure and its essential cooling water pumps.

    The NRC inspectors rejected that strategy. “The sandbagging activity would be insufficient,” the NRC concluded in a July 15, 2010, letter to OPPD. The half-inch cross section on the top of the floodgates was too small to support a 5-foot stack of sandbags hit by swirling floodwaters, the agency said.

    OPPD spokesman Jones said the heart of the dispute is a disagreement in how the utility and the NRC assess the plant operator’s responsibilities. “We presented our analysis to them, which we felt indicated that the design basis [for the flooding threat] should remain 1,009 feet,” rather than 1,014 feet, he said.

    snip

    After OPPD assembled a panel of experts last year to contest the NRC’s judgment, the agency fired back with an even stiffer dismissal of the utility’s plans.

    OPPD said that if a flood threatened to go past 1,009 feet, it would weld steel plates over some of the doors to the auxiliary building, containing essential control equipment to manage reactor cooling. (Other barriers would be fitted into slots at entranceways.)

    The utility said the plant’s fire engine could also be lifted onto the deck of the turbine building alongside the reactor to pump floodwaters from that building.

    New defenses still under evaluation

    The NRC responded in its October 2010 letter that once flooding reached 1,004 feet, water would have entered the plant and the ability of emergency workers to move around the site would “significantly degrade.”

    If levels exceeded 1,004 feet, water would reach the lower floodgates, hampering the welding of plates to door frames, the NRC said. At 1,008.5 feet, the technical support center used by emergency technicians would have been inundated. At 1,010 feet, water would begin to enter the auxiliary building, “shorting power and submerging pumps. The plant could then experience a station blackout with core damage estimated within 15 to 18 hours,” under a worst-case scenario, the NRC said.

    The NRC concluded that the use of the fire truck for emergency pumping would fail, after it determined the truck could not draw floodwaters successfully from the turbine building. Moreover, it was not clear how workers could operate a crane to lift the fire truck into position if outside power were lost, the NRC staff added.
    snip

  43. Shore Guy says:

    Too many people involved in safeguarding nuclear reactors seem to be drawing from this school of thought:

    http://www.sciencecartoonsplus.com/images/miracle_sharris.gif

  44. Juice Box says:

    Just heard mY BIL who was attempting to buy a fixer upper in a Detroit Burb came in 8 k over assesed.He and the seller are so broke they cannot split the difference, so the deal a 3.5% FHA will fall apart. Why are we still trying to lend money to these people? I saw the inspection report, house was nevr updated old wiring and probobaly needs new windows and a roof. I asked him where he would get 30k to fix these things and he looked dumbfounded. Told him to walk away now and explained reasons.

  45. Shadow of John says:

    Unless you look like me, dont even try to use any of these. My crush velour makes them fool proof. You nancy boys just cant pull them off.

    http://manofthehouse.com/relationships/single-divorced/15-bad-pickup-lines-not-use-on-women?page=1

  46. Kettle1^2 says:

    Shore

    liquid thorium reactors are “old” technology. There were built and run in the 60’s as I am sure you are aware. A liquid thorium reactor using CO2 as the coolant and for power generation should be a no brainer as the preferred nuclear tech.

    Of course as always pilitics F’d up the whole field since the military wanted civilian reactors that could produce weapons material.

    For those that aren’t familiar with the material, liquid thorium reactors can’t “meltdown” like fukushima and can’t produce weapons material. They should in theory produce less radioactive waste as well.

  47. NJGator says:

    Shore 34 – our excuse is that we’re in the middle of moving. And by the way, while the sales market is in the crapper here, the rental market is hot, hot, hot. Stu rented our old place out simply by attending a birthday party this week.

  48. Kettle1^2 says:

    Shore. There is very solid justification fir removingbthe owners if Calhoun from the picture. The safety of that reactor is a primary national concern abd the management has already demonstrated a severe lack of respect for the national scale disaster if there so called “worst case” occurs. That’s without even considering that their worst case is more like a medium case in any real risk assessment.

    On tip of all of that, the Gavins dam is a very real risk right now.

  49. Shore Guy says:

    Kettle,

    We may have been seperated at birth.

  50. Kettle1^2 says:

    Shore

    any reactor design that is not intirnsivly safe (I.e you can simply walk away from it, remove all power and the reactor simply shuts down without any excursions or failures) should be banned from civilian power generation.

    That would preclude even the most modern light water orboiling water reactor designs and would force power gwneration to pebblebed or liquidcore gas cooled reactors for the most part.

  51. Kettle1^2 says:

    Shore 50

    in spirit perhaps, but I suspect there is a bit of an age difference.

  52. Juice Box says:

    re #49 – kettle1 – Flood wall failed last night at 1:30 AM.

    The 2,000-foot berm collapsed about 1:30 a.m. Sunday, allowing the swollen river to surround two buildings at the plant. The NRC says those buildings are designed to handle flooding up to 1014 feet above sea level. The river is at 1006.3 feet and isn’t forecast to exceed 1008 feet.

    http://owweb.ow.atl.publicus.com/article/20110626/NEWS01/110629782

  53. Shore Guy says:

    Kettle,

    Indeed, I am ancient.

  54. Shore Guy says:

    Juice,

    Note the NRC concerns I noted above, then consider what happens if an upstream dam fails. While it might seem unlikely, when things go wrong, they have a tendancy to go very badly– the old cascade of failures.

  55. Kettle1^2 says:

    Juice shore

    of course this is all “unexpected” and “unforseeable” while a meltdown at Calhoun would be “unfortunate”.

    It’s very unexpec that the “most powerful” nation in the world can’t seem to properly secure a reactor from flooding when they have 2 weeks advance notice by the Corp of e gineers.

    They should forcibly relocate the Calhoun executives families to onsite quarters until the flood has receeded and the site is fully repaired. I imagine we would see a slughly different response at that point

  56. Shore Guy says:

    “of course this is all ‘unexpected’ and ‘unforseeable'”

    Yup.

    “We regret the loss of all productive farming capacity in the state of Iowa, and Northern Illinois and Indiana, and the need for relocating so many millions of families; however, it was really beyond the pale for the NRC to have wanted us to protect our facilities with adequate levees and berms, which could have cost us several million dollars to install, and which would have cost me as much as 5% of last-year’s bonus.”

  57. Shore Guy says:

    Kettle,

    I am all for nuclear power, I have operated a nuclear reactor, I know what it is like to have to check a dosimiter and verify that one has not exceeded a permissible dose. That said, I am coming to think that the people we have licensed to operate nuclear reactors cannot be trusted to vallet park a car much less run such an unforgiving piece of technology.

  58. Shore Guy says:

    Hey, Gator. Happy moving day. Play some Bruce in the background, it makes the time go faster.

  59. Shore Guy says:

    http://online.wsj.com/article/SB10001424052702304314404576409410834139324.html

    Global Banking is What’s Really in Crisis

    We are confronting a crisis, all right, but it is not a Greek crisis, unless uncertainty as to the date of that country’s de facto default counts as a crisis.

    If the insolvency of that tiny country were the world’s only problem, it would be stretching the word “crisis” to apply it to the travails and insolvency of that tiny country.

    What we have come to call the Greek crisis is, first, an international banking crisis. Like Lehman Brothers, Greece is definitely not too big to fail. It is too interconnected to fail, too interconnected to the international banking system, too interconnected to the political ambitions of those who have spent decades replacing the system of nation states with a united Europe.

    Start with Greek banks, which hold €70 billion ($99.3 billion) of their government’s sovereign debt. The Economist estimates that if Greek banks were required to recognize the fact that markets are valuing Greek government debt at about half the value assigned to this paper on their books, shareholders would be wiped out and the banks would have to scramble to raise substantial new capital. Depositors would scramble to get their money out, and the European Central Bank would have to torture its rules to find a way to continue accepting Greek bank IOUs in return for the cash needed to maintain the liquidity of the Greek banking system.

    Other financial institutions would also find life more difficult. Many of Germany’s under-capitalized banks would be hard hit if they were forced to recognize that their books are in good part works of fiction, with IOUs of Greece and its banks and businesses recorded at values that have no relation to their true worth.

    German banks are not alone in their predicament:

    snip

  60. Shore Guy says:

    The author of the WSJ piece could be a regular here:

    snip

    Greece’s problem has also revealed another crisis—a crisis of governance. The Tower of Babel that is euroland governance is collapsing. Markets have gone from puzzled to incredulous and on to near-panic

    snip

    On to the next, and related crisis, a crisis of German identity. The current generation of German voters is no longer certain it must pay any price to subsume its nation in a wider Europe lest its nation’s economic power stir fears of a rebirth of the “German problem.” Germans remember the decades-long price they paid to bring woebegone East Germany closer to the economic standard of the West, and are not sure they want to pay a similar price to bring southern Europe up to German standards of economic performance, if that is even possible

    snip

    What we are calling the Greek crisis is also a crisis of structural economic dysfunction. Illiquidity and insolvency are merely the symptoms of the deeper problem affecting a broad swathe of the euro-zone.

    snip

    If we accept that the politicians have decreed that immediate default is off the table, we can, indeed, must:

    • force the banks to recognize that much of what they count as assets aren’t, and to recapitalize, even if this slows lending and growth in the short term;

    snip

  61. Shore Guy says:

    Cue the music from the Blues Brothers, Michelle Bachman is on a mission from God, even if she needs to lie about receiving benefit money from the government:

    http://www.latimes.com/news/nationworld/nation/sc-dc-0627-michele-bachmann-20110626,0,7255963.story?track=rss

    snip

    The Los Angeles Times reported Sunday that Bachmann, a congresswoman from Minnesota and “tea party” favorite, portrayed herself as a fiscal conservative while also benefiting from government funds and federal farm subsidies. An examination of her record and finances showed that a counseling clinic run by her husband received nearly $30,000 from the state of Minnesota in the last five years, with part of the money coming from the federal government. And a family farm in Wisconsin, where she is listed as a partner, received some $260,000 in federal subsidies.

    Photos: Potential 2012 GOP candidates

    Bachmann and her staff declined to talk to about the government assistance for the L.A. Times article. But asked about the issue on “Fox News Sunday,” she insisted that she and her husband had not benefited at the expense of federal and state taxpayers.

    “First of all,” she said, “the money that went to the clinic was actually training money for employees. The clinic did not get the money. And my husband and I did not get the money either. That’s mental health training money that went to employees.”

    As for the farm, she said it belonged to her father-in-law. “It’s not my husband and my farm,” Bachmann said. “And my husband and I have never gotten a penny of money from the farm.”

    As the Los Angeles Times reported on Sunday, however, in financial disclosure forms, Bachmann reported receiving between $32,503 and $105,000 in income from the farm, at minimum, between 2006 and 2009.

    Bachmann also repeated her stance that she was opposed to federal earmarks that sponsored pet projects for politicians back home and said she believed “the states have to build roads and bridges,” not the federal government. But asked whether that was an inconsistency given that her family appeared to be benefiting from government aid, she said the clinic money was spent to train employees when they otherwise would have been there working.

    “It actually took away from the clinic because these were training hours where employees were not able to bring more income in,” she said. “This is onetime money that came in from the federal government, and it certainly didn’t help our clinic. It was something that was additional training to help employees.”

    Bachmann also was asked about the farm subsidies on CBS’ “Face the Nation.” She suggested the public instead should be more outraged about a sharp increase in government limousines in the two years since President Obama took office.

    She also said she had been a Christian since she was 16 and that God often steered her political course.

    “When I pray, I pray believing that God will speak to me and give me an answer to that prayer,” she said. “That’s what a calling is. If I pray, a calling means that I feel like I have a sense from God.”

    snip

  62. nj escapee says:

    Battle of the beach brews in the Jersey Shore
    Officials are rewriting rules that could help well-to-do towns keep tourists off their beaches

    http://www.msnbc.msn.com/id/43541011/ns/us_news-life/

  63. nj escapee says:

    Clemons never said no to Keys fundraisers
    Posted – Saturday, June 25, 2011 11:00 AM EDT

    Re: The death of part-time Marathon resident Clarence Clemons, sax player for Bruce Springsteen and the E Street Band:

    I’m proud we were the catalyst inviting him well over a decade ago to fish in the Redbone’s Key West SLAM tournament and the long-lasting relationships developed with the Redbone celebrity family of events throughout the Keys and across the nation since then.

    When we picked him up at the arrival section of Key West International Airport, he was just settling his 6-foot, 5-inch, 250-pound frame on a bench, with his suitcase at his sandaled feet, his saxophone case under one arm, lighting up a huge cigar.

    And when he saw us, that instant magnificent smile further lit up an already beautiful Key West day and his wonderful hug added warmth.

    He loved the Keys. He told me later that invitation to the Redbone events gave him a chance to get to know the Keys community better, and boy, did the Big Man ever jump in with support throughout the islands in a big way.

    He became an instant and much-loved member of the Redbone family, taking an active interest in helping out where and any way he could using his celebrity in the Redbone’s fight for cystic fibrosis research — now at $15 million raised over 23 years. He was always there when Gary, Susan or Nicole Ellis would ask him to attend at a fundraiser; most times, he’d step up and volunteer well before they asked.

    He provided unbelievable entertainment, jamming at Redbone events with Big Richard and his Family Fun Band at the Lorelei or with Capt. Jimmy Lozar and the Marlin Too Review.

    He stepped up and gave many sold-out concerts with his own Palm Beach band, the Temple of Soul, at the Redbone’s Keys tournaments. At the drop of a hat, he’d travel to a number of the other Redbone celebrity fishing events in such places as New York City, Montauk and Cleveland — and everywhere the anglers and other participants loved him.

    What a performer, what a fisherman and what a totally nice human being.

    When his brother Bill moved here to Phoenix, Clarence introduced our two families. Bill is probably a more accomplished musician than Clarence if you can believe it, and like Clarence is a great friend. He loved the Keys, as you can tell by that wonderful smile. Fishing in the Keys was an instant gateway to his deep temple of soul.

    Three things I’ll always remember with Clarence: That truly magnificent smile, his enveloping hugs and that beautiful wailing saxophone. Thank you, Clarence, for all you gave us with your love. We will truly miss the Big Man.

    Pete Johnson

    Scottsdale, Ariz.

  64. chi in hershey.... says:

    Is there something particularly wrong with this article?
    …as I stay in the shadow of Three Mile Island….

    BUSINESS JUNE 27, 2011
    Waters Encircle Nuclear Plant
    By ANNA RAFF
    A protective berm holding back floodwaters from a Nebraska nuclear power plant collapsed early Sunday after it was accidentally torn, surrounding containment buildings and key electrical equipment with Missouri River overflow.

    Nuclear Regulatory Commission inspectors verified that processes to cool the reactor and spent-fuel pool were unaffected, the agency said in a press release.

    The 484-megawatt Fort Calhoun plant, located 19 miles north of Omaha, had been shut down since April 7 for refueling, and the NRC has said it won’t be restarted until floodwaters recede.

    Regulators have been keeping close watch on Fort Calhoun and Cooper Nuclear Station, both operated by the state of Nebraska, as flooding along the Missouri River has become increasingly widespread.

    Two years ago, deficiencies in flood preparation at the plant were found during an inspection, but were remedied.

    The situation in Nebraska has developed amid heightened fears about nuclear safety following the catastrophe at the Fukushima Daiichi plant in Japan. The damage wreaked by an earthquake-triggered tsunami in early March was the cause of a series of explosions and the release of harmful radiation.

    The water-filled berm—not required by NRC regulations— provided supplemental protection. It collapsed at about 1:25 a.m. after it was accidentally torn while work was being performed at the site, according to Victor Dricks, an NRC spokesman.

    The berm, essentially a huge inner tube, subsequently collapsed. Mr. Dricks said he didn’t know the exact nature of the work that was underway.

    The auxiliary and containment buildings surrounded by water are protected by design to a floodwater level of 1,014 mean sea level. Missouri River levels aren’t expected to exceed 1,008 feet.

    The berm’s collapse allowed floodwaters to wash around the main electrical transformers. As a result, emergency diesel power generators were started. Later in the day, power was restored.

    The NRC’s Mr. Dricks said temperature monitors were working properly and temperatures of key parts of the nuclear power plant were normal. Water has not seeped into any of the containment structures, he said.

    Even when in shutdown mode, a nuclear plant requires electricity to keep key components cool in order to avoid any degradation or melting of the core that could result in the release of radiation.

    In response to the berm collapse, the NRC has activated its Incident Response Center. The lowest of four levels of emergency notification remain in effect for the plant.

    NRC Chairman Gregory Jaczko is scheduled to visit the plant on Monday. Water levels were receding a bit overnight, but weather forecasts are calling for more rain.

    Write to Anna Raff at anna.raff@dowjones.com

  65. Kettle1^2 says:

    Chi 66

    See shore’s post at 43

    The NRC has criticized Calhoun’s flood plans and that says a lot since the NRC can generally be considered to be “captured” by the industry

    If levels exceeded 1,004 feet, water would reach the lower floodgates, hampering the welding of plates to door frames, the NRC said. At 1,008.5 feet, the technical support center used by emergency technicians would have been inundated. At 1,010 feet, water would begin to enter the auxiliary building, “shorting power and submerging pumps. The plant could then experience a station blackout with core damage estimated within 15 to 18 hours,” under a worst-case scenario, the NRC said.

    The water level is currently somewhere between 1006 and 1008 ft and more rain is expected. Note that core damage generally means a release of radioactive material (fallout). The details and magnitude depend on the mode and degree of core damage.

    There are about 1000 fuel rods in the SFP at Calhoun weighing in at about 400 tons ( the pool currently holds about 4X the design spec).

    to put that into perspective the spent fuel pools at Fukushima hold the following:
    • Reactor No. 1: 50 tons of spent fuel
    • Reactor No. 2: 81 tons
    • Reactor No. 3: 88 tons
    • Reactor No. 4: 135 tons
    • Reactor No. 5: 142 tons
    • Reactor No. 6: 151 tons

    In this type of reactor the spent fuel pool holds the potential to be significantly more dangerous then the core itself. that would depend on the details of how the reactor fails. A worst case for calhoun is a station blackout followed by core meltdown followed by the spent fuel pool seeing a “prompt criticality” which can throw fuel rods for miles.

    this is what that looks like with a SPF holding about 88 tons of fuel
    http://www.youtube.com/watch?v=T_N-wNFSGyQ

    there are dozens of less damaging scenarios before you get to this point. If they see core damage you will see radioactivity flow down the Missouri and into the Mississippi.

  66. Kettle1^2 says:

    One of the critical upstream dams controlling the water level

    http://www.youtube.com/watch?v=im3k9xwvDYc&feature=related

    it is currently flowing at about 150,000 CFS (cubic feet per second)

  67. Kettle1^2 says:

    Shore

    latest release:

    Army Corps of Engineers Announce New Release Levels For Gavins Point Dam

    Omaha, Neb. – Releases from Gavins Point will increase to 160,000 cubic feet per second by Thursday as a result of continued wet weather throughout the Missouri River Basin.

    A large, heavy rain system has impacted South Dakota and northern Nebraska in the past 48 hours, with as much as 6-inches falling across part of South Dakota. The heavy rains resulted in high inflows to Oahe, Big Bend and Fort Randall reservoirs. High inflows are also anticipated for Gavins Point.

    The impact of an additional 10,000 cfs to the current 150,000 cfs will result in an increase in river stages from 0.7 to 1 foot at Sioux City, Ia., and 0.3 to 0.4 of a foot from Omaha to Rulo, Neb. At St. Joseph, Mo., the river stage rise will be roughly 0.6 foot, and at Kansas City, the rise will be roughly 0.7 foot. Actual stages will depend on tributary inflows. …….

    http://www.claycountyoem.org/

  68. Shore Guy says:

    One large storm or a failed dam will ruin Iowa’s day, and the rest of the decade as well.

  69. Kettle1^2 says:

    To put that 160,000 cfs into perspective, the Delaware river at trenton has an average flow rate of about 7,000 CFS. So that dam (Gavins point) is releasing the equivalent of about 22 Delaware rivers

  70. Shore Guy says:

    Calhoun is by marker 643, right?

  71. Shore Guy says:

    “Gavins point is releasing the equivalent of about 22 Delaware rivers”

    Only to keep it from failing, I suspect.

  72. Punch My Ticket says:

    Greetings from Mo’orea, where fruity drinks are unobtainable on Sundays, and where I have just discovered that the mainland Chinese are now big into plying tropical waters in giant floating gin palaces.

    May the upcoming week be fiscally responsible and alpha particle free in the Garden State.

  73. Useful information shared..Iam very happy to read this article..thanks for giving us nice info.Fantastic walk-through. I appreciate this post. .

  74. Jana Renner says:

    It is incredibly frustrating to finally be working in a market where the average teacher, policeman, and blue collar worker can actually afford the price of homes but lenders will not make credit available. As a Realtor, I fully understand how important it is for our major financial institutions to be healthy and prosperous, but the working class is being punished for mistakes they didn’t make.

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