The View From The Golden Dome

Views on the week's events plus some of mine.

> Les Berman Group’s Archive > Les Berman Weekly 8-14 Gas Ripoff, Freddie & Fannie Packed, Disneyland and much more Les Berman Weekly 8-14 Gas Ripoff, Freddie & Fannie Packed, Disneyland and much more


Why is gas still at $3.60 / gallon? Why are federal statutes being created (i.e. crimes being invented) that don’t require prosecutors to prove criminal intent by the ‘suspect’ (I really hate that word when it comes to bad guys). And are you going to stay up late tonight with your kids to watch the Perseid display.

Greetings. Hope your week was not too weak.

Gas – When gas was about $140 per barrel a couple of years ago, prices in California were close to $5.00 / gallon. And the oil companies raised prices every time oil prices moved up. It was irrelevant to them that the oil already in their refineries was purchased some time earlier, when prices were lower. A little profiteering I think. So now, oil close down Friday at about $85 per barrel. The simple math (85 / 140 X $5) that gas prices should be about $3 / gallon . A little profiteering I think. Oops – I’m being repetitive!  And every time you fill your tank, you are repetitively pouring money into the bank accounts of the oil companies. When will the Feds get off their collective rear-ends, quit genuflecting to the oil lobbyists, and actually do something for the people. Let’s have the Oil Equality Act. When a unique concept ! Oh.. wait a sec. We just saw what happened with the raising of the debt ceiling. So forget the Oil Equality Act – but it really is a good name !

And the oil companies plead refinery shortages. When a refinery shuts down in California for maintenance, gas shoots up 10 – 15 cents a gallon, and amazingly, when the maintenance is completed, gas prices stay up. hmmm…. Here’s the solution to the refinery issue in California. We all know that whenever anything of any kind is proposed, protesters appear in a millisecond. We do need refinery capacity – no question. So let’s build it on federal land where local governments have no jurisdiction. Allow the protesters two years to do their dance – and then the feds should build it. Then, lease the refinery to the highest bidder, and use the lease income, etc,., to reduce the debt used to construct the refinery. And after that’s paid for, use the money to pay off the general debt. Cash flow is king ! This solves everyone’s issue except for the protesters who are still likely walking back and forth in front of the refinery with picket signs that say something like “Govt Unfair to People” . Well, what else is new.? Sorta makes me wonder who was the first person to look at a cow and say, ‘I think I’ll squeeze these dangly things and drink whatever comes out?’

I’ve lost track – is this the week that the government wants out of mortgage banking, and to dissolve Freddie & Fannie, or is this the week when they want to continue to control securitization, underwriting, and servicing? I guess it is the latter: The Obama administration, through FHFA, Treasury, and HUD, will seek investors’ ideas for turning thousands of foreclosed properties owned by government-backed entities into rental homes, thus, in theory, helping values and lowering inventories (?). Heck, Fannie Mae and Freddie Mac sold a record 100,000 homes during the second quarter – I bet they’re becoming adept at it. Fannie + Freddie + FHA = 250,000 homes at the end of June, or around half of all unsold, repossessed properties. According to the WSJ, there are another 830,000 homes through the three agencies in the foreclosure pipeline. Seriously, anything is better than a vacant, deteriorating property, and given many ex-owners’ credit reports, their only choice is to rent.

And there are special financing programs available for people who want to buy these homes. There was a program that only required $100 as a down payment. Now it’s a little more, and, Fannie and Freddie pay bonuses to realtors who participate in the sale of these properties. I haven’t seen any of these in an area where I would want to live but people are buying them.

I now have a financing program called Delayed Financing. If you buy a property with cash because the seller needs a quick closing, I can finance the property immediately after closing, based on the purchase price, give you most of your money back, and not ding you as if it were a cashout loan. Call me today at 818.305.4695 for further information. I am working this weekend !

Occasionally, Americans are going to prison in the U.S. for violating the laws and rules of other countries. Last year, Abner Schoenwetter finished 69 months in federal prison for conspiracy and smuggling. His conviction was related to importing the wrong kinds of lobsters and bulk packaging them in plastic, rather than separately in boxes, in violation of Honduran laws. After conviction, Mr. Schoenwetter and three co-defendants appealed, and the Honduran government filed a brief on their behalf saying that Honduran courts had invalidated the undersized-lobster law. By a two-to-one vote, however, a federal appeals panel found the Honduran law valid at the time of the trial and upheld the convictions. The law is an ass !

Wait- hold your breath ! Maybe there is a chance !

Last month, the Supreme Court unanimously ruled an appellant has standing to challenge a federal law. By distributing jurisdiction among federal and state governments, the Constitution “protects the liberty of the individual from arbitrary power,” Justice Anthony Kennedy wrote for the court. “When government acts in excess of its lawful powers, that liberty is at stake.” During oral arguments in the case, Justice Samuel Alito expressed concern about the law’s “breadth” by laying out a hypothetical example. Simply pouring a bottle of vinegar into a bowl to kill someone’s goldfish, Justice Alito said, could be “potentially punishable by life imprisonment.” Of course, some jerky attorney could say – why didn’t you just wait a couple of weeks until the goldfish was doing the backstroke anyway?”

OK kids – it’s time for the annual astrological exhibition of what we call, shooting stars. It’s the Perseid meteor showers – 2011 version. The Perseid meteor shower of 2011 peaks in the early hours of Saturday morning, U.S. time. It’s not hard to watch, and it can be quiet fun, but you do have to give up some sleep, and patience helps. The whole sky, actually. The shooting stars, created as tiny comet fragments enter and burn up in the atmosphere, will seem to come from the constellation Perseus, in the northeastern sky. But they may appear anywhere as quick streaks.

img_bullet_bluedot.gifWhere not to look? Don’t look at the moon — or anything else bright. You want your eyes to get really, really used to the dark. Tonight’s full moon will cut down the number of meteors you’re likely to see (on a moonless night, you might have seen 50 to 60 per hour), but by dawn the moon will be low in the western sky. Best to look east. Unless of course, it’s cloudy. In which case, go to bed and plan for the 2012 version.

Did you go to Disneyland in the olden days? What’s missing? The submarine rides (1959 – 98); the Flying Saucers (1961 – 66); the Mine Train in Frontierland (closed in 1977); the Skyway (1956 – 94); and Rocket Rods (1998 – 2000).  I haven’t been to Disneyland since my daughter was about 12. Been a long time…. What was your favorite ride? I liked the Pirates of the Caribbean before some idiot complainers said it was too bawdy and it was toned down.

Here is something that I don’t understand: business people who use an Earthlink (or related company) email address for business. Firstly, why would you advertise Earthlink rather than your company. My email is les@lesberman.com or lberman@firstcal.net. You can get an email address for a few bucks at GoDaddy that advertises your business rather than Earthlinks. Secondly, say a potential new client sends you an email and in the style of Earthlink, your email is blocked until you send a second message to the recipient. Excuse me – I want to do business with you and you want me to plead my case before you open my email. That won’t happen. I wonder how many customers you lose because you chose Earthlink? At very least use a gmail account for your business.

A reminder: mortgage rates are ridiculously low. Call me and I will get you a detailed analysis, without obligation, of what the current market is doing vs your current loan.(CA residents only because I am only licensed in CA). My number is 818.305.4695 or send me an email to les@lesberman.com.

Have a great week ! Your phone calls and emails are welcome.

 

Les

Berman’s Factoids of the Week

If Jimmy cracks corn and no one cares, why is there a song about him?

Do illiterate people get the full effect of alphabet soup?

If corn oil is made from corn and vegetable oil is made from vegetables, then what is baby oil made from? (just askin’)

 

First California Mortgage
Provided to you Exclusively
By
Les Berman CMC
Les Berman CMC
Senior Mortgage Advisor
NMLS ID # 227675
First California Mortgage
Office: 310-271-1588
Cell: 818-305-4695
Fax: 877-707-8823
E-Mail: lberman@firstcal.net
Website: www.firstcal.net/berman
Les Berman CMC

Forecast for the Week sym_arrow.gif

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A slew of economic reports this week could give us a hint as to where we’re heading. Look for:

  • Housing news with July’s Housing Starts and Building Permits Report on Tuesday and Existing Home Sales Report on Thursday.
  • Inflation news with the Producer Price Index, which measures inflation at the wholesale level, on Wednesday, followed by Thursday’s Consumer Price Index. Inflation readings are important to watch right now, as a deflationary or low inflation environment will support low home loan rates.
  • Manufacturing news with Thursday’s Philadelphia Fed Index.
  • Thursday also brings another weekly Initial and Continuing Jobless Claims Report. Last week’s Initial Claims came in at 395,000, below crucial 400,000 level which signals real improvement in the labor market.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates reached some of their best levels last week, and still remain at great levels even with all the volatility. Let me know if you have any questions at all about whether you can benefit from this situation. Call me today at 818.305.4695
———————–

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 12, 2011)
Japanese Candlestick Chart
The Les Berman Weekly View… sym_arrow.gif
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The Downgrade and Home Loan Rates

Standard & Poor’s (S&P) downgrade of the United States’ credit rating from AAA to AA+ was historic-and Stocks have certainly been volatile since the downgrade.

But US Bonds and home loan rates haven’t been crushed by the news. If you’ve heard questions about the downgrade and home loan rates, keep the following points in mind:

  • Despite the downgrade, there are a number of factors that bode well for US Bonds and home loan rates.
  • S&P is currently the only credit rating agency that has downgraded the United States.
  • Both credit rating agencies Moody’s and Fitch have maintained the United States’ AAA rating.
  • More importantly, the ongoing credit crisis in Greece and other parts of Europe means that US Bonds are still considered one of the safest places to invest.

The bottom line is that home loan rates remain near their historic best levels, but about the only thing that is certain in the markets right now is the volatility. If you know someone who has been thinking about buying a home or refinancing, call 818.305.4695 or email me today les@lesberman.com to get started.
————————–
Economic Calendar for the Week of August 15-19, 2011

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of August 15 – August 19

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. August 15
08:30
Empire State Index
Aug
-0.4
-3.76
HIGH
Tue. August 16
08:30
Housing Starts
Jul
608K
629K
Moderate
Tue. August 16
08:30
Building Permits
Jul
NA
624K
Moderate
Tue. August 16
09:15
Capacity Utilization
Jul
77.0%
76.7%
Moderate
Tue. August 16
09:15
Industrial Production
Jul
NA
0.2%
Moderate
Wed. August 17
08:30
Core Producer Price Index (PPI)
Jul
0.2%
0.4%
Moderate
Wed. August 17
08:30
Producer Price Index (PPI)
Jul
NA
-0.4%
Moderate
Thu. August 18
08:30
Jobless Claims (Initial)
8/13
400K
305K
Moderate
Thu. August 18
08:30
Consumer Price Index (CPI)
Jul
0.2%
-0.2%
HIGH
Thu. August 18
08:30
Core Consumer Price Index (CPI)
Jul
0.2%
0.3%
HIGH
Thu. August 18
10:00
Existing Home Sales
Jul
4.87M
4.77M
Moderate
Thu. August 18
10:00
Philadelphia Fed Index
Aug
1.0
3.20
HIGH
Thu. August 18
10:00
Index of Leading Econ Ind (LEI)
Jul
0.2%
0.3%
Low

 

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

 

As your trusted advisor, I am sending you the LES BERMAN WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.
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August 15, 2011 - Posted by | Uncategorized

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