My Blog

Category: Finance

  • Illinois 3rd in Foreclosures Nationally

    This is embarrassing:

    Foreclosures starts in Illinois are on par with those in other areas but the state’s court-supervised foreclosure system continues to bog down properties in the process.

    Almost 7.5 percent of all one-to-four-unit mortgage loans in Illinois were in foreclosure in the first quarter, compared with a national average of 4.39 percent, according to data released Wednesday by the Mortgage Bankers Association.

    “Illinois and New Jersey trail only Florida as being the worst in the country, and they’re getting worse,” said Jay Brinkmann, the association’s chief economist “The rate in Illinois more than twice that of California. In the judicial states the problem continues to get worse in terms of the backlog of loans in the foreclosure process.”

    via Chicago Tribune.

    Perhaps if we had a government that was at least minimally friendly to business more people would be working.  That would certainly help.  But you cannot crush every businesses’ ability to efficiently function in the city and then wonder why more people don’t have good jobs.

    Jobs will come when businesses come.  When people are working again mortgages will get paid.

  • Gov. Red Tape Kills Another Biz, Jobs

    Last month when Mayor Rahm Emanuel announced his streamlining of city business licensing procedures, he chose Logan Square Kitchen as the location to herald this new day in better relations between the city and small businesses.

    And so it’s more than a little ironic that today LSK owner Zina Murray annouced on her website that her shared kitchen is closing at the end of June due to continued red tape from the city. The city’s Department of Business Affairs and Consumer Protection did not respond immediately to requests for comment.

    Here’s an excerpt from and link to her full post:

    It’s a sad time when our government kills the very things that can heal our City. Logan Square Kitchen was designed to heal the local economy, environment and food system all at once. It was an innovative, bold idea that never had its chance. The Dept of Business Affairs and Consumer Protection (BACP) began hammering nails in its coffin before we even opened our doors in 2009 and hasn’t stopped. Unfortunately, we see no end to regulatory burdens, which will continue to block our ability to grow a healthy business.

    Murray says that the 20 businesses operating in her shared kitchen–which rents hourly cooking space to artisanal food entrepreneurs–will have to find new kithens by June 28.

    via Chicago Tribune.

    Very sad.

    A government overrun with power.  Harassing the very people who create jobs and pay the bills.  This is why Illinois is doing poorly and other states (Wisconsin, Indiana) are recovering.

  • Stripping Chicago Spending, Bare Down

    “What do a Chicago strip club
    and the President’s campaign fund have in common?    ”

    ANSWER:  BOTH were paid- with public funds- as “VENDORS” to the City of Chicago.
    _______________________________________

    Yesterday, OpenTheBooks.com upgraded it’s transparency portal to include the City of Chicago checkbook from 2002-2011.

    It contains $74 billion in vendor payments. Last year 69,800 entities received checks.

    Here’s what I found while scanning the data…

    The City of Chicago approved checks to both The Admiral Theatre Inc, a Chicago strip club, and Obama For America, the president’s campaign organization. According to data received, both share the same “vendor code.”  Yet, neither organization exists in Chicago’s current transparency portal: click here and here.

     

    The Admiral Theatre strip club received $5,197.78 in City of Chicago checks. Sixteen checks range from $1.20 to $1,900. A buck twenty?

    See a database of City payments to The Admiral here.

     

    The check to Obama for America raises more questions. The campaign received a $1,000 check on August 28th, 2007. For some reason, theydidn’t disclose this to the Federal Election Commission: click here, and Open Secrets- here.

    Click here for my Freedom of Information Act Request seeking more information. See the detailed accounting data surrounding the check: vendor code, transaction id, PO#, fund, department, amount, check number, and date.

     

    Surely, the City will have some sort of explanation. Because, public funds used for campaign purposes violates federal and state law. And, we know that no Illinois or city worker would ever violate those laws, right?

     

    The City has five days to respond to our request for additional information. I can barely wait for the naked truth.

    You can search for yourself at www.openthebooks.com

    Sincerely,

    ADAM ANDRZEJEWSKI
    Chairman | For The Good of Illinois PAC

     

  • Wealthy Flee France (Shhh, don’t tell the U.S. Media)

    For those that don’t know, France recently had an election and voted for the most socialist guy on the ballot.  The guy who’s promising to raise taxes on the rich and increase the transfer payments to the poor.  The result?  The rich are leaving…  in droves.

    France’s high earners feel increasingly unwelcome in a country now led by a man who has admitted: “I don’t like the rich.” So where are they looking? London. It comes as no surprise – while Hollande prepares to raise taxes, over here David Cameron is cutting the 50pc tax rate for income above £150,000 to 45pc. “I have already worked in London and lived in South Kensington,” said one French banker who expects to return to the UK over the next three months. “The question is how much of Hollande’s rhetoric will materialise into policy.”

    Few are keen to find out. Private equity firms and American banks in Paris have already begun making arrangements for their top executives to set up office in London, amid widespread concern about changes to the French income tax regime.

    via Telegraph.

    This story is told over and over again in the European press, particularly earlier this week (I realize I’m late to the story.)  But the U.S. press is just getting to the story; mostly in the business press.  Neither the Chicago Tribune nor the sun-Times has not written a single word about it.

    While it can be shown that the rich are generally willing to pay their fair share, i.e. remain in places with high taxes, it is only when they feel that the quality of life issues make paying the high taxes worthwhile.  There can be no doubt that ever higher and higher taxes will drive the wealthy away; the Laffer Curve is real.

    The net result of this is that higher taxes impose a disproportionate burden on the middle class and the poor.  States like Illinois need to move to a more progressive tax structure; however they must do so very carefully in order to assure that the rich are not incentivized to relocate to Indiana.

  • Layoffs on Wall Street?

    After adding thousands bankers in the past two years, financial firms again appear to be on the verge of cutting that many positions and then some. Consultants and Wall Street recruiters say banks could eliminate nearly 21,000 jobs from their securities divisions in New York alone. Worldwide cuts could be even larger. Recruiters say big banks are in the process of finalizing their downsizing plans, and that layoffs could start soon.

    The latest round of job cuts could rival those that happened during the financial crisis. Back then, which was less than four years ago, Wall Street eliminated 28,000 positions. But that round of downsizing included the collapse of Bear Stearns and Lehman Brothers, and the biggest crisis in the financial markets since the Great Depression. By comparison, the stock market is up this year, and just last week banks reported better than expected earnings for the first quarter. What’s more, at the same time large firms are firing, many smaller investment banks have been staffing up. As a result, overall employment on Wall Street might not drop as much as it did after the financial crisis.

    via Fortune Mag.

    Two thoughts:

    First, just so everyone knows, the crisis in not over; we’re not out of the woods yet.  It’s sad whenever anybody loses their job and there may be a lot more of this coming.  Bankers, especially investment bankers, are especially susceptible.  A story this week about how JP Morgan Chase lost $2 billion in their “synthetic credit portfolio” shows with what relative ease the wheels can fall off the bankers bus.  Everyone who works in that industry is on the edge everyday.

    Second, this is a fine example of the private sector doing something the public sector cannot — getting rid of unnecessary people.  We know from the 2010 U.S. Census that Illinois while Illinois is growing its 3% rate over a decade is enemic compared to other states; we lost a U.S. House seat.  Yet Illinois government continues to grow and grow and grow.  We need to right-size Illinois government.  Some agencies are actually understaffed; leaving taxpayers waiting for basis services.  Others are bloated with staff getting paid to attend baseball games.

  • Scientists plan $1b Ghost Town

    A scientific ghost town in the heart of southeastern New Mexico oil and gas country will hum with the latest next-generation technology — but no people.

    A $1 billion city without residents will be developed in Lea County near Hobbs, officials said Tuesday, to help researchers test everything from intelligent traffic systems and next-generation wireless networks to automated washing machines and self-flushing toilets.

    via Fox News.

    I can’t help but think of the good we could do in this town with one billion dollars.  Google’s testing self driving cars on public streets.  Self-flushing toilets can be tested anywhere.  I’m skeptical as to why someone — maybe taxpayers — would spend a billion on what is nothing more than a big toy for a few scientists.

  • B of A’s Mortgage Reduction Insanity

    Bank of America has started sending letters to thousands of homeowners in the United States, offering to forgive a portion of the principal balance on their mortgages by an average of $150,000 each.

    The reduction for qualifying homeowners could amount to monthly savings of up to 35 percent on mortgage payments, Bank of America said in a news release on Monday evening.  …

    To be eligible for the principal reductions, however, homeowners will have to meet certain criteria, including: having a loan owned or serviced by Bank of America; owing more on the mortgage than their property is worth; and being at least 60 days behind on payments as of the end of January.

    via NYTimes.com.

    What craziness is this?  Just curious, what is B of A doing for all the folks who (a) bought a house they could afford, and (b) make all the payments on time even when times get tough.  Some folks have cancelled vacations, stopped eating out, shopping at cheaper grocery stores, walking instead of driving, and all sorts of other things.  What’s being done to help the responsible?

    When you give something away to those who don’t deserve it the rest suffer by default.  We’ve been doing that for far too long in this country.  It’s one of the reasons we’re in the state we’re in.

  • China Enters U.S. Banking Market

    The United States on Wednesday opened its banking market to ICBC, China’s biggest bank, for the first time clearing a takeover of a US bank by a Chinese state-controlled company.

    Just days after high-level US-China economic talks in Beijing, the Federal Reserve approved an application from Industrial and Commercial Bank of China to buy a majority stake in the US subsidiary of Bank of East Asia.

    The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.

    via Yahoo! News Canada.

    An interesting development.  Curious why so little coverage of this in the U.S. MSM.

     

     

  • Labor Force Participation Rate Messes with Unemployment Rate

    Exactly a month ago I wrote about the bogus employment numbers claimed for the Chicago area.  I claimed that there were no actual jobs “created” and that the only reason the employment rate went down was because people simply left the job market.

    Didn’t have this at the time… but my theory has real support.

    Changes in population and the participation rate can significantly impact the unemployment rate. If the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year – and the participation rate stays flat – the economy will need to add about 94 thousand jobs per month to keep the unemployment rate steady at 8.2%.

    However if the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 63.8%) over the next two years, the economy will need to add 227 thousand jobs per month to hold the unemployment rate steady.

    via Calculated Risk.

    Wanna see a chart of the Labor Force Participation Rate?

    US Labor Force Participation Rate Chart

    US Labor Force Participation Rate data by YCharts

    Pretty wild?  That fall off represents millions and millions of people who are simply no longer working, looking for work, claiming unemployment benefits, or are new grads who can’t find work.

    It’s no wonder that more and more people are eating at McDonald’s.

  • FYI, You CAN Cheat on Your Property Taxes

    Cook County Board President Toni Preckwinkle and Assessor Joe Berrios on Tuesday urged state lawmakers to give them more power to go after property owners who improperly claim tax breaks, saying they could recover more than $150 million in three years with the new authority.

    Under legislation pending in Springfield, counties could go after back taxes from people who have wrongly received homestead exemptions. The tax break should only be applied to a property owner’s primary residence, but people often also claim it for rental properties, vacation homes and secondary residences. Other property owners get inappropriate property tax reductions for being a senior citizen, disabled person or disabled veteran.

    People who claimed multiple improper homestead exemptions also would be fined a percentage of their unpaid taxes, and the county could place liens on the properties to try to compel property owners to pay up.

    via Chicago Tribune.

    Wha?!

    So let me get this straight… right now, I could file for a homestead and senior freeze exemptions on properties I own but don’t live at and despite the fact that I’m not a senior?

    How stupid are the politicians in Springfield?  They grant all these exemptions but provide no way to enforce them.  This would be funny if not so sad.

    Of course, there is someone who can do something about it; two in fact.  Both women… both lawyers… both elected to put bad people — like people who lie on government documents — in jail and fine them.

    So rather than pushing for new laws, why doesn’t the county just ask Anita Alvarez to file charges against these people?  And if she’s too busy, Lisa Madigan could take some of the cases.

    Of course both Alvarez and Madigan are too busy doing nothing.
    So instead Preckwinkle and Berrios are asking for another new law so they can hire more government workers to police this new law.

    $50 million a year in new revenue… $50 million a year in new expenses for staff and pensions.  The taxpayer will end up with nothing.