Condos Fight Back
In the news today…..
Condo’s Fight Back – by forcing banks who hold mortgages on condos to pay the HOA fees. This is true for Housing associations too. It’s called a “reverse foreclosure.” Here’s how it works. When a Condo owner stops paying its mortgage, it generally stops paying HOA fees too. The HOA files a lien on the condo right away. The bank is very reluctant to foreclose, so they don’t because they don’t want upside down properties on their books. So, the Condo HOA goes to court and the court gives the condo to the bank, and the bank MUST pay the HOA fees. A nice trick. The banks were sticking it to mortgage holders over the past few years, and it’s nice to see the HOA sticking it to the banks. What goes around, comes around.
China – today hyped bonds and trashed gold. Why? Well, I believe they want to maintain the value of their US Treasury holdings, and want to depress gold prices so they can buy more, cheaper in the future. But, that’s only my opinion. China is very crafty, and you should always look behind whatever they say – and I could add you should do that for any government’s statement.
FDIC – head, Shiela Bair, said that big banks should pay an upfront fee to pre-fund a “resolution authority” to handle future bank failures. It would only cost about $10B/year, and that’s no bad, according to Bair. Is this the beginning of getting the Resolution Trust Authority of the 80’s back in business?
Brazil – will put import duties on over 100 imports from the US? Why? Because the US is giving money to US cotton producers, thereby giving US producers an unfair advantage. This is the WTO ruling, and it allows Brazil to take this action. Is a trade war starting? I wouldn’t doubt it as the world economy continues to crumble. Each nation will try to protect its own markets. This happened in the Great Depression, and what’s going to stop it now? Well, we are much more closely tied internationally now; but is that enough to stop a trade war in general? I don’t think so.
Mutual Fund Cash Reserves – are at the lowest they’ve been since 2007. They are currently at 3.6% of total assets. This means there is little cash left for new stock purchases. Does this mean stocks are hitting highs and will be difficult to go higher? I leave that to the reader to determine – as I usually get stock predictions wrong.
Tonight’s Dinner Conversation….
Where is the budget deficit from all that spending by our beloved Congress? How big will it get? Can we ever pay for it? Those are the topics tonight. Here is a graph to help focus your mind. Please note that the CBO projections are FAR WORSE than the President’s projections. My personal belief, based on past performance, is that the CBO estimate is also optimistic. For example, the CBO assumes that inflation will remain stable (low) throughout the estimated period – I doubt it. So, reality is probably worse than this graph shows. However, these are today’s official figures. So, go figure.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,565 (up 10)
10 Year Treasury Bond – 3.70% (down 0.01%)
Euro – $1.3599
Gold – $1124 (down $11)
Oil – $30 (down $0.57)
Gasoline – $2.29 (up $0.02)
