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David's Macro Blog

Analysis and commentary on business, economics, real estate, financial markets, and other fun topics

Archive

Archive for March, 2011

The economy during the Great Recession rivals the collapse during the Great Depression. Never has the economy contracted this much and the recovery been this slow. Millions of Americans resorted to unemployment benefits to make ends meet, many for the first time in their lives.

The most shocking aspect of the Great Recession is the slow recovery and the length of time people are unemployed. In fact, Congress extended unemployment benefits to 99 weeks.

60 Minutes interviewed the “99ers” in San Jose, California, the high tech capital of Silicon Valley.

Many of the 99ers are people in their prime earning years of 40’s, 50’s, and 60’s. They should be stocking away excess earnings for their children’s college fund and their retirement. Instead, they are liquidating their 401 K’s and IRA’s to pay their mortgage and grocery bills.

The economic crisis in Silicon Valley is so severe that many people with PhD’s, Master’s and college degrees find themselves unemployed for the first time in their lives. Instead of saving for retirement and paying payroll taxes to fund the government, they are drawing benefits from the government, resulting in a trillion-dollar annual budget deficit.

One of the best quotes:

[The 99ers are] too young to retire, but too old to rehire.

After watching this video, ask yourself these questions and comment on your thoughts below:

  1. Who would you hire of the people profiled?
  2. Do you believe these people will ever again make $70,000, $100,000, or $200,000 per year?
  3. This the high unemployment college educated workers due to the global economy?
  4. Is $100 billion on 99 weeks of unemployment benefits money well spent by a government with over $10 trillion in national debt?

Source: 60 Minutes – Unemployment Benefits: The 99ers

Swedish academic researcher Hans Rosling uses augmented reality to demonstrate the growth in health and wealth in regions and countries over the past 200 years. His engaging presentation takes all of 4 minutes, yet there probably isn’t a better description of health and wealth per country as measured by the life expectancy and income of its people.

Using 120,000+ bits of data and augmented reality, the energetic professor takes us through the last 200 years of global history. Our recent past is filled with spurts of growth, war, and political repression or freedom, all of which lead to health and income disparities fluctuating over time. No one else makes statistics quite as awe-inspiring as Rosling.

Rosling has continually struggled to find new ways of presenting data that speak to and engage the audience. This is one of the best graphical illustrations of stats I’ve seen. It is a must watch.

Hans Rosling’s 200 Countries, 200 Years, 4 Minutes video is part of a program on BBC Four called The Joy of Stats. The Joy of Stats takes viewers on a fascinating ride through the wonderful world of statistics to explore the remarkable power stats have to change our understanding of the world.

Source: GapMinder.org

Real estate and mortgage fraud ran rampant during the 2000’s great housing bubble. We’ve all heard the stories but there have been few prosecutions, so it’s good to see some in progress.

David Crisp and Carl Cole were arrested by federal agents on mortgage fraud charges. They ran a prominent real estate brokerage in Bakersfield and apparently created straw buyers and manufactured false loan documents in order to sell homes and inflate housing prices.

Ten people, including Realtors, loan officers, and a notary, were arrested on 56 different indictments. It looks like these people will move from their private gated neighborhoods to a public gated high-density community of inmates.

Low interest rates and easy lending standards created an environment primed for mortgage fraud. It is good to see arrests that will likely result in jail time for the most prolific perpetrators. Unfortunately, this investigation took five years.

Rapidly rising home prices are not usually a good thing because they cause new buyers to pay high prices that are not supported by market fundamentals or their ability to pay back the debt.

Also check out the local news coverage of Crisp and Cole’s arrest at KGET.

Ever wonder how the real estate boom and bust occurred? Why is the foreclosure process such a mess and causing problems across the country?

The system was set up for failure.

Watch both videos of the deposition of alleged robosigner Dhurata Doko of Nationwide Title Clearing. The deposition was taken by attorney Christopher Forrest of The Forrest Law Firm.

This is not about the actions of a few lower-level employees but the system created by those in power.

Part 1

Part 2

Again, this is not about the people performing tasks on a daily basis — they were NOT the ones in power or control. They were just following orders from above.

Other robosigner deposition videos: