by Calculated Risk on 8/23/2010 01:49:00 PM

Steve Randy Waldman at Interfluidity writes about a discussion last week with several bloggers and Treasury officials: Monday at the Treasury: an overlong exegesis

A few excerpts:

Obviously the headline act was Timothy Geithner. Off the record (or “on deep background”), Geithner is entirely different from the sometimes stiff character who appears on television. He is fun to argue with, very smart, good natured, and intellectually wily. As Yves Smith quipped afterwards, Geithner “gives good meeting.”

Despite that, our seminar was an adversarial affair.

And on HAMP:

On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.

If correct, HAMP was mostly a foreclosure delaying program.

There is much more in the post from Waldman.

by Calculated Risk on 8/23/2010 10:47:00 AM

The Department of Transportation (DOT) reported that vehicle miles driven in June were up 1.3% compared to June 2009:

Travel on all roads and streets changed by +1.3% (3.4 billion vehicle miles) for June 2010 as compared with June 2009.
...
Cumulative Travel for 2010 changed by +0.1% (1.6 billion vehicle miles).

Click on graph for larger image in new window.

This graph shows the rolling 12 month total vehicle miles driven.

On a rolling 12 month basis, vehicle miles driven are mostly moving sideways. Miles driven are still 1.9% below the peak - and only 0.7% above the recent low.

Back in 2008, vehicle miles turned strongly negative on a "month over the same month of the prior year" basis, and that was one of the pieces of data that helped me correctly predict oil prices would decline sharply in the 2nd half of 2008. So far we haven't seen a sharp decline in vehicle miles - but we also haven't seen a strong increase.

Early next year this will be the longest period with the rolling 12-months miles driven below the previous peak since the DOT started tracking this series. The current longest slump followed the 1979 oil crisis and lasted for 40 months (starting in 1979 and lasting through the recession of the early '80s).

by Calculated Risk on 8/23/2010 08:30:00 AM

Note: This is a composite index based on a number of economic releases.

From the Chicago Fed: Index shows economic activity rebounded in July

Led by improvements in production-related indicators, the Chicago Fed National Activity Index returned to its historical average of zero in July, up from –0.70 in June. Three of the four broad categories of indicators that make up the index improved from June, but only the production and income category made a positive contribution to the index in July.

The index’s three-month moving average, CFNAI-MA3, edged lower to –0.17 in July from –0.12 in June. July’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.

Click on table for larger image in new window.

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. According to the Chicago Fed:

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.

This composite index increased in July because of the boost in industrial production. That was probably mostly auto related and recent surveys (like from the Philly Fed) have indicated slowing or even contraction for production in August.

by Calculated Risk on 8/22/2010 10:07:00 PM

Note: Here is the Weekly Summary for last week, and the Schedule for next week (will be busy!).

Amazing ... people still think house prices will go up 10% per year ... from David Streitfeld at the NY Times: Housing Fades as a Means to Build Wealth, Analysts Say

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.

“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.

by Calculated Risk on 8/22/2010 05:50:00 PM

Note: Here is the Weekly Summary for last week, and the Schedule for next week (will be busy!).

A bizarre story from Danny Westneat at the Seattle Times: Mansion squatters return in a big way (ht Laura)

Mark von der Burg [is] the Eastside real-estate agent who, two months ago while prepping for an open house to sell a $3.3 million mansion in Kirkland, was stunned to find that complete strangers had moved in and were staking a tortured legal claim to the foreclosed property.
...
Von der Burg says that while the mansion-squatting story may have been entertaining — it ended when police retook control of the house for the bank that owned it — it cost his client, a bank, $35,000 in ... So count him as not amused that this week, the same team of squatters apparently attempted to stake claims to three new mansions on the Eastside ... Police say no one has as yet moved into any of the houses. But all three had letters tacked to the front doors ordering anyone claiming ownership "to surrender possession within three days." And then threatening "judicial proceedings" against anyone who doesn't comply.

These squatters sounds like upscale "bandos"¹, but it sounds like they are really just scammers - looking for something for nothing. The real estate bust has really brought out the worst in some people.

¹ "Bandos" are homeless people who live in abandoned homes.