ABOUT BANKS, WALL STREET & AN OUT OF CONTROL ECONOMY

Mother Jones is a national magazine, (circulation 240,000) and the "enfant terrible" of fearless investigative  reporting. Many times winner of National Magazine Awards for General Excellence, (lately in 2008 and 2010), they had recently their moment of fame when they released the famous "47-percent" video that captured Mitt Romney at a private fundraiser, ranting and denigrating nearly half the electorate as "victims" who do not take "personal responsibility and care for their lives", to which many attribute an important part in his 2012 elections defeat.

I do not believe everything I read in the magazine, of course. But I had been asking myself for a long time what exactly were these puzzling and shadowy stock market transactions in which banks were risking billions of dollars and making tons of money in highly unregulated ways.

This article from the magazine has clarified many questions. I think it should be required reading as an introduction to our 21st century's economy. 

You and I have always understood that a bank receives our money as a deposit with the purpose of keeping it safe in the first place, then lend it with a maximum care to businesses or individuals engaging in business, or even granting mortgage loans to solvent persons so that they can purchase a home.

Things have changed. Banks are not at all interested in lending to John Smith or Mary Jones the money they need to open their shop or expand their restaurant. They are not even interested in giving a loan to a small or  medium sized corporation. 

Banks now have changed their trade to:

1) Credit Cards. 

2) Asset Management.

3) High level transactions such as corporate buyouts.

4) Selling "forced insurance" at ten times its costs to people whose mortgages they are holding, under any convoluted excuse.

5) Nickel-and-diming their customers (but the total profits are staggering), with all kinds of abusive charges and fees.

6) Taking people's money in deposit and paying hardly any interest to the depositor, thanks to our Federal Reserve's policy of the last few years, while they lend it (see item #1) at interest rates that can reach an effective annual 30%  in many cases.

7) And of course, from time to time, get involved in massive mortgage business....(oops!) but this could be the subject of another article.

.... and a few more, I guess.

But you guys, children of the internet, super-computers savvy, intelligent phones users, algorithms apprentices, will surely want to know about some incredible facts that have sunk our country in the deepest recession in many years, and are still threatening our way of life with no relief in sight.

For example, when you hear "STOCK MARKET" you understand that it is a mechanism used by the common person to purchase shares of corporations with his or her savings, invest carefully and get a decent return in profits (dividends) of a successful enterprise, and even make some profit by selling these shares at a higher price later in the future, due to their appreciation.

Right?

Wrong. 

Read on:

You will learn how things are done nowadays, you ignorant.

Sorry, it's a bit too long,  but still worth a few minutes of your busy time.

Here is the article I am talking about:

Too Fast to Fail: Is High-Speed Trading the Next Wall Street Disaster?

Computer algorithms swap thousands of stocks each instant—and could set off a financial meltdown.

—By Nick Baumann

At 9:30 A.M. on August 1, a software executive in a spread-collar shirt and a flashy watch pressed a button at the New York Stock Exchange, triggering a bell that signaled the start of the trading day. Milliseconds after the opening trade, buy and sell orders began zapping across the market's servers with alarming speed. The trades were obviously unusual. They came in small batches of 100 shares that involved nearly 150 different financial products, including many stocks that normally don't see anywhere near as much activity. Within three minutes, the trade volume had more than doubled from the previous week's average.

Soon complex computer programs deployed by financial firms swooped in. They bought undervalued stocks as the unusual sales drove their prices down and sold overvalued ones as the purchases drove their prices up. The algorithms were making a killing, and human traders got in on the bounty too.

Within minutes, a wave of urgent email alerts deluged top officials at the Securities and Exchange Commission. On Wall Street, NYSE officials scrambled to isolate the source of the bizarre trades. Meanwhile, across the Hudson River, in the Jersey City offices of a midsize financial firm called Knight Capital, panic was setting in. A program that was supposed to have been deactivated had instead gone rogue, blasting out trade orders that were costing Knight nearly $10 million per minute. And no one knew how to shut it down. At this rate, the firm would be insolvent within an hour. Knight's horrified employees spent an agonizing 45 minutes digging through eight sets of trading and routing software before they found the runaway code and neutralized it.

By then it was shortly after 10 a.m., and officials from the NYSE, other major exchanges, and the Financial Industry Regulatory Authority were gathering for an emergency conference call. It didn't end until 4 p.m.Ads by CouponDropDown      

In the four years since the collapse of Lehman Brothers drove the global financial system to the brink of oblivion, new technologies have changed Wall Street beyond recognition. Despite efforts at reform, today's markets are wilder, less transparent, and, most importantly, faster than ever before. Stock exchanges can now execute trades in less than a half a millionth of a second—more than a million times faster than the human mind can make a decision. Financial firms deploy sophisticated algorithms to battle for fractions of a cent. Designed by the physics nerds and math geniuses known as quants, these programs exploit minute movements and long-term patterns in the markets, buying a stock at $1.00 and selling it at $1.0001, for example. Do this 10,000 times a second and the proceeds add up. Constantly moving into and out of securities for those tiny slivers of profit—and ending the day owning nothing—is known as high-frequency trading.    

This rapid churn has reduced the average holding period of a stock: Half a century ago it was eight years; today it is around five days. Most experts agree that high-speed trading algorithms are now responsible for more than half of US trading. Computer programs send and cancel orders tirelessly in a never-ending campaign to deceive and outrace each other, or sometimes just to slow each other down. They might also flood the market with bogus trade orders to throw off competitors, or stealthily liquidate a large stock position in a manner that doesn't provoke a price swing. It's a world where investing—if that's what you call buying and selling a company's stock within a matter of seconds—often comes down to how fast you can purchase or offload it, not how much the company is actually worth.

As technology has ushered in a brave new world on Wall Street, the nation's watchdogs remain behind the curve, unable to effectively monitor, much less regulate, today's markets. As in 2008, when regulators only seemed to realize after the fact the threat posed by the toxic stew of securitization, the financial whiz kids are again one step—or leap—ahead.

• Circuit breaker: A mechanism to shut down trading when the market falls too fast or individual securities trade dramatically outside the normal range.
• Dark pools: Broker-run markets outside the public stock exchanges that allow investors to trade large batches of stocks anonymously.
• Holding period: The time an investor owns a security.
• Latency: How long it takes to execute a financial transaction over a network connection. This winter, two tech companies hope to launch the lowest-latency link yet between Illinois and New Jersey, a 733-mile chain of microwave towers to hurtle data in 8.5 milliseconds round-trip.
• Liquidity: A liquid asset can be easily bought or sold without changing in value—cash, for example, is more liquid than stocks.
• Proprietary trading: When financial institutions trade for the benefit of their companies, rather than for their customers. The Dodd-Frank financial reforms put some restrictions on proprietary trading at big banks, but loopholes abound.
• Quote stuffing: Placing and quickly rescinding a large number of buy or sell orders to confuse or slow down rival traders.
• Spread: In trading, commonly the difference between the highest price a buyer will pay and the lowest price a seller will take.

The Knight episode was "a canary in the mine," says Michael Greenberger, a University of Maryland law professor and former regulator at the Commodity Futures Trading Commission (CFTC). "We've been lucky so far that this hasn't been more serious."

Knight wasn't the worst-case scenario. Not even close. A lot of high-frequency trading is done by small proprietary trading firms, subject to less oversight than brand name financial institutions. But big banks have also tried to get in on the act. Imagine a runaway algorithm at a too-big-to-fail company like Bank of America, which manages trillions, not billions, in assets. Or, says Bill Black, a former federal regulator who helped investigate the S&L crisis of the '80s and '90s, imagine trading algorithms causing "a series of cascade failures"—like the domino effect that followed Lehman's collapse. "If enough of these bad things occur at the same time," he says, "financial institutions can begin to fail, even very large ones." It's not a question of whether this will happen, Black warns. "It is a question of when."

Years of mistakes and bad decisions led to the 2008 collapse. But when the next crisis happens, it may not develop over months, weeks, or even days. It could take seconds.

Alpha, New Jersey, is a sleepy hamlet in the Lehigh Valley, near the Delaware River. Somewhere in town (the owners won't say exactly where) is one of 10 2,000-square-foot amplifier facilities that dot the landscape every 75-or-so miles between Chicago and New York City, ensuring that fiber-optic signals travel between the two points as clearly and quickly as possible. Spread Networks, the firm that operates the facility, may have seen some poetry in the community's name—"alpha" is the term investment managers use to describe the performance of an investment after adjusting for risk.

Spread is part of a growing industry dedicated to providing hyperspeed connections for financial firms. A faster trader can sell at a higher price and buy at a lower one because he gets there first. A connection that's just one millisecond faster than the competition's could boost a high-speed firm's earnings by as much as $100 million per year, according to one estimate.

Because of this, trading firms are increasingly pushing the limits to establish the fastest connections between trading hubs like New York, Chicago, and London. Every extra foot of fiber-optic cable adds about 1.5 nanoseconds of delay; each additional mile adds 8 microseconds. That's why companies like Spread have linked financial centers to each other by the shortest routes possible. Spread's Alpha facility is one of more than a dozen similar centers arrayed along the path of its 825-mile-long, $300 million fiber-optic cable between Wall Street and the Chicago Mercantile Exchange. Spread reportedly charges traders as much as $300,000 a month to use its network. Exchanges like the NYSE charge thousands of dollars per month to firms that want to place their servers as close to the exchanges as possible in order to boost transaction speeds. Industry experts estimate that high-speed traders spent well over $2 billion on infrastructure in 2010 alone.

Traders' need for speed has grown so voracious that two companies are currently building underwater cables (price tag: around $300 million each) across the Atlantic, in an attempt to join Wall Street and the London Stock Exchange by the shortest, fastest route possible. When completed in 2014, one of the cables is expected to shave five to six milliseconds off trans-Atlantic trades.

But why stop there? One trading engineer has proposed positioning a line of drones over the ocean, where they would flash microwave data from one to the next like the chain of mountaintop signal fires in The Lord of the Rings. "At what point do you say, 'This is fast enough'?" asks Brent Weisenborn, a former NASDAQ vice president.

The acceleration of Wall Street cannot be separated from the automation of Wall Street. Since the dawn of the computer age, humans have worried about sophisticated artificial intelligence—HAL, Skynet, the Matrix—seizing control. But traders, in their quest for that million-dollar millisecond, have willingly handed over the reins. Although humans still run the banks and write the code, algorithms now make millions of moment-to-moment calls in the global markets. Some can even learn from their mistakes. Unfortunately, notes Weisenborn, "one thing you can't teach a computer is judgment."

One set of signals the programs have to weigh are countless trade orders other algorithms send out and then quickly rescind. There's a fierce debate about what these abortive trades might be. Some speculate they are new algorithms being tested or strategic feints, the equivalent of sonar pings probing the market for a response. Some of the fake trades could be aimed purely at gobbling up bandwidth to slow down competitors. "There are doubtless former [high-speed traders] who could tell us," Black says. "If I worked for the CFTC or the SEC I would be seeking them out to try to learn what was going on."

On the afternoon of May 6, 2010, CNBC viewers could have mistaken the channel's programming for an apocalyptic blockbuster. The Dow, already down 400 points on bad news from Europe, had suddenly plummeted another 600. Erin Burnett, wide-eyed, gesticulated at charts to illustrate the "unprecedented" 1,000-point drop. The typically manic Jim Cramer reached a new level of frenzy, shouting at viewers to buy—BUY!—Procter & Gamble, which had fallen 25 percent, and wagging his finger at the screen: "If that stock is there, you just go and buy it. It can't be there. That's not a real price!"

Prices of nearly every stock and exchange-traded fund had plunged in minutes. Some 300 securities experienced wild gyrations, with trades executed at prices as low as a penny and as high as $100,000 a share. During the same second, shares of the consulting firm Accenture traded at both $0.01 and $30.

In what was later dubbed the "flash crash," nearly $1 trillion in shareholder value was wiped out in a matter of minutes before the market rebounded, eventually closing down 3 percent from the previous day.

 Almost five months later, regulators would conclude that, on a day when traders had already been shaken by the Greek debt numbers, a single massive sell order executed by an algorithm belonging to a firm in Kansas had triggered a series of knock-on events that sent the market into a tailspin. The analysis portrayed "a market so fragmented and fragile that a single large trade could send stocks into a sudden spiral," the Wall Street Journal reported.

The flash crash spurred regulators to action—but spurs can only make a horse gallop so fast. No one in Washington makes an extra million bucks a year for moving a millisecond faster, and it shows. So far, Congress and the nation's financial watchdogs have done more hand-wringing than regulating. In classic Washington fashion, when a Senate subcommittee held a hearing in late September on the "rules of the road" for algorithmic trading, the only consensus to emerge was that more hearings were needed.

"Thanks to technology, our securities markets are more efficient and accessible than ever before," then-SEC chair Mary Schapiro said at an October market technology roundtable. "But we also know that technology has pitfalls. And when it doesn't work quite right, the consequences can be severe. Just imagine what can happen if an automated traffic light flashes green rather than red, if a wing flap on a plane goes up rather than down, if a railroad track switches and sends the train right rather than left."

Politicians and regulators realize there's an issue, but by the time Washington gets a handle on the situation, some experts fear, the damage may already be done. "We're always fighting the last fire," says Dave Lauer, a market technology expert who has worked for high-speed trading firms.

If it's a fire the SEC needs to fight, the agency is working with equipment that's more reminiscent of bucket brigades. The New York Times has called regulators' tech "rudimentary." David Leinweber, the director of the Center for Innovative Financial Technology at Lawrence Berkeley National Laboratory, has slammed the SEC and the CFTC for running an "IT museum"—and taking nearly five months to analyze the flash crash, which was essentially over in five minutes.

One mysterious algorithm was described as running "like a bat out of hell on crystal meth with a red bull chaser."

To enhance its market-monitoring capacity, the SEC has had to turn to industry—specifically, a firm called Tradeworx that specializes in very-high-speed trades—for a new computer program to analyze trading data. That program, called Midas, was scheduled to go online at the end of 2012. But even Midas won't give the SEC a comprehensive picture of the markets. It offers no data on so-called "dark pools," private markets where buyers and sellers can trade anonymously, and it won't tell the SEC who is responsible for a given trade. 

To fill those gaps, the SEC plans to ask market participants to submit comprehensive information about every trade in the US markets—creating what is called a consolidated audit trail. But the SEC won't receive this information in real time. Instead, the audit information will be due by 8 a.m. the next day.

"When that data does come in, since we have every single step, we will be able to reconstruct it exactly as it happens," says Gregg Berman, an ex-physicist and SEC adviser who led the agency's inquiry into the flash crash. "The only thing we miss is the opportunity to do something the same day. But given that a robust and defensible analysis of even a small portion of the trading day can itself take many days, we don't give up much by waiting until the next day to receive a complete record of the day's events." Studying this market data will help the agency develop rules to address problems in the market—but only after they occur.

Meanwhile, the financial world is getting even more fast-paced, opaque, and downright mysterious. The same week Schapiro spoke at the SEC roundtable, an algorithm consumed 10 percent of the bandwidth of the US stock market. It "ran like a bat out of hell on crystal meth with a red bull chaser, to mix a few metaphors," Leinweber wrote on his Forbes blog. "It generated 4% of U.S. stock market quote activity," but the program "didn't make a SINGLE TRADE, cancelling every order. That is pretty darn weird." Leinweber suspects that the culprit was a new algorithm being tested, but that's just a guess—no one knows for sure, least of all the SEC. It used up "10% of the communications capacity of our overly wired market," Leinweber noted. "Ten of these guys could use the whole market...Scary stuff."

So far, the problems caused by algorithms appear to be mostly accidental. But what if someone designed a program intended to wreak havoc? John Bates, a computer scientist who, in the early 2000s, designed software behind complicated trading algorithms, worries that the kind of tools he's created could end up in the wrong hands. "Fears of algorithmic terrorism, where a well-funded criminal or terrorist organization could find a way to cause a major market crisis, are not unfounded," he wrote in 2011. "This type of scenario could cause chaos for civilization and profit for the bad guys and must constitute a matter of national security."

Ask the Wall Street lobbyists about things like cascade failures or algorithmic terrorism and they'll tell you not to worry. They'll note that transaction costs have never been lower and that the average investor can execute trades faster and cheaper than ever before. In their view, the fact that Knight lost $440 million and didn't take the rest of the financial sector down with it suggests that the market isn't nearly as fragile as detractors claim.

Thanks to these arguments, and the nearly $200 million Wall Street spent lobbying Congress around the Dodd-Frank financial reform bill in 2010, that law did almost nothing to regulate high-speed trading. In the absence of actual rules, the most widely discussed safeguards are now the "kill switches" or "circuit breakers" that kick in when a certain threshold is breached. After Black Monday in 1987, when the Dow Jones dropped by nearly a quarter in one day, the New York Stock Exchange instituted circuit breakers that halt trading temporarily when the market falls by 10 percent and shut it down entirely when it falls by 30 percent. Neither of these fail-safes, though, was triggered by the flash crash—the market fell in a blink, but it fell less than 10 percent.

After the flash crash, the SEC implemented new circuit breakers that kick in when an individual stock experiences rapid, unusual price swings. But those didn't prevent the Knight debacle—it was mostly trading volume, not unusual prices, that cost the company hundreds of millions. New SEC rules slated to take effect in February will halt trading for five minutes if prices of individual stocks move outside of a set range for more than 15 seconds. But those are "a Band-Aid," complains Lauer, the technology expert. "You're treating the symptom, not the cause."

Lawmakers have proposed a financial-transactions tax to limit high-speed trading churn, and raise revenue.

Most participants at the SEC's October market tech roundtable endorsed the idea of installing more kill switches at various levels—for individual firms, individual stocks, and perhaps for the market as a whole. But there's a problem: If a kill switch or circuit breaker is automatic, it does nothing to reintroduce human judgment. Conversely, if a person has to pull a kill switch, he or she has to take responsibility for doing so—which creates its own problems

. "No one wants to be the guy who cried wolf and got you onto the front page of the Wall Street Journal," Black says. "The word that's going to be used is that [you] panicked."

So, if kill switches and circuit breakers don't prevent future problems (and they haven't before), how do you avoid the algorithmic apocalypse? Reformers are advocating what amount to speed limits. 

One of their proposals involves implementing what could be viewed as a temporary "no backsies" rule, requiring trading firms to honor the prices they quote for a minimum amount of time unless they execute the trade or make a better offer. Even a minimum quote life of just 50 milliseconds "would have eliminated the flash crash," says Eric Hunsader, the CEO of Nanex, a company that makes software for high-speed traders.

In a more far-reaching proposal, Rep. Peter DeFazio (D-Ore.) and Sen. Tom Harkin (D-Iowa) have proposed levying a financial-transactions tax—they suggest 0.03 percent—on each trade, as a way of discouraging churn and raising revenue. (The United States had such a tax until 1966.) Economists, activists, and even some finance big shots—Warren Buffett among them—have endorsed the idea. "Even at the modest level we've proposed, [the tax] would raise $35 billion a year, which would either be used to defray the deficit or be used for job-creating investments by the government," DeFazio told me. Eleven European Union countries (though not the United Kingdom) are pressing ahead with the idea—and they've talked about a tax as high as 0.1 percent. Wall Street lobbyists have pushed back against both speed limits and bringing back the transaction tax.

 But in the wake of the Knight episode, some industry experts are expressing doubts about the status quo.

"I believe this latest event was handled better than the flash crash, but the larger question is whether our markets are adequate to deal with the technology that is out there," Arthur Levitt Jr., a former chairman of the SEC and a dean of the financial establishment, told the New York Times in August. "I don't think they are." That view is becoming more widely accepted, even among corporate CEOs, traders, and the algorithm builders themselves.

The chief executives of publicly traded companies—who are hired and fired based on stock prices—increasingly worry that their shares could be sent into a free fall by an algorithmic feeding frenzy. The current markets have created a "somewhat disjointed world between what a company does and what its stock does," the CEO of one billion-dollar, NYSE-traded company told Mother Jones.

According to Ben Willis, a longtime NYSE trader, "When you have the heads of the Fortune 500 companies say, 'Hey, wait a minute, guys: Our stocks look like hell and...no one can tell me with any certainty who is doing what to my stock and why,'" the critics might gain political momentum. Then again, the financial sector has a pretty solid track record of stymieing reform. And, given the extent to which the international financial markets are intertwined, would slowing down Wall Street make a difference if similar measures weren't taken in London and Hong Kong?

As market-shaking episodes pile up, even some of the tech geniuses who helped usher in Wall Street 2.0 now worry about their innovations running amok. Wall Street Journal reporter Scott Patterson's book on high-speed trading, Dark Pools, recounts the story of Spencer Greenberg, a young math genius who built a hugely successful trading algorithm named Star but later came to have reservations about what he had unleashed on the world. "In the hands of people who don't know what they're doing," Greenberg warned a gathering of algorithmic traders in 2011, "machine learning can be disastrous."

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

www.condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condo 

floride-immobilier.fr

 

More about our Middle Class Endangered Species.

...and why our real estate crisis is not over.

It has become a regular feature in our media: The Destruction of Jobs.

As the monopolization of our economy continues at accelerated trends, the degradation of our infrastructures is every day more evident and flagrant, as the voices of our media are silenced one by one, either by the “concentration and consolidation” of TV and Radio stations, and gradual closure of our most respected newspapers and magazines, we are left to voice our admiration for the incredible gains in profitability. efficiency, and productivity of the gigantic corporations that are becoming the owners of our lives, our destinies, and our democracy.

While these too big to fail “banking institutions” continue to use incredibly sophisticated software to gamble by the trillions of dollars their customer’s deposits, (for which they basically pay zero interest),  and achieve very risky but very juicy results; while the least they perform is their basic social function which is to use depositor’s money to lend to small and medium sized businesses and start-ups, to promote construction of houses, grant loans to new home-buyers, finance rehabilitation of our roads, bridges, and take risks in encouraging and sponsoring new sources of clean and renewable energy, their accumulated wealth only results in more job reductions and misery. 

Please read the following articles published yesterday (February 26, 2013), and you will understand what I am talking about:

Can we do something about it?  It is becoming harder by the minute. But we still have a chance while our tiny voices might be still be heard. 


Here is the First Article:


NEW YORK (Reuters) - JPMorgan Chase & Co plans to cut 3,000 to 4,000 jobs in its consumer bank in 2013, representing about 1.5 percent of the company's overall workforce, as the bank tries to improve the profitability of its branches.

The cuts will come mainly through attrition, spokeswoman Kristin Lemkau said. The bank's branches have 63,500 employees, representing about a quarter of JPMorgan Chase's total employees.
JPMorgan is one of the few big U.S. banks that is still adding branches to its network, but to boost profit it plans to scale back the tellers it has on hand for routine transactions and to add some salespeople for products and services like wealth management that can boost revenue.

The net effect will be to reduce staff per branch by 20 percent through 2015, the company's head of consumer banking, Ryan McInerney, said in a presentation to investors.
In JPMorgan Chase's mortgage business, the company reiterated its previously announced plans to shed 13,000 to 15,000 jobs by 2014.

JPMorgan Chase had 5,614 branches at the end of 2012, and plans to increase its network by about 100 branches a year, it said. Chase's U.S. branch network is second to Wells Fargo & Co's in size.
The bank is hoping to focus on selling more to wealthy depositors. Its average consumer checking account has a balance of $4,276, and about half of all affluent U.S. households are within two miles a Chase branch or automated teller machine, the bank said.

JPMorgan Chase overall earned $21.9 billion last year, excluding accounting charges linked to changes in the value of its debt. The bank said it has the potential to earn about $27.5 billion, thanks in part to efficiency gains. It aims to cut overall expenses by $1 billion in 2013.

For overall staffing levels, JPMorgan Chase had 258,965 employees globally at the end of 2012. Its headcount rose following the financial crisis, to 262,882 in the second quarter of 2012 from 219,569 in the first quarter of 2009. Since last year's second quarter, staffing levels have drifted lower.
JPMorgan Chase shares were down 1.3 percent at $47.08 on Tuesday morning on the New York Stock Exchange.
                                                  

 **************

And Here is the Second Article:

WASHINGTON, Feb 26 (Reuters) - The U.S. banking industry in 2012 recorded its highest earnings since before the 2007-2009 financial crisis, according to data released on Tuesday by the Federal Deposit Insurance Corp.

The FDIC said the industry's full-year earnings were the second-highest on record at $141.3 billion, an increase over 2011 of $22.9 billion, or 19.3 percent.

Bank earnings peaked in 2006 at $145.2 billion.

Much of the earnings growth in 2012 came from banks reducing the amount they set aside in case of losses on loans, the FDIC said. Banks also saw gains on loan sales and higher servicing income.

"While there is still room for further income growth, we don't expect the pace of earnings growth to continue at these levels," FDIC Chairman Martin Gruenberg said in a statement.

The report will likely be seen as a sign that the industry is healing after the financial crisis, although some bigger banks cut jobs last year to cope with persistent pressures such as declines in trading volume.

The industry's earnings for the fourth quarter of 2012 totaled $34.7 billion, up $9.3 billion, or 36.9 percent, from the same period in 2011, the FDIC said.

Net operating revenue during the fourth quarter was $169 billion, up $7.3 billion, or 4.5 percent, from a year earlier, the FDIC said.

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condo 

floride-immobilier.fr

Local Real Estate Buyers - Endangered Species

In more than 5 years, I haven’t sold a single home to a local resident. 

Let me repeat:  not even one person or one couple living in the area of South Florida has bought a house using my services since 2007.

I have done fairly well as a realtor, however, but it has only been the providential arrival of the foreigners, out-of-town buyers, snowbirds, Canadian, French, British, and affluent clients from Northeastern states.

Hard to explain? Of course not.

The first reason we will jump on is the newly found toughness of banks and lenders and their reluctance to assume any kind of risk that is not 110% covered, endorsed and required by every existing state or federal law or statute, internal rule and regulation, and this oh so pure newly assumed purist attitude of appraisers and underwriters. 

How ironic is the 180 degree turn from the thrill and craziness of those loans with “no-income-verification”, “zero-down”, 107% loan to value, “ no-interest payment” that allowed completely ineligible applicants with horrendous credit history to acquire thousands of high priced homes and condos, just five years ago.

Well we know the story, and it isn’t the subject of this article.

The second reason is even more powerful. 
Very few persons nowadays feel secure in their jobs. 

Productivity is the word that has driven small and large businesses – perhaps more so the larger corporation – to squeeze  their human resources to the maximum, pay them less, work them harder, make them feel that they are expandable, that they can and will be fired at the will of any low level supervisor, manager, director, or just by a new policy of “personnel reduction”, which will get rid of  5, 10 or 20 percent of the workforce, every now and then, so the same amount of work will be performed by the remaining and grateful ones who have perhaps escaped to the previous purge performed in  accordance with the "outsourcing" solution that feed the soul of our business elite and has turned to be the nightmare of our working class.

The pain is less felt by younger workers than by the middle-aged. It is easy to imagine the anxiety, and stress caused by the possible loss of employment which hangs on the head of any 45 or 50 years-old loyal worker who can be fired at any time for a younger, fresher and cheaper replacement.

Can you find a better reason not to get into long term debt that could leave you homeless, credit-less and hopeless?

The third reason is affordability. 

I am not into statistics and numbers, but I can say with certainty that salaries have not kept up – and by large – with inflation during the last 30 years.

People are just underpaid. 

I get working class Canadians clients looking for condos in the range of $100,000, $200,000 and more. These are their “vacation homes”, “their investments for retirement time”. (Words that have almost disappeared from the vocabulary of an American common person).

Many of these Canadians are just plain middle class, but when they present their income information to the condo associations, you will see yearly revenues of $80,000, $120,000, $150,000.

They are white or blue collar employees, working in all kind of  companies, or they are small business owners, but you don’t see the stress in their eyes. Their healthcare is free, their kids' college education is almost free, and if that doesn’t make a big difference, they also get much longer vacations, and we just look at them with envy, enjoying them here. 

Shall we say that these guys are at the point where we should have been if all our wonderful policies of "less-government" , free-market, globalization, banks supreme power and corporate monopolistic control  hadn’t been implemented in the same period?

But again, this is not a political or an economical discussion. Just some remarks on why I can’t sell a home to my fellow Florida residents.

In fact, so many “people spending so much of the country's budget
 in food stamps” are in their vast majority just trying to make ends meet because they are prisoners of the miserable seven dollars minimal hourly wage.

The so called “entitlements” that are “feeding our deficits” are undoubtedly the result of the low salaries that enrich corporations, forcing people into public health services, food stamps, and other “subsidies” or "entitlement programs". 

Let's face it: the ”productivity gains” have only benefited business but massively impoverished my potential local buyers. Low paying jobs, part time jobs, unstable jobs, this is what has replaced a vibrant economy that was once the envy of the developed world.

I can't by conclude that this whole scenario is threatening our economy which is  based in the consumption and reasonable standard of living of the majority.

Are we going to address these issues? All of them?

Otherwise, it is evident that nothing is going to stop the trend of local residents renting foreign-investor-owned homes.

Here is the article I read today in FloridaRealtors.org, that triggered this unprofessional anger.

Survey: Economic uncertainty keeps renters renting 

CHICAGO – Feb. 6, 2013 – The average monthly apartment rental cost in the U.S. was $1,048 in fourth quarter 2012, up 3.8 percent from a year earlier, according to Reis. At the same time, the nation’s apartment vacancy rate continued a steady decline to 4.5 percent in the fourth quarter – its lowest level in more than a decade.

In response, Apartments.com conducted a nationwide survey of more than 1,300 renters to gain insights into their moving plans this year. In looking at the survey results, Apartments.com says a growing number of former homeowners are choosing to rent, while others make a move based on employment relocation, cost savings and apartment size.

“There is a growing trend toward previous homeowners choosing to rent after carefully considering economic factors such as affordability, employment opportunities and unaffordable homeownership expenses,” said Dick Burke, senior vice president and general manager, Apartments.com. “The fiscal cliff our country was headed toward in December seems to have motivated all renters to take a realistic approach toward budgeting for 2013.”

Top 5 reasons renters choose to rent

• Renting is a more affordable option: 22.2% (down from 26.3% in 2012)
• Flexibility: 15.7% (down from 21.2% in 2012)
• Can’t afford to keep up with homeownership expenses: 14.2% (up from 10.5% in 2012)
• Relocate for employment: 13.3% (down from 20.5% in 2012)
• Lost home due to foreclosure or divorce: 11.2% (up from 5.9% in 2012)

Reasons renters plan to move in 2013

• Relocating for employment opportunities: 15%
• Shopping for a less expensive apartment: 13.2%
• Looking for a bigger apartment: 11.2%
• Change in marital status: 10.8%
• Wanting to live in a different neighborhood: 9.8%
• Relocating for educational reasons: 6.7%
• Other family reasons: 5.2%
• Recent college grad moving to their own place: 4.6%
• Looking for a smaller apartment: 3.3%
• Wanting to live alone: 2.5%

Resources used in an apartment search

All renters surveyed had used Apartments.com, but they also reported using other online apartment listing websites (such as Craigslist), search engines and review websites.

The opinions of others seem to play a more important role in searches than in previous years. More than half of respondents said they use review websites during their apartment search, versus 32.6 percent in 2012; 45.1 percent relied on word of mouth versus 31.5 percent in 2012.

Apartment share arrangements nearly identical to 2012

• Husband/wife/significant other and/or kids: 49.6%
• Living alone: 40.3%
• Roommate(s): 10.1%

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condo 

floride-immobilier.fr

The Foreclosure Saga Goes On

Law firm warns of foreclosure ruling's effect

WEST PALM BEACH — The national law firm of Greenberg Traurig issued an alert this week warning its lawyers that a 4th District Court of Appeal ruling in favor of Palm Beach County homeowners could "dramatically change the foreclosure landscape in Florida."

The Sept. 7 decision in the case of Gary and Anita Glarum vs. LaSalle Bank says that an affidavit of indebtedness submitted by the bank was hearsay because the person who signed it did not have personal knowledge of the case. It reversed a 2010 Palm Beach County Circuit Court summary judgment that said the Glarums owed the bank $422,677.

"This decision could have broad, sweeping application in the lending and loan servicing industries and affect thousands of foreclosure cases, among other types of cases, currently pending in Florida courts," says the alert posted on Greenberg Traurig's website. The Orlando-based firm of Butler & Hosch represented LaSalle Bank in the case, but Greenberg Traurig also is a bank representative.

The amount the circuit court said the Glarums owed was based on an affidavit of indebtedness signed by loan servicer employee Ralph Orsini, who pulled the information from a company computer - a move that appeals court judges said amounts to hearsay. The court's ruling means the home can't go to foreclosure sale until the bank either gets another summary judgment or goes to trial. The plaintiffs have 15 days to file for a rehearing.

Ice Legal of Royal Palm Beach represents the Glarums, who have been in foreclosure since 2008 and continue to live in the home. Ice Legal founder Tom Ice said the alert is a "transparent attempt to influence" the court to change its ruling .

"Being denied a prohibited shortcut may cost the banks a little more, but given that they are the deep pockets here, pockets lined with our own taxpayer money, the ruling is hardly unfair or earth- shaking," he said.

Greenberg Traurig writes that the Glarum decision is the first case to specifically hold that an affidavit of a loan servicer relying on computer records is inadmissible hearsay because the affidavit was unable to identify who made the data entries, or how or when they were made.

"In the context of foreclosure matters, Glarum is especially concerning given the fact that the lending community uniformly relies upon computer data, including data from prior servicers, when drafting affidavits of indebtedness in support of summary judgment motions," the alert notes.

It says the appeals court sent a "strong statement" that "may have achieved the unintended result of dramatically changing the foreclosure landscape in Florida."

From the Palm Beach Post – Sept. 16, 2011

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condo 

floride-immobilier.fr

Golden Beach Developers paid $24 million for the 1.1-acre site at 19505 Collins Ave. in Sunny Isles Beach.

Read in the South Florida Business Journal - Sept. 20, 2011

 

Regalia in Sunny Isles Beach sold for 24MM

Golden Beach Developers paid $24 million for the 1.1-acre site at 19505 Collins Ave. in Sunny Isles Beach.

Instead of selling at a discount to its troubled mortgage, as is usually the case in South Florida, a Sunny Isles Beach development site got dealt for $24 million – significantly higher than its loan.
In 2009, FirstBank filed an $11.7 million foreclosure lawsuit against Regalia LLC, along with managing members Jerold M. Kaufman, Abraham Cohen, Paul C. Murphy and Avra J. Jain.
It targeted the vacant 1.14-acre beachfront site at 19505 Collins Ave.
Regalia received approval to build the 43-story 40-unit condo there, but no major construction had taken place.
FirstBank failed and its assets were assumed by Beal Bank Nevada    Beal Bank Nevada Latest from The Business Journals BRT Realty buys loan on Savoy HotelATP shares go up on production dealKobi Karp faces claims over loan guarantees Follow this company . The new lender recently assigned the loan to International Lending in the British Virgin Islands.
Given the price the property brought, it looks like Regalia is off the hook. The new owner is Golden Beach Developers, an Aventura company managed by attorney Louis Montello.

This confirms my predictions.


Undoubtedly some people believe in beachfront properties.
At the pace that most of the inventory on the beach in South Florida has been swallowed by foreign investors, we shouldn't be waiting too long before prices are on the rise.

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condo 

floride-immobilier.fr

Foreign Buyers make the difference

Upturn in Florida home sales a welcome surprise
 

The following story provides insight into the world’s positive view of Florida as a smart real estate investment. It was published by Xinhua, a Chinese news agency that claims over 800 million website visitors.

(Xinhua) – Sept. 1, 2011 – One of the first U.S. states to have its economy crushed by the U.S. housing market recession is now experiencing a rather happy surprise – its housing market is undergoing an upturn.

Despite an unemployment rate of 10.7 percent, which is higher than the national rate of slightly over 9 percent, enough people are buying houses in Florida, especially in the Miami area, so that the state’s housing market is no longer considered an imminent problem by housing and regulatory agencies.

What makes this even more unique is the fact that the status of Florida’s housing market seems to be in the opposite condition of the national housing market.

End of July statistics by the U.S. Department of Commerce show that total sales of newly built homes in the U.S. declined for the third consecutive month. Total sales in July fell almost one percent.

On another housing market matter, Standard and Poor’s (S&P), the rating agency which created a global storm by downgrading U.S. credit rating in early August, is currently being investigated by the U.S. Department of Justice to see whether or not S&P mis-rated home mortgage securities. S&P declined to be interviewed by Xinhua for this story.

With all of the above fiscal-related problems negatively affecting the U.S. housing market, how are the Miami and Florida housing markets now having success? Todd Nordstrom, a Realtor for Keller Williams Realty in Miami Beach, got the answers.

“The recent building boom has brought a tremendous increase in residents to the (Miami) downtown areas. At this time, approximately 85 percent of all condominiums built in the last boom are currently occupied, which is fueling new restaurant and entertainment options. Foreign nationals account for over 50 percent of all sales in the (Miami-Dade) county,” said Nordstrom.

According to Nordstrom, “foreign nationals with cash due to rising currencies” were attracted to Florida by its lower home prices. They are mostly nationals from Brazil, one of a few countries that have witnessed rapid economic expansion in the past decade despite the recession that hit the U.S. and other major industrialized countries.

A spokesman for RealtyTrac, which publishes the monthly U.S. Foreclosure Market Report, also gave its explanations for the housing boom in Miami and Florida.

“We believe a slowdown in foreclosure activity, that started 10 months ago because of problems with foreclosure paperwork and documentation, is actually helping the Miami and Florida housing markets to experience this upturn,” said Daren Blomquist of RealtyTrac.

Miami and Florida’s good-fortune housing market environments have happened elsewhere in the U.S. – most notably in Phoenix, Arizona – and “prices have passed the tipping point where buyers are willing to jump in, and the temporary lull in the foreclosure activity has helped to boost buyer confidence as well,” Blomquist said.

Yet there are two other possible reasons for Miami and Florida’s upturn in their respective housing, according to Brad Sullivan, a spokesman for the U.S. Department of Housing and Urban Development (HUD).

“Florida/Miami has a relatively high concentration of retirees that may contribute to the demand for housing, relative to states/metro areas with a higher share of unemployed persons. The Southeast in general was/is growing faster than many other parts of the country – the upper Midwest, for example,” noted Sullivan.

The Miami-Dade housing market has had 12 consecutive quarters of increased sales. Condominium and home sales in the Miami-Dade area rose almost 50 percent in the second quarter of 2011.

The Internet is another source for would-be homebuyers to refer to if interested in buying a house in Florida. RealtyTrac.com and Foreclosure.com, which has monthly charges for customers who are given a grace period of seven days without fees, allow Internet users to examine Florida foreclosure records. Another website, Equator.com, does the same, but for no charge at all to customers.

While the Federal Housing Finance Agency (FHFA) is considering making tens of thousands of government-owned foreclosed homes into rental units, the medium price for a single-family home in the West Central Florida region dropped 3.2 percent from June to July. The medium price for such a home is now 125,000 U.S. dollars.

According to S&P’s Case-Schiller home price index, from June of 2010 to June of 2011, Tampa had the largest decrease in the price of a single-family home than anywhere else in the U.S. In that time span, the price of a home in the region of Tampa declined by 9.5 percent.

When RealtyTrac released in late July its mid-year report of the 20 metropolitan areas in the U.S. that had the most foreclosures, only one Florida area – Cape Coral/Fort Myers, which rated at 12 – was listed. One year ago, Florida had nine areas and cities listed in the top 20 of RealtyTrac’s listing.

But in Washington D.C., a number of federal agencies have churned out data and reports about the housing market that seem to conflict – and the upturn in the Miami and Florida housing markets is no exception.

On Wednesday, the FHFA issued a 83-page report about the status of housing markets all throughout the country, which stated that Florida’s housing market was down 8 percent in the second quarter of 2011 compared with the same period of last year.

Yet Andrew Leventis, a senior economist for the FHFA, admitted that all is not glum for the Miami and Florida housing markets.

“The strength (of both housing markets) is that there are incredibly affordable price levels for houses and that interest rates are at historic lows. If you want to buy a house in Florida and you have good credit, there’s a good chance that you can get a 30-year loan, which Americans love to do. There’s a lot of inventory (i.e., unsold homes) out there,” noted Leventis.

Miami-Dade County is not the only area of Florida’s housing markets that is now experiencing robustness. In Orange and Seminole counties, both located in the middle of Florida, Realtors note that there is anywhere from four to five months of backlog inventory houses available – meaning that all types of homes, from single- family houses to mansions, are available to would-be buyers.

In Leon County, only 9 percent of all homes available for purchase were sold in 2010, yet 2011 figures showed that this statistic is on the rise.

DataQuick.com, a website which posts real estate news and custom data, reported that in the immediate Miami metropolitan area, the number of foreclosures decreased to it’s lowest level since 2007.

From FloridaRealtors.org  -  Sept. 1, 2011

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condos

Best Unit at The Beach Club - Now Renting !

$ 4,850 per month - for a Yearly Rental

The Beach Club II
1830 S. Ocean Drive - Apt. 3702

This is a gorgeous apartment, right on the beach.
The Beach Club is the newest development in Hallandale Beach.
Magnificent views from every corner.


Direct access to the beach;  7 pools,  the best Spa you could find in the whole area, a 2-story Gym, and all the luxury you could dream about.
The new Hallandale Village at Gulfstream, with its famous Casino and Racetrack, is just one of the attractions.


Hollywood Beach Boardwalk is a few blocks away. 5 minutes drive to Shopping Centers, Restaurants, Nightlife, and Aventura Mall, the largest shopping venue in South Florida. Fort Lauderdale Downtown and Beach,  Bal Harbour, South Beach, are just a few minutes drive away.


Floor-to-ceiling windows, open floor-plans add to this unique sensation of living in a surrounding of water and sky.


Modernly furnished and decorated, this is presently the best deal if you are looking for a Waterfront, Ultra-Luxurious Condo on the Beach.

For Full-Season rentals at a higher rate, please contact us.

 


Call: Henry B. Nathan
UNITED REALTY GROUP
(954) 296-6741
or Email: hbnathan@gmail.com
for more information.

www.condo-southflorida.com