Warren Buffett praised the U.S. government Tuesday for its efforts to heal the economy, but the influential investor said he expects a slow recovery as consumers remain wary of spending.
Buffett said U.S. officials have done "a terrific job, all things considered" to help forestall the worst economic crisis since the Great Depression.
"We were right at the brink," Buffett told Carol Loomis, Fortune senior editor at large, at the magazine’s Most Powerful Women Summit in California. "This country was becoming not only dysfunctional, but nearly inoperative."
In fact, Bank of America chief executive Ken Lewis may have "inadvertently" helped save the financial system a year ago by arranging for BofA (BAC, Fortune 500) to buy troubled Merrill Lynch in "virtually a 24-hour period," according to Buffett.
If Lewis hadn’t, Buffett said Merrill "would have been gone in a nanosecond," joining Lehman Brothers in going out of business.
While he does not see the "green shoots" of economic renewal, Buffett said "I don’t see things getting worse either."
He said the housing market has shown signs of improvement and that markets in certain parts of the country could stabilize within a year.
But the pullback in consumer spending that has occurred as unemployment has risen to a 25-year high could remain in place for some time, he said free credit report without a credit card.
"I think that change in behavior is going to be long lasting, and that may mean that the recovery will be quite slow," he said.
Looking back, Buffett said the head of American International Group (AIG, Fortune 500) contacted him last year looking for help raising money shortly before the troubled insurer was rescued by the government.
"Don’t waste your time on me," Buffett told said he told Robert Willumstad, then the chief executive officer of AIG. "I’m not going to be able to do anything for you."
Buffett said he was also contacted by Barclays with a request to provide insurance for the British bank’s bid to buy Lehman Brothers last year. Buffett said he requested additional details from the bank but didn’t learn until 10 months later that a Barclays executive had tried to contact him on his cell phone, which he didn’t understand how to operate.
"Don’t try to get in touch with me by cell phone," he said.
Buffett’s Berkshire Hathaway Inc. (BRK.A) invests in more than 70 businesses, including various insurance and reinsurance companies and public utilities.
Great. The global economy finally starts to show signs of emerging from the recession and now a possible trade war between the U.S. and China is throwing a monkey wrench into the recovery.
The U.S. just slapped a 35% tariff on tires imported from China, beginning Sept. 26.
And in a move that doesn’t look like mere coincidence, the Chinese government announced Sunday that it is launching a probe into possibility of the U.S. dumping auto parts and chickens on the Chinese market.
This is not good news. This spat could have a major impact on more than just Goodyear Tire & Rubber (GT, Fortune 500), Cooper Tire & Rubber (CTB) and poultry producer Tyson Foods (TSN, Fortune 500).
If the tension between the U.S. and China escalates into a full-blown bout of global protectionism, we might need to kiss the notion of an economic recovery goodbye. This could be the start of that much-feared double dip into another recession.
Or as Michael Corleone said in an often parodied line from the "The Godfather: Part III": "Just when I thought I was out … they pull me back in!"
On the one hand, it makes sense for the White House to try and enforce existing trade laws so that U.S. tire makers can compete more effectively with cheaper tires imported from China.
The trade deficit with China has soared in recent years, hitting a record high in 2008. This is a concern for obvious reasons: If we continue to buy a lot more from China than we sell to them, more U.S.-based manufacturing jobs could be lost.
"It’s not uncommon for the government to side with certain industries to protect American workers," said Keith Hembre, chief economist with First American Funds in Minneapolis. "These tariffs wouldn’t be happening if the unemployment rate was substantially lower."
But we’ve been down this road before. The launching of tariffs during a severe economic slowdown has done more than harm than good in the past.
Many historians blame the Smoot-Hawley Tariff Act of 1930, which raised tariffs to their highest levels ever, for making the Great Depression worse.
Protectionism is a bad idea. In this increasingly globalized economy, it just doesn’t make sense to alienate trading partners.
"One would hope we can avoid more of this. There is no positive side to raising tariffs," said Kurt Karl, chief U.S. economist with Swiss Re. "In this global crisis, you want global cooperation. This doesn’t help."
And that’s especially true with China since it is also the largest foreign holder of U.S. Treasury debt, owning about $776 billion of Treasurys as of June.
If the Chinese stopped buying Treasurys — or worse started selling them en masse — it could have a catastrophic effect on the dollar and the nation’s fiscal state as a whole.
"A trade war would be very detrimental to the U.S. and the global economy," said Michael Pento, chief economist with Delta Global Advisors, Inc., a money management firm. "We should have fair, open trade. But our banker right now is the Chinese, and it’s best not to bite your banker’s hand."
Karl isn’t too concerned that China would dump Treasurys. He argues that would be the equivalent of China shooting itself in the foot since it would further erode the value of its holdings.
Nonetheless, Karl does worry that China could retaliate against the tire tariff with tariffs of its own and even more government subsidies of Chinese manufacturers. That could make the trade deficit worse.
But at least one economist thinks cooler heads will eventually prevail and that the brouhaha over tires won’t lead to the China and U.S. levying more tariffs on other goods.
Michael Strauss, chief economist with Commonfund, a money management firm based in Wilton, Conn. said there is not going to be a repeat of the mistakes of Smoot-Hawley.
Strauss said both the U.S. and Chinese are smart enough students of economic history to know that the last thing the world needs now is for arguably the two most important economic powers to turn a spat over tires and chickens into something that could derail a global rebound.
"This is not that big of a deal. You get these battles once in a while and they pass. This is not reminiscent of what happened 80 years ago," he said. "Deep down, the U.S. and China know that they need one another. There’s going to be more negotiation than retaliation."
Here’s hoping that he’s right.
Talkback: Would a trade war between the U.S. and China be a bad thing? Or should the U.S. be more protectionist to try and save jobs? Share your comments below.
As President Obama turns up the heat on health care reform, one new and surprising detail to emerge is his pledge to tackle medical malpractice.
"I don’t believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs," Obama said Wednesday night.
Obama’s decision to wade into the issue has some insiders scratching their heads, because cutting down on medical malpractice lawsuits is a Republican tenet.
But the president’s idea of reducing health care costs by cutting down on lawsuits isn’t the same as Republicans, who want to cap lawsuit damage awards. Instead, Obama plans to run with an idea left over from his predecessor’s administration and fund pilot projects in states that trumpet patient safety.
In one approach, the Department of Health and Human Services would fund projects aimed at limiting lawsuits by encouraging doctors and clinics to disclose accidents early and apologize to patients when appropriate.
Experts point to the University of Michigan Health Care system as a potential model. Malpractice claims in the system dropped by 55% between 1999 and 2006.
"If we make a mistake, we’ll move quickly to apologize and compensate that patient. But if we didn’t make a mistake, we talk to the patient and explain," said Richard Boothman, chief risk officer for the University of Michigan system.
Politics of malpractice
As the Obama administration knows well, medical malpractice can be a sticky issue. When the discussion centers on lawsuit damages, it pits two deep-pocketed lobbying groups against each other: trial lawyers and big business.
Advocates like the U.S. Chamber of Commerce and hospital and doctor groups say that lawsuits, especially frivolous ones, drive up the cost of health care by increasing the cost of doctors’ malpractice insurance.
Trial lawyers counter that limiting their ability to hold doctors and hospitals accountable for mistakes won’t reduce costs.
More neutral agencies like the Congressional Budget Office say that efforts to curb medical malpractice lawsuits can prompt cheaper malpractice insurance premiums but don’t really affect health care spending.
In June, Obama told the American Medical Association that he was not an advocate of lawsuit caps, which he said can "be unfair to people who’ve been wrongfully harmed."
Despite his legal background, Obama hasn’t always sided with lawyers on legislation targeting the court system.
In 2005, he voted with Senate Republicans to pass a law that limited attorneys’ fees in class action suits and shifted most of those cases into federal courts to prevent attorneys from seeking more favorable state-court venues.
On Wednesday, the president made it clear that he brought up medical malpractice as a sign of good will to the "Republican side of the aisle."
That irks some left-leaning Democrats. Rep. Keith Ellison, D-Minn., said he didn’t see the need to address the issue, which is often called "tort reform."
"But you know, if the president wants to discuss tort reform — fine. I am not going to die on that hill," Ellison said.
Details and next steps
The next wave of controversy depends on the kinds of medical malpractice pilot projects the Obama administration agrees to fund.
If the projects aim to stop and prevent medical errors and accidents before they happen, the trial lawyers’ lobbying group, the American Association for Justice, is on board. If the measures limit liability, that’s another story.
"If you really want to solve the health care crisis, you need to focus your efforts on saving lives," said Linda Lipsen, the AAJ’s top lobbyist. "That’s where the most cost savings are."
The American Medical Association was more guarded in its reaction, but the doctors lobbying group applauded Obama’s intent to address malpractice lawsuits as a way of cutting health care costs.
An administration official said the types of things they’re looking to fund include two proposals contained in one of the health care reform bills now in Congress.
One resembles what the University of Michigan already does, where hospitals and clinics disclose errors and apologize when at fault. Meanwhile doctors are well-insured against lawsuits.
"I’ve the luxury of saying to our physicians, no matter how big a case is, how bad a case is, ‘You’re completely insured and your personal assets are not at stake,’ " Boothman said. "You can’t ask them them to be totally honest when they have such things at stake."
The other provision would require patients who want to file lawsuits to get a panel of experts or doctors to agree their lawsuit has merit before they go to court.
But if the Obama administration is truly thinking of running with Bush administration ideas, they’ll look at a 2002 Institute of Medicine study aimed at cutting malpractice suits.
That study offered recommendations that have yet to surface in current health care policy discussions.
In one, the federal government would offer backup insurance to provider groups who disclose mistakes and compensate patients for avoidable injuries. But the report also recommended that participating states limit pain and suffering awards.
The other option gave health care providers "immunity," or protection against lawsuits if they agreed to participate in a government-run administrative system that compensated injured patients, mostly based on a formula.
William Sage, a doctor and attorney who advised the Institute of Medicine, said the 2002 recommendations fit well with the president’s pledge, because they attack malpractice lawsuits from the bedside instead of the courtroom.
Sage said he expects that such medical malpractice reforms will go beyond pilot projects and make it into final legislation.
"This year it’s different," said Sage, vice provost for health affairs at the University of Texas at Austin. "We have to have major long-term changes, so malpractice proposals have to appeal more broadly. They have to gain the confidence of a large number of medical physicians and make them think about their work differently without always being afraid of being sued."
Central clearing of privately traded derivatives contracts won’t be enough to make the $600 trillion sector safe, while clearing of some bespoke trades may not be desirable, the Bank of International Settlements said.
The lack of transparency in parts of the over-the-counter (OTC) derivatives market has alarmed regulators, particularly after U.S. insurer AIG nearly failed last September when it faced massive collateral calls on contracts.
Lehman Brothers and Bear Stearns were also involved in OTC derivatives and when they crashed last year market participants did not know their exact exposures to the two banks.
The G20 group of countries agreed in April that credit default swaps, an insurance-type derivatives product at the heart of AIG’s problems, should be centrally cleared.
A central counterparty (CCP) is widely seen as reducing risk and improving transparency in markets by ensuring there is a default fund at hand in case one side of a trade fails.
Clearing of CDS contracts has already begun in the United States and the European Union but the BIS’ latest quarterly review said on Sunday this is not enough.
“The introduction of CCPs alone, however, is not sufficient to ensure that OTC derivatives markets operate efficiently and remain resilient,” the review said.
“It is important to complement the introduction of CCPs with improvements in trading and settlement infrastructure,” the review said totally free credit score.
“Finally, introducing CCPs for nonstandard, custom-made OTC derivatives may not be feasible or even desirable,” it added.
The BIS said OTC markets have been an engine of financial innovation and continue to offer cost-effective and well-tailored risk reduction products.
Preserving the incentives to create new financial instruments is important and OTC markets have clear advantages, the BIS said.
“As new contract types become more widely used, however, the overall benefits from using a central counterparty will likely outweigh the flexibility offered by the over-the-counter format,” the review said.
The U.S. Treasury wants as much standardization as possible of OTC contracts and for standardized products to be not only centrally cleared but also traded on an exchange if possible.
The EU’s executive European Commission is also studying likely regulation but so far has stopped short of saying trades should migrate to exchanges.
The United States and the EU say clearing must be done locally so that authorities can access data on trades, which has led to several clearing services being set up on both sides of the Atlantic to ensure competition.
Web TV firm Joost, owned by the founders of Skype, removed its high-profile chairman Mike Volpi by shareholder vote, it said in a statement late on Friday.
Volpi, who continued as Joost chairman after leaving the chief executive role at end-June, then joined the venture firm Index Ventures, which was part of consortium bidding $1.9 billion to Internet auction house EBay Inc for 65 percent stake of Skype.
Skype co-founders Niklas Zennstrom and Janus Friis had contacted several private equity firms in an effort to launch a bid to buy back their old business, sources have said.
“Mr. Volpi was removed from the Board of Directors and from his position as Chairman of Joost by shareholder vote,” Joost said in a statement.
“The company and its Board of Directors is conducting an investigation into Mr. Volpi’s actions during his tenure as CEO and as Chairman.”
Volpi, when contacted by Reuters on Saturday, said by email: “I am no longer associated with Joost.”
On June 30 Joost, an early pioneer in bringing popular TV shows and movies to the Web, said it was dropping its consumer service, cutting jobs and losing its chief executive Volpi as it struggles to find revenue to survive.
Joost has programing deals with CBS Corp, Viacom Inc and Warner Bros among others.
Joost launched with much fanfare in 2007 as the latest venture of Skype founders Friis and Zennstrom. Before Skype, the Scandinavian entrepreneurs founded KaZaa, a file-sharing service popular with music and entertainment fans for sharing songs and video clips.
Volpi, a former rising star within Cisco Systems Inc joined Joost soon after.
Skype is facing next year a key court case against Joltid, a company controlled by Zennstrom and Friis, which controls key technology behind Skype. (Reporting by Tarmo Virki; Editing by Andy Bruce)
The poverty rate rose last year to 13.2%, the highest level since 1997, said a report released Thursday.
That marks the first statistically significant annual increase since 2004, according to the annual Census Bureau report "Income, Poverty, and Health Insurance Coverage in the United States: 2008."
Last year, 39.8 million people lived below the poverty level, which is $22,025 for a family of four, according to the Office of Management and Budget. That’s up 3.9% from 2007, when 37.3 million people lived in poverty.
Regional changes. The West had 9.6 million people living in poverty in 2008, which represents 13.5% of that region’s population, up from a rate of 12% in 2007.
The Midwest had 8.1 million people living below the poverty line in 2008, which is a rate of 12.4%, up from 11.1% in 2007.
"Unfortunately, the regional numbers make perfect sense," said Heidi Shierholz, labor market economist at the Economic Policy Institute free instant credit report.
"The West was very hard hit by the housing bubble, and the industrial Midwest states are suffering in the manufacturing sector."
The poverty rates for the Northeast (11.6%) and the South (14.3%) were both statistically unchanged from 2007.
State-by-state. New Mexico had the highest poverty rate of any state– 19.3% — followed by Louisiana (18.2%), Mississippi (18.1%), Arizona (18%) and Kentucky (17.1%).
At 7% New Hampshire had the nation’s lowest poverty rate, followed by Utah (7.6%), Connecticut (8.1%), Alaska (8.2%) and Maryland (8.7%).
A key bank-to-bank lending rate fell to its lowest point on record Wednesday, signaling continued easing of the once-frozen credit markets.
Three-month Libor fell below 0.30% (0.269869%) for the first time since the British Bankers’ Association started keeping records in 1986. That’s a far cry from where rates sat just one year ago, when the 3-month rate peaked above 4.8% on Oct. 10.
After brokerage firm Lehman Brothers collapsed on Sept. 15, market volatility headed off the charts and banks quickly slammed their lending doors shut. The resulting credit crunch has been a hallmark of the recession.
The London Interbank Offered Rate — or Libor — is a daily average of rates that 16 different banks charge each other to lend money. A higher Libor rate indicates tighter credit, and lower rates can free up a choked market. More than $350 trillion in assets are tied to Libor, including many school, auto and home loans. The overnight Libor rate held steady Wednesday at 0.22%.
The Fed has been on a campaign to ease the credit crunch by slashing its interest rate, and by buying up long-term bonds to seed the financial system with money.
Three-month Libor is tied to the Federal Reserve’s benchmark interest rate, making it a barometer of the central bank’s monetary policy.
The Fed has held the interest rate at a range between 0% and 0.25% for the past six policymaking meetings.
"We’re at an awakening point," said William Larkin, analyst at Cabot Money Management. "When you’re this close to zero, people react."
A new normal. "What we’re seeing is a new normal," Larkin said. "And we don’t know what’s to come — how do we go from pouring money into the economy to pulling back and being more restrictive?"
The Fed may remain cautious even as recovery signs pile up, said Action Economics analyst Kim Rupert.
"We’ve been seeing evidence that a recovery is at hand, but they’re nervous about removing support prematurely," Rupert said. "That will keep Libor headed south."
Larkin said the credit market will likely see stability in the short term, helping market participants to diversify their investments.
In this decade so far, the 3-month Libor has averaged 3.31% on a weekly basis, Larkin said. But without "current distortions" and lows after the 2001 terrorist attacks, the average is about 4%, he said.
Still, defining a "normal" range for the key rate is difficult, he said.
"In our current situation, low is good," Larkin said. "In a negative-growth economy, you want something stimulative."
Rupert disagreed. "These rates are a little bit nervewracking," she said. "We’re not seeing any sign of resistance from policymakers, which shows economic conditions are still not strong enough to overcome their nervousness over the recovery."
Banks are the driving force. The borrowers who have gained access to capital are seen as the ones who deserve the credit, Larkin said, adding that banks will likely "step up the due diligence" when reviewing future loan applications. While many consumers may not feel the easing yet, credit has loosened, he said.
"The system is working," Larkin said. "The money is flowing into the higher parts of the marketplace. But [the government] has the gas all the way to the floor — they can’t really do anything else."
The Fed would prefer to deal with inflation rather than a double-dip recession, Larkin said, and that bias is probably already built into the credit system.
"They’re looking at the 1930s and saying, ‘We don’t want a repeat of that,’" Larkin said. "That will be the question throughout 2010: How do we get such a fragile economy into a normal monetary policy? We can’t stay at 0% forever."
Bonds slip. The credit crisis has also impacted government debt.
For example, in 2008, the 30-year note gained 41% in 2008, said Larkin. So far in 2009, it’s lost 20% with its yield has skyrocketing 40% year-to-date, he added.
On Wednesday, the 30-year long bond fell 21/32 to 102-12/32 and yielded 4.36%. Bond prices and yields move in opposite directions.
The benchmark 10-year bond slipped 8/32 to 100-30/32, and its yield rose to 3.51% from 3.54% late Tuesday. The 2-year note ticked down less than 1/32 to 100-3/32 and its yield rose to 0.95%.
The 3-month yield, which is an indication of appetite for short-term bonds, rose to 0.14%.
The fight over health care overhaul is on track to be the most expensive issue ever to hit the hallways of Congress.
The bill for lobbyists, television ads and political donations has topped $375 million — or enough to pay the entire insurance tab for about 30,000 families a year.
The big spenders range from drug companies, hospitals and doctor groups to organizations that advocate for unions, immigrants and retirees.
The largest chunk has gone to direct lobbying of lawmakers and other policymakers. In the first half of 2009, the health care industry spent nearly $280 million on lobbyists, according to the Center for Responsive Politics.
Another $75 million was spent on television advertising airtime by health care interests, mostly politically left-leaning groups and health industries. And another $23 million has flowed from the health care sector into the campaign war chests of 2010 candidates for federal office, on the heels of some $95 million raised during the 2008 cycle.
"The health sector is on track in 2009 to spend more on lobbying than it has on any other year in U.S. history — and by a lot," said Dave Levinthal of the Center for Responsive Politics, which analyzes and collects lobbying and campaign spending figures.
Taking the Hill
Part of the reason for the big price tag is that so many different types of groups and companies could be affected by health care reform. Business models could be upended — for better or worse — for everything from urgent care clinics to providers of electronic medical records.
Lobbyists have been hired for groups as varied as the College of American Pathologists, which has spent $775,717 on lobbying this year, and the prestigious University of Texas M.D. Anderson Cancer Center, which spent $220,000.
The other reason for the big bucks is the duration of the debate. Every week it goes on, millions more are spent trying to influence the negotiations.
The lobbying figures alone are on track to exceed half-a-billion-dollar mark by the end of the year, which would be a record.
The big payoff for such spending? Open doors to policy makers.
Consider that Richard Umbdenstock, who heads the American Hospital Association, has spent $7 million on lobbying this year and made seven White House visits since March to talk to staffers, according to a White House letter to Citizens for Responsibility and Ethics, a nonprofit watchdog group that sued to get such information.
Other advocates that have made White House visits include the head of the lobbing group for drug makers, Pharmaceutical Research and Manufacturers of America, and the head of the health insurance lobbying group, America’s Health Insurance Plans.
"Health care is supposed to be a personal issue that addresses the issues of individual Americans, but now it’s addressing drug and insurance industry concerns, thanks to their lobbyists," said Christine Hines of Public Citizen, a nonprofit group that tracks money and power on the Hill.
Yet, lobbying and advertising is guaranteed by the Constitution. And several big spenders, such as the Pharmaceutical Research and Manufacturers of America, say they’re educating not advocating for any particular bill creditreport.
"All of our advertising to date has been done to raise awareness of the importance of passing bipartisan health care reform this year," said Ken Johnson, a senior vice president at the pharmaceutical group, which has spent $13 million on lobbying this year.
Johnson points out that his association’s members have told policymakers they’ll commit $80 billion to cutting costs over the next 10 years. However, the group is also wary of legislative attempts to allow government to use its purchasing power to force drugmakers to negotiate pricing or allow cheaper foreign drugs to be imported.
"Our companies directly employ nearly 700,000 workers around the country as well as another 2.5 million indirectly," Johnson said. "I would say that we have a pretty significant stake in this debate, too."
TV ads get the word out
A popular way to influence public opinion is through television ads, and August was the biggest month this year for health care advocacy ads, according to the Campaign Media Analysis Group.
About $1 million a day has been spent on health care reform TV ads since June, said Evan Tracey, president of the the media research group.
In August alone, $20 million was spent on 34,000 ads, with foes of congressional reform proposals outspending proponents. Earlier in the year ads supporting reform outnumbered those opposing by a margin of 2-to-1.
The buyers range from left-leaning groups Health Care for America Now, whose members include unions and immigrant advocacy groups, to the U.S. Chamber of Commerce and anti-tax groups such as Our Country Deserves Better.
"What you’ve got is the perfect storm of lots of stakeholders who have access to all kinds of capital, so they’re putting everything into this," said Tracey, whose group consults for CNN. "Everyone has a dog in this fight. That’s what is compounding this from an advocacy perspective."
Another way to influence the debate is through election campaign contributions. Although it is early in the 2010 election cycle, the health care sector has contributed $23 million, according to the Center for Responsive Politics.
One of the biggest beneficiaries has been conservative Blue Dog Democrats.
Many Blue Dogs are on the fence about controversial health care issues, such as whether to create government-run insurance plans. Their votes are crucial to passing a final bill, so they also tend to attract more attention and campaign contributions than other Democrats and Republicans.
Health and accident insurers, HMOs and health services organizations increased their contributions to Blue Dogs from $106,200 in the first quarter of 2009 to $122,650 in the second, according to the Center for Responsive Politics.
That is a 15% increase. By comparison, Democrats not in the Blue Dog group saw a 3% hike in contributions.
Hundreds of thousands of first-time homebuyers across the country have begun to claim their tax credits, according to new government data released on Friday.
So far, nearly 315,000 people have claimed the tax credit after filing an amended 2008 tax return, according to a Treasury Department report on the status of the Recovery Act.
California led all states with 42,304 claimed credits.
Eligible first-time homebuyers can claim the credit of up to $8,000 — or 10% of the home’s value, whichever is less — on either an amended 2008 return or on their 2009 return.
Treasury’s figures more than likely sharply underestimate the real number of people who have taken advantage of the credit because many homebuyers have not yet claimed it on their tax return.
According to a recent National Association of Realtors survey, about 1.1 million first-time homebuyers have used the credit. NAR expects that number to grow to about 1.8 million by the time the credit expires on Nov. 30.
The discrepancy between Treasury and NAR probably stems from the fact that a majority of eligible first-time homebuyers have opted to wait to file for the credit on their 2009 returns, which they can file in early 2010.
State-by-state data. The Treasury figures show how some of the hardest-hit states during the housing downturn are now among the states with the largest numbers of claimed tax credits.
California, Georgia, Florida, Arizona and Michigan are all in the top 10, when it comes to claiming the credits. Though part of that is likely skewed by population figures, other large states like New York and Virginia have been left in the dust payday loans.
"We’re seeing some big increases in many of the areas with the biggest price corrections," said NAR spokesman Walter Maloney. "That’s no coincidence."
A National Delinquency Report from the Mortgage Bankers Association showed that California, Florida, Arizona and Nevada combined accounted for 44% of all foreclosure starts during the quarter. Last quarter, the Cape Coral metro area in Florida recorded the largest decline in home prices: 52.8% to $84,000, according to a NAR report.
After California, Texas and Florida were the next states with the largest number of claims, with over 29,000 each. Arizona had nearly 9,300 claims and Nevada rounded out the top 20, with 5,259.
Most of the smaller states made up the bottom of the list, with Vermont’s first-time buyers bringing up the rear, claiming just 351 credits.
Applying for the credit is as easy as filing income taxes. First-time homebuyers just have to claim it on their return — no other forms or papers have to be filed.
National Association of Realtors estimated an extra 350,000 sales will occur this year, solely because of the credit. The National Association of Homebuilders, more conservatively predicted 165,000 extra home sales.
The government said Thursday it has so far approved $500 million to reimburse auto dealers for cars sold under the Cash for Clunkers program, and will refund all eligible dealer requests in the nearly $3 billion program by the end of the month.
According to a Transportation Department official, more than 120,000 dealer submissions have been approved. All eligible and completed dealer submissions from program should by paid in full by Sept. 30, the official said.
The government received a total of 690,114 requests for vouchers under the program. Those requests amounted to about $2.9 billion, or just under the $3 billion that had been allocated for the program.
The program, which ended Aug. 24, was designed to spur sagging auto sales by offering buyers cash to trade in older vehicles for new, fuel-efficient models. But many dealers had been nervous about reimbursements, since demand for the program was much stronger than expected.
Under the Clunkers program, eligible buyers received refund vouchers worth $3,500 to $4,500 on new, more fuel-efficient vehicles if they traded in vehicles with a fuel economy rating of 18 miles per gallon or less.
The program made August the best month of the year for auto sales. Industry-wide sales were 1.2 million vehicles last month, up 1% from a year ago. That was the first annual sales gain since October 2007, and sales were about 26% above July’s levels.
Powered by WordPress -- XHTML 1.0