"4 Sale by Owner" -- as found on Main Street in Grand Junction, Colorado. Stephanie Walker

 

Folks, we're off for the July Fourth holiday. We wish you iced tea and fireworks, and whatever American dream makes most sense to you.

(Thanks to Stephanie Walker of Love in the Time of Foreclosure for the picture, which she took with her husband on their way to move in with her parents for a while.)

Click to play. Chana Joffe-Walt

 

Last week I spent a day at the Port of Tacoma watching a bunch of longshoremen unload a ship full of 700 Kias. These guys race the cars off the boat one by one. Then they drive them to an enormous parking lot about a half a mile away, where the cars sit and wait for their next stop. These days that wait is much longer than usual.

But this is one of those stories that brushes up against the profound.

The news: The International Monetary Fund has decided to issue what could be $70 billion dollars worth of bonds. It's the first time the IMF has raised money through bonds. The fund has been short of cash to lend out because of the financial crisis.

The interesting bit: The bonds are denominated in a kind of synthetic currency called Special Drawing Rights (SDRs). SDRs are used internally at the IMF as units of account. But China has proposed turning them into a new kind of global currency that could one day replace the dollar's central role.

We'll have a story on All Things Considered tonight, with commentary from Eswar Prasad who used to run the IMF's China division. About the bonds, he writes "A Win-Win Proposition? Almost, but Not Quite"

Dear Editor in Chief

As an actor who has played the role of Mustafa Kemal Ataturk in 6 Films in Turkey, I would like to make an interview with your newspaper by e-mail

Information about myself is given below.

Sincerely yours

Yavuz HEKYM
President
GROUP OF EGEKONS
Egekons Prefabricated-Metal Building Industry & Trade Ltd.Co.
actory & Main Office
Ankara Asfalty 40.Km Armutlu Kavpaoy 35170 Kemalpapa Yzmir
www.egekons.com

Our email exchange follows:

What would you want to talk about?

From: Yavuz Hekim


Sent: Tuesday, June 30, 2009 10:31 AM

To: David Kestenbaum

Subject: Re: interview

Busines and Acting movies,

best regards

From: David Kestenbaum

To: Yavuz Hekim

Sent: Tuesday, June 30, 2009 5:51 PM

Subject: RE: interview

What does Prefabricated-Metal Building mean? What do you do?

From: Yavuz Hekim

Sent: Tuesday, June 30, 2009 10:55 AM

To: David Kestenbaum

Subject: Re: interview

prefabricted building and motor yacht manufacturing or acting atesshment pls

From: David Kestenbaum

To: Yavuz Hekim

Sent: Tuesday, June 30, 2009 5:58 PM

Subject: RE: interview

Thanks. And how did you hear about us?

From: Yavuz Hekim
Sent: Tuesday, June 30, 2009 11:21 AM
To: David Kestenbaum
Subject: Re: interview

your email adress searc internet to find...

your radio ...nationa rubibli radio

From: David Kestenbaum

To: Yavuz Hekim

Sent: Wednesday, July 01, 2009 2:08 PM

Subject: RE: interview

How is your yacht manufacturing business doing in this global recession?

From: Yavuz Hekim

Sent: Wednesday, July 01, 2009 7:11 AM

To: David Kestenbaum

Subject: Re: interview

no,bed yacht manufacturing yes,recession....favori buzines now acting and prefabricated building...

Postscript: Yavuz was kind enough to send this article from the Tripoli Post, if you'd like to know more.

All quiet in downtown Portland. Andy Davenport

 

Andy writes:

This is the Park Avenue West building in Downtown Portland, whose construction was halted around two months ago. My office overlooks this site on two sides of the building, According to this article in the Oregonian, this building was originally scheduled to be 32 stories of mixed business and condos. Construction is halted until next year, and the plans are to cut the building to 22 stories. Equally amazing is the location - this site is located just two blocks from Pioneer Square, the heart and likely most-traveled area in downtown Portland.

Bush Garden, a Japanese restaurant, has been in Portland for 30 years. Bush Garden is located adjacent to Park Avenue West, and the sign states that they are closing indefinitely due almost entirely to the construction making it difficult to pull in customers or provide parking.

Have you seen this tiger? jagian/flickr

 

Ireland just had its government bond rating lowered one level by Moody's Investors Services -- to Aa1 from Aaa. The company also gave Ireland a "negative" outlook, meaning it's likely to decrease even more within in the coming months. Standard & Poor's has already downgraded its rating of Ireland twice this year, and Fitch knocked it down one level in April.

Ireland's suffered one of the worst crashes since the recession began. After riding a huge boom for over a decade, empty houses litter the countryside and the country's deficit is set to rise to 10.8 percent of GDP -- three times the European Union limit.

First, the good news, such as it is: The jobless rate for June ticked up by just .1 percent, to 9.5. The last report, for May, showed a jump of .5 percent.

You can also consider the overall number of jobs lost last month.

Personally, I'm struck by how long people are remaining out of work -- a figure that has steadily increased with the recession. We're up to an average of 24.5 weeks for the average job search, two weeks longer in than last month's report. "[B]road job losses are effectively making unemployment a way of life for millions," the New York Times reports. That's pure misery on a Saltine cracker.

You could also look at what's happening to wages, which are flat, flat, flat. Ian Shepherdson of High-Frequency Economics writes, "[O]minously, hourly earnings were unchanged for the second time in three months." He predicts, "Wages will soon be
falling outright, a classic deflation signal."

As of June, the average job search was clocking in at 24.5 weeks. That's compared to 22.5 in May.

So we have almost the same rate of joblessness, but it's taking longer to replace a job that's been lost. From the BLS:

The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million. In June, 3 in 10 unemployed persons were jobless for 27 weeks or more.

After the jump, woe to bankers, car dealers and journalists.

Retail trade employment edged down in June (-21,000); job losses in retail trade have moderated in the past 3 months. Over the month, job losses continued in automobile dealerships (-9,000). Employment continued to fall in wholesale trade (-16,000).

In June, financial activities employment continued to decline (-27,000). Since the start of the recession, this industry has lost 489,000 jobs. In June, employment declined in credit intermediation and related activities (-10,000) and in securities, commodity contracts, and investments (-6,000).

The information industry lost 21,000 jobs over the month and 187,000 since the start of the recession. Publishing accounted for about half of the employment decline in the information industry during the recession.

Health care employment increased by 21,000 in June. Job gains in health care have averaged 21,000 per month thus far in 2009, down from an average of 30,000 per month during 2008. Employment in federal government fell by 49,000 in June, largely due to the layoff of workers temporarily hired to prepare for Census 2010.

What does economics hold for South Carolina Governor Mark Sanford? Davis Turner/Getty Images

 

On today's Planet Money:

-- South Carolina Governor Mark Sanford faced a decision last month -- stay home and fulfill his public and family roles, or sneak off to Argentina for a visit with his mistress. Sanford chose the latter, of course, and economist Tim Harford argues it must make some kind of sense. Harford writes the Dear Economist column for the Financial Times and is the author of the Undercover Economist.

-- Listener Eric Laube says he and his wife paid off their mortgage in Houston this spring. They love the feeling of being debt free. But they like the tax breaks that come with a mortgage, and it's got them thinking of taking out another.

Bonus: After the jump, a listener argues that a house may be a home, but it's not an investment.

Download the podcast; or subscribe. Intro music: Glasser's "Apply (Tanlines Remix)." Find us: Twitter/ Facebook/ Flickr.

I had a hard time listening to "Should We All Burn Our Mortgages?" because the term "investment" was being used for a home. If we classify your home as an investment, then it is the worst performing investment of all time. Like you mentioned in the podcast, homes used to be looked at like a car or a dress. They are still used today the same way but with the housing bubble in the past few years we have forgot that the point of a home is ... to live it. To have a stable place to raise our children.

Consider this:

A home which costs $350,000 with a 10% down payment creates a $315,000 loan. At an interest rate at 4.875% for a 30 year fixed loan the payment before taxes and insurance would be $1,667.01 a month. With taxes and insurance the payment would be around $2,232.00 (assuming 1.2% property taxes and $3,000 a year in insurance). Over the life of the loan (if you could last the 30 years) the cost of borrowing that money would be $285,122.13, the insurance would cost around $90,000 and the property insurance would cost around $113,400. For a grand total for 30 years of $803,522.13!

Assuming an average return on the value of homes of no more than 3% since 1929 that home would be "worth" $824,797. Selling it would give you a profit of $21,275.80. Throw in a kitchen remodel and that is gone (the tax benefits are easily taken out of the argument because spending $1 to save $.35 doesn't make sense).

Take the difference from what it is to rent and own and invest it into the S&P and on average the amount at the end of the 30 years will be between $250,000 and $500,00 ... in cash!

Buying a home is a home not an investment. I believe that the bubble has changed the minds of millions of people and it needs to get fixed.

At least there's one benefit to being a Madoff victim. korafotomorgana/flickr

 

Bloomberg reports that the agency liquidating Bernie Madoff's company has committed $231 million to pay 543 claims by his victims. Depending on how much money can be recovered from Madoff's assets, claimants may be able to receive up to $2.74 billion later on. Thousands more claims are waiting to be evaluated, and the deadline to file one is tomorrow -- so if you happen to be one of his victims, you can still hand-deliver it to AlixPartners LLB by midnight tomorrow.

It's a far cry from how much money was actually lost, but hey -- at least it's something.

Think of an overdraft fee like a parking ticket. eflonFlickr/CC by 2.0

 

How much does your bank account cost you? An article by Nancy Trejos and Jonathan Starkey in the Washington Post this weekend looked at how banks have been increasing fees for overdrafts and ATM usage. It's full of statistics designed to irritate: "the average ATM surcharge in 2008 was up more than 10 percent," and "Bank of America this year raised the maximum number of times customers can get hit with overdraft fees from five a day to 10," and "overdraft revenue will reach $38.5 billion this year."

Are these fees a new necessity, part of what Anne Pace, a spokeswoman for Bank of America, calls "a landscape that has changed"? I asked John Hall, from the American Bankers Association, whether the increase in fees would really make them a big part of bank profits.

So what's the rationale for the fee increase? Think of it like a parking ticket, Hall says. The fees are there to train customers to use their accounts responsibly -- if the fees too low, they provide no deterrent to practices that eat up a bank's resources.

If they get too high, the repercussions for customers can be devastating. The cases cited in Trejos and Starkey's article offer frightening worst-case scenarios, but Hall told me that in a 2008 study by the ABA, 65 percent of customers said that they paid $3 or less in monthly overdraft fees. He also told me that most customers, given the choice, prefer "free checking" with penalties to accounts that come with built-in maintenance fees.

If it were up to you, which would you pick: paying the bank for its services in small, annoying fees, or trusting that their financial betting practices are safe enough to provide those services for "free?"

Click for a larger version

 

The Mortgage Bankers Association just released its weekly index of applications to buy a home or refinance a loan, and the numbers aren't good: it fell last week by 19 percent -- the biggest plummet since February. As you can see from our nifty chart, applications have fallen by over 50 percent since April. The data suggests that the Obama administration's plans to help out the housing market aren't entirely working yet.

The June figures on manufacturing are due in later today, from the Institute on Supply Management. The Wall Street Journal picks apart the consensus forecast -- still shrinking, but more slowly -- and says we've still got inventory to burn before factories crank into gear again.

The Bureau of Labor Statistics releases the June unemployment figure on Thursday. Meanwhile, the private ADP payroll report shows the U.S. job market shedding 473,000 gigs in June. With an average loss of 492,000 jobs a month for the last three months, we're still falling, but more slowly.

The bad news is we can't pay you what you're worth. The good news is you can stay in the profession, advance your skills, and have an opportunity to grow with us as the market recovers.

Well, at least they're honest. Perhaps applicants will feel lucky the job pays anything. These days many people work for free -- or even pay -- for an internship that gives them a small chance at establishing a career in their field of choice.