New home sales take surprise tumble

Effect of the soon-to-expire, first-time buyer tax credit begins to fade

WASHINGTON - Sales of new homes dropped unexpectedly last month as the effects of a temporary tax credit for first-time owners started to wane.

The Commerce Department said Wednesday that sales fell 3.6 percent to a seasonally adjusted annual rate of 402,000 from a downwardly revised 417,000 in August. Economists surveyed by Thomson Reuters had expected a pace of 440,000.

It was the first decline since March. Sales in September were off 7.8 percent from a year ago. Despite the surprising decline, the market is up 22 percent from the bottom in January, though down more than 70 percent from the peak in July 2005.

The median sales price of $204,800 was off 9.1 percent from $225,200 a year earlier, but up 2.5 percent from August's $199,900.

The drop in sales was driven by a nearly 11 percent decline in the West and a 10 percent drop in the South. Sales rose 35 percent in the Midwest and were unchanged in the Northeast.

The report reflects contracts to buy homes, not completed sales. It has been taking longer to close a transaction this year because it's taking longer to get approved for a mortgage and to have a property appraised.

Those time lags could make buyers nervous they won't be able to complete the deal before the Nov. 30 deadline to take advantage of a tax credit of up to $8,000 for first-time buyers.

The report "demonstrates the power of the first-time homebuyers tax credit," said Bernard Markstein, senior economist with the National Association of Home Builders, which has been lobbying Congress to extend and expand the tax incentive. "We just haven't gotten the economy back to the point where we can step back and say the housing market doesn't need any more support."

Congress is considering extending the tax credit through March 31 and gradually phasing it out over the rest of next year. "If they don't extend it, then I think the pullback could be quite significant," said Brad Hunter, chief economist with Metrostudy, a real estate research firm.

Critics, however, say many buyers would have entered the market anyway and call the credit an unnecessary subsidy for people who don't need it.

Low mortgage rates, the tax credit and more affordably priced homes have provided a big lift to the housing market this year. Sales of previously occupied homes, for example, jumped more than 9 percent in September. That report measures completed sales rather than sales agreements.

There were 251,000 new homes for sale at the end of September, down almost 4 percent from August and the lowest inventory in nearly 27 years. At the current sales pace, that represents 7.5 months of supply.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

No jobs= No recovery

Check this link ..... http://bit.ly/60p8B

Turkey to use national currencies in trade with Iran, China

ANKARA, October 28 (RIA Novosti) - Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.

Turkey has already switched to settlements in national currencies with Russia amid weakening confidence in the greenback as the world's major reserve currency. The move was initiated by Turkish President Abdullah Gul during his visit to Moscow in February.

Turkey's decision to make settlements with Iran and China in national currencies was announced during a visit to Iran by Turkish Prime Minister Recep Tayyip Erdogan. The Turkish premier told a Turkish-Iranian business forum on Tuesday that the countries had prepared a legal framework for transition to settlements in national currencies.

"We have adopted a necessary legislative act and are prepared for the transition," the Turkish newspaper Milliyet quoted Erdogan as saying.

According to the paper, Turkey's trade with Russia, Iran and China exceeds $65 billion a year. Russia is Turkey's largest trade partner, with $37.8 billion commodity turnover registered last year.

Russian Prime Minister Vladimir Putin said on October 14 that Russia was ready to consider using the Russian and Chinese national currencies instead of the dollar in bilateral oil and gas dealings.

"We are ready to examine the possibility of selling energy resources for rubles, but our Chinese partners need rubles for that. We are also ready to sell for yuans," Putin said.

Britain's Independent newspaper reported in early October that Russian officials had held "secret meetings" with Arab states, China and France on ending the use of the U.S. dollar in international oil trade.

The countries are reportedly seeking to switch from the dollar to a basket of currencies including the euro, Japanese yen, Chinese yuan, gold, and a new unified currency of leading Arab oil producing countries.

The Independent said the meetings have been confirmed by Chinese and Arab banking sources, although Russian officials said they had no knowledge of the talks.

"Money Multipliers Have Collapsed Everywhere...Confidence Is Missing. I Don't See Any Way To Stabilise M3 In Such Circumstances"

Former officials are often more honest than current ones, since they aren't under pressure to spread happy talk.

Former European Central Bank chief economist Otmar Issing recently said what current officials aren't addressing:

Nobody can be sure that we have a self-sustaining recovery. The challenges facing the ECB are tremendous. "Money multipliers have collapsed everywhere. What M3 is telling us is that confidence is missing. I don't see any way to stabilise M3 in such circumstances.

As Ambrose Evans-Pritchard notes:

Data from the European Central Bank shows that the M3 broad money supply has contracted over the last six months, confounding expectations that ultra-low interest rates would soon boost monetary growth. Loans to the private sector fell 0.3pc from a year earlier, the first such decline since the data started in 1983.

The M3 figures include a wide range of bank accounts...

The picture is even starker in America where M3 has shrunk at an annual rate of 6.5pc over the last three months, a pace of contraction not seen since the 1930s. US bank loans have plummeted since May.

(While the Fed stopped reporting M3 in 2006, people are still tracking it).

How can M3 have collapsed when governments world-wide are printing money faster than IHOP can cook pancakes?

Well, professor Tim Congdon from International Monetary Research says:

A key reason for credit contraction is pressure on banks to raise their capital ratios... "The current drive to make banks less leveraged and safer is having the perverse consequence of destroying money balances," he said. "It strengthens the deflationary forces in the world economy. That increases the risks of a double-dip recession in 2010."

But isn't it good that governments are requiring banks to raise their capital rations?

Sure, but unless they force the banks to write off their bad debts, they will remain giant black holes, and will never be adequately capitalized. If they are never adequately capitalized, they will never release money out into the economy through loans and other economic activity which increases M3.

As just one example, remember that the nominative amount of outsanding derivatives dwarfs the size of the global economy. As another example, remember that several of the too big to fails have close to a trillion dollars each in toxic assets in off-book SIVs.

IMF chief Dominique Strauss-Kahn says that the history of financial crises shows that "speedy recovery" depends on "cleansing banks' balance sheets of toxic assets". "The message of all financial crises is that policy-makers' priority must be to stop the quantity of money falling and, ideally, to get it rising again," he said.

As many people have repeatedly written (including me), the world's governments must restore sound economic fundamentals - which includes forcing banks to write down their bad assets - instead of cranking up the printing presses and trying to paper over all of the problems.

Moreover, as Mish, Michael Rivero, and many others have pointed out, governments can create all the credit they want, but if people do not have jobs, they will not borrow that money.

In addition, the amount of credit and wealth destroyed exceeds the amount of money pumped into the system.

When will the politicians listen? Will they wait until after the next huge market crash? When there are tent cities everywhere? After their governments default and they essentially lose sovereignty under "austerity measures" imposed by the IMF, World Bank or other agency?

韓國‧胡錦濤邀金正日訪華

（韓國‧首爾）中國國家主席胡錦濤邀請朝鮮領導人金正日，在方便的時候訪問中國。

朝中社報導，胡錦濤是週三（10月28日）接見朝鮮勞動黨中央書記崔泰福時，提出這項邀請。崔泰福被視作朝鮮最高領導人金正日的密友。

報導稱，胡錦濤表示，兩國應為維護地區和平穩定共同努力。

朝10月導彈試射失敗

另外，有報導指，朝鮮10月較早前進行的短程導彈試射徹底失敗。5枚導彈中，4枚沒有命中目標，還有一枚甚至無法成功發射。

自由亞洲電台週四（10月29日）引述消息人士指，朝鮮10月12日在東岸外海，用發射器發射5枚射程120公里的KN-02型導彈。其中2枚在發射後立刻墜落海面，另外2枚沒有命中目標，最後一枚甚至無法發射。

韓國軍方及國家情報單位沒有置評。

美國‧阿諾信中藏粗話

（美國）加州州長阿諾舒華辛力加早前去信民主黨州議員安米亞諾，否決他提出的法案。但信中暗藏密碼，只要把左邊每行第一個字母打直讀，竟然是粗口“I Fxxx You”。

安米亞諾提出法案，要求將三藩巿一個舊船塢活化為新社區。法案獲州議會通過，但阿諾否決之餘，按慣例去信解釋原因。本來信件平平無奇，但若將八行內容左邊第一個字母串起來，卻是粗口。

阿諾的發言人麥克利爾否認阿諾暗中用粗言穢語辱罵議員，指純屬巧合。但許多人相信阿諾今次趁機報復，因26個字母中，這8個字母串在一起的機會僅80億分之一。

印度‧油庫爆炸5死6人困火海

（印度）西部一個大型油庫發生爆炸引致大火，造成至少5死150傷，6人被困火場，死傷人數可能上升。

現場位於西部拉賈斯坦邦首府齋浦爾附近的Sitapura工業區。工業區內的油庫發生大爆炸，火災蔓延到半徑3公里以內的幾家工廠。15公里外也可見到濃煙。

事發於當地時間週四（10月29日）晚7時半左右，現場附近多家民宅玻璃被震碎，政府已經下令附近居民撤離。