The Dow Jones Industrial Average is currently at 12,852, up almost 200 points on the week.  Crude oil spot prices are currently just under $97 per barrel, down about $3 per barrel on the week.  The Dollar strengthened versus the Euro and weakened versus the Yen on the week.

Next week look toward Thursday’s weekly jobless claims and Friday’s International Trade report as potential market moving events.

Ordinarily a payroll jump like this would have killed us, especially in combination with strong results in the two ISM surveys for January: manufacturing to 54.1 from 53.1 in December, and service-sector way up to 56.8 from 52.6 last month. Some of the calm reaction in markets is suspicion — few other data confirm a big economic turn. Europe is a continuing cause of deep anxiety, but quiet this week, nothing but the muffled clanking of picks and shovels in the bottom of its ever-deeper hole.

And housing hangs over everything in the US economy, all measures of prices in continuing decline through December. But, to his great credit, Mr. Obama devoted a speech this week to housing, including new proposals. “This housing crisis struck right at the heart of what it means to be middle class in America: our homes.” Right!

The proposals will be without effect, but that’s not Mr. Obama’s fault. That two years have passed without proposals or priority or even mention, that is his fault, but give him full praise for saying out loud: “Hey, there’s an elephant in this living room!” Why there are no effective proposals, and why it’s beyond even the President’s power to put them forward is a tale of human nature. We know perfectly well what to do, but several things in ourselves and our political process prevent action.

Federal housing finance agencies created in the Great Depression were by far the most effective aspect of the New Deal, perhaps more so than all the rest put together. Aside from restoration of credit, the miracle of government guarantee made mortgage lending easy as apple pie. Guarantee and uniform underwriting standards — sound ones! — made previously illiquid and expensive mortgages as easy to transfer as shares of stock, and cheap, long after the Depression was gone.

For good or ill, as early as the end of WW II our homes became the stores of our national household wealth. Got to put it someplace. Stock market guys would like it to be their market, but it has its own epic instability. Houses it was. The original stop-the-Depression charter of the mortgage agencies became ordinary everyday-everybody utilities. We let them bloat, 1985-2004, for the interest of their stockholders, an inherently unstable situation. Even before mortgage credit went bonkers, ca. 2002, and the push for home ownership ran beyond qualified candidates, the ease of mortgage finance had likely over-fed housing wealth.

Here in the aftermath of the Bubble it is convenient to have someone to blame for our pain. “Fannie and Freddie” have become curse words. Profanities. They were NOT responsible for the $2 trillion in toxic loans, but they are big, fat targets for the Right, hating all government, also oddly the agencies’ boosters on the Left. Hell hath no fury like a social engineer scorned.

The truly culpable parties — Wall Street bankers — have made a clean getaway. John Dillinger and Clyde Barrow would still be in business if they had gone to Princeton, gotten MBAs, and learned to lie properly.

The result is self-inflicted paralysis. The plain-sight truth: for housing to recover we must re-activate Fannie. In a time of falling collateral value, private lenders cannot lend, and we must rely on government guarantee. That’s as certain as the Pope’s religion and behavior by bears in woods. However, reactivation is impossible without leadership to explain what happened and what did not, and that rhetorical task might be beyond FDR himself. In every financial crisis, senior bankers have been available to explain and structure recovery, but this time the bankers’ conduct before, during, and after has been so without conscience that it may be another generation before financial-market Pooh-Bahs can earn back trust. If they tried, which they have not.

The politicians are prisoners of a homicidally angry people, and we’re going to stay in this pickle until we get over it.

The turn in these ISM surveys may be even more important than the often-revised payroll survey.

The report also shows that 1.45 percent of U.S. housing units (one in 69) had at least one foreclosure filing during the year, down from 2.23 percent in 2010, 2.21 percent in 2009, and 1.84 percent in 2008.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” says Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages-particularly in states with a judicial foreclosure process.

“There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”

December activity hits 49-month low, scheduled auctions up in fourth quarter

Foreclosure filings were reported on 205,024 U.S. properties in December, a decrease of 9 percent from the previous month and down 20 percent from December 2010. December’s total was the lowest monthly total since November 2007-a 49-month low.

December Default notices (NOD, LIS) decreased 19 percent from the previous month and were down 23 percent from December 2010; Scheduled foreclosure auctions (NTS, NFS) decreased 12 percent from the previous month and were down 24 percent from December 2010; and bank repossessions (REO) increased 10 percent from the previous month but were still down 12 percent from December 2010.

Foreclosure filings were reported on 586,133 U.S. properties in the fourth quarter, a 4 percent decrease from the previous quarter and down 27 percent from the fourth quarter of 2010. Fourth quarter default notices were down 6 percent from the previous quarter and down 22 percent from the fourth quarter of 2010; scheduled foreclosure auctions increased 4 percent from the previous quarter but were still down 32 percent from the fourth quarter of 2010; and REOs decreased 11 percent from the previous quarter and were down 24 percent from the fourth quarter of 2010.

Nevada, Arizona, California post top state foreclosure rates for year

More than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year despite a 31 percent decrease in foreclosure activity from 2010. Nevada foreclosure activity dropped 35 percent from the third quarter to the fourth quarter, driven primarily by a 70 percent decrease in default notices -the result of a new law (AB 284) that took effect in October requiring lenders to file an additional affidavit before starting the foreclosure process. The new law also increases the penalties for the use of fraudulent documents in foreclosure.

Despite a 28 percent drop in foreclosure activity from November to December- caused largely by a 41 percent drop in scheduled foreclosure auctions-Arizona registered the nation’s second highest state foreclosure rate for the third year in a row, with 4.14 percent of its housing units (one in 24) with at least one foreclosure filing in 2011.

California also experienced a substantial month-over-month drop in initial foreclosure notices in December-default notices there were down 38 percent from the previous month-but the state still registered the nation’s third highest foreclosure rate for all of 2011. One in every 31 California housing units (3.19 percent) had at least one foreclosure filing during the year, down from 4.08 percent in 2010 and 4.75 percent in 2009.

Georgia posted the nation’s fourth highest state foreclosure rate, with 2.71 percent of housing units (one in 37) with at least one foreclosure filing in 2011, and Utah posted the nation’s fifth highest state foreclosure rate, with 2.32 percent of its housing units (one in 43) with a foreclosure filing during the year.

Other states with 2011 foreclosure rates ranking among the nation’s 10 highest were Michigan (2.21 percent), Florida (2.06 percent), Illinois (1.95 percent), Colorado (1.78 percent), and Idaho (1.77 percent).

Foreclosure processing timelines continue to increase

U.S. properties foreclosed in the fourth quarter took an average of 348 days to complete the foreclosure process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010. The length of the average foreclosure process has increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures in earnest as the result of the so-called robo-signing controversy.

The average foreclosure process in New York has increased 37 percent during the same time period, and New York properties foreclosed in the fourth quarter took an average of 1,019 days to complete the foreclosure process-the longest of any state.

New Jersey documented the nation’s second longest average foreclosure process, at 964 days, and Florida documented the nation’s third longest average foreclosure process, at 806 days. Foreclosure activity in both these states dropped more than 60 percent from 2010 to 2011. All three states with the longest foreclosure timelines employ the judicial foreclosure process.

Texas continued to register the shortest average foreclosure process of any state, at 90 days-still an increase from 86 days in the third quarter and from 81 days in the fourth quarter of 2010. Other states with average foreclosure process among the nation’s shortest in the fourth quarter were Delaware (106 days), Kentucky (108 days), Virginia (132 days), and Louisiana (134 days).

Top metro foreclosure rates

With 7.38 percent of its housing units (one in 14) with at least one foreclosure filing in 2011, Las Vegas posted the nation’s top foreclosure rate for the year among metropolitan statistical areas with a population of 200,000 or more.

Ten out of the top 20 metro foreclosure rates in 2011 were in California cities, led by Stockton at No. 2, with 5.43 percent of housing units (one in 18) with at least one foreclosure filing during the year. Other California cities in the top 10 were Modesto at No. 3 (5.29 percent), Vallejo-Fairfield at No. 4 (5.20 percent), Riverside-San Bernardino at No. 5 (5.16 percent), Merced at No. 7 (4.40 percent), Bakersfield at No. 9 (4.31 percent), Sacramento at No. 10 (4.17 percent), Fresno at No. 11 (3.82 percent), Visalia at No. 13 (3.67 percent), and Ventura at No. 16 (3.27 percent).

Other metro areas with foreclosure rates ranking among the top 20 were Phoenix at No. 6 (5.10 percent); Reno, Nev., at No. 8 (4.37 percent); Atlanta at No. 12 (3.69 percent); Prescott, Ariz., at No. 14 (3.50 percent); Cape Coral-Fort Myers, Fla., at No. 15 (3.29 percent); Greeley, Colo., at No. 17 (2.97 percent); Detroit at No. 18 (2.94 percent); Boise, Idaho, at No. 19 (2.85 percent); and Salt Lake City at No. 20 (2.81 percent).

“Eliminating unnecessary paperwork and storing tax files in one organized, secure place is vital to a stress-free tax filing process,” said Rebecca Smith, vice president, marketing for Master Lock. “By creating and maintaining a master storage system, individuals can not only ease the tax filing process, but also enjoy a feeling of preparedness year-round.”

1. Purge the paperwork

First things first-clear the clutter. Go through all of your paperwork and eliminate anything you no longer need, shredding identifying documents to protect against identity theft. Get rid of expired warranties and year-old receipts and bank statements.

2. Safely store crucial records

Designate a specific storage space for vital documents including birth certificates, marriage licenses, passports, wills and social security cards. These items, as well as any important memorabilia, should be stored in a locked, fire retardant box. Not only will you always know where these items are, they’ll be safe from home mishaps.

3. Create a tax file

Create a separate file for all of your tax documents. Organize this file into 10 categories: income (pay stubs, W-2s, interest statements), medical (medical expenses and health insurance out-of-pocket), donations (cash and non-cash donations), real estate (interest statements from mortgage, tax assessments), child care (payment receipts), tax correspondence (important IRS or state revenue service letters), student loans (statements of payment), miscellaneous receipts (any receipts that might be needed for deductions), payments (records of advance payments) and old tax papers (old tax returns). Continue to use your tax file year-round, and you won’t have to scramble for these documents when it comes time to file next year.

4. Back up everything

Make digital copies of important documents and store them in your fireproof box on a zip or thumb drive. Use a secure online organization and security solution to store log-in and password information for bank accounts and credit cards as well as lock combinations or key numbers to your file boxes. Consider appointing a guardian as an additional security measure who knows where and how your records are stored for easy access in your absence.

5. Make it a tradition

Select a specific time of year (perhaps when tax time rolls around again) and make your review of these records an annual occurrence. This will ensure your information is streamlined and up-to-date and that finding or organizing this information is never an overwhelming process again.

The Dow Jones Industrial Average is currently at 12,639, down about 80 points on the week.  Crude oil spot prices are currently just under $100 per barrel, up over $1 per barrel on the week.  The Dollar weakened versus the Euro and Yen on the week.

Next week look toward Monday’s Personal Income and Outlays, Wednesday’s ISM Manufacturing Index, Thursday’s weekly jobless claims, and Friday’s employment report for January as potential market moving events.

Some brave souls thought the Fed would surprise by rolling out QE3, and begin to buy more MBS, driving mortgage rates down. Everyone expected a pair of meaningless inside-Fed jokes (more transparency, and an inflation target) and we got those. Nobody expected this: to extend its zero-percent rate from 2013 to the end of 2014.

Bonds have rallied, the 10-year T-note back down to 1.92% and mortgages close to 4.00%, markets still adjusting. Bernanke’s term expires a year before the end of the new zero-rate period! 2014 is so far off in the economic future that nobody can know its conditions, but you can bet — bet a lot — that the Fed would make a three-year commitment only if it is seriously worried. That anxiety has penetrated even the stock market, which has sold off for the first time in years after a new easing by the Fed. The Fed’s concern was justified by today’s weaker-than-looks Q4 GDP report.

Europe… the ECB will NOT allow a bank to fail. Those dominoes are off the table. The ECB may or may not play the ultimate card, buying or second-stage monetizing Club Med wallpaper, but banks will not be the trigger for ultimate euro collapse.

However, the underlying disaster is still rolling along. Christine LaGarde, French Minister of Finance until last summer, now Managing Director of the IMF, this week delivered a speech worthy of the White Queen. “Why, sometimes I’ve believed as many as six impossible things before breakfast.” In grand French style, her speech soooo important, soooo without consequence: demand European growth measures simultaneous with cutting spending and raising taxes; a larger financial firewall but no source for the money; and deeper integration among cultures farther apart every day. Banks not in play, European economies will determine the next stage there.

“The state of the union is getting stronger.” Uh-huh. Fifteen hours and fifteen minutes after the President spoke those words, the Fed announced an economy in such peril that its previously unprecedented aid would extend over the horizon.

Okay. All Presidents have the right to use lipstick. However, forty minutes and 58 paragraphs into his words, words, and words, the President first mentioned “homeowner.” Gave it three sentences to describe a refinance proposal that does not exist and will not. Three weeks after the Fed Chairman, a Fed White Paper, and four other Fed governors and regional presidents identified housing as the most serious risk to the economy, why it is, and what to do about it… three empty sentences in the SOU.

The 12th and 69th paragraphs (only) contained the word “deficit” in self-congratulation for last year’s painful mini-cut. Nowhere in the speech was a reference to a domestic spending cut or planned spending discipline of any kind.

We are entering the second year of an inert White House. Blame the Tea party, rightly, but a second year with no meaningful, Congressional pass-able economic proposal? At all? When in modern times has the White House been so dormant?

FDR was active, heaven knows. Some still argue about what he did, but not that he tried with mighty invention. Harry Truman let no grass grow in a deadly time and with a hostile Congress. Ike knew how to use staff better than anybody; it got him time for golf, but he got stuff done, and ornery Democrat Sam Rayburn ran Congress. JFK’s two years had questionable result, but action! Statues of LBJ would be common had he not become entangled in Vietnam, as any President might in 1965. Odd, brilliant Dick Nixon was plenty productive until the last six months, and never had a Republican Congress. Gerry Ford restored faith and fought inflation. Jimmy Carter never connected, and micromanaged his way to oblivion, but was anything but asleep. Anything Ron Reagan got done in eight years had to be negotiated with Tip O’Neil. Daddy Bush faced nothing but Democrats, and Bill Clinton had to make deals with the Mad Hatter. Newt.

These last 11 years… I find no parallel except the emptiness of Harding and Coolidge. Hell, even Herbert Hoover tried hard.

Fourth Quarter GDP arrived plus 2.8%, but consumer spending rose only 2.0% (after all that media jive through the holidays), and the savings rate fell below 4%, leaving little slack in household budgets. Inventory rebuilding aside, GDP rose only 0.8%, and that was boosted by an improbable 10.9% jump in residential construction, likely to be revised closer to Q3′s 1.3% gain.

The Dow Jones Industrial Average is currently at 12,691, up about 270 points on the week.  Crude oil spot prices are currently at $98.35 per barrel, down slightly on the week.  The Dollar weakened versus the Euro and strengthened versus the Yen on the week.

Next week look toward Thursday’s Durable Goods Orders, weekly jobless claims, and New Home Sales along with Friday’s first look at Q4 GDP as potential market moving events.  Also, the Federal Reserve’s FOMC meeting concludes on Wednesday.

One week ago, downgraded credit in Europe and another failure in Greek debt negotiations had taken the 10-year T-note to 1.85% and big-equity refis a hair below 4.00%. Today, nothing is resolved in Europe, but nothing is falling, either, so 10s are back to 2.02% and even a 20%-down low-fee mortgage is near 4.25%. Adios, refis.

The mortgage spread to 10s — 2.25% — is very wide, now opened in part by the new-mortgage surcharge inflicted by Congress and the White House to pay for part of the payroll tax cut. Which the public doesn’t know, because mainstream media can’t be bothered to cover the madness, and the Fed every day trying to close the spread.

The most striking US data is the decline in weekly claims for unemployment insurance, which seem decisively to have dropped below 400,000 (352,000 last week) where we had been stuck for most of 2011. Fewer layoffs is not hiring, but it is good news. Regional Feds report up-ticks in manufacturing. Inflation is receding from its commodity push last year, overall zero change in December CPI.

Then a data-interpretation argument, this time housing. The consensus is very optimistic that housing is past its bottom and 2012 will mark beginnings of recovery for construction and resales. I wish… oh, how I wish. The optimists assert pent-up demand, household formation, lower listed inventory, and faith. Halleluiah, brothers and sisters.

Always-suspect NAR has reported a 5% gain in sales of existing homes in December. Also a balmy, La Nina split-jet December, northern-city NFL finales and playoffs in dry 30-degree sunshine. Economic data is adjusted for season, but not weather. NAR also reported that one-third of contracts failed, its members correctly blaming mortgage underwriting and appraisals.

There is some legitimacy to hopes for new construction because builders are agile in shifting location and price point, and some places really are short of housing (North Dakota). However, new delinquencies are not improving, there is no work-off of distressed inventory, and all major measures of prices resumed their declines early last fall. The household-formation argument is based on recent historical pattern, but a hard look contradicts: we have a 1930s-style decline in birth rate, and for good or ill a sharp drop in illegal immigration. Pent-up demand is offset by pent-up caution about prices.

The void in political leadership continues, and among economic thinkers of all stripes the widening, hysterical scatter of what-to-do-if-you-were-king.

Heaven help moderates: Democrats were thrilled this week by Mitt Romney’s exposure as wealthy (who knew?) and paying completely legal taxes, if low in some parts. This guy tithes, 10% of his considerable income to his church. Lefty Democrats think that tithing is taking 10% of somebody else’s income, and Righty Republicans are in a 16th century argument about what a church is, and whose is acceptable.

Economic policy has two centers of confusion: stimulus versus austerity, and the central banks. Ordinarily sensible people chant: short-term stimulus, then austerity. Pardon: when is then? Less sensible people demand spending on infrastructure. Maybe we could avoid Japan’s bridges-to-nowhere, but even nifty new bridges to somewhere add what multiplier to economic growth? Governor Moonbeam’s California bullet trains are the most questionable public investment since the projects at Pruitt-Igoe.

The central banks. I hear more and more center-thinkers drifting toward the Libertarian posse. A good guide for 10 years has been the www.hoisingtonmgt.com quarterly, but the newest issue demands “a five-year moratorium on all new Fed actions.” A bright, studious investment manager and friend (better nameless) refers to Fed “meddling.” As we enjoy better US data, and no new recession, please understand that the Fed and ECB are holding open our living space against crushing deflationary pressures. And until accidental healing, or somebody finds the support to do useful things, the issue is in doubt and central banks are playing for time.

Big questions for spring: is the decline in inventory a good sign for prices, or a sign of demoralization; and what happens when distressed inventory is released to market?

Apparently, I’m not the only one.

“We often get calls from homeowners who are concerned that their windows are ‘sweating’ or leaking either inside or outside the home because they see moisture on the glass,” says Christopher Burk, technical product manager at Simonton Windows in Columbus, Ohio.

That’s simply not the case.

“While condensation may collect on the interior or exterior of energy-efficient windows, the units are really doing their job by helping serve as a barrier in the home,” Burk says.

Windows don’t cause condensation. They just prevent the moisture in the home from escaping to the outside.

“If the inside glass surface on double- or triple-glazed windows show excessive moisture, you can be reasonably sure that the moisture is also collecting on your walls and ceilings,” Burk says. “This means you should take steps to reduce the humidity level in your home by using exhaust fans and dehumidifiers.”

A lot of the water vapor is created by the inhabitants.

A family of four can add a half pint of water vapor every hour to the home just through normal breathing and perspiration. And, if you take a five-minute shower, you produce another half pint of water vapor. Even the simple act of cooking dinner on a gas stove can produce two and a half pints of water vapor.

Water vapor is part of our lives and our homes. To help control the amount of condensation in the home, experts at Simonton Windows recommend the following tips:

Use kitchen and bathroom exhaust fans.

If you have a humidifier, set it to the correct outside temperature.

If your home is overly humid, or if you have a damp basement, use a dehumidifier.

Properly vent clothes dryers, gas appliances and stoves.

Open a window in the bathroom.

Make sure your attic, basement and crawl spaces are well-ventilated and free from obstructions.

Store firewood outside. Freshly cut wood can consist of up to 45 percent water, which adds water vapor to the home. Even well-seasoned firewood generally has a 20 percent to 25 percent moisture content.

Open curtains and blinds to allow more air circulation around your windows.

Homeowners with the most cause for concern are those with older, less efficient windows.

“Windows are just like any other major part of the home,” Burk said. “They wear out over time and need to be replaced. If your windows have air leaks, don’t close properly, or are failing to act as a solid barrier to the environment, then it’s time to consider replacing them with energy-efficient windows.”

Burk also recommends knowing the difference between condensation on the glass and between the glass panes of the window.

“If you see moisture, fogging or cloudiness between the panes of glass in your window, this indicates that the seal of your window has failed and it’s time to get a new window,” Burk says.

“Failed seals lack the energy efficiency and features necessary to help you keep energy bills low and enjoy comfortable living in your home,” he said.

“While condensation on the interior or exterior of the glass is manageable, moisture between the glass needs swift attention by homeowners,” according to Burk.

By Alan J. Heavens

“Turn off all water and blow out (water lines) with an air compressor if you are turning off heat in a climate that freezes,” says plumber Tim Walker of River Edge. “Put (non-toxic) antifreeze in all sink, tub/shower and washing-machine traps, and remove water from toilet tanks and bowls and add (that same) antifreeze.”

Or, “just lower the heat to 45 degrees and install a special thermostat in the house that will call your (main) home or cell phone if the temperature goes below 45,” says plumber Rob Wickersheim of Hackensack. “This way you have some time to get there and fix the problem before any real damage occurs.”

Hire a local contractor to keep on eye on the vacation property, particularly during/after storms.

Keep a couple sheets of half-inch plywood on hand for emergency cover-ups before/after storms. Have a manual saw, hammer and 2-inch common nails on hand, as power tools are worthless during an outage.

Be aware that oil deliveries can force air out of the storage tank and into the fuel line. When the furnace comes on and calls for fuel, it will not receive enough due to the air bubble and will shut down. This could lead to costly flooding should pipes burst due to lower temperatures.

By Tom Skevin