Bizarro World Strikes Again...

...yes, just when we thought things couldn't get weirder in the housing economy comes this story where a condo association is actually foreclosing on the lenders--who themselves had previously foreclosed on the property:

The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees.

The lender owes $32,252 in late maintenance fees on the unit it took back more than a year ago.

Determining exactly who is on the hook is itself difficult. The original mortgage was issued by Mortgage Loan Specialists of Irvine, Calif. A spokeswoman for Wells Fargo said it was only the trustee for the bondholders who invested in a securitized mortgage pool. The servicer of the loan is Impac Funding Corp. of Irvine, Calif., which shares the name with the company that issued the mortgage-backed securities and is also named in the foreclosure suit, Impac Secured Assets Corp.

So now we're dealing with Foreclosures to the Second Power. Bizarre, indeed.

Interesting LA Times Article...

...projecting what things would look like at $200 barrel:

Besides the obvious effect $7-a-gallon gasoline would have on commuters, automakers, airlines, truckers and shipping firms, $200 oil would drive up the price of a broad spectrum of products: Insecticides and hand lotions, cosmetics and food preservatives, shaving cream and rubber cement, plastic bottles and crayons -- all have ingredients derived from oil.

A Shorter Work Week...

...that's what Utah's governor is doing to save energy costs:

Seeking to reduce state energy costs, Utah Governor Jon Huntsman announced Thursday that the state would close administrative offices on Fridays, while extending hours on Monday through Thursday.

The idea is to work longer during the week and reduce the amount of trips to and from work.

Following suit just in time for soaring summer gas prices is New York’s Suffolk County Legislator Wayne Horsley. His plan: Let employees work four 10-hour days from July 1 through Sept. 30.

What If...

...gas reaches $7 per gallon within the next two years? Do you have a plan on how to get to work? To the store to buy groceries? To church or school?

To travel statewide or even nationwide?

This WSJ article discusses these questions:

And who will be parking their cars? The 57 million American households that have both cars and access to something resembling public transit. Gasoline at $7 begins to approach prices Europeans have paid for years, meaning that chunk of America “will start to act more and more like Europeans,” Mr. Rubin says. Not soccer moms in a minivan—soccer fans, searching for tokens:

Our analysis suggests that about half of the number of cars coming off the road in the next four years will be from low income households who have access to public transit. At their current driving habits, filling up the tank will have risen from about 7% of their income to 20%, an increase that will see many start taking the bus.

Gas prices already appear to be reshaping suburbia. But what Mr. Rubin is predicting is a far bigger shock to the American system. Europe has had decades to develop a society based on expensive energy. What will happen if Americans suddenly are forced to shoulder European-style energy prices — but without the European-style society to cope with them?

Proctor & Gamble Considers...

...making major changes to its distribution network. Why? Increasing energy costs:

Mr Harrison, responsible for the supply chain behind P&G’s global sales of more than $80bn, said the supply system was currently based on “large, single-category regional production sites with long supply chains”.

“Up to where oil was $70 or so, it was hard to justify building new capacity only on the back of new distribution costs. With oil at $140, the world has changed.”

Same song, different company. Expect to read this type article numerous times in the near future.

Growing Financial Risks...

...this article explains on certain key economny matters (especially inflation) are treading into potentially very dangerous water:

Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.

Very Important Article

If you read anything this week on Daily Sprawl, then we recommend that you read this article:

The oil crisis is upon us. I hope to convince you that sharply curtailing our oil demand is the only and best way for Americans to negotiate the coming decade (2008-2018). To that end, I will construct three scenarios for you to consider in contemplating your future energy consumption.

As you can probably guess, I read hundreds of articles each week on topics related to Peak Energy and Sprawl. The above analysis is one of the most succinct descriptions that I've seen of the pending problems.

And, as the author does, Daily Sprawl suspects that Door #2 is the most likely. Get prepared.

Is GM Going Bankrupt?

It's almost unfathomable that General Motors could go under. After all, they've been one of America's bedrock companies for generations.

Yet, that's exactly what I am hearing and reading from a variety of sources today. Indeed, predictions are ramping up that GM may be bankrupt by the end of this year.

Maybe this is why Goldman Sachs is placing GM on its "Sell" list--an unprecedented move for Detroit's largest car maker:

Shares of General Motors Corp hit their lowest level since 1955 and dragged down the auto sector on Thursday after Goldman Sachs cut the struggling U.S. industry's largest manufacturer to a "sell" rating and warned it would have to raise capital.

The panicky slide in GM (NYSE:GM - News) shares capped a period of growing concern about liquidity risks to U.S. automakers and suppliers from a domestic auto market reeling from record gas prices and the impact of a housing slump and tighter credit.

The Goldman Sachs warning, including the unusual "sell" call on the U.S. auto industry's largest player after a period of sharp stock price declines just ahead of the close of the second quarter, prompted selling across the sector.

Then again, should we really be surprised that a company that based most of its business model on cheap oil could fade away into the abyss of those who lost the big bets on sprawl...

Want to Save Paper...and Hassles?

Then you can go to this website administered by the various credit agencies where you can opt-out of receiving unsolicited credit and insurance offers. There's a quick and easy on-line form that you can fill out.

Daily Sprawl recommends opting out for a variety of reasons, including the fact that it reduces junk mail waste.

The New York Times...

...is rethinking the feasibility of suburban sprawl:

Juanita Johnson and her husband, both retired Denver schoolteachers, moved here last August, after three decades in the city and a few years in the mountains. They bought a four-bedroom house for $415,000.

Last winter, they spent $3,000 on propane for heat, she said. Suddenly, this seemed like a place to flee. “We’d sell if we could, but we’d lose our shirt,” Ms. Johnson said. Recently she counted 15 sale signs. One home nearby is listed below $400,000.

“I was so glad to get out of the city, the pollution the traffic, the crime,” she said. Now, the suburbs seem mean. “I wouldn’t do this again.”

Sad. And what's even sadder is the photo essay (an image of which is above) that accompanies the story.

Ode to Exurbia...

Goodbye exurbia...we knew ye only too long:

As I noted before, any lifestyle dependent on low gas prices - and low gas mileage vehicles - is becoming uneconomical. For those that own a home in a remote location, work in construction, and drive a low gas mileage vehicle, this must feel like a depression.

The Last Desperate Gasps...

...of General Motors. That's the case that uber-economist Mish Shedlock is making.

It's actually pretty compelling:

Status symbols are out and frugality is in. That is especially tough on the Hummer because other than status, the tank had nothing going for it. I would question any company that would want to buy it. GM is late to the sales party by two years. GM is late to every party.

Drilling

Several have recently asked how Daily Sprawl feels about the latest oil drilling political happenings. The answer is a big indifferent yawn but let's first recap.

McCain and several other elected officials have proposed that States be given authority to decide whether to approve oil drilling off their shores (note: contrary to the intellectually-lazy rantings of sportscasters turned cable t.v. commentators like Keith Olbermann, the issue is not whether Congress should approve such drilling itself but whether it should empower states to do so).

Well, in return, several other elected officials decided that the Talking Point response should be "No way because oil companies are not fully drilling their existing oil leases already. Do that first and then we'll talk."

For the uninformed, that may make sense at first blush. But, for the informed, its a non-starter. Why?

Simple, really. Just because an oil lease exists, doesn't mean that oil does. Indeed, many of the undrilled leases remain undrilled because they have been scouted but no significant oil was found.

Meaning that guys like Rahm Emmanuel are essentially saying that you have to first drill the areas without appreciable oil before states are given the authority to allow drilling in those areas that do.

In other words, just more partisan politics on this nation critical issue.

But, alas, what does Daily Sprawl think?

Again, practically and simply: drill where we believe appreciable deposits of oil exist--whether it is ANWR, the Gulf Coast, or Cheyenne, Wyoming. After all, we will need every drop we can get to aid in the Peak Oil transition. Leaving reserves in the ground--even though they won't themselves solve the issue--is a bad idea because the time will come where we may lack the energy resources to actually go and get that oil at all.

When you consider that petroleum plays a large role in our health care, food sourcing, and other key aspects like shelter, it becomes clear that you can be both anti-sprawl and pro-drilling.

In fact, not just "can be" but "should be".

A Return to Urban...

Young families might settle for tighter quarters closer to the city instead of the larger, less expensive homes with long commutes. For suburban professionals, a more expensive condo in downtown Boston might make financial sense. And baby boomers might consider giving up the family home because higher gas prices eat into their retirement savings.

Daniel Gustafson and his partner, Paula Parker, are buying a home in Milton that abuts the Red Line's Mattapan trolley. Gustafson realized he could ride the subway to work at the Massachusetts Institute of Technology in Cambridge rather than drive his van, as he has done for years. That sold him. He calculated this would save about $200 a month in gas, after subtracting the cost of a subway pass.

Read the entire story here.

Saudis Lose Control

It used to be that the mere suggestion of an oil production increase (especially by Saudi Arabia--the world's largest producer) could send oil prices tumbling.

Not anymore.

In fact, within the last several weeks, Saudi Arabia has actually announced two production increases (totaling roughly 500k barrels per day) and what did the market do?

Go up instead of down.

My what unexpected times we are living in these days.

Credit Card Companies Cut Limits...

..no big surprise here. Credit card companies are cutting card limits as they continue to lose large barrels of money on delinquencies.

Ironically, this actually could be a good thing for the long term as it will hopefully help consumers realize that the old axiom "living within your means" actually means something:

The easy money that led Americans to depend on credit cards to pay their bills is starting to dry up.

After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Banks that issue cards like Visa and MasterCard, as well as the American Express Company, are cutting the limits for customers who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries.

The reductions come as consumers, squeezed by a slack economy, a weak housing market and rising unemployment, are falling behind on monthly credit card payments in growing numbers.

This would be a good place to start learning this lesson.

What To Do for Fun in an...

...economic crisis?

Go to the library. It's generally free with books, movies, and special programs for the kids (and, in some places, lectures and such for adults).

A great value this summer as family entertainment budgets shrink:

Library cards don’t cost $4 a gallon.

Southwest Floridians struggling to make ends meet are driving to area libraries. They’re filling their intellectual tanks and keeping their children entertained on the cheap.

As Tara Andalman, 38, stepped out of her mini-van on Monday afternoon outside the branch library in Bonita Springs, cars were doing circles around her.

More than a dozen library patrons were coming or going every 15 minutes as Andalman unloaded four children, all in elementary school. Two of the kids were hers, the others friends. Clearly, it was time for distractions.

After cutting movie rentals from the family budget earlier this year, Andalman said she has had no problem finding free alternatives.

Analyzing Hawaii...

...in a Peak Oil world.

While few Daily Sprawl readers live in Hawaii, the basic framework of the author's analysis is useful for almost everywhere someone lives.

Under this scenario, here in Montgomery is actually one of the better Southeastern locales to live in a Peak Energy situation.

Anecdotal Information...

...while Daily Sprawl tries to avoid too much anecdotal evidence related to Peak Energy challenges (after all, while often compelling, anecdotes sometimes are not actually representative of a trend), a recent Daily Sprawl conversation with someone in the rental car industry is worth noting.

The two interesting points to come out where these:

1. More and more customers are declining upgrades from the small cars they reserved to high level cars such as Yukons or Cadillacs. I remember in the not too distant past where Upgrade coupons at rental car agencies could even be sold on web-auction sites. Now, it's a quick "No, Thank you" when the rental car agent offers to upgrade from a Ford Focus to a GMC Yukon.

2. At least one major rental car agency is seriously considering a major flip-flop: smaller cars will cost more to rent than large ones. The reason is simple...very little rental demand for full size, SUV and luxury class vehicles leave the sitting on the lot generating no revenue for the rental company. Just imagine that the same Ford Focus might cost $40 per day with the Yukon costing only $20.

These are very strange days indeed. Most peculiar.

Once Upon a Time...

...there was this thing called "overnight shipping":

Budget-conscious shippers are deciding their packages and envelopes can take a slower path to their destinations, going by second-day air or, even slower, by truck. Some businesses are just plain sending less.

The shift, propelled by the declining economy and record fuel prices, was reflected in FedEx Corp.'s dismal earnings report Wednesday.

The changing outlook has altered the way the Big Three express delivery companies compete for air and ground shipments. It's also pushing DHL Express into the arms of a rival, probably bringing layoffs to DHL's 350-employee West Coast air hub in Riverside County.

Gas Prices and House Prices Intersect...

Thanks to the reader who forwarded this MSNBC article on gas prices affecting home purchases:

Stroud's choice represents a fundamental shift in the way more Americans are approaching home buying in this era of ballooning gas prices. Real estate agents, transportation officials and industry surveys indicate that home buyers are placing more importance on cutting their gas bills and commute times than they have since the oil shocks of the 1970s.

And there are some early indications that homes near urban centers, and subway, train and bus stops are often selling faster and at better prices than those in the distant suburbs.

On Wednesday, a survey of 900 Coldwell Banker agents showed a remarkable 96 percent said that rising gas prices were a concern to their clients, and 78 percent said higher fuel costs are increasing their desire for city living.

CNN is Asking an Important Question...

"Is America's suburban dream collapsing into a nightmare?":

When Shaun Yandell proposed to his longtime girlfriend Gina Marasco on the doorstep of their new home in the sunny suburb of Elk Grove, California, four years ago, he never imagined things would get this bad. But they did, and it happened almost overnight.

"It is going to be heartbreak," Yandell told CNN. "But we are hanging on."

Yandell's marriage isn't falling apart: his neighborhood is.

Significant Quote...

As of June 2008, the entire U.S. air transportation system is operating on borrowed time. Between January and today, the situation has degenerated from a crisis to a survival situation

Read the entire Dallas Morning News story here.

Solitary in Suburbia...

The Atlanta Journal Constitution has an interesting piece on a growing trend:

Every so often, William Saunders snatches up a golf club and steps behind his Smyrna townhouse to whack balls down a line of neighboring lots.

He never hits another home and never hears complaints from neighbors. But that's an easy accomplishment. Most of Saunders' neighborhood is a ghost town, another fallout of metro Atlanta's housing market horrors.

One of just two residents in what was to be a 105-home development, the 54-year-old information technology manager strolls down lonely streets past silt fences, weedy lots, nearly 20 vacant homes and a sign cheerily announcing that a pool and cabana are "Coming Soon!"

While the story goes on to discuss some benefits of being alone in an almost unbuilt development, the reality is that increased crime is a real potential problem. Plus, they cost alot for the city This is not a good thing for anyone in any sense.

Export Land Model...

...yeah, that sounds like a somewhat fancy technical term but, its also a very important piece to the Peak Oil puzzle. This article explains why:

Which brings us to the Export Land Model (ELM). The basic thesis expressed by students of the ELM is that, to fully appreciate the impact of peak oil, you cannot look only at the production declines so presciently anticipated by ML Hubbard in 1956. You also have to look at the rate of local consumption and the importance of that consumption on the ability of a country to export their oil.

Read more about the crucial topic of ELM, here.