Q: I understand these are trying times for all especially the real estate industry. As a now divorced single mother of five, 100% disabled and trying to redirect my future, I am fortunate enough to have income that is guaranteed throughout the remainder of my life, which is a HUGE advantage these days. I am in the process of trying to buy a house for me and my family and have run into endless roadblocks. Being eligible as a First-time Homebuyer, I am eligible for the $8000 tax assistance rebate. This has been ackowleged by HUD (who I am purchasing the home from) and also the lender handling the mortgage. My twenty year marriage ended causing a pre-foreclosure and eventual sale of our house. My ex-husband, living in the property for the final two years, defaulted on the mortgage many times and I continually had to remedy the financial situation. Now, with my life finally being mine, I have been told I can move forward and am considered a new individual and the past of my marriage could not be held against me. But this is the wall I have run into. How do I handle the contradiction of having a previous situation, that all parties have agreed cannot stop me from getting my house, stop me from getting my house? What are your suggestions? Must it be taken to the highest level and who would that be??

Submitted by Tricia Werdmuller vo from Lancaster, CA

A: I think you can't go wrong asking to talk with a supervisor, but I think you probably would be wise reaching out to HUD to see if they have a credit counselor who can help. Also any number of groups that work with the disabled might be able to provide a person to help you battle the lenders. There is some truth to having a clean slate, but if your name was on the mortgage it will up to some point affect your credit rating I believe.

Answered 06/23/09 15:27:12 by Kevin Hall and Tony Pugh

Q: By claiming the extended benefits on line early. Is there a possibility that the checks could be mail out before July 2009?

Submitted by Angela Dunn from Miami Gardens Fl

A: Don't know. Florida is one of the states with double digit unemployment so I presume things are backed up. States around the country have been overwhelmed in trying to deal with jobless benefits. Online is presumably faster, but I just don't know whether July 09 is doable or not.

Answered 06/23/09 15:24:41 by Kevin Hall and Tony Pugh

Q: In your recent article on the Geithner’s stress tests, you describe the reserve requirements Geithner is requiring as being in the order of tens of billions for each of the banks. I have been trying to make sense of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities (4th quarter, 2008). http://www.occ.treas.gov/ftp/release/2009-34a.pdf They describe the “notional” value of the swaps on the order of many TRILLIONS of dollars: “ The notional value of credit derivative contracts as of the end of that quarter as $15.9 TRILLION, not billion. Only about 5 banks, they say, hold 98% of all swaps. I can’t reconcile how it could be that only a fraction of $1 trillion is involved when the total notional value is almost $16 trillion. One could, of course, make the argument that the bets were balanced by counterparties, but my impression is that they did not do this because many, if not most, were not registered. Furthermore, wouldn’t most of them have bet by that time on a downward slide? For that matter, how are we to know any of this with even rough accuracy? One could also assume the underlying values of the swaps fell by at least 40% as did everything else, although the subprime could have been much worse. Even then, of course, the figures involved are described in the Trillions, not Billions. Have I wildly misinterpreted the tables? I hope I have because some of the figures on swaps go as high as $60 trillion – which would mean that nothing less than a thorough going world wide reorg would be called for or simply a chaotic collapse.

Submitted by Chuck Palson from Boston area, MA

A: Investigative reporter Greg Gordon tackled your question, here is his response: Please forgive our woefully slow reply to your query about credit-default swaps. It’s been a hectic week, but we do try to get back to folks quicker than this. You raise perfectly rational questions about a very complicated subject. But when you get beneath the surface, you can quickly see why it would be hyperbolic to focus on the credit-default figures in the trillions. A large chunk of these insurance-like swaps were written on pools of subprime mortgages or collateralized debt obligations (CDOs) whose underlying assets are securitized mortgages. Typically, the swaps only cover the upper slices, or tranches as they’re known, of each pool of thousands of mortgages, not the riskiest ones at the bottom that are the last ones to get paid in the event of mortgage defaults. One way to understand this is that if you had a pool of like-sized mortgages with a 30 percent default rate and those defaulted homes were all seized in foreclosures and auctioned off, if half the value of the homes were recovered, the overall pool would lose 15% of its investment. So the folks holding credit-default swaps in the top, AAA-rated tiers wouldn’t get hit much. However, rising default rates lead to ratings downgrades that force counterparties in credit-default swaps to post increasing amounts of collateral, as occurred with AIG, the giant insurer at the center of the current mess. That left AIG in a liquidity crisis and forced a massive taxpayer bailout. To get to the full notional value something like this would have to happen: If you had $1 billion in mortgages and they all defaulted, the lender foreclosed on ‘em all and the underlying land and homes were all worthless, but you had a credit-default swap insuring the upper tiers then the buyer of the swap would have recourse to collect in full. Hope that clarifies how this works and you have my admiration for digging around in the bank reports to assess their risk.

Answered 06/18/09 18:37:00 by Kevin Hall and Tony Pugh

Q: I'm a reporter for the Columbia Missourian in...Columbia, MO. I read Tony Pugh's story, and the map was great. While I was excited that we were ranked in the top 6 for being projected to return to the pre-recession employment levels by the end of 2009, I'm still a little foggy on the exact criteria that was used to put us there. It would help me talk to some of the REDI people here along with the local economic development team. Can you point me in the right direction? Or can you expound more upon what went into this projection? Thanks a lot!

Submitted by Jim Holt from Columbia, MO

A: send Tony an email to tpugh@mcclatchydc.com and he can get in contact directly with you.

Answered 06/18/09 18:34:34 by Kevin Hall and Tony Pugh

Q: In past recessions, we always had new emerging industries that picked up the slack for new employment, this time I do not see any new technology or industry that can rehire the unemployed? Coupled with the world is flat, theory, what industries will emerge as the major job growth engines? And when will this take place?

Submitted by David Lewenz from Lakewood Ranch, FL

A: The author of the story, Tony Pugh, responds:Professional and business services will be a high job-growth area as will the green jobs sector, health care and education. Construction will likewise pick up as stimulus bill projects get off the ground and home construction rebounds. How soon the economy picks up will vary from locale to locale. A recent IHS Global Insight analysis of 325 metropolitan areas, or population centers, found that only six would reach their pre-recession employment levels this year, five in 2010, 28 in 2011, 95 in 2012, 79 in 2013, 41 in 2014 and 71 in 2015 and beyond. In other words, it's gonna take some time.

Answered 06/18/09 18:34:03 by Kevin Hall and Tony Pugh

Q: Is there anything you can do about employers cutting hours down to under 32 hours so they don't have to pay for health insurance?? and do unemployment rates include all the people that ran out of unemployment?? or do they just not count anymore??

Submitted by cristal from roseville,cal

A: This answer from Tony Pugh: By law, employers do not have to provide a 40-hour work week or health benefits. Most do so because it helps them retain and acquire the most talented people. Depending on its structure, a universal health care provision could help by providing care for all through a government program or by requiring all americans to purchase health care - with government assistance for those who need it. But if a government-run plan covered those who can't now afford coverage, there's no guarantee employers would use the savings to add more full-time workers. As for your second question, unemployment rates include all people who are actively looking for work, but can't find it. It doesn't include people who have given up looking. So people who have lost their unemployment benefits, but are still looking for work would be included in the the unemployment rate. Those who've exhausted their benefits and aren't looking would not be included. In other words, the status of their unemployment benefits isn't a determing factor.

Answered 06/18/09 18:33:11 by Kevin Hall and Tony Pugh

Q: What is being done to enforce the laws against illegal Naked Short Selling, especially by Hedge Funds? What is being done to penalize and eliminate Failures to Deliver on short sales? Why are "phantom" shares still traded in our markets? impunity?

Submitted by Carl from Philadelphia, PA

A: Good questions, not sure where things stand actually on the naked short selling, it was temporarily banned then went into a grey zone alogn with the uptick rule. I'm not your best source for this technical question, only followed it on the margins. Sorry.

Answered 06/18/09 18:31:31 by Kevin Hall and Tony Pugh

Q: How can our nation continue to let the actions of our government carry on considering the following: "according to Article 1, Section 8 of the Constitution which happens to be the inviolable law of the land. The article states that Congress shall have the power to coin (create) money and regulate the value thereof. In 1935, the US Supreme Court ruled the Congress cannot constitutionally delegate its power to another group or body. The Congress thus acted in violation of the Constitution it's sworn to uphold and in so doing created the Federal Reserve System" The Federal Reserve System is ILLEGAL, so why is Obama giving them MORE POWER!?!?

Submitted by Cathlene Hatzenbuile from Beaverton, OR

A: You are on your on this one. The Federal Reserve exists and it isn't going away anytime soon. Thanks for sharing your thoughts.

Answered 06/18/09 18:29:54 by Kevin Hall and Tony Pugh

Q: The answer to the correction of the regulatory system lies in how they treat an auditor during the first discovery of irregular behaviour, there is NO protection for the auditor in either the CPA Arena nor the Gov't arena, because there is always a supervisory auditor above the primary auditor who was not supposed to let this happen. Whistleblower reform is necessary within the regulators and audit firms themselves? No.?

Submitted by Howard Mann from Kennewick WA

A: Very good point and I hope our readers see this. This was certainly the history with Enron and countless of others, whether it was blowing the whistle on non-bank lenders encouraging weak lending etc, those who spoke out were always punished by those higher up. Tx for reminding on the importance of such reform.

Answered 06/18/09 18:28:54 by Kevin Hall and Tony Pugh

Q: Watching the questioning of Ken Lewis by members of congress, I started wondering - regardless, of what their level of participation was, is there a difference between the non transparent way that the government involved itself in the Bank of America/Merril Lynch merger and any other nontransparent involvement they have had with other financial institutions? Thank you for your answer.

Submitted by sherry mysak from cedar rapids IA

A: The closest example was the sale of Bear Stearns. A very good book, out recently, called House of Cards recounts the final days of that investment bank as the feds brokered its sale to JP Morgan Chase and many of the strongarm tactics taken with Bank of America were employed with JP Morgan too. Treasury Secretary Paulson actually suggested JP bid even lower than its lowball offer, and then pressured JP to up it... in a scenario where a JP hired attorney made a mistake and the only way to clarify it, since govt left JP out to dry, was to agree to a higher per share purchase of Bear Stearns in exchange for fixing the technical mistake in the agreement.

Answered 06/18/09 18:27:36 by Kevin Hall and Tony Pugh

Q: What are the chances of asking my mortgage holder, Wells Fargo, for a 2 month break on paying mortgage until I get some more money from selling a very valuable set of furniture at auction? it would be paid up after money is received. i have never been late before.

Submitted by Suzanne gartz from Monroe, MI

A: You can try but my experience is that lenders are generally unwilling to work with you until you are late. It's a perverse situation and encourages non payment, but I have been on the phone with people as they try to modify mortgages and recently contacted one mortgage servicers who refused to entertain any change while the borrower was still making payments. Never hurts to try, you never know when you'll get lucky, I'm not sure Iw ould say why you will be able to pay in two months, I would say exigent circumstances have arisen and see if they will work with you for a couple of months.

Answered 06/18/09 18:25:03 by Kevin Hall and Tony Pugh

Q: Is it true that obama is thinking about cutting Social Security by 70%

Submitted by Shirley from Sikeston

A: No.

Answered 06/18/09 18:22:54 by Kevin Hall and Tony Pugh

Q: If the credit default swaps are a form of insurance on debt or risk then why aren't they regulated as insurance? Were they invented to get around the regulations on insurance and the required capital to back the insurance? Can just changing what you call something make it unregulated?

Submitted by Rick from Tulsa,OK

A: I wouldnt say they were invented to get around insurance rules, more an expansion of the concept of insurance into financial markets to mitigate risk. These swaps provide a way of protecting yourself against debt you have issued, loans you have extended etc. But it was grew into naked swaps, where parties with no relation to the underlying asset can bet on its success or failure, and this has been disruptive. for example, WSJ had a very good piece showing how credit-default swaps were hampering the ability of Ford and Six Flags, the latter now in bankruptcy, to renegotiate its debt. Holders of CDS stood to gain if the companies went to into bankruptcy, and to hell with the workers, suppliers and anyone else affected. That's why many people find CDS unsavory, though they clearly also have a function in managing risk.

Answered 06/18/09 18:22:47 by Kevin Hall and Tony Pugh

Q: How is the dollar amount of security (used to be gold bullion @ $35 an ounce) determined today with respect to not exceeding that maximum monetary amount that can be printed? Who determines what the maximum monetary amount that can be printed is?

Submitted by Duane Steil from Rancho Murieta, CA

A: There is no such reference today to the gold bullion example you gave. The Federal Reserve determines the money supply, in accordance with its dual mandate of combating inflation and deflation (price stability) and promoting maximum employment. While the Fed is autonomous and has these powers, it publishes data and since this data is public record it leads to scrutiny and even an autonomous entity but pay attention to both market and political sentiment about how it does its job. In the case of what you asked, the money supply, if the Fed were just to print willy nilly -- something short-handed as monetizing the debt -- there would be all kinds of repercussions. The Fed has been creative in how it has tried to step in amid a credit crunch and try to keep these markets functioning, but it has done so cautiously, limiting the risk it is taking on its own balance sheet for fears of losing credibility and thus its power to persuade.

Answered 06/15/09 13:01:58 by Kevin Hall and Tony Pugh

Q: prove marginal cost goes through the minaimal of avg total cost? I have to write one full page can you get me started?his is economic question

Submitted by carla Logan from Camden SC

A: Perhaps this link will help.... http://www.unc.edu/depts/econ/byrns_web/ModMicro/MM08_Costs/Interm_MICRO_08.pdf and this one... http://www.unc.edu/~straines/econ10/lecture%208.pdf

Answered 06/15/09 12:34:56 by Kevin Hall and Tony Pugh