Calculated Risk posts the graph that makes it clear why this is not exactly a cause for celebration: Unemployment claims remain very high, and the drop in claims has stalled out. For the general employment picture to improve, that number needs to start falling.

The homeowner vacancy rate (the percentage of total housing units that are for sale but have not found a buyer) declined to 2.6 percent; it averaged 2.85 percent in 2009. Calculated Risk notes, “A normal rate for recent years appears to be about 1.7 percent. This leaves the homeowner vacancy rate about 0.9 percent above normal. This data is not perfect, but based on the approximately 75 million homeowner occupied homes, we can estimate that there are close to 675 thousand excess vacant homes.” And the rental vacancy rate declined slightly to 10.6 percent, after averaging 10.63 percent last year. “It’s hard to define a ‘normal’ rental vacancy rate based on the historical series, but we can probably expect the rate to trend back towards 8 percent,” the blog says.

The word “normal” is crucial there. It is difficult, if not impossible, to prescribe housing norms, because the housing bubble and its attending credit bubble distorted the economy so much, for so long. One might expect to see those statistics returning to their trend lines. But homeowners are defaulting at historically high and in some cases rising rates. Until the foreclosure crisis stops — and, again, there is no sign of that yet — there is no saying what “normal” is.

Did you know that since 2003, when the subprime market really took off, April has been Financial Literacy Month? Now you do. But in an age where financial expertise seems so discredited what qualifies someone to be financially literate?

It’s a fair question. Unfortunately, the answers aren’t reassuring. First, as Konczal notes, “financial literacy” as a course of study doesn’t exactly exist in the economics field. There’s no incentive to get published on it; there’s little academic research as a result. What fills the gap? As we pointed out, subprime lenders align themselves with mainstream financial literacy groups and fund their efforts as a way to distract from the controversies surrounding their products. Konczal explains the problem goes even further, with unqualified “experts” dispensing their alleged personal finance wisdom.

There’s little academic backing, there’s no money for journals, research grants, conferences, the development of theory and expertise that is deployable into policy. That leaves the field wide open to be funded by credit card companies, subprime lenders, and others with a vested interest in certain modes of thought becoming the norm. And for expertise to be filled by people who come from motivational speaking backgrounds, and theory to end up as a mess of common-sense adages and low-level morality plays. The theme of Financial Literacy Month for 2008 was “Financial Responsibility Begins with Me”; why didn’t they call it “caveat emptor”?

One of the biggest hurdles facing the creation of legitimate and useful financial literacy programs will continue to be funding for non-biased, professional counselors.  It’s not a great time to push the government to provide more money to the nation’s Cooperative Extension System — but that national educational network remains a valuable source of credible personal finance research. And as we said, some corporations are beginning to incorporate financial literacy into their human resources responsibilities, given the problem of employees burdened with distracting financial problems.

In the end, that may really be what it takes to get untainted financial literacy education going — the overwhelming debt crisis facing American consumers. Maybe the government and the private sector will come to realize that partnering with credit card companies and subprime lenders isn’t going to get the job done. As Calculated Risk has repeatedly asked, why aren’t consumers being educated on the perils of not paying their credit card bills off in full every month? Probably because, in the absence of untainted financial literacy advice, a company like Visa is backing a high-profile financial literacy initiative. It seems unlikely advising people to pay off their credit cards is the focus of that effort.

As credit tightens, so will the need for legitimate financial literacy education. And as consumer debt becomes something harder to ignore, maybe the unholy alliance of creditors with a stake in the game and financial literacy education programs often aimed at younger borrowers in particular, will finally come to an end.

Jim the Realtor seems to have hit the big time because he’s not your typical real estate agent. Armed with his pocket video camera, he tells it exactly like he sees it, a running commentary of slightly jaded, off-kilter observations as he walks through another foreclosed and once wildly-overpriced home. My favorite is his  running pool trick video, where he toured a spacious, clean, lovely foreclosed house, with a pool and hot tub out back, the soothing sound of gurgling water everywhere. That is, until Jim the Realtor turned off the water to the pool and hot tub – and showed how the running water masked the loud and constant roar of the freeway nearby.

Here are some bloopers and outtakes of Jim the Realtor’s work, currently making the rounds. Enjoy.

I’m hearing stories frequently of banks selling REOs far below market prices, only to have local investors flip the properties.

A reader sent me some info on a property in Redwood City that is typical. The lender turned down two short sale offers at close to $649,000, and then, after foreclosing on the property, the bank listed the property at $509,000. The property sold for $493,000 all cash, even though there were other offers above the list price.

What is going on? I think the lenders are swamped, and this is OPM (other people’s money). The money doesn’t belong to the people making the decisions, and it is hard for them to accept a short sale, and after foreclosure, it is probably easier for them to just take a check and get the property off their desk. The result is the banks make a series of less than optimal decisions, and they leave money on the table at several points in the process.

CR also cites a story from the North County Times in California, noting how banks are so overwhelmed by the foreclosure crisis they are dumping properties in bulk.

Maybe now that the furor over AIG bonuses is settling down a bit, this problem will begin to get the attention it deserves. Like so much in the mortgage crisis, it’s felt first in neighborhoods and communities, long before politicians and policymakers see it. They’re already way behind the curve.

As Calculated Risk puts it, it’s time to party like it’s 1997.

Indeed, the Wall Street Journal runs the numbers:

The Dow Jones Industrial Average, which suffered a 485-point slide last week to hit new bear-market lows, ended down 250.89 points, or 3.4%, at 7114.48, its lowest closing mark since May 7, 1997. The S&P 500 dropped 26.72 points, or 3.5%, to 743.33, its lowest close since April 11, 1997.

The economy was booming in those Clinton years. But it’s painful to see the stock market falling back to  mid-1990s levels.

When it comes to the stock market, forget about nostalgia. Just cross your fingers and hope for an end to the free fall.

So much for the homeownership gains of the last 8+ years. Gone.

Specifically, Census figures show home ownership rates in the fourth quarter of 2008 declining to 67.5 percent, about the same level as in late 2000.

So. Given all the foreclosures, the failed banks, the sinking economy, the falling living standards, the neighborhood blight and upheaval, the unhinged financial industry and a severe recession… I think it’s safe to say subprime loans really weren’t worth all the trouble after all. We had eight years of highs and lows in the housing market, and all we’ve gotten from it is a return to where we started.

The subprime boom never led to a picket fence and front porch that most people could live in for the long term. If these figures show anything, it’s that subprime lending was all just about the money, the profits from high-rate loans, and nothing more. Now we’re living with the consequences, and we’ll be doing so for a long time to come.

From the Wall Street Journal:

In key concessions to the banking industry, Mr. Conyers agreed to alter the legislation to allow court-ordered modifications only for existing mortgages and to require that borrowers contact their lender at least 15 days before filing bankruptcy. Citigroup Inc. had demanded the changes in exchange for throwing its weight behind the bill, a move that angered the rest of the industry.

In another change, the legislation will now require recipients of cram downs who resell their home within five years to share the proceeds with their lender.

The panel also added language dissuading bankruptcy judges from shrinking the principal amounts of mortgages guaranteed by the Federal Housing Administration, the Veterans Administration or the Department of Agriculture. Under current law, the government cannot guarantee or insure amounts that have been crammed down on such loans.

The financial blog Calculated Risk cites a passage from the late-contributor Tanta to argue that limiting the bankruptcy avenue to existing loans might mitigate the law’s effectiveness: From Tanta’s post:

I’m in favor of it [cramdown] because I think it will be part of a range of regulatory and legal changes that will help prevent future borrowers from getting into a lot of jams, which is to say that it will … actually help “stabilize” the residential mortgage market in the long term. Any industry that wants special treatment under the law because of the socially vital nature of its services needs to offer socially viable services, and since the industry has displayed no ability or willingness to quit partying on its own, then treat it like any other partier under BK law.

Even after taking hundreds of billions of taxpayer dollars, it seems the banks still hold considerable sway over Congress.

Financial shares alone fell to a 14-year low, Bloomberg added:

State Street Corp., the largest money manager for institutions, tumbled 59 percent after unrealized bond losses almost doubled. Wells Fargo & Co. and Bank of America Corp. slumped more than 23 percent on an analyst’s prediction that they’ll need to take steps to shore up their balance sheets. The Dow Jones Industrial Average plunged 4 percent, the most on an Inauguration Day in the measure’s 112-year history.

As if that’s not bad enough, there’s more. Also from Bloomberg:

U.S. financial losses from the credit crisis may reach $3.6 trillion, according to New York University Professor Nouriel Roubini, who predicted last year’s economic and stock-market meltdowns. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion,” Roubini said at a conference in Dubai today. “This is a systemic banking crisis.”

Well.

Calculated Risk puts the problems in perspective:

From an economic perspective, Mr. Obama’s first few weeks in office will be critical as his administration finalizes the stimulus package and addresses the ongoing crisis in the banking system. Best wishes to Mr. Obama. You are now on the clock.

I guess today’s slide is just Wall Street’s way of welcoming the new administration.