Monday October 20 Housing and Economic stories

TOP STORIES:

Mervyns to liquidate merchandise, wind up business - (www.reuters.com) Department store chain Mervyns Holdings LLC said on Friday it plans to liquidate its merchandise and auction its store leases. The privately held retailer, which sells clothing and home goods, said it will hold going out of business sales at all of its remaining 149 locations. The Hayward, California-based chain said it hoped selling off its assets during the holiday season would maximize the amount of money it has to pay off creditors. "We are disappointed with this outcome, but the company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action," Mervyns' Chief Executive John Goodman said in a statement.

Father-son land dispute may have led to Ga. law office explosion ... - (www.newser.com) A bitter family dispute over property in north Georgia apparently erupted Friday when a 78-year-old man threw an explosive into a law firm that represented his son, causing a blast that killed the father and injured four people in the office. The explosion blew out windows of the two-story, colonial-style house where attorneys worked, and some in the small blue-collar town of 30,000 felt vibrations from more than a block away. Authorities identified the bomber as Lloyd Cantrell, a man known around town for wearing bib overalls and carrying a small Chihuahua. Over the years, Cantrell amassed several parcels of land in the area, and gave some of the property to his son. His son had grown fearful of his father, though, and filed a lawsuit seeking to keep his dad off the property the son had been given, claiming the elder man stole tools, kicked down a door and was suicidal.

Man convicted in SF of bilking Don Johnson's mother-in-law - (www.sfgate.com) A 62-year-old man has pleaded guilty to federal charges of stealing more than $2 million from the mother-in-law of actor Don Johnson while supposedly providing financial services for her, authorities said Friday. Michael J. Edison admitted to bilking Jean Phleger, 70, of Woodside. She is the widow of San Francisco attorney Atherton Phleger, whose father founded the Brobeck, Phleger & Harrison law firm. Edison pleaded guilty Tuesday to seven counts of mail fraud, wire fraud and obstruction of justice. Edison, who has no known address, is expected to be sentenced to five years and three months in federal prison at a hearing before U.S. District Judge William Alsup in San Francisco. Edison was arrested in February 2007 in an Atlanta hotel room after an FBI investigation. Court records show that Phleger was introduced to Edison through Johnson, who is married to her daughter, Kelley Phleger.

7000 workers laid off in China as toy maker closes: state media ... - (news.yahoo.com/s/afp) A Chinese toy maker that supplied household US brands such as Mattel and Disney has gone bust due to the financial crisis, leaving up to 7,000 people jobless, the company and local officials said Friday. Hong Kong-listed Smart Union closed its factory doors in southern China's export hub of Dongguan this week, leaving its unpaid workers stranded outside the plants and leading to government concerns about protests. Smart Union announced on its website Friday it had gone into liquidation, giving no word about the fate of its employees. "Between 6,000 and 7,000 workers from two Smart Union factories are involved," said a local government official in Zhangmutou, an area of Dongguan where the factories are located. The woman, who declined to be named, said government officials were locked in talks with factory and workers' representatives to resolve the crisis, adding local authorities would try to pay the workers next week. The workers crowded around the gates earlier this week looking for answers about their jobs and unpaid salaries, prompting the Zhangmutou government to warn them against escalating their action.

Bear Raids and Economic Warfare on a Global Scale - (jessescrossroadscafe.blogspot.com) - The lawmakers and regulators may wish to look into the quiet but devastating run on the hedge funds that is occurring right now, that is going to cut that industry in half, and distort the markets until the end of the year. This will affect key commodities in addition to certain industries, and may temporarily impair some national economies. The Prime Brokers have a rough idea where the hedge funds, their clients, have their major holdings, and are leading bear raids on them as the funds have to raise liquidity because of redemptions. They are publicly identifying those positions to other players in the industry. A conflict of interest of the first order it appears at first blush. Perhaps not illegal, but certainly destructive and 'feeding the fire.' These bear raids on key positions generate more panic and losses for the hedge funds, which in turn generates more forced selling and losses

ING Drops on Speculation Firm Needs to Raise Capital - (www.bloomberg.com) The Netherlands made 20 billion euros available to financial institutions on Oct. 10 to boost liquidity and strengthen capital amid a worsening global credit crunch. ING said at the time that it would assess the government package and the ``possible implications once more details are available.'' That statement still holds, spokeswoman Carolien van der Giessen said today. ``There seems to be ongoing speculation that ING doesn't have enough capital,'' said Joost de Graaf, a senior portfolio manager who helps oversee about $650 million at Kempen Capital Management in Amsterdam. Kempen doesn't hold ING stock.

The Fraudacity Of American Finance - (market-ticker.denninger.net) John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios - not be lent out. In other words, they intend to hoard it.
This means, bluntly, that not one nickel of benefit will be seen by Main Street, despite claims by Paulson, Bush and others that this bailout is necessary for "Main Street, not Wall Street."

Hedge fund squeeze wreaks havoc in equity markets - (www.telegraph.co.uk) Prime brokers have this week hiked up the cost of trading for hedge funds. The move has pushed some funds closer to the brink and triggered yet more havoc in global stock markets. The bankers say that the wild swings in stock prices across the globe has radically increased their risk, forcing them to demand as much as five times more collateral from the hedge funds. The extra demand has left funds scrambling to find the extra cash or collateral, forcing many to sell other positions to fund their more important ones. One hedge fund said: "One of our positions is a blue chip firm for which we have normally put up just 5pc cash [while the bank funds the remaining position]. Yesterday we got a call saying we had to put up 50pc margin. We're already tight on the line and had to quickly sell stock to fund it. And this was just one position." A prime broker said: "The volatility in the market over the past few days has been extraordinary. Huge stocks have been swinging by 40pc a day – Morgan Stanley went down 85pc in one day. We can't handle this sort of risk without passing it on, even though we know it's causing more volatility."

Ground is shifting under empires of Russian oligarchs - (www.iht.com) Are the Russian oligarchs going bust? In the global financial crisis, perhaps no community of the affluent has fallen as hard, or as fast, as the brash Kremlin-connected insiders whose wealth was tied up in the overlapping bubbles of the Russian stock market, commodity prices and easy credit. Oleg Deripaska, the richest person in Russia, the nuclear physicist turned post-Soviet corporate raider, has already ceded more than a billion dollars in assets to jittery creditors as his aluminum-to-automobile empire reels. "Half the Russians could fall off the Forbes list" of wealthiest individuals by next year, Maxim Kashulinsky, the editor of the Russian edition of the magazine, said in an interview. The crisis is also upending the rules by which the tight coterie of businessmen and the Kremlin do business.

Worries grow as GM-Chrysler talks gain momentum - (www.ap.com) In the doomsday scenario raising anxiety around the Motor City, General Motors Corp. makes a deal for Chrysler LLC, keeps Jeep and the minivans, and vaporizes the rest of the company. Tens of thousands of Chrysler's 66,409 employees lose their jobs as cash-desperate GM swiftly cuts redundant operations and sheds unprofitable models. Factories and dealerships are closed, and the lights go out at Chrysler's gleaming corporate headquarters campus in the northern suburb of Auburn Hills. It's not something Andre Thibodeaux wants to think about. The general manager of Lelli's, an upscale steakhouse and Italian restaurant near Chrysler's 15-story tower, gets about half his lunch business from the automaker and related businesses.

The Guys From ‘Government Sachs’ - (www.nytimes.com) THIS summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings. In September, after the government bailed out the American International Group, the faltering insurance giant, for $85 billion, Mr. Paulson helped select a director from Goldman’s own board to lead A.I.G. And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance. Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs. The power and influence that Goldman wields at the nexus of politics and finance is no accident. Long regarded as the savviest and most admired firm among the ranks — now decimated — of Wall Street investment banks, it has a history and culture of encouraging its partners to take leadership roles in public service.

'Financial crisis sparks anti-Semitism' Jewish News Jerusalem Post - (www.jpost.com) The worldwide financial meltdown has triggered an uptick in anonymous anti-Semitic comments blaming Jews for the crisis on mainstream Web site message boards, the Anti-Defamation League said on Thursday. "Jews are greedy, rotten slimeballs," wrote one surfer on a Yahoo Finance group, according to the ADL statement. "It's difficult, if not impossible, for one honest investor to neutralize the efforts of thousands of Jewish swindlers," another added. A YouTube video titled "The Court Jewsters" includes a montage of Jewish figures involved in the crisis - from Lehman Brothers chief Richard Fuld to US Federal Reserve Chairman Ben Benanke - and includes a shot of a dollar bill emblazoned with "In Zionist bankers we trusted." The comments were similar to those posted on white supremacist sites such as the Vanguard News Network, an "Aryan Alternative Newspaper," where a comment ridiculed Congress for "sittin' around eating crumpets while the Jews are driving away with truck loads of hundred dollar bills." "The age-old canards about Jews and money are always just beneath the surface," ADL national director Abraham Foxman said. "As we witnessed after 9/11, whenever there is trouble or uncertainty in the economy or world events, Jews become the scapegoats, and ugly anti-Semitic canards are given new life." Yahoo has been quick to remove comments containing hate speech, but the YouTube videos remain up and many anti-Semitic posts remain archived on live discussion boards, Foxman said.


OTHER STORIES:

Reggie On Lehman: "I can tell you who's holding the bag" - (www.ml-implode.com) - ``As a continuation of the recent posts on credit default swap risks, I am releasing my proprietary study of Lehman's counterpar...
Don't Blame Capitalism - (www.ml-implode.com) - Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders wer...
Wall Street Monsters & Meat (You) - (www.ml-implode.com) - With each big bank failure, whether a commercial bank or investment bank, heavy damage is done to the system. The CDSwap destruc...
The Bank Bailout's Side Effect: Rising Mortgage Costs - (www.ml-implode.com) - "The government's effort to boost bank lending to end the credit crisis is hurting one of the areas critical to the nation's rec...
The People Lawyer is Still At It - (www.ml-implode.com)

For Fast Cash, Firms Tap Revolving Loans - (www.ml-implode.com)
Stocks decline after lackluster housing data - (www.ml-implode.com)
Treasury Has No Authority to Coerce the Banks - (www.ml-implode.com)

Home Prices Seem Far From Bottom - (www.nytimes.com)
Mainstream Media Finally Catching On The Bottom Far Away - (findingbottom.blogspot.com)
Should we all just stop paying the mortgage? - (www.wisebread.com)
Gold's Relationship with Real Estate - (www.seekingalpha.com)
End to Fed's Hands-Off Approach to Bubbles - (www.bloomberg.com)
IL bars Countrywide from mortgage lending - (www.chicagobusiness.com)
Bank failure hits NV resident hard - (www.lasvegassun.com)
Investors rush in to apocalypse - (www.marketwatch.com)
Bad Mortgages Are Just The Beginning - (www.nuwireinvestor.com)
Housing Bubble Induced Severe Recession - (www.scoop.co.nz)
Vegas Shows How Americans Crap Out in Housing Casino - (www.bloomberg.com)
Inflation hits cost of crack cocaine - (www.tcpalm.com)
The Week in Political Cartoons - (www.msnbc.msn.com)

U.S. Economy: Sentiment Drops by Record; Starts Fall - (www.bloomberg.com)
Single-Family Home Starts in U.S. Fall to 26-Year Low - (www.bloomberg.com)
Fed Rethinks Stance on Popping Bubbles - (online.wsj.com)
As Credit Tightens, Companies Curtail Spending, Expansion - (www.washingtonpost.com)
A spent force - (www.economist.com)
Social Security Benefits to Rise 5.8% - (www.washingtonpost.com)
Banks borrow record $437.5 billion per day from Fed - (www.reuters.com)
In Downturn, Families Strain to Pay Tuition - (www.nytimes.com)
Harley profit down 37%, cuts outlook - (www.chicagotribune.com)
Banks Are Likely to Hold Tight to Bailout Money - (www.nytimes.com)
Car dealers demand more cash for down payments - (www.usatoday.com)
The $58 Trillion Elephant in the Room - (www.portfolio.com)
But will it work? - (www.economist.com)
Highland Capital to close 2 hedge funds after losses on risky loans - (www.dallasnews.com)
What went wrong - (www.washingtonpost.com)
Hedge funds in grip of vicious selling cycle - (www.ft.com)
Buybacks take a beating - (www.fortune.com)
2 Large Hedge Funds Face Mounting Troubles, Report Says - (www.nytimes.com)
Southland office vacancies rise, rents fall - (www.latimes.com)
Barakett Bros. Lose Hedge Magic - (www.nypost.com)
Swiss to fund $60bn 'bad bank' for UBS - (www.ft.com)
Sudden business collapses likely in frozen markets - (www.ft.com)
`KIKO' Hedges Slay Korean Exporters, Threaten Banks - (www.bloomberg.com)
Caisse d'Epargne Had EU600 Million Derivatives Losses - (www.bloomberg.com)

Financial Crisis Provides Fertile Ground for Boom in Lawsuits - (www.nytimes.com)
Some investors grow leery of stocks in grim market - (www.ap.com)
European banks in no hurry for bailouts - (www.iht.com)

Spending Surge Pushing Deficit Toward $1 Trillion - (www.washingtonpost.com)
Government’s Leap Into Banking Has Its Perils - (www.nytimes.com)
Fallout from financial crisis hammers housing - (www.ap.com)
Investigators Said to Take Closer Look at Lehman - (www.nytimes.com)
We’ll Rescue You on Four Conditions - (www.nytimes.com)
Building Flawed American Dreams - (www.nytimes.com)
Empires Built on Debt Start to Crumble - (www.nytimes.com)