Goldman Sachs' Tax Rate Drops to 1% - (www.bloomberg.com) Goldman Sachs Group Inc., which got $10 billion and debt guarantees from the U.S. government in October, expects to pay $14 million in taxes worldwide for 2008 compared with $6 billion in 2007. The company’s effective income tax rate dropped to 1 percent from 34.1 percent, New York-based Goldman Sachs said today in a statement. The firm reported a $2.3 billion profit for the year after paying $10.9 billion in employee compensation and benefits. Goldman Sachs, which today reported its first quarterly loss since going public in 1999, lowered its rate with more tax credits as a percentage of earnings and because of “changes in geographic earnings mix,” the company said. The rate decline looks “a little extreme,” said Robert Willens, president and chief executive officer of tax and accounting advisory firm Robert Willens LLC. “I was definitely taken aback,” Willens said. “Clearly they have taken steps to ensure that a lot of their income is earned in lower-tax jurisdictions.” U.S. Representative Lloyd Doggett, a Texas Democrat who serves on the tax-writing House Ways and Means Committee, said steps by Goldman Sachs and other banks shifting income to countries with lower taxes is cause for concern.
Correct prediction that CalPERS was lying back in July - (wcvarones.blogspot.com) Interesting story from July that CalPERS was lying on their yearly statement through June 30 2008. CalPERS reports 2008 performance numbers: While the value of Calpers' stock portfolio fell nearly 11 percent, its private equity holdings gained 19.6 percent for the 12 months through March 31 and its inflation-linked assets returned 22.9 percent over nine months. Global fixed-income assets returned 7.7 percent for the year and real estate gained 8.1 percent for the 12 months through March 31. What a coincidence. While things that have easily observable market prices (i.e. stocks) went down, everything that is valued subjectively went up! Private equity? It does great during a credit crunch when stocks are crashing! Just ask noted private equity players Blackstone Group or Babcock & Brown. And real estate? Well, whose real estate portfolio is not up at least 8% this year? Nice numbers, CalPERS! Especially considering your investment in toxic waste CDOs at the beginning of the mortgage crisis, and your $1 billion dollar investment in the now-bankrupt LandSource at the peak of the real estate bubble.
Deutsche Bank decides not to repay €1bn bond - (www.ft.com) Deutsche Bank jolted bond and equity investors on Wednesday when it became the first big bank to say it would not repay €1bn ($1.4bn) of a particular kind of bond as expected in January. The move raised fears about Deutsche’s capital strength and signalled a much higher likelihood that other banks would follow the example in not repaying so-called hybrid-capital bonds. This could, in turn, erode the market for hybrid capital deals, which are supposed to occupy a kind of grey area between debt and equity. These instruments have been hugely important in squeezing extra funding into bank balance sheets – and in propping them up since the financial crisis exploded. The bonds are typically repaid at the first opportunity after an initial period when redemptions are not allowed. If an issuer does not redeem then, they must pay a higher penalty coupon rate. Deutsche Bank decided it was more cost-effective to pay this penalty rate rather than replace the funding in current difficult market conditions, which have made finance more expensive.
Palm Beach pawn shop becomes a bit of a sensation amid Madoff scandal - (www.chicagotribune.com) Pawnbroker Levi Touger tells reporters wanting to see the Lamborghini a Bernie Madoff victim hawked for quick cash that they needn't bother stopping by. He doesn't have it. And, by the way, it was a Ferrari. Touger's Royal Pawn & Jewelry has made loans to some of the well-heeled Palm Beach investors caught in Madoff's alleged $50 billion scam, turning his business into a bit of a media sensation as television crews inquire about filming the big-ticket booty. He says reports have overstated the items people were pawning, but not the income bracket of some of his more recent clients. "People call me and say, 'Levi, if I need you, what could I get?'," he said.
Citadel Shuts Down Its Special Situations Group - (www.nytimes.com) Another day brings more news of the downsizing taking place at the Citadel Investment Group, Kenneth C. Griffin’s giant hedge fund firm. Citadel, based in Chicago, shut down its special situations group last week after its strategy racked up big losses for the firm. People close to the group said that at one point several years ago its strategy covered as much as 15 percent of Citadel’s total assets under management, but it had recently been pared down to about 3 percent of the firm’s overall portfolio as several investments turned sour. Through November, the special situations portfolio had sustained losses of about 61 percent, according to a person briefed on the matter. News of the shutdown was first reported by David Faber of CNBC. A spokeswoman for Citadel declined to comment.
'Orderly' Bankruptcy Is One Option for US Auto Bailout - (www.cnbc.com) The Bush administration is seriously considering "orderly" bankruptcy as a way of dealing with the ailing US auto industry.
GMAC Still Short of Capital to Become a Bank - (www.cnbc.com) Financing company GMAC said in a regulatory filing Thursday that about $16.9 billion, or 58 percent, worth of its notes have been tendered as part of a plan to swap $38 billion of debt and amass enough regulatory capital to become a bank holding company. The total includes notes tendered through the end of Wednesday. That's about $300 million more than the $16.6 billion worth of notes tendered at end of day Tuesday, according to a filing with the Securities and Exchange Commission. In addition, GMAC's Residential Capital mortgage business has tendered $3.5 billion, or 38 percent, of its notes, the company said. In order to become a bank holding company, and eligible for a slice of the federal government's $700 billion bank rescue plan, GMAC must show that it has at least $30 billion in regulatory capital. The company has said it needs about 75 percent participation on the offers in order to meet that requirement. GMAC warned last week that failure to convert to a bank holding company would have a "material adverse effect" on its business. And some analysts have speculated that without the federal financial help, the company could be forced to file for bankruptcy protection or shut down the ResCap division, which has accounted for the bulk of its recent losses.
FDIC rules will ban new banks - (www.blacklistednews.com) The Federal Deposit Insurance Corp. may be implementing what is effectively a ban on new banks in metro Atlanta and other distressed areas nationwide, as the financial industry’s and broader economy’s deterioration accelerates. The FDIC, the nation’s bank deposit guarantor, has increased scrutiny of new banks applying for deposit insurance in select areas of the Southeast and other regions, including Western states, industry insiders said. The new reviews, insiders said, make approval difficult in practice, if not impossible. “It is a de facto ban,” said Stephen Johnson, CEO of Alpharetta-based consultant T. Stephen Johnson & Associates Inc. “I’ve never seen a time this difficult to get a charter.” Johnson is a longtime bank organizer and consultant in Atlanta, raising $500 million for various bank investments during his two-decade career.
Ukraine Hryvnia Drops 15% in 2 Days; Half of Loans May Default - (www.bloomberg.com) Ukraine’s hryvnia pared a record two-day plunge after the central bank said a rate above 9 per dollar was “unacceptable.” The currency fell 1.7 percent to 9.1000 per dollar by 6:28 p.m. in Kiev. It pared an earlier 18 percent two-day drop to a record 9.78 after the central bank sold reserves to support the currency. Petro Poroshenko, head of the central bank council, said at a press conference a weak hryvnia is a threat to the economy. “The central bank did say they would intervene at 8.95 today so it looks like they went ahead with it,” said Dmitry Gourov, an economist focusing on Ukraine at UniCredit SpA in Vienna. “The question is how big is their war chest, and given the limited amount of reserves they have to spend, there’s not much room left.” President Viktor Yushchenko earlier tried to stem the drop, saying Ukraine will buy hryvnia and calling for licenses to be revoked for lenders found speculating against the currency. The central bank said it will raise its benchmark refinancing rate from 12 percent to an unspecified level. Ukraine is attempting to arrest a deepening crisis since the International Monetary Fund provided a $16.4 billion bailout last month as the falling currency increases the cost of more than half of loans from domestic lenders that are in dollars, according to central bank data. The ex-Soviet nation, with $105 billion of corporate and state debt, has the third-highest credit risk worldwide after Ecuador, which defaulted last week, and Argentina, based on the cost of credit-default swaps.
Calpers To Report Losses of 103% on its Residential Investments - (Mish)
Forecast: A Long, Cold Winter - (online.barrons.com)
HUD Chief Calls Aid on Mortgages A Failure - (www.washingtonpost.com)
55% of SoCal house sales were foreclosures - (lansner.freedomblogging.com)
Record decline in SoCal house prices - (themessthatgreenspanmade.blogspot.com)
Foreclosures push So Cal house prices down 35 percent - (www.pasadenastarnews.com)
Half of OC's house boom gain now gone - (lansner.freedomblogging.com)
Fed now lending money for 0% interest - (www.newsday.com)
Banks Show No Signs of Easing Credit in Step With Feds Rates - (www.bloomberg.com)
Bonds Stagnate on Mind-Numbing Housing Data - (blogs.wsj.com)
SEC plans to investigate ties to Madoff's niece - (www.marketwatch.com)
The Great Unraveling - (www.nytimes.com)
A New DIS-Belief System Is Born - (extremely negative) - (ashizashiz.blogspot.com)
Repost -- context for following: - (www.tampabay.com)
The Sunny Kim Power Training Series - (www.youtube.com)
TARP Now Likely to Be Used for Housing, Stimulus - (www.cnbc.com) The second half of the $700 billion Wall Street bailout fund is likely to go toward foreclosure relief—and possibly economic stimulus.
Oil Plunges to Settle Below $37 as Demand Slows - (www.cnbc.com)
Obama Stimulus Plan Could Reach $850 Billion - (www.cnbc.com)
Schapiro Picked for SEC Post - (www.cnbc.com)
Jobless Claims Ease - (www.cnbc.com)
Homeowners Are Rushing To Refinance as Rates Fall - (www.cnbc.com)
30-Year Mortgage Hits Low - (www.cnbc.com)
How Low Can Rates Go? - (www.cnbc.com)
Madoff Scandal Shaking Real Estate Industry - (www.cnbc.com)
Wedbush Morgan CEO: Madoff Performance Was 'Odd' - (www.cnbc.com)
Oracle Earnings: 'Good' News Might Be Too Good - (www.cnbc.com)
Wednesday, December 31, 2008
Tuesday, December 30, 2008
Bonuses tumble 80% at Goldman Sachs - (www.ft.com) Is it just me or does $400K still sound like a lot of cash for this kind of performance? Cash payout capped at $400,000. Partners at Goldman Sachs are set to see their bonuses fall by up to 80 per cent this year and the cash component of their year-end packages capped at $400,000. The rest of partners’ compensation packages will be paid half in stock and half in options, which will be priced based on the close of Goldman’s share price on Wednesday.
Funding For 2,000 CA Projects Axed – (www.sfgate.com) Casualties include drilling the fourth bore of Caldecott tunnel, affordable S.F. housing. California's financial leaders decided today to cut funds for at least 2,000 public works projects across the state, including drilling the fourth bore of the Caldecott tunnel, affordable housing in San Francisco and carpool lanes on Highway 101 in Sonoma County. The decision comes as state officials have failed to solve a $40 billion budget shortfall through mid-2010. The Senate and Assembly are expected to vote later today on a new budget plan by Democrats to solve $19 billion of that, according to a legislative source. The vote by the Pooled Money Investment Board - consisting of the state controller, treasurer and head of the finance department - will halt about $3.8 billion in funding through June of next year and could result in some projects being scuttled. California's state government, which could run completely out of money by the end of February, can now use the funds for other expenses.
States Squeeze Cities, Spreading the Pain - (online.wsj.com) The worst budget crisis in decades is forcing states to cut funding to cash-strapped cities, which already are slashing police, firefighters and other services. The worst budget crisis in decades is forcing states to cut funding to cash-strapped cities, which already are slashing police, firefighters and other services. Cities have limited options when presented with state cuts, but some are fighting back. Last month, the League of Arizona Cities and Towns sued the state over its demand for city funds. A group of California redevelopment agencies sued their state to block it from conducting a "raid" of $350 million in local redevelopment funds. States typically reduce city aid during budget shortfalls. Localities will be hurt more during this recession than when government finances turned down earlier in the decade, said Scott Pattison, executive director of the National Association of State Budget Officers. After the 2001 recession, sales and income taxes were squeezed, but property taxes -- the primary source of local-government funds -- held up relatively well.
More California Towns Face Bankruptcy - (online.wsj.com) A California state board voted to shut off $3.8 billion in financing to hundreds of infrastructure projects as the state confronts a huge deficit. California may soon have more bankrupt towns on its hands. The city of Vallejo, Calif., gained national attention earlier this year by filing for Chapter 9 bankruptcy protection. Now, two neighbors are fighting to avoid the same fate, as the state's economic crisis spreads. Isleton and Rio Vista, small towns roughly 50 miles northeast of San Francisco, say they have begun consulting with bankruptcy lawyers as they draw up plans to deal with their mounting budget crises. The towns' leaders say they hope to avoid bankruptcy, but concede the move may eventually be their only option. "We're strapped for cash and by the end of March or early April we may not have enough money to pay for payroll," says Hector De La Rosa, Rio Vista's city manager. A Rio Vista, Calif., street is empty after construction was halted at a housing development last month. California's troubled towns can't expect much help from the state. A state board voted Wednesday to shut off $3.8 billion in financing to hundreds of infrastructure projects to preserve cash, as the nation's most populous state struggles under a budget deficit that officials say could balloon to more than $40 billion over the next two years.
Calpers Losses Add to a City's Stress - (online.wsj.com) Pacific Grove, a coastal town south of San Francisco, already faces a budget crisis. Now losses by California's giant pension fund could make the pain worse. "Calpers could bankrupt us faster than anything else," says Mayor Dan Cort. City officials say other towns face financial stress unless the California Public Employees' Retirement System is able to quickly recover from its investment losses. Says Dan Davis, a former city councilman who has crunched the numbers for Pacific Grove: Other municipalities "are trying to live in denial." A welcome sign greets motorists as they arrive in Pacific Grove, Calif., by way of Holman Highway. In recent years, Pacific Grove has seen its annual pension costs soar, largely because of increased contributions to make up for losses caused by the last market downturn. Last month, residents voted to consider ditching Calpers as the town's pension provider and look into possible alternatives. But the window of opportunity may have shut. With the market's plunge this fall, the city would have to spend $10 million or more to pay off its widening obligations to vested retirees were it to pull out of Calpers.
Biggest Madoff loser eyes legal move on PwC - (www.ft.com) Victims look for deep-pocketed sources of compensation. The fund, believed to be the biggest single loser in Bernard Madoff’s alleged $50bn “Ponzi” scheme is considering suing PwC, its own accountants, for failing to detect the fraud, as victims start looking for deep-pocketed sources of compensation for their losses. Fairfield Greenwich, whose clients stand to lose $7.5bn invested with Bernard L Madoff Investment Securities, is considering the action after an auditor was named in a case brought by another victim. Mr Madoff was on Wednesday ordered to submit to electronic monitoring and given an overnight curfew in his Manhattan apartment. His wife was ordered to surrender her passport. An interactive guide to exposure of investors in Madoff’s venture. With three of the four biggest accountancy firms – PwC, KPMG and Ernst & Young – auditing the Madoff feeder funds, lawyers say the asset-rich firms are likely to be targeted for legal action. Madoff Securities was audited by a tiny operation in Rockland County, New York, with only three employees, making it an unlikely potential source of compensation for victims. The New York Law School this week named BDO Seidman, part of BDO International, the fifth-biggest auditor, in its legal action against Ezra Merkin and his Ascot Partners fund, which invested its money with Madoff. Ascot was audited by BDO.
On Wall Street, Bonuses, Not Profits, Were Real - (www.nytimes.com) As regulators sift through the rubble of the financial crisis, questions are being asked about what role lavish bonuses played in the debacle. “As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.” — E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 2008. For Dow Kim, 2006 was a very good year. While his salary at Merrill Lynch was $350,000, his total compensation was 100 times that — $35 million. The difference between the two amounts was his bonus, a rich reward for the robust earnings made by the traders he oversaw in Merrill’s mortgage business. Mr. Kim’s colleagues, not only at his level, but far down the ranks, also pocketed large paychecks. In all, Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.
Madoff Scandal Shaking Real Estate Industry – (www.nytimes.com) Commercial brokers and developers had heavily invested with Bernard L. Madoff, whose business style mirrored the practices of the real estate world. Almost no segment of New York City’s real estate industry was spared in the Madoff scandal, which may be history’s largest Ponzi scheme: commercial brokers large and small, little-known developers and prominent families like the Wilpons and Rechlers all lost money to Bernard L. Madoff, industry executives say. The outsize impact on the industry may have resulted largely because Mr. Madoff (pronounced MAY-doff) managed his funds much the way that real estate leaders have operated successfully for decades: He provided little information and demanded a lot of trust. “You have a lot of wealthy people who made a lot of money on handshakes,” said Mark S. Weiss, a commercial real estate broker at Newmark Knight Frank, where several brokers had invested heavily with Mr. Madoff. There was “something about this person, pedigree and reputation that inspired trust,” he said. Across the city, industry executives said deals had been scuttled or jeopardized because of the scandal. Residential brokers are taking calls from Madoff investors who have had to put their apartments on the market. Many developers had pledged their investments with Mr. Madoff as collateral for projects, and are now worried that their banks will call in their loans.
Director dumps nearly half of Sears holdings - (www.chicagotribune.com) A director of retail giant Sears Holdings Corp. has dumped $51.8 million in Sears stock this week almost half of his holding, according to regulatory filings. Hedge-fund operator Richard C. Perry, a Sears director since September 2005, disclosed in a Securities and Exchange Commission filing Tuesday that he had sold 530,000 Sears shares Monday at a blended price of $41.09 apiece, for a total of $21.8 million. Wednesday, Perry told the SEC in a separate filing that he had sold an additional 767,000 Sears shares at $39.08 each, for a total of $30 million. Perry, a onetime trader with investment banker Goldman Sachs, has since 1988 headed a private-investment firm now known as Perry Capital, which controls Perry Partners International. Perry Partners is formally listed in the two SEC filings as seller of the Sears shares.
Motorola Freezes Pension Plan; More To Come - (online.wsj.com) Motorola likely won't be the only major company to freeze its pension in 2009. Other struggling companies are expected to cut plans, and many businesses already are suspending 401(k) matches to slash expenses.
Dollar plunges in wake of Fed move - (www.ft.com) Zero rate spurs slide against euro and yen
State Dems plan to increase taxes - (www.latimes.com) A complex proposal would classify some taxes as fees, allowing them to be hiked with a simple majority vote. Discuss
L.A. council OKs $74m in midyear budget cuts - (www.latimes.com)
China may send warships to Somalia coast - (www.latimes.com)
Getty endowment drops 25%; hiring freeze ordered - (www.latimes.com)
Fox TV producers asked to trim budgets 2 percent - (www.boston.com)
Feds raid SoCal offices of The Ensign Group - (www.boston.com) Federal agents raided the headquarters of The Ensign Group Inc. and several other locations Wednesday in what company executives suspect is a probe into alleged Medicare fraud at the national chain of nursing homes. Agents raided several locations in Orange and Los Angeles counties, said FBI spokeswoman Laura Eimiller. She said the subject of the federal search warrant remains sealed and could not provide further details.
NZ government forecasts increased debt, deficits - (www.boston.com)
General Mills grows market share in second quarter - (www.boston.com)
Goldman agrees to Panasonic bid for Sanyo: sources - (www.boston.com)
BCE sues private equity group over failed deal - (www.boston.com)
Motorola freezes pension plans, cuts co-CEOs' pay - (www.chicagotribune.com)
Wal-Mart says it created $5.3 million in sales taxes with Chicago store - (www.chicagotribune.com)
Citibank customers regain access to accounts - (www.chicagotribune.com)
Oil prices fall despite huge cuts from OPEC - (www.chicagotribune.com)
Monday, December 29, 2008
Investors Unlikely to Find Relief From SIPC – (online.wsj.com) Investors who lost money with Bernard Madoff shouldn't count on the Securities Investor Protection Corp. riding to their rescue. The federally mandated SIPC has a narrow requirement as to what it covers -- generally theft in brokerage accounts. Furthermore, securities attorneys say the nonprofit organization, which is supported by brokerages' membership fees, has a miserly track record of paying out claims and its current reserves may not be nearly big enough to handle potential losses from the Madoff case.
Inside Madoff’s Empire: Former Employee Speaks Out - (www.cnbc.com) Andrew Cohen was a profitable trader at Bernard Madoff’s firm throughout the 1990s. Shortly before Cohen left the firm—and the financial sector altogether—he was given the opportunity to invest with Madoff. “I started to hear about people getting really good returns, so I was interested in making good returns,” he said. “It was almost a reward to be able to be allowed to invest with him.” Now, like many others, Cohen says he lost nearly his entire net worth in Madoff’s alleged Ponzi scheme. “One moment I was enjoying a very happy life, teaching a fitness class and a yoga class over at the gym, and suddenly I get a phone call from some friends of mine, and in one minute I find out my whole net worth is just about gone." See the accompanying video for the interview.
Chrysler to Shut Down All Production For One Month - (www.cnbc.com) Chrysler said it will shut down all of its manufacturing operations for at least a month from Dec. 19, and warned dealers that due to increasing withdrawls, it may be forced to stop financing vehicle inventories. Chrysler made the announcement in a letter sent Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website. The blanket shutdown will come as Chrysler and its larger rival, General Motors, both seek to shore up cash as they seek a federal bailout they say they need to survive.
Chrysler Financial may briefly stop dealer loans - (www.reuters.com) Chrysler LLC's finance arm has told dealers it may temporarily stop loans used by dealers to stock vehicles because the retailers pulled money from a fund that helps finance them. Chrysler Financial Chief Executive Tom Gilman sent letters to dealers, dated Dec. 12, that asked them to refrain from withdrawing large amounts from a "cash management account" used to finance the loans, a source familiar with the letter said. Withdrawals from the fund, which have totaled more than $1.5 billion since July, have caused a drain on Chrysler's resources and could limit the company's ability to offer financing to dealers to buy vehicles, according to the letter. Chrysler Financial said in a statement that it finances 75 percent of all vehicles shipped to U.S. dealers and continues to support its dealer network with "uninterrupted" wholesale financing. The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances." Chrysler dealers were paid a bonus if they kept money in the account. Talk about potential bankruptcy at Chrysler, which is seeking federal loans to survive through March, has spooked dealers, who withdrew heavily from the account in the past few months.
Dreier Law Firm Files for Bankruptcy After Founder Arrested - (www.bloomberg.com) The law firm Dreier LLP, after its founder was jailed and accused of cheating hedge funds out of more than $100 million, filed for bankruptcy protection. Marc Dreier is being held on federal criminal charges and may also seek court protection from creditors, said Mark Pomerantz, a receiver for the law firm chief. The Midtown Manhattan-based law firm yesterday listed assets of $100 million to $500 million and debt of $10 million to $50 million in its filing in U.S. Bankruptcy Court in New York. “In the aftermath of the arrest of Mr. Dreier, no effective management of the debtor or other Dreier entities exists,” Pomerantz said a statement to the bankruptcy court. “I have determined an orderly liquidation of the firm cannot take place without bankruptcy protection.” Pomerantz alerted U.S. District Judge Miriam Cedarbaum in Manhattan to the anticipated bankruptcy filing in a Dec. 11 letter made public on Dec. 15. Cedarbaum is presiding over Dreier’s criminal case.
Detroit newspapers to cut delivery to just 3 days a week - (www.chicagotribune.com) Fighting to stay in business, Detroit's two daily newspapers will radically change their relationship with readers by slashing home delivery to three days a week, printing small editions on other days and encouraging people to get information online. The Detroit market is the largest in the country to undergo that transformation. But it reflects a calculation facing newspapers across the country, with print circulation dropping as readers increasingly get their news on the Internet. By curtailing home delivery on certain days, the papers reduce printing, fuel and labor expenses for editions that tend to attract fewer advertisements. The chief executive of Detroit Media Partnership, which runs the Detroit Free Press and The Detroit News, said the move announced Tuesday was not an experiment. He predicted it would succeed in keeping two papers alive.
55% of SoCal home sales were foreclosures - (www.ocregister.com) Foreclosed homes made up 55% of resale transactions in Southern California – 44% in Orange County and nearly seven out of every 10 sales in the Inland Empire – driving down prices to levels not seen since the spring of 2003, market-tracker MDA DataQuick reported today. Last month’s price was roughly a buy-three-get-two-free sale for Southern California homes: The median price of a Southern California was $285,000, down 44% — or almost half off — from the value for similar homes at the market peak 18 months ago. That is, a single median-priced home cost $505,000 in June 2007. Last month, you could buy two median priced homes for $570,000, or just $65,000 more.
Restraints planned for coal-fired plants - (www.ft.com) Environmental regulators are laying the groundwork for tougher controls on new coal-fired power plants in the administration of president-elect Barack Obama. The industry was put on notice last month, when the Environmental Protection Agency’s appeals panel rejected a permit for a coal power plant in Utah issued by its Denver office. It found the office had not justified its failure to consider carbon emissions in the application.
Ecuador May Be Forced to Scrap Dollar After Defaulting on Debt - (www.bloomberg.com) Ecuador’s default on $3.9 billion of international bonds means it’s only a matter of time before the country drops the U.S. dollar as its currency, Goldman Sachs Group Inc. says. Ecuador’s use of the dollar gives President Rafael Correa no outlet for providing credit to the economy as access to foreign financing dries up and revenue from sales of oil, the nation’s biggest export, tumbles. Correa, a critic of so-called dollarization, also may use the default as an excuse to abandon the policy, said Alberto Ramos, a Latin America economist with Goldman Sachs in New York.
Commercial property fears deepen - (www.ft.com) The value of commercial property loans in breach of their agreed terms more than trebled in six months as rapidly falling real estate prices hit a heavily leveraged sector struggling under almost £208bn of debt. With more than £76bn of debt needing to be refinanced before the end of 2010 and increasing numbers of loans slipping into default, the findings of an influential survey of property lending, to be published on Wednesday, will add to warnings that commercial property could be a timebomb for banks that supported the real estate boom.
Apple ordered to end French iPhone deal – (finance.yahoo.com) Apple Inc. has been told by French officials that its exclusive deal to sell iPhones through France Telecom SA violates antitrust laws in that country. Regulators suspended the contract with Apple (NASDAQ: AAPL), although France Telecom has said it plans to appeal the decision. The decision came as a result of a complaint filed by Bouygues Telecom, a unit of French diversified construction group Bouygues SA.
Chrysler Warns Dealers on Loans - (online.wsj.com)
Governor Fights Impeachment Panel - (online.wsj.com)
Calif. Halts Infrastructure Spending - (online.wsj.com)
Second Thoughts Hamper Stocks - (online.wsj.com)
Jobs Won't Take Macworld Stage - (online.wsj.com)
U.K.: Iraq Pullout by May 31 - (online.wsj.com)
Perils of Debt on Display in Korea - (online.wsj.com)
U.S. Targets Iran-Controlled Firm - (online.wsj.com)
U.S. Stocks Fall on Concern Fed Is Running Out of Ammunition - (www.bloomberg.com)
Gold Climbs in New York After Dollar Weakens on Fed Rate Cut - (www.bloomberg.com)
Dollar Falls Most Against Euro Since 1999 Debut After Fed Cut - (www.bloomberg.com)
Oil tumbles despite huge OPEC production cuts - (biz.yahoo.com/ap)
Treasuries Touch Record Lows on Concern Slowdown Far From Over - (www.bloomberg.com)
Dollar No Longer Haven After Fed Rate Cut, State Street, CMC Say - (www.bloomberg.com)
OPEC ready for deepest oil cut to rescue prices - (www.reuters.com)
In Fraud Case, Middlemen in Spotlight - (www.nytimes.com)
Ultra-low US rates undermine repo market - (www.ft.com)
Southern California's median home price drops below $300,000 - (www.latimes.com)
World Confidence Drops as Slump Deepens, (www.bloomberg.com) Survey Shows - (www.bloomberg.com)
U.K. Jobless Claims Rose at Fastest Pace Since 1991 - (www.bloomberg.com)
UK businesses plan sharp cutbacks - (www.ft.com)
European Banks Tally Losses Linked to Fraud - (www.nytimes.com)
China Cuts Home-Sales Tax as Property Slump Deepens Slowdown - (www.bloomberg.com)
Banks Show No Signs of Easing Credit in Step With Fed’s Rates - (www.bloomberg.com)
HUD Chief Calls Aid on Mortgages A Failure - (www.washingtonpost.com)
Bernanke Charts New Fed Course With Zero Rate, Asset Purchases - (www.bloomberg.com)
U.S. MBA’s Mortgage Applications Index Rose 2.9% Last Week - (www.bloomberg.com)
New Poll Shows 63% Are Already Hurt by Downturn - (www.washingtonpost.com)
Morgan Stanley Posts Wider-Than-Estimated $2.2 Billion Loss - (www.bloomberg.com)
Auto suppliers fear White House bailout ignores them - (www.usatoday.com)
Bristol-Myers to cut 10 percent of workforce - (www.signonsandiego.com)
Mexico's Cemex expects 23 percent sales drop in 4th quarter - (www.chicagotribune.com)
Honda slashes profit forecast - (www.chicagotribune.com)
Sunday, December 28, 2008
GMAC's Merkin, Ascot Fund sued over Madoff investments - (www.marketwatch.com) J. Ezra Merkin put his own hedge fund money in Madoff’s hedge fund and pawned the results off as his own. New York Law School filed an investor lawsuit against J. Ezra Merkin, chairman of lender GMAC Financial Services, one of his funds and its auditor on Tuesday over investments made through Bernard L. Madoff Investment Securities LLC, whose founder has been charged in a massive Ponzi scheme. The lawsuit, filed in U.S. District Court in Manhattan, alleges recklessness, gross negligence and breach of fiduciary duties by Merkin, who also heads money-management firm Gabriel Partners; the fund, Ascot Partners LP; and its auditor, BDO Seidman LLP. The complaint alleges Merkin abdicated his responsibilities and duties as Ascot's general partner and manager in entrusting substantially all of its assets - $1.8 billion - to the Madoff firm and that Seidman failed to recognize "red flags" at the Madoff firm. "As a proximate result of Merkin's bad faith breach of fiduciary duty, plaintiff and other class members have sustained damages, suffered mental and emotional distress and have lost most, if not all, of their respective investments in an amount yet to be determined," the lawsuit said
Home Buyers Turn to USDA for Mortgages – (online.wsj.com) - When Erick Moore first read about the USDA's Rural Development Guaranteed Loan program, he says he imagined it would be "restricted to some little farmhouse." Instead, the 33-year-old computer programmer moved last month into a four-bedroom, three-bath home in Fuquay-Varina, N.C., 17 miles outside Raleigh. The house sits on nearly one acre and features a brick facade, 10-foot ceilings and hardwood floors. "I couldn't believe it until we closed," says Mr. Moore, who paid only $1,200 out of pocket to move into the $228,000 home. The seller contributed $5,000 in closing costs, and Mr. Moore rolled the 2% fee charged by the USDA into the loan. Mr. Moore, who owned a home in St. Louis before he relocated to the Raleigh area last year, says a 60% drop in his stock portfolio made it difficult to come up with a down payment. He directed his Realtor to show him only homes that were eligible for the USDA program.
So Why Do We Want To Bail Out This Houseowner Again? - (www.nuwireinvestor.com) So do we still think a foreclosure moratorium is a good thing? Here is an actual listing on Craigslist: http://tampa.craigslist.org/hil/apa/958697241.html
I HAVE A 3 BEDROOM HOUSE THAT I AM LETTING GO, IT SHOULD BE ATLEAST ANOTHER YEAR BEFORE THE COURT WANTS THE KEYS, SO I AM RENTING OUT THIS HOUSE WITH NO CREDIT CHECK AND ON A MONTH TO MONTH TERM, SO NO ONE IS LOCKED IN, IT IS A CHEAP WAY FOR YOU TO SAVE MONEY. THE HOUSE HAS NO APPLIANCES BUT YOU CAN GO TO CRAIGS LIST AND GET FREE ONES UNDER THE FREE STUFF. CHECK OUT THE LINKS BELOW. IF YOU ARE INTRESTED PLEASE E-MAIL ME. ALSO THERE IS NO SECURITY DEPOSIT AND THE HOUSE IS ON A 1/4 ARCE. YOU CAN E-MAIL ME DIRECTLY AT JOEYCARLO@******** FIRST COME FIRST SERVE. THANKS JOE. This guy Joe is asking $499 a month for this house, which is ridiculously low, so I’m sure that he won’t have a problem finding a tenant to take him up on his offer. Obviously he has no intention of using the rental proceeds to pay his mortgage, and is planning to take full advantage of the system for as long as he can.
Condo Meltdown: $30 million site sold at auction for $100 - (www.dailybusinessreview.com) Developer Homero Meruelo’s plans for a $300 million condo project officially ended Monday with a lender’s $100 bid during a foreclosure auction at the Palm Beach County courthouse. The Merco Group’s principal had been fighting a foreclosure lawsuit by Eastern Financial Florida Credit Union on a 4.5-acre West Palm Beach site where he planned to build Palladio Terrace for more than a year. Meruelo had managed to win postponements of several previously scheduled auctions. But Monday, he wasn’t even aware an auction had taken place, he confirmed in a phone interview. “No one bid on it?” he asked after learning the site went back to the lender for $100, the minimum Eastern Financial had to bid in order to retrieve the property. During the auction, the attorney for Eastern Financial said the lender was willing to bid up to $30 million. No bidder came forward with a counteroffer to the $100.
Taxpayers furious over bailouts - (money.cnn.com) Many Americans are outraged that their money is being spent to rescue irresponsible mortgage borrowers. Still, that probably won't stop government officials. Ask most Americans whether they're in favor of spending taxpayer dollars to help delinquent mortgage borrowers and you're likely to get an emphatic "No!" But the government didn't ask its citizens before it committed hundreds of billions of taxpayer dollars to guarantee loans through various foreclosure prevention initiatives such as FHASecure and Hope for Homeowners, which let troubled borrowers refinance expensive mortgages into more affordable loans. Nor did it take a vote before it agreed to fund the new streamlined mortgage modification programs for loans backed by Fannie Mae and Freddie Mac. And now there is the possibility that some of the hundreds of billions of dollars allocated for the Treasury's Troubled Assets Relief Program will go towards bailing out borrowers.
Realtors seeks Federal housing market manipulation - (www.politico.com) he Realtors are pushing several proposals to stimulate and stabilize the housing market, including making permanent the higher caps on the loan size that Fannie Mae, Freddie Mac and Federal Housing Administration can take on. Last year’s economic stimulus package temporarily lifted it to $729,750, but new rules for 2009 will lower the cap by more than $100,000. The Realtors also would like the upcoming economic stimulus to expand the first-time home buyer tax credit passed earlier this year to apply to all home buyers. And they’re asking Congress to eliminate the current repayment requirement, arguing that more people will use it if it’s a straight tax break. The National Association of Home Builders and the mortgage bankers also are lobbying hard for the higher conforming loan limits. “In the current economic downturn, Fannie Mae, Freddie Mac and FHA are the only significant sources of housing finance liquidity. … The operational and market challenges that would result from a loan limit decrease would also perpetuate additional market disruptions,” the three groups wrote congressional leaders. The home builders have their own plan, around which they’ve launched an inside-the-Beltway campaign. Their proposal includes beefing up the home buyer tax credit to a maximum of $20,000 for any buyer’s primary residence. The mortgage bankers, meanwhile, are lobbying just as hard against one proposal as they are for increasing the loan limits. Democratic Sens. Richard J. Durbin of Illinois and Chris Dodd of Connecticut have called for the stimulus to include a change in the bankruptcy code to allow judges to reduce distressed homeowners’ mortgage interest and principal.
Defaulted Australian couple served with legal documents via Facebook - (www.telegraph.co.uk) n what may be a world first, lawyers from Canberra law firm Meyer Vandenberg persuaded a judge in the Australian Capital Territory's Supreme Court to allow them to serve the documents over the internet after repeatedly failing to serve the papers in person. Lawyer Mark McCormack came up with the Facebook plan after it became clear that the couple did not want to be found. Carmel Rita Corbo and Gordon Poyser had failed to keep up repayments on a $150,000 (£44,000) loan they had borrowed from MKM Capital, a mortgage provider. The pair had ignored emails from the law firm and did not attend a court appearance on Oct 3. Mr McCormack said the pair had "vanished". So he looked to Facebook, better known for its tendency to break up marriages and ruin careers, for inspiration. "It's somewhat novel, however we do see it as a valid method of bringing the matter to the attention of the defendant," McCormack said. "It's one of those occasions where you feel most at home with what you know and I myself have a Facebook account."
Western Digital to slash 2,500 jobs - (www.latimes.com) Hard drive maker Western Digital Corp. said today it plans to cut 2,500 jobs, or about 5 percent of its global work force, and will reduce executive pay in response to weakening demand for its products because of the economic turmoil.
Hollywood figures snared in Bernard Madoff's alleged fraud - (www.latimes.com) Screenwriter Eric Roth, Steven Spielberg and Jeffrey Katzenberg are among those who suffered losses in the investment manager's alleged $50-billion Ponzi scheme.
Morgan Stanley loses $2.37 billion in quarter - (www.latimes.com) Morgan Stanley said today it lost $2.37 billion during its fiscal fourth quarter as it took a range of losses on assets amid one of the roughest quarters for investment banks.
Public mood darkens on job fears: Reuters poll - (news.yahoo.com/s/nm) A recession-mired economy and growing job insecurity have shaken American confidence in the future despite an upbeat view of President-elect Barack Obama's performance, according to a Reuters/Zogby poll released on Wednesday. The Reuters/Zogby Index, which measures the mood of the country, dipped to 90.5 in December from 93.3 in November as seven of the 10 measures of public opinion used in the index declined.
Citibank lends bailout cash from US taxpayers to poor Chinese - (news.xinhuanet.com)
IRS to help houseowners refinance or sell houses - No help for renters - (news.yahoo.com)
Who will Bail Out State and Local Governments? - (www.newgeography.com)
0% Interest Rates And 100 Year Mortgages Coming Soon - (www.geldpress.com)
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)
Record House Price Slide in Southern California - (www.businessweek.com)
Monterey County's declining property values mean lower tax revenue - (www.montereycountyweekly.com)
Will The Madoff Debacle Finally End The "Who Could Have Known?" Era? - (www.huffingtonpost.com)
How Madoff cost my family a job, a 401k, and a worthy cause - (www.marketwatch.com)
The End of Retirement? - (www.informationclearinghouse.info)
Commercial real estate grim - (www.nytimes.com)
The Mortgage Meltdown Video - (www.cbsnews.com)
Morgan Stanley Loss Narrows to $2.37 Billion - (www.cnbc.com) Morgan Stanley says it lost $2.37 billion during its fiscal fourth quarter as it takes a range of losses on assets amid one of the roughest quarters for investment banks.
Refinancing Drives Mortgage Applications Up - (www.cnbc.com)
Citigroup to Merge Corporate, Investment Banking - (www.cnbc.com)
OPEC Ready for Historic Oil Cut to Rescue Prices - (www.cnbc.com)
Honda Falls on Profit Fears, Nissan Cuts Output - (www.cnbc.com)
Retail Tracker Raises Holiday View, Citing Wal-Mart - (www.cnbc.com)
General Mills Posts Higher-than-Expected Profit - (www.cnbc.com)