Sunday February 8 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Flood of Foreclosures: It's Worse Than You Think - (www.truthout.org) Ezekiel Pierre Sejour stands in front of an empty, foreclosed home that he and his mother Marie Nadine Pierre, were moved into by the Miami group Take Back the Land after she lost her jobs and could no longer pay her loans. Take Back the Land moves homeless families into empty foreclosed homes in Miami and provides legal protection from eviction. Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate. Housing might be in worse shape than we think. There is probably even more excess housing inventory gumming up the market than current statistics indicate, thanks to a wave of foreclosures that has yet to hit the market. The problem: Many foreclosed homes and other distressed properties that are now owned by banks have yet to be listed for sale. The volume of this so-called "ghost inventory" could be substantial enough to depress already steeply falling prices when it does go on the market. "That's not good news," said Pat Newport, an analyst with IHS Global Insight. "[Excess] inventory is the biggest problem in housing these days, and it leads to lower housing prices, which leads to more foreclosures." RealtyTrac, the online marketer of foreclosed properties, recently discovered that it has far more foreclosed properties listed in its database, which the company compiles using courthouse records, than there are listed in the multiple listing services (MLS) maintained by real estate agents.

Wall Street Quakes at Threat of $400,000 Pay Cap - (www.nakedcapitalism.com) Today, Senator Claire McCaskill of Missouri introduced legislation that would limit salary, bonus, and stock options for executives as financial firm recipients of bailout funds be limited to the President's level of pay, currently $400,000. McCaskill's proposal is likely to go all of nowhere. She is not a member of the Finance or Appropriations committee, so her proposal is more a shot across the bow than a serious initiative. And given that "executive" is generally defined as the five most highly paid corporate officers, the ones whose remuneration is listed in the proxy statement, it covers only a trivial number of employees. But her bill is getting a lot of media coverage, which means it could serve as a starting point for negotiations. It has become a benchmark as far as the public is concerned. So how reasonable is it? The problem is that too few people in the industry have any memory of what bad times were like, and the last few years were so grotesquely rich (in terms of pay, not risk adjusted performance) as to have distorted industry participants' sense of reality. The pretext for the largess was that the really good people would decamp to hedge funds, so pay had to be ratcheted up to those levels (John Whitehead, former co-chairman of Goldman, dismissed that idea when the bubble was at its peak). Bear in mind: the bonuses paid in 2008 in New York, when all the big domestic players and most of the large foreign firms (who constitute the bulk of employment) were on government life support, were the roughly the same as in 2004, which was a good but not stellar year. I'm not certain of the headcount differences then versus now; with the loss of Bear, Lehman, and a lot of headcount cuts industry-wide, I doubt that employment is much above 2004 levels. Since people are generally not too open about pay (and tend to exaggerate to boot), I have only a couple of datapoints, but I think they are germane. Anyone with relevant info from the last downturn is encouraged to speak up. The dot bomb bust was bad on Wall Street. To give an idea: I went to see a friend in the search business in 2002 to get his insights about a company he knew. He had two neat stacks of unopened letters on a credenza behind his desk, each roughly 2 feet high. I asked about them. He explained he was getting an enormous amount of letters from job-seekers (and mind you, his was a very small firm). He didn't bother opening them, since he knew or could find plenty of good people and employers preferred to hire the employed over the unemployed. The letters were from unknown quantities and there was no reason for him to try to weed through them. So why did he keep them? In case someone connected called him to ask him if he had received the resume of his good buddy. Then he would dig through the pile and give it a (usually obligatory) look.

Obama to Unveil CEO Pay Plan, 'Bad Bank' Delayed - (www.cnbc.com) The Obama administration will not unveil new measures to aid the financial services industry this week as had been expected. Instead the issue of Wall Street bonuses and executive compensation will be addressed, an industry source says. An industry aid package, including the creation of a "bad bank" concept, will be announced next week, said the source, who is familiar with a weekend's worth of discussions between government officials and representatives of the financial services industry. The Obama administration and those people have been discussing a number of measures and issues on a concentrated basis since Friday, when speculation first arose that any policy initiative on a bad bank would be delayed.
Though details of the intended Obama administration announcement on Wall Street compensation are unknown at this time, it will be executed through the TARP plan, meaning it will address limits on pay for those firms receiving government assistance, as both Congressional Democrats and senior White House advisors have urged in recent weeks.

Chrysler turns the screw on part makers - (www.ft.com) Chrysler has stepped up pressure on beleaguered North American automotive parts makers by demanding price cuts as part of its drive to meet the conditions for receiving $4bn in US government loans. The Detroit carmaker, which is also seeking an additional $3bn from Washington, is understood to be seeking a 3 per cent reduction in parts costs, although suppliers with long-term contracts providing for price reductions above the target will not be required to make further cuts. While declining to confirm specific figures, Chrysler said that it “strongly believes that this is the time for shared sacrifice in the automotive industry”. Production cuts by carmakers have already put the parts industry under immense strain. “I suspect there will be some relatively large [car parts suppliers] that will go into Chapter 11 in the near future,” said Thomas Manganello, head of the auto industry practice at Warner Norcross & Judd, a Detroit law firm that represents numerous suppliers. Contech, a maker of light-weight castings with 1,100 employees, filed for bankruptcy protection last Friday. Also on Friday, American Axle, which depends on General Motors for about three-quarters of its sales, disclosed that its customers expect to close their assembly plants for a cumulative total of 35 weeks between January and March, double the shutdowns in the fourth quarter of 2008.

Mortgage crisis spreads to more affluent areas of Silicon Valley - (www.mercurynews.com) In almost every neighborhood in Santa Clara County, homeowners are increasingly falling behind on their mortgage payments — even in areas that were relatively untouched by the foreclosure crisis as recently as late 2007, according to a Mercury News analysis. The late-payment problem is creeping across the valley into areas such as Willow Glen, Campbell and Sunnyvale. Experts say it's likely that foreclosures will hit these more affluent areas as layoffs mount, home values drop and adjustable-rate loans reset. The study of all the ZIP codes in Silicon Valley shows that the mortgage crisis is no longer confined to working-class neighborhoods where subprime lending was common during the housing boom. And it makes clear that the tide of foreclosures is not yet likely to retreat. As Jed Kolko, a research fellow who studies housing at the Public Policy Institute of California, put it, "People at all income levels are losing jobs, so we are likely to see at least some delinquency and foreclosure in all types of ZIP codes." Take, for example, San Jose's 95125 ZIP code, which includes the picturesque, sought-after Willow Glen neighborhood. The portion of serious delinquencies — loans that were at least 90 days overdue — rose steeply from November 2007 to November 2008, from just 0.3 percent to 1.7 percent.

$9,718: Your bailout cut - (money.cnn.com) What is going on with the economy, the rescue plan and the government? You asked, experts answered. Question: "If we just gave all the bailout money to taxpayers, how much would we each get? I've seen $25,000, $300,000, $1 million - what's the real answer?" Answer: $9,718.49. To arrive at that figure, CNNMoney.com took the total of the bank bailout, $700 billion, and added that to the proposed stimulus spending in the House of Representatives bill, $819 billion. That totals $1.519 trillion. We then divide that number by 156.3 million, which was the total number of U.S. filers in 2008. So: $1.519 trillion divided by 156.3 million equals $9,718.49 per U.S. taxpayer.




OTHER STORIES:

AT&T freezes 120,000 salaries - (money.cnn.com)
Citi Field or Bailout Ballpark? - (money.cnn.com)
GM's $35 billion albatross - (money.cnn.com)
Roubini Sees Global Gloom After Davos Vindication - (www.bloomberg.com)
The worst is still ahead - (www.marketwatch.com)
Foreclosure's Final Act - (www.washingtonpost.com)
Freddie Mac to rent foreclosures to "owners" who could not afford to own them - (finance.yahoo.com)
Visual Guide To Unemployment Rates - (www.mint.com)
Slim chance of an '09 turnaround - (money.cnn.com) Consumers and businesses have retrenched so deeply that it will take a long time for the economy to stage a meaningful comeback. more
Soaring Unemployment Means No U.S. Housing Market Bottom - (www.marketoracle.co.uk)
Dying market in Palo Alto denied by realtors - (www.sfgate.com)
San Francisco saw biggest drop in price per square foot - (www.bloomberg.com)

Global recession - where did all the money go? - (www.guardian.co.uk)
Stiglitz Criticizes Bad Bank Plan as Swapping Cash for Trash - (www.bloomberg.com)
Don't Regulate Em, Punish Em! - (blogs.marketwatch.com)
Merchant Banker - (www.youtube.com)
Computer admin plotted to erase Fannie Mae - (www.theregister.co.uk)

US set for ‘big bang’ financial clean-up - (www.ft.com)
Risks Are Vast in Revaluing Tainted Assets - (www.nytimes.com)
Sea of policy options raise mortgage bond angst - (www.reuters.com)
Wen looks at fresh Chinese stimulus - (www.ft.com)
Republicans urge major changes to $894bn injection bill - (www.ft.com)
GOP leaders doubt stimulus bill will pass Senate - (www.dallasnews.com)
Out of Gaps In Treaties, First Salvos Of Trade War - (www.washingtonpost.com)
Stimulus plan seems too unfocused to straighten out mess - (www.chicagotribune.com)
Extreme glut of high-end housing - (www.californiahousingforecast.com)
A Month Free? Rents Are Falling Fast - (www.nytimes.com)
New house sales hit new lows - (themessthatgreenspanmade.blogspot.com)
Hold the champagne; US new house sales still ugly - (www.guardian.co.uk)
Putin's Speech at Davos - (www.globalresearch.ca)

Wall St face moment of truth over pay, perks - (www.reuters.com)
Following Clues the S.E.C. Didn’t - (www.nytimes.com)
Our Love Affair With Malls Is on the Rocks - (www.nytimes.com)
The credit crunch according to Soros - (www.ft.com)
A Rise in Pessimism in the Corner Office - (www.nytimes.com)