Thursday June 12 Housing and Economic stories

Top Stories:

Deutsche Bank finds buyers for 3 of its 7 New York skyscrapers ... - (www.cnbc.com) – This is a critical story, as it now causes an instant 20-30% decline in NYC commercial real estate. Deutsche Bank has cut deals to sell three of the seven skyscrapers it took back from New York developer Harry Macklowe in deals that reflect a 20 to 30 percent decline from what he paid last year, the Wall Street Journal reported.
Buy And Bail On The Rise - (online.wsj.com) - The WSJ reports that some savvy homeowners are buying new homes in the same neighborhood that are far cheaper, and then walking away from their old homes and letting them fall into foreclosure. Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.
Mr Mortgage: Record-Breaking May CA Foreclosure Report - (www.ml-implode.com) - "California broke a major foreclosure record in May with $10.4 BILLION in loans going back to lender’s balance sheets. This was a near 9% increase month-over-month. Last month $9.237 Billion went back to the bank."
CalPERS may sell some residential land holdings amid big losses - (www.latimes.com) Watch closely as CalPERS releases their annual report next month. Two of their top executives have resigned and they had huge stakes in Bear Stearns. The California Public Employees Retirement System, the largest U.S. public pension fund, may sell part of its $2 billion in residential land holdings after the investments lost 31% last year amid falling home prices and forecasts of further declines. Sacramento-based CalPERS hired investment bank Morgan Stanley to review seven land deals that it made with joint-venture partners and real estate advisors, fund spokeswoman Pat Macht said. The fund may sell some of the land, purchased to develop new homes, or renegotiate the partnerships. One of the CalPERS ventures under review is LandSource Communities Development, a 15,000-acre tract north of Los Angeles known as Newhall Ranch, which filed for Chapter 11 bankruptcy protection Sunday after failing to restructure its debts with lenders. CalPERS paid $970 million in cash and property to home builder Lennar Corp. through advisor MacFarlane Partners for 62% of the development in January 2007.
Gov't role in lending boom - (www.boston.com) - The federal government encouraged Fannie Mae and Freddie Mac to buy more than $400 billion in subprime mortgage loans between 2004 and 2006, helping to fuel the boom in risky lending, the Washington Post reports. The story underscores an important issue: The federal government didn't just fail to prevent the subprime lending explosion. Rather, it encouraged, abetted and participated in the subprime lending explosion. LET’S BE CLEAR. THE CURRENT SET OF POLITICIANS IN OFFICE ARE RESPONSIBLE. THEY PUSH THE FED AND THE OTHER GOVERNMENT AGENCIES TO DO ANYTHING TO PREVENT A RECESSION DURING THEIR WATCH.
US Bank eliminates stand-alone seconds, purchases above 85% LTV - (www.ml-implode.com) - As banks and MI companies become more conservative home prices will continue to fall as the market of potential home buyers shrinks. 15% down is a nice change and hearkens back to the days when buying a home meant you actually wanted to own it; but for a cash-strapped populace used to financing life it means that it’s harder to own a home right now
Manhunt Stepped Up for Hedge-Fund Con Man - (www.cnbc.com) - The manhunt for a hedge fund manager who skipped his prison date and may have killed himself (CNBC: We know you guys are dense and biased, but please don’t fall for this crap) dragged into a third day Wednesday as police look for a body and other agents search for a rich man who may be on the run. Police thought Samuel Israel III, who was scheduled to begin serving a 20-year prison term for fraud June 9, may have plunged to his death after finding his abandoned car on the Bear Mountain Bridge in New York. The words "suicide is painless'' were written on it. (Footage of the scene and the message can be seen in the accompanying video). The phrase was the title of the theme song from the television show ''M+A+S+H.'' But with no body found, other government agencies quickly jumped on the case and are now broadening their search for the man who engineered the $1.8 trillion hedge fund industry's most brazen and long-running fraud. Israel, 48, and his partners pocketed millions as investors in his Bayou Group hedge fund lost more than $400 million over eight years, court papers show.
Pension Fund Land Bust - (briansullivan.blogs.foxbusiness.com)
SEC Scarlet Letter' Drive Hurts Asset-Backed Market - (www.bloomberg.com) - Regulators' plans to add a letter to credit ratings of asset-backed debt may constrict the $4.6 trillion market and choke off consumer credit at a time when Federal Reserve Chairman Ben S. Bernanke (aka helicopter pilot Ben) wants more lending to bolster the economy. The U.S. Securities and Exchange Commission may recommend this week that Moody's Investors Service, Standard & Poor's and Fitch Ratings include a new designation to the scale created by John Moody in 1909, according to people familiar with the plans. The changes may force investors to reassess the way they gauge the risk of securities backed by mortgages, student and auto loans and credit cards, said one of the people, who declined to be named before the announcement. The action could force banks to add capital to guard against losses or curb lending.
Panic without a net on Wall Street - (www.marketwatch.com) - The panic selling comes under two very different circumstances that surrounded Bear Stearns Cos.'s collapse in March. Lehman has just secured $6 billion in largely domestic financing from private equity and pension funds. Lehman, Goldman and all of Wall Street can now go to the Federal Reserve's discount window to borrow funds.
Foreclosed house prices slashed - (news.enquirer.com) - Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, said Mark Zandi, chief economist at Moody's Economy.com. The number can be as high as 90 percent in some newly built subdivisions, real estate agents say. By setting prices at extraordinarily low levels, say, $175,000 for a house that sold for $350,000 three years ago, banks can spark multiple offers


Other Stories:

Top Treasury official eases Wall St fears - (www.ft.com) - Investment banks unlikely to face borrowing limits. Of course, these investment banks want access to the same cash as lending banks, but not the rules governing them on leverage and margin.
Global Inflation's Bite Worsens - (online.wsj.com)
Concerns on Economy Are Shifting to Inflation - (www.nytimes.com)
Inflation fears may push gold back to $1,000/oz - (www.reuters.com)
Wall St banks face $10bn cost - (www.ft.com)
Homebuilders' debt ratings cut on grim sector outlook - (www.signonsandiego.com)
CalPERS may sell some residential land holdings amid big losses - (www.latimes.com)

Airlines retreat from latest increase in fares - (www.chicagotribune.com)
Ad sales signal drop in TV ratings - (www.chicagotribune.com)
Toyota promises plug-in hybrid vehicle by 2010 - (www.chicagotribune.com)
Gap to Combine Brands In Single Stores to Save - (online.wsj.com)
U.S. corn supply shrinks as floods ravage new crop - (www.signonsandiego.com)

Stark Says ECB Not Talking About Series of Increases - (www.bloomberg.com)
China's Export Growth Unexpectedly Accelerates to 28% - (www.bloomberg.com)

Wealth Evaporates as Gas Prices Clobber McMansions - (www.bloomberg.com)
Treasury Bet Unwind Continues - (Mish at globaleconomicanalysis.blogspot.com)
A 'ZZZ' rating for U.S. economy - (www.baltimoresun.com)

Update: Vanguard M&T Shareholders Being Tapped ... Again - (www.ml-implode.com) - An email to shareholders (of Vanguard Mortgage and Title) went out 06-10-2008 stating Vanguard is "facing financial difficulties" and describes the current corporate activities as a resurrection of sorts. We have been told not all shareholders were notified. New CEO Joe and partner are asking existing investors to pony up another $2.5 million and if they do, he'll come up with $5 million.
Oil Speculation - (www.oilgeopolitics.net)
Stocks, Real Estate and Oil Are Overvalued - (www.bloomberg.com)
Housing crisis hits high end - (money.cnn.com)
Breaking: Jim Johnson steps down as chief VP vetter for Obama - (www.ml-implode.com) - He did the right thing. For those that don't know what this is about, see our earlier thread.
BofA Names Some Countrywide Execs to Posts at Combined Mortgage Company - (www.ml-implode.com) - "Bank of America Corp. will retain a few key executives from Countrywide Financial Corp. (CFC: 4.765, -1.95%) once the merger of...
Rents seen falling 3.1% at big O.C. complexes - (lansner.freedomblogging.com)
America's Need for Saudi Oil and Gulf Money - (english.daralhayat.com)
An Italian Snags the Flatiron - (www.ml-implode.com) - As bad as the U.S. housing bust has been, the falloff in sales has been cushioned by foreign buyers in such places as New York City and Florida. Anne Marie Moriarty, a vice president of Corcoran realtors, says residential real estate sales to foreigners have doubled in the past 15 months. This is the only reason Miami isn't a smouldering crater.
Shareholders File Class Action Against Wachovia - (www.ml-implode.com) - A New York law firm has filed a class-action lawsuit against Wachovia Corp. that contends the bank misrepresented its standards for underwriting loans. Its stock has gone from around $54 to$18/share in the past 2 years.
The Golden Child - (www.ml-implode.com)
Abu Dhabi negotiating to buy Chrysler building - (www.ml-implode.com)
Market Failure, Mortgage Style - (www.ml-implode.com)
Fact: Too many crooks in Florida - (www.dailybusinessreview.com) - Florida ranks first in the country for mortgage fraud and second in foreclosures. Combine that with understaffed and overworked law enforcement agencies, a real estate industry where money doesn’t change hands unless a deal closes and crafty crooks who know the system, and there’s no sign the fraud epidemic will abate soon."