Tuesday June 3 Housing and Economic stories

Top Stories:

Has Phase 2 of the Credit Crisis begun???:
Student Loans Start to Bypass 2-Year Colleges - (www.nytimes.com) – Credit crunch beginning to freeze loans for 2 year colleges and lower quality (perceived by lenders) 4 year colleges.
Wachovia Ousts Thompson on Writedowns, Share Plunge - (www.ml-implode.com) - Wachovia Corp. ousted Kennedy Thompson as chief executive officer of the fourth-largest U.S. bank after the board blamed him for...
Expect further declines in 2008 and into 2009 - (www.freddiemac.com) - While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway
Liars Rejoice! Stated income cannot be used against you - (www.theconglomerate.org) - Judge Leslie Tchaikovsky, a bankruptcy judge in the Northern District of California, has issued a whopper of an opinion holding that a mortgage lender on a stated income loan is not entitled to rely on the "stated" income in the loan application for purposes of bankruptcy discharge.
Permabear Peter Schiff's Worst-Case Scenario - (www.usnews.com) – First off, the title is a bit unfair, as Peter was not a bear 12 years ago. He says “There's nothing good to say about our situation. The policies both the Fed and government are pursuing are making the situation worse. We've been getting a free ride on the global gravy train. Other countries are starting to reclaim their resources and goods, so as Americans are priced out of various markets, the rest of the world is going to enjoy the consumption of goods Americans had previously purchased. This is a natural consequence of this phony economy. If America had maintained a viable economy and continued to produce goods instead of merely consuming them, and if we had saved money instead of borrowing, our standard of living could rise with everybody else's. Instead, we gutted our manufacturing, let our infrastructure decay, and encouraged our citizens to borrow with reckless abandon.”
Price Erosion Hits the $5 Million-Plus Market - (finance.yahoo.com)
Moody's Implied Ratings Show MBIA, Ambac Are Junk - (www.bloomberg.com)
House of pain - (www.jsonline.com) - While earning $9.25 an hour, Medellin struggles to pay a $103,500 high-interest loan for an often-vandalized house on Milwaukee's north side. The city assessed the property at almost $40,000 less.
Next Housing Market to Crash? Seattle - (www.usnews.com)
SUV Owners Trash Vehicles, Turn in the Keys - (www.ml-implode.com)
Repackaged Mortgage Garbage Is Still Garbage - (www.ml-implode.com) - It's what financial engineering and securitization is all about: It's taking something nobody wants and creating something people will want, be able to finance, or able to hold,'' said James Grady, a managing director at the New York-based unit, which has $240 billion of fixed-income assets under management
Credit where it’s due - (www.ml-implode.com) - The slowdown in housing looks increasingly hazardous to the overall economy…. Without such a strong underlying economy, the current malaise in housing could turn into a deeper, longer downturn….Arguably, the current episode may…be one of the worst housing downturns we have ever seen, given the amount of excess supply coupled with extremely low levels of affordability and the deflation of what could be described as a speculative investment mania
Apollo company halts cash payouts - (www.ft.com) A fourth company owned by private equity firm Apollo Management has exercised its option to suspend cash payments on part of its debt, taking advantage of one of the most controversial financing techniques of the leveraged buy-out boom. But the obvious downside is that some investors are being paid with paper, increasing their exposure to troubled companies. Other companies with PIK options enabling them to suspend cash payments on their bonds include some of the targets of the leveraged buy-out binge – such as Freescale Semiconductor, HCA and Univision.
Moody's Implied Ratings Show MBIA, Ambac Turn to Junk - (www.bloomberg.com) - The team from Moody's Analytics, which operates separately from Moody's ratings division, uses credit-default swap prices as an alternative system of grading debt. These so-called implied ratings often differ significantly from Moody's official grades. The implied ratings frequently show that swap traders think debt is in more danger of defaulting than Moody's credit ratings signify. And here's the kicker: The swaps traders are usually right
Banks' credit crisis solutions have echoes of 1929 Depression - (www.telegraph.co.uk)


Other Stories:

Thornburg Earnings Further Delayed, Stock Faces Delisting - (www.ml-implode.com) - Thornburg Mortgage announced today that it needed even more time to complete its form 10-Q for the first quarter, which was expe...
A Tale of Two Housing Markets: There’s REO, and Everything Else - (www.ml-implode.com) - "Proving that even within a single local housing market, sales trends can be more complex than they might otherwise seem, new da...
Real Price Declines Swamping Nominal Home Price Trends: First American - (www.ml-implode.com) - "That inflation monster investors are worried about? It may prove to have a strong bite on housing just yet, according to data released Monday morning by First American CoreLogic
Fed On Hold Till the Fall (Despite Calls to Raise Rates)? - (www.ml-implode.com) - "It appears the US central bank got taken to the woodshed at a conference hosted by the New York Fed for overly aggressive rate ...
Number of Foreclosed Homes Keeps Rising - (www.ml-implode.com)
Fed Buying Less at Treasury Auctions Thanks to New Facilities - (www.ml-implode.com)
In ‘Foreclosure Capital’ 3 out of 4 homes for sale is a foreclosure - (www.ml-implode.com)
Research Zeitgeist: Inflation, Libor and Vintage Subprime - (www.ml-implode.com)
Liquidity Issues Hit Hedge Funds - (www.ml-implode.com)
Kohn Signals Wall Street May Get Permanent Access to Fed Loans - (www.ml-implode.com)

The Lowdown on Libor - (www.businessweek.com)
Traders Seek Truth With Swaps Instead Of Libor - (www.bloomberg.com)
The State of Real Estate - (PDF - patrick.net)
Trouble in Housing Trickles Up - (www.nytimes.com)
Troubled Sellers Up 463% In San Mateo County - (sanmateore.dreamhosters.com)
Global housing markets in review; forecasts for 2008 - (www.globalpropertyguide.com)
Banks' solutions have echoes of 1929 Depression - (www.telegraph.co.uk)
Newly Overdue Mortgages Swamp Effort to Fix Defaults - (www.bloomberg.com)
It's Only Going to Get Worse - (www.weeklystandard.com)
U.S. Bank Failures Loom - (www.blacklistednews.com)
Don't raid retirement savings to pay the mortgage - (www.marketwatch.com)
Maryland County Realtors' Building For Sale - (patrick.net)

Influx of workers 65 or older working in retail jobs - (www.chron.com)
Egg price reflects soaring costs for diesel, feed, chicks - (www.ajc.com)
Economic chill freezes Vegas budget - (www.lasvegassun.com)
Slow economic times mean pay cuts for many workers - (www.usatoday.com)

Morgan Stanley, Merrill, Lehman Ratings Cut by S&P - (www.bloomberg.com)
The market turns cold in a desert boomtown - (www.latimes.com)
U.S. Treasury secretary: No 'quick fix' for high oil prices - (www.chicagotribune.com)
Number of Foreclosed Homes Keeps Rising - (online.wsj.com)
Foreclosure Bus Tour, Sign of Housing Bust, Hits New York Area - (www.bloomberg.com)
A Return of That ’70s Show? - (www.nytimes.com)
U.S. ISM Factory Index Probably Shrank in May for Fourth Month - (www.bloomberg.com)
The Fed, the cost of oil and inflation - (www.ft.com)

Wachovia Ousts Thompson on Writedowns, Share Plunge - (www.bloomberg.com)
HSBC overhauling mortgage, credit practices - (www.chicagotribune.com)
Luxury retailers realize it's a new shopping scene - (www.chicagotribune.com)
Airline Group Sees ‘Desperate’ Times - (www.nytimes.com)
GM, Motorola, New York Times Burn Cash Flow, Keeping Dividends - (www.bloomberg.com)
Airline industry to plunge into loss - (www.ft.com)
Minnesota town tells Google Maps to get lost - (news.cnet.com)
Student Loans Start to Bypass 2-Year Colleges - (www.nytimes.com)

U.K. Mortgage Approvals Drop to Record, Factory Growth Stalls - (www.bloomberg.com)
European Finance Ministers Signal Inflation Concerns - (www.bloomberg.com)
Outlook: UK nears recession - (www.ft.com)
US staring at double-dip recession as calls for higher interest rates grow - (www.telegraph.co.uk)
South Korea to delay resumption of U.S. beef imports - (www.chron.com)
Negative equity mounting in the UK - (www.guardian.co.uk)
Malaysia tired of subsidizing gas for Thai drivers - (www.chron.com)