Thursday July 31 Housing and Economic stories

Top Stories:

Fed lays on extra liquidity support - (www.ft.com) The Federal Reserve ramped up its liquidity support operations again in an effort to reduce money market strains and pre-empt the possibility of funding crises at the year-end or at other stress points.

Bennigan's files for bankruptcy protection - Yahoo! News – (news.yahoo.com/s/ap) Most stores shutting down for good. Restaurant chains Bennigan's and Steak & Ale have filed for Chapter 7 bankruptcy protection and stores owned by its parent company will shut their doors. Meanwhile, employees at what appeared to be a company-owned Bennigan's in Plano were greeted by a sign Tuesday on the front door reading "WE ARE CLOSED. THANK YOU." Next door, a Steak & Ale sat empty in a deserted parking lot but there was no sign posted.

Mervyns, a California retail fixture, files for bankruptcy - (www.latimes.com) Will continue to operate. The department store chain is the latest in a series of retailers to enter bankruptcy, as a weak economy has been made more tenuous by job losses and high gas prices.

Credit Crunch Reaches Critical Mass - (globaleconomicanalysis.blogspot.com) Bloomberg is reporting MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan. MGM Mirage and Dubai World are late in raising as much as $3.5 billion for their $11.2 billion CityCenter project in Las Vegas because banks saddled with debt to casinos and hotels are wary of making new loans. Deutsche Bank AG and Credit Suisse Group, the Zurich-based bank that advised Dubai World last year when it invested $5.1 billion in MGM, are among the holdouts, bankers with knowledge of the matter said. Funding was supposed to be completed by the end of June, MGM Chief Financial Officer Daniel D'Arrigo told analysts in May. President James Murren said Frankfurt-based Deutsche Bank has been part of every MGM loan since 1998. Title Companies Complain "Banks Deprived Us Of Cash": Title companies are shutting down in Arizona, California, and Texas. Tonight's story is United Title of Texas shuts down statewide. United Title of Texas has closed all its offices around the state, including six in the Houston area, because of financial troubles related to its Colorado-based parent company.

Financial Title Shuts Down - (globaleconomicanalysis.blogspot.com) The Business Journal is reporting Financial Title Co. shuts down in California. Financial Title Co., the largest real-estate title agent in Silicon Valley, has shut its doors as part of a closure of multiple offices and title companies by its parent, Mercury Cos. of Colorado. The decision follows a move by Mercury's lenders to pull their line of credit after Mercury failed to meet loan requirements, according to an e-mail from Jim Hilbun, president of United Title of Texas, which is also owned by Mercury. "Mercury is closing all of its companies outside of Colorado, which includes Arizona, California, Oregon and Nevada," Hilbun told employees.

Merrill sells mortgage debt for 22 cents on the dollar - (money.cnn.com) When Merrill Lynch (MER, Fortune 500) on Monday sold a $30.6 billion portfolio of risky mortgage debt for 22 cents on the dollar, it took a big - though by no means final - step toward providing the sort of transparency that will have to sweep through the financial sector before any sustained rebound can take place. That's the good news. The bad news is now that investors can see the picture a little more clearly, it's pretty ugly. By selling the so-called collateralized debt obligations rather than simply taking another round of guesstimated markdowns on its balance sheet, Merrill blew a hole in the thesis of many who had argued that the credit crunch wasn't all that bad: That in the absence of marketplace sales, the writedowns of illiquid securities that firms were taking-a process known as marking-to-market-were actually bigger than the economic fundamentals dictated. "I have previously argued that mark-to-market losses exaggerate the severity of the credit crisis," wrote investment strategist Ed Yardeni in his e-mail newsletter Tuesday. "Then again, Merrill Lynch converted its mark-to-market losses into permanent ones.... This is bad news for other investment banks and commercial banks trying to get rid of loans and securities in a market flooded with distressed assets."

Why should Israelis care about American economic woes? - (www.haaretz.com) Why should I, a reader in Israel, care about Fannie and Freddie, which are purely American companies? Because the American economy is still the biggest in the world, because the factor that affects Israel's economy the most is still America and because Fannie Mae and Freddie Mac are the reason U.S. treasury secretary Henry Paulson and Fed chairman Ben Bernanke are losing sleep at night. Why are they losing sleep? They're still new on the job. Is Fannie and Freddie's collapse their fault? No, they inherited the real estate and mortgage bubble from George W. Bush and Alan Greenspan. But the last thing they need is for Fannie or Freddie or both to collapse on their watch. Why? Because Fannie and Freddie hold half of America's housing market, something around $6 trillion, and their collapse would trigger a financial Armageddon, a catastrophe on a scale that Wall Street has never seen.

New OC houses down $430,000 and still overpriced - (www.ocregister.com) Back in February ‘06, the median contract price of a new Orange County house was $1.29 million. This May, a new house here cost $859,880 — a drop of roughly $429,000, or 33%, from that peak. These Costa Mesa-based Hanley Wood Market Intelligence figures are significant since they track sales contracts entered into escrow, so we see what’s in the pipeline to be sold; and they break down new home sales by housing type. The latest figures show May’s contracts for all new home types fell 37% vs. May 2007, declining to 174 units. The steepest decline was for condos, which fell 44% to 46 units. House contracts were down 35% to 85, and contracts to buy townhomes or buildings of one to four units (duplexes, triplexes, etc.) fell 34% to 43.

National embarrassments known as Fannie Mae and Freddy Mac - (www.atimes.com) Yet, against this staggering load of incestuous liabilities, and liabilities masquerading as assets, that totals a third of the annual GDP output of the whole freaking country, these two greedy, corrupt, filthy pieces of debt-addled government-sponsored enterprise crap have only a paltry $80 billion in capital! Hahahaha! This shows the utter madness of it all, as it means that each dollar of capital is leveraged (hold onto your hats) 62 times! When's the last time you bet on some nag to win when the odds were 62-to-1 against you? For Fannie and Freddie, this leverage means that their total assets equal only a miniscule 1.6% of their total liabilities! So, if the value of their insane levels of mortgage liabilities decreases by a lousy 2%, all their capital would be gone, and they would be completely bankrupt! Hahaha! What insanity!

SEC extends emergency order on short-selling - (www.ft.com) The US Securities and Exchange Commission on Tuesday night extended an emergency order against abusive short-selling in a select group of financial stocks as it prepares new rule proposals to ban the practice across the entire market. The emergency order, which bars so-called “naked short-selling” in shares of the mortgage financiers Fannie Mae and Freddie Mac and 17 banks, including big Wall Street firms, was due to expire late Tuesday night. It will now be in effect until August 12 and will not be further extended, the SEC said.



Other Stories:

Spanish retail sales suffer record fall - (uk.reuters.com)
America's house price time bomb - (news.bbc.co.uk)
The world cannot grow its way out of this slowdown - (us.ft.com)
Paterson Warns of Economic Crisis - (cityroom.blogs.nytimes.com)
Restaurant Chains Close as Diners Reduce Spending - (www.nytimes.com)
Freddie, Fannie `Fair Values' Hardly Look Fair - (www.bloomberg.com)
'Stealth' Housing Bailout: It's Bigger Than You Think - (www.cnbc.com)
U.S. Economy: House Prices Drop, Confidence Near Low - (www.bloomberg.com)

Moody’s downbeat on credit market rebound - (www.ft.com) Net income almost halves
US delays accounting changes - (www.ft.com) Reprieve over urgent need to raise capital
Store closures wipe out profit at Starbucks - (www.ft.com) First quarterly loss since going public

America's house price time bomb: Walkaways - (news.bbc.co.uk)
CA Median House Prices Down 37.7% In June - (Mish at globaleconomicanalysis.blogspot.com)
Foreclosure threat spreads in Orange County - (mortgage.freedomblogging.com)

US prices down 15.8 percent from May 2007 - (www.nytimes.com)
'Extreme Makeover' house faces foreclosure - (news.yahoo.com)
The Extreme Reality Makeover Show - (washingtonpost.com)
Why the Housing Relief Bill is No Relief - (www.seekingalpha.com)
Housing bill fixes nothing - (www.baltimorechronicle.com)
Take A Load Off Fannie - (trendocracy.blogspot.com)
Lax Lending Standards Led to IndyMac's Downfall - (www.nytimes.com)
Workingman's blues - (www.economist.com)

Update: First Horizon Cuts 170 Jobs, Eliminates Back-Office - (www.ml-implode.com) - As reported today in Memphis' CommercialAppeal.com, parent company First Horizon National Corp. is cutting 170 jobs "from its ab...
Financial Title Shuts Down - (www.ml-implode.com) - Financial Title Co., the largest real-estate title agent in Silicon Valley, has shut its doors as part of a closure of multiple ...
Statewide Shutdown of United Title in Texas - (www.ml-implode.com) - United Title of Texas has closed all its offices around the state, including six in the Houston area, because of financial troub...
S&P Does Hatchet Job on Thousands of Prime, Alt-A and Subprime RMBS - (www.ml-implode.com) - "In response to the obvious house price fall awaiting heavy Jumbo prime and Alt-A regions once summer seasonal demand stops in A...
Mortgage professionals flooding temp agencies - (www.ml-implode.com) - "As mortgage companies continue to fold, their employees are struggling, largely without success, to find jobs with comparable p...
Covered by whom? Bonds on what? - (www.ml-implode.com)
GE Money Canada Exits Mortgage Business - (www.ml-implode.com)
Subprime Lending Not to Blame For Credit Mess, - (www.ml-implode.com)
Update: Franklin Bank Gets Notice From NASDAQ - (www.ml-implode.com)
Mortgage Application Volume Lowest Since 2000 - (www.ml-implode.com)
State, homeowners taking on lenders - (www.ml-implode.com)
Bush Signs Sweeping Housing Bill into Law - (www.ml-implode.com)
Kenneth Rogoff: We Need a Recession - (www.ml-implode.com)
Corrupt GOP Senator Ted Stevens indicted on seven counts. One down, 99 to go. - (www.ml-implode.com)
U.S. Commercial Real Estate Sales Down 70% - (www.ml-implode.com)

Oil Rises More Than $4 After Unexpected Gasoline-Supply Decline - (www.bloomberg.com)
U.S. Stocks Rally, Led by Oil Companies; Financial Shares Gain - (www.bloomberg.com)
Gold Tumbles as Dollar Trades Near One-Month High Against Euro - (www.bloomberg.com)

After 7 Years, Talks on Trade Collapse - (www.nytimes.com)
Sweeping Housing Bill Signed by Bush - (www.nytimes.com)
ADP Says U.S. Companies Increased Payrolls by 9,000 - (www.bloomberg.com)
Mortgage applications slowest since 2000: MBA - (www.reuters.com)
Term Auction Facility is oversubscribed - (www.cfo.com)
Building Costs Soaring - (www.nypost.com)

U.S. Profits May Drop Most Since at Least 1998, Led by Lehman - (www.bloomberg.com)
A Deal at Merrill Puts Spotlight on Others - (www.nytimes.com)
Credit gets crunchy - (www.thestreet.com)
FASB to reconsider phases for securitization rule - (www.reuters.com)
Big Bankruptcies Are Piling Up - (www.nytimes.com)
Suddenly, hedge funds are shorting oil - (www.reuters.com)
Marshals, Coping With Business Crime Wave, Sell Fund Portfolios - (www.bloomberg.com)
Is Your Student Loan Safe? - (www.abcnews.go.com)

Restaurant Chains Close as Diners Reduce Spending - (www.nytimes.com)
For Merrill, the Investments Are Gone, but the Risk Remains - (www.nytimes.com)
Fannie Mae Portfolio Rises at Fastest Rate Since 2003 - (www.bloomberg.com)
Mervyns, a California retail fixture, files for bankruptcy - (www.latimes.com)
Many Bennigan's to close as parent files bankruptcy - (www.chicagotribune.com)
Chase to halt leasing on Chrysler brands - (www.chicagotribune.com)
Homebuilder Centex widens 1Q loss - (www.signonsandiego.com)
Builders Feel Pinch of Key Omission From the Housing Bill - (online.wsj.com)
Las Vegas's Gambling Slump Shows Why Starbucks Bubble Lost Air - (www.bloomberg.com)

European Confidence Drops Most Since Sept. 11 Attacks - (www.bloomberg.com)
Trade Talks Broke Down Over Chinese Shift on Food - (www.nytimes.com)
Australia's property market hits reverse - (www.news.com.au/heraldsun)
Japan's Industrial Output Falls 2% as Exports Decline - (www.bloomberg.com)
GE exits Canadian mortgage business - (www.theglobeandmail.com)