Wednesday July 16 Housing and Economic stories

Top Stories:

They were told their money was "totally safe". It wasn't. - (www.idahostatesman.com) - Norm Brown thought he was doing three of his friends a favor last year when he suggested they invest in a little-known type of security whose interest rate was higher than that of a money market account but was supposed to hold little risk. Today, he wishes he'd kept his mouth shut. INVESTORS WERE TOLD RISK OF FAILURE WAS LOW. Ploss knows what Brown's broker told him. "I asked him (the broker) point blank if there was any risk with these securities," said Ploss, who operates the contracting company Ploss Enterprises LLC. "I was worried about the economy and was looking around for a safe place to park this money while I looked around for a piece of real estate to buy. He told me the only way it could fail is if there was 'a complete financial meltdown where money markets and CDs would fail,' which would mean 'nothing would be any good.' " Ploss invested "substantially" in the securities, though neither he nor Brown would say how much. As of last week, the value of his investment had been written down by 51.1 percent, he said. That means that even if he could sell the securities, he would get 49.9 percent of his investment back. Brown said his investment was written down 30 percent.

Freddie’s Charm Offensive – (optionarmageddon.ml-implode.com) Freddie Mac’s PR people are fighting back, even as Hank Paulson is floating a bailout plan. Yesterday the company began purchasing keyword-targeted online ads from Google. “Keyword-targeted” ads are pretty simple to understand. Websites that take advertising from Google install Google’s code on their page. Google’s computers read the content of the page, finding key words, and then serve ads by advertisers who wish their pitch to be seen next to those words. Most articles with the words “Freddie Mac” in them tend to be critical these days. Freddie Mac wants to tell its side of the story. So you may be seeing more of the following ads in the weeks and months to come: Banner Ads are as follows: Freddie Mac: The Strength and Reserves To Fulfill our Mission. www.FreddieMac.com

Tempers flare at IndyMac branch - (www.latimes.com) - Police are called to tame an angry throng of trying to pull money out of the Encino branch on Day 2 of the takeover. Los Angeles police were dispatched to an IndyMac branch in Encino this morning when customers waiting to withdraw money became agitated after several people tried to cut in line on the second day of the failed institution's federal takeover. Harding said that as many as 80 people were waiting outside the bank when several people tried to cut in line, apparently upset that they had been issued numbers Monday that were not honored, Harding said. Order was quickly restored and private security guards stood watch over the line, with police acting as backup. As a precaution, the LAPD sent a squad car to another IndyMac branch in Northridge, although no incidents were reported there, Harding said

SEC to Limit Short Sales of Major Financial Firms - (www.cnbc.com) Funny how they are criminalizing you if you go long oil and gas (those bad speculators) but also if you go short financial stocks. The SEC has not been enforcing this rule for other firms and technology companies. But when it involves their financial brethren, they will do anything possible to prevent a decline. The U.S. Securities and Exchange will issue an emergency rule later Tuesday to stop "naked" short selling in major financial firms, including Fannie Mae and Freddie Mac, the SEC said. Short sellers borrow shares they consider overvalued and sell them. If the price drops, they repurchase the shares, return them and pocket the difference. The rule would require any person making a short sale in the listed securities to borrow the securities before the short sale is effected and deliver the securities on settlement date.

Democrats See a Need for Further Economic Stimulus – (www.nytimes.com) – Yes folks, the Democratic leadership is clueless (just like the Republican leadership previously). You can’t spend your way out of a credit induced coma. Let’s see, if I owe $40K in credit card debt because I have been saving any money and buying SUVs, HDTVs, etc., borrowing another $40K is not going to help me become more prosperous, unless I leverage and take heavy risks. Yes, this unfortunately is what got us in this mess in the first place. Democratic leaders have begun fashioning a package of stimulus measures, but President Bush and the Fed chairman, Ben S. Bernanke, both pronounced such action premature on Tuesday.

Banks hit by fallout from the crisis at IndyMac - (www.latimes.com) Some depositors at the failed thrift, seized by regulators, leave without all of the funds that were in their accounts. Bank shares slide, but institutions say they are well-capitalized.

SEC Chairman Cox Says New Limits Will Be Put on Short Sales of Fannie Mae and Freddie Mac Stock - (www.cnbc.com)
Paulson: Fannie, Freddie Need Stronger Regulator - (www.cnbc.com) – Yes, these ass-wipes that got us into this mess are trying to give themselves more power to prevent future messes from happening. Basically, these guys have committed more crimes than Kenneth Lay and Skilling from Enron, yet they are going after more power.

Tequila and sympathy: Bars offer foreclosure specials - Jul. 15, 2008 – (robots.cnnfn.com) Are some of your customers worried about losing their homes? Take a tip from Cole Durbin, owner of Padre's Modern Mexican in Phoenix, and let them know that you're on their side. Like restaurants across the country - from Table 8 in Los Angeles to Liberty Bar in Hoboken, N.J. - Durbin is offering up a Recession Happy Hour. But he has added a twist: Anyone who arrives at Padre's with a foreclosure notice can have any drink on the menu.

Inland CA condo projects shut down as foreclosures flood market - (www.pe.com) After a short comeback when housing prices peaked, condominiums and town houses have lost their allure as an affordable alternative to conventional single-family homes. The reason is a flood of competition from foreclosed, detached homes at prices that new attached housing can't beat.

G.M. Suspends Dividend and Plans More Layoffs - (www.nytimes.com) The moves, which include selling at least $2 billion in assets and borrowing as much as $3 billion, are expected to raise about $15 billion by the end of 2009, the chief executive Rick Wagoner said. Mr. Wagoner said the automaker would stop providing health care coverage to salaried retirees at age 65, offer buyout and early retirement packages to reduce its salaried work force and freeze base pay for salaried employees through 2009.

Airlines to begin selling ads on boarding passes - (www.latimes.com) – Airlines beginning to get desperate. Luggage? Got it. Boarding pass? Check. Ads on boarding pass to help beleaguered airline industry pay for expensive fuel?

'King of beers' will be getting a new nationality - (www.latimes.com) – Fed weak dollar policy is causing US icons to be sold to overseas companies. Dollar has been devalued by 40% so US companies are being acquired at huge discount to overseas companies. InBev of Belgium is acquiring the largest United States brewer for $52 billion.


Other Stories:

Bush Urges Quick Action on Fannie, Freddie Rescue – (www.cnbc.com)
More Homeowners Consider Taking Boarders - (www.nytimes.com) - As foreclosures rise, many owners are opening their homes as a way to make ends meet. Above, Katherine Ongiri in the space she rents in a Baltimore home.
Jesse Ventura: Government Out to Destroy the Middle Class - (www.prisonplanet.com)
Karl Rove Defies Congressional Subpoena: "My Lawyer Says Its Okay" - (www.rawstory.com)Kucinich May Get Hearing on Impeachment - (www.cqpolitics.com)Wholesale Prices Soar in June; Sales Sluggish - (biz.yahoo.com/ap)Bernanke: Risk to Both Growth and US Inflation - (www.bloomberg.com)Here Comes the Jobs Crash - (www.itulip.com)Kunstler: Event Horizon - (www.depression2.tv)GM on the Brink - (www.bloomberg.com)Oil Falls $8 - (www.bloomberg.com)

The Bad Egg Theory - (www.ml-implode.com) - "One of the small consolation prize benefits showing up is that there are far fewer bad eggs entering the subprime delinquency p...
More Layoffs Coming For WAMU - (www.ml-implode.com) - Washington Mutual Inc., battling to cut costs, will lay off more employees in September, according to people familiar with the c...
Forget the house- Where’s a safe haven for my money, and who’s in trouble next? - (www.ml-implode.com) - "We were told in May that crisis was averted after the rescue of Bear Sterns. Then yesterday crisis was averted again by the ba...
Subprime-Related Litigation on the Rise - (www.ml-implode.com) - "A new report from NERA Economic Consulting takes a look at emerging trends in litigation as a result of the subprime crisis and...
Why Financial Stocks Will Continue To Fall - (www.ml-implode.com) - "The larger problem is that the market cannot avoid looking at the fact that the credit crisis is systemic. Shoring up trouble i...
CEO Sees Dismal Economy (Bunch of Whiners!) - (www.ml-implode.com)
Vote of No Confidence: Dollar Tanks (And More on Fannie and Freddie) - (www.ml-implode.com)

Why Fannie and Freddie Have Doomed Housing Prices - (Charles Hugh Smith at oftwominds.com)
Bush Offers Plan to Increase Inflation and Taxes, Destroy Savings - (www.nytimes.com)
Treasury, Fed to feed mortgage giants with taxpayer blood - (msnbc.msn.com)
Government as the Big Lender - (www.nytimes.com)
Fannie Plan a "Disaster" says Rogers - (www.bloomberg.com)
Feds to help only the politically well-connected - (msnbc.msn.com)
Fannie, Freddie: Affirmative Action for the Rich and Stupid - (www.seekingalpha.com)
Freddie, Fannie, and Curses on FDR - (www.mises.org)
Freddie's Charm Offensive - (optionarmageddon.ml-implode.com)
What's the difference between Enron and Fannie Mae? - (nalert.blogspot.com)
Analysts Say More Banks Will Fail - (finance.yahoo.com)
Many more US bank failures likely after IndyMac - (www.guardian.co.uk)
Farewell Indymac, Who's Next? - (www.marketoracle.co.uk)
Feds to freeze IndyMac's house-equity credit lines - (latimesblogs.latimes.com)
Nervous investors mull more potential bank failures - (www.marketwatch.com)
Calif. house prices down 27.3%, nation's worst - (lansner.freedomblogging.com)
Buying Foreclosed Condominiums - (www.reochronicle.com)
Rich, but Rejected - (www.nytimes.com)

U.S. Producer Prices Rise 1.8% in June; Core Rate Gains 0.2% - (www.bloomberg.com)
Retail Sales in U.S. Increased Less Than Forecast in June as Rebates Faded - (www.bloomberg.com)
Congress to hear Bernanke, Paulson on market strain - (www.reuters.com)
Bagging Lunch: The Inflation Effect - (online.wsj.com)

Mortgage Insurers Raise Bar - (online.wsj.com)
Paramount forced to suspend $450m financing - (www.ft.com)
S&P data show surge in downgrades - (www.ft.com)
Scramble Led to Rescue Plan on Mortgages - (www.nytimes.com)
Paulson Drove Plan to Shore Up Fannie Mae, Freddie Mac - (online.wsj.com)
Mortgage Insurers Raise Bar - (online.wsj.com)
Fed slaps new rules on mortgage lenders - (www.latimes.com)
SEC subpoenas over 50 hedge-fund advisers: report - (www.reuters.com)

Bank Stocks Are Battered as Unease Grows - (www.nytimes.com)
GM prepares for ‘realignment’ - (www.ft.com)
GM chief said likely to detail more cuts - (www.latimes.com)
Lehman Looks Hard at Taking Firm Private - (www.nypost.com)
Midwest Airlines to ax 1,200 jobs - (www.startribune.com)
IndyMac Reopens, Halts Foreclosures on Its Loans - (online.wsj.com)
Banks hit by fallout from the crisis at IndyMac - (www.latimes.com)
Citigroup reflects what's ailing the industry - (www.iht.com)

Eurozone industrial production falls - (www.ft.com)
U.K. Inflation Rate Jumps to 11-Year High, House Prices Fall - (www.bloomberg.com)
Squeeze on British households tightens as inflation hits 3.8pc - (www.telegraph.co.uk)
German Investor Confidence Fell to Record in July - (www.bloomberg.com)
U.K. June House-Price Drops Stay Close to 1978 Low - (www.bloomberg.com)
Fresh warning over Japanese economy - (business.timesonline.co.uk)
Paulson's Fannie Test - (online.wsj.com)