Thursday September 4 Housing and Economic stories

Top Stories:

Integrity Bank Becomes 10th Failure This Year - (www.bloomberg.com) – Very ironic (Orwellian) name of the 10th bank that failed this year. Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression.

Time for some Hedge Fund Bashing, as these guys were well paid during good years, and prevent redemptions of client’s cash during bad years:
· Hedge funds suffer worst returns for 18 years - (www.telegraph.co.uk) The $2,000bn global hedge fund industry is experiencing its worst performance in 18 years as a result of the continued credit crisis and wider economic malaise. The industry, which has until now prided itself on out-performing other money managers, has become one of the many victims of the general downturn affecting financial markets. Hedge funds are experiencing the worst returns since 1990, the year that Hedge Fund Research began tracking performance, with the average fund down by 4.7pc on the year to August 28. Well-known funds such as those managed by Atticus Capital, TPG-Axon, Citadel and Lone Pine Capital, are reported to be down between as much as 6pc and 25pc so far this year. The industry attracted just $30bn net new money in the first six months of 2008, down from $119bn in the same period last year. Many hedge funds are now focused on September 30, the normal deadline for investors to give notice if they want to withdraw money at the end of the year. A number of funds have already stopped clients from redeeming their investments, while others have been restructured or closed down.

· Ospraie’s flagship fund to be shut down - (www.ft.com) Would anyone trust Lehman Brothers to manage anything, let alone large amounts of cash??? These guys are overpaid poor financial managers!!! Ospraie Management, the US hedge fund firm run by commodities trader Dwight Anderson and part owned by Lehman Brothers, is to shut down its flagship fund and return money to investors after the fund suffered heavy losses in August. The Ospraie Fund, which was launched in February 2005, lost 26.7 per cent in August and was down 38.6 per cent over the year to date. It had about $2.8bn at the start of August. In a letter to investors, seen by the Financial Times, Mr Anderson wrote: “I am extremely disappointed with this result and the fund’s sudden reversal in performance.” The losses were primarily caused by a sell-off in the fund’s energy, mining and resource equity holdings. Given the level of anticipated redemptions, in addition to outstanding redemption requests, the fund’s managers and board decided to suspend redemptions and conduct an orderly disposal of the fund’s remaining positions.

· Hedge Funds Are Caught in a Tight Spot - (online.wsj.com) Some of the biggest hedge funds are having their worst years, and the flood of new money going into funds has slowed. That is pressuring an industry bracing for investor withdrawals and worrying about how to survive without lucrative performance fees. Some investors willing to put new money in funds are even beginning to ask about better terms, a contrast to the situation just last year, when investors needed to beg to get into hot funds.


Stubborn seller was "a little cocky, or stupid" - (www.nytimes.com) For sale: one newly constructed three-bedroom, four-bathroom home near the University of Miami, with South African wood in the kitchen, marble from India, Egypt and Spain, and a $4,500 top-of-the-line garage door. Listing price two years ago: $979,000. Listing price now: $599,000. “I always figured the market trend wouldn’t catch me,” said Rafael Diaz, the owner and builder. He turned down $770,000 more than a year ago, he said, and has come to accept that he will never get the $700,000 he said he needed to break even. “By the end of the year,” he said, “I might just turn it over to the bank.” Homeowners are struggling nationwide. But here in South Florida, the reversal of fortune has been especially severe, scrambling the psychology of a community that has historically treated real estate as a game of how-rich-can-you-get. Homeowners trying to compete say they often feel flabbergasted by the competition. Alexandra Swanberg said she reduced the price of her 1,482-square-foot town house to $245,000, from $287,000 last year, to keep up with the dozens of for-sale signs sprouting throughout her middle-class South Miami neighborhood. “Everyone has been in a panic,” Ms. Swanberg said. “The Realtors are crazy; they want you to drop the price really low.”
Ms. Swanberg, 52, acknowledged that she could afford it. Like many homeowners, the losses of the last few months have not erased the gains of two decades. She said she bought the house 19 years ago for $60,000, and she plans to move to the Orlando area simply because she feels it is time to move on. But when a real estate agent recently told her to cut the price to $225,000, she angrily refused. “It’s a large unit, three huge bedrooms, large windows,” she said. “This is not something you want to give away.”

Fed governor sees US contagion, not 'decoupling' - (www.forbes.com) U.S. economic troubles have spread to world credit and stock markets, slowing growth amid rising inflation and dashing hopes of the financial "decoupling" some thought would protect emerging economies from U.S. contagion, Federal Reserve Board Governor Randall Kroszner said Monday. For better or worse, trade and investment continues to tie the U.S. economy to others abroad, spreading economic shocks as it ensures the "efficient operation of global markets," Kroszner told a forum in Buenos Aires, Argentina. The spreading U.S. sub-prime mortgage crisis dried up credit, slowed growth and weighed on stock markets in both advanced and emerging economies - proving their connection to the U.S.,

Nightmare diary of house sale hit by market crash - (www.mirror.co.uk) It is a snapshot of the housing market crash.
Last November, newlyweds Paula and Graham Butcher put their house on the market ready to start a new life.
Graham, 26, had been offered a dream job with the Australian government and they were looking forward to moving 9,000 miles to Perth from Leeds.
Instead, the Butchers have found themselves on the wrong side of the slump, stuck in a family spare room and tens of thousands of pounds out of pocket.

You Cannot Afford $350,000 House with $75,000 Income! - (www.mybudget360.com) Yes, these are lessons you should have learned in Home Economics in high school. But most were caught up in the mania of the century. You would think that before people make the largest financial decision in their lives, they would do a monthly budget first. Yet during this past decade budgets were hardly brought to the forefront and were pushed to the back of any financial decisions. The new definition of housing affordability should include the idea of maintaining a sustainable long-term budget. Of course many can afford a two year teaser rate but what happens when the payment jumps up? How secure is your employment? Do you have enough to save for retirement after you pay for your home each month? These are all factors that need to be considered to purchase a home.I’ve gotten a few e-mails about buying a home in California. Of course many people that have been sitting on the fence are now thinking seriously about purchasing a home in the state.

A Plague on Houses - (www.timesonline.co.uk) The Government should not deceive itself or homebuyers that there is an easy remedy for plunging prices - but it can avoid making things worse. The housing market has ground to a halt. Builders have downed tools. Estate agents are losing their jobs. Sellers are having to slash their asking prices to tempt buyers. Prices have fallen by 10.5 per cent in the past 12 months, according to the Nationwide building society, in the steepest year-on-year dive in 18 years. Nor is the top end of the market immune: Savills joined the chorus of doom yesterday, reporting that million-pound homes were also sliding in value. Falling house prices are not wholly a bad thing. It cannot be good that so many people well into adulthood have been unable to afford homes of their own. The decline in prices has not been precipitous enough to make property easily affordable, but starting on the housing ladder is at least less daunting than a year ago. The correction is also a lesson. After a glut of borrowing and consumption fuelled largely by rising property values, the current hangover will make lenders and borrowers think twice before repeating the mistake. Bluntly, bank losses, repossessions and bankruptcy orders should encourage wiser behaviour next time. In normal times, then, a reversal in property prices after a prolonged boom would be healthy. But these may not be normal times. The economy is souring at an alarming pace. Jobs and dividends are being cut and business leaders are shelving capital investment plans. The danger is that the collapse in personal wealth levels tips Britain from a mere recession into something deeper and more prolonged.


Other Stories:

Homebuyers turn the screws on desperate sellers - (money.cnn.com)
Don't pay the mortgage! Live free, no foreclosure - (www.nctimes.com)
Underwater? Buy and bail! - (www.pe.com)

Prime Foreclosures Exceed Subprime Foreclosures - (norris.blogs.nytimes.com)
When Will Southern California House Prices Bottom? - (Mish at globaleconomicanalysis.blogspot.com)
Very weird things going on in stock market - (dividendinc.blogspot.com)
Super-rich moving into cash - (www.reuters.com)
John McCain's Housing Crisis - (theboard.blogs.nytimes.com)
JP Morgan ends mortgages for overseas buyers - (www.chicagobusiness.com)
Fed Rate Cuts Fail to Halt US House Price Crash - (www.marketoracle.co.uk)
Unthinkable Happens: Manhattan Apartment Prices Fall - (www.nysun.com)
Property values plummet, challenges to taxes skyrocket - (www.palmbeachpost.com)
Bring on the pain of a recession and purge our coarsened souls - (www.independent.co.uk)

Government rating seen safe from GSE dependence - (www.ml-implode.com) - "The top "AAA" debt rating of the U.S. government will probably stand firm despite the increased likelihood the Treasury may hav...
"No panic signals" from Freddie debt auctions - (www.ml-implode.com) - "Freddie Mac's bill sales drew fewer bids than similar issues a week ago, but these bids as well, as demand for a note deal on T...
Lehman Brothers On the Ropes - KDB Deal May be Ugly, or Not Happen At All - (www.ml-implode.com) - One nugget that seems to escape mention in the major business publications who are following the Lehman saga, is that Min Euoo-s...
Update: Home 123 Mortgage Relaunched - (www.ml-implode.com) - Reported today in MarketWatch, Home 123 Mortgage is being relaunched by PBG Financial Services Ltd. (PBG) who bought the rights ...
Manhattan Market Beginning To Show Cracks - (www.ml-implode.com) - As the US housing slump deepened over the past three years, Manhattan’s real estate market seemed immune. Instead of crumb­ling ...
South Korea heads for black September with won problems - (www.ml-implode.com)
The Greatest Government Bailout of All Time - (www.ml-implode.com)
Chancellor Darling's Panic Move To Rescue Housing - (www.ml-implode.com)
Paulson Asked to Spurn Rubin's Inflation Indexed Debt - (www.ml-implode.com)
Fitch: $100 Billion in Options Arms to Recast in Next Two Years - (www.ml-implode.com)
The Next Bailout - (www.ml-implode.com)
Say ‘Goodbye’ to 95% Fannie/Freddie Loans. 10% Soon to be Required. - (www.ml-implode.com)
British government takes aim at housing market - (www.ml-implode.com)
Writedowns vs Underwriting Scorecards - (www.ml-implode.com)
Las Vegas homes for $60 a Square Foot? - (www.ml-implode.com)

Gustav Insured Damage Not as High as First Feared - (www.bloomberg.com)
Three Fed Banks Sought an Increase in Discount Rate - (www.bloomberg.com)
U.S. Economy: Factory Index Slips, Construction Slows - (www.bloomberg.com)
Winter heat crisis looms, little relief seen - (money.cnn.com)
Laboring longer a growing trend for Americans - (www.signonsandiego.com)
Housing slump drags on broader Southern California economy - (www.latimes.com)
Lehman in Talks With Korea Development Bank, Min Says - (www.bloomberg.com)
Asset management sales could raise capital - (www.financialweek.com)
More artists steer clear of iTunes - (www.azcentral.com)
Dutch venture promises cheap, powerful electric cars in 2009 - (www.chron.com)
Mid-tier retailers try on new brands - (www.latimes.com)
Canada on brink of recession - (www.ft.com)
UK recession this year, OECD says - (news.bbc.co.uk)
Australia central bank cuts rates first time in 7 years - (www.reuters.com)
U.K. Suspends Homebuyer Tax in Moves to Reverse Slump - (www.bloomberg.com)

Manhattan shows first cracks - (www.ft.com)
Central bankers in Asia intervene as dollar gains - (www.iht.com)
Will private equity ride to banks’ rescue? - (www.economist.com)
Citadel, SAC Capital Get Pick of Casualties as Carnage Worsens - (www.bloomberg.com)
U.S. Stocks at 25.8 Times Profit Means Rally May End - (www.bloomberg.com)
Using Nest Eggs Before Maturity - (www.washingtonpost.com)