Friday October 24 Housing and Economic stories

TOP STORIES:

Argentina Default Looms, Pension Seizure Roils Market - (www.bloomberg.com) Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is headed for its second default in a decade. President Cristina Fernandez de Kirchner's decision hurt markets already reeling from slumping commodity prices and slower growth. The retirement system, set up in 1994 to help bolster capital markets, owns about 5 percent of companies listed on the Buenos Aires stock exchange and 27 percent of shares available for public trading, data compiled by pension funds show. Argentine bond yields soared above 24 percent before the announcement late yesterday, and the benchmark Merval stock index tumbled 11 percent. The last time the government sought to tap workers' savings to help finance debt payments was in 2001, just before it stopped servicing $95 billion of obligations. ``It's the final of many nails in the coffin from an institutional investor perspective,'' Bill Rudman, who helps manage $3 billion of emerging-market equity at WestLB Mellon Asset Management in London. Argentina is ``disappearing into irrelevance,'' he said.

Argentine Bonds, Stocks Plunge on Pension Fund Takeover Plan - (www.bloomberg.com) Argentine bond yields soared above 24 percent and stocks sank the most in a decade as the government proposed a takeover of pension funds, a move analysts said is a bid to seize assets and stave off the second default this decade. ``It's horrible,'' said Jaime Valdivia, who manages $1 billion of assets for Emerging Sovereign Group in New York. ``We're going back to the dark ages. Not even in times of the worst financial stress did the government ever think about taking over the private pension system.'' President Cristina Fernandez de Kirchner has struggled to cover financing needs that have ballooned as the global financial crisis pushed down prices on the country's commodity exports. The government's borrowing needs will swell to as much as $14 billion next year from about $7 billion in 2008, RBC Capital Markets, a Toronto-based unit of Canada's largest bank, said today.

Hungary Suddenly Hikes Rates to 11.5% from 8.5% - (www.cnbc.com) Hungary's central bank on Wednesday raised interest rates by 300 basis points to 11.50 percent in an emergency move after its forint currency fell close to an all-time low against the euro. The bank had kept interest rates steady at its regular policy meeting on Monday in the face of a two-week sell-off of Hungarian assets by investors worried over its ability to ride out the fallout of the global credit crunch. It said in a statement it had held an extraordinary meeting on Wednesday, after markets took a fresh hammering. Hungary relies on external cash to finance its current account deficit and debt, and its markets have slumped far more than its regional peers in recent weeks as investors dumped forint assets on worries over its banking system and debt. "It means the economy is toast," said Nigel Rendell, emerging market strategist with Royal Bank of Canada. "There is pretty much no chance of getting any reasonable economic growth out of Hungary in 2009."

More retailers liquidating - (www.chicagotribune.com) So far this year, 17 major retailers have filed for bankruptcy reorganization, up from seven in 2007 and six in 2006, according BankruptcyData.com. Wickes Furniture and Sharper Image have already gone away. Whitehall Jewelers, Linens 'n Things and Shoe Pavillion are liquidating. And California discount department store Mervyns decided last week that it would go out of business after failing to find a buyer. Private-equity firms, once flush with cash and eager to buy retailers for their real estate, aren't in the hunt. And big chains that had been obvious buyers in the past, such as Nordstrom, Target, J.C. Penney and Kohl's, are cutting back expansion plans. "There is less of a population of people to sell these things to and it is creating more difficulty for those retailers to get out of those leases," said Jeffrey Hecktman, chairman and chief executive of Hilco Trading LLC in Northbrook, one of the nation's largest liquidation firms. "And that's a big problem right now." Linens 'n Things, for example, held a bankruptcy auction for 85 leases and sparked interest in only five, according to Laura Davis Jones, managing partner of Pachulski Stang Ziehl & Jones LLP, a Wilmington, Del.-based law firm that represented secured noteholders in the bankruptcy.

'Under Water' Mortgages are Growing Threat to US - (www.cnbc.com) Long before she filed for bankruptcy, Ann Neukomm was "under water" -- she owed more on her mortgage than her house was worth -- a situation more and more Americans are finding themselves in. As the financial crisis hits Main Street America, nearly one in six U.S. homeowners are finding themselves in the same position, threatening the U.S. economy with a new wave of foreclosures and bankruptcies. About 12 million U.S. homeowners owe more than their homes are worth, compared with 6.6 million at the end of last year and slightly more than 3 million at the close of 2006, said Mark Zandi, chief economist at Moody's Economy.com. "At the root it's 'the' problem," said Zandi. "If you're going to put your finger on the one thing that's gotten us into this fiasco, it's the fact that millions of homeowners are under water on their homes." If, like Neukomm, these homeowners go into foreclosure, it would add to the oversupply of homes, delay a recovery in the housing market, and add to pressure on banks.

Currency Bets Backfire - (online.wsj.com) One day, Controladora Comercial Mexicana SAB de CV was thriving as Mexico's No. 3 retailer and a competitor of discount giant Wal-Mart Stores Inc. The next day, Oct. 9, the family-owned chain, known to Mexican shoppers as La Comer, had filed for bankruptcy protection, crippled by risky foreign-currency bets. Such abrupt reversals have gotten more common these days. As global stock markets have plunged in recent months, so has the value of almost everything else, from Mexico's peso to the price of oil.

Investors suffer as US ethanol boom dries up - (www.ft.com) FT analysis shows value of holdings plummet. Investors, such as Microsoft’s Bill Gates, are sitting on billions of dollars in losses after buying into the corn-based ethanol industry that George W. Bush embraced as the ans wer to US energy woes. Six of the biggest publicly traded US ethanol producers have lost more than $8.7bn in market value since the peak of the boom in mid-2006 and the beginning of this month, according to an analysis by the Financial Times. The boom followed a 2005 law requiring refiners to mix billions of gallons of the biofuel with petrol. Investors who bought and held shares in hotly anticipated market listings of Aventine Renewable Energy, VeraSun Energy and other ethanol producers that have gone public since 2005, have seen the value of their holdings plummet as much as 90 per cent from their flotation price, in spite of billions of dollars of government support for the industry. The losers in the ethanol investment frenzy, which some have compared to the dotcom mania of the late 1990s, include famous names, such as Mr Gates, Microsoft founder. His private investment firm has lost millions on its 2005 investment in a company called Pacific Ethanol. Mr Gates’s firm, Cascade Investments, did not return calls seeking comment.

Yahoo to axe 10% of workforce - (www.ft.com) Poor advertising sales hit quarterly earnings. Yahoo on Tuesday announced a cut of at least 10 per cent in its workforce by the end of the year as it reported a disappointing third quarter caused by weakening display advertising sales. The Silicon Valley company reported its third consecutive quarter of falling revenues and lowered its forecast for the fourth quarter. The layoffs follow Ebay’s announcement of a 1,500 reduction in its headcount this month and a wave of cuts by smaller web companies. Yahoo reported revenues of $1.325bn, after subtracting payments to partners – below analyst expectations of $1.369bn averaged by Reuters Estimates. Earnings per share of 9 cents were a cent above expectations. Jerry Yang, chief executive, said strong growth in Yahoo’s search advertising business was not matched by display advertising. “Demand for branded display advertising slowed further in the US with weakness in categories such as finance and retail, where marketers are becoming increasingly cautious, as well as geographic weakness in branded advertising in Europe and Asia,” he told analysts

Protest greets mortgage bankers meeting in S.F. - (www.sfgate.com) Notice the common theme. These protestors/investors do not want to take blame for their investments going down. They are blaming others, which is common in the US, country of lazy slackers. "Incompetence also, basically, at the bottom of it," he said. "No one was watching the store," said Bob Stice of San Francisco and Malibu, on his walk in the gardens. "The trouble is these guys (in Congress) have been getting so much money from the banking institutions, so they have been very friendly," said Stice, who said his own considerable stock portfolio is down 35 percent. "To see a life's work, 35 percent of it, just go away because of some really stupid investments on the part of people we relied on - the banks."

Startup implosion begins in Silicon Valley - (www.marketwatch.com) Many Internet startups are starting to heed the dire warnings of their venture capital investors, and last week, some began cutting costs in order to survive the economic downturn, including laying off employees. Two weeks ago, Sequoia Capital, Benchmark Capital, angel investor Ron Conway and other investors wrote some scary memos to their portfolio companies, warning them to conserve their cash, cut costs and start generating revenues. See full story.
So many companies, some of them backed by the above-mentioned firms, started making cuts. Companies ranging from online real estate appraiser Zillow.com in Seattle to Internet radio station Pandora of Oakland, Calif. to San Francisco-based ad network AdBrite all began to issue pink slips to employees last week.

Sell your bad debts to taxpayers! Bailout application only two pages long - (www.treas.gov) Hmmm, makes you wonder. Much easier than any mortgage loan application J

SF Bay Area Prices Plunge - (www.sfgate.com) A total of 5,449 existing single-family homes traded hands in the nine-county region in September, up 74.8 percent from a year ago, according to MDA DataQuick. The median price was $400,000, down 40.3 percent from September 2007. Those are the largest year-over-year gains and drops, respectively, in the San Diego research firm's 20 years of data.

Ron Paul: Bailout means we'll all suffer - (www.ml-implode.com)


OTHER STORIES:

Menacing letters, white powder sent to Denver banks - (www.denverpost.com)
The Safety and Immediacy of Liquid Assets in a Deleveraging Panic: MZM, Home Currencies, Bank Reserves, and Gold - (www.ml-implode.com) - ``Banks need a kick start by a component of the economy that is still functioning normally, if in an impaired manner. That is in...
Burn After Reading - (www.ml-implode.com) - "For many years now there has been a tendency towards secrecy which has now erupted into blatancy. This is not the first time th...
National City Posts $729 Million Loss For Quarter, Will Layoff 4,000 - (www.ml-implode.com) - National City Corp. on Tuesday reported a third-quarter loss and said it will cut 4,000 jobs, as the regional bank continues to ...
Bailout contracts contain blacked out portions - (www.bailoutsleuth.com)
Freddice Mac secretly killed legislation intended to prevent meltdown - (ap.google.com)
AIG ordered to bare all its secrets - (taxdollars.freedomblogging.com)
Mortgage rates see record jump - (blogs.moneycentral.msn.com)

Europe's Stormy Outlook - (www.ml-implode.com) - "Stormy conditions prevail across Europe's economies, blackening the outlook after the arrival of a full-blown banking sector cr...
MBA To Push for Boost to Conforming Loan Limit - (www.ml-implode.com) - "With the economy languishing and mortgage lending withering, the Mortgage Bankers Association is readying for a lobbying push t...
ALT-A: The Risk Abatement Disaster is Coming - (www.ml-implode.com)
Housing slump far from reaching bottom - (business.inquirer.net)
Regional banks 3Q reports show ongoing credit woes - (www.businessweek.com)
US house prices face long fall to bottom - (news.yahoo.com)
What Now? - (jameshowardkunstler.typepad.com)
US Bank, Subprime & Alt-A Lender and Mortgage Holder? - (www.ml-implode.com)
Jim Kuntsler sees inflation - (www.ml-implode.com)
The Bank Of America on 60 Minutes - (www.ml-implode.com)
Mortgage Insurers Taking Active Role in Education, Loss Mitigation - (www.ml-implode.com)
Exit Portfolio Charge-Offs Drive Nat City Third Quarter Loss - (www.ml-implode.com)
How Do You Help A Ghost? - (www.ml-implode.com)
U.S. Is Said to Be Urging New Mergers in Banking - (www.ml-implode.com)

Turmoil May Make Americans Savers, Worsening Recession - (www.bloomberg.com)
14 reasons Main Street loses while Wall Street sinks democracy - (www.marketwatch.com)
42% of California Bay Area Sales from Foreclosures - (calculatedrisk.blogspot.com)
Vive la Depression! - (www.nytimes.com)

Emerging Market Bonds, Currencies Drop on Argentina Concern - (www.bloomberg.com)
Global Stocks Decline on Economy Concern; Euro, Oil Retreat - (www.bloomberg.com)
Asian markets slide on glum corporate outlook - (www.ap.com)
Pound plunges as King warns on recession - (www.ft.com)
European Money-Market Rates Decline After Fed Aids Mutual Funds - (www.bloomberg.com)
Gold Futures Fall Below $750 as Dollar Rallies; Silver Declines - (www.bloomberg.com)
CDO Cuts Show $1 Trillion Corporate-Debt Bets Toxic - (www.bloomberg.com)
S&P 500 Dividends to Fall Most Since '58 This Quarter, S&P Says - (www.bloomberg.com)
Hedge Funds Worldwide Post Record Losses in September - (www.bloomberg.com)
Market downturn shatters faith in stocks - (www.latimes.com)
Even in Resilient Seattle, Office Vacancy Rate Is Rising - (www.nytimes.com)
Economy rocks China factories - (www.usatoday.com)

Hungary Raises Benchmark Rate to Defend Its Currency - (www.bloomberg.com)
U.K. Warns of Recession - (online.wsj.com)
China charges into credit cards - (www.latimes.com)
Fed to Provide Up to $540 Billion to Aid Money Funds - (www.bloomberg.com)
Mortgage applications dropped 16.6% last week - (www.marketwatch.com)
Fed Prepared to Prop Up Money-Market Funds - (www.washingtonpost.com)
"Under water" mortgages are growing threat to U.S. - (www.reuters.com)
5% of UA freshmen obtained payday loan - (www.chron.com)
California Home Sales Revive, But Not Without Intense Pain - (online.wsj.com)
Some Cut Back on Prescription Drugs in Sour Economy - (www.nytimes.com)
Worst joblessness in nation staggers R.I. - (www.boston.com)
U.S. aid to banks seen exceeding $700 billion - (www.reuters.com)
Kerkorian, Cerberus Auto Retreat Spotlights Industry Collapse - (www.bloomberg.com)
Caterpillar's 3Q profit sinks 6% on higher costs - (www.chicagotribune.com)

GM in hunt for Buffett-style capital injection - (www.ft.com)
Regional Banks Struggled Through 3rd Quarter - (www.nytimes.com)
Chili's parent Brinker sees profit fall 37% - (www.dallasnews.com)
Toyota to post first drop in annual sales in a decade due to weak global demand - (www.chicagotribune.com)
'Thousands' of Merrill jobs may be cut - (www.ft.com)
Higher loan losses hit US regional banks - (www.ft.com)
U.S. to Ask Analysts if Lehman Misled - (online.wsj.com)
Lehman Dynamic Spreads Through Chinese Economy: William Pesek - (www.bloomberg.com)