Saturday October 11 Housing and Economic stories

TOP STORIES:

Chicago's Cook County won't evict in foreclosures - (news.yahoo.com) The sheriff here said Wednesday that he's ordering his deputies to stop evicting people from foreclosed properties because many people his office has helped throw out on the street are renters who did nothing wrong. "We will no longer be a party to something that's so unjust," a visibly angry Cook County Sheriff Tom Dart said at a news conference.

Da Vinci hedge fund suspends redemptions - (business.timesonline.co.uk) Fund that invests in Russia cites 'extraordinary economic events' and is unable to determine value of assets. The fund is likely to have been hit badly by the collapse of stock markets in the region as its investment scope is described as being listed companies in Russia, Kazakhstan, Ukraine and other Commonwealth of Independent States countries. It is one of several funds that form part of Da Vinci Capital Management, an investment firm set up just over a year ago by Oleg Jelezko, formerly a managing director at Renaissance Capital in Moscow and before that an emerging markets specialist at Credit Suisse First Boston in London. In May, the company scrapped free redemptions on the Special Opportunities Fund, imposing a fee equivalent to 3 per cent of the value of the shares and a 14-day written notice period.

NBC Edited SNL Bailout Skit For Legal Reasons - (www.deadlinehollywooddailycom) On the past weekend's Saturday Night Live, a brutal but hilarious Democrat-bashing skit aired about the $700 billion federal bailout and the insanity of those subprime mortgages, and it featured lookalikes for George W. Bush, Nancy Pelosi, Barney Frank, hedge fund billionaire and big Democratic donor George Soros, and a parade of sob-story “victims” who turn out to be deadbeats, greedy house-flippers, and schemers. (The unedited YouTube version was taken down by NBC lawyers.) The sketch was embraced by Republicans for appearing to blame Democrats for the Wall Street meltdown. At one point in the sketch, President Bush (played by SNL regular Jason Sudeikis) even said, "Wasn't it my administration that warned about the problem six years ago and it was Democrats who refused to listen?" (Immediately Barney Frank starts to complain... only to be hushed by Pelosi.) The skit was very obvious payback for all the Sarah Palin bashing this season on SNL which was trying to portray equal opportunity satire. NBC put the video online Sunday morning. But then it disappeared off the network's SNL website soon after. Needless to say, a lot of conspiracy theories were spun, real or imagined, especially by Republicans who wondered if the Democratic Congress, or perhaps Soros himself, were pulling NBC's puppet strings. "If you suspect a few high-placed phone calls to NBC led to the bailout skit slipping down the memory hole, you’re not alone," wrote right-wing commentator Michelle Malkin. But anyone who actually saw that video could see this might be a lawsuit waiting to happen. Because SNL labeled Herb Sandler and his wife Marion, the real-life former owners of Oakland's Golden West Financial (aka World Savings), as "people who should be shot" and accused them of predatory lending that brought down Wachovia Bank even though no charges have been filed. NBC told me just now they never received any legal threat from the Sandlers. [Though the couple did give an angry interview to The Associated Press about the SNL sketch.]

'Armageddon' in the oil patch - (www.reportonbusiness.com) Jeffery Tonken has lost a fortune over the past six weeks."It's Armageddon out there," Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said yesterday. "I've lost millions. Everyone has." The value of Canada's energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show. Despite being one of the success stories of 2008 - Birchcliff has capitalized on the B.C. gas rush - the company's shares have plunged from almost $16 in July to just over $6 today. Mr. Tonken is far from alone. While the price of oil has fallen from $147 (U.S.) a barrel in July to below $90, the value of Canada's energy firms has been hit disproportionately as hedge funds and other investors liquidate their positions in sectors in which they had bought heavily, such as energy. "There's some chaos and panic selling, and people have lost sense of the fundamentals," said Harvest Energy Trust CEO John Zahary. Harvest's unit price has fallen from $26 in June to below $11, also a hit for Mr. Zahary, who said he owns about 100,000 units. "Clearly I've participated in the downturn - there's a reduction in my net worth, and that of other employees and shareholders," he said. "It's a substantial sum of money that is no longer there," Mr. Zahary said.

In Flailing Iceland, Disbelief and Regret - (www.nytimes.com) People go bankrupt all the time. Companies do, too. But countries? Iceland was on the verge of doing exactly that on Thursday as the government shut down the stock market and seized control of its last major independent bank. That brought trading in the country’s currency to a halt, with foreign banks no longer willing to take Icelandic krona, even at fire-sale rates. As the meltdown in the Icelandic financial system quickened, with the government seemingly powerless to do anything about it, analysts said there was probably only one realistic option left: for Iceland to be bailed out by the International Monetary Fund. “Iceland is bankrupt,” said Arsaell Valfells, a professor at the University of Iceland. “The Icelandic krona is history. The I.M.F. has to come and rescue us.” Prime Minister Geir Haarde, who had warned this week of the threat of “national bankruptcy,” said Thursday that Iceland’s finance minister, Arni Mathiesen, would be in Washington this weekend for the autumn International Monetary Fund/World Bank meetings. He declined to say whether Iceland was seeking a rescue package from the international lender.

Silicon Valley Finds It Isn't Immune From Credit Crisis - (us.rd.yahoo.com) The technology industry, which had seemed immune to the financial crisis, is now getting squeezed on two sides: Established companies are struggling with slackening demand while venture capitalists are telling start-ups to cut costs and plan for a prolonged downturn. Sequoia Capital, which has invested in Silicon Valley stars such as Google Inc. and YouTube, gathered the chief executives of its portfolio companies this week and told them to focus on becoming profitable and take a hard look at expenses they could cut, according to people who attended the event. A salesman demonstrates a computer game in a display area of Nvidia Corp. at the 2007 Computex Taipei. Sequoia's partners, who began the special meeting with a slide that read "RIP: Good Times," pored over dire economic data and warned that the current downturn will be long and painful, according to people present. Sequoia declined to comment. Until a few weeks ago, the tech sector looked relatively insulated from a downturn, as tech companies rode still-strong international sales and benefited from a weak dollar. Tech companies also typically have little debt on their balance sheets, limiting their exposure to the frozen credit markets -- and leading to a certain complacence in Silicon Valley this summer as the credit crunch burned other industries.

Panic grips Asia – (www.marketwatch.com) Early stampede for exits sends stocks into nosedive; Japan's Nikkei 225 loses as much as 11.4%. Situation begins to stabilize as session wears on, but Nikkei still headed for biggest one-day loss since the 1987 crash. Hong Kong analyst describes "complete market disarray, where valuations aren't even appropriate to mention" and says investors are "selling at 15 to 30 cents on the dollar."

Nikkei dives, eyeing biggest fall since '87 crash – (us.rd.yahoo.com) The Nikkei average tumbled 11 percent on Friday, leaving it facing its biggest one-day drop since the 1987 stock market crash on fears the financial crisis will lead to a global recession. The benchmark Nikkei N225 sank 10.6 percent or 974.12 points to finish the morning session at 8,183.37. At one stage, it hit the lowest point since May 2003. If it finishes at this level, it will surpass a 9.4 percent fall in the Nikkei earlier this week, which was the biggest fall since a 14.9 percent one-day slide during the 1987 stock market crash.

Japanese insurer Yamato Life files for bankruptcy in Tokyo – (www.marketwatch.com) Japanese insurer Yamato Life Insurance Co. filed for bankruptcy protection from creditors Friday, reportedly becoming the first in the industry to do so in seven years. The insurer said recent declines in the value of its securities holdings had impaired its balance sheet, with liabilities exceeding assets by 11.49 billion yen ($116.02 million), according to wire reports citing comments by a company spokesman at a press briefing Friday. Yamato had assets totaling 283.1 billion yen ($2.86 billion) and policies worth 1.075 trillion yen at the end of the fiscal year through March 2008, according to a report by the Nikkei newspaper.

U.S. Mutual Fund Withdrawals a Record as Investors Choose Banks - (www.bloomberg.com) Investors pulled a record $52.1 billion from U.S.-managed stock and bond mutual funds in the past week, seeking the safety of government-insured bank deposits as the financial crisis worsened. Shareholders took $43.3 billion from stock funds and $8.8 billion from bond funds in the week ended Oct. 8, according to data compiled by TrimTabs Investment Research in Sausalito, California. The exodus followed $72.3 billion of outflows in September, the most in a single month. Investors deposited $185.5 billion into bank accounts last month through Sept. 22, TrimTabs said, citing U.S. Federal Reserve data.

History lessons: Galbraith's 'The Great Crash 1929' is still essential reading today - (www.independent.co.uk) The late John Kenneth Galbraith attributed the longevity of his book The Great Crash 1929 – published in 1955 and never since out of print – to the tendency of history to threaten a repeat. "Each time it has been about to pass from bookstores," he wrote in a later foreword, "another speculative episode – another bubble or the ensuing misfortune – has stirred interest in the history of this, the great modern case of boom and collapse, which led on to an unforgiving depression." So here we are again. The financial crisis that has engulfed credit markets over the past year has finally crashed into the public consciousness, and the question of whether the US is headed for a second Great Depression is now a staple of bar-room debate. Little wonder, this has pushed the old Keynesian economist's book back into the Amazon charts. Almost 80 years ago, a financial crisis led directly to an economic catastrophe. The Great Crash 1929 sets out the five routes by which one became the other. Not all have direct parallels today, but some do. All these years later, Galbraith's book is still essential reading.

Here are some bad stock market predictions at the beginning or throughout 2008:
· 2008 - Stock Market Predictions - (www.fool.com) Here are my 2008 stock market predictions: Here are the sectors that I predict to be UP in 2008: 1) Financials (Individual picks: Citi, Merill Lynch, Goldman Sachs, Bank of America) 2) Water (Look for ETFs such as PHO, CGW to beat SP500) 3) Home Builders will start bouncing back as well 4) Materials and Agriculture ( Global demand will continue to rise the demand) 5) Telecom: (Global demand is still the reason) 6) IT Market: Beaten most of 2007, will see a bounce-back here. Excellent profit margins, will learn to cope with falling dollar. My pick INFY. 7) Last but not the least: Emerging Markets. I do not think they are done by any means. The steam may be off a bit, but still they will beat the SP500 handily in 2008.
· ALMOST ANY PREDICTION BY ASS-WIPE JIM CRAMER. HE HAS LED A BUNCH OF UNSUSPECTING LEMMINGS TO THE SLAUGHTER. AS THE SAYING GOES: A fool following Cramer's advice, and his money are soon parted...
o Jim Cramer Last Week: Don't Sell Bear Stearns! watch! – (www.liveleak.com) One week before Bear Stearns cratered in March 2008, Cramer was telling investors “NO, NO, NO, BEAR STEARNS IS FINE”
o CNBC's Jim Cramer (August 1) announces that the market has hit bottom - (www.generationaldynamics.com) - I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15. and I think anyone out there who’s waiting for that low to be breached is in for a big disappointment and [they’re] missing a great deal of upside. Stop waiting, [and] buy the next dip because I think it might be the last big one
o August 26 2008: StreetInsider.com - Cramer Calls Housing Bottom Again - (www.streetinsider.com) Thus far, Jim has been eating crow on his multiple bottom calls in housing (remember he recommended buying Countrywide multiple times in '07), but hopefully for our economy's sake, he is finally right.
o October 6 2008 - Jim Cramer throws in the towel - (www.moneycentral.msn.com) After leading the lemmings to a slaughter throughout all of 2008, he finally throws in the towel after the markets are down 25-30% for the year. "Whatever money you may need for the next five years, please take it out of the stock market right now, this week," he said. "I do not believe that you should risk those assets in the stock market right now.”

Here are some good to great stock market predictions at the beginning or throughout 2008:
· Oppenheimer's Meredith Whitney predicts imminent meltdown of over 25 financial institutions - (www.generationaldynamics.com) In March, Meredith Whitney, Oppenheimer's executive director of equity research, appearing on CNBC, said that banks have been trying to avoid having to write down their assets for as long as they can avoid it. But the longer they wait, the worse it is, because the mortgage-backed assets keep falling as time goes on. Whitney went much farther -- she predicted a full-scale panic when banks finally are forced to mark these assets down. Because the market will be loaded down with these securities from all sorts of financial institutions, they really will be almost worthless.
· Charles Nenner on CNBC: 2008 to be a bad for stock market – (www.huliq.com) In terms of 2008, he predicts a tough stock market February and March, and a very volatile year overall, with 3 to 4 roughly 15% corrections. He believes 2008 will be a very difficult year to make money in. Charles Nenner believes we are right on the edge of a deflation scare
· Nouriel Roubini This is what this author wrote on January 1st 2008 predicting a bear US stock market in 2008: 2008 may be real bearish for stocks: in a typical US recession the S&P 500 falls by an average of 28% in nominal terms and 21% in real terms. No wonder as recessions are associated with sharp drops - of the order of 15-20% - in earnings. Many sectors earnings have already taken a major beating in 2007: financials, home builders, consumer discretionary, retailers. The next shoe to drop will be all the other cyclical sectors of the economy that will seriously suffer from the forthcoming recession. So while 2007 was lousy for the US market 2008 may end up being much worse. Even more than in 2007, in 2008 cash will be king.



OTHER STORIES:

Brunswick plans to shut 4 plants, lay off 1,400 - (www.chicagotribune.com) Beleaguered boatmaker Brunswick Corp. says it's cutting 1,400 additional jobs as the company shuts four plants and furloughs workers at three more. Thursday's announcement comes four months after the suburban Chicago company said it would cut 1,000 jobs and cautioned it could slash another up to 1,700 more. Brunswick says the latest round of cuts will save $300 million by the end of 2009 and are necessary as boat sales free fall. Lake Forest-based Brunswick says it plans to close plants in Washington, Minnesota, Oregon and North Carolina. It's also furloughing workers at three facilities in Tennessee beginning Oct. 27.

AIG Rocked Out With Your Bailout Money - (www.thesmokinggun.com)
AIG Plans ANOTHER Party With Taxpayer Bailout Money - (www.bloomberg.com)
For the first time since the Great Depression - (optionarmageddon.ml-implode.com)
Foreclosures Hit Rural America, But Quietly - (www.npr.org)
Dow zero? At this rate, almost there by Halloween - (latimesblogs.latimes.com)
Downturn has wiped one fifth off retirement funds - (www.guardian.co.uk)
The next burden: inflation - (www.guardian.co.uk)
Taking Hard New Look at a Greenspan Legacy - (www.nytimes.com)
Manhattan's Luxury Bubble Pricked - (www.observer.com)
Investment banks were ruined by poor minorities. Right. - (www.slate.com)
Sen. Feinstein knows what's best for you. So shut up. - (www.youtube.com)
UK Interest Rate Forecast 2009 - (www.marketoracle.co.uk)
Wells Fargo 30-year fixed rate now 9.429% - (www.wellsfargo.com)
Impact Confined To Subprime Area - (d.yimg.com)
Find The Stupid Person - (d.yimg.com)

Paulson Signals U.S. May Invest in Banks to Shore Up Confidence - (www.bloomberg.com)
Interbank lending not freed by rate cuts - (www.ft.com)

Buyout Loans Fall on Speculation of Iceland Fire Sale - (www.bloomberg.com)
Federal debt-purchasing program may exclude states - (www.latimes.com)
Redemptions Lead Funds to Unload Stocks - (online.wsj.com)
This Is Not Your Father’s Market Crash - (online.wsj.com)
Suddenly, trade finance is hot again - (www.financialweek.com)
Hedge Funds Set to Lose a Tax Dodge - (online.wsj.com)
Icelandic Regulator Takes Control of Kaupthing Bank - (www.bloomberg.com)
Dubai's Heavy Debt Load Stirs Concern - (online.wsj.com)
Über-rich count their losses in billions - (business.timesonline.co.uk)
After Years of Heavy Borrowing, Spain Is Poised for a Slump - (online.wsj.com)

Japan Machine Orders Fall, Worst Streak Since 2001 - (www.bloomberg.com)
Are Korean banks next in line for government rescue? - (www.reuters.com)
Deal reached to secure Dexia's future - (www.ft.com)

Zimbabwe's annual inflation soars to 231 million percent - (news.yahoo.com/s/afp)
Economists Expect Crisis to Deepen - (online.wsj.com)
U.S. Treasury May Buy Stakes in Banks Within Weeks - (www.bloomberg.com)
Taking Hard New Look at a Greenspan Legacy - (www.nytimes.com)
IMF projects global economy slowing sharply, led by U.S. - (www.latimes.com)
Consumers forced to rethink buying patterns - (www.ft.com)
States That Can't Pay for Themselves - (www.businessweek.com)

Credit crisis hits Atlanta project - (www.ajc.com)
Jobless claims fall from 7-year high - (money.cnn.com)
California Seeks $4 Billion Notes, Retail Demand, Lockyer Says - (www.bloomberg.com)
Retailers’ Sales Fall Sharply at Both High End and Low - (www.nytimes.com)
Bernanke's Push for Global Cut Began With Trichet, King Talks - (www.bloomberg.com)
GE Capital scales back lending - (www.ft.com)
Citi Concedes Wachovia to Wells Fargo - (www.nytimes.com)
Credit Crunch Threatens Chesapeake's Growth - (online.wsj.com)
Micron to Cut Workforce by 15%, Reduce Flash Output - (www.bloomberg.com)
Downturn Forces Cutbacks Big and Small - (online.wsj.com)
Spending slump hits luxury retailers Neiman Marcus, Saks - (www.dallasnews.com)
GM shares at lowest since 1950s - (www.ft.com)
After several boom years, some Midwest ethanol and biodiesel companies going bust - (www.chicagotribune.com)
CEO turnover hits a record high - (www.latimes.com)

A lesson from 1929 for the hedge funds - (www.ft.com)
Taking Hard New Look at a Greenspan Legacy - (www.nytimes.com)