Wednesday October 8 Housing and Economic stories

TOP STORIES:

Terror as Iceland faces economic collapse - (business.timesonline.co.uk) The Icelandic Government seized control of the country’s biggest banks last night in an attempt to fend off wholesale economic collapse. Turmoil at the banks, whose shares were suspended by the Government yesterday afternoon, had sparked panic in the tiny state. Queues formed at petrol stations as Icelanders rushed to fill up before reported fuel shortages, while savers who tried to withdraw money from banks or sell bank shares on the internet found websites were not working. Savers in Britain also face fallout from the collapse of the Icelandic banking system. Fears mounted yesterday among the 300,000 British savers holding bank accounts with Landsbanki that their deposits were at risk.

Fed Could Slash Rates by 100 bps - (www.cnbc.com) The Fed may slash rates by 100 bps to 1%, from the current 2%, says Donald Straszheim, vice chairman of Roth Capital Partners. He tells CNBC's Amanda Drury & Sri Jegarajah this move can happen as soon as next week.

Big Australia rate cut spurs Asia stocks rebound - (news.yahoo.com/s/nm) Asian stocks outside Japan rose for the first time in four days on Tuesday and the yen fell after a surprisingly large interest rate cut by Australia's central bank raised hopes that other policymakers would follow suit. Panic that U.S. and European governments have not yet found a solution to the plague sweeping through the global financial system had pushed Asian stocks to a near 3-year low earlier. The fury with which global equity markets have sold off in recent weeks and the worsening condition of the financial system has made the upcoming Group of Seven rich nations meeting even more important. Investors have begun to anticipate some kind of cooperation among countries to solve the crisis, especially after the Reserve Bank of Australia delivered a full percentage point rate cut, the biggest cut in rates since 1992.

Herbert Hoover tried the same kind of Wall Street bailout - (presidency.ucsb.edu) Letter from Herbert Hoover to George L Harrison (Federal Reserve Board, October 1931). Dear Mr. Harrison: The request which I laid before the leading New York bankers last night for cooperation in unity of national action to assure credit security can, in the light of our discussion, be simplified to the following concrete measures: 1. They are to take the lead in immediate formulation of a national institution with a capital of $500,000,000. The function of this institution to be: (a) The rediscount of bank assets not now eligible in the Federal Reserve System in order to assure the stability of banks throughout the country from attack by unreasoning depositors. That is to prevent bank failures. (b) Loans against the assets of closed banks to enable them to pay some early dividend to depositors and thus revive many business activities and relieve many families from destitution.

Fed Refuses to Provide Details On Secret Bear Stearns Bailout - (abcnews.go.com) Top government officials are refusing to provide details on a secretive deal it made to manage billions in assets from an earlier bailout. Sen. Charles Grassley, R-Iowa, has been pressing top officials for months to provide details on a deal the Federal Reserve made for a private firm to manage $30 billion in financial assets from the collapsed investment bank Bear Stearns, as part of an arrangement to facilitate J.P. Morgan Chase's purchase of the bank in March. The Federal Reserve announced at the time that it had contracted with BlackRock Financial Management Inc. to manage the assets. Since then, it has declined to share any further details on the arrangement with anyone – not reporters, not the public, and not Sen. Grassley.

Rep. Sherman says threat of martial law was used to force bailout - (www.youtube.com) Rep. Brad Sherman says Congress was threatened with Martial Law if bill is not passed. He said they were told the market would go down a few thousand points and potentially could have martial law if bill is not passed.

Assistant sheriff retires making more than $200K - (www.ocregister.com) One of the last members of indicted Sheriff Mike Carona’s executive team retired last month, and it looks like he’s going to be collecting more money throughout his golden years than his former boss. Assistant Sheriff Charles Walters was the last Carona executive hire left on staff after the sheriff retired amid federal charges that he was using his office to collect cash and gifts from friends in exchange for favors. In case you don’t remember, Walters was in charge of the the sheriff’s jail operations in Oct. 2006 when inmate John Derek Chamberlain was beaten to death by other inmates at Theo Lacy jail. While Chamberlain was being attacked, jail guards 68 feet away were busy watching television and text messaging. (Walters is pictured above in May, giving a tour at Theo Lacy.) In his last 12 months at the department, Walters earned a total of $343,033.61, including base pay (most recently at $92.86/hour), payouts from all the vacation and sick hours he’s accumulated since he started working at the department 33 years ago, holiday comp time and an auto allowance.

Fed Planning Credit Default Swap Marketplace - (www.cnbc.com) I am sure the Fed will provide even less transparency to this multi-trillion dollar market.

Seattle sellers growing desperate as buying stalls - (seattletimes.nwsource.com) One of the last strong markets starting to weaken. The owner of a town house in Factoria put his place on the market a year ago, dropped the price repeatedly and accepted two seemingly solid offers that fell through at the last minute. Less than two weeks from foreclosure, he got a third offer that he hopes will hold up. A couple living high in the Bellevue hills are by no means desperate, but they've dropped their price by more than $200,000 and still haven't seen an offer they like. For now at least, they're waiting it out, their plans to live closer to all 12 grandkids on hold. The next chapter already has begun — though not quite to script — for a former Shorewood couple already building a retirement house in Arizona. It'll be done next month, but their view house here, which they were sure would sell by now, has not. The Seattle-area housing market, once touted as bulletproof against the forces that were pulling down other markets across the country, is now stressing out sellers, who are seeing inventories rise, sales fall and prices drop. Many are shell-shocked — particularly those needing to move out of town or trying to forestall foreclosure.


OTHER STORIES:

US Calls for Coordinated Response to Credit Crisis - (www.cnbc.com) U.S. officials called for a "forceful and coordinated" global response to the credit crisis Monday as financial market confidence cratered despite another heavy dose of central bank lending. The Federal Reserve said it would begin paying interest on reserves banks hold at the Fed, a move that would allow it to keep flooding markets with cash without driving its benchmark federal funds rate below target.
JPMorgan Froze Lehman Assets Ahead of Bankruptcy - (www.cnbc.com)
Wall Street doesn't "need" bailout unless bailout includes CEO bonuses! - (www.guardian.co.uk)
DTC: The unknown 20 trillion dollar company - (www.ming.tv)
Manhattan real estate prices headed downward - (biz.yahoo.com)
Citigroup Sues Wells Fargo, Wachovia for $60 Billion - (www.cnbc.com)
SEC, Fed Aware of Everything at Lehman: Fuld - (www.cnbc.com)

BofA in $8.6 Billion Settlement over Countrywide - (www.cnbc.com)
There's No Time Like Now to Assess Your Risk Profile - (www.cnbc.com)
California's housing meltdown and the elections - (www.guardian.co.uk)
Food 10.5% more expensive due to Fed's deliberate inflation - (www.marketwatch.com)
Taxes will also rise to pay the Wall Street bailout bill - (www.idahostatesman.com)
Exploit The Housing Crash To Your Advantage - (www.fool.co.uk)
Carter-era economist advises bailout opponents - (www.politico.com)

Credit is Both Dearer and Harder to Get, CFOs Say - (www.cnbc.com)
Chadwick: Brace Yourself ... And Look to Cash - (www.cnbc.com)

A Conservative for Obama - (www.dmagazine.com)
Wall Street At the Trough - (www.caglecartoons.com)
Wall Street Bailout Scam: Bend Over America - (www.youtube.com)
When Will Housing Really Bottom? - (Charles Hugh Smith at www.oftwominds.com)
CA needs $7-billion to pay golden state pension benefits - (www.latimes.com)
From 1999: Fannie Mae Inflating The Bubble For Profit - (query.nytimes.com)

Emerging Market Stocks Fall Most in 2 Decades; Russia Tumbles - (www.bloomberg.com)
U.S. Stocks Decline, Dow Industrial Average Falls Below 10,000 - (www.bloomberg.com)
Oil drops $5 to below $89 on demand concerns - (www.reuters.com)
Brazilian Stocks Head for Biggest Drop in Decade - (www.bloomberg.com)
Treasuries Rally as Stocks Tumble, Company and Muni Bonds Fall - (www.bloomberg.com)
European Stocks Tumble, Stoxx 600 Has Biggest Slump Since '87 - (www.bloomberg.com)
VIX Jumps to Record, Topping 50, on Concern About Global Growth - (www.bloomberg.com)
Three-Month Euro Money Market Rate Reaches Record a Seventh Day - (www.bloomberg.com)
Investors to Commercial Paper: No Thanks - (www.cfo.com)
Non-banks join banks in scramble for deposits - (www.financialweek.com)
Money fund rescue smacks banks - (www.financialweek.com)
When banks find it hard to borrow, so do the rest of us - (www.economist.com)
Meltdown highlights our own failings - (www.chron.com)
Yen Unbeatable as Credit Seizure Kills Carry Trades - (www.bloomberg.com)
Smaller Hedge Funds Struggle - (online.wsj.com)
Short shrift - (www.ft.com)
Lancelot Lent About $1 Billion to Petters Affiliates - (www.bloomberg.com)
Banking stocks plummet across Europe - (www.ft.com)
European Governments Race to Help Banks Amid Crisis - (www.bloomberg.com)
Germany Moves to Shore Up Confidence in Economy - (www.nytimes.com)
European Crisis Deepens; Officials Vow to Save Banks - (www.bloomberg.com)
Germany takes hot seat as Europe falls into the abyss - (www.telegraph.co.uk)
Asian Stocks Fall for Third Day as Global Credit Crisis Deepens - (www.bloomberg.com)
Iceland Scrambles for Cash to Save Banks, Economy - (online.wsj.com)
Slowdown could force UK to cut rates - (www.ft.com)
Fed Boosts Cash Auctions to $900 Billion, May Do More - (www.bloomberg.com)
Nervous Days as Consumers Tighten Belts - (www.nytimes.com)
Full of Doubts, U.S. Shoppers Cut Spending - (www.nytimes.com)
Fed May See Lending to Companies, States as Next Crisis Fronts - (www.bloomberg.com)
Crisis hits home as consumers curb their spending - (www.boston.com)
New Jersey Offers a Preview of Possible Economic Woes to Come - (www.nytimes.com)
Big Discounts Fail to Lure Shoppers - (online.wsj.com)
Mall Vacancies Grow as Retailers Pack Up Shop - (online.wsj.com)
Countrywide to Set Aside $8.4 Billion in Loan Aid - (www.nytimes.com)
Glut of retail failures forecast - (www.ft.com)
BNP to take control of Fortis - (www.ft.com)
Rising finance costs threaten to put the brakes on car dealers struggling to stay profitable - (www.chicagotribune.com)
'Unbundling' of airline fees gaining speed in U.S. - (www.latimes.com)
Gambling industry holds weak hand as downturn bites - (www.ft.com)
Private-jet use, sales nose dive with economy - (www.chicagotribune.com)
Kraft to cut several hundred jobs - (www.chicagotribune.com)
The Two Faces of Lehman's Fall - (online.wsj.com)
America and the New Financial World - (online.wsj.com)