Monday November 10 Housing and Economic stories

TOP STORIES:

U.S. Weighs Options to Ease Strain on AIG - (online.wsj.com) Federal officials are considering ways to ease the financial pressure on American International Group Inc., including changing the terms of the $85 billion loan extended to the insurer. Negotiations remain fluid, but one option under examination is to have the government backstop AIG's credit-default-swap contracts. It also may reduce the interest rate or extend the duration of the two-year loan facility, the people familiar with the matter said. AIG agreed to the government's terms under duress in mid-September, with the expectation that it would be a short-term bridge until AIG could sell assets to meet its obligations. But it came just hours after Lehman Brothers Holdings Inc. filed for bankruptcy protection, which helped throw world markets into turmoil and complicated the AIG plan. AIG's role in the credit-default-swap market remains a sensitive issue for the government. AIG counterparties have demanded billions of dollars in collateral to ensure AIG stands behind its commitments to make payments in the event of defaults. If it were unable to meet those obligations, it would prove to be a systemic risk to the global economy, said people involved in the matter. This has become a concern for foreign governments, who are pressuring U.S. officials to find a solution.

States try to stem losses in public pension funds - (www.usatoday.com) As the volatile stock market eats away at the assets of public pension funds, states are moving aggressively to mitigate their losses. Some states are raising the amount that employers and employees contribute to traditional pensions, which guarantee a set monthly payment — based on employees' salary and job tenure — in retirement. Others are freezing benefits or scaling back cost-of-living adjustments. The moves come amid states' ballooning budget deficits. Pensions' poor investment performance threatens to aggravate states' fiscal woes. "When revenue is down and pensions are suffering investment losses, the budgets of governments are squeezed," says Dave Slishinsky, a principal at Buck Consultants, which advises states on pension plans. In the 12-month period ended Sept. 30, public pension plans lost 14.9%, according to Wilshire Associates, a consulting firm.


Now that socialism of financials/banks/insurance/public pensions is in progress, the socialism of the auto industry will begin shortly: Nancy Pelosi is leading the charge to bailout the car manufacturers with low interest loans with no covenants. Why not let the car companies run their course and go into bankruptcy if needed?
· Automakers and Union Seek Help From Pelosi - (www.nytimes.com) The chief executives of Detroit’s Big Three automakers and the president of the United Automobile Workers union are scheduled to meet Thursday with House Speaker Nancy Pelosi about emergency financial aid for the companies, according to three people with knowledge of the plans.
· GM Says It May Not Have Enough Cash to Operate This Year - (www.bloomberg.com)
· Chrysler cash drains away as crisis deepens: sources - (www.reuters.com)
· Ford Needs Government Bridge Loan: Mulally - (www.cnbc.com) Mulally also said he's concerned about General Motors [GM 4.26 -0.54 (-11.25%) ] , which also reported dismal earnings Friday amid talk that bankruptcy might be the auto giant's only recourse at this point. The nature of the industry makes GM's problems that of the entire sector, he said. "We're very interdependent," Mulally said. "We're going to monitor that carefully." As for Ford itself, he said the company is using its resources to alter its product line into something more palatable to consumers, with affordability and fuel efficiency paramount. "I think this has been our plan all the way along and today we showed we are implementing that plan," he said. In the meantime, Ford and other industry leaders are working with the government to develop a plan to save the ailing US auto industry. He said the government needs to provide bridge loans to cash-strapped companies "so that we are a part of the answer in the recovery of the economy."
· GM, Ford Losses Deepen; Industry Outlook in Doubt - (www.cnbc.com) GM and Ford reported far deeper-than-expected quarterly losses as an extended slump in car sales raised questions about the future of the US auto industry
· GM Reports Huge Loss, Suspends Chrysler Talks - (www.cnbc.com) GM posted a worse-than-expected $4.2 billion loss and suspended merger talks with Chrysler as the automaker struggled with a deepening sales slump. The grim results come as GM, Ford, Chrysler and the United Auto Workers union in pressing for a US government rescue package that backers say is needed to keep the industry from collapse at a time when sales have plunged to 25-year lows. GM said it would cut white-collar jobs and cut $2.5 billion in capital spending next year as part of a revised restructuring plan now aimed at freeing up $20 billion in liquidity through 2009. The struggling automaker posted a third-quarter net loss of $2.5 billion, or $4.45 per share, compared with a loss from continuing operations of $42.5 billion, or $75.12 per share, a year earlier. Revenue fell to $37.9 billion from $43.7 billion a year earlier. GM Chief Executive Rick Wagoner said while the U.S. government had taken an important step to stabilize the economy, more needed to be done to help the battered auto industry.
· Ford Reports Sharp Loss - (www.cnbc.com)
· Car Makers Seek Billions in Aid - (www.cnbc.com)
· GMAC Leaves Individuals With $15 Billion of Car Lender's Junk - (www.bloomberg.com)
· GM's Wagoner: No Plans For Bankruptcy Filing - (www.cnbc.com)
· Ford Has $2.98 Billion Operating Loss as Sales Plunge - (www.bloomberg.com)
· U.S. Automakers Are Said to Seek $50 Billion in Federal Loans - (www.bloomberg.com)

Citadel Suffered 22% Loss in October - (www.nypost.com) Citadel Investment Group founder Ken Griffin continues to be haunted by the Wall Street meltdown horror show, as October proved to be more challenging than September. The Chicago-based hedge fund lost about 22 percent last month, which followed a 16 percent loss in September. October's loss was Griffin's biggest setback since he launched the now $18 billion fund nearly 20 years ago with $1 million in capital. Year to date, Griffin's Wellington and Kensington flagship multi-strategy hedge-fund vehicles are down 38 percent, according to people familiar with Citadel's performance. The carnage underscores what is turning out to be an abysmal run for Griffin and other high-profile hedge-fund titans.



OTHER STORIES:

Obama Gathers Economic Team; No Appointments Today - (www.cnbc.com)
Help Wanted: Treasury on the Hunt for Asset Managers - (www.cnbc.com)
Buffett Plays the Role of Charlie for Obama's 'Angels' - (www.cnbc.com)
Vanishing Jobs, Stressed Consumers Feed Downturn - (www.cnbc.com)
Unemployment Surges - (www.cnbc.com)
Is Your Firm Laying Off? - (www.cnbc.com)
Pending Home Sales Off 4.6% in September - (www.cnbc.com)
Should Judges Be Modifying Your Mortgage? - (www.cnbc.com)
Hedge Fund Results Seen Going From Bad to Worse - (www.cnbc.com)
AIG Shares Up on Report of Possible New Loan Terms - (www.cnbc.com)
JPMorgan Sees Consumer Loan Defaults Rising - (www.cnbc.com)
Lehman, Bear Stearns Survivors May Get Best Bonuses - (www.cnbc.com)

Dollar Falls Versus Euro as U.S. Loses More Jobs Than Forecast - (www.bloomberg.com)
Crude Oil Rebounds From a 19-Month Low as Equity Markets Gain - (www.bloomberg.com)
Stocks higher despite jobs report - (biz.yahoo.com/ap)
Shopping by Options Traders Points to a Gloomy Holiday - (online.wsj.com)
Sign of troubled times for private equity - (www.ft.com)
Investors Lick Wounds From Dividend Cuts - (online.wsj.com)
Hedge Funds Put New Stress on Market - (online.wsj.com)

Lenders are pushing for freshness in 'comp' data - (www.chicagotribune.com)
Banks Say `Kiss My Ring,' Choke Dealmaking - (www.bloomberg.com)
Bank of Korea Lowers Rates for Third Time in a Month - (www.bloomberg.com)
Once Sizzling, China’s Economy Shows Rapid Signs of Fizzling - (www.nytimes.com)
All fall down - (www.economist.com)
Germany's economy hits the skids - (www.latimes.com)
UK insolvencies jump 26% - (www.ft.com)
Lenovo Faces Challenge as Demand Falls, Amelio Says - (www.bloomberg.com)
U.S. Unemployment Rate Climbs to 14-Year High of 6.5% - (www.bloomberg.com)
Treasury Is Working To Widen the Rescue - (www.washingtonpost.com)
Pelosi Pushes Two-Part Stimulus - (online.wsj.com)
Retailers Report a Sales Collapse - (www.nytimes.com)
Longer-term jobless benefits hit 25-year high - (www.usatoday.com)
Hospitals See Drop in Paying Patients - (www.nytimes.com)
Sprint Says Profit Trails, Amends Credit Agreement - (www.bloomberg.com)

Retailers post worst October sales figures since at least 1971 - (www.latimes.com)
Wells Fargo Raises $11 Billion in Stock Sale for Wachovia Deal - (www.bloomberg.com)
Disney Profit Declines 13% on Drop in Parks Profit - (www.bloomberg.com)
Retailers post worst October sales figures since at least 1971 - (www.latimes.com)
Sands at Risk of Violating Covenants - (online.wsj.com)
Proceed With Care, Mr. Obama - (www.nytimes.com)
The great untangling - (www.economist.com)