Saturday November 8 Housing and Economic stories

TOP STORIES:

SOCIALISM IS ALIVE AND WELL IN THE USSA:
· New Stimulus for Economy May Arrive by Christmas - (www.cnbc.com) Though it's too soon to say whether Christmas will arrive early in the nation's capital, Barrack Obama's victory and an expanded majority in Congress could encourage Democrats to make up a list of economic stimulus measures and check it twice. House Speaker Nancy Pelosi on Wednesday urged passage of at least $61 billion in new economic stimulus funding this month, but said the future of the legislation requires the cooperation of Republicans in the Senate and President Bush. House Majority Leader Steny Hoyer told CNBC earlier in the day that "we need to act sooner than later" on a second stimulus package but didn't commit it to it getting it done in a lame duck Congressional session, which would presumably start in mid- to late-November. (See video here)
· The Market's on a Crash Course with Socialism - (www.cnbc.com) Now that Barack Obama has won the U.S. presidency, investors are wondering whether markets are heading on a crash course with socialism. William Smith, senior portfolio manager at SAM Advisors, David Roche, global strategist at Independent Strategy Ltd and Daryl Guppy, CEO of Guppytraders.com discuss the direction of U.S. markets with CNBC's Martin Soong.
· Will Democrats Tinker With Mutual Funds, 401k Plans? - (www.cnbc.com) As Democrats celebrate winning the White House and gains in Congress, the victory is rippling through the $11 trillion mutual fund industry in anticipation of reforms to retirement plans that could hurt earnings. Some academics say the financial crisis raises questions about the vulnerability of a retirement system managed heavily by fund companies where many workers rely on 401(k)s and similar plans with deep exposure to volatile stock markets. U.S. workers lost more than $2 trillion in retirement savings in the last 15 months, a loss that could lead workers to delay retirement, Peter Orszag, the director of the Congressional Budget Office, told Congress last month. "As an outgrowth of this downturn, will we see new attempts to change 401(k)s in any way?" said Geoff Bobroff, head of fund consulting firm Bobroff Consulting Inc in East Greenwich, Rhode Island, reciting a question the mutual fund industry is asking after Tuesday's historic presidential election. "Will Congress decide to weigh in and revise the 401(k) process plan? To some extent it would be helpful because it could enhance or encourage more savings. On the other hand more regulation could just be more burdensome," he said. The fortunes of the U.S. mutual fund industry are tied increasingly to retirement savings and to plans such as 401(k)s that allow workers to defer taxes on some income and typically put the money in a mix of stock, bonds and other investments.
· Automakers and Union Seek Help From Pelosi - (www.nytimes.com) After being rejected last week, the heads of Chrysler, Ford and G.M. and the president of the United Automobile Workers are set to meet House Speaker Nancy Pelosi over aid for the companies. 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. The meeting would come just hours after the Energy Department said late Wednesday that the auto companies would be able to apply as soon as next week for $25 billion in low-interest loans to develop more fuel-efficient vehicles. But that loan program seemed unlikely to meet their needs, and some of the money could go to Asian carmakers with plants in this country. The meeting with Mrs. Pelosi will be attended by Rick Wagoner, chairman of General Motors; Alan R. Mulally, chief executive of the Ford Motor Company; Robert L. Nardelli, chairman of Chrysler; and Ron Gettelfinger, president of the autoworkers. Legislators from states with heavy automotive employment are likely to be involved too. The Energy Department said Wednesday that it had rushed through rules on how to process loan applications and was prepared to begin evaluating them next week. But the money could only be used for expenses incurred after the application was filed, and not for general expenses or for expenses incurred so far.
· Schwarzenegger proposes 90-day freeze on home foreclosures - (www.latimes.com) Gov. Arnold Schwarzenegger on Wednesday proposed a 90-day freeze in pending home foreclosures to give California's financially pinched homeowners more time to get new or more affordable loans.

Fannie Mae acknowledges $6,000 golf outing - (www.latimes.com) An outing that cost $6,000 took place after the firm's seizure by the U.S. It vows to halt such events.

Voters Embrace Debt, Approving 83% of Measures in Early Results - (www.bloomberg.com) Voters in states led by the (morally-corrupted state of) California embraced municipal debt as they approved about $39.7 billion of new borrowing, representing about 83 percent of measures for which results were available. Californians approved at least $27 billion, including money for schools and loans to veterans. Voters in 41 states from Rhode Island to Alaska considered $66.4 billion of bond proposals yesterday, the second-biggest slate after November 2006's $78.6 billion, according to Ipreo, a New York-based financial data provider. The measures sought the largest amount of new borrowing during a presidential election. So far, taxpayers assented to most of the $47 billion in proposals for which results were immediately available, as they shrugged off economic woes to affirm their support for public works and infrastructure. On average, voters have approved 82 percent of the debt proposed at November general elections the past 10 years, according to Ipreo figures. ``Voters generally, under most circumstances and in most elections, tend to be overwhelming receptive to bond proposals,'' said Jennie Drage Bowser, a policy analyst at the National Conference of State Legislatures. California had the largest referendum, $9.95 billion in funding for a high-speed train network, with proposals around the state totaling almost $42 billion.

Credit Card Bond Sales Plunge to Zero, First Time in 15 Years - (www.bloomberg.com) Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze. A weakening job market and a looming recession are making it harder for consumers to make monthly payments, eroding confidence among investors about the safety of credit-card-backed bonds. It's the first month since April 1993 that there have been no sales, according to Wachovia Corp. data. Issuers sold $17.1 billion of the debt in October 2007, the data show. ``Nobody is eager to put money to work given the uncertainty in the market,'' said James Grady, a managing director at Deutsche Bank AG's asset management unit. ``When you think it can't get worse, it continues to get worse. There is not a demand'' for these bonds.

France threatens to seize banks, German bail-outs escalate - (www.telegraph.co.uk) The French state has threatened to seize control of the country's banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need. "The banks have got to open up credit to business: they have the means to do it," said prime minister Francois Fillon, accusing lenders of hoarding cash. "We don't think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state's contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy." Speaking on French television, he warned: "Broadly speaking, we'll be able to judge over the next 10 days whether they are playing the game as they should, or not." Under last month's rescue deal, banks agreed to raise lending to firms and households by 3pc to 4pc in exchange for a state injection of €10bn (£8bn) in fresh capital for the six largest banks, a modest sum compared to the bail-outs in Britain, Germany, Belgium and the Netherlands. In Germany, HSH Nordbank – 59pc owned by the city of Hamburg and state of Schleswig-Holstein – rattled the markets yesterday by revealing that it would need €30bn in guarantees from Berlin's €500bn stabilisation fund. It warned that further sums may be need`ed to meet capital adequacy ratios in the future.

GMAC Posts Loss, Says ResCap Mortgage Unit May Fail - (www.bloomberg.com) GMAC LLC, the financing arm of General Motors Corp. gripped by a cash squeeze, posted its fifth straight loss and said its mortgage unit may not survive. The third-quarter net loss widened to a record $2.52 billion from $1.6 billion a year earlier, the Detroit-based company said in a statement today. Total net revenue declined 43 percent to $1.72 billion. The Residential Capital home-loan unit lost $1.9 billion during the quarter, and GMAC's auto finance business lost $294 million. GMAC, led by Chief Executive Officer Alvaro de Molina, 51, was crushed by slumps in the housing market, where foreclosures are running at record levels, and in auto sales, which GM labeled the worst since 1945 when it reported October results this week. ResCap, which ranked among the biggest U.S. subprime lenders two year ago, has posted losses totaling $9.1 billion over the past eight quarters. Without more support from GMAC, ``substantial doubt exists regarding ResCap's ability to continue as a going concern,'' GMAC said in today's statement. ``Investing in the housing industry did what it was intended to do for GMAC for a while, but the tremendous changes in the market conditions have left many of those previous bets exposed,'' said Keith Gumbinger, vice president of HSH Associates Inc., a Pompton Plains, New Jersey research firm. ``They never suspected the road would end with a cliff.'' `Most Difficult Environment' GMAC has been shut out of some credit markets, and the firm today repeated its hopes of converting to a bank holding company, which could make it eligible for help from the Treasury's $700 billion bailout fund. It's unclear whether regulators will approve GMAC's application, Chief Financial Officer Robert Hull said on a conference call.


OTHER STORIES:

Meredith Whitney Speaks - “Wells Fargo $20 Per Share”! - (www.ml-implode.com) - ``I have been very vocal for a year on the true hazards of Wells Fargo and their secretive ways. I worked closely with Wells Far...
Credit Card Bond Sales at Zero, First Time Since 1993 - (www.ml-implode.com) - Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more th...
Update: Rescap's BK Option An Inevitability? - (www.ml-implode.com) - 2008's third quarter earnings are out, and the picture still looks grim for Residential Capital.
Obama’s Housing Promises - (www.ml-implode.com) - "Historic significance aside, the next president-elect is going to have his hands full. From the economy being in the dumper to ...
FHA Originations Soar in First Half of 2008 - (www.ml-implode.com)
What Now for Fannie & Freddie? - (www.ml-implode.com)
Shiller: "Worst Times Ahead" - (www.ml-implode.com)
Plumbing of CDS becoming clearer - (www.ml-implode.com)
Mortgage Apps Off More Than 40 Percent From Year Ago - (www.ml-implode.com)
ISM Services Index Declines Sharply in October - (www.ml-implode.com)
MBIA Posts Q3 Loss, Builds Loss Reserves - (www.ml-implode.com)
Good morning, Mr. President (elect) - (www.ml-implode.com)
What Obama As President Means For The Economy - (www.ml-implode.com)
More Manhattan Real Estate Woes: Commercial Tenants Flee to Brooklyn - (www.ml-implode.com)

U.S. Stocks Post Biggest Post-Election Drop on Economic Concern - (www.bloomberg.com)
Oil Falls More Than $5 After Unexpected Gasoline Supply Gain - (www.bloomberg.com)
Treasuries Advance as Stocks Fall on Job Losses, Slowing Growth - (www.bloomberg.com)
Gold Falls on Signs Economy's Slump to Damp Commodity Demand - (www.bloomberg.com)

Commercial Paper Rates Hit 4-year Low - (www.cfo.com)
In Modeling Risk, the Human Factor Was Left Out - (www.nytimes.com)
Bond insurers post big losses - (www.financialweek.com)

Libor's Biggest Drop Fails to Match Fed, Spur Loans - (www.bloomberg.com)
GLG Partners Suspends Redemptions at 2 Funds - (www.nytimes.com)
Next market loser: deferred comp - (www.financialweek.com)
Funding Drought Slams Chinese Plans as Banks Shun Plea to Lend - (www.bloomberg.com)
Euro banks spread gloom as profits fall - (www.reuters.com)
Europe's markets take profits on Obama win - (biz.yahoo.com/ap)
U.K. Factory Output Drops in Worst Streak Since 1980 - (www.bloomberg.com)
Obama Victory Provokes Trade Worries In Asia - (www.forbes.com)
Regulators May Curb Currency Derivatives in Asia - (www.bloomberg.com)

U.S. Economy: ISM Services Index Slumps to Lowest on Record - (www.bloomberg.com)
ADP Says U.S. Companies Reduced Payrolls by 157,000 - (www.bloomberg.com)
Summers, Emanuel Top Candidates for Obama Administration Posts - (www.bloomberg.com)
Obama Sweeps to Historic Victory - (online.wsj.com)

Consumer spending hit by crisis: MasterCard - (www.reuters.com)
Luxury Sales Drop Sharply - (online.wsj.com)
Up in the Air - (www.washingtonpost.com)
New York, Seattle, Miami Home Foreclosures Increase - (www.bloomberg.com)
Obama May Not Wait for Inauguration to Put His Stamp on Economy - (www.bloomberg.com)
Cisco First-Quarter Sales Growth Slowest in 3 Years - (www.bloomberg.com)
Wells Fargo Plans to Raise $10 Billion in Stock Offer - (www.bloomberg.com)

MBIA, Ambac Losses Widen After Increasing Reserves for Claims - (www.bloomberg.com)
Delta to impose $15 fee to check first bag - (www.chron.com)
IBM's vendor financing more risky in credit crisis - (www.fortune.com)
U.S. Luxury Retailers Face Grimmest Holiday as Economy Withers - (www.bloomberg.com)
ArcelorMittal expects weaker fourth quarter - (www.ft.com)
History on how presidential elections affect stock markets - (www.usatoday.com)
AT&T tests limits on subscribers' Web use - (money.cnn.com)