Thursday November 20 Housing and Economic stories

TOP STORIES:

Good Story on Government Mismanagement of Tax Dollars and Then Going Back for More: Where did last batch of 2000 BART tax money go? - (wwwsiliconvaley.com) I was one of the more than 33 percent who voted no on the Measure B BART tax on Election Day. Ironically, I eagerly voted yes in 2000 when I wasn't commuting daily on Interstate 880 to Oakland. By voting no on Measure B, I was acknowledging that I would never see completion of the Bay Area BART loop during my working lifetime. Also, I'm disappointed that we were asked for a handout a second time, when we were led to believe that the 2000 measure was designed to see us through. It's obvious this second request for funding wouldn't be the last. Fool me once, shame on you. Fool me twice, shame on me. Now, I want to know: Will we receive a refund for the sales tax money we have been paying for the past eight years? Where did this 2000 BART money go? Did it build a new BART line? Did it go to productive jobs or use? A Here's the rundown on money spent so far, from the local Measure A tax and state funds:
· $550 million for BART studies and buying land from Union Pacific.
· $235 million to buy new light-rail cars and studies on future light-rail lines.
· $66 million to operate current transit lines.
· $19 million for the bus program.
· $18 million for double tracks on Caltrain line from Gilroy to San Jose, a pedestrian crossing at Blossom Hill Road and station upgrades in Palo Alto.

Owner of Century 21 and Coldwell Banker at risk of default - (www.bloomberg.com) HOW IRONIC!!! Realogy Corp., owner of the Century 21 and Coldwell Banker brands, is at risk of violating the terms of its bank loans and is offering to exchange about $1.1 billion of bonds at a discount for new debt. Leon Black's buyout firm Apollo Management LP, which bought Realogy for $6.6 billion in April 2007, is trying to reduce debt by almost $600 million and stave off default at the Parsippany, New Jersey-based real-estate broker, according to a regulatory filing dated yesterday. ``It's kicking the default can further down the road,'' said Christopher Garman, chief executive officer of debt research firm Garman Research LLC in Orinda, California. ``All parties have an interest in keeping companies away from default.'' Realogy reported $209 million of losses in the last three quarters amid the worst housing crisis since the Great Depression. U.S. home prices tumbled the most in at least 17 years in August and foreclosures increased to the highest on record in the third quarter, according to reports last month from the Federal Housing Finance Agency and RealtyTrac, a seller of foreclosure data.

Illinois needs a bailout - (www.bloomberg.com) “Illinois, the ninth most-populous U.S. state, is $4 billion behind in paying bills to its suppliers of goods and services, Comptroller Dan Hynes said. Vendors face a 12-week delay in getting paid, and the wait may extend to 20 weeks, Hynes said… The ‘unprecedented’ backlog of bills might grow to $5 billion by March… ‘To call this an imminent crisis is an understatement,’ said Hynes… The payment delays may hurt school districts waiting for funding and force state police to park vehicles if vendors stop supplying gasoline, Hynes said. The situation also may affect food supplies to state prisons, physician services to Medicaid recipients and funding of transit agencies, he said.”

Legislative Analyst: Budget Outlook ‘Truly Awful’ - (www.sacbee.com) California will face "truly awful" budget shortfalls through at least 2014 without immediate action by lawmakers and Gov. Arnold Schwarzenegger, according to the legislature's nonpartisan budget analyst, Mac Taylor. He said the state needs a slew of tax increases and spending cuts to resolve a $27.8 billion problem over the next 20 months and help narrow annual deficits of about $22 billion in subsequent years.

Gov. Corzine grappling with grim prospects for N.J. budget - (www.nj.com) New Jersey officials are considering the postponement of raises for 51,000 state employees, as well as layoffs, elimination of tax rebates next year and other tough measures as they struggle to keep the state solvent amid a worsening economic storm. While no decisions have been made, Gov. Jon Corzine said there have been preliminary discussions about the same sort of sacrifices other states are already making, in the face of a $1.2 billion budget deficit that continues to grow. "We will be mindful certainly of public safety and the most vulnerable. But we have to get to the end result of revenues and expenditures being balanced," Corzine said. Economists, legislators and budget analysts looking at the country's deepening economic crisis say the shortfall in tax revenues has left many states, including New Jersey, desperately searching for added revenue and savings. With red ink flowing from California to Florida, everything is being considered -- even cuts in safety nets to the young and poor. In New York, which needs to find $5.2 billion in cuts, Gov. David A. Paterson is proposing major reductions in state aid to schools for the first time in a decade, while sharply reducing Medicaid reimbursements. He also wants to reopen previously negotiated contracts with labor unions

Fannie Says $100 Billion Pledge From Treasury May Not Be Enough – (www.bloomberg.com) Fannie Mae may need more than the $100 billion in funding pledged by the U.S. Treasury to stay afloat after reporting a record $29 billion loss and confronting more difficulty in issuing and refinancing debt. ``This commitment may not be sufficient to keep us in solvent condition or from being placed into receivership,'' if there are further ``substantial'' losses or if the company is unable to sell unsecured debt, Washington-based Fannie said in a filing today with the U.S. Securities and Exchange Commission. Fannie said it has a limited ability to issue debt maturing past one year, citing market conditions, the lack of an explicit federal guarantee and competition from government-insured bank bonds. Fannie, which along with Freddie Mac was seized by regulators on Sept. 6, slashed the value of its assets by at least $21.4 billion for the third quarter and increased credit loss reserves by 75 percent to $15.6 billion. Freddie is required to file its quarterly earnings by the end of the week.

Freddie Mac Posts Record Loss, Asks for $13.8 Billion (Update2) - (www.bloomberg.com) Freddie Mac, seized by the government two months ago, asked the Treasury for $13.8 billion after a record quarterly loss caused its net worth to fall below zero. The mortgage-finance company, which had a net worth of negative $13.7 billion at the end of the third quarter, said it expects to receive the money by Nov. 29. The net loss widened to $25.3 billion after the company wrote down tax assets and providing for bad mortgages and securities, Freddie said in a statement today. Freddie's demand adds to the government's growing burden as it tries to avert a collapse in financial markets spurred by the worst housing slump since the Great Depression. The U.S. pledged $100 billion each to Freddie and larger rival Fannie Mae when it placed them into conservatorship in September. Fannie said this week it may need more money at the end of the year. ``You could very well get losses north of $100 billion on both of these companies,'' said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.

TARP's $700 Billion Can't Meet `Phenomenal' Spending, Reid Says - (www.bloomberg.com) The U.S. Treasury's $700 billion Troubled Asset Relief Program will have to be increased to meet the `phenomenal' demand for government bailouts, according to Deutsche Bank AG strategist Jim Reid. The extra $150 billion pledged to support insurer American International Group Inc. this week and the prospect of a financial package to rescue General Motors Corp., the largest U.S. automaker, from bankruptcy may drain the TARP fund, Reid wrote in a note to investors today. ``It does feel that the $700 billion TARP fund is going to have to be increased at some point in the not-too-distant future,'' wrote Reid, head of fundamental credit strategy at Deutsche Bank in London. Either that, ``or another acronym will have to be formulated to deal with the phenomenal amount of government spending that's still likely as this crisis escalates.'' Treasury Secretary Henry Paulson's TARP fund was created to help shore-up banks' balance sheets by buying toxic mortgage- linked securities. Neel Kashkari, who heads the program, said last week the government is open to all options in expanding the use of the funds.

67000 Chinese factories closed in 6 mos. - (www.upi.com) A declining export market contributed to the closing of 67,000 factories in China from January through June, government data revealed. While exports are still growing, the annual growth rate of 9 percent in October contrasts sharply with the September 2007 annual growth rate of 26 percent, The New York Times (NYSE:NYT) reported Friday. Closing factories have left thousands of Chinese workers angry over the loss of back pay, leading to some clashes with police, the Times said. Others are wondering where to turn to find jobs. The Pearl River Delta, an area known as the "world's factory" once served as the backbone of China's massive export business. Now many workers are returning to their homes in country villages, the Times said.

Banks see rise in voluntary repossessions - (www.ft.com) - Banks are seeing an increase in the numbers of homeowners deciding voluntarily to hand back their properties because they cannot afford to keep up mortgage payments. Northern Rock, the nationalised bank, has seen a growing number of voluntary repossessions since the summer. The bank was one of the most aggressive mortgage lenders before it ran into difficulty last year and it is thought that a significant proportion of customers saying they can no longer afford their mortgages are those with Together products - where the customers took out an unsecured loan and a mortgage. Another mainstream mortgage lender, which did not wish to be named, said it had seen cases of voluntary repossessions jump from 10 a month in January and February to 55 a month in September and October. Some of this increase relates to new build developments, particularly in industrial cities such as Liverpool and Manchester.

Don't Bail Out My State - (online.wsj.com) - Washington is short on cash these days and will borrow every dime of the $150 billion to $300 billion for the "stimulus" bill now being worked on. Federal appetites may know no bounds. But the federal government's ability to borrow is not limitless. Already, our nation's unfunded liabilities total $52 trillion -- about $450,000 per household. There's something very strange about issuing debt to solve a problem caused by too much debt.

Freddie, JPMorgan in Dispute Over Bad WaMu Loans – (www.bloomberg.com) JPMorgan, which took over Washington Mutual's assets after the thrift collapsed, told Freddie it won't buy back mortgages sold by WaMu that failed to match promises made about their quality, McLean, Virginia-based Freddie said today in a regulatory filing. Freddie, the mortgage-finance company seeking $13.8 billion of capital from U.S. taxpayers, in turn told JPMorgan that it won't permit the bank to keep the thrift's mortgage servicing contracts ``unless it assumes the Washington Mutual repurchase obligations,'' according to the filing.

Shantytowns Spring Up in Major US Cities - (www.minyanville.com) A quick Internet search turns up news reports of similar tent cities emerging in Santa Barbara, Fresno, and San Diego, California; Portland, Oregon; Chattanooga, Tennessee; and Columbus, Ohio - you name it.


OTHER STORIES:

We need more editorials like this - (www.ml-implode.com) - This is well worth reading in its entirety with lots of history about the Bretton Woods system and Nixon closing the gold window...
Insurers pull cover from GM and Ford suppliers - (www.ml-implode.com) - Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big...
Sex, Lies, and Subprime Mortgages - (www.ml-implode.com) - But as the housing bubble inflated, wholesalers—though hidden from public view—became high-earning superstars. Lane, a manicuris...

Meet me at the Bottom - (www.ml-implode.com)
Kashkari Squirms! - (www.ml-implode.com)
Paulson says additional bank capital needed - (www.ml-implode.com)

Are you an idiot to keep paying your mortgage? - (www.sfgate.com)
Peter Schiff Was Right - (patrick.net)
Why must the upside-down owner be saved rather than prosecuted? - (greatdepression2006.blogspot.com)
Property: The end of the affair? - (news.bbc.co.uk)
Two Different Plaintiffs Claim to Own Same Mortgage - (blogs.wsj.com)
Prof sees history lesson in financial crisis - (lansner.freedomblogging.com)
Accounting Tricks, Outsourcing and Leverage - (www.reochronicle.com)

The Faces of for Sale by Owner - (www.nytimes.com)
The present crisis and the way forward - (www.dailynews.lk)
From McMansions to modest - (www.denverpost.com)
FDIC, U.S. Treasury clash on anti-foreclosure plan - (www.reuters.com)
It's time to Break the Bailout! - (www.breakthebailout.com)
Downturn Drags More Consumers Into Bankruptcy - (www.nytimes.com)
Most subprime lenders were exempt from Community Reinvestment Act - (www.ocregister.com)
Sun Microsystems slashes jobs in survival fight - (www.sfgate.com)
S.C. Bank Gets Aid Despite Protest over Golden Parachute - (www.thestreet.com)
Why Canada's Banks Don't Need Help - (www.time.com)
Bubble graph vs trend line - (kbasu.blogspot.com)
$500K is the new $1 million - (images.businessweek.com)