Tuesday November 11 Housing and Economic stories

TOP STORIES:

Peter Schiff: ‘There is a major, major crisis coming’ - (www.contrarianprofits.com) Good video: Peter Schiff, president of Euro Pacific Capital Inc. and disciple of Austrian School economics, says “a major, major crisis is coming,” thanks to the government’s attempts to ‘fix’ the economy with giant bailouts. In fact, Schiff, a well-known dollar bear, says the result of the government bailout packages and an Obama administration will be the total destruction of the dollar. Watch it here: As usual, he is discounted by the clowns on CNBC even though he is one of the few that has been right for the past few years.

Another Wall Street casualty - (www.themessthatgreenspanmade.blogspot.com) Barry Fox, a research supervisor who worked for nine years at the brokerage firm, took a drug overdose and then jumped from his 29th-floor apartment the evening in May after he learned he wouldn't be hired by J.P. Morgan Chase & Co., which was about to buy his firm. A coroner recently confirmed in an autopsy report that the death was a suicide

Wall Street bailout: Cashing in on the mess you created - (www.rollingstone.com) The Wall Street bailout looks a lot like Iraq — a "free-fraud zone" where private contractors cash in on the mess they helped create. On October 13th, when the U.S. Treasury Department announced the team of "seasoned financial veterans" that will be handling the $700 billion bailout of Wall Street, one name jumped out: Reuben Jeffery III, who was initially tapped to serve as chief investment officer for the massive new program. On the surface, Jeffery looks like a classic Bush appointment. Like Treasury Secretary Henry Paulson, he's an alum of Goldman Sachs, having worked on Wall Street for 18 years. And as chairman of the Commodity Futures Trading Commission from 2005 to 2007, he proudly advocated "flexibility" in regulation — a laissez-faire approach that failed to rein in the high-risk trading at the heart of the meltdown. Bankers watching bankers, regulators who don't believe in regulating — that's all standard fare for the Bush crew. What's most striking about Jeffery's résumé, however, is an item omitted when his new job was announced: He served as executive director of Paul Bremer's infamous Coalition Provisional Authority in Baghdad, during the early days of the Iraq War. Part of his job was to hire civilian staff, which made him an integral part of the partisan machine that filled the Green Zone with Young Republicans, investment bankers and Dick Cheney interns. Qualifications weren't a big issue back then, because the staff's main function was to hand over stacks of taxpayer money to private contractors, who were the ones actually running the occupation. It was this nonstop cash conveyor belt that earned the Green Zone a reputation, in the words of one CPA official, as "a free-fraud zone." During Senate hearings last year, when Jeffery was asked what he had learned from his experience at the CPA, he said he thought that contracts should be handed out with more "speed and flexibility" — the same philosophy he cited back when he was in charge of regulating Wall Street traders. The Bush Administration has since reversed the Jeffery appointment, perhaps thinking better of giving a CPA alum such a central role in the Wall Street bailout. Still the original impulse underscores the many worrying parallels between the administration's approach to the financial crisis and its approach to the Iraq War. Under cover of an emergency, Treasury is rapidly turning into an economic Green Zone, overrun with private companies collecting lucrative contracts. Fittingly, one of the first to line up at the new trough was none other than the law firm of Bracewell & Giuliani — yes, that Giuliani. The firm's chairman, Patrick Oxford, could scarcely conceal his glee over the prospect of cashing in on the bailout. "This one," he told reporters, "is very, very big." At least four times bigger, in fact, than the post-9/11 homeland-security bubble, from which Giuliani and his various outfits have profited so extravagantly. Even bigger, potentially, than the price tag for the Iraq War itself.

Bank Bailout: Bush's Final Pillage - (www.alternet.org) In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. "How much of it do you think may be actually spent by January 20 or so?" Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout. When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts. The Bush gang prefers bureaucratic instruments: "distressed asset" auctions and the "equity purchase program." But make no mistake: the goal is the same as it was for the defeated Portuguese -- a final frantic looting of the public wealth before they hand over the keys to the safe. How else to make sense of the bizarre decisions that have governed the allocation of the bailout money? When the Bush administration announced it would be injecting $250 billion into America's banks in exchange for equity, the plan was widely referred to as "partial nationalization" -- a radical measure required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings...) and the government is reduced to pleading that they use a portion of it for loans.

Should Judges Be Modifying Your Mortgage? - (www.cnbc.com) President-elect Obama is meeting with economic advisors today, and you have to believe that the housing crisis will be pretty high on the agenda. What a lot of folks in the mortgage industry, however, are not high on is the proposal to allow bankruptcy judges to modify loans. This proposal was actually ripped out of the Housing and Economic Recovery Act passed over the summer, because it was a deal-breaker for President Bush. But it is is listed as one of the four main tenets of Obama's housing plan. So what's wrong with it? Well, here's the take from the Mortgage Bankers Association: Granting judges this power would throw into question the value of the collateral that backs every mortgage made in this country—the home. In response, investors—to offset the risk of a judge unilaterally modifying the loan—would require an additional risk premium and thus lenders will be forced to charge higher rates, require higher down payments and charge higher costs at closing. All these costs would be borne by the borrower. The mortgage bankers claim that mortgage rates would increase by at least one and a half points. Ken comment: This would be changing 200 years of contract law in the US, and would likely cause investors to stop trusting the US resulting in drops in stock market, home prices, etc.

AIG Repays More of $85 Billion Fed Loan Through Trickery (by Borrowing From Other Government Entities and Programs) - (www.cnbc.com) American International Group reduced the amount it owes the U.S. government by another $2.3 billion as the insurer continues to use the Federal Reserve's new commercial-paper-funding program. The updated figures come as reports circulated Friday that New York-based AIG may receive less stringent loans terms. Shares of AIG [AIG 2.11 0.24 (+12.83%) ] jumped 26 cents, or 13.9 percent, to $2.13 in late afternoon trading. The Wall Street Journal said Friday that federal officials were considering a possible change in the terms of an $85 billion loan made to AIG in September. AIG spokesman Joseph Norton declined to comment on the report, but said "AIG continues to work on its plan to find a permanent solution to its liquidity losses, to sell assets so it can repay the Federal Reserve loan with interest and to explore other avenues to help AIG restore its financial health."

Retailers Report a Sales Collapse - (www.nytimes.com) Sales at the nation’s largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades. Skip to next paragraphThe remarkable slowdown hit luxury chains that sell $5,000 designer dresses as badly as stores that offer $18 packs of underwear, suggesting that consumers at all income levels are snapping their wallets shut. Sales at Neiman Marcus, the luxury department store, dropped nearly 28 percent in October compared with the same month last year. Sales fell 20 percent at Abercrombie & Fitch, nearly 17 percent at Saks, 16 percent at Gap and nearly that much at Nordstrom.

Fire Sales Add to US Retailers' Holiday Worries - (www.cnbc.com) Deep discounts offered by bankrupt and struggling U.S. retailers will create unwelcome competition for healthier rivals already bracing to fight for sales in a dismal holiday season this year. Taut consumer spending and tough credit markets have dealt a hard blow to many companies, forcing some like home goods retailer Linens 'n Things and jewelers Friedman's and Whitehall Jewelers to seek bankruptcy protection. Circuit City [CC 0.25 -0.01 (-3.85%) ] , the latest to be hurt by the global financial crisis and credit crunch, is shutting 155 U.S. stores, as it struggles to rejuvenate its business. Together, the companies are selling several billion dollars worth of merchandise at fire-sale prices, on top of the deep markdowns and promotions offered by the wider retail sector. Whitehall began its sales in August, while Circuit City stores slated for closing started on Nov. 5. Most of the sales run through Dec. 31, piling on pressure during a holiday season already expected to be one of the worst in about 20 years. "Stores that are closing will have going-out-of-business sales, deep markdowns," said William Armstrong, an analyst with CL King & Associates. "As long as that lasts, that will have an impact on the other retailers in that area."

I.O.U.S.A. The 30-Minute Version - (www.blip.tv)


The Financial Bubble was Created by Central Bank Policy - (www.aier.org) With a collapsing housing market, a falling stock market, and a serious economic recession on the immediate horizon, the blame game about who or what has been behind the financial nightmare is in full swing. In recent testimony before a congressional committee former Federal Reserve Board Chairman, Alan Greenspan, pointed his finger at various financial insurance schemes and the inescapable uncertainty of the future. “We’re not smart enough as people,” he said. “We just cannot see events that far in advance.” The one thing he did not admit was that it was his own monetary policy when he was at the helm of America’s central bank that created the boom that has now resulted in a crash. The ballooning housing market and the rising stock market of the past decade would have been impossible if not for the easy money policy of the Federal Reserve. Monetary expansion through the banking system and resulting low rates of interest fed the housing and stock market frenzy, indeed it made them possible.


OTHER STORIES:

Capital One Shuts Overland Park, KS Center, Cuts 320 Jobs - (www.ml-implode.com) - Capital One Home Loans is closing its Overland Park lending center, a move that will displace 320 employees, most of them in Feb...
Don't Do It, Obama. Don't Save Ford (F) And General Motors - (www.ml-implode.com) - "Ford, GM, and Chrysler are a national embarrassment, Obama. Bailing them out yet again won't fix them. It will just prolong the...
When will the NBER call it a recession? - (www.ml-implode.com) - "It would be interesting to know how long after the "official" beginning of past recessions the National Bureau of Economic Rese...
Pending Home Sales Decline in September - (www.ml-implode.com) - "The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, declined 4.6 percent to 89.2 ...
Banks Have Fewer Borrowers Willing To Pay The Price? - (www.ml-implode.com) - "According to an AP article today, money is available for banks to lend, but fewer borrowers are interested in borrowing it"
Cenbank Agencies Selloff Continues amid Surge into Treasuries - (www.ml-implode.com)
Queen Baffled by Credit Crisis - (www.ml-implode.com)
Preliminary Injunction Against ML-Implode Denied - (www.ml-implode.com)
S&P Cuts Ratings on $34.1 Billion in Alt-A RMBS - (www.ml-implode.com)
UK: Mortgage Lenders Refuse to Pass on Rate Cut as House Prices Plummet - (www.ml-implode.com)

Deflation:the new threat - (money.cnn.com)
U.S. Unemployment Rate Climbs to 14-Year High of 6.5% - (www.bloomberg.com)
Citigroup, Goldman Said to Begin Eliminating Jobs - (www.bloomberg.com)

Obama: Help Needed Now For Economy, Auto Makers - (www.cnbc.com) President-elect Obama, seeking to calm a jittery nation and financial markets, called for swift action on the economy, including a second stimulus package and help for the battered auto industry.
Berkshire Hathaway Earnings Fall More Than Expected - (www.cnbc.com)
Job Losses Hitting All Income Levels and Sectors - (www.cnbc.com)
Unemployment Surges - (www.cnbc.com)
Where the Layoffs Are - (www.cnbc.com)
Hyundai Has Held Talks To Buy Chrysler: Sources - (www.cnbc.com)
Goldman Sachs Plans to Stay Public, Seek Deposits - (www.cnbc.com)

Surprises in a Closer Look at Credit-Default Swaps - (www.nytimes.com)
Plumbing of swaps becoming clearer - (optionarmageddon.ml-implode.com)
What's really burning down the financial house: swaps - (news.yahoo.com)


Why We Need to Limit Executive Compensation - (www.businessweek.com)
Mortgage Insurer Losses Widen on Higher Claims Forecast - (www.bloomberg.com)
Schwarzenegger proposes 90-day foreclosure moratorium in CA - (mortgage.freedomblogging.com)
Maui house, condo prices plummet from year before - (www.honoluluadvertiser.com)
Builder bets against market with high-end development - (www.zoniereport.com)
Hitler's Real Estate Downfall - (www.youtube.com)