Wednesday November 19 Housing and Economic stories

TOP STORIES:

Cost of protecting against a default by Russia soared after Central Bank increased the ruble’s trading band - (www.bloomberg.com) The cost of protecting against a default by Russia soared after the central bank increased the ruble's trading band and lifted its benchmark interest rate to stem record capital outflows. Credit-default swaps on Russian government bonds jumped to 7.87 percent of the amount insured from 6.14 percent yesterday, according to CMA Datavision prices. The yield on its 30-year dollar bonds increased to 10.77 percent from 9.1 percent, according to Bloomberg prices.

Laid-off tech worker shoots, kills CEO, two others at office, then flees - (www.mercurynews.com) A recently laid off high-tech employee opened fire inside the Santa Clara office where he used to work late Friday afternoon, killing the CEO and two others and sparking a massive police dragnet that spread throughout the area. Santa Clara police identified Jing Hua Wu, 47, of Mountain View as the gunman who shot to death two men and one woman with a handgun before driving off in a silver sport-utility vehicle, believed to be a rented Mercury Mountaineer. Wu remained at large late Friday, and police warned he should be considered armed and "extremely dangerous." Friday's violent scene erupted just before 4 p.m. when police say Wu arrived at Siport, a small semiconductor firm at 3255-7 Scott Blvd. and opened fire. Wu apparently had been laid off either Friday morning or Thursday, Santa Clara police Lt. Mike Sellers said. When police arrived, the gunman already had escaped and was initially believed to be on his way to Mountain View, where police remained outside his home into the night. Other reports indicated he may have been headed to an airport. Police said Chief Executive Officer Sid Agrawal was killed. The identities of the other victims were not released as of 10 p.m. Friday, pending notification of their families. Siport is a relatively small firm that specializes in developing digital radio semiconductors. It raised at least $20 million in venture capital last year.

San Jose to request $14 billion in federal bailout funds - (www.mercurynews.com) As cities around the United States start to scramble for a share of the $700 billion federal bailout package, San Jose Mayor Chuck Reed said Friday he's working with leaders of other large California cities to make sure they're not left behind. The stimulus package Congress passed last month wasn't designed to dole out money to governments, so it's far from clear whether San Jose will get a piece. But with $1.6 billion in unfunded retiree health care obligations, plus $500 million worth of local and regional road work to be done and the $750 million price tag to bring BART to the South Bay, Reed noted the city has a full slate of needs. After meeting Friday with Gov. Arnold Schwarzenegger and the mayors of California's largest cities to discuss budget issues, Reed said California mayors plan to present their own bailout wish-list through the governor soon, after Schwarzenegger finishes dealing with the state budget meltdown. Reed created a minor furor Friday when he told an Associated Press reporter he would seek 2 percent of the bailout, or $14 billion, for San Jose — an eye-popping figure, given that the city's entire annual budget is $3.3 billion. Reed later told the Mercury News that his remark was "off the cuff," and based on the fact that the city contributes more than 2 percent of the nation's Gross Domestic Product.

Prosecutors Going after Fraudulent Mortgage Borrowers - (www.seekingalpha.com) While lenders are coming under increased pressure to help borrowers avoid foreclosure, the U.S. Attorney in San Francisco has launched an effort to pursue fraud cases against subprime borrowers who lied on their loan application. “In my way of thinking, it didn’t make any sense for us to excuse any one component of the group that was involved in this phenomenon,” said U.S. Attorney Joseph Russoniello. “So while we obviously have an interest in the predatory lending practices, we’re also finding from our investigators that significant numbers of borrowers submitted falsified applications for a mortgage.” [Emph. added] Good for Russoniello. The media likes to portray the typical defaulted subprime borrower as some poor soul who’s feeding her kids Kal-Kan sandwiches and burning the furniture to heat the house, but the reality is more complex.

Oversight of bailout "a mess" - (www.denverpost.com) Despite the commitment of billions of dollars to the federal bailout effort, no formal action has been taken to fill the independent oversight posts established by Congress to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed. "It's a mess," said Eric Thorson, the Treasury Department's inspector general, who has been trying to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing." In approving the rescue package, lawmakers trumpeted provisions that established layers of independent scrutiny, including a special inspector general to be nominated by the White House, and a congressional oversight panel.

GM Collapse at $200 Billion Would Exceed Bailout Tab, Firm Says - (www.bloomberg.com) General Motors Corp., burning through cash as sales slump, would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, a forecasting firm estimated. A GM collapse would mean ``more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,'' Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, said yesterday in an interview. Behravesh's projection of $100 billion to $200 billion in costs dwarfs the $25 billion industry bailout plan that will be debated in Congress next week to prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC. The drain on taxpayers from a rescue or a GM failure is a central issue for U.S. lawmakers. Included in the Global Insight estimate, which Behravesh supplied to Bloomberg News, are the anticipated costs for existing programs, such as unemployment insurance, and new measures that the economist said would be needed to revive economic growth after millions of auto-related job losses. A GM shutdown would wipe out jobs among suppliers as well as at the automaker itself, pushing the U.S. unemployment rate next year to 9.5 percent, compared with current projections of as high as 8.5 percent, Behravesh said.

Hedge managers brace for shrinking feeling - (www.ft.com) After the sharp deterioration in asset values and market turmoil since the end of September, many analysts have predicted a surge in client requests to withdraw their money. It could mark a critical moment for the industry, allowing it to quantify accurately for the first time how much money will be withdrawn by the year end. From there, managers will be able to assess how much more of their investment portfolios they might have to sell to meet redemption requests.



OTHER STORIES:

Santa Clara County Underwater! - (www.viewfromsiliconvalley.com)
House sales data bleak nationwide - (www.azstarnet.com)
US Foreclosure Rates Up 25 Percent From A Year Ago - (www.huffingtonpost.com)
Hawaii October foreclosures triple over last year - (www.honoluluadvertiser.com)
Housing Crash to Reach NYC - (www.minyanville.com)
Consumer Buying Binge Slams to Halt - (www.nytimes.com)
Soros says deep recession inevitable, depression possible - (www.reuters.com)
The Golden Years, Tarnished - (www.nytimes.com)
CalPERS' housing portfolio loses 35% in a year - (www.latimes.com)
Bailout Lacks Oversight Despite Billions Pledged - (www.washingtonpost.com)

Credit-Crunch Villains Pass the Buck, Party On - (www.bloomberg.com)
Taxpayers on the hook for $5 trillion - (msnbc.msn.com)
Misguided Gov't Policies Perpetuate Pain - (www.seekingalpha.com)
Paulson Credibility Takes Hit With Rescue-Plan Shift - (www.bloomberg.com)
Forget Red vs. Blue -- It's the Educated vs. The Easily Fooled - (www.alternet.org)

World Leaders Agree to Act Together on Financial Crisis - (www.nytimes.com)
G-20 Calls for `Broad' Policy Action as Major Economies Weaken - (www.bloomberg.com)
China holds the cards at summit - (www.iht.com)
G-20 to Back Stimulus, Smooth Over Differences on Regulation - (www.bloomberg.com)
Cash-Strapped Big Cities Seek TARP Funds to Stimulate Local Economies - (online.wsj.com)
Citigroup to cut 10 percent of jobs: source - (www.reuters.com)
Tech Industry Feels a Slump - (www.nytimes.com)

Freddie Mac Gets Cash Infusion - (www.washingtonpost.com)
Asia’s toxic assets - (www.ft.com)
U.K. Conservatives Say Brown Risks `Run on Pound' With Deficit - (www.bloomberg.com)