Friday December 19 Housing and Economic stories

TOP STORIES:

Ecuador defaults, says to fight "monster" creditors - (www.reuters.com) President Rafael Correa declared a default on Ecuador's foreign sovereign bonds on Friday, vowing to fight "monster" debt-holders in court in one of most aggressive moves against investors in the region for years. Ecuador's dollar-denominated debt prices plunged on news of its second default in a decade and the first in Latin America since Argentina in 2002, although the decision was not expected to lead to similar moves around the region. Correa, a U.S.-trained economist and ally of Venezuela's anti-U.S. President Hugo Chavez, refused to make a $31 million interest payment due on Monday on 2012 global bonds, saying the debt was contracted illegally by a previous administration. "I gave the order not to pay the interest and to go into default," Correa said. "We know very well who we are up against -- real monsters."

Citadel Halts Withdrawals From Two Hedge Funds After 50% Drop - (www.bloomberg.com) Citadel Investment Group LLC, enduring its biggest losses since starting in 1990, halted year- end withdrawals from its two biggest funds after investors sought to take out $1.2 billion, or 12 percent of assets. Withdrawals may resume as early as March 31 for the Kensington and Wellington funds, the Chicago-based firm said in a letter yesterday to clients. The funds, which together manage about $10 billion, have lost 49.5 percent of their value this year through Dec. 5. “We have not made this decision lightly,” Citadel founder Kenneth Griffin, 40, wrote. “We recognize how a suspension impacts our investors, especially those with current financial obligations of their own to meet.”

Anger Grips Auto Workers - (www.washingtonpost.com) As the workers and residents of this small town that launched the Saturn automobile see it, there are several villains in the collapse of the automakers' rescue plan. But what stuns many in this place defined by the General Motors auto plant and its 4,200 workers is that no person played a larger role in the demise of autoworker hopes than their own Sen. Bob Corker (R), who is now regarded by some here with the kind of disdain reserved for traitors. Corker emerged as one of the leading critics of the rescue plan passed by the House. He lashed into the carmaker chief executives when they came to Washington looking for help. And it was Corker's alternative proposal, which was a plan that would have been tougher on union workers, that ultimately failed. In a dozen interviews with workers here, many suspected that he only feigned interest in rescuing Detroit's Big Three. Instead, they say, he wants to crush GM and its union to benefit foreign automakers, such Nissan and Volkswagen, who have opened or are opening nonunionized plants in the state.

Mitch McConnell's Finest Hour - (online.wsj.com) The same can't be said for President Bush on the auto bailout. In the Senate's Thursday night automobile showdown, the United Auto Workers said "No thanks" to a bailout with strings attached. Most Senate Republicans took them at their word and voted to block the bill. But within hours, President Bush blinked and Treasury is now scrambling to use money from the Troubled Asset Relief Program, or TARP. Who'd have thought Mr. Bush would want to join the long line of Detroit executives in caving to the UAW? Senate Republicans had more gumption. Led by Tennessee Senator Bob Corker, they asked the auto workers to show they were serious about making Detroit competitive again. In exchange for a lifeline from Washington, Mr. Corker wanted the union to set a "date certain" in 2009 for lowering the Detroit Three's hourly labor costs to the average of foreign-owned auto makers in the U.S. He also wanted creditors to bring down Detroit's total debt by two-thirds through an equity swap, making sure debtholders share the cost of restructuring. The union's counteroffer was that it would bring down labor costs in 2011, when its current contracts run out. Maybe we missed something, but we thought GM and Chrysler were facing bankruptcy now, not in three years. As Minority Leader Mitch McConnell said on the Senate floor, that sounds like "taxpayer money today for reforms that may or may not come tomorrow."

Americans' net worth in steep decline - (www.latimes.com) The latest Fed report, with data as of Sept. 30, was published Thursday. It showed that the value of U.S. households’ net worth -- the amount by which their assets exceeded debts -- tumbled $2.81 trillion in the quarter, or 4.7%, to $56.5 trillion. That’s still a big number, of course. But it now has fallen 11.1% from a record high of $63.63 trillion in September 2007. That is the largest year-over-year drop since record-keeping began in 1952, according to Bloomberg News.


More groups affected by Madoff Fraud:
Madoff Madness: "I knew he was cheating, That's why I used him" - (Mish at globaleconomicanalysis.blogspot.com) - So why did these smart and skeptical investors keep investing? They, like many Madoff investors, assumed Madoff was somehow illegally trading on information from his market-making business for their benefit. They didn't consider the possibility that he was clean on that score but running a good old-fashioned Ponzi scheme.
Madoff lawsuits in line - (www.marketwatch.com) Investors are expected to line up to sue brokerage founded and run by Bernard Madoff after his arrest on fraud charge. Fund fraud hits big names (WSJ.com) - (www.marketwatch.com) Santander has big exposure to Madoff - (www.marketwatch.com) Unicredit's Pioneer unit into Madoff - (www.marketwatch.com)
For Investors, Trust Lost, and Money Too - (www.nytimes.com) The zoning lawyer in Miami trusted him because his father had dealt profitably with him for decades. The officers of a little charity in Massachusetts respected him and relied on his advice.Skip to next paragraph Wealthy men like J. Ezra Merkin, the chairman of GMAC; Fred Wilpon, the principal owner of the New York Mets; and Norman Braman, who owned the Philadelphia Eagles, simply appreciated the steady returns he produced, regardless of market conditions. But these clients of Bernard L. Madoff had this in common: They chose him to oversee much of their personal wealth. And now, they fear, they have lost it. While Mr. Madoff is facing federal criminal charges, accused by federal prosecutors of operating a vast $50 billion Ponzi scheme, many of his clients are facing an abrupt reversal of fortune that is the stuff of nightmares. “There are people who were very, very well off a few days ago who are now virtually destitute,” said Brad Friedman, a lawyer with the Milberg firm in Manhattan. “They have nothing left but their apartments or homes — which they are going to have to sell to get money to live on.”



OTHER STORIES:

Update: Rescap Deadline Extended... Again - (www.ml-implode.com) - The previous extension only yielded an additional commitment of less than $1 billion...
Moscow Memories of 1997 - [2008-12-13] - They were desperate times, and you could see that there was a climactic crisis coming. It is easy to talk about this sort of th...
BLAMING “THE STUPIDS” FOR THE FINANCIAL DISASTER - (www.ml-implode.com) - A few weeks old, but a great read. Tom then lays out who was complicit in all this—with nary a mention of the media that spent...

Now Accused of Fraud, Wall St. Wizard Had His Skeptics - (www.nytimes.com)
Fed regulators shut 2 banks in Georgia, Texas - (biz.yahoo.com/ap)
'All Just One Big Lie' - (www.washingtonpost.com)

GM Moves Closer to Bailout as Wagoner Holds Talks With Bolten - (www.bloomberg.com)
White House Ready to Aid Auto Industry - (www.nytimes.com)
Global car crisis far from over, executives say - (www.reuters.com)

White House still working on Big 3 bailout - (money.cnn.com)
Busy last full week of trading in '08 awaits - (money.cnn.com)
December layoffs exceed 100k - (money.cnn.com)
Auto bailout: What went wrong? - (money.cnn.com)
8 really, really scary predictions - (money.cnn.com)
Fear of a worthless car warranty - (money.cnn.com)
A little sympathy for car dealers - (money.cnn.com)