Saturday December 20 Housing and Economic stories

TOP STORIES:

Real-Estate Recovery to Start by Spring: Zell - (www.cnbc.com) Funny, but this is the same clown that bankrupted the Tribune Company. Why does anyone listen to Sam Zell? revival in the U.S. real estate market, key to a recovery in the world economy, should begin by next spring, property mogul Sam Zell told an Israeli business conference on Sunday. "I believe that in a country that continues to grow and where the population continues to grow, we will see the first signs of equilibrium in the housing market in the spring of 2009 and I will expect by spring 2010 the housing market in the U.S. will look a lot better," Zell said. Zell is the owner of Tribune Co, publisher of the Chicago Tribune and the Los Angeles Times, which filed for Chapter 11 bankruptcy protection last week.

Blank Check for Banks, Pink Slips for Detroit - (www.nytimes.com) HERE in Bailout Nation, you’ll be surprised to learn, some of us are more equal than others. Witness the Congressional back of the hand delivered last Thursday to Detroit automakers. Chrysler and General Motors were asking for $14 billion to see them through the end of the year; the Senate said no. Mitch McConnell of Kentucky, who leads the Senate Republicans, opposed the rescue. “None of us want to see them go down, but very few of us had anything to do with the dilemma that they have created for themselves,” he said. “We simply cannot ask the American taxpayer to subsidize failure.” That’s a new concept — not asking the taxpayer to subsidize failure. Is that not what we just did with the banks, to the tune of $700 billion, 50 times what the beleaguered carmakers asked for? Moreover, in the bank rescue, taxpayers are subsidizing not only failure but also outright recklessness and greed. In spite of the fact that financial institutions drove the nation into the economic ditch, and even though “very few of us had anything to do with the dilemma that they have created for themselves,” the financial industry received billions, with few strings attached.

Global car crisis far from over, executives say - (www.reuters.com) Top European car makers warned of a bleak 2009 as signs grew the deep crisis in the auto sector went far beyond the U.S. industry's life-or-death struggle. The heads of Renault-Nissan and Fiat said the car market would decline further next year after steep sales drops pushed the U.S. Big Three to ask for the bailout that was rejected by Congress and prompted White House action. The world's largest carmaker Toyota Motor Corp was set to report a loss of about 100 billion yen ($1.11 billion) for October-March, according to Japanese media on Saturday, and is expected to cut its earnings forecast again. German premium car maker BMW, which also sells Mini cars and Rolls-Royce limousines, is putting up financial aid to its German dealer network for at least 100 million euros ($132.7 million), according to WirtschaftWoche weekly.

S.F. feels the pain of real estate meltdown - (www.sfgate.com) San Francisco's real estate industry might be happier to bid farewell to this year if next year offered the hope of anything better. It doesn't. Instead, executives at the helms of the city's biggest brokerages say they're preparing for an unpleasant and unprofitable 2009, although it may turn out to be the best year that buyers have seen in more than a decade. "When we get to the end of 2009, I'll have a smile on my face," said Bill Drypolcher, owner and founder of San Francisco's Zephyr Real Estate. "I don't know if I'll have any money in my pocket, but I'll have a smile on my face." The downturn that slammed other parts of the Bay Area and the rest of the country didn't really begin inflicting serious pain on San Francisco until the second half of this year, real estate experts said. And while no one expects San Francisco to see the kind of foreclosures and bank sales that have become common in the East Bay, the city's real estate market is clearly suffering. "San Francisco had managed to fool itself through most of 2008 into thinking that it wasn't going to suffer the same sort of issues that have hurt other places in the state," said Christopher Thornberg, an economist with the consulting firm Beacon Economics. "The last four or five months of the year, San Francisco has seen price declines that have been quite prominent. You can't have prices fall as much as they have across the bay without some impact on San Francisco itself."

Nascar’s Sponsors, Hit by Sticker Shock - (www.nytimes.com) But in an office inside the racetrack, the scene was far from celebratory. Executives of the Big Three Detroit automakers told Brian France, the Nascar chief executive and chairman, that they planned to cut their investments in the sport sharply in the 2009 racing season. Since then, Chevrolet has said it is cutting back on advertising and sponsorship deals with 12 tracks. Ford is trimming Nascar spending by 20 percent, and Chrysler by 30 percent. The economic crisis is hitting industries around the globe, and the pain is beginning to filter down into professional sports. Many sports may face smaller crowds and shrinking player salaries, with, of course, exceptions for stars like the Yankees pitcher C. C. Sabathia. General Motors said in September that it wouldn’t buy any advertising time for the Super Bowl in February; earlier this year, it withdrew Cadillac’s sponsorship of the Masters golf tournament. It has also terminated its $7 million-a-year endorsement deal with Tiger Woods.

Home buyers look for their own bailout with a 4.5% mortgage rate - (www.latimes.com) Reporting from Washington -- Could a 4.5% mortgage be your personal piece of the bailout pie? Apparently many consumers thought precisely that the week after hearing that the Treasury Department was working on plans to slash loan rates for consumers who buy houses in the coming months. The news threw a wrench into the marketplace -- making some shoppers reluctant to commit to purchase without guaranteed access to 4.5% mortgage money. In some cases, it stalled deals that were ready to go. "It put us into limbo," said Dennis Badagliacco, chief executive of Altera Real Estate, a brokerage firm in San Jose. "Once [news] leaked out, it immediately slowed down" the pace of sales contracts and discussions, he said -- an ironic side effect of a plan ultimately meant to stimulate real estate transactions. Customers didn't want to gamble that they'd be locked into a 5.5% mortgage when 4.5% financing might be readily available if they simply waited a week or two, Badagliacco said.

Lawyer Seen as Bold Enough to Cheat the Best Investors - (www.nytimes.com) Marc S. Dreier knew the 45th-floor conference room of Solow Realty well. He had been in it many times as a trusted lawyer for the company’s founder. So nothing seemed amiss when he showed up one afternoon in October and told a receptionist he had a meeting with her boss, people associated with Solow say. Mr. Dreier was elegantly dressed, as always, the people said. He had three people with him. The receptionist ushered the group past her desk. They were sitting there, visible inside the glass-walled room, a few minutes later when the boss, Steven M. Cherniak, happened to walk by. Mr. Cherniak would later tell people at the company how surprised he had been to see Mr. Dreier. He had not scheduled any meeting with him, and he had no idea what Mr. Dreier was up to. But people there gave little thought to Mr. Dreier’s odd visit until November, when the company’s founder, Sheldon H. Solow, received a disturbing call. The caller wanted to let Mr. Solow know that Mr. Dreier had offered him the chance to buy promissory notes that had been issued by the company, people associated with the firm said. They were fake notes, and shortly thereafter, lawyers for Solow Realty — different lawyers — were in touch with federal authorities, reporting their suspicions that Mr. Dreier might be engaged in financial fraud. Since that opening tip, federal authorities have been tracking what they describe as a brazen swindle of some of New York’s savviest investors by one of New York’s more accomplished lawyers. Mr. Dreier has been charged with multiple frauds in the United States and a related crime in Canada, and is being held without bail in Manhattan. In court last week, prosecutors said their count so far put the money missing at $380 million, most of it lost by hedge funds and other investors who had bought promissory notes that were flat-out fictions.

Dubai shares hit despite promises - (news.bbc.co.uk) Dubai's stock market has fallen 5% to the lowest in four years, despite the emirate's efforts to assure investors that it can meet debt obligations. The head of Dubai's economic taskforce, Mohammed al-Abbar, said the government owed $10bn (£6.6bn), while state-affiliated firms were $70bn in debt. However, he said both the government and state companies had assets worth much more than their debts.
Dubai's government recently bailed out two lenders hit by the credit crisis. "We are rationalising our expenditure and consolidating our activities", said Mohammed al-Abbar.




OTHER STORIES:

Bush Postpones Decision on TARP for Auto Makers - (www.cnbc.com)
Fed Expected to Drop Interest Rates Close to Zero - (www.cnbc.com)
Why the Fed May Cut Rates Less Than Investors Expect - (www.cnbc.com)
Blagojevich May Resign Monday: Illinois Officials - (www.cnbc.com)

Before the Fear, There Was Foolishness - (www.nytimes.com) Misinformed and moronic Ben Stein writing a story way after the issue became a crisis. Before the credit crisis, lenders lent with unimaginable foolishness and made incredibly risky bets. And the bets busted.
Measuring the Shock Waves in Bond Funds - (www.nytimes.com) Many middle-of-the-road bond mutual funds that seemed to promise stable returns in a difficult market have recently taken gut-wrenching plunges.
Wait. Why Is the F.T.C. After Whole Foods? - (www.nytimes.com) The Federal Trade Commission once feared Whole Foods would dominate the market for organics. Now, that looks unlikely.
The Divorced Find a Housing Niche - (www.nytimes.com) New complexes offer tenants the ability to sign a lease for any time period 30 days

Homeowners have the power to stop special assessments - (www.latimes.com) A board cannot override a vote of owners by simply declaring an emergency.
Mortgage-broker business falls to new low - (www.ml-implode.com) - Loan brokers accounted for 18.9% of all mortgages funded in the third quarter, the lowest since at least the late 1990s, according to a survey by National Mortgage News.
The decline fits with news that several large banks and thrifts have stopped working with brokers, especially on alternative mortgages
Madoff Victims’ ‘Tragedy’ Said to Have Escaped Scrutiny by SEC - (www.bloomberg.com)
The Man Who Is Unwinding Lehman Brothers - (www.nytimes.com)
List of potential victims grows in NY fraud case - (finance.yahoo.com/news)
Geneva banks lost more than $4 billon to Madoff: report - (www.reuters.com)
China to increase supply of money to boost economy - (finance.yahoo.com/news)
Report: Saudi's Prince Alwaleed lost $4B this year - (finance.yahoo.com/news)
White House Ready to Aid Auto Industry - (www.nytimes.com)

Sharp mulls LCD factory cutbacks - (news.bbc.co.uk)
China inflation eases in November - (news.bbc.co.uk)
Russia confirms recession to come - (news.bbc.co.uk)
Pound in another record euro low - (news.bbc.co.uk)
Oil prices rise on growth hopes - (news.bbc.co.uk)
Slump hits India's car industry - (news.bbc.co.uk)
India unveils $4bn stimulus plan - (news.bbc.co.uk)