Tuesday December 9 Housing and Economic stories

TOP STORIES:

D.E. Shaw, Farallon Restrict Withdrawals as Fund Freeze Deepens - (www.bloomberg.com) More shameless funds suspend withdrawals. D.E. Shaw & Co. LP, the investment firm run by David Shaw, and Farallon Capital Management LLC limited withdrawals by clients, joining more than 80 hedge-fund managers to impose restrictions in the past two months. D.E. Shaw, which oversees $36 billion, capped redemptions from its Composite and Oculus funds, said two people familiar with the New York-based company. Farallon, a $30 billion firm based in San Francisco, did the same with its biggest fund after investors asked to get back more than 25 percent of their money. The firms are two of the biggest to block withdrawals, known as putting up gates, so they aren’t forced to liquidate investments at distressed prices to raise cash. New York-based Fortress Investment Group LLC said yesterday it froze an $8 billion fund after getting redemption requests for 40 percent of its assets. Tudor Investment Corp., the Greenwich, Connecticut, firm run by Paul Tudor Jones, locked the $10 billion BVI Global fund last week ahead of plans to split the fund into two. “There’s no longer the stigma associated with putting up gates or suspending redemptions as it was before this crisis,” said Jaeson Dubrovay, head of the $19 billion hedge-fund group at consulting firm NEPC LLC in Cambridge, Massachusetts. “It’s actually being encouraged by some large institutions as a way to protect longer-term investors from those who panic and redeem.”

Ohio: One in Eight In Foreclosure – (www.cincinnati.com) - Foreclosures continue to rise locally, across Ohio and Kentucky and nationally, new data released Friday showed. Nearly one of eight homeowners in Ohio with mortgages were behind on their payments or in foreclosure at the end of the third quarter. That's worse than the national rate of more than 10 percent, according to the Mortgage Bankers Association, which released its quarterly delinquency survey Friday. Kentucky fared slightly better than the national average with 9.9 percent of homeowners being either behind or in foreclosure. In Ohio, 3.93 percent of the 1.5 million mortgage-holders were in foreclosure - about 59,700 households, while another 8.31 percent or 126,000 were behind on payments.

FarmerMac (Fed Agricultural Housing Corp) Sued For Securities Fraud – (www.marketwatch.com) - Farmer Mac and certain of the Company's officers and/or directors are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934 (the "Exchange Act"). Farmer Mac was chartered by Congress for the purpose of establishing a market for agricultural real estate and rural housing mortgage loans and rural utilities loans, as well as to facilitate capital market funding for USDA-guaranteed farm program and rural development loans

Democrats Fooled by Automaker CEOs After they Drive to DC, Set to Offer Loans for Carmakers - (www.cnbc.com) The three stooges (Pelosi, Dodd, and Barney Frank) are suckered by the CEOs of the automakers after they drive to DC in green cars. Well, possibly the 530,000 job losses shocked them into approving this as well. Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week, the New York Times reports. Faced with staggering new unemployment figures, Democratic Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week.

Taxpayers will get a return on the bailout - (money.cnn.com) Usual flawed thinking from government and their associated agencies: Taxpayers will get money back from the government program providing up to $250 billion in capital to banks around the country, a Treasury Department official said Friday. Neel Kashkari, the director of Treasury's Office of Financial Stability, which oversees the $700 billion financial rescue fund, said the government is investing in "very high quality institutions of all sizes." The Treasury Department has received preferred stock and warrants to buy additional shares in return for the $150 billion it has invested so far in 52 banks, including Bank of America Corp (BAC, Fortune 500)., Citigroup Inc. (C, Fortune 500) and JPMorgan Chase & Co (JPM, Fortune 500). Inc.

Argentina tries gov't car loan plan using recently nationalized pension system - (money.cnn.com) Argentina's auto industry will get a 3.1 billion peso ($900 million) boost with cut-rate loans for first-time new car buyers, the government said Saturday. Production Minister Deborah Giorgi's announcement detailed a key part of a broader economic stimulus package based largely on assets of the recently nationalized pension system. Giorgi told a news conference that six automakers will each offer two models selling for $10,000 or less for people buying a new car for the first time. The companies, most of which saw sales drop sharply in November, will have to promise to shun layoffs and hold down profit margins on cars sold under the program.

Citadel Seeks to Raise $500 Million by Opening Fund to New Cash - (www.bloomberg.com) This sounds like a ponzi scheme. Citadel Investment Group LLC is opening a $2 billion hedge fund to new cash from clients and plans to have it buy stocks from the firm’s two biggest funds, which have lost almost half their value this year. The firm, run by Kenneth Griffin, hopes to raise as much as $500 million before the end of the year, according to a letter sent to investors. Clients will be allowed to put money in the Citadel Tactical Trading fund, whose returns exceeded 40 percent this year through November.

First Georgia Community Bank Closed, Boosting 2008 Toll to 23 - (www.bloomberg.com) First Georgia Community Bank of Jackson, with four offices southeast of Atlanta, was closed by regulators, becoming the 23rd U.S. bank failure this year amid losses tied to record mortgage delinquencies and foreclosures. First Georgia, with $237.5 million in assets and $197.4 million in deposits, was shut by the Georgia Department of Banking and Finance yesterday and the Federal Deposit Insurance Corp. was named receiver. United Bank of Zebulon, Georgia, will assume First Georgia’s deposits and open the failed bank’s offices today as United branches, the FDIC said. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in an e-mailed statement.

AIG, Carlyle Leveraged Loan CLOs May Be Downgraded - (www.bloomberg.com) Loan funds managed by American International Group Inc., Carlyle Group and KKR Financial Holdings LLC may face downgrades after Standard & Poor’s review of 197 portions of collateralized loan obligations. “Rapid deterioration in the credit quality of the corporate loans in the underlying collateral pools in recent weeks” led to the move, the New York-based ratings company said today in a statement. The securities, valued at $3.89 billion at issuance, are from 127 CLOs including deals overseen by the three managers, S&P said. Cash flow CLOs that pool high-yield, high-risk loans have been largely immune from the credit crisis that affected subprime collateralized debt obligations. Only 1.1 percent of 4,350 U.S. CLOs have had a ratings downgrade, according to S&P. “November was yet another bleak month for CLOs and leveraged loans,” analysts Dave Preston and Justin Pauley at Wachovia Corp. in Charlotte, North Carolina, wrote. “CLO structures are weakening along with the loan market.”

NYC Market wonders if party's really over - (www.nypost.com) And with the demise of so much of Wall Street, real estate experts predict it all will probably get worse before it gets better. "Wall Street provides 5 percent of the New York job market," says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. "But it's 25 percent of the income." Given that financial sector job losses will likely be tens of thousands (or more) - and that a large part of the NYC housing boom has been fueled by Wall Street bonus money - this does not bode well. "The cut in bonuses could be anything from 25 to 75 percent," says Miller, who adds that he's heard layoff figures as high as 65,000 by the end of the year. Though the full effect has yet to be felt, the current data is already startling. According to figures released by appraisers Mitchell, Maxwell & Jackson, the average price of a Manhattan apartment fell 8.8 percent from the first quarter of this year to $1.418 million, down from $1.552 million. And the number of contracts inked in September and October were down 75 percent from the same time last year.



OTHER STORIES:

Accord on U.S. help for automakers - (money.cnn.com)
Stocks rally despite jobs report - (money.cnn.com)
$1 trillion rescue: Not so out there - (money.cnn.com)
OPEC head predicts output cuts Oil at 4-year low - (money.cnn.com)
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)

Loan Risk Soars as Payrolls Plunge, Economy Falters - (www.bloomberg.com)
Capitalism needs to be rescued by capitalism - (www.pittsburghlive.com)
Residential Real Estate: Erosion Ahead - (www.seekingalpha.com)
Over 1 million U.S. layoffs so far this year - (www.sfgate.com)
New York Fed Opens Pawn Shop to Buy Up Junk - (yourmortgageoryourlife.wordpress.com)
More bad news expected for Chinese real estate - (www.iht.com)
India’s Central Bank Cuts Key Rate - (www.nytimes.com)
U.S. Economy Heads for Deep, Long Recession as Job Losses Mount - (www.bloomberg.com)
U.S. Loses 533,000 Jobs in November; Joblessness at 6.7% - (www.nytimes.com)
1.25 million jobs lost in three months - (www.latimes.com)
Too Big Not To Fail -- By Eliot Spitzer - (www.slate.com)
Death by a thousand price cuts - (www.bankrate.com)
Lower mortgage rates aren't the answer - (money.cnn.com)
Where's the strategy for $700 billion? - (emailthis.clickability.com)
Paulson Considers New Plan to Screw Responsible Borrowers and Renters - (www.bloomberg.com)

Democrats Set to Offer Loans for Carmakers - (www.nytimes.com)
GM, Chrysler Bankruptcy Financing Would Be Double Bailout Loans - (www.bloomberg.com)
Treasury urged to screw retirees and savers - (msnbc.msn.com)
Treasury Tries to Re-Inflate Housing Bubble - (www.minyanville.com)
Treasury Weighs Messing with Mortgage Rates - (www.washingtonpost.com)

Chinese People Come to Buy US Foreclosures - (news.newamericamedia.org)
Hyperinflation in action - (optionarmageddon.ml-implode.com)
Why the Economy Grows Like Crazy Amid High Taxes - (www.alternet.org)
The Global Poker Tour: An Allegory - (ashizashiz.blogspot.com)
Economists : Economic forecasting animation - (www.andyfoulds.co.uk)