Friday January 2 Housing and Economic stories

TOP STORIES:

Crude hits $34 despite prospect of output cuts - (www.ft.com) Doubts grow about OPEC members keeping pledges. Oil prices this week plunged to their lowest level since April 2004, in spite of Opec’s latest effort to steady the market with an agreement to implement the largest supply cut in the cartel’s history, which was announced on Wednesday. The benchmark US crude price sank below the $34-a-barrel level on Friday. Nymex January West Texas Intermediate dropped to $33.44, a four a-half-year trough, before recovering to trade 75 cents lower at $35.47, down 23.4 per cent this week. The January contract expired at the close on Friday, so there was significantly more trading in the February WTI contract, the benchmark from next week, up 73 cents at $42.40 a barrel, recovering from a low of $40.90. ICE February Brent rebounded 64 cents to $44 a barrel, down 10.4 per cent this week.

Bucolic town loses $42m in pension fund to Madoff - (www.ft.com) The 58,000 residents of the bucolic town of Fairfield, in Connecticut, awoke this week to some unpleasant news. The Fairfield pension fund, which manages the retirement money of the town’s police officers, firefighters and municipal workers, discovered over the weekend that it could have lost $42m, or 14 per cent of its assets, to Bernard Madoff’s alleged Ponzi scheme. The fund had invested in Maxam Capital Management, a hedge fund heavily exposed to Mr Madoff’s operation. Maxam is run by Sandra Manzke, an industry pioneer who founded Tremont Capital Management, one of the biggest US funds of hedge funds which has over $3bn in exposure to the scheme itself. Ken Flatto, the First Selectman of Fairfield, told the Financial Times: “We had always been given a lot of information, we totally believed it was a safe and conservative investment. In fact, only three months ago we got a memo from [Mr] Madoff saying that he had moved all the money into [US Treasury bills] to be even safer.”

Funds blame US regulators for Madoff debacle – (www.ft.com) Hedge funds and investors who lost money in the alleged $50bn Madoff scam have begun defending their decision to invest with Bernard Madoff, in some cases trying to shift the blame to US regulators. Union Bancaire Privée, the Swiss bank that is one of the world’s biggest hedge fund investors, told clients in a letter this week that it had spotted potential dangers but had been reassured by Mr Madoff’s reputation and clean regulatory record. Other investors – while expressing shock at what could be the biggest ever financial fraud – said they were angry at the failure of the Securities and Exchange Commission, the US markets watchdog, to spot the fraud. “The American authorities must bear a great deal of blame for this,” said Ken Thornber, leader of the UK’s Hampshire County Council, whose pension fund lost £7m by investing with a Madoff fund. “They missed as obvious a trick as pyramid selling and to do that with people’s savings is unforgivable. We have got a regulatory crisis of global proportions. Where on earth were the American authorities here?”

Polaroid files for bankruptcy - (www.ft.com) Compromised’ by parent company fraud charges. Polaroid, the US company that introduced instant photography 60 years ago, has filed for bankruptcy to restructure its business, which it said was compromised after the founder of its parent company was arrested earlier this year on fraud charges. The iconic cameramaker said it filed for bankruptcy protection in Minnesota on Thursday as a result of the fraud investigation into Petters Group Worldwide, which has owned Polaroid since 2005. Polaroid said that it is not under investigation and that it does not expect to shut down. “Polaroid’s financial condition was compromised by the apparent fraudulent acts perpetrated by the founder of Petters Group Worldwide, Polaroid’s parent company, and certain of his associates,” the company said in a statement. The company said it has ample cash to finance the reorganisation and that it does not expect to seek additional debtor-in-possession financing.

MLB Tells Employees It Has Initiated Hiring Freeze - (www.cnbc.com) CNBC has exclusively learned that Major League Baseball had a meeting with its employees yesterday and announced to its staff that, in order to deal with the current economic environment, it was undergoing a hiring freeze, freezing salaries and taking 20 percent of employees' vacation time for 2009. At this time, unlike the NBA and NFL, there will be no layoffs. The NHL has also instituted a hiring freeze.

British PM says oil price volatility is great threat to global economy - (www.chicagotribune.com) British Prime Minister Gordon Brown warned Friday that a failure to tackle volatility in oil prices could cost the global economy trillions of dollars and hurt both producers and consumers. Brown told an energy summit in London that the wild variation in crude prices was the "most pressing challenge" facing the international community and called for improved regulation of oil markets to stabilize prices. Oil prices have fallen to four-year lows this week despite OPEC's agreement on Wednesday to slash global output. The British leader pushed for greater investment in clean energy technology as he addressed energy and oil ministers from 27 key oil-producing and consuming countries.

California home prices dive 38% - (www.latimes.com) The median home price in California dived 38% in November from a year earlier as foreclosures propped up sales but eroded prices, a real estate tracking firm said Thursday. The median home price dropped to $258,000 last month from $414,000 in November 2007, San Diego-based MDA DataQuick said. A total of 32,163 houses and condominiums were sold statewide, up 26% from a year earlier. "Indicators of market distress continue to move in different directions," DataQuick said. "Foreclosure activity is at or near record levels, financing with adjustable-rate mortgages is near the all-time low."



OTHER STORIES:

Banks lent billions to Madoff ‘feeder funds’ - (www.ft.com)
A Troubled Asset Becomes a Year-End Bonus - (www.nytimes.com)
Warning on price volatility of oil - (www.ft.com)
Record oil cut fails to lift prices - (www.ft.com)
Traders gamble oil price yo-yo is on way up - (www.ft.com)
TARP Rule Could Mean Retroactive Limits, Executive Salary Caps - (www.bloomberg.com)
BOJ cuts rates and pumps funds to fight credit crunch - (www.reuters.com)
Denmark Unexpectedly Cuts Key Interest Rate to 3.75% - (www.bloomberg.com)
Canada Plans Stimulus Package Up to C$25 Billion, Official Says - (www.bloomberg.com)
Mortgage lending set to turn negative - (www.ft.com)
Owners find themselves trapped underwater - (www.usatoday.com)
Obama Team Assembling $850 Billion Stimulus - (www.washingtonpost.com)

Bay Area home values hit 8-year low in November - (www.sfgate.com)
GM and Chrysler Will Get $13.4 Billion in U.S. Loans - (www.bloomberg.com)
Goldman, UBS, Deutsche Bank Among 12 Banks Lowered by S&P - (www.bloomberg.com)
GM, Chrysler May Get U.S. Loans to Survive to March - (www.bloomberg.com)
White House mulls Chapter 11 for carmakers - (www.ft.com)
GE, GE Capital Ratings Outlook Cut to Negative by S&P - (www.bloomberg.com)
2010 Ford Fusion Hybrid: 52 mpg and the darkness before dawn - (www.latimes.com)
Toyota may post first parent operating loss in 71 years - (www.reuters.com)
Giants Lose to Lehman in $300 Million Swaps as They Romp in NFL - (www.bloomberg.com)
The saga of Parmalat’s collapse - (www.ft.com)

Twelve Major Banks Downgraded by S&P - (www.cnbc.com)
S&P Cuts Rating on American Express - (www.cnbc.com)
Low Mortgage Rates Toss Housing Market a Lifeline - (www.cnbc.com)
Utilities, Retailers in Path of Winter Storm - (www.cnbc.com)
Credit Suisse Execs Get Risky Assets as Bonus - (www.cnbc.com)
Madoff Scandal Pulls In an Unlikely Player - (www.cnbc.com)
Numbers Cruncher Says Madoff Math Didn't Add Up - (www.cnbc.com)
Retailers to Unleash Jaw-Dropping Sales in Final Push - (www.cnbc.com)