Monday January 12 Housing and Economic stories

Go to KeNosHousingPortal.blogspot.com

TOP STORIES:

Financiers checking out, 3 suicides this week - (www.ml-implode.com) Three prominent financiers/executives have committed suicide this week, and these guys are choosing gruesome ways to go out. Steven Good swallowed a bullet: Real-estate executive Steven L. Good was found dead of an apparently self-inflicted gunshot wound Monday in his Jaguar in a forest preserve outside Chicago, said the Kane County Sheriff’s Department. Mr. Good, 52 years old, was chief executive of Sheldon Good & Co., one of the nation’s largest real-estate auction firms. His father founded the company in 1965… As chairman of the Realtors Commercial Alliance Committee, Mr. Good said last month in an industry outlook news release that market conditions were “very challenging.” Villehuchet slit his wrists: A French executive who invested with accused swindler Bernard Madoff was found dead in an apparent suicide on Tuesday, reportedly distraught over losing up to $1.4 billion (955 billion pounds) in client money. Thierry Magon de la Villehuchet, 65, a co-founder of money manager Access International, was found dead on the 22nd floor of a New York City office building, officials said. He slit both wrists with box cutters, and appeared to bleed to death, according to a police source who spoke on condition of anonymity. Adolf Merckle went with the Anna Karenina exit: He seemed to be the epitome of the respectable German industrialist: a modest family man who strove to avoid publicity. But behind the scenes, the billionaire entrepreneur Adolf Merckle speculated and gambled away his fortune. On Monday, his body was pulled from under a train. The 74-year-old pillar of Germany’s business community and the country’s fifth richest man committed suicide after losing millions in a high-risk stock market venture that backfired. Yesterday, his family blamed the credit crunch for his death.

Cathay Pacific shares tumble after warning it could lose $1 billion from fuel hedging - (www.chicagotribune.com) Shares in Cathay Pacific Airways Ltd. fell sharply Thursday after Asia's third-largest carrier said it could lose nearly $1 billion from hedging its jet fuel costs, adding to the toll on global airlines from bad bets on oil prices. The company also reiterated its profit warning for 2008, saying passenger and cargo traffic had weakened significantly in November and December. Cathay shares tumbled 7.6 percent to 8.97 Hong Kong dollars on the territory's stock exchange. Hong Kong's flagship airline, in a statement late Wednesday, said its unrealized losses from hedging contracts as of year's end had soared to HK$7.6 billion ($980 million) as oil prices slumped in recent months. That's almost triple the HK$2.8 billion ($361 million) hedging loss the carrier had reported as of Oct. 31. The bets were originally placed to protect against surging oil prices early last year. Most of the losses on the contracts, which run through 2011, hadn't been realized and could be lower should fuel prices rise again, the carrier said.

Chrysler Wants Money, Asks To Become "Independent Lending Corporation" – (www.globaleconomicanalysis.blogspot.com) The requests for handouts keep right on coming: Chrysler seeks to tap relief funding. Chrysler’s financing unit is in talks with the US government to change its status in a way that will allow it to tap into the troubled assets relief programme and other sources of credit. The Detroit carmaker, which received $4bn in government aid on Friday, said on Monday that Chrysler Financial first applied three years ago to be classified as an “independent lending corporation” and that the talks have recently intensified. Unlike GMAC, General Motors’ financing arm, Chrysler Financial is not seeking a bank charter. Even so, Ron Kolka, chief financial officer, said the proposed new status would “give us multiple sources of funding and cheaper sources of funding for the finance company”. He did not elaborate.

US porn industry seeks multi-billion dollar bailout – (www.telegraph.co.uk) Porn baron Larry Flynt is seeking a $5 billion bailout from Washington to rejuvenate the industry, which he says is suffering because of the economic downturn. The Hustler magazine founder has teamed up with fellow adult entertainment mogul Joe Francis, creator of the Girls Gone Wild video series, to approach Congress for the same kind of financial assistance recently approved for car manufacturers. The pair have asked the 111th Congress, which convened on Tuesday with the economy at the top of its agenda, "to rejuvenate the sexual appetite of America" with a bailout. "Congress seems willing to help shore up our nation's most important businesses, (and) we feel we deserve the same consideration," Francis said in a statement. "In difficult economic times, Americans turn to entertainment for relief. More and more, the kind of entertainment they turn to is adult entertainment." "The take here is that everyone and their mother want to be bailed out from the banks to the big three," Owen Moogan, a spokesman for Flynt, told CNN. "The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion. Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine."

More Pain for US Borrowers as China Hangs on to Cash - (www.cnbc.com) China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers. The declining Chinese appetite for United States debt, apparent in a series of hints from Chinese policy makers over the last two weeks, with official statistics due for release in the next few days, comes at an inconvenient time. On Tuesday, President-elect Barack Obama predicted the possibility of trillion-dollar deficits “for years to come,” even after an $800 billion stimulus package. Normally, China would be the most avid taker of the debt required to pay for those deficits, mainly short-term Treasurys, which are government i.o.u.’s. In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasurys.

Financial Scandal at Outsourcing Company Rattles a Developing Country - (www.nytimes.com) Ramalinga Raju was contrite, sort of. In an emotionally charged four-and-a-half page letter, Mr. Raju, the chairman and co-founder of one of India’s largest outsourcing companies, described to his board on Wednesday how a small discrepancy had mushroomed into one of the biggest scandals in Indian corporate history. “What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew,” he wrote. “It was like riding a tiger, not knowing how to get off without being eaten.” In the end, the scandal threatened to gobble up not just Mr. Raju, who resigned, but his company, Satyam Computer Services. Far beyond Satyam, it raised fears that similar problems might lurk in other Indian companies, particularly in its vaunted outsourcing industry. “One only hopes that with the kind of scrutiny and the kind of focus this brings, everybody doesn’t end up being painted with the same brush,” said Lakshminarayana, the chief strategy officer for Wipro Technologies, which competes with Satyam. The long-running fraud, which is being called India’s Enron, also raised questions about the vigilance of regulators in India and the United States.

Samberg’s Pequot Said to Face New SEC Insider-Trading Inquiry - (www.bloomberg.com) The U.S. Securities and Exchange Commission opened a new investigation into whether Pequot Capital Management Inc., the hedge fund run by Arthur Samberg, illegally profited in 2001 by tapping inside information on Microsoft Corp., two people familiar with the matter said. Investigators learned of documents that show former Microsoft employee David Zilkha may have obtained confidential information about the software maker, said one of the people, declining to be identified because the investigation isn’t public. Zilkha left the company in 2001 to join Pequot. The documents were discovered on a hard drive Zilkha’s ex- wife copied from their shared computer during the divorce, her lawyer, Mark Sherman, said in an interview. It couldn’t be determined whether investigators have verified the records, or whether the documents played a role in reopening the inquiry.

state unemployment claim systems are overwhelmed - (www.ap.com) Electronic unemployment filing systems have crashed in at least three states in recent days amid an unprecedented crush of thousands of newly jobless Americans seeking benefits, and other states were adjusting their systems to avoid being next. About 4.5 million Americans are collecting jobless benefits, a 26-year high, so the Web sites and phone systems now commonly used to file for benefits are being tested like never before. Even those that are holding up under the strain are in many cases leaving filers on the line for hours, or kissing them off with an "all circuits are busy" message. Agencies have been scrambling to hire hundreds more workers to handle the calls. Systems in New York, North Carolina and Ohio were shut down completely by technical glitches and heavy volume, and labor officials in several other states are reporting higher-than-normal use. "Regardless of when you call, be prepared to wait and just hang on. Try not to get frustrated," said Howard Cosgrove, a spokesman for the Wisconsin Department of Workforce Development, which boosted its staff of telephone operators by 25 percent last month to cope with a phone system that has been overloaded for weeks. "We sympathize, we're on their side, we're doing our best to help them out." The nation's unemployment rate in November zoomed to 6.7 percent, a 15-year high. Economists predict it will rise to 7 percent in December, with another 500,000 jobs probably cut last month. The government releases its monthly employment report on Friday. Some states attribute the increase in call volume in part to an extension of federal emergency unemployment compensation from 13 weeks to 20 weeks in late November. More than 54,000 Pennsylvanians had exhausted their federal benefits after 13 weeks by the time that occurred, said David Smith, a spokesman for the Pennsylvania Department of Labor and Industry.

WaMu’s New $1 million 5-year 1% Balloon Loan (mod) - $878 Per Month! - (www.ml-implode.com) - Mortgage modifications have turned into a disaster of epic proportions. Everywhere you look, mortgage mod firms are promising things that I do not believe can be attained. Back in the good old days of nine months ago when I became hot and heavy on private sector loan mods, the banks and servicers were actually looking at the entire picture and reducing principal balances when necessary. The home owner or mod company would present a ‘present’ and ‘proposed’ solution to the note holder of which one of the choices was a principal reduction — and many times it was granted. As you know, I am a big proponent of mortgage modifications done the right way. I have swung completely over to this side of the fence as regulators, law makers and banks have rolled out their harmful, boiler-plate loan modification initiatives that leave many underwater, over-leveraged renters for life. It is obvious that these loan modification plans have been born as a result of panic and the need to protect the bank’s balance sheets rather than doing what is beneficial for the home owner and broader housing market. Fannie/Freddie and FDIC ‘mod in a box’ examples below. Below is an actual example of a recent WaMu loan mod with a 5-year $1 million bullet payment. This mod takes exotic lending to level I have never witnessed in my 20-years of mortgage banking. This makes a Pay Option ARM looks safe and cozy — and puh-lease do not tell me this is great because it frees him up to spend money into the economy. Banks offering and borrowers actively accepting this style loan mod will guaranty that the housing crisis stays will us for a long time to come. This borrower will lose his home in 5-years, I have no doubt. That is of course unless his house price goes up 100% AND great, low rate super jumbo money returns to the market so he can refi out of it - then again, many lenders won’t even refi a loan that has had a previous loan mod done.


OTHER STORIES:

Housing Push for Hispanics Spawns Wave of Foreclosures - (www.ml-implode.com)
Shilling: Housing Market Could Fall Another 20 Percent - (www.ml-implode.com)
Paulson Offers Suggestions For Fannie/Freddie Roles - (www.ml-implode.com)
Ended Dollar Dead Bounce - (www.ml-implode.com)
Early Warnings Signaling An Ugly Earnings Season - (www.cnbc.com)
Russia, Ukraine Fail to Solve Gas Row, Talks to Go On - (www.cnbc.com)
Ballmer Opens New Windows, Beats Microsoft Drum - (www.cnbc.com)
Crucell in Friendly Merger Talks With Wyeth - (www.cnbc.com)

U.S. stock futures turn lower after Wal-Mart warning - (www.marketwatch.com)
Stocks in Europe, Asia Decline on Earnings Concern; BHP Drops - (www.bloomberg.com)
Oil up to $43 after 12 percent fall overnight - (www.reuters.com)
2008 Leaves Pensions Underfunded - (www.washingtonpost.com)
China Losing Taste for Debt From the U.S. - (www.nytimes.com)
Housing downturn hits L.A.-area rents - (www.latimes.com)
BOE Cuts Rate to Lowest Since Bank’s Creation in 1694 - (www.bloomberg.com)

European Confidence Declines, Unemployment Increases - (www.bloomberg.com)
ECB Expands Balance Sheet by 36 Percent to Revive Lending - (www.bloomberg.com)
Record U.K. Gilt Sales Raise Risk of Auction Failure - (www.bloomberg.com)
Report Places 2009 Budget Deficit at $1.2 Trillion - (www.washingtonpost.com)
A Crisis Trumps Constraint - (www.nytimes.com)
Budget gloom will toughen resistance to stimulus - (www.ft.com)
US deficit set for postwar record - (www.ft.com)
Loan Delinquencies Hit Record High Last Year - (www.washingtonpost.com)
Congress Urges Spending Restraint - (www.washingtonpost.com)
Wal-Mart sales disappoint, cuts forecast - (www.reuters.com)
A rare dip in airline traffic in 2008 - (www.latimes.com)
Retailers' December seen as among the worst in 40 years - (www.latimes.com)
Life Insurer Surplus Plunges $77 Billion, Erasing Six-Year Gain - (www.bloomberg.com)
Intel, Time Warner Shortfalls Signal Further U.S. Forecast Cuts - (www.bloomberg.com)
Chinese PC maker Lenovo to cut 11 percent of work force, warns of quarterly loss - (www.chicagotribune.com)
For Pittsburgh, There’s Life After Steel - (www.nytimes.com)