Monday January 19 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Six somewhat-related stories about corporate/finance criminals gone wild, with 3 potentially faking their own deaths. According to some people, Ken Lay may be the only one to get away with it (with a little help from his friends in the White House) :-)
· Mystery pilot captured after apparent suicide try - (www.cnn.com) Marcus Schrenker, the financial manager who officials say faked his own death in a plane crash after scamming his customers, has been found after an apparent suicide attempt, Florida and federal authorities said Tuesday.
· Samuel Israel, Hedge Fund Suicide Faker, Seeks Guilty Plea But Is ... – (www.huffingtonpost.com) A hedge-fund swindler accused of faking his own suicide tried to plead guilty Wednesday for going on the lam, but his case was postponed for six weeks after he told the judge that his drug therapy was affecting his ability to think clearly. If his guilty plea is ever accepted, Samuel Israel III, 49, could have as much as 10 years added to his 20-year sentence for bilking investors out of hundreds of millions of dollars. Israel tried to plead guilty before a federal magistrate judge Wednesday morning, but she refused and an afternoon session with U.S. District Judge Kenneth Karas was scheduled. Karas asked Israel several questions meant to make sure that a defendant entering a guilty plea knows what he is doing. When Karas asked about medications, Israel said he was being weaned off the painkiller fentanyl _ which had been prescribed after several back surgeries _ with methadone.
· F.B.I. and S.E.C. Probe Missing Fund Manager - (http://www.nytimes.com/) The investigation of Arthur Nadel is leaving clients concerned that they might have lost as much as $350 million. The F.B.I. and securities regulators have joined the investigation of Arthur Nadel, a Florida hedge fund manager who disappeared four days ago, leaving clients concerned that they might have lost as much as $350 million. Skip to next paragraphThe Federal Bureau of Investigation and the Securities and Exchange Commission are helping on the case, police Lt. Stanley Beishline of Sarasota, Fla., said in a telephone interview. One of Mr. Nadel’s business partners, Neil Moody, said Mr. Nadel had spoken to his wife, Peg, since he was reported missing. Mr. Nadel, 76, is president of Scoop Management in Sarasota, which oversees funds that include Valhalla Investment Partners. Mr. Moody holds no position in Scoop Management and was a partner with Mr. Nadel only on the Vahalla fund and two Viking funds. Scoop’s claim to have managed as much as $350 million “may be high because performance results were exaggerated,” Mr. Moody said in an interview. Mr. Moody said he did not know anything was wrong until Mr. Nadel was reported missing. Mr. Nadel was last seen by his wife at 8:45 a.m. on Wednesday when he left for work, said Lt. Chuck Lesaltato of the Sarasota County sheriff’s office.
· Former UBS Banker Declared a Fugitive by US - (www.cnbc.com) The former head of the wealth management business at UBS, Raoul Weil, was formally declared a fugitive on Tuesday after failing to surrender to U.S. authorities on charges of conspiring to help wealthy Americans hide assets from U.S. tax authorities. Prosecutors in Miami released a copy of a judge's brief order putting Weil on the court's fugitive list, but said they would have no further comment. An indictment unsealed in November alleged that Weil and other unidentified bankers conspired to help 17,000 Americans hide $20 billion of assets in Swiss bank accounts in order to avoid paying U.S. taxes. At the time, an attorney for Weil said he was innocent and called the indictment against him "totally unjustified." Weil was based in Switzerland. He oversaw the Swiss bank's cross-border private banking business and was a member of UBS' executive board until stepping down when the charges were made public. UBS has said it was cooperating with investigators. Weil's failure to appear is bound to refocus attention on prosecutors' so far unsuccessful bid to jail alleged swindler Bernard Madoff while he awaits a possible indictment for fraud in what could the be largest Ponzi scheme in history.
· Joseph Forte, Mini-Madoff: Philly Man Charged With $50M Ponzi Scheme - (www.huffingtonpost.com) An investment manager ran a Ponzi scheme that swindled an estimated $50 million from as many as 80 investors, federal authorities charged. Joseph S. Forte, 53, of Broomall, Pa., was given the money to invest between 1995 and 2008, the Securities and Exchange Commission said Thursday. Through his firm, Joseph Forte LP, he either lost it playing the market or didn't invest it at all, authorities said. Meanwhile, Forte was telling his investors that he was making huge profits, investigators said. His portfolio in September reported a value of more than $150 million but its trading account contained less than $147,000, according to an SEC complaint filed Wednesday. The commission said Forte admitted using as much as $20 million in investor funds to repay other investors and withdrawing up to $12 million in so-called fees for his own use. Investigators said account statements provided to Forte LP investors show he actually pocketed $28 million. Forte, who is charged with fraud and related counts, did not return messages left by The Associated Press. The investors thought their money was going into a commodity futures pool that traded in securities futures contracts, including S&P 500 stock index futures. The SEC said Forte admitted falsifying investment returns from the beginning.
· The conspiracy theories surrounding Ken Lay's death. - Jul. 6, 2006 - (money.cnn.com) Is Ken Lay, a Fortune 500 power broker who rubbed shoulders with world leaders and the jet set elite, really dead? To some folks, no. "It's the CIA," said one mysterious caller to CNNMoney.com. "There [must] be proof beyond any doubt that Ken Lay is dead and there is not a double being used so that Ken Lay can hide somewhere with the money he stole," wrote a reader. "Make sure somebody in the press sees a body," added another reader. There are several theories. The general idea is that Lay faked his death and is now living somewhere south of the border ... no doubt partying with Elvis. How could he pull off such a feat? Well, he was a one-time friend of President Bush. Even raised campaign funds for him. So either through friendship or even blackmail, then, the government helped. Or perhaps Lay is dead ... but not from a heart attack, as the local coroner said. Maybe the CIA used one of its fancy poisons -- you know, the untraceable kind -- to keep Lay from embarrassing the President. Or Lay used a poison himself to keep from suffering the indignity of prison. A sort of Samurai send off. After all, his whole family was with him at the end. (That Fourth of July holiday thing was just a cover).


Go East, young man? Californians look for the exit - (www.sacbee.com) Mike Reilly spent his lifetime chasing the California dream. This year he's going to look for it in Colorado. With a house purchase near Denver in the works, the 38-year-old engineering contractor plans to move his family 1,200 miles away from his home state's lemon groves, sunshine and beaches. For him, years of rising taxes, dead-end schools, unchecked illegal immigration and clogged traffic have robbed the Golden State of its allure. Is there something left of the California dream? "If you are a Hollywood actor," Reilly says, "but not for us." Since the days of the Gold Rush, California has represented the Promised Land, an image celebrated in the songs of the Beach Boys and embodied by Silicon Valley's instant millionaires and the young men and women who achieve stardom in Hollywood. But for many California families last year, tomorrow started somewhere else. The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period - more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.

David Lereah - now even more pathetic - (themessthatgreenspanmade.blogspot.com) The saga of David Lereah, the former Chief Economist for the National Association of Realtors, is getting more and more interesting and, as might be expected, more and more pathetic. Recall that last week, in a CNN/Money report, he essentially confessed to being a paid shill for the realtors' trade group and was the subject of ridicule here and elsewhere (Barry Ritholtz was not nearly as kind as Paul Kedrosky). This week, in a story appearing in tomorrow's Wall Street Journal, he bares even more of his soul and the details that emerge raise the "creepy" factor by at least an order of magnitude. (Note: The image above comes courtesy of the Marin Real Estate Bubble blog and, yes, just like his Wikipedia entry, the WSJ story mentions Baghdad Bob.). Disturbing new revelations include the following: the NAR won't return his phone calls (stop calling!) he works out of a home office that doubles as an exercise room he drives to McDonald's or Dunkin' Donuts everyday and eats in his car. Seriously. You have to wonder what he held back... Mr. Lereah, who says he left NAR voluntarily, says he was pressured by executives to issue optimistic forecasts -- then was left to shoulder the blame when things went sour. "I was there for seven years doing everything they wanted me to," he said, looking out his window to his tree-filled yard in this Washington suburb. Mr. Lereah now works at home, trying to rebuild his career and saddled with a sagging portfolio of real-estate investments.

Punish savers and make them spend money Anatole Kaletsky – (business.timesonline.co.uk) Very dangerous story but beginning to gain favor. These are the same supposed “economists” who believed the stock market and housing markets only go up. When their advice and investments go back, they believe everyone should be forced to spend their savings for the “better good”. Near-zero interest rates and even a tax on bank deposits are necessary to force those with cash to use it productively. The battlelines are drawn. On one side we have the Labour Government and the Liberal Democrats, the Bank of England, the US Federal Reserve Board and the vast majority of Keynesian economists in every country - plus Barack Obama. On the other side, the Tory Opposition, the German Socialists, the European Central Bank, the Church of England and the vast majority of Marxist economists in every country - plus the British public. The question, of course, is what to do about the recession. Specifically whether the way out is “to spend, spend, spend or to save, save, save” - as David Cameron has so clearly put it. I believe, in line with the vast majority of non-socialist economists, that Mr Cameron's campaign for savings is completely wrong; that “borrowing our way out of debt”, paradoxical as it sounds, is exactly the right prescription for our present problems. This paradox is easily explained: if governments or wealthy individuals increase their borrowings they replace weak debtors - bankrupt hedge funds, struggling businesses or repossessed homeowners - with strong ones and this helps to stabilise the financial system and sustain economic activity and employment. The country can borrow its way out of debt.

NAR Whore Lereah Has Few Regrets - (optionarmageddon.ml-implode.com) From the WSJ piece: Once one of the world’s most-visible housing experts, Mr. Lereah is disconnected from his old life. The former chief economist for the National Association of Realtors says the group’s top executives won’t return his phone calls. He says he wasn’t invited to the association’s 100th birthday bash last May… Mr. Lereah, who says he left NAR voluntarily, says he was pressured by executives to issue optimistic forecasts — then was left to shoulder the blame when things went sour. “I was there for seven years doing everything they wanted me to,” he said, looking out his window to his tree-filled yard in this Washington suburb. Mr. Lereah now works at home, trying to rebuild his career and saddled with a sagging portfolio of real-estate investments. He deserves zero sympathy for issuing rosy forecasts under “pressure,” though it is interesting that he ate his own cooking. During the boom years, Mr. Lereah was eager to profit himself. He snapped up condos, including two in Washington in 2003 and 2004 and one each in Tampa, Richmond, Va., Alexandria, Va., and Naples, Fla. By 2006, he says, he owned six condos worth between $150,000 and $400,000 apiece. Hah! Tampa and Naples? Those are two of the hardest hit markets in the country. Mr. Lereah admits to one mistake: believing there would be no national housing crash. “I have to take the blame for that,” he says. “I never thought it would be as bad as this.”

Massive Taxpayer Backlash Over Pension Crisis Is Coming - (globaleconomicanalysis.blogspot.com) Pension plans are a bubble that is now bursting wide open. Five major factors contribute to the crisis: mounting stock market losses, optimistic plan assumptions, longevity (retirees living longer), overly generous payouts, and a surge of boomer retirements. There are new stories out every day discussing these issues, yet few are aware of them. Let's take a look at a few recent headlines. $865 Billion Loss Affects New HiresState Pensions’ $865 Billion Loss Affects New Hires: State governments from Rhode Island to California have run up estimated pension-fund losses of $865.1 billion, forcing some to cut benefits for new hires. Assets for 109 state funds declined 37 percent to $1.46 trillion over the 14 months ended Dec. 16, according to the Center for Retirement Research at Boston College. The Standard & Poor’s 500 Index of stocks fell 41 percent in the period. After Philadelphia’s fund lost $650 million in the first nine months of last year, Nutter joined the mayors of Atlanta and Phoenix in writing a letter to Treasury Secretary Henry Paulson seeking financial help for U.S. cities. Their November letter cited investment deficits and rising pension costs.Bernanke Hints Banks, Economy In Much Worse Shape Than Previously Admitted - (globaleconomicanalysis.blogspot.com) At the Stamp Lecture, London School of Economics, London, England,Bernanke Urges ‘Strong Measures’ to Stabilize Banks. Federal Reserve Chairman Ben S. Bernanke warned that a fiscal stimulus won’t be enough to spur an economic recovery and that the government may need to buy or guarantee banks’ tainted assets to revive growth. “Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system,” Bernanke said in a speech today at the London School of Economics. “More capital injections and guarantees may become necessary to ensure stability and the normalization of credit markets.” My Translation: "Banks are in much worse shape than we have admitted previously. More taxpayer money is needed to prop up these failing banks."


OTHER STORIES:

2nd Downtown Key West House Asking Less Than $200,000 - (rocktrueblood.blogspot.com)
Obama Faces Tough Job Selling TARP to Democrats - (www.cnbc.com)
Obama Pushes for Funds - (www.cnbc.com)
Treasury to Monitor Lending - (www.cnbc.com)
Tough Talkin' Bartz Takes On Yahoo - (www.cnbc.com)
Chrysler in Talks With Renault, Magna: Report - (www.cnbc.com)
Geithner Faces Questions On Housekeeper, Taxes - (www.cnbc.com)
Hot Trade For First 100 Days - (www.cnbc.com)
Bernanke: Governments Will Need to Do More - (www.cnbc.com)

Europe baffled by broken gas promises - (www.ft.com) Russia accuses the US of meddling.
Market Blather from Experts - (online.barrons.com)
Financial scoundrels have little to fear from the law - (www.latimes.com)
Financial advisor faked own death via plane crash - (www.cnn.com)
America's Weakest Housing Markets - (promo.realestate.yahoo.com)
No Refi's For Borrowers with Modified Loans - (mrmortgage.ml-implode.com)
In recession, home builders reduce square footage - (www.usatoday.com)
Jerry Maguire, Mission Statements and the Great Housing Malaise - (www.seekingalpha.com)
A Plan For Another Real Estate Bubble - (www.nuwireinvestor.com)
Email the Treasury Department - (www.watchingmarcitz.com)
Kissinger: The chance for a new world order - (www.iht.com)
The Last Bubble -- Barack Obama - (www.scoop.co.nz)
Right to Rent: Helping Houseowners Without Throwing Money at Banks - (www.huffingtonpost.com)
I Want My Bailout Money - (www.youtube.com)