Saturday January 3 Housing and Economic stories

TOP STORIES:

Downturn hits vacation enclave of New York elite - (www.reuters.com) Just months after he was ousted from Lehman Brothers, Joseph Gregory put his mansion in tony Bridgehampton on the market for $32.5 million. The former president of the sinking investment bank could not have picked a worse time. The Hamptons, a summer vacation playground for New York's financial and celebrity elite, are being hit hard as Wall Street power houses like Lehman and Bear Stearns succumb to the financial crisis. According to a report by Douglas Elliman, real estate prices fell 11.1 percent in the third quarter in the Hamptons, an exclusive section on the eastern tip of Long Island, less than 100 miles from New York City. According to Gregory's real estate agent, he and his wife are selling because they spent little time there after purchasing and upgrading the posh property two years ago. But the Gregorys are not the only Wall Streeters opting out of the Hamptons as the financial markets crumble. The financial sector has announced 220,506 job cuts so far this year, the most of any industry, according to a recent report by global outplacement consultancy Challenger, Gray & Christmas. In November alone, there were 91,356 job cuts announced, the report showed. Citigroup has said it plans to eliminate a whopping 52,000 jobs, while Bank of America has said it will cut 35,000, with some of the job losses expected to be in New York. Wall Streeters who have not lost their job face bonuses that will sharply pale in comparison to previous years. That bonus is the bulk of their compensation. "There is a palpable fear I sense right now from people who realize they may be in over their heads with a mortgage or are anxious about selling their homes," said Diane Saatchi, senior vice president at Corcoran Group Real Estate in East Hampton.

Foundation tied to Madoff losses says it will close – (www.marketwatch.com) Picower Foundation gave millions to medical research and educational efforts. The Picower Foundation, a large U.S. charity that's given hundreds of millions of dollars to medical research and educational initiatives, says it's closing its doors, another victim of the alleged fraud perpetrated by Bernard Madoff, according to published reports. In a move that could have ripple effects for many other nonprofit groups, the foundation will stop making grants "effective immediately" and go out of business in the coming months, according to a statement from co-founder Barbara Picower. She also said that Madoff's "act of fraud has had a devastating impact on tens and thousands of lives as well as numerous philanthropic foundations and nonprofit organizations." Philanthropies of all sizes are scrambling to assess their exposure to investments handled by Madoff, who's accused of orchestrating a $50 billion Ponzi scheme that's ensnared a broad swath of individual investors, charities, universities, hedge funds, pension funds and banks in the U.S., Europe and Asia. Read more about how Madoff built his operation. The Picower Foundation had a Madoff-managed investment portfolio valued at nearly $1 billion, as listed in its 2007 tax return, according to reports. It was started in 1989 by investor Jeffry M. Picower and his wife Barbara and had given millions to Human Rights First and the New York Public Library, among other groups. It also funded brain research at the Massachusetts Institute of Technology. The foundation is based in Palm Beach, Fla., with offices in New York.

Wynn to open new casino resort in Las Vegas – (www.marketwatch.com) His competitors face free falling stock prices and potential bankruptcies, but Steve Wynn's company is sitting pretty as it prepares to open the doors on Monday to its lavish new resort, Encore. The $2.3 billion, 2,000-room hotel-casino, which is attached to the three-year-old Wynn Las Vegas on the Strip, debuts at a moment when Las Vegas is gripped in its worst downturn in decades. But Wynn is confident that he'll weather the storm. "I don't owe a dime personally, and the company's solid as a rock," said Wynn, 66, chief executive and president of Wynn Resorts Ltd. "That's why we were just named to the S&P 500. We're not at risk here. We're very lucky." Wynn Resorts, which also has the 600-room Wynn Macau in China and plans to open a 400-room expansion called Encore Macau by Christmas 2009, has certainly suffered in the downturn. Yet whereas the company has lost about half of its stock value this year, rival MGM Mirage has lost more than 80%, and Las Vegas Sands (LVS) has dropped more than 90%.

A Risk for Ford in Shunning Bailout, and Possibly a Reward - (www.nytimes.com) The Big Three automakers are now two troubled companies getting government help to survive and one — the Ford Motor Company — trying to make it on its own. But Ford faces a new challenge of its own — improving its competitive position without the assistance that $17.4 billion in federal loans will provide General Motors and Chrysler. The loan package given to G.M. and Chrysler came with strict conditions that it cut its labor costs and reorganize its debt obligations, or possibly be forced into bankruptcy. Ford, however, needs to reduce its own costs to stay on a level playing field with its crosstown rivals. A Ford spokesman said Friday that the company expected to work with the United Automobile Workers union to achieve any savings that G.M. and Chrysler might negotiate. “We have a strong relationship with the U.A.W.,” said Mark Truby, the Ford spokesman. “We’re going to continue to work to completely close the competitive gap with foreign transplants.”

Failure to Bail out Bank Topples Belgian Government - (www.cnbc.com) Belgium's King Albert consulted political leaders on Saturday after the government collapsed for the third time in a year following its botched attempt to bail out financial group Fortis. Prime Minister Yves Leterme tendered his government's resignation on Friday after a report by the Supreme Court found signs of political meddling to sway a court ruling on the future of the bank, a victim of the credit crunch. The king, who under the constitution must decide whether to accept the resignation, held successive talks at the palace with the heads of the five ruling-coalition parties until 2 a.m. on Saturday, a palace spokesman said. Consultations were to continue later in the day. Belgian media said there was little chance of Leterme staying in power. The newspaper De Morgen said a reshuffled, emergency cabinet could be stitched together to govern until June.

Russians protests over car tariffs in what could be serious challenge to Kremlin - (www.latimes.com) Sergei Morozov fears new import tariffs will keep him from buying the car he wants for months. The Kremlin fears Morozov's discontent — and that of thousands of other Russians — will snowball into the biggest challenge to its authority in years. Some 500 motorists rallied in Russia's far east Saturday to protest the government's decision to raise car import tariffs, and thousands others are expected to stage similar demonstrations across Russia Sunday. The wave of protests may serve as a harbinger of much broader discontent among the Russians accustomed to years of strong economic growth and consumer boom. The Russian government is grappling with the worst economic crisis in a decade, as oil prices tank, the ruble slides and unemployment steadily creeps up. Prime Minister Vladimir Putin said Friday that the tariffs were designed to prop up demand for Russian-made cars and secure jobs in the ailing Russian auto industry.

Bernard Madoff’s Misconduct Said to Date to 1970s - (www.bloomberg.com) .S. regulators, trying to unravel the breadth of Bernard Madoff’s alleged $50 billion fraud, have found evidence of misconduct stretching back to at least the 1970s, two people familiar with the inquiry said. Madoff’s investment advisory business, where he allegedly operated the biggest Ponzi scheme in history, is now estimated to have had more than 4,000 customers, the people said, declining to be identified because the inquiry isn’t public. An advisory unit Madoff registered with the Securities and Exchange Commission claimed in a January filing to have no more than 25 clients. People familiar with the investigation said Dec. 14 he also ran a secret unregistered business.



OTHER STORIES:

Madoff Scheme Kept Rippling Outward, Across Borders - (www.nytimes.com)
Hedge funds gain access to $200bn Fed aid - (www.ft.com)
Foundation to shut down, says Madoff managed money - (finance.yahoo.com)
Canada unveils C$4 billion plan to help auto industry - (www.reuters.com)
Japan unveils record budget to bolster economy - (finance.yahoo.com)
State jobless rate at 14-year high - (www.sfgate.com)

After Lifeline, Big 3 Are Still in Deep - (www.nytimes.com)
Madoff Placed Under Tighter Surveillance - (www.cnbc.com)
The Week Ahead: Break from the Volatility? - (www.cnbc.com)
US Music Industry Ends Mass Piracy Lawsuits - (www.cnbc.com)
Warner Music Pulls Videos from YouTube - (www.cnbc.com)
Twelve Major Banks Downgraded by S&P - (www.cnbc.com)

Guyana blames global financial crisis for possible delay in international projects - (www.latimes.com)
Canada offers $3.29 billion bailout to Canadian subsidiaries of US automakers - (www.latimes.com)
Irish recession, record-strong euro means Christmas boom for Northern Ireland shops - (www.latimes.com)