Sunday February 1 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

End may be Near for Madoff-Victim Tremont - (www.nypost.com) Hedge-fund firm Tremont Group Holdings, which lost more than half of its assets to alleged scammer Bernard Madoff, is winding down operations and could shutter its doors by summer, sources tell The Post. The Rye, NY, fund, which is owned by life-insurance company MassMutual, has cut its staff by about 40 percent, The Post has learned, and people familiar with the situation said some remaining employees have been told they may be let go in June with severance packages. Tremont spokesman Montieth Illingworth declined to comment on the layoffs, but confirmed that the firm has closed its Rye Investment Management unit, which offered a line of single-manager funds, and which invested a whopping $3.1 billion with Madoff.

Elliott Hedge Fund Bought Fictitious Securities From Dreier - (www.bloomberg.com) Elliott Management Corp., the $12.8 billion hedge-fund firm founded by Paul Singer 32 years ago, told clients that it bought securities from Marc Dreier, the New York lawyer jailed for alleged fraud. Elliott lost money on promissory notes purchased in October from Dreier, who had previously done work for the company, it said in an undated quarterly letter to clients. The firm’s Elliott Associates LP fund declined 9.2 percent in the fourth quarter, its worst quarterly loss. “There are many reasons why funds lose money, but being defrauded is among the most embarrassing and annoying,” New York-based Elliott said in the letter, a copy of which was obtained by Bloomberg News. “We continue to adapt our processes to keep several steps ahead of fraudsters, and we maintain an attitude of probing skepticism. But sometimes we get hooked, as in the Dreier case.”

Fannie, Freddie may tap U.S. Treasury for $51 billion - (www.reuters.com) Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages. The storm of rising delinquencies and falling securities values that led to the government's seizure of the companies in September accelerated in the last quarter, requiring Fannie Mae and Freddie Mac to seek more of the stop-gap measures organized by the U.S. Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009. Fresh losses in the most recent quarter will probably be the harshest on Freddie Mac (FRE.P), which holds a larger portfolio of risky mortgage securities, including subprime bonds. The McLean, Virginia-based company said on Friday it may have to seek $30 billion to $35 billion in capital from the Treasury in the form of senior preferred stock.

GE Capital Leads Commercial Paper ‘Test’ as Fed’s Buying Ebbs - (www.bloomberg.com) Seventeen months after seizing up at the onset of the credit crisis, the $1.69 trillion commercial paper market may be the first to cut its reliance on federal bailout programs. About $245 billion of 90-day commercial paper that companies sold to the Federal Reserve starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York. The market’s ability to absorb the maturing debt may build confidence that U.S. companies are able to fund themselves without government support, said Deborah Cunningham, chief investment officer for taxable money markets at Federated Investors Inc. Investors, betting the commercial paper market has stabilized, pushed interest rates to record lows this month and bought the most 90-day debt since September, Fed data show. The debt rollover represents “a test of how well the market can sustain itself,” said Cunningham, who is buying commercial paper for Pittsburgh-based Federated, which oversees $288 billion in money-market assets. “And I think it will pass the test.”

Defaults stack up in the junk bond market - (www.latimes.com) The corporate junk bond market once again is living up to its name, as defaults continue to surge. A total of 15 companies worldwide have defaulted on their bonds this month, triple the total in January 2008, according to Standard & Poor's. The casualties this month include Lyondell Chemical Co., cable TV firm Charter Communications and mattress maker Simmons. All of the 15 were U.S. companies except one: Canadian telecom giant Nortel Networks. Junk bond values crumbled last fall, driving yields sky-high, as investors began to anticipate a sharp increase in defaults because of the sinking economy and the credit crunch.

Korean Financial Blogger Detained - (www.mikeabundo.com) We know political bloggers get harassed all the time, but this is the first I’ve heard of a financial blogger getting thrown in the can. Park Dae Sung, 31, an unemployed blogger now finds himself in hot water for allegedly being “Minerva,” a web guru who posted his thoughts on the state of the economy and the government’s economic policies. Those thoughts generated huge attention in Korea, particularly following Minerva’s prediction that Lehman Brothers would fail. Those musings, however, have not sat well with Seoul. Now Park has been taken into custody by the government and, according to his lawyer, faces a maximum five-year prison sentence for allegedly spreading false information with the intention of harming or threatening public interest. Park was arrested on Jan. 10 for a Dec. 29 posting in which he accused bureaucrats of ordering banks to stop buying dollars while the won was falling during last December’s global economic crisis. The official news agency Yonhap reported that Park was also arrested for a July 2008 posting that said the Finance Ministry had suspended all foreign currency exchanges. Park’s lawyer, Park Chan Jong, says prosecutors are alleging that the posting destabilized the foreign currency market to such an extent that an additional $2.2 billion injection was needed the next day to calm the market.

Condo developers in San Francisco hurting for buyers - (www.sfgate.com) Most developers unlucky enough to be marketing San Francisco condominiums today are scrambling for customers, dropping prices, boosting concessions or putting up "for rent" signs in an effort to fill their buildings. Condos in the city have outperformed the real estate market as a whole throughout the downturn, especially on the luxury end, but tight lending and relentless economic gloom have spread the pain across the region and price spectrum. -- The company behind Millennium Tower, the 60-story luxury project in SoMa set to open in April, will soon announce it is slicing all prices by 15 percent to entice buyers. In a surprising move, it's also extending that bargain to those who have already submitted deposits to purchase units. -- The owners of the Radiance, the 99-unit waterfront mid-rise in Mission Bay, expect to say next week that they will lower prices by an average of 10 percent on selected units. -- One Rincon Hill, the 64-story building that rises above the western approach to the Bay Bridge, isn't promoting any across-the-board cuts, but prices are down between 10 percent and 15 percent from a year ago, while spending on various incentives is up between 3 percent and 5 percent, said Paul Zeger, chief executive officer of Pacific Marketing Associates Inc., which markets that building.



OTHER STORIES:

Nikkei Surges on Rescue Plan - (www.nytimes.com)
U.S. Stock-Index Futures Rise; American Express, Citigroup Gain - (www.bloomberg.com)
Harvard, Dartmouth Losses May Increase on Buyouts, Real Estate - (www.bloomberg.com)
Global Financial Crisis Fells Iceland Government - (www.washingtonpost.com)
Bankers braced for bitter pill of regulation - (www.reuters.com)
German January Business Confidence Unexpectedly Rises - (www.bloomberg.com)
Layoffs Spread to More Sectors of the Economy - (www.nytimes.com)
Caterpillar, Sprint, Home Depot Slash Jobs on Falling Sales - (www.bloomberg.com)
For Fed Policy-Making, Murky Era Lies Ahead - (www.nytimes.com)
Layoffs Cut Deeper Into Economy - (www.washingtonpost.com)
Geithner Sworn in at Treasury; Dudley May Get Fed Job - (www.bloomberg.com)
Fannie to Tap U.S. for as Much as $16 Billion in Aid - (www.bloomberg.com)
Housing Prices Tumble at Record Pace - (www.bloomberg.com)
Flood of foreclosures: It's worse than you think - (money.cnn.com)
California jobless rates leaps to 9.3% - (www.sfgate.com)

Wealthy Sellers Happy to Break Even - (www.sfgate.com)
Peter Schiff: Let the Housing Market Crash - (www.usnews.com)
Mortgage Rates Soar - Fed Better Buy More - (mrmortgage.ml-implode.com)
Can Obama get us off our debt binge? - (optionarmageddon.ml-implode.com)
Who Needs Economists When We Have the Home Builders? - (www.financialsense.com)
Obama moves to force automakers to produce more fuel-efficient vehicles - (www.latimes.com)
Madoff Enablers Winked at Suspected Front-Running - (www.bloomberg.com)
F.D.R’s Example Offers Obama Cautionary Lessons - (www.nytimes.com)

Bank Stock Value Losses - (1.bp.blogspot.com)
Which banks profiting from bailout? Rep. Marcy Kaptur - (www.youtube.com)
Bankers have hijacked our savings and tax dollars - (jonnyob.blogspot.com)
California property tax revenue plummets with house values - (www.sfgate.com)

Sweden's Fix for Banks: Nationalize Them - (www.nytimes.com)
'Bad bank' could cost trillions - (www.washingtontimes.com)
Capitalism's Self-Inflicted Apocalypse - (www.commondreams.org) Excessive Mortgage Lending Causing Worldwide Economic Riots - (www.hubpages.com)