Tuesday January 6 Housing and Economic stories

TOP STORIES:

Notice the blind optimism again from the clueless supposed “pros” at CNBC. Just like they predicted the housing meltdown in 2005-2006 and the credit crisis meltdown in 2008:
· Predictions '09: Real Estate Looks For Recovery Signs - (www.cnbc.com)
· Stocks to Post Big Gains, Economy to Rebound: Pros - (www.cnbc.com)

Madoff 's Victims Unlikely To Recover Much Money - (www.cnbc.com) Just as it should be. This hedge fund was closed off to the general public, and only available to wealthy connected insiders, they never paid SIPC insurance funds, so should get absolutely zero bailout money or SIPC insurance money. Everyone caught up in the scandal of accused Wall Street swindler Bernard Madoff wants to know where the money is. Madoff, who authorities say confessed to losing $50 billion in "a giant Ponzi scheme," has given a list of his assets, liabilities and property to U.S. regulators. But the thousands duped, from the beach cities of Florida to yacht clubs of the Mediterranean to Hollywood and Manhattan, may never see it. And judging by the scandals involving Bayou Group hedge fund, WorldCom and Adelphia Communications, any money they may see down the road will likely be a fraction of what they invested. "We have received many calls from people and everyone is saying 'where did the money go?' because he obviously didn't use it all," said Craig Stein, an attorney in Boca Raton, Florida. "If you add up all of the firms and entities and brokers that were making commissions and compensation off of the promotion or facilitation of the money to Madoff, I bet you will find a very large number there, an economy of its own," Stein said. Stein said he is investigating on behalf of two clients whose money in Westport National Bank of Connecticut ended up with Madoff. The bank said it provided only custodial services and did not invest any of its own money with Madoff or introduce anybody to Madoff.

IndyMac's Mortgage Obligations $1 Billion: Report - (www.cnbc.com) Yes, isn’t life a bitch when you have to take back from the investors the bad mortgage debt you sold to them because they didn’t meet certain minimum standards? Unfortunately, the brokers and execs that were peddling this crap have already benefited from a good 4-5 years of annual bonus payments which will never be seen again:
Fannie Mae, the largest U.S. home funding company, believes that failed mortgage lenderIndyMac has obligations to repurchase around $1 billion of home mortgages that failed to meet Fannie's standards, the Wall Street Journal said, citing people familiar with the situation. Banks that sell loans to Fannie or its smaller rival, Freddie Mac , must make "representations and warranties" that those loans meet certain quality standards, the paper said. If not, the lenders can be forced to buy the loans back, the paper reported on its website late on Thursday. A spokesman for Fannie told the paper the company is working with the Federal Deposit Insurance Corp (FDIC) to resolve the issue. Fannie could not be immediately reached for comment by Reuters.

Economy Blunts Korea’s Appetite for Plastic Surgery - (www.nytimes.com) Yes, I am sure some industry trade group will be asking for an industry bailout here as well, and I am sure some politician will back the proposal J
A grim frugality has settled over this export powerhouse that once burst with optimism — and silicone. Cosmetic surgery took off here after South Korea’s spectacular recovery from its currency crisis a decade ago. Rising living standards allowed ever-growing numbers of men and women to get the wider eyes, whiter skin and higher nose bridges that define beauty for many here. Improved looks were even seen as providing an edge in this high-pressure society’s intense competition for jobs, education and marriage partners. But turmoil coursing through the financial world and then into the global economy has hit South Korea hard, as it has many middle-income countries. The downturn drove down the stock market and the currency by a third or more last year, and the resulting anxiety forced many South Koreans to change their habits. A particular chill has seeped into the plastic surgery industry, emptying waiting rooms and driving clinics out of business. “In hard times, people always cut back on luxuries like eating out, jewelry and plastic surgery,” said one plastic surgeon, Park Hyun, who has seen the number of his patients drop sharply. “If this is a normal recession, then these desires will eventually get reignited, and our patients will come back.”

Steel Industry, in Slump, Looks to U.S. Stimulus - (www.nytimes.com) I am sure Wilbur Ross is somewhere behind this industry bailout request. He is somewhat like Donald Trump where he brags about his financial acumen but then goes begging to government when his investments go bad. The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes — and it is now in collapse — so will go the national economy. That maxim once applied to Detroit’s Big Three car companies, when they dominated American manufacturing. Now they are losing ground in good times and bad, and steel has replaced autos as the industry to watch for an early sign that a severe recession is beginning to lift. The industry itself is turning to government for orders that, until the September collapse, had come from manufacturers and builders. Its executives are waiting anxiously for details of President-elect Barack Obama’sstimulus plan, and adding their voices to pleas for a huge public investment program — up to $1 trillion over two years — intended to lift demand for steel to build highways, bridges, electric power grids, schools, hospitals, water treatment plants and rapid transit. “What we are asking,” said Daniel R. DiMicco, chairman and chief executive of the Nucor Corporation, a giant steel maker, “is that our government deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a ‘buy America’ clause.” Economists in the Obama camp said the president-elect’s proposals to Congress will include significant infrastructure spending that draws on heavy industry.

Worldwide, a Bad Year Only Got Worse - (www.nytimes.com) Stocks lost 42 percent of their value in 2008, as calculated by the MSCI world index, erasing more than $29 trillion in value and all of the gains made since 2003. Just about the only assets to prosper were government bonds of developed countries and gold, where prices rose as investors ran for cover. The year began with a shock, but only a previously lonely group of bears predicted the disaster to come. WhenSociété Générale lost 4.9 billion euros ($6.8 billion) in January on the unauthorized positions taken by a low-level trader, it seemed the year might already have its biggest financial news. But that loss would prove trivial compared with what happened afterward. The bad news never seemed to let up:Bear Stearns in the spring, then after a bit of a summer lull, the Lehman Brothers bankruptcy in mid-September, the takeover of Merrill Lynch, the bailout of American International Group, the collapse of Bernard L. Madoff’s business, the near-bankruptcy of General Motors. The names say it all for one of the most memorable years in financial history. Many economists held out hope through the first half of the year that because of the rise of China and India and the growing might of the European Union, the rest of the world would escape the fallout of the American subprime mortgage crisis. That hope — ultimately dashed — was never reflected in the markets. Even as economic data from Brussels and Beijing looked better than that from Washington, stocks in Europe and Asia were falling faster than their counterparts in the United States, partly because panicked dollar-based investors were repatriating their overseas investments. By the end of the year, the global economic picture was almost uniformly bad.

Citi-Style Rescues to Be Done Case-by-Case: Treasury - (www.cnbc.com) So only the insiders and connected people will know which will be bailed out and which will be left to die. he U.S. Treasury Friday said financial institution rescues and asset guarantees similar to those it provided Citigroup will be considered on a case-by-case basis. In program guidelines required under financial bailout legislation, the Treasury said it will consider targeted investments and asset guarantees for "systemically significant" financial institutions whose destabilization could cause a major loss of confidence that would disrupt markets and weaken the economy. The Treasury agreed on Nov. 23 to invest another $20 billion in Citigroup [C 7.14 0.43 (+6.41%) ] preferred stock and help guarantee up to $306 billion in risky assets held by the bank in an effort to contain a widening financial crisis. The Treasury is required by law to draft guidelines for programs it creates under its $700 billion bailout fund, known as the Troubled Asset Relief Program.




OTHER STORIES:

Economy May Be Worse A Year From Now: Feldstein - (www.cnbc.com)
Manufacturing Index Hits Lowest Level Since 1980 - (www.cnbc.com)

Madoff Trustee Sued to Free Up Frozen Funds - (www.cnbc.com)
Ford Sees Sharp Drop in US Sales, No Quick Rebound - (www.cnbc.com)
GMAC Gives Up Some GM Financing Rights Via Bailout - (www.cnbc.com)
Starwood Signs Confidentiality Pact with Zell Firm - (www.cnbc.com)
Commission Calls for 50% Rise in Federal Fuel Tax - (www.cnbc.com)
Treasuries Fall as Stocks Soar, Banks’ Reluctance to Lend Eases - (www.bloomberg.com)
Oil Caps Biggest Weekly Gain Since 1986 on Geopolitical Concern - (www.bloomberg.com)
U.S. Stocks Advance, S&P 500 Jumps to 2-Month High; GM Rallies - (www.bloomberg.com)
Dollar climbs on euro data, gets U.S. ISM setback - (www.marketwatch.com)
Funds suffer $320bn outflow - (www.ft.com)
Credit Freeze Puts Chill on Dealmaking, With Volume Down 29% - (www.washingtonpost.com)
Flight to safety hits mutual funds with $320bn outflow - (www.ft.com)
Asia’s Economic Slump Deepens as Manufacturing, Exports Shrink - (www.bloomberg.com)
China Manufacturing Shrinks for 5th Month on Exports - (www.bloomberg.com)
Europe watches gas flows after Russia cut-off - (www.reuters.com)
U.S. Factories Contracted at Fastest Pace Since 1980 -(www.bloomberg.com)
Republicans threaten to delay stimulus - (www.ft.com)
As Recession Deepens, So Does Milk Surplus - (www.nytimes.com)

Sharp fall in hybrid vehicles sales as US tightens belt - (www.ft.com)
Berkshire Has ‘Nowhere to Hide’ in Worst Drop in Three Decades - (www.bloomberg.com)