Saturday February 7 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

A few good stories about Wall Street and Financial Media who just don’t “get it”. Per my brother, the fact that they feel bonuses are part of their regular salary tells you all you need to know about their culture of entitlement.
· It’s Theirs and They’re Not Apologizing - (www.nytimes.com) Despite the president’s scolding and the media’s outrage regarding Wall Street bonuses, many moneymakers downtown said they’d earned the extra compensation.
· Dear Mr. President, A Bonus Isn't A Bonus - (www.cnbc.com) A bonus by any other name would smell just as sweet. The fury over the fact that Wall Street paid out $18.4 billion in bonuses in 2008, the "sixth largest" amount in history, is about words and nothing else. This isn't a compensation issue, it's a diction issue. Outside of lower Manhattan, a "bonus" is a special, one-off reward for performance above and beyond what's expected of an employee. And if investment bankers had gotten $18.4 billion worth of bonuses in that traditional sense of the word, then of course it would be truly outrageous. But on Wall Street, and at many law firms as well, a bonus is simply part, often the greater part, of your regular compensation. It may vary from year to year, but when you take one of these jobs, the understanding is that you'll be paid a base-salary and once a year you'll also get a "bonus."
· Getting Theirs Cuts Both Ways on Wall Street - (www.nytimes.com) The Wall Street bonus is under fire at a time taxpayer money is propping up the financial industry.
· ‘Why Pick on Wall Street Bonuses?’: Robertson - (www.cnbc.com) People who are not on Wall Street have a misunderstanding about the concept of “bonuses,” Tiger Management’s chairman Julian Robertson told CNBC. “I think [Wall Street bonuses are] defensible,” said the hedge fund legend. “The war about people’s salaries have gone on for years…But it isn’t just on Wall Street. There are singers, actors, sports figures [who are] all making huge amounts of money. You can’t just take one group and pick them out.” Taxpayers and even President Barack Obama have recently expressed their outrage at Wall Street firms who passed out a collected estimate of $18.4 billion in bonuses for the year, despite receiving multibillion-dollar government bailouts. Robertson explained that some companies have a maximum amount they can give to employees as salary, but workers are able to earn more through bonuses.

Calif. to Delay $4 Billion in Payments - (online.wsj.com)

General Motors to Invest $1 Billion of TARP funds in Brazil Operations – (www.laht.com) General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker. According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012." "It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Facing Foreclosure? Freddie Mac to Offer Leases - (www.cnbc.com) Freddie Mac, the second-largest provider of funding for U.S. home mortgages, on Friday said it would offer leases to borrowers who lose their homes under foreclosure. Tenants of borrowers will also be offered leases, a feature of a new plan implemented this month by Fannie Mae, according to statements from the two government-controlled companies. Both extended their suspensions of evictions of borrowers or renters due to foreclosure through Feb. 28.
By extending leases to borrowers in addition to tenants, Freddie Mac's plan may go further toward easing the impact of foreclosures on homeowners and communities, where a rising numbers of empty homes is depressing home values. When home prices fall, foreclosures follow as stressed borrowers find themselves owing more than the house is worth and unable to obtain financing.

General Motors Facing Tax Hit From Bailout Cash - (www.cnbc.com) General Motors could face a multibillion-dollar tax hit under its $13.4 billion federal bailout, a scenario the automaker faces just weeks before it must file a restructuring plan with the government. Two sources familiar with bailout terms said the company has asked Congress to address the matter in economic stimulus legislation, which is expected to be finalized by mid-February. GM and its allies in Congress believe it makes little sense for the bailout to generate a massive cash liability, especially when the government demands the company cut expenses, according to the sources. GM declined comment. The House made no tax changes for GM in its massive $825 billion stimulus package approved on Wednesday. However, the tax issue could be addressed in eventual negotiations with the Senate on a compromise stimulus bill.

Nearly 6% of world’s boxships laid up – (www.seatradeasia-online.com) The number of containerships laid up is growing very fast. According to French maritime consultant AXS-Alphaliner, 255 ships, equivalent to 675,000 teu in capacity (5.5% of the global containership fleet), were laid up as of January 19 this year. It projects that the volume of containerships on standby will jump to the equivalent of 750,000 teu in early February this year, accounting for 6% of the entire global boxship fleet. Since the week before Christmas - just one month ago - the number of ships idling has grown by 90 or 255,000 teu. Worse is to come. Alphaliner estimates that new build deliveries in 2009 will represent 14% of the current fleet. Another 12% will join in 2010. Despite continued scrapping, the weak demand trends will fall well short of absorbing this net new capacity. Compounding the problem, as pointed out by Alphaliner, is that current bunker prices are reaching the point where the popular coping practice of "slow steaming" becomes uneconomical. In short, the idle fleet will expand considerably.

Harbours fill with surplus ships - (www.mbmclub.com) Boatowners are likely to encounter many more laid-up merchant ships around the UK due to the credit crunch. Harbours and anchorages in several parts of the country are filling up with surplus ships as owners lay-up their vessels. The lay-up area at King Harry Ferry on the River Fal is already so full of dormant ships that Carrick harbourmaster Andy Brigden has had to reject a request to accommodate a further fleet of seven vessels. Southampton, meanwhile, has become the temporary home of four large ships totalling over 300,000 tonnes, and it is reported that additional moorings will be laid to accommodate further arrivals.

AIG in Talks for U.S. to Backstop Assets - (online.wsj.com) American International Group Inc. is in discussions with the government about Washington backstopping some of its troubled assets and is considering selling units through initial public offerings. "We're looking at a broader array of recapitalization options," said Paula Reynolds, an AIG vice chairman who is overseeing the restructuring of AIG, which was rescued by the government in September with a bailout package that now totals $150 billion. "We both realize that the environment's changing and we have to adjust to that environment," Ms. Reynolds said in an interview, referring to the federal government.


OTHER STORIES:

New York Mayor Proposes Budget Cuts - (online.wsj.com) New York's mayor proposed cuts in jobs and benefits and a higher sales tax to close a looming $4 billion budget gap.
China fears riots will spread as boom goes sour – (www.guardian.co.uk) Today millions will leave the cities to return to their rural family homes for the new year celebrations. But this year Beijing hopes the newly jobless revellers will stay there - to prevent a fresh wave of unrest in the cities. They surged into the grimy streets around the factory: first scores, then hundreds, then more than a thousand, as word spread and tension loaded the stale, grey air. The boldest overturned a police van and smashed up motorcycles, then tore through the building destroying computers and equipment. The mood was exhilarated, angry and frightened. "It happened so quickly ... There were maybe 500 involved and another 1,000 watching them. People were yelling: 'It's good to smash'," said a witness. But the riot late last year at the Kai Da factory in Dongguan, amid the grim industrial sprawl of the Pearl River Delta, was not an isolated incident. It was one of tens of thousands of protests, many erupting from the same mixture of economic grievances, resentment of police and swirling rumour.
Charter Communications Cable Firm in Bankruptcy - (www.cnbc.com) Cable television system operator Charter Communications, struggling with a $21 billion debt load, is preparing a bankruptcy filing, according to sources familiar with the situation. The action comes after the company missed a $73.7 million interest payment in mid-January and as it continues to negotiate a financial restructuring with its bondholders, sources said on condition of anonymity. A spokeswoman for Charter declined comment. The timing of a possible bankruptcy filing is unclear, and there is a possibility the company could negotiate a so-called "prepackaged" bankruptcy with bondholders, one of the sources said. A prepackaged plan is a cheaper and quicker way to go through the bankruptcy process because major creditors vote on the terms of the bankruptcy plan before it is filed with the court. In the past, some companies have avoided bankruptcy by renegotiating their debt. Charter, whose largest single investor is Microsoft co-founder Paul Allen, first said in December it had called in investment bank Lazard to initiate discussions on a reorganization of its debt with bondholders. It then opted not to make the mid-January payments on those bonds.
British Unions, Angry Over Use of Foreign Workers, Stage Walkouts - (www.nytimes.com) The disruption underscored rising fears of labor unrest across Europe as job losses across the Continent mounted into the hundreds of thousands with the global financial crisis.
With a Swipe at Bush, Obama Acts to Bolster Labor - (www.nytimes.com) President Obama announced steps that he said would strengthen organized labor and thereby improve the lot of middle-class Americans.
Layoffs Herald a Heyday for Employee Lawsuits - (www.nytimes.com) With new jobs hard to find, laid-off workers are increasingly filing suits against previous employers.
Plans to Create 'Bad Bank' Are Running Into Problems - (www.cnbc.com)

Big US Banks Must Go: Economist - (www.cnbc.com)
Wall Street Bonuses Being Targeted by Lawmakers - (www.cnbc.com)
Cramer: Reasons to Buy Stocks, Solutions for Obama - (www.cnbc.com)
Obama: Stimulus Needed to Stop 'Continuing Disaster' - (www.cnbc.com)
GDP Sinks As Consumers And Businesses Cut Back - (www.cnbc.com)
Americans Drinking Less Booze, Even In Recession - (www.cnbc.com)

U.S. Economy Shrank 3.8% in Fourth Quarter, Most Since 1982 - (www.bloomberg.com)
Steep Slide in U.S. Economy as Unsold Goods Pile Up - (www.nytimes.com)
Economic Signs Turn From Grim To Worse - (www.washingtonpost.com)
Economy Pinches the Billable Hour at Law Firms - (www.nytimes.com)
Grim Japan, U.S. figures show world crisis deepening - (www.reuters.com)
Temp workers becoming recession's overlooked casualties as payrolls purged - (www.chicagotribune.com)