Saturday March 14 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Merrill's $10 million men - (online.wsj.com) Wall Street Journal reports that as Merrill Lynch staggered last year, 11 top executives were paid more than $10 million each in cash and stock, and 149 more received $3 million or more. As bad as 2008 was for Merrill Lynch & Co., it was very good for Andrea Orcel, the firm's top investment banker. Although Merrill's net loss ballooned to $27.6 billion last year, Mr. Orcel, 45 years old, was paid $33.8 million in cash and stock, just shy of his pay in 2007. While Merrill staggered, 11 top executives were paid more than $10 million in cash and stock last year, say people familiar with the situation. An additional 149 received $3 million or more. The stock awards, which accounted for much of the compensation, have fallen sharply in value since they were made last year. New York Attorney General Andrew Cuomo has subpoenaed information about Merrill's highest-paid employees in connection with his probe into $3.6 billion in bonuses paid by Merrill in the days before it was taken over by Bank of America Corp. Thus far, Bank of America hasn't turned over the names of Merrill's highest-paid executives, claiming it would help rivals woo its top talent. The Wall Street Journal has identified most of the top 10 executives and their compensation levels from documents and interviews with people familiar with Merrill's compensation. Merrill's 10 highest-paid employees got a total of $209 million in cash and stock in 2008, up slightly from $201 million paid to the top 10 a year earlier, according to the figures reviewed by the Journal. In 2007, 28 Merrill employees were paid more than $10 million. That total doesn't include Merrill's private-client group, where its brokers work. Top trader David Sobotka received about $13 million in cash and stock. Much of the 2008 pay came from bonuses, since base salaries for top Merrill executives generally range from $200,000 to $750,000. Some of the top Merrill earners ran divisions that did well last year amid the firm's troubles.

Fla. county may declare itself disaster area - (msnbc.msn.com) Politician says that might be solution for area hit hard by foreclosures. Just five years ago, Port St. Lucie was America's fastest-growing large city. Then the foreclosure crisis slammed it like a hurricane. Today it sits in one of the hardest-hit counties in the nation. Thousands of houses are empty or unfinished. Neighborhoods are littered with for-sale and foreclosure signs and overgrown, neglected yards. Break-ins are on the rise. But one politician believes he has a unique solution: Declare St. Lucie County a disaster area as if it had been hit by, well, a hurricane. "This is a manmade disaster," County Commissioner Doug Coward acknowledged. But he said that is why "we've got to do something. Clearly, the economic crisis of the country far exceeds the ability of local governments to solve it, but we're trying be a part of the solution." The declaration would act like a mini-stimulus plan, giving government officials access to a $17.5 million county fund usually reserved for natural disasters. The county would be able to put some of that money toward shovel-ready construction projects and loosen the bidding requirements so that local contractors got the jobs. That, in turn, could enable residents to pay their mortgages and stave off foreclosure. Other politicians fear a disaster declaration could scare off investors and drive down the county's credit rating, which would make it more expensive to borrow money. But the idea has appeal among many homeowners, particularly those in the construction trades, which are seeing unemployment rates of up to 40 percent.

Consumer Bankruptcy Filings Jump in February - (www.cnbc.com) The number of U.S. consumers filing for bankruptcy jumped 29 percent in February from the year earlier, and the number is expected to keep rising as economic troubles deepen, according to the American Bankruptcy Institute Tuesday. Some 98,344 consumers filed for bankruptcy protection in February, according to the ABI which compiles data from the National Bankruptcy Research Center. It represents the most bankruptcies filed in the month of February since new bankruptcy laws went into effect in 2005. "We expect at least 1.4 million bankruptcies this year," said ABI Executive Director Samuel Gerdano, in a statement. Gerdano added that the number will be even higher if Congress changes laws that would permit residential home mortgages to be modified under Chapter 13 of the Bankruptcy Code. Chapter 13 allows people to budget their future earnings under a plan in which creditors are paid in whole or in part.

Madoff seeks to keep NYC penthouse, $62M in assets - (www.breitbart.com)

Housing crash is good news in Barstow, CA - (www.desertdispatch.com) In the past year, home prices have fallen dramatically in Barstow as in California as a whole. Data recently released by the California Association of Realtors shows that home sales are climbing as the median price of a single family home fell off by 40.5 percent from January 2008 to 2009. In the High Desert as it whole, prices dropped by 45.5 percent. In Barstow, the drop-off in the past year has been slightly lower — about 35 percent — but still significant. The drop in prices has gone in tandem with an increase in sales statewide — up by 100.8 percent from January 2008 to 2009, according to the data. For Richard West and his two adopted daughters, the rupture of the housing bubble has been a good thing. With home prices in Barstow back to the level before the housing boom, West, a retired missionary living on Social Security income, is within a few weeks of closing on the purchase of a three bedroom house with a pool for $86,000. His mortgage payments will be comparable to what he currently pays in rent on a two-bedroom apartment, West said. Like many homes for sale in the current market, the house was foreclosed upon and is currently bank-owned. That meant having to do more repairs on the property himself than if he had bought from an individual homeowner, but West said the price is worth it. Without the market downturn, he said, “I would have had to rent for the rest of my life.”

Cramer to White House: Wealth Destruction Is Real - (www.cnbc.com) White House Press Secretary Robert Gibbs on Tuesday pushed back against Cramer’s comments that President Obama has caused “the greatest wealth destruction I have seen by a president.” “I’m not sure what he’s pointing to, to make some of the statements,” Gibbs told reporters, adding that Mad Money is geared toward a small audience while Obama has to help the entire country. Cramer in response pointed to the Dow Jones Industrial Average, the S&P 500, Nasdaq and the Russell Index, all of which are down huge since Inauguration Day. And the only small thing about the MadMo audience, he said, is its 401(k)s, pension plans and annuities after the damage Obama’s proposed spending plans have caused the markets. The stock market right now is a better barometer of Americans’ wealth than the president and his press secretary seem to realize, Cramer said. And while Obama said he’s focused on Main Street rather than Wall Street, he needs to realize the two are merging. Everday people today have a tremendous amount of exposure to stocks and the declining markets. President Obama even went so far as to say that right now was a good time to buy stocks. Cramer, of course, is far less optimistic, but he did find 10 reasons for investors to be hopeful.

President Obama Says Stocks Are 'Good Deal' - (www.cnbc.com) Obama unfortunately is economically illiterate and didn’t realize there was a housing bubble in the first place. Therefore, how does he know if stocks are cheap. Is Obama To Blame For Market Turmoil? Over the past few days there’s been a growing outcry that the budget is the reason for the recent stock market plunge. That it was the budget which sent stocks to a level far below the critical technical level of 740 on the S&P 500 [.SPX 696.33 -4.49 (-0.64%) ] , which many investors including FM trader Jeff Macke really thought would hold. In his blog, Fast Money producer John Melloy wrote about this phenomenon. He said, in speaking with big investors Dylan Ratigan has learned that the Street is worried about this massive budget for one of two reasons: 1) because of higher taxes and/or 2) because the potentially tremendous increase in the deficit -- will have the effect of lowering the rate of return for investors over the long-term. Therefore, they are applying an even lower P/E multiple to stocks. Daniel Clifton, Strategas Research head of policy research, is among the growing number of Obama critics. He tells Fast Money the new spending is inefficient per dollar of debt issued. And we can’t pay for it. “We’re going to spend about $4 trillion and we only have $2 trillion in revenue. Not only will we have to raise taxes but we’ll probably have to create new taxes.” Among the first people to point out this phenomenon was CNBC's Larry Kudlow. In a somewhat incendiary post published Friday he said Obama had declared war on investors. Democrats, however, have expressed confidence that the reforms will work. "We need economic growth and access to credit. That is what we are focused on in the next year or two," White House Budget Director Peter Orszag said before the House of Representatives Budget Committee.

Blockbuster seeks debt overhaul, shares halted - (news.yahoo.com) Blockbuster stock at around 22 cents per share. Top U.S. movie rental chain Blockbuster (BBI.N) has enlisted lawyers to help it raise capital and refinance debt, but stressed on Tuesday it has no plans to file for bankruptcy. Blockbuster spokeswoman Karen Raskopf said the company has hired law firm Kirkland & Ellis LLP, but denied news reports that the firm could help Blockbuster file for bankruptcy. Shares of the U.S. company, which has scrambled to compete with the increasing popularity of online video, plunged more than 76 percent before trading in them was suspended amid the reports. A source familiar with the matter told Reuters on Tuesday that the struggling, debt-laden firm had hired lawyers and investment bank Rothschild to explore restructuring options -- including a potential bankruptcy filing. "We do not intend to file for bankruptcy," Raskopf told Reuters. Instead, the law firm will assist "with our ongoing financial and capital raising initiatives," she said, including restructuring $328 million in debt, comprising a term loan and a revolving credit facility due in August. If needed, Blockbuster can implement a plan to self-fund its debt through 2009, Raskopf said.

MGM Mirage warns of debt default risk - (www.ft.com) MGM Mirage, the gaming operator that owns some of the world’s best-known casinos, warned on Tuesday that it is at risk of defaulting on its debt, underscoring the steep downturn in the global gaming sector. In a regulatory filing to explain the delayed release of its fourth-quarter earnings, MGM Mirage – which counts billionaire Kirk Kerkorian as its biggest shareholder – said it was “still in the process of assessing its financial position and liquidity needs”. The group owns the Bellagio, MGM Grand and Mirage casinos in Las Vegas, and other properties in Atlantic City. It is trying to complete construction of CityCenter, a $9bn gaming and hotel complex on the Las Vegas Strip that is the costliest such development ever. The group recently drew down the remaining $842m from its revolving credit facility but still needs more capital. It has $1.2bn of bonds that fall due this year and another $1.2bn in 2010. It also needs to finance an extra $1.2bn to complete CityCenter. With credit markets frozen, it has been unable to refinance any of its debt. It said it was close to breaking its debt covenants “if the recent adverse conditions in the economy in general – and the gaming industry in particular – continue”. “It is likely that the report of [MGM Mirage’s] independent registered public accounting firm . . . will contain an explanatory paragraph with respect to [its] ability to continue as a going concern,” the company said.

Bernanke defends AIG rescue, says U.S. had no choice - (news.yahoo.com) U.S. Federal Reserve Chairman Ben Bernanke on Tuesday defended the government's latest bailout of embattled insurer AIG, telling irate lawmakers that he was also angry, but that the failure to act could have triggered an economic disaster.

And Do I Hear 2 Million for That Condo? No? 1 Million? Sold! - (www.nytimes.com) As housing prices around the country began to tumble about three years ago, the New York market kept rising, and only in the last year did it begin to show some weakness. But now sales in the city have slowed so significantly that worried developers are planning to auction off some luxury condos in the spring for around half of what they were asking just a year ago. Developers who are awash in unsold inventory see auctions as a tactic to jolt a paralyzed public to life. A two-bedroom on the Upper East Side, for example, could be marked down to $1.1 million from $2.2 million….. Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked. Today, almost every signpost is bleak for new developments. Buyers who signed contracts long before condo projects were completed are expected to walk away in droves this coming quarter. In many cases, these buyers will be abandoning deposits of $100,000 or more that pale in comparison to the slide in market values. Many buyers may have lost jobs, or may be worried about their jobs, while others will be unable to get financing.



OTHER STORIES:

Trump and lenders temporarily suspend litigation: report - (news.yahoo.com) Real estate developer Donald Trump and his lenders agreed to temporarily suspend litigation on the Trump International Hotel & Tower project in Chicago, the Wall Street Journal said.
Buffett's Berkshire cuts jobs broadly, more coming - (news.yahoo.com) Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) reduced staffing last year in half of its nearly 80 operating units, and said more job cuts were coming in an economy unlikely to recover before 2010.
NBC/WSJ Poll: Support for Obama, but Challenges Await - (www.cnbc.com)
Cramer to White House: Wealth Destruction Is Real - (www.cnbc.com)
Buffett's Berkshire Hathaway Hits 5-1/2 Year Low - (www.cnbc.com)

Manhattan Apartment Prices Get Cut Most in 5 Years - (www.bloomberg.com)
California unemployment rate reaches 10.1% - (www.latimes.com)
Money Pit: The Untold Secret of House Ownership - (denseblogadvisory.wordpress.com)
AIG: The Nexus of Capital, Debt and Insurance - (yourmortgageoryourlife.wordpress.com)
The Never-Ending Bailout - (www.nytimes.com)
Bernanke Says Insurer AIG Operated Like a Hedge Fund - (www.bloomberg.com)
Geithner resurrects the Bad Bank again - (optionarmageddon.ml-implode.com)
Banks waiting for gov't to buy their rotting empty foreclosures -(www.washingtonindependent.com)
U.S. rescue efforts may risk double-dip recession - (www.reuters.com)
Bankers Don't Care About the Banks - (www.dailykos.com)
U.S. Likely to Keep Ownership of Fannie and Freddie - (www.nytimes.com)
Roubini Sees More Economic Gloom Ahead - (www.time.com)
Decline In Value Reassessment Application Form - (www.smcare.org)
Countrywide arsonists to profit by selling charred ruins - (www.nytimes.com)