Sunday March 8 Housing and Economic stories

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TOP STORIES:

Photographer Annie Leibovitz pawns her life's work to pay her mortgage - (www.dailymail.co.uk) – Photographer Annie Leibovitz has borrowed 10 million pounds against some of her most famous pictures to pay the mortgages on all her homes. The artist, 59, has become so concerned with her mounting debt, accumulated on properties she inherited in 2004 after the death of her lover Susan Sontag, she has turned to a company that lends money with fine art as collateral. Documents seen by the New York Times reveal she secured the funds by giving the company, Art Capital, ownership of all her work – past and future – until the loan is repaid……. What’s amazing is that individuals and institutions who previously we thought were untouchable are now scrambling,’ he said.

San Francisco Chronicle may shut down - (www.reuters.com) San Francisco may lose its main newspaper, the San Francisco Chronicle, as owner Hearst Corp cuts a "significant" number of jobs and decides whether to shut or sell the money-losing daily. The privately held New York-based publisher already is considering shutting a second West Coast paper, the Seattle Post-Intelligencer, in the face of a devastating decline in advertising revenue and big losses. Founded shortly after Gold Rush fever hit California in the mid-19th century, the Chronicle has long been an essential part of daily life for many Bay Area residents, even as it sometimes disappointed or outraged them. But the Chronicle lost more than $50 million last year and this year's losses to date are worse, Hearst said on its website on Tuesday. It said the paper has lost "major" amounts of money since 2001, a year after Hearst bought the paper. "Survival is the outcome we all want to achieve. But without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down," said Hearst Corp Chief Executive Frank Bennack Jr. More than 100 employees gathered in a conference room to hear the news from Editor Ward Bushee and Publisher Frank Vega after receiving a message about a mandatory staff meeting. "Some people were crying at the meeting," said Rachel Gordon, 47, a transportation reporter at the paper. "But people are trying to get the newspaper out for tomorrow." "We knew it was going to be ominous when we got that message," Gordon added. " said Hearst really wants to make this work, that shutting us down is a last resort."

Cable operators seek platform to put TV shows online - (www.latimes.com) HBO on your PC? It could happen sooner than you think. Wary of the growing number of consumers watching TV shows online for free -- and yet reluctant to upset viewers by yanking shows from the Internet -- the nation's largest cable operators are in talks with media conglomerates to take back control. They would create a platform to release cable TV shows online, but exclusively for paying subscribers. It's a delicate dance for those involved, which include Comcast Corp., Time Warner Cable Inc., Cox Communications Inc., Cablevision Systems Corp., General Electric Co.'s NBC Universal, News Corp., Viacom Inc. and Time Warner Inc. Cable networks considering the project include Time Warner's HBO; Viacom's MTV; Discovery Communications Inc., owners of Discovery channel, TLC, Animal Planet and others; Cablevision's Rainbow Media Holdings, owner of AMC, IFC and Sundance; Turner Broadcasting, owner of CNN, TBS and TNT; and Scripps Networks, owner of Food Network and HGTV. Potentially at stake is the business model of cable TV operators. They pay networks a per-subscriber fee each month for the right to carry channels. But the cable companies have groused that they are paying for content that programmers are giving away for free on the Web.

As A.I.G.’s Losses Grow, Its Survival Options Shrink - (www.nytimes.com) The American International Group faced two distasteful options on Tuesday: selling prized assets to competitors or handing over a big part of its business to the federal government. Grappling with huge losses, A.I.G. appears to have few choices as the government focuses on trying to keep the giant insurer from toppling and perhaps injuring other institutions. The insurer has received a preliminary offer of $11 billion from MetLife for its American Life Insurance Company subsidiary, called Alico, according to people with knowledge of the discussions, who asked not to be identified because the details of the deal were not public. But they said MetLife’s offer might slip to about $8 billion, as more became known about how the global downturn is affecting Alico, which has operations in more than 55 countries. The same sources said A.I.G. had received an offer from AXA, for all of Alico except its operations in Japan. The price was not disclosed. But A.I.G.’s need for capital appears to be growing so quickly that $8 billion, or even $11 billion, would not come close to filling the hole. A.I.G. is expected to report fourth-quarter losses of perhaps $60 billion early next week, and losses on that scale could initiate a domino effect like the one that flattened the company last September. First would come a credit downgrade, then calls from trading partners to post the billions of dollars in collateral that their contracts stipulate after a downgrade. If A.I.G. failed to produce the required amounts, the financial institutions holding its contracts would have to recognize losses of their own. That would erode their capital, leaving them at risk of downgrades as well. “It looks like they’re in a downward spiral,” said Andrew J. Barile, an insurance industry consultant. “They’re in a position where they’re almost forced into selling.” Another possibility being discussed for A.I.G. is the conversion of the government’s holdings of A.I.G.’s preferred stock, worth $40 billion, into common shares. That would provide some relief because the preferred stock gets a 10 percent dividend, and the company would not pay any dividend on the common stock.

Government says 'mass layoffs' soared in January - (www.latimes.com) Employers took a large ax to their payrolls in January, the government said today, and the cuts are likely to get worse over the next few months. The Labor Department reported that mass layoffs, or job cuts of 50 or more by a single employer, increased to 2,227 in January, up almost 50 percent from the same month last year. More than 235,000 workers were fired as a result of last month's cuts. January was a bad month for the labor market. Companies from a wide range of sectors announced thousands of layoffs, including Home Depot Inc., Boeing Co., Pfizer Inc. and Caterpillar Inc. Not all of those cuts were reflected in the government's mass layoffs report, which counts actual firings as reported by laid-off workers seeking unemployment benefits. Many of the layoffs announced in January will take place over time, meaning that the department's mass layoff figures will likely keep increasing. The pain has continued this week. On Monday alone, troubled flash memory maker Spansion Inc. said it will cut about 3,000 employees and computer chip maker Micron Technology Inc. announced it will slash as many as 2,000 workers by the end of August.

SEC probes O.C. real estate lender Point Center Financial - (www.latimes.com) An investor lawsuit accuses the firm, owned by the husband of Assemblywoman Diane Harkey, of fraud. The Securities and Exchange Commission has opened an investigation into an Orange County real estate lending company that is owned by the husband of a California state assemblywoman. In an e-mail to his firm's roughly 3,000 investors, Point Center Financial Inc. President Dan J. Harkey disclosed that the SEC had subpoenaed records from the firm last week. In an interview, Harkey said the SEC was seeking thousands of pages of documents in connection with a $25-million investment pool that funded construction loans. He predicted the SEC would find no irregularities in his company's loan pool, noting that the California Department of Real Estate took no action after a similar review. Harkey said it would take weeks to compile the records the SEC requested. Officials with the Securities and Exchange Commission in Los Angeles would neither confirm nor deny any inquiry into Point Center. More than 50 Point Center investors filed a lawsuit against Harkey last week, accusing him of placing their money in risky construction loans and funneling profits to his wife's political campaigns. In the interview, Harkey acknowledged that many of his investors had lost money but blamed it on the real estate downturn, which has caused widespread losses. About 60% of the company's loans are in default and interest payments to many investors have been reduced or suspended as a result, Harkey said. Through a spokesman, Assemblywoman Diane Harkey (R-Dana Point) said she had no affiliation with Point Center and contributed her own money -- about $1.1 million -- to her campaigns. Before her career in politics, she worked as an executive at Security Pacific National Bank and Bank of America Corp., her husband said.



OTHER STORIES:

U.S. Stocks Retreat as Insurers Cut Dividends, Home Sales Drop - (www.bloomberg.com)
Gold Gains as U.S. Stocks Fall on Economic Woes; Silver Rises - (www.bloomberg.com)
Treasuries Little Changed Before Record $32 Billion Auction - (www.bloomberg.com)
Stress Test for Banks Exposes Rift on Wall St. - (www.nytimes.com)
A Second Try at Calming Bank Investors - (www.washingtonpost.com)
Emerging markets threaten euro - (www.ft.com)
U.K. Economy Shrinks Most Since 1980 on Spending Drop - (www.bloomberg.com)
Japan exports nearly halve in deepening recession - (www.reuters.com)
Russian economy hit by 8.8% decline - (www.ft.com)
Ukraine Credit Rating Downgraded 2 Levels to CCC+ by S&P - (www.bloomberg.com)
EU Officials Concerned About Risks of Pound Drop - (www.bloomberg.com)
U.S. Existing Home Sales Fell in January to 4.49 Million Rate - (www.bloomberg.com)
Bernanke Spurns Outright U.S. Control of Banks in Rescue Plan - (www.bloomberg.com)
Fed Chairman Says Recession Will Extend Through the Year - (www.nytimes.com)
Mortgage Applications Fall, Led by Refinancing - (www.cnbc.com)
Unpaid furloughs a trend for U.S. white-collar jobs - (www.boston.com)
Record drop in home prices caps grim year - (www.sfgate.com)
Big banks get ready for White House stress tests - (www.ap.com)

Ambac reports $2.34 billion net loss - (www.reuters.com)
Macy's reports 59% drop in 4Q profit - (www.chicagotribune.com)