Tuesday March 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Soros sees no bottom for world financial "collapse" - (www.reuters.com) Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union. He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system. "We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom." His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama. Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

SEC Questioned on Lehman Probe - (www.washingtonpost.com) A senior Republican lawmaker pressed the Securities and Exchange Commission yesterday about whether it had properly investigated warnings about possible insider trading at the failed investment bank Lehman Brothers. Sen. Charles E. Grassley (Iowa), the ranking Republican on the Senate Finance Committee, said in a letter to the SEC that it was unclear whether the agency was seriously examining the allegations raised by a whistleblower at the firm. Since April, a senior Lehman analyst has provided more than 4,000 e-mails and other documents to agency staff, including at a six-hour meeting, according to Grassley. Grassley said his concerns about the SEC's performance in the case reflected, in part, the agency's failure to detect a $50 billion fraud allegedly carried out by Wall Street financier Bernard L. Madoff. "In light of the SEC's failure to follow-up on repeated warnings about the Madoff ponzi scheme," Grassley wrote, "I must inquire as to whether these allegations are being acted upon." The Lehman analyst provided evidence to the SEC about possible insider trading involving a Lehman unit called the Product Management Group, according to documents released by Grassley's office. Stock analysts at Lehman sent their reports to this unit several hours before the findings were released publicly, possibly giving traders a head start in transacting deals, according to the documents. "There are many documents that raise suspicions of possible insider trading," Grassley added. "It is unclear whether or not the SEC staff adequately investigated."

“The government is promoting bad behavior” - (www.ml-implode.com) "While it isnt shown in the above video, Rick Santelli also called for a "Chicago Tea Party". Anyone ready to put on some war paint?"

Santelli Leads Trader Mortgage Revolt - (www.cnbc.com) CNBC's Rick Santelli and the traders on the floor of the CBOE express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capital.

Ross: Consumer Leveraging a 'Giant Ponzi Scheme' - (www.cnbc.com) Billionaire investor Wilbur Ross, chairman and CEO of WL Ross & Co., shared his insight on Obama's economic plans, the SEC, the housing market and more with CNBC.
“Basically it (plush times) all came from the consumer, and it was consumer income, it was consumer leveraging. Median income in this country actually went down from 2000 to 2006 and so basically did net worth…in a sense that’s a giant Ponzi scheme itself, it makes Madoff and everybody else look pretty small.”

Brzezinski: ‘Hell, There Could Be Even Riots’ - (www.finkelblog.com) - Brzezinski fears class warfare. Not Mika. Zbigniew. And not Barney-Frank-on-Meet-the-Press class warfare. Real, blood-in-the-streets riots. Jimmy Carter’s former National Security Adviser expressed his concern about the possibility of riots on Morning Joe today. To stave them off, he proposes the creation of a voluntary National Solidarity Fund, whose contributors would be those who made out very well in recent times. JOE SCARBOROUGH: You also talked about the possibility of class conflict. ZBIGNIEW BRZEZINSKI: I was worrying about it because we’re going to have millions and millions of unemployed, people really facing dire straits. And we’re going to be having that for some period of time before things hopefully improve. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America . . . And you sort of say to yourself: what’s going to happen in this society when these people are without jobs, when their families hurt, when they lose their homes, and so forth? We have the government trying to repair: repair the banking system, to bail the housing out. But what about the rich guys? Where is it? [What are they] doing? It sort of struck me, that in 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets. Some financiers, led by J.P. Morgan, got together. He locked them in his library at one point. He wouldn’t let them out until 4:45 AM, until they all kicked in and gave some money to stabilize the banks: there was no Federal Reserve at the time. Where is the monied class today? Why aren’t they doing something: the people who made billions, millions. I’m sort of thinking of Paulson, of Rubin. Why don’t they get together, and why don’t they organize a National Solidarity Fund in which they call on all of those who made these extraordinary amounts of money to kick some back in to [a] National Solidarity Fund? A bit later, Zbig made his fears explicit. BRZEZINSKI: And if we don’t get some sort of voluntary National Solidarity Fund, at some point there’ll be such political pressure that Congress will start getting in the act, there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!

Fannie Mae Rescue Hindered as Asians Seek Guarantee - (www.ml-implode.com) ... “there is still a concern that there is no guarantee” from the government, said Shimomura, who oversees $4 billion in non-yen bonds for the arm of Japan’s largest bank. “Looking at the risk, they’re not so attractive,” he said. “We need a guarantee before we’ll buy.”

Latvia's government resigns amid economic crisis - (www.sfgate.com) Latvia's center-right coalition government resigned Friday after weeks of instability brought on by the country's economic collapse. President Valdis Zatlers said he accepted the resignation of Prime Minister Ivars Godmanis and his administration, which had been in power since December 2007. Zatlers said he would begin talks with party leaders Monday to find a new candidate for prime minister. Godmanis blamed those parties — the People's Party, and the Greens and Farmers Union — for the government's collapse, particularly at a time when Latvia must carry out tough economic reforms to get a rescue package from international creditors. International lenders, including the EU, the International Monetary Fund and Nordic countries, have pledged euro7.5 billion (US$9.5 billion) to help the Baltic country recover from its economic predicament. President Zatlers has pressured the government to cut back on the number of ministries and bring in new faces in an effort to win back the public's trust, which has plummeted. However, despite repeated attempts, the four ruling parties have been unable to reach a consensus on which ministries to abolish. The country's economic decline is accelerating. Output plummeted more than 10 percent in the fourth quarter year-on-year, meeting a common yardstick for a depression. On Wednesday the Finance Ministry predicted that gross domestic product would fall 12 percent fall this year. Public anger spilled into the streets on Jan. 13, when scores of protesters clashed with police as they tried to storm Parliament. More than 40 people were injured in Latvia's worst riots since the country split from the Soviet Union in 1991.

Westfield malls to cut shopping hours - (www.chicagotribune.com) Most of the centers in the U.S. will open 30 minutes later and close 30 minutes earlier on weekdays. Some will close an hour earlier Sundays. The owner of Westfield Old Orchard, Westfield Fox Valley and three other shopping centers in Illinois announced plans Thursday to cut shopping hours at nearly all of its 55 U.S. malls starting March 1. Most of Westfield Group's malls will open 30 minutes later and close 30 minutes earlier on weekdays, spokeswoman Katy Dickey said. About a third will close an hour earlier on Sundays; hours will generally stay the same on Saturdays. Westfield did not provide specifics on changes for each shopping center. The company said the move was intended to help struggling retailers save money. "What we're hoping to do is help our retailers save, conserve resources and respond to changing consumer demand and traffic patterns," Dickey said. The decision comes at a brutal time for the retail industry: Sales are falling, big-name companies are filing for bankruptcy protection, and stores are shutting their doors for good. Shortened hours would help retailers cut payroll, utilities and other costs, and could be a strategy that other mall owners try in coming months. Executives at Macerich Co., a Santa Monica-based shopping center chain, have been monitoring hourly foot traffic at the company's malls and meeting with retailers to determine hourly sales volume, said Ken Gillett, senior vice president of property management. "We're carefully studying our operating hours right now, because the world today is different now than it was six months ago," he said. "But we want to be very careful so we don't hurt our retailers or hurt ourselves." Dickey said Westfield's retailers were consulted in recent weeks and that the idea to cut hours was "well received." Department store, restaurant and movie theater hours will remain the same.

Trouble Trickles From Steep Drop in Oil Prices - (www.washingtonpost.com) The precipitous fall in the price of oil in recent months, while good for consumers, has contributed to the confusion in the global economy, wreaking havoc with the budgets and economies of oil-exporting nations and putting many expensive energy projects on hold. In Canada, where President Obama visited yesterday, the drop in oil prices has done more to slow development of controversial oil sands projects than the protests of environmental groups, who note that the energy-intensive process of mining those sands contributes to global warming. Executives in the past have said oil must cost $60 to $90 a barrel to justify the investment. In Kuwait this month, the government unveiled a $5 billion rescue plan for banks, pledging to guarantee 50 percent of new loans to ease a credit crunch in the oil-rich nation. The country's biggest investment bank, Global Investment House, said last month it had defaulted on most of its debt, while an Islamic rival said in December it needed up to $1 billion in loans. Russia, which last year was flush with oil and gas revenue, bolstered its deteriorating financial position this week by promising to supply China with 300,000 barrels a day of Siberian oil over the next 20 years in return for $25 billion in loans to Russian state-owned oil and pipeline firms with large debt payments coming due this year.

Jumbo Loan Defaults Rise at Fast Pace as Rich Suffer - (www.bloomberg.com) Luxury homeowners are falling behind on mortgage payments at the fastest pace in more than 15 years, a sign the U.S. financial crisis that began with the poorest Americans has reached the wealthiest. About 2.57 percent of prime borrowers who took out jumbo loans last year were at least 60 days delinquent, according to LPS Applied Analytics, a mortgage data service in Jacksonville, Florida. They got to that level within 10 months, almost twice as quickly as 2007 borrowers and the fastest rate since at least 1992, when LPS Applied Analytics began tracking the market. The jump in late payments on jumbo loans, while still lower than the 20 percent delinquencies in subprime mortgages, signals that the borrowers with the most money and the best credit are hurting as the U.S. recession deepens in its second year. It also means these loans will be even more difficult to obtain and more expensive to pay off. “The biggest influence in rising delinquencies is related squarely to the economy rather than poor underwriting,” said Keith Gumbinger, vice president of HSH Associates, a Pompton Plains, New Jersey-based mortgage research firm. “We are apparently all suffering to some degree. It’s certainly more severe for some but still, it’s pretty much widespread.”

Highland Capital CDO Fund Is Insolvent, Wiping Out Investors - (www.bloomberg.com) Highland Capital Management LP, the investment firm founded by James Dondero and Mark Okada, said one of its hedge funds was wiped out by losses on high-risk debt securities, at least its third fund since October to close. The managers and directors of Highland CDO Opportunity Fund LP, comprised of a U.S. partnership and an offshore affiliate, determined that “it is in the best interests” of the fund to wind down, according to a Feb. 4 letter to investors. Remaining assets will be distributed to creditors, leaving nothing for shareholders. Highland Capital, based in Dallas, said in October it would shutter its flagship Crusader Fund, which had declined about 30 percent during the year, and its Credit Strategies fund. That month, Barclays Capital Inc. seized $642 million of leveraged loans from the firm, which oversees $33 billion. As recently as October 2007, Barron’s magazine ranked Highland CDO Opportunity third among the top 50 hedge funds, with an average annual return of 44.12 percent during the three-year period ended that June. Its fortunes reversed last year, as the securities it invests in, known as collateralized debt obligations, plunged in value amid the credit crunch and downgrades by ratings firms. The fund became insolvent after assets values were eroded by “the unprecedented market volatility and disruption to the financial system, and the market for structured products assets in particular,” Highland Capital said in the letter, a copy of which was provided by an investor to Bloomberg News. Assets were valued at $361.6 million, according to a June 2008 regulatory filing.



OTHER STORIES:

Fear of factory shutdown after UK car production halves - (www.guardian.co.uk) Amid job cuts and temporary closures across sector, Swedish firm Saab seeks protection from creditors
Anglo American to cut 19,000 jobs - (www.guardian.co.uk) Mining giant badly hit by plunge in value of commodities.
Sales jump at Goodwill stores as non-profit takes commercial approach - (www.chicagotribune.com)
SEC to Examine Boards' Role in Financial Crisis - (www.washingtonpost.com) Chairman Mary Schapiro plans to look into whether boards of banks conducted effective oversight and considers asking them to disclose more about their risk management.
Mortgage Aid Eligibility Still Being Finalized - (www.washingtonpost.com) The White House is developing a standard for lenders to use that seeks to exclude homeowners who either are not in real need or are too far behind to be saved.
UK: Homeowners Mortgage Support scheme - (www.ml-implode.com) " [T]he Homeowners Mortgage Support scheme ... will allow borrowers with mortgages up to £400,000 to take a payment holiday if t...
“You Are Entitled To Getting Your Terms Reduced” - (www.ml-implode.com) - With the new housing bill which passed last year, YOU ARE ENTITLED TO GETTING YOUR TERMS REDUCED in order to lower your paymen...
Energy costs push consumer prices up in January - (www.latimes.com) Consumer prices rose by the most in six months in January, propelled by higher energy costs. But over the...
Southern California home prices fall to 2002 levels - (www.latimes.com) January's median sales price falls 40% from a year earlier, to $250,000. As...
New state levies and fees will take a big bite out of the federal tax credit - (www.latimes.com) The various increases included in the budget approved by the Legislature will...

Boeing, Airbus deliveries may be cut in half - (www.marketwatch.com) Delays in deliveries that had been scheduled for 2009 are likely to reflect weaker demand and precarious state of credit markets.Airbus to slow production rate - (www.marketwatch.com) Spring won't bloom for Lowe's - (www.marketwatch.com) Reporting lower sales and profit, No. 2 home-improvement retailer offers a sobering top-line outlook for the April quarter.

Gold Tops $1,000, Highest Since March, as Global Equities Slide - (www.bloomberg.com)
Growing Worry on Rescue Takes a Toll on Banks - (www.nytimes.com)
Highland Capital CDO Fund Is Insolvent, Wiping Out Investors - (www.bloomberg.com)
Bear Market's Bite Could Go Deeper - (www.washingtonpost.com)
Madoff Never Made Supposed Investments - (www.nytimes.com)
SEC to Examine Boards' Role in Financial Crisis - (www.washingtonpost.com)
Support Urged for Eastern Europe - (www.washingtonpost.com)

U.S. Lawmakers Clash Over Nationalizing Banks to Stem Declines - (www.bloomberg.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Madoff Left No Sign of Trades Reported to Clients, Trustee Says - (www.bloomberg.com)