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Checkmate at the Yellowstone Club - (www.nytimes.com) NINE days after declaring personal bankruptcy — again — a barefoot Edra Blixseth pads excitedly around Porcupine Creek, her 30,000-square-foot estate here. Guests are coming, probably 125 in all. They’re due any minute. The zipper on her sternum-baring cocktail dress is jammed. Do you think it’s too tight? Can somebody help her? Porcupine Creek is lavish, with a 240-acre private golf course and a pool guarded by bronze lions. Many visitors have seen all that, plus the automated fountain that splashes at the end of her 1,700-foot driveway. But so far, only Ms. Blixseth’s good friends have wandered around the private space inside: the prayer room, the gym, the beauty parlor, the wet room, the cozy massage alcoves and the private theater adorned with murals; then there’s the 18th-century French furniture, the Italian stained glass, the bedroom suite from the Vatican, the ancient Tibetan Tankas. Until this day, she has never hosted a charity event inside her home. Given the circumstances, though, it’s the best she can do. “I can’t write a check this year,” she says, referring to her usual gift to a shelter for battered women. Her Gulfstream IV has been grounded. Her jewelry, mostly sold. To help pay the bills, her boyfriend even had to sell his Bentley. Edra Denise Blixseth, age 55, is tiny, barely 5 foot 3, but she is at the center of a huge financial mess. According to personal bankruptcy papers her lawyer filed in March, she owes $500 million to $1 billion and has assets of barely half that, almost none of them liquid. Earlier this month, the court approved the sale of one of her most prized possessions — the private ski resort in Big Sky, Mont., known as the Yellowstone Club — to the private equity firm of one of its members for $115 million. Just a year ago, that same buyer, CrossHarbor Capital Partners, had been willing to pay $400 million for the club. The Yellowstone Club, a 13,600-acre playground 20 miles north of Yellowstone National Park, may be the world’s lone members-only ski resort. Its pristine natural beauty and remote location have attracted wealthy skiers who prize their privacy, including Bill Gatesof Microsoft; Barry Sternlicht, the hotelier; and Peter Chernin, president of the News Corporation. In one of the signature, fin de siècle moments of our passing Gilded Age, the Yellowstone Club filed for Chapter 11 protection last November; four months later, Ms. Blixseth followed suit — a club and its doyenne, sucked into a financial downdraft that has wounded even once-untouchable elites.
California Foreclosure Moratoriums An Exercise Of Stupidity - (Mish at http://globaleconomicanalysis.blogspot.com) Except for bankruptcy attorneys, most want the massive spike in foreclosures to end. However, it is impossible to wish foreclosures away or for that matter legislate them away. Unfortunately, economic illiterates do not understand the dynamics. Please consider CA Lawmakers Impose 90-Day Foreclosure Moratorium. California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday. The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing. But supporters acknowledge the California Foreclosure Prevention Act won't stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled. This bill is no more likely to work than a bill declaring poverty to be illegal or the sky to be green. Home prices will bottom when they bottom, unemployment will bottom when it bottoms, and foreclosures will stop when they stop. Those are simple economic facts. The 90 day extension gives anyone sitting on the edge of walking away as well as those wanting a reduction in principle an incentive to stop paying their mortgage, safe and secure in the fact they cannot be thrown out of their house for another 90 days. This bill is pure idiocy and will not stop a single foreclosure. Instead, the bill will increase late pays and foreclosures. It's an exercise of sheer stupidity.
Median Home Prices In Detroit Fall To $6,000 - (Mish at http://globaleconomicanalysis.blogspot.com) A few years ago, after my dad passed away, we sold his Danville, Illinois house for the grand total of $14,000 which was then split among 4 siblings. Friends where I live now cannot ,fathom a house selling for $14,000. Moreover, it was a livable house. When I grew up I never thought much about it. In fact, I thought we were solidly middle class. The house had 3 bedrooms and one very tiny bathroom. I have 2 sisters and one brother. We must have learned to share because I recall no significant fights over the bathroom or for that matter anything else. However, Danville (then a city of 44,000 now 32,000) is one thing, andDetroit is another. In 2008 Detroit ranked as the United States's eleventh most populous city, with 916,952 residents. At its peak in 1950 the city was the fourth largest in America. The name Detroit sometimes refers to the Metro Detroit area, a sprawling region with a population of 4,425,110. Although I am a deflationist, I must admit surprise that the median home price in Detroit has fallen to a stunningly low $6,000. Please consider a Detroit Free Press article Home sales rise as prices keep falling. Metro Detroit home sales rose by 12.6% in May as compared with last year, yet home prices continued their fall -- an indication that the market hasn't hit bottom yet. Overall, 5,955 homes were sold in May, compared with 5,288 sold in May 2008, according to Realcomp, a Farmington Hills-based multiple listing service. The median sales price for homes sold in May was $50,000, a 44.3% drop from $89,700 in May 2008.
Smuggling Or Counterfeit-Printing? - (www.market-ticker.org) Ok, this was rumored several days ago, but now I can find actual news reports - at least, outside the US: Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Those sound like Bearer Bonds - at least the Kennedy ones do. We no longer issue those (nor does pretty much anyone else) for obvious reasons - they're essentially money and can be had in VERY large size, making them great vehicles for various illegal enterprises. But folks: This is $134.5 billion dollars worth. If they're real, what government (the only entity that would have such a cache) is trying to unload them? If they're fake, this is arguably the biggest counterfeiting operation ever, by a factor of many times. I've seen news about various counterfeiting operations over the years that have made me chuckle, but this one, if that's what it is, is absolutely jaw-dropping. The cute part of this is that if the certificates are real Italy just got a hell of a bonanza - their money laundering laws provide for a statutory 40% penalty for failure to declare instruments and cash in excess of $10,000 Euros, which means they'd garner a close-to-$40 billion dollar windfall. That ought to help their budget problems! Notice, by the way, that the US Media has totally ignored this story - even though the securities in question are allegedly US instruments. Gee, I wonder why? Might the authorities know they're real and be just a wee bit nervous that disclosure of a sovereign attempting to covertly dump nearly $140 billion in debt could cause a wee bit of panic, given that we're running nearly $200 billion a month in deficits? Inquiring minds want to know what's really going on here.
Deep in Debt, Six Flags Is Bankrupt - (www.nytimes.com) ix Flags, the theme park operator, filed for bankruptcy early Saturday in Delaware after failing to reach an agreement with lenders to reorganize its debt. Six Flags is the latest company to prove unable to cope with its debt load at a time when previous solutions like refinancing are largely unavailable. The theme park operator, which had $2.4 billion in debt, faced nearly $300 million in payments to preferred stockholders due in August. In a statement, Six Flags said it was seeking court approval for a restructuring plan it had already negotiated, which has the unanimous approval of its lenders. That proposal would eliminate $1.8 billion in debt and slice off the $300 million in preferred stock payments. “The current management team inherited a $2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets,” Mark Shapiro, the chief executive of Six Flags, said in a statement. The filing is a blow to Dan Snyder, the owner of the Washington Redskins, who took control of Six Flags in 2005 after waging a proxy fight and holds about a 6 percent stake in the company. He sought to turn around the company by installing new management, led by Mr. Shapiro, and selling underperforming parks. They improved the remaining parks by banning smoking, increasing security and having more costumed characters like Tweety on the grounds. Other major investors include Cascade Investment, controlled by Bill Gates, which held an 11.1 percent stake, and the hedge fund Renaissance Technologies, with a 5.5 percent stake.
Regulators Feud as Banking System Overhauled - (www.nytimes.com) Two of the nation’s most powerful bank regulators were once again at each other’s throats. At a public meeting three weeks ago, John C. Dugan, the comptroller of the currency, blasted a proposal to impose stiff new insurance fees on banks as unfair to the largest banks, which he regulates. The financial crisis stemmed in part from problems at small banks, he insisted. Sheila C. Bair, chairwoman of theFederal Deposit Insurance Corporationand the regulator for many smaller, community banks, could barely hide her contempt. The large banks, she said, had wreaked havoc on the system, only to be bailed out by “hundreds of billions, if not trillions, in government assistance.” She added, “Fairness is always an issue.” Behind the scenes, the two regulators have been clashing over a host of issues, officials said, be it the administration’s coming regulatory overhaul or Ms. Bair’s campaign to shake up the top management at Citigroup. The long-running and deeply personal feud between Mr. Dugan and Ms. Bair, two Republican holdovers with similar career paths in Washington, is now helping to shape President Obama’s attempt to revamp financial regulation aimed at preventing the regulatory lapses that contributed to the economic crisis. Some of Mr. Obama’s advisers and some senior Democratic lawmakers have suggested creating a single bank regulator. But the administration’s current version, which could be announced as early as this week, would not combine the regulatory agencies. Instead, it would give Mr. Dugan and Ms. Bair significant new powers — and could intensify their turf battles. Ms. Bair and Mr. Dugan declined to comment for this article. The Treasury secretary, Timothy F. Geithner, the main author of the administration’s plan, in recent weeks has refereed among the competing views of Ms. Bair, Mr. Dugan and Ben S. Bernanke, the Federal Reserve chairman. The four generally agree that, if starting from scratch, they would not create the cumbersome system that has evolved piecemeal over the last 150 years. But with the administration and crucial lawmakers rejecting a single agency, the four officials have often disagreed on just how to streamline and strengthen regulation. Some points of contention include views on which agencies should play central roles in overseeing financial companies whose troubles could pose problems for the overall system, and whether to create a new agency to protect consumers from abusive mortgages or credit cards. Officials say the latest version of the plan, in large part, is a compromise of various viewpoints.
OTHER STORIES:
US moves to spur bank buy-outs - (www.ft.com)
U.S. Corporate Bond Issuance Tumbles as Treasury Rates Rise - (www.bloomberg.com)
Politics Puts Insurance Regulators in a Bind - (www.washingtonpost.com)
Treasury faces pressure on price of TARP exit - (www.reuters.com)
Soros Says Default Swaps Should Be Outlawed - (www.nytimes.com)
Hedge fund fervour fizzles - (www.ft.com)
Early On, Europe Is Out Front in Overhaul of Global Financial System - (www.washingtonpost.com)
Reformers arrested in Iran clampdown - (www.ft.com)
Ahmadinejad Heads for Win in Iran Presidential Vote - (www.bloomberg.com)
Lender’s Role for Fed Makes Some Uneasy - (www.nytimes.com)
At Group of 8 Talks, Geithner Defends Stimulus - (www.nytimes.com)
G-8 Divided on Stimulus Exit Strategies, Bank Tests - (www.bloomberg.com)
Summers Defends U.S. Interventions - (www.washingtonpost.com)
Instead of Zen Dens, Starwood Builds an Espionage Case Against Hilton - (www.washingtonpost.com)
Debts Coming Due at Just the Wrong Time - (www.nytimes.com)
A tale of two markets divided by the conforming-loan limit - (www.latimes.com) Mortgage rates are low and sales are booming for cheaper homes. But sales are at a virtual standstill for...
Blue Shield hits health insurance policyholder with 54% rate hike (www.latimes.com) The increase raises questions about how costs would be controlled if a national mandate is approved...
Sell the time share -- and limit impulse buys from now on (www.latimes.com) Also: Credit card accounts that close due to inactivity, and follow-up advice on refinancing a 30-year...
Consumer lawyer chose a road less traveled (www.latimes.com) In 1965, after three years with the Army, William Shernoff had two jobs lined up in different states....
Tax credit legislation seeks to broaden program's reach (www.latimes.com) Two Dallas-area congressmen have introduced bills that would extend the $8,000 credit for first-time...
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