KeNo's Housing and Economic Portal: Thursday February 11 Housing and Economic stories

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Growing Movement To Disband Police Departments – (Mish at http://globaleconomicanalysis.blogspot.com) In response to Hoschton Georgia Dissolves Police Department I received an email from "Adam" who writes .. Mish, The city of Pewaukee, Wisconsin voted to do the same towards the end of 2009. As of the new year, the department was eliminated. Police protection is now handled by the Waukesha country sheriff's department where the majority of the old officers now work. Of course, the union is suing to reverse the vote of the people. Please consider Waukesha Sheriff Takes Over in Pewaukee: The sign at the city hall building still reads the City of Pewaukee Police department but Friday there was a new sheriff in town...quite literally. "11 pm on December 31st Waukesha County took over," said Lt. Neil Dussault with the Waukesha County Sheriff's Department. But Dussault says if you weren't paying attention in Pewaukee, you may not have known about the take-over. The squad cars, at least for now, still read Pewaukee Police, but driving them are deputies dressed in their brown uniforms with new Pewaukee arm patches. The city voted in November to close the police department and then contract with the Waukesha County Sheriff's Department. Officials claim it will save the city around $1 million. 26 officers lost their jobs with Waukesha County hiring 16 of them.

Chief TARP investigator to open two AIG probes - (www.marketwatch.com) The special inspector general for the government's $700 billion Wall Street rescue plan is opening a pair of probes into the government's rescue of American International Group Inc., including efforts to slow public disclosure of all of the terms of the deal. Special Inspector General Neil Barofsky disclosed the existence of the investigations in testimony prepared for a Wednesday hearing before the House Committee on Oversight and Government Reform. Barofsky, who can conduct criminal and civil investigations, said he is investigating whether there was "any misconduct relating to the disclosure or lack thereof" surrounding the November 2008 transactions to pay off the insurer's counterparties. Additionally, Barofsky said he is reviewing the cooperation of the Federal Reserve with his staff's attempt to conduct an audit of the AIG transactions. Some of the documents recently turned over to the Oversight panel "were not provided to the SIGTARP audit team during the course of the audit," he said. Barofsky's intention to investigate the public disclosures surrounding Maiden Lane III, the structure formed to facilitate federal assistance to AIG, is likely to ratchet up the political stakes for Wednesday's hearing before the Oversight panel. Treasury Secretary Timothy Geithner and a top Federal Reserve Bank of New York official are scheduled to testify, among others, and panel Republicans said in a memo reviewed Monday that Geithner "needs to explain his role" in the November 2008 negotiations between the government and AIG. The Treasury Department has insisted that Geithner was not involved in the discussions over whether AIG should publicly disclose the names of its counterparties. Thomas Baxter, the general counsel of the New York Fed, confirmed that position in interviews with congressional investigators.

Repo fears over US bank levy plan - (www.ft.com) The Obama administration’s proposed bank levy is threatening the $3,800bn repurchase market, an obscure but fundamental source of funding for financial groups and the US Treasury, executives and analysts have warned. The potential impact of the $90bn, 10-year levy on the repo market could also complicate Federal Reserve efforts to drain the huge amounts of liquidity it injected into the financial system during the crisis. Banks use the repo market, where securities such as US Treasuries are used as collateral in exchange for loans, for short-term funding. But they also provide funding for investors wanting to buy the securities, earning a profit on the difference between the interest rate at which they borrow and the one at which they lend. Wall Street executives say the proposed levy, which would charge banks a 15 basis point fee on their liabilities minus insured deposits, will prompt them to reduce repo exposure to cut short-term liabilities. They say the profit they make on repo contracts – about five basis points – would be wiped out by the levy, making repo transactions loss making.

1,250 axed auto dealers fight shutdowns - (money.cnn.com) At least 1,250 dealerships that got the axe from Chrysler and General Motors as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association. The nearly 3,000 dealerships the auto manufacturers scrapped have until the end of day Monday to file with the AAA for an independent arbitration of their case. Even in the final hours, applications from dealers are piling up fast. "There are cases that have been sent to the various regional offices around the country, which the legislation permits, so I assume that there are another 100 or so on the way to our intake staff," said India Johnson, senior vice president of AAA.

Greece Sells 8 Billion Euros in Notes After Offering Premium - (www.bloomberg.com) Greece sold 8 billion euros ($11.3 billion) of five-year notes at a premium to ensure the country’s first bond issue since being downgraded was a success. The 2015 securities yield 6.2 percent, the Greek ministry of finance said today in an e-mailed statement. The ministry received 25 billion euros in orders for the bonds. Greece offered 0.3 percentage point more yield than on its existing debt, a banker with knowledge of the deal said earlier. The cost of insuring against a default on Greece’s debt plunged from a record today on speculation the issue will help the government cut the biggest budget deficit in the European Union. “A successful sale now is absolutely crucial to market sentiment, which will help them in the future,” said Fabrizio Fiorini, head of fixed-income at Aletti Gestielle SGR SpA in Milan, who helps oversee $12 billion of assets. “If I were the government, I would raise as much as I could from this sale.” Prime Minister George Papandreou’s government is struggling to reduce a deficit of 12.7 percent of gross domestic product and needs to sell 53 billion euros of debt this year, the equivalent of about 20 percent of GDP. Greece’s credit ratings were cut by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings last month.

Dubai investment vehicle suffers S&P blow - (www.ft.com) Dubai’s standing in financial markets was dealt a further blow on Monday after Standard & Poor’s withdrew its credit rating on an investment vehicle owned by the emirate’s ruler. The credit ratings agency cited concerns about the financial strength of the company and complained that “insufficient” information had been provided about it. S&P warned that the cash flow position of Dubai Holding Commercial Operations Group, one of the groups controlled by Sheikh Mohammed bin Rashid Al Maktoum, was “likely to be materially weaker” than previously thought. DHCOG, which includes hotel chain Jumeirah and Dubai Properties, has been hit hard by Dubai’s recession and real estate crash. Its businesses span real estate, business parks and hospitality interests. Many analysts expect the group to face debt repayment problems this year after Dubai World, another Dubai state-linked conglomerate, said in November that it would call a standstill on $26bn (£16bn) in debts – a move that stunned the markets. The S&P withdrawal is a blow to the emirate, which says it is striving to boost transparency to repair the damage done to its reputation among international investors.

DP World warns on container traffic‎ - (www.ft.com) Full-year profits at DP World, one of the world’s largest container terminal operators, are set to fall after it handled 8 per cent fewer containers in 2009 than in 2008. But the Dubai-based company, controlled by debt-laden Dubai World, said in a trading statement that it had performed less poorly than the overall container ports market because of its emphasis on faster-growing emerging markets. It also saw only a 6 per cent fall in throughput at its core terminals in Dubai, which account for a disproportionate share of profits. DP World, the world’s fourth-largest container terminal operator, became the first large company in the sector to announce throughput figures for 2009 – the first year since container shipping was invented in 1956 – to have seen a fall in volumes. Worldwide container handling by all operators fell 12 per cent, DP World said. Mohammed Sharaf, chief executive, warned that its decline would reduce pre-tax profits before separately disclosable items below the $701m on $3.28bn revenue achieved in 2008. However, a cost-cutting programme would reduce the impact. Consolidated volumes at DP World’s facilities fell to 25.6m 20ft equivalent units (TEUs) against 27.7m in 2008. DP World, which is 80 per cent owned by Dubai World, has insisted that it and some other key profitable subsidiaries of the state-owned conglomerate are insulated from the problems that have caused it to seek renegotiation of $22bn debt.