Thursday October 9 Housing and Economic stories

TOP STORIES:

Nightmare Day For Banks - (Mish at globaleconomicanalysis.blogspot.com) Prime Minister Gordon Brown and Chancellor Alistair Darling call an emergency meeting with finance chiefs after nightmare day for banks. Gordon Brown and Alistair Darling were tonight meeting with finance chiefs to discuss the recapitalisation of the UK banking system after a turbulent day on the markets which also saw British savers hit by the collapse of the Icelandic bank Icesave. The Prime Minister and Chancellor will meet the Mervyn King, Governor of the Bank of England and Lord Turner of Ecchinswell, Chairman of the Financial Services Authority at 5pm. No 10 denied that it was “an emergency meeting” and had been in the diary for sometime. But officials had to admit they had not given notice of the meeting at an earlier briefing today. This suggests that Mr Brown and Mr Darling have been convinced that they must show the market that they are at least close to an announcement in order to restore some calm. On another rollercoaster day for the markets, banking shares were badly hit as a report leaked out from top-secret talks between the banks and the Treasury in Downing Street last night. HBOS shares were down 41.5 per cent at 94p, Royal Bank of Scotland was below £1 at 90p, 39 per cent, down, while Lloyds TSB fell 12.9 per cent, or 33.5p, to 225p. Barclays was 9 per cent down at 285p. HSBC was the only big bank to rise by 19p, or 2 per cent, to 901.25p. The Government is furious with the banks for apparently divulging details of their meeting with the Chancellor at which they asked him to speed up the injection of taxpayers money into their coffers. In Europe, the 27 member states today agreed to more than double the minimum level of bank deposit protection in Europe to €50,000, and the US Federal Reserve announced that it would start making loans directly to businesses to help them with short-term funding difficulties. Meanwhile, Icesave's 300,000 British now face a struggle to extract their cash, after withdrawals were blocked this morning when, Landsbanki, the Icelandic parent bank, went bust and was nationalised. Iceland has been battling to stave off national bankruptcy after its banks took on massive debts in expanding overseas, far exceeding the country's gross domestic product. British Taxpayer On Hook For £50bn Bailout. In the US the word "recovery" replaced the word bailout. The UK is calling their bailout an "investment". Whatever you want to call it, British taxpayers are on the hook for a £50 billion. Taxpayers will be committed today to providing more than £50 billion to bail out high street banks in an attempt to avert a cataclysmic failure of confidence. Alistair Darling was due to tell the City in an early morning announcement today that the sum will be available for “investment” in banks that have demanded help from the Government. The drastic rescue move is designed to help to reassure savers and to kickstart the paralysed credit markets by encouraging banks to lend to each other again. After meeting Mervyn King, the Governor of the Bank of England, Downing Street was forced to make the announcement earlier than it had intended because of fears that a second day of hammering for bank shares had made leading institutions vulnerable. HBOS shares slumped by 42 per cent yesterday, Royal Bank of Scotland was down 39 per cent and Lloyds TSB dived 13 per cent in another torrid day for the banks.

FHA Will Take on Subprime Loans Shunned by Lenders - (www.bloomberg.com) The Federal Housing Administration has grown so large that by the end of the year it will guarantee mortgages for three in 10 U.S. borrowers, many of whom have bad credit or loans that required no verification of income. Congress wants FHA to do more. The Hope for Homeowners program, unveiled Oct. 1, authorizes the agency, part of the cabinet-level Department of Housing and Urban Development, to guarantee up to $300 billion of 30-year, fixed rate home loans for struggling borrowers over the next three years. The Congressional Budget Office estimates that 400,000 households will get FHA- insured loans and about one-third of those will fall behind again on their new loans. Hope for Homeowners is one way the U.S. government is trying to prevent further losses in the worst housing decline since the Great Depression of the 1930s. The rewritten mortgages may not be enough to stem rising defaults, said David Olson, a 40-year veteran of the U.S. mortgage industry. ``FHA has completely replaced subprime and Alt-A,'' said Olson, former director of market research at Freddie Mac, the second-biggest mortgage buyer, who now runs Wholesale Access Mortgage Research & Consulting Inc. in Columbia, Maryland. ``I hope it's not setting them up for another crackup. There have been so many crackups.''

Third "Extreme Makeover" Home Going Bust - (www. perezhilton.com) Could doing good cause a negative affect? Yet another house built by ABC's Extreme Make over: Home Edition is in jeopardy of being foreclosed on. This is the third house in the last few months that is facing financial problems, the others are in Atlanta and South Jersey. A 7,000 sq ft home was built in Seminole County, Florida, back in 2006 for Sadie Holmes. The upgrade left the community activist Holmes with a beautiful six-bedroom home. Holmes is a former drug addict who - after turning her life - around began a charity to distribute food, clothes and furniture to needy neighbors. But Holmes says she's now struggling. The amount of debt she has built up might cost her her $400,000 house, which she also uses for her charity. Holmes says, "I'm grateful for this building, but it's causing

Panic in UK and Iceland as bank shares crumble:
· UK savers left in lurch as Icesave crumbles - (business.timesonline.co.uk) Landsbanki, Iceland's second largest bank, goes into receivership, leaving 300,000 UK internet savers unprotected
· Q&A - what now for Icesave depositors? - (business.timesonline.co.uk)
· RBS shares close under £1 on bailout fears - (business.timesonline.co.uk)
· British taxpayer tied into £50bn bank bailout - (business.timesonline.co.uk) Alistair Darling will tell the City in a morning announcement that the sum is available for 'investment' in leading banks
· Spain goes it alone as Europe squabbles - (business.timesonline.co.uk) Spain is latest European country to announce unilateral rescue package, while Iceland receives €4 billion loan from Russia

The Panic Of 1873 -- A Better Model For The Crisis? - (www.itulip.com) - Our current episode has more in common with the 1870s depression which, as Nelson notes, was considerably worse. It was primarily caused by over-indebtedness in the commercial real estate sector, which mortgages were based on new forms of financing which were intermingled on the balance sheets of commercial banks with less rarefied assets that the banks added by making business loans. As the panic deepened, ordinary Americans suffered terribly. A cigar maker named Samuel Gompers who was young in 1873 later recalled that with the panic, "economic organization crumbled with some primeval upheaval." Between 1873 and 1877, as many smaller factories and workshops shuttered their doors, tens of thousands of workers — many former Civil War soldiers — became transients. The terms "tramp" and "bum," both indirect references to former soldiers, became commonplace American terms. Relief rolls exploded in major cities, with 25-percent unemployment (100,000 workers) in New York City alone. Unemployed workers demonstrated in Boston, Chicago, and New York in the winter of 1873-74 demanding public work. In New York's Tompkins Square in 1874, police entered the crowd with clubs and beat up thousands of men and women. The most violent strikes in American history followed the panic, including by the secret labor group known as the Molly Maguires in Pennsylvania's coal fields in 1875, when masked workmen exchanged gunfire with the "Coal and Iron Police," a private force commissioned by the state. A nationwide railroad strike followed in 1877, in which mobs destroyed railway hubs in Pittsburgh, Chicago, and Cumberland, Md. In Central and Eastern Europe, times were even harder. Many political analysts blamed the crisis on a combination of foreign banks and Jews. Nationalistic political leaders (or agents of the Russian czar) embraced a new, sophisticated brand of anti-Semitism that proved appealing to thousands who had lost their livelihoods in the panic. Anti-Jewish pogroms followed in the 1880s, particularly in Russia and Ukraine. Heartland communities large and small had found a scapegoat: aliens in their own midst.

Foreclosure? Sue and delay. Live mortgage free! - (www.tbo.com) Ernie Harpster fell behind on his mortgage payments last year, so he tried to persuade his bank to give him time to sell his home and pay off what he could. Instead, the lender filed a foreclosure lawsuit. Harpster then did something troubled homeowners may never think of doing: He fought back. Harpster has been living payment-free for nearly a year in his Wesley Chapel home. His case is trickling through court, and there are no signs he will be kicked out anytime soon. "Not having a mortgage payment meant I didn't have to file for bankruptcy because I could pay other bills, like credit cards and the electric bill," said Harpster, whose income as a real estate agent dried up along with the market. "But I'm not trying to take advantage of the situation. I tried to do what I thought was right. To me, it's the bank's fault this has stalled."

Is It 1929 Again? - (www.washingtonpost.com) There are parallels between then and now, but there are also big differences. Now as then, Americans borrowed heavily before the crisis -- in the 1920s for cars, radios and appliances; in the past decade, for homes or against inflated home values. Now as then, the crisis caught people by surprise and is global in scope. But unlike then, the federal government is a huge part of the economy (20 percent vs. 3 percent in 1929), and its spending -- for Social Security, defense, roads -- provides greater stabilization. Unlike then, government officials have moved quickly, if clumsily, to contain the crisis. We need to remind ourselves that economic slumps -- though wrenching and disillusioning for millions -- rarely become national tragedies. Since the late 1940s, the United States has suffered 10 recessions. On average, they've lasted 10 months and involved peak monthly unemployment of 7.6 percent; the worst (those of 1973-75 and 1981-82) both lasted 16 months and had peak unemployment of 9 percent and 10.8 percent, respectively. We are almost certainly in a recession now, but joblessness, 6.1 percent in September, would have to rise spectacularly to match post-World War II highs.

Star hedge fund crashes to earth - (www.fortune.com) Tontine Associates, a $10 billion Greenwich, Conn.-based fund, told investors on Friday that it expected to show a 2008 loss through Sept. 30 of 65%, according to two people familiar with the fund's performance. Tontine builds large, concentrated positions in companies central to the big-picture investment thesis of the fund's general partner, former Smith Barney analyst Jeffrey Gendell. That kind of focused strategy can pay off big when a manager's vision is spot on. Earlier this decade, Gendell bet correctly on the explosion in home-building, driving the fund to 100% returns in 2003 and 2005. Gendell made the Forbes magazine list of richest Americans in 2008 with an estimated net worth of $1 billion.

Fed, Treasury, FDIC Take New Steps to Defrost Credit – (www.cnbc.com) Moves aimed at defrosting commercial paper markets. U.S. financial stocks rose in pre-open Tuesda trading after the Federal Reserve said it would begin buying commercial paper in an effort to free up short-term liquidity in the credit markets. Commercial paper is the shortest-term credit available and generally ranges in maturities from overnight to several months. The Treasury Department and the Federal Reserve took a major step Tuesday to support strained commercial paper markets. As speculated, the central bank said it was creating a special facility to help the $1.7 trillion commercial paper market. The Commercial Paper Funding Facility will buy unsecured and asset-backed commercial paper directly from eligible issuers.


OTHER STORIES:

Wachovia, Citi, Wells Fargo To Halt Litigation - (www.ml-implode.com) - "Wachovia and suitors Wells Fargo and Citigroup agreed on Monday to halt all litigation until noon Wednesday in hopes of decidin...
Ex-CEO of S&L bought by Wachovia defends record - (www.ml-implode.com) - Sandler contends the troubles cropping up in World's option-ARM, or "pick-a-pay," portfolio haven't been severe enough to drag ...
HANK WASTES NO TIME - (www.ml-implode.com) - ``Since it may be weeks before the bailout bill money is available, some on Wall Street think Paulson will use the $200 billion ...
Update: Carteret Files Ch. 7 BK - (www.ml-implode.com) - Carteret Mortgage Corporation filed a Chapter 7 Bankruptcy in the Eastern District of VA court on October 1st, 2008. The deadlin...
Update: BankUnited Wholesale Gone? - (www.ml-implode.com)
Countrywide to Set Aside $8.4 Billion in Loan Aid - (www.ml-implode.com)
Citigroup sues Wachovia, Wells Fargo for $60B - (www.ml-implode.com)
The Federal Reserve Slays the US Dollar! - (www.ml-implode.com)
Update: Wachovia May Be Split; Citi Sues Wachovia & Wells Fargo - (www.ml-implode.com)
French President Nicolas Sarkozy Calls For "New World" - (www.ml-implode.com)
Citigroup, Wells Fight May End by Splitting Wachovia - (www.ml-implode.com)
Press May Own a Share in Financial Mess - (www.ml-implode.com)

Buffett: Fannie had a blank check from the government - (blog.heritage.org)
Fannie, Freddie to Sell Bad Assets To Duped Taxpayers - (www.housingwire.com)
Why the Bailout Solves Nothing, Wastes Money - (www.fool.com)
7 reasons why bailout will damage the economy - (news.cincinnati.com)
Worst-case scenario is approaching rapidly - (business.timesonline.co.uk)
European, Asian markets plunge on crisis fears - (news.yahoo.com)
Europe's banks melting down, too! - (ocbiz.freedomblogging.com)
Global Carnage In Pictures - (Mish at globaleconomicanalysis.blogspot.com)
U.S. bank failures almost certain to increase in next year - (www.cnn.com)

Similarities and Differences from Great Depression - (www.signonsandiego.com)
Richard Fuld: My Dinner With Henry Paulson - (www.usnews.com)
Lehman Brothers Boss Fuld Defends $484 Million in Pay - (abcnews.go.com)
Aid for reckless borrowers, but not for those who avoid debt - (biz.yahoo.com)
Feels good to be a banksta! - (www.sinfest.net)
US as debtaholic - (www.sinfest.net)
$700 billion is nothing - (www.youtube.com)

Stock futures drop after Fed auction statement - (www.reuters.com)
Gold Advances in London on Rising Demand for Haven Investment - (www.bloomberg.com)
Money-Market Rates Climb to All-Time Highs as Freeze Deepens - (www.bloomberg.com)
Dollar down, gold up in early European trading - (www.ap.com)
Oil rises to $90 after steep slide - (www.reuters.com)
Treasuries Fall on Speculation U.K. Preparing to Bail Out Banks - (www.bloomberg.com)
Lehman exposes credit default swap faults - (www.ft.com)
Banks prepare for CDS pay-outs - (www.ft.com)

Hedge Fund Finds Itself on Defense - (www.nytimes.com)

Lancelot Lent About $1 Billion to Petters Affiliates - (www.bloomberg.com)
Barclays, RBS in Talks on U.K. Government Funding - (www.bloomberg.com)
Russia Lends Iceland 4 Billion Euros to Save Banks - (www.bloomberg.com)
Banks ask chancellor for capital - (www.bbc.co.uk)
Europeans handle crisis together and separately - (www.iht.com)
Australia Cuts Rate by Most Since 1992; Stocks Rise - (www.bloomberg.com)

Iceland nationalises Landsbanki - (www.ft.com)
Pressure mounts in UK to guarantee savings - (www.ft.com)
New Zealand Cuts Growth Forecast - (online.wsj.com)
Credit crunch hitting Saudi Arabia - (www.ap.com)
Fed Considers Plan to Buy Companies’ Unsecured Debt - (www.nytimes.com)
September consumer sales drop sharply: MasterCard - (www.reuters.com)
Global Fears of a Recession Grow Stronger - (www.nytimes.com)
Fed eyes plan to fund short-term business loans - (www.ap.com)
Lenders Squeeze Corporate Borrowers Amid $112 Billion of Losses - (www.bloomberg.com)
Fed Sets Floor Below Rate Target, Engineering `Stealth' Cut - (www.bloomberg.com)
Massachusetts Leads States, Cities Looking to Revive Debt Sales - (www.bloomberg.com)
Fed's first foray into unsecured loans - (www.ft.com)
Unfolding Worldwide Turmoil Could Reverse Years of Prosperity - (www.washingtonpost.com)
As economy slowed, states' Q2 revenues from sales, fuel and property taxes dropped - (www.chicagotribune.com)
Falling behind: More Americans see utilities cut off - (www.latimes.com)
Bank of America Posts Lower Profit, Cuts Dividend - (www.bloomberg.com)
General Motors' Europe Unit to Suspend Work at All Factories - (www.bloomberg.com)
Wyndham cuts back to weather storm - (www.ft.com)
September retail sales expected to be dismal - (www.dallasnews.com)
Bleak outlook for global manufacturing - (www.ft.com)
S(www.ap.com) Tempers Revenue Outlook - (online.wsj.com)
Steelmaker Warns of Overcapacity - (online.wsj.com)
Banks' Pain Spreads to Their Suppliers - (online.wsj.com)
EBay cuts 10% of workforce - (www.ft.com)
Sun Country Files for Ch. 11 - (online.wsj.com)
Financial crisis: the latest blow to free-market 'dogma' - (www.csmonitor.com)
With Bubbles Popping Worldwide, No Wonder the Economy's Gone Flat - (www.washingtonpost.com)

Friday June 6 Housing and Economic stories

Top Stories:

Holyfield's Estate Under Foreclosure - (www.11alive.com) - A legal notice that appeared in a local newspaper showed his Fayette County estate is under foreclosure. The home worth an estimated $10 million is set to be auctioned by a bank on July 1. The mother of one of Holyfield's nine children said he has missed two child-support payments. Toi Irvin, who lives in Clayton County, filed a petition for contempt in Fayette County Superior Court on behalf of her 10-year-old son. Irvin said she was told by Holyfield's representatives not to expect the payment for May and June totaling $6,000.
Ed McMahon Loses Home - (and Blames Britney Spears) - (www.clusterstock.com) - "In the midst of trying to sell this property, there were a lot of distractions," Davis said, citing paparazzi who have converged around the nearby home of Britney Spears. "When we were trying to sell the house one time, there were about 100 paparazzi there," he said. Where's that mortgage bailout when you need it?
Home foreclosures set record in first quarter - (www.ml-implode.com) - "Home foreclosures and late payments set records over the first three months of the year and are expected to keep rising, stark signs of the housing crisis' mounting damage to homeowners and the economy. The latest snapshot of the mortgage market, released Thursday, showed that the proportion of mortgages that fell into foreclosure soared to 0.99 percent in the January-through-March period. That surpassed the previous high of 0.83 percent over the last three months in 2007.
Luxury houses in Napa Valley falling into foreclosure - (www.latimes.com) - Napa County saw 112 homes repossessed in the first quarter, up from 23 a year earlier, according to DataQuick Information Systems. Most of those foreclosures have been in lower-priced areas, where new-home construction and sub-prime lending were widespread during the housing boom. But the top end is now starting to tumble.
Builder sees 'depression' in housing market - (money.cnn.com) - The chief executive of Toll Brothers Inc., the nation's largest luxury-home builder, said Wednesday the housing industry is in a "depression" and any recovery could be two or three years away.
$5 Trillion Hidden Off Bank Balance Sheets - (Mish at globaleconomicanalysis.blogspot.com) The absurdity is not $5 trillion coming back on bank balance sheets. Rather the absurdity is with accounting rules that let banks hold this much stuff off balance sheets in the first place. It makes a mockery of stated leverage, value at risk, and capitalization ratios. Banks claim to be well capitalized but the ratio is a mere 6% and that 6% does not include the effects of hiding $5 trillion off balance sheets.
Jeff Lacker, Suddenly Uncomfortable With These Fed Lending Facility Things - (www.ml-implode.com) - Richmond Fed President Jeffrey Lacker, in a speech — and later, an interview with the Wall Street Journal’s Greg Ip — says the acronym soup the Fed has created (TSLF, TAF, et al) to combat the credit crisis is distorting asset values and encouraging risky behavior. In essence, he has thrown the “moral hazard” flag on the various creative efforts undertaken by Mr. Bernanke & Co. to help markets that are frozen.''
Tax Those Vacant Properties Away! - (www.ml-implode.com) - The D.C. Council voted Tuesday to double the tax rate on vacant properties and make permanent some of the tighter enforcement rules the D.C. Department of Consumer and Regulatory Affairs has been practicing since early last year. Starting Oct. 1, the vacant property rate will be $10 per $100 of assessed value, up from $5, once approved by D.C. Mayor Adrian Fenty and Congress. The new rate is more than five times the $1.85 charged to the majority of commercial properties and the 85 cents charged for residential properties.
Countrywide’s Mozilo Hushes Homeowner With an Unaffordable Loan Modification - (www.ml-implode.com) - it is interesting that Mr. Dan Bailey was given a pretty decent loan modification. But what was VERY interesting was the fact that Dan still can’t afford the loan offered and gave to him by Countrywide.



Other Stories:

Fixed Mortgage Rates Hold Steady; Adjustable Rates Fall Sharply - (www.ml-implode.com) - "During a week when mortgage applications took a nose dive, average mortgage rates tended to hold tight as inflation concerns do...
Toll Bros. CEO: Housing in 'depression'; recovery years away - (www.ml-implode.com) - The chief executive of Toll Brothers Inc., the nation's largest luxury-home builder, said Wednesday that the housing industry i...
Home Equity Loans Losing Value - (www.ml-implode.com)
REO Tech Provider Sees Historic Growth as Bank-Owned Properties Swell - (www.ml-implode.com)
BofA's Ken Lewis moving forward with Countrywide Toxic Mortgage - (www.ml-implode.com)
Court OKs Fieldstone Mortgage Chapter 11 BK plan - (www.ml-implode.com)
Subprime Debacle May Spark 2-Year Credit Crisis - (www.ml-implode.com)
Fannie Mae and Freddie Mac Conspire to Put Real Estate Investors In Harm's Way... - (www.ml-implode.com)

Mortgaging America: America For Sale - (www.latimes.com)Lawrence Lindsay: It Is Only Going to Get Worse - (www.aei.org)Return of the Credit Crisis: Did It Ever Leave? - (www.financialsense.com)Wall Street to Shed Up To 25,000 Jobs - (www.thestar.com)Airline Industry Faces 'Worst Crisis Since 9/11' - (www.marketwatch.com)

Bernanke "warns" of danger of weak dollar - (www.guardian.co.uk)
Downsizing the American house - (money.cnn.com)
Subprime debacle may spark 2-year credit recession - (news.yahoo.com)
Prices are falling. Wait. - (patrick.net)
MBIA, Ambac Credit Ratings Under Threat - (www.bloomberg.com)
Sliced, Diced Mortgages More Likely to Default - (www.bloomberg.com)
Buying debt at deep discount - (www.dailybusinessreview.com)
MBIA, Ambac Hammered on News of Likely Downgrades - (www.housingwire.com)
In South Florida, Eviction Spares Few - (www.nytimes.com)
The Golden Collapse - (www.reason.com)

Treasuries Decline as Policy Makers Stoke Inflation Concern - (www.bloomberg.com)
Oil Rebounds From a 3-Week Low After Dollar Drops Against Euro - (www.bloomberg.com)
Euro Rises After Trichet Says July Rate Increase Is `Possible' - (www.bloomberg.com)
U.S. Stocks Rise Most in Month on Retail Sales, Jobless Claims - (www.bloomberg.com)

Lacker Says Fed Loans to Wall Street Risk More Crises - (www.bloomberg.com)
Even with bad economy, job number could be good - (www.nypost.com)
Bernanke to Grads: No Repeat of '70s - (www.washingtonpost.com)
Summer airfares double, triple, quadruple - (www.usatoday.com)
Jobless claims show unexpected improvement - (www.ap.com)
Atlanta may charge street vendors rent - (www.ajc.com)
Large lot inventory hangs over Tuscon market - (www.azbiz.com)
Airfares from Bush Intercontinental leaping skyward - (www.chron.com)

S&P in warning over leveraged loans - (www.ft.com)
Food Is Gold, and Investors Pour Billions Into Farming - (www.nytimes.com)
As layoffs bite Wall St, New York real estate hit - (www.ap.com)
Number of Wall Street IPOs pulled - (www.ft.com)
Small businesses turn to alternative lenders - (www.dallasnews.com)
Ed McMahon fights foreclosure on Beverly Hills home - (www.reuters.com)
Santa Maria house bought with no money down goes into foreclosure - (www.latimes.com)

MBIA, Ambac May Quit Aaa Battle on Moody's Likely Cut - (www.bloomberg.com)
Parts suppliers crushed by auto plant closings, cuts - (www.chicagotribune.com)
Chrysler may be next to announce production cuts - (www.chicagotribune.com)
Betting against Lehman at record levels - (www.ft.com)
Detroit wakes up to need for new vehicle mix - (www.ft.com)
Neiman Marcus plans to add discounts - (www.dallasnews.com)
Fidelity in new round of layoffs - (www.boston.com)
Electric Retailer's Default Pushes Texas Into Action - (online.wsj.com)
More fliers are cashing in their miles - (www.startribune.com)
Continental to cut 3,000 jobs, slash domestic flights - (www.chron.com)
Airlines raise nonstop fares sharply for summer - (www.azcentral.com)

Upturn in costs fuels higher pay deals - (www.ft.com)
ECB, Bank of England leave key rates unchanged - (www.ap.com)
Britain faces deepest slump since 1990s - (www.telegraph.co.uk)
Producers lose taste for going overseas - (www.ft.com)
U.K. House Prices Decline Most in 15 Years, HBOS Says - (www.bloomberg.com)
Indonesia, Philippines Raise Rates to Fight Inflation - (www.bloomberg.com)
Russian Inflation Accelerated to 15.1% in May on Food - (www.bloomberg.com)
Fuel price rise may only power inflation - (www.ft.com)
China's trade surplus 'to shrink' for first time in five years - (news.yahoo.com/s/afp)
Bollard Says New Zealand May Cut Interest Rate; Currency Slumps - (www.bloomberg.com)
Time to Put Investment Banking Back in Its Box: Mark Gilbert - (www.bloomberg.com)
Climate change will add to food, utility bills - (www.reuters.com)

Wednesday June 4 Housing and Economic stories

Top Stories:

The "parking lot" homeless of Santa Barbara - (edition.cnn.com) There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. It is illegal for people in California to sleep in their cars on streets. New Beginnings worked with the city to allow the parking lots as a safe place for the homeless to sleep in their vehicles without being harassed by people on the streets or ticketed by police.
Harvey stays at the city's only parking lot for women. "This is very safe, and that's why I feel very comfortable," she said.
Fat pensions spell doom for many cities - (money.cnn.com) – People should be up in arms over these costs: But the real nail in Vallejo's coffin was the city's labor costs. Under the current labor agreement, the average police officer walking the beat in Vallejo will be paid $122,000 this year before overtime, according to city documents. An average sergeant will make $151,000; a captain, $231,000. The average firefighter, meanwhile, will bring in $130,000 before overtime.
It’s Not So Easy Being Less Rich - (globaleconomicanalysis.blogspot.com) - NANCY CHEMTOB, a divorce lawyer in Manhattan, has found that her days have become crammed seeing clients, all worried about how an economic downturn will affect their marriages. One of her clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations. “I literally had to sit there and tell him that he had to tell his wife that she had to stop spending,” she said. “He was actually scared she would leave him because their financial situation changed so drastically.”
Mr. Mortgage: CA Housing Stats…The Real Story. 4.25 Years Supply - (www.ml-implode.com) - ``Most think the CA ‘housing crash’ has been ongoing for a couple of years. That is not the case... California has YEARS OF INVE...
-2 + -2 = 4 as Liabilities Get New Bond Math - (www.bloomberg.com) Leave it to Wall Street to profit from its own distress. Merrill Lynch & Co., Citigroup Inc. and four other U.S. financial companies have used an accounting rule adopted last year to book almost $12 billion of revenue after a decline in prices of their own bonds. The rule, intended to expand the ``mark-to- market'' accounting that banks use to record profits or losses on trading assets, allows them to report gains when market prices for their liabilities fall.
Expensive House Fails To Sell, Then Burns - (www.arktimes.com)
Villains in Mortgage Mess? Start at Wall Street. Keep Going. - (www.washingtonpost.com) - But make no mistake: Today's crisis dwarfs the S&L fiasco. The eventual cost to taxpayers of this scandal is likely to make yesteryear's culprits look like pikers.
The short version of how we got here: Lenders, fat with money made cheap by the federal government, aggressively coaxed millions of borrowers to take out unaffordable mortgages. They lent this money without assessing whether borrowers could repay it. They assumed, in fact, that most wouldn't be able to and would have to refinance into new, equally unaffordable loans. This process would produce an endless cycle of fees for the lenders -- but only if home prices rose, fairy-tale-like, forever.
Another English Bank In Trouble - (news.yahoo.com) - Shares in British buy-to-let specialist Bradford & Bingley plunged Monday after it issued a profit warning and agreed to a massive US cash boost, sparking fresh credit-crunch nerves after the Northern Rock fiasco
Foreclosure capital Stockton has odd market - (msnbc.msn.com)
Thornburg Earnings Further Delayed, Stock Faces Delisting - (www.ml-implode.com) - Thornburg Mortgage announced today that it needed even more time to complete its form 10-Q for the first quarter, which was expe...


Other Stories:

Bernanke Blames Saving Glut For Housing Bubble - (globaleconomicanalysis.blogspot.com) – Greenspan was known for his Fed Speak, but I think this tops many of Greenspan’s deflections of blame. Very funny. In the financial sphere, the three longer-term developments I have identified are linked by the fact that a substantial increase in the net supply of saving in emerging market economies contributed to both the U.S. housing boom and the broader credit boom. The sources of this increase in net saving included rapid growth in high-saving East Asian countries and, outside of China, reduced investment rates in that region; large buildups in foreign exchange reserves in a number of emerging markets; and the enormous increases in the revenues received by exporters of oil and other commodities. The pressure of these net savings flows led to lower long-term real interest rates around the world, stimulated asset prices (including house prices), and pushed current accounts toward deficit in the industrial countries--notably the United States--that received these flows. To be sure, the large inflows of savings and low global interest rates presented a valuable opportunity to the recipient countries, provided they invested the inflows wisely. Unfortunately, this did not always occur, as an increased appetite for risk-taking--a "reaching for yield"--stimulated some financial innovations and lending practices that proved imprudent or otherwise questionable.
America's Recession Could Slip to Depression - (waldo.villagesgroup.com)Nystrom: The Second Great Depression Visits Detroit – (depression2.tv/d2/node/118)
US News: Peter Schiff's Worst Case Scenario - (www.usnews.com)
Economist: America's Housing Prices Falling Faster than During Great Depression - (www.economist.com)
* VIDEO: THE CASE FOR THE PROSECUTION OF GEORGE W. BUSH FOR MURDER * - (bullnotbull.blogspot.com)
Mike Whitney: Economic depression in America: Evidence of a withering economy is everywhere - (www.globalresearch.ca)
Credit Hurricane To Make Landfall - (www.ml-implode.com) - An incredible (yet sobering) article by Benet Sedecca. Some highlights: Another important takeaway was that the older and mo...
Foreclosures Cost Lenders, Homeowners, the Community, and You Big Bucks - (www.ml-implode.com) - "Earlier this month a reader, Pamela Norvell, wrote a suggestion for lessening the foreclosure crisis. She suggested a freeze an...
Corporate Bankruptcies Increase As More Near "Financial Disaster" - (www.bankruptcy-statistics.com)
GM Closing 4 More Plants in North America - (biz.yahoo.com/ap)
Bernanke Signals Discomfort With Weak Dollar (But what's he going to do about it?) - (www.marketwatch.com)
Subprime Crisis to Hit Egypt? - (weekly.ahram.org.eg)
Ike Obasi Wants to Sell You a House - (www.businessweek.com)
House Prices, Confidence Continue Plunge - (www.seekingalpha.com)
Where the Financial Crisis Is Headed Next - (www.smartmoney.com)
Why Lower House Prices Are in Your Interest - (www.seekingalpha.com)
Alt-A Borrowers Looking More Like Subprime than Prime - (www.researchrecap.com)
Desperate Americans Selling Nest Eggs - (www.clusterstock.com)
Total Borrowings of Banks from Fed - (research.stlouisfed.org)
Japan financial firms' 2007 subprime losses total Y1.9 trillion - (www.marketwatch.com)
Japan a good buy in contrary trend - (www.iht.com)
Foreclosure Bus Tour, Sign of Housing Bust, Hits NY Area - (bloomberg.com)
The market turns cold in a desert boomtown - (latimes.com)
High food and energy prices not all bad - (www.washingtontimes.com)

Oil Falls More Than $1 as Bernanke Signals U.S. Rates on Hold - (www.bloomberg.com)
U.S. Stocks Rise on Bernanke Outlook, Growth in Factory Orders - (www.bloomberg.com)
Dollar Rises to Two-Week High Versus Euro on Bernanke's Remarks - (www.bloomberg.com)

Bernanke signals discomfort with weak dollar - (www.marketwatch.com)
Skyrocketing gasoline prices force changes - (www.latimes.com)
Souring economy puts the bite on pet owners - (www.chicagotribune.com)
After Mortgages, Construction Crisis May Be Building - (online.wsj.com)
Credit worries rattle markets again - (www.reuters.com)
An Impossible Dream, the Euro Finds Its Way - (www.nytimes.com)
Apollo unit halts cash payouts - (www.ft.com)
Soros sounds alarm on oil 'bubble' - (www.ft.com)
Las Vegas called 'mortgage fraud ground zero' - (www.usatoday.com)
Wheat futures surge near $8 on hot U.S. weather - (www.signonsandiego.com)

Lehman may raise $3-4 billion fresh capital: (online.wsj.com) - (www.reuters.com)
GM to Close Four Plants, Shift Production to Cars - (www.bloomberg.com)
Lehman Weighs Raising Capital - (online.wsj.com)
Toll Brothers swings to Q2 loss - (www.reuters.com)
Marriott sees softening US demand - (www.marketwatch.com)
ResCap says needs more liquidity - (www.ap.com)
After Wachovia, WaMu Shuffles, Who's Next? - (www.thestreet.com)
Winnebago Idles Plant in Iowa - (online.wsj.com)
Dutch wind power giant to open research center in Houston - (www.chron.com)
GM seen cutting deeper as recovery sideswiped - (www.reuters.com)

European Producer-Price Inflation Accelerates to 6.1% - (www.bloomberg.com)
Foreign investors 'losing faith' in economy - (www.ft.com)
U.S. Slump Spreading To Canada? - (www.forbes.com)
Inflating China - (online.wsj.com)
Europe's Expansion Accelerates More Than Estimated - (www.bloomberg.com)
China says U.S. economic slump won't deflate exports - (www.latimes.com)
Food Production Must Rise 50% - (online.wsj.com)

Tuesday June 3 Housing and Economic stories

Top Stories:

Has Phase 2 of the Credit Crisis begun???:
Student Loans Start to Bypass 2-Year Colleges - (www.nytimes.com) – Credit crunch beginning to freeze loans for 2 year colleges and lower quality (perceived by lenders) 4 year colleges.
Wachovia Ousts Thompson on Writedowns, Share Plunge - (www.ml-implode.com) - Wachovia Corp. ousted Kennedy Thompson as chief executive officer of the fourth-largest U.S. bank after the board blamed him for...
Expect further declines in 2008 and into 2009 - (www.freddiemac.com) - While we expect to see further declines in average home values throughout this year and into 2009, we will be watching very carefully for signs of stabilization in indicators of real housing activity, such as a leveling off in home sales, now that the traditional home-buying season spanning late spring and early summer is underway
Liars Rejoice! Stated income cannot be used against you - (www.theconglomerate.org) - Judge Leslie Tchaikovsky, a bankruptcy judge in the Northern District of California, has issued a whopper of an opinion holding that a mortgage lender on a stated income loan is not entitled to rely on the "stated" income in the loan application for purposes of bankruptcy discharge.
Permabear Peter Schiff's Worst-Case Scenario - (www.usnews.com) – First off, the title is a bit unfair, as Peter was not a bear 12 years ago. He says “There's nothing good to say about our situation. The policies both the Fed and government are pursuing are making the situation worse. We've been getting a free ride on the global gravy train. Other countries are starting to reclaim their resources and goods, so as Americans are priced out of various markets, the rest of the world is going to enjoy the consumption of goods Americans had previously purchased. This is a natural consequence of this phony economy. If America had maintained a viable economy and continued to produce goods instead of merely consuming them, and if we had saved money instead of borrowing, our standard of living could rise with everybody else's. Instead, we gutted our manufacturing, let our infrastructure decay, and encouraged our citizens to borrow with reckless abandon.”
Price Erosion Hits the $5 Million-Plus Market - (finance.yahoo.com)
Moody's Implied Ratings Show MBIA, Ambac Are Junk - (www.bloomberg.com)
House of pain - (www.jsonline.com) - While earning $9.25 an hour, Medellin struggles to pay a $103,500 high-interest loan for an often-vandalized house on Milwaukee's north side. The city assessed the property at almost $40,000 less.
Next Housing Market to Crash? Seattle - (www.usnews.com)
SUV Owners Trash Vehicles, Turn in the Keys - (www.ml-implode.com)
Repackaged Mortgage Garbage Is Still Garbage - (www.ml-implode.com) - It's what financial engineering and securitization is all about: It's taking something nobody wants and creating something people will want, be able to finance, or able to hold,'' said James Grady, a managing director at the New York-based unit, which has $240 billion of fixed-income assets under management
Credit where it’s due - (www.ml-implode.com) - The slowdown in housing looks increasingly hazardous to the overall economy…. Without such a strong underlying economy, the current malaise in housing could turn into a deeper, longer downturn….Arguably, the current episode may…be one of the worst housing downturns we have ever seen, given the amount of excess supply coupled with extremely low levels of affordability and the deflation of what could be described as a speculative investment mania
Apollo company halts cash payouts - (www.ft.com) A fourth company owned by private equity firm Apollo Management has exercised its option to suspend cash payments on part of its debt, taking advantage of one of the most controversial financing techniques of the leveraged buy-out boom. But the obvious downside is that some investors are being paid with paper, increasing their exposure to troubled companies. Other companies with PIK options enabling them to suspend cash payments on their bonds include some of the targets of the leveraged buy-out binge – such as Freescale Semiconductor, HCA and Univision.
Moody's Implied Ratings Show MBIA, Ambac Turn to Junk - (www.bloomberg.com) - The team from Moody's Analytics, which operates separately from Moody's ratings division, uses credit-default swap prices as an alternative system of grading debt. These so-called implied ratings often differ significantly from Moody's official grades. The implied ratings frequently show that swap traders think debt is in more danger of defaulting than Moody's credit ratings signify. And here's the kicker: The swaps traders are usually right
Banks' credit crisis solutions have echoes of 1929 Depression - (www.telegraph.co.uk)


Other Stories:

Thornburg Earnings Further Delayed, Stock Faces Delisting - (www.ml-implode.com) - Thornburg Mortgage announced today that it needed even more time to complete its form 10-Q for the first quarter, which was expe...
A Tale of Two Housing Markets: There’s REO, and Everything Else - (www.ml-implode.com) - "Proving that even within a single local housing market, sales trends can be more complex than they might otherwise seem, new da...
Real Price Declines Swamping Nominal Home Price Trends: First American - (www.ml-implode.com) - "That inflation monster investors are worried about? It may prove to have a strong bite on housing just yet, according to data released Monday morning by First American CoreLogic
Fed On Hold Till the Fall (Despite Calls to Raise Rates)? - (www.ml-implode.com) - "It appears the US central bank got taken to the woodshed at a conference hosted by the New York Fed for overly aggressive rate ...
Number of Foreclosed Homes Keeps Rising - (www.ml-implode.com)
Fed Buying Less at Treasury Auctions Thanks to New Facilities - (www.ml-implode.com)
In ‘Foreclosure Capital’ 3 out of 4 homes for sale is a foreclosure - (www.ml-implode.com)
Research Zeitgeist: Inflation, Libor and Vintage Subprime - (www.ml-implode.com)
Liquidity Issues Hit Hedge Funds - (www.ml-implode.com)
Kohn Signals Wall Street May Get Permanent Access to Fed Loans - (www.ml-implode.com)

The Lowdown on Libor - (www.businessweek.com)
Traders Seek Truth With Swaps Instead Of Libor - (www.bloomberg.com)
The State of Real Estate - (PDF - patrick.net)
Trouble in Housing Trickles Up - (www.nytimes.com)
Troubled Sellers Up 463% In San Mateo County - (sanmateore.dreamhosters.com)
Global housing markets in review; forecasts for 2008 - (www.globalpropertyguide.com)
Banks' solutions have echoes of 1929 Depression - (www.telegraph.co.uk)
Newly Overdue Mortgages Swamp Effort to Fix Defaults - (www.bloomberg.com)
It's Only Going to Get Worse - (www.weeklystandard.com)
U.S. Bank Failures Loom - (www.blacklistednews.com)
Don't raid retirement savings to pay the mortgage - (www.marketwatch.com)
Maryland County Realtors' Building For Sale - (patrick.net)

Influx of workers 65 or older working in retail jobs - (www.chron.com)
Egg price reflects soaring costs for diesel, feed, chicks - (www.ajc.com)
Economic chill freezes Vegas budget - (www.lasvegassun.com)
Slow economic times mean pay cuts for many workers - (www.usatoday.com)

Morgan Stanley, Merrill, Lehman Ratings Cut by S&P - (www.bloomberg.com)
The market turns cold in a desert boomtown - (www.latimes.com)
U.S. Treasury secretary: No 'quick fix' for high oil prices - (www.chicagotribune.com)
Number of Foreclosed Homes Keeps Rising - (online.wsj.com)
Foreclosure Bus Tour, Sign of Housing Bust, Hits New York Area - (www.bloomberg.com)
A Return of That ’70s Show? - (www.nytimes.com)
U.S. ISM Factory Index Probably Shrank in May for Fourth Month - (www.bloomberg.com)
The Fed, the cost of oil and inflation - (www.ft.com)

Wachovia Ousts Thompson on Writedowns, Share Plunge - (www.bloomberg.com)
HSBC overhauling mortgage, credit practices - (www.chicagotribune.com)
Luxury retailers realize it's a new shopping scene - (www.chicagotribune.com)
Airline Group Sees ‘Desperate’ Times - (www.nytimes.com)
GM, Motorola, New York Times Burn Cash Flow, Keeping Dividends - (www.bloomberg.com)
Airline industry to plunge into loss - (www.ft.com)
Minnesota town tells Google Maps to get lost - (news.cnet.com)
Student Loans Start to Bypass 2-Year Colleges - (www.nytimes.com)

U.K. Mortgage Approvals Drop to Record, Factory Growth Stalls - (www.bloomberg.com)
European Finance Ministers Signal Inflation Concerns - (www.bloomberg.com)
Outlook: UK nears recession - (www.ft.com)
US staring at double-dip recession as calls for higher interest rates grow - (www.telegraph.co.uk)
South Korea to delay resumption of U.S. beef imports - (www.chron.com)
Negative equity mounting in the UK - (www.guardian.co.uk)
Malaysia tired of subsidizing gas for Thai drivers - (www.chron.com)