Tuesday December 9 Housing and Economic stories

TOP STORIES:

D.E. Shaw, Farallon Restrict Withdrawals as Fund Freeze Deepens - (www.bloomberg.com) More shameless funds suspend withdrawals. D.E. Shaw & Co. LP, the investment firm run by David Shaw, and Farallon Capital Management LLC limited withdrawals by clients, joining more than 80 hedge-fund managers to impose restrictions in the past two months. D.E. Shaw, which oversees $36 billion, capped redemptions from its Composite and Oculus funds, said two people familiar with the New York-based company. Farallon, a $30 billion firm based in San Francisco, did the same with its biggest fund after investors asked to get back more than 25 percent of their money. The firms are two of the biggest to block withdrawals, known as putting up gates, so they aren’t forced to liquidate investments at distressed prices to raise cash. New York-based Fortress Investment Group LLC said yesterday it froze an $8 billion fund after getting redemption requests for 40 percent of its assets. Tudor Investment Corp., the Greenwich, Connecticut, firm run by Paul Tudor Jones, locked the $10 billion BVI Global fund last week ahead of plans to split the fund into two. “There’s no longer the stigma associated with putting up gates or suspending redemptions as it was before this crisis,” said Jaeson Dubrovay, head of the $19 billion hedge-fund group at consulting firm NEPC LLC in Cambridge, Massachusetts. “It’s actually being encouraged by some large institutions as a way to protect longer-term investors from those who panic and redeem.”

Ohio: One in Eight In Foreclosure – (www.cincinnati.com) - Foreclosures continue to rise locally, across Ohio and Kentucky and nationally, new data released Friday showed. Nearly one of eight homeowners in Ohio with mortgages were behind on their payments or in foreclosure at the end of the third quarter. That's worse than the national rate of more than 10 percent, according to the Mortgage Bankers Association, which released its quarterly delinquency survey Friday. Kentucky fared slightly better than the national average with 9.9 percent of homeowners being either behind or in foreclosure. In Ohio, 3.93 percent of the 1.5 million mortgage-holders were in foreclosure - about 59,700 households, while another 8.31 percent or 126,000 were behind on payments.

FarmerMac (Fed Agricultural Housing Corp) Sued For Securities Fraud – (www.marketwatch.com) - Farmer Mac and certain of the Company's officers and/or directors are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934 (the "Exchange Act"). Farmer Mac was chartered by Congress for the purpose of establishing a market for agricultural real estate and rural housing mortgage loans and rural utilities loans, as well as to facilitate capital market funding for USDA-guaranteed farm program and rural development loans

Democrats Fooled by Automaker CEOs After they Drive to DC, Set to Offer Loans for Carmakers - (www.cnbc.com) The three stooges (Pelosi, Dodd, and Barney Frank) are suckered by the CEOs of the automakers after they drive to DC in green cars. Well, possibly the 530,000 job losses shocked them into approving this as well. Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week, the New York Times reports. Faced with staggering new unemployment figures, Democratic Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week.

Taxpayers will get a return on the bailout - (money.cnn.com) Usual flawed thinking from government and their associated agencies: Taxpayers will get money back from the government program providing up to $250 billion in capital to banks around the country, a Treasury Department official said Friday. Neel Kashkari, the director of Treasury's Office of Financial Stability, which oversees the $700 billion financial rescue fund, said the government is investing in "very high quality institutions of all sizes." The Treasury Department has received preferred stock and warrants to buy additional shares in return for the $150 billion it has invested so far in 52 banks, including Bank of America Corp (BAC, Fortune 500)., Citigroup Inc. (C, Fortune 500) and JPMorgan Chase & Co (JPM, Fortune 500). Inc.

Argentina tries gov't car loan plan using recently nationalized pension system - (money.cnn.com) Argentina's auto industry will get a 3.1 billion peso ($900 million) boost with cut-rate loans for first-time new car buyers, the government said Saturday. Production Minister Deborah Giorgi's announcement detailed a key part of a broader economic stimulus package based largely on assets of the recently nationalized pension system. Giorgi told a news conference that six automakers will each offer two models selling for $10,000 or less for people buying a new car for the first time. The companies, most of which saw sales drop sharply in November, will have to promise to shun layoffs and hold down profit margins on cars sold under the program.

Citadel Seeks to Raise $500 Million by Opening Fund to New Cash - (www.bloomberg.com) This sounds like a ponzi scheme. Citadel Investment Group LLC is opening a $2 billion hedge fund to new cash from clients and plans to have it buy stocks from the firm’s two biggest funds, which have lost almost half their value this year. The firm, run by Kenneth Griffin, hopes to raise as much as $500 million before the end of the year, according to a letter sent to investors. Clients will be allowed to put money in the Citadel Tactical Trading fund, whose returns exceeded 40 percent this year through November.

First Georgia Community Bank Closed, Boosting 2008 Toll to 23 - (www.bloomberg.com) First Georgia Community Bank of Jackson, with four offices southeast of Atlanta, was closed by regulators, becoming the 23rd U.S. bank failure this year amid losses tied to record mortgage delinquencies and foreclosures. First Georgia, with $237.5 million in assets and $197.4 million in deposits, was shut by the Georgia Department of Banking and Finance yesterday and the Federal Deposit Insurance Corp. was named receiver. United Bank of Zebulon, Georgia, will assume First Georgia’s deposits and open the failed bank’s offices today as United branches, the FDIC said. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in an e-mailed statement.

AIG, Carlyle Leveraged Loan CLOs May Be Downgraded - (www.bloomberg.com) Loan funds managed by American International Group Inc., Carlyle Group and KKR Financial Holdings LLC may face downgrades after Standard & Poor’s review of 197 portions of collateralized loan obligations. “Rapid deterioration in the credit quality of the corporate loans in the underlying collateral pools in recent weeks” led to the move, the New York-based ratings company said today in a statement. The securities, valued at $3.89 billion at issuance, are from 127 CLOs including deals overseen by the three managers, S&P said. Cash flow CLOs that pool high-yield, high-risk loans have been largely immune from the credit crisis that affected subprime collateralized debt obligations. Only 1.1 percent of 4,350 U.S. CLOs have had a ratings downgrade, according to S&P. “November was yet another bleak month for CLOs and leveraged loans,” analysts Dave Preston and Justin Pauley at Wachovia Corp. in Charlotte, North Carolina, wrote. “CLO structures are weakening along with the loan market.”

NYC Market wonders if party's really over - (www.nypost.com) And with the demise of so much of Wall Street, real estate experts predict it all will probably get worse before it gets better. "Wall Street provides 5 percent of the New York job market," says Jonathan Miller, president and CEO of appraisal firm Miller Samuel. "But it's 25 percent of the income." Given that financial sector job losses will likely be tens of thousands (or more) - and that a large part of the NYC housing boom has been fueled by Wall Street bonus money - this does not bode well. "The cut in bonuses could be anything from 25 to 75 percent," says Miller, who adds that he's heard layoff figures as high as 65,000 by the end of the year. Though the full effect has yet to be felt, the current data is already startling. According to figures released by appraisers Mitchell, Maxwell & Jackson, the average price of a Manhattan apartment fell 8.8 percent from the first quarter of this year to $1.418 million, down from $1.552 million. And the number of contracts inked in September and October were down 75 percent from the same time last year.



OTHER STORIES:

Accord on U.S. help for automakers - (money.cnn.com)
Stocks rally despite jobs report - (money.cnn.com)
$1 trillion rescue: Not so out there - (money.cnn.com)
OPEC head predicts output cuts Oil at 4-year low - (money.cnn.com)
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)

Loan Risk Soars as Payrolls Plunge, Economy Falters - (www.bloomberg.com)
Capitalism needs to be rescued by capitalism - (www.pittsburghlive.com)
Residential Real Estate: Erosion Ahead - (www.seekingalpha.com)
Over 1 million U.S. layoffs so far this year - (www.sfgate.com)
New York Fed Opens Pawn Shop to Buy Up Junk - (yourmortgageoryourlife.wordpress.com)
More bad news expected for Chinese real estate - (www.iht.com)
India’s Central Bank Cuts Key Rate - (www.nytimes.com)
U.S. Economy Heads for Deep, Long Recession as Job Losses Mount - (www.bloomberg.com)
U.S. Loses 533,000 Jobs in November; Joblessness at 6.7% - (www.nytimes.com)
1.25 million jobs lost in three months - (www.latimes.com)
Too Big Not To Fail -- By Eliot Spitzer - (www.slate.com)
Death by a thousand price cuts - (www.bankrate.com)
Lower mortgage rates aren't the answer - (money.cnn.com)
Where's the strategy for $700 billion? - (emailthis.clickability.com)
Paulson Considers New Plan to Screw Responsible Borrowers and Renters - (www.bloomberg.com)

Democrats Set to Offer Loans for Carmakers - (www.nytimes.com)
GM, Chrysler Bankruptcy Financing Would Be Double Bailout Loans - (www.bloomberg.com)
Treasury urged to screw retirees and savers - (msnbc.msn.com)
Treasury Tries to Re-Inflate Housing Bubble - (www.minyanville.com)
Treasury Weighs Messing with Mortgage Rates - (www.washingtonpost.com)

Chinese People Come to Buy US Foreclosures - (news.newamericamedia.org)
Hyperinflation in action - (optionarmageddon.ml-implode.com)
Why the Economy Grows Like Crazy Amid High Taxes - (www.alternet.org)
The Global Poker Tour: An Allegory - (ashizashiz.blogspot.com)
Economists : Economic forecasting animation - (www.andyfoulds.co.uk)

Monday December 8 Housing and Economic stories

TOP STORIES:

Crude Oil Falls 24% This Week -- How Low Will It Go? (CHK) - (www.streetinsider.com) Crude oil has fallen another 4% today (Friday), pushing as low as $40.85. With today's continued move lower, the price of a barrel of crude oil has declined by about 24% in December, which has had only 5 trading days so far. This month's sharp slide in prices have left oil & gas related stocks in the gutter, which, in turn, have dragged down prices in the entire energy complex. Among numerous once-high-flyers now in the doldrums, one name is sticking out today as it has seen unusually high ...

Another Friday, Another Bank Failure: First Georgia Community Bank closed -- 23rd failure in '08 - (www.marketwatch.com) First Georgia Community Bank was closed by regulators Friday, the 23rd bank failure of the year and the fourth in the Atlanta area amid the ongoing financial crisis. The four branches of Jackson, Ga.-based First Georgia will re-open Saturday as United Bank, which has assumed First Georgia's deposits, the Federal Deposit Insurance Corporation said in a statement. As of Nov. 7, First Georgia had $237.5 million in assets and $197.4 million in deposits, the FDIC said. The FDIC estimated the closure will cost its Deposit Insurance Fund $72.2 million. In November, state regulators closed Community Bank of Loganville, while Integrity Bancshares Inc. and Alpha Bank & Trust, both in Alpharetta, Ga., have also been closed.

Activist moves homeless into foreclosures - (msnbc.msn.com) Man executes bailout plan of his own on Miami's empty streets. Max Rameau delivers his sales pitch like a pro. "All tile floor!" he says during a recent showing. "And the living room, wow! It has great blinds." But in nearly every other respect, he is unlike any real estate agent you've ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don't have a dime for a down payment. Rameau is an activist who has been executing a bailout plan of his own around Miami's empty streets: He is helping homeless people illegally move into foreclosed homes. "We're matching homeless people with people-less homes," he said with a grin. "I think everyone deserves a home," said Rameau, who said he takes no money from his work with the homeless. "Homeless people across the country are squatting in empty homes. The question is: Is this going to be done out of desperation or with direction?"

Former Treasury Undersecretary Proposes 100 Year Treasuries - (Mish at globaleconomicanalysis.blogspot.com) Those not thrilled with the prospect of getting 3% for 30 years on the long bond can now entertain the possibility of getting 3% for 100 years. Peter Fisher Says Treasury Should Consider 100-Year Debt. BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion. If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

Jesse Jackson plans rallies to support automakers - (www.freep.com) The Rev. Jesse Jackson says he will organize rallies in several cities to urge Congress to grant aid to the struggling U.S. automakers. At a press conference today with minority auto suppliers and dealers in Detroit, Jackson said, "It's time to go back to the streets for some action." The civil rights leader and former presidential hopeful says the issue is not about "the Big Three execs, it's the big 4 million jobs." Jackson spoke while the leaders of General Motors, Ford and Chrysler are in Washington for their second day of hearings to request up to $34 billion in emergency funding to stay in business.

China Won't "Dare" Invest in US Financial Firms - (www.bloomberg.com) China’s sovereign wealth fund said it wouldn’t “dare” invest in foreign financial firms after losing $6 billion on stakes in Morgan Stanley and Blackstone Group LP. “I don’t dare to invest in financial institutions now,” Lou Jiwei, chairman of China Investment Corp., said today at a conference in Hong Kong. “The policies of the developed nations on these institutions are not clear. Until they are clear, I don’t dare to invest in them. What if they go bust? I will lose everything.”

Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary - (www.villagevoice.com) Lehman Brothers CEO Dick Fuld told Congress on October 6 that the Wall Street investment bank was destroyed by a "financial tsunami"—a natural disaster, an act of God. In other words, it wasn't his fault. But the truth is that Lehman's fall in the subprime-mortgage crisis was a man-made disaster. The white-shoe firm was not just deeply involved in the murky subprime-mortgage market; Lehman and the other dominant Wall Street investment banks, experts tell the Voice, actually created the demand for the mortgages that they would then package and swap for enormous returns. Addicted to the profits that such securities brought in, Lehman was desperate for the risky mortgages they required. "Sure, there were sleazy brokers out there who were fooling people, but you have to understand—to use a drug analogy—they are like the 'corner boys,' " says Irv Ackelsberg, a Philadelphia lawyer who specializes in representing homeowners in foreclosure cases. "You have to look at the cartel at the top. The brokers were basically creating loans that had been ordered by Wall Street." Put another way, Lehman and other top financial firms "primed the pump and controlled production," says Kevin Byers, an Atlanta forensic accountant who has spent years tracing the evolution of the subprime market. "Lehman was very early in getting this deal machine into place," he says. "With one hand, they loaned the money to the mortgage lender to allow them to originate loans to home buyers. With the other hand, they ostensibly bought the loans originated with their line of credit, and resold them as securities to investors." The scheme worked like this: Homeowners signed mortgages with loan companies. Lehman bought those mortgages and bundled them into "tranches," which they then sold to investors—often large pension funds and other financial institutions. Jay Weiser, an associate professor of law and real estate at Baruch College, says the system was set up to assure the owners of the mortgage-backed securities that they would get a steady return. "Since everyone at the top was paid for how many mortgage-backed securities they put out each year, they had every incentive to look the other way and overstate the quality of the loans they were making," he says.

Federal judge rules Citibank must stand trial - (www.poconorecord.com) A six-year-old private civil suit alleging a conspiracy to sell Poconos homes at fraudulently inflated values could go to trial next spring, following a federal judge's rejection of a bank's motion to dismiss them as a defendant. U.S. District Judge Christopher Conner ruled Oct. 24 — for the second time this year — that Chase Manhattan Mortgage Corp. and branch manager William K. Spaner must stand trial on allegations that Chase conspired with Tannersville developer Gene Percudani to fraudulently sell homes in excess of market value through inflated appraisals. Nearly 100 sets of homeowners charge that Percudani, his construction and brokerage companies, Chase, and former home appraiser Dominick Stranieri violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and state consumer protection law. The suit was filed following a 2001 series of stories in the Pocono Record detailing the sales practices.



OTHER STORIES:

Detroit Finds Some Sympathy in House After Jobs Report - (www.nytimes.com) The Detroit automakers’ bid for federal aid was received more favorably by some lawmakers following the news that another 533,000 Americans lost their jobs.
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)
Consumer credit drops $3.6B in October - (money.cnn.com)
Taxpayers will get a return on the bailout - (money.cnn.com)
Oil at 4-year low Gasoline down again - (money.cnn.com)
Taxpayers: Furious over homeowner bailouts - (money.cnn.com)
Let House Prices Fall - (www.cbsnews.com)
Stabilize House Prices By Cutting Them Drastically - (blogs.wsj.com)
To truly revitalize housing we must allow prices to fall - (optionarmageddon.ml-implode.com)
Mortgage fraud incidents up 45% in second quarter - (money.cnn.com)
Corporate Debt Protection Costs Climb Amid Depression Concern - (www.bloomberg.com)
The American Crisis and the Case for an Inflationary Depression - (www.seekingalpha.com)
Deflation: Bargains abound, which could be a problem - (www.usatoday.com)
Auto Sales Plunge To Lowest Level Since 1982 - (Mish at globaleconomicanalysis.blogspot.com)
Preemptive Housing-Bubble-Bursting - (www.cjr.org)
The Housing Bubble and the Boomer Generation - (www.newgeography.com)
Manhattan Awash in Open Office Space - (www.nytimes.com)

Citigroup Said to Cut Most of Asia Real Estate Team After Slump - (www.bloomberg.com)
Fed rushing headlong into liquidity trap - (www.monthlyreview.org)
Investor Sues to Block Mortgage Modifications - (news.yahoo.com)
Understanding Deleveraging and Credit Cards - (optionarmageddon.ml-implode.com)
Paulson Bucks Paulson as His Hedge Funds Score $1 Billion Gain - (www.bloomberg.com)
With Change in Season, House Prices Fall Together - (www.marketwatch.com)
Oahu house, condo sales plummet - (www.starbulletin.com)
Hawaii Real Estate: Back to 1981? - (Charles Hugh Smith)
Real estate a tough sell in troubled economy - (www.sfgate.com)
Financial troubles, unhappiness linked, but not directly - (www.idahostatesman.com)
Doris Dungey, Prescient Finance Blogger, Dies at 47 - (www.nytimes.com)
Bond Trading Trends Warn of Deflation - (www.seekingalpha.com)
Bernanke-san Evokes Japan Comparison - (www.bloomberg.com)
Somali Pirates to acquire Citigroup - (optionarmageddon.ml-implode.com)