Sunday February 1 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

End may be Near for Madoff-Victim Tremont - (www.nypost.com) Hedge-fund firm Tremont Group Holdings, which lost more than half of its assets to alleged scammer Bernard Madoff, is winding down operations and could shutter its doors by summer, sources tell The Post. The Rye, NY, fund, which is owned by life-insurance company MassMutual, has cut its staff by about 40 percent, The Post has learned, and people familiar with the situation said some remaining employees have been told they may be let go in June with severance packages. Tremont spokesman Montieth Illingworth declined to comment on the layoffs, but confirmed that the firm has closed its Rye Investment Management unit, which offered a line of single-manager funds, and which invested a whopping $3.1 billion with Madoff.

Elliott Hedge Fund Bought Fictitious Securities From Dreier - (www.bloomberg.com) Elliott Management Corp., the $12.8 billion hedge-fund firm founded by Paul Singer 32 years ago, told clients that it bought securities from Marc Dreier, the New York lawyer jailed for alleged fraud. Elliott lost money on promissory notes purchased in October from Dreier, who had previously done work for the company, it said in an undated quarterly letter to clients. The firm’s Elliott Associates LP fund declined 9.2 percent in the fourth quarter, its worst quarterly loss. “There are many reasons why funds lose money, but being defrauded is among the most embarrassing and annoying,” New York-based Elliott said in the letter, a copy of which was obtained by Bloomberg News. “We continue to adapt our processes to keep several steps ahead of fraudsters, and we maintain an attitude of probing skepticism. But sometimes we get hooked, as in the Dreier case.”

Fannie, Freddie may tap U.S. Treasury for $51 billion - (www.reuters.com) Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages. The storm of rising delinquencies and falling securities values that led to the government's seizure of the companies in September accelerated in the last quarter, requiring Fannie Mae and Freddie Mac to seek more of the stop-gap measures organized by the U.S. Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009. Fresh losses in the most recent quarter will probably be the harshest on Freddie Mac (FRE.P), which holds a larger portfolio of risky mortgage securities, including subprime bonds. The McLean, Virginia-based company said on Friday it may have to seek $30 billion to $35 billion in capital from the Treasury in the form of senior preferred stock.

GE Capital Leads Commercial Paper ‘Test’ as Fed’s Buying Ebbs - (www.bloomberg.com) Seventeen months after seizing up at the onset of the credit crisis, the $1.69 trillion commercial paper market may be the first to cut its reliance on federal bailout programs. About $245 billion of 90-day commercial paper that companies sold to the Federal Reserve starting in October will mature this week and next, central bank data show. As much as $50 billion to $70 billion of the debt may be rolled over and bought by investors, according to Barclays Capital in New York. The market’s ability to absorb the maturing debt may build confidence that U.S. companies are able to fund themselves without government support, said Deborah Cunningham, chief investment officer for taxable money markets at Federated Investors Inc. Investors, betting the commercial paper market has stabilized, pushed interest rates to record lows this month and bought the most 90-day debt since September, Fed data show. The debt rollover represents “a test of how well the market can sustain itself,” said Cunningham, who is buying commercial paper for Pittsburgh-based Federated, which oversees $288 billion in money-market assets. “And I think it will pass the test.”

Defaults stack up in the junk bond market - (www.latimes.com) The corporate junk bond market once again is living up to its name, as defaults continue to surge. A total of 15 companies worldwide have defaulted on their bonds this month, triple the total in January 2008, according to Standard & Poor's. The casualties this month include Lyondell Chemical Co., cable TV firm Charter Communications and mattress maker Simmons. All of the 15 were U.S. companies except one: Canadian telecom giant Nortel Networks. Junk bond values crumbled last fall, driving yields sky-high, as investors began to anticipate a sharp increase in defaults because of the sinking economy and the credit crunch.

Korean Financial Blogger Detained - (www.mikeabundo.com) We know political bloggers get harassed all the time, but this is the first I’ve heard of a financial blogger getting thrown in the can. Park Dae Sung, 31, an unemployed blogger now finds himself in hot water for allegedly being “Minerva,” a web guru who posted his thoughts on the state of the economy and the government’s economic policies. Those thoughts generated huge attention in Korea, particularly following Minerva’s prediction that Lehman Brothers would fail. Those musings, however, have not sat well with Seoul. Now Park has been taken into custody by the government and, according to his lawyer, faces a maximum five-year prison sentence for allegedly spreading false information with the intention of harming or threatening public interest. Park was arrested on Jan. 10 for a Dec. 29 posting in which he accused bureaucrats of ordering banks to stop buying dollars while the won was falling during last December’s global economic crisis. The official news agency Yonhap reported that Park was also arrested for a July 2008 posting that said the Finance Ministry had suspended all foreign currency exchanges. Park’s lawyer, Park Chan Jong, says prosecutors are alleging that the posting destabilized the foreign currency market to such an extent that an additional $2.2 billion injection was needed the next day to calm the market.

Condo developers in San Francisco hurting for buyers - (www.sfgate.com) Most developers unlucky enough to be marketing San Francisco condominiums today are scrambling for customers, dropping prices, boosting concessions or putting up "for rent" signs in an effort to fill their buildings. Condos in the city have outperformed the real estate market as a whole throughout the downturn, especially on the luxury end, but tight lending and relentless economic gloom have spread the pain across the region and price spectrum. -- The company behind Millennium Tower, the 60-story luxury project in SoMa set to open in April, will soon announce it is slicing all prices by 15 percent to entice buyers. In a surprising move, it's also extending that bargain to those who have already submitted deposits to purchase units. -- The owners of the Radiance, the 99-unit waterfront mid-rise in Mission Bay, expect to say next week that they will lower prices by an average of 10 percent on selected units. -- One Rincon Hill, the 64-story building that rises above the western approach to the Bay Bridge, isn't promoting any across-the-board cuts, but prices are down between 10 percent and 15 percent from a year ago, while spending on various incentives is up between 3 percent and 5 percent, said Paul Zeger, chief executive officer of Pacific Marketing Associates Inc., which markets that building.



OTHER STORIES:

Nikkei Surges on Rescue Plan - (www.nytimes.com)
U.S. Stock-Index Futures Rise; American Express, Citigroup Gain - (www.bloomberg.com)
Harvard, Dartmouth Losses May Increase on Buyouts, Real Estate - (www.bloomberg.com)
Global Financial Crisis Fells Iceland Government - (www.washingtonpost.com)
Bankers braced for bitter pill of regulation - (www.reuters.com)
German January Business Confidence Unexpectedly Rises - (www.bloomberg.com)
Layoffs Spread to More Sectors of the Economy - (www.nytimes.com)
Caterpillar, Sprint, Home Depot Slash Jobs on Falling Sales - (www.bloomberg.com)
For Fed Policy-Making, Murky Era Lies Ahead - (www.nytimes.com)
Layoffs Cut Deeper Into Economy - (www.washingtonpost.com)
Geithner Sworn in at Treasury; Dudley May Get Fed Job - (www.bloomberg.com)
Fannie to Tap U.S. for as Much as $16 Billion in Aid - (www.bloomberg.com)
Housing Prices Tumble at Record Pace - (www.bloomberg.com)
Flood of foreclosures: It's worse than you think - (money.cnn.com)
California jobless rates leaps to 9.3% - (www.sfgate.com)

Wealthy Sellers Happy to Break Even - (www.sfgate.com)
Peter Schiff: Let the Housing Market Crash - (www.usnews.com)
Mortgage Rates Soar - Fed Better Buy More - (mrmortgage.ml-implode.com)
Can Obama get us off our debt binge? - (optionarmageddon.ml-implode.com)
Who Needs Economists When We Have the Home Builders? - (www.financialsense.com)
Obama moves to force automakers to produce more fuel-efficient vehicles - (www.latimes.com)
Madoff Enablers Winked at Suspected Front-Running - (www.bloomberg.com)
F.D.R’s Example Offers Obama Cautionary Lessons - (www.nytimes.com)

Bank Stock Value Losses - (1.bp.blogspot.com)
Which banks profiting from bailout? Rep. Marcy Kaptur - (www.youtube.com)
Bankers have hijacked our savings and tax dollars - (jonnyob.blogspot.com)
California property tax revenue plummets with house values - (www.sfgate.com)

Sweden's Fix for Banks: Nationalize Them - (www.nytimes.com)
'Bad bank' could cost trillions - (www.washingtontimes.com)
Capitalism's Self-Inflicted Apocalypse - (www.commondreams.org) Excessive Mortgage Lending Causing Worldwide Economic Riots - (www.hubpages.com)

Saturday January 10 Housing and Economic stories

TOP STORIES:

GE Capital to Raise $10 Billion in Sale of FDIC Notes - (www.bloomberg.com) Another government bailout, allowing GE Capital to sell debt backed by FDIC. GE Capital Corp., the lending arm of General Electric Co., plans to raise $10 billion in the biggest offering of debt backed by the Federal Deposit Insurance Corp. The sale will include $2 billion of two-year notes, $5.5 billion of 3.5-year debt and $2.5 billion of 18-month securities, according to a person familiar with the sale who declined to be identified because terms aren’t set. The sale may take place as soon as today. Today’s offering would put GE Capital halfway toward its goal to “pre-fund” $45 billion in debt that the company plans to refinance this year. GE Capital sold about $12.5 billion of FDIC-backed notes last year, according to data compiled by Bloomberg.

Ron Paul: Social Security & Fractional Reserve Banking are Ponzis that Dwarf Madoff - (www.housingdoom.com) - Good video from today's Madoff Fraud Allegations & Financial Markets Regulation hearing during which Ron Paul calls fractional reserve banking and our social security system Ponzi schemes.

Harley International Fund Said to Have Invested With Madoff - (www.bloomberg.com) Hmm, interesting to see how many $$s in fees. Harley International Ltd., a hedge fund run by Cayman Island-based Euro-Dutch Management Ltd., invested all its assets with Bernard Madoff, the financier arrested last month in an alleged $50 billion fraud, a person familiar with the matter said. The fund managed $2.76 billion as of Oct. 31 and returned an average of 10.9 percent annually since April 1996, according to a monthly update sent to investors. Jamie Moss, a New York- based spokeswoman for the fund, declined to comment. Madoff, 70, was arrested in New York last month after confessing to employees that his investment company was “a giant Ponzi scheme,” according to an FBI complaint. Investment firms including Tremont Group Holdings Inc. and Fairfield Greenwich Group also set up hedge funds whose assets were overseen by Madoff. Euro-Dutch’s directors are Anthony L.M. Inder Rieden and Dawn Davies, according to the firm’s 2007 financial statement. Rieden is a former director and Davies a retired deputy managing director of Fortis Fund Services. Fortis Prime Fund Solutions Ltd. is the administrator of Harley International, the report to investors shows. Fix Asset Management, which has managed portfolios since 1984, provides research and data services to Euro-Dutch, according to the person, who asked not to be identified because the firm is private.

FSA to end ban on short selling - (www.ft.com) Short sellers will be allowed to target financial stocks once again after the City watchdog said that it would relax the contentious ban it introduced during the market chaos of September. The Financial Services Authority said on Monday that it would not renew the restrictions, when they expire on January 16, but added that it would still require those shorting financial stocks to continue disclosing their positions – at least until the end of June. The FSA added that it retained the right to reintroduce the ban without consultation "if necessary". The decision, released after London markets closed yesterday took traders by surprise as prominent politicians had called for the ban to be extended. It also prompted warnings that the resumption of shorting could cause falls in financial stocks.

Manhattan Apartment Sales Drop for Fourth Quarter in Recession - (www.bloomberg.com) Manhattan apartment sales fell for the fourth straight quarter and prices for the most expensive apartments dropped for the first time since the recession began as the national housing slump hit the metropolitan area. Fourth-quarter transactions dropped 9.4 percent to 2,282 units from a year earlier, New York property appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. While the overall median sales price rose 5.9 percent, luxury prices dropped 3.9 percent and the median for all resale apartments slid 3.6 percent.

This Great Depression Is Just Getting Started - (www.seekingalpha.com) Arguably, what we can see here is that the current collapse in industrial activity is starting to get near the US historic one in terms of proportions, but we still aren't quite there yet. What we could note that JP Morgan, in its monthly report suggests, is that the present rates of output are equivalent to an annual fall of between 12% and 15%. Really to compare with the fall in the US, we need to get up into the 20% region, but remember the global index is based on an average for 26 countries, and some of these are much worse than others (Japan, Spain, possibly Russia) and will already be around the 20% annual contraction rate in December. The point is also that the situation is still deteriorating, so hang on a bit, since it is not at all excluded that we will hit a 20% annualised contraction rate for the whole aggregate 26 sometime during the first quarter.

Realtors Slam New Fannie Mae Fees, Bloggers - (www.thetruthaboutmortgage.com) In the past week, the National Association of Realtors has slammed both Fannie Mae for imposing new fees and bloggers for creating misperceptions about required housing down payments. In a letter sent to the Federal Housing Finance Agency, the trade group argued that fees set to be added to certain types of mortgages as of April 1 will be passed onto consumers. The fees in question will make it costlier for borrowers to get an interest-only option on their loans, and make it more expensive for those looking to buy a condo or a co-op. The Wall Street Journal cited one fairly typical example that would raise associated costs by two percent, though a Fannie Mae spokesman said the fees are targeted at the highest-risk loans. Which begs the question, why offer such loans to begin with? But I suppose that’s a completely different kettle of fish.


OTHER STORIES:

Bailout Costs Now Exceed That of American Wars - (www.ml-implode.com) - "According to CRS, all major U.S. wars (including such events as the American Revolution, the War of 1812, the Civil War, the Sp...
Pending Sales of Existing Homes Fell 4% in November - (www.ml-implode.com) - The index of pending home resales fell 4 percent to 82.3, the lowest level since the series began in 2001, from a revised 85.7 i...
A bottom in home prices in 2009? 2010? - (www.ml-implode.com) - "If the 1990s housing boom/bust cycle in California is a good guide, we won't see a bottom in home prices nationally until five ...
Home Sale Decline Continues Amid Bleak Economic Forecast - (www.ml-implode.com) - "Pending home sales continued to decline in November but show signs of stabilization, according to data released Tuesday by the ...
Confessions of a former real estate bull - (www.ml-implode.com)
Is The COMEX Doing Fractional Reserve Delivery of Gold? - (www.ml-implode.com)

Treasuries Drop as U.S. Prepares to Sell Record Amount of Debt - (www.bloomberg.com)
Oil up to over $50 on Russia gas, Mideast - (www.reuters.com)
Most Asian Stocks Rise, Led by Electronics; Utilities Decline - (www.bloomberg.com)
Gold Drops for 4th Day in London as Stronger Dollar Cuts Demand - (www.bloomberg.com)
U.S. stock futures return to rising path - (www.marketwatch.com)
European Stocks Gain for Sixth Day; U.S. Index Futures Advance - (www.bloomberg.com)
IPOs at standstill as economy stalls - (www.latimes.com)
Venture firms find turning investments tougher - (www.sfgate.com)

Russia Reduces Gas Deliveries Via Ukraine; Balkan Supply Halted - (www.bloomberg.com)
U.K. December house prices see record annual drop - (www.marketwatch.com)
Indian Exporters May Cut 10 Million Jobs on Global Recession - (www.bloomberg.com)
Toyota to suspend production for 11 days in Japan - (finance.yahoo.com)
Obama Is Said to Favor About $775 Billion for Stimulus Plan - (www.bloomberg.com)
U.S. December Auto Sales Dive 36%, Drag Industry to 16-Year Low - (www.bloomberg.com)
Consumer bankruptcies surge 33% in 2008 - (www.latimes.com)
Metro-Area Foreclosure Sales Tripled in First 10 Months of 2008 - (www.bloomberg.com)
Fed Focuses on Consumer, Corporate Rate Spreads Over Treasuries - (www.bloomberg.com)
Automakers Fear a New Normal of Low Sales - (www.nytimes.com)
GM’s 2008 U.S. Sales Fall to 49-Year Low; Ford Declines - (www.bloomberg.com)
Toyota to shut car plants for 11 days - (www.ft.com)
GMAC’s Sweet Government Ride - (www.nytimes.com)
Hyundai offers US buy back scheme - (www.ft.com)
Eating Crow at a Dinner for Wall St. - (www.nytimes.com)
Grandiosity: Fraud's Perfect Cloak - (www.washingtonpost.com)
TV converter coupon program's out of cash; wait list started - (www.usatoday.com)