Monday July 7 Housing and Economic stories

Top Stories:

Real estate agent killed in office - (www.freep.com) I have had trouble with a few realtors in the past, but trying to hold a realtor responsible for a price decline for a property he bought in 2005 is a bit outrageous. A man upset about a property transaction shot a real estate agent in the head, mortally wounding him, during a meeting Tuesday morning in the victim’s office, authorities said. Troy VanderStelt, 34, was pronounced dead at 12:45 p.m. at Mercy Health Partners Hackley Campus in Muskegon, said Muskegon County Prosecutor Tony Tague. A suspect was arrested a short time after the shooting at a home in nearby Norton Shores. Tague identified him as Robert Arnold Johnson, 73, of Roosevelt Park. Tague told WOOD-TV in Grand Rapids that Johnson believed that VanderStelt took advantage of him in a real estate deal. Johnson bought a house through him in 2005, then recently decided to sell it and went to a different real estate agent. The second agent told Johnson that, because of the slumping housing market, the home was not worth what he had paid for it.

Is the American Dream in business? - (news.bbc.co.uk) Must read, but sad commentary on the state of Detroit. East Grand Boulevard in Detroit is still handsome, in its way. There are wooden and brick houses on spacious plots, with trees front and back. They have that early 20th Century confidence that American architects were able to exploit, with high chimneys, wide porches and plenty of room inside. But many of them are not homes any more. They're empty, bricked up, maybe open to the sky or burnt-out. As a street, it represents a generation of inner city decline. You can find plenty of prosperity around the edges of Detroit. But take a trip down East Grand Boulevard and into the enclave of Hamtramck, which was the heart of the American car industry, and you can sense the economic angst that's gripping the country.

The Credit Crisis Is Going to Get Worse - (online.wsj.com) Twenty years ago, Ted Forstmann contributed a scathing – and prescient – op-ed to this newspaper warning that the junk-bond craze was about to end badly: "Today's financial age has become a period of unbridled excess with accepted risk soaring out of proportion to possible reward," he wrote in October 1988. "Every week, with ever-increasing levels of irresponsibility, many billions of dollars in American assets are being saddled with debt that has virtually no chance of being repaid." Within a year, the junk-bond market had collapsed, and within 18 months Drexel Burnham Lambert, the leading firm of the junk-bond world, was bankrupt. Mr. Forstmann sees even worse trouble coming today. "We are in a credit crisis the likes of which I've never seen in my lifetime," Mr. Forstmann warns. He adds: "The credit problems in this country are considerably worse than people have said or know. I didn't even know subprime mortgages existed and I was worried about the credit crisis."

Bitter lessons learned from refinancing - (www.latimes.com) Vicki Miller bought her childhood home in Altoona, Pa., from her mother's estate for $32,000, using a nice, traditional mortgage from the local savings and loan. Seven years later, her debt has more than doubled, her once-significant equity has shrunk to zero and she's behind on her payments. The lender has begun to threaten foreclosure. "I grew up here. My son grew up here. And I had hoped my grandchildren would grow up here," Miller said woefully. Miller said she was persuaded to refinance her mortgage twice into sub-prime loans she didn't really understand, along with taking out a second mortgage. As such, she reflects what experts say is the true face of the sub-prime mortgage debacle.

Airline woes cause pain for Las Vegas casinos - (content.usatoday.com) So much for that idiotic argument that Vegas is recession-proof. That was just more garbage being spewed by overpaid financial analysts who have never lived through a real recession and who are basing their research on 20 years worth of data. Nevada's Tourism Alliance convened an "Air Crisis Briefing" Monday to discuss the issue. US Airways, the second-largest carrier to Las Vegas after Southwest Airlines, said earlier this month that it plans to cut flights to the gambling center by nearly half. Other air carriers to announce scaled-back flight schedules after the peak summer travel season include Continental Airlines, American Airlines, United Airlines and Delta Air Lines. About half of visitors to Las Vegas arrive by air, with the rest driving in, mainly from Southern California. But air arrivals account for about 80% of hotel stays. From now through the end of next year, the room inventory in Las Vegas is slated to jump by more than 11,000 with the opening of casino-hotels like Wynn Resorts' Encore, MGM's City Center and Fontainebleau Las Vegas. "We are concerned that Las Vegas could lose several million or more air seats at a minimum," Macquarie Research analyst Joel Simkins said in a research note earlier this week.
Greff estimated that the flight cutbacks will at least cause significantly higher airfares and single-digit declines in flight arrivals into Las Vegas. "We think the impact of lower airlift capacity and high gas prices couldn't come at a worse time for the Strip, with four larger mega-resorts set to open over the next three years," he said in a research note. In total, work is underway to add more than 40,000 luxury hotel rooms to the gambling corridor — about one-third more than today.

Down and out in Las Vegas - (www.independent.co.uk) - With the high oil prices, people don't have much disposable income to spend on gaming and entertainment. And on the horizon is further strife. As a hangover from the frenzied growth of two years ago, Las Vegas is also in the grip of a speculative building boom, with dozens of cranes towering over the Strip... The prevailing emotion among business leaders is a mixture of optimism and denial. No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it's starting to hurt even the town's Elvis impersonators, wedding chapels, and sex industry. When money's tight, the prospect of stuffing another $20 bill into a lap-dancer's gyrating stocking-top somehow doesn't seem quite so enticing. "This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.

Las Vegas suffers epidemic of bankruptcies, foreclosures and mass layoffs. - (www.belfasttelegraph.co.uk) - This week, in an attempt to prevent financial meltdown, Nevada's Tourism Alliance convened an "Air Crisis Briefing" in an effort to prevent airline plans to halve the number of flights to the resort. The city's gut-busting "eat all you can" buffets are also being scaled back to account for the US's 4 per cent food inflation. Where a long queue of obesity once trailed across The Bellagio hotel restaurant's ornate carpets, demand for its famous (but now pricey) lunch buffet had on Thursday slowed to a trickle. In what sounds suspiciously like a panic measure, the Golden Gate Hotel this month even said it was doubling the price of its signature 99 cent shrimp cocktail. For the inhabitants of the desert resort, which was founded in 1905 and became prosperous after gambling was legalised in 1931, it's no joking matter. The growing unemployment crisis (MGM just axed another 400 middle-managers), plus a downturn in the tips that form a significant portion of the Vegas economy, has a human cost, too. Local bankruptcies have quadrupled. The property market, which rode the wave of a boom for most of the past decade is now below its peak by anything from a quarter to a third (depending on whose figures you believe), while Nevada now boasts, if that is the right word, the nation's highest foreclosure rate.

Billionaire Says Economy in Worst Slump Since World War II - (www.bloomberg.com) Billionaire investor Eli Broad said the U.S. economy is in the worst recession since World War II and a recovery in the housing market is ``several years'' away.
``This is worse than any recession we've had since World War II,'' Broad, 75, said in an interview yesterday. Broad, the founder of homebuilder KB Home, said the U.S. should avoid a depression on the scale of the 1930s because the country now has sufficient ``safety nets.'' With home sales and prices declining and consumer confidence at a 28-year low, ``I don't see it turning around very quickly,'' Broad said. The economy expanded at an annual rate of 1 percent in the first quarter, the Commerce Department said last week. That caps the weakest six months of growth in five years. ``This is the worst period of my adult lifetime,'' Broad said, speaking about the U.S. economy. ``I do not think things are going to get any better'' before the next president takes office in January. Selling off vacant, unsold homes could take ``several years,'' he said.

California wildfires strain state's resources - (www.ap.com) The governor noted that he recently ordered 400 National Guard troops to be trained in wildfire fighting so they could help fight the state's blazes. He also urged lawmakers to adopt his budget plan for a $70 million emergency surcharge on home and business insurance policies to buy more firefighting equipment. California now has a year-round fire season and needs the money from the fee, which should cost the average homeowner about $1 a month, Schwarzenegger said.

Analyst sees 'ghost town' in Inland Empire - (www.latimes.com) A financial analyst fresh from a tour of construction sites in the Inland Empire is warning Wall Street of a "ghost town" where finished homes sit vacant and additional homes are still under construction.
"At several properties, there were a significant number of fully built homes sitting vacant along with a large number of additional homes still under construction," Sandler O'Neill & Partners analyst Aaron Deer wrote today after touring developments in Corona and Ontario. "At one master plan community, the entire development appeared to be vacant -- with the exception of crews working on new construction, it was a ghost town."

Ghost Towns In California - (globaleconomicanalysis.blogspot.com) More from Deer's note: "The homes all appeared to be empty, and there were no prospective buyers anywhere to be found. Surprisingly, the sales office was open ... but the woman working there had questionable English fluency. When asked how many homes had been sold in the past month she simply responded, 'Uh huh. Thank you. Yes!' and handed us some additional literature on the property." More: "Perhaps the most interesting aspect to the development was what it revealed about the nature of the housing boom: that at the peak even the most undesirable and remote locations were worthy of expensive, high-end homes."
The bank financing this project will own the entire subdivision when it is complete.

As Gas Prices Soar, Elderly Face Cuts in Aid - (www.nytimes.com) Early last month, Jeanne Fair, 62, got her first hot meals delivered to her home in this lake town in the sparsely populated southwestern part of the state. Then after two deliveries the meals stopped because gas prices had made the delivery too expensive. “They called and said I was outside of the delivery area,” said Mrs. Fair, who is homebound and has not been able to use her left arm since a stroke in 1997. Faced with soaring gasoline prices, agencies around the country that provide services to the elderly say they are having to cut back on programs like Meals on Wheels, transportation assistance and home care, especially in rural areas that depend on volunteers who provide their own gas. In a recent survey by the National Association of Area Agencies on Aging, more than half said they had already cut back on programs because of gas costs, and 90 percent said they expected to make cuts in the 2009 fiscal year.

Bradford & Bingley counts cost of private equity pull-out - (www.guardian.co.uk) - Shares in Bradford & Bingley slumped today after its attempts to raise urgently needed fresh capital were hit by the withdrawal of US private equity firm TPG Capital. The buy-to-let lender's share price tumbled in early trading, at one stage dipping below 55p – the price at which it hopes to sell new shares to investors through its bruised rights issue. But by noon the company's shares had settled at 55.25p, a 9% fall. TPG ditched its plan to inject £179m into B&B last night, after ratings agency Moody's told the bank it was planning to downgrade its credit rating. The downgrade reflects Moody's view that B&B, which has been hit by the sub-prime crisis and the slumping UK housing market, is now a greater risk to investors.

TPG faces cool reception in future - (www.ft.com) This is a funny article on how pissed off the UK finance community is that TPG walked away. Yes, TPG will be shut-out of the next big housing boom in the UK 20 years from now.TPG Capital’s decision to scrap its £179m capital injection into Bradford & Bingley is likely to make life harder for the US buy-out group the next time it comes to the UK fishing for a deal – especially in financial services. Supporters of TPG were thin on the ground yesterday after B&B’s shareholders were forced to plug the gap in the mortgage bank’s finances created when TPG pulled a proposed capital injection three working days before scheduled completion. The buy-out group has not breached contractual obligations to B&B since a clause in its agreement gave it the right to walk away if the bank’s credit rating was lowered, as happened yesterday morning

Online Commenter Bogeyman of New Brooklyn - (www.nymag.com) Interesting story about prejudices coming out on a Brooklyn housing blog. Is Clinton Hill an okay place to move? It’s vibrant, diverse, and feels very safe. Clinton Hill is full of black people who have a chip on their shoulder and some white people who think themselves cool for living among them. It is a gorgeous little stretch of buildings. If you like the ghetto, you will love that area. I’m comfortable in Clinton Hill but my wife isn’t and she wants out. Go back to Kansas, asswipe. Crown Heights is one of the most beautiful neighborhoods in Brooklyn. If you are white, look for another area, unless you want to get attacked. Since moving into the neighborhood two years ago, I have already seen it change dramatically. Just so you know, “edgy” and “unsafe” means “black.” The new residents look at you as if you are a piece of ghetto trash. Every town in Brooklyn will be gentrified sooner or later. This is an awesome area. It’s disgusting and ugly. This is my neighborhood, motherfuckers, I was born and raised here. Jeez, you people are hateful. Please leave Brooklyn, you do not belong here, newcomer. The war is over. You lost. Get out.

Bowyer: Back to Monarchy in Land Rights? - (www.cnbc.com) Interesting take on how our government has regressed on mineral rights from what Jefferson proposed. Jefferson, who wrote the Declaration of Independence which we celebrate today, fought for the powerful idea that the right to private property included what’s under the surface of the ground as well as what is above it. Jefferson announced a Novus Ordo Seclorum. This translates as “new order of the ages”, not as certain right wing conspiracy cranks claim “new world order”. It means that the old legal order of the divine right of kings would give way to a new order of "all men are created equal." We have in recent decades drifted backwards, a little, to the old world. Some western states are almost all government owned, and the resources of those states remains buried in the ground. Not so with Pennsylvania, which is historically a farming state. That’s why the world’s first commercial oil well was sunk not far from here, in Titusville, on what previously been a farm.


Other Stories:

Should Congress pass the $300 billion housing bailout bill? - (www.cnbc.com) No, No, No, No, No, No, No, No!!!!! Most politicians will sign of course because it is an election year.
FDIC Warns Banks on HELOC Freezes, REO Management - (www.housingwire.com)
How Lehman Brothers Veered Off Course - (www.washingtonpost.com)
LA, Miami Foreclosure Rates More Than Double - (www.bloomberg.com)
Overdue House-Equity Credit Lines Rise Most Since 1987 - (www.bloomberg.com)
Option ARM delinquencies spiking - (www.businessweek.com)
Calif budget deficit turns spotlight on Prop. 13 - (www.cnbc.com)

Obama and McCain Flip-Flops, Housing Sketchiness - (www.ml-implode.com) - ``More germane to this blog and to the theme of ‘politics as usual’ than to ‘flip-flopping,’ both candidates have (or had) ties ...
Mr Mortgage: Mortgage Modifications Part 2 - Being Forward Thinking - (www.ml-implode.com) - Being forward thinking is key in understanding this mess. Talking about all of this is key because the only way we are going to...
The rate of option ARM delinquencies is already spiking - (optionarmageddon.ml-implode.com) - According to a recent analysis by Lehman Brothers, option ARMs that originated in 2006 performed about as well as fixed-rate Al...
Honolulu house prices fall 8.8% in year - (www.honoluluadvertiser.com)
Paulson: U.S. house prices to fall more - (biz.yahoo.com)
Housing market seen getting worse - (uk.reuters.com)
Merrill’s desperate: Bloomberg stake on the block - (www.ml-implode.com) The NYT will report in tomorrow’s paper that Merrill is seeking a buyer for its 20% stake in Bloomberg LP, the maker of the ubiquitous financial terminals. According to the Times:
…Merrill, which has already raised $15 billion since John A. Thain took over as chief executive last fall, is finding it difficult to raise additional capital through previously used means, like selling preferred stock to sovereign wealth funds and other institutional investors, and it would prefer to avoid diluting the holdings of existing investors.
``The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants'' - (www.ml-implode.com) Never has there been a time in our history where our freedom has bee over shadowed by our burdens of debt and war, as it is now. The time has come to unite in the streets of America as people, families and communities who must stick together, stand tall and keep fighting for what the fathers of our country did over 200 years ago.

Number of Those Unemployed For at Least 6 Months Rises - (online.wsj.com)
Accelerating Price Declines - (PDF - pmi-us.com)
Gas prices hit another high for holiday weekend - (www.ap.com)
Service Sector Data Adds to Inflation Anxiety - (www.nytimes.com)
U.S. Apartment Vacancy Unchanged at 5.9 Percent, Rents Increase - (www.bloomberg.com)
As Summit Approaches, G-8 Weighs Expansion - (www.washingtonpost.com)
FDIC: FIL-62-2008: Guidance on Other Real Estate - (www.fdic.gov)
Credit Card Overhauls Seem Likely - (www.nytimes.com)

Bearish battalions - (www.economist.com)
Foreclosures to rise whoever wins White House - (www.ap.com)
Santa Cruz prices breaking down - (patrick.net) Zillow shows house is worth $1.55M but it is listed at $650K
Nowhere to Turn for Market Relief? - (www.seekingalpha.com)
Understanding Bernanke - (optionarmageddon.ml-implode.com)

Merrill Said to Be in Talks to Sell (www.bloomberg.com) Stake - (www.nytimes.com)
Merrill Lynch in talks to sell (www.bloomberg.com) stake: report - (www.marketwatch.com)
A window to a new world - (www.economist.com)

European Banks May Need EU90 Billion, Goldman Says - (www.bloomberg.com)
Yuan Falls Most in a Month as China Seeks to Curb `Hot Money' - (www.bloomberg.com)
Weak dollar is global concern: EU's Barroso - (www.reuters.com)
Inflation could hit 12% on costlier edible oil, food & steel - (economictimes.indiatimes.com)
ECB Policy Makers Say Fighting Inflation Remains Priority - (www.bloomberg.com)
British consumers face their retail reckoning - (www.ft.com)
Philippines inflation highest in 14 years - (www.ft.com)
A Window in a Smoky Market - (www.nytimes.com)
Settling scores - (www.economist.com)
The Economy? Words Fail Me. - (www.washingtonpost.com)

Friday July 4 Housing and Economic stories

Top Stories:

California senators upset by limit in foreclosure bailout bill - (www.mcclatchydc.com) Earlier this year, Congress temporarily set the loan limits at $729,750. But the Senate is now proposing to reduce it to $625,000, which would make it harder for struggling homeowners to refinance loans in California, Florida, Hawaii and other states with high property values. "These provisions are a serious blow to California," said California Democratic Sen. Barbara Boxer. The limits will determine who can cash in on a $300 billion program aimed at paying for new mortgages for homeowners facing foreclosure. It would allow the Federal Housing Administration to help an estimated 400,000 borrowers who would otherwise not qualify for new and cheaper 30-year fixed-rate mortgages that would be guaranteed by the U.S. government.

Analyst sees 'ghost town' in Inland Empire - (www.latimes.com) A financial analyst fresh from a tour of construction sites in the Inland Empire is warning Wall Street of a "ghost town" where finished homes sit vacant and additional homes are still under construction.
"At several properties, there were a significant number of fully built homes sitting vacant along with a large number of additional homes still under construction," Sandler O'Neill & Partners analyst Aaron Deer wrote today after touring developments in Corona and Ontario. "At one master plan community, the entire development appeared to be vacant -- with the exception of crews working on new construction, it was a ghost town."

Ghost Towns In California - (globaleconomicanalysis.blogspot.com) More from Deer's note: "The homes all appeared to be empty, and there were no prospective buyers anywhere to be found. Surprisingly, the sales office was open ... but the woman working there had questionable English fluency. When asked how many homes had been sold in the past month she simply responded, 'Uh huh. Thank you. Yes!' and handed us some additional literature on the property." More: "Perhaps the most interesting aspect to the development was what it revealed about the nature of the housing boom: that at the peak even the most undesirable and remote locations were worthy of expensive, high-end homes."
The bank financing this project will own the entire subdivision when it is complete.

Santa Cruz prices breaking down - (patrick.net) Zillow shows house is worth $1.55M but it is listed at $650K

Regulators to Schumer on IndyMac: Please shut up - (www.latimes.com) Sen. Charles E. Schumer publicly taunted bank regulators last week about IndyMac Bancorp's financial condition, which helped trigger a sudden outflow of deposits from the Pasadena thrift. Now the New York Democrat is getting some harsh blowback from one current and one former regulator. "Leaking his IndyMac letter to the press was reckless and grossly irresponsible. I don't see how he can be trusted with confidential information in the future. What this incredibly stupid conduct does is put at risk the willingness of regulators to share any information with the [congressional] oversight committees. After this, you'd be crazy to share information with Schumer."
Regulators to Schumer: We’ve got a Whole Bag of Shhh With Your Name on It - (www.housingwire.com) Our industry sources have gone so far as to suggest that Schumer was paid off to leak the letter to the press, although it’s unclear if the suggestion is anything more than idle speculation. The conspiracy theory goes like this: IndyMac has been privately negotiating for new capital for at least the last few months, and a Large Investor offered a deal that CEO Michael Perry balked at; Large Investor decided to pay a few bucks to a Senator in New York to force the issue

Spain, Ireland `Thrown to the Wolves' After ECB Move - (www.bloomberg.com) - For homeowners in Spain and in Ireland, struggling to stay afloat amid the wreckage of a decade-long real-estate boom, those prayers are going unanswered. The European Central Bank yesterday increased its benchmark rate to 4.25 percent to fight inflation, pushing both economies a step closer to recession

States face dwindling unemployment insurance funds - (www.sfgate.com) Thirty-three states have funds below recommended levels, meaning they're at risk of running out in less than a year unless they're replenished as required under federal law. Nearly half the states could run out in less than six months. The funds, totaling about $38 billion today, are in worse shape than before the last recession, when the total was about $54 billion. States can't skip paying unemployment insurance benefits to out-of-work employees, meaning they must borrow money if the funds get too low.

Live bombs haunt Orlando neighborhood - (www.cnn.com) Multiple lawsuits have been filed, accusing builders of gross negligence and seeking unspecified monetary damages. John K. Overchuck, a lawyer representing homeowners, is suing one builder, Lennar. "They're the ones who made the money off this property. They're the ones who bought this for dirt, and built these houses for up to a half a million dollars," he says. "They're the ones who made the profit, they're the ones who are responsible because they've got these people suckered into these houses." Lennar would not consent to an interview to CNN, but did provide a written statement. Lennar says it relied on studies that "made no mention of ... a military range," and claims the military did not show up in property ownership records because, "it had leased the land." But at the same time, it was no secret that the military once used the property. Nearly two decades ago, the 1989 development order, in which the county granted the permission to develop the land, shows that builders and developers knew "of the site's history of military use."

Never Let Them See You Sweat - (bigpicture.typepad.com) – Funny video. Dana Milbank is a Washington Post reporter, and is very funny. Think you're worried about the economy? Phillip Swagel is a wreck. The assistant Treasury secretary for economic policy, Swagel came out for his monthly economic briefing yesterday, 90 minutes after the Labor Department reported that the country had shed jobs in June for the sixth straight month.

Merrill says GM bankruptcy possible – (news.yahoo.com) - General Motors Corp (GM.N) will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said. Other analysts
have suggested GM, whose shares fell to a new 54-year low on Wednesday, needs to raise funds to ride out the downturn in the U.S. auto market through 2009. But Merrill's estimate of GM's financing needs is the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest U.S. automaker. If conditions continue to deteriorate, we would consider other operating measures," GM spokeswoman Renee Rashid-Merem told Reuters.

Barclays warns of a financial storm - (www.telegraph.co.uk) - Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

India Bans Corn Exports to Control Domestic Prices - (www.bloomberg.com)

American workers brace for thousands of job cuts - (www.ap.com) Many more job cuts, likely totaling more than 6,000, are likely at American Airlines as the nation's biggest airline hunkers down and tries to survive record high fuel costs. American notified its flight attendants union on Wednesday that it will cut up to 900 jobs starting Aug. 31, but that appears to be the tip of the iceberg. Although American has not given a total figure, the airline says it expects to shed 8 percent of its work force. With about 85,500 workers, including those at sister airline American Eagle, that would represent more than 6,800 jobs. "The mood is fairly glum," said Karl Schricker, an American pilot and union spokesman. "They brought back 30 furloughed pilots in June. Those guys quit other jobs to come back ... and now they wonder if they'll be out the door."
Employers Cut Workers for a Sixth Month - (www.nytimes.com)
New Jobs Magically Vanish - (www.minyanville.com) - The birth-death "adjustment" added 177,000 jobs to the latest report, which put the total adjustment for the year at 600,000 new jobs - or so the government claims.
Of course, they arrived at this number through a completely flawed methodology: At the end of the year, these numbers will quietly be backed out - just as they were last year.


Other Stories:

Big Builders At Odds with NAHB - (www.bigbuilderonline.com) A rift between the nation's largest home building companies and the National Association of Home Builders regarding lobbying strategy is threatening to grow into a schism that could greatly weaken the organization. The rift is evident on both sides. Earlier this year, an ad hoc group of financial executives from big builders, including Beazer, Centex, Hovnanian, KB, Lennar, M.D.C., M/I, Meritage, Orleans, Pulte, Shea, Standard Pacific, Toll and TOUSA hired an independent lobbying firm, C2 Group in Washington, to represent them, a move which angered NAHB CEO Jerry Howard.
Mortgage ruling could shock U.S. banking industry - (www.reuters.com)
Resets Peaking on Subprime Loans - (www.washingtonpost.com)
Struggling with the mortgage? Get out now - (www.news.com.au)
Pick-A-Pay Goes Away - (www.businessweek.com)
When Will Housing Market Bottom? - (www.istockanalyst.com)
Housing fuels bankruptcies in Hawaii - (www.starbulletin.com)
Freddie Mac shares fall as housing troubles worsen - (biz.yahoo.com)
IndyMac bank denies that it's close to collapse - (www.latimes.com)

Foreclosure mix-up means new buyer's possessions given away - (www.statesman.com)

Paramax vs. UBS: "CDO Insurance Was Just A Joke Anyway" - (www.ml-implode.com)
Goldilocks is dead, CSI looking for the body, says Wells economis - (www.ml-implode.com)
Lehman Deleveraging Smoke-and-Mirrors? - (www.nakedcapitalism.com) Readers may recall that this humble blog, thanks to the information provided by a former senior person at Lehman, reported that some of the investment bank's wondrous deleveraging (it was well distributed across products, geographies, and credit quality) was due to asset sales to newly formed hedge funds, R3 Capital Partner and One Williams Street, which had former Lehman MDs at the helm and in which the firm was a significant investor.
That of course begged many questions: were the sales really arm's length? Were there any financed? And if either of these funds got into difficulty, would Lehman wind up rescuing them?
Mr Mortgage on Mortgage Modifications: You May Qualify! - (www.ml-implode.com)
Deutsche Bank’s Jain: Crisis is Solvency, Not Liquidity - (www.ml-implode.com)
Servicers Not Doing Enough for Troubled Borrowers, Consumer Group Says - (www.ml-implode.com)
HOPE NOW on Pace For Record; So, Too, Are Foreclosures - (www.ml-implode.com)

Oil prices fall more than $1 a barrel - (www.ap.com)
European Stocks Fall, Led by Banks, B&B; British Airways Drops - (www.bloomberg.com)
Canada Stocks Drop, Led by EnCana, Goldcorp; BCE Soars - (www.bloomberg.com)
Most Asian Stocks Drop on Record Oil; Kansai, Bumiputra Decline - (www.bloomberg.com)
China's Stocks Fall for Seventh Week as Oil Climbs to Record - (www.bloomberg.com)
Gold Falls in London on Reduced Hedge Demand; Silver Also Drops - (www.bloomberg.com)

Fed Cuts Bear Stearns Asset Estimate to $28.9 Billion - (www.bloomberg.com)
Gas prices hit another high for holiday weekend - (www.ap.com)
Service Sector Data Adds to Inflation Anxiety - (www.nytimes.com)
Payrolls Shrank Again in June; Jobless Rate Steady at 5.5% - (online.wsj.com)

LBO Defaults May Rise as About $500 Billion Comes Due, BIS Says - (www.bloomberg.com)
S&P, Moody's Must Be Clearer on Asset-Backed Ratings, BIS Says - (www.bloomberg.com)
Bearish battalions - (www.economist.com)
Housing market seen getting worse - (www.reuters.com)

Lax Real Estate Decisions Hurt Starbucks - (www.nytimes.com) Starbucks would not comment for this article. But it appears that the company strayed from the exacting real estate science that it had perfected and guided it through its first expansion wave. Though the flagging economy and soaring gas prices are responsible for at least some of Starbucks’s woes, interviews with commercial real estate brokers nationwide who work with the chain suggest another aspect of the story. These people say that the company was so determined to meet its growth promises to Wall Street that it relaxed its standards for selecting new store locations. In some cases, brokers say, Starbucks misjudged the risks of putting stores close to each other, leading to the decline in same-store sales that the company started reporting for the first time in its history this year.

Merrill Lynch in talks to sell Bloomberg stake: report - (www.marketwatch.com)
Lehman's Hedge-Fund Deals Leave Public in Dark: Jonathan Weil - (www.bloomberg.com)
A window to a new world - (www.economist.com)

European Banks May Need EU90 Billion, Goldman Says - (www.bloomberg.com)
Yuan Falls Most in a Month as China Seeks to Curb `Hot Money' - (www.bloomberg.com)
British economy falling into American-style slump - (www.iht.com)
Weak dollar is global concern: EU's Barroso - (www.reuters.com)
Inflation could hit 12% on costlier edible oil, food & steel - (economictimes.indiatimes.com)
Eyes on Inflation, European Bank Raises Rate - (www.nytimes.com)
Philippines inflation highest in 14 years - (www.ft.com)

To Find a Bubble, Follow the Young - (www.nytimes.com)
Settling scores - (www.economist.com)
Whip Inflation Now, Before It Whips You - (www.washingtonpost.com)
The Economy? Words Fail Me. - (www.washingtonpost.com)

Thursday July 3 Housing and Economic stories

Top Stories:

Before and After pictures and price for the same house that looks like it has been completely trashed:
· Menlo Park House BEFORE in 2005 - (patrick.net) Sold for $675K. House looks cute and well-kempt
· Menlo Park House AFTER in 2008 - (patrick.net) Now selling for $365K. House looks trashed and grass is long.

Modesto, Patterson houses in peril for late fees - (www.modbee.com) The cities of Modesto, Patterson implemented special property tax assessments that are causing 100s of homeowners to go into foreclosure. Hundreds of homeowners in Modesto and Patterson are late paying special property taxes, forcing the cities to begin a speedy foreclosure process for houses in newer subdivisions. The cities went through the same procedures last year when clusters of homeowners didn't pay Mello-Roos taxes they owe for growth-related effects such as roads and parks. Neither city has a choice in turning to foreclosures. Bonds tied to the taxes require them to foreclose on the homes when 5 percent of the total amount owed becomes delinquent. Delinquency rates in both cities are higher than 8 percent this year. Normally people have 18 months to catch up on Mello-Roos taxes. But because the delinquency is higher this year, the fees are due immediately and the foreclosure process quickens. People who don't have to pay Mello-Roos taxes usually have five years to break even on their county property taxes. April property taxes officially become delinquent today. More than a fifth of what Patterson residents owe in Mello-Roos charges hasn't been paid, City Manager Cleve Morris said. That has cost the city about $1 million this year.

Fairfax County, VA Socializing House Ownership - (www.washingtonpost.com) Let’s see how long it takes for Fairfax County to go bankrupt!! Noble goal, but these politicians are idiots. Maybe the same people losing their homes to foreclosure will get them back from Fairfax County again at a reduced price and subsidized by the taxpayers of Fairfax County. “Fairfax County approved a landmark housing program yesterday to buy foreclosed properties for middle-income families, becoming one of the first communities in the country to tackle the nation's growing mortgage crisis while also addressing the region's increasing demand for affordable housing. County leaders said the program, through which Fairfax will purchase some properties outright and help families buy others through subsidized loans, takes advantage of a unique moment when thousands of homes are entering foreclosure and available for purchase at below-market prices. The program will expand the county's stock of affordable housing and help stabilize areas where clusters of abandoned, unkempt properties in foreclosure threaten the value and vitality of surrounding neighborhoods, county officials said.”

Merrill says GM bankruptcy possible – (news.yahoo.com) - General Motors Corp (GM.N) will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said. Other analysts have suggested GM, whose shares fell to a new 54-year low on Wednesday, needs to raise funds to ride out the downturn in the U.S. auto market through 2009. But Merrill's estimate of GM's financing needs is the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest U.S. automaker. If conditions continue to deteriorate, we would consider other operating measures," GM spokeswoman Renee Rashid-Merem told Reuters.

IndyMac: Too Big to Fail? – (www.minyanville.com) Federal regulators may soon be forced to decide if IndyMac Bank (IMB) is too big to fail. IndyMac? Spun out of Countrywide (CFC) in the late 1980s, IndyMac is a Southern California thrift and mortgage originator specializing in loans a couple of notches above subprime. Known as “Alt-A,” these mortgages thrived during the credit boom, when verifying a borrower's income was considered due-diligence overkill. IndyMac aggressively issued these loans, along with billions in option adjustable rate mortgages, or option ARMs, to become the country’s second largest private mortgage lender. Countrywide was number one. Since the mortgage market stumbled last year, however, IndyMac's shares have plummeted. They now sit at just 70 cents per share, down from over $47 in December 2006.Thanks to Senator Chuck Schumer, the Federal Reserve may need to decide whether IndyMac’s potential demise is too great a risk for the fragile financial system to bear. According to The Wall Street Journal, Schumer sent a letter to banking regulators last week suggesting that they look more closely into the bank’s financial strength - and the potential implications of its collapse.

IndyMac reassures customers after Schumer letter - (biz.yahoo.com) - The Pasadena, Calif.-based mortgage lender said Monday that the letter, by Sen. Charles Schumer, D-N.Y., gave "the wrong impression" on several issues.
Depositors withdrew about $100 million from the bank in the wake of Schumer's letter, company spokesman Grove Nichols said in a prepared statement. The withdrawals are equivalent to one-half of 1 percent of the bank's deposits, he said. "While branch traffic is somewhat elevated this morning," Nichols said, it is "substantially lower than on Saturday." Schumer said Tuesday that he had spoken with Treasury Secretary Henry Paulson and Sheila Bair, chairman of the Federal Deposit Insurance Corp., and "I am reassured they are on top of the situation."

Here's a video of the realtwhore selling her home on eBay and Craigslist - (housingpanic.blogspot.com) – A video of the woman trying to off-load her half million dollar property. Claudio from Italy seems to be in the lead. “Everyone gets their 15 minutes... Even realtor would-be-hookers. I hadn't wanted to post, because my my gut says 'scam alert', but have at it..”

Home builder Taylor Wimpey sees shares collapse - (news.yahoo.com). Home builder Taylor Wimpey faced collapse after its shares plunged by more than half on Wednesday, having failed to secure a refinancing package to help it weather a downturn to the housing market, traders said.

Conspiracy theory? Congress Secret Session March 13, 2008 and Imminent Collapse of the US Economy - (www.dailypaul.com). I am usually not a conspiracy theorist but this one is very interesting and the question is posed to Ron Paul on the Ron Paul website. The March 13, 2008 Closed Door Session was only the 4th time in 176 years that Congress has closed its doors to the public. Word has begun leaking from the special, closed-door session of the United States House of Representatives. Not only did members discuss new surveillance provisions as was the publicly stated reason for the closed door session, they also discussed:
- the imminent collapse of the U.S. economy to occur by September 2008,
- the imminent collapse of US federal government finances by February 2009,
- the possibility of Civil War inside the USA as a result of the collapse,
- advance round-ups of "insurgent U.S. citizens" likely to move against the government,
- The detention of those rounded-up at "REX 84" camps constructed throughout the USA,
- the possibility of retaliation against members of Congress for the collapses,
- the location of "safe facilities" for members of Congress and their families to reside during expected massive civil unrest
- the necessary and unavoidable merger of the United States with Canada (for its natural resources) and with Mexico (for its cheap labor pool),
- the issuance of a new currency - THE AMERO - for all three nations as the proposed solution to the coming economic armageddon.
Members of Congress were FORBIDDEN to reveal what was discussed. Several are so furious and concerned about the future of the country, they have begun leaking info.

Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks - (www.dft.nl ) – TRANSLATED FROM DUTCH: Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. “We have been saved just in time. The situation in the US is much worse than we thought”, says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US”

Barclays warns of a financial storm - (www.telegraph.co.uk) - Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."




Other Stories:

Fugitive hedge-fund swindler surrenders in Mass. - (news.yahoo.com) A hedge fund swindler who set off a national manhunt when he faked his suicide to avoid reporting to prison surrendered Wednesday to small-town police in Massachusetts after three weeks in which authorities suspected he was hiding out in RV parks and highway rest areas. Israel disappeared June 9 just hours before he was to report to prison to begin serving a 20-year sentence handed down in April for his role in the collapse of the Bayou hedge funds. Israel's SUV was found abandoned on a bridge over the Hudson River in suburban New York City with the words "Suicide is Painless" — the theme song for the "MASH" television show — scrawled in dust on the hood. In a separate development, federal prosecutors announced Wednesday that more than $115 million is available to pay back victims of the Bayou fraud. The money includes whatever was forfeited by Israel and his co-defendants as part of their sentences, plus interest. The total loss to investors was about $300 million.
U.N. Report Calls for Government Intervention on Global Economy - (www.washingtonpost.com)
Send Spare Keys To Protest Bailout - (www.stopthehousingbailout.com)
Vacant houses spread blight, so we need LOWER PRICES - (www.csmonitor.com)
Auto Sales Dismal At GM, Toyota, Ford, Chrysler - (Mish at globaleconomicanalysis.blogspot.com)
Angry Consumers Flood Federal Reserve Board with Complaints - (www.loanworkout.org) - Apparently the Federal Reserve has been inundated with over 8,200 consumer complaints against various banking and lending institutions for credit card abuse and predatory lending. The Fed’s inbox has been full since it invited personal comments regarding a proposed new rule to end “Unfair or Deceptive Acts or Practices.” Sarah Byrnes said, Campaign Manager of Americans for Fairness in Lending (AFFIL)
Obama Got Discount on Home Loan - (www.ml-implode.com) - Shortly after joining the U.S. Senate and while enjoying a surge in income, Barack Obama bought a $1.65 million restored Georgian mansion in an upscale Chicago neighborhood. To finance the purchase, he secured a $1.32 million loan from Northern Trust in Illinois
As Foreclosures Escalate - (www.ml-implode.com) - By the time the Senate returns next Monday from its July 4 recess, some 55,000 more homes will have entered foreclosure. And that’s hardly the full picture of the growing calamity.
Mortgage Rates Mark Time Waiting for Federal Action - (www.ml-implode.com) - "Mortgage rates continued to set record 2008 levels with long term rates moving up slightly during the week ended June 26, and s...
Small Banks' Reckoning Day Is Coming - (online.wsj.com) - Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders. According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.
Taylor Wimpey Drops After Failing to Secure Funding - (www.ml-implode.com)
HELOC Delinquencies Rise in Q1, ABA Says - (www.ml-implode.com)

June car sales plummet for nearly all automakers - (news.yahoo.com)
At Midyear, the Economic Pain Persists - (www.nytimes.com)
As Foreclosures Escalate - (www.nytimes.com)
English house prices fall at fastest rate in 16 years - (www.telegraph.co.uk)
Across the pond, a housing mess redux - (www.housingwire.com)

Oil prices rise to record highs above $144 - (www.ap.com)
Stocks drop on profit jitters, oil record - (www.reuters.com)
Dollar Falls to Two-Month Low Against Euro on ADP Jobs Data - (www.bloomberg.com)

Consumer delinquencies up in first quarter: ABA - (www.reuters.com)
Overdue Home-Equity Credit Lines Rise Most Since 1987, ABA Says - (www.bloomberg.com)
Deepening Cycle of Job Loss Seen Lasting Into ’09 - (www.nytimes.com)
ADP Says U.S. Companies Decreased Payrolls by 79,000 - (www.bloomberg.com)
Factories feel pain as their costs rise - (www.chicagotribune.com)
Car Sales at 10-Year Low - (www.nytimes.com)
Manhattan Second-Quarter Apartment Sales Drop Most Since 1998 - (www.bloomberg.com)
Rising prices hammer seniors on fixed incomes - (www.usatoday.com)
Peak likely this summer in resetting ARM loans - (www.philly.com)
Leveraged Loan Prices Drop to April Lows on Default Concerns - (www.bloomberg.com)
Fears for US disclosure rules after CSX ruling - (www.ft.com)
Few signs of deals returning to table - (www.ft.com)
Manhattan apartment sales drop, but prices climb - (www.chicagotribune.com)
When Hedge Funds Bar the Door - (online.wsj.com)
CDO Creators Seek Redemption, and Profits, From Mortgage Market - (www.bloomberg.com)
Oil Demand Will Grow, Despite Prices, Report Says - (www.nytimes.com)

Honda, Hyundai Motor Avoid Slump as Asians Again Top U.S.-Based Automakers - (www.bloomberg.com)
Construction Loans Hurt Banks - (online.wsj.com)
Moody’s Says Workers Rated Some Securities Incorrectly - (www.nytimes.com)
IndyMac still facing nervous depositors - (www.latimes.com)
Sparks fly over rate plan by Southern California Edison - (www.latimes.com)
CIT Group exits home lending businesses - (www.chicagotribune.com)
Stagflation grips Eurozone as interest rates look set to rise - (www.telegraph.co.uk)
British Firms Hit by Weak Economy - (online.wsj.com)
Europe Producer-Price Inflation Accelerates to Record - (www.bloomberg.com)
Trichet Sees Risk of `Exploding' Inflation; May Raise Rates - (www.bloomberg.com)
Nikkei hits longest losing streak in 43 years - (www.boston.com)
Japan Stocks Fall, Sending Nikkei to Worst Streak in 43 Years - (www.bloomberg.com)
Housing slowdown starts to bite economy hard - (www.reuters.com)
Wanted: Skilled Workers for a Growing Economy in Brazil - (www.nytimes.com)

East End businesses begin accepting payment in euros - (www.newsday.com)
SUV Drivers Burned Twice: At the Pump, on the Car Lot - (www.washingtonpost.com)

Wednesday July 2 Housing and Economic stories

Top Stories:

Conspiracy theory? Congress Secret Session March 13, 2008 and Imminent Collapse of the US Economy - (www.dailypaul.com). I am usually not a conspiracy theorist but this one is very interesting and the question is posed to Ron Paul on the Ron Paul website. The March 13, 2008 Closed Door Session was only the 4th time in 176 years that Congress has closed its doors to the public. Word has begun leaking from the special, closed-door session of the United States House of Representatives. Not only did members discuss new surveillance provisions as was the publicly stated reason for the closed door session, they also discussed:
- The imminent collapse of the U.S. economy to occur by September 2008,
- The imminent collapse of US federal government finances by February 2009,
- The possibility of Civil War inside the USA as a result of the collapse,
- Advance round-ups of "insurgent U.S. citizens" likely to move against the government,
- The detention of those rounded-up at "REX 84" camps constructed throughout the USA,
- The possibility of retaliation against members of Congress for the collapses,
- The location of "safe facilities" for members of Congress and their families to reside during expected massive civil unrest
- The necessary and unavoidable merger of the United States with Canada (for its natural resources) and with Mexico (for its cheap labor pool),
- The issuance of a new currency - THE AMERO - for all three nations as the proposed solution to the coming economic armageddon.
Members of Congress were FORBIDDEN to reveal what was discussed. Several are so furious and concerned about the future of the country, they have begun leaking info.

Fortis Bank Predicts Meltdown Of U.S. Financial Markets In Coming Weeks - (www.dft.nl ) – TRANSLATED FROM DUTCH: Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. “We have been saved just in time. The situation in the US is much worse than we thought”, says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US”

Barclays warns of a financial storm - (www.telegraph.co.uk) - Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Ron Paul Speaks Out Forcefully Against War with Iran - (www.dailypaul.com ) Another Ron Paul must watch video.
MUST SEE: Startling Images from Iran You Don't See Every Day - (www.lucasgray.com)
Preparing the Battlefield: The Bush Administration steps up its secret moves against Iran - (www.newyorker.com) Late last year, Congress agreed to a request from President Bush to fund a major escalation of covert operations against Iran, according to current and former military, intelligence, and congressional sources. These operations, for which the President sought up to four hundred million dollars, were described in a Presidential Finding signed by Bush, and are designed to destabilize the country’s religious leadership.The Joint Chiefs of Staff, whose chairman is Admiral Mike Mullen, were “pushing back very hard” against White House pressure to undertake a military strike against Iran, the person familiar with the Finding told me. Similarly, a Pentagon consultant who is involved in the war on terror said that “at least ten senior flag and general officers, including combatant commanders”—the four-star officers who direct military operations around the world—“have weighed in on that issue.”
What War With Iran Would Mean - (www.globalresearch.ca) We bring to the attention of our readers David DeBatto's scenario as to what might occur if one of the several contingency plans to attack Iran, with the participation of Israel and NATO, were to be carried out. While one may disagree with certain elements of detail of the author's text, the thrust of this analysis must be taken seriously. It’s no secret that the U.S. is currently putting the finishing touches on several contingency plans for attacking Iranian nuclear and military facilities. With our ground forces stretched to the breaking point in Iraq and Afghanistan, none of the most likely scenarios involve a ground invasion. Not that this administration wouldn’t prefer to march into the seat of Shiite Islam behind a solid, moving line of M1 Abrams tanks and proclaim the country for democracy. The fact is that even the President knows we can’t pull that off any more so he and the neo-cons will have to settle for Shock and Awe Lite. If we invade Iran this year it will be done using hundreds of sorties by carrier based aircraft already stationed in the Persian Gulf and from land based aircraft located in Iraq and Qatar. They will strike the known nuclear facilities located in and around Tehran and the rest of the country as well as bases containing major units of the Iranian military, anti-aircraft installations and units of the Revolutionary Guard (a separate and potent Iranian para-military organization).

IndyMac denies that it's close to collapse - (www.latimes.com ) Battling rumors that it may collapse, Pasadena-based IndyMac Bancorp (whose stock is down 90% this year) acknowledged Monday that its financial position had deteriorated but described the fears as overblown and said it was working with regulators to improve its "safety and soundness." IndyMac, a national home lender burned by the mortgage meltdown, went public after depositors lined up at San Gabriel Valley branches starting Friday to pull out their money. Striving to reassure them, the thrift said nearly all their deposits were insured by the Federal Deposit Insurance Corp. Nonetheless, Elizabeth Brown closed four accounts totaling $200,000 Monday at an Arcadia branch where about 20 customers were lined up at noon, saying: "The only reason I'm panicking is if anything happens, my money is tied up.

Lehman speculation blamed on short-sellers - (www.ft.com ) – As usual, the banks are blaming everything. Maybe it has something to do with Lehman being leveraged to the hilt (over 50 to 1 ratio) on mortgage garbage and are now trying to get bailed out by the Fed???? According to Lehman, “the problem for Lehman is that similar rumours circulated about Bear Stearns (NYSE:BSC) in the weeks leading to the investment bank's collapse and emergency sale to JPMorgan Chase. Those rumours, mainly that the bank had run out of cash, were also untrue until they became a self-fulfilling prophecy. People close to Lehman say the bank is now convinced that it is the target of an orchestrated campaign by short-sellers attempting to force it into sharing the same fate as befell Bear. “

A Cringing Quarter for Venture Capitalists - (www.nytimes.com ) venture capitalists experienced a very poor second quarter. The industry’s trade association said Tuesday that for the first time since 1978, not a single venture-backed company went public in the quarter. From the perspective of the venture capital industry, it turns out that the news was worse than I reported. The other bad news was the industry’s disclosure early Monday morning that acquisitions of venture-backed companies are down sharply, too. In the second quarter, 50 mergers or acquisitions of venture-backed companies were completed. That’s down from 70 in the first quarter. In the first half of 2008, there were 120 such deals altogether, down 28 percent from the 169 in the first half of 2007.

Slowdown Squeezes Vegas Casinos - (online.wsj.com) The gambling slowdown that began early this year is taking a serious toll on Las Vegas, with banks, investors and private-equity funds growing as tightfisted as the consumers who are gambling less in the slumping economy. Once believed to be recession-proof, casinos are proving to be highly vulnerable to the economic downturn, which is striking the industry at a bad time. Several casino companies have defaulted on debt or have sought bankruptcy protection, tripped up by costly land acquisitions and ambitious new development. Kentucky-based Tropicana Entertainment LLC filed for Chapter 11 bankruptcy protection in May, defaulting on $2.67 billion in bank and bond debt. Greektown Holdings LLC of Detroit and Illinois-based Legends Gaming, which has casinos in Louisiana and Mississippi, have also sought bankruptcy protection. Shares of several gambling companies have tumbled dramatically this year, washing out billions of dollars in market valuation. Las Vegas-based Boyd Gaming Corp. has fallen to about $12 a share, a five-year low, from a high of $54 last summer. After topping $98 last fall, shares of casino giant MGM Mirage now trade below $35. The public debt of Harrah's, which is highly leveraged after a $17 billion private-equity buyout last year, has traded as low as 52 cents on the dollar. Mr. Loveman, the chief executive, says Harrah's is profitable and is not in danger of default or a bankruptcy filing. The company, he says, is spending money to expand and improve existing properties, and is boosting visits to its regional casinos by chartering airplanes to fly in loyal customers.

PIMCO bond guru Bill Gross, a Republican, writes an open letter to President Barack Obama - "You have inherited a mess" - (housingpanic.blogspot.com) “You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence."

BIS slams central banks, warns of worse crunch to come - (www.telegraph.co.uk) The central bankers' bank renews fear of second depression, writes Ambrose Evans-Pritchard. A year ago, the Bank for International Settlements startled the financial world by warning that we might soon face challenges last seen during the onset of the Great Depression. This has proved frighteningly accurate.



Other Stories:

GM Shares Near 54 Year Low - (money.cnn.com) Will GM survive this downturn without filing for bankruptcy? Shares of General Motors fell Monday, at one point trading at their lowest level since 1954, on the eve of what's expected to be a dismal report on June vehicle sales. GM stock ended down 5 cents to $11.50 a share after hitting a low of $10.57 earlier in the session. That was the lowest level for the company's stock since Sept. 22, 1954, when it traded at $10.49 on a split-adjusted basis, according to data from the University of Chicago's Center for Research in Security Prices.
Chrysler to Close Another Plant, Reduce Output - (www.nytimes.com) Both plants affected by the announcement are in Fenton, Mo., 20 miles southwest of St. Louis. About 2,400 of the company’s 3,500 hourly jobs in Fenton will be eliminated within four months, Chrysler said. Thomas W. LaSorda, one of Chrysler’s two presidents and vice chairmen, said in a conference call that the minivan plant, which opened in 1959 and was closed for several years in the early 1990s, would be idled “indefinitely,” meaning there was no expectation that it would reopen.
Detroit's Mood Grim as Automakers Face the Brink - (ww.reuters.com) Martinez, 50, must choose between retiring and making a long and expensive commute across state lines to stay with General Motors Corp (GM.N). Any future he can imagine is going to be costly and tough. "My whole family is under stress," he said. With four kids, retirement is not an option for Martinez. But driving more than 100 miles daily between home in the Detroit suburb of Lincoln Park and Toledo, Ohio -- where GM has a job for him -- is going to hurt with gas over $4 a gallon. Moving from Detroit, one of the markets hit hardest by the ongoing housing slump, could prove impossible.
"I can't probably sell my home for what it's worth," said Martinez. "I will owe more than I sell it for." When Martinez joined GM in the late 1970s, it controlled 46 percent of the U.S. vehicle market. A union job in the U.S. auto industry was seen as steady work with good wages and rock-solid benefits -- for life.

Ron Paul on Federal Reserve and Inflation - (www.youtube.com)
Crash not be an altogether bad thing - (www.atimes.com)
Next Victim of Real Estate Bubble: Government - (www.businessweek.com)
Who owns my mortgage? - (msnbc.msn.com)
OPEC pres sees oil at $170 this year, blames Fed - (www.marketwatch.com)

Whodathunk - (www.wallstreetexaminer.com) - In the Whodathink Department we now see bank credit quantity in a major free fall. The reason for this is straightforward, the bank system as a whole simply does not meet capital requirements even with all the fictitious capital accounting and lack or proper reserving being employed. And they know it, so loans are being called, and new ones capped. The latest report from the Fed of assets and liabilities of commercial banks in the U.S. showed the sharpest 13-week contraction in bank credit - loans and investments - in the history of the series, which dates back to January 3, 1973. In the 13 weeks ended June 18, bank credit contracted at an annualized rate of 9.14%.
Fitch: Non-Agency REO Volume Jumps 441 Percent - (www.ml-implode.com) - "Unprecedented growth of U.S. real estate-owned property volumes and the costs needed to maintain these assets are hindering rec...
IndyMac: Mini Bank Run, Thanks to Schumer - (www.ml-implode.com) - "IndyMac Bancorp, Inc. felt the pain of a mini bank run this past week, thanks to a leaked letter from New York Senator Charles ...
MBA Says Home Construction Loan Delinquency Rate Misleading - (www.ml-implode.com) - "Constructions loans for single and multi family projects in the United States are incorrectly included in commercial real estat...
Subprime, Alt-A Bonds to Extend Drop as Banks Retreat - (www.ml-implode.com)
Same As It Ever Was - (www.ml-implode.com)
Lender Clears Out Possessions Of Home Not In Foreclosure - (www.ml-implode.com)
Australia Home Lending At Lowest Level Since 1991 - (www.ml-implode.com)

BIS: Global economy could face deeper downturn - (www.chicagotribune.com)
Manufacturing in U.S. Unexpectedly Expanded in June - (www.bloomberg.com)
Global slowdown could be the next crisis for business - (www.financialweek.com)
Broad Says U.S. Economy in Worst Recession Since World War II - (www.bloomberg.com)
At Midyear, the Economic Pain Persists - (www.nytimes.com)

SAC's Bad News for Bankers - (online.wsj.com)
Regulators mull letting PE firms take stakes in U.S. banks - (www.financialweek.com)
IPOs Fall to Five-Year Low as Economy Slows, Loan Losses Climb - (www.bloomberg.com)
Fears for US disclosure rules after CSX ruling - (www.ft.com)
Few signs of deals returning to table - (www.ft.com)

Starbucks Plans to Close 600 U.S. Stores, Fire 12,000 - (www.bloomberg.com)
Chrysler to close 1 plant, cut production at 2nd - (www.chicagotribune.com)
Fortune Brands issues earnings warning - (www.chicagotribune.com)
CIT to sell home lending business for $1.5 billion, shares jump - (www.financialweek.com)
Honda, Hyundai Motor Avoid Slump as Asians Again Top U.S.-Based Automakers - (www.bloomberg.com)
Wachovia quits offering risky mortgage loan - (www.signonsandiego.com)
Airlines try to hedge against soaring fuel costs - (www.signonsandiego.com)
Promise of Biofuel Clouded by Weather Risks - (www.nytimes.com)
Doctors get temporary reprieve on Medicare cuts - (www.chicagotribune.com)

Stagflation grips Eurozone as interest rates look set to rise - UK (www.telegraph.co.uk)
Hot money floods China - (www.economist.com)
Soaring Asian commodity costs feed worldwide inflation - (www.iht.com)
Recession Clips Denmark - (online.wsj.com)
Subprime Losses Hit Japan - (online.wsj.com)
U.K. House Prices Drop Most Since 1992, Manufacturing Contracts - (www.bloomberg.com)
U.K. June Manufacturing Contracts Most Since 2001 - (www.bloomberg.com)
Japan's Tankan Sentiment Falls; Profits to Drop 7% - (www.bloomberg.com)