Thursday March 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Congressman Won't Answer Simple Debt Questions - (www.youtube.com) Watch Congressman Pete Stark blow up when Jan Helfeld asks him why Stark believes, "the more we owe, the wealthier we are." This guy represents Pleasanton, Hayward, Fremont, and proves that he is an idiot. Yes, I said it. Pete Stark is a complete moron. He believes the more money a country owes, the wealthier it is. Yes, this is the quality of the people representing us.

Britain faces summer of rage - police - (www.guardian.co.uk) Fears raised that anger over economic crisis could erupt into violence on streets. Police are preparing for a "summer of rage" as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned. Britain's most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming "footsoldiers" in a wave of potentially violent mass protests. Superintendent David Hartshorn, who heads the Metropolitan police's public order branch, told the Guardian that middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year. He said that banks, particularly those that still pay large bonuses despite receiving billions in taxpayer money, had become "viable targets". So too had the headquarters of multinational companies and other financial institutions in the City which are being blamed for the financial crisis. Hartshorn, who receives regular intelligence briefings on potential causes of civil unrest, said the mood at some demonstrations had changed recently, with activists increasingly "intent on coming on to the streets to create public disorder".

Bill Maher Interviews Ron Paul - (www.dailybail.com) Bailout Comedy Video HBO: Bill Maher interviews Texas Congressman Ron Paul. Great Interview. This is an excellent 7 minute clip from Real Time with Bill Maher from last night (February 20). Among his guests were Tina Brown, Maxine (batshit crazy) Watters and Texas Congressman Ron Paul by satellite. This video is Bill Maher with Congressman Paul. It's outstanding and well worth your time, funny and informative. Paul says he would cut federal spending drastically and legalize all drugs but not tax them. He advocates the dismantling of the Federal Reserve and wants to save $1 trillion annually by closing overseas military bases and bringing troops home. It's a shame his presidential candidacy never caught fire as his supporters hoped. The change Ron Paul would bring to this nation makes establishment politicians quake in fear. He would move quickly to dismantle 75% of the federal government. Can you imagine how much fun it would be to watch Washington attempt to deal wth a downsizing of this sort.

Hillary Clinton pleads with China to buy US Treasuries - (www.telegraph.co.uk) US Secretary of State Hillary Clinton has pleaded with China to continue buying US Treasury bonds amid mounting fears that Washington may struggle to finance bank bail-outs and ballooning deficits over the next two years. "It's a safe investment. The United States has a well-deserved financial reputation," she told Chinese television stations at the end of her diplomatic tour of Asia. "We are truly going to rise and fall together. Our economies are so intertwined, the Chinese know that to start exporting again to their biggest market the United States has to take some very drastic measures with this stimulus package, which means we have to incur more debt," she said. Chinese media reports say Mrs Clinton has offered emphatic assurances to premier Wen Jiabao and President Ju Jintao that the Obama administration intends to restore the health of US public accounts and safeguard the interests of bondholders once the economy has begun to recover. Asian investors have expressed concern over the flood of debt in the United States, fearing that it could tempt Washington to engineer a stealth default by allowing inflation to creep up. The Treasury says it needs to raise almost $500bn (£350bn) in debt in the first quarter alone. Estimates for 2009 reach as high as $2 trillion, a huge sum in a world starved of capital at a time almost all the major governments are launching fiscal rescue packages.

U.S. may take big stake in Citi as crisis rages - (uk.reuters.com) The U.S. government could end up owning as much as 40 percent of ailing financial giant Citigroup, according to media reports, underlining the depth of the crisis gripping the world economy. The Wall Street Journal said Citigroup had proposed converting into common equity a big chunk of the preferred shares the government bought last year in an attempt to stabilise what used to be America's most valuable bank. While Citi executives hope to limit the government's stake to closer to 25 percent, it could end up as high as 40 percent, the paper reported on its website. The preferred shares now amount to a 7.8 percent stake in the company. The Financial Times said Citi's aim was to keep the government's stake to no more than 40 percent, or at least below the 50 percent mark that would spell nationalisation -- something that is anathema to many U.S. politicians, executives and voters. "This gives you the sense that authorities' worries have intensified that problems relating to the U.S. economy may potentially spill over to the rest of the world," said Sailesh Jha, senior regional economist at Barclays Capital, in Singapore.

Desperate Brown plans £500billion bank gamble - (www.telegraph.co.uk) A £500 billion banking bail-out will be at the centre of a rescue package announced by Gordon Brown this week amid desperation over the Government’s failure to save the economy. The Prime Minister is to unveil a series of key measures that will see the Government insure the ‘toxic assets’ of major lenders and pump around £14 billion into the mortgage market through Northern Rock. Five months after Mr Brown’s first bank bail-out, there is a growing acceptance in Downing Street that it has not worked - beyond stopping the total collapse of the banks. Businesses are continuing to go bust and workers are losing their jobs as the financial crisis continues to deepen and banks refuse to start lending. The Government has drawn up a new rescue package that will start today with an announcement that Northern Rock, which was nationalised last year, will increase mortgage lending by up to £14 billion over the next two years. Ministers will this week also pave the way for “quantitative easing” – the so-called printing money option – with £150 billion being spent on buying bonds and gilts from banks. Gordon Brown to bar 100pc mortgages - (www.telegraph.co.uk) Gordon Brown is to prevent banks and building societies offering 100 per cent mortgages in an attempt to usher in a new era of "responsible lending". The Prime Minister and Alistair Darling, the Chancellor, will make the move in a tacit admission that the Government did not do enough to stem the wild lending policies that played a major role in creating the credit crisis. Although critics will claim that the Government is acting too late – few if any 100 per cent mortgages are available to home buyers now – ministers insist that action must be taken to stave off a future crisis. "This will be a symbol of a new era of responsible lending," a senior government source told The Sunday Telegraph. Mr Brown, who visits Berlin on Sunday for an economic summit with fellow European leaders, and Mr Darling have asked the Financial Services Authority (FSA) to review the rules that allow lenders to offer loans worth the entire value of a property – or even more.

Eastern European Bailout Proposed - (online.wsj.com) European leaders called for doubling the International Monetary Fund's war chest to $500 billion for bailing out financially stricken nations, amid new signs that Europe's former Communist east is sliding into a full-blown crisis. Europe's developing economies are facing their worst economic trauma since the fall of the Berlin Wall 20 years ago. Capital is fleeing Europe's east, sending currencies sliding and threatening the region with deep declines in output and employment, and a deluge of debt defaults. Poland's industrial output in January fell at a painful 15% annual rate; its currency last week hit an all-time low against the Swiss franc. European leaders called for a doubling of IMF aid to ex-Communist countries, but didn't say where the funds would come from. From left to right are Luxembourg's Prime Minister Jean-Claude Juncker, Czech Prime Minister Mirek Topolanek, German Chancellor Angela Merkel, French President Nicolas Sarkozy, French Finance Minister Christine Lagarde, British Prime Minister Gordon Brown and German Finance Minister Peer Steinbrück arriving for a group photo. The spreading trouble could force more countries on Europe's periphery to seek help from the international community. The IMF already has bailed out four ex-Communist countries, as well as Iceland and Pakistan in recent months. Latvia's economy alone could shrink by as much as 10% this year, according to some estimates; its government fell on Friday. The brief proposal by European leaders, who met in Berlin Sunday, didn't say where funds to double the IMF's war chest would come from; the proposal also falls short of demands by the World Bank and some governments for Europe's wealthy West to go further to prop up the continent's vulnerable East. Until the past couple of weeks, the turmoil mainly hurt Eastern Europe's most financially overstretched countries, including Latvia and Hungary. But collapsing currencies and markets even in previously robust economies, such as Poland and the Czech Republic, show that investors are fleeing the whole region.

Miles of Idled Boxcars Frustrate Towns - (online.wsj.com) As Slumping Railroads Run Out of Parking, an Indiana Hamlet Is Divided by Wall of Cars. Folks here figured the mile-long stretch of a hundred-plus yellow rail cars, which divides this small town like a graffiti-covered wall, would leave soon after it arrived. That was a year ago. "They stayed and they stayed and they stayed," says Bruce Atkinson, a local resident. "Then more moved in." Tens of thousands of boxcars are sitting idle all over the country, parked indefinitely by railroads whose freight volumes have plummeted along with the economy. And residents of the communities stuck with these newly immobile objects, like the people of New Castle, are hopping mad about it. Rail cars, idled by the slump in shipping caused by the recession, have sat for months on tracks in New Castle, Ind. Residents complain the cars cast shadows over homes that sit as close as 10 feet from the tracks. Before February 2008, boxcars were a fleeting sight in this hamlet of 17,500 people 50 miles east of Indianapolis. For decades, no more than one or two trains a day traveled down the sleepy short-haul line that cuts through town. Then rail cars -- 20-foot-tall yellow behemoths covered with the sort of spray-painted artwork once associated with New York City subway cars -- started rolling in by the dozens and grinding to a halt. Now an elementary-school playground sits only feet from a line of rail cars covered with curse words. Someone with a paintball gun opened fire on one of the cars but missed, pelting a house instead. The looming cars have been blamed for casting shadows over homes that sit as close as 10 feet from the tracks. One woman says the lack of sunlight has turned her backyard into a mud pit. One of the more visible manifestations of the global recession is the idling of vehicles used to move everything from scrap metal produced in the U.S. to sneakers made in China. Ocean-shipping companies have taken scores of ships out of service, anchoring them in or near ports around the world. The parking lots of trucking companies are clogged with trailers that in better times were rolling on highways. People in New Castle, Ind., see a string of rail cars sitting unused in their town as a nuisance and an eyesore. Railroads, which have seen shipping volumes drop by double-digit percentages in recent months, face a particularly vexing problem. The nation's five largest railroads have put more than 30% of their boxcars -- 206,000 in all -- into storage, according to the Association of American Railroads. Placed end-to-end, the cars would stretch from New York to Salt Lake City.

Journal Register Files for Chapter 11 - (online.wsj.com) The weekend bankruptcy filings of Philadelphia's two major newspapers and Journal Register Co., publisher of the New Haven Register and 19 other dailies, marks the latest in a wave of companies crushed by corporate debt and is likely a sign of more pain to come. The operating arm of Philadelphia Media Holdings, publisher of the Philadelphia Inquirer and Daily News, sought bankruptcy protection Sunday, following on the heels of a Saturday filing by the Journal Register. Both companies were victims of debt taken on for acquisitions, which became a noose as advertising revenue shrivels across the newspaper industry.

Regulators: Commodity market Ponzi schemes on the rise - (wwwchicagotribune.com) Falling prices exposing alleged schemes, director of enforcement says. As prices for everything from oil to stocks to grains have fallen, allegations about Ponzi schemes in the commodity markets are booming. Federal regulators this year have charged eight commodity funds with defrauding investors, up from just two complaints at this point last year. The Commodity Futures Trading Commission said Friday that it had filed a complaint charging Brookshire Raw Materials Management in Barrington of operating a Ponzi scheme and shuttling $4.6 million in customer money to Canadian bank accounts. A complaint Thursday accused Hawaii-based Marvin Cooper of taking $1.4 million from his 125 investors—all of them deaf—to buy himself electronics equipment, flying lessons and a $1 million home. The financial crisis has played a role in exposing several of the alleged Ponzi schemes, which depend on an influx of new capital instead of investment profits to repay existing customers.



OTHER STORIES:

Philadelphia Publisher Files for Chapter 11 - (online.wsj.com) The owner of Philadelphia's two major daily newspapers filed for bankruptcy protection, capping a tumultuous experiment to bring local ownership to the city's dailies.
LDV pleads for help to save 850 jobs - (www.telegraph.co.uk) LDV, the UK white van manufacturer, has pleaded with the Government to provide an emergency bridging loan.
IMF emergency fund doubled to $500bn in global rescue effort - (www.guardian.co.uk) EU's senior leaders agree to increase in bid to prevent recession turning into fullscale depression

Elderly Emerge as a New Class of Workers - (online.wsj.com)
Older workers are up against workers half their age in a desperate scramble for employment.
Obama Pushes Firmer Budget Rules - (online.wsj.com)
U.A.E. to Help Dubai Ease Debt Load - (online.wsj.com)
Turkish Mogul Clashes With Premier - (online.wsj.com)
Coaches Among Big Earners at Colleges - (online.wsj.com)
U.S. Renews Hard Line on Venezuela - (online.wsj.com)
Agreement on Woes, Not Stimulus - (online.wsj.com)

Falling house prices are the solution, not the problem - (www.freedomblogging.com)
Let Housing Fall To Right Price - (blogs.reuters.com)
Unemployment Shows Housing has Farther to Fall - (www.chartingtheeconomy.com)
Landlords become tenants' slave! - (www.jonnyoblog.com)

Obama Punishes Responsible Parties - (www.chrismartenson.com)
Obama HURTS 100 Million to Help 9 Million - (www.watchingmarcitz.com)
Worth getting out of bed to pay my mortgage or not? - (www.newgeography.com)
The Housing Plan and the Stupidity Tax - (bitterbetterideas.blogspot.com)
Jumbo Loan Defaults Rise at Fast Pace as Rich Suffer - (www.bloomberg.com)
Even SF Bay Area's high-end house market hurting - (www.sfgate.com)
Santa Clara County Down More Than 40% - (extras.mnginteractive.com)
SF Bay Area may be in too deep for mortgage relief - (www.contracostatimes.com)
Lenders Leave Properties Derelict Without Penalties - (www.lenderoffender.com)
The Evolving Crisis and Japan's Experience - (www.freerepublic.com)
When Consumers Cut Back: A Lesson From Japan - (www.nytimes.com)
Would-Be Sellers Trapped in Their Own Homes - (www.nytimes.com)
Large Cloud Looming Over Commercial Real Estate - (www.redmol.com)
Court Enforces Request to Release TARP Details - (yourmortgageoryourlife.wordpress.com)

Wednesday March 4 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Jobless hit with bank fees on benefits - (www.latimes.com) For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even as they're collecting unemployment benefits, they're paying bank fees just to get access to their money. Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JPMorgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 -- even though they could decline charges for more than what's on the card. "It's a racket. It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals. The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets. The fees are raising questions from lawmakers who just recently voted to infuse banks with taxpayer money to keep them afloat. Rep. Carolyn Maloney, D-N.Y., a member of the House Financial Services Committee, said the situation points to "yet another example of how we need to regulate the ways in which banks charge overdraft and other fees." "Banks, particularly ones that have received federal help, should not be imposing endless fees and charges on the unemployed in this time of economic crisis," said Maloney, who has written a bill to require that consumers be notified at the point of sale if they're about to incur overdraft fees. Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it's spent. The banks and credit card companies also get roughly 1 to 3 percent off the top of each transaction made with the cards. Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest. It's difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.

Obama and White House Press Secretary Gibbs shamelessly rebukes CNBC's Santelli because he spoke out against housing bill – (www.politico.co) White House Press Secretary Robert Gibbs jumped at the chance Friday to rebuke a CNBC reporter whose attack on President Barack Obama’s anti-foreclosure plan caught fire on the Internet. Gibbs took on CNBC’s Rick Santelli in unusually personal terms after being asked a question about Santelli’s bracing critique during a regular White House briefing. “I’ve watched Mr. Santelli on cable the past 24 hours or so. I’m not entirely sure where Mr. Santelli lives or in what house he lives but the American people are struggling every day to meet their mortgages, stay in their jobs, pay their bills, send their kids to school,” Gibbs said. “I think we left a few months ago the adage that if it was good for a derivatives trader that it was good for Main Street. I think the verdict is in on that,” the press secretary said, poking directly at the cable journalist, who reports from the trading floor at the Chicago Mercantile Exchange. Gibbs insisted Santelli was misinformed when he said Obama’s program would amount to a transfer of money from prudent taxpayers to those who had taken reckless risks.

Santelli Responds to White House Criticism - (www.cnbc.com) Santelli responds to White House Press Secretary Gibbs.
Becky Quick: Rick Santelli Gains Rockstar Net Status - (www.cnbc.com)

California Offers Its Own Homebuyer Tax Credit - (www.cnbc.com) Clueless politicians in California continuing to do things that will create excess inventory and to pay back political donations from the homebuilders. All this will do is keep the game going a little longer. California lawmakers have approved a $10,000 homebuyer tax credit, throwing a juicy bone to homebuilders disappointed by the federal stimulus bill. The credit, approved Thursday, applies to newly constructed, previously unoccupied homes and is available for a year starting March 1, or until the $100 million earmarked for it is drawn down, according to the California Building Industry Association. "It's a $100 million 'gimme' to someone," said Fox-Pitt analyst Robert Stevenson. "The builders' lobby seems to be much more effective in California than it is in Washington." The credit will provide a near-term boost to builders, but does nothing to address the underlying problem of excess housing supply, Stevenson said. "No game changers here," said Citi analyst Josh Levin, who puts the U.S. stock of excess homes at about 2 million. "There's no dial that someone in Washington can twist. These are deep, systemic problems."

Don't Panic, This Decline Is Different! - (www.cnbc.com) Anxiety about the state of our banking system has sent investors scrambling every which way. But this decline in stocks may be different. "The stock market wants to know what’s going on with the banks and it appears it’s willing to go as low as it has to go to get an answer," explains Dylan Ratigan. Although the White House says they strongly believe a privately held banking system is the way to go -- investors don't buy it, entirely. It's true the comments helped lift the Dow and S&P off their lows, but investors still clobbered shares of Bank of America and Citigroup; in fact this is the sixth day in a row that investors have pummeled these stocks. "It's a clear sign that the markets are expecting a high probability of them being nationalized," says Mike Holland, founder of Holland & Co. "The clear expectation is that shareholders would effectively be wiped out."

Lebanon central bank chief got it right - (www.latimes.com) Riad Toufic Salame bucked pressure in 2005 and kept Lebanese banks from investing in mortgage-backed securities. Now the sector is prospering amid the global downturn. Reporting from Beirut -- Throughout history, men braved the odds to perform great feats. Outmatched generals snatched victory from the jaws of defeat. Titans of industry gambled on bold innovations to reap jackpots. Athletes tested the limits of human endurance in quests for glory. Riad Toufic Salame, the governor of Lebanon's central bank, is not one of those men. Instead, the silver-haired banker became a hero by playing it very, very safe. In 2005, he defied pressure from the Lebanese business community and bucked international trends to issue what now looks like a prophetic decree: a blanket order barring any bank in his country from investing in mortgage-backed securities, which contributed to the most dramatic collapse of financial institutions since the Great Depression. So as major banks in America and Europe were shuttered or partly nationalized and thousands of people in the U.S. financial sector were laid off, Lebanon's banks had one of their best years ever.

After Losses, a Move to Reclaim Executives’ Pay - (www.nytimes.com) SHOULD executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke? Skip to next paragraphAs the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish. Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation. Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst. Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.

Joblessness takes a toll on the soul - (www.latimes.com) For more than 17 years, Yvonne Nance knew just who she was -- the helpful voice at the other end of the line when people called AT&T for directory assistance. That ended in December, when AT&T Inc. informed the 47-year-old mother of four that she was among 12,000 workers being cut from the telecom giant's payroll. "Right now, I don't feel so good about myself," Nance said. "I've always had a job. I've never been laid off from a job. Some days, I don't even want to get out of bed." The statistics are alarming: Nearly 2 million people have lost their jobs in the last three months, almost 600,000 in January alone. The national unemployment rate has reached 7.6%. In California it's 9.3%. But the numbers are only half the story. The other half is what happens to people and families when a job disappears. The psychological and emotional toll can be devastating. "Our culture is based on what people do and how much they make," said Sharon Tucker, an L.A. psychologist who says an increasing number of her clients are dealing with layoff-related issues. "For a lot of people, being laid off means your identity has been taken away."



OTHER STORIES:

Carmakers seek Canada aid - (www.ft.com) Request doubles earlier aid estimate
Hummer beginning to run out of road - (www.ft.com)
Saab left in the cold as GM cuts it adrift - (www.ft.com)
Dow sinks to 7,365 -- the lowest point of the current bear market - (www.latimes.com) The blue-chip index falls 100 points amid vagueness about financial rescue plans...
Oregon Bank Is 14th Bank to Fail in 2009 - (www.cnbc.com)

Obama Tells Treasury to Begin Tax Cuts - (www.cnbc.com)
No Patience, Some Hope. . . Looking for a Bottom - (www.cnbc.com)
European Leaders Agree to Crack Down on Tax Havens - (www.cnbc.com)
Yahoo May Announce Major Overhaul This Week: Report - (www.cnbc.com)
UAE Throws Dubai a $10 Billion Lifeline - (www.cnbc.com)

Gold Tops $1,000, Highest Since March, as Global Equities Slide - (www.bloomberg.com)
Growing Worry on Rescue Takes a Toll on Banks - (www.nytimes.com)
Bear Market's Bite Could Go Deeper - (www.washingtonpost.com)
Madoff Never Made Supposed Investments - (www.nytimes.com)
Soros sees no bottom for world financial "collapse" - (www.reuters.com)
Support Urged for Eastern Europe - (www.washingtonpost.com)
U.S. Lawmakers Clash Over Nationalizing Banks to Stem Declines - (www.bloomberg.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Madoff Left No Sign of Trades Reported to Clients, Trustee Says - (www.bloomberg.com)

Geithner, Summers Meet With Auto Task Force - (www.cnbc.com)
The Week: Stone Cold, Except for Gold - (www.cnbc.com)
Soros Sees No Bottom for World Financial "Collapse" - (www.cnbc.com)
Madoff Trustee: No Securities Bought in 13 Years - (www.cnbc.com)
Morgan Stanley to Pay Up to $3 Billion to Keep Brokers - (www.cnbc.com)

When Consumers Cut Back: A Lesson From Japan - (www.nytimes.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Fears rise over Russia’s foreign debt - (www.ft.com)

Tuesday March 3 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Soros sees no bottom for world financial "collapse" - (www.reuters.com) Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis. Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union. He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system. "We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom." His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama. Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

SEC Questioned on Lehman Probe - (www.washingtonpost.com) A senior Republican lawmaker pressed the Securities and Exchange Commission yesterday about whether it had properly investigated warnings about possible insider trading at the failed investment bank Lehman Brothers. Sen. Charles E. Grassley (Iowa), the ranking Republican on the Senate Finance Committee, said in a letter to the SEC that it was unclear whether the agency was seriously examining the allegations raised by a whistleblower at the firm. Since April, a senior Lehman analyst has provided more than 4,000 e-mails and other documents to agency staff, including at a six-hour meeting, according to Grassley. Grassley said his concerns about the SEC's performance in the case reflected, in part, the agency's failure to detect a $50 billion fraud allegedly carried out by Wall Street financier Bernard L. Madoff. "In light of the SEC's failure to follow-up on repeated warnings about the Madoff ponzi scheme," Grassley wrote, "I must inquire as to whether these allegations are being acted upon." The Lehman analyst provided evidence to the SEC about possible insider trading involving a Lehman unit called the Product Management Group, according to documents released by Grassley's office. Stock analysts at Lehman sent their reports to this unit several hours before the findings were released publicly, possibly giving traders a head start in transacting deals, according to the documents. "There are many documents that raise suspicions of possible insider trading," Grassley added. "It is unclear whether or not the SEC staff adequately investigated."

“The government is promoting bad behavior” - (www.ml-implode.com) "While it isnt shown in the above video, Rick Santelli also called for a "Chicago Tea Party". Anyone ready to put on some war paint?"

Santelli Leads Trader Mortgage Revolt - (www.cnbc.com) CNBC's Rick Santelli and the traders on the floor of the CBOE express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capital.

Ross: Consumer Leveraging a 'Giant Ponzi Scheme' - (www.cnbc.com) Billionaire investor Wilbur Ross, chairman and CEO of WL Ross & Co., shared his insight on Obama's economic plans, the SEC, the housing market and more with CNBC.
“Basically it (plush times) all came from the consumer, and it was consumer income, it was consumer leveraging. Median income in this country actually went down from 2000 to 2006 and so basically did net worth…in a sense that’s a giant Ponzi scheme itself, it makes Madoff and everybody else look pretty small.”

Brzezinski: ‘Hell, There Could Be Even Riots’ - (www.finkelblog.com) - Brzezinski fears class warfare. Not Mika. Zbigniew. And not Barney-Frank-on-Meet-the-Press class warfare. Real, blood-in-the-streets riots. Jimmy Carter’s former National Security Adviser expressed his concern about the possibility of riots on Morning Joe today. To stave them off, he proposes the creation of a voluntary National Solidarity Fund, whose contributors would be those who made out very well in recent times. JOE SCARBOROUGH: You also talked about the possibility of class conflict. ZBIGNIEW BRZEZINSKI: I was worrying about it because we’re going to have millions and millions of unemployed, people really facing dire straits. And we’re going to be having that for some period of time before things hopefully improve. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America . . . And you sort of say to yourself: what’s going to happen in this society when these people are without jobs, when their families hurt, when they lose their homes, and so forth? We have the government trying to repair: repair the banking system, to bail the housing out. But what about the rich guys? Where is it? [What are they] doing? It sort of struck me, that in 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets. Some financiers, led by J.P. Morgan, got together. He locked them in his library at one point. He wouldn’t let them out until 4:45 AM, until they all kicked in and gave some money to stabilize the banks: there was no Federal Reserve at the time. Where is the monied class today? Why aren’t they doing something: the people who made billions, millions. I’m sort of thinking of Paulson, of Rubin. Why don’t they get together, and why don’t they organize a National Solidarity Fund in which they call on all of those who made these extraordinary amounts of money to kick some back in to [a] National Solidarity Fund? A bit later, Zbig made his fears explicit. BRZEZINSKI: And if we don’t get some sort of voluntary National Solidarity Fund, at some point there’ll be such political pressure that Congress will start getting in the act, there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!

Fannie Mae Rescue Hindered as Asians Seek Guarantee - (www.ml-implode.com) ... “there is still a concern that there is no guarantee” from the government, said Shimomura, who oversees $4 billion in non-yen bonds for the arm of Japan’s largest bank. “Looking at the risk, they’re not so attractive,” he said. “We need a guarantee before we’ll buy.”

Latvia's government resigns amid economic crisis - (www.sfgate.com) Latvia's center-right coalition government resigned Friday after weeks of instability brought on by the country's economic collapse. President Valdis Zatlers said he accepted the resignation of Prime Minister Ivars Godmanis and his administration, which had been in power since December 2007. Zatlers said he would begin talks with party leaders Monday to find a new candidate for prime minister. Godmanis blamed those parties — the People's Party, and the Greens and Farmers Union — for the government's collapse, particularly at a time when Latvia must carry out tough economic reforms to get a rescue package from international creditors. International lenders, including the EU, the International Monetary Fund and Nordic countries, have pledged euro7.5 billion (US$9.5 billion) to help the Baltic country recover from its economic predicament. President Zatlers has pressured the government to cut back on the number of ministries and bring in new faces in an effort to win back the public's trust, which has plummeted. However, despite repeated attempts, the four ruling parties have been unable to reach a consensus on which ministries to abolish. The country's economic decline is accelerating. Output plummeted more than 10 percent in the fourth quarter year-on-year, meeting a common yardstick for a depression. On Wednesday the Finance Ministry predicted that gross domestic product would fall 12 percent fall this year. Public anger spilled into the streets on Jan. 13, when scores of protesters clashed with police as they tried to storm Parliament. More than 40 people were injured in Latvia's worst riots since the country split from the Soviet Union in 1991.

Westfield malls to cut shopping hours - (www.chicagotribune.com) Most of the centers in the U.S. will open 30 minutes later and close 30 minutes earlier on weekdays. Some will close an hour earlier Sundays. The owner of Westfield Old Orchard, Westfield Fox Valley and three other shopping centers in Illinois announced plans Thursday to cut shopping hours at nearly all of its 55 U.S. malls starting March 1. Most of Westfield Group's malls will open 30 minutes later and close 30 minutes earlier on weekdays, spokeswoman Katy Dickey said. About a third will close an hour earlier on Sundays; hours will generally stay the same on Saturdays. Westfield did not provide specifics on changes for each shopping center. The company said the move was intended to help struggling retailers save money. "What we're hoping to do is help our retailers save, conserve resources and respond to changing consumer demand and traffic patterns," Dickey said. The decision comes at a brutal time for the retail industry: Sales are falling, big-name companies are filing for bankruptcy protection, and stores are shutting their doors for good. Shortened hours would help retailers cut payroll, utilities and other costs, and could be a strategy that other mall owners try in coming months. Executives at Macerich Co., a Santa Monica-based shopping center chain, have been monitoring hourly foot traffic at the company's malls and meeting with retailers to determine hourly sales volume, said Ken Gillett, senior vice president of property management. "We're carefully studying our operating hours right now, because the world today is different now than it was six months ago," he said. "But we want to be very careful so we don't hurt our retailers or hurt ourselves." Dickey said Westfield's retailers were consulted in recent weeks and that the idea to cut hours was "well received." Department store, restaurant and movie theater hours will remain the same.

Trouble Trickles From Steep Drop in Oil Prices - (www.washingtonpost.com) The precipitous fall in the price of oil in recent months, while good for consumers, has contributed to the confusion in the global economy, wreaking havoc with the budgets and economies of oil-exporting nations and putting many expensive energy projects on hold. In Canada, where President Obama visited yesterday, the drop in oil prices has done more to slow development of controversial oil sands projects than the protests of environmental groups, who note that the energy-intensive process of mining those sands contributes to global warming. Executives in the past have said oil must cost $60 to $90 a barrel to justify the investment. In Kuwait this month, the government unveiled a $5 billion rescue plan for banks, pledging to guarantee 50 percent of new loans to ease a credit crunch in the oil-rich nation. The country's biggest investment bank, Global Investment House, said last month it had defaulted on most of its debt, while an Islamic rival said in December it needed up to $1 billion in loans. Russia, which last year was flush with oil and gas revenue, bolstered its deteriorating financial position this week by promising to supply China with 300,000 barrels a day of Siberian oil over the next 20 years in return for $25 billion in loans to Russian state-owned oil and pipeline firms with large debt payments coming due this year.

Jumbo Loan Defaults Rise at Fast Pace as Rich Suffer - (www.bloomberg.com) Luxury homeowners are falling behind on mortgage payments at the fastest pace in more than 15 years, a sign the U.S. financial crisis that began with the poorest Americans has reached the wealthiest. About 2.57 percent of prime borrowers who took out jumbo loans last year were at least 60 days delinquent, according to LPS Applied Analytics, a mortgage data service in Jacksonville, Florida. They got to that level within 10 months, almost twice as quickly as 2007 borrowers and the fastest rate since at least 1992, when LPS Applied Analytics began tracking the market. The jump in late payments on jumbo loans, while still lower than the 20 percent delinquencies in subprime mortgages, signals that the borrowers with the most money and the best credit are hurting as the U.S. recession deepens in its second year. It also means these loans will be even more difficult to obtain and more expensive to pay off. “The biggest influence in rising delinquencies is related squarely to the economy rather than poor underwriting,” said Keith Gumbinger, vice president of HSH Associates, a Pompton Plains, New Jersey-based mortgage research firm. “We are apparently all suffering to some degree. It’s certainly more severe for some but still, it’s pretty much widespread.”

Highland Capital CDO Fund Is Insolvent, Wiping Out Investors - (www.bloomberg.com) Highland Capital Management LP, the investment firm founded by James Dondero and Mark Okada, said one of its hedge funds was wiped out by losses on high-risk debt securities, at least its third fund since October to close. The managers and directors of Highland CDO Opportunity Fund LP, comprised of a U.S. partnership and an offshore affiliate, determined that “it is in the best interests” of the fund to wind down, according to a Feb. 4 letter to investors. Remaining assets will be distributed to creditors, leaving nothing for shareholders. Highland Capital, based in Dallas, said in October it would shutter its flagship Crusader Fund, which had declined about 30 percent during the year, and its Credit Strategies fund. That month, Barclays Capital Inc. seized $642 million of leveraged loans from the firm, which oversees $33 billion. As recently as October 2007, Barron’s magazine ranked Highland CDO Opportunity third among the top 50 hedge funds, with an average annual return of 44.12 percent during the three-year period ended that June. Its fortunes reversed last year, as the securities it invests in, known as collateralized debt obligations, plunged in value amid the credit crunch and downgrades by ratings firms. The fund became insolvent after assets values were eroded by “the unprecedented market volatility and disruption to the financial system, and the market for structured products assets in particular,” Highland Capital said in the letter, a copy of which was provided by an investor to Bloomberg News. Assets were valued at $361.6 million, according to a June 2008 regulatory filing.



OTHER STORIES:

Fear of factory shutdown after UK car production halves - (www.guardian.co.uk) Amid job cuts and temporary closures across sector, Swedish firm Saab seeks protection from creditors
Anglo American to cut 19,000 jobs - (www.guardian.co.uk) Mining giant badly hit by plunge in value of commodities.
Sales jump at Goodwill stores as non-profit takes commercial approach - (www.chicagotribune.com)
SEC to Examine Boards' Role in Financial Crisis - (www.washingtonpost.com) Chairman Mary Schapiro plans to look into whether boards of banks conducted effective oversight and considers asking them to disclose more about their risk management.
Mortgage Aid Eligibility Still Being Finalized - (www.washingtonpost.com) The White House is developing a standard for lenders to use that seeks to exclude homeowners who either are not in real need or are too far behind to be saved.
UK: Homeowners Mortgage Support scheme - (www.ml-implode.com) " [T]he Homeowners Mortgage Support scheme ... will allow borrowers with mortgages up to £400,000 to take a payment holiday if t...
“You Are Entitled To Getting Your Terms Reduced” - (www.ml-implode.com) - With the new housing bill which passed last year, YOU ARE ENTITLED TO GETTING YOUR TERMS REDUCED in order to lower your paymen...
Energy costs push consumer prices up in January - (www.latimes.com) Consumer prices rose by the most in six months in January, propelled by higher energy costs. But over the...
Southern California home prices fall to 2002 levels - (www.latimes.com) January's median sales price falls 40% from a year earlier, to $250,000. As...
New state levies and fees will take a big bite out of the federal tax credit - (www.latimes.com) The various increases included in the budget approved by the Legislature will...

Boeing, Airbus deliveries may be cut in half - (www.marketwatch.com) Delays in deliveries that had been scheduled for 2009 are likely to reflect weaker demand and precarious state of credit markets.Airbus to slow production rate - (www.marketwatch.com) Spring won't bloom for Lowe's - (www.marketwatch.com) Reporting lower sales and profit, No. 2 home-improvement retailer offers a sobering top-line outlook for the April quarter.

Gold Tops $1,000, Highest Since March, as Global Equities Slide - (www.bloomberg.com)
Growing Worry on Rescue Takes a Toll on Banks - (www.nytimes.com)
Highland Capital CDO Fund Is Insolvent, Wiping Out Investors - (www.bloomberg.com)
Bear Market's Bite Could Go Deeper - (www.washingtonpost.com)
Madoff Never Made Supposed Investments - (www.nytimes.com)
SEC to Examine Boards' Role in Financial Crisis - (www.washingtonpost.com)
Support Urged for Eastern Europe - (www.washingtonpost.com)

U.S. Lawmakers Clash Over Nationalizing Banks to Stem Declines - (www.bloomberg.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Madoff Left No Sign of Trades Reported to Clients, Trustee Says - (www.bloomberg.com)

Monday March 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Fannie Mae Rescue Hindered as Asians Seek Guarantee - (www.bloomberg.com) Asian investors won’t buy debt and mortgage-backed securities from Fannie Mae and Freddie Mac until they carry explicit U.S. guarantees, similar to those given on bonds issued by Bank of America Corp. or Citigroup Inc. The risks are too great without a pledge that the U.S. will repay the debt no matter what, according to Hideo Shimomura, chief fund investor in Tokyo for Mitsubishi UFJ Asset Management Co., and other bondholders and analysts in Japan, China and South Korea interviewed by Bloomberg. Overseas resistance may hamper U.S. efforts to hold down home-loan rates and rebuild the nation’s largest mortgage-finance companies. Even after President Barack Obama vowed on Feb. 18 to sink as much as $400 billion of capital into Fannie Mae and Freddie Mac, double the original commitment, “there is still a concern that there is no guarantee” from the government, said Shimomura, who oversees $4 billion in non-yen bonds for the arm of Japan’s largest bank. “Looking at the risk, they’re not so attractive,” he said. “We need a guarantee before we’ll buy.”

U.S. Tries a Trillion-Dollar Key for Locked Lending - (www.nytimes.com) Credit cards, home equity lines, student loans, car financing: none come cheaply or easily in these credit-tight times. The banks, the refrain goes, just will not lend money. But it is not simply the banks that are the problem. It is also what lies behind them. Largely hidden from view is a vast financial system that serves as the banker to the banks. And, like many lenders, this system is in deep trouble. The question is how to fix it. Most banks no longer hold the loans they make, content to collect interest until the debt comes due. Instead, the loans are bundled into securities that are sold to investors, a process known as securitization. But the securitization markets broke down last summer after investors suffered steep losses on these investments. So banks and other finance companies can no longer shift loans off their books easily, throttling their ability to lend. The result has been a drastic contraction of the amount of credit available throughout the economy. By one estimate, as much as $1.9 trillion of lending capacity — the rough equivalent of half of all the money borrowed by businesses and consumers in 2007, before the recession struck — has been sucked out of the system. Banking chiefs, who have come under sharp criticism for not making more loans even as they have accepted billions of taxpayer dollars to prop themselves up, say it is the markets, not the banks, that are squeezing American borrowers.

Government tightens grip on Fannie and Freddie - (www.ft.com) The Obama housing plan announced this week draws Fannie Mae and Freddie Mac yet more tightly into the embrace of federal government and shows their importance to housing policy. The latest moves, including doubling the public capital available to the government-sponsored enterprises to $200bn apiece, firm the implicit guarantee on their debt to the brink of making it explicit. “Through the preferred stock purchase agreements and our commitment to ensure that each organisation maintains a positive net worth, we effectively stand behind the debt of these companies,” said Treasury spokeswoman Stephanie Cutter. This raises the question as to whether at some point the administration might abandon the remaining ambiguity about their status and declare that it stands full-square behind their debts. Such a statement could substantially reduce the risk spread between their securities and government securities, lowering their cost of funds and bringing down the rates of conforming mortgage loans – those guaranteed by Fannie and Freddie.

GM’s Saab Unit Files for Reconstruction to Survive - (www.bloomberg.com) Saab Automobile filed for protection from creditors after parent General Motors Corp. said it will cut ties with the Swedish carmaker following two decades of losses. Saab, based in Trollhaettan, filed for reorganization with a Swedish district court to separate itself from GM and bring resources back to Sweden, Saab Chief Executive Officer Jan Aake Jonsson said in a statement today. The reorganization, slated to take three months, will place Saab under court supervision, with the aim of creating a “fully independent” business entity. Saab’s future was put in doubt after GM said on Feb. 18 that it wants to cut the unit loose by 2010 at the latest or seek protection from creditors for Saab if it fails to win financial support from the Swedish government. Sweden has ruled out taking over Saab, saying taxpayers’ money shouldn’t be pumped into a company that’s been unprofitable for 19 of the last 20 years. “Unless the Swedish government is prepared to put a lot of money into Saab, I think that this is just another step down the road to the graveyard,” said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.

Summit to tackle ballooning US deficit - (www.ft.com) The Congressional Budget Office shocked global markets a month ago, when it estimated that America's budget deficit would hit almost $1,200bn this year - a number that would shatter all postwar records. Four weeks later, the CBO's projections look positively rosy.Capitol Hill has since passed a $787bn (€620bn, £550bn) two-year fiscal stimulus. Barack Obama, US president, has announced $75bn in new spending to provide relief to struggling mortgage holders and an additional $200bn in contingent liabilities for the housing market via Fannie Mae and Freddie Mac, the state-owned mortgage providers. Finally, Chrysler and GM have asked for another $21.6bn in state aid - barely a drop in the sea of red ink now enveloping Washington. This is without anticipating Treasury's request for hundreds of billions to recapitalise the financial sector. Mr Obama will host a bipartisan summit on fiscal discipline next Monday that will aim to address America's long-term struggle to control entitlement costs in healthcare and social security. For most economists, it cannot come a moment too soon. "We are now looking at fiscal deficits of over a trillion [a million million] dollars every year for the next decade," says William Gale of the Brookings Institution. "And that is without adding all the trillions of dollars in contingent liabilities of the Federal Reserve and the Treasury, which show up nowhere in the budget or national debt numbers."

Irish Mogul's Empire Totters - (online.wsj.com) Once a symbol of Irish resurgence, business titan and rugby hero Sir Anthony O'Reilly is now being tackled from all sides by the economic crisis. Sir Anthony O'Reilly long has been a symbol of Irish resurgence, a national rugby hero and raconteur who conquered the U.S. corporate world before returning home to oversee a sprawling business empire. That empire now shows signs of unraveling. Sir Anthony, once America's highest-paid chief executive while leading H.J. Heinz & Co., has seen the value of his holding in his Dublin-based global newspaper group, Independent News & Media PLC, plunge to $52 million from more than $1.1 billion just 18 months ago. Concerns about a €200 million ($253 million) debt payment that Independent News faces in May have sent its shares down 90% over the past year to 18 European cents -- less than the price of most of its newspapers. Facing declining advertising and readership in addition to its debt load, say analysts, the company could be forced into a fire sale of assets that could cost the firm its trophy publication: the London-based Independent. In another corner of the O'Reilly world, Waterford Wedgwood PLC, the historic maker of fine china and crystal controlled by Sir Anthony and his brother-in-law, is in the equivalent of bankruptcy reorganization, and workers are occupying a shuttered factory. U.S. private-equity investor KPS Capital Partners LP is negotiating a possible purchase of the company that could be announced within days, according to a person familiar with the situation. Sir Anthony is an example of how, for some business titans, the credit crunch and recession have become a brutal multifront assault. His big bets on newspapers, luxury goods and the remaking of Ireland itself made him the richest man in the country. Now each of those areas has boomeranged on him. Mr. O'Reilly, 72 years old, sounds pessimistic about his prospects and Ireland's, saying in a recent interview that the Irish economy will be "lucky" to contract just 4% this year and that there is little the country can do about it. "It is impossible that if Ireland does not do well, that any of us can do well," he said.




OTHER STORIES:

Policing TARP Proves Tricky - (online.wsj.com)
BofA's Lewis Gets Subpoena on Merrill - (online.wsj.com) Bank of America Chairman Kenneth Lewis was subpoenaed by New York state over bonuses and losses at Merrill. Former Merrill CEO Thain was interviewed.
Authorities Widen Stanford Probe - (online.wsj.com) Texas financier R. Allen Stanford was tracked down in Virginia by FBI agents, at the request of the SEC, and served papers. Prosecutors are investigating if he was operating a Ponzi scheme.
Stanford's Political Investments - (online.wsj.com)
U.S. Wants More Names From UBS - (online.wsj.com)
Market Hits Crisis Low - (online.wsj.com)
Wave of Selling Spans Globe - (online.wsj.com) A selloff that pushed the Dow industrials to a new six-year low and then spilled across the globe to drag down markets in Europe and Asia looked likely to pull U.S. shares down further Friday. Gold neared $1,000.
Gold Futures Hit High of $998 - (online.wsj.com)
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Gold Advances Near Seven-Month High in London on Haven Demand - (www.bloomberg.com)
Futures point to more Wall Street losses - (www.marketwatch.com)
Stocks in Europe, Asia, U.S. Futures Decline; Anglo Retreats - (www.bloomberg.com)
Oil falls below $39 as economic outlook worsens - (www.reuters.com)
Corporate Bond Trading Highest Since ‘07 as Credit Freeze Thaws - (www.bloomberg.com)
Bank debt trades at distressed levels - (www.ft.com)

SEC to Examine Boards' Role in Financial Crisis - (www.washingtonpost.com)
Trouble Trickles From Steep Drop in Oil Prices - (www.washingtonpost.com)
Europe Services, Manufacturing Shrink at Record Pace - (www.bloomberg.com)
Japanese stocks tumble as Topix hits 25-year low - (finance.yahoo.com)
Euro zone economic downturn gathers pace - (finance.yahoo.com)
BoJ to buy Y1,000bn of corporate bonds - (www.ft.com)
California Legislature Passes Tax Plan, Ends Impasse - (www.bloomberg.com)
Southern California home prices fall to 2002 levels - (www.latimes.com)
Costs for individual health plans soar - (www.usatoday.com)
Summit to tackle ballooning US deficit - (www.ft.com)

A Swiss Bank Is Set to Open Its Secret Files - (www.nytimes.com)
ABC cuts Oscar ad rates - (www.latimes.com)
Its Muscle Car Glory Faded, Pontiac Shrivels Up - (www.nytimes.com)
The Global Recession, Graded on a Curve - (www.nytimes.com)