Wednesday February 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

One in five California public workers to be fired - (business.timesonline.co.uk) The state of California was yesterday set to fire 20,000 public employees as it teetered on the brink of a total financial collapse. The crisis in the Golden State, home to 37 million people and a $1.8 trillion economy, is now so intense that anyone who overpaid their 2008 taxes will receive an IOU instead of a refund cheque. Meanwhile, all public works projects are being cancelled, schools are facing closure, the Department of Motor Vehicles has shuttered many of its offices and the state’s bonds are almost unsaleable on Wall Street, which has in turn pushed up the cost of borrowing, forcing the state into the kind of death-spiral that has laid waste to many businesses over recent months. “We are dealing with a catastrophe of unbelievable proportions,” said the state Senator Alan Lowenthal, a Democrat, and chairman of the Senate transportation committee. Many aspects of the crisis are making an already-grim economic situation worse: thousands of construction workers are being laid-off from road and bridge repair projects and it is becoming more time-consuming to arrange the paperwork to either buy or sell a car.

4 Bay Area GMC Pontiac Buick dealerships close - (www.mercurynews.com) Four GMC Pontiac Buick dealerships — in San Jose, Dublin, Newark and Colma — have abruptly closed their doors, as a fresh wave of shutdowns and consolidations roils the ranks of Bay Area auto dealers in the new year. About 100 employees lost their jobs because of the closing of Dublin Buick Pontiac GMC in Dublin and the shutdown of Fremont Pontiac GMC in Newark. Those East Bay operations closed Jan. 29. An unknown number of employees were affected by the shutdown of Colma Buick Pontiac GMC in Colma and the closing of Capital Buick Pontiac GMC in San Jose. All four dealerships were owned by the same group, led by retail entrepreneur Ken Okenquist.

Cash found in Ohio house’s walls becomes nightmare - (www.pantagraph.com) A contractor who found $182,000 in Depression-era currency hidden in a bathroom wall has ended up with only a few thousand dollars, but he feels some vindication. The windfall discovery amounted to little more than grief for contractor Bob Kitts, who couldn’t agree on how to split the money with homeowner Amanda Reece. It didn’t help Reece much, either. She testified in a deposition that she was considering bankruptcy and that a bank recently foreclosed on one of her properties. And 21 descendants of Patrick Dunne — the wealthy businessman who stashed the money that was minted in a time of bank collapses and joblessness — will each get a mere fraction of the find. “If these two individuals had sat down and resolved their disputes and divided the money, the heirs would have had no knowledge of it,” said attorney Gid Marcinkevicius, who represents the Dunne estate. “Because they were not able to sit down and divide it in a rational way, they both lost.” Kitts was tearing the bathroom walls out of an 83-year-old home near Lake Erie in 2006 when he discovered two green metal lockboxes suspended inside a wall below the medicine chest, hanging from a wire. Inside were white envelopes with the return address for “P. Dunne News Agency.”

Bay Area food banks busy as economy tanks - (www.contracostatimes.com) Federal program intends to help feed the poor and overpay for goods to help stabilize prices for farmers facing shrinking demand. In November, government food went to more than 7,000 households, or 22,200 people, in Contra Costa and Solano counties, up more than 40 percent from last year. The story is similar for the Alameda County Community Food Bank, which saw the number of people served monthly under the program rise 31 percent, from an average of 21,400 to nearly 28,000 in the last quarter of 2008, said spokesman Brian Higgins. Sigler called the demand over the past six months "explosive and unprecedented." There are rumors lately, she said, of a big "bonus" buy of cheese, thanks to plummeting dairy prices across the world. That could only help, said Michael Marsh, CEO of Modesto-based Western United Dairymen. He said the price California milk producers fetch per gallon dropped from $1.51 in January to 98 cents this month. Central Valley lawmakers met last week with new Secretary of Agriculture Tom Vilsack to lobby for help. Dairy farmers have joined in agreements to cull their herds to shrink demand and make their farms more efficient. For the poor, he said, that could mean another federal bonus buy, Marsh said. "One of the other messages delivered to (Vilsack) is the importance of removing excess beef from the marketplace, to avoid compromising beef prices as well. We can move that beef into feeding programs to help hungry Americans." Filet mignon for the hungry, courtesy of Uncle Sam? Unlikely. But Contreras, a 41-year-old kitchen cabinet installer from Concord with a wife and four children, said he wasn't so picky. Whatever's in the bag, and a sack of tortillas, will go a long way, he said. "The kids eat it. We all eat it," he said, loading a bag of USDA food into the van. "It's not like we're used to eating anything special."

Wealthy cities discovering they're not recession-proof - (www.latimes.com) Beverly Hills, Santa Monica and Newport Beach, which are usually shielded from economic downturns, are seeing decreases in sales tax revenues, along with two-thirds of cities in Southern California. There are million-dollar mansions in foreclosure, layoffs on Rodeo Drive. And reservations are no longer a must at all but the most exclusive restaurants. As recently as the summer, many wealthy Southern California enclaves appeared beyond the reach of the worst recession in decades. But rich cities, it turns out, aren't always so different from the rest. City officials in Beverly Hills -- a place insulated from most economic downturns -- now project a $24-million drop in tax revenues over the next 16 months. The loss represents about 15% of the general fund budget, said Beverly Hills City Manager Roderick Wood. "This will be the largest percentage budget reduction, as far as we can tell, during the city's history," Wood said. "Even for a community as well-funded as Beverly Hills, you absolutely feel a 15% reduction in the budget."

Financier charged with $9.2 billion fraud - (money.cnn.com) The Securities and Exchange Commission said Tuesday that it has charged financier R. Allen Stanford and three of his companies with orchestrating a $9.2 billion investment and sales fraud. The SEC's complaint alleges that the fraud centered on a CD program in which Stanford International Bank promised "improbable and unsubstantiated high interest rates." SIB, based in Antigua, allegedly acted through a network of Stanford Group Company financial advisers to sell approximately $8 billion of "certificates of deposit" to investors. The SEC's complaint also alleged an additional scheme relating to $1.2 billion in sales. The bank boasted a unique investment strategy that it said allowed it to receive double-digit returns on its investments for the past 15 years, the SEC said.

Is Ireland the next big bomb in the global debt crisis? - (www.latimes.com) Ireland's main stock index dived 4% today, the fifth straight decline, after European media reports over the weekend focused on the possibility of the once-booming Emerald Isle reneging on its debt. "Fears are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector," Britain’s Sunday Times reported. In the credit-default-swap market, the cost to insure $10 million in Irish sovereign debt against default jumped to $377,000 on Friday, up from $262,000 at the end of January and just $24,000 a year ago, MarketWatch.com reported. The Times noted that pledges made by Ireland to support its crumbled banking sector amount to 220% of the country’s annual economic output. Loans outstanding at Irish banks are more than 11 times the size of the economy. Ireland still has a "Aaa" credit rating from Moody’s Investors Service, but the rating was placed on "negative outlook" last month, meaning it’s at risk of a downgrade.

Banks on the brink: Unsavory options may be only salvation. - (www.insidebayarea.com) And right now, the federal govern­ment — working without a road map, and without a net — is putting together a plan to keep U.S. banks from collaps­ing. Not just to get the banks lending again. To keep them alive. The government announced a plan this past week short on details that would expand the Federal Reserve's role in lending and may include lifting soured mortgage assets off selected banks' books, possibly along with guarantees against other losses and maybe more direct injections of cash. Financial industry experts say it is a matter of choosing the best of several options, none of them very palatable. And no one knows for sure what will work because nothing like this has happened in living memory. Getting it wrong could trigger a re­play of what happened after Lehman Brothers collapsed last fall — the stock market in free fall, seizure of the credit markets, ripples of layoffs. Perhaps even a run on other banks — so many customers rushing to pull out their cash that it would make the bank run in “It's a Wonderful Life” look like, well, a feel-good holiday movie. “The banks are at a terrible junc­tion,” says Robert Reich, a labor secre­tary under President Bill Clinton. “The bottom is falling out. Almost every area of the credit markets, we're find­ing people unable to repay their loans. That means many banks are basically insolvent.” “If one big bank implodes,” he says, “the reverberations could be endless.” So how did we get into this mess? And how do we get out? Washington and Wall Street are still playing the blame game. But most fi­nancial experts agree that a cocktail of bad economic policies and lax govern­ment oversight led lenders, borrowers and investors to take huge risks. Greed and recklessness trumped fear and reason, and they led banks to the brink.

Californian dream turns into nightmare - (www.ft.com) Counties struggle to fund welfare system. In Contra Costa County, a few miles from San Francisco and the millionaires of Silicon Valley, widespread poverty has returned to California. Buffeted by a housing collapse and a slumping economy, the county of 1m is struggling to cope with a sharp rise in the number of residents seeking welfare assistance.
EDITOR’S CHOICE

Banks broke the law, got rewarded rather than punished - (www.cbsnews.com) How did the mortgage industry destroy itself and set off an economic collapse that ruined the finances of millions of Americans? Executives tend to hold themselves blameless, saying that no one could have seen the disaster coming. Well, judge for yourself after you hear the story of Paul Bishop, who worked at the nation's second largest savings and loan. World Savings Bank was among the industry's most admired mortgage lenders. But Bishop says the kind of lending practices he saw were leading to a world of trouble that would ultimately result in billions in losses and a federal investigation. What does Paul Bishop say he told executives at World Savings, three years before the crash? "We're breaking the law, okay? We're breaking the law. You know we're breaking the law. I know we're breaking the law. What the hell do you think is going on here? You know, you're granting too many people loans who simply can't qualify," Bishop told 60 Minutes correspondent Scott Pelley. Bishop's story is a rare inside look at forces that tore the economy apart, as seen by a plain-spoken loan salesman who is now suing World Savings, claiming that he was fired for telling executives what they didn't want to hear.

How the Crash Will Reshape America - (www.theatlantic.com) My father was a child of the Great Depression. Born in Newark, New Jersey, in 1921 to Italian immigrant parents, he experienced the economic crisis head-on. He took a job working in an eyeglass factory in the city’s Ironbound section in 1934, at age 13, combining his wages with those of his father, mother, and six siblings to make a single-family income. When I was growing up, he spoke often of his memories of breadlines, tent cities, and government-issued clothing. At Christmas, he would tell my brother and me how his parents, unable to afford new toys, had wrapped the same toy steam shovel, year after year, and placed it for him under the tree. In my extended family, my uncles occupied a pecking order based on who had grown up in the roughest economic circumstances. My Uncle Walter, who went on to earn a master’s degree in chemical engineering and eventually became a senior executive at Colgate-Palmolive, came out on top—not because of his academic or career achievements, but because he grew up with the hardest lot. My father’s experiences were broadly shared throughout the country. Although times were perhaps worst in the declining rural areas of the Dust Bowl, every region suffered, and the residents of small towns and big cities alike breathed in the same uncertainty and distress. The Great Depression was a national crisis—and in many ways a nationalizing event. The entire country, it seemed, tuned in to President Roosevelt’s fireside chats. The current economic crisis is unlikely to result in the same kind of shared experience. To be sure, the economic contraction is causing pain just about everywhere. In October, less than a month after the financial markets began to melt down, Moody’s Investor Services published an assessment of recent economic activity within 381 U.S. metropolitan areas. Three hundred and two were already in deep recession, and 64 more were at risk. Only 15 areas were still expanding. Notable among them were the oil- and natural-resource-rich regions of Texas and Oklahoma, buoyed by energy prices that have since fallen; and the Greater Washington, D.C., region, where government bailouts, the nationalization of financial companies, and fiscal expansion are creating work for lawyers, lobbyists, political scientists, and government contractors.


OTHER STORIES:

Stimulus: Now for the hard part - (money.cnn.com)
Get stimulated! Your questions answered - (money.cnn.com)
Berkshire portfolio down 25% - (money.cnn.com)

Stocks put November lows to the re-test, as S&P dips under 800 - (www.marketwatch.com)
Gold Climbs to Seven-Month High in London as Economy May Worsen - (www.bloomberg.com)
Oil Drops as Manufacturing Data Shows U.S. Recession Deepening - (www.bloomberg.com)
Treasuries Rise as Global Slump Concern Deepens, Stocks Decline - (www.bloomberg.com)
U.S. Accuses Texas Financial Firm of ‘Massive’ Fraud - (www.nytimes.com)
Obama May Press Banks to Cut Mortgage Payments - (www.nytimes.com)
Foreign Demand for U.S. Long-Term Assets Increases - (www.bloomberg.com)
Government pension agency braces for recession - (www.latimes.com)
Hedge-Fund Assets Set to Drop $192 Billion by March, UBS Says - (www.bloomberg.com)
Government pension agency braces for recession - (www.latimes.com)

East European Banks Slump to Six-Year Low as Economies Worsen - (www.bloomberg.com)
Japan’s Finance Minister to Quit After G-7 Blunder - (www.nytimes.com)
Japan growth plunges to a 35-year low - (www.ft.com)
Japanese Economy, Leader Both Sinking - (www.washingtonpost.com)
Russian industrial output falls 20% - (www.ft.com)
Shipping Index’s 147% Rise Signals Jump in Commodity Currencies - (www.bloomberg.com)
Obama’s Economic Stimulus Bill Most Ambitious Since Roosevelt - (www.bloomberg.com)
NY manufacturing slump worsens in February - (www.reuters.com)
California Lawmakers Face Lockdown as Budget Falters in Senate - (www.bloomberg.com)
Economy Strains Under Weight of Unsold Items - (www.washingtonpost.com)

Clinton suggests Tarp go green - (www.ft.com)
A lot is riding on GM and Chrysler's plans - (www.latimes.com)
Daimler Has EU1.53 Billion Loss on Recession, Chrysler Costs - (www.bloomberg.com)
Obama to appoint panel for auto recovery - (www.chicagotribune.com)
Dead End in Detroit - (www.nytimes.com)
Honda sees soaring demand for cheapest hybrid - (www.chicagotribune.com)
Declining luxury sales weigh on L’Oréal - (www.ft.com)
Late Change in Course Hobbled Rollout of Geithner's Bank Plan - (www.washingtonpost.com)

Taleb on bad bankers - (www.dailybail.com)
If British Empire Wasn't Too Big to Fail, Neither is Citigroup - (www.minyanville.com)
Settling Scores With Wall Street - (www.thenation.com)
To the President: Why forsake those who avoided the debt trap? - (thelastgoodidea.blogspot.com)
Geithner's Plan: Not Transparent and Still a Bailout - (robertreich.blogspot.com)
The terror beneath the TARP - (www.businessspectator.com.au)
Stimulus will only deepen the depression - (optionarmageddon.ml-implode.com)
Japan's deflation sapped spending, but made bargains - (www.marketwatch.com)
U.S. Making Same Mistakes that Led to Japans Lost Decade - (www.moneymorning.com)
Worse than Japan? - (www.economist.com)
Fed Finally Admits Gain in Family Wealth Was A Mirage - (www.nytimes.com)
The Blow the Working Class Saw Coming - (www.washingtonpost.com)
It's going to get worse before it gets worse - (www.writingshop.ws)

How debt creates money - (www.debtdeflation.com)
Requirement For Buying A House - Don't Lose Money - (www.geldpress.com)
Privatized profits, socialized losses - (patrick.net)
Stimulus Package Q&A - (www.ritholtz.com)

Tuesday February 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Congressional Junkets Defended - (online.wsj.com) As members of Congress fume over executives' inflated salaries and lavish travel, lawmakers are getting a raise, and making travel plans. Republican members of the House of Representatives took a break earlier this month from bashing the Democrats' $800 billion stimulus bill and journeyed here to the Homestead Resort, an 18th-century mountain spa, where the diversions include golf, skiing, skeet shooting and falconry. Republican lawmakers paid for their travel and lodging, mostly with campaign funds. Staffers' bills and the rest of the tab was picked up by the Congressional Institute, which is funded by 54 "patrons," including General Electric Co. and the National Association of Home Builders. About 45 lobbyists attended a dinner on opening night. House Republican Conference spokesman Matt Lloyd, said Republicans accept partial corporate funding of the retreat because "We don't believe in using taxpayer money." The Breakers Palm Beach, site of a coming Republican fund-raiser. A few days later, as the stimulus bill inched forward, Democrats held a two-day issues conference at the Kingsmill Resort & Spa in Williamsburg, Va., a property owned by brewer Anheuser Bush-Inbev NV and whose spa is known for its hops and chamomile massage. Taxpayers helped foot the bill, which was paid partly with money appropriated for congressional office expenses. "Our issues conference, especially this year, was a very serious working session," said Emily Barocas, spokeswoman for the Democratic Caucus. President Barack Obama took his maiden Air Force One voyage to rally support from fellow Democrats for the stimulus plan. The sour economy and public outrage have put a damper on corporate junkets to posh resorts, especially for banks that took taxpayers' money as part of the financial rescue plan. But as they fume over inflated salaries and lavish travel by executives whose companies are on the federal dole, members of Congress are getting a raise, and making travel plans. Last month, when 600,000 Americans lost their jobs, the House and Senate allowed themselves a $4,700 cost-of-living raise, bringing their annual salaries to $174,000.

With No Budget, California to Cut 20,000 State Jobs - (www.cnbc.com) California, which is on the brink of running out of cash, will notify 20,000 state workers on Tuesday their jobs may be eliminated, a spokesman for Governor Arnold Schwarzenegger said on Monday. The announcement came a day after California lawmakers narrowly failed to pass a $40 billion budget that would have plugged the state's deficit with a mix of tax hikes and spending cuts. "In the absence of a budget, the governor has a responsibility to realize state savings any way he can," said Aaron McLear, a spokesman for the Republican governor. "This is unfortunately a necessary decision." The layoff notices will affect about 20 percent of state workers, McLear said, adding the cuts would extend to every part of state government. The positions would be eliminated in June in preparation for California's next fiscal year, which starts in July. California, America's most populous state and the world's eighth biggest economy, has experienced a dramatic fall in revenues because of the housing downturn, rising unemployment and a sharp pullback in consumer spending.

Retailers' loss of revenue hammers city and state budgets - (www.usatoday.com) In the world of shopping centers, strip malls and the cities that house them, a closed Ann Taylor here or an out-of-business Circuit City there might not matter much. But the timing and immensity of the current downturn in retail are dire, and not just for the employees who lose jobs, the company shareholders and the shoppers who no longer can buy from their favorite stores. Cities — entire regions, even — that boomed as Americans shopped till they almost dropped for more than a decade are struggling mightily because spending has almost slammed to a stop. The resulting store closures (150,000 are expected this year), steep declines in sales taxes collected by cities and states, and the plethora of empty buildings are wreaking havoc on budgets, wrecking town center plans and ruining dreams for revitalization. Outside St. Louis, the decline of Crestwood Court mall, which is more than half vacant, is crushing the city's budget. About half of the city's $14 million in revenue in 2008 came from sales taxes, which were down almost 10% last year. Sears is the only major tenant left at Crestwood. Dillard's left the mall a couple of years ago, and many smaller stores have followed. The ultimate blow could be Macy's planned closing in April, but mall owner Centrum Properties is hoping to keep the existing tenants and perhaps use some of the other space for artists until it tries to convert the mall into an open-air center late next year or in 2011. Sixty-year-old roads may not get repaired; parks may not get improved; and property taxes may have to rise. "Most people would agree we were too heavily reliant on sales taxes for some time," says Jim Eckrich, city administrator. "But the city succeeded for a long time with those sales taxes."

Government pension agency braces for recession - (www.latimes.com) The deepening recession spells trouble for a little-known government corporation that insures the pensions of 44 million workers and retirees. The Pension Benefit Guaranty Corp. already has an $11 billion deficit that seems sure to grow larger as Corporate America suffers through the worst economic crisis since the Great Depression. With companies reporting shortfalls in their pension funds, it's all but certain that the PBGC will be forced to take over the pension plans of a rising number of bankrupt businesses. That means more red ink at the corporation before things possibly can improve. The future financial health of the agency is hard to forecast. It is hinged on interest rates, the length of the recession and the PBGC's own luck in playing the market, where it has billions invested. The agency has $63 billion in assets. But it is obligated to spend $74 billion on pension benefits in the coming years. The PBGC might have time to rebound, but over the long term it might become insolvent and require a bailout. "Someday -- probably more than 20 years from now -- there's a significant chance that somebody is going to have to pay the piper," said former PBGC Director Charles E.F. Millard, a Bush administration appointee who stepped down on Jan. 20 when Barack Obama became president. "In the near- to medium-term, there will be no need for a bailout of PBGC."

Comrade Obama May Press Banks to Cut Mortgage Payments - (www.nytimes.com) Comrade Barack Obama, is trying to force banks to cut mortgage payments. President Obama’s plan to reduce the flood of home foreclosures will include a mix of government inducements and new pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses, according to people knowledgeable about the administration’s thinking. The plan, to be announced Wednesday, is expected to include government subsidies for reducing a borrower’s interest rate, which a lender would have to match with its own money. But officials cautioned that subsidies for lower interest rates would not in themselves help many troubled homeowners, because lenders were still likely to view many of those borrowers as bad risks and refuse to restructure their loans. As a result, they have been casting about for sticks as well as carrots to persuade the lenders to take part. Exactly what kind of pressure Mr. Obama would bring to bear remains unclear. One possibility is a stepped-up effort to enact legislation that would give bankruptcy judges new power to restructure mortgages and reduce a borrower’s payments.

Kansas suspends income tax refunds, may miss payroll - (finance.yahoo.com) Kansas has suspended income tax refunds and may not be able to pay employees on time, the state's budget director said Monday. The state doesn't have enough money in its main budget account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and Republican leaders refused Monday. Budget Director Duane Goossen said that without the money, he's not sure the state can meet its payroll. State employees are scheduled to be paid again Friday. Goossen said the state stopped processing income tax refunds last week

Politically, Stimulus Battle Has Just Begun - (www.washingtonpost.com) Thanks to the party-line nature of Congress's votes on the economic stimulus package, the plan to turn around the worst financial crisis facing the country in more than 50 years now carries not only enormous fiscal stakes but also political stakes that are nearly as large. View Only Top Items in This StoryPresident Obama's advisers are betting that the historic legislation he will sign tomorrow will bear fruit quickly, and they plan to do everything they can to highlight evidence of it creating the jobs he has promised. That public relations effort kicks off tomorrow as a two-day swing through the West begins. But the Republican Party has made its own bet: that the stimulus package that Democrats rushed through Congress will have been deemed a failure by the time the 2010 elections arrive, leading voters to rebuke Obama and reward the GOP with much-needed victories. Whichever side proves to be right, the sharp, partisan lines over the stimulus bill make it plain that both parties intend to exact a political cost over last week's votes. And their leaders are looking to history for inspiration as they consider how to maneuver in the weeks and months ahead. For Democrats, the guide is Franklin D. Roosevelt, who even with unemployment still above 20 percent led House Democrats to pick up nine seats in the 1934 midterm elections. Senate Majority Whip Richard J. Durbin (D-Ill.) carries with him "Traitor to His Class," a new biography of how FDR built the Democratic domination that endured for three decades. But Rep. Eric Cantor (Va.), the House minority whip who led the fight to deny Obama every GOP vote for the plan, is studying Winston Churchill's role leading the Tories in the late 1930s, a principled minority that was eventually catapulted into power over the Labor Party. He calls the stimulus bill "a stinker." If the economy turns around, Obama could eventually benefit much as President Bill Clinton did after pushing his economic recovery plan through Congress in 1993 with little Republican support.

Dead End in Detroit - (www.nytimes.com) For all the ups and downs, and more downs, that white-collar workers here have lived through, they have always managed to put on a brave face, assuring one another that the American auto industry will come back stronger than ever. Skip to next paragraphBut now that resolve has given way to grim resignation, as General Motors, Ford Motor and Chrysler have announced wave upon wave of job cuts. After closing plants and shrinking their blue-collar work force, Detroit’s troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace — more than 15,000 in the last year, with more to come. Unlike union workers laid off from idled factories, salaried workers have no safety net of health care or guaranteed income for a year. At best, it’s a small severance or buyout, and a voucher for a discount on one of the hundreds of thousands of unsold cars that G.M. or Chrysler has sitting in inventory.

States and Cities in Scramble for Stimulus Cash - (www.nytimes.com) Well before President Obama’s stimulus package completed its tortuous path through Congress last week, state and local officials facing multimillion-dollar budget deficits, crumbling infrastructure and the prospect of massive reductions in services were already jockeying for the upper hand in deciding how the money should be spent. In Missouri, the Department of Transportation says that within 180 days of Mr. Obama’s signing the legislation it is prepared to begin 34 transportation projects, costing $510 million and with the promise of 14,000 jobs. Echoing the thoughts of many political leaders across the country, Mayor Frank C. Ortis of Pembroke Pines, Fla., says simply, “We have a wish list.” And high on that list is money to repair aging sewer pipes in his city of 150,000. When Mr. Obama signs the stimulus bill in Denver on Tuesday, it will release the biggest influx of federal dollars since the days of President Lyndon B. Johnson’s Great Society program. But it also is expected to set off a multitude of political battles across the map: between governors and legislatures, state capitols and city halls, and even between neighboring municipalities. Because the effectiveness of any stimulus plan depends on the money being quickly spent, whether state and local governments can work through the rules and resolve any disputes will have a large impact on the success Mr. Obama’s plan has in lifting the economy.

UBS Predicts Hedge-Funds Assets to Sink 35% - (www.cnbc.com) Global assets of hedge funds may drop to $1.2 trillion by the end of the first quarter, down 35 percent from 2007 as the number of managers decline and funds rely less on strategies that use leverage, a UBS executive said on Tuesday. "We are gonna see a reduction in hedge fund assets, we are gonna see decline in the number of hedge funds, we are gonna see some strategies that will not work in this environment," Timothy Bell, global head of hedge funds advisory at UBS Wealth Management, told reporters in Singapore. Hedge funds had assets worth $1.9 trillion at the end of 2007, which peaked at $1.93 trillion in the middle of 2008, according to data from Chicago-based Hedge Fund Research. These assets dropped to $1.4 trillion at the end of 2008.

OTHER STORIES:

Banks Are Heading Towards Nationalization - (www.cnbc.com)
Clinton Talks Policy 'Harmony' During Japan Visit - (www.cnbc.com)
Japanese Confidence Skids, Aso Takes Another Hit - (www.cnbc.com)
Japan Finance Minister to Step Down After G7 Furore - (www.cnbc.com)
Santander Raises Madoff Compensation: Report - (www.cnbc.com)

S&P sees new systemic risk in CLO defaults - (www.ft.com)
Gold’s glitter attracts investors - (www.ft.com)
Stanford’s Bank Cuts Financing as U.S. Probes Related Broker - (www.bloomberg.com)
Japan Economy Shrinks 12.7%, Steepest Drop Since 1974 Oil Shock - (www.bloomberg.com)
Japan growth plunges to a 35-year low - (www.ft.com)
Russian industrial output falls 20% - (www.ft.com)
Japan’s politicians lose their way at a bad time - (www.ft.com)
Japan's Prime Minister Aso Faces Ugly Economic Truths - (www.time.com)
India warns of growing fiscal deficit - (www.ft.com)
Asia looks to turn latest crisis into opportunity - (www.reuters.com)
Russia's super-rich are super-losers, too - (finance.yahoo.com)
China shares hit 5 1/2-month high - (finance.yahoo.com)
California Lawmakers Reconvene, Remain Apart on Solving Budget - (www.bloomberg.com)
California Lawmakers Fail to Pass Budget Package by One Vote - (www.bloomberg.com)
Obama Opts Against ‘Car Czar’; Geithner, Summers to Head Team - (www.bloomberg.com)
Clinton suggests Tarp go green - (www.ft.com)

Obama to appoint panel for auto recovery - (www.chicagotribune.com)
Honda sees soaring demand for cheapest hybrid - (www.chicagotribune.com)
Declining luxury sales weigh on L’Oréal - (www.ft.com)
Deere in the crosshairs as recession hits farmers - (www.reuters.com)
Decade at Bernie’s - (www.nytimes.com)

Monday February 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Mortgage Fraud Suspect Found With $70G In Shoes - (www.foxnews.com) A suspect in a nationwide mortgage fraud scheme who fled the country was caught at the Canadian border with $70,000 stuffed in his cowboy boots and nearly $6,000 worth of platinum, authorities said Wednesday. Christopher J. Warren, 26, was arrested early Wednesday while entering the United States at Buffalo, N.Y. After he disappeared Feb. 3, Warren was charged with conspiracy, fraud and conducting a continuing financial crime. If convicted, he faces life in prison. Warren is the second of three fugitives to be caught in the ongoing fraud investigation of Loomis Wealth Solutions, a Roseville, Calif.-based investment company, and several related companies. Court documents alleged they defrauded investors and mortgage companies of $100 million since 2006. The fraudulent deals involved 500 homes and condominiums in California, Florida, Nevada, Illinois, Colorado and Arizona, according to Internal Revenue Service affidavits. Warren flew to Ireland on Feb. 3 on a chartered private jet, then traveled to Lebanon and Canada, acting U.S. Attorney Lawrence Brown said. U.S. Customs and Border Protection agents were on the lookout for him when he took a taxi from Toronto to the border at Buffalo. Prosecutors said Warren had photocopies of assay certificates showing the weight and purity of $1.1 million worth of gold, but it was unclear if he actually had ownership of that gold. They earlier had said he was carrying $1 million in Swiss bank certificates. Authorities believe Warren also had brought to Lebanon $4 million to $5 million in gold, which he had shown some of the flight crew, but that has not been recovered, Brown said. "He's a man of high style — all of it ill-gotten," the prosecutor said. Brown also said Warren was carrying two fake passports with an alias, and authorities previously said he had obtained a passport with another name and indicated he planned to go to Mexico. Warren had an initial court appearance in Buffalo on Wednesday, Brown said. He was represented by a federal public defender, Roxanne Mendez Johnson, who declined comment. Don Heller, Warren's lawyer in Sacramento, said he was disappointed that his client chose to flee, adding: "I think he will now pay the price." On Tuesday, authorities announced that a second suspect in the case, Garret Griffith Gililland III, 27, of Chico, had been apprehended in Spain in October. He is fighting extradition to the U.S. Authorities are still looking for Scott Cavell, 25, of Sacramento, who they said fled the country a day after Warren left. Lawrence Leland "Lee" Loomis, president of Loomis Wealth Solutions, has not been charged with any crime. His attorney denies any wrongdoing by his client. Brown said the investigation into the mortgage scheme was ongoing.

How financial crimes are handled in China - (www.marketwatch.com) A Chinese court has handed a death sentence to Li Peiying, a former chairman of Capital Airports Holding Co., for bribery and embezzlement of more than 100 million yuan ($14.6 million), according to a state media report. Li was given the sentence by the Jinan Intermediate People's Court in Shandong province in eastern China, after he was found guilty of seeking or accepting bribes for 26.61 million yuan while he was in office from 1995 to 2003, Xinhua reported. Li also misappropriated 82.5 million yuan from 2000 to 2003, according to the court, the report added.

Fannie to Expand Mortgage Rules for Realty Investors - (www.ml-implode.com) Excellent. The government has learned nothing, and it regrets nothing. Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to increase housing demand. The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.

Fannie Invites Speculators To Screw Taxpayers - (www.bloomberg.com) Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to spur housing demand. The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site. “Bona-fide, experienced investors bringing significant equity to the table will play a key role in the housing recovery,” Brian Faith, a Fannie Mae spokesman, said today in an e-mailed statement. Since their September takeovers, Fannie and competitor Freddie Mac have loosened some underwriting rules and set policies for their loan servicers to rework more delinquent debt to aid the slumping housing market and lower their foreclosure costs. The companies, which own or guarantee almost half of the $12 trillion of U.S. residential debt, also have tightened guidelines and boosted fees for some loans to reflect their higher risks.

As Vacant Office Space Grows, So Does Lenders' Crisis - (www.nytimes.com) Vacancy rates in office buildings exceed 10 percent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders. With job cuts rampant and businesses retrenching, more empty space is expected from New York to Chicago to Los Angeles in the coming year. Rental income would then decline and property values would slide further. The Urban Land Institute predicts 2009 will be the worst year for the commercial real estate market “since the wrenching 1991-1992 industry depression.” Banks and other financial companies have not had the problems with commercial properties in this recession that they have had with residential properties. But many building owners, while struggling with more vacancies and less rental income, will need to refinance commercial mortgages this year. The persistent chill in lending from banks to the credit markets will make that difficult — even for borrowers who are current on their payments — setting the stage for loan defaults. The prospect bodes ill for banks, along with pension funds, insurance companies, hedge funds and others holding the loans or pieces of them that were packaged and sold as securities.

Alleged Madoff victims may be vulnerable to other victims' claims - (www.latimes.com) Those who profited before suffering losses -- including retirees and charities -- could be hit with demands to give back cash in a settlement. Santa Monica retiree Bob Braslau considers himself a victim of accused fraud mastermind Bernard L. Madoff. But the court-appointed bankruptcy trustee, he fears, might consider him a beneficiary. Braslau was among the thousands who lost money when the Madoff fund collapsed amid allegations that it was a $50-billion Ponzi scheme. But because Braslau had taken out some proceeds over the years, he could be forced to return those earnings if a court determines they weren't real investment returns, simply money from other victims. "I do feel in jeopardy," said Braslau, a former aerospace engineer for TRW Inc. who invested with Madoff through Stanley Chais, a Beverly Hills money manager. "People are going to be frantic in trying to recover their money." Some of the charities and foundations that lost millions with Madoff are also potential targets in the gathering scramble to recover cash from those who profited to distribute among those who did not. Madoff, 70, has been under house arrest at his luxury Manhattan apartment since Dec. 11. The former Nasdaq chairman is reported to be cooperating with investigators while awaiting trial on securities fraud charges.

OTHER STORIES:

Obama to Form Auto Task Force, "Car Czar" Dropped - (www.cnbc.com) President Barack Obama will form a government task force for restructuring the struggling U.S. auto industry instead of naming a "car czar" with sweeping powers, a senior administration official said.
Japan's Economy in Biggest Dive Since 1974 - (www.cnbc.com)
China Commentary Blasts "Buy American" Plan - (www.cnbc.com)
Is This Recession Really Worse Than Others? - (www.cnbc.com)
GM reportedly to ask for more money - (www.marketwatch.com)
Trump casino may be headed back to court - (www.marketwatch.com) Bondholders may force company into Chapter 11, its third trip to bankruptcy court, report says.
TV-station operator Young Broadcasting files Chapter 11 - (www.marketwatch.com)
Peanut Corp. of America files for Chapter 7 bankruptcy - (www.marketwatch.com)

For Fastest Fix, Government Should Do NOTHING - (blogs.law.harvard.edu)
Obama eyes taxpayer subsidies for foolish debtors - (finance.yahoo.com)
Hawaii foreclosures up 174% - (www.starbulletin.com)
House Prices in U.S. Slid 12% in Fourth Quarter, Most on Record - (www.bloomberg.com)
Banks underestimating house price declines - (www.minyanville.com)
U.S. Houseowners Will Lose Up to $10 Trillion, Talbott Estimates - (www.bloomberg.com)
Government Bonds May Be Last Bubble: Jim Rogers - (www.cnbc.com)
Why the market gagged on Treasury's plan - (www.marketwatch.com)
Taking Apart the $819 billion Stimulus Package - (www.washingtonpost.com)
Will US bank recapitalization succeed? - (www.patrick.net)
Bailout cash leads directly to bailout fraud - (www.newsday.com)
Great Recession seen lasting 3 years, experts say - (www.reuters.com)
Laid-Off Foreigners Flee as Dubai Spirals Down - (www.nytimes.com)

Sunday February 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Donald Trump Quits Trump Entertainment, Bankruptcy Possible - (www.bloomberg.com) Donald Trump resigned from the board of Trump Entertainment Resorts Inc., the debt-laden casino company he founded, ahead of a possible involuntary bankruptcy filing next week. “I’m not managing it, it’s not me that’s responsible for managing,” Trump, who was chairman, said in a telephone interview today. “Unless we’re going to be responsible for management it’s just not something that’s worthwhile.” Trump’s departure comes ahead of a Feb. 17 deadline to make a $53 million bond payment originally due on Dec. 1. The Atlantic City, New Jersey-based casino operator said at the time it needed to conserve cash and hold debt-restructuring talks with lenders. Since an initial grace period ended on Dec. 31, Trump Entertainment’s deadline has been extended four times. The 62-year-old real estate entrepreneur has “no idea” whether there will be a bankruptcy filing, he said. Trump is “not thrilled” the company may continue to use his name. Bondholders are planning to force Trump Entertainment into Chapter 11 bankruptcy early next week, the Wall Street Journal reported today, citing unidentified people familiar with the matter. Trump controls 28 percent of the stock, according to a March 21 regulatory filing. His daughter, Ivanka Trump, also resigned, according to an e-mailed statement. “I strongly disagree with the bondholders’ decisions and actions,” Trump said in the statement without elaborating. Tom Hickey, a spokesman for Trump Entertainment, and Chief Financial Officer John Burke didn’t return phone messages left after normal business hours. ‘It’s a Disaster’

Sirius could file bankruptcy as early as Tuesday - (www.sfgate.com) Financially strapped Sirius XM Radio Inc. said Friday that it could file for bankruptcy as early as Tuesday if it cannot successfully negotiate with the holders of its debt. While the satellite radio company said it has exchanged $172.5 million of debt maturing in December for new debt due in 2011, it still has about $175 million coming due this Sunday. Sirius is fighting against attempts for control by Charlie Ergen, the chief executive of Dish Network Corp. and sister company EchoStar Corp. Ergen bought much of a $300 million batch of discounted Sirius bonds that come due next week. Sirius had rejected a previous offer by Ergen for control of the company.

U.S. auto suppliers seek $18.5 billion in government aid - (www.reuters.com) U.S. auto suppliers submitted a formal request to the U.S. Treasury on Friday for $18.5 billion in emergency funding to avoid a wave of bankruptcies and a deeper crisis in the auto industry. The request, which was submitted by two industry groups, outlined three proposals for financial relief. The proposals say the government could guarantee supplier receivables from U.S. automakers, accelerate payment terms or guarantee commercial loans to parts companies. The formal petition was filed by the Motor & Equipment Manufacturers Association and its affiliate, the Original Equipment Suppliers Association (OESA). The submission includes a request for $10.5 billion in guarantees for receivables and accelerated payment terms, as well as $8 billion in direct loans, OESA President Neil De Koker said.

The Worst Misstep: Geithner Added to the Doubt - (www.nytimes.com) TIMOTHY GEITHNER, the brand new Treasury secretary, was panned last week for how he unveiled the Obama administration’s plan to rescue the financial system from the bankers who broke it. Mr. Geithner was not especially articulate, his critics said, and he provided only an outline of an outline, not the detailed blueprint people anticipated and wanted. To a degree, one of Mr. Geithner’s biggest problems was not of his own making. His boss, President Obama, had fanned expectations for his debut as Mr. Fix-It, leaving the impression that it would be boffo. It wasn’t. Why is anyone surprised that Mr. Geithner’s Financial Stability Plan lacked details? We are still in sugar-coating mode — yes, we have a problem, government officials contend. But they can handle it. Don’t you sweat the details, dear taxpayers. To be sure, Mr. Geithner is in something of a box. If he were to lay out precisely how he plans to save the financial system, he might actually telegraph to the public that the problem is more dire than they suspect. Being vague might be less scary. Unfortunately, market participants have lost their patience with vague. Uncertainty, for investors anyway, can be worse than simply acknowledging genuinely grim circumstances. Treasury’s fuzziness, of course, also provides an opening for corporate lobbyists to step into the vacuum and bend the program to suit their needs. Taxpayers, on the other hand, don’t have lobbyists arguing on their behalf.

SEC probing alleged improper trades by hedge funds - (news.yahoo.com/s/ap) Federal regulators are investigating allegations by a large insurer that several hedge funds conspired to drive down its stock price by using advance notice of an analyst's negative report about the company. The Securities and Exchange Commission is examining the situation involving insurer Fairfax Financial Holdings Ltd., a person familiar with the inquiry said Friday. The person spoke on condition of anonymity because the investigation has not been made public. Fairfax Financial, a Canadian property and casualty insurer, brought the allegations in a lawsuit filed in July 2006 in state court in New Jersey. Documents submitted in the ongoing case indicate that executives of the hedge funds discussed the upcoming report of the analyst, John Gwynn of Morgan Keegan Inc., who was fired by the brokerage firm in August 2008. The hedge funds — SAC Capital Advisors, Third Point LLC and Kynikos Associates — used knowledge of Gwynn's report before its public release to bet against Fairfax Financial's stock by short-selling it, the insurer alleges. Short sellers borrow a company's shares, sell them, and then buy them when the stock falls and return them to the lender, pocketing the difference.

Las Vegas Sags as Conventions Cancel - (www.nytimes.com) This city’s reputation as freewheeling and anything goes may have made it the champion of convention markets. But the city’s image — so successfully cultivated in the “What Happens Here, Stays Here” advertising campaign — is not squaring with the new era of fiscal restraint brought on by the economic crisis. Skip to next paragraph A rash of conference cancellations, and a presidential admonishment peppered with a Las Vegas reference last week, has unnerved politicians and resort executives who are fearful that the all-important convention industry could be on the verge of collapse. “It’s certainly a moment we should all pay great attention to,” said Jan L. Jones, senior vice president for Harrah’s Entertainment, which had a 30 percent decline in convention business in January compared with a year ago at its seven resorts on the Strip. “Las Vegas has long tried to balance the image of party town, serious town. This is an opportunity for us to remind business why they do business here, and it’s because it’s the best value.” In the last month, 30,000 hotel room nights booked for conferences have been canceled at an estimated loss of $20 million to the city, according to the Las Vegas Convention and Visitors Authority.

Regulators Shut Four Small Banks - (online.wsj.com) Regulators shut down small banks Friday in Nebraska, Florida, Illinois and Oregon, marking the year's 10th, 11th, 12th and 13th failures as a severe U.S. recession continues to pound financial institutions across the U.S. The four seizures represent the most to go under on a single day so far in 2009. Regulators are bracing for dozens more to collapse in the coming months,

Morgan Stanley, Citi Eye Retention Fees - (online.wsj.com) Building the biggest brokerage firm on Wall Street is proving costly to Morgan Stanley and Citigroup Inc., which are planning to pay brokers about $3 billion to keep them from being poached away from the joint venture, people familiar with the matter said. While the terms aren't expected to be announced until later this month, the issue could grow politically sensitive, because the U.S. government holds stakes in Citigroup and Morgan Stanley as part of its bailout of the financial system.


OTHER STORIES:

Failed Banks Pose a Big Test for Regulators - (www.nytimes.com)
Treasury Boss Taking Fire in Europe Over Stimulus - (www.nytimes.com)
Rise in Jobless Poses Threat to Stability Worldwide - (www.nytimes.com)
Stimulus Plan Receives Final Approval in Congress - (www.nytimes.com)
Hints of Which Sectors Will Weather the Storm - (www.nytimes.com)
As Stimulus Grows, So Does Task of Closing Whopping Deficit - (www.washingtonpost.com)
A Stress Test for the Latest Bailout Plan - (www.nytimes.com)

As Housing Prices Plunge, Refinancing Gets Harder - (www.cnbc.com)
Carlos Slim Not Interested in Citi's Banamex - (www.cnbc.com)
Stimulus Spending: Lessons From Japan - (www.cnbc.com)
GM, Chrysler Labor Talks Slow As Deadline Nears - (www.cnbc.com)
Stimulus Plan Places New Limits on Wall St. Bonuses - (www.cnbc.com)
Obama Vows Quick Action on Stimulus - (www.cnbc.com)
Alleged Swindler Nadel To Stay Behind Bars - (www.cnbc.com)

White House seeks to ease final rules on bank pay limits - (www.latimes.com) Aides to President Obama suggested today that he wants to soften the curbs on...more
Investment losses can lower your tax bill - (www.latimes.com) There's at least a little silver lining to the disaster that befell your portfolio last year. more
Owners of Park LA showroom fashion their own success - (www.latimes.com) As representatives of several designers, they sell clothing wholesale to boutiques as well as giant... more
Fannie Mae, Freddie Mac are raising fees, toughening rules for credit scores and down payments - (www.latimes.com) Under the new guidelines, even applicants who assumed that their FICO scores would get them favorable...more

Go Ahead and Save. Let the Government Spend. - (www.nytimes.com) The government is in a far better position than consumers to provide immediate economic stimulus.
Hints of Which Sectors Will Weather the Storm - (www.nytimes.com) Market volatility appears to be revving up again but various sectors have not all been moving in tandem.
The Optimists’ Club - (www.nytimes.com) Although real estate is moving like glue, the agent’s licensing exam is still finding takers: Models. Bartenders. The superconfident.
Auto Workers’ Talks With G.M. Are Said to Break Off - (www.nytimes.com) The issue of health care costs for retired workers was a stumbling block, a person briefed on the talks said on Saturday.
The Big Guns Unload - (www.nytimes.com) Soon after the collapse of Lehman Brothers last fall, a wave of luxury listings appeared on the market.

U.S. Considers More Mortgage Aid - (online.wsj.com)
Sprint Official to Shape Telecom Policy - (online.wsj.com)
The Obama administration has tapped a Washington executive of Sprint to help run an agency that shapes telecommunications policy and will dole out stimulus money to wireless providers.
Lloyds Warning May Shake U.K. Bailout - (online.wsj.com)