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AIA's newly released Consensus Construction Forecast
http://archrecord.construction.com/news/daily/archives/2010/100122construction_spending_slump.asp
Thats kind of what I was thinking when you posted this reply to Len.
"It is people like rogue and otc and split and me and even Koz who fight this crap so people can enjoy the luxury of burying their heads in the sand."
How do you dispose of the manure?
Bring it to the Value Microcaps Free-For-All board?
The Fundamental Unreliability of America's Media
By Glenn Greenwald
January 12, 2010 "Salon" -- Consider the record of the American media over the last two weeks alone. Justin Elliott of TPM documents how an absolute falsehood about the attempted Christmas Day airline bombing -- that Abdulmuttab purchased a "one-way ticket" to the U.S., when it was actually a round-trip ticket -- has been repeated far and wide by U.S. media outlets as fact. Two weeks ago, Elliott similarly documented how an equally false claim from ABC News -- that two of the Al Qaeda leaders behind that airliner attack had been released from Guantanamo -- became entrenched as fact in media reports (at most, it is one of them, not two). This week, Dan Froomkin chronicles how completely discredited claims about Guantanamo recidivism rates continue to be uncritically "reported" by The New York Times and then inserted into our debates as fact.
As I documented two weeks ago, government claims about which "top Al Qeada fighters" were killed by our airstrikes turn out to be untrue far more often then true, yet are always mindlessly featured by our media, ensuring little questioning of those actions; at least two of the three Top Terrorists claimed to have been killed by our airstrikes in Yemen -- and possibly all three -- are quite likely alive. As Greg Sargent writes, one of the most provocative and inflammatory claims of the trashy Halperin/Heilmann gossip book -- that Bill Clinton told Ted Kennedy that Obama would have been "getting us coffee" just a couple years earlier -- is not only completely unsourced (like virtually every one of their sleazy claims), but also "paraphrased."
Aside from falsity, what do all of these deceitful reports have in common? They're all the by-product of granting anonymity to people and then repeating what they claim as fact, protected by their journalist-guaranteed anonymity from any and all accountability for their falsehoods. It's exactly the same process that caused our leading media outlets to tell Americans about Iraq's massive WMD program and Al Qaeda connections; Jessica Lynch's heroic firefight with inhumane Iraqi devils and her "rescue" by our Marines; Pat Tillman's death at the hands of Al Qaeda monsters; and government tests that "confirmed" the presence of bentonite in the anthrax used to attack the U.S., which meant it was likely that Saddam was behind the attacks.
Unjustified anonymity -- especially when mindlessly repeating what shielded government sources claim in secret -- is the single greatest enabler of false and deceitful "reporting." Despite its unbroken record of producing lies, it will never stop, because agreeing to it is how "journalists" end up being selected as favored message-carrying servants for the powerful. This falsehood-producing method isn't ancillary to American journalism but central to it; the book which is occupying the attention of America's political and media class is based exclusively on unattributed, shielded sources, and that seems to bother one of them.
None of the falsehoods documented here will ever lead to any accountability, because the identity of the falsehood-producers will be shielded by their loyal journalist-servants, and the journalists themselves will simply claim that they wrote what they did because their hidden sources told them to. That's not only the effect, but the intent, of the central method of American journalism: to disseminate outright falsehoods to the American public and ensure that neither the liars nor their loyal message-carriers ever face any consequences or even reputational loss. Anonymity is so common that "reporters" barely even bother any longer to explain why it's justified, notwithstanding numerous policies of media outlets requiring exactly that explanation. As the use of anonymity has escalated rapidly, so, too, has the pervasiveness of outright falsehoods and the inherent unreliability of much of what the American media "reports." Lying is so much easier -- and thus so much more common -- when you get to do it while remaining hidden.
* * * * *
Two other media points:
(1) I've been writing frequently of late about the perception disparities between Americans and the Muslim world due not to their propaganda-based ignorance but to ours. Here's a somewhat old but highly illustrative example: in 1996, then-Secretary-of-State Madeline Albright was asked by 60 Minutes about the fact that American sanctions on Iraq resulted in the deaths of "half million children," to which Albright dismissively replied: "We think the price is worth it." At the time, FAIR documented that while the number of dead Iraqi children -- as well as Albright's quote -- was known far and wide in predominantly Muslim countries, it was almost completely blacked-out in the American press.
(2) Last night, Brian Williams began his NBC News broadcast by expressing extreme and righteous anger over a truly momentous scandal: Mark McGwire's steriod use, telling his audience: "Because this is a family broadcast, we probably can't say what we'd like to about the news today." If Williams has expressed even a small inkling of an objection -- let alone righteous outrage -- over things like torture, lies that led to the Iraq War, chronic surveillance lawbreaking and the like, I'd be quite surprised. Walter Cronkite famously and unusually abandoned precepts of journalistic "objectivity" in order to stand up to the U.S. Government's lies over the Vietnam War; Brian Williams -- who was embedded in the Iraq War and was a reverent commentator regarding everyone involved -- does so in order to stand up to a detested, powerless baseball player. In that contrast one finds a nice illustration of what our modern press corps is.
© 2010 Salon.com
http://www.informationclearinghouse.info/article24378.htm
bbotcs, I guess it is no yoke,
Shell Game: Government Hatches Secret Program to Lay Eggs
http://online.wsj.com/article/SB126326011266225669.html
Is this a yoke?
Secret Swine Flu Egg Farms in Amish Country
Jan. 11, 2010
The farms that supply eggs for the H1N1 vaccine are top secret -- so secret that even the communities in which they are located don't know about them. WSJ's Jeanne Whalen reports from Pennsylvania Dutch Country.
http://www.marketwatch.com/video/asset/secret-swine-flu-egg-farms-in-amish-country-2010-01-11/E8147107-2248-4893-A6A6-2D0500EA6CEE
len, that was good....LOL
"Young Americans Are Taking The Pledge"
Anyone who thinks that breathing Pledge out of a paper bag is a good idea is obviously running low on brain cells in the first place.
Scientists pull an about face on global warming
http://www.calgaryherald.com/business/scientists%20pull%20about%20face%20global%20warming/2010571/story.html
By Lorne Gunter, For The Calgary HeraldSeptember 19, 2009
Imagine if Pope Benedict gave a speech saying the Catholic Church has had it wrong all these centuries; there is no reason priests shouldn't marry. That might generate the odd headline, no?
Or if Don Cherry claimed suddenly to like European hockey players who wear visors and float around the ice, never bodychecking opponents.
Or Jack Layton insisted that unions are ruining the economy by distorting wages and protecting unproductive workers.
Or Stephen Harper began arguing that it makes good economic sense for Ottawa to own a car company. (Oh, wait, that one happened.) But at least, the Tories-buy-GM aberration made all the papers and newscasts.
When a leading proponent for one point of view suddenly starts batting for the other side, it's usually newsworthy.
So why was a speech last week by Prof. Mojib Latif of Germany's Leibniz Institute not given more prominence?
Latif is one of the leading climate modellers in the world. He is the recipient of several international climate-study prizes and a lead author for the United Nations Intergovernmental Panel on Climate Change (IPCC). He has contributed significantly to the IPCC's last two five-year reports that have stated unequivocally that man-made greenhouse emissions are causing the planet to warm dangerously.
Yet last week in Geneva, at the UN's World Climate Conference--an annual gathering of the so-called "scientific consensus" on man-made climate change --Latif conceded the Earth has not warmed for nearly a decade and that we are likely entering "one or even two decades during which temperatures cool."
The global warming theory has been based all along on the idea that the Atlantic and Pacific Oceans would absorb much of the greenhouse warming caused by a rise in man-made carbon dioxide, then they would let off that heat and warm the atmosphere and the land.
But as Latif pointed out, the Atlantic, and particularly the North Atlantic, has been cooling instead. And it looks set to continue a cooling phase for 10 to 20 more years.
"How much?" he wondered before the assembled delegates. "The jury is still out."
But it is increasingly clear that global warming is on hiatus for the time being. And that is not what the UN, the alarmist scientists or environmentalists predicted. For the past dozen years, since the Kyoto accords were signed in 1997, it has been beaten into our heads with the force and repetition of the rowing drum on a slave galley that the Earth is warming and will continue to warm rapidly through this century until we reach deadly temperatures around 2100.
While they deny it now, the facts to the contrary are staring them in the face: None of the alarmist drummers ever predicted anything like a 30-year pause in their apocalyptic scenario.
Latif says he expects warming to resume in 2020 or 2030.
In the past year, two other groups of scientists--one in Germany, the second in the United States--have come to the same conclusion: Warming is on hold, likely because of a cooling of the Earth's upper oceans, but it will resume.
But how is that knowable? How can Latif and the others state with certainty that after this long and unforeseen cooling, dangerous man-made heating will resume? They failed to observe the current cooling for years after it had begun, how then can their predictions for the resumption of dangerous warming be trusted?
My point is they cannot. It's true the supercomputer models Latif and other modellers rely on for their dire predictions are becoming more accurate. But getting the future correct is far trickier. Chances are some unforeseen future changes will throw the current predictions out of whack long before the forecast resumption of warming.
Lorne Gunter is a columnist with the Edmonton Journal and National Post.
© Copyright (c) The Calgary Herald
My Superpatriots are going down the bowl to the Ravens, 24-7 as of this writing, and yes they are undressing the Pats.
Dress Rehearsal for Debt Peonage
Audio interview with Dr. Michael Hudson
http://economicedge.blogspot.com/2009/08/dr-michael-hudson-interview-must-listen.html
Dr. Michael Hudson
http://www.michael-hudson.com/
Americans Oppose Initiatives Limiting 401(k) Choices, ICI Says
January 08, 2010, 10:30 AM EST
By Jeff Plungis
Jan. 8 (Bloomberg) -- U.S. investors oppose federal initiatives that would force them to give up control over their 401(k) accounts, the Investment Company Institute said.
Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing a steady payment for life, according to an institute-funded report today.
“Households’ views on policy changes revealed a preference to preserve retirement account features and flexibility,” the institute, which represents the mutual-fund industry, said in the report.
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
The institute’s member companies manage $11.6 trillion of assets in mutual funds, including employer-sponsored 401(k) accounts. Some lawmakers have questioned the public-policy value of the tax benefits for people investing in retirement accounts, the ICI said in a report today.
The average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages. The Standard & Poor’s 500 Index tumbled 46 percent in that period. The average balance of the Fidelity accounts recovered to $60,700 as of last Sept. 30 as the stock market rebounded.
Senator Herb Kohl, chairman of the Senate Special Committee on Aging, proposed legislation on Dec. 16 to require fund companies to do more to ensure 401(k) options are appropriate for workers. The Wisconsin Democrat cited reports that target- date funds designed for people retiring in 2010 invested in high-yield, high-risk corporate bonds.
Representative George Miller, a California Democrat, is advocating legislation to require more disclosure about 401(k) fees paid by investors. The Education and Labor Committee, which Miller leads, approved a bill requiring more disclosure about fees in June.
The ICI survey was based on a telephone survey of 3,000 households from Nov. 20 to Dec. 20 and had a sampling error of plus or minus 1.8 percent.
--With assistance from Theo Francis in Washington. Editors: Tina Davis, Chris Thompson
Friday, January 8. 2010
Posted by Karl Denninger at 13:31
401k/IRA Screw Job Coming?
Now this is a guaranteed rape job.
In a short conversation this noontime that CNBC apparently has omitted from their archives (Why's that folks?) Rick Santelli was talking about a potential to effectively force money into the Treasury market.
Where would they get this?
From your 401k and IRA accounts!
From Businessweek:
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!
Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!
Guess what? They'll do that here too - you're going to "invest" in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.
The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!
What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI - the "inflation index" - as they have for the last 30 years) so as to guarantee that you lose over time compared to actual purchasing power.
THIS HAS BEEN THE CASE SINCE THE 1980s AND IT WILL NOT CHANGE!
I have been talking about this for quite some time and recall writing a Ticker on it a year or more ago, although I can't find the entry immediately.
Let me be clear:
I have no quarrel with the government mandating that you have a choice in your IRA or 401k account to buy short-duration Treasuries - much like the "G" fund that government and civil-service workers have.
But - "choices" have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market - so they will effectively tax you by forcing your "retirement" money to buy them!
This may be the only way for Treasury to hold down interest rates to something reasonable in the intermediate term, but doing so will instantaneously remove a major source of funding for the stock market - that is, the monthly and quarterly inflows from retirement accounts.
You can bet this won't be good for you, the ordinary American.
You can also bet that once such an "option" is made available there is a very high probability of the government doing things that either promote or simply don't stand in the way of another stock market crash as a means of "herding" your money into Treasuries - so they can blow it - all under the guise of being allegedly "safe".
Of course this begs the question - what if the government can't pay down the road when you retire, just as they can't pay on a forward basis with Social Security and Medicare?
This "proposal" can only mean one thing - Treasury smells smoke. Maybe you should pay attention to what they're huffing!
And before you say "oh they'd never do that" I want you to read this:
Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.
...
My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare.
Any questions?
PS: if you're wondering what hammered the dollar starting at about 9:00 today, this is probably it. Such a "move" would free the government to further abuse the issuance of Treasuries rather than take necessary austerity steps and places us even further down the road toward a political and economic collapse.
bbotcs:
I just wonder how much longer Bernanke can keep this mess glued together. Give it another few months and see what happens when the States, Cities, and Towns start to own up to the troubles their in, some have, but it takes awhile for the public to feel the pain.
The least expected at the least expected time may very well tip this whole apple cart upside down, we know the spokes are broke, the wheels are wobbling and the apples are rotten.
Tax Revenues Tanking
Chris Wood
Casey Research, LLC
Weds. Jan 6, 2010
If there’s one thing the federal government is good at, it’s taking our money. So, if the underlying economy is improving and we are producing more, you’d think tax “revenues” would be rising.
All of the Obama administration’s plans are predicated on growing tax revenues, from individuals and from corporations. The truth of the matter is, however, that rather than increasing, tax revenues from these sources, and overall, are falling fast.
If you comb through the past couple dozen editions of the “Monthly Treasury Statement of Receipts and Outlays of the United States Government,” which is compiled and published by the Treasury Department’s Financial Management Service, you’d find some disturbing trends.
Over the most recent 12 months for which there is data (through November 2009), individual income taxes are down 22.4% from the previous 12 months, corporate income taxes are down an astounding 56.5%, and total tax receipts have fallen 17.6%.
Looks like all that money the government is spending will have to come from somewhere else, i.e., the hidden tax known as inflation.
Debt Continues to Grow
Although consumer credit and home mortgage debt declined 0.8% and 0.9%, respectively, in the third quarter, increases in government debt more than made up for this marginal decline. Federal, state, and local government debt outstanding grew 4.2% in the third quarter, pushing total debt outstanding to a new all-time high of $34,551.9 billion, according to the Federal Reserve’s newly released Z.1 Flow of Funds document.
This document also revealed that in the third quarter, personal savings dropped 17.8% based on the seasonally adjusted annual rate figures.
Personal Bankruptcy Rising
As icing on the cake comes this story from The Wall Street Journal. And I quote:
The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses.
And more people are filing for Chapter 7 bankruptcy, which liquidates assets to pay off some debts and absolves the filers of others. That is significant because a 2005 overhaul of federal bankruptcy laws aimed to encourage Chapter 13 filings, which force consumers to sign onto debt-repayment plans in exchange for keeping certain assets.
The changes were designed to make it more difficult for people to shed their debt, particularly in a Chapter 7 filing. A "means" test, for example, was introduced to separate those who could afford to repay their debt from those who couldn't. A Chapter 7 filing is off the table if the means test determines a person is able to pay back at least a portion of the debt after it is restructured.
The worst U.S. recession in a generation is testing the effectiveness of these laws. The economic downturn also has prompted more middle-class Americans to file for bankruptcy protection.
Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center, which compiles and analyzes bankruptcy data. It is the highest level of consumer-bankruptcy filings since 2005. Consumers rushed to file in 2005 before the new bankruptcy laws took effect in October of that year.
Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier, according to the research center. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November.
It's 16 deg. and snowing -1 WC. No I just happened to see YRCW a few days ago and then read the news I posted, I don't think I'll be around tomorrow so I would not chance a play unless I was watching.
Did you get the e-mail I sent about the rooky video?
YRCW, possible bounce
YRC Worldwide, the largest U.S. trucking company, said on Dec. 31 that bondholders agreed to swap their debt for equity, enabling the company to avoid a bankruptcy filing that may have resulted in liquidation. S&P equity analyst Kevin Kirkeby said in a Dec. 31 note that YRC reported that 88% of certain notes were tendered, allowing it to proceed, as per revised terms from lenders, with a debt restructuring.
Completion of the debt-for-equity exchange also allows YRCW to defer interest and fee payments while it continues to struggle with liquidity constraints, he said. Current shareholders will see significant dilution as tendering noteholders will receive stock representing a 94% equity stake in the company, Kirkeby said.
Is The Government Misrepresenting Unemployment By 32%?
http://www.zerohedge.com/article/government-misrepresenting-unemployment-32
Tyler Durden's picture
Submitted by Tyler Durden on 01/01/2010 09:38 -0500
There is an old saying, "when in doubt follow the money." These days investors have lots of doubt about pretty much everything (if not so much money). And with data from the government increasingly bearing the Quality Control stamp of approval of the Beijing Communist Party, there is much doubt in store courtesy of an administration which will stop at nothing in its competition with China as to who can blow the biggest asset bubble the fastest, data integrity be damned. Undoubtedly, of all government released data, the most important is, and continues to be, anything relating to unemployment. This is precisely where the government's propaganda armada is focused. Yet in matters of (un)employment, the ultimate authority is, luckily, the Treasury, and not the Fed. "Luckily," because when it comes to making money "difficult to follow" Tim Geithner's office still has much to learn. Which is why when we looked at the Daily Treasury Statement data we were very surprised: because it indicates that the government could be underrepresenting employment data by up to 32%!
The suddenly very prominent topic of Unemployment Insurance, whether it pertains to Initial Claims or to Emergency Unemployment, has one very useful characteristic: it is based on "money", specifically money outflows from the US treasury which goes to fund the weekly "paychecks" of those that have not been in the workforce for well over a year. And as pointed out earlier, money can be followed. The US Treasury presents a daily in and outflow of all money sources in the Daily Treasury Statement prepared by the Financial Management Service. And in the plethora of data presented here, probably the most relevant and useful data series is the Withdrawals quantified in the form of Unemployment Insurance Benefits.
Compiling the monthly data of Treasury Disbursements for Unemployment Insurance Benefits and then superimposing it with the total number of people receiving Insurance Benefits as disclosed by the Department of Labor is a useful exercise, as the two series have historically correlated with an R2 of well over 0.90. Below is an indexed comparison of UIB outlays and Unemployment Insurance Receivers for Fiscal 2007.
Surely this is logical: the more unemployed collecting benefits from the government, the more the outlays.
Yet what struck us is the when this chart is presented from 2007 until today. Something unusual emerges. An absolute chart of the money spent by the government superimposed with the total insured unemployed is presented below:
Yet the best way to see what this chart indicates is on an indexed basis with a September 2007 baseline.
What becomes obvious is that a correlation which used to be almost 1.000 has diverged massively, and now the relative outlays surpass what the government highlights are the number of people actually collecting benefits by 32%! This implies two things: either the average unemployment monthly paycheck has surged, which is not the case, or there is some gray unemployment area which is not disclosed by the government, and which accounts for a shadow unemployed insurance economy. Because while the DOL indicates there are about 9.5 million total unemployed, for the correlation to return to its near 1.0 trendline the number of unemployed on benefits has to be 14 million. At least this is what the actual cash outlays by the Treasury suggest: the government spent a record $14.7 billion on Unemployment Insurance Benefits as of December 30, a 24% jump sequentially from the $11.8 billion in November. Yet the DOL has disclosed a mere 1.7% increase in those to whom insurance benefits are paid: from 9.4 million to just under 9.6 million. To put the $14.7 billion number in perspective, in December the Federal Government paid a total of $14 billion ($700 million less) in Federal Salaries! A cynic could be temped to say that effectively the number of people employed by the government is double what is disclosed. A yet bigger cynic could claim that America is now the biggest socialist state in the world. Both cynics would not necessarily be wrong.
And some more perspective: in calendar 2009 the government has paid $140 billion in Unemployment Insurance Benefits. This is yet another economic stimulus that nobody in the administration discusses, yet which undoubtedly has the biggest impact on the economy, as all those millions unemployed can moderate their pain courtesy of a passable weekly check from the government which should just about cover the rent and beer. Which is why more than anything, Obama is dead set on extending insurance benefit payments in perpetuity: because if the 10 million official and 14 million unofficial people who are on benefits (not to mention the tens of millions of unemployed unlucky enough to even get their weekly allowance from Uncle Sam) start thinking about their true predicament and their real "employability", then a landslide loss by this administration at the mid-term elections will actually be an upside surprise to what it can objectively expect.
StevenRisk, Congratulations
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44994622
Len,
try this.. go to stockcharts (free)
http://stockcharts.com/
under enter symbol type in $indu click go, scroll down to the bottom you will see interactive perfectchart, click on it, scroll down on it and you will see symbols: with $INDU in the elongated box, add $wtic , $gold separated by commas than click go..........it should come up....
That's strange because
I know you used it Jan 3,09,
I originally posted it Jan. 2,09
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=34549688
Interactive chart dow,oil,gold
252 days equals 12/31/2008 to 12/30/2009
the dow increased..from 8,776 to 10548 + 20.19%
oil...from $44.60 to $79.34....+77.89%
gold from $884.30 to $1093.20..+23.62%
http://stockcharts.com/charts/performance/perf.html?$INDU,$wtic,$gold
the 200days (bottom right) has to be extended out to 252 days and the dates in the top left corner of the chart will change
dow..12154
oil..74.95
gold 974.00
I was out looking for an eye doctor for my squirrel
lentinman, Appreciate all your work...Thanks
Stevenrisk, Let me be the first to congratulate you, unless something catastrophic occurs between now and closing tomorrow (12-31-09) I think you are safe.
As of now 11:43 pm EST gold is trading in Hong Kong @ $1097.70 and light crude @ $79.61
This blind squirrel climbed from hovering around the bottom of the barrel during the first few months of the year to near the top.
Again Congrads
New-home sales crater as subsidy wanes
Inventory of unsold homes falls to 38-year low
Dec. 23, 2009, 11:10 a.m. EST
WASHINGTON (MarketWatch) -- Sales of new homes fell 11.3% in November to a seasonally adjusted annual rate of 355,000 as a popular tax break for first-time homeowners was set to expire, the Commerce Department estimated Wednesday.
It was the lowest sales pace since April and followed months of steadier sales boosted by the tax break that was set to expire on Nov. 30.
Buyers would have had to sign a contract on a new home by early October at the latest in order to receive the original tax credit, which was ultimately extended until June and expanded to include repeat buyers.
New home sales are recorded when a contract is signed, not at closing, as existing-home sales are. On Tuesday, the National Association of Realtors reported that resales popped 7.4% in November as buyers rushed to complete sales ahead of the deadline.
"The housing recovery is far from becoming self-sustaining," wrote Anna Piretti, an economist for BNP Paribas. "The current rebound remains very much dependent on government support."
November's sales were far weaker than the 421,000 expected by economists surveyed by MarketWatch. See our complete economic calendar and consensus forecast.
October's sales pace was revised lower to 400,000 from the 430,000 earlier reported.
Sales were down 9% compared with last November. Through the first 11 months of 2009, 349,000 homes had been sold, down 24% from the same period a year ago.
Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors. In most months, the government isn't sure whether sales rose or fell. The standard error in November, for instance, was plus or minus 11%. Read the full government report.
The government says it can take up to five months to establish a new trend in sales. Over the past five months, sales have been on a 395,000 seasonally adjusted annual pace, down slightly from 404,000 in the five months ending in October.
Home builders continued to slash their inventories of unsold homes. The number of unsold homes dropped 2.1% to 235,000, the lowest in 38 years. The number of homes for sale that are under construction or not yet started fell to a record low.
Builders have cut back on production of new homes, but still face stiff competition from unsold existing homes as foreclosures continue to mount up.
At the November sales pace, it would take 7.9 months to sell the inventory, up from 7.2 months in October.
Once a home is completed, it's taking 13.6 months to sell it, a reflection of the mismatch between the more expensive homes in the inventory and the lower priced homes that have been selling.
Very expensive homes did sell better in November, however, with the market share of homes costing more than $750,000 rising to 5% from 2% in October. Forty-five percent of sales were for less than $200,000 and 76% were for less than $300,000.
The median sales price of a new home sold in November was $217,400, down 1.9% in the past year.
Sales fell in three of four regions, led by a 21% drop in the South to a 19-year low. Sales fell 9% in the West and 3% in the Northwest. Sales increased 21% in the Midwest.
In a separate report, the Commerce Department said income from wages and salaries rose a seasonally adjusted 0.3% in November, pushing total income growth to 0.4%. Real spending increased 0.2% in November. See full story on the income and spending data.
Also, consumer sentiment improved slightly in December, but consumers are still anxious about their own finances, according to the University of Michigan/Reuters survey released Wednesday. See Economic Report on consumer sentiment.
AUSTIN, Texas – Texas Attorney General Greg Abbott is vowing to fight what he called an "outrageous" decision to give Nebraska multimillion-dollar tax breaks as part of a deal to get enough votes for the health care overhaul working its way through Congress.
Abbott, a Republican, said Wednesday that he and several other attorneys general will explore legal options in telephone meetings planned for next week. The coordinated attack from several Republican attorneys general, initiated in South Carolina, now includes officials in 10 states, Abbott said.
Congress raises debt ceiling to $12.4 trillion
WASHINGTON (AP) -- The Senate voted Thursday to raise the ceiling on the government debt to $12.4 trillion, a massive increase over the current limit and a political problem that President Barack Obama has promised to address next year.
The Senate's rare Christmas Eve vote, 60-39, follows House passage last week and raises the debt ceiling by $290 billion. The vote split mainly down party lines, with Democrats voting to raise the limit and Republicans voting against doing so. There was one defection on each side, by senators whose seats will be on the ballot next year: GOP Sen. George Voinovich of Ohio and Democratic Sen. Evan Bayh of Indiana.
"I would not support raising the debt ceiling because Congress has not adopted a credible process to restrain spending and eliminate red ink," Bayh said a statement after the vote.
The bill permits the Treasury Department to issue enough bonds to fund the government's operations and programs until mid-February. The Senate will vote again on the issue Jan. 20.
Obama must sign the measure into law to prevent a market-rattling, first-ever default on U.S. obligations. The government piled up a record $1.4 trillion deficit in 2009 to counter a meltdown in financial markets and help bring the nation out of its worst recession in seven decades.
The early-morning vote followed the Senate's passage of a landmark bill to overhaul the nation's health care system. They were the Senate's last votes of the year.
With the exception of Voinovich, Republicans uniformly derided the bill, though they routinely supplied votes for eight previous increases totaling $5.4 trillion under President George W. Bush.
Voinovich, who is retiring, said he voted "yes" after Majority Leader Harry Reid agreed to consider amendments when the Senate takes up the matter again next month. Bayh told the Senate Budget Committee in November that he would oppose an increase in the limit unless Congress commits to a strict new debt-fighting plan.
Democrats had originally planned to pass an unprecedented increase of almost $2 trillion to avoid another vote before next year's midterm elections.
But that plan fell apart amid opposition from about a dozen Senate Democratic moderates, who refuse to support a debt limit increase unless it is accompanied by legislation to establish a new bipartisan task force to come up with a plan to curb the deficit. That idea is opposed by House Speaker Nancy Pelosi, D-Calif., and other Democratic leaders.
Pelosi, meanwhile, is supporting demands of moderate House Democrats, who are demanding a "pay-as-you-go" budget law aimed at ensuring that new tax cuts or new spending programs don't increase deficits in exchange for their votes for the next debt increase.
The Senate is generally opposed to the idea, even though it was the law of the land for more than a decade.
Battles over those issues and others, such as a vote on a GOP proposal to end the Wall Street bailout program, are expected to resume during January's debate.
Except for Voinovich, Republicans -- who helped supply votes to increase the debt ceiling twice last year and provided 27 votes for an $850 billion increase two years ago -- opposed the legislation. It is required to issue new debt to pay for federal operations and deposit up to $50 billion into the Social Security trust funds to pay pensions.
Thursday's debt limit measure and the larger version looming in January require a supermajority of 60 votes to pass. Democrats control the chamber with 60 votes, which could require all 60 members of the Democratic caucus to vote for it, including several members who are politically endangered.
The current measure is needed as a result of the out-of-control budget deficit, which registered $1.4 trillion for the budget year that ended in September. The current debt ceiling is $12.1 trillion and is set to be reached by Dec. 31.
Vino, Patty, db7, eagle(hope your out there) and all on this board........I Would like to take this opportunity to wish all a Very Merry and Safe Christmas.
I hope and pray that next year is much better for many folks in this country, their are a multitude of family,s that are struggling just to put food on the table let alone buy presents for their children. I'm now 63 and have never seen this many people struggling just to survive.
Regulators shutter 2 big Calif. banks, 5 others
(and appear to be having trouble finding other banks to step up and take some over)
WASHINGTON – Regulators on Friday shut down two big California banks, as well as banks in Alabama, Florida, Georgia, Michigan and Illinois, bringing to 140 the number of U.S. banks brought down this year by the weak economy and mounting loan defaults.
The Federal Deposit Insurance Corp. took over all seven.
Regulators shuttered First Federal Bank of California, based in Santa Monica, with $6.1 billion in assets and $4.5 billion in deposits, as was as Imperial Capital Bank of La Jolla, Calif., with about $4 billion in assets and $2.8 billion in deposits.
California was one of the states hardest hit by the real estate market meltdown and many banks there have suffered under the weight of soured mortgage loans. First Federal and Imperial Capital bring to 17 the number of California banks to fail this year.
Also closing their doors Friday were Atlanta-based RockBridge Commercial Bank, with $294 million in assets and $291.7 million in deposits; and New South Federal Savings Bank, based in Irondale, Ala., with $1.5 billion in assets and $1.2 billion in deposits.
Citizens State Bank of New Baltimore, Mich., with $168.6 million in assets and $157.1 million in deposits, was shut down, along with Peoples First Community Bank of Panama City, Fla., with $1.8 billion in assets and $1.7 billion in deposits.
Regulators also closed Independent Bankers' Bank, based in Springfield, Ill. — a sort of wholesale bank that provided services to 450 client banks in four states — with $585.5 million in assets and $511.5 million in deposits.
OneWest Bank of Pasadena, Calif., agreed to buy all of the deposits and essentially all of the assets of First Federal Bank. All 39 of its branches will reopen on Saturday as branches of OneWest.
Los Angeles-based City National Bank agreed to assume all of Imperial Capital's deposits, as well as $3.3 billion of the failed bank's assets. The FDIC will retain the remaining assets for a later sale. All nine branches of Imperial Capital will reopen Monday as City National Bank branches.
Beal Bank, based in Plano, Texas, agreed to assume the assets and deposits of New South Federal Savings Bank, which only had one branch. Hancock Bank, based in Gulfport, Miss., agreed to assume the deposits and about $1.6 billion of the loans and other assets of Peoples First Community Bank. The FDIC will retain the rest for eventual sale.
The FDIC was unable to find a buyer for RockBridge Commercial Bank, so checks covering insured accounts will be mailed to retail depositors, the agency said.
For Independent Bankers' Bank, the FDIC set up a temporary "bridge bank," which the agency will operate as it continues to seek a buyer. The FDIC also set up a "bridge bank" for Citizens State Bank, which will continue to operate for about 45 days to allow customers access to their deposits and open accounts at other banks. It will be operated by Huntington National Bank of Columbus, Ohio, under a contract with the FDIC.
The FDIC estimates the failure of First Federal Bank of California will cost the deposit insurance fund $146.3 million and Imperial Capital's closing is expected to cost the fund $619.2 million.
The failure of Citizens State Bank will cost $76.6 million; the failure of New South Federal Savings Bank is expected to cost $212.3 million; that of Peoples First Community Bank $556.7 million; Independent Bankers' Bank, $68.4 million; and RockBridge Commercial Bank, $124.2 million.
RockBridge Commercial had about $2.1 million in deposits that exceeded the $250,000 per-account insured limit, an estimate likely to change after more information is gathered from customers, the agency said.
Depositors with funds that exceed the insured limits become essentially creditors of the failed bank. They will eventually recover some of their money, but the amount can range from 40 cents on the dollar up to the full amount. Recovery can take months.
RockBridge Commercial is the 25th Georgia-based bank to fail this year, more than in any other state. Independent Bankers' Bank was the 21st bank in Illinois to fail and Peoples First Community Bank was the 14th bank in Florida.
As the economy has slumped, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated around the country.
The 140 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the government-backed deposit insurance fund — which has fallen into the red — more than $30 billion so far this year. The failures compare with 25 last year and three in 2007.
The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.
Banks have been especially hard hit by failed real estate loans, both residential and commercial.
If the economic recovery falters, defaults on the high-risk loans could spike. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.
Last week, the Obama administration extended until next October the $700 billion financial bailout program, saying the fund was still needed to prevent further turmoil in the banking system. Treasury Secretary Timothy Geithner said extending the rescue program also will help homeowners struggling to avoid losing homes to foreclosure and small businesses having trouble getting loans.
OT: The Tiger Collection
The Tiger Collection
lentinman,
This sounds like one of my family reunions :-0
PS: don't reply or you will not love yourself...I am in Mass. ;-(
Cabinet Appointments..Public vs Private sectors,
chart........
http://blog.american.com/?p=7572
Help Wanted, No Private Sector Experience Required
By Nick Schulz
November 25, 2009, 8:19 am
A friend sends along the following chart from a J.P. Morgan research report. It examines the prior private sector experience of the cabinet officials since 1900 that one might expect a president to turn to in seeking advice about helping the economy. It includes secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing & Urban Development, and excludes Postmaster General, Navy, War, Health, Education & Welfare, Veterans Affairs, and Homeland Security—432 cabinet members in all.
When one considers that public sector employment has ranged since the 1950s at between 15 percent and 19 percent of the population, the makeup of the current cabinet—over 90 percent of its prior experience was in the public sector—is remarkable.
The Dollar Bubble starring Peter Schiff, Ron Paul, Marc Faber, Gerald Celente, Jim Rogers, and others. Prepare now for the U.S. dollar collapse.
Number of Americans going hungry increases
By HENRY C. JACKSON, Associated Press Writer Henry C. Jackson,
USDA
WASHINGTON – More than one in seven American households struggled to put enough food on the table in 2008, the highest number since the U.S. Department of Agriculture began tracking food security levels in 1995.
That's 14.6 percent of U.S. households, or about 49 million people. The numbers are a significant increase from 2007, when 11.1 percent of U.S. households suffered from what USDA classifies as "food insecurity" — not having enough food for an active, healthy lifestyle.
Agriculture Secretary Tom Vilsack said the numbers could be higher in 2009 because of the global economic slowdown.
"This report suggests its time for America to get very serious about food security and hunger," Vilsack told reporters during a conference call.
The USDA said Monday that 5.7 percent of those who struggled for food experienced "very low food security," meaning household members reduced their food intake.
The numbers dovetail with dire economic conditions for many Americans. And they may not take the full measure of America's current struggles with hunger: Vilsack and the report's lead author, Mark Nord with USDA's economic research service, both emphasized that the numbers reflected the situation in 2008 and that the economy's continued troubles in 2009 would likely mean higher numbers next year.
The report also showed an increasing number of children in the United States are suffering food insecurity. In 2008, 16.7 million children were classified as food insecure, 4.3 million more than in 2007.
Hunger advocates said they were not surprised by the numbers, and said the numbers for children, in particular, were lamentable.
"What should really shock us is that almost one in four children in our country lives on the brink of hunger," said David Beckmann, the President of Bread of the World, a hunger advocacy organization.
Vickie Escarra, the president of Feeding America, another hunger advocacy group, said all indications were that numbers in 2009 would be even worse than 2008.
"(T)he escalating unemployment rate and the number of working-poor, lead us to believe that the number of people facing hunger will continue to rise significantly over the coming year," she said. "Research on previous economic recessions indicates that people who fall into the grips of poverty in a time of recession do not recover financially."
Vilsack said that it would take a concerted effort to reduce the number of Americans who face food insecurity and said he hoped that the stark reality of Monday's report would inspire action. He also said it was important to recognize that the numbers could have been much worse without adequately funded food aid programs, such as food stamps.
"There's an opportunity here for the country to make a major commitment to focus on ways we can improve this process and make sure that food is safe and available for everyone," he said.
asus------inflation calculator
http://www.bls.gov/data/inflation_calculator.htm
http://www.usinflationcalculator.com/
Commercial Real Estate Loans A Growing Problem For Banks
IBD
Norm Alster – Mon Nov 2, 6:47 pm ET
Housing may be starting to turn the corner. But commercial real estate's woes may be just beginning.
Banks' loan quality "continues to deteriorate," in large part due to commercial real estate, said Jon Greenlee, associate director of the Federal Reserve's banking supervision and regulation division, before a House panel.
Over the next 15 months, $2 trillion worth of commercial mortgages will mature, notes Jeffrey Rogers, president of Manhattan-based Integra Realty Resources, appraisers of commercial real estate. With office vacancy rates soaring, rents deflating and property values still falling, lenders face rising default rates likely to trigger new write-offs. Many banks have yet to bite the bullet and address the problem.
In all, banks stand to lose $200 billion to $300 billion on commercial real estate loans, estimates Richard Parkus, head of commercial real estate debt research at Deutsche Bank Securities.
In an Oct. 28 report that has attracted the attention of several government agencies, Parkus predicted that "many hundreds" of banks will fail due to their exposure to commercial real estate.
On Friday, billionaire Wilbur Ross lent his voice to those predicting a "huge crash in commercial real estate," Bloomberg reported. Fellow megainvestor George Soros predicted a "bloodletting."
Lenders are learning that many commercial property owners can't pay back loans -- or qualify for new ones. Delinquency rates on construction loans have already soared to 16% and could go much higher, notes Parkus.
And yet to this point, he adds, the banks have taken very little in charge-offs or reserves for commercial real estate losses.
"Less than 1% of commercial real estate loans have been written off. Our expectation is that losses will exceed 8%," Parkus told IBD.
And despite the 16% delinquency rate, banks have written off just 4% to 7% of construction loans, he estimates.
"It looks like most of the reckoning lies ahead," he said.
Rogers reasons that banks have lagged in taking charges because they haven't had to. Accounting rules now give them wide latitude in recognizing impaired loans.
"They have not been forced to mark to market," he noted.
The immediate source of trouble for borrowers is no mystery: Massive job cuts have slashed office occupancy and crimped consumer spending in retail outlets. By year-end, 2.5 million office jobs will have been lost, says Matt Anderson, partner with Foresight Analytics, a real estate research and forecasting firm in Oakland, Calif.
Suburban office vacancy rates across the U.S. will approach 20% by the end of the year, Anderson reports. Rents have fallen by 17%.
In Manhattan, notes Parkus, office rents have fallen by roughly 50% from their peak. He expects further declines.
Summing up the problem, Rogers said, "Commercial real estate properties are not generating enough cash flow to pay off mortgages."
There are ways that the banks can delay their day of write-down reckoning. One option is to offer refinancing on a maturing loan. But this is often not possible because the borrowers, with depreciated property assets, don't qualify.
'Extend And Pretend'
More typically, the banks extend loan repayment terms, pushing the crisis further into the future.
"The saying is: 'extend and pretend. Pretend that things are getting better,'" said Jonathan Simon, president of Simon Development Group, which owns office, retail and residential property in New York City.
But "extend and pretend" is just a band-aid.
"It doesn't solve the problem," said Anderson. Extending deadlines for balloon payments just swells banks' backlog of bad debt maturing in coming years.
If the banks do allocate new reserves in anticipation of write-offs, they would face renewed pressures to raise capital. And their ability to make new loans would also be curtailed. "They're not going to have the money to lend to entrepreneurs and families," said Rogers.
The FDIC last Friday issued guidelines that encourage banks to do "prudent" loan modifications with "credit-worthy" borrowers. It would appear that the FDIC hopes to at least partially stem the advancing tide of defaults with loan rewrites.
Big banks, including Bank of America (NYSE:BAC - News), Citi (NYSE:C - News) and Wells Fargo (NYSE:WFC - News), have significant commercial loan exposure. In some cases, the exposure is via commercial-mortgage-based securities held off-balance sheet.
"Some lenders originated mortgages, packaged them and sold them off as CMBS. But they'd keep some in off-balance-sheet vehicles," said Anderson.
It is near impossible to know just how much exposure banks have to commercial real estate in these off-balance-sheet entities, he said.
Regional Fallout
Still, the large banks have been less exposed to commercial real estate loans relative to their smaller peers.
The Fed's Greenlee warned of "unprecedented concentrations of CRE loans" at some regional and community banks.
Scott Valentin, regional bank analyst with FBR Capital Markets, has computed commercial loans as a share of total outstanding loans as of June 30 at various banks.
Thirty-nine percent of M&T Bank Corp.'s (NYSE:MTB - News) loan portfolio is commercial real estate, according to Valentin. Regions Financial's (NYSE:RF - News) share is 36% vs. 35% at BB&T (NYSE:BBT - News), 34% at Comerica (NYSE:CMA - News), 25% at KeyCorp (NYSE:KEY - News) and 23% at Fifth Third (NasdaqGS:FITB - News).
Most regionals have yet to charge off the bulk of souring debt. "A very small fraction of eventual commercial mortgage loan losses have been reserved or charged off to date," said Valentin.
Manageable Or A Massacre?
Some real estate observers contend that the problems are manageable. Dan Fasulo, managing director of Real Capital Analytics in New York City, says lender losses could be contained to the "tens of billions." Pain from defaults "will be spread around," he reasoned. "I don't see a situation where commercial real estate will impact the overall health of the financial system."
But Anderson believes commercial real estate could bring down 650 banks in addition to the more than 100 that have already failed. "There's more of the trouble ahead of us than behind us," he said.
As with residential mortgages, loose lending played a large role in setting the stage for the looming commercial crisis. Loan volume soared during the 2001-2007 period as the Fed kept rates low and lenders made cheap money available on easy terms. Loans were often made on inflated property valuation and cash-flow assumptions.
And lenders were willing to get "creative." Traditionally, commercial loans amortized interest and principal over 20 years or more. But recent loans were designed to lure buyers with seemingly cushy terms. Only interest was paid back for the first few years. But a balloon payment of principal would suddenly come due after three to seven years, notes Anderson. Those balloon payments are now coming due.
At highest risk are loans done in 2006 and 2007, says Anderson. These were based on hyper-inflated property values and Anderson questions if they can be refinanced now that values have tumbled. Just over $50 billion of the 2006-07 loans mature this year and next. But the real flood of maturities follows closely behind. From 2011 to 2013, $300 billion of these loans, many already problematic, are due for full repayment, Anderson estimates.
With the economy reviving in Q3, commercial real estate sales also picked up, noted Real Capital Analytics. The property research firm also said the value of distressed properties rose just 1% in September, while increased asset resolutions and foreclosures offer "some hope that lenders are becoming more proactive" at dealing with their CRE woes.
But problems continue to mount. CMBS delinquencies rose to 4.8% in October from 4.36% in September and just 0.77% a year earlier, according to Trepp LLC, which analyzes commercial real estate finance.
"We're probably in the second or third inning of real estate problems. It's just starting," said Valentin.
Soros Says ‘Bloodletting’ Yet to Come for LBOs
Oct. 30 (Bloomberg) -- Billionaire investor George Soros said a “bloodletting” may be coming for leveraged buyouts and commercial real estate amid the worst slowdown in 70 years.
“In commercial real estate and leveraged buyouts, the bloodletting is yet to come,” Soros said today during a lecture organized by the Central European University in Budapest, where he was born. “These factors will continue to weigh on the American economy, and the American consumer will no longer be able to serve as the motor for the world economy.”
Lenders worldwide have logged $1.66 trillion of writedowns on bad loans since the start of the credit crisis in 2007, according to data compiled by Bloomberg. Moody’s Investors Service expects the global speculative default rate to peak at 12.5 percent this quarter as the U.S. and European economies struggle to recover. The rate rose to 12 percent in the third quarter, from 2.8 percent a year earlier, Moody’s said Oct. 6.
The global economic recovery is “liable to run out of steam,” and a “double dip” recession may follow in 2010 or 2011, said the 79-year-old Soros.
Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash
Oct. 30 (Bloomberg) -- Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”
“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”
U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.
Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.
“The American consumer will no longer be able to serve as the motor for the world economy,” said Soros, 79.
His comments came in the same week that Capmark Financial Group Inc. filed for Chapter 11 bankruptcy protection after originating $60 billion in commercial property loans in 2006 and 2007.
‘Extreme Caution’
Ross, the 71-year-old chairman and chief executive officer of WL Ross & Co. LLC, said in an interview on Bloomberg Radio that he would use “extreme caution” before putting money into commercial real estate, especially office space, because properties are losing tenants.
U.S. office vacancies hit a five-year high of almost 17 percent in the third quarter, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc.
“I think it’s going to take quite a while to work itself out,” Ross said.
As of Oct. 15, Ross said he had spent less than $100 million of at least $1.5 billion available to him under the Public-Private Investment Program, an investment pool of private and government money for purchasing distressed assets from financial institutions.
Ross used the funds he spent so far to purchase residential mortgage-backed securities, he said in a Bloomberg Television interview.
Corus Investment
WL Ross was among a group of firms that agreed Oct. 6 to buy $4.5 billion of Corus Bankshares Inc.’s real estate. Starwood Capital Group LLC and TPG led the group to buy the assets of the Chicago-based lender, which was seized by federal regulators Sept. 11 after its investments in construction loans for condominiums went bad.
In 2007, Ross ventured into the declining residential property market, winning an auction for the home-loan servicing unit of Melville, New York-based American Home Mortgage Investment Corp. He agreed to pay between $435 million and $500 million for the right to collect payments and maintain escrow on about $45.3 billion of home mortgages.
Making Lists
Dubbed the King of Bankruptcy by clients during his quarter century at the Rothschild investment bank, Ross entered the U.S. home mortgage business as an increasing number of borrowers quit making payments and profits sank in loan servicing.
“Our methodology is to make a great big list: What’s every thing we can think of that’s either wrong with the industry or that we just plain don’t like about it,” Ross said today.
“Then we start work on another list. If we had control of this industry, what would we do to fix each one of those problems?” he said. “Once we feel that there is a reasonable likelihood that the second chart kind of equals the first chart, that’s when we get ready to do something.”