Chris Whalen sticks it to Heli Ben-FIRE HIS *SS

Bernanke Made A 'Pig's Breakfast' Of the Financial Crisis: Christopher Whalen (VIDEO)
http://www.huffingtonpost.com/2009/12/17/bernanke-made-a-pigs-brea_n_395447.html

Did Ben Bernanke deserve to be named Time's "Person of the Year"?

"Absolutely not," Christopher Whalen, managing director of Institutional Risk Analytics told Yahoo's Tech Ticker yesterday. "On a personal level I have great sympathy for Chairman Bernanke but he's made such a pig's breakfast of this whole situation."

Whalen's been a vocal critic of banks like Citigroup, which he called "the queen of the zombie dance party" and has been adamant about the disparity between Wall Street's rebounding profits and the larger economy. He also certainly has no love for the Fed Chairman, who will face a Senate vote today for confirmation for a second term.

Arguing that Bernanke has politicized the Federal Reserve and done little other than rescuing the banking sector, Whalen said:

"He hasn't changed the underlying financial reality inside the banks and he hasn't done anything for the real economy. So where have you helped us? The only thing I see is inflation. For the average American the message they should take away from this year is this: Bernanke's policy has insured we'll see the purchasing power of Americans' savings dwindle."

Whalen also suggested that by keeping debt levels high and interest rates at historic lows, Bernanke is actually exacerbating the financial crisis:

You saw the way the bubble was during '05, '06, '07, do you think all of that GDP was real? Of course not, it was financed with debt. I think we're closing to the real economy now in terms of GDP. You have to deflate in order to fix the economy."

Though he believes Bernanke will win enough Senate vote to be reconfirmed, Whalen said Connecticut Senator Chris Dodd could be in trouble if he supports Bernanke. "Every member of the Senate who is running for reelection next November would love to vote no," he added.

Block the Bernanke Re-Nomination-Write your Senators!


Bernanke Approved For 2nd Term As Fed Chairman By Senate Banking Panel
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JEANNINE AVERSA | 12/17/09 12:28 PM | AP
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WASHINGTON — A Senate panel on Thursday approved the nomination of Federal Reserve Chairman Ben Bernanke to run the nation's central bank for another four years.

The Senate Banking Committee voted 16-7 to send Bernanke's nomination to the full Senate for consideration. Approval came after a two-hour debate that heaped both praise and criticism on the Fed chief.

In voting for Bernanke, the panel's chairman, Sen. Christopher Dodd, D-Conn., said Bernanke's "wise leadership" will mean "better days do lie ahead."

Although Bernanke, 56, appears to have enough votes in the Senate to win a second term, six Republicans and one Democrat on the committee did line up against him. They blame him for not spotting problems that led to the financial crisis, failing to protect consumers and supporting Wall Street bailouts.

Bernanke's nomination comes at the height of public anger toward the Fed.

Many ordinary Americans were disgusted by the Wall Street bailouts and hefty bonuses paid to employees of those rescued companies, while Main Street continued to suffer from rising unemployment, record-high home foreclosures and stagnant wages.

In turn, legislation in Congress would rein in the Fed's powers, and a House-passed provision would subject the Fed to an audit by congressional investigators.

The opposition to Bernanke came from an odd coalition of liberals and conservatives.
Story continues below

Sen. Richard Shelby of Alabama, the top-ranking Republican on the committee, was among the seven senators voting no.

"Our trust and confidence were misplaced," Shelby said of Bernanke's leadership.

The others voting against Bernanke were: Republicans Jim Bunning of Kentucky, Jim DeMint of South Carolina, David Vitter of Louisiana, Kay Bailey Hutchison of Texas and Mike Crapo of Idaho. The sole dissenting Democrat was Jeff Merkley of Oregon.

"We can't have a Federal Reserve that the majority of Americans no longer trust, and that's what we have today," said DeMint.

So dissatisfied by the bailouts, Sen. Bernie Sanders, an independent liberal from Vermont, wants to block the nomination on the Senate floor. He has placed a "hold" on the nomination, meaning it will require a super-majority of 60 votes to confirm Bernanke.

Bernanke's term ends Jan. 31 and unless Sanders relents, a full Senate vote on his nomination is not expected until January.

Despite lawmaker anger over the bailouts and worries about stubbornly high unemployment, even some of Bernanke's critics acknowledge that his out-of-the-box thinking helped prevent the Great Recession from turning into the second Great Depression.

"Obviously mistakes were made," said Sen. Judd Gregg, R-N.H., who voted for Bernanke. However, assessing Bernanke's swift reaction to the financial and economic crisis, Gregg concluded: "I tell you it worked. It's that simple."

Time magazine on Wednesday gave Bernanke its highest honor as Person of the Year. Bernanke's "creative leadership" was credited with helping to assure that 2009 was a period of economic recovery, rather than "catastrophic depression."

Bernanke was first tapped to run the Fed by President George W. Bush. Before taking over in February 2006, Bernanke had served as Bush's top economic adviser and was a Fed member when Alan Greenspan was chairman.

Most of his professional life, however, was spent in academia, including teaching economics at Princeton for 17 years.

Here, Disbelief, is "Life Settlement" Fraud

Life Settlements – Life Insurance Rescue
http://www.quatloos.com/life_settlement-life_settlements.htm

Seems like people will figure out how to make a buck out of anything. Lately, this includes death. Don't get me wrong: Since the dawn of man a lot of people have been making a lot of money on death. Death sells, for the reason that it is the big unavoidable. Morticians and those who sell burial plots are getting ready to go through their biggest up cycle ever as the baby boomers start cashing it in. And life insurance has always been a very lucrative business, though the trouble with life insurance is that you actually have to die to reap the benefit of it.

Not anymore. Seems like some very bright people have figured out a way for you to make money on your life insurance before you die. No, it does not involve being placed into a time machine and being teleported to some future date right after you've been lowered into the ground where you collect on your own policy and then get zapped back to the present where you can spend it. It doesn't involve you faking your death, either.

Nope, these very bright people have figured out a way for you to make money on your own death before you die, in a way that doesn't involve fraud or teleporting. To the contrary, they will show you how to create vast amounts of cash - hundreds of thousands of dollars if not more - seemingly out of thin air without you having to do much than take a medical, signs some forms, receive the check, and then of course at some future date die at your leisure.

The one sure thing about anything this good is that it is sure to get a bunch of other folks all riled up, and indeed this strategy has of late come under some serious scrutiny with some other very bright people claiming that there are some significant and hidden downsides to the strategy. What? You can't get something for nothing? If it is too good then it is not true?

Somewhere between the very bright people who claim that you can make money off your death before you die, and the very bright people who claim that you can't, lies the truth. To find that truth you must first understand the concept of a "life settlement", and to understand that, you must understand what its immediate predecessor, the "viatical settlement" are all about.

Viatical Settlements

Let's say that you are diagnosed with a terminal illness, such as serious cancer or AIDS, but you don't have sufficient money for treatment or even to keep yourself comfortable until you die. But let's say that you do have a life insurance policy, although in such a case you'll find that it does you pitiful little good until you do cash it in. So, you find somebody who will buy your insurance policy now at some reduced value, knowing that very shortly they will be able to cash it in. This gives you the money for treatments to hopefully slow the progress of your disease and also maybe keep you somewhat comfortable until you finally kick the bucket.

From the investors' perspective, they have examined your medical records and prognosis and know with some certainty (depending on what you have, and how bad it is) that you are going to die within a couple of years. When you die, the investors know that your life insurance policy will now pay them as the named beneficiaries, so they will get the money that they paid you for the policy plus some. It is then just a simple matter of taking their total profit on the policy, and dividing it by how many years you actually live, and that is their return on their investment.

So, let's say that you have a $300,000 life insurance policy, your oncologist tells you that at best you have two years to live, and so the investors pay you $200,000 for it and you name them the beneficiaries of the policy. If in fact you die in two years, the investors will have made a profit of $100,000 split over two years, or what amounts to a $50,000 per year return - although this will be a pre-tax profit and income taxes will be owed on it. Still, not bad for a $200,000 investment.

This type of investment in the life insurance owned by a person who is probably soon going to die (with "soon" being somewhat arbitrarily set as being within three years) is known as a "viatical settlement". In the 1980s, there was created almost overnight a multi-billion industry in investing in the life insurance policies of AIDS patients, and later this industry spread to cover terminal cancer patients and in fact nearly any other disease where sure death was a soon-to-be-realized certainty.

The fly in the ointment for investors is of course that you might outlive your physician's prognosis, meaning that when the Angel of Death came for you at the appointed time you told him to take a hike and don't come back until much later. This danger, from the investors' view, arises primarily from advances in medical technology. What might have been sure death a couple of years ago, might become defeatable or at least put into long term remission.

Such was the case with many of the AIDS patients. As medical technology progressed, some of the patients start living longer while with others the AIDS went into remission altogether and they are still alive. Doubtless, there are few investors out there who have been waiting a couple of decades now to cash in on the life insurance policies that they long-ago bought, and there probably are not just a few cases where the AIDS victims have now outlived the investors in their policies.

Eventually, the same thing started happening with cancer patients who also refused to cash in their chips at the appointed time, and investors were no longer willing to take anything but the very worst cases, where no advance in medical technology was going to make a difference. This selectivity started causing a lot of fraud in the viaticals market, as people who actually weren't very sick at all started portraying themselves at death's doorstop and repeatedly sold policies on their own lives. Then, some viatical fraudsters simply collected money from investors and never even invested in policies. This and similar fraud caused the viaticals market to be viewed as very sleazy (as if dealing in death wasn't sleazy enough in the first place), thus inviting state regulators in to further muck up the process with red tape, and driving would-be investors out. More on viaticals fraud at http://www.quatloos.com /Viaticals_ Fraud_scam.htm

Life Settlements

So the viaticals mess left a multi-billion dollar business with relatively few real victims of disease to buy policies from. But one of the great things about America is the ingenuity of our capital markets, and their ability to not just let money sit around but to put it to work. It was just about when the viaticals markets were starting to fall apart that some very bright person looked at the situation and said,

"Hey, what about people who aren't terminally ill, but whose health has gone down since they originally bought their policy? Since the insurance companies are prohibited from lowering benefits to reflect their poor health, their policies are worth a lot more than their surrender value."

Thus was born the concept of investing in the life insurance policies of the elderly, or what is known as "life settlements".

Assume that you have an old codger who is 65 and had a significant decline in health, such as a stroke or major heart attack (their medical records include physician's comments to the effect of "one foot in the grave" or "quite surprised to see him again"), but who once upon a time bought a $1 million life insurance policy. The old codger has since raided all the cash value out of the policy to fund his medical treatments and early retirement. Indeed, because of his age the cost of insurance is now rapidly increasing meaning that the old codger will either have to put more money into the policy or it will expire anyway. His problem is that he doesn't have any more money to put into the policy unless he borrows against the equity in his home or something, which he really doesn't want to do.

Keep in mind that by this time the old codger has forgotten what he bought the life insurance for initially, which was both for tax-free growth and to leave something for his kids. Because it no longer has cash value for him to access, and because he has forgotten that it will pay out a large amount of money to his kids if he keeps it up, it to him is a wasting asset that he would love to get rid of. The life insurance has basically become a "What have you done for me lately" sort of investment, and thus emotionally the old codger is much more willing to hold it than, say, stock in IBM which hasn't paid him much in the way of dividends but still has dramatically appreciated in value.

A quick glance at your handy pocket guide to Actuarial Tables & Life Expectancies reveals that the old codger is supposed to die, on average, within five years. So, you go to the old codger and say, "Hey, I'm willing to buy your life insurance policy from you for $500,000 paid immediately." From your viewpoint, this is a good investment. If he cashes it in by 70 as predicted, then you get paid $1 million on the policy, meaning that you've made $500,000 over 5 years (less any premiums you have to pay to keep the policy up). In round numbers, this is a $100,000 per year pre-tax profit on your original $500,000 investment. That 20% annual pretax return doesn't look too shabby against current interest rates, and the insurance company is arguably much more solvent than any bank. Gosh, even if the old codger lives to 75, it's still not a bad investment, since then you're still making 10% per year. And the odds of the old codger living past 75 (and giving your corporate bond like rates) are somewhat offset by your hope that he will cash it in before 70 meaning that you made a wonderfully nice profit.

As an aside, most of the investors in life settlements are large financial firms and hedge funds who are looking for something that has at least the safety of high-grade corporate bonds, but with a high return (since bond yields are still intolerably low). These firms buy many, many life settlements and pool them together. While these firms can not, of course, predict when a particular old codger will finally kick the bucket, they can employ the Law of Large Numbers to get a pretty good actuarial feel for when most of the policies will pay, thus allowing them to calculate their expected yield for the pool - and sell slices of the pool to investors looking for safe, higher yielding investments.

Who Loses With Life Settlements?

From the old codger's viewpoint, it is a great deal for him too. Since he couldn't afford to make current payments to keep the policy up anyway, in his mind the value of the policy was a precisely calculated "$0". And here you come along and give him $500,000 hard cash for it. Sucker!

Wait, you say, how can this "win win" situation be? Not everybody can be a winner in a transaction, right?

Absolutely right. In this situation there is a loser, and a big loser too. It is the old codger's kids. Had the old codger kept the policy alive, his kids would have been big winners at his death - just like the investors will be, and even more so since unlike the investors the kids will not have to pay income taxes when the policy pays off (although the old codger's estate may have to pay federal estate taxes, depending on what happens with estate tax repeal).

In other words, if this transaction makes so much sense for the investors, it makes even more sense for the old codger's kids. Basically, the old codger is giving up a very valuable future asset for basically pennies now - it is simply not a good trade. However, few of the life insurance salesmen tell their clients to engage in life settlements really work to advise their clients that it is a bad trade to settle their life insurance policy instead of keeping it alive.

Keep Bessie, throw out BofA,UBS,GS & OpCrap

Time Capsule Post (2010 Forecasts) — Open One Year Hence
By Invictus - December 17th, 2009, 8:00AM

I hereby invoke Bob Farrell’s Rule #9: When all the experts and forecasts agree — something else is going to happen.

Let’s look at the forecasted year-end 2010 levels for the S&P500 and S&P500 earnings:


Firm Strategist 2010 Close 2010 EPS
Bank of America David Bianco 1275 73
Bank of Montreal Ben Joyce 71
Barclays Barry Knapp 1120 66
Citigroup Tobias Levkovich 1150 72.5
Credit Suisse Andrew Garthwaite 1125 76
Deutsche Bank Binky Chada 1260 77.8
Goldman Sachs David Kostin 1250 76
JP Morgan Thomas Lee 1300 80
Morgan Stanley Jason Todd 70
Oppenheimer Brian Belski 1300 70
RBC Myles Zyblock 1200 72
UBS Thomas Doerflinger 1250 80

Mean 1223 $73.69
Median 1250 $72.75
High 1300 $80.00
Low 1120 $66.00

HOV Numbers Good- Only a Quarter Billion Subsidized Loss!

Hovnanian posts another quarterly loss
By MarketWatch

BOSTON (MarketWatch) -- Hovnanian Enterprises Inc., the home builder that hasn't posted a quarterly profit since fiscal 2006, late Wednesday reported a loss for its latest quarter as revenue dropped.

The Red Bank, N.J.-based company /quotes/comstock/13*!hov/quotes/nls/hov (HOV 3.94, -0.29, -6.86%) reported a fiscal fourth-quarter net loss of $250.8 million, or $3.21 per common share. That compares to a net loss of $450.5 million, or $5.79 per common share, in the year-earlier period.

Mortgage fix elusive for many

Recent evidence suggests housing is rebounding, but many mortgage holders who face financial problems because of the recession have a tough climb to modify their loans and keep their homes out of foreclosure.

Revenue was $437.4 million in the latest quarter, versus $721.4 million in the same quarter a year ago, the Red Bank, N.J.-based company added.

Analysts polled by Thomson Reuters had forecast a quarterly loss of $1.72 a share on revenue of $464.1 million, on average.

Hovnanian shares fell 6.6% to $3.95 during after-hours trading on Wednesday.

Hovnanian shares jumped 11% during regular trading after the Commerce Department reported U.S. housing starts rose about 9% in November, topping estimates, following a sluggish October.
Congress recently extended the $8,000 tax credit for new-home buyers, and offered a new $6,500 credit for some move-up buyers.

"Home builders responded to the extension and broadening of the home-buyers' tax credit, but another test remains for the market as the tax credit is now set to expire at the end of April 2010," economists at PNC said.

Indeed, an index of home-builder confidence fell in December, according to a report earlier this week. The benchmark fell to 16 in December from 17 in November, the National Association of Home Builders reported Tuesday. The index is at the lowest level since June.

Hovnanian's chief executive, Ara Hovnanian, at a builder conference last month hosted by UBS said there are signs the housing market has overcorrected and should be ripe for a recovery. Yet he cautioned the market is still shaky.

"I don't want to paint the wrong picture that we see everything with rosy glasses. There are still many challenges in the marketplace today," the CEO said.

"The unemployment rate, obviously, that's a concern," Hovnanian said. "We've had, since World War II, several periods of double-digit unemployment rates. We have it again. It could go higher. That is clearly a risk."

Another headwind is rising foreclosures as more borrowers run into trouble paying their mortgages in the recession. A wave of foreclosures would only add to the inventory glut of unsold homes on the market.

"What we haven't had [in previous housing cycles] is the foreclosures that we have today," Hovnanian said. "Clearly, there's great risk that there are going to be, for the short-term, more foreclosures coming to the market. And it's hard to know how that will play out."

Permutter is a criminal with talking points, why isn't he arrested?

Actually mentioned the "New Deal" 3 times, and the wild west twice. Can't these ****ers think for themselves?

----------
"The Data Do Not Lie", Mr Mortgage (aka Hedgefundmanip), April 16th March Foreclosure Crisis Video.

House passes bank regulatory reform bill, complete with a gaping loophole
Bob CescaBob Cesca RSS Feed
Dec 14th 2009 at 12:00PM
http://www.walletpop.com/blog/2009/12/14/house-passes-bank-regulatory-reform-bill-complete-with-a-gaping/

Filed under: Recession
magicThe House finally passed its financial regulatory reform bill today by a 21-vote margin. Apparently, there are 202 members of the House, Republicans and Democrats, who aren't interested in clamping down on the too-big-to-fail financials that helped to get us into this mess. While there are a lot of great things in the bill, there are also some gigantic loopholes.

One of the loopholes involves exempting some of the largest banks from regulatory oversight contained within the bill and its newly formed Consumer Financial Protection Agency.

We can thank Rep. Ed Perlmutter (D-CO) for making this happen.

According to Sam Stein at the Huffington Post, Perlmutter engaged in a parliamentary trick in order to write into the record the "intent" of the bill with regards to the largest financial institutions, thus creating a gigantic opening for them to wiggle through and escape oversight. This after he tried and failed twice to pass such a loophole as a legitimate amendment.

Perlmutter's actions have been matched almost perfectly with a series of contributions from the same groups that would benefit most from the loophole.

Over the last couple of months, Stein reports, Perlmutter has collected cash from the Independent Community Bankers of America PAC ($3,500), the American Bankers Association PAC ($5,000), the Credit Union National Association PAC ($2,500), and U.S. Bancorp's PAC ($5,000). All of this since September. Oh, and by the way, he owns around a quarter of a million dollars in U.S. Bancorp stock.

It was this exact brand of collusion between Congress and financials that plunged us into this quagmire in the first place, and now, within the bill that's supposed to prevent another disaster, they've done it again. And while we're busily hyper-evaluating the usual suspects, it's nobodies like Perlmutter who dash between the rain drops practically undetected and wreak the most damage.

Too-big-to-fail gets a loophole from too-small-to-be-noticed.

Extended Benefits Recipients Approach 5 MILLION

Initial Jobless Claims in U.S. Unexpectedly Increase
By Timothy R. Homan

Dec. 17 (Bloomberg) -- More Americans than anticipated filed first-time claims for unemployment benefits last week, a reminder that the labor market will take time to strengthen and may weigh on the economic recovery.

Initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12, from a revised 473,000 the prior week, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance was little changed in the prior week, while those getting extended payments increased.

Federal Reserve policy makers yesterday said weakness in the labor market is restraining consumer spending, which accounts for about 70 percent of the world’s largest economy. Concerns over the lack of jobs prompted the central bank yesterday to reiterate a pledge to keep the benchmark interest rate low for an “extended period.”

“The level of new claims remains elevated,” said Steven Wood, president of Insight Economics LLC in Danville, California. “The labor market is improving, but remains soft.”

Stock-index futures were down after the report as Citigroup Inc. sold stock for a price so low the U.S. government delayed plans to shrink its one-third stake. The contract on the Standard & Poor’s 500 Index fell 0.9 percent to 1,096.2 at 8:49 a.m. in New York. Treasury securities rose.

Exceeds Forecast

Jobless claims were projected to drop to 465,000 from 474,000 initially reported for the prior week, according to the median forecast of 43 economists in a Bloomberg News survey. Estimates ranged from 450,000 to 475,000.

The report showed the four-week moving average of initial claims, a less volatile measure, fell to 467,500 last week, the lowest level since September 2008, from 472,750.

Continuing claims increased by 5,000 in the week ended Dec. 5 to 5.19 million. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

Today’s report showed the number of people who’ve use up their traditional benefits and are now collecting extended payments jumped by about 144,000 to 4.73 million in the week ended Nov. 28. Seventeen of the 50 states and territories where workers are eligible to receive the government’s latest 13-week extension have begun to report that data, a Labor Department spokesman said.

No Bears Left, Only Dead Shorts Carcasses

Investors Intelligence

print Print | 1 Month | 3 Months | 6 Months | 1 Year | 2 Years

Date Published Percent Bullish Percent Bearish
12/16 52.2 16.7
12/09 48.4 16.5
12/02 50 16.7
11/25 50.6 17.6
11/18 46.1 21.3
11/11 44.4 26.7

$38 Billion Tax Break Granted to Citigroup to Help Improve the TARP Results
"Change We Can Believe In" - No Taxes for Bailed Out Corporations!
http://jessescrossroadscafe.blogspot.com/2009/12/38-billion-tax-cut-granted-by-irs-to.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

Maybe it's a mistake. Did Timmy have time to run their return on TurboTax?

Well, at least it will make the results of the TARP program look better on paper if it drives up Citi's stock price by inflating their financial results. That's a plus, right?

I guess raising the credit card rates to 26% and free money from Ben was not enough to push Citi over its capital objectives in time for bonus season. We'll all have to really tighten our belts for this one.

Change you can believe in.

Washington Post
Citigroup gains massive tax break in deal with IRS
By Binyamin Appelbaum
Tuesday, December 15, 2009; 8:05 PM

The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis.

The Internal Revenue Service on Friday issued an exception to longstanding tax rules for the benefit of Citigroup and the few other companies partially owned by the government. As a result, Citigroup will be allowed to retain $38 billion in tax breaks that otherwise would decline in value when the government sells its stake to private investors.

While the Obama administration has said taxpayers likely will profit from the sale of the Citigroup shares, accounting experts said the lost tax revenue could easily outstrip those profits.

The IRS, an arm of the Treasury Department, has changed a number of rules during the financial crisis to reduce the tax burden on financial firms. The rule changed Friday also was altered last fall by the Bush administration to encourage mergers, letting Wells Fargo cut billions from its tax bill by buying the ailing bank Wachovia.

"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," said Robert Willens, an expert on tax accounting who runs a firm of the same name. "I've been doing taxes for almost 40 years and I've never seen anything like this where the IRS and Treasury acted unilaterally on so many fronts."

Treasury officials said the most recent change was part of a broader decision initially made last year to shelter companies that accepted federal aid under the Troubled Assets Relief Program from the normal consequences of such an investment. Officials also said that the ruling benefited taxpayers because it made shares in Citigroup more valuable and asserted that without the ruling, Citigroup could not have repaid the government at this time. (Thank God. Just in time for prime bonus season - Jesse)

"This guidance is the part of the administration's orderly exit from TARP," said Treasury spokeswoman Nayyera Haq. "The guidance prevents the devaluing of common stock Treasury holds in TARP recipients. As a result, Treasury can receive a higher price for this stock, which will benefit the financial system and taxpayers." (George Orwell would have fun with this one. Let's give them a lot more money, so that when they give some back it will make our government program look better - Jesse)

Congress, concerned that the Treasury was rewriting tax laws, passed legislation earlier this year reversing the ruling that benefited Wells Fargo and restricting the ability of the IRS to make further changes. A Democratic aide to the Senate Finance Committee, which oversees federal tax policy, said the Obama administration had the legal authority to issue the new exception, but Republican aides to the committee said they were reviewing the issue.

A senior Republican staffer also questioned the government's rationale. "You're manipulating tax rules so that the market value of the stock is higher than it would be under current law," said the aide, speaking on condition of anonymity. "It inflates the returns that they're showing from TARP and that looks good for them." (And a nice accomplishment for Timmy's year end performance review - Jesse)

Health Care Blackmail from the Big Zero-Like 9-11 and TARP

President Obama: Federal Government 'Will Go Bankrupt' if Health Care Costs Are Not Reigned In

December 16, 2009 3:01 PM
ABC's Karen Travers reports from Washington:

President Obama told ABC News’ Charles Gibson in an interview that if Congress does not pass health care legislation that will bring down costs, the federal government “will go bankrupt.”
The president laid out a dire scenario of what will happen if his health care reform effort fails.

Gibson Obama “If we don't pass it, here's the guarantee….your premiums will go up, your employers are going to load up more costs on you,” he said. “Potentially they're going to drop your coverage, because they just can't afford an increase of 25 percent, 30 percent in terms of the costs of providing health care to employees each and every year. “

The president said that the costs of Medicare and Medicaid are on an “unsustainable” trajectory and if there is no action taken to bring them down, “the federal government will go bankrupt.”

“This actually provides us the best chance of starting to bend the cost curve on the government expenditures in Medicare and Medicaid,” Obama said.

Watch Charlie Gibson’s interview with President Obama tonight on World News and check back on ABCNews.com for the full interview.

Obama told Gibson that anybody who says they are concerned about the rising deficit or worried about tax increases in the future has to support this health care bill.

“Because if we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget,” the president said.

Obama is facing an increasingly skeptical American public when it comes to his push for health care reform.

The latest ABC News/Washington Post poll found that support for the health care reform package, while never robust, is now at a low ebb and opposition has been steadily growing stronger in intensity.

For the first time, a majority of those surveyed disapproved of the president’s work on health care (53 percent) and oppose the health care reform package making its way through Congress (51 percent, compared to 44 percent approval).

That seven-point margin for opposition is its most to date -- indeed statistically significant for the first time -- and the differential in intensity of sentiment has grown since September.

More on the ABC News/Washington Post poll HERE.

December 16, 2009 | Permalink | Share | User Comments (331)

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And if the "stimulus" package wasn't passed Obama said we'll see 8% unemployment. It passed and we're well past his uneducated promise of 8% unemployment. If health care reform doesn't pass by New Years' Day, the world will end. Sorry, B.O., we're not buying your schtick anymore.

Posted by: s | Dec 16, 2009 3:14:00 PM

I am so tired of the same ole politics. The republicans have made so many road blocks and refuse to work together that people begin to sour on healthcare reform. Sour? You shouldn't sour - you should get mad! Angry! When is this country going to be able to resolve anything when all they do in Washington is play politics and all to their own ends... never caring what the American people need or think! We should be
on the lawns of the capital demanding our senators and congress pass a comprehensive healthcare package by end of January - Stop the politics - Do what is right for the people!

Fannie, Freddie, Forgotten In Reform Bills, May Ask Government For MORE Money

Huffington Post | Ryan McCarthy
First Posted: 12-16-09

Those who assumed that the recent round of TARP repayments by Citigroup and Wells Fargo signaled an end to the bailout era may want to think again.

Forgotten in all of the recent outrage over soaring bank profits and Wall Street bonuses are two bloated, bailed-out institutions that are are increasingly exposing taxpayers to hundreds of billions in losses. Bloomberg reports that Fannie Mae and Freddie Mac, the government-sponsored companies that guarantee or own nearly half of all U.S. mortgage debt, are likely going back to the government for more money.

Fannie and Freddie are seeking an increase in their $400 billion government lifeline and claim that they can no longer afford to pay dividends to the government, Bloomberg notes. Cumulatively, the two companies have lost $188 billion in the last nine quarters, and have used approximately $112 billion in capital from the government this year. As they continue to hemorrhage money, the firms are balking at the annual dividend they are required to pay to the government, which amounted to about $5 billion each this year.

Fannie and Freddie's call for more money comes at time when much of the public discourse from policymakers has focused on bailed-out banks and financial reform. But the two companies, referred to as government-sponsored entities (GSEs), seem to be preparing themselves for the possibility of future losses. Here's the Wall Street Journal:

"The politics of any decision are thorny. If the Treasury doesn't increase the reserves now but needs to do so next year, it would have to appeal to a bailout-weary Congress in an election year. But upping its reserves now could remind taxpayers they still bear significant risk for the government's rescue of the financial system."

As the HuffPost's Ryan Grim has reported, Fannie Mae and Freddie Mac are not only huge, massively-subsidized firms, they also lack their own independent watchdog.

Which may be part of the reason why Fannie and Freddie seem to have been largely overlooked in the latest financial reform bills. At Time.com, Justin Fox wonders why:

The lynchpin part of the nation's financial system that is effectively owned by the government, the government has yet to ring in on. We've got proposed changes for credit rating agencies, over-the-counter derivatives, hedge funds, the insurance industry, executive compensation, institutions that are "too big to fail," even individual home loans--but not for the two government-sponsored entities that own or guarantee half of the nation's $11 trillion mortgage market.


To be fair, the Feds are working on it. And it's probably better to take more time and get this right--or as close to right as is possible--than to rush ahead willy-nilly. Still, it's a little annoying that there seems to be plenty of time for topics like creating jobs, which the federal government can't really do much about anyway, and yet not for figuring out how to deal with the $111 billion albatross hanging around taxpayers' necks.

Story continues below


In an interview with Time for its "Person of the Year" feature, Fed Chairman Ben Bernanke hinted at the sheer size of the exposure that the U.S. taxpayer has to the mortgage market through Fannie and Freddie. (John Carney has also written about this subject at length) Here's Bernanke, who seems to be suggesting the government's support for Fannie and Freddie will only deepen -- or, rather, he seems to be bragging about the GSE's accomplishments:

We've purchased about $1 trillion worth of mortgages that are guaranteed by Fannie Mae and Freddie Mac, and the U.S. Treasury. And in doing those purchases, we have succeeded in reducing the national 30-year fixed-rate mortgage rate from about 6-1/2% to about 4.8%. By lowering mortgage rates that way, we have helped to stabilize the housing sector, to help stabilize the housing crisis, and allow people to refinance, to buy homes. And that, obviously, should get construction started again and house prices stabilizing, and people being able to meet their mortgages. That's obviously going to be helpful.

Oil Companies Paying to Promote "Cap & Tax"
http://www.cbsnews.com/blogs/2009/12/10/taking_liberties/entry5964504.shtml

CBS News, meanwhile, reports that "the largest U.S. physicists' association is finding itself roiled by internal dissent and allegations of conflict of interest over a forthcoming review of its position statement on man-made global warming":

The scientist who will head the American Physical Society's review of its 2007 statement calling for immediate reductions of carbon dioxide is Princeton's Robert Socolow, a prominent supporter of the link between CO2 and global warming who has warned of possible "catastrophic consequences" of climate change.

Socolow's research institute at Princeton has received well over $20 million in grants dealing with climate change and carbon reduction, plus an additional $2 million a year from BP and still more from the federal government. In an interview published by Princeton's public relations office, Socolow called CO2 a "climate problem" that governments need to address. . . .

Hal Lewis, a professor emeritus of physics at the University of California, Santa Barbara who has been an APS member for 65 years, says that he asked both the current and incoming APS presidents to require that Socolow recuse himself from a review of this subject, and both refused.

That means the review will be "chaired by a guy who is hip deep in conflicts of interest, running a million-dollar program that is utterly dependent on global warming funding," Lewis says.

The BP connection is especially rich. Apparently global warmists see no problem so long as they're the ones being bankrolled by Big Oil.

Australia's ABC News, meanwhile, reports that "Inuit communities need funds to adapt to climate change in the Arctic, including measures to build communal deep freezers to store game, an Inuit leader said on Friday." That's right, global warmists are selling iceboxes to Eskimos! What's next, bringing coal to Newscastle?

So does a nutball like Obama Science "Advisor" Holdren

First a global cooling fearmonger in the 70s and early 80s, he got excited about the policy/political rigging of the "climate change" world. Chemtrails is an anti-warming scheme to spray clouds with aluminum dioxide and barium (get it? sterilization)- Holdren has rolled out nationwide (Dallas, Seattle, LA, etc..)

http://www.articlesbase.com/environment-articles/obama-considers-chemtrails-875865.html

"President Obama is full of surprises. But even expectant reporters were taken aback when White House science adviser John Holdren used his first interview on April 18, 2009 to announce, “Global warming is so dire, the Obama administration is discussing radical technologies to cool Earth's air.”

With the first feedback effects from methane releases starting to kick in and our space colony’s atmospheric CO2 levels surging toward the “Do Not Exceed” redline of 440 parts per million, Holdren declared that the Obama administration is considering “last resort” technologies to chill the global greenhouse village – aka the worldwide ‘hood.

Is the Obama administration about to “out” chemtrails? Referring to “radical” technologies that include spreading a sunlight-reflecting artificial cloud cover, Holdren declared, “It's got to be looked at. We don't have the luxury of taking any approach off the table.” "

Punk'd: Time Picks Heli Ben as "Man of the Year"- Americans DON'T Trust Him and He is a corrupt liar- "couldn't see the housing bubble coming"

Americans Think (KNOW) Federal Reserve Chairman Ben Bernanke Prefers Wall Street Over Main Street

First Posted: 12-16-09 07, HuffingtonPost

By a better than two-to-one margin, Americans think Federal Reserve Chairman Ben Bernanke puts Wall Street ahead of Main Street, according to a new poll by a liberal advocacy group.

The poll numbers come on the eve of a crucial confirmation vote in which senators will decide whether Bernanke should keep his job. Already, at least five Democratic and Republican senators have placed "holds" on his nomination, temporarily blocking it from moving forward.

The poll, commissioned by the Progressive Change Campaign Committee (PCCC) and Democracy for America, recently asked more than 800 voters a simple question: "Who do you think that Federal Reserve Chairman Ben Bernanke cares about more, Wall Street or Main Street?"

Forty-seven percent of respondents said Bernanke favors Wall Street; 20 percent said Main Street; the rest weren't sure.

The results were largely similar across party lines, geography, sex, race and age. Independents, however, said they think Bernanke favors Wall Street by a three-to-one margin, the highest disparity recorded by the poll.

"This poll proves that Americans simply don't trust Ben Bernanke. Any senator who votes to confirm Ben Bernanke will make a statement that they care more about Wall Street bankers than their constituents," Aaron Swartz, PCCC's co-founder, said in an e-mail. "If Bernanke was smart, he'd withdraw his name."

OT- Good post, actually, I do believe in human causation BUT I don't want the UN or the IMF to tax developed countries to PAY for our global warming while India and China ignore it. Frankly, I have seen the free vs fair trade debate first hand and the transfer of the American manufacturing jobs overseas for what? Again, the issue on CRU was that they were served with a FOIA request- ignored, ignored and then leaked by a whistleblower! Phil Jones, "Scientist", says "delete emails" to his other climate change criminals. Oh, they have to pledge loyalty to the Met Office in the UK or they lose their lab funding... Oh, don't ask about the falsified data (now destroyed) at Copenhagen. Dissenters shut down, arrested or (get this) "detained for 12 hours" pre-emptively because some cops in COP15 say you might commit a crime!

Gee, look at how well FOIA requests in the US and UK are being complied with: Madoff, Bloomberg, OTS for WaMu, etc...

Yeah,WaMu Collapse Investigation-NOTHING TO SEE, LITERALLY!

The fight for WaMu documents- Getting Stonewalled
Friday, December 11, 2009, 6:35pm
http://seattle.bizjournals.com/seattle/blog/2009/12/the_fight_for_wamu_documents.html

The Puget Sound Business Journal for months has asked the Office of Thrift Supervision (OTS), the federal agency that regulated Washington Mutual, to release internal communications between WaMu's regulators.

The newspaper made its requests under the U.S. Freedom of Information Act, the decades-old law that requires federal agencies to disclose public documents.

Of particular interest were internal emails, which could help explain why regulators seized the bank in September 2008 even though WaMu appeared to meet regulatory standards for operating banks, despite its burden of bad loans. (You can read the second installment of our six-month investigation about that decision here. The first in the series, about the bank's final days is here.)

On Wednesday, an OTS official told the Business Journal in an email: “After careful review, I have determined that your request, as it pertains to the above-referenced documents, is denied in full.”

The email cited exemptions to the FOIA that protect records concerning the operations of financial institutions and protect inter-agency communication.

The denial came a day after the Obama Administration announced an open-government directive to its agencies, including the U.S. Department of the Treasury, which oversees the OTS.

The White House press release said: “Today’s announcement will help to make government more open, transparent, and accountable to bridge the gap between the American people and their government."

President Barack Obama has promoted the notion of open government before. As soon as he took office, Obama issued a directive that said: “The Freedom of Information Act should be administered with a clear presumption: In the face of doubt, openness prevails.”

Under the Freedom of Information Act, the Business Journal has received several hundred pages of government emails about WaMu, written during its final months, in which almost all of information is blacked out. Some of those "redacted" emails are posted here.

These emails were released by the Federal Deposit Insurance Corp., another government agency in charge of WaMu. In withholding the information, the FDIC cited similar exemptions regarding banking secrecy, often using FOIA exemption 8, which allows the government to redact information related to the regulation or supervision of financial institutions.

WaMu ceased to be a regulated institution when government officials shut it down more than a year ago.

The OTS, meanwhile, has released no communication between its regulators in response to the Business Journal FOIA requests initially filed in June.

Both agencies have declined repeated requests to answer questions about how they decided to close WaMu. WaMu is just one of 155 financial institutions closed since the housing crisis got under way in 2008, including six closed so far this month.

Under FOIA, agencies are required by law to provide information within 20 days.

Gore and the Copenhagen Fraud to Politicize Science
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/column_gore_is_grossly_careless_or_a_barefaced_liar

Al Gore has studied the Climategate emails with his typically rigorous eye and dismissed them as mere piffle. No way did these leaked emails discredit his global warming crusade, he assured Slate magazine. And you’d trust him, wouldn’t you? Like you trust our own doom-preaching Tim Flannery, for all his false predictions, dodgy memory, vested interests and frequent flying hypocrisy.

Yes, you trust Gore, this Nobel Prize laureate and Oscar winner, when he tells you that the leaked emails from the University of East Anglia’s Climatic Research Unit don’t in fact show that the world’s most influential climate scientists used “tricks” to “hide the decline” in temperatures.

You trust him when he also denies that they show this powerful clique of scientists destroying inconvenient data, committing fraud, censoring sceptical scientists and privately admitting to doubts about the warming theory they publicly scream is settled.

No way would Gore cover up such stuff in defending his warmist cause, right? No way, even if a British judge did rule that his film An Inconvenient Truth contained at least nine very convenient untruths. No way, even if he’s now the first man to reportedly make $1 billion from the global warming scare he did so much to create.

So you would believe Gore when he now gives his word - his considered opinion - that the Climategate emails are “sound and fury signifying nothing”. As he explained: “I haven’t read all the emails, but the most recent one is more than 10 years old.
“These private exchanges between these scientists do not in any way cause any question about the scientific consensus.”

Huh? Just in case you think that was a mere slip of the tongue, here’s Gore again, dismissing the very idea of warmist scientists hiding data, as the emails actually revealed:

“I think it’s been taken wildly out of context ... An email exchange more than 10 years ago including somebody’s opinion that a particular study isn’t any good is one thing, but the fact that the study ended up being included and discussed anyway (in IPCC reports) is a more powerful comment on what the result of the scientific process really is.”

In fact, three times did Gore claim these 4000 Climategate emails and documents - leaked by a whistleblower - were of no account, being a decade old: “What we’re seeing is a set of changes worldwide that just make this discussion over 10-year-old emails kind of silly.” (Four times now: see video above.)Fact-check time. Let’s see whether Gore’s word is worth a dime.The truth is that the most recent Climategate email is from November 12, 2009 - just a month ago. The email in which IPCC leader author Kevin Trenberth privately admits “we cannot account for the lack of warming at the moment and it is a travesty that we can’t” is dated October 12, 2009. Only two months ago.

The infamous email sent by CRU chief Phil Jones, ordering four other Climategate scientists to “delete any emails” that sceptics had asked to check, dates from just last year.

THEN there are the damning emails from Australian Climategate scientist Tom Wigley, in which he seems to me to choke on the deceit he’s witnessing. (He now denies this.)

In these emails Wigley privately blasts his colleagues and the IPCC for “dishonest presentations”, rightly suggests a university covered up an apparent fraud by a Climategate scientist, accuses another Climategate scientist of using “very deceptive” evidence, demands to know why dodgy data was used to falsely “prove” recent warming, and warns the Climategate conspiracy that “withholding data is still a hot potato” and “looks like hiding something”.

Every one of those Wigley emails was sent this year, and most within the past two months. This is not stale correspondence but a lividly fresh scandal with devastating implications. So now the questions.

How closely did Gore read these emails? Did he actually read any at all? Was he lying or just grossly mistaken in telling you they were old news of no account? What else has he got wrong - deliberately or otherwise - while terrifying the world about a warming that actually stopped, or paused, in 2001?

The fact is you have been lied to by many people for a long time, and the media has betrayed you by not holding the liars to account. Too much is now at stake for us to tolerate the stifling of debate for an instant longer.

Glass-Steagall's Renewal After 1999 Repeal Considered by House, Hoyer Says

The U.S. House is considering reinstituting the Depression-era Glass-Steagall Act, which barred bank holding companies from owning other financial companies, Majority Leader Steny Hoyer said today.
A renewal of the 1933 law “is certainly under discussion” by House members, Hoyer, a Maryland Democrat, told reporters in Washington. The Glass-Steagall law was repealed in 1999. Hoyer made the comments when asked whether Congress and the Obama administration could do more to persuade banks to make more business loans to get credit flowing into the economy.“As someone who voted to repeal Glass-Steagall, maybe that was a mistake,” Hoyer told reporters.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=arM...

Wal-Mart settles wage and hour claims for $40 million…
www.footnoted.org

Wal-Mart-For the second time in the past week, a major corporation has settled a lawsuit for $40 million. As we footnoted last week, Dell (DELL) quietly disclosed in its Q that it had settled a shareholder lawsuit for $40 million. And then yesterday, Wal-Mart Stores (WMT) disclosed in its 10-Q that on Oct. 19 it had settled a long-running wage and hour dispute in Massachusetts for $40 million. Needless to say, Wal-Mart never put out a press release on the settlement, though the Boston Globe reported on the settlement last week and called it the biggest wage-and-hour settlement in Massachusetts history.

Granted the $40 million is small change for a company of Wal-Marts size. But given the number of wage and hour lawsuits that Wal-Mart faces — the Q only describes the number as “various” — one can see how these settlements could start to pile up, especially if some folks start smelling settlement. Keep in mind that last December, Wal-Mart paid $640 million to settle 63 state and federal lawsuits that were also related to wage and hour laws, which works out to just under $10 million per suit. Here’s how Wal-Mart describes the wage-and-hour issues in the current Q:

The Company is a defendant in various cases containing class-action allegations in which the plaintiffs are current and former hourly associates who allege that the Company committed wage-and-hour violations by failing to provide rest breaks, meal periods, or other benefits, or otherwise by failing to pay them correctly. The complaints generally seek unspecified monetary damages, injunctive relief, or both. The Company cannot reasonably estimate the possible loss or range of loss that may arise from these lawsuits, except where the lawsuit has been settled or otherwise as noted below and described elsewhere in this Form 10-Q.

The filing then goes on to describe two suits — the one in Massachusetts which was settled and a second one in Philadelphia which Wal-Mart lost two years ago and was ordered by a judge to pay $188 million. That case is currently under appeal. But how many other similar suits are out there remains a big mystery.

Floating storage of distillates nearly 100M barrels
(Gee, who may be expecting a near term war??)

Bloomberg: Refining margins, or the profit from turning oil into fuels such as gasoline and diesel, will remain weak in 2010 as demand stays subdued and new capacity starts, according to the Organization of Petroleum Exporting Countries.

“The product market in 2010 is expected to remain weak due to the excessive overhang in product inventories and slow recovery in industrial sector demand, especially middle distillates,” OPEC said today in a monthly report. “Current low utilization rates may be exacerbated in the coming year due to around 1 million barrels a day of new capacity expected to come onstream.”

The global recession cut demand for middle distillates, fuels such as diesel used to power factories and trucks, leading to lower operating rates at refineries, temporary closures, and sites being put up for sale as refiners tried to stem losses.

Worldwide margins fell to an average of $1.18 a barrel in this quarter up to Dec. 10, according to data by BP Plc. That compares to $5.19 in the last three months of 2008. BP's Global Indicator Margin is a broad measure of refining profitability.

Gasoil stockpiles in independent storage in the Amsterdam-Rotterdam-Antwerp area, Europe's oil-trading hub, are 54 percent higher than this time last year, according to consultant PJK International BV. Inventories of the fuel used in heating rose 7.3 percent to 2.84 million metric tons in the week to Dec. 10.

Oil-products stored at sea rose 18 percent in November because of rising futures prices and are expected to increase this month and next, the International Energy Agency said on Dec. 11. Floating storage of distillates rose to 98 million barrels at the end of last month from 83 million barrels in October, the Paris-based agency said.

OT, Drug money saved banks in global crisis, claims Antonio Maria Costa, head of the UN Office on Drugs and Crime

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

* Rajeev Syal
* The Observer, Sunday 13 December 2009

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.


This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.


Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered. "That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.


The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.


British bankers would want to see any evidence that Costa has to back his claims. A British Bankers' Association spokesman said: "We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks."

Yea, market musical chairs is coming-look at the pressure building in the Middle East...Jesse looks at Russia's demise

Propaganda, Western Style: Moscow Memories II
http://jessescrossroadscafe.blogspot.com/

As regular readers know, Le Proprietaire was doing business in Russia, mostly in Moscow and St. Pete, in the 1990's as part of the overall international business portfolio during his past corporate life.

It was an exciting and somewhat nerve-wracking experience, but one that vividly drove home certain lessons about government, currency, and the resilience of the human spirit that have served well in the following decade. Moscow Memories of 1997

I have to admit I was not aware of this series about Russia by the Wall Street Journal, given a long term preference for The Economist and The Financial Times. Thanks to Zero Hedge for bringing this story about it from The Nation (which I would have never read, being a long time conservative) about the Journal and Steve Liesman to light.

As someone involved there I can say that anyone who did not perceive the growing crisis was living in a bubble, or carrying some particularly optimistic slant in their outlook.

The decline of the Russian economy was oppressive, palpable, almost on everyone's mind. Hard to miss, even at the occasional showy party in English thrown by western corporations for an audience largely made up of ex-pats. The move out of the rouble into just about anything else with substance was becomng a groundswell, later to become unstoppable default. Any presentation about a Russian venture in the 1990's had better contain some plans regarding currency risk.

But why bring this up now? Le Cafe has no particular squabble with the Liesman, and since we do not watch CNBC anymore, are largely immune to whatever it is he says that does not appear in a youtube excerpt, generally involving his getting owned by Rick Santelli.

We bring it up because this article below exposes the typical modus operandi of the Western press, now and over the past twenty years. Carry a party line until the situation explodes, cover it up and distract the public with phony debates and verbal circuses, and then back to give breaking coverage of Armageddon, with a twist of shared guilt. No one is to blame.

Can you remember the coverage of the tech bubble of 2000 by the media? Giddy excitement as the numbers climbed higher, with reassurance as they turned down that this was just a temporary setback.

And I will never forget, as the stocks collapsed and people were wiped out, the CNBC regular arrogantly saying "Well, no one FORCED them to buy those stocks."

Keep this in mind, because we are nearing that point again, with the western media reassuring its public that all is well, while the insiders sell, and the grifters and grafters are draining the nation of its wealth, while the propaganda puppets mouth the slogans of the day. And after it blows up, they will shift gears without an afterthought, keeping the public mind moving on, trusting to the collective amnesia of a distracted populace.

As they said on Bloomberg this morning regarding the crisis just passed, 'We are all to blame; the regulators, the government, the rating agencies, the banks, and the public who was apathetic, who failed to act."

And then they moved on to let us know that Ashley Dupre will be providing a weekly advice column in the NY Post. Romance with a financial twist?

The difference here, at least it seems to me, is that the American public is still a believer in what the government says. The Russian people, at least by that time, did not. So perhaps there are a few more good years left.

A $200B Market Cap for Apple? Bubble Much?? What happens with the Google phone release?

Apple stumbles in China?
November 4, 2009 · 1 Comment
http://timdyson.wordpress.com/2009/11/04/apple-stumbles-in-china/

Thanks to a tweet by Joe Kingsbury I picked up on a news story on Street Insider which claims that in the first four days since the iPhonebroken-iphone went on sale in China a mere 5,000 have been sold. If that’s true it suggests that Apple’s largest potential market isn’t as in love with the device as western markets. Now if someone else were to market a smart phone that did become a hit in China, such as Nokia or Motorola, then perhaps Apple would start to feel the pressure in western markets before long.

UK facing debt downgrade- EU May Collapse (Good Riddance)
early election-PM Brown arrest

Bond Traders Put Pressure on Debt-Laden Nations
Jason Alden/Bloomberg News

The central bank of Britain, a country attracting the attention of investors seeking higher interest rates on the nation's debt.
http://www.nytimes.com/2009/12/14/business/global/14deficits.html?_r=3&ref=business

By LANDON THOMAS Jr.
Published: December 13, 2009

LONDON — The bond vigilantes are back. Gordon Brown, the British prime minister, may not view the country's deficit as a top priority, an analyst says. But this time they are roaming mostly through Europe rather than the United States — at least for now. Their mission: to force governments to cut budget deficits that have ballooned in the wake of the financial crisis.

As big investors in the credit markets, activist bond traders developed a fearsome reputation in the early 1990s by pushing up yields on Treasuries in order to force the government to tame large deficits. Their most famous target was a newly elected president, Bill Clinton, whom they pressured to abandon campaign promises of tax cuts.

Today, the bond market posse has set its sights on Europe — particularly Britain and Greece — where stagnant economies and high levels of government spending have led to the highest budget deficits in the region.

Although the left-leaning governments in both countries are struggling to show investors that they have a workable plan to reduce deficits — which now average around 13 percent of gross domestic product — bond traders are increasingly demanding higher interest rates to reflect the rising risks.

Bond traders last week pushed the spreads between Greek 10-year bonds and their benchmark German counterparts — a measure of investor confidence in the country — to highs of 250 basis points after the nation’s credit rating was downgraded, raising concerns over Greece’s ability to service its enormous debt.

In Britain, where the nation’s economy and finances have fallen so sharply that investors fear a possible downgrade of the country’s triple-A rating, bond traders are also taking a hard line. Last week, yields on gilts were pushed to their highest levels since the depths of the financial crisis, after the Labour Party issued a preliminary budget report that skimped on details of spending cuts. “There is a clear drop in confidence on the part of bond investors,” said Mark Schofield, a fixed-income strategist at Citigroup in London. “I think it is all beginning to unravel.”

The power of the bond trader to influence governments once prompted James Carville, Mr. Clinton’s political strategist at the time, to say that he wished to be reincarnated as one because “you can intimidate everybody.”

Mr. Clinton may not have been intimidated, but he did heed the advice of Robert Rubin, who joined the administration from his post at the top of Goldman Sachs, that a policy of budgetary restraint would keep the bond market happy and interest rates on United States government bonds low. Since then, the vigilantes have been largely in abeyance: As the global economy boomed, public sector deficits were not a concern for investors.

All that changed rapidly with the onset of the credit crisis last year. Bond traders surfed the global liquidity wave, buying up government debt all over the world in the view that, just as most big banks were too big to fail, so were sovereign economies, no matter how crushing their fiscal picture.

But Dubai World’s recent decision to delay payment on its debt has brought the crisis to reality for complacent bondholders. They have begun to demand that governments with large budget gaps start to pay higher interest rates on their bonds to reflect rising sovereign risk — a development that will lead to higher borrowing costs in countries like Britain, Greece, Ireland and Spain.

The United States and Japan also face unusually high debt levels, deepened by huge stimulus programs. For the time being, investors are still willing to lend to them at generous rates. But bondholders are running out of patience as the finances of even the wealthiest nations spiral downward.

As bond investors become more impatient, some European countries have taken aggressive fiscal action. In Ireland, the government this month presented the most severe budget in the nation’s history, largely to prove to wary bond investors that it was serious about cutting its own deficit. “There is a greater market focus now on who the fiscally vulnerable countries are,” said Michael Saunders, the head of European economics at Citigroup.

Britain falls into that category, he said, because the British Labour government, led by Prime Minister Gordon Brown, is facing a difficult election battle and appears more concerned with pleasing voters than investors. That could lead to a bond market rout if gilt holders, a large proportion of them foreign, come to the conclusion that cutting the deficit is not a top priority, he said.

In the euro zone, the European Central Bank’s interest in keeping inflation low means that it is likely to maintain a stable euro, leaving smaller European economies with no opportunity for a cheaper currency to help generate growth from exports.

As a result, governments in Portugal, Ireland, Greece and Spain have had to turn to increasingly skeptical bond markets to raise funds while waiting for their economies to recover through the far more painful process of squeezing wages and shedding jobs to restore competitiveness.

A recent report from Standard Chartered even suggested that weak euro members like Greece and Ireland might reconsider their ties to the union if investors pulled the plug and stopped refinancing their countries’ debts. “The idea that currency unions can’t break up is rubbish,” said Tim Congdon, an economist and professed euro skeptic who has advised Conservative governments in Britain. “The critical issue is whether governments can repay their debts in new currencies or euros once they leave.”

If they can pay back bond investors in new and cheaper currencies, then it is in the interests of countries like Greece to go out on their own, Mr. Congdon said.

But with other countries seeking the shelter of the euro and leaders like Angela Merkel of Germany hinting that the big powers would come to the rescue of Greece and other distressed countries if necessary, most economists argue that the euro zone is unlikely to crack.

Still, that has not stopped bond investors from talking up a new divergence trade in Europe — the flip side to the convergence trade earlier this decade, during which Irish, Greek and Spanish government bonds were bought on the theory that a grand economic harmony would sweep Europe.

UAE Joins Bailout World (Dubai)or Did They?

Or did they? It sure sounds that way....
http://market-ticker.denninger.net/

First, the Government of Abu Dhabi and the UAE Central Bank have agreed to provide important support.

Specifically, the Government of Abu Dhabi has agreed to fund $10 billion to the Dubai Financial Support Fund that will be used to satisfy a series of upcoming obligations on Dubai World.

You'll bail out the immediate maturing bond (you can call it a "sukuk" if you want; I call it a dodge to "comply" through fraudulent means a claimed absolute ban on the charging of interest, but then again, I tend to view anyone who creates artifices like "sukuk" as a fraudster.)

As a first action for the new fund, the Government of Dubai has authorized $4.1 billion to be used to pay the sukuk obligations that are due today. The remaining funds would also provide for interest expenses and company working capital through April 30, 2010 – conditioned on the company being successful in negotiating a standstill as previously announced.

In addition, the Government of Dubai is particularly focused on addressing the concerns of Dubai World trade creditors within the Emirate of Dubai. To help address these concerns, today the Government of Dubai is announcing that the remainder of the funds provided will be used for the satisfaction of obligations to existing trade creditors and contractors. Discussions with affected contractors will begin in short order.

Discussions eh? Uh, what's there to discuss? You have an invoice for completed work, why not just pay it? Why do I get the feeling that the "discussion" will be over what percentage of those invoices you will pay?

Next, the central bank is also prepared to provide support to local UAE banks.

But only local UAE banks. Everyone else can go stuff, right? Since most of the lending wasn't by UAE banks.....

Finally, today the Government of Dubai will announce a comprehensive reorganization law, a framework that is based upon internationally accepted standards for transparency and creditor protection. This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.

Oh really? Is the King's Land going to be subject to seizure? I doubt it.

Let's face the facts about Dubai - you've run an effective slave labor camp over there for the last decade - a practice that supposedly disappeared worldwide in the 1800s.

But in point of fact, effective human trafficking and slavery have not ended. It was, however, the necessary condition for "Dubai World" and its similar adjuncts to be a viable economic entity, given that Dubai has zippo for natural resources (unless you count the raw material for high-quality glass to be a natural resource, although it is not exactly in short supply - or expensive) and was entirely reliant on conspicuous consumption of oil revenue - which incidentally also seems to all belong to what amounts to absolute monarchies and those who they have enabled - for its continued "prosperity."

We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices. Dubai is, and will continue to be, a strong and vibrant global financial center. Our best days are yet to come.

Do those "best days" continue to include dumping raw sewage - complete with the condoms used by your Islamic friends who use Dubai as a place where they can ignore Islamic Law (provided you're one of the privileged rich) a few hundred yards from your "pristine" beaches?

Go have another hit off your hookah Sheikh. Your vision of a "global financial center" for those with too much money and too few brain cells will eventually be reclaimed by the desert, as it should be.

I continue to believe that the "infidels" will get hosed, and as noted above, there are plenty of weasel-words in your "statement" to keep anyone from claiming you lied through you teeth when the unilateral imposition of haircuts - against all but UAE-aligned interests, of course - begin.

Check out what happened to PIP after the BARDA conference last week
PharmAthene was supposed to be a stockpile player for anthrax. I am seeing signs that NIH is running out of authority to allocate new funds. They are telling researchers for long term basic research projects to "go look elsewhere" - So much for Obama's claim to return science to its rightful prominent place...

Agreed, no natural buying, next to zero volume on quad witching, Vix at 32.65, only active in C & BAC, volatility thru the floor in XLF. NDX, RUT; Threats from the EPS to IMPOSE Cap & Tax regardless, Soooo many loopholes in the financial "reform" bill,

OT-FF- STFU- You are part of the problem. Work for Baucus?
Report: Baucus' Girlfriend Worked on His Divorce While on His Staff
FoxNews.com ^ | 12/11/09 | Staff


Melodee Hanes, Baucus' former state director and now his live-in girlfriend, reportedly met at least twice with the Montana Democrat's divorce attorney to talk about the Baucuses' divorce eight months before the senator and his wife separated.

The last person to know that Sen. Max Baucus wanted a divorce may have been his wife of 25 years.

It appears that Wanda Baucus was in the dark even as a member of Baucus' staff -- Melodee Hanes, the woman who is now his live-in girlfriend -- was plotting out the senator's life without a wife.

Hanes, Baucus' former state director, reportedly met at least twice with the Montana Democrat's divorce attorney eight months before the senator and his wife separated

Father Fraud- Iran War to Crush your Crystal Ball

https://www.fibozachi.com/images/stories/TechniciansCorner/FTU/12-10-09/INDU%20Weekly.png

Greece, China, USA and the Euro - All Connected?
Bruce Krasting's picture
Submitted by Bruce Krasting on 12/10/2009 16:02 -0500

* .sovereign debt
* 200
* Bonds
* Budget Deficit
* China
* Debt
* Deficits
* Dollar
* EU
* Euro
* FX
* FX markets
* GDP
* Greece
* Gross Domestic Product
* Italy
* laws
* Markets
* money
* Spain
* Speculation
* Swiss Franc
* Switzerland
* Tax
* Tax Code
* taxes
* The dollar
* US
* USA
* WSJ



I spoke with some friends who are Greek and also in the shipping business. They hate the problems that Greece is facing. The 12.7% budget deficit is the highest in the EU and is not sustainable. Efforts to cut government expenses have caused a political backlash against PM Papandreou. The only available solution is to raise taxes and crack down on tax evaders.

The Shippers are largely untaxed on their global operations. Their status is ‘protected’ under the constitution. Taxing the shippers would go a long way toward closing the budget gap. The changes in tax laws will not come easy. There is no certainty of the outcome. The sense that I got from these discussions was that there is a short window open for Greece to come up with a plan to cut its deficit to approximately 9%. I asked for both a ”good” and a “bad” news scenario. Although the responses to the question I asked are speculation, they have interesting implications.
GOOD NEWS:
"If Greece is able to restructure its tax code and install a plan to reduce its deficits to 8% of GDP, then China will invest Euro 25 billion in Greek bonds."

The issue of the Chinese investing in Greece was first raised on November 29 by the WSJ. I think it was one of those well placed rumors. If this were to happen, it would be of significance. It would establish that China is assuming a role as some form of 'lender of last resort'. The bilateral trade conditions that would be attached to a deal of this magnitude would re-raise the issue of China’s trade hegemony and economic muscle. For me, the most significant aspect of this is that it would represent yet another significant diversion of China’s investable funds away from the US.

If this were to happen, the $40 billion under discussion would not impact the supply demand equation for US debt. But the direction of this would be significant. The US desperately needs China to significantly increase their holdings of US IOU’s in the coming years. They are under no obligation to do so. What if they were to take a stance with the US similar to Greece? We would get a headline that looked like:

China to Purchase $200 Billion of US Debt
Terms include: Higher interest rate, a commitment to buy Chinese goods and a promise to reduce the deficit.

Of course we are not going to see a headline like that anytime soon, but the developments in Greece are a possible first step in that direction. If China bails out Greece in 2010 it is a game changer from a number of perspectives.

Lululemon stock priced on questionable growth prospects
Posted: December 10, 2009, 9:24 AM by David Pett
www.nationalpost.com

Lululemon Athletica's third quarter earnings were "fantastic", says Paul Lajuez, Credit Suisse analyst, but investors should remain cautious about the yoga-inspired retailer, given the stock's current valuation based on growth prospects that, in reality, may never transpire.

"We cannot get over the valuation hurdle taking a longer term view, he said in a note to clients.

"Although one of the few growth concepts in retail, at 31x [fiscal 2010 consensue earnings estimates], the stock is priced as if they had 300 North American stores open today, when this is not likely to occur for 5-10 yrs (if at all). The slow pace of store openings (and a few stores gone bad already) makes us question whether getting to 300 will become a reality."

For the time being, Mr. Lajuez maintained his Neutral rating on Lululemon and left his $19 price target unchanged.

David Pett

Booyah, BAC Screws Taxpayers Again-"Borrows" $26B from Fed

A few media outlets cheered the announcement that Bank of America was repaying its $45 billion of bailout money ahead of time. Bank of America is now obviously healthy again, so it's time to celebrate, right?
http://www.businessinsider.com/henry-blodget-now-let-us-admire-the-clever-way-in-which-bank-of-america-has-screwed-taxpayers-again-2009-12

Well, no.

The main reason Bank of America paid back the money was to get out from under the onerous pay caps that makes it harder to keep its people and attract a new CEO. To make the payment, Bank of America had to take huge dilution at what a year ago would have been considered an appalling price. Bank of America may be healthier than it was 9 months ago (maybe), but shareholders certainly didn't consider selling $19 billion of equity at $15 a share cause for celebration.

But aren't taxpayers better off now that Bank of America has paid us back?

Not if you thought the control and pay restrictions TARP provided were a good thing.

What Bank of America has done is simply replace one form of taxpayer sponsored capital (TARP) with equity and another form of taxpayer sponsored capital--loans from the Fed. Those loans carry super-low interest rates, so they'll help Bank of America make more money at taxpayer expense. Those loans also, importantly, come with NONE of the restrictions that TARP does.

In case you're not following exactly what happened here, let us explain:

Bank of America raised $19 billion of new equity. It paid the government $45 billion of TARP funds back. To make up the difference, it borrowed $26 billion of new funds from the Fed (at a subsidized rate, no less).

And taxpayers are on the hook every bit as much with the Fed loans to Bank of America as they were for the TARP capital. The only thing that has changed is that taxpayers don't have any control anymore. Bank of America can now take that money and do whatever it wants with it, including paying out tremendous bonuses for making stupid loans.

And, god forbid, if Bank of America isn't healthy and gets itself into trouble again, taxpayers will be right there to bail it out again.

Because this is America, land of bailouts. And TARP-free Bank of America is still too big to fail.*

GNMA STILL Enabling Mortgage Fraud!

Mortgage agency's growth gives fuel to risky lenders
Ginnie Mae enables the firms to issue more taxpayer-backed loans

By Brian Grow and Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, December 10, 2009
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/09/AR2009120904635_pf.html

This report is a collaboration between the Center for Public Integrity and The Washington Post.

The trouble signs surrounding Lend America had been building for years. A top executive was convicted of mortgage fraud but still helped run the company. Home loans made by its headquarters were defaulting at an extremely high rate. Federal prosecutors alleged in a civil suit that the company falsified loan documents and committed fraud.

Yet despite these red flags, a little-known federal agency continued giving its blessing to Lend America, allowing it to do business in the name of the U.S. government. The Government National Mortgage Association, known as Ginnie Mae, authorized the firm to bundle its mortgages into securities and sell them to investors around the world -- all backed by U.S. taxpayer money.

Until last week, federal housing officials said that Lend America met requirements for participating in the program run by Ginnie Mae, an agency in the Department of Housing and Urban Development, and allowed the firm to sell more than $1 billion in mortgages via Ginnie Mae securities.

Lend America is hardly the only lender with a troubled record that Ginnie Mae has endorsed. The agency has provided taxpayer backing to at least 36 other mortgage companies with a history of reckless lending, fines or other sanctions by state and federal regulators or civil lawsuits, according to an analysis of government records, court documents and statistics in a HUD database.

Ginnie Mae's ongoing relationship with these firms allows them to swap the home loans they've made for new cash so they can make more loans, which can then be traded for even more cash to make even more loans. Housing experts say this dynamic turbocharges the type of bad mortgage lending that first helped trigger the financial crisis that battered global markets over the past two years. And ultimately, taxpayers are on the hook for the troubled mortgages. "Ginnie is like an accelerant to a fire," said Anthony Sanders, professor of real estate finance at George Mason University.

More than a dozen lenders with Ginnie's endorsement have made loans that are now delinquent at rates far in excess of what regulators consider acceptable. And some of these lenders have been accused of misleading both borrowers and the government about these loans.

Created more than four decades ago to help expand homeownership, Ginnie Mae works in the guts of the financial system, offering a secondary layer of government insurance that helps make it easier for mortgage lenders to provide financing for home buyers. The first layer of government backing comes primarily from the Federal Housing Administration, which principally seeks to help first-time home buyers who have impaired credit or little money for down payments. The FHA insures the mortgages made to these borrowers, promising that the lender will ultimately be repaid if the borrower defaults. The FHA has the primary responsibility for monitoring the lenders.

Then Ginnie Mae enters the picture. Mortgage lenders often want to bundle the loans they've made into securities and sell them to investors. Ginnie Mae guarantees those securities, ensuring that investors continue to get their principal and interest without interruption if any of the loans go bad or lenders are otherwise unable to make payments to investors. This additional insurance makes the securities easy to sell, generating new cash for lending.

In the past year, nearly one in five new mortgages -- both good loans and bad -- were put into securities guaranteed by Ginnie Mae. Ginnie Mae officials said that the average delinquency rate on all their loans is lower than that of the overall market, which has suffered mortgage defaults and foreclosures on a scale unseen since the Great Depression. These officials added that they have never needed taxpayer money to meet their obligations and have enough money in reserve to cover foreseeable losses.

To limit losses, Ginnie Mae often plucks delinquent mortgages from its securities and makes lenders take them back. But even if the agency is successful at protecting the securities, this practice does little to choke off the stream of money that troubled lenders get to keep making new loans.

HUD Inspector General Kenneth Donohue said Ginnie Mae is too accommodating of problem lenders, adding that the agency has put its highest priority on ensuring that money is pumped into the mortgage market. "Ginnie Mae is in the business of trying to bring in business," he said. (TALK ABOUT MORAL HAZARD!)

But Mary K. Kinney, who took over running Ginnie Mae last month as its executive vice president, defended the steps the agency has taken to improve oversight. "We will leave no stone unturned to protect the integrity of our programs," she said. "Ginnie Mae has already taken strong steps to tighten risk management. But let me be clear that we will continue strengthening our controls until we can be satisfied that we're airtight." BULLSH*T!

Bit player to big time

Only a few years ago, Ginnie Mae was a bit player in the mortgage market, backing just 4 percent of new mortgages. Then the housing market melted down, and many of the banks and other lenders that had made risky but highly popular loans got out of the business. So did the financial firms that had bundled these loans into mortgage-backed securities. A reinvigorated Ginnie Mae helped fill the void as part of government efforts to stabilize the market.

In the past two years, the total value of Ginnie Mae's guarantees for principal and interest on home loans jumped 43 percent, to $826 billion. While many of these loans were made by the nation's big banks, dozens of smaller lenders rushed to obtain the government's endorsement because this type of business was one of the few remaining opportunities for lending amid the mortgage meltdown.

Ginnie Mae officials said the agency carefully evaluates firms that apply to its program and monitors their performance. Officials said they look at each company's financial condition, its track record, and its ability to ensure that its loans meet government standards and do not put taxpayers at risk.

Ginnie Mae reports there are about 300 firms approved to issue the securities it guarantees, including 68 that started in the past two years. About 90 companies were rejected during that period, the agency said.

Despite this screening, recent entrants and veteran firms alike show signs of trouble, according to a review of filings and reports issued by HUD and its inspector general, federal and state banking regulators and federal court records, as well as statistics in government databases. Lenders with spotty histories and poor financial health have sold nearly $100 billion in loans packaged into Ginnie Mae-guaranteed securities in the past two years, according to calculations based on data provided by Inside Mortgage Finance, a trade publication.

Housing experts say that Ginnie Mae should be providing a second level of defense against questionable lenders, on top of oversight performed by the FHA. Ginnie Mae said it does not rely on the FHA to vet firms.

"If Ginnie Mae as a separate watchdog looks at issuers and cracks down, then that is going to independently crimp the ability of fraud artists to operate," said Ed Pinto, a mortgage industry consultant and former senior executive at Fannie Mae. "If they are not cracking down, they are giving them access to the capital markets with the full faith and credit of the U.S. government."

Sixteen mortgage lenders endorsed by Ginnie Mae have been cited by various federal regulators for unsafe banking practices, insufficient capital or other violations. Thirteen firms have been fined, sanctioned or ordered by HUD auditors to cover the cost of bad loans. Eight firms have FHA loan portfolios that are defaulting at double the rate of their principal competitors, which can be grounds for suspension from the FHA program. Another eight companies have FHA default rates more than 50 percent higher than the average in their area.

Premium Capital Funding of Jericho, N.Y., for example, is the subject of several lawsuits in federal court alleging that it misled borrowers about the terms of both traditional and FHA loans. Its default rate on FHA loans made in the past two years is 14.3 percent, or more than double that of other lenders in its area. The company's default rate has more than tripled in the past year, yet Premium was allowed to sell $78 million of Ginnie Mae securities from January to September, according to Inside Mortgage Finance.

Andrew Pennacchia, vice president of legal affairs at Premium, said Ginnie Mae has not raised concerns about the company's FHA default rate. Pennacchia said that Premium believes the suits filed against it lack merit. He also noted that some of the claims have been dismissed.

MVB Mortgage of Southfield, Mich., was faulted by the Federal Deposit Insurance Corp. in a 2007 order for allegedly helping a bank founded by one of its owners violate federal banking laws. Moreover, MVB has an FHA default rate on loans made in the past two years of 11 percent, nearly twice the average in its area. Still, MVB was allowed to sell $110 million in Ginnie Mae securities from January to September, according to Inside Mortgage Finance.

MVB president MaryAnn Tomczyk said Ginnie Mae officials have not been concerned about the FDIC cease-and-desist order, which is the subject of an ongoing FDIC investigation and a federal lawsuit. But Tomczyk said Ginnie Mae last year required the company to lower its FHA default rate to 7.5 percent and capped the volume of securities MVB can issue at $5.5 million per month.

According to court documents, MVB disagreed with the FDIC's finding and has sued the agency to reclaim seized funds.

The most expensive blow to Ginnie Mae came this summer with the bankruptcy of the giant Florida mortgage lender Taylor, Bean and Whitaker. The firm not only made mortgage loans but bought loans from hundreds of other lenders that didn't have Ginnie Mae status and converted the loans into securities.

More than a dozen of such lenders had previously been sanctioned -- for instance, fined or put on probation -- for violating FHA rules. In July, Ginnie Mae discovered inconsistencies in filings Taylor, Bean and Whitaker made with the agency, prompting an investigation. A month later, HUD accused the company of providing false information to the department and failing to file required reports and notify officials about transactions that could put the FHA at risk of fraud.

An attorney for the lender could not be reached for comment, despite several attempts.

Ginnie Mae declined to say how much the lender's failure will cost the agency.

Ginnie Mae officials said they have required many issuers to take corrective actions, which often aren't publicly disclosed. The officials said they closely evaluate the lenders, looking at metrics such as payment defaults, staffing levels and other measures of financial health. "We consider all sources of information and take the appropriate actions, working closely with the office of the general counsel within HUD," said Stephen L. Ledbetter, vice president for mortgage-backed securities at Ginnie Mae.

But in November, Ginnie Mae's outside auditor reported a "significant deficiency" in Ginnie's internal controls: The agency could not adequately track whether loans sold to investors had been insured by the FHA and therefore met government requirements. The auditors noted they first identified the problem in 2007.

Joe Murin, who recently left as head of Ginnie Mae to return to the private sector, acknowledged that the enormous growth of Ginnie Mae's portfolio has increased the risk for the agency. He said the main problem is that the agency doesn't have the staff needed to track the growing number of issuers. Despite the huge increase in issuance, Ginnie Mae's staffing has hovered at just over 60 employees.

Additional hiring "never really took place," Murin said. "It taxed the hell out of those Ginnie Mae employees."
Red flags

When Lend America, based on Long Island, N.Y., was approved as a Ginnie Mae issuer in June 2008, there were already reasons for caution. HUD's database shows that nine months before that approval was granted, FHA loans made by one of the firm's branches had a default rate far higher than is deemed acceptable by the FHA. The company's chief business strategist, Michael Ashley, had been convicted of fraud, including for falsifying loan applications, and been subject to multiple investigations into his business practices.

A federal fraud complaint filed by the Justice Department alleged that Ashley urged his employees to "imagine" a world in which they "couldn't say no," creating an environment in which loan officers were willing to make loans to most anyone who applied.

Yet for the past 18 months, nearly all of Lend America's 6,500 new loans have been turned into Ginnie Mae securities, giving the company additional cash flow and putting taxpayers at risk. A spokesman for Lend America said neither the company nor Ashley would respond to questions for this report.

Lend America's conduct also allegedly endangered borrowers. In seven states, borrowers with loans refinanced by Lend America have alleged that the company is not paying off their old mortgages, forcing them to face potential foreclosure, according to interviews with borrowers and filings by regulators.

On Oct. 1, Walter Westbrook used Lend America to refinance the mortgage on his Erwin, N.C., home into an FHA loan but found that Lend America didn't uphold its end of the bargain, he said in an interview. Even as he made payments on his new loan to Lend America, the company didn't pay off the old first mortgage owed to CitiMortgage until more than a month after the closing and still hasn't paid off the second mortgage owed to SunTrust, which continues to demand a $312 monthly payment from Westbrook. "I refinanced so my bills would go down, but now my bills are higher," he said.

Ginnie Mae has stood on the sidelines as the Justice Department -- and, at times, HUD itself -- tried to crack down on the company's business practices. Last week, federal officials removed Lend America from the FHA program altogether, shutting down the firm's government-backed lending. That triggered an immediate suspension of the company by Ginnie Mae.

Insider Trading- DG Dumps $1B++

This list is updated weekly on Friday and is based on Form 4 SEC filings received from Disclosure Inc. The filings are delivered to MSN Money one week after they are received by Disclosure. Insiders have until the 10th of the month to file a Form 4 covering a trade in the previous month.

Top 10 Largest Sales In Last 30 days
Symbol Company Amount
DG DOLLAR GENERAL CORP $1,031.22 Mil
AWK AMERICAN WATER WORKS CO INC $862.05 Mil
BKD BROOKDALE SENIOR LIVING INC $565.12 Mil
SWI SOLARWINDS INC $508.09 Mil
CVI CVR ENERGY INC $264.07 Mil
BZ BOISE INC $251.65 Mil
RUE RUE21 INC $200.25 Mil
WCRX WARNER CHILCOTT PLC IR $175.60 Mil
GHL GREENHILL & CO INC $131.51 Mil
PSA PUBLIC STORAGE $119.22 Mil

Unbelievable Arrogance from Hedge Fund Managers
Momo investing in front of the CRE Crash

Hedge Fund King Who Lost Billions Asking For More Billions
Posted on 11/20/09 at 10:44am by Ed Liston
http://www.benzinga.com/topics/hedge-funds/43776/hedge-fund-czar-in-a-soup

Hedge fund giant Kenneth Griffin lost $8 billion in investors’ money last year, but the Wall Street Journal says he is now trying to persuade investors to trust him with more money.

Griffin explains a loss of $8 billion of other people's money by saying he showed human fallibility, which incidentally cost a 55% loss in the hedge funds at his firm Citadel Investment Group. This was much higher than the average 19% that hedge funds lost as a whole last year.

Incidentally, Mr. Griffin is looking for the next big thing while investors are still recovering from their losses. He is focusing on investment banking and making some money from the profitable vacuum left back by the "deceased" Lehman Brothers. He has been one of the best investors in the past 2 decades.

He has been exasperated by people’s desire to dissect last year’s losses as he tries to concentrate on future opportunities by focusing on the company’s biggest hedge funds. In an interview, he compared this with people's fascination with a car-crash, and how they cannot look away from one.

Citadel is now trying to drum up money from investors, telling them that Citadel has already made $5 billion in nine months of trading this year as markets recovered. In fact, Griffin has been talking of an IPO for Citadel as early as next year, based on his new found confidence from losing so much money in such a short time.

Kenneth Griffin flew to Europe in his private jet in September to convince investors to keep on trusting him. He is known to have met with Pictet & Cie, a Geneva bank with more than $300 billion in assets. The bank questioned him closely about his recent "car-crash," and decided not to invest.

Monday deadline for $5.5bn Dubai bonds
http://arabianmoney.net/

The $3.5 billion Nakheel bond that matures on Monday is a litmus test for the Dubai debt crisis which has destabilized local, regional and even global financial markets over the past two weeks, while a $2 billion bond from Dubai Electricity and Water Authority also falls due to an early repayment clause triggered by a debt downgrade.

Time is running out. Current market speculation is that Nakheel bond holders will be offered a deal involving a reduction in debt and extension of payment. That would leave Dubai World free to negotiate with its other long-term debt holders.
Dubai Holding debts

But the Dubai debt crisis took another turn late yesterday with an announcement from Emaar Properties that it is not proceeding with a proposed merger with Dubai Holding real estate companies. This points the focus onto debts at Dubai Holding which sources told the Financial Times amount to some $10 billion of which $2 billion mature next year.

The proposed merger with Emaar would presumably have involved the assumption of these liabilities, but that is not now going to happen.

Indeed, the fear of bad debts at state-related companies within the UAE has moved on to Abu Dhabi, with Moody’s saying it is considering a possible downgrade for Mubadala and the Tourism and Investment Company.

At the same time it emerged that the fall in Dubai’s credit ratings have triggered an early repayment clause in a $2 billion loan to the Dubai Electricity and Water Authority which does have a sovereign guarantee unlike the Dubai World companies Nakheel and Limitless.

Dubai Group, a part of Dubai Holding, yesterday sold a 6.5 per cent stake in EFG-Hermes for $120 million, reported the Financial Times, the first asset disposal since the Dubai World debt standstill announcement. On the same day Dubai World unit Istithmar lost control of the $282 million W Hotel in Manhattan for $2 million at a foreclosure auction.

All eyes will therefore be on the Monday bond announcements after another difficult week for Dubai business. But it will not be until all the dirty washing is hung out to dry that the crisis will be over.

For only when the financial community is sure that it has a ‘true and fair’ view of the situation will the speculation and anxiety cease. The local newspapers have at least now started reporting these events which is a step forward in terms of transparency.

Will it all turn out to have been a sandstorm in a teacup? Veteran Dubai watchers certainly hope so but the battle over who owes what to whom, and who is going to pay is not over yet.

Nonetheless, Dubai continues to function as the only large container port in the region and it remains unchallenged as a regional trading hub, and thanks to Abu Dhabi the ultimate credit of the UAE is extremely solid indeed. Pimco is buying bonds issued by Abu Dhabi and Qatar which it feels are now too cheap.

Systematically Understating Unemployment Claims
http://www.ritholtz.com/blog/2009/12/morning-stuff-9/

Initial Jobless Claims totaled 474k, 19k above estimates and up from 457k last week. Continuing claims, which capture 26 weeks of benefit collection, were 293k below forecasts and down by 303k from last week BUT Emergency Unemployment Compensation that runs past this rose by 327k. Extended Benefits that go up to 99 weeks in some states fell by 190k but its unclear whether that’s due to an exhaustion or because a job was found. Bottom line, while initial claims were above expectations, they are below 500k for a 3rd month and confirms still the slowdown in firings but hiring is still cloudy. The Oct Trade Deficit was almost $4b less than expected at $32.9b as exports rose by 2.6%, more than offsetting a .4% gain in imports which was suppressed by a reduction in petroleum imports. Ex petro, imports were up 2.9%. Overall, with the lower than expected #, Q4 GDP estimates may get raised by up to .3%.

Dubai, Greece and Spain are bouncing back. Dubai’s stock market jumped 7%, Greece by 3% and Spain by almost .5%. Dubai CDS are also lower as are Greek bond yields. The EU’s Junker said “I completely rule out a bankruptcy of the Greek state” and thus it “won’t be necessary” to bail them out. The BoE left rates unchanged as expected and made no change to their asset purchase plan. The BoKorea and Swiss NB also left rates unchanged and the SNB said they will stop buying corporate debt. Australia generated 31.2k jobs in Nov, well above estimates of 5k. Adjusting for population size to compare to the US, the figure is 436k and follows Canada’s adjusted job gain last week of 790k. The ECB’s Mersch said that deflation is “no more on our radar” but thinks the inflation outlook is balanced. Leaving no doubt the ECB will act when the time is right he said “inflation is the most unsocial of measures that could be imagined.”

Well, C can't raise $20B & GM is bankrupt
(So Bloomberg spins this exec departure EIGHT DAYS AFTER JOINING! as enabling "Chairman Whitacre to deepen his imprint on senior management"- What a load of cr*p!

GM’s Buick-GMC Chief Said to Leave Eight Days After Being Hired
By Katie Merx

Dec. 10 (Bloomberg) -- General Motors Co.’s chief of the Buick and GMC brands is leaving eight days after joining the biggest U.S. automaker, two people familiar with the matter said yesterday.

Michael D. Richards, formerly of Ford Motor Co., was hired Dec. 1, the same day that Fritz Henderson was ousted as chief executive officer and replaced by Chairman Ed Whitacre. No replacement for Richards has been named, said the people, who asked not to be identified, because the move isn’t public yet.

Richards’s departure means Whitacre, 68, will be able to deepen his imprint on senior management. The former AT&T Inc. chairman and CEO, who was appointed to the board in June, chose new leaders for GM’s North American and European operations among other positions on Dec. 4. He told reporters Dec. 8 that newly promoted executives didn’t have long to show results.

“What they’re doing is getting away from the entrenched old-think GM, and get to the free thinkers,” said George Peterson, president of AutoPacific Inc., an industry consultant in Tustin, California. “It seems like they’re headed in the right direction of getting leaner and meaner.”

Dayna Hart, a spokeswoman for Detroit-based GM, declined to comment on Richards.

He had been hired to replace Susan Docherty, who was promoted earlier to head of sales and on Dec. 4 became vice president of vehicle sales, service and marketing. Richards worked most recently at Austin, Texas-based software maker Trilogy Inc. and wasn’t available to comment.

Other Changes

Earlier, GM announced the retirement of Brent Dewar, 54, the head of Chevrolet, GM’s top-selling brand.

James M. Campbell, 45, the former head of fleet and commercial operations, will replace Dewar as general manager of the global Chevrolet brand.

Dewar said in an e-mail that his decision was in part to spend more time with his daughter. Dewar joined General Motors of Canada in 1978, according to his company biography.

Whitacre, chosen to lead GM’s board by President Barack Obama’s automotive task force, told employees last week that the CEO search may take as long as a year and that he wouldn’t waste any time.

He told reporters this week that he may name a replacement for Chief Financial Officer Ray Young in two or three weeks. “We’re close and have narrowed it down and have a real good candidate,” Whitacre said in a Web chat.

To contact the reporter on this story: Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net
Last Updated: December 10, 2009 00:01 EST

'Wake up, gentlemen’, world’s top bankers warned by former Fed chairman Volcker
Patrick Hosking and Suzy Jagger
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6949387.ece

One of the most senior figures in the financial world surprised a conference of high-level bankers yesterday when he criticised them for failing to grasp the magnitude of the financial crisis and belittled their suggested reforms.

Paul Volcker, a former chairman of the US Federal Reserve, berated the bankers for their failure to acknowledge a problem with personal rewards and questioned their claims for financial innovation.

On the subject of pay, he said: “Has there been one financial leader to say this is really excessive? Wake up, gentlemen. Your response, I can only say, has been inadequate.”

As bankers demanded that new regulation should not stifle innovation, a clearly irritated Mr Volcker said that the biggest innovation in the industry over the past 20 years had been the cash machine. He went on to attack the rise of complex products such as credit default swaps (CDS).
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“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board.

He said that financial services in the United States had increased its share of value added from 2 per cent to 6.5 per cent, but he asked: “Is that a reflection of your financial innovation, or just a reflection of what you’re paid?”

Mr Volcker’s broadside punctured a slightly cosy atmosphere among bankers and regulators, assembled in a Sussex country house hotel to consider reform measures, at the Future of Finance Initiative, a conference organised by The Wall Street Journal.

Another chilling contribution came from Sir Deryck Maughan, a partner in Kohlberg Kravis Roberts, the private equity firm, who in the 1990s was head of Salomon Brothers, the investment bank.

He warned delegates that many of the flawed mathematical techniques that underpinned banks’ risk management approaches were still being used, saying that the industry had not “faced up to the intellectual failure of risk management systems, which are still hardwired into many banks and many trading floors”.

Sir Deryck also questioned whether it was right that taxpayers should continue to underwrite many of those risks: “There’s something wrong about large proprietary risks being taken at the risk of taxpayers. The asymmetry will not hold. I’m not sure we’ve thought about that.”

Earlier Baroness Vadera, adviser to the G20 — and an adviser to Gordon Brown during the banking crisis — had warned the world’s most senior bankers that continental lenders had yet to acknowledge the scale of their losses and bad debts. She said: “It’s not the UK banks that have to come clean, but some of the continental banks still have issues.”

She added that, contrary to City assumptions, the supposedly hardline French and German governments were more relaxed about leverage and liquidity constraints than Britain and America.

The former UBS banker said that she continued to have nightmares about how close the British banking system came to collapse last year.

She also warned bankers that the G20 process was “like herding cats” and that one of the main problems with the group of the world’s wealthiest nations was that they did not want to give up national sovereignty and co-ordinate their behaviour.

Meanwhile, George Soros argued that CDS should be banned. The billionaire investor likened the widely traded securities to buying life assurance and then giving someone a licence to shoot the insured person.

“They really are a toxic market,” he said. “Credit default swaps give you a chance to bear-raid bonds. And bear raids certainly can work.”

The pigmen control the government. They are planning to establish a permanent bailout apparatus. Backstoping Wall Street losses will become the taxpayers responsibility. Its for your own good, remember?

The Dec 10 Rolling Stone article (Obama's Wall Street Sellout) by Matt Taibbi gives names, dates and details of how the Goldman Sachs/Robert Rubin disciples pushed the progressives to the side and took over. You'll love the chart with the "team of Rubins" on page http://www.huffingtonpost.com/2009/12/09/geithner-bailout-program-_n_385413.htmltml#

That would be unrestrained GREED, Newly? CREs??

Reggie Middleton vs Goldman Sachs, Pt. Deux: Buy into a Collapsing Market to Fund Bonuses, PLEASE!!!
www.zerohedge.com

As a quick recap: I pointed out the illogical, self destructive, circular relationship between Goldman and its clients/customers as significant monies are lost following bad advice and purchasing trash in the form of financial and investment products. See "Reggie Middleton vs Goldman Sachs, Round 1". Goldman has recently issued a buy rating on the commercial REIT sector (of course, Goldman has started underwriting and selling REIT securities), something that I consider to be suicidal at best. Let's take some anecdotal glances into the commercial real estate world to see exactly what it is that Goldman would have us buy, and why.

In December of 2007, I wrote an article " Will the commercial real estate market fall? Of course it will", which I will excerpt from...

Sam Zell, one of the most successful real estate investors of our time, sold his Equity Office Properties Trust of Class A and B buildings to Blackrock for what I assuredly thought was a fools price. When I saw the numbers, I said easy money or not, there is an ass for every seat. Well, little do I know. Blackrock found someone to pass the cherry on to, and in near real time at that - and they paid even lower cap rates than Blackrock did. Hats off to the Blackrock folk. You found the guys at the very tip top of the market to drop those cap rates off on.

Now, the problem for the last guys to buy these properties (as Sam Zell sits there smiling on his $21 billion pile of cash) is that it is going to be nigh impossible to find someone who will pay a ZERO cap rate, and try as you might it will be damn hard to raise lease rates amongst an economic hard landing and negative trending earnings... And thus, this is the fate of commercial real estate. The many guys who overpaid, will get burnt as values tumble from their peak bubble highs. Old school real estate guys email me and say they never even heard of 5, 6 and 7 percent cap rates until recently (after 30 years in the biz). Well, some of these guys are pushing zero (literally 1.5% to 3 and 4%).

Let's fastforward to today, where we may learn the fate of those guys who bought that CRE flip from Blackrock. From Crain's Chicago Business, "Zombie fears stalk Tishman in the Loop"

A venture led by Tishman Speyer Properties L.P. has defaulted on part of a package of loans used to finance the $1.72-billion purchase of six prime downtown office towers during the frenzied real estate market of 2007, sources familiar with the deal say.

The New York developer bought the 5.7-million-square-foot portfolio from Blackstone Group, which flipped them as part of the New York private-equity firm's $39-billion leveraged buyout earlier that year of Sam Zell's Equity Office Properties Trust. [Anybody reading my blog in 2007 or even knew me in 2006 could have seen this coming a mile away!]

The buildings, including such Loop landmarks as the Civic Opera Building and the 10 & 30 S. Wacker Drive complex, have lost much of their value amid the broad decline in the commercial real estate market...

Tishman Speyer, led by longtime developer Jerry Speyer, is in hard-nosed negotiations with officials of the Federal Reserve Bank of New York to rework an estimated $1.4 billion in loans. The Fed inherited the mortgages as part of the 2008 collapse and sale of Wall Street investment bank Bear Stearns Cos. With the talks at a stalemate, the Fed is taking an aggressive tack, cutting off a key source of capital for leasing costs.

The portfolio, which also includes 161 N. Clark St., 30 N. LaSalle St. and 1 N. Franklin St., already illustrates several recent real estate trends, such as rapidly falling property values after prices peaked thanks to large amounts of cheap debt. With credit now virtually gone, defaults on downtown buildings are likely to rise, forcing them into foreclosure or onto the market at big discounts that will put more downward pressure on prices in a spiral similar to the struggles of residential real estate across the country.

"Virtually all the assets bought between '05 and '07 cannot be refinanced today without a significant capital infusion," says Shawn Mobley, executive vice-president at real estate firm Grubb & Ellis Co. "These buildings need to be recapitalized to get back in the business of being active real estate."

Without a financial restructuring, the properties are likely to join a new trend — "zombie buildings," which can't compete for new tenants because they lack the money to cover brokers' commissions and interior office reconstruction.
...
Many tenants won't consider zombie buildings because they need landlords' cash [for tenant improvements].

Avoiding a "Night of the Living Dead" scenario could be tough even for an established firm like Tishman Speyer, whose local portfolio totals 12.2 million square feet.

A company-led venture is in default on a mezzanine loan of undetermined size, part of an estimated $1.4-billion package of mortgages, sources say. The loans come due next year but can be extended until 2012, sources say [when prices have corrected even farther, put your head in the sand].

... The number of zombie buildings in the Chicago area is likely to grow in 2010, according to a forecast by California-based Grubb & Ellis. For landlords, the trend means even top-quality office properties are likely to divide themselves into "haves" and "have-nots," with the latter seeing their vacancy rates worsen because of the lack of financing. [SHHHH! You Freakin' Idiots! You didn't get the memo?!?! Goldman just upgraded the sector! Goldman needs to underwrite REIT securities to fund the 2010 $23 billion, 500% of the dividend payout bonus pool]

Even landlords that may have cash are hoarding it. Dallas-based Behringer Harvard REIT I Inc., which owns five downtown office buildings, says it is avoiding upfront costs by cutting rents on existing leases in exchange for lengthening the agreements.

From NYC's local real estate rags:

Midtown Manhattan sees double-digit drop in office rents, London's West End still world's most expensive office market
As commercial real estate floundered across the globe, the cost of renting office space plummeted in some of the world’s most prominent financial centers. On average, office markets saw a 7.7 percent decline in rental expenses, according to a CB Richard Ellis report released this week, but several dozen markets experienced drops in the double-digits. Midtown Manhattan slipped to 24th on that list, at $68.93 per square foot, down from its 15th-place ranking last year, though it is still the most expensive office market in the U.S. Nearly three-quarters of the 179 markets surveyed saw declines, and Singapore, Hong Kong’s Central Business District, and Downtown New York City were among those hit hardest. Those markets ranked second, fourth and ninth for largest rental cost decreases with roughly 53 percent, 41 percent, and 30 percent, respectively. Kiev, Ukraine came in first with a crushing 65 percent drop. Meanwhile, the West End district in London clung to its title as the world’s most expensive office market, with costs averaging $184.85 per square foot. "While there are signs that commercial real estate values are stabilizing in some markets in Asia and parts of London, underlying property fundamentals are still weak," Raymond Torto, global chief economist at CBRE, said in a statement.

Stuyvesant Town ruling post-mortem report examines which properties are in danger

New York City multi-family landlords who took advantage of the same J-51 tax abatement program that got Stuyvesant Town into legal trouble are facing legal battles of their own, according to a Deutsche Bank report released this week. The report, a culmination of an analysis of hundreds of these tax break recipients whose loans are secured by commercial mortgage-backed securities, said landlords of properties like the tony Belnord and the Ansonia on the Upper West Side, as well as the Meyberry House on the Upper East Side, would have to make due with decreased operating income as a result of the October Stuyvesant Town ruling, which stipulated that rents cannot be destabilized while J-51 is being utilized. “In the longer term, owners may face decreased investor demand for rent-stabilized properties since the growth rate of cash flow is now severely limited,” the report said. Many rent-stabilized buildings will not be able to increase tenants' monthly payments until 2017, according to the report. The Belnord, which has a loan balance of $375 million, topped Deutsche Bank’s list of largest CMBS loans on properties affected by the ruling. [WSJ]

Experts see steep rise in deadbeat renters
The percent of residential apartment dwellers in the city who are not paying their rent has as much as quadrupled since the market weakened last year, industry leaders on a panel discussing multi-family properties said earlier this week. "Collections, especially in New York City, have become more of an issue," said Mark Stern, senior vice president at Waterton Residential, a Chicago-based building owner and operator. His firm is planning on making acquisitions in New York City. "[They are] going from the 5 percent range to now 10 or 20 percent in collections, which makes a difference on the bottom line," he said. Mason Sleeper, a principal with the real estate investment firm Praedium Group, said he has seen a similar distress in the market. "You have your collection issue which is increasingly creeping up to becoming a little bit of a problem," he said. They were speaking on a panel that also included Kevin Davis, partner of Area Property Partners; Tim Wang, vice president at ING Clarion and Max Herzog, senior vice president at CB Richard Ellis. The panel, moderated by Mike Kelly, president of Caldera Asset Management, was part of a day-long forum covering multi-family real estate organized by GreenPearl.

NYC real estate pounded with layoffs
The New York City real estate industry shed 600 broker-related jobs in October, bringing the 2009 tally thus far to 5,700, or 4.7 percent of that sector's labor force, according to a new employment report from Eastern Consolidated. Nationwide, brokerage firms cut 2,200 employees during the month, for a current total of 105,500 job losses, or 5.1 percent, since December 2008. The construction industry alone, however, is weathering a more serious fallout. A whopping 16,300 New York City construction jobs -- 12.3 percent -- were lost during the month, though that was only a fraction of the nearly 1.6 million construction employees terminated across the country, who comprised 20.7 percent of the industry. TRD

Michael Stoler -- "Extend and pretend," the new rule for commercial real estate loans
As the fall of 2009 comes to a close, many of the commercial real estate lenders continue to limit their exposure to financing for real estate. The buzzword for 2009 is "extend and pretend," whereby a bank extends the term of a loan to a later date. The legendary Samuel Zell, chairman of Equity Group Investments, the keynote speaker at the NYU Capital Markets conference Nov. 19, stated that "our government has become the bailout city. If a loan is kept current, banks will 'pretend and extend.'" No one is surprised by the "pretend and extend concept," especially if you had the opportunity to gain insight from the Federal Reserve's October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices and hear the comments made by Ben Bernanke, chairman of the Federal Reserve, in a speech at the Economic Club of New York Nov. 16

Dubai impact on NYC limited to distressed hotels, but signals end to sovereign wealth rescue
As the international credit crisis spread into the kingdom of the United Arab Emirates, real estate experts said that while any direct impact on New York would be limited, it may signal the inability of sovereign wealth funds to bail out distressed assets here. The financial world briefly shuddered last week after Dubai World, the main investment arm of the powerful Gulf region city-state, asked lenders for a six-month suspension of nearly $60 billion in debt payments. Analysts say the suspension may force Dubai to sell many of its trophy assets around the world, including several high-profile buildings in New York, like the Jumeriah Essex House, the former Knickerbocker Hotel and the flagship W New York-Union Square hotel, whose mezzanine debt is scheduled for a Dec. 8 foreclosure auction. “Dubai got drunk with debt just like we did here in New York,” said Dan Fasulo, managing director of research at Manhattan-based investment research firm Real Capital Analytics. “A lot of people think Dubai [was financing its deals with] oil. In actuality, it was very much of a debt-fueled building boom.”



So, hopefully, between my link-dense introductory post and this anecdotal 'semblage of newsbytes you can fathom that there may be a rather selfish motive to