Thursday, January 10, 2008

Financial Times - "Clothing retailers cut their earnings forecasts" (1-10-08)

"American Eagle, the youth clothing chain, and Men's Wearhouse, which specialises in business suits, both cut their fourth-quarter earnings guidance yesterday - presaging what is expected to be a round of grim December sales figures today from other leading US retailers."


Kren
- "
As Housing Slumps, Real Estate Agents Quit the Business" (1-10-08)

"
As many train for new careers, return to old ones, or wait tables until prices rebound, the plight of the real estate agent - average age, 51 - reveals the human dimension of how loose lending, raw opportunity, and self-determination produced a housing bust that has stunned the U. S. economy. 'They've tasted success and big money, and now their standard of living has been rocked and reality has set in,' says John Baen, a real estate professor at the University of North Texas in Denton. 'The whole [economy] has been built on real estate. When the music stops, what is left?'"

CNN - "
Bank of America's Countrywide trap" (1-10-08)

"Late last summer, Bank of America and its deal-hungry chief Kenneth Lewis won kudos for a $2 billion investment in Countrywide Financial, the once high-flying mortgage lender hit hard by the housing slump. In one stroke, Lewis erased his reputation as a serial over-payer with the kind of convertible preferred stock deal that arbitrage traders dream of. In exchange for its $2 billion, Bank of America secured the right to buy Countrywide stock at $18, a tidy 21 percent discount over the price at the time. Lewis, it seemed, had deftly locked in an instant $424 million profit for the bank."

CNN - "
Will foreclosures spark an arson boom?" (1-10-08)

"With the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with 'untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments.'"

Yahoo - "
Chair: Fed Willing to Cut Interest Rates" (1-10-08)

"
Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates as needed to prevent housing and credit problems from plunging the country into a recession. The Fed chief made clear the central bank was prepared to act aggressively to rescue a weakening economy. 'We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,' he said."

CNN - "
Housing: No room for bulls" (1-10-08)

"Even a few months ago, it seemed like a good idea to hold a debate between real estate bulls and bears. But with home sales spiraling and the outlook getting gloomier, it was hard to find a single optimist at a recent panel discussion on the forecast for the housing market."

Bloomberg - "Greenspan's Reputation at Risk as Recession Odds Grow" (1-10-08)

"
The next bubble to deflate may be Alan Greenspan's reputation. Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under attack from critics ranging from the New York Times to economists at the American Enterprise Institute for his handling of the 2000-2005 housing boom. The former Fed chairman has taken to the media to defend himself, writing in the Wall Street Journal and appearing on network television."

Bloomberg - "Lennar's New Homes Fetch 60% Less as U.S. Market Slump Deepens" (1-10-08)

"
Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar. That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year."

Bloomberg - "The Fed's Message Is Getting Lost in Translation" (1-10-08)

"While the Fed took a pass on a formal assessment of the balance of risks, the impression was one of equal and offsetting concerns about weaker growth and higher inflation. It was a surprise, then, to see the compendium of downbeat assessments and degree of institutional angst in the minutes, made public on Jan. 2. Almost everything -- housing, mortgage finance, credit conditions, bank balance sheets, consumer and business sentiment and spending -- was worse or weaker than previously expected. Exports were the only bright light. Market expectations for more aggressive rate cuts took a giant leap forward following the release of the minutes and subsequent data showing weak manufacturing and job growth."

Los Angeles Times - "Countrywide 'on a collision course with bankruptcy'" (1-10-08)

"The LA Times this morning quotes Weiss Research, which rates the condition of lenders, as saying Countrywide Financial 'is on a collision course with bankruptcy,' adding that it 'exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year.'"

Real Estate Journal - "
Home Builders Shrink the Choices For Carpet, Counters to Save Cash" (1-10-08)

"The nation's second-largest home builder is whittling down options and moving toward a one-faucet-fits-similar-price-points model, seeing standardization and simplification as tools in a cost-cutting drive aimed at saving millions of dollars and surviving the housing slump. Other home builders are taking similar steps. Beazer Homes USA Inc. says it reduced its carpet offerings by 85%. Pulte Homes Inc. cut back to 400 floor plans from more than 2,000, and Centex Corp. cut its roughly 4,500 plans in half, with more reductions under way."

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