yuna49 writes “Adam Liptak of the New York Times reports this day about the plight of a Spanish tour operator whose domain names have been embargoed by his domain name registrar (eNom). They pulled his domains after they discovered the tour operator’s name on a US Treasury blacklist. It turns out he packages tours to Cuba largely for European tourists who can legally travel there, unlike Americans. The article cites ‘a press release issued in December 2004, nearly three years before eNom acted. It said Mr. Marshall’s company had helped Americans evade restrictions on travel to Cuba and was ‘a generator of resources that the Cuban regime uses to oppress its people.’ It added that American companies must not only stop doing business with the company but also freeze its assets, meaning that eNom did exactly what it was legally required to do.’ The only part of the operator’s business in the United Says is his domain name registration; all other aspects of his business lie outside the United States.”

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Helical writes “In an attempt to defy the newly approved state science standards, Florida Senator Rhonda Storms has proposed a bill that would allow instructors to contradict the teaching of evolution. Her bill states that ‘Every public school teacher in the state’s K-12 school system shall have the affirmative right and freedom to objectively present scientific information relevant to the full range of scientific views regarding biological and chemical evolution in connection with teaching any prescribed curriculum regarding chemical or biological origins.’ The bill’s main focus is on protecting instructors who want to adopt alternative teaching plans from sanction, and to grant instructors the freedom to instruct whatever they wish, even if it is in opposition to current standards.”

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s1d writes “A almost-anonymous British psychologist named Gavin Potter has suddenly risen to the top of the Netflix prize charts. With his very first attempt, he got a score which took the BellKor team seven months to reach. Currently at a score of 8.07, he has only five teams ahead of him now in the race for the ultimate Netflix algorithm. ‘Potter states his anonymity is mostly accidental. He started that way and didn’t come out into the open until after Wired found him. “I guess I didn’t think it was worth putting up a link until I had got somewhere,” he says, adding that he’d been seriously posting under the name of his venture capital and consulting firm, Mathematical Capital, for two months before launching “Just a guy.” When he started competing, he posted to his blog: “Decided to take the Netflix Prize seriously. Looks kind of fun. Not sure where I will get to as I am not an academic or a mathematician. However, being an unemployed psychologist I do have a bit of time.”‘”

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mdekato writes “MSNBC reports that NASA’s Mars Reconnaissance Orbiter has captured an avalanche on Mars’ surface as it happened. Very good still images show what must have been an awesome sight. ‘The full image reveals features as small as a desk in a strip of terrain 3.7 miles (6 kilometers) wide and more than 10 times that long, at 84 degrees north latitude. Reddish layers known to be rich in water ice make up the face of a steep slope more than 2,300 feet (700 meters) tall, running the length of the image. Mars’ north pole is covered by a cap of ice, and it even snows there. The scientists suspect that more ice than dust probably makes up the material that fell from the upper portion of the scarp.’”

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An anonymous reader writes “Start buying Cold War nuclear shelters and piling up the canned food, because Boeing Advanced Systems has started System F6: ‘DARPA’s Future, Fast, Flexible, Fractionated, Free-Flying Spacecraft United by Information Exchange space technology program.’ In other words: multiple, networked specialized spacecraft swarms that are intelligent enough to perform a single coordinated task together, like analyzing the crops or deciding to destroy humanity, Skynet-style. Actually, it could completely change satellites for the better, according to some experts.”

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An anonymous reader writes “A spectacular, rotating binary star system is a ticking time bomb, ready to throw out a searing beam of high-energy gamma rays that could lead to a major extinction event — and Earth may be right in the line of fire. Australian science magazine Cosmos Magazine reports: ‘Though the risk might be remote, there’s evidence that gamma ray bursts have swept over the planet at various points in Earth’s history with a devastating effect on life. A 2005 study showed that a gamma-ray burst originating within 6,500 light years of Earth could be enough to strip away the ozone layer and cause a mass extinction. Researchers led by Adrian Melott at the University of Kansas in Lawrence, U.S., recommend that such an event may have been responsible for a mass extinction 443 million years ago, in the late Ordovician period, which wiped out 60 per cent of life and cooled the planet.’”

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Helical writes “In an attempt to defy the newly approved state science standards, Florida Senator Rhonda Storms has proposed a bill that would grant teachers to contradict the teaching of evolution. Her bill says that ‘Every public school teacher in the state’s K-12 school system shall have the affirmative right and freedom to objectively present scientific information relevant to the full range of scientific views regarding biological and chemical evolution in connection with teaching any prescribed curriculum regarding chemical or biological origins.’ The bill’s main focus is on protecting instructors who want to adopt substitute teaching plans from sanction, and to allow instructors the freedom to teach whatever they wish, even if it is in opposition to current standards.”

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Filed under: Law, Politics, Housing

Federal Judge Lawrence Karlton has ruled that the Bush Administration must reassess its plan to outlaw a down payment assistance program that’s used by more than 100 thousand low and middle-income borrowers. He ruled that the Department of Housing and Urban Development failed to finish a “reasoned analysis” and that bureau head Alphonso R. Jackson might not take part in that analysis.

The New York Times reports that “The administration sought to ban the aid, contending the program leads to higher housing prices and a disproportionate number of foreclosures.”

What makes this unique is that the Bush Administration was not seeking to eliminate federal assistance but rather seeking to eliminate private assistance with down payments.

The argument goes something like this: Non-profits giving money to people to finance down payments artificially grants people to get into homes they couldn’t otherwise afford — The capability of a buyer to come up with a down payment one measure that lenders look to for evidence that a borrower is worthy of credit. Home owners allowed to purchase homes without having to come up with their own down payment money may be more prone to get into trouble on the mortgage payments. And, as we learned from the subprime mess, allowing people to buy homes they can’t really afford does drive up home prices.

Here’s what makes the Bush Administrations stance hypocritical. If you’re going to ban gifts by non-profits to help people come up with down payment money, shouldn’t you also ban gifts from family members to help with down payments? The principle is exactly the same. Banning loans like those made by Nehemiah Corporation of America, the largest and oldest private down payment assistance provider, but not gifts from relatives gives a leg up to people with wealthy/generous relatives — and penalizes those who weren’t smart enough to make the decision to have rich parents.

In a statement celebrating the Judge’s decision, Nehemiah stated that “We are thrilled with the Court’s decision to support low-to-moderate income families across the country by ruling against HUD’s attempt to ban private down payment assistance … This is a major and conclusive judgment, leaving no uncertainty that down payment assistance is a life line to the families that Nehemiah serves …”

I don’t necessarily have a stance on the worthiness of these programs — but it should be consistent. Either people should be able to get help from other people with their down payments … or they shouldn’t.

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Filed under: PepsiCo (PEP), Citigroup Inc. (C), Merrill Lynch (MER), Kraft Foods’A’ (KFT), Housing, Federal Reserve, Newcastle Investment (NCT)

Oh man, the news coming from the Fed seems to get worse and worse. On a day when financials like Citigroup (NYSE: C) continue to weaken — Merrill Lynch (NYSE: MER) reduced Citi’s outlook — Fed head Ben Bernanke sends the market indication that we’re not yet near the end of the mortgage debacle, and he’s looking for a “vigorous response” to address it.

According to an AP article, Bernanke, in an address to a banking group, said that the mortgage crisis wasn’t done, and that more relief would be necessary for homeowners who simply are unable to balance their books. This isn’t what anyone on Wall Street wanted to hear, and certainly not what an individual investor like myself was looking for, either; I’ve ample financial exposure in the form of MFA Mortgage (NYSE: MFA) and Newcastle Investment Corp. (NYSE: NCT).

Further, Bernanke made a suggestion that bankers would obviously find tough to implement — he said that a reduction in loan principal might be an appropriate way to relieve a struggling owner of real estate. Hmmm, that might not go over too well, especially with the crowd that isn’t happy with government intervention — now Bernanke is calling for lenders to be more lenient? But, what should one anticipate? This is the Fed, after all, and it’s the institution’s job to promote some economic homeostasis in times of need. Bernanke believes more foreclosures are coming, and he wants to get ideas out there that’ll save as much home equity as possible. He brings up a good point, implying that lenders will benefit from loan-principal reductions simply because the rate of foreclosures would, in theory, decline as a result of such a tactic.

What does all this tell us as investors? Well, more reductions in the Fed Funds rate are on the horizon. Yes, it will be tricky to balance this with inflationary concerns, but they are coming. The recession — count me in, I believe we are in a recession — is going to get worse before it gets better. And, we’re in for more volatility vis a vis swings in stock-index values. I don’t believe we’re done going down yet, but at the same time, I think this is a great time to look for values and for stocks that’ll go up in this environment. The aforementioned MFA is a great way to play Fed rate cuts, in my view, and you can always look around for defensive plays in the consumer-products area for some safer bets — Kraft (NYSE: KFT), PepsiCo (NYSE: PEP), stocks like that. One thing I am not taking away from this article is that we are nearing any sort of bottom — my gut tells me this is not the case. So, if you’re buying low, prepare to buy lower.

Disclosure: Steven Mallas own shares of MFA and Newcastle; positions can change at any time.

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Filed under: Good news, Federal Natl Mtge (FNM), Housing, Recession

The nation’s two largest sources of mortgage funds have agreed to sponsor a new home appraisal watchdog group to prevent inflated home values, Reuters reported Tuesday. Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) will provide $12 million each over the next five years to create the new independent organization to monitor the new appraisal standards.

Seeking to avoid multiple lawsuits by New York Attorney General Andrew Cuomo, the two also agreed to a code of conduct to take effect January 1, 2009, The Wall Street Journal reported Tuesday (subscription required). Further, as the largest purchasers of mortgages, the code will become the effective new standard for the U.S. mortgage industry.

The new code bars lenders from using appraisals ordered by mortgage brokers, and also bars them from pressuring appraisers to supply inflated estimates of property values, which many believe were a major factor in the mortgage crisis.

Fannie Mae fell $1.44 to $24.95, while Freddie Mac fell $1.85 to $21.86 on Tuesday at mid-day. However, it should be noted that U.S. Federal Reserve Chairman Ben Bernanke also recommended that lenders forgive a portion of money owed by home owners at risk of foreclosure, a policy proposal that undoubtedly sparked additional selling of FNM’s and FRE’s shares Tuesday.

Sector Analysis: With the caveat that the new appraisal organization’s oversight powers haven’t been evaluated yet, if the organization is empowered and truly independent, it will go a long way toward addressing one of housing market’s excesses: inflated or false appraisals. The inherent conflict of interest in the former system was obvious enough; with their fees tied to mortgage approval, and mortgage approvals frequently hinging on LTVs (loan-to-value ratios), mortgage brokers and lenders pressured appraisers to inflate property values, in some cases by 30% or more above fair market values.

Further, so long as the housing market was booming, with double-digit real appreciation rates, few regulators seemed to care. But then the housing boom ended, and consequences were revealed: many homeowners could not refinance out of problematic mortgages because market value were nowhere near appraisal values. This sad reality comprises a major component of the high level of foreclosures. Hence, if the new appraisal oversight organization can keep appraisals accurate — i.e. reflecting market value — the nation will have deployed a safeguard against a repetition of the same error in the next housing boom.

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