Is It Obvious writes “Bank Julius Baer has moved to withdraw suit against Wikileaks. We’ve discussed this story a few times, most recently when the judge lifted his injunction against WikiLeaks’ registrar. The Baer story reflects an issue that’ll only grow worse over time: the gap between technology and the legal system’s understanding of stated technologies and their application to established legal principle. Given the rapid rate of technological change, is there a more practical way to interface emergent technology with our legal system while retaining civil rights over corporate rights?”

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Hennen named POW
Cleveland Daily Banner - EQUAL HOUSING OPPORTUNITY PUBLISHER’S NOTICE: All real estate advertised in this newspaper is subject to the Federal Fair Housing Act of 1968 and the Tennessee Human Rights Act which makes it illegal to advertise “any preference, limitation or

Mounting worries sink stock market
Reuters UK - Mar. 6 - U.S. stocks tumbled to lows not seen since late January as renewed worries about the financial and housing sectors pummeled investor sentiment. The Dow tumbled 214 points to 12,040. The S&P 500 lost 29 points to 1,304. The Nasdaq was down 52

Stocks Slide on Credit Fears
BusinessWeek - Bonds were higher Thursday as Boston Federal Reserve bank President Eric Rosengren urged quick action on the housing crisis, while the Cleveland Fed’s Sandra Pianalto said the economic slowdown will reduce inflation.

D.C. Mayor Fenty’s housing chief quits, states she was ‘marginalized’
Washington Business Journal - The District’s housing chief, Leslie Steen, has resigned because the deputy mayor for economic development, Neil Albert, left her job “marginalized with no authority to assure change,” according to a Feb. 29 resignation letter. Appointed in February

Retire steps box
AZCentral.com - Tap your housing equity or downsize. Homes are the main source of wealth for most people. You can tap into your equity in various ways, from reverse mortgages to downsizing and living off the proceeds from a home sale in retirement.

For Bloomberg, it’s all downhill from here
Newsday - When Mayor Michael Bloomberg draws a spotlight from here on, it will shine on the hard realities of his day job — the crude bombing at Times Square , sagging tax revenues, immense housing costs, and the school system’s flaws.

Buyer packs branded ‘waste of time’
Croydon Guardian - Housing Minister Caroline Flint insisted that a public awareness campaign has been launched since the trials last year, and estate agents had been reminded of their responsibility to hand out the packs.

Resources boom boosts home sales
News.com.au - But in the bigger says, rate rises appear to be eating away at sales. National new home sales of houses and units climbed by 11.3 per cent during January, the Housing Industry Association (HIA) revealed today. Home sales were up by 13.3 per cent

Housing market spirals, no end in sight
Forbes - NEW YORK (AP) - Nervous homeowners and economic analysts have been wondering how much worse the housing market could get. On Thursday they got an answer: Plenty. Foreclosures are at a record high. Home equity is at a record low. The housing market is

Fed Poole: Housing Sector Faces A Few Lean Years
RTT News - • 3/6/2008 8:12:59 PM *Australia’s All Ordinaries Index Is Currently Losing 159 Points Or 2.88% To 5,373 [] • 3/6/2008 8:12:29 PM *Australia’s S&P/ASX 200 Index Is Presently Trading At 5,270; Down 165 Points Or 3.04% [] • 3/6/2008 8:10:31 PM

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KentuckyFC writes “Italian physicists are claiming the first observation of Hawking radiation, but not from a black hole. Instead they’ve spotted it streaming from a sonic horizon in a Bose Einstein Condensate (abstract on the arXiv). That’s consistent with previous predictions but they’re claiming the ‘first’ although the experiment was only a numerical simulation. Does that really count?”

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palegray.net writes “Wired News brings us an article about brain scanning systems that can accurately tell what you’re looking at by analyzing your brain’s electrical activity. Using a database constructed of readings taken on test subjects who were shown thousands of photographs, the system works in real time to decipher what you’re seeing. Naturally, there are some ethical concerns over some potential applications for this technology. Definitely a new twist on “input devices.””

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Filed under: Bad news, Economic data, Housing

U.S. home foreclosures reached another record high in Q4 2007, the Mortgage Bankers Association announced.

A record 0.83% of mortgages were entering the foreclosure process in the last three months of 2007, compared to 0.54% for the same period in 2006, the MBA announced.

In addition, the delinquency rate reached 5.82% in Q4 2007 — the highest level since 1985 — up from 4.95% in Q4 2006.

Further, although the foreclosure rate is at a record high, numerous economic fundamentals recommend the foreclosure rate will move higher still in 2008. An oversupply of homes — known as home inventories — is making it harder for sellers to find buyers. Banks’ more-rigorous lending requirements and generally-tighter credit conditions at the retail level has made it harder for many borrowers to escape high-interest-rate mortgages that reset when consumer credit market conditions tightened in the second half of 2007.

In addition, the rise in unemployment has removed mortgage-supporting jobs for certain borrowers. Finally, the U.S. Federal Reserve’s interest rate cuts, while they’ve increased yield spreads and eased wholesale credit conditions, have not substantially lowered interest rates for fixed, 30-year mortgages. In fact, rates for conventional mortgages have risen during the past year: to 6.03% in March 2008 from 5.69% in March 2007. The rate for 15-year mortgages has remained flat: at 5.42% in March 2008 versus 5.43% in March 2007.

Economic Analysis: Scant good news regarding the MBA’s Q4 2007 foreclosure data. The foreclosure line continues to trend in the wrong direction for homeowners, the housing sector, and the U.S. economy. Further, economists’ projections differ, but the current consensus argues that foreclosure rates will continue to rise through at least the end of Q2 2008, as the second wave of mortgage-resets begins to take effect.

One bright spot: Starting today, the Federal Housing Administration can temporarily insure single-family loans up to 125 percent of each area’s median price, with a minimum of $271,050 and a maximum of $729,750, The San Francisco Chronicle reported Thursday. The change, part of the Economic Stimulus Act of 2008 approved by Congress earlier this year, is expected to be become an attractive new option for low-down-payment / sub-par credit borrowers in high-cost states, such as California. The old FHA limits were $200,160-362,790 depending on location.

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Filed under: Forecasts, Economic data, Housing

U.S. pending homes sales were flat in January 2008, the National Associations of Realtors announced Thursday, in a statement, with the association also forecasting a gradual housing sector recovery in the second half of 2008.

Economists surveyed by Bloomberg News had forecast that January 2008 pending sales would fall 1%.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January 2008, held at a stable level of 85.9, unchanged from December 2007, but was 19.6% below the January 2007 reading of 106.8, the NAR stated.

Regional stats

By region, the January 2008 Pending Home Sales Index was as follows: Northeast, down 4.1%; South, down 6.1%; West, up 13.0%; and Midwest, up 0.6%.

Further, the NAR anticipates existing-home sales to remain flat at about an annual level of 4.9 million in 1H 2008 before improving to a 5.8-million pace in 2H 2008. Assuming a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen rising 3.5% to 5.60 million in 2009, the NAR said.

In addition, the aggregate existing-home price is projected to decline 1.2% to a median of $216,300 in 2008, and then increase 3.5% to $223,800 in 2009.

Meanwhile, the NAR expects new-home sales to decline 23.7% to 590,000 this year before rising 7.2% to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1% to 1.01 million this year, and then continue to slip another 2.7% to 987,000 in 2009.

Economic Analysis: A surprisingly tame January 2008 pending homes sales report, but the telling data here’s the rather optimistic — and unrealistic — NAR predictions regarding the 2009 housing market. In 2009 the NAR expects existing home sales to increase 3.5% and new home sales to increase 7.2% — goals unlikely to be achieved given the high level of home inventories nationally. Further, the NAR’s 2009 existing/new home sales forecasts look all the more problematic when one notes that the NAR also expects the U.S. economy to grow 1.5% in 2008 before accelerating to 2.4% in 2009: a 1.5% 2008 GDP growth level would not be high enough to give the economy the tailwind needed to generate the 2009 existing/new home sales the NAR anticipates.

With the above as a backdrop, the NAR’s projection that the aggregate existing home price will rise in 2009 to $223,800 also has to be viewed as an optimistic forecast.

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Filed under: Market matters, Housing, Cramer on BloggingStocks, Recession

TheStreet.com’s Jim Cramer states this default should send shudders through each institution with a credit line.

Sure I was hoping it wouldn’t come to this, but right now we don’t even have enough money in the system to purchase one asset and sell another and take advantage of the differences.

I know you could argue that who cares, people shouldn’t be levering up like that anyway. All people should be able to do is borrow a tiny bit against their collateral and do nothing else.

But we’ve trillions of dollars invested in a system where we own one asset and we bet another asset against it, either as an arbitrage or a way to pick up extra interest. A lot of the mortgage REITs that you see going under, and have gone under, were companies that existed to exploit differences in residential mortgage prices. They took on some credit risk, meaning that the assets they purchased weren’t rock solid but had been as long as housing didn’t depreciate too much, but they had good steady businesses.

But those have now been obliterated by the decline in the value of the collateral.

Today with the default of Carlyle Mortgage, we are seeing that even companies that took on no credit risk, companies that make bets on rock solid bureau paper, can go under. Agency paper is about as good as it gets below treasuries and has implicit guarantees of the government. If that paper is worthless we are all worthless.

This is all really about the lack of capital to lend to these entities. The system doesn’t have it.

That’s what Carlyle is about. No one has the money to pay those who borrow on a big scale to make bets on financial assets.

I’ll be following this new development all day but it should send shudders through each single institution with a credit line in the country this day.

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RELATED LINKS:

• Time for the Dow to Drop Alcoa
• Should You Buy It? Charting GrafTech’s Potential

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in stocks mentioned.

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Filed under: Forecasts, Economic data, Housing, Federal Reserve, Recession

Alan Greenspan may appear to have a gift for the obvious. He states that a recovery in the housing market is necessary for a recovery of global credit markets. Since subprime and other mortgage instruments have pulled down earnings at a number of large banks and brokerages, that would not seem to be any news.

“The sooner we can get home prices in the United States stabilized, the sooner we will resolve all questions,” Greenspan said, according to Reuters.

Greenspan may be wrong. If banks can wash mortgage problems though their balance sheets by aggressive write-downs, they may be able to build a firewall against rising default rates. The federal government may also step in through the FHA to help refinance or “guarantee” a number of home loans.

The comments also neglect to acknowledge that most huge companies have record sums of cash on their balance sheets, by one measure over $600 billion at the firms in the S&P Industrial Index. Earnings at many companies may drop but their core finances probably won’t be threatened.

Housing may be important, but it is only one leg on the stool.The government’s biggest job now is to make sure that all the other legs are healthy.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: JPMorgan Chase (JPM), Federal Natl Mtge (FNM), Economic data, Housing, Federal Reserve

AFXNews reports that Thornburg Mortgage Inc. (NYSE: TMA) is bankrupt. That’s because it couldn’t come up with $28 million it owed JPMorgan Chase & Co. (NYSE: JPM). Specifically, Thornburg needed to pay JPMorgan — to whom it owes $320 million — the $28 million for a margin call.

According to The Associated Press, the notice of default from JPMorgan triggered cross-defaults “under all of the company’s other reverse repurchase agreements and its secured loan agreements.” According to MarketWatch, Thornburg has been facing margin calls due to a 15% drop in the value of mortgage-related securities in early February.

Margin calls are a common response from investors when securities bought with loans rapidly lose value. If they fall too far too fast, they might hit triggers that require the issuing company to either shore up their position or sell off additional assets.

What exactly is going on here? Thornburg specialized in adjustable-rate “jumbo” mortgages — those greater than $417,000 and “Alt-A” loans — which, like subprime ones, have been abused by people who overstated their income on mortgage applications. The jumbo loans are typically not bought by Federal National Mortgage (NYSE: FNM) so they’re less liquid. And the Alt-A loans have seen rising defaults and are the subject of government investigations.

Garbage in, garbage out. In response to this morning’s announcement, Thornburg stock is down 43% in pre-market.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Filed under: Major movement, International markets, Products and services, Consumer experience, Middle East, Economic data, Commodities, Oil

Oil prices are moving to the upside again this day, adding to yesterday’s strong gains to trade up as high as $105.97 a barrel.

On Wednesday, oil prices surged on two basic factors. The first being a decline in U.S. inventories (the first in eight weeks), and the second being OPEC’s decision not to adjust its production quotas. While the inventory report may have come as a surprise to some, the OPEC decision was mostly expected, as the oil cartel had been hinting all along that it wasn’t in favor of lifting its output.

The primary reason though why traders are pushing prices higher is Wednesday’s inventory report. Analysts had been expecting to see an increase for the eighth-straight week, but instead were served up data that showed crude supplies dropping by 3.1 million barrels.

Also adding support to high oil prices is the ever declining U.S. dollar, which just can’t seem to turn itself around. The dollar once again dropped to a new all time low versus the euro (surpassing yesterday’s record) and pushed the euro as high as $1.5329.

How much higher oil can continue to go remains to be seen, but for now at least, all signals are pointing to prices remaining above the psychological $100 price barrier for some time to come.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.

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