Items of interest - updated:
Wiping away the sins.
Shannon D. Harrington & Elizabeth Hester / Bloomber:
Citigroup Rescues SIVs With $58 Billion Debt Bailout -- Citigroup Inc. will take over seven troubled investment funds and assume $58 billion of debt to avoid forced asset sales that would further erode confidence in capital markets. Moody's Investors Service lowered the bank's credit ratings.
The biggest U.S. bank by assets will rescue the so-called structured investment vehicles, or SIVs, taking responsibility for their $49 billion of assets, the New York-based company said in a statement late yesterday. [...]
``It speaks to a change in leadership,'' Joshua Rosner, managing director at Graham Fisher & Co., whose New York-based firm analyzes structured finance and real estate investments. ``It speaks to a new management who can wipe away the sins, call them someone else's and start to heal.'' [...]
The Ballooning Of Easy Credit Has Come Back To Roost -- [reports from Illinois, Michigan, and Wisconsin ... "times are less than good in real estate these days.”]
How Goldman Won Big on the Mortgage Meltdown -- A Team's Bearish Bets
Netted Firm Billions; A Nudge From the CFO
...The group's big bet that securities backed by risky home loans would fall in value generated nearly $4 billion of profits during the year ended Nov. 30, according to people familiar with the firm's finances. Those gains erased $1.5 billion to $2 billion of mortgage-related losses elsewhere in the firm. On Tuesday, despite a terrible November and some of the worst market conditions in decades, Goldman is expected to report record net annual income of more than $11 billion. . .
Recession Odds Stable at 45% --
Even though many have said that the 25 basis point cut by the Fed this week increased the odds of a recession because it was not enough, prediction markets have indicated that odds remain the same. Currently, the Intrade contract is putting the odds of a recession (2 consecutive quarters of negative GDP growth) in 2008 at 45.5%. As shown in the historical chart below, the odds have actually been trending slightly lower since mid-November.
Phoenix Home Sales: Lowest Median Price Since May 2005 -- many of the vacant homes are in submarkets that current buyers do not want, due to travel congestion, higher energy costs, lack of area amenities and uncertainty about the future appreciation in the area,” said Butler. “Thus, the 2007 resale housing market continues to show signs of increasing weaknesses that are well below the expectations of even a few months ago.” [...]