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Updated: 2014-10-02T22:01:54.993-07:00


Central banks lead subtle shift away from dollar


Tue Nov 3, 2009 4:31pm ESTBy Steven C. Johnson - AnalysisNEW YORK (Reuters) - Central banks with trillions of dollars in reserves that are already stepping up euro and yen purchases will likely continue doing so in coming years, driven by worries over the stability of the greenback.A record U.S. budget gap and the rise of dynamic developing economies like China suggest the dollar, down over 20 percent since 2002 on a trade-weighted basis, has further to fall.Of course, the dollar comprises some two-thirds of global reserves and will remain dominant in most holdings, as attempts to dump it would destroy the value of central bank portfolios.But with the speed of reserve accumulation increasing after a crisis-induced lull late last year, policy makers can choose to park more new cash in euros and yen without having to sell existing dollar assets."I think 2009 will be remembered as a watershed moment for currencies," said Neil Mellor, strategist at BNY Mellon, which has some $20 trillion in assets under custody. "I don't think there will be an imminent move, but it is quite clear there's a plan to shift reserves to a more balanced portfolio."Barclays Capital research showed that central banks that report reserve breakdown put 63 percent of new cash coming into their coffers between April and July into non-U.S. currencies."There's an incipient desire to reduce the dollar share of reserves, and central banks will use any opportunity to do it, provided it doesn't cause the dollar to fall out of bed," said Steven Englander, chief U.S. currency strategist at Barclays.International Monetary Fund data shows the dollar's share of known world reserves has been declining since it stood at 72 percent in 1999, the year the euro was introduced. As of the second quarter of 2009, it accounted for 62.8 percent.To be sure, some of that shift is driven by the dollar's decline against a basket of currencies over that period.But the Barclays data, which removes valuation effects, shows the second quarter was the only one in which central banks accumulated more than $100 billion in reserves and put less than 40 percent into dollars, down from a 70 percent quarterly average back to 2006.Overall reserves rose 4.8 percent to $6.8 trillion in the second quarter, the IMF said, the first increase in a year.CATCHING UP TO THE DOLLARPolicy makers acknowledge the dollar will remain a linchpin of global finance for many years to come. But it has fallen steadily on a trade-weighted basis over the last decade, a troubling sign for China, Russia, India and other big U.S. creditors holding trillions of dollars of U.S. Treasury debt.Worries about record deficits, run up as the United States borrowed hundreds of billions to stimulate an economy ravaged by financial crisis, has further diminished foreign demand for U.S. assets, making it likely the dollar will weaken further.For a graphic of the dollar's declining share of known reserves and rising U.S. budget deficit.And as others catch up to the United States, the dollar will share the stage with other currencies, said Barry Eichengreen, an economics professor at the University of California at Berkeley."The big beneficiary in the short run will be the euro, as only it has the requisite liquidity," he said. "But there's no reason why we shouldn't look forward to the advent of a multipolar reserve currency system."The euro's share of known reserves hit 27.5 percent in the second quarter, from 18 percent in late 2000, IMF data showed. Analysts say it could exceed 30 percent in coming years.The yen and sterling also stand to gain, while currencies from commodity exporters such as Australia may see more buying, Mellor said, particularly by energy-hungry emerging economies such as China, which holds $2.3 trillion in reserves.Barclays' data showed claims in "other currencies" beyond the big four -- dollar, euro, yen, sterling -- rose more than 10 percent between April and July.China does not report currency composition but is widely thought to hold around 70 percent in dollars.Russia, the third biggest reserve holde[...]

Sorry, no jobs. This is California


Thu Oct 15, 2009 11:42am EDTBy Jim Christie - AnalysisSAN FRANCISCO (Reuters) - If you're looking for work, don't look in California.The world's eighth largest economy is still finding its feet after suffering multiple economic shocks, including a housing slump, mortgage crisis and recession.Employers in California, the most populous U.S. state, are expected to keep cutting staff in 2010 as the wider U.S. jobs market recovers.As industries in other U.S. states prepare to rehire on signs of recovery, firms in California are still waiting for their economy to rebound.The state has 12.2 percent unemployment, above the national U.S. level of 9.8 percent, and at odds with California's image as an oasis of opportunity in hard times.California's economic engines -- Silicon Valley, Hollywood and gateway ports to Asia -- remain the envy of other U.S. regions but seem incapable of reducing Rust Belt-like unemployment rates.That is largely because of the Golden State's housing and home building crisis.In the 12 months through August, California's construction industry shed 142,000 jobs, or 18.5 percent of its work force, marking the largest decline on a percentage basis over the period of surveyed industry groups.Those workers are struggling to find new jobs in construction or other trades, according to analysts.House prices soared higher in California than in most other U.S. states earlier this decade and have crashed harder amid the credit crunch.Developers are trying to unload unsold new homes and real estate agents are relying on selling foreclosures for a large share of business.Tight credit and steep job losses have slimmed ranks of prospective home buyers, with many waiting for prices to drop further. At the same time, a number of other states are beginning to see home prices stabilize.Tumbling personal, corporate and property tax revenues have put the brakes on government hiring as manufacturers wait for consumer spending to pick up before adding jobs."We're calling for a jobless recovery," said Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp.California is not poised for relief from double-digit unemployment like the broader U.S. jobs market, which is expected to see joblessness peak at 10 percent in early 2010 and ease to 9.5 percent by the end of next year, according to the National Association of Business Economics.Analysts expect California's jobless rate to climb well into next year even as other measures of the state's economy regain some of their luster.Comerica Bank last week reported its California Economic Activity Index extended gains since March by rising to a reading of 101 in August and marking a "welcoming strengthening" of the state's economy, said Dana Johnson, the bank's chief economist."The key missing ingredient to a sustained and healthy rebound continues to be job growth," Johnson said. "It is the only component of our index that has not contributed positively since it bottomed five months ago."Similarly, California purchasing managers expect manufacturing to grow this quarter -- without new jobs.Chapman University's index tracking their views rose to 54.5 this quarter from 53.8 in the third quarter, a return to late-2007 levels and the second consecutive quarter of readings above 50, indicating expansion.Job seekers, however, won't benefit. Chapman University's index report said output and new orders are projected to increase in the fourth quarter, but employment and inventories of purchased materials are expected to decline at a faster rate compared to the third quarter.Manufacturers are reluctant to hire without definitive signs the recession is letting up, said Raymond Sfeir of the university's Anderson Center for Economic Research."They're trying to survive with as few workers as possible," Sfeir said. "They're not going to commit until they're more certain."Small- to medium-sized companies need more than economic cues to boost payrolls, Kyser said: "They're having trouble accessing bank lendin[...]

Heads or tails? It depends on how you flip it


By Jon Wilner and Mark EmmonsMercury NewsPosted: 10/16/2009 06:28:06 PM PDTUpdated: 10/18/2009 03:16:24 AM PDTEveryone knows the flip of a coin is a 50-50 proposition.Only it's not.You can beat the odds.So says a three-person team of Stanford and UC-Santa Cruz researchers. They produced a provocative study that turns conventional wisdom, well, on its head for anyone who has ever settled a minor dispute with a simple coin toss.It also could have profound implications in America's favorite sport — pro football — because the coin flip plays an integral role in deciding games that go into overtime.But first, here's what the researchers concluded: Using a high-speed camera that photographed people flipping coins, the three researchers determined that a coin is more likely to land facing the same side on which it started. If tails is facing up when the coin is perched on your thumb, it is more likely to land tails up.How much more likely? At least 51 percent of the time, the researchers claim, and possibly as much as 55 percent to 60 percent — depending on the flipping motion of the individual.In other words, more than random luck is at work.The humble coin toss has been the subject of considerable study by researchers exploring concepts such as probability and statistics. There even was an unscientific look by a prisoner who once flipped a coin 10,000 times inside his cell."But they've all been wrong because people write down whether it comes up heads or tails, but they don't know how itAdvertisementstarted," said Susan Holmes, a Stanford University statistics professor who co-authored the study, which was published in 2007. "You have to know how it starts.''And if you know that, the researchers believe, then you have a better chance of knowing how it will land.The power of a coin flipTossing a coin long has been a choice for deciding trivial matters — like a dinner-table spat over the last piece of pizza. But coin flips also have played much more prominent roles. The Oregon city of Portland got its name after a best two-out-of-three penny toss by two settlers. (Boston was the losing name.)There was a fateful coin flip on Feb. 3, 1959, that allowed early rock 'n' roll star Ritchie Valens to get a seat on a small plane that was supposed to carry him, Buddy Holly and two others to their next concert site. The plane crashed shortly after takeoff, killing all four.The coin flip even is found in literature and cinema. Javier Bardem won an Oscar for his role in the 2007 film version of Cormac McCarthy's "No Country for Old Men" in which the villain tosses a coin to decide whether he should kill someone or let them live.But nowhere in modern society does the coin flip loom larger than in sports — specifically the NFL.A coin toss determines which team gets the football first in overtime if the score is tied after regulation play. And heading into this season, the team winning the overtime toss had won 63.3 percent of the games — and won the game 43.3 percent of the time on its first possession, preventing the other team from even touching the ball.Consider the very first game of the season, on Sept. 10, when Tennessee quarterback Kerry Collins called the overtime coin toss and lost. Pittsburgh elected to receive the kickoff and marched down the field for the game-winning field goal. But before the coin flip, referee Bill Leavy, a former San Jose policeman and firefighter, had held the silver dollar out on his thumb. It would have been clearly visible to Collins if he had looked.The Stanford and University of California-Santa Cruz researchers would suggest that Collins missed a golden opportunity to shade the odds in his favor.Although the study's results would seem to potentially tilt the NFL's playing field, the league office in New York doesn't believe it has a problem. Officials were surprised that anyone had bothered to conduct a study examining coin-tossing odds.They studied what?At the 49ers training facility in Santa Clara, players had two initial reactions:1) [...]

Will Renting Be The Undoing Of Home Prices?


CNBC ran a brief segment on the number of people who have decided to rent homes and apartments rather than buy them. The point of the reporting was simple. People who need to move out of their houses sometimes cannot sell them. Instead, they rent wherever they have moved and hope to sell their homes later when the market improves.
In addition, people who cannot sell their homes often rent them out to others to help cover mortgage and maintenance costs.

What has been lost in the review of home buying and renting habits is that some people who own a home will decide never to buy one again. The reaction to losing so much money on what is the largest investment many people will ever have will be, in many cases that they will not come back to the real estate market again. People who have suffered through anxious months not knowing if they will be able to pay their mortgages may decide that it is not an experience they want to repeat.

There are currently 3.4 million homes for sale in America. The average prices of these homes drops each month. Neither lower interest rates nor better prices are bringing buyers back into the market. Too many people believe that the market has not made a bottom. No one wants to own real estate that could lose another 15% of its value.
The renter does not have to lose sleep over the issue of whether his home will fall further in value. He does not have to worry about an ARM with an interest rate that might be set higher. Renters do not even have to worry about major repairs, the great enemy of the homeowner.

Renting was considered a fool’s way of living just a decade ago. A renter could not get equity in a property like the one that his homeowner friends had. A new house could double in value in ten years, offering the owner ready access to capital, a way to educate children and pay for vacations. With very few people willing to believe that those benefits are still a part of owning a home, the incentives to buy one have dwindled.

Realtors believe that the economy is at the root of the reason that people will not buy homes. That is true to some extent. People who are worried about their jobs or have seen their stock market holdings lose half of their values are not likely to be in the market. But, the shift may be more profound than that. Renting could become the norm for many people, especially those who cannot foresee a future when real estate is an asset which can rapidly increase in value again.

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Friday, February 20, 2009, at 6:00 p.m. EST.

Worries over a nationalized banking system pushed the Dow Industrial Average to an intraday low of 200. At the close, the Dow plunged 100 points, closing at 7,366, while the Nasdaq lost one point, closing at 1,441. The S&P 500 fell almost 9 points, closing at 770. Oil closed $0.54 lower at $38.94 per barrel, and gold closed $25.70 higher at $1,002.20 per ounce.

Wall Street has not reacted well to any measures presented by the Obama Administration to address the banking crisis, the credit crisis, and the deflationary slide of the housing sector.

Date News Event Dow Average

1/30 Fourth quarter GDP down 3.8 percent Fell 148 points

2/5 Obama/Geithner announce executive pay cap Fell 122 points

2/10 Geithner releases $2 trillion bank rescue plan Fell 382 points

2/13 House passes $787 billion stimulus bill Fell 82 points

2/17 Obama signs $787 billion stimulus bill Fell 298 points

2/19 Banks fear Nationalization Fell 89 points

2/20 Confusion after Bernanke speech (today) Fell 100 points

- 12 million home mortgages are under water.
- At least 344 banks have received TARP funds.
- Europe and the U.K. are sliding into a deep recession.
- GDP growth and profits growth will be negative in 2009.
- The Dow peaked at 14,164 on 10/9/07. Today the Dow is at 7,300 down 6,867 points or 48 percent.

Our Washington politicians will not be able to stop the next Great Depression from unfolding between 2010 and 2022, a period of 12 years. Pay off all debts. Sell all of your real estate, if possible.

During a deflationary depression the price or value of virtually everything will decline from current levels. Selling the personal residence is a very personal decision.

All of the bubbles including commodities, the stock market, and real estate will eventually burst and crash. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth have already turned negative.

The next Hotline Update will be on Tuesday, February 24, 2009, at 6:00 p.m. EST.

Price Drops to Continue


JANUARY 13, 2009, 9:07 P.M. ET

Home prices are likely to be lower in two years in more than one-quarter of the nation's housing markets, according to a new study by mortgage insurer PMI Group Inc.

The study "tells us ... that we are far from a rebound in prices," says PMI chief economist David Berson. The risk that home prices will be lower in the third quarter of 2010 increased in 97% of 381 metro areas, according to the PMI analysis, though in many markets that risk remains relatively low.

The markets with the greatest risk that home prices will be lower in two years include California's Inland Empire, the greater Miami area, Lake Havasu City-Kingman, Ariz., and Cape Coral-Fort Myers, Fla. Metro areas with the lowest chance of price declines include the Dallas-Fort Worth area, greater Houston and Pittsburgh.

In developing its risk index, PMI considers recent trends in home prices, housing affordability, unemployment rates and foreclosures, among other factors. The study included data through the third-quarter, but there was little sign of improvement since then, Mr. Berson says. Falling mortgage rates were a plus for the housing market, he says, "but offsetting that is the fact that unemployment rates are up everywhere, home prices fell further in the fourth quarter and the foreclosure rates probably increased in most places."
—Ruth Simon

U.S. mortgage applications slump to 8-year low


Wed Feb 11, 2009 7:28am EST

By Lynn Adler

NEW YORK (Reuters) - Demand for U.S. mortgage applications tumbled nearly 25 percent last week, with requests for loans to buy homes sinking to an eight-year low, the Mortgage Bankers Association said on Wednesday, as potential buyers hold out for better terms and government help.

The Mortgage Bankers Association's seasonally adjusted home purchase applications index slid 9.8 percent in the week ended February 6 to 235.9, its lowest level since the end of 2000.

Average 30-year mortgage rates slipped to 5.19 percent from 5.28 percent a week earlier, the trade group said.

The rate has fallen more than a full percentage point in three months, but is up about 3/8 point from early this year and seen heading lower.

"In addition to waiting for the rate, you have home prices continuing to come down, so why would I pay $200,000 today when I can pay maybe $180,000 in a couple months or even $150,000," Daniel Penrod, industry analyst for the California Credit Union League in Rancho Cucamonga, California, said on Tuesday. The government is "really pushing against some very strong forces."

U.S. Treasury chief Timothy Geithner on Tuesday proposed pumping $2 trillion into the banking system to sop up bad assets, restore credit and revive lending at lower mortgage rates.

Expectations that government steps could yank 30-year home loan rates near 4 percent, a proposed $15,000 home-buying tax credit and the outlook for still lower house prices has raised the incentive to wait.

Home prices through November tumbled at least 25 percent from their mid-2006 peak, according to Standard & Poor's/Case-Shiller Home Price indexes. The descent should persist, with a record number of foreclosed properties dragging down market values, analysts have said.

The Mortgage Bankers Association's loan refinancing gauge tumbled 30.3 percent to 2,722.7 last week, its lowest level since the November 21 week and a far cry from the 7,414.1 reached in January when 30-year mortgage rates fell to 4.89 percent.

Intensified government actions will help, Penrod said, but the needed elixirs are more bank lending and a more stable employment picture.

"There's no urgency to jump in until prices settle," Penrod said. "Given the current state of unemployment and the projections there is still downward movement coming in the first half of the year for non-foreclosure sales and prices."

U.S. employers slashed nearly 600,000 jobs in January, the biggest monthly cuts in 34 years, while the unemployment rate set a 16-year peak.

The $15,000 home buyer tax credit that is part of the economic stimulus program adopted by the U.S. Senate would create nearly 500,000 home sales and add 255,000 jobs in the coming year, according to the National Association of Home Builders.

Analysts had also been predicting that at least a third of home owners applying to cut costs by refinancing would be turned down because of more rigid lending standards, job loss or because their home values have fallen below the size of existing mortgages.

Borrowers with mortgages that surpass their appraised home price are called "under water," or "upside down."

"Even with the proposed tax break and the rates dropping way down, it unfortunately doesn't change the water level for those drowning in their home debt," Penrod said.

(Editing by Leslie Adler)

The Panic of 2008-2009


Michael ShulmanOptionsZone.comUp, down, up, down – 800-point market gains, bookended by 400-point losses and punctuated with 200-point gains.The dizzying market activity of 2008 is forcing investors to the sidelines to hide their cash (and contend with their newfound case of vertigo).If you’re looking toward Wall Street for some reassurance that this whipsaw trading action will stop anytime soon, well, here is the growing mantra on Wall Street:First housing failed, then the credit and equity markets, and now it’s the economy’s turn. A neat, three-step process for economic meltdown.And now that we’re in this third leg, according to the Street, the markets are now nearing a bottom.If you listen to the pundits, the markets will be heading up as soon as the Street sees a bottom in the recession – perhaps Q3 of next year – which means a sustainable market bounce in Q1, maybe Q2 of 2009.Well, if you believe that, would you like to buy a bridge? (The one closest to Wall Street – the Brooklyn Bridge.)Why do I say that? Because only a sucker could believe this nonsense coming out of Wall Street.Let the suckers listen to the talking heads and invest (or not invest) accordinglyAnalysts' Off-the-Wall (Street) ExpectationsThere are three fundamental reasons why Wall Street is dead-wrong on a quick turnaround for our economy and the stock market:1. The Street sees a bottom in housing prices in early- to mid-2009.If you do third-grade math on publicly available information for mortgages, housing inventory, the population and credit standards, you will see this will happen in mid- to late-2011. With this disconnect comes unreasonable assumptions about future bank write-downs and future consumer spending.2. The Street sees a slowdown in write-offs and thinks the credit markets are already healing.This is the reason it was surprised by Wachovia’s (WB) write-offs and why the talk is uneasy when it comes to Citigroup (C), the book of business Morgan Stanley (MS) got with Washington Mutual (WM) and what exactly Bank of America (BAC) is finding as it sorts through Countrywide’s balance sheet.The Street is also in willful denial about the coming sharp acceleration in bad credit card, home equity and auto loan debt due to the recession. And, as long as write-offs continue and eat away at bank capital, lending will continue to contract.3. The Street says the consumer is tapped out and will be for at least three quarters.Consumers are not just tapped out – they are only beginning to suffer and will soon go into hibernation. The $800 billion in home equity draw-downs that supported spending in past years has nearly evaporated down to a few billion. Consensus estimates now put future unemployment at 8% – I see it a couple of points higher – which means even less consumer spending; Our proprietary ChangeWave Research network surveys show some of the worst consumer and business spending plans in the past seven years.Businesses are not getting the credit to expand or even stay afloat; they see fewer consumers spending and more cutting back; and export markets are imploding due to the credit crisis and the rapid rise in the dollar. GDP is contracting and will continue to do so faster than Street estimates.The bottom line: We are not near the beginning of the end of this crisis; we are at merely at the end of the beginning.Reality Has a New DefinitionOver time, equity markets will face reality and come way down. But even if the market stays where it is right now, this does not mean we cannot make money through this crisis – you can.So, let’s take a hard, fundamental look at the crisis – without ideology or willful optimism – and from there, you will see how profits can head your way once you join us at ChangeWave Shorts.The Epicenter – HousingThe epicenter of this crisis – as I have been saying since February 2007 – is the U.[...]

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Tuesday, January 20, 2009, at 6:00 p.m. EST.

Financial stocks led the market lower today. At the close, the Dow plunged 332 points, closing at 7,949, while the Nasdaq dropped 88 points, closing at 1,441. The S&P 500 fell almost 45 points, closing at 805. Oil closed $2.23 higher at $38.74 per barrel, and gold closed $15.30 at $855.20 per ounce.

Fears that the global banking crisis is worsening sent financial stocks plunging today, with many companies' shares down by double-digit percentages and Citigroup Inc. diving to a 17-year low.

U.S and British banks are still suffering losses from loans and are warning that those losses will not subside anytime soon. Regional banks as well as the big money center banks are struggling.

Evidence that the banking crisis is worsening overseas also rattled investors. Bank stocks also dropped in the aftermath of multibillion losses announced Friday by Citigroup Inc. and Bank of America Corp.

An $825 billion stimulus bill will not stop the next Great Depression to unfold between 2010 and 2022, a period of 12 years. Pay off all debts. Sell all of your real estate if possible.

All of the bubbles including commodities, the stock market, and real estate will burst and crash. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth will turn negative by mid-2010.

The next Hotline Update will be on Friday, January 23, 2009, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Tuesday, January 13, 2009, at 6:00 p.m. EST.

Falling commodity prices continue to weigh on the market. At the close, the Dow lost 25 points, closing at 8,449, while the Nasdaq gained 7 points, closing at 1,546. The S&P 500 gained slightly more than one point, closing at 872. Oil closed $0.19 up at $38.27 per barrel, and gold closed $0.30 down at $820.70 per ounce.

The economic news is bad and it will get worse. A global recession is underway. A global depression will unfold by mid-2010.

Deflation is the Fed's biggest fear, because deflationary psychology is difficult to reverse. "Why should I buy a home today, when it will be cheaper next month or next year?" As a result, home prices continue to fall. Four-percent mortgage rates would help if our regulators could get the banks to lend money. Home prices still have much further to fall. An 11.2-month inventory of homes for sale weighs on the market.

On Thursday, January 8th, President Elect Obama said, "We will spend our way out of this mess." Investors and consumers do not believe an $800 billion stimulus bill will produce prosperity. FDR tried that with the New Deal in the 1930s. It did not work. The Great Depression of the 1930s still lasted 12 years. The next Great Depression will unfold between 2010 and 2022, a period of 12 years. Pay off all debts. Sell all of your real estate if possible.

The Kress major market down cycles bottomed on December 22. I expect a bear market rally to unfold between January and July 2009. This rally may or may not post new highs in 2009. This will be a temporary bear market rally, not a new bull market. All of the bubbles including commodities, the stock market, and real estate will burst and crash by mid-2010. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth will turn negative by mid-2010.

The next Hotline Update will be on Friday, January 16, 2009, at 6:00 p.m. EST.

Apartments Try to Stay Afloat


JANUARY 14, 2009

The rapid reversal of fortunes in commercial real estate is taking down yet another sector: apartment complexes.

Owners and developers of multifamily buildings are trying to stay afloat as the deteriorating economy and escalating job losses create difficulties in raising rents and shortfalls in projected revenues from these buildings.

While sharp declines in retail and office sectors of commercial real estate have commanded attention in recent months, some analysts say deterioration in the multifamily sector is quickly catching up.

A downturn in this sector also drags in housing mortgage giants Fannie Mae and Freddie Mac, which are already hurting from ...

Commercial Sector Expects Things to Get Worse


JANUARY 14, 2009Riverside-San Bernardino, Calif.By MAURA WEBBER SADOVI | SPECIAL TO THE WSJCalifornia's Inland Empire, the two-county region that stretches east of Los Angeles, has gone from a booming development smorgasbord to a basket case in a few short years.The Riverside-San Bernardino area's unemployment level rose to 9.5% in November, tying with Detroit to lay claim to the highest unemployment rate of any large U.S. metropolitan area, according to the Labor Department. Third-quarter home-foreclosure rates were the third-highest of the nation's metros surveyed by RealtyTrac and the area's median single-family home price fell 39.4% to $227,200 in the third quarter from a year earlier, according to the National Association of Realtors.The Inland Empire's commercial real-estate market also is by no means the picture of health. Roughly one-fifth of its office market is now vacant, store rents are plummeting and a rising number of warehouses are emptying as retailers have filed for bankruptcies and imports into the nearby ports of Los Angeles have slumped.Still, as in many parts of the country, for now the downturn of commercial property in this region isn't as severe as that of its residential sector and job market.Home to about 4.2 million people, the Inland Empire was favored in recent years by new residents and many industrial investors drawn to its expanse of relatively affordable land near Los Angeles.So far, the region's commercial market isn't yet topping out the nation's various misery indexes, but it appears likely things will get worse before they get better. "We don't know when and where the bottom is," says Tim O'Rourke, executive vice president with Jones Lang LaSalle's industrial group in Los Angeles.Mr. O'Rourke says the Inland Empire industrial market is still viewed as having long-term promise due to the area's above-average population growth and location. But as retail bankruptcies mount, an increasing amount of distribution space is going vacant, including a warehouse in Rancho Cucamonga previously occupied by Wickes Furniture Co., he says.Warehouse vacancies in the third quarter remained among the country's lowest, even after roughly doubling over the past 12 months, according to Boston-based Property & Portfolio Research Inc., a real-estate research firm. Harder hit are metrowide office vacancies, which rose above 20%, and fourth-quarter retail rents, which had the third-highest percentage decline of 76 major metros tracked by New York-based Reis Inc., a real-estate research firm.Delinquencies on commercial mortgages packaged and sold as bonds, which represent nearly a third of the commercial real-estate debt market, suggest the Inland Empire's retail market is getting hit particularly hard by the downturn, as evidenced by delinquencies on commercial mortgage-backed securities, or CMBS. A study of delinquencies in the region's largest cities and towns showed four retail properties with delinquent CMBS loans valued at a total of $165 million, according to Richard Parkus, head of research on such bonds for Deutsche Bank.There were no delinquent office, warehouse, apartment or hotel loans in the region, according to the CMBS survey. But the retail problems gave the market an aggregate commercial delinquency rate of 3.8% as of December, well above the overall national delinquency rate of 1.2%, Mr. Parkus says. "Retail is going to get slammed in the Inland Empire, and it's already starting," Mr. Parkus says.That outlook for the office and warehouse sector is also looking tougher. Financial companies are still emptying office space, including about 265,000 square feet in Rancho Cucamonga to be vacated by a unit of Citigroup Inc. in March.New supply also will raise competition for shrinking warehouse users. Wh[...]

Great Depression jobs parallel may not be far flung


By Pedro Nicolaci da Costa

NEW YORK (Reuters) - When economists tell us the current U.S. slump could never turn into another Great Depression, they all point to one thing: one of four Americans was out of work in the 1930s.

But since the definition of joblessness has changed over the years, this expert assessment might be too rosy.

As many as 25 percent of Americans were unemployed during the days of bread lines that symbolized the Depression, but that figure is more than three times the current 6.7 percent unemployment rate, the economists say. Even the most pessimistic estimates only foresee the rate rising barely above 10 percent.

"We are in a very, very different place than the U.S. economy was in the 1930s," James Poterba, president of the National Bureau of Economic Research told a recent Reuters Summit.

Or are we? Figures collected for Reuters by John Williams, from the electronic newsletter, suggest that, while we are not there yet, the comparison is not as outlandish as it might initially seem.

By his count, if unemployment were still tallied the way it was in the 1930s, today's jobless rate would be closer to 16.5 percent -- more than double the stated rate.

"I expect that unemployment in the current downturn, which will be particularly deep and protracted, eventually will rival, if not top, the 25 percent seen in the Great Depression," Williams said.

He and other critics have one particular sticking point with the current way of measuring unemployment: the treatment of discouraged workers.

Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.

"Both part-time workers wanting full-time work and discouraged workers tend to make the unemployment rate lower than it would otherwise be," says Robert Schenk, professor of economics at St. Joseph's College, Indiana.

The latest report, due on Friday, is expected to show another month of more than half a million job losses in December, and a jump in the unemployment rate to 7 percent.

However, some economists, including Kenneth Rogoff at Harvard University, now say joblessness could top 11 percent. Under Williams' methodology, that picture might look much more like the Great Depression.

(Reporting by Pedro Nicolaci da Costa; Editing by Kenneth Barry)

Apartment rents show first decline in over 5 years


Wed Jan 7, 2009 3:46am EST

BOSTON (Reuters) - Average rents for U.S. apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released on Wednesday.

Rents fell 0.4 percent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found.

The vacancy rate rose to 6.6 percent, a level last seen in the first quarter of 2005, and up from 5.7 percent a year earlier.

While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.

"The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide," Calanog said.

The current global economic downturn can be traced back to the decline in U.S. home prices that began in the middle of the decade. That led to a collapse in the subprime lending market, which last year snowballed into a global credit crunch.

The slump is not confined to residential properties. Reis data released on Tuesday showed that office rents across the United States fell 1.2 percent in the fourth quarter, as a slumping economy drove vacancy rates higher.

Shares of major U.S. owners of apartment complexes including Apartment Investment and Management Co, Equity Residential and AvalonBay Communities Inc have been pummeled in recent months.

(Reporting by Scott Malone; Editing by Tim Dobbyn)



From inflation to deflation, or de-coupling to contagion, it was a year of unprecedented swings, not only in global markets but also in conventional wisdom.

Oil CLc1 started the year setting a series of records that culminated with prices hitting a peak at little under $150 in July.

It heads to the end of year below $39 a barrel, as investors have adjusted to the new economic order.

Prices will rise in 2009, but not by much. Analysts are forecasting an average of $49 a barrel for U.S. crude in the first quarter, and an average of $58.48 for the year.

In between, bursts of volatility in oil prices are expected as shown by the violence between Israel and Islamic group Hamas that sent oil prices jumping as much as 12 percent on Monday.

"Basically, the situation globally is much worse than expected. It's all very pessimistic numbers," said Tetsu Emori, a fund manager at Astmax Co Ltd in Japan.

Meanwhile, the U.S. dollar ends on a weakening tone, with the safe-haven bid that only a few months ago sent the greenback rallying all but forgotten now that the Federal Reserve intends to keep U.S. interest rates at near zero.

Japan's yen surged about 19 percent this year to post its biggest annual percentage gain since 1987, denting the prospect of exporters in the world's second-largest economy.

British sterling is pinned at near record lows amid a truly dire outlook for the U.K. economy.

The euro edged up to $1.4115 in Asian trade, from $1.4072 late on New York on Tuesday, while the dollar was down almost 1 percent .DXY at 80.627 against a basket of currencies.

The euro was holding firm at 97.75 pence against the sterling, having touched a high of 98.05 on Tuesday, near parity for the first time since its launch in 1999.

Assets seen as safer during times of trouble outperformed. Gold was trading at $865.35 an ounce, down $6.75 from New York's notional close on Tuesday, but it still ends the year as one of few commodities to end the year firmer despite its traditional role as an inflation hedge.

Among the best bets this year were government bonds. U.S. Treasury benchmark yields have dropped this month to their lowest since 1950, amid an intense bid for safety, rock bottom rates and expected Fed buybacks of debt, including of mortgage-backed securities.

Benchmark 10-year notes dipped 4/32 in price to yield 2.067 percent on Wednesday, near the five-decade low of 2.04 percent struck earlier in the month. For the year, yields have tumbled 1.96 percentage points for their biggest yearly drop since 1995 and the second biggest in the last 20 years. (Additional reporting by Simone Giuliani in SYDNEY and Parvathy Ullatil in HONG KONG, Editing by Lincoln Feast)

More economic pain seen in 2009, govt's to pump up aid


* 2008 one of the worst on record, investors eye more government aid* More layoffs, bad loans, bankruptcies seen in near term* Business activity continues to shrink* Paulson says U.S. lacked tools to tackle financial crisis (For stories on the financial crisis, click on [nCRISIS]By Kim CoghillSINGAPORE, Dec 31 (Reuters) - Investors said good riddance on Wednesday to one of the worst years on record and prayed that massive government rescue plans will pull the global economy out of its fierce tailspin later in the new year.But more pain is expected in the near-term as bleak economic reports roll in, signalling more bankruptcies, bad debts and layoffs through at least early 2009, and more sleepless nights for everyone from central bankers to consumers struggling to pay off mortgages and credit card bills.The biggest financial crisis in 80 years, sparked by the meltdown of the risky U.S. subprime mortgage market, made this year one of the worst ever for investors as recession stalked the global economy."It has been a shocking year, hardly anything was spared in the market carnage," said Michael Heffernan, senior client adviser and strategist at Austock Group in Australia.European shares looked set to end the year with a 45 percent loss, their biggest ever annual drop and roughly in line with gut-churning declines on other major global markets.The slump wiped out nearly $14 trillion in market value, according to the benchmark MSCI world index of larger companies.For all markets, the damage was probably much worse. The World Federation of Exchanges, which tracks stock markets in 53 developed and emerging economies, said some $30 trillion in market value evaporated through end November.The crisis also radically changed the landscape of global finance, bringing down big U.S. investment banks Bear Stearns and Lehman Brothers, saddling many other international banks with huge losses and crippling the credit system that keeps the world economy humming.The U.S. S&P 500 benchmark has lost about 40 percent with just one trading day left in 2008. Its biggest yearly drop was in 1931 during the Great Depression, when it fell 47.1 percent.No sector has been spared from global banks to autos to resources, and even corner stores.Victims of the crisis are still piling up, with announcements almost daily of fresh company losses, more layoffs, and slumping prices for assets from cars to homes. Gold was one of the few commodities to end the year higher, gaining about 4 percent, as panicky investors fled stock markets for assets which are seen as safer during times of trouble.MORE BAD NEWSTuesday brought more dismal economic news in the United States, with single-family home prices down 18 percent in October from a year earlier and consumer confidence plunging to a record low due to severe job cuts. [ID:nN30339924]"We are not going to be seeing anything fundamentally positive from the U.S. for the time being," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.But with central banks cutting interest rates to spur growth, declining oil prices and governments pumping money into the system, Heffernan said there were some positive signs for 2009."The blood has been drained and we are now getting a transfusion."World governments have pumped more than $1 trillion into their economies to keep business afloat and save jobs, and more aid is expected in 2009 as leaders battle to stave off an even deeper and possibly longer recession.Global credit markets are showing some signs of improvement, but banks remain reluctant to lend to businesses and consumers, fearing a rash of bad loans as economies worsen.Government stimulus pla[...]

FOREX-Dollar rises; euro poised for yearly fall


* Dollar rises; euro/dlr eyes first yearly drop since 2005* Yen seen as standout FX winner in 2008* Pound down 27 pct vs dlr, worst since gold standard ended(Changes byline, adds comment, updates throughout)By Naomi TajitsuLONDON, Dec 31 (Reuters) - The euro fell against the dollar on Wednesday and was poised to post its first annual fall versus the U.S. currency in three years as a historic financial crisis sparked a rush into the dollar this year.Along with the yen, the dollar is seen ending 2008 higher against major currencies as the financial market meltdown and a global recession has triggered a wave of deleveraging and repatriation flows in both currencies amid extreme risk aversion.Currency moves were limited as traders closed their books at the end of a year which saw failures and part-nationalisations of banks around the world and an escalation of the credit crunch triggered as the U.S. subprime mortgage market went belly up.This triggered a massive slashing of global interest rates as central banks fought to shore up their economies -- the Federal Reserve and the Bank of Japan cut rates virtually to zero -- and analysts said that the gloomy economic scenario will continue to drive the currency market next year."The legacy of 2007-2008 is going to hang over into 2009. the question is whether we're going to see any traction on the economic backdrop and at least at this juncture that's difficult to see that occurring," said Jeremy Stretch, strategist at Rabobank in London.The euro is en route to posting a 3.9 percent fall against the dollar this year -- its first annual drop since 2005 -- while the U.S. currency is seen gaining roughly 5.5 percent against a basket of currencies .DXY.The yen inched up slightly, prodding the dollar down to 90.20 yen. Despite its rally against higher-yielding currencies like sterling and the Australian and New Zealand dollars, the U.S. dollar has tumbled roughly 19 percent against the yen since the start of the year.This year's standout currency is the yen, which has soared as the financial crisis prompted a massive unwinding of carry trades -- borrowing in the low-yielding yen to invest in higher-yielding assets elsewhere.Sterling stood out as the major currency loser in 2008. Its near 27 percent slide against the dollar this year would be the biggest since the gold standard was abandoned in 1971, while euro/sterling hovers around a record high and inches towards parity.The pound has taken a beating as the Bank of England frantically slashed rates to 2.0 percent this year, their lowest since the 1950s, and investors see more room for rates to fall. Analysts said that 2008 will remembered by currency market participants as a year of intense volatility as traders used foreign exchanges as a platform to put on risk-averse trades."People are shell shocked from the past year... It's been a roller coaster ride," said Stretch at Rabobank."Clearly it's been a year when forex has moved back up onto the radar screens of financial markets.2009 OUTLOOKWhile analysts agree that none of the world's major economies will be spared from recession next year, views are divided about how economic weakness will affect currencies.Rabobank's Stretch said that the euro is likely to continue a slide against the dollar from past weeks on growing expectations that the U.S. economy may be among the first to recover from the downturn, while the fragility of the euro zone economy is likely to become more pronounced in 2009.Still, other analysts say that ongoing U.S. economic woes and uncertainty about how the country will fund a massive fiscal stimulus programme when it is runnin[...]

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Tuesday, December 23, 2008, at 6:00 p.m. EST.

Existing home sales plunged in November. At the close, the Dow sank 100 points, closing at 8,420, while the Nasdaq lost 10 points, closing at 1,522. The S&P 500 fell 8 points, closing at 863. Oil closed $0.93 lower at $39.13 per barrel, and gold closed $9.10 lower at $838.10 per ounce.

The economic news is bad and it will get worse. The economic data is signaling a deep global recession

Existing home sales fell 8.6 percent in November. Home prices fell 13.2 percent year-over-year, the biggest decline on record. Analysts expect home prices to plunge further as foreclosures rise and unemployment continues to rise in the coming months and years. Economists expect unemployment to finally peak in 2013. The Fed, the U.S. Treasury, and Congress have done nothing to stop falling home prices, which is the principle cause of the deflationary credit collapse.

The Kress major market cycle bottomed on Monday, December 22. I expect a bear market rally to unfold between January and July 2009. This rally may or may not post new highs in 2009. This will be a temporary bear market rally, not a new bull market. I continue to believe all of the bubbles including commodities will burst by mid-2010. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth will turn negative by mid-2010.

The Wall Street Digest's office will be closed Thursday and Friday, December 25th and 26th, 2008 in observance of the Christmas Holiday.

The next Hotline Update will be on Tuesday, December 30, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Tuesday, December 2, 2008, at 6:00 p.m. EST.

Traders were apparently betting that Congress will bail out the auto unions, excuse me, the big three auto-makers. Stock prices soared right to the closing bell. At the close, the Dow jumped 270 points, closing at 8,419, while the Nasdaq rose 51 points, closing at 1,450. The S&P 500 gained 32 points, closing at 849. Oil closed $2.32 lower at $47.13 per barrel, and gold closed $6.50 higher at $783.30 per ounce.

The economic news is bad, and will get worse. The economic data is signaling a deep global recession.

The U.S. manufacturing sector hit a 26-year low yesterday. Treasury yields also hit record lows. GM auto sales fell 31 percent, Ford sales fell 30 percent, Toyota fell 34 percent, and Chrysler sales were down 47 percent.

On the plus side, there is a major market cycle bottom that is due on about December 21st. I expect to see a bear market rally to unfold between January 2009 and July 2009. This rally may or may not rise to new highs in 2009. This will be a temporary bear market rally, not a new bull market. I continue to believe all of the bubbles including commodities will burst by mid 2010. Nothing can stop the 2010-2012 bear market and recession because all of the engines of economic growth turn negative by the middle of 2010.

(A) If you are out of the market stay out and wait for a confirmed bottom.

(B) If you are market neutral with both long and short positions stay that way.

(C) If you are long the market, consider offsetting short positions using ETFs.

(D) If you are short the market, consider offsetting long positions using ETFs.

Now is a good time to read "The Great Bust Ahead" by Daniel Arnold, and "Dollar Crisis" by Richard Duncan.

Stay close to our Hotline Updates.

The next Hotline Update will be on Friday, December 5, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This is an Interim Wall Street Digest Hotline Update for Wednesday, November 12, 2008, at 6:00 p.m. EST.

Profit warnings by Best Buy helped push stock prices lower today. At the close, the Dow plunged 411 points, closing at 8,283, while the Nasdaq fell 81 points, closing at 1,499. The S&P 500 lost 45 points, closing at 852. Oil closed $3.17 lower at $55.75 per barrel, and gold closed $14.50 lower at $718.30 per ounce.

The market is testing the October lows. The completion of an inverse head-and-shoulders pattern could produce the final bottom followed by a strong 2- to 6-month bear market rally back to Dow 11,000 to 12,000.

(A) If you are out of the market stay out and wait for the bottom.

(B) If you are short the market stay short for now.

(C) However, if you are long the stock market, consider purchasing off-setting short positions so you are market neutral. Use Proshares 200 percent short ETFs to offset your long positions.

ProShares Ultra Short 200% Short

Dow 30 DXD

S&P 500 SDS

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Make no further portfolio investments.

Now is a good time to read "The Great Bust Ahead" by Daniel Arnold, and "Dollar Crisis" by Richard Duncan.

Stay close to our Hotline Updates.

The next Hotline Update will be on Friday, November 14, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This is an Interim Wall Street Digest Hotline Update for Wednesday, November 5, 2008, at 6:00 p.m. EST.

Uncertainty over the new administration pushed stock prices lower today. At the close, the Dow plunged 486 points, closing at 9,139, while the Nasdaq lost 98 points, closing at 1,681. The S&P 500 closed almost 53 points lower, closing at 952. Oil closed $5.23 lower at $65.29 per barrel, and gold closed $14.90 lower at $742.40 per ounce.

The market's gains since the Wednesday, October 27, 2008 bottom last week have been largely from short-covering. However, aggressive buying on Tuesday triggered a technical buy signal.

The pull-back today produced a better buying opportunity for investors.

Here are the best performing ProShares ETFs. All eight of these ETFs are leveraged 200 percent:

ProShares Basic Materials UYM

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ProShares Mid-cap 400 Index MVV

ProShares Nasdaq 100 Index QLD

ProShares Dow 30 Index DDM

This is a bear market rally that could move up to Dow 11,000, possibly 12,000 before the Recession and Bear Market of 2010-2014.

Now is a good time to read "The Great Bust Ahead" by Daniel Arnold, and "Dollar Crisis" by Richard Duncan.

Stay close to our Hotline Updates.

The next Hotline Update will be on Friday, November 7, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This The Wall Street Digest Hotline Update for Friday, October 3, 2008, at 6:00 p.m. EST.

The House passed the bail-out bill by a wide margin. A 300-point gain in the Dow Jones Industrial Average evaporated during the televised House vote. At the closing bell, the Dow fell 157 points, closing at 10,325, while the Nasdaq lost 29 points, closing at 1,947. The S&P 500 closed 15 points lower at 1,099. Oil closed $0.09 lower at $93.88 per barrel, and gold closed $11.10 lower at $833.20 an ounce.

Traders on the floor of the stock exchanges are saying, "the magnitude of the problem is greater than the bail-out bill." Fed Chairman Bernanke is flooding the banking system with money-an astounding $120 billion last week. If the banks don't start lending, Bernanke has the option of lifting banking licenses, which are issued by the Fed.

Credit is still tight and very expensive. The banking and housing stocks tumbled after the bail-out bill passed. The $700 billion bailout plus one trillion dollars to be created by the Fed will liquefy the banking system and inflate the last bubble; commodities.

The economy is sliding into a ditch. 2009 will be a very difficult year. An economic disaster is waiting for the next President.

The real value of the $700 billion TARA bail-out is to temporarily stop a financial collapse, which will give you time to prepare for the great Bear Market crash between 2010 and 2015.

Now is a good time to read "The Great Bust Ahead" by Daniel Arnold.

You should stay 100 PERCENT CASH. I do not have a buy signal for the stock market.

Stay close to our Hotline Updates.

The next Hotline Update will be on Tuesday, October 7, 2008, at 6:00 p.m. EST.

Wall Street Digest Hotline Update


This is The Wall Street Digest Hotline Update for Tuesday, September 30, 2008, at 6:00 p.m. EST.

Efforts to put the TARA bill back on the table pushed stock prices higher today. At the closing bell, the Dow soared 485 points, closing at 10,850, while the Nasdaq jumped 98 points, closing at 2,082. The S&P 500 closed 58 points higher at 1,164. Oil closed $4.27 higher at $100.64 per barrel, and gold closed $13.60 lower at $880.80 an ounce.

The powerful six-year down cycle bottomed today. But let's wait and see what the SEC does with the short-selling ban.

Trading on Monday was an exceptional 75-to-1, downside volume to upside volume indicating a sold-out market.

The Vix Volatility Index hit a multi-year high at 46.72, another indicator of a likely major market bottom. If Congress passes a convincing Main Street bail-out bill fairly soon, we could see a multi-month rally perhaps into December.

However, the economy is sliding into a ditch. 2009 will be a very difficult year. An economic disaster is waiting for the next President.

The real value of the $700 billion TARA bail-out is to temporarily stop a financial collapse, which will give you time to prepare for the great Bear Market economic crash between 2010 and 2015.

Now is a good time to read "The Great Bust Ahead" by Daniel Arnold.

You should stay 100 PERCENT CASH.

Stay close to our Hotline Updates.

The next Hotline Update will be on Friday, October 3, 2008, at 6:00 p.m. EST.

China's Wen says to cooperate to calm markets


09.28.08, 1:51 PM ET

United States - (Adds quotes, details, background)
WASHINGTON (Reuters) - Chinese Premier Wen Jiabao said Beijing was worried about the impact on its investments of U.S. financial market turmoil but now was the time to cooperate to calm markets.

"U.S. finance is closely connected with the Chinese finance," Wen said in an interview aired on Sunday on CNN.

"If anything goes wrong in the U.S. financial sector then we are anxious about the safety and security of Chinese capital," he said, but now was time to "join hands" to deal with the crisis.

"Now, cooperation is everything," Wen said in an interview that was taped last week.

He said Beijing still considered the U.S. economy to be "solidly based, particularly in the high tech industries and basic industries" but wanted to see it become more stable.

"The Chinese government hopes very much that the U.S. side will be able to stabilize its ... economy and finances as quickly as possible," Wen said. "Of course we are concerned about the safety and security of Chinese money here."

The United States is reliant on borrowing from China and other countries to finance its day-to-day operations. China at the end of June held $1.8088 trillion in foreign exchange reserves.

"We believe the United States is a credible country," Wen said. "Particularly at such difficult times China has reached out to the United States and we believe that such a helping hand will help stabilize the entire global economy and finances and prevent major chaos from occurring." (Reporting by Glenn Somerville; Editing by Neil Stempleman)

Copyright 2008 Reuters,

Lawmakers Reach Accord on Huge Financial Rescue


By Lori Montgomery and Paul KaneWashington Post Staff WritersSunday, September 28, 2008; 2:56 AMCongressional leaders and the Bush administration this morning said they had struck an accord to insert the government deeply into the nation's financial markets, agreeing to spend up to $700 billion to relieve Wall Street of troubled assets backed by faltering home mortgages.House and Senate negotiators from both parties emerged with Treasury Secretary Henry M. Paulson Jr. at 12:30 a.m. from a marathon session in the Capitol to announce that they had reached a tentative agreement on a proposal to give Paulson broad authority to organize one of the biggest government interventions in the private sector since the Great Depression.Full details of the plan were not immediately available. Lawmakers said their staffs would be working through the night to assemble the package and post it on the Internet."We've made great progress, but we have to commit it to paper before we can formally agree," said House Speaker Nancy Pelosi (D-Calif.), who has pledged to make the plan available to the public for at least 24 hours before the House votes on it. A vote could come as early as tomorrow in the House, with the Senate expected to follow soon after. "We've been working on this a long time. We've still got more to do to finalize it, but I think we're there," Paulson said. "So far, so good."Rep. Roy Blunt (R-Ohio), who represented House Republicans, the group that had raised the most serious objections to the plan, said he was pleased with the progress made but that he had to take the proposal back to his caucus before committing his support for it. "I look forward to what we're going to see on paper and presenting these ideas to my colleagues and getting their reaction," Blunt said.A senior administration official, who requested anonymity to speak freely about the plan, said both sides had made significant concessions to achieve compromise. The Bush administration has agreed to accept a number of Democratic demands, including:· The money would be dispersed in segments, with Paulson receiving $250 billion immediately, $100 billion upon White House certification of its necessity and the final $350 billion only after Congress has been given 15 days to object.· Firms participating in the bailout would be required to grant the government warrants to obtain nonvoting shares of stock, so taxpayers can benefit if the companies return to profitability. · Firms taking advantage of the bailout would be required to limit compensation for senior executives, with especially severe limits on "golden parachutes" at failing firms. The compensation limits will be enacted primarily, but not solely, through the tax code by reducing tax deductions for firms that pay executives more than $400,000 a year.The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years.Democrats also made a number of concessions, abandoning demands that bankruptcy judges be empowered to modify home mortgages on primary residences for people in foreclosure. They also agreed not to dedicate a portion of any profits from the bailout program to an affordable housing fund that Republicans claimed would prima[...]