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Archive for December, 2008

Home Prices Continue Slide Down

NEW YORK — A closely watched index shows home prices dropped by the sharpest annual rate on record in October.

The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell by a record 18 percent from October last year, the largest drop since its inception in 2000. The 10-city index tumbled 19.1 percent, its biggest decline in its 21-year history.

Both indices have recorded year-over-year declines for 22 straight months. Prices are at levels not seen since March 2004.

Banks Won’t Reveal Where Federal Bailout Money Has Gone

WASHINGTON – It’s something any bank would demand to know before handing out a loan: Where’s the money going?

But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?

None of the banks provided specific answers.

Some banks said they simply didn’t know where the money was going.

There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that’s happening and there are no consequences for banks who don’t comply.

Motor City’s Woes Extend Beyond Ailing Auto Industry

DETROIT (AP) — One measure of how tough times are in the Motor City: Some of the offenders in jail don’t want to be released; some who do get out promptly re-offend to head back where there’s heat, health care and three meals a day.

For now, better times seem distant. Even with no hurricane or other natural disaster to blame, Detroit has – by many measures – replaced New Orleans as America’s most beleaguered city.

The jobless rate has climbed past 21 percent, the embattled school district just fired its superintendent, tens of thousands of homes and stores are derelict and abandoned, the ex-mayor is in jail for a text-messaging sex scandal. Even the pro football team is a pathetic joke, within two losses of an unprecedented 0-16 season.

And overarching these and many other woes is the near-collapse of the U.S. auto industry, Detroit’s vital source of jobs and status for more than a century.

The roots of Detroit’s current plight go back decades. Court-ordered school busing and the 12th Street riots of 1967 accelerated an exodus of whites to the suburbs, and many middle-class blacks followed, shrinking the city’s population from a peak of 1.8 million in the 1950s to half that now.

Detroit’s crime, poverty, unemployment and school dropout rates are among the worst of any major U.S. city. The bus system is widely panned; car and home insurance rates are high. Chain grocery stores are absent, forcing many Detroiters to rely on high-priced corner stores.

Detroit’s downtown abounds with symbols of past dreams – the still-gleaming round towers of the Renaissance Center of the ’70s, Super Bowl XL venue Ford Field, the three hotel-casino resorts with their gaudy exterior lights and cavernous gaming rooms.

Yet less than two miles from downtown stands the decaying, 18-story Michigan Central railroad station, built in 1913 and unoccupied for 20 years while developers shied way from the cost of restoring its Beaux-Arts grandeur.

Along Grand River Avenue, a six-lane thoroughfare leading from downtown to the northwest, liquor stores and check-cashing outlets alternate with scores of abandoned commercial buildings, some boarded up, others just gutted shells.

“Detroit is a very giving community, but it’s hard to reach out beyond your capacity,” said Jones, who recently retired as chief operating officer of Chrysler Financial and will become head of Focus:HOPE on Jan. 1

“I hope the region is prepared to band together, because we’re all in this together,” he said. “We won’t get through the tough times if we don’t have a dream of what’s ahead.”

Big Three Bailout is Near

DETROIT, Dec 18 (Reuters) – General Motors Corp and Chrysler LLC made significant progress late Thursday on a deal to secure emergency loans as part of a U.S. government aid package, people familiar with the talks said.

The package would demand sweeping restructuring at the troubled automakers in exchange for bridge loans to carry GM and Chrysler for several months, according to the sources.

Emergency federal loans for the two companies could be announced by the government as early as Friday, according to the sources who were not authorized to discuss the negotiations.