The Daily Digest - Nov 26

Wednesday, November 26, 2008, 10:10 PM

Downturn in China puts breaks on industry, mortgage rates plummet, a Bloomberg interactive on where that $7.4 trillion went, commercial real estate - the next shoe to drop, Treasury conference call reveals insider bias, and buy one get one free (trucks). 



A Global Downturn Put the Brakes on China's Industry 

MA'ANSHAN, China - The Ma'anshan Iron and Steel Company recently opened a giant $3 billion steel mill on the outskirts of this city. The mill, which covers one and a half square miles and has its own power plant and shipping port, was built to help meet China's seemingly insatiable appetite for growth. 

But during what should have been a peak production period two weeks ago, it was silent. Rolls of coiled steel sat near the end of a long assembly line as a few helmeted workers lounged about, playing with their mobile phones. 

Mortgage rates plummet 

NEW YORK ( -- Mortgage rates fell sharply yesterday after the administration announced that it will pump another $800 billion into credit markets to free up frozen consumer and mortgage lending. 

That number dwarfed previous government actions aimed at bolstering the mortgage lending market.

"The feds agreed to spend a half a trillion dollars to buy up mortgage backed securities and another $100 billion to fund lending for Fannie and Freddie; we're not talking chump change anymore," said Keith Gumbinger of HSH Associates, a publisher of mortgage information. 


(Interactive) Follow the $7.4 Trillion: Breakdown of the U.S. Government's Rescue Efforts Bloomberg


Commercial Real Estate - the Next Shoe to Drop 

The residential real estate sector is in shambles and, some economists say, will not recover until the end of 2010, at the earliest. Now it looks like commercial real estate may be the next block to fall in our "Jenga economy." 

On November 19, bonds and stocks backed by commercial real estate loans plummeted on investors' fears the struggling U.S. economy might lead to a wave of defaults.

Big real estate companies suffered big losses: shares of Simon Property Group, the top U.S. mall operator, declined 13%; Boston Properties Inc., owner of skyscrapers and office buildings in key U.S. markets, fell 12.1%. 

Mussolini-Style Corporatism in Action: Treasury Conference Call on Bailout Bill to Analysts (Updated) 

Various readers wrote us, and it was confirmed by a detailed report on the call at DealBreaker, that the Treasury Department held a conference call this evening for analysts on the bailout bill. A memo was evidently sent to SIFMA members; others may have been contacted by other means. But the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident. 

This is simply scandalous. To have a group of interested parties get a privileged briefing by government officials on a matter of keen public interest flies in the face of what a democracy is supposed to be about. The proper method would either be a published FAQ on the Treasury website or a briefing with the media included. But why should I be surprised? Favoritism has been a staple of the Bush Administration. 

Barack Obama announces a new economic advbisory board (with Paul Volker on it)

Buy One Dodge Ram, Get One Free 

"Buy one new dodge ram, get a second dodge ram at no additional cost," reads the ad for Rob Lambdin's University Dodge. The auto industry is officially totally f$#@#d. In response to the ad, a commenter on quipped, "Well at least one of the Big Three is admitting that if you buy one of their new cars you will need a second one as a parts car for the first." I can't read the asterisks but our tipster says the deal is you buy one Dodge Ram Quad Cab 1500 and you get a Dodge Ram Single Cab for free. 


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