Real estate: Values keep plummeting
Just when you thought the news about home values couldn’t get any worse, it does, said Daniel Taub in Bloomberg.com. Zillow.com, a Seattle-based provider of real estate data, reported this week that U.S. home values plunged a jaw-dropping $1.9 trillion through the first three quarters of 2008, “and are likely to fall further this quarter.” The losses already exceed the $1.24 trillion in real estate value that was vaporized in all of 2007. About 11.7 million people—or one in seven homeowners—now owe more on their homes than those homes could fetch on the open market.
Prices dropped in 133 of the 163 markets nationwide that Zillow tracks, said Les Christie in CNNmoney.com. The three worst-hit areas were all in California. The average price in Stockton fell 32.3 percent, to $210,179, while nearby Merced was close behind at 32.1 percent. Surprisingly, most of those houses weren’t financed by subprime mortgages. That’s scary because it suggests that “there are other toxic mortgage products whose default rates probably have not peaked.”
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
Legal affairs: Siemens settles U.S. bribery charges
Siemens, the giant German engineering firm, is closing the curtain on its long-running bribery scandal, said Mike Esterl and David Crawford in The Wall Street Journal. The firm this week agreed to pay the U.S. $800 million to settle charges that it “spent more than $1 billion bribing government officials around the globe.” The bribes—including payments to former Argentine President Carlos Menem—were allegedly authorized by “the top echelons of Siemens management,” who were eager to win lucrative infrastructure contracts with foreign governments. A similar settlement with German authorities is expected soon.
Investing: Citi, UBS to buy back disputed bonds
Citigroup and Switzerland’s UBS agreed last week to buy back $30 billion of auction-rate securities from their customers, said Ronald Orol in Marketwatch.com. The move ends litigation by the Securities and Exchange Commission, which charged that Citi and UBS, among other brokers and banks, “falsely marketed the securities as highly liquid.” Purchasers believed they could sell their securities at weekly auctions, but those auctions failed when brokers and banks stopped supporting them with their own bids.
Deals: Huntsman, Apollo call off buyout
Apollo Management this week called off its proposed $6.5 billion acquisition of privately held chemicals giant Huntsman Corp., ending “a nasty, six-month war,” said Peter Lattman in The Wall Street Journal. The breakup is a costly one. Apollo, a private-equity firm, will pay $1 billion to back out of the deal. But it could have been worse. Huntsman had sued Apollo for $3 billion, and Apollo boss Leon Black might have been personally liable for much of the judgment if Huntsman had prevailed in court.
Hotels: MGM Mirage sells Treasure Island
Struggling hotel-casino operator MGM Mirage this week agreed to sell its Treasure Island Hotel & Casino to billionaire developer Phil Ruffin, relieving the company of a heavy financial burden, said the Associated Press. Ruffin skirted the credit crunch, paying $500 million in cash and giving MGM Mirage a two-year note for $275 million. “We are able to complete a transaction at the right price with no financing involved,” said MGM Mirage spokesman Alan Feldman. The company expects “a substantial gain on the sale.”
