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Meanwhile, back in Connecticut

The Dow rose Tuesday, regaining nearly half of Monday's record losses. Bank stocks were up as was confidence that a solution to the economic crisis might be at hand. Connecticut Banking Commissioner reported that Connecticut's banks are stable but community banks will likely report third quarter losses due to Fannie Mae and Freddie Mac.

But there is good news around the state. In New Haven, development of the former New Haven Coliseum site was awarded to Northland Investment Corp. Northland was one of six bidders on the 4.5 acre redevelopment project. In addition to having experience in secondary and tertiary commercial real estate markets like New Haven, Northland was chosen due to its experience with green design and has a track record in Connecticut. Northland is the largest landlord in the city of Hartford and built Hartford 21, an apartment tower that is part of the Hartford Civic Center's redevelopment.

Madison, Connecticut met Hollywood in Harvest an indie film shooting in Madison for three weeks in September. Crews have been shooting on the post road and town green. The film centers on multiple generations of a Jewish Italian family summering in Madison and mourning.

In Waterbury, Indoor water park Coco Key will open October 3rd. The $23 million dollar park is a new addition to the Holiday Inn. Formerly a parking lot, the 55,000 square foot space will host up to 700 people at one time and features a 45 foot high water slide, as well as a wave pool, water cannons and an arcade. The park has already hired more than 150 employees. Other Coco Key parks are thriving in Boston, Cincinatti, Chicago, Columbus.

But it's not all good news, Foxwoods Resort Casino and MGM Grand at Foxwoods announced today that 700 employees, about 6% of its workforce will be laid off in the coming weeks. This is the third round of layoffs since May bringing the total to about a thousand employees.

The Mashantucket Pequots aren't alone in scaling back due to the economic crisis. The Mohegan Sun Casino has tabled its plans for an expansion. A month after opening the 64,000 square foot Casino of the Wind, The Mohegan sun has put a spa, 39-story hotel tower, House of Blues and retail and restaurant space on hold indefinitely or until the economy rebounds substantially.

September 30, 2008

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The greatest drop in points at 778 points down but not the greatest percentage fall.

The House didn't pass the bailout, but take the Government's advice - Don't Panic. In the immortal words of Woody Boyd "Noooo, sudden movements" If you're not a Cheers fan you'll have no idea what I'm talking about, but it's a lot more fun than a free falling stock market......


Washington Mutual (Wamu) sold to JP Morgan Chase. Bank of America bought Countrywide and then Merrill Lynch. Lehman Brothers failed while the United States Government staked AIG.

$700 Billion is now headed to the US banking industry. Senator Chris Dodd (D) of Connecticut, Senate banking committee chairman announced that the bailout plan is going to a vote. Chairman of House Financial Services Committee Barney Frank hedged slightly saying that the house was expected to debate the bailout plan and then vote, but both agreed that a vote could come as soon as Monday afternoon or Tuesday with a Senate vote to follow quickly.

When the government announced its stake in insurance giant AIG, the claim was that the failure of AIG could destabilize world financial markets. Still it wasn't enough and the bailout plan was hatched. In the meantime, Fortis, the largest Belgian financial services firm received a bailout from Belgium, The Netherlands and Luxembourg. Like American banking institutions Fortis, crumbled under credit write-downs from the consumer-banking group ABN Amro, that it bought just as the sub prime credit crisis hit the states last year.

Bradford & Bingley Plc, the largest lender to Landlords in Britain is also laboring under the threat of nationalization or purchase by another bank in a plan to protect customer deposits.

It seems that the world financial markets are destabilizing no matter whom the U.S. government decides to bailout. Meanwhile, Wachovia may get bids from Wells Fargo & Co. and Citigroup Inc. Wachovia's stock has fallen 80% in the last 12 months, so no matter who bids, shares of Wachovia will sell for pennies on the dollar. So far, the federal government has not announced any plans to take a stake in Wachovia or structure a Wamu style sale where federal regulators seized operations and then sold them off. Wachovia's troubles seem to stem from a 2006 purchase of Golden West Financial Group, a California firm that specialized in Options-ARM loans.

There is no telling how long it will take for all the dominoes to fall and where consumers will find themselves. The instability is too wide spread for safe predictions about where the financial shake out will ultimately hit Main Street.

Between 3:00 a.m. Monday Morning and 10:00 a.m. Monday Morning, Wachovia stock dropped to $.91 a share from its close on Friday at $10.00 already down 74% from its high. Then, they took Wachovia off the board and it became Citibank.

The best news this week is that both Gray's Anatomy and Desperate Housewives premiered, even if their first episodes were not all that great. Paris Hilton will be televising her search for a new BFF (best friend forever) and on the Hills, Lauren is back from her Italy trip. The election is a month away. The presidential debate focused heavily on the economy and the bailout instead of foreign policy as planned and still most Americans aren't sure where they stand on the convoluted economic crisis. Maybe we all should turn on Dancing with the Stars, root for Cloris Leachman and hope for the best in the worldwide banking system -kristin

September 29, 2008

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Congratulations America, it's a bi-partisan bailout. (born Sunday, September 28, 2008)

At least there is today at 11:30 in the morning. One the scariest facts of the financial crisis might be how hard banking executives and government officials are working on weekends. If that isn't an apocalyptic sign, nothing else might be.

It was just two Sundays ago that all of Lehman Brothers options dried up and Monday morning it declared bankruptcy. Last Friday, the bailout was announced and congress immediately began working out the details. They worked on it all weekend so that by Monday they could announce uncertainty and send stock markets around the world into another week of uncertainty

The framework of a bailout is in place. Subject to change, but not affected by politics of congressmen who'd like to be reelected into their next terms. The general election, the stock market, foreign perception or American panic calls, this bailout is to save the economy from the worst disaster since The Great Depression.

This framework of bailout will save us. The highlights seem to be that everyone will hold onto their money, except the tax payer, whether they are in over their heads on a mortgage or not. The government will renegotiate mortgage payments with banks to reduce the strain on homeowners in trouble. The government will insure these loans so that it doesn't have to buy them out right today, saving money. (Don't say it, if you're thinking, but what if the mortgages still aren't being paid and the government is forced to pay out on insurance? Don't ask that question. Don't muddy the waters with those kinds of questions.)

For banks who bought mortgage backed securities as an investment and that investment failed, mortgage defaults, Surprise! The government will buy those up so that banks will be burdened by less debt free up capital and make new loans! This seems logical because their underwriting standards worked so well for the past five years, get in early while the modified Ponzi scheme is still hot.

The best news which really brought the two parties together on the bailout package was the news that legislation place "reasonable" limits on executive severance packages. These are the retirement packages for the guys who encouraged predatory lending, knew that the bottom could fall out as interest rates rose and salaries didn't and had their homes featured as set pieces in movies, their parties reported on page six, their "Scores" bills reported on The Smoking Gun. Congress, a hard working legislative body that reports to work on the Congressional Floor 150 days a year, 5 months, is going to determine a reasonable severance package.

So what have we learned? The government is going to have a stake in our banks. The government also has a stake in our Trade Deficit, so that's reassuring, the banks will still be able to make loans and they should make loans because businesses need loans to operate. Construction companies need loans to build and employ union labor and down it trickles (shades of Reagan).

But are Americans buying their first home still going to believe that they deserve a 4 bedroom with a bonus room simply because they want it? Senators and Representatives are going to impose reasonable restraint on the retirement packages of bank executives. While their packages are outrageous, isn't that the job of each individual bank's board? Where were they?

So now we're going to have men and women who have held elected offices for ten, twenty, thirty years, and go to meetings five months a year decide what's reasonable for the guys who while spoiled at least made the money that taxpayers paid so that the government had something to spend. It?s a little like the Elected homecoming queen telling the football captain that he has to behave while the booky is in the corner telling his hold customers that they can't bet on games any more, they've got to find fresh bettors first.

Meanwhile as government plans to spend more than it has on the entire Iraq War, one still has to wonder is it really necessary? If this crisis happened two years ago, instead of thirty days before the election, how would the pressure change? Finally, now that we?ve taken a big pile of monopoly money and shuffled it around the table, why hasn't anyone mentioned that America still doesn't manufacture anything any more? That the economy of this country was built on selling products? Why wasn't any of this money, so readily available now, invested into industry and new technology that the world would buy years ago? Because as congress sits there trying to figure out how to quell the panic that pollsters, pundits and headline makers created, The United States? Biggest exports are Hollywood and Prescription Drugs *there's a joke there.*

How much longer can a country of our size thrive on that? India, China, they'll beat us in the biotech game and if they are lucky they will continue to sell products to economies built on bankers and lawyers and CPA's and Restaurateurs and real estate brokers and hoteliers, sellers of bullshit, dreams, and lawsuit money. But if we're smart, our government will learn its lesson and invest in new technology.

Americans can still make products that people will buy.

We still have brilliant inventors and scientists and researchers in this country and the world is poised to make a shift in what it will consider energy, why doesn?t congress ensure that this will never happen again by investing in something that will grow and prosper over time instead of more bullshit and dreams? Cause when it comes to those sales America, lookout Abu Dabhi is hot on our heels. After all have any of our developers thought to name a skyscraper after Pamela Anderson? -kristin

***Over the weekend Connecticut lost one of its favorite nearly native sons when Paul Newman passed away at the age of 83. Paul Newman and his wife Joanne Woodward moved to Westport Connecticut 55 years ago. He attended Yale Drama School and proceeds from his Newman's Own brand of salad dressings and everything else even pet food have been given to charity since the start. Even in New England you become a native after about 20 years and Paul Newman and Joanne Woodward did much to benefit the state, their stalwart support of the Westport Playhouse, his opening of the Hole in the Wall Gang camp in Ashford CT twenty years ago was a boon to kids and one of the quieter corners of our state. Many more camps have since the opening of Ashford's camp. Read the words of any hole in the wall camper to learn how the camp changed their lives. If we're lucky we'll still see Joanne Woodward on the Long Wharf Stage and Westport Playhouse Stage but Connecticut and Hollywood have lost a class act.

September 28, 2008

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Wall Street's Hangover - Lehman and Merrill Lynch headed for the History Books?

To say it was a tough weekend on Wall Street would be an understatement. The face of Wall Street has changed again. The phrase New Financial World Order is being spoken and not lightly. Merrill Lynch and Lehman Brothers Holdings are suddenly gone, headed for extinction. After 94 years in Merrill's case and 158 years for Lehman, it feels like they disappeared overnight. Intense negotiations began Friday evening and raged through the weekend but the dust settled and Monday morning the financial industry is reshaped.

Bank of America agreed to buy Merrill Lynch for $50 Billion in an all stock purchase. After buying Country Wide Mortgage, the poster child for subprime mortgage disaster, in January, B of A is snapping up Merrill another firm mired in the toxic mortgage related debt. Debt that is roiling the financial markets and consumer confidence across the board. Last year it wrote down $40 Billion. But, Kenneth Lewis has made his reputation on risky acquisitions and growth.

The acquisition adds another dimension to Bank of America and cements Lewis?s dream of being the leader in the brokerage business. With the purchase Bank of America will be the biggest wealth management player on the map. B of A is on track to have the best and largest retail brokerage in the country one of the top investment banks in the world, and a large stake in one of the best investment managers in the world. When it bought Countrywide, a collective eyebrow was raised. Now there are rumblings that, that purchase, much like the one of MBNA in 2005, is a brilliant strategic move. The purchase of Merrill may well ultimately be a success but the stock market and B of A stocks aren?t expected to jump with joy and climb immediately. Chaos will likely rule the stock market on the news of this shotgun merger as well as what looks like the end for Lehman.

Lehman. The name itself inspired, if not awe, at least confidence. In 2007 it posted record high net revenues. Now the Number Four Investment Bank in the country is going Chapter 11. Lehman brothers filed for bankruptcy protection today. Both suitors and the government walked away from the storied firm. Bank of America looked like the buyer on Friday but by Saturday had all but walked away. Barclay?s of London took a pass on Sunday.

Lehman?s failure is the highest profile bankruptcy since 1990?s failure of Drexel Burhnam, Lambert home of the junk bond king Michael Milken who, not so ironically, has been repeatedly blamed by talking heads and pundits for the present credit crisis. Claims that might be fun but don?t really have any merit.

The implications of both Merrill Lynch?s buyout by Bank of America and Lehman?s failure begin to hit home when the numbers hit the page. Lehman employs about 25,000 people; Merrill, 60,000.

But the disappearance of Lehman could change the real estate landscape of Manhattan as quickly as it changed the financial markets flooding the office market with space. Lehman owns its one million square foot headquarters, but leases nearly one and a half million square feet of additional space. It?s been quietly marketing 400,000sf of space for sublet at Rockefeller Center for several months now. The official marketing of that space and Lehman?s other leases will have a big impact on the New York office market. Generally about one third of office space is occupied by financial industries. It remains to be seen whether Merrill Lynch will contribute to a sublet glut as it moves forward with its B of A merger.


September 15, 2008

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