In our more contrarian moods we like to point out to people that a real housing crisis would involve mass homelessness rather than a surplus of homes pushing down housing values. And when we get really cranky we go all generational war about it: "Well, this just means we'll get to buy those baby boomers' houses for less."

We didn't realize we were channeling a former head of the Federal Deposit Insurance Corp. After the jump, read William Isaac from today's Wall Street Journal on why you should stop worrying and learn to love the housing crash.

We’ve finally gotten around to reading the words that the Bearded One spoke at Columbia Business School on Monday night. Stitching together his various proposals, it’s clear that Ben Bernanke has become a partisan of big government. The way we read it, he pretty much calls for the federal government to bailout lenders who have provided mortgages for homes that have suffered major declines in value.

At one point in the speech, Bernanke called on Congress to expand the Federal Housing Administration, both in terms of its role in issuing mortgages and determining underwriting strategies in order to help “troubled borrowers.” How does he expect the expanded FHA to help? By bailing out lenders with mortgages where the principal is now worth more than the value of the home.

“In some cases, when the source of the problem is a decline of the value of the home well below the mortgage's principal balance, the best solution may be a write-down of principal or other permanent modification of the loan by the servicer, perhaps combined with a refinancing by the Federal Housing Administration or another lender,” Bernanke said.

In other words, the Federal government should step in to refinance loans in danger of defaulting due to the decline in housing prices.

Despite what your crazy uncle or Warren Buffett says about housing prices, the residential real estate market in many areas of the US is still in a lot of trouble. Doug French, an executive vice president of a Nevada bank, spent Derby day at a housing auction in Las Vegas and what he saw wasn't pretty.

Finally it was post time for the action and the first home went up for bid – just short of 2,600 square feet in southwest Las Vegas. A brand new home, a one-year builder warranty, built by a reputable builder with a nearly 99 percent customer satisfaction rating, the auctioneer emphasized. To listen to the auctioneer, the bidding quickly escalated from the $159,000 starting point. The three young men working the crowd were frantically giving signals to the auctioneer, quickly moving from one attendee to another, and the price of home kept rising. It seemed like a real auction. But it was only real like professional wrestling is real. There were no actual bids on the first house, or the second, or the third. No bidding cards were raised.

The auction company kept up the charade for over 2 hours and for all 46 homes. The auctioneer’s rapid-fire delivery never waned. The young ladies who were there to help winning bidders with their sales contracts stood in the corner and clapped in unison until the very end. And the young tuxedoed gentlemen who worked the floor carried on with their elaborate gestures and signaling, as if it was a choreographed Broadway dance routine.

Only a couple dozen people remained by auction end, and only a handful of homes were actually sold. There were few real bids even at the low starting prices that were only a third the price that similar homes fetched during the boom a couple years ago.

No Bids at the Auction [LewRockwell.com]

Compared to December a year ago, pending home sales were down 24.2 percent. The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, dropped to 85.9 from 87.2. These are the deals that are expected to close in January and February. House signings were down further than demographic and employment trends had implied.

All this seems to indicate that we've got a long way to go before our real estate led financial troubles are over. Lower housing sales also point to a higher default rate, as homeowners who can no longer afford their mortgages can't find buyers for their property.

But what do we know? Home builders were up nearly 50% in January, presumably on the expectation that lower interest rates would spur home buying. And it's not likely that so many investors could be wrong on something as fundamental as real estate, right?

Dec pending home sales fell 1.5 percent: Realtors [Reuters]

The notion that troubles on Wall Street are starting to filter out to the broader New York City economy got a boost this morning when a real estate group released its latest rental market report showing that all average apartment rents decreased in October. The downturn in rents was most sharply felt in doorman one and two bedroom units, according to The Real Estate Group which released the report.

This marks the first time this year that average rents in Manhattan decreased. But tell your studio-dwelling friends not to get too excited—rents for studios remain stable.

Also, you may have some added negotiating room when it comes to those always painful broker fees, as landlords are reportedly giving brokers who close deals things like all-expense paid trips, overseas airlines tickets, free I-Pods and digital cameras. Why not ask your broker if you can have the I-Pod?

Actually, the report raises some questions about how that deal led by Tishman Speyer to buy Peter Cooper Village/Stuyvesant Town might be working out. Recall that Tishman partnered with the Blackrock Group and the California State Teachers' Retirement System to buy up the housing complexes for $5.4 billion just one year ago. At the time it was the most expensive real estate transaction in American history. Now the Real Estate Group reports that some of the most lavish deals for brokers—those free trips and airline tickets—are coming from Peter Cooper and Stuy Town.

Market Report [Tregny.com; pdf]

Real estate blog Curbed recently sat down with an investor in the field to discuss whether or not Andre Balazs’ High Line-squatting Standard Hotel is symptomatic of a developmentification of Manhattan that’s turning the island into a place where only utterly lame (but sufficiently rich) people will live. A simple ‘yes’ would’ve sufficed, but the expert, perhaps going through some sort of personal problem or maybe having had the unfortunate pleasure of drinking at Joshua Tree last night, took it one step further.

Fuck it, I say. Manhattan is one big joke. I think they should let highrises go up anywhere at this point. What's the point of communities on the island anymore?

Everyone's so priced out, does it matter anymore?

If you want a neighborhood/community, move to Brooklyn.

Let Manhattan be just one big bullshit skyscraper. Tower of Motherfuckin' Babel. But for douchebags.

And the Lord spoke and said, "Let us make sure these douchebags do not understand each other, less they build a Tower of Douchieness. Let one douchebag not understand the other." And thus the languages of Goldman, Lehman, and Morgan were formed and the Lord saw it and it was good.

First of all, this tower already exists, and its name is Windsor Court (and on the UES, Dormandy). Second of all, and we’re just passing this along, analysts from Merrill Lynch and Bear Stearns would like to know, “Hey, why weren’t we included on that list?”

Investor Rant: 'Manhattan is One Big Joke' [Curbed]

He’s got all the re-mastered DVDs. He hosts ‘TOC’ marathons with Chuck Prince and Sandy Weill, drawing straws to determine who has to prepare the Chex Party Mix. He’s written op-ed pieces about Felix Unger’s sexual ambiguity. Two summers ago, he laid out $15,000 at a silent auction for a lock of Jack Klugman’s hair. And now Vikram Pandit, who joined C after the bank bought his Old Lane hedge fund last year, will sleep where Tony Randall slept.

The Citi Alternative Investments head has paid $17.9 million for the late Randall’s CPW co-op, topping Widow Heather’s original asking price of $17.85 million. The ten-room residence occupies an entire floor of the Beresford apartment building and, according to the Corcoran Group, “enjoys superb light and impressive park views through 20 windows spanning two exposures.”

For his part, Pandit, according to people familiar with the matter, has apparently said that he would’ve paid that much “or more” for a “1-bedroom shithole” on the corner of “fifth floor walk-up” and “this is the only neighborhood in Manhattan that hasn’t yet been gentrified,” if its presence had once been graced by Tony. (VP already owns Randall’s boyhood home in Tulsa, Oklahoma.) Pandit could reportedly “not give a baker’s f**k” about new neighbors Jerry Seinfeld and John McEnroe.

Upon joining Citi last year, Pandit was greeted by an approximately 40% drop in CAI profit. Old Lane fell 5.9% in August.

What Bubble? [New York Post]

Manhattan has largely been immune to the direct effects of the mortgage problems that are plaguing many areas of the country. In the first place, there are few subprime mortgages here, in part because real estate is so costly and in part because many co-ops and condos require would-be buyers to demonstrate a high level of financial stability.

What has real estate people worried, however, is the possibility of secondary or tertiary fall-out from the credit crunch hitting what has been one of the country’s hottest real-estate markets. The Gotham Gazette runs through the “spillover” scenario, with an eye to what happened in 1987.

Wall Street salaries and bonuses are only part of the story behind the giddy housing market. Many brokers and bankers benefit from generous mortgage packages provided by their employers. While those packages differ, they need to continue if the market is to remain robust. Without them, trouble will appear quickly.

And the spillover effect here should not be underestimated. Wall Street traditionally contributes about 20 to 25 percent of New York City’s economic output. (No wonder Mayor Michael Bloomberg worried about the U.S. markets losing business to London and other overseas markets.) Jobs are at stake, and less employment on Wall Street has consequences for the city.

The phenomenon has happened before. After the 1987 stock market rout, the market for one and two bedroom condos and co-ops in Manhattan was hard hit, with prices falling significantly. It took several years before they recovered and began an upward spiral fueled by low mortgage rates. Apartments of that size were frequently bought by younger traders and investment bankers - the first casualties of securities firms feeling the pinch of losses and lower revenues. That market problem also caused many securities firms to trim back their staffs, contributing to the recession that followed.

Will the Sub-Prime Crisis Reach Manhattan? [Gotham Gazette]

The soon-to-be opened 15 Central Park West—what, you haven’t heard of it, hobo? Basically: the Kosher 740 Park—just added Sandy Weill and Daniel Och (-Ziff) to its list of inhabitants. Other Shul-enthusiasts on the condominium complex’s roster include Lloyd Blankfein and Daniel Seth Loeb, who bought a penthouse in the building for $45 million in 2005.

Interested in the property? Too bad—all the units have sold. However, developers Arthur and William Zeckendorf predict that there may be up to ten flipped apartments up for grabs when the building opens in the fall. So if you think you can stand living alongside the nouveau-riche, and are willing to risk having one of Loeb’s pet gerbils burrow a hole into your apartment, here’s the low-down:

-The building is coated in 2,832 panels of limestone from the same Empire Quarry in Indiana that makes up the skin of the Empire State Building.

-Working fireplaces (fireplace fetishizer Weill would sooner live in a studio on Rivington than a penthouse without an accessible means of burning things, you know this)

-Screening room

-Game room

-60-seat lobby dinging room (with private chef)

-Health club

-A waiting room for chauffeurs

-29 maid’s suites on low floors so you Louisa can work around the clock but not contaminate your personal space

-30 wine rooms surrounding “an octagonal tasting area”

-31 autofellatio rooms, all finished in English oak, with a lovely marble trim

-Pizza party Fridays

15 CPW [NYO]

From the CFO Blog, the Implode-O-Meter is a website that tracks mortgage lenders that blow up. The site hit 100 "imploded" lenders yesterday, although one company insists that the reports of its implosion were greatly exaggerated, and is suing the Implode-O-Meter as a result.

Loan Center of California (LCC) was deemed an explosion last month (primarily based on what a LCC mortgage did to the pictured abode), causing Credit Suisse and WaMu to cut LCC's credit, pulling the plug on almost $4 million worth of funding and wiping out 75% of the lender's available cash. Although it is rumored that LCC was in the midst of an imminent collapse, the lender is accusing the Implode-O-Meter of shorting certain lenders and manipulating the market. LCC believes the Implode-O-Meter wanted to shut the lender down, and is asking for $50k in damages.

Implode-O-Meter wants to avoid self-implosion, and is asking for donations to fund legal expenses.

Blaming the Implode-O-Meter [CFO blog]
Implode-O-Meter

From Fintag - Check out these office real estate prices in Europe (from IVG). London office rent is off the charts, and scaled down accordingly to make pricey rival cities feel a little better. The average monthly rent for an office in London is twice that of Paris and nearly three times that of Moscow, the next two most expensive European cities. Average office rent in London increased more than 25% from last year. Is it time to short real estate (Fintag thinks so)?

Bricks and Mortar [Fintag]

It’s widely known that Blackstone had a powerful real-estate arm. Its $39.2 billion purchase of Equity Office Properties broke records and made headlines for weeks. The firm manages six general real estate funds and two internationally focused real estate funds, and has somewhere in the neighborhood of $20 billion of assets under management for its real estate deals.

But it wasn’t until the most recent filing by Blackstone that we learned how lucrative its real estate business has been in recent months. The firm’s real estate business garnered pre-tax income of $762 million in the first three months of this year alone, according to the prospectus filed with the Securities and Exchange Commission on Monday. That puts it well on pace to soundly beat the $902.7 million of income from real estate last year.

Blackstone doesn’t disclose the details of this huge increase in income but we suspect a good deal of it comes from flipping EOP properties. At the time the deal was announced, there was lots of tut-tutting from those who simply could not believe the gods of finance would not punish the hubris of Blackstone for daring to take on such a huge deal. Isn’t that the lesson of all of Greek tragedy?

Blackstone’s Jon Gray, who orchestrated the EOP buyout, looks to be following the path of a writer from another era who told us: fortune favors the bold.

CNBC’s Money Honey has a new hive, the New York Observer’s “Manhattan Transfer” column reported today. Maria Bartiromo and husband Jonathan Steinberg have closed on a five-level townhouse on East 62nd Street. The price-tag: $6.5 million, the Observer says.

Here are the details, according to the Observer.

The five-bedroom house, east of Third Avenue, has a second-floor balcony overlooking the 39-foot-long backyard garden, plus a two-camera security system with a flat-screen monitor…

Photographs from the recent Stribling listing show the townhouse as a customarily fancy Upper East Side place with big ruffled curtains and bigger chandeliers. Better yet, the place has four working wood-burning fireplaces, a 32-foot-long kitchen, and a wet bar between the second floor’s dining and drawing rooms.

That puts the Money Honey within walking distance of Lexington Bar and Books, where she can enjoy the Monday ladies night—women get stogies for free. But we couldn’t help but wonder, “East of Third Avenue?”

Sold! "Money Honey," Hubby Buy $6.5 M. East Side Townhouse [New York Observer]

As we reported this morning, one time mortgage king New Century has tumbled all the way down into bankruptcy. It will now be up to the courts, the creditors and the management to see if they can put this shattered egg-shell of subprime loans back together again.

Some quick reactions from around the blogs:

DealBook writes that "For New Century, which billed itself as 'a new shade of blue chip'; whose executives grew rich as its stock soared; and where top sales people in the go-go years were treated to vacations in Europe and the Caribbean, the end came particularly fast and furious."

Market Beat comes with the broader market perspective: "The rest of the market isn’t going wild here, because this company’s fate has been all-but-assured for some time now. But the SPDRs Financial Sector ETF is down 0.9%, suggesting investors in financial stocks aren’t ignoring this news."

MarketBeat also quotes the guy who might be the official analyst of the day judging by how frequently his stuff is getting referenced, emailed and cited in light of new Century’s announcement. His name is Jeffrey Saut, and he’s very skeptical about the idea that problems in real state are not spilling over into the broader economy. Here’s an excerpt that made its way into the Big Picture’s “Quote of the Day”:

Similarly, “Why is Citigroup cutting 15,000 financial-related jobs?” And, “Why is GMAC stating that its Residential Capital subsidiary is going to hurt profits?” Inquiring minds want to know such things.

Moreover, if the problems in sub-prime mortgages are NOT spreading, why are sub-prime mortgage companies dropping like flies, why are companies like ACC Capital closing their “call centers,” and why are delinquencies rising not only in the Alt-A complex, but in prime portfolios as well?”

Get ready for the worst summer ever. Apparently the best rentals out on the East End are already gone. The little Gatsbys of the world have hoovered them up with this year’s giant bonuses, according to the New York Sun.

"The market is incredible. It's the best couple months we've had, probably since 2003," a Corcoran Group realtor tells the Sun.

Translation: The financial euphoria of Wall Street has once again devoured the Hamptons. When a real estate agent says a summer rental market is “the best” that means exactly the opposite for anyone looking for a place to rent.

And the real estate guys know exactly who is the blame: you. Assuming, of course, you work on Wall Street and earn a salary that could feed hundreds of starving children in impoverished places such as Greenwich, Connecticut. (And our survey results tell us you probably are.)

Considering last year's record bonuses in the financial sector, who needs to settle?

"It's the playground for Wall Street," one of Corcoran's top brokers in Bridgehampton, Gene Stilwell, said. He says that even if someone has the cash for high-end real estate, property is scarce.

"Every time I call for a high-end rental the lease is out," Mr. Stilwell said. "Looking for 8,000 square feet? It's just gone."

A local agent for Sotheby's, Myles Reilly, who has worked exclusively in the Hamptons for the past 15 years, says the rental market is the strongest he's ever seen: "Last year the rental season came late. This season there's not a lot of flexibility of price and the inventory is very tight."

The top agent at Prudential Douglas Elliman's Southhampton office, Laura Nigro, agrees that the big bucks from Wall Street made all the difference.

Hamptons Rental Market Soars [New York Sun]

…is that there are a whole lot of banks in this city, according to Observer scribe-cum-Master of Recon, Chris Shott. And get this: there’s about to be—and here’s where the story gets crazy-- one more. That’s right: New York, Lexington Avenue between 58th and 59th streets, in the Bloomberg Tower, to be exact, is about to add a record 56th notch to its Citigroup bank branch bedpost. But will it be welcomed with open arms or is this a case of no room at the inn for one of Charles Prince’s babies?

The company’s forthcoming…branch…will fill a 5,000-square-foot void along this Upper East Side commercial block, which is so desperately underserved by the cavernous Wachovia branch next-door. And the Bank of America two doors north.

Shott’s (duly noted) attitude smacks of the latter. And, apparently, according to a like-minded executive from Vornado Realty Trust, he’s not alone.

“Who’s excited about having three banks on one side of the street?” Her enthusiasm in confirming the deal was clearly lacking.

(Someone’s got a branch up her ass). But it doesn’t appear the branch bank craze will be slowing down anytime soon. Last April, Vernon Hill of Commerce Bank told the New York Times: “The building frenzy in branch banking is probably nearing its peak.” Less ominous words have clearly never been spoken. Further evidence of the phenomenon can be found in the sacrilegious conversion of the Second Avenue Deli into a Chase bank. We haven’t seen this much Jew-on-Jew violence since christ v Pharisees in the first century AD.

Bank Branches Disappearing? What Corner Do You Live On? [NYO]

Casey Serin’s story is being treated as a morality tale of greed and hubris gone wrong. Oh, and maybe a dash of stupidity thrown in. And no doubt there’s a fair amount of that. But reading the story, keep in mind that it was easy access to debt—helped along by a generous federal reserve—that financed this particular production of The Rise and Fall of the Speculator. And that this is just one version of a story being played out across America as the housing bubble deflates.

The rise and fall of Casey Serin is a tale with moral and financial lessons for real estate buyers, lenders and regulators. Having consumed real estate guides and seminars, Serin made just about every mistake a newbie could make — most of them, he admits, were no one's fault but his own — from fudging loan applications to buying homes sight-unseen. That he began with bold dreams of class mobility makes his fall a peculiarly American saga.

The best part about it is that Casey has a blog. This time around the bubble bursting will be blogged.

10 mistakes that made flipping a flop [USA Today]

Hank Paulson got a pretty sweet leaving package when he stepped down from running Goldman Sachs to take the job as George Bush's Treasury Secretary. And now his move down to Washington, DC is looking even sweeter. Eight million dollars sweeter.

U.S. Treasury Secretary Henry Paulson, the former chief executive officer of Goldman Sachs Group Inc., sold his 50th floor condominium near Manhattan's Lincoln Center for almost $8 million, according to public records.

Paulson paid a total of $2.88 million for two apartments he bought and combined on West 67th Street, one in 1996 and the other in 1998. Tax on the re-sale was about $112,000, according to the New York City Register.

U.S. Treasury's Paulson Sells New York Condo for $8 Million [Bloomberg]

Jossip confims our earlier report about the probable end-destination for Duke lacrosse players--investment banking:

While we're still sorting out which Wall Street financial house has the unlucky fortune to be associated with Evans (perhaps we'll let Dealbreaker.com in on the fun), we do know he was already apartment hunting, looking for a three bedroom flat in the $4-5,000 range somewhere in Greenwich Village, Union Square, Central Park South, Midtown, East Village, or SoHo.

Duke Rape Suspect Dave Evans' Grand I-Banking Plans [Jossip]

Update: WallStreetFolly speculates that the bank in question is probably Merrill Lynch.

Nepotism has a long and storied tradition on Wall Street. From John Pierpont Morgan to Sanford I. Weill, handing jobs and entire businesses to immediate family members is as much a part of working at the highest levels of American business as wearing monogrammed French cuffs and having at least three layers of administrative assistants answer your phones before people get to speak to you. It is the erosion of that nepotism--that hallowed institution--that has contributed to the painful decline of this country's once-thriving plutocracy. But we're relieved to see that at least one New Yorker is doing his part to uphold the tradition. As Footnoted.org points out, SL Green Realty chairman Stephen Green has been dishing out $11 million worth of business to his son Gary's various business projects:

In the proxy it filed recently, the company added up just how much business Gary’s various companies — a cleaning service, a messenger service, a security service and a restoration company (which is included in the proxy for the first time) — have with SL Green. The $11 million in business last year is a nearly 25% increase from 2004. As the proxy notes, that doesn’t include any additional contracts that Gary’s companies have with SL Green tenants.