Troubled Builders, Bargain Seekers United
Troubled homebuilder (aren't they all?) Lennar has sold a big tract of 11,000 homes to a division of Morgan Stanley for $525 million. Previously the sites had been marked on Lennar's books as being worth $1.3 billion, so maybe we've got another big mark-to-market event here, a la E*Trade. There are some stipulations here, such as Lennar being able to buy the homes back, and the builder will retain an equity stake in them, but it still looks like a firesale. Then again, a firesale is probably better than no sale. Part of it, notes the Journal, is tax considerations. You can't take losses on asset depreciation unless you've actually booked sales. Perhaps Lennar & Co. will just sell off everything, establish as much as they can in tax-loss carry forwards and then get into a totally new business with confidence that they won't have to pay taxes on profits for a long time.
Venezuelans Reject Chavez's Plans for Constitution (Bloomberg)
But wait, isn't Venezuela supposed to be a communist dictatorship a la Cuba? Well, maybe it's not quite there yet. Suffering the first significant defeat of is Presidency, Venezeulan voters ended up rejecting, in a national referendum, proposed changes to the constitution. The best is that only about 56 percent of the population, which comes off as surprisingly low in an emerging (somewhat) economy facing a huge issue. Great to see that even there, rational ignorance is alive and well.
The Dollar Is Falling, and That's Good News (NYT)
The decline of the Dollar does not tell some metaphysical truth about our existence. It doesn't speak to any fundamental flaws in our character, or even our economy. The real problem: it makes us feel bad about ourselves, especially when we compare the imDollar to the Loonie or the Euro. It's all about ego and insecurity, and if we could be more Yogi-like, then it'd be no big deal. That's the message of Tyler Cowen, anyway, writing is latest Times column. Is it just abdication or rationalization? Perhaps. Though he does raise some points: But from a broader perspective, the value of the dollar hasn't fallen quite as much as it might seem. Since President Bush started his second term in January 2001, to Nov. 20 of this year, the dollar has dropped 19.8 percent -- if we weight the dollar by how much America trades with individual countries. That is a noticeable decline, but it is hardly a radical economic event. Certainly worth a read.
Dollar Falls as Moody's Prepares Rating Cuts on Subprime Losses (Bloomberg)
Meanwhile... just in case the decline of the Dollar does mean something, here's the latest. Down against the Yen and the EUR again. One analyst from UBS had this to say:"U.S. monetary policy may tilt more toward a dovish stance... The dollar's allure may diminish." Huh. Oh, and Moody's is prepping a big general downgrade of subprime debt, though we'll go out on a limb and predict that it's nothing the market hasn't already priced in for some time.
Vivendi to Acquire Activision (NYT)
Boy, this videogame business sure is starting to get big. When did that happen (joke)? In a deal announced Sunday, Vivendi said it would acquire Activision, surpassing EA as the world's largest maker of videogames. Together, the companies own a number of big franchises, in both the PC gaming and online gaming world. The move also comes as the complexion of the industry is changing, as the popularity of the Wii has created big profit opportunities outside the world of violent shoot-em ups. One funny thing: Just last week, EA boss John Riccitiello was quoted as telling the Reuters Media Summit that big game mergers were coming to an end, or at least slowing down. He meant starting now.
Russian Vote Is Victory for Putin (WSJ)
Unlike Venezeula, Russia may legitimately resemble a communist dictatorship. Sure they've got voting, but what does it matter when the electorate is so infatuated with one power-hungry leader. Elections simply serve to bolster, not check, Putin's power, or so it would seem. In the latest election, Putin's party saw wide gains, ensuring his lasting influence and the ability to time his departure. Chavez must be jealous. You know, just thinking about it some more -- wonder if Chavez feels he overreached. Perhaps he should've been more incremental in his plans, rather than a "sweeping" proposal, that might've ended up scaring some voters. Just a tip for next time.
At the Intersection of Chinese Walls and Wall Street (Information Arbitrage)
It's been awhile since there's been a good Ben Stein takedown on the blogs. But apparently the actor/gameshow host really stepped in it with his latest Times column. We couldn't really bring ourselves to read it (surprise), but the gist is something about a Goldman Sachs conspiracy to depress the economy for the benefit of its short positions. We suppose for the Steiniacs (just kidding, for there are none), this must be easier to believe than alternate theories a) Goldman Sachs might some right calls b) the capital markets are beyond Goldman Sachs' influence c) Goldman has been exaggerating the extent to which it played subprime perfectly, and we may see writedowns yet. Anyway, Roger Ehrenberg lets Stein have it. So does Felix Salmon. A real financial Fisking (does anyone use that anymore) going on here. Perhaps Carney will weigh in.
Tech Ignorance: Not Funny (Tech Liberation Front)
Considering the importance of tech to the economy (arguably more important, in the long run, than finance, hard as that is to believe), why is it that politicians are comfortable with blithe references to their tech ignorance. You know -- even when they're supposed to be regulating something, like broadband regulation, they'll joke about they just sent their first email, or only get online using Microsoft's old WebTV. Seems that people should be horrified by that, no? Then again, when a politician expresses cluelessness on an issue, it's hard for them to demagogue it, no? We'd rather hear Chuck Schumer say: "I wouldn't know what a mortgage is, if I were facing foreclosure" than to propose some sweeping mortgage regulation on the basis that he's an expert. Seriously.
Computer Research Might Land Senior $100,000 Scholarship (Washington Post)
A high schooler in Virginia has made a breakthrough in computer science, and hopes it will land him a $100,000 college scholarship. We hope it will too, but, um, doesn't this seem a little quaint? Like, if sounds like he's done some interesting work in the area of computer networking (we don't know, neither, probably, does the WaPo reporter who did the piece), but if he did, he should just start some startup and raise a few million in venture capital. Perhaps he could pay himself a salary of $100,000 that he could put in a college account, just in case he's worried about missing out on that. Skip college kid -- be the next Mark Zuckerman.