Attention Options Traders … Sell Volatility Now! – Feng shui masters see calmer markets in Year of the Ox -… “This year of the Ox is an ‘earth’ year, when people will take a breather and reflect on what they should do after a turbulent 2008,” said Hong Kong feng shui master Raymond Lo.  … – Reuters Yahoo 

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Hudson City Advances After Reporting Higher Income – Jamie McGee – Hudson City Bancorp Inc., the best- performing lender in the Standard & Poor’s 500 Financials Index last year, said profit climbed 60 percent to a record and raised its dividend. The company gained in New York trading. – Bloomberg

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read point #5 – What’s In Store for Financial Services in 2009 -  Offered with some trepidation, my predictions for the year to come – Vernon Hill – Bankstocks.com 

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Parsons takes over as Citi chairman – The former Time Warner CEO has the unenviable task of trying to fix the troubled financial titan. – By Colin Barr – CNNMoney.com

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Casey’s Charts – What the Banks Did with The Latest Bailouts -  The stated objective of Paulson’s bailout program was to provide liquidity to banks that would, in turn, make loans and thus expand the economy. As today’s chart from Bud Conrad, chief economist of Casey Research, shows, however, the banks on the receiving end had something else in mind. – Casey’s Charts 

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Ninety-Nine Days And Counting – Thomas F. Cooley – Obama must show more restraint than FDR. – Forbes

Riding Out The Bear Market – Martin T. Sosnoff – Even with mortgage rates now below 5%, thereby qualifying millions of incremental families for loans, there is no sign of recovery as new foreclosures … In the deep real estate recession of 1973-1974 Wall Street partners at defunct brokerage houses sold their New York co-ops for a song and moved to garden apartment rentals in New Jersey. Today, Hoboken beckons. … Forbes

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Peter Miller has additional thoughts    on yesterday’s post about the distorted dow index. 

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Loan Modifications Don’t Work. Let’s Find an Alternative. – Like, say, an enhanced mortage interest deduction -  Gary Townsend – … Here’s a better idea, in my view: Rather than shovel billions toward mortgage mitigation, Congress (if it must spend) should use the funds to improve the economics of homeownership, perhaps through an increase in the deductibility of home mortgage interest, to 110% or 120% of the current allowance.  … – bankstocks.com 

The View From Europe: The Rise and Fall of RBS  – How Fred Goodwin went from hero to zero in what seems like the blink of an eye  – Chris Skinner – bankstocks.com 

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Where Will the Federal Reserve Go? – John Mason – The Federal Reserve evolved over the years to perform three major tasks: to supply liquidity to commercial banks and the financial markets … ; to manage the monetary system so as to encourage economic growth, yet contain inflation; and to oversee the health of the banks who were members of the Federal Reserve System … Whereas the Federal Reserve System is supposed to fight a liquidity crisis, a very short term phenomenon, it was not set up to resolve a solvency crisis, a longer term situation. – Mase: Economics and Finance

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Deflation and the Treasury bubble – Tim Iacono – One more reason why it’s probably still too early to short U.S. Treasuries, what many now refer to as “the biggest bubble of them all”, becomes quite clear after realizing that the talk of “deflation” has just begun. … There is also no doubt that, regardless of where consumer prices head in late-2009, 2010, and beyond, we’re going to be hearing a lot more talk about deflation in the next few months with the clear implication that the bubble in Treasuries could get even bigger. … -   themessthatgreenspanmade

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Toll Bros. Offering 30-year Fixed 3.99% Mortgage  – Dow Jones CNN

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Trouble Ahead for US Treasury if Foreigners Keep Selling – Foreigners, who have been all too eager to buy U.S. treasury securities in recent years, appear to have taken to the sidelines or worse, according to CreditSights.  … for the first time in November, foreigners were net sellers. … “The market’s ability to take on $144 billion worth of Treasury coupons in a scant two-week time frame” will be tested.”  –David Ader, RBS Greenwich Capital. – Research Recap

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U.S. MONTHLY HOUSE PRICE INDEX ESTIMATES – 1.8 PERCENT PRICE DECLINE FROM OCTOBER TO NOVEMBER – FHFA Press Release
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Catherine Castle Dissects The Foreclosure Crisis -  By Phil Hall – As the foreclosure crisis continues to worsen, it is hard to determine how long can it last. This week, MortgageOrb speaks with Catherine Castle, vice president of capital markets at Wingspan Portfolio Advisors, Carrollton, Texas, on the rising level of foreclosed properties and what it means to both the industry and the economy. – MortgageOrb

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Converting TARP shares to common could help banks – By Dan Wilchins – Analysis – The U.S. government may want to consider converting the preferred shares it has bought in troubled banks into common stock to boost capital levels at no initial cost to Uncle Sam. – Reuters