Tue Jan 29, 2008 5:29pm EST

By Al Yoon

NEW YORK (Reuters) - Home prices in 10 major metropolitan areas fell a record 8.4 percent in the year through November, suggesting the housing slump is worsening, according to a Standard & Poor index released on Tuesday.

The decline in the S&P/Case-Shiller Home Price Index topped the 6.7 percent annual drop for October and was deeper than predicted by economists at Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. The consensus was for a 7.1 percent fall, Goldman economists said.

Home prices across big cities have now declined for 11 consecutive months and show little sign of bottoming, said economists, including Robert Shiller, a founder of the index and chief economist at MacroMarkets LLC. The decline in the index accelerated to 2.2 percent in November over October, from 1.4 percent in the previous month, S&P said.

The index "confirms our outlook that the housing shock is by no means over," said Michelle Meyer, an economist at Lehman Brothers in New York. "Home prices are falling in response to weak demand, which is a function of buyer sentiment and tight credit conditions."

Falling U.S. home prices in the past year have fueled rising delinquencies and foreclosures, with homeowners unable to get out of costly loans. Banks and investors, throttled by losses in risky mortgages, have sharply curtailed financing for all but the most credit-worthy borrowers.

A surprise cut in the Federal Reserve's target interest rate last week and another probable one on Wednesday is one ray of hope for the housing market by pulling down most mortgage rates, economists said. The Fed, in cutting its federal funds rate by 0.75 percentage point, cited concerns of deteriorating financial markets and reduced credit for homeowners.

Rate cuts "could give housing a boost but I'm guessing they won't be enough to stop a decline" in prices, Shiller said. "The best that we could hope for is a slower pace of declines."

A broader but newer index of 20 cities recorded an annual decline of 7.7 percent in November, S&P said. Miami and San Diego led with annual declines of 15.1 percent and 13.4 percent, respectively.

Other double-digit year-over-year declines were in Las Vegas, Detroit, Phoenix, Tampa and Los Angeles.

Total declines in U.S. home prices will be at least 15 percent from the peak to the trough, Meyer said. The 10-city composite S&P/Case-Shiller index at 205.09 in November is down 9.4 percent from a high of 226.29 in June 2006.

(Editing by Leslie Adler)

REMEMBER BUSH AND HIS BUDDIES SAID THE WAR WOULD BE PAID BY IRAO LIE
U.S. NATIONAL DEBT CLOCK

The Outstanding Public Debt as of 29 Jan 2008 at 06:48:17 PM GMT is:

The estimated population of the United States is 304,215,016
so each citizen's share of this debt is $30,268.35.

The National Debt has continued to increase an average of
$1.44 billion per day since September 29, 2006!
Concerned? Then tell Congress and the White House!

Tuesday, January 29, 2008

Soldier From the Roanoke Area, a Mother of 3, Is Killed

Tuesday, January 29, 2008; Page B06

Sgt. Tracy Renee Birkman, an Army mechanic and mother of three from the Roanoke area, died Friday after suffering injuries unrelated to combat in Owesat, Iraq, according to military officials. The incident is under investigation, they said.

In addition to her three sons, Birkman, 41, of New Castle, is survived by her parents, according to officials at Fort Campbell, Ky., where her division, the 101st Airborne, is based.

Birkman's father, Jerald Griffith, a Vietnam War veteran, said he was angry with military officials for releasing information about his daughter's death and with the news media for its portrayal of soldiers such as himself.

"I didn't want it released. I am so [furious] about all this I can just scream," said Griffith, also of New Castle. "I hate the media with just an unmitigated passion. You . . . lied about me when I was in Vietnam."

He said his daughter was on her third deployment. "She's over there in a war we shouldn't even be involved in, on her third tour," Griffith said.

Information about the circumstances of Birkman's death was not immediately available, said Cathy Gramling, a Fort Campbell spokeswoman. "I just know that it was non-combat-related injuries," she said.

Determining the cause of death will involve an autopsy, Gramling said.

The Defense Department has a long-standing policy of identifying fallen service members, she said. "The DOD puts out the information at least 24 hours after the final next of kin is notified," Gramling said.

Birkman was a light-wheel vehicle mechanic. She was assigned to the 626th Brigade Support Battalion, 3rd Brigade Combat Team, 101st Airborne Division (Air Assault) and had received several awards, including the Global War on Terrorism Expeditionary Medal, the Iraq Campaign Medal and the Korea Defense Service Medal, according to the military.

-- Michael Laris and Meg Smith

Northern Iraqi City Is Growing Concern as Insurgent Base

By Joshua Partlow and Ann Scott Tyson

Washington Post Foreign Service
Tuesday, January 29, 2008; Page A15

BAGHDAD, Jan. 28 -- An American military convoy came under a barrage of gunfire in the northern city of Mosul on Monday and then was hit by a roadside bomb that killed five U.S. soldiers. It was a particularly bloody day for the U.S. military in a city that has become a gathering point for the Sunni insurgency, and where Iraq's prime minister vowed to have the "final" battle with the group al-Qaeda in Iraq.

The joint patrol of U.S. and Iraqi soldiers was attacked at about 12:40 p.m. in the Somer neighborhood of southeastern Mosul, when insurgents began shooting at the convoy from a mosque. Amid the gunfire, a roadside bomb exploded, killing the five soldiers, said Maj. Gary Dangerfield, a U.S. military spokesman in Mosul.

As black smoke rose from a damaged vehicle, a fierce gun battle ensued. American soldiers cordoned off the neighborhood and helicopters circled overhead, according to witnesses. The U.S. military said that by the time Iraqi soldiers searched the mosque, the gunmen had fled.

"This event was a tragic loss," Dangerfield said. "But we will continue to pursue and hunt" for insurgents, he added, "by either capturing or killing them."

The attack raised the U.S. military's reported death toll for January to 36, an increase over the 23 troops killed in December, which was one of the lowest monthly fatality totals of the war. The military said it had detained 18 suspected insurgents in the area by the end of the day.

"When you attack the enemy more, the violence increases, so you have higher casualty rates," said Maj. Peggy Kageleiry, a military spokeswoman for northern Iraq. "That's what we're doing, we're pushing al-Qaeda and they're fighting us."

The city of Mosul, about 225 miles northwest of Baghdad, has become a source of growing concern for U.S. and Iraqi officials in recent weeks because they believe insurgents are massing there after fleeing more heavily patrolled areas such as Baghdad and Anbar provinces. The insurgents have set up base camps and stockpiled weapons in the surrounding countryside and desert, Maj. Gen. Mark Hertling, the top U.S. military commander in the region, said in an interview.

The fighters recently have shown their ability to mount devastating attacks, such as the explosion of a booby-trapped building Jan. 23 that an Iraqi relief agency says killed as many as 60 people and wounded 280 others. The following day the provincial police chief was killed up by a suicide bomber as he surveyed the wreckage.

Although overall violence in northern Iraq has dropped significantly since June, attacks in Mosul and the surrounding province of Nineveh have increased slightly over the past two weeks, when compared with the average of the past year, Hertling said. Currently about 20 attacks are carried out each day in the province, most of them in Mosul, he said.

Col. Stephen Twitty, a former commander of U.S. forces in Mosul, said there were about eight attacks a day in the city in October.

Insurgents are attacking more frequently with small arms and using fewer car bombs, which Hertling saw as "an indicator that shows the enemy in the city are less well supplied and less well organized."

The city's Arab population has become increasingly vocal about concerns over the rise of Kurdish influence, and U.S. military officials say they believe insurgents are hoping to exploit these divisions and further destabilize the city.

Iraqi officials from Mosul have been warning for months of the growing strength of insurgents and demanding that Iraq's central government commit more resources to prevent al-Qaeda in Iraq from becoming entrenched in the city.

In the aftermath of last week's violence, Prime Minister Nouri al-Maliki said that reinforcements were moving toward Mosul ahead of an operation he vowed would be the "decisive" battle against al-Qaeda in Iraq.

Over the past year, the two Iraqi army divisions in Nineveh province have lacked three battalions that were sent to Baghdad to help with the counterinsurgency effort. Two of those battalions have returned to the province, and one of them, the 3rd Battalion, 1st Brigade of the 3rd Division, has recently begun operations in western Mosul. The additional troops are setting up several new outposts inside the city and are operating a provincial operations command, which was established Jan. 15 and is led by a two-star Iraqi general.

The U.S. military also has boosted its troop strength in the city over the past month by moving in an additional battalion. About 5,000 American soldiers and more than 40,000 Iraqi security forces are in the province. The city of Mosul, with a population of more than 1.8 million people, has 18,200 Iraqi soldiers and police officers.

U.S. military officials said that over the next few months there would be a gradual increase in Iraqi security forces and more frequent combat operations.

Tyson reported from the Pentagon. Special correspondent Naseer Nouri in Baghdad contributed to this report.

Year-End Payouts Dipped Only Slightly on Wall St.

By Tomoeh Murakami Tse and Renae Merle

Washington Post Staff Writers
Tuesday, January 29, 2008; Page D01

NEW YORK The grim toll that the U.S. mortgage crisis has taken on financial markets has been felt worldwide, from traders in Hong Kong to small-town mayors in Europe to pensioners in the American Midwest.

But largely spared have been financiers on Wall Street, a place where brokers, bankers and traders are called into corner offices at the end of each year and told how large a bonus they'll receive for the year's work. The size of the figure reflects their value to the company, and many feared -- even complained out loud -- that the amount would be badly affected by the subprime mess.

They needn't have worried. Wall Street bonuses totaled $33.2 billion in 2007, down just 2 percent, by the estimates of the New York state comptroller's office.

Seven of Wall Street's biggest firms boosted their total compensation and benefits to a combined $122 billion, up 10 percent since 2006, despite seeing their net revenue collectively fall 6 percent, according to Equilar, an executive-compensation research firm based in California. Mortgage-related losses reported by the seven firms totaled $55 billion and wiped out more than $200 billion in shareholder value.

"In a year when shareholders have lost nearly half the value of their holdings, it strains one's imagination how the firms can continue to give such pay," said Michael Garland, director of value strategies at CtW Investment Group, which works with pension funds on corporate governance. "You've got Wall Street guys engineering derivatives securities that destabilized broader financial markets -- it's hard to understand why anyone should get paid for that."

The seven large firms -- Merrill Lynch, Citigroup, Bear Stearns, Morgan Stanley, J.P. Morgan Chase, Lehman Brothers and Goldman Sachs -- richly compensated their employees and executives even as three of those firms suffered their biggest losses ever in the final months of 2007. Employee compensation at those firms was equal to 47 percent of net revenue in 2007, compared with 40 percent the year before, according to Equilar. This change was partly due to an increase in employees at some firms.

The bonus figures, banking executives and some compensation experts said, reflect an ingrained pay culture on Wall Street that leaves firms little choice but to keep paying hefty bonuses to their executives and traders, especially those in divisions that are still making money. Some employees involved with mortgage-related securities have taken cuts. But heading into a tough year, when a credit crunch and possible recession are expected to dampen business, the firms reason that they must continue to reward revenue makers to stay ahead.

One Wall Street executive said his firm would most certainly lose its high-caliber employees if they were not compensated in accordance with their performance. "That's a fact," said the executive, who spoke on condition of anonymity because he was not authorized to speak publicly on the matter. "That's not just a myth generated by greedy Wall Street. I've seen it happen."

Some investment banks already have a list of people they would like to pluck from rival firms and are waiting for their employers to be in a tough position, said Steven Hall, managing director of Steven Hall & Partners, a compensation consultancy.

"You have to pay people who are performing, even in bad times, in order to keep them in place," Hall said. "There is not a lot of willingness to stick around when bonuses aren't being paid out."

But skeptics question the notion that an exodus would occur, noting that Wall Street firms are in firing, not hiring, mode.

Wall Street firms tend to pay bonuses based on a combination of individual performance, unit performance and overall institutional performance. The payments usually represent 60 to 80 percent of an employee's take-home pay. A senior executive may have a base pay of $200,000 to $300,000 but make another $2 million to $10 million in bonuses, a portion of which may be in company stock.

Not all firms on Wall Street performed poorly. Most notably, Goldman Sachs posted another record year, with only modest mortgage-related write-downs. Chief executive Lloyd C. Blankfein took in a $67.9 million bonus for 2007. And even those firms that fared badly, dragged down by massive losses in subprime mortgage securities, had other divisions that posted record profits. These came largely in investment banking, equities capital markets, mergers and acquisitions, and private wealth management.

Because rainmakers continue to command the most generous bonuses, this has led to pay disparities both among investment banks and within them, executive-compensation experts said.

Michael Karp, chief executive of Options Group, a global executive search and consulting firm that specializes in financial services, said bonuses were down by as much as 50 to 60 percent in subprime-mortgage-related departments, while groups such as investment banking took in bonuses that were on average 10 percent higher than in 2006.

At Morgan Stanley, those deemed responsible for the outsize mortgage losses, which the company blamed on bad bets by a single trading team, saw less pay. Neal Shear, the trading chief, has been demoted. Zoe Cruz, the co-president overseeing the securities unit, was ousted in November. Neither was among the top-paid executives this year. In 2006, they were the highest paid at the firm after chief executive John J. Mack. Mack said he would forgo his bonus for 2007 in light of the mortgage write-downs, in which the firm massively restated the value of those holdings on its balance sheets.

Some shareholders argue that a fundamental overhaul of Wall Street pay is necessary, calling for measures like claw-backs (giving back pay based on short-term earnings) and bonuses based on performance over multiple years. Indeed, the people who generated billions of dollars on fixed-income desks in the past five years include those who dealt in mortgage-related securities that turned toxic last summer. Profits from the once-highflying fixed-income business have helped triple the average Wall Street bonus in five years, to $180,420 last year from $60,900 in 2002, according to the New York State comptroller's office.

Others want a system whereby pay is tied more closely to overall corporate performance. It is only fair, they say, as shareholders buy shares in the bank as a whole, not in particular divisions.

Compensation experts noted that some Wall Street firms have already moved to preserve cash and keep employees tied to the company by paying a higher proportion of this year's bonuses -- as much as 70 percent -- in the form of restricted stock, which cannot be cashed in if they leave the firm immediately.

Some firms said they want to make longer-term changes. An official at Merrill Lynch, which made bigger payouts last year compared with 2006 despite heavy losses, said its new chief executive, John A. Thain, would recalibrate the bonus system to reflect overall company performance. It appears that 2007 could be the peak year for overall compensation, just as 2000 was for the tech-boom era, with a cautious Wall Street dampening bonus expectations for 2008.

Mortgage-related executives have already felt the pinch, though they didn't end the year empty-handed, according to Options Group. The average bonus for a vice president who sells mortgage-backed securities fell by roughly half in 2007. At the end of last year, that executive would have received only $300,000 to $400,000.

Merle reported from Washington.