Some housing bubble news from Wall Street and Washington. Bloomberg, "Citigroup Inc. will take over seven troubled investment funds and assume $58 billion of debt to avoid forced asset sales that would further erode confidence in capital markets. The biggest U.S. bank by assets will rescue the so-called structured investment vehicles, or SIVs, taking responsibility for their $49 billion of assets, the New York-based company said in a statement."

"The decision to bring the SIVs onto the balance sheet marks a turnaround for Citigroup. In a Nov. 5 regulatory filing, the company said it 'will not take actions that will require the company to consolidate the SIVs.'"

"'After considering a full range of funding options, this commitment is the best outcome for Citi and the SIVs,' Vikram Pandit, who was named CEO on Dec. 11, said in the statement." "Citigroup said its decision was independent of the Treasury plan to create the $80 billion so-called SuperSIV that would buy assets from other funds that couldn't finance their investments."

"'The need now has completely gone away,' said Joseph Mason, associate professor of business at Drexel University and a former financial economist at the Office of the Comptroller of the Currency. 'They were the only ones keeping it alive.'"

"Citigroup follows HSBC Holdings Plc, Societe Generale SA and WestLB AG in bailing out SIVs to avert fire sales of assets. 'That was really the last major outstanding piece of the SIV problem,' said Peter Crane, founder of Crane Data LLC. 'The SIV problem is very close to resolution.'"

From Reuters. "'It says the super SIV is dead in the water. That shows it was a bad idea in the first place and as with (British bank) HSBC they have realized they have to sort their own problems and not seek help from someone else,' said Alan Webborn at SG Securities in London."

From MarketWatch. "Interest in the fund has waned as several banks concluded they couldn't wait for it to become operational, and decided to bail out their own SIVs."

"SIVs are funds that use money borrowed under short-term agreements -- typically commercial paper -- to buy longer-term, higher yielding debt investments, which have included subprime mortgage-related assets."

"As the credit markets have tightened in response to growing instability in the subprime mortgage market, SIVs have struggled to secure financing, which in turn has sparked concerns that they may have to sell their assets into a weak market."

"The biggest concerted effort by central banks in six years to restore confidence in global money markets is showing little sign of success. Policy makers are reacting to more than $70 billion of losses announced by financial institutions this year and estimates of about $300 billion more on securities linked to subprime mortgages, collateralized-debt obligations and structured investment vehicles, or SIVs."

"The rates banks charge each other for three-month loans held at seven-year highs for a second day after policy makers in the U.S., U.K., Canada, Switzerland and the euro region agreed to ease the logjam in short-term credit markets."

"'The market clearly doesn't believe central banks can do anything about this crisis,' said Nathalie Fillet, senior interest-rate strategist at BNP Paribas SA in London. 'This is not going to be a magical solution to the problem.'"

"The concerted central bank effort to ease the liquidity crisis may do no more than shine a spotlight on the other problems faced by the financial markets -- including a growing concern about fundamental asset quality."

"While the move has undoubtedly eased tensions into year-end and will allow frazzled nerves some respite over the Christmas and New Year period, bankers and investors will return in January to face largely the same problems."

"The central banks may have raised more questions than they answered. 'The next leg of bad headlines will be real losses,' credit analysts at Royal Bank of Scotland warned on Thursday. 'Forget mark-to-market on CDOs, CDO of ABS, RMBS and the like, 2008 will see real losses.'"

"'You have a slowing U.S. consumer,' Jeffrey Immelt, CEO of General Electric said this week. 'I'm not going to put a happy face on this...clearly consumer delinquencies in the United States are increasing.'"

"Analysts at UniCredit asked whether central banks had a realistic chance of fighting the crisis with the measures announced."

"'It is becoming more and more apparent that this is not the case,' they wrote. 'The stressed liquidity situation is not the reason for the crisis, it is just one symptom. The liquidity the central banks provide is absorbed quickly by banks that pile up cash on their balance sheets.'"

"This does remove pressure from the market to provide funding, and is highly welcome in stabilising those institutions that might face liquidity risk. 'But funding a bank's balance sheet is truly not the business of a central bank,' they said."

The Financial Post. "With the deadline for a restructuring proposal for $33-billion of asset-backed commercial paper hours away, a roomful of investment bankers and lawyers are still struggling to come out with a document that will enable investors to put a value on their holdings for the first time since the market melted down in early August."

"Sources close to the investor committee overseeing the negotiations said that while some noteholders might get most of their money back, others will likely see losses of more than 50%."

"'There are some pretty bad trusts,' said one source, adding that the worst of the losses are focused on just three or four trusts, including the now infamous Apsley, whose assets include nearly $1-billion of investments linked to subprime mortgages in the United States."

The Associated Press. "The phones don't ring off the hook any more at Spanish real estate offices, once the giddy beneficiaries of a sizzling property market. In fact, they hardly ring at all. And the revolving-door flow of customers has vanished."

"Sharply higher interest rates, a glut of homes and newly jittery banks have come together to stall the engine that has driven one of Europe's top-performing economies for more than a decade."

"Promoters who just a few years ago could sell new homes just by showing crude blueprints, they didn't even bother to build pilot houses or apartments, are now desperate. 'The market has become paralyzed. Things are just paralyzed,' said Javier Martinez de los Santos, manager of a realtor's group."

"Banks used to trip over each other competing to throw low-interest rate mortgage money at anything that moved. Interest rates have jumped nearly three points in as many years, however, which means much heftier monthly payments for homeowners because the vast majority of mortgages in Spain are adjustable-rate."

"So banks worried over the prospect of defaults are now much more miserly, ending the once-common practice of financing 100 percent or even more of a home purchase, and raising the threshold for what people need to earn in order to qualify for a loan."

"'There is still demand. There are more people looking for a house now than before. The problem is the banks have turned off the spigot,' said Jesus Duque, vice president of a Spanish real estate chain with 600 offices around the country."

"Malena Garcia Mexia, a dance instructor in Torrelodones, 30 kilometers (20 miles) northwest of Madrid, knows all about it. She and her husband put their 3-bedroom apartment up for sale in November 2006 and have got nibbles but nothing serious."

"'People try to take advantage of the situation,' she said, recounting how they've lowered their price three times only to have prospective buyers now ask them to come down as much as 20 percent more."

"For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008. Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year."

"The housing market collapse has been anything but the 'soft landing' that Federal Reserve Bank of San Francisco President Janet Yellen and David Lereah, former chief economist at the National Association of Realtors in Chicago, predicted for real estate at the start of 2007."

"Median home prices declined in the U.S. this year, the first annual drop since the Great Depression, according to forecasts from the National Association of Realtors."

"'I'm not going to sit here and tell you it's going to turn real strong next year,' said Jim Gillespie, CEO of Coldwell Banker Real Estate LLC, the largest U.S. residential brokerage, according to Franchise Times. 'It's not going to turn real strong next year.'"

"Moody's Economy.com Inc. says home sales will hit bottom next year, declining 40 percent from their peak."

"'I know we weren't predicting things would get this bad,'' said Frank Liantonio, executive VP for global capital markets at New York-based Cushman & Wakefield Inc., the largest closely held real estate services provider. 'There were some signs there, but I don't think anyone anticipated the level of dislocation that was actually created.'"