Economic Update – CityCenter Still On — For Now
- Mar 30, 2009
For the moment, the CityCenter development in Las Vegas–lately bedeviled by a feud between co-owners MGM Mirage and Dubai World–is still an ongoing thing, thanks to a $200 million payment by MGM to the joint venture late last week. “It is as an acceptable, albeit temporary, solution to the liquidity issues that MGM Mirage is facing,” Dubai World, which is owned by the emirate, said in a statement. Left unspoken was the fact that CityCenter’s main problem seems to be the unlucky timing of getting under way just ahead of a severe recession, something not even $200 million is likely to fix in the long run. TARP was back in the news over the weekend, at least to the extent that U.S. Secretary of the Treasury Timothy Geithner quantified “roughly” how much was left: $135 billion. On ABC’s This Week, on Sunday, Geithner didn’t rule out going back to Congress for more money eventually, a prospect that brings to mind the term “stir up a hornets’ nest.” Still, $135 billion is a lot of money. But not quite enough to bail American International Group again, should it come to that. The “bottom” of the economy may be elusive (unless Jim Cramer is to be taken seriously), but the bottom for mortgage rates might be here. On Friday, Freddie Mac noted that 30-year fixed rate mortgages have dropped to their lowest level since it began surveying the rate in 1971. For the week ending March 26, the 30-year, fixed rate averaged 4.85 percent, down from 4.98 percent the week before. As recently as last July, the rate averaged 6.63 percent. That doesn’t necessarily mean that the upfront costs of getting a mortgage will be particularly cheap, however, since banks are taking this opportunity to make some money off of originations. Data from the Federal Housing Finance Agency put the average cost of getting a mortgage in the United States at $640 per $100,000 in December and January, the highest price since 2000. In 2005, when the housing bubble was still more-or-less inflated, the cost was about $280 per $100,000. After mostly upward momentum last week, Wall Street cooled off on Friday, with the Dow Jones Industrial Average dropping 148.38 points, or 1.87 percent. The S&P 500 lost 2.03 percent and the Nasdaq was down 2.63 percent.