I just read an analysis from bond rating agency Standard & Poor's about how Japan dealt with its banking crisis in the early 1990s. From 1994 to 2003, 180 Japanese banks failed. Total cost of the credit losses: $950 billion.

There the government took small incremental steps. There was strong opposition to bank bailouts and a series of administrations that failed to act.

The Japanese real estate bubble burst in 1992. It wasn't until 1998 that the government began investing in the banks through subordinated debt. The government kept weak banks alive longer than they should have through depostion protection. Eventually the government began purchasing non-perfomring loans. The shortages of capital lasted until the early 2000s though.

Japanese industrial companies also had problems with excess capacity and a shortage of funding. In 2003 the government established an Industrial Revitalizaiton Corp. of Japan to provide capital. One of the lessons learned from Japan, according to S&P, is that it's also vital for a country to protect big industrial corporations, such as the automakers.

Okay we fell for this. The real estate information site
Cyberhomes shot us a comparison of the two earliest U.S. settlements, Jamestown, Virginia and Plymouth, Mass. Cyberhomes looked at which place would make the best settlement in 2008. The Jamestown Settlement is in James City County and the Plymouth Colony is in Plymouth County.

James City County

Median Estimated Home value - $319,766, which is down -6.44 percent in the past 12 months.
Population - 62,649
Pop Change since 2000 - 3.71%
Median Household Income - $95,567
Unemployment Rate - 2.60%
Recent Job Growth - 2.31%

Plymouth County

Median Estimated Home value - $310,752, which is down -13.87 percent in the past 12 months.
Population - 505,547
Pop Change since 2000 - 0.93%
Median Household Income - $92,471
Unemployment Rate - 4.80%
Recent Job Growth - 0.27%

Based on the above, Cyberhomes concludes that settlers looking to drop anchor today would be best to settle in Jamestown. Compared to Plymouth, James City County boasts a higher median household income, a faster growing population, lower unemployment rate and higher recent job growth. In addition, the county’s home values have not taken nearly as big a hit as in Plymouth.

No comment on who's got friendlier Indians.

A new Gallup study suggests that cities with loyal, passionate citizens are more likely to be economically vibrant. The three-year study, funded by the John S. and James L. Knight Foundation, surveyed 26 communities and looked at how emotionally connected residents were to their city compared to the GDP growth during the past five years.

"The findings show a significant correlation," a press release for the study said. "Over three years, the researchers will analyze the trends to prove whether emotional connection drives economic growth, or the other way around."

Hovnanian, the big New Jersey-based homebuilder, got a big no thanks from its bond holders this week. The company had tried to reduce its massive $1.6 billion debt load by offering bondholders new securties paying 18% interest. The catch was they had to accept just 60 cents on the dollar for their outstanding notes. Just $71 million worth of bonds were tendered.

The move was an attempt to preserve some assets for stockholders, including the 18% of the shares owned by management and the Hovanian family, says the debt watchers at the research firm Gimmie Credit.

"It's going to be long and dangerous housing recession," Gimmie Credit concluded. "If Hovnanian fails, at least the normal pecking order of claims to its assets will remain in tact for now."

Mortgage rates fell sharply yesterday after the administration announced that it will pump another $800 billion into credit markets to free up frozen consumer and mortgage lending.

The City Council of Valencia, Calif., has approved the $300 million expansion plan for Henry Mayo Newhall Hospital, under which the facility will gain a new patient wing and three additional medical buildings, along with a helipad and new parking structures.

Matrix Development Group has acquired an 82-acre site in New Jersey that includes a total of some 342,000 square feet across 13 office and labratory buildings. The site has 2,000 feet of frontage on the New Jersey Turnpike near exit 8A.

The S&P/Case-Sheller index came out today and the news is not very good. In the national index, prices were down 16% from the third quarter 2007 to the same period of this year. Prices overall are back to 2004 levels, erasing four years of gains. From the peak in the second quarter of 2006, prices are down 21% nationally.

The trends are different from one part of the country to another, however. The Sunbelt cities that had the largest gains have had the largest decline--Miami, Los Angeles, Phoenix, and Las Vegas. “A pattern we’ve seen consistently and if anything has become more pronounced,” notes David Blitzer, the index committee chairman at Standard & Poor’s. Blitzer noted that those cities were the ones where most of the subprime and creative mortgages were used. San Francisco is an extreme example of this. Higher priced homes have fallen less severely than low priced ones.

Detroit is one exception to the Sunbelt trend. It’s also the only city where housing prices are lower than where they were eight years ago.

The firm also introduced condo data for five cities—Los Angeles, New York, San Francisco, Chicago and Boston. Patterns are very similar to that of homes, substantial declines, more so on the West Coast. Homes have actually dropped more steeply in some markets such as San Francisco.

Wellesley College Professor Karl Case said “there’s no hiding from the bad news.” And it will likely get worse because the recent unemployment, credit crunch and panic on Wall Street has yet to hit the numbers. If there’s a glimmer of hope, he said, there are a bunch of cities including Boston, Chicago, New York, Atlanta and Seattle where prices are only down 10% or less. “Hardly a freefall in three years,” he said.

Individual cites are often a tale of two markets—one is the bank-owned home auction market, where prices have crashed dramatically. The other is markets where prices are even up. Case said the firm has considered dropping auction sales from the data. “If you look at the bottom end of the market, prices literally tripled,” he said. “If those are in there on the way up and you take them out on the way down, you get a biased view.”

A lot will depend on how the market responds to the various government-sponsored mortgage relief plans. “There’s a danger if you do that in too generous a way, people who have performing mortgages get angry, if they see their neighbor getting a break,” Case said. “It could be fairly easy to talk 3 million more into non-performing if they think they’ll get a hair cut. It’s a moral hazard.”

Mortgage lenders helped save a record 225,000 at-risk mortgage borrowers from losing their homes during October, according to a report issued Tuesday by a coalition of lenders, mortgage servicers, investors and counselors assembled to fight the foreclosure plague.

Mack-Cali Realty Corp. said today that Thomson Inc. has extended the term of its existing 62,500-square-foot lease at 2 Independence Way at Princeton Corporate Center in Princeton, N. J.  In addition, the company has agreed to lease the building’s remaining 4,800 square feet.