US Market Outlook: 2009 Will Be the Year of the Bankruptcies

Will 2009 Will Be the Year of the Bankruptcies affect Singapore Market?
This maybe the 2nd Wave of Finanical Crisis after the 1st Wave in Oct. 2008.

Japan to go down zero-rate road again

BOJ expected to cut rate today while it seeks to rein in power of yen

THE Bank of Japan appears set to cut interest rates today, returning in effect to the zero rate policy it pursued from 2000 to 2006 to counter deflation and to stabilise the Japanese financial system.

This time, Japan will join the US, where the Federal Reserve cut rates this week to near zero, and probably Britain where Bank of England deputy governor Charles Bean said yesterday that zero rates were possible.

Official warnings meanwhile grew louder in Japan yesterday of intervention by the BOJ in foreign exchange markets to stem the surge in the value of the yen, which yesterday hit a new 13-year high of near 87 yen to the US dollar. But such intervention could be neutralised by a tsunami of private capital now flowing back into Japan, analysts warned.

'We have conducted currency intervention in the past, and we will take appropriate measures, which includes that (option),' Japan's Chief Cabinet Secretary Takeo Kawamura said yesterday.

Japan's leading motor vehicle and electronics makers have already seen their profits savaged by the strength of the yen and yesterday chairman of the Japan Automobile Manufacturers Association Satoshi Aoki called for measures to restore stability in foreign exchange markets.

Japan has conducted intervention (via the Bank of Japan, acting as agent for the Ministry of Finance) on numerous occasions in the past when the yen was subjected to sudden and sharp appreciation. But some economists say that such a move now by Japan could trigger competitive currency devaluations elsewhere in Asia and beyond.

The BOJ's Policy Board will end its latest two-day meeting around midday today and is expected to announce a cut in the central bank's short-term overnight policy lending rate from its current level of 0.3 per cent to 0.1 per cent. This is in effect a zero interest rate level as dealers say it is difficult to hold the rate at precisely zero.

Such a move is not expected to have any measurable impact on Japan's economy, which is officially in recession and which is expected to continue contracting well into next year. But it would have the symbolic effect of signalling Japan's solidarity with monetary authorities that are pushing rates down to zero to counter deepening economic recession.

What Japanese authorities appear to be hoping for through a combination of cutting rates and launching a unilateral dollar-buying operation in foreign exchange markets is to deter speculation in the yen and to re-ignite the so-called yen carry trades which had pushed the yen down to very low levels until recently.

These carry trades, which involved hordes of Japanese and other speculators selling yen and buying assets denominated in higher yielding currencies and areas - thereby pushing the yen down - have reversed in the face of the story that has swept through global financial markets and some analysts doubt they can be re-ignited in the current climate of fear and volatility.

Recently, Japanese portfolio investors have begun to sell foreign assets and repatriate capital. This appears to be an actor behind the rise of the yen, in spite of the fact that foreign investors have been selling Japanese assets.

The Nikkei 2225 stock average (up some 0.6 per cent yesterday to 8,667.23) appears stable despite selling by foreign investors, indicating that Japanese investors feel safe now with yen assets, analysts say.

Bernanke may not stay in office to see fruits of his labour

Dated on 19-12-2008

(WASHINGTON) The fruits of Federal Reserve chairman Ben Bernanke's aggressive and unprecedented moves to fight off a major US recession may come too late to cement his legacy and ensure him a second term.

Mr Bernanke gets high grades from many analysts for recognising relatively quickly that the credit crunch spreading from defaulting mortgages to banks to businesses could have broader impact, and for taking bold measures in response.

'Once Bernanke realised how serious and severe his problem was, he moved quickly, and he moved aggressively,' said Bernard Baumohl, of the Economic Outlook Group in Princeton Junction, New Jersey.

In a Reuters poll, economists said the US central bank chief was early to acknowledge the scale of the crisis, especially when compared to his counterparts in Europe and Japan, and they gave his performance high marks.

Mr Bernanke looked prescient compared with European Central Bank president Jean-Claude Trichet who in July worried enough about inflation to raise rates, only to reverse direction three months later when the financial crisis intensified.

Perhaps no one has been better equipped to handle the crisis than Mr Bernanke, who studied how central bank complacency in the 1920s set the stage for the Great Depression, and whose speeches in 2002 and 2004 laid out a detailed map for monetary policy when a central bank's interest rate drops to zero.

On Monday, the Fed pushed on into uncharted terrain, dropping its benchmark interest rate to a range at or near zero for the first time and promising to keep rates low for a long time.

The central bank went further, promising to use untested weapons to boost growth as its conventional ammunition was spent. Mr Bernanke opened the door to expand purchases of debt issued and guaranteed by government-sponsored mortgage agencies and to buying longer-dated Treasury securities.

The response in markets was largely positive, with a rally in stocks on Tuesday, albeit followed by a fall on Wednesday, and a tumble in yields on longer- dated Treasury debt.

Mr Bernanke has said the Fed is willing to bypass banks and directly provide funding to specific market areas where activity has stalled, including consumer and small business loans. Commercial real estate may follow.

The Fed's moves are likely to foster private sector risk-taking and lead to appreciation of asset prices, fuelling a recovery, said Zach Pandl, an economist with Barclays Capital.

'Our view is that these policies will gain traction,' he said. 'We've been impressed with the speed and scale, and the Fed has rarely been behind the curve. We think they've been creative, nondogmatic.'

However, there is the possibility that the Fed's actions could backfire since the rate cut has lowered the value of the US dollar, and other countries may try to lower the value of their currencies to make them more stable, said Richard Bove, an analyst for Ladenburg Thalmann.

In addition, the Fed's rate cuts have failed to lower some private sector borrowing costs, Mr Bove said. 'The Fed is not impacting the private sector,' he said in a note to clients.

But most economists don't expect the economy to show signs of rebounding until the second half of next year.

Unemployment rates, which lag an economic recovery, may be peaking next autumn, right around the time the administration of current President-elect Barack Obama needs to announce whether they want Mr Bernanke to stay on for a second four-year term.

'If by fall of 2009 there's no improvement in the economy, and indeed, if it's even worse, I can see case being made for replacing the chairman of the Federal Reserve,' said Campbell Harvey, a professor at Duke University's Fuqua School of Business. 'Politically, you would have to shake the team up.'

Mr Bernanke's detractors also point to the decision in September to let Lehman Brothers fail as a serious error of judgment. Authorities including Mr Bernanke have said they could not find a buyer for the investment bank, but the event was seen as triggering an acceleration of the economic downturn.

Mr Obama's naming of former Treasury secretary Lawrence Summers, a highly regarded economist, to a senior White House economics coordination post also raises the possibility that the President-elect is grooming him to replace Mr Bernanke. -- Reuters

明年才是真正的“严冬”

Dated on 18-12-2008

《货币战争》作者、提前半年预警美国“两房”灾难和金融海啸爆发的旅美华裔学者宋鸿兵，昨天上午接受本报记者采访时称，明年没有春 天，金融海啸将在明年4至9月间升级为第二波，届时将爆发对冲基金和保险公司的倒闭潮。他同时解释，这不是理论性的推断或凭空的猜测，而是 通过数据分析得出的时间触点。

　　提前半年预测次债危机

　　“《货币战争》一书问世时，美国次债危机未正式发生，而您却作出预测，请问您的依据是什么？”当记者抛出这个提问时，他解释，是通过大 量数据统计分析到的。他同时强调，他都能预测到，相信美国一些大的投行机构以及权威部门，应该知道金融危机的到来。

　　宋鸿兵称，目前情况来看，“危机最严重的时刻还没到来”。也即说，2008年还不是金融海啸危害最大的年头，明年才是真正的“严冬”，2009 年没有春天。明年将是金融海啸的第二波段，美国的商业银行体系会遭受前所未有的冲击，多家商业银行巨头或会在这一波海啸中倒下。

　　他说，这次国际金融危机将有四个波段，现在仅仅是第一波。明年4-9月间，还会有第二波袭来，冲击力将甚于现在。第二波金融海啸的引爆点 ,将从目前的房贷市场转向“企业债和地方政府债券”，尤其是企业债中的垃圾债。因为历史规律是：美国经济一旦步入衰退，首当其冲的就是垃 圾债。

　　他说：“到明年，美国经济正式确认步入衰退，在实体经济下滑的冲击下，垃圾债券的违约率将急速爬升，预计到9月底违约率将急升500%,从目 前的2.68%飙升至12%以上。在 62兆美元的信用掉期市场中，有20兆余美元在对赌垃圾债券，垃圾债违约率大幅飙升的直接后果是这种对赌行为将 大规模失败。”

　　“第二波金融海啸下，将有多至上百家对冲基金、保险公司等金融机构血本无归、最终倒闭；而商业银行资产负债表的问题也将暴露无遗， 直接冲击美国商业银行系统，美国五大商业银行倒掉几家是有可能的。”

　　外向型经济肯定受冲击

　　广东外向型经济占比大，美国经济衰退对我省乃至全国都将受到影响。宋鸿兵认为，明年美国经济会出现比较严重的衰退。在金融海啸的冲 击下，中国经济尤其是广东的外贸企业，当然会受到较大的影响。不过，据他估计，明年上半年实体经济恐怕会出现较大冲击。

　　有何良策规避风险呢？他提出，目前最重要的是按照中央经济工作会议的部署，扩大内需，拉动经济，做足各方面工作，有准备地度“严冬”。 至于如何扩大内需，他认为，目前最大的问题是生产过剩而消费不足。因此，我们提倡扩大内需，还要各级政府拿出切实可行的措施，才能将口号变 为现实行动。特别是要想方设法解决当前农村存在的问题，设法增加农民的收入，让农民敢于消费，消费得起。

　　我们黄金储备太少

　　这次金融危机的爆发，美国债务危机是导火索。宋鸿兵预测，这一危机可能持续3年以上，并可能演化为美元危机，而黄金在这个时候应该得到 我国上至国家下至平民百姓的重视。他认为，目前我国的黄金储备太少了。应该设法储备，越多越好，从战略上考虑，应该做到“藏金于国、藏金 于民、藏金于市、藏金于未来”。

　　他阐述我国储备黄金的必要性后指出，金融危机将引发美元危机，而黄金是美元定价的。美元越发越多，黄金石油这些美元定价的商品就会不 断上涨。美元贬值， 即是让全世界来为美国买单。因为他是最大的债务国，供应货币就等于是在还债。他还称，目前的黄金价格是低估了。以房 子为例，在同样的时间里，房产价格已涨了10倍以上，而黄金价格最多为1倍。

　　对于普通投资者来说，在金融危机来临时，首先是保护财富不要被这种振荡所吞噬，这是首要的。而赚钱是次要的。在危险的情况下，更重要 的是守住自己的钱袋子。至于投资的方向，他认为还是黄金。在目前黄金价格被低估情况下，可以大胆买入。他认为，越是美元疲软，被全世界看 空，黄金的走势就会越好。据他预测，国际黄金价格超过1000美元/盎司只是时间的问题。

　　南方日报记者 朱桂芳

　　金融海啸明夏将更猛烈

　　“危机最严重的时刻还没到来。”因编着畅销书《货币战争》而闻名、并提前预警美国“两房”灾难和金融海啸的经济学者宋鸿兵，再次 预言：金融海啸将在明年4至9月间升级为第二波，届时或将涌现企业倒闭潮，美国商业银行系统更会遭受前所未有的冲击，多家商业银行巨头 或会在此波海啸中倒下……

　　最近，宋鸿兵应邀做客建设银行佛山市分行举办的财富名家讲座。他以《金融海啸下中国经济的发展方向》为主题演讲，并预言“目前仿 佛一切风平浪静——金融市场稳定了，人心安定了，但实际上现在正处于两波金融海啸之间的波底，第二波正在积蓄力量！”

　　危机解读：根源在于资产膨胀依赖型经济增长模式不可持续

　　伴随着《货币战争》长期雄霸各大畅销书榜前三名，该书作者宋鸿兵迅速从一个默默无名的旅美华人变为备受瞩目和争议的经济学者。

　　在书中，他指出有美国政府背景的“两房”机构将因不合理操作而引致灾难，并预言“两房”危机恐将在今年6至8月间爆发。今年6月，宋 鸿兵再次预言次贷危机将演变成金融海啸。一个月后，“两房”股价腰斩、美国政府宣布接管，进而雷曼等投资银行陷入困境，危机，正朝着 他的预言发展。

　　由于他原来在房地美和房利美工作，他有大量的数据。他预言，6、7、8三个月是次贷危机暴发的高峰，美股将会进入快速下跌阶段，A股 难以独善其身。后来发生的一切，证明了他的看法。

　　“这次次贷危机从根本上来说是美元机制长期失衡下的爆发。”宋鸿兵表示，长期以来，美国是过度消费和较低储蓄率，2007年美国储蓄 率仅为1.7%，创下了1933年大萧条时代以来的历史最低记录。然而由于各种金融创新手段如雨后春笋般冒出来，使美国得以吸纳来自其他国家 的储蓄来弥补自身储蓄的不足。

　　在宋鸿兵看来，资本的膨胀在长期失衡累积下必然会有一阵调整。他认为此次金融海啸实质是虚拟经济的财富分配导致实体经济无法持续 有效运作，根源在于资产膨胀依赖型经济增长模式不可持续。

　　危机预测：金融海啸明夏升级第二波

　　“金融海啸远没有结束，2009年夏，它将会开始第二波的冲击，冲击力度也将是第一波的三倍。”宋鸿兵将此次危机分为4个阶段，次贷地 震——违约海啸——利率火山——美元冰河。目前，正处于两波中间的低谷，明年6、7、8三个月危机将会殃及美国五大商业银行。 宋鸿兵表 示，2009年夏，企业债及公债等违约问题，尤其是企业垃圾债，将导致大数额的CDS市场（CDS为信用违约掉期）发生违约危机，金融海啸将开 始第二波的有力冲击。他预计，美国垃圾债券的违约率将急速爬升，而这一切将给美国五大商业银行猛力冲击。

　　“明年信用掉期市场会发生违约危机。从美国商业银行资产负债表上看，其主要投向了表外的SIV资产、按揭抵押债券，两房债券、CDO、 CDS，以及垃圾债券，在信用违约掉期市场违约率飙升过程中，而这些放贷中的大部分将永远无法偿还了，将冲击更多的对冲基金、保险公司等 金融机构，而美国五大商业银行也将遭受前所未有的冲击，可能会在此波海啸中倒下。”

　　不仅如此，宋鸿兵认为金融海啸的冲击波远远未止，将会迎来第三波、第四波。第三波的利率火山危机，即信贷全面紧缩造成长期贷款利 率飙升，触发利率掉期市场危机，以及第四波的“美元冰河”危机。全球美元资产将出现信心危机，从而动摇美元世界储备货币的地位。

　　危机应对：游戏规则或将有新调整

　　然而，在最近美元走强形势下，有专家开始对美国经济形势看好，他们认为美元走强是由于美国经济处于复苏之中，美国与欧洲其它国家 相比，目前经济状况有所好转，已经过了最艰难时期。

　　对此，宋鸿兵另有看法，他认为目前的金融衍生品等资产是以美元计价的，市场在大量抛售这些美元资产，从而引起美元稀缺，导致美元 走强。他认为，美国的形势依然不看好，一旦每年创造的GDP全部增加值还偿还不了债务利息，美元体系可能最后会崩溃。

　　“不过，美国是游戏规则的定义者，所以并无法肯定美元体系最终一定会崩溃。但可以说的是目前这种美元体系面临着游戏规则的改变。 会有新的调整。”宋鸿兵认为。

　　问及如何评价我国对金融海啸的应对措施时，宋鸿兵承认，全球金融海啸对我国会产生不利影响，但他认为我国的金融体系仍是安全的。 对于中国政府的4万亿救市方案，他表示很有帮助，但至于力度和效果如何，还有待实际情况验证。

　　一旦关于第二波海啸袭来的预言不幸被验证，中国将如何应对？宋鸿兵坦言，目前国家出台的救市政策对稳定经济发展能产生有利的影响 ，但届时我国金融市场将遭遇一系列更新的问题，大家应提前有心理预期，着手思考新的应对之策。

　　佛山日报记者 李琳、罗超

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Invest in Gold and KISS US Dollar bye bye

There is a few ways to invest your money in Gold:-

1) Buy physical Gold coin.

2) Invest in SGX ETF Gold (GLD 10US$).

3) invest in US market on those Gold ETF:-

a) PowerShares DB US Dollar Bearish Fund (UDN)

b) PowerShares DB Gold Double Long (DGP)

c) Market Vectors Gold Miners ETF (GDX)

Once the gold price hit ever high it will have a gold Rush effect on the Gold price as a result of world currency printed more and more that may lead to hyperinflation that are in the long term future. We cannot stop Govt. from printing Dollar notes but we can bought some gold for hedging the loss of the currency value due to dilution of dollar notes in all part of the world.

Invest in SGX ETF Gold (GLD 10US$).

For invest in SGX ETF Gold, you can used your CPF Gold investment account to invest on SGX ETF GOLD 10US$ or you used your own saving that are in Singapore Dollar (that come without CPF check)

Please click the picture to to learn to know how to fill the order for purchase the Gold ETF in SGX.

Reference:-

http://en.wikipedia.org/wiki/Reserve_Currency

http://en.wikipedia.org/wiki/Foreign_exchange_reserves

Falling of US Dollar may have a short term effect this will have to watch Bank of Japan (BOJ) action on Japanese YEN as they are the one of the major US Dollar reserves Holder and their economy is getting hit very badly due to ever highest high Japanese Yen.

There are few thing to watch out in the investment of GOLD:-

1) China's interest rate, China currency, China's money supply.

2) Japanese Yen exchange rate, BOJ intervention of US Dollar and rate cut etc.

3) Gold supply in this market, central banks that are going to sell more Gold in the market.

4) Singapore MAS further devalue Singapore dollar. (coming April 2009)

Those Govt. have their own reason to devalue their own currency, they have to walk out of the crisis as the jobless rate in their country is getting ever high and there will be a social unrest threat to those Govt. if they don't anything at all or do too little.

Next year 2009 will be the year of currencies turbulence. we shall watch it the news for update.

Fed Cuts Rates to Near 0%, Vows to Bolster Economy

The Federal Reserve slashed its target for overnight interest rates to a record low of zero to 0.25 percent, and said it would employ "all available tools" to battle a year-long recession.

The surprise move to lower its target for the benchmark federal funds rate from one percent puts the Fed in uncharted territory. Financial markets had expected the Fed to lower rates by no more than three-quarters of a point, to 0.25 percent.

AP

In its statement, the Fed underscored its committment to use extraordinary measures, including using its balance sheet to support the credit markets.

"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said.

The cut in the federal funds rate pushes it to its lowest level on records dating to July 1954, and the central bank said it would likely keep it at "exceptionally low levels for some time."

"There is no more room to cut rates, as the target cannot go negative," said economist Chris Rupkey of Bank of Tokyo-Mitsubishi.  "Quantitative easing will be the new way for the Fed to stimulate the economy going forward."

In addition to the rate cut, the Fed said it was prepared to expand already announced large purchases of debt issued by government-sponsored mortgage agencies to support the battered US housing market.

The program to buy $600 billion in debt and mortgage-backed securities from mortgage giants Fannie Mae and Freddie Mac already has helped pushed mortgage rates down.

The Fed, however, remained cautious about another unusual measure, which Fed Chairman Ben Bernanke first floated two weeks ago. The statement said the central bank was still "considering" buying long-term Treasury securities, which is also thought to be aimed at lowering borrowing costs by going around commercial banks.

By boosting the quantity of money in the financial system, the Fed has engaged in so-called "quantitative easing" to provide economic relief. The Fed's balance sheet has ballooned to $2.2 trillion, from close to $900 billion in September, reflecting efforts to mend the financial system.

"With this statement the Fed embarks on a no-holds barred posture to help the economy." said Robert Brusca, chief economist at Fact & Opinion Economics. "The rate cut is the least of what the Fed is doing."

Mickey Levy, chief economist at Bank of America, said the Fed emphasized its intention to focus on "open market purchases of agency mortgages and debt, which will involve allowing the federal funds rate go toward 0%."

Prices for US stocks and government debt shot higher, while the dollar slipped, on the Fed's announcement.

"It's a highly unorthodox and creative step," said Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon in New York. "We think it's the best possible move for the U.S. consumer and for the financial market."

The Fed's unusual decision to establish a target range for the federal funds rate rather than a set level is a clear response to recent market conditions, where the rate has actually traded well below the one percent target.

The Fed is "acknowledging that", Bob Doll of BlackRock told CNBC. In recent days, the rate has been solidly below 0.25 percent.

In its statement, the Fed signaled its intentions by saying circumstances "warrant" keeping interest rates low for "some time." The Fed empoyed a similar telegraphing approach during the 2003 period when there were worries about inflation. That successfully managed the market's expectations.

"He [Bernanke] took the conventional funds rate out of play," says David Jones, of DMJ Advisors. "He's saying I'm going to use everything in my power."

Doll says the Fed is trying to get investors to buy a broader range of debt products than Treasuries, which have benefitted from an enormous flight to safety in recent months.

If successful, investors will move to government agency securities and then corporate bonds, which market strategists say is a necessary precondition to any sustainable improvement in stock prices.

Though economists and money managers welcomed the Fed's latest innovation, it did raise some concen about the state of the economy.

"The economy must be in pretty bad shape if the Fed needs to jump market expectations and push rates just a hair above the zero line," said Rupkey.
One veteran economist—among those who thought the Fed had already eased more than enough—said the central bank may have created an interesting predictament for itself and the markets going forward.

"What will the statement at the end of January say other than offer a litany of all the risky assets they are buying," asked Ram Bhagavatula of Combinatorics Capital. "How does that indicate whether monetary policy is more or less easy?"

—AP and Reuters contributed to this story.

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US Dollar is expected to drop over the long term, Fed have cut the Fed fund rate to the lowest ever seem in US history. you have to buy Gold for hedging against Dollar falling. The reason to buy Gold is simple because Gold in this earth is limited as the US Dollar is unlimited, Fed needed to print as much Dollar note to bail out those Banks and companies that needed the money to finance their business operation.

Next year 2009 Singapore Dollar may will depreciate by printing more Singapore dollar, this is to invite more direct investment to Singapore, to simulate the export for income. In this method the depreciate of Singapore Dollar will maintain the US strong Dollar policy. There may have a side effect in the future economy growth that is inflation. The inflation actually come from US but all over the world central banks will print more their currency notes, in another word, this wil import US inflation to their own country so inflation in future cannot be avoided if MAS want to depreciate Singapore Dollar by printing more notes the amount of monies to be print in order to maintain that strong US Dollar policy to a standard will be huge. So what do you think about the gold price in the future will be?

Sell These Assets Before The Ground Gives Way Beneath Them.

Publish Post

Bill Bonner - Mon 15 Dec, 2008

The ground is giving way beneath our feet: Sell the dollar... Sell Treasuries...

Sell these assets before the ground gives way beneath them Sell the Dollar and Sell Treasuries London, England

The ground is giving way beneath our feet: Sell the dollar...Sell Treasuries.

People still stand their ground...they do not panic. They do the right thing. But then, they go into work – but find they have no jobs. They look at their pension account – wisely invested in a diversified portfolio – and find that it has lost half its value. And their houses lose 20% of their value. In places such as San Diego, Las Vegas and Miami, the losses are more like 30%- 40%.

The ground gives way...and they find themselves in Hell.

Friday, the Dow registered a 61 point improvement, after much disappointment the day before. Is the rally on or off? We don’t know...

But what MUST happen, WILL happen. Fish gotta swim. Birds gotta fly. And bubbles gotta pop. The bubble in private debt has popped already. And now, the bubble in public debt has to pop too. And the dollar’s got to go down. That’s when the ground will really give way... For many people, the collapse of the dollar will wipe out what is left of their assets. Pension funds and insurance companies will be devastated. Savers will be unsaved.

Investors have rushed from risky investments of all sorts – emerging markets, mature markets, real estate, commodities – into the strong, welcoming arms of the US Treasury market. “Give me your tired, your poor huddled masses of dollars...yearning for protection from capitalism,” says Uncle Sam. “And I’ll give you 2.58% return over 10 years. Give me your money for 91 days, and I’ll give you nothing.”

Is that a good deal, dear reader? It depends on how solid the ground is under the US Treasury market. So far, as the ground gives way under other asset classes, the Treasury market has held solid.

But here is why the word “must” was invented. When something’s gotta happen, it’s gotta happen. The US Federal government already has an official national debt over $10 trillion. The deficit for next year will likely exceed $1 trillion...and could reach up to $2 trillion by 2010 – or more than 4 times the biggest deficit the country has ever run...and more than the entire US budget only 7 years ago. At this rate, in a couple of years, US debt will exceed US GDP.

Is it likely that the feds can so greatly increase the quantity of US debt without reducing the quality of it? Is it likely that the last IOU issued by the federal government will be as valuable as the first? No, it’s not likely. Something’s gotta give.

And we are talking about big money. A business or a small government can sometimes borrow more than its annual revenues. It’s borrowing can be funded by a small percentage of the world’s reckless savers. Lending to US government on such a scale is another matter. It takes up a large percentage of the world’s total savings, effectively shouldering other borrowers out of the way, and actually reducing the world’s capacity for economic growth.

Everybody, except bankers of course, knows that lending large amounts to a small country is extremely speculative. But lending to the US for ten years at 2.58% has a nasty stink of certainty about it. You can’t borrow that kind of money without some consequences...and the consequences of that much debt are bound to be bad.

To us, it seems almost inevitable that it will turn out to be a bad place to put your money. Because the ground is almost sure to give way beneath the feet of Treasury-market investors. How so? Ben Bernanke has already told us. When the borrowing gets tough, the Fed will turn to other forms of liquidity – buying US treasury bonds itself. In other words, instead of borrowing from savers – thus leaving the net money supply unchanged – the Treasury will borrow from the Fed. Where will the Fed get trillions of extra dollars? It will create them out of thin air.

That’s why the dollar has turned down.

“Greenback’s haven status thrown into doubt,” reported the Financial Times.

Last week, the euro jumped to $1.33 – a level it hasn’t seen in many months. And gold keeps edging up. It’s up to $820 an ounce as of last week.

The dollar is Hell-bound, dear reader. Sell it. And sell Treasuries too. We might be early with this advice. But we won’t be wrong.

*** If you want to own gold coins, you’ll pay $870 - $890 an ounce. Coins are scarce. People are looking for something solid to hold onto. Coins are solid. They are portable. They have no hidden liabilities.

And you won’t pick up the paper and find that a crook like Bernard Madoff has stolen away the value of your gold coins. The latest Wall Street desperado took investors for some $50 billion. And now the FBI, SEC and all the gumshoes and hacks are making a big deal of it.

Of course, in purely financial terms it is a big deal. The press has labeled it a “ponzi scheme.” But Charles Ponzi took in only $10 million. Peanuts compared Madoff’s scheme.

Another important difference. Ponzi took money from ordinary investors, widows and orphans. But Madoff went for bigger game – hedge funds, banks, and professionals. Today’s news tells us that the world’s largest bank – HSBC – was a victim. Banks in Geneva said they were out $4 billion. The Fairfield Greenwich Group said it had invested $7.5 billion with Madoff.

Of course, we don’t like to see widows and orphans get scammed. But hedge funds? Banks? Who can honestly say that they don’t enjoy seeing these mighty moneymen tripping over their own greedy delusions? Here at the Daily Reckoning...the news of Wall Street’s losses cheers us up...like reading the obituaries and finding no mention of our own name.

But when you own a gold coin you won’t have to wonder if the balance sheet is made up...or if the trades were fictitious...or why the SEC was asleep at the switch. A gold coin is what it is...no more, no less.

When the ground gives way...gold coins stay right where they were – or go up in value.

Not that we’re urging you to buy gold coins. We did that for the last 8 years. Now, you’re on your own.

*** Word from the Washington Post is that autoworkers are “angry.” Why should they be angry? They’ve been paid far too much (compared to autoworkers in, say, India) for far too long. Now their gravy train seems to be stalled on a sidling and they want the government to “do something” to get it going again.

It isn’t fair for the feds to bail out Wall Street but not Detroit, they say.

Elsewhere in the news, Bloomberg has asked the Fed to reveal what it did with the $2 trillion in emergency loans it passed out. Surely, the money went to the Fed’s clients – banks, and financial institutions generally. How? To whom? What were the terms? The Fed wouldn’t say. It refused the Freedom of Information Act petition on several grounds.

“Blank check for banks, pink slips for Detroit,” is how Gretchen Morgenson explains it in the New York Times.

The UAW (United Auto Workers) has a point, of course. Neither industry should be bailed out. But if you’re going to throw money around in Manhattan, why not toss some to Detroit?

But the autoworkers can stop kvetching. Detroit will get its bailout too. Just wait.

*** “What Hell Really is...” said the sign in front of a church in Arizona. “Choir practice at 4 PM!” was the next line.

Angry Citi investors to unveil new court complaint

NEW YORK - After Citigroup shares tumbled last year on the bank's subprime mortgage woes, angry investors sued for fraud.

Now, stockholders are due to file a new version of their lawsuit as their losses have become much more stark.

A lot has changed for the worse for Citigroup stockholders since the lawsuit about its subprime debt exposure was first brought in November 2007. The bank's shares are trading at around US$6 apiece compared with US$31 a year ago - even after two government bailouts in the last two months.

The US government this week agreed to inject US$20 billion of capital and shoulder nearly US$250 billion in potential losses on about US$306 billion of the bank's risky assets - after injecting US$25 billion of taxpayer money in October.

A consolidated shareholder complaint in the case is scheduled to be filed in US District Court in Manhattan by Monday. An earlier version accused Citigroup and several individuals, including former CEO Charles Prince, of violating securities law by artificially boosting the bank's stock price by concealing its exposure to subprime-linked debt.

Citigroup believes the lawsuit 'is without merit, and will defend against it vigorously,' company spokesman Mike Hanretta said on Tuesday.

The lawsuit, which seeks class-action status on behalf of a large group of stockholders, could be among the biggest subprime-related cases moving through US courts, given Citigroup's huge stock market declines.

The company was once the biggest US financial institution based on stock market value, but shares have plummeted and are down 54 per cent this month alone. Shareholder lawsuits can take years to litigate, and many are ultimately thrown out by courts or settled.

The lead plaintiff is a group of former employees and directors at closely held Automated Trading Desk (ATD) who received Citigroup stock in exchange for selling their electronic trading firm to the bank in a US$680 million deal announced in July 2007.

Through that deal, group members acquired more than 3.9 million Citigroup shares, which were valued at about US$52 a piece at the time the buyout was being negotiated, according to a January court filing from the ATD plaintiffs.

The group said its members had suffered losses of about US$76.8 million as of January, a figure that is much higher now given Citigroup's stock declines this year.

A lawyer for the shareholders, Ira Press of law firm Kirby McInerney LLP in New York, declined to comment about the specifics of the new court complaint, saying it is still being drafted.
'If last week is any indication, the story may still be unfolding,' he said. 'We are obviously continuously monitoring the unfolding events.'

The original lawsuit was filed by an individual investor. Other shareholders have competed to become lead plaintiff, a role that allows investors to help set strategy in litigation and play a role in any possible settlement talks.

US District Judge Sidney Stein, who is overseeing the case, appointed the ATD Group as the lead plaintiff in August.

The End--

Recession’s Grip Forces U.S. to Flood World With More Dollars

news retrieve from Bloomberg (date: 25 Nov. 2008)

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The world needs more dollars. The United States is preparing to provide them.

In an all-out assault on capitalism’s worst crisis since the Great Depression, the U.S. is taking on the role of both lender and borrower of last resort for the global economy.

The Federal Reserve, which has already pumped out hundreds of billions of dollars, might formally adopt a policy of flooding the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, may tap global capital markets for even more to finance a fiscal stimulus package of as much as $700 billion and provide additional bailout money for banks.

“You want to do everything you can when you’re facing the threat of a deflationary breakdown of the economy,” says Michael Feroli, a former Fed official who is now an economist at JPMorgan Chase & Co. in New York. He sees the central bank cutting the overnight lending rate to zero in January and holding it there throughout the year.

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are being forced to pull out the stops because the extraordinary actions they’ve taken so far have failed to gain much traction. Credit markets are collapsing, stock prices are plunging and the world economy is sinking into a recession.

As the economy deteriorates, deflation -- a sustained decline in wages and prices -- is emerging as a new threat. U.S. government figures last week showed that consumer prices excluding food and fuel costs fell in October for the first time since 1982.

Shell-Shocked

Investors, shell-shocked by the turmoil, are piling into super-safe Treasury securities, even as the U.S. government ships more supply out the door. Three-month bill rates dropped last week to 0.01 percent, the lowest since at least January 1940, and yields on Treasuries maturing in two through 30 years all fell to the least since the government began regular sales of the securities.

And the dollar has risen as loss-ridden banks worldwide husband their resources, even after receiving generous dollops of liquidity from the Fed. The U.S. currency has surged about 17 percent against the euro -- signaling demand for still more dollars -- in the two months since the crisis deepened after the failure of Lehman Brothers Holdings Inc. Meanwhile, gold is down almost 25 percent from its peak in March.

Swap Lines

To help fight the worldwide dollar squeeze, the Fed has set up currency swap lines with more than a dozen other central banks. Some arrangements, including those with Europe, Britain and Japan, are open-ended, allowing the Fed’s counterparts to draw as many dollars as they need. The U.S. has also established individual $30 billion swap lines with Brazil, Mexico, South Korea and Singapore.

In a speech to a banking conference on Nov. 14, Bernanke characterized these efforts as an “internationally coordinated approach” among central banks to fulfill their function as lenders of last resort.

As the Fed has stepped up its efforts to combat the credit crisis, its balance sheet has mushroomed. Assets rose to $2.2 trillion on Nov. 19 from $924 billion on Sept. 10, just before the bankruptcy of Lehman Brothers shook the global financial system.

The central bank’s holdings are likely to increase further. “I would not be surprised to see them aggregate to $3 trillion -- roughly 20 percent of GDP -- by the time we ring in the new year,” Dallas Fed President Richard Fisher told the Texas Cattle Feeders Association on Nov. 4.

Only the Start

That may be only the start if the Fed cuts its benchmark rate, now at 1 percent, to zero and adopts what economists call a policy of “quantitative easing.” Under such a strategy, it would concentrate on expanding the amount of reserves in the banking system because it could no longer reduce the cost of that money.

The Bank of Japan followed this policy in the early part of the decade as it struggled to rescue the world’s second-largest economy from the grip of deflation. Its balance sheet eventually rose to the equivalent of about 30 percent of gross domestic product, says Tom Gallagher, head of policy research for International Strategy and Investment Group in Washington.

“The Fed could blow through the BOJ’s ceiling,” he adds - - ballooning the central bank’s holdings to more than $4 trillion.

The Treasury is also heading into uncharted territory as it taps capital markets for cash to help finance its bailout fund for the banking system and plug holes in the federal budget caused by the weak economy.

Money From Abroad

Much of that money will come from abroad. “Foreigners don’t seem to be interested in any kind of risky U.S. asset,” says Brad Setser, a former Treasury official now at the Council on Foreign Relations in New York. So, “instead, they are buying Treasuries.” That includes China, which recently passed Japan as the biggest holder of Treasuries.

On Nov. 3, the department tripled its estimate of planned debt sales in the final three months of the year to a record $550 billion. Paulson told a conference in Washington Nov. 17 that the U.S. will issue some $1.5 trillion worth of Treasury securities in the fiscal year that began Oct. 1.

That number, too, could grow. Lawrence Summers, Treasury secretary under President Bill Clinton and an adviser to President-elect Barack Obama, told the same conference that the U.S. needs a “speedy, substantial and sustained” stimulus package to aid the economy.

More Government Spending

“Government may have to spend $600 billion to $700 billion next year to reverse the downward cycle,” Robert Reich, another Obama adviser and a professor at the University of California at Berkeley, wrote in his personal blog Nov. 9.

Kenneth Rogoff, a professor at Harvard University in Cambridge, Massachusetts, and former chief economist at the International Monetary Fund, says the new administration will also have to ask Congress for more money to repair the financial system, over and above the $700 billion already authorized for Paulson’s Troubled Asset Relief Program.

“By the time all this ends, the TARP is going to be closer to $2 trillion than $1 trillion,” ISI’s Gallagher says.

Paulson has already committed $290 billion from the program to buy preferred shares in banks and troubled insurer American International Group Inc.

There’s always a danger the Fed and Treasury may go too far, setting the stage for a big rise in inflation or another asset bubble down the road as the economy revs up and investors get back their nerve. That’s what happened in the early part of the decade as ultra-easy Fed policy and Treasury tax cuts helped fuel a credit boom since gone bust.

Bernanke and Paulson might welcome a bit of that exuberance right now -- even at the risk of higher inflation later -- as they try to prevent the biggest credit catastrophe in decades from sending the economy into a deflationary nosedive.

“It’s true that, over the long run, too much money creates inflation,” says Lyle Gramley, a former Fed governor now at the Stanford Group Co. in Washington. “But they’re trying to keep the economy from going over the precipice and into the abyss.” 

Geithner Struggled to Get Movement on Swap Dangers

news retrieve from Bloomberg (Date: 25 Nov. 2008)

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Timothy Geithner was among the first policy makers to shine a light on the unregulated $47 trillion credit-default swap market back in 2005. The New York Federal Reserve president has struggled since then to get dealers to carry out reforms.

The industry has yet to launch a structure to safeguard against market-wide losses in case a dealer fails, though its leaders expect to get one off the ground by the end of the year. Geithner, selected yesterday by President-elect Barack Obama to be his Treasury secretary, has made clear that such a step is crucial to help contain the mushrooming credit crisis.

“In classic Tim and New York Fed style, the work has been done behind the scenes, among technocrats, largely by consensus,” said Adam Posen, a former Fed official who is now at the Peterson Institute for International Economics in Washington. “The downside is that it takes awhile to get consensus.”

Geithner may not have the luxury of time in his new job as he faces a credit crisis that has morphed into a global recession. As Obama’s chief economic spokesman, it will be up to Geithner to take the lead in quelling the turmoil in financial markets and turning the economy around.

A protégé of former Treasury Secretary and Citigroup Inc. director Robert E. Rubin, Geithner worked on the Asian financial crisis of 1997-1998 and helped stave off a Mexican default earlier that decade.

Bank Capital

In the current crisis, Geithner, 47, was the Fed’s point man in the rescues of Bear Stearns Cos. and American International Group Inc., and tried to stem market turmoil after the decision to allow Lehman Brothers Holdings Inc. to fail. In August, he put his staff to work figuring out how much capital major banks would need if the economy worsened, foreshadowing the steps Treasury Secretary Henry Paulson later took to invest some $125 billion in the country’s largest banks.

Geithner’s skills and limitations as a consensus-builder perhaps show up most clearly, though, in his handling of credit- default swaps, where he played a leading role in trying to make the market safer and more stable.

Trading in credit-default swaps, which were conceived to protect bondholders against default, exploded 100-fold the past decade as investors increasingly used them to speculate on creditworthiness. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should the borrowers fail to adhere to their debt agreements.

Unregulated Market

The big problem Geithner faced in trying to get a handle on the market: It was unregulated, so he lacked authority to make changes on his own and had to depend on his powers of persuasion.

The New York Fed chief began pressing banks in September 2005 to reduce trading backlogs that could prove dangerous should a crisis hit. An average 17 days’ worth of unsigned trades had piled up on dealers’ books, threatening to undermine the market if a wave of defaults hit. A lax system for unwinding and reassigning trades left dealers at times unsure of who was on the other side of their trade.

It took dealers a while to respond. A year later, they had cut the backlog of unsigned trades by 70 percent and doubled the number of deals that were electronically processed.

“It was like herding cats,” said Brad Bailey, director of business development at Jersey City, New Jersey-based brokerage Knight Capital Group and a former derivatives trader, who praised Geithner for making the effort and getting results.

Absorb Losses

The New York Fed chief has run into similar problems in trying to get the industry to set up a central counterparty that would absorb losses on trades in the event a dealer went bust.

After the collapse of Lehman Brothers in September sent market participants scrambling to cover an estimated $2 trillion of trades, the New York Fed chief stepped up pressure on the dealers to act.

On Oct. 7, he summoned the dealers and fellow regulators to the New York Fed. This time, he included futures exchanges at the meeting -- Chicago-based CME Group Inc., Intercontinental Exchange Inc., NYSE Euronext and Frankfurt-based futures exchange Eurex -- in a bid to put competitive pressure on the dealers to come up with a satisfactory plan.

The strategy worked. After three meetings in two weeks, the dealer-owned Clearing Corp. agreed to be acquired by Intercontinental Exchange, one of the exchanges vying for a piece of the market. That paved the way for the launch of at least one clearinghouse by the end of the year.

‘Ahead of Game’

“The Fed can only be commended for being ahead of the game among regulators globally,” said Mark Yallop, chief operating officer of London-based ICAP Plc, the world’s biggest broker of trades between banks and a minority owner in Clearing Corp.

Not everyone agrees. Julian Mann, a mortgage- and asset- backed bond manager at First Pacific Advisors LLC in Los Angeles, criticized Geithner for not doing enough.

“He oversaw the massive expansion in the credit-default swaps market, which arguably is what is behind much of the crisis today,” said Mann, whose firm manages about $9 billion.

Vincent Reinhart, a former senior Fed official now at the American Enterprise Institute in Washington, said that Geithner was quick to recognize some of the problems with the swaps market, though it was tough for him to persuade the industry to carry out reforms while business was booming.

“It shows the limits of what he could do,” Reinhart said, referring to the fact that the market is unregulated. “He had to try to induce good behavior rather than command it.” 

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit.

news retrieved from Bloomberg (Date: 24 Nov. 2008)

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The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”

Too Big to Fail

Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.

The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.

William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.

‘Credit Risk’

The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer.

Citigroup received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.

“No question there is some credit risk there,” Poole said.

Congressman Darrell Issa, a California Republican on the Oversight and Government Reform Committee, said risk is lurking in the programs that Poole thinks are safe.

“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”

The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.

Markets Down

The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.

Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.

Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.

‘They Got Snookered’

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”

President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office, now called the Government Accountability Office.

‘Worst Crisis’

The 1979 U.S. government bailout of Chrysler consisted of bond guarantees, adjusted for inflation, of $4.2 billion, according to a Heritage Foundation report.

The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.

“This is the worst capital markets crisis in modern history,” Harris said. “So you have the biggest intervention in modern history.”

Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.

Collateral is an asset pledged to a lender in the event a loan payment isn’t made.

‘That’s Counterproductive’

“Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,” Bernanke said Nov. 18 to the House Financial Services Committee. “We think that’s counterproductive.”

The Fed should account for the collateral it takes in exchange for loans to banks, said Paul Kasriel, chief economist at Chicago-based Northern Trust Corp. and a former research economist at the Federal Reserve Bank of Chicago.

“There is a lack of transparency here and, given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency,” Kasriel said.

Bernanke’s Fed is responsible for $4.74 trillion of pledges, or 61 percent of the total commitment of $7.76 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.

“Too often the public is focused on the wrong piece of that number, the $700 billion that Congress approved,” said J.D. Foster, a former staff member of the Council of Economic Advisers who is now a senior fellow at the Heritage Foundation in Washington. “The other areas are quite a bit larger.”

Fed Rescue Efforts

The Fed’s rescue attempts began last December with the creation of the Term Auction Facility to allow lending to dealers for collateral. After Bear Stearns’s collapse in March, the central bank started making direct loans to securities firms at the same discount rate it charges commercial banks, which take customer deposits.

In the three years before the crisis, such average weekly borrowing by banks was $48 million, according to the central bank. Last week it was $91.5 billion.

The failure of a second securities firm, Lehman Brothers Holdings Inc., in September, led to the creation of the Commercial Paper Funding Facility and the Money Market Investor Funding Facility, or MMIFF. The two programs, which have pledged $2.3 trillion, are designed to restore calm in the money markets, which deal in certificates of deposit, commercial paper and Treasury bills.

Lehman Failure

“Money markets seized up after Lehman failed,” said Neal Soss, chief economist at Credit Suisse Group in New York and a former aide to Fed chief Paul Volcker. “Lehman failing made a lot of subsequent actions necessary.”

The FDIC, chaired by Sheila Bair, is contributing 20 percent of total rescue commitments. The FDIC’s $1.4 trillion in guarantees will amount to a bank subsidy of as much as $54 billion over three years, or $18 billion a year, because borrowers will pay a lower interest rate than they would on the open market, according to Raghu Sundurum and Viral Acharya of New York University and the London Business School.

Congress and the Treasury have ponied up $892 billion in TARP and other funding, or 11.5 percent.

The Federal Housing Administration, overseen by Department of Housing and Urban Development Secretary Steven Preston, was given the authority to guarantee $300 billion of mortgages, or about 4 percent of the total commitment, with its Hope for Homeowners program, designed to keep distressed borrowers from foreclosure.

Federal Guarantees

Most of the federal guarantees reduce interest rates on loans to banks and securities firms, which would create a subsidy of at least $6.6 billion annually for the financial industry, according to data compiled by Bloomberg comparing rates charged by the Fed against market interest currently paid by banks.

Not included in the calculation of pledged funds is an FDIC proposal to prevent foreclosures by guaranteeing modifications on $444 billion in mortgages at an expected cost of $24.4 billion to be paid from the TARP, according to FDIC spokesman David Barr. The Treasury Department hasn’t approved the program.

Bernanke and Paulson, former chief executive officer of Goldman Sachs, have also promised as much as $200 billion to shore up nationalized mortgage finance companies Fannie Mae and Freddie Mac, a pledge that hasn’t been allocated to any agency. The FDIC arranged for $139 billion in loan guarantees for General Electric Co.’s finance unit.

Automakers Struggle

The tally doesn’t include money to General Motors Corp., Ford Motor Co. and Chrysler LLC. Obama has said he favors financial assistance to keep them from collapse.

Paulson told the House Financial Services Committee Nov. 18 that the $250 billion already allocated to banks through the TARP is an investment, not an expenditure.

“I think it would be extraordinarily unusual if the government did not get that money back and more,” Paulson said.

In his Nov. 18 testimony, Bernanke told the House Financial Services Committee that the central bank wouldn’t lose money.

“We take collateral, we haircut it, it is a short-term loan, it is very safe, we have never lost a penny in these various lending programs,” he said.

A haircut refers to the practice of lending less money than the collateral’s current market value.

Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.

‘Mark to Market’

“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”

“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.

Some of the bailout assistance could come from tax breaks in the future. The Treasury Department changed the tax code on Sept. 30 to allow banks to expand the deductions on the losses banks they were buying, according to Robert Willens, a former Lehman Brothers tax and accounting analyst who teaches at Columbia University Business School in New York.

Wells Fargo & Co., which is buying Charlotte, North Carolina-based Wachovia Corp., will be able to deduct $22 billion, Willens said. Adding in other banks, the code change will cost $29 billion, he said.

“The rule is now popularly known among tax lawyers as the ‘Wells Fargo Notice,’” Willens said.

The regulation was changed to make it easier for healthy banks to buy troubled ones, said Treasury Department spokesman Andrew DeSouza.

House Financial Services Committee Chairman Barney Frank said he was angry that banks used the money for acquisitions.

“The only purpose for this money is to lend,” said Frank, a Massachusetts Democrat. “It’s not for dividends, it’s not for purchases of new banks, it’s not for bonuses. There better be a showing of increased lending roughly in the amount of the capital infusions” or Congress may not approve the second half of the TARP money. 

George Soros and other hegde fund billionaires finally forced to answer some questions.

Geroge Soros the money behind the purchase of California law, such as Prop 215, the medical marijuana scam, and 36, the get out of jail free card, was forced to testify before the house oversight committee. Soros lost his most recent bid to legalize drugs in California, as Prop 5 went down in flames!

George Soros, Jim Simons, John Paulson, Philip Falcone, and Kenneth Griffin are sworn in. Photograph: Tim Sloane/AFP/Getty

America's top hedge fund managers staunchly defended the conduct of their secretive, high-risk industry yesterday and warned Congress that knee-jerk regulation could push financial jobs across the Atlantic to London.

In a rare day of public scrutiny, the billionaire bosses of five leading hedge funds appeared before the house oversight committee to answer charges that their unregulated bets on financial markets have destabilised the global economy.

George Soros, Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson - who have an estimated combined wealth of $29bn (£20bn) - faced grilling over their low rate of tax and their funds' minimal level of transparency.

They expressed a willingness to disclose more information about their investments to the securities and exchange commission but insisted that any such data must remain shielded from the public gaze.

Griffin, whose Chicago-based Citadel Group manages more than $20bn, told lawmakers that public transparency would be "parallel to asking Coca-Cola to disclose their secret formula to the world".

The 40-year-old added that periods of regulatory uncertainty had undermined the US's competitiveness with Britain: "It breaks my heart when I go to Canary Wharf and I look at thousands and thousands of jobs in London in the derivatives market which belong in America."

The hearing, part of an investigation into oversight of hedge funds, became tense at times when the billionaires were quizzed about their personal wealth. Elijah Cummings, a Democratic congressman, said a neighbour had accosted him to ask: "How does it feel to go before five folks who've got more money than God?"

Cummings called on the witnesses to explain why their income is often taxed as capital gains at 15% - below the rate paid by a "schoolteacher or a plumber".

More here:

http://www.guardian.co.uk/business/2008/nov/14/useconomy-investmentfunds

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America's top hedge fund managers staunchly defended the conduct of their secretive, high-risk industry yesterday and warned Congress that knee-jerk regulation could push financial jobs across the Atlantic to London.

In a rare day of public scrutiny, the billionaire bosses of five leading hedge funds appeared before the house oversight committee to answer charges that their unregulated bets on financial markets have destabilised the global economy.

George Soros, Kenneth Griffin, Philip Falcone, Jim Simons and John Paulson - who have an estimated combined wealth of $29bn (£20bn) - faced grilling over their low rate of tax and their funds' minimal level of transparency.

They expressed a willingness to disclose more information about their investments to the securities and exchange commission but insisted that any such data must remain shielded from the public gaze.

Griffin, whose Chicago-based Citadel Group manages more than $20bn, told lawmakers that public transparency would be "parallel to asking Coca-Cola to disclose their secret formula to the world".

The 40-year-old added that periods of regulatory uncertainty had undermined the US's competitiveness with Britain: "It breaks my heart when I go to Canary Wharf and I look at thousands and thousands of jobs in London in the derivatives market which belong in America."

The hearing, part of an investigation into oversight of hedge funds, became tense at times when the billionaires were quizzed about their personal wealth. Elijah Cummings, a Democratic congressman, said a neighbour had accosted him to ask: "How does it feel to go before five folks who've got more money than God?"

Cummings called on the witnesses to explain why their income is often taxed as capital gains at 15% - below the rate paid by a "schoolteacher or a plumber".

Paulson, who personally scooped more than $3bn last year when his fund bet against sub-prime mortgages, said the comparison was unfair. "If one of your constituents, whether they're a plumber or a teacher, bought a stock and held that stock for more than a year, they would pay a long-term rate of capital gains tax."

Several times Soros broke ranks with his colleagues to adopt a more accommodating line. The Hungarian-born financier, who proposed the establishment of a not-for-profit credit-rating agency to scrutinise derivatives, said he would have no objection to paying a standard rate of tax on all his income: "I agree to it. I've no problem with it."

The 78-year-old, who is famed for betting against sterling on Black Wednesday in 1992, said he was open to greater oversight to ensure that banks and hedge funds do not use excessive leverage by borrowing too heavily on their assets.

Soros said the financial crisis had exposed flaws in the present regulatory approach: "The fact that Lehman Brothers was allowed to declare bankruptcy in a disorderly way really caused a genuine meltdown in the financial system - a cardiac arrest."

The hedge fund managers told Congress that they owed their profits during a downturn to hard work and detailed research that turned up evidence that US mortgages were overvalued. Simons said credit-rating agencies were the most culpable financial players in failing adequately to scrutinise mortgage-backed securities: "They allowed sows' ears to be sold as silk purses."

The witnesses remained unapologetic about the scale of their personal earnings, insisting that the hedge fund industry provides liquidity and "outside-the-box thinking" to the financial markets.

Falcone, who made millions by taking short positions in banks, said he was the youngest of nine children in a working-class Minnesota town, with a father who never earned more than $14,000 a year.

"I take great pride in my upbringing," said Falcone. "Not everyone who runs a hedge fund was born on Fifth Avenue - that is the beauty of America."

The men with "more money than God"

THEY are the five best paid hedge fund managers in the world. Between them, they earned US$12.6 billion ($19.10b) last year. This, at a time when the financial world was beginning to melt down.

r George Soros, Mr Kenneth Griffin, Mr Philip Falcone, Mr Jim Simons and Mr John Paulson were hauled before the US Congress yesterday and assailed over their huge salaries, their tax perks and their contribution to the credit crisis that has engulfed the globe.

The men, however, declared themselves innocent of causing the market meltdown, The Independent reported.

One Congressman, Democrat Elijah Cummings disagreed. He said: 'These five citizens have more money than God.'

Here are their stories...


George Soros, 78
Soros Fund Management
Paid last year: US$2.9 billion

Famed as 'the man who broke the Bank of England', after netting more than US$1 billion by betting the pound would fall out of the Exchange Rate Mechanism in 1992, Mr Soros has attacked unfettered free market capitalism as being at the root of today's crisis.

With an estimated current net worth of around US$9 billion, he isranked by Forbes as the 99th-richest person in the world.

In 1997, during the Asian financial crisis, then-Malaysian Prime Minister Mahathir Mohamad blamed Mr Soros for undermining South East Asian economies by destabilising their currencies, and famously called him a 'moron'.

But in 2006, Mr Mahathir Mohamad met Mr Soros and said he accepted the latter was not responsible for the 1997-98 Asian financial crisis.


Jim Simons, 70
Renaissance Technologies
Paid last year: US$2.9 billion

The world's most expensive hedge fund manager, he is considered a mathematical genius. He charges clients 5 per cent a year, plus a whopping 44 per cent of returns beyond a certain level. His fund runs 'black box' programmes that harvest tiny profits from millions of automated trades.

Renaissance's Medallion Fund - which uses computers and trading algorithms to invest in world markets - returned more than 50per cent in the first three quarters of last year.

For all of his achievement and material success, Mr Simons' life has been beset by the kind of tragedy that few parents can fathom - the death of not one but two of his five children in separate accidents.

In 1996, his son Paul, 34, was struck by a car and killed while riding a bicycle near Mr Simons' home in Long Island, New York.

In 2003, 24-year-old son Nick drowned while on a trip to Bali.


John Paulson, 52
Paulson & Company
Paid last year: US$3.7 billion

Having run an obscure fund for 14years, he last year made what rivals called 'the greatest hedge fund trade of all time'.

As a result, Mr Paulson traded up in the Hamptons, the upstate playground for New Yorkers, and bought a lakeside compound for US$41million.

The Financial Times says he is the one figure who correctly identified the growing bubble in the US housing market.

His best-performing credit fund was up almost 600 per cent last year. That, in turn, made him the highest-earning hedge fund manager, with pay of US$3.7 billion, according to Alpha magazine.

A sharp-suited New Yorker with a taste for luxurious homes and a penchant for quoting Winston Churchill, he lives in a 2,600 sq m five-storey townhouse on New York's Upper East Side built in 1916.


Philip Falcone, 47
Harbinger Capital Partners
Paid last year: US$1.7 billion

Born in Minnesota, he was the youngest of nine kids who grew up in a three-bedroom home in a working-class neighbourhood.

His father is a utility superintendent who never made more that US$14,000 a year, while his mother worked in the local shirt factory.

Mr Falcone went to Harvard where he received an AB in Economics in 1984. After college, he went on to pursue his first love, hockey, although an injury cut short a professional hockey career abroad.

He made his fortune trading junk bonds in the '80s. His firm was founded in 2001 and made another fortune last year betting against sub-prime mortgages. His two funds boasted 114 and 176 per cent returns in 2007.

Dubbed the Midas of Misery by BusinessWeek, he made tens of millions of dollars on an earlier wager that Bear Stearns and other financial stocks would collapse.



Ken Griffin, 40
Citadel Investment Group
Paid last year: US$1.5 billion

Last year, it looked as if he would become one of the world's biggest financial players after buying up many distressed funds, banks and brokers. Now he is fighting to save his fund after losing 35 per cent of it this year.

Mr Griffin began in 1987 by trading convertible bonds as a sophomore from his Cabot House dorm room at Harvard University with US$265,000 from his mother, grandmother and two other investors.

He lives in a penthouse in Chicago that he bought for US$6.9million in 2000.

In 1999, he bought Paul Cezanne's 'Curtain, Jug and Fruit Bowl' for US$60.5 million, the most ever paid for one of the French Impressionist artist's paintings.

He keeps a row of management- theory books on a credenza behind his desk, and he says he tries to emulate one of America's most celebrated business leaders, former General Electric Co. CEO Jack Welch.

http://newpaper.asia1.com.sg/news/story/0,4136,183692,00.html

经济迅速下滑或引发第二波金融海啸

11月15日《财经点对点》

曾瀞漪：欢迎收看《财经点对点》，我是曾瀞漪。

G20峰会怎化解全球经济危机？

曾瀞漪：金融海啸余波荡漾，共乘一条船的其中主要20个国家，这两天正在华盛顿召开国际金融峰会。G20国家现在要解决世界上很多的经济问题，但怎么样才能够尽快解决？还有现在又出现了哪些问题呢？我们今天请到的是经济学家谢国忠来帮我们做最新的分析，Andy，你好。

谢国忠：瀞漪，你好。

G20峰会正举行焦点众多 何者最迫切待解？

曾瀞漪：距离9月15号雷曼兄弟倒闭到现在整整两个月的时间，这些国家领袖们好不容易坐下来一块儿来商讨世界经济问题，但各个的问题或解决方法都是不一样的，从你的观点觉得怎么样才是最应该解决的，哪些问题是最应该的解决呢？

两个月前：政府出钱稳定银行现已基本达到

谢国忠：像两个月前的话，就是最重要的挑战是稳定银行，因为大家对银行失去信心，认为银行也可能会破产，所以引起了混乱，现在主要的国家出了很多钱，2万多亿美金来稳定银行体系，现在这个目的基本是达到了。

当前：经济迅速下滑或引发第二波金融海啸

谢国忠：现在主要的挑战是经济的快速下滑，就是世界经济出现了史无前例的萎缩，如果这个萎缩这样继续下去的话，出现第二次金融风暴的可能性都有。

应对经济下滑需靠财政刺激稳定经济

谢国忠：所以我觉得需要通过财政刺激，赶快把经济稳住。

“国际金融新秩序”务虚维稳经济为要务

谢国忠：现在有很多人认为就是开这个会的目的，就是要提新的世界金融秩序等等，这些都是一个比较虚的东西，因为这么大的一个金融危机出现以后，下一个危机是十几年以后的事，所以改革是有足够的时间。现在主要的任务应该是稳定经济，所以看看是不是他们能够达到共识。

困难：欧不愿刺激基础美面临政府轮替

谢国忠：现在有很多困难，一个是欧洲政府不愿意刺激经济，第二个是美国政府在换届。

G20金融峰会要取得成效难度大

谢国忠：在欧洲跟美国有这么大的困难的情况下，我觉得这个会议要达到真正、有效的一个成果的话，还是不容易的。

各国纷纷刺激经济但股市为何持续下跌？

曾瀞漪：虽然说欧美各有不同的政治或经济现况，但是我们看到这一段时间以来，各个国家有很多的刺激市场的方法，譬如说减息快要零利率了，然后比如说用外汇储备入市救市等等，那么为什么现在全球的股市还是不断的下跌呢？

世界经济迅速萎缩股市现恐慌

谢国忠：是，股市的下跌是因为股市看到了经济在萎缩，美国经济第三季度是0.3%，按每年0.3%的速度在萎缩，其实我觉得这个修正以后的话，可能萎缩的速度会更快，以4个百分点的速度在萎缩，也可能更高都有可能。

公司盈利下跌大股市失去支撑

谢国忠：英国、澳洲都会有这样幅度的下降，这是历史上从来没有过的，所以股市是非常恐惧的，股市看到盈利的下降，是一眨眼公司盈利都没了。10月份美国的很多零售商、百货店都预警说是销售下降10个百分点，这个是一般的正常的情况下，看到的一个变化的10 倍，所以因为有这样的一个不确定因素，所以股市觉得就是这个盈利的变化还有下降是没底的，所以为什么股市就没有支撑了。

信心确实与担忧经济前景影响股市

曾瀞漪：是，有些国家进行减息了，或者是有财政措施出来，今天股市上涨，结果第二天股市就下跌。

谢国忠：对。

曾瀞漪：所以终究还是个信心，经济前景的大的问题。

资产缩水银行不愿借贷减息无短期效应

谢国忠：对，既然减息没有短期的效应，其原因是减息的话，是鼓励大家去借钱，银行贷款贷出去，然后就是家庭跟公司愿意借钱，但这个现在都不存在，其主要原因是因为就是资产缩水，全世界资产缩水50万亿美金，在这样的情况下，让大家都去借钱，这个不太现实。现在银行也不愿意贷，因为现在公司的盈利不好，家庭的资产缩水，所以贷出去也不安全。

唯一方法：政府借钱推行财政刺激

谢国忠：所以银行都想贷更政府，现在其实只有一条路，就是政府借钱做财政刺激，这样的钱才能够转到经济体里面，让经济能稳住，我觉得需要除了财政刺激的话，可能没有第二条路可以走了。

美国救市如何动用财政刺激？

曾瀞漪：财政刺激我们现在看到，美国在救市的过程当中，好像还没有大力去用这个部分，我们看到最重要的这个礼拜三，美国财长保尔森改变了他们7000亿元的救市计划，把这个主要是放在消费、金融这几个部分，可能比较受到更多挑战的部分，那么这个代表什么样的意义呢？美国的财政刺激的方式？

美今年初一千六百亿财政刺激现计划动用三千亿

谢国忠：美国的财政刺激未来，上一次财政刺激是就是年初的时候，做的是1600亿，现在在谈的是3000亿，有可能分两次做。

美政府有意财政刺激但有时间的不确定因素

谢国忠：但是不是布什愿意支持这样一个方案，还是如果他支持的话，就是民主党是愿意通过这样的法案的；如果他不支持的话，就要等到新的总统上任，那是再要等两个月了。所以这个是美国有意要做的，但是时间上是现在有不确定的因素。

原七千亿用于稳定金融特体系非刺激经济

谢国忠：至于说它7000亿原来拯救的方案，主要是为了稳定金融体系，并没有谈到刺激经济，但现在议会是要求他用这个钱去救汽车行业，因为汽车行业可能熬不过年底了。

美议会施压财长动用七千亿部分救汽车业

谢国忠：它那个现金流，它现金流出非常多，可能到年底资金链就要断了，就破产了，所以现在议会对财长有压力，让他们这个钱去救汽车这个行业。

美汽车业若出问题对亚洲经济影响？

曾瀞漪：保尔森他们有明言说，这个转换的计划是不是要救汽车业，但是跟信贷也都是有关系的，对汽车业也会有些帮助的。美国的汽车业现在看起来政府即便支持的话，可能力度不像汽车业所支持那么的多，美国汽车业如果真的出问题，对亚洲国家来说，会有些影响吗？

美汽车业大量债务及衍生产品遍布世界

谢国忠：它主要是债的规模很大，债的后面有很多衍生产品，我们现在看到就是说一个公司或者一个银行倒了之后，后果很难想象，因为它有很多衍生产品，但那个债通过所谓的信贷破产，就是什么对冲、CDS这个市场的话，那很多可能都卖到全世界了。

美汽车行业若倒闭必强烈冲击全球金融

谢国忠：所以现在如果是美国的汽车行业倒的话，对金融的冲击是会非常大的。

美政府不可避免要救债主且要解决失业问题

谢国忠：所以我觉得美国政府最终是没办法的，救的话主要是救那个它的债主，就是当然了，这么多工人如果失去就业的话，对那个新的政府肯定也会有比较大的打击，因为它是民主党的政府，它这个是受工会支持的，所以它的政策应该是偏向劳工的。

曾瀞漪：所以这方面可能，如果没处理好的话，对全球来说可能会有再一步的大的危机出现了？

美汽车业若破产六十万亿CDS市场将大混乱

谢国忠：如果真的是让它破产的话，那个对银行的冲击是非常大的，现在那个CDS市场现在60万亿不到一点，它已经缩小了一部分。但60万亿还是巨大的数字，里面有多少炸弹大家都不知道，是吧？如果是汽车行业破产的话，那个60万亿CDS市场一定会出现很大的混乱的。我们现在看到的很多大的银行，大家都觉得安全的银行，可能都会出大事。

曾瀞漪：谢谢Andy这方面的提醒是非常重要的，在广告之后我们继续回来请Andy来谈谈就是，中国方面推出的刺激方案有些什么样的看法和分析，还有其他的发展中国家，他们目前的应对方式如何？

谢国忠搜狐博客　http://xieguozhong.blog.sohu.com/

US crude sinks below $60 a barrel

By Esther Bintliff and Chris Flood

Published: November 7 2008 11:16 | Last updated: November 7 2008 22:33

Commodity markets remained under pressure this week amid ongoing concerns about the threat of a global economic recession and the weakening demand outlook for oil and metals.

US crude oil prices dipped below $60 a barrel on Friday for the first time since March 2007 but recovered after disappointing US employment data led to pressure on the dollar.

Nymex November West Texas Intermediate fell to a 20-month low of $59.97 a barrel but later recovered to close 27 cents higher at $61.04 a barrel, down 10 per cent this week.

ICE November Brent fell 8 cents to close at $57.35 a barrel on Friday, down 12.2 per cent this week.

Oil prices continued to fall even as the International Energy Agency warned that current global trends in energy supply and consumption were “patently unsustainable”. The energy watchdog said oil prices would rebound to more than $100 a barrel as soon as the global economy recovered.

Paul Horsnell, of Barclays Capital, said the oil market was in a state of “significant disequilibrium” and that there was no clear consensus on what price level would bring long-run demand and capacity into a sustainable balance.

Gold was fractionally weaker at $735 a troy ounce on Friday, up 1.6 per cent this week. Gold held above $700 throughout the week, taking its lead from movements in the dollar and equity markets.

Platinum rose 1.7 per cent to $837 a troy ounce, up 3 per cent on the week helped by renewed supply concerns after Anglo Platinum, the world’s largest producer, shut its Polokwane smelter after an accident. Initial reports suggested that about 200,000 ounces of platinum production, equivalent to 3 per cent of global supply, could be lost.

Amanda Lee, analyst at Deutsche Bank, said platinum prices were “oversold” and this latest accident illustrated the market’s fragile supply fundamentals.

Aluminium fell 3.4 per cent to $1,970 a tonne, under pressure from rising stock levels which, globally, have reached the highest level for 14 years at 3.7m tonnes, enough for almost five weeks of demand.

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is the worst stock market melt over? is stock market hit bottom?

Banks Face 50% Drop In Hedge Fund Fees.

This news is retrieve from Dow Jones & Company, Date: 10/11/2008

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A piece of advice don't Hold any Bank shares! Sell it!
This recession is cause by Banking sector, They loss huge money.
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The decline in the hedge fund industry will wipe out tens of billions of dollars in fees they pay to investment banks next year, forcing banks to make further staff cuts and shift their focus to less lucrative customers.

The closure of hedge funds, withdrawals by investors and deleveraging in the hedge fund industry, which has gathered pace over the past six weeks, has started to have an impact on sales and trading and prime brokerage revenues, the two major areas where hedge funds pay fees and commissions to banks. Huw van Steenis, head of banks and financials research in Europe at Morgan Stanley, forecasts a 45% to 55% drop in investment banking revenues from hedge fund business in 2009 - significantly worse than the widely forecast figure of 30% of hedge funds closing. "This would be such a sharp fall that it would call for a major right sizing of the business," he said. Hedge funds were among the most important customers of investment banks, paying an estimated $61 billion in fees to banks, or 21% of total revenues at the peak, according to estimates from Credit Suisse published last year.

In the boom years, when hedge funds grew their assets to almost $2 trillion, banks weak in prime brokerage, the business of financing hedge fund trades and custody of their assets, added to their divisions with several transactions in the sector. BNP Paribas bought Bank of America''s prime brokerage business, JP Morgan inherited Bear Stearns'' and Barclays Capital took over Lehman Brothers''. But forecasts of future revenues from hedge funds is expected to reverse into a rapid decline, across both prime brokerage and sales and trading.

Morgan Stanley estimates suggest hedge fund assets will shrink from $1.9 trillion in June to $1.3 trillion to $1.4 trillion in December and could fall as low as $1 trillion in 2009. Robert Sloan, managing partner of financing specialist S3 Partners in New York said: "Contract values, interest rates and the value of assets are down, the number of funds has fallen and liquidity is less; when you''re running a prime brokerage business that''s bad for making money." He added that prime brokers would have to be doing a lot more volume or widening spreads just to stand still. As a result, analysts are forecasting further staff cuts. Van Steenis said: "While UBS, we estimate, will start 2009 with staff only 4% above 2003, most other banks remain far heavier. We think 2009 could be another very painful year of adjustment, like 2002 was."

The deleveraging process has already started to dent some prime brokerage businesses. UBS, which grew its prime brokerage business aggressively over the past five years, said last week that revenues slowed in thethird quarter, partly as a result of lower client balances. Furthermore, analysts said even those universal banks that added large numbers of prime brokerage accounts in September following the collapse of Lehman Brothers are now unlikely to enjoy the full benefits from the business as gains are offset by lower leverage levels. Richard Webley, a director in the capital markets practice of business and technology consultants Detica in New York said: "The recent years of sustained growth and expansion in prime brokerage will see a fundamental shift in 2009."

A chief executive of a London-based hedge fund said: "With the lower amounts of leverage being employed by hedge funds, it''s not hard to see prime broker revenue next year will be half of what it may have been at its peak at the end of last year. The outlook for 2009 is pretty bleak." Roy Martins, head of international prime services at Credit Suisse, which took in Sfr117 billion inclient assets in the third quarter, said: "The concern is that the markets have fallen so much and spreads are based on notional values.

That''s a bigger concern than deleveraging, which has only effected certain funds." But a more damaging, although less visible, impact on investment banking revenues is expected to come through reduced sales and trading commissions from hedge funds as their assets shrink and they turn over their portfolios less. To compensate for the decline in revenues from hedge funds, investment banks are steering their sales forces towards long-only fund managers which, before the rise of hedge funds this decade, were their bread and butter. But they trade less and in lower margin, more vanilla products. David Martins Da Silva, head of hedge fund sales for rates at BNP Paribas said: "It is very easy for people to write off hedge funds, but the reality is that although they have gone from being easily the most heraldedaccounts, they remain an important sophisticated investor type with a unique mandate."

China's Xie Runs Home to Fix Economy

As Dani Rodrik, who saw this item first, said, "Why do I think this is really bad news?" Remarkably, the article suggests that XIe might not attend the November 15 summit in Washington to discuss the future of the world financial order. This would be particularly noteworthy given China's strong desire to push for a change in the currency regime.

From Bloomberg:

China's Finance Minister Xie Xuren was called back from an international economic conference in Peru before the meeting began, following orders from Beijing to help resolve problems at home...

``They told him he has to resolve an economic problem and that he's the only one who could do so,'' de Swinnen said. ``He was complaining because he had to fly 32 hours to get here and then he had to fly another 32 hours to get back.''

China's largest banks, with 4 trillion yuan ($586 billion) of cash, are resisting government efforts to boost lending to 42 million small and medium-size companies that drove the economic boom of the past decade. On Nov. 2, the central bank scrapped curbs on loans after three interest rate cuts in seven weeks failed to revive economic growth that has sagged to its slowest in five years.

Half the nation's toy exporters have closed this year, and 67,000 smaller enterprises filed for bankruptcy in the first half, according to government statistics. Companies with assets of less than 40 million yuan provide three-quarters of urban jobs and 60 percent of China's gross domestic product...

Xie arrived in Beijing to take care of some ``urgent business,'' two finance ministry officials, who declined to be named, said today. They didn't elaborate....

Xie will not attend the Group of Twenty meetings in Sao Paulo, Brazil, this weekend, one finance ministry official said. Xie's attendance for next week's Washington summit on financial crisis is yet to be confirmed, the official added.

Credit Crunch May Produce Another Food Crisis in 2009

Restricted credit and access to foreign exchange may lead farmers to cut production, worsening agricultural price pressures. From the Financial Times:

The world might face a repeat of this year’s food crisis as the credit crunch encroaches on the agricultural market, leading farmers to cut their planting because of falling prices and lack of finance to buy fertilisers, the United Nations warned on Thursday.

“Riots and instability could again capture the headlines,” the Food and Agriculture Organisation said.

The warning was made despite a fall in the price of most agricultural commodities as farmers harvest bumper crops...

“Under the current gloomy prospects for agricultural prices, high input costs and more difficult access to credit, farmers may cut their plantings, which might again result in a tightening of world food supplies,” the FAO said in the report....

Concepción Calpe, a senior economist at the FAO in Rome, said a price surge might take place in the 2009-10 harvesting season, “unleashing even more severe food crises than those experienced recently”.

Lower production and higher prices next year could add to developing countries’ problems in obtaining sufficient credit and foreign exchange to buy agricultural commodities. “Export finance is becoming more difficult to obtain, with banks tightening up the conditions for issuance of letters of credit,” the FAO said.

Thailand and Iran agreed last month to barter rice for oil, the clearest example yet of how the financial crisis, high fuel price and scarcity of food are reshaping global trade.

In spite of the continuing fall in food prices, the world’s food imports’ bill is set to surge above $1,000bn (€785bn, £633bn) for the first time ever, up 23 per cent from last year and 64 per cent higher than in 2006, the FAO said.

Developing countries will spend $343bn this year on food imports, up a record 35 per cent from last year’s $254bn. Some poor countries, the organisation said, were curtailing food imports in an effort to lower their bills.

The best recipe for avoiding a global recession.

retrieve from FT.com By Jeffrey Sachs
Published: October 27 2008 19:52 | Last updated: October 27 2008 19:52

Before our political leaders get too fancy remaking capitalism next month at the Bretton Woods II summit in Washington, they should attend to urgent business. Since the closure of Lehman Brothers triggered a global banking panic, political leaders in the US and Europe have successfully thrown a cordon round their banks to prevent financial meltdown. What they have not done yet is to co-ordinate macroeconomic policies to stop a steep global downturn. This is the urgent agenda.

A US downturn will not be avoided. US households cannot continue to spend more than their income as they have in recent years, even if the credit crunch eases. Household consumption is bound to fall steeply. The writedowns in US household wealth from the reversals in housing and equities will probably reach $15,000bn (€12,000bn, £9,700bn) and the resulting steep decline in private consumption and investment could reach about one-tenth of that amount.

Some other economies will also suffer home-grown recessions because they too allowed a housing bubble to develop, which has now burst. This appears to be the case in Australia, the UK, Ireland and perhaps Spain. This drop in spending outside the US because of capital losses and reversals in housing may add another $300bn-$500bn to first-round decline in global demand.

Yet even a steep recession in the US and in a few other countries need not throw the world into recession. The world economy is about $60,000bn, so a first-round demand decline of as much as $1,800bn would be about 3 per cent of world output. If there were no offsetting macroeconomic policy changes, the demand decline could be multiplied further to as much as 6 per cent, relative to 4 per cent trend growth, meaning a global decline of about 2 per cent.

On the other hand, even a 3 per cent global demand decline can be substantially offset by expansionary policies, undertaken by the surplus economies of Asia and the Middle East. Ironically, until recently China had been pursuing monetary and fiscal tightening to fight inflation. Now China must make a policy U-turn, to boost its internal demand and support a co-ordinated expansion throughout east Asia.

Any co-ordinated expansion should include the following actions. First, the US Federal Reserve, the European Central Bank and the Bank of Japan should extend swap lines to all main emerging markets, including Brazil, Hungary, Poland and Turkey, to prevent a drain of reserves. Second, the International Monetary Fund should extend low-conditionality loans to all countries that request it, starting with Pakistan. Third, the US and European central banks and bank regulators should work with their big banks to discourage them from abruptly withdrawing credit lines from overseas operations. Spain has a role to play with its banks in Latin America.

Fourth, China, Japan and South Korea should undertake a co-ordinated macroeconomic expansion. In China, this would mean raising spending on public housing and infrastructure. In Japan, this would mean a boost in infrastructure but also in loans to developing nations in Asia and Africa to finance projects built by Japanese and local companies. Development financing can be a powerful macroeonomic stabiliser. China, Japan and South Korea should work with other regional central banks to bolster expansionary policies backed by government-to-government loans.

Fifth, the Middle East, flush with cash, should fund investment projects in emerging markets and low-income countries. Moreover, it should keep up domestic spending despite a fall in oil prices. Indeed, the faster a global macroeconomic expansion is in place the sooner oil prices will recover.

Sixth, the US and Europe should expand export credits for low and middle-income developing countries, not only to meet their unfulfilled aid promises but also as a counter-cyclical stimulus. It would be a tragedy for big infrastructure companies to suffer when the developing world is crying out for infrastructure investment.

Finally, there is scope for expansionary fiscal policy in the US and Europe, despite large budget deficits. The US expansion should focus on infrastructure and transfers to cash-strapped state governments, not tax cuts. This package will not stop a recession in the US and parts of Europe, but could stop a recession in Asia and the developing countries. At the least it would put a floor on the global contraction that is rapidly gaining strength.

The writer is director of the Earth Institute at Columbia University and special adviser to Ban Ki-Moon, UN secretary-general.

Markets demand US action.

news retrieve from Emerging Markets - Dated 13th October 2008

The US must match the sweeping financial system rescue measures announced yesterday by European leaders and by other countries, and move immediately to unfreeze global credit markets by guaranteeing interbank lending, financial industry leaders said yesterday.

Leaders of the 15 eurozone countries, at their emergency gathering in Paris, agreed on a package of measures to prevent systemically important banks from failing and to unfreeze credit markets in a bid to halt panic.

The moves, which will be detailed today by European authorities, were matched by similar initiatives yesterday in Norway, Portugal, Australia and New Zealand as well as by Gulf states.

In Washington, financiers gathered at the IMF/World Bank meetings greeted the measures, and said the US must follow suit.

Billionaire investor George Soros told Emerging Markets the European plan is “real”, and expressed confidence that the US would follow suit. “It will work”, he told a press briefing at the IMF in Washington. “We will have similar measures in the US. Libor should return close to the Fed fund rates. That will be a significant improvement.”

Richard Fisher, president and CEO of Reserve Bank of Dallas, pledged that members of the US Federal Reserve system would “do whatever we have to do to provide a credible backstop for the credit system. Wecan and will restore order to the credit markets, but we can not undo in short order the damage to confidence.”

Markets welcomed the plan. As Emerging Markets went to press, Sydney’s and Seoul’s indexes leapt 4.5% and 2.7% respectively in early trading.

At the same time, the UK finalized its plans for injecting new capital into banks, announced earlier. Prime minister Gordon Brown said: “We will see over the coming few days worldwide action that will make people see that confidence in the banking system can be restored.”

The Paris meeting was called by French president Nicolas Sarkozy following last Friday’s G7 finance ministers’ meeting in Washington, that has been criticised for failing to offer concrete and collective solutions to the financial crisis.

Sarkozy said after the Paris meeting that a series of coordinated announcements of financial details could be expected today from leading European capitals.

According to a eurozone joint statement, leaders pledged to help or subscribe to debt-raising by banks for periods of up to five years. This should take the pressure off the blocked interbank market and also off bank balance sheets.

Germany alone is expected to unveil a rescue package for its banks worth around 400 billion euros, an official in Chancellor Angela Merkel’s conservative party said yesterday.

Financial industry leaders gathered in Washington had throughout the day been repeatedly calling for leading nations of the world to show “leadership”.

Citigroup senior vice chairman Bill Rhodes told a meeting of the Institute of International Finance, of which he is first vice chairman: “Policy makers need to get out in front. Resolving the crisis will require strong leadership and making difficult decisions.”

Deutsche Bank chief executive Josef Ackermann said: “The market is stalled now and so public policy actions to restore the market are essential,” he said, adding that “a systemic crisis needs systemic responses.”

AIG vice-chairman Jacob Frenkel told Emerging Markets that markets had interpreted the lack of concreteness in the G7 finance ministers’ statement “as a signs of lack of agreement” which served only to further undermine confidence. “What the markets are now looking for is something that is more concrete than the general statements of intent,” he said.

“We must see further initiatives within the next 24 hours and they must be coherent and concrete,” he said. “Markets are the gauge” and they are providing “a daily referendum” on policy-makers actions, Frenkel added.

Sovereign crisis fears surface.

news retrieve from Emerging Markets - Dated 13th October 2008

Senior bankers and economists warned yesterday that the risk of sovereign default among G7 members cannot be ruled out, as the financial crisis places unparalleled strain on rich country balance sheets.

Analysts added that the effective blanket guarantees of the financial system, and plans for massive government spending, had raised the spectre of sovereign ratings downgrades.

Philip Suttle, chief economist at Institute of International Finance, warned that the US government could “lose it its Triple A credit rating” as a result of having to finance bail-outs. He told Emerging Markets yesterday he did not see “how such a downgrade can be avoided.”

A US sovereign rating downgrade could fundamentally reshape the global investment landscape since global asset prices are benchmarked against US Treasuries.

Suttle’s comments came as the US National Debt Clock in New York this weekend ran out of digits, when the counter registered $10 trillion. Gross US debt this year reached about $9.6 trillion, or about 68% of GDP. The rescue legislation increased the government’s debt limit to more than $11.3 trillion from $10.6 trillion.

The additional borrowing faced by Treasury Secretary Henry Paulson could push the national debt well past 70% of GDP, the highest since the immediate aftermath of World War II, when the US was still paying off war debt.

John Chambers, chairman of the sovereign ratings committee at Standard & Poor’s, said: “When the dust settles, public finances would have changed markedly for the industrialized nations and that will have an impact on ratings in terms of rank ordering. It may also have an impact on absolute levels.”

Nouriel Roubini, the New York economics professor who forecast the current financial crisis two years ago, told Emerging Markets: “The largest sovereigns are not at risk yet, although several trillion of budget deficit in the US over the next few years might lead people to question whether the US is triple-A rated. But that is down the line.”

If the US has to issue $1 trillion of public debt next year, and the same the year after, on top of $500 billion that will need rolling over on maturity – i.e. a total of $3 billion – then “the question is whether the rest of the world is going to finance the US.

“I fear that the Chinese were willing to finance us when we were buying their goods, but now with exports to the US falling, they will do it rather to support our financial system. There is a fiscal time bomb in all [G7] economies.”

But bankers said the risk of inaction outweighed future fiscal consequences. Citigroup senior vice chairman Bill Rhodes argued that authorities should aim to “overshoot” rather than undershoot in organizing a financial bailout of their financial systems and institutions – and worry about “mopping up” later.

The policy response “has to overshoot,” agreed Bank of Mexico governor Guillermo Ortiz, speaking at an IIF seminar.

Goldman Sachs International managing director Robert Hormats told Emerging Markets he “did not believe” the US sovereign debt rating should or would be downgraded. The government should be prepared to go deeper into debt during emergencies such as the current one, Hormats added.

He said US government debt would in any case remain attractive to domestic and international investors, because of the enormous breadth and depth of the Treasury markets, a view that was echoed to Emerging Markets by former US Treasury undersecretary for international affairs Tim Adams.

Suttle said he accepted such arguments but that this did not weaken the case for objective ratings of US government debt.

郎咸平：中国经济增长扭曲 真正冬天还未到.

www.cnfol.com　2008年10月20日 08:28　新快报　白明 陈庆麟

正当人们以为，冬天已经来临，只要熬过以后便是康庄大道的时候，郎咸平却宣称，目前只是秋天，真正的冬天还没有到来。

　　郎咸平认为，今天的中国已经进入到一个前所未有的工商链条时代。任何一个部门出了问题它必将出现可怕的连锁效应，即多米诺骨牌效应，2008年大萧条，江苏、浙江企业的大量倒闭就是一个必然的多米诺骨牌效应，全国的专家学者都认为楼市、股市泡沫是从流动性开始的，其实是制造业的回光返照。

中国经济增长是扭曲的 

　　郎咸平指出，中国的经济增长是扭曲的，中国经济是全世界独一无二的"二元经济"环境，同时过热又过冷。哪些部门过热？与地方政府大力推动GDP工程有关的部门是过热的,占30%，包括地产、钢铁、证券公司等部门；而民营制造业,70%的制造业都是过冷。

　　在"二元经济"里面，制造业经营条件恶化以后，钱都打到股市和楼市。以炒股为例，2006年-2007年的股市泡沫基本就是制造业资金大量进入股市，2007年5月份到11月份的大盘上涨基本上就是"二元经济"的过热所拉动，这就是去年所谓的二八或三七现象，说明经济更坏而不是更好。2007年年底股指开始不断下跌的现象则预警着"二元经济"中国过冷的制造业出现重大危机，不过目前还看不到这场危机的底限。

　　郎咸平认为，在"二元经济"环境之下，宏观调控的推出将透过三个管道，使我国经济进一步恶化。第一管道，是在宏观调控的压力之下，银行从民营企业部门大量收回流动资金，然后打给过热的部门，即资金从过冷的部门转到过热的部门；第二管道，是在于汇率、新《劳动合同法》、宏观调控的压力之下，江浙、广东的企业家尤其是出口导向型企业无法继续经营，把很多本应该用于投资的钱抽去炒楼、炒股，从过冷的部门拿出，打到过热的部门；第三个管道，简称"海尔现象"，即原先过冷部门的企业由于无法经营而拿出大量的资金到过热部门自己做开发商，这种现象非常明显。第一个管道通过银行，第二、三个管道是企业家自己的行为，以上三个管道都无法避免地使得资金从过冷的部门流到过热的部门，使过冷的部门更冷，过热的部门更热。所以造成4年宏观调控的失败。

中国企业劳动力优势已消失 

　　郎咸平认为中国经济已经从"二元经济"的磨难当中走入一个前所未有的国际金融战略当中去了。产品已经不是产品跟产品的竞争，也不是公司跟公司的竞争，更不是行业与行业的竞争，而是整条产业链的竞争，在这条产业链中，中国处于是最低端。中国企业家辛勤工作，破坏环境，浪费资源，剥削劳动力，每创造100万美元的价值同时为美国创造900万美元的产值。因此，中国越制造，美国越富裕，这个就是所谓国际分工。

　　郎咸平举例，芭比娃娃的制造成本是1美元，最后终端零售市场是10美元，那么这9美元是怎么创造的呢？是产业制造上存在6+1产业链环节。所谓6，包括产品设计、原料采购、仓储运输、订单处理、批发经营以及终端零售。这六大块能创造的价值应该是90%，制造环节的价值只占10%。而中国企业过去30年的发展，做6的居少，做1的居多，这是我国制造业衰退的真正原因。因此，他建议要做产业链的升级，让企业从1转移到大附加价值的6。

　　郎咸平指出，中国企业的劳动力优势已经荡然无存。在整条产业链里面，劳动成本只占不到2.5%，节省成本需要通过产业链的高效整合，中国的企业只要还想利用廉价劳动力，配合技术的升级或者品牌的界定，想走出国门的都很困难。比如说TCL和明基，TCL收购了阿尔卡特、汤姆森，明基收购了西门子移动，想利用廉价劳动力生产配合国外的品牌技术走出去，最后结果是轰然垮台。为什么？还是因为我国企业仍然在制造业的成本上面下工夫，而制造业的劳动成本只占产业链条的2.5%。

　　郎咸平表示，在短期之内，要确保降低投资风险，就必须确保现金流的上升；在中长期之下，要从1走到6，产业升级的正确方向，而品牌效应只是产业链高效整合的必然结果。(白明 陈庆麟)

http://finance.qq.com/zt/2008/langxianping/index.htm 郎咸平.简介-腾讯财经

http://blog.sina.com.cn/jsmedia 郎咸平.官方博客

http://baike.baidu.com/view/5424.htm 郎咸平.简介-度百

http://xianpinglang.blog.sohu.com/ 郎咸平.搜狐博客

http://www.langxianping.com.cn/ 郎咸平.中中文网

http://zh.wikipedia.org/wiki/郎咸平 郎咸平.维基百科

http://www.cuhk.edu.hk/puo/bulletin/issue/199702/chinese/cprofile11.htm  

香港中文大学网站介绍郎咸平教授

http://www.google.com/search?q=郎咸平&rls=com.microsoft:en-US:&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7DVXA 

Asia and Europe call for joint action on markets.

Heads of state from across Asia and Europe called for a coordinated response to the global financial crisis in a two-day conference in Beijing, an event that underlined China's growing role as a diplomatic counterweight to the United States.

But the leaders fell short of offering specific solutions to the current economic troubles, which have shown no signs of slowing. On Sunday, the central bank of South Korea, where stock markets and the currency have been plunging, said that it would hold an unscheduled monetary policy meeting Monday morning, Reuters reported.

The bank, which gave no other details about the meeting, is under pressure to cut interest rates for the second time this month. Top government financial officials met Sunday with President Lee Myung Bak and agreed on "the need to stabilize market interest rates and to provide sufficient liquidity to avoid corporate bankruptcy," Reuters quoted a senior presidential economic policy aide, Bahk Byoung Won, as saying.

In the difficult balance between preserving financial innovation and ensuring adequate regulation to prevent crises, the presidents, prime ministers and other leaders assembled in Beijing tilted toward more regulation in their meetings Friday and Saturday. A joint statement issued at the conference did not suggest how to accomplish this, but it said "necessary and timely measures should be taken."

The statement did not exclude innovation, but contained a two-sentence section that indicated the preference of the attendees: "Leaders were of the view that to resolve the financial crisis it is imperative to handle properly the relationship between financial innovation and regulation and to maintain sound macroeconomic policy. They recognized the need to improve the supervision and regulation of all financial actors, in particular their accountability."

China said it would attend the international conference on the financial crisis in Washington that President George W. Bush has scheduled for Nov. 15. But without directly criticizing the United States, Prime Minister Wen Jiabao of China noted that the effect of global financial turmoil on Chinese financial institutions had been muted.

China has moved cautiously in allowing greater financial competition and in permitting money to flow in and out of the country. "We need financial innovation, but we need financial oversight even more," Wen said at a news conference in Beijing on Saturday, according to Reuters.

Bush and his advisers have also accepted a need for more regulation in some areas. But in a subtle yet potentially important difference of tone that reflects many years of more market-oriented policies in the United States than in Europe or Asia, the Bush administration has repeatedly said that regulation should not go so far that it prevents banks and other financial institutions from finding effective yet safe ways to meet their customers' needs.

The event in Beijing drew heads of state and other top officials from the 27 member countries of the European Union and the 10 members of the Association of South East Asian Nations as well as China, Japan, South Korea, India and Pakistan. The conclave was the seventh biennial Asia-Europe Meeting, a series of gatherings started in 1996 and last held in Finland two years ago.
In addition to Wen and President Hu Jintao of China, those attending the Beijing meeting included President Nicholas Sarkozy of France, Chancellor Angela Merkel of Germany, Prime Minister Taro Aso of Japan and Lee of South Korea.

The statement issued at the conference contained a veiled indication of wariness about the International Monetary Fund, saying that it "should play a critical role in assisting countries seriously affected by the crisis, upon their request."

China has been blocking the release of the IMF's annual report on its economy for months because it objects to the IMF's attempt - mainly at the request of the United States - to review whether China is deliberately undervaluing its currency so as to increase exports.

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From 20 Oct. 2008 to 24 Oct. 2008 Europe Zone fail to stop the finanical meltdown, the above news is what they are now working on the stop the finanical metldown, maybe needed a big chance in finanical system.

This Dec. may have a window dressing for fund managers so will expected a sell down as investors from all over the world are redeeming their fund from unti trust funds.

Expert like warren buffet claim is a good time to buy the stock at cheap price but look like the finanical metldown will have to cool down with a longer time, may like what Japan's 90s property market bubble burst. For warren buffet, he is rich, he is able to hold on with longer period like 5 to 6 years for a stock that he bought, he know the business cycle where he had bought those stocks at cheapest price.

Bank of America Credit-Card Unit Loses $373 Million on Defaults.

- Could it be the next crisis on Credit Card banks consumer default?.....

Bank of America Corp., the largest U.S. consumer bank, lost money on credit cards for the first time since its January 2006 purchase of MBNA Corp. as more borrowers missed payments amid the slowing economy.

The card-services unit lost $373 million in the third quarter, compared with a profit of $1.04 billion in the same period last year. Defaults on cards and home mortgages contributed to a 47 percent decline in operating profit at the consumer and small-business division, the Charlotte, North Carolina-based company said today in a regulatory filing.

Credit-card lenders are facing ``an exceptionally challenging period'' as the U.S. unemployment rate climbs, limiting borrowers' ability to repay loans, Moody's Investors Service said in an Oct. 16 report. ``The uncertainty and tempo of the turmoil will test even the stalwarts' ability to adapt.''

Bank of America provided more details on its third-quarter results today, two weeks after reporting a 68 percent decline in profit. Those results, released ahead of schedule to coincide with the announcement that the bank was raising $10 billion by selling common shares, were worse than analysts expected.

The consumer division, which contributed 55 percent of the bank's profit in the first nine months of this year, earned $1.2 billion in the quarter ended Sept. 30, compared with $2.3 billion a year earlier.

The $35 billion purchase of MBNA made Bank of America the largest U.S. credit-card issuer at the time. For the first nine months of this year, Bank of America earned $720 million in card services, compared with profit of $3.7 billion for all of last year and $5.7 billion in 2006.

Unemployment Rates

The credit-card industry's default rates are ``all but certain'' to surpass post-recession peaks reached in 2003, Moody's said in the report. Unemployment may rise until the fourth quarter of 2009, pushing the default rate to a peak of about 8.5 percent from 6.82 percent in August, Moody's said.

Late payments of more than 30 days increased to 5.89 percent at Bank of America, up from 5.53 percent in the quarter ended June 30 and 5.24 in the third quarter of 2007.

American Express Co., the biggest U.S. credit-card company by purchases, said yesterday profit in the company's U.S. card business dropped 59 percent to $244 million in the third quarter.

U.S. employers cut staff by the most in five years last month, pushing the jobless rate to 6.1 percent, according to the Labor Department. Borrowing by U.S. consumers fell $7.9 billion in August, the biggest drop since the Federal Reserve began tracking the figures in 1943.

Mortgages, Home Equity

Bank of America's mortgage, home equity and insurance services unit lost $162 million in the quarter compared with profit of $30 million a year earlier. The latest results included Countrywide Financial Corp., the largest U.S. mortgage lender, which was acquired on July 1. The bank is expected to complete its purchase of Merrill Lynch & Co., the world's largest securities brokerage, at the end of this year.

Bank of America slipped 18 cents to $24.22 at 11:51 a.m. in New York Stock Exchange composite trading. The shares have declined about 41 percent this year.

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Shall have to wait for it to float on the water surface. IMF have warns business as EU outlook worsens.

Credit Cards Could Become Next Trouble Spot in Crisis.

Credit-card delinquencies are likely to become the next flashpoint in the credit crisis, though the impact on the overall economy won't be as severe as the housing slump, analysts believe.

As the economy worsens and unemployment rises, more Americans are having trouble paying off their credit card balances. That has pushed up losses for credit card issuers, forcing them to tighten standards, which puts a further squeeze on cash-strapped consumers.

“After mortgages and home equity, credit cards are the next in line to feel the crunch,” says Marc DeCastro, an industry analyst with Financial Insights.

With job losses growing, credit cards delinquencies could rise to 7 percent by the first quarter of 2009, which would be a 20 year high, says Howard Shapiro, an industry analyst with Fox-Pitt Kelton.

And because consumers no longer have the equity in the house to fall back on, they're relying even more on credit cards to pay for living expenses.

“Now with their home equities getting shut off, people are going to start augmenting their income with their credit cards," DeCastro says. "They are going hit their limits and once they hit their limits, then they are probably going to walk away from their credit cards.”

Though consumer spending accounts for three-quarters of the US economy, the credit-card crunch isn't likely to be as big an economic blow as the housing crisis has been.
The reason is that credit card debt, while still large, is much smaller than the amount tied up in mortgages.

There is roughly $1 trillion of outstanding credit card debt—compared to $14 trillion worth of outstanding mortgages—and in the second quarter of 2008, $385 billion of this had been bundled into asset-based securities, according to the Securities Industry and Financial Markets Association.

Another reason for the smaller fallout is that credit card issuers have been working over the past year to tighten standards and limit the damage.

“I don’t see the credit card industry facing the kind of stress that the mortgage industry has faced," says Shapiro. "They have had time to prepare, to tighten their underwriting standards which were not stretched to the same degree as they were in the mortgage industry."
Still, that doesn't mean the growing losses aren't going to hurt.

Credit card write-offs last year totaled $26.6 billion, and are on track to reach more than $41.4 billion this year. And that's just the beginning.

“We think 2009 is going to be a difficult year for the credit card industry," Shapiro says. "There’ll be higher charge offs, slower growth, people are cutting back on spending. That is going to mean pressure on earnings.”

Innovest Strategic Value Advisors forsees delinquencies rising through the next three quarters, peaking at 10 percent, with industry losses of close to $100 billion in 2009.

That’s higher than most estimates but that's because most models do not sufficiently account for the freezing of the transfer market, in which borrowers could rollover debt into new cards with a low (or zero) introductory annual percentage rate (APR), says the investment research firm.
That option is quickly disappearing, leaving a growing raft of people with more debt than they can repay and no place to turn. That essentially was the situation that burst the subprime mortgage bubble, when people could no longer just roll over into a new subprime or sell their house.

The pain for the industry comes at a particularly difficult time for banks, which have long relied on credit card operations as steady, and highly lucrative, profit centers, contributing significantly to total revenues.

American Express and Discover, which both have small bank subsidiaries, are better positioned to weather the storm because of tighter standards. Retailers are probably the most vulnerable, mainly because they are usually the last to get paid by strapped consumers. Target recently lowered its guidance because of higher than expected credit card write-offs.

Another problem for the industry is its exposure to borrowers with less-than-stellar credit, also known as sub-prime. That’s believed to be about 20 percent industry-wide (more than 30 percent at Bank of America and Capital One) but the scale of the problem is far smaller than in mortgages and much of that has been shifted off company balance sheets.

Tightened credit terms will help card issuers, but it also will mean fewer options for borrowers who have stumbled into trouble. Instead of transferring balances to a new card, often a new low introductory rate, they may end up defaulting.

This just makes a bad credit situation worse and is “unsustainable” argues Laura Nishikawa, an analyst with Innovest, who says issuers need to work with consumers to encourage "healthier use of credit," not the orgy of the past decade.

She says Discover is showing the way, by offering convenient loan calculators, allowing customers to choose payment days, and offering cash back rewards for being on time.

“There is some cause and effect here….but [as an issuer] you don’t want to the last one in the line” to get repaid, responds Dennis Moroney, research director for bank cards industry at TowerGroup, a wholly owned subsdiary of MasterCard which operates with editorail independence.

That’s precisely the risk retailers run by issuing store-specific credit cards, as he expects retailers will feel compelled to do to boost holiday shopping revenues.

Since these cards can only be used in the stores issuing them, they are typically the last to get repaid, raising the chances of charge-offs, especially as the economy weakens.

Even if consumer spending retains its holiday sparkle, the real test for the credit card industry, he says, will come in early summer, when families’ ability to stay current on bills rolled over from the holiday binge, and when delinquencies typically pick up.

If the recession we are sinking into proves deep and prolonged it will probably force painful consumer change.

"People are basically spending far more than they earn and that is just going to have to change, especially if banks are not willing to indulge that kind of behavior any more, that’s going to have big repercussions in the economy,” says Gregory Larkin, a senior Innovest analyst.
That may mean the days of carrying card balances of ten of thousands of dollars may be over if banks have doubts about your ability to catch up.

The new economic reality may bring some rude moments, cautions Larkin. “You may have that embarrassing moment when you are out with your wife and the guy says, ‘Sorry, you are maxed out’ – you are going to get a lot more of that happening, your card not letting you charge dinner tonight.”

Will Bailouts Risk Hyperinflation?

posted on 13 Oct. 2008 on CNBC site.

Government bailouts of the financial system will destroy the dollar, euro and sterling because of hyperinflation, Martin Hennecke, senior manager of private clients at Tyche told CNBC. But Todd Everts, president & CEO of Wall Street Global, disagreed.

"The privatization of the banks is the first step down the road to hyperinflation," Hennecke said Monday. "Maybe we are not seeing the Zimbabwe-style (hyperinflation), but inflation is a major major risk and investors should look at this very carefully."
Standard and Poor's projected in 2005, well before the current crisis hit, that all the major Western governments would be heading towards default on their sovereign bonds, Hennecke said.

But the dollar's value is set to decrease over time, argued Everts, after hearing Hennecke's case.

"The US consumer is not going to be able to drive the world economies as we've seen in the last several generations," Everts said, adding that a worsening trade deficit would help to ease inflation.

"I don't think we're going to get hyperinflation to the extent that we've seen in falling economies like we saw several years ago in Argentina, Brazil and what's happening right now in Iceland," Everts said.

Hennecke said the price of gold would continue to surge as investors swapped out of cash.
Everts agreed that cash was not necessarily the safest place to invest: "You can't just go to cash, What is cash? Cash is a several trillion dollar money-market mutual-fund industry in the US, which has seen several funds lose its one dollar NAV (Net Asset Value)."

Singapore slips into recession.

Official 2008 growth estimate cut to 3%, but market economists already shaving 2009 forecasts

Singapore on Friday joined other Asian nations in easing monetary policy as the economy slipped into recession for the first time since 2002.

The economy contracted by 0.5 per cent in the third quarter from a year ago, based on preliminary data. The trade ministry cut its full-year growth forecast for 2008 to 3 per cent from a previous estimate of 4-5 per cent.

On an annualised, seasonally adjusted rate, the economy shrank by 6.3 per cent from the previous quarter, after contracting by 5.7 per cent in April-June period, which meant that Singapore is in a technical recession defined as two consecutive quarters of negative growth.
Singapore, due to its export-dependent economy, is seen as an important indicator of economic trends in the rest of Asia.

The trade ministry gave a bleak outlook for economic growth next year due to deteriorating global demand.

Nearly all of the city-state’s manufacturing industries, which make up a quarter of gross domestic product, are weakening. The ministry reported that the pharmaceutical industry is in ”negative growth” due to a fall in the value of products made locally.

The chemicals and marine-base precision engineering industries also are being affected by slower global demand. Although the ministry did not mention the mainstay electronics sector, analysts say it too is slowing significantly.

Construction, which has helped prop up the economy due to a building boom, grew by 7.8 per cent from a year ago compared to 18.3 per cent in the first half of 2008. The ministry said that emerging bottlenecks in the sector were curbing growth, including a shortage of contractors, a tight labour market for engineers and projects and equipment delays.

Services are expected to be affected by problems in the financial industry. Singapore has attracted fund management companies and hedge funds to boost its status as a regional financial centre, but analysts believe they will suffer cutbacks due to market turmoil.

In response to the gloomy forecast, the Monetary Authority of Singapore shifted to a neutral stance in its currency policy for the first time since 2003. The MAS conducts monetary policy through the foreign exchange rate rather than setting interest rates.

The value of the Singapore dollar is set by undisclosed trading band against a basket of key foreign currencies.

MAS said it was shifting it policy to zero per cent appreciation from a policy of modest and gradual appreciation adopted in April 2004. However, it will not change the slope or width of the trading band.

The monetary easing by the MAS was less than expected, but reflected concerns that inflation remained high. Consumer inflation is estimated to be 6-7 per cent this year, although it will slow to 2.5-3 per cent in 2009, MAS said.

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If Singapore fall into technical recession the Singapore dollar would be depreciated for reflex the weakness on the singapore economy. Inflation maybe come in, as the Singapore dollar is depreciated. believe that this should be short term problem and the problem will be over come, Singapore fundamental is still strong.

IMF sees major global economic downturn

Crisis puts policy makers 'between a rock and a hard place'

The world economy has entered a "major downturn" with significant risks of worsening, the International Monetary Fund said Wednesday in its annual World Economic Outlook.

"After years of strong growth, the world economy is decelerating quickly," the report said. "Global activity is being buffeted by an extraordinary financial shock and by still-high energy and other commodity prices."

The financial shock has put monetary-policy makers "between a rock and a hard place," the IMF said, needing to work on two fronts: stabilizing the financial sector and using monetary and fiscal policies to support growth.

The coordinated rate cuts announced Wednesday by the major central banks, including the Federal Reserve and the European Central Bank, was "clearly a step in the right direction," said Olivier Blanchard, director of research for the IMF.

The IMF report was written in the past few weeks, after the crisis entered a "tumultuous new phase" in September.

The forecast for global economic growth next year has been marked down to 3% in the latest forecast, with "the major advanced economies already in or near a recession," the fund said. "The pickup is likely to be unusually gradual, held back by the continuing financial market deleveraging."

Inflation should recede quickly, the IMF forecasters said, provided crude-oil prices do not revisit this summer's highs.

The forecasters acknowledged "considerable downside risks" to their predictions, pointing to the possibility that financial stress could remain very high and that credit constraints could intensify.
The forecast assumes authorities take decisive and successful action to arrest the decline in financial markets, Blanchard said. Public funds will be needed to support financial stabilization, he said, including help in recapitalizing the banks.

Looking ahead, the fund said the major immediate challenge for policy makers is to "stabilize global financial markets while nursing economies through a global downturn and keeping inflation under control."

In the longer run, financial systems must be rebuilt. Policy makers will also have to reduce "procyclical tendencies" in the global economy and strengthen "supply-demand responses" in commodity markets.

The IMF forecast has been significantly reduced since July's report. Global growth in 2009 is now seen at 3%, rather than 3.9%. The advanced economies are expected to grow 0.5%, rather than 1.4%. The emerging markets are expected to grow 6.1%, rather than 6.7%.
The United States economy is projected to grow 0.1%, rather than the 0.8% projected three months ago. The euro-zone economy is expected to grow 0.2%, rather than 1.2%. Japan is expected to grow 0.5%, not 1.5%.

Emerging economies should fare better. China's growth-rate forecast was marked down to 9.3% from 9.8%, and India's to 6.9% from 8%.

Global trade is expected to slow significantly from 7.2% growth in 2007 to 4.9% in 2008 and 4.1% in 2009.

With commodity prices projected to fall in 2009, inflation should moderate to about 2% in the advanced economies, the IMF said.

Time will tell as FBI probing bailout firms

Time for FBI investigation on those Banks.

The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG - and their executives - as part of a broad look into possible mortgage fraud, sources with knowledge of the investigation told CNN Tuesday.

The sources would not speak on the record because the investigation is ongoing.
FBI spokesman Special Agent Richard Kolko had no comment on that information, but said 26 firms are currently under investigation as part of the bureau's mortgage fraud inquiry.
Earlier this month, FBI Director Robert Mueller told Congress that 1,400 individual real estate lenders, brokers and appraisers are now under investigation in addition to two dozen corporations.

"The FBI currently has 26 pending corporate fraud investigations involving subprime lenders," Kolko said. "As we have seen, this number can fluctuate over time; however we do not discuss which companies may or may not be the subject of an investigation."

The Crisis: A timeline
Previously, CNN has reported that lender Countrywide and Atlanta-based homebuilder Beazer (BZH) - which dropped out of the mortgage business early this year - are part of the investigation.

The sources said the probes of Fannie (FNM, Fortune 500), Freddie (FRE, Fortune 500), Lehman (LEH, Fortune 500) and AIG (AIG, Fortune 500) are believed to be in the early stages. One source said the government would be "remiss" if it didn't look into what happened at these companies because of the financial problems they are involved in and the actions of individuals running them.

Lehman Brothers and Freddie Mac declined comment on the matter. AIG spokesman Joseph Norton said, "We don't have details about the FBI investigation. Of course, we will cooperate with the FBI."

The United States is in the midst of a spiraling economic crisis fueled largely by the housing market. Earlier this decade, mortgage lenders relaxed restrictions on obtaining mortgages as home prices soared about 85% from 1996 through 2006 in inflation-adjusted dollars, creating a bubble. Then the bubble popped, and lenders - as well as mortgages - took the hit.

Money Crisis: Your questions answered
Last week, mortgage insurer AIG narrowly avoided bankruptcy when the federal government took 80% of its equity in exchange for an $85 billion loan from the Federal Reserve while Lehman filed the largest bankruptcy in American history. Earlier this month, the government took over mortgage giants Fannie and Freddie.

Bank of America (BAC, Fortune 500) bought Countrywide in July. Beazer dropped its mortgage arm early this year after an internal investigation - prompted by a Charlotte Observer investigation - found "evidence that employees violated [federal] regulations ... back to at least 2000." The company said it is cooperating with the federal investigation.

Other bank failures and takeovers have led to the Bush administration's current proposal to spend $700 billion to shore up the financial markets. The proposal is under consideration by Congress, where lawmakers from both sides of the aisle have balked at the proposal's lack of oversight provisions, among other issues.

As the mortgage industry began to unravel, the FBI, with assistance from the IRS, launched a broad investigation into mortgage fraud. In June, its Mortgage Fraud Task Force arrested more than 400 mortgage brokers, lenders, appraisers and other industry insiders who, it said, were responsible for more than $1 billion in losses.

Last month, a Mortgage Asset Research Institute (MARI) study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007.

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Things would happen so easily, someone would have to answer for it for jail.

谢国忠：中国道路在于提高经济效率

[金融体系都是依赖于政府的隐性支持来维持运转，这样下去的话，金融体系将面临国有化的危险。所以美国政府最终还是在雷曼兄弟这件事上下了决心，划一条线(分清政府与市场的边界)，看市场自己能否消化。]

作者：谢国忠，独立经济学家

“这不代表宏观政策的变动，是为了提振市场的信心。”9月16日，独立经济学家、玫瑰石顾问公司董事谢国忠接受本报专访时如此解读。他是全球最早预言美国次贷危机的爆发及其深广的影响的专家之一。

他依旧对全球经济前景不抱乐观。他给出两个标志：金融机构的不良资产被市场重新定价并再流通——这是金融危机见底；公司能够融资并再投资，需求开始回归——这是实体经济见底。“美国经济见底并恢复估计要四五年。

中国希望靠美国经济复苏把我们拉上来，而必须要另外杀出一条血路来。”他坦言。
“杀出血路”的利器，就是提升中国经济效率，“改革是唯一出路。”而他认为，在财政收支、金融资本政策控制、价格体系政府控制中，存在着相当多低效率的地方。“降低政府在经济中的重要程度，可能解决中国目前面临的经济问题。”他说。

美国政府：恢复金融体系市场机制

《21世纪》：作为美国第四大投资银行，雷曼兄弟公司申请破产保护，有人将其称为“华尔街地震”。这究竟意味着什么？

谢国忠：雷曼兄弟公司破产，意味着将有价值6000亿美元的资产需要平仓，这当然会对市场造成相当大的恐慌。这里面有流动性的问题，也有资产价格重估的问题。

雷曼现在很多资产没怎么流通，价格都是大家猜测、想象的，如果它真的抛出来，资产价格就要重新定位，这会给很多金融机构带来很大的问题。如果用金融价格来衡量这些机构资产的话，那他们可能就资不抵债了。这也是市场目前非常担心AIG (美国国际集团，美国最大保险公司)的原因。

《21世纪》：此前，市场一直寄希望于美国政府像对待贝尔斯登那样，通过财政来支持雷曼，使其免遭破产厄运。但在最后时刻，美国政府没有动用这一招。怎样看美国政府这一次的作为？
谢国忠：这表明，美国政府最终还是想恢复金融体系的市场化机制。

这一年多来，金融体系都是依赖于政府的隐性支持来维持运转，这样下去的话，金融体系将面临国有化的危险。所以美国政府最终还是在雷曼兄弟这件事上下了决心，划一条线(分清政府与市场的边界)，看市场自己能否消化。

《21世纪》：美联储9月14日联合全球十大银行成立了首期700亿美元的市场救助基金，欧洲央行、英国央行也纷纷向市场注入流动性。这些举措是否为了救市？能否从根本上解决问题？
谢国忠：这些举措，目的都是为了提供资金保障，支持市场短期流动性。因为短期可能因为恐慌性抛盘、资产非理性下跌带来流动性问题。但这个问题不是很大，是一个技术性问题。
而基本面的问题在于，你这个资产到底值多少钱。如果按照美林之前出售抵押债务债券(Collateralized Debt Obligation，简称CDOs)的价格，一元钱只作价0.22元，如果这是一个真实价格的话，很多金融机构都要破产了。而这些央行的救助方案是不能改变这个基本现实的。

全球央行出手：危机仍未见底

《21世纪》：那么这个危机何时才会见底？见底的标志是什么？

谢国忠：金融机构的不良资产抛出后，让市场定价，然后这些资产可以重新有流通，这是金融危机见底的一个最重要的象征，而不能说像现在，不良资产还放在自己的账上，自己可以伪装一个价格。

《21世纪》：那全球实体经济的见底恢复会要多久？
谢国忠：金融危机的见底应该早于实体经济。实体经济见底恢复的标志是公司能够融资并再投资，需求开始回归。美国经济见底并恢复还要很久，估计要四五年。

《21世纪》：你对此这么悲观？
谢国忠：原来，美国经济的增长都是靠消费者借钱消费支撑的，这次金融危机也是因此导致的。下一轮经济增长靠什么？不能再回到老路吧？

这次，美国要韬光养晦很久了，不能再虚胖，而要瘦身，再长肌肉，需要的时间会很长。所以，我的观点是，中国不要再等待，希望靠美国经济复苏把我们拉上来，而必须要另外杀出一条血路来。

中国对策：财政“托一把”经济

《21世纪》：在全球经济动荡、面临衰退风险的时候，中国怎样才能“另外杀出一条血路来”呢？

谢国忠：核心问题是，经济的发展不能靠股市、楼市来支撑，中国接下来的路一定是要提高经济效率，改革是唯一出路。

中国经济里面低效率的地方太多了，提高效率，中国经济就可以上一个新台阶。别老说自己的经济增长那么快，你的基础还是很低的。

《21世纪》：你的意思是还是要坚持市场化的制度变革。但短期内政策应如何调整以应对全球经济风险呢？下调人民币贷款基准利率和部分存款类金融机构人民币存款准备金率，是中国政府宏观政策变动的一个信号么？接下来是否会进入降息周期？

谢国忠：这不是宏观政策的变动，是为了提振市场的信心。
准备金率下调是应该的，是为了保持银行体系流动性的正常水平。因为原来是热钱大量流入，现在是热钱向外流，但是要根据外汇储备的升降速度做适度调整。利率大幅下降目前还不可能，通胀过几个月就会消失的想法并不现实。

《21世纪》：下一步的关键在哪里？

谢国忠：从短期来看，两方面的政策很重要。
从稳定需求来看，财政政策对经济应该“托一把”。考虑到出口企业和地产开发商的资产流动性问题，中国经济增速放缓越来越明显。一些财政刺激措施可以做“软着陆”的保障，例如加快城市基础设施建设、铁路网修建等，来缓冲下行风险，对经济长期发展也有好处。
同时，要增加地方政府的财政收入，解决他们的偿债能力问题。
中国企业存在偿还债务问题。“三角债”特别是以应收账款形式存在的债务在不断堆积，问题的源头可能是地方政府缺少资金。

《21世纪》：中长期来看呢？

谢国忠：接下来就应该找到经济低效率的地方并加以改变。在财政收支、金融资本政策控制、价格体系政府控制中存在着相当多低效率的地方。
多年来，中国消费率持续走低，刺激消费政策一直难以真正奏效，很重要的一个原因就是政府占有的收入比重过高。

中国的税收已经达到历史最高水平。今年预算收入可能达到6万亿人民币，占GDP21％，是20世纪90年代最低水平的两倍。国有企业利润也可能达到GDP的6％。还有大量预算外收入。
总体而言，政府收藏了GDP三分之一的财富，或者是国民生产净值(GDP减去资本贬值)的40％。在过去十年，中国经济明显地转向政府这边。降低政府在经济中的重要程度，可能解决中国目前面临的经济问题。

中国可能有潜能在一个良好的投资回报率在未来一年。美国有问题经济，中国的经济可能以更快的速度超过美国。

Andy xie:- bury the Greenspan put and let people get what they deserve.

The global credit bubble is bursting and there are many out there who “deserve what is coming to them,” writes Andy Xie, now an independent economist in Shanghai, in Tuesday’s FT.

In full finger-pointing stride, Xie, who resigned last year as Morgan Stanley’s chief Asia economist after some people took exception to his dim view of Singapore, says “this bubble is primarily leverage financing for owning risky assets”.

”The people who were responsible for what happened played with other people’s money, marketed arcane financial products with false promises of fat profits, but stuffed their own pockets with big bonuses. Neither these masters of the universe nor their greedy but naïve investors deserve to be bailed out”, he says.

The central banks bear equal responsibility in the current debacle, says Xie. After the 9/11 terrorist attacks on America, they slashed interest rates and “provided the cheap money for this leverage bubble”.

“They must not flood the world with liquidity again to sustain this bubble or create another,” warns Xie. Rather, they should focus on “price stability, not financial market stability, and should provide liquidity only to contain the multiplier effect of the bubble bursting on the economy”.
Nor should central banks stimulate to “avoid recession at any cost”, as that would only worsen the “excesses” in the global economy and make the inevitable correction more painful, he says. “Business cycles are not bad. Excesses must be followed with cleansing.”

Wall Street also comes in for its share of vitriole. In the past five years, says Xie, the collapsing agency business has pushed banks into betting their own money for profit and selling “high margin” structured products to their clients: “Their eagerness for selling new and poorly understood products, such as sub-prime mortgage derivatives, is a major factor in the current bubble”; and, like after the junk bond bubble of the 1980s, “lawsuits may hit Wall Street for years to come”.

Rating agencies, of course, “should share the guilt”, says Xie. “They give high ratings to sub-prime derivatives with high seniority in payment. Unfortunately, the repayment behaviour of the sub-prime borrowers depends on macro conditions… Like in the previous debt bubbles, rating agencies behave like momentum traders. The ratings are supposed to give guidance to investment risk during bad times, not to be downgraded when the situation turns sour.”

And let’s not forget the “ballooning” hedge fund industry. “As their funds have become big, they have focused on their 2 per cent management fees rather than the share in investment profit,” says Xie. “So they have focused on gathering assets by over-promising.” Some funds specialise in illiquid assets such as derivative products of sub-prime mortgages and can “report whatever pefromance they want” as long as they do not face redemption, he says. “As soon as redemptions happen, they cannot even sell their stuff and have to refuse withdrawals.”

If central banks try to bail out Wall Street, it would lead to high inflation for years, he warns. The inflationary effect of loose monetary policy of the past was offset by the deflationary effect of globalisation, he adds. “Now China and other developing countries are experiencing high and rising inflation. Loose money will go straight into inflation. The vicious cycle of the wage-price spiral of the 1970s has not occurred as both labour and capital still believe in the inflation-fighting credibility of the central banks. If they loosen up again to bail out Wall Street, this credibility may be squandered. The ensuing wage-price spiral could ruin the global economy for years to come.”

Xie’s conclusion is that central banks should now grab the opportunity to restore their credibility: “Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former Fed chairman, to flood the market with liquidity during financial instability is the genesis of this ‘central bank put’. As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan ‘put’ for good.”

Andy Xie also goes on to distribute blame:-
“In the past five years, Wall Street has changed dramatically and that may not be for the better. The collapsing agency business has pushed banks into betting their own money for profit and selling “high margin” structured products to their clients. Their eagerness for selling new and poorly understood products, such as sub-prime mortgage derivatives, is a major factor in the current bubble. Like after the junk bond bubble of the 1980s, lawsuits may hit Wall Street for years to come.

Rating agencies should share the guilt. They give high ratings to sub-prime derivatives with high seniority in payment. Unfortunately, the repayment behaviour of the sub-prime borrowers depends on macro conditions. As soon as property prices drop significantly, they tend to default at the same time and the seniority in repayment is not worth much. Like in the previous debt bubbles, rating agencies behave like momentum traders. The ratings are supposed to give guidance to investment risk during bad times, not to be downgraded when the situation turns sour.

The ballooning hedge fund industry is also culpable. As their funds have become big, they have focused on their 2 per cent management fees rather than the share in investment profit. So they have focused on gathering assets by over-promising. Some funds specialise in illiquid assets such as derivative products of sub-prime mortgages. As long as they do not face redemption, they can report whatever performance they want. As soon as redemptions happen, they cannot even sell their stuff and have to refuse withdrawals.”

Andy Xie finishes:-
“If central banks try to bail out Wall Street, it would lead to high inflation for years. The inflationary effect of loose monetary policy of the past was offset by the deflationary effect of globalisation. Now China and other developing countries are experiencing high and rising inflation. Loose money will go straight into inflation. The vicious cycle of the wage-price spiral of the 1970s has not occurred as both labour and capital still believe in the inflation-fighting credibility of the central banks. If they loosen up again to bail out Wall Street, this credibility may be squandered. The ensuing wage-price spiral could ruin the global economy for years to come.

What is occurring is an opportunity for central banks to restore their credibility. Markets have been taking more risk than they should because they believe that central banks will come to their aid during times of crisis, like now. The penchant of Alan Greenspan, former US Federal Reserve chairman, to flood the market with liquidity during financial instability is the genesis of this “central bank put”. As long as this expectation remains, financial bubbles will occur again and again. Now is the time to act. Let the crooks go bankrupt. Central banks should bury the Greenspan “put” for good.”

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NOTE: Andy Xie’s article is the most over-the-top article on the FT , this will help you see the whole picture in term your investment.

We shall see US govt. jail Wall street greed one by one in the coming future as after the bubble have gonna.

"The greed of Wall street"

There is news on Lehman Files For Bankruptcy, BofA To Buy Merrill

News from CNN, Date: 15th Sept. 2008

THE EVENTS: Two of Wall Streets' venerable investment giants have been brought to their knees - and an insurance powerhouse hangs by its fingertips. Lehman Brothers Holdings Inc. (LEH) filed for bankruptcy protection, while Merrill Lynch (MER) agreed to be acquired by Bank of America Corp. (BAC) for $50 billion.

Meanwhile, another victim of the ongoing credit and housing crunch, insurance giant American International Group Inc. (AIG), is desperately trying to raise capital.

MARKET REACTION:
Merrill shares gained 26% to $21.59 as investors expressed relief, but Bank of America fell 14% to $28.88. Lehman stock fell 95% to 19 cents a share and AIG dropped 47% to $6.34.
In the broader market, the Dow Jones Industrial Average was down 223 points at 11198, Nasdaq was off 26 at 2234 and the S&P 500 down 21 at 1230.
Treasurys soared as investors scrambled for safety.

The U.S. dollar was off its overnight lows after initial risk aversion moves.
Oil futures slid to a seven-month low as speculators fled for perceived safe havens amid turmoil on Wall Street.

Gold prices jumped nearly 3%.
European stock indexes were down 4% to 5%.
Equity indexes in Asia were off about 4% with the bourses in Japan, China and Hong Kong closed for holidays.

LEHMAN BROTHERS SEEKS PROTECTION: Wracked by massive real-estate-related losses, Lehman Brothers Monday filed for Chapter 11 protection after a feverish weekend of negotiations to attract a potential buyer. But the two most likely suitors, BofA and Barclays PLC (BCS), walked away after the U.S. government said it would not backstop Lehman's troubled assets to facilitate a sale.

Federal regulators assured Lehman brokerage customers that their accounts will be protected and transferred to other brokerage firms. Meanwhile, Lehman employees received few answers Monday about the status of their jobs. Thousands are expected to be laid off.

MERRILL ABSORBED AMID CRISIS: Merrill, in a rushed bid to ride out the storm sweeping Wall Street, agreed to be taken over by BofA in a $50 billion all-stock transaction. Through the weekend, federal officials strongly encouraged the deal, fearing Merrill would be the next financial house to approach the brink after Lehman.

AIG SEEKS CAPITAL: AIG - hobbled by credit default swap investments that have gone sour - spent the weekend trying to raise $40 billion to avoid a credit downgrade which would let counterparties pull their capital from deals with the firm. AIG Chief Executive Robert Willumstad made an extraordinary appeal to the Fed for temporary funding to tide it through the crisis.

WALL STREET CIRCLES THE WAGONS: Ten major commercial and investment banks announced Sunday they would pool $70 billion of their own money to create a borrowing facility that they could tap into to help them ride out the crisis.

U.S. TAKES STEPS TO SUPPORT FINANCIAL MARKETS: U.S. regulators Sunday announced a series of steps - including an expansion of the Federal Reserve's credit facilities - in hopes of stabilizing financial markets after a tumultuous weekend. The moves are designed to make it easier for banks to gain access to emergency credit.

WHAT THEY SAID:
Bank of America Chief Executive Ken Lewis said he felt "no pressure" from federal government regulators to acquire Merrill.

"Today we are looking forward. This weekend's discussions made clear that both market participants and regulators in this country and abroad recognize the need to support market stability and remove uncertainty as they address current challenges," Treasury Secretary Henry Paulson said.

"Monday will be a day of reckoning for the financial markets," said Carlos Mendez, senior managing director of ICP Capital.

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Where in earth having so much money or Huge Capital for those failure banks to refinance their debts? can't US govt. help those banks or protect those banks?

I think to get out of this crisis must able to rise even more fund than those debts adding together that will over come the crisis. The Crisis is meet where the money is short of cash to run the businesses.

America has been number one for more than a centry. The number one are in their economy. are China able to over take it fast enough? are China meet with those standard that America alway meet.

Is there a greed and fear factor in the crisis?

Treasurys jump that cause Wall Street crisis escalates.

Has US crisis over?.....

U.S. debt had gains most since September 2001...

Treasurys jumped Monday, pushing yields down by the most since September 2001, as investors clamored for the safety of government debt in the wake of Lehman's bankruptcy, Merrill Lynch's demise and AIG's need for cash.

Two-year note yields dropped 37 basis points, or 0.37%, to 1.86%, the biggest decline since Sept. 17, the first day bonds traded after the terrorist attacks. The yield is the lowest since April.

"It's definitely an extraordinary set of circumstances and I don't know if it's a culmination," said Jason Brady, who helps oversee about $6 billion in fixed-income assets at Thornburg Investment Management. "There isn't a lot of hope that this is going to turn around anytime soon. People would rather own things they don't have to think about so are buying Treasurys."

Bank of America, which absorbed failing mortgage lender Countrywide earlier this year, agreed to buy Merrill Lynch in the hopes of preventing the demise of yet another Wall Street giant.

Lehman filed for Chapter 11 bankruptcy, ending the 158-year-old Wall Street firm's run and rattling the foundation of the global financial system.

"For markets, the question is whether the liquidation of Lehman's illiquid assets will force other dealers to mark down the value of their holdings, resulting in another wave of write-downs and fire-sales that could destabilize markets," said BMO Capital Markets analysts.

Analysts also note the economic ramifications of potentially thousands of layoffs from all four firms because of overlapping positions or attempts to streamline the business. And as financial firms tighten their belts, it will also likely mean less lending to individuals and businesses, slowing down economic activity even more.

Ten-year note yields, which move inversely to prices, dropped 19 basis points to 3.54%.

Interest-rate futures have jumped as traders almost fully expect the Federal Reserve to reduce its benchmark rate at its meeting tomorrow to 1.75% from 2% to make borrowing and lending more feasible for a battered financial system.

"We believe that the gravity of the situation requires a Fed ease of 50 basis points and a removal of the current 25 basis point premium of the discount rate" at which banks can borrow from the Fed directly, said T.J. Marta, income strategist at RBC Capital Markets. "Such a move would put the Fed 'ahead' of the market."

Futures also show an 80% chance of another quarter percentage point cut at the central bank's meeting on Oct. 31.

The Fed also expanded its loan programs for banks and other financial institutions "to mitigate the potential risks and disruptions to markets," Chairman Ben S. Bernanke said in a statement.

The news are from MarketWatch Date: 15th Sept. 2008

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Is US Dollar flooding the whole world? Since near to all most everything are rate in USD......
I guess US should be able to deal with the crisis it just because there isn't any other country that bigger than US economy...in other word if they can't no single one are able bail them out fast.

This will have to take a long time than expected with the many country finance strength.....

Oil Jump More Than $6 on US's NYMEX.

Are the world getting themselve ready for high oil price with the oil peak period? (The long ever Oil crisis). This is not everyone like to see it happen but it really happen.

The news is retrieve from Bloomberg on Aug. 21:--
-------------------------------------------------------

Crude oil rose more than $6 after the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt the flow of oil, and as a weaker dollar increased the appeal of commodities.

The U.S. missile shield in Europe, which has ``a real anti- Russian potential, won't increase the continent's security,'' Russia's Foreign Ministry said. Russia is the world's second- biggest oil producer. Energy and metals futures also climbed as the dollar fell to the lowest against the euro in a week.

``The tensions between Russia and the West were supposed to be simmering down but they are now ratcheting up because of Poland's agreement with the U.S.,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``The fall of the dollar is sending a huge investor flow into commodities.''

Crude oil for October delivery rose $5.72, or 5 percent, to $121.28 a barrel at 12:01 p.m. on the New York Mercantile Exchange, the biggest increase since June 6. Oil rose as much as $6.48 to $122.04 a barrel, the highest since Aug. 4. Futures are down 17 percent from a record $147.27 reached on July 11. Prices are up 75 percent from a year ago.

Brent crude oil for October settlement rose $6.02, or 5.3 percent, to $120.38 a barrel on London's ICE Futures Europe exchange.

``The dollar has been the big driver of both the rally and the pullback,'' said Kevin Kerr, president of Kerr Trading International in Wilton, Connecticut.

The dollar fell to $1.4875 per euro, from $1.4747, and touched $1.4891, the weakest since Aug. 14. The U.S. currency has climbed versus the euro since touching an all-time low of $1.6038 on July 15.

Hard Assets ``The dollar's rise was too swift to have faith in,'' said John Kilduff, senior vice president of risk management at MF Global Inc. in New York. ``The resumption of the currency's fall has increased the appeal of hard assets.''

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 3.6 percent to 1503.858 today, the highest since Aug. 1.

Russia has defied calls by U.S. President George W. Bush and other Western leaders for an immediate withdrawal from Georgia since a cease-fire agreement last week ended five days of fighting.

The Baku-Supsa pipeline, which pumps more than 100,000 barrels of oil a day from Azerbaijan to the Georgian port of Supsa on the Black Sea coast, is still shut on security concerns following fighting between Georgian and Russian troops, Toby Odone, a London-based spokesman for BP, said today by telephone. Railway transportation to Georgia's Black Sea ports has also been suspended because of a damaged bridge.

The Baku-Tbilisi-Ceyhan pipeline, which transports oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, will be fully operational this week and tanker loading will resume next week, officials said. The pipeline has a capacity of 1 million barrels a day.
`Geopolitical Worries'

``I've been waiting for the gathering geopolitical worries to pump up the security premium,'' Kilduff said. ``The increase in tension with Russia will probably spell the end of cooperation on the Iran nuclear front.''

The U.S. and its European allies are trying to persuade Iran to halt its uranium enrichment program, saying it's a cover for developing nuclear weapons. Iran is the world's fourth-biggest oil producer.

``The hope was that Russia's fields would be developed and the barrels made available,'' Kerr said. ``If you are a multinational, you are already afraid of nationalization of your assets. Now, with the recent problems between Russia and its neighbors, nobody is going to invest there.''
TNK-BP, a 50-50 venture between BP Plc and a group of billionaires known collectively as AAR, is embroiled in a dispute over strategy and management. BP, which relies on the company for almost a quarter of its output, is struggling to maintain control amid pressure on foreign employees.

Gasoline Supplies U.S. gasoline supplies fell 6.2 million barrels last week, the U.S. Energy Department said in a report yesterday, more than double analysts' predictions. Crude-oil stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain since March 2001, the report showed. Stockpiles fell the previous week when Tropical Storm Edouard hit Texas.
Refineries operated at 85.7 percent of capacity in the week ended Aug. 15, down 0.2 percentage point from the week before and the lowest since the week ended May 2, the report showed.
``The market shrugged off the big crude build because they attributed it to delayed imports that couldn't arrive during the week of Edouard,'' McGillian said. ``More attention was paid to the drop in gasoline stocks and refinery runs. If refiners continue to operate at this level we won't be able to build product inventories.''

Gasoline for September delivery rose 13.69 cents, or 4.7 percent, to $3.0472 a gallon in New York.

Pump prices haven't increased since July 19, according to the AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, fell 1.5 cents to $3.702 a gallon, the AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17.

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Is the coming future oil supply depend on Russia? If let's say Saudi lost the world oil producer title with the weak oil proved reserves figure that put up by them.

Russia maybe the potential country that able to replace Saudi's world Top oil producer position.
Most scientist may will said, "the Russia is the world largest land in this earth got the most potential in conventional oil recovery."

Will Russia use Oil as a weapon in the future? If that really happen the world will have to suffer the ever crisis that never seen before. no one know what Russia thinking now and also the future.

How much you know about Russia Govt. and the country?

NOTE: The above facts are come without any proof to proof them but the facts can be found from it's fundamental figure that are come from the internet. I will try my best to find the fundamental figure and some facts to support for this article that I posted.

http://en.wikipedia.org/wiki/Russia

https://www.cia.gov/library/publications/the-world-factbook/geos/rs.html

Who is Boris Berezovsky?
http://en.wikipedia.org/wiki/Boris_Berezovsky

The show for Boris Berezovsky in "The Russian Godfathers (BBC) Ep 1" - The Fugitive.
There six parts of them, will take sometime for watching them, please enjoy watching.

http://www.youtube.com/watch?v=thy3C_rlUGc

http://www.youtube.com/watch?v=-_KB6mOCrSE

http://www.youtube.com/watch?v=cwPXpr1rr8Y

http://www.youtube.com/watch?v=sgftWsKABlc

http://www.youtube.com/watch?v=2e8irtXUkBs

http://www.youtube.com/watch?v=mPeMuBcG4ok

Please enjoy watching those videos they are filmed by BBC with the real facts story.

Hot money come to China in march 2008.

What is Hot money in economy term?

In the economics, hot money refers to funds which flow into a country to take advantage of a favourable interest rate, and therefore obtain higher returns. They influence the balance of payments and strengthen the exchange rate of the recipient country while weakening the currency of the country losing the money. These funds are held in currency markets by speculators as opposed to national banks or domestic investors. As such, they are highly volatile and will be shifted to another foreign exchange market when relative interest rates make this more profitable.

This kind of hot money fund can be may come from various way, it can be borrowing of huge fund from bank while the interest is very low for an example 0.5% prime lending rate.

Hot money is a major factor in capital flight and the ability of developing nations to finance their debt. As large sums of money can move very quickly to take advantage of small fluctuations in interest rates and currency values, countries which have difficulty raising money through the sale of long-term bonds are particularly susceptible to short-term interest rate pressure, particularly during periods of rapid inflation. These types of transactions were largely responsible for the currency crises in Mexico and Asia during the 1990s. See 1994 economic crisis in Mexico and East Asian financial crisis.

In part to reduce the influence of hot money on a nation’s economy, a few nations have minimum time requirements for investment. For example, Chile requires all foreign investments to be put in a one-year-locked account. Although this sort of control reduces investment in a country, it also makes its economy less susceptible to currency flight.

Hot Money is a form of fund that come in vey sudden with huge amount and is undetectable by government or market, it also goes very sudden and quickly.

alright below is the news that I retrieve from Chinadaily dot com.

-----------------------------------------

Foreign investments and international hedge funds, some of which are speculative hot money, are now elbowing into the China market. They're lured by the Chinese people's emerging consumption power, and expectations of the Chinese yuan appreciating higher.

The Ministry of Commerce said on Wednesday that China drew $18.13 billion in overseas investments in January and February, shooting 75.2 percent year-on-year.

Chinese Commerce Minister Chen Deming, who was promoted to the post late last year, said at a news conference in Beijing that the reason for the big increase of overseas capital in the first two months was due to the big increase in large-scale investing projects and a stronger yuan.

Chen's ministry, which oversees foreign trade and domestic consumption, said that during the first two months, investments from the European Union countries rose a whopping 109 percent, while investments from the United States increased 44 percent.

Wild expectations abroad that the yuan will continue to rise in value against major world currencies has led to money coming to China.

"When you bring US dollars to invest in China, you need to change it into the yuan. Naturally you would like your funds to enter China at an earlier date. Because, if you are late, the same amount of dollars will turn out to be less yuan bills," Chen told reporters.

China's foreign exchange administration, under the auspices of the People's Bank of China, the central bank, said in its latest report that the country's total foreign exchange reserve has reached nearly $1.59 trillion by the end of January, the world's largest.

China's currency, also called the renminbi, has been constantly rising in value. The People's Bank of China, set the medium parity trading price at 7.0970 against one US dollar on Thursday, a new record high. The yuan has gained 3 percent against the dollar in value since the beginning of 2008.

The sharp increase in the stock of hard currencies has triggered another round of concern on speculative hot money flowing into China, posing potential risks to China's financial system stability.

Wu Xiaoling, deputy head of the National People's Congress's Finance Committee, who was a former central banker, said that the American subprime crisis and the rising trend of the yuan's value will make world speculative funds come to the China market to seek profits.

When asked by reporters whether the hot money has arrived in the name of foreign direct investments, Minister Chen Deming said: "I can hardly tell their entering channels, and their volume. It belongs to the management of the foreign exchange administration."

Economist Suggests Quick Appreciation.

Liang Hong, economist at the Goldman Sachs, argued in a written article published by a major Chinese financial newspaper on Thursday that Chinese monetary authorities should consider quickening the appreciation pace of the yuan, to fight domestic inflation, which approached to 8.7 percent in February.

Others have suggested another "one-off" big rise of the value of the yuan, possibly 5 percent against the greenback by the central bank, to block more hot money from flooding in.

Liang said in her article that "allowing a marked rise in the yuan value is the most opportune policy instrument to curb inflation, as well as rectify the foreign trade imbalance".

She also argued for immediate interest rate hikes to thwart inflation, otherwise the Chinese economy faces an increasing risk of a hard-landing.

Singapore cuts growth forecast to 4%~5% for the 2008 GDP!

Singapore Prime Minister Lee said in his National Day message, that he has cut the 2008 GDP growth forecast to between 4 per cent and 5 per cent from an earlier estimate of between 4 per cent and 6 per cent.

Prime Minister Lee said the country faces a tough time in the year as it is beginning to feel the impact that affect by the US economy slowdown.

"For the whole year, Prime Minister Lee expect growth to be between 4 and 5 per cent," Prime Minister Lee said in his annual message, which was televised on the eve of Singapore’s 43rd birthday.

Prime Minister Lee said the Singapore economy had expanded by 4.5 per cent in the first six months of 2008.

"Singapore’s economy has so far been partly buffered, because singapore economy have been carried along by the vibrancy of the Asian region. But Asian economies are starting to feel the impact of America’s problems, and so are Singapore. Singapore must therefore prepare themselves for a bumpy year ahead," as Prime Minister Lee said.

Prime Minister Lee also acknowledged the problems Singaporeans are facing are due to global inflation. And while the government cannot prevent prices from going up as they are worldwide, it is trying to lighten the burden on Singaporeans through schemes like Workfare and ComCare.
"The government are doing the next best thing: to put in place effective relief measures, and provide the poor and the needy with the help they need. Singapore government must look beyond immediate problems like the cost of living, to understand what is happening in the world around us, discover new opportunities and tackle Singapore's longer term challenges," he said.
The annual message is seen as a prelude to the National Day Rally, where the Prime Minister goes into further detail on the long term challenges facing the country.

In the televised message on Friday, Prime Minister Lee highlighted three other points.
First, the upgrading of Singapore’s economy: to do so, there must be investment in its people. One way is through education. To that end, Singapore is building a fourth university which will take its first batch of students in 2011, well ahead of the original target of 2015. The publicly—funded university will have its campus in Changi.

The second point Prime Minister Lee highlighted was how to encourage Singaporeans to have more children to boost the country’s total fertility rate, which currently stands at only 1.29
Prime Minister Lee said: "The government can create an environment where Singaporeans see them (children) as a natural and important part of life, and where young couples get support in starting families. The government have looked at this comprehensively and will take further steps to address the practical problems which couples face."

Prime Minister Lee also spoke of adapting Singapore to be able to educate and engage what he called "cyber—citizens".

Prime Minister Lee said: "Singapore must adapt themselves to it, and use it to educate and engage their cyber—citizens. The government will evolve their policies and rules, Singapore economy and society, to take full advantage. The government will continue to open up their system progressively."

Prime Minister Lee hinted that the country will continue to open up space for political and societal debate, saying it is the "right way to go". But he also said that as the country continues to open up, its new generation of citizens need to understand that all freedoms come with responsibilities.

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Be prepare for the tough time to come, the impact I believe will last for two to three year down the road. there is an example to see is Japan's property bubble in 90s.

we in the world of globalisation, the impact of US economy slowdown will spread around the world.

Just hope that the credit crunch crisis will over soon and the economy will have a bull run again.

There is news list for reviewing:-

Italy economy contracts, bringing recession close.
http://www.channelnewsasia.com/stories/afp_world_business/view/366035/1/.html

OECD sees growth easing in top economies.
http://www.channelnewsasia.com/stories/afp_world_business/view/365915/1/.html

Japan's longest post-war economic recovery over.
"It is possible that the economy may already be in a recession,"
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/365596/1/.html

Singapore banks sound warning after mixed results.
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/365581/1/.html

Barclays says net profit slides 35% in first half. (Barclays is the 18th largest company in the world according to Forbes.)
http://www.channelnewsasia.com/stories/afp_world_business/view/365498/1/.html

AXA reports 32% profit slump on sub-prime damage. (The 15th largest company in the world by Fortune.)
http://www.channelnewsasia.com/stories/afp_world_business/view/365534/1/.html

Freddie Mac's rising losses bode ill for US housing crisis.
http://www.channelnewsasia.com/stories/afp_world_business/view/365456/1/.html

BNP Paribas second quarter profits down 34%
http://www.channelnewsasia.com/stories/afp_world_business/view/365221/1/.html

Societe Generale reports quarterly profit slump, but shares rally.
http://www.channelnewsasia.com/stories/afp_world_business/view/365008/1/.html

Greenspan warns US governments may have to bail out more banks.
http://www.channelnewsasia.com/stories/afp_world_business/view/364947/1/.html

Analysts say Asian economies yet to feel real impact of US subprime crisis.
http://www.channelnewsasia.com/stories/economicnews/view/364863/1/.html

POSSIBLE of Global SLOW DOWN in economy.

In the recent higher crude oil price hit at near US$139 per barrel during Friday NYMEX trading , also there is a number of anlaysts put up their target for this year end at US$150 per barrel.

What have done is been done, American President George W. Bush have asked Saudi King to produce more crude Oil output for second time but the King disagree to increase oil output, the reason for his disagree are market having enough oil supply, maybe he are refering the 1971 oil crisis that don't even had any oil supply to oil consumer countries. Some believe Saudi have reach it Oil peak. (What is oil Peak? please check " Hubbert peak theory ")

Some of the country Govt. have subsidize the cost of higher oil price by using govt.'s extra fund that are ended up exhaused their fund that the Govt. forced to remove subsidize so sudden and so large amount that might put the their economy at halt.

All this is cause by lack of putting more interest in alternative Enegry investment and Research in Govt. level in the previous time, why I said it in this way? look country like Brazil is a sucessful country that make full used of sugar cane to convert to Ethanol fuel for so many years. So this is the country that you can put more money in for investing in the coming future. Why Brazil used only sugar cane not other crops to do it? That's is because Sugar cane can have the best yield in getting higher percentage of alcohol that are useable in modern combustion engine that are unlike corn is a lousy crops for yielding Ethanol fuel, that's is why American can't push whole nation wide to use more crops yielded Ethanol fuel, also America is not a suitable place to crops sugar cane that unlike Brazil where the Sunlight, Temperature, water vapour and soil is most suitable for crops sugar cane, beside Brazil there is India the second suitable cropping sugar cane for Ethanol fuel. India might not be a great country to be invest why? because their country do have a bit of price control policy and they used more on crude oil. India Govt. not very good in managing matters, like setting a foreign company in India have to goes thru a number of Govt. sector for an apporval.

With the Global population is increasing there are things needed to be change for economy progress, might be a new economy evolution? example like modify genetic engineering crops... If the change not fast and aggressive would lead to a possible global down in economy, therefore a country wide expansion is not possible. What I really want to tell you is invest in Alternative Enegry is Not Guarantee if you really study in Depth you will food from your Reseach.

NOTE: World population is marching toward 7 billions in 2010. Exiting about 2.4 billions people upgraded to middle class to obtain a modern standard of living. (example China, India, Vietnam and others) What gonna to do with all this? population will drive the demand in everthings as human need to live with a modern standard of living.

Main side effect of price control.

I just got this news from net. Just read it then you will know what the out ome of the price control in those China big company......

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News: Chinese oil giants to get tax rebate amid price controls

China's two major state oil companies will get a tax rebate on gasoline and diesel imports to help offset losses blamed on price controls, the government said Wednesday.

China National Petroleum Corp. and China Petroleum & Chemical Corp., better known as Sinopec, will receive a refund on a 17 percent value-added tax on imports between April 1 and June 30, the Finance Ministry said on its Web site.

The government ordered the companies in November to step up imports to ease fuel shortages. CNPC and Sinopec blamed the shortages on controls that barred them from passing on record-high crude prices to consumers, leading to losses for their refining units and prompting them to cut back output.

The rebate "is aimed at reducing the refining losses of the oil companies and increasing refined oil products supply in the domestic market to prevent a shortage," the government newspaper China Daily said.

CNPC will receive a rebate on imports of 4.2 million barrels of gasoline and 8.5 million barrels of diesel, while Sinopec gets a rebate on a similar amount of gasoline and 12.7 million barrels of diesel, the Finance Ministry said.

Beijing froze retail gasoline and diesel prices in September as part of efforts to contain rising inflation. It raised prices by about 10 percent in November to curb surging demand but has rejected appeals by the oil companies for more increases.

Analysts had expected the oil companies to get government aid to offset refining losses. They received similar aid at the end of 2006.

Sinopec, Asia's biggest refiner by volume, said this month its refining unit lost 13.7 billion yuan ($2 billion) in the latest quarter due to the price freeze.

Sinopec said it received a 12.3 billion yuan ($1.75 billion) government subsidy to compensate for the losses.

CNPC's publicly traded arm, PetroChina Ltd., said in March that its refining unit lost 20.1 billion yuan ($2.9 billion) in the latest quarter due to the price freeze. The company has not said whether it received a government subsidy.

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So far there is only two big oil company that have their taxes offset / Taxes refund. Others China company are able to withstand this type of price freeze by govt.?

This article tells when the China govt. freeze the price of those products that those company produced, it will lead a volume cut back in those company output of products, if things goes bad, the company might may fall into bankrupt and that would be marked The End.

The Lesson to be learn from Japan.

Lesson to learn from Japan, as Japan want to share it to US, this is the story below:-

The United States should use public funds to shore up its financial system and calm recent market turmoil, Japan's financial services minister said in an interview published Monday. "It is essential (for the US) to understand that given Japan's lesson, public fund injection (into the financial sector) is unavoidable," Yoshimi Watanabe told the Financial Times.

He said Japan was ready to share its experience with the United States at the Group of Seven meetings of finance ministers, who are due to gather in Washington next month. "We are prepared to take coordinated action if necessary," he said. "We must recognise that the current crisis is not as straightforward as past dollar crises." The same newspaper reported over the weekend that US and European central banks were considering buying mortgage-backed securities to resolve the credit crisis triggered by a wave of US home loan defaults.

The problems have pushed the dollar down to a 12-year low against the yen and to the lowest-ever levels against the euro, causing concern in Japan and the eurozone about the impact on exports. Japan suffered a deep and prolonged banking crisis in the 1990s after the country's asset bubble burst, leading to the failure of a number of high-profile financial institutions. The Japanese government injected capital to the banking sector in an effort to shore up markets and struggling financial institutions, some of which were nationalised to prevent their collapse. The problems came amid Japan's "lost decade" of stagnant growth and on-off recession in the 1990s, from which the country is still recovering.

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This is the same kind of matter that happen in Japan's property bubble. If the crisis is very serious it may have a serverity deflation in all asset in US just like Japan that time. Is not hard to find some information that Japan had the property bubble that cause a great deflation.

is there a advantage for currencies to pegged with weak dollar?

This is the news that I get from internet that said:-

Abundant liquidity, triggered by sharply higher oil revenues, and the effect of currencies pegged to a weakening dollar are fuelling inflation in the Gulf region, economists say. And the situation is so serious that Gulf business leaders will meet in Bahrain on Monday to get advice from the International Monetary Fund (IMF) and the European Union on how to tackle the problem. "The growth of money supply in Gulf countries has in some cases exceeded 20 percent," leading Bahraini economist Ahmed al-Yusha told AFP this week. "This reflects in (higher) demand, and consequently affects prices." Gulf Cooperation Council members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have been enjoying a windfall of oil revenues on the back of record crude prices. But the surge in revenues, which have injected GCC economies with a shot of energy reflected in impressive economic growth, has also left countries awash in cash.

The IMF expects overall GCC inflation to rise to six percent in 2008, with consumer prices in some member states rising at much higher rates. The UAE and Qatar registered 9.3 percent and 11.8 percent, respectively, in 2006. Most final inflation figures for 2007 have not been released, but inflation is estimated to have hit 11 percent in the UAE and 12 percent in Qatar. Saudi Arabia, which traditionally had a fairly low inflation rate, reported a 4.1 percent rise in its consumer price index in 2007. A key element in higher prices is the sharply higher cost of housing. Even though the region is experiencing a frenzy of construction, there is still a bottleneck in supply. The increase in the cost of goods that are imported from non-dollar zones is also blamed. A December study by the Federation of GCC Chambers blamed inflation mainly on the huge money supply and the peg of all GCC currencies - except the Kuwaiti dinar - to the deteriorating dollar. "Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture. The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China." "The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 percent increase," the study said. The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates. On Tuesday, the Federal Reserve slashed key interest rates three-quarters of a point, lowering the federal funds rate to 2.25 percent, and most GCC central banks followed suit with cuts of their own. Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.

"We forecast a greater than 60 percent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency de-pegging or revaluation. It suggested however that the UAE or Qatar might lead the way, while saying it might be done by the GCC as a whole. Meanwhile, Yusha suggested that the link to the dollar should be revisited without necessarily de-pegging the Gulf currencies, saying this could be done through revaluation.

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So do you think is a good ideal to invest in weak dollar? Better think twice first before you put your money in weak dollar. Do more research the fundamental of dollar and you will know why.

As for me what I think Dollar got a hard time to climb back to pre-credit crunch level. This is due to high level of bad debt in US, unless US come out a new standard for their currency policy that are not Dollar policy.

Does currency hike curb higher oil price?

Oil price for NYMEX is future price that why is at least one month advance contract.

Nov. Oil price is USD$ 90/barrel

Mar. Oil price is USD$105/barrel

Base on the currency Chart for one SG Dollar that exchange in US Dollar.
We get the Oct. exchange rate at 0.68 for buying Nov. Oil contract at NYMEX.

and get Feb. exchange rate at 0.705 for buying Mar. Oil contract at NYMEX.

Working on Nov. Oil :-

Using SG Dollar to buy Nov. Oil, therefore 1/US$0.68 = SG$1.47058

SG$1.47058 X US$90/Barrel = SG$132.35220

Working on Mar. Oil :-
Using SG Dollar to buy Mar. Oil, therefore 1/US$0.705=SG$1.41843

SG$1.41843 X US$105/Barrel = SG$148.93515

The difference is 148.93515 - 132.35220 = 16.58295

that is for 11.1% increase currency hike for SG Dollar to buy the oil at NYMEX.

If let's say SG Currency fixed at Oct. exchange rate to buy Mar. Oil at NYMEX.

(Mean that SG Dollar don't get any hike)

Working:-

SG$1.47058 X US$105/Barrel = SG$154.41090

The difference is 154.41090 - 132.35220 = 22.05870

This is very expensive to fixed the currency for buying the growing high oil price.

This is the Pro for currency hike to curbing higher oil price but is bad for exporting goods to other trading country, because high SG Dollar other country people will have to pay more to buy SG Goods.

I believe that oil price will goes down in the middle term this is due to most country adjust their economy growth to lower and the winter in cold country is goes to ended soon.

New York bridge is falling down! - US Dollar is falling..

By looking at this chart you will know US Dollar is falling and Japanese Yen is raising.
This will making more inflation to the world economy just because of cheap US Dollar in the near future, just don't forget those commodity product are priced in US$ and the buyers are from the country from the whole world because their currency is going up and up..they have a lot of saving to buy those commodity.

It look like Japan may head a recession, maybe to Japanese recession is not a big deal because they have went thru a very long recession since that burst of property bubble (that is 1989 time...) I can't image that one US Dollar can only buy 97 Japanese Yen (Forex Exchange rate on 17/03/2008) that can tell you Japanese goods are expensive. To those who are able to go to Japan for a tour that they are well loaded with cash. most of the people will start to thinking of buying US goods when US Dollar is falling to the lowest like 1.20 or 1.15?...who will know how low the Dollar will goes? can't tell.

There is a lot used of US Dollar in many products, like Oil, Gold, commodity, most of the country in the whole world their saving (reserves) are in US Dollars that is a lot..that are talking about 1/8 trillion or 1/2 trillions..like China is ready having more than a Trillion in their reserves.
NOTE: US Dollar is a "reserves currency" that are commonly used in the world. There is noway for a Top billionair to manipulate US Dollar movement because it too huge for manipulate you are talking about a country level in controling the currecny that needed a few billions..unless a few central banks make-up together for invention the Forex market then the US Dollar will follow as their wish. if not they just don't like US Dollar like what some OPEC countries going to do about the US Dollar in the future (recent news only)...

Following day may will be happening because most of the US Banks, lenders and brokers going to report their earning in this week. so there will be a market meltdown again. This type of market only headed for selling only, good for short seller. I feel that 2nd Quarter of this year maybe is the bottom if US economy can really avoid the recession if not,...all the way down. that tell me something like Japan's property bubble during 1990's. now you can know it about how bad, just to get you the feel. What the US Fed can do is printing more and more US Dollar notes that what American said "Paper Dollar"....print more US Dollar note will cause the falling in currency Value and making other Foreign currency to rising...

American alway said "In God We Trust" let the God make the faith.

Will Oil price continue to rise?

Future oil price believe to stay at $100 and above but in the mean time there should be a correction in oil price in the short term is because most of the countries are try hard to let their economy to slow down for control the recent high inflation, also the weather in cold country will went into warm weather soon.

If the Oil price still staying high, is would tell they can afford at current price with the amount of oil that they want, then after if they can't afford the Oil price would fall. This would have to wait until most of them exhausted in their fund for purchased Oil.

We can never know when and where in the world oil well is going to run at peak rate that so call peak oil in oil and gas industry.

For your information an average oil well will run completed dry that will be about 45 years for a average size of oil well we are talking about. but not for Saudi's giant Ghawar field, the world's largest oil field, with estimated remaining reserves of 70 billion barrels. That field is the largest and have not yet reach it oil peak production, also that is couldn't know it that is when.

Creative Technology could be bullish in the future.

The stock price have reach high again, it had cut thru 200 day moving average. We can have the time to watch it if the company business is good, the price maybe will break $10 level for a test. buying Creative Technology have the advantage that is they do have good dividend paid out that able to keep some income in your pocket.

Time for buying in 2008 maybe fall within March to April when I guess the bottom will be there as what the stock analysts said this year will be a S shape growth for economy and end of the year maybe had a rally, that should be able to form S shape growth chart.

US will not fall into recession but will had slow growth.

US Treasury Secretary Henry Paulson said in the recent G7 meeting that US will not fall into Recession but will have a slow growth. The aim for the G7 meeting is to be more open in the sub prime figure bad debt write off and other important information as well. This will help each and other counties in coping with the credit crunch crisis in Finanical Market that may ensure the economy is moving and is not falling into recession. So this meeting is expected to keep the economy on track and crub inflation for this year.

For the coming future the Fed will be easy then before in performing his job as a lot of the thing is fall within his expectation.

OPEC will may ditch US Dollar.

As you can read from the TELETEXT the future of the US Dollar is going to be a bearish trend. I don't have any figure on how much US printed the Dollar notes in this world, but there is economist that ever mention US itself only hold 20% and the rest of the countries holding 80% of the US Dollars if they are all added together it will be roughly around a Tens of Trillions of US Dollars, I just guess only... (There is no document can proof how much they have printed.)

Will there a trend of untie the Dollar with their products? Just like what the OPEC is going to do.

This is a unstoppable trend for those people to do as what OPEC does, because they also don't want their value to get weaker. So if this trend get stronger, people might avoid Dollar more often and the Dollar will be getting even weaker.

Most of the Market tie with Dollar, example Oil (US$/barrel), gold (US$/Kg), metals and other more commodities. Why US want to do in this way, this is because the more consumer want the commodity they have to sell their currency to buy Dollar for the commodity that they wanted to buy. This will be talk in Foreign Exchange (Forex), example 1 US Dollar buy 120 Japanese Yen that is last time rate, now the rate is 1 US Dollar buy 107 Japanese Yen, this mean the US Dollar is getting weaker and the Japanese Yen is getting stronger.

Weaker currency will have their advantage and disadvantage. The Advantage is the exporting trade will get strong as the goods for US is getting cheaper so consumer from other countries buy more. For the Disadvantage is weaker dollar cannot curb the high inflation. This all will be talk in economic study in degree course.

If US Dollar want to be strong again, US Govt. will have to put more productivity in their high end / high value export, cut down the most of their Govt. spending, regain the strong Dollar diplomat by asking other countries currency to tie with Dollar for not to sell Dollar (also by Exchange other things). once US govt. have the more money they will have to buy back their debts fast to keep their Dollar strong.

This Year US GDP is expected below 2%, many of the economist is expected to see this to be happen even the US economy will no fall into recession as what the US President and Fed expected for the 2008 US economy.

All this will depend on the new US Govt. to defence for their Strong Dollar policy. Question now is Who will be the next US Govt....?

Reference:-

United States public debt

http://en.wikipedia.org/wiki/United_States_public_debt

U.S. NATIONAL DEBT CLOCK -News (you can keep track on this link for the news.)
http://www.brillig.com/debt_clock/

NOTE: This Article is just for a prediction only, the trend of the currency itself will be change by time to time when the Central Bank intervation the Markets, Monetary Policy and others more.

Recent Major Market melt down.

World's Largest Bond Insurers Collapsing!

Bush's $145 billion stimulus package is for short term relief.

The $145 billion stimulus package cannot help US to pull out of subprime mortgage financial crisis, this stimulus help US and other countries to escape from recession risk but slow growth is unavoidable in the coming future. it will take a long time for a fully recovery stage as right now US Govt. are in huge debts and they just can't simply offer to print more US Dollar notes. (9 trillions plus of bad debts) Why US able to build up so huge debt? They know the way to refinancial by using their huge debts that cause so huge. (They know how to borrow but they don't know how to pay back that huge debts, on one able to settle this problem either their govt. and their Fed too - This will build up a more huge risk in the coming future US if the huge debts is not going to reduce.)

From 16th Jan 2008 and 17th Jan 2008 market movement that tell me most of the countries are depend on US for their major trade partner in that mean once US is falling the whole trade partner to US is falling too.

Anyway Bush take this action that show that he are a responsibility US president even his term is going to be ended soon and recession may avoided in short term (one year?). Compare EU (European Union) and US their action taken in their package is difference, in last year's August, September and Octcber EU have injected more than 250 billions of money into their banking system for the relief. I guess in the coming future's economic superpower maybe not going to be US again that holding more than one century title (next is who? China?).

China maybe want to slow down their overheat economy in the coming future but for 5 year down the road China is still good to be invested in, as the recent UK is looking for China to increase the trade. India is a good choice to be invested in as EU is increasing their investment recently. To have a good investment choice read more newspaper and internet news to know more future market movement.

Referance:-
-Rank Order of countries Debt
-Rank Order of countries Public debt
-Rank Order of countries GDP (purchasing power parity)
-US Debt news

STI drop near to 3000 level.

Now is only begining of the year 2008 and is only the first month of the year 2008. We can see this bad market sell down at this time, this maybe mean we can see even bad than this in the coming future. as What I know those banks bad loan write off will last until mid of 2008 or Q308 the later, after that may will have a turning point in the market.

Now we have to watch Fed Chairman or US president are they able to resolve?

US is a country that alway printing Dollar notes this is one of the way to resolve or US govt. selling their asset to rich nation, selling Military Arm to some money to kill this problem that is second way of doing in US, this is what I know how they rise their money and there is a few method more...

Singapore analysts target STI will go 4000 level at this year end 2008 and 3000 is the expected low for 2008 but right now we already see STI at near 3000 today. no sure how low STI will go? We shall watch.

Another place to put your money at this time.

The US sub prime causing a credit crunch that force the Banks to sell their stock in the market, this may last for 6 month to 1 year time and is depend on the US govt. to take a very effective action to make their economic to go for a growth instead of recession.

I saw this DBS Enhanced income is growing day by day, is a good place to your money in for 6 month to 1 year time. Why 6 month to 1 year time? those bank's write off may will last until 6 month to 1 year time, as the write off is reduce or gone the market may start to have a turning point by that time the market may have a bull rally. This is depend on many other facts that add in to have a bull rally.

This is another place to think of. The DBS Enhanced Income.

Streettracks Gold is on the rise.

The price for 10 Jan. 2008 is at the all time high, it break the 52 weeks high, this maybe tell you that major market cashflow is going to Gold. Gold is a safer place for the cash to place and future Gold price may expected more even higher than present price.

Market now is mostly seller more then buyer and world market are lack of cashflow as this is the effect of credit crunch that causes. Major bank like citibank, Goldman and others will keep selling their share for keeping the cash for running their core business.

On the other side if the Bank stock price keep on down, may can watchout for their bottom and grab it if you can, anyway bank is one to more the country economy by offer loan to those businesses.

Most of the market analysts expected to see Gold price at US$1000, I just keep to see the price to hit this price US$1000 level.

Next we have to watch what can US Govt. do to help their economy in the year of 2008, as Bush expected 2008 will have a growth rather than slow down.

Will US fall into deflation like Japan's 1990 bubble? I shall watch it...

Reccession Odds- Greenspan 50%, Merrill 100%

In an interview this morning with NPR, former Fed Chairman Alan Greenspan said that the odds of a recession are "clearly rising" and are now about 50%.
click for NPR radio broadcastEarlier on Thursday, CNBC reported that Greenspan raised his view of chances of a U.S. recession to 50%, from 30%:

"Greenspan said it's too soon to say whether a recession is coming, "but the odds are clearly rising."
"We're getting close to stall speed" in economic growth, he said. "And we are far more vulnerable at levels where growth is so slow than we would be otherwise. Indeed ... somebody who has an immune system which is not working very well is subject to all sorts of diseases, and the economy at this level of growth is subject to all sorts of potential shocks."
~~~
The former Fed chair is downright chipper compared with some of the data crunchers over at Merrill Lynch: They look at the simple formula involving the Yield Curve and Corporate Spreads. This correctly forecast the 2001 and 1990-91 recessions.
Based on Merrill's read of these two elements -- and I don't know precisely what they do to generate this chart based on those factors -- they have a much more distraught view of the economy than the Maestro:>100% Chance of Showers

Chart courtesy of Merrill Lynch, Gartman Letter
>
If any one can tell me how this chart gets assembled and massaged, it would be greatly appreciated . . .
>
Sources:Greenspan: Recession Odds 'Clearly Rising'NPR, Morning Edition, December 14, 2007http://www.npr.org/templates/story/story.php?storyId=17210282
Merrill Lynch Global Research
Greenspan Says Recession Odds Are `Clearly Rising' Vivien Lou ChenBloomberg, Dec. 14 2007http://www.bloomberg.com/apps/news?pid=20601087&sid=aGyhKOCi4xdU&

Economists say 2008 may will be a year to forget.

Analysts at American Economic Association now see recession as a given

NEW ORLEANS -- Gathered in this city struggling to regain its footing after Hurricane Katrina, a group of leading economists said the U.S. is getting hit by another damaging storm: the global credit crunch.

Many analysts gathered at the American Economic Association's two-day annual meeting spoke of a recession as almost a given but differed over how severe it will be.
"The recession is likely to be a serious one," said Dean Baker, co-director of the Center for Economic and Policy Research.

He estimated losses in prime mortgages will be two to three times the $160-$200 billion hit seen in the subprime sector. This, he said, will lead to large losses at banks and difficulty for Fannie Mae and Freddie Mac.

University of Chicago professor of finance and former chief economist at the International Monetary Fund, Raghuram Rajan, said questions in the media over whether the U.S. economy will fall into recession are really only about semantics.

"We are going to have very low growth in the first two quarters of the year. Whether it is negative or zero, it is going to feel like the same thing," Rajan said.
But he added that it remains an "open question" whether an even more serious slowdown develops in the second half of the year.

"One of the big issues is the extent to which the credit crunch initiated by the subprime crisis starts spreading and how much does it affect smaller corporations and poorly rated corporations," he said. "Do we have a bank credit crunch which starts impacting on retail credit for small and medium enterprises? There is some uncertainty."

Alistair Milne, a professor at the City University of London's Cass Business School, told MarketWatch he's expecting "a really weak year," but added that "it is too early to say how deep the crisis is going to get."

"There has been a substantial credit expansion in many areas -- not just subprime -- over the past five to 10 years," he said. But now, with credit now under pressure, he sees the risk of a vicious cycle developing where the decline in bank lending pushes down growth, which further reduces bank lending.

"If there is a severe enough downturn, it will make all the credit problems worse," he said, adding that the crisis would also hit credit card debt and leverages buyout loans.
But Milne also pointed to a bright spot, namely sovereign wealth funds pouring money into troubled banks, which shores up capital and could help prevent an extreme economic downturn.
He also said that the Federal Reserve is moving in the right direction and that the European Central Bank is likely to follow with rate cuts within six months, adding that a negative economic shock will take the pressure off inflation eventually.

Still, he said, the economy won't likely get back on track until 2010 and will require more capital from overseas.

Can the government help?

Several economists at the conference said attention needs to turn to a possible government stimulus package to take the punch out of the downturn.

The likely magnitude of coming economic difficulties makes it important for Congress to take action on the fiscal side, complimenting easing by the Federal Reserve, they said.

President Bush has also indicated support for crafting a stimulus package to help the economy.
But many analysts argued that the government may be powerless to prevent a downturn.
"My sense is that even though the government wants to be seen as reactive, there is not that much they can do at this point," Rajan said. "Monetary policy has lags of a year. It can't revive lending that isn't taking place because banks have capital constraints."

Baker said he supports the idea of a stimulus package but added that it has to be big -- over $100 billion -- and it has to be fast.

Princeton economist and New York Times columnist Paul Krugman was skeptical that Congress would put aside partisan politics over tax policy in order to pass such measures.
"One side will not accept tax cuts for rich people, and the other side won't take fiscal action without tax cuts for the rich," he said.

The news are from MarketWatch.

There maybe stand a chance for recession...

This is cause by US economy slow down that may hurt other country like Japan. there is news on Goldman Sach that comment Japan economy will stand a 50% chance of recession. Here is the news:-

Date: 10 Jan. 2008.
Goldman Sachs Group cut its economic growth estimate for Japan and said there's a 50 percent chance of a recession in the world's second-largest economy. ``The probability of a recession in Japan has risen to the danger level,'' Tetsufumi Yamakawa, chief Japan economist at Goldman,
said in a report to clients today. ``We project weaker- thanexpected growth in Japan.'' The nation's economy will continue to slow ``for the time being,'' Bank of Japan Deputy Governor Toshiro Muto said today. The housing slump in the U.S., which Goldman yesterday said may
already be in recession, could prompt overseas investors to sell real estate holdings in Japan, Credit Suisse Group said today.

Yamakawa cut his 2008 growth estimate to 1 percent from 1.2 percent, citing slower demand from emerging markets. Stocks including Mitsubishi Estate Co. declined today after the Credit Suisse report. Japan's leading index, a gauge of growth in the next three to six months, stalled in November, a report today showed.
``Goldman's report highlighting the increasing chances of a recession, as well as the leading index's poor showing, indicates the outlook for external and internal demand is nonexistent,'' said Hiroaki Osakabe, who helps oversee $365 million at Chiba-Gin Asset Management Co. in Tokyo.

Sluggish spending by consumers has left Japan more dependant on overseas markets, just as cooling U.S. demand threatens to spread to Asia, where Japan sells half its exports.

Slashing Interest Rates.
Goldman yesterday said slower growth in the world's largest- economy may force the U.S. Federal Reserve to slash interest rates. It predicts the Fed to cut its benchmark rate to 2.5 percent by the third quarter, after saying in November it would reduce the key rate, currently at 4.25 percent, to 3 percent by the middle of 2008.

Earnings gains among Standard & Poor's 500 Index members may have averaged 8.1 percent from a year earlier, the slowest growth in six years, according to data compiled by Bloomberg.
The Bank of Japan probably won't be able to raise its key interest rate, the lowest among industrialized nations, this year because of the recession risk, Yamakawa said. The cycle of rising corporate profits feeding into wages and consumer spending is losing momentum and the bank will conduct policy ``with discretion,'' Muto said in a speech in Sapporo, northern Japan.

`Increasingly Cautious'
``Muto is signaling the Bank of Japan is becoming increasingly cautious about the downside risks for the economy,'' said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. ``The central bank is already veering from its path of raising rates.''

And there is news that comment on Alan Greenspan:-

Date: 10 Jan. 2008.
The next bubble to deflate may be Alan Greenspan's reputation. Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under
attack from critics ranging from the New York Times to economists at the American Enterprise Institute for his handling of the 2000-2005 housing boom. The former Fed chairman has taken to the media to defend himself, writing in the Wall Street Journal and appearing on network television.

``He's had a bubble reputation that derived from the growth of U.S. household wealth,'' said Edward Chancellor, author of ``Devil Take the Hindmost: A History of Financial Speculation.'' ``As that goes down, his standing as a superstar will suffer.''
At stake is not only Greenspan's legacy but also the future of policies he espoused during 18-1/2 years atop the central bank. Critics blame his aversion to regulation and reluctance to use interest rates to puncture asset bubbles for the boom in house prices and mortgage lending that has since gone bust, threatening to throw the economy into recession.

In an interview, Greenspan said such criticism ignores limits on what regulation and monetary policy can achieve.


Fed Chairman Ben S. Bernanke has already moved away from the laissez-faire approach of his
predecessor by proposing new restrictions on subprime mortgages.

High Marks
Academics, including Princeton University professor and former Fed Vice Chairman Alan Blinder, Fed historian and Carnegie Mellon University economist Allan Meltzer and Stephen Cecchetti, a former Fed official now at Brandeis University, generally give Greenspan high marks for his performance as chairman. During his tenure, the economy weathered two recessions, each lasting less than a year, and enjoyed its longest expansion ever.

Some of the earlier enthusiasm for Greenspan's tenure has been tempered by the performance of the economy, particularly the housing market, since he left. Blinder, who wrote in a 2005 paper that Greenspan might be the greatest central banker, now hedges on whether that assessment still stands.

Greenspan still merits a ``summa cum laude'' for his conduct of monetary policy, he said. The 81-year old former Fed chief falls short of that lofty grade, though, for his oversight of the banking industry, Blinder said.

`Slow on the Draw'
``The Fed and the other regulatory agencies were slow on the draw,'' Blinder said. ``They could have made this debacle substantially smaller, not by better monetary policy, but by better regulatory and supervisory policy.''

Desmond Lachman, a former International Monetary Fund official now at the American Enterprise Institute in Washington, blames Greenspan's libertarian bent for his failure to curb lending abuses:

``That philosophy got us into a lot of trouble.''
Greenspan said in the interview that, while the Fed's bank examiners were hard at work during the mortgage-lending boom, ``we have to be realistic about what regulators can and cannot do.''
``It is extremely rare to uncover fraud other than through whistle-blowers,'' he said. ``You don't get at it through internal audits, you don't get it through outside audits and you certainly don't get it through bank examinations.''


Rates Too Low
Some economists, including Blinder, also fault Greenspan for fostering the housing bubble by keeping interest rates too low for too long. The Fed cut its benchmark rate to a 45-year low of 1 percent in June 2003, held it there for a year, then raised it only gradually, in quarter-percentage-point increments.

``For that episode of monetary policy, I would probably give him a B, where my overall grade is A or Aplus,'' Blinder said.

A simulation by Stanford University professor John Taylor suggested that much of the housing boom could have been avoided if the Fed hadn't cut rates so deeply and had raised them back up more quickly.

Meltzer said that while Greenspan was a ``great Fed chairman,'' he erred in ignoring warnings about the risks of keeping rates low.

``I think he lets himself off much too easy,'' Meltzer said, adding that he told Greenspan at the time that he was exaggerating the danger of deflation and thus making a mistake in cutting interest rates to 1 percent.

Rethinking Approach

Allen Sinai, chief economist at Decision Economics Inc. in New York, said the Fed's experience is leading other central banks to rethink their approach to asset bubbles.

``There is a growing body of thinking in central banking that one should not let these bubbles run and allow them to burst,'' he said. ``They should lean against them.''
Greenspan disagrees with such a strategy. ``There is no evidence that it works other than in computer models,'' the former Fed chief said. He noted that the stock market merely leveled off when the Fed doubled interest rates to 6 percent in 1994-95, then resumed its climb.
Greenspan maintained that the housing bubble was inflated not by the Fed's monetary policy but by a global savings glut that held down long-term interest rates worldwide.
As evidence, he pointed out that the U.S. wasn't alone in experiencing a housing boom in the early 2000s. The IMF said in its World Economic Outlook last October that other nations, including Britain, Spain and Australia, experienced bigger house price run-ups than the U.S.
Cecchetti, professor of international economics at Brandeis' International Business School, said it's natural that Greenspan's legacy is being reassessed.

``With distance, you get perspective,'' he said. ``We'll get a much more balanced view of the
Greenspan legacy as the years go by.''

The above two news are from Bloomberg.

Gold can be look at it in 2008.

2008 outlook equity in singapore market will still affected in first half of 2008 by US's SubPrime crisis chain reaction. Therefore Gold can be looking for it.





Is there a recession in 2008?

Good stock to be introduce - FerroChina.

The stock that I going to introduce is FerroChina, this is not a China company, why is it so?
Because they are a group of people that are expert in Galvanized steel making that are from Taiwan. They are using a fairly cheaper method of manfacturing and enviromental friendly way to produce masses tonnes of Galvanized steel, They claim that they are the leading Galvanized steel maker in China. Galvanized steel is very potential in China, because they are cheaper to be purchase by common China people to used the Galvanized steel for building of their house, this is the recent China housing building method as they use, China have phase out the old method of building their house. And in the coming future China will have many major big events that needed Galvanized steel as the structure of building, like Beijing 2008 Olympic Games and other many..etc.

This is the part of the story of FerroChina started in China:-
In Oct.2003, the company's Board of Directors decided to increase the total investment by US$22,500,000 to bring in another hot-dip galvanizing line with the design annual production capacity of 400,000 tonnes (i.e. Stage2 of the Project). Total increased investment capital in phase Ⅲ is USD 60.2 million, the design annual production capacity of phase Ⅲ is 400,000 tonnes. And increased registered capital is USD 30.88million.The land square is 150 mu(i.e. 100050 m2 ).

Now Changshu Xingdao Advanced Building-Material Co., Ltd is fully owned by Ferrochina Limited, which is incorporated in Bermuda .

With the aim to obtaining the greatest value for all involved parties by means of strengthening economic co-operation, technical communication guided by the win-win strategy ,the company will frankly cooperate with its partners, suppliers and customers and continuously upgrade the quality of the products through application of advanced foreign equipments and technologies. Meanwhile the company will give more attention to protect the environment. More energy will be spent on exploiting the foreign advanced building-material markets and satisfying the needs of our various customers. All employees of the company will sincerely act on the policy of team sprit, continuous improvement, innovation and value creation and continuously pursue the state of super excellence. The company will make great effort to promote the local economy through hard working. The company will also actively take part in and promote the development of local society's culture, education, medical care system and social welfare.

They are from the FerrorChina website:-
The History http://www.ferro-china.com/history.asp
http://www.xing-dao.com/en/lsyg.asp
http://www.xing-dao.com/en/scsb.asp

Investor http://www.ferro-china.com/investor.asp

Inside trading http://www.ferro-china.com/investor.asp

The FerroChina Video Steaming. (This will make you more confident in FerroChina)
Corporate Video Click here to download

IPO Launch Video Presentation http://ss1.shareinvestor.com/ir/ferrochina/ipo_launch/index.htm

1HFY2005 Results Presentation http://ss1.shareinvestor.com/ir/ferrochina/1h05/index.htm

1HFY2006 Results Presentation http://ss1.shareinvestor.com/ir/ferrochina/1hfy2006/Web/Script/index_IE.htm

newspress http://www.listedcompany.com/ir/ferrochina/newsroom/newsroom.cgi?

Companies Earning Announcement Date.

The coming future companies earning announcement may will put pressure on STI index to push even high than present 3600, something like 3700 to 3800 or even higher may expected.

So watchout for those date, it maybe the one of your portfolio stock that coming to earning announcement.

if the economy is going for a bad performanc the first to see is those company will report bad earning and they will be putting up a profit warning. we shall see how many of them are on the earning track.

Good Luck to you.

In God We Trust?

AP Oil at it's historical high.

Stock price of the AP Oil had rised that show the investor is confident on the future growth, I believe the future growth is potential as the CEO and the management know how to manage business and the company that will keep AP Oil on the growing path.

The above chart is the all year chart for AP Oil, it had aready hit $0.40 level that break the historical high. if they manage well for 2007 the stock price maybe see beyond $0.40 that give investor a confident on their business and their management.

I myself had bought at 0.14 @ 56000 shares, if look at present price it will have a profit of 65%

= [(0.40 -0.14) /0.40 ] X 100

Is nice to see that kind of result if you can spot the potential of the company that able to making money. stock investment needed to do homework, it's not a gamble game, because I'm not a stock trader but I'm a value and growth investor. understand their business so that you are able to profit from it.

Stock List Earning per shares 04/07/2007.

This is my personal potential stock list to watch out for:-
The list of value are the estimated earning per shares for this year 2007, the actual value of EPS maybe hit low than the listed here.

Stock name ------EPS (estimated)
ASIA Water ------- 0.33
AMTEK ---------- 0.09
Beauty China ----- 0.09
Best World ------- 0.10
China Essence ---- 0.46
China Fish -------- 0.13
China Milk ------- 0.52
China Petrotech -- 0.05
DeLong ---------- 0.36
FerrorChina ----- 1.14 (Rmb)
Global Testing --- 0.02
HG Metal ------- 0.07
Ho Bee ---------- 0.28
Innovalues ------ 0.06
KS Enegry ------ 0.24
LongCheer ------ 0.12
People Food ----- 0.78
TPV ------------- 0.10
UTAC ----------- 0.09
YHI ------------- 0.05

NOTE: Buy at your own risk! If you buying base on the above listed the risk is in your own hand and you are the ownership!

Rising oil prices test consumer.

if the high oil price stay up for quite sometime then there will have inflation occur. if there high oil price can be avoid that is a good things to see.

Will Hi-P recover this year?

Recently Suisse have upgraded HI-P International Ltd from "underperform"to "outperform"
with a target of $0.93

On the other side HI-P International Ltd hope that earnings will recover this year.

Hi-P International Ltd net profit for last year slumped 35.5% to S$57 millions as margins were
pressured by the higher material content of its product mix, higher staff costs
and excess capacity. The higher material is a main concern on higher crude oil price.

Plastic is a material that made by crude oil, tool steel that they used in making tools for plastic injection mould and others that needed steel material that are used the higher steel price.

The process of making plastic injection mould required some EDM process to form the complex profile of the plastic part required. most common used of electrode in EDM are copper which the price of copper have goes up a lot. Copper are in the demand that cause by lack of supply, mined copper supply are way behind the copper demand that are one of the reason that cause higher in price. The copper mine are getting hard to find in the world, supplying of copper are believe to be remain tight in the coming years if there is no solution on increasing the supply. recycle of copper does help to cool down the demand by a bit but it will not last long as China and india are continous to growing and developing.

if the crude oil price and copper price can slight down by increase the supply HI-P International Ltd may benefit from it. Govt. Tax cut may help HI-P International Ltd a little but will not last long in the long term business. They may have to change their overall business strategy to place themselve in a most benefit way. Will the increase of GST help HI-P International Ltd in their business?

So what can HI-P International Ltd promise their investors that the stock price will goes up? hoping to see a recover? Think about it first...

Company web site: http://www.hi-p.com

AUDITORS

Ernst & Young

BACKGROUND

The Company was incorporated in Singapore on 26 December 1980 under the name of Hi-P Tool & Die Pte Ltd. It changed the name to Hi-P Singapore Pte Ltd on 5 February 1997 and subsequently to Hi-P International Pte Ltd on 12 October 2000. It adopts its current name on 10 October 2003.Hi-P is an integrated contract manufacturing services provider specialising in precision plastic injection molding, mold design and fabrication, assembly, surface finishing and precision metal stamping. It provides turnkey contract manufacturing services to its customers in the consumer electronics & electrical industry. Its customers are mainly multi-national original equipment manufacturers in:• Telecommunications• Consumer electronics & electrical• Data storage• Life sciences / medical• AutomotiveIts principal markets include China, Singapore, USA and Europe. Its customers' end products include mobile phones, razors, electric toothbrushes, electric shavers, hairdryers, cameras (digital, reloadable and disposable), hard disk drives and medical devices.Some of its major customers include Motorola, Gillette, Braun, Siemens, Kodak, Seagate, Maxtor and Elcoteq. It has a total of 16 manufacturing plants, 13 in China (Shanghai, Chengdu, Xiamen, Tianjin, Qingdao, Suzhou), 2 in Singapore and another in Mexico.

Summary
Hi-P International Limited, together with its subsidiaries, is engaged in the design and fabrication of mold (MDF), precision plastic injection molding (PPIM), assembly, provision of ancillary value-added services (mainly surface finishing services) and precision metal stamping. The Company's subsidiaries are engaged in the manufacture of molds, manufacture of plastic injection parts, manufacture of camera products, spray painting, manufacture and sale of plastic product modules, manufacture of molds and related appliance plastic components, manufacture of metal precision components, provision of engineering support services, international sales and marketing activities, manufacture and production of in-mold decoration lenses, design and sales of electro-mechanical components, and manufacture of precision-stamped metal components and precision tools and die design and fabrication.

Will global economy entering a recession in 2007 or 2008?

The Recent global market sell-off is probably due to profit-taking more than a signal that the global economy is entering a recession?

There are Fund managers thinking of global economy maybe entering a recession this year 2007, but there is no positive idication of recession in asia market and business, there is news articles that post on world bank expected that global economy would see a slow down in 2007 and 2008. World Bank had come out a report on "Global Economic Prospects 2007" but the report needed to be purchase for reading.

Former Federal Reserve Chairman Alan Greenspan mention that "a recession in the U.S. is possible" which doesn't in-line with the present Federal Chairman Bernanke's outlook.

I have did a search on "market outlook 2007" to study more on outlook 2007 that written by those analysts out there. Is better to do your own research to know more about economy, is easy just do a search on engine to study those articles that posted on internet.

Or what you also can do is attend seminar that conducted by those fund manager like an example "Aberdeen Asset Management" they are the expert, they will do those study and conclude the outlook for you.

An advice to you is invest carefully, just do watchout for market news from time to time.

AP Oil had hit new high again, they have back in black again!

Hi reader, catch those summary point for AP Oil, those summary will be your guide in your investment. I have try my best to write everythings that I know.

环球石油集团去年全年取得690万元的净利，扭转了前年的亏损情况。

集团去年的收入激增41.8％，达6550万元。其中3550万元来自贸易；1896万元来自制造；1085万元来自特许经营。每股盈利报5.29分。集团每股净有形资产跃高72.8％至12.89分。
脱售AP石化（越南），使得环球石油集团获得一笔995万元左右的现金。
由于业绩好转，同时为了奖励长期支持集团的股东，它拟以每四股给一股的比例，派发红股。
环球石油往后将有四个增长策略：-一、在现有的市场增加宽度和深度，包括越南、中国和印尼；二、开拓新市场——印度、巴基斯坦、斯里兰卡和非洲；三、特许经营，希望在印度半岛和中东把最成功的孟加拉特许经营模式加以复制应用；四、合并与收购。

AP OIL International last year had made a net profit of $6.9 million, reversing the previous year's loss.This also back in the black for its 2006 financial year.
The lubricant and chemical specialist announced yesterday a net profit attributable to equity-holders of $6.97 million for FY2006, against a loss of $5.56 million for FY2005. Earnings per share came to 5.29 cents.

AP Oil has proposed a bonus issue of one new share for every four existing shares.
It attributed the turnaround to higher revenue, which grew 41.8 per cent to $65.48 million; better gross margins for its core businesses; and a $4.9 million extraordinary gain from the sale of its subsidiary AP Petrochemical Pte Ltd, which owned 80 per cent of AP Petrochemical (Vietnam) Co Ltd.

AP Oil Future growth strategy will be four of them:-

1.) Increase the breadth and depth of the existing market, including Vietnam, China and Indonesia.

2.) Opening up new markets -- India, Pakistan, Sri Lanka and Africa

3.) Franchising, in the Indian peninsula and the Middle East Bengal the most successful franchise model to replicate application.

4.) Mergers and acquisitions.

http://www.zaobao.com/cj/cj070223_524.html

http://business-times.asiaone.com/sub/companies/story/0,4574,225409,00.html?

AP Oil International Limited is a Singapore-based company engaged in the manufacture of lubricating oil, import and export of oil and fuel, dealing in paraffin wax, lubricating oil and grease, and investment holding. The Company's business segments include manufacturing, trading, and franchising and outsourcing. The manufacturing segment manufactures a range of lubricating oils and fluids, and specialty chemicals for industrial, automotive and marine applications, and provides blending services to its customers. The trading segment trades in base oil and additives, and specialty chemicals. The franchising and outsourcing segment trades in base oil and additives using the Company's brand name. AP Oil International Limited's sales are mainly to South East Asia, Indo-China, East Asia and other countries. AP Oil International Limited has formed a joint venture company in the Philippines, AP Tang Mining (Phil) Corp.

AP Oil had hit 52 week high!

The new trend is confirm to go up, this is cause by the 100 day MA and the 200 day MA is going to have a U-Turn, please take a look at the 5 year chart on the bottom one. if Previouly you put your money in AP Oil you would win some money by now.

http://singapore-sti.blogspot.com/2007/01/is-ap-oil-ready-going-for-rally.html

This is the Article that post by me on the 01/2007. I got no idea much higher will AP Oil move?

nice to know that STI have break 3300 level, next level well be 3,500 for STI.

Tung Sing stock price is on the all time high.

Tuan Sing stock price is doing well, this can be mean the company business is doing well as the stock volume had improve recently. Further on if the business can continue to well the stock price is believe to going even higher than now, Tuan Sing have not been perform well in the past six years in the stock price and the company business. The managment have do their best in restructing and re-engineering the company business & finance. Part of Tuan Sing business also support Singapore's construction sector as they can provide service in civil engineering services and infrastructure works. beside that they have other business sector. Hope to see more potential in the company business and the company stock price.

http://www.google.com/finance?q=T24&hl=en - Tung Sing on Google finance.

Link to company Website:-
http://www.tuansing.com/

AUDITORS

Deloitte & Touche

BACKGROUND

The Company was incorporated on 13 March 1969 as Hytex Ltd to manufacture polypropylene bags. It turned public on 2 May 1973. Following some financial difficulties and restructuring, the Company became an investment holding company on 20 September 1983 under its present name.The Group's primary business activities are property, technology and industrial services.The Property Division focuses on investment and development of prime residential, commercial, industrial and hotel properties in Singapore, China and Australia. TSH is a recognised quality developer of residential housing in both Singapore and China. The Group also holds a 25 percent stake in the Grand Hotel Group, a public listed company that owns luxury and mid-market hotels in Australia.The Technology Division consists of TS Technologies and its two subsidiaries Gul Technologies and TS Matrix. The publicly listed Gul Technologies, 60 percent owned by Tuan Sing Holdings, is a global printed circuit board manufacturer with operations in Singapore, China and the USA. TS Matrix, wholly owned by TSH, engages in semiconductor component testing and assembly in Malaysia.The Industrial Services Division consists of three core businesses: Marketing Services, Engineering Services and Manufacturing. Almost all of these activities are carried out under SP Corporation Limited (formerly SPP Limited), Tuan Sing Holding's 80 percent listed subsidiary. Marketing Services include the distribution of tyres and auto products, as well as the trading of selected industrial products like chemicals, oil, coal, rubber, metal and machinery in Asia. Engineering Services include civil engineering work, as well as geotechnical and environmental investigation and monitoring in Singapore and selected regional markets. Manufacturing activities consist of tyre retreading, tyre mould manufacturing and the production of polypropylene packaging bags.

Summary
Tuan Sing Holdings Limited is a Singapore-based company whose principal activities are industrial services, technology, property, retail, as well as corporate and others. The industrial services segment trades and distributes industrial products, tyres and auto related products; provides civil engineering services, infrastructure works, geotechnical instrumentation and investigation, environmental services and manufactures polypropylene woven bags, tyre mould and related products and tyre retreading. The technology segment manufactures and sells double-sided and multi-layered printed circuit boards, and conditions, tests and assembles semi-conductor components. The property segment develops properties for sale, property investment, provides property management, property consultancy and hotel management services. The retail segment distributes and markets golf and golf-related lifetsyle products; manages golf driving ranges and teaching schools and provides other golf-related services.

Noble Group may start a new trend stock movement.

There is indication that stock price may change the trend from the previous bearish trend. This is due to most of the market stocks are overweight in stock price that cause investors to focue on stock like Noble Group. Previously company insider trade on a few block purchase of stock but no Fund managers interested to purchase the stock during that time. commodities price may rise on the help of rising oil price. I try to have a record on what I have researched.

Reference and Article:-

Spotted Noble Group Limited had a volume surge before closing time. Thur, January 4, 2007

http://www.google.com/finance?q=SIN%3AN21 - Noble group on Google finance.

Link to Internet Website:-
http://www.thisisnoble.com

AUDITORS

Ernst & Young

BACKGROUND

Noble Group Limited was incorporated in Bermuda in 1994. Noble is Hong Kong-based, Singapore-listed and is a market leader in managing the global supply chain of agricultural, industrial and energy products. With 2004 revenue of US$8.6 billion, the Group operates a network of over 65 offices in 35 countries serving more than 3500 customers.

Summary
Noble Group Limited is an investment holding company in Singapore. The Company, through its subsidiaries, is principally engaged in managing global supply chain of agricultural, industrial and energy products; ship ownership, chartering and the provision of technical ship management services, and trade finance and coal mining. Noble Group Limited operates in two business segments: supply of raw materials, and vessel chartering and related operations. The supply of raw materials segment comprises the Company's businesses of supplying industrial and agricultural raw materials and commodities, coal mining and transport resources. The vessel chartering and related operations segment comprises Noble Group Limited's ship ownership, chartering and the provision of technical ship management services. As of October 23, 2006, DBSN Services Pte. Ltd. held a 37.47% interest in the Company. In November 2006, the Company acquired Sino Agri-Trade Pte Ltd and Great Wall Investments Pte Ltd.

CHT rated 'buy' target at SG$1.22 - UOB Kay Hian

UOB Kay Hian has initiated coverage on CHT (Holdings) Ltd, with a "buy" call and a price target of S$1.22 per share based on the Chinese adhesive tape manufacturer's steady earnings potential.

"As a major producer of specialty adhesive tapes, CHT is a direct play on the
fast-growing automobile sector in China and overseas," UOB Kay Hian said.

"CHT's acquisition of technological know-how through its joint venture with
Plymouth Rubber Co Inc and its low production costs are its key competitive
advantages," it added.

UOB expects CHT to post a 22.3% compounded annual growth rate for revenues
between 2005-2009, from 580.7 million yuan to 1.3 billion yuan, driven by the ramp-up in
utilisation rates.

It estimates CHT's net profits will grow to 156.5 million yuan last year from 113.6
million in 2005, to 205 million this year, to 221.6 million next year, and to 241.7 million in 2009.

AUDITORS

Grant Thornton, Hong Kong

BACKGROUND

The Company was incorporated on 31 December 2002 under the laws of Bermuda as a holding company. Its subsidiaries are established in China, Hong Kong and the British Virgin Islands. The Group's manufacturing facilities are located in Zhuozhou City, Hebei Province, China.The principal activity of the Company is investment holding. The Group is principally engaged in the business of the manufacture and sale of adhesive products, polyvinyl chloride ("PVC") film and pressure sensitive adhesive ("PSA"). It is also engaged in the manufacture and sale of machinery for the manufacture of adhesive products.

Company web site:-
http://www.chinahuaxia.com

Summary
CHT (Holdings) Ltd. is an integrated adhesive tape producer in the People's Republic of China. It is engaged in the development, manufacturing and distribution of categories of adhesive tapes, which include polyvinyl chloride (PVC) electrical tapes, biaxially orientated polypropylene (BOPP) and PVC packaging tapes, polyethylene and PVC protective tapes, masking tapes, PVC marking tapes, double-sided tapes, pipe wrapping tapes, cotton tapes and BOPP stationery tapes. The adhesive tape products segment manufactures and sells adhesive tapes such as electrical tape, packaging tape, protective tape and stationery tape for industrial and household use, as well as other related products. The PSA segment manufactures pressure sensitive adhesive for use in the manufacture of adhesive tapes. The PVC film segment manufactures polyvinyl chloride film for use in the manufacture of adhesive tapes. The machinery segment manufactures machinery use in the manufacture of adhesive tapes.

FerroChina stock price higher on hoping for high future earnings.

Kelive Research on FerroChina.
The investors hope the Ferrorhina will have robust earnings in future, with the group benefitting from demand for steel and from its expansion program.
Kelive Research estimates that by 2008, FerroChina will have a steel processing
capacity of 2.4 million tonnes, compared to 900,000 tonnes at present.
By that time, FerroChina will also have emerged as the largest producer of
galvanized steel in Asia.

Kelive Research expects FerroChina's net profit to have risen to 291 million yuan last year
from 146.1 million yuan in 2005, and to rise to 400.75 million yuan this year and 730
million yuan next year. Kelive Research‘s fair value for FerroChina is S$1.92 per share.

CIMB-GK on FerroChina.
FerroChina, a maker of galvanized steel coils in China, with an "outperform"
rating and a target price of $2.29 per share as it expects the company to
post robust earnings in the next two years on the back of its aggressive
expansion plans.

By 2008, FerroChina will have an aggregate capacity of 2.4 million tons, making it
the largest non-integrated galvanized still maker in Asia, CIMB-GK said.
Earnings will expand in tandem with capacity expansion.

CIMB-GK said it expects FerroChina's net profit to rise from 146.1 million yuan in
2005 to 289.3 million yuan last year, 364.1 million this year and 691 million next year.
Demand for galvanized steel is well diversified, with FerroChina recently
securing some US$317 million worth of orders from the UK, Australia, New Zealand, Israel, Italy and Southeast Asia.


AUDITORS
Deloitte & Touche

BACKGROUND
The Company was incorporated in Bermuda on 30 September 2004.The Group is a manufacturer of heavy gauge galvanized steel coils with thickness ranging from 0.6mm to 4.2mm and width ranging from 660mm to 1550mm. Currently, the Group has one galvanization production line with an annual production capacity of 300,000 tons for the manufacturing of its products. The Group is expected to expand its capacity to 700,000 tons a year when its second galvanization production line is put into commercial production by end May 2005.The Group's customers are mainly steel trading companies, steel structure engineering companies and steel processing factories in China.

Company web site:-
http://www.ferro-china.com/history.asp

Summary
FerroChina Ltd. is a steel processor engaged in the production and sale of galvanized steel coils, primarily heavy gauge galvanized steel coils, and other related products, with an annual production capacity of 700,000 metric tons. The concentration of the zinc layer ranges from 180 grams per square meter to 350 grams per square meter. The thickness of the Company's steel coils ranges from 0.6 millimeters to 4.2 millimeters and the width ranges from 600 millimeters to 1,550 millimeters. Its production facility is located in Dongbang Industrial Park, Changshu, Jiangsu Province, the People's Republic of China. It has made export sales to Singapore, Spain, the United States, the United Kingdom and Taiwan. FerroChina Ltd., through its wholly owned subsidiary, Twin Well Group Limited, holds a 100% equity interest in Changshu Xingdao Advanced Building-Material Co., Ltd. In December 2006, the Company acquired Xinghai and Xingyu.

Links:-
http://www.ferro-china.com/
Investor Relations
Corporate History/Profile
Products/Services

China Farm Equipment launches IPO at $0.345 of 62 million new shares.

China Farm Equipment Ltd, a China-based manufacturer of farm equipment, launched an initial public offer (IPO) here of 62 million new shares at $0.345 per share, aiming to raise S$17.8 million in net proceeds. The IPO comprises a retail tranche of 3 million shares and a placement tranche of 59 million shares. China Farm said it will use the net proceeds to acquire more plants, machinery and production facilities, enhance research and development capabilities, expand sales and marketing network and the rest for working capital requirements. SAC Capital Pte Ltd is the IPO manager, while UOB KayHian Pte Ltd acts as underwriter and placement agent. The public offer will close on February 7 and trading will commence on February 9.

"The directors believe that China offers substantial growth potential for
its farm equipment industry, China Farm said. "The Chinese government's support and encouragement for mechanization in the Chinese agricultural industry will lead to increased automation and growth and developmento of the Chinese agricultural industry," it added. The company said it intends to distribute dividends of not less than 30% of its net profit to shareholders for its 2006 financial year.
Its net profit surged 156.8% year-on-year to 33.9 million yuan in 2005 on the back of a 51.5% jump in revenue to 236.5 million yuan. For the 10 months to October 2006, the group posted net profit of 44.8 million yuan and revenue of 254.6 million yuan.

I think this is one the good investment in China stock especially in China farm equipment. The best is to look for Ex-state own company (mean last time the company was own by the Govt. but now is become private company.) in this way you will be safe and the growth will be potential. It is better to get as many information as possible that will reduce the risk in your investment.

UTAC's target price raised to $1.21

United Test and Assembly Center (UTAC) target had raised to S$1.21 from S$1.08 after
the company increasing its forecast of the net profit for this year by 1.3% to US$89.9 million .

UOB Kay Hian is keeping its "buy" rating for the UTAC. The reason for keeping the buy rating for UTAC is the Valuation is attractive, with the 2007 price-to-earnings ratio at nine times and price-to-book ratio at 1.4 times.

The brokerage expects UTAC to outperform the seasonally softer trend for the industry in the first quarter. It sees new opportunities for UTAC in its DRAM business, with the commercial
launch this month of Microsoft Corp's new Windows Vista operating system and its bid to be Hynix's outsourcing partner in China. The Mixed-signal business will benefit from new businesses in digital consumer and wireless applications in the second half.

Other Links:

http://finance.google.com/finance?q=United+Test+and+Assembly+Center

Corporate History/Profile
UTAC news press

Investor Relations

Executives

AUDITORS

PricewaterhouseCoopers

BACKGROUND

The Company was incorporated in Singapore on 26 November 1997 under the name of United Test Center Singapore Pte Ltd and subsequently changed its name to United Test and Assembly Center (S) Pte Ltd in January 1999. It was converted to a public company limited on 15 May 2000 and changed its name to United Test and Assembly Center Ltd.UTAC is a leading independent provider of test and assembly services for a wide range of semiconductor devices that include memory, mixed-signal/RF and logic integrated circuits. UTAC was ranked as the 9th largest independent provider of semiconductor test in 2002 by Gartner Dataquest. Headquartered in Singapore, UTAC has manufacturing facilities in Singapore and Shanghai, as well as well-established sales network in Singapore, China, the United States, Italy, Japan and Israel.UTAC offers full turnkey services that include wafer sort / laser repair, assembly, test, burn-in, mark-scan-pack and drop shipment, as well as value added services such as package design and simulation, test solutions development and device characterization, failure analysis, and full reliability test. The Company's manufacturing facility in Singapore is certified under ISO 9001, QS 9000, ISO 14001 and SAC Level I quality systems.Its customers comprise integrated device manufacturers, fables companies and wafer foundries that design and manufacture semiconductors that power modern electronic devices. Its expertise in both memory and non-memory (mixed-signal/RF and logic) semiconductor devices allow it to provide wide-ranging solutions such as multi-chip packages that integrate memory and non-memory die. For the non-memory segment, its "BM/W" strategy focuses on further strengthening its capabilities in the faster growing Broadband and Mobile/ Wireless communications sectors.

Summary
United Test & Assembly Center Ltd. (UTAC) is an independent provider of assembly and testing services for semiconductor devices that include memory, mixed-signal/radio frequency (RF) and logic integrated circuits. The Company offers services that include wafer sort/laser repair, assembly, test, burn-in, mark-scan-pack and drop shipment, as well as value-added services, such as package design and simulation, test solutions development and device characterization, failure analysis and full reliability test. The Company's customers comprise integrated device manufacturers, fabless companies and wafer foundries that design and manufacture semiconductors that power modern electronic devices. It provides a range of solutions, such as multi-chip packages that integrate memory and non-memory die. Its manufacturing facilities in Singapore, Taiwan and Shanghai, China are supported by a global sales network in Singapore, China, the United States, Italy, the United Kingdom, Japan and Korea.

SPC had just released the earning for FY2006.

Singapore Petroleum Co Ltd had just released the earning for FY2006 that the result is fell 29.5% year on year to S$284.57 million, the margins have soften during second half of 2006 this may cause by the higher cost of crude oil purchased for refinery to petroleum products. The recent crude price is lower for example during 2nd half of 2006 SPC maybe purchase the highest crude price at around near US$80/barrel compare to recent price of US$55/barrel there is aready a difference
of US$25/barrel and this is just difference in crude price purchase only that have not included the refinery cost and other costs, this can aready tell you how well is SPC doing in manage the costing.

results of year to December 2006:

Sales - 8.57 bln sgd vs 7.47 bln
Pretax profit - 338.48 mln sgd vs 439.10 mln
Net profit - 284.57 mln sgd vs 403.56 mln
EPS - 55.23 cents vs 79.22 cents
Final div - 20 cents; unchanged
Special div - 15 cents vs 12 cents

Crude oil price.
There is a lot of factors that causes the crude oil price to fall, for example China ready have enough in building up the crude oil reserve, world oil field activity on exploration, oil well drilling, well completion and crude oil recovery that are out numbers of projects that are carring out.(those news can be found on the past news on internet base on the exiting company news to know them.) also as well as the weather that make the demand of crude oil weaken, for example those country this year winter are warmer than last year. There is the news from those experts that said the coming February winter temperature may fall below than December 2006 and January 2007's temperture. I will watch how high the crude price will rebound. let's us see how first.

Invest in Oil stock is risky.
this is due to crude oil price is unpredictable. Even those hedge fund managers they themselve as a professional also making loss on buying crude oil. if you are interested you can look into some area that are extreme far below than market fair price like example AP oil is one of them that are traded at below market fair price and there is issue on CAD investigation going on and that had not resolved yet unitl now so the risk is there but is lower than buying expensive those one. AP oil is good for trading only by buying small amount of volume. - this is my view only, Please do your own research before you commit buying the stock.

Extra-
There is a recent news on US president that wants to put more effort on renewable enegry. This is to believe that the trend crude oil is going for bearish in long term (long term mean next 5 to 10 years time). so please beware of the risk in invest on oil stock.

AsiaPharm re-rate by Phillip securities Research.

AsiaPharm Group Ltd recently acquisition of CMNa and Solid Success Group could be possible to become one of the China's Top ten players in the cancer drug industry. The forecasted projection growth for the coming future need to do an adjustment in it's value, because those increased asset are able to get more revenue and increase of business market share (increase the strength in market position in China). This is to be believe there is a significant boost in AsiaPharm's revenue and the profit for the coming future. market analyst forecasted is about double-digit growth for the coming future earning.

The recent collaboration with KKC Corporation Co. Ltd (KKC)could help in conducting the cancer drug clinical trials process in Korea by effective cost saving and that will also help to obtain the necessary approvals to distribute cancer drug in Korea market. This is an incentive to Asiapharm in Korea market.

The company's management will continues to look for more value acquisition in the coming future and this is to done by issues new share placements.

On the other hand most of the Fund manager predicted China domestic market will growth as the certain percentage of the China population getting urbanize where demand is created and the living standard is improve. I believe that AsiaPharm are able to play a important role in China's market in the coming future.

AsiaPharm fair value is S$0.92 - Phillip securities Research

Is AP Oil ready going for a rally?

AP Oil International Limited had close higher at $0.165 and up by $0.015 is AP Oil shares price are going to recover to it's previous higher level?

Base on stock chart, AP Oil had hit to the bottom of the 5 year's low, the previous quarterly earning report show some recoverly and the cashflow had slight improved. The company management are projecting a good earning and improving of cashflow in the coming future quarterly report, as well as hoping for a good FY2007 earning.

NOTE: The Key Stats & Ratios are from Google Finance.

There is an issues on CAD's investigation going on and that have not been resolve to close the case, there maybe have doubt on the investigation.... that will leave to CAD to do their investigate. So just beware of the risk went you buy AP Oil, is better to buy at cheap from the 5 year's low.

NOTE: Please click the below picture for AP Oil's news site.

Please do your own research, the cashflow and some of the data will have to look out yourself on the AP Oil's recent quarterly report.

AUDITORS

Chio Lim & Associates


BACKGROUND
The Company was incorporated in Singapore under the name of Huan Chew Oil Trading Pte Ltd on 24 December 1975. On 24 March 2001, it was converted into a public company and changed its name to AP Oil International Ltd. The Group is principally engaged in the manufacture of lubricating oils and fluids for industrial, automotive and marine applications. It is also engaged in the supply and trading of base oils and additives used in lubricant production.Through its subsidiary, AIM Chemical Industries (Pte) Ltd (AIM), the Group provides tollblending and contract manufacturing services for specialty chemicals. AIM also supplies and trades in chemicals.The Group operates three manufacturing plants, two for manufacturing lubricants and one for manufacturing chemicals, in Singapore. One of its lubricant manufacturing plants has an oil terminal and a private jetty for loading and unloading of liquid cargo. The storage terminal and private jetty capable of berthing up to 15,000 tons of vessel will be completed by end March 2004. Equipment and machinery are expected to be ready by April and official operation is scheduled to be in June 2004.



Summary
AP Oil International Limited is a Singapore-based company engaged in the manufacture of lubricating oil, import and export of oil and fuel, dealing in paraffin wax, lubricating oil and grease, and investment holding. The Company's business segments include manufacturing, trading, and franchising and outsourcing. The manufacturing segment manufactures a range of lubricating oils and fluids, and specialty chemicals for industrial, automotive and marine applications, and provides blending services to its customers. The trading segment trades in base oil and additives, and specialty chemicals. The franchising and outsourcing segment trades in base oil and additives using the Company's brand name. AP Oil International Limited's sales are mainly to South East Asia, Indo-China, East Asia and other countries. AP Oil International Limited has formed a joint venture company in the Philippines, AP Tang Mining (Phil) Corp.

Results Announcement

The recent market rally is cause by the coming companies announcement on their earning result for the FY2006. Some company will have a good earning.

Learn to invest with insider trading. - SingTel

To have a good insider trading information is better to study the insider biography, background, history & education. Some company do publish the company CEO's biography, background, history & education that show that company is doing their part to make it transparency to the public investors. Those facts can be a good support that he/she knows how to run the business in the company if those facts are relevants to his/her position as a CEO.

Company insider (CEO, CFO etc..) know more about the company business and company operating activity, as well as business risk, business trend and other more...

Those posted picture are copy and paste from POEMS research column, the latest SingTel insider trading transaction record and the historical insider trading transaction as well.

POEMS - Phillip's on-line electronic Mart system.

AUDITORS: Deloitte & Touche

BACKGROUND

Singapore Telecommunications Ltd (SingTel) was corporatised on 1 April 1992 and is licensed to provide telecommunications and postal services in Singapore. The company was listed on the local stock exchange in November 1993 and is majority-owned (2006: 54.27 percent) by Temasek Holdings (Private) Limited. Headquartered in Singapore, SingTel is Asia's leading communications group, with operations and investments in more than 20 countries and territories worldwide.It provides a diverse range of services to meet the communications needs of consumers and businesses, including mobile and fixed-line voice and data, narrow band and broadband Internet services as well as integrated Information Technology and communications solutions.In Singapore, SingTel is the market leader in the telecommunications industry with more than 125 years of operating experience. Leveraging its experience in Singapore, it has successfully expanded overseas. In Australia, it has significant presence through its wholly-owned subsidiary, SingTel Optus – the second largest communications company in the country.Its other investments in Asia include AIS in Thailand, Bharti in India, Globe in the Philippines, Pacific Bangladesh Telecom in Bangladesh and Telkomsel in Indonesia.Its overseas presence further extends to 37 SingTel Global Offices located in Asia Pacific, South Asia, Middle East, Western Europe and North America that deliver network solutions to meet the needs of its multi-national clients, and a pan-Asian chain of 12 world-class data centres that offers a suite of managed hosting telecommunications solutions. These offices and centres are supported by an extensive infrastructure of sophisticated satellite networks and submarine cable systems that provides seamless connectivity across Asia Pacific and to the rest of the world.Today, SingTel is Asia's largest multi-market mobile operator outside China, serving 85 million mobile customers in the seven markets of Singapore, Australia, Bangladesh, India, Indonesia, the Philippines and Thailand.

Summary
Singapore Telecommunications (SingTel) is engaged in the operation and provision of telecommunication systems and services, and investment holding. The principal operations of SingTel are in Singapore and Australia. The Company has subsidiaries that are engaged in activities, such as the provision of mobile phone, Internet, information technology (IT) and consultancy services, and the sale of telecommunications equipment. SingTel also has interests in several other communications companies outside Singapore, including AIS in Thailand, Bharti in India, Globe in the Philippines, Pacific Bangladesh Telecom in Bangladesh and Telkomsel in Indonesia. SingTel has operations and investments in more than 20 countries and territories. In April 2006, the Company dissolved its dormant subsidiary, SingTel (Jersey) Private Limited. In October 2006, the Company sold its entire 40% stake in PT Bukaka SingTel International to PT Bukaka Telekomindo International.

Do your investment research is alway be safe to your investment, is good to know more rather than know nothing or know less. Internet is a good place to do search, if you know the technique of using the search engine and the keywords to search the valuable information.

Reference:-

http://home.singtel.com/about_singtel/board_n_management/senior_management/boardmgmt_seniormanagement.asp

http://en.wikipedia.org/wiki/Lee_Hsien_Yang

2nd Chance: A Muslim Apparel Retailer?

Author: Soon Fong

Who is 2nd Chance?

BACKGROUND
The Group started out as a sole proprietorship in 1975, when Mohamed Salleh set up Second Chance Enterprises to engage in the tailoring of men's garments. By 1976, the business had expanded to 3 tailoring shops. However, due to difficulty in expanding the tailoring business further, Second Chance Enterprises decided to switch to retailing of men's ready-to-wear fashion clothes in 1979.
In 1993, the Group opened its goldsmith shop, called Golden Chance Goldsmith. The gold jewellery retail business is currently the main revenue and profit contributor to the Group. In 1996, the Group expanded its gold jewellery retail business into Malaysia.
The Company was incorporated on 7 July 1981 as Indonesian Mercantile Traders (S) Pte Ltd. It changed its name to Second Chance Enterprises Pte Ltd in 1986 and to its present name in 1987 to reflect its change of status to a public limited company.
The Group is principally engaged in the retailing of ready-made wearing apparel, and gold and diamond jewellery, through a network of retail outlets in Singapore and Malaysia. Its 2nd Chance and First Lady outlets retail mainly the 2nd Chance brand of boys and men's clothing, and the First Lady brand of traditional Malay ladies' and girls' clothing respectively, while its Golden Chance outlets retail gold and diamond jewellery. In 1999, it diversified into property investments.

Business Review for FY2006

As we can see from the profit contribution breakdown, the main contributor is from properties segment which is 43.5%. Rental income was S$6.7 million or 40% of group’s profit before tax.

Apparel ( which many think that it was the main business ) contributed the least or 11.2%. Gold contributed 25% of the earning.

All the 3 segments are enjoying high profit margins as seen in the table above. And I believe the diversity in the business of 2nd Chance is bringing more profits to the company.

Breakdown of its Properties Why so many properties in City Plaza?

2nd Chance is aware of the condition and perception of many towards City Plaza (CP). There are 2 (two) compelling reasons for their purchases in CP. The government that owns Tanjong Katong Complex (TKC) have informed all tenants that this site is earmarked for redevelopment. Their tenancy agreement now includes a clause to vacate premises within 3 months of notice.

All retail profits from gold and apparel business in Singapore comes from our shops in TKC. The other 150 tenants in TKC will also be affected and when the time comes theytoo will be looking for premises hoping to rent or buy nearest to TKC. CP being just across the road, rentals and capital values of its shops is expected to enjoy a big increase when this expected new demand materialise.

It should be noted that any new development will take about 4 years to complete and its rental will be more in line with other suburban shopping centres like Parkway Parade, Tampines Square etc., whose present rentals are 3 to 4 times that of the rentals in CP.

Due to the declining popularity of CP, 2nd Chance had purchased 22 shop units there at depressed prices and expect to greatly benefit in the near future from the expectedincrease in rentals and capital values apart from having ready premises for retail businesses to relocate.

So how much does these assets worth?

The investment properties are stated at directors’ valuation carried out on June 30, 2006. The last independent professional valuation carried out by Jones Lang Lasalle Property Consultants Pte Ltd as at 30 June 2005 on the basis of open market valuation for existing use. It is the Group’s policy to revalue its investment properties at least once in every three years.
Based on the latest revaluation, all the properties are worth S$84 million.

Financial position at end 2006
The Group’s total assets stood at $126.6 million of which $84.7 million consisted of investment properties. Apart from these, the properties, which are self-occupied, amounts to $9.76 million. The Group held $19.95 million of quoted securities including REITS.

The Net current assets position as at end 2006 was $10.94 million and current ratio was
1.53 as compared to $6.81 million and 1.35 respectively in 2005. The increase was due to valuation of securities held for trade at fair market price as per FRS 39 guideline.
The shareholders’ funds were $71.81 million as compared to $58.05 million in 2005. The increase is attributable to the year’s net profit and increase in share capital. The net asset value per share was accordingly, 28.32 cents as compared to 31.78 cents in 2005.

What’s interesting about 2nd Chance?
Dividends Due to the steady growth of the Group a first and final dividend before tax of 20% or 3.0 cents per share, has been proposed for 2006. This is a 20% increase compared to the 2.5
cents per share dividend before tax for last year.

The dividend net of tax of 20% will amount to 2.4 cents per share or a total of $6.08 million on the existing issued capital as at 30 June 2006 giving a payment ratio of about 57.8%.

The Company has an estimated $2.31 million of section 44 credit available for franking the dividend and expect to fully utilise the Section 44 credit before the end of the transitional period in 2007, subject to the availability of profits for distribution.

Also 2nd Chance also announced a dividend of 2.7 cents for FY07 and 3.0 cents for FY08. These figures are attractive as they represent close to a 10% yield annually for the next 2 years and it excludes any further capital gain in the share prices.

Accompanying that, the board also intends to announce dividend for FY09 in FY07. This will give shareholders a chance to know their long term rewards from 2nd Chance and represent the confidence of 2nd Chance.

Earning per share is 3.96 cents on a diluted basis, and this represents a 7.32 times P/E ratio with a share price of 29 cents. This is an attractive figure, as property firms are trading at an higher P/E ratio.

NTA was 28.32 cents, this mean that buying the share at 29 cents represent no premium over its asset. With a high profit margin in its businesses, I do expect share price to be trading at 1.3-1.5 times over its asset or 36.8 cents-42.5 cents.

My personal take is buy for long term with a target of 36 cents to 42 cents with a annual yield of 10%.

Price Chart on 2nd Chance.

AsiaPharm will be growth in the longer term.

During that period Q306 & Q406 AsiaPharm Share price dropped is because one of AsiaPharm's major revenue contributor Maitongna's specification has suddenly changed by the China government, 25ml drug can not be sold any more. In some hospitals if there are 25ml drug available, because AsiaPharm can not sell 25ml now and to sell other 5ml, 10ml, 15ml drugs, they have to wait for next time to rebid to enter into those hospitals. So it will take times to recover the sales and 2q and 3q06 will be affected most. 4q 06 most hospital will start rebidding. Since Maitongna is the market leader so AsiaPharm would be able to covering to the pre-drop level.

strength of AsiaPharm:-
Strong management
-Long term vision
-Transparent
-CFO/internal auditor

Healthy company structure.
-Strong R&D
-High standard manufacturing
-Self owned distribution team
-Healthy financial position

The China Regulation changes and improve market efficiency.
-Healthy competition
-Mergers & Acquisition (M&A)

What I feel that AsiaPharm shares price will hit all time high in the coming future as the business in China getting better. AsiaPharm is going for a long term ride.


AUDITORS
Ernst & Young


BACKGROUND
The Company was incorporated under the laws of Bermuda on 2 July 2003. It is the holding company of AsiaPharm Investments Ltd which owns 95.93 percent of the shareholdings of Shandong Luye Pharmaceutical Co Ltd. Shandong Luye owns 69 percent and 80 percent of the shareholdings of Shandong Luye Natural Drug Research and Development Co Ltd and Yantai Luye Drugs Trading Co Ltd respectively.

The Group is in the business of:
(1) research, development, production and sale of pharmaceutical drugs for the fields of orthopaedics, neurology, gastroenterology and hepatology, focusing on natural drugs and chemical drugs with new formulations;
(2) distribution of products of other pharmaceutical manufacturers in China;
(3) processing and sale of active ingredients, mainly chondroitin sulphate, for the manufacture of pharmaceutical drugs;
(4) sale of R&D results and/or patents of new drugs and provision of research services on a contract basis.


Summary
AsiaPharm Group Ltd. is a specialty pharmaceutical group in the Peoples Republic of China. It specializes in the research and development (R&D), production and sale of pharmaceutical drugs and formulations for chemical drugs, the sale of research and development results and patents for drugs, and the provision of research services on a contract basis. Its distribution network includes 35 sales support offices, covering 30 provinces, municipals and autonomous regions, reaching approximately 2,000 hospitals. Its core products include Lutingnuo, Maitongna, Nuosen, Okai, Sidinuo and Ximingting. In May 2006, the Company's wholly owned subsidiary, Shandong Luye Pharmaceutical Co., Ltd (Luye), acquired the remaining 20% minority interest in Luye's subsidiary, Yantai Luye Drugs Trading Co.

Referece:-
http://ir.asia1.com.sg/asiapharm/stbtnews.html
http://www.listedcompany.com/ir/asiapharm/newsroom/newsroom.cgi?news_cat=News%20Release&
Asiapharm Group Limited: Upgrade to Strong Buy

Thai Beverage Public Company Limited.

I have take note for quite sometime the block volume purchase quite often appear.
let's watch the price will it surge in the coming future.

Summary
Thai Beverage Public Company Limited is engaged in the production, distribution and marketing of alcoholic and non-alcoholic beverages, industrial alcohol and other by-products. It operates through four business segments. The beer/water segment is engaged in the production and sale of branded beer and water products. The spirits segment is involved in the production and sale of branded spirits products. The alcohol segment is involved in the production and sale of alcohol. The related segment is involved in the purchase of packaging materials and sale of by-products. The Company offers beer under various brands, which include Chang, Chang Draught, Chang Light and Archa. Non-alcoholic drinks offered include Chang Drinking Water and Chang Soda Water. It produces, distributes and sells white spirits (Ruang Khao and Pai-Thong), Chinese herb spirits (Chiang-Chun, Chu Sib Neaw and Sua Dum), sake (Shinobu) and brown spirits (rum and whiskey). Its flagship brown spirits brand is Sang Som rum.

Spotted Noble Group Limited had a volume surge before closing time.

Will watch Noble Group for tomorrow trading to know about the future trend of Noble.

-Try to used the Search option on my blog to kown more about the company news and finanical report.

Summary
Noble Group Limited is an investment holding company in Singapore. The Company, through its subsidiaries, is principally engaged in managing global supply chain of agricultural, industrial and energy products; ship ownership, chartering and the provision of technical ship management services, and trade finance and coal mining. Noble Group Limited operates in two business segments: supply of raw materials, and vessel chartering and related operations. The supply of raw materials segment comprises the Company's businesses of supplying industrial and agricultural raw materials and commodities, coal mining and transport resources. The vessel chartering and related operations segment comprises Noble Group Limited's ship ownership, chartering and the provision of technical ship management services. As of October 23, 2006, DBSN Services Pte. Ltd. held a 37.47% interest in the Company. In November 2006, the Company acquired Sino Agri-Trade Pte Ltd and Great Wall Investments Pte Ltd.