Thursday, December 18, 2008
David Sinclair + Sirtris
Wednesday, December 17, 2008
the subprime solution - robert shiller
Now there is similar time, with people unable to pay their credit
homeownership increased in US from 65.7% (1997) - 68.9% (2005). Result of an add campaign for home ownership. Building industry got 6.3% of GDP ( 2005) highest from 1950 ( prekoreean war )
1925-1933 house prices fell 30%, unemplyment 25%
important measures: - bankruptcy law
- create institution to sponsor prolongation of credit from 5 years to 15 years
Florida bubble 1925 peaked 19% starting 1921 -> became accesible by car
California bubble 1880 -> newspapers had a major role
causes for 2007 house bubble:
- no historical index data older 30 years
- on a graphic from old adds -> from 2000 - exponential growth on house price, while population slope 15''
building costs decreasing since 1980
- FED, Bush denied any problem with the house bubble
- social contagion, with lack of financial education - it is like an epidemia: the median expected price increase in San Franciso for the next 10 years was 14% per year among home buyers. 30% expected 50% per year
in a bubble people learn from about the information that others have by observing their behavior
- Fed rate cut to 1% in 2003 and hold it while the price was increasing ( the Fed was fighting with recession and deflation )
- aggresive lending
- The price of land during normal times was 15% of the value of the house. in 2007 - 50%
Real estate myth:
3% increase of GDP -> gets into houses. It gets more in the quantity and quality of houses. 1973 avg house: 1525 square feet, 2006 2248sqF. For this period the increase is 1% per year
goods and services dependent on technology decrease in time. Human involved services increase. Housing depends on technology -> price should decrease.
urban US area: 2.6%
urban patriotism: people tend to overvalue their own city
construction costs: all needed materials are easy to find anywhere
house price should decrease
Crise solutions:
-bailout: short term solution. If people have a hope, they can cooperate better. After 33' compare US with Europe, Marshall plan
- a new loan corporation which helps people to pay their credit
- IT: - to make available for anyone financial knowledge ( promoting financial advice )
- database with financial information about anyone to predict any bubble ( consumer watchdog)
- database with information about houses and % increase on an integrated market for risk management contracts
- new system of economic measures -> makes easier to understand inflation
- futures for real estate -> to be able to sell contracts on house
- home equity insurance
Sunday, December 14, 2008
The Shiller p/e, based on average earnings over the past ten years, is only just
below the long-term average of 15 in America, while in Europe and Britain it is
also – at 13 – some way above the single figures that have been seen at the end
of major bear markets.
A broader point is that we may in future have to get used to lower
valuations. As Bill Gross of Pimco points out, stocks are cheap in the context
of an economy fuelled by cheap debt and little regulation, but now we are
heading into an era of "more regulation, lower leverage, higher taxes… and a
government checkbook" that "crowds out" the private sector, undermining
innovation and productivity. That implies lower profits and valuations,
hampering equities. All of which suggests that once we're through this seriously
nasty bear market, the next bull market will be one of history's less
spectacular market upswings.
mba distance
http://www.economist.com/markets/rankings/displaystory.cfm?story_id=10590282
house indexes
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=7933596&story_id=12748853
Labels: invest
by 87% after a holiday? Do I know that people who take four weeks
holiday each year live eight years longer than those who do not? Do I
know he asks, again mistaking me for a hopeless workaholic, that 97% of
obesity is caused by stress?
If you take four weeks holiday per year for the next thirty years at a
cost of $200 per night do you know how much it will cost you?’ Without
giving me time to reply he supplies the answer. ‘$633,000!’
When prices are rocketing, property fortunes are magnified using debt.
Here's how it works – or rather, worked. Take a property valued at
£200,000. You could pay for it 100% cash, if you are wealthy enough.
But not only does this tie up a lot of cash, it also limits your
potential return on investment. So let's say you put down a 25% deposit
of £50,000 and borrow the other £150,000 from a bank. Say the property
market rises by 15% over the next 12 months. The property is then worth
around £230,000, so you decide to sell. Ignoring costs, a cash buyer
would make a straight £30,000 on their £200,000 purchase, banking a 15%
return (£30,000/200,000). But that is beaten hands down by someone with
a 75% mortgage. That's because if the property sells for £230,000 and
the original mortgage of £150,000 is paid off, they walk away with
£80,000, having put down a deposit of £50,000. That's a return on the
capital invested of 60% (£30,000/50,000) in just 12 months.
Last time, in the early 1990s, house prices fell by 37.4% in inflation-adjusted terms
A hundred years of US history suggests a normal yield of around 10-12%;
property gets cheap when yields approach 15-20%, while yields lower
than 6-8% suggest overvaluation and bubble territory.
The historical rule of thumb is that one annual income indicates
undervalued properties, two annual incomes normal valuation, and three
annual incomes overvaluation and bubble territory
deficits have reached nightmarish proportions at 20% of GDP, so the
collapse of the currency board and the economy is a certaint
Yet to bank that sort of gain, you must get your timing right. In a
falling market, gearing works in reverse. Say prices had fallen by 15%
instead (about the current rate of annual house-price falls, according
to the Halifax). A cash buyer loses 15% if they choose to sell. But
with a 75% mortgage, things look far worse. Were the property to be
sold for £170,000 (0.85 x £200,000), the mortgage of £150,000 can still
be repaid – but that leaves just £20,000 over. So the deposit of
£50,000 has shrunk to £20,000, a 60% loss. Should the price fall
another 20%, sales proceeds of £136,000 (£170,000 x 0.8) wouldn't even
be enough to repay the original £150,000 loan. So your £50,000 equity
has been wiped out and you owe the bank £14,000. In other words, you're
deep in negative equity.
http://www.moneyweek.com/investments/property/the-great-british-property-myth-14052.aspx
Ireland: value of land in housing 1994-2006
| 1994 | 2000 | 2006 | |
| Average house price € | 72,732 | 169,191 | 305,637 |
| Rebuilding cost | 64,004 | 121,818 | 177,800 |
| Land | 8,728 | 47,373 | 127,837 |
| No. of houses | 26,863 | 49,812 | 88,219 |
| Total land cost €m | 234.5 | 2,359.7 | 11,277.6 |
Friday, December 12, 2008
Labels: forex
Friday, December 05, 2008
HOUSE
http://www.economist.com/finance/displaystory.cfm?story_id=12725898
Barclays Capital says house prices may fall by about 15% over the next two
years, hitting their long-term trend levels next year, then overshooting on the
downside for another year.
OIL
http://www.economist.com/finance/displaystory.cfm?story_id=12725914
Michael Lewis of Deutsche Bank argues that OPEC’s past efforts to prop up
prices have succeeded more often than not. Since 1993, cuts in production have
led to higher prices on three-quarters of occasions. The exceptions, however,
have occurred when the world economy has slowed unexpectedly—most notably in
1998, after the Asian crisis, and in 2001, after the dotcom bubble burst. On
those occasions, the price kept falling for more than six months after OPEC
first began reducing its output. In 2001, for example, the cartel had to resort
to a series of cuts, totalling 5m barrels, before the price finally began to
recover.
If events take a similar turn this time, Mr Lewis reckons, OPEC will have to
keep cutting its output for another year. The price may not hit rock bottom
until early 2010. But the world economy looks less healthy now than it did in
2001, so OPEC may face even more of a struggle this time, he thinks. Deutsche
Bank, for one, sees prices falling as low as $35 at times between now and then.
After adjusting for inflation, Mr Lewis points out, that would only take the
price back to its average level since 1972.
Labels: invest
Monday, December 01, 2008
http://hymerion.wordpress.com/2008/11/30/cum-se-naste-cat-costa-si-cum-se-ingroapa-o-criza-bancara/#more-1877
In 55 la suta dintre cazuri, criza bancara coincide cu o criza a
monedei locale si doar in 11 % dintre cazuri problemele din sistemul
bancar au legatura cu o “debt crisis” . Macroeconomic, in cazul celor
mai recente 42 de crize bancare, in anul anterior izbucnirii crizelor,
deficitele fiscale erau in medie de 2 % in majoritatea cazurilor,
deficitele de cont curent depaseau 4 la suta din PIB`ul statelor, iar
creditele neperformante erau, cu mici exceptii, de peste 10 % din total
credite.
De regula, statele afectate de crize bancare aveau un regim
institutional de slaba calitate, iar drepturile debitorilor au un
coeficient de 1,8 pe o scara de la 1 la 4.
Ca reactii la criza, in 71 la suta dintre cazuri s`a mers pe idea
injectiei de lichiditate. Unele state au trecut la inghetarea
depozitelor, in vreme ce altele au declarat “vacanta bancara”.
Inghetarea depozitelor a variat si ea, cea mai lunga perioada fiind cea
implementatate prin planul Bonex, in Argentina. Metoda nu este deloc
recomandata deoarece aduce pierderi si chiar tensiuni sociale.
Cat despre “vacanta bancara”, folosita in unele situatii de criza, ea e
binevenita pana la punerea la punct a unui plan riguros de salvare
Labels: invest
Astfel, cea mai mare centrala de energie solara din regiune va fi construita in
tara vecina, mai exact langa satul Paunovo din apropierea Sofiei va acoperi o suprafata de 45 de hectare, va contine 13.000 de panouri care vor
avea o putere instalata de 1.250 de megawati/an. La un calcul facut de
autoritatea bulgara in materie de reglementare a domeniului energetic, energia
verde produsa aici ar economisi circa 900 de tone de emisii de monoxid de carbon compania bulgara SunService, cu sprijinul germanilor de la IBC Solar. Complexul
este aproape de a fi finalizat, constructia durand un an. Valoarea totala a
proiectului este de patru milioane de euro.
http://www.zf.ro/eveniment/preturi-cu-circa-20-000-de-euro-mai-mici-la-apartamentele-din-capitala-3566404/
grafic pret metru patrat
Sunt toate sansele ca minimul sa fie depasit ( 1758)
Dat fiind ca se scade incet treb sa apara o acceleratie in care va scadea ff repede. Pe panica s-a scazut 10%
deci un target de 1000 nu e un target rau
Retailerii americani si-au deschis portile astazi cu reduceri de pana la 70%,
dupa sarbatorirea Zilei Recunostintei, in incercarea de a salva ceea ce ar putea
fi cel mai slab sezon de cumparaturi din ultimii 6 ani
Cea mai buna saptamana din ultimii 75 de ani pentru indicele
Standard&Poor's. Indicii bursieri americani au inchis sedinta de
tranzactionare de miercuri pe plus pentru a patra zi consecutiv, trimitand
indicele Standard&Poor's 500 spre cel mai mare avans de patru zile din 1933
pana in prezent. Evolutia pietelor americane a fost impulsionata de aprecierea
pretului petrolului si de popularitatea de care se bucura noua echipa de
consilieri pe teme economice a presedintelui ales Barack Obama. Indicele
Standard&Poor's 500 a crescut miercuri cu 3,5%, recuperand astfel 18
procente in patru zile, dupa minimul ultimilor 11 ani atins pe data de 20
noiembrie. Acesta reprezinta cel mai consistent sir de cresteri ale indicelui
din ultimii 75 de ani. Joi, pietele din SUA au fost inchise deoarece americanii
au sarbatorit Ziua Recunostintei.
Producatorul american de automobile General Motors, aflat intr-o criza de
lichiditati acuta din cauza scaderii vanzarilor, a cerut sprijinul firmei
imobiliare Jones Lang LaSalle pentru a-si vinde sediul din Detroit pentru circa
200 de milioane de euro, pe care il va închiria ulterior
Activitatea din industria prelucratoare si constructii va
inregistra o scadere in perioada noiembrie 2008 - ianuarie 2009, comertul cu
amanuntul se va stabiliza, in timp ce sectorul de servicii va consemna un avans
Aproximativ o mie de muncitori ai Azomures, reprezentand jumatate din
numarul total al angajatilor, vor intra de luni in somaj tehnic
196 mil. lei (53,9 mil. euro), fata de pierderi de 7,5 mil. lei in perioada
similara a anului trecut. Cifra de afaceri a crescut in aceeasi perioada cu 80%,
la 963 mil. lei (264,6 mil. euro), in conditiile in care pretul ingrasamintelor
chimice pe pietele externe a atins niveluri record in acest an, scumpindu-se
chiar de 3-4 ori fata de anul trecut.
stirii, scazand de la un pret de 0,224 lei/actiune la 0,191 lei/actiune. La
acest nivel, capitalizarea societatii se ridica la 26,3 mil. euro (100,5 mil.
lei).
ipotecare, in functie de tipul imobilului care este adus in garantie - daca
este vorba despre casa in care
clientul locuieste, de o casa "de vacanta" sau de un imobil cumparat in scopuri
investitionale.
In noile conditii multi clienti nu mai au acces la imprumuturi, iar cei care se
califica obtin sume cu pana la jumatate mai mici comparativ cu variantele
precedente.
Prin noile norme BNR cere bancilor sa impuna clientilor un grad mult mai mic de
indatorare pentru creditele contractate in valuta pe termen lung, acesta
coborand chiar sub 40%.
. Banca americana Wells Fargo a achizitionat rivala Wachovia, cea pe care
autoritatile de reglementare au obligat-o in luna septembrie sa fuzioneze din
cauza pierderilor foarte mari din sectorul creditelor ipotecare, care au atins
valoarea totala de 120 de mld. dolari
creditor ipotecar, si banca americana de investitii Merrill Lynch, care a
inregistrat pierderi in valoare de 24 mld. dolari. Mai mult, banca
Morgan Stanley a pierdut aproape o treime din valoarea activelor in ultimele
trei luni.
1.300 mld. dolari in ultimul an, intrucat Fed a oferit lichiditati in valoare de
415 mld. dolari bancilor si a achizitionat instrumente financiare bazate pe
ipoteci de 272 mld. dolari.
casa medie in US costa 250 k deci ac suma inseaman 700k case
Investitorii straini controleaza 87,9% din sistemul bancar romanesc, cea mai
mare parte a acestora fiind greci, arata datele BNR Grecia (21,6%), restul fiind din Austria (19,3%), Olanda (7%) sau Italia (5,3%).
Romania are un deficit de cont de numai 14 %, o moneda in regim de
flotare controlata si este mai putin dependenta de exporturi decat
vecina ei din Sud. Insa ar putea avea parte de o aterizare fortata a
economiei. Estimarile privind cresterea economica pentru 2009 sunt de
doar 0,9 %. Sistemul bancar romanesc este mai putin profitabil decat
cel din Bulgaria. Chiar daca sunt detinute de jucatori straini, bancile
romanesti arata o anumita instabilitate. Rezervele straine sunt in
scadere, iar FMI a calculat ca moneda nationala este supraevaluata cu
19 %. Datorita cheltuielilor populiste angajate de la buget pe fondul
campaniei electorale, deficitul public ar putea atinge 3,9 %
Inteleg ca S&P sunt nesimtiti, ca Moody`s la fel, ca Fitch habar nu
are de fundamente, ca bancherii straini sunt prosti si speculanti, dar
acum si jurnalistii britanici vor fi fiind la fel de ignoranti? Analiza
fmi e cu siguranta facuta la plesneala, iar noi stam bine si fericit
he young millionaires of the property market shivered when prices took a dive to levels never seen in the past decade
omania is now the only country in the European Union with a junk
rating on its bonds, which is bad news for the Romanian government,
given that investors are more conscious than ever of ratings
downgrades.
A country which attracted 7.2 bn euros (£5.8bn) worth of investment in 2007, appears to have lost its appeal to investors.
But hardest hit is the once-booming property market. With prices in old
communist blocks of flats falling 30% year-on-year and new developments
also hit by from falling demand, some foreign investment funds have to
quit the country overnight.
There is still time for Romania to engineer a soft landing for its economy.
growth through a soft-landing, by controlling spending, or it will take
a massive hit on its currency," he said.
for the first time they turn the Fed into a direct lender to consumers. Many
homeowners, though they do not know it, will be sending their monthly mortgage
payments to the Fed. The Fed will finance these programmes with newly created
reserves: that is, it will print money. Its balance-sheet, which has ballooned
from $900 billion to $2.2 trillion since August, could grow by another $800
billion, making it a larger lender than any commercial bank
It is tempting to look to Japan for a map of where the Fed may be heading next.
Faced with sinking asset prices, insolvent banks, moribund growth and deflation,
the Bank of Japan (BoJ) eventually lowered its policy rate to zero in 1999. In
2001 it announced “quantitative easing”: through large-scale purchases of
government bonds, it would fill the banks with excess reserves that it hoped
they would lend out, stimulating loan growth.
To give it more impact, the Fed could commit itself to keeping the funds rate at
zero for some time or until the economy or inflation meet some predetermined
conditions. Such a commitment could drag down long-term Treasury-bond yields.
Academics have concluded that Japan’s quantitative easing had little benefit
except to buttress expectations that its policy rate would be zero for a long
time. Alternatively, the Fed could target long-term rates via purchases of
Treasuries, as it did from 1942 to 1951. That strategy could gain in appeal if
big government deficits start to press bond yields higher
Labels: invest
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