LONDON The Paragon Group of Companies PLC (PAG.LN), the mortgage origination company for residential property investors, Wednesday announced the acquisition of further unsecured consumer loans, through its Idem Capital Securities subsidiary, from The Royal Bank of Scotland PLC (RBS.LN) under the terms of a forward flow agreement.
MAIN FACTS:
-The consideration, which is being financed from Paragons cash reserves and which represents the value at which the acquired loans will be taken on to the Groups balance sheet, is GBP0.1 million.
-The investment is expected to be earnings enhancing in the current financial year.
-It is anticipated that there will be opportunities to make further modest acquisitions under the agreement and these will be announced as they occur.
-The acquisition follows the announcement, on Oct. 27, 2011, of the acquisition of a portfolio of loans from RBS for consideration of GBP43.2 million.
Planaria Price, left, who has been with Evans Community Adult School for 39 years, says the adult education program has already been cut in half. Now we find out that we are being zeroed out of the budget.
(Anne Cusack / Los Angeles Times / January 25, 2012)
This legislation requires the OMB and CBO to use fair value
accounting in calculating the true cost of federal credit programs,
including the costs of risk incurred by issuing a federal loan or
loan guarantee. This reform would bring federal budgeting in line
with private sector practices.
It also requires Fannie Mae and Freddie Mac to operate under a
budget. Since the financial crisis these enterprises have become
the responsibility of the federal government and these reforms
would ensure that their enormous liabilities are reflected in the
federal budget.
In order to further establish credibility, Loans.org made an appeal to the Better Business Bureau. The loan quote site is now accredited with an A+ rating.
Los Angeles, CA (PRWEB) February 08, 2012
Loans.org, the nationwide loan quote gathering hub, is proud to announce it is now accredited by the Better Business Bureau (BBB).
While Loans.org focuses on educating the consumer and granting the public with a means to acquire the lowest priced loans, the website also understands that it must establish credibility in order to gain the public’s trust.
The BBB rates companies based on 16 factors, all of which contribute to a letter grade assigned to each company.
Boasting an A+ rating from the BBB’s business review, Loans.org takes another step in ensuring the public that it is a credible resource for obtaining both financing information and quick, free quotes from various lending sources.
Additionally, the BBB granted Loans.org a position on TrustLink, which allows consumers to ask questions and further connect with the company in an unbiased third-party forum.
Cesar Diaz, founder of Loans.org, said, “We hope to serve as a means for the public to obtain information on safe and affordable borrowing. Acquiring an A+ rating from the BBB is but the first step of many to propel ourselves to the forefront of the public arena.”
Following the Great Recession, Diaz felt the public needed a trusted source for lending information and sought to create this online service. The site covers five types of loans–home, student, personal, payday and auto–and carefully analyzes each in articles, news stories and frequently asked questions.
While the nation struggles to stand back up after predatory lenders pushed it to the ground, Loans.org seeks to never allow such activity to take place again. The public should no longer be led astray by the fine print in contracts. Instead, the website hopes to serve as a trusted hub where consumers can learn everything they need to know about the most popular forms of lending.
As recommended by the FBI, the BBB should be consulted when trying to determine the legitimacy of an online website.
To read more about lending issues, go to http://loans.org/ where you will find a constantly updated library of financing information. In addition, you can access a free-to-use quote-comparison generator that consumers can use to ensure they receive the lowest mortgage loan interest rates possible.
###
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/2/prweb9177365.htm
While I have thoroughly enjoyed writing about frugal living in Richmond, theres a time and season for everything and its now time for me to move on. This doesnt mean Im not going to continue with a frugal lifestyle, Ill always be a thrifty person looking for ways to save more. Hopefully all the tips and information Ive provided in my many past articles have helped other Richmonders live a frugal lifestyle. My final thoughts on frugal living are centered around some great tips on how to have a frugal approach to life and some of the best tips I can offer on how to live better on less.
Key Points for a Frugal Approach to Life amp; Living on Less:
Learn the Basics of Frugal and Simple Living Learn the basics of frugal and simple living, meaning you should learn how to budget your money and create a budget, save for unexpected costs, retirement, and for anything you want, clear your mind and house of clutter and realize the difference between wants and needs. Make a plan to followit could be a one-year plan or even longer if you wish. Know how much debt you owe, how much your annual salary is and how much you want to save. Work on paying off debt so that you can have more money to save and more spending money for things you need or want. Look at where you can cut back and get rid of expenses to pay down debt quicker and save money faster. For example, do you need cable TV? Do you need a landline and a cell phone? Do you need subscriptions to magazines and so on?
Anything you feel comfortable getting rid of (at least short term) can help contribute to your debts, bills and necessary costs like food. Getting rid of things that are nice to have, but not necessary, doesnt have to be permanentyou can always get those things again later if you still want them once you have your debt and budget under control. If youre barely getting by or dont have much extra money to put towards debt, savings or little things then cutting back can definitely help free up some money in your budget. Being debt free and having access to more of your money can give you the freedom to save more towards retirement (and other goals like purchasing a home, paying for childrens education, etc), the ability to spend more on things you enjoy and give you breathing room if an emergency or lay-off were to happen.
Follow Through on Living Simply and Minimally Nothing in life will happen unless you commit to it and follow through with it, so take living a more simple and minimal life seriously and follow through on your goals. This doesnt mean you have to change everything overnight, start out with small changes and work your way toward a frugal lifestyle. Being frugal also doesnt mean depriving yourself either as some may think. Its okay to splurge every once in a while, just do so responsibly, like paying cash for an item instead of putting it on credit or paying your credit card off every month if you use credit cards instead of cash.
Shop Wisely This is a no brainer; shop smarter for things you need such as food, household supplies, health supplies, clothing, furniture, and appliances. Save on essentials by shopping at thrift stores and consignment shops, using coupons, watching the sales and buying different items at different times of the year. Shopping all year round and/or using layaway for gifts and for the holidays are some good ideas too. Shopping after the holidays is another good way to save for next year. Wrapping paper, boxes, cards and all sorts of other Christmas stuff will be marked down (usually half price) after Christmas, this is the perfect time to stock up for next year. There are a lot of different ways to shop smarter, such as knowing the prices of the top 10 or 20 things your family purchases the most so you can figure out when those items are at their lowest cost, making a shopping list and sticking to it, staying within a monthly budget, buying in bulk (if you have a large family), planning meals ahead of time and only shopping every two weeks to a month for the majority of food items you need.
Travel Cheaply Refer to some of my past articles about how to travel cheaply and for frugal travel destinations for vacationing. There are many ways to travel cheaply and save on the cost of seeing friends and family who live out of town or out of the country. Vacations planned ahead of time can save on the cost of going on vacation. Also, setting aside a certain amount every week or month can help with the cost of taking a vacation or traveling.
Make Good and Informed Decisions Your choices really do carry consequences and the small decisions you make every day can have a big impact on your financial life. Making good decisions can help you both immediately and down the road too. Getting your finances in order early in your life and learning frugal living tactics early can spare you a lot of financial trouble in the future. For example, having a good credit score is important if you want to take out a loan for a house, car or other big purchase. Establishing credit and having good credit can help you, whereas having bad credit scores can hurt you. Making good financial decisions cannot be stressed enough, plus, making good decisions now will most likely make your life easier later.
Look for New Ways to Save Continuously – Never stop learning about how to save more and spend less. Always look for new ways to save and cut back on expenses. There are a lot of ideas out there floating around on blogs, news web sites and personal finance sites that list ideas you could try. Try to make your finances easily manageable and always live below your means, not above them.
Value in your Time and Money When making purchases, think about how long you have to work in order to earn the amount of money youre going to spend on the item you want to purchase. It can really put things into perspective when you realize that you might have to work a whole day just to spend that money on something you dont really need like a new designer purse or really expensive jeans. For example, if youre making $10 dollars an hour and you want to purchase something that costs $100 dollars, thats 10 hours of work you have to do to pay for that purchase. Do you want to trade your time for the item you want? Realize that there is a trade off you make with every purchase. Your time is your life. While most of us have to work full time jobs to pay our bills and for our needs and wants, if you keep yourself in check when it comes to wants and splurging then you could potentially retire early and/or work less.
Sharing Instead of Owning Sharing items instead of owning is a revolutionary new idea that could have a big impact on how we all live. Imagine, instead of buying every tool you need to fix stuff in your home and then having to store those tools you just go to the store and rent them or borrow them, then take them back when youre done. There are a lot of items (like tools) that you may only use every once in a while over the course of your life. If you only need this item once or twice in your life, why buy it and store at your home when you can rent it cheaper and then take it back so its not taking up your space. You could borrow stuff from friends and family too. Imagine sharing a car with a group of people instead of having to own a car. All the costs are split so it makes for a much more inexpensive option. There are a lot of ideas coming about from sharing instead of owning, especially when it comes to things like music and movies.
Focus on what you Love If youre not worried about money and you are somewhat stable when it comes to your finances you can focus on what really matters like doing things you enjoy, exploring your passions, relationships, living life to its fullest (whatever that means to you), learning new things, having new experiences, creating, traveling, supporting charity and doing things that make a difference in the lives of others like giving back to your community or the world. You dont have to have a huge bank account and be extremely rich to focus on what you enjoy doing, you just have to manage your finances and plan for what you would like to do. So what do you want to do? Whatever it is plan for it and make it a reality.
Save, Save, Save Saving for the future is tough, but necessary. Many people want to live for today and put off saving for tomorrow, then tomorrow never comes and then all of a sudden theyre close to retirement age and they have almost nothing to show for it because of many poor financial decisions made throughout their life. Or, maybe they were dealt a really bad hand and lost a lot of income in the stock market or some other way, when they fully intended on saving. Unless you plan on working for the rest of your life and living paycheck to paycheck you must make it a priority to save, even if its just a little bit, from every paycheck and every month.
Something is better than nothing right? Start out small and work your way up as you cut back on expenses, increase your income or take on other income streams. You will be lured to spend any extra money you make but its important to save. Saving money and putting it aside for a rainy day can help you get through a layoff from a job, a medical emergency, unexpected auto or home repairs or a tough financial time. Plan for the unexpected things in life like: your car breaks down or needs a repair, a refrigerator or other appliance stops working, a leaky roof, a potential layoff coming in your work, needing some kind of medical help like an unexpected surgery.
Life doesnt give you a heads up that these types of things are coming, but we all know theyre possibilities that can happen to any and all of us. Be responsible and plan for the unexpected ahead of time so that way you wont freak out when something happens and you dont have enough money to pay for it.
Diversify Your Income If you cut back and you still cant seem to afford what you need then it may be time to think about taking on a freelance job or a part-time job on top of your full time job. If you dont have a full time job you might have to work several part time jobs to make a full time income in this still volatile economy. Do whatever it takes to try to pull in more income and make it work. Dont put all of your savings into one account either.
Diversify and open up a couple of types of savings like a 401K, IRA, savings, money market savings and investments in things like CDs, bonds, gold, silver, dividend-paying stocks and so on. Bring in some extra income by having a yard sale, selling on Craigslist, Ebay and Etsy. Selling for direct sales companies like Avon is a good choice if you are good at selling and have loyal buyers who love the products. Build passive income streams that continue to pay you after youve done the work, for example, writing a book, a blog, writing articles, affiliate marketing, stocks that pay dividends and a few other ideas you can find online.
If you can afford to purchase an inexpensive continuous money maker like soda machines, snack machines, candy machines and sticker/toy machines you could make an income off of those machines continuously. However, it will require continuous work to service the machines and re-stock them. If youre not scared from the downturn in the housing market and can afford to do so you could purchase an investment property and sell it when the market rebounds. If you have a lot of money saved you could invest in kiosk machines like Redbox to make money off of continuously.
If you work for a company that still offers a pension, you are one of the lucky few. Pensions have sadly fallen by the wayside, as most companies no longer offer them. Dont depend on Social Security entirely for retirement as it may not be something that is around forever and even if it does stick around it will not be enough money for someone to live off, plan on needing at least one to two additional income streams in retirement in order to live comfortably. In order to have enough to live on when you retire you should figure out exactly how much you should be saving now, heres a calculator to help you.
Goodbye and Good Luck – I would like to take this opportunity to say a final thank you to everyone whos read my articles on frugal living in RVA and urge you to please continue to practice a frugal lifestyle. Thanks!
Plus I would like to point out there are some really great local bloggers who keep up with and post all the local deals in RVA, check out their blogs to find local deals and steals:
Bad Home Loans Top $72 Billion in ‘Colossal Failure’: Mortgages February 14, 2012, 12:38 PM EST
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Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans
Goldman Sachs Seeks Exemption for Bank Stakes in ‘Credit Funds’
Citigroup Will Pay $158 Million to Settle U.S. Lending Case
JPMorgan, HSBC Implicated by Informant Bank in Canada Libor Case
By Donal Griffin
Feb. 8 (Bloomberg) — Costs from faulty mortgages and shoddy foreclosures have topped $72 billion at the biggest U.S. banks as they near a settlement of a 50-state probe into the industry’s practices.
Wells Fargo & Co., Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Ally Financial Inc., the five largest home lenders during the real estate boom, tallied at least $6.78 billion in new costs tied to mortgages during the second half of 2011, according to data compiled by Bloomberg. Bank of America, ranked second among U.S. banks by assets, contributes $41.8 billion of the overall total.
The mounting costs are pushing lenders and regulators to resolve investigations and lawsuits over faulty home lending, including a 50-state review of foreclosures. The wrangling over the status of old loans has made some banks more reluctant to make new ones, even as Federal Reserve Chairman Ben S. Bernanke appeals for action to increase lending and fix the U.S. housing market because it’s a drag on the economic recovery.
“It’s a colossal failure of basic banking,” said David Knutson, a credit analyst in Chicago with Legal & General Investment Management, a holder of bonds in some of the lenders involved. “It’s surprised everyone in terms of persistence and longevity and I think it will continue to surprise.”
‘Fear of the Unknown’
The banks are negotiating a settlement said to be worth as much as $25 billion with state attorneys general, and it may expand later to include some smaller lenders that made mortgage loans. While an accord could be announced as early as this week, some states have been holding out for tougher and possibly more expensive terms, including the right to press future legal claims.
“The fear of the unknown is a lot worse than when you finally get a figure,” said Alex Lieblong of Key Colony Management LLC, which manages about $153 million, including shares in Bank of America and Wells Fargo. “If you could get it all into a box and say that this is the known figure, then that will be viewed as a positive.”
Spokesmen for all five of the lenders declined to comment.
The bulk of the expense was triggered by investors who bought mortgages and then demanded refunds after finding flaws in the underwriting, including false data about borrower incomes and home values. Such sales to investors typically came with promises, known as representations and warranties, to buy back defective loans.
Outstanding claims against Bank of America jumped 22 percent in three months to $14.3 billion as of Dec. 31.
Countrywide Acquisition
Bloomberg’s tally also includes expenses tied to court cases and investigations. Bank of America’s increase of at least $2.65 billion in mortgage costs during the second-half of 2011 included $1.76 billion tied to litigation, filings show.
That increased total costs since the start of 2007 for the Charlotte, North Carolina-based bank to $41.8 billion. Chief Executive Officer Brian T. Moynihan has been hobbled by bad loans created at Countrywide Financial Corp., acquired in 2008 as the subprime home lender careened toward possible bankruptcy.
The combined company, which once accounted for one in every four U.S. mortgages, now controls only 5.6 percent of the market, according to FBR Capital Markets Corp., as Moynihan tries to stanch losses at the home lending unit.
Wells Fargo, now the biggest home lender with 30 percent of the market, added $794 million to its repurchase reserve for the six months. The San Francisco-based company said Jan. 17 it would pay $100 million to meet with the requirements of so- called requirement of consent orders that banks signed with federal regulators last April designed to curb any abuses. That brings its total costs to at least $5.98 billion.
Costs Surge
JPMorgan, the biggest U.S. lender, saw costs surge by at least $2.25 billion during the six months, increasing mortgage expenses to $18.5 billion, according to regulatory filings. The New York-based firm, led by CEO Jamie Dimon, added $1.53 billion in legal costs during the period, the filings show.
Citigroup, the third-biggest U.S. bank, didn’t disclose specific litigation costs for mortgages. Vikram Pandit, CEO at the New York-based company, set aside more than $600 million for repurchasing faulty loans during the last six months of 2011, more than the $541 million set aside by Bank of America.
Citigroup said in a Jan. 24 presentation that litigation costs at its Citi Holdings unit were $1.1 billion in 2011. The majority of those expenses were tied to a $109 billion mortgage portfolio, according to a person briefed on the costs, who declined to be identified because he wasn’t authorized to comment publicly about the matter.
Citigroup Losses
Bloomberg News excluded the $1.1 billion cost from the overall tally. Citigroup’s total legal and repurchase costs from the mortgage crisis so far are at least $3.61 billion when this figure is included. The total number for the five banks rises to more than $73 billion.
Pandit created Citi Holdings to hold and sell troubled assets in the wake of the lender’s $45 billion bailout in 2008. The bank lost $29.3 billion for 2008 and 2009 combined, much of it tied to subprime mortgage bonds.
“We remain concerned about the U.S. housing market,” Pandit said on an Oct. 17 call with analysts. “The U.S. residential mortgage portfolios of most banks remain their greatest risk.”
Ally, the lender controlled by U.S. taxpayers following a bailout, added $114 million to its repurchase reserve during the period, filings show. The Detroit-based company also said last month it will record a fourth-quarter charge of about $270 million for penalties associated with foreclosure practices by its mortgage unit Residential Capital LLC, bringing total costs to about $3.67 billion since 2007.
Ally Penalties
Michael Carpenter, Ally’s CEO, wants to sell the firm’s shares in an initial public offering to help repay $17.2 billion of bailout funds to taxpayers. This is unlikely to happen until issues tied to faulty home loans are resolved, Carpenter said last week.
Paul Miller, a former examiner for the Federal Reserve Bank of Philadelphia and analyst with FBR Capital Markets, wrote in a note last September that bank losses from repurchases could surpass $121 billion. About 60 percent of that, or about $72.6 billion, might be incurred by Bank of America, Citigroup, JPMorgan and Wells Fargo, Miller wrote.
The mounting costs sparked concern that some lenders might need to raise capital and helped send their stocks reeling last year, with the KBW Bank Index down 25 percent in 2011. Bank of America was the worst performer in the Dow Jones Industrial Average with a 58 percent plunge; this year, the company leads the Dow with a 41 percent gain amid signs that the U.S. economy is gathering strength.
Robo-Signing Investigation
All 50 states announced almost 16 months ago they were investigating disclosures of so-called robo-signing, a term that describes the practice of mortgage lenders and their contractors vouching for foreclosure documents without verifying them. Officials from a group of state attorneys general offices and federal agencies, including the Justice Department, have since been involved in negotiating terms of a proposed settlement with the banks.
The Justice Department also contacted smaller mortgage lenders, including U.S. Bancorp, PNC Financial Services Group Inc. and HSBC Holdings Plc, with the goal of including them in any future settlement agreement.
More than 40 states signed on to the accord, according to Iowa Attorney General Tom Miller, who is helping to lead talks with the banks. Other attorneys-general, including California’s Kamala Harris and New York’s Eric Schneiderman, have yet to join the settlement.
MERS Litigation
The accord may not cover a new round of litigation from local governments, who may claim they were cheated out of fees by the industry’s electronic system of registering and transferring mortgages, known as MERS. Banks used the database to help speed the sale of home loans for more than a decade as trading in mortgage-backed bonds accelerated, bypassing some traditional real-estate recording practices.
“There are counties out there that are desperate for revenue that may come after the banks,” said Peter Henning, a law professor at Wayne State University in Detroit. “The MERS- related litigation could run into the billions.”
Bloomberg’s tally was compiled from regulatory filings, company statements and financial presentations. The data cover provisions and expenses attributable to repurchases, foreclosure errors and abuses, payments to reimburse investors for lost value on faulty mortgages, legal settlements and litigation expenses.
Smaller Banks Included
The compilation also includes writedowns of assets, such as mortgage servicing rights, when the company attributed the loss in value to problems in mortgage underwriting or foreclosures and the costs of remedies. The figures may increase as more detailed breakdowns become available.
Bloomberg’s tally focused only on firms that were among the top five home lenders during the mortgage boom. The industrywide total would be closer to $75 billion if smaller banks and securities firms were included.
U.S. Bancorp reported a $130 million expense in the fourth quarter tied to mortgage servicing by the Minneapolis-based company, ranked fifth by deposits. CEO Richard Davis told investors in January that smaller banks had been invited into settlement talks with the attorneys general, and “we believe we have something that we need to reserve for.”
PNC, the sixth-largest U.S. lender by deposits, set aside $240 million for costs tied to residential mortgage foreclosures as a result of “ongoing governmental matters,” the Pittsburgh- based company said.
California, New York, Nevada, Florida and Massachusetts are among the states that haven’t signed off on a settlement with banks over foreclosure abuses, according to state officials and two people familiar with the talks. Even a quick agreement may not help the banks keep the tally from soaring even higher.
“It does give them certainty and it gives them a PR boost,” said Wayne State’s Henning. “But it isn’t over. They may want to be out of the headlines but this isn’t the last we’re going to hear about mortgages.”
–With assistance from David McLaughlin and Michael Hytha in New York and Lorraine Woellert in Washington. Editors: Rick Green, Pierre Paulden
To contact the reporters on this story: Donal Griffin in New York at dgriffin10@bloomberg.net
To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Rob Urban at robprag@bloomberg.net
Japan used so-called stealth
intervention in November as the government sought to stem yen
gains that hammered earnings at makers of exports ranging from
cars to electronics.
Finance Ministry data released today showed Japan conducted
1.02 trillion yen ($13.3 billion) worth of unannounced
intervention during the first four days of November, after
selling a record 8.07 trillion yen on Oct. 31, when the yen
climbed to a post World War II high of 75.35 against the dollar.
The currency’s strength has eroded profits at exporters such as
Sharp Corp. and Honda Motor Co., just as faltering global
growth undermines demand.
“Japan has clearly shown its intention to stop a further
appreciation of the yen, and there is a high chance” for more
yen selling, said Hideki Shibata, a senior strategist for rates
and foreign exchange at Tokai Tokyo Research Center Co.
“Caution against intervention has increased in markets.”
November’s unannounced yen sales were the most effective
strategy to weaken the currency, said a Japanese official who
spoke to reporters in Tokyo today on condition of anonymity.
Finance Minister Jun Azumi said he won’t rule out any options to
curb the yen’s appreciation and that he will take action
whenever necessary.
Exporting ‘Nearly Impossible’
His comment came a week after Sharp, Japan’s largest maker
of LCD panels, forecast its worst annual loss since its founding
a century ago, with its president saying exporting is “nearly
impossible” with the strong yen. Panasonic Corp., Japan’s
biggest appliance maker, forecast a 780 billion yen loss, the
worst since the Osaka-based company was established in 1918.
Honda, the nation’s third-largest automobile maker,
forecast on Jan. 31 net income for the 12 months ending March
will decline to a three-year low of 215 billion yen. The company
estimates its operating income is cut by 15 billion yen for
every one yen gain against the dollar.
The Bank of Japan last month lowered its forecast for
economic growth to 2 percent in the year starting in April from
an October estimate of 2.2 percent, citing a slowdown overseas
and the stronger yen.
The US Treasury Department criticized Japan in a December
report for unilaterally selling its currency in August and
October, saying the Asian nation should focus on steps to
“increase the dynamism of the domestic economy.” Intervention
is an option if the yen moves excessively, Naoyuki Shinohara, a
deputy managing director at the International Monetary Fund,
said in an interview in Tokyo on Feb. 3.
US Criticism
“Coming under growing criticism from overseas, Japan
couldn’t openly intervene in the markets,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd.
“Japan had to choose stealth intervention from the very few
options to deal with increasing pressure within the country.”
Intervention is defined as “stealth” when it’s done
without any finance ministry announcement, he said.
The yen sale in October was the biggest intervention on a
monthly basis in data going back to 1991, while sales totaled
14.3 trillion yen in 2011, the third-largest annual amount,
ministry data also showed.
No New Tactics
“We do not believe that the intervention over a period of
several days by Japanese authorities signals a significant shift
in tactics compared to previous interventions,” Osamu Takashima, Issei Suzuki and Todd Elmer, foreign-exchange
strategists at Citibank Japan Ltd. in Tokyo, wrote in a note to
clients today. “Investors may be inclined to sell into any
renewed bout of intervention on USDJPY on a breakdown beneath
recent range lows.”
The first intervention of 2011 was a 692.5 billion yen sale
on March 18, when the Bank of Japan led a coordinated effort
with Group of Seven nations to counter a jump in the yen after a
record earthquake struck Japan a day earlier, stoking
speculation companies would repatriate overseas assets to pay
for rebuilding. Current Prime Minister Yoshihiko Noda, who was
finance minister at the time, ordered the nation’s central bank
to intervene again unilaterally on Aug. 4.
The yen reached 76.03 per dollar on Feb. 1, the strongest
since Oct. 31. It traded at 76.72 as of 2:33 pm today in
Tokyo.
To contact the reporters on this story:
Monami Yui in Tokyo at myui1@bloomberg.net;
Shigeki Nozawa in Tokyo at
snozawa1@bloomberg.net.
To contact the editor responsible for this story:
Garfield Reynolds at
greynolds1@bloomberg.net
Financial Secretary John Tsangs fifth and last budget of the current-term Hong Kong government delivered last Wednesday was a model of fiscal design, the envy of most governments. Which government around the world can boast a surplus of HK$66.7 billion, against a forecast deficit for 2011 and 2012 of HK$8.5 billion amidst a year of crisis in Europe and global slowdown? Which government (perhaps with the exception of Singapore) can claim fiscal and foreign exchange reserves equivalent to 35 per cent of GDP or 22 months of government expenditure? And which government can claim to have pure government debt (excluding statutory body debt) of less than 2 per cent of GDP?
Ministers of finance in Europe who are struggling with debt crises can only shake their heads at the ability of Hong Kong to increase tax allowances, cut property taxes and waive some profits tax. All these goodies, and the forecast deficit for next year is (only) HK$3.4 billion. We should nominate John Tsang for the post of commissioner for fiscal reform in Europe.
The financial secretary is correct to warn about potential shocks from global crises, and growth in real terms in 2012 is forecast at 1 per cent to 3 per cent, but the medium-term average is projected at 4 per cent for the period 2013 to 2016.
In his concluding remarks, Tsang labelled himself as having worked conscientiously as a financial secretary, and I cannot agree with him more. Having steered the economy through some tumultous times, it has not been easy to navigate the most open economy in the world amidst such huge turbulence. But Hong Kong has been lucky to be part of the fastest growth story in the 21st century and to be located in the right neighbourhood.
The financial secretary spent a fair amount of time reflecting on how to capitalise on Hong Kongs competitive edge, mentioning specifically Chinas 12th Five Year Plan having a dedicated chapter on Hong Kong and Macao. He has identified the importance of further liberalisation of the mainland economy for Hong Kong to develop, promotion of cross-Straits relationships, further linkages to Asean and Brics countries and the promotion of more parent companies to locate in Hong Kong.
I commend his analysis of the strategic need to develop social capital, urban renewal and his concentration on promoting and supporting the four Pillar Industries (namely trade and logistics, financial services, business and professional services and tourism) and six industries where Hong Kong has core competitive advantages – cultural and creative industries, medical services, education services, innovation and technology, environment industries, and testing and certification services.
What I missed from the budget speech was a discussion of what role Hong Kong will play in the global game, when there is a perceptible shift in economic power from West to East, and how Hong Kong needs to position itself to facilitate that shift so that this will be achieved without huge conflicts and volatility.
Coming back from recent visits to Saudi Arabia, Indonesia and India, my perception is that the emerging markets in Asia are now looking at different models of growth. One trend that is emerging is that the future of competition may be less of nations, but between cities.
The reason is simple. With 55 per cent of the global population in Asia, and mostly in rural areas, one path for development is through urbanisation. The UN estimates that by 2025, Asias urban population will be more than 50 per cent, and by 2050 the proportion will be two-thirds. The McKinsey Global Institute estimates that just 380 cities in the advanced countries account for 50 per cent of current world GDP. China and India are urbanising very fast, and the new mega-cities will all be searching for solutions to deal with jobs, environmental issues, traffic congestion, education, medicare and social welfare.
No one can question the fact that one of Hong Kongs core competencies is that it is one of the most successful cities in Asia, if not the world. That knowledge alone can be exploited to engage in new partnerships with other cities to bring economic opportunities to these partners and to Hong Kong.
What does that mean for planning for the future? The current paradigm of economic theory, based on neo-classical thinking and free-market ideology, is too simple and flawed to help us think through such complex, non-linear and evolving challenges. Eric Beinhocker, in his book The Origin Of Wealth, suggested that wealth creation is really through the interaction between three forces – business plans, physical technology and social technology.
It is clear in my mind that Hong Kongs comparative advantage is not in physical technology, not because modern cities cannot buy or attract the technology or hardware, but because of scale. Hong Kongs real comparative advantage is its vibrant entrepreneurial business models that are flexible and competitive at a global scale, and its social technology, which is defined as methods and designs for organising people in pursuit of goals.
In other words, Hong Kong does not have hard power, but soft power. Competition and innovation in the future will be less about more hardware (of which Hong Kongs infrastructure is already at the forefront), but about the software of people, skills and experience, and how to organise these at both the business and the government level.
Hardware-driven innovation (especially in physical technology) thinks that helping guys in garages to make the next Microsoft or funding large RD labs and science parks will create the next breakthrough in wealth creation. For large countries with large resources, this may be true. But for cities like Hong Kong, the real breakthrough, which is already happening although perhaps less recognised, is the innovation in business plans and social technology that Hong Kong is very good at.
Facilitating the next phase of innovation in social technology and business plans for Hong Kong to maintain not just its hardware leadership, but its thought leadership globally will be the real challenge for the next generation of Hong Kong leaders.
Andrew Sheng is President of the Fung Global Institute, Hong Kong. (www.fungglobalinstitute.org).
(Updates to add euro forecast in fifth paragraph, algorithmic trading in 13th.)
Feb. 8 (Bloomberg) — The euro will probably struggle to rise even as funding measures taken by the European Central Bank to unfreeze lending have reduced the risk of a Lehman-style catastrophe, according to JPMorgan Chase amp; Co.
Im more optimistic than many on Europe, but that doesnt mean I think that the euro will be higher any time soon, Troy Rohrbaugh, global head of currency trading, said in an interview in London. Many countries across Europe are applying forms of austerity and enhanced liquidity which, in the medium-to-long term, is not going to be beneficial to the currency.
The ECB provided 489 billion euros ($649 billion) of three- year loans to banks on Dec. 21 to keep credit flowing amid the regions sovereign debt crisis. The additional cash followed interest-rate cuts on Nov. 3 and Dec. 8 as policy makers sought to bring down euro-era record bond yields in nations including Italy and Spain. The central bank announces its next rate decision tomorrow.
The premium European banks pay to convert euro payments into dollars through the swaps market has fallen from a three- year high reached in November as the Federal Reserve led six central banks including the ECB in making it cheaper to borrow dollars.
Three-month cross-currency basis swaps were 68.3 basis points below the euro interbank offered rate at 12:27 pm in London, from 162.5 basis points on Nov. 30, the most since the month after the collapse of Lehman Brothers Holdings Inc. in September 2008.
Weaker Euro
JPMorgan, the largest US bank by assets, forecasts that the euro will weaken to $1.30 by the end of March. The euro was little changed at $1.3248 at 10:54 am in New York.
The 17-nation euro has fallen 0.8 percent this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. It fell 2 percent in 2011, the third yearly decline, the gauge shows.
By providing more liquidity, policy makers have reduced the risk of a Lehman-style catastrophe, Rohrbaugh said on Jan. 26. If we see a solution with Greek debt and the ECB continues to show willingness to support banks with liquidity, that will go a long way in mitigating the most dangerous aspect of this crisis.
The ECB said two days ago it settled 219 billion euros of bond purchases from nations including Italy, Spain, Portugal and Greece. The central bank began the debt-buying program in May 2010 to contain yields. It will offer a second round of the three-year cash this month.
Hedging Practices
A quarterly survey by JPMorgan published last month showed most companies havent changed their currency management practices in response to the euro-area crisis. The New York- based bank said 69 percent of US and Japanese firms said no changes were made in their hedging practice, as did 79 percent of European companies.
European leaders have maintained pressure on Greece to reach a debt deal to avert a financial collapse. They are also crafting tougher fiscal rules and considering whether to boost the funds available for a bailout.
The sooner we have a resolution in Europe, the better for the global economy, Rohrbaugh said. It doesnt have to be perfect or involve a complete bailout. As long as policy makers can further reduce uncertainty, we should have the kind of stability that weve seen at the start of the year.
Rohrbaugh said JPMorgan will keep investing in its so-called algorithmic-trading business this year. Such trading uses computers to enter buy or sell orders based on information they receive from the market, without human intervention.
We are seeing a growing trend where some clients are looking to outsource perceived lower value function such as order execution, and they are looking to us and our algo solutions to do this for them, he said. Depending on client suitability, we will look to do more of this kind of business.
–Editors: Daniel Tilles, Nicholas Reynolds
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
Chicken fingers. No one â no chef and no parent â wants to raise a child who eats only chicken fingers. Or only white bread, or pasta-with-butter-and-nothing-else. The question of how to raise that highly desirable child who eats everything is one many first-time parents grapple with, and Fanae Aaron, an author and art director, was one such parent. Unlike most of us, though, who approach the process through trial and error, asking around the playground and either embracing or completely rejecting the foods we grew up with, Ms. Aaron set out to ask chefs how they fed their kids (who, she rightly presumed, mostly ate more than just white food).
The result was What Chefs Feed Their Kids, a book that offers advice from chefs seeking to cultivate a love of good food in their children from infancy (fresh pea and spinach purÃe) to teenage years (Goan shrimp curry). More than just recipes, this is a book that’s full of suggestions to encourage kids to eat and enjoy what’s on their plate at every age. Offer a variety, and offer things more than once. Don’t highlight your own dislikes (I hid a dislike of broccoli from my own children for nearly a decade, and all four love the stuff). Offer a new food with a familiar food (which is why you’ll nearly always find a new dish served with rice or pasta at our house). Don’t push a kid who’s not hungry to eat, but let your kids get hungry, because even the best cooks know that a little hunger is the best sauce.
But to raise a child who enjoys good food, you have to cook good food yourself. That’s where many of us, especially in households where every adult works, or where teenagers are constantly engaged in evening activities, fall down.
On the Well blog, Tara Parker-Pope embraced An Everlasting Meal, another cookbook that’s as much about approach and technique as it is about recipes. The message of the author, Tamar Adler, is that cooking does not have to be complicated, and all anyone needs are a few basics to get started. If cooking isn’t complicated (and few of the recipes in What Chefs Feed Their Kids are complicated), then making dinner at night is less daunting. Approached right, it’s also cheaper (and sometimes faster) than prepared foods or eating out, and it’s generally healthier (although you can certainly buy a healthy meal at many grocery stores, for a price).
If you plan your meals, it does save money at the store, says Billie Kahler, who blogs about her frugal lifestyle at the Frugal Flamingo. You are taking the guesswork out of what you need when shopping. It allows you to orchestrate meals around your busy nights. If Tuesday night is crazy, plan a simple meal in the slow cooker. Or cook two meals on Monday night to prepare for Tuesday. Ms. Kahler has four children (one adopted internationally, which is our connection), a busy life and a goal: cook a healthy meal most nights of the week.
What Chefs Feed Their Kids never makes this point, but chefs are working parents, with odd hours, and many of the chefs Ms. Aaron interviewed are also small-business owners. In some cases, it may be easier for them to combine cooking for their children with their working hours, but most are cooking separate family meals on their own time. They’re doing it because they love food, love eating, and want to share that with their families. I feel the same way, but sometimes I need a push to remind myself that with a little planning, I can have steamed black cod with ginger broth and noodles on the table in half an hour (that’s sablefish to most of us), or even potato-chip crusted chicken tenders.
Are you cooking dinner tonight? (We’re having pork from the slow cooker, corn cakes and brussels sprouts.) Do your children appreciate your cooking, or would they take a dinosaur-shaped nugget any day? What do you do to help cultivate a love of good (and healthy) food?
