Citigroup Inc. has barred investors in one of its hedge funds from withdrawing their money, and a new leveraged fund lost 52% in its first three months, the Wall Street Journal reported on Friday.
The largest U.S. bank suspended redemptions in CSO Partners, a fund specializing in corporate debt, after investors tried to pull more than 30% of its roughly US$500-million of assets, the newspaper said. Citigroup injected US$100-million to stabilize the fund, which lost 10.9% last year, the newspaper said.
The fund’s manager, John Pickett, left following a dispute with Citigroup executives and complaints from investors after he tried to back out from committing more than half the fund’s assets to buy leveraged loans tied to a German media company, the newspaper said. That matter was settled when CSO agreed to buy US$746-million of the loans at face value, though they were trading at 86% to 93% of face value, it said.
Meanwhile, Falcon Plus Strategies, launched Sept. 30, lost 52% in the fourth quarter, after betting on mortgage-backed and preferred securities and making trades based on the relative values of municipal bonds and U.S. Treasuries. Some collateralized debt obligations in the fund trade at 25% of their original worth, the newspaper said.
Both funds are run in Citigroup’s alternative investments unit. That unit was briefly headed last year by Vikram Pandit, who in December replaced Charles Prince as Citigroup’s chief executive. Old Lane Partners, a hedge fund that Pandit founded and sold to Citigroup last year, has also had weak performance, falling 1.8% in January, the newspaper said.
Since June, Citigroup has disclosed some US$30-billion of write-downs and losses tied to subprime mortgages, complex debt and deteriorating credit. The problems contributed to a record US$9.83-billion fourth-quarter loss. Profit that quarter in the alternative investments unit fell 89% to US$61-million.
Citigroup was not immediately available for comment. A spokesman told the newspaper that CSO and similar hedge funds are subject to comprehensive risk oversight, and that Falcon Plus’s returns suffered from volatile fixed-income markets.
Shares of Citigroup closed Thursday at US$25.74 on the New York Stock Exchange.
haha..."homebuilders don't do a very good job building houses...one thing they know how to do well is trade their own stocks." ^_^
Homebuilders catch fire
By Colin Barr 14 February 2008
NEW YORK -- The hard-charging homebuilding stocks are making believers of some investors.
Shares of the S&P Homebuilders Sector Spider (XHB), the exchange-traded fund that tracks the biggest publicly traded companies in the residential construction business, have risen 7% this year. That gain is noteworthy on its own, given the 7% decline in the S&P 500.
But what's even more dramatic is the huge rally that erupted in these stocks in the middle of last month, right before the Federal Reserve started cutting interest rates in a bid to stave off a possible recession. The homebuilders ETF is up 29% off its early January lows, while components Toll Brothers (TOL), Lennar (LEN) and Hovnanian (HOV) are up 40%, 52% and 96%.
So after two and a half years of steep drops, have the homebuilding stocks finally seen a bottom? Some investors believe they may have - and that the recent bounce foretells sunnier days for an economy that has been besieged in recent months by recession talk.
"What took us into this malaise will be what takes us out," Bill Miller, portfolio manager for the Legg Mason Value Trust, wrote this week in a letter to the fund's shareholders. "Housing stocks peaked in the summer of 2005 and were the first group to start down. Now housing stocks are one of the few areas in the market that are up for the year."
Miller, whose fund lagged behind the S&P 500 by some 20 percentage points over the past two years after a 15-year run of beating the index, sees a possible replay of the early 1990s recession. Back then, a brief, mild contraction followed a housing boom and a banking industry crisis - the failure of the savings and loans. Many stocks tied to the financial sector fell to deeply depressed levels in that episode, and investors who bought those stocks near their lows raked in huge gains when the economy recovered.
Housing stocks "were among the best performing groups in 1991," Miller wrote, "and could repeat that this year."
The rise of the housing stocks is all the more remarkable given the declining health of the real estate market. The S&P/Case-Shiller 10-city index of house prices dropped 8.4% in November, marking its 11th straight monthly decline. Despite the sliding prices and a recent drop in interest rates, the market for houses remains glutted: The National Association of Realtors said last month that year-end inventory of existing homes for sale amounted to a supply of nearly 10 months at recent selling rates.
Meanwhile, the early returns on the 2008 winter sales season haven't been encouraging. Toll Brothers chief Bob Toll said earlier this month that based on January's traffic and deposit numbers, "we are not yet seeing much light at the end of the tunnel." And that was before the recent string of stories noting that more homeowners are walking away from their properties rather than try to pay off staggering debt. Toll Brothers even said in a recent regulatory filing that co-founder Bruce Toll's daughter, Wendy Topkis, and her husband have signaled their intent to back out of an agreement to buy a $2.5 million Florida condominium.
The apparent disconnect between stock prices and what's going on in the industry has some observers questioning the bottom call. The skeptics attribute the bounce to factors like short-covering - the process in which investors who had been betting against a stock buy the shares to cover, or close out the trade. Stocks in the homebuilders have been a favorite target of short-sellers, who are counting on falling house prices and a glut of houses for sale to depress demand for new houses and stretch the builders' finances.
"Hedge funds have been told to cut back on leverage," says Ron Muhlenkamp, who runs investment manager Muhlenkamp & Co. in Wexford, Pa., and oversees the Muhlenkamp (MUHLX) fund. Muhlenkamp, who owns shares of homebuilder NVR (NVR), says the market's swoon in January - a month in which three-quarters of hedge funds lost money, according to one survey - could have accelerated the short-covering, driving homebuilder stocks up further.
Muhlenkamp isn't buying the homebuilders' stocks now for several reasons. First, he believes it won't be possible to get a good read on the 2008 spring selling season for another two months. Muhlenkamp adds that he suspects the rebound of the homebuilders is "more of an '09 story than an '08 story." That's partly because stocks that fall as far as the homebuilders have - Toll Brothers, for instance, has lost a third of its market value over the past year and is down 60% from its July 2005 peak - often need more than one tax-loss selling seasons to fully regain their footing, Muhlenkamp says. That suggests 2008 could bring further declines as investors look to offset other investment gains by selling homebuilder shares purchased at higher prices.
Others say the homebuilders have rallied before and may do so again, but they won't put in a sustained upswing till their businesses improve. Analyst Gary Gordon at Portales Partners in New York notes that over the past year, the homebuilders and related stocks have repeatedly rallied, only to give up those gains and touch new lows afterward. He believes the economy must start generating more high-paying jobs before the fundamentals will support higher prices for homebuilding stocks.
Gordon adds that he expects the government to try to take more action - going beyond the one-time stimulus program President Bush signed this week - to make housing more affordable and more accessible to less affluent buyers. An expanded guarantee program at the Federal Housing Administration, for instance, could significantly increase the pool of possible house buyers, he says. Sweeping action like that could set the group up for a more sustainable gain, Gordon says.
But other market watchers say the bounce in these stocks is already predicting a turn in the homebuilding business.
"Stocks are predictive of the industry about six to nine months ahead of time," says Justin Walters of Bespoke Investment Group in Harrison, N.Y. He says he is bullish on the sector, noting that house-price futures at the Chicago Mercantile Exchange have been forecasting a bottom in house prices in many U.S. markets toward the end of 2008.
Walters says the recent rally in the homebuilders stands out from past stock moves because volume has been so much heavier. He adds that this year's bounce in the homebuilders follows a pattern laid out in the collapse of the tech bubble back in 2000. Walters says the steep decline in these stocks - despite the recent rally, the XHB is down 48% from a year ago - has made the sector look attractive even if more declines are ahead for housing prices.
Perhaps the most bullish signal comes from the executive suites at homebuilders such as Hovnanian. In a recent post on the Bespoke Investment Group Web site, Walters and colleague Paul Hickey note that a few homebuilder insiders have started buying their own stock - a marked contrast to the heavy insider selling at marquee names such as Toll Brothers that marked the group's 2005 top.
"While some may argue that homebuilders don't do a very good job building houses," Hickey and Walters write, "one thing they know how to do well is trade their own stocks.
New Delhi -- Fullerton India, a subsidiary of Fullerton Financial Holdings Pte Ltd of the Singapore-based Temasek Holdings, is looking at acquiring new entities in the country to augment its business. “We are open to acquiring businesses which are in sync with our line of business. We are keen on both organic and inorganic growth,” G S Sundararajan, managing director and CEO, Fullerton India told FE. Temasek would have a greater foothold in India through the subsidiary route, if these plans succeed, even as it awaits the Reserve Bank of India clearance to increase stake in ICICI Bank.
Sunderajan said that the company is set to roll out a pilot project in the rural Markets in April. A detailed study has already been conducted to assess the credit and risk appetite of these Markets. The pilot run would be initiated in states like Maharashtra, Karnataka, Andhra Pradesh, Rajasthan and Tamil Nadu among others. Fullterton, a non-banking finance company, with 600 branches in 300 towns, is targeting customers belonging to the lower to mid-sized income group. It has disbursed loans to the tune of Rs 2,200 crore so far in the last two years. However, Sunderajan said that the company hopes to double the figure this year.
Meanwhile, the RBI and the government are yet to take a decision on whether to allow Temasek Holdings and the government of Singapore Investment Corporation (GIC) to increase their stakes in ICICI Bank. The two have asked the government to recognise them as separate entities for all future investments in Indian entities.
Both entities have evinced interest in picking up 10% stake each in ICICI Bank. However, the Reserve bank is yet to take a decision on the issue. The central bank had earlier said that the two entities cannot be treated separately as both belonged to the government of Singapore. These investments came into India following the comprehensive economic co-operation agreement singed between India and Singapore.
'Flat broke' is taking on a new meaning in Manchester. Miles Brignall explains why
Miles Brignall The Guardian, Saturday February 16 2008
The return of negative equity, now blighting new-build apartments in Manchester, will strike fear into the heart of anyone who recently bought a city centre home.
Over the last five years, property developers and estate agents have increasingly marketed the flats to first-time buyers and buy-to-let landlords.
Encouraged by TV programmes, and amid rocketing house prices, many buyers threw caution to the wind and paid a considerable premium for flats in swanky city-centre locations.
But this week Money reveals how dream homes have turned to nightmares. Although many of the buyers who bought off-plan in Manchester are still well up on the price they paid, there's a growing group who bought that are now facing big losses - in many cases as much as £50,000.
Repossessions have started appearing at auctions. The local Citizens Advice Bureau said the number of enquiries about possible repossessions has doubled over the last 12 months.
This week I travelled to the city I last stayed in 20 years ago as a student. Over the past two decades it has gone through a remarkable renaissance. But any visitor cannot help but be struck by the extraordinary number of new apartments that have shot up.
Take a walk around the city's edge and almost every conceivable piece of spare land is set to play host to yet another "landmark" development.
In Manchester today you are never far from the hammering that goes with construction work. When the BBC's employees are finally relocated to Manchester in 2011 there will be no shortage of accommodation to choose from - if they like living in flats, that is.
But for now, at least, buyers are in short supply. A search on the property website Rightmove.com shows that there are more than 2,500 two-bed flats for sale in Manchester alone, and yet there were very few buyers to be seen in any of agents I visited.
You don't need to be an economist to know that over-supply leads to one thing - falling prices.
When I posed as a potential buy-to-let investor at various agents, it soon became clear that negotiators, who can usually be relied on to talk up the market, had given up trying to maintain the charade. Past claims of spectacular returns have been replaced with "price corrections" or "fantastic bargains". In one agent's window, some sales particulars featured the strapline: "Make me an Offer - I may say YES". Others increasingly featured photos of homes with the extra line "price reduced".
Most had tales of professional investors clamouring to get out of properties in a desperate attempt to cap their losses. And a look at ThinkProperty.com's link to the official Land Registry figures reveals why. When we compared the asking prices in some of the city's developments with those paid just a few years ago, we were staggered to see many had suffered big falls.
In the City Point building just to the north of the city centre, a repossessed flat, that some unfortunate soul bought for £178,000 in 2004, was recently offered at a London auction with a guide price of just £80,000. Although it sold prior to auction, we were offered other two-bed flats in the block for less than £129,000.
At a similar development, City South, one flat bought new from the developer in 2001 for a shade under £140,000 was sold a few months ago for just £87,970. When I talked to its residents this week, few were aware of the price falls - mostly because the flats are almost entirely rented. At the nearby landmark development, the Hacienda, flat 213 is being offered for sale for £205,000. The same apartment was bought for £261,000 in April 2004.
Back across town at the Quebec building, flats that used to sell for £180,000 are fetching less than £128,000. In each case there is another two of three new developments just a stone's throw away - all being marketed at prices which are looking increasingly fanciful.
While the estate agents in the city had clearly given up for now on property sales, many were still keen to talk up the rental market as "strong".
But even that proved to be something of a fallacy, if you are the landlord, that is. While the demand for flats to rent remains buoyant, a chat with some of the army of young office workers that rent many of the city centre flats soon revealed that the prices quoted were just a guide. "If a flat's rental is advertised for £700 a month, you offer £600, you'll almost certainly get it for that. It's a buyers' market, no mistake," I was advised.
One agent outside the Danube building, who was waiting to show a client around a flat, said most of the losses were being born by the countless buy-to-let investors that had "blindly" piled into the city.
"Home-grown investors, who know Manchester well, have been sitting tight for the last five years. Anyone with half a brain could see that if you keep building more and more flats it will only lower existing prices, but this didn't deter some of the investment clubs pushing the city hard."
She warned some of the same problem is starting to hit East Manchester - near the Manchester City football ground. "Some of the developments in the city centre that were put up at the beginning of the boom had a scarcity value and shot up in price.
"But they weren't so well built and, as other nicer flats have come on the market, the older stock has been falling in value," she said.
Los Angeles (AP) -- Countrywide Financial Corp. said Friday home loan delinquencies and foreclosures rose in January as more borrowers struggled to make their mortgage payments.
The nation's largest mortgage lender and servicer said loan delinquencies as a percentage of unpaid principal balance increased to 7.47 percent last month from 7.2 percent in December and 4.32 percent in January 2007.
Loan servicers collect mortgage payments and distribute them to the owners of the mortgages. The Calabasas, Calif.-based lender services mortgages totaling about $1.48 trillion.
Foreclosures pending as a percentage of unpaid principal balance increased to 1.48 percent in January, from 1.44 percent in December and 0.77 percent in January 2007.
Delinquencies and pending foreclosures increased despite stepped up measures outlined by Countrywide in recent months to help borrowers manage their mortgage payments.
Mortgage loan fundings slipped 6 percent to $22 billion from $23.4 billion in December, and were down 41 percent from $37 billion a year earlier.
Still, the lender's average daily mortgage applications rose last month to $2.6 billion from December's $1.5 billion.
Interest rates have been falling this year, and that's fueled a spike in mortgage applications industrywide, particularly as homeowners look to refinance existing loans.
Countrywide's mortgage pipeline - loans in progress that have not been funded - stood at $51 billion at the end of January, up from $35 billion in December, the company said.
Following last summer's collapse of the subprime mortgage market, the lender has tightened underwriting criteria and all but ceased making subprime loans for borrowers with past credit problems.
It did not list a January figure for fundings of subprime mortgages. It funded $2.9 billion in subprime loans a year earlier.
Home equity loan fundings plunged to $872 million, down 93.6 percent from $3.6 billion a year earlier.
The lender's slate of adjustable rate mortgages fell by 79.5 percent to $2.8 billion, from $13.7 billion in January 2007.
Countrywide has been struggling amid a nationwide housing downturn and lingering credit crisis.
The company previously reported a loss of $422 million in 2007's fourth quarter, as higher defaults forced the lender to boost its provisions for anticipated losses.
In January, Bank of America Corp. agreed to purchase Countrywide for about $4 billion in stock. The transaction is projected to close in the third quarter.
Shares of Countrywide rose a penny to $6.93 Friday.
Sign of a faltering economy? Feds to close economic indicator site
EconomicIndicators.gov will be shuttered on March 1 because of 'budgetary constraints.'
By Heather Havenstein February 15, 2008
It may soon be harder to track whether the U.S. is in fact sliding into a recession with the closing of the U.S. Department of Commerce's EconomicIndicators.gov Web site. The site provides a public portal to key economic indicator data from the government.
The department's Economics and Statistics Administration announced that the site, which provides daily updates of key economic indicators released by the government's Bureau of Economic Analysis and the U.S. Census Bureau, will be shut down on March 1 because of "budgetary constraints."
Amanda Terkel, deputy research director at the Center for American Progess, noted that the site has been particularly useful because people can sign up to receive e-mails as soon as new economic data across government agencies becomes available. "While the data will still be available online at various federal Web sites, it will be less readily accessible to the public," she added.
In an e-mail announcing the closing of the site, the Commerce Department offered a free quarterly subscription to STAT-USA/Internet service that provides economic and business data. "Once this temporary subscription runs out, however, the public will be forced to pay a fee," Terkel noted. "So not only will economic data be more hidden, it will also cost money."
Michael Masnick, president and CEO of IT research firm Techdirt, noted that the timing of the closure raises some questions.
"Of course, to actually call a recession, the general consensus is that there would need to be two consecutive quarters of negative economic growth," Masnick added. "So how would you measure that growth? Well, apparently the White House would prefer to make it as difficult as possible. It's not that difficult to manage a Web site. If it's really so expensive to manage, why not throw it open and make it into a wiki?"
SAN FRANCISCO (AFP) - Top US retailer Wal-Mart on Friday drove another nail a coffin for Toshiba's HD DVD video disks by announcing it would shift to exclusively selling Japanese rival Sony's format Blu-ray.
Wal-Mart's announcement comes the same week that major electronics seller Best Buy and online video rental giant Netflix declared their allegiance to Blu-ray, a new high-definition format promoted by a coalition led by Sony.
Wal-Mart says its 4,000 US stores, including those under the Sam's Club banner, will phase out HD DVD offerings in the next few months and begin selling movies only on Blu-ray disks.
"We've listened to our customers, who are showing a clear preference toward Blu-ray products and movies with their purchases," said Wal-Mart senior vice president of home entertainment Gary Severson.
"We wanted to share our decision and timeline with them as soon as possible, knowing it will help simplify their purchase decision, increase selection, and increase adoption long term."
The death of HD DVD has been heralded since January, when Warner Brothers studio -- Hollywood's largest distributor of DVDs -- pulled out of an alliance with Toshiba's HD DVD camp and switched sides in the format war to Blu-ray.
Toshiba's HD DVD format has vied for years with Blu-Ray to win a battle to become the industry standard for the next generation of DVDs.
Industry analysts and electronics makers maintain the format war has stifled sales of high-definition DVD players because consumers are waiting for a victor before plunking down money for the expensive new technology.
The loser of the battle will become a mere footnote in consumer electronics history, much the way Betamax was forgotten after VHS became the technology of choice for home video players, according to industry analysts.
Analysts say that if Paramount and Universal film studios also abandon HD DVD, the format is doomed.
Respondents in Sunday Times poll blame higher cost of housing, transport, food and utilities
By Tan Dawn Wei Feb 17, 2008
HOUSEWIFE Goh Lay Leng has seen her monthly grocery bills go up by 10 per cent, and that has prompted the mother of four to look for cheaper alternatives. 'Everything is increasing and we're spending more. My husband says there's hardly any money left at the end of the month,' said Madam Goh, 44.
Her engineer husband brings home about $5,000 a month and the family lives in a four-room flat in Pasir Ris.
A total of 91 per cent of the 353 respondents in a Sunday Times survey agreed with Madam Goh, saying that Singapore had become an expensive place to live in.
The survey had been conducted in late December to understand Singaporeans' attitude to money.
Nine in 10 also felt that Singapore was an expensive place to raise a family. Less than half were confident that their living standard would improve in the next two years.
They blamed the higher cost of housing, transport and basic necessities such as food, water and power.
Almost half said that they felt the financial strain of servicing mortgages or rents, although 36 per cent were contented.
Nearly half felt that a family of four needed between $50,000 and $70,000 a year - or $4,167 to $5,833 a month - to live comfortably.
The latest figures from the Department of Statistics show that the average household's income went up by 9.6 per cent last year, the biggest increase in at least a decade.
It rose to $6,280, up from $5,730 the year before. Families with higher incomes also had bigger pay hikes than those in lower-income households, widening the rich-poor gap.
Prime Minister Lee Hsien Loong said recently that he expected inflation this year to be 5 per cent or more. It was about 2 per cent last year.
MP Halimah Yacob said that the public's mood may have been dampened by the continuing prospect of high inflation. But she was also heartened that Singaporeans were practical and prudent.
'They think of investing in their children's education and old age and that reflects that they do recognise the need to plan for the long term,' she said.
Take 41-year-old Madam Zaina Mohammad. The part-time cashier and her Cisco officer husband's combined monthly income is just $2,000, but the couple make sure they deposit $50 every month into each of their three children's bank accounts for their education fund.
Like her, the priority for most Singaporeans is their children's future. If they had a million dollars, 27 per cent said that they would spend most of the money on education.
One possible indication as to why their children's education reigned supreme: More than half of those surveyed said that they were either not sure, or did not think that their children would be able to improve upon or afford their present lifestyle as adults.
Another indication of Singaporeans' prudent and practical traits: More than four in five chose to save their surplus income every month.
Despite rising prices, nearly all the people polled had no plans to pack up for greener pastures.
Ninety per cent agreed that Singapore was still a place worth living in. Also, two in five were glad that Singapore had become one of the richest countries in the world, because it meant better public amenities, a more cosmopolitan society and a vibrant nightlife and cultural scene.
Despite having to scrimp and save, Madam Zaina isn't going anywhere. 'It's peaceful here and it is our home after all,' she said.
Why has a crisis that began with loans to a limited group of home buyers ended up disrupting so much of the financial system？？？ *_*
A Crisis of Faith
By PAUL KRUGMAN February 15, 2008
A decade ago, during the last global financial crisis, the word on everyone’s lips was “contagion.” Troubles that began in a far-away country of which most people knew nothing (Thailand) eventually spread to much bigger countries with no obvious connection to Southeast Asia, like Russia and Brazil.
Today, we’re witnessing another kind of contagion, not so much across countries as across markets. Troubles that began a little over a year ago in an obscure corner of the financial system, BBB-minus subprime-mortgage-backed securities, have spread to corporate bonds, auto loans, credit cards and now — the latest casualty — student loans.
Indeed, this week the state of Michigan suspended a major student-loan program because of the sudden collapse of another $300 billion market you’ve never heard of, the market for auction-rate securities.
Why has a crisis that began with loans to a limited group of home buyers ended up disrupting so much of the financial system? Because, ultimately, it’s more than a subprime crisis; indeed, it’s more than a housing crisis. It’s a crisis of faith.
I know that sounds dramatic. But, let me talk about what just happened to auction-rate securities.
Like many of the financial innovations that are now being called into question, auction-rate securities are complicated deals that seemed to offer something for nothing.
They seemed to offer the borrowers — typically local governments or quasi-governmental agencies, like the Port Authority of New York and New Jersey and the Michigan Higher Education Student Loan Authority — a way to borrow long term without paying the relatively high interest rates investors usually demand on long-term loans.
At the same time, they seemed to offer investors an asset that was as good as cash — readily available whenever needed — but paid higher interest rates than bank deposits.
The operative word in all of this, of course, is “seemed.”
Auction-rate securities seemed as good as cash because they involve regular, well, auctions, held as often as once a week, in which investors wanting out sell their positions to investors wanting in. In principle, it was always possible for auctions to fail for lack of enough willing buyers — but that wasn’t ever supposed to happen.
Meanwhile, these securities seemed like a good deal for borrowers despite the fact that they contain a penalty clause: if an auction fails, the interest rate the borrower pays jumps up. (The Port Authority, which had a failed auction last week, just saw the interest rate it pays leap from 4.3 percent to 20 percent.) You see, there weren’t ever supposed to be failed auctions, so the penalties weren’t supposed to be relevant.
Now, what wasn’t ever supposed to happen has. In the last few weeks, a series of auctions have failed, leaving investors who thought they had ready access to their cash stuck, even as borrowers find themselves paying penalty rates.
The collapse of the auction-rate security market doesn’t reflect newly discovered problems with the borrowers: the Port Authority is as financially sound today as it was a month ago. Instead, it’s contagion from the broader credit crisis.
One channel of contagion involves monoline bond insurers, the specialized insurance companies that are supposed to guarantee debt. These companies insured buyers of local government debt against losses — but they also guaranteed a lot of subprime-related investments, which makes everyone wonder whether they’ll actually have the money to compensate losers in other markets.
More important, however, is the way the ever-widening financial crisis has shaken investors’ faith in the whole system. People no longer trust assurances that fancy financial instruments will function the way they’re supposed to — after all, they know what happened to people who thought their subprime-backed securities were safe, AAA-rated investments. Why, then, should they believe that auction-rate securities are as good as cash?
And loss of trust can be a self-fulfilling prophecy. Now that new investors won’t buy auction-rate securities because they no longer believe that they’re as good as cash, those securities become a much worse investment.
Needless to say, all of this is bad for the economy. I like to think of what’s happening as a sort of minor-key reprise of the banking crisis that swept America in 1930 and 1931. Frustrated investors who can’t get their money out of auction-rate securities aren’t as photogenic as angry mobs milling outside closed banks, but the principle is the same. And so are the effects: would-be borrowers can’t get credit, and the economy suffers.
One simple measure of the seriousness of the credit problem is this: although the Federal Reserve has sharply cut the interest rate it controls over the past few weeks, the borrowing costs facing many companies and households have actually gone up.
And the financial contagion is still spreading. What market is next?
Lenders Get Creative to Reach Borrowers in Default
By Renae Merle Washington Post Staff Writer Saturday, February 16, 2008
Mortgage lenders hunting for delinquent homeowners who have dodged their phone calls and letters are employing aggressive new methods to track them down, potentially making every knock on the door or fancy envelope seem like part of the pursuit. Even wedding invitations are suspect.
The idea, they say, isn't to twist arms. Instead, it's to avoid foreclosures, which have cost the mortgage industry billions of dollars in the past year.
Ocwen Financial is negotiating a deal with HomeFree-USA, a nonprofit group, to go door to door in the Washington area to strike deals with elusive borrowers. Fannie Mae is offering foreclosure lawyers up to $600 to help find solutions for these homeowners. Wells Fargo is disguising its letters in different colored envelopes, including some resembling wedding invitations.
Although some lenders initially resisted paying for assistance, the industry has begun backing community groups that help them find these borrowers. The math is simple: The typical foreclosure costs more than $50,000. It is usually cheaper and less time-consuming to lower the borrower's interest rate, put them on a repayment plan or sell the home at a loss. To stem the foreclosures, the mortgage industry says, lenders need to reach people they call "no-contact borrowers," those who have eluded or rebuffed them.
There are lots of them. From September 2005 to August 2007, 53 percent of the loans backed by Freddie Mac that went into foreclosure involved borrowers who could not be reached.
Many of these homeowners do not expect, or trust, offers of help from their lenders, say community groups that have become active in this work. Some borrowers tried reaching out before an interest rate increase pushed the monthly payments out of their reach, only to be told to call back after they fell behind.
"They feel that the lender has put them into this bind, so they are not returning phone calls," said Marcia J. Griffin, president of HomeFree-USA, a local group that works with home buyers and homeowners.
Jennifer Lewin, 39, a receptionist, stretched to pay $310,000 for a three-bedroom house in Prince George's County in 2005. She was unprepared last year when her monthly payments doubled, to $2,100 a month. Lewin said she scraped the money together for two months and called her lender almost daily. She hoped to have the rate lowered, she said, but never seemed to reach the right person.
"It was just so much. I mean, I couldn't do it," said Lewin, who asked that The Post identify her by her maiden name.
Lewin fell behind on her payments. She couldn't catch up, she said, so she dodged the persistent calls and letters from the lender. "There was no way out," Lewin said. The house eventually went into foreclosure.
Many borrowers have been pursued before by aggressive debt collectors who encouraged them to use their retirement accounts, borrow from family members or raid their child's college fund to catch up on their bills, said Michael Shea, executive director of Acorn Housing, a counseling agency. "They badger you until [you] don't want to talk to the servicer again," he said. "By then, [you] don't even want to answer the phone."
Even though lenders said they were reaching out, it remains difficult to work out deals, said Mosi Harrington, executive director of Housing Initiative Partnership in Prince George's County. "We have cases that we have tried for two months to get paperwork to the right department," she said. "They put you on hold for half an hour, and the phone clicks off."
But the lenders said they were trying to change the perception that they're difficult to work with. They are testing new approaches for reaching homeowners like Janet Stark, who fell behind on her mortgage payments last year after her interest rate increased and her monthly bill rose from about $700 to $1,100. She initially tried to reach her lender but found the maze of voice mails and transfers daunting.
"Thinking you are going to lose [your home], you want to hide under the bed," said Stark, a cashier at a gas station in Minneapolis.
As Stark fell three months behind, she began getting calls six times a day. "It was horrible. They kept calling and calling. You don't have to answer the phone, but you know who it is," said Stark, a married mother of three. "We were really suffering. I didn't know where to turn."
Late last year, Stark received a letter from Acorn, the counseling agency. Within a month, she said, her interest rate and payments were lowered. The missed payments were added to her mortgage total.
Wells Fargo estimated that it had no contact with about 30 percent of delinquent homeowners who went into foreclosure in 2006. Last year, it began testing envelopes in bold or unusual colors or resembling wedding invitations.
Last month, it began experimenting with offering $250 gift cards to delinquent borrowers who had been unreachable, said Joe Ohayon, a Wells Fargo vice president.
Other lenders are focusing on building relationships with community groups. While borrowers typically respond to 3 to 5 percent of the letters sent out by lenders, they respond to about a quarter of those from such grass-roots groups, according to the Hope Now Alliance, a nonprofit organization funded by mortgage lenders.
Sometimes just using a community group's name is enough: Chase, which services $600 billion in loans, sends letters on Acorn letterhead and pays the group to leave its door hangers at the homes of borrowers it has not reached otherwise. When Ocwen, a subprime servicer, reached out to borrowers on Hope Now letterhead in December, it had a 15 percent response rate.
"That compares extremely well to the response rate from other mailings," said William Rinehart, an Ocwen vice president.
But even community groups need to approach homeowners gingerly. The Consumer Credit Counseling Service of San Francisco, under an agreement with Freddie Mac, first sends a letter offering help but usually gets only about a 5 percent response. These borrowers are probably bombarded with questionable offers of help and do not know which to trust, said Rick Harper, the group's director of housing.
Five days later, the nonprofit begins a series of at least three calls, trying to reach the homeowner at different times and on the weekend, Harper said. "We let them know the lender doesn't want your house," he said. Last year, the group was able to reach about 22 percent of targeted borrowers.
But when the program began, the counseling service first had to convince its wary employees that they were not acting as debt collectors. "We're not asking for money; we're asking if they want to keep their home," Harper said.
Some lenders pay nonprofits to go door to door. Countrywide first hired Acorn for that work in 2005 when it needed help finding homeowners displaced by Hurricane Katrina. Acorn found about 70 percent of those it sought, some of whom were sitting on their porch but had no phone service, Shea said.
More recently, when foreclosure rates spiked in Detroit and Cleveland, Countrywide tapped Acorn again. The Acorn employees told homeowners they found that they would like to help, Shea said. During the conversation, the borrowers were offered use of the Acorn employee's cellphone and given a toll-free number that would speed them through the process.
"We tell them that the lender may be willing to work out a special deal since they are there with us," he said. Acorn is paid $50 to $70 for every person found. The organization is negotiating with other companies to expand these efforts, he said.
HomeFree-USA expects to begin knocking on doors for Ocwen next month. The group's relationship with the company will not influence the advice borrowers receive, HomeFree's Griffin said.
"A homeowner who really needs to sell their home, they are going to take it a little better from us than if a lender tells you, 'You need to go and sell your house,' " she said.
"I definitely feel the economic ramifications of the unfolding Credit Crisis are receiving short shrift in the media. This week saw parts of the municipal debt market grind to a virtual halt and the corporate debt market take another significant blow. Investment grade debt issuance has now slowed markedly after beginning the year at near record pace. At this point, the junk, CDO, ABS, “private-label” MBS, muni, and even investment grade debt markets are all somewhere between impaired, dislocated and completely dysfunctional...Today, with bursting bubbles in corporate and municipal finance joining the mortgage bust, the U.S. Bubble economy has quickly fallen desperately short of sufficient Credit and liquidity. And the greater the Credit market dislocation and broad-based tightness of Credit, the bleaker become economic prospects and the more intense the Revulsion to Wall Street’s Credit instruments. The days of free-flowing cheap finance for home buyers, state and local governments, LBO firms, commercial real estate speculators, college students, risky auto buyers, and high-risk Credit card holders are over - and they will not be returning for some time to come. ..In a disconcerting development, recent market developments seem to confirm that the leveraged speculating community and the GSEs are poised as the next shoes to drop – the next Dominoes in an Escalating Contagion. Along with the “monolines” and mortgage insurers, the “Credit default swap market” and GSE mortgage Risk Intermediation were at the epicenter of the most egregious Systemic Risk Distortions and Accumulations. They are now quickly moving to the forefront of Current Acute Fragilities. Simplifying highly complex circumstances, the various risk models that empowered the greatest leveraging of risk in the history of finance no longer function as expected - or as required to maintain highly leveraged exposures to a multitude of escalating risks. And it was all just only a matter of time. The overriding flaw was to ignore that a runaway Bubble in market-based finance ensured that various market and Credit risks all coalesced into One Massive, Unmanageable, Highly Correlated, Unhedgable, Undiversifiable Association of Interrelated Systemic Risks. "
MALAYSIA raked in RM90 billion from commodity exports in 2007, a fresh record for the sixth consecutive year.
"The main contributors to this big jump are palm oil, cocoa and pepper. Palm oil surged by 42 per cent, cocoa by 25 per cent and escalating pepper prices fuelled exports by 30 per cent," Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui told Business Times in a telephone interview from Miri yesterday.
"Initially we forecast that we could surpass RM80 billion. Now, the numbers show we've raked in RM89.60 billion. 2007 has been a fantastic year.
The value of Malaysia's commodity exports has risen by 13 per cent every year for the past five years, thanks to strong demand and better prices.
Exporters are also not worried about a slowdown in the US economy as they have diversified their markets.
Chin explained that America's healthcare sector will continue to buy our rubber gloves because they are a necessity.
"The biggest buyers of our palm oil are China, Europe and Pakistan. As for rubber, it is China, Japan and Europe. When it comes to timber, it is Japan, China and India. So, you see, the bulk of our green commodities go to China, not the US," he added.
Recently, economists noted the increasing contribution of commodities to Malaysia's economy while manufacturing, which makes electrical and electronic (E&E) products, posted less encouraging numbers.
"Although exports of E&E still contribute a big chunk to the economy, plantation-based exports are expanding rapidly. Another point is this sector imports very little raw materials to make finished products for exports," he said.
"When you compare oil and gas exports, green commodities are renewable. We are constantly replanting old and unproductive trees with better-yielding ones as we go along," Chin said.
When a group of university students were shown photographs of some leaders who have helped shape modern Singapore, none could identify them.
FOUR decades after independence, Singapore still retains its British names on a firm policy of maintaining a link to the past – but this may soon change.
A few roads, buildings and MRT stations may be renamed in honour of those who helped make its modern history, as a reminder to the younger generation of their achievements.
The proposal came from Senior Minister Goh Chok Tong a year ago, and the Street and Building Names Board had said it would look into the matter.
At present no post-independence figure has been named for any road or building, and Minister Mentor Lee Kuan Yew has always rejected the idea of building statues for Singaporean leaders.
The need to perpetuate the role of Singapore’s former leaders is compelling.
When a group of university students were shown photographs of some leaders who have helped shape modern Singapore, none of them could identify them, said Ambassador-at-large Prof Tommy Koh during a recent meeting.
Unlike other leaders who shed their colonial past upon independence, Lee has steadfastly retained Singapore’s British names to maintain historical continuity.
Roads with names like Robinson, Tyrwhitt, Duxton Hill, Kent Ridge, Spottiswoode Park and a lot more are found in various parts of the island.
The statue of Sir Stamford Raffles, founder of Singapore, stands with arms folded as a tourist attraction. It has become a brand name, with places, schools, a hospital and a hotel named after him.
The estate where I live, a former residence for the British army, still keeps names like Chartwell, Braemar, Borthwick, and so on. None has been changed.
The proposed changes are expected to be gradual, not substantial.
Goh said that only roads named after minor colonial officials could be replaced. Among the first to go would be the unimaginative, nondescript names, he added.
(The use of numericals like Ang Mo Kio Avenue 1, 3 or 5 or Geylang Lorong 18, for example, could be scrapped, some suggested. So should names like Bukit Batok.)
In recent years as Lee (aged 86) and his remaining first generation leaders (mostly retired) reached their sunset years, some steps were taken to mark their role in society.
A newspaper has brought out, for young readers, a pocket guide featuring 10 of Singapore’s political pioneers. Called ‘Founding Fathers’ it contains stories, cartoons and photos about them.
The list, led by Lee, includes Goh Keng Swee, S. Rajaratnam and David Marshall (the only non-People’s Action Party member).
Some Singapore leaders have institutions named after them:
> The Hon Sui Sen Memorial Library, National University of Singapore;
> The S. Rajaratnam School of International Studies, Nanyang Technological University; and,
> The Lee Kuan Yew School of Public Policy, NUS, with a S$200mil (RM46.6mil) fund.
The Public Service Commission has a Goh Keng Swee scholarship, while Lee himself has several education awards.
Singaporeans largely agree that the country needs to record the role of people who helped to make history, but say it should not be used to glorify leaders of the ruling party.
Not many would like to see the eradication of the colonial past from Singapore’s roads.
At any rate, with the exception of World War Two and the first two pioneering decades, Singapore’s contemporary history has been too short to produce many heroes.
Much of it was made in the first 20 formative years when leaders were more passionate and self-sacrificing, not in the current science- and technology-based age.
It should not exclude critics or opposition members like Marshall and Lim Chin Siong.
The decision should involve the community, including outside the government, and be based on popular choice, rather than be made by only a few people.
It could then result in a flurry of name changing after a new government is installed.
Taiwan recently closed the Chiang Kai Shek Mausoleum in a vigorous campaign to diminish the legacy of the late leader.
The history of Suharto’s coup in 1964 is also being reviewed. Statues of dictators in Albania and Iraq were pulled down after they were deposed.
Most people are, however, opposed to any large-scale replacement of British names.
Associate Prof Victor R. Savage, who is with the NUS geography department and who wrote a book on road names in Singapore titled Toponymics, said these names should be retained.
“Every name carries with it a sort of historical continuity and provides a sense of identity to a particular place or a nation as a whole,” he told The Straits Times newspaper.
Another Singaporean, Ying Min, agrees. “There is history attached to place names. Changing the name could sometimes be akin to denying the history of the place.”
She suggested naming new roads and places after modern history-makers rather than replacing existing names.
A reader suggested that civil servants should be more sensitive to people who are unable to read or write English – estimated at 26% – and have difficulty managing names like Compassvale.
“How are they going to tell a taxi driver where they want to go?” he asked.
13 comments:
Two Citigroup funds have troubles: report
Reuters
February 15, 2008
Citigroup Inc. has barred investors in one of its hedge funds from withdrawing their money, and a new leveraged fund lost 52% in its first three months, the Wall Street Journal reported on Friday.
The largest U.S. bank suspended redemptions in CSO Partners, a fund specializing in corporate debt, after investors tried to pull more than 30% of its roughly US$500-million of assets, the newspaper said. Citigroup injected US$100-million to stabilize the fund, which lost 10.9% last year, the newspaper said.
The fund’s manager, John Pickett, left following a dispute with Citigroup executives and complaints from investors after he tried to back out from committing more than half the fund’s assets to buy leveraged loans tied to a German media company, the newspaper said. That matter was settled when CSO agreed to buy US$746-million of the loans at face value, though they were trading at 86% to 93% of face value, it said.
Meanwhile, Falcon Plus Strategies, launched Sept. 30, lost 52% in the fourth quarter, after betting on mortgage-backed and preferred securities and making trades based on the relative values of municipal bonds and U.S. Treasuries. Some collateralized debt obligations in the fund trade at 25% of their original worth, the newspaper said.
Both funds are run in Citigroup’s alternative investments unit. That unit was briefly headed last year by Vikram Pandit, who in December replaced Charles Prince as Citigroup’s chief executive. Old Lane Partners, a hedge fund that Pandit founded and sold to Citigroup last year, has also had weak performance, falling 1.8% in January, the newspaper said.
Since June, Citigroup has disclosed some US$30-billion of write-downs and losses tied to subprime mortgages, complex debt and deteriorating credit. The problems contributed to a record US$9.83-billion fourth-quarter loss. Profit that quarter in the alternative investments unit fell 89% to US$61-million.
Citigroup was not immediately available for comment. A spokesman told the newspaper that CSO and similar hedge funds are subject to comprehensive risk oversight, and that Falcon Plus’s returns suffered from volatile fixed-income markets.
Shares of Citigroup closed Thursday at US$25.74 on the New York Stock Exchange.
haha..."homebuilders don't do a very good job building houses...one thing they know how to do well is trade their own stocks." ^_^
Homebuilders catch fire
By Colin Barr
14 February 2008
NEW YORK -- The hard-charging homebuilding stocks are making believers of some investors.
Shares of the S&P Homebuilders Sector Spider (XHB), the exchange-traded fund that tracks the biggest publicly traded companies in the residential construction business, have risen 7% this year. That gain is noteworthy on its own, given the 7% decline in the S&P 500.
But what's even more dramatic is the huge rally that erupted in these stocks in the middle of last month, right before the Federal Reserve started cutting interest rates in a bid to stave off a possible recession. The homebuilders ETF is up 29% off its early January lows, while components Toll Brothers (TOL), Lennar (LEN) and Hovnanian (HOV) are up 40%, 52% and 96%.
So after two and a half years of steep drops, have the homebuilding stocks finally seen a bottom? Some investors believe they may have - and that the recent bounce foretells sunnier days for an economy that has been besieged in recent months by recession talk.
"What took us into this malaise will be what takes us out," Bill Miller, portfolio manager for the Legg Mason Value Trust, wrote this week in a letter to the fund's shareholders. "Housing stocks peaked in the summer of 2005 and were the first group to start down. Now housing stocks are one of the few areas in the market that are up for the year."
Miller, whose fund lagged behind the S&P 500 by some 20 percentage points over the past two years after a 15-year run of beating the index, sees a possible replay of the early 1990s recession. Back then, a brief, mild contraction followed a housing boom and a banking industry crisis - the failure of the savings and loans. Many stocks tied to the financial sector fell to deeply depressed levels in that episode, and investors who bought those stocks near their lows raked in huge gains when the economy recovered.
Housing stocks "were among the best performing groups in 1991," Miller wrote, "and could repeat that this year."
The rise of the housing stocks is all the more remarkable given the declining health of the real estate market. The S&P/Case-Shiller 10-city index of house prices dropped 8.4% in November, marking its 11th straight monthly decline. Despite the sliding prices and a recent drop in interest rates, the market for houses remains glutted: The National Association of Realtors said last month that year-end inventory of existing homes for sale amounted to a supply of nearly 10 months at recent selling rates.
Meanwhile, the early returns on the 2008 winter sales season haven't been encouraging. Toll Brothers chief Bob Toll said earlier this month that based on January's traffic and deposit numbers, "we are not yet seeing much light at the end of the tunnel." And that was before the recent string of stories noting that more homeowners are walking away from their properties rather than try to pay off staggering debt. Toll Brothers even said in a recent regulatory filing that co-founder Bruce Toll's daughter, Wendy Topkis, and her husband have signaled their intent to back out of an agreement to buy a $2.5 million Florida condominium.
The apparent disconnect between stock prices and what's going on in the industry has some observers questioning the bottom call. The skeptics attribute the bounce to factors like short-covering - the process in which investors who had been betting against a stock buy the shares to cover, or close out the trade. Stocks in the homebuilders have been a favorite target of short-sellers, who are counting on falling house prices and a glut of houses for sale to depress demand for new houses and stretch the builders' finances.
"Hedge funds have been told to cut back on leverage," says Ron Muhlenkamp, who runs investment manager Muhlenkamp & Co. in Wexford, Pa., and oversees the Muhlenkamp (MUHLX) fund. Muhlenkamp, who owns shares of homebuilder NVR (NVR), says the market's swoon in January - a month in which three-quarters of hedge funds lost money, according to one survey - could have accelerated the short-covering, driving homebuilder stocks up further.
Muhlenkamp isn't buying the homebuilders' stocks now for several reasons. First, he believes it won't be possible to get a good read on the 2008 spring selling season for another two months. Muhlenkamp adds that he suspects the rebound of the homebuilders is "more of an '09 story than an '08 story." That's partly because stocks that fall as far as the homebuilders have - Toll Brothers, for instance, has lost a third of its market value over the past year and is down 60% from its July 2005 peak - often need more than one tax-loss selling seasons to fully regain their footing, Muhlenkamp says. That suggests 2008 could bring further declines as investors look to offset other investment gains by selling homebuilder shares purchased at higher prices.
Others say the homebuilders have rallied before and may do so again, but they won't put in a sustained upswing till their businesses improve. Analyst Gary Gordon at Portales Partners in New York notes that over the past year, the homebuilders and related stocks have repeatedly rallied, only to give up those gains and touch new lows afterward. He believes the economy must start generating more high-paying jobs before the fundamentals will support higher prices for homebuilding stocks.
Gordon adds that he expects the government to try to take more action - going beyond the one-time stimulus program President Bush signed this week - to make housing more affordable and more accessible to less affluent buyers. An expanded guarantee program at the Federal Housing Administration, for instance, could significantly increase the pool of possible house buyers, he says. Sweeping action like that could set the group up for a more sustainable gain, Gordon says.
But other market watchers say the bounce in these stocks is already predicting a turn in the homebuilding business.
"Stocks are predictive of the industry about six to nine months ahead of time," says Justin Walters of Bespoke Investment Group in Harrison, N.Y. He says he is bullish on the sector, noting that house-price futures at the Chicago Mercantile Exchange have been forecasting a bottom in house prices in many U.S. markets toward the end of 2008.
Walters says the recent rally in the homebuilders stands out from past stock moves because volume has been so much heavier. He adds that this year's bounce in the homebuilders follows a pattern laid out in the collapse of the tech bubble back in 2000. Walters says the steep decline in these stocks - despite the recent rally, the XHB is down 48% from a year ago - has made the sector look attractive even if more declines are ahead for housing prices.
Perhaps the most bullish signal comes from the executive suites at homebuilders such as Hovnanian. In a recent post on the Bespoke Investment Group Web site, Walters and colleague Paul Hickey note that a few homebuilder insiders have started buying their own stock - a marked contrast to the heavy insider selling at marquee names such as Toll Brothers that marked the group's 2005 top.
"While some may argue that homebuilders don't do a very good job building houses," Hickey and Walters write, "one thing they know how to do well is trade their own stocks.
Fullerton scouts for country-wide buys
Mahua Venkatesh
February 15, 2008
New Delhi -- Fullerton India, a subsidiary of Fullerton Financial Holdings Pte Ltd of the Singapore-based Temasek Holdings, is looking at acquiring new entities in the country to augment its business. “We are open to acquiring businesses which are in sync with our line of business. We are keen on both organic and inorganic growth,” G S Sundararajan, managing director and CEO, Fullerton India told FE. Temasek would have a greater foothold in India through the subsidiary route, if these plans succeed, even as it awaits the Reserve Bank of India clearance to increase stake in ICICI Bank.
Sunderajan said that the company is set to roll out a pilot project in the rural Markets in April. A detailed study has already been conducted to assess the credit and risk appetite of these Markets. The pilot run would be initiated in states like Maharashtra, Karnataka, Andhra Pradesh, Rajasthan and Tamil Nadu among others. Fullterton, a non-banking finance company, with 600 branches in 300 towns, is targeting customers belonging to the lower to mid-sized income group. It has disbursed loans to the tune of Rs 2,200 crore so far in the last two years. However, Sunderajan said that the company hopes to double the figure this year.
Meanwhile, the RBI and the government are yet to take a decision on whether to allow Temasek Holdings and the government of Singapore Investment Corporation (GIC) to increase their stakes in ICICI Bank. The two have asked the government to recognise them as separate entities for all future investments in Indian entities.
Both entities have evinced interest in picking up 10% stake each in ICICI Bank. However, the Reserve bank is yet to take a decision on the issue. The central bank had earlier said that the two entities cannot be treated separately as both belonged to the government of Singapore. These investments came into India following the comprehensive economic co-operation agreement singed between India and Singapore.
Welcome to negative equity street
'Flat broke' is taking on a new meaning in Manchester. Miles Brignall explains why
Miles Brignall
The Guardian, Saturday February 16 2008
The return of negative equity, now blighting new-build apartments in Manchester, will strike fear into the heart of anyone who recently bought a city centre home.
Over the last five years, property developers and estate agents have increasingly marketed the flats to first-time buyers and buy-to-let landlords.
Encouraged by TV programmes, and amid rocketing house prices, many buyers threw caution to the wind and paid a considerable premium for flats in swanky city-centre locations.
But this week Money reveals how dream homes have turned to nightmares. Although many of the buyers who bought off-plan in Manchester are still well up on the price they paid, there's a growing group who bought that are now facing big losses - in many cases as much as £50,000.
Repossessions have started appearing at auctions. The local Citizens Advice Bureau said the number of enquiries about possible repossessions has doubled over the last 12 months.
This week I travelled to the city I last stayed in 20 years ago as a student. Over the past two decades it has gone through a remarkable renaissance. But any visitor cannot help but be struck by the extraordinary number of new apartments that have shot up.
Take a walk around the city's edge and almost every conceivable piece of spare land is set to play host to yet another "landmark" development.
In Manchester today you are never far from the hammering that goes with construction work. When the BBC's employees are finally relocated to Manchester in 2011 there will be no shortage of accommodation to choose from - if they like living in flats, that is.
But for now, at least, buyers are in short supply. A search on the property website Rightmove.com shows that there are more than 2,500 two-bed flats for sale in Manchester alone, and yet there were very few buyers to be seen in any of agents I visited.
You don't need to be an economist to know that over-supply leads to one thing - falling prices.
When I posed as a potential buy-to-let investor at various agents, it soon became clear that negotiators, who can usually be relied on to talk up the market, had given up trying to maintain the charade. Past claims of spectacular returns have been replaced with "price corrections" or "fantastic bargains". In one agent's window, some sales particulars featured the strapline: "Make me an Offer - I may say YES". Others increasingly featured photos of homes with the extra line "price reduced".
Most had tales of professional investors clamouring to get out of properties in a desperate attempt to cap their losses. And a look at ThinkProperty.com's link to the official Land Registry figures reveals why. When we compared the asking prices in some of the city's developments with those paid just a few years ago, we were staggered to see many had suffered big falls.
In the City Point building just to the north of the city centre, a repossessed flat, that some unfortunate soul bought for £178,000 in 2004, was recently offered at a London auction with a guide price of just £80,000. Although it sold prior to auction, we were offered other two-bed flats in the block for less than £129,000.
At a similar development, City South, one flat bought new from the developer in 2001 for a shade under £140,000 was sold a few months ago for just £87,970. When I talked to its residents this week, few were aware of the price falls - mostly because the flats are almost entirely rented. At the nearby landmark development, the Hacienda, flat 213 is being offered for sale for £205,000. The same apartment was bought for £261,000 in April 2004.
Back across town at the Quebec building, flats that used to sell for £180,000 are fetching less than £128,000. In each case there is another two of three new developments just a stone's throw away - all being marketed at prices which are looking increasingly fanciful.
While the estate agents in the city had clearly given up for now on property sales, many were still keen to talk up the rental market as "strong".
But even that proved to be something of a fallacy, if you are the landlord, that is. While the demand for flats to rent remains buoyant, a chat with some of the army of young office workers that rent many of the city centre flats soon revealed that the prices quoted were just a guide. "If a flat's rental is advertised for £700 a month, you offer £600, you'll almost certainly get it for that. It's a buyers' market, no mistake," I was advised.
One agent outside the Danube building, who was waiting to show a client around a flat, said most of the losses were being born by the countless buy-to-let investors that had "blindly" piled into the city.
"Home-grown investors, who know Manchester well, have been sitting tight for the last five years. Anyone with half a brain could see that if you keep building more and more flats it will only lower existing prices, but this didn't deter some of the investment clubs pushing the city hard."
She warned some of the same problem is starting to hit East Manchester - near the Manchester City football ground. "Some of the developments in the city centre that were put up at the beginning of the boom had a scarcity value and shot up in price.
"But they weren't so well built and, as other nicer flats have come on the market, the older stock has been falling in value," she said.
Delinquencies Rise at Countrywide
By Alex Veiga
Feb 15, 5:57 PM EST
Los Angeles (AP) -- Countrywide Financial Corp. said Friday home loan delinquencies and foreclosures rose in January as more borrowers struggled to make their mortgage payments.
The nation's largest mortgage lender and servicer said loan delinquencies as a percentage of unpaid principal balance increased to 7.47 percent last month from 7.2 percent in December and 4.32 percent in January 2007.
Loan servicers collect mortgage payments and distribute them to the owners of the mortgages. The Calabasas, Calif.-based lender services mortgages totaling about $1.48 trillion.
Foreclosures pending as a percentage of unpaid principal balance increased to 1.48 percent in January, from 1.44 percent in December and 0.77 percent in January 2007.
Delinquencies and pending foreclosures increased despite stepped up measures outlined by Countrywide in recent months to help borrowers manage their mortgage payments.
Mortgage loan fundings slipped 6 percent to $22 billion from $23.4 billion in December, and were down 41 percent from $37 billion a year earlier.
Still, the lender's average daily mortgage applications rose last month to $2.6 billion from December's $1.5 billion.
Interest rates have been falling this year, and that's fueled a spike in mortgage applications industrywide, particularly as homeowners look to refinance existing loans.
Countrywide's mortgage pipeline - loans in progress that have not been funded - stood at $51 billion at the end of January, up from $35 billion in December, the company said.
Following last summer's collapse of the subprime mortgage market, the lender has tightened underwriting criteria and all but ceased making subprime loans for borrowers with past credit problems.
It did not list a January figure for fundings of subprime mortgages. It funded $2.9 billion in subprime loans a year earlier.
Home equity loan fundings plunged to $872 million, down 93.6 percent from $3.6 billion a year earlier.
The lender's slate of adjustable rate mortgages fell by 79.5 percent to $2.8 billion, from $13.7 billion in January 2007.
Countrywide has been struggling amid a nationwide housing downturn and lingering credit crisis.
The company previously reported a loss of $422 million in 2007's fourth quarter, as higher defaults forced the lender to boost its provisions for anticipated losses.
In January, Bank of America Corp. agreed to purchase Countrywide for about $4 billion in stock. The transaction is projected to close in the third quarter.
Shares of Countrywide rose a penny to $6.93 Friday.
Sign of a faltering economy? Feds to close economic indicator site
EconomicIndicators.gov will be shuttered on March 1 because of 'budgetary constraints.'
By Heather Havenstein
February 15, 2008
It may soon be harder to track whether the U.S. is in fact sliding into a recession with the closing of the U.S. Department of Commerce's EconomicIndicators.gov Web site. The site provides a public portal to key economic indicator data from the government.
The department's Economics and Statistics Administration announced that the site, which provides daily updates of key economic indicators released by the government's Bureau of Economic Analysis and the U.S. Census Bureau, will be shut down on March 1 because of "budgetary constraints."
Amanda Terkel, deputy research director at the Center for American Progess, noted that the site has been particularly useful because people can sign up to receive e-mails as soon as new economic data across government agencies becomes available. "While the data will still be available online at various federal Web sites, it will be less readily accessible to the public," she added.
In an e-mail announcing the closing of the site, the Commerce Department offered a free quarterly subscription to STAT-USA/Internet service that provides economic and business data. "Once this temporary subscription runs out, however, the public will be forced to pay a fee," Terkel noted. "So not only will economic data be more hidden, it will also cost money."
Michael Masnick, president and CEO of IT research firm Techdirt, noted that the timing of the closure raises some questions.
"Of course, to actually call a recession, the general consensus is that there would need to be two consecutive quarters of negative economic growth," Masnick added. "So how would you measure that growth? Well, apparently the White House would prefer to make it as difficult as possible. It's not that difficult to manage a Web site. If it's really so expensive to manage, why not throw it open and make it into a wiki?"
Wal-Mart drives another nail in HD-DVD coffin
Sunday February 17, 2008, 12:25 pm
SAN FRANCISCO (AFP) - Top US retailer Wal-Mart on Friday drove another nail a coffin for Toshiba's HD DVD video disks by announcing it would shift to exclusively selling Japanese rival Sony's format Blu-ray.
Wal-Mart's announcement comes the same week that major electronics seller Best Buy and online video rental giant Netflix declared their allegiance to Blu-ray, a new high-definition format promoted by a coalition led by Sony.
Wal-Mart says its 4,000 US stores, including those under the Sam's Club banner, will phase out HD DVD offerings in the next few months and begin selling movies only on Blu-ray disks.
"We've listened to our customers, who are showing a clear preference toward Blu-ray products and movies with their purchases," said Wal-Mart senior vice president of home entertainment Gary Severson.
"We wanted to share our decision and timeline with them as soon as possible, knowing it will help simplify their purchase decision, increase selection, and increase adoption long term."
The death of HD DVD has been heralded since January, when Warner Brothers studio -- Hollywood's largest distributor of DVDs -- pulled out of an alliance with Toshiba's HD DVD camp and switched sides in the format war to Blu-ray.
Toshiba's HD DVD format has vied for years with Blu-Ray to win a battle to become the industry standard for the next generation of DVDs.
Industry analysts and electronics makers maintain the format war has stifled sales of high-definition DVD players because consumers are waiting for a victor before plunking down money for the expensive new technology.
The loser of the battle will become a mere footnote in consumer electronics history, much the way Betamax was forgotten after VHS became the technology of choice for home video players, according to industry analysts.
Analysts say that if Paramount and Universal film studios also abandon HD DVD, the format is doomed.
9 in 10 find S'pore an expensive place to live in
Respondents in Sunday Times poll blame higher cost of housing, transport, food and utilities
By Tan Dawn Wei
Feb 17, 2008
HOUSEWIFE Goh Lay Leng has seen her monthly grocery bills go up by 10 per cent, and that has prompted the mother of four to look for cheaper alternatives.
'Everything is increasing and we're spending more. My husband says there's hardly any money left at the end of the month,' said Madam Goh, 44.
Her engineer husband brings home about $5,000 a month and the family lives in a four-room flat in Pasir Ris.
A total of 91 per cent of the 353 respondents in a Sunday Times survey agreed with Madam Goh, saying that Singapore had become an expensive place to live in.
The survey had been conducted in late December to understand Singaporeans' attitude to money.
Nine in 10 also felt that Singapore was an expensive place to raise a family. Less than half were confident that their living standard would improve in the next two years.
They blamed the higher cost of housing, transport and basic necessities such as food, water and power.
Almost half said that they felt the financial strain of servicing mortgages or rents, although 36 per cent were contented.
Nearly half felt that a family of four needed between $50,000 and $70,000 a year - or $4,167 to $5,833 a month - to live comfortably.
The latest figures from the Department of Statistics show that the average household's income went up by 9.6 per cent last year, the biggest increase in at least a decade.
It rose to $6,280, up from $5,730 the year before. Families with higher incomes also had bigger pay hikes than those in lower-income households, widening the rich-poor gap.
Prime Minister Lee Hsien Loong said recently that he expected inflation this year to be 5 per cent or more. It was about 2 per cent last year.
MP Halimah Yacob said that the public's mood may have been dampened by the continuing prospect of high inflation. But she was also heartened that Singaporeans were practical and prudent.
'They think of investing in their children's education and old age and that reflects that they do recognise the need to plan for the long term,' she said.
Take 41-year-old Madam Zaina Mohammad. The part-time cashier and her Cisco officer husband's combined monthly income is just $2,000, but the couple make sure they deposit $50 every month into each of their three children's bank accounts for their education fund.
Like her, the priority for most Singaporeans is their children's future. If they had a million dollars, 27 per cent said that they would spend most of the money on education.
One possible indication as to why their children's education reigned supreme: More than half of those surveyed said that they were either not sure, or did not think that their children would be able to improve upon or afford their present lifestyle as adults.
Another indication of Singaporeans' prudent and practical traits: More than four in five chose to save their surplus income every month.
Despite rising prices, nearly all the people polled had no plans to pack up for greener pastures.
Ninety per cent agreed that Singapore was still a place worth living in. Also, two in five were glad that Singapore had become one of the richest countries in the world, because it meant better public amenities, a more cosmopolitan society and a vibrant nightlife and cultural scene.
Despite having to scrimp and save, Madam Zaina isn't going anywhere. 'It's peaceful here and it is our home after all,' she said.
Why has a crisis that began with loans to a limited group of home buyers ended up disrupting so much of the financial system？？？ *_*
A Crisis of Faith
By PAUL KRUGMAN
February 15, 2008
A decade ago, during the last global financial crisis, the word on everyone’s lips was “contagion.” Troubles that began in a far-away country of which most people knew nothing (Thailand) eventually spread to much bigger countries with no obvious connection to Southeast Asia, like Russia and Brazil.
Today, we’re witnessing another kind of contagion, not so much across countries as across markets. Troubles that began a little over a year ago in an obscure corner of the financial system, BBB-minus subprime-mortgage-backed securities, have spread to corporate bonds, auto loans, credit cards and now — the latest casualty — student loans.
Indeed, this week the state of Michigan suspended a major student-loan program because of the sudden collapse of another $300 billion market you’ve never heard of, the market for auction-rate securities.
Why has a crisis that began with loans to a limited group of home buyers ended up disrupting so much of the financial system? Because, ultimately, it’s more than a subprime crisis; indeed, it’s more than a housing crisis. It’s a crisis of faith.
I know that sounds dramatic. But, let me talk about what just happened to auction-rate securities.
Like many of the financial innovations that are now being called into question, auction-rate securities are complicated deals that seemed to offer something for nothing.
They seemed to offer the borrowers — typically local governments or quasi-governmental agencies, like the Port Authority of New York and New Jersey and the Michigan Higher Education Student Loan Authority — a way to borrow long term without paying the relatively high interest rates investors usually demand on long-term loans.
At the same time, they seemed to offer investors an asset that was as good as cash — readily available whenever needed — but paid higher interest rates than bank deposits.
The operative word in all of this, of course, is “seemed.”
Auction-rate securities seemed as good as cash because they involve regular, well, auctions, held as often as once a week, in which investors wanting out sell their positions to investors wanting in. In principle, it was always possible for auctions to fail for lack of enough willing buyers — but that wasn’t ever supposed to happen.
Meanwhile, these securities seemed like a good deal for borrowers despite the fact that they contain a penalty clause: if an auction fails, the interest rate the borrower pays jumps up. (The Port Authority, which had a failed auction last week, just saw the interest rate it pays leap from 4.3 percent to 20 percent.) You see, there weren’t ever supposed to be failed auctions, so the penalties weren’t supposed to be relevant.
Now, what wasn’t ever supposed to happen has. In the last few weeks, a series of auctions have failed, leaving investors who thought they had ready access to their cash stuck, even as borrowers find themselves paying penalty rates.
The collapse of the auction-rate security market doesn’t reflect newly discovered problems with the borrowers: the Port Authority is as financially sound today as it was a month ago. Instead, it’s contagion from the broader credit crisis.
One channel of contagion involves monoline bond insurers, the specialized insurance companies that are supposed to guarantee debt. These companies insured buyers of local government debt against losses — but they also guaranteed a lot of subprime-related investments, which makes everyone wonder whether they’ll actually have the money to compensate losers in other markets.
More important, however, is the way the ever-widening financial crisis has shaken investors’ faith in the whole system. People no longer trust assurances that fancy financial instruments will function the way they’re supposed to — after all, they know what happened to people who thought their subprime-backed securities were safe, AAA-rated investments. Why, then, should they believe that auction-rate securities are as good as cash?
And loss of trust can be a self-fulfilling prophecy. Now that new investors won’t buy auction-rate securities because they no longer believe that they’re as good as cash, those securities become a much worse investment.
Needless to say, all of this is bad for the economy. I like to think of what’s happening as a sort of minor-key reprise of the banking crisis that swept America in 1930 and 1931. Frustrated investors who can’t get their money out of auction-rate securities aren’t as photogenic as angry mobs milling outside closed banks, but the principle is the same. And so are the effects: would-be borrowers can’t get credit, and the economy suffers.
One simple measure of the seriousness of the credit problem is this: although the Federal Reserve has sharply cut the interest rate it controls over the past few weeks, the borrowing costs facing many companies and households have actually gone up.
And the financial contagion is still spreading. What market is next?
You're Invited . . . To Pay Your Mortgage
Lenders Get Creative to Reach Borrowers in Default
By Renae Merle
Washington Post Staff Writer
Saturday, February 16, 2008
Mortgage lenders hunting for delinquent homeowners who have dodged their phone calls and letters are employing aggressive new methods to track them down, potentially making every knock on the door or fancy envelope seem like part of the pursuit. Even wedding invitations are suspect.
The idea, they say, isn't to twist arms. Instead, it's to avoid foreclosures, which have cost the mortgage industry billions of dollars in the past year.
Ocwen Financial is negotiating a deal with HomeFree-USA, a nonprofit group, to go door to door in the Washington area to strike deals with elusive borrowers. Fannie Mae is offering foreclosure lawyers up to $600 to help find solutions for these homeowners. Wells Fargo is disguising its letters in different colored envelopes, including some resembling wedding invitations.
Although some lenders initially resisted paying for assistance, the industry has begun backing community groups that help them find these borrowers. The math is simple: The typical foreclosure costs more than $50,000. It is usually cheaper and less time-consuming to lower the borrower's interest rate, put them on a repayment plan or sell the home at a loss. To stem the foreclosures, the mortgage industry says, lenders need to reach people they call "no-contact borrowers," those who have eluded or rebuffed them.
There are lots of them. From September 2005 to August 2007, 53 percent of the loans backed by Freddie Mac that went into foreclosure involved borrowers who could not be reached.
Many of these homeowners do not expect, or trust, offers of help from their lenders, say community groups that have become active in this work. Some borrowers tried reaching out before an interest rate increase pushed the monthly payments out of their reach, only to be told to call back after they fell behind.
"They feel that the lender has put them into this bind, so they are not returning phone calls," said Marcia J. Griffin, president of HomeFree-USA, a local group that works with home buyers and homeowners.
Jennifer Lewin, 39, a receptionist, stretched to pay $310,000 for a three-bedroom house in Prince George's County in 2005. She was unprepared last year when her monthly payments doubled, to $2,100 a month. Lewin said she scraped the money together for two months and called her lender almost daily. She hoped to have the rate lowered, she said, but never seemed to reach the right person.
"It was just so much. I mean, I couldn't do it," said Lewin, who asked that The Post identify her by her maiden name.
Lewin fell behind on her payments. She couldn't catch up, she said, so she dodged the persistent calls and letters from the lender. "There was no way out," Lewin said. The house eventually went into foreclosure.
Many borrowers have been pursued before by aggressive debt collectors who encouraged them to use their retirement accounts, borrow from family members or raid their child's college fund to catch up on their bills, said Michael Shea, executive director of Acorn Housing, a counseling agency. "They badger you until [you] don't want to talk to the servicer again," he said. "By then, [you] don't even want to answer the phone."
Even though lenders said they were reaching out, it remains difficult to work out deals, said Mosi Harrington, executive director of Housing Initiative Partnership in Prince George's County. "We have cases that we have tried for two months to get paperwork to the right department," she said. "They put you on hold for half an hour, and the phone clicks off."
But the lenders said they were trying to change the perception that they're difficult to work with. They are testing new approaches for reaching homeowners like Janet Stark, who fell behind on her mortgage payments last year after her interest rate increased and her monthly bill rose from about $700 to $1,100. She initially tried to reach her lender but found the maze of voice mails and transfers daunting.
"Thinking you are going to lose [your home], you want to hide under the bed," said Stark, a cashier at a gas station in Minneapolis.
As Stark fell three months behind, she began getting calls six times a day. "It was horrible. They kept calling and calling. You don't have to answer the phone, but you know who it is," said Stark, a married mother of three. "We were really suffering. I didn't know where to turn."
Late last year, Stark received a letter from Acorn, the counseling agency. Within a month, she said, her interest rate and payments were lowered. The missed payments were added to her mortgage total.
Wells Fargo estimated that it had no contact with about 30 percent of delinquent homeowners who went into foreclosure in 2006. Last year, it began testing envelopes in bold or unusual colors or resembling wedding invitations.
Last month, it began experimenting with offering $250 gift cards to delinquent borrowers who had been unreachable, said Joe Ohayon, a Wells Fargo vice president.
Other lenders are focusing on building relationships with community groups. While borrowers typically respond to 3 to 5 percent of the letters sent out by lenders, they respond to about a quarter of those from such grass-roots groups, according to the Hope Now Alliance, a nonprofit organization funded by mortgage lenders.
Sometimes just using a community group's name is enough: Chase, which services $600 billion in loans, sends letters on Acorn letterhead and pays the group to leave its door hangers at the homes of borrowers it has not reached otherwise. When Ocwen, a subprime servicer, reached out to borrowers on Hope Now letterhead in December, it had a 15 percent response rate.
"That compares extremely well to the response rate from other mailings," said William Rinehart, an Ocwen vice president.
But even community groups need to approach homeowners gingerly. The Consumer Credit Counseling Service of San Francisco, under an agreement with Freddie Mac, first sends a letter offering help but usually gets only about a 5 percent response. These borrowers are probably bombarded with questionable offers of help and do not know which to trust, said Rick Harper, the group's director of housing.
Five days later, the nonprofit begins a series of at least three calls, trying to reach the homeowner at different times and on the weekend, Harper said. "We let them know the lender doesn't want your house," he said. Last year, the group was able to reach about 22 percent of targeted borrowers.
But when the program began, the counseling service first had to convince its wary employees that they were not acting as debt collectors. "We're not asking for money; we're asking if they want to keep their home," Harper said.
Some lenders pay nonprofits to go door to door. Countrywide first hired Acorn for that work in 2005 when it needed help finding homeowners displaced by Hurricane Katrina. Acorn found about 70 percent of those it sought, some of whom were sitting on their porch but had no phone service, Shea said.
More recently, when foreclosure rates spiked in Detroit and Cleveland, Countrywide tapped Acorn again. The Acorn employees told homeowners they found that they would like to help, Shea said. During the conversation, the borrowers were offered use of the Acorn employee's cellphone and given a toll-free number that would speed them through the process.
"We tell them that the lender may be willing to work out a special deal since they are there with us," he said. Acorn is paid $50 to $70 for every person found. The organization is negotiating with other companies to expand these efforts, he said.
HomeFree-USA expects to begin knocking on doors for Ocwen next month. The group's relationship with the company will not influence the advice borrowers receive, HomeFree's Griffin said.
"A homeowner who really needs to sell their home, they are going to take it a little better from us than if a lender tells you, 'You need to go and sell your house,' " she said.
February 17, 2008
Doug Noland:
"I definitely feel the economic ramifications of the unfolding Credit Crisis are receiving short shrift in the media. This week saw parts of the municipal debt market grind to a virtual halt and the corporate debt market take another significant blow. Investment grade debt issuance has now slowed markedly after beginning the year at near record pace. At this point, the junk, CDO, ABS, “private-label” MBS, muni, and even investment grade debt markets are all somewhere between impaired, dislocated and completely dysfunctional...Today, with bursting bubbles in corporate and municipal finance joining the mortgage bust, the U.S. Bubble economy has quickly fallen desperately short of sufficient Credit and liquidity. And the greater the Credit market dislocation and broad-based tightness of Credit, the bleaker become economic prospects and the more intense the Revulsion to Wall Street’s Credit instruments. The days of free-flowing cheap finance for home buyers, state and local governments, LBO firms, commercial real estate speculators, college students, risky auto buyers, and high-risk Credit card holders are over - and they will not be returning for some time to come. ..In a disconcerting development, recent market developments seem to confirm that the leveraged speculating community and the GSEs are poised as the next shoes to drop – the next Dominoes in an Escalating Contagion. Along with the “monolines” and mortgage insurers, the “Credit default swap market” and GSE mortgage Risk Intermediation were at the epicenter of the most egregious Systemic Risk Distortions and Accumulations. They are now quickly moving to the forefront of Current Acute Fragilities. Simplifying highly complex circumstances, the various risk models that empowered the greatest leveraging of risk in the history of finance no longer function as expected - or as required to maintain highly leveraged exposures to a multitude of escalating risks. And it was all just only a matter of time. The overriding flaw was to ignore that a runaway Bubble in market-based finance ensured that various market and Credit risks all coalesced into One Massive, Unmanageable, Highly Correlated, Unhedgable, Undiversifiable Association of Interrelated Systemic Risks. "
Commodity exports hit record RM90b
By Ooi Tee Ching
2008/02/16
MALAYSIA raked in RM90 billion from commodity exports in 2007, a fresh record for the sixth consecutive year.
"The main contributors to this big jump are palm oil, cocoa and pepper. Palm oil surged by 42 per cent, cocoa by 25 per cent and escalating pepper prices fuelled exports by 30 per cent," Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui told Business Times in a telephone interview from Miri yesterday.
"Initially we forecast that we could surpass RM80 billion. Now, the numbers show we've raked in RM89.60 billion. 2007 has been a fantastic year.
The value of Malaysia's commodity exports has risen by 13 per cent every year for the past five years, thanks to strong demand and better prices.
Exporters are also not worried about a slowdown in the US economy as they have diversified their markets.
Chin explained that America's healthcare sector will continue to buy our rubber gloves because they are a necessity.
"The biggest buyers of our palm oil are China, Europe and Pakistan. As for rubber, it is China, Japan and Europe. When it comes to timber, it is Japan, China and India. So, you see, the bulk of our green commodities go to China, not the US," he added.
Recently, economists noted the increasing contribution of commodities to Malaysia's economy while manufacturing, which makes electrical and electronic (E&E) products, posted less encouraging numbers.
"Although exports of E&E still contribute a big chunk to the economy, plantation-based exports are expanding rapidly. Another point is this sector imports very little raw materials to make finished products for exports," he said.
"When you compare oil and gas exports, green commodities are renewable. We are constantly replanting old and unproductive trees with better-yielding ones as we go along," Chin said.
Remembering the city founders
By SEAH CHIANG NEE
February 16, 2008
When a group of university students were shown photographs of some leaders who have helped shape modern Singapore, none could identify them.
FOUR decades after independence, Singapore still retains its British names on a firm policy of maintaining a link to the past – but this may soon change.
A few roads, buildings and MRT stations may be renamed in honour of those who helped make its modern history, as a reminder to the younger generation of their achievements.
The proposal came from Senior Minister Goh Chok Tong a year ago, and the Street and Building Names Board had said it would look into the matter.
At present no post-independence figure has been named for any road or building, and Minister Mentor Lee Kuan Yew has always rejected the idea of building statues for Singaporean leaders.
The need to perpetuate the role of Singapore’s former leaders is compelling.
When a group of university students were shown photographs of some leaders who have helped shape modern Singapore, none of them could identify them, said Ambassador-at-large Prof Tommy Koh during a recent meeting.
Unlike other leaders who shed their colonial past upon independence, Lee has steadfastly retained Singapore’s British names to maintain historical continuity.
Roads with names like Robinson, Tyrwhitt, Duxton Hill, Kent Ridge, Spottiswoode Park and a lot more are found in various parts of the island.
The statue of Sir Stamford Raffles, founder of Singapore, stands with arms folded as a tourist attraction. It has become a brand name, with places, schools, a hospital and a hotel named after him.
The estate where I live, a former residence for the British army, still keeps names like Chartwell, Braemar, Borthwick, and so on. None has been changed.
The proposed changes are expected to be gradual, not substantial.
Goh said that only roads named after minor colonial officials could be replaced. Among the first to go would be the unimaginative, nondescript names, he added.
(The use of numericals like Ang Mo Kio Avenue 1, 3 or 5 or Geylang Lorong 18, for example, could be scrapped, some suggested. So should names like Bukit Batok.)
In recent years as Lee (aged 86) and his remaining first generation leaders (mostly retired) reached their sunset years, some steps were taken to mark their role in society.
A newspaper has brought out, for young readers, a pocket guide featuring 10 of Singapore’s political pioneers. Called ‘Founding Fathers’ it contains stories, cartoons and photos about them.
The list, led by Lee, includes Goh Keng Swee, S. Rajaratnam and David Marshall (the only non-People’s Action Party member).
Some Singapore leaders have institutions named after them:
> The Hon Sui Sen Memorial Library, National University of Singapore;
> The S. Rajaratnam School of International Studies, Nanyang Technological University; and,
> The Lee Kuan Yew School of Public Policy, NUS, with a S$200mil (RM46.6mil) fund.
The Public Service Commission has a Goh Keng Swee scholarship, while Lee himself has several education awards.
Singaporeans largely agree that the country needs to record the role of people who helped to make history, but say it should not be used to glorify leaders of the ruling party.
Not many would like to see the eradication of the colonial past from Singapore’s roads.
At any rate, with the exception of World War Two and the first two pioneering decades, Singapore’s contemporary history has been too short to produce many heroes.
Much of it was made in the first 20 formative years when leaders were more passionate and self-sacrificing, not in the current science- and technology-based age.
It should not exclude critics or opposition members like Marshall and Lim Chin Siong.
The decision should involve the community, including outside the government, and be based on popular choice, rather than be made by only a few people.
It could then result in a flurry of name changing after a new government is installed.
Taiwan recently closed the Chiang Kai Shek Mausoleum in a vigorous campaign to diminish the legacy of the late leader.
The history of Suharto’s coup in 1964 is also being reviewed. Statues of dictators in Albania and Iraq were pulled down after they were deposed.
Most people are, however, opposed to any large-scale replacement of British names.
Associate Prof Victor R. Savage, who is with the NUS geography department and who wrote a book on road names in Singapore titled Toponymics, said these names should be retained.
“Every name carries with it a sort of historical continuity and provides a sense of identity to a particular place or a nation as a whole,” he told The Straits Times newspaper.
Another Singaporean, Ying Min, agrees. “There is history attached to place names. Changing the name could sometimes be akin to denying the history of the place.”
She suggested naming new roads and places after modern history-makers rather than replacing existing names.
A reader suggested that civil servants should be more sensitive to people who are unable to read or write English – estimated at 26% – and have difficulty managing names like Compassvale.
“How are they going to tell a taxi driver where they want to go?” he asked.
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