High A - Telcos, Independent finance, Natural gas utilities, Beverages, High quality Electric Utilities.
Mid A - Food processing and Bottling.
Low A - Domestic Bank Holdings, Tobacco, Medium quality electic utilities, Consumer product industry, High grade diversifed Mfg/Conglomerates, Leasing, Auto Manufacturers, Chemicals, Energy.
High BBB - Natural gas pipelines.
Mid BBB - Paper/Forest products, Retail, Property and Casualty Insurance, Aerospace/Defence, Info/Data technology.
High BB - Supermarkets, Cable and Media, Vehicles, Textile/Apparels.
Mid BB - Low quality electric utilities, Gaming, Restuarants, Construction, Hotel Leisure, Low quality manufacturing.
Low BB - Airlines.
High B - Metals.
Friday, November 28, 2008
Average Credit Safety of Industry Groups
Sunday, November 23, 2008
RIP - Orienwise
China Orienwise - personal gurantee company. A case of someone expanding too fast and aggressively. In this mkt environment, this guy is going to be thrashed big time.
Headquartered in Shenzhen, China Orienwise Limited -- is a private guarantee company in China. As of August 31, 2006, the company had total assets of CNY 2.6bn (USD 329m). The company is 100% owned by the ultimate parent Credit Orienwise Group Limited, which is in turn majority owned by the founder Mr. Zhang Kai Yong through Orienwise International Holding Limited. Other strategic investors for Credit Orienwise include the Asian Development Bank, Citigroup Venture Capital International and Carlyle.
Live within yr Means
Lehman has been the No.1 biggest company to go bankrupt. This week, I am looking at Citi going under ~ 2 trillion in assets and followed by GM and Chrysler. Obama looking to create 2.5mm jobs in 2011 in schools, infrastructure spending, alternatives energy eg solar and wind farms. Think it is time for us to reprice risk premium. I like the following article written by Goh Eng Yoew, ST Mkt correspondent.
Something good will come from these bad times. It is worth noting that during the Great Depression, formidable businesses were being established in the United States, such as Walt Disney, IBM and Hewlett-Packard. These turned into the global household names they are today. People will have to start living within their means, learn how to preserve capital and reduce debt.
..........
Many have described the current upheaval as the worst financial crisis since the Great Depression 80 years ago. Let's put things in perspective. The few people who still remember those bleak times have observed that such talk is quite exaggerated. One 86-year-old businessman here recalled that during the Great Depression which occurred during his childhood, many people went hungry in the streets as the rubber trade in Singapore crashed. Yet, the British colonial authorities did not lift a finger to help them. In contrast, the Government is already rushing to put together a series of measures to combat the current downturn.
But the vast destruction of wealth now under way in global financial markets is not something that happened overnight. It may actually be the result of many years of risk-taking gone awry. The problem has been simmering beneath a surface calm during the last couple of boom years, but no one paid any attention to it, given the obsession with instant gratification. It is easy to get carried away and pin all the blame on the mortgage crisis in the United States. But look around us. Didn't we suffer from similar excesses as well? Until recently, some banks literally made it a virtue to approve risky unsecured personal loans within 24 hours - never mind the credit checks they are supposed to do on the borrower. Even while the super-bull run was hitting its peak early last year, there were already warning signs that the stock market might come crashing down. These signals were mostly ignored.
Companies bled dry by years of losses, such as Rowsley, Equation and Ban Joo, were valued at more than $200 million each even though they were literally shell firms with few viable assets left in them. In May last year, one audacious China solar start-up even wanted to inject its fledgling operations into Rowsley at a hefty price tag of $2.7 billion. While it offered investors a $300 million profit guarantee for each of the financial years ending June 30, 2008, 2009 and 2010, it gave precious few details on how it intended to fulfil its side of the mega-size bargain. Small wonder, then, as the US sub-prime crisis started to bite, these counters tumbled like tenpins as the sexy stories surrounding them turned sour. They have since fallen to about one-tenth of the prices reached during the feverish penny stock price run-up in July last year. It is now quite possible that we will have a few lean years ahead of us - as the excesses are being drained out of the system - but that is nothing to fear, really.
..........
'Nothing is moving. The decline is not confined to the US market; Europe, Japan are also down significantly, with slowdowns in the emerging markets as well.' The situation is most dire in the US, the biggest car market in the world. Sales there have plummeted to their lowest in 17 years, putting General Motors, Ford and Chrysler on the brink of disaster.
The Big Three are asking for US$25 billion (S$38 billion) in federal assistance - which was rejected by Congress - with GM and Chrysler warning that they could go under in weeks. Europe has suffered six consecutive months of declining car sales, with a drop of almost 15 per cent last month. Renault, Peugeot, Opel, Mercedes-Benz and Audi have announced either cutbacks or layoffs, and in many cases, both.
Japan, home of some of the world's most efficient, affordable cars, has not been spared. Toyota, Honda, Mazda and Nissan have all announced production cutbacks and staff layoffs in domestic as well as overseas plants. The slowdown of the auto industry is potentially devastating for not just the carmakers, but also the countries they operate in. A report by the Centre for Automotive Research shows that if one of the Big Three goes bankrupt, the US could lose 2.5 million jobs and US$125 billion in personal income in the first year alone.
In Germany, where the auto industry is estimated to provide one in eight jobs, a slowdown for carmakers will also hit the electronics, transport, chemicals, engineering and advertising sectors. Even countries such as Thailand and South Korea have already been hit by production cuts.
But what ails the industry? Most firms lay the blame squarely on the current economic crisis, dropping demand and weak consumer confidence. Not only are cars seen as luxury items that people can go without in these lean times, but loans from banks are also drying up.
'That's in nobody's business plan,' Ms Kimberly Rodriguez, an automotive specialist with global accounting firm Grant Thornton, told Time magazine. 'The best planning in the world cannot survive that fluctuation.'
But others blame structural weakness in the carmakers, especially in the US. Long criticised for their inefficiencies, US carmakers are coming under greater fire for their cost management. Much of the bailout money that they want, for instance, will go to keeping overpaid workers in their jobs, their pensions and their retirement benefits.
Critics also slam the US automakers for failing to develop smaller, fuel-efficient cars, and concentrating instead on fuel-guzzling sport utility vehicles - whose sales have been devastated by high fuel prices.
Despite all this, some carmakers are keeping their hands firmly on the gearshift, ready for a comeback.
Saturday, November 22, 2008
Music ~ Somebody + Bcos I Love U
Two songs that I like quite alot - Somebody + Bcos I love u.
Sombody ~ Depeche Mode
I want somebody to share
Share the rest of my life
Share my innermost thoughts
Know my intimate details
Someone wholl stand by my side
And give me support
And in return
Shell get my support
She will listen to me
When I want to speak
About the world we live in
And life in general
Though my views may be wrong
They may even be perverted
Shell hear me out
And wont easily be converted
To my way of thinking
In fact shell often disagree
But at the end of it all
She will understand me
Aaaahhhhh....
I want somebody who cares
For me passionately
With every thought and
With every breath
Someone wholl help me see things
In a different light
All the things I detest
I will almost like
I dont want to be tied
To anyones strings
Im carefully trying to steer clear of Those things
But when Im asleep I want somebody
Who will put their arms around me
And kiss me tenderly
Though things like this Make me sick
In a case like this
Ill get away with it Aaaahhhhh....
BECAUSE I LOVE YOU -(Gordon Campbell); Shakin' Stevens
...
If I got down on my knees and I pleaded with you,
If I crossed a million oceans just to be with you,
Would you ever let me down?
If I climbed the highest mountain just to hold you tight,
If I said that I would love you every single night,
Would you ever let me down?
Well, I'm sorry if it sounds kinds sad,
It's just that I'm worried,
So worried that you'll let me down.
Because I love you,
Love you,
Love you, so don't let me down.
If I swam the longest river just to call your name,
If I said the way I feel for you would never change,
Would you ever fool around?
Well, I'm sorry if it sounds kinds bad,
Just that I'm worried,
'Cos I'm so worried that you'll let me down.
Because I
(Instrumental Break) (love you love you)
Love you, love you.
Well I'm sorry if it sounds kinds bad,
Just that I'm worried,
'Cos I'm so worried that you'll let me down.
Because I love you, love you
Oooooh, I love you,
Love you,
Love you.
(Contributed by Ferda Dolunay - April 2006)
Friday, November 21, 2008
US pensions ~ this is a time bomb
The Wall Street Journal reported on October 30, 2008,that at the end of 2007,the combined pension-plan surplus of all the S&P 500 companies was $60 billion, but that by late September of this year it had become a $75 billion deficit.
http://www.larouchepub.com/other/2005/site_packages/strategic_bankruptcy/3221pensions_gone.html
http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States
Bloomberg article - funded Pension Liability: Lenders And Buyers Beware 2008-11-21 06:10:44.640 GMT By Mr Brad Scheler
Introduction
Underfunded defined benefit pension plans have always carried a certain amount of risk. With the current uncertainty and downturnin the markets, low interest rates and the impact of new pension rules, pension plan sponsors with underfunded pension plans, and those who seek to acquire companies with defined benefit plans or lend to such companies, have a heightened exposure to risk. Underfunded pension plans appear to be significantly impacting the ability in certain cases to get financing in today's tough financial markets. Although the new FASB Statement No.158 requiresa company to recognize the underfunded status of defined benefit plans as a liability on its balance sheet and to recognize changes in that funded status in the year such changes occur, the ultimateliability is still uncertain. The company's consolidated balance sheet and the footnotes to its financials provide certain historical information based on assumptions made as of the date of such statements and do not have sufficient detail to make an exact determination as to the company's potential liability.Furthermore, members of a company's controlled group are joint and severally liable for Pension Benefit Guaranty Corporation("PBGC") claims. Therefore, significant due diligence asto the scope of the company's pension liabilities needs to be performed by a lender or buyer.
Lenders obviously need to examine carefully all pension liabilities before they make loans. Even a company with a fully funded plan in prior periods may now be significantly underfunded,due to the dislocation of various markets. For existing credits, lenders should regularly examine the pension funding requirements, particularly for troubled credits. Given the recent economic turmoil, the amounts required to satisfy underfunding maybe significantly greater than the amounts anticipated when the loan was entered into.
Lenders may also want to make sure that their loans are guaranteed by subsidiaries of the parent company, so they are not structurally subordinated to any PBGC claims due to controlled group liability. Even more beneficial for lenders would be security for borrower's obligations, which would make their claim senior to any PBGC claims with respect to the lender's collateral.
Companies looking to purchase other companies also need to take particular note of potential pension liabilities. Underfunded pensions can be a critical issue when examining the costs and risks of an acquisition, since potential liabilities cannot be determined with certainty at the time an acquisition is made.
The Pension Protection Act of 2006 (the "PPA") addednew funding requirements that were designed to ensure that pension plans become fully funded within seven years. These funding rules became effective for plan years beginning in 2008; all pension plans will need to be fully funded by 2015. This memorandum explains briefly the contours of these funding rules and their requirements with respect to underfunded pension plans in the United States. It also covers the impact of bankruptcy on those pension plans whose underfunded pension plan obligations generally rank equal to any unsecured financing of the parent entity (if those underfunded pension obligations are obligations of the parent entity). This memorandum also discusses similar issues in other countries, focusing especially on France, Germany (where pension liabilities are not always prefunded), and the United Kingdom. This memorandum also suggests how to mitigate against additional plan liabilities in the current volatile market.
New Funding Rules for US Underfunded Pension Plans ~ Effective for plan years that start in 2008, plan sponsors must begin making funding contributions sufficient to meet full funding targets and to eliminate funding shortfalls over a seven-year period, so that all plans are fully funded within seven years. For existing plans, the new funding requirements went into effect in 2008; all existing pension plans will need to be fully funded by 2015.
The PPA also adopted new requirements for plan funding assumptions, including interest rates and mortality tables. Under the new funding rules, plan sponsors must make minimum required contributions to plans where the value of plan assets is less than the funding target (the present value of all benefits accrued or earned as of the beginning of the plan year). Benefit limitations and participant notice requirements may also apply to certain underfunded plans.
There are additional funding requirements and a higher funding target for "at-risk" plans. If a plan is at risk for the current year and two out of the previous four years, an additional "loading factor" of 4% of the funding target, plus $700 per participant, is added to the at-risk liability. Plans will be considered at risk generally when (i) the plan's funding target attainment percentage (the ratio of the plan's assets to the plan's funding target for the year), determined without using special at risk assumptions, is less than 65% in 2008, 70% in 2009,75% in 2010, and 80% thereafter and (2) the plan's funding target attainment percentage, determined using the special at-risk assumptions, is less than 70%.
Plan sponsors are subject to penalties if they fail to make the required minimum funding contributions to their plans. A sponsor is generally subject to an excise tax of 10% of the aggregate unpaid minimum required contributions if the required contributions are not met. If the deficiency is not corrected in a specified period, a tax of up to 100% of the unpaid minimum required contribution can be imposed.
Accordingly, lenders and acquirers of businesses need to take the underfunding amount, and the period over which it must befunded, into account when determining how much to lend to, or pay for, a company. In the current market, at times when stock and asset values are falling precipitously, significantly greater amounts than anticipated may be needed, and it will be difficult to determine the actual amounts that may be required to be paid in the future. Businesses will need to have sufficient liquidity availabl eeach year, in the form of a line of credit or otherwise, to makesure they can make the required payments and not be subject to the penalties described above.
Bankruptcy of Plan Sponsors and Underfunded Pension Plans ~ In bankruptcy, while claims arising from pension plan obligations may have priority over general unsecured claims in particular circumstances and with certain monetary limits, they areusually treated as general unsecured claims without any priority or subordinated status in connection with any distributions in bankruptcy. Therefore, they usually rank equal with any unsecured lender and senior to subordinated lenders who have agreed to be subordinated to pension liabilities. Many subordinated lenders do not agree to be subordinated to pension liabilities and agree to subordinate themselves only to indebtedness for borrowed money. Accordingly, a secured lender will be entitled to recover its allowed claims in full to the extent of the value of its interest in the collateral, while the claims of an unsecured creditor,including those arising from a pension plan, will have lower priority. Pension plans are not automatically terminated in bankruptcy and can sometimes survive the bankruptcy process intact.When a pension plan is terminated in bankruptcy, the PBGC steps in and uses its own assets to ensure that participants do not lose all their benefits.
A pension plan can be terminated in bankruptcy in one of two ways; either the company can voluntarily terminate its plan in a distress termination or the PBGC can terminate the plan in an involuntary termination. A distress termination may occur only if certain notice requirements are met and the PBGC determines that the plan sponsor and its corporate affiliates meet any one of four tests relating to the financial state of the company. In an involuntary termination, the PBGC terminates a plan on its own initiative if certain tests are met, regardless of the intentions of the plan sponsor. A plan cannot be voluntarily terminated in violation of a collective bargaining agreement, although the PBGC can impose an involuntary termination. In bankruptcy, collective bargaining agreements can be rejected (thus removing the barrier toa voluntary distress termination) only if the debtor leaps significant hurdles imposed by the Bankruptcy Code.
If the pension plan is terminated in bankruptcy, the PBGC has three primary types of claims in the bankruptcy case: (1) the unfunded benefit liability, which is the difference between thepresent value of the plan's liabilities and the fair marketvalue of the plan's assets (although bankruptcy courts do not agree on the appropriate methodology for determining funded status), (2) the unpaid minimum funding contributions that the plansponsor owes the pension plan and (3) the unpaid pension plan termination insurance premiums owed to the PBGC.
Pursuant to the Employment Retirement Income Security Act of1974, the members of a sponsor's "controlled group" are jointly and severally liable for PBGC liabilities. A controlled group generally consists of a parent company and its 80%-ned subsidiaries, as well as any brother-sister corporations of a common parent. Because of joint and several liability, a lender should receive, if possible, guarantees from all members of acontrolled group in order not to be structurally subordinate to PBGC claims. In that way, a lender would be pari-passu to PBGC claims. Of course, it would be desirable for a lender to have a security interest in order to be senior to the PBGC'sunsecured claims with respect to the lender's collateral.
Foreign Underfunded Pension Plans - In addition to the US underfunding issues described above, multinational companies will have similar issues in each of the countries in which they operate. Every country has its own pension schemes. Below, we summarize those of France, Germany, and the United Kingdom. Buyers and lenders will need to consult experts inthe countries in which borrowers or targets (or their subsidiaries)have pension obligations in order to understand the ultimate pension liability.
..........
France
In France, defined benefit pension plans have been gradually phased out for new employees and progressively replaced by defined contribution pension plans, known as PERCOs (Plan d'EpargneRetraite Collectif) or "Article 83" retirement accounts. A number of large-cap French companies have nevertheless accumulated significant retirement liabilities through historical underfunded defined benefit pension plans or through their ownership of subsidiaries with such plans in foreign jurisdictions.
In light of the relatively small weight attributed to defined benefit pension plans in the overall French pension scheme, the funding of these plans is not heavily regulated. French corporations that do not report their financial statements using International Financial Reporting Standards may elect either to book pension liabilities as provisions on their balance sheet or to disclose them in notes to their financial statements. As a consequence, plans may be unfunded, with plan sponsors contributing to them on a "pay as you go" basis. In light of the significant risks associated with this approach, corporations often book provisions on their balance sheet to cover future liabilities. They increasingly turn to insurance companies that set funding targets to eliminate funding shortfalls and manage the plans on the corporation's behalf.
Such group insurance plans do not,however, entirely remove the risk that those funding targets, as determined by the insurer's actuarial analysis, might not be sufficient to cover the plan's future funding needs.
..........
Germany
The German system has five basic types of occupational pension schemes that an employer can implement: pension promise, relief fund, direct insurance, pension plan and pension fund. The essential differences between these schemes are in
whether they are funded or unfunded, the asset classes that are available for investment, and certain other features. It is, within certain limits, up to the employer to elect the pension scheme it intends to offer an employee. The pension scheme may be funded by employer contributions, employee contributions or a mixture of both.
Of the five pension schemes, four are externally funded, and one, the pension promise, is a pure payment obligation that is not externally funded. Under certain limited circumstances, a semipublic institution exists that may provide relief to employees and may assume certain occupational pension scheme obligations of the employer in the case of an employer insolvency. Correspondingly, employers who engage in pension promises are obliged to make contributions to this semi-public institution. Suchcontributions do not constitute the funding of pension obligations but rather a mandatory contribution to a semi-public institution.Otherwise, as a general principle, employee entitlements from occupational pension schemes are not given preference in employer insolvency proceedings and are treated as equal to those of otherunsecured creditors.
..........
United Kingdom
A UK pension plan must be sufficiently funded to meet plan liabilities on an ongoing basis, as determined by the plan'strustees and based on criteria set by the UK Pensions Regulator. Asa general rule, a plan's funding standard is often significantly higher than the liabilities shown on a company accounting basis, so corporate accounts often are not a true reflection of the costs associated with a plan. As in the US,insolvent pension plans in bankruptcy are generally treated as unsecured creditors with no priority status. However,commencementof a UK insolvency procedure results in: (1) a debt on the employer, calculated by reference to the full cost of securing all of the plan's accrued benefits through purchasing annuities,and (2) the Pension Protection Fund (a statutory body) assessing whether it will assume the plan. If the Pension Protection Fund assumes the plan, it will also assume the plan's right to attempt to recover the debt from the insolvent employer.Additionally, the UK Pensions Regulator may have the power to compel other affiliates (including subsidiaries) to support the pension plan, even if these entities are located outside the UK.
..........
Strategies to Avoid Pension Plan Issues in the Current Market
Owners of businesses and those who lend to them may want to consider how to protect their pension plans from incurring increasingly large funding obligation liabilities in the current volatile market. In particular, the new funding rules described above require annualized payments, which may fluctuate significantly in the current economic climate. If a plan is fully funded, one option is to place pension assets into fixed income or other investment products to match liabilities. The potential downside is that, if the pension plan is not fully funded at the time this approach is adopted, then this approach may require contributing substantial amounts of money.
Lenders will also want to make sure that they have a security interest in the pension obligor's assets in order to be senior to the pension liabilities with respect to the collateral or are at least pasipassu with the pension liabilities by obtaining guarantees of subsidiaries so that the lender will not be structurally junior with respect to the subsidiaries' assets. The recent pension funding changes will also require more regular funding of pension amounts, and companies and acquirers will need to make sure they will have sufficient liquidity to make any payments.
Lenders may want to include amounts payable to pension plans as a cash obligation for purposes of determining covenant levels and calculations of cash flow for determining compliance with financial covenants. Buyers of businesses should obviously take into account the cost of pension liabilities and the timing and amounts of annual contributions (as well as the risk that such amounts may change)in determining the amount they are willing to pay for a business.
Mr Brad Scheler
Fried Frank Harris Shriver & Jacobson
Structured Investment Vehicle - SIV
Structured Investment Vehicle - SIV - invented by Citi in 1988 and popular till they crashed in 08. Borrow short term at low interest and then buy longer dated securities at higher interest. Classified as structured credit product ranging from size USD1~30bn. Reinvested in ABS and corp bonds. Open ended and evergreen structure.
Twofold risk - solvency risk if asset value drops and liquidity risk. A SIV may be thought of as a virtual bank. It borrows money using CP, which it traditionally issues close to LIBOR. It then uses money to purchase bonds. The bonds usually selected by a SIV are predominantly (70-80%) Aaa/AAA ABS and MBS - hence the SIV is effectively providing funds for mortgages, credit cards, student loans and similar products. A SIV would typically earn around 0.25% more on the bonds than it pays on the CP. This difference represents the profit that the SIV will pay to the capital note holders and the investment manager. The capital-note holders are the "first-loss investors," in that if any of the bonds purchased default, the capital-note investor will lose his investment before the CP investors do.
The short-term securities that a SIV issues often contain two tiers of liabilities, junior and senior, with a leverage ratio ranging from 10 to 15. The senior debt is invariably rated AAA/Aaa/AAA and A-1+/P-1/F1 (usually by two rating agencies). The junior debt may or may not be rated, but when rated it is usually in the BBB area. There may be a mezzanine tranche rated A. The senior debt is a pari passu combination of medium-term notes (MTN) and commercial paper (CP). The junior debt traditionally comprises puttable, rolling 10-year bonds, but shorter maturities and bullet notes are becoming more common.
In order to support their high senior ratings, SIVs are also obliged to obtain liquidity facilities (so-called back-stop facilities) from banks to cover some of the senior issuance. This helps to reduce investor exposure to market disruptions that might prevent the SIV from refinancing its CP debt. To the extent that the SIV invests in fixed assets, it hedges against interest-rate risk.
Oct 2007 - US govt wanted to set up Super SIV bailout fund but pull back last min. Stanchart got killed on Whistlejacket SIV. Citibank rescue SIV and bring them on balance sheet. BOA 4Q07 results got killed on SIV. Northen Rock got killed in SIV since Aug07 and nationalised in 2/8. Cheyne another victim.
http://en.wikipedia.org/wiki/Structured_investment_vehicle
On bloomberg - NI SIV
Couple Jokes
Love Your Enemy
From his death bed, the husband called his wife and said, 'One month after I die I want you to marry Samy.' 'Samy! But he is your enemy!' 'Yes, I know that! I've suffered all these years so let him suffer now.'
Why divorce?
In a divorce court a woman requested the judge: 'Your honor, I want to divorce my husband.' 'But why ?' asked the judge. She replied, 'Because he is not faithful to me.' The judge asked, 'How do you know?'
She replied, 'My lord, not a single child resembles him.'
Wedding Ring
At the cocktail party, one woman said to another, 'Aren't you wearing your wedding ring on the wrong finger?' The other replied, 'Yes I am, I married the wrong man.'
Why?
'Dad, I was away for a week. Yesterday I sent a fax to my wife I'd be home that night, and when I got into my room I found my wife in another man's arms. 'Why, Dad? Tell me why!'
Dad kept silent for a few minutes, then coolly said, 'Maybe, Son, she didn't get the fax.'
Same Service
A husband visited a marriage counselor and said, 'When we were first married, I would come home from the office, my wife would bring my slippers and our cute little dog would run around barking. Now after ten years it's all different, I come home, the dog brings the slippers and my wife runs around barking.'
'Why complain?' said the counselor. 'You're still getting the same service!'
Talk about Husband
One woman told another: ' My neighbour is always speaking ill of her husband, but look at me, my husband is foolish, lazy and a coward; but have I ever said anything bad about him?'
Love To Do
A wife, one evening, drew her husband's attention to the couple next door and said, 'Do you see that couple? How devoted they are? He kisses her every time they meet. Why don't you do that?' 'I would love to. 'Replied the husband. 'But I don't know her well enough.'
No Answer Back
A man was telling his friends, 'When my wife is infuriated, she starts shouting at me, my children and even at our dogs and nobody dares answer her.'
One of his friends asked. 'And when you are angry, what do you do?'
The man replied, 'I also shout angrily at the windows and doors of the house and none of them dares to answer back.
Come Home Late
A woman was complaining to the neighbour that her husband always came home late, no matter how she tried to stop him. 'Take my advice,' said the neighbour, 'and do what I did. Once my husband came home at three o'clock in the morning, and from my bed I
called out: 'Is that you, Jim?' And that cured him. 'Cured him!' asked the woman, 'but how?'
The neighbour said, 'You see, his name is Bill.'
Problem Father
'You looked troubled,' I told my friend, 'what's your problem?'
He replied, 'I'm going to be a father.'
'But that's wonderful,' I said.
'What's so wonderful? My wife doesn't know about it yet.
-------------------------------------------------------------------------------------
MARRIAGE ~ The Ten Commandments
COMMANDMENT 1
Marriages are made in heaven; But so are thunder and lightning.
COMMANDMENT 2
If you want your wife to listen and pay strict attention to every word you say, talk in your sleep.
COMMANDMENT 3
Marriage is grand -- and divorce is at least 100 grand!
COMMANDMENT 4
Married life is very frustrating.
In the first year of marriage, the man speaks and the woman listens.
In the second year, the woman speaks and the man listens.
In the third year, they both speak and the neighbours listen.
COMMANDMENT 5
When a man opens the door of his car for his wife, you can be sure of one thing:
Either the car is new or the wife is.
COMMANDMENT 6
Marriage is when a man and woman become as one; The trouble starts when they try to decide which one.
COMMANDMENT 7
Before marriage, a man will lie awake all night thinking about something you say.
After marriage, he will fall asleep before you finish.
COMMANDMENT 8
Every man wants a wife, who is beautiful, understanding, economical, and a good cook.
But the law allows only one wife.
COMMANDMENT 9
Marriage and love are purely matter of chemistry.
That is why wife treats husband like toxic waste.
COMMANDMENT 10
A man is incomplete until he is married.
After that, he is finished..
BONUS COMMANDMENT STORY
A long married couple came upon a wishing well.
The husband leaned over, made a wish and threw in a penny.
The wife decided to make a wish too.
But she leaned over too much, fell into the well, and drowned.
The husband was stunned for a moment but then smiled and said,
"Hey!...This thing really works!"
Thursday, November 20, 2008
Iceland - FT article .. this is sad
This is quite a sad story - good people being screwed by the govt and their banks. I was scratching my head when I was selling Kaupthing tier 1 paper and how they managed to come up with their smart investments, like buying West Ham.
Kaupthing, Landsbanki and Glitnir sported all the trappings of fully fledged international banks. They had offices around the world, slick PR, extravagant parties and huge amounts of debt. Iceland’s banks borrowed more than $250,000 for every man, US75bn of debt for 300k people. $75bn = 10X annual GDP. Coupled with the currency, savings are down 60% and cost of living up 20%. Potential loss of STG8bn for half a million savers in northern europe, esp UK. UK froze Landsbanki and one week later, Kaupthing went under. Iceland still owed UK 2.2bn, included under the IMF plan. When banks were privatized in 2002, govt sold it to a group of rich businessmen. These new shareholders used the banks to support their other businesses. For example, FL Group (which then became Stodir) – an investment company owned by the Icelandic retail entrepreneur Jon Ásgeir Johannesson – was both Glitnir’s biggest shareholder and one of its significant borrowers. Does it smell right?!!
Letter from Iceland
By Robert Jackson. Photographs by Bjarki Reyr
Published: November 14 2008 11:51 | Last updated: November 14 2008 11:51
Hallgrímskirkja cathedral looms up out of the mists and gloom of downtown Reykjavík
Think of Ireland. Rotate it 90 degrees clockwise, make it a third bigger and hang it like a pendant from the Arctic Circle. Crack open the earth’s crust below to release limitless supplies of geothermal steam, then fill its territorial waters, all 200 miles of them, with an abundance of cod.
Give it a population of 300,000, about the same as Coventry, 70 per cent of them in the cities of Reykjavik and Akureyri. Ensure they are all related and give the majority the ability to trace their ancestry back to the times of settlement, more than a thousand years earlier. Endow these people with industry and ambition. Give them their own language – all but unchanged for a millennium – a literary tradition, three national newspapers, two television channels, free universal healthcare and education and close to zero unemployment. Give this country a consistently high ranking in the world standard-of-living charts and you have the Iceland of the recent past. Not a bad place, all in all.
Now allow this country’s banks – virtually unregulated – to borrow more than 10 times their country’s gross domestic product from the international wholesale money markets. Watch as a Graf Zeppelin of debt propels its self-styled “Viking Raiders” across the world’s financial stage, accumulating companies like gamblers hoarding chips. Then sit on the sidelines as the airship flies home and explodes, showering its blazing wreckage over this once proud, yet tiny, nation.
There you see the Iceland of today – the victim of an economic 9/11 and one of the very few places in the world where the words “financial meltdown” can be used without fear of exaggeration.
. . .
There is no daytime TV in Iceland. Parents are at work and children at school, so the test card, that feature of a bygone age, is the only thing aired. For the transmitters to be switched on in mid-afternoon and a sombre-looking Geir Haarde, the prime minister, to appear behind a desk, a national flag at his side, it had to be serious – and it was. The country was on the verge of bankruptcy; the government was taking control of the banks and was going to assume far-reaching powers to secure the safety of the nation and its savers.
As I watched, I felt a detached sympathy for those poor people living on a blighted island – until it dawned on me that I was one of them. Recent events had savaged my net worth by 60 per cent and pushed up my cost of living by more than 20 per cent. Iceland’s plight was mine, too. What I failed to appreciate at the time was the emotion of this unprecedented television address, particularly in the way it finished:
“Fellow countrymen ... If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of every one of us, to protect those values which will survive the storm now beginning. I urge families to talk together and not to allow anxiety to get the upper hand, even though the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice, and we all need to find an inner courage to look to the future ... Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.
“God bless Iceland.”
Edda, my partner, was in tears on the sofa beside me.
A drive across town later that afternoon, October 6, at first gave grounds for comfort. The roads were as full as usual for the Reykjavik rush-hour – a half-hour build-up of traffic. Aircraft flew in and out of the downtown airport, students made their way home from schools and universities – note the plural – while visitors went to hospitals and fitness fiends to sports clubs. Reykjavik showed all the outward appearances of carrying on.
But a different picture began to emerge from the hourly news bulletins on the car radio. The Icelandic krona’s freeze in the capital markets had now spilled over into the day-to-day transactions of Icelanders abroad. Holidaymakers and business travellers venturing “til Útlanda”, as it is called, found their credit cards refused, and those wishing to buy foreign currency could not find willing sellers, aside from one or two who limited their purchases to €200.
Trust in the banks had evaporated and people were trying to find a safe haven for their cash. One man had waited for six hours in a bank while his life savings, more than £1m in kronur (at IKr200 to the pound), were counted out in cash in front of him. “I feel like an innocent man dragged from his bed, put in a barrel and hurled over Gullfoss!” wrote one journalist that morning. “We have been brought down by a handful of men who bet our nation’s wealth, fame and prosperity on a throw of the dice.” Gullfoss is one of Iceland’s tourist attractions – a majestic 100ft waterfall.
On collecting our daughter from her handball practice, I learnt the news that her club could not obtain the foreign currency it needed to release their new team shirts from customs. The city’s myriad sports teams rely on local sponsors and our daughter also brought the news that this source of funding for her team was likely to dry up in the months to come. Later that evening, Skype, our communications lifeline, would not renew our credits with an Icelandic credit card. E-mails began to arrive from friends overseas, alarmed by news reports and asking if we were all right.
But all this was trivial compared with the financial distress, in some cases ruin, that now faces a significant proportion of the population.
Easy access to 100 per cent mortgages has seen a change to the traditional pattern of young Icelanders living with their parents until their mid-twenties. The suburbs of Reykjavik have grown by a third in the past decade, most of it housing for first-time buyers. Whole new neighbourhoods have emerged. New streets house young couples, many with children, most with two cars in the drive and furnished with the best that Ikea can provide. All bought with 100 per cent loans, many in foreign currencies.
Iceland is the only country in the world that indexes its loans in addition to charging interest. This means that when Icelanders borrow IKr1,000 from the bank and inflation increases by 5 per cent, the bank increases their debt to IKr1,050 at the end of the year. A great deal for the bank and fine for you, too – so long as the property’s value and your salary are increasing by inflation and more. The majority of Icelandic mortgages are based on this punitive system and with inflation running at nearly 20 per cent, they will see their IKr1,000 loan turn into a IKr1,200 loan. The interest burden will increase proportionally. This is bad enough, but when coupled with falling house prices, it means that many face a particularly savage variety of negative equity. The impact on highly geared borrowers, which in practice means most Icelanders, would be hard enough even with two incomes, but with unemployment set to soar, many households are going to go under.
A recent first-time buyer, a woman in her late twenties, said: “I took a 100 per cent loan to buy an apartment. I placed my savings in Kaupthing’s money market account, because it promised high interest rates, and my pensions in Kaupthing’s Vista 1 at the prospect of becoming a millionaire retiree. Both of these funds were based on stock investments and I knew that they were risky – but I took the bait and the risk. Now most of this money, if not all, is lost.”
Icelanders are by nature frugal people. It was one of the few countries in the world, perhaps the only one, that had a pension system that could meet the needs of its ageing population. But in recent years, many older people have been persuaded by the banks to invest their savings in high-yielding money-market accounts. As a result of the collapse of the banking system, many of these accounts have seen huge write-downs and some are now worth less than half of their previous values. The additional money people had put aside to top up their pensions has been hard hit.
Bjork, Iceland’s ambassadress of cool, summed it up in The Times on October 28: “Young families are threatened with losing their houses and elderly people their pensions. This is catastrophic. There is also a lot of anger. The six biggest venture capitalists in Iceland are being booed in public places and on TV and radio shows; furious voices insist that they sell all their belongings and give the proceeds to the nation. Gigantic loans, it has been revealed, were taken out abroad by a few individuals and without the full knowledge of the Icelandic people. Now the nation seems to be responsible for having to pay them back.”
A homemade banner, made of sheets, hangs over the main motorway in Reykjavik, tied to the railings of a bridge. “Stondum Saman!” it cries out. “Let us stand together!” It’s the new rallying cry of a beleaguered nation.
A cyclist in Reykjavík on a gloomy day
Icelanders have seen their economy swell and shrink from time to time over the centuries, and always handled it calmly. Perhaps their heritage in fishing and agriculture enabled them to meet good years and bad with equanimity. Now they must cope equally well with an attack of economic bulimia. To understand what makes this crisis – kreppa, as it is known here – so unlike any other, a little history is needed.
For Icelanders, the golden years were the early years, shortly after the land was settled in the ninth century. The Viking tradition, the Althing – the legislative assembly dating to 930 – and the literary canon of Sagas and Eddas are the nation’s cultural bedrock. But after that, Iceland almost disappears from the history books. While the agricultural revolution, the Renaissance, the industrial revolution came and went, while the fine cities of Europe were being built, while artists from Michelangelo to Mozart were pouring forth their creations, while the great inventions and discoveries were being invented and discovered, Icelanders were hunkering down in their turf houses, meeting the hardest challenge of all – survival.
They survived plague, famine, earthquakes and volcanoes. There were times when some even considered abandoning the island. But they stayed on. They stayed and survived. Icelanders will tell you that only the fittest survived, but that is only half the story, because survival requires another key attribute: stubbornness. And Icelanders have it in spades. It is a national trait, and they view it not as a weakness but as a virtue. It comes from experiencing hardship and enduring it. It means finding satisfaction in a simple task done well and sticking to it; finding comfort and solace in family and kinship and being bound by those familial bonds and duties. And perhaps most important of all, it means believing in the independence of the individual as part of the fabric of nationhood, and fighting for that independence. Put simply, the country has values.
And this is what sets this catastrophe apart from the earthquakes and plagues of former years. This is a man-made disaster and worse still, one made by a small group of Icelanders who set off to conquer the financial world, only to return defeated and humiliated. The country is on the verge of bankruptcy and, even more important for those of Viking stock, its international reputation is in tatters. It hurts.
. . .
Picture a pig trying to balance on a mouse’s back and you’ll get some idea of the scale of the problem. In a mere seven years since bank deregulation and privatisation, Iceland’s financial institutions had managed to rack up $75bn of foreign debt. In his address to the nation, Haarde put the problem in perspective by referring to the $700bn financial rescue package in America: “The huge measures introduced by the US authorities to rescue their banking system represent just under 5 per cent of the US GDP. The total economic debt of the Icelandic banks, however, is many times the GDP of Iceland.”
And here is the nub. Iceland’s banks borrowed more than $250,000 for every man, woman and child in Iceland, and placed an impossible burden on the modest reserves of the central bank in the event of default. And default they have.
Voices of caution – there were many in Iceland – were drowned out by a media that became fixated on the nation’s emergence from drab pupa to gaudy butterfly. Yet, Icelanders’ opinions were divided. For some, the success of their Viking Raiders, buying up the British high street, one even acquiring that most treasured bauble of all, a Premier League football club, marked the arrival of a golden era. The transformation of Reykjavik from a quiet, provincial fishing port to a brash financial centre had been as swift as it was complete, and with the musicians Bjork and Sigur Ros and Danish-Icelandic artist Ólafur Eliasson attracting global audiences, cultural prestige went hand in hand with financial success. Icelanders could hold their heads high before the rest of the world.
Hallgrimur Helgason, well-known for his novel 101 Reykjavik, said in a letter to the nation in a Sunday newspaper on October 26: “Deep down inside we idolised these titans, these money pop-stars. Awestruck we watched their adventures and admired them when they supported the arts and charities. We never had clever businessmen, not for a thousand years, not to mention men who had won battles in other countries...”
For others, the growth was too rapid, the change too extreme. Many became uncomfortable with the excesses of the Viking Raiders. The liveried private jets, the Elton John parties, the residences in St Moritz, New York and London and the yachts in St Tropez – all flaunted in Sed og Heyrt, Iceland’s equivalent of Hello! magazine – were not, and this is important, they were not Icelandic. There was a strong undertow of public opinion that felt that all this ostentatious celebration of lavish lifestyles and excess was causing the nation to disconnect from its thousand-year heritage. In his letter to the nation, Hallgrimur continued: “This was all about the building of personal image rather than the building of anything tangible for the good of our nation and its people. Icelanders living abroad failed to recognise their own country when they came home.”
What international sympathy there was for Iceland’s plight evaporated with the dark realisation that the downfall of Iceland’s three main banks – Landsbanki, Kaupthing and Glitnir – brought with it the potential loss of £8bn for half a million savers in northern Europe, the bulk of whom were British. The shrill media response in the UK was reported extensively in Iceland. The British government’s use of anti-terror legislation to freeze the assets of Landsbanki pushed Iceland’s banking system into the abyss. It was a move viewed in Iceland as hateful and unnecessary. A few days later the one remaining viable bank, Kaupthing, went under.
Pedestrians brave the cold in Reykjavík, beneath a poster of young Icelanders. The prime minister recently urged people to explain to children that ’the world is not on the edge of a precipice’. Then Landsbanki was placed on a British Treasury list of groups subjected to financial sanctions, along with al-Qaeda and the Taliban. A copy of the UK government webpage appeared in Icelandic papers and a new website, www.indefence.is, was launched. A picture on it shows a young girl with a placard that reads: “I am not a terrorist, Mr Brown.”
At this time of year, the most-watched TV show in Iceland is Saturday night’s Spaugstofan, which translates literally as The Spoof Room. It’s a hit-or-miss affair, but events of the past few weeks have provided the writers with a rich seam of source material. A recent episode featured a well-worked lampoon of the film Titanic, entitled Icetanic, with Geir Haarde and the chairman of the governors of the central bank, David Oddsson, standing on the bridge of “the economy that could not sink”. A sketch shows Gordon Brown throwing Icelanders off a life raft. “Get back in the water where you belong, you terrorist bastard!” he shouts as he throws another one overboard.
When I tried to explain Iceland’s plight to a friend in the UK who works in banking, I received short shrift. “You must have gone troppo, Robert! They may not have dressed up in burkas and strapped several kilos of Semtex around their waists. But to go into the high street, persuade charities, pensioners, local authorities to deposit money and then disappear, having trousered nigh on £8bn is, even by City standards, bad. Financial terrorism, grand larceny, call it what you will, but the government had to act and act quickly to stop funds leaving the country.”
Troppo can hardly apply one degree south of the Arctic Circle, but if its northern equivalent is to go polar, then evidently I have.
. . .
Fear, outrage, jealousy and guilt have mingled to form a volatile cocktail of emotions as the blame game has started, and Icelanders attempt to come to terms with it all. They are divided between those who blame the Viking Raiders and those who blame successive governments and central banks for allowing them to behave the way they did.
There have been demonstrations, previously almost unheard of in Iceland, in which families have marched on the parliament buildings, stringing up an effigy of Oddsson along the way.
Of the various Viking Raiders, only one, Jon Ásgeir, of Baugur fame, has had the guts to turn up and face the music on a TV chat show. But any temporary benevolence towards him evaporated when it emerged that he had arrived back in Iceland with high-street billionaire Sir Philip Green in tow. Together they proposed to buy Baugur’s debt, reported at the time as £2bn, thereby acquiring the group’s UK retail assets, including House of Fraser and Hamleys at a significant discount that would involve massive debt writeoffs.
One of the most telling images was the departure of Jon Ásgeir’s private jet on news that the government had nationalised Glitnir Bank (in which his investment vehicle Stodir was a leading shareholder), wiping out his shareholding and rattling the debt-burdened house of cards that is his Baugur business empire. Painted black and as sleek as a Stealth bomber, the aircraft was photographed taxiing from its hangar by Morgunbladid, a daily newspaper. Like the last helicopter out of Saigon, the departure of Ásgeir’s jet symbolised the end of an era, the last act of Iceland’s debt-fuelled spending spree.
Bjorgolfur Thor and his father Bjorgolfur Gudmundsson have, to date, disappeared from the radar. Together they own a majority stake in Landsbanki, and Gudmundsson owns West Ham United football club. Their jets have also flown the coop. Downtown, beside the harbour, construction work on a landmark project underwritten by them, the National Concert Hall, is expected to stop any day now. Like Hallgrimskirkja, the striking cathedral that presides over Reykjavik and that took more than 40 years to complete thanks to a lack of finance, the concert hall might need a change in the country’s fortunes before it can be completed.
The government has announced that it will carry out a thorough investigation into what happened and determine who is to blame. It will be called “The White Book”, and “leave no stone unturned in getting to the truth”. It will not be a slender volume.
. . .
We live now in a foreign-currency lockdown, and although the government has assured everyone that there are sufficient reserves to buy essentials such as oil, grain and medical supplies for the winter, such assurances only serve to create a further sense of unease in a people who have learnt to take such commodities for granted.
There is some encouraging news. The International Monetary Fund is putting the finishing touches to a $2bn bailout package and this is likely to lead to a further $4bn from a consortium of Nordic central banks. These funds will come with stringent conditions that will impose external financial controls and impinge heavily on Iceland’s hard-won sovereign independence. But they should inject some much-needed confidence into the currency and into an embattled people.
There is an Icelandic expression: “We started with two empty hands.” Whoever coined it could not have expected that it would still be so pertinent in 2008, as the nation begins the process of rebuilding its economy and that thing it covets most of all, its reputation.
It is going to be a long, hard struggle.
Robert Jackson is a British journalist who has lived in Iceland since 2003
............................................................................
How the Icelandic banks got it all so wrong
“Let me get lunch,” I said, fumbling in my handbag for my wallet. “Your bank’s just gone bust after all.” But old habits die hard and anyway, the Icelandic banker wanted to find out if his company credit card still worked. He handed it over and drummed his fingers nervously on the bar in the gloomy City pub, writes Sarah O’Connor.
The payment went through. And with a whimper – two sandwiches and two lemonades – the bank’s six-year debt-fuelled spending spree sputtered to a stop. The next day his card was refused.
Barely a month earlier, at his bank’s annual September shindig in Iceland, international financiers who had arranged loans for the bank were treated to quad-biking, axe-throwing, belly-wrestling and copious alcohol – and challenged to run round a traffic cone 10 times while resting their foreheads on top of it. “Believe it or not, but some of the participating bankers fell over. And over. And ... well, you understand,” chortled Euroweek, a trade magazine also flown out for the party.
Kaupthing, Landsbanki and Glitnir sported all the trappings of fully fledged international banks. They had offices around the world, slick PR, extravagant parties and huge amounts of debt. That culture alone could have been enough to pitch them into trouble as the credit cycle turned. But at their core, something deeper was amiss. Two things, actually. The first has been picked over and over since the trio’s calamitous demise: they were too big, and the economy upon which they rested too small to support the huge liabilities they had taken on.
The banks don’t mind this explanation; neither do Iceland’s politicians. It paints them as fearless – if foolhardy – in their expansion, but ultimately as the casualties of a global crisis. They would have survived in spite of their size, they argue, if Lehman Brothers and Washington Mutual had not collapsed, leaving their creditors empty-handed.
In September, creditors’ sense of security evaporated, and soon Glitnir was facing demands for extra money from the increasingly nervous institutions from which it had borrowed. It just didn’t have the money.
Glitnir went to Iceland’s central bank and asked for a bridging loan to see it through to the end of the month in which it was due to pay back a big bond issue. The central bank refused, and took a 75 per cent stake in Glitnir instead. The move triggered panic in international markets. Maybe the government was big enough to bail out Glitnir, but what about the other two Icelandic banks? It surely couldn’t afford to support all three.
In the face of a massive run on Landsbanki by foreign depositors and creditors, the government seized that bank, too, and soon after Kaupthing imploded as well.
A week later, in an upstairs room of the Ministers’ Residence in Reykjavik, Geir Haarde the prime minister looked weary but unruffled as he shook my hand and poured out coffee. “We spoke before didn’t we, earlier this year? As I remember you were very aggressive.”
His special adviser had called me out of the blue in March. She had heard I was writing a story about fears the government was not strong enough to underwrite the banks if they ran into trouble. Would I like to speak to the prime minister about it? I would.
In the interview, he seemed perplexed about the stratospheric cost of insuring against a default by Iceland’s banks on their debts. “If you’re worried about not being repaid, which is what the creditworthiness is about, you shouldn’t be worried when it comes to the Icelandic banks, let alone the Icelandic government,” he said.
But would the government be capable of supporting the banks, given that their foreign currency liabilities dwarfed the country’s ability to generate cash? He didn’t give a clear answer.
It was an odd episode, and highlights the other, deeper problem at the heart of Iceland’s banking system. How did the prime minister’s office know that a junior journalist in London was writing a story about Iceland? Presumably because someone from one of the banks told them. If so, why are they in such close contact? Because the whole system is run by a small group of men who go back a long way and, in the words of one businessman, “sit in the same hot tub three times a week”.
When the banks were privatised in 2002, the government – headed by David Oddsson, then prime minister, and Geir Haarde, then finance minister – sold chunky stakes to a select group of rich businessmen. Father and son team Bjorgolfur and Bjorgolfur Thor Gudmundsson, recently returned from Russia flush with cash, took a 45.8 per cent stake in Landsbanki after a process some have criticised as uncompetitive. These new shareholders used the banks to support their other businesses. For example, FL Group (which then became Stodir) – an investment company owned by the Icelandic retail entrepreneur Jon Ásgeir Johannesson – was both Glitnir’s biggest shareholder and one of its significant borrowers.
There were rumblings of discontent in Iceland over the way the system was being run, but few spoke out. Iceland’s government and supervisory authority did nothing to break up the close-knit network of relationships.
Sveinn Valfells is one malcontent. A private investor now living in London, his grandfather played a key role in setting up one of the banks that were merged to form Glitnir. Sveinn left Iceland in 2004 when he decided the banking system was spiralling out of control. “This was like Eastern Europe, this was like Russia ... In most respects it is a developed country, but the political system and business culture are significantly underdeveloped.”
The banks looked and sounded just like their large international peers. But as one businessman in Iceland says: “Astute investors should have asked themselves, ‘Does this smell right?’”
Sunday, November 16, 2008
Love - A market analysis
A funny article I found by ST writer : Chua Mui Hoong. Sunday Times. 16 Nov 2008
Five kinds of Men that women in their 30s can go for :
- Father of young kids
- Younger men seeking financial security
- Older Divorcees
- Married man
- Single man
Interesting perspectives which I never consider before.
Love: A market analysis - I've crunched the numbers and figured out how women in their 30s can still sell themselves in the marriage market. By Chua Mui Hoong
Single women seeking partners would benefit from a hard-headed analysis of where their best prospects lie. A marketing perspective is helpful: What is the market potential of women in their 30s? What is their value proposition? Which group of potential 'buyers' might they appeal to? I did my usual 'research' for an article like this on matters of the heart: I talked to my friends and consulted myself.
Here is my take on the market segments of men who may find women in their 30s most appealing:
Fathers of young kids: Divorced or widowed men with young children want a mother for their children. Women in their 20s are deemed too young. Thirty-somethings are perfect: experienced enough in life and mature enough to take on the responsibilities of stepping in as an instant mother, yet young and energetic enough to romp around and enjoy young children. Those in their mid- to late-30s may be giving up the idea of having their own children, yet welcome the chance for motherhood.
Pros: Likely to want a long-term relationship.
Cons: High expectations and intense job pressure.
Younger men seeking financial security: Professional women in their 30s are likely to have their own home and car and a steady income, and still look and act like they are in their swinging 20s. This may appeal to men looking for creature comforts or a woman to take care of them.
Pros: Energetic partner to have fun with.
Cons: Relationship may be transactional, with partner seeking new love gravy-train when you get older.
Older divorcees seeking fresh lease of life: Many divorced men in their 40s to 60s with teenage or grown-up children in the custody of their ex-wives are looking for a new love. They will find 30-somethings appealing. Dating a 20-something smacks too much of cradle-snatching. Dating women in their 40s or 50s provide uncomfortable reminders of their real vintage. An attractive, nubile woman in her 30s is young enough to be viewed as a trophy partner, yet is mature enough to be viewed by his friends as a respectably aged partner.
Pros: No pressure to start a family, for women content to be childless.
Cons: Divorcees usually have outstanding financial commitments to their ex-spouses and children.
Married men: Morality aside, the fact is that some women in their 30s end up having relationships with married men. Some women target this group, either because they can't find single men, or because they want a relationship they need not be committed to, or for perverse reasons such as to test if they can lure a man away from his wife.
Pros: Suitable for commitment-phobic women. Can be financially rewarding with a wealthy partner.
Cons: You never come first. Guilt-inducing for breaking up families.
Single men: At risk of attracting hate mail from single men, let me say aloud what women whisper to each other: Men who are never married and still single in their late 30s or 40s are either: gay, very choosy, have been hurt and are risk-averse, mummy's boys or socially dysfunctional. (No, this doesn't apply to single women.) Dating them will be challenging.
Pros: A partner who knows what he wants and has waited all his life for it - you.
Cons: Adapting to married life may be challenging for this partner.
Conclusion: There is considerable potential for women in their 30s to appeal to different market segments of men.
Smart women can review the options, figure out which category or categories they want to market themselves to and devise a plan to go for it. Good luck and happy dating.
Saturday, November 15, 2008
Investor Benjamin Graham
Benjamin Graham’s investment principles - In The Intelligent Investor, Benjamin Graham sums up his investment philosophy by saying that an intelligent investor must be "businesslike" in approach. Investing in shares in a company is just like owning a share in a business enterprise and the investment must be approached as if one were buying a business, or a partnership in one.
There are four guiding principles for Graham:
- Know the business
- Know who runs the business
- Invest for profit
- Hv confidence
In The Intelligent Investor, Benjamin Graham sums up his investment philosophy by saying that an intelligent investor must be "businesslike" in approach. Investing in shares in a company is just like owning a share in a business enterprise and the investment must be approached as if one were buying a business, or a partnership in one.
There are four guiding principles for Graham:
1. Know the business
The investor needs to become knowledgeable about the business or businesses carried on by the company in which they propose to invest – what it sells, how it operates, what is the competitive environment, what are the threats and opportunities, the strengths and weaknesses. An investor who bought a fruit shop, or a shoe factory, without investigating these things, and knowing them, would be foolish. The same applies to share investment. An investor who does not understand the business should not be investing in it.
2. Know who runs the business
An investor who cannot operate the business for himself or herself, needs a manager. This is the position of the average share investor, who owns a share of an enterprise that is run by others. The owner of a business in this position would want a manager who will manage the business competently, efficiently and honestly. The share investor should not be satisfied with less. Unless the investor believes, through sound research, that the company is managed efficiently, competently and honestly, in the best interests of the shareholders, the investment should not be made.
3. Invest for profits
An investor would not normally buy a business that did not, on proper research, appear to have reasonable expectations of producing good profits over time. Share investors should take the same approach and buy, as Graham says, "not on optimism, but on arithmetic".
4. Have confidence
Graham encourages investors to properly research their investments and, if they believe their investment judgment to be sound, to act on it. He cautions investors in this position against listening to others. "You are neither right nor wrong because the crowd disagrees with you. You are right [or wrong] because your data and reasoning are right [or wrong]."
http://www.buffettsecrets.com/investment-principles.htm
China Stock Exchanges and Shares
The CSI 300 is a capitalization-weighted stock market index designed to replica the performance of 300 stocks traded in the Shanghai and Shenzhen stock exchanges. The index is compiled by the China Securities Index Company, Ltd. It has been calculated since April 8, 2005. Its value is normalized relative to a base of 1000 on December 31, 2004. S and H are those that got listed in Singapore and HKSE.
Q: What is A shares?
A: These are shares in Chinese companies issued in China under Chinese law. They are denominated in Chinese currency, the renminbi, and are listed on the Shanghai or Shenzhen stock exchanges. Currently, only Chinese residents of China may trade the 776 companies listed in Shanghai, and the 489 companies listed in Shenzhen. Qualified Foreign Institutional Investors (QFII) licence holders and approved foreign investors under the strategic investment scheme. (This scheme permits foreign business entities to take a minimum approved 10% stake in A share companies, but holdings must be held for at least three years). The China Securities Regulatory Commission (CSRC) and China’s State Administration of Foreign Exchange (SAFE) introduced the Qualified Foreign Institutional Investor (QFII) Licence to allow foreign investors to invest in China A shares.
Q: What is B shares?
A: B Shares are foreign-invested shares issued domestically by PRC's companies. B Shares are also known as Renminbi Special Shares. B Shares are issued in the form of registered shares and carry a face value denominated in Renminbi. B Shares are subscribed and traded in foreign currencies and are listed and traded in securities exchanges inside China. The B Share Market came into existence in 1991. By the end of April 1999, there were totally 107 B Share issuers. There were 54 B Share companies listed in Shenzhen with a total capitalization of RMB10.94 billion whereas there were 53 B Share companies listed in Shanghai with a total capitalization of RMB9.778 billion. The B Share Market has attracted a considerable amount of foreign investors. The Market provides an additional channel for foreign capital thereby enhancing the progress of the evolvement of PRC's securities market.
Q: What is H shares?
A:H shares are shares in Chinese companies issued in China under Chinese law. They are listed on the Hong Kong Stock Exchange and subject to its stringent listing and disclosure requirements. The shares are denominated in H.K. dollar and trade like any other shares listed on the Hong Kong Exchange. There are now 91 companies offering H shares giving exposure to more than a dozen sectors including Telecommunications, Insurance, Real Estate, Airlines, Logistics as well as Infrastructure such as roads and electricity, Oil, Mining and Basic Materials such as steel, cement, aluminum and petrochemicals. They are required to meet the same standard of disclosure required of all companies listed on the SEHK.
QDII was initially proposed by the Hong Kong government to introduce mainland capital to the Hong Kong securities market and to attract more international capital, which was significant to the low-priced Hong Kong securities market after the Asian financial crisis. When QDII was first proposed, the China Securities Regulatory Commission was enthusiastic in promoting the scheme. On the other hand, the State Administration of Foreign Exchange's response was lukewarm, due to foreign exchange control concerns. However, now the table has been turned. Due to growing pressure on the appreciation of renminbi, SAFE is now more active in promoting the scheme, to maintain the stability of the RMB exchange rate, but the Securities Regulatory Commission is becoming more conservative, because the formal adoption of such a scheme might affect the A and B share markets.
Hua'an Fund was the first pilot project for QDII and was only allowed to use hard currency, instead of RMB, for its investment, to reduce risks in connection with QDII. Many banks in China are laying the ground work in preparation for the formal adoption of QDII. While the attitude of various government departments is becoming more receptive to QDII, it is unclear when the scheme will be formally adopted in China.
Judging by successful experiences from other countries and districts, QDII is an effective scheme to assure the steady transition of all market aspects during the gradual process of opening the domestic market to foreign capital. With the process of opening up the domestic securities market, the full adoption of QDII is only a matter of time.
QDII subscriptions much larger than expected
When China Southern Asset Management launched its Global Selected Allocation Fund last month, the subscription period was originally scheduled to run from 12 September to 28 September. The fund was however closed on the first day when subscriptions hit RMB50bn (US$6.67bn). This was way above their initial target and QDII limit of US$2bn. The regulators however expanded China Southern's QDII quota, allowing the size of the fund to be doubled to US$4bn. The mandate of the Fund is to invest in global stock markets. The fund manager is understood to be targeting five developed market and five emerging markets: the US, Japan, Switzerland, Italy, Hong Kong, Russia, India, Brazil, Malaysia and South Korea. 40% of the fund is expected to be invested in Hong Kong and 60% in global markets through fund of funds. The sub-advisor of the fund is Bank of New York Mellon Asset Management.
China Asset Management's QDII fund, launched last Thursday, drew an even higher level of subscription. It attracted US$8bn, exceeding the limit of US$4bn, and the subscription period also closed early. The fund will invest in overseas stock markets including the US, Europe, Japan, Hong Kong and other emerging markets. The consultant to the fund is the T. Rowe Price Group.
Harvest Fund Management, a joint venture with Deustche Bank, is expected to launch its QDII fund on 9 October 2009. The Harvest Fund will focus on H-shares, red chips and Chinese stocks listed in the US and Singapore (S-chips). It is understood to be looking to increase its QDII quota to US$4-5bn. The news of the pending launch of the Harvest Fund was apparently one reason for the rally in S-chips last week.
The QDII scheme (Qualified Domestic Institutional Investor) was actually launched in April 2006 but had a very slow start partly because of restrictions in what the QDII funds could invest in and partly also because of the strong performance of the domestic A-share market. Under the old scheme, banks and insurance could only offer overseas fixed income products with overseas equity products restricted to asset management houses. Under the latest QDII guidelines, banks and insurance companies can now offer equity (up to 50% of their QDII quota) as well as fixed income products. QDII equity products have also been extended to securities houses. The range of overseas markets allowable under the scheme has also been widened.
Thursday, November 13, 2008
Credit-Crunch Villains Pass the Buck, Party On
This is a very funny and yet serious bbg article that I found. The past couple of weeks hv been a nightmare. This is really the Mother of all Financial Crisis - worse than 1929 Depression. I really wonder how long we will take to get out of this sh*t.
Credit-Crunch Villains Pass the Buck, Party On: Mark Gilbert
Nov. 13 (Bloomberg) -- The great and the good of capitalism and free markets held a requiem dinner for the global financial system at a secret hideaway this week. As the waiter decanted a fresh bottle of 1985 Chateau Margaux, the blame game began. "I blame the central banks," growled the bond trader, stabbing the air with a forkful of raw steak. "If Alan Greenspan hadn't kept interest rates so low at the start of this decade, we wouldn't be in this mess. Talk about refilling the punch bowl when the party guests are already as drunk as skunks!"
"We told you we were not in the business of identifying bubbles, let alone trying to puncture them," replied the central banker, nibbling at a lettuce leaf. "We warned you that credit spreads, emerging-market yields and volatility in stocks and bonds were all too low, and that you were under-pricing risk."
The central banker took a sip from his refilled wine glass. "Can you imagine the outcry if we had tried to halt the explosion in home ownership? I think you'll find that the true villains are the mortgage lenders; if they hadn't trashed their standards with self-certified and liar loans, the crisis in the housing market would have remained self-contained."
"That's not fair," said the mortgage originator. "We weren't on a level playing field. Fannie Mae and Freddie Mac were using their implicit government guarantee to distort competition in home loans. We were forced to take on more subprime borrowers just to stay in the game; if it hadn't been for all those clever derivatives products, we would never have been able to recycle all that toxic waste and keep the pyramid scheme afloat."
Above Board
"Ah, the derivatives bogeyman," chuckled the structured-finance specialist. "Listen, derivatives don't kill markets. Markets kill markets. Everything we did was designed to promote efficiency by allowing investors to disaggregate their risks. I can show you the bills from my lawyers to prove that every product we invented was legitimate."
"All we did was offer advice on the best method of structuring securitization transactions," the capital-markets lawyer said. "There would never have been a market for the racier collateralized-debt obligations if the rating companies had done proper due diligence, instead of slapping AAA ratings on anything and everything that offered to pay them a fee."
"You can hardly expect the finest minds in finance to come and work for us when they can earn gazillion-dollar bonuses doing the same work for an investment bank," said the credit-rating assessor. "We relied on the computer models that the banks helped us build, and those models turned out to be, shall we say, less than perfect. Besides, everything was fine until the money-markets froze. The problem wasn't over-optimistic ratings, it was an over-reliance on wholesale markets to fund leverage."
On the Hook
The waiter cleared away the dinner plates. The diners all declined dessert -- "Humble pie? No, thanks." -- agreeing instead that a couple of bottles of 1982 Chateau d'Yquem would round off the evening nicely.
"I'd never even heard of Structured Investment Vehicles until they started to blow up," said the central banker. "We believed the banks when they said their business model was based on originate-to-distribute; how were we to know that once the music stopped, they were still on the hook for trillions of dollars of liabilities they'd slipped off the balance sheets?"
"Look, domestic savings rates just weren't high enough to provide the kind of leverage we needed to juice our returns to match those of our peers," said the commercial banker. "We had to rely on money-market funds, rather than our deposit base. And the money markets wouldn't have frozen if it hadn't been for those ridiculous mark-to-market rules forcing all of us to prematurely disclose that we owned huge piles of securities that were rotting, before prices had any chance to recover."
Capital Inadequacy
"We gave you plenty of leeway to play fast and loose with the truth so that you could stay solvent," said the regulator. "Besides, you were just doing your job of maximizing returns to shareholders. If those greedy investors hadn't forced you to take on more risk, our rules on capital would have been more than adequate to keep the banking system solvent."
"How on Earth was I supposed to fund the retirements of thousands of ex-employees when returns were collapsing simultaneously in every market?" asked the pension-fund manager. "Of course we wanted the banks to work their capital harder. We were in the same boat, trying to move money into new arenas to make a buck or three. We bought derivatives, commodities, we even held our noses and gave money to the hedge funds. That didn't turn out to be such a good idea."
"Hey, we warned you there would be times like this," said the hedge-fund manager. "If you want years when we deliver 50 percent, 60 percent returns, you have to expect periods when we will lose 20 or 25 percent of your money. You won't see us lining up with our begging bowls at the government bailout window."
The waiter coughed, proffering a slim leather folder containing the reckoning for the evening's entertainment. "You are a taxpayer, I take it?" asked the investment banker. The waiter nodded. "In which case, we were rather hoping you would foot the bill."
(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)
Wednesday, November 12, 2008
RIP ~ Peace Mark
Watch-maker Peace Mark - Sincere Watches to be sold for >HKD500mm by Dec 12. Peace Mark sold to Chow Tai Fook for HKD505mm (USD65mm). Back in 2006, Peace Mark's turnover is HKD2.2bn(USD287mm) end-Mar.
Monday, November 03, 2008
Financial Scams - Enron Nov 2001 and Worldcom Jul21, 2002
I was really quite curious how these things can happen yr after yr with all these scams. Really amazed. I was selling Worldcom bonds back then. Haha.
http://en.wikipedia.org/wiki/Enron_scandal
The Enron scandal was a financial scandal involving Enron Corporation Former (NYSE ticker symbol: ENE) and its accounting firm Arthur Andersen, that was revealed in late 2001. After a series of revelations involving irregular accounting procedures conducted throughout the 1990s, Enron was on the verge of bankruptcy by November of 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. Enron filed for bankruptcy on December 2, 2001.
As the scandal was revealed, Enron shares dropped from over US$90.00 to less than 50¢. As Enron had been considered a blue chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements.
In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the five largest accounting firms in the world.
http://en.wikipedia.org/wiki/MCI_Inc.#Accounting_scandals
MCI, Inc. is an American telecommunications company that is headquartered in Ashburn, Virginia. The corporation was the result of the merger of WorldCom (formerly known as LDDS followed by LDDS WorldCom) and MCI Communications, and used the name MCI WorldCom followed by WorldCom before taking its final name on April 14, 2003 as part of the corporation's emergence from bankruptcy. The company formerly traded on NASDAQ under the symbols "WCOM" (pre-bankruptcy) and "MCIP" (post-bankruptcy). The corporation was purchased by Verizon Communications with the deal closing on July 7, 2006, and is now identified as that company's Verizon Business division with the local residential divisions slowly integrated into local Verizon subsidiaries.
MCI's history, combined with the histories of companies it has acquired, echoes most of the trends that have swept American telecommunications in the past half-century: It was instrumental in pushing legal and regulatory changes that led to the breakup of the AT&T monopoly that dominated American telephony; its purchase by WorldCom and subsequent bankruptcy in the face of accounting scandals was symptomatic of the Internet excesses of the late 1990s. It accepted a proposed purchase by Verizon for US$7.6 billion.
For a time, WorldCom (WCOM) was the United States' second largest long distance phone company (AT&T was the largest). WorldCom grew largely by acquiring other telecommunications companies, most notably MCI Communications. It also owned the Tier 1 ISP UUNET, a major part of the Internet backbone. It was based in Clinton, Mississippi before moving to Ashburn, Virginia.
Bernard Ebbers became very wealthy from the rising price of his holdings in WorldCom’s stock. However, shortly after the MCI acquisition in 1998, the telecommunications industry entered a downturn and WorldCom’s growth strategy suffered a serious blow when it was forced to abandon its proposed merger with Sprint in late 2000. By that time, WorldCom’s stock was declining and Ebbers came under increasing pressure from banks to cover margin calls on his WorldCom stock that was used to finance his other businesses (timber and yachting, among others). During 2001, Ebbers persuaded WorldCom’s board of directors to provide him corporate loans and guarantees in excess of $400 million to cover his margin calls.The board hoped that the loans would avert the need for Ebbers to sell substantial amounts of his WorldCom stock, as his doing so would put further downward pressure in the stock's price. However, this strategy ultimately failed and Ebbers was ousted as CEO in April 2002 and replaced by John Sidgmore, former CEO of UUNet Technologies, Inc.
Beginning in 1999 and continuing through May 2002, the company under the direction of Scott Sullivan (CFO), David Myers (Controller) and Buford “Buddy” Yates (Director of General Accounting) used fraudulent accounting methods to mask its declining earnings by painting a false picture of financial growth and profitability to prop up the price of WorldCom’s stock.
The fraud was accomplished primarily in two ways:
Eugene Morse, an internal auditor at WorldCom reporting to Cynthia N. Cooper, uncovered approximately $3.8 billion of the fraud in June 2002 during an examination of capital expenditures.Cynthia Cooper subsequently alerted the company’s new auditors, KPMG (who had replaced Arthur Andersen, WorldCom’s external auditors during the fraud) and the chairman of the audit committee, and she has been widely credited as having uncovered the fraud at Worldcom. Shortly thereafter, the company’s audit committee and board of directors were notified of the fraud and acted swiftly: Sullivan was fired, Myers resigned, Arthur Andersen withdrew its audit opinion for 2001, and the U.S. Securities and Exchange Commission (SEC) launched an investigation into these matters on June 26, 2002. By the end of 2003, it was estimated that the company's total assets had been inflated by around $11 billion.
On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time (since overtaken by the collapse of Lehman Brothers in September 2008). The WorldCom bankruptcy proceedings were held before U.S. Federal Bankruptcy Judge Arthur J. Gonzalez who simultaneously heard the Enron bankruptcy proceedings which were the second largest bankruptcy case resulting from one of the largest corporate fraud scandals. None of the criminal proceedings against WorldCom and its officers and agents were originated by referral from Gonzalez or Department of Justice lawyers.
WorldCom changed its name to MCI, and moved the corporate headquarters from Clinton, Mississippi to Dulles, Virginia, on April 14, 2003. Under the bankruptcy reorganization agreement, the company paid $750 million to the SEC in cash and stock in the new MCI, which was intended to be paid to wronged investors. In May 2003, the company was given a no-bid contract by the United States Department of Defense to build a cellular telephone network in Iraq. The deal has been criticized by competitors and others who cite the company's lack of experience in the area.
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