'Last year' of the Tiger as boom peters out

The Celtic Tiger era could be over next year, according to a leading economist.

He said that the growth in the Irish labour market had been the envy of Europe but now the 'second wave' of the boom was coming to an end.

Brian McCormick from FAS predicted that the number of net new jobs will plummet from 69,000 this year to only 17,000 next year. At the same time the unemployment rate will rise from 4.5pc to 5.2pc next year.

Net immigration will be halved from 70,000 this year to 35,000 next year, he told the sixth annual FAS Labour conference held in Farmleigh House.

He said that something like 400,000 Personal Public Service (PPS) numbers had been issued to immigrants over the past few years, mainly to those coming from Poland, Slovakia, the Czech Republic and the Baltic States. About two-thirds of the recipients worked in Ireland at one stage or another and many were still here while others had returned home.

Many of the immigrants worked in the building industry but, with the slowdown in that sector, some of these skilled personnel would move to other countries where construction was picking up.

Success

The turnaround comes after unprecedented success in the Irish labour market which began in earnest in 1998. An additional 600,000 jobs have been created since thenr.

Most of the recent growth was driven by consumer demand and by the construction sector. But now there is a slowdown in that sector along with concerns about competitiveness and credit, added Mr McCormick.

Dr James Wickham, TCD's Employment Research Centre, noted that a high percentage of returned emigrants and new immigrants had skills and third level qualifications. But people could also leave said Dr Wickham who commented that there was a global 'war' for talent.

The Indo

Bank of England warns credit crisis to worsen

Charles Bean said that the banks have so far reported "only a relatively small fraction of the likely losses associated with the US sub-prime market."

"It is quite likely that, over the coming months, there will be more revelations to come out, not necessarily just in this country," he added.

The message from Mr Bean comes after Goldman Sachs warned earlier this month that sub-prime mortgage losses could force banks to slash lending by $2,000bn (£980bn) and push the United States into a deep recession.

Mr Bean said that the immediate future would be characterised by "lots of volatility" and said that it would be "quite a long time before things come back to a full state of normality."
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He made the comments in an interview with the Liverpool Daily Post, and said that the Bank was waiting to see what impact the crisis would have on the wider economy.

"What matters particularly to us is the impact on the economy at large.

"It is reasonable to expect lenders to be more cautious in extending loans whether to households or riskier lending to businesses, maybe some mergers and acquisitions, maybe the commercial property market may be particularly hit.

"That's something that the Monetary Policy Committee will be monitoring closely," he said.

He added that monetary policy would depend on inflationary pressure from the rapidly growing economies of China and India.

"Over the last two or three years, we have moved into a slightly less favourable external environment where the ill-effects of the development of China and India have started to be felt in the form of intense upward pressure they have been putting on commodity prices.

"Those pressures are likely to remain there for some time. The key question will be the extent to which the supply of those commodities can expand to meet the increasing demand from emerging economies.

The Telegraph

Closing the stable door after the horse has bolted

Bank of Ireland has banned 100 per cent mortgages -- except for civil servants in safe, pensionable jobs and other certain high-earning professionals, the Sunday Independent has learned.

The development is clear evidence that civil servants, who have benefited from huge benchmarking pay increases, are regarded as protected from the current economic uncertainty facing most other taxpayers in the credit squeeze.

It also reflects a loss of confidence in the economy, and is a clear indication that financial institutions believe negative equity is now a reality in the housing market, and will be for the foreseeable future.

Only those who have the potential to ride out the storm in the property market, because they enjoy secure long-term employment, will be offered full loans.

This clearly includes cosseted civil servants, who are hoping for further pay increases from the benchmarking body in a fortnight's time.

Their expectations are real following the massive pay rises recently awarded to public sector managers, including members of the cabinet, who received pay increases of between 12 and 15 per cent.

Following inquiries by this newspaper, the bank issued a short statement confirming the new directive: "Having reviewed our policy with regards to our 100 per cent first-time buyers product, with effect from today, Friday November 23rd, our 100 per cent product is now limited to certain customer segments," it read.

The Sunday Independent has learned that the memorandum has already been sent to Bank of Ireland managers and brokers acting on behalf of the country's second largest financial institution.

The clampdown on 100 per cent mortgages comes as a new survey showed that almost €15,000, or close to 5 per cent, has been wiped off the value of an average house so far this year.

The latest Permanent TSB/ESRI house price index showed that last month house prices nationally fell by 1.3 per cent.

Niall O'Grady, head of marketing at Permanent TSB bank, said that the normally strong autumn buying period had been marked by a "deferral of purchase decisions". He said the fact buyers were waiting to see what would happen was now having an impact on the rental sector, where rents are rising steadily.

The Sindo

Sub-prime ‘time bomb’ is set to explode in Britain

Lenders are cracking down on sub-prime borrowers across Britain and could force tens of thousands of homeowners into forced sales of their homes, property experts warned yesterday.

The global credit crunch provoked by the crisis in American sub-prime mortgages is creating a time bomb in Britain’s own market for loans to borrowers with imperfect credit records.

The warning came as figures from the British Bankers’ Association (BBA) suggested that the slowdown in house prices was on course to be the most severe in at least a decade, as would-be buyers take fright at a declining market.The number of mortgages approved in October for home purchases by the BBA dropped by 17 per cent over the month to only 44,105, the lowest figure since the body began to compile figures in September 1997. Approvals were 37 per cent lower than a year ago.

Experts fear that the emerging British sub-prime crisis could further destabilise the domestic property market. As existing homeowners with particularly bad credit records – known as “heavy” sub-prime customers – come to the end of the cheap two-year fixed deals that were readily available until the summer, lenders are refusing to offer similar deals.
In the past, heavy sub-prime borrowers could find a cheap deal if their loan was equivalent to 95 per cent of the value of their home – but the loan-to-value (LTV) ratio has dropped significantly.

Bob Sturges, of Money Partners, a sub-prime lender, said: “These are people who before the credit crunch would have been able get a maximum of 95 per cent LTV. Now the maximum they can get is 75 or 80 per cent. When they come off their fixed-term deal they are going to be disenfranchised from the beneficial rates they have enjoyed. If they can’t afford the higher rates, they face the prospect of selling up and joining the rental sector. This will affect tens of thousands, if not hundreds of thousands of people.”

Those who have insufficient equity in their homes and who do not have the cash to make up the shortfall will be forced to pay their lenders expensive Standard Variable Rate (SVR).

Two years ago, borrowers could snap up a two-year fixed-rate deal for heavy adverse borrowers of 6.58 per cent. Hundreds of thousands of homeowners face being moved on to their lender’s higher rate, which typically will be at 9.5 per cent. On a £150,000 mortgage, this will leave homeowners facing an extra £280 a month in loan repayments. Thomas Reeh, of Black & White Mortgages, the sub-prime broker, said: “There are very difficult times ahead for customers who are habitual defaulters, or heavy sub-prime. They are unlikely to get a new competitive deal, and face significant pressure from their existing lender.”

The higher cost of all mortgages, prime and sub-prime, in the wake of rises in interest rates and the credit squeeze has also put people off from dipping into their housing equity to fund big purchases, in a worrying sign for the retail sector as the Christmas season approaches. Mortgages not for house purchase or remortgage fell to 38,471 in October, the lowest figure since May 2000.

Timesonline

The Blame Game

AN Irish Nationwide Building Society committee set up to approve home loans of over €1m was merely "a device" to satisfy the Financial Regulator, a spurned senior manager has claimed.

In practice there was "limited compliance" with the mortgage provider's own rules and loans were "entirely informal", it has been alleged.

In the first major sign of a blame game within the banking system over the role of mortgage lenders in the recent solicitor's scandals, a senior INBS official has accused his employers of providing leaked reports of his suspension to the media in an attempt to discredit him over the remortgaging affair.

Yesterday, Tipperary native Brian Fitzgibbon, who has been a homeloans manager with the Irish Nationwide since 2000, claimed that he is being "scapegoated" over the approval of loans to disgraced solicitors Michael Lynn and Thomas Byrne.

Mr Fitzgibbon (41) from Liscahill, Thurles, was granted an injunction preventing his suspension after he claimed that his employers victimised him over the approval of loans to the solicitors who are now under garda investigation and whose practices have been closed by the Law Society.

He claims INBS managing director Michael Fingleton was personally responsible for bypassing the society's own procedures for granting loans and he (Fingleton) gave direct approval for at least one substantial loan for Mr Lynn for the purchase of Glenlion House, Howth, where Mr Lynn and his wife hoped to live.

The Indo

Builders hold finished units to wait and see

With an estimated 10,000 empty apartments in the Dublin area, builders are opting to rent them out rather than try to sell them, says Fiona Tyrrell

The former gasholder at Ringsend is one of a number of newly built apartment buildings in Dublin that is lying empty as developers adopt a wait-and-see approach in the ailing new homes market.

It is estimated that there are more than 10,000 empty units in the Dublin area. The vast majority of these are new apartments which have either failed to sell or have not been put on the market.

The most notable example is the Alliance Building, the nine-storey cylindrical apartment block built inside the metal struts of the Victorian gasholder at the Gasworks scheme in Ringsend, Dublin 4.

The landmark structure forms part of a 7.8-acre site bought by developer Liam Carroll from Bord Gáis in the mid 1990s. Six hundred apartments were built here, along with the office complex now occupied by Google. A further 200 apartments were built in the former gasholder.

The first 50 apartments were launched in June 2006 with prices ranging from €675,000 to just over €1 million. However, it is not clear how many of these were sold. The entire scheme has now been withdrawn from the market, according to the selling agent Hooke & MacDonald.

Rumours are circulating among residents at the Gasworks that those who did buy apartments at the gasholder were given their deposits back by the developer. There has even been speculation that the unusual building may be turned into a hotel.

Carroll is one of a growing number of developers who have extra stock on their hands at the moment. In some cases developers are holding off launching entire schemes until conditions improve rather than risk a failed sales launch.

Others are opting to retain the stock themselves and rent them out, taking advantage of the high rents being achieved in the city. Developers are either renting out the last few units in schemes that have failed to sell or in some cases entire schemes that have never been launched.

The Irish Times

Curtains

Anyone notice anything strange about these photo's?
It seems strange that everybody choose the same Curtain's.

Investment banks erred by chasing future mortgage profits

WASHINGTON _ Big-name investment banks are taking a financial beating this year, leaving many Americans to ask: Just how did all these Wall Street bankers in their $5,000 John Lobb shoes manage to step in you-know-what?

The answer is simple: They made the same mistakes as the rest of us, just with more zeros attached to them and bigger consequences for the U.S. economy, if not for their own $625 John Lobb wallets.

Those mistakes are why the heads of Merrill Lynch and Citigroup have been ousted in recent weeks, why household names such as Bank of America and Wachovia are announcing billion-dollar losses and why more trouble is brewing.

Individual investors frequently lose money by chasing past returns, deciding on future investments by looking at past performance instead of future market conditions. Investment banks did just that amid the booming housing market. They mirrored each other's moves as they raced into ever-shakier lending. Some estimates suggest that collectively they'll lose more than $400 billion.

"They are basically a herd of sheep. They all go into it together," said A. Gary Shilling, a financial consultant and television commentator who warned in 2005 and 2006 of troubles to come. In the 1980s, banks followed each other into massive Latin American debt. Later, he said, they all got burned together by losses in manufactured housing.

In hindsight, the risks from an overheated housing market seem obvious. But in a now-famous July interview with London's Financial Times, then-Citigroup CEO Charles Prince appeared to confirm the sheep metaphor when he shrugged off the imminent danger.

"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing," he said.

Insurancenewsnet

Slow Moving Train Wreck

Nov. 20 (Bloomberg) -- They dubbed it ``The Survivors' Conference.'' In early November, 2,000 people who handle asset- backed securities for a living crowded into a ballroom at the JW Marriott hotel in Orlando, Florida, just 3 miles from Disney World, to hear speaker after speaker explain why 2008 may be their worst year ever.

The subprime crisis, which has claimed the jobs of three chief executive officers and prompted more than $45 billion in writedowns at the world's biggest banks, may end up spilling into 2009.

``These events tend to become deeper and play out longer than most people initially expect,'' says Michael Mayo, an analyst who covers securities firms at Deutsche Bank AG in New York. ``This is one of the slowest-moving train wrecks we've seen.''

The tumbling U.S. housing market will continue to inflict the damage. Mortgage-backed securities and collateralized debt obligations containing those securities are falling in price and won't find their footing anytime soon. That's because most of the subprime mortgages, which provide collateral for $800 billion in securities, have yet to go bad, says Christopher Whalen of Hawthorne, California-based Institutional Risk Analytics.

``The collateral is not yet problematic,'' Whalen says. ``That's the next big shoe to drop.''

Housing Starts

Whalen says defaults will soar as the rates of low-interest ``teaser'' mortgages held by borrowers with poor credit move up. At the end of August, about $46 billion in subprime loans, representing 225,000 homes, had defaulted, according to Credit Suisse Group. The number will more than triple to $143 billion by the middle of 2009, the bank forecasts. Total subprime loan defaults will top out at about $270 billion, or 1.52 million homes, in 2010 or later.

Bloomberg

Peter Schiff on Mortgage Bailout's

I Think this guy is the biz.

Fog and fear obscure the reality behind subprime losses

Another week, another memorable encounter with a nervous financial beast. This time, however, the animal in question is Royal Bank of Scotland, the British banking group.

Last week, RBS raised eyebrows when it was widely reported that one of its highly respected credit analysts had predicted that subprime losses could eventually rise to between $250bn and $500bn - or twice previous estimates.

However, this fascinating research was not being released to ordinary investors, even though it had been in the press. Instead, circulation was restricted to RBS's favoured clients. The analyst was unavailable for comment; apparently he was on holiday.

On one level, this is simply standard operating procedure for big banks these days. (RBS has particular reason to feel edgy as it is likely soon to disclose its own subprime writedowns.) But on another level, the saga reveals a much bigger point: how much fog and fear still surrounds the whole issue of subprime losses, notwithstanding the recent shocking write-offs by major banks.

For behind the scenes - and occasionally in public view - the credit analyst community remains distinctly divided about just how big the final hit might be, let alone what write-offs to expect from banks. Thus while some observers project a $100bn hit, others talk about $500bn. Perhaps there are even bigger numbers in ultra-ultra private reports I have yet to see.

This feels wearily familiar. A decade ago, I covered the Japanese bank crisis and became embroiled in a bad-loan guessing game that continued for many years. The tally of Japanese bad loans was estimated to be about $100m at the start of the 1990s, but by 1999 had risen to 1,000 times that size. I am told that a similar game occurred during the Latin American debt crisis in the 1980s and the Savings and Loans crisis - or indeed in almost every other recent banking shock.

What could make the 2007 subprime shock a little unusual, I suspect, is the way the rot is coming to light. Back in the 1990s, Japanese banks were able to sit on their problems for years, because they were a clubby bunch - and corporate loans have very long shelf lives. Similarly, in the Latin American debt crisis, American banks effectively colluded to conceal the rot as they restructured loans.

However, these days, Wall Street bankers have little appetite - or ability - for collaboration. Whereas the bank controllers used to discuss with each other how to value illiquid derivatives instruments in the 1990s, this crisis is unfolding with minimal interaction between banks.

Worse still, the losses are emerging with unusual speed. That is partly because instruments such as collateralised debt obligations tend to have a shelf life of three years or so, which means that losses crystallise faster than on, say, a Japanese corporate loan. Moreover, accounting reforms are forcing many institutions to mark their assets to market, however difficult this might be.

But this mark-to-market process is not being applied in a uniform way: though parts of the financial world are using it, others are not. Thus, senior bankers currently find themselves in the worst of all worlds: investors have just enough knowledge about the losses to feel scared but not enough information to think the worst is past. In this situation, partial transparency can actually be worse than no transparency at all.

Of course, eventually this fog and fear will clear. After all, even Japan produced clarity in the end (and, for the record, though the losses there were more than $100m, they were also less than the gloomy $1,000bn-odd projections.)

The Financial Times

Pay Day Lenders

FINANCIAL STABILITY REPORT 2007

The Situation in Ireland
Like their international peers, Irish banks are operating in an environment where liquidity is not as readily available as heretofore. In addition, notwithstanding the fact that the larger institutions have diversified their businesses outside the Irish economy, the banking sector is operating in an economy where growth will be slower by comparison with recent years. Investor sentiment towards the banking sector globally has been negative in recent times. However, the current situation and outlook for Irish banks, based on an assessment of developments so far, is positive. Firstly, the sector’s shock absorption capacity has been largely unaffected by the turbulence in international financial markets. The domestic banking system reports no significant direct exposures to US sub prime mortgages and essentially negligible exposures through investments and through links with other financial companies or special purpose vehicles which themselves were negatively affected by the current market turmoil. The Financial Stability Report contains an article summarising the results of a survey conducted with the banks on this issue. Secondly, given the extent of the disruption to normal market functioning internationally in recent months, it is inevitable that Irish banks – like all banks - would experience some impairment in their access to liquidity in the interbank market. However, the comprehensive liquidity framework within the Eurosystem and the significant volumes of collateral held means that Irish banks are well positioned to access Eurosystem liquidity. Also, a fuller assessment of the funding patterns of Irish banks indicates that there is a significant medium-term element to much of their funding, as well as a relatively wide range of funding options available to them. Finally, our stress-testing of the banking system and our extensive financial stability analysis indicate that Irish banks are solidly profitable and well-capitalised. In this context, it is worth noting that they have one of the lowest rates of non-performing loans among banks in all EU countries.

Lessons from the Current Episode of Financial Market Turbulence
As the evolution and duration of the current episode is uncertain, it is difficult to draw firm conclusions at this early stage. Nevertheless, EU Finance Ministers have looked at recent events and have set out a roadmap of issues to address, to help avoid a repeat of recent events. A number of areas would seem to require attention in the near future:
There is a need to improve transparency about where financial risks lie. The lack of accurate and timely information on exposures and underlying risks has been an important factor in triggering the loss of investor confidence in recent months;
While securitisation and financial innovation have significantly enhanced credit risk transfer, they have had other, less benign - effects. In particular, the ‘originate and distribute’ model behind securitisation has changed the incentives for lenders regarding the monitoring of risk and we probably need some more checks and balances here;
Clearly, rating agencies play a very important role and should continue to do so. However, there are some potential conflicts of interest and how these are handled needs to be thought through, as does the question of whether a more differentiated scale of ratings for structured credit products is appropriate; the issue of how to value complex products, many of which are not traded on markets with genuine liquidity, also needs further consideration.

Conclusion
The publication of this Report is one way in which the Central Bank & Financial Services Authority of Ireland fulfils its financial stability mandate. In addition, we maintain an active dialogue with the domestic credit institutions in order to highlight issues for the financial system, and the Central Bank works in close co-operation with the Financial Regulator to help maintain financial stability in Ireland. The Financial Regulator conducts regular on-site inspections and monitors banks’ exposures on a regular basis. Finally, we continue to develop procedures to assess and deal with any concern of a financial stability nature that might arise in the future. I may add that, in the current environment, we have had more extensive dialogue with financial institutions to ensure that we and they are cognisant of the main risks and challenges in financial markets at this time.
I hope that the comprehensive analysis in our Financial Stability Report conveys the importance of a stable financial system and that it may stimulate discussion of the current financial stability climate in Ireland among financial market participants and the wider public.

To conclude, I am pleased to report that, notwithstanding some significant vulnerabilities and downside risks noted earlier, our overall conclusion is that the Irish financial system continues to be in a good state of health.

The Irish Central Bank

Financial Engineering

NEW YORK (Reuters) - The U.S. credit crisis deepened on Friday as Wachovia Corp reported a $1.1 billion (530 million pound) loss on subprime mortgage-related debt in October, while Capital One Financial Corp said more customers are missing payments.

The news helped cause losses in broader market indexes, on expectations that write-downs and bad loans will mount, and perhaps plunge the economy into recession.

"This is now worse than Long-Term Capital (Management)," said Jack Malvey, chief global fixed-income strategist at Lehman Brothers Inc., referring to the hedge fund whose 1998 collapse threatened to unhinge global financial markets. "This is a painful lesson in financial engineering."

Reuters

The Dollar Drop

75pc of homes fail to sell at auction

House sellers were this weekend warned not to put their houses up for auction as they are unlikely to sell because of the state of the housing market.

According to new figures obtained by the Sunday Independent, three out of four houses up for auction this year have had to be withdrawn because of lack of interest.

Now estate agents all over the country have begun warning people not to use the auction route because of lack of interest this year and the high costs involved.

Dublin estate agent Peter Wyse said yesterday: "Last year, 80 per cent of auction houses were sold at or just after auction. This year, it is the total opposite with 80 per cent of houses being withdrawn because of lack of interest. We are advising people not to use auctions right now."

Wyse said that auctions in the past worked best for individual or one-off houses, but that the slump in the property market has killed off any movement in that sector.

Putting your house up for auction can cost between €6,000 and €15,000, mainly on advertisement before the intended sale, but auctioneers have warned that spending that much does not guarantee your house will be sold.

One such case involved a house valued at over €4m on Eglinton Road in Dublin. The house failed to sell at auction and the owners were landed with a bill of over €10,000.

"We don't give any guarantee that the house will sell, we can't. What we do is make sure that the seller understands what is involved in putting the house up for auction. It's expensive and difficult and it's not worth doing right now."

The Indo

Empire of Debt

You cannot properly anticipate the coming wealth destruction unless you understand that the entire model rests on financial instruments (derivatives) which mask and distort risk. Thanks to readers Cheryl A. and U. Doran, I read the best description of how derivatives are written and sold--and how they blow up: Fiasco: The Inside Story of a Wall Street Trader.

Here is an analogy. Let's say you are offered a chance to play roulette, a very risky game of chance, but with an option for insurance which guarantees you will suffer no more than a tiny loss.

Let's say you place a $10 bet, in the hopes of winning $100. Your "insurance"--what we call a hedge, as in "hedging your bets"--costs only $1. Thus you can gamble $10, with a chance of winning as much as $100, and your loss is limited to a mere $1--the cost of your hedge. If you lose the $10, the other side of the hedge trade--whoever took your $1--will give you $10. Life is good, n'est pas?

Note what this hedge does: it makes you believe a high-risk game can be played at almost no risk. But alas, the game is inherently risky, and the reduction of risk is ultimately illusory: you can't change roulette into a low-risk gamble.

Since this is such a low-risk bet, you are soon gambling, say $100 billion. And why not? The hedges are so cheap! Abd everything goes swimmingly until the day you lose the $100 billion. Ah, bad luck, Mate; but no worries, you turn to the other side of your hedge and politely request your $100 billion.

Oops--that guy just lost his bets, too, and can't pay you. Now the risk of the underlying game is fully revealed; the entire hedge which made it all so "safe" is revealed as a house of cards which depends on all the other players being able to pay off their bets. Once they can't, well, as the saying goes, all bets are off.

To hide your immense losses, you continue to claim your bet is still worth $100 billion. Since you aren't required to "mark to market," i.e. reveal the market value of your bet, you stash the $100 billion loss in "Level 3" of your assets--a dark place where you can temporarily hide your worthless bets.

http://www.oftwominds.com/blognov07/empire-debt1.html

The US Iraq and oil

RoboPaddy on youtube

RoboPaddy

Negative equity warning for 35,000 borrowers

UP to 35,000 households face the prospect of falling into negative equity after a new report warned house prices will plummet by 8pc next year.

Many of the affected homeowners will be left servicing a mortgage that is greater than the value of their home.

The gloomy scenario emerged after a report by Goodbody's Stockbrokers said the average value of homes would drop by 5pc this year -- meaning a drop of 13pc in just two years.

Goodbody chief economist Dermot O'Leary said the slide into negative equity would affect mainly those who took out 100pc mortgages, which were first introduced at the end of 2005. These were mostly snapped up by first-time buyers.

Mr O'Leary attempted to play down the potential impact on homeowners. He said: "It only becomes a problem if the mortgage becomes unaffordable."

However, the news will come as a serious concern to households who are already struggling to cover the cost of rising mortgage repayments.

The report also predicted house completions will fall from 90,000 this year to just 50,000 in 2008 -- 10,000 fewer than previously estimated.

The Irish Independent

The Skeleton in the Closet

Nov. 7 (Bloomberg) -- Banks may be forced to write down $64 billion because of falling prices on collateralized debt obligations backed by subprime assets, Citigroup Inc. analysts said.

Wall Street has marked down prices of the asset-backed securities by about $15 billion so far, analysts led by Matt King in London wrote in a report e-mailed today. The data excludes Citigroup's own projected writedowns of as much as $11 billion announced this week.

``Of the many skeletons hiding in the subprime closet, writedowns on banks' positions on CDOs of ABS are probably the scariest,'' King wrote.

Investor concern that banks face more losses from the worst U.S. housing market in 16 years pushed shares of Citigroup to the lowest in more than four years. Royal Bank of Scotland Group Plc analysts today predicted banks may writedown between $250 billion and $500 billion because of the credit slump.

Bloomberg

Another Cramer Rant

Gisele's Euro Demand Is False

Gisele Bundchen's manager sister has denied reports the supermodel demands to be paid in euros instead of U.S. dollars, insisting the claims are "ridiculous."

The Brazilian beauty was alleged to have refused payment in American currency because the dollar is "too weak."

But her sister Patricia Bundchen, who was credited for the quotes, has denied making any such comment and claims the supermodel is simply "bemused" by the reports.

Patricia says, "It's a joke by some journalist, it's ridiculous.

"I never said that to any press organization. We never talk about Gisele's contracts, and even less so the money involved.

"(Gisele) is continuing to sign her contracts in dollars or euros, as she has always done.

"She is bemused by these reactions. This information is not true. ... I do not recall ever having said anything that could be interpreted in that way."

Robopaddy

This holiday address, destined by nature, lies only 35 km away north of the city of Bourgas, featuring wide and warm sea with gently sloping sand bottom and approx. 1,700 hours of sunshine from May to October, plenty of ozone and ultraviolet rays, along with the fresh breeze.

This fine beach resort was awarded the prestigious Blue Flag International prize for proven ecological advantages.
Sunny Beach has more than 100 hotels, 2 campsites, over 130 catering establishments: restaurants, taverns with folklore shows, bars with floor shows, night clubs, casino, discos and cafes, providing culinary pleasures and a good mood.

Every conceivable opportunity for sports: surfing, water skis and parachutes, hang-gliding and banana, sailing, yachts, paddle boats, cutters, scooters, rowboats, tennis courts, beach volleyball, playing grounds, mini-golf, skittle alley, bowling, riding ground, fitness halls, sports tournaments for amateurs and professionals.
A genuine children's paradise - plenty of fun and games, children pools, slides, carting, Rolba water slide, inflatable trampoline, sport schools. In addition: special discounts, children's menus, 24-hour kindergarten, etc.

Youtube

I was playing with windowz movie maker this evening. this is the result


Enjoy

The Falling Dollar

US Recession?

Mortgage Fraud and Solicitors

In a statement, issued through his solicitors, Byrne said he ‘‘deplores the unworthy, idle, hurtful and irrelevant speculation about his domestic and personal life’’ in certain media coverage, ‘‘including unfounded assertions (linked to spurious official sources) that he had absconded’’.

Byrne’s statement, however, did not answer the main questions: where is the money and is he in a position to pay it back? As the solicitor returned to court, IIB Bank was informing Mr Justice Frank Clarke that the €9 million the bank had loaned to Byrne seemed to have vanished.

A week previously, IIB had secured an injunction freezing Byrne’s bank accounts in a bid to recover the €9million,which it had forwarded to him a month before.

In an affidavit, the bank said it feared that Byrne would dissipate his assets with a view ‘‘to defrauding’’ the bank.

Last week, however, the bank said the order had been too late to prevent the disappearance of the €9 million. Byrne may have turned up in court, but the whereabouts of the money was still unknown.

It certainly was not where it was supposed to be - in a bank account with National Irish Bank. The court permitted IIB to seek documents from NIB in an effort to track the money, but the trail was cold.

IIB is not the only bank licking its wounds. As the details of Byrne’s financial transactions came to light over the past fortnight, it emerged that eight banks are owed more than €40 million by the solicitor.

The largest creditors to date are EBS Building Society and Irish Nationwide, which are owed €12.5 million and €10.5 million respectively by Byrne.

Anglo Irish Bank was quick out of the blocks and has appointed a receiver over a significant portion of Byrne’s Irish property and business assets.

John McStay and Jim Luby, the two partners of accountancy firm McStay Luby, have been installed by Anglo as joint receivers over elements of Byrne’s Irish property portfolio.

Anglo is owed about €4 million by Byrne, and is taking the move to shore up its assets. At the moment, it remains unclear to which elements within Byrne’s complex financial structure Anglo is claiming entitlement.

According to the IIB affidavit, Byrne has more than 20 properties around the country, while other banks are claiming that the figure is higher.

However, the main problem is that no one is really sure who has actual claim over his assets, as Byrne secured multiple mortgages from different banks on the same properties.

IIB granted the €9 million loan only after Byrne offered 20 properties as security. The majority of these are located across Dublin, with one in Carlow.

More than a dozen of these properties were already mortgaged, however, and IIB has discovered that several properties provided by Byrne as security for its loan had already been mortgaged with four other lenders - Bank of Scotland (Ireland), ICS Building Society, Anglo and Ulster Bank.

A barrister for Bank of Scotland (Ireland) has since indicated to the High Court that it, too, had several mortgages with Byrne.

Bank of Scotland (Ireland) is believed to be owed between €5.2 and €5.6 million, according to informed sources.

Each institution had previously thought its loan was secured, based on its claim over the property asset in question, but it has emerged that many of them had no charge over any assets whatsoever.

Will This Guy do time? I Think Hell will freeze over first

The Property Snake

Scarcely a day seems to go by at the moment without another new prediction of doom and gloom for the British housing market. Last month, the International Monetary Fund informed us that property in Britain could be overvalued by as much as 50%. Last week, Hometrack, the market analysts, reported prices fell by 0.1% in October – the first drop in two years – while the Council of Mortgage Lenders has predicted that next year would see a sharp rise in repossessions. Even those estate agents who, only six months ago, were confidently predicting the market would keep going up and up, defying the laws of gravity, are starting to look distinctly queasy.

Not worried enough yet? Then try logging on to Property Snake (www.propertysnake.co.uk), a website that describes itself as the “opposite of the property ladder” and carries details of more than 100,000 properties that have had their prices reduced, in some cases by as much as 44%. Many of the most dramatic examples on the site, compiled electronically from various other sources on the web, may not be what they seem – the result, perhaps, of prices that were input incorrectly and then corrected, or of comparisons of like with unlike.

Nevertheless, there are some startling genuine examples, such as a four-bedroom flat in west Hampstead, north London, which went on the market in August at £1.33m and has been reduced three times over the past few months – a total drop of 24% – to its current price of £999,950.

Paddy The Carpenter

KENNY TIMMONS has spent three long weekends in New York City since 2003, catching up with friends he knew in Ireland, visiting ground zero, restocking his wardrobe at Armani and Niketown and chatting about real estate with a bartender in an Irish pub in Midtown Manhattan.

That was enough of a glimpse of New York for Mr. Timmons, a 32-year-old carpenter from County Meath, Ireland. Last summer, he put down 10 percent on a $760,000 studio under construction at 75 Wall Street.

Mr. Timmons has never seen the apartment and does not plan to live there. Instead, he hopes to rent it out for $3,000 a month when it’s finished next year and eventually to sell it at a profit.

He predicts that a Wall Street address will always be in demand. “If you can’t rent on Wall Street, then where can you rent?” Mr. Timmons said. “It’s one of the biggest business areas in the world.”

This is what someone on the american bubble blog had to say

I read this NYTimes piece this am. Columbians, Koreans and smart guys like this Irishman Timmons. Let’s see, he’s a carpenter, and the piece says he owns 11 spec houses in Ireland, a market already beginning to unravel. So he buys a studio on Wall Street…which is not remotely a residential neighborhood. It’s bleak, as nycjoe says, it has no supermarkets, stores, and is deserted on weekends. Rent it, yeah maybe, if he lists it with a corporate agency for short term business travelers in lieu of a hotel, but what a grim place to be stuck. And of course, the agency will grab a good chunk of fees.
All this for 750K. Well I’m just dumbfounded at his investment savvy. And all the rest of the foreign buyers, getting in at the top of the market while the locals are stepping back from the cliff–sure,the devalued dollar will cushion any mistakes you make.
Not.
But keep these yokels coming…we gotta feed the sharks here.

Now where was that elephant hiding

Fears of a fresh wave of losses arising from the credit squeeze spread around the globe on Friday, depressing stock markets in Europe and Asia and savaging bank shares for the second day in a row.

Despite a surge in US employment growth last month, investors remained worried that banks and other financial institutions still faced heavy losses arising from the troubled US mortgage market and related securities

Market expectations that the impact of these losses on the broader US economy could spur the US Federal Reserve to cut interest rates further drove the dollar down to a new low against euro. The dollar’s slide in turn helped drive gold to a 28-year high of more than $800 an ounce and oil above $95 a barrel.

Andrew Wilkinson, analyst at Interactive Brokers, said: “A daisy chain of market reports predicting continued writedowns and runaway credit losses” at the biggest banks and brokerage firms hit investor sentiment.

Merrill Lynch led the fallers as the bank tumbled nearly 8 per cent, extending its drop over two days to 14 per cent. Its latest fall followed a report over its dealing with hedge funds about its holdings of mortgage-related securities.

Merrill, still reeling from this week’s departure of Stan O’Neal, its chief executive, after news of fresh writedowns of its holdings of mortgage-related securities, said it had no reason to believe that any “inappropriate transactions occurred”.

Enron 2 just around the corner

Subprime Reset Time

Do home buyers with reduced-payment option adjustable rate mortgages really understand the big monthly cost increases headed their way?

Major lenders who actively pushed option ARMs during the heyday housing boom years have now scaled back, and at least one is concerned enough about the coming payment "reset" dates that it has sent letters directly to thousands of borrowers.

Option ARMs -- wildly popular in high-cost markets in California, the Southwest, and the East coast during 2003-2005 -- allow borrowers to choose to make minimum monthly payments that are insufficient to pay the full interest due or to reduce the principal. When borrowers choose that option, their deferred payments are lumped onto their principal balance -- raising the debt they owe the lender higher than their original loan amount.

The other two options available to borrowers are a fully-amortized payment -- principal plus interest -- or an interest-only payment where no principal debt is paid off. Mortgage industry research has found that roughly 75 percent of all option ARM borrowers choose the minimum payment.

Many option ARMs are scheduled to reset to higher payments this year and next -- an estimated half trillion dollars worth during 2006 alone, according to mortgage giant Freddie Mac. Federal and state financial institution regulators, along with some prominent lenders, worry that not all borrowers now making minimum payments are aware of the size of the monthly payment increases they may soon face. Worse yet, some of these loans were made to people who were on the financial bubble to begin with: their credit was stretched to make even the minimum payments necessary to afford the house they purchased.