Friday, November 20, 2009

Mahindra offers premium homes in Chennai -GST

Mahindra Lifespaces has recently launched a marketing campaign to sell their new development inside Mahindra World City. Investors and end-users have to do their homework before jumping in on the Mahindra brand-name. There is no doubt that Mahindra's have the vision and they started work on MWC before anybody else and their success is a testimony to their vision and execution. There are a large number of companies and MNC's within MWC and the number will increase as time goes by.
However the pricing of Aqualiy is what should be of interest to the buyer. As per their press release a 2200 sq ft twin home si priced at 90L, a 4000 sq ft villa at 1.7cr and a 1800 sq ft apt at 45 L.
Now if one goes to look for plots around MWC, one can easily get a ground (60x40) 2400 sq ft at 600 rs per sqft, within 2-3 kms of MWC. Now given a construction cost of 1200 per sq/ ft for premium construction one can easily get a 2400 house for 1800 x 2400 = 43 L. Why should anyone spend 3 times more for land on a 99 year lease. Yes, the Mahindra World City land is on a 99 year lease from the government of Tamil Nadu.
Mahindra World City is a landmark and will continue to do so, however investors/end-users should look to land around this area rather then pay a premium to Mahindra for living in this area. Ofcourse the community aspect of Lifespaces cannot be replicated by an individual house on a plot, however does it a warrant a premium of 45L ? That is the million dollar question.

Mahindra Group, has launched a premium residential project — Aqualily — that would be developed within Mahindra World City near Chennai.

“Aqualily is being developed as a gated community spread over 55 acres and will involve construction of 1.5 million sq ft of living space, comprising around 760 residential units. The project is being implemented at a cost of Rs 400 crore,” said Anita Arjundas, managing director & chief executive officer, Mahindra Lifespace Developers. The project will have about 10 acres of green lawns.

Aqualily will offer a mix of villas, twin homes and luxury apartments, with a built-up space up to 4,000 sq ft. The company has now launched the villas and twin-homes in the first phase, apartments will be launched a couple of months later.

While twin-homes, starting with 2,200 sq ft, will cost Rs 90 lakh, 4,000 sq ft large villas could cost up to Rs 1.7 crore.

The apartments will vary from 1,200 sq ft to 1,600 sq ft and priced at Rs 45 lakh, said Rajendra Joshi, vice-president (marketing) of Mahindra Lifespace Developers.

According to Joshi, about 150 units will be villas and twin-homes, while 610 units will be apartments. While villas and twin homes are likely to be completed by the end of 2011, the apartments will be ready for occupation six-eight months thereafter. Four banks, including HDFC, ICICI Bank and Axis Bank have already approved the project for home loans.

The project offers two clubhouses equipped with all modern amenities and several play areas.

“We envisioned Mahindra World City as a complete ecosystem where work, living and learning spaces would coexist to offer an enhanced quality of life to its residents. We have achieved significant milestones in this pursuit by creating work spaces for companies like BMW, Infosys, Wipro and lifestyle amenities and facilities like Mahindra World School, Apollo Clinic, as well as enhanced bus and train facilities,” said Arun Nanda, executive director, Mahindra and Mahindra, and vice-chairman, Ma­hindra Lifespace Developers.

“Aqualily represents a significant endeavour in offering international living in a picturesque environment and will ensure a nature-friendly living environment,” Nanda added. The project is being executed by Mahindra Residential Developers, a joint venture between Mahindra Lifespace and Arch Capital, the real estate fund of the Philippines-based Ayala Group.


Anonymous said...

At this juncture the following news is very relevant that a very very very big property bubble is being created. Prices are going up up and up without any reason. The government is not doing anything to control this speculation. They have said that they do not have any plans to control these prices of property. See the following news which is a matter of concern as per FT.

Big property bubble forming in China, warns leading developer
By Jamil Anderlini in Beijing


A large bubble is forming in China's property market as a result of Beijing's credit-driven stimulus programme, one of the country's most prominent real estate developers warned.
Zhang Xin, chief executive of Soho China, one of the country's most successful privately-owned property developers, told the Financial Times the asset bubble was leading to rampant wasteful investment in the sector, undermining the country's long-term growth prospects.
“Real estate prices should only go up because people want to actually use the space, but at the moment we can see more and more empty buildings across the whole country and in every real estate segment,” Ms Zhang said. “The rising prices are a direct result of so much money coming from the banks and the Chinese banks should be very worried.”
Ms Zhang's assessment was echoed by Fan Gang, a member of the central bank's monetary policy committee, who warned yesterday that real estate in cities such as Beijing, Shanghai and Shenzhen was expensive and there was a growing risk of asset price bubbles.
Urban property prices in 70 big and medium-sized Chinese cities rose 3.9 per cent in October from a year earlier, accelerating from September's 2.8 per cent rise, according to government figures.
Price rises in top-tier markets such as Beijing and Shanghai have been much faster. Analysts say the rebound has largely been driven by an unprecedented government-led expansion of bank lending. It is also being driven by government policies, including tax breaks, low interest rates and smaller down-payment requirements.
Investment in real estate development, a key driver of economic growth, rose 18.9 per cent in the first 10 months of the year on a year earlier, a marked acceleration from 17.7 per cent growth in January-September.
Ms Zhang said the current speculation should be a serious warning for the industry and the general economy.
“In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers,” she said.
“If you look at GDP growth, then China looks like a new engine driving the global economy, but if you look at how growth is being created here by so much wasteful investment you wouldn't be so optimistic.”

中国经济走到回暖的十字路口了吗? (2009-11-18 )
中国通胀的前景如何? (2009-11-16 )
Decline but no fall (2009-11-16 )

主页 搜索
© The Financial Times

Anonymous said...


I am about to close a deal in

Saraswati Apartments, Madhu Vihar,
Patparganj, Delhi.

It is a 3 BHK Flat in high rise society. Owner is asking for 80 lakhs, me insisting on 70. Both of us have decided to keep brokers out of this deal.

Anyone familiar with the area please let me know their valuation of the flat.

Thanks in Advance

Arulkumar said...

1800 x 2400 = 28.8 L ??

Its 43.2 Lakhs

Anonymous said...

Japan had a similar problem in the mid-80's. The export markets to US were booming and so was internal growth...wild investments and wild speculative growth initiatives. The Japanese stock market exploded towards the end of 80' that point the crystal ball gazers were talking of unheralded decades of growth for Japan and how Japan would take over the world. We see a repeat with China and India now..India is still growing at a sustainable pace and not trying to create a developed economy overnight. But China in all its hurry looks headed for a lost decade of its own. All this craziness of devaluing yuan, liberally easing credit, rampant infrastructure growth and what have you...may provide employment for some time. But its to be seen what they would do in the event of a real recessionary double dip. I have a feeling we will get a chance to see that real soon...

Anonymous said...

Vik - This project has been launched and relaunched 3 times so far. First without any specific name in 2002 and then again as 'Silvan County' and now as 'Aquality'

I still have the 2002 mails fromm the sales team. In 2002 it was just plot; they were selling.


Anonymous said...

Anon at 1:52----
If I were you I would not buy this flat even at 70lacs. I'm sure you can rent the same flat between Rs. 12,000 to Rs. 16,000 per month. I think the price should not be more than 35 lacs. Now, people may think 35 lacs is never possible when people are thinking the prices are 80lacs.

This has all happened all over the world. Like in US, houses that used to sell for 600K USD are now selling at 250K USD. These owners of 600K USD never could imagine such a fall including the banks and builders. But when it happened, it really happened.

If you can rent cheap, why buy. Put your money @9% in a bank and pay your rent with the interest and till the prices fall by 50% or so. It might take a few years though for it to happen. Keep cah as you would be able to buy 2 houses in 70 lacs in a few years. Choice is yours.

Vik said...

my bad, the construction cost is 28L plus the land cost will put it at 43L. which is till 50% less then the twin home

Vik said...

my bad, the construction cost is 28L plus the land cost will put it at 43L. which is till 50% less then the twin home

shailesh said...

Timely withdrawal of stimulus is a challenge for India, says OECD

Releasing its biannual world economic outlook for its members and non-members from the emerging economies, the Paris-based club of 30 rich industrial countries said the challenge for India is particularly pronounced “given the resurgence of inflationary pressures so early in the recovery.”

Considering the magnitude of the easing in the recent past and the speed at which inflation has bounced back, the monetary policy would need to be “tightened fairly soon,” it said, adding that as the long-term government bond rates continue to trend up over 2009, this largely reflects pressure from higher government borrowing and the inflation bounce.

It said that after slowing sharply in the late last year, growth recovered during the first half of 2009 and the recent high-frequency indicators suggest that traction is gaining.

“In the near term, the ongoing recovery will be only modestly hampered by poor monsoon rainfall,” it said, adding that India’s growth is projected to reach over 7 per cent in 2010 and 7.5 per cent in 2011. Inflation has been rising since mid-2009 and is likely to remain high over the next two years.

Stating that since mid-2009, India’s inflation picked up sharply for consumer prices, it said much of the recent spike was driven by higher food prices arising out of shortfalls in farm output due to deficient monsoon rainfall.

shailesh said...

Bubbles will continue inflating for a long time

Nine months later, the stock market has almost doubled. Real estate companies once regarded as insolvent crooks are able to raise millions of dollars. Commodity prices have shot up. Investors are behaving as though another party without end has begun. Bubbles are inflating everywhere, with no sign of caution induced by the bursting of the last bubble.

Some analysts fear that the bubbles will burst very soon. India, China and some other countries may have recovered, but western countries face a distinct risk of a double-dip recession. Housing is again in the doldrums in the US, and foreclosures continue to rise. A record number of US banks have been seized and closed down by the regulator. Commercial real estate is heading for a massive bust, endangering real estate financiers. Unemployment looks like rising to 11% or more.

Many western countries registered positive growth in the last quarter, leading to hopes that the recession has ended. But the latest data warns of the possibility of a second downward dip. Analysts fear that a double-dip recession can erode confidence and generate new panic, causing bubbles to burst across the globe.

I think the danger of that is close to zero. Markets in the West have already factored in the possibility of a double dip. Regulators everywhere are aware of and prepared for that risk. Indeed, the mad rush of dollars into emerging markets is occurring precisely because investors believe that growth prospects are far better in emerging markets than the West. Over $15 billion has flooded into India this year.

No doubt the bubbles inflating today will burst eventually. But they will continue inflating for a long time because the US will, for the foreseeable future, keep flooding the world with dollars at virtually zero interest. To check the possibility of a double-dip recession, the US Federal Reserve looks certain to follow an easy money policy for a long time. Economists like Paul Krugman are calling for a fresh fiscal stimulus to avoid a double dip. Finance Ministers in all western countries are emphasizing the need to avoid any early exit from the massive monetary and fiscal stimulus of 2008: they fear unemployment and recession much more than future bubbles. So, the flood of dirt-cheap dollars is going to continue for a long time.

shailesh said...

Real estate: Volumes, not prices, are the way ahead

A likely revival in the real estate sector could well be jeopardised because of the irrational exuberance of builders. There are others concerns too. It is likely that from next year, the first instalments of restructured debt of most of these builders would become due. According to RBI data, there was a 55% year-on year (y-o-y) growth in August 2009 in bank loans to the realty sector compared to the 46% y-o-y growth in August 2008.

It is this huge exposure to the high beta sector that led RBI to increase provisioning norms on realty loans by banks. Developers will need to ensure that cash flows are sufficient to service their debt. That will call for a focus on increasing volumes and not prices.

Not too long ago, property registrations rose by 20% starting March 2009. The growth continued at a monthly average of 7%. However, builders seem to have got carried away and misread the pent-up demand with the result that price started to rise in August 2009. The impact was felt immediately — a 13% drop in flats registered in August. The trend continued in September. The decline was attributed to ‘pitr paksh’, a period considered inauspicious for buying homes. However, with October being no different, it is clear that the going will not be easy for the realty sector.

Anonymous said...

1) There has been an unprecedented level of government intervention to stem housing price declines.

2) Those recently purchasing homes are most likely doing so because they believe the government’s suggestion that it is possible to use market-distorting interventions to restart housing bubble price inflation.

3) The actual effect on making home prices start going up again has been small compared to the massive level of intervention.

4) Given their magnitude, the interventions may not be sustainable.

5) Once it becomes clear that the effect of stimulus on home price appreciation is “smaller than expected”, demand will fall further from already abysmal levels.

6) The factors supporting an ongoing (if not increasing) supply glut are still in place.

7) Lower demand and high (if not higher) supply => lower prices.

Anonymous said...

My view is that the Power Groups gain a lot of power and were able to get laws passed that favored the expansion of their self-interest ,but that self interest set up a ‘Black Swan ” drama that would eventually play out because of cause and effect. The power groups were so sinister that they brainwashed the World (including India) that real estate always goes up ,and they controlled the media through advertising dollars in large part to create that myth .

In the US, the same Power Groups have been directional in the solutions to
the Crash ,therefore billions have been wasted saving corrupt
systems and Companies ,just so they could exist when they deserved to fail ,which would of caused a overhaul of the corrupt systems , the unregulated systems , the monopolies or price fixing ,or the systems that were based on faulty business models or fraudulent or bad faith business models .

To sum it up ,the game was to use other peoples money by taking leverage to a a risk that knew no bounds ,just to make short term gains .

The brainwashing machine was so powerful that people walked around like drones repeating the same talking points and the so-called Experts where on the bandwagon and the Politicians and Regulators were just bribed and incompetent.

The time is near for unwinding all this corruption in India. And when it all is exposed, major property price declines are on the card.

Anonymous said...

Life is not necessarily rosy outside the U.S.

The whole world will go dark when Atlas Shrugs. I’d rather be in the dark in America where at least we can decide to return to rule of law and the Constitution.

China will likely gobble up Central America, Australia, and New Zealand without Pres. Obama raising an eyebrow.

Anonymous said...

Germany warns US on market bubbles ~ Frankfurt
Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fuelled by low US interest rates and a weak dollar.

Wolfgang Schäuble’s comments highlight official concern in Europe that the risk of further financial market turbulence has been exacerbated by the exceptional steps taken by central banks and governments to combat the crisis.

Last weekend, Liu Mingkang, China’s banking regulator, criticised the US Federal Reserve for fuelling the “dollar carry-trade”, in which investors borrow dollars at ultra-low interest rates and invest in higher-yielding assets abroad.

Speaking at a banking conference in Frankfurt on Friday, Mr Schäuble said it would be “naive” to assume the next asset price bubble would take the same guise as the last.

He said: “More likely today is a scenario in which excess liquidity globally creates a new [sort of] asset market bubble.”

Anonymous said...

In the US, I heard recently that vacancy rates are at a 45 year high and rental rates are dropping. Of course home builders are showing increased sales and projections of increased production next year. With foreclosure rates continuing to climb and expected to climb and remain high, for the next couple years, the cycle of devaluing then foreclosing may continuing longer than most people think.

Anonymous said...

For Anon buying at 70lacs in PatparGanj.

"Those who refuse to do arithmetic are doomed to speak nonsense."
– John McCarthy

Do your homework properly mathematically. THere is going to be no more appreciation but price declines in years to come and for many many years. So, think and buy.

shailesh said...

'367k housing units in seven metros by 2011'

Property consultancy firm Knight Frank on Monday said that 367,000 housing units will be available by 2011, across seven Indian cities of which 25 per cent will come up in the National Capital Region alone.

Examining potential residential supply, the report said that with 92,202 units, NCR would be the highest contributor to the supply followed by Mumbai [ Images ] with 20 per cent or 72,906 units, during the period.

Zia said that the residential property prices have increased by 10-30 per cent in Mumbai and Bengaluru since March 2009 after the big slump which witnessed upto 40 per cent price correction.

The price improvement, however, is limited to Mumbai and Bengaluru and was not a country-wide phenomenon, the property consultancy firm said.

Anonymous said...

The role of rating agencies during the financial fiasco...

Ohio Sues Rating Firms for Losses in Funds
Published: November 20, 2009

Already facing a spate of private lawsuits, the legal troubles of the country’s largest credit rating agencies deepened on Friday when the attorney general of Ohio sued Moody’s Investors Service, Standard & Poor’s and Fitch, claiming that they had cost state retirement and pension funds some $457 million by approving high-risk Wall Street securities that went bust in the financial collapse.

Anonymous said...

Wave of Debt Payments Facing U.S. Government.

WASHINGTON — The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.

But that happy situation, aided by ultralow interest rates, may not last much longer.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

Anonymous said...

I smell stock market selloff (and dollar trend reversion) after the red hot year end Wall Street bonus season.

Anonymous said...

Sell your gold soon or enjoy the crash below $1000/oz early next year. All the signs are there for those who are paying attention, including Bullard’s very explicit “we prop up dollar prices of assets”

Anonymous said...

People are trying to preserve wealth. The natural reaction to the FED printing unlimited amounts of paper/electronic currency is that money/wealth is looking for a new home. Gold up, oil up, stocks up, cotton up, real estate up, etc. The price being up sharply is nothing unique to Gold, look at any other asset class over the past 6 month.

Anonymous said...

“My friends are not buying gold, they are saving as much money as they can…”

So’s most everyone; Unfortunately for savers this forces interest rates for savers to go to zero.
But, for many people, the word is out: Cash is the place to be, even if the nominal rate of return for cash is zero the real rate of return for cash in a deflationary environment is a positive number.

This screws money managers. If cash is the place to be then why do people need to pay money managers a commission to go to cash when they can go to cash themselves for free? This sort of thinking forces money managers into chasing risky ventures in the hope of getting a good return for their clients so their clients won’t leave and take their money with them.

Thus “Commodities are up while demand on the street is down”.

Anonymous said...

f you were elected to US Congress a year from now, what would you do about this?

The Federal Government pays interest on the $12 trillion national debt. (As of Thursday it was $12,011,787,382,266.61.) A staggering $383 billion dollars of interest was incurred during the last fiscal year. That compares to NASA’s budget of $18 billion, the Department of Transportation’s budget of $74 billion, and the California state budget of $90 billion. $383 billion in annual interest could purchase four thousands homes a day in the high priced California market. That same sum is a 1,000 times greater then the distance from Earth to Jupiter in miles.

Anonymous said...

The next bubble appears to be blowing into gold. $2300/oz, here we come…and then the hard landing.

Nov. 23, 2009, 12:01 a.m. EST

New gold bugs making gold investments mainstream

Tudor, Paulson, Greenlight, Hayman bring precious metal in from the fringe

By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold has long been favored by a fringe of the investment world, but this year some of the world’s leading hedge-fund managers have loaded up on the precious metal amid concern government efforts to avoid another Great Depression that could undermine major currencies and fuel rampant inflation.

“I have never been a gold bug,” Paul Tudor Jones, chairman of hedge-fund giant Tudor Investment Corp., wrote in an Oct. 15 letter to investors. “It is just an asset that, like everything else in life, has its time and place. And now is that time.”

Tudor has been building positions in gold and other precious metals in recent months and they now represent the firm’s largest commodities exposure, he noted.

“I can’t remember in 20 years so many respected investors focused on a single strategy,” said Bradley Alford of Alpha Capital Management, which invests in hedge funds. “Some of these people are icons of the industry with at least 15-year track records. It’s a losing proposition to bet against guys like that. They aren’t billionaires because they make bad bets.”

It’s not only hedge funds. Managers of mutual funds and insurance company portfolios are often limited in how much gold they can buy, but these investors have been purchasing the metal for their personal accounts, according to Ed Yardeni, president of Yardeni Research.

“A surprising number of level-headed folks, who I have known over the years, are confessing to me that they’ve become gold bugs,” he said. “They’re starting to give more respect to what was for a long time considered the lunatic fringe.”

The original gold bugs have been fans of the metal for decades. They yearn for the past, when the so-called Gold Standard was the central cog of the world’s currency system. A similar system known as the Bretton Woods Agreement tied the U.S. dollar, and all currencies pegged to the dollar, to the price of gold. When the system broke down in 1971, there was no longer a limit on the amount of money that could be printed by governments.

Gold bugs hung on grimly as prices dropped in the ’80s and ’90s amid quelled inflation and roaring stock markets. But gold prices began climbing at the start of this decade, when the Federal Reserve slashed interest rates to revive the U.S. economy in the wake of the dot-com bust.

That helped fuel a housing and credit market boom that came crashing down last year, triggering a global financial crisis and the worst recession since the Great Depression.

The Federal Reserve, headed by Ben Bernanke, responded by slashing interest rates to almost zero and spending more than $1 trillion buying long-term U.S. Treasury bonds and mortgage-backed securities and other debts from collapsed housing giants Fannie Mae and Freddie Mac. See latest on Fed’s efforts.

That’s stabilized the economy, but some leading hedge fund managers worry about the long-term consequences of this so-called quantitative easing and are using gold to protect themselves.

‘Grandpa Ben’

“The Fed is making loans collateralized by toxic waste and has now begun a policy called ‘quantitative easing’ — a fancy term for ‘printing money,’” Greenlight’s Einhorn wrote in a January letter to investors.

Printing so much new money will cut the value of the U.S. dollar, which could fuel rapid inflation. In such an environment, the solidity of gold could shine.

“If the chairman of the Fed is determined to debase the currency, he will succeed,” Einhorn added. “Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself.”

Anonymous said...

Dollar Slump Persisting as Top Analysts See No Bottom.

Nov. 23 (Bloomberg) — The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Federal Reserve begins to raise interest rates, which policy makers say is an “extended period” away.

Standard Chartered Plc, Aletti Gestielle SGR, HSBC Holdings Plc and Scotia Capital Inc. say the dollar will depreciate as much as 6.4 percent versus the euro. About $12 trillion of fiscal and monetary stimulus, the world’s lowest borrowing costs and a record $4 trillion of government bond sales between 2009 and 2010 will weigh on the currency, they said. So will the nation’s 10.2 percent unemployment rate and signs that the economic recovery may falter, they said.

“History tells us the dollar shouldn’t start rising on a sustained basis until 12 months after the Fed starts to lift rates,” said Callum Henderson, the Singapore-based global head of foreign-exchange strategy for Standard Chartered.

The best forecaster of the dollar against the euro in the six quarters ended June 30 in Bloomberg’s ranking of 46 firms last month predicts the greenback will weaken 5.3 percent to $1.58 per euro in 2010, from $1.4970 today.

“It’ll take time to drain the oversupply of dollars from the market,” Henderson said. “The dollar will remain weak until the Fed’s rates rise above the competitors’.”

Anonymous said...

Markets are manipulated, and information is unreliable.

Anonymous said...

Economists bullish — but not about jobs.
Despite recent fears of another recession, survey finds top economists predicting stronger growth in 2010. But job gains aren’t likely until the spring.

NEW YORK ( — Despite rising fears of the U.S. falling into another recession, a survey of top economists found them more optimistic about growth in the fourth quarter of this year and throughout 2010. But job seekers will have to wait a little longer for employers to start hiring again.

According to the November survey by the National Association of Business Economics, 48 top forecasters now expect the economy to grow at a 3% annual rate during the last three months of this year, up from their prediction of 2.4% growth in October.

The economists also raised their forecast for growth during every quarter of 2010. They now expect a 3.2% rise in economic activity over the course of the next four quarters, up from their previous estimate of 3%.

Anonymous said...

IMF warns second bailout would ‘threaten democracy’.
Times Online ~November 23, 2009

The public will not bail out the financial services sector for a second time if another global crisis blows up in four or five years time, the managing-director of the International Monetary Fund warned this morning.

Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

“Most advanced economies will not accept any more [bailouts]…The political reaction will be very strong, putting some democracies at risk,” he told delegates.

“I do believe that the financial sector needs to contribute both to the costs of the financial crisis and to reduce recourse to public funds in the future,” he said.

Mr Strauss-Kahn said that imposing high capital ratio requirements on banks was one price the financial services sector must pay to prevent the threat of further multi-billion dollar bailouts.

He pointed to the debate in the US over the Troubled Asset Relief Programme and said that in many countries, including France and Germany, he doubted that politicians would secure the mandate needed to secure any further bail-outs if banks got in to trouble again, in several years’ time.

Anonymous said...

“There’s a disconnect between the price and reality.”
That’s seems to be the case for just about everything these days. Stocks, commodities, PM, real estate, you name it. That’s what you get if a bunch of hot bailout & stimulus money is looking for high returns or simply afraid that all the bailout & stimulaus money will dilute the value of the . So “they” will buy anything with the money.
The 2 possible outcomes are IMHO either a deflationary collapse or runaway inflation. In the latter case it makes sense to buy anything, no matter what the cost. In the former it is best to be all in cash.
I am still not sure which one but I am pretty sure it won’t end well.

Anonymous said...

he Financial Times
Greek market falls alert eurozone
By David Oakley in London and Kerin Hope in Athens

Published: November 23 2009 20:43 | Last updated: November 23 2009 20:43

Greece’s bond and stock markets have fallen sharply in the past week amid fears for its banks and economy as the European Central Bank prepares to end emergency funding for the eurozone financial system.

The volatility in financial markets in Greece – one of the weakest eurozone economies – is an early warning of potential problems for other eurozone banks and economies after the ECB ends its unlimited offer of loans to financial institutions.

Athens shares rose on Monday – and bonds were flat – but they were down 3 per cent since the start of last week, when the Greek central bank advised some of its banks to start weaning themselves off the ECB liquidity support. Ten-year government bond yields, which have an inverse relationship with prices, are up 0.15 percentage points since last Monday.

Greek banks are more dependent than others in the eurozone on ECB loans, with those outstanding from the central bank of €38bn, 7.9 per cent of their total assets, Barclays Capital has calculated.

Huw Worthington, fixed-income strategist at Barclays Capital, said: “The fall in the Greek markets is a warning to financial institutions not to become too addicted to the support of the central bank.”

Anonymous said...

The funniest SNL skit in years - Chinese premier tells Obama China wants its $800 billion dollars back. Could this be an indication that some elements of the MSN are shaking off their fawning adoration of The One and finally calling him out on his catastrophic economic policies?

Shriniwas K said...
This comment has been removed by the author.
Shriniwas K said...

The 2 states of Nevada and Arizona alone have enough natural gas reserves to power America for 100 years. Also the recent advances in Shale Natural gas extraction have yielded huge amount of natural gas potential on entire gulf coast and Brazilian East coast.

Shriniwas K said...

You forget that US still is a military super power. As long as it is powerful militarily nobody can touch it. Else the US wont stop short in using force. In fact the US will get away with paying a fraction of what it owes thanks to China's blunt controlled Yuan policy. US will force China to appreciate yuan and depreciate the $ and pay pay back a depleted US$ / equivalent resources.

Example if oil hits US$ 160 a barrel, US will simply pay back 5 billion barrels (which is only about 8-10 months worth of oil consumed by US since US consumes 20 million barrels crude per day) to China from its Alaska stockpile

US Canada and Russia together have more unused reserve oil than rest of the world put together.

--Correcting comment --

Anonymous said...

U.S., Overseas Stock Correlation Too Strong to Last


The correlation between U.S. and foreign stock markets, even the emerging markets, has become so strong as to render almost meaningless the concept of geographic investment diversification and asset allocation.

According to data from S&P, the correlation between the S&P 500 and the MSCI EAFE and MSCI EM indexes is now above 0.83, an extremely high figure.

However, this strong correlation between such disparate markets is unlikely to last partially because it was created in the first place by the extraordinary and unprecedented synchronized downturn in the global economy last year.

Anonymous said...

One in Four Borrowers Is Underwater
NOVEMBER 25, 2009

The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.

Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.

These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market.

Anonymous said...

Debt turning shoppers into Scrooges

By Jeannine Aversa
Associated Press
November 24, 2009 2:00 AM
WASHINGTON — A lot more Americans are feeling stressed out by debt this holiday season, raising the glum likelihood they'll behave like Scrooge rather than Santa.

In fact, fully 93 percent say they'll spend less or about the same as last year, according to an Associated Press-GfK poll. Half of all those polled say they're suffering at least some debt-related stress , and 22 percent say they're feeling it greatly or quite a bit. That second figure is up from 17 percent just last spring, despite all the talk about economic recovery.

Most people — 80 percent — say they'll use mostly cash to pay for their holiday shopping, and that generally means buying less.

Anonymous said...

US FDIC fund falls into red, Bair urges lending

11.24.09, 04:38 PM EST
BANKS-FDIC/ (UPDATE 3):UPDATE 3-US FDIC fund falls into red, Bair urges lending

By Karey Wutkowski

WASHINGTON(Reuters) - The government fund used to safeguard U.S. bank deposits tumbled to a negative balance of $8.2 billion as the number of problem banks surged in the third quarter.

The Federal Deposit Insurance Corp's depleted insurance fund and the sharp rise in troubled institutions underscored the fragility of the U.S. banking system and the continued weight of bad commercial and residential real estate loans on their balance sheets.

Noncurrent commercial real estate loans, which rose 19.2 percent during the quarter, increasingly are becoming a driver of the banking industry's woes.

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