Category Archives: Money

Wall St Invasion?

The distress over the global financial meltdown encompasses more than just frightening 401k statements and doomsday newscasts. We’ve now another impetus for headaches and acid stomachs. This week, Libya’s Qaddafi became a major shareholder in Unicredit, Italy’s largest bank, which might have prompted the Italian Prime Minister Berlusconi’s warning. “I have news that oil producing countries with large funds are buying heavily into our markets.”

So beyond China helping the United States with its perpetually unbalanced budget, we’ve got Arabs trolling for bargains. Berlusconi elaborated: “Now there are great opportunities for those who have capital, and I think that certain sovereign funds, and ones you would oppose, are hostile.”

I take it that it isn’t just moderate Saudi Prince Al-Waleed bin Talal bargain hunting in the major indices. I use the term ‘moderate’ because apart from his support for CAIR and his comments after 9/11 which elicited a rejection of his $10 million check, he’s been a revolutionary among his fellow Bedouins. He has supported women’s rights and hired the first female pilot in Saudi Arabia.

As gas prices have ballooned and the economy has slowed, “drill baby drill,” has become an increasingly popular refrain repeated at McCain rallies. More than just cheap gas, it’s our sovereignty at stake.

According to Rand, U.S. oil shale reserves represent three times that of Saudi Arabia. Yet, we would rather buy the oil from the Saudis, making them wealthy enough to buy large chunks of our corporations.

Only in America

Barclay’s Stock Plummets 13%: Party Time

Outrageous.

Last night on Italy’s Lake of Como, eighty Barclay’s bankers and clients gathered together in the storied Villa Erba to celebrate with their fiddles as Rome continued burning around them.  And while the paparazzi wary bankers spent two days and 700,000 Euros, the British Prime Minister traveled across Britain to sell his rescue package to hardworking British voters.

The bankers banned the paparazzi, but not the Greco di Tufo wine, ricotta stuffed ravioli, fillet of Brunello, apple pastry and chocolate mousse. Their sacrifice of the evening was to forgo a planned trip to La Scala, ostensibly due to the 13 percent of company value lost that day, but in reality, they wanted to avoid the aggressive paparazzi that would have been free to snap away in front of the legendary opera house.

It wasn’t just a once a year broker-client excursion. Just last week the oblivious bankers enjoyed a week in one of the Cote d’Azur’s finest hotels priced at around three thousand Euros per night.

The fury over the trips has little to do with class envy and everything to do with discretion. Hopefully, these Neros will be awakened to the reality of the global economic inferno, ignited by financial institutions like Barclay’s.

Global Financial Meltdown

How many more black Mondays, Tuesdays or Wednesdays are in store for the world markets? The quickie summit convened by the EU leadership over the weekend apparently inspired the same sort of confidence garnered by Paulson’s plan passed last Friday.

The U.S mortgage crisis and its resulting effect on European banks, combined with skepticism over Paulson’s plan of recovery, sent European markets tumbling. Russia and Italy were even forced to halt trading. According to Le Figaro, traders worry whether the price tag of Paulson’s plan was big enough.

As for their own plan? Reminding everyone why there hasn’t been meaningful progress in the adoption of a European Constitution, EU leaders failed to agree on a solution to the economic crisis.

From the Telegraph:

France, Germany, Italy and the UK could not agree on a single course of action because – as Mr Sarkozy effectively admitted in a characteristically irritable press conference performance – they all have different economic circumstances and needs. He described this as having “different cultures”, but it adds up to the same thing: France and Germany do not have property-owning traditions that produce house-price booms and busts, the UK population has much greater credit liabilities than the French, etc, etc.

Late Monday, the German government provided an additional 15 billion Euros in liquidity to the 35 billion already pledged to help the German lender Hypo Real Estate.

Elsewhere….

Saudi Arabia’s market, the Gulf’s largest, was off 9 percent. Dubai’s Financial Market fell almost 7 percent, its lowest fall since ’06, and Abu Dhabi’s index lost 5 percent.

The head of Al Dhafra Brokerage Vyas Jayabhanu, via UAE’s Gulf News, argued: “Uncertainty prevails despite the U.S. government passing the package, and there is this lingering fear that the $700 billion may not be enough.”

Israel’s TA-25 down 4.63%

Japan:

The Nikkei stock average tumbled 4.3 percent to a four-and-a-half-year closing low on Monday.

The Korea Exchange in Seoul, South Korea finished the day off 4.3 percent.

Singapore’s Straits Times Index was down nearly 4.9 percent in late-day trading and the Shanghai Composite fell about 5.2 percent. The Taiwan Weighted shed 4.1 percent.

The Australian Securities Exchange plunged about 3.4 percent to 4,544.70, and Hong Kong’s Hang Seng was off 4.7 percent of its value, falling to 16,853.85.

Russia’s Micex Index plunged 18 percent before trading was halted for a second time today.

Europe:

Germany’s DAX: Down 7.07%

Italy’s MIBTEL: Down 8.58%

France’s CAC: Down 9.04%

Sweden’s OMX: Down 7.24%

UK’s FTSE 100: Down 7.85%

With the crisis infecting global stock markets, it’s baffling why neither American Presidential candidate appears willing to blame government officials who fostered this failure through their social engineering and their belief that home-ownership is one of the inalienable rights guaranteed in the U.S. Constitution.

Perhaps the shock of looking at the big board and seeing the Dow off some 800 points on Monday will shock the leaders into dialogue, although I suspect one party is a bit more reluctant to discuss their role in the current fiasco.

Air-Fore

The coffee is different, and the plastic parmesan doesn’t remotely resemble the fresh cheese from what used to be my local Italian markets. After spending four years in Europe, filled with cappuccino and brioche breakfasts, shopping at the local Orlando market or eating at the nearest diner had become a bit more depressing.

Of course, there is more to life than food, even though people-watching at the mall reveals that many are still unaware of that truism. But at least I had come back to chicken fingers and Cracker Barrel. And hey, we Americans, well, we always have hot dogs. Wieners and cappuccino aside, my reality changed in Europe, and it allowed me to see everything differently. I had never noticed how big our portions were, how cheap our gas still is, and how common sense had either never been preached, or had made a mass American exodus.

There are so many examples of inanity, especially when government is involved, but one of my recent favorites concerns the Air Force and its golf course in Niceville.

My husband Riccardo recently played golf with a friend who lives near Eglin Air Force Base. During the round, Riccardo asked if he had played Eglin’s Eagle course recently.

“Can’t. It’s closed for green reconstruction. They can’t afford to send decent boots or armored Humvees to our troops in Iraq, but they can afford to ruin the best greens in the panhandle. And all because the members wanted them flatter.”

I decided to do a little checking, not about the boots or the Humvees, but about the golf course and its planned remodel. With a struggling economy and a very expensive war, it seemed unlikely that the government would be spending money to renovate a golf course.

My first step was a Google search. Nothing. Never had my search pages come up as empty. Next, posing as a college student writing a term paper on golf course construction, I phoned Eglin Golf Course and spoke to a couple of people. They confirmed that the renovation had begun on all eighteen greens, but when I asked how much the project would cost, they clammed up. Eventually, I was able to squeeze the name of the company responsible, but the budget—it was classified.

Luckily for me, I was able to reach a higher-up in the golf course design firm, and believing he was helping my research, he let loose with the embargoed info. The project was running upwards of $1.8 million. “Normally, the time frame is shorter,” he advised. “But the Air Force has rules about days and hours we’re not allowed to work. They also have consultants which has made the process lengthier.”

The Air Force has golf course consultants? Any guess as to how many other nations have golf course consulting as a part of their military program? And God bless our troops and retired military, but can’t they learn how to put on undulated greens?

I suppose some congressman snuck an ear mark in some farm bill, or perhaps they didn’t even try to hide it. It doesn’t matter. Almost two million dollars to fix a golf course that didn’t need fixing is just one of the many nonsensical decisions that appear more glaring and feel more frustrating, since my return from a place whose citizens can’t afford to neglect common sense.

No Mercy!

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Under normal circumstances I would be inclined to feel pity for the industry that has slowed the global economy and impacted thousands of families. Of course I’m talking about the mortgage companies. But in light of recent experiences, it is truly difficult to feel much sympathy.

A week ago, my mother, a real estate broker, showed a pre-foreclosure property, a two-year old townhouse located in a new development popular with presale flippers in Orlando, Florida. Aside from the few holes in the wall and rotten food left in the refrigerator by an angry foreclosee, the buyers loved it. They liked it so much that they instructed my mom to make an offer.

She called the listing agent and advised him that her clients were ready to make an offer on the townhouse.

 “Oh, it’s not in foreclosure yet and the lawyers for the bank don’t get paid unless it goes into foreclosure,” the agent responded.

“So, it’s useless they make an offer?” she asked.

“Pretty much”

If that weren’t bad enough…My next door neighbors are in the process of remodeling and is seeking out around 50k to make the improvements. They are half-way through their 30 year mortgage and their credit rating is in the high 800s which is phenomenal. Dawn, the one assigned to research their options, spoke with numerous brokers and none seem excited to give a fixed loan for a second mortgage. Instead, they are all trying to convince her to settle for an adjustable rate which is of course the type of mortgage that has greatly contributed to the crisis. They’ve also advised her to spend any excess money on a flat-screen TV or furniture, instead of paying back part of the principle. “It’s good for the economy” one agent told her.

The industry doesn’t seem humbled at all. They appear as greedy and foolish as ever.

Everything is Relative

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From Michigan to Florida, voters are anxious about the direction of the U.S. economy and how the downturn will affect their pocketbook. Their anxiety is understandable, but a proper perspective might dampen their increasing negativity.

 From today’s Italian newspaper (with the help of Google translator), Il Corriere Della Sera According to ISTAT, 14.6% of Italian families (one in seven) say they have a hard time at the end of the month to pay their bills. One out of ten have difficulty with the most essential expenses: bills, heating, and medical treatment, while 4.2% of families in Corsica had problems, at least once, to stock their refrigerator. The Istat survey was in 2006.” 

Americans face tough times, but in looking around the world, even in Western Europe, they still sit top the figurative list of world’s luckiest populations.