From Reuters
Democrats complain Colombia has not done enough to stop violence against trade unionist and they want changes in Panama's tax haven laws and labor regime.
Midwestern lawmakers, including some Republicans, are unhappy with auto provisions of the Korean agreement they say fail to tear down barriers that keep American cars out.
U.S. trade officials also met recently with Ford Motor Co (F.N) President Alan Mulally, whose company is the loudest industry opponent of the Korean pact.
U.S. Wheat farmers -- reliant on exports for half their sales -- said they were anxious for the Colombia pact to pass, noting Canada will soon ratify a similar deal, which would give it a leg up in that market.
Obama said in his State of the Union Address that he wants to double U.S. exports in 5 years, supposedly supporting some 2 million jobs within the U.S. Trade pacts with Colombia, Panama, and South Korea have historically been blocked by Democratic party opposition. Obama's remarks are meant to real in Republican interests to help support other Obama initiatives such as health care reform.
But Daniel Price, a lawyer at Sidley Austin and former White House adviser to George W. Bush, said many would be "puzzled" by Obama's failure to explicitly urge approval of the deals and instead only call for stronger trade ties.
If Obama were to actually push these deals through Congress, he would risk dividing the Democratic party, many of whom have been against such negotiations since they began during the Bush administration. These Democrats blame the North American Free Trade Agreement (NAFTA) of the early 1990s and China's entry into the World Trade Organization in 2001 for the loss of millions of US manufacturing jobs.
Thursday, January 28, 2010
Monday, January 25, 2010
Housing Update
"We have shamelessly borrowed from our children. And we used it, we didn't invest it. That's the picture we're in," said Ben Verwaayen, Chief Executive of Alcatel-Lucent.
FT.com reports
The Obama administration agreed just before Christmas to offer an unlimited credit extension to Fannie Mae (FNM) and Freddie Mac (FRE) for the next three years, lifting a cap that was at $200 billion for each company.
The $8,000 credit tax reward for purchases of new homes will end in April, after it was already set to expire in November.
The argument for the extension of government stimulus in the housing sector is the growing pressures of defaults on mortgages due to the 10% unemployment rate. There are concerns that foreclosures could top the 2009 level of 2.8 million. The 2009 levels were 21% greater than 2008. These figures would have been worse without the aid of Obama's Home Affordable Modification Program.
Repossessed homes, however, were up only 1.1% from 2008, driven primarily by short-term factors such as trial loan modifications, state legislation extending the foreclosure process, and an overwhelming inventory volume, reports James Saccacio CEO of RealtyTrac.
It is unclear whether these modifications have only forestalled the inevitable foreclosures to come while filings peaked in July of 2009 and declined the following 4 months.
The Fed has been buying up mortgage-backed securities, which reduces mortgage rates by 25 to 75 basis points. 30-year mortgages are at 4.98% for the week ended Jan. 28, the lowest rate in decades. Mortgage rates are also linked to yields on Treasuries and MBOs.
Most of the loan modifications are temporary which leaves economists pessimistic about the future of the housing market.
The four states with the most foreclosure filings -- California, Florida, Arizona and Illinois -- accounted for a full 50% of the nation's properties receiving notices.
Most forecasts predict price declines in 2010, from 3% up.
Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%.
The stabilization of home prices, which started in October 2009, can be attributed to the low mortgage interest rates and the first-time homebuyers tax credit.
The three primary reasons why home prices are expected to fall once again are:
1. The second wave of home foreclosures
2. Rising interest rates
3. The end of the tax credits
Strategic defaults are also expected to rise as the value of home prices fall and people will walk away realizing that the value of the home dips below the value they owe.
Peter Schiff, president of Euro Pacific Capital, says that home prices (now down 29% from their peak) are only half way to the bottom.
FT.com reports
The Obama administration agreed just before Christmas to offer an unlimited credit extension to Fannie Mae (FNM) and Freddie Mac (FRE) for the next three years, lifting a cap that was at $200 billion for each company.
The $8,000 credit tax reward for purchases of new homes will end in April, after it was already set to expire in November.
The argument for the extension of government stimulus in the housing sector is the growing pressures of defaults on mortgages due to the 10% unemployment rate. There are concerns that foreclosures could top the 2009 level of 2.8 million. The 2009 levels were 21% greater than 2008. These figures would have been worse without the aid of Obama's Home Affordable Modification Program.
Repossessed homes, however, were up only 1.1% from 2008, driven primarily by short-term factors such as trial loan modifications, state legislation extending the foreclosure process, and an overwhelming inventory volume, reports James Saccacio CEO of RealtyTrac.
It is unclear whether these modifications have only forestalled the inevitable foreclosures to come while filings peaked in July of 2009 and declined the following 4 months.
The Fed has been buying up mortgage-backed securities, which reduces mortgage rates by 25 to 75 basis points. 30-year mortgages are at 4.98% for the week ended Jan. 28, the lowest rate in decades. Mortgage rates are also linked to yields on Treasuries and MBOs.
Most of the loan modifications are temporary which leaves economists pessimistic about the future of the housing market.
The four states with the most foreclosure filings -- California, Florida, Arizona and Illinois -- accounted for a full 50% of the nation's properties receiving notices.
Most forecasts predict price declines in 2010, from 3% up.
Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%.
The stabilization of home prices, which started in October 2009, can be attributed to the low mortgage interest rates and the first-time homebuyers tax credit.
The three primary reasons why home prices are expected to fall once again are:
1. The second wave of home foreclosures
2. Rising interest rates
3. The end of the tax credits
Strategic defaults are also expected to rise as the value of home prices fall and people will walk away realizing that the value of the home dips below the value they owe.
Peter Schiff, president of Euro Pacific Capital, says that home prices (now down 29% from their peak) are only half way to the bottom.
Wednesday, December 30, 2009
Little overview of quantitative easing
SO I can't remember where I got this material so don't sue me. I will Italics it for whoever came out with the ideas.
Quantitative Easing: used to increase the money supply by buying government securities or other securities from the market. [Investopedia]
Q: What will happen to the government securities once rates increas? Once the economy recovers and stocks increase?
Quantitative easing will flood financial institutions with capital in an effort to promote increased lending and liquidity. Central banks tend to use quantitative easing when interest rates have already been lowered to near 0% levels and have failed to produce the desired effect.
The major risk of quantitative easing is that although more money is floating around, there is still a fixed amount of goods for sale. This will eventually lead to higher prices or inflation.
So this expansionary monetary policy that is happening in key global economies of the US, China, Japan, and Europe will place increased pressure on the output gap (Actual output - potential output). BUY! is the message that central banks are stating worldwide, yet the only to-do shopping lists seem to be focused around commodities, bonds, stocks, and emerging market economies. INVESTMENTS have recovered but not the fundamental consumer piece that fuels the economy. Gilts, for example, are bonds issued by the governments of the UK, South Africa, or Ireland. 2/3 of gilts are held by insurance companies and pension funds.
In 2009, large quantities of filts have been purchased by the Bank of England under its policy of quantitative easing.
In essense, this represents a benign facade of investor enthusiasm in the markets, fueled by taxpayers (government securities bought by the government!?) and insurance. Insurance, on an industry outlook worldwide view, will experience very healthy returns some of the biggest players lost over 100 million euros due to record defaults this past year. Healthy premiums and a heightened need for security will raise revenues and defaults will be stagnant for the next few years. So they are in a stable position to purchase these securities without taking on additional debt.
Quantitative Easing: used to increase the money supply by buying government securities or other securities from the market. [Investopedia]
Q: What will happen to the government securities once rates increas? Once the economy recovers and stocks increase?
Quantitative easing will flood financial institutions with capital in an effort to promote increased lending and liquidity. Central banks tend to use quantitative easing when interest rates have already been lowered to near 0% levels and have failed to produce the desired effect.
The major risk of quantitative easing is that although more money is floating around, there is still a fixed amount of goods for sale. This will eventually lead to higher prices or inflation.
So this expansionary monetary policy that is happening in key global economies of the US, China, Japan, and Europe will place increased pressure on the output gap (Actual output - potential output). BUY! is the message that central banks are stating worldwide, yet the only to-do shopping lists seem to be focused around commodities, bonds, stocks, and emerging market economies. INVESTMENTS have recovered but not the fundamental consumer piece that fuels the economy. Gilts, for example, are bonds issued by the governments of the UK, South Africa, or Ireland. 2/3 of gilts are held by insurance companies and pension funds.
In 2009, large quantities of filts have been purchased by the Bank of England under its policy of quantitative easing.
In essense, this represents a benign facade of investor enthusiasm in the markets, fueled by taxpayers (government securities bought by the government!?) and insurance. Insurance, on an industry outlook worldwide view, will experience very healthy returns some of the biggest players lost over 100 million euros due to record defaults this past year. Healthy premiums and a heightened need for security will raise revenues and defaults will be stagnant for the next few years. So they are in a stable position to purchase these securities without taking on additional debt.
Don't cut corners with your supplier
Another excerpt from John Wiley Spiers' "How Small Business Trades Worldwide" (2001)
Another way suppliers can cut corners to make up the loss of revenue is to ship you defective goods. Normally, if your order is for, say, 2,000 pieces, they would make 2,200 pieces, sort out the defectives, and ship you 2,000 excellent items. (The other 200 pieces they can sell to some poor fool who comes from the United States and says, "do you have something cool I can sell and make a killing?") But if you squeeze the supplier on price, they might make you 2,000 pieces, ship you 2,000 pieces, and you can pay the freight, taxes (duty) on the defectives and have to sort them out yourself.
The bottom line is that you must never deny the supplier just compensation for his efforts.
Another way suppliers can cut corners to make up the loss of revenue is to ship you defective goods. Normally, if your order is for, say, 2,000 pieces, they would make 2,200 pieces, sort out the defectives, and ship you 2,000 excellent items. (The other 200 pieces they can sell to some poor fool who comes from the United States and says, "do you have something cool I can sell and make a killing?") But if you squeeze the supplier on price, they might make you 2,000 pieces, ship you 2,000 pieces, and you can pay the freight, taxes (duty) on the defectives and have to sort them out yourself.
The bottom line is that you must never deny the supplier just compensation for his efforts.
Business meeting at Dinner
More stuff from John Wiley Spiers' "How Small Business Trades Worldwide" (2001).
Quick Lesson: Organize around the opportunity, not a resource.
So say you find an overseas supplier and they wish to meet with you in your homeland.
If "the feel" is right, move into the bar after dinner to discuss the business, and if appropriate, hammer out agreements on the ten points mentioned next.
As the waitroid is seating you and your guest(s) at a table in the bar excuse yourself and say you will join them in a minute. When your guests are out of earshot, instruct the bartender that whenever you order a gin and tonic, the bartender is to pour you only the tonic. And whatever your guests order, the bartender is to make them doubles. Then return to your guests, order drinks, and get down to the serious business of hammering out some solid business agreements. (This is precisely what they will do to you overseas).
Quick Lesson: Organize around the opportunity, not a resource.
So say you find an overseas supplier and they wish to meet with you in your homeland.
If "the feel" is right, move into the bar after dinner to discuss the business, and if appropriate, hammer out agreements on the ten points mentioned next.
As the waitroid is seating you and your guest(s) at a table in the bar excuse yourself and say you will join them in a minute. When your guests are out of earshot, instruct the bartender that whenever you order a gin and tonic, the bartender is to pour you only the tonic. And whatever your guests order, the bartender is to make them doubles. Then return to your guests, order drinks, and get down to the serious business of hammering out some solid business agreements. (This is precisely what they will do to you overseas).
The Innovator/conservator paradigm.
Here are some interesting excerpts from John Wiley Spiers' "How Small Business Trades Worldwide" (2001).
The Innovator/conservator paradigm.
In 1976, Apple introduced the personal computer to the marketplace. Jobs and Wozniak, Apple's founders, have a letter from executives turning their idea down when they offered it to Hewlett Packard. IBM certainly had the capital and technological resources to introduce a personal computer that year if they had wanted to do so. But in 1976 there was no interest, and [Peter F.] Drucker explains why: no mainstream conservator company is going to risk his 9-5, weekends free, country club membership, good salary, health insurance and pension plan on a risky venture.
After innovation such as a personal computer does gain popularity, the the conservators step in, as IBM did, with their version of the PC [1981]. And when they moved in, they took the lion's share of the PC market. But this is a very important point to remember: IBM did not introduce the PC until 1981. As fiercely competitive as the computer business is, Apple was virtually alone in the market for five years!
After IBM stole the lion's share of the PC market, the then-new Macintosh line assured the survival of Apple Computer.
Never bother "protecting" your ideas as an innovator. Worry about the customer's needs.
The Innovator/conservator paradigm.
In 1976, Apple introduced the personal computer to the marketplace. Jobs and Wozniak, Apple's founders, have a letter from executives turning their idea down when they offered it to Hewlett Packard. IBM certainly had the capital and technological resources to introduce a personal computer that year if they had wanted to do so. But in 1976 there was no interest, and [Peter F.] Drucker explains why: no mainstream conservator company is going to risk his 9-5, weekends free, country club membership, good salary, health insurance and pension plan on a risky venture.
After innovation such as a personal computer does gain popularity, the the conservators step in, as IBM did, with their version of the PC [1981]. And when they moved in, they took the lion's share of the PC market. But this is a very important point to remember: IBM did not introduce the PC until 1981. As fiercely competitive as the computer business is, Apple was virtually alone in the market for five years!
After IBM stole the lion's share of the PC market, the then-new Macintosh line assured the survival of Apple Computer.
Never bother "protecting" your ideas as an innovator. Worry about the customer's needs.
Monday, December 21, 2009
Healthcare Bill
From Reuters.
"The impact of this vote will long outlive this one frantic, snowy weekend in Washington," Republican Senate leader Mitch McConnell said. "This legislation will reshape our nation, and Americans have already issued their verdict -- they don't want it."
"What the American people ought to pray is that someone can't make the vote tonight," Republican Senator Tom Coburn said beforehand. Democrats control 60 votes, the exact number needed to overcome united Republican opposition.
The Senate bill would require most Americans to have insurance, extend coverage to 30 million uninsured Americans and provide subsidies to help some pay for it.
Also included is an increase in the bill's Medicare payroll tax from 0.5 percent to 0.9 percent on income over $200,000 for individuals and $250,000 for couples.
"The impact of this vote will long outlive this one frantic, snowy weekend in Washington," Republican Senate leader Mitch McConnell said. "This legislation will reshape our nation, and Americans have already issued their verdict -- they don't want it."
"What the American people ought to pray is that someone can't make the vote tonight," Republican Senator Tom Coburn said beforehand. Democrats control 60 votes, the exact number needed to overcome united Republican opposition.
The Senate bill would require most Americans to have insurance, extend coverage to 30 million uninsured Americans and provide subsidies to help some pay for it.
Also included is an increase in the bill's Medicare payroll tax from 0.5 percent to 0.9 percent on income over $200,000 for individuals and $250,000 for couples.
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