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(news from thestar online. Picture from Wikipedia)
Tuesday, December 30, 2008
Saturday, December 27, 2008
America Hooked on Drugs
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December 26, 2008
Chinese Savings Helped Inflate American Bubble
By MARK LANDLER
“Usually it’s the rich country lending to the poor. This time, it’s the poor country lending to the rich.”
— Niall Ferguson
WASHINGTON — In March 2005, a low-key Princeton economist who had become a Federal Reserve governor coined a novel theory to explain the growing tendency of Americans to borrow from foreigners, particularly the Chinese, to finance their heavy spending.
The problem, he said, was not that Americans spend too much, but that foreigners save too much. The Chinese have piled up so much excess savings that they lend money to the United States at low rates, underwriting American consumption.
This colossal credit cycle could not last forever, he said. But in a global economy, the transfer of Chinese money to America was a market phenomenon that would take years, even a decade, to work itself out. For now, he said, “we probably have little choice except to be patient.”
Today, the dependence of the United States on Chinese money looks less benign. And the economist who proposed the theory, Ben S. Bernanke, is dealing with the consequences, having been promoted to chairman of the Fed in 2006, as these cross-border money flows were reaching stratospheric levels.
In the past decade, China has invested upward of $1 trillion, mostly earnings from manufacturing exports, into American government bonds and government-backed mortgage debt. That has lowered interest rates and helped fuel a historic consumption binge and housing bubble in the United States.
China, some economists say, lulled American consumers, and their leaders, into complacency about their spendthrift ways.
“This was a blinking red light,” said Kenneth S. Rogoff, a professor of economics at Harvard and a former chief economist at the International Monetary Fund. “We should have reacted to it.”
In hindsight, many economists say, the United States should have recognized that borrowing from abroad for consumption and deficit spending at home was not a formula for economic success. Even as that weakness is becoming more widely recognized, however, the United States is likely to be more addicted than ever to foreign creditors to finance record government spending to revive the broken economy.
To be sure, there were few ready remedies. Some critics argue that the United States could have pushed Beijing harder to abandon its policy of keeping the value of its currency weak — a policy that made its exports less expensive and helped turn it into the world’s leading manufacturing power. If China had allowed its currency to float according to market demand in the past decade, its export growth probably would have moderated. And it would not have acquired the same vast hoard of dollars to invest abroad.
Others say the Federal Reserve and the Treasury Department should have seen the Chinese lending for what it was: a giant stimulus to the American economy, not unlike interest rate cuts by the Fed. These critics say the Fed under Alan Greenspan contributed to the creation of the housing bubble by leaving interest rates too low for too long, even as Chinese investment further stoked an easy-money economy. The Fed should have cut interest rates less in the middle of this decade, they say, and started raising them sooner, to help reduce speculation in real estate.
Today, with the wreckage around him, Mr. Bernanke said he regretted that more was not done to regulate financial institutions and mortgage providers, which might have prevented the flood of investment, including that from China, from being so badly used. But the Fed’s role in regulation is limited to banks. And stricter regulation by itself would not have been enough, he insisted.
“Achieving a better balance of international capital flows early on could have significantly reduced the risks to the financial system,” Mr. Bernanke said in an interview in his office overlooking the Washington Mall.
“However,” he continued, “this could only have been done through international cooperation, not by the United States alone. The problem was recognized, but sufficient international cooperation was not forthcoming.”
The inaction was because of a range of factors, political and economic. By the yardsticks that appeared to matter most — prosperity and growth — the relationship between China and the United States also seemed to be paying off for both countries. Neither had a strong incentive to break an addiction: China to strong export growth and financial stability; the United States to cheap imports and low-cost foreign loans.
In Washington, China was treated as a threat by some people, but mostly because it lured away manufacturing jobs. Others argued that China’s heavy lending to this country was risky because Chinese leaders could decide to withdraw money at a moment’s notice, creating a panicky run on the dollar.
Mr. Bernanke viewed such international investment flows through a different lens. He argued that Chinese invested savings abroad because consumers in China did not have enough confidence to spend. Changing that situation would take years, and did not amount to a pressing problem for the Americans.
“The global savings glut story did us a collective disservice,” said Edwin M. Truman, a former Fed and Treasury official. “It created the idea that the world was doing it to us and we couldn’t do anything about it.”
But Mr. Bernanke’s theory fit the prevailing hands-off, pro-market ideology of recent years. Mr. Greenspan and the Bush administration treated the record American trade deficit and heavy foreign borrowing as an abstract threat, not an urgent problem.
Mr. Bernanke, after he took charge of the Fed, warned that the imbalances between the countries were growing more serious. By then, however, it was too late to do much about them. And the White House still regarded imbalances as an arcane subject best left to economists.
By itself, money from China is not a bad thing. As American officials like to note, it speaks to the attractiveness of the United States as a destination for foreign investment. In the 19th century, the United States built its railroads with capital borrowed from the British.
In the past decade, China arguably enabled an American boom. Low-cost Chinese goods helped keep a lid on inflation, while the flood of Chinese investment helped the government finance mortgages and a public debt of close to $11 trillion.
But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.
“Nobody wanted to get off this drug,” said Senator Lindsey Graham, the South Carolina Republican who pushed legislation to punish China by imposing stiff tariffs. “Their drug was an endless line of customers for made-in-China products. Our drug was the Chinese products and cash.”
Mr. Graham said he understood the addiction: he was speaking by phone from a Wal-Mart store in Anderson, S.C., where he was Christmas shopping in aisles lined with items from China.
A New Economic Dance
The United States has been here before. In the 1980s, it ran heavy trade deficits with Japan, which...
...
An Embrace That Won’t Let Go
For China, too, this crisis has been a time of reckoning. Americans are buying fewer Chinese DVD players and microwave ovens. Trade is collapsing, and thousands of workers are losing their jobs. Chinese leaders are terrified of social unrest.
Having allowed the renminbi to rise a little after 2005, the Chinese government is now under intense pressure domestically to reverse course and depreciate it. China’s fortunes remain tethered to those of the United States. And the reverse is equally true.
In a glassed-in room in a nondescript office building in Washington, the Treasury conducts nearly daily auctions of billions of dollars’ worth of government bonds. An old Army helmet sits on a shelf: as a lark, Treasury officials have been known to strap it on while they monitor incoming bids.
For the past five years, China has been one of the most prolific bidders. It holds $652 billion in Treasury debt, up from $459 billion a year ago. Add in its Fannie Mae bonds and other holdings, and analysts figure China owns $1 of every $10 of America’s public debt.
The Treasury is conducting more auctions than ever to finance its $700 billion bailout of the banks. Still more will be needed to pay for the incoming Obama administration’s stimulus package. The United States, economists say, will depend on the Chinese to keep buying that debt, perpetuating the American habit.
Even so, Mr. Paulson said he viewed the debate over global imbalances as hopelessly academic. He expressed doubt that Mr. Bernanke or anyone else could have solved the problem as it was germinating.
“One lesson that I have clearly learned,” said Mr. Paulson, sitting beneath his Chinese watercolor. “You don’t get dramatic change, or reform, or action unless there is a crisis.”
(complete story at nytimes.com)
==================================================
December 26, 2008
Chinese Savings Helped Inflate American Bubble
By MARK LANDLER
“Usually it’s the rich country lending to the poor. This time, it’s the poor country lending to the rich.”
— Niall Ferguson
WASHINGTON — In March 2005, a low-key Princeton economist who had become a Federal Reserve governor coined a novel theory to explain the growing tendency of Americans to borrow from foreigners, particularly the Chinese, to finance their heavy spending.
The problem, he said, was not that Americans spend too much, but that foreigners save too much. The Chinese have piled up so much excess savings that they lend money to the United States at low rates, underwriting American consumption.
This colossal credit cycle could not last forever, he said. But in a global economy, the transfer of Chinese money to America was a market phenomenon that would take years, even a decade, to work itself out. For now, he said, “we probably have little choice except to be patient.”
Today, the dependence of the United States on Chinese money looks less benign. And the economist who proposed the theory, Ben S. Bernanke, is dealing with the consequences, having been promoted to chairman of the Fed in 2006, as these cross-border money flows were reaching stratospheric levels.
In the past decade, China has invested upward of $1 trillion, mostly earnings from manufacturing exports, into American government bonds and government-backed mortgage debt. That has lowered interest rates and helped fuel a historic consumption binge and housing bubble in the United States.
China, some economists say, lulled American consumers, and their leaders, into complacency about their spendthrift ways.
“This was a blinking red light,” said Kenneth S. Rogoff, a professor of economics at Harvard and a former chief economist at the International Monetary Fund. “We should have reacted to it.”In hindsight, many economists say, the United States should have recognized that borrowing from abroad for consumption and deficit spending at home was not a formula for economic success. Even as that weakness is becoming more widely recognized, however, the United States is likely to be more addicted than ever to foreign creditors to finance record government spending to revive the broken economy.
To be sure, there were few ready remedies. Some critics argue that the United States could have pushed Beijing harder to abandon its policy of keeping the value of its currency weak — a policy that made its exports less expensive and helped turn it into the world’s leading manufacturing power. If China had allowed its currency to float according to market demand in the past decade, its export growth probably would have moderated. And it would not have acquired the same vast hoard of dollars to invest abroad.
Others say the Federal Reserve and the Treasury Department should have seen the Chinese lending for what it was: a giant stimulus to the American economy, not unlike interest rate cuts by the Fed. These critics say the Fed under Alan Greenspan contributed to the creation of the housing bubble by leaving interest rates too low for too long, even as Chinese investment further stoked an easy-money economy. The Fed should have cut interest rates less in the middle of this decade, they say, and started raising them sooner, to help reduce speculation in real estate.
Today, with the wreckage around him, Mr. Bernanke said he regretted that more was not done to regulate financial institutions and mortgage providers, which might have prevented the flood of investment, including that from China, from being so badly used. But the Fed’s role in regulation is limited to banks. And stricter regulation by itself would not have been enough, he insisted.
“Achieving a better balance of international capital flows early on could have significantly reduced the risks to the financial system,” Mr. Bernanke said in an interview in his office overlooking the Washington Mall.“However,” he continued, “this could only have been done through international cooperation, not by the United States alone. The problem was recognized, but sufficient international cooperation was not forthcoming.”
The inaction was because of a range of factors, political and economic. By the yardsticks that appeared to matter most — prosperity and growth — the relationship between China and the United States also seemed to be paying off for both countries. Neither had a strong incentive to break an addiction: China to strong export growth and financial stability; the United States to cheap imports and low-cost foreign loans.
In Washington, China was treated as a threat by some people, but mostly because it lured away manufacturing jobs. Others argued that China’s heavy lending to this country was risky because Chinese leaders could decide to withdraw money at a moment’s notice, creating a panicky run on the dollar.
Mr. Bernanke viewed such international investment flows through a different lens. He argued that Chinese invested savings abroad because consumers in China did not have enough confidence to spend. Changing that situation would take years, and did not amount to a pressing problem for the Americans.
“The global savings glut story did us a collective disservice,” said Edwin M. Truman, a former Fed and Treasury official. “It created the idea that the world was doing it to us and we couldn’t do anything about it.”
But Mr. Bernanke’s theory fit the prevailing hands-off, pro-market ideology of recent years. Mr. Greenspan and the Bush administration treated the record American trade deficit and heavy foreign borrowing as an abstract threat, not an urgent problem.
Mr. Bernanke, after he took charge of the Fed, warned that the imbalances between the countries were growing more serious. By then, however, it was too late to do much about them. And the White House still regarded imbalances as an arcane subject best left to economists.
By itself, money from China is not a bad thing. As American officials like to note, it speaks to the attractiveness of the United States as a destination for foreign investment. In the 19th century, the United States built its railroads with capital borrowed from the British.
In the past decade, China arguably enabled an American boom. Low-cost Chinese goods helped keep a lid on inflation, while the flood of Chinese investment helped the government finance mortgages and a public debt of close to $11 trillion.
But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.
“Nobody wanted to get off this drug,” said Senator Lindsey Graham, the South Carolina Republican who pushed legislation to punish China by imposing stiff tariffs. “Their drug was an endless line of customers for made-in-China products. Our drug was the Chinese products and cash.”
Mr. Graham said he understood the addiction: he was speaking by phone from a Wal-Mart store in Anderson, S.C., where he was Christmas shopping in aisles lined with items from China.
A New Economic Dance
The United States has been here before. In the 1980s, it ran heavy trade deficits with Japan, which...
...
An Embrace That Won’t Let Go
For China, too, this crisis has been a time of reckoning. Americans are buying fewer Chinese DVD players and microwave ovens. Trade is collapsing, and thousands of workers are losing their jobs. Chinese leaders are terrified of social unrest.
Having allowed the renminbi to rise a little after 2005, the Chinese government is now under intense pressure domestically to reverse course and depreciate it. China’s fortunes remain tethered to those of the United States. And the reverse is equally true.
In a glassed-in room in a nondescript office building in Washington, the Treasury conducts nearly daily auctions of billions of dollars’ worth of government bonds. An old Army helmet sits on a shelf: as a lark, Treasury officials have been known to strap it on while they monitor incoming bids.
For the past five years, China has been one of the most prolific bidders. It holds $652 billion in Treasury debt, up from $459 billion a year ago. Add in its Fannie Mae bonds and other holdings, and analysts figure China owns $1 of every $10 of America’s public debt.
The Treasury is conducting more auctions than ever to finance its $700 billion bailout of the banks. Still more will be needed to pay for the incoming Obama administration’s stimulus package. The United States, economists say, will depend on the Chinese to keep buying that debt, perpetuating the American habit.
Even so, Mr. Paulson said he viewed the debate over global imbalances as hopelessly academic. He expressed doubt that Mr. Bernanke or anyone else could have solved the problem as it was germinating.
“One lesson that I have clearly learned,” said Mr. Paulson, sitting beneath his Chinese watercolor. “You don’t get dramatic change, or reform, or action unless there is a crisis.”
(complete story at nytimes.com)
==================================================
Sunday, December 21, 2008
One Cock Color
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IS there any difference between Madoff's 50 Billion Dollar Ponzi scheme and the Trillion Dollar Wall Steet Robbery ? This Nobel Laureate thinks they are pretty much "One Cock Color"!
----------------------------------------------------
December 19, 2008
Op-Ed Columnist
The Madoff Economy
By PAUL KRUGMAN
The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.
Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.
But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.
Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
O.K., maybe my example wasn’t hypothetical after all.
So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.
We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.
But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.
At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.
After all, that’s why so many people trusted Mr. Madoff.
Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.
Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.
But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.
Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
O.K., maybe my example wasn’t hypothetical after all.
So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.
We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.
But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.
At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.
Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.
After all, that’s why so many people trusted Mr. Madoff.
Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.
(Source: nytimes.com)
==================================
Friday, December 19, 2008
Recession Hits Sinkapor
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Rolex appeal fades as recession blues hit Singapore
By Melanie Lee Melanie Lee
Tue Dec 16, 2:05 am ET
SINGAPORE (Reuters Life!) – Suffering from recession blues and looking to offload that new Rolex watch?
Don't turn to us, say second-hand luxury stores in
Singapore, who are being swamped with requests from people desperate to sell their luxury goods.
Traditionally resilient during times of economic downturn, more than 70 second hand shops in the city-state are feeling the chill of recession, as the appetite for expensive goods has fallen sharply despite big discounts.
"Rolex prices have been like a reliable currency in the past, but there are signs that even Rolex is hit by this recession wave," said Ngo Han, an avid watch collector.
"New Rolexes are selling at much lower prices than before and that has trickled down to the second-hand market," Ngo said.
Home to the highest density of millionaires in the world, Singapore is a wealth management center and a shopping destination for the region's wealthy.
UNAFFORDABLE LUXURIES
Second-hand stores that stock luxury goods, such as brand name bags and flatscreen televisions, experienced a boom in the past few years, as rising incomes and the need to upgrade to keep up with fast-changing fashions created a fertile secondary market for designer wares.
But with the city-state becoming the first Asian country to slip into recession this year, customers are changing their habits.
Where once they would have bought Rolexes or Patek Philippes that can cost over S$10,000, (about $6,775), they now opt for models that cost under S$5,000, (about $3,390), shop owners said.
"Business has gone down about 20 to 30 percent. The interest to buy watches is still there, but whether people can afford to buy is another thing," said Alvin Lye of Monster-Time.
His online store, http://www.monster-time.com, carries second hand watches from Breitling, Audemars Piguet, Cartier and Longines.
During lunch hour in Singapore's financial district, people fill up May Fong's second-hand luxury bag store, but few are buying, even with many of the bags going at a 50 percent discount.
"There is definitely a drop in business. People are more conscious (of their) spending, even if it's a bargain," Fong said.
TEMPORARY SETBACKS?
Shops that rent, rather than sell, designer goods, are however reporting a spike in rentals despite the recession, suggesting some locals are still keen to get glamorous goods, albeit temporarily.
"New bags are leased out within seconds (of being) posted on the website," ex-policeman Tan Ho Ching, who rents out designer bags for about S$125 a week via his online store http://www.thatbagiwant.com, told local press on Sunday.
The recession's impact on workers whose salaries are commission-based, such as property agents, could be a likely explanation for the drop-off in sales.
"These people tend to earn much more during the boom times, and they are also likely to make up a significant portion of the consumers for these luxury goods," said Alvin Liew, an economist with Standard Chartered in Singapore.
However, some watch enthusiasts said they were holding onto their horological investments, keen to turn a profit once the recession lifts.
A recent Reuters poll said Singapore would be the worst performing emerging Asian economy next year, but would see a recovery together with the rest of the region in 2010 [ID:nHKG10473].
"Watches are better to keep and are better than cash in a recession. They won't drop in value, and after a recession, the value is still there or more," said collector Yeo on online watch forum http://www.swx.com.sg.
(source: yahoo! news)
Rolex appeal fades as recession blues hit Singapore
By Melanie Lee Melanie Lee
Tue Dec 16, 2:05 am ET
SINGAPORE (Reuters Life!) – Suffering from recession blues and looking to offload that new Rolex watch?
Don't turn to us, say second-hand luxury stores in
Singapore, who are being swamped with requests from people desperate to sell their luxury goods.Traditionally resilient during times of economic downturn, more than 70 second hand shops in the city-state are feeling the chill of recession, as the appetite for expensive goods has fallen sharply despite big discounts.
"Rolex prices have been like a reliable currency in the past, but there are signs that even Rolex is hit by this recession wave," said Ngo Han, an avid watch collector.
"New Rolexes are selling at much lower prices than before and that has trickled down to the second-hand market," Ngo said.
Home to the highest density of millionaires in the world, Singapore is a wealth management center and a shopping destination for the region's wealthy.
UNAFFORDABLE LUXURIES
Second-hand stores that stock luxury goods, such as brand name bags and flatscreen televisions, experienced a boom in the past few years, as rising incomes and the need to upgrade to keep up with fast-changing fashions created a fertile secondary market for designer wares.But with the city-state becoming the first Asian country to slip into recession this year, customers are changing their habits.
Where once they would have bought Rolexes or Patek Philippes that can cost over S$10,000, (about $6,775), they now opt for models that cost under S$5,000, (about $3,390), shop owners said.
"Business has gone down about 20 to 30 percent. The interest to buy watches is still there, but whether people can afford to buy is another thing," said Alvin Lye of Monster-Time.
His online store, http://www.monster-time.com, carries second hand watches from Breitling, Audemars Piguet, Cartier and Longines.
During lunch hour in Singapore's financial district, people fill up May Fong's second-hand luxury bag store, but few are buying, even with many of the bags going at a 50 percent discount.
"There is definitely a drop in business. People are more conscious (of their) spending, even if it's a bargain," Fong said.
TEMPORARY SETBACKS?
Shops that rent, rather than sell, designer goods, are however reporting a spike in rentals despite the recession, suggesting some locals are still keen to get glamorous goods, albeit temporarily."New bags are leased out within seconds (of being) posted on the website," ex-policeman Tan Ho Ching, who rents out designer bags for about S$125 a week via his online store http://www.thatbagiwant.com, told local press on Sunday.
The recession's impact on workers whose salaries are commission-based, such as property agents, could be a likely explanation for the drop-off in sales.
"These people tend to earn much more during the boom times, and they are also likely to make up a significant portion of the consumers for these luxury goods," said Alvin Liew, an economist with Standard Chartered in Singapore.
However, some watch enthusiasts said they were holding onto their horological investments, keen to turn a profit once the recession lifts.A recent Reuters poll said Singapore would be the worst performing emerging Asian economy next year, but would see a recovery together with the rest of the region in 2010 [ID:nHKG10473].
"Watches are better to keep and are better than cash in a recession. They won't drop in value, and after a recession, the value is still there or more," said collector Yeo on online watch forum http://www.swx.com.sg.
(source: yahoo! news)
Wednesday, December 17, 2008
tOXIC sTORY mADE eASY
-
A couple of simplified visual presentations of the toxic debt story.
The Mortgage Banking Meltdown
Understanding the financial crisis
A couple of simplified visual presentations of the toxic debt story.
The Mortgage Banking Meltdown
Understanding the financial crisis
Tuesday, December 16, 2008
Monday, December 15, 2008
"the American Dream"
George Carlin on "the American Dream"
==============================================
Wednesday, December 10, 2008
Wednesday, December 3, 2008
Right to Humour
Sarkozy voodoo doll wins 'right to humor' in courtFriday, November 28, 2008
PARIS: Amid deepening economic gloom, the tale of the voodoo doll of Nicolas Sarkozy has provided some needed light relief for the French.
Twice, the French president asked the courts to ban the sale of a figurine made in his image. On Friday, an appeals court dealt him the latest rebuff: not only can the doll remain on sale, but the judges ordered that it be sold with a bright-red banner on the packaging entitled "Judicial Injunction" and a warning that sticking needles into the doll affronts Sarkozy's dignity.So far, Sarkozy's actions in court have had the apparently unintended consequence of turning the voodoo doll into something of a cult item. The actions Friday may give another boost to its popularity.
The doll's light-blue body, which comes with a set of 12 needles and a manual explaining how to put a curse on the president, also features some of Sarkozy's best-known quotes and gaffes: "Work more to earn more" reads one quote, a slogan from Sarkozy's presidential campaign. "Get lost, you poor jerk," reads another, a swipe Sarkozy took at a bystander at a farm fair who refused to shake his hand.In keeping with the often meticulous nature of French officialdom, the ruling Friday was very specific. The distributor of the dolls, K&B Editions, was ordered to write the notice that will be distributed with the doll in black block-lettering and it must say exactly this: "It was ruled that the encouragement of the reader to poke the doll that comes with the needles in the kit, an activity whose subtext is physical harm, even if it is symbolic, constitutes an attack on the dignity of the person of Mr. Sarkozy."
The court also awarded the president a symbolic euro in damages and ordered K&B Editions to pay the equivalent of about $2,000 in legal costs.
But the court also stuck to the initial ruling by a lower court last month: "The demanded ban is disproportionate," the judges ruled, "in that it is a measure that would compromise freedom of expression." The earlier ruling had already argued that the case fell under what it dubbed "the right to humor."
Thierry Herzog, a lawyer for Sarkozy, appeared to indicate on Friday that the president was satisfied with the ruling and that he would not appeal a second time. "The important thing is that consistent principles and jurisprudence should be applied," Herzog said.In asking for a ban, Herzog had argued that the president owns the right to his image and that the doll could provoke violence against him. It was Sarkozy's sixth lawsuit this year, and the first time that a sitting French president has lost a court case dealing with the country's strict privacy laws.
Sarkozy is not the only public person whose voodoo doll is on sale. K&B Editions has sold similar figurines in the image of Ségolène Royal, Sarkozy's Socialist rival for the presidency last year. Other dolls represent President George W. Bush and Senator Hillary Clinton.
According to K&B Editions, the initial 20,000 Sarkozy dolls that went on sale on Oct. 9 sold out by Oct. 28. Another 20,000 will be delivered to newsagents from mid-December, this time with the court-ordered label.
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