Mack Martinez, 19, of Cedar Rapids, Iowa, smokes in front of his tent at the tent city that sprung up next to the homeless shelter in downtown Reno, Nev., Wednesday, June 25, 2008. Martinez, who says he has never been more than two weeks without work, had a run of bad luck in Las Vegas before moving to Reno to look for work. He recently got a job with a traveling carnival group. From Seattle to Athens, Georgia, homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation. (AP Photo/Scott Sady)
From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.
RENO, Nev. - A few tents cropped up hard by the railroad tracks, pitched by men left with nowhere to go once the emergency winter shelter closed for the summer.
Then others appeared — people who had lost their jobs to the ailing economy, or newcomers who had moved to Reno for work and discovered no one was hiring.
Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless population. Like many other cities, Reno has found itself with a “tent city” — an encampment of people who had nowhere else to go.
From Seattle to Athens, Ga., homeless advocacy groups and city agencies are reporting the most visible rise in homeless encampments in a generation.
Nearly 61 percent of local and state homeless coalitions say they’ve experienced a rise in homelessness since the foreclosure crisis began in 2007, according to a report by the National Coalition for the Homeless. The group says the problem has worsened since the report’s release in April, with foreclosures mounting, gas and food prices rising and the job market tightening.
“It’s clear that poverty and homelessness have increased,” said Michael Stoops, acting executive director of the coalition. “The economy is in chaos, we’re in an unofficial recession and Americans are worried, from the homeless to the middle class, about their future.”
The phenomenon of encampments has caught advocacy groups somewhat by surprise, largely because of how quickly they have sprung up.
“What you’re seeing is encampments that I haven’t seen since the 80s,” said Paul Boden, executive director of the Western Regional Advocacy Project, an umbrella group for homeless advocacy organizations in Los Angeles, San Francisco, Oakland, Calif., Portland, Ore. and Seattle.
The relatively tony city of Santa Barbara has given over a parking lot to people who sleep in cars and vans. The city of Fresno, Calif., is trying to manage several proliferating tent cities, including an encampment where people have made shelters out of scrap wood. In Portland, Ore., and Seattle, homeless advocacy groups have paired with nonprofits or faith-based groups to manage tent cities as outdoor shelters. Other cities where tent cities have either appeared or expanded include include Chattanooga, Tenn., San Diego, and Columbus, Ohio.
The Department of Housing and Urban Development recently reported a 12 percent drop in homelessness nationally in two years, from about 754,000 in January 2005 to 666,000 in January 2007. But the 2007 numbers omitted people who previously had been considered homeless — such as those staying with relatives or friends or living in campgrounds or motel rooms for more than a week.
In addition, the housing and economic crisis began soon after HUD’s most recent data was compiled.
“The data predates the housing crisis,” said Brian Sullivan, a spokesman for HUD. “From the headlines, it might appear that the report is about yesterday. How is the housing situation affecting homelessness? That’s a great question. We’re still trying to get to that.”
In Seattle, which is experiencing a building boom and an influx of affluent professionals in neighborhoods the working class once owned, homeless encampments have been springing up — in remote places to avoid police sweeps.
“What’s happening in Seattle is what’s happening everywhere else — on steroids,” said Tim Harris, executive director of Real Change, an advocacy organization that publishes a weekly newspaper sold by homeless people.
Homeless people and their advocates have organized three tent cities at City Hall in recent months to call attention to the homeless and protest the sweeps — acts of militancy, said Harris, “that we really haven’t seen around homeless activism since the early ’90s.”
In Reno, officials decided to let the tent city be because shelters were already filled.
Officials don’t know how many homeless people are in Reno. “But we do know that the soup kitchens are serving hundreds more meals a day and that we have more people who are homeless than we can remember,” said Jodi Royal-Goodwin, the city’s redevelopment agency director.
Those in the tents have to register and are monitored weekly to see what progress they are making in finding jobs or real housing. They are provided times to take showers in the shelter, and told where to go for food and meals.
Sylvia Flynn, 51, came from northern California but lost a job almost immediately and then her apartment.
Since the cheapest motels here charge upward of $200 a week, Flynn ended up at the Reno women’s shelter, which has only 20 beds and a two-week limit on stays.
Out of a dozen people interviewed in the tent city, six had come to Reno from California or elsewhere over the last year, hoping for casino jobs.
“I figured this would be a great place for a job,” said Max Perez, a 19-year-old from Iowa. He couldn’t find one and ended up taking showers at the men’s shelter and sleeping in a pup tent barely big enough to cover his body.
The casinos are actually starting to lay off employees.
“Sometimes I think we need to put out an ad: ‘No, we don’t have any more jobs than you do,’” Royal-Goodwin said.
The city will shut down the tent city as soon as early October because the tents sit on what will be a parking lot for a complex of shelters and services for homeless people. The complex will include a men’s shelter, a women’s shelter, a family shelter and a resource center.
Reno officials aren’t sure whether the construction will eliminate the need for the tent city. The demand, they say, keeps growing.
BEIJING (Reuters) - Threatened by a “financial tsunami,” the world must consider building a financial order no longer dependent on the United States, a leading Chinese state newspaper said on Wednesday.
The commentary in the overseas edition of the People’s Daily said the collapse of Lehman Brothers Holdings Inc (LEH.P: Quote, Profile, Research, Stock Buzz) “may augur an even larger impending global ‘financial tsunami’.”
The People’s Daily is the official newspaper of China’s ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.
Its pronouncements do not necessarily directly reflect leadership views, but this commentary by a professor at Shanghai’s Tongji University suggested considerable official alarm at the strains buckling world financial markets.
China’s central bank earlier this week cut its lending rate for the first time in six years, a move analysts said was aimed at bolstering the economy and the battered stock market.
“The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States’ financial oversight and supervision,” writes the commentator, Shi Jianxun.
“The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”
But Vice Premier Wang Qishan, on a visit to the United States, told U.S. trade officials in a meeting on Tuesday that China and the United States needed to maintain close economic ties with global markets going through such turbulence.
“The Chinese government is well aware of the fact that the United States, which is the world’s largest developed country, and China, which is the world’s largest developing country, should have constructive and cooperative economic and trade relations,” he said.
China is a major buyer of U.S. Treasury bonds, and through its sovereign wealth fund it has taken stakes in two large U.S. financial institutions.
In July 2005, China revalued the yuan and freed it from a dollar peg to float within managed bands. But the yuan and China’s trade remains tightly linked to the fortunes of the dollar.
The commentary suggested China must brace for grave economic fallout and look to alternatives, saying the crisis brings to mind the Great Depression of the 1930s.
“Lehman Brothers announced bankruptcy will not only have a domino effect on the global financial world, it will bring a shock to the world economy,” the front-page comment stated.
(Reporting by Chris Buckley; Editing by Ken Wills)
Lingering hopes that the damage could be contained to a handful of financial institutions that made bad bets on mortgages have evaporated. New fault lines are emerging beyond the original problem — troubled subprime mortgages — in areas like credit-default swaps, the credit insurance contracts sold by American International Group Inc. and others. There’s also a growing sense of wariness about the health of trading partners.
The consequences for companies and chief executives who tarry — hoping for better times in which to raise capital, sell assets or acknowledge losses — are now clear and brutal, as falling share prices and fearful lenders send troubled companies into ever-deeper holes. This weekend, such a realization led John Thain to sell the century-old Merrill Lynch & Co. to Bank of America Corp. Each episode seems to bring government intervention that is more extensive and expensive than the previous one, and carries greater risk of unintended consequences.
Expectations for a quick end to the crisis are fading fast. “I think it’s going to last a lot longer than perhaps we would have anticipated,” Anne Mulcahy, chief executive of Xerox Corp., said Wednesday.
“This has been the worst financial crisis since the Great Depression. There is no question about it,” said Mark Gertler, a New York University economist who worked with fellow academic Ben Bernanke, now the Federal Reserve chairman, to explain how financial turmoil can infect the overall economy. “But at the same time we have the policy mechanisms in place fighting it, which is something we didn’t have during the Great Depression.”
Spreading Disease
The U.S. financial system resembles a patient in intensive care. The body is trying to fight off a disease that is spreading, and as it does so, the body convulses, settles for a time and then convulses again. The illness seems to be overwhelming the self-healing tendencies of markets. The doctors in charge are resorting to ever-more invasive treatment, and are now experimenting with remedies that have never before been applied. Fed Chairman Bernanke and Treasury Secretary Henry Paulson, walking into a hastily arranged meeting with congressional leaders Tuesday night to brief them on the government’s unprecedented rescue of AIG, looked like exhausted surgeons delivering grim news to the family.
Fed and Treasury officials have identified the disease. It’s called deleveraging, or the unwinding of debt. During the credit boom, financial institutions and American households took on too much debt. Between 2002 and 2006, household borrowing grew at an average annual rate of 11%, far outpacing overall economic growth. Borrowing by financial institutions grew by a 10% annualized rate. Now many of those borrowers can’t pay back the loans, a problem that is exacerbated by the collapse in housing prices. They need to reduce their dependence on borrowed money, a painful and drawn-out process that can choke off credit and economic growth.
At least three things need to happen to bring the deleveraging process to an end, and they’re hard to do at once. Financial institutions and others need to fess up to their mistakes by selling or writing down the value of distressed assets they bought with borrowed money. They need to pay off debt. Finally, they need to rebuild their capital cushions, which have been eroded by losses on those distressed assets.
But many of the distressed assets are hard to value and there are few if any buyers. Deleveraging also feeds on itself in a way that can create a downward spiral: Trying to sell assets pushes down the assets’ prices, which makes them harder to sell and leads firms to try to sell more assets. That, in turn, suppresses these firms’ share prices and makes it harder for them to sell new shares to raise capital. Mr. Bernanke, as an academic, dubbed this self-feeding loop a “financial accelerator.”
“Many of the CEO types weren’t willing…to take these losses, and say, ‘I accept the fact that I’m selling these way below fundamental value,’” said Anil Kashyap, a University of Chicago Business School economics professor. “The ones that had the biggest exposure, they’ve all died.”
Deleveraging started with securities tied to subprime mortgages, where defaults started rising rapidly in 2006. But the deleveraging process has now spread well beyond, to commercial real estate and auto loans to the short-term commitments on which investment banks rely to fund themselves. In the first quarter, financial-sector borrowing slowed to a 5.1% growth rate, about half of the average from 2002 to 2007. Household borrowing has slowed even more, to a 3.5% pace.
Not Enough
Goldman Sachs Group Inc. economist Jan Hatzius estimates that in the past year, financial institutions around the world have already written down $408 billion worth of assets and raised $367 billion worth of capital.
But that doesn’t appear to be enough. Every time financial firms and investors suggest that they’ve written assets down enough and raised enough new capital, a new wave of selling triggers a reevaluation, propelling the crisis into new territory. Residential mortgage losses alone could hit $636 billion by 2012, Goldman estimates, triggering widespread retrenchment in bank lending. That could shave 1.8 percentage points a year off economic growth in 2008 and 2009 — the equivalent of $250 billion in lost goods and services each year.
“This is a deleveraging like nothing we’ve ever seen before,” said Robert Glauber, now a professor of Harvard’s government and law schools who came to Washington in 1989 to help organize the savings and loan cleanup of the early 1990s. “The S&L losses to the government were small compared to this.”
Hedge funds could be among the next problem areas. Many rely on borrowed money to amplify their returns. With banks under pressure, many hedge funds are less able to borrow this money now, pressuring returns. Meanwhile, there are growing indications that fewer investors are shifting into hedge funds while others are pulling out. Fund investors are dealing with their own problems: Many have taken out loans to make their investments and are finding it more difficult now to borrow.
That all makes it likely that more hedge funds will shutter in the months ahead, forcing them to sell their investments, further weighing on the market.
Debt-driven financial traumas have a long history, from the Great Depression to the S&L crisis to the Asian financial crisis of the late 1990s. Neither economists nor policymakers have easy solutions. Cutting interest rates and writing stimulus checks to families can help — and may have prevented or delayed a deep recession. But, at least in this instance, they don’t suffice.
In such circumstances, governments almost invariably experiment with solutions with varying degrees of success. President Franklin Delano Roosevelt unleashed an alphabet soup of new agencies and a host of new regulations in the aftermath of the market crash of 1929. In the 1990s, Japan embarked on a decade of often-wasteful government spending to counter the aftereffects of a bursting bubble. President George H.W. Bush and Congress created the Resolution Trust Corp. to take and sell the assets of failed thrifts. Hong Kong’s free-market government went on a massive stock-buying spree in 1998, buying up shares of every company listed in the benchmark Hang Seng index. It ended up packaging them into an exchange-traded fund and making money.
As the sell-off in global markets continues, RCM’s CIO for Europe Neil Dwane believes the aftermath of Monday’s events will lead to the formation of a ‘new world order’, in which the remaining financial giants will flourish.
‘Merrills rushed into the arms of Bank of America (BoA) who last night shut down its investment banking operations admitting failure. Surely BoA will not indulge Merrills’ investment banking operations anywhere near to the extent that the old Merrills’ management had done?’ Dwane asks.
Dwane believes the key implication of the Fed’s decision not to facilitate the sale of Lehmans Brothers is that it shows that capacity is being removed from the markets, alongside the clear message that ‘policy will not bail out all investors and losers’.
‘Moral hazard is back and negligent Boards will find there to be no willing supplier of capital except on very onerous terms. The key messages of this weekend remain that capital remains scarce, leverage and accounting for the leveraged assets remains incomplete and inconsistent and a New World order is being born where financial behemoths are best placed,’ he says.
One of the key features of this ‘New World order’ will be increased regulation, transparency and risk control, according to Dwane. However, the CIO of the equity specialist of Allianz Global Investors is anxious that ‘investors remain complacent over the changes to come and the lower returns and earnings power of the sector in the future’.
“The tectonic plates beneath the world financial system are shifting, and there is going to be a new financial world order that will be born of this,” said Peter Kenny, managing director at Knight Capital Group Inc.
`Tectonic’ Market Shift as Lehman Fails, Merrill Sold
By Christine Harper
Sept. 15 (Bloomberg) — In the biggest reshaping of the financial industry since the Great Depression, two of Wall Street’s most storied firms, Merrill Lynch & Co. and Lehman Brothers Holdings Inc., headed toward extinction.
New York-based Lehman, founded 158 years ago, said early today that it filed for bankruptcy protection after failing to find a buyer. Merrill Lynch, 94 years old and also based in New York, agreed to sell itself to Bank of America Corp. for $50 billion in an emergency deal hashed out yesterday.
“The tectonic plates beneath the world financial system are shifting, and there is going to be a new financial world order that will be born of this,” said Peter Kenny, managing director at Knight Capital Group Inc., the Jersey City, New Jersey-based brokerage that handles about $1 trillion worth of stock transactions a quarter. “It’s an ugly and painful process.”
The engines that powered record growth in the financial industry over the past decade — cheap credit and surging property values — have been thrust into reverse. Companies that once thrived on making real estate loans and holding assets bought with borrowed money are now under siege, giving the upper hand to those less reliant on leverage and holding the fewest assets tied to property.
Bear, Fannie, Freddie
The industry convulsions that started last year have already eliminated Bear Stearns Cos., forced into a cut-price sale to JPMorgan Chase & Co. with government support in March. A week ago, the U.S. Treasury placed mortgage companies Fannie Mae and Freddie Mac into conservatorship, guaranteeing their widely held debt securities while all but erasing their equity value.
American International Group Inc., once the world’s largest insurer, is struggling to raise cash to avoid a credit-rating downgrade that could cripple its business. AIG shares fell as much as 52 percent in New York Stock Exchange composite trading today and were down $5.49, or 45 percent, to $6.65 at 10:50 a.m.
The five New York-based securities firms that dominated Wall Street have been reduced to two: Goldman Sachs Group Inc. and Morgan Stanley. While both firms are scheduled to report a drop in third-quarter earnings this year, their business has remained profitable throughout 2008 — unlike Lehman and Merrill. As concerns swirled about their futures, Goldman’s stock dropped as much as 7.9 percent and Morgan Stanley’s fell as much as 13 percent in New York Stock Exchange composite trading today.
`Ride This Out’
“I think highly of Morgan Stanley and Goldman Sachs, so I expect them to ride this out,” Evercore Partners Inc. Chief Executive Officer Roger Altman, a former deputy Treasury secretary who spent his early career at Lehman, said in an interview on CNBC. “But as to whether we’ve seen the last of this crisis, I think the answer to that is clearly no. And exactly where it goes from here and how it unfolds, I’m unsure.”
Lehman, which employed 25,935 people at the end of August in 61 offices around the world, had a balance sheet totaling $786 billion as recently as February. Merrill Lynch, with 60,000 employees, is known for its “thundering herd” of financial advisers that brought Wall Street financial products to Main Street investors.
`Vaporized’
“I’ve been on Wall Street for many years, and I’ve never seen a weekend like this one,” said Michael Holland, 64, chairman and founder of New York-based Holland & Co. “We are unwinding what has been years of silliness in the financial markets, and the silliness is being vaporized as we speak, unfortunately with the stock price of a number of companies involved in it.”
To help cushion the fallout, 10 banks created a $70 billion fund to lend to firms that are having trouble financing their assets in the markets. The Federal Reserve also said it will be willing to lend money in return for a wider array of collateral including stocks.
Still, the repercussions may be widespread.
Meredith Whitney, an analyst at Oppenheimer & Co., wrote in a note to investors that sales of Lehman’s assets will push down the value of securities, forcing other firms to write down their own holdings.
`Fundamentally Flawed’
Nouriel Roubini, an economics professor at New York University, said the independent securities firm model is “fundamentally flawed” and that every securities firm will need to combine with a bank to gain a deposit base and greater access to loans from the Federal Reserve.
Just five months ago, Lehman Brothers Chief Executive Officer Richard Fuld, 62, was telling shareholders that “the worst is behind us” in the credit contraction. As concerns escalated about the value of Lehman’s assets tied to residential and commercial real estate, Fuld replaced Chief Financial Officer Erin Callan and President Joseph Gregory in June.
Deteriorating markets put more pressure on the value of Lehman’s assets and the firm, unable to negotiate an investment from the Korea Development Bank, instead tried to reassure investors last week by revealing third-quarter results early and unveiling a plan to sell part of its fund management unit and create a separate unit for its real estate holdings.
Fuld’s efforts were undermined on Sept. 10, when Moody’s Investors Service put Lehman’s credit rating on review for downgrade, noting that the firm needed a “strategic transaction with a stronger financial partner” to help support its rating.
Stock Tumbles
Lehman’s stock fell 50 percent on Thursday, Sept. 11 and Friday, Sept. 12 and the collapse spread to Merrill, which has reported four consecutive quarters of losses and is expected to lose money again this quarter.
New York Federal Reserve President Timothy Geithner called a meeting of Wall Street’s top firms starting at the Fed’s downtown headquarters that began at 6 p.m. on Friday, with a goal of helping ease a sale of Lehman, according to people familiar with the situation.
The two banks most interested in Lehman, London-based Barclays Plc and Charlotte, North Carolina-based Bank of America, balked at a deal unless the government would protect it from any losses on some of the hardest-to-value assets. The government, already shaken by criticism of its actions to support Bear Stearns, Fannie Mae and Freddie Mac, refused to budge and tried to persuade the CEOs of the biggest Wall Street firms to pitch in instead.
Weekend Discussions
The talks lasted through the weekend, with groups of executives breaking off into smaller groups to discuss options and teams of traders examining positions at every major firm. Yesterday, Barclays, the U.K.’s third-biggest bank, dropped out, deciding it couldn’t agree on a deal so quickly without some type of protection from losses.
As hopes dimmed for salvaging Lehman, attention turned to the future of Merrill, Lehman’s bigger rival. That business, with its 16,690 financial advisers and almost half of fund manager BlackRock Inc., was more attractive to Bank of America than Lehman could be. Merrill CEO John Thain, persuaded by the weekend’s events that a deal was necessary to avoid a loss of confidence and a fate similar to Lehman’s, entered into negotiations with Bank of America’s Ken Lewis.
The liquidation of Lehman, last year’s top underwriter of bonds backed by mortgages, is an amplified version of investment bank Drexel Burnham Lambert Inc., which filed for bankruptcy in 1990. Drexel made its name financing corporate takeovers in the 1980s using junk bonds pushed by Michael Milken.
Keeping the Talent
Maintaining the confidence of the markets is only one of the challenges for an investment bank — the other is retaining employees, recalled Fred Joseph, Drexel’s CEO from 1985 to 1990.
“It’s an awfully good business, but the assets go down in the elevator every night,” said Joseph, 71. “Despite the tough times, the Street’s so small, everybody wants the really good guys.”
A key difference with Drexel is Lehman’s central role in the over-the-counter derivatives markets, which have ballooned to $454 trillion since Drexel was in business. A default by Lehman on its obligations in that market could cause chain reactions throughout the markets that have never before seen a major financial counterparty fail to honor its obligations.
“The implications of one of the `too big to fail’ institutions being allowed to fail is incredibly difficult to grasp, but suffice to say that a huge number of firms and securities are going to get affected,” said Michael Auyeung, who manages about $500 million as chief executive officer at Pacific Mutual Fund Bhd. in Petaling Jaya, Malaysia. “The reach of the carnage will be global and system-wide.”
Lehman’s collapse wipes out a company that had a market value of $45.5 billion in February 2007. Merrill’s sale to Bank of America for $29 a share, while about a 70 percent premium to Merrill’s value on Friday, compares with the company’s $86 billion market capitalization in January 2007.
“It’s breathtaking that we’ve gone from five standalone firms to two very quickly,” said Roy Smith, a finance professor at New York University’s Stern School of Business and a former partner at Goldman Sachs. “It’s certainly going to cause Wall Street to rethink the strategy.”
House prices are falling at the fastest rate since the Great Depression new figures show, with the number of home owners in negative equity trebling in the last month alone.
Figures released by Halifax, the country’s largest mortgage lender, showed that the average house price has slumped in value by 12.7 per cent since August last year – leaving the average price at just £174,178.
This represents a fall of more than £25,000 over the last year and is the fastest rate of decline since Halifax started collecting its monthly data in 1983.
However, leading City economists said that the housing market has never witnessed an annual fall of more than 10 per cent except for in 1931 – a year when Britain was hit by the aftermath of the Wall Street crash and sterling collapsed.
David Owen, chief European economist at investment bank Dresdner Kleinwort, said: “It is a major collapse. The last correction in house prices was around 20 per cent from peak to trough.
“What we are seeing in terms of declines at the moment – those sorts of falls are absolutely unprecedented, certainly in living memory, and you would have to go back to the 1930s to find anything similar.
“There is still not an awful lot of evidence of mass distress selling. If unemployment starts to rise and distress selling happens this will become very nasty indeed.”
With the fall taking average prices back to the level they were in March 2006, thousands of home owners now own a property worth less than when they bought it.
According to the credit rating agency Standards & Poor’s, the number of people in negative equity has now climbed to over 200,000 – a near trebling of the 70,000 it estimated at the end of July.
Negative equity is when a home owner ends up owning more on their mortgage than their house is worth, a situation that can cause serious problems – and ultimately repossession – if someone can no longer pay their mortgage or if they are forced to move home.
While the number of people currently in negative equity is well below the level hit in the early 1990s, when two million fell into that predicament, the speed of the deterioration has shocked many experts.
Standards & Poor’s predicts that this number is likely to rise towards 1.7 million, or even above, if house prices continue falling at their current rate.
Michael Saunders, chief UK economist, at the world’s largest bank Citigroup, pointed out that this year’s house price crash has happened far quicker and hit people more severely than the declines seen during the early 1990s.
“In the early 1990s, the peak-trough decline in house prices was 13.1 per cent, and this occurred over 74 months, from May 1989 to July 1995.
“Now, house prices are down 12.7 per cent already, in just 12 months.
“The message of economic weakness is clear.”
The rate of declines is causing turmoil for people trying to sell their house, according to leading estate agents, with buyers nervous about committing to buying a property that could be worth much less in a few months’ time.
Jeremy Leaf, a north London estate agent, and spokesperson for the Royal Institution of Chartered Surveyors, said: “People will carry on pulling out of deals until they are confident that we have hit the bottom.
“There’s just such a lack of confidence out there.”
Gazundering, where a buyer drops the price at the last moment, has made an unwelcome return to the property market.
Equally, some sellers are being shocked to discover that mortgage company valuers are valuing their properties at less than the price a buyer has agreed.
Jonathan Cornell, at mortgage brokers Hamptons, said: “Because there are so few property transactions happening at the moment, it’s getting very hard for valuers to put a value on any property.
“If the most recent house sold in a certain street was four months ago, well that was another world back then.”
The Bank of England failed to give any relief for homeowners by keeping rates on hold at 5 per cent, despite some leading economists calling for a cut in order to stimulate the deteriorating economy.
The housing market data from the Halifax helped push the FTSE 100 index of leading shares sharply lower, with the index closing 2.5 per cent lower, down 137.6 to 5,362.1.
Britain is in the grip of its worst economic crisis for 60 years, Alistair Darling has admitted.
The Chancellor of the Exchequer warns that the slump is going to be “more profound and long-lasting than people thought”.
In an astonishingly frank interview, Mr Darling admits that voters are “p***** off” with Labour and says the party must recover the “zeal” which won it three successive general elections.
Since taking up the post, Mr Darling is said to have faced a crisis “every week”, including the collapse of Northern Rock and the loss of millions of people’s personal details from HM revenue & Customs.
Such is the public concern over the economic crisis, Mr Darling said that he has been challenged while filling up his own car by motorists demanding to know how he intends to improve the situation.
A wine waiter also warned him from ordering a second bottle of wine during a restaurant meal, he reveals.
The Chancellor, who had been tipped for a move in a possible Cabinet reshuffle later in the Autumn, also candidly admits that he is “not a great politician.”
The article in The Guardian is a clear sign that Mr Darling is determined not to be blamed for Gordon Brown’s troubles.
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During the interview he claims people are trying to take his job and says they are “actively trying to do it,” a remark that will be widely interpreted as a sideswipe at the Prime Minister.
There have been clear tensions between the Treasury and Number 10 in recent months and many of his comments will be read with dismay in Downing Street.
Mr Darling makes clear that he was not the source of a story earlier this month that he might temporarily suspend stamp duty in order to stimulate the housing market. The leak - which the Treasury suspects came from Downing Street - backfired and led to accusations that the uncertainty caused had actually caused home sales to stall.
The Chancellor says he has spent all his political life trying to avoid “this kind of interview”. But his advisers have long claimed that he does not conform to his “boring” caricature and have chosen the eve of the new political season to improve his public image. However, many of his comments will be seized upon by his opponents.
Mr Darling says the economic times we are facing “are arguably the worst they have been in 60 years.” “And I think it’s going to be more profound and long-lasting than people thought,” he adds. Further evidence that Britain is on the brink of recession emerged this week.
A report into house prices showed they had dropped 10 per cent in the last month - the biggest drop in prices since 1990.
And on Thursday David Blanchflower, a member of the Bank of England monetary policy committee, warned unemployment would hit two million by Christmas. Mr Darling admits Labour - currently 19 points behind the Tories in the latest Telegraph opinion poll - is in trouble.
He says: “We’ve got our work cut out,” he said. “This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly.
“In the space of 10 months we’ve gone from a position where people generally felt we were doing ok to where we’re certainly not doing ok.
“We’ve got to rediscover that zeal which won us three elections, and that is a huge problem for us at the moment - people are p***** off with us.”
He adds: “I was at a filling station recently, and a chap said, ‘I know it’s to do with oil prices - but what are you going to do about it?’ People think, well surely you can do something - you are responsible - so of course it reflects on me.”
The Chancellor also said he heeded a warning from a waiter when out for dinner with friends recently not to have a second bottle of wine, seemingly because it would look like he was pushing the boat out while others were being forced to live more frugally.
A year on from the start of the credit crunch Mr Darling admits that the first time he really became aware of a problem was while on a Mediterranean holiday when he read a newspaper report about the European Central Bank ploughing billions of pounds into the money market.
In addition to the economic problems he has faced, Mr Darling also recalls the moment he discovered that millions of child benefit records contained on computer disks had been lost by the government.
“I just thought this is a disaster. This is terrible…I phoned Gordon up….We knew it was bad.”
He takes aims at two of Labour’s senior female figures, calling former Scottish leader Wendy Alexander “not likeable at all” and Cherie Blair’s memoirs “awful.”
And recalling the celebrations at the Millennium Dome - a project championed by New Labour - he says: ‘Thank God I didn’t have to go there on Millennium night.”
China’s National Audit Office also revealed that there had been “managerial irregularities” in the handling of a further £3 billion of government money.
Liu Jiayi, the auditor general, said 88 people had been arrested, prosecuted and sentenced, including 14 “top officials”.
The ten government agencies with the worst record included the education and trade ministries, the National Bureau of Statistics, the Tax Office and the State Radio, Film and Television administration.
More than £2 billion was found to have been “misspent” by the ministries, and problems included false accounting, under-reporting revenues and over-reporting costs.
Mr Liu also revealed that £1.8 million in disaster relief funds after the Sichuan earthquake in May had been embezzled in order to build government buildings.
However, the amount of looted money had fallen significantly from 2006 and 2005. In 2006, around £800 million had been embezzled by officials and there were far more prosecutions.
President Hu Jintao has called for a zero-tolerance approach to corruption and warned that it poses a threat to China’s government.
Last December a website started by the anti-corruption bureau crashed after just a day because it was overwhelmed by visitors logging on to register complaints.
Reports are already out in Mexico that the large number of illegal immigrants returning home could drive down wages and put pressure on social services — the same concerns many Americans have with illegals living and working in the U.S.
DALLAS — Illegal immigrants are returning home to Mexico in numbers not seen for decades — and the Mexican government may have to deal with a crush on its social services and lower wages once the immigrants arrive.
The Mexican Consulate’s office in Dallas is seeing increasing numbers of Mexican nationals requesting paperwork to go home for good, especially parents who want to know what documentation they’ll need to enroll their children in Mexican schools.
“Those numbers have increased percentage-wise tremendously,” said Enrique Hubbard, the Mexican consul general in Dallas. “In fact, it’s almost 100 percent more this year than it was the previous two years.”
The illegal immigrant population in the U.S. has dropped 11 percent since August of last year, according to the Center for Immigration Studies. Its research shows 1.3 million illegal immigrants have returned to their home countries.
Some say illegal immigrants are leaving because a soft economy has led to fewer jobs, causing many laborers to seek work elsewhere.
Others argue that a tough stance on immigration through law enforcement has spread fear throughout the illegal population.
“There’s no question there’s a variety of suggestions that people are in fact returning,” said Mark Krikorian, executive director of the Center for Immigration Studies. “Remittances, which is the money immigrants send home to Mexico, have gone down dramatically over the past year. Again, probably part the economy, but also part enforcement, leading to fewer people being here.”
Advocates for immigrants are disturbed by the trend. Albert Ruiz, an organizer for the League of United Latin American Citizens, agrees that more undocumented immigrants are going home — but says families are being torn apart in the process.
If a father is deported, Ruiz says, his family members in America are forced either to fend for themselves or follow him to a country where they’ve never even lived.
“So the mother is saying we should return home with the breadwinner of the family to Mexico, and the children are saying, I don’t want to leave, I’m a U.S. citizen, I don’t know that country,” said Ruiz.
Mexican President Felipe Calderon plans to help returning nationals by providing food, medical care and temporary shelter if needed. But reports are already out in Mexico that the large number of illegal immigrants returning home could drive down wages and put pressure on social services — the same concerns many Americans have with illegals living and working in the U.S.
HM King Bhumibol Adulyadej the Great, center left, and Queen Sirikit, center right, pose with the visiting representatives of 25 royal houses from Europe, Africa, the Middle East and Thailand’s Asian neighbors in the elaborate century-old high-ceilinged Ananda Samakhom Throne Hall in Bangkok Monday, June 12, 2006. (Photo: Chiangmai Mail)
“As a group, the world’s 15 richest royals have increased their total wealth to 131 billion dollars, up from 95 billion last year,” Forbes said on its website.
NEW YORK (AFP) — With a fortune estimated at 35 billion dollars, Thailand’s King Bhumibol Adulyadej is the world’s richest royal sovereign, and oil-rich Sheikh Khalifa Bin Zayed Al Nahyan of Abu Dhabi is far back at No. 2, Forbes magazine reported Thursday.
King Bhumibol, 80 and, at 62 years on the throne the world’s longest-serving head of state, pushed to the top of the richest royals list by virtue a greater transparency surrounding his fortune, Forbes said.
It said that the Crown Property Bureau, which manages most of his family’s wealth, “granted unprecedented access this year, revealing vast landholdings, including 3,493 acres in Bangkok.”
Forbes called it a good year for monarchies, investment-wise. “As a group, the world’s 15 richest royals have increased their total wealth to 131 billion dollars, up from 95 billion last year,” Forbes said on its website.
With oil prices soaring, the monarchs of the petro-kingdoms of the Middle East and Asia dominate the list.
Sheik Khalifa, 60, the current president of the United Arab Emirates, was estimated to be worth 23 billion dollars, on the back of Abu Dhabi’s huge petroleum reserves.
In third was the sovereign of the world’s biggest oil exporter, Saudi Arabia. King Abdullah bin Abdul Aziz, 84, who inherited the Al-Saud family throne in 2005, came in with a fortune of 21 billion dollars.
The previous king of kings, wealth-wise, 62 year old Sultan Haji Hassanal Bolkiah of tiny, oil-endowed Brunei on the Southeast Asia island of Borneo, fell to fourth place with 20 billion dollars.
“The sultan, who inherited the riches of an unbroken 600-year-old Muslim dynasty, has had to cut back on his country’s oil production because of depleting reserves,” Forbes explained of his dwindling fortune.
Fifth was Sheikh Mohammed bin Rashid, 58, of another Emirate, Dubai, with a net worth of 18 billion dollars.
One of two Europeans on the list, Prince Hans-Adam II of Liechtenstein, 63, ranked six on the list with 5 billion dollars in wealth. However the bank that is a key source of his family’s wealth, LGT, is under investigation by the United States for helping wealthy people evade taxes.
Qatar’s Sheikh Hamad bin Khalifa Al Thani, 56, came in at seventh, worth two billion dollar; eighth was King Mohammed VI of Morocco, 46, his 1.5 billion dollar fortune based on phosphate mining, agriculture and other investments.
Number nine was Prince Albert II of Monaco, 50, his diverse fortune in the southern European principality put at 1.4 billion dollars.
Tenth on the list was Sultan Qaboos bin Said of Oman, 67, worth 1.1 billion dollars.
Rounding out the top 15 were: The Aga Khan Prince Karim Al Hussein, 71 (1.0 billion); Britain’s Queen Elizabeth II, 82, 650 million dollars; Kuwait’s Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, 79, 500 million dollars; Queen Beatrix Wilhelmina Armgard of the Netherlands, 70, 300 million dollars; and King Mswati III of Swaziland, 40, with 200 million dollars.
Forbes noted that because many of the royals inherited their wealth, share it with extended families, and often control it “in trust for their nation or territory,” none of those on its list would qualify for the magazine’s famous annual world billionaires ranking.
“Because of technical and idiosyncratic oddities in the exact relationship between individual and state wealth, these estimates are perforce a blend of art and science,” it added.
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Facts about King Bhumibol Adulyadej
Former US president George Bush (L) talks with Thai King Bhumibol Adulyadej (2L) while Barbara Bush (2R) and Thai Queen Sirikit (R) look on during dinner at Palace in Bangkok, 11 December 2006. Former US president George Bush had an audience with Thailand’s King Bhumibol Adulyadej, who marked his 60th anniversary on the throne. (Photo: HO/AFP/Getty Images)
“Bhumibol has manipulated Thai politics to a degree far beyond his constitutional power. As a traditional conservative force he has hindered the democratic development of his country.”
- Serhat Unaldi, in Modern Monarchs: A Comparison of the Democratic Roles of Thailand’s Bhumibol Adulyad and Juan Carlos of Spain
Having reigned since June 9, 1946, he is the world’s longest-serving current head of state and the longest-serving monarch in Thai history.
Reported to be the richest man in the world… He is immensely popular in Thailand, and is revered as a semi-divine figure by the Thais.
Bhumibol was born at the Mount Auburn Hospital in Cambridge, Massachusetts, in the United States. Bhumibol finished his primary schooling at Mater Dei school in Bangkok and then left with his family in 1933 for Switzerland, where he received his secondary education at the École Nouvelle de la Suisse Romande in Chailly-sur-Lausanne. He received the baccalauréat des lettres (high-school diploma with major in French literature, Latin, and Greek) from the Gymnase Classique Cantonal of Lausanne. He was studying science at the University of Lausanne when his elder brother, Phra Ong Chao Ananda Mahidol, was crowned King of Thailand in 1935. King Ananda Mahidol then elevated his brother and sister to Chao Fa status, the most senior class of the Thai princes and princesses. They came to Thailand briefly in 1938, but returned to Switzerland for further study in Lausanne, remaining there until the end of World War II in 1945.
Sarit Dhanarajata era
Sarit Dhanarajata seized power, and two hours later Bhumibol imposed the martial law throughout the Kingdom. Bhumibol issued a Royal Command appointing Sarit as “Military Defender of the Capital” without anyone countersigning this Royal Command. The said Royal Command contained the following matters:
“The military under the leadership of Field Marshal Sarit Dhanarajata has successfully took over the administrative power and is acting as the Military Defender of the Capital. I, therefor, appointed Field Marshal Sarit Dhanarajata as Military Defender of the Capital. All the people are requested to remain calm while all public servants are to follow the Orders issued by Field Marshal Sarit Dhanarajat. Henceforth onwards”.
During Sarit’s dictatorship, the monarchy was revitalised. Bhumibol attended public ceremonies, toured the provinces and patronised development projects. Under Sarit, the practice of crawling in front of royalty during audiences, banned by King Chulalongkorn, was revived…
The CPB spearheaded a plan to turn Bangkok’s historical Rajadamnoen Avenue into a shopping street known as the “Champs-Élysées of Asia” and in 2007, shocked longtime residents of traditional marketplace districts by giving them eviction notices. Bhumibol’s substantial income from the CPB, at least five billion baht in 2004 alone, is exempt from taxes. The CPB receives many state privileges. Although the Ministry of Finance technically runs the CPB, in reality the decisions are made by Bhumibol.The CPB’s annual report is for the eyes of Bhumibol alone.
Although Bhumibol is held in great respect by many Thais, he is also protected by lèse majesté laws which allow critics to be jailed for three to 15 years. The laws were toughened during the dictatorship of royalist Premier Tanin Kraivixien, such that criticism of any member of the royal family, the royal development projects, the royal institution, the Chakri Dynasty, or any previous Thai King was also banned.
The publicity materials at the Yale University Press website originally described the book as telling “the unexpected story of (King Bhumibol Adulyadej’s) life and 60-year rule — how a Western-raised boy came to be seen by his people as a living Buddha, and how a king widely seen as beneficent and apolitical could in fact be so deeply political, autocratic, and even brutal… Blasting apart the widely accepted image of the king as egalitarian and virtuous, Handley convincingly portrays an anti-democratic monarch who, together with allies in big business and the murderous, corrupt Thai military, has protected a centuries-old, barely modified feudal dynasty.”
The New York Times noted that the book “presents a direct counterpoint to years of methodical royal image-making that projects a king beyond politics, a man of peace, good works and Buddhist humility.” McCargo praised Handley’s “understanding of Bhumibol as a political actor, as the primary architect of a lifelong project to transform an unpopular and marginalized monarchical institution—on the verge of abolition more than once—into the single most powerful component of the modern Thai state.” McCargo also praised Handley’s “brilliantly intuitive grasp of the seedy interplay between money and power,” regarding the workings of the Crown Property Bureau.
Thailand: Factbook on Global Sexual Exploitation
Around 80,000 women and children have been sold into Thailand’s sex idustry since 1990, with most coming from Burma, China’s Yunan province and Laos. Trafficked children were also found on construction sites and in sweatshops. In 1996, almost 200,000 foreign children, mostly boys from Burma, Laos and Cambodia, were thought to be working in Thailand. (Mahidol University’s Institute of Population and Social Research, “Trafficking of children on the rise,” Bangkok Post, 22 July 1998)
Enforced disappearances a blight on Thailand
Thailand is a democracy, or so we claim, but we have yet to face the uglier side of our society - the forced disappearances that have been occurring throughout Thailand. The Working Group on Justice for Peace (WGJP) has compiled 90 cases of disappearances throughout Thailand, six of which took place last year. It is interesting to note that Kalasin, one of the poorest provinces in Thailand, has the highest number of reported cases of disappearances, violations of human rights and extrajudicial killings. The police force in the province systematically abuses its powers with impunity. Each year, hilltribes suffer at the hands of security forces. For instance, the Lahu hilltribes in Chiang Mai’s Fang district reported 15 disappearances. Most of the cases occurred between 2003 and 2004, and the main perpetrators were said to have been members of paramilitary forces. There has not been any progress in these cases. Although the Constitution and the penal code carry punishments for those who carry out enforced disappearances through random or other means, they contain no provisions to punish the perpetrators when a disappearance is the result of dark political forces at work.
Thai State Crimes
Thailand’s King Bhumibol is a traitor
The role of King Bhumibol in the most recent and the other coups in the past in Thailand is highly questionable to me. He never really defended democracy. Because he obviously is anti-democratic if you look a little deeper. He always supported the Military or at least kept quiet when they staged another coup. Would the military ever even stage a coup without the prior approval of King Bhumibol? They for sure consult him before each coup. Bhumibol never disagrees, condems or even publicly calls for resistance in case of any of the past coups. Bhumibol, you are a traitor. Shame on you.
Who Owns the World
The hidden facts behind landownership King Bhumibol of Thailand third biggest landowner with 126 million acres
Land ownership is an increasingly topical subject that affects us all in one way or another. Kevin Cahill’s book Who Owns the World provides an in depth and informative resource on the subject, no matter where you live on the planet.
Child prostitution, trafficking, and sex slavery in Thailand
Recent International Labor Organization research suggests a speculative figure of 12,000 children per year being trafficked for sexual exploitation in South East Asia, mostly to Thailand. Thai non-governmental organisations and the Thai government estimate that 30,000 to 40,000 prostitutes are under 18. A proportion of prostitutes over the age of 18, including foreign nationals from Asia and Europe, are also in a state of forced sexual servitude and slavery.
Royal book ban stirs debate in Thailand
Thailand’s banning of a rare “warts and all” biography of revered King Bhumibol Adulyadej could risk an eventual explosion of pent-up political tension, an academic says. “Banning books is usually something we associate with fascist and repressive regimes,” Australian anthropologist Annette Hamilton told a seminar on the book The King Never Smiles at an international Thai studies conference in Bangkok on Thursday.
Thailand’s military junta tightens its hold on power
The Thai military junta strengthened its grip over the weekend by appointing a retired general as the new “civilian” prime minister and imposing an authoritarian constitution that sanctions the September 19 coup. King Bhumibol Adulyadej, who supported the military takeover, approved the arrangements.
