News of the finance

Chris Edwards, executive director of the Downtown Windsor BIA, speaks with the Department about Speed Dating for Store Owners

Adam (left), Charday (centre), and Said (right), three members of the partnership operating Drunkin' Burrito (419 Ouellette Avenue)

Ming Shen, owner and chef, of Mandarin House (331 Ouellette Avenue)

We’ve completed three interviews so far today. The first was with Victor a financial adviser with TD, the second with Said one member of the partnership operating Drunkin’ Burrito and finally with Ming from Mandarin House.  We’re grateful to each of these individuals for taking the time to speak with us.

Victor came highly recommended to us by a store owner we interviewed yesterday. Our conversation focused on the role of the bank in supporting new and growing business ventures through lending money. We asked them how best to approach a bank. His advice was as follows: approach them with a fully researched business plan that communicates a clear vision for your business, including awareness of market trends, and your competition, as well as honest financial projections. Victor also said that a prospective business owners’ personal and financial history are taken into consideration. If this new venture doesn’t appear as a logical transition (to the bank) in your life, identify strategic partnerships that can be bring in that missing experience to the project. All past credit is taken into consideration for your application. He suggested canceling any credit cards you aren’t using, and if there are multiple cards to cancel them at the same time opposed to over a period of time. We closed the interview by asking him what his definition of success was. He simply stated that success is not a coincidence.

More compelling headlines in commercial real estate indicate several of the largest banks are assuming and preparing for a return of the CMBS market, both US based and foreign.  The reasoning:

“These lenders are beginning to make and warehouse loans because they believe that securitization has become viable again, although tentative, and will certainly be a preferred outlet for them to raise additional capital,” said John Lyons, US head of Savills He added that his firm was raising about $1.5 billion in financing on behalf of his domestic and foreign clients.

Click HERE to read the full NYTimes.com story.

watch out – Citi could have a big run up!!!

This drive to make money, has epitomised what the first 10 years have been about. The richer have become richer. The poor, poorer. Children are living on the poverty line. Families only just making ends meet. This in a so called developed nation – the first world?! Financial insitutions have brought the country to near bankruptcy. But who is accountable? Who has been been brought to account? No-one. They continue to play the same game. The lure of money and the associated trappings are all to great. Capitalism uncontrolled.

RSI is positive – stochastics are really positive – MACD is positive – over the last year when all of these were in sync, there have been gains of 40-60% over 4-8 weeks !!!!!

A share sale at Agricultural Bank of China – set to be the world’s biggest initial public offering (IPO) – begins in Hong Kong…. From BBC News. Full story

Selasa, 29/06/2010 15:44:42 WIB
Aksa Mahmud: Kredit macet di BPD perlu haircut
Oleh: M. Noor Korompot

MAKASSAR (Bisnis.com): Anggota Dewan Perwakilan Daerah (DPD) Sulawei Selatan (Sulsel) Aksa Mahmud meminta jika Menteri Keuangan berencana melakukan amandemen Undang-undang No 49 tahun 1960 tentang urusan piutang negara sebaiknya memasukkan juga kredit macet yang ada di Bank Pembangunan Daerah (BPD).

“Nasabah kredit macet di BPD seluruh Indonesia yang berpotensi mendapatkan fasilitas pemotongan utang pokok [haircut] jumlahnya cukup banyak dan mereka adalah kelompok usaha kecil menengah. Mereka juga butuh kebijakan yang sama dengan pengusaha yang menjadi debitur bank pemerintah lain [BUMN],” kata Aksa kepada Bisnis.com, hari ini.

Menurut dia, pembahasan soal rencana amandemen Undang-undang No. 49 tahun 1960 akan memberikan dampak positif terhadap iklim usaha perbankan nasional khususnya bank BUMN, dan termasuk adalah BPD karena dengan adanya perubahan kebijakan tersebut semua kredit macet yang sudah tidak tertagih akan dihapus bukukan dari laporan keuangan bank-bank tersebut.

Aksa mengatakan rencana Menkeu sebaiknya segera dibawa ke DPR sehingga mendapat legitimasi yang kuat dari parlemen. “Proses amandemen UU No.49 tahun 1960 ini tidak akan memakan waktu yang lama sebab tujuannya sudah jelas adalah memperbaiki kembali neraca keuangan sejumlah BUMN yang terbebani piutang lama dan lukuiditasnya lebih kuat.

Kebijakan haircut, lanjut Aksa, sebenarnya bukan barang baru karena bank-bank swasta nasional sudah melaksanakan hal tersebut. Sebaliknya bank BUMN dan BPD tidak bisa menghapus kredit macet yang sudah tidak tertagih lagi karena UU menyatakan bahwa hal tersebut harus dicatat dalam neraca keuangannya.

Karena itu, lanjut dia, jangan heran jika kredit bermasalah di bank BUMN ataupun BPD tetap menumpuk. “Pada hal riwayat kredit macet ini sudah puluhan tahun dengan kasus yang bermacam-macam dan debiturnya kemungkinan ada yang sudah tidak memiliki kegiatan atau sudah meninggal dunia,” paparnya.

Ada ketidakpastian

Aksa yang juga pendirik kelompok usaha Bosowa ini mengatakan bahwa selama ini ada ketidakpastian soal penyelesaian kredit macet yang dimiliki bank BUMN. Sebab, lanjut dia, dalam Peraturan Pemerintah (PP) Nomor 33/2006 tentang Tata Cara Penghapusan Piutang Negara yang merupakan revisi dari PP No. 14/2005 memang tak cukup kuat bagi bankir BUMN untuk berani, misalnya, melakukan hair cut atas kredit macet yang dimilikinya.

Apa yang dialami oleh bank-bank BUMN, juga berlaku BPD) sebab menurut menurut Undang-Undang (UU) No. 17/2003 tentang Keuangan Negara, kedudukan bank BUMN dan BPD adalah sama karena merupakan bagian keuangan negara.

Dengan demikian, katanya, perlakuan yang dialami bank BUMN, sesungguhnya berlaku pula di BPD. “Jadi jika keleluasaan melakukan haircut akan dimiliki bank BUMN, maka BPD harus memiliki hak yang sama. “Kita harus meletakan kedudukan BUMN dan BPD sama karena UU Keuangan Negara menyatakan dua lembaga ini kedudukanya sama.(ln)

coastal at vancouvercondo.info 27 Jun 2010 5:43 pm -

“I know a couple who were forced into buying a couple of years back cause “daddy knew best” and he co-signed and coughed up the downpayment as they work low level jobs. The suite in the basement idea never worked out cause they kept getting assholes for renters and they had to put their kids in an illegal daycare to save money. They can’t sell cause daddy will lose his cash and they’re stuck paying most of their income to the mortgage.”

Markets were dealt a double whammy resulting in a broad global equity and commodities sell off, and a jump in equity and FX volatility. The risk asset selling began following the news that the Conference Board revised its leading economic indicator for China to reveal a 0.3% gain in April compared to 1.7% increase initially reported earlier.

Given that this indicator has not been a market mover in the past it is difficult to see how it had such a big impact on the market but the fact that the release came at a time when the mood was already downbeat gave a further excuse to sell.

The damage to markets was exacerbated by a much steeper drop than forecast in US consumer confidence, with the index falling to 52.9 in June, almost 10 points lower than the consensus expectation. Consumer confidence remains at a relatively low level in the US, another reason to believe that the US economy will grow at a sub-par pace.

Renewed economic and job market worries were attributable for the fall in confidence, with an in increase in those reporting jobs as “hard to get” supporting the view of a below consensus outcome for June non-farm payrolls on Friday. Further clues will be derived from the June ADP jobs report today for which the consensus is looking for a 60k increase.

A run of weaker than forecast US data releases over recent weeks have resulted in a softening in the Fed’s tone as revealed in the last FOMC statement as well as a fears of a double-dip recession. There will not be any good news today either, with the June Chicago PMI index set to have recorded a slight decline in June, albeit from a high level.

There will also be attention on the release of the US Congressional Budget Office (CBO) 10-year budget outlook, which will put some focus back on burgeoning US fiscal deficit and relative (to Europe) lack of action to rectify it.

European worries remain a key contributor to the market’s angst, with plenty of nervousness about the repayment of EUR 442 billion in 12-month borrowing to the ECB. Demand for 3-month money today will give clues to the extent of funding issues in European banks given that the 12-month cash will not be rolled over.

Elevated risk aversion will keep most risk currencies under pressure, with the likes of the AUD, NZD and CAD also suffering on the back of lower commodity prices. The AUD has failed to gain much traction from a purported deal being offered to miners including various concessions to the mining industry. Much will depend on the reaction of mining companies, and despite the concessions there is importantly no reduction in the 40% rate of the tax.

Equity markets, especially the performance of Chinese stocks will give direction today but a weak performance for Asian equities points to more risk being taken off the table in the European trading session. EUR/USD will now set its sights on a drop to support around 1.2110 ahead of a likely drop towards 1.2045. Having dropped below support around 88.95 USD/JPY will see support coming in around 87.95.

Asian currencies also remain vulnerable to more selling pressure today, with the highly risk sensitive KRW looking most at risk in the short-term, with markets likely to ignore the upbeat economic data released this morning. USD/KRW looks set to target the 11 June high around 1247.80. Other risk sensitive currencies including MYR and IDR also face pressure in the short-term. TWD will be slightly more resilient in the wake of the China/Taiwan trade deal but much of the good news has been priced in, suggesting the currency will not escape the downturn in risk appetite.

Crowd at New York’s American Union Bank during a bank run early in the Great Depression.
The Bank opened in 1917 and went out of business on June 30, 1931. (source)

As Lateral Thinking reports, there’s an uncomfortable– if not indeed, an eerie– resemblance between the events of the early 30s and today:

As we have said many times lately, history rhymes… Today’s world looks very much alike the 30s… See what David Rosenberg has to say about it:

“DARING TO COMPARE TODAY TO THE 30′S
Coming off a crash (’29) and rebound (’30); aftermath of an asset deflation and credit collapse banks fail (Bank of New York back then, Lehman this time around); natural disaster (dust bowl then, oil spill now); global policy discord (with the U.K. then, with Germany now); geopolitical threats; interventionist governments; ultra low interest rates (long bond yield finished the 1930s below 2%); chronic unemployment (25% then, 17% now); deflation pressures; competitive devaluations; gold bull market (doubled in Sterling terms in the 30s); debt defaults; sputtering recoveries and rallies; onset of consumer frugality.“

Add to that the growing concern over the sanctity of foreign debt (as remarked by, e.g., The Bank of England)…  At the very least there’s reason to dust off those concerns about a double-dip recession– and to be careful to recall that, while inflation is the demon we’ve fought these last several decades, deflation lurks still.  (C.F.  here and here.)