The Predicate

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Saturday, 27.08.05

Interest-only loans? In whose interest?

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The most feared man in the Government issued a warning of sorts about the economy. No, I'm not talking about W who was last seen biking with Lance Armstrong and issuing clever revelations about his fellow rider ("He's a good rider"). I'm talking about the man aptly named for the way he controls the country's Green, Allan Greenspan. "Our forecasts and hence policy are becoming increasingly driven by asset price changes," the Fed chief said about the alarming increase in home prices across the U.S.

According to recent statistics, home prices have gone up by double-digits in the coastal regions of the U.S. In the past five years, national home prices have increased by a whopping 50.5%. Greenspan fears that the rising asset prices and the buying frenzy might turn off investors wary of risk and affect national and global economy as a result.

Without the slightest influence by 10 straight increases in short-term rates by the Federal Government (dating back to June 2004), long-term interest rates have stayed remarkably low in the U.S. These long-term rates, set in financial markets, have fueled the boom in home sales by providing cheap credit and irresistible mortgage plans to homebuyers.

Many economists fear that avaricious realtors and shortsighted financial institutions are pushing interest-only mortgage plans to seduce naive first-time buyers. People who really yearn for a house they couldn't otherwise afford are signing up in record numbers since rising rates promise them their interest-only loans are worthwhile short-term risks. According to a recent survey by the Mortgage Bankers Association, "Adjustable-rate and interest-only loans together accounted for 63 percent of all loan originations in the second half of 2004." Homebuyers who don't see an end to the home price bubble have staked their not too distant future on cheaper interest-only mortgage payments for the next three to five years. Ask the real-estate agent about the dangers of over-extending his client and he'll pass on to the financial institutions the burden of risk assessment. Ask the lenders and they'll point to their competition and record profits as motives to forego responsibility. But does anyone care about the impossibly over-stretched homeowners who will be the direct victims should the economy reverse? Perhaps the homeowners should.

Related blogs:

Poewar.com Money

Financeprofessorblog

Udhaya - pencil 12:31:00 - General - pencil permalink -

Wednesday, 24.08.05

The Iran Conundrum

I have not been following the Iran issue and the Bush Government's stance on the openly anti-american position of Iran. Partly because it is still early in the game, there are lots of bureaucratic and political wranglings that will occur before US does anything of substance against Iran, like use its force.

Apparently, the Bush Government has been underplaying the Iran affair, may be deliberately. Wretchard from The Belmont Club notes:

[read more]

balaji - pencil 01:23:50 - General - pencil permalink -

Thursday, 18.08.05

Quick Takes - II

Google is planning to sell 14.2 million shares in a secondary offering to raise almost $4 billion, it announced today. It has filed a registration statement with the Securities and Exchange Commission for a proposed public offering by the company of 14,159,265 shares of Class A common stock.

Does the number of shares sound interesting? It is Pi without the leading 3 !

[read more]

balaji - pencil 15:45:41 - General - pencil permalink - [19.08.05 11:44]

Wednesday, 17.08.05

Food Crisis in Niger and Mali

According to this BBC article, the food and livestock crisis in Niger is getting worse. From the article:

Both countries (Niger and Mali) were badly hit by poor rains and locust invasions last year and are among the world's poorest countries.

Although food aid is starting to arrive in Niger and be distributed, it is not enough. The UN is still asking for $50m to get Niger through to October's harvest.

Some 32,000 children could die without urgent help, aid agencies say, while some 2.5m people need food aid.

[read more]

balaji - pencil 09:33:00 - General - pencil permalink -

Tuesday, 09.08.05

Quick Takes

Police try to control agitated activist students of BJP during demonstration against 50% reservation in Aligarh Muslim University, in New Delhi on Tuesday.

Does anyone look like a student here?

In London, snow came in the summertime - along with Santa and Dino the donkey - as Harrods opened an entire department dedicated to Christmas.

.. and then Santa was barred from the store because he was carrying a huge backpack.

Syrian born artist, Hala Faisal, protests the war in Iraq and the occupation of Palestine by appearing in the nude with anti-war slogans written in both English and Arabic, in Washington Square Park Tuesday, Aug. 9, 2005, in New York City. Faisal was arrested by New York City police.

In other news, people fled in bulk from New York City since Rush Limbaugh announced that he would launch a similar protest for the war in Iraq.

I was trying to load and share these photos through flickr, but couldn't get them to work. Does anyone have a better way to upload photos and share them?

balaji - pencil 23:34:24 - General - pencil permalink - [10.08.05 11:44]

Monday, 08.08.05

Dubious IPO of Baidu

What's that over there up in the sky with the Discovery shuttle? Must be Baidu's share price.

China? Wow, that is the growing market place, the happening region. Internet? Of course, the best things are happening here. Search? Did you see how Google performed? What's not to like in Baidu, then? Let's just all buy Baidu shares.

[read more]

balaji - pencil 23:19:14 - General - pencil permalink -

Unanswerable Questions

I found this news story about a soldier's mom protesting at the Crawford Ranch interesting, because of the stunning directness and immediacy of the act that reduces the Iraq issue to its bare bones. I could relate to it also because the protester is from around here (Vacaville, CA) and this is something that only a Californian can come up with. (The degree to which this region is skewed compared to the mainstream is amazing.)

[read more]

balaji - pencil 00:55:39 - General - pencil permalink - [15.08.05 10:33]

Wednesday, 03.08.05

CNOOC withdraws Unocal bid

CNOOC withdrew its $18.5 million bid on Unocal yesterday. In an earlier article, I wrote that I didn't think US Govt will allow Unocal to be purchased by the Chinese Govt. That happened, more or less. CNOOC, withdrawing its bid, has cited growing political backlash at Capitol Hill prompted its decision.

This is not the last we will hear from the Chinese corporations with the backing of the Chinese Government. China will succeed sooner than later. CNOOC itself has signaled that it will continue to look for acquisitions in foreign countries in the near future. US Politicians will have to come to terms with the growing economic power that China is and will have to let China play on the same field that they believe in. Chinese oil companies already own interests in countries like Iran, Myanmar and Sudan, places where the Western oil companies have not made inroads. The future is likely to see an intense tussle for oil supplies in the Asia-Pacific and Australian regions. I think the issue of US having the face the consequences of its support of the Capitalist model has been skirted now; Soon, Capitol Hill will have to face it head-on.

- Balaji.

balaji - pencil 07:27:27 - General - pencil permalink -

Monday, 01.08.05

Blood and Ink

Author Note: The following is strictly a brief summary to bring the reader up to speed on the historical background that gave way to the Irish Republican Army (IRA). As an impartial observer, I’m only summarizing my research on the net. Should it come off as one-sided that is certainly not the intent, knowledge is the only goal here. While the clear history of one side’s suppression becomes evident, the violent agenda by the other in retaliation is hardly justified in my mind. The first part of the article delves into Irish history: the partition, the Catholic versus Protestant conflict, and the IRA. The second part of the article covers the recently announced disarmament by the IRA and its implications for the future.

Part I

In 1920, with the British Empire slowly dismantling in the rest of the world, the British government decided to pull out of Ireland. The stumbling block for Britain was the reluctant Protestants who lived in what is now referred as Northern Ireland. The Protestants, the majority, believed they were British based on their history (refer to “Plantation of Ulster” ) and were willing to fight for their right. Feeling obligated to the Protestant majority, Britain could only come up with the partition as a solution. When the island was partitioned, with the northeast becoming Northern Ireland and the rest of the country a separate entity under British jurisdiction, discontent was breeding. Catholics in Northern Ireland felt shortchanged and robbed out of their heritage, while the Protestants felt entitled to control Northern Ireland. With both sides claiming to be victims and heeding a select version of history, conflict was imminent.

Sinn Fein, the governing body of Ireland at the time, split on the partition decision. The majority of Irish favored the partition, but the minority didn't. The minority wanted nothing short of Irish unity and wanted no British influence whatsoever. This internal conflict led to a civil war that ironically killed more Irish than those killed by the British during the War of Liberation.

A militant minority had always been present in Ireland since the partition. With Catholics increasingly feeling alienated and discriminated against by the Irish government, a civil rights movement began in Ireland mirroring Martin Luther King Jr.’s successful movement in the U.S. When the non-violent protests with simple demands like the right to vote for Catholics netted no results, the militant minority swelled in ranks and the IRA came into existence as a reckonable force. Events like the Bloody Sunday massacre and the worsening living conditions for Catholics spread the divide further and gave root to the violent campaigns by the IRA and other factions (to read more about the different factions of IRA, the CIRA, and the PIRA, check here.). This is the historical backdrop that fueled the IRA to wreak havoc all over Ireland and Britain for the last three decades of the 20th century.

Part II

On Thursday, the IRA called for all of its volunteers to disarm, officially ending a 36-year guerilla campaign against the British government. Politically, Tony Blair has a flair for the propitious spotlight. Just when his luck hit a wall, drawing unfavorable eyes to his alliance with Bush in the wake of the London train bombings; just when widespread restlessness over the investigations is set to ripple his calm, lands the IRA disarmament news like a parachuted barrel of gifts.

Though this calculated peace had been years in the making since the cease-fire in 1997, the favorable news arrives just when a rankled public desperately needs it. The IRA fought not only to renounce British rule of Ireland, but also to re-unify the 32 counties of Ireland. Viewed by many as a necessity, the power-shared government between IRA leaders and the British government is a less-than-ideal solution for both sides. Meanwhile, that other cause about unifying the 32 counties seems far-fetched based on the proposed agreements.

Ed Muloney, respected Irish journalist and author of “The Secret History of the IRA”, remains skeptical of what this portends, “…the I.R.A. leadership, Gerry Adams and Martin McGuinness, will keep the I.R.A. going as a sort of semi-criminal type organization which has the potential to cause instability to the peace process. And out of that instability, Sinn Fein builds electoral support. So this has become a story which is less about the achievement of Irish unity or Irish independence and now is more really about, …how Sinn Fein grows into a major political party.” Doesn’t this sound similar to the blown peace treaties by Israel-PLO or Sri Lanka-Tamil Tigers? Every time a peace treaty was on the table, some unsanctioned rogue faction (on either side) conveniently disrupted the peace signings with a callous attack on an unsuspecting target; only to have the respective leaders bemoan the killings and walk away from the treaty as if it hurt them to retreat from peace. Blood and ink will never flow together.

Perhaps leveraging their motives politically will prove far more successful for Adams and McGuinness by winning them admirers on all fronts. But the new IRA is allegedly involved in racketeering, pushing pirated DVDs and CDs from China, and selling stolen cigarettes door-to-door, accounting for the sudden wealth among some of its Army council members. While we all welcome peaceful negotiations and the prospect of World Peace (beauty pageant finalists included), it is disenchanting to see a once righteous struggle that was emboldened by the blood and fury of patriots now receive a lukewarm compromise. But what is more shameful, some robber barons will take their well-proven path to political power, trading years of resolve by others for aisle seats; burying yet another earnest cry for emancipation in bureaucratic fodder.

-Udhaya

Sources:

--“The IRA and Sinn Fein”. Frontline Online. Frontline/BBC Interview with Paul Arthur.

--“Irish Republican Army Announces End to Violence”. By Amy Goodman, Juan Gonzalez, Democracy Now!

Udhaya - pencil 00:17:43 - General - pencil permalink - [01.08.05 04:07]
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