First Property Choice Economic Insight

GDP Growth Forecasted

2010-01-25T02:49:00.000-08:00

The UK is predicted to show a small .3% growth in GDP, therefore signalling the end of recession. There hasn´t been any growth since 2008 and so far there has been a 6% contraction in the overall economy since its highest point. Experts warn that the recovery will be fragile, this is understandable considering the depth of the problems we had.

The housing market is also showing some signs of stabilizing with prices ending up slightly higher at the end of ´09 than at the start of the year. Again, tentative signs that should not be construed as a full speed ahead recovery.

Inflation Fallen Less Than Expected

2009-02-19T06:44:00.000-08:00

........... but we still need to fight the threat of deflation.
The consumer prices index (CPI) fell from 3.1% to 3% in December. That was higher than expected as economists had expected a rise of 2.7% according to a Bloomberg survey.
The Retail Prices Index (RPI) – which includes housing costs – tells a similar story. It rose 0.1% in January whereas some commentators had expected a fall.

Source : Fool

US Stimulous Plan Approved

2009-02-15T01:40:00.000-08:00

Great news for the worldwide economy.

I think its fair to say that the US is really pushing to get the economy back on its feet.

The Guardian published an article stating that The Duke of Westminster has had to visit bankers to discuss his banking covenants.

He also refuted the claim that banks could seize assets.

€10 Billion Loss "Seemed Like a Good Idea at The Time"

2009-02-10T05:03:00.000-08:00

The above shocking comments were from Sir Fred Goodwin (Ex-Numero uno at RBS) and he was referring to the misguided purchase of ABN Amro, whose toxic debts made it virtually worthless.

America will be the place to watch today, as the latest TARP announcement is being made, watch for a strong market reaction, particularly in the banking sector - which way will it go?

The RBS Bonus Situation Escalates

2009-02-06T00:54:00.000-08:00

Peter Mandelson The Business Secretary intervened regarding the issuing of bonuses for RBS executives in a couple of weeks time.

As my previous post says the general public will be nothing less than outraged if said bonuses are awarded to traders, whose risky portfolios contributed to the bank now being 68% owned by the state.

Sir Philip Hampton ex-Sainsburys boss, has a tough job ahead of him. 7 executives have retired making way for the his new team.

Its amazing that greed and the use of ill understood derivatives could lead to such a mess and even more astounding that this high risk strategy went unchecked.

House Prices Rise in the UK

2009-02-05T13:23:00.000-08:00

One of the leading lenders in the UK, The Halifax actually recorded a 1.9% gain in house prices over the month of Jan. This piece of news was totally unexpected.

It would be easy to get carried away and attribute it to the road of recovery, however there are so many other issues currently, that such assumptions would be naive.

Unemployment is rising rapidly, liquidity is still poor and consumer confidence is at rock bottom. That said, Halifax housing economist Martin Ellis optimistically views this statistic as a sign of stabilization.

Lets hope he´s right

UK Tax Payers Pay RBS trading arm GBM £100´s Millions in Bonuses

2009-02-05T00:48:00.000-08:00

After The Royal Bank of Scotland has been bailed out by the taxpayer, they are planning to pay out £100´s Millions to high flyer's. The justification for this is that if they don´t reward the talent they will defect.

I am sure the average UK citizen will feel little compassion for poorly reward traders.

UK Financial Investments (UKFI), the Treasury operated body holding the Government´s stake in RBS have allowed the payments. They do understand how incendiary this will be to the UK taxpayer.

Ministers vetoed bonuses to members of the board as a condition of the rescue, but anyone below board level in unaffected.

I wonder how transparent these payments will be when they are made?

The Man Who Moves Markets

2009-02-04T09:29:00.000-08:00

Robert Peston the BBC business editor has been grilled today by MP´s on the Treasury Select Committee, over his involvement with the banking crisis.

Cast your mind back to his reporting on Northern Rock ( breaking the news that they were seeking emergency funding) and the possibility of privileged information appearing on his blog regarding HBOS takeover talks with Lloyds, causing mass share buying. Both of these assumptions, by the way turned out to be correct.

Peston defends himself, saying it is due to good journalism rather than insider information.

The recession/credit crunch has proven to be the best thing that could happen to Mr. Pestons career, this is indeed his finest hour and it is plain for all to see he is enjoying the attention.

I would suggest that he is either incredibly lucky or he has the journalistic skills Peter Parker gained when he was bitten by a mutant arachnid and developed spider sense.

Article in The Telegraph on House Price Negotiation

2009-02-04T03:04:00.000-08:00

How much do I offer : Source The Telegraph

A friend house-hunting in villages near my home in north Norfolk found a stylish converted coach house that took her fancy. It was on the market at £550,000. Balancing the factors involved – a sought-after village and unusual house against the muddle of discounts, sliding prices and gloomy predictions – she had one question. “How on earth do we know what to offer?”

In the event she tentatively agreed £465,000 but then, as happens in life, another buyer appeared from nowhere and snapped it up for “tens of thousands more”. It serves as a reminder that, even in these dark days, purchases are still being made, people have money to spend and a good location will be as seductive as ever.

But how much to offer is the question that is taxing buyers all over the country, and the answer is complex. We all know this is a buyer’s market. The fact that the number of transactions so far this year is down by 49 per cent means that purchasers have the cards in their hands. But they need to have their funding sorted.

As James Hyman of Cluttons says, shaving the interest rate to 1.5 per cent doesn’t melt the banks’ hard-hearted unwillingness to lend, especially as “few borrowers have spotless credit ratings and total job security, and are able to afford 25 per cent to 30 per cent deposits”. As a cash buyer, therefore, you can afford to swagger a little.

Mark and Georgina Robinson, with their six-month-old baby Sally, are renting a flat in Wimbledon while they hunt for a three- to four-bedroom house in West Sussex. They owned a flat before, but sold in 2006 to go travelling. “When I bought in 2002 it was quite different,” says Mark.
“Estate agents were flash, blasé, driving convertibles, on their mobiles all the time, not interested in the buyers at all because they knew the properties would sell themselves.”

Now, he says, they ring up and suggest that sellers will accept lower offers. “Once you have been looking for a few months you get a real sense of prices dropping,” he says. “Stuff we looked at in November at £300,000 is now £275,000. So there is no hurry. We are told they will accept £250,000. There is a seller who wants to go to Australia. Others are frantic because they have split up. Some don’t seem to be in such a rush but they are still on the market, so their underlying reason to sell is still there.”

Mark and Georgina are fortunate – they have a mortgage offer and large deposit ready. As Mark worked previously as an accountant and now has his own specialist running shop, Lanson Running (fortunately, people run just as much in a recession as they do in a boom), he has financial acumen. So what is his answer to the question of what to offer? “We are prepared to put in low offers and work upwards by small increments until we wear the sellers down. We can’t afford to think too much about what sellers are going through. They have probably still made a profit anyway, and I have to put my family first.”

But should people study the market and work out a more scientific approach? Knight Frank agency, for instance, says that prime property in London shed almost 10 per cent of its value in the past three months of 2008, so buyers can calculate an appropriate discount. At the £1m to £2.25m level, prices have shed 22 per cent since their peak, and anything over £10m has fallen by 8 per cent since August last year. So different categories of property have been moving at different speeds.

Much also depends on the psychology of the seller. “The gap between vendor’s expectations and buyer’s expectations shows in the comparison between asking prices and sale prices,” says Lucian Cook, head of residential research at Savills. “In January 2008, actual prices paid were 3.5 per cent higher than asking prices. In November and December they were 8.2 per cent lower, even though asking prices were cut by 5.5 per cent.”

Two new horrors, which sellers now fear more than anything, have appeared. There is the “double discount”, where a price has already been substantially reduced and an even lower offer is made. And the “gazunder”, in which buyers demand a second discount just on the point of exchange of contracts, when sellers are at their most vulnerable. According to Savills this is happening with roughly one in six sales.

But no one is more experienced on where to pitch an offer than the smooth-tongued buying agent. “We ignore completely the guide price on any property, whether it has been price-reduced or comes fresh to the market,” says Philip Selway of The Buying Solution. “We go back to autumn 2007, which was the recognised peak, and establish what the property was worth at that moment. Then we come down 20 per cent because that is how much the market has dropped.”

But do they take account of possible further falls? “We think there will probably be another 10 per cent dip. So the advice to our clients is that it is best to offer another 5 per cent lower and put yourself within 5 per cent of the bottom. They won’t ever be able to find the bottom of the market unless they are dead lucky. So the important thing is to buy on the line going down, not when it comes back up. That’s when vendors start to change their attitude and it gets competitive.”

Oddly, he and other search agents say they are busy at the moment because people want certainty from expert advice and access to research data. “Those people whose jobs are secure have only benefited from interest rate cuts and have more disposable income than they had before,” he says. “They are also able to enjoy lower prices. So, contrary to some reports, we aren’t all going to hell in a handcart.”

The Art of Negotiation

2009-02-03T07:40:00.000-08:00

Have you noticed that everyone thinks they are a master of negotiation. In reality most of us are not, however when negotiating there are some principles that can help.

The main reason either party comes out on top of a negotiation is that they exploit the others weakness, sounds like Gordon Gekko talking, I know, but that is the plain truth.

The main way of discovering weakness in who you are negotiating with is research ie. having a full understanding their circumstances and position.

Using a property purchase as an example - log on to http://www.upmystreet.com/ and check out the last transaction for a house near the one you want. How long has it been on the market? Why is the vendor is moving? What do they do for a living? Are they in a chain and what is their timescale for moving if they are. Not going into a negotiation with adequate research is a surefire way of coming out bottom!

If you really dig and dig, a crack in their armour usually appears, hopefully not as big as the one they have exposed in yours.

The most important thing of all is integrity, if you make a deal stick to it. I am a firm believer that you treat people the way you would like to be treated yourself. Have that philosophy and you can´t go far wrong!

Improve the Value of Your Home

2009-02-03T07:23:00.000-08:00

Here is a great article from The Times giving some great tips about adding value to your home.

1 INSTALL AN ENSUITE BATHROOM

If you have three or more bedrooms, people these days expect more than one bathroom. The best option is to squeeze an ensuite bathroom into the master bedroom, leaving the original as the “family” bathroom. This could mean shaving a bit off your bedroom with a stud wall or, if you’re lucky, pinching a bit of the landing.

Bathroom companies have clever designs for tight spaces. Look for “quadrant” showers, shaped like a quarter-circle to fit in corners; you can also get corner loos and sinks. If you must have both a bath and shower, go for a combination bath with a curved screen at one end to give you more showering space.

Cost: From £2,000, depending on how involved you get.

Can you do it yourself? A competent DIYer could do the flooring, tiling and painting to keep costs down. Plumbing, and probably electrics, are best left to the experts.

Money back? Yes – unless you go crazy. The National Association of Estate Agents says that a second bathroom or ensuite can add up to 5% to the value of your home.

2 CONVERT THE LOFT

This is one of the most cost-effective ways to add space – especially if you turn it into an extra bedroom and bathroom. Bear in mind that you need to have at least 2.3 metres of headroom, and think about where you will put all the stuff you’ve been storing up there.

It’s probably better to use a specialist loft conversion company than a general builder, as whatever problems you have, they will have solved them before. Julie Eveleigh used Outlook Loft Conversions (www.outlooklofts.co.uk) to add a bedroom and a bathroom to her Edwardian house in Wandsworth, southwest London. “In our area, it’s a huge leap to move up to the next level, the five-bedroom houses, even if it were possible to move in the current market,” she says. “Instead, we’ve bridged the gap and made ours into a five-bedder with the loft conversion. The builders were great. They said it would take five weeks to get it done and it took exactly that.”

Cost: The most basic conversion starts at £7,000, but the price will run well into five figures if you need to put in a mansard or a dormer – though it is still much cheaper than digging out a basement. Try www.loftquoter.co.uk for quotes, but be sure to shop around.

Can you do it yourself? Not the structural work, but you can keep costs down by decorating yourself.

Money back? Yes, particularly if you use it to add a bedroom. Depending on the area, this could add between £20,000 and £50,000 to the property’s value.

3 EXTEND THE KITCHEN

Open-plan kitchen/diner/family rooms remain in vogue – and the bigger the better. Building an extension should be easier thanks to changes in the rules, introduced last October, allowing you to extend terraces and semis by three metres and detached properties by four metres without planning permission (www.planningportal.gov.uk).

Chris and Jan Wright, who bought a fairly standard four-bedroom new-build detached house 10 years ago in Heswall, Wirral, knocked the kitchen and dining room together and extended to create three areas. “We’ve got the kitchen area with an island, a dining table that seats eight and two three-seater sofas at the other end,” says Chris, a financial services consultant.

The Wrights, who used Architect Your Home to plan the extension (www.architect-yourhome.com), use the new space to entertain in, too. “Our guests can get comfortable on the sofas with a drink and talk to us while we get the meal ready,” Chris says.

Cost: About £15,000 for a small extension, plus the cost of kitchen units and appliances, if needed.

Can you do it yourself? Probably not, unless you are a builder. If you touch a supporting wall, you will be closely supervised by the local building-control service and will probably need a structural engineer, too.

Money back? Probably: kitchen/dining spaces are in demand, especially if you have a small kitchen. Get advice from local estate agents.

4 CONVERT THE GARAGE

Does the car really need a room of its own? Turning a garage into a playroom, study, extra bedroom or games room is one of the easiest and least expensive ways to extend – as long as you still have somewhere to park. If you have a double garage, convert half of it. The structure is already there, so all you need is heating, insulation, a window, plastering and decorating.

Cost: As little as £5,000, all in.

Can you do it yourself? Possibly, but you will need electrician’s skills and will have to meet building regulations.

Money back? Yes: the extra space can add 10% to the value of your home.

5 PUT IN A SKYLIGHT

There is plenty you can do to your home on a smaller budget. With prices starting at less than £100, skylights can transform loft and attic rooms, corridors and stairwells, flooding the house with light. You’ll need blinds if the skylight is in a bedroom. If you’re a light sleeper, be warned that raindrops can make a racket in the middle of the night. Competent DIYers could fit one themselves, but if that’s not you, get the store to recommend someone, ask a glazier or pay a specialist company to do it.

Cost: B&Q has a 45cm x 55cm skylight for £80 (www.diy.com), but you’ll pay much more for Velux and other brands. Having a skylight installed costs about £600 with a specialist such as www.simplyroofwindows.co.uk.

Can you do it yourself? Yes – if your DIY skills are up to it.

Money back? The price is so small relative to the cost of a home that it should be a winner. The property will also be more attractive to prospective buyers.

6 ADD A UTILITY ROOM

Reclaim your kitchen by getting rid of laundry clutter and cleaning kit. Like ensuite bathrooms, utility rooms are becoming de rigueur – especially as the kitchen turns into a living and entertaining space. The good news is, creating one is cheap.

The ideal time to create a utility room is when you’re extending the kitchen. Otherwise, section off a corner with a stud wall or commandeer the back of a garage. Utility rooms in cellars are another option. Jude Tugman, an architect based in London, has also fitted them under stairs: “Even if the space only allows for one appliance and somewhere for the mop and vacuum cleaner, it’s worth it.”

Cost: Minimal if you are sectioning off the back of the garage or fitting a washing machine under the stairs.

Can you do it yourself? Yes, with advice from DIY websites.

Money back? Difficult to say, but it should make the house more saleable.

7 FIRST APPEARANCES

Giving the door and woodwork a fresh coat of paint will make a big difference and won’t cost much. It will make you feel better about your home and, when you come to sell, should impress potential buyers. Choose blues, greens or a smart black, but avoid pinks, oranges and purples, as they’re too personal a choice. And don’t neglect window boxes or pots near the door in winter – there’s always something with bright berries or glossy leaves to be found at the garden centre.

Cost: You can keep it to a minimum by painting the door and windowsills and planting up a couple of pots.

Can you do it yourself? Yes.

Money back? In a weak market, a smart front can be the difference between a potential buyer walking past and coming in for a viewing.

8 TREAD THE BOARDS

Ripping up that tired fitted carpet to reveal the boards beneath is the easiest and most cost-effective way to update. “Renovating floorboards, like opening up fireplaces, increases the saleability of your home,” Clarke says.

You can hire a sander and do it yourself, but it’s noisy, dusty work and might be worth leaving to a pro. Staining or varnishing is a nicer job. Test a small patch first to see the effect – the more coats you use, the darker it will become. Now for the fun part: go and buy some new rugs to complete the transformation.

Cost: Hiring a sander, buying varnish and doing the whole job could come to about £150. Getting someone in will cost about £400, depending on the number of rooms.

Can you do it yourself? Yes – if you can stand the dust.

Money back? Easily.

9 LANDSCAPE THE GARDEN

A patch of lawn with a tree at the end is old hat: anyone who’s ever watched a garden makeover programme wants an outdoor space that will seem like an extension of their living room – which means glass sliding doors or french windows leading to paving or decking with nice furniture. Now is the time to plan, so you can plant in early spring.

Cost: It can easily run to thousands. Plants are pricey and so are designers; save money by hiring a student on a garden design course.

Can you do it yourself? Yes, with the help of green-fingered friends and by watching TV garden makeover shows.

Money back? Yes, provided you keep costs under control. It will certainly provide enjoyment in the meantime.

10 OPEN UP THE FIREPLACE

A working fireplace adds focus to a room, and most period houses have one – although, if it hasn’t been used for some time, the hearth may no longer comply with building regulations. This must be made of a noncombustible material such as stone, tiles or brick, be 48mm thick and project forward at least 30cm.

The Solid Fuel Association (www.solidfuel.co.uk) offers a step-by-step guide to get a fire working. You’ll need the chimney swept and checked for cracks; make sure you cover all your furniture and carpets, as soot can make a real mess of a cream sofa.

Cost: Minimal if you don’t need a new grate or hearth. It can cost as little as £25 to have a chimney swept.

Can you do it yourself? Yes, with the exception of the sweeping. Don’t be tempted to use the kids.

Money back? Who cares? You haven’t spent much, and it’ll make winters something to look forward to.

Lay Off The Non Americans First

2009-02-03T05:47:00.000-08:00

Microsoft, the software giant, is laying off more than 5000 jobs worldwide, in an effort to cut costs and preserve profitabilty.

Senator Charles Grassley sent a letter to Steve Balmer, current CEO of Microsoft saying that they have a "moral obligation to protect American workers first".

This is an exaple of "protectionism" the definition of which I posted a couple of days ago on this blog.

BoE Rate Cut When Not IF

2009-02-02T13:55:00.000-08:00

Seems the general consensus of opinion is that 1% interest rates are on the cards after the Monetary Policy Committee meet later this week.

Building societies are getting increasingly worried and are pleading against further rate cuts.

I predict within 6 months we will have 0% interest rates.

If only the BoE had acted a little quicker 18 months ago, instead of focusing excessively on inflation, still hindsight is a perfect science. I think it would be naive of anyone to think this crisis could have been averted.

Just a softer landing, maybe.

Obama Talks Sense to Bailout Banks

2009-02-02T10:23:00.000-08:00

Obama seems to be making some decisive and sensible decisions regarding the TARPS program. He will ensure banks actually start giving credit again,as part of the bailout criteria.

He quite rightly believes that further procrastion will damage the ecomomy further, saying "modest differences of opinion should not slow the process".

New Completed Project in Siderno Calabria

2009-02-01T23:20:00.000-08:00

A new week that is hopefully as productive for us as last week.
I should be getting details of a completed project in Siderno, Calabria this week. Siderno is a great little town, totally unspoiled with some of the best value restaurants I have ever seen.
I will post information on here as and when.

On a different note The Spanish Prime Minister, Jose Zapatero called a meeting with with leading bankers to urge them to lend. Lets see how that request is received.
It astounds me money was pumped into these banks without a criteria being attached. Looks like nationalization will be the only option for some of them.

Adios.

The End of a Very Busy Week for First Property Choice

2009-02-01T09:10:00.000-08:00

What a week it has been, there is a marked increase in enquiries this week, signalling the end of the quiet period just after the New Year.

I think many people have come to terms with the fact that there is a recession and want to move forward with their plans, albeit more cautiously.

I have been looking into some great new projects in Sicily and Sardinia that offer great value in stunning locations, I will keep you posted about them on this blog.

Lenders Trying Not to Pass on Further Rate Cuts

2009-02-01T07:22:00.000-08:00

Surprise, surprise The Council of Mortgage Lenders (CML) have gone to the government to try and put a "collar" on existing tracker mortgages. They complain if they don´t that it would hurt their ability to get savings deposits.

Is it just me or do banks want everything their own way.

They got themselves into this situation, through ridiculous lending criteria, surely they should face the consequences.

New Blog on Istanbul

2009-01-31T11:05:00.000-08:00

Get insider information on this exciting property market, save literally €1000´s by being fully informed on property in Istanbul.

Click here for the definative guide on Istanbul.

What is Protectionism and Why does Gordon Brown Fear it?

2009-01-31T02:14:00.000-08:00

" protectionism" - The practice of protecting domestic goods and service industries from foreign competition with tariff and non-tariff barriers.

Gordon Brown has started trying to rally the population, but mentioned protection may be an issue.

Protectionism causes higher prices for consumers because domestic producers are not exposed to foreign competition, and can therefore keep prices high. There is also the possibilty domestic exporters may also may suffer, because foreign countries tend to retaliate against protectionism with tariffs and barriers of their own.

Many economists say that the Depression of the 1930s was precipitated by the protectionist trade barriers erected by the United States.

This is why the summit taking place in April hosted by Gordon Brown will be instrumental to moving the G8 economies forward.

Before the summit Mr. Brown calls for positivity from the British public, indeed many of the predictions of doom and gloom from analysts become self fulfilling.

Improved consumer sentiment is a piece in the jigsaw of economic recovery.

New Blog Specifically for Calabria

2009-01-31T00:14:00.000-08:00

I have just launched a blog with some of our exclusive developments in Calabria. The blog aims to give useful information on buying or owning a property in Calabria.

Discover some of the most exciting new properties coming to the market this year, so check it out.

Follow this link http://propertyincalabria.blogspot.com

Business Lessons by The Master

2009-01-29T10:43:00.000-08:00

I have just finished a book appropriately named Winning
by the redoubtable Jack Welch, the successful ex-CEO of General Electric.

Mr. Welch had somewhat of a reputation for being a ruthless and emotionless boss, savagely deploying his regime of "differentiation", culling his bottom 10% of staff each year.

When you actually understand the process though, it is an honest and sensible way to run a business and could be applied to anything.

This is how differentiation works

The process requires managers to assess their employees and separate them into 3 categories in terms of performance: top 20 percent, middle 70% and bottom 10%.

The top 20% should be rewarded, nurtured, given bonuses and generally afforded all they need to continually motivate them and keep them at the top.

The middle 70% are hugely important as the business cannot function without them. They need to be managed carefully and cultivated, ensuring complacency and stagnation doesn´t occur. Some of these employees will be top 20% material.

Here's the difficult one, the bottom 10% have to go. This is why this method is sometimes referred to as cruel and Darwinian.

The people who label it this way would probably think differently if it was their business and they had to consistently meet payroll for people who just aren´t performing.

There it is, its that simple.

This method was applied to GE businesses too, Mr. Welch would often say if we can´t be top or second in a business then we should not be operating in that sector.

Constantly evaluating what you have is important, whether its property, investments or your professional life.

Sometimes tough decisions need to made.

Forex Tip

2009-01-29T01:44:00.000-08:00

Given the Obama "bad bank" plans, I feel sterling will rally against the dollar. Contrary to post oulining Mr. Rogers theories.

The Psychological Phenomenon of Confirmation Bias

2009-01-29T00:31:00.000-08:00

Definition: A tendency to interpret information in a way that confirms one's preconceptions .

Confirmation bias is a huge enemy to the investor, its strangles clear headed analysis and negates the point of any research you make.

Ask yourself whenever examining an investment, " what empirical evidence is there available that constructively disputes my theory".

Objectivity is key to any investment decision big or small.

Banking Stocks Surge

2009-01-28T10:57:00.000-08:00

Double digit gains for many of the banks today as a "bad banks" plan was outlined by Barack Obama. The FDIC (Federal Deposit Insurance Corporation) would absorb toxic assets, therefore shoring up balance sheets if the plan is agreed.

The uncertainty of "who holds what" assets is still seizing up liquidity and compounding nervous feelings about the toxicity of assets each bank holds. The proposed plan would get things out in the open and instill confidence into the system once again.

Just the possibility of this happening added 44% to Lloyds share price and 34% for RBS ( The Royal Bank of Scotland).

For those of you who like a risky punt, banking shares are still looking cheap and if this incentive is given the green light you could make considerable returns.

He who dares............................

Surprise Rise in US Property Sales

2009-01-28T07:18:00.000-08:00

Sales of existing homes rose 6.5% to an annual rate of 4.74 million, up from 4.45 million units in November, the National Association of Realtors said.

The association said that existing home prices fell by 15.3% in December from the same period a year earlier, with 45% of transactions viewed as "distress sales", where the seller was forced to sell at a discounted price.

Mr Soros Up To His Old Tricks Again

2009-01-28T06:09:00.000-08:00

George Soros, the man who nearly destroyed the bank of England in 1993 admitted he had been short selling sterling ( short selling is a technique that allows you to profit from falling prices).

Although he says he doesn´t have a position anymore, as he doesn´t feel the risk/reward is as "compelling" at it current levels.

Mr. Soros didn´t say that the pound wouldn´t de-value further, but expected it to continue to fluctuate.

Villagio Del Mare, Calabria

2009-01-28T05:30:00.000-08:00

I have a picture of the view taken from the plot of Villagio Del Mare, the Calabria Property I gave you details on a couple of days ago.

Close to the town of Brancaleone in Reggio Di Calabria, I firmly believe this development is unparalelled in terms of value.

Calabria has long since been a favourite of northern Italians and is fast becoming the holiday destination of those who want an unspoiled taste of the "real Italy".

Available for €69,219 only. Click here for more information.

Moodys Disagrees With Me

2009-01-28T02:29:00.000-08:00

Apparently Moodys credit rating agency thinks the UK commercial property market has a further 25% to fall.

This opinion is the exact opposite to my prediction of a bullish run. Imagine if the 25 million pounds worth of property deals in Edinburgh I posted yesterday were 25% over the odds!

Having said that the credit rating agencies don´t always get in right, didn´t they give these bundled mortgage securities triple A ratings, when some of them contained more toxicity than Chernobyl.

I still stand by predictions, we´ll see who is closer to the mark later this year.

Turkish Property Market

2009-01-27T09:30:00.000-08:00

I was passed some interesting statistics today from The Association of Real Estate Companies (GYODER).
This contained information about mortgage figures for home owners stating that 80-90% of the properties bought in Northern Europe are financed with mortgages.

The figure in Turkey is closer to 5%, understandable as home finance has only been made available there in the last one and a half years.

The following banks have moved into Turkey in the last 3 years, obviously looking to benefit from this "virgin" marketplace.

- ING Bank from Holland (took over Oyak Bank in Turkey)
- Fortis Bank from Belgium
- Dexia Bank from Belgium (took over DenizBank in Turkey)
- BNP Paribas from France (took over TEB Bank in Turkey)

My company has sourced some outstanding property in turkey offering affordability in excellent locations.

We offer turkey properties for sale in a variety of area including PriceWaterhouseCoopers 2nd favourite investment location, namely Istanbul.

£25m Property Deal in Edinbrugh Indicate Commercial Property Market has Reached Bottom

2009-01-27T07:34:00.000-08:00

The TheScotsman reported the purchase of two prime location buildings in Edinburgh, this gives us further indication that the commercial property market has reached its lowest ebb.

A private investor has agreed to purchase a building occupied by The Royal Bank of Scotland at 24 St Andrew Square for £16 million and Thistle property is finalising a £9 million purchase in George St.

I predict a bullish run on commercial property, as cash rich investors will regard this as an indicator they are getting the best deals and the market will fall no further.

Watch this space for more big deals!!

Some Positive UK Mortgage News!!!

2009-01-27T01:32:00.000-08:00

Figures produced by the British Bankers´ Association recorded a 27% increase in mortgage approvals last month. November saw 17,339 approvals, whilst December saw 22,051.

Could this be a sign that we are at a turning point?

A little to early for such a bold statement, however this is hugely positive.

Lets hope banks start increasing their lending book, for both homeowners and SME´s (small/medium enterprises).

$13.5 million Dollar Mansion Sold for a $100!!

2009-01-27T01:16:00.000-08:00

Dick Fuld, the alleged architect of Lehman Brothers demise sold his 3.3 acre Jupiter Island mansion to his wife for $100. The property was purchased in 2004 for $13.75 million.

This is yet another insult to former workers and shareholders of Lehman Brothers, as Florida laws will now prevent the home being sold from under Mr. Fuld to raise capital, should he face litigation.

Incredible.

Tips for You To Avoid Buying the Wrong House

2009-01-27T00:59:00.000-08:00

The Times published an article on definate no no´s when it comes to buying a house. Although many of the points raised are common sense, some are that obvious you might miss them!

Here are the top ten.

1 Poor location

Location is the one thing that cannot be repaired by renovation or building work. Avoid at all costs: busy roads, train and Tube lines, and the flight-paths of major airports, especially those marked for expansion. Areas susceptible to flooding can also be problematic.

2 Damp and dry rot

The obvious properties to avoid are those with serious structural issues, but even “fixable” problems will affect re-sale. “A property with dry rot can put buyers off instantly, as although it can be put right, it is a big and often costly job,” says Andrew Hunt, of Kinleigh Folkard & Hayward (KFH). Jo Eccles, director of Sourcing Property, a property search company, says: “The smell of damp puts buyers and tenants off straightaway, despite it often being fairly easy to sort out.”

3 Noisy neighbours

“It is very difficult to sell a property with noisy or rude neighbours,” says Justin Bhoday, of KFH in Kennington. “Buyers like to know that they are moving into a ‘nice' area.” Homes beside busy pubs or bars are best avoided. Flats above commercial premises are now more acceptable to mortgage lenders, but may struggle to sell in a weak market.

4 Access problems

“Anything that is more than three floors and is a walk-up is difficult to sell,” says Nathalie Hirst, director of Prime Purchase, a property search firm. This is especially true in prime areas, as foreign buyers often prefer lateral living, or at the very least a decent lift.

5 1960s architecture, uneven proportions

"Externally unattractive properties are usually the most difficult to sell,” Bhoday says. “1960s and 1970s architecture is a definite ‘no' for some buyers.” However, a well-laid-out interior can rescue an ugly house. Eccles explains: “I would avoid buying a property with uneven proportions - for example, one big bedroom and one box room. This is especially important if you are buying-to-let, because tenants looking for two-bed properties will want evenly-sized bedrooms.”
6 ...and 1970s interiors

Buyers looking to let properties need to avoid dated interiors, or face up to replacing them. “Ancient avocado or pink suites will almost certainly prompt a tenant to move on to the next property on the list,” says Nesreen El-Gunindi, lettings manager at KFH Streatham.
7 Darkness

“Natural lighting is a huge factor,” says Federico Young, of KFH St John's Wood. Unless they are cleverly lit, basement flats and those in the shadow of another building are often hard to sell or let.

8 Inflexibility

“In Central London, there are some leases that have a non-alteration clause,” Hirst says. “This can be problematic where properties are unmodernised. You need to get your lawyer to check the lease carefully.”
9 Poor management

If you are purchasing a leasehold property, ask your lawyer to do plenty of research on the managing agent's track record. Russell Hunt, of Property Hunt, a property search agency, says: “Speak to other residents in the building to ensure that communal areas are managed effectively.”

10 Properties with a past

“A house with any association of a crime is difficult to sell,” Andrew Hunt, of KFH, says. However, while a grisly murder will deter buyers, talk of ghostly presences may not. “With haunted homes, buyers tend to instantly love them or hate them.”

From The Times by Paula Hawkins

George Soros Former Business Partner Thinks The End is Nigh for Sterling

2009-01-26T12:02:00.000-08:00

Jim Rogers, former business partner of George Soros commented that anyone with sterling based assets should get out of them quick.

He sights dollar based assets would take preference, as it is regarded as a " safe haven" currency.

He also predicts parity between the Pound and the Dollar in the not too distant future.

Looks like that trip to Disney Land needs to be booked now before it costs me 30% more!!!

Weak Sterling Makes UK Property Cheap for Overseas Investors

2009-01-26T11:09:00.000-08:00

Savills produced the following research.

The figures below show the change in the average price of prime central London property from the September 2007 peak to January 2009 adjusted for currency fluctuations.

Sterling = -19.9%
Euro = -42.2%
Dollar = -43.5%
Yen = -55.5%
Swiss Franc = -48.5%
Eqyptian Pound = -44.1%

If you get paid in Yen, I would take it to London and buy a house.

Great New Development in Calabria

2009-01-26T06:14:00.001-08:00

Our company has recently been lucky enough to secure a below market value opportunity in Italy. With perfect sea views this Calabria property offers a lot for a little, including floor to ceiling windows, contemporary design and each of the 8 penthouses have a huge rooftop solarium .

Each apartment has a perfect, uninterrupted sea view which would be impossible to obscure due to the natural gradient of the land. Like for like properties cannot be found at this price per m2. The development could be described as "boutique" given the project only has 16 apartments in total, making this a unique opportunity.

The intriguing thing about Calabria is that it would be regarded as an emerging market within an established one. There is still a huge dis-parity between Northern and Southern Italy property prices. The government has committed a huge sum of money in order to remove this gulf, therefore infra-structure, businesses and property owners will benefit commensurately.

The planned Messina suspension bridge linking Sicily to Italy will also increase accessibility and worldwide visibility of this previously forgotten region.

The sheer beauty of the area cannot be overstated making this a location that will blossom in the future.

Available for €69,219 only. Click here and register for an in depth market report and price per m2 analysis for each licensed development in the region.

Invest Like Warren Buffet

2009-01-26T05:41:00.000-08:00

That's a great title for a blog isn´t it!

Well trying to distill Mr. Buffets plethora of knowledge into a few paragraphs would be impossible, but for further reading I would suggest a book entitled The Intelligent Investor
by Benjamin Graham (Warren Buffet´s mentor).

Value Investing is how Warren Buffet became the richest man in the world. Simply put he will study a business and then estimate its worth, he will then see if the market undervalues it.

The Fascinating thing is Market Capitalization (total number of shares issued x single share price = Market Capitalization) has little to do with the NAV (Net Asset Value = Assets - Liabilities)of a company and everything to do with market perception. Therefore it is possible to bag a bargain.

Sounds simple enough? Try looking at a business and valuing it yourself.............its difficult and took Mr. Buffet years to perfect.

"I´d rather be vaguely right than precisely wrong"

Warren Buffet

Gordon Brown to the Rescue

2009-01-26T01:45:00.000-08:00

New home enquiries have risen since Mr. Brown outlined a multi-billion pound package to help banks lend again.

This is good news, the only thing is I thought the first round of financial assistance was to ease liquidity. Seems all the banks did with that was strengthen their own balance sheets.
Similarly with low interest rates, no-one is benefiting except the banks. Savers get very little and borrowers haven´t seen the rates passed on.

Reminds me the old saying " banks will give you an umbrella when its sunny, but will demand it back when it starts raining!"

Twenty-five people at the heart of the meltdown ...

2009-01-26T01:31:00.000-08:00

There is nothing like pointing the finger when things go wrong! Here is an article printed in The Guardian today with their interpretation of who is culpable and those who saw the whole financial turmoil coming.

The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis.

Alan Greenspan, chairman of US Federal Reserve 1987- 2006Only a couple of years ago the long-serving chairman of the Fed, a committed free marketeer who had steered the US economy through crises ranging from the 1987 stockmarket collapse through to the aftermath of the 9/11 attacks, was lauded with star status, named the "oracle" and "the maestro". Now he is viewed as one of those most culpable for the crisis. He is blamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. He backed sub-prime lending and urged homebuyers to swap fixed-rate mortgages for variable rate deals, which left borrowers unable to pay when interest rates rose.
For many years, Greenspan also defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later.
Billionaires George Soros and Warren Buffett might have been extremely worried about these complex products - Soros avoided them because he didn't "really understand how they work" and Buffett famously described them as "financial weapons of mass destruction" - but Greenspan did all he could to protect the market from what he believed was unnecessary regulation. In 2003 he told the Senate banking committee: "Derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so".
In recent months, however, he has admitted at least some of his long-held beliefs have turned out to be incorrect - not least that free markets would handle the risks involved, that too much regulation would damage Wall Street and that, ultimately, banks would always put the protection of their shareholders first.
He has described the current financial crisis as "the type ... that comes along only once in a century" and last autumn said the fact that the banks had played fast and loose with shareholders' equity had left him "in a state of shocked disbelief".
Politicians
Bill Clinton, former US presidentClinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans.
In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%.
Gordon Brown, prime ministerThe British prime minister seems to have been completely dazzled by the movers and shakers in the Square Mile, putting the City's interests ahead of other parts of the economy, such as manufacturers. He backed "light touch" regulation and a low-tax regime for the thousands of non-domiciled foreign bankers working in London and for the private equity business.
George W Bush, former US presidentPresident Clinton might have started the sub-prime ball rolling, but the Bush administration certainly did little to put the brakes on the vast amount of mortgage cash being lent to "Ninja" (No income, no job applicants) borrowers who could not afford them. Neither did he rein back Wall Street with regulation (although the government did pass the Sarbanes-Oxley Act in the wake of the Enron scandal).
Senator Phil GrammFormer US senator from Texas, free market advocate with a PhD in economics who fought long and hard for financial deregulation. His work, encouraged by Bill Clinton's administration, allowed the explosive growth of derivatives, including credit swaps. In 2001 he told a Senate debate: "Some people look at sub-prime lending and see evil," he said. "I look at sub-prime lending and I see the American dream in action."
According to the New York Times, federal records show that from 1989 to 2002 he was the top recipient of campaign contributions from commercial banks and in the top five for donations from Wall Street. At an April 2000 Senate hearing after a visit to New York, he said: "When I am on Wall Street and I realise that that's the very nerve centre of American capitalism and I realise what capitalism has done for the working people of America, to me that's a holy place."
He eventually left Capitol Hill to work for UBS as an investment banker.
Wall Street/Bankers
Abi Cohen, Goldman Sachs chief US strategistThe "perpetual bull". Once rated one of the most powerful women in the US. But so wrong, so often. She failed to see previous share price crashes and was famous for her upwards forecasts. Replaced last March.
"Hank" Greenberg, AIG insurance groupNow aged 83, Hank - AKA Maurice - was the boss of AIG. He built the business into the world's biggest insurer. AIG had a vast business in credit default swaps and therefore a huge exposure to a residential mortgage crisis. When AIG's own credit-rating was cut, it faced a liquidity crisis and needed an $85bn (£47bn then) bail out from the US government to avoid collapse and avert the crisis its collapse would have caused. It later needed many more billions from the US treasury and the Fed, but that did not stop senior AIG executives taking themselves off for a few lavish trips, including a $444,000 golf and spa retreat in California and an $86,000 hunting expedition to England. "Have you heard of anything more outrageous?" said Elijah Cummings, a Democratic congressman from Maryland. "They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill."
Andy Hornby, former HBOS bossSo highly respected, so admired and so clever - top of his 800-strong class at Harvard - but it was his strategy, adopted from the Bank of Scotland when it merged with Halifax, that got HBOS in the trouble it is now. Who would have thought that the mighty Halifax could be brought to its knees and teeter on the verge of nationalisation?
Sir Fred Goodwin, former RBS bossOnce one of Gordon Brown's favourite businessmen, now the prime minister says he is "angry" with the man dubbed "Fred the Shred" for his strategy at Royal Bank of Scotland, which has left the bank staring at a £28bn loss and 70% owned by the government. The losses will reflect vast lending to businesses that cannot repay and write-downs on acquisitions masterminded by Goodwin stretching back years.
Steve Crawshaw, former B&B bossOnce upon a time Bradford & Bingley was a rather boring building society, which used two men in bowler hats to signify their sensible and trustworthy approach. In 2004 the affable Crawshaw took over. He closed down B&B businesses, cut staff numbers by half and turned the B&B into a specialist in buy-to-let loans and self-certified mortgages - also called "liar loans" because applicants did not have to prove a regular income. The business broke down when the wholesale money market collapsed and B&B's borrowers fell quickly into debt. Crawshaw denied a rights issue was on its way weeks before he asked shareholders for £300m. Eventually, B&B had to be nationalised. Crawshaw, however, had left the bridge a few weeks earlier as a result of heart problems. He has a £1.8m pension pot.
Adam Applegarth, former Northern Rock bossApplegarth had such big ambitions. But the business model just collapsed when the credit crunch hit. Luckily for Applegarth, he walked away with a wheelbarrow of cash to ease the pain of his failure, and spent the summer playing cricket.
Ralph Cioffi and Matthew TanninCioffi, pictured, and Tanninn were Bear Stearns bankers recently indicted for fraud over the collapse of two hedge funds last year, which was one of the triggers of the credit crunch. They are accused of lying to investors about the amount of money they were putting into sub-prime, and of quietly withdrawing their own funds when times got tough.
Lewis RanieriThe "godfather" of mortgage finance, who pioneered mortgage-backed bonds in the 1980s and immortalised in Liar's Poker. Famous for saying that "mortgages are math", Ranieri created collateralised pools of mortgages. In 2004 Business Week ranked him alongside names such as Bill Gates and Steve Jobs as one of the greatest innovators of the past 75 years.
Ranieri did warn in 2006 of the risks from the breakneck growth of mortgage securitisation. Nevertheless, his Texas-based Franklin Bank Corp went bust in November due to the credit crunch.
Joseph Cassano, AIG Financial ProductsCassano ran the AIG team that sold credit default swaps in London, and in effect bankrupted the world's biggest insurance company, forcing the US government to stump up billions in aid. Cassano, who lives in a townhouse near Harrods in Knightsbridge, earned 30 cents for every dollar of profit his financial products generated - or about £280m. He was fired after the division lost $11bn, but stayed on as a $1m-a-month consultant. "It seems he single-handedly brought AIG to its knees," said John Sarbanes, a Democratic congressman.
Chuck Prince, former Citi bossA lawyer by training, Prince had built Citi into the biggest bank in the world, with a sprawling structure that covered investment banking, high-street banking and wealthy management for the richest clients. When profits went into reverse in 2007, he insisted it was just a hiccup, but he was forced out after multibillion-dollar losses on sub-prime business started to surface. He received about $140m to ease his pain .
Angelo Mozilo, Countrywide FinancialKnown as "the orange one" for his luminous tan, Mozilo was the chairman and chief executive of the biggest American sub-prime mortgage lender, which was saved from bankruptcy by Bank of America. BoA recently paid billions to settle investigations by various attorney generals for Countrywide's mis-selling of risky loans to thousands who could not afford them. The company ran a "VIP programme" that provided loans on favourable terms to influential figures including Christopher Dodd, chairman of the Senate banking committee, the heads of the federal-backed mortgage lenders Fannie Mae and Freddie Mac, and former assistant secretary of state Richard Holbrooke.
Stan O'Neal, former boss of Merrill LynchO'Neill became one of the highest-profile casualties of the credit crunch when he lost the confidence of the bank's board in late 2007. When he was appointed to the top job four years earlier, O'Neal, the first African-American to run a Wall Street firm, had pledged to shed the bank's conservative image. Shortly before he quit, the bank admitted to nearly $8bn of exposure to bad debts, as bets in the property and credit markets turned sour. Merrill was forced into the arms of Bank of America less than a year later.
Jimmy Cayne, former Bear Stearns bossThe chairman of the Wall Street firm Bear Stearns famously continued to play in a bridge tournament in Detroit even as the firm fell into crisis. Confidence in the bank evaporated after the collapse of two of its hedge funds and massive write-downs from losses related to the home loans industry. It was bought for a knock down price by JP Morgan Chase in March. Cayne sold his stake in the firm after the JP Morgan bid emerged, making $60m. Such was the anger directed towards Cayne that the US media reported that he had been forced to hire a bodyguard. A one-time scrap-iron salesman, Cayne joined Bear Stearns in 1969 and became one of the firm's top brokers, taking over as chief executive in 1993.
Others
Christopher Dodd, chairman, Senate banking committee (Democrat)Consistently resisted efforts to tighten regulation on the mortgage finance firms Fannie Mae and Freddie Mac. He pushed to broaden their role to dodgier mortgages in an effort to help home ownership for the poor. Received $165,000 in donations from Fannie and Freddie from 1989 to 2008, more than anyone else in Congress.
Geir Haarde, Icelandic prime ministerHe announced on Friday that he would step down and call an early election in May, after violent anti-government protests fuelled by his handling of the financial crisis. Last October Iceland's three biggest commercial banks collapsed under billions of dollars of debts. The country was forced to borrow $2.1bn from the International Monetary Fund and take loans from several European countries. Announcing his resignation, Haarde said he had throat cancer.
The American publicThere's no escaping the fact: politicians might have teed up the financial system and failed to police it properly and Wall Street's greedy bankers might have got carried away with the riches they could generate, but if millions of Americans had just realised they were borrowing more than they could repay then we would not be in this mess. The British public got just as carried away. We are the credit junkies of Europe and many of our problems could easily have been avoided if we had been more sensible and just said no.
Mervyn King, governor of the Bank of EnglandWhen Mervyn King settled his feet under the desk in his Threadneedle Street office, the UK economy was motoring along just nicely: GDP was growing at 3% and inflation was just 1.3%. Chairing his first meeting of the Bank's monetary policy committee (MPC), interest rates were cut to a post-war low of 3.5%. His ambition was that monetary policy decision-making should become "boring".
How we would all like it to become boring now. When the crunch first took hold, the Aston Villa-supporting governor insisted it was not about to become an international crisis. In the first weeks of the crunch he refused to pump cash into the financial system and insisted that "moral hazard" meant that some banks should not be bailed out. The Treasury select committee has said King should have been "more pro-active".
King's MPC should have realised there was a housing bubble developing and taken action to damp it down and, more recently, the committee should have seen the recession coming and cut interest rates far faster than it did.
John Tiner, FSA chief executive, 2003-07No one can fault 51-year-old Tiner's timing: the financial services expert took over as the City's chief regulator in 2003, just as the bear market which followed the dotcom crash came to an end, and stepped down from the Financial Services Authority in July 2007 - just a few weeks before the credit crunch took hold.
He presided over the FSA when the so-called "light touch" regulation was put in place. It was Tiner who agreed that banks could make up their own minds about how much capital they needed to hoard to cover their risks. And it was on his watch that Northern Rock got so carried away with the wholesale money markets and 130% mortgages. When the FSA finally got around to investigating its own part in the Rock's downfall, it was a catalogue of errors and omissions. In short, the FSA had been asleep at the wheel while Northern Rock racked up ever bigger risks.
An accountant by training, with a penchant for Porsches and proud owner of the personalised number plate T1NER, the former FSA boss has since been recruited by the financial entrepreneur Clive Cowdery to run a newly floated business that aims to buy up financial businesses laid low by the credit crunch. Tiner will be chief executive but, unusually, will not be on the board, so his pay and bonuses will not be made public.
Dick Fuld, Lehman Brothers chief executiveThe credit crunch had been rumbling on for more than a year but Lehman Brothers' collapse in September was to have a catastrophic impact on confidence. Richard Fuld, chief executive, later told Congress he was bewildered the US government had not saved the bank when it had helped secure Bear Stearns and the insurer AIG. He also blamed short-sellers. Bitter workers at Lehman pointed the finger at Fuld.
A former bond trader known as "the Gorilla", Fuld had been with Lehman for decades and steered it through tough times. But just before the bank went bust he had failed to secure a deal to sell a large stake to the Korea Development Bank and most likely prevent its collapse. Fuld encouraged risk-taking and Lehman was still investing heavily in property at the top of the market. Facing a grilling on Capitol Hill, he was asked whether it was fair that he earned $500m over eight years. He demurred; the figure, he said, was closer to $300m.
... and six more who saw it coming
Andrew LahdeA hedge fund boss who quit the industry in October thanking "stupid" traders and "idiots" for making him rich. He made millions by betting against sub-prime.
John Paulson, hedge fund bossHe has been described as the "world's biggest winner" from the credit crunch, earning $3.7bn (£1.9bn) in 2007 by "shorting" the US mortgage market - betting that the housing bubble was about to burst. In an apparent response to criticism that he was profiting from misery, Paulson gave $15m to a charity aiding people fighting foreclosure.
Professor Nouriel RoubiniDescribed by the New York Times as Dr Doom, the economist from New York University was warning that financial crisis was on the way in 2006, when he told economists at the IMF that the US would face a once-in-a-lifetime housing bust, oil shock and a deep recession.
He remains a pessimist. He predicted last week that losses in the US financial system could hit $3.6tn before the credit crunch ends - which, he said, means the entire US banking system is in effect bankrupt. After last year's bail-outs and nationalisations, he famously described George Bush, Henry Paulson and Ben Bernanke as "a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America".
Warren Buffett, billionaire investorDubbed the Sage of Omaha, Buffett had long warned about the dangers of dodgy derivatives that no one understood and said often that Wall Street's finest were grossly overpaid. In his annual letter to shareholders in 2003, he compared complex derivative contracts to hell: "Easy to enter and almost impossible to exit." On an optimistic note, Buffett wrote in October that he had begun buying shares on the US stockmarket again, suggesting the worst of the credit crunch might be over. Now is a great time to "buy a slice of America's future at a marked-down price", he said.
George Soros, speculatorThe billionaire financier, philanthropist and backer of the Democrats told an audience in Singapore in January 2006 that stockmarkets were at their peak, and that the US and global economies should brace themselves for a recession and a possible "hard landing". He also warned of "a gigantic real estate bubble" inflated by reckless lenders, encouraging homeowners to remortgage and offering interest-only deals. Earlier this year Soros described a 25-year "super bubble" that is bursting, blaming unfathomable financial instruments, deregulation and globalisation. He has since characterised the financial crisis as the worst since the Great Depression.
Stephen Eismann, hedge fund managerAn analyst and fund manager who tracked the sub-prime market from the early 1990s. "You have to understand," he says, "I did sub-prime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn't give a shit what it sold."
Meredith Whitney, Oppenheimer Securities On 31 October 2007 the analyst forecast that Citigroup had to slash its dividend or face bankruptcy. A day later $370bn had been wiped off financial stocks on Wall Street. Within days the boss of Citigroup was out and the dividend had been slashed.
Kathleen Corbet, former CEO, Standard & Poor'sThe credit-rating agencies were widely attacked for failing to warn of the risks posed by mortgage-backed securities. Kathleen Corbet ran the largest of the big three agencies, Standard & Poor's, and quit in August 2007, amid a hail of criticism. The agencies have been accused of acting as cheerleaders, assigning the top AAA rating to collateralised debt obligations, the often incomprehensible mortgage-backed securities that turned toxic. The industry argues it did its best with the information available.

Corbet said her decision to leave the agency had been "long planned" and denied that she had been put under any pressure to quit. She kept a relatively low profile and had been hired to run S&P in 2004 from the investment firm Alliance Capital Management.
Investigations by the Securities and Exchange Commission and the New York attorney general among others have focused on whether the agencies are compromised by earning fees from the banks that issue the debt they rate. The reputation of the industry was savaged by a blistering report by the SEC that contained dozens of internal emails that suggested they had betrayed investors' trust. "Let's hope we are all wealthy and retired by the time this house of cards falters," one unnamed S&P analyst wrote. In another, an S&P employee wrote:
"It could be structured by cows and we would rate it."

What do you think?

Gloomy Week For UK Economy, but every cloud....

2009-01-25T08:07:00.000-08:00

Well its official, figures this week told us what we all knew. We are is recession. Sterling weakened accordingly, creating a 25 year low against the US Dollar.

From an economic perspective its impossible to put a positive spin on whats going on, the only thing we can do is realise that the world isn´t going to stop, we will all come out the other side, probably a little wiser.

Many investors see now as the time to pick up some bargain basement assets. John Cauldwell (Founder of Phones4U) revealed he spent a considerable amount of money on commercial property as he believes the market is at its lowest point, but then again he does have a spare 1.6 billion pounds sitting in his account!

I have just finished a great book by James Caan (Dragons Dens) modestly titled "The Real Deal". One pearl of wisdom from the book really stood out, actually came from the authors father.

"Observe the masses, then do the opposite"

This tends to be the mantra of many successful people and it certainly worked for Mr. Caan