THE number of Americans filing new claims for jobless benefits fell sharply last week to its lowest level since the early days of the 2007-09 recession, suggesting that the US job market is recovering.
Initial claims for state unemployment benefits dropped by 18,000 to a seasonally adjusted 324,000, the US Labour Department said yesterday. The level of claims was the lowest since January 2008, a month after the start of a recession. - Reuters.
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IMF2013-05-05 14:22
IMF 'carefully' monitoring capital flows to Asia
THE International Monetary Fund (IMF) said yesterday it is "carefully" monitoring massive capital flows into Asia and urged the region's policymakers to guard against risks of overheating.
The level of the inflows - which have sent Asian stocks and property prices skyrocketing - are close to or above historical trends in most economies, including those in South-east Asia, the IMF said.
"We are seeing finanical pressures - you may call them imbalances, or the risk of imbalances - rising", said Mr Anoop Singh, director for the IMF Asia and Pacific Department. - AFP.
No surprise that the European Central Bank and the Bank of England are keeping interest rate low, as the region grapples with debt.
And signs are pointing to a rate increase here, as the US prepares to end quantitative easing and China tightens credit.
The result: less money available.
For home owners and those shopping for property, that means paying more for their mortgages.
Fluctuates
Home loans are pegged to a floating rate, which fluctuates.
As interest rates rise by, say 1 per cent, current home owners would have to fork out more cash to cover their monthly mortgages.
An increase in interest rate means monthly mortgage installments will rise and this may dent demand.
Less demand (also pulls) property prices downwards, as home buyers and investors are expected to become more discerning in their purchases.
Home buyers and investors already have to fork out more cash, due to the increase in additional buyer's stamp duty, lower loan-to-value ratios and higher down payment.
Private home sales volume has also been down since March, with property agents saying the average wait for a sale can take up to six months compared to a maximum of two months a year ago.
The rental market is also expected to slow down, with a huge supply of completed homes vying for a limited pool of tenants.
What lies ahead
US: Things improving?
• The Federal Reserve has hinted that quantitative easing (QE) is being tapered off.
• Less money is printed and circulated around the world.
Europe's austerity drive
• Deep spending cuts and political turmoil as the region grapples with debt crisis.
• Consumer confidence is likely to plunge further.
• Minor knock-on effects in Asia.
China's slowdown
• Beijing's move to tighten credit: Harder for people to borrow money and buy goods and services.
• Trade shrinks and investments slow down.
• Chinese investors less keen to snap up new property abroad.
What less money means:
Rising interest rates here
• Less money in the system means banks are more careful about who they lend to.
• Borrowing (like getting a home loan) becomes more expensive.
• Since home loans here are pegged to a floating rate, a rate increase translates to a significant rise in the monthly mortgage repayment.
• Current homeowners have to come up with more cash to finance their mortgage.
• Potential buyers are less likely to take loans for big-ticket items like property.
Rentals down
• Limited pool of tenants as the Congress tightens foreign expat numbers.
• So tenants can pick and choose from what's available - and bargain for lower prices.
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Anonymous2013-08-25 12:51
CURRENCIES
If Uncle Sam is well, Why is Asia sick?
Currencies against the US dollar compared to earlier this year 2013
Indian rupee
Down 15 per cent
Hit all-time low and closed at 64.11 rupees to US$1.
Indonesian rupiah
Down 10.7 per cent
Hit four-year low and closed at 10,755 rupiah to US$1.
Malaysian ringgit
Down 7 per cent
Hit three-year low and closed at RM3.29 to US$1.
Thai baht
Down 5 per cent
Hit 13-month low and closed at 31.78 baht to US$1.
End of easy credit party as US recovers
THERE'S that financial adage - if the US sneezes, Asia catches a cold.
But Uncle Sam is recovering and Europe is doing much better, thank you.
Then why are Asian currencies and stock markets down?
In a perverse way, bad news is now good.
And good news, bad.
When the Federal Reserve, on the back of a recovering economy, said it will cut back on the printing of money - it had been printing trillions of US dollars every month and much of it flowed to Asia - stock markets around the world plunged in value.
Now the Federal Reserve qualified it by saying it was watching US job figures before deciding on tapering.
So when fewer jobs were recently created than had been anticipated, that's bad news, right?
Well no, stock markets climbed.
Why? Simply put - a recovering US economy means the post-Lehman Brothers and easy credit party is coming to an end.
Yes, the lights are coming on and people don't like the new dawn. The supply of easy money is ending and some people have become addicted to partying with easy money.
The lights are also showing up the flaws, with stock markets and currencies in the region falling.
People are worried the fundamentals may not have been all that sound and the economies in the region weren't as robust as first thought.
Take Jakarta, which until about a month ago still had a swagger.
Lamborghinis
On the crowded streets in Senayan, Lamborghinis and BMWs crowded out the more common Toyota Kijangs and ojek riders (motorcycle taxis).
Now there's a little more feet dragging and furrowed brows.
And while the luxury marquees still try to hit 50kmh along Glodok - Jakarta's Chinatown - the drivers are now more worried about that monthly installment.
"Certainly people are worried that the new apartments they bought will fall in value while their monthly payment goes up because of higher interest rates. They are also worried if a slowdown leads to job losses," said Mr Aries W, a 40-year-old university lecturer living in Jakarta.
Then there's Thailand, which has seen a pregnant pause in growth after two quarters of painful contractions.
This August 2013, Thais woke up to a recession.
Things are not much better in India either, with the rupee and stock market going down faster than a glass of chilled lassi.
"There is a lot of resemblance to prior crises like 1997-98. We have had two countries going down, India and Indonesia, and now you have got to start thinking about the third and fourth countries," Mr Pradeep Mohinani, a Nomura credit analyst in Hong Kong, told Malaysian Insider.
He added "The likely candidates would be those with high fiscal deficits, slowing economies and high foreign ownership of government bonds. Thailand and Malaysia tick most of the boxes in that regard,"
In 1997, a series of financial events, including steep falls in the value of local currencies, turned the proud Tigers of South-east Asia, which had borrowed heavily in US dollars to fund mega projects, into alley cats scrounging for foreign investment.
It was dubbed the Asian financial crisis.
But it won't be the Asian financial crisis again because the regional governments saw it coming this time.
Furthermore, in spite of the post-2008 partying, there was no bingeing in borrowing large sums in short-term loans.
Post-global financial crisis in 2008, Asia reaped the benefits with trillions of dollars leaving the US and Europe looking for high returns.
A lot of it landed in South-east Asia.
But four years of expansion are now being reduced into a few months of contractions.
Now, investors want to return the money to the US and Europe.
Yes, the party is over.
Now there's the hangover to deal with.
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Anonymous2013-08-30 11:27
【The history of financial Aid(include Debt) from Japan to Korea】
1910 Japan takes over a huge Korean debt from Russia before Korea was annexed to Japan.
1910 Japan funds maintenance Infrastructure of Korea during Annexed Period 600 billion US dollars
1965 Japan-Republic of Korea Basic Relations Treaty Fund 800 million US dollars
1983 Economic Cooperation Debt 4 billion dollars
1997 Economic currency crisis relief Debt 10 billion dollars (IMF 57 Billion Dollars)
2002 Japan-Korea FIFA World Cup Stadium construction Debt 30 billion dollars
2006 Korean won relief Debt 20 billion dollars
2008 Lehman Shock relief Debt 30 billion dollars
Others:
ODA interests are not returned yet.
When Japan discontinues ODA to Korea, Korean President demanded apology from Japan to continue ODA.
Japan financed Korea every time they have Economic Crisis, but these debts were never returned.
At the time of IMF fund, Korea officially remarked that IMF was welcome but Japan money was annoyance.
These debt were not returned yet.
During Lehman Shock, Korean president remarked “Japan is very stingy, Asian countries are not happy of attitude of Japan”
During FIFA world Cup, Korea requested 30 billion dollar debt from Japan to construct their Succor stadiums.
And Korea requested to Spell the World Cup name as “Korea-Japan World Cup” not “Japan Korea World Cup”
Korea is the Country who does not return money, but also steal Takeshima island from Japan, and invent disastrous history to demand apology and compensation from Japan.
We have to understand Korea is such country to defend from their totally ridiculous demands.
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Anonymous2013-09-09 0:12
Wealthy Germany's forgotten poor
Retiree's tearful appeal to Merkel on TV draws attention to their plight
Ms Paweski barely gets by on her monthly state pension and housing benefit of €723 from which she pays €310 for rent and electricity. She grows vegetables as she cannot afford to buy groceries.
BERLIN - At first glance, Ms Christel Paweski's small plot of land, with its garden gnome and flowerbeds, appears to be the epitome of comfortable German retirement. Tucked away among the flowers are rows of potatoes, peppers and cabbage that the former nurse carefully tends.
But her gardening is not a hobby - it's survival. On her meagre pension, the 70-year-old says she simply cannot afford to buy groceries at the store.
Ms Paweski's plight and that of millions of other Germans living below or close to the poverty line burst onto the campaign for the Sept 22 national elections after she tearfully confronted Chancellor Angela Merkel on national television, asking whether the country's leader had forgotten the growing numbers of retirees and working poor who have missed out on Germany's economic success.
"I didn't want to cry in front of her," she told Associated Press in the poorly heated, rickety wooden shack where she spent the last four brutal Berlin winters before recently finding an apartment she could afford.
"But then I remembered how I used to go to bed with three pullovers and three pairs of socks in winter because I didn't have proper heating."
Ms Paweski, who retired six years ago, barely gets by on her monthly state pension and housing benefit of €723 from which she pays €130 for rent and electricity.
The amount of the divorced mother of one of relying on food handouts and homegrowth vegetables - and still sometimes going hungry in order to buy clothes - does not chime with the expectation most Germans have of being able to retire in relative comfort after decades of work. It also jars with the image of wealthy Germany as an oasis of prosperity amid Europe's economic turmoil.
To be sure, with a booming export surplus, full tax coffers and an unemployment rate of 6.8 per cent, Germany is the envy of many of its European neighbours, which are enduring sky-high levels of joblessness and public debt.
Berlin has encouraged Greece, Spain, Italy and others to emulate a series of economic reforms it began a decade ago that helped drive down the cost of labour and boost Germany's competitiveness.
But many economists say the reforms have also pushed down real wages and put hundreds of thousands precariously close to the poverty line. Germany is also one of the few European nations that do not have a minimum wage. Since Dr Merkel came to power in 2005, the number of people considered in poverty - earning less than €869 after taxes each month - or on its borderline has grown by about 400,000 to 12 million, according to the Federal Statistics Office.
Then there are the estimated three to five million of Germany's 80 million people who live in "hidden" poverty.
Dr Marcel Fratzscher, president of the German Institute for Economic Research, called the drop in unemployment from 12 per cent in 2005 to 6.8 per cent today "certainly a big success".
"But there's a significant number of Germans whose real income is lower today than it was a decade ago," he said.
Dr Merkel - who has fervently preached austerity abroad - said she took Ms Paweski's case seriously, perhaps mindful that most polls put the combined share of votes for left or centre-left parties on a par with that of her centre-right coalition. "I haven't forgotten her," she said after Ms Paweski's emotional appeal.
ASSOCIATED PRESS
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Anonymous2013-09-23 13:19
US fiscal drama may mute trading
Wall Street analysts say that the current policy stand-off is more bluster than bravado, and contains overblown threats.
NEW YORK - Investors may be tempted to shy away from stocks these two weeks as the latest version of the fiscal follies plays out in Washington.
It is understandable. The prospect of a government shutdown or, worse, default on the federal debt, rekindles memories of 2011 when Washington's infighting prompted the loss of the United States' triple-A credit rating and was a key driver behind the stock market's last full-on correction.
The sense from Wall Street analysts this time, however, is that the current drama is likely to feature more bluster than bravado, and contains overblown threats.
"In spite of all the brinkmanship being talked about... there will be a deal and then we will move on," said Mr Stephen Massocca, managing director at Wedbush Equity Management in San Francisco.
This stand-off comes with two separate but related deadlines. First, failure to come up with a budget deal by the end of the month risks a federal government shutdown starting on Oct 1.
Then by the middle of next month, lawmakers must vote to raise the federal debt ceiling to prevent a default.
The posturing has been under way for weeks. In the latest move, the Republican-controlled House of Representatives passed legislation last Friday to fund federal agencies through to mid-December, but also inserted a provision killing President Barack Obama's health-care overhaul.
Democrats, who control the Senate, have said they will strip out that provision when the Bill comes before the Senate, most likely this week.
Wall Street players are sanguine about the events unfolding in Washington.
"Uncertainty will probably rise ahead of these events, but we think this is likely to be short-lived and probably less severe than some other recent episodes," said a Goldman Sachs research note.
In fact, the current episode could prove to be an empty threat, like the so-called "fiscal cliff" last December.
After weeks of dire predictions of big tax hikes and draconian spending cuts if no deal was reached, lawmakers came to a last-minute accord, and the market kicked into high gear for this year.