Wednesday, December 2, 2009
World’s Most Expensive Office Markets Get Cheaper
The world’s most expensive office markets got a little cheaper this year. More than 130 cities worldwide had declines in rent expenses in the year ended Sept. 30, CB Richard Ellis Group Inc. said in a report today. Almost 50 cities reported declines of more than 10 percent. Rental costs fell about 30 percent in Midtown Manhattan, 53 percent in Singapore and 41 percent in central Hong Kong. Overall, rents fell an average 7.7 percent across 179 markets worldwide.
“The places that went up the fastest and highest also came down the fastest and at greater depth,” said Raymond Torto, Boston-based chief economist for CB Richard Ellis, the largest publicly traded broker. “You party Saturday night and you pay for it on Sunday morning. That’s true across the globe.”
The global recession and credit crisis are pushing down office rents as companies pare jobs. About 1.93 million job cuts have been announced worldwide this year, data compiled by Bloomberg show. In the U.S., the unemployment rate jumped to 10.2 percent in October, the highest level since 1983. (more)
Eco barons lead the way
THE global rich are going green as never before. This first Sunday Times Green Rich List shows that the enthusiasm among the world’s wealthiest for investments in areas as diverse as electric cars, solar power and geothermal energy is unaffected by the recession.
The Green List has unearthed 100 tycoons or wealthy families worth £200m or more who have made either serious investments in green technology and businesses or hefty financial commitments to environmental causes. In total, the Green 100 are worth nearly £267 billion.
This enormous sum demonstrates that many of the world’s richest tycoons and entrepreneurs have embraced environmentalism. Indeed, our list is dominated by America’s wealthiest financiers and entrepreneurs such as Warren Buffett (worth £27 billion) and Bill Gates (worth £26 billion). (more)
Predictions of War, Financial Bust, and More Gloom
Speaking at a conference in Singapore on Wednesday, Faber said: "The crisis has not solved anything. On the contrary there is less transparency today than there was before. The government's balance sheet is expanding, and the abuses that have led to the one cause of the crisis have continued".
"I think eventually there will be a big bust and then the whole credit expansion will come to an end," Faber added.
"Before that happens, governments will continue printing money which in time will lead to a very high inflation rate, and the economy will not respond to stimulus". (more)
Where We Are in this Parabolic Gold Rally?
Another Debt Cloud Rises; It Won’t Be the Last $60 billion worth of Dubai state company debt threatened by default hung over the market last week. To understand more about Dubai and who runs it, click on this link to a BBC article.
Fears that the events on the Arabian Peninsula could lead to a second wave of the financial crisis caused a serious sell-off in Asia last week.
However, the influence of the Dubai event on the US market is still difficult to assess due to light trading on Friday. As far as the consequences of the coming default or potential restructuring of the Dubai debt on the world financial system, we agree with Cumberland Advisors’ point of view.“The panic associated with the financial difficulties of Dubai’s government-controlled Dubai World is having ripple effects into commodities, developing countries, and other markets. Such contagion seems to have become commonplace now, as the short-run interests of traders in worldwide markets are matched against the interests of long-run investors.” (more)
Benign neglect may turn the dollar from a safe haven to a dangerous place to be
The trade deficit of the world's biggest economy also remains huge. How much longer can the dollar defy gravity?
Last week, America's currency fell to a 15-month low against the euro, cutting through $1.5050. Against a trade-weighted currency basket, the dollar was also at its weakest since July 2008. The greenback plunged to parity with the rock-solid Swiss franc, then hit a 14-year low against the yen.
The dollar's weakness is based on fundamentals – not least America's jaw-dropping debt. It's a long-term trend. From the start of 2002 until the middle of last year, the dollar lost 30pc on a trade-weighted basis.
It was during the summer and autumn of 2008, though, that the sub-prime debacle entered its most vicious phase (so far). The rescue of Fannie Mae and Freddie Mac, America's quasi-state mortgage-lenders, followed by the Lehman collapse, sent shock waves around the world. For six months or so, Western investors piled into what they knew, liquidating complex positions and buying plain dollars. The greenback became stronger, spiralling upward during the so-called "safe haven rally". (more)
China 2009 Gold Demand, Output May Gain to Records
China, the world’s largest gold producer, may break records for both demand and output this year as jewelry consumption soars and miners expand production after prices reached all-time highs, the China Gold Association said. Gold demand may be more than 450 metric tons compared with 395.6 tons in 2008, and output may climb to 310 tons, compared with 282 tons a year earlier, Zhang Yongtao, deputy secretary- general of the association, said at a conference in Kunming yesterday. China’s gold production increased by an average 9.5 percent in the past eight years, he said.
China overtook South Africa to become the world’s largest producer in 2007 and the World Gold Council said in July that the nation may pass India as the biggest consumer. Bullion touched a record of $1,195.13 an ounce Nov. 26 as a weaker dollar drove demand for precious metals as an alternative asset. (more)
Is The Fed Facing Margin Calls From European Banks?
Consider first "footnote 33," that reads as follows:
The first Basel Accord, known as Basel I, was issued in 1988; it focused on the capital adequacy of financial institutions. The capital adequacy risk—the risk that a financial institution will be hurt by an unexpected loss—categorizes the assets of financial institution into five risk categories (0 percent, 10 percent, 20 percent, 50 percent, and 100 percent). Banks that operate internationally are required to have a risk weight of 8 percent or less.... (more)