Deficits May Make U.S. Eager to Pounce on Tax Returns (Update1)

By Alexis Leondis

Dec. 11 (Bloomberg) -- The most important U.S. tax tip to remember this year: make sure your return is accurate, as the Internal Revenue Service is looking for every dime it can get, said tax attorney Ian Comisky.

“Because of a huge deficit and major enforcement initiatives by the IRS, an inaccurate return will have a better chance of being picked up than in prior years,” said Comisky, a partner at the Philadelphia office of law firm Blank Rome LLP.

The U.S. budget deficit grew to a record $455 billion this fiscal year and the Congressional Budget Office estimates it will reach $408 billion for the first two months of fiscal year 2009.

IRS Commissioner Doug Shulman said in a Dec. 8 speech to tax lawyers in Washington that the agency will “remain vigilant to ensure that wealthy individuals don’t use offshore accounts to avoid paying their U.S. taxes.”

People with incomes above $500,000 a year are more likely to cheat on their taxes than those with lower incomes, according to a paper published in September by University of Michigan business professor Joel Slemrod and IRS economist Andrew Johns, based on unpublished IRS data from 2001.

Uncertainty regarding the economy and possible tax measures by President-elect Barack Obama, including a campaign pledge to raise the long-term capital gains tax to 20 percent from 15 percent for households that earn more than $250,000, has many taxpayers wondering whether to accelerate or defer income and deductions.

Dismal Year

There are steps taxpayers can take to make sure they make the most of a dismal year while still following the rules, planners say.

“Always think about tax planning over a two-year horizon, at a minimum,” said Jackie Perlman, senior tax research analyst for Kansas City, Missouri-based H&R Block Tax Institute. Filers should estimate what their income will be and any big purchases they will make over the next couple of years, she said.

A 39 percent drop in the Standard & Poor’s 500 Index this year may present an opportunity for investors to restructure their portfolios. Stocks that have performed poorly can be “harvested” to offset capital gains. If losses exceed capital gains, up to $3,000 can be deducted from taxable ordinary income for married couples who file jointly. Additional losses can be carried over to offset gains in future years.

Wash Rule

Alan Skrainka, chief market strategist at Edward Jones & Co., the brokerage firm based in St. Louis, said investors need to buy similar investments after selling to avoid “moving out and missing a market rebound.” Buyers also should be aware of the so-called wash-sale rule, which prevents repurchase of the same security or fund before or after 30 days from the selling date.

Beware of buying a mutual fund before it makes its yearly capital gains distribution, which is usually in mid-December, said Helen Modly, a fee-only financial planner at Focus Wealth Management, Ltd. in Middleburg, Virginia. Payout dates are generally posted on a fund’s Web site.

Record mutual-fund withdrawals have forced managers to sell their profitable stocks to meet redemption requests, triggering distributions and possible capital gains, even if the fund has lost value.

“If you buy in right before distributions, some of the money you bought into the fund with will be returned to you as taxable income,” Modly said. She also advised reporting income as diligently as possible, saying “this is not the year to go into the gray area on your return.”

AMT Rules

Tax filers should be aware of rules concerning the alternative minimum tax, as some regular deductions don’t apply. Initially created to target the highest earners, the AMT now affects about 4 million taxpayers because it hasn’t been adjusted for inflation. Tax-planning software and online calculators at Web sites such as http://www.hrblock.com are usually equipped to assess AMT liability.

For 2008, married joint filers who earn less than $69,950 are exempt from the AMT. Employees who exercise and hold incentive stock options offered by their employer can often land in AMT territory, said Perlman of H&R Block.

Charitable giving can help lower tax liability. Donors must itemize their deductions and have receipts for donations over $250, according to Kim Wright-Violich, president of San Francisco-based Schwab Charitable. Checks made out to charitable organizations must be postmarked by Dec. 31 to be deductible this year.

IRA Donation

Taxpayers aged 70 and a half and older who don’t need their mandatory IRA distributions can donate up to $100,000 directly to charity under a tax provision extended through 2009. Although the donation isn’t deductible, it is not included as part of income. To qualify, the distribution can only be made to a public charity, not a donor-advised fund or private foundation.

Donors should remember that different rules apply to non- monetary assets, such as artwork, real estate, yachts and airplanes, which should always be appraised, said Wright- Violich. The title of ownership must be transferred from the donor to the charity before the end of the year to get a tax deduction for the same year.

This year and through 2009, joint filers who don’t itemize deductions, but pay real estate taxes, will get an additional standard deduction of up to $1,000 depending on the real estate taxes paid.

“Just report income correctly and don’t be too aggressive with deductions,” said Comisky, co-author of “Tax Fraud and Evasion.”

“The IRS is the last government agency you want to have problems with.”

To contact the reporter on this story: Alexis Leondis in New York aleondis@bloomberg.net.

Last Updated: December 11, 2008 12:12 EST

Fort Lauderdale set for 37th annual Winterfest Boat Parade

Santa, Belushi and more top lineup for 37th annual event in Lauderdale

By Christina Veiga |South Florida Sun-Sentinel

December 11, 2008

One of the boats containing many santa elves heads out of Port Everglades and under the 17th Street bridge as the people on board wave at the people on the bridge. (ROBERT DUYOS, Sun Sentinel / December 16, 2000)

Santa is poised to set a world record, and the Blues Brothers are ready to rock on the water.

The Winterfest Boat Parade returns Saturday, departing at 6:30 p.m. along the New River from just east of the Stranahan House, 335 SE Sixth Ave. off Las Olas Boulevard in Fort Lauderdale Is your Fort Lauderdale restaurant clean? - Click Here..

From there, the parade will pass through downtown and travel east to the Intracoastal Waterway, then north to Lake Santa Barbara in Pompano Beach.

"We're looking forward to even bigger and better ideas," said Jane Miskovich, of Pittsburg, Pa., who lives in Fort Lauderdale six months of the year. "They always come up with something different."

This is the fourth year she and her husband plan on watching the 12-mile parade.

Grand Marshal Jim Belushi, star of ABC's sitcom According to Jim, is to kick off the 37th annual event. Trailing behind will be 100 boats, each with its own story.

Dressed in a dark suit, hat and sunglasses, Kerry Gruson, 61, will ride out the parade on a Blues Brothers-themed boat entered by Shake a Leg, a watersports center for the disabled in Miami.

Gruson, of Miami, is a paraplegic. She said she's excited to showcase Shake a Leg and "the healing power of water" in front of the hundreds of thousands of spectators parade organizers expect.

Hank Thorschmidt, 50, of Lake Worth, is also looking forward to participating — again. This is his 24th year entering the parade.

"It's still a great parade," Thorschmidt said. "It brings out the kid in you."

He and his family will ride atop the "Fountain Boat," which sprays 20,000 gallons of water per hour through a device Thorschmidt built.

Boat number 100 features Carl Andrioff, 58, of Boca Raton Click here for restaurant inspection reports, who will attempt to set a world record for the most lights connected to a Santa suit, with 1,000 LED lights. It took Andrioff four months to build the suit, complete with an air conditioning system.

Observers can watch Santa and others light up the night from along the sea walls east of the Stranahan House. Parts of the parade can still be seen to the west, but boats won't go by in order or be fully prepared for the show.

Hugh Taylor Birch State Park, 3109 E. Sunrise Blvd. in Fort Lauderdale, is also a viewing area. Park entry costs $2, and seating is free at the public level or $20 for reserved spots. Blankets or chairs are recommended for public-area seating.

The park will be closed to motor vehicles, but shuttles will run from The Galleria mall, 2414 E. Sunrise Blvd., Fort Lauderdale.

For more information, visit winterfestparade.com.

The New River will be closed to non-parade boat traffic starting at 2:30 p.m. Saturday. Organizers said long-term dock renters and traveling boaters who rent city docks along the river will have to move their boats for the parade.

Boaters who want to watch the parade should set anchor by 4 p.m. to avoid bridge closures. For anchor sites, visit earthnc.com/winterfest.

source: sun sentinal

George Washington, Farewell Address, September 17, 1796:

As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible.

Marcus Tullius Cicero 106 BC to 43 BC:

The budget should be balanced. Public debt should be reduced. The arrogance of officialdom should be tempered, and assistance to foreign lands should be curtailed, lest Rome become bankrupt.

Thomas Jefferson

Yes, we did produce a near-perfect republic. But will they keep it? Or will they, in the enjoyment of plenty, lose the memory of freedom? Material abundance without character is the path of destruction.

Yuan's slide no power game

Yuan's slide no power game
By Antoaneta Bezlova

BEIJING - Recent downward movements of the Chinese yuan have been interpreted in Beijing as political statements aimed at the incoming administration of US president-elect Barack Obama indicating that it should respect China's sovereignty rights on the currency issue.

Obama, when a candidate for the US presidency, accused China of keeping the value of its currency artificially low to protect the competitiveness of its export prices.

"Little concrete results can be expected to be achieved with a lame duck administration," said independent economist Xie Guozhong. "That is why Beijing chose this time to send a strong



signal to the incoming US administration that they need to be more considerate about China's needs to maintain its currency stable."

But there are signs that the yuan's sharp fall last week is more than just a salvo in a tense diplomatic exchange, and that, not unlike the US during the Great Depression, China is trying to export its way out of the economic crisis.

"China can go through its own version of the 1930s' Great Depression," argues Michael Pettis, professor of finance at Guanghua School of Management at Beijing University.

According to Pettis, Beijing's recent moves - increasing subsidies to exporters and halting appreciation of the yuan - bear similarities to the ways the US sought in the 1930s to export its problem of overcapacity.

Beijing exercises heavy control over the yuan's value. While most Asian currencies (except the Japanese yen) have fallen against the US dollar in recent months, the yuan has remained stable.

China gained considerable political credit from its decision during the 1997-8 Asian financial crisis to keep its currency stable and often reminds its neighbors of that effort. Nor have Chinese officials discouraged expectations that they would repeat this feat during the current economic crisis.

But then the Chinese yuan fell by its maximum daily trading limit of 0.5% against the US dollar for two consecutive days last week - the largest such change since China ended its effective peg to the US currency in the summer of 2005.

An editorial in the China Times newspaper was emphatic: "The currency move is a political signal aimed at the Obama administration not to exercise more pressure on China to revalue its currency.''

The sudden and steep fall of the yuan on December 1 came ahead of the latest round of biannual US-China strategic economic dialogue held in Beijing, where US Treasury Secretary Henry Paulson was expected by some economists to raise the heat on his hosts to speed up the appreciation of the Chinese currency.

China has been under immense pressure from its trade partners in the West to allow the yuan to appreciate and thus reduce its huge trade surplus. Over the past two years, China allowed the yuan to gain value relative to the dollar. That process has come at a high price, hitting Chinese exporters who were already struggling with rising costs and slumping global demand.

In mid-November, Zhou Xiaochuan, governor of the People's Bank of China, said that he could not rule out a depreciation of the yuan if the external environment remained tough for Chinese exporters.

His statement was followed by comments by President Hu Jintao that China was in danger of losing its completive edge in trade. Speaking to a regular study session of top Communist party officials, Hu warned that the economic crisis was testing the government's ability to steer the country through simultaneous global recession.

Several weeks ago Beijing announced a stimulus package of 4 trillion yuan (US$586 billion) in government and private-sector spending on public works and social programmes but little of that package is aimed at helping the collapsing exporters.

The yuan's drop came amid signs that the economic slowdown was hurting the country's exports more than had been previously envisaged. In southern China, where the main manufacturing hubs are based, hundreds of factories have gone bust, throwing thousands of workers on the streets.

November trade figures were expected to be released on Wednesday and experts anticipate export growth will be negative.
The Ministry of Commerce's latest trade outlook report warns of more closures amid plunging global growth rates. "The situation will get even more complicated, and there will be more uncertainties in 2009,'' the report said.

Exports have accounted in recent years for about one-third of the country's growth in gross domestic product. Beijing has been trying to shift gears and boost domestic consumption as the new driving force for growth but change has been slow.

In the days after the currency drop, speculation grew that Beijing was going to adopt a long-term weaker yuan policy to try and bail out its struggling exporters.

"There are still several leverages that the government could use to increase exports including the exchange rate," said Pei Changhong, a trade expert, in the "Blue Book of China's Economy", released by the China Academy of Social Sciences.

Commerce minister Chen Deming has rejected suggestions that the drop in the yuan was a deliberate government move to stabilize exports, saying it was due to "purely market forces".

The yuan's value has been a perennial bone of contention between China and its trade partners in the West, particularly the US, which says the low value of Chinese currency has allowed Beijing to grow its economy at the expense of competing countries' manufacturers.

China generates a huge trade surplus of goods and services, which last year accounted for 9% of its GDP. As more and more economies enter recession, Beijing's moves to use currency regime to ward off economic troubles are likely to raise protectionist hackles in more than one country.

"They [the Chinese] can't get away with increasing their trade surplus and exporting their over-capacity," says Pettis. "There would be a wave of anti-China sentiment around the world".

source: asia times

link to the original post:
http://www.atimes.com/atimes/China_Business/JL11Cb01.html


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www.FortLauderdaleLiving.net

Title attorney latest charged in mortgage scam

By Jeff Ostrowski Thursday, December 4, 2008, 03:53 PM

A Boca Raton title attorney has been charged with one count of mail fraud after selling a home to a player in a wide-ranging real estate scam that involved dozens of properties in Palm Beach County.

Marni Belkin, an attorney who ran Fortune Title Services in Boca Raton, was charged Nov. 21 with using a bogus loan application to sell a home in suburban Lake Worth to convicted scammer Ralph Michel in 2006. See the charge here.

Belkin closed at least 20 transactions in 2006 and 2007 involving Berry Louidort, Michel, their associates and straw buyers the pair recruited, according to property records.

When mortgage broker Lauren Jasky was sentenced today for her role in the scam, a friend of the Jasky family spoke to the judge and blamed Belkin for Jasky’s involvement in the scam.

“She was introduced to the bad guys by an attorney she trusted, Marni Belkin,” said the family friend, Michael Sonsini.

The fraud ring duped Belkin, her attorney, Marc Nurik, told me in May.

“The title company in this case did not do anything wrong and was not part of the criminal fraud,” he said, adding that Belkin and her employees had no reason to question the deals. In fact, the scam was sophisticated enough that sham borrowers appeared to have hefty bank accounts at Bank of America and six-figure incomes from a Delray Beach insurance agency, federal investigators said.

source: palmbeachpost.com

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http://www.palmbeachpost.com/blogs/content/shared-blogs/palmbeach/realestate/entries/2008/12/04/title_attorney_latest_charged.html#comments

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Locals pour more and more of their income into mortgages

By ANDREW ABRAMSON and CHRISTINE STAPLETON

Palm Beach Post Staff Writers

Monday, December 08, 2008

The golden rule of not spending more than 25 percent of your income on housing no longer applied for nearly four of every 10 mortgage holders in Palm Beach County in 2007, Census figures show.

That number probably is higher now and likely to grow even more before getting smaller, housing analysts say.

"With the amount of new foreclosures, high unemployment, in addition to historically high amount of inventory means we're seeing more households spending a larger portion of income toward housing expenses," said housing analyst Jack McCabe, of McCabe Research Consulting in Deerfield Beach. "Unfortunately that's going to hold true, and we'll probably see those rates increase by the end of next year."

Survey data released Monday by the U.S. Census Bureau shows that more than 25 percent of Palm Beach County residents spent at least 35 percent of their household income on housing costs in 2007, up from 24 percent in 1999.

The growth in the number of people spending more than 35 percent of their income on their mortgage, property taxes, insurance and utilities was even greater in local cities: from 21.1 percent in 1999 to 30.7 percent in 2007 in Wellington, from 20 percent to 32.9 percent in Royal Palm Beach and from 22.8 percent to 33.8 percent in Port St. Lucie.

That's largely because home values were skyrocketing between 2000 and 2007.

In Wellington, more than 32 percent of homes were valued over $500,000, up from 3.6 percent in 2000. In Jupiter the percentage was 25.6 percent, up from 6.4 percent in 2000, according to the Census data.

Before the real estate bust, incomes were rising about 3 percent while the cost of living was going up 25 percent to 30 percent, said Bill Davis, mortgage banker for Private Funding Specialists.

"That was one of the things led to the crash," Davis said.

McCabe says the percentage of mortgage holders paying more than 35 percent of their income for housing has probably grown since 2007 because the unemployment rate in Florida rose from 4.2 percent two years ago to 6.7 percent this year, and he expects it to rise to more than 10 percent in 2009 before improving in 2010.

He also anticipates 3 million foreclosures on a national level in 2009, up from about 2 million this year.

McCabe expects it to start trending back toward the 2000 percentages in the beginning of the next decade.

"In 2010, we'll see the effects of lower housing prices and hopefully lower taxes because house values have dropped, and correlatively you'll have lower insurance cost," McCabe said. "Then you should see the rate in 2011 come down."

But for now, while home values and mortgage rates drop, even those who can afford to buy homes are cautious about committing themselves.

"What's happened in the last three months, is that even though people can afford, they're so fearful of the future that they postpone that decision to purchase for several months, maybe even a year, and see which way the economy is going," Davis said.

source: palmbeachpost.com

link to the original post:
http://www.palmbeachpost.com/localnews/content/local_news/epaper/2008/12/08/a1b_census_1209.html

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Treasury Bills Trade at Negative Rates

Form Bloomberg: Treasury Bills Trade at Negative Rates as Haven Demand Surges (hat tip Justin)

Treasuries rose, pushing rates on the three-month bill negative for the first time ... The Treasury sold $27 billion of three-month bills yesterday at a discount rate of 0.005 percent, the lowest since it starting auctioning the securities in 1929. The U.S. also sold $30 billion of four-week bills today at zero percent for the first time since it began selling the debt in 2001.

My guess is the banks are parking the TARP money in short term treasuries - and that has pushed the yield to zero. The flight to treasuries is across all durations: the Ten year is now yielding 2.67% and the thirty year treasury just over 3.0%.

source: calculatedrisk

link to the original post:
http://calculatedrisk.blogspot.com/2008/12/treasury-bills-trade-at-negative-rates.html


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The CRE Bust: Quick Overview

This post is a summary of recent commercial real estate (CRE) data suggesting that investment in non-residential real estate will decline sharply over the next several quarters.

Note: There is another problem with CRE too (not discussed here) - many existing properties were recently purchased at prices that were based on overly optimistic pro forma income projections. These loans typically included reserves to pay interest until rents increased (like a negatively amortizing option ARM), and it is likely that many of these deals will blow up when the interest reserve is depleted - probably in the 2009-2010 period.

Historically investment in non-residential structures lags investment in residential by 5 to 8 quarters. The reasons are pretty clear - the commercial builders (for malls, offices, lodging, etc.) usually build after they "see the rooftops", i.e. the residential is in place.

It appears the Commercial Real Estate (CRE) bust has started. Here is a summary of recent data:

From the American Institute of Architects:

Click on graph for larger image in new window.

On the heels of a six-point drop in September, the Architecture Billings Index (ABI) plummeted to its lowest level since the survey began in 1995. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI rating was 36.2, down significantly from the 41.4 mark in September (any score above 50 indicates an increase in billings). The inquiries for new projects score was 39.9, also a historic low point.
emphasis added

The key here is that the index fell off a cliff in early 2008, and that there is "an approximate nine to twelve month lag time between architecture billings and construction spending". We should expect weaker non-residential structure investment for the foreseeable future (at least through 2009).

From the Fed: The October 2008 Senior Loan Officer Opinion Survey on Bank Lending Practices

Of particular interest is the increase in tighter lending standards for Commercial Real Estate (CRE) loans. This graph compares investment in non-residential structure with the Fed's loan survey results for lending standards (inverted) and CRE loan demand.

Note that any reading below zero for loan demand means less demand than the previous quarter. This is strong evidence of a significant slump in CRE investment.

Construction Spending. From the Census Bureau: September 2008 Construction at $1,060.1 Billion Annual Rate

The graph shows private residential and nonresidential construction spending since 1993.

Nonresidential construction was at a seasonally adjusted annual rate of $417.7 billion in October, 0.7 percent below the revised September estimate of $420.6 billion.

It appears spending on private non-residential construction (blue line) peaked in June and is just starting to decline.

This graph based on data from the Federal Reserve shows the delinquency rates at the commercial banks for residential and commercial real estate.

Commercial real estate delinquencies are rising rapidly, and are at the highest rate since Q3 '94 (as delinquency rates declined following the S&L crisis).

Mall vacancy rates rising rapidly.

From the WSJ: Mall Vacancies Grow as Retailers Pack Up Shop

For strip centers and other open-air shopping venues, the vacancy rate climbed to 8.4% in the third quarter from 8.1% in the second quarter. That marks the highest rate since 1994, according to Reis.

This graph shows the strip mall vacancy rate since Q2 2007. Note that the graph doesn't start at zero to better show the change.

Office vacancy rates rising.

From Reuters: Office vacancy rate reaches 2-year high: report

U.S. office vacancy rose to 13.6 percent, up 0.5 percentage points from the second quarter, its largest one-quarter jump since the second quarter of 2002. The third-quarter vacancy rate was the highest since the second quarter of 2006 and was 110 percentage points higher than its recent low of 12.5 percent set in the third quarter of 2007.

About 23.7 million square feet of office space was available in the third quarter than was leased. About 18.2 million square feet of that was added in just the third quarter, Reis said. That is more than five times the 3.59 million square feet added in the second quarter.

Hotel occupancy rates falling. See PricewaterhouseCoopers: PricewaterhouseCoopers Forecasts a Substantial Reduction in Hotel RevPAR in 2009


This graph shows the annual occupancy rate for the last 50 years. The data is from PricewaterhouseCoopers LLP (1958 to 1986), and Smith Travel Research (1987 to 2007).

The PricewaterhouseCoopers forecast for 2008 and 2009 are in red. Note: The y-axis starts at 50% to better show the change.

source: calculatedrisk

link to the original post:
http://calculatedrisk.blogspot.com/


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Rory Vanucchi
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On the Road to a Smart Grid

By Kate Galbraith

Scott Jarman, an engineer with Austin Energy, atop a city building that is testing architectural wind as a possible energy source. The smart grid of the future, says the company’s general manager, Roger Duncan, will include much more interaction between building owners and the utility. (Photo: Associated Press)

“Smart grid” is an exciting term that comes up a lot these days. But what does it actually mean? I sat down last week with Roger Duncan, general manager of Austin Energy, one of the most innovative utilities in the nation.

Taking a wide view of the electric grid of the future — one that will likely see increased demand from electrified cars — Mr. Duncan envisions a triangle of consumption and production, its three points being the utility; homes and buildings; and the transportation sector.

In the old model, Mr. Duncan said, the utility simply produced the electricity, delivering it over transmission lines to commercial and residential customers who used it.

“And then you had a transportation sector completely disconnected that ran off petroleum,” he said.

Now, the utility and its customers are developing a much more symbiotic relationship, with more and more homes and businesses, for instance, placing solar panels on their rooftops, allowing them to generate energy that utilities can purchase and redistribute. Essentially, said Mr. Duncan, utilities and customers alike are becoming both consumers and producers of electricity.

Meanwhile, the the transportation sector is slowly becoming part of the electricity equation.

Very slowly. Currently there are only several hundred plug-in hybrid cars in the nation, and Mr. Duncan reckons that large-scale adoption could take another decade. But one day the transportation sector, too, may act as both a consumer and a producer of electricity, if plug-ins become a reality. Not only will they run on electricity, but the energy stored in their charged batteries could be tapped at hours when the grid needs it.

Before this grand vision of a smart grid is to be achieved, Mr. Duncan concedes that there are plenty of questions to be answered. “What are the actual hardware connections that we need?” he asked. “What is the software that will allow us to communicate, even to the level of communicating with appliances like your refrigerator or your pool pump?”

There is also the problem of energy storage. Battery technology must be improved before plug-in hybrids can work on a commercial scale — or before the sun’s energy can be stored for use at night, or the wind’s energy at calm times of the day. “We haven’t developed energy storage capacity yet,” said Mr. Duncan — nor plenty of other tools for the smart grid of the future.

Still, things are moving forward. By the end of next year, Austin Energy may become the first utility in the nation to have installed so-called “smart meters” in every home in its service area.

Smart meters — which are the beating hearts of any smart-grid system — allow both home and building owners, as well as utilities, to monitor power demands in real time, creating a more efficient system of electricity pricing.

That means that rather than charging a flat rate for power, utilities can set prices that vary by time of day — so that people who run their dishwashers at midnight on a midsummer evening, when there is little strain on the electricity system, might pay less than those who run them at 3 p.m., when air-conditioners are on at full blast.

source: nytimes

link to the original post:
http://greeninc.blogs.nytimes.com/2008/12/08/on-the-road-to-a-smart-grid/#more-659


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Worldwide search for asthma clue

By Rebecca Harrison
BBC Horizon

Tristan da Cunha offers a great chance for scientific study

In the middle of the South Atlantic, 1,500 miles from any other land mass lies the most remote inhabited island in the world, Tristan da Cunha.

This in itself is quite extraordinary, but the island is also unique for an entirely different reason - half of its 261 residents suffer from asthma.

Dr Noe Zamel, of the University of Toronto, first recognised this phenomenon when he met the islanders after they were evacuated to Britain in 1961, when the island's volcano erupted.

Studying for his PhD at the time, Dr Zamel was part of the team of scientists assembled to learn everything they could about this unique population.

"I was in charge of doing the pulmonary function tests and I was amazed that every second Tristanian that I tested had evidence of airway obstruction caused by asthma" said Dr Zamel.

After the volcano calmed, the islanders returned home, followed eventually in 1993 by Dr Zamel. His quest was to discover what was behind the asthma pandemic.

No air pollution

Dr Zamel knew the island was pristine.

"From the air pollution point of view, Tristan da Cunha is the safest place in the planet. There is basically no industry and the winds are so strong that the air here is as pure as it can be."

So the answer, Dr Zamel deduced, must lie in their genes.

With only seven surnames amongst the entire island, the population has a very homogenous gene pool.

Rates of asthma are very high on Tristan da Cunha

"So with the smaller sample size we could achieve what would be required with thousands and thousands of other populations," he said.

By analysing the islanders' genes Dr Zamel achieved what would have been impossible with any other population - the isolation of one particular gene - known as ESE3.

This gene is involved with the deposition of collagen in the airways. If the gene is faulty then the airway walls are thickened and constricted, making it more difficult to breathe.

Barbados clue

However, Dr Zamel's discovery in Tristan da Cunha is exceptional, and it does not explain the allergy explosion in the rest of the world.

Professor Gideon Lack, the Head of Paediatric Allergy at Guys and St Thomas' , explains the extent of the problem.

Dr Zamel is carrying out research on Tristan da Cunha

"Twenty percent of schoolchildren carry an asthma inhaler. That's one in five children," he said.

"Similar numbers of young children, 20%, suffer symptoms of eczema. About thirty to forty percent of patients suffer hay fever."

At least part of the answer behind the allergy explosion in the rest of the world may lie on the sundrenched shores of Barbados.

Barbados has so many people suffering from asthma that part of the A&E ward in the Queen Elizabeth Hospital in Bridgetown is dedicated entirely for patients coming in with asthma attacks.

Dr Harold Watson who runs this asthma bay explains the degree of the problem.

"In a typical busy day we can see 30 asthma patients per eight hour shift passing through."

Modern home

Associate Professor Kathleen Barnes, of Johns Hopkins University, has been investigating why the island has become so allergic in recent years.

"Barbados really is a microcosm of what's happening globally, it's gone through a very rapid period of change over a very short period of time," she said.

Allergies are the price we pay for our modernization over time Professor Kathleen Barnes Johns Hopkins University

Over the past 20 years, Professor Barnes and her team have analysed the homes on the island in minute detail, collecting dust samples, and monitoring allergen levels.

Professor Barnes' results are enlightening. "We believe that in the modern home there are a variety of factors that contribute to this exposure.

"Indoor carpeting, better upholstered furniture and so on. All of these things combined contributed to these higher levels of allergen."

Studies such as this are illustrating that the modern home that many of us desire is greatly increasing our exposure to allergens, the substances that induce allergies such as dust mites.

The people of Tristan da Cunha are only part of the jigsaw that is the global allergy explosion.

It is hoped that with the discovery of the gene that contributes to asthma, medications will be developed to target the disease worldwide.

With Dr Zamel's latest visit to the island, accompanied by the Horizon team, he collected more DNA samples to further his studies.

However, it is clear that the answer does not only lie in our genetics.

'Price we pay'

Like the people of Barbados, we are changing our environment so rapidly that our bodies simply can not keep pace.

Dr Barnes goes on to explain: "Allergies are the price we pay for our modernization over time.

"This convergence if you will of various environmental factors, rapid changes in the domestic environment, changes in lifestyle due to rapid modernisation - all of the cars on the streets and the pollution that comes from these cars.

"It's sort of this perfect storm if you will."

Many of us are living the dream, the Western lifestyle. However, with more than 300 million asthmatics worldwide, and a third of all adults in the UK affected by allergy, perhaps this dream is at the cost of our own health.

Horizon: Allergy Planet is on BBC Two, on 9 December at 2100GMT.

The Story of Asthma Island is on BBC Four, on 9 December 2200GMT.

source: bbc

link to the original post:
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U.S. Sugar approves sale of 181,000 acres to Florida

The board of directors of U.S. Sugar voted Monday to approve a $1.3-billion deal to sell 181,000 acres to the state for Everglades restoration.

"After a lengthy day of discussions, the contract was signed, sealed and delivered unanimously by our board of directors," U.S. Sugar vice president Bob Coker said.

The company's vote sets the stage for the deal's final approval by officials of the South Florida Water Management District, scheduled for a meeting next week.

In approving the deal, the board of the sugar giant turned aside an offer from a Nashville company. The Lawrence Group sought to buy full control of U.S. Sugar by offering shareholders a bid of $300 per share — cash. That translates to about $588-million, far less than what the state was offering.

But in its appeal to the shareholders, the Lawrence Group contended its offer was better than the state's because it's in cash and it's immediate. The state buyout wouldn't happen for at least seven years and could be deferred longer.

Coker said the U.S. Sugar board did not regard that as a formal offer to be considered, only an expression of interest.

The Lawrence Group has tried before to buy U.S. Sugar. Headed by Gaylon Lawrence Sr. and son Gaylon Lawrence Jr., the company twice offered U.S. Sugar $293 a share. Both bids, in 2005 and again in 2007, were rejected by the company's board.

The 60-page contract that the sugar board approved calls for the water district to pay U.S. Sugar $1.34-billion at closing and, in exchange, get title to more than 180,000 acres of land — but not the company's mill, railroad, buildings or other facilities, which were supposed to be part of the buyout when Gov. Charlie Crist originally proposed it in June.

The water district will borrow the money and pay off the debt using a special property tax that applies only in its South Florida region.

In return, U.S. Sugar will lease that land back at $50 an acre and continue farming it until the state needs it for restoring the flow of water from Lake Okeechobee south to Everglades National Park. The lease is for seven years but could be renewed.

The leaseback is expected to bring in more than $50-million in revenue for the state and save it $40-million more in costs to hire someone else to manage the property, according to state Department of Environmental Protection Secretary Mike Sole.

U.S. Sugar has agreed to pay more than $21-million to clean up any pollution left behind on its property.

Sugar farming south of Lake Okeechobee has long been considered a major obstacle to the $10-billion plan for restoring the Everglades. Restoring the long-lost link between the lake and Everglades National Park seemed impossible as long as sugar cane grew there.

Then environmental groups sued to challenge the sugar companies' practice of back-pumping farm runoff containing phosphorus, pesticides and other chemicals into the lake. After a judge ruled for the environmental groups, the water district board voted in August 2007 to end the practice.

U.S. Sugar dispatched lobbyists to ask Crist for help. Instead, he proposed the state buy all the company's assets: 187,000 acres of land, plus its sugar mill, citrus operation and railroad.

Craig Pittman can be reached at pittman@sptimes.com or (727) 893-8530.

source: tampabay.com

link to the original post:
http://www.tampabay.com/news/environment/wetlands/article930877.ece


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Florida newspapers at core of industry strife

Wake up and good morning. With plenty of implications for Florida, it's one more turn of the wringer this week for a troubled newspaper industry with reports the Tribune Co. is preparing for a possible filing for bankruptcy-court protection. The Tribune Co. owns 23 TV stations (and the Chicago Cubs) and 12 newspapers, including two of the eight largest in the country by circulation: the Los Angeles Times had weekday circulation of 739,000 and the Chicago Tribune had 542,000 as of Sept. 30.

The company also owns the South Florida Sun-Sentinel in Fort Lauderdale and the Orlando Sentinel.

Tribune Co. has been struggling under a $13-billion debt load incurred last December when real estate magnate Sam Zell took the company private in an $8.2-billion leveraged buyout. Today the company faces a deadline on $70-million of unsecured debt taken on by Tribune Co. before the deal.

Chicago-based Tribune has hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, say reports in the Wall Street Journal and New York Times.

For Florida newspaper readers, it's only the latest crisis brewing. Another newspaper company also burdened by debt and a steep slide in newspaper advertising, the McClatchy Co., wants to sell the Miami Herald, according to reports. The Herald is one of the largest of McClatchy’s 30 daily papers, with daily circulation of 210,000, and arguably its most prestigious, having won 19 Pulitzer prizes. The newspaper was once the largest in Florida but demographic changes and competition has forced it to shrink. (The St. Petersburg Times -- the newspaper I work for -- is Florida's largest newspaper now, and it, too, faces a challenging business environment. But it is privately owned and does not face the same stock price or debt pressures of many publicly-traded companies.)

Of course, the Miami Herald got a new owner just a few years ago when the once-great-now-defunct Knight-Ridder newspaper chain sold most of its papers to McClatchy for $4.5-billion in 2006.

Here's what all these newspaper companies share. They are publicly traded and investors are pessimistic about the industry's future, depressing company stocks. They have large debt loads -- the Tribune because buyer Zell borrowed heavily to buy the company in the first place, and similarly McClatchy borrowed to buy Knight-Ridder. They also face sharply dropping advertising revenue (most newspapers, public or not, face this same issue) because of the recession and some fundamental shifts in advertising strategies away from the printed page.

What does this all mean for Florida, which has suffered especially because of the sharp decline in housing (and real estate advertising)? Well, the Miami Herald could see a new owner of some kind. It's less clear the Orlando Sentinel or Fort Lauderdale's Sun-Sentinel will be sold but it's a distinct possibility if a Chapter 11 step by their parent company forces the sale of assets to raise money.

The owner of the struggling Tampa Tribune, Media General Inc. in Richmond, Va., saw its stock price close at a startling low $1.57 on Friday after trading above $27 per share in the past year.

The hardest-to-decipher question: Who's in the market for newspapers? With newspaper profits shrinking fast, the economy contracting and credit tight, many newspapers have been on the block for months without selling. Tribune Co. did manage to auction off its Long Island, N.Y., daily Newsday (bought by a cable TV business) to raise cash. But tighter credit markets are pushing sale prices lower.

Consider what's happening in the Denver market. William Dean Singleton, the chief owner of The Denver Post, said told the Denver Business Journal that Cincinnati's E.W. Scripps Co., the owner of the Rocky Mountain News, told his company last month it planned to close the money-losing News "as soon as practical." Singleton told the Journal he doubts a buyer will emerge for the 149-year-old daily, which was put up for sale Thursday.

-- Robert Trigaux, Times Business Columnist

source: tampabay.com

link to the original post:
http://blogs.tampabay.com/venture/2008/12/troubled-newspa.html


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Three Reasons Why the Dollar's Not Yet Done

by Louis Basenese

Recall, in late March, I predicted here the dollar was overdue for a rally. Ninety-six percent of you cursed me. The other 4% pocketed an easy 20% or so (more if you played the options market).

But after such a swift run - mind you similar moves in currencies typically take years, not months - is the dollar rally finally coming unhinged?

Legendary investor Jim Rogers seems to think so. As he told Bloomberg News in a TV interview, he plans to exit his dollar holdings because he thinks the dollar “will go down a lot” and it is “going to lose its status as the world’s reserve currency.”

To which I simply respond, “Into what Jimbo?” No other choice for a reserve currency exists. No matter how much other governments wish it were so. The euro is frequently mentioned. But it’s depreciating in value. And there’s not enough liquidity to handle the demand. Plus, it’s still a prepubescent, experimental currency, not one governments can invest in with 100% faith.

Moreover, with two-thirds of foreign reserves already in dollars, it would take more than eight years to replace the dollar as the currency of choice.

So once again, I’m striking out on my own. (And I’m ready for the flood of fan e-mails.) While many pundits would like you to believe that the dollar rally will be short-lived, I completely disagree.

The dollar’s not done.

Today I offer up three more reasons why. And of course, three ways to play it.

Too Far, Too Fast? Hardly…

Keep in mind, currency rallies tend to be measured in years and months. Not weeks and days. In fact, according to Bespoke Investment Group, the average dollar rally lasts 489 calendar days. The longest rally on record lasted roughly 10 years.

While I don’t think we’re in store for a historic run this time, I do think the current rally has more legs (about another year based on the averages out of Bespoke).

Aside from no alternative world reserve currency, here are three more fundamentals in defense of the dollar:

Further Interest Rate Cuts
Foreign governments bought into the farce that was decoupling. As a result, they remained hawkish for way too long, keeping interest rates too high, at a time when they should have been cutting them to stimulate growth. And now they’re scrambling to catch up. They must make growth their first priority. So further interest rates cuts are inevitable, narrowing the gap with U.S. interest rates. And before long, perhaps the middle of 2009, we could be raising rates while other countries are still lowering.

Continued Deleveraging
As Mark Astley, CEO of Millennium Global Investments, a U.K.-based currency manager, notes, “there is a pyramid of leverage” in the financial markets that will take considerable time to unwind. The half-frozen credit markets are only slowing down the process. As they thaw out completely, expect hedge funds and foreign banks to keep buying up dollars.

Uncertainty Reigns
Despite a new president, uncertainty remains in the markets. Or as UniCredit wrote in a recent research note, “We do not expect global recession fears to wane considerably.” And during times of fear and risk aversion, the dollar tends to outperform.

Bottom line, the current rally has plenty of room to run. If you dare to be contrarian, here’s how I recommend you play it.

Consider Pure Plays
For a pure play on the U.S. dollar - without trading the currency markets - I recommend the PowerShares DB US Dollar Bullish Fund (UUP). It’s designed to replicate the performance of being long the greenback against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

Another strong choice is the EverBank* DollarBull CD. Available in 3-, 6-, 9- and 12-month terms, it offers potential appreciation in the U.S. dollar against a selected foreign currency. If you opt for the latter, I recommend going long the U.S. dollar versus the euro.

Take Profits on Unhedged Multinationals
Consider taking profits in multinationals with significant foreign currency exposure. I say that because the rapidly strengthening dollar will dent future earnings in two major ways. First, because profits earned abroad will be worth less, as they’re translated back into dollars. Second, because demand for the company’s products will drop off, as they will be more expensive to foreign buyers. We’re already seeing this double-whammy hurt third-quarter results for some big multinationals. But if the dollar holds its ground, or strengthens further, the impact will be much more dramatic in the fourth quarter. So get out while you’re ahead.

Buy American
While the dollar was plummeting, it made sense to buy companies with significant international sales. They provided a nice currency hedge. However, a strong dollar means we need to reverse course and seek out companies with zero (or minimal) international revenues. I’d stick to solid companies in the utility, health care and consumer staples industries, as demand will remain steady no matter how long the recession lasts.

In the end, I know my dollar stance is contrarian. Or as many of you put it last time, “ignorant” and “completely out of touch.”

I’d add “profitable” to that list now. And I don’t expect this time to be any different.

*Disclaimer: The publisher of Investment U maintains a marketing relationship with EverBank, but it’s important to note that we’d recommend their products and services anyway.

source: seekingalpha.com

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http://seekingalpha.com/article/108259-three-reasons-why-the-dollar-s-not-yet-done?source=commenter


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Shareholders Ponder North Dakota Law

A new front in the battle over corporate governance is emerging in an unlikely place: North Dakota.

Only two publicly traded companies are incorporated in North Dakota. But last year lawmakers there -- prodded by out-of-state activists including Carl Icahn -- enacted the nation's most shareholder-friendly corporate-governance law.

Associated Press

Carl Icahn

The law prescribes rules that companies incorporating in North Dakota can adopt as a package, including requiring an annual shareholder advisory vote on executive pay and the naming of a chairman who isn't an executive. The rules also provide for the annual election of directors and make it easier for shareholders to nominate their own director candidates.

Now, shareholders at four companies are offering resolutions urging those companies to reincorporate in North Dakota. Experts say the proposals, while unlikely to pass, could lead to pressure for more shareholder-friendly corporate-governance rules in other states.

John Chevedden, a longtime activist investor in California, filed a proposal urging Oshkosh Corp. to move its incorporation to North Dakota from Wisconsin. Mr. Chevedden also helped shareholders at Hain Celestial Group Inc., Whole Foods Market Inc. and PG&E Corp. draft and file similar proposals.

Mr. Chevedden says he picked those companies because of what he considers to be their weak governance and the timing of their annual meetings. "We wanted to get early feedback ... to see what level of support this will generate," he says.

In October, Hain Celestial, a Melville, N.Y., organic-food maker incorporated in Delaware, unsuccessfully petitioned the Securities and Exchange Commission to dismiss the proposal on procedural grounds. A company spokeswoman declined to comment.

Brian Hertzog, a spokesman for California-based and incorporated PG&E, says shareholders are well served by the utility's current corporate-governance rules. "It's unlikely that we would support" the proposal, he says. "We've been a California company now for over 100 years."

Representatives at Oshkosh and Whole Foods declined to comment.

The North Dakota law is part of an effort by shareholder advocates to generate competition among states for company incorporations based on governance rules. More than half of publicly traded companies are incorporated in Delaware, which has long courted such business. Critics say Delaware law favors management over shareholders.

In 2005, a group of activists, including Mr. Icahn, hired William H. Clark Jr. -- a Philadelphia lawyer who has helped write corporate laws in Pennsylvania -- to draft a pro-shareholder governance model. Mr. Chevedden says he isn't affiliated with that group.

"I think it was prescient," says Mr. Icahn. "If you look at the companies on Wall Street and the problems you have there, it's because nobody is accountable."

Mr. Clark first took the legislation to Vermont, home to only five public companies in 2005. But one company objected, and the bill died in committee.

The following year, North Dakota removed a provision from its constitution that had discouraged companies from incorporating there. Mr. Clark then began building support for a revamped corporate-governance bill. He recruited local lawyers, a prominent businessman and the former mayor of Bismarck as backers. The group then hired a well-known Bismarck lobbyist, Joel Gilbertson.

Republican State Rep. Duane DeKrey says he has known Mr. Gilbertson for years and agreed to co-sponsor the bill, although he had no "burning desire one way or another" and didn't expect it to pass.

The Greater North Dakota Chamber of Commerce and Integrity Mutual Funds Inc., the larger of two companies incorporated in the state, opposed the bill. But Integrity dropped its objections after learning it could stick with its traditional rules, Mr. Clark says. Integrity Chief Executive Bradley Wells declined to comment.

Al Jaeger

The group also won the support of longtime Secretary of State Al Jaeger, who thinks the law might attract business to North Dakota. "Our position was ... we will build it," Mr. Jaeger says. "If somebody wants to come and play in our ball field, that's great."

The North Dakota law is unlikely to draw much business to the state soon, experts say. The four reincorporation proposals are nonbinding and unlikely to win approval, says Carol Bowie, director of the Center for Corporate Governance at proxy adviser RiskMetrics Group Inc.Activist investors say the North Dakota law adds fuel to the debate over shareholder rights and oversight, which has intensified during the U.S. financial crisis.

"This is more a wake-up call for Delaware to modernize than any significant attempt to attract business in North Dakota," says Richard Ferlauto, head of corporate governance and pension investment at the American Federation of State, County and Municipal Employees.

Write to Cari Tuna at cari.tuna@wsj.com

source: wsj.com

link to the original post:
http://online.wsj.com/article/SB122852051008284099.html


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China plays beggar thy neighbor

By Peter Navarro

The latest summit between the United States and Chinese officials graphically illustrates that China has learned to play two games from the West: hardball and beggar thy neighbor.

China's hardball approach is evident in the announcement by its major sovereign wealth fund that it will no longer invest in the US financial sector.

The stated reason for this provocative announcement, which was issued on the very eve of the economic summit, is that any such investments would be too risky.

"I don't dare to invest in financial institutions now," Lou Jiwei, chairman of China Investment Corp, said at a conference in Hong



Kong. "The policies of the developed nations on these institutions are not clear. Until they are clear, I don't dare to invest in them. What if they go bust? I will lose everything."

In fact, China's new policy represents both retaliation and a bargaining chip. The retaliatory part of the hardball message has been aimed directly at US Treasury Secretary Henry Paulson, who, much to the displeasure of the Chinese, continues to repeat his demand for Chinese currency reform. The bargaining-chip part is designed to reinforce just how weak the US position is in negotiations while leaving open the door to future investments by China's sovereign wealth fund if the US behaves itself.

As for the beggar thy neighbor, it has become clear over the past week that Chinese government officials intend to export their way out of the global economic crisis. This is all too readily apparent in the recent downward movements of the Chinese yuan relative to the dollar. Stripped of any rhetoric, this movement represents a "competitive devaluation" designed to boost Chinese exports to the US at the expense of both domestic US manufacturers and competing countries such as South Korea and Japan.

In fact, Chinese currency manipulation represents "beggar thy neighbor" on a grand scale. By grossly undervaluing the Chinese yuan relative to the US dollar over the past five years, China has grown its economy on the backs of American workers and helped to decimate the American manufacturing base. Today, it is almost impossible for American manufacturers to compete against their Chinese counterparts when the yuan is undervalued by 30% or more. Add to this an extensive array of illegal Chinese export subsidies, and it becomes easy to understand how China has been able to offshore so many American jobs to its own factories.
Under political pressure, China allowed the yuan to modestly appreciate relative to the dollar over the past year. However, despite this appreciation, the yuan still fell relative to the euro and other major currencies - in the process, significantly exacerbating China's trade imbalance with Europe.

It's not just the United States and Europe that China's currency manipulation hurts. Japan, South Korea and others of China's erstwhile competitors in Asia for export markets likewise lose competitive advantage. That's why China's latest devaluation of its currency could not come at a worse time for its Asian neighbors.

South Korea is experiencing an horrific currency crisis of its own, one that is in large part driven by the steep decline in its exports and a collateral slowing of its economy. The last thing South Korea needs right now is a competitive devaluation by China that further negatively impacts South Korean exports and puts more downward pressure on the won.

Japan is in exactly the same boat. This is a country that just a year ago finally got its head above the economic waters but now is sinking back into the recessionary, deflationary morass. China's devaluation likewise strikes hard at the ability of Japan to bounce back.

The ultimate big picture here is that China could play a very constructive role in the rebuilding of the global economy. With its huge foreign reserves, it could assist Asian neighbors like South Korea in their time of need. China could also use this time as a transition point for moving from an export-driven economy to one fueled by domestic consumption.

It is all too clear, however, that China has chosen to move in the opposite direction. This will not only further destabilize the global economy. It will also significantly strain relations with the United States. This is particularly true given the campaign promise of president-elect Barack Obama to crack down on Chinese mercantilism.

Peter Navarro is a professor at the Paul Merage School of Business, University of California-Irvine, a CNBC contributor, and author of The Coming China Wars. www.peternavarro.com

(Copyright 2008 Peter Navarro.)

source: atimes.com

link to the original post:
http://www.atimes.com/atimes/China_Business/JL09Cb01.html


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Mediterranean Diet Enriched With Nuts Cuts Heart Risks

MONDAY, Dec. 8 (HealthDay News) -- In older adults at risk for heart disease, a Mediterranean diet plus daily servings of mixed nuts may help manage metabolic syndrome, according to a Spanish study.

Metabolic syndrome describes a group of health problems that includes abdominal obesity, high cholesterol, high blood pressure and high glucose levels -- all of which are risk factors for cardiovascular disease. Previous research suggests that a Mediterranean diet -- which includes lots of cereals, vegetables, fruits and olive oil, moderate consumption of fish and alcohol, and low intake of dairy, meats and sweets -- lowers the risk of metabolic syndrome.

This new study included 1,224 people, ages 55 to 80, at high risk for cardiovascular disease. They were randomly assigned to one of three groups. The control group received advice on a low-fat diet while the other two groups received quarterly education about the Mediterranean diet. One of the Mediterranean diet groups received one liter per week of virgin olive oil, while the other group received 30 grams per day of mixed nuts.

At the start of the study, 61.4 percent of the participants met criteria for metabolic syndrome. After one year, the prevalence of metabolic syndrome decreased by 13.7 percent in the mixed nut group, by 6.7 percent in the olive oil group, and by 2 percent in the control group.

There were no weight changes in any of the groups over the one-year study period. But the number of people with large waist circumference, high triglycerides or high blood pressure significantly decreased in the Mediterranean diet/mixed nuts group compared with the control group. This suggests that the Mediterranean diet with mixed nuts improves certain features of metabolic syndrome, such as oxygen-related cell damage, insulin resistance, and chronic inflammation, the researchers said.

"Traditionally, dietary patterns recommended for health have been low-fat, high-carbohydrate diets, which generally are not palatable. The results of the present study show that a non-energy-restricted traditional Mediterranean diet enriched with nuts, which is high in fat, high in unsaturated fat and palatable, is a useful tool in managing the metabolic syndrome," concluded Dr. Jordi Salas-Salvado, of the University of Rovira i Virgili, and colleagues.

source: usnews.com

link to the original post:
http://health.usnews.com/articles/health/healthday/2008/12/08/mediterranean-diet-enriched-with-nuts-cuts-heart.html


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Majority of Modified Loans Fail Again, Regulator Says (Update3)

By Alison Vekshin

Dec. 8 (Bloomberg) -- Most U.S. mortgages modified in a voluntary effort to keep struggling borrowers in their homes and stem foreclosures fell back into delinquency within six months, the chief regulator of national banks said.

Almost 53 percent of borrowers whose loans were modified in the first quarter were more than 30 days overdue by the third quarter, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today at a housing conference in Washington.

“The results, I confess, were somewhat surprising, and I say that not in a good way,” Dugan said, citing a third-quarter survey his agency plans to release next week.

Lenders and loan-servicing companies have been modifying mortgages by lowering interest rates or creating repayment plans through the voluntary Hope Now Alliance. The group, which includes Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., said last month it helped 225,000 borrowers keep their homes in October.

Foreclosures rose to a record in the third quarter as one in 10 U.S. homeowners fell behind on payments or were in foreclosure, the Mortgage Bankers Association said last week.

“Our third-quarter report will show many of the same disturbing trends as other recent mortgage reports,” Dugan said. “Credit quality continued to decline across the board, with delinquencies increasing for subprime, Alt-A and prime mortgages.”

The OCC’s survey represents institutions that service more than 60 percent of all first mortgages, or 35 million loans worth $6 trillion, Dugan said.

‘More Questions’

The data “raises more questions than answers because it fails to define, in any meaningful way, the modifications that have re-defaulted,” Federal Deposit Insurance Corp. Chairman Sheila Bair said in a statement.

The lack of detail makes it tough to distinguish “re- default rates of sustainable modifications versus cosmetic modifications that by their nature are more likely to re- default,” said Bair, who has proposed using $24 billion from the U.S. Treasury’s $700 billion financial-rescue package to modify 1.5 million mortgages through the end of 2009.

Dugan’s figures reflect a failed focus on interest rates in loan modifications, House Financial Services Committee Chairman Barney Frank said today in a Bloomberg Television interview. If companies were to cut the amount owed on mortgages, borrowers would be less likely to default again, Frank said.

“The people who made the bad loans or bought the bad loans from others need to realize” that they would be better off with principal reductions than with foreclosure, the Massachusetts Democrat said.

Foreclosure ‘Timeout’

New Jersey Governor Jon Corzine, speaking at the conference earlier today, urged a three- to six-month “timeout” on foreclosures, saying keeping people in their homes is necessary to correct a “deeply troubled” market.

“Housing markets and mortgage-finance markets are the fuel for this problem,” said Corzine, a Democrat and former chairman of Goldman Sachs Group Inc. “We need a systematic protocol and process.”

John Reich, director of the Office of Thrift Supervision, questioned whether the federal government should be more involved in foreclosure prevention.

“I do have a concern of allocating government resources with such a high rate of re-default,” said Reich, whose agency sponsored today’s National Housing conference

source: bloomberg.com

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Will We Reach 4 RMB Per U.S. Dollar?

Though this title may be extreme to some readers, it is provocative on purpose. The dollar has appreciated 30 to 54 percent against most of the world's leading currencies over the last few months. Recently, 1.0 Euro was equal to 1.6 USD, now it is traded at 1.3USD. Similarly, 1.00 USD was equal to 1.03 Australian dollars; it currently is traded at 1.59 AUD.

The fact that something appears to be an extreme scenario does not necessarily make it unreasonable. In the economy there are cycles that canrepeat. A lack of balance is built gradually. When change happens gradually, people slowly become accustomed to it, soon accepting the new status quo without question.

Macro economic problems can not just be swept under the carpet, hoping that no one will notice. Over the last few months, many Americans are converting foreign currencies from countries such as Australia, New Zealand, Britain, Brazil and Turkey into US Dollars. The US dollars appreciated against the Euro 26%, the Australian dollar 54% and the British pound 30%. In the long term this will have to change; this article seeks to elaborate on the reasons why.

Why can't the American trade deficit continue to grow forever?

Until the 80's America had a surplus in its trade balance with most countries. Starting from the early 80's the trade balance began to change and the US economy shifted from a surplus to a deficit. In 2000, when the hi-tech bubble burst, federal banks tried to stimulate the economy and artificially encourageAmerican consumption by lowering interest rates and borrowing money from China, Europe and Japan to finance the trade balance deficit. The result is that American debt is now over 11 trillion dollars – almost 100% of the GDP of the US. This is similar to countries like Argentina and Turkey, significantly worse than most OECD countries.

In the following graph we can see how the American trade deficit was at almost zero in the 80's, jumping over the last 30 years to a significantly high proportion of the GDP.

Why is American trade deficit bad for the global economy?

This process of borrowing money from Europe, China and Japan is similar to that of an ordinary family in New York (say the Smith family) borrowing money from its bank over 30 years to buy property. Eventually their debt becomes more than the family's annual income. The Smiths will ultimately have to pay back the bank or it will begin foreclosure procedures.

This is exactly what will happen between the US and Europe, China & Japan; the Americans will have to pay it back. There is only one way to do so: stop lending money and start returning money by reducing imports and increasing exports.

Why is a weak USD necessary to decrease the American trade deficit?

American exports need to grow and imports must decline until the trade balance normalizes in order for debt to decrease.

Let's look at an American software exporter (The American Company) as it aims to sell its software in Europe, China and Japan. Let's say that average software is now being sold for 1,000 USD (6,800 RMB). If the dollar / RMB exchange rate depreciates to 4.00 the actual software price will still maintain 6,800 RMB price but in USD it will become 1,700 USD. This will generate The American Company higher revenues in USD, while costs remain the same. In addition, it will be able to compete better with Chinese and European Software developers, thus contributing to an increase in exports.

On the other hand, let's look at a toy manufacturer from Guangzhou, China that now receives 10USD for the average item it exports to the United States. Say that the cost is now 8USD (54 RMB). If the exchange rate is reduced to 4.00, the revenue per item drops to 40RMB, thus making it impossible to export to the US. The exporter will need to shift its focus to Europe, other markets in Asia and of course, Chinese consumers. Exporting toys to the US will no longer make sense, enabling local American toy producers to compete better in American local markets.

The final outcome would result in China importing more goods and services from US companies, while trying to divert some of their exports to countries where their currency is stronger. This would mean higher American exports, lower imports, thus lower debt. In this light, creating a weak dollar is the only remedy to treat the rising trade deficit.

Only time will tell, but by 2013 we could expect the following exchange rates:

Currency	Current exchange rate	Exchange rate (January 2008)	Change (last 3 months)	2013 predictions	Expected change until 2013
RMB	6.84	6.85	0%	4	-42%
Yen	115.00	96.00	-17%	65	-32%
AUD	1.03	1.59	54%	1	-37%
GBP	0.48	0.62	30%	0.4	-35%
Euro	0.63	0.79	26%	0.5	-37%
YTL	1.16	1.68	45%	1	-41%

This represents a USD average decline of 40% when viewed in comparison to a few major and emerging market currencies. If one is considering investing in American stock or bond markets, one must take this into consideration. In estimation, this trend would be gradual, but in reality foreign exchange market can react very quickly, thus affecting the overall the speed of this transition.

source: seekingalpha.com

link to the original post:
http://seekingalpha.com/article/109540-will-we-reach-4-rmb-per-u-s-dollar


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Rory Vanucchi
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