Archive for the ‘News’ Category

In Singapore, we En-bloc, In China, they just confiscate your land, flatten your house, and kill your husband

Human Rights Will Overshadow Beijing As Olympics Approach

A recent Reuters article on Chinese looming issues says that “Groups such as Free Tibet campaigners or China’s growing band of domestically dispossessed are hoping to use the Olympics to highlight their complaints in front of a massive global audience.”

Chinese Censorship

One of the biggest issues that China will face in 2008 is the assault that will inevitably come over China’s public image on certain issues. China is often denounced for the censorship that it carries out against ideas that are commonly spread outside of Chinese borders. From a liberty standpoint, this kind of restraint on society is unthinkable.

The article does suggest that China isn’t taking the criticism lightly and the cause of humans rights activists may be misguided because China does adhere to acceptable human rights standards. “Human rights, as a concept, have become a constitutional principle, a mainstream subject in the political life of both the Party and the state,” it quoted Dong Yunhu, vice president of the China Human Rights Research Association, as saying.

Here’s an excerpt from a Reuter’s article on the upcoming 2008 Olympics; it notes the challenges that lay ahead for the Chinese government and the problem with journalistic standards and censorship.

BEIJING (Reuters) – China exuded optimism on Tuesday about the 2008 Beijing Olympics, saying its centuries of culture and history would light up the world, even as organizers came under renewed pressure to fulfill a media freedom pledge.

“We will show the world 5,000 years of splendid Chinese history, the significant achievements of modern China and the zeitgeist of the Chinese people,” said the Communist Party mouthpiece, the People’s Daily, in a New Year’s Day editorial.

While recognizing that unprecedented challenges lay ahead for the year as a whole, the editorial said that there would be far more opportunities than challenges.

For those interested in further learning about China and their ’successful’ approach to Censorship, you might want to read this article from CNN: China and Internet Censorship

The great fall of China

Revised GDP calculations show that Beijing isn’t the giant we thought it was.
By Walter Russell Mead
December 30, 2007
The most important story to come out of Washington recently had nothing to do with the endless presidential campaign. And although the media largely ignored it, the story changes the world.

The story’s unlikely source was the staid World Bank, which published updated statistics on the economic output of 146 countries. China’s economy, said the bank, is smaller than it thought.

About 40% smaller.

China, it turns out, isn’t a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

What happened to $4 trillion in Chinese gross domestic product?

Statistics. When economists calculate a country’s gross domestic product, they add up the prices of the goods and services its economy produces and get a total — in dollars for the United States, euros for such countries as Germany and France and yuan for China. To compare countries’ GDP, they typically convert each country’s product into dollars.

The simplest way to do this is to use exchange rates. In 2006, the World Bank calculated that China produced 21 trillion yuan worth of goods and services. Using the market exchange rate of 7.8 yuan to the dollar, the bank pegged China’s GDP at $2.7 trillion.

That number is too low. For one thing, like many countries, China artificially manipulates the value of its currency. For another, many goods in less developed economies such as China and Mexico are much cheaper than they are in countries such as the United States.

To take these factors into account, economists compare prices from one economy to another and compute an adjusted GDP figure based on “purchasing-power parity.” The idea is that a country’s GDP adjusted for purchasing-power parity provides a more realistic measure of relative economic strength and of living standards than the unadjusted GDP numbers.

Unfortunately, comparing hundreds and even thousands of prices in almost 150 economies all over the world is a difficult thing to do. Concerned that its purchasing-power-parity numbers were out of whack, the World Bank went back to the drawing board and, with help from such countries as India and China, reviewed the data behind its GDP adjustments.

It learned that there is less difference between China’s domestic prices and those in such countries as the United States than previously thought. So the new purchasing-power-parity adjustment is smaller than the old one — and $4 trillion in Chinese GDP melts into air.

The political consequences will be felt far and wide. To begin with, the U.S. will remain the world’s largest economy well into the future. Given that fact, fears that China will challenge the U.S. for global political leadership seem overblown. Under the old figures, China was predicted to pass the United States as the world’s largest economy in 2012. That isn’t going to happen.

Also, the difference in U.S. and Chinese living standards is much larger than previously thought. Average income per Chinese is less than one-tenth the U.S. level. With its people this poor, China will have a hard time raising enough revenue for the vast military buildup needed to challenge the United States.

The balance of power in Asia looks more secure. Japan’s economy was not affected by the World Bank revisions. China’s economy has shrunk by 40% compared with Japan too. And although India’s economy was downgraded by 40%, the United States, Japan and India will be more than capable of balancing China’s military power in Asia for a very long time to come.

But don’t pop the champagne corks. It is bad news that billions of people are significantly poorer than we thought. China and India are not the only countries whose GDP has been revised downward. The World Bank figures show sub-Saharan Africa’s economy to be 25% smaller. One consequence is that the ambitious campaign to reduce world poverty by 2015 through the United Nations Millennium Development Goals will surely fail. We have underestimated the size of the world’s poverty problem, and we have overestimated our progress in attacking it. This is not good.

There is more bad news. U.S. businesses and entrepreneurs hoping to crack the Chinese and Indian markets must come to terms with a middle class that is significantly smaller than thought. Investors in overseas stocks should take note. Companies with growth plans tied to the Indian and Chinese markets could face disappointing results, and the high prices of many emerging-market stocks depend on buzz and psychology. Investor sentiment on China and India may now be significantly more vulnerable to future bad news.

China’s political stability may be more fragile than thought. The country faces huge domestic challenges — an aging population lacking any form of social security, wholesale problems in the financial system that dwarf those revealed in the U.S. sub-prime loan mess and the breakdown of its health system. These problems are as big as ever, but China has fewer resources to meet them than we thought.

And there is the environment. With poor air quality, acute water shortages, massive pollution in major watersheds and many other environmental problems, China needs to make enormous investments in the environment to avoid major disasters. Globally, it will be much harder to get China — and India — to make any sacrifices to address problems such as global warming.

For Americans, the new numbers from the World Bank bring good news and bad. On the plus side, U.S. leadership in the global system seems more secure and more likely to endure through the next generation. On the other hand, the world we are called on to lead is poorer and more troubled than we anticipated.

Maybe the old Chinese curse says it best: We seem to be headed for interesting times.

Walter Russell Mead, a senior fellow at the Council on Foreign Relations, is the author of “God and Gold: Britain, America and the Making of the Modern World.”

The US sub-prime crisis in graphics

The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.

THE NEW MODEL OF MORTGAGE LENDING
How it went wrong

flow chart

Traditionally, banks have financed their mortgage lending through the deposits they receive from their customers. This has limited the amount of mortgage lending they could do.

In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets. This has made it much easier to fund additional borrowing,

But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.

THE RISE OF THE MORTGAGE BOND MARKET

Growth in mortgage bond market

In the past five years, the private sector has dramatically expanded its role in the mortgage bond market, which had previously been dominated by government-sponsored agencies like Freddie Mac.

They specialised in new types of mortgages, such as sub-prime lending to borrowers with poor credit histories and weak documentation of income, who were shunned by the “prime” lenders like Freddie Mac.

size of the mortgage bond market

They also included “jumbo” mortgages for properties over Freddie Mac’s $417,000 (£202,000) mortgage limit.

The business proved extremely profitable for the banks, which earned a fee for each mortgage they sold on. They urged mortgage brokers to sell more and more of these mortgages.

Now the mortgage bond market is worth $6 trillion, and is the largest single part of the whole $27 trillion US bond market, bigger even than Treasury bonds.

HOW SUB-PRIME LENDING AFFECTED ONE CITY

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THE SUB-PRIME CRISIS IN CLEVELAND

  Sub-prime lending   Black areas
  Foreclosures (repossessions)   Deutsche Bank properties

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For many years, Cleveland was the sub-prime capital of America.

It was a poor, working class city, hit hard by the decline of manufacturing and sharply divided along racial lines.

Mortgage brokers focused their efforts by selling sub-prime mortgages in working class black areas where many people had achieved home ownership.

They told them that they could get cash by refinancing their homes, but often neglected to properly explain that the new sub-prime mortgages would “reset” after 2 years at double the interest rate.

The result was a wave of repossessions that blighted neighbourhoods across the city and the inner suburbs.

By late 2007, one in ten homes in Cleveland had been repossessed and Deutsche Bank Trust, acting on behalf of bondholders, was the largest property owner in the city.

THE CRISIS GOES NATIONWIDE

Growth of sub-prime lending

Sub-prime lending had spread from inner-city areas right across America by 2005.

By then, one in five mortgages were sub-prime, and they were particularly popular among recent immigrants trying to buy a home for the first time in the “hot” housing markets of Southern California, Arizona, Nevada, and the suburbs of Washington, DC and New York City.

House prices were high, and it was difficult to become an owner-occupier without moving to the very edge of the metropolitan area.

Rise in foreclosures

But these mortgages had a much higher rate of repossession than conventional mortgages because they were “balloon” mortgages.

The payments were fixed for two years, and then became variable and much higher.

Consequently, a wave of repossessions is likely to sweep America as many of these mortgages reset to higher rates in the next two years.

And it is likely that as many as two million families will be evicted from their homes as their cases make their way through the courts.

The Bush administration is pushing the industry to renegotiate rather than repossess where possible, but mortgage companies are being overwhelmed by a tidal wave of cases.

THE HOUSING PRICE CRASH

US house prices


The wave of repossessions is having a dramatic effect on house prices, reversing the housing boom of the last few years and causing the first national decline in house prices since the 1930s.

There is a glut of four million unsold homes that is depressing prices, as builders have also been forced to lower prices to get rid of unsold properties.

And house prices, which are currently declining at an annual rate of 4.5%, are expected to fall by at least 10% by next year – and more in areas like California and Florida which had the biggest boom.

HOUSING AND THE ECONOMY

US residential housing construction forecast

The property crash is also affecting the broader economy, with the building industry expected to cut its output by half, with the loss of between one and two million jobs.

Many smaller builders will go out of business, and the larger firms are all suffering huge losses.

The building industry makes up 15% of the US economy, but a slowdown in the property market also hits many other industries, for instance makers of durable goods, such as washing machines, and DIY stores, such as Home Depot.

US economic growth

Economists expect the US economy to slow in the last three months of 2007 to an annual rate of 1% to 1.5%, compared with growth of 3.9% now.

But no one is sure how long the slowdown will last. Many US consumers have spent beyond their current income by borrowing on credit, and the fall in the value of their homes may make them reluctant to continue this pattern in the future.

CREDIT CRUNCH

credit crunch

One reason the economic slowdown could get worse is that banks and other lenders are cutting back on how much credit they will make available.

They are rejecting more people who apply for credit cards, insisting on bigger deposits for house purchase, and looking more closely at applications for personal loans.

The mortgage market has been particularly badly affected, with individuals finding it very difficult to get non-traditional mortgages, both sub-prime and “jumbo” (over the limit guaranteed by government-sponsored agencies).

The banks have been forced to do this by the drying up of the wholesale bond markets and by the effect of the crisis on their own balance sheets.

BANK LOSSES

bank liabilities in commercial paper market

The banking industry is facing huge losses as a result of the sub-prime crisis.

Already banks have announced $60bn worth of losses as many of the mortgage bonds backed by sub-prime mortgages have fallen in value.

The losses could be much greater, as many banks have concealed their holdings of sub-prime mortgages in exotic, off-balance sheet instruments such as “structured investment vehicles” or SIVs.

Although the banks say they do not own these SIVs, and therefore are not liable for their losses, they may be forced to cover any bad debts that they accrue.

BOND MARKET COLLAPSE

Value of mortgage-backed bonds

Also suffering huge losses are the bondholders, such as pension funds, who bought sub-prime mortgage bonds.

These have fallen sharply in value in the last few months, and are now worth between 20% and 40% of their original value for most asset classes, even those considered safe by the ratings agencies.

If the banks are forced to reveal their losses based on current prices, they will be even bigger.

It is estimated that ultimately losses suffered by financial institutions could be between $220bn and $450bn, as the $1 trillion in sub-prime mortgage bonds is revalued.

Book details billionaire’s secret philanthropy

LONDON – He wears a $15 watch, flies economy class and does not own a house or car. For years. few guessed that Chuck Feeney was one of the world’s biggest philanthropists, secretly giving away his billionaire fortune.

Born in New Jersey during the Depression to a blue-collar Irish-American family, Feeney co-founded Duty Free Shoppers (DFS), the world’s largest duty-free retail chain. He liked making money but not having it, and gave it away for years in strict secrecy.

Journalist Conor O’Clery’s new book “The Billionaire Who Wasn’t: How Chuck Feeney Secretly Made and Gave Away a Fortune” (Public Affairs $26.95), reveals that Feeney may be destined to go down in history as one of the greatest American philanthropists.

Witty, self-deprecating, frugal and astute, Feeney was listed by Forbes Magazine in 1988 as the 23rd richest American alive and worth $1.3 billion, richer than Rupert Murdoch and Donald Trump. He wasn’t.

Four years earlier, Feeney had placed most of his money in charitable foundations.

Inspired by the great 19th century philanthropist Andrew Carnegie, Feeney helped fund schools, hospitals, universities, medical research and human rights from the United States and Ireland to South Africa and Vietnam.

‘I set out to work hard, not to get rich’
“I had one idea that never changed in my mind — that you should use your wealth to help people. I try to live a normal life, the way I grew up,” Feeney said. “I set out to work hard, not to get rich.”

Feeney made money in his youth selling Christmas cards door-to-door, clearing snow from driveways and caddying at golf courses. He loved the challenge of making money but had little use for it.

After serving as a U.S. Air Force radio operator in Japan during the Korean war, he graduated from Cornell University and launched his career selling duty-free liquor to American sailors at Mediterranean ports in the 1950s.

The business expanded rapidly to embrace airport duty free concessions. By the late 1960s business was booming thanks to sales of duty free from Anchorage to Hong Kong. Over the decades his fortune mushroomed and so did his determination to give it away.

He rejected the trappings of the jet set, giving his money away to worthy causes with the same alacrity with which he had built one of the biggest retail empires of the 20th century.

Feeney kept his generosity secret for years, saying he did not want to “blow my own horn” or discourage others from giving to the same deserving causes.

 

Big jobs that pay badly

Some careers cost time and money to take up. But don’t expect a big paycheck.
By Jeanne Sahadi, CNN/Money senior writer

NEW YORK (CNN/Money) – Most of us work hard for a living. And if we’re lucky, we’re well compensated for the effort.

But there are some jobs you should take only if you really love the work because the investment you make to get the job and the hours you keep aren’t necessarily commensurate with what you earn.

Not that all careers in this category are necessarily low-paying, at least not by national standards.

But they may require a great deal of time and money in graduate education, offer working conditions that only passion can excuse, and there may be such a long run for the roses that you forfeit prime working and child-bearing years just to achieve a salary that college peers were earning a decade earlier.

Here are just three of those jobs.

Architects

For every Philip Johnson or Frank Lloyd Wright in a generation of architects, there are countless more who work without fanfare on the everyday buildings where we work, live and shop.

Architects may spend up to seven years completing undergraduate and master’s-degree studies, or up to three-and-a-half years in a master’s program if they majored in another area during college. To be eligible to take the licensing exam, they also must log three years as interns working for licensed architects.

Architects with a master’s might enter the work force with between $50,000 and $80,000 in student loan debt. But as first-year interns, they might earn only $34,000, the national median according to the 2005 compensation survey by the American Institute of Architects. Meanwhile, several steps up the ladder, senior architects earn a median of $68,900.

Chefs

There’s a reason they say if you can’t stand the heat get out of the kitchen. Restaurant kitchens usually aren’t air conditioned, so temperatures can top 100 degrees in the summer, said Stephan Hengst, spokesman for the Culinary Institute of America (CIA).

Since most restaurant chefs are not on track to become the next Jean-Georges Vongerichten or Wolfgang Puck, they can expect far more modest incomes.

Culinary school graduates who might have spent two to four years and tens of thousands of dollars to get their degrees might get a low-level job on the kitchen line paying around $32,000 soon after graduation (more if they had experience prior to culinary school).

By the time they work their way up to sous-chef after perhaps three or four years, they might make around $55,000, Hengst said.

Benefits are more likely to be included if they work for a chain rather than a small, independently owned restaurant.

And the hours they log on their feet average about 12 hours a day, Hengst said, although 80- to 100-hour weeks aren’t unusual for some.

When you work behind the scenes in a restaurant, kudos aren’t delivered directly by the customer, but rather indirectly by their returned plates: the emptier, the better.

Academic research scientists

A career with one of the most disproportionate ratios of training to pay is that of academic research scientist.

A Ph.D. program and dissertation are requirements for the job, which can take between six and eight years to complete. (See correction.) Add to that several years in the postdoctoral phase of one’s career to qualify for much coveted tenure-track positions.

During the postdoc phase, you are likely to teach, run a lab with experiments that require you to check in at all hours, publish research and write grants – for a salary that may not exceed $43,000.

The length of the postdoc career has doubled in the past 10 years, said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University. “It’s taking longer and longer to get there. You can’t start a family. It’s really tough.”

And it’s made tougher still by the fact that in many disciplines, there aren’t nearly as many tenure-track positions as there are candidates.

So, to those who earn their MBAs in two years and snag six-figure jobs soon after graduation, your jobs may be hard, but maybe not quite as hard as you think.