Silencing the Lions!

It was truly a fateful day for the MCA in Malaysia. The second largest party of the Barisan Nasional went for a referendum of sorts to determine who should indeed lead the much battered MCA.

Fateful Double 10th it was. Using the historical memorable date of the independence of mainland China to stage this EGM, more than 2,304 delegates silenced the lions and sent them packing. They were tired of the bickering. They could smell the "Et tu Brutus" refrain,orchestrated by "known and seen' hands of the President and his men, to killed off the opposition,the much maligned Deputy who continues to be tainted by a sex scandal.

The party is now in shambles like a rooster without a head. This Thursday, October 15 will see a procedural MCA Central Committee meeting that will decide what to do with the fell-out of the EGM. Morally, The President, defeated in a unprecedented 'No Confidence' vote should just resign honourably and ride away into the political void. As for the erstwhile ex-Deputy, he has been granted his wish to be an ordinary member until his dying day.


Anyone can guess the future of MCA.

With third rate Leos coming in to fill the vacuum at the top, the once proud MCA will now slowly be put into political wilderness and lose its glory forever.

Expect non-partisan members to desert in droves to the DAP and the PKR!

The Rhythm of the American Heart

Slice it, dice it anyway you want it.

But truth be told, the American Dream is no more,at least that is the way it is showing from Corporate America.

This article was taken from the blog of 'Where is Ze Moola'.

Currently,circa Friday October 9, 2009, every 13 seconds there is a foreclosure filing in US.

I paraphrase:

What is the rhythm of the American heart these days?

It is in aberration. It beats to the rhythm of a crisis that threatens to choke off hopes for a recovery in the US housing market as it destroys hundreds of billions of dollars in property values a year.

There are more than 6,600 home foreclosure filings per day, according to the Centre for Responsible Lending, a non-partisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the moving flood of foreclosures shows no sign of abating any time soon.

If anything, the country’s worst housing downturn since record-keeping began in the late 19th century, may only get worse since foreclosures, which started with subprime borrowers, have now sadly moved on to the much bigger prime loan market on the back of mounting unemployment.

In congressional testimony last month, Michael Barr, the Treasury Department’s assistant secretary for financial institutions, said more than six million families could face foreclosure over the next three years.

“The recent crisis in the housing sector has devastated families and communities across the country and is at the centre of our financial crisis and economic downturn,” Barr said.

A September report by a foreclosure taskforce appointed by Florida’s Supreme Court pointed to a shift in the root cause of foreclosures.

“People are no longer defaulting simply because of a change in the payment structure of their loan. They are defaulting because of lost jobs or reduced hours or pay,” it said.

Florida had the country’s highest rate of homes – 23% – that were either in foreclosure or delinquent on mortgage payments in the second quarter, and the report said: “The latest news for Florida is horrifying.”

A recent pickup in sales and home prices in some regions has been heralded as a sign that the crisis in residential real estate may be close to bottoming out, after the steepest price decline since at least 1890.

But nearly half of recent sales have been attributed to foreclosures or “short sales” at bargain-basement prices.

Even as the US economy seems to be recovering from its worst recession since the Great Depression, mortgage delinquencies continue to rise. And that adds risk to any relatively upbeat assessment, since foreclosures depress the value of nearby properties while eroding the net worth of homeowners and the tax base for communities nationwide.

The Centre for Responsible Lending says foreclosures are on track to wipe out US$502bil in property values this year.

That spillover effect from foreclosures is one reason why Celia Chen of Moody’s Economy.com says nationwide home prices won’t regain the peak levels they reached in 2006 until 2020.[This is indeed scary!]

In states hardest-hit by the housing bust, like Florida and California, the rebound would take until 2030, Chen predicted. [This is indeed even more scary!]

“The default rates, the delinquency rates, are still rising,” Chen said. “Rising joblessness combined with a large degree of negative equity are going to cause foreclosures to increase.”

Anyone doubting that the recovery in US real estate prices would be long and hard should take a look at Japan, Chen said. Prices there are still off about 50% from the peak they hit 15 years ago.

Jay Brinkmann, chief economist with the Mortgage Bankers Association, said foreclosures were expected to peak in the second half of 2010. But that forecast is based on a projection that unemployment will begin falling after topping out “barely in double digits by the middle of next year.”

Last week, the Labour Department reported the unemployment rate rose to a 26-year high of 9.8% in September, in the latest evidence that a turnaround in the jobs market is the missing link in the economic recovery.

Since the start of the recession, the number of unemployed people has soared 7.6 million to 15.1 million. In Florida, unemployment is hovering at a nearly 40-year high of 10.7%, led by a steep decline in construction jobs.

Modifications and ‘monsters’

Mortgage modifications, the centrepiece of a plan unveiled by the Obama administration in March to help as many as nine million struggling borrowers hold onto their homes, have gotten off to a sluggish start.

The Office of the Comptroller of the Currency, which regulates US banks, said in a Sept 30 report that banks and loan services stepped up efforts to help distressed homeowners in the second quarter, more than tripling the loan modifications that reduced principal.

“This trend represents a significant shift from earlier quarters, when the vast majority of loan modifications either did not change monthly payments or increased them,” it said.

Only a relatively small number of homeowners have seen financial relief from so-called “loan workouts” so far, however, and government officials acknowledge that far more is needed to reverse the national tide of foreclosures.

Help would be more than welcome in areas like Miami Gardens where there is a pervasive sense of anger about banks and the blight caused by foreclosures in a city that once boasted one of the highest home-ownership rates in the country.

A predominantly African-American community of 111,000 people, just north of Miami, it now has a 13% foreclosure rate – the second highest in Florida – and a glut of shuttered or boarded-up homes.

“The banks were bailed out first. We all assumed that they were going to turn around and help other people but that didn’t happen,” said Ruby Milligan, 61, a teacher who took early retirement after suffering a mild stroke several years ago.

Milligan received a foreclosure notice from Deutsche Bank in August last year, but still lives in her Miami Gardens home, fearing a knock on the door with an eviction order any time.

Her retiree income is considered insufficient to qualify her for any modification of the adjustable-rate home-equity loan that she took out when the property was worth far more than it is today, she says.

“I feel that the banks should write these mortgages down,” Milligan said. “They wrote these bad mortgages, they created these monsters.”

One way of easing the crisis would be so-called “cramdowns”, a measure giving bankruptcy judges authorisation to write down the principal on homeowners’ mortgages.

A similar measure helped curtail family farm foreclosures in the 1980s, but Representative Brad Miller, a North Carolina Democrat, said the banking lobby killed it when it came up for approval by Congress earlier this year.

“We fought that fight before and lost it,” Miller said. “The industry will continue to oppose it.” — Reuters

The saddest part was the following quote:

* “The banks were bailed out first. We all assumed that they were going to turn around and help other people but that didn’t happen,” said Ruby Milligan, 61, a teacher who took early retirement after suffering a mild stroke several years ago.

Sigh! Help the rich and screw the poor? Sigh!

And it does not help when the poor reads how many millions in bonuses the bankers will receive!

Yeah, rewarded for doing what???

How?

Worse is over? Or worse is yet to come?

Shale Oil-New Hopes for Petronas?

With a new technique that tapped previously inaccessible supplies of natural gas in the United States spreading to the rest of the world, there is now elevated hope for a huge expansion of global reserves of the cleanest fossil fuel.There is now fresh new hope for Petronas.

Italian and Norwegian oil engineers and geologists have arrived in Texas, Oklahoma and Pennsylvania to learn how to extract gas from layers of a black rock called shale. Companies are leasing huge tracts of land across Europe for exploration. They are gathering rocks and scrutinizing Asian and North African geological maps in search of other fields.

The global drilling rush is still in its early stages. But energy analysts are already predicting that shale could reduce Europe’s dependence on Russian gas. They said they believed that gas reserves in many countries could increase over the next two decades, comparable with the 40 per cent increase in the United States in recent years.

“It’s a breakout play that is going to identify gigantic resources around the world,” said Amy Myers Jaffe, an energy expert at Rice University. “That will change the geopolitics of natural gas.”

More extensive use of natural gas could aid in reducing global warming, because gas produces fewer emissions of greenhouse gases than either oil or coal. China and India, which have growing economies that rely heavily on coal for electricity, appear to have large potential for production of shale gas. Larger gas reserves would encourage developing countries to convert more of their transportation fleets to use gas rather than gasoline.

Shale is a sedimentary rock rich in organic material that is found in many parts of the world. It was of little use as a source of gas until about a decade ago, when American companies developed new techniques to fracture the rock and drill horizontally.

Because so little drilling has been done in shale fields outside of the United States and Canada, gas analysts have made a wide array of estimates for how much shale gas could be tapped globally. Even the most conservative estimates are enormous, projecting at least a 20 per cent increase in the world’s known reserves of natural gas.

One recent study by IHS Cambridge Energy Research Associates, a consulting group, calculated that the recoverable shale gas outside of North America could turn out to be equivalent to 211 years’ worth of gas consumption in the United States at the present level of demand, and maybe as much as 690 years. The low figure would represent a 50 per cent increase in the world’s known gas reserves, and the high figure, a 160 per cent increase.

The projections suggest that the new method of producing gas “is the biggest energy innovation of the decade,” said Daniel Yergin, chairman of the Cambridge consulting group. “And the amazing thing is there was no grand opening ceremony for it. It just snuck up.”

Over the last five years, production of gas from shale has spread across wide swaths of Texas, Louisiana and Pennsylvania. All the new production has produced a glut of gas in the United States, helping to drive down gas prices and utility costs.

Now American companies are looking abroad for lucrative shale fields in countries hungry for more energy. They are focusing particularly on Europe, where gas prices are sometimes twice what they are in the United States, and large shale beds are located close to some cities.

Exxon Mobil has drilled a few exploratory wells in Germany in recent months. Devon Energy is teaming up with Total, the French oil company, seeking approval to drill in France. ConocoPhillips announced recently that it had signed an agreement with a subsidiary of a small British firm to explore a million acres in the Baltic Basin of Poland.

Early estimates of recoverable European shale gas resources range up to 400 trillion cubic feet, less than half the industry’s estimates of what is recoverable in the United States. But European energy executives say they are excited about the prospects because the Continent’s conventional gas reserves are too small to meet demand.

“It is obvious to everybody that it has huge potential,” said Oivind Reinertsen, president of StatoilHydro USA and Mexico, a Norwegian company with growing shale interests. “You see a lot of land-grabbing by different companies in Europe, potentially spreading to the Far East, China and India.”

Donald I. Hertzmark, a consultant who advises multinational oil companies on gas projects, said that in a decade or so, the new shale gas resources would improve Europe’s ability to withstand any future reduction in Russian pipeline shipments. In 2006 and again last winter, Russia cut off gas deliveries shipped through Ukraine because of disputes between the two countries, causing shortages around Europe.

European companies are buying large interests in shale fields in the United States, partly to supply the American market, but also to learn the specialised mapping and drilling techniques required for shale gas.

Several of the European companies have entered into partnerships with smaller American companies. ENI of Italy paid US$280 million (RM980 million) in May for a stake in a 13,000-acre gas field north of Fort Worth operated by Quicksilver Resources. ENI has a crew of four engineers, a geologist and a geophysicist in Texas to learn from Quicksilver personnel.

One of the biggest marriages is between Chesapeake Energy of Oklahoma City and its strategic partner StatoilHydro.

Seeking cash, Chesapeake agreed to sell Statoil a large stake in its Marcellus shale holdings, centred in Pennsylvania, for US$3.9 billion last November. The two companies are looking at shale fields in China, India, Australia and other countries. Seven Statoil employees are working in Oklahoma and Pennsylvania learning to map and fracture shale and calculate shale gas pressures, and more are coming.

“We know the shale is out there,” said Lars Erik Oino, a Statoil geologist working at Chesapeake headquarters here, as he rubbed hydrochloric acid on a shale sample to test its mineral makeup. “This could have a huge impact on the European energy situation.”

So, with potential new gas supplies, God has given countries like Malaysia a second chance at better resource utilization for economic development.