chilling prelude for Singapore

[chaos theory]

In view of all the arrogant statements regarding "Sub-prime could never happen in Singapore because Singapore is too smart" I thought this latest article on the second wave of USA property woes is a chilling article which has significant parallels for Singapore.

Simply, sub -prime was only 3% of the market. Now 9% of US homes are in default or in foreclosure.

These are good credit people who simply paid too much and therefore borrowed too much for overvalued assets. All this in a low interest rate environment. Read on:

New low for US market Loan crisis shifts to home owners with risky debt

Trouble in the United States mortgage market has shifted from subprime loans made to borrowers with bad credit to home owners who had solid credit but took out risky loans with ballooning monthly payments.

The Mortgage Bankers Association said more than 4 million American home owners with a mortgage - a record 9 per cent - were either behind on payments or in foreclosure at the end of June.

These figures come as the Labor Department said on Friday that the unemployment rate reached a five-year high of 6.1 per cent in August.

As the US economy falters and home prices keep falling, concern is building about a second wave of mortgage defaults in 2010.

"The problem that policymakers and Wall Street once assured us was `contained' to subprime mortgages has proven to be anything but," Mike Larson, a real estate analyst with Weiss Research, said.

A drop in income, whether through a lost job, divorce, death of a spouse, or health problems, is the main reason people fall behind on mortgages and lose their homes.

But mortgage defaults and foreclosures in many areas, especially California and Florida, can also be blamed on egregious lending practices and rampant speculation by home builders and small investors.

"We are unlikely to see a national turnaround until we see a turnaround in the two largest states," with the most outstanding home loans, said Jay Brinkmann, the mortgage association's chief economist.

The latest quarterly figures broke records - started in 1979 - for late payments, homes entering the foreclosure process and for the inventory of loans in foreclosure. The percentage of loans at least one month past due or in foreclosure was up from 8.1 per cent in the January quarter, and up from 6.5 per cent a year ago, using figures not adjusted for seasonal factors.

New foreclosures rose from the first quarter in 35 states and Washington.

The number of home owners with risky, adjustable-rate prime loans made with little or no proof of income or assets is the driving force behind the current delinquency rate.

[Make $$ & Leave]

Chaos Theory - I repeat - Sub-rpime will never happen in Singapore. Shows how little you know about Singapore. Afterall what can be expected of an expat. Make your money and leave.

[chaos theory]

read the article. Its not about sub prime. Its about the second wave of property crisis. That is caused by people with good credit who are defaulting because they borrowed too much on overpriced assets.

This IS happening in Singapore still today. Once interest rates start to rise, with a decline in rental returns due to global economy, the defaults will happen.

[why bother]

Sounds like a local who lost his job while an expat colleague got promoted.

No attempt at logic (just useless baseless assertion), sour grapes.  Unfortunately shows how little they know about anything at all, pity they can't make any money or likely they would leave.

[Bull is back for good]

Sounds like a local who lost his job while an expat colleague got promoted.

No attempt at logic (just useless baseless assertion), sour grapes.  Unfortunately shows how little they know about anything at all, pity they can't make any money or likely they would leave.

No need logic. Go and look at the market indices today. The new uptrend just started.

[Kubes.SG]

No need logic. Go and look at the market indices today. The new uptrend just started.

Like a child that has not yet developed self-awareness or rational thought, these bulls get overly excited by the most simplistic and misleading triggers.  Maybe if you are a smart day trader this hysterical volatility is good for your business.  Just because the US Govt privatized $6 trillion of risk that Freddie and Fanny carry is no boom or trend in the making. Where will that capital come from?   If I recall just 6 months ago, there was market jubilation after the Fed provided $30 billion backing for the Bear Sterns purchase.  That resulted in a short-lived market blip caused by the same retarded excitement as the child-like poster above.

[why bother]

No need logic. Go and look at the market indices today. The new uptrend just started.

Like a child that has not yet developed self-awareness or rational thought, these bulls get overly excited by the most simplistic and misleading triggers.  Maybe if you are a smart day trader this hysterical volatility is good for your business.  Just because the US Govt privatized $6 trillion of risk that Freddie and Fanny carry is no boom or trend in the making. Where will that capital come from?   If I recall just 6 months ago, there was market jubilation after the Fed provided $30 billion backing for the Bear Sterns purchase.  That resulted in a short-lived market blip caused by the same retarded excitement as the child-like poster above.

You may also note that half these guys think US mortgages have no reason to have any negative effect on Singapore but Singapore will obviously participate fully in any upside from US Govt intervention in the same thing.  It's all rather silly really.

[why bother]

Or we may all be wrong.  The uptick in global markets today has nothing to do with Freddie & Fannie but rather word got out someone bought an apartment here for near the asking price.

[worse to come]

Title : Experts say Singapore won't be spared from market turmoil 
By : Esther Fung, TODAY 
Date : 08 Sep 2008 0714 hrs (GMT + 8hrs) 

SINGAPORE: The turmoil in the Asian markets last week is just the beginning of worse to come, said economists and analysts, and Singapore is unlikely to be spared in the weeks ahead.


There were jitters, even signs of panic, in Asian bourses the end of last week, with the rise in United States jobless claims — the highest in five years — spooking market sentiment. The Straits Times Index (STI) dropped 51.84 points or 2 per cent last Friday to 2574.21, its lowest close since October 2006.


Economists told TODAY that they are concerned by the blood-letting on the bourses, the result of various forces converging to contribute to fears of a prolonged global slowdown. None of them gave an indication of when things would pick up.


"There is a substantial degree of fear factor in the markets. Risk aversion dominates the market and everyone is getting worried despite the oil prices going down," said DBS economist Irvin Seah.


"A few months ago, when oil prices shot up, it was interpreted as bad news for the economy. This time round, even when oil prices come down, it was also interpreted as a negative thing because of slowing global demand," he added.


The manufacturing sector would probably bear the brunt of the cyclical decline. Such woes may eventually spread to export-oriented sectors as well as the transport services sector.


Sentiment-driven sectors like property and financial services may also start to feel the pain. There would be some pockets of retrenchment in these sectors, probably towards the end of the year, but nothing similar to what occurred in 2001, added Mr Seah.


A small open economy like Singapore's will feel more acute pain as compared to an economy with a larger domestic market, said economists. Political instability in Asia — the violent clashes in Thailand and the abrupt resignation of Japan Prime Minister Yasuo Fukuda — only breeds more uncertainty for many companies here.


Credit Suisse, in a recent note, advised investors to avoid Malaysia and Thailand as the anticipated returns do not justify the risks.


Mr Song Seng Wun, regional economist at CIMB, said: "There will be more downward pressure on earnings growth, and we in Singapore will see fewer people passing through Changi Airport. Being a hub, we ride on overseas growth and people coming through. There could be lower growth than what the government projected."


The recent selldown in the STI is more likely due to macroeconomic indicators pointing to slower economic activity and indicators of consumer confidence painting a cautious outlook.


"With the rest of the world showing very wobbly growth, perhaps higher inflation and tightening monetary policies around the world are taking their toll," Mr Song said.


In the short term, the STI is unlikely to show signs of recovery and is expected to continue to decline. "For the week ahead, take cover, it's going to be rough. There might be some technical rebounds, but they are unlikely to be sustained," said an analyst at a local brokerage. "Fundamentals are way too messed up, and we don't really need indicators to tell us things are going to get worse."


Vice-president of group wealth management at OCBC Bank, Mr Vasu Menon, said that investors would need to brace themselves for a longer period of volatile stock markets. "Although commodity prices have pulled back and we see inflation abating, it is clear that there are still more bearish times ahead and investors need to tread cautiously in the short term," he said.


Investors who are still seeking for places to park their money can consider funds that adopt market neutral strategies, said Mr Menon.


Economists are warning of tougher times ahead for the man on the street, but the reality has yet to hit most wage-earners.


"My hunch is that most Singaporeans are not feeling the pain yet. The turnout (at recent travel and consumer electronics fairs) has been fantastic despite headline growth coming off and the stock market crashing," said DBS's Mr Seah.


Yet, pressures on the employment scene are building up, say economists. The labour market tends to respond to the economic growth cycle after two quarters, and that means there might be some layoffs by the end of the year.


On a decidedly pessimistic note, he predicted that bonuses will shrink, and fresh graduates may find difficulty getting good jobs. "Workers who intend to switch jobs may find it difficult to find attractive openings as compared to the last two years."
 

[Bear talk]

Today/Tonight all the bear talk does not matter, the market is going up anyway.. Try again another day when the mood changes..

[But]

the Bears should seriously and decisively test the Dow's 11k level..

[why bother]

And were you telling all the bulls to be quiet most days for the last year or so while the markets fell.  No? Oh, this is special.....

Idiot.

[What are you talking]

And were you telling all the bulls to be quiet most days for the last year or so while the markets fell.  No? Oh, this is special.....

Idiot.

about? There are things for you to work out. It has something to do with ranges..

[why bother]

I was replying to bear talk.  Seems to think one day of gains reverses all the pessimism of over a year while almost certainly not offering the opposing view the whole time and probably claiming the whole thing didn't affect singapore.

Selectively blind.

[Bear talk]

I was replying to bear talk.  Seems to think one day of gains reverses all the pessimism of over a year while almost certainly not offering the opposing view the whole time and probably claiming the whole thing didn't affect singapore.

Selectively blind.

Times are changing, rules are changed to better an economy. It's too bad the rescues of Fannie Mae (FNM) and Freddie Mac (FRE) interfered with the formation of the latest bottom of the Dow (this is the second). Nevetheless, we can treat the announcements by the U.S. government as part of the trend setting..