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Tuesday, December 21, 2010

Japans Economy Shows signs of Tanking

Crowded street in Japan. Click image to expand.
Will The Rising Suns Economy Set?

When the financial world tries to anticipate the next meltdown, all eyes turn to Europe. Greece needed a bailout, then Ireland did. Talk is that Spain will follow, though the country denies that it has a problem.

But a few contrarians think everyone is looking in the wrong direction. Forget Europe, they say. Check out Japan instead. "A global fiasco is brewing in Japan," predicted Societe Generale analyst Dylan Grice in a recent report. "It's like the Titanic has already hit the iceberg and you know it's going to sink, you just don't know how long it will take to go down," said Vitaliy Katsenelson, a Denver-based money manager, in a recent interview that was printed in well-known analyst John Mauldin's newsletter. One hedge fund analyst I spoke to recently noted that Japan has had no fewer than nine finance ministers in the last 4½ years—one of whom apparently committed suicide after resigning.

Japan was thought to possess a miracle economy before it all went to hell in the early 1990s following a spectacular real estate bust. Today the popular perception is that Japan is stagnant but stable. After the economy slowed down, the Japanese government lowered taxes and increased spending, sending deficits, and also government debt, way up. But the debt hasn't been a problem, because Japan's risk-averse populace—which became even more risk averse after the collapse of the technology bubble a decade ago—has sunk its considerable savings into government bonds, known colloquially as JGBs. What could be safer than government debt? As a result, the vast majority of Japanese debt is funded by its own residents—in stark contrast to the United States, which sells a sizable chunk of its debt overseas. And as deflation struck the Japanese economy, the interest rate on its outstanding debt has fallen to an average of a mere 1.5 percent.
In sum, the Japanese government has been able to increase its debt without driving borrowing costs up because of falling interest rates. That fortunate circumstance has allowed Japan to ramp up government spending even as tax revenue has dropped by nearly one-third .The not-so-lucky part is that even at today's low interest rates, Japan's interest on its debt is eating up a scary proportion of its tax revenue—more than 25 percent (not including the funds that come from issuing yet more debt), according to government figures. In addition, much of Japan's debt is relatively short-term in nature, meaning that the government last year had to "roll" at least 140 trillion yen in debt (i.e., replace retiring debt with new debt) even as it issued some 50 trillion in fresh debt to fund the growing gap between what the government spent and what it took in.
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As Bernie Madoff would tell you, this is a game you can play only so long. Japan's savings rate, which was once in the mid-teens, is quickly approaching zero. Meanwhile, the country has the oldest population in the world, with basically no immigration. When people retire, what do they do? They start to withdraw money from the banking system. You begin to see the problem.
Why, you might ask, can't Japan do what us profligate folk in the United States do—sell its debt to international investors? Well, it could, but it would likely have to pay a much higher interest rate than 1.5 percent. After all, if you were an investor, why would you buy Japanese debt yielding 1.5 percent when you could buy U.S. or German debt that paid you more? My source thinks Japan would have to pay roughly 4.5 percent interest on 10-year debt to be competitive, and he says that's a conservative estimate. But that would create a different problem. If Japan's interest rates merely doubled, from 1.5 percent to 3 percent, then interest expense would be more than half of the government's tax revenues. "Any meaningful re-pricing of Japanese sovereign risk would push yields to a level the government would be unable to pay," writes Grice.
Another way for Japan to dig itself out of this hole would be to cut spending. But already, Grice says, Japan's tax revenues can't cover debt service combined with social security. So where the hell do you start?
Those who believe in historical precedent point to examples like Weimar Germany and say Japan is going to swing from deflation to hyperinflation. The Bank of Japan, they say, will print yen in order to pay down debt. "Cash-strapped governments," observes Grice, often resort to "currency debasement." That story never ends happily.
But at least so far, the consensus is that this dire scenario won't, can't, happen. Indeed, it's often said that you aren't a real macro trader (someone who bets on global trends) until you've gotten burned shorting (i.e., betting against) Japan. "You'll find 10,000 people saying I'm an idiot and that people have been saying this, and been wrong, for 15 years, and kid, shut up," laughs my source. The Bank of Japan says the economy is improving; analysts say the government has lots of options, including raising the value-added tax or having the banking system put even more assets into government bonds. (Already, the Bank of Japan is engaged in its own form of "quantitative easing," or purchasing government bonds, which, just as in the United States, is supposed to help the economy recover.) Japan's relatively healthy corporate sector could take over from households in investing its surplus cash into government bonds. "Everyone acknowledges the long term seriousness of Japan's fiscal position," writes Grice. "But people seem almost fatigued with the idea that a country which has defied bond market logic for so long now is ever going to change."
But just because things haven't changed doesn't mean they won't. While any deterioration in Japan's finances should, mathematically speaking, happen gradually—savers don't yank their money out of the system all at once—modern markets have a way of accelerating underlying problems into crises with remarkable speed. If there's a lesson we should all have learned, it's that once fear takes hold, anything can happen. And if Japan is a problem, it's a problem for all of us. After all, Japan is still the world's third-largest economy. Unlike Greece and Ireland, it is simply too big to bail out, even if the world were willing to do so. China and Japan are the largest foreign holders of U.S. debt. One obvious question is, what happens here if Japan starts selling?
There's another way in which Japan's problems might matter, too. In some important ways, the United States is following in Japan's footsteps—for instance by taking advantage of low interest rates to issue a slew of cheap debt. Japan's "more profound influence might be psychological," Grice writes. What he means is that Japan's benign experience with debt (so far) has led other countries (notably ours) to think that it can have a worsening fiscal condition yet still pay a low interest rate on its debt . If bond markets begin to act like that notion is wrong, this story doesn't end happily for anyone.

More Money Than God: Hedge Funds and the Making of a New Elite

Review

There was only one reason to read this book and that was to obtain more information on the Medallion methodology. The author does provide information that hitherto was not public. For this I am grateful, but I would have liked, even more, a really deep interview with the various individuals involved in the development of Medallion.

For example, Berlekamp presents himself, on his website, as the creator of Medallion and the solver of its trading problems. He kicks himself for selling his share of this cash-generating marvel to the ruthless Medallion Pool Operator Owner for only six times the amount he had invested. I guess his intense need to play Dots and Boxes just overwhelmed his common sense.

Starting in the 1990's, hedge funds became large enough to move markets of all kinds. They could even overpower governments. This allowed the Tiger Fund in 1998 to approach "Russian friends...to buy the entire stock of nongold precious metals held by the central bank and finance ministry...take the palladium, the rhodium, and the silver. All of it." leaving the logistics problem of getting it into a Swiss bank with Tiger's name on it.

Money can be made in this lucrative venture and Sebastian Mallaby, will give you an education you won't find in any college. If you want to make a million, don't talk to an economic professor, go talk with a millionaire. If you want to make money with hedge funds, buy this book and do what Sebastian Mallaby tells you to do.

- it is often dangerous to trade on statistical evidence unless it can be intuitively explained". "Visceral" is the word meaning deep inward feelings rather than just an intellectual focus.

- "The whole point of leverage, the very definition of the term, is that investors feel ripples of the economy in a magnified way."

- We all rationalize success. One position by the Chanos Fund only worked out because the April 1989 Tiananmen Square demonstration broke out. This earned the comment "The way Ah see it, is that it took a revolution of a bihl-lion people for your darn short to work out."

- "Event driven" investing at Farallon Fund specialized in predicting events that cause existing prices to be wrong e.g. takeover announcements, demergers, avoiding bankruptcy, meeting banking covenants, major economic events, hybrid security maturity dates etc.

- `Pattern investing' used by the Medallion fund looking for patterns in the market. This applies research on French/English translation where the computer finds the grammatical rules not the programmer (using the Canadian Hansard which is conveniently in both languages).

- A Tiger Fund manager "should manage the portfolio aggressively, removing good companies to make way for better ones; should avoid risking more than 5 percent of capital on more than one bet; and should keep swinging through bad times until luck returned".

- Remember that "...the market can stay irrational longer than you can stay solvent".

- "If one of these stocks fell ... it was probably being pushed by an institutional block trader that needed to raise cash...the price would soon revert, creating an opportunity to profit." In other words, why is the seller selling?

- "the biggest danger for buyers of illiquid assets is that in a crisis these assets will collapse the hardest."

- "...the larger an investment fund, the harder it was for a fund manager to generate returns" meaning the small investor has more opportunity.

- And remember, "LTCM calculated that this loss should have occurred less than once in the lifetime of the universe. But it happened anyway." The market does not follow a normal distribution; often it is not random; but then is it often predictable?


Mallaby grapples with the variety of thought behind the success of the hedge funds giving us a workmanlike insight. This attempt to describe how the hedge funds actually operate - as far as he is able (and he tells us when he cannot) - makes this a valuable book indeed.

Saturday, December 18, 2010

Robert Glasper Experiment Live @ The Cotton Club TOKIA Marunouchi Tokyo

Which version of Robert Glasper would it be this time? With one foot in the straight-ahead jazz camp and one planted in hip-hop and funk, the American pianist has been carving out a dual identity. On his album Double Booked the two facets of his personality are laid out for all to see, tracks by his acoustic trio juxtaposed with the contemporary riffs of his other line-up, the Robert Glasper Experiment.

With Chris Dave on drums Glasper was certainly not short of firepower. Dave may be a diminutive figure, but he produced the most electrifying playing seen at this venue for a long time. Some parts of the set, in fact, came close to being a miniature drum concerto, Glasper laying down minimal accompaniment as his partner fired off round after round, at one point surging into a mesmerising drum ’n’ bass tattoo.

Memorable themes were thin on the ground, however. Glasper’s elliptical style, full of staccato runs and knotty harmonies, generates undeniable rhythmic tension but also runs the risk of turning in ever-decreasing circles. Glasper, who was in a jovial mood,  prefers to ditch set-lists to follow the mood of the moment.

The venue was Tokyo's Cotton Club in Marunouchi Finance precinct.
I attended the gig with Masayuki Koito (Finance Researcher) & Editor of Japans Jazz Magazine "The Walker".
http://www.t-walkers.com
The Cotton Club is high-end and offers a nice and more elegant change for the usual Tokyo nightspots.
The acoustics where brilliant while the band stage showcases a nostalgic remake of the Harlem Theater.
All in all, one of the best live performances I have every seen.
James Sleeman





Robert Glasper Experiment Live Cotton Club Tokyo 17/12/2010 -jimmy james by Spirit-Fingers


Rob's Birthday

the real robert glasper | Myspace Music Videos

2010 And Beyond - Deflation Japanese Style

"The cause of sustained price falls is a lack of demand. When demand itself is weak, prices won´t rise just through liquidity provision." – Masaaki Shirakawa, central bank governor of Japan
 
Japan’s structural problems are substantial and well known. A massively indebted government is under pressure to reduce the scale of its borrowings. Demographics are conducive to a contraction in the overall economy, given the impact of ageing is not being offset by net immigration, and Japan’s globally competitive exporters continue to face patchy conditions in most of their overseas markets. Furthermore, the savings rate remains high and bank lending is stagnant, therefore Japan remains susceptible to deflation.

None of this augurs well for Japan’s long-embattled commercial real estate sector. There is also the problem of gross oversupply of property – with the partial exception of the office and retail sub-sectors of Osaka. Over the last decade, Japan has essentially become over developed relative to the needs of its economy.

The last two years have been particularly harsh for the sector. data provided to me in March and July 2010 – confirm that rental rates fell sharply during 2009. Where there were property transactions, they generally resulted in substantial drops in capital values. More recently, there appear to have been minor rises in rents across the board. However, given the actual conditions and protagonists’ expectations, this appears to be little more than a bounce in the wake of a horrendous year. Our in-country sources expect rental rates to track sideways through 2011. Yields have moved in differing directions across the various sub-sectors. The fall in yields in Yokohama over the last year or so is probably reflective of an absence of transactions. The market clearing capital values and yields are, we suspect, respectively lower and higher than they currently appear to be. Looking forward, we expect that yields will track sideways. 
 
Looking back at the ‘Weak Decade´, we can´t avoid being reminded of Japan´s TWIN decades of weakness. Today, at about 10´380, the Nikkei 225 stands pretty much at the same (nominal) level as it did around 1987. And, it´s A LOT LOWER than it was at the end of its great bull market in 1989. On December 29, 1989, the Nikkei peaked at 38,876. In other words, the price levels of the Nikkei today stand at roughly a quarter of what they were 20 years ago...TWO decades later!

Saturday, December 11, 2010

James Howard Kunster – A Sense of Place.

Here’s another great TED talk that really has the ability to change the way you think about your surroundings, if you let it. James Howard Kunster tells it like it is. When talking about public spaces, urban sprawl, and creating a sense of place he describes, in general terms, what went wrong and how to fix it. I’ve posted some notes below, but I recommend you take 20 minutes and watch the video for yourself, it’s worth it:



Sense of Place – Your ability to make places that are meaningful and places of quality and character. This depends entirely on your ability to define space with buildings.
The public realm mainly comes in the form of the street in America because we don’t have the 1,000 year old cathedrals and market squares of older cultures.
The culture of civic design – a body of knowledge, methods, skills, and principles that we threw in the garbage after WWII and we can see the result all around us.
The public realm has to inform us not only where we are geographically, but it has to inform us where we are in our culture – where we’ve come from, what kind of people we are, and by doing that it needs to afford us a glimpse to where we’re going.
The places we’ve created over the past 50 years have deprived us of the ability to live in a hopeful present.
To create a place of character and quality you have to be able to define space.
We have about 38,000 places that are not worth caring about in the United States. When we have enough of them, we’re going to have a Nation that’s not worth defending.
The remedy for mutilated urbanism is good urbanism and good buildings, not just flower beds not just cartoons of the Sierra Nevada Mountains, that’s not good enough, we have to do good buildings.
The industrial city was such a trauma that we developed this tremendous aversion for the whole idea of the city, city life, and everything connected with it.
We have to downscale, rescale, and resize virtually everything in this country and we cannot start soon enough.
We’re gonna have to live closer to where we work, we’re gonna have to live closer to each other, we’re gonna have to live closer to where we produce food, we’re gonna have to improve our railroad system.
We have to re-learn how to compose meaningful places, places that are integral and are living organisms.
We need revivified town centers – our cities grew where they are because they occupy all the important sites.
Life in the 20th century is going to be about living locally. Be prepared to be good neighbors, be prepared to find vocations that make you useful to your neighbors and fellow citizens.
Stop referring to yourself as consumers. Consumers are different than citizens, consumers do not have responsibilities to their fellow human beings.

Commercial Real Estate Videos of the Week

Nicholas Smith, director & strategist at MF Global, explains his investment strategy for Japan and suggests investing in the country’s property and financial plays.


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Sunday, November 28, 2010

Massive Chinese Luxury Spending Shows The Real Estate Mania Is Spreading

pyramid

Tiffany results give excellent insight into the luxury market mania. At the flagship US store in New York sales were down 3%. It was up a modest 8% in the US as a whole. Japan was up 2%, but the rest of Asia was up a whopping 24%. Growth for sure, but Chinese consumer consumption is $2 trillion, or one-tenth the size of Europe and the US combined. I am not quite sure what to make of the 22% increase in Europe. Sales of items under $500 declined, but high end jewelry and diamond sales drive expensive purchases much higher. That, ladies and gents, is the foundation of the luxury boom of 2010.

The TIF result couldn’t be more clear. This mania is directly correlated to the Chinese speculative real estate mania, which I originally covered in a report in Russ Winter’s Actionable (a subscription service). This one makes the US real estate bubble look like child’s play. The Chinese authorities have taken measures to check this, but the mania has just spilled over into Hong Kong . As with all great manias, people feel that they have hit the jackpot, but in reality there are less than a million millionaires in China, suggesting that much of this fleeting bubble-mania wealth is driven by Wannabees. Wannabees drove the US housing bubble, and we are still dealing with the aftershocks. For those who wished they had played the US bust aggressively, now you have an even bigger mutha to play as China will be much worse.

A prevailing myth is that even in the US the wealthy are now carrying the consumer based economy. Usually when the discussion is centered around the US, the bottom 60% are dismissed as irrelevant, as if the US was really a banana republic of sorts. Nor is there particular concern about how this indebted lower tier affects the holdings (largely bonds and stocks) of the 5% who hold the securities that represent their debts. The belief is that the Fed or the government will take care of most of the risk of holding investments dependent on, drum roll please, debts owed by the lower 60% or 80% in the banana republic. Incidentally, despite the Ministry of Truth barrage going into Black Friday about improving employment, there were 1,651 mass layoff events (at least 50 workers) in October, resulting in 148K job losses – 121 more mass layoffs than in September.

Further aggravating the myth is that the retail sector is full of quasi-luxury retailers like JWN and COH who are getting the luxury bubble bath treatment. Apparently the idea here is that the top 20% are now doing great as well. I would suggest the obvious: excluding the top 5%, the rest of the top 20%, holds a much higher percentage of their wealth in housing rather than in financial assets. Therefore, that group is largely missing in action.

For sake of argument let’s consider that the top 5% are the drivers of this wealth and luxury theme. These people hold 72% of all the financial assets in the country. Obviously with the stock market having recovered a large portion of their 2008-2009 losses, these people are feeling somewhat wealthier compared to a year ago. The only problem with this is that if we use mutual fund flows as a surrogate for where these folks put their money, their participation was muted.

pyramid
pyramid

The wealthy have put money into the aforementioned mania induced emerging market bubble to the tune of $83.3 billion in 2009, and $79.9 billion so far in 2010. Connecting the dots, a bust in inflated luxury stocks should correlate well to an emerging market equity and debt bust.

The wealthy have also put money into tax free bond funds ($30 billion in 2010) as part of some misguided derisking play, and to squeeze out a little extra yield. A half a trillion is parked in these funds, although last reported week 1% was pulled out. I suppose a plutocrat opening his monthly statement at the end of August and September and on the eve of QE2 might feel smug enough to engage in some luxury spending hysterics. That has now come and gone, as any benefit or gain from investing in tax free bonds in 2010 has also come and gone.


Thursday, November 25, 2010

Japan's commercial properties have largest debt-funding gap in Asia Pacific

Japan's commercial properties have the largest debt-funding gap in Asia Pacific, at US$70 billion.

This is according to research by real estate firm DTZ.

The funding gap is defined as the difference between the debt secured by a commercial property that is maturing and needs to be paid, and the debt that is available to fill the vacuum.

According to DTZ Asia Pacific Research, aside from Japan, the only other markets in Asia-Pacific with funding gaps are Australia and New Zealand. However, the shortfalls in these countries are only US$500 million and US$100 million, respectively.

DTZ added that despite a development boom in China and India recently, neither has a debt-funding gap as capital values have held up.

As a result, DTZ said both countries have been insulated against any significant downturn.

Globally, DTZ also estimates that US$376 billion of equity capital is available for investment in commercial properties in the next three years.

This works out to more than 1.5 times the estimated global debt-funding gap in the next three years, which DTZ estimates at US$245 billion.

However, DTZ cautions that the debt-funding gap continues to be the biggest challenge in many international property markets.

Friday, November 19, 2010

Consortium Buys Lauren Building in Tokyo

Consortium Buys Lauren Building in Tokyo
Secured Capital Japan and Other Investors Snap Up Outlet in One of the City's Poshest Areas.

In a sign that Japan's moribund real-estate market is coming back to life, a Japanese-led consortium is set to acquire the iconic Ralph Lauren building in central Tokyo for $350 million, in one of the largest real-estate transactions this year.

Secured Capital Japan, a real-estate investment fund, is set buy the property, along with other investors. Deka Bank, Germany's largest manager of property funds, is the main lender. The sale is set to close as early as next week.


Ralph Lauren's flagship store in Omotesando—one of the poshest addresses in Japan, located on Tokyo's version of the Champs Elysees in Paris—is a standalone, white, neoclassical mansion that measures 2,200 square meters. The property, which opened in 2006, stands out on the wide boulevard that is primarily filled with modern glass-and-steel buildings. Ralph Lauren leases the store space.

The purchase of the Ralph Lauren Omotesando building is another trophy asset for Secured Capital Japan, which in December 2009 won a bid for the Pacific Century Place Marunouchi, a top-tier office building located in the central business district adjacent to Tokyo Station, for 140 billion yen, marking that year's largest transaction by deal size.
[ralph] Associated Press

Ralph Lauren's flagship store, shown here in March 2006, is in Omotesando in central Tokyo.

Japanese real-estate transactions have been heating up this year. With prices still near 36-year lows, Tokyo led all cities world-wide during the first half of 2010 with real-estate transaction volume exceeding $10 billion, according to Real Capital Analytics, maintaining a big lead over London and Hong Kong, the Nos. 2 and 3 cities, respectively. Real-estate investment trusts and foreign investors have been active participants in the market, confident that prices have finally bottomed out.

"We're definitely more aggressive about lending compared with a year ago," said Shinroku Wakayama, general manager of real-estate finance at Mizuho Corporate Bank.

Since banks are facing weak loan demand from corporations, there is ample cash to spend in the real-estate market, Mr. Wakayama said.

He said the Japanese market is still an attractive destination for real-estate investment given the stable economy and relatively high yields.

Though defaults on loans have forced many real-estate transactions this year, observers say delinquency rates have already hit a peak and are starting to decline.

Bankers aggressively pushed real-estate loans in Japan from 2004 to 2007, with properties sometimes leveraged as much as 90%. When the real-estate bubble bust during the global financial crisis, the accompanying drop in portfolio valuations led to an increase in loan defaults.

Commercial-mortgage-backed securities loans typically have a shorter life span in Japan, where CMBS loans are usually due in about three years, compared with five to seven years in Europe and about a decade in the U.S.

"There is still demand in the Tokyo real-estate market from developers and real-estate funds if a property is located in the center of the Tokyo metropolitan area," said Takashi Hashimoto, an analyst at Barclays Capital. "For office or retail properties in the area, getting financing from financial institutions is easier."

Daiwa Real Estate to Boost REIT Assets by 25% in 3 Years, President Says

Daiwa Real Estate to Boost REIT Assets by 25% in 3 Years, President Says
Daiwa Real Estate Asset Management Co., a unit of Japan’s second-biggest brokerage, plans to boost assets in its real estate investment trust by a quarter to about 350 billion yen ($4.2 billion) as it bets the nation’s property market has bottomed.


The property unit of Daiwa Securities Group Inc. is seeking to lure investors by arguing that the yield on the Tokyo Stock Exchange REIT Index offers attractive return after the gauge dropped about 60 percent from a 2007 peak. The difference between 10-year Japanese government bonds and REITs stood at 5 percent as of Oct. 31, almost five times the 1.1 percent in the U.S., and about three times the 1.7 percent in Europe, according to an estimate by Credit Suisse Securities (Japan) Ltd.

“When you compare the yield spreads in Japan and those in other international markets, Japan offers the best return ever,” Yamanouchi said in an interview on Nov. 16. “We expect that trend to continue and we are keen to capture growth in this market.”

Ichigo Targets $3.6 Billion in Assets for Tokyo Property Funds

Ichigo Targets $3.6 Billion in Assets for Tokyo Property Funds

Ichigo Group Holdings Co., Japan’s third-biggest publicly traded property manager, aims to boost assets to at least 300 billion yen ($3.6 billion) by February for funds that will invest in Tokyo office buildings.

The increase in assets is the first in three years based on half-year figures from the company. The Tokyo-based firm, which had 266.6 billion yen under management as of August, plans to start “several” funds over the next few months,

Ichigo aims to start new funds after its assets halved from their peak in February 2007 and amid signs that Tokyo’s real estate market may have bottomed. Office building values in the capital declined 40 percent to 50 percent since their 2007 high, while the market for private real estate funds expanded 7.9 percent in the first half of the year, according to CB Richard Ellis Group Inc.’s Japan unit and STB Research Institute Co.

Monday, November 15, 2010

The Most IMPORTANT Video You'll Ever See

Debt is not a problem. The real problem is the irreversible multiplication of debt BY INTEREST'

There is more of that. The future value of money FV=PV(1+i)^n, the favorite formula of the Usurers & Money Changers has Class III of Impossibility in the physical world (Class III - Technologies that violate the known laws of physics) arranging itself next to things like perpetual motion machines and precognition.

In the tangible value of money appears basic SI unit ([seconds], even to some power)

This Is Mind Blowing!

Here' another mind blowing concept -

Just as we can zoom OUT to see the bigger universe, we can also zoom IN to see the smaller universe. Just as outer space seems to go on forever, INNER SPACE goes on forever too!

For example, do a google image search for "atom". Notice how a tiny atom LOOKS JUST LIKE A HUGE SOLAR SYSTEM?

Perhaps SIZE ITSELF is just an illusion!



Gro-Bels's Freeze Recommends Japanese Real Estate:

Gro-Bels's Freeze Recommends Japanese Real Estate:
Curtis Freeze, chief executive officer of Gro-Bels Co., a Tokyo-based property developer, and chairman of Honolulu-based Prospect Asset Management Inc., talks about Japan's economy and his investment strategy. Japan’s economy grew more than forecast in the third quarter as consumer spending increased, shielding the expansion from a stronger yen and export slowdown likely to have a greater impact this quarter.


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Friday, November 12, 2010

Top Asset Managers Rebound Strongly

Assets managed by the world’s largest 500 fund managers rose by 16% in 2009 to US$62 trillion at the end of the year. This is in contrast to a 23% loss the year before, according to the Pensions & Investments / Towers Watson World 500 ranking. The research also shows that although the percentage rise in total assets in 2009 is the second largest since the research began in 1996, asset levels are still below 2006 levels. In addition, during the past five years only half of the fastest growing firms have done so in a primarily organic way, with the other half doing so by merger or acquisition.

Top 10 Global Asset Managers

Barclays Global Investors
1. Barclay's is a leading global wealth management firm, and has offices in 20 countries. The company also provides retail, corporate banking and investment banking.


State Street Global Advisors--SSGA
2. SSGA has 28 locations worldwide, with assets under management worth $1.8 trillion. The company is the world's second largest asset manager.


Fidelity Investments
3. Fidelity Investments was founded in 1969, and provides asset management services to clients around the world. The company manages over $200 billion in assets for private investors and institutions.


The Vanguard Group
4. The Vanguard Group is based in Malvern, Pennsylvania, and manages assets worth $1.4 trillion. The company provides over 200 stock bonds as well as variable annuity portfolios.

JP Morgan Asset Management
5. JP Morgan is a leading provider of asset management services to individuals, institutions and financial intermediaries. The company offers full spectrum asset classes.


Capital Research and Management Company
6. Founded in 1931, the Capital Group provides asset management services in North America, Europe and Asia. The company has 22 offices worldwide.


Deutsche Asset Management
7. Deutsche Bank is a leading provider of financial services, and is headquartered in Frankfurt, Germany. The company specializes in private wealth management, and also provides retail banking services around the world.

Northern Trust Global Investments
8. Founded in 1889 by Byron Laflin Smith, Northern Trust Global Investments has $603 billion in assets under management and is based in Chicago. Through its subsidiaries the investment firm provides a wide array of products and services to United States and international clients.


UBS Global Asset Management
9. Headquartered in Zurich, Switzerland, UBS provides investment services to private, corporate and institutional clients and has offices in 50 countries. UBS Wealth Management is the largest private bank in the world and has over $540 billion in assets under management.


Alliance Capital Management
10. Alliance Capital Management is based in New York and provides diversified investment products to private clients and institutions. The company has approximately $458 billion in assets under management.

Commercial Real Estate USA Ready to Move On Up?

The commercial sector in the US is ready to move on up, according to James McCaughan, of Principal Global Advisors. He shares his view with the Strategy Session crew.

Saturday, November 6, 2010

Akiko - I Miss You

I recently saw Akiko live she played this song.
Akiko is a phenomenal songwriter and musician.
Her voice is best suited for down tempo songs sung slow motion like this track
"I Miss You".
Mesmerizing, romantic and exquisite voice perfect for live jazz club venues.

Japan does not expand its bailout

Japan does not expand its bailout in response to US



The Bank of Japan has decided not to increase its measures to inflate the Japanese economy in response to the US decision to pump a further $600 billion into its economy this week.

However, the central bank is proceeding with unusual plans to buy shares in exchange traded funds and real estate investment trusts as part of a 5 trillion yen asset buying scheme starting next week.

Maintaining interest rates at an ultra-low level of between 0% and 0.1% the central bank painted a downbeat picture of Japan’s economy.

‘Japan's economy still shows signs of a moderate recovery, but the recovery seems to be pausing. Exports and production have recently been more or less flat,’ it said.

‘Business fixed investment is showing signs of picking up. The employment and income situation has remained severe, but the degree of severity has eased somewhat,’ it added.

Friday, October 29, 2010

Worldwide Corruption Rankings index 178 countries

Since 1995, Transparency International has published an annual Corruption Perceptions Index  ordering the countries of the world according to "the degree to which corruption is perceived to exist among public officials and politicians". The organization defines corruption as "the abuse of entrusted power for private gain".


Governments committing huge sums to tackle the world's most pressing problems, from the instability of financial markets to climate change and poverty, corruption remains an obstacle to achieving much needed progress. The 2010 Corruption Perceptions Index shows that nearly three quarters of the 178 countries in the index score below five, on a scale from 10 (highly clean) to 0 (highly corrupt). These results indicate a serious corruption problem.

To address these challenges, governments need to integrate anti-corruption measures in all spheres, from their responses to the financial crisis and climate change to commitments by the international community to eradicate poverty. Transparency International advocates stricter implementation of the UN Convention against Corruption, the only global initiative that provides a framework for putting an end to corruption. Denmark, New Zealand and Singapore are tied at the top of the list with a score of 9.3, followed closely by Finland and Sweden at 9.2. Bringing up the rear is Somalia with a score of 1.1, slightly trailing Myanmar and Afghanistan at 1.4 and Iraq at 1.5.

Notable among decliners over the past year are some of the countries most affected by a financial crisis precipitated by transparency and integrity deficits. Among those improving in the past year, the general absence of OECD states underlines the fact that all nations need to bolster their good governance mechanisms. The message is clear: across the globe, transparency and accountability are critical to restoring trust and turning back the tide of corruption. Without them, global policy solutions to many global crises are at risk.

Wednesday, October 27, 2010

Toranomon-Roppongi Building

Toranomon-Roppongi Area

Vertical Garden City

Construction is currently underway for the Vertical Garden City redevelopment of a large slice of central Tokyo close to ARK Hills. Working in concert with local residents, Mori Building will transform these areas into safer, more comfortable and greener places to live.























About the Project
Concept.

This redevelopment project covers approximately 2.0 hectares of land located extremely close to Kamiyacho Station on the Tokyo Subway Hibiya Line and Roppongi 1-chome Station on the Namboku Line.

Many embassies and hotels are located nearby, making it an area with a strong international flavor, and it is being developed through category 1 urban redevelopment projects such as ARK Hills, Izumi Garden, etc. Moreover the "Loop Road No. 2, vicinity of Shimbashi, Akasaka, and Roppongi" area, which includes the site of this development, has been designated an urgent urban renewal area.

Based on the concept of "a life surrounded by nature in the heart of the city," we are aiming to build an appealing urban area that is very cosmopolitan and has abundant culture. It will combine residential, retail, and business functions to a high standard. The development will be in harmony with other developments in the vicinity, ensure reasonable and sound land use, improve disaster prevention capability, and advance the development of the city infrastructure.

Development of public facilities is to include widening of the ward road on the western side of the site by 12 meters from the opposite bank, and the building of two new ward roads, 9 meters and 6 meters wide, around the perimeter of the site. We will also develop public spaces inside the site itself, an approximately 3,000m2 space on the west side and an approximately 1,000m2 space on the south side, and develop new pedestrian walkways and green areas. There is a height difference of approximately 10 meters between the existing residential areas on the west side and east side of the development site, but this project will help to improve the convenience of the area by installing escalators and elevators in the walkways.

Overview of Plan

Location Roppongi 1-chome and Toranomon 5-chome, Minato-ku, Tokyo
Size of site (C-1 Area) Approximately 15,370m2
(C-2 Area) Approximately 510m2
Total floor area Approximately 143,720m2
Floors Mixed-use tower: Above ground: 47 / Basement levels: 4
Residential building: Above ground: 6 / Basement levels: 2
Major uses Offices, shops, residences
Construction to be started Autumn 2009
Construction to be completed 2012

Janek Gwizdala Project Live

All the players on this recording are monster.  Oli rockberger rips it on Ivories, Janek shreds it on Bass - they're all awesome. The composition is constantly fresh. It's like a more jazz-oriented Maceo Parker, but still with a lot of funk influences.The Bass lines have fantastic harmonies, and the band is very tight. One of my favorite contemporary Jazz Trios!
Janek Gwizdala Bass, Oli rockberger Keyboard, Tobias Ralph - Drums.



Janek is one of the highest level bass players alive today but mostly a great composer, a true musician and arranger.

Monday, October 25, 2010

Latitudes not Attitudes: How Geography Explains History

Latitudes not Attitudes: How Geography Explains History

Many reasons have been given for the West’s dominance over the last 500 years. But, Ian Morris argues, its rise to global hegemony was largely due to geographical good fortune.
I am wearing your clothes, I speak your language, I watch your films and today is whatever date it is because you say so.
This is what Shad Faruki, a Malaysian lawyer, told the British journalist Martin Jacques in a 1994 interview. And he was right: for 200 years, a few nations clustered around the shores of the North Atlantic – ‘the West’, as we normally call them – have dominated the world in ways without parallel in history.
Most people, at some point or another, have wondered why the West rules. There are theories beyond number. Perhaps, say some, westerners are just biologically superior to everyone else. Or maybe western culture is uniquely dynamic; or possibly the West has had better leaders; or the West’s democratic politics and its Christianity might give it an edge. Some think western domination has been locked in since time immemorial: others that it is merely a recent accident. And, with many westerners now looking to China’s double-digit economic growth to pull the world out of recession, some historians even suggest that western rule has been an aberration, a brief interruption of an older, Sinocentric, world order.
When experts disagree so deeply, it usually means that we need fresh perspectives on a problem. Most of those who pronounce on Western rule – economists, political pundits, sociologists – tend to focus on recent times and then make sweeping claims about the past. Asking why the West rules, though, really requires us to work the other way round, posing questions about history, then seeing where they lead. As the masthead of this magazine puts it: ‘What happened then matters now.’

The shape of history

Explaining why the West rules calls for a different kind of history than usual, one stepping back from the details to see broader patterns, playing out over millennia on a global scale. When we do this the first thing we see is the biological unity of humanity, which flatly disproves racist theories of western rule.
Our kind, Homo sapiens, evolved in Africa between 200,000 and 70,000 years ago and has spread across the world in the last 60,000 years. By around 30,000 years ago, older versions of humanity, such as the Neanderthals, were extinct and by 10,000 years ago a single kind of human – us – had colonised virtually every niche on the planet. This dispersal allowed humanity’s genes to diverge again, but most of the consequences (such as the colour of skin, eyes, or hair) are, literally, only skin deep and those mutations that do go deeper (such as head shape or lactose tolerance) have little obvious connection to why the West rules. A proper answer to this question must start from the fact that wherever we go – East, West, North, or South – people are all much the same.
So why have their histories turned out so differently? Many historians suggest that there is something unique about western culture. Just look, they say, at the philosophy of Socrates, the wisdom of the Bible, or the glories of Leonardo da Vinci; since antiquity, the West has simply outshone the rest. Such cultural comparisons, however, are notoriously subjective. Socrates, for instance, was certainly a great thinker; but the years in which he was active, during the fifth century bc, were also the age of the Hebrew prophets in Israel, of the Buddha and the founders of Jainism in India, of Confucius and the first Daoists in China. All these sages wrestled with much the same questions as Socrates (Can I know reality? What is the good life? How do we perfect society?) and the thoughts of each became ‘the classics’, timeless masterpieces that have defined the meanings of life for millions of people ever since.
So strong are the similarities between the Greco-Roman, Jewish, Indian and Chinese classics, in fact, that scholars often call the first millennium bc the ‘Axial Age’, in the sense of it being an axis around which the whole history of Eurasian thought turned. From the Mediterranean to the Yellow Sea, larger, more complex societies were facing similar challenges in the first millennium bc and finding similar answers. Socrates was part of a huge pattern, not a unique giant who sent the West down a superior path.
From a global perspective, Christianity, too, makes more sense as a local version of a broader trend than as something setting the West apart from the rest. As the Roman Empire disintegrated in the middle of the first millennium ad and new questions (Is there something beyond this life? How can I be saved?) gained urgency, the new faith won perhaps 40 million converts; but in those same years, in the wake of the Han dynasty’s collapse in China, Mahayana and Theravada Buddhism offered their own answers to the same questions and won their own 40 million devotees. Soon enough Islam repeated the feat in Africa, the Middle East and South Asia.
Even such astonishing Renaissance men as Leonardo and Michelangelo, who refined the wisdom of the ancient West to revolutionise everything from aeronautics to art, are best seen as Europe’s versions of a new kind of intellectual which societies needed as they emerged from the Middle Ages. China had produced its own Renaissance men some 400 years earlier, who also refined ancient wisdom (in their case, of course, the East’s) to revolutionise everything. Shen Kua (1031-95 ad), for instance, published groundbreaking work on agriculture, archaeology, cartography, climate change, the classics, ethnography, geology, maths, medicine, metallurgy, meteorology, music, painting and zoology. Even Leonardo would have been impressed.
Over and over again, the triumphs of western culture turn out to have been local versions of broader trends, not lonely beacons in a general darkness and, if we think about culture in a broader, more anthropological sense, the West’s history again seems to be one example of a larger pattern rather than a unique story. For most of their existence, humans lived in small, egalitarian hunter-gatherer bands. After the Ice Age some hunter-gatherers settled down in villages, where they domesticated plants and animals; some villages grew into cities, with ruling elites; some cities became states and then empires and, finally, industrialised nations. No society has ever leaped from hunting and gathering to high technology (except under the influence of outsiders). Humans are all much the same, wherever we find them; and, because of this, human societies have all followed much the same sequence of cultural development. There is nothing special about the West.

Location, location, location

You may have noticed that all the historical examples I have mentioned – Italy, Greece, Israel, India, China – lie in a narrow band of latitudes, roughly 20-35° north, stretching across the Old World. This is no accident: in fact, it is a crucial clue as to why the West rules. Humans may all be much the same, wherever we find them, but the places we find them in are not. Geography is unfair and can make all the difference in the world.
When temperatures rose at the end of the last Ice Age, nearly 12,000 years ago, global warming had massive consequences everywhere, but, as in our own times, it impacted on some places more than on others. In the latitudes between 20° and 35° north in the Old World and a similar band between 15° south and 20° north in the Americas, large-grained wild grasses like wheat, rice and teosinte (the ancestor of maize) and large, relatively tame mammals like wild goats, pigs and llamas went forth and multiplied in the warmer weather. This was a boon for humans, who ate them, but in the process of managing these other species – cultivating and tending the plants, herding and culling the animals – humans unintentionally domesticated them. We unwittingly altered their genomes so much that they became new species, providing us with far more food. Genetically modified organisms had been born. Potentially domesticable plants and animals existed outside the lucky latitudes, but they were less common. Indeed many places, such as large parts of Western Europe, sub-Saharan Africa and Australia, had no domesticable native species at all. The consequence, given that humans were all much the same, was predictable: the domestication of plants and animals – farming – began in the lucky latitudes long before it began outside them. This was not because people in the lucky latitudes were cleverer or harder-working; nature had just given them more to work with than people in other places and so the task advanced more quickly.
Nor was nature even-handed within the lucky latitudes. Some places, above all the so-called ‘Hilly Flanks’, which curve from what is now Israel through Syria, southern Turkey, northern Iraq and western Iran, were extraordinarily well endowed; China between the Yellow and Yangzi rivers and the Indus Valley in Pakistan were somewhat less so; Oaxaca in Mexico and the Andes in Peru somewhat less still. Consequently, the Hilly Flanks were the first to see farming firmly established (by 7500 bc); then came China and Pakistan (around 5500 bc); then Oaxaca and Peru (by 5000 bc); and then, over the next 7,000 years, most of the rest of humanity.
Farming spread from its original cores because it could support more people than hunting and gathering. The lives farmers led were often harder and their diets poorer than hunters’, but that was beside the point. The farmers’ weight of numbers, nastier germs (bred by crowding and proximity to domestic animals), more efficient organisation (required to keep order in larger villages) and superior weapons (necessary to settle constant quarrels) steadily dispossessed the hunters, who either took up farming in their own right or ran away.
The agricultural cores developed increasingly complex institutions as they expanded. Within 3-4,000 years of the start of farming (that is, by 3500 bc in Southwest Asia, 2500 bc in the Indus Valley, 1900 bc in China, 1500 bc in Mesoamerica and 1000 bc in the Andes) the first cities and states were taking shape. Within another few centuries, most had bureaucrats keeping written records and by 2,000 years ago a continuous band of empires, with populations in the tens of millions, stretched from the Mediterranean to China. By then imperialists and traders had exported agriculture, cities and writing beyond the lucky latitudes as far afield as cold, rainy Britain in the northwest and hot, humid Cambodia in the southeast. These great empires – the Han in the East, the Mauryan in India, the Parthian in Iran and Iraq and the Roman further west – had many similarities; but the biggest, richest and grandest by far was Rome, the descendant of Eurasia’s original, westernmost agricultural core in the Hilly Flanks.
Geography explains why farming first appeared towards the western end of the Old World’s lucky latitudes; and, if the West had simply held on to the early lead that nature’s unfairness had given it, geography would be the obvious explanation for why the West now dominates the world.
But that is not what actually happened. The West has not always been the richest, most powerful and most sophisticated part of the world during the last ten millennia. For more than 1,000 years, from at least 600 to 1700 ad, these superlatives applied to China, not the West.
After the fall of the Roman and Han empires in the early-to-mid first millennium ad, China was reunited into a single empire while the West remained divided between smaller states and invading Arabs. By 700, China’s capital at Chang’an had probably a million residents and Chinese literature was enjoying a golden age. Woodblock printing presses churned out millions of books, paid for with the world’s first paper money (invented in the 10th century). By 1000 an economic revolution had joined the cultural explosion: 11th-century China produced almost as much iron each year as the whole of Europe would be doing in 1700, on the eve of its Industrial Revolution. Chinese ironmasters produced so much, in fact, that they clear-cut entire forests to feed their forges, and – six centuries ahead of the West – learned to smelt their ores with coke.
For centuries, Chinese wealth and power dwarfed the West’s. Between 1405 and 1433, while little Portuguese caravels tentatively nosed down Africa’s west coast, Chinese emperors dispatched gigantic fleets across the Indian Ocean under the leadership of the eunuch admiral Zheng He (who, according to legend, was nearly three metres tall and 230 cm around the belly). Zheng’s flagship was on the same scale as its skipper. At 80 metres long, it was the largest wooden ship ever built. When Columbus set sail in 1492, his own flagship was shorter than Zheng’s mainmast and barely twice as long as the big man’s rudder. Columbus led three ships and 90 sailors; Zheng led 300 ships and 27,870 sailors. His fleet extracted tribute from the cities of India, visited Mecca and even reached Kenya, where today Chinese archaeologists are diving to locate wrecks of Zheng’s ships.

The power of place

The glories of medieval China seem, on the face of it, to disprove any geographical explanation for why the West now rules. After all, geography has not changed very much in the last 500 years.
Or maybe it has. Geography shapes history, but not in straightforward ways. Geography does determine why societies in some parts of the world develop so much faster than others; but, at the same time, the level to which societies have developed determines what geography means.
Take, once again, the example of Britain, sticking out from Eurasia into the cold Atlantic Ocean. Four thousand years ago, Britain was far from the centres of action in the Nile, Indus and Yellow River valleys, where farming had been established for millennia, great cities had grown up and labourers by the thousand broke their backs to immortalise divine kings with pyramids and palaces. Distant Britain had few of these things, which spread only slowly from the Mediterranean core to the Atlantic periphery. Geography made Britain backward.
But, if we fast-forward to 400 years ago, the same geography that had once made Britain backward now gave the island nation wealth and power. Britain had been drawn into a vastly expanded and more developed core, which now had ships that could reliably cross oceans and guns that could shoot the people on the other side. Sticking out into the Atlantic, such a huge disadvantage 4,000 years ago, became a huge plus from the 17th century.
The first sailors to the Americas were Italians (Christopher Columbus was from Genoa; the famous ‘British’ explorer John Cabot, who reached Newfoundland in 1497, actually grew up as Giovanni Caboto, in Florence). They were soon shoved aside by the Portuguese, Spanish, British, French and Dutch – not because the Atlantic littoral produced bolder or smarter adventurers than the Mediterranean, but simply because Western Europe was closer to America.
Given time, the 15th century’s greatest sailors – the Chinese – would surely have discovered and colonised America too (in 2009 the Princess Taiping, a replica of a 15th-century junk, came within 20 miles of completing a Taiwan–San Francisco round trip, only to collide with a freight ship within sight of home). But in much the same way that geography had made it easier for people in the Hilly Flanks to domesticate plants and animals than for people in other parts of the world, it now again stacked the odds in the West’s favour. The trip from England to New England was only half as far as that from China to California. For thousands of years this geographical fact had been unimportant, since there were no ocean-going ships. But by 1600 it had become the decisive fact. The meaning of geography had changed.
This was just the beginning of the changes. In the 17th century a new kind of economy took shape, centred around the North Atlantic, generating massive profits and driving up wages in north-west Europe by exploiting the geographical differences round its shores. In the process, it enormously increased the rewards for anyone who could explain how the winds and tides worked, or measure and count in better ways, or make sense of the secrets of physics, chemistry and biology. Not surprisingly, Europeans began thinking about the world in new ways, setting off a scientific revolution; they then applied its insights to the societies they lived in, in what we now call the Enlightenment. Newton and Descartes were geniuses, but so too were Chinese scholars like Gu Yanwu (1613-82) and Dai Zhen (1724-77), who also spent lifetimes studying nature. It was just that geography thrust new questions on Newton and Descartes.
Westerners answered their new questions, only to find that the answers led to still newer questions. By 1800 the combination of science and the Atlantic economy created incentives and opportunities for entrepreneurs to mechanise production and tap into the power of fossil fuels. This began in Britain, where geography conspired to make these things easier than anywhere else; and the energy windfall provided by fossil fuel quickly translated into a population explosion, rising living standards and massive military power. All barriers crumbled. British warships forced China to open to western trade in 1842; Americans did the same in Japan 11 years later. The age of western rule had arrived.

The lessons of history

So what do we learn from all this history? Two main things, I think. First, since people are all much the same, it is our shared biology which explains humanity’s great upward leaps in wealth, productivity and power across the last 10,000 years; and, second, that it is geography which explains why one part of world – the nations we conventionally call ‘the West’ – now dominates the rest.
Geography determined that when the world warmed up at the end of the Ice Age a band of lucky latitudes stretching across Eurasia from the Mediterranean to China developed agriculture earlier than other parts of the world and then went on to be the first to invent cities, states and empires. But as social development increased, it changed what geography meant and the centres of power and wealth shifted around within these lucky latitudes. Until about ad 500 the Western end of Eurasia hung on to its early lead, but after the fall of the Roman Empire and Han dynasty the centre of gravity moved eastward to China, where it stayed for more than a millennium. Only around 1700 did it shift westward again, largely due to inventions – guns, compasses, ocean-going ships – which were originally pioneered in the East but which, thanks to geography, proved more useful in the West. Westerners then created an Atlantic economy which raised profound new questions about how the world worked, pushing westerners into a Scientific Revolution, an Enlightenment and the Industrial Revolution. By the mid-19th century, the West dominated the globe.
But history did not end there. The same laws of geography continued operating. By 1900 the British-dominated global economy had drawn in the vast resources of North America, converting the USA from a rather backward periphery into a new global core. The process continued in the 20th century, as the American-dominated global economy drew in the resources of Asia, turning first Japan, then the ‘Asian Tigers’ and eventually China and India into major players.
Extrapolating from these historical patterns, we can make some predictions. If the processes of change continue across the 21st century at the same rate as in the 20th century, the economies of the East will overtake those of the West by 2100. But if the rate of change keeps accelerating – as it has done constantly since the 15th century – we can expect eastern global dominance as soon as 2050.

An age of rapid change

It all seems very clear – except for one niggling detail. The past shows that, while geography shapes the development of societies, development also shapes what geography means; and all the signs are that in the 21st century the meanings of geography are changing faster than ever. Geography is, we might even say, losing meaning. The world is shrinking and the greatest challenges we face – nuclear weapons, climate change, mass migration, epidemics, food and water supply – are all global problems. Perhaps the real lesson of history is that by the time the East overtakes the West, the question of why the West rules may have ceased to matter very much.

Easy does it

Symbolic moves by the Bank of Japan 
 
JAPAN’S economy has long been sickly. It now also has to contend with a stronger yen, thanks in part to loose monetary policy elsewhere in the rich world. That alone gave the Bank of Japan (BoJ) reason to act on October 5th. So too did criticism that it has not done enough to spur the economy, which has inspired Japanese politicians to suggest legislation to weaken the central bank’s independence.
Whatever its motivation, the BoJ this week took three modest but symbolic steps. First, it lowered its policy rate from 0.1% to a range between zero and 0.1%. That signals to the market, and to disenchanted politicians, that the BoJ cares. Second, the BoJ stated that it would maintain its virtual zero-rate policy until there was “medium- to long-term price stability”. Until deflationary Japan sees consumer prices rise by between 0% and 2% a year (with an unofficial aim of 1%), the long-standing near-zero policy rate will remain.
Third, the central bank said that it would consider establishing a programme to buy public- and private-sector assets from banks—including commercial paper, corporate bonds and perhaps even exchange-traded funds and Japan real-estate investment trusts. Since the financial crisis Japan has continued to accept financial instruments as collateral in order to pump money into the system, but has not bought the assets. The effect would be to restart the policy of quantitative easing that Japan used to claw out of its banking crisis between 2001 and 2006. The initial amount under consideration is about ¥5 trillion ($60 billion), ¥3.5 trillion of which is for public-sector debt. That is on top of a sum of ¥30 trillion already budgeted for BoJ loans to banks.
The market had expected some form of easing but had not imagined a whittling of interest rates, however symbolic. The Nikkei 225 Stock Average hit a two-month high on October 6th and bonds rose sharply. From a political standpoint, too, the moves were a success. The finance minister, Yoshihiko Noda, said he expected the actions to weaken the yen and improve the economy. “Very timely,” gushed Banri Kaieda, the economics minister.
Whether the BoJ’s actions will have any lasting impact on the economy is another matter. The change in the policy rate does not mean much in practice: it merely reinforces the message that low rates are here to stay for a while. The asset-purchase programme is as yet too small to matter. An expected round of fresh quantitative easing by America’s Federal Reserve later this year will put more upward pressure on the yen, which on October 7th reached a 15-year high against the dollar, about where it was before last month’s currency intervention. Still, the BoJ seems willing to respond to a worsening economic climate and to political heat. The psychological boost that represents should not be discounted.

Global Real Estate prices

Global Real Estate prices

Floor to ceiling

Our latest round-up shows that prices are on the rise in most markets

THIS time last year global real estate prices were a sea of negative numbers. That was then. Of the 20 markets tracked in the last year, only four still posted year-on-year declines and only Ireland’s property catastrophe has worsened. (America’s FHFA index, which excludes real estate that was financed with large mortgages, was also down, but the country’s Case-Shiller national and ten-city indices rose modestly.)
Asia’s price rises lead the way, as they did when the data were last published in July. Singapore, Hong Kong and Australia boast the gaudiest year-on-year price increases, even if the rate of appreciation is down a bit from the summer. Real Estate prices in China rose by 9.1% in the year to September, compared with a 12.4% rise in May. That is still too fast for the government, which unexpectedly raised interest rates on October 19th and has outlined more measures to cool the market in recent weeks, including higher down-payment requirements and the introduction of a property tax in some cities.
My analysis of “fair value” in real estate, which is based on comparing the current ratio of real estate prices to rents with its long-run average, suggests that China has less to worry about than the likes of Australia, which is again the most overvalued of the markets we track. That makes it all the more surprising that Australia’s central bank opted not to increase its benchmark interest rate this month.
Europe shows a familiar split between core countries and peripheral ones. Ireland, Spain and Italy continue to suffer year-on-year price declines; German and French homes have shown big gains in value over the past year, a particular turnaround for France since our previous round-up. The British housing sector’s talent for defying gravity may be on the wane. The pace of annual appreciation in the country’s property market has slowed over the summer. British housing is still overvalued—outright falls may loom.
check out this interactive Real Estate-price tool that compares global real estate data, now including price-to-rent ratios
America’s real estate market, almost alone among those which experienced a big bubble, is more or less fairly valued at this point, at least according to price-to-rent ratios. But price rises may not last for long. Earlier gains were driven by substantial reward programmes and government subsidies, many of which have now lapsed. America’s overhang of housing inventory may get worse if concerns over lenders’ foreclosure processes jam up sales. The temptation for the country’s 11m underwater borrowers to walk away is another threat (see Economics Focus). And being at or below fair value is no guarantee of a bounce in prices: Japanese housing fell by 4% in the year to the end of the first quarter, despite being stuck far below its long-run price-to-rents ratio.

Wednesday, October 20, 2010

I Think I'm Turning Japanese

I Think I'm Turning Japanese

There is no subtler, surer means of overturning society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a way that not one man in a million is able to diagnose.

A fall from grace
At one point in the late 1980s, there was a square block of real estate in downtown Tokyo, near the Imperial Palace, that was worth more than all of California.
The country was booming...
The Japanese led the world in electronics. Every teenager had to own a Sony Walkman. The Toyota Supra and four wheel drive pickup were the two bests car of the decade.
Japanese investors bought up American icons like Rockefeller Center, Columbia Pictures, and the Pebble Beach Golf Course.
Along the way, Japan also created the 100-year mortgage and had an unassailable cadre of elites that ran the banks, the government, and the corporations. The country was run by one political party — the Liberal Democratic Party — from 1955 to 2009.
Stimulating death
This political party's main platform was "spend money and create growth."
It tried stimulus after stimulus... They've built bridges in mountainous villages where few people live... They've forced banks to take on massive debt, and shuffled other debt to different banks.
And after twenty years of spending, Japan has $9.7 trillion in public debt — twice its GDP in 2009. They still have no growth.
A few months ago, in the thick of the Greece debt crisis, the Prime Minister warned the Japanese Parliament, “It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European Community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone.”
Death spiral
Japan has been in a deflationary spiral for 20 years.
The nation's housing bust has still not hit bottom.
People hold onto money because they know what they want to buy will be cheaper later.
Core consumer prices fell 1.0 percent in August, marking 18 consecutive months of decline.
And to top it off, they just aren't making any more Japanese. Check out the population pyramid:
 japanpopBD

As you can see during the “Economic Miracle” period from 1950 to 1990, Japan was youthful, ambitious, and full of vigor.
Despite what economists would have you believe, it still takes people to make stuff.
Right now, the birth rate in Japan is 1.34 — well below the replacement level.
Furthermore, Japanese culture isn't accommodating to foreign immigration. The fact is that Japan's workforce is shrinking at the same time its population of retirees is growing.
And to add to our Japan bashing, I give you the Nikkei 225 Index:

ni225

After hitting 40,000 in 1990, the NI225 has been one dead cat bounce after another. It's looking like it might bottom around 5,000.
The Bank of Japan forecast its economy would grow 2.6 percent in the fiscal year to March 2011, and 1.9 percent the following year.
The yet the yen goes up
With everything seemingly going against Japan, why is it that their currency is going through the roof?
Below is the U.S. dollar/Japanese yen conversion chart.
I like to flip currency charts over in my mind to get a good idea of them. The drop means that you can buy more dollars with your yen. In other words, the yen has gone up 13 points in three months. (Note the doji at the bottom of the trend.)
dollar-yen
That's a huge deal in currency markets, and Japanese exporters like Toyota don't like it — the higher yen makes exports expensive.
President of Toyota Motors Akio Toyoda recently said, “Toyota Motor Corp (TM) is not considering hastily shifting production overseas despite the yen’s strengthening against the dollar.”
The automaker went on to say, “Theoretically speaking, Toyota cannot afford to compete with its rivals.”
This was a clear shot at the government to do something about the yen...
A large group of legislators from the Democratic Party of Japan said the central bank "should carry out drastic monetary easing."
Taking the hint, the government is starting to act. Japan's central bank has launched a 5 trillion yen (or USD$60 billion) effort to buy a wide range of debt — including government bonds, corporate IOUs, and real estate investment trust funds, among others. This is just the first step in Japan's quantitative easing.
It is obvious that Japan has taken the worst hit as the rest of the world goes into a currency war. Japan understands this, and will attempt to reverse the cycle by destroying its own currency and creating inflation.
The obvious trade here is to short the yen.

In other words, if the yen goes down, your investment goes up twice as much.
If this is too confusing, think of it this way: The entire world — with the exception of China — is hell-bent on destroying their own currencies in an effort to inflate away debt and increase exports.
This means that things that have inherent value will go up, especially in dollar terms.

Tuesday, October 19, 2010

Japan M&A Boom Will Lead Country Out of Deflation, Says Freeze

Japan M&A Boom Will Lead Country Out of Deflation, Says Freeze
Japanese mergers and acquisitions are set to increase and will help steer the country out of deflation, said Curtis Freeze, chairman of Honolulu-based Prospect Asset Management Inc.

There will be at least 100 transactions with a value of $1 billion for both inbound and outbound deals in the next few years, said Freeze, who is also chief executive officer of Gro- BeLS Co., a Tokyo-based real-estate firm. That will create opportunities for investors in the world’s third-largest economy, he said at the Hedge Funds Asia Summit hosted by Bloomberg Link in Hong Kong today.

“Japan’s best day is yet to come,” Freeze said. “There is going to be more activity” as Japanese companies look to buy firms at home and Asian companies look to access capacities of Japanese firms, creating opportunities for investors, he said.

“Japan is the world’s most cash-rich country,” Freeze said. “And that’s exciting.”

The value of takeovers and asset sales involving Japanese companies worldwide has reached $93 billion this year, according to data compiled by Bloomberg. That compares with $128 billion in 2009 and $153 billion in 2008, the data show.

The Bank of Japan earlier this month pledged to keep its benchmark interest rate at “virtually zero” until deflation has ended and created a 5-trillion yen ($61 billion) asset- purchase fund to buy government debt and assets including exchange-traded funds and real-estate investment trusts.

Japan’s gross domestic product may shrink for the first time in more than a year in the three months ended Dec. 31, according to a survey by the government-affiliated Economic Planning Association. The economy grew at a 1.5 percent pace in the second quarter, half the pace of the first quarter of 2010.

The catalyst for Japan defeating deflation will be “change in control” amongst Japanese firms rather than government policies, Freeze said. As aging owners of Japanese firms are replaced, their successors will look for new business strategies, Freeze said.

Saturday, October 16, 2010

Leon Ware ;Carleen Anderson & Michael Franti - "Inside My Love"

Leon Ware & Carleen Anderson - Inside My Love (Live in Amsterdam, 2001)

"Inside My Love" written by...Minnie Ripperton, Richard Rudolph and Leon Ware(along with several other tunes) in 1975 and it's featured on Minnie's "Adventures In Paradise".
Here is a more recent version of "Inside my Love" with the J.Dilla touch and Production and a brilliant hip hop Rap fusion scratch mix ending by Michael Franti who is so in the groove and kool his contribution works soooo well it rocks it.
Carleen Anderson,s voice is so beautiful...no mistake leon chose her to perform with him...michael franti catches the BIG vibe too...like i said, perfect...wish i could have been there.
Minnie would've been So proud!!!!

MPS Jazzin' The Black Forest

In the film's ninety minutes there are many memorable passages, but one of the most enlightening is archival footage of Oscar Peterson and his trio arriving at Brunner-Schwer's house after a concert performance. What started as a brief bit of fun turned into a lengthy house concert, and while it's not all captured on film, one can sense Peterson's comfort in the environment and appreciate just how much that sense of comfort contributed to the creative process. There's also some exciting, albeit brief, concert footage of Mangelsdorff with Jaco Pastorius and Alphonse Mouzon that would ultimately result in the album Trilogue - Live! (MPS, 1976).
 
 Albert Mangelsdorff, Alphonse Mouzon, Jaco Pastorius




Friday, October 15, 2010

Investors Eye Tokyo Property Sale


Bloomberg News
Tokyo in view: A forthcoming commercial property sale is attracting interest from elsewhere in Asia.
Japan’s once-storied real estate sector has gone from bubbly to bad, to even worse in recent years. But an upcoming commercial property sale in Tokyo, which is seen as a litmus test for the market, is drawing a new kind of investor: Asian money.
Japan Tobacco Inc., the world’s third-largest tobacco maker, is in process of selling three mixed-use buildings in Tokyo, which could fetch up to 100 billion yen, according to market observers. The site is called Shinagawa Seaside Forest and was once home to a JT plant. JT is selling three of its office buildings in the site, and the tobacco maker will sell all three as a package or each building separately, depending on demand.
This is the first big commercial real estate deal Tokyo has seen since the collapse of Lehman Brothers. It is being closely watched by industry observers and bankers, to see if the property market is showing a sign of the recovery.
Japanese real estate’s supply-demand balance has eroded since the financial crisis, and the nation’s land prices have plummeted for nearly a decade.
But what makes this deal really different is that Asian investors are showing a keen interest in the sale. In the past, most foreign real estate investment flowing into Japan came from Western private equity funds or investment banks.
“There is a possibility that money from a pension fund or a sovereign fund from Asia, such as Taiwan, Korea, Hong Kong, Singapore or mainland China, will be poured into the Japanese market,” said Takashi Hashimoto, an analyst at Barclays Capital analyst, citing Asian appetite for the JT deal.
A JT spokesman said bidding is scheduled to take place on November 25, and the company expects an agreement will be reached in January

Distress is a Global Phenomenon with Few Solutions

Distress is a Global Phenomenon with Few Solutions

Oct 14, 2010 2:44 PM, By David Bodamer
Ever since the commercial real estate market turned south in early 2007, investors have speculated about when this cycle’s distressed real estate opportunities would materialize. That conversation has not been limited to the United States. And it turns out that investors in Europe and Asia have largely seen the same process play out there as has happened here; distressed real estate exists, but banks are working at a glacial pace in resolving problems.
A panel at the ULI Fall Meeting took up this discussion. The session, “Global Deals on Distressed Assets”, was moderated by Stephen Blank, senior resident fellow, finance, with ULI, and featured Robert Peto, president, the Royal Institution of Chartered Surveyors, and Simon Terry, group CEO of Australian private equity real estate investment advisory firm MGPA.
New York City-based research firm Real Capital Analytics pins the current amount of total distressed commercial real estate in the U.S. at about $290 billion. Peto, for his part, pinned the level of distress at a similar level in Europe, where there is about 1.4 trillion euros in commercial real estate debt outstanding and about 150 billion euros in distress. According to Terry, the picture in Asia is a bit murkier given the lack of transparency in China’s real estate market, while in Japan there is about $170 billion in commercial real estate debt coming due in the next few years.
To date, however, banks have largely sat on that debt. Phenomenon like “extend and pretend,” where banks have opted to roll over troubled loans rather than recognize losses, has led to less opportunity than many investors imagined. In the U.S., about $90 billion in distressed debt has been dealt with. In Europe, Peto estimates that the total amount of outstanding commercial real estate has shrunk by as little as 20 billion euros since the market’s peak. “Almost nothing has been taken out,” he said. “There’s been no meaningful pay down.”
What’s enabled the situation to play out like this has been the fact that governments across the world have largely opted to save the banks. That, in turn, has enabled them to delay dealing with bad debt, according to Blank. Banks don’t have to mark their loans to market. That’s significant because a large percentage of commercial real estate that was financed at the market’s peak is now worth less than the mortgages arranged on the assets. If banks had to mark-to-market, the panel said, they wouldn’t have enough equity to cover the resultant losses.
Instead, banks are able to borrow money at near 0 percent interest rates. That money, in turn, is generating profits through trading desks or by buying government debt, such as Treasuries. This process is enabling banks to recapitalize and—the idea goes—enter into a position to resolve distressed situations as they build buffers of capital.
But Blank pointed to another factor delaying the resolution of distressed assets. He said that banks missed out on the upside after the Resolution Trust Corporation (RTC) bailout in the late 1980s. At the time, the government-created institution absorbed assets from liquidated savings and loans and other bad debt and then auctioned off assets. The buyers of those assets profited as assets recovered in the next real estate cycle. So banks are trying to hold on and wait for real estate values to recover so they don’t miss out on profits this time around.
As Peto put it, “Nobody is willing to put assets on the market. Banks can’t take hits to satisfy your need for cheap property.”
Another problem the panel identified was the fact that the market doesn’t understand what properties are truly worth. Peto talked about how even the concept of “distressed” assets is a bit of a misnomer. “A distressed sale is one where you are forced to the market and have to move the property in a short amount of time,” he said. If you have six months to prepare, market it and complete the sale, “then it’s not a distressed price, it’s the actual market price.”
Ultimately, none of the speakers saw the logjam of distressed assets getting resolved any time soon. Unless banks are forced to act, they will continue to dribble out properties and spread the pain as long as possible. In short, that “tsunami of distress” everyone talked about a few years ago is never going to materialize.