If you were the editor, what would you do?
PETALING JAYA: Total vehicle sales in October 2011 rose slightly by 3% to 53,654 units from 52,297 units a year earlier, boosted by the fact that it was a longer working month (versus September) and the return in consumers’ buying interest. [Eugene Mahalingam. Vehicle sales up. The Star. November 17 2011]
Here is a clue: year-on-year.
More on CDS and the European crisis.
U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.
Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show. [Yalman Onaran. Selling More CDS on Europe Debt Raises Risk for U.S. Banks. Bloomberg. November 1 2011]
This should be read in the context of the 50% Greek haircut, although that haircut itself is in question after the Greek government decided to have a referendum on the bailout and its conditions instead of executing it outright. Because of the referendum, CDS holders, especially speculative holders, may yet win their bet.
But even if they win, this might be a repeat of AIG. A Pyrrhic victory, one might say.
If I were a European taxpayer seeing my money being used to bailout a near-bankrupt socialist government due to outrageous spending while I live responsibly, I would be angry. Why should I be the guarantor of a profligate? But if I wanted the Eurozone to stay intact, I would bite the bullet and angrily pay for the bailout.
If I were a European taxpayer funding the bailout, I would be fuming mad with the Greek Prime Minister Georgios Papandreou’s referendum plan. After all the hassles and the blows punched to get the money, however insufficient it is for the whole of Eurozone, Papandreou hides behind the angry masses, trying to deflect blame from the Greek government to the benefactors of the bailout facility.
The Greek government is a bunch of coward socialists, refusing to own up for its mistake, too insignificant to be bold and solve it. Papandreou may say it is done in the name of democracy, but he forgets the adjective representative. He could easily do it but no. He is afraid of the political cost and so he adopts direct democracy and gambles the whole structure for his own convenience. He wants to refresh his mandate but he has his mandate already. This is about passing the buck.
Oh, he is Papandreou the socialist, the coward, the opportunist.
But I am not a European. Yet, I am very angry at the Greek government.
I hope Greece burn. Let Papandreau fiddles while Greece burns, as Nero did when Rome did. Let us see how bad the austerity plan compares to a complete bankruptcy. Let Greece be demoted to the third world. On with the natural experiment on the socialists.
The holders of $22 billion in Italian CDS may be growing anxious after receiving news that a 50 percent haircut on Greek debt will fail to trigger a credit event that would force sellers of the swaps to pay out.
[…]
If this failed to trigger a CDS event, many investors may find themselves without protection, potentially triggering substantial and unexpected losses.
More broadly across Europe, DTCC data show that net notional CDS outstanding for France, Italy, Germany, Spain and the U.K. total nearly $100 billion. [Michael McDonough. Efficacy of CDS in doubt. Bloomberg Brief: Economics. October 28 2011]
It is not a crime to dream of a place to call one’s own. It is hard to beat having a roof none can take away in the worst of times. If anything happens, at least there is a home to run to. It is a comforting feeling to have a haven. That is the sort of sentiment fuelling the dream of homeownership. So pervasive is the thought that the inability to own one is seen as a problem by many.
Across the Pacific Ocean, the American Dream is invariably linked to having a good home. With a government subscribed to the Dream, measures were taken to encourage homeownership. As the housing market crashed partly due to the pro-homeownership policy, the Dream grew distant to create a pessimistic American worldview.
Across the straits, the Singapore government built high-rise flats all over the island, partly to encourage homeownership. The product of that encouragement is a contemporary culture. These flats are ubiquitous enough to form part of the Singaporean consciousness. The Complaints Choir of Singapore sings: ”I’m stuck with my parents till I’m 35, ”˜cause I can’t apply for HDB.” Failure to own a home is a source of shame.
It is no different in Malaysia. Homeownership occupies the collective mind. The high prices of ordinary homes stand as a barrier. That barrier is stirring up discontent among the middle class and down.
The Malaysian government knows this and it has introduced various incentives to make homeownership a cheaper endeavor for Malaysians.
For the longest time, the government has relied on low-cost housing projects to encourage homeownership. Despite the name, the term low-cost can be a misnomer. What is cheap for the financially well-off Malaysians may not be cheap for the impoverished. The whole enterprise can add too much financial burden to would-be owners, pulling them down into a deep unsustainable debt hole.
That concern does not stop the Najib administration from expanding its pro-homeownership policy by introducing the 1 Malaysia Housing Program. Proponents of the program tout the initiative as an affordable home program. Just as the term low-cost can be misleading, so too can the term affordable.
In the eagerness to translate private dream into reality through very public means, not many have asked, is there a better option to homeownership?
Popular opinion immediately accepts homeownership as the only respectable option.
The debates on homeownership ignore other housing options altogether.
For one, renting can be a superior option to ownership. That can be so when rental cost can be much cheaper than mortgage payment, when mortgage payment eats too much of current income and when the financial market is sophisticated enough to handle the substantial saving arising from the difference between the mortgage and the rental rate. The saving can present a whole lot of possibilities that homeownership cannot. There is virtue in flexibility and whatever virtue homeownership has, flexibility is not one of them.
Perhaps more substantially, one has to realize the importance of having decent home. If a decent home means homeownership, so be it. The relationship can be true but it is not necessarily true. Neither does homeownership absolutely mean decent home.
Pro-homeownership sentiment ignores this complexity and instead falsely assumes homeownership stands above having a decent home or that homeownership is about having a decent home.
Despite an alternative that focuses on having a decent home instead of homeownership, many individuals and the government continue to believe in the virtue of homeownership without question. The former complains about the affordability of homeownership and the latter, indulging the former, refuses to believe and to adapt to a new reality.
Ownership must have made sense in the past but just as time changes, so too can the justification for homeownership. It could very well be that individual and societal preferences, formed after years when the financial logic actually made sense, lag behind the market. When expectation lags behind market and with the government supporting the indulgence, something bad is bound to happen.
