Friday, December 19, 2008

The Global Credit Crunch: Benefiting House Buyers?

Despite the groans of Wall Street insiders over the housing slump, will the ongoing credit crunch be a good thing for prospective house buyers since real estate agents are now forced to slash prices just to make a sale?

By: Ringo Bones

Even though it is a sure sign of our ever-deepening global credit crisis when real estate agents and property developers start to aggressively slash their prices just to make a sale. They are even staring to reduce the prices of their “Root of all Gentrification” luxury-themed gated communities. Fire sale prices without the fire?

The bad news (or good news depending on which side of the transaction you lie) is that prospective buyers are still harboring a wait-and-see attitude. Understandably so given that property prices will certainly be slashed further in the near future. The better deal that’s still at hand in the near future can be too tempting to pass up. Worse still, the housing market could initiate a runaway deflation caused by delayed spending of the wait and see attitude of prospective house buyers.

No matter what side of the transaction you lie, sometimes you’ll wonder if this is just a simple by-product of the global economic downturn or a much-feared anti-gentrification backlash. Given that the new generation can now safely afford to be “noveau-poor” due to the new income opportunity paradigm provided by the Internet, they might be practicing a new form of Socialism for all intents and purposes. And since the “nuclear” family had fallen out of fashion for over 30 years now, real estate agents and property developers better start tweaking their antiquated business models if they chose to survive in our current climate of fiscal and consumer austerity.

The US Economic Downturn: A Boon for Indian Law Firms?

Rumored to have the world’s largest population of underutilized professionals, will the current US economic downturn be a good thing for Indian law firms?

By: Ringo Bones

Ever since globalization created the outsourcing market, low cost services – no matter how far away – has always been too tempting for the richest countries to ignore despite of quasi-protectionism legislation. And while the world markets waited with baited breath whether the US economic downturn will get much worse, the American economic hardship had inadvertently become a good thing to a service sector half a world away – namely Indian law firms.

Basing on the increased visibility of Indian law firms advertising on the Internet like the Singhania & Co. LLP Advocates and Solicitors for example, offering arbitration and all types of business assistance. And given that as a business model, outsourcing has proven to be very economically viable, it is inevitable that Indian law firms will soon be benefiting from the misfortunes of corporate America’s woes.

Outsourcing has since outgrown from the fledgling phoning in of DVD player queries. The evaluation of legal documents via legal outsourcing has recently reduced the cost overheads of US financial lawsuits and other corporate legalese and rigmarole. Given that corporate legal procedures are seldom cheap – especially when it involves filing for bankruptcy – every method of cost reduction, like legal outsourcing, had recently been in vogue. Looks like corporate America’s loss will be every Indian law firm’s gain. Looks like the US economic crisis might wind up helping others before it disappears.

Saturday, December 13, 2008

Pyramid Scheme Killed the Hedge Fund Star?

Dubbed by Wall Street insiders as a scandal bigger than ENRON, will the Bernard L. Madoff hedge fund scandal forever undermine investor confidence?

By: Vanessa Uy

When the 70 year old former NASDAQ chairman Bernard L. Madoff was arrested a few days ago as the result of an on-going investigation over might be one of the largest fraud case of the 21st Century. He is suspected of being responsible for creating a pyramid / Ponzi scheme disguised as a hedge fund firm that dates back to the 1960 which resulted in the defrauding of his investors by 50 billion US dollars.

Bernard L. Madoff started a hedge fund firm called Bernard L. Madoff Securities LLC was even regarded by many Wall Street insiders as “the birthplace of modern Wall Street” due to it’s pioneering business model. Bernard L. Madoff’s business model was deemed to tempting – even to seasoned investors due to his promise of relatively high return of investment when compared to the norm despite of the risks involved or the obvious lack of transparency. During its heyday, Madoff’s hedge fund firm was trading on average of 50 million shares a day. And even during October 2008, when the global financial crisis was already in full steam, his firm was still the 23rd largest market maker on NASDAQ.

What became of Bernard L. Madoff’s undoing is by running his hedge fund firm like a pyramid or Ponzi scheme, where money is being exchanged despite of the lack of trade in goods or services being provided – the primary reason that made it illegal. First tier investors were comfortably living off from the investment funds of latter entrants of their shaky pyramid scheme, which miraculously, only recently collapsed despite dating from the 1960’s. Bernard L. Madoff’s fraudulent dealings even predated mortgage backed securities and other complex credit derivatives which are primarily blamed for the ongoing global financial crisis.

Will Bernard L. Madoff’s stunt forever undermine investor confidence? Well, given that the start of 2008 saw the audacious rogue trading antics of Société Générale junior trader Jérôme Kerviel, lack of investor confidence will be the norm – rather than the aberrant exception – which will probably worsen our ongoing global financial crisis. Those new “green technologies” being peddled by newly elected US President Barack Obama will never get of the ground due to lack of investment. The pyramid scheme did indeed killed one of NASDAQ’s leading hedge fund “stars” by sending its greedy CEO to the slammer.