One of the issues I address when writing a financial plan is that of diversification. And by this I mean diversification across asset classes. Of late I have had numerous conversations with worried “property” investors. Without exception diversification has not been considered at all. The narrow investment schemes (not financial plans) all share the same features;

1) All of their money is tied up in property.
2) All their property is residential.
3) All their residential properties are in the same city (and sometimes even on the same section or street!)

But wait: there is more, they have used the equity in their own home to buy these properties. This puts their own home at risk. Property is cyclical, just as other asset classes are cyclical. Why borrow money, secured against your home, to make a risky investment. Depending on who you listen to the property market will cool by 10-30%. I see mortgagee sales on the horizon that’s for sure.

Source:http://moneyaintitfunny.blogspot.com/2008/05/finance-and-investment.html

http://www.rgemonitor.com/content/view/251400/86/

I think the reason that Korean and Chinese banks might be hesitant to borrow from the Fed is that once you take money from Uncle Sam, you are going to have inspectors from the Federal Reserve pouring over the books of the parent company. (Which is also why stand alone investment banks might be skittish about getting money from the Fed.)

Also, unlike the Korean and Chinese central banks, the Fed is unlikely to loan money to a foreign bank which is actually insolvent. The problem with the Chinese banks wasn’t a liquidity issue but a solvency issue, and I think the same was true for the Korean banks. If you need recapitalization then a loan from the Fed is not going to help you.

The really interesting thing is to see how much power the Fed is amassing at the expense of the SEC. The big battle is Bernanke versus Cox, and Bernanke is winning this. The other interesting thing to watch is whether this will be the end of the independent investment bank. Also, it does seem interesting that the financial system of the US is starting to look a lot like the Chinese financial system with four really huge banks that are basically controlled by the central bank, which exercises its power by the fact that it can print money, whereas private shareholders can’t.

Source:http://twofish.wordpress.com/2008/03/27/notes-on-investment-banking/

They work fast in Texas!Clear Channel scored a temporary restraining order overnight with the judge saying the banks must not “interfere with or thwart consummation of the Merger Agreement.” (A WSJ.com report, and in turn a first version of this post as well as its headline, earlier said in error the judge compelled the banks to issue financing.) The ruling far from resolves the situation. Still, shares of Clear Channel soared at the open.

According to CC press releases that started hitting the wires around 3 in the morning, Judge John D. Gabriel ordered that the banks:

among other things, must not “interfere with or thwart consummation of the Merger
Agreement” by 1) refusing to fund the Merger transaction, 2) insisting
on terms that are inconsistent with the Commitment Letter, or 3)
refusing to act in good faith in the drafting of definitive loan
documents.

Lots of Texas law firms listed on the petition, including Beck, Redden & Secrest: Davis, Cedillo & Mendoza and Gibbs & Bruns.

More soon. And yes, we’ll try to get the order!

http://blogs.wsj.com/law/2008/03/27/clear-channel-texas-judge-orders-banks-to-finance-buyout/?mod=WSJBlog/trackba

Posted by Jamie Heller

So you have finally settled on a bank to help you with all your needs. Of course you are excited, because this bank will truly work for you and your money. Now you need to make sure that you maintain a great relationship with your bank. You do not want anything to happen, especially when your money is involved. Here are some tips on how to keep things running smoothly.

Tips for a Healthy Banking Experience

One thing that is getting so important now days is online banking. This can save you so much time, and it is very safe. Online banking should be free, so use it. You can check your balance at any time, and you can transfer money from your checking account to your savings account and vice versa. You can also send money to other peoples accounts when you want. Most importantly however, you can pay your bills online! No longer do you have to go to the bank to make your transactions, or wait around for your paper statement to come in the mail. Use this to your advantage, and it will really help with your banking relationship.

Next what you need to do is take all the precautions that the bank has laid out in front of you. The bank will set up security for you and help make you protected. However, if there are times you do not feel safe, or there are things you feel like the bank could do better, let them know. If it helps their company, then they will definitely be open to it.

When you sign up for online banking, make sure you keep all that information private. You can help yourself by not giving out your information to anyone. Even though there is protection online, it does not mean you can relax on protecting yourself. Work with your bank to protect yourself. This also means that you need to review your banking statement every month. Since you can check online, look to see if the transactions match up. If something there does not add up alter your bank immediately.

Finally you need to know what is protected by your bank. Are your assets protected by some of the features of the bank? When is your money at risk? The answer may be never, but you just need to make sure of this. You need to check all this at the beginning of your account, but do not stop after this. Check periodically throughout the life of your account to make sure that there are not any major changes.

Work With Your Bank

Together, you and your bank will make sure that your money truly works for you. Do not let anything take you by surprise. When you and your bank communicate regularly you will find that you begin to have a great banking relationship. Maintaining that relationship is something that is very important.

It is often the case that a frugal lifestyle can make a big difference to also helping the environment.

These are some tips which will help you save money and the environment

1. Moderate Heaters and Air Conditioners.

To heat the house an extra 2 degrees becomes relatively more expensive and contributes to increased carbon emissions. Try getting used to having the thermostat a little lower and the air con a little higher. Just by wearing an extra jumper you can make a big difference to your bills and the environment

2. Maximise Insulation

You can save heating bills by maximising the insulation for your house. This can involve investing in upgrades such as loft insulation, double glazing and cavity wall insulation. Check to see whether the government or agencies may be able to subsidise this. My local council (Oxford) provided cavity wall insulation for free!. The above will pay off in the long run. But, you can also make immediate savings by cutting out drafts, closing windows and using thick insulated curtains.

3. Only Boil What You Need.

To Make a cup of tea, my lodger used to boil a full kettle, enough for 12 cups! Not only does this take longer, but it uses energy unnecessarily. Eventually, I got round to asking him to only boil minimum and it will make a difference to saving money and energy. Similarly when boiling vegetables don’t have the pan boiling for 30mins, there’s nothing worse than overcooked brussel sprouts!

4. Cycle and Walk.

Nearly 50% of all car journeys are less than 3 miles. All of these journeys could be completed by walking or cycling. Both of these types of transport are much cheaper than other filling up with petrol (gas). This is especially important with the price of oil being so high. As an added benefit it will also help you get fit!

5. Turn it Off.

Everyone know we should turn lights off when not in the room, but less well known is the cost of leaving electrical appliances on standby. If you leave your TV permanently on standby you will unnecessarily use electricity and energy.

6. Re Use Things

In the past, the motto was ‘make do and mend’. Today’s attitude is ‘throw it away and buy a new one’. We don’t have to goto either extremes, but, before you start buying new items, ask whether you really need it or you could make do with something smaller.

7. Buy a Smaller Engine Car.

Is there any benefit in buying a 3 litre car which could theoretically do 170mph? If you want to make a big difference to your petrol bills, insurance and road tax, by a smaller engine car and help reduce pollution levels. This is one decision that can make a big difference. (my 1.4 litre Ford Focus, is still pretty nifty and doesn’t cost £60 to fill up a tank, yet…)

8. Reduce Your washing temperature.

If you reduce the temperature on your washing machine to 40degrees most washes will have the same results but use less power and energy. Also if you have the facilities for drying avoid using a tumble dryer, but use natural heat from the sun.

9. Take a Short Shower.

A shower can save a lot of money compared to a bath. Unless, like my lodger, your shower lasts for 30 minutes on the hottest possible temperature

10. Energy Saving Light Bulbs.

They are now becoming compulsory in the UK, but there may also be other electrical appliances where buying a lower power variety can save both money and energy.

Despite the mountain of evidence to the contrary, despite the work by former chief of the World Bank — Sir Nicholas Stern — showing that cutting greenhouse gas emissions and working to limit and tackle climate change makes economic sense, there remain some willfully ignorant folks who persist in framing the global warming debate as though the environment and the economy are mutually exclusive.

Not the biggest banks in America, however.

America’s biggest banks recognize that carbon and global warming risks and concerns have to be factored into everything, including what kind of energy projects to invest in. You can get a more detailed understanding of how U.S. banks are thinking about climate change and the environment in this speech by Bank of America boss Ken Lewis.

Defaultrisk.com is a visually frenetic site whose author, a risk professional, has enthusiastically collected 1,327 academic and industry articles, and counting, on credit risk management. The majority of these articles are available for free download.  (I tried a couple of them myself, and it seems to work quite satisfactorily).  The site is a juicy gold mine  — so rich that I’m not ashamed to mix metaphors over it — and potentially useful for anyone in SSF working up a literature review of Basel II, credit markets, structured debt securities, credit risk metrics, swaps… and so on.  If you’d like to join the gang of contributors check out the submissions page.  Or, if you just want to peek to see if you recognize anyone who has work housed on the site, check out the photo gallery of featured researchers.  

Calculatedrisk.blogspot.com is highly ranked on Google and pops up frequently in my searches on consumer credit risk.  It must be very successful because since the last time I looked at it, it’s become peppered with ads.  The anonymous authors are a retired senior executive, and a former bank officer and mortgage lending specialist.  They tend to have some pretty sensible, to-the-point, and up-to-date (if not earth shattering) commentary on the events of the day.  They also provide extensive links to the main stream press on the economic news and regulatory updates, with special coverage of the domestic real estate issues and mortgages. 

Here’s one of no direct relevance to finance which I’ll include just for fun.  Its concept is a thrill to any fan of historian Susan Strasser who might be working on a topic related to the history of consumerism and consumer culture.  BrandlandUSA™ is a blogspot dedicated to the preservation of America’s best-loved brand names.  (I came across it looking for a good price on a Penguin Munsingwear sweater, where I was informed that the company was recently taken over by Perry Ellis.  Which made me wonder: With so many brands, but such huge conglomerates supporting them all, what does this say about the role of finance in the dynamics of contemporary fashion?  A thought to pursue on another day…)