Frank Comments by Dennis Ng on various Topics

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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Fri Jun 08, 2012 10:59 pm

More than 1 year ago, when Greece was in trouble, on 31 May 2011, I already posted in my forum that the next country to go into trouble is Spain...

The latest news is that Spain indeed is going into trouble and is poised to ask for help to rescue its banks.

Exclusive: Spain poised to request EU bank aid on Saturday:

http://www.reuters.com/article/2012/06/ ... DX20120608

Cheers!

Dennis Ng

Dennis Ng wrote:31 May 2011

The Euro Zone is artificially created by 17 countries choosing to "band together". The countries are very different, and some are financially very weak, eg. the PIGS.

The Financially weakest are ranked as follows:

1. Greece
2. Ireland
3. Portugal
4. Spain
5. Italy

So far, 3 out of the 4 PIGS are already in trouble, the good news is these 3 PIGs are "small", in terms of their economies as compared to the whole of Euro Zone.

However, Spain is ranked No. 4 and Italy is ranked No. 3 in terms of size of economy. In my opinion, it is just a matter of time Spain might get into trouble, and when that happens, I think the 2 Richest countries Germany and France might think twice about rescuing Spain and this might lead to the disintegration and break up of Euro Zone.

This is my prediction of what is likely to happen.

Below is an article on Europe Crisis.

Cheers!

Dennis Ng

Fixing Europe credit crisis made harder by the euro

By ROBERT SAMUELSON


IT has come to this. A year after rescuing Greece from default, Europe is staring into the abyss. The bailout has proved insufficient. Greece needs more money, and it can't borrow from private markets where it faces interest rates as high as 25 per cent. But Europe's governments are reluctant to advance more funds unless other lenders - banks, bondholders - absorb some losses by writing down their debts. This, however, would constitute a default, risking a broader banking crisis that might torpedo Europe's fragile recovery in France, Germany and elsewhere. There is no easy escape.


What's called a 'debt crisis' is increasingly a political and social crisis. Looming over the financial complexities is the broader question of the ability - or willingness - of weak debtor nations to endure growing hardship to service their massive government debts. Already, unemployment is at 14.1 per cent in Greece, 14.7 per cent in Ireland, 11.1 per cent in Portugal and 20.7 per cent in Spain. What are the limits of austerity? Steep spending cuts and tax increases do curb budget deficits; but they also create deep recessions, lowering tax revenues and offsetting some of the deficit improvement. Just how long this grinding process can continue is unclear. In Spain, the incumbent socialist party lost big in recent elections. Popular unrest persists in Greece amid signs of a 'resurgence of an anarchist movement' there and elsewhere.

Some causes of Europe's plight are well-known: the harsh recession following the 2008-2009 financial crisis; ageing populations coupled with costly welfare states. But there's also another less recognised culprit: the euro, the single currency now used by 17 countries. Launched in 1999, it aimed to foster economic and political unity. Economic growth would improve. Costly currency conversions would cease; money would flow smoothly across borders to the best profit opportunities. Using euros - and not marks or lira - Germans, Italians and others would increasingly consider themselves 'Europeans'. For a while, it seemed to succeed. In the euro's first decade, jobs in countries using the common currency increased by 16 million.

It was a mirage. The euro helped create the crisis and has made its resolution harder, as a new report from the International Monetary Fund shows. For starters, the euro fostered a credit bubble that led to booms in housing, borrowing and consumer spending. When each country had its own currency, the country's central bank regulated local interest rates and credit conditions. With the euro, the European Central Bank (ECB) assumed that job. But one policy didn't fit all: Interest rates suited to Germany and France were too low for 'periphery' countries (Greece, Ireland, Portugal and Spain).

'Financial markets' - private investors - compounded the problem by assuming that the euro's creation reduced risk. Weak countries would be protected by the strong. Money poured into the periphery countries. There was a huge compression of interest rates. In 1997, rates on 10-year Greek government bonds averaged 9.8 per cent compared to 5.7 per cent for similar German bonds. By 2003, Greek bonds fetched 4.3 per cent, just above the 4.1 per cent of German bonds.

'The markets failed. All this would not have occurred if banks in Germany and France had not lent so much,' says economist Desmond Lachman of the American Enterprise Institute. 'It was like the US housing market.'

Both American and European banks went overboard in relaxing credit standards. Now that the credit bubble has burst, the euro impedes recovery. One way countries revive from financial crises is by depreciating their currencies. This makes exports and local tourism cheaper, creating some job gains that cushion the ill effects of austerity elsewhere. But latched to the euro, Greece and other vulnerable debtors forfeit this safety valve.

Greece's debt is now approaching an unsustainable 160 per cent of its annual economy (gross domestic product). If it defaulted, investors might dump bonds of other weak debtors for fear that they too would default. That could send interest rates soaring and saddle European banks with huge losses. At the end of 2010, Europe's banks had about US$1.3 trillion of loans and investments - both governmental and private - in Greece, Ireland, Spain and Portugal, reports the Institute of International Finance, an industry research group. A banking crisis would imperil economic recovery.

So Europe is playing for time. It's struggling to delay any Greek default long enough for other vulnerable countries to demonstrate they can handle their debts. The very process makes the euro - contrary to original intent - a source of contention, as nations shift blame and costs to others. Given Europe's huge debts, even the holding action may fail. It may merely postpone a broader crisis. 'They may dodge this bullet,' says Mr Lachman, 'but not the next.' - The Washington Post Writers Group
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Sat Jun 09, 2012 10:10 am

I remember at 4, I could not speak well at all, and I stutter and stammer whenever I speak...who would have imagined this same person (Dennis Ng) now is a sought after speaker by newspapers, Radio and TV?

In Primary 2, I got 2nd last place in my class and Chinese was my worst subject then...who would have imagined this same student later wrote a book 100% in Chinese and won the Inaugural Popular Bookstore "Readers' Choice" contest for 1st prize for Chinese Book Category?

In Sec 4 mid year exams, I got F9 for my English and even my English teacher gave up hope on me passing my O levels...who would have imagined this same student went on to write a book 100% in English which became the No. 1 English (Non-fiction) Best Selling Book in Singapore?

Truly, whatever you can Conceive and Believe in, you can Achieve.

Conceive and Believe in something good, have no fear. Becos we might not get what we want, but we typically get what we fear. So have no fear. Think and Believe in something good only.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Sat Jun 09, 2012 10:45 am

next week I won't be on http://www.in988.com nor 95.8 FM, as I'll be having a holiday in London and Paris with my family from 10 to 19 Jun 2012. On 19 Jun 2012, (also won't have my article in My Paper)...guess I deserve to take a break and have informed these 3 media in advance of my holiday plans.

During this period, I won't be logging in to this forum as well, as I want to have 100% presence with my family.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Sat Jun 09, 2012 11:05 am

about to finish reading one of the books I find very good, it is entitled "Being Buddha at Work". At first, the title didn't attract me, as I was thinking what has work go to do with Buddha? Is this just a gimmicky title?

Actually, many people have alot of misconceptions about Buddhism. It is actually NOT a Religion, but the teachings of Buddha (an enlightened Human Being) about the Right thoughts, Right words, Right actions etc..it is following a Balanced and Middle Path, not going to extremes.

This book explore and answer 101 dilemmas we encounter in our lives and shares with us what will (an enlightened being) Buddha do in those circumstances. This is now one of the bestsellers and you can buy it from any bookstores eg. Kinokuniya, Popular, Times, MPH. I bought my copy from online http://www.fishpond.com.sg

This is the link: http://www.fishpond.com.sg/Books/advanc ... 0at%20work

(FREE mailage, but you need to wait about 2 weeks before book mailed to you after purchase).

A Book Review on Amazon I found:

There are lots of books that address how we should take care of ourselves, find calm, and enjoy happiness in a hectic work world. But few of those books apply the lessons of Buddhist thinking as resolution and guidance tools. These questions, though found in the modern day, are actually the core of all Buddha’s teachings – impermanence, suffering, and the quest for happiness (freedom from suffering). This makes Buddha the kind of consultant or coach we need today in our workplaces.

Following in the tradition of the authors' first bestseller, this work goes on to explore and answer 101 dilemmas that we encounter at work, with topics ranging from time management, goal-setting, conflict to job dissatisfaction, unemployment, and even workplace trysts. The authors emphasize practical learning and coping, not esoteric insights or metaphysics, applying concrete solutions from Buddhist teachings to real problems in easily digestible chunks.


This review is from: Being Buddha at Work: 108 Ancient Truths on Change, Stress, Money, and Success (Paperback)
I spent the weekend 'sharpening the saw' on all the gems of wisdom contained in this book. What I discovered is that these 108 ancient truths apply not only to the workplace, but in every other aspect of life. The chapters are written in clear and concise terms - I really appreciated the bottom line messages that site specific examples of meaningful, memorable and actionable items. I highly recommend this for people who are seriously seeking solid principles that can guide your steps towards your goals!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby erph78 » Tue Jun 12, 2012 5:19 pm

Hi Dennis,

Thanks for book recommendation.

You are right-on on Buddhism, the sad truth is that many people think is it religion, or something supertitious. If you can, I hope you can understand more about buddha's teaching and share with us (though I know that you are a free-thinker). In fact alot of your beliefs that you have shared with us like the universal law and such, are also address in Buddha's teaching.

Cheers
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 2:41 pm

On Sunday (17 Jun 2012), most shops in Paris are closed.

LV Louis Vutton store is one of those that stay open and I almost could not believe my eyes when I saw that we need to queue to get into the store... anyway, we did queue (took us about 15 minutes) and like many who step into the store, after looking around, we walked out of with Big Louis Vutton shopping bag... even I could not resist their "magic"...and I bought the most expensive belt, tie and cufflink I ever bought...yet I did it willingly...looks like they are really successful in capturing the imagination and hearts of consumers...
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 2:50 pm

erph78 wrote:Hi Dennis,

Thanks for book recommendation.

You are right-on on Buddhism, the sad truth is that many people think is it religion, or something supertitious. If you can, I hope you can understand more about buddha's teaching and share with us (though I know that you are a free-thinker). In fact alot of your beliefs that you have shared with us like the universal law and such, are also address in Buddha's teaching.

Cheers


yes, I'm actually very amazed as I read some of the books and realised that many things that are now proven and explained by Science were already mentioned and explained by Buddha more than 2,500 years ago... some say that Buddhism is a Philosophy, actually, it is more that that, and beyond that, it contains some really, really advanced Science as well...and many of the values and principles are also taught and in line with other religions...

Thus, in my seminars and this forum, I would not really talk about any religion since different people might have different views on different religions but would only share Universal Truths I learned.

To me, if something is agreed upon by ALL religions and taught by all religions, these are Universal Truths...and some of these Common Universal Truths include:

1. Give and you shall receive. (so we should be Go-Givers and NOT Go-Getters, it is possible for Win/Win and we don't have to be Win/Lose...whatever goes round comes around. That's why we don't need to be Greedy and definitely Greed is NOT good (don't be misled by "teaching in the Wall Street movie".
2. The Law of Cause and Effect and thus Sow and you shall Reap (very much linked and reinforce to the First Universal Law)
3. Selfless Love, having Compassion for all beings, including human beings and all living and non-living thing in the Universe.
4. Admission and repentence of mistakes are necessary steps
5. Forgiveness - do not hold on to resentment and any hatred.
6. Having a sense of Gratitude.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 3:30 pm

dragonhart2 wrote:STI closed the day at 2821 after gapping up to 2845.....seems like it is resisted by the 200 dMA...so it is a false breakout(to be confirmed by tom and next few days closing)....if it cannot breakout above 2845 cleanly...then likely to head downwards forming a little peak, Lower high...which is Bearish!

just for sharing the analysis...can't predict future....i could be wrong..


cheers,
jason.


yes, looks like when I was away in the last 10 days and didn't really bother about catching up on news of the stock markets, looks like nothing much has changed in the last 2 weeks, Global Stock Markets are still in "range trading" with a slight bias to the Bearish side...how long would the "relief" of Greece elections provide? After that, anything really changed in Greece or Europe Debt Crisis? Nothing actually if one really thinks about.

Yes, then perhaps U.S., Europe and China can all come out to "print more money" to stimulate the economy, but these are likely to be similar to Pain Killers and only provide temporary relief from Pain... based on current situation and information, things look negative for year 2013...(which is positive for those of us who are already prepared for such situation financially).

I really learn to Let Go. In the 10 days I was overseas, I didn't call back my office a single time...did not think about business or work, just focus on being Present for each moment...no checking of emails or internet for 10 days...it can be done and I've done it.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 3:42 pm

Justinlee wrote:Hi Dennis and all,

I recently attended one of your seminars on how to accumulate 1 million dollars. on the 9 June. i think. I am new and i am very interested to learn more. i am doing my best to learn as much of the terms and definitions as possible as these are foreign concepts as i am not exposed(not financially literate). My background is I just ORD and i am 23. My passion is gardening.(People think i am crazy cause singapore is so hot!!) and i do not want to be caught in the rat race. Nobody really teaches me to plan my finances. i am glad to have meet you.

Do you have a step by step process on which you can advise me on how i should put my savings to? This is where i am now, i have the goal keepers and midfielders roughly planned out, the pyramid of emergency funds, TI, Income disability, hospital plans, opportunity funds, accumulation goals. (personally i think its very solid defending hahaha.) i have also spend much time studying the SRS, and planning about tax exemption.
How do i invest? it is very humbling to admit that i have 0% of knowledge in this area. :( is there an account i must open? where do i move onto the next pyramid box which is asset enhancement. with regards to CPF and SRS investments. Please teach me to move on from here. Thank you very much for your input :)


Hi justinlee,

the good news I like to share is that EVERYONE starts with zero knowledge, including myself. In fact, I was worse, in 1998, I started the learning journey with many, many misconceptions and many things to un-learn in order for me to learn. Thus, you don't know how lucky you're to start on a "Clean Slate".

The first Step is to Invest in investment knowledge. After attending the Million Dollar Seminar, you can attend the other 2 seminars that I conduct, and learning how to invest and grow my money in Stocks and Property is how I reached Financial Freedom myself and how many of my multi-millionaire sifus did it as well. So it is a proven path, it works and you're not a guinea pig.

You can also read my book "What Your School Never Taught You About Money", it is a book that not only teaches Financial Principles and Concepts, but actual "How to do it" (how to plan your insurance, how to choose IPOs, how to chose Housing Loans, factors to consider in purchase of property etc, etc)....

Visit this forum daily, there is lots and lots of stuff to read and learn in this forum. It can take you weeks or months to really read and digest what is being shared in the forum. It is a Treasure Trove of Knowledge and is growing everyday.

Learning is a continuous process. Each day I never stop learning. Observe the nature, there is either Growth or Decay...there is no status quo. Thus, either we are learning and growing or we are decaying...I choose to Grow. What's your choice?
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 5:42 pm

I'm so happy when Serene Loong (a seminar graduate) shared with me that she shares a similar passion to educate the public and wanted to help educate and empower more people with Real Life Knowledge that works...

What I truly admire and respect her is that she really takes action...

She has the "Just Do It" spirit instead of just thinking about ideas and talking about it...and she started this website called... www.reallifetheory.com

Way to go! Serene!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 5:49 pm

Dennis Ng wrote:I'm so happy when Serene Loong (a seminar graduate) shared with me that she shares a similar passion to educate the public and wanted to help educate and empower more people with Real Life Knowledge that works...

What I truly admire and respect her is that she really takes action...

She has the "Just Do It" spirit instead of just thinking about ideas and talking about it...and she started this website called... http://www.reallifetheory.com

Way to go! Serene!


How to be Richer than your boss? Serene Loong shares this short and educational video here:

http://www.youtube.com/watch?v=bLzTEcb8 ... ure=relmfu

Actually what she shares really works. How do I know for sure? Becos I was one person earning about S$5,000 a month and I managed to reach a million dollars wealth by age 39...15 years after I started working...and all I did was save 20% of my income and grew that savings through Investing into stocks and property.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 19, 2012 6:22 pm

The last 10 days while I was holidaying in Paris and London, my 3 companies continue to run without me and continue to earn an income with/without my presence...of course that (owning Business that works without the business owner) is another thing I plan to teach starting in Aug 2012 in a 2 full-day Secrets to Making Money in Business...

But most people, whether employed, self-employed or own a business, can ALL reach financial freedom simply by spending less than you earn and growing the savings by earning a return higher than inflation rate...that's was how I reached my first million dollars, earning an average household income of S$5,000 a month and having 2 children and a HDB flat Housing Loan instalment to service...("If Yan can cook, so can you") and if Dennis can do it, so can you!
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Sun Jun 24, 2012 6:36 pm

In 1998, when I read "Rich Dad, Poor Dad" by Robert Kiyosaki, the book changed my mindset about money. "Make your money work for you, instead of working for your money"...

However, after buying and reading more than 10 of his books, I discovered that he didn't really share the specifics of HOW to make money work for you. How to choose stocks to buy, How to choose properties to invest in. His many books only touch on general principles and concepts.

I also bought and own his full set of Board Games, namely Cashflow Game 101, Cashflow Game 202 and Cashflow Game for Kids. (total cost S$600, they are the most expensive board games I own, and I own many board games, including those not publicly known such as "Leverage Game - Board game on Business", "From Zero to Hero - board game on Business", Success Board Game, FQ (a Singapore Financial Board game) etc, etc).

I once so admired him that I actually helped conducted Cashflow Game workshop for 2 years, from year 2001 to year 2002. Later, as I learned from Real multi-millionaires in Singapore, I realised that some of the things Robert Kiyosaki teach are not correct. eg. his definitions of Assets and Liabilities.

http://www.sharesinv.com/articles/2012/ ... are-wrong/

罗伯特清崎对资产与负债的定义有误!
http://www.sharesinv.com/zh/articles/31612/

He keeps emphasizing the Importance of Cashflow, Cashflow, Cashflow in his books and seminars. However, I personally realised that for a person who is starting out and not Rich, focusing on Cashflow or Passive Income will not help you become Rich, to become Rich, to reach your first Million dollars, the FACT is that you need to focus on Capital Gains, how to grow your money from S$1 to S$2, to S$4, to S$8 and repeat the process. That's how I re-started my journey after losing half my wealth in Asian Financial Crisis with remaining S$50,000 and slowly grew my money to reach S$1 million by year 2008, NOT by focusing on Cashflow.

Just work out the simple Maths yourself. If you have a S$100,000 and invest into a property Priced S$500,000 and borrow S$400,000 loan. Each month, instalment may be S$1,800. If the rental income is say S$2,500. Property tax 1 year may be S$2,400 or about S$200 per month, condo management fee S$200, not even counting other expenses, such as Fire insurance, Income Tax on rental, commission on teanancy etc, etc. Your NET Cashflow per month is S$300, or works out to S$3,600 a year. If you want to each S$1 million from Cashflow, it would only take 277.77 years ONLY!!!

So I really wonder how anyone can become Rich focusing on Cashflow.

There is a lot of controversy about him as well, some doubt he really made the money from what he teaches you, but think he makes most of his money from books and seminars. And the Rich Dad which he claimed is a real person in his book, some have checked and doubt that such a person really exist in Hawaii.

Here are some postings I read in the internet which expresses such skeptism:

http://www.arystoteles.pl/robert_kiyosaki_fraud.php

http://www.johntreed.com/Kiyosaki.html
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

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Re: Frank Comments by Dennis Ng on various Topics

Postby Dennis Ng » Tue Jun 26, 2012 9:49 am

Moody's Downgrades 28 Spanish Banks. As I said, it is just a matter of time that Spain would get into financial trouble. Just wait and see. And when that happens, Spain is too big to fail (1 trillion euros debt) and also Too Big to Rescue...and what if this is followed by trouble in Italy (even bigger at 2 trillion euros debt)...risk of Spain and Italy have been highlighted by me in this discussion thread I started in May 2011. Yes, I saw this coming more than 1 year ago...the only problem is I don't know and cannot predict the exact timing. Nobody knows the exact timing unless he is God.

Cheers!

Dennis Ng

Dennis Ng wrote:31 May 2011

The Euro Zone is artificially created by 17 countries choosing to "band together". The countries are very different, and some are financially very weak, eg. the PIGS.

The Financially weakest are ranked as follows:

1. Greece
2. Ireland
3. Portugal
4. Spain
5. Italy

So far, 3 out of the 4 PIGS are already in trouble, the good news is these 3 PIGs are "small", in terms of their economies as compared to the whole of Euro Zone.

However, Spain is ranked No. 4 and Italy is ranked No. 3 in terms of size of economy. In my opinion, it is just a matter of time Spain might get into trouble, and when that happens, I think the 2 Richest countries Germany and France might think twice about rescuing Spain and this might lead to the disintegration and break up of Euro Zone.

This is my prediction of what is likely to happen.


Moody’s Downgrades 28 Spanish Banks on Sovereign Risk
By Charles Penty and Dakin Campbell - Jun 26, 2012 8:45 AM GMT+0800

Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s largest lenders, were downgraded by Moody’s Investors Service because of the country’s sovereign debt and souring real-estate loans.

At least a dozen lenders were lowered to junk status, Moody’s said yesterday in a statement. The ratings company downgraded six banks by four levels and 10 by three grades with the rest getting one- and two-tier declines.


“In Spain you have a combination of a significant sovereign-debt burden coupled with a collapsing real estate market,” said Bruce Simon, chief investment officer at Los Angeles-based City National Bank, which manages $14 billion in client assets and doesn’t own debt issued by the lenders. “That’s doubling the pressure on Spanish banks.”

Moody’s issued a three-step reduction in Spain’s credit grade on June 13, citing the debt, a weakening economy and limited access to capital markets. Spain was lowered to Baa3, the lowest investment-grade rating, from A3 and remains on review for a further cut after announcing plans to borrow 100 billion euros ($125 billion) from European Union rescue funds to recapitalize banks.

The lenders are facing the “reduced creditworthiness” of the nation as well as the “expectation that exposures to commercial real estate (CRE) will likely cause higher losses, which might increase the likelihood that these banks will require external support,” the ratings firm said in its statement.
Banco Santander

Banco Santander had its long-term debt rating cut to Baa2 from A3. That’s one step higher than the sovereign rating because of the Madrid-based lender’s geographical diversification and “manageable” level of direct exposure to Spanish debt, Moody’s said. BBVA, based in Bilbao, is rated Baa3, down from A3.

The ratings company, based in New York, also downgraded 16 Spanish banks on May 17.

The latest cuts reflect the government’s reduced creditworthiness, which lessens its ability to support the lenders, as well as Moody’s expectation that losses linked to commercial real estate will keep rising, according to yesterday’s statement.

Moody’s downgraded 15 global banks last week, saying their capital-markets businesses suffered from volatility and the potential for “outsized losses,” according to a statement. The ratings firm also cited the companies’ exposure to Europe. The ratings on Bank of America Corp. and Citigroup Inc. (C) were cut to two levels above junk.
Banking Rescue

Concern that Spain will struggle to bail out its banks as their loan losses mount has driven up the country’s borrowing costs. The extra yield investors demand to hold Spain’s 10-year bonds rather than German bunds ballooned to 517.4 basis points on June 25 from 479.9 basis points on June 22. A basis point is a hundredth of a percentage point.

Spain requested the banking bailout in a letter to Luxembourg’s Jean-Claude Juncker, who leads the group of euro- area finance ministers.

Moody’s “views positively the broad-based support measures being introduced by the Spanish government to support the Spanish banking system as a whole,” analysts including Greg Bauer, global banking managing director, said in the statement. The ratings firm will assess the impact of the measures “once the final amount, timing and form of funds flowing to each individual bank are known.”
Stress Tests

The government of Prime Minister Mariano Rajoy published results of stress tests on June 21 that showed Spain’s banks may need as much as 62 billion euros of capital to withstand a worst-case economic scenario.

Oliver Wyman Ltd. estimated banks would need 51 billion euros to 62 billion euros should Spanish gross domestic product shrink by 6.5 percent over three years and housing prices drop 60 percent from their peak. Roland Berger Strategy Consultants said lenders would need 51.8 billion euros under those conditions.

The ratio of bad loans to total lending at Spain’s banks surged to 8.72 percent in April, the highest since 1994, from less than 1 percent in 2007, according to Bank of Spain data. Lenders have 184 billion euros of what the regulator terms problematic real estate-related assets after taking property onto their books following the collapse of Spain’s property boom in 2008.

“Moody’s action was fairly well telegraphed,” said Blake Howells, an analyst at Portland, Oregon-based Becker Capital Management Inc., which oversees $2.3 billion. “The market is well aware of the challenges these banks face.”

To contact the reporters on this story: Charles Penty in Madrid at cpenty@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net.
Cheers!

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Re: Frank Comments by Dennis Ng on various Topics

Postby ui21cn » Tue Jun 26, 2012 4:36 pm

While we have been talking about the Euro zone crisis and there could lead to a good opportunity to make money in the crisis. On the other hand, perhaps we could draw some lessons from it and do our part to make the positive influence so that our children/grandchildren need not have to pay for our “sin”, if we choose to walk the same paths after a good economy growth in the last 40years ( just an illustration, no specific individual being implied here )

I made the summary based on The Huffington Post- Alexander Eichler, Bloomberg and The Atlantic that I read:-
(I would not claim those 100% accurate but I am sure they are good enough for us to draw some lessons learnt)
Portugal, Ireland, Italy, Greece and Spain -- gathered under the unfortunate acronym PIIGS -- are some of the most highly leveraged eurozone countries, and most people think that if a disaster happens, it will start with one of them. Italy's debt is 121 percent the size of its economy. For Ireland, that figure is 109 percent. In Greece, it's 165 percent.

Interestingly each of the above took a different path but it leads to the very similar dire straits.

Portugal does not have the highest debt of the eurozone, nor its highest unemployment, nor did it have a real estate crash. It didn’t even have the largest budget deficit. Yet, it seems like it will be the next domino to fall. So what is the reason(s) ?? It was the very low growth and over protective and bureaucratic economy. (Blomberg has a good report on this)

Ireland, underwent a massive real estate bubble, and its banks sustained giant losses. The Irish government wound up rescuing its banks, and now the country is burdened under a huge debt load

Italy, more than 20 years of low growth, poor productivity, poor governance (corruptions) and widening income gap between North and Southern regions

Greece, not only borrowed beyond its means, but exacerbated the problem with lots of over spending, creative book keeping and little economic production.

Spain, also experienced a huge housing bubble. The country didn't indulge in excessive borrowing -- rather, it ended up with high deficits because it couldn't collect enough tax revenue to cover its expenses.

My own conclusion is poor long term economy policy and populist decisions will eventually bring economy distress. The worst thing is, the effect can only be felt decades down the road !
What can we do as a responsible individual then? - continue to invest in ourselves (learning), invest wisely, be self-reliance and help the needy/the unfortunates.

Rgds,
Wei Teck
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