Wednesday, November 30, 2005
Rates Rise: now what ?
And I thought I was the only one knowing it! Over the past three days I have received six telephone calls and four e-mails all from alarmed people (one my own niece) very concerned about rising mortgage interest rates, and all asking the very same, panicking question: ‘Now what’? For one thing, you could try doing nothing about it – it normally works well for me and, who knows, perhaps with a little luck tomorrow interest rates will drop. For another thing, you may want to hug your Teddy Bear – and buy one also for your friendly neighborhood banker, turned overnight into a voracious T-Rex.
When you last went shopping for a mortgage you found yourself facing an array of options, from a six-month ‘open’ to a 10-year ‘closed’ and everything in-between. And chances are you didn’t quite grasp or paid attention to the differences among all those many options, mostly because you never envisioned a time of interest rates increase. Now that the tide is changing direction, of course, the basic question becomes the most important: which option is the best to minimize mortgage costs? To answer this, let’s take a look first at a few definitions.
For starters and contrary to popular belief a mortgage is not a loan. It is both an interest in land created by contract and a type of security for a debt. In essence, a mortgage is not a debt but, rather, the evidence of a debt. More importantly, a mortgage is a transfer of a legal or equitable interest in land on the condition that the interest will be returned when the terms of the mortgage contract are fully satisfied. This usually means upon repayment of the underlying debt. Mortgage Law originated in the English feudal system as early as the 12th century. At that time the effect of a mortgage was to legally convey both the title of the interest in land and possession of the land to the lender. This conveyance was ‘absolute’, that is subject only to the lender’s promise to re-convey the property to the borrower if the specified sum was repaid by the specified date. If, on the other hand, the borrower failed to comply with the terms, then the interest in land automatically became the lender’s and the borrower had no further claims or recourses at law. There were, back in feudal England, basically two kinds of martgages: ‘ad vivum vadium’, Latin for ‘a live pledge’ in which the income from the land was used by the borrower to repay the debt, and ‘ad mortuum vadium’, Latin for ‘a dead pledge’ where the lender was entitled to the income from the land and the borrower had to raise funds elsewhere to repay the debt. Whereas at the beginning only ‘live pledges’ were legal and ‘dead pledges’ were considered an infringement of the laws of usury and of religious dogmas, by the 14th century only dead pledges remained and were all very legal and very religious. And, apparently, they are still very religious in the 21st century.
Mortgages are better known to consumers by their re-payment schemes:
Interest Accruing Loans
Typically used by builders, an interest accruing loan is one on which no payment of interest and no repayment of principal are required to be made during the life of the loan. These type of loan may be ‘closed’, i.e. booked at an interest rate fixed throughout the term of the loan or ‘open’, that is with a fluctuating rate. In effect, in this type of loan the lender actually to the borrower the additional amount corresponding to the interest payable during the term.
Interest Only Loans
Typically preferred by lenders, in this type of loan the borrower contracts out to make fixed payments of only interest to the lender, with the principal due in one lump sum at the end of the term. Obviously, the principal amount never increases because interest is discharged at fixed intervals.
Straight-Line Principal Reduction Loans
Favored in the United States and continental Europe, this type of loan has an equal amount of principal repaid every interest compounding period plus interest for the period. For example, a mortgage may call for complete repayment of principal over a fifteen-year period through monthly payments of interest, so that 180 payments will be made in the entirety of the term of the loan. The principal balance and the amount of interest due decrease over time.
Constant Payment Repayment Schemes
Favored in Canada, England and throughout the Commonwealth, these can be fully amortized or partially amortized. Payments are equal throughout the life of the loan and consist of both principal repayment and interest. However, as each payment installment becomes due, an increasing portion of the principal is repaid, thereby reducing the outstanding balance on which interest is charged during the next period. As a result of the decreasing principal balance on which interest is charged, interest as well decreases over time thereby increasing the amount of principal repaid each subsequent installment. When fully amortized, the principal balance is fully repaid at the end of the term. However, most loans are partially amortized so that repayment of principal plus interest are calculated so as to repay the debt over an amortization period which is longer than the term of the loan. This means that at the end of the term of the loan the principal ourstanding balance must either be paid off or it is refinanced for an additional term. Also, because of the way payments are structured, early payments consist largely of interest and little repayment, so that typically the principal outstanding balance at the end of the first terms is large.
Variable Rate Mortgages
This type of loan differs from a costant payment mortgage because the interest rate charged may be changed during the term of the loan., Generally, these loans are initially set up like standard, partially amortized payment repayment loans based on the current interest rate, Then the rate is revised at fixed intervals and the mortgage repayment scheme is altered as well by changing either the size of the payments or the length of the amortization period, or a combination of both.
The term ‘Open’ does not refer, like many people believe, to a fluctuating interest rate. The term ‘Open’ refers to the possibility granted to the borrower to pay off the loan without penalty prior to maturity. In general, lenders do not like Open Mortgages because the early payoff reduces the interest they earn. Open Mortgages can be written either wih a ‘fixed rate’ or with a ‘variable rate’. In Variable Rates Open Mortgages the payment stays the same, but what changes is the ratio of interest to principal. If market rates increase, principal repayment decrease during the life of the loan.
In general, Closed Mortgages offer a better rate than Open Mortgages but the drawback is the borrower is not afforded the right of payoff at anytime. If the borrower intends to payoff the loan, a penalty is applied typically amounting to three months interest payments. If the borrower anticipates making only fixed payments and no early payoffs, Closed Mortgages are usually preferable.
These are yet another variation of the same product wherein the rate is fixed for an initial period, say six months or even one year, with the provision that at any time during this period the borrower mat ‘lock in’ into a longer term with little or no cost. This is clearly the best mortgage if rates are in a downward trend.
Now that I have managed to drive you up the wall, let me point out that another couple of considerations ought to be made by the expert consumer (which, by now, it is definitely not you …):
Fixed v.Variable Interest Rate Mortgages
The choice is whether the borrower prefers the security of fixed payments as opposed to the volatility of the market. Typically, security of fixed interest rates comes at a premium: the borrower can fix the principal repayment and interest for a term ranging from 6 months to 10 years, but the longer the term the higher the rate. On the other hand, Variable Interest Rate Mortgages will fluctuate sometimes literally overnight with the market, but interest rate will typically be less. So really, the choice is between the security of fixed rates and the potential savings afforded by a fluctuating variable rate.
Short v. Long Term
Short Term Mortgages are appropriate when the borrower believes that interest rates will fall substantially by the time renewal date comes up. Alternatively, Long Term Mortgages are suitable when current interest rates are reasonable and it is deemed preferable to lock in so that a budget can be laid out for future fixed payments.
So, again, going back to the original question which option is best to minimize costs? To find out, Canada Mortgage Housing Corporation (CMHC) developed the measure of effective mortgage rate differential between five-year and one-year mortgage rates over five-year moving spans between 1980 and 2005. The model assumes that the borrower has the option every year of taking on a five-year mortgage term or a one-year mortgage term at the rates then prevailing, and that there is no difference in mortgage principal. The results are surprising. CHMC has found that it is cheaper more than 85 percent of the times to opt for a one-year term and roll it over than to take a five-year mortgage up front.
More importantly, CHMC has found that borrowers with Variable Rate Mortgages benefited of substantial savings over each five-year span than their Fixed Rate Mortgages counterparts. Whereas they paid more interest in the short term they ultimately and invariably ended up saving more over the long run, which then gives credo to the belief that security and peace of mind when it comes to mortgages are purely a matter of perception.
Monday, November 28, 2005
The Affordability Crisis
The Affordability Indexes of Greater Vancouver and Metropolitan Toronto, were they measured in degrees Celsius, would be fast approaching the absolute zero or minus 276 degrees these days. And so are the affordability indexes of all other large urban centers in the United States, ranking North America in third place after East Asia and Europe on the scale of the world’s most unaffordable places when it comes to housing. We win the Bronze Medal, so to speak, but I am not so sure there is reason to celebrate. Tokyo and Hong Kong, with an average resale value of U.S. $1,100 and U.S. $900 per square foot approximately have turned into cities of sardines, with people reduced to live in 300 square foot cubicles to afford a roof over their heads. London and Paris, with average resale values of U.S. $700 and U.S. $650 per square foot respectively have turned into cities of renters. By comparison, Vancouver and Toronto with resale values of U.S. $420 and U.S. $430 per square foot respectively are still dirt-cheap - for foreigners, that is, certainly not for Canadians.
The Affordability Crisis is a very serious matter indeed. It has economic, political, social and demographic reverberations and repercussions. We have heard it over and over again these past few years: historically low mortgage rates, pent-up demand, low inventories and an improved overall economic atmosphere have all contributed to hot local real estate markets. Which, in turn, have driven prices literally through the roof. But an intelligent analysis of the roots of this crisis, in all fairness, must really reach beyond the mere finger pointing to the relationship between supply and demand. Home ownership is the single most important element in the democratization of prosperity. It is the element of social stability and cohesion and, therefore, an important pillar of a sustainable modern economic capitalistic growth. We do everything with our homes in addition, of course, to live and sleep inside: we use them as collateral for personal lines of credit, we use them to increase our net worth, we use them to establish our hierarchy within society, we use them to improve our own self-esteem and, last but not least, we also use them as parachute of last resort to save us from dire financial straits. Ownership of our homes is everything to us. Now, try to think of a world without such ownership: everything we normally think of as an asset and a credit all of a sudden turns into a liability and a debit – our own personal balance sheet in reverse. That’s how important housing affordability is in our lives.
The primary culprit and cause of the crisis is the ratio between wages and real estate market values. This ratio is entirely skewed to values. Whereas market values in metropolitan areas in Canada have appreciated an average of fifteen percent per year for the past five years - or a total of seventy-five percent since 2000, salaries have increased an average four percent per annum – or twenty percent total. There is, therefore, a fifty-five percent gap, which accounts for the problem buyers are facing today when it comes to go to the bank and qualifying for a loan. And if you think you are out of the problem because you have bought already – well, think again: no buyers, no demand, and lower values. Lenders claim they cannot lower their qualification standards, and that is probably credible in light of how cutthroat the lending business has become. And governments have chipped in already with aid programs especially oriented towards first-time buyers and tax incentives and credits applicable to everyone else. Which, then, leaves consumers with no other choice but to rent – just like in Europe, until such time as a new economic equilibrium is established.
Price dropping has been a steady staple these past few weeks in many markets. Many economists do not envision this as a market downturn, much less the onset of the real estate bubble believers in Apocalypse have been prognosticating all along. The general belief is that we are now facing a ‘deceleration' of capital appreciation – but still an appreciation - now forecasted to hover to on or about five percent in 2006. Real estate, therefore, remains a viable investment venue, but not the gold mine it has been these years past. More importantly, a slower appreciation will allow salaries and wages to catch up and thus to regenerate the pool of buyers, especially first-time Buyers, entitled to take their first steps into the world of real estate
Real Estate Chronicle
Sunday, November 27, 2005
Up ... Up ... and Up Again !
Saturday, November 26, 2005
It’s a corrupted … corrupted … corrupted World !!
As everything else in the Science of Economics, corruption has a very well defined function. Not a positive function, to be sure, but very well defined. Corruption is in fact viewed as a barrier to economic development, a relic of the past wherein ambition and good will are impeded to flourish for the common good of society. As such, unfortunate people that live in a corrupted society are locked into a never-ending cycle of misery.
Corruption is economically defined as a practice or set of practices of dishonesty so widespread and powerful to interfere with the natural flow of process and equilibrium of free-market economic forces such as supply and demand. Whereas dictatorships or other undemocratic forms of government are by their own very nature corrupted, corruption is very much real in democracies as well. The general tendency of corruption is to create “oligopolies” – from the Greek words ‘oligos’ [few] and ‘polis’ [power] – that is market situations that are controlled or dominated by few. Oligopolies are, of course, similar to monopolies and more detrimental in many respects.
In order to expose and fight corruption, several watchdog agencies have sprouted all over the world in recent times. The most credible and thorough of them all appears to be Transparency International (TI), based in Berlin, Germany. TI is the only watchdog agency entirely financed by the private sector, and with a policy of emphatically refusing governmental contributions. It is also the largest, with over 85 chapters around the globe and surveying 64 countries. TI is the creator of the Corruption Perception Index (CPI) report that neatly locates each country surveyed on a score from 1 (very high level of corruption) to 10 (clean score). CPI findings are astounding and at the same time remarkable. They speak a lot about how government and institutions are perceived and how wealth, culture and lifestyle influence the development and spread of corruption through all levels of society. More than two-thirds of the 159 countries surveyed show a serious and worrisome level of corruption, and nearly half of them scored no better than 3. The worst, in fact, are Chad, Bangladesh, Turkmenistan, Myanmar and Haiti – also the poorest countries in the world.
On the other hand, wealth is no deterrent against corruption. For instance, in Canada and Ireland there is a marked increase in the level of corruption in 2005 over 2004 and 2003, whic has increased progressively over the past ten years. Canada scored an 8.4 and Ireland a 7.2 in 2005. The classification, from best to worse, of the G7+1 industrialized countries is as follows: U.K (8.6), Canada (8.4), Germany (8.2), U.S.A. (7.6), France (7.5), Japan (7.3), Italy (5.0) and with Putin’s Russia scoring a very low 2.4. The G7 are all eclipsed by the scores of the scandinavian countries, with Finland (9.6), Denmark (9.5), Sweden (9.2) and Norway (8.9).
The three winning runner-up are Iceland (9.7), Finland (9.6) and New Zealand (9.6) and the three worst countries, in descending order, are Haiti (1.8), Bangladesh (1.7) and Chad (1.7). Norway (8.9), Australia (8.7) and Austria (8.6) all registered improvements over 2004. China has scored a meager 3.2, quite a contrast with Hong Kong (8.3) and Taiwan (5.9).
Unfortunately, Central and South America, notorious powerhouses of corruption, have lived up to their reputation. Save and except for Chile that sets the example with an enviable score of 7.3, the rest of the pack lags well behind: Uruguay (5.9), Costa Rica (4.2), El Salvador (4.2), Colombia (4.0), Cuba (3.8), Brazil (3.7), Mexico (3.5), Peru (3.5), Honduras (2.6), Nicaragua (2.6), Bolivia (2.5), Ecuador (2.5) – and somebody should inform Hugo Chavez that Venezuela is the last at 2.3.
The lessons are clear: risk factors such as government secrecy, inappropriate influence of elite groups and distorted political finance apply to both wealthy and poorer countries, and no rich country is immune to the scourge of corruption. Stamping out corruption and implementing reforms are critical to realizing the crucial human and economic development goals that all people are entitled to.
Real Estate Chronicle
Thursday, November 24, 2005
Estates and Interests in Land.
Wednesday, November 23, 2005
On God and Riches.
While far away from me the idea of even remotely criticizing the rightful place of religion in society in terms of history, education and anthropological value, one recurrent economic theme is the change of perspective that today’s distribution of wealth has created vis-à-vis secular religious beliefs. This is so because the tenets of wealth and economics have changed, so that the religious values of yesterday relating to wealth may not be necessarily applicable to our world . That, of course, does not mean that religion has no relevance in today’s world – only that religion must be used carefully when applying its general principles to judge the economic life of our times.
The concept of wealth as seen through religion – especially Christianity - is tempered by the belief that all property belongs to God and that we are trustees – and only temporary at that – of God’s property. The purpose of this entrustment on the part of God is not so much for our own personal satisfaction but, rather, for fulfilling God’s purposes such as, for example, helping the poor and the needy. The pursuit of wealth in the ancient world was fraught with potential problems which made it easy to view those who possessed wealth with moral and spiritual skepticism. However, there are recognizably some important differences between ancient and modern economic systems that account for the strong cautions about wealth as they relate to the past.
The ancient economic system was largely centered around agriculture, limited commerce and trade with real estate as the predominant productive asset. More specifically, the pool of economic resources was relatively fixed, so that when one person became wealthy it was usually at the expense of someone else. Such an arrangement, naturally, set up numerous opportunities to attain wealth abusively by theft, taxation, or extortion. One of the most common instances of this abuse in the Roman World, for example, was for those who had resources to loan money to the poor at terms they could not repay, requiring what little land the poor owned as collateral. Then when the debtors inevitably defaulted, the lender appropriated their land. The debtors became tenant farmers or slaves or were reduced to dependence on charity. This form of taking advantage of the poor occurred regularly in the ancient world and is possibly the main reason as to why religion came to so frequently condemn exploitation of the poor. In these cases, literally, the rich became richer at the expense of the poor, and when someone was wealthy, more often than not, they acquired their riches through some immoral means. Thus, the wealthy were viewed with suspicion and great emphasis was placed on the potential temptations of becoming wealthy, because society then had so few morally legitimate avenues to acquire wealth.
This is obviously no longer the absolute case in the Post-Industrial Revolution era. Although it is certainly true that the poor continue to be exploited to a certain extent, we have shifted from a relatively immobile economy to a more versatile, vibrant model where wealth is being created instead of simply being transferred. In our economies of scale where the cost of producing an additional good is less than the good produced before it, every time a company manufactures or otherwise produces a certain good wealth is created, and every time a company sells that certain good that it has produced wealth is being redistributed. This is the main reason as to why, in contemporary society, the rich can become wealthy while at the same time the poor can also be better off.
It follows, therefore, that in a modern market economy wealth is constantly being created, so that it is possible for someone to become wealthy without necessarily succumbing to the temptations about which religion has warned humanity for centuries. Which, therefore, in a certain respect balances the Fear of God religion has instilled in man as it relates to wealth with the possibilities created by the redistribution of the Power of Money.
And which, furthermore, if memory does not falter me is precisely what brought the schism between spiritual and temporal powers and separation of Church and State – only said differently ...
Real Estate Chronicle
Monday, November 21, 2005
The ambivalence of U.S. policy towards China may be perhaps best characterized by the incident of the spy airplane back in 2001. While gathering intelligence off the coast of China, a U.S. Navy EP-3 electronic spy plane, piloted by Lt. Osborn collides in mid-air with a Chinese F-8 and is forced to make an emergency landing at Hainan Island. The Chinese pilot, Wang Wei, is killed in the incident. China charges that the U.S. plane illegally entered Chinese airspace, and detains the 24 U.S. crew members for 11 days. It demands that the U.S. take full responsibility for the incident and issue a full apology. In the end, the United States offers a letter in which it says it is "very sorry" for the loss of the Chinese pilot and "very sorry" that the aircraft landed in China without permission. The damaged U.S. airplane is not returned for three months. Together with the letter of apologies, however, China also gets a U.S. carrier battlegroup of the Seventh Fleet permanently stationed off the coast of Taiwan.
On the other hand, Chinese ambivalence towards the United States can be perhaps best described by the statement of a Chinese official to a visiting American delegation to Shanghai in 2001: "I surely hope that you and the American economy do well in this global slowdown, because your economic interest and your economic development are critical to the welfare of people in Shanghai and China.". This remarks comes at a time while China is intent at stealing U.S. military secrets from Martin Lockheed - and it's caught with both hands in the bag doing so.
And then, of course, American and Chinese joint ambivalence towards the rest of the world must be perhaps encapsulated in the philantropic website maintained at http://www.uschina.org/ where both sides are trying to convince the rest of us in English - and for those who do not get it the first time around, in Chinese - that seldom have there been in the history of humanity two great pals like the Bald Eagle and the Red Dragon. Well ... well ...
China's giant leap towards a Western-style, capitalistic economy presents an increasingly urgent set of challenges that must be resolved by the leading elite if they hope to sustain the miraculous economic growth, which has averaged eight percent a year for the past decade. When you consider that the People's Republic of China (PRC) has 1.3 billion people, more than four times the population of the United States, the implications of its radical economic transformation are sobering. In 2004 the Chinese added 1.8 million cars to their roads, bringing the national total to well over 10 million. At recent growth rates, the number could very well double every three to four years. Should car ownership ever match that in the United States (135 million vehicles in 2002), there would be about 600 million cars on China's roads - more than all the cars in the world today. A statistical comparison between the two giants compiled by the World Resource Institute of the United Nations reveals even more staggering figures:
CHINA vs. UNITED STATES
AREA : 3,705,820 square miles vs. 3,717,796 square miles
POPULATION : 1,288,700,000 vs. 291,500,000
DENSITY : per square mile 348 vs. 78
ENERGY CONSUMPTION per person : 880 Kg/oil per year vs. 7,960 Kg/oil per year
MEAT CONSUMPTION per person : 104 lbs. per year vs. 269 lbs. per year
PAPER CONSUMPTION per person : 73 lbs. per year vs.730 lbs. per year
AVERAGE NUMBER OF PERSON : 1.1 per room vs. 0.5 per room
WATER USE per person : 116,000 gals. per year vs. 484,500 gals. per year
TV SETS per 1,000 persons : 292 vs. 844
VEHICLES per 1000 persons : 16 vs. 774
Since its onset in 1949 the People's Republic has gone through a lot including a famine where 20 million to 30 million people died in the early 1960s; a cultural revolution that went on into a decade, and with a skyrocketing national suicide rate as well. And yet, never in the history of the world have so many people been lifted from poverty so rapidly. President Clinton, in one of his last speeches, said that 200 million people in China were lifted from absolute poverty from 1978 to about 1999. That's equivalent to about two-thirds of the entire population of the United States in twenty years. The economic achievements, therefore, are huge. But so are the problems. The factors of economic instability are many and worry the leadership. In fact, the leading elite justifies some of the repressive political measures precisely because of what they call "the factors of instability." These factors include a financial and banking system that is basically bankrupt, with bad loans out greater than the real net reserves of the entire banking system. There are perhaps between 80 million to 100-plus million people that are moving from the countryside on a kind of temporary contract labor into the Chinese cities. And yet a large numbers of urban unemployed are getting put out of business from non-competitive state enterprises. As a result China has got urban unemployed, rural unemployed coming into the cities, unsound financial system, and general resentment against a regime that has, in the past, grotesquely mismanaged things. And then, of course, there is the widespread problem of corruption that permeates every facet of society.
Indeed, corruption is not a Chinese characteristic per se. It has, however, developed in a world where old, antiquated and inefficient laws are not being replaced fast enough to keep up with the speed of present times, and the vacuum has to be somehow filled. Experts think that on one hand the economic opening will bring more outside influences and in a way more chaos to the country which is not a bad thing in some ways. But, conversely, experts agree that the leadership will try to keep a tight control so that, at the end of the day, there may actually very well be more human rights violations than ever before. There is also an imbalance of wealth between the thirty-five percent of the population that lives in the cities and the sixty-five percent inhabiting the countryside. There is a system of residence controls. If you are lucky enough to be born in a city - and registered as a city dweller - it's easier for you to get into university. You are in the city, you can work at all the large companies and government agencies in the city. If, conversely, you are registered as a rural person there are very severe restrictions on where you can live and work. And this is actually the biggest human rights problem in China today. You have a majority of this population of 1.3 billion that are, by law, second class citizens. Furthermore, there are the other matters of the more than 20 million people who have no social security net whatsoever to assist taking care of their basic needs, as well as the environmental concerns that the new era of industrialization is bringing up. Of the ten worst polluted cities in the whole world according to the World Environmental Agency, eight are in China. And, finally, the PRC accounts for 23 percent of the global population while supply of fresh water is less than 6 percent.
Yet, the social and economic improvements are huge as anyone who saw China in the '70's will confirm. Three decades ago there were no automobiles, no super markets, no highrise buildings. And there were no consumer goods to speak of. It was a Stalinist society, and a very poor Stalinist society at that. So the economic system has totally changed, and the private sector is now the dominant sector of the economy. It didn't exist at all as late as 1979. The political system has changed as well, albeit not nearly as drastically as the economic system. The China of the twenty-first century is a one-party state without a firm ideological foundation, more similar to Mexico under the PRI than Russia under Stalin. It is certainly difficult today to call China a Communist State, and the regime is no longer the party of workers and peasants. Mao Zedong would be unpleasantly surprised at how things got out of hand. But then, even this political transformation is nothing new to the Chinese. In fact, historically China has often gone through periods of consolidation followed by periods of weakening of the central authority. And the inequality of wealth is just a consequence of it all.
No issue is more pivotal and controversial in the U.S.-China relations than the question of Taiwan. On October 1, 1949 after nearly two decades of civil war, Chinese Communist Party leader Mao Zedong declared victory over the U.S.-supported Nationalists (Kuomintang or KMT) led by Chiang Kai-shek. Mao proclaimed the establishment of the People's Republic of China (PRC) and instituted a new communist system modeled after the U.S.S.R. After his defeat Chiang Kai-shek fled to the Chinese island of Taiwan, then called Formosa, along with two million Nationalist refugees. Taiwan is located about 100 miles off China's coast. There he established a "provisional" Nationalist capital in Taipei and declared martial law. The Nationalists claimed to be the sole legitimate government of all of China, and set up the same political bodies on Taiwan which had ruled on the mainland. Under Chiang's authoritarian leadership, the Nationalist government established a successful land reform program during the 1950s which helped transform the country from an agricultural to a commercial and industrial economic powerhouse.
It is difficult for Westerners to understand why Chinese are so adamant about reunification with Taiwan, until an example is brought up by the Chinese. "Think of California as an island off America's West Coast and inhabited by Americans but under a different regime. Wouldn't Washington want to seek reunification ?" The analogy made by Yang Jiechi, Chinese Ambassador to the United States, makes perfect sense. Taiwan is the PRC's unfinished civil war. They fought a civil war with this Nationalist government. They essentially won. The Nationalists escaped out to an island which the Chinese consider an integral part of China. And then, because of American support and other intervening factors, they never finished their civil war. In terms of the military, the PRC is also developing very rapidly. It is acquiring a modern aircraft and modern battleships. Its naval force and air force are developing so fast that China is now at the forefront of Asia's military innovations. Ambivalence exists both in the political relations of China and the U.S. with Taiwan as well as between China and the U.S. over Taiwan. China pursues a policy of "One country - Two systems" , a policy that is working well with Hong Kong and Macau after their return to the PRC. The United States pursues a strategy aptly called "Strategic Ambiguity": it recognizes Bejing as the only legitimate government while at all times investing in and supplying weaponry to Taiwan. And Taiwan's strategy is to court the United States while increasing its trade with the PRC, now amounting to over US $40 billion per year.
It is in this complex context of political and economic balances and counter-balances that the Eagle and the Dragon are eyeballing each others. A context certainly not for the faint of heart. And yet, in the geopolitical situation of Asia the United States and China make a very good team. Both are disdainful of absolutist chieftains the like of North Korea's Kim Il Sung, both want peace and relaxation in the region, both are fervent in their plight against terrorism and both are eager to improve trade and cultural exchange with each others. The Chinese - founders of civilization are now meeting and talking to the Americans - spearheads of modern society. Two great countries, two great people.
Will the Eagle and the Dragon find a common ground for peaceful co-existence and mutual understanding?
Real Estate Chronicle
Thursday, November 17, 2005
What makes a Realtor a Realtor.
Real Estate Chronicle
Saturday, November 12, 2005
The Funniest Real Estate Blunders.
- CENTRALLY LOCATED
"Location .. Location .. This property is conveniently located with Revenue Canada only two short blocks to the south, the hospital only one short block to the north and the cemetery right across the street."
- CENTRALLY LOCATED ... IN THE INTERIOR
"This apartment complex is located in the center of town, surrounded by all modern amenities and with Safeway only a short two-hour drive away".
- WHISTLES AND BELLS
"Furthermore this very fine house comes with all the whistles and bells you can possibly imagine, including the front door".
- HOW HIGH IS IT ?
"From the luscious living area step outside the large, stone-covered, wrap-around balcony where you can enjoy the most amazing, breathtaking, 360-degree view of Canada".
- LEAVE THEM IN THE CAR ...
"Additionally this open layout apartment comes with the exclusive use of one underground parking where you can securely park your car with your inlaws".
- ENGLISH AS A SECOND LANGUAGE ...
"The living room is bordered by the open wall which coupled by the crystal floor-to-ceiling divisory partition enhances the spaciousness and luminosity of the area so that practically anyone can be laid down".
- PERFECT FOR ROBINSON CRUSOE ...
"Enjoy the sunsets from the acreage of this wonderful, pristine island estate, with the ferries passing on the horizon once a week".
- THE FASTEST GUNS IN THE WEST ...
"This spectacular house was built by the famous Sahota Brothers, Amrit and Jill, in less than a month".
- A VERY SMALL MAID
"The kitchen communicates with an approximately 8' by 7' room that can be used as pantry or can easily be adhibited as living quarters for the maid".
- SHE IS GOING TO NEED A LADDER
"Grandma will no doubt enjoy the ceiling-mounted wall socket, perfect for plugging in the iron while watching TV".
- THIS ONE IS REALLY, REALLY NEW
"This fine property is still on the drawing board, construction will begin in mid-June and it's never been used before".
- LEAVE THEM IN THE GARAGE
"The detached garage is fully functional and self-sufficient and can be used to park your cars or as a guest suite for the inlaws".
- START YOUR HOME BUSINESS
"The manicured backyard which is second to none borders with the United States and is, therefore, a smuggler's paradise".
- A LITTLE TIGHT, PERHAPS ?
"Don't be fooled by the square footage. This studio will easily fit yourself, the wife, the children and your pets all in the same room".
- HOW MANY DO YOU NEED ?
"There is a master bedroom on the main floor, a master bedroom on the upper floor and a master bedroom downstairs. They will make a Frenchman pale".
And here are some very good reasons for hiring them:
- "With me real estate is not an art: it is an adventure !"
- "List with Bob Bye - The Guy with the Tie".
- "I am not only your Realtor! I am your boyfriend!"
- "I am not only passionate about real estate, not only passionate about your house: I am passionate about you !"
- "My marketing plan is very simple and efficient: I will present you the offers and then will dispose of them all".
- "My motto is not integrity, not credibility, not sincerity: my motto is you and me !"
- "Your friendly neighborhood expert. And I know the whole town too !"
- "I will get you the highest possible price - if not, it could not be done".
- "If I can' t sell your house in four months, by then you will stay with me for another four months".
Real Estate Chronicle
Wednesday, November 09, 2005
Fundamentals of Agency Law.
Saturday, November 05, 2005
The North American Consumer: an endangered Species ?
Real Estate Chronicle