Here is an infomrative and detailed video with analysis of the European debt crisis, which is being handled by the ECB using LTRO (Long Term Repurchase Operation), which is similar to QE1 and QE2 done by the Federal Reserve Bank in the USA. The debt levels around the globe are unprecedented in peacetime. The odds of restructurings and/or defaults are higher than most believe. When does debt become unsustainable? The video shows the debt levels of numerous countries have reached “problem” levels. Since the bill coming due in the form of maturing bonds is so large, policymakers in Europe have no easy way out. “Solutions” may include printing money to create inflation or debt restructurings/defaults; or a combination of the two. Chris Ciovacco of Ciovacco Capital Management compares healthy markets to the current state of affairs. Which investments tend to perform well during deflation/defaults/restructurings? Which investments tend to perform well during periods of inflation/money printing by central banks? What is a back-door bazooka? Studies by Kyle Bass of Hayman Capital Management.

Today in 2010, due to the global recession since 2008, there is a much higher supply of commercial real estate than its demand, and hence the prices are attractive and can be negotiated hard by interested buyers.

We expect that commercial real estate prices may correct by 10-20% in 2011 depending on the country and city. In general one can’t go wrong with buying commercial real estate (office space, rather than shopping malls) in big cities if the time frame is 5-10 years.

The risk-reward is more in commercial property than in residential property. Commercial real estate returns can give attractive over 5-10 year period; much better than you would get from residential real estate of the same proportion.

Location is very important in commercial real estate. Our experience has been that “it is better in general” to have a small space at a busy city-center/downtown place, than to a big space at a suburb.

London and New York are two cities that will deliver good returns despite recession if you can invest for 5-10 years. Irrespective of where you are in the world, see if you can invest in commercial property in high growth cities like Mumbai, New Delhi, Hong Kong, Shanghai, etc. These cities can deliver 5x returns in 10 years.

Buying, selling and evaluating commercial real estate is a complex process. If you are an investor, or an aspiring investor, banker or real estate professional, acquire a better understanding of commercial real estate by learning key terminology and quantitative concepts.

Commercial real estate is made up of all property that is for sale or rent. It does not include residential buildings. The property will appreciate as long as people are selling things and offering services to the public – using a brick and mortar set-up.

Given the low interest rates of today for 10-20 year loans, one can purchase commercial property on attractive terms.

Commercial real estate is characterized by six principles:

1. location
2. financing
3. timing of market cycles
4. leasing
5. ownership structure and
6. external factors.

From the perspective of the developer, lender and investor, there are five basic types of commercial real estate: office, industrial, retail, multi-family, and hotel.

Leasing commercial real estate is a process – a lot of ideas and knowledge that combine into a successful lease agreement that meets the needs of all the parties involved. Lease documents will likely contain new provisions to modify the established rent on day one of the lease.

Just like passing the gas station, the price of construction changing from one day to the next will force landlords to increase rent between the execution of the lease and the move in day.

But supply eventually begins to outstrip demand, causing rents to fall and capital values to tumble. Finally, a period of relatively little construction – like that experienced by many Western countries for the past several years – leads to under-supply and a rise in prices.

You could take up commercial real estate for either reselling after appreciation or for renting out to, say, retailers.

Office building leases can also be simple month to month rentals. Office centers also have facilities such as FedEx, UPS and other delivery companies that you may need and therefore good to know where they are located as well.

Please Note: The increasing use of the Internet for work and e-business is a factor to keep in mind. It reduces the demand for commercial real estate and probably shifts the demand to higher quality residential real estate. So you have to select locations that will remain important in the coming years. Commercial real estate is a long-term investment so please do your homework and find a property that can make you money over the long haul.

About the Author:  Shankar AVSB runs MyOrbit Online, of which MyOrbit.tv is a part. He is a real estate investor and follows real estate industry developments across America, Europe and Asia.  He is also leads 7Avenues, a private equity with ventures in Retail, Farming, Financial Services and MarketStar Capital, an investment services company. He can be contacted from here.

Michael Pento, senior economist at Euro Pacific Capital, and Dan Greenhaus, chief economic strategist with Miller Tabak, debate the issues in this clip.

I strongly disagree with Michael Pento, who says a depression should be encouraged in America. His view that the govt. should be as impotent as possible, is one of the most funny statements in the recent months. The need is to increase the money supply, not decrease it. The asset prices (home prices) will automatically fall down gradually in the coming years, based on demand-supply, but it will avoid a crash. Today is not the time to trim the role of the Govt.

If anything can prevent America from depression with deflation, it is the US Govt taking the lead with offering new economic stimulus packages – for infrastructure, for education, for vocational training, etc. Fiscal policy levers/incentives must be used to spur private sector growth, where in the govt. either becomes a buyer or actively sources buyers through export opportunities.

The need is for the govt. to take charge and play a major role. US businesses alone can’t do much. In addition, taxes on the rich must be renewed, not removed. Unless job growth happens, no real economic recovery is possible.
-Shankar

Create a massive fall in the market large enough to trigger stop-losses typically set up at 5% drop, and then buy blue chip stocks at 30% less price before they recover, sell Put Options at 1000% gain, blame it all on computers and trading algorithms. Some person or some company somewhere has walked away with billions in profits after this event. It looks very well planned. This event was most probably an example of higest form of market manipulation, a bold master stroke, though illegal and unethical.

To find answers, we need to check the money-trail.
Who all bought millions of DOW 10500 Puts for pennies a few days back? Those Put options would have got sold at 10 dollars each, making billions of dollars. It is very unlikely that the organizer is within the US, otherwise the SEC/FBI can find ways to take back the money. The organizers are most probably hedge funds, outside the US, in offshore locations. The sponsors had enough capital, and NYSE/NASDAQ trading algorithm expertise, to make the initial 250 point dent, and then the market forces took over, pushing everything down in free fall.

To those who say that since the prices came back to pre-fall levels, and no real damage was done — they clearly are not traders or have market positions or investors who have put stop losses.  Many traders and brokerages got blown out of their positions because their stops were taken out after 5% drop in the Index.  Many futures and options traders squared loss making positions, and opened hedging positions, only to be caught in the pull-back few minutes later.  It was violent – a financial hurricane. Such extreme movement of stock prices has cascading effects on margin positions which impact other non-related trades, commodity positions and forex, because all these market are inter connected.

In the short term, the conflict between inflation and growth always exists. As of now, there is no case for raising interest rates, at least till inflation is below 5%. The food price pressure will remain for the next 2-3 months.

Rangarajan sees price pressures due to inflation from growth, and oil prices will play a key role. 9% GDP growth for India is possible after the world economy has come out of recession in FY 2011-2012 by when the global trade will pick up.

This is an Insurance marketplace where insurance buyers can get quotes from various insurance sellers. Till now, there was no such website to provide this service in India. Based on feedback so far, the site offers a very useful service.

Many buyers of insurance products today want reliable services that be purchased online, or using phone plus email. The site is currently registering insurance sellers (agents/ brokers/ companies) for the sell side, and expects to have 100+ insurance sellers by December 2009, which will enable competitive offers to insurance buyers coming to the site. IndiaInsuranceMart.com

There is much to learn for any business, whether it is privately held or a public-listed.

Read the specific analysis here: Lessons From Satyam Investor Issues 

Goldman Sachs has posted a quarterly loss of $2.1 billion, or $4.97 per share, on net negative revenue $1.58 billion, down from a profit of $7.01 per share in the same quarter last year. Results for the entire year weren’t actually all that bad; the i-bank posted a profit of $2.3 billion, or $4.47 per share, on revenue of $22.2 billion.

Though some may say its down from an $11.6 billion profit last year, but if you see it with a “grounded perspective”, most of Goldman Sach’s competition is in tatters, or buried already.

To us, a surviving and standing Goldman Sachs represents strength. And they have managed to be significantly less exposed to much of the sub-prime crisis and its toxic derivatives.

More than that, Goldman Sachs has the belief to battle it out. If anyone on Wall Street can do it, it has to be Goldman Sachs. And at their current valuation, they are still a ‘buy’!

GSIBM: Graham School of Investing & Business Management

http://GSIBM.com

It could be considered as an online b-school that’s very practical in its approach, and aims to build business leaders. The program is based on successful business teachings by Ben Graham (and followed by Warren Buffet to produce financial results we all know).

The program has been carefully designed after extensive market research on the business knowledge needs of working professionals at various levels, and it will address a large unmet need.

The program will help working professionals in their career growth with the wide coverage planned: from Finance & Investing, to Sales & Marketing, and Legal Contracts, etc.

You are the among first to get this news, and it will be great if you can share it with others who may be interested, and also bookmark the website: http://GSIBM.com
Best Wishes,
Shankar AVSB for MyOrbit Team