Saturday, June 14, 2008
CapitaLand Looking For Distressed Assets
Source : The Business Times, June 14, 2008
It is on the lookout in Japan, China to help its expansion in these markets
Capitaland Ltd, South-east Asia's biggest developer, is looking for distressed assets in Japan and China to help its expansion in the two markets, chief executive officer Liew Mun Leong said.
The developer already runs two property funds in Japan and teamed up with Mitsubishi Estate Co in a Tokyo project worth as much as US$1.5 billion. It runs seven funds in China, and developed office and retail complexes under the Raffles City brand in Shanghai and Beijing.
Mr Liew: There will be developers who are under stress and need money
'We are always on the lookout,' Mr Liew said in an interview in Beijing late on Thursday. 'There will be developers who are under stress, they got land bank and they need money.'
The Singapore developer is expanding in new markets to broaden its revenue base beyond its home market of 4.6 million people. It's also seeking distressed assets as rising energy and commodity prices and a slowing global economy add to financial stress on companies and stoke defaults worldwide.
The global default rate may rise to 5 per cent by the end of 2008 and reach 6.1 per cent by April 2009, Moody's Investors Service said last month. The number of corporate defaults worldwide this year has already exceeded the total in 2007, according to Standard & Poor's. Borrowers have defaulted 28 times on US$18.9 billion of debt, compared with 22 last year and 30 in all of 2006, S&P said.
CapitaLand is seeking distressed assets in China as the country raised reserve requirements for banks for the fifth time this year.
Chinese banks must put aside a record 17 per cent of deposits as reserves starting on June 15, rising to 17.5 per cent beginning on June 25, the People's Bank of China said on June 7. Investors are also buying distressed assets as banks and brokerages globally raise capital after booking US$391.4 billion of writedowns and credit losses related to sub-prime mortgages.
CapitaLand said in a May 14 presentation that it has a portfolio of 114 malls, including 73 in China and 7 in Japan. The developer said that its assets under management, including real estate investment trusts and funds, rose $1.4 billion to $19.1 billion since the start of the year.
Asked about his outlook on the Singapore property sector, Mr Liew said that he expected the mid-market and lower-end home prices in Singapore to be little changed this year.
Demand for homes is still 'holding very well', Mr Liew said.
Prices of mid-market and lower-end homes, usually bought by residents upgrading from government-built apartments, have risen 3 per cent to 5 per cent this year, he said.
'This year, the lower end will be marginally up or down,' Mr Liew said. 'Unless it affects the affordability of the buyers so badly, there is still demand. Our unemployment has gone down and economy in Singapore is good.' Home sales in Singapore, the fastest-growing market in 2007, are slowing as confidence among prospective buyers were eroded by the sub-prime mortgage crisis in the US and the contraction in global credit markets. The economy may grow as little as 4 per cent, the slowest since 2003, after expanding 7.7 per cent last year, the government said.
In the first quarter, residential sales fell to 787 units from 1,449 in the previous three months, according to the city's Urban Redevelopment Authority.
CapitaLand said in January that it plans to offer fewer homes for sale this year in Singapore, between 800 and 1,000, from 1,200 in 2007. It also said that prices may rise as much as 10 per cent. City Developments Ltd, Singapore's second-biggest developer, said last month that it was delaying sales of new residential projects.
Home prices in Singapore rose 3.8 per cent in the first quarter, the smallest gain in a year, after rising 31.2 percent in 2007. -- Bloomberg
It is on the lookout in Japan, China to help its expansion in these markets
Capitaland Ltd, South-east Asia's biggest developer, is looking for distressed assets in Japan and China to help its expansion in the two markets, chief executive officer Liew Mun Leong said.
The developer already runs two property funds in Japan and teamed up with Mitsubishi Estate Co in a Tokyo project worth as much as US$1.5 billion. It runs seven funds in China, and developed office and retail complexes under the Raffles City brand in Shanghai and Beijing.
Mr Liew: There will be developers who are under stress and need money'We are always on the lookout,' Mr Liew said in an interview in Beijing late on Thursday. 'There will be developers who are under stress, they got land bank and they need money.'
The Singapore developer is expanding in new markets to broaden its revenue base beyond its home market of 4.6 million people. It's also seeking distressed assets as rising energy and commodity prices and a slowing global economy add to financial stress on companies and stoke defaults worldwide.
The global default rate may rise to 5 per cent by the end of 2008 and reach 6.1 per cent by April 2009, Moody's Investors Service said last month. The number of corporate defaults worldwide this year has already exceeded the total in 2007, according to Standard & Poor's. Borrowers have defaulted 28 times on US$18.9 billion of debt, compared with 22 last year and 30 in all of 2006, S&P said.
CapitaLand is seeking distressed assets in China as the country raised reserve requirements for banks for the fifth time this year.
Chinese banks must put aside a record 17 per cent of deposits as reserves starting on June 15, rising to 17.5 per cent beginning on June 25, the People's Bank of China said on June 7. Investors are also buying distressed assets as banks and brokerages globally raise capital after booking US$391.4 billion of writedowns and credit losses related to sub-prime mortgages.
CapitaLand said in a May 14 presentation that it has a portfolio of 114 malls, including 73 in China and 7 in Japan. The developer said that its assets under management, including real estate investment trusts and funds, rose $1.4 billion to $19.1 billion since the start of the year.
Asked about his outlook on the Singapore property sector, Mr Liew said that he expected the mid-market and lower-end home prices in Singapore to be little changed this year.
Demand for homes is still 'holding very well', Mr Liew said.
Prices of mid-market and lower-end homes, usually bought by residents upgrading from government-built apartments, have risen 3 per cent to 5 per cent this year, he said.
'This year, the lower end will be marginally up or down,' Mr Liew said. 'Unless it affects the affordability of the buyers so badly, there is still demand. Our unemployment has gone down and economy in Singapore is good.' Home sales in Singapore, the fastest-growing market in 2007, are slowing as confidence among prospective buyers were eroded by the sub-prime mortgage crisis in the US and the contraction in global credit markets. The economy may grow as little as 4 per cent, the slowest since 2003, after expanding 7.7 per cent last year, the government said.
In the first quarter, residential sales fell to 787 units from 1,449 in the previous three months, according to the city's Urban Redevelopment Authority.
CapitaLand said in January that it plans to offer fewer homes for sale this year in Singapore, between 800 and 1,000, from 1,200 in 2007. It also said that prices may rise as much as 10 per cent. City Developments Ltd, Singapore's second-biggest developer, said last month that it was delaying sales of new residential projects.
Home prices in Singapore rose 3.8 per cent in the first quarter, the smallest gain in a year, after rising 31.2 percent in 2007. -- Bloomberg
Prime Condo Prices Heading For Long, Gentle Decline
Source : The Business Times, June 14, 2008
Cushman model shows subdued market until 2012 but firm argues it's still a good time to buy
The prices of condos and private apartments in the Core Central Region (CCR) will inch downwards and are unlikely to touch their recent peaks for almost the next four years, a model developed by Cushman & Wakefield (C&W) shows. The extent of the fall will depend on how slowly the Singapore economy grows, but C&W expects these median prices to drop between 8 per cent and 17 per cent from their peak of Q1 2008, before recovering by some time in 2012.
Even so, it argues that now may be a good time to look at buying into new developments, as the developers are unlikely to slash prices dramatically. Instead, a gentler decline is on the cards.
The trigger for this is 'there's still a lot of private housing supply', says C&W's head of forecasting Lee Chong Yong, who developed the model.
Mr Lee points to the Urban Redevelopment Authority's projections that about 8,000 non-landed private homes will be completed this year, followed by another 12,000 units next year, around 16,000 in 2010, and some 20,000 in 2011, before the supply eases to around 8,000 units again in 2012.
'Some of these units have not been launched yet. As time goes on, the unsold or yet-to-be-sold stock will keep creeping up, until 2011. The extent to which there will be downward price pressure from this will depend on the pace of economic growth. The stronger the economic growth, the faster the supply can be absorbed,' Mr Lee says.
Assuming Singapore's GDP grows at a rate of 4 per cent a year between 2008 and 2012, the median per square foot (psf) price for non-landed private homes in CCR - which includes the prime districts 9, 10 and 11, Downtown Core location and Sentosa Cove - will fall a total of 17 per cent between the Q1 2008 high and Q1 2012.
Based on a higher 5 per cent GDP growth rate, the price decline will be a lower 12 per cent over the same period.
If GDP grows at 6 per cent, the median price will decline 8 per cent between early 2008 and Q3 2009 before recovering back to the Q1 2008 high by end-2012.
C&W also tracked developers' sales in 255 new condo projects across Singapore and constructed an islandwide non-landed private residential new sales price index, which showed a 2.2 per cent decline between the peak in December last year and May this year.
'From the start of the credit crunch in August 2007 through to May 2008, developers of only 10 per cent of the 255 new condo projects tracked have cut their prices by more than a fifth,' C&W said.
C&W argues that 'compared to the 1997-1998 Asian crisis, today's falling prices are at present moderate without any signs of panic from the developers'. During the Asian crisis, most developers cut prices by at least 20 per cent while some reduced asking prices by up to 40 per cent in 12 months, it said.
The property consultancy group says 'now would be a good time to consider buying into new developments'. It also notes that expats living in Districts 9, 10 and 11 have seen a doubling of rents over the past two years, while sale prices of many condos are starting to see a slow price decline. 'For expats expecting to stay in Singapore, it would be a good time to consider buying (a condo) to take advantage of this short-term dip in the market,' C&W's head of residential Connie Looi says.
But JPMorgan analyst Christopher Gee gave a different view, saying that compelling values were needed to get buyers back to the market. 'The fear of making a purchase now, only to have prices fall later, is what's holding buyers back at this stage. Developers too don't want to sell too cheap; if prices recover, then they would have missed out on making bigger profits.'
One property market watcher said that tempting buyers back would require mass-market condos to be launched at $600-$650 psf on average, compared with a price of $700-$800 psf last year.
In the mid-range category, a freehold condo in the Balestier area for instance would today need to be priced at $900-plus psf, instead of the $1,000-plus psf they're still being marketed at, based on last year's pricing. For freehold projects in the prime districts 9,10 and 11, what would lure buyers back today would be an average price of no more than $3,000 psf, instead of $3,500-$4,000 psf last year, another industry observer said.
Giving his take, an experienced property industry player said: 'How Singapore home prices will pan out will depend on both internal and external factors. Residential property prices have fallen in many markets across the globe, such as the US, Europe, UK, Australia, Vietnam and China. If we want to be in line with the rest of the world, we'll also see some slide.'
Cushman model shows subdued market until 2012 but firm argues it's still a good time to buy
The prices of condos and private apartments in the Core Central Region (CCR) will inch downwards and are unlikely to touch their recent peaks for almost the next four years, a model developed by Cushman & Wakefield (C&W) shows. The extent of the fall will depend on how slowly the Singapore economy grows, but C&W expects these median prices to drop between 8 per cent and 17 per cent from their peak of Q1 2008, before recovering by some time in 2012.
Even so, it argues that now may be a good time to look at buying into new developments, as the developers are unlikely to slash prices dramatically. Instead, a gentler decline is on the cards.
The trigger for this is 'there's still a lot of private housing supply', says C&W's head of forecasting Lee Chong Yong, who developed the model.
Mr Lee points to the Urban Redevelopment Authority's projections that about 8,000 non-landed private homes will be completed this year, followed by another 12,000 units next year, around 16,000 in 2010, and some 20,000 in 2011, before the supply eases to around 8,000 units again in 2012.
'Some of these units have not been launched yet. As time goes on, the unsold or yet-to-be-sold stock will keep creeping up, until 2011. The extent to which there will be downward price pressure from this will depend on the pace of economic growth. The stronger the economic growth, the faster the supply can be absorbed,' Mr Lee says.
Assuming Singapore's GDP grows at a rate of 4 per cent a year between 2008 and 2012, the median per square foot (psf) price for non-landed private homes in CCR - which includes the prime districts 9, 10 and 11, Downtown Core location and Sentosa Cove - will fall a total of 17 per cent between the Q1 2008 high and Q1 2012.
Based on a higher 5 per cent GDP growth rate, the price decline will be a lower 12 per cent over the same period.
If GDP grows at 6 per cent, the median price will decline 8 per cent between early 2008 and Q3 2009 before recovering back to the Q1 2008 high by end-2012.
C&W also tracked developers' sales in 255 new condo projects across Singapore and constructed an islandwide non-landed private residential new sales price index, which showed a 2.2 per cent decline between the peak in December last year and May this year.
'From the start of the credit crunch in August 2007 through to May 2008, developers of only 10 per cent of the 255 new condo projects tracked have cut their prices by more than a fifth,' C&W said.
C&W argues that 'compared to the 1997-1998 Asian crisis, today's falling prices are at present moderate without any signs of panic from the developers'. During the Asian crisis, most developers cut prices by at least 20 per cent while some reduced asking prices by up to 40 per cent in 12 months, it said.
The property consultancy group says 'now would be a good time to consider buying into new developments'. It also notes that expats living in Districts 9, 10 and 11 have seen a doubling of rents over the past two years, while sale prices of many condos are starting to see a slow price decline. 'For expats expecting to stay in Singapore, it would be a good time to consider buying (a condo) to take advantage of this short-term dip in the market,' C&W's head of residential Connie Looi says.
But JPMorgan analyst Christopher Gee gave a different view, saying that compelling values were needed to get buyers back to the market. 'The fear of making a purchase now, only to have prices fall later, is what's holding buyers back at this stage. Developers too don't want to sell too cheap; if prices recover, then they would have missed out on making bigger profits.'
One property market watcher said that tempting buyers back would require mass-market condos to be launched at $600-$650 psf on average, compared with a price of $700-$800 psf last year.
In the mid-range category, a freehold condo in the Balestier area for instance would today need to be priced at $900-plus psf, instead of the $1,000-plus psf they're still being marketed at, based on last year's pricing. For freehold projects in the prime districts 9,10 and 11, what would lure buyers back today would be an average price of no more than $3,000 psf, instead of $3,500-$4,000 psf last year, another industry observer said.
Giving his take, an experienced property industry player said: 'How Singapore home prices will pan out will depend on both internal and external factors. Residential property prices have fallen in many markets across the globe, such as the US, Europe, UK, Australia, Vietnam and China. If we want to be in line with the rest of the world, we'll also see some slide.'
US Homes Facing Foreclosure In May Up 48%
Source : The Business Times, June 14, 2008
WASHINGTON - Soaring foreclosures are continuing to raise questions about the mortgage industry's claims that they are making a dent in the US housing crisis.
Foreclosure filings last month were up nearly 50 per cent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 per cent from 176,137 in the same month last year and up 7 per cent from April, foreclosure listing service RealtyTrac said on Friday.
Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short
The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.
'It's clear that these voluntary efforts in and of themselves cannot really make a dent,' said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America.
'Government intervention is going to be necessary.' Mark Zandi, chief economist of Moody's Economy.com who also serves as an adviser to Republican John McCain's presidential campaign wrote earlier this week that 'the Bush administration's efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.'
A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 per cent of all US homes.
Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as US$300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.
A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup, foreclosures climbed to 1.23 per cent of all loans in March from 0.9 per cent in October.
In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding 'significant limitations' with data collected by trade groups like Hope Now.
'Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness,' Mr Dugan said.
'They were typically responses to surveys that produced aggregate, unverified results from individual firms.'
The comptroller's report found that 2.7 per cent of seriously delinquent mortgages had been modified as of March, up from 1.8 per cent in November 2007.
The industry has continued to favour repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.
Democratic Rep Barney Frank said this week that Dugan' analysis shows that 'much more aggressive action is needed.'
The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing US economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.
Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 per cent this week, the highest level in nearly eight months and up sharply from 6.09 per cent last week.
According to the RealtyTrac report, one in every 483 US households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.
Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.
Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, California, and the Cape Coral-Fort Myers area in Florida.
Irvine, California-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.
In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.
Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. 'I don't think we've seen the high point,' he said.
About 50 to 60 per cent of borrowers who receive foreclosure filings are likely to lose their homes, Mr Sharga said. The rest are likely to be able to sell or refinance.
As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.
Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.
Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 per cent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.
In some neighbourhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that's a positive for the real estate market, buyers in other parts of the country are still holding back.
'I think a lot of people are waiting to see if we really have hit the bottom,' Mr Sharga said.
Lehman Brothers economist Michelle Meyer said in a report on Thursday that US home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be 'feeble.' Home prices, she wrote, are still expected to fall another 10 per cent by the end of 2009. -- AP
WASHINGTON - Soaring foreclosures are continuing to raise questions about the mortgage industry's claims that they are making a dent in the US housing crisis.
Foreclosure filings last month were up nearly 50 per cent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 per cent from 176,137 in the same month last year and up 7 per cent from April, foreclosure listing service RealtyTrac said on Friday.
Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far shortThe latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.
'It's clear that these voluntary efforts in and of themselves cannot really make a dent,' said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America.
'Government intervention is going to be necessary.' Mark Zandi, chief economist of Moody's Economy.com who also serves as an adviser to Republican John McCain's presidential campaign wrote earlier this week that 'the Bush administration's efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.'
A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 per cent of all US homes.
Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as US$300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.
A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup, foreclosures climbed to 1.23 per cent of all loans in March from 0.9 per cent in October.
In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding 'significant limitations' with data collected by trade groups like Hope Now.
'Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness,' Mr Dugan said.
'They were typically responses to surveys that produced aggregate, unverified results from individual firms.'
The comptroller's report found that 2.7 per cent of seriously delinquent mortgages had been modified as of March, up from 1.8 per cent in November 2007.
The industry has continued to favour repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.
Democratic Rep Barney Frank said this week that Dugan' analysis shows that 'much more aggressive action is needed.'
The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing US economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.
Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 per cent this week, the highest level in nearly eight months and up sharply from 6.09 per cent last week.
According to the RealtyTrac report, one in every 483 US households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.
Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.
Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, California, and the Cape Coral-Fort Myers area in Florida.
Irvine, California-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.
In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.
Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. 'I don't think we've seen the high point,' he said.
About 50 to 60 per cent of borrowers who receive foreclosure filings are likely to lose their homes, Mr Sharga said. The rest are likely to be able to sell or refinance.
As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.
Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.
Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 per cent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.
In some neighbourhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that's a positive for the real estate market, buyers in other parts of the country are still holding back.
'I think a lot of people are waiting to see if we really have hit the bottom,' Mr Sharga said.
Lehman Brothers economist Michelle Meyer said in a report on Thursday that US home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be 'feeble.' Home prices, she wrote, are still expected to fall another 10 per cent by the end of 2009. -- AP
Greenspan Sees US Recession Risk Lessening
Source : Channel NewsAsia, 14 June 2008
MEXICO CITY - Former Federal Reserve chairman Alan Greenspan told the Latin American Economic Forum here Friday that he sees a reduced possibility of a deep recession in the United States.
"I think the worst is over," Greenspan said of US economic woes, speaking via video-conference from Washington.
There is now a "reduced possibility" of a deep recession, the former Fed oracle said, after telling the Financial Times late last month that a US recession remained a probability.
Greenspan told the paper he believed "there is a greater than 50 percent probability of recession," noting, however, that "that probability has receded a little."
He also told the paper that the likelihood of a severe recession had "come down markedly" but added it was too soon to tell whether the worst was already over.
The US economy grew at an annual 0.9 percent pace in the first quarter of the year, the government said in late May, in an upward revision that calmed the nerves of some economists.
The Commerce Department initially pegged first-quarter gross domestic product (GDP) growth at 0.6 percent, the same lackluster pace as the 2007 fourth quarter.
The revision, in line with expectations, bolsters the stance of some economists who believe the world's largest economy will avoid a recession despite a deep housing slump, a related credit crunch and soaring oil prices.
A recession, which last hit the US in 2001, is typically defined as two straight periods of negative economic activity. The Federal Reserve has been trying to avert an economic slump by aggressively slashing interest rates. - AFP /ls
MEXICO CITY - Former Federal Reserve chairman Alan Greenspan told the Latin American Economic Forum here Friday that he sees a reduced possibility of a deep recession in the United States.
"I think the worst is over," Greenspan said of US economic woes, speaking via video-conference from Washington. There is now a "reduced possibility" of a deep recession, the former Fed oracle said, after telling the Financial Times late last month that a US recession remained a probability.
Greenspan told the paper he believed "there is a greater than 50 percent probability of recession," noting, however, that "that probability has receded a little."
He also told the paper that the likelihood of a severe recession had "come down markedly" but added it was too soon to tell whether the worst was already over.
The US economy grew at an annual 0.9 percent pace in the first quarter of the year, the government said in late May, in an upward revision that calmed the nerves of some economists.
The Commerce Department initially pegged first-quarter gross domestic product (GDP) growth at 0.6 percent, the same lackluster pace as the 2007 fourth quarter.
The revision, in line with expectations, bolsters the stance of some economists who believe the world's largest economy will avoid a recession despite a deep housing slump, a related credit crunch and soaring oil prices.
A recession, which last hit the US in 2001, is typically defined as two straight periods of negative economic activity. The Federal Reserve has been trying to avert an economic slump by aggressively slashing interest rates. - AFP /ls
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