Russia Offers 'Outstanding' Opportunities

Russia's public image has been seriously tarnished over recent months, with accusations of corruption, human-rights abuses and fraud becoming commonplace.

But investors willing to look through the headlines will see the country is improving and could provide impressive returns, Jochen Wermuth, founder of Greater Europe Fund, told CNBC.

"Russia presents two different faces these days. One is the disregard of civil rights and the rule of law… The other face is President Medvedev," Wermuth said.

"He very openly highlights Russia's shortcomings and urges his fellow citizens to fight corruption, backwardness, lack of human rights, election fraud, or drunkenness," he said.

"The outlook for rates of return is unusually good given the very negative perception of Russia among investors," Wermuth said.

Greater Europe Fund, which is focused on investing in Russia, recently won an award from for its September return of 16.71 percent. The fund has seen a 134.86 percent gain over the last 12 months and 212.22 percent over the year to date.

"The glass is at least half full and not half empty. On balance, Russia continues to move in the right direction. This creates outstanding investment opportunities," Wermuth added.

Many investors will likely remain wary of buying into Russian growth after high-profile incidents such as Hermitage Capital Management. Sergei Magnitsky, a lawyer who was imprisoned while representing the firm, died recently in prison while awaiting trail.

Dubai World Debt Gets No State Guarantee

The Dubai government disclaimed responsibility for the debts of its Dubai World conglomerate on Monday, crushing earlier assumptions by creditors that the Arab emirate would guarantee its liabilities.

"Creditors need to take part of the responsibility for their decision to lend to the companies," said Abdulrahman al-Saleh, director general of Dubai's department of finance. "They think Dubai World is part of the government, which is not correct."

United Arab Emirates stocks plunged on Monday as investors waited for clarity on Dubai's request for a six-month delay on repaying billions of dollars in debt issued by Dubai World and its Nakheel unit, developer of three palm tree-shaped islands.

"The government is the owner of the company, but since its foundation it was established that the company is not guaranteed by the government," Saleh explained on Dubai Television.

"It deals with all parties on this basis and it borrows based on ... its projects and not the guarantee of the government," he said.

Saleh said market reaction to last Wednesday's announcement by Dubai World, which initially shook global financial confidence, was exaggerated.

"The restructuring is a wise decision that is in the interest of all parties in the long term but might bother creditors in the short term," he declared.

The standstill agreement would affect about $5.7 billion of debt due to mature before the end of May.

The UAE central bank has promised additional liquidity to local banks, but Saleh said he doubted it would be required.

"I think banks are not at a stage where they need any extra liquidity from the central bank," he said.

Dubai World is one of the emirate's three big holding firms, along with Dubai Holding and Investment Corporation of Dubai.

Meanwhile, contagion effects for Abu Dhabi from the restructuring of Dubai World debt will be "unavoidable", ratings agency Moody's said, and the restructuring could lead to downgrades for United Arab Emirates bank ratings.

"The contagion effect for Abu Dhabi will be unavoidable, as doubts will be raised as to how Dubai is going to finance its growth," Moody's analysts said in a weekly note.

"The form of the proposed debt restructuring could increase the likelihood of downgrades of bank financial strength ratings (BFSRs) for the (UAE) banks that are already on review." Moody's said the potential default of quasi-sovereign Dubai World "changes long-held market assumptions regarding implicit government support of local credits".

Grand Theft Malaysia

The Port Klang Free Zone scandal may be big, but it is only the latest in a long line of Malaysian scandals going back to the early 1980s. Time Magazine quoted Daniel Lian, a Southeast Asia economist at Morgan Stanley in Singapore, saying that the country might have lost as much as U$100 billion since the early 1980s to corruption."

The scandals listed below are only a small sample of the looting of the country's coffers:

In July of 1983, what was then the biggest banking scandal in world history erupted in Hong Kong, when it was discovered that Bumiputra Malaysia Finance (BMF), a unit of Bank Bumiputra Malaysia Bhd, had lost as much as US$1 billion which had been siphoned off by prominent public figures into private bank accounts. The story involved murder, suicide and the involvement of officials at the very top of the Malaysian government. Ultimately it involved a bailout by the Malaysian government amounting to hundreds of millions of dollars.

Mak Foon Tan, the murderer of Jalil Ibraim, a Bank Bumi assistant manager who was sent to Hong Kong to investigate the disappearance of the money, was given a death sentence, and Malaysian businessman George Tan who had participated in looting most of the funds, was jailed after his Carrian Group collapsed in what was then Hong Kong's biggest bankruptcy, and a handful of others were charged. No major politician was ever punished in Malaysia despite a white paper prepared by an independent commission that cited cabinet minutes of Prime Minister Mahathir Mohamad giving an okay to a request to throw more money into the scandal in an effort to contain it.

That was just the first Bank Bumi scandal. The government-owned bank had to be rescued twice more with additional losses of nearly US$600 million in today's dollars. Ultimately government officials gave up and the bank was absorbed into CIMB Group, currently headed by Nazir Razak, the prime minister's brother. That scandal, which stretched over several years before its denouement in 1985, set the tone for 24 years of similar scandals related to top Malaysian officials and was the first to prove that in Malaysia, you can not only get away with murder, you can get away with looting the treasury as well.

Perwaja Steel, for instance, lost US$800 million and its boss, Eric Chia, a crony of Mahathir's, was charged with looting the company. He stood trial, but was acquitted without having to put on a defense.

In the mid 1980s, the Co-operative Central Bank, a bank set up to aid the Indian smallholder community, had to be rescued by Bank Negara, the country's central bank, after hundreds of millions of ringgit in loans granted to a flock of United Malays National Organisation and Malaysian Indian Congress politicians became non-performing. Some had never been serviced at all. Although the chief executive and general manager were charged with criminal breach of trust, none of the politicians were ever charged.

Before that, the Malaysian government was believed to have lost US$500 million in an attempt at Mahathir's urging to corner the London tin market through a company called Maminco, driving the world price of tin from US$4.50 per tonne to US$7.50. It then sought to cover up the loss by establishing a US$2 company called Mukawasa from which allocations of new share issues to the government's Employees Provident Funds' were diverted. Mukawasa expected to sell the shares at a windfall profit to hide the tin speculation.

Mahathir also was behind an attempt by the then governor of Bank Negara, the central bank, to aggressively speculate in the global foreign exchange market. Bank Negara ended up losing an estimated RM20 billion. The governor, Jaffar Hussein, and the head of forex trading, Nor Mohamed Yakcop were forced to resign.

There have been many other political and financial scandals since. In 2005, Bank Islam Malaysia, the country's flagship Islamic bank, reported losses of RM457 million mainly due to provisioning totaling RM774 million as a result of bad loans and investments incurred by its Labuan branch. Cumulatively, Bank Islam ran up nonperforming loans of RM2.2 billion, partly from mismanagement and poor internal controls but also "years of regulatory indifference fueled by the misconceived notion of an untouchable Bank Islam because it was a favorite child of the Malaysian government, being the first and model Islamic bank in the country and region," according to a December 19, 2005 article in Arab News.

"Bank Islam had a reputation in the market for being the spoilt child of the Malaysian Ministry of Finance; and the perception of the bank was more of a Muslim financial fraternity or government development financial institution," the report said.

In 2007, in what was called Malaysia's Enron scandal, the publicly traded Transmile Group Bhd, whose chairman was former MCA President and Cabinet Minister Ling Liong Sik, was caught having overstated its revenue by RM530 million. A pretax profit from Rm207 million in 2006 was actually a loss of RM126 million, and a pretax profit of 120 million in 2005 was a loss of RM77 million, causing the government postal company Pos Malaysia & Services Holdings Bhd to warn that its earnings for the 2006 financial year might be affected by the reported overstatement, as the postal group owned 15.3 percent of Transmile.

Over the years 2001 to 2006, the government had to spend billions to rescue seven privatized projects including Kuala Lumpur's two public transport systems, the perennially ailing Malaysia Airlines, the national sewage system and a variety of others that, in the words of one study, "had been privatized prematurely." The government also repeatedly bailed out highway construction concessionaires, all of them closely connected to Umno, to the tune of another RM38.5 billion.

In 2008, it was revealed that Rafidah Aziz, who had served as trade and industry minister for 18 years, had been peddling approved permits for duty-free car sales and allegedly lining her pockets. Two companies which didn't even have showrooms – one of which belonged to the husband of Rafidah's niece – received scores of permits. Although Rafidah came in for heavy criticism from within Umno, she remained in office until she was defeated in party elections.

In the 1960s, federal prosecutors in the United States who were attempting to jail the late labor boss Jimmy Hoffa for looting the Teamsters Pension Fund of millions of dollars with his cronies were puzzled by the fact that their revelations appeared to have little effect on the union's rank and file. It was because no matter how much money Hoffa and his cronies stole, there was always money left because the fund was so rich. That appears to be the case with Malaysia.

Mental and Physical Tortured by MACC

KUALA LUMPUR - Victims of torture by a government commission revealed the “mental and physical” pressure that they underwent following the death of an opposition member last week allegedly in the hands of the same group.

Tan Boon Wah was forced to stand for four hours by the Malaysian Anti-Corruption Commission that threatened to assault him repeatedly, according to Malaysian opposition members, which appeared in a report by Din Merican, a Malaysian-based independent news correspondent.

"They kept calling me stupid China man. They said that if I don't 'tell the truth', they will take away my wife and there would be no one to care for the children. But I did not give in," Tan said.

Ramon calls for review

Ramon Navaratham, an adviser to the MACC, grudgingly admitted that "no normal person can withstand the mental and physical pressure" of the MACC interrogation tactics and called for a review of the agency procedures. "Teoh's death is tragic and unnecessary," he said.

Navaratham referred to Teoh Beng Hock, 30, who was found dead on Thursday at the balcony of the Malaysian Anti-Corruption Commission building in Shah Alam, the capital of Selangor state controlled by the People's Alliance coalition of Anwar's Justice Party, the Democratic Action Party and the Pan Malaysian Islamic Party.

Well-placed sources and officials close to the MACC said Teoh was "manhandled and threatened" by investigators during a 10-hour interrogation as part of a political conspiracy to bring down opposition leaders, led by Anwar Ibrahim, and to implicate them for alleged misuse of funds.

"When he refused to do so, the officers dragged him to a window on the 14-story building and threatened to throw him out," the said the source who was not authorized to speak to media.

Teoh was to get married on the day his body was found. His fiancée is expecting their first baby and has vowed to raise the child as a symbol of her love for Teoh.

MACC officers claim that Teoh was not a suspect in any crime. But officers declined to answer why he was interrogated beginning late evening until the early hours of next day and that his lawyers were not allowed to be present.

'They are all the same'

The government pledged a thorough investigation on Teoh's death but few were willing to believe in that assurance. "They are all the same, the police can investigate but how many suspects have died in police lockups and nothing has been done. It will be no different this time," said Kesavan Munusamy, a 32-year old businessman.

Liew Chin Tong, an MP from DAP, said Teoh's death has revealed "the most sinister elements of the National Front government."

"In its attempt to implicate elected members of the opposition for corruption which would later pave the way for a coup d’ etat, the MACC has started killing our young."

“It is now our obligation to see that Malaysia is freed from the National Front misrule and justice is restored in our beloved nation,” he said. - The Inquirer, Manila

Meanwhile, Boon Wah who is also a Kajang Municipal Councillor was at the Selangor police headquarters last night to give his statement to assist investigations into Teoh's death. He was accompanied by his wife and lawyer.

Earlier, Selangor police chief Khalid Abu Bakar had advised Boon Wah to present himself at the police station since he had made a police report against the MACC last Saturday.

Boon Wah had earlier refused to give his statement to the police. - Reports by the Inquirer, Manila and Bernama

Mahathir squandered RM100 bil, says new book

Malaysia has squandered an estimated RM100 billion on financial scandals under the 22-year rule of Dr Mahathir Mohamad, according to a new book about the former prime minister.

According to Barry Wain, author of the soon-to-be launched ‘Malaysian Maverick: Mahathir Mohamad in Turbulent Times’, direct financial losses amounted to about RM50 billion.

This doubled once the invisible costs, such as unrecorded write-offs, were taken into account. The RM100 billion total loss was equivalent to US$40 billion at then prevailing exchange rates.

Barry, who is a former editor of the Asian Wall Street Journal, says most of the scams, which included a government attempt to manipulate the international tin price and gambling by Bank Negara on global currency markets, occurred in the 1980s.

‘Malaysian Maverick’ is the first independent, full-length study of Mahathir, who retired in 2003 after more than two decades as premier. The book will be published globally next week by Palgrave Macmillan.


Wain writes that the Mahathir administration, which took office in 1981 with the slogan, “clean, efficient, trustworthy”, was almost immediately embroiled in financial scandals that “exploded with startling regularity”.

By the early 1990s, he says, cynics remarked that it had been “a good decade for bad behaviour, or a bad decade for good behaviour”.

Secret military deal with US

The book also reveals that:

Mahathir, despite his nationalistic rants, signed a secret security agreement with the United States in 1984 that gave the Americans access to a jungle warfare training school in Johor and allowed them to set up a small-ship repair facility at Lumut and a plant in Kuala Lumpur to repair C-130 Hercules transport aircraft.
Mahathir used a secret fund of his ruling Umno to turn the party into a vast conglomerate with investments that spanned almost the entire economy.
Mahathir’s Umno financed its new Putra World Trade Centre headquarters in Kuala Lumpur partly with taxpayers money, by forcing state-owned banks to write off at least RM140 million in interest on Umno loans.
Wain, who is now a writer-in-residence at the Institute of Southeast Asian Studies in Singapore, however credits Mahathir with engineering the country’s economic transformation, deepening industrialisation and expanding Malaysia’s middle class.

But Mahathir had undermined state institutions, permitted the spread of corruption and failed to provide for Malaysia’s future leadership, he says.

$4.8 trillion - Interest on U.S. debt

NEW YORK (CNNMoney.com) -- Here's a new way to think about the U.S. government's epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

More than half. In fact, $4.8 trillion.

If that's hard to grasp, here's another way to look at why that's a problem.

In 2015 alone, the estimated interest due - $533 billion - is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

On the bright side - such as it is - the record levels of debt issued lately have paid for stimulus and other rescue programs that prevented the economy from falling off a cliff. And the money was borrowed at very low rates.

But accumulating any more interest on what the United States owes at this point is like extreme sport: dangerous.

All the more so because interest rates will rise when private sector borrowers return to the debt market and compete with the government for capital. At that point, the country's interest payments could jack up very fast.

"When interest rates rise even a small amount, the interest payments go up a lot because of the size of the debt," Konigsberg said.

The Congressional Budget Office, which made the $4.8 trillion forecast, already baked some increase in rates into the cake. But there is always a chance those estimates may prove too conservative.

And then it's Vicious Circle 101 - well known to anyone who has gotten too into hock with Visa and MasterCard.

The country depends heavily on borrowing to fund what it wants to do. But the more debt it racks up, the more likely it becomes that creditors could demand a higher interest rate for making new loans to the government.

Higher rates in turn make it harder to pay off the underlying debt because more and more money is going to pay off interest - money, by the way, which is also borrowed.

And as more money goes to interest, creditors may become concerned that the country can't pay down its principal and lawmakers will have less to fund all the things government is supposed to do.

"[P]olicymakers would be less able to pay for other national spending priorities and would have less flexibility to deal with unexpected developments (such as a war or recession). Moreover, rising interest costs would make the economy more vulnerable to a meltdown in financial markets," the CBO wrote in its most recent long-term budget outlook.

So far, that crisis of confidence hasn't happened. And no one can predict with any certainty whether or when it could occur.

But should it occur, the change could be abrupt.

That's because the government frequently rolls over - or refinances - the debt it has issued as it comes due.

In other words, when a Treasury bond or note matures, the government must pay the investor the face value on that debt. In order to do that, the Treasury borrows money to pay back the investor, which means the debt would be refinanced at whatever the going interest rates are at the time.

Just how much churn is there? Of late, a fair bit it seems. A Treasury borrowing advisory committee reported in early November that "approximately 40 percent of the debt will need to be refinanced in less than one year."

Since rates may well stay low over the next year, it's possible that debt could be refinanced at the same or even lower rates. But that situation won't last forever.

So what will Washington do?
To help mitigate the potential risk of rising rates, the Treasury has said it would start increasing the average maturity of the new debt it issues. That way the debt it refinances in the next couple of years will be locked in at lower rates for longer periods of time.

And the Obama administration has promised to produce a deficit-reduction plan that would aim to bring down annual deficits to roughly 3% of GDP over the next several years, below the 4% to 5% currently projected.

0:00 /1:34Uncle Sam's got his hand out
If that happens, the $4.8 trillion in interest payments that CBO estimates for the next decade could go down if interest rates don't increase as much as CBO expects.

"There will be less debt outstanding than if we don't get the deficit down. It may also reduce [the average interest rate on the debt] since less debt means less pressure on interest rates," said William Gale, co-director of the Tax Policy Center.

But whether they can do that within a few years of an economic recovery is another matter. "Even under the president's [2010] budget as evaluated by the CBO we do not get anywhere close to that," Gale said.

That could mean the president's 2011 budget proposals would have to make a lot of changes to get closer to the 3% goal. Unpopular changes like tax hikes and spending cuts.

Budget hawks hope the president will push for a deficit-reduction commission to come up with ways to cut the deficit and then propose legislation that lawmakers would only be able to vote for or against. The reason: There is no political will to make the tough calls. Especially in a mid-term election year.

Who made your iPhone?

TAIPEI, Nov 20 – Hourly wages below a dollar. Firings with no notice. Indifferent bosses. Labour brokers that leech away months of a worker’s hard-earned wages. A corporate shell game that leaves no one responsible.

Such conditions are widespread at the contract factories cranking out some of the most popular gadgets on the holiday season’s gift lists, according to labour rights activists and workers interviewed by GlobalPost.

Whether it’s your cherished iPhone, Nokia cell phone or Dell keyboard, it was likely made and assembled in Asia by workers who have few rights, and often toil under sweatshop-like conditions, activists say.

By the time a gadget reaches Apple’s flagship store on Fifth Avenue in New York City or any other US retailer, it may have passed through the hands of a heavily indebted Filipina migrant worker on the graveyard shift in Taiwan, a Taiwanese “quality control” worker who’ll soon be fired without warning, and a young Chinese worker clocking 80-hour weeks on a final assembly line, at less than a dollar an hour.

Recent years have seen a drumbeat of reports on such abuses. In 2006, in an audit following a British media report, Apple found that workers in a factory assembling iPods in China were working excessive overtime hours.

Earlier this year, the Pittsburgh-based National Labour Committee, a non-profit human rights group, alleged that workers at a supplier to Microsoft, Dell and other brands in Dongguan, China, were clocking mandatory 81-hour weeks, on average.

(Dell said in an email that a “corrective action plan” has since been developed after a joint audit of the firm with other customers. A Microsoft spokesperson said it was investigating the supplier firm and would make any “necessary improvements.”)

Embarrassed companies have vowed to do better. They’ve drafted “codes of conduct” for their Asian suppliers, and promised more factory audits to catch abuses.

But here’s the problem, say activists: While such codes may be great public relations, they’re not working to fix the problem.

Worse, the codes permit the big brands to pat themselves on the back, even as workers continue to be exploited in the shadowy world of Asian electronics supply chains.

“These codes of conduct and audits are new tools that every brand will have, and they feel so proud of themselves,” said Jenny Chan, a labour rights activist formerly with Hong Kong labour rights group Students and Scholars Against Corporate Misbehavior (SACOM).

“But the codes have limits. To see fundamental change, you have to get labour groups involved and gain the trust of workers. Otherwise it’s just a cat-and-mouse game between auditors and suppliers.”

The problem is compounded by a lack of transparency. Asian electronics supply chains are notoriously murky. Contractors shift orders across borders and between factories and subcontractors, and many major brands treat their supplier list as top-secret information.

That makes it difficult to pin down who’s making what for whom and, therefore, difficult to fix blame when allegations of abuse come to light. When a factory catches flak from labour rights groups and negative media coverage, the big customers often cut orders or sever business ties — a surgical strategy that activists say fails to address underlying, systemic problems in the industry.

Apple’s response: “We take corrective actions when required.”

Even by the industry’s own assessment, its codes are routinely ignored.

In its latest annual report, the Electronic Industry Citizenship Coalition (EICC) published results of joint audits in 2007 and 2008. (EEIC members employ some 3.4 million workers. Members include Apple, Dell and Hewlett-Packard.) It found rampant violations of its code of conduct on working hours and wages and benefits.

Or, take Apple’s own findings. In its latest “supplier responsibility” update, published in February 2009, Apple found that nearly 60 per cent of audited suppliers violated its code of conduct guidelines on work hours and days off.

Other common violations included under-paying for overtime and deducting salary as punishment. And Apple found a few factories that falsified records, employed under-aged labourers and hired workers who had paid recruitment fees exceeding the legal limit.

All of that raises a question: Why aren’t the big brands being tougher in enforcing their codes?

Apple insists it is doing a lot. “Our audits are done across all our suppliers,” said Apple spokesperson Jill Tan, in a phone interview. “It’s a pretty rigorous process, and we take corrective actions as and when required. We audit aggressively, and post all results on our website.”

The company’s code is a “dynamic document which we continually update,” Tan said, and audits are done both by Apple itself, and third-party experts.

Asked how Apple responds to those who say it’s hiding behind codes that are ineffective in securing workers’ basic rights, Tan said, “It’s not just a matter of posturing, we look into this very meticulously. To me, we’re pretty open. We don’t see how we can provide more information beyond what’s already available.”

“I’m not sure there are many manufacturers or vendors out there who audit as aggressively as we do,” said Tan. “I’m not sure there are many out there who take this as seriously as we do. Have you come across any other companies that provide this much detail in their audits?”

(Apple declined GlobalPost’s request to go beyond the public relations department and interview Bob Bainbridge, the firm’s director of social responsibility for suppliers.)

Dell also rejected the idea that industry codes aren’t effective. “We take exception to that,” said spokesman David Frink. “Given the size and breadth of the global supply chain, full implementation of these important standards is a long-term effort to which Dell is fully committed,” the firm said in a later email.

Our investigation

In May, GlobalPost covered reports of labour abuses at just one Taiwan electronics firm believed to supply Apple, Nokia and Motorola at its factories in Taiwan and China. Since then, we’ve interviewed 12 current and former workers at this same company. We heard the following new allegations:

* For Taiwanese workers, routine violations of Apple and industry codes of conduct on work hours, days off, overtime, worker complaint mechanisms and the right to organise;

* For Chinese workers, violations of a major electronic industry group’s code of conduct on all of the above, and allegations of under-aged labour;

* For Filipina migrant workers, “placement fees” far in excess of Taiwan regulations, with fees and deductions amounting to nearly a full year’s salary — a “core” violation of Apple’s code.

These allegations, which are documented throughout this series, are by no means limited to this one supplier. Taiwan’s labour broker system applies to many Southeast Asians who come to work on the island. And labour rights groups have done numerous studies of the scope of the problem.

But the news is not all bleak.

In our reporting, we heard sincere commitments to deal with these issues by frustrated executives who struggle with these complex economic realities.

We also learned of a groundbreaking project to improve conditions at a Taiwan supplier for HP that appeared to have excellent results. Though limited in scope, the project offers some degree of hope that the big electronics brands can do more to fix the problem. – GlobalPost/Reuters

From homeowner to tenant

CHICAGO (MarketWatch) -- Qualifying homeowners facing foreclosure will be able to stay in their homes -- as renters -- under a new program announced by Fannie Mae on Thursday.

The Deed for Lease Program is designed to help borrowers who aren't eligible or haven't been able to sustain other work-out solutions, including a modification, according to a news release.

Participating borrowers voluntarily transfer their property deed back to the lender; the lender then leases the house back to the borrower at a market rate for up to a year. After the period is up, there's a possibility of a term renewal or a month-to-month lease arrangement, the release said.

More aid for home buyersThe News Hub panel discusses Washington's new legislation that will extend more help to the jobless and to home buyers.
"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, vice president of Fannie Mae, in the release. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

To qualify, the home must be the borrower's primary residence, and he or she needs to be released from any subordinate liens on the property. The borrower also has to document that the new market rental rate doesn't exceed 31% of his or her gross income.

"This policy takes advantage of the fact that in many former bubble markets, ownership costs are likely to be far higher than the cost of renting an equivalent unit, if the homeowner purchased their home near the peak of the market. In many cases this gap can be dramatic," said Dean Baker, co-director of the Center for Economic and Policy Research, in a separate release.

"For example, the savings on a moderate-priced home purchased near the peak of the market in the Washington, D.C. area could be more than $1,300 a month. The gap between ownership costs and renting in the Los Angeles area could be almost $2,000 a month," he said. "Many homeowners who could not sustain mortgages based on the original purchase price, even with sharp reductions in interest rates, can afford the market rent."

A big step
Baker called the Deed for Lease Program a "very big step" toward giving families facing foreclosure more housing security.

"Families that like their home, their neighborhood, or the schools for their children will have the opportunity to stay in their house even after foreclosure," he said. "This is also good policy for neighborhoods that have been hard-hit by foreclosures. The Deed for Lease Program will keep the homes occupied rather than being an eyesore and a potential safety hazard."

But Baker does have one criticism of the program: He said the guaranteed lease period should be longer than a year -- possibly contingent on timely rent payments and proper upkeep. "Nonetheless, the new policy by Fannie Mae is an important step forward in dealing with the housing crisis," he said.

How to Use Futures Trading Strategies

Before making any investments, no matter what the investment vehicle, a person should know the market and understand how to use certain trading strategies to possibly turn a profit. Futures' trading is no exception, and a person should use caution when trading. There are certain trading strategies that have proven themselves over the long-term, but an investor still must understand the underlying investment and not just the strategy.

Step 1 : Go long on a futures contract. Going long is just trading verbiage for buying a futures contract and then holding it on the expectation that the price will rise. Then, you can sell the future at a profit.

Step 2 : Trade futures contracts on margin. This is where you borrow the money from a trading company and then use that money or credit to buy futures contracts. Generally, the trading will require that you deposit a percentage of the margin to secure the loan. The percentage by law has to be 50% or more. This is risky because the company can call the margin at anytime they choose, and you will be responsible for any deficit in trading price no matter the amount.

Step 3 : Use a spread strategy to trade futures contracts. This is where a trader can buy and sell futures contracts for the same commodity. For example, say there is a -05 price difference in the futures of pork belly contracts from one month to the next month. You expect the price to rise. You would then sell the current month's contract and buy the next months contract given that this expected rise in price makes the latter contract more profitable.

Step 4 : Utilize a butterfly-spread futures-trading strategy. In this example, you would buy a first-of-the-month contract, sell two middle-of-the-month contract and then buy an end-of-the-month futures contract.

Overseas students hit by Australia college closures

MELBOURNE, Nov 6 — Australia’s image as a top destination for foreign students suffered another setback today after four bankrupt colleges closed, leaving more than 2,000 students stranded.

Australia’s A$13 billion (RM40.49 billion) international student sector, the country’s third-largest export earner behind oil and coal, has come under fire after reports some colleges had taken payments for certificates and residency visas.

The issue has caused diplomatic discomfort for Australia, with Indian officials expressing concern over the treatment of Indian students, who make up the largest number of overseas students in Australia.

A spate of attacks on Indian students in Australia earlier this year also sparked angry protests in India and prompted Prime Minister Kevin Rudd to call his Indian counterpart to assure him of student safety.

Global Campus Management Group, which owns four private colleges in Sydney and Melbourne, was placed into voluntary administration yesterday.

India’s deputy high commissioner to Australia, V. K. Sharma, said an estimated 300 or so of the affected students were Indians and that the recent collapse of some colleges had led to a sharp fall in student arrivals from India.

“There was also a lot of fraud going on in the system,” he added.

He said the current shake-out of Australia’s education system was necessary to restore the confidence of overseas students, a process that could take a couple of years.

The Australian Education Union said greater regulation of the private colleges was needed.

“There are a growing number of private colleges collapsing and it’s the students who pay the price,” said union president Angelo Gavrielatos.

“The scrutiny of new and existing operators has not been adequate to ensure that they are financially viable and delivering a quality education to international and domestic students.” — Reuters

Can gold hit $1,500?

NEW YORK (CNNMoney.com) -- Gold investors are partying like it's 1849.

The price of the yellow precious metal hit yet another all-time high Wednesday. At nearly $1,100 an ounce, you have to wonder just how much higher gold can go in the next few months. Is it $1200? $1300? Heck, is $1500 out of the question?

The Gold Rush of 2009 has been stunning to watch. Unlike some prior gold price spikes, the "good" news about gold's recent rise is that it does not appear to be due to worries about an imminent meltdown of the financial system. Gold rallied in early 2008, for example, just as Bear Stearns was about to collapse.

Instead, gold has rallied recently as the dollar has weakened. Gold, along with other metals, such as silver and copper, and commodities, like oil, are benefiting from inflation fears.

Investors around the world have fled the dollar due to worries that the massive amounts of money pumped into the U.S. economy by Congress, the Treasury Department and the Federal Reserve will eventually lead to inflation.

Prior to this week though, many experts thought that the bump in gold had more to do with momentum traders taking advantage of these fears and simply riding a hot hand. But there is now growing evidence that real demand for gold is playing a role in the run as well.

Gold, unlike silver, copper and many other metals, does not have that much of an industrial use. But gold has often been considered the safest of safe havens when the dollar declines. As a hard, tangible asset of value, some investors buy gold as an alternative to the dollar.

The International Monetary Fund announced on Monday that it sold a huge chunk (200 metric tons) of gold to the central bank of India. Now there is chatter that other nations may also want to bulk up on gold.

"More central banks may look to move into gold and out of the dollar. There are some rumblings that it could be like a series of dominos now that India has taken the first step," said Darin Newsom, senior analyst with Televent DTN, a financial markets research firm based in Omaha.

Partly for this reason, Newsom said that it's not out of the question for gold to go as high as about $1,400 an ounce in the next year or so.

0:00 /2:32Cashing in on gold
Central banks don't appear to be the only big gold buyers. Mining companies are doing so as well.

With gold prices continuing to rise, some producers have announced plans to stop hedging as much (if it all) against the possibility of falling prices. To do that, producers are buying back gold from what is known as their hedge books.

Barrick Gold (ABX) said Monday that it bought back 1 million ounces in October, while AngloGold Ashanti (AU) also announced that day that it intends to reduce the size of its hedge book by 800,000 ounces a year over the next five years. More gold producers may follow suit.

"Gold producers are going to need to close their hedge books because for every dollar that the price of gold goes up, they lose a lot of money," said David Beahm, vice president of economic research with Blanchard & Company Inc., a New Orleans-based investing firm that specializes in gold and other precious metals.

This demand, coupled with more worries about inflation, is likely to lead gold significantly higher, Beahm said. He thinks gold could hit $1,150 by the end of this year and $1,500 by the end of 2010.

"There is no doubt that there will be inflation. It's not a matter of if but a matter of when. And when that happens gold will spike again," he said.

Now of course, it's probably a good idea to still have a healthy dose of skepticism about how much higher gold can go. After all, it was only a year ago that oil spiked above $140 a barrel and many commodity bulls were predicting that crude would hit $200 before long. That didn't happen.

If the economy is really in recovery mode, the Fed will eventually start raising interest rates from their current level of near zero. Once it does that, some of the inflation pressures should subside. That could take some of the air out of the gold run.

But there is also a good chance that gold could gain even more ground over the long haul even if the global economy gets back on track and the dollar strengthens again. It's simple Economics 101.

Marshall Berol, co-manager of the Encompass fund, a mutual fund that is currently investing heavily in commodity-producing companies, said many investors don't realize how much time and effort it takes to produce gold.

And instead of just watching gold trends from afar, Berol said he and his fellow co-manager like to visit projects of companies the fund owns to get a better sense of how supply is shaping up. They have a trip planned to Chile and Argentina next week, for example, to look at mining projects run by Exeter Resources (XRA), one of the fund's holdings.

So even if demand doesn't remain as robust as it is now, Berol thinks a low supply of gold should mean that prices will continue to move up.

"On a day-to-day basis, people talk about gold going up because of the dollar or oil," he said. "But the difficulties in finding significant new deposits is overlooked. Not only do you have to find it but determine how much there is and how you are going to get it out. Bringing new mines to production takes years."