The Federal Reserve in the United States has now cut their prime interest rate three times in as many weeks in an attempt to stave off a recession that many believe has already arrived. Unfortunately the US Real Estate market, which is dominated by long term fixed rate mortgages will not benefit from these cuts in the same way as home-owners in European countries do.

The problem lies in the historic nature of mortgage lending which varies considerably in the US from the standard model used across Europe. In the US it is commonplace to take out a mortgage with a twenty-five year fixed rate at the time of purchase, rather than rely on the fluctuating standard variable rate mortgage that is more commonplace in the UK and across Europe.

The resulting affect of an interest rate cut in the UK would immediately see a benefit to existing home-owners in terms of lowering their monthly repayments, whereas in the US a rate cut only provides a stimulus to new borrowing that can be now be obtained a the new, lower rate. Whilst this makes first time borrowers more likely to step into a weak real estate economy, the total affect has less of an impact on consumer spending than a similar rate cut by the E.C.B. or the Bank of England.

One thing is certain though. A recession in the US is very bad news for the global economy and whilst the sub-prime credit crisis which originated in the US may have little direct effect on the economies in Europe, the knock-on effect of a US recession has historically seen recession across the major economies around the world.

The question is then, why are the European Central Bank and the Bank of England refusing to move on interest rates? Surely a cut in the E.C.B rate would take pressure off the dollar which in turn would have a positive affect on the price of oil and help cut rising energy costs across the globe. It would also stimulate both the british and European property sectors, who are currently balancing of the knife edge of a collapse that hasn’t been seen in the UK since 1989.

Maybe the European Union is too diverse an economy and it is this, that is holding back the E.C.B. from action. It has always been asserted that the lack of mobility of labour in the E.U. could be a source of keeping the economies of the members on different inflationary paths, making it difficult for the central bank to act decisively on interest rate policy when by doing so, one members economy may benefit to the detriment of another. By doing nothing however, the ECB stand the risk of pushing the property sectors in many countries into decline. It can already be seen in markets such as Spain, where any fresh impetus from overseas buyers due to recent falls in property prices, has been extinguished by the strengthening Euro against the pound. As British buyers make up over 65% of this holiday property market, the nullification of any price adjustments has dampened what was already a pretty ‘wet’ market.

What, if any, action is taken by the E.C.B. will have to wait until they meet again at the beginning of April . Until then, it can be assumed that the longer they delay, the worse the overall slowdown may become.

About the Author

Neil Ebsworth is the founder of AMLASpain, the Spanish MLS for property for sale in Spain and rentals Spain

If you are a pregnant woman wanting to know the gender of your baby, - see below, to the cup of tea you will need after the delivery, the Chinese have a lot to answer for during the seven millenium of history their civilization has spanned. The Chinese Birth calendar that predicts the sex of a child shows that they do have a lighter side but in more recent years it has been the number of children born to a Chinese family that took the headlines.

There was a time when the opinion of the world didn’t matter to the Chinese. Its communist regime steadfast in its oppressive behaviour towards its people immortalized in the photo of a protester standing in front of a tank during the Tianamen Square demonstrations in 1989 was indicative of the regimes disregard for world opinion. Its similar behaviour in Tibet and Nepal has caused outrage and dismay amongst most right thinking people. So it is somewhat of a surprise that as we move towards the summer Olympics of 2008 that are to be held in Beijing that we find the government of China working so hard to distance its actions from the atmosphere surrounding the games.

Many will say that since being awarded the games much has changed in the Chinese republic and this would be true. The emergence of China as the largest, fastest growing economy and leader in manufacturing is true. The economic explosion triggered following the handing back of Hong Kong by the British government in 1997 has seen areas of China expand, not only in economic terms but also in wealth for a limited numbers of its people. The awarding of the games could be said to have been the carrot to the Chinese government to continue on its road of more openness and freedom for its people.

China however, has always been ruled by an iron fist and as the longest surviving civilization the world has ever seen, it could be said that this control is in fact a reason for its longevity. Sima Qian dated the history of the country to 2800 B.C. and in the millenia leading to the establishment of the Peoples Republic of China under Chairman Mao Tse Tung in 1949 the country was ruled by hereditary Emperors under various dynasties.

With such a long history, it is not surprising that many inventions have come from the Chinese. The advancement of its culture, epitomized by the army of Terracotta warriors discovered near the Mausoleum of the First Qin Emperor which dates to 209-210 B.C. is just one example of how far ahead the Chinese had advanced ahead of other civilizations. A coutier, Ts’ai-Lun is credited in 105 A.D. with the invention of paper. The name, paper, came later from a derivative of the Egyptian Papyrus, a method of drying stem section of the papyrus plant to create a writing surface.

Over the centuries the Chinese are also accredited with inventions such as the compass, gunpowder, silk and as an Englishman I am unable to cite Chinese achievements without mentioning tea. Its origins believed to date from around 5000 B.C. under the reign of an emperor called Shen Nung. The emperor, a scientist himself, whose edicts included the boiling of all drinking water, discovered tea by accident. The story goes that he was visiting a province under his reign when some leaves from a nearby bush fell into the pot where the drinking water was being boiled, creating a brown coloured infusion. As a scientist, the emperor was intrigued and drank some of the infusion. He declared it refreshing, and the rest, as they say, is history!

On a lighter note, the discovery in the tomb of a 14 century emperor, of a birth calendar is supposedly able to predict the gender of a newborn baby based on the month of conception and the age of the mother to be. It just goes to show that if a civilization lasts long enough, it will try its hand at anything!

So as we look forward to the Olympics of 2008, we can but marvel at the achievements of a long and proud nation and hope that the interaction of the world in a global experience based in its country, will guide its leaders to think more kindly on its people and their needs.

About the Author

Predict the gender of your baby with the Chinese birth calendar. This ancient Chinese birth chart from the 14 century will tell you the sex of your baby!

When one thinks of Panama several images immediately spring to mind. Panama hats, the canal and offshore tax havens to name but a few. The more literary may think of John Le Carre’s ‘Tailor of Panama’, the espionage story made notable by the film it inspired starring Pierce Brosnan.

It is therefore somewhat ironic that my first thought of Panama, the hat, is a misnomer. The Panama hat does not originate in Panama at all, but comes in fact from Ecuador. The wide brimmed hats woven from the Toquilla plant got their adopted name during the construction of the Panama Canal when the workers that were imported to complete the work, wore the hats to help shelter them from the burning sun. Theodore Roosevelt was even pictured in one whilst inspecting the work on the canal in 1906. 

The Panama Canal which was completed in 1914 is one of the centuries great engineering achievements. Built in two stages and by two countries, the canal took thirty three years to finally complete. Started by the French in 1881 under the leadership of  Ferdinand Marie de Lesseps, who ten years earlier had completed work on the Suez canal, the canal was finally completed by an american alliance that guaranteed Panamanian independence and a perpetual lease on a 10 mile stretch that is now known as the Canal Zone.

Ever since its completion, Panama and the USA have been inextricably linked. These relations hit an all time low in 1988 with the freezing of Panamas assets following the indictment of the countries president, General Manuel Noriega  on drug trafficking charges. US troops eventually invaded the country to oust Noriega in 1989 and he is now serving a 40 year sentence in the US. Following the invasion, the US announced a billion dollar aid package to the country and in the years that followed, Panama returned to democratic rule with successfully monitored elections.

Panama as a tax haven dates back to 1916 when it approved its first fiscal code. This exempted companies that carried out transactions abroad from paying taxes in Panama. By the 1970’s Panama held more ‘offshore companies’ on its company registrar than all of the caribbean tax havens combined. Following the Noriega crisis, some of these left to incorporate in new offshore tax havens such as the British Virgen Islands who since the enactment of its BVI International Business Companies Act of 1984 (IBC) has incorporate nearly 150,000 new companies. Many of these emigrated from Panama whilst Noriega was in control.

In recent years, under the influence of stable government, Panama has evolved into one of the most efficient banking tax havens in the world. Recent tightening of privacy laws in favour of the individual, including the outlawing of the behaviour associated with the Papparazzi mean that Panama has become a leader in not only sheltering offshore profits, but combined with its pensionada provisions under Law 9, it has become a destination for the wealthy looking to acquire new residency from a second passport.

Law 9 allows anyone who registers as a pension holder, (qualification requires only a pension of $500 a month) to benfit from a long list of discounts from cinema tickets to air travel. The benefits are available to anyone who qualifies over the age of 18.

You may need to hurry though. Recent activity suggests that the Panamanian government may begin to tighten restriction on the availability of new residents. A sign maybe of the popularity of the country and its favourable tax regime.

About the Author

Panama Legal are a Panamanian based law firm that specialize in offshore trust and offshore company formation. For information on residency and obtaining a second passport Panama Legal can guide you through the legal procedures.

It is an undisputed fact that the dollar is weak. The trade deficit run up by the Bush Administration in financing the war in Iraq and the sub-prime mortgage crisis are just two of the factors that have driven investors from the dollar to its baby sister, the Euro. The resulting effect has been to see a rise in the price of oil above 100 dollars a barrel as the race for commodities in the markets has left currecy traders trampled under the rush to get out of the way. Oil, gold, even wheat seems preferable.
The US economy is brinking on recession, although we have yet to see one quarter of negative growth ( the definition of recession is two quarters of negative growth).

Definitions aside, you can feel the mood of anticipation when you talk to realtors in some parts of the country. In South Carolina, a real estate market that has not been hit by as large a correction, as say, California, realtors in Mount Pleasant tell an all too familiar story when they say that they are finding buyers sitting on the fence in a waiting game to see how prices will jump before committing to a purchase.
The mortgage crisis which burst the bubble in the US was quick to spread and the tightening of secondary lending soon put UK mortgage lender Northern Rock Bank in a liquidity crisis that needed a government bailout. In a matter of a month the virus had crossed the atlantic and the UK property market caught the same cold as its never ending climb stalled under a realization that prices were not a never ending staircase. This was something that had not been seen for nearly a generation of home-owners and was 1989 since the fears of mortgage debt being higher than property value had reared their ugly head.
The virus continued to spread. Spanish developers who had been building as fast as they could were soon realising that they had more units than they could sell and the holiday property industry in the Spanish Costas fell victim to the same indecision found in the UK. (Unsurprising really as up to 65% of Spanish Property on the coastline of Spain was bought by UK residents looking to invest in a place in sun.

So whilst the world coughs and splutters towards global recession could it be that the Euro could hold the key to releasing the pressure and will we have to wait until the recession bites into European economies before the European Central Bank cuts interests rates?
It is certainly no forgone conclusion that a cut in base rates in Europe would take the pressure off the dollar. Certainly the election result in November could see McCain having to fund an even longer exit strategy in Iraq that would push the deficit to epic proportions. Hopefully voters may have to suffer $4 a gallon at the petrol pumps this summer to alight them to the fact that a Democrat may be a better choice than more of the same.

A Democrat win in November and a cut in European interest rates however may produce a combined effect that would ease pressure on the dollar. The good will feeling normally felt following any election would stimulate the economy in the states and combined with falling oil and gas prices it may be all the economy needs to stave off the recession everyone is feeling.

About the Author (HTML)

Neil Ebsworth is co-founder of AMLAspain.com, The MLS for Property in Spain MLS and Mount Pleasant SC Real Estate.