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) Family Finances: Consolidate debts only as a last resort
There are a number of ways to consolidate debt and possibly lower monthly payments. Our advice: Consider debt consolidation only as a last resort. Generally, it comes with several drawbacks.Among those: Possibly a host of extra fees -- charged either upfront, annually or if you terminate the loan. Plus, you have another very real threat. You could consolidate all your debt and lower monthly payments only to accumulate even more debt if you still can't stop spending.
Nevertheless, if you're strong-willed and if lower monthly payments provide a viable way out of a financial bind, debt consolidation could be worth considering. Here are your loan options:
Home equity loan or home equity credit line. It's possible that interest on some of these loans may serve as an itemized deduction on your income taxes. More>>
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) Boss defends home loan 'formula'
Rudco CEO Rudi Visagie believes his "simple" business formula is a winner for consumers and has big banks and financial services brokers running scared. The National Credit Act regulates maximum interest rates and initiation fees, but no minimums, Visagie said in defence of his six percent interest rate on home loans. Visagie said Rudco was complying with the act by offering a maximum initiation fee of R150, plus 10 percent of the agreement in excess of R1 000, but limited to R1 140 (including VAT). A further proviso of the act is that the initiation fee may not exceed 15 percent of the principal debt. Rudco's "management fee" of R750 had been converted to an interest rate of 17 percent, said Visagie. Before June 1, when the act came into force, this was how Rudco calculated a R100 000 "debt consolidation" - what the act refers to as a personal loan: Capital outlay of R100 000 (this was used to repay people's debts, Visagie stressed, and no money was paid directly to clients); 20-year (240 month) repayment period; R750 management fee. More>> - (
) Ample Liquidity for Us Telecoms in Current Market Environment
U.S. telecommunications companies have, in general, solid liquidity to withstand current credit market volatility and meet their debt maturities, according to a Fitch Ratings report.Since the previous liquidity crisis of 2001-2002, the telecom industry has experienced a period of consolidation, providing most operators with increased scale and diversity. This consolidation has led to greater financial stability and flexibility due to increased scale and diversity of operations. Operators have taken advantage of the low interest rate environment and previously aggressive lending standards in the loan market to 'push-out' maturities beyond 2009. Furthermore, Fitch notes that bankruptcies essentially removed the smaller, weaker players from the industry.
"The industry is much better positioned to weather liquidity issues compared to five years ago," said Michael Weaver, Managing Director, Fitch Ratings. More>>
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) Nigeria: Why Banks Shun Real Sector Fund Seekers
While some stakeholders, especially those in the manufacturing industry, point their accusing fingers at banks as being responsible for the dearth of real sector financing, banks said that it was their duty to protect the interest of shareholders from bad debt as the money does not belong to the board and management of the institution. The inability of the real sector to access funds from banks has been associated with the high lending rates which stood between 18 per cent and 20 per cent. Although, some operators in the manufacturing industry were excited that consolidation in the banking sector would usher in an opportunity for them to get credit facilities from banks at lower rate to increase their capacity utilisation, but they were disappointed with the rate to be contended with. More>> - (
) Japan Weakens
Yasuo Fukuda faces an uphill battle as Japan's new prime minister.The 71-year-old has to heal a rural community that feels left behind after five years of combative economic reforms while imposing structural changes to boost the world's second-biggest economy.The former cabinet secretary has to restore the battered credibility of his ruling Liberal Democratic Party after a scandalous 12 months and work with a hostile Upper House in Parliament.The son of Takeo Fukuda, a former prime minister in the late 1970s, has to face the policy dilemmas of an aging population and a massive public debt that is 150% of Japan's gross domestic product.He must deal with weak wages growth and stubbornly high unemployment in some areas.The bespectacled party veteran said he had "drawn the short straw" to replace Shinzo Abe, 53, who was hospitalised shortly after resigning as prime minister after only one year in power.Yasuo Fukuda says he will not reverse policies that have helped Japan's economy."We have to promote reform," he said."The world is changing, and if we don't change we will be left behind."And he has acknowledged the tough challenges."Japan is at a turning point," he said."The population is shrinking and greying and the social structure is changing."We have to raise labour productivity to meet these challenges."Fukuda, who spent many years as an oil company salaryman, has received mixed reviews.He has been described as mild-mannered, a foreign policy dove, shrewd and tough, a quiet compromiser, a moderate on international affairs and typically bland but sometimes testy.Some Japanese fear he could represent a return to the old days of Japan.Others have said he will be a "good caretaker" as the new prime minister, a reference to opinion polls showing a majority of the Japanese people want an early election in summer time next year."This is something that we should consider carefully," Fukuda said.An election is not legally required until September 2009.He has held out an olive branch to the main opposition Democratic Party of Japan: "I want to have dignified discussions with the aim of protecting the people's livelihoods and national interests."But financial markets will be unforgiving if the reform agenda stalls.Standard & Poor's, a credit ratings agency, said it might lower its AA credit rating on Japan if the new Fukuda government did not continue the path of fiscal restraint."The ratings of Japan could come under pressure if political gridlock resulted in a reversal of the government's fiscal consolidation," S&P said in a statement."Policy risks present a serious challenge to improvements in Japan's economic and credit outlook."Japan's official interest rates of 0.5% are the lowest among rich countries.Last year the Bank of Japan (BOJ) first raised its official rates by a quarter of a percentage point to 0.25% after five years of zero interest rates due to an anaemic economy for more than a decade.The ultra-low rates have fuelled demand for yen carry trades.These risky bets involve investors borrowing the low-yielding Japanese currency to fund investments in high-yielding currencies, such as the Australian and New Zealand dollars."There is little pressure for the BOJ to consider aggressive moves on rates in the absence of higher inflation," ANZ Investment Bank senior currency strategist Tony Morriss said in a weekly report.Analysts at Westpac said the August BOJ minutes indicated the central bank's outlook remained basically on track, implying the board was taking a "glass half full" attitude on recent soft data."The board has some thinkers who feel that normalisation should proceed as soon as stability in offshore financial markets is again apparent," Westpac analysts said in a report.UBS recently trimmed its 2008 growth forecast for Japan by 0.1 percentage point to 1.8%.Just over a year ago, Fukuda said low official rates in Japan were abnormal but putting Japan's public finances back in order was the main priority for the ruling LDP government.Some analysts believe Fukuda's election to the top job will be positive for financial markets."It was good for financial markets to see Fukuda chosen as the new leader because of his clear commitment to fiscal consolidation," Seiji Shiraishi, chief economist at HSBC Securities in Toyko, was quoted by Reuters as saying.Japan's Asian neighbours are also likely to welcome Fukuda, who has ruled out visiting the controversial Yasukuni Shrine, which is often at the centre of political storms.Although the shrine is dedicated to about 2.5 million people who have died in Japan's conflicts between 1853 to 1945, it also venerates 14 convicted Class A war criminals."Fukuda respects other Asian countries," Zhou Yongsheng, a professor at the Institute of China Foreign Affairs University, was quoted by the Wall Street Journal as saying. More>> - (
) PALCO files reorganization plan
The long-anticipated strategy for how Pacific Lumber Co. and its subsidiaries hope to emerge on firm financial footing following their Chapter 11 bankruptcy protection filing in January has been submitted in a federal court in Texas.The several-hundred-page plan, which must be approved in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, aims to provide for the continued operations of PALCO and Scotia Pacific Co. as a single consolidated company.The plan calls for the full repayment of all creditors, which includes $713.8 million owed to timber noteholders and $36.2 million for SCOPAC's line of credit.A key feature identified in the plan is the consolidation of PALCO, SCOPAC and its subsidiaries under a new business model that will continue sawmill and forest operations, but at harvest levels significantly lower than current or historical rates.To pay off its creditors, PALCO is seeking to generate $400 million through the sale of approximately 6,600 acres of SCOPAC's timberlands, which have stringent logging restrictions placed on them to protect the marbled murrelet seabirds that nest there.The first part of the project, which the company hopes to accomplish within 24 months of the plan's approval, will be to sell each of the old-growth forests it calls "Ancient Redwood Groves" as preserves at a value of $60,000 per acre to buyers who are willing to commit to permanent environmental protection.The second phase aims to raise an additional $780 million through the sale of 22,000 acres of lands the plan identifies as "Redwoods Ranch Development," or individual 160-acre parcels to be marketed as "trophy" properties valued at approximately $5 million on average.That would leave approximately 181,000 acres of timberlands for sustained timber harvesting, under the proposed plan.For its part in aiding its cash-strapped subsidiaries, parent company MAXXAM is pledging to make contributions valued at more than $150 million, including providing real estate expertise, to provide $25 million to allow existing noteholders to cash out a portion of their notes, the forgiveness of $40 million in intercompany debt, and tax benefits valued at approximately $85 million.In a statement released on Business Wire, PALCO President and CEO George O'Brien recognized MAXXAM's leadership in standing alongside the company and its significant economic contributions, which he said underscores the confidence MAXXAM has in the company's future."This plan saves a 140-year-old company and creates a viable forest products enterprise that can provide excellent long-term jobs and it does so by putting some of the company's most unique and valuable property to a higher and better use than commercial forestry," O'Brien stated in the news release.While consultants for SCOPAC's creditors have testified in court recently that the companies' equity doesn't exceed their debt and should be liquidated immediately to maximize its value, the submitted plan indicates PALCO's consultants put a value of the lands and businesses in excess of $1.4 billion.Reached by phone Monday, Mark Lovelace, president of the environmental group Humboldt Watershed Council, which has long been critical of PALCO for its alleged environmental violations and unsustainable timber harvesting, called the plan "laughable."Lovelace said he doesn't believe the company will generate the cash it anticipates because no potential buyers will be willing to pay the $60,000-per-acre price for the lands that are already off-limits to logging for the next 42 years under the arrangement of the Headwaters Agreement.He said the only reason anyone might purchase the lands now is because they could be considered undervalued and a steal for someone looking for a bargain."But for PALCO to ask what they are for them now is ridiculous," Lovelace said.In addition, Lovelace said MAXXAM isn't contributing any real financial support as part of the plan, rather it is only shuffling money around.A hearing is scheduled in Corpus Christi this morning at 9 a.m. More>> - (
) Lihir Gold denies takeover talks
LIHIR Gold chief executive Arthur Hood has brushed off takeover talk surrounding the company after it was described as an attractive target by Newmont Mining. Newmont, the world's second largest gold producer, said low cost producers like Lihir looked "increasingly attractive'' against the company's rising cash cost profile. Market watchers noted Lihir would become an attractive takeover target after the company raised $1.2 billion in April to close out its hedge book and retire debt. Mr Hood said today he was not fazed about the takeover talk. "My responsibility is to deliver value for shareholders,'' he said. Newmont's comments, which were made last month, also focused on Australia's largest independent gold producer Newcrest Mining. Brokerage Credit Suisse said there was significant potential for further consolidation within the gold industry, both domestically and abroad. More>>