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Mortgage Crisis Spirals

(My comment: Belief in promises of “easy” money cause problems all over the world. Eventually, there is always a price to pay. Meanwhile, the current crisis presents buying opportunities to those who have saved and wisely invested.)

Mortgage Crisis Spirals, and Casualties Mount
from today’s New York Times

Published: March 5, 2007
Even in affluent Orange County, Calif., the growing wealth of executives and brokers in the booming mortgage industry was hard to miss.

For Kal Elsayed, a former executive at New Century Financial, a large lender based in Irvine, driving a red convertible Ferrari to work at a company that provided home loans to people with low incomes and weak credit might have appeared ostentatious, he now acknowledges. But, he says, that was nothing compared with the private jets that executives at other companies had.

“You just lost touch with reality after a while because that’s just how people were living,” said Mr. Elsayed, 42, who spent nine years at New Century before leaving to start his own mortgage firm in 2005. “We made so much money you couldn’t believe it. And you didn’t have to do anything. You just had to show up.”

Just as the technology boom of the late 1990s turned twenty-something programmers into dot-com billionaires, and leveraged buyouts a decade earlier turned Wall Street bankers into Masters of the Universe, the explosive growth in subprime lending turned mortgage bankers and brokers into multimillionaires seemingly overnight.

Now an escalating crisis in the market, which seemed to reach a new crescendo late last week, is threatening a wide band of people. Foremost are the poor and minority homeowners who used easy credit to buy houses that are turning out to be too expensive for them now that mortgage rates are going up, but the pain is also being felt widely throughout the business world.

Large companies that bought subprime lenders during the boom, like H&R Block and HSBC, are now scrambling to sell them or scale back their exposure. Many investors are also likely to suffer: Wall Street firms made billions in fees, commissions and trading revenue from packaging and selling subprime mortgages to them as bonds.

New Century has emerged as a poster child for the lenders that rode that boom to the top and are now in free fall. The company disclosed on Friday that federal prosecutors and securities regulators were investigating stock sales and accounting errors. The latter could jeopardize billions of dollars in financing for the company, which issued $39.4 billion in subprime loans in the first nine months of last year.

Weakening home prices and rising default rates have rocked the subprime business. But for those who cashed out before the market turned, the ride up was particularly sweet. The three founders of New Century, for example, together made more than $40.5 million in profits from selling shares in the company from 2004 to 2006, according to an analysis by Thomson Financial. They collected millions of dollars more in dividends, salaries, bonuses and perks.

The company said in a statement yesterday that the founders were “still significant shareholders,” noting that they collectively owned about 7 percent of the company at the end of last year.

New Century’s stock price, which seemed to mirror the trajectory of the subprime business, peaked at nearly $66 a share in December of 2004 and traded in the $40s most of last year; on Friday, it was trading at $11 a share after the market closed. In a series of sales from August to November, two of the company’s founders sold shares for an average price of about $40 a share, for a total profit of $21.4 million.

It is not known whether the stock sales by the founders are among the sales being examined by federal investigators. Some of them had been part of scheduled stock sales that are often used by executives to diversify their portfolios. But some of the sales occurred on the same day that the executives entered the plans. A New Century spokeswoman, Laura Oberhelman, said that executives declined further comment.

You can read the rest of the article by clicking here.

March 5, 2007 Posted by | Bureaucracy, Crime, Family Issues, Financial Issues, Kuwait, Living Conditions, News, Social Issues, Uncategorized | 7 Comments

Offices Full of Germs: Women the Worst

From – I am not kidding – The Nigerian Tribune.

(A recent) study pointed out that for a woman, her office desk may harbour far more bacteria than the workplace restroom and the office desk of men. In fact, women have three to four times the number of bacteria in, on and around their desks, phones, computers, keyboards, drawers and personal items than men do, the study by University of Arizona Professor Charles Gerba found. Gerba, a Professor of Soil, Water and Environmental sciences, tested more than 100 offices on the UA campus and in New York, Los Angeles, San Francisco, Oregon and Washington, D.C. in a study commissioned by the Clorox Co.

The researchers swabbed the offices of 59 women and 54 men in New York City, Los Angeles, San Francisco, Oregon, and Washington, D.C. They sampled eight sites in each office: the phone, desktop, computer mouse, computer keyboard, exclamation key on the computer keyboard, pen, bottom of desk drawer, and handle of desk drawer. The researchers also swabbed workers’ personal items at the office, including personal digital assistants (PDAs), women’s purses and makeup cases, and men’s wallets and found women have more germs on their office desks than men.

“I thought for sure men would be germier,” Gerba said. “But women have more interactions with small children and keep food in their desks. The other problem is makeup.” The tendency is high to doubt this statement. But much as a woman’s desks may typically look cleaner, the germs are likely to be more abundant. Cosmetics and hand lotions make prime germ-transfer agents, Gerba said. Makeup cases also make fine germ homes, along with phones, purses and desk drawers. Food in desk drawers also harbour lots of microorganisms, and it is more abundant among female office workers to have food in their desks and munch while on an assignment, on the computer or even picking a call.

Then, they tend to be around children more often than men, and we all know how easily kids transmit germs. And finally, they use makeup, which tends to absorb germs. Then it rubs off the face or gets scattered by brushes and sponges. The news was not all negative for females though. Gerba in the study found the worst office germ offender is men’s wallets. The back pocket is nice and warm; it’s a great incubator for bacteria. Another hot spot for bacteria in men’s offices: the personal digital assistant.” Men tend to play with their palm pilots more, thinking they’re playing video games or something,” Gerba said.

The top three bacteria hot spots in women’s offices, in order of germs amount : Makeup case, phone, and purse and in men’s offices starting from the highest to the least: Wallet, personal digital assistant and phone. Though a similar study by the Clorox Company, a manufacturer of disinfectant in February 2006, reported that in a study of nine office-based jobs, teachers had the work space with the highest amount of germs and lawyers had the least, Gerba said everyone should arm their office with a germ arsenal that includes: disinfectant wipes, disinfectant spray, paper towels and fruit (for drawer).

According to Gerba, people should clean cell phones and desk phones to get rid of bacteria. “You need to use a disinfectant wipe, or spray disinfectant on a paper towel, and clean the phone off. Never directly spray disinfectant cleaner on phone,” he said. “Do not use soap and water — that just pushes the germs around.” “We recommend that you use a wallet or purse that can be easily wiped off — like leather. A fabric bag is harder to clean and just holds more germs.”

Finally, Gerba said office knickknacks and accessories should be given the same thorough cleaning as everything else , explaining that “people tend to touch and pick up the germs on their desks. It’s a vicious cycle of germs transferring from hands to objects to desks. Hand sanitizers are great in eliminating the transfer of germs from your hands.” The level of germs on office desktops and telephones came in gender neutral; women had three to four times more germs on their keyboards and computer mice than their male counterparts. Desk drawers at women’s desks contained seven times more germs than men’s. Surprisingly, the research showed that the average office desktop has 400 times more bacteria than the average office toilet seat.

What Gerba found among the bacteria was coliform — intestinal bacteria generally found in human waste — on the restroom handles and faucets, in the kitchen sink and sponge, and even in candy basket. That “indicates to me somebody’s not washing his or her hands after coming back from the bathroom,” Gerba said.

That’s why Gerba found hundreds of thousands of bacteria on hot spots like a printer button and the button for the first floor in the elevator, touched by hundreds of fingers each day. Even though none of the bacteria Gerba found was life-threatening, they could lead to more colds and flu.

Prof Oluwole Adebo, a cardiothoracic surgeon commenting said this is a study Clorox, maker of a disinfectant commissioned and is motivated at helping them sell more of their products.” Without being in an office, the surface of our hand picks up germs throughout the day, but you don’t get infected by them because the skin is a barrier against germs. Some of the germs are not in a state to infect, especially in places that are dry and hot, but where humid, it can incubate bacteria. So when you are to eat, wash your hands because there are bacteria on your hands. These bacteria are not in a position to harm us and therefore these is no reason to clean with disinfectants.

“America is full of studies like that. They study everything and make money out of it. The fact is this, in the air you breathe in, there are bacteria in it. Do you sterilize it? No, the body is sufficient to keep the germs at bay. It is all out to pursue people to buy their product”, he concluded.

My Comment: Remember Lies, Damn Lies and Statistics where we talked about who structures the survey? It works the same for studies. The sponsor of this study is Clorox, who make Clorox bleach and multiple cleaning disinfectants. It is in their interest for Professor Gerba to find a very germy environment. The more disinfectants we buy, the higher their profits soar. Prof Oluwole Adebo is right! Germs are everywhere, and we survive, and even develop immunities to them. This study is purely to sell more Clorox products by convincing us we have an epidemic of uncleanliness.

On the other hand . . . it may be time to clean out the make up case and throw away that candy bar . . . 🙂

March 5, 2007 Posted by | Africa, Cross Cultural, Customer Service, ExPat Life, Family Issues, Health Issues, Hygiene, Lies, Living Conditions, News, Random Musings, Shopping, Social Issues, Statistics, Tools, Uncategorized, Women's Issues | 8 Comments