| Defaults moving beyond sub-prime
Thought the mortgage meltdown was just a sub-prime affair? Think again. There's another time bomb waiting to explode, experts say: risky loans made to people with good credit.
So-called pay-option adjustable-rate mortgages, or option ARMs, were the easiest and most profitable home loans for lenders and brokers to make for much of this decade. Last year, they accounted for about 9% of the volume of all mortgages made in the U.S. and were especially popular in California, Florida and Nevada -- states where home prices rose the most during the housing boom and are now falling most sharply.
An option ARM loan gives a borrower the option of paying less than the interest due, causing the loan balance to rise. If it rises too much -- say, by 10% or 15% -- the opportunity to make a low payment vanishes and the required payment skyrockets.
Apple's computer, incorporated
At first glance, it might have seemed that the Mac was invisible at Macworld Expo. During Steve Jobs's keynote address, there was no announcement of new Mac hardware, no news about Leopard, no word about iLife or iWork—and to top it all off, Jobs announced that Computer was no longer part of Apple's name. This has led some pundits to conclude—wrongly—that Apple's success in consumer electronics signifies some sort of decrease in its commitment to the Mac. Part of this stems from Apple's recent history as a one-product company; between the eras of the Apple II and the iPod, the Mac was the only product keeping Apple afloat. It's time to spread the news that Apple is no longer a one-product company. The iPod, the iPhone, and the Apple TV are not products that Apple created at the expense of the Mac; it created them in addition to the Mac.
Prudential's Art Ryan talks football and finances
Former Prudential Chief Executive and current chairman Art Ryan was interviewed Jan. 22 by The Star-Ledger in his office conference room on the 24th floor of the Prudential building in downtown Newark. (See the Sunday Business section of The Star-Ledger for Greg Saitz's profile on Ryan.) Here is a transcript of that conversation: Q: When we talked a month and a half ago, you said you had no interest in running another company. But I think the Redskins job is still open. Are you interested? A: (Laughing) It's funny. I think I'm among many, including the Washington Post and all the local people imploring Dan Snyder to hire a general manager, not just a coach. But I don't think our wishes are going to be granted. He seems to think he's doing a fine job in the front office.
Bear Stearns boss to repel boarders
BEIJING, Jan. 10 -- Bear Stearns Cos Inc's management shake-up could make the investment bank a takeover target, but the possibility of more writedowns and chance of legal entanglements from the subprime mortgage crisis could sideline suitors for now, analysts said. Bear Stearns' president Alan Schwartz on Tuesday became the company's new chief executive, replacing James Cayne, who was under fire for the company's big mortgage losses and the collapse of two hedge funds. The appointment of Schwartz, a 57-year-old investment banker, could signal Bear Stearns' willingness to entertain offers, even as its shares hover near four-year lows, some analysts said. But Schwartz said he plans to return the company to strong profitability and he's not waiting around for a takeover bid to materialize.
Finding the Bargains In Global Real Estate
UNTIL 2007, GLOBAL PROPERTY STOCKS PROVIDED a "haven" from the vagaries of stock and bond markets. Shares of commercial property companies and income-generating real-estate investment trusts, or REITs, as measured by the Global Property Research 250 index, have generated annualized returns of 23.8% and 12.7% over the past five- and 10- year periods, respectively, versus 12.8% and 5.9% for the Standard & Poor's 500. But in the year just concluded, as the fallout from the subprime-mortgage mess in the U.S. began to mushroom and credit tightened, the prices of many property developers began to fall, in the States and abroad. How much further will prices fall? What's the outlook for recovery? Are European and Asian property companies and REITs better buys now than their American peers? We recently posed these questions and others to Scott W.
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