[MinMin]

Global financial turmoil
Sometimes, it pays to hold on

WICKED. That's the only way to describe last week's stock market rout.

We're only halfway through, but expect this October to go down in the annals of world financial history as the global financial system's most volatile month ever.

Earlier this week I had watched, from the safety of the sidelines, wide-mouthed and flabbergasted, as Wall Street stormed back after its worst week ever to stage the biggest single-day stock rally since the Great Depression in the 1930s.

The benchmark Dow Jones industrial average regained 11.6 per cent in one day - after tumbling some 22 per cent over the previous eight trading days.

That was on Monday.

Global stock markets staged a historic 'relief rally' on that day, as European governments pledged a total of 1.87 trillion euros (about $3.7 trillion) to save their ailing banks, and as the US confirmed it would follow suit with a similar rescue.

Watching US investors rummage through the financial wreckage on Wall Street for so-called bargains, you might think the worst is over.

But is it?

To answer this question, we need to take a closer look at last week's historic fall on Wall Street, which left the Dow at 8,451 on that frenzied Friday - 40.3 per cent off its 9 Oct 2007 all-time high of 14,164.

Friday was a roller-coaster day that saw the Dow dip briefly below the 8,000-point mark before creeping back up as investors snapped up last-minute bargains.

Indeed, last week's precipitous drop eclipsed the dark days of the Great Depression.

All in all, the Dow lost 18.2 per cent over five days, worse than the dismal week that ended 22 Jul 1933, when it plunged 17 per cent - and that was when the exchange on Wall Street was open six days a week.

But consider the worst period in history from a long-term investor's perspective.

If you were 55 just before the stock market crashed in 1929, and had been rich enough to invest US$100,000 in the market, you would have been in a very sorry shape by the time you retired 10 years later.

After an 83 per cent decline in the stock market by 1932, you would have recovered some of your money by retirement in 1939 - but not all of it.

On your retirement, you would have had only US$60,200 for your nest egg, according to market data tracked by Ibbotson Associates, a Chicago research firm.

That's because, on average, it took an investor just before the 1929 crash almost 13 long years to recover all that was lost.

But what about younger investors?

If you were only 25 just before the 1929 crash, the humongous loss in the Great Depression would have been a distant memory by the time you retired in 1969.

By then, you would have seen your US$100,000 investment grow 21-fold to US$2.1 million.

A harsher bear market

But, young or old, don't count on history repeating itself to prove you right.

This bear market - a term often defined as a prolonged drop in stock prices of 20 per cent or more - already is harsher than most of the 10 bear markets since the 1930s. (Those earlier bear markets have lasted an average of only 16 months from peak to trough.)

Expect a turnaround no earlier than 2010.

The Hong Kong Monetary Authority, for instance, has said that it would provide government backing for all of the US$773 billion in Hong Kong bank deposits through 2010 as government assistance for banks in Europe and the US put pressure on Asian regulators to follow suit (though Asian banks tended to be better capitalised).

The good news? Since the record 83 per cent plunge in 1929-32, the current market plunge is exceeded only by the drops of 49 per cent in 2000-02 during the dotcom implosion and 48 per cent in 1973-74 during a recession and energy crisis.

Unfortunately, many investors have now convinced themselves that this time it's different - that the credit crisis could push economies worldwide into the deepest recession since the Great Depression.

But in their panic, investors are ignoring 70 years of history.

Since the Great Depression, governments throughout the world have become far more aggressive about intervening when credit markets seize up or economies struggle.

And, trust me, those interventions have generally succeeded.

The writer, a Harvard-trained economist based in Singapore, is a freelance contributor.

http://newpaper.asia1.com.sg/news/st...80308,00.html?

[MinMin]

FERTILITY DONORS UP
Women sell eggs to pay off debts

THERE has been an increase in the number of women selling their eggs for profit.

Ms Nancy Block from the Center for Egg Options, outside Chicago, said there has been 'probably at least a 40 per cent increase in the number of people who are donating eggs'.

Ms Block said she quite certain it is because people are looking for money as the financial crisis bites.

The centre is not only seeing more donors but more repeat donors as well, reported CBS news.

Women can earn US$7,000 ($10,000) or more for just one donation.

'That's a lot of money,' Ms Block said.

'It's great for school. It's great for the mortgage. It's great to help their families out. And you know, it's something that they feel good about.'

The fact that egg donation is not an easy way to make a quick buck shows how desperate people are.

Worth the trouble?

It's a time consuming medical procedure, with risks. Donors will spend weeks taking fertility drugs. Medications can cause hot flashes, headaches and vision problems.

Donors also have to have frequent blood tests and ultrasounds. And it takes several days to recover after the eggs are harvested.

But Ms Christy Bush has earned US$30,000 so far.

It has helped support her two kids and pays for nursing school.

Over the past four years, she says, she has donated four times and, with money being tight, she has decided to donate again.

'It makes it so that I'm not working 40 hours a week... It's given me hope that I can actually do the parenting and the schooling and still be home and doing great things and actually watching my kids being raised,' Ms Bush said.

But for parents Karen and Mark who wanted a second son but were unable to have one because of health reasons, the situation is 'win-win'.

She gave birth to a healthy boy using donors eggs.

Karen said: '... if it weren't for the donors, this could not have happened for us.'

http://newpaper.asia1.com.sg/news/st...80311,00.html?

[MinMin]

INSURANCE FRAUD UP
Burned by debt, they torch their vehicles

BURDENED by debt and driving home from a night of gambling in West Virginia, Sergio Lopez launched a scheme that at the time must have seemed like a good idea.

He pulled his Volkswagen Jetta up to a random corner, doused the interior with petrol, set it on fire and walked away.

He later made a claim to Nationwide Insurance. He said that the car was missing and that someone could have stolen it.

But when his bluff was uncovered, Lopez found himself standing before the law. He pleaded guilty in his case this year.

Torching cars, especially if one can't meet payments, is set to become a trend.

The Washington Post said among the offenders were:

A police officer

A firefighter

And one man who did it as a favour to a friend.

Investigators say such crimes, which now number in the hundreds, are expected to increase . Many offenders have fallen behind on payments to car dealerships. This year, more people are behind on such loans than in nearly two decades.

'With what has just happened to the economy in the last week,' said Mr Donald Galbreath, a longtime fraud investigator for the insurance industry, 'I see the trend will get worse.'

Ms Yesenia Gomez and husband Jose Reyes fell behind on payments on their 2007 Dodge Caravan. Gomez torched the car but was caught later.

As Gomez described it to detectives, she had to choose 'between the house and the car,' Assistant Commonwealth's Attorney Marc Birnbaum said.

Gomez's attorney, Ms Kimberly Phillips, said Gomez and her husband had tried to return the minivan to the dealership and were desperate.

'She just didn't know where to turn,' she said.

Mr Duane Svites, a Maryland deputy chief state fire marshal, said 'the market is right' for insurance fraud.

'A lot of people trying to dig themselves out of a jam,' he said.

Historically, such arsons go up as people fall behind on car payments, experts say. In 2006, the number of delinquent loans to car dealerships began to rise. It recently reached levels not seen since at least 1990, according to the American Bankers Association.

But why burn a car in the first place? Why not just sell it to a chop shop or push it into a lake?

Car arsonists often want police to find their torched vehicles so they can get claims more quickly.

And unlike setting fire to a home or business, scam artists don't have to make a car fire seem like an accident, because the fraud scheme typically relies on the claim that a car thief set the fire.

Car burns often happen in out-of-the-way places with few witnesses.


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