Eurozone quakes as Greek election does little to allay fears about single currency's future

By Hugo Duncan

Europe felt the wrath of the financial markets yesterday as the Greek election did little to allay fears about the future of the single currency.
The euro tumbled and borrowing costs in Spain and Italy lurched to dangerously high levels as the region spiralled deeper into crisis.
Analysts said victory for the pro-bailout New Democracy party in Greece’s second election in just six weeks merely delayed the inevitable break-up of the eurozone with a Greek exit still on the cards.

Marching to oblivion?: Markets were jittery over fears the single currency is set to collapse

It is also feared that Spain and Italy – the region’s third and fourth biggest economies – will require full-blown international bailouts following the earlier rescues of Greece, Ireland and Portugal.

Nick Eisinger, an analyst at Fidelity Investments, said Spain would need another £240billion on top of the £80billion bailout of the banking system agreed last week: ‘The market is very sceptical because the bank deal doesn’t really make any difference to the tricky and challenging position of the Spanish economy.

‘There’s a pretty strong likelihood that the Spanish sovereign will need some kind of funding programme in the next six to nine months.’

 

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The euro fell more than 1 per cent against the US dollar to below $1.26 and was down 0.7 per cent against sterling to 80.3p as investors dumped the single currency and ran for cover.

The crucial 10-year bond yield in Spain – the amount the government pays to borrow – smashed back above 7 per cent to a euro-era high of 7.14 per cent. In Italy the bond yield rose above 6 per cent. The 7 per cent level is seen as psychologically important as it proved to be the point of no return for Greece, Ireland and Portugal.

Stock markets surrendered initial gains with the FTSE 100 index closing just 12.28 points higher at 5491.09 having been 80 points to the good in early trading.

Banking shares fell sharply with Royal Bank of Scotland down 5 per cent, Lloyds Banking Group 3.6 per cent and Barclays 2.4 per cent.

Ben May, an economist at Capital Economics, said: ‘The reaction in the financial markets said it all – investors are sceptical that the narrow victory of New Democracy in Sunday’s general election in Greece marks a turning point in the eurozone crisis. The election result merely shifted attention back on to Greece’s larger troubled neighbours.’

Kathleen Brooks, research director at currency experts Forex.com, said: ‘There is still the chance that a member of the eurozone will leave the currency bloc. Piecemeal can-kicking is not enough any more.’

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Property asking prices hit record high, but sporting summer and rush of homes for sale may disappoint sellers

By Simon Lambert

New high: Asking prices have hit a record level, but sellers may be being over optimistic says Rightmove.

Property asking prices have hit another record high, but a rush of new homes for sale and the sporting summer could apply the brakes, according to the latest figures from Rightmove.
Optimistic homesellers, mainly in London and the South East, have pushed up asking prices to a new national high for the third month in a row, the property listing website has said.
But it warned that more homes on offer, a two-tier market and economic worries meant that those without properties located in the most popular areas may find they have to cut their asking price to get their home sold.
Miles Shipside, director at Rightmove, said: ‘Agents report a two-tier market where those who can afford to price realistically are selling, while those who are equity-poor are struggling to sell as they often have to price up to make any prospect of a move viable.’
The sports-packed summer with Euro 2012 and the London 2012 Olympics will also keep more potential buyers away, it claimed, while the eurozone debt crisis rumbling on is hitting confidence.
On top of this Rightmove recorded a fresh wave of supply, with 29,394 new sellers a week arriving prior to the Jubilee long weekend, the 'highest new listing run-rate for two years'.
The national average asking price rose one per cent in the month to mid-June to £246,235, as sellers added an extra £2,476.
That pushed the Rightmove index of newly-listed asking prices two per cent higher that they stood in August 2007, the month before the Northern Rock bank run signalled that the financial crisis had arrived in Britain.

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Bouncing back: Asking prices have steadily risen this year, despite the economic gloom deepening

But number crunching by the website has revealed how London has buoyed prices over that period – strip out the capital and asking prices are down five per cent.
And Rightmove said that once adjusted for  Retail Prices Index inflation, asking prices are actually down nationally over that near five-year period, even with London included in the mix.
Its report said: ‘In spite of sellers’ current record price aspirations, in real terms they are still an average of 13% lower. London is the only region where there has been an inflation-busting increase over the same five year timescale, with asking prices 3% ahead of the national Retail Price Index (RPI).’

Enlarge  

Asking prices vs inflation: How individual regions have changed when adjusted for RPI

Optimistic sellers may be left disappointed

For many home sellers, the optimistic raising of asking prices is likely to prove misplaced. A wave of tightening in the mortgage market in recent months has combined with economic uncertainty to take any gloss off the housing market in the first six months of the year.
The best mortgage rates have risen by between 0.5 and one per cent since early spring, with even borrowers with big deposits hit.
The latest report from the Royal Institution of Chartered Surveyors illustrated the tough time facing the market with agents selling less than four homes a week in May on average, despite this traditionally being one of their better months, according to the latest RICS housing market survey.
Sellers are being forced to accept lower prices and properties are sitting on the shelf for longer, RICS said, with an average of 15.6 sales recorded by its member surveyor estate agents last month.
Rightmove suggested that those who want to get their home sold need to realistically evaluate demand for property where they live and act accordingly.
Mr Shipside said: ‘It remains a very local market ruled by property style and location, and a few minutes study will reveal whether your property is hot or not.
‘The traditionally more active spring window is closing and a summer of sporting distractions underway. Cutting your asking price to be cheaper than your competition and promoting your selling points better will be the key to avoid being an also-ran in the race to sell.’

Enlarge  

Under water: Only London asking prices have beaten inflation (the red line), while average prices (blue) have fallen 15 per cent in real terms and Wales (green) has performed the worst down 24 per cent.

Asking prices and inflation: only London beats RPI

Greater London is the only region where the average asking price has outpaced inflation and is 3% ahead since August 2007 – when Rightmove says real asking prices peaked. (Real prices are once inflation has been taken into account.)
The other nine regions of England and Wales have seen double-digit percentage falls in new seller asking prices when adjusted for inflation, with Wales the worst performing where real prices are now 24% lower than August 2007.
Inflation has slowly been steadily eating into house price performance over the past five years, with even properties that can match their 2007 peak values in nominal terms now, down in value in real terms.
Nationwide Building Society includes a real house prices measure in its monthly report. This shows that while in nominal terms property prices are down 11 per cent on its index, in real terms the fall is 25 per cent.
Economists typically suggest that the effect of inflation slowly eroding property values makes them more affordable over the prolonged down period following the bursting of a house price bubble.
However, the past five years have seen a wave of wage freezes that has meant earnings have failed to keep up with the rising cost of living, while mortgage lenders demands for bigger deposits have locked buyers out of the market.
Mr Shipside said: ‘This reduction in real house prices would be great news for home-movers if their wages had kept pace with inflation and the return of mass-market mortgage finance was just around the corner. However, the reality is wage freezes, rising costs of living, and continuing tight mortgage funding have squeezed affordability for many buyers.’
In its most recent report, Nationwide highlighted how over the longer term house price inflation has massively outstripped RPI. Its chart going back 60 years provided a stark illustration of how property prices broke away from the wider cost of living in the early 1980s before soaring well beyond it in the house price boom from 1997 onwards.

Inflation busting: House prices have massively outstripped inflation over the long term, the chart above from Nationwide shows

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Ortac Resources' Šturec gold project could support 2 Mtpa operation, says broker

 
by Giles Gwinnett Šturec is close to the town of Kremica, where the mining industry dates back to the 9th century

Ortac Resources' (LON:OTC) significant resource upgrade today to its wholly owned Šturec project in Slovakia means it could support a larger mining operation than previously thought.
That's the view of broker Optiva Securities, which also says the market is undervaluing the company.
This morning's update improved geological confidence in the Šturec resource and saw the JORC compliant number increase to 1.36 million ounces of gold equivalent from 1.1 million.
More significant, however, was the 75 per cent increase in the resource at the project - part of the firm's flagship Kremnica project - into the higher confidence measured and indicated level to 1.01 million, from 579,000 eqivalent ounces previously.
Now that the majority of the deposit is in these higher confidence categories, the firm can move ahead to its next stage of technical studies, Optiva analyst Jason Robertson said in a note to clients.
The analyst also said he had re-assessed the company's valuation in the light of today's news.
Previously, that valuation had been based on the scoping study reported in January this year, which outlined a base case of a 1.5 million tonne per year operation to extract  867,000 ounces of gold equivalent.
This gave an estimated net present value of US$106 million using a 10 per cent discount rate and a flat gold price of US$1,188 over a mine life of 11 years.
"We now believe a 2.0Mtpa (million tonnes per annum) operation is the most likely, producing 947,000 ounces of gold Eq, which works out at an estimated NPV of $119mln," said Robertson.
This along with Ortac's estimated cash reserves of £7.4 million and £0.36 mln investment in Vatukoula Gold Mines (LON:VGM), which owns a producing gold mine, gives a valuation for the firm of £81.5 million (or US$132 million), added the analyst.
On a price per share basis, this works out at 3.5 pence and ignores the remaining value for the 414,000 ounces of gold equivalent left in the ground and any exploration upside at the Šturec and the firm's other exploration licences in Slovakia.
To put this into context, the company's shares are today trading up 1.32 per cent, at just 0.77 pence each.
"With progress being made in Slovakia and the gold price continuing to trade at around US$1,600 per ounce, far ahead of the estimated cash cost for an open pit mine at Šturec of around US$443 per ounce, we recommend Ortac Resources as a BUY, with a 3.5p price target, representing a potential 360 per cent upside from today’s share price," said Robertson.
Alongside today's update, Ortac highlighted the potential for a further resource upgrade for the  Šturec project, saying that the high-grade Schramen vein structure remained open at depth and along strike.
Ortac chief executive Vassilios Carellas told investors: "This is a further key development in the advancement of the Šturec Project.
“Following the completion of our scoping study earlier this year, which confirmed highly positive economic fundamentals for the Šturec Project, this updated mineral resource estimate further increases the scope and potential of this valuable asset.”
Šturec is close to the town of Kremica, where the mining industry dates back to the 9th century, and 17 km west of the central Slovakia's largest city, Banská Bystrica.
As well as that project, Ortac owns nine exploration licences across the country. Two of these are adjacent and to the south of the Kremnica licence.
The remaining seven are found in central and eastern Slovakia.

The Empire State Building Is For Sale: Why You Shouldn't Buy It

by Daniel Lauchheimer
Malkin Holdings, the company that owns The Empire State Building and an additional 5 million square feet of office and retail space in New York City and its immediate boroughs filed to go public a few weeks ago under the company name Empire State Realty Trust (ESB). Their filing does not give an indication as to the valuation of the company, making it difficult, nay impossible, for investors to evaluate whether or not to invest in the company. With that said, I would still like to examine one specific detail of the filing, which I think investors should take into consideration if and when the company completes its offering. Aside from the issue at hand in this analysis, along the way I will make some general comments as to the current environment of the New York City office space market.
In page 7 of the S-11 filing Empire State's management lists the vacancy rates and rents in its particular buildings. While reading the filing I felt surprised by how much of the company's future rides on the success of its efforts to turn around the Empire State Building from a building filled with small, poor credit tenants, into a strong institutional building.
This turnaround effort has two parts:

1. A full modernization of the building, which management estimates will cost about $320 million, or $100 per square foot
2. Clearing the building of smaller low quality tenants, to make room for larger tenants.

This second part has caused The Empire State Building to have a huge vacancy rate. In the filing, Empire State's management writes that The Empire State Building currently has about 875,000 square feet of vacant space, nearly half of the total portfolio vacancy.
Therefore, in order to realize an upside on the stock, management must execute its strategy of attracting high quality tenants effectively. The way I see it, The Empire State Building must overcome a few major hurdles to effectively execute this strategy. Chief among them - the new developments coming on line in the next few years both in its current sub-market in New York City, and in other areas of New York City. Secondly, management must contend with the general trends in the New York City market, which seem to point to a lack of demand for large blocks of space.
These new developments pose a threat to Empire State because they offer tenants new, high quality, modern, and energy efficient space, which developers will build to suit for a large tenant. Though this space might run higher than the Empire State Building, companies in general will spend more money on their spaces for two reasons:

1. The more expensive spaces tend to allow for a more efficient layout, shaving off costs in different areas.
2. Employees make up a company's most expensive and important asset. Companies will spend more money on space because it doesn't make up a huge expense for them, as opposed to employee costs. And secondly they will attract better employees if they have nicer space.

The Empire State Building's location - Penn Plaza district along 34th Street - puts it into direct competition against three major developments, undertaken by three major developers that have either broken ground already, or will break ground once they sign a major tenant. Moving from New York City's East side to West side, the Empire State Building faces the following competition:

1. 15 Penn Plaza - Vornado (VNO): 2 million square feet of space
2. Manhattan West -- Brookfield Office Properties (BPO): 4 million square feet of space
3. Hudson Yards - Related Companies: 6 million square feet of space.

All of these developments share the common high quality attributes for office space listed above, and will attract interest from tenants that Empire State would like to have in its buildings.
I will now focus on Vornado's development at 15 Penn Plaza and I will use that as a jumping-off point to talk about what I see as the second problem Empire State faces: A lack of demand.
15 Penn Plaza
Vornado has plans to build a major, 2 million square foot office building on 34th Street, less than 900 feet away from The Empire State Building on the site of the current Hotel Pennsylvania. Empire State launched a major campaign to stop this development, which it lost handily in a community board vote. Vornado does not have plans to start construction anytime soon. In fact, recent reports say Vornado intends to fully renovate the hotel and upgrade it in order to achieve higher rates and occupancy.
This could give Empire State some breathing room from a major competitor, but I would argue against that theory. The very fact that Vornado has put the brakes on this major project, which it has spent a major amount of time, money and effort on, shows the slowing demand in the institutional tenant space. Boston Properties (BXP) echoed this sentiment in its most recent conference call. On the call, Boston Properties noted that it will have a major vacancy of 145,000 square feet in the New York City market this year at 399 Park Avenue. In management's comments they noted how they wished they could lease the whole space to one tenant, but in reality they might have to break up the space into smaller spaces, because of the lack of demand for large blocks of space.
The upshot of this analysis shows how Empire State really has two major threats.

1. Other developers competing for similar quality tenants
2. The lack of demand in this market

World Trade Center - An Empire State Building Alternative
An easy argument many will make when trying to rebut my theory will run something like this. True, Empire State faces stiff competition from nearby developments, but the new buildings will command much higher rents, allowing Empire State to attract low-end and government style tenants. And although I disagree with this for the majority of corporate tenants, as noted above, I think the argument holds water for government tenants. The problem with this line of thinking lies in the fact that Empire State will face competition in luring those tenants away from the World Trade Center. When Tower 1 of the World Trade Center opens, the General Services Administration (GSA) will occupy 415,000 square feet of space. Other potential government tenants - the New York State Office of General Services (OGS), had committed to the tower, but recently pulled out. Both the GSA, which will take space in the tower, and the OGS, which had a commitment to take space, had political motivations for taking the space. Government agencies want the World Trade Center to get rebuilt, as it will cement for any politician a major win. This political wildcard will prove extremely difficult for Empire State to overcome when trying to lure tenants into its buildings, especially considering that The World Trade Center project still has about 10 million square feet of office space approved and ready to build when a tenant decides to sign a lease.
Other Developments
Besides the three major Midtown developments and the World Trade Center, the Empire State Building has to contend with 3.5 million square feet of new office space coming to the market from the likes of Boston Properties and other major developers.
These smaller developments can get underway with a smaller commitment from a major tenant, in contrast with the larger projects mentioned above that require a large commitment from a tenant. The fact that Empire State has to fight on both of these fronts against new developments, in addition to the waning demand from large blocks of space, could prove very challenging.
Conclusions
The total for all the new developments listed above will rise above 20 million square feet, all of which will directly compete with Empire State. I did not talk about the many other institutional-style buildings with large blocks of space coming onto the market, which will also pose a tremendous challenge to Empire State.
In a word, Empire State has made a valiant attempt at transforming itself from a low grade building, into a truly world class building. But in my opinion, that effort will fall short both because of new developments, and lack of demand. We need look no further than Times Square, where a brand new 1.1 million square foot building, 11 Times Square, still sits nearly 50% vacant, waiting for an institutional tenant to take a large block of space. Empire State will not only face this space challenge, but also fierce competition from competitors who offer a better, higher quality product.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Economic Crisis 2011

Justify the economic crisis in 2012 will happen ...certainly no one person who can answer with certainty ..., at least we can predict ... but more important is whether or not a crisis in 2012 necessarily for the business or business owner will always retain even always trying to develop business y,......

but even so if we are moving in the field of business must still be alert to what will happen in times to come. thus in this article will be described how the steps in overcoming the economic crisis will affect the business we are living:
1. Preparing human resources (staff) are ready to fight in any condition.
human resource management is very vulnerable at all because this is the basic capital in improving the business will continue to exist in times to come. certainly very difficult in fostering an employee to always care about the job responsibilities that have been imposed. of course that is best done by a leader is to approach an individual basis so as to appear not to fear the leader, a leader must be able to instill a sense of belonging to the company, because with the companies that we will live in prosperity and ....
2....

Health care system

A health care system is the organization of people, institutions, and resources to deliver health care services to meet the health needs of target populations.

There is a wide variety of health care systems around the world, with as many histories and organizational structures as there are nations. In some countries, health care system planning is distributed among market participants. In others, there is a concerted effort among governments, trade unions, charities, religious, or other co-ordinated bodies to deliver planned health care services targeted to the populations they serve. However, health care planning has been described as often evolutionary rather than revolutionary.

The explosive growth of managed care has led to an increased role for general internists and other primary care physicians in the American health care system. This change is welcome in many respects, since generalists have perennially been undervalued by health care institutions, payers, and even patients. The greater prominence of generalism has led to an increase in the number of medical students who choose careers in primary care, expanded job opportunities for generalists, and a modest increase in the incomes of primary care physicians.

Two of the principles underlying generalism, whether in the form of internal medicine, pediatrics, or family medicine, have been comprehensiveness and continuity. Ideally, the primary care physician would provide all aspects of care, ranging from preventive care to the care of critically ill hospitalized patients. This approach, argued the purists, would result in medical care that was more holistic, less fragmented, and less expensive. To its proponents, the notion was so attractive — the general internist admits the patient to the hospital, directs the inpatient workup, and arranges for a seamless transition back to the outpatient setting — that questioning it would have seemed sacrilegious merely a few years ago.