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Rent Control & price ceiling

admin — Wed, 12 Oct 2011 18:11:01 +0000

Rent controls are a price ceiling intended to protect residents from high housing prices. Rent controls are currently in place in many U.S. cities, including New York, Washington, D.C., Newark, New Jersey, and San Jose, California. Most of these measures were enacted during either World War I1 or the 1970s, when inflation was high. Rent controls peaked in the mid-1980s. At that time, more than 200 cities, encompassing about 20 percent of the nation’s population, imposed rent controls.
Because rent controls push the price of rental housing below the equilibrium level, the amount of rental housing demanded by consumers will exceed the amount landlords will make available. Initially, if the mandated price is only slightly below equilibrium, the impact of rent controls may be barely noticeable. Over time, however, the effects will worsen. Inevitably, rent controls will lead to the following results.

Currency Trading

admin — Tue, 05 Jul 2011 18:08:41 +0000

Some corporate Treasuries are run as a profit centre and thus this part will also be of interest to them. For the purpose of dividing currency activity into trading and hedging, we assume the generalization that corporate Treasury for the most part uses the currency market for hedging purposes. The aim here is to show how a currency market practitioner can combine the strategy techniques described in this blog for the practical use of trading or investing in currencies. Given that I focus primarily on the emerging market currencies, we will keep the focus to that sector of the currency market, though clearly these strategy techniques can and should be used for currency exposure generally. The example we use here is that of a recommendation I put out on January 10, 2002. The key point here is not just that the recommendation made or lost money, but also how the strategy was arrived at. The aim is not to copy this specific recommendation, but to be able to repeat the strategy method. Note that these types of currency strategies should be attempted solely by professional and qualified institutional investors or corporations.

Auto loans

admin — Thu, 29 Jul 2010 11:29:29 +0000

Auto loan credit characteristics fall somewhere between those of mortgages and credit cards. They are secured but on a depreciating asset and are relatively short-term loans. Data on default rates is reasonably accessible where auto loan securitization issues are common.The main risk to all lenders comes from changes in tax policies that have a direct impact on the value of new and second-hand cars and a particular concentration on a particular class of vehicle or type of customer.
If a government acts to reduce taxes or import tariffs on new cars this will at a stroke lower the value of recently bought second-hand cars and the price of new cars. In cases where the reductions are extreme some people who have bought their vehicle on credit may simply return the keys for their original purchase and buy a new car.
Some lenders specialize in lending to taxi drivers or owner–drivers of coaches or trucks. The number of taxi licenses is frequently restricted and it is not uncommon for the cost of the license to be considerably more than the cost of the taxi itself. An increase in the number of licenses issued, a downturn in business or relaxation of licensing requirements will all have a negative impact on the value of the licenses and hence the lender’s collateral.