BRIC+ News & comments

Discussion in 'Business & Economics' started by Billy T, Aug 10, 2008.

  1. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    BRIC+ News records economic data and locally published POVs, often with US comparison. Typically this is NEW data from newspapers, not information easily found on the web. If only Billy T supplies this thread will sink to it grave, but he hopes other not in US or EU will add to thread. The US and EU are no longer the only countries that matter economically. The world is rapidly changing.

    BRAZIL has many economic indices and groupings. For example four levels (Elite, Average, Poor and Miserable) based on the family's monthly total income.
    E > R$4,591; > A > R$1,064; > P > R$768; M < R$768. Currently US$ = ~1.6R$ so these income levels are far below those of US.

    16% are E
    52% are A
    14% are P
    18% are M

    But many of the Ms are not really miserable. They just live outside the cash economy or are not with disclosed salaries. Typically the Ms are rural folk who only need cash for flour, cooking oil, second hand clothes, electricity, beer, etc. They grow their own food, coffee, tobacco, etc. cook on a wood fire, and help each other build their house, etc. Tools are often passed from father to son but they too are bought (knifes, nails, saws, fish hooks & line etc.). When they kill a pig, they distribute some to others and later will receive something. I.e. they live in close knit communities and mainly lack adequate modern medical* care, but have herbs and teas etc. For example, to stem blood flow from deep cut, they will use clean spider web, which is probably a good idea as that protein will be removed as the wound heals and does not seem to provoke the immune system. Many Ms work hard but seem happier than some of the E group. They do not have a phone, but gossip and news spreads to everyone in their area in less than a day.

    To represent the material quality of life alternative system exists, which ignores income and focuses on possessions and education levels giving points for various items. This system has five levels “A” the highest thru “E” the lowest.

    By both measures, conditions for classes D & E Brazil have significantly improved during President Lula’s two terms, but purchase of some items has dropped some recently for classes A& B. For example, compared to June 2007, June08 sales of items for hygiene and cleaning to classes A&B were down 6.9%, to class C down 3.5% but to D& E were up 1.1%. Perhaps the Ms now no longer use a well chewed stick to clean their teeth, but now have tooth brush and paste. Etc.

    Brazil has 3% of world's population is rich in fresh water, farm land, sunshine & minerals including oil (but the newly discovered light oil is deep) but only produces 2% of global GDP as it has corruption and exports mainly low value added items (food and minerals) but there are exceptions: More than 3 million efficient "flex fuel" car will be made in 2008 and significant fraction exported. Embaraer is world's main producer of mid-size (70 to 120 seats) airplanes and #4 overall, with a very popular line of corporate jets. (Order backlog wait is several years so used ones sell for much more than a new one. - This popularity is due to fact one collided with a big Boeing, breaking it into two pieces and killing more than 300 people, yet the much smaller Embaraer jet flew safely on to land half an hour later with no one even injurred!)
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    *It is available in some nearby town for free but few go there to get it when sick and the clinic line forms at 8AM so it is not either easy or the highest quality. Brazil does preventive care well with free vaccination, blood pressure monitoring, etc. using mobile busses etc. to reach the rural poor. They park at the local school for a few days and many do come.
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    After this “background OP” I will be more narrow with specific details, but if no other non US/EU post appear, I will just stop. I would like to see some post from other non US/EU countries to understand what is happening in the economic world better.
     
    Last edited: Aug 11, 2008
  2. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Following is an example of how Indian government disturbes the free market. They have subsidized gasoline prices also but as the number of cars is increasing and price of oil (even at today's $114/b) is much higher than a year ago, this subsidy must be, and is, being reduced by monthly mandated increases at the pump. What is typical price now?

    "...The Indian sugar industry could be a major beneficiary of the quest for sustainable alternate energy. It has always been subject to absurd controls because prices and offtake of this key commodity directly affects the political stances of 60 million farmers and many more industry workers across six states.

    States set cane procurement prices; mills must sell a proportion of their produce at controlled prices; mills are restricted to small catchment areas for cane procurement; distillation is controlled; molasses sales are controlled; open market sales quotas are capped month-by-month, etc. As a result of these inefficient controls, around 12 per cent of India’s labour force is stuck in an industry that generates 1 per cent of GDP. ..."

    From: http://www.business-standard.com/india/storypage.php?autono=330938
     
  3. Asguard Kiss my dark side Valued Senior Member

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    ok billy i will give it a go

    As far as direct aid to asian countries australia is more involved in governance as far as i know. For instance we have RAMSI (i think thats the right acronim) which provides governanance as well as security to the sollomons islands. Its more than a US style millatry intervention or UN peace keeping mission however. We have lawyers and judges over there (or did) helping to rebuild there justice system, we have public servents from all area's of goverment trying to rebuild there whole goverment ESPECIALLY from the AEC (Australian electrol commission).

    Then there is east timor where the aid is mostly in police and millatry rather than public servants.

    The last thing is Austaid which is the federal goverments aid program and is mostly focused on the asia paciffic region (though we do give money to africa as well)

    As far as economics is concerned china and India are MASSIVE buyers of just about an mineral we can did up. The main exception to this is uraninum which is tightly goverment controled, i belive we alow it to be exported to china because they are part of the anti perlifferation tretie, As far as india is concerned though there was an agreement signed with the howard goverment and George Bush its unlikly to be continued with the new goverment. Most australians belive that the US is untrustworthy when it comes to nukes anyway and if india wont join the existing tretie they wont get urainium (thats my reading of the policy as it currently stands though of course i could be wrong)

    China is such a big user of raw matterials however that they are even investing in Australia. There is a joint venture mine which is partually funded by a chinesse company (i THINK its a goverment owned country).

    Apart from minerals education is the biggest export we have to asia, there are lots of students on student VISA's in our uni's and even talk of actually operning up a campus of one of the SA uni's in china itself.

    Apart from training indians we act as a market for alot of the indian IT industry. To alot of australian's discust (because its very hard to understand the accent more than for any other reason) alot of call centers have moved to india and so have alot of IT work

    I hope this is what you wanted billy
     
  4. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Ref to 3:
    Brazil is actively helping in East Timor also (almost certain) as they speak Portuguese.

    AU and Brazil compete for the beef export market. You earn more as AU has higher quality (more tender) but Brazil sell more Kilograms of the tougher grass-grazed only beef. Last I read AU has serious drought & wild fire problems. Still true?

    We have higher quality iron ore, but shipping to China cost more. China is also helping economically here to increase exports (new rail and port facilities as well as more mines an equipment) Vale is world's largest iron ore exporter. Japan is doing the same for the alcohol from sugar cane industry. I think Canada has large part of the world's NEW uranium market. (The Rusians are still taking highly enriched bomb grade and blending it in to lower grades for cheap expansion of power plant grades but that supply will stop.) The price is now down,* but probably will go back up in a year or two.

    Not sure, but think Asians getting advanced degrees in US is down (Or at least not growing). Perhaps AU is taking part of that business away from US universities.
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    *Here are some notes I filed from Forbes article 4 days ago:
    7Aug08 (Forbes) Cameco, CCJ has 19% of global production, > 500e6 pounds of proven and probable reserves. With oil apparently in retreat, uranium spot price is down more than 50% from a year ago even with increasing talk about more nuclear reactors. Uranium’s boom-and-bust is now in a bust stage due to oversupply, but demand is slowly increasing. We're not going to see prices back at $130 a pound any time soon, but a gradual upward move from here seems likely. Cameco's Saskatchewan holdings are highest-grade in the world but their region has the potential for frequent mishaps (floods as last year. closing mines). RBC Capital Markets forecasts that Cameco will earn $2.63 a share in 2008, increasing to $2.83 in 2009 and $3.04 in 2010.
     
    Last edited: Aug 12, 2008
  5. Asguard Kiss my dark side Valued Senior Member

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    23,052
    bush fires happen every year, big ones every couple of years. Thats just part of life here (and the reason our vollies are always in the US helping them out), they get really bad because of the nature of the trees here.

    As for drought yes we have a HUGE problem with it, its a once in 1000 year drought and our water surplie is drying up. However as far as i know this only effects SA and the lower southen states. Queensland, the areas around darwin and WA have sufficent water.

    As for grain feed beef vs grass feed i think you will find you have things backwards there. Grain feed only a VERY small percentage of our exports and only as far as i know to japan and the US. All meat for the domestic market and most of the stuff we ship overseas is grazed because we dont like the fat content of grain feed meat (or the cruelty of the practice). Plus we have wide areas for the cattle (and sheep for that matter) to graze.

    I cant comment on the quality of iron ore from australia vs else where but do know that the australian ecconomie is compleatly reliant on the surplie to china currently. If it wasnt for that (and the large public sector workforce which spreads that wealth around) our ecconomie would be in compleat melt down

    We have one further psycological advantage in our economic dealings with china, our PM speaks fluant manderin:p

    BHP and Riotinto have been skyrocketing even while the rest of the stock market crash's
     
  6. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    OK - you must have better genetic in the cattle herds then. More than half in Brazil are Zebu (have big hump on the back and come at least in part from Indian stock - I think they withstand the heat better or something is why they dominate.)

    Brazil still sell more to USA than anyone else, but that trade is dropping and to China is rapidly growing. If I knew any thing about raising pigs I would buy a pig farm here. Pork is the preferred red meat in China I think and price has about trippled in last couple of years as population gets more wealthy and local farmers move to the cities (roughly a million each month!).
     
  7. Asguard Kiss my dark side Valued Senior Member

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    thats falling here because of the price of grain. Piggeries are going out of buiness all over the place
     
  8. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Brazil has terrible railroad infrastructure. soy beans mainly go to port in trucks. Sometimes the line of trucks waiting on side of road to enter the port is 20 Km long! The cost of freight both locally and to China is up greatly so less soy bean were planted (lower production by 3 million tons) -If soy were converted into pork, near the farms, I think it might be a good business here.

    From today paper (Year to Year comparisons):
    Freigh cost up 57% on car ships, 93 % on frozen food ships, 150% on iron ore, 93% on container ships.

    To/from Argentina up 17%

    Above is same economic effect as a 9% increase in tariffs.

    To cut air polution and traffic problems in Sao Paulo, two weeks ago truck were forbidden to enter city region for about 3hours both in the AM aqnd PM rush hours. This is estimated to add R$23 billion (US$14e6) to freight cost this year (if continued)!

    China or Japan (I forget which) is building big steel plant here as like my soy to pork idea, Iron ore made into steel here is cheaper to ship to China.

    Ocean transport is no longer cheap, but in the world's ship yards (all over booked and many new "green field" yards are now opening) are underconstruction a 40% expansion of the world's fleet. Deep water drill ships now command $600,000 PER DAY rental fee and get signed for 3 to 5 year contracts as so few are available.
     
    Last edited: Aug 12, 2008
  9. Asguard Kiss my dark side Valued Senior Member

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    23,052
    there have been various infestructor problems here as well most of which i blame on the federal goverment (the states dont have enough money to provide the services they are expected to provide). For instance the ports need to be expanded to acomidate the increase in traffic
     
  10. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Argentina defaulted on its debt in 2001 but has clawed back with impressive GDP growth from the low base that followed default, thanks mainly to Hugo Chavez buying their bonds, recent another billion more in US dollars in last 10 days. Chavez has made his banks buy these and older bonds but they are also trying to unload them. Result is that they have dropped in value about 12% in last few days.

    Yesterday instead of using the new US$ 1 billion for productive investment in Argentina, the Argentina government announced it will buy back the bonds the banks are dumping to prevent further fall. (S&P lowered the Argentine rating from B+ to B, five steps below Brazil, recently when the inflation data for July came out.)

    There is a lesson here for the US also, IMHO, as the FED buys Treasury bonds, issues guarantees, etc. - The well-known physics observation that you cannot pull yourself up by your boot straps. Clearly Argentina will default again before the US does, or more probably both will just print the needed money, but both are following the same policy now - When others do not want to buy as much as you need to issue, just buy them yourself. I.e. pile on more debt and/or print money, but hide it as best as you can.

    In contrast Brazil continues to prosper. Today's paper notes that the salary minium now buys 20% more electric power than it did four years ago -this despite the general rapid rise in energy costs. (Data was for typical household using 200KW hours / month.) Today's paper also states that during next three years, Mercedes will invest R$1,5 billion (almost 1 billion US) to nearly double its car production capacity in Brazil.
     
    Last edited: Aug 12, 2008
  11. kmguru Staff Member

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  12. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Kmguru's post tells of mid level financial jobs going to India, but even high level medical jobs are too. There have been several stories on TV of surgate mothers having baby for US and EU women - one small Indian city has that as its major economic activity, (A local doctor developed this, recruits the women, makes all arrangements, etc for US$5,000, hotel not included.) but I am speaking of reading X-rays.

    Emergncy X-rays are processed in the US, but routine X-rays taken as part of a general check up in many major medical centers go thru the internet to India during the late US evening. Are read in India by a radiologist, who may even be graudate of US med school, during his normal work day. He writes up the report and sends it back to the US or EU center that made it. It is back in the center in less than 24 hours and at less than half the cost, days before* all the blood work etc exams reports are.

    If blood could go thru the internet - most routine US and EU medical test business would be done in India now. (Not only do they speak English, cost much less, but the day/nite difference also often helps.)
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    *This delay may be soon over as now in some doctor's office is a compact machine originally designed for NASA's "space medicine" tests. It is fullly automatic and FDA certified for many (99% of common tests done) so blood and other body fluid work no longer needs to go out to a lab. See www.Abaxis.com (I own shares in them.)
     
    Last edited: Aug 13, 2008
  13. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    "JBM Auto, an Indian auto parts maker will invest as much as INR4.1 billion {what is that in dollars?} during the next two years building three manufacturing plants.
    JBM has established an equal joint venture with Magneto to invest INR2.45 billion building a plant at Chakan, near the western city of Pune.
    The factory will supply skin panels for cars to a joint venture between Tata Motors Ltd. (TTM) and Fiat SpA (F.MI).

    JBM has also formed a joint venture with Ashok Leyland, India's second-biggest {Tata is No.1} truck and bus maker by sales, to supply body panels for truck cabins.
    The trucks will be introduced by the end of next year at a new factory by Ashok Leyland at Pantnagar, in the northern Uttarakhand state. JBM will invest about INR650 million to build its facility.
    JBM will also set up a facility in the port city of Chennai to supply parts to the Renault-Nissan joint venture for their cars."

    From:http://news.morningstar.com/newsnet...J/200808140825DOWJONESDJONLINE000527_univ.xml {I got as I own ADR shares in Tara Motors, maker of the Nano - the US$2,500 car. See pictures in another thread.}

    Many more Indians will be driving soon - oil prices to be above $150 soon, not years after the Olimpics, as many more Chinese also begin to drive and factories that closed for the control of pollution make up for lost time, and China can focus on restoration of earth quake damage and restart its rapid building a modern society's infrastructure again.
     
  14. kmguru Staff Member

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    India News

    India hopes to send spacecraft to moon: PM
    Prime Minister Manmohan Singh Friday said that India hopes to send a spacecraft to the moon this year and called it "an important milestone".


    Faculty shortage: IITs to go on a global hunt
    All the seven old IITs are facing a shortage of teaching staff between 15 to 25 percent. The 13 Indian Institutes of Technology (IITs) battling a severe faculty crunch are set to go on a global hunt to appoint "quality young teachers".


    Jindal Steel to invest Rs.183 bn on Chhattisgarh unit
    Jindal Steel and Power Ltd (JSPL) will invest Rs.183 billion in Chhattisgarh to set up a steel unit and a 1,000 MW captive power plant, a company official said Friday.


    Tata Power eyeing $3 bn nuclear power foray
    With India's nuclear isolation likely to end soon, energy major Tata Power is busy planning and studying a minimum $3 billion (Rs.120 billion) foray into nuclear power.

    New scheme to generate 4 million rural jobs in 5 years
    The government has approved a new employment generation programme with an outlay of Rs.47.35 billion to create around 4 million jobs during 2008-12. (No scheme for America!)
     
  15. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    from post 1:
    Much of the progress of lower economic classes has been due to "Bolsa Familia" (BF) program started by administartion prior to Lula and then expanded by Lula.

    In June 2008, BF cost government (transfer of wealth to poor) R$866 million (~US$541 million) and went to 11.1 million families to keep 16.2 million kids, ages 6 to 17, in school (and vacinated etc.) 21,000 families lost their BF support, for failing to do these requirements. Monthly aid to family was between R$20 and R$182 with average per family of R$78 (or about US$ 49/month). BF's relatively low cost compared to social benefits is widely recognized by economists and program is being copied in other other countires. (May even be a net negative cost when the reduced rate of illness and crime costs are considered. Only 625 girls became pregnate prematurely and their families were among the 21K that lost their BF aid. The government gives out free contraceptives much to the dislike of Brazil's Catholic Church, which is the largest in the world.)

    Closely related, and not much liked by industry, an employeed woman now get 6 months maternity leave, instead of three. Not sure of details, but either her job or very similar one waits for her return or she gets extra compensation. Employer associations are making comments that this is an "anti-woman law" as it will bias employment towards men, but I doubt there is much truth to that as women get less pay for the SAME* job here in Brazil as they do in most countries. I doubt it applies to maids as they are already exempt from many other labor laws, but also are making progress: I.e. If work 3 or more days per week, their employer must now register them and pay into the Brazilian version of Social Security.(INSS)

    By contrast, US lets it urban school be under funded, and be training grounds for crime. US taxpayers pay more than Harvard tution annually on average for each prisoner in Jail. US has highest fraction of it population in jail of any "developed" nation. The cost of their crimes (and larger police forces) is NOT included in the above comparison to Harvard tution**- Just the prison costs.
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    *Recent study stated 35% less in SAME job, but interestingly the first job of a woman pays more than a man's first job. (R$1,401.63 vs R$1,039.76 on average per month). These facts are not in conflict as the woman, officially employed, typically has a more intellectual job (bank clerk, secretary, etc. vs manual labor or motorcycle delivery man***, etc.)

    **This comparsion is based on data of several years ago. - Harvard's tution may now have caught up to "prision tution"

    ***City traffic is so bad (due to rapid increase in number of private cars) that pizza, business papers, small drugs or store items always go to your house in boxes on back of a motor cycle. They drive like crazy thru the slow moving cars as usually their only pay is your tip and they are amoung the "not officially employed" of course.
     
    Last edited: Aug 17, 2008
  16. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    There has been much self-congratulation in the press about the success of the Bolsa Familia program (see prior post) but recent newspaper editorial noted there is work still to be done: 15 million families still are in the "M" or "misserable class." 57.4% of them do not have indoor toilets, 43.7% did not have any job income* in the month prior to the survey interview, and only 16% had their job officially (their work record book signed by their employer).
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    *Quite a number of old people (single person family), but many of those with kids in school and less than R$120/ month job income, were getting Bolsa Familia aid.
     
    Last edited: Aug 17, 2008
  17. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Use of alcohol fuel is up 52.9% in first half of 2008, vs 1H07, but so is production so price at pump has not significantly changed either way. (Many producers are just making cost, not profits and some are being bought up in consolidation of the still very diverse local industry.)

    This surge to alcohol has actually caused the price of gasoline at the average station to drop 5.7% in 1H08 vs 1H07. In part, I think, is due to fact that now the percent of "gasoline" that is actually alcohol (and much cheaper) is at the upper limit (25%) to help out the alcohol industry with it glut of production. (Made on less than 2% of Brazil's exisitng farm land.)

    I do not know, but guess the per mile cost to drive a gasoline only* car in Brazil is about 2% less now than last year.
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    *No one uses gas if their car can use alcohol.
     
    Last edited: Aug 17, 2008
  18. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    In contrast to Joe American, as mentioned in my last three posts, things are rapidly improving for Pedro Brazil. Here is how he is spending his increasing purchasing power (10.6% nominal in sales - ~5% inflation adjustment) is real 5.6% up in one year!):

    Increases in nominal values (1H08 vs 1H07):
    Fuel & lubericants ............up 8.3%
    Food.................................up 5.9% (more meat, less potatoes, but probably slight decrease in calories as being trim / beautiful etc. is more popular / important now)
    Clothes & shoes.................up11.6%
    Furniture and appliances.. up18.5%
    drugstore sales..................up12.8%
    Computers & related sales..up30.9%
    Books, newspapers, etc. ....up11.4%
    Personal & cleaning items ..up21.5%
    New Vehicles & parts .........up22.3% (Brazil will make more than 3 million cars in 2008 - about same as USA on per capit basis, & many more motorcycles.)
    Construction materials.......up11.1%

    Total Retail Sales up 10.6% 1H08 vs 1H07.
     
    Last edited: Aug 17, 2008
  19. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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  20. Billy T Please use Sugar Cane Alcohol Fuel Staff Member

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    Brazil is not as exposed as many to home mortages defaults because that is not how most are financed, almost never for a unit in a high rise, where most of Sao Paulo's population lives. Before telling how here is some data on total consumer debt as Percent of GDP:

    Brazil ...37% (and among the slowest growing in the world!)
    USA.....180%
    Japan ..180%
    UK ......160%
    Italy ....90%
    France..90%

    This is because Brazil's mortgages total only 2% of GDP, but in the USA mortgages are are more than 70% of GDP. -All data form a recent World Monetary Fund report, but I have it indirectly from my newspaper.

    In Brazil when builder of a high rise gets option on the lot he will use, first thing he does is build a fullsize show model apartment on it, and hire a bunch of pretty young girls to stand on side walk waving big flags to attract passing cars and walkers. This may last a month or so, until all the units are under purchase contracts. Then he tears down the sales model he built and starts to dig the building foundation. With the contracts, and the monthly inflation adjusted payment from the buyers he builds the building.

    He is probably a big builder with dozens of projects in various phases of construction. So some people are making the last payments on one as he is breaking ground on the newest one. He may at time be slow in paying some his suppliers, but they do not want to lose his business, so extend him a few months credit. Or he may get a "bridge loan" for half a year etc. None of the buyers has a mortgage or a debt* OR A UNIT IN THEIR NAME, until the final payment is made to the builder. Typical term is only 10, not 30 years.
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    *Effectively it is a rent to buy plan.
     
    Last edited: Aug 29, 2008

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