Moonstone Monitor 24 January 2008
Our House was very very fine House
The Crosby Stills and Nash song came to mind when I read an article last week in which one of the four big banks stated that fears of a crash in the housing market was "premature" as the warning lights were still very dim. Not a very apt comparison to use in these days where the light at the end of the tunnel appears to be a candle.
Reasons for their view include the following:
* Although bond redemption constitutes 10.4 percent of a normal household's expenditure, this is not abnormally high compared to 14 percent in 1998.
* Various figures are given on arrears in bond installments, with only 0.9 percent being more than one year in arrears and 1.5 percent behind between three and five months.
* Since 2006 there was a 60 percent increase in losses sustained by the banks, but this was off a low base.
In this same period (since January 2007) there was also an increase of 30 percent in housing loans. What is worrying about this is of course the fact that anyone and everyone involved in providing credit and loans were offering all kinds of lucrative deals to attract the maximum number of clients before the advent of the new regulations on credit provision in July.
There can be little doubt that some substandard housing loans went through, but the major concern should be the total picture of consumer spending, as measured by government which lead to interest rates being increased by four percent over the last 18 months to try and curb it.
A major factor in the USA's "sub-prime bond" crisis was the granting of loans below the normal rate for an initial period. When the higher loans kicked in, many were unable to maintain payments, and defaults started mounting.
The same is likely to happen here, despite the fact that some experts may disagree with this view. Those of you who, like me, do their own grocery shopping, will know what impact rising food prices had on a household's monthly expenditure, particularly if you enjoy red meat. Add to this the fuel price and a huge rise in rates and taxes, and it is easy to understand that for many people there is to much month at the end of the money.
Our concern hinges on the impact hereof on the retention of our business. If the client has to choose between keeping his house or maintaining his policy payments, the latter would be his third choice, as we all know.
We would suggest that the proactive step for financial advisors would be to identify their potential "bad debts" and taking the steps necessary to ensure maximum damage control.
The worst thing you can do is to ignore these clients. Sometimes a sober conversation can help clear a troubled mind and lead to a decision that is far better than the client would have made on his own panicky self - better for him and for you.
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Speak your Mind in 90 Days
The article hereunder should come as a relief to insurance companies that the constitutional court has ruled in their favor regarding the contractual clause that a client should take action within 90 days if dissatisfied.
(Prepared by Candidate Attorney Nwabisa Ntuli, of the George Office of Millers Incorporated Attorneys)
In our June 2005 Newsletter we reported on a matter of Barkhuizen vs Napier, with regard to a dispute between Mr. B and his insurance company as a result of the fact that he had instituted action more than 90 days after his claim had been repudiated, when in terms of his insurance contract, he only had 90 days.
The matter has now gone full circle, by having been heard in the Constitutional Court. In response to his claim, the company alleged that Mr. Barkhuizen’s claim was barred because he had not instituted legal action within 90 days as required by the contract. In reply, Mr. Barkhuizen alleged that the clause relied upon by the insurance company violated section 34 of the Bill of Rights which guarantees the right to approach a court for redress as well as public policy which also protected this right. He submitted that the clause was therefore unconstitutional and that it should not be enforced.
The Pretoria High Court upheld the challenge holding that the clause violated section 34 of the Bill of Rights. On appeal to the SCA the Appeal Court reversed the decision of the High Court.
It held that section 34 does not prohibit time limitation clauses. In addition, it held that there was no evidence that Mr. Barkhuizen did not freely and voluntarily conclude the insurance contract. It concluded that the time limitation clause did not therefore violate the provisions of the constitution.
The Constitutional Court (by majority) held that the proper approach to Mr. Barkhuizen’s constitutional challenge is to determine whether the time limitation clause is contrary to public policy as evidenced by constitutional values, in particular, those found in the Bill of Rights. The question was whether the period of 90 days allowed to him, to sue, was adequate or fair. When the 90 days period commenced to run, Mr. Barkhuizen had all the information that was necessary for him to sue the insurance company as he had already lodged his claim with the insurance company and the insurance company had rejected his claim. In addition, there was no evidence that the contract was not freely concluded between persons with equal bargaining power or that Mr. Barkhuizen was not aware of the clause. Although the contract required him to submit his claim to the insurance company within 30 days, Mr. Barkhuizen submitted his claim to the insurance company within 8 days of the accident through his insurance broker.
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Paul se Perspektief/ Paul's Perspective
I came across a website that provides one with the number one song on the hit parade on the day you were born. My song turned out to be "Unforgettable" sung by Nat King Cole. Now before you start giggling and offering me your late granny's walking stick, remember that's when I was born. The web address is http://www.everyhit.com/dates.
Benewens die negatiewe impak wat Eskom se beurtkrag op die land se ekonomie het, is daar 'n verdere nasleep in die vorm van grappe en e-posse wat die kuberruim vervuil het en waarvan die lees en aanstuur produktiwiteit erg benadeel het. Mens kry die idee dat jy die erns en omvang van 'n probleem kan meet aan die hoeveelheid grappe en spotprente wat die rondte doen. As jarelange WP ondersteuner weet ek maar te goed hoe die geringste terugslag uitgebuit word deur diegene wat jou nie goedgesind is nie.
Ons hoop om u binnekort amptelik te laat weet wat die standpunt van die korttermyn versekeraars is rakende die situasie waar inbraak gepleeg word waar alarmstelsels buite werking is as gevolg van beurtkrag. Dit is 'n baie relevante probleem vir ons en ons kliënte, en iets wat u seker aan hulle sal wil oordra.
"Caffeine appears to lower a woman's chances of developing ovarian cancer, US researchers found, while smoking cigarettes and drinking alcohol do not. Risk also appeared to decline the more total caffeine and coffee a woman consumed. Decaffeinated coffee had no apparent benefit. The researchers found no significant link between current or past smoking or drinking and overall ovarian cancer risk, though cigarettes seemed to raise the likelihood of one rare form of the disease."
When I read this, I felt a strong urge to share it with readers who, like me, must be sick and tired of all the health warnings flying around all the time. While the changes of me contracting ovarian cancer must be relatively small, researchers will list enough other side effects to scare me off anything that is remotely enjoyable.
My contention is that we were born with an innate ability and biological arsenal to fend for ourselves against viruses and diseases, but over the years we have allowed the Mother Grundy's of this world to scare us into relying on medication. This in turn has caused our natural immune system to collapse.
If a catastrophe has to hit this country tomorrow, who do you think has the best chance of survival; those with the carefully structured healthy diets, or the unfortunate poor among us who has to survive scraping through our dirt bins?
Being a realist, I will continue enjoying full cream milk in my coffee and good wine with my red meat - you never know when disaster can strike, and I want to be prepared.
The court further found that Mr. Barkhuizen waited for two years after being told of the rejections of his claim but did not furnish any reason for non-compliance with the clause. In the circumstances the clause was not unfair or unreasonable. Several of the other judges disagreed stating that 90 days is merely too short a time to be reasonable, but it's the majority decision that counts.
