It's that time of year - relocation network meetings, how many can you attend or should you bother?

Can you believe how many meetings are happening the same week as ERC?  It's unreal, compensation conferences, tax conferences, benchmarking conferences, all in the same week when ERC is in Denver.  Which prompts a question I continuously struggle with, are these conferences and meetings worth our time and money and effort?  And I don't just mean the two annual ERC meetings, but also all of the regional and local meetings which, let's be real now, include 80% salespeople and 20% corporate clients (there are exceptions but very few).  So I asked my friend and co-worker David Cox, who currently is the Vice President of the Pacific Northwest Relocation Council, "why does he go to these meetings?"  And he told me the following: networking -- for business development, recruiting, forming business alliances, identifying emerging trends and how peers are dealing with them, rewarding high performers with a break from the office, public relations and name recognition, staying current on the "who's who" of relocation, understanding current focus of corporate clients and vendors.  David, thank you!  Those are excellent reasons and, admittedly, it's hard to make that come true for both sales, operations and corporate clients alike.  But, perhaps those of us, myself included, who are responsible for making these meetings happen, should think about the last few meetings and the next few meetings to see if they accomplish all of these things for everyone.  If we did, maybe more people would attend and make for a better connection.

Life is what I make of it

I can't be reminded often enough of that.  When I see people around me who really "drink" in life and bring joy and passion to everything they touch, I'm am enamored and impressed.  A couple weeks ago I read an article in the Wall Street Journal about a professor at Carnegie Mellon named Randy Pausch.  At some universities, there are some lecture series called, "Your Final Lecture."   A catchy little idea where professors are asked to lecture as if it was the very last one they would be allowed/able to give.  Unfortunately, Randy's situation, it is his reality.  He has terminal cancer and he will die soon (3-6 months), leaving a wife, three young children and great legacy.  I don't know him, but I feel like I do after hearing his story and his lecture.   Here is the link, if you click on the WSJ article  it has a quick, good summary of the situation and the lecture.   But if you want to really hear his message, the full lecture link contains it all including some introductions (it runs about an hour).  It's very heartbreaking and heartwarming . http://www.cs.cmu.edu/~pausch/

2007 Transfer Volume and Cost Survey

The 2007 Transfer Volume and Cost Survey from ERC has been released and once again its revealing about organizations true habits and realities regarding relocation of their employees. I really look forward to this issue every year, I guess because it always seems the most objective and consistent survey within the industry. If you don't subscribe to Mobility magazine, you can find the survey here, http://www.erc.org/MOBILITY_Online/current/0907lamech.shtml

Some of the more interesting findings this year include....companies had more homeowner relocations than renters in 2006. There aren't enough specifics to explain why, but I wonder if it could be are there more companies offering home sale benefits or has the aggressive lending environment allowed renters to become homeowners or does this year's survey contain a very different set of reporting companies?

Also notable, the #1 reluctance to relocate reason this year, "slowed real estate appreciation." This is shocking only because there are so many ways to mitigate that reason: through benefits, by policy or especially in pre-relocation counseling during the recruitment of an employee to either join the company or a take a new position in a new location. I find it amazing that someone would forego career growth, personal income growth and better "work" because they are disappointed they can't get 25% per year appreciation on their home. Now, if all these folks are people who are upside down on their mortgage...well that's a different story, but isn't that a much talked about in the media but relatively small part of the population? Of all my personal friends, I can only think of a couple who are probably in more home than they can afford in a "normal" market with a "normal" lending rate.

There are some new and not-new ideas on how companies are dealing with the real estate markets in regards to relocation, check out page 4 of the survey.

Finally, I don't remember the last year the results showed a DECREASE in the average total cost of a relocation. I don't have a clue as to what might have caused that, unless of course they only surveyed Graebel Relocation customers :)

One word about my Blog in general, I'm getting fired up again and you'll see some new commentary from me and others here about once per week between now and the end of the year. Future topics include: networking groups worth the time or not, how are some client's more helpful than others to suppliers and how much are fee-for-services destination services worth. If you have a topic you would like to see addressed, please let me know.

Two-too-tu-2 areas of mortgage/new home benefits to consider

First, is it time to do away with the discount point for corporate transferees? Or maybe you already have long ago. Here's an article which addresses how the point doesn't make much benefit for the consumer, so if that's the case, then why should companies continue to provide that benefit? You could use that somewhere else in your program with better ROI.

Second article, mortgage rates take a jump.

Hope either or both of these are of interest to you and your program managers.
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There's rarely a point in paying points, experts say
Saturday, January 6, 2007 - 12:00 AM
By Jeff BrownThe Philadelphia Inquirer

Pay points or not?
Anyone who's ever shopped for a mortgage has faced that question. And borrowers who expect to stay in their homes for some time generally have been advised to pay points to get a lower mortgage rate.
But new research turns the conventional wisdom on its head, showing paying points is a bad idea for most people.
For the most part, points benefit the lender, not the borrower.
Each point is an up-front payment equal to 1 percent of the loan. Paying one, two or three points gets you a lower interest rate and smaller monthly payments. With points, borrowers have more choices.
If you have the mortgage long enough, that saving will more than make up for the cost of the points. Once the break-even point is passed, you're ahead.
It's simple arithmetic.
The other day, for example, Wachovia advertised a 30-year, fixed-rate loan for 5.5 percent and 1.75 points. After paying $5,250 in points on a $300,000 loan, monthly payments would be $1,703.
The bank also had a 5.875 percent loan with just 0.125 points. Points on the same loan would be $375 — but monthly payments would be $1,775.
It would take 68 months for the $72 difference in payments to offset the extra $4,875 in points you'd pay to get the lower rate. After that, the decision to pay points would save you $72 a month for as long as you had the mortgage. You'd save $21,024 if you had the mortgage a full 30 years.
Seems simple enough.
But it turns out that most people get it wrong.
The problem, according to the study, is most homeowners don't keep their mortgages as long as they expect to when they get them, so they don't reach the break-even point.
Abdullah Yavas, a business professor at Penn State University, and Yan Chang of Freddie Mac, the mortgage-funding company, looked at 3,785 mortgages granted from 1996 through 2003.
They found the average homeowner paid off his or her mortgage three years before reaching the break-even point. Only 1.4 percent of borrowers kept their loans long enough to make paying points worthwhile.
The study also found that borrowers who declined to pay points almost always made the right decision. Only 1.5 percent of them would have saved money by paying points.
Disturbingly, borrowers who paid points tended to wait too long to refinance after rates dropped, missing chances to reduce their mortgage payments.
Apparently, this was because they mistakenly thought they should keep their loans long enough to "pay off" the points. In fact, the points should not enter into that decision. All that matters is whether the new mortgage would be held long enough for the reduction in monthly payments to offset the refinancing charges.
Points do have their place. After all, it is possible to save by paying them, if you keep the mortgage long enough.
But how do you judge that?
Most people probably focus on how long they expect to keep their home — until they start a family and need more room or until the kids move out or mom and pop retire.
But many of these events are not as predictable as we think.
Then there's another big unknown: Will rates rise or fall after you get your loan?
Even if you stay in your home as long as you'd expected, falling interest rates may make it worthwhile to refinance.
If that happens before the break-even date, much of what you'd paid for points may have been wasted. It becomes profit for the lender.
One last consideration: What else could you do with that money if you didn't pay points?
Taking the example above, imagine if the extra $4,875 spent on points instead was put in a bank account paying 5 percent interest. Imagine that if the higher points were paid, the $72 in monthly mortgage-payment savings could be deposited in the bank to earn 5 percent interest.
This postpones the break-even date by a year, to 80 months instead of 68. Because the bank account would be growing, it would take longer to catch up.

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Mortgage rates jump on strong labor market, inflation pressuresPosted 1/11/2007 1:03 PM ET
WASHINGTON (Reuters)

Average interest rates on 30-year mortgages crept upward in the latest week to 6.21% from 6.18%, according to a survey by finance company Freddie Mac on Thursday.
Rates on 15-year mortgage rates also rose, to 5.96% from 5.94%. And one-year adjustable rate mortgages averaged 5.44% compared to 5.42%.
A year ago, 30-year mortgages averaged 6.15%, 15-year mortgages 5.71%, and the one-year ARM 5.15%.
Even with the slight increase, Freddie Mac expects rates on 30-year mortgages to stay below 6.5% throughout 2007, said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.
It also expects home buyers to borrow fewer adjustable rate mortgages this year.
"The gain in employment in December exceeded the consensus forecast, and helped ease fears about the state of the economy. But stronger employment and higher wages put upward pressure on inflation, which, in turn, translates into higher interest rates," Nothaft said.
Last week the Labor Department reported the United States added an unexpectedly large 167,000 non-farm jobs in December and average hourly earnings rose by 0.5% that month.
Freddie Mac said lenders charged an average of 0.4% in fees and points on 30- and 15-year mortgages, both unchanged from last week. They charged 0.5% on the one-year ARM, down from last week's 0.6%.
The "5/1" ARM, set at a fixed rate for five years and adjustable each following year, inched upward to 6.03% from 6.02%. Fees and points charged on the hybrid mortgage averaged 0.4%, the same as last week.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.
Copyright 2007 Reuters Limited.

Find this article at: http://www.usatoday.com/money/perfi/housing/2007-01-11-mortgage-rates_x.htm

Mixed forecast from economists

Hmmm, take a look at some of these comments and decide for yourself. Hopefully we'll know by end of Q1 what the real estate market looks like since that's the biggest impact to our transferees and their ability to relocate easily.

January 2, 2007
ECONOMIC FORECASTING SURVEY

Economy Poised For '07 Rebound,Forecasters Say
Weakness in Housing, Manufacturing Is Likely To Take a Lighter Toll

By MARK WHITEHOUSE
January 2, 2007; Page A1

The U.S. economy is poised to shake off the housing slump and regain momentum by the end of this year, and the credit goes to techies, bankers, chefs and shoppers, according to a Wall Street Journal survey of economists.
The panel of 60 economists who participated in the Journal's latest semiannual economic forecasting survey offered an optimistic outlook for 2007: The service sector should keep humming along as the recent weakness in housing and manufacturing abates and the Federal Reserve begins to reduce interest rates. That would allow the economy to expand at a rate fast enough to keep investors happy, but slow enough to keep inflation at bay. (See related article1.)
CHARTS AND FULL RESULTS
2
See and download forecasts3 for growth, housing, inflation and employment. Plus, views on the "Christmas Effect," the biggest risks to growth and predictions for the DJIA. Survey conducted Dec. 8-18.HITTING THE MARK

U.S. Trust's Robert McGee4 was the most accurate forecaster in the 2006 second half. How did he climb to the top?

Find More Online:6 Here is a sampling of other Web resources for tracking economists' predictions.
Even so, economists haven't stopped worrying about what could happen if the current slowdowns in housing and manufacturing spread further -- a pattern that has characterized previous recessions. In another potentially ominous sign, they increasingly differ about the economy's trajectory.
On average, the economists predict that inflation-adjusted gross domestic product, a broad measure of economic activity, will grow at an annualized rate of 2.3% in the first half of 2007 and 2.8% in the second half. That's up from a sluggish 2% in the third quarter of 2006, but still far below the robust annual growth rates of 3.2% for 2005 and 4.1% for early 2006.
"As long as you don't think the labor market is going to collapse or financial conditions are going to change, then you're starting to have the conditions for better growth down the road," says Bruce Kasman, head of economic research at J.P. Morgan Chase & Co. in New York.
The rapid expansion of technology companies such as Google Inc. and the huge bonuses lavished on New York investment bankers are just a couple of signs of the service sector's strength. Across the country, restaurants, hospitals, software makers and consulting firms are growing and hiring. All told, service businesses, which make up about 80% of the nation's economy, added 1.1 million jobs from May through November.

ABOUT THE SURVEY

The Wall Street Journal surveys a group of 60 private-sector economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted semiannually, at midyear and at year-end. Between each semiannual survey, four monthly updates are conducted for the most closely watched forecasts. This is the semiannual survey that evaluates how economists fared in the second half of 2006 and looks ahead to 2007. For prior installments of the semiannual and monthly surveys, see: WSJ.com/Economists7.
"We've been extremely busy," says Anthony Kolton, president and chief executive of Logical Information Machines, a Chicago company that provides research software to hedge funds, trading firms and investment banks. "There's a lot of money out there, and people have to put it to work."
The upbeat attitude in services contrasts sharply with the recent pain in the housing and manufacturing sectors. Builders have been slashing prices and production as they attempt to get rid of a large backlog of unsold homes. Despite a rise in November, new-home construction was down 30% from its January peak.
Housing-related industries shed 145,000 jobs from May though November, according to Zoltan Pozsar, an economist at Moody's Economy.com. Falling home values have also left people with less power to extract cash from their homes through home-equity loans and refinancings, a factor that many economists expect to take a bite out of consumer spending.
Along with slumping auto sales, the drop in housing activity has affected all kinds of manufacturers, from drywall factories to furniture makers. The Institute for Supply Management, a purchasing managers' trade group, said that its index of manufacturing activity for November fell to 49.5, the lowest point since April 2003. (Any number below 50 indicates contraction.) By contrast, the ISM's index of service-sector activity for the same month rose.
"It's really two very different economies, depending on whether you're looking at the goods or service industries," says J.P. Morgan's Mr. Kasman.
The bottom line is that the strength in services will help to keep the job market relatively healthy. In the consensus scenario, nonfarm businesses will add about 100,000 jobs a month in 2007. That should be strong enough to slowly lift wages, but not to keep the unemployment rate from creeping up to 4.9% from 4.5% in November.
The economists surveyed expect year-to-year inflation to decline to 1.7% in May from 2.0% in November. As a result, they expect the Fed to shift its focus from fighting inflation to helping the economy grow, lowering short-term interest rates to 4.75% by the end of 2007 from the current 5.25%.
That's a big change from six months ago, when forecasters saw the Fed's battle with inflation as the greatest challenge facing the economy. "The Fed was hoping to slow the economy down enough to take the wind out of inflation without triggering a recession," says Nariman Behravesh, chief economist at consulting firm Global Insight in Waltham, Mass. "So far it looks like it has succeeded."
Most forecasters expect 2007 to be a good -- not great -- year for the economy. While six in 10 said they think the worst of the housing downturn's impact on the broader economy had passed, they still see a deeper housing slump as the biggest risk looming over the economy. That concern was reflected in the odds they placed on a recession in the next 12 months, which rose to 27% from 20% in June.
More so than in recent surveys, forecasters differ on the economic outlook. One measure of their disagreement -- the standard deviation of their forecasts for inflation-adjusted GDP for the coming half year -- widened to about 0.7 percentage point in December, up from a 20-year low of 0.5 percentage point in June. Each of the past two recessions have been preceded by sharp increases in the deviation measure -- to levels greater than one.
Ian Shepherdson, chief U.S. economist at consulting firm High Frequency Economics and one of the survey's most pessimistic forecasters, places the odds of a recession at one in two. He believes that home construction still has a long way to fall before it levels off with demand, and that the Fed's rate increases, which helped push corporate borrowing costs upward by about a full percentage point between fall 2005 and spring 2006, have yet to take their full toll on business activity. Mr. Shepherdson expects real GDP to grow at an annual rate of 0.5% in the first half of 2007 and 2.25% in the second half.
"It's going to be worse than the consensus expects," he says. "My guess is that we'll probably avoid a recession, but by the skin of our teeth."
Most other forecasters believe the economy will prove more resilient. For one, stronger growth abroad should help boost U.S. exports: More than three out of four forecasters pointed to Asia as the biggest contributor to global growth in 2007.
Beyond that, money remains easy to borrow despite the Fed's efforts to raise interest rates. Global investors' appetite for U.S. bonds has helped fuel a boom in mergers and acquisitions, and low long-term interest rates have kept mortgages accessible for potential home buyers. Even people with shaky credit, whose tendency to default has proved greater than many investors expected, still have access to money.
"We've had a remarkably benign credit environment," says Richard Berner, chief U.S. economist at Morgan Stanley in New York. "That's partly a tribute to our flexible and resilient capital markets, but I think it's also just plain good luck."
To some extent, the hit U.S. manufacturing has taken in recent years has made the sector's outlook less consequential today because there just aren't as many American manufacturing jobs left to lose, says Ed Leamer, head of the forecasting center at the University of California's Anderson School of Management. Manufacturing has been shedding jobs since the recession of 2001.
"There's no fat to trim," says Mr. Leamer. "And without the trimming of fat in manufacturing, you just can't get the job loss that can add up to a recession."

Write to Mark Whitehouse at mark.whitehouse@wsj.com8
URL for this article:http://online.wsj.com/article/SB116741731488562667.html

Industry gossip and going's on

I hate to be boring, but at Graebel Relocation we are just taking care of transferees and their families. While this week, others in the industry are keeping us all entertained with their "big changes"!

Cartus Sold!

George's crib notes: Look out, Apollo will probably want some cost savings (can you say "right-sizing" of staff) and will want more in fees from realtors (can you say, higher RE commissions)

Apollo Management Is Poised To Acquire Realogy
By DENNIS K. BERMAN and JAMES R. HAGERTYDecember 18, 2006; Page A10
In a further sign of private equity's widening influence over the economy, buyout firm Apollo Management agreed to purchase real-estate services firm Realogy Corp. for $6.6 billion, company officials said yesterday.
As the holding company for such operations as Coldwell Banker, Century 21 and the Corcoran Group, the former Cendant Corp. arm is one of the most powerful players in the U.S. residential real-estate market, with a hand in one of four brokered U.S. home sales.
That position has put Realogy in a tight bind given the faltering domestic real-estate market. The company is forecasting sharp revenue declines for the foreseeable future, a bleak outlook that has weighed on its shares since they were first offered to the public in July.
Nonetheless, Apollo is taking on a large wager -- some $2 billion of its own capital -- that real-estate sales will recover shortly and that Realogy will maintain its strong brand names. Apollo has the benefit of hyperliquid financing markets, which are backing the rest of the purchase while allowing it to assume an additional $2.4 billion or so in existing Realogy debt and other liabilities.
As in most private-equity deals, Apollo is essentially asking shareholders to trade some of Realogy's long-term potential for a short-term profit, in this case a $30-per-share offer that awards an 18% premium to Friday's closing price of $25.50. Following a spinoff from the old Cendant conglomerate, the company's shares began trading at just under $26, and later dropped below $20 in September.
"The view of the board is that companies with declining earnings and no visible growth should be private," said Realogy Chairman and Chief Executive Henry R. Silverman. Buyout shops "have a much longer-term view. The people who own our stock have a five-second view. These are the kind of people whose performance is graded weekly, monthly, and annually. They don't have that kind of patience."
It still remains to be seen just how satisfied these shareholders will be with the transaction. Realogy didn't hold a broad auction for the company, an approach that shareholders usually favor. The company does have a "go shop" in place that allows it to find a buyer at a higher price, but go-shops have proved largely futile exercises since coming into vogue over the past year.
Shareholders are also likely to examine the relationship between Apollo and Realogy's management. The two sides don't have employment agreements in place, but Apollo anticipates that the executives will remain with the company once it is taken private. The sides have a deep history together, forming a business called National Realty Trust nearly 10 years ago to consolidate operations serving the residential real-estate market, with Cendant buying out Apollo's stake in 2002. Neither Mr. Silverman nor other top managers participated in the sales negotiations, Mr. Silverman said.
Shareholders can take satisfaction in the tax treatment that Realogy will be enjoying in the sale. The company was originally part of the Cendant conglomerate, a huge services and franchisor formed by the 1998 merger of HFS Inc., and CUC International Inc. An accounting scandal dogged Cendant from the get-go, as its various real-estate and travel-related businesses struggled to mesh.
Mr. Silverman later retreated on his strategy, and Cendant chose to break up the company, using a tax-free spinoff over the summer. By comparison, an outright sale of the company from a corporate parent would have resulted in a large tax bill. And now that Realogy is a stand-alone entity, it doesn't have to pay taxes on its own sale.
The question for Apollo is whether Realogy's market position will remain as strong in the years ahead. The National Association of Realtors projects that sales of previously owned homes in the U.S. this year will total 6.47 million, down 8.6% from a year earlier. The trade group expects a further 1% decline in 2007 but says sales should be starting to rebound by the end of the year. Some economists, however, believe the housing market could remain sluggish for several years.
The slowdown has slashed earnings for real-estate brokers. In the third quarter, after stripping out costs related to restructuring and the spinoff from Cendant, Realogy's earnings before interest, taxes, depreciation, amortization and minority interests came to $277 million, down 32% from $406 million a year earlier.
One long-term threat is that discount brokers eventually will grab a bigger share of the market, pushing down commission income, but Realogy officials have insisted that most consumers are willing to pay for services offered by traditional brokers.
Evercore Partners and attorneys Skadden, Arps, Slate, Meagher & Flom advised Realogy. J.P. Morgan Chase & Co. and Credit Suisse with attorneys from Wachtell, Lipton, Rosen & Katz advised Apollo. J.P. Morgan Chase, Credit Suisse and Bear Stearns are financing Apollo's debt.
Write to Dennis K. Berman at dennis.berman@wsj.com and James R. Hagerty at bob.hagerty@wsj.com

Bonuses for the bosses and the former Chairman and current Vice Chairman to leave!

George's crib notes: I can't figure this out, won't it hurt the rank and file who actually touch the transferee to see the bosses taking their bonus when the stock is near all time lows? And I don't know this stuff but is the head of the audit committee leaving be good thing?

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
Departure of Directors

On December 13, 2006, James W. Rogers resigned as a member of the Board of Directors (the “Board”) of SIRVA, Inc. (“SIRVA”), effective as of December 31, 2006. Mr. Rogers’ resignation was not the result of a disagreement with SIRVA on any matter relating to SIRVA’s operations, policies or practices.
On December 13, 2006, Carl T. Stocker advised SIRVA that he will not be standing for reelection as a director of SIRVA when his term expires at SIRVA’s 2007 annual meeting of stockholders. As Vice Chairman of the Board, Mr. Stocker’s responsibilities included the oversight of SIRVA’s remediation efforts with respect to its financial reporting process. Because SIRVA has made substantial progress with respect to its remediation initiatives, SIRVA’s Audit Committee has assumed the ongoing responsibility for overseeing the remediation plan. Given the Audit Committee’s assumption of this responsibility and the independence of the Chairman of the Board, the need for an independent Vice Chairman has diminished. As a result, Mr. Stocker has resigned as Vice Chairman. However, Mr. Stocker will continue to serve as a director until SIRVA’s 2007 annual meeting of stockholders. Consequently, Mr. Stocker’s decision to not stand for reelection and resignation as Vice Chairman were not the result of a disagreement with SIRVA on any matter relating to SIRVA’s operations, policies or practices.
Also on December 13, 2006, Robert W. Nelson advised SIRVA that he will not be standing for reelection as a director of SIRVA when his term expires at SIRVA’s 2007 annual meeting of stockholders. In addition, Mr. Nelson resigned as the Chairman of the Audit Committee of the Board, effective as of December 13, 2006. Mr. Nelson will continue to serve as a director until SIRVA’s 2007 annual meeting of stockholders. Mr. Nelson’s decision to not stand for reelection and resignation as the Chairman of the Audit Committee were not the result of a disagreement with SIRVA on any matter relating to SIRVA’s operations, policies or practices.
The Board appointed Robert W. Tieken, who currently serves on the Audit Committee, as the Chairman of the Audit Committee to replace Mr. Nelson, effective as of December 13, 2006.
Election of Director
On December 13, 2006, the Board elected Thomas E. Ireland as a new member of the Board, effective as of January 1, 2007, to fill the vacancy created by Mr. Rogers’ resignation. The Board also named Mr. Ireland to serve on the Board’s Executive Committee, effective as of January 1, 2007.
Mr. Ireland is a principal of Clayton, Dubilier & Rice, Inc., a private investment firm (“CD&R”). CD&R manages Clayton, Dubilier & Rice Fund V Limited Partnership and Clayton, Dubilier & Rice Fund VI Limited Partnership, which own approximately 23.1% and 9.6%, respectively, of SIRVA’s outstanding common stock.

2
Management Incentive Plan
On December 14, 2006, the Compensation Committee of the Board of Directors of SIRVA, Inc. (“SIRVA”) authorized an aggregate of approximately $3.7 million in discretionary bonus payments under the SIRVA, Inc. Management Incentive Plan (the “MIP”) to certain employees and officers. These payments include $325,000 to Brian P. Kelly, SIRVA’s President and Chief Executive Officer, $100,000 to J. Michael Kirksey, SIRVA’s Senior Vice President and Chief Financial Officer, and $135,000 to Michael B. McMahon, SIRVA’s President, Moving Services North America.
Although SIRVA failed to meet the MIP’s threshold financial performance levels for nondiscretionary payments, the Compensation Committee desired to reward individuals for outstanding performance during a challenging year for SIRVA. In recognition of individual achievements and for retention purposes, the Compensation Committee exercised its discretion under the MIP to authorize bonus payments to certain employees and members of SIRVA’s management. Given the extraordinary efforts exerted by employees, the Compensation Committee believed that the discretionary bonus payments were consistent with the MIP’s purpose, which among other things, includes attracting, retaining, motivating, and rewarding executive officers and key employees by providing such individuals with an opportunity to earn compensation based on their contributions to SIRVA.

Economic Forecast

First, Have a Happy Thanksgiving! Now, some very interesting opinions on the housing market, there seems to be some consensus among economists.

Is the Worst Over for the Housing Bust?
Economists Say 'Yes' in New WSJ.com survived Their Views on Home Prices Vary Wildly

By PHIL IZZONovember 20, 2006; Page A2
The worst of the housing bust is over, economists said by nearly 2-to-1 in the latest WSJ.com economic forecasting survey. But they still predict that the average selling price of a house will fall next year.

After several years of double-digit percentage increase, housing prices stopped soaring this year. The 49 economists responding to the WSJ.com forecasting survey expect home prices, measured by the government's Office of Federal Housing Enterprise Oversight index, to rise 2.8% this year and to fall by 0.5% next year. That contrasts with a 13.4% increase in 2005.
"We're nearing the end of the slowdown for most markets," said Ethan S. Harris at Lehman Brothers. Prices still have some ways to fall before they'll stabilize, but there are signs that most drastic parts of the downturn – marked by a sharp pullback in demand and new construction – have run their course.
The economists' predictions for home prices next year vary widely, from an increase of 7%, predicted by Kurt Karl and Arun Raha of Swiss Re, to a 10% decline, expected by Maury Harris of UBS. Mr. Harris, for his part, said he expects a large inventory of vacant newly constructed homes to push prices lower in the first half. Construction companies "built much more than were justified because of investor interest," he said.
While 20 economists predicted home prices would rise next year, 24 forecast a decline. Just eight of the economists forecast gains greater than 2.1%, which is their average forecast for consumer-price inflation through mid-2007. The Ofheo index, which is closely watched by economists, has never posted a year-to-year decline.
Richard DeKaser, an economist at National City Corp., a big mortgage provider, said he thinks the worst is over. "We're starting to see inventories topping out and possible declining," he said. Mr. DeKaser forecast a 4.4% increase in prices this year and a 1.8% decline next.
The housing market, of course, doesn't move uniformly across the country; some regions or individual cities often have price changes decidedly above or below the national average.
Mr. Harris of Lehman expects price declines next year to be confined to "bubble" markets, such as those in Florida, California and cities in Nevada and Arizona, where large numbers of investors have artificially inflated prices. "There's no reason for prices to be falling in areas without a bubble," he said. "People are just slowing down purchase decisions."
Allen Sinai, at Decision Economics Inc., believes the worst of the bust is over, but he feels housing remains a big risk to the economy. The housing sector subtracted 1.1 percentage points from third-quarter gross domestic product, according to preliminary numbers from the U.S. Commerce Department.

The Wall Street Journal surveys a group of more than 50 economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted semiannually, at midyear and at year-end. Between each semiannual survey, four monthly updates are conducted for the most closely watched forecasts.

The economists trimmed their forecasts for fourth-quarter economic growth: Their average estimate puts gross domestic product growth at a 2.3% rate in the fourth quarter, down from the 2.5% rate they forecast in the October survey. They expect growth to remain at that rate through the first half of 2007 and then to accelerate later in the year. On average, the economists predicted growth of 2.8% during the second half 2007. GDP is the broadest measure of economic output.

The housing slowdown is expected to hit consumer spending, but the "consumer won't cave in and drive us into a recession," said Mr. Sinai. Steady interest rates, controlled inflation, stabilizing energy prices and a solid jobs market will support the economy, he said.
Indeed, new data released Monday indicated that weakness in the housing sector is being offset by other areas of the economy. The Conference Board, an industry-backed research group based in New York, said its composite index of leading indicators for October rose by 0.2% to 138.3, in line with expectations. September's reading was revised up to a 0.4% advance. The index is designed to predict activity in the three to six months ahead.
"People say all bubbles end in disaster, but this is a small bubble. Home prices are just about 20% too high. We need to take it seriously, but in the history of bubbles, this will go down as one of the smaller ones," said Lehman's Mr. Harris.

A Changing Real Estate Market

Capturing a range of strategies, from the WSJ.

Pricing Your Home Gets Trickier
Sellers Test Different Strategies As Houses Languish on Market;How to Trigger a Bidding War
By RUTH SIMONSeptember 28, 2006; Page D1
As the housing market cools, one of the hardest decisions facing home sellers is how to price their properties.
Traditionally, brokers have set listing prices by reviewing how much comparable homes sold for in a neighborhood. Now, with prices edging lower in many places and the number of homes on the market climbing, checking comparable sales is becoming less useful. At the same time, many would-be buyers are sitting on the sidelines, waiting to see how far prices will fall. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.

Ruth Simon talks2 about the difficulty homeowners are facing and the best way to sell your house in a slowing market.
What it takes to sell a house varies from market to market. Some brokers are telling customers they need to underprice the competition -- even if they think their home is more attractive. Sharon Baum, a senior vice president with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million. That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. "As buyers have more choices, you've got to make your apartment stand out," she says.
Sellers are also being told to cut prices aggressively if their house isn't moving -- or risk chasing the market downward. If a home doesn't get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, president and owner of Coldwell Banker Redpath & Co. in Hanover, N.H., often advises the seller to slice the asking price by 10%. "We don't like to see $2,000 or $5,000 price adjustments," he says. "We want to see a real whack" that attracts attention.
Strategy 1: Set a low price for the property to trigger a bidding war. Location: San Francisco, Calif. Description: One bedroom fixer-upper on large lot with city views. Asking price: $650,000 Selling Price: $845,000
Builders of new homes also are tinkering with their pricing formulas to generate sales. Mid-Atlantic Builders in Rockville, Md. is offering to adjust the sales price downward up to 45 days before closing if the price on one of its similar homes declines. Waterford Development Corp. will have homes in its Woodland Pond at Manchester development in New Hampshire reappraised two years after closing. If the price drops, the company says it will write the buyer a check for up to 15% of the original sales price, not including the value of any optional upgrades.
Even in relatively strong markets, brokers are paying closer attention to price trends. Wallace Perry, president of Coldwell Banker United, Realtors, Carolinas region, says he has begun checking multiple-listing service data every week or two instead of once a quarter to see how recent sales compare with deals that closed three and six months ago. "Things can change...very quickly," he says.
The renewed emphasis on pricing represents a dramatic turnabout from the heady days of the housing boom, which peaked in the middle of last year. Bidding wars were common and, in many markets, homeowners simply looked at the last sale and asked for more.
That's all changed. The National Association of Realtors said this week that the median sales price of existing, or previously owned, homes fell 1.7% to $225,000 in August from a year earlier, the first such drop in 11 years. There's now a 7.5-month supply of existing homes on the market, the most since April 1993.
Strategy 2: Boost the asking price slightly to $274,500 so the home appears in more Web searches and looks like a better deal to buyers shopping a certain price range via the Internet. Location: Shawnee, Kan. Description: Four bedroom, 3 ½ bath home with fireplace. Asking price: $275,000 Selling price: $271,000
With so many properties vying for attention, sellers are also looking for creative ways to catch the eye of would-be buyers and their brokers. Some sellers are offering to pay closing costs or provide other incentives. When their 3,500-square-foot carriage house in Exton, Pa., failed to sell this spring, the owners dropped the asking price twice, to $449,000 from $479,000, says Beth Koser, an agent with Prudential Fox & Roach, Realtors. When that didn't do the trick, the couple agreed to offer $10,000 toward closing costs to any buyer or agent who attended an open house within a two-day period. The home sold a few weeks later for $430,000. "The incentive created a sense of urgency," says Ms. Koser. Buyers "saw that the seller was willing to negotiate."
Other brokers are using incentives to counter competition from new home builders. In Tampa Bay, Fla., Craig Beggins, president of Century 21 Beggins Enterprises, recently put together a list of 16 incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period.
Another approach is a personal plea. Traci Smith, president of Century 21 Smith & Associates in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing, such as the fact that the kids on the block trick-or-treat at Halloween together. During the height of the housing boom, some brokers were encouraging the same type of personal notes -- but from buyers eager to get their bid accepted.
Strategy 3: Run a two-day open house with a special offer of $10,000 towards closing costs. Location: Exton, Pa. Description: Three bedroom carriage house built two years ago. Asking price: $479,000, reduced to $449,000 Selling price: $430,000
Some brokers are trying to trigger bidding wars by setting an asking price sure to attract attention. Romeo Aurelio Jr., sales manager for Century 21 Hartford Properties, recently listed a small one-bedroom, one-bath fixer-upper in San Francisco's fashionable Noe Valley neighborhood for $650,000, even though he figured the home would sell for $100,000 above that. "If we priced it at $750,000, it was going to sit," Mr. Aurelio explains. "We marketed it aggressively at $650,000 and it generated 20 offers." The house sold this week for $845,000.
And with more buyers hunting houses online, selling strategies are adapting to the new technology. Michael Gallagher, a financial-services executive, initially listed his four-bedroom house in Shawnee, Kan., at $274,500. When the listing expired, Mr. Gallagher's new broker suggested that he boost the price to $275,000. Within weeks, the home sold for $271,000, $36,000 more than the best previous offer.
The explanation? Buyers who use the Internet typically search in increments of $5,000 or $25,000, says Kerwin Holloway, a managing broker with Reece & Nichols, a unit of Berkshire Hathaway Inc., which handled the sale. At the higher price, Mr. Gallagher's home was likely to turn up in more searches. It also looked like a bargain to someone whose search started at $275,000. At the lower price, it was one of the most expensive homes priced between $250,000 and $275,000. Until recently, brokers had taken their cues from retailers, pricing a home at $199,500 because it seemed like a better deal than one priced at $200,000.
A property that's not priced properly can languish on the market and get shopworn, says Dan Elsea, president of brokerage services at Real Estate One in the Detroit area. A four-bedroom house in Troy, Mich., has been sitting on the market for 10 months, even though the price has been cut to $349,900 from $394,900, Mr. Elsea says. By contrast, a similar home in the same market sold this month for $360,000, just 23 days after it came to market priced more appropriately at $369,000, he says.
Write to Ruth Simon at ruth.simon@wsj.com3

Inspiration

Boy, I needed some. I've really let my blog fall off. Super-busy for a few weeks, and then I was so tapped out, I didn't know what to share with anyone.

But I found my inspiration today, in the blogs from both the CEO and the GC at Sun Micro.

http://blogs.sun.com/roller/page/jonathan/

http://www.blogs.sun.com/dillon

It really is a great tool to get insight into a company and its people, especially you can see why they choose to work there.

I've struggled with the direction of my blog, keep it technically oriented in terms of relocation nuts and bolts, make it more gossipy about happenings in the industry, or make it personal. But I've always tried to keep Graebel, my work-home and the place and people where I spend 50% of my time out of it. After reading these other blogs, I'll start to include more about Graebel, what's happening here, and why I think its great. I'm not going to worry about it seeming "salesy" or "schmaltzy" because after seeing these other blogs, as long as I keep "real" then its just the facts and me sharing my passion for the people and place I work.

Does HR Have a Seat at the Table?

Did it make you sick to read this tired cliche in the title, it made me sick to write it, what an old statement still getting talked about everywhere in regards to HR. I've always thought it fell into the category of "if you have to ask, you aren't." But when I saw the news in the Wall Street Journal about Brocade, I had to pull it out, as this maybe settles the question once and for all, that if you are implicated by the DOJ and/or the SEC, "yes, you officially have a seat at the table!"

(from the Wall Street Journal) Brocade Ex-CEO, 2 Others Charged In Options Probe Authorities Signal Hard Line As Backdating InvestigationsExtend to Over 80 Companies
By CHARLES FORELLE and JAMES BANDLER in Boston and STEVE STECKLOW in San FranciscoJuly 21, 2006;
Page A1
Federal authorities issued civil and criminal securities-fraud charges against a former Silicon Valley chief executive and two other executives in a stock-options backdating scheme, signaling they will take a hard line in the widening scandal. Prosecutors accused 43-year-old Gregory Reyes, the CEO of Brocade Communications Systems Inc. until January 2005, of backdating options he doled out as a "committee of one" to hundreds of employees, boosting the potential value of the options and concealing millions of dollars of compensation expenses from shareholders. Officials underscored how seriously they view options manipulation by charging not just Mr. Reyes -- who isn't directly accused of backdating his own grants, and who made no profit from them -- but also a former chief financial officer and former vice president for human resources at the firm. They also indicated that many more executives could face charges related to manipulating options. Securities and Exchange Commission Chairman Christopher Cox said the agency is investigating more than 80 companies. "The full weight of the federal government is being put behind this effort to stamp out fraudulent stock-option backdating," he said at a San Francisco news conference. He said additional cases likely would be brought in the "coming weeks and months." The crux of the case brought yesterday is that Mr. Reyes altered the dates of option grants to new employees to increase their value and give Brocade, a San Jose, Calif., maker of switching devices for data-storage networks, an edge in the cutthroat scramble for talent during Silicon Valley's boom days. In doing so, prosecutors said, he violated accounting rules by not recording the proper expenses for the options. Under a criminal complaint from the U.S. attorney for the Northern District of California, Mr. Reyes faces a single count of securities fraud, which carries a maximum penalty of 20 years in prison. Also facing a criminal-fraud charge is Stephanie Jensen, 48, Brocade's human-resources director from October 1999 through February 2004. She is accused of helping Mr. Reyes with the scheme. Both also face civil charges from the SEC of securities fraud and filing false documents. Antonio Canova, 44, who served as the company's finance chief from May 2001 until he left in December, also was charged in the civil case but not in the criminal action. A lawyer for Mr. Reyes, Richard Marmaro, said in a statement issued before the charges were announced that Mr. Reyes is innocent. Mr. Marmaro lambasted prosecutors for acting "not based on the facts or the merits of this case, but on some perceived need to show quick action." Signaling a key defense argument, he said, "Financial gain is always the motive in securities fraud cases, and here there was none." Asked about that argument, U.S. Attorney Kevin V. Ryan countered, "We don't have to show personal gain" to bring criminal securities-fraud charges. "Different people have different reasons for what they do and why they do it." Ms. Jensen's attorney, Jan Little, said in a statement, "Stephanie Jensen is innocent of these charges. Ms. Jensen directed Brocade's Human Resources Department, and she had no responsibility for finance or accounting. These charges are completely wrongheaded, and we will vigorously fight them in court." An attorney for Mr. Canova didn't return a call seeking comment. Marking the first major charges brought in the recent scandal, the Brocade case is being watched closely at many companies, particularly in California's technology corridor, where dozens of companies are among those being investigated for their past options practices. The focus of the investigations by the SEC and federal prosecutors in several offices is whether grants were backdated to enrich executives, among other possible manipulations. (The investigations appear to be focusing on those who planned and implemented grant programs, not passive recipients of options.) Employee stock options give recipients the right to buy shares in the future at a fixed price, typically the current market value. Backdating the grant to a time when the share price was lower than it was on the actual grant date increases the potential gain in an option. Doing so without properly accounting for it can lead to financial restatements, tax trouble and possibly criminal-fraud charges. The Brocade case is the first in which charges have been brought, partly because it has been under way since early 2005, well before most of the current backdating investigations began. It also has some key differences from other investigations. Many of the companies currently under investigation have top executives who personally profited richly from options grants. That suggests the next wave "is going to have a lot more graphic and colorful and sexy cases," said George Stamboulidis, head of the white-collar defense and corporate investigations practice at law firm Baker Hostetler LLP. Underscoring the importance the federal government is giving the options-timing investigation, a phalanx of top SEC and Justice Department officials appeared at the news conference announcing the Brocade charges. The SEC's Mr. Cox warned that backdating "deceives investors and the market as a whole about the financial health of companies that cheat in this way." He added, "It is poisonous to an efficient marketplace." The charges against Ms. Jensen and Mr. Canova suggested that federal officials won't hesitate to pursue those further down the corporate ladder who allegedly participated in an options-timing fraud. John Coffee, a law professor at Columbia Law School, said human-resources officials could find themselves in the hot seat as prosecutors attempt to persuade them to cooperate in investigations of senior executives. "This is going to send a shiver through the spines of much of corporate America," he said. The SEC also showed it won't take a kind view of executives who knew about backdating but signed off on financial statements. The agency said that's what Mr. Canova did, despite hearing misgivings from some employees about the practice. The SEC also alleged that he "helped facilitate" the fraud by directing others to ensure that option dates matched hiring dates in employee records. The civil and criminal complaints allege broad backdating at Brocade from 2000 to 2004. The SEC alleged that Mr. Reyes was trying to attract employees to the company with particularly valuable options grants. Brocade's stock price was rising rapidly for part of the period, meaning that every day that passed before employees received their grants decreased potential gains. The complaints allege that Mr. Reyes looked at the stock-price history and picked prior days when the stock was particularly low to date option grants. Prosecutors charge that that Mr. Reyes and Ms. Jensen falsified paperwork so the company didn't need to record expenses for these particularly valuable options. The government alleges that the widespread manipulation of employee grants, presided over by Mr. Reyes, grossly misrepresented the financial position of the company. Brocade restated results in 2005 after an internal probe into options matters. The biggest impact was in the year ended Oct. 28, 2000, which swung from a $67.9 million profit to a $951.2 million loss. The restatement lowered net income in some periods, and raised it in others. In all, Brocade shaved a total of $303 million in net income between fiscal 1999 and fiscal 2001, the SEC noted in its complaint. In yesterday's filings and at the news conference, officials described in some detail how the alleged scheme worked. In one instance, according to the SEC complaint, Mr. Reyes interviewed a job candidate on Feb. 1, 2002, and told Ms. Jensen that day that the candidate would be hired and should be included in an options grant being backdated to Nov. 28, 2001. Ms. Jensen included the person and signed a backdated offer letter to the candidate, who was hired. When Brocade shares fell, according to the SEC, Mr. Reyes changed the grant date again, and Ms. Jensen directed preparation of a new, backdated offer letter. Explaining the backdating's impact, Linda Thomsen, the SEC's enforcement director, said that in fiscal 2002, for instance, all of Brocade's employee grants were dated at monthly or quarterly low points in the stock price. Ms. Thomsen said the "scheme was blatant." To facilitate the scheme, the SEC said, Ms. Jensen prepared false compensation-committee minutes purporting to show that Mr. Reyes -- the committee's sole member -- actually granted the options on the days they were dated. The SEC said Mr. Reyes and Ms. Jensen provided the phony documents to financial staffers so that they would record the options as having been granted at fair market value on the date of grant. Officials also claim warning signs were ignored. For instance, they claimed, Mr. Canova received an email from an unidentified employee that described the options-granting process to another employee as "forging option paperwork and offer letters so he could get better-priced options." The SEC complaint alleges that Mr. Canova did not investigate or report the backdating or the falsified documents to Brocade's board. Beyond options gains, Ms. Thomsen said, an executive also can benefit by selling stock at prices "inflated" because of false financial statements. Mr. Reyes sold some $380 million in Brocade shares during his tenure. The SEC's complaint said Mr. Reyes's own options, which were granted by the company's board, not the one-man committee, also were backdated. But the agency's complaint doesn't explain who was responsible, or how the backdating occurred. Two 2001 grants to Mr. Reyes were backdated to the same dates as other employees' grants, the SEC said. One was dated in April and the other on Oct. 1, at the bottom of a deep trough in Brocade's share price after the Sept. 11 terrorist attacks. Mr. Reyes never cashed in any of his options. Brocade's stock, after peaking in late 2000, declined in the larger tech collapse, and for years has traded at a fraction of its price during the boom. Said Patrick D. Daugherty, a Detroit-based partner at the law firm Foley & Lardner, "The government has chosen a very good case to begin a crackdown or send a message. These are very ugly facts that are spelled out." Still, the case may not be a slam dunk. Though there is strong documentary evidence of fraud, including emails and apparently forged meeting minutes, options backdating is a novel area of the law and it's unclear whether jurors will agree the charges, if proved, are worthy of prison time. Brocade said in a statement that it had reserved $7 million for a proposed settlement with the SEC. The settlement amount, already accepted by SEC staff, is contingent upon approval by SEC commissioners, the company said.

Data points on the global housing market

The global housing boom
6/29/2006

Never before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.The global boom in house prices has been driven by two common factors: historically low interest rates have encouraged home buyers to borrow more money; and households have lost faith in equities after stockmarkets plunged, making property look attractive. Will prices now fall, or simply flatten off? And in either case, what will be the consequences for economies around the globe? The likely answers to all these questions are not comforting. The increasing importance of house prices in the world economy prompted The Economist to start publishing a set of global house-price indices in 2002 (see article). These now cover 20 countries, using data from lending institutions, estate agents and national statistics. Our latest quarterly update shows that home prices continue to rise by 10% or more in half of the countries. America has seen one of the biggest increases in house-price inflation over the past year, with the average price of homes jumping by 12.5% in the year to the first quarter. In California, Florida, Nevada. Hawaii, Maryland and Washington, DC, they soared by more than 20%.In Europe, prices have long been at dizzy heights in Ireland and Spain, but over the past year have also spurted at rates of 9% or more in France, Italy, Belgium, Denmark and Sweden. Both France (15%) and Spain (15.5%) have faster house-price inflation than the United States.By contrast, some housing booms have now fizzled out. In Australia, according to official figures, the 12-month rate of increase in house prices slowed sharply to only 0.4% in the first quarter of this year, down from almost 20% in late 2003. Wishful thinkers call this a soft landing, but another index, calculated by the Commonwealth Bank of Australia, which is based on prices when contracts are agreed rather than at settlement, shows that average house prices have actually fallen by 7% since 2003; prices in once-hot Sydney have plunged by 16%. Britain's housing market has also cooled rapidly. The Nationwide index, which we use, rose by 5.5% in the year to May, down from 20% growth in July 2004. But once again, other surveys offer a gloomier picture. The Royal Institution of Chartered Surveyors (RICS) reports that prices have fallen for ten consecutive months, with a net balance of 49% of surveyors reporting falling prices in May, the weakest number since 1992 during Britain's previous house-price bust. The volume of sales has slumped by one-third compared with a year ago as both sellers and buyers have lost confidence in house valuations. House-price inflation has also slowed significantly in Ireland, the Netherlands and New Zealand over the past year.Since 1997, home prices in most countries have risen by much more in real terms (ie, after adjusting for inflation) than during any previous boom. (The glaring exceptions are Germany and Japan, where prices have been falling.) American prices have risen by less than those in Britain, yet this is still by far the biggest boom in American history, with real gains more than three times bigger than in previous housing booms in the 1970s or the 1980s. The most compelling evidence that home prices are over-valued in many countries is the diverging relationship between house prices and rents. The ratio of prices to rents is a sort of price/earnings ratio for the housing market. Just as the price of a share should equal the discounted present value of future dividends, so the price of a house should reflect the future benefits of ownership, either as rental income for an investor or the rent saved by an owner-occupier. Calculations by The Economist show that house prices have hit record levels in relation to rents in America, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium. This suggests that homes are even more over-valued than at previous peaks, from which prices typically fell in real terms. House prices are also at record levels in relation to incomes in these nine countries. America's ratio of prices to rents is 35% above its average level during 1975-2000. By the same gauge, property is "overvalued" by 50% or more in Britain, Australia and Spain. Rental yields have fallen to well below current mortgage rates, making it impossible for many landlords to make money.To bring the ratio of prices to rents back to some sort of fair value, either rents must rise sharply or prices must fall. After many previous house-price booms most of the adjustment came through inflation pushing up rents and incomes, while home prices stayed broadly flat. But today, with inflation much lower, a similar process would take years. For example, if rents rise by an annual 2.5%, house prices would need to remain flat for 12 years to bring America's ratio of house prices to rents back to its long-term norm. Elsewhere it would take even longer. It seems more likely, then, that prices will fall. A common objection to this analysis is that low interest rates make buying a home cheaper and so justify higher prices in relation to rents. But this argument is incorrectly based on nominal, not real, interest rates and so ignores the impact of inflation in eroding the real burden of mortgage debt. If real interest rates are permanently lower, this could indeed justify higher prices in relation to rents or income. For example, real rates in Ireland and Spain were reduced significantly by these countries' membership of Europe's single currency-though not by enough to explain all of the surge in house prices. But in America and Britain, real after-tax interest rates are not especially low by historical standards. Betting the houseAmerica's housing market heated up later than those in other countries, such as Britain and Australia, but it is now looking more and more similar. Even the Federal Reserve is at last starting to fret about what is happening. Prices are being driven by speculative demand. A study by the National Association of Realtors (NAR) found that 23% of all American houses bought in 2004 were for investment, not owner-occupation. Another 13% were bought as second homes. Investors are prepared to buy houses they will rent out at a loss, just because they think prices will keep rising-the very definition of a financial bubble. "Flippers" buy and sell new properties even before they are built in the hope of a large gain. In Miami, as many as half of the original buyers resell new apartments in this way. Many properties change hands two or three times before somebody finally moves in.New, riskier forms of mortgage finance also allow buyers to borrow more. According to the NAR, 42% of all first-time buyers and 25% of all buyers made no down-payment on their home purchase last year. Indeed, homebuyers can get 105% loans to cover buying costs. And, increasingly, little or no documentation of a borrower's assets, employment and income is required for a loan. Interest-only mortgages are all the rage, along with so-called "negative amortisation loans" (the buyer pays less than the interest due and the unpaid principal and interest is added on to the loan). After an initial period, payments surge as principal repayment kicks in. In California, over 60% of all new mortgages this year are interest-only or negative-amortisation, up from 8% in 2002. The national figure is one-third. The new loans are essentially a gamble that prices will continue to rise rapidly, allowing the borrower to sell the home at a profit or refinance before any principal has to be repaid. Such loans are usually adjustable-rate mortgages (ARMs), which leave the borrower additionally exposed to higher interest rates. This year, ARMs have risen to 50% of all mortgages in those states with the biggest price rises. The rapid house-price inflation of recent years is clearly unsustainable, yet most economists in most countries (even in Britain and Australia, where prices are already falling) still cling to the hope that house prices will flatten rather than collapse. It is true that, unlike share prices, house prices tend to be somewhat "sticky" downwards. People have to live somewhere and owners are loth to accept a capital loss. As long as they can afford their mortgage payments, they will stay put until conditions improve. The snag is that eventually some owners have to sell-because of relocation, or job loss-and they will be forced to accept lower prices. Indeed, a drop in nominal prices is today more likely than after previous booms for three reasons: homes are more overvalued; inflation is much lower; and many more people have been buying houses as an investment. If house prices stop rising or start to fall, owner-occupiers will largely stay put, but over-exposed investors are more likely to sell, especially if rents do not cover their interest payments. House prices will not collapse overnight like stockmarkets-a slow puncture is more likely. But over the next five years, several countries are likely to experience price falls of 20% or more. While America's housing market is still red hot, others-in Britain, Australia and the Netherlands -have already cooled. What lessons might they offer the United States?The first is that, contrary to conventional wisdom, it does not require a trigger, such as a big rise in interest rates or unemployment, for house prices to decline. British home prices started to fall in the summer of 2004 after the Bank of England raised rates by a modest one and a quarter percentage points. Since 2002, the Reserve Bank of Australia has raised rates by exactly the same amount and unemployment is at a 30-year low, yet home prices have fallen. The Federal Reserve's gradual increase in rates by two percentage-points over the past year has done little to scare away buyers, because most still have fixed-rate mortgages and long-term bond yields have remained unusually low. But as more Americans have been resorting to ARMs, so the housing market is becoming more vulnerable to rising rates. Rung at the bottomBritish and Australian prices have stalled mainly because first-time buyers have been priced out of the market and demand from buy-to-let investors has slumped. British first-timers now account for only 29% of buyers, down from 50% in 1999. And, according to the National Association of Estate Agents, buy-to-let purchases are running 50% lower than a year ago. As prices become more and more heady in America, the same will happen there.British experience also undermines a popular argument in America that house prices must keeping rising because there is a limited supply of land and a growing number of households. As recently as a year ago, it was similarly argued that the supply of houses in Britain could not keep up with demand. But as the expectation of rising prices has faded, demand has slumped. According to RICS, the stock of houses for sale has increased by one-third over the past year. America has faster population growth than Britain, but its supply of housing has also been rising rapidly. Economists at Goldman Sachs point out that residential investment is at a 40-year high in America, yet the number of households is growing at its slowest pace for 40 years. This will create excess supply.

http://www.financialexpress-bd.com/index3.asp?cnd=6/29/2006&section_id=9&newsid=29395&spcl=no

Good HR business partner opportunity in San Jose

Sorry for the extended absence, its RFP-season, so my "day-job" has been keeping extraordinarily busy. Here's a nice opportunity identified by my friend Marcy who is an HR executive consultant.

I am looking for HR Business Partners who possess the following experience and skills:
* Bachelor degree and/or MBA
* At least 7 years of HR generalist and recruiting experience.
* Experience supporting client organizations.
* Familiar with current human resources concepts, practices, and
procedures.
* Demonstrated understanding of organizational development theories.
* Demonstrated ability to think critically and effectively resolve
employee issues.
As a strategic HRBP they will work with the management team to understand business strategies, diagnose current organization performance, and develop/implement plans to build needed organization capabilities. In addition, the HRBP will serve as a day-to-day advisor and coach to managers and employees in all human resource areas.

If interested, contact Marcy via http://www.blogger.com/www.nicolaoconsulting.com

Modifications of Exclusions

New legislation that is going to impact US expats and probably cost more money for the companies who put them on assignment. It is in position to be signed into law shortly. Thanks to Carol-Ann Simon of BDO, San Jose, CA for the briefing.

http://www.google.com/search?hl=en&q=bdo+expatriate+tax+alert

What does a new Treasury Secretary have to do with Global Relocation?

Well, maybe a lot. What follows are some key excerpts provided by the Wall Street Journal that I've filtered to reflect his statements surrounding Europe and China. Or course, his influence will impact US relationships worldwide:

Paulson, in His Own WordsMay 30, 2006 12:26 p.m.
Henry Paulson, newly appointed to the job of Treasury secretary, has been a solid supporter of the Bush administration in commentary pieces published in The Wall Street Journal, the Financial Times and elsewhere. His arguments frequently also cite the benefits to Goldman Sachs, where he has been the sole chief executive officer since 1999. Below, excerpts.
* * *
On the pain and benefit of globalization
Today's global economy is in the midst of a period of … intense growing pains. The emergence of new technologies, more efficient global capital flows and production, distribution and servicing networks are converging to create new levels of competition and challenge our traditional notions of comparative advantage. … It is in America's interest to push for open markets that have the power to create new demand from consumers in emerging economies. (Full text)-- The Wall Street Journal, July 14, 2005

On Europe's failed deregulation, opposition to mergers
Europe must restructure its inadequate pension systems while finding the right mix of regulation and taxation. It needs less intrusive government regulation. It needs to liberalise and integrate its capital and labour markets and to promote development of continent-wide clearance and settlement systems. And it needs more accountable corporate governance. These are admittedly daunting challenges. Regrettably, it is unclear that Europe is willing to meet them. The failure of the European Takeover Directive squandered 12 years of efforts. Governments, including those in France and Germany, have recently taken some backward steps in deregulating labour markets. Even in the UK, there are worrying signs that regulation is becoming more intrusive in areas such as financial services, telecommunications, water and electricity. Moreover, mergers are under assault across the EU. There are, indeed, legitimate grounds for stopping some mergers; but the EU must be careful to avoid giving the impression of rigidity that risks inhibiting competition rather than enhancing it.-- Financial Times, Nov. 13, 2001

On how the U.S. will lose if it does not do business with China
Chinese economic reform has reached a milestone as PetroChina, the oil and gas company that is the flagship of Beijing's privatization program, has begun offering stock to the public. (Goldman Sachs was a proud underwriter of the initial offering.) Trading in the stock began last week on the New York and Hong Kong exchanges. … This entry of a giant state-owned Chinese company into the international equity market had been far from a sure thing. An array of special interests, led by labor unions, had lobbied hard against it, asking the Clinton administration, Congress and the Securities and Exchange Commission to prevent listing of the shares on the New York exchange. …If Congress turns down normalized trade with China, we are the ones who will be isolated. The rest of the world is eager to do business with the Chinese, and China will still be able to join the World Trade Organization. On the diplomatic level, a no vote would repudiate nearly 30 years of constructive engagement under Democratic and Republican administrations alike. -- New York Times, April 15, 2000

http://online.wsj.com/article/SB114900189210166357.html?mod=home_whats_news_us

Memorial Day

Memorial Day, originally called Decoration Day, is a day of remembrance for those who have died in our nation's service. There are many stories as to its actual beginnings, with over two dozen cities and towns laying claim to being the birthplace of Memorial Day. There is also evidence that organized women's groups in the South were decorating graves before the end of the Civil War: a hymn published in 1867, "Kneel Where Our Loves are Sleeping" by Nella L. Sweet carried the dedication "To The Ladies of the South who are Decorating the Graves of the Confederate Dead" (Source: Duke University's Historic American Sheet Music, 1850-1920). While Waterloo N.Y. was officially declared the birthplace of Memorial Day by President Lyndon Johnson in May 1966, it's difficult to prove conclusively the origins of the day. It is more likely that it had many separate beginnings; each of those towns and every planned or spontaneous gathering of people to honor the war dead in the 1860's tapped into the general human need to honor our dead, each contributed honorably to the growing movement that culminated in Gen Logan giving his official proclamation in 1868. It is not important who was the very first, what is important is that Memorial Day was established. Memorial Day is not about division. It is about reconciliation; it is about coming together to honor those who gave their all.
General John A. LoganLibrary of Congress, Prints & Photographs Division, [LC-B8172- 6403 DLC (b&w film neg.)]
Memorial Day was officially proclaimed on 5 May 1868 by General John Logan, national commander of the Grand Army of the Republic, in his General Order No. 11, and was first observed on 30 May 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery. The first state to officially recognize the holiday was New York in 1873. By 1890 it was recognized by all of the northern states. The South refused to acknowledge the day, honoring their dead on separate days until after World War I (when the holiday changed from honoring just those who died fighting in the Civil War to honoring Americans who died fighting in any war). It is now celebrated in almost every State on the last Monday in May (passed by Congress with the National Holiday Act of 1971 (P.L. 90 - 363) to ensure a three day weekend for Federal holidays), though several southern states have an additional separate day for honoring the Confederate war dead: January 19 in Texas, April 26 in Alabama, Florida, Georgia, and Mississippi; May 10 in South Carolina; and June 3 (Jefferson Davis' birthday) in Louisiana and Tennessee.
In 1915, inspired by the poem "In Flanders Fields," Moina Michael replied with her own poem:
We cherish too, the Poppy redThat grows on fields where valor led,It seems to signal to the skiesThat blood of heroes never dies.She then conceived of an idea to wear red poppies on Memorial day in honor of those who died serving the nation during war. She was the first to wear one, and sold poppies to her friends and co-workers with the money going to benefit servicemen in need. Later a Madam Guerin from France was visiting the United States and learned of this new custom started by Ms.Michael and when she returned to France, made artificial red poppies to raise money for war orphaned children and widowed women. This tradition spread to other countries. In 1921, the Franco-American Children's League sold poppies nationally to benefit war orphans of France and Belgium. The League disbanded a year later and Madam Guerin approached the VFW for help. Shortly before Memorial Day in 1922 the VFW became the first veterans' organization to nationally sell poppies. Two years later their "Buddy" Poppy program was selling artificial poppies made by disabled veterans. In 1948 the US Post Office honored Ms Michael for her role in founding the National Poppy movement by issuing a red 3 cent postage stamp with her likeness on it.
Traditional observance of Memorial day has diminished over the years. Many Americans nowadays have forgotten the meaning and traditions of Memorial Day. At many cemeteries, the graves of the fallen are increasingly ignored, neglected. Most people no longer remember the proper flag etiquette for the day. While there are towns and cities that still hold Memorial Day parades, many have not held a parade in decades. Some people think the day is for honoring any and all dead, and not just those fallen in service to our country.
There are a few notable exceptions. Since the late 50's on the Thursday before Memorial Day, the 1,200 soldiers of the 3d U.S. Infantry place small American flags at each of the more than 260,000 gravestones at Arlington National Cemetery. They then patrol 24 hours a day during the weekend to ensure that each flag remains standing. In 1951, the Boy Scouts and Cub Scouts of St. Louis began placing flags on the 150,000 graves at Jefferson Barracks National Cemetery as an annual Good Turn, a practice that continues to this day. More recently, beginning in 1998, on the Saturday before the observed day for Memorial Day, the Boys Scouts and Girl Scouts place a candle at each of approximately 15,300 grave sites of soldiers buried at Fredericksburg and Spotsylvania National Military Park on Marye's Heights (the Luminaria Program). And in 2004, Washington D.C. held its first Memorial Day parade in over 60 years.
To help re-educate and remind Americans of the true meaning of Memorial Day, the "National Moment of Remembrance" resolution was passed on Dec 2000 which asks that at 3 p.m. local time, for all Americans "To voluntarily and informally observe in their own way a Moment of remembrance and respect, pausing from whatever they are doing for a moment of silence or listening to 'Taps."
The Moment of Remembrance is a step in the right direction to returning the meaning back to the day. What is needed is a full return to the original day of observance. Set aside one day out of the year for the nation to get together to remember, reflect and honor those who have given their all in service to their country.

http://www.usmemorialday.org/backgrnd.html

ERC will keep you busy

Well, I should know better. I had visions of multiple daily blog reports from ERC but here we are post-ERC and I'm catching up. This happens every year, I anticipate a nice lazy pace, catching some sessions, catching some sun...it never works out that way.
Always running into someone and often that run-in requires some sort of follow up so at the end of every day, in addition to the regular work neglected there are additional things to do.
No worries, Orlando was time well spent this year. Here's a brief recap of some of the sessions:
Fundamentals - missed it, heard mixed reviews, "too basic" "just right"
Policy - good content, good corporate client perspective, boy there hasn't been much "new" to policy in years
Tax and Legal - just caught the end, well attended and well received
SLA's - best takeaway, escalating SLA's due to implementation and relationship growth, funniest observation, clients struggle with keeping SLA's simple and succinct
Anyone There on Moving Day - lots of people here for a Friday am session, no doubt HHG continues to be the area where ee's and relo mgrs feel the most pain and require a "new" solution
I missed the infamous Oakwood party and did not hear any reviews yet. Hoped for changes...I understand the need to not mention vendor names in sessions/presentations, but also it can be so restrictive at times that it hinders a real "meat and potatoes" discussion. Maybe a happier medium than what is allowed today exists?
Now, "vacation" over...back to the mine.

Live from Orlando...

ERC kicked off to a good start last night. I have not seen anyone get eaten by a gator yet (http://www.foxnews.com/story/0,2933,195851,00.html), but I was keeping my eyes peeled, there were a lot of "sharks" around last night at the start of the ERC convention:)

It seems to me that the exhibit hall (aka "shark tank") is smaller and/or less companies here, but when I asked around, some long time ERC'ers told me its about average. A big presence, Stewart Title (www.stewart.com), no surprise since they have a lot of customers here.

Also, it sounds like there were more than a couple companies "breaking" the no-parties on Wednesday night rule. As a rule, ERC asks that companies all host their client events on Thursday, most comply, but there were a couple I heard who went ahead and had their events last night (thereby removing their corporate clients from the first night vendor parade).

I did a straw poll of realtors I saw last night. Almost to a person, all confirmed what the media's been hyping, varying degrees of "softness" in the real estate market nationwide. And, now it looks like rates will go up again (http://markets.usatoday.com/custom/usatoday-com/html-story.asp?markets=Domestic&guid=%7B17D1B7BC%2D52A1%2D4EF8%2D9215%2D7BAECAB2C98F%7D). Meaning, some adjustments in our industry, more inventory homes, perhaps less homeowners initiations. But I also think that changing dynamics already underway are well suited to a less frenzied real estate market (like the silent but growing us of temporary domestic assignments).

I'm skipping the kick off speaker right now (guys got to get some work done some time), but will share a post about any and all sessions I get to attend later today.

Shootout question: What does the World Cup have to do with Corporate Relo?

Nothing...and everything. First, a disclaimer, soccer (aka football) was never my first sport nor is it one that I follow most closely (hockey..but please don't ask about my Red Wings this year). But, that soccer doesn't make my world turn puts me in the minority compared to the rest of the world. Soccer (football) is the world's most popular professional sport (http://www7.nationalgeographic.com/ngm/0606/feature1/). The 32 countries in contention for the world cup, plus many others across the globe will be fixed to their televisions, radio's and newspapers this summer to cheer and pay close attention to every development (the whole thing begins in Germany on June 9th).

And how does it relate to relo...everyday we move ten of thousands of US citizens to other parts of the world (aka expats) and every day we help companies move tens of thousands of foreign nationals to work and live in the US, and to most all of those folks, its a good bet World Cup soccer is very important.

As a result, I'm replacing the normal link to China Daily (over on the right of this page) to a World Cup link for the duration of the event. For those of us who deal daily with transferees and vendors and clients whose personal satisfaction will rise and fall on the number of goals scored and shots stopped by their team! USA's first game is June 12 http://www.ludustours.com/wcschedule.htm

Arrrrg and ERC in Orlando

When's the last time you wrote something, edited it, read it, left it, came back to it, then went to use it and *poof* it was gone. Either not saved or corrupt or *poof* That happened to someone I know yesterday and I remember thinking "why weren't you saving your work." Well, Murphy's Law triumphs again and I just experienced it myself. Shame, shame, shame.

ERC's national convention http://www.erc.org/news_events/nrc06_session_topics.shtml is nearly upon us, do you have all of your parties lined up? Of course you do, now its time to look at the sessions. I'm excited by some of the topics and it looks like there will be some "teeth" to some of these sessions. I hope that the reality proves worthy of the descriptions. There's nothing worse than when you are anticipating a lively discussion and everyone up on the panel talks real nice-nice. Here's a couple that have caught my eye:

Putting All the Pieces Together – Policy Design and Balance**

Thursday, May 18
10:30 a.m. – 12 NoonThis session will help you achieve a deeper awareness of how policy pieces fit together, and will discuss balancing the full program versus just looking at each component of your policy individually on a cost vs. culture basis. Attendees will develop a deeper understanding of how all policy components fit together to ensure the greatest return on spend and achieve the intended corporate goals and objectives. Learn what drivers affect balance and how to address these issues. Discover ideas and strategies to ensure solid solutions in meeting relocation goals when designing your policy and program delivery.

Will There Be Anyone There for your Transferee on Moving Day?**

Friday, May 19, 2006
8:30 – 10:00 a.m.As capacity shrinks, and direct costs increase, many household goods service providers are becoming more selective as to where to commit their resources. Discover the ramifications of pricing, policy, and process decisions on your ability to find services for your transferees. This session will provide you with the tools to make your program attractive and ensure the highest quality service available in today’s competitive marketplace while meeting your corporate objectives.

Both seem to me very pertinent to large and small relo programs, as well as US and Global.

In case you are not able to attend this year (I know a lot of people not coming, due to travel budgets, time constraints and/or they don't want this to be the one relo industry trip they take this year). Regardless, I will be doing my best to blog from the convention. So keep an eye out for my field reports. And if you want me to keep my eye out or ears open for something in particular, then let me know.

A thoughtful article on implications of pandemics

From our friends at SHRM, good reading.

http://www.shrm.org/hrmagazine/articles/0506/0506cover.asp

Why don't we hear more about pandemic flu at ERC and other industry resources?

I think, unfortunately, pandemic flu or something like it is going to have huge impact on our industry (remember SARS, that was nothing compared to what may happen with Asian bird flu). Funny I don't hear it discussed much, perhaps we are all too busy on the current moment and unable to spend time preparing for things that may or may not happen. From the information I've heard, its not a question of "if" but rather "when." If you have any good information on the relocation industry's attention/thoughts around preparations for pandemic flu, please let me know. Here's an article from Watson Wyatt on the subject of whether companies are creating plans to prepare for it or not:

Companies Preparing for Avian Flu Across the Globe, Watson Wyatt Survey Finds
WASHINGTON, March 21, 2006 –
Multinational companies are taking steps in many parts of the world to plan for the possibility of an avian flu outbreak, a new survey by Watson Wyatt Worldwide, a global human capital firm, has found.
The survey of 90 multinational companies found that 52 percent of companies operating in Asia-Pacific are considering putting programs in place in that region to deal with the avian flu. Forty-eight percent of companies operating in the United States are considering such plans, as are 47 percent in Europe, 44 percent in Latin America and 42 percent in Canada.
Companies are much more likely to already have plans in place (32 percent) in Asia-Pacific to deal with the effects of the avian flu. Only 15 percent have plans in place in the United States, 11 percent in Europe, 10 percent in Canada and 9 percent in Latin America. In addition, about one in five companies is not at all concerned about the avian flu.


Greatly or Moderately Concerned About Avian Flu Plan in Place in Event of Outbreak
Asia-Pacific
74% 32%
Europe
45% 11%
Canada
38% 10%
Latin America
36% 9%
United States
34% 15%

“While focusing on Asia is a logical response to news of flu cases there, employers need to make sure they are considering the possible impact the avian flu could have on all regions,” said Robert Wesselkamper, director of international consulting at Watson Wyatt. “It pays to be proactive when dealing with a virus that could have such a big impact on the workforce.”
Companies also said they were far more worried about an avian flu outbreak in Asia than in other regions. A strong majority (74 percent) said they were concerned to a great or moderate extent about the impact the flu would have on their workforce in Asia-Pacific, compared with 45 percent in Europe, 38 percent in Canada, 36 percent in Latin America and 34 percent in the United States.
“A good first step for companies is to note what worked and what didn’t in their planned responses to past threats such as SARS,” Wesselkamper said. “Companies should also make sure to communicate their formal plans to manage through any business interruption — including alternative work arrangements and reimbursement for preventive and onset treatment — to the entire workforce, particularly associates responsible for deployment.”

About Watson Wyatt Worldwide
Watson Wyatt Worldwide (NYSE:WW) is a global human capital and financial management consulting firm. The firm specializes in employee benefits, human capital strategies, technology solutions, and insurance and financial services and has 6,000 associates in 30 countries. The firm is located on the Web at http://www.watsonwyatt.com/.
Contact
Ed Emerman, 609/452-5967, eemerman@eaglepr.comEmily Rieger, 703/258-7634, emily.rieger@watsonwyatt.com