The Era of Pre-Depression Cycle - Malaysia

It's been a long time I have not been blogging since 2009 and reflected and commented on various topics, 1997 Asian economic crisis and government reaction - currency peg; GM crisis and so on.

Today, the urge of writing just come back on top of my mind- can't help but to write it down. Malaysia Ringgit is close to 45% lower compare to 4th Sept 2014!!!

Dr. Zeti (BNM, Bank Negara Malaysia) governor mentioned that we should see the Ringgit should strengthen when the Goverment-linked Companies (GLC) withdraw their money or earnings from overseas.

The approach is rather passive than actively controlling. People, investors, institutions are selling off Ringgit quicker than you think. The question is how fast you can get to overseas money to return? How about fixed asset acquired like apartment in Australia? How much is it that is enough to counter the bleeding? would there be reduction of interest rate in Malaysia to boost the internal demand and counter the lack of consumer spending since the commencement of GST (since 1st April 2015)?

If there are no immediate action taken by the Government. It is going to hit us hard, more foreclosure and default are awaiting at the door steps. The governor's optimism is not enough to retain the money.

Peg the currency if you need to!

Anti Hot Money

Gold is exponentially growth in the this whole week! it is a run to safety where money is going to be worthless. If this phenomena presist.

Governments' actions to counter the situations

Increased interest rate

Monetary control - Peg or Gold-tied currency (like in WWII time); Ban offshore trading

Hot Money Tax

Dear GM Bondholder

I think you are every angry on what had happen thus far. Isn't that "you should understand the prospectus and the risk involved when you decided to invest or lend out the money"? it's risk and return trade off.

Even though pennies on a dollar is a bad deal, but if GM goes under you get almost nothing.
From current point of time, the Government has the tendency to fail GM, which they think is a better choice.

Check this out,
http://news.yahoo.com/s/ap/20090527/ap_on_bi_ge/us_gm_bondholders

From economics point of view, the cost of failing is not greater than the cost of not failing this giant. The government wants to create a smaller healthier company.

For your pocket, you should consider the deal, even though it's pennies on a dollar, it might worth billions in years to come with the new structured GM.

A real example, my Grandpa had brought a company's share about 30 years ago for 20 cents a share. And now it's about 2 million on 1% of the company.

So think again, it might cost you that much for now, lose half of your pension or more, but in years to come, it benefits your descendants. Isn't that our purpose to work hard in this generation, and we want our children to reap the harvest?

Do We have the choice?

http://education.wallstreetsurvivor.com/big-chill-gm

Fear is the factor, Obama has to conquer so that he can restore the investor confidence.
When recession occurs that's what we expect to happen, government interference.

Everyone is panicking, can we still put an assumption that all investor are rational? risk averse is not equal to rational, especially for the entire economy as a whole.

Gospel Concert Tomorrow~!

More Information, please visit www.buffalochinesechurch.org

How safe it is considered safe?

We are back to the question,How safe it is considered safe?
Is exchange of debt solves the world crisis? I doubt it.

What a prefect idea?

People are spending less and saving more!
http://www.nytimes.com/2009/02/03/business/economy/03econ.html?hp

The Multiplier is losing it's ground and the money goes back to savings!