Friday, April 10, 2009

Is The Worst Over ?

Back to my title above ... is the worst over ? It's the trillion dollar question. After the G20 Summit is over, it seems that everyone is happy. The stock market is going up and gold prices is going down. So .. is the worst over ? or we are just in the eye of the storm, where it is calm.

Signs Of Recovery ?

It seems that the global stock market is in it's uptrend again, people start to buy shares battered in the previous months due to the uncertainty of the market. We got some positive numbers on the American companies, dying banks such as Citibank and Wells Fargo started to post some earnings. So is the global economy on the path of recovery ? I still have some doubt. Why ?

1. Bank Positive Reports

Citibank, Bank Of America and Wells Fargo is reporting that the banks are doing better in this quarter. They are reporting positive income. Why ? That is the question which is need to be asked. Is it because the bulk of the toxic assets burden has been shifted to the public ? Eventhough they are reporting positive income, are the banks still solvent ? How can banks positive income is a sign that the economy is improving ? If the value of the shares in the stock market is increasing, does it mean that the company is profitting or doing well in its operation ?

2. The Effect of Economic Stimulus Package

The stimulus package basically is the government spending to pick up where the market is slacking. By creating demand in the market for goods, it is dispersing funds to the people and when people get money and a sense of well being, people will start to spend again. It is some sort of economic grease. However, I fear the sustainability of the idea on a long term basis. I think it might delay pr ease the full effect of the recession.

3. Printing Money

The US, British, Swiss and Japanese Government is printing money, which is inflating the currency and decreases its value. When inflation really hits, it going to be huge. It's going to drag the price of everything higher.

In my opinion, the rally we are seeing now is just a bear market rally. What the government has achieved is just delaying the process. Good news might brighten up the mood for investors longing to see the bottom in search of entry position. However, with weak economic fundamentals, it does not look like the economy might be recovering very soon. The market lives on demand for goods, without any demand, there is no market. However, the market could not live on fake demands powered by cheap debt. Debt is not good for the people, more debt is even worse. When money is cheap, it does not worth a lot isn't it

Tuesday, March 31, 2009

G20 and The New World Order

G20 and The New World Order

This week the G20 will sit down in London for its meeting which will affect our lives and direction of the world economy. We are basically at an economic crossroads, why?

The Ditching

1. China and Russia are campaigning to ditch the US Dollar for another super currency which is more stable and they would like gold to be in the basket. The uncertainty of the US Dollar has been the major factor for this move after the US opts for quantitative easing in order to lower down interest rates to stimulate its dying economy.

2. The Chinese government is ditching the US Dollar to reduce its exposure to the US Dollar since it carries a significant risk factor.

3. When major government such as the US, UK and Germany has conducted fail bond sales. It shows that investors are losing faith in such bonds. Thus it is why the US and the UK government have resorted to printing money.

4. The act of printing money or also known as quantitative easing carries a high risk of creating hyperinflation due to the devaluation of the currency.

Inflation VS Deflation

5. Up to date, we have seen the weakening of the pound while the US Dollar is still maintaining its value which many says it is due to deleveraging.

6. Even though many economists are crying deflation, people in the main street are experiencing price hikes on food and essential goods.

7. The price of real estate is incredibly high in the US due to the cheap credit that the Fed has allowed. Thus it sparks a housing mania funded by cheap credit. Therefore the price o does not represent the real value of the property. I believe the call on deflation is just an excuse to allow the inflating of the currency.

False Claims

8. The US has claimed that the past few years their economy is growing at a good pace and we must note that consumer expenditure is also accounted inside the GDP calculation. However, when the crisis broke, we already knew that all this consumer expenditure is due to cheap credit and it is false. It does not reflect the productivity of the US. Besides its false GDP, US has a big trade deficit with all other countries especially China. China has been using its trade deficit to buy US Treasury Bonds. This shows that the US cannot pay its debtors.

The Stimulus and the Collapse

9. With the new stimulus package which has been announce not so long ago. I wonder where they got the money. If they failed to sell those bonds, who are funding them?

10. From what I have written earlier, it is concrete evidence that the US has no longer had the economic power. When they opt for quantitative easing, it is evident that most of their previous plan has failed, and quantitative easing is their last option or Nuclear Option.

11. Before the Nuclear Option start to show its effects, it is essential for all to ditch the US Dollar before its value drops and rendered useless … maybe it still has a use … as a toilet paper.

12. I fear that this economic downturn will spark a new era which will lead to world war 3. A war to secure limited resources.

Uncertainty and The New World Order

13. In this time of uncertainty, we will see that people will become jobless, hunger will reign, and people will do anything to feed themselves. This will lead to restlessness and lead to fascism. This terrible uncertainty will create anarchy and government will be turned over due to their failure to control the situation.

14. This uncertainty will be a great opportunity to extend the notion of a New World Order where the world is dictated by a single government and use the same currency and economic structure.

15. They will plunder everything from you and your nation

Saturday, March 28, 2009

Good commentaries

To all my dear readers, I would like you all to listen to the Financial Sense Newshour, which is a good online radio show. It covers a broad perspective in various economic sectors.

Best Regards


The Malaysian Economic Front

Friday, March 27, 2009

The End of Dollar Hegemony ?

On the April, 02 2009, the G20 summit will be organized. I think, this summit will draw the line on the direction of the US Dollar. More and more country members are trying to ditch the US Dollar such as the US Dollar ( China calls for full-scale financial system overhaul ). Some has called for the formation of a new currency or using the IMF's SDR ( Special Drawing Reserve ) as a new currency since the value of the currency is calculated based on a basket of currency. Such move will reduce the reliance on US Dollars heavily thus reducing the value of the US Dollar.

This move has been initiated since the US Federal Reserve and it Treasury has resorted to quantitative easing in order to stimulate the dying US economy. Besides the US, other countries has also start to resort to quantitative easing such as UK and Switzerland. SNB has taken such measures to prevent their currency from rising in order to make swiss exports to be competitive in the world market. The US and UK has resort to such move due to failure on bond auction. Therefore, their respective central bank has resort to bought those bonds.

wait and see ............

Tuesday, March 24, 2009

To Americans : You Just Have Been Robbed !

Dear fellow Americans, you just have been robbed by the greatest scam ever to took place on earth. Treasure Secretary Timothy Geithner just paid those big fat cat of Wall Street trillions of dollars just for taking your country into the new depression. Things are not just going to get better now, its gonna get even worse. By bailing the major banks, buying toxic assets at rediculous price and they will charge you all for all the follies these banks made. They are not the ones suffering, its the average joe is the ones who suffer, the ones who toiled day and night and finding themselves had to pay it back in taxes. What the fuck is that ! They're gonna print money out of the presses and reduce your currency into merely toilet papers. Are you gonna work for them if they gonna pay you toilet papers ? To hell .... you can use it to wipe your asses. It is time for a revolution in the US, the government is working for those who paid them fat cash and sponsors during the election. America has become a police state. All the Al Qaeda bullshit is just merely stories they sell just to justify their moves and to misdirect the public from the real issue is. I'm not anti America but i think you just got scammed big time into paying taxes to pay a perpetual debt which is only going bigger and bigger by the day.

Inflation & Deflation

These few days, something is boggling in my mind. Inflation or deflation ? From what I understand is inflation means inflating the money supply, when money supply is expanded, it decreases the value of money and the result is the price of things seems to be increasing. However, people are shouting its deflation since they are seeing that prices of things are going down. Lets analyze this situation :

  1. You go the market to buy groceries and you found out that the price of vegies and poultry product seems to be higher. So is that inflation ? how will it affect you ? of course it will make feel unhappy since groceries are necessities in life.
  2. You went to a fashion house at this time and you found that the price of designer cloths and wears are decreasing. Is that deflation ? the price of those things might be lower but you still can live happily without those items.
So when people scream " deflation" since designer cloth, SUV's and luxury items are decreasing, how bad can that be. Those items are expensive anyway and people can still live without them. People only buy them when they have the money. However things like groceries, vegies and poultry are necessities, if you live in the middle of a city, you cant afford to grow your own and you will be dependent on the farmers in the countryside. If these things are going to be priced higher, people will start to feel uneasy.

So ... what are you experiencing right now ? inflation or deflation ? is it threatening your lifestyle ? by now i think you already know what to think when the government is shoving information into your skull !

Friday, March 20, 2009

Quantitative Easing ( Money Printing )

On the 18th of March, the US Federal Reserve Chairman, Ben Bernanke annouced that the Federal Reserve has made plans to purchase as much as $1.15 trillion in U.S. bonds and mortgage-backed securities. These measure are also known as quantitative easing.

What the US Federal Reserve is similar to what the Bank of England (BOE) is doing. For those who are not familiar with these terms, they are basically printing money just to meet payment demands. By doing so, they are basically devaluing the US Dollar.

Due to the US Federal Reserve actions, investors has become wary and striking fears on the credibility of the US Dollar and its treasuries as a safe haven. Since the announcement, the US Dollar has started to depreciate.

Investors might flee from the US Dollar to other types of assets such as precious metals in order to preserve their wealth. The announcement has triggered the price of gold back to the USD 940 to USD 960 range since gold has been know to be a safe haven.