Tuesday, December 23, 2008
1. The used car industry reported that sales are dropping, less people are buying cars. The situation arises due to
a. People are trying to save money due to the uncertainties.
b. People don't have the money
c. Banks won't give loans
The conclusion is, less money to go around. The velocity of money has been slowed by the situation. Therefore its going to be harder to get money.
2. The fall of crude oil prices will affect petronas's income. So lesser income ... lesser tax to the govt. guess .. its going harder for the govt to get money in the future.
3. more companies will file losses thus, lesser tax revenue.
4. Falling commodity prices will affect 3 of our exports ... crude oil, palm oil and rubber.
5. Falling demand on electrical goods will hamper our electronic exports ... companies will have to take cost cutting measures. Factories may have to cease operations.
6. lets just hope ... the tourism industry is not affect ... lol
i guess it looks bleak, lets pray we will see light at the end of the tunnel
Monday, November 10, 2008
1. To me it is obvious that Obama will continue the policies which Bush has administered during his tenure as a the President. So I dont expect any difference. Anyway these policies are beyond Obama's control. The US Council Of Foreign Relations is the one who decides.
2. The world economy seems to be in a very volatile period, it plunges today and rise the next day. So what do we conclude from this ? basically, the average joe is not the one in the market these days. Either they're already wiped out or the dont even dare to come near the stock market. The cloud of uncertainties is so thick, people just dont know where the market is actually heading.
3. At this moment, I think that we wont see any more bank failures or failure from the financial institution. But what I say might be wrong. It seems like central banks is joining forces to nationalize these banks. It means the government is intervening the market. There is no such thing as a free market now. Central banks are pumping cash into this banks as if the banks are in ICU's. Therefore for the short term I do think that news that this or that bank is going down ends here. However, if those banks are really in deep financial trouble. I wonder what'll happen. It seems that in the US economy, the quantity of US Dollar is increasing. Thus theoretically, more money means inflation. However, with conjoints efforts from the federal reserve, European Central Banks and Sovereign Funds. These parties might be able to absorb these excess USD and prevent the USD from crashing down to the ground. But we need to remember that USD is a fiat currency which is based on nothing. The notional value of the USD depends on the demand on the currency.
4. Fuel prices going down, is that a good news ? there's pro's and con's on the issue. It seems like that fuel prices is going down because people accepted the idea that the demand for oil is declining. US might be the biggest oil consumer in the world, lesser SUV's on US roads doesnt mean that demand is declining. The world population is not declining. It is growing exponentionally. If the price drops today, it means lesser funds for oil companies to find and extract oil from new oil fields. It means supply is decreasing. It means that the price of oil is going up to the high heavens.
5. At the moment, I don't see where is the economy going. I think people are trying to figure it out. With Obama is not fully in power, so we are still living in the Bush Regime. It will be soon till Obama assumes office and I think the investors are sitting and observing on the next Obama's move.
6. As the people in US is busy on Obama, we are busy with Najib's transition. Recently, Najib has presented his new budget in order to stimulate growth. RM 7B is the magic number and I want to see where it will take us. I have no actual comments yet, but a stimulus package is good to get the wheels of economy moving.
7. So, till my next post. Laters !!
Tuesday, October 14, 2008
1. According to the news on bullion, it is derived that there are shortages in the market on gold bullion.
2. The public in the US, UK, Europe and other countries are experiencing shortages of gold bullion supplies.
3. It has been clear that even banks in Germany are holding up gold, as a hedge against inflation and the devaluing of the currency.
4. Silver also suffers the same condition as gold, silver investors are required to wait for 8-10 weeks for their gold shipments to arrive.
5. Despite, the conditions mentioned in the above, we are seeing gold value slumping. According to theory of supply and demand, due to scarcity factors, the value of gold should be rising higher at the moment; however, the direct opposite is happening.
6. according to some market analyst, there is some sort of disconnect on the price of bullions.
7. Some analyst had the notion that it had to do with the COMEX. How does one buy or sell an object which is not even existed? How does someone buy something without throwing any money and has the capability to sell it and reap the profits? Yes it does sounds preposterous. Well, welcome to the futures market.
8. How the hell that physical gold which is getting scarcer to obtain and high in demand is losing value as stated by COMEX?
9. The price of paper gold as in COMEX does not reflect the true value of gold. If the prices quoted by COMEX are not the true value, what is the true value of gold compared to fiat currencies?
10. Is the true value of gold is being manipulated in order to strengthen the fiat currencies? When the fiat currencies are strengthening, it will make the fiat currencies more favorable compared to bullion.
11. Is Naked Short Selling is what has caused the decline of the value of gold? If Naked Short Selling is causing for the value of gold to decline, how does the quote by COMEX on the value of gold could be deemed as the right current value? By now, the credibility of COMEX should be questioned, and the practice of naked short selling should be banned. If short selling is a tool to prevent the price of commodities from soaring too high. There need to be some sort of regulation to prevent the activities in COMEX from distorting the true value of certain commodities.
12. I'm not deeming my notes to be correct, if there's any misunderstandings or misconception please inform me so i could understand better
Wednesday, October 8, 2008
2. Why is the US dollar rising despite the bailout ? It is known that the US treasury and the Fed is flooding the market with USD 7 trillion with funny money ? It should trigger and inflation since the US government is debasing its currency. What is happening here ?
3. Although we've seen by now that gold has strengthen its position in the market, there is still cries mentioning that the it is still undervalued. Few are the reasons why they claimed that the price of gold should be much higher :
- People still cant acquire physical gold in the market such as gold coins due to shortage of gold coins minted.
- The cost of producing gold has increased, from mining till minting, thus the cost of gold should be on the rise.
- Since investors are seeing a slump in the stock market, many are turning to gold instead of cash as a hedge from inflation. Some say cash is king, but gold is the emperor ...
4. Some conspiracy theorist are saying that there is a "cartel" which is trying to keep the prices of gold from surging to its actual value. Why ? Its because they want the market to see that fiat currencies are still viable as savings and investments.
5. One might think why. The only reason I can think is, it is because, when people keep their wealth in currencies, they'll put it in banks. Why ? because commercial banks needs this deposit in order to create liquidity and to create funny debt generated money through the fractional reserve system.
6. In other perspective, when people still keep their wealth in fiat currencies. It means that the banks are still in business. But, when the public starts going panic. They will start withdrawing the money from banks, and it might create a run on banks. It means that the banks will not have the capacity to provide all the cash if the public is demanding cash all at the same time.
7. If run on banks occur, the banks will simply collapse. Thus, we see that the US government is raising its guarantee on savings in banks up to USD 250,000. The same situation is happening also in Europe. We could see the measures taken to guarantee all this savings is just to prevent a run on banks. They are trying to calm the public to prevent a run on banks. Some government is pledging guarantees on savings without limit. Why is the government trying to help banks eventhough the mess is created by the banks themselves ?
8. Some might feel relieved that the government is pledging a guarantee on their deposits. What will happen if the public starts to withdraw their savings and deposits and the banks cannot honor the publics withdrawals ? It means that the government will have to pump in more money . If the government has the resources to honor the withdrawals then, its good for them. What if there's no enough resources to meet the withdrawals ? Will the government print more funny toilet papers ? and devalue their currency ?
9. If the government is inflating the currency, the currency will lose its value. When the currency loses its value, it will create price inflation. It is not because that things costs more. But it is because the currency is losing its value.
10. So, have we seen the lowest point in this financial mess ? I dont think so. It is expected things will go worse from now on. It is said that the next quarter will be even worse which makes the current are still " acceptable".
11. Buckle up .... we dont know what will happen soon.
Monday, October 6, 2008
1. Before the bailout was in uncertainty we see the stock market rally up a bit and the gold prices were crashing down. At the moment, it seems like the bailout is mandatory to keep their banking system alive ( as like in life support machine ).
2. After the bailout passes, the stock market crashes again and gold prices rally up as in today. The KLCI fell again below 1000 points and so all other bourses in the region.
3. We see another bailout for Fortis Bank which has been bought by BNP of France. It looks like its another casualty of the Credit Crunch.
4. Commodity prices has been falling, on signs that the biggest economy on earth which is the US is in recession. Consumer spending has been declining. Thus, brining down prices from crude oil, crude palm oil and bla bla bla bla ...
5. If the price of crude oil is declining, crude palm oil is declining, rubber is declining, will the demand for electronic product decline? and the strengthening value of USD means that our export value is decreasing because we are paid less.
6. Its look like our 2nd biggest trade partner which is Singapore is also in economic pressure and the US which as we all know are already in deep shit. It is likely the demand of our products and produce will decline soon and who knows how will it affect us.
7. For the past decade, it looks like the economic boom was fueled by cheap credits. Banks offering cheap credit to public without regarding their credit worthiness, suddenly people were flooded with money. It looks like the party is over now.
8. Some economic expert are revealing that all these US financial institution is keeping toxic financial derivative products in their books and the value are reaching as high as USD 500 trillion. So, my question is, how will USD 700B will help to cover USD 500 trillion in losses ? It looks like that USD 700B is not a bailout, it is just an attempt to delay the impending doom of financial armageddon. USD 700B is such a small number compared to USD 500 Trillion, its just the tip of an iceberg.
9. If we apply the "fractional reserve" rule. It means that the US has just flooded the market with USD 7 trillion of debts for all to enjoy. Maybe buy some shelter before the financial armageddon becomes imminent and guess what ... the American Public gets to pay the bill.
10. Economist say that the influx of those " debt " created money will create inflation. But it seems like with the declining value of commodities such as crude oil from its all time high seems like deflation to me. Or ... is it some sort of market manipulation by the " cartel " ? Whatever it is, in my opinion, if you have the capital power and political will, manipulation is a simple game to play.
11. Well, its doesnt look like our banks are going to fail unless they themselves has been fooled by those toxic derivative products. I dont see we're going to get the credit crunch treatment. But I see slower growth in the coming month. I might be wrong, but time will tell.
Sunday, October 5, 2008
Global Red Alert: US Will Not Be Able to Service Its Debts By H2-2009 - Market Shut Down After Declaration of Force Majeure - By Matthias Chang (LATES
|Something Important to think about and ponder |
Global Red Alert: US Will Not Be Able to Service Its Debts By H2-2009 - Market Shut Down After Declaration of Force Majeure - By Matthias Chang (LATEST UPDATE)
|Saturday, 04 October 2008 06:30|
This is the most important Red Alert to be issued by me. Do not take my word for it. Verify my facts and analysis, word for word, paragraph by paragraph, as your fortune (if any) and more importantly your family’s livelihood depends on you taking all the necessary steps now to avoid the inevitable pain that will follow.
All the signs are there that the Bush regime may impose stringent measures before the year is out, and if not, his successor will definitely do so when he assumes power in 2009. This will take place, at the earliest, by year end 2008 and latest by H2 – 2009. This is a given.
You have the means to verify it. Do it now! Google it before you read the next sentence. Once you have verified the same, you will be scared, very scared as I am now. We have an urgent duty and responsibility – that is to warn every American citizen as the first priority, and then fellow citizens in your country. This is because the impact and consequences will be global.
US Has Not Been Servicing Its Debts For Years
Sometime ago, before the Beijing Olympics, I had warned that the financial crisis would unravel rapidly after the Olympics, as China could not afford a calamity before and during their version of the greatest show on earth.
We are now witnessing the U.S. economy’s slippery slide to the financial hell hole.
Not many Americans are aware that the US has to service annually, debt-interest to the tune of US$400-500 billion! Being in perpetual deficit (both trade and budget), the only way that the US can continue borrowing and paying its ever increasing interest burden is by borrowing in larger and larger amounts from the central banks in Asia, Middle East and Europe.
Additionally, the US banks have been insolvent for years but they were able to cover up their bankruptcy because Alan Greenspan and his masters in Wall Street and Thread-needle Street were able to come up with an incredible Ponzi scheme – the selling of financial toxic wastes (CDOs, MBS, CDS etc.) which enabled these bankrupt banks to fleece both central banks and private investors, and create digital profits by fraudulent creative accounting and corruption of politicians in Congress!
Everyone was borrowing to pay off the previous debts and interests.
In 2000 / 2001, the US economy almost collapsed and the false flag operation of September 11, provided the pretext and the opportunity for the Military-Industrial-Financial Complex to wage a global war (the “War On Terror”) to avert the financial crisis – the massive US debt default. The Bush regime was able to delay the crisis for seven odd years.
China, Japan and other major central banks, given the then prevailing circumstances, accepted the status quo and grudgingly allowed the US to be in default and to part-pay the interests due on past debts and the monthly new debts to pay for the war in Iraq and other misadventures.
China realized that unless she accommodated the US predator, her economy would suffer a major blow and even a war with the US. Bush’s challenge that you are either with us or with the terrorists, was and is directed at creditor countries and served as a warning not to ditch the dollar and derail the US controlled global fiat money / fractional reserve banking system. To the Bush war cabal, any attempt to call a default would be considered a “terrorist threat” on America.
It was a brute’s message: Any threat of economic war would be countered by a hot war and all military options would be on the table, including nuclear war.
The Japanese Yen Carry Trade
For more than two decades the Yen Carry Trade was the main pillar that shored up the shaky foundations of the US controlled global banking system. The Japanese was feeding the hungry US banking system, knowing full well that it would be a matter of time, before the hungry US financial beast would choke on its debts.
Of late, there have been several articles in the American mass media singling out China as the main threat to the security and financial interests of the US. I beg to differ. The principal threat to the US is Japan. She has been, and will be in the future, the greatest threat to the US. This is because Japan’s war party never forgave the US for its disastrous defeat suffered in World War II and the humiliation of the nuclear destruction of Hiroshima and Nagasaki!
But for China’s agreement to finance the US’s ever growing appetite for debt, the financial crisis would have erupted much earlier. The Japanese grand plan has therefore been delayed. But no longer! Why?
The End of The Road
Given the present state of financial health of the US, China can no longer sustain the massive handouts to the US without damaging its economy. This is also the situation faced by other central banks.
This is a matter of simple arithmetic and common sense as every honest banker (if ever there was one) will tell you. Interest is revenue. If interest is not paid, there is no revenue to the lender. It is the interest payments that will enable the lender to lend more monies to borrower as well as other borrowers eager for loans. Once a borrower fails to service the interest payments or service it adequately, the lender will have a cash-flow problem. In the result, the lender will not be able to lend or unwilling to lend further unless and until the delinquent interest payments are remedied.
In the present scenario, we are not even addressing the payment of the principal loan. If interest payments are in default, the lender can forget the repayment of the principal sum.
For all intent and purposes, the US cannot in the next 50 years at the earliest, pay off the principal outstanding to global central banks! And this is conditional on the US not waging any more wars.
Declaration of Default, Only Way Out
For the past 16 months, we have witnessed borrowers defaulting on their loan installments and walking away from their mortgaged homes, because it does not make any sense for them to continue making payments when the mortgaged homes’ values have collapsed to two-thirds of its original value or even worse.
The same situation applies to the US. America knows that it cannot pay the principal which is now in the trillions. It cannot continue to pay the ever increasing interests due on past debts and new debts to finance the deficits and the wars in Iraq and Afghanistan. So, why continue with the pretense that it is still credit worthy?
The Bush regime, and for that matter any other future regimes, will not be able to cut back on defence spending. The Military-Industrial-Financial Complex will not allow it. If any President attempts to do so, he would be removed from office by a bullet to the head or an induced heart attack.
Neither would it be possible to raise taxes to pay off the over-due interests as it has been estimated by several economists as well as Paul O’Neill that the taxes would have to be increased from the present 28% to 65%. No President can impose such a hefty tax and remain in office.
David Walker, US Comptroller-General and Head of GAO have warned repeatedly that the US could no longer service its debts beyond 2009! And he is being optimistic. I would say that by year end, the US would hit the dead end.
The recent US$700 billion “bailout” approved by Congress is an attempt to prolong the inevitable. Bush hopes that he can pass the buck to the next president. But I doubt it.
And if I am right, and the shit hits the ceiling fan, Bush will have no choice but to declare a force majeure, tell the world that US is in default and impose martial law to prevent social unrest.
To the skeptics, I would like to remind them that when President Nixon was faced with the demand by France that their dollar holdings be redeemed in gold, he announced to the stunned world that the US dollar would no longer be convertible to gold, as there were insufficient gold in Fort Knox to meet the demand.
And because the Western world was facing the threat of war with Russia (an engineered threat at that), countries outside the communist bloc all fell in line and kow-towed to the “mighty US paper tiger”!
Today, the US and the Western world are reaping what they have sowed in the 1970s! The chickens have all come home to roost.
Government protocols for economic collapse are all in place. All the relevant institutions have the necessary legal powers to enforce government decrees and edicts to ensure that when banks are closed and markets shut down, there will be minimum resistance or else blood will flow on the streets!
This is the scenario that we will be facing in the coming months.
Tuesday, September 30, 2008
Thursday, September 25, 2008
2. The event of gold value reaches up to USD 1000 and falling back to USD 750 an ounce shows that the value of gold can be manipulated. Since we have seen that hedge fund traders has trillions and trillions of dollars pocketed by unscrupulous derivative trading. I still think that the value of gold can be manipulated by coordinated buying by hedge fund traders.
3. However, contradicting to my 2nd point. Even though gold is still up for speculation and manipulation. the value of gold will not drop to new lows in this modern day. Thanks to god which has created it to have and hold value. Therefore minimizing the risk of severe currency devaluation. And similar as Tun, I am also not an economist, therefore my argument could be ridiculous.
4. In my opinion, to use the Ringgit as a trade currency in order to increase the demand for Malaysian Ringgit thus strengthening its value might be a risky business. Even though we are one of the largest trading nation. One must remember that if trade volume decreases, it will affect our currency too. Thus, making the currency vulnerable to speculation and attacks. We have seen that speculative attacks to our currency is causing capital flights out of Malaysia.
5. We have seen that the value of USD fiat money is due to the demand for it in the market and I wouldn't like to see the Malaysian Ringgit suffer the same thing we had in the late 90's. China has trillions of dollars in reserves and as the the Arabs. But if the dollar keep weakening day after day. These economic behemoth's might call it a day and disposing their US dollar in order to protect their wealth. The disposing the US dollar will further devalue its currency and we know that the US dollar is losing its value day after day after they abandoned the gold standard after the Bretton Woods agreement failed.
6. In my opinion we all should go back doing what Tun has teach us a long time ago which is " Belilah Barangan Buatan Malaysia " , Establish our own brand. Invest in the Malaysian economy. Reduce imports and increase exports whether its raw materials, finish products, professional expertise and etc. Increase R&D for our own product and trust on the creativity and innovation of Malaysian. Sometimes we know how the Malaysian products fair with products of other country in terms of quality. But I don't doubt that we can produce goods as good as others. By reducing the need for imported goods, I think we are building our economy on more sound and solid foundation.
10 years back we too suffer economic hardships due to those pirates who plunder our wealth and putting it in their pockets by sleight of hand, by flight of capital. In merely few months, years of toil by our people reduced into dust as if someone is robbing our nations wealth. The economic downturn not only hit our nation, but even every sovereign nation in the region. These are the works of what I call Economic Terrorist. Looting and plundering our wealth in such a way that even the law of our sovereign country couldn't catch.
And now due to their greed, they crumble into ashes, and requesting their political leaders to give a helping hand by nationalizing private debt. By means, government bailouts of private debts. The public has been forced to pay their hard earned money to pay debts created by sleight of hand of financial magicians. How can you pay debt consist of trillions of dollars with a few billions. While the good American people suffer, those Economic Terrorist still live in their big mansions with drivers and cheering on the suffering of others. The American people has been led to astray by these financial giants with the offering of cheap debt like carrot on a stick. People start to live above their means by utilizing cheap debt.
Now, the American people as the largest consumers in the world has lost their buying power. As the value of dollar declining, they buying power too. It will impact other nations such as us. Resulting slower growth in our region.
After they terrorize us 10 years ago, now they're terrorizing the American people and the global population. What we've seen is just the tip of the iceberg. More shall prevail in the coming months.
Are we ready for the global financial meltdown ? We are being terrorized economically and it is an economic assault. This financial meltdown is far more powerful than any other nuclear bomb ever created. Millions will die due to starvation, millions will die due to bad living conditions, million will die due to neglect, millions will die due to petty crimes, and the numbers are unimaginable due to the sheer size of its effects. This Economic chemically toxic biological nuclear bomb will affect millions of the world populations. This bomb will affect everyone socially and economically. Poverty will lead people to unthinkable things and breeding fascism as what we have seen in history books such as the rise of the Third Reich in Germany 60 years ago.
Someone is engineering this global financial meltdown phenomenon and they have nothing to lose. The rise of fascism will lead to war and more unthinkable events. Think deep and think hard, be wise and prudent, the storm is just brewing and the world financial fundamentals are shaking...... and maybe the tides of war might be coming too...
Saturday, September 20, 2008
Saturday, 20 September 2008 08:36
If someone is slow in comprehension and or stupid, we should bend backwards and strive to assist such a person to understand the issues at hand.
But when a well-educated and qualified person lies and or misrepresents the facts for a political agenda, thereby causing financial loss and hardship to innocent people, we should not hesitate to demand his ouster or dismissal from his position of responsibility.
I have therefore no hesitation in demanding the dismissal and ouster of Tan Sri Nor Mohamed Yakcob as Second Finance Minister in the Badawi regime because it is abundantly clear that he has been, and will continue to be, an irresponsible minister. My reasons for demanding his dismissal are as follows:
1. Since December 2006, I have been warning the government of the global financial crisis as a result of the corrupt banking system in the United States. He may be forgiven for not taking action and or advising the sleepy Badawi in 2006. But when the crisis erupted in July and August 2007, and was headlines news in all the international mass media, this idiot took no noticeable action to prepare the nation.
2. When the crisis became full blown in 2008, both the Mid-Term Review of the 9th Malaysia Plan and the recent 2009 Budget  failed to address sufficiently the impact that the financial crisis will have on the Malaysian economy.
3. If sleepy Badawi and this idiot are of the view that the financial crisis will have little impact on Malaysia’s economy, I would like to know their explanations for the massive price inflation in Malaysia, the withdrawal of subsidies for petrol, the massive injection of funds in the public sector – more than RM30 billion for Operating Expenditure in the 2009 budget tabled recently in Parliament and the scaling down and or abandonment of the so-called “mega projects”. Additionally, the injection by Petronas of another 6% dividend to the government to enable the Badawi regime to have more liquidity to meet pressing demands.
4. On Wednesday, the Dow suffered a massive heart attack and this immediately caused the KLCI to breach below 1,000, the first time in two years!
5. Yet, our Second Finance Minister dare state, and as reported in the Star newspaper on 20th September 2008 at page 4, that “Malaysia will not be vastly affected by the financial crisis in the United States because of its strong economic fundamentals.” It has been often said that when the US sneezes, Malaysia catches the cold.
Yet, in the same report, a few paragraphs later, this idiot contradicted himself by acknowledging that: “Malaysia as a country which was well integrated into the global economy would not be spared from the US financial crisis.” I can come to one conclusion and one conclusion only – Nor Mohamed Yakcob has been infected by the Badawi flip-flop disease and is totally overwhelmed by the crisis and is at a loss as to how to cope with the worsening situation. Is he not an idiot?
6. Like Badawi, he is only too glad to have Najib take over the finance portfolio so that whatever blunders committed thus far (for which he shares equal responsibility with Badawi) and all future financial chaos as a result of the mismanagement of the economy will fall squarely on Najib’s shoulders. This scumbag will then hide behind the convenient excuse that he is only the Second Finance Minister and cannot be held responsible as the buck must stop with the Finance Minister.
7. But the public are not fools easily taken in by such rhetoric. This is because when Badawi was the Finance Minister, it was known to all that Nor Mohamed Yakcob was the man running the ministry. This will not change when Najib assumes the responsibility of Finance Minister. Najib has little or no experience in this area and it takes at least a year to settle in any ministry and get to grips with the policies and strategies necessary to keep the ship in good order. It is a given that Najib, like Badawi, will rely heavily on Nor Mohamed Yakcob.
8. Nor Mohamed Yakcob cannot deny and or state that he was unaware that on Wednesaday, all major international mass media were of the view that the global banking system was on the verge of total collapse and that the massive US$85 billion bail-out of AIG temporarily halted the massive collapse of the global stock markets and run on US banks!
9. Major central banks collectively injected a massive US$180 billion into the market – this is on top of the US$ 1 trillion injected betweern 2007 and the first half of 2008. This was part of the package of the US$247 billion rescue structure – ECB giving US$110 billion, the Swiss National Bank up to US$27 billion, the Bank of Japan up to US$60 billion, the Bank of England up to US$40 billion and the Bank of Canada up to US$10 billion. And yet this idiot says that Malaysia will not be affected by this massive financial crisis. This is either height of arrogance or downright stupidity. Whichever may be the case, it is clear that he is incompetent and utterly irresponsible!
10. So let me ask all Malaysians the following question:
Given the past performance of the Badawi regime in economic matters (for which Nor Mohamed Yakcob played a critical role) and an inexperienced Najib assuming the responsibility of Finance Minister (and his inevitable reliance on this idiot), do you have any confidence in the Badawi/Najib regime to steer the country in an orderly fashion out of the financial mess that will impact massively on our economy before the end of 2008?
11. If your answer is a resounding NO then it is obvious that Nor Mohamed Yakcob must be dismissed and replaced with a more suitable person. Malaysia’s economy is like a ship without a captain. This is bearable if we have a good and experienced chief mate . But Nor Mohamed Yakcob has been proven to be utterly inadequate. And unless we address this critical issue within the next two months, we will be beyond rescue.
Let me explain why the situation is so dire and dangerous.
Since Wednesday, when the financial shits hit the ceiling fan, I was hoping that the so-called leading economics and financial commentators and opinion makers would explain the situation to the Malaysian public via the national dailies, the blogs and the TV network. I came across not one article or broadcast that explains the underlying reasons for the inevitable dire consequences.
Sure there were articles on the crisis, but they were merely describing the rescue of the largest insurance company in the USA (A.I.G.) if not the world and the amount involved. No explanation whatsoever, as to why only a few days earlier the Fed and the Treasury allowed the 4th largest bank, Lehman Bros to fold up but rushed in to rescue AIG with an unprecedented US$ 85 billion.
In my various articles published in my website and my final volume of the Future Fast-Forward Trilogy – The Shadow Money-Lenders and the Global Financial Tsunami – I explained in great detail the corruption within the global banking system and how these financial leeches through fraud and political protection created and amassed a global financial fortune in excess of US$500 Trillion.
Let me assure you that this is not a typo error. You got it right. It is not billions but a whopping US$500 trillion. I have been advised that as of the Q2 of 2008, the figure may have reached US$565 trillion.
This is a complex subject but I shall endeavour to make it as simple as I can.
The Ponzi Scheme
The crux of the fraudulent Ponzi scheme is the twin pillars of:
1) Fannie Mae & Freddie Mac – the two giant mortgage corporations of USA
2) The Derivative financial tool known as Credit Default Swap (CDS)
Once you have a grasp of these two concepts, you cannot but agree that we are facing total global banking collapse. Why? Because the entire global banking system has been built on these two financial pillars! But the system became irreparable in the last 7 years when CDS became the linchpin in the massive expansion of derivative trading and financial engineering.
1. Banks became greedy and were unwilling to earn safe and steady profits from mortgages for housing and commercial properties which usually spread over a period of between 5 to 30 years.
2. Banks wanted massive profits in the shortest period of time and the ability to lend massive amounts and not be regulated as to how to do it.
3. The crooks devised a scheme. It was a simple idea.
4. Banks will provide mortgages to all and sundry.
5. I am going to use a simple example and using small numbers to illustrate for ease of calculation. Thus, assuming the Bank gave out US$1 million to finance mortgages, bearing interest at 10%.
6. The bank then sold the mortgages to Fannie Mae and Freddie Mac at a discount. Fannie Mae and Freddie Mac being Government Sponsored Companies (GSCs) are able to get cheap financing to purchase these mortgages as they were assumed to be “guaranteed by the US Government”.
7. Fannie Mae and Freddie Mac then package these mortgages into all sorts of structured financial products and these were sold to investors (private as well governments). Central Banks hold massive amounts of dollar reserves and they need to find a safe haven for them. Hence, and invariably, Central Banks invest their reserves in US Treasuries and financial “mortgage-backed" products issued by Fannie Mae and Freddie Mac as well as other US financial institutions.
8. With the payment of US$ 1 million by Fannie Mae / Freddie Mac, the bank by law, can lend ten times the amount after keeping 10% reserves i.e.US$100,000. Therefore, the bank can lend US$9 million by “creating money out of thin air” i.e. by crediting the borrowers in their loan accounts in amount of the loans extended. These US$9 million loans secured by mortgages are then sold to Fannie Mae / Freddie Mac again.
The cycle keeps repeating and the banks keep creating more and more loans.
It was so easy that the banks decided to create dubious loans called “Liars Loans” whereby the borrower need not state the actual income and or ability to repay.
9. As more and more of these loans were created, investors (government and private) demanded assurances that these loans were good for investments. The rating agencies (e.g. Moodys, Standard & Poor and Fitch etc.) who in collusion with banks, gave AAA ratings to what were essentially junks. This fraud led investors to believe that these financial products were good investments.
10. The rating agencies were only too aware that this scheme needed something more concrete to prolong the fraud and induce the investors to part with their monies.
11. The insurance companies like A.I.G. came into the picture. They were seduced by the idea that if they can insure against risks of accidents, storms etc., they could also insure risks against default by the mortgage holders. Thus was born the financial innovation – Credit Default Swap (CDS). Any financial product with a sound CDS would be rated AAA. It was as good as being guaranteed by Uncle Sam. Assholes the world over, especially central banks, fell for it – hook, line and sinker. Bank Negara was no exception.
12. The scheme works out like this – AIG sells protection – i.e. in the event there is a default, AIG will pay out to the buyer who buys the protection (the CDS) in exchange for the payment of premiums covering the period of protection not unlike your usual insurance policy. It was easy money for everyone.
The banks get to sell their loans and have the liquidity to create more loans.
Fannie Mae / Freddie Mac and other financial institutions get the opportunity to repackage these loans / mortgages and sells them to investors with a tidy profit.
The investors are happy with their so-called guaranteed returns. The insurance companies, investment banks and other players get their premium income for selling protection. It was old fashion mafia loan sharking and protection business dressed up in modern financial jargon and everyone was too arrogant and greedy to see through the fraud.
13. When loans default and continue to be delinquent, the law (depending on each country) provides that if the loan is in default for 90 days or more, it should be declared a Non-Performing Loan (NPL) and banks must provide reserve to cover the loss.
14. What happened was banks were covering the defaults and kept them on the books for two years or more in the hope that no one would be wiser and interest income from new loans would cover the defaulted old loans – the classic ponzi modus operandi.
15. When the two years default reached critical proportions starting with the sub-prime loans, the fraud began to unravel. Investors began demanding their protection money for the losses arising from these defaults. It has been estimated that the market value of the CDS was in excess of US$60 trillion but the capital of the insurance companies like AIG are only in the billions. It is therefore a physical impossibility to make good the demand for payment for the defaults.
16. If AIG the No. 1 insurer in US and the world is in default, it means the rest are in deep shits. You can take it as a given that no one and no one has good coverage and protection anymore.
17. When there is no coverage and protection, how can there be AAA ratings for new issues of such financial products? Fannie Mae/Freddie Mac etc. cannot package these products for sale to investors and if they cannot sell, they will have no funds to buy more dubious mortgages from corrupt and fraudulent Wall Street banks. With no additional funds, these crooks in JP Morgan Chase, Goldman Sachs, Citigroup, Lehman Bros., Morgan Stanley, Merrill Lynch, Bank of America, UBS, Barclays, HSBC, Deutsche Bank, Credit Suisse, etc. will have difficulty extending new loans.
The “Musical Money Chair” will have to come to a complete halt. The entire system gets into a gridlock.
Given the above explanation, can the US government and the Fed continue to bail out banks and other financial institutions? When US is in deficit in both the budget and current accounts, where else can they get the extra monies except by creating out of thin air (virtually by keying digits into computers) or print more dollars.
If you are a sovereign lender or a private hedge fund, knowing the situation, would you lend more monies to the US Treasury knowing that each dollar issued (whether digitally or in printed notes) are not worth the value stated therein.
These dollars ARE NO BETTER THAN TOILET PAPER.
The bulk of our reserves are in US dollars. Our trade – petroleum products, palm oil and other exports are mainly traded in dollars. When the dollar dives into the cesspool of waste, what then?
This is the impending mess that Malaysia will be facing as early as end of 2008.
Have you heard anyone other than this writer talking about it?
Has anyone got the faintest idea as to how we are to cope with the social disruption arising out of this mess?
Has anyone advised you what alternatives you can adopt to save your family and your hard-earned money from the devastation?
YES, I AM BLOODY MAD THAT THIS STUPID GOVERNMENT HAS DONE ABSOLUTELY NOTHING TO PROVIDE A SAFETY NET FOR THE RAKYAT.
WHEN THE TIME COMES, ARE YOU PREPARED TO STAND IN LINE WITH ME IN THE TRENCHES TO HUNT DOWN THESE CROOKS AND SCOUNDRELS?
This is a decision you have to make.
I hope that you will make the right choice and decision.
 The Malaysian Budget is tabled before Parliament in the Q3 of the year. Hence, the 2009 Budget is tabled in Q3 of 2008 and the 2008 budget was tabled in the Q3 of 2007.
 The chief mate is responsible to the captain for the safety and security of the ship. Responsibilities include the crew's welfare and training in areas such as safety, firefighting, search and rescue. The Chief Mate is second in command.
Thursday, September 18, 2008
1. The US Federal Reserve is basically a private corporation and it's major goals are to profit more.
2. The reason why the US Federal Reserve is bailing out AIG is because of that the AIG is a major guarantor of many derivative products such as CDO's etc which are deemed as " toxic waste " by most economist. These financial products needed to be insured so that it can improved it ratings by the ratings agency. Thus luring investors to buy those products. If AIG fails, it will render all those financial derivative products to be worthless and losing value. Resulting that more financial companies and hedge funds are going busted due to that their so called paper assets are considered worthless as if it was toilet paper and it means they are insoluble. If this happens, there's going to be more failure in the finance sector.
3. The Federal Reserve creates money out of thin air as if creating money is just a matter of creating an entry in an book keeping account. Please do some research on how banks created money.
4. The value of US Dollar is rallying up recently. Maybe someone could explain to me why since most of the commodities and equities market are suffering. Something is not right when prices are going down but supply is not enough or the market has been filled with coordinated speculators and hedge fund traders who took part in creating a bubble to manipulate the market and sucking out our hard earned income. Or something much more eerie is brewing up as if we're going into a war.
5. I think it is wise for Bank Negara to dump US dollars. However if a war broke out. I wonder what will happen to the US dollar.
Wednesday, September 17, 2008
Monday, September 8, 2008
2. Everyday when we wake up and get on with our daily lives, do we realize that " The New World Order " is being forged without us even knowing or seeing it or we don't even know what the hell it is and how it is going to affect our lives.
3. Lately, most of us Malaysians are complaining on the increase of cost of living due to rising fuel cost. Its not just us Malaysians, the whole world is in distress due to the rising fuel prices. However, recently we have seen that world fuel prices is declining. Therefore one question arises in my head, what was the real reason of the escalating fuel prices ? Is there really a shortage of fuel in the world market ? Until now, no one has come out with the answer on why does the fuel price increase. I read in the news and on the net, all the possible causes are merely just notions and hunches by economist trying to justify the increase by applying text book economics of supply and demand. However, is there a possibility that the escalating price was a situation engineered and properly executed and coordinated by a certain entity which have the capability to do so ? In that case, that entity might have the ability to set " The New World Order "
4. If that is the case, how do we mitigate this mischievous act which destroys our life, our nation and our country.
5. These are the few questions which riddled me everyday and causing me to lose sleep thinking, reading, researching. I'm not an economist, I'm and engineer by profession. But all these events is encouraging me to know more on economics. Anyone want to sponsor me for a postgraduate degree ?
6. Due to the factors above, I feel that it is our obligation as Malaysians to be prepared and safeguard our national interest against these forces of the unknown which is trying to siphon our wealth and destroying our nation.