Saturday, September 20, 2008

RED ALERT !! excerpt from

Why Tan Sri Nor Mohamed Yakcob, the 2nd Finance Minister, Should Be Sacked - By Matthias Chang (LATEST UPDATE) PDF Print E-mail
Matthias Chang
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 [1] 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 [2]. 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.

Starting Point

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.

The Mechanics

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.


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?



This is a decision you have to make.

I hope that you will make the right choice and decision.

End Notes

[1] 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.

[2] 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.

1 comment:

pedu said...

I think our RM can be pegged against gold if the US Dollar went to zero value.But watta heck,if the Greenback is flushed down the toilet,the world will be in total chaos and everyone wont be able to use any sort of paper money...I read the book and what the writer said starts to unravel..