Monday, November 10, 2008

Its Been A While !

I'm sorry guys, its been a while since I've written something. I have been busy with work recently. After these few weeks, finally the wait is over ... Obama is going to be the new President of the United States Of America.

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 !!

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