Stock-taking time/s

Desi, in more ways than wan, is taking stock today. In fact I've been doing that in my mindscape a lot lately -- since 916 did NOT materialise on first stated date, but it's a longer term Merdeka Mission that believers like me and others since Reformasi 10 years ago are looking at. Political struggles do not yield results overnight. In fact, the next generation has to catch the baton the present gen who has started the relay race passes on.

But it's GOoD to once a while to pause, think where we are at, and reflect...

Today I urge fellow Malaysians, especially those who play the stock markets, and those small&medium traders, it's TIME TO TAKE STOCKS.

Hence I am doing a COMPOSITE POST today and may run it as a series till 15th of March, 2009.
WHY 15th? you dare aRsEk?

From cpiasia.net~~~~~~~


FINANCIAL TURMOIL WORLDWIDE: Two perspectives on Malaysia's status
Media Monitor
Written by various
Wednesday, 22 October 2008 07:01
Media take 1:


Malaysia to revise downwards growth forecast for 2009

Written by S. Ramesh in Kuala Lumpur | Posted: 21 October 2008 0217 hrs
Published by Channel NewsAsia's

KUALA LUMPUR: The Malaysian government will revise downwards its growth forecast for 2009 from the targeted 5.4 percent, says Deputy Prime Minister and Finance Minister Najib Razak.

Details are expected to be announced in Parliament on November 4.

Meanwhile, the government will inject US$1.4 billion into the stock market to shore up sentiments.


Malaysians and financial analysts are watching keenly for the country's response to the global financial crisis.

For a start, the Malaysian government like its neighbour Singapore has announced that it would guarantee all bank deposits till 2010.

Mr Najib had indicated last week that he would probably be addressing Parliament on Monday about more measures to tackle the current ongoing financial crisis.

His Press Secretary said Mr Najib would likely deliver his speech on November 4.

And that's also probably when the Malaysian government would announce its projected growth figures for next year - expected to be lower than the original 5.4 percent.

Mr Najib said because of the volatility of the financial crisis, the government has to calibrate the figures carefully.

"Your growth figures depend on the assumptions that you make in terms of the price of oil for example, plus other commodities. This relates as well to the level of subsidy. There are certain things we have to look deeper into," he said.

Mr Najib also revealed that government projects will be re-prioritised. Only those with higher multiplier effects will go forward.

But he stressed that Malaysia is not in a financial crisis, even though the economy would be affected by the global financial problems. - CNA/de



*******************************************

Bloggers take 2:

THE FINANCIAL TURMOIL AND MALAYSIA


Posted by Dr. Mahathir Mohamad

at October 20, 2008 6:19 PM

1. I am glad to hear that Malaysia will be spared from the fallout of the systemic collapse of the whole world's financial system. This ability to isolate Malaysia and Malaysian banks from the effect of the bankruptcies of all the biggest banks in the world must be regarded as a miracle. Our ability to manage our financial system better than others must earn us the admiration of the world.

2. I hope we are right in forecasting the effect on us of the collapse of the world's financial system. But I have a sneaking feeling that all is not well.

3. We are a trading nation which trades with all countries of the world. The United States and Europe are among the biggest of our trading partners. Roughly 40 per cent of our total trade is with them. I may be wrong but I believe that if our buyers cannot pay for what they import from us, we would not make the profit we had expected. In fact we would lose a lot of money as we will not recover the cost of the goods we sell even.


4. Now the common practise is for importers to open Letters of Credit (LCs) with banks to ensure that when they receive the goods the corresponding banks will release the money. However, if the importers' banks go bankrupt they would not be able to transmit the payment.

5. They may be bailed out by the US Government. But they may not consider paying Malaysian exporters as a priority. In which case we will not be paid. Worse still we can no longer entertain orders coming from this market. Our trade must shrink.

6. We are not talking about one company. We are talking about hundreds of companies trading with America and Europe and other countries not getting paid for their exports. We are talking about tens of millions, even hundreds of millions of Ringgit worth of goods not being paid for.

7. These companies all borrow from banks to finance their operations. They hope to pay the banks from the proceeds of their export. When they cannot pay the banks, the banks in turn would have a lot of non-performing loans.

8. The banks would be wary of lending money to not only the exporting companies but to others as well. There will be a credit squeeze which would hurt other businesses. There will be margin calls. When the borrowers cannot meet this there may be foreclosures.

9. We see a lot of construction in Kuala Lumpur, all dependent on borrowed money. If these buildings are not sold or rented, payment by the developer to the banks would not be forthcoming. Again there will be a lot of non-performing loans.

10. When the Government withdrew the subsidy for oil the pump price increased by 40 per cent. The immediate result was to increase the prices of a wide range of food, goods and services commonly needed by the people. In other words the purchasing power of the people had been reduced.

11. Since then the price of oil had been reduced three times. But the prices of food, goods and services have stayed up.

12. Some cranks estimated that every citizen had lost purchasing power by RM300 a year. Since we have a population of 27million, the country's loss of purchasing power amounts to RM8.1 billion. That is a lot money which is lost by food suppliers, cooked and uncooked, goods and service providers at various levels. A lot of small businesses would just fold up.

13. The Government has given back some money but not enough to reduce the losses sustained by the economy.

14. Now the corridors cannot be fully implemented. But this is fine because nothing had been implemented anyway. Unfortunately the anticipated earnings by contractors, sub-contractors, suppliers, workers, teh tarik and nasi lemak sellers would not materialise.

15. Maybe we will not need several hundred billions to bail out our banks. But the banks will also face the problem of unpaid loans incurred by their credit card users. They have been rather lax in providing credit card facilities to their customers, many of whom have no accounts with them. It is believed that unpaid credit card loans is in excess of RM20 billion.

16. Will the Government guarantee depositors will not lose their deposits when the banks which had in the past made huge profits now go bankrupt because of their mismanagement?

17. This is what the peoples of America and Europe are asking. Their money is used to bail out the banks whose profits had enriched their Chief Executive Officers and their share holders so much in the past. The people did not get a share of the profit, but they must pay for the losses.

18. We are told that six billion Ringgit in Foreign Direct Investment would flow into the country. But what about the RM30 billion outflow as foreign investors pulled out of the stock market?

19. I pray that I am wrong. I pray that the Government is right in declaring that the whole world may collapse but we would be the only country which won't. We will sail calmly through the seas of shattered economies.

20. What is happening in the world today is the total collapse of the international financial system. This has been brought about by greedy people abusing the system. Instead of doing business in goods and services they now do business in money, in fictitious money.

21. We had experienced the effects of the trade in our currency in 1997-98. For no very good reason, our Ringgit was devalued so that its purchasing power was halved. And we became poor.

22. Fortunately for us we succeeded in stopping the trade in Ringgit and restoring its value. But the system is still in place. And now it is the US Dollar which is devalued.

23. But trading in currencies is only one of the abuses. The banks are lending more money than they have. They actually go to the people to persuade them to borrow.

24. Their clients can borrow 100 per cent of the money to buy a house for example.

25. They need not worry about paying or servicing the loan. The price of the house would appreciate. You may even have a second mortgage. You may even sell at a profit.

26. In the meantime the bank would register the loan and add the projected earnings from interest maybe over 20 years. That done the bank can put all the loans together and sell it to the hedge funds at a discount after adding potential interest.

27. The more risky the loan the higher would be the interest and the higher would be the profit. The hedge funds which buy the loans can basically sell the mortgages to investors in the fund or to the huge Government financed Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac.

28. Now the hedge funds and the banks would feel safe and enjoy the huge profits that they have made.

29. But when hundreds of thousands of house buyers find themselves unable to pay simply because they have no money, and could not sell the houses and could not borrow from banks, Freddie Mac and Fannie Mae would not be able to pay the hedge funds. Then the hedge funds would collapse and drag down the banks with them.

30. This simply is what happened. The same applies to credit cards. People with little or no money would be given credit cards. They would spend more than they can afford and the banks would be faced with huge amounts of non-performing loans. The banks cannot pay the bills submitted by the sellers of goods or suppliers of services. The banks would collapse and there would be a run on the banks and on other banks which had lent the money to the affected banks. And so we see one after another of the giant banks of America and Europe going bankrupt.

31. The Government may try to bail them out. But the confidence does not last long. Soon the bailout would be seen to fail.

32. Actually I am giving a very simplified version of what is happening. All these shuffling of papers and figures cannot but encourage cheating. The bigger the amount of money involved the bigger would be the returns. The tendency is therefore to play with very large sums of money.

33. But where does the money come from? From nowhere. The Government and the banks, including the Federal Reserve Bank conjured up the money from nothing. If you ask yourself where do the US700 billion Dollars come from when you know the United States' Government has to borrow US1.5 billion every day, you will find no answer. Is the US Government holding US700 billion Dollars in its treasury just in case it has to bail out the banks? Not likely when it cannot even make ends meet, when it has twin deficits.

34. So money can be conjured up out of thin air. And this must be the money the banks lent, the money the hedge funds and currency traders play with, the payments for expensive wars etc.

35. Basically the international financial system and the market economy has failed. Unless and until a new system is introduced and Governments regulate with the running and operation of national and international finance and the so-called free market we are going to see the financial turmoil and collapse repeated over and over again.


Media -- Take 3:

Taking stock in a global turmoil
Malaysia In The News
Written by BTS
Monday, 20 October 2008 18:05
Written by Business Times (Singapore)
Published by The Malaysian Insider

October 20, 2008

Malaysia should cut spending, reassess fuel subsidy, energy policies

KUALA LUMPUR, Oct 20 - While Malaysia will likely escape a recession this year, next year is harder to call.

Although one of the stronger economies in the region, it is a major trading economy and will not be immune to the knock-on effects of a deepening global turmoil.

Following the Asian financial crisis a decade ago, the rebuilding of financial systems and stricter governance have strengthened its banking framework and put the country in a relatively stronger position to fend off the contagion effects.


Unlike many nations whose financial systems have been bled nearly dry by sub-prime loans and toxic mortgage-related debt, local banks have negligible exposure to both sub-prime related securities and affected financial institutions of other countries.

The central bank last week sought to give assurance that the financial system is secure when it confirmed that more than 90 per cent of the total assets of the banks and insurance companies are ringgit-denominated assets.

It also pointed out that the banks are more than adequately capitalised, have ample liquidity - complaints about a credit squeeze are not obvious - and the level of non-performing loans have dropped to 2.5 per cent.

It also joined a number of central banks in guaranteeing all deposits - at least until end 2010.

Foreign reserves are still high at US$110 billion as at end September although off a mid-year peak of US$126 billion. The savings rate is robust, and the current account surplus is estimated to have hit over RM100 billion this year. Although commodity prices have plunged by more than half from record peaks reached earlier this year, the commodities are still valuable resources.

Because the problems are originated externally, Malaysia should keep its head down and brace itself for the headwinds. The use of monetary and fiscal tools would be limited given prevailing low interest rates and a fairly big budget deficit, which after extra spending was allocated to counter inflation, is expected to rise to nearly 5 per cent of gross domestic product this year.

But can the government reduce its spending? A record RM208 billion allocation was set aside for next year's budget - the budget is now 3 times bigger than a decade ago - and the current Ninth Malaysia Plan saw an extra RM20 billion allocated towards coping with building material, food and transport price increases.

With oil now at about half of its US$147-a-barrel peak, other than using the additional allocations to further strengthen the social safety net when the economy ticks at a lower pace, spending ought to be reduced to keep the deficit in check.

Petronas's revenue last year accounted for a hefty 44 per cent of the federal income. Because of a one-year lag, the oil income will still be substantial given the oil price average of around US$115 last year.

But the unhealthy dependency on Petronas will be felt in 2010 when its revenue slips dramatically. Which is why as gratifying as the recent fuel price reductions have been at the pump - in line with lower global oil prices - the government should rethink its fuel subsidy policy and use this as an opportunity to gradually reduce the subsidy so that it can be channelled to far more productive areas of the economy.

In the current crisis, a bigger problem could be emerging. Energy players last week warned that imbalance and unsustainable subsidies in the power sector have led to glaring 'structural issues' which are a threat to energy supply security.

A national energy policy is desperately needed to address the possibility of supply shortages which, according to state investment agency Khazanah Nasional, could occur as early as 2010. Petronas has repeatedly warned that its oil and gas reserves are dwindling at a rapid pace, in part due to cheap prices.

Unaddressed, that time bomb can be expected to hit the economy harder - and the worst part is that it will be self-inflicted. - Business Times Singapore

DESIDERATA @1.42AM the day after:

I reprised below a regular Commenter DPP out-of-court with an insightful input:)

"Desi

lately, too much cut and paste stuff we can get elsewhere.

By donplaypuks®, "

which I appreciate verymuch.

I do C&P often because I have adoptd certain broad issues I wish to onitor which I "aggregate" for the benefit ofmy EsteemedReader's leisurely perusal in case they msiied out elsewhere. Further, I do try to thread the various (news) items plus other Bloggers' discerning writes to put on record what I feel are unfolding events that impact on most Malaysians' everyday life.

In a way, My Blue H'aven serves as a journal in a diarist style when TIME does not permit this Blogger much luxury ofpenning his original pieces. As for poetry, when Inspiration strikes.And that one waits for a Blue Moon.

DonPlayPuks, I often also steal your outstanding Posts as evidential theft to prove I do prowl around fellow Bloggers' abodes.

Just a Hi:) from my readers lift the heART, and Desi's, knot his face does need a lift once a while. In exchange I gift thee poetry prose when I can. When I can't -- which is getting into a(nu's) habit -- I do resort to a tailor's suit, Cut&Pasta!:)
smile-s a GOoDnite @1.51AM


Another Wan! ~~ DESIDERATA Updates @7.17AM, October 23, 2008:

Panic returns to global share markets
By staff writers
NEWS.com.au
October 23, 2008 07:50am


Panic returns ... staggering losses on world markets overnight point to heavy falls when the ASX opens this morning
/ File
World stock markets plunge overnight
Local shares set to open 5pc down
Coming up: Market open LIVE

PANIC-selling returned to global stock markets overnight, with Wall St stocks falling to a five-year low, as fears of global recession stalked investors.

News that world leaders are to meet in Washington next month at a summit to discuss the global financial crisis failed to halt a sell-off that began early Wednesday and accelerated in late US trading.

In falls reminiscent of the worst of the turbulence of the last few weeks, prompted by gloomy outlooks and weak company results, European markets lost between 4 and 5 per cent while the Dow Jones closed down more than 5 per cent.

The Australian share market is tipped to open nearly 5 per cent lower, according to the Sydney Futures Index.

(Join NEWS.com.au for live, interactive coverage of the market open from 9.45am (AEDT). )

In Brazil, regulators suspended trade on the Sao Paulo stock exchange after the main Bovespa index plunged more than 10 per cent, reflecting chaos in fellow Latin American nation Argentina.

Don't look at the headlines take a week by week view. The financial crisis is subsiding the markets are stabilizing but still volatile. Now the focus is on the global slowdown. ...


A day after Argentinian President Cristina Kirchner moved to nationalise private pension funds, the main stock market index fell more than 16 per cent.

G20 leaders' summit

The White House announced that leaders of the Group of 20 rich and emerging countries would gather in Washington on November 15, extending efforts to coordinate responses to the worst financial crisis since the Great Depression of the 1930s.

"The president today is going to invite the leaders of a group of 20 countries ... to discuss the financial markets and the global economy," White House spokeswoman Dana Perino said.

"The leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes and in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes for the world's financial sectors."

Britian's 'likely' recession

The announcement came as one of Mr Bush's closest allies, British Prime Minister Gordon Brown, acknowledged his country was "likely" entering recession.

"Having taken action on the banking system, we must now take action on the global financial recession, which is likely to cause recession in ... Britain, too," Mr Brown said.

Crucial data is expected to show the British economy shrank in the third quarter after zero growth in the second. The technical definition of a recession is two straight quarters of negative economic growth.

A similarly gloomy assessment came in a forecast from the Swiss bank UBS which said Europe faced "inevitable" recession which would begin "almost in sync" with the US.

Mr Brown's remarks come a day after Bank of England governor Mervyn King said the credit crunch and high inflation were combining to pose "the risk of a sharp and prolonged slowdown in domestic demand".

Currencies hammered

The Australian dollar was marginally weaker this morning at after the plunge on the Argentine stock market turned traders off riskier currencies.

The British pound plunged to a five-year trough but the euro also took a pummelling, falling to its lowest level for almost two years against the US dollar, amid similar rates cut expectations.

There were also more signs of trouble in the emerging markets, with South Africa's rand falling to a six-year low against the dollar.

Crude oil prices careened lower after surging US energy reserves highlighted falling demand in a cooling global economy.

New York's main contract, light sweet crude for December, skidded $US5.43 to close at $US66.75 a barrel.

In London, Brent North Sea crude for December delivery tumbled $US5.20 to settle at $US64.52. On stock markets elsewhere, Japan's Nikkei share index closed down 6.79 per cent while Europe's major markets suffered big losses.

The London FTSE 100 index shed 4.46 per cent to close at 4040.89 points, while in Paris the CAC 40 plunged 5.10 per cent to 3298.18. The Dax in Frankfurt fell 4.46 per cent to 4571.07.

The turbulence on the stock and currency markets came despite new attempts by the US Federal Reserve to restore confidence in the fragile financial system.

There was also positive new evidence that the credit freeze might be thawing, with interbank lending rates showing modest declines.

In its latest move, the Fed said it would increase the interest rate it pays on excess cash deposited with it by banks, adding to measures to channel funds to lenders and free up credit.

The rate for reserves had previously been the Fed's main target rate minus 75 basis points. The new rate will be the target rate minus 35 basis points, the Fed said.

An opinion poll out Wednesday showed declining support for the US government's rescue policy, with more than half of Americans disapproving of the multi-billion dollar bailout plan.