Branding

There were no surprises in the Reader’s Digest Trusted Brands Awards 2009. The survey was carried out by research firm The Nielsen Co, with respondents voting for their most trusted brands in 43 categories of products and services.

The brands were assessed and ranked quantitatively and qualitatively based on six determining factors: trustworthiness and credibility, quality, value, understanding of customer needs, innovation and social responsibility. The winners of the awards were the top choices of consumers. The ultimate measure of success for any brand was the level of consumer trust and confidence it enjoyed

Malayan Banking (Maybank) and Public Bank won top honours in the bank category. Amanah Saham Nasional Bhd and Public Mutual were the winners in the category of most trusted investment fund companies.

Other notable winners - a) Car - Honda, Toyota & Proton (surprise!) b) Insurance - AIA, Great Eastern. Prudential c) Family tourist attraction - Genting Highland, Langkawi d) Phone services - Maxis

Economics for Dummies II

Saving is sin, and spending is virtue.

Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. Has an annual trade surplus of over 100 billions. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and is due to get stronger.

But where from do Americans get money to spend? They borrow from Japan, China and even India. Virtually others save for the US to spend. Global savings are mostly invested in US, in dollars.

India itself keeps its foreign currency assets of over $50 billions in US securities. China has sunk over $160 billion in US securities.. Japan's stakes in US securities is in trillions.

Result:
--------
The US has taken over $5 trillion from the world. So, as the world saves for the US, Americans spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2 billion a day, to the US!

Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested in US.

India have invested in US over $50 billion. But the US has invested less than $20 billion in India. Why is the world after US?

The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US. So US imports more than what it exports year after year.

The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money.

It's like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is the lucky customer. And the world is like the helpless shopkeeper financier.

Who is America's biggest shopkeeper financier? Japan of course. Yet it's Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted itself, reduced the savings rates, even charged the savers. Even then the Japanese did not spend. Their traditional postal savings alone is over $1.2 trillions, about three times the Indian GDP. Thus, savings, far from being the strength of Japan, has become its pain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend. "Saving is sin, and spending is virtue."

*another forwarded mail!

Economics For Dummies

In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes Euro100. The butcher takes the money and races to his supplier to pay his debt. The wholesaler rushes to the farmer to pay Euro100 for pigs he purchased some time ago.

The farmer triumphantly gives the Euro100 note to an escort who gave him her services on credit. The escort goes quickly to the hotel, as she was owing the hotel for her room use.

At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his Euro100 back and departs.

There was no profit or income. But everyone no longer has any debt and the people at the small town look optimistically towards their future. ???????

* forwarded mail from a buddy!

One Pence Mortgage

A couple in Britain pays almost nothing for the mortgage on their house. When news broke out about a British couple paying a paltry one pence (five sen) a month for their mortgage, it set tongues wagging.

However it came as no surprise. After all, banks are paying what pensioners grumbled were “less than peanuts” interest for their hard-earned savings. They seemed blessed as their interest-only mortgage payments plunged from £1,500 (RM7,950) a month to almost zero.

On closer examination, it doesn’t appear that rosy. While the base rate on their £400,000 (RM2.12mil) house in south-west London, had plunged from 5.5% to 0.5% they still have a huge debt that is not getting any lower. The principal, that is.

Perhaps, they could have negotiated with the bank to maintain their payments and reduce the mortgage. This would have reduce the amount of interest they have to pay down the years. Regardless of the interest rate, the top priority should have been to pay off the debt (principal) as much and as quickly as possible.

Paying an interest-only mortgage is risky business, more so when the property value continues to slide, especially during an economic crisis. They bought their house in 2007 and property have depreciated by about 20%. That means it is worth about £320,000 (RM1.69mil) or less. In other words, they would have lost about £80,000 (RM424,000) on paper – despite having to pay almost zero interest on their loan.

Having said that, the worst off are probably pensioners and widows who had saved all their lives and survived on the interest from their savings. These fat-cat bankers are paying little or no interest on savers’ accounts.

Where Are We In The Financial Crisis?

The answer is that we are in transition. The crisis has turned a corner, but obstacles lie ahead. Government interventions in the financial sector and the real economy are starting to gain traction.

This is a major change. Two months ago, the major economies were in free fall. A full global downward spiral in which the damaged balance sheets in the household sector led to reduced consumption and then reduced investment and employment. Similar damage in the financial sector led to very tight credit, reduced consumption and investment.

Those relative destructive interactions and dynamics have started to abate.

The downward resetting of asset values was inevitable as was the reduced consumption and increased savings that they caused. The uncertainty leads to fear and cautious behaviour on the part of consumers, businesses and investors. Defer the purchase of a car until you figure out what your house is worth or whether you will lose your job. Wait until the asset markets clearly turn before jumping in to buy bargains.

The effect of these sensible choices is a collectively destructive outcome in which asset values and activity in the real economy decline beyond the point required to get rid of the imbalances that initiated the crisis.

Cue the government. In the past two months, governments have taken actions that over time will short-circuit some of these negative feedback loops. There are stimulus packages of varying sizes. Governments are consuming and investing for us on an interim basis until stability and confidence are restored.

These programs are only starting to be implemented and we have not felt the full effect. The anticipation of their impact is having a more immediate effect on business confidence and asset prices. The financial side of the equation is equally important and complementary. The impact of the stimulus comes in rounds.

The government hires me to repair a bridge and I spend my income generating / expanding business and employment somewhere in the economy. These subsequent round effects are called multipliers. Their size depends on the financial system. Specifically, if consumers and businesses can’t get credit or if asset prices are still plunging, consumers and businesses remain cautious and the multipliers (the second, third and fourth round effects) muted.

Restoring credit at reasonable prices and building confidence so that value investors return to the asset markets will therefore amplify the impact of the fiscal stimulus and vice versa.

So where are we? Probably at the start of the process of turning the corner.
That can happen quite quickly in the capital markets and much less so in the real economy. In equity markets, rallies similar to the current one are likely, based on what might be called the reduction of extreme pessimism.

But the real economy continues to lose jobs at a rate in the US of about 650,000 a month.

That will take time to decelerate. How fast will determine how much further damage there is to credit quality and hence the ultimate issue of solvency in financial institutions.

Edited from an article posted by Michael Spence, a former dean of Stanford University’s graduate business school and a 2001 Nobel laureate in economics.

Invest in 747?

Continue to learn and challenge yourself and your brain will continue to grow. Learning over time enhances memory and the survival of new brain cells. - Anonymous

Even the aviation industry is not being spared!

Airlines have announced plans to take 1,700 planes out of service as fewer people fly. United Airlines is retiring all 94 of its Boeing 737s by year end and Northwest Airlines has cut its old DC-9 fleet by about a third.

According to aerospace data firm Ascend Worldwide, the number of planes in storage has jumped 29 percent to 2,302. That includes 930 parked by U.S. operators alone.

Eventually, some will be sold, scrapped and some remain at desert facilities in southern California, Arizona, and New Mexico. One of them, Evergreen Maintenance Center scraps roughly 15 planes a year.

The deserts in the U.S. Southwest have become one of the top destinations for airliner storage because of the perfect combination of cheap land as far as the eye can see and a dry climate that preserves the planes. Planes deteriorate quickly in high humidity.

An airliner that has been stripped of valuable parts like the cockpit, the landing gear, and the doors can still yield as much as 80,000 pounds (36,300 kilograms) of aluminum.

Those that are still airworthy will be maintained to attract the potential buyers. (Similar to second hand car garage?) Storing a 747 with the required maintenance checks costs $60,000 a year!

Too much cash to burn, how about getting a 747? - now everyone can fly!

Big in Japan

According to Bank of Japan's quarterly "tankan" survey for March, confidence at major Japanese manufacturers has fallen to an all-time low, dragged south by an unprecedented drop in global demand and a deep credit crunch.

The closely watched sentiment index for large manufacturers stood at minus 58 - the sixth straight quarter of decline and the worst reading ever. The index's previous lowest result was minus 57, hit in June 1975.

The Bank of Japan surveyed a total of 10,441 companies between Feb. 23 and March 31, of which 98.5 percent responded. The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable. The lower the number, the greater the pessimism.

The world's second-largest economy, which had relied on overseas demand to drive growth, is in its deepest recession since World War II.

Major exporters including Toyota Motor Corp. and Sony Corp. have moved quickly to adjust to the collapse in global demand by reducing shifts, suspending factory lines and slashing thousands of workers. While their aggressive moves have suppressed inventory levels, it's a troubling sign for families losing those jobs.

Every Cloud Has A Silver Lining

In difficult times, the main challenge is survival and to maintain liquidity. Bad times don’t last forever. Often such times make better people. If dark clouds are forming, be prepared with an umbrella. It does not mean you have to stay indoor during the rain. It is your choice. In the economic rain, many can still find new fortune and success. So be ready to chase after the opportunities that many others may miss out due to complacency, lack of preparedness and courage to brave the economic storm!

Never Ending Story

Samuel Johnson, 18th century literary sage, evaluated a manuscript of an aspiring writer - "Your work is both original and good. Unfortunately, the parts that are good are not original and the parts that are original are not good!"

More outbursts on AIG (See my posting 2 days ago).

The CEO of insurance giant AIG told furious members of Congress that some of the firm's executives have begun returning all or part of bonuses totaling $165 million paid.

Overall, AIG has paid $220 million in retention awards to its financial products employees - $55 million in December and $165 million had to be paid this month.

President Obama, said: "I know Washington's all in a tizzy and everybody's pointing fingers at each other and saying, 'It's their fault, the Democrats' fault, the Republicans' fault.' Listen, I'll take responsibility. I'm the president."

(That’s why he is a respected statesman unlike most leaders – thou should not be named -who will not take responsibilities but blame it on the rain, act of God or hide under the ‘abused’ kangaroo court!)

"We didn't draft these contracts. It is appropriate when you're in charge to make sure that stuff doesn't happen like this. These bonuses, outrageous as they are, are a symptom of a much larger problem. It's a culture where people made enormous sums of money taking irresponsible risks that have now put the entire economy at risk. I think people have a right to be angry. I'm angry."

(We are angry too!)

The government has intervened heavily, fearing that AIG's collapse could have unraveled America's, and, perhaps, the global financial system. AIG has taken $170 billion in federal bailout money. AIG now is 80% owned by the government, meaning any profit or loss directly effects long-term taxpayer indebtedness.

(Similarly back home, MAS, RapidKL, Time and counting, were being bailed out by taxpayers. The culprits went off richer by cashing out the government’s coffer!)

Don't You Cry!

“Acceptance does not mean being weak and allowing people to push us around. It means being strong enough to accept that we cannot alter everything to suit us and it does make our life easier by getting rid of those futile feelings of wanting to change everyone and everything” - Anonymous

When factory supervisor Anusia heard that all employees had to abide by drastic cost-cutting measures, she knew that her employer of 12 years had not been spared from the dreadful global financial crunch. Since December last year, the Japanese company manufacturing hard disk drives had sent 600 foreign workers back and cut the salaries of the local workers by 20%. This month, they work only 11 days. That has shrunk Anusia’s income by at least half.

“The situation is really bad. Orders have dropped by 50% and are still dipping. We are constantly reminded to be prepared as we have to leave if things get worse. If the company shuts down, more than 1,000 will lose their jobs”.
Anusia has indeed prepared well. She is ready to face the possible perilous days ahead.

“After paying off the monthly commitments like car and house instalments and insurance, I have only RM100 left. How can I ever survive with that?”
Instead of being a cry baby and feeling sorry, she took a bold step into an unchartered territory. She joined a direct-selling company. What started as just a source of extra revenue during her free time has become a financial cushion in trying times. She uses the extra days off to do more sales. She sees the impending retrenchment as a turning point in her life that would propel her into a more exciting and lucrative career in marketing.

“I am glad that I am mentally and physically prepared for the worst. You have to work something out. Everybody can do it. You just need the determination and enthusiasm. Your relatives may help when you are jobless for the first few weeks, but you can’t keep on asking help from them. You have to stand up to help yourself.”

Well done Anusia. Take a leaf from her. Those who are in the same predicament, just do it – Everybody can do it. Explore the alternative jobs like direct selling, selling unit trust, insurance etc (that are legal!). It could indeed be a lucrative career!

AIG Almost in Grave!

President Barack Obama was angry. He issued a blistering attack on American International Group and pledged to stop the insurance giant from paying out millions in executive bonuses. After taking $170 billion in federal bailout funds, the company announced that it was bound contractually to pay out $165 million in executive bonuses, prompting a storm of criticism from Mr President to every Damn Yankee.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat? All across the country, there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts or multimillion-dollar bonuses. And all they ask is that everyone, from Main Street to Wall Street to Washington, play by the same rules."

This move to pay bonuses amounted to "rewarding incompetence and failure.” A lot of these people should be fired, not awarded bonuses. It is outrageous.

AIG reported that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history. The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

It also was revealed that AIG used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts. Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks - France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.

The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.

I am not surprise if similar ‘concept’ is being practiced in Malaysia. However I can bet there is one glaring difference. The public will make lots of noises but the authorities will suddenly turn deaf at that particular moment (selective deafness?) and proceed to "rewarding incompetence and failure”. After all, they have a lot in common!

Crude Oil

Supertankers that once raced around the world to satisfy an unquenchable thirst for oil are now parked offshore, fully loaded, anchors down, their crews killing time. In US, vast storage farms for oil are almost out of room. As demand for crude has plummeted, the world suddenly finds itself awash in oil that has nowhere to go.

It has been less than a year since oil prices hit record highs. But now producers and traders are struggling with the new reality: The world wants less oil, not more.
Oil-producing countries have pumped millions of barrels of their own crude into idle tankers, effectively taking crude off the market to halt declining prices that are devastating their economies. Traders have always played a game of store and sell, bringing oil to market when it can fetch the best price.

We thought the market would keep rising to $200, even $250, a barrel. Now the strategy is storage. Anyone who can buy cheap oil and store it might be able to sell it at a premium later, when the global economy ramps up again.

The oil tanks that surround Cushing, Oklahoma, in a sprawling network that holds 10 percent of the nation's oil, have been swelling for months. It is approaching capacity. There are other storage tanks in the country with plenty of extra room to take on oil, but Cushing is the delivery point for the oil traded on the New York Mercantile Exchange. So the closer Cushing gets to full, the lower the price of oil goes.

On these supertankers, rented by oil companies such as Shell, there is little for crews to do but paint and repaint the decks to pass time. More than 30 tankers, each with the ability to move 2 million barrels of oil from port to port, now serve as little more than floating storage tanks.

On the other hand, as storage units on land have filled up, the companies that own the tankers have profited. Tanker companies charge an average of $75,000 a day, three times as much as last summer, to hold crude.

Demand for oil began to increase steadily in the early 1980s, and it went into overdrive in recent years as the Chinese economy surged and as producers pumped lakes of oil out of the ground to take advantage of a spike in prices. Then recession gripped the globe, frozen credit markets made things worse, and inventories swelled. Refineries in the U.S. have cut way back on production of gas as the economy weakens and millions of Americans, many of them laid off, keep their cars in the garage.

The latest records show U.S. inventories are bloated with a virtual sea of surplus crude, enough to fuel 15 million cars for a year. Inventories have grown by 26 million barrels since the beginning of the year alone. Oil from Saudi Arabia, the United Arab Emirates and Nigeria is finding few takers, even though much of it is used to make gasoline in the United States.

One fear is that with oil prices so low, companies will slash drilling and production, setting the world up for an energy crunch that would send prices soaring. Others say prices would plummet if companies forced millions of barrels onto the market at once.

Whopping $62 Billion Loss in 92 Days

American International Group Inc. managed to lose $62 billion in just 92 days. That's nearly $470,000 a minute. And it's more money than Bill Gates' net worth.
The insurance giant's quarterly loss reported Monday was the biggest in corporate history, topping the previous record of about $45 billion set by Time Warner Inc. during the fourth quarter of 2002.

That news came as the government said it would plunge another $30 billion in taxpayer money into the ailing New York-based company, which already has received some $150 billion in U.S. aid since September. The government is bailing out AIG as it could not afford another ‘Lehman Brothers’ which cause a series of serious consequences in the financial market. ($150 plus $ 30 billion and counting – whopping sum for a single bailout and dwarfed our very own bailout in previous downturn!)

The company, first wounded when the housing slump and credit crisis decimated the value of its investments in mortgage-backed securities, is now being hurt by the recession as well. AIG's quarterly loss totaled $61.7 billion for the October to December period, about 12 times the $5.3 billion it lost in the same quarter of 2007. AIG lost more in the fourth quarter of 2008 than it made from 2001 to 2007, when net income totaled more than $58 billion.

This super-sized loss stands out. Take a look at followings:

AIG's loss is more than Bill Gates' net worth of $57 billion as of last September, according to Forbes magazine's "400 Richest Americans" list.

The government provided $62 billion for immediate relief and rescue efforts in the months after Hurricane Katrina in 2005.

If $62 billion was spread across the U.S. population, Americans could each get about $200.

AIG's loss amounts to 92 percent of the $67.4 billion that Americans spent at world largest retailer Wal-Mart in the fourth quarter, which includes the holiday season.

It would take a person spending $1 million per day, everyday, the next 169 years to spend as much money as AIG lost during the fourth quarter, which lasted just 92 days.

Hey Big Spenders!

Even the most careful spenders can find themselves with too much debt on occasion. The biggest culprit is impulse buying. So start developing good habits. Here are some ways to regain control :

a) Make a list
Make a list before you go shopping. Try to stick to it. Ads, store displays and coupons will entice you to buy things that are not on your list. Use your list to help you resist.

b) Shop when you need to
Shop when you need something. Not for fun or to cheer yourself up.

c) You are the boss
Before making any sizeable purchase, leave the store to think it over. Don't go back if the sales person has been using pressure tactics like "It's the last one in stock." "If you buy one right now, I'll give you an additional discount." "This is a once-in-a-lifetime deal."

d) Is there an alternative?
You can save by buying a less-expensive model. You can also buy just about any quality item second-hand. Check the classifieds in your local newspaper, or use the Internet.

Sign 'O' The Times

According to the Reshaping Economic Geography Report in East Asia, an East Asian and Pacific region companion volume to the World Development Report 2009, real wages (wages that have been adjusted for inflation) in Malaysia have dropped dramatically over the last 10 years since the Asian financial crisis.

Real wages growth for export-oriented industries had reduced significantly to 1.9% post-crisis from 5.6% per annum. Meanwhile, for domestic-orientated industries such as food, beverages as well as tobacco, growth in real wages had fallen to 1.4% post-crisis from 6.8% per annum.

According to report author Dr Yukon Huang, the fall in real wages was in tandem with the drop in gross domestic product (GDP) over the last 10 years.

No surprises here as we have to deal with high inflation and global credit crunch. In fact, the current buzz word is retrenchment! So better make yourselves valuable – be more productive, learn new skills, reduce surfing time!!!

However, personally I believe there are opportunities in current situation. Many will be playing safe and not take risk. If you could tolerate higher degree of risk, then the sky is the limit! The thing to fear is fear itself!

100 Trillion Thrilling Note

Zimbabwe will introduce a 100 trillion dollar note as the once prosperous country battles to keep pace with hyperinflation that has caused many to abandon the country's currency.

The new 100 trillion dollar bill would be worth about $300 in U.S. currency. A loaf of bread in Zimbabwe now costs about 300 billion Zimbabwean dollars! Like most commodities, the price increases every day.

The country is fighting cash shortages, stemming from the world's highest inflation rate. As of July, the official rate was 231 million %. The currency is in free fall, forcing traders to peg their prices to international currency to hedge against losses.

Most traders and workers demand their pays in foreign currency. Doctors and nurses have been on strike since last September, demanding salaries in U.S. dollars. The strike coincided with a cholera epidemic that has claimed more than 2,000 lives. Teachers had left their jobs. The end-of-year examinations taken in November are yet to be graded and thus schools are yet to re-open.

What a mess! Could not imagine buying a loaf of bread using a suitcase full of money! Wallets are of no use, gotta bring the huge hiking haversacks wherever we go! Another interesting and chaotic scene expected when giving angpow to the kids! The kids would be overwhelmed to receive suitcase after suitcase of angpow. So the new trillion notes are supposed to solve the problem. However these kids would face another dilemma – probably could not take their eyes of so many zeroes!

Wishing everyone a very Happy and Prosperous Chinese New Year. Keep our fingers cross that it is going to be a bullish Ox!

Knowing Me Knowing You, KAKA

“Knowing me, knowing you Kaka
There is nothing we can do
Knowing me, knowing you Kaka
We just have to face it, this time were through” – Abba

Manchester City Football Club, failed in its astounding 100 million pound ($147 million) bid to buy Brazilian Kaka from AC Milan. On top of the signing fee, he could easily have earned well over 1 million pounds a month. Wow! This move could have damaged the sport image at a time when many clubs and fans are in debt.

The bid was made possible after a consortium from Abu Dhabi bought the club from Thaksin in August. Yes, that 'assets frozen' Thaksin, who was associated with the mayhem in Bangkok, that showed little sign of ending!

In investment point of view, how do we justify this amount? Assuming he stays injury free and is to play 5 years for the club, are there enough time to recoup such a high single investment? Wouldn't it be a better bet to diversify and spend on 5 different high quality players?

Agreed, the calculation of return of investment in football business is very different as there are many spillovers. In addition to increase in gates collection, his glamour boy appeal could translate into millions of pounds in replica jersey and other merchandises sales. Then there are the television and image rights, branding and other intangible like new supporters’ base all over the world.

This formula had been proven but at a very much lower cost. The first few Asian imports (Korean, Chinese and Japanese footballers) to English league were signed primarily for commercial reason instead of footballing reason. They get their wages warming their rears but the revenues generated were multifold. The Asians especially the proud countrymen started supporting these clubs. Some flew over to watch the games; all dressed up in the team colours. Summer tours to these countries were arranged as more money was milked from Asians. Not forgetting increased in cable TV subscription! It was a commercial masterstroke.

In purely football point of view, there could untold damages. Spending such a huge amount on one player could trigger angry reactions from players and supporters. The gap between the haves and have-nots is widening. As unemployment is growing across Europe, spending so lavishly would have been nothing short of outrageous; enough to make some followers of the game simply turn off.

Personally, this model does not work. Are these rich investors prepared to stay for the long haul? They might have unlimited funds but do they have unlimited passion and patience? If they were tired of these toys, they could just go on another spending spree and dump the oldies. Look at Chelsea. Just like US government, the club is in spending deficit and heavily in debt! The moment the Russian walks out, there is a real danger all the pounds and ruble will turn to rubble!

To put into perspective, Kaka’s fee could be used for the following :

It could buy almost three F16 fighters which were priced at $US55 million dollars each in 2008.

It could cover the GDP of a host of nations. For example, in 2005, the Marshall Islands estimated GDP was $US115,000,000 and Anguilla $US108 million.

It would fund 20 million family-sized mosquito nets for sub-Saharan Africans, who lose 800,000 children under age five to malaria each year.

It could buy roughly 588 million meals for the World Food Programme. More than 10 million deaths were related to malnutrition each year.

It could buy himself Malaysia's Premiership. Not the football premiership as it had long gone to the dogs but the other almost going to the dogs premiership.

In the end, the four Liverpool lads were right to sing Money Can’t Buy Me Love. To add salt to injury, Mancunians could only shed Holding Back The Tears.

Another One Bites The Dust

The recycling industry has not been spared from the global economic downturn. There is a shortage of buyers from all over the world. The slump has caused the prices to drop 80% to 90%. Plastic scraps, sold at RM1.30 per kg before the slump, are now a paltry 30 sen, while the price of waste paper has halved.

The slump in the scrap business may cause some collectors and traders to go out of business as they cannot cover their operating costs. Those who have holding power may resort to keep the scraps, hoping to sell when the prices go north. Hedging the bet as they reckon what goes down, will come up.

However many charitable organization may resort to other form of fund raising. Many sell recyclables as their primary revenue to run the activities. They have to work harder to collect more as they have to cover their operating funds.

Consumers and small time collectors, too, felt the pinch. Nevertheless the plunging prices should not change the consumers’ attitude towards recycling. No matter what, we should be committed to recycling our trash and preserve the environment.
At the very least, separate paper and plastics from the rest of the waste! If you do not know where to dispose them, kindly contact this charitable organization for pick up :
Lovely Disabled Home, No.1 Jln SS2/5, 47300 Petaling Jaya, Selangor. Tel 603-78739622 or 013-3409622 email lovelydisabledhome@gmail.com . This home provides shelter to the physically challenged and at the same time creates job opportunities to them.

The Perfect Storm

The ultimate measure of a man is not where he stands in moments of comfort but where he stands at times of challenge and controversy – Martin Luther King

This is it - the perfect storm! Chain of global events for the past year – bankers’ greed sparked sub-prime and financial crisis, commodity speculators’ twist and turn, high profile fraudsters (Madoff and Satyam), Middle East war criminals plus the unimpressive domestic politicians’ antics have aggravated the situation drastically.

For those in the mid thirty to early forty, it is the once in a life time chance to capitalize on the storm. The next perfect storm might hit our shore in 10 to 12 years time and by then; most probably we would not have the energy to come out of it alive! In brief, we will be too old! The previous big wave, post 97-98 Asian financial crisis – most of us had just joined the workforce – too ‘young’ to gain the most benefits.

It is the moment to stand up and be counted. Personally, I believe the storm is still heading south until middle of the year. So start arming ourselves with the surfboard and be prepared to ride the upward wave! Look around for bargain in property and share market! It is now or never!

What Crisis? Honky Dory Dude!

Bank Negara said that the banking system is strong enough to withstand the turmoil of the global financial crisis. It stood ready to pump liquidity into banks if needed. It has a fully developed supervisory and surveillance system and is closely engaging other monetary authorities in the region to monitor and respond with coordinated measures to deal with the current challenging environment. Several years of reforms, capacity building, and continuous efforts to enhance corporate governance and risk management practices have significantly strengthened the banking system.

With immediate effect, the following measures are being implemented:
•all deposits will be fully guaranteed by the Government through Perbadanan Insurans Deposit Malaysia (PIDM) until December 2010
•access to Bank Negara liquidity facility will be extended to insurance companies and takaful operators regulated by the Bank.

Non-performing loans in the banking system had improved to 2.5%. There is ample liquidity to facilitate the orderly functioning of economic and financing activities as the net interbank placements was RM198.5bil. The banking and insurance industries are therefore operating with adequate capital and liquidity buffers that have negligible exposure to both subprime-related securities and affected overseas financial institutions. More than 90% of total assets of these companies are in ringgit-denominated assets. Additionally all foreign financial institutions were locally incorporated (not operating as foreign branches).

The risk weighted capital ratio of the banking system was 13.2% and exceeded the minimum of 8% by RM42.3bil. It was an indication that the leverage position of the industry was manageable. The insurance industry posted a solvency surplus of RM16.5bil at the end of August.

The Association of Banks in Malaysia (ABM) is singing the same tune. The tune goes like this- there is no credit crunch in the country and that the banking sector remains strong and well capitalised despite the turmoil in the global financial markets. It is business as usual and commercial banks are not putting any brakes on lending.

As at end-August, loan-to-deposit ratio stood at 74.5% compared with the high 90% in 1997. The stable and low three-month domestic interbank rates, and relatively narrow spreads against the three-month Malaysian Government Securities yields are also indicative of the robustness of the banking system.

The additional strength is that credit extension is more diversified today between business and household loans, with no heavy exposure to any single segment. Malaysia has a savings rate of 37% which is high by international standards.

In summary, the strong liquidity, backed by high domestic savings rate and mid-September external reserves of US$119bil, will continue to facilitate the orderly functioning of transactional and lending activities so as to spur domestic economic growth, albeit at a more moderate pace.

However Tun Mahathir begged to differ. He doubted the claim that all is honky dory.

He said; " 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 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. 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."

So is there a crisis? No – then don’t worry be happy. Yes - can we survive the crisis?