BBC Panaroma - Credit Where It’s Due

February 25th, 2009

I watched BBC Panaroma  Credit Where It’s Due and wanna laugh seeing the Dragon Den, multi millionaire turned TV star presenting the program. I suspect his Finance director must be laughing as well.

http://news.bbc.co.uk/panorama/hi/front_page/newsid_7902000/7902189.stm

Item 1 - The florist being charged an overdraft interest of 12%, up from 5%.  Her Bank must have been extremely kind to give her 5% interest during the past few years.  Small business overdraft rates normally runs into lower double digit plus a commission/fee.  Ryman group might be ablt to borrow at significantly better terms, but that is Ryman group…not small businesses..

Given the climate and probability of default running into maybe 20% or so, (as an ex Insurance man, Theo should known better) that 5% unsecured rates just isn’t going to work (unless the overdraft is secured against a property).

Item2 - PDQ payment taking 5 days (working days?) is a bit long but 2 days is pretty common. Doesn’t Theo looked at his Ryman receipts - has those card taking ever been instant/same day?  The acquiring process basically involve :

(a) The PDQ authorising/capturing the payment  (Day1)
(b) The bank computer dialling in at the end of the day (or PDQ dial out) to submit the daily file (day2)
(c) Bank batch process the daily file
(d) Send credit via BACS network / or if same bank, its own bulk payment system
(e) Day 3, money showing up.

Instant? He got to be joking.

Capitalistic society dictates that if the bank are charging too high prices, than other competitors will move in. Perhaps Bank Of Ryman should be established to save us all soon giving out 5% overdraft?

Theo seemed to downplay the effect of exceeding overdraft limits several time. For bigger businesses, that is called a breach of the convenances and the results is often severe.  If a bank every does that, it goes bust straight away.

There is a serious issue of trust now - not just with the banks. The fact that the program highlighted that suppliers are demanding post dated cheque means that no one is trusting anyone. The lax UK insolvency law clearly does not help that either (Creditor voluntary liquidation, then phoenix the business and creditor’s lost out).

Warren Buffet said that those living on credits are relying on the kindness of strangers and that no one is obliged to lend anyone money.  Perhaps debt, in bad time, is weapon of mass destructions after all..

I certainly don’t see Theo giving away money easily on Dragon Den. I suppose at least the banks are not demanding for 50% equity with their cash !

Boom-time on benefits: The 140,000 families who claim £20,000 a year in state handouts

December 29th, 2008

Boom-time on benefits: The 140,000 families who claim £20,000 a year in state handouts

http://www.dailymail.co.uk/news/article-1102386/Boom-time-benefits-The-140-000-families-claim-20-000-year-state-handouts.html

That is out of control…

Malaysia export to GDP>100%, Eco grow down to 3.5%

November 4th, 2008

Pretty scary stuff with export (gross) > 100% of GDP.  It is so export dependent, and sounds like
Malaysian sole reason of exsitence is to make stuffs for other countries..

KUALA LUMPUR, Nov 4 (Reuters) - The downward revision of Malaysia’s 2009 economic growth forecast is not a surprise given the country’s heavy dependence on exports, ratings agency Moody’s said on Tuesday.

Malaysia’s government dramatically increased its budget deficit forecast for 2009 due to slowing revenues and said that economic growth would come in at just 3.5 percent, its slowest pace since 2001.

‘The growth forecast has not come as a surprise, obviously Malaysia is quite heavily exposed to the global economy with an exports-to-GDP ratio in excess of 100 percent,’ said Aninda Mitra, Sovereign Analyst at Moody’s (nyse: MCO - news - people ) Investors Service.

The country’s direct export exposure to the U.S., the European Union and Japan is also very high at almost one-third of the total exports, he said.

‘So in that context the export slowdown is under way. Not only that, but also commodity prices have dropped a lot, palm oil and crude oil prices have come down quite a bit, so the growth revision does not come as a surprise.’

He did not comment on the revised budget deficit, saying he needed to see the details.

Retailer Wow real life

October 24th, 2008

I placed an order for a LCD (i.e TFT) monitor yesterdat with a “Whenever they are free to pack it” delivery option (as I am not in a hurry) and the item was packed and sent to courier this morning at 10am (Order placed 10pm yesterday, assuming they start working at 8, that is still pretty quick).

There are two explanation - either they are super efficient or that there isn’t much order to process AT ALL.

This financial mess is now spreading everywhere.

Singapore may head towards subprime crash as well

October 23rd, 2008

I was in Singapore in July and had an opportunity to visit several condo developments.  At teach of the development, there is a mortgage advisor from a bank linked to the developer.

Upon enquiry, there were willing to lend to me up to 100% of my monthly income (no kidding), provided that 30% deposit is put down.  From the sound of it, also no doc (or no full verification of income was (Banks are required).  (This only apply at 70% or less, 90%+ loans are quite strict).

However, during the last recession, Singapore condo crash by more than 50%. And if this crisis continues (which looks like it will be), we will have a nice drama of subprime @ Singapore.

http://4.bp.blogspot.com/_YlvEjlIelzk/SQCC1xZyh_I/AAAAAAAAUUg/grVZ2H8TaZw/s1600-h/1.jpg

(Oct 6 - OCt 12 transaction price)


http://1.bp.blogspot.com/_YlvEjlIelzk/SLbZMyG1sGI/AAAAAAAANoE/qLT3slrm7Gs/s1600-h/1.jpg

(Aug 11 Weekly Transaction price)

http://propertyhighlights.blogspot.com/2008/10/high-loan-exposure-becomes-dampener.html

and a warning from Moody

http://propertyhighlights.blogspot.com/2008/10/high-loan-exposure-becomes-dampener.html

Fiscal Stimulus

October 23rd, 2008

Now US is talking about fiscal stimulus and UK is talking about bringing ahead project spending (which will act as fiscal stimulus).

If the stimulus is spent on truely useful infrastructure (e.g. rail), then it is an investment that our children will benefit from.  If it is spend on rubbish stuffs ( as Brown government often does such as hiring consultants who cost millions to figure out how to spend the money), then it would become a debt that we and our children have to pay.

There is also a possibility of giving the money back to the citizens via tax cut / tax rebate but there is a risk that the money is saved rather than spend (and hence defeat the purpose).

I have a proposal - let’s send the rebate in prepay Visa/Mastercard issued by the government (or contract it to say the like of Newcastle Building Society) and makes the credit expire after 3 months.  In this case, they would have no choice but to spend the money (albeit on Groccery if they must).

Super credit insurance fund

October 11th, 2008

Things are getting really bad. The latest implosion in the Letter of Credit market now risked the entire world economic system to fall.   There was a report on the

http://www.clusterstock.com/2008/10/credit-freeze-slams-global-trade

Basically, international importers (say issued by BNP Paribas) will send the exporter a letter of credit where the importer’s bank (say Citi) will pay the importer on presentation of evidence of delivery of goods/services.  The importer’s bank Citi then reclaim the sum from the exporter’s bank. In this case, the exporters’ bank becomes a counterparty of the  importer’s bank.  If it (i.e. Citi), cannot be sure that it will get paid from BNP (importer’s bank), then it refuses the letter of credit.   Without being able to be sure that the company will get paid, goods get stucked at the ports.

Of course, this can be mitigated by using prepayment/escrowed but then this is very expensive.  Also, under such enviroment, global banks like HSBC will do well as HSBC USA will of course accept HSBC Hong Kong’s LC.

The same credit crisis also prevent investors from lending to banks and corporation (via the Commercial paper) market and worse still, banks are not lending to each other either.  (except HSBC noted that it lent about £2bn to UK banks via HSBC UK).

Now, what we need is a Global Credit re-Insurance fund backed by government, but with its initial capital raised from various mega insurers around the world.  The fund would be staffed by legendary insurer such as Warren Buffet who know the odds.  This is to put to rest the counter party risk and so that corporation and banks that are not a credit risk can start borrowing again.  This will also eliminate the uncertainty in the CDS market once and for all (rather than moving it to an exchange - we can do that later) as now all credit insurance contract are now centrally reinsured/cleared.  Those that are no longer credit worthy would not be sold an insurance at a acceptable price and would need to be allowed to go down.

The insurance fund should also be transparent and make all the reinsured contracts transparent.

To simplicy things, the fund can probably forced all contract to be written in USD or RMB (whcih will allow RMB to replace USD as the global currency for all)

Zaid Ibrahim, “My Future” foundation and hope

September 23rd, 2008

It has been a long time since there is a principled politician in Malaysia (such as Tunku Abdul Rahman,  Datuk  Onn Senior). Zaid has shown us that there is hope.


A reform is only complicated if you don’t want it, says senator Datuk Zaid Ibrahim. If you want reforms, make the Government more transparent, adopt meritocracy and a more equitable system; that’s not difficult.

PUTTING Senator Datuk Zaid Ibrahim in a Barisan Nasional Cabinet after the March 8 general election might have seemed to some like trying to force a square peg into a round hole.

“Will he fit in?” wondered his friends with concern while others reacted with consternation.

Tried as hard as he did for six months to fit in that hole, Zaid decided to call it quits after six months, when hit by the last straw - three civilians were arrested under the Internal Security Act on Sept 12. Sunday Star caught up with him shortly after his resignation and quizzed him on his time in the Cabinet, his political will and his next venture.


/> What has been the most severe criticism levelled at you?

Not severe-lah, just irritating. That the reforms (for greater equality) don’t serve the Malays. It just shows their level of ignorance. Some said I’m not a team player, I don’t know how to convince people.

/> The public were happy when the Prime Minister announced the setting up of a JAC. They understand it’s very complicated and the Government needs time but…

It is actually not a complicated thing. It’s only complicated if you don’t want it. The reform was meant to make the Government more transparent, employ a fairer and more equitable system, get the best people for the job, and to have meritocracy in place. That’s not difficult.

/> So what was the difficulty, especially after March 8?

The difficulty is some people don’t want to change and as long as they are in power you have to live with it.


/> You talked of setting up a foundation called MyFuture. What’s its mission?

I see race relations as a major problem in Malaysia. There are Malays who subscribe to ketuanan Melayu, special rights, special law and are fearful of the Chinese. They are fearful of accepting non-Malays in administration, high positions and in universities. There is too much ethno-centric and communitarian politics.

I want young people to be able to understand the other’s problems and fears so we can solve problems rather than “don’t talk about this, don’t talk about that”, “this is sensitive”, “you are threatening us” and “get out of the country if you don’t like it here.” It’s all symptomatic of a state of mind that is not confident. You can’t have reform then.

In a JAC, for example, with a more open process, you will end up having an Indian Chief Justice; you’d ask “how could that be? I can’t accept that.” That argument is racist in character. Or if you want a more equitable housing policy and if you perceive the act of redistribution of wealth or opportunity as benefiting one particular group you don’t like, then you say that is not on because it would endanger or violate your rights.

The whole spectrum of our national life cannot undergo reform if the Malays, Chinese and Indians are ridden with fear and chauvinistic views.

We should move beyond talk. It’s no point charging people with sedition here and there every other week. You have to address the fundamental problem.

It is compounded by the fact that we have two court (civil/syariah) systems. You must understand the issues and be willing to sit down and be trusting enough with one another to say how can we solve this problem.

We need a different approach for this. I hope this foundation can do that in a small way, based on the experiences and modules from other countries on how they deal with racial prejudices through cultural outreach programmes €“ beyond eating and makan. We need to understand, for example, why Hindus build temples all over the place? What is the historical perspective? Can a church be next to a mosque? We have had that in Penang for over 100 years but can we do that now?

/> You reckon they could build a multi-storey carpark next to the two places of worship to serve both communities, resolving the traffic/parking problem on Fridays at the mosque and Sundays at the church?

Yes (laughing). But you can effect reform only if people are trusting and don’t think that one violates another’s tenets.

We devote too much time on things like tolldouble tracking when we should devote more time on Bangsa Malaysia, what kind of people we want to be.

I was told a person asked why a 9A’s student didn’t get a scholarship and the reply was that it was okay for one race but not another. I find that repugnant. What kind of values are we teaching? We should teach our children not to fear another race or religion. We should recognise our differences and live as equal citizens in this country.

/> Many Malaysians speak nostalgically about how race relations were better decades before. How will you erase years of racism and bigotry sown at home or in school?

We have the trappings of success but need to improve. I think the Malays are less fearful of the Chinese now but some people in my party think otherwise. I also know the Chinese in my constituency voted PAS.

/> How will you woo parents who worry your programmes might “brainwash” their children into “liberals?”

There is a lot “brainwashing” here to start with, the brainwashing of civil servants and politicians. So if I do my brainwashing (laughing) what’s wrong with that? I am just sending a different message and countering theirs. I am willing to engage with these people that this is a flawed policy, this is not what makes us Malays proud.

/> Do you think a JKKK (Village Development and Security Committee) would allow you to hold a programme in their village?

Why not? You need to engage with them. You can’t legislate, well you can but you have to do more. I’m not pretending I’m a great reformist in the area of values and beliefs but I would like another language, one more positive to be used.

If we can influence the young people, they will become decision makers every five years. That’s the one thing politicians are afraid of.

I used to go to Hindu temples in Kelantan. Nobody says anything there. When I saw the famous reclining Buddha I wondered about him. That started my interest in philosophy. Everything that you see stimulates your interest in something else.

We really need to get out of mediocrity and stereotype…I’m not so much interested in seminars and papers but in field activities involving young people. Then hopefully they will not grow up stopping forums and so forth; hopefully they will grow up willing to understand what the problem is.


(吉隆坡讯)首相署主管法律事务前部长再益依布拉欣揭露,他当初在建议成立司法委任委员会时,就发现马来西亚的种族问题根深蒂固。

  他说:“当时有人说,届时法官将多数由印度人来担任,那怎么行?这是非常不理性的种族言论,为什么一定是印度族?是马来人太笨吗?当时我就想:天啊,如果我们一直有这种争议,要如何改革司法?你要的是公义还是肤色?对我来说这不是问题,最重要是我们有好的法令;我宁可要一个聪明的非马来人法官,也不要一个贪污又不太聪明的马来人法官。”

人民须对抗

种族沙文主义

  他接受《新海峡时报》访问时说,种族关系是影响国家未来的主要因素,但现在国內却有一些人挑起破坏种族和谐的课题。若种族沙文主义成为国民的中心思想,将摧毁国人的生活及国民团结的目标。国人必须了解,在马来西亚,没有人会因为种族或肤色而受威胁;所有问题和冲突其实都有解决方案。

  “但却有些马来人还主张马来人主权、特权等令华人害怕的主义,他们对非马来人担任政府高职感到恐惧;各族人民必须站起来对抗种族沙文主义;因此,我决定成立‘马来西亚未来基金会’(My Future)来促进国民团结。”

  再益在出任部长前是马国规模最大的律师行“Zaid Ibrahim & Co”资深合伙人和主席。今年初,他入榜美国富布斯杂志(Forbes)首次公布的亚洲慈善家名单。

  他批评团结、文化、艺术及文物部和国民团结局,在宗教课题上没有效发挥作用。他说:“每年国庆日我们都会提一次马来西亚民族,但却不曾真正落实,这才是问题;我们须相信其他族群,不应老想着其他族群会占我们便宜,否则国家如何前进?”

欲改变各民族观念

  他认为,国家必须重新展开国民建设,因为国人已不再互相认识与了解,而这种“无知”是政治因素使然。“我要年轻人明白其他民族的问题和恐惧,这样才能解决问题,而不是以敏感为由,阻止人们讨论或指別人威胁本身的族群,而叫他们离开马来西亚。”
他指出,他创办的基金会将让各种族在不受威胁的氛围中,以文明方式讨论问题,通过互动方式教育及改变他们的行为,让各族年轻人真正享有丰富多元的马来西亚生活。

  再益曾任首相署部长,负责法律事务和推行司法改革。上周一,他对警方动用内安法令逮捕国会议员及记者深感不满,愤而辞职。

http://www.zaobao.com/yx/yx080923_505_1.shtml

Singapore IR resort drained Malaysian skilled worker

September 12th, 2008

That is Global competition.  Either Malaysia reform and be competitive, or get wiped out.

A graduate accountant for $4000 (GBP1600 real exchange rate / GBP3000 in after tax purchasing power approximately) in Singapore, nice one.

I think even UK graduate should consider the move..


中国报:马国人才投身新加坡IR
使柔南计划面对巨大冲击

(2008-09-12)

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(新山讯)《中国报》报道,新加坡综合度假胜地(IR)目前如火如荼展开,造成马来西亚专业人才出现严重外流现象。此外,柔南依士干达发展计划才起步,却面对马国人才被挖走,连外劳也纷纷转往新加坡效力,使这项发展计划面对巨大冲击。

由于马国无论在薪金、福利,甚至就业发展前途都远不如新加坡,加上依士干达计划推展至今仍未见起色,马国人民为了前途着想,无不跨海打拼。

人力资源真空危机

柔佛华人建筑商公会人顾问陈伟雄受访时说,新加坡与柔南同期推动大型发展计划,但新加坡计划已明显影响新山的发展,造成当地出现人力资源真空危机。

他说,新加披两个综合度假胜地计划吸收了不少马国中层专业人士和蓝领人士,如会计师、木土工程师、品质管理员,甚至是熟练技术人员。

他坦言,建筑业人才目前非常难寻,即使原有的工程师都陆续辞职,转到彼岸就业,这是过去20年来未曾发生过的现象。

马来西亚中小型工业公会副会长郑己胜说,早前他与一名从事资讯科技的朋友谈起新山市场,对方直言不敢在新山设公司,宁愿把公司设在吉隆坡。理由是,在新山难以发展资讯科技事业,因为人才容易外流到新加坡,不像吉隆坡或槟城的人力资源较稳定。

他坦言如果仔细观察整个市场,许多大企业都不到新山投资,一般上到吉隆坡深造的学生,毕业后会继续留在吉隆坡工作,但在新山的学生都朝新加坡发展。例如 一个攻读会计的朋友,毕业后即到新加坡工作,每月赚取4000新元(约8400令吉)薪金。反之,在马国要获4000令吉薪水可能都有困难。

他说,柔南人力资源外流是长期存在现象,只是新加坡综合度假胜地推展,带来更大压力。“优秀人才都到新加坡,待依士干达计划正式起跑,可能人才难寻,外资可能有所顾虑。”

Trush about American Wages

September 6th, 2008

I read this  http://taxprof.typepad.com/taxprof_blog/files/120TN0887.pdf
today.  It was written by David Cay Johnston, former tax reporter for The
New York Times.

The article basically says US wages for the 99 percentile has hardly increased (and in fact, real
wages of the lower earning US workers have in effect decrease from 2000 to 2007) and call for policy
that protect worker’s wages.

BUT… the sole reason of depressed wage level in the US and most of the west is that the West has been having it too goo for too long. In economic term, their super-wages will have to come down to the mean when more and more labour, who are getting more productive by the day, enter the market.  Unless western workers become more productive (e.g. 1 person can produce more than, say 10 people in China), then cannot realistically expect their wages to be 10 times more than China over medium term.

Those who are argue for higher wages (without higher productivity) often forget that while in isolation, it looks like it is good for the worker, in reality, it is unlikely to be so (unless of course he is the only person who get higher wages in the economy).  This is because at current wage level, he can get a McDonald burger for say £2.50.  If every McWorker get paid £10 per hour (vs around £5.50), the price of the burger will likely to double to £5.  That goes with all services that he/she use.

Also will a conssumer buys a American DVD player that cost 4 times as much as a China made DVD player that has the capabiltiy - extremely unlikely.

Higher wages without higher productivity means one thing - just look at GM (lots of benefit) - Bankruptcy. Of course, when the employer goes burst, the wages becomes ZERO.

Those who are still dreaming the American Dreaming (or UK/France/German dream) needs to wake up.  The super-normal wages occured because most Asian (and now Arabs, African, Eastern European) competitors were sleeping.

Coincidentally, HSBC Chairman stephen green said here

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7_nACEQnBlQ&refer=home

Sept. 5 (Bloomberg) — HSBC Holdings Plc Chairman Stephen Green foresees financial markets shifting toward Asia as emerging markets grow faster than the rest of the world economy.

So..wake up & work and stop dreaming.