Posted: 17 October 2008 at 12:23am | IP Logged

Hey...where's everyone else? Don't let Melbournian do the job alone...come on guys..we are all in a team!

Anyway, YES, I have to be very general these days in this period of 'uncertainty'.  Have to play with 'encoded messages', 'piggyback communication', 'hints', 'cynical' etc.

I have been receiving some anonymous comments from some 'fanatic goons'  (from all sectors and walks of life) who took my words for granted or better - as a gospel. In the end I was made the 'guinea pig' and 'black sheep' (which one huh? :-) ) to put all the blame when my views don't work...What a crap!

Anyway, this decoupling paradox is now coming too fast - not only Australia but some countries in ASEAN as well. I don't have to comment so much on this matter - perhaps the very reason why I don't want to talk about what Globalization can do for you....

Posted: 16 October 2008 at 12:34pm | IP Logged

Your views are very general Nik.  However, it would appear that your previously borrowed negative views on "de-coupling" are now looking more and more likely to come true, unfortunately for Australia.

Posted: 14 October 2008 at 6:59pm | IP Logged

Hi Melbournian...yes, the article I've posted is not my views really...perhaps they are the positive-thinkers...I admire their guts... the following is mine (a very humble opinion)

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As you all have already known that the financial experts (or so called) have commenced their efforts to charter the implications of this year's credit crisis (esp. in the US) as a result of financial market turbulence. Not too long ago, everyone is aiming at the renaissance of China but with the current condition they are facing, it may potentially be a little while before their internal problems can be stabilized if not solved fully.

So, what can our world governments do? I humbly think that the financial market should be slowly integrated to become a global network or hub. Except for US, I've seen efforts via conferences and seminars towards implementing such plans. I'm also shocked to know the rate of countries retreating from Euro these days.

US on the other hand; if not properly controlled; may affect even to the security matters - just wait if New York started to feel the pinch and everything will start to lead to one problem to another. (esp. security matters) I do not know if US need to cut down on foreign assistance at the moment - but if this is the case, then the fiscal pinch may affect the amount of such aid. If I may say, I hope that New York can start efforts of working together with other financial hubs to become a network of global capitals. The only setback is the global political stability as whenever there are plans of more effective and beneficial integration, the political element has to be part and parcel of financial market. Of course, I don't need to tell how much US can save by less interfering in other countries internal affairs as what have been done in Africa, Iraq, Afghanistan and Pakistan. US Bush Administration has tried their best to save their economy but it is too sluggish - I hope they can crush their ego and restrategize - try to create a better relationships with other countries - they have tried too many models and these models just don't work...

We can no longer depend on IMF, World Bank (now almost irrelevant) and even the UN (they themselves are now in hot soup despite funded the US) but we have to do something NOW to create a healthier market - e.g. making more rooms for reserves. We know that UN's stand on Darfur, Georgia & Pakistan - total silence for unknown reason.

When I talk about integration or interdepence, I'm not really pointing towards globalization as it is still a concept of uncertainty that may become a friend or a foe. That is too much for a small guy like me to anticipate. Just referring to the good ol' concept working together as a team. This 'teamwork' may lead to good global financial governance will create better monetary policies, securities regulations and even signifcant changes can be made to auditing and accounting standards.

Where would be the ideal starting point? The answer is the first tier - Banking and Financial Institutions. I would like to open this suggestion to Asia (or SEA) as Asia is a very unique continent that has always found a way towards survival. (perhaps some democratization of financial policies should be in place) Most important is TRUST and coordinated efforts one another - as every bankers and financiers have all the knowledge. (Don't wait for someone else to start first) There should be no more too much dependency on certain elite groups or industries that are 'controlling the financial world' and we have seen the impact when these 'big mega industries' started to fall. (NASTY!)

Again, my 2 sens worth!

Posted: 10 October 2008 at 9:20am | IP Logged

This is something interesting and perhaps making sense. The world is NOT at recession? Inquisitive? Read On

Posted: 06 August 2008 at 9:00pm | IP Logged

There has been some interesting stories I heard in the market about the intention of the Government to issue bonds  to stabilize the economy. When plan of economic stabilization involves, these bonds are known as "GDP-linked"

Just a short comment (I hope)

There are a number of things to talk about whenever anybody touched about GDP and linking it to bonds.

But one of the most popular reactions would be the increasing interest in creating bonds. 

1. Bond servicing is higher during rapid growth but lower if the growth is slow.

2. For borrowers - issuance may stabilize public spending as Government can service more debt during affordable times and less during difficulties. It is also said to lower down crisis of debts and defaults. When you reduce the service of country's debt during recession, it may help in the recovery process.

3. For investors - losses may happen due to defaults. Thus, comapred to the conventional bond, this kind of bond (GDP-linked) can ensure higher total payment hence reducing default probability (what am I saying? )

4. The Government can help in financing some potential sectors if GDP-linked bonds are issued. In theory, some emerging or new sectors (any industry esp. manufacturing) can target to be listed in the Bursa Malaysia if they wish as bond issuance can help correction in the stock market.

5. It also helps in improving capital market as well (esp. corporate bonds - in Malaysia's case - the bonds issued by GLC). The corporate sector can reduce cost and improve capital efficience once bonds are integrated into the financial stucture.

Having said the above, there are disadvantages as well...I'll save the 'bad news' for another day.

Posted: 30 June 2008 at 10:49pm | IP Logged

A professor friend of mine would have said this was "a clever use of morphology with morphemes derived from existing lexicon in sound syntactic construct to give meaningful semantics".

Seriously, semantics aside, accountability has its enforcement within the jurisdiction of bureaucrats who are answerable to elected representatives of the people. The reason why there is "sub-prime" and there is ABS ( Assets Backed Securities), loan securitisation, hedge, futures and private equity funds, mezzanine lending etc because PEOPLE want and are seduced by them. Basic human traits of FEAR and GREED dictate the herd mentality, and this is not likely to change in any time soon. That is why I firmly believe that economic cycles are unavoidable so long as human beings remain human. Am I advocating dehumanisation ? Of course not ! However, according to a learned friend of mine,  understanding our own frailties is the pre-requisite for getting of wisdom. Efforts in self preservation are afterall noble pursuits, are they not ?

Posted: 27 June 2008 at 10:07pm | IP Logged

Melbournian wrote: A very lengthy analysis that echos familiar cliche from "soft-landers". My only comment is that there are two important factors that seems to be absent from his presentation: ie the component of human emotion and the lack of accountability in the derivative instruments that are prevalent in recent years. The health of credit market depends un-surprisingly on market "credibility". Quite akin to the railroad stock bubble and the (in)famous tulip futures fiascos in the past , the total sum of global derivatives todays seems to have exceeded the true intrinsic values of the actual goods and services that these instruments are supposed to underpin.  Laws of conservation and Newton's principle of inertia are no longer relevant. No longer can one confidently say for sure that one man's gains equal in exactitude to another's losses. Containment ? Lets hope and pray.

Hi Melbournian, I must say that I'm impressed!

This research seem to miss out "CCI" (Consumer Confidence Index) which I think suitably describes what you meant by 'human emotion' in the context of economics. (it's obvious isn't it....the article is touching on 'purchasing power', 'manpower', business surroundings - which are all linked to the CCI)

Surprisingly I have also discovered that the Global CCI have always been missing (in fact seldom being measured) But; in US; it will suddenly 'appear' during proposal to hike interest rates by the Feds - hence one of the main indicators to the performance of the stock market worldwide.

I can understand why the CCI is sometimes there and sometimes not there...it's because of the big variance between one country to another. CCI is suppose to be the consumption indicator for GDP.

Lack of accountability on derivative instruments

What you have said - coincidentally reminding me of the core of Management - it is said that :

"Responsibility is a derivative of authority and accountability is a derivative of responsibility"

It's a paradox - I do not know if there is any connection.

Anyway, in this case, the derivative instrument (to the accounting standards esp. balance sheet) becomes a concern when it involve hedging and embedded derivatives (contract) - to determine of whether they (derivatives) are liabilities or asset. Otherwise positioning of finance and determining the derivatives value cannot be accurately achieved.

I'm not a qualified accountant but I do know the affects of hedging either the normal fair value, cashflow or currency. Now? As you said and I would to agree to it that most accounting (and auditing) bodies (even in Malaysia) are 'shouting' demanding accountability but again, it is easier said than done unless further education to include hedging activities and the volatility behind them in the context of derivatives are developed further.

Yes, breaking every rule in the book is now trendy!! It is also the reason why I am really interested in the concept of Knowledge-Based Economy and Knowledge Management but of course these two terms are moulded according to my style of intepretation - in short my experience. At times, I never trust figures, data and statistics but I use my instincts to make decisions.

Finally quoting you : "Let's Pray and Hope"