Tuesday, October 14, 2008
im sorry if it's in my character to leave it late.
im sorry if sometimes i take things too lightly
im sorry if i over play
im sorry if im a 1 pointer and you're a near 4.
congrats for keeping me uninformed about this till now
congrats for kinda spoiling my day
congrats for likely ending this friendship
congrats for everything else that's not coming to my mind.
we could have talked it out. see how things can work. with everyone happy at the end of the day.
composed.* 10:59 PM
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Friday, October 03, 2008
something interesting for a boring day....
Before the Battle of Agincourt in 1415, the French, anticipating victory over the English, proposed to cut off the middle
finger of all captured English soldiers. Without the middle finger it would be impossible to draw the renowned English
longbow and therefore they would be incapable of fighting in the future. This famous English longbow was made of the
native English Yew tree, and the act of drawing the longbow was known as "plucking the yew" (or "pluck yew" .
Much to the bewilderment of the French, the English won a major upset and began mocking the French by waving their
middle fingers at the defeated French, saying, See, we can still pluck yew! Since 'pluck yew' is rather difficult to say, the
difficult consonant cluster at the beginning has gradually changed to a labiodentals fricative F', and thus the words often
used in conjunction with the one-finger-salute! It is also because of the pheasant feathers on the arrows used with the
longbow that the symbolic gesture is known as "giving the bird."
IT IS STILL AN APPROPRIATE SALUTE TO THE FRENCH TODAY!
And yew thought yew knew every plucking thing.
composed.* 10:24 PM
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Thursday, October 02, 2008
and so now the 700billion buyout plan is finally accepted. but what actually made the guys in the jury decide that the first ever plan was rejected. the dow jones is finally picking up abit after it's scary decline. seriously this plunge is the most shocking one in years liao. as much as -700 points in A DAY. wow that's serious shit.
the govt has launched a ban on short selling stocks few weeks ago. good plan imo to stop the rot. for those who dont know what's short selling, basically it means "selling" a number of shares at a point, and hoping the stocks to plunge before buying it back. easy money, but a real disadvantage if you cant manage to sell the shares on the day itself. that would mean that the company can charge you anything they want for the shares you buy. and yes, that means you're in deep shit once again.
but why is shorting bad? this is because it makes the value of the company to plunge. shorties, they call them. the pain in the normal buyers ass. (somehow i kinda love this way of playing though ^^)
anyway back to the topic.
this would just be a start for the major crisis to come. why?
Just like in the previous big crisis (Latin American debt crisis in 1980s, Asian financial crisis in 1997/98), the current sub-prime crisis in the US since mid-2007 is just the tip of a huge iceberg.
This time, it's not just a US crisis but going to deteriorate into a global one, one so messy and huge that dwarfs the 2 crises mentioned above and one which most of us still alive on earth have never seen in our life time.
This is because from 2000-2007, the world economy has been sustained, to a large extent, by the economic bubble formed as a result of the easy monetary and FX policies of US Fed and most of the central banks around the world.
The huge US trade and current account deficits of US$50-60 billion per month or US$600-700 billion per year for the past 8 years is a reflection of the inapt monetary and FX policies around the world. 8xUS$600 billion = US$4.8 trillion. Inadvertently, this gross economic imbalance in the world economy is beginning to rear its ugly head after the loose policies have run their courses (forming an asset bubble) and the economic cycle has began to turn down.
The tail end of the bubble had seen rampant speculation in commodity prices and caused high inflation in 2007-2008 as huge funds shifted away from traditional assets which had rocketed to bubble level and begun to burst.
High inflation is a prelude to a recession because rapidly increases in price indicate economic imbalance which will result in drastic re-allocation of resources in the economy, causing economic disruptions as consumers change their spending habits radically to cope with the new circumstances.
The World economy is today much more integrated and connected than it has been ever in the past. The huge US current account deficits are also the surpluses of the rest of the world. Instead of letting their currencies appreciate steadily against the US$ and tightening monetary policies to avoid building up of a bubble similar to the one US was creating, the central banks at the rest of the world were more concerned with maintaining short-term growth with easy monetary and FX policies in tandem with the US than preventing a formation of a bubble.
So the US and the rest of the world had been in a cozy relationship of using easy monetary and FX policies to sustain domestic economic growth. As a result, stock markets and property prices in UK, rest of Europe, China, Australia, New Zealand, Hong Kong, Singapore etc. went up dramatically as huge amount of international funds fueled by liquidity go around the world snapping up assets.
Some (ignorant) people have argued for loose monetary and FX policies based on the simplistic reasoning that they sustain international competitiveness, promote growth and create employment. I say that these people are simplistic because they are obviously not aware that :
1) Excessively loose monetary and FX policies are like ecstasy pills. When taken, they create temporary highs : rapid growth, increasing huge profits, brisk business and constructions, soaring property and stock markets, and high labour employment. However, once their effects have run their courses, you will experience very painful lows which are below what you would normally feel if you have not taken the pill.
2) Soaring asset prices have an effect of increasing money supply further and cause high inflation as prices of things are always relative and interconnected : for e.g., rentals are increased to justify the high price the property/land can fetch in the market and the positive one-off wealth effect on assets holders increase their ability and willingness to pay for the goods and services they desire.
3) A recession will follow high inflation subsequently because rapidly increasing prices means that resources in the economy will be re-allocated as people change their consumption patterns and this disrupts economic activities.
The aftermath of excessively loose monetary policies is the reversal of the earlier boost and is very ugly : people caught with having bought assets at very high prices, systemic banking failure as lots of money loaned out to even previously financially sound companies become irrecoverable or doubtful, closure of over-expanded businesses, loss of jobs etc. No one will be spared as even companies which are otherwise viable for the long term will also be affected and may fail because of their inability to tie over this short-term tumultuous period.
The destructive power of excessively loose monetary and FX policies cannot be overstated and the economy may regress back to a few years ago and then stagnate or experience very slow growth and employment for a long period of time as the debris of the aftermath get cleaned out. For e.g. Latin America in the early 1990s was only back to the same level as they were in the early 1980s before their debt crisis. Indonesia, Malaysia, Thailand and Philippines etc. in 2004 were also worse than they were in 1997 before the Asian financial crisis. Even supposedly sound economies like Singapore and Hong Kong also staggered during 1998-2004 before the ecstasy boost started in 2005. At the end of it, you’re worse off than without taking the pill.
2008 is actually a year of stagflation : negative real growth + inflation. Real inflation has been understated and if real inflation for the past year has been correctly assessed, real growth would have been slightly negative already for many countries.
Before the US economy goes into a tailspin later, the current mild financial upheaval in the US has already started to create fear in other financial markets and economies. This contagion effect is similar to that seen for other crises and can be expected to spread further, creating uncontrollable panic around the world. It’s all part of human psychology. This economic fear, exacerbated by the expected sharp slow down in the US economy, will cause the huge exports to the US to be adversely affected. The rest of the world will also go into a recession, deteriorating into a global financial and economic disaster.
Now and the next couple of years are the aftermath of the earlier loose monetary and FX polices around the world and for not allowing the world economy to balance itself back first in 2005.
The worst of the crisis will not happen overnight but will take many months to unfold.
this is a super duper wall of text, i know, but i got carried away i guess lol.
so what are we gonna expct from the days to come? no one knows for sure... but all i can say is that we must be prepared for a huge bombshell. this is because Singapore's STI index, if you noticed, is really a share that follows the Dow Jones index. Similar to the Japan Nikkei and Korea's Kospi, which you see are freefalling too.
would this spell the end of the USA reign for the financial powerhouse role and give china/india the chance to imprint their mark? maybe, maybe not. but what i believe is that China would one day rise up to be good enough to compete against the powerful dow jones index and win. could this be the time? i dont think so. but its gonna be soon.
ok that's more than enough of my rant on what ive learnt from my dad this holiday. lol time for my story.
went to lim's house to tennis/gym/swim. jiahan and sok came too.
seriously very long time since i've seen sok. nice body he has now. haiz compard to mine ah.. haha i ish very beh kan. lol. anyway dunno what's wrong with jiahan he suddenly left us. =/
tennis was fun. number of lost balls count has dropped to 1 for me today. good number considering the last time was 4 i think. lol! horrible la me. nvm improving with tennis skills.
anyway i have a deep cut in my knee thanks to lim and sok forcing me to climb this wall and me failing (and falling) from it. ouch. landed in the swimming pool tho, and thus we started swimming.
after that as lim went up to bathe me and sok went to try the steam bath. shuang is shuang la must admit, but it got too hot that i felt that i was a frog in boiling waters. so went out and had a cold shower. best shower ive taken in ages man.
lim wanted to drink all of a sudden so we decided to WALK all the way to beauty world dat side to grab dinner and at the same time get some booze. went to eat at five star chicken rice, where sok wierdly ordered HK beehoon (or xin zhou mee fen). so our food came and we tucked in. all except one guy.... sok of course.
HE WAS PLAYING WITH HIS FOOD.
goodness! but okay la he was doin what i usually do also. which is removing all the vege and beansprouts. hahaha
stuff was kinda boring after that as we sat down and drank abit while talking about old times and it was back to home..
not sure what im gonna do tmr but definately im gonna make the most out of my remainding holiday time :D
composed.* 11:05 PM
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