This is an extract from a Reuter's article in Malaysia Today:



"Malaysia's former deputy prime minister and finance minister Anwar Ibrahim is widely respected by foreign investors for his tenure around the time of the Asian financial crisis. However, the cost of insuring Malaysian bonds against default has risen sharply since Anwar's coalition took a over a third of the seats in Malaysia's election in March, increasing political risk. The 5-year CDS stood at 140.96 basis points on Monday, up from 91.85 on March 7, the day before the election.

That means it costs almost $141,000 to insure $10 million of Malaysian bonds against default."


http://mt.m2day.org/2008/content/view/12386/84/



See how bad it is.But I don't blame DSAI .He is our only hope now.

repcoyeoh,

It is NOT only Malaysia.

No. It will be WORSE. It is a GLOBAL recession this time. It is NOT Asia only. With USA going into recession and Europe is about the same, how could you believe that it is NOT worse than 1997?

Dreamer

Then explain why growth is slowing down in Vietnam, China? SO the slowdown of these economies have no bearing on Malaysian economy?

Korea, Japan, China, Australia PMI all showed contraction. So i don't uderstandstand what you mean by "now its only malaysia" especially when all other asian countries are fighting inflation and a slowed down economy.

No offense but you gotcha check your data.



This post has been edited by AdamG1981: Sep 9 2008, 09:51 AM

ya..it's a GLOBAL meltdown.....i believe those in US, Europe are having a harder life than us now......look at those Europeans workers protesting during the oil rally.....and when i was in Vietnam, there were some Europeans looking for cheap hotel complaining it was so expensive for a room to cost USD20/nite and tat they can't afford them....in d end....they followed us to book a USD10/nite room instead hahahaha........

i think we have to accept the fact about the slowdown.....but.....if u all feel M'sia is hopeless n US is a better play to put ur money.....then u can do it but no way can one be 100% sure it's the right decision.....We don't even know who will b the next US president...democrats or republic????

Who cares about who's going to be the next president. The main point of argument is that his view of the Malaysia's economy is not similar of the 1997 crisis when in fact it is!


This post has been edited by AdamG1981: Sep 9 2008, 09:58 AM

thanks for this article which gives us an insight of Anwar's policies.

Its a global recession...Slow down in China because there's a slow down in America...

And back then was the attack of Currency that causes businesses that borrow on short term loans for using it on LONG term causes them unable to pay back therefore declare bankrupcy...This round is different...the currency isnt attacked...and...the businesses are able to forecasty better in the future unlike last time...suddenly the currency you are holding had its value slashed...

And for Australia, the RBA (Reserve Bank of Australia has been rising the cash rate in fear of recession for the past 3 years I think? and just this month, last Wednesday they slash the cash rate by 25basis points. In order to encourage spending....)

(Australians and Asians spending are very different....The spend on what they borrowed while most Asians spend when they have $$$ therefore the slash in cash rate that results the drop in interest rate by the commercial banks will encourages spending (demand) in this case and its expected to have another 2 rate cuts within this year.)

Did you notice that the purpose of a slow down of economy in Asia is mainly US's doing? As China is growing too strong...Like 10years ago...main purpose is also slow down asia's growth...and then the attack on Iran for oil...Cost of around $60/barrel....and they hike the price of crude oil somewhere this year to nearly $150/ barrel....while before that was the shorting of their own currencies and also the subprime mortgage....it links one after another like instantly as the subprime mortgage didnt affect China's rapid growth that much so they decided to use petroleum.... Link it together and you will see it...

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Added on September 9, 2008, 10:01 amand Malaysia has USD$26billion of CASH in reserves at for year 2007

This post has been edited by repcoyeoh: Sep 9 2008, 10:02 AM

We are talking about capital flight out of the country. We are not talking about currency attack by speculators. Read the previous post carefully. The main point is capital flight out of the country due to the poor economic state, high inflation, worthless currency and now political crisis. Who cares about 26 billion dollar in reserves? The forex market is 3 trillion dollars TRADED a day. So freaking what? Is BNM going to drop a few billion here and there everytime USD strengthen?

the reserves is the reply to the Bond market that you indicated..and currency attack is reflecting the 1997 Asian crisis...

Yes, but did you look at the bond prices? Do you know its harder for Malaysia to get cheap financing for its populist budget? Currency devaluation is one the reasons that foreign investors are fleeing. Who wants to invest in toilet paper? Not me.

and as for capital flight...It has been flowing out of the country since ages ago...they wont wait till after the election....After the election will be money coming in...just the matter of time....

Note: Staying ahead of the Curve

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Added on September 9, 2008, 10:11 amMalaysia is an exporting country...weaker currency is good for us...

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Added on September 9, 2008, 10:11 amI consider Malaysia 3rd /2nd world country....I prefer 3rd...The highest return on investment is on 3rd world country

This post has been edited by repcoyeoh: Sep 9 2008, 10:11 AM

Ok,

How is a weaker currency good for us when global demand is declining? And real interest rate is negative? Don't forget, our inflation is imported.

I never hear bond prices declining this rapidly before, and you said capital has been flowing out the country ages ago?? Is it me who read wrongly or is the government trying to bullshit me by printing that each year in the 21st century, FDI has been slowly increasing. There's an article out on Star regarding the volume of capital that has been withdrawn in this country this year alone.

Highest return also means highest risk; which Malaysia has plenty of risk but almost negative return.

This post has been edited by AdamG1981: Sep 9 2008, 10:18 AM

Weaker currency is good for us because we are exporting...even when glabal demand is declining at least we have income...Real interest rate is negative....everyone knows about that...In terms of capital on the Stock Exchange yes...But if its on fix assets......It will not move out as asset is for long term..Not speculating

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Added on September 9, 2008, 10:21 amDo you want a stronger currency that allows you to buy foreign goods cheaper (while in the first place, the cost of your production is so high already[if the currency is strong]....with global economy slowing down, you will get yourself even more deep shit if you are exporting)

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Added on September 9, 2008, 10:26 amJapan's economy was "OKAY" back in 1980s too but their Nikkei collapsed along with the property market....

Conclusion: Political and economical stabality doesn't mean a sure-sure win...Not to mention US is the world's most bankrupt countries with a negative of 700+billion USD....You can go try to invest / whatsoever there....Keep in mind you are risking on currencies and brokerage fees X 2

This post has been edited by repcoyeoh: Sep 9 2008, 10:26 AM

how come today all reddish ar around the region??? profit taking? yest DJ was up a lot rite?

Sorry, your logic is flawed. If a weaker currency is good, why BNM needs to intervene?

Yes, my investments are all profitable except the ones in malaysia

Hey, Dreamer can tell you more about his experiences.

This post has been edited by AdamG1981: Sep 9 2008, 10:33 AM

Its normal for the Reserve Bank (BNM) in this case to intervene as they need to balance out inflation and recession...Not only BNM....All reserve bank are intervening the economy...Good for you that your investment are profitable...then don't bother what ever will happen to Malaysia then ...why stay here?

yesterday BNM's intervention lead our currency to 3.41.
Today, back to 3.457.
I don't think its a good idea to use up reserves to prop up the currency at this point of time. They should wait & see in medium-term.

Baltic Dry Index, a measure of shipping costs for commodities, fell 3 percent yesterday for a 14th consecutive day of declines and finished at the lowest level since June 2007 on concern Chinese demand for iron ore is slackening.

maybulk is going to sink these few days...those interested might nd to prepare ur 'luggage' to get onboard hehehhe

You have Malay doing things....Probably from university of Malaysia which you can even get in with a score of C/D grades

oh.... what's the connection with our thread discussion?