Investing in this market is financial suicide

SUARA KEADILAN

By Matthias Chang

I only read mainstream financial newspapers for their latest double-speak and to see how markets react to such nonsense.

Time after time, greedy suckers would be lured into the trap and get slaughtered by the insiders.

How can one explain mainstream media reports such as “market rallied as price of oil surges on global demand” on some days and on others “market tumbles as crude oil spikes”?

Then we have yet another analysis that states, “markets surge as oil price tumbles as inflation worries take a back seat” to be contradicted a few weeks later, “market moves in tandem with crude’s upward trend”.

The inflation worries have evaporated from the radar screen!

In the weeks before GM Bankruptcy, we have the following analysis:

Dow falls: “Stocks Decline On GM Bankruptcy Fears” (May 27 Forbes)

Dow falls: “Rally hopes shelved as the likelihood of bankruptcy for GM shook Wall Street” (May 28 Wall Street Journal)

But when GM filed for bankruptcy on Monday, the world cheered and the market surged!

Dow soars: “Stock Market Shrugs Off GM Filing” (June 1 Reuters)

The Dow gains over 200 points!

If this is not madness, what is?

Another slaughterhouse soon

To me, this is a sure sign of market manipulation by the financial power brokers and anyone who does not have a ringside seat is going to get slaughtered as sure as the sun will rise tomorrow.

When bad news can be turned into good news and start a rally, this is another indication of desperation and or worse, a grand scheme to divert attention from another more fatal financial scandal.

America is broke, bankrupt.

Obama has already admitted that America has no money in the coffers.

Bernanke’s FED has stated that they will print as much money as needed to purchase US treasuries to finance bankrupt USA.

This year alone, US must find creditors willing enough to lend US$1.8 trillion to fund current deficits as a result of the massive bailout.

USA must also find the moneys to repay debts amounting to US$14.5 trillion and the interest due on that colossal sum.

UK is in the dog house!

Europe is groping in the dark.

Malaysia depends on these huge markets for her exports.

These markets have collapsed. Vanished to cyberspace!

We will be lucky if these markets are back to positive territory in five years, and even then, they will not be back to pre-crisis levels.

Bank Negara’s analysis is wrong. EPU’s analysis is wrong. Treasury’s analysis is wrong.

So, who can Najib trust, Omar Ong and his new version of the 4th floor boys?

Pakatan Rakyat and Anwar are indulging in By-election politics and have not the faintest idea how to manage the country.

They are good at throwing stones and hoping one or two might just hit the target. But they are living in glass houses.

I cry for Malaysia.

I also speak for myself

P.S. My views are my views. I don’t represent anyone. They are given without fear or favour.

Those who propagate the rumours that I influence Tun Dr. Mahathir Mohamad are much too kind and generous as to my intellectual capabilities.

Tun Dr. Mahathir Mohamad is an intellectual giant and a former prime minister and has no need of any “advice” from me.

To those who read my articles (especially Najib’s boys) please banish from your thoughts that what I write is a reflection of Tun’s views and or that I write under his direction.

As a practicing lawyer of 31 years and a citizen of Malaysia, I believe that I am entitled to express my own views concerning the country.

Visit my website for my views and visit Tun’s blog for his views. If there are similar opinions on some issues, let me assure you that it is mere coincidence.

I have the highest respect for Tun and my failings (if any) in expressing my views should not be attributed to Tun.

If anyone who does not like my style of writing and or my calling a spade a spade, please refrain from visiting my website. I did not stuff it in your throat!

[Matthias Chang is a barrister of 31 years standing and was once Political Secretary to former premier Mahathir Mohamad. He is also the author of three novels Future FastForward; Brainwashed for War, Programmed to Kill; and The Shadow Money Lenders and the Global Financial Tsunami]

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Is anyone really in charge of our economy

Najib faces key test over Port Klang scandal

The Malaysian Insider

KUALA LUMPUR, May 7 — A financial crisis at Malaysia’s main port agency, which could saddle the government with losses exceeding RM12 billion, is shaping up as a major policy test for the administration of Prime Minister Datuk Seri Najib Razak.

Senior government officials told The Straits Times that the soon-to-be-released audit report on a foray by the Port Klang Authority will show that losses stemming from bonds issued to finance the project could plunge it into insolvency by 2012.

The report, which is expected to be released later this week, also details an array of alleged management irregularities at the free-trade zone development, the officials who are familiar with the report said.

The Port Klang Free Zone project includes industrial buildings, offices and an exhibition centre.

The alleged problems began during the final years of the Mahathir Mohamad government, and continued during the Abdullah Badawi administration, the report by accounting firm PricewaterhouseCoopers will show.

Najib, who took over early last month, must now deal with the fallout from the deepening scandal. It is set to expose the government to the repayment of the bonds that could exceed RM12 billion because of mounting interest charges.

Analysts said the move by the government to make the report public is likely to be welcomed. But they said that Najib’s real test will be whether his government will pursue legal action against those responsible for the huge losses.

That is because the PricewaterhouseCoopers report alleges serious conflict-of-interest breaches between officials of the port authority and executives of private companies with close ties to the ruling Barisan Nasional (BN) government.

“It is a tough situation for the PM,” said a chief executive of a state-controlled commercial bank who is familiar with the audit report. “But the best thing to do is to come clean because it didn’t happen during his watch.”

Among other things, the report will show that the Port Klang Authority failed to carry out detailed studies before pushing ahead with the project and that major decisions were made without consultation with relevant government agencies.

The report also raises serious questions over the conduct of the Transport Ministry in its supervision of the project.

The free-trade zone began as a joint venture between the Port Klang Authority and the promoters of the Jebel Ali Free Trade Zone in 1999 to attract foreign investment and promote the port.

The land from the project belonged to Kuala Dimensi, whose shareholders include senior politicians from Umno and other BN component parties.

The company had acquired the land in the 1990s for RM96 million, or roughly RM3 per sq ft (psf).

When the Port Klang Authority proposed to buy the land from Kuala Dimensi, government officials said the port agency was advised to forcibly purchase the land under the Land Acquisition Act, which meant it would have been valued at around RM10 psf.

But the port authority ignored the advice from the government’s chief legal adviser and proceeded to buy the land from Kuala Dimensi in 2002 on a commercial basis, for RM1 billion, or roughly RM25 psf, government officials said.

The authority later moved to award Kuala Dimensi sole rights to develop the zone without any competitive bidding.

And to fund the development, Kuala Dimensi raised funds through the issue of bonds that received the backing of the Transport Ministry.

Government officials said the backing given by the Transport Ministry for the issue of bonds is irregular because guarantees on loans or bonds can be issued only by the Ministry of Finance.

“The ministry’s decision to provide government backing on loans raised by developers of the project is the chief reason for the government’s huge exposure to the project,” said a senior government official. — The Straits Times

The panic of 2008

How we got into this mess

 Asia Sentinel

The following is taken from a chapter of Market Panic: Wild Gyrations, Risks and Opportunities in Stock Markets 0470824727, by Stephen Vines, who updated it in the wake of the 2008 economic crisis. e second edition by Stephen Vines. Reprinted with the gracious permission of John Wiley & Sons (Asia) Pte Ltd. The book is available through all major bookstores, US$19.95. First of three parts

It is almost certainly of little comfort to investors, who saw their portfolios slashed to shreds by the market panic of 2008, and of even less comfort to those who lost their jobs and homes during the carnage, but the plain fact remains that this crash was predictable and barely differed, in essence, from any of the major crashes seen in the past century or before.

It may be argued that this crash spread faster and wider than past crashes and a case could be made that the proliferation of financial derivative instruments accelerated the pace of the crash and made the whole mess even more complex.

Moreover, in some ways, the panic of 2008 had a greater ability to shock because it came after a period of sustained economic growth, engendering a false sense of security fortified by the growing acceptance of an ideology asserting the supremacy of free markets and their ability to be sufficiently resilient to cope with any shocks to the system.

However, as the crisis developed, the ideologues were cowed into an awkward silence as it became clear that markets alone could not solve their own problems and that even the most fervent free marketers were seeking state intervention at levels rarely seen in history.

So, there is some validity in attempts to seek exceptional circumstances for the crash of 2008 but the differences are not to be exaggerated.

The effect of this bout of market panic is undoubtedly larger in cash terms than the losses incurred in any previous panic but that is simply because financial markets have got much bigger. Also, nations, notably Asian nations, have developed large stock markets which have joined the global financial system and become subject to the contagion that is part and parcel of globalization.

However, in percentage terms, markets fell more sharply during the crash of 1987 and the contagion from market to market spread with equal speed back then. That said, it is true that there are far more derivative financial products around today and that they have become increasingly removed from the underlying assets they are supposed to represent. In the 1920s, banks were busy repackaging loans they had made for highly speculative purposes, in a manner similar to what we now describe as the securitization of credit, and their activities did much to contribute to the crash of 1929. So, it would be a mistake to believe that there is something fundamentally different about the crash of 2008.

And, because memories are incredibly short, there has been much ill-informed talk of unprecedented government bailouts in the wake of the 2008 crash. Here too, there has been little fundamental departure from ground covered in the past. There was considerable state intervention in the immediate aftermath of the 1929 crash but most of it turned out to be counterproductive.

  In 2008, the impressively rapid response by governments does not look as though it will be similarly counterproductive, indeed the emphasis on infusing liquidity into financial systems and preventing the collapse of key financial institutions has a fair chance of ameliorating the worst consequences of the crash. In cash terms, more money is being poured into corporate rescues, loan guarantees and bank deposit guarantees than at any time in the past and it is more than interesting to see the return of nationalization as a means of supporting the economy. Additionally, it is also almost certainly true that the global spread of rescue plans from the United States, to China, to Iceland and so on, occurred at a speed and a level of geographic diversity never seen before.

However, who can pretend that, in terms of scale, what happened in 2008 was smaller than, say, Franklin D. Roosevelt’s New Deal program that followed the 1929 crash. Or even the $293.3 billion rescue of the failed saving and loans companies that was launched as one of the first acts of George HW. Bush’s presidency and related to just one set of financial institutions, as opposed to a rescue of the entire sector.

In the last big regional crash which preceded the events of 2008, the Asian financial crisis of the mid-to-late 1990s, Hong Kong’s acutely self-conscious free market government plunged into the stock market spending $15 billion to buy blue-chip shares in a scheme designed to prevent further market falls. The South Korean government, which espouses capitalism as its reason for being in contrast to the communist government that rules North Korea, spent even more on rescue packages.

In 2008, there were indeed new forms of rescue, initiated by the administration of Prime Minister Gordon Brown in Britain and widely emulated in other countries, including the United States, that involved the partial nationalization of banks. However, these were not novel methods of rescue – on the contrary, they hark back to the period following the end of World War II.

So, in essence, what happened in 2008 fitted neatly into the cycle of past panics rather than breaking new ground. This is not to suggest that the panic of 2008 was somehow trivial and lacked distinctive features but it is to say that its overwhelming characteristic was recognizability. In Chapter 4 we shall see how panics occur in cycles. Although the chapter was written in 2003, there is nothing in its general description of cycles that does not fit the circumstances of 2008. To emphasize this point it is worth going through the stages of the cycle that brought about the crash of 2008.

Malaysia-Market factors to watch March 24

Source : http://www.reuters.com/article/rbssTechMediaTelecomNews/idUSKLR43286920090323

KUALA LUMPUR, March 24 (Reuters) – Following is a list of
events in Malaysia as well as news stories and press reports
which may influence financial markets.

 (Reuters News welcomes your feedback and for any queries

please contact David Chance in Kuala Lumpur editorial on +603

2333 8033 or via email at david.chance@thomsonreuters.com or on

Reuters messaging david.chance.reuters.com@reuters.net)

 WHAT IS HAPPENING IN MALAYSIA, ALL TIMES LOCAL FOLLOWED BY GMT

 – UMNO General Assembly and elections for the biggest party

in the coalition that has ruled Malaysia for the past 51 years.

The election of Najib Razak to the party presidency unopposed

will happen on Thursday evening. On Tuesday it starts with a

closed door briefing for delegates by Abdullah Ahmad Badawi. At

8.00 p.m.(1200GMT), Najib delivers policy speech as opening

address to UMNO Youth, Women and Women’s Youth wings.

 – TM International (TMIT.KL) EGM at 0930 a.m. (0130 GMT)

Shareholders will decide on the company’s planned name change

and plan to boost its capital base.

 – Commodities Minister Peter Chin delivers keynote address

at Asian Biofuels Roundtable 2009 at 0900 a.m. (0100GMT)

 MARKET SNAPSHOTS

 * STOCK MARKET [.KLSE]

 Malaysian shares .KLSE are expected to soar on Tuesday to

test the 890 point resistance level as a U.S government plan to

soak up toxic debts pushed up Wall Street, which may resonate

through Asian financial markets, traders said.

“Local shares are going to fly today and the composite index

may hit the 900 points level this week as plantation counters

get a leg up on better oil prices,” said a trader with a local

investment bank.

 “The same would go for the UMNO-linked construction stocks

such as UEM Land,” the trader said, referring the United Malays

National Organisation, a key party in the government which will

come under the formal control of Deputy Prime Minister Najib

Razak this week.

 * For global market news click on: [ID:nN23299471]

 * PALM FUTURES [POI/]

 –  Malaysian crude palm oil futures rose 2.3 percent to their

highest close in nearly six months on the back of fund buying,

with stronger crude oil and soy prices weighing on sentiment,

traders said.

The benchmark June contract KPOc3 on the Bursa Malaysia

Derivatives Exchange rose 45 ringgit to 2,030 ringgit ($558)

per tonne, the first time it closed above 2,000 ringgit since

September. The previous high was 2,090 ringgit set on Sept.

30.

To read more please go to source

News: Anwar Ibrahim on BBC – World News

BBC WORLD NEWS INTERVIEW – MARCH 13TH 2009

http://www.youtube.com/watch?v=WOwe54n4WJg&eurl=http://dinmerican.wordpress.com/2009/03/18/anwar-ibrahim-on-bbc-world-news/

Dato Seri Anwar Ibrahim appears on BBC World News to discuss the progress made by Pakatan Rakyat since the 2008 General Election and the shortcomings of the RM 60Bn stimulus package announced recently. He also highlighted human rights abuses taking place in Malaysia including the deaths of a number of Indian citizens while in police custody.

News : 4.5pc dividends despite higher EPF income in 2008

Source : http://www.themalaysianinsider.com/

KUALA LUMPUR, March 17 — Despite earning a record RM20 billion in gross income in 2008, a cautious Employees’ Provident Fund has declared a 4.5 per cent dividend for its members and blamed the lower rate of returns on the global financial crisis.

The state pension fund had declared 5.8 per cent in 2007 when it just earned RM18.29 billion. In 2008, its gross income jumped 9.36 per cent for EPF to record its highest ever earnings of RM20 billion.

“While last year was challenging due to the unprecedented global financial crisis that has impacted economies worldwide, EPF’s investment portfolio for the year performed better at the gross income level compared to 2007,” EPF chairman Tan Sri Samsudin Osman said in a statement.

“But due to the sharp decline in the equity markets, a large provision has to be made, resulting in marked reduction in net income.”

The dividends will be credited into members’ accounts on March 23. Union sources had already indicated the lower dividend but were hoping the announcement would prove them wrong.

One of Malaysia’s five government linked investment companies (GLICs), EPF’s main investments are in government securities and bonds apart from the equity markets. It holds substantial shares in government-linked companies (GLCs) such as banks and infrastructure companies.

Late last year, it loaned RM5 billion to Valuecap Sdn Bhd for its activities to buy Malaysian stocks much to the consternation of the general public. The figure was deemed high as the first stimulus package was only RM7 billion.

Valuecap was formed in 2002 with a capital of RM 50 million in equity provided equally by Khazanah Nasional Berhad, Permodalan Nasional Berhad and Majlis Kumpulan Wang Amanah Pencen. The three GLICs provided RM10 billion in bonds for Valuecap’s investments.

In the statement, EPF said its net income for 2008 was RM14.26 billion, after deducting allowances for diminution in value of equities and doubtful debts, dividends for withdrawals, investment expenses, operational expenses, and death and incapacitation benefit payments.

This represented a decrease of 15.47 per cent over 2007 net income of RM16.87 billion.

Equities accounted for 34.82 per cent of the EPF’s total gross investment income. The EPF earned RM6.67 billion from equities which was the second largest contributor to income in 2008 compared to RM5.37 billion in 2007.

“Up until September last year, the EPF was doing well in equities. However, following the effect of the global financial meltdown, our performance in equity investments recorded a drop of less than 20 per cent, which impacted our dividend payout.

“This, however, compares better with that of the KLCI which was down approximately 40 per cent from end of December 2007 to December 2008,” said Samsudin.

As a result of the sharp fall in global equity prices and following a conservative provisioning policy in accordance with accounting best practices, the EPF made allowances of RM4.69 billion for diminution in value of both overseas and local equities, compared to only RM520 million in 2007.

Out of the 2008 provision, RM3.20 billion was allocated for overseas equities.

“The fundamentals of the companies we have invested in remain strong and we are confident that this provision will be written back once recovery takes place,” he said.