Thursday, April 22, 2010

Governments Will 'Bankrupt Us': Marc Faber

Current economic policies are not sustainable and the world faces doom because "the governments are taking over", said Marc Faber, editor & publisher of The Gloom, Boom & Doom Report.

"They will all bankrupt us and expropriate us, but it may not happen tomorrow. They'll give us something to play with, until the whole system breaks down...they'll just print money and print more money," he said on CNBC Thursday.

"What I object to the current government intervention in so-called 'solving the crisis', (is that) they haven't solved anything. They've just postponed it."

Faber warned that the "ultimate armageddon" would be much worse the next time around, as "governments will go bust", which would lead them to print more money.

He also warned that China's growth was "completely unsustainable in the long run," highlighting the red-hot property sector.

Goldman Sachs an 'Honest Firm'

"I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others — they're like an angel. But they targeted Goldman as it stands as a symbol of Wall Street," Faber said.

With U.S. President Obama's ratings sliding due to the health care reforms, the government was going after the investment bank to distract the attention of the people, he claimed.

"Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street."

Sunday, April 18, 2010

Goldman Could Trigger Market Correction: Jim Rogers

Some expert investors have described the market's reaction to the SEC's accusations against Goldman Sachs as a 'storm in a teacup.' They believe the fallout would be short-lived, and eventually present buying opportunities.

However, billionaire investor Jim Rogers, Chairman of Rogers Holdings, feels slightly differently.

"Markets are overdue for a correction," Rogers told CNBC in a telephone interview Saturday. "Any market that goes up this much, this fast, this steadily without correction - it's not normal. When that sort of things happens, the market could be setting itself up for a 15 - 20% correction."

Rogers does not think the Goldman [GS 160.70 -23.57 (-12.79%) ] issue itself would cause a correction - it would be more of a catalyst.

"When the markets are ready for a correction, something will come along... the straw that breaks the camel's back."

The investment guru did not seem all that surprised by the SEC's actions, noting that these kind of investigations usually take place after major financial meltdowns (like dotcom).

Borrowing a quote from Warren Buffett, Rogers said "when the tide goes out, you see who's swimming naked. I'm sure there will be many many more skeletons to come."

Thoughts of more high profile lawsuits on Wall Street and a pending market correction may send some into a panic, but Rogers said it is important to stay calm.

"What I am doing is watching. If this is going to be the beginning of a correction. we will know how the markets does next week, by Thursday, I suspect. It's not time to sell in any significant way."


Rogers also said investors should start thinking about adding shorts to their portfolio, and suggested shorting indexes. Select bank stocks are also in his sights - the legendary investor is waiting for the right time to build short positions in them.

And then, there's always gold.

If the SEC's crusade against fraud on Wall Street gathers pace, Rogers said, one should watch out for opportunities to buy into the yellow metal. "Go back to 2008, you have AIG go broke, Lehman go broke. There was a gigantic forced liquidation in commodities - not because of fundamentals, but because people were forced to sell... it would be an opportunity."

Thursday, April 15, 2010

Setiap hari rakyat Malaysia kahwin wanita Indonesia di Sumatera

MEDAN, 15 April —Secara purata seorang rakyat Malaysia mengahwini wanita Indonesia dari Sumatera setiap hari dalam tempoh lima bulan lepas dan 80 peratus daripada mereka mengambil isteri kedua.

Trend ini dilihat daripada rekod di Pejabat Konsulat Jeneral Malaysia di sini yang menunjukkan bahawa dalam tempoh lima bulan itu, 30 lelaki Malaysia berkahwin wanita Indonesia dari Sumatera setiap bulan.

Konsul Muda Bahagian Konsular dan Imigresen di pejabat itu, Ismail Ali, memberitahu Bernama bahawa pada Januari, terdapat 31 pasangan yang berkahwin, Februari 29 pasangan dan Mac 32 pasangan.

“Hampir kesemua mereka beragama Islam,” katanya.

Terdapat juga rakyat Malaysia yang mengahwini wanita Sumatera tetapi dipercayai tidak mendaftar di bahagian itu kerana mereka gagal mendapat izin untuk berpoligami atau izin berkahwin di luar negara dari mahkamah syariah dan jabatan agama Islam negeri asal masing-masing, kata Ismail.

Rakyat Malaysia perlu mendapat surat pengesahan warga negara dari Bahagian Konsular di sini sebelum mereka dibenarkan menikahi wanita Indonesia di Sumatera.

Sebelum datang ke Sumatera, seseorang lelaki harus mendapat surat izin berkahwin di luar negara, sijil kursus perkahwinan, surat status bujang, berkahwin atau duda dan janda serta surat izin berpoligami bagi yang masih beristeri, daripada pihak berkuasa agama Islam di negeri asal mereka.

Ismail berkata pasangan yang berkahwin itu bertemu jodoh di Malaysia dan wanita Indonesia pilihan lelaki Malaysia biasanya bekerja sebagai pembantu

rumah atau di sektor perkilangan dan sektor perkhidmatan seperti pencuci.

“Ramai calon isteri mereka merupakan janda yang sudah beranak dan wanita-wanita ini berkahwin kerana faktor jaminan hidup di Malaysia,” katanya.

Majlis perkahwinan mereka diadakan di Sumatera atas permintaan pengantin perempuan untuk restu daripada wali, dan selepas berkahwin, isteri mereka dibawa pulang ke Malaysia.

Mengikut Peraturan-peraturan Imigresen 1959/63 di bawah kemudahan Pas Lawatan Sosial Jangka Panjang, isteri warga negara asing kepada suami warga negara Malaysia layak tinggal di Malaysia untuk tempoh enam bulan pertama dan selepas itu boleh disambung untuk tempoh 12 bulan setiap tahun sehingga lima tahun.

Selepas lima tahun, isteri berkenaan layak memohon menjadi penduduk tetap Malaysia manakala anak-anak pasangan itu automatik menjadi warga Negara Malaysia.

Apa yang menyedihkan, kata Ismail, ialah ada rakyat Malaysia sanggup menceraikan isteri warga negara Malaysia mereka untuk menikahi isteri warga negara asing.

“Ada juga lelaki Malaysia berkahwin kali kedua kerana telah kematian isteri pertama,” katanya.

Perkahwinan rakyat Malaysia bukan Islam dengan wanita Indonesia di Sumatera sangat kurang.

Sebagai contoh, pada Mac, hanya ada dua pasangan bukan Islam berkahwin.

Bagi bukan Islam, mereka perlu mendapat surat kebenaran daripada Jabatan Pendaftaran Negara untuk berkahwin di luar negara. — Bernama

Monday, April 12, 2010

World Bank gives $3.75 billion loan to Eskom

FRANKFURT (MarketWatch) -- The rand rose against the U.S. dollar on Friday, buoyed by the World Bank's approval of a $3.75 billion loan for South African power utility Eskom that aims to ease the nation's severe electricity shortages.

The loan is the World Bank's first major lending engagement with South Africa since the fall of apartheid 16 years ago. It was approved late Thursday and has a maturity of 28-and-a-half years.

In the currency markets, the greenback /quotes/comstock/21o!x:susdzar (CUR_USDZAR 7.2420, +0.0067, +0.0926%) fell 0.5% to 7.2310 rand, after trading at 7.27 rand late Thursday. The dollar hit an intraday low of 7.2052 rand.

"Sentiment is a little bit better than it was yesterday," said Nigel Rendell, senior emerging markets analyst at RBC Capital Markets, commenting on the strength of the rand.

"The other thing is that there has been a loan agreed with the World Bank to lend to Eskom," Rendell said. "It's a long-term loan and it allows them to spend money on infrastructure to prevent many of the power cuts we've had in the past. This eases the tensions, at least the near-term problem."

Of the total loan, $3.05 billion will be used to complete the 4,800-megawatt Medupi coal-fired power station. One wind and one solar-power project will be financed with $260 million, while $485 million will go toward low-carbon energy efficiency components.

"Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth," said Obiageli K. Ezekwesili, vice president for the Africa region at the World Bank, in a statement.

The loan combines much-needed investments to boost generation capacity with creating jobs, Ezekwesili said.

South Africa's energy crisis of 2007 and early 2008, together with the global financial crisis, prompted the World Bank to give the loan.

State-owned Eskom generates 95% of the electricity used in South Africa and 45% of the electricity used in Africa, according to the firm's Web site.

South Africa, a major global producer of metals such as gold and platinum, has been plagued by electricity shortages for several years, constraining economic growth and investment in key industries.

Earlier this week, the chief executive of Xstrata PLC /quotes/comstock/23s!a:xta (UK:XTA 1,279, -21.00, -1.62%) /quotes/comstock/22a!xtan (CH:XTAN 20.90, -0.35, -1.65%) said the mining firm has put on hold a 5 billion rand ($690 million) investment in the expansion of its ferrochrome business because of South Africa's energy problems.

"Security of energy supply is crucial," said Mick Davis, CEO of Xstrata, in a speech to the Wits Business School in Johannesburg.

"A shortage of energy generation capacity has already stalled further investment in mining and beneficiation capacity, losing with it the potential for thousands of jobs and the associated revenue and foreign exchange this production would earn for the country."

The looming European debt wars — Michael Hudson

APRIL 12 — Government debt in Greece is just the first in a series of European debt bombs that are set to explode. The mortgage debts in post-Soviet economies and Iceland are more explosive.

Although these countries are not in the Eurozone, most of their debts are denominated in euros.

Some 87 per cent of Latvia’s debts are in euros or other foreign currencies, and are owed mainly to Swedish banks, while Hungary and Romania owe euro-debts mainly to Austrian banks.

So their government borrowing by non-euro members has been to support exchange rates to pay these private-sector debts to foreign banks, not to finance a domestic budget deficit as in Greece.

All these debts are unpayably high because most of these countries are running deepening trade deficits and are sinking into depression. Now that real estate prices are plunging, trade deficits are no longer financed by an inflow of foreign-currency mortgage lending and property buyouts.

There is no visible means of support to stabilize currencies (e.g., healthy economies).

For the past year these countries have supported their exchange rates by borrowing from the EU and IMF. The terms of this borrowing are politically unsustainable: sharp public sector budget cuts, higher tax rates on already over-taxed labor, and austerity plans that shrink economies and drive more labour to emigrate.

Bankers in Sweden and Austria, Germany and Britain are about to discover that extending credit to nations that can’t (or won’t) pay may be their problem, not that of their debtors. No one wants to accept the fact that debts that can’t be paid, won’t be.

Someone must bear the cost as debts go into default or are written down, to be paid in sharply depreciated currencies, but many legal experts find debt agreements calling for repayment in euros unenforceable. Every sovereign nation has the right to legislate its own debt terms, and the coming currency re-alignments and debt write-downs will be much more than mere “haircuts.”

There is no point in devaluing, unless “to excess” — that is, by enough toactually change trade and production patterns. That is why Franklin Roosevelt devalued the US dollar by 41 per cent against gold in 1933, raising its official price from US$20 (RM63)to US$35 an ounce.

And to avoid raising the US debt burden proportionally, he annulled the “gold clause” indexing payment of bank loans to the price of gold. This is where the political fight will occur today — over the payment of debt in currencies that are devalued.

Another byproduct of the Great Depression in the United States and Canada was to free mortgage debtors from personal liability, making it possible to recover from bankruptcy. Foreclosing banks can take possession of collateral real estate, but do not have any further claim on the mortgagees.

This practice – grounded in common law – shows how North America has freed itself from the legacy of feudal-style creditor power and the debtors’ prisons that made earlier European debt laws so harsh.

The question is, who will bear the loss? Keeping debts denominated in euros would bankrupt much local business and real estate. Conversely, re-denominating these debts in local depreciated currency will wipe out the capital of many euro-based banks. But these banks are foreigners, after all – and in the end, governments must represent their own home electorates. Foreign banks do not vote.

Foreign dollar holders have lost 29/30th of the gold value of their holdings since the United States stopped settling its balance-of-payments deficits in gold in 1971. They now receive less than a thirtieth of this, as the price has risen to US$1,100 an ounce. If the world can take that, why shouldn’t it take the coming European debt write-downs in stride?

There is growing recognition that the post-Soviet economies were structured from the start to benefit foreign interests, not local economies. For example, Latvian labour is taxed at over 50 per cent (labor, employer, and social tax) – so high as to make it noncompetitive, while property taxes are less than 1 per cent, providing an incentive toward rampant speculation.

This skewed tax philosophy made the “Baltic Tigers” and central Europe prime loan markets for Swedish and Austrian banks, but their labor could not find well-paying work at home. Nothing like this (or their abysmal workplace protection laws) is found in the Western European, North American or Asian economies.

It seems unreasonable and unrealistic to expect that large sectors of the New European population can be made subject to salary garnishment throughout their lives, reducing them to a lifetime of debt peonage. Future relations between Old and New Europe will depend on the Eurozone’s willingness to re-design the post-Soviet economies on more solvent lines — with more productive credit and a less rentier-biased tax system that promotes employment rather than asset-price inflation that drives labor to emigrate.

In addition to currency realignments to deal with unaffordable debt, the indicated line of solution for these countries is a major shift of taxes off labor onto land, making them more like Western Europe. There is no just alternative. Otherwise, the age-old conflict-of-interest between creditors and debtors threatens to split Europe into opposing political camps, with Iceland the dress rehearsal.

Until this debt problem is resolved – and the only way to resolve it is to negotiate a debt write-off — European expansion (the absorption of New Europe into Old Europe) seems over. But the transition to this future solution will not be easy.

Financial interests still wield dominant power over the EU, and will resist the inevitable. Gordon Brown already has shown his colours in his threats against Iceland to illegally and improperly use the IMF as a collection agent for debts that Iceland doesn’t legally owe, and to blackball Icelandic membership in the EU.

Confronted with Brown’s bullying — and that of Britain’s Dutch poodles — 97 per cent of Icelandic voters opposed the debt settlement that Britain and the Netherlands sought to force down the throat of Allthing members last month. This high a vote has not been seen in the world since the old Stalinist era.

It is only a foretaste. The choice that Europe ends up making will likely drive millions into the streets. Political and economic alliances will shift, currencies will crumble and governments will fall. The European Union and indeed, the international financial system will change in ways yet to be seen. This will be especially the case if nations adopt the Argentina model and refuse to make payment until steep discounts are made.

Paying in euros — for real estate and personal income streams in negative equity, where the debts exceed the current value of income flows available to pay mortgages or for that matter, personal debts – is impossible for nations that hope to maintain a modicum of civil society.

IMF and EU-style “austerity plans” are nothing but technocratic jargon for the life-shortening impact of gutting income, social services, spending on health on hospitals, education and other basic needs, and selling off public infrastructure for buyers to turn nations into “tollbooth economies” where everyone is obliged to pay access prices for roads, education, medical care and other costs of living and doing business that have long been subsidized by progressive taxation in North America and Western Europe.

The battle lines are being drawn regarding how private and public debts are to be repaid. For nations that balk at repayment in euros, the creditor nations have their “muscle” waiting in the wings: the credit rating agencies. At the first sign a nation is balking in paying in hard currency, or even at the first hint of it questioning a foreign debt as improper, the agencies will move in to reduce a nation’s credit rating. This will increase the cost of borrowing and threaten to paralyze the economy by starving it for credit.

The most recent shot was fired n April 6 when Moody’s downgraded Iceland’s debt from stable to negative. “Moody’s acknowledged that Iceland might still achieve a better deal in renewed negotiations, but said the current uncertainty was hurting the country’s short-term economic and financial prospects.”

The fight is on. It should be an interesting decade. — www.counterpunch.org

Monday, April 5, 2010

Syndicate nets millions from cheque scam

KUALA LUMPUR, April 5 — A local bank has reportedly lost more than RM100 million over the past few years to cheque fraud believed to have involved government agencies and bank insiders.

A financial industry source told The Malaysian Insider that account holders from private firms and government agencies are involved in cashing third party’s cheques, disclosing several cases included agencies that handle large amount of money such as the Royal Customs Department and the Immigration Department.

The National Union of Bank Employees (NUBE) said that they detected the cases after one of its members was charged for cheque fraud recently.

“It has been happening for a very long time, so the loss is estimated to be more than RM100 million,” NUBE secretary-general J. Solomon told The Malaysian Insider.

He added that NUBE was made to understand that senior bank officers were also involved in the cheque fraud.

“We understand that there are four bank officers have been suspended for cheque fraud,” he said.

The Malaysian Insider understands that the case involving the NUBE member was not a major one, compared to dozens of similar fraud detected since 2003. The bank, run along Islamic lines, has acknowledged the cases and it is understood it is taking action with the cooperation from the police and the central bank.

In the case, the Islamic bank where it detected losses of almost RM12 million after a breach of banking procedure when it cashed a third party cheque belonging to a public agency to an account for a law firm in northern peninsula Malaysia.

In one transaction, the cheque had a face amount of RM1.6 million.

The cases apparently occurred between Oct 2007 to Dec 2009. The clerk involved has been suspended pending internal investigation.

“We also received unconfirmed reports that the amount may reach RM100 million and we understand that the bank is still conducting internal investigation,” Solomon said in a statement put on the NUBE website.

“The clerks who handled the transaction under the head service centre have faced disciplinary action,” he added.

The statement was made in response to the bank’s move to transfer six clerical staff to other branches without strong justification.

It also complained about the bank management’s reluctance to pay laundry allowance of RM55 per month but at the same losing millions to cheque fraud.

Friday, April 2, 2010

Our education system is obsolete

Malaysia is undergoing rapid changes especially from the environment, technology, political and social aspects. These inevitable changes are in some ways attributed to globalisation and the expectations of a more educated workforce.

Being endowed with a fantastically diverse population with multi-faceted religions, beliefs, practices, culture and history, we are in a better position to move forward and accept globalisation. This is indeed one of our nation's strengths that has been acknowledged by prominent world leaders and tourists alike.

On every strata of life in Malaysia today, we are exposed to changes brought about by the direct or indirect affects of globalisation. It is positive and also bad in certain areas. It is affecting everyone. This is where leadership at every level is vital to steer us to a new paradigm to face reality and most importantly, practice the accepted principles of integrity, discipline, accountability, duty and long-term perspective.

These are the key qualities of leadership. Our society needs such leaders in all these fields and disciplines. However, to produce leaders who can think, act and decide on the same platform of the above virtues requires a good all-rounded education system which emphasises the future, notwithstanding accepted universal moral values.

Presently, our education system is obsolete, where rote learning is the order of the day though this has not produced the desired expectations. In short, our education system is not ready for the globalisation which is inevitable.

This means our graduates and workforce will lose out in many areas of employment by multi nationals unless we act immediately. Education has to be apolitical.

We need to review and change our education system, curriculum and culture immediately. The models of education 'best practices' in Korea, Turkey, and Taiwan just to name a few will be an excellent model to follow.

And it has to be free of politics with the best academic experts charting our nation's education. The first step is, of course, to take an inventory of where we are against where we wish to go.

If we don't take the steps to rectify this now, I see a bleak Malaysian future.

Look at the human capital and education system of any nation and you can predict their futures. If we continue with our current system, we will stagnate and in twenty or thirty years from now we will probably be on the level with the Philippines, Jamaica and maybe even Myanmar.

Do we have a choice not to change? The politicians and decision-makers of today have to be accountable for the future too.