StockTube Make Money Online Tip - Investing Stocks Option Trading

Dow below 10,000; $700B bailout plan was the poison?

2008-10-06T23:53:00.005+08:00

Lame-duck and flip-flop PM Abdullah Badawi said he will announce the decision on whether he would defend the UMNO presidency either tomorrow or by Wednesday. Although he would most probably quit, the Malaysian PM might just show his infamous indecisive leadership again – he might announce he still has many things to do and people are still supporting him so he’ll only decide when he crosses the bridge next Mar 2009. Bet his anxious deputy, Najib, would be fuming with anger because his wife could be waiting at home and ready to slap him for not pushing the sleepy-head enough. She had made the necessary arrangement for the big day – to be the country’s First Lady (although hierarchy-wise the wife of PM is not the First Lady but who cares).

Heck, who cares if Badawi decided “not to retire” officially by Mar 2009 - just for the fun to frustrate Najib and those Supreme Council warlords who dared to tell Badawi to get lost? Even if Najib managed to poke his finger again into Badawi’s butt to wake him up and surrender his trophy, would that make any difference to the nation’s economy, education, administration and people’s welfare? Dow Jones has just plunged 300 points within the first 30-minutes of trading hour and it appears the bottom is still quite far away. Chances are high that both the clueless Badawi and Najib will not be able to strategize preventive measures to minimize the global recession when the full-scale tsunami reaches the country’s shore. We know for sure that the country will still on auto-pilot mode for the next six months simply because none of the top government officials will care about the economy – they’re too busy politicking.

For the first time since 2004 the much-respected Dow Jones Industrial Average fell to below 10,000-level. The European governments were scrambling to save their financial institutions from bankruptcy which saw major indexes in London, Paris, and Frankfurt all down about 5 percent. Amazingly the trading on banking stocks was halted after indexes fell more than 14 percent in Russia and Iceland. Germany agreed to pump a mind-boggling $68 billion to bailout commercial-property lender Hypo Real Estate Holding AG while France's BNP Paribas agreed to acquire a 75 percent stake in Fortis's Belgium bank after a government rescue failed. However investors were so pessimistic that they continue their selling spree, not even Germany’s guarantee of $785 billion in private savings and checking accounts could calm the situation.

Already the American consumers are cutting on their spending and this Christmas could be a boring one even if the current global oil prices were to plunge to below $90 a barrel. Bernanke and his boys could not afford to stand and watch the consumers do window-shopping only so the Feds might be force to cut the interest rate again. Now if you were to ask 100 people, I bet 99 percent of them will tell you the recession is inevitable. Only last week investors were brainwashed that without the $700 billion rescue plan and if the lawmakers do nothing, the U.S. economy will collapse. But today people (including me) are wondering if the law signed by President Bush was the right medicine or was it the catalyst (or poison) that is accelerating the recession. Average Joes are thinking that since the governments were so damn anxious to save the banks, the problems with these institutions must be really huge. Period. And so they’re selling the shares on their hand because their friends are doing the same thing. It’s the contagion of fear that is sweeping the trading floors.

Of course the participation of Warren Buffett’s (NYSE: BRK.A, stock) in scooping $3 billion of Electric Company (NYSE: GE, stock) and $5 billion of Goldman Sachs Group Inc. (NYSE: GS, stock) preferred shares could be seen as a sign of confidence and time to go into the stock market but the fact is his personal wealth of $62 billion is just chicken-feed compared to the scale of toxic facing the banking systems now. The Dow plunged more than 500 points during the morning trading session and I’m not going to wait and see if it could beat the 777-points recorded last week. Yes, I was greedy with my Apple Inc.’s AAPL Nov 110 Put Option initially but I decided it’s time to take some money off the table. The bull and bear are fighting very hard to stay above 10,000-level at this moment. Forget about all the technical indicators for the time being because it is the sentiment of fear that is ruling the game now.

Other Articles That May Interest You …

Arrogance, Greed & Corruption – Will We Ever Learn?

2008-10-05T00:05:00.002+08:00

Germany is a great nation. The country also saw the emergence of a great hero, or devil depending on how you look at it – Adolf Hitler. He participated in both worlds’ greatest war, World War I and II. I can’t imagine what would happen to Germany if Hitler never invaded Soviet Union and spared the three million elite German troops and the much feared and greatest tanks of all time, Panzer, to guard his newly acquired territory of Poland, Austria, Czechoslovakia, Denmark, Norway, France, Luxembourg, Netherlands, Belgium, Hungary, Northern African Countries, Romania and Bulgaria. Arrogance and greed were the main reasons that soon sent Germany to her defeat and Hitler his death. If only he listened to his advisors.

Amazingly both countries that were defeated in the World War II, Japan and Germany, rebound and becomes world’s third and fifth largest economy respectively. However the Germans are not so happy lately. As expected the U.S. Congress finally passed (263 – 171 in favor) and President Bush signed the $700 billion rescue plan. So I guess everything is settled as if we’ve traveled through the time machine back to the future to the good time, no? At least the Dow didn’t panic and only drop 157 points, better than the previous 777 points drop *grin*. The Congress’s vote of approval might help to calm the stock market in the sense that wild volatility would most probably contained and depositors don’t need to worry about their money now that the amount of deposits covered by FDIC increased from $100,000 to $250,000.

Unfortunately an economic downturn is happening. You can choose to argue until the cows come back whether U.S.’s economy is technically in recession (Warren Buffett believed so months ago) but in reality the times are getting tougher. Despite Germany’s surplus of $185 billion compared to United States’ deficit of $731 billion in 2007 and the fact that the Germans save on average 11 percent of their incomes into savings accounts, the country that once ruled most of the European countries is mumbling about having to bailout their financial institutions as a result of United States’ own problem. Not even the mighty “Terminator” Governor Arnold Schwarzenegger is immune from current crisis that the California state is screaming for $7 billion emergency loan from federal government because it is running out of cash.

All the eyeballs are now monitoring on how the $700 billion will be disburse effectively to meet the objectives. But if the Dow’s performance is any indicator to goes by, it appears that majority of the investors, analysts and economists do not think the $700 billion bailout plus the $150 billion tax breaks will do any good and the monies are as good as flushed down the toilet. Sure, now that the U.S. economy is in a huge mess it quickly becomes the laughing stock. Countries (such as Malaysia) that was criticized (and laughed at) because it didn’t subscribe to the IMF medicine during the 1997-1998 Asia Crisis are now giggling and laughing back at the military power-house United States. No doubt that U.S. is literally bankrupt and relies on printed monies without the backing of gold reserve (go check the Fort Knox) as claimed by such parties but like it or not all the economic super-powers are holding huge amount of U.S. Treasury bills. Japan owns $593 billion and China has $519 billion while Asian countries hold more than $1 trillion of these IOUs. Why?

Now I realized the truth when one of the wise-man told me “If you want to owe money, make sure your debts is as huge as possible”. Try to owe the bank millions of dollars yourself and chances are high you’ll be given VIP treatment and you can negotiate for the lowest interest rate in town. Go try it if you don’t believe me. As of now the U.S. national debt stands at $10 trillion with each citizen’s share of about $33,300.00. You can laugh back at the U.S.’s economic backyard now but it won’t take another decade for the same mess to happen in another countries. The point here is do we learn from our past mistakes and take the “right” medicine no matter how bitter it is? I doubt so and if you have politician suckers running the financial show as well, chances are high the taxpayers’ money will be used again to bailout many more inefficient fat cats.

I read that the blogger, Kickdefella, was toying with the prospect of being kicked into the detention center without trial (ISA) when he claimed that the outgoing PM Abdullah Badawi actually received RM200 million from the total of half a billion ringgit commission gotten from the submarine deal. He claimed the money was paid by deputy PM and PM-in-waiting Najib Razak’s wife, Rosmah. This is absolutely ridiculous because Malaysian politicians are the cleanest and can never be so corrupt, can they? RM200 million is a lot of money and I can tell you a dozen of good companies to buy over after their share prices took the beating lately. Do we really have that US$119 international reserves as claimed by the new Finance Minister Najib recently? It would be interesting to get an independent auditor to perform such check else all our jaws will drop to the floor one fine day when we open the vault only to find a couple of pussy meowing inside.

Other Articles That May Interest You …

Waiting for Congress’s “Aye” but the Problem is Gigantic

2008-10-03T11:37:00.005+08:00

When you read from the government-controlled media that Malaysia’s economy has the capacity to weather the destabilizing consequences of developments in the US economy and international financial markets, that’s when you need to start worrying about the economy. It’s better for newly appointed Finance Minister Najib Razak to shut his mouth and do what his boss didn’t do for the last four years – listen to foreign (and domestic) investors what they want in order to attract them into the country and carry out those reforms. Stop bragging about the US$119 billion international reserves because going by the rate FDI outflows are pulling out, the chicken feed of US$119 billion will not help in the long run.

The fact is many countries are still depended on U.S.’s economy and if this super-power is not doing well chances are high that countries such as Malaysia will be affected. Like it or not diversification can only do so much and you still need foreign investors to bring in their hot money to excite the domestic activities. It would be foolish and disastrous to underestimate the current problem of U.S. financial crisis. Former premier Mahathir had tasted the medicine before during 1997-1998 Asia Crisis and the old man screamed the exact same wordings – country’s international reserves were strong, economic fundamental was strong, banking sector was strong, export was healthy and heck, everything were strong. The dictator almost ran a one-man show with total control over Malaysia’s economy and he spent lavishly to build the biggest and the tallest, apparently in his obsession to search respect from the West.

Yet when the stock market nose-dived to 200+ points from 1,000+ points back then, Mahathir pointed his fingers are outsiders particularly the speculators and the Jews. It was so bad (the stock market) that Mahathir was literally asking the rich to pawn their jewelry overseas and bring back the money to the country in order to replenish the treasury. He also begged average-Joe to donate their jewelry to help the country’s economy but of course nobody gave a hoot about it. People were also asked to plant vegetables in their front yard to reduce foreign bill for food. Wonder what happened to that “silly program”.

On Wednesday, U.S. Senate strongly (74 to 25 in favour) endorsed the $700 billion economic bailout plan and the ball has been passed back to Congress which had earlier rejected the plan causing the Dow Jones to tumble 777 points. Congress will decide again on Friday whether to approve the rescue plan after sweetener of $150 billion in tax breaks for individuals and businesses was included. Analysts expect the latest modified $700 billion plan to get the backing from Congress this time. Really, after the 777 points drop and many fingers pointed at Congress it would be interesting to see if Congress dares to screw up again. Frustrated, some investors were asking whether Nancy Pelocy, a hippie from San Francisco, is more qualified to make critical economic decisions than Secretary Paulson, the former CEO of Goldman Sachs.

National service or not, Barack Obama and his Republican rival, John McCain, scrambled to make personal calls in their attempt to switch “Nay” lawmakers to “Aye”. If things are not bad enough, U.S. auto sales dropped below 1 million last month for the first time in more than 15 years thanks to difficulties in getting loans. The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, the highest since the Sept 11, 2001 terrorist attacks. Commerce Department reported that factory orders in August plunged by 4 percent compared to July, steeper than 2.5 percent drop expected. Another sign of economic distress is the sudden “Sales” and promotions from stores nationwide. Heck, even Berkshire Hathaway's (NYSE: BRK.A, stock) furniture and jewelry stores are not spared by the U.S. economic problems.

Billionaire investor Warren Buffett said the nation has been hit with an "economic Pearl Harbor" and predicts that the rest of the "Main Street" economy will start to have problems if the government's financial bailout plan doesn't pass Congress soon. Buffett who has always tries to be greedy when others are fearful is still shopping for good deals, the latest being $3 billion of preferred shares of Electric Company (NYSE: GE, stock), which carry a 10 percent dividend – that’s $300 million a year dude. Last week, the Sage of Omaha invested $5 billion in preferred Goldman Sachs Group Inc. (NYSE: GS, stock) shares which comes with a 10 percent dividend string attached – that’s another $500 million a year, mind you. But the icing is the warrants to buy $5 billion in Goldman Sachs common shares at a strike price of $115 that can be exercised at any time over the next five years in addition to the right to buy $3 billion in GE common shares at a price of $22.25.

The question on traders’ mind before the stock market starts Friday morning is whether an endorsement by the Congress will help push up Dow Jones permanently. Using the indicators (Dow erased almost 350 points) after the closing bell Thursday, the answer is an obvious “No”. Buffett said in his adult lifetime he has never seen people as fearful economically as they are now and that was precisely the sentiment on the trading floor Thursday. It simply means the $700 billion won’t save the economy from a potential severe recession. So will Dow register positive gains after Friday’s closing? Most probably! Will we see the sunshine again thereafter? Most likely not simply because the problem is too gigantic in scale to be solved by a $700 billion bailout alone so don’t expect an immediate recovery! If you’ve some Put Options on hand and it’s in profitable territory, prepare to dispose some. It’s always nice to take some money off the table instead of expose it to the risks.

Other Articles That May Interest You …

Should we rejoice or mourn on Maybank-BII deal?

2008-10-01T01:15:00.001+08:00

Let’s rejoice and celebrate because Malaysia’s largest lender, Malayan Banking Berhad (KLSE: MAYBANK, stock-code 1155), has just managed to beg PT Bank Internasional Indonesia’s (JAK: BNII) major shareholder Fullerton Financial Holdings, a unit of Singapore's Temasek, for more sweets. Maybank agreed to a rebate of S$315.2 million (RM758.9 million) after rejected the initial rebate of S$236.4 million (RM569.2 million) – an improvement of a whopping 33.33 percent, mind you. At last, the state-owned bank knows how to negotiate, big deal. I bet Maybank’s board of directors was popping the Champaign as if it was the greatest victory on earth.

With the current weak market sentiment it’s only logical for Singapore’s Temasek to back down and compromise on a lower offer. Seriously it was a pathetic offer and what is an extra of S$78.8 million to Temasek compared to the still-overprice deal pushed into Maybank’s throat? The joke here is that while the latest rebate is welcome, it only reduces the offer price to 433 Indonesian Rupiah from the initial 511 Indonesian Rupiah per BII share for the first 55.6 percent stake. Maybank will still have to pay 511 Indonesian Rupiah per BII share for the remaining 44.4 percent stake. Therefore Maybank will pay a total of RM4.26 billion ($1.24 billion) for 55.6 percent and RM3.8 billion ($1.11 billion) for the remaining 44.4 percent stake.

This is perhaps another classic example of how incompetent the decision-makers (or politicians) at the negotiation table. It is still unbelievable how generous Maybank was in its offer of 4.6 times book value for BII. Rumors were flying that former Finance Minister, Daim Zainuddin, had his hand on the deal and is set to make handsome profit from Maybank’s coffer. As the new deputy Chairman of Khazanah the newly Finance Minister cum deputy PM, Najib could probably shed some lights on this acquisition since Maybank is part of Khazanah’s Transformation Program for Government-linked Companies (GLCs). One of the intentions of the program it to continue Maybank’s Economic Profit, lest the special “friendship” with Temasek has blinded the objective and reverse it to Economic Loss *grin*.

Obviously it was not a smart move to acquire BII in the first place simply because it was done at the wrong time and most likely by the wrong people (board of directors under instruction from politicians?). Maybe the money is better spent acquiring some trouble but potential financial institutions from U.S. You don’t need to be a brain-surgeon to scout for such companies and guess what. For once Malaysia could claim victory because it would definitely be able to buy U.S. assets at a lower price than Singapore. That’s right! Singapore’s Temasek Holdings bought into U.S. financial companies such as Merrill Lynch & Co. Inc. (NYSE: MER, stock) end of last year and is planning to raise its stake to 13.7 percent from 9.4 percent. Just follow the money and buy at a lower price and you can laugh at Singapore, no sweat.

Admit the mistake that the BII’s acquisition is indeed pricey and stop making a fool of yourself with announcement that you’re happy with the agreement (better rebate offer) when in reality it was a bad deal. The only party that can afford a celebration is Temasek Holdings which is making roughly fivefold profit from the sale. And they are still giggling all their way to the bank, thinking of Maybank’s stupidity. With BII’s last traded stock price at 310 Indonesian Rupiah a share, it will take more than a rebate coupon to convince investors that the deal was a freaking good one.

Other Articles That May Interest You …

Economic 9/11 after $700 billion Bailout Plan Rejected

2008-09-30T11:35:00.003+08:00

Boeing is a trademark synonym with domination in aerospace and by far the largest global aircraft manufacturer. Mentioned 777 and chances are the awesome “Triple Seven” world’s largest twinjet jumbo plane appear in front of you. It’s jumbo alright and when you’re talking about something this huge and heavy, it would be disastrous should there be a crash. After I closed my Apple Inc.’s AAPL position yesterday to lock in the profit, I didn’t look back. Little did I realize the huge crash following thereafter on the U.S. stock markets – a jaw-dropping historic 777 points decline on Dow Jones. Guess that should be the expected result from the $700 billion failed bailout plan by Bush administration when the vote in the House showed 228-205.

It was the biggest one-day fall ever beating even the 684 (721 at one point) points plunge on the first day of trading after the Sept 11, 2001’s terrorist attacks on U.S. soils. There’s only one work to describe the scenario – “panic” selling. Dow closed at 10,365.45; it’s lowest in three years but percentage-wise the 777 points drop (almost 7 percent) is still the 17th-biggest decline in Dow’s history. Hopefully we will not live long enough to see the 20-percent-drop occured on Black Monday in 1987 and before the Great Depression. Light, sweet crude fell $10.52 to settle at $96.36 on the New York Mercantile Exchange as investors feared energy demand would continue to slide amid further economic weakness.

Rates on three-month Treasury bills declined 55 basis points to 0.29%, nearing the levels hit on Sept. 17 when they hit their lowest level since World War II. The TED Spread - the difference between what banks and the Treasury pay to borrow for three months, widened to 3.59% when it was 1.10 percent a month ago. The three-month London interbank offered rate (LIBOR), a key measure of lending rates between banks climbed to 3.88%. In short, banks are extremely reluctant to lend money to people on the street as well as businesses. Americans do not save but spend more than they earned instead (to some extent) hence the Feds is playing the role of a father trying to distribute money into financial institutions so that people can go to these banks for cash, literally. This brings back the good memory of 1997-1998 Asia Financial Crisis *grin*.

Of course not all the lawmakers who participated in the voting session voted with good knowledge about the current financial problems. Some of them voted according to the wishes of the people’s sentiment on the street lest they wish to risk their political seats with five weeks before the elections. You can’t blame the people when the fact remains the plan was designed to bailout the problematic financial companies, not the average Joe. It was reported that more than two-thirds (133 votes) of Republicans and 40 percent (95 votes) of Democrats opposed the bill. Now the ball has been passed to the Federal Reserve’s court.

However the fact remains that even if the plan succeeded (from the voting), majority of analysts predicted the U.S. economy will probably turns for the worse before it becomes better. Final quarter of 2008 and first quarter of 2009 would be gloomy. Now that the Congress is not moving, the economic forecast will be slashed and the contractions will nosedive further. Already the unemployment is at five-year high of 6.1 percent and it could hit 7.5 percent by end of 2009. Whatever it is one thing is for sure, more banks could appear on the news screaming for helps. Let’s wait if the Malaysia government politicians will still yell “We’re not affected by U.S. economy crisis … The fundamental is still intact …The economic growth of 6 percent remains … blah blah blah”

Other Articles That May Interest You …

Panic again, $700 billion is insufficient to treat disease

2008-09-29T23:39:00.002+08:00

Wachovia Corp., just like Washington Mutual Inc., is probably one of the classic examples of investing at the wrong time. It suffers huge losses after it acquired mortgage lender Golden West Financial Corp in 2006 for a whopping $24 billion. The acquisition was done at the peak of housing boom – talk about bad timing huh? Days after CEO Robert Steel assured Wachovia employees that the company was doing fine and remained strong, Citigroup Inc. today announced it will acquire the company and will absorb about $42 billion of losses from Wachovia’s $312 billion loan portfolio. As a result Citigroup it will sell $10 billion in common stock and cut its quarterly dividend in half to 16 cents.

Wachovia stock price tumbled 91 percent *Ouch!* to 94 cents. I’ve wrote earlier that despite the $700 billion (let’s put it at $1 trillion, shall we?) injection into the financial market the fear factor will remains and it’s not the right time to become a hero and long the stocks. Seriously your chances of making money is better off shorting the stocks (not naked, mind you) or playing the Put Options – if you do not mind the volatility. Hey! This is the greatest time to put your psychology into this greed and fear into the testing chamber. At one time the Dow Jones plunged to more than 300 points in the morning trading session – everyone is waiting for the bailout vote. I’m not taking any chances and my AAPL trade got triggered so I’m taking my money and run further up the hill to get a clearer picture of the fight between bull and bear on the trading floor.

If you think this could be the bottom now that a solution was found for Wachovia maybe the statement from FDIC that there’re roughly 117 banks still in trouble could change your thought. You’re really a brave soul if this news is not enough to hold you back to at least stay at the sideline should your intention was to long the stocks. It would be interesting to see if KLSE could take the punches after the opening bell tomorrow morning.

Other Articles That May Interest You …

Maybank-BII deal goes wrong? Taste your own medicine

2008-09-29T22:09:00.002+08:00

Only after heavy criticisms and sell-off of Malayan Banking Berhad’s (KLSE: MAYBANK, stock-code 1155) shares as a sign of protest, the Malaysia’s Central Bank woke up (from sleep) and told Maybank to behave and re-negotiate for a better pricing in its acquisition for PT Bank Internasional Indonesia (BII) (JAK: BNII). The Minority Shareholder Watchdog Group (MSWG) did bark against the silly deal but as expected the authorities did not give it much thought since the group is toothless. The proposed deal was the laughing stock within Abdullah Badawi’s administration simply because the 4.6 times book value was more than twice the book value of state-owned Maybank itself and the highest amongst Indonesian banks. Indonesian leading lender, Bank Mandiri’s own book value is only 1.98 times. Instantly speculation was floating that the deal was filled with hanky-panky hands.

Foreign investors and local fund managers dumped the stock, a normal reaction to such a silly business transaction. It’s puzzling that while buyer normally fights tooth and nail to get a better pricing Maybank’s board of directors seemed to see it fit and happy with such a generous offer price regardless of how attractive Indonesian banking business is. You don’t just raise your hand unnecessarily to bid for the highest price without a limit. Only fools will blindly do such thing and considering Maybank is the largest lender of the country, such ignorance is disturbing as the shareholders and depositors’ money were being spent lavishly. But of course you won’t hear any single brave soul from the Maybank’s board of directors resign to take full responsibility.

Long story short, on Saturday Maybank reportedly did not accept the last-minute rebate of S$236.4mil (RM570mil) by Singapore’s Temasek unit Fullerton Financial Holdings Pte Ltd to close the controversial sale of BII. Sure, Maybank dare not accept such an offer as it would be an insult to accept such a cheap sweet in exchange for the US$2.7 billion deal. But would Maybank’s losses limited to only RM480 million deposit should the deal goes bad? Knowing how smart Singapore’s government is in doing business, could there are clauses (surely Maybank’s board of directors knew about it) within the “Sale and Purchase” agreement that would enable Temasek to sue Maybank for losses *time for easy money, Temasek*?

In fact Temasek would be happier if Maybank decided to abort the plan at this stage because it could sue for more money while maintaining its stake in BII, theoretically. Earlier Maybank MD, Abdul Wahid Omar, said that the loss from the RM480 million deposit would narrow to RM290 million due to unrealized foreign exchange gains (parked in Singapore) of RM193 million. Nevertheless if Maybank was idiot enough to sign a blank check in the sense that the Malaysia largest lender is willing to pay the difference of the agreed 4.6 book value and the maximum book value that another buyer is willing to pay for the stakes should Maybank walks away then Maybank could be in deep trouble, though I doubt Maybank is so stupid. The potential losses could be huge if Temasek has the option and decided to seek legal case.

Heads need to roll and it’s high time to clear all the doubts. Transparency and accountability are all we are asking. It’s not that the minority shareholders and the public are asking for those responsible for the deal to be put behind bars, not that you can dream of such action in Malaysia. All we’re asking is for those responsible to admit the mistake and resign with honour. Is this too much to ask? Who are the people that the authorities are protecting here? As much as you hate Indonesian’s flip-flop policies, Maybank is actually tasting it’s own medicine when Malaysian government is practicing the same pathetic flip-flop policies which are driving many investors away, no?

Other Articles That May Interest You …

Lame Duck PM to quit? Or another Mother of All Lies?

2008-09-28T23:41:00.001+08:00

Game over for lame duck Abdullah Badawi! PM to quit next Mar 2009! Early transition of power in Mar 2009 instead of June 2010! The headlines go on and on after Friday’s UMNO supreme council meeting. On paper it appears the sleepy PM, as he often labeled will have to enjoy his sleep to the fullest for another six months before start his packing and show his successor Najib around his bedroom – the place PM will miss the most. Just like someone who has just been diagnosed of having cancer reaching stage four and has only maximum six months of life, the PM looks equally sad and confuse at his fate.

Heck, most probably the lame duck might not even have the luxury to enjoy the maximum six-month face-saving exit plan. A round of applause should be given to Badawi who managed to issue brave yet empty and silly statement that he would decide by Oct 9 (11 days away) whether to defend his post in the party. I believe all the journalists were giggling at the lame duck because he still has the cheek to deny he was under tremendous pressure to quit. Doubly silly was his laughable response that he has a lot of work to do when asked if he will be going on leave. Right, if he couldn’t do a single right thing in the past four years did he expect people to be so stupid to believe he could pull the rabbit out from the hat in the next 6-months, provided the 25 supreme council warlords allow him to stay that long? Sometimes you can’t help but wonder if he was really out of vocabulary when he answered the press.

It’s an open secret that his deputy, Najib, is rushing against time to become the sixth Prime Minister since he has so many skeletons in his closet and if not for the fact that the pit-bull of political bloggers RPK was thrown into detention center without trial, more worms could be seen crawling from his jacket. As much as he likes to shake off the allegations that he had a sexual relationship with a murdered Mongolian woman (Altantuya) before passed her to his political advisor, the public perception of Najib as a tainted politician persists. Najib might be the best candidate to take over from the weak Abdullah as far as UMNO’s 25 powerful supreme council warlords are concerned but he has yet to be put to test in winning back the people’s mandate come next general election. Abdullah is paying the price for being indecisive and weak but the same fate would knock on Najib’s door if he is no difference from his predecessor.

So, the R.A.H.M.A.N Prophecy, the thought that the prime minister of the country has been somehow per-determined by the order of RAHMAN, really works huh? I’m not sure who started this prophecy but just like the Indiana Jones’ adventure in solving some ancient artifacts mystery, if Najib was destined to be the country’s sixth prime minister from the ruling government then the prophecy is complete. But would Najib be the last prime minister from UMNO that this country will see? His father didn’t manage to live long to enjoy the fruits from his coup d’état together with Harun (Selangor Chief Minister) from the first PM, Tunku Abduk Rahman. So, does the son who is almost certain to become the sixth prime minister has what it takes to navigate this country to a greater height? The four warlords namely Muhyiddin, Rafidah, Hishammuddin (Najib’s cousin) and Shafie Apdal will definitely be rewarded handsomely for their roles in threatening Abdullah Badawi into submission.

Obviously Najib was the invincible hands behind the curtain that architected the plan to fast-forward Badawi’s downfall, no? Did he play any part in Anwar’s huge victory in Permatang Pauh recently? How dare the supreme council warlords demanded Abdullah to quit or else face the embarrassment of not getting even the 30 percent minimum nominations (58 votes) to defend his presidency – unless of course there’s a powerful person who was pulling the string from behind. Maybe Najib was panic after intelligence told him that Anwar is set to meet-up (or already has met?) with the King. If that happens Abdullah might just concede defeat and grant Anwar the much needed vote-of-confidence session provided Anwar promise to take care of his son-in-law, Khairi.

Other Articles That May Interest You …

FDI Out-Flows began rushing the day Badawi becomes PM

2008-09-26T01:04:00.001+08:00

Just like history, numbers don’t lie unless someone deliberately twist it. Fortunately somewhere within this globe the real facts about history or numbers will be kept and archived. Something is definitely very wrong with the current government judging from the numbers lately. No matter how you crunch the number and try to hide from the public, the fact remains that Abdullah Badawi administration is the worst PM this country ever produced since independence. One wonders where have all the smart and genius economic advisors who used to assist the former premier Mahathir gone. You don’t think Mahathir was that smart, do you? Yeah, the old fox might be one of the most racist PM ever but he knows how to leverage on smart people.

Inflation rate jumped to a 27-year high of 8.5 percent in August, thanks to the genius plan by Badawi’s 41% sudden fuel hike. Still, I have doubt about this so-called 8.5 percent inflation rate number. It’s not important though as most of the average-Joes on the street are mumbling about the next plate of food on the table. The latest numbers that spark the concern is the direct foreign investment (FDI) outflows from Malaysia. If you do not know what the heck is this and don’t bother, wait till you get laid-off *grin*. The latest numbers compiled by UNCTAD (United Nations Conference on Trade and Development) shows Malaysia scores another “first”.

For the first time, outflows of FDI surpassed the FDI inflows in 2007. Abdullah Badawi was right when he said the FDI inflows registered positive numbers – 38.94 percent increase to US$8.403 billion in 2007 from $6.048 billion in 2006. But what he didn’t or too afraid to tell you is the fact that the “FDI outflows” recorded a whopping 81.92 percent to US$10.989 billion in 2007 from US$6.041 billion in 2006. If you look at the chart for Malaysia FDI and if this represents the cash-flow of a company seeking listing (IPO), you had better run away fast from such “company”. In fact the FDI outflows were already bad in 2006 when it registered a puzzling 103.33 percent.

If you care to look closer at the chart, you’ll be surprise to note that the FDI inflows retracted in 2005 after Badawi took over the premiership. Of course the PM cannot put the blames on the regional foreign investment because for the same year (2005), the FDI inflows to the South East Asia increased by 10.91 percent. In fact in 2005 when the South East Asia FDI showed negative outflows (minus 18.77 percent), Malaysia continued to registered positive outflows of 44.15 percent *gulp*. And you know what is really funny about the statistic on Malaysia’s FDI inflows and outflows? Since Abdullah Badawi took over as PM from Mahathir in 2003 it appears that the “FDI outflows” (blue-bar in the chart) is racing at top speed to over-take the ”FDI inflows”. The F1-race was over in four years and finally the FDI outflows won the race when it successfully surpassed the FDI inflows for the very first time in 2007.

So can Abdullah Badawi put the blame on Anwar and accused him as a threat to national security and the country’s economy when he himself screwed-up the economy because he preferred to sleep on job? And now he’s passing the shits to his deputy after found his new toy (hopefully he doesn’t mistake the C4 as firecrackers during the coming Hari-Raya festival). There’s something funny and fishy about the episode of Anwar slowing down his pace in taking over the government. With Najib refused to go (cancelled) overseas and preferred to stay back in the country, the rumors that Badawi will be forced to announced his early retirement latest by next June (or March?) 2009 could be true after all. I bet Anwar likes Badawi to stay a bit longer as he has just began to have fun with this game of hide-and-seek.

Other Articles That May Interest You …

Google Android G1 Phone – this Beast is Features-Rich

2008-09-24T23:06:00.005+08:00

Finally, Google Inc. (Nasdaq: GOOG, stock) unveiled its first Android cell-phone. Android actually refers the phone’s operating system. Features-wise it appears the Google G1 cell-phone could easily kick Apple Inc.’s (Nasdaq: AAPL, stock) iPhone miles away. Touch screen, Wi-Fi, Bluetooth, Google Maps, 3-megapixel camera, GPS-capabilities, full-screen web browsing, on-the-air downloadable Apple and music store, removable battery, memory expansion card slot (pre-installed 2GB Micro SD memory card expandable to 8GB), voice dialing and most importantly a physical QWERTY keyboard hidden beneath the screen. Although it plays music sadly it doesn’t play video except YouTube videos.

If you hate iPhone’s AT&T’s 3G network, then you can take your revenge by owning this G1 phone because it comes from T-Mobile. Unfortunately T-Mobile 3G network covers only 19 cities compared with AT&T’s 280 but who cares if your intention is to unlock this latest cool phone after 90 days. Since G1 is based on open-source and free, it simply means you can put in any SIM-card from any carrier and it will work within seconds. You can make changes and add your own applications without paying a penny to Google and I promised you won’t be thrown into detention center without trial. Obviously Android G1 is not as beautiful as iPhone but if you’re looking to build a mini super-phone (build your own applications on top of it) then this is what you should have.

Not convinced yet? How about a $20 cheaper G1 than iPhone at $179? The G1 which comes with black, white and brown color also has this little built-in compass feature which displays a 360-degree Google Street view based on location. G1 is a bit thicker but slightly narrower than iPhone. Google hopes the open-source Android software powering the G1 will eventually become the dominant operating system for mobile phones and make handsets compatible with the networks of multiple carriers. Good news for blogger - The T-Mobile G1 will soon also offer users the ability to upload and post pictures to blogs.

The T-Mobile G1 will be released on T-Mobile's U.S. network on October 22 for $179 with a two-year contract. UK will see the phone sometime in November 2008 while other European countries such as Germany, Austria, Czech Republic and the Netherlands will get it in Q1 2009. Google targeted to sell around 400,000 Android phones by end of 2008. Android is position to give iPhone a run for its money but it will need more cosmetic jobs to pull the crowds away from iPhone but Google is prepared for the long-term marathon competition. No doubt Android G1 phone is the beast compared to the beauty of iPhone.

Other Articles That May Interest You …

RPK sent to detention without trial, FCUK you Big Bully

2008-09-23T22:24:00.002+08:00

As expected the most controversial yet favorite blogger of Malaysia netizens, Raja Petra Kamarudin (RPK), has been sent to Kamunting Detention Center today to begin his two-year detention under ISA – WITHOUT A TRIAL (MalaysiaKini was the first to repot it). No matter how many bloggers scream in objection of such action designed primarily to shut RPK’s mouth for good and generally to threaten and intimidate other bloggers, the current chaos ruling government could not care less. It would be very strange indeed if they were to free RPK considering the amount of damages he has wrote about the PM (Abdullah Badawi) and his deputy (Najib Razak).

Now that the throne is inches away within his reach it would be mad for Najib to forget, forgive and free the sensational blogger. And you can bet your last penny that one of the most-hated minister, Home Minister Syed Hamid Albar, has swung his arms of support to the PM-in-waiting Najib. You can FCUK the whole day but this Hamid Albar has just signed the paper to throw RPK into the detention center. RPK can only smell the air of freedom by either a “Prison Break” attempt (needs Michael Scofield’s help), an intervention from the King or hopefully Anwar could topple the current government. Many bloggers will miss RPK’s “entertaining” articles for the next two-year *sigh*. It appears that unless you blog “I love this government” or “The PM and his deputy are the most spectacular people I’ve ever known”, you might find yourself in hot soup.

Although the fact remains that the government has been using the ISA as a tool to silence critics, those who oppose the draconian law are helpless against the government; what more with the police on their side. The threat of ISA could also be the main reason why Anwar has not check-mate Badawi yet. ISA has been used very successfully to frustrate and curb the freedom of speech in Malaysia. As long as you’re a threat (criticize) to the ruling government, you would be thrown into detention without trial in the name of “national security threat”. Who needs Hitler’s Gestapo when you have ISA?

You’ve heard unhappy voices in the blogosphere condemning the forever postponement of Anwar’s supposedly plan to take over the government. After 916, 923 and now 1001 it seems the number will continue to change. Yeah! Anwar could be bluffing all this while and his 916 could be the biggest April-Fool joke ever but he could also be playing mind-games with the ruling government. Remember the 1982 movie Rambo: First Blood? The arrogant Sheriff Will Teasle leads his junior team members into the woods to capture Rambo only to be sent into disarray with booby traps. One of the Sheriff’s team members said instead of hunting Rambo, it appeared they were the one who were being hunted instead. If you look at the scenario now, it is obvious Anwar has created the fears, panics, uncertainties and doubts to the whole government. Guess it’s true when Mahathir said recently that Abdullah Badawi is no match for Anwar Ibrahim.

Maybe Anwar is waiting for the right time to be at the right place in order to meet the right person. The timing is definitely not now with dozens of Special Branch spies tracking his every movement. There’s no trial and error. It has to work on the first attempt lest Anwar miss RPK so much he wishes to become the latter’s cell-mate at Kamunting. No doubt the ruling government is trembling in fears but they would rather risk labeled as racist, dictator, brutal etc than to lose power (and luxurious contracts). Many demanded the ISA be repeal in totality but I say keep it in order for people such as Mahathir, Badawi, Najib, Syed Albar and all the government ministers to taste their own medicine – provided Anwar has the number to kick Badawi out of office.

Other Articles That May Interest You …

PM to proceed with Gunfight, forgotten about fuel prices?

2008-09-23T00:25:00.001+08:00

You had Saddam Hussein’s “mother of all battles”, Anwar Ibrahim’s “mother of all by-elections” and now you have U.S.’s “mother of all bailouts”. I bet former premier Mahathir is giggling now looking at the financial havocs that prompted Bush administration to seek a whopping US$700 billion to buy up bad loans. It was about 10-years ago when Mahathir was criticized for bailing out Malaysian listed companies after the 1997-1998 Asia Crisis that left these companies licking their wounds. The difference was while the financial institutions in U.S. are in critical situation (Lehman Brothers is bankrupt) due to subprime crisis and the U.S. lawmakers are studying and seeking approval from Congress to help “qualified” financial firms, Mahathir’s approach was to help only certain companies largely seen as his cronies “without” approval from the “Congress”.

Regardless whether the bailouts will chew up $700 billion or $1 trillion, the question is would such huge taxpayer money bring back the consumers and investors confidence to the financial markets as if nothing has happen? It’s not like you have Hiro Nakamura from the “Heroes” TV series who can stop the time, load the $700 billion into the financial institutions and pretends everything is OK. Treasury Secretary Henry Paulson acknowledged that the nation's outdated regulatory system for financial markets must be overhauled. It’s true that at this moment you should not look at the 400-point up and down swing but rather the credit markets, which are still fragile. Investors are silly not to lock in any profit from the fierce swings (up or down) but nevertheless greed and fear will determine if you’re making money or otherwise.

U.S. total mortgages amounting to $12,000 billion hence the $700 billion is not a huge amount, so much so the U.S. Treasury and Feds have to burn the midnight oils to identify and qualify the institutions that genuinely need rescue. The fact remains that whether the U.S. government latest action is the ultimate pill to cure the current sickness in the long run remain to be seen. There’re two companies which benefit from the current crisis though. Uncle Sam’s last two major investment banks, Goldman Sachs Group Inc. (NYSE: GS, stock) and Morgan Stanley (NYSE: MS, stock), have been granted their wishes to become full-fledge banks – a status that will allow both to take deposits. Nonetheless, nobody has the crystal ball to tell if the market will reach its bottom after this bailout.

With millions of eyeballs looking at U.S. stock markets for the coming trading days, it’s different problem in Malaysia. Former premier Mahathir was trying to push his old toy again - pegging the ringgit to the dollar. It was shot down by the new Finance Minister Najib today who promised not to re-peg the local currency now or in the future. Obviously Mahathir has not learnt his lesson 10-year ago but for the time being the thrilled deputy PM Najib is not going to scare the handful remaining foreign investors away. Najib has cancelled his Middle East trip in an attempt to focus on the political uncertainties – opposition leader Anwar Ibrahim is supposed to spring into action on Tuesday (tomorrow) after his initial two attempts to meet the PM and a vote of no-confidence were ignored by Abdullah Badawi.

The famous Gunfight at the OK Corral more than 125-years ago in Tombstone, Arizona, is set to repeat again here. The only difference this time – it’s a one-to-one gunfight between Abdullah and Anwar. Cowboy PM Badawi is waiting for Cowboy Anwar to draw his “gun” so that he can draw his pistol tucked into the waistband of his pants – ISA (internal security act). While deputy PM Najib rejoiced after he was crowned the new Finance Minister, he was nevertheless given the post as deputy chairman of Khazanah Nasional Berhad only while the chairmanship still belongs to PM Badawi (after a check from Khazanah website). Whether the portfolio swap (between PM and his deputy) was a temporary carrot to pacify Najib and his gang is up to your interpretation.

After bombarded by four warlords to resign not later than 9 Oct at the UMNO’s supreme council meeting, Abdullah Badawi was rumored to have decided to throw in the towel until his son-in-law, Khairy, jumped in and persuade his father-in-law to reconsider and continue to fight for his survival for the position as president of UMNO. It’s only normal for Khairy to prolong Badawi’s tenure because the former’s political survival depends solely on the latter’s position as PM. Furthermore political calculation reveals Najib will most likely refrain from challenging his boss should Badawi decided to defend his position. Interestingly Teresa Kok was released after just a week under the draconian ISA-law prompting the speculation if Najib has anything to do with it. It doesn’t help to inherit an unstable government if it’s fated that the country will have Najib as the next PM.

It’s definitely stupid to win the UMNO president post but to get the boot from the people come the next election. So expect more slogans from Najib on how he’ll be the PM for all Malaysian, provided he wins the race against Anwar Ibrahim. Entertainment asides, people are more interested to know if the government would bring down the fuel prices now that the global oil prices is below the level when the 78 sen a liter (petrol) increase was announced recently. Going by the same logic shouldn’t the government re-adjust the petrol price to at least RM1.92 a liter now? Sadly the PM pretends nothing happens and gave lots of silly excuses not to lower the fuel prices.

Other Articles That May Interest You …

Short-Selling Crackdown on Naked Shorties but will it help?

2008-09-19T15:07:00.003+08:00

In my previous article (before the trading ends) I wrote that even if the Dow were to rebound 400-points investors were not ready to show their hands. Guess what, the Dow did precisely that and rebound about 400-points. I think I should bet some dollars on 4D or 3D for that matter. It was a coincidence really and the fact that the U.S. Congress promised quick action in support of Bush administration to rescue banks from bad debts helped to push Dow above 11,000-level once again, at least for now.

Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and other officials planned to work through the weekend on a comprehensive plan to take away bad assets and debts off the books of struggling financial institutions. Since the plan requires Congress approval, it will most likely involves empowering the government to buy over bank assets, something similar to the 79.9 percent stake acquisition of American International Group Inc.’s (NYSE: AIG, stock) but on a larger scale. Despite flooded the street with $180 billion by Feds, banks remained cautious and reluctant to lend money. U.S. regulators, SEC, also tightened rules on short-selling with a temporary emergency ban on all short-selling – naked or non-naked. However such action hasn’t been publicly announced yet.

This is absurd and if the SEC really wishes to implement such ban, it should only restrict it to “naked” short-selling only. I disagree with “naked” short-selling myself and if you’ve read my previous article on How to Write Check to Yourself Every Month?, I’ve warned against getting yourself naked *grin*. Nevertheless the news of short-selling ban ultimately helped the huge jump in Dow Jones. British regulators, citing "current extreme circumstances" has slapped the temporary ban on short-selling Thursday. Meanwhile New York state attorney general announced a probe into illegal short-selling practices that may have hurt finance firms including Lehman Brothers and Morgan Stanley. Attorneys general from Texas and Connecticut are also doing the same (cracking the short-sellers). But short-selling is just the small part which contributed to the Dow’s bleeding. No doubt they’re the opportunists who made great money during such trying time but they’re definitely not the root of the problems of the global economy meltdown.

Talk about naked short-sellers and chances are you cannot help but to read about “Emperor was without clothes” written all over the blogosphere. The emperor was associated with the current PM Abdullah Badawi obviously. Well, the PM has been walking naked for too long until yesterday’s UMNO supreme council meeting. Apparently some warlords demanded Abdullah Badawi to step down by Oct 9 or risk the embarrassment of not getting the minimum nominations for the president post. Some naughty insiders even went the extra miles and said the PM was seen weeping after bombardment of lectures thrown at him until his deputy, Najib came to his rescue. I bet Najib was enjoying the sight of his boss being screwed left, right and center.
The latest breaking news was that Seputeh MP (Member of Parliament) and senior Selangor state executive councillor Teresa Kok was released from detention under the draconian ISA (Internal Securtity Act) at about 1pm today after one week (of tortured?) behind the dark room, thanks to an article in Utusan Malaysia quoting former Selangor Mentri Besar (Chief Minister) Khir Toyo who made a baseless accusation that Teresa was petitioning a mosque to reduce the volume for azan (the call to prayer) – an accusation which was denied even by the Kinrara mosque committee chairman and Kota Raja MP Dr Siti Mariah. However I doubt the authorities will let RPK out anytime soon especially after he has aimed and let off many cannon balls at deputy PM, Najib. Surprisingly former premier Mahathir who got so fond of this toy called ISA commented that there is no justification for arrest of the bloggers.

Other Articles That May Interest You …

Nightmare on Dow Street & the shadow of Deep Depression

2008-09-18T22:42:00.002+08:00

Shorties are laughing all their ways to the bank. That’s right! If you’re one of the traders or investors who were and still are not convinced of the $85 billion American International Group Inc.’s (NYSE: AIG, stock) rescue plan by the U.S. government, you should be rejoicing by now, provided you short the stocks or bought some Put Options. In fact almost any stocks you shorted would have yield fruits by today. It’s pretty hard isn’t it? On one hand if the government does not bailout the financial institution it could collapse and affect many life but after it did that investors’ fear many more companies would face the same fate (bankruptcy). It was a “lose-lose” situation for the authorities.

Every regional stock exchange depend very much on U.S. economy and practically all the bourses fell in tandem with Dow Jones which tumbled about 450 points. It was a complete collapse of confidence and the thing that is playing on every investor mouth is – if the largest insurance company can fail then any grandma can tell you that no one is safe. While the stocks collapsed, the rush for gold pushed the metal by a whopping $90.40 to $870.90 (Dec delivery) an ounce. But where does Uncle Sam come up with such a huge sums of money for the multiple rescue plans? The U.S. government has to tap its reserve and borrows elsewhere. The Treasury Department was asked to sell debt on behalf of the Federal Reserve.

Already the Bush administration is projecting a deficit of $480 billion for the new budget but with the bailouts the deficit could ballooned but it’s not something that Bush will need to worry because the baton will be passed to the next president. You’ve stimulus checks totaling $168 billion, Treasury’s $200 billion for Freddie and Fannie, $29 billion loan for Bear Stearns, $85 billion for AIG and God knows how much more are needed. Japan’s central bank has injected another $24 billion for the sixth time this week bringing the total of injection to a mind-boggling $76 billion in order to flood the market with sufficient cash. If you think the economy tsunami has settled then you might be wrong (long live shorties!).

Let’s hope this does not materialize but New York Mayor Michael Bloomberg warned the "next wave" of financial pain may come from overseas if foreign entities stop buying U.S. debt. Fortunately so far foreign investors are still willing to buy U.S. debt but Bloomberg was concerned that a prolong credit crisis in the United States may scare off these buyers ultimately. The joke of the town is to make money by betting which is next to fall. Washington Mutual which once considered by many as the Starbucks of banking is rumored to be the next to be affected. Washington Mutual’s stock price is now lower than that of a latte. The havoc in the U.S. financial market is so bad that even the $60 billion Reserve Primary Money Fund, one of the oldest money market funds in the country, has become the first money-market fund in more than a decade to lose money because it was forced to write down $785 million due to losses in Lehman Brothers paper that it held.

The sentiment on the trading floor is such that fears still dominate the overall stock market and any rebound on sight will be met with selling. Even if the Dow were to rebound 400-points today investors are not ready to show their hands. Meanwhile Malaysian stocks finally breached below the important 1,000-level to close at 991.66-level. Volume was relatively high at above 550 million shares but it was a result of foreign selling. With Dow and KLCI went down below 11,000 and 1,000 respectively, would the PM Abdullah Badawi goes down as well as the weakest PM the country ever produce? Sure, he has just chickened out and refused to call an emergency Parliament session as requested by opposition leader Anwar to deliberate on a vote of no-confidence against the PM.

It’s pretty simple really – if the PM is damn sure Anwar was playing high-stake poker and was bluffing from the start about forming the new government, by all means the PM should just call for a vote of no-confidence and put to rest once and for all that Anwar is indeed a big-time liar, unless of course the PM knew very well that Anwar actually has the numbers in his pocket. The more the PM runs away from Anwar the more people will believe the latter. Badawi should just confront the reality and move forward instead of intimidate with ISA’s threat. It won’t help the country’s economy to have a weak, incompetent, indecisive yet arrogant, stubborn and power-crazy leader walking the corridors of power.

Other Articles That May Interest You …