Economy- things might become worse soon
The bailout by the US government has been approved. I expect the share to go up a little this week. Elsewhere, governments across the world have been spending a lot to help failing companies in order to avoid the economy from crashing down. But I don’t see this as a long-term solution.
Firstly, the governments only have THAT much money to save the failing companies. Unless their treasuries have bottomless $$$, I don’t see that this behavior can last long enough to be able to lift the worldwide economy.
Secondly, they’re only saving the failing big companies. It’s very unfair for other big companies which did not do THAT bad. And it’s even worse for those small companies. Who are helping them? And I can foresee that more people will lose their jobs because the “help” cannot reach that many companies.
Back to Malaysia. Our share market has not been doing well since the March 8, 2008 election. It’s partly due to our slumping worldwide economy, food shortages…and also due to our political issues. Our inflation rate is already record high (i think highest in 27 years? I forgot what I’ve read this). The government was pretty oblivious when they first announced that our inflation rate was under control. Well, at least now, they’re being honest to themselves. Furthermore, do bear in mind that our Bank Negara has not increase the interest rates.
That’s why things do look a little gloomy in 2008 and 2009….and maybe the situation will continue till 2010. So if you’re looking to buy shares now…wait for the next big drop which will possibly cause some panic selling. Go in, buy some good dividend-based blue chips….and wait for at least 12 months. If you’re not willing to wait that long, then hold on to your money. Put in FD for short term investment…maybe 3 – 6 months but not more than that. Why? Because I think sooner or later, our Bank Negara would have to increase the interest rates…….which will definitely increase the interest rate for Fixed Deposit. And at that time, you will want to have your money ready.
And if you’re already in the stock market for now….you can either sell or let go when the shares go up again after the US bailout….. or keep it for 1 year. Short term profit taking is simply too risky now. So please be cautious and don’t get burn like I did.
If you’re looking to change job, do it now. The job market in Malaysia is still OK since most of the multinationals are slashing jobs in their home countries…….and adding jobs here due to the cheaper labor fees. Smaller companies tend to be a bit risky.
And if you’re like me, who are planning to start own business soon, then make sure you have enough financial support to last till 2010 or later. And make sure you have ideas which will capitalise on the current situation. A lot of great companies were started in the last recession…in the 1997-1999 period. So, if you want to do it, do it now…else you’ll have to wait for another 10 years.
Just my opinion.
p/s…….. latest update. The bailout suggested by the US government was rejected. The US market dropped 777 points….7%. Worse things will follow soon.
p/s…….. banks in Europe are undergoing tough times as well.
that’s what happen when u have wars all over the place. i think US is heading to another Great Depression. as for malaysia, it’s all because of politic.
anyone wanna exchange link? slumbeRAJA
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slumberaja
30 Sep 08 at 10:00 am
y do they reject the bailout? it is really hard to understand..
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cbenc12
30 Sep 08 at 10:55 pm
I can totally feel the bailout thingy here! [as I'm currently studying in the states]
major banks failed…bought over by other bank.
FDIC’s funds are not bottomless as we can see the bottom already….
Next, 2 other banks falling soon….
Hope everything will go back asap!
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Toc
1 Oct 08 at 9:35 am
@ slumberaja
great depression? that’s pretty likely. they’re already in depression now….it’s just that the worst will come soon.
for everyone, not just them.
@ cbenc12
many reasons. first, the republicans are losing in the coming election. they need to do something to buy the people’s heart. and rejecting this might win them some votes…since the bailout is actually coming from taxpayers’ money. second, the bailout will definitely not last long. how many companies can they save? isn’t it better to keep that $$$ for something more urgent than to save those companies which created their own failures (there are some companies which did not fail…like Citibank…who is going on a shopping spree).
a lot of other political reasons i guess. but by rejecting the idea raised by the president, who is a republican, i think it didn’t give them a very good image to their nation.
@ Toc
I think it’ll take at least 3 – 5 years to recover. sadly
Alvin Lim
1 Oct 08 at 12:13 pm
Nice and interesting posts! Hopefully the economy at least here in Malaysia won’t be affected that much by them. : )
Starting your own Biz? What kind of Biz you’re in? Congratulation and good luck to you!
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ChampDog
2 Oct 08 at 9:57 pm
@ ChampDog
Sadly, Malaysia’s economy will be badly hit as well thanks to our politics.
Furthermore, a lot of our products are being exported to US. With the consumers unwilling to buy stuff over there, things will not be OK for our companies here.
Starting own biz? err not yet la. No money. hahaha
Alvin Lim
3 Oct 08 at 9:33 am
Our “interesting” politics will resume after raya… hahaha
I work for U.S company hopefully they don’t cut my pay. 
Not enough money, write a proposal then just borrow or take from Government lor… haha…
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ChampDog
3 Oct 08 at 9:14 pm
I guess they have not much options. If the government doesn’t help them, other countries (e.g. China) will buy those companies and end up the whole U.S. will controlled by outsiders.
ChampDogs last blog post..Coping With Rising Petrol Prices
ChampDog
3 Oct 08 at 10:41 pm
@ Champdog
Politics kinda quiet now, which is a good thing. they should jz work together to overcome this financial crisis. =_=
i work for a UK company which currently doesnt have much project. hahaha.
Proposal? Yea thinking about it but don have any good business idea yet
China already entered and bought some i think, if not wrong. But they’re still limited. I think China’s stance now is – you need help, you come ask from me.
Alvin Lim
4 Oct 08 at 11:19 am