While it’s entertaining and exciting to read the spectacular development in Malaysian politic with the latest twist of which the former Deputy Prime Minister was accused of sodomy “again”, you got to pay a little attention to the global economy because if it’s going to slow down continuously chances are you might want to thank for what you’re having now. If you think the fuel pumps are going to remain at RM2.70 a liter for the rest of this year, think again. If you think unemployment will not get any worse and you won’t be affected, think again. If you think Malaysian economy will reverse overnight for the better after Anwar somehow miraculously managed to become the new PM, think again.
European countries hit a record yearly inflation of 4 percent in June putting pressure on the ECB (European Central Bank) to raise interest rate from 4 percent to 4.25 percent – possibly this Thursday. The problem with such rate hike is the indirect impact on the global oil prices which already hit a record of $143.67 a barrel Monday. If the interest rate is hiked the US dollar will be weaken and thus could send the black oil higher, possibly above $150 in a very near future.
Meanwhile in Switzerland where my brother is working, the Bank of International (BIS) Settlements warned the global economy could face a deeper downturn than anybody could imagine mainly due to rising inflation and problems on financial markets. I bet not many people know about BIS. Widely known as “central bank” of central banks, BIS was established by the Hague agreements of 1930 with the role to make monetary policy more predictable and transparent among its 55 member central banks. It does not provide financial services to individuals or corporations but administer the transaction of monies according to the Treaty of Versailles via information sharing and economic research.
Last year BIS has warned the global economy is so vulnerable that another 1929 Great Depression could repeats itself again – if the multiple credit instruments combined were to burst. Besides, nobody foresaw the 1929 Great Depression or 1997-1998 Asia Economy Crisis, did they? According to BIS, 2006’s record issuance of $470 billion in collateralized debt obligations (CDO) and a further $524 billion in “synthetic” CDOs alone could spark an ugly sight. CDO’s are bond-like packages of mortgages and other forms of debt.
But BIS said nothing beats the risk from China which may, without the giant realize it, have repeated the disastrous errors made by Japan in the 1980s when Tokyo let rip with excess liquidity. It was estimated that some 40 percent of China’s state-owned enterprises are loss-making thus exposing the banking system to likely stress in a downturn. China’s growth was unstable, unbalanced, uncoordinated and unsustainable.
By the way, don’t forget tomorrow (1st July 2008) is the first day for the second batch of motorists to claim their RM625.00 rebate. Move your lazy ass to the nearest post-office dude.
Other Articles That May Interest You …
- Holy Cow! The Sodomee-Sodomite is back, lazy CopyCat
- POS Malaysia, New Scandal after Transmile Irregularities?
- RM625 Rebate to be scrapped soon? Flip-Flop is Contagious
- It’s Wise to Claim your RM625 Rebate Soonest Possible
- Could the country pushed to the brink of Recession?