The transition is taking place

Stephen Bernard and Tim Paradis, AP Business Writers, On Thursday May 27, 2010, 6:19 pm EDT NEW YORK (AP) -- Stocks had another turnaround Thursday and rocketed higher after China reassured investors it doesn't plan to sell the European debt it holds. The Dow Jones industrial average surged nearly 285 points. Treasury prices tumbled as traders funneled money into riskier assets like stocks and commodities. China's show of confidence in Europe let the market resume a rally that stalled late Wednesday following a report that the Chinese government was considering cutting its European debt holdings. If that were true, such a move would have signaled that China didn't think Europe would be able to contain its debt crisis. The agency that manages China's $2.5 trillion in foreign reserves denied the report.... The above passages are signs that the world leadership is slipping from the fingers of the American and into the Chinese. A few words by China are enough to bring a rally in European and American stock markets while Timothy Geithner's visit last week yield practically not even hot air. The weight that China carries in the financial world is evident in contrast to the mess the Americans carved themselves into by the very best financial gurus they have produced from their best universities. These unethical selfish individuals are out there doing their best for their own pockets with total disregard to the ruins they are creating. Obama is trying his level best to put a lease on these crooks but unlikely to succeed as nearly everyone in Congress is probably being paid by these guys or their institutions. The bills may be passed, but the implementation is another matter. In the meantime the American financial system, including the Europeans, will continue to wind down and implode. On the military front, the hawkish and warmongering policy of George Bush of pre emptive strike comes under the limelight. This cowboy gun firing policy, the right to invade any country on the ground that the US claims that it is a threat is now being abandoned by Obama in name. In practice, the policy is still in practice as is seen in the Korean peninsula and the Middle East. Just brand the countries as a threat to American interests and it is up to the Americans to decide when to invade. The world must be feeling very disgusted with the evil Empire and Obama knows it. Unfortunately the little girl is still innocent about what she is doing and is waving the flag of war in Korea. More sanctions, more war games and provocative actions against the North on a charge backed up by evidences that are highly suspect, like the WMD evidences. She is still continuing with the Bush Doctrine of starting war everywhere. As the world wisen up to the deeds of the evil Empire and their bankrupt policies and treasury, I wonder when will they jump ship and let the boy to continue crying wolf and playing the pipe piper to lead the world in financial ruins and war?

North Korea's acts as baffling as ever

This is the title of an article by John McBeth in the ST today to describe the sinking of Cheonan. He could not find a sensible reason for the North Koreans to do such an act. And as national leaders, one must assume that they are thinking people and will act only when they are to benefit from it. There must be good reasons for them to sink the South Korean ship. But apparently there were none. The truth is that the sinking of Choenan has all the bad reasons for North Korea. And the evidence are all there to say that the North Koreans have nothing to do with it. Instead, the sinking are all in favour of South Korea and its allies and what they are up to. The AGENCIES reported that the South Koreans are monitoring and tracking the movements of the North Korean submarines. This is a Freudean slip in the first order. It reveals and admits that the South Koreans have all the while been tracking the North's submarines. And if there was one near Choenan, they would have known and would not have been knocked out by surprise. The South Korean's National Intelligence Service also reported to the President that the North did not do it. And they were arranging for a meeting between the two Presidents which made such an incident intolerable. The factors that are in favour of such an incident is exactly the above. The meeting between the two Presidents and the warming up of relations between the two Koreans must be stopped. Then there is the China element. China is gaining in building up closer relations with the two Koreas. The third reason is of course the American bases in South Korea and Japan. An incident like the sinking of the Choenan would strain relations between the two Koreas, raise tension and justify greater American military presence. And of course, it would drive a wedge between China and its closest ally, North Korea. China would be forced to take sides and whichever side it takes will hurt its relation with the other. Brilliant strategy! China is now in a fixed. North Korea is branded as the bad boy. America, Japan and South Korea are the good guys. And after months have passed, they expect the Chinese to examine the evidence provided by them for the sinking of the ship. During this time they were the ones meddling with the evidence and who knows what they had done to it. They had the chance to have an international and impartial body to examine the evidence but they passed it. China and North Korea should simply rule the evidence as questionable and not admissible as proof. Period.

Be tough to Singapore!

This mentality was stamped in the Mahathir era and has been embedded deeply in the minds of those who have worked with him. Anwar is no exception. And his immediate response to Najib's agreement with Hsien Loong was that Najib was soft. Any Malaysian leader that signed or come to any agreement with Singapore must be soft. Then what is being tough? Being tough means never to sign any agreement with Singapore. If Singapore asks for 10% Malaysia must ask for 20%. If Singapore asks for 20% Malaysia must ask for 40%. The greatest example was the price of water to Singapore. It was a few cents and Mahathir asked for $3 for a starting price, I could not remember the exact figure. And when Singapore tried to negotiate, the price was raised to more than $10 and even higher everytime Singapore try to negotiate for a more reasonable price. This is what tough meant to Mahathir. Actually it is not tough. It is sheer stupidity. It is an approach that says he would not want to sign any agreement unless it is on his terms. In any business or bilateral agreement, how could any party think that an agreement can be signed on a one sided terms. To go forward, to negotiate any deals, the premise must be that both parties are comfortable with the deal and see benefits in them in an equitable manner. And that was exactly what happened when Najib and Hsien Loong met. And a deal was done. So, in the eyes of Anwar and Mahathir, and those who have been programmed to be tough, Najib must be soft. How to go forward like dat? PS. The best part is that after signing every deal that they had thoroughly studied in details before signing, they will come back and say they had a raw deal. That they were cheated.

Anwar dismisses Najib for being soft

The Pakatan Rakyat defacto leader said that the agreement which was announced yesterday raised concerns that Malaysia is seen to be too “submissive” in catering to Singapore’s demands. “There is a tendency that in the policy of Najib, like in the case of Barack Obama, he seems to be too submissive, agreeing, and there is a lot of concern. “Why is it we have now a Prime Minister that surrenders too easily?” asked Anwar. The above paragraph was posted in The Malaysian Insider in an article. 'Anwar flays ‘submissive’ Najib in Singapore deal' By Shazwan Mustafa Kamal May 25, 2010 The impression I get from Anwar's comment is that Malaysian leaders must act tough and play hard ball with Singapore. Otherwise they are seen to be soft, unfit to be Malaysian leaders. This is the underlying confrontational mindset that is prevailing since the Mahathir's time and is still existing today. Anwar's words are a revelation, that within closed doors, they must have been telling each other so. Be tough to Singapore leaders. With this kind of confrontational and aggressive mindset, it is tough to negotiate and come to any kind of agreement. No matter how good a deal, how fair a deal is, any agreement will be seen as a sell out, as being weak. So how to go ahead? Signing any agreement with Singapore is weakness. Signing any agreement with Singapore is signing a bad deal and to their disadvantage. When will they be able to sign an agreement that is fair or to their advantage? When can they sign an agreement and be seen as being tough? Strange mentality.

Concerns of a Harvard don

Cheong Suk Wai interviewed Harvard business administration professor Robert Pozen on his take of the world financial system. The professor was an advisor to George Bush and also chairman of MFS Investment Management, a mutual fund of US$200 billion in assets. The professor came under criticism for recommending that Fannie Mae and Freddy Mac ‘be given a good shake up’. When asked by Suk Wai on ‘What should we be focusing on to prevent, or at least anticipate, future financial fallouts’, these are his replies. 1. When there are very high levels of leverage in the system, that means everyone is running for the exit at the same time.(Spelt derivatives) 2. When you have foreign money supporting a real estate boom, that creates fragility because such money is always hotter than local money. (Be prepare for a quick cash out and a run on the property market) 3. Mismatches between assets and liabilities: If your financing is highly dependent on short term financing against long term assets, you’re vulnerable to liquidity crises. (Careful when taking big loans on properties and depending on salaries to pay) 4. Beware of financial innovations that grow extremely rapidly without proper supervision.(Spelt property bubbles, derivatives, CDOs, toxic products) 5. If you have fixed exchange rate, lots of pressure will build up to make it disintegrate in a short time as opposed to a flexible exchange rate, which goes up and down. The professor also commented on the need for truly independent and professional directors and that at most one should sit in 3 boards to be effective. The concerns of the professor are nothing new as the professionals, govt and academics are all privy to the indiscretions and the flaws existing in the current system. Our little system in paradise is also exposed to the same flaws and risks and it is just a matter of time before they explode in our faces. Do we have the political will and ethical responsibility to clean up the mess before it is too big to do anything about it? The only thing I disagree with the professor is point 5 on fixed exchange rate. The pressure building up is caused by the manipulation of speculative funds and govts like the US who are thrashing it to hide the weaknesses in their own system. A fixed exchange rate under the present condition is much safer and stable and would not be attacked by unscrupulous big funds. It also allows govts to manage the exchange rates purposefully and orderly.