Saturday, October 11, 2008

Recession Is Setting In Not

Recession Is Setting In Not - this is my statement.

It was made after reading the following statement - "Malaysia is not in recession and will not go into a recession, he said." says Second Finance Minister Tan Sri Nor Mohamed Yakcob. He also said that Malaysia's forecast of economic growth will be 5.7% and 5.4% for this year and next year respectively. Just that next year's forecast have to be re-examined.

BUT .................

Gulf Arab states - who have lots of investments in USA and Europe assets, are worried that the continued crisis will certainly cause worldwide recession. Gulf Arab states' stock markets have not been spared either.

Singapore - its Ministry of Trade and Industry has released their third quarter GDP of 2008 which has contracted compared to a year before. Meaning - Singapore has slipped into recession.

Analysts in Singapore have mentioned that retrenchment is expected to happen by December 2008 with the worse setting from April 2009 onwards. A strong economy all this while but couldn't avoid recession.

Japan - with the fall of many banks (as per my previous blog posting), an insurance company by the name of Yamato Life Insurance Co Ltd has declared bankruptcy (now, this is real). Japan's Nikkei closed down on Friday morning to stop the stock market slump of 10%. This is the worst drop for the last twenty years. On average, it has knocked of 24% of the stock values.

Ireland - its economy slipped into the red too, being the first euro-zone country to do so.

Australia - in March 2008, analysts have already predicted that Australia will fall into recession by 2009.

Europe - nearing recession as mentioned by International Monetary Fund.

USA - predicted to be heading into recession as of now .......... as housing sales have dropped, unemployment rate has gone up, fewer jobs available and credits from financial institutions have tighten. Just this year alone, 600,000 people have lost their jobs.

The worst of all - Iceland - the nation could declare bankruptcy. I'm serious on this one. Iceland is a nation and not a company. The Icelandic Financial Supervisory Authority has appointed receivership committees into the operations of four main Icelandic banks, namely Kaupthing Bank hf, Landsbanki Islands hf (a new bank has been incorporated to operate - New Landsbanki), Glitnir hf wherelse trading in the shares of Straumur-Burdaras Investment Bank hf, Exista and Spron have been halted.

What happened to the banks? The top four banks' total foreign liabilities have exceeded US$100 billion wherelse the nation's GDP is only US$14 billion. Since income generated in the nation is so much lower, how do you expect the nation to support its liabilities. Therefore, bankruptcy for this nation is there.

For football fans and especially if you are a Chelsea fan, your rich owner as in Roman Abramovich has suffered badly during the last few months. His fortune has been eroded by as much as US$20 billion in recent worldwide stock slump especially the Russia stock exchange. Referring to Forbes' list of billionaires for 2008, Roman's fortune was estimated to be around US$23.5 billion and the stock exchange has made him very poor now.

With Chelsea's current liabilities exceeding US$1 billion in which Roman is accountable for it, that leaves him with only US$2.5 billion. That's still a lot for you and me and our family to spend together for the rest of our life but not him man as Roman purchases assets by the hundreds of millions. All the best to Chelsea.

Will try to find ways to prepare for the forthcoming recession even though my country's finance minister has mentioned that our nation is safe from it. Do you believe that Malaysia will maintain a strong economy when the whole world is heading towards a recession?

Reading: Gulf Arabs: crisis may stoke world recession - Reuters
Reading: Redefining recession - Economist
Tags: Recession, Bankruptcy, Stock Market, Singapore Recession, Yamato Life Insurance Co Ltd, Euro-Zone Country, Iceland Bankrupt, International Monetary Fund, Chelsea, Roman Abramovich, Russia Stock Exchange, Kaupthing Bank hf, Landsbanki Islands hf, Glitnir hf, Straumur-Burdara Investment Bank hf, Exista, Spron, Financial Supervisory Authority



Blogger Borneo Falcon said...

We are not into a recession? Who is he kidding with?

11 October, 2008 09:11  
Blogger Convivialdingo said...

I would say it's not that bad here in the States for the average family. Most people have work, most have homes and are in decent shape.

I don't know if things will get bad in Malaysia - a lot depends on who your primary export partners are and how safely your banks have operated. I would imagine that after the Asian crisis of 1999 that many banks have become leery of western practices and have already prepared for this.

American banks have continuously and haphazardly extended credit to unworthy businesses and individuals. Many of our banks are literally bankrupt - only surviving on credit from the US government itself.

11 October, 2008 11:40  
Blogger acura said...

Bad news for Chelsea
Good news for Man Utd fans. Hope the Glazers are doing fine ^~^

11 October, 2008 14:40  
Blogger Johnny Ong said...

borneo - don't think we are in it yet but definitely not that high prediction for the economy

conviv - m'sian bank is still safe and hopefully they are truthful with their statutory records

the mainstream media, under the govt's control, may not be revealing the real happening even if they knew of the real stuff

acura - worst case scenario for man u wld be aig failing to fulfill their advertising contract

12 October, 2008 01:17  
Blogger Simon Ho said...

Malaysia has the best economics team in the world man.

12 October, 2008 21:20  
Blogger foongpc said...

I don't know about you but I'm getting a bit nervous. Better keep your money in Maybank or CIMB. At least the Government will back these banks. I don't know how other banks will fare - banks like Public Bank, Alliance Bank, StanChart, RHB etc. as established banks in Europe are already facing financial problems and closing down.

13 October, 2008 12:26  
Blogger Johnny Ong said...

simon - wow, how u know?

foong - so, u dont trust the foreign banks in m'sia? hehe

14 October, 2008 22:05  
Blogger meiphing said...

who's gonna believe that dungu?

22 October, 2008 16:52  
Blogger Johnny Ong said...

phingy - 'forced' to believe got one haha

23 October, 2008 23:20  

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