Time To Buy A House Without Downpayment?

In the recent 2011 budget as tabled by the prime minister, the public (applicable to first time house buyers only) will be able to purchase houses valued at RM220,000 and below without putting up downpayment for it and will be able to obtain a 100% housing loan for the full purchase price.

Another condition to be met is that the household income must be less than RM3,000 or less. I presume that whoever is (be it individual or joint applicants) applying for the housing loan must not be commanding a total gross income of more than RM3,000 per month.

Let's do some calculations here with the above assumptions.

The current base lending rate is 6.3% ("BLR"). Some banks are currently fighting each other for customers by offering good housing loan packages where some offered BLR minus 2.2% (or even more) with zero entry cost (with no other cost involved). Say:-

*Housing loan of RM100,000 at BLR minus 2.2% for 20 yrs; monthly payment of RM612
*Housing loan of RM160,000 at BLR minus 2.2% for 20 yrs; monthly payment of RM979
*Housing loan of RM220,000 at BLR minus 2.2% for 20 yrs; monthly payment of RM1,346

There could be a few obstacles along the way.

You must bear in mind that a bank may only grant you the housing loan provided that your total loan with any other banks do not exceed 30% - 40% of your monthly gross income. So, at an income level of RM3,000 you may not even qualify for a house that cost RM220,000 as the monthly payment would have exceeded the 40% threshold level unless the bank sees you fit to take up the housing loan. You may have to extend the loan tenure instead. Yeah, be a slave to the bank for a longer period.

Not forgetting that a salary of RM3,000 may have a nett take home pay of RM2,500 only after deducting your EPF, SOCSO and taxes. I have blogged about "Salary of RM3,000 Is Considered Low Income" and to survive on RM3,000 is not easy unless you sacrifice lots of stuff.

What do you have to sacrifice or what are the stuff that you may not be able to enjoy if you take up either one of the abovesaid housing loan calculation? You may just have to read this blogpost of mine that is quite factual in a comical sense- "How to Survive With Your Salary?"

Now, if you are having a nett take home pay of RM2,500 and your housing loan monthly payment is RM1,346, it means to say that you have a balance of RM1,154 to pay for the remaining expenses of yours. What about savings for your any emergency cases?

Therefore, the idea as proposed in the budget is not beneficial to the public at all. At the surface, it sounded so nice "No downpayment for houses costing RM220,000 and below". After computing the actual figures, those fellas who take up such loans will just have to scrape through in their life. Of course, the above are based on assumptions and you may suffer in the initial first few years upon obtaining that housing loan. The question is "Can you manage?".

The government is just proposing something which you may have to weigh it for yourself in the end. If you were not careful in your financial planning, this budget proposal is actually going to cause bankruptcy or financial burden to many people.
Tags: Bankruptcy, Financial Burden, Housing Loan, Base Lending Rate

Half Revealed World Bank Report

The NST newspaper published an article on World Bank's forecast on Malaysia's potential growth.

Highlighted in bold that Malaysia may achieve a growth forecast of up to 5.7%.

After reading through the article, I found that all were very positive indeed and the economy is on the rise.

Seeing that the mainstream media are being controlled by the existing government (directly or indirectly), I checked further (my usual style on confirming stuff).

True enough that Malaysia could go all the way but it was subjected to a number of conditions. The article talks about end results only but was mum on how to achieve the potential growth of 5.7%.

The writer who's from World Bank, Philip Schellekens, has written more stuff and three main conditions have to be achieved prior to Malaysia hitting a good economy:-

High-income economy - Growth to date has been driven primarily by greater quantities of capital and labor. To break the glass ceiling between middle and high income, growth will need to be based on innovation with greater emphasis on the quality of capital and labor as well as the efficiency with which these are combined in production. Structural reforms, as argued in the report, will be essential to unleash Malaysia’s innovation potential and achieve the high-income objective.

Inclusive growth - Affirmative action is an essential policy instrument in many countries around the world and can be designed and implemented in ways that are conducive to growth. Pro-growth affirmative action requires a refocusing on needs so that the errors of inclusion and exclusion are minimized. More broadly, structural reforms that boost growth and enlarge the pie of national income make it easier to meet distributional challenges which remain significant. Poverty in Malaysia is four times higher than in Korea and Singapore, and inequality remains high at levels comparable with Indonesia and Vietnam.

Government debt sustainability - Extraordinary times call for extraordinary measures and governments around the world expanded their balance sheets. The experience in Malaysia has not been different. Structural reforms, however, will be essential to ensure that the growth momentum is sustained and the debt level is gradually reduced. Slippages on the structural reform implementation front could be costly and cause the debt to rise relative to national income, which in turn would require additional fiscal consolidation. Structural reform thus matters not only for growth but also for debt sustainability.

More details are found here.

Unless most of the above are achieved / imposed / implemented strictly, the New Economic Model (NEM) is just a talk talk thingy again.

Maybe there isn't sufficient space in the newspaper print to publish such a long article but readers were not directed to read more elsewhere.
Tags: World Bank, Philip Schellekens, New Economic Model, NEM

How Frugal Are You Lately?

Jesus set a great example for frugality. Even though He had performed a miracle and fed a crowd of 5,000 men and an undisclosed number of women and children with only five loaves and two small fishes, He instructed His disciples to gather up the leftovers. When it was all said and done, they had gathered 12 basketfuls. Now, Jesus, you may wonder, was that necessary? You could have thrown that extra bread away. All you had to do was perform another miracle and make more bread when You needed it. Through His actions, Jesus was showing the importance of not squandering what God has provided-even when it appears that you do not need the excess.

I talked to a couple recently who had lived a rather lavish lifestyle, but through a series of misfortunes lost everything. They are starting to rebuild their lives and are working at jobs that pay much less than they were used to making. I queried them about the role they had played in their financial decline, and they confessed that they were partly responsible. I concluded from a casual observation of their current behavior that a lot of their old wasteful habits were still alive and well. They called it "generosity" when they gave a 95 percent tip to the restaurant's parking attendant. By no means am I opposed to such bigheartedness, but when you are trying to stabilize your finances, you need to understand that frugality is a significant part of spirituality and God is not pleased when we engage in extravagance.

In one of His parables, Jesus talked about a son who convinced his father to give him his inheritance before the appointed time. "A few days later this younger son packed all his belongings and took a trip to a land, and there he wasted all his money on wild living"(Luke 15:13 NLT). When the economy turned sour, he could only find work feeding a farmer's swine. He almost starved to death. At one point, he became so hungry he had to eat the pods that the farmer fed to the swine. I can imagine him sitting there by the trough dividing the food between himself and the pigs: "swine," "mine," "swine," "mine." He then realized that his father's servants were living better than this. He humbled himself and headed home. His merciful father was glad to receive him and gave him a big welcome back party. Of course, by having the party, the father was by no means condoning his son's wastefulness, but rather celebrating his coming to his senses.

Are you wasteful in any area of your life, or do you actively seek ways to practice frugality? For instance, do you allow your children to open a can of soda, take a few sips, and then trash it? Did you know that there are special lids available at the supermarket that will allow you to seal the can and preserve the fizz? Are you too embarrassed to ask for a doggie bag when you eat out? Do you bring home leftovers from your restaurant dining and then allow them to spoil in the refrigerator before you can consume them? Do you consider reusing plastic lunch bags, especially when you only use them for dry goods such as chips and cookies? They can be recycled at least once after a quick swipe with a damp towel. Do you always turn the lights off when you leave the room? Do you use both sides of the paper when printing drafts of reports-at home and at work?

I have practiced frugality as far back as I can remember. In fact, Darnell teases that I squeeze each dollar so tightly it's a wonder I don't rub George Washington's face right off the front of it. Yes, I turn the bottle upside down and get the last drop out of everything. I pick up every penny I find when I'm out walking. As Benjamin Franklin said, "A penny saved is a penny earned." I use vinegar and water instead of the fancy cleaners to clean glass and shiny surfaces. I do everything I can to save money-not to hoard it, but so that I can share it. I can't think of a single thing I have ever purchased that has brought more joy than writing a check to someone who desperately needs it. We are never more like Christ than when we are giving.

I want to be careful to balance our discussion by warning that we should not allow our desire to be frugal to keep us from fully enjoying the things that are within the bounds of what God allows. I thoroughly enjoy the breathtaking view of the city from my home. My husband and I have made great sacrifices in putting the needs of God's house before our own desires. Therefore, we refuse to allow Satan to make us feel guilty about what God has provided.

Frugality is not a call to poverty, and it certainly should not take the fun out of our lives. It is important that we enjoy the abundant life that Christ came to give us. It is equally important to understand that abundance is not to be equated with extravagance. God blesses His children with abundance so that they can bless others with their overflow. If we are all poverty-stricken, how will we have an overflow?

Frugality is simply avoiding waste. Wastefulness will keep your finances in a tailspin. Frugality is evidence that God can trust you with increased resources because you have learned how to manage what He already supplied.

Read the above in 30 Days to Taming Your Finances: What To Do (and Not Do) to Make Your Money Go Further by Deborah Smith Pegues

Reading: Extreme cheapskates: Tightwads revel in frugality - Newsvine
Tags: Frugal, Frugality

Phantom Money

In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro 100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes Euro 100. The butcher takes the money and races to his supplier to pay his debt. The wholesaler rushes to the farmer to pay Euro 100 for pigs he purchased some time ago.

The farmer triumphantly gives the Euro 100 note to a local prostitute who gave him her services on credit. The prostitute goes quickly to the hotel, as she was owing the hotel for her hourly room use to entertain clients.

At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his Euro 100 back and departs.

There was no profit or income. But everyone no longer has any debt and the small townspeople look optimistically towards their future.

-------------------------------------------
The above analysis may help solve the current financial crisis which is largely triggered by "phantom" money.
Tags: Rich Russian, Euro Dollar, Prostitute, Phantom Money

Economic Bailout

Very, very interesting. Sounds so simple, but feasible. I wonder ... interesting reading!

This appeared in the St. Petersburg Times newspaper. The Business Section had asked readers all week for ideas on "How Would You Fix The Economy?" A man nailed it.

Dear Mr. President,

Patriotic retirement: There's about 40 million people over 50 years old in the work force - pay them $1 million apiece severance with the following stipulations:-

1) They leave their jobs. Forty million job openings - UNEMPLOYMENT FIXED
2) They buy New American cars. Forty million cars ordered - AUTO INDUSTRY FIXED
3) They either buy a house or pay off their mortgage - HOUSING CRISIS FIXED

Like I have been saying, they are bailing out the wrong people.

Signed

Tags: St. Petersburg Times, Economic Bailout, Unemployment, Auto Industry, Housing Crisis

100 Billion Note is Useless Now

This is a Z$100 billion dollars note for the nation of Zimbabwe.

It's worthless as not long after the new Z$100 trillion note was circulated to overcome the ever increasing inflation rate that was running into millions of percentages. To be precise, 231,000,000% in the third quarter of 2008.

The people in the Zimbabwean are no economists at all or do not have any good advise from any specialists in the nation. Everyone was in just to ride on getting the side incomes while working with the government. Unfortunately, at the detriment of the general public.

How much is Z$100 trillion dollars worthed actually? It's only US$30. Pathetic isn't it ...

The money is growing smaller and smaller each and the public was forced to withdraw more and more money to survive. How much can they withdraw to meet the ever increasing prices of daily goods required?

Banks do not have enough monies for the public to withdraw and people even found that it was more expensive to work than not to work. A teacher's present salary is only worthed US$1 and to catch a bus to the school is US$2 ...... thereby leading to an unemployment rate of 80% now.

I have been following Zimbabwe's predicament since 2007 and the central bank, under useless guidance from some so-called professionals, kept adding a numeric zero to their currency note to overcome the inflation and continued to print new monies.

I did mention that by adding more numeric zeros in the currency notes does not help at all as the root of the problem was not the money. In Aug 2008, the central bank re-valued their Z$10 billion into 1 Zimdollar, efffectively cutting away 10 zeros. They thought they have made it. How wrong!

The inflation continued and continued, the new currency was changed and changed again till it reaches Z$100 trillion dollars in Jan 2009 in a short five months.

Now, how are you going to carry your monies around when you require Z$1,243,255,000.00 to pay for your meal in the Victoria Falls Hotel.

The people in the Zimbabwean government and central bank, Reserve Bank of Zimbabwe, cracked their heads again ....... they could be really doing their work but they are really lost in their own world.

The solution? Cut the zeros behind the Z$100 trillion dollars ..... it's so simple only.


What's the value now? Z$1 trillion = Z$1.

To overcome the damages, foreign currencies are allowed to be traded and workers' salaries are payable in foreign currencies too. Practically, the Zimbabwean dollar is useless.
Tags: Zimbabwe, Zimbabwean Dollar, Trillion Dollar Note, Billion Dollar Note, Victoria Falls Hotel, Reserve Bank of Zimbabwe, Special Agro-Cheque

Main Cause of Stock Exchange Meltdown

Financial gurus / world class economists / professional stock traders are putting their brains together to find an answer or a method in trying to put a stop to the selldown in world stock markets.

They missed one fundamental point - communication.

(Picture was stolen from Daniel Ng)

Tags: Stock Exchange Meltdown, Stock Market, Financial Guru, Economist, Stock Traders

Ten Reasons You Aren't Rich

Here are ten possible reasons you aren't a millionaire:-

1. You Care What Your Neighbors Think: If you're competing against them and their material possessions, you're wasting your hard-earned money on toys to impress them instead of building your wealth.

- This is what we called 'envy'. Envy could even make you go bankrupt without you knowing.


2. You Aren't Patient: Until the era of credit cards, it was difficult to spend more than you had. That is not the case today. If you have credit card debt because you couldn't wait until you had enough money to purchase something in cash, you are making others wealthy while keeping yourself in debt.

- Lots of people spent beyond what they could afford to pay. They are not worried that they are owing the banks due to the excessive usage of their credit cards. Such consumers thought that being able to pay the minimum monthly payment and interest charged are considered good enough and they considered themselves 'risk takers'.


3. You Have Bad Habits: Whether it's smoking, drinking, gambling or some other bad habit, the habit is using up a lot of money that could go toward building wealth. Most people don't realize that the cost of their bad habits extends far beyond the immediate cost. Take smoking, for example, it costs a lot more than the pack of cigarettes purchased. It also negatively affects your wealth in the form of higher insurance rates and decreased value of your home.

- Will consumers realise this? Or the related advertisings are so good that it continued to draw more attention.


4. You Have No Goals: It's difficult to build wealth if you haven't taken the time to know what you want. If you haven't set wealth goals, you aren't likely to attain them. You need to do more than state, "I want to be a millionaire." You need to take the time to set saving and investing goals on a yearly basis and come up with a plan for how to achieve those goals.

- Most people will tell you that they barely survive with their current salaries especially with the higher cost of living nowadays. Besides the cost of living, some have to squeeze out from somewhere to pay for their 'bad habits' as above.


5. You Haven't Prepare: Bad things happen to the best of people from time to time, and if you haven't prepared for such a thing to happen to you through insurance, any wealth that you might have built can be gone in an instant.

- At times, we may have to acquire the right kind of insurance that meets our needs.


6. You Try to Make a Quick Buck: For the vast majority of us, wealth doesn't come instantly. You may believe that people winning the lottery are a dime a dozen, but the truth is you're far more likely to get struck by lightning than win the lottery. This desire to get rich quickly likely extends into the way you invest, with similar results.

- Many people who have fell for those quick bucks scheme are easily susceptible to another scheme if not careful. Why lotteries can afford high pay outs to one in a million winner is because it's very rare to win.


7. You Rely on Others to Take Care of Your Money: You believe that others have more knowledge about money matters, and you rely exclusively on their judgment when deciding where you should invest your money. Unfortunately, most people want to make money themselves, and this is their primary objective when they tell you how to invest your money. Listen to other people's advice to get new ideas, but in the end you should know enough to make your own investing decisions.

- You need to know what kind of investments is suitable for yourself as others won't know what sort of commitment you have.


8. You Invest in Things You Don't Understand: Your hear that Bob has made a lot of money doing it, and you want to get in on the gravy train. If Bob really did make money, he did so because he understood how the investment worked. Throwing in your money because someone else has made money without fully understanding how the investment works will keep you from being wealthy.

- In any investments, it's good that you know how it operates and you have to keep track of its performances as it's your hard earned money.


9. You're Financially Afraid: You are so scared of risk that you keep all your money in a savings account that is actually losing money when inflation is put into the equation, yet you refuse to move it to a place where higher rates of return are possible because you're afraid that you will lose money.

- Put it this way, this group of people is not risk takers. On the other hand, they build their financial wealth slowly slowly ........ can't be millionaires but can live a moderate life without much worries.


10. You Ignore Your Finances: You take the attitude that if you make enough, the finances will take care of themselves. If you currently have debt, it will somehow resolve itself in the future. Unfortunately, it takes planning to become wealthy. It doesn't magically happen to the vast majority of people.

- Lots of people failed to plan. They couldn't care less about obtaining the easiest financing schemes and would pay more for services compared to others.

(extracted from TheStreet.com)
Tags: Millionaire, Finance, No Goals, Credit Card Debt, Building Wealth, Financial Health

Record Inflation of 231,000,000%

When inflation sets in, many Third World countries will not be able to handle it. They are already considered poor nations but cost of living is rising daily.

Zimbabwe's economy has been spiralling downwards with no signs of any potential economy comeback.

Inflation rose from few hundred per cent up to an impossible rate of two hundred thirty one million per cent (231,000,000%). Many people will not be able to comprehend what kind of inflation is this. In layman example, a loaf of bread that was sold at 100 Zimbabwe Dollar in year January 2007 is now sold at 23,100,000,000 (that's hitting above Twenty Three Billion Zimbabwe Dollar).

The country tried to print bigger currency denomination to counter the increasing rate of inflation but to no avail. Then it changed the currency valuation by deleting the number of zeros. Is that the correct way to handle the economics? Whoever that gave this advise is really marvellous. Were they graduates from Cambridge UK or MIT, USA? Or local politicians that graduated from their local universities?

Hence, it decreases the value of the currency and on a positive note, it helped the citizens in the way of carrying lesser currency notes when they go for shopping. Effective Aug 2008, from the height of a 100,000,000,000 Zimbabwe Dollar (One Hundred Billion) currency note that equates to less than USD400.00, it now becomes 10 Zimdollar (at a rate of Z$10 billion = 1 Zimdollar).

As root of inflation was the political instability, inflation rate continued its climb. The nation needed to print bigger currency denomination notes again. Firstly, the 10,000 Zimdollar and now 20,000 Zimdollar (equivalent to US$20). You could only withdraw the maximum of 20,000 Zimdollar from your bank account ...... daily!

It will be neverending and by early next year, the 100,000 Zimdollar will be out on the street. By then, I would have lost count of the number of times it has printed new notes. Next level of inflation rate? This African nation is really one of a kind with the leaders in power, who are living in posh lifestyle, not considering the suffering citizens.

Reading: Zimbabwe inflation hits new high - BBC News/Africa

Related posts:-
* Zimbabwe's Growing the Wrong Way
* Just How Much is 500 Million Dollars?
Tags: Zimbabwe, Zimbabwe Dollar, Zimdollar, Economics, Inflation, Africa

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

Bad Financial News in Japan

Regrettably, more bad financial news ................

Following the problems in the sub-prime lending market in America that has hit a number of investment banks and the run on Northern Rock in the UK, uncertainty has now hit Japan.

In the last 7 days:-

Origami Bank has folded

Sumo Bank has gone belly up

Tempura Bank is in hot oil

Bonsai Bank announced plans to cut some of its branches

Karaoke Bank is up for sale and will likely go for a song

shares in Kamikaze Bank were suspended after they nose-dived

Samurai Bank are soldiering on following sharp cutbacks

Ninja Bank are reported to have taken a hit, but they remain in the black

500 staff at Karate Bank got the chop

Analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal
Tags: Financial News, Japan, Japanese Bank, Funny, Humour

Liquid Assets

If you had purchased $1,000 of shares in Delta Airlines one year ago, you will have $49.00 today.

If you had purchased $1,000 of shares in AIG one year ago, you will have $33.00 today.

If you had purchased $1,000 of shares in Lehman Brothers one year ago, you will have $0.00 today.

But, if you had purchased $1,000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling refund, you will have received a $214.00.

Based on the above, the best current investment plan is to drink heavily & recycle. It is called the 401-Keg. A recent study found that the average American walks about 900 miles a year. Another study found that Americans drink, on average, 22 gallons of alcohol a year.

That means that, on average, Americans get about 41 miles to the gallon!

Now this will make an American feel a little bit better about life!
Tags: American, Delta Airlines, AIG, Lehman Brothers, Beer, Funny, Humour, 401-Keg

Oil Price Dropped Drastically

World oil price has dropped drastically in the futures market from a high of US$147.27 on just 11 July 2008. On 15 Sept 2008 (2300 hrs), the current oil prices in various futures exchanges were:-
* Crude oil for October is trading at US$92.40 a barrel on the New York Mercantile Exchange
* Brent crude oil for November is trading at US$90.40 a barrel on London's ICE Futures Europe
When our Malaysian government increased the fuel price on 6 June 2008 up to RM2.70 from RM1.92, the world oil price was trading at US$130 plus. When it was reduced to RM2.55 on 23 Aug 2008, the world oil price was at US$110 plus . It's already being traded at US$92 now, the fuel price should be re-priced to around RM1.92 (the fuel price before Jun 2008) or even lower.

Our faithful Prime Minister has said VERY LOUDLY that our fuel price would be priced according to world oil price and a price mechanism that would be effected every fifteen days. Excuse sir, the price has dropped way below all those oil prices you have mentioned. When will you wake up from your slumberland to review the fuel price again ........ to a much lower pricing.

Reading: Crude Oil Drops Below $92 as Lehman Adds to Demand Concern - Bloomberg
Tags: Oil Price, Crude Oil, Brent Crude Oil, New York Mercantile Exchange, ICE Futures Europe, Commodity, Futures

Lifestyle After Fuel Crisis

Talking abount change lifestyle - we have to see how to change lifestyle for various categories of citizens:-

(I) SUPER RICH (very small percentage)
- no need to change lifestyle

(II) RICH
- cutting some overseas shopping trip (5 trips per month to 3 trips per month)

(III) QUITE RICH (income RM15,000 -RM20,000 per month)
- changing car from 4,000cc to 3,000cc
- cut down on some high teas at 5 star hotels

(IV) MIDDLE (UPPER) (income RM6,000 -RM14,000 per month)
- changing cars from 3,000cc to 2,500cc
- cutting some dining out

(V) MIDDLE (LOWER) (income RM4,000 - RM6,000 per month)
- cut Astro subscription
- cut gym membership
- send back Indon maid (can't afford to pay salary anymore)

(VI) LOWER (UPPER) (income RM3,000 -RM4,000 per month)
- cut Astro subscription
- replace airconds with ceiling fans
- eat lower grade rice

(VII) LOWER (MIDDLE) (income RM2,000 - RM3,000 per month)
- cut Astro subscription
- use fans
- switch off light by 11pm
- sell off car, buy motorbike

(VIII) LOWER (LOWER) (income RM1,000 -RM2,000 per month)
- eat 2 meals a day instead of 3 meals a day
- use bicycle instead of motor bike

(IX) HARDCORE LOW (below RM1,000/ RM300 per month)
- stop watching TV
- electricity supply cut off as can't afford to pay bill
- eat only 1 meal in 3 days (plain rice with salt) from previously 2 meal a day
- walk to work (even 5km)
- if renting, move out to live under the bridge or cave
- eat and drink only to remain alive.......
Tags: Lifestyle, Fuel Crisis, Cut Down, Austerity

Austerity Drive, Literally

With worldwide economics heading towards recession and inflation rising at an alarming rate, economists are still trying to define the scenario to their respective governments.

Common citizens can only dream about having better or luxury life. The poorer ones may have to resort to the following austerity drive:-

Tags: Austerity Drive, Economics, Economist, High Inflation

Salary of RM3,000 Is Considered Low Income

With the recent high increase in fuel prices and inflation setting into the life of every single person in the world, Malaysians were not spared either.

The Malaysian government still said that inflation rate in Malaysia is less than 5%. But when you go out for a meal or to buy some simple household stuff, prices have shot up more than 10%. What were they measuring? Maybe the government statistic's was comparison made between today and few months back without them telling us which month or year they were using to say that inflation in Malaysia is well under control.

FOMCA has done a survey to see how a salaried man could survive life in the city with just RM3,000 (approx. US$930) in his pocket. He also needs to feed his one wife and four kids.

By looking at the survey results, one could see that he will have more months left after finishing his RM3,000.

If you are earning RM3,000 per month, you are considered a low income earner now as RM3,000 couldn't get you a lifestyle but just living modestly. Yes, you won't die but no luxuries, no entertainment, no mamak, no extras, no holidays or no pampering. Unless you are single and not thinking of getting married, then RM3,000 is more than enough. That also not on excessive spending.

Those with families, the way to survive nowadays is to cut down on excesses, lavish spending, unnecessary purchases and by budget by deleting non-essentials from the list.

Household monthly in come range (Percentage range of families):-
* <> RM 10,000 (4.9%)
Source: Figures presented by Senator Amirsham A Aziz, Minister in the Prime Minister’s Department, in response to a query in Parliament by Dr Jeyakumar Devaraj, MP for Sungai Siput

From the above statistic, an approximate 57.8% of Malaysians are earning RM3,000 or less. More than half of the nation's population are considered low income earners. My my ........ and the government has time to play around with politics instead of concentrating on improving the economy.

From the last general election, we have heard that some Malaysians voted for the oppositions because the citizens were fed up with the non-sensible stuff that the government was dealing in. The talk was the voters were teaching the government a lesson. Looks like the lesson has not been understood yet.

With the pricing of every single goods and services rising up like mad, soon, the Malaysian citizens will compromise. If the compromise was to have lesser luxuries, that should be alright but I would say that many has compromised to live a life of lower grade.

Kindergarten fees are increasing due to increased expenses. Therefore, parents may forego sending their children to the kindergartens. Maybe one year in kindergarten, at the age of six, will be sufficient for most low income earners. In this way, the low income earners won't die but they have sacrificed their kids' future livelihood.

Cereals and oats are essential for a growing child. Do you think the low income earner will sacrifice this sort of food just to survive? Yes, they will and at the detriment of the child's health this time.

The government has produced the above statistics and knowing that inflation is hitting the nation hard, what are they doing about it?

Reading: Fomca: Help families cope - Star
Reading: Malaysians brace themselves for higher cost of living - Straits Times

Related post - How to Survive With Your Salary?
Tags: RM3,000, Low Income Earner, Low Income, Low Salary, Lifestyle, Inflation, Malaysia, Higher Cost Of Living

Just How Much is 500 Million Dollars?

Zimbabwe, which has an 165,000% inflation rate, is trying to ensure that their citizens do not need to carry tons of money while going out to buy their stuff.

When I was in Sudan, I have to carry a bulk of of their 1,000 Sudanese Dinar wherever I go so that I would have enough to pay for stuff that I wanted. A simple meal at a restaurant would cost me easily 3,000 Sudanese Dinar (equivalent to US$15). At this point of time, Sudan has made their currency becoming smaller denomination where 100 Sudanese Dinar is equivalent to 1 Sudanese Pound, which is still at the same exchange rate of 2 Sudanese Pound = US$1.00. Sudan is not linked to any international currency exchange rate and they change their denomination as they like.

Wherelse in Zimbabwe, the value of their money has dropped even further. When I blogged about the new issuance of the 10,000,000 (Ten Million) Zimbabwe Dollars in January 2008, the situation was already bad enough. In January, their 10,000,000 Zimbabwe Dollar was equivalent to US$3.90 at the height of the 165,000% inflation rate.

Today, the Reserve Bank of Zimbabwe (tried to find their link but to no avail) has done something that nobody has done before which is to issue a 500,000,000 (Five Hundred Million) Zimbabwe Dollar note. Today, their 500,000,000 Zimbabwe Dollar is worthed US$2.00.

What's the percentage of increase like? 10,000% on top of 165,000%???
Which works out to 1,650,000,000% inflation rate right now? One Billion???????

Going back to history, in 1980, one Zimbabwe dollar was worth more than US$1.00.
Reading: Zimbabwe bank issues $500m note - BBC News/Africa
Tags: Zimbabwe, Zimbabwe Dollar, Economics, Reserve Bank of Zimbabwe

Is Malaysia's Fuel Price Cheaper?

The Malaysian government, on each occasion of announcing the fuel / petrol price increase would tend to compare with the neighbouring countries' prices. In doing so, they would say that our price was still the lowest in the region.

But has our Malaysian government tried to compare the fuel / petrol price with other oil producing countries? Malaysia is still a net exporter oil producing country at the moment.

A Germany-based company, GTZ International ("GTZ"), has done a survey in year 2007 on behalf of the World Bank in reviewing the fuel prices throughout the world. A common price denominator was fixed at US$0.38 per litre (Nov 2006 pricing), which was also the benchmark price for the world crude oil market. A good way to gauge when comparing different countries' way of measurement.

In GTZ's latest survey (click to download the 2 pages full survey), Malaysia has been listed at number 20. It shows that Malaysia's fuel price was the twentieth cheapest in the world. Not bad........... not true when the Malaysian government said that Malaysia's fuel price was the cheapest in the South East Asia region as Brunei's fuel price was even cheaper.

The Top Twenty list:-
1) Turkmenistan - US$0.02 per litre (ultra cheap, are you sure this is top grade oil?)
2) Venezuela - US$0.03 / litre
3) Iran - US$0.09 / litre
4) Libya US$0.13 / litre
5) Saudi Arabia - US$0.16 / litre
6) Qatar - US$0.19 / litre
7) Bahrain - US$0.21 / litre
8) Kuwait - US$0.22 / litre
9) Egypt - US$0.30 / litre
10) Yemen - US$0.30 / litre
11) Oman - US$0.31 / litre
12) Algeria - US$0.32 / litre
13) Brunei - US$0.34 / litre (Brunei is in the same region with Malaysia)
14) United Arab Emirates - US$0.37 / litre
15) Trinidad and Tobago - US$0.43 / litre
16) Azerbaijan - US$0.46 / litre
17) Ecuador - US$0.47 / litre
18) Angola - US$0.50 / litre
19) Nigeria - US$0.51 / litre
20) Malaysia - US$0.53 / litre (approx. RM1.71)

You have to know that the top twenty countries are oil producing countries and also net oil exporters. The US$0.38 per litre benchmark price was based on the crude oil price of US$60.20 per barrel. At that point of time, the Malaysian government has already mentioned that they have subsidised the fuel / petrol price heavily to the tune of tens of billions (Ringgit Malaysia currency).

As can be seen in the GTZ 2007 survey, during the crude oil price of US$60.20 or US$0.38 per litre, Malaysian fuel price was already being retailed at petrol station at the price of US$0.53 or RM1.71 (using the current currency exchange rate of US$1.00 = RM3.23).

The Malaysian government has been maintaining the fuel price at US$0.59 or RM1.92 and it would have started subsidising the fuel price if it hits above US$93.46 per barrel or US$0.59 per litre (approximately). The crude oil price hit US$94.00 per barrel on 20 Oct 2007.

Unless the Malaysian government can proof that this GTZ 2007 survey done for World Bank is wrong, otherwise please tell us what kind of oil subsidies were our Malaysian government talking about all these years?

Reading: World Crude Oil Prices - Energy Information Administration

Related posts:- Peak Oil and Confirmed! Petrol Price @ RM2.70 TONIGHT! and Malaysia's Subsidy for Petrol Price
Tags: Fuel Price, Oil Price, Petrol Price, Crude Oil Price, GTZ International, World Crude Oil Price, Energy Information Administration, World Bank, Commodity, Malaysia

Cost of Raising Up Year 2007 Babies

A study was done by United States Department of Agriculture on the costs involved in raising up a baby born in the year of 2007 till he/she is 18 years old (that would be year 2025).

With the cost of providing food (17%) and child care and education expenses (12%) taking up the majority of the costs involved, it also depends on your disposable income at the end. But on average, families were expected to spend US$204,060 on feeding, housing and schooling a child. That's easily RM650,000 for the full 17 years. Having two kids could make you an instant millionaire. Lemme count, that would be roughly US$12,000 or RM38,000 required per annum per child.

The study also stated that families making less than US$45,800 (RM146,000) per annum would likely spend around US$148,320 (RM474,000) on the full 17 years on one child . Those earning more than US$77,100 (RM246,000) a year, will spend approximately US$298,680 (RM955,776) till the kid's 18th birthday.

By the time they are a teenager, with inflation setting in in years to come, you have to be a multi-millionaire to raise a kid. Getting too ridiculous, isn't it?

I wonder why they stopped the study at age 18. Maybe you need to be a billionaire from there onwards with their college and university fees included.

Reading: Raising that '07 baby will cost $204,060 in U.S. - Reuters

Related post:-
* How to Survive With Your Salary?
Tags: Cost of Raising a Child, Child Rearing Cost, Cost of Living

Oil Price Will Continue to Rise

Yeah, my prediction is as per the title "Oil Price Will Continue to Rise". Why did I say that?

Colombia chased and strayed into Ecuador's border to kill FARC rebels. Ecuador, so shocked with that intrusion, decided to cut off all diplomatic ties with Colombia.

Venezuela in supporting Ecuador joined in the fray by strengthening its armed forces fronting the Venezuela-Colombia border.

Even though the Revolutionary Armed Forces of Colombia–People's Army (in Spanish Fuerzas Armadas Revolucionarias de Colombia–Ejército del Pueblo) or FARC rebels, in short, may be real but all this hoo haas were just a cover up. By stirring up this whole confrontations amongst this three countries who so happened to be oil producers were actually good news. Good news for this three countries actually as their national income would continue to rise.

Looking at the map on the left, Venezuela has no reason to be apprehensive about the situation as Colombian armed forces went into Ecuador, faraway from Venezuela.

Tensions created there would cause concerns throughout the world on the fear of shortage of oil production in this three countries. Aren't they clever?

Oil price is hovering around US$103 and Malaysian motor vehicle owners better be prepared for a historic increase in the petrol price, rumoured to happen in April 2008.

Reading: Venezuela, Ecuador break Colombia ties over raid - Reuters
Reading: Ecuador cuts ties with Colombia - BBC News/Americas
Reading: Venezuela Orders Troops to Colombian Border - News VOA
Tags: Economics, Oil Price, Petrol Price, Ecuador, Colombia, Venezuela, FARC Rebel