Monday, March 16, 2009

Domino Effect

I hope you all will take a little time out to open your heart and thank God for his blessings, as you pray for the poor folks of Madagascar, and the other nations that are in such despair. For them, life has always been so very hard.
The last thing they needed was a global economic meltdown.

Reuters Published: March 16, 2009
By Richard Lough

Explosions were heard near Madagascar's presidential palace on Monday, raising tensions in the crisis between President Marc Ravalomanana and the opposition.

Opposition leader Andry Rajoelina has been demanding Ravalomanana's resignation and calling himself Madagascar's de facto leader in a crisis since the start of this year which has killed at least 135 people and is crippling the economy.

The opposition is due to give its response to the president's offer of a referendum to end the crisis.

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Gandhi
By: Abhishek Kumar Sadhu


Mahatma Gandhi always insisted on Truth and Non-violence as the inseparable part of humanism.


I have nothing to teach this world,

"Truth and Non-violence as old as hills"


With present phase of globalization, the third world need to look into the evil effects of globalization. We cannot allow our fellow citizens to starve, to lose their employment and to become destitute. It is Gandhi’s Charakha, that can save us from this predicament.




G – Generosity
A – Affection
N- Nonviolence
D- Dedication
H- Honesty
I- Integration

He said “Non-violence is the greatest force at the disposal of mankind. It is mightier than the mightiest weapon of destruction devised by ingenuity of man."

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US Budget Deficits, we are looking not at a few tens of billions US dollar but rather something like 800 billion greenbacks for 2008 alone. To provide a perspective of what USD800B is like, the entire Malaysian Budget for the last decade (2000-2009) is only worth RM1,290.3 billion or USD368.7 billion – less than half of what the US 2008 Budget Deficit is. Still cannot visualize it? Imagine winning the Big Sweep (RM3 million) every month without fail for the next 77,778 years. Get it now? Imagine just how big a hole the US Government had dug for themselves and in the same process, for the rest of the world as well.

Because of these baseless funds used to finance their imports, the exporters from all over the world enjoyed more profits. Trade surpluses are evident once a nation exports more to a country than it imports from. When a nation earns more than it spends, the monetary value of its currency grows stronger and inflation creeps up as well. To offset this, more new local money is introduced into the system to balance things up a bit and to ensure that the value of its exports remain low and stable. This mirrors exactly what the US is doing, albeit for different reasons, but with the same consequences.

Come one fine day and the US faces an Economic Tsunami because there is only so much “unwarranted” money that the system can withstand before it breaks down. Well, that day has arrived and henceforth the credit crunch, and when the US economy goes downhill, all global economies follow suit. Domestic economist might say that the Malaysian economy is decoupled from the US economy and henceforth the impact will be minimal. BS! During those years of trade surpluses and high growth, the Ringgit became stronger. Bank Negara Malaysia (like all other central banks in Asia) had to keep it low to sustain the growth rate that was primarily propelled by exports. This is achieved by the introduction of new money into the Malaysian market. Now that the exports are no longer there, this “new money” is still floating around, fiat money not backed by gold, an almost exact scenario replicating the US economy. Will it affect Malaysians the same way it affected the Americans? Definitely so because the Laws of Economics follow the same principles no matter where it is applied and doubly so because BNM would have also invested in these American TS instruments – the major factor because US Dollars are the defacto international trading currency.

The ultimate conclusion is that there is no avenue of escape from the impact of the US credit crunch and its thereafter consequences no matter what anybody tells you. It is akin to a domino effect whereby the first toppled domino will take out the next in line and so forth. Malaysia might be way down the line but the effects will be encountered here nonetheless. It is just a matter of time. Subsequently, what are the consequences?

Next stop, hyperinflation.

- Hakim Joe








“Every child brings proof that God has not lost faith in man.”

3 comments:

masterwordsmith said...

Dear Walt,

Thank you for your bird's eye-view of the many problems inthe world today. You have gleaned from Madagascar to Malaysia to your country and reminded us that all is not well not just in our home front but all over.

The time has come for us to live simply, humbly and to reconcile with those who have hurt us....

May God help us find solace in Him.

Take care and thanks again, Walt.

HANNA said...

Ha!
look at this here
take care, from italy ;)

Igakely said...

Hi Walter !

Thanks for praying for malagasy folks !
In my country (Madagascar), life is hard but God's blessings are and were always there for us.